MGT503 Assignment 1 (3,000 words)

While theory of ethics does not invent ethical behavior, or even reflection on it, it
does try to bring systematic thinking to bear on the phenomenon. The 20th century saw the
expounding of various thoughts on how business should conduct themselves in meeting
with the growing ethical demands by multiple stakeholders on corporations. Many western
management thinkers have immensely contributed in shaping the ethical paradigm of the
constantly evolving business behaviors. One of the management Guru proposed the theory
for dealing with the ethical issue in 21st centurys business practices is Greet Hofstede.
Greet Hofstede is a researcher in the fields of organizational studies and
organizational culture, also cultural economics management (Dyck and Neubert, 2010). He
is a well-known for his pioneer in research on cross-cultural groups and organizations (Keith,
2011). His studies demonstrated that there are national and regional cultural groups that
influence the behavior of societies and organizations.
Greet Hofstede was born in 1928 in Netherland (Witzel and Warner, 2010). The
Netherlands is a socialist country, but it also has a free market economy. When World War II
ended, Hofstede was seventeen and had always lived in the Netherlands under rather
difficult circumstances, so he decided to entered Technical College (HTC), Netherlands, in
1945, and had one year of internships, including a voyage to Indonesia in 1947 as an
assistant ships engineer (Minkov and Hofstede, 2011). It was his first time out of his
country, immersed in a foreign culture, and was an early influence in his career to study
cross-cultures. After finished his M.Sc. in Mechanical Engineering from Delft Technical
University of Netherlands, he worked as a factory hand in Amsterdam and worked
professional and managerial jobs in 3 different Dutch industrial companies (Minkov and
Hofstede, 2011). He had a chance to see the organization from the bottom up (lowest level)
working as a mechanic. Then, he changed to worked as a management trainer and manager
of personnel research, and founded and managed the Personnel Research Department at
IBM International. At the same time, he was doing the Ph.D. in social psychology at
Groningen University, Netherlands (Minkov and Hofstede, 2011). This was his transition
from the the field of engineering into psychology. In this role, he played an active role in the
introduction and application of employee opinion surveys in over 70 national subsidiaries of
IBM around the world (Norhayati Zakaria, Abdul-Talib and Osman, 2016). He traveled across
Europe and Middle East to interview people and conduct surveys regarding peoples
behavior in large organizations and how they collaborated, but it was unable to conduct a
significant amount of research. However, his research has a progress after been a visiting
lecturer at IMEDE, Switzerland. He administered a selection of IBM questionnaire items to
his course participants, who were international managers from over 30 countries and from a
variety of different private and public organizations unrelated to IBM and found that the
same results that he discovered in the IBM surveys had reproduced themselves significantly
in the sample of his students (Norhayati Zakaria, Abdul-Talib and Osman, 2016). This was
the first hard piece of evidence that the differences among countries was not specific to
IBM, but, instead, were due to a generalized set of shared socialization skills that were
specific to people having grown up in the same country, and not necessarily, the same
organization. He worked in the data and analyzed it in a variety of ways. He used existing
literature in psychology, sociology, political science, and anthropology to relate his findings
in a larger scope of study. Finally, in 1970, the results of his analysis were presented in his
book Cultures Consequences.

In his book, Hofstede argues that societies differ along four major cultural
dimensions: power distance, individualism, masculinity, and uncertainty avoidance
(Hofstede, 1970). This cultural typology is based on the findings of several studies.
According to Hofstede (1984), power distance is the extent to which the less powerful
individuals in a society accept inequality in power and consider it as normal. Although
inequality exists in every culture, but the degree to which it is accepted and tolerated varies
between one culture to another culture (Coleman, Deutsch and Marcus, 2014). Hofstede
defines individualist cultures as being those societies where individuals are primarily
concerned with their own interests and the interests of their immediate family. In contrast,
collectivist assume that individuals belong to one or more in-groups (e.g., extended
family, clan, or other organization) from which they cannot detach themselves. The ingroup protects the interest of its members, and in turn expects their permanent loyalty.
Masculinity, according to Hofstede, is the extent to which individuals in a society
expect men (as opposed to women) to be assertive, ambitious, competitive, to strive for
material success, and to respect whatever is big, strong and fast (Hofstede, 1984).
Masculine cultures expect women to serve and to care for the non-material quality of life,
for children, and for the weak. Feminine cultures, on the other hand, define relatively
overlapping social roles for both sexes with neither men nor women needing to be overly
ambitious or competitive. Masculine cultures value material success and assertiveness while
feminine cultures values qualities such as interpersonal relationships and concern for the
weak (Jandt and Jandt, 2004).
Uncertainty avoidance is defined as the extent to which individuals within a culture
are made nervous by situations that are unstructured, unclear, or unpredictable, and the
extent to which these individuals attempt to avoid such situations by adopting strict codes
of behaviors and a belief in absolute truth (Hofstede, 1984). Cultures with strong
uncertainty avoidance are active, aggressive, emotional, security-seeking, and intolerant. On
the other hand, cultures with weak uncertainty avoidance are contemplative, less
aggressive, unemotional, accepting of personal risks, and relatively tolerant.
All four of these cultural dimensions relate to ethics in the sense that they may influence the
individuals perception of ethical situations, norms for behavior, and ethical judgements,
among other factors (Scholtens and Dam, 2007). His model negates that one set of
principles is universally applicable to structure organizations and institutions. Managers in
international organizations should operate according to their country's values, rather than
to the organizations culture. Employees from related national cultures should work in
similar fashions, thereby reducing the chance of conflicts. Hofstede's model provides
managers of cross-cultural relations a tool to help them understand differences in value sets
and behavior.
Because the Hofstedes research was one of the research using the largest cross-national
databased that existed in that time (over 100,000 questionnaires from more than 70
countries around the world) (Hofstede, 2011), thus his research took a very long time to be
completed; from 1965 to 1980.
In that period of time, management techniques by thinkers was heading toward the
personnel. During those day, the social contract between employers and employees is
redefined. Employees have an adversarial relationship with management. Values shift away
from loyalty to an employer to loyalty to ideals (Ethics.org, 2016). Old values are cast aside.
Because the economy suffers through recession, corporations downsize and employees'

attitudes about loyalty to the employer are eroded. Popular management philosophy
shifted from pure authoritarianism to more collaboration and working on equal footing.
Furthermore, it is the golden age of international trade. In those day, many countries
transform to a free market economy and become a new market. A large number of
companies do global expansion and become a multinational enterprise. The emergence of
the multination enterprises brings about moral diversities and challenges international
business management in that time (Lerche III, 2016).
However, the 21st century is different from the past. The business context at the
present is substantially different from at the 1965 to 1980 period. In the modern world,
news information has moved and been shared abruptly and everyone is able to access to
his/her wanted information easily because our world is connected by internet and
information technology. Consumers have greater access to information than ever before
(Kennell, 2015).
In the fast moving world, it is important the company must not overlook the ethical issue
that may bring about bad rumor and news to the public and effect companys image.
Now, customer more and more care for and have an interest in the issue about the business
ethic. Recent global focus on corporate misdeeds, such as garment factory disasters,
environmental damage, banking scandals and health and safety issues in the food chain has
increased public scrutiny (Business Ethics for SMEs, 2016). There is now an expectation of
ethical and transparent practice from customers and civil society. Due to requirements
higher up supply chains, smaller firms are increasingly asked during tendering processes
with large corporations about their social and environmental credentials and ethical risk
management. Owners and managers can often encounter ethical challenges. Examples
include: How do I ensure that my employees do their work properly and do the right thing?
How do I deal with my employees desire to balance their work obligations with their
personal ones?
Additionally, it is very hard that companies can hide and conceal the misbehaviors
because their customers want more transparent in doing business. Right now, the company
become the naked organization. "The new economy is all about transparency", says Thomas
Gad, a Swedish branding expert, and one of the founders of the web branding consultancy
Differ (Gad, 2001). "The Internet has accelerated a process that was already underway.
Consumers have greater access to information than ever before. They are able to observe
the internal workings of the companies they do business with. As they become more aware
of their new power, they will peer into every nook and cranny (Gad, 2001). Transparent
markets demand transparent organizations. We are now entering the transparent market.
The openness created by the Internet makes this development more dramatic. Production is
increasingly controlled by customer values. The result is transparent production where the
customer has full insight, and products that are also transparent, including the values and
the knowledge behind them. Everything becomes open to the consumer.
Not only the information that move quickly in the modern age, but the workers also move
quickly, both in administrative and labor levels (Biggiero, 2006). A large number of
companies do global expansion and become a multinational enterprise more than in the
past (International Management, 2016). However, although the people in this world is more
connected (globalization) by the information technology, but there is still the subordinate
group of people divided by life-style of living (segmentalism). People nowadays have lost
the sense of company and are more segmented than in the past. Their behaviors are

various, no clear direction and very hard to predict. Pope Benedict XVI once wrote that as
society becomes ever more globalized, it makes us neighbors but does not make us
brothers. (2009, n. 16). Indeed, global and local processes, along with tensions of
interconnectedness and separation do impact on the content and structure of human
relationships. Thus, it is harder to manage the more diversified organization. The most
fundamental ethical problem that the manager of an international business faces is the
problem of moral diversity (Peill-Schoeller, 2012). Cultural diversity and the existence of
different moral perceptions are relevant questions in business ethics and in cross-cultural
management. Cultural diversity and globalization bring about a tension between universal
ethics and local values and norms (Mel and Snchez-Runde, 2013). Simultaneously, the
current globalization and the existence of an increasingly interconnected world seem to
require a common ground to promote dialog, peace, and a more humane world. Our rapidly
changing world, characterized by this intensive globalization, is filled with deep-rooted
inequality and extreme cultural differences. There are some practices that are morally
acceptable in some cultures but condemned in others, such as infanticide, genocide,
polygamy, racism, sexism, or torture. Such differences in moral practices across cultures
have lead to the question whether there are any universal moral principles or whether
morality is merely dependent on the particular culture. It is not generally enough to refer to
the doctrines of international law and the universal declarations of human rights when
different cultures, and their particular moral and value systems clash. Many oil companies,
for example, operate in the United States which professes that men and women should be
treated as equals and where bribery is considered wrong, while simultaneously operating in
several Middle Eastern countries where women are regarded as subordinate to men and
bribery is widely accepted. To deal with such differences in ethic like this example, the
manager can apply the Hofstedes theory to deal with the cultural diversity and the
existence of different moral perceptions.
Nevertheless, the Hofstedes theory has the consistency with the ancient philosophy.
The Hofstedes concept is similar to the concept of Yin Yang. Yin Yang, the indigenous
Chinese philosophy, views cultural dimensions as having inherently opposite and
paradoxical value orientations. Yin Yang suggests that all cultures share the same potential
values, but simultaneously differ (Fang, 2011). Over time each has experienced unique
learning that has yielded dynamic value orientations. In the age of globalization, the Yin
Yang perspective on ethical and culture has important implications for companies and
managers conducting business internationally. The ancient Chinese philosophy of Yin Yang
offers an alternative to the Hofstede paradigm for understanding culture (Fang, 2011).
Practically, the Yin Yang perspective of culture suggests that managers must understand
cultural differences but not be shattered by cultural differences. More important, they
should applaud the beauty of cultural differences, cultural clashes, cultural collisions, and
even cultural shocks because they stimulate and boost cultural learning, change, innovation,
and creativity.
In conclusion, the Hofstedes theory can be applied for business practice in 21st
because his model is the good model for dealing with the moral diversity and difference of
ethical perception due to the cultural difference. The executives and managers in the
modern world should try to understand and be able to apply the Hofstede theory in order
to conduct themselves in meeting with the growing ethical demands by multiple
stakeholders on corporations.

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