Report Assignment

University of Huddersfield
Business School

“The report on the impact of nation culture on

organizations and management aspects in
China and Sweden”

Module: Cross Cultural Studies

Module No: BHO 0034

by
Mirosław Łukaszczyk
Table of Contents

1. Summery................................................................................................................................3
2. Background...........................................................................................................................4
2.1 Culture...............................................................................................................................4
2.2 Chinese Culture.................................................................................................................4
2.3 Swedish Culture................................................................................................................5
3. Culture dimensions...............................................................................................................5
3.1 Hofstede Analysis.............................................................................................................5
3.1.1 Power Distance..........................................................................................................6
3.1.2 Uncertainty Avoidance...............................................................................................7
3.1.3 Individualism and Collectivism.................................................................................7
3.1.4 Masculinity and Femininity.......................................................................................8
3.1.5 Long- versus Short-Term Orientation........................................................................8
3.2 PESTEL Model.................................................................................................................9
4. Practical implications..........................................................................................................11
5. Conclusion............................................................................................................................11
6. References............................................................................................................................13
6.1 Books...........................................................................................................................13
6.2 Articles........................................................................................................................14
 1. Summery

In the 21st century one of the most important issues affecting world’s economy is
expanding globalization process. Cross nation business is experiencing great challenges in
cultural differences. Today’s world has become smaller, we own better communication
systems, and we have more availability of standardized products thanks to global corporations
and global marketing activities (Potter et al 2004). When the world is shrinking it will
contribute to more interaction between different countries and cultures which could lead to
new challenges for the business managers. They would have to replace the methods they use
for the domestic markets and discover different cultural values, competitive dynamics, and
demographics that exist in the new market (Javalgi & Martin 2007). Therefore, there are
different possibilities and risks to provide business, not only across nations, but most
importantly in other business cultures. That is why this particular study is based on two
relatively different countries: Sweden and China. To present how international companies can
beat the cultural differences to start economical activity in those country, this report contains
culture definitions, political and economic environment, the work ethics, implementation for
organizational relationship and managerial process with Hofstede’s five dimensions analyze,
all those aspects should be useful for firm’s future managers.
 2. Background

2.1 Culture

Many definitions of word culture may be found in existing literature. It is a concept that is
known very well to all of people through books, papers and magazines which are filled with
this in. However it is quite difficult to define what this concept actually means.
Anthropologist Kroeber and Kluckhohn (1952) catalogued 164 separate and different
definitions. But in this case as Schein (2004) suggest Culture is a collective experience, since
one will gather with persons who have the same view on things and all the members that have
the shared system of meanings. However, those shared meanings are rather stable since they
contribute to define the group’s identity and this status should be maintained. According to
Hofstede (2005) word culture means “the collective programming of the mind which
distinguishes the members of one group or category (nation) from another”. It has been also
argued by that Culture: learned and shared human patterns or models for living; day- to-day
living patterns. These patterns and models show all aspects of human social interaction.
Culture is mankind's primary adaptive mechanism Hofstede (2005).

2.2 Chinese Culture

The Chinese people are part of a civilisation, that longer than any other in the world
have kept their common culture and made it survive and develop through a 5000-year
evolution. Certain elements have had an enormous impact on this development, such as the
ideology of Confucianism. This philosophy has strongly influenced the moral code of Chinese
society by its values of loyalty, friendship, faithfulness, righteousness and the importance of
education (Pang et al 1998). Confucianism consists of five cardinal relations (between
sovereign and subject, father and son, husband and wife, elder brother and younger brother,
and friend and friend) which prescribes a vertical relationship between superior and
subordinate (Chan et al. 2007). Therefore there is the importance to look deeper into this
culture to be able how to understand it and make a correct analysis. The Chinese culture is
summarized by (Pang et al 1998) as the Chinese Hallmark which includes; patience, harmony,
flexibility, time, trust and collectivism, communication, the rule of Guanxi and the concept of
face.
2.3 Swedish Culture

Sweden is the largest of the Scandinavian countries, both in numbers and in area, with
its 9 million people spread over a land 1000 miles long (Hickson et al 2001). The Swedish
culture is among the small number of business cultures which are transaction and deal
oriented. Swedish people are reasonably open dealing with people or companies they have
never heard of and usually respond positively to requests for meetings without a third-party
introduction or recommendation (Gesteland 2002). Egalitarianism and informal business
behaviour strongly distinguish the Swedish culture from others. Swedes value equality,
efficiency and modesty, this being expressed in the flat structure of the Swedish management
model (Gesteland 2002). A manager tends to think of himself as a coach rather than a
commander, and he often delegates tasks and authority to his staff. Swedes are very punctual
and adhering to schedule, what makes their behaviour very time-rigid, or monochromic.
Usually the same behaviour is expected from the business partners. Being punctual is not only
regarded as a sign of respect but also of efficiency. Moreover, the Swedish culture is
characterized by an emotionally reserved communication style. Swedish society prefer to
avoid open displays of emotion, like to get down to business right away, do not gesticulate a
lot, and avoid intense eye contact. In addition, one feature of business communication and
expression of emotions is Swedish verbal directness (Gesteland 2002).

3. Culture dimensions

3.1 Hofstede Analysis

Hofstede conducted a comprehensive study about cross-cultural management. The aim

was to analyze the employee values in different countries. His research concluded in the
finding of 5 dimensions which enabled him to point out certain characteristics for each
analyzed country. In this thesis, the five dimensions function more as a conceptual
framework, trying to explain the influence of culture on the research (Hofstede 2001).
 POWER
DISTANCE

UNCERTAINTY AVOIDANCE
LONG-SHORT TERM ORIENTATION

CULTURAL DIFFERENCES

MASCULINITY/ FEMININITY
INDIVIDUALISM & COLLECTIVISM

1. Hofstede culture dimensions diagram based on (Hofstede 2001).

3.1.1 Power Distance

“The extent to which the less powerful members of institutions and organizations within a
country expect and accept that power is distributed unequally.” (Hofstede 2001, pp. 98)

Hofstede (2001) state that in countries with high Power Distance the subordinates are
very dependent on their boss, but they are also normally the first to blame for anything wrong
in the system. The emotional distance is often quite huge between the subordinate and the
boss in these cases and it is not likely that any disagreement will occur with the boss. China is
an example with a high Power Distance in contrast to Sweden who has a very low Power
Distance. In countries like Sweden, the subordinate’s dependency on their boss is limited and
instead is many times consulted which leads to a mutual dependence between the two. The
emotional distance between the subordinate and the boss is then also rather small and the
employee can disagree without any further consequences (Hofstede 2001, 2005).
3.1.2 Uncertainty Avoidance

“The extent to which the members of a culture feel threatened by uncertain or unknown
situations.” (Hofstede, 2001, pp. 161)

Hofstede (2005) states that it would be wrong to claim that uncertainty feelings are
only personal since he argues that they also can be shared by other members of the peoples
society. In an organization the technology, rules and rituals are used to cope with uncertainty
and to measure possible anxiety and worries an employee may have over their work in the
future Hofstede (2001) has considered several aspects. He observed the degree of nervousness
and anxiety that employees feel towards their work. In the study he states that both Sweden
and China are considered to be countries with low Uncertainty Avoidance, although China is
seen to have a somewhat higher level. This means that the both countries have cultures where
individuals are secure about the future and believe that new circumstances are interesting with
new things in contrast to those with high Uncertainty Avoidance who find what the future
holds danger (Hofstede 2001, 2005).

3.1.3 Individualism and Collectivism

“Individualism stands for a society in which the ties between individuals are loose: Everyone
is expected to look after him/herself and her/his immediate family only. Collectivism stands
for a society in which people from birth onwards are integrated into strong, cohesive in
groups, which throughout people’s lifetime continue to protect them in exchange for
unquestioning loyalty.” (Hofstede, 2001, pp. 225)

This dimension in Hofstede’s study describes the relationship between the individual
and collectivity that is applicable on a given society. Hofstede (2001) argues that the level of
Individualism could be identified with the valued spare time, freedom and challenges since it
emphasizes the employee’s independence regarding the company. Within a collectivistic
society, on the contrary, people are appreciating good education, good physical work
conditions, full use of talents and competence in the company and are expecting a broad
responsibility from the organization. In the result of Hofstede’s study it is shown that a
majority of the individualistic countries are rich while the majority of the collectivistic
countries often are poor. The outcome could then be the reason to why people in collectivistic
countries are appreciating for example education more than in individualistic countries when
they take that for granted. Sweden is said to be a more individualistic country than China and
that could be because Sweden is a richer country where the people have more space to
develop their personal goals (Hofstede 2001, 2005).

3.1.4 Masculinity and Femininity

“Masculinity stands for a society in which social gender roles are clearly distinct: Men are
supposed to be assertive, tough, and focused on material success; women are supposed to be
more modest, tender, and concerned with the quality of life. Femininity stands for a society in
which social gender roles overlap: Both men and women are supposed to be modest, tender,
and concerned with the quality of life.” (Hofstede, 2001, pp. 297)

Different societies cope with the fundamental differences between the sexes in
different ways according to Hofstede (2001). He argues that almost universally there are
tendencies showing that women attach more importance to social goals such as helping
others, having a relationship and the physical environment while men attach more importance
to ego goals such as money and careers. In Hofstede’s research he found that the values of
men and women in the same jobs differed less in lower-MAS (Masculinity Index) countries
than in a higher-MAS countries. When a conflict arises the Masculinity-Femininity dimension
is one core factor that affects the handling of the conflict at the workplace. In a masculine
culture, like China, the conflict will be solved by a good battle. “May the best man win” is a
motto they often use. On the contrary, conflicts in feminine cultures, like Sweden, are usually
solved by negotiations and compromises (Hofstede 2001, 2005).

3.1.5 Long- versus Short-Term Orientation

“Long Term Orientation stands for the fostering of virtues oriented towards future rewards,
in particular, perseverance and thrift. Its opposite pole, Short Term Orientation, stands for
the fostering of virtues related to the past and present, in particular, respect for tradition,
preservation of ‘face’ and fulfilling social obligations.” (Hofstede, 2001, pp. 359)
 Hofstede (2001) suggests that in cultures with Long-term Orientation are family and
work not separated, it is common with family businesses and the values of this pole foster
entrepreneurship. Perseverance, hard work, respect for memorisation, honesty, openness for
new ideas, responsibility taking, self-discipline and confidence are values that are high ranked
in Long-term Oriented cultures. Values that are ranked highest in Short-term Oriented
countries are; freedom of speech, personal freedom, self-confidence, individual rights, hard
work, personal target achievement and to master your own thoughts. China is one of the
countries with highest score on the LTO-dimension which means that they are accustomed to
working towards strong positions in their markets without expecting any immediate results.
Managers in cultures like China are often allowed resources and time to make own
contributions while managers in Short-term Oriented countries like Sweden constantly are
judged by the results from the past period like a month, quarter or year (Hofstede 2001, 2005)

3.2 PESTEL Model

Second very popular method after Hofstede’s analysis of culture dimensions is

PESTEL model of research. PESTEL analysis stands for "Political, Economic, Social,
Technological, Environmental and Legal analysis" and describes a framework of macro-
environmental factors used in the environmental scanning component of strategic
management. It is a part of the external analysis when conducting a strategic analysis or doing
market research and gives a certain overview of the different macro-environmental factors
that the company has to take into consideration. It is a useful strategic tool for understanding
market growth or decline, business position, potential and direction for operations (Johnson et
al 2006).

The PESTEL framework has categorised six main types of macro-environmental

influences that has an effect on a company:
• Political
• Economic
• Social
• Technological
• Environmental
• Legal
 These factors are not independent of each other, instead many of them are linked and
affect each other. If one of them change it is most likely that one or a few other also change
thereby changing the organisations competitive environment. The PESTEL framework is best
suited for looking at the future impact of environmental factors, since the future impact may
not be the same as the past impact (Johnson et al 2006).

2. The PESTEL framework based on (Johnson et al 2006).

 4. Practical implications

This report suggest that when doing business between different cultures there will
always be clashes or misunderstanding that can delay or hinder an agreement but it is then
best to take a step back, be patient, and be attentive to reactions. The better knowledge a
person have about his/her counterpart and about the context they are in the easier it is to be
flexible and create good relationships (Hofstede 2005). When the businessmen is going to
China he should try to adapt to the Chinese way of building relationship and that is best way
by creating a profound knowledge about the Chinese culture and business culture (Cooke
2008). Since culture is not anything that could be learned by reading a book, but need to be
lived to learn that time should be deposit to build up a profound network before rushing into a
business deal. The best way to be able to comprehend the culture is to live there, however that
might not be an option for some people. By spending time in China a person will acculturate
and see how for instance Guanxi is interlinked to culture and society. When gained this
knowledge the person can build more relationships and networks applying Guanxi, which
could make the relationships built today later become potential future business partners, if a
business proposal should arise, the person should have patience and let the Chinese slow paste
reign to not disrespect them (Cooke 2008). In this case it is important to create a bond rather
than proceeding with business, which is normal in the Swedish way of conducting business
(Lawrence & Spybey 1986). Cultural clashes will always emerge and it is important then to
remember the values that are valid in Sweden do not necessary have to be valid in China and
opposite. Therefore these misunderstandings should not be rejected but embraced rather with
an open mind and a will to solve them.

5. Conclusion

It is evident through this study that the Swedish and Chinese culture differs in many
ways. It is important to be aware of these differences to prevent misunderstandings or clashes
from occurring. Hierarchy is one of the biggest differences between Swedish and Chinese
culture. The Chinese hierarchy is vast and the Swedish insignificant which can lead to
contrasting ways of making decisions in the two countries. Based on empirics there is a
believe that the Swedish non authoritarian leadership perspective has been subject to many
emerged cultural clashes (Lawrence & Spybey 1986). These clashes could be because the
Chinese people have judged different Swedish interactions from their perspective. In Sweden
teamwork are applied to a greater extent than in China which has had the effect that in
Sweden several persons can take their own personal responsibility and decide in different
aspects, whereas in China it is only the top managers who have that authority (Lawrence &
Spybey 1986). One way of avoiding misinterpretations of this kind is for the Swedish
managers to be over explicit in their role when dealing with a Chinese counterpart so that they
can get a distinct comprehension (Cooke 2008).
The Swedish way of conducting business can be very practical and direct (Lawrence &
Spybey 1986). The Chinese are on the other hand very courteous and respectful towards
guests and they often have difficulties giving negative responses which also make them acting
ambiguously. This has caused a lot of problems since the business people often misinterpret
the Chinese courtesy for showing interest in their business factors (Cooke 2008). Instead they
should celebrate the non-existing deal they and bond and nourish the relationship so that
future collaborations can happen. In Sweden organisations are more Short-term Oriented and
are very monochromic in our approach which many times could collide with the Long-term
Oriented China (Lawrence & Spybey 1986). In China the future and past interrelate and are
therefore not as driven as the Swedes to accomplish everything under a strict timeframe. In
the eyes of the Chinese the Swedes have a habit of rushing into business transactions and
therefore they get the impression that Swedish businessmen are opportunistic. In the Swedish
eyes the slow paste that the Chinese are applying is seen as wasting money. To be able to
conduct business in China there is a suggestion that there is a need to respect the lower paste
by changing towards the Chinese perspective and becoming more patient (Cooke 2008).
It has been argued that this phenomenon appears because of two reasons. Firstly the Chinese
are afraid of doing anything wrong that also could damage their prestige and lead to lose Face.
The concept of Face is strongly influencing the Chinese culture which contributes even more
to the anxiety of offending someone or getting deprived of their own prestige. Secondly
because it is part of the Chinese culture to be attentive and courteous and not oppose someone
and risking losing Face (Cooke 2008). When someone will cross the line where the Chinese
feels he has lost the Face there is no turning back.
 6. References

6.1 Books

Cooke, F. L., (2008) “Competition, strategy and management in China”, Basingstoke:

Palgrave Macmillan,

Gesteland, R., (2002) “Cross-cultural business behavior marketing, negotiating, sourcing and
managing across cultures”, Copenhagen Business School Press,

Hickson, D. J., Pugh, D. S., (2001). “Management worldwide: distictive styles amid

globalization”, London: Penguin,

Hofstede, G., (2005) “Cultures and organizations: software of the mind”, 2nd ed., New York;
London: McGraw-Hill,

Hofstede, G., (2001) „Culture’s Consequences – Comparing Values, Behaviors, Institutions,

and Organizations Across Nations”, Thousand Oaks, Calif.; London: SAGE,
Holden, N., (2002) “Cross-Cultural Management a Knowledge Management Perspective”,
Harlow: Financial Times Prentice Hall,

Johnson, G., Scholes, K., Whittington, R., (2006) “Exploring corporate strategy: Gerry
Johnson, Kevan Scholes, Richard Whittington”. Harlow: Financial Times Prentice Hall,

Kroeber, A. & Kluckhohn, C., (1952). In: Holden, N.J. (2002), „Culture: Acritical review of
concepts and definitions”, Harvard University Press,

Lawrence, P. and Spybey, T., (1986) „Management and society in Sweden”, London:
Routledge & Kegan Paul,

Potter, R. B., Binns, T., Elliot, J. A., and Smith, D., (2004) „Geographies of Development”,
2nd ed., Pearson Education Ltd; England,

Rugman, A. R., Collinson, S., Hodgetts, R. M., (2006) “International Business”, 4th ed.,
Harlow: FT Prentice Hall,

Schein, E. H., (2004). “Organizational Culture and Leadership”, 3rd ed., San Francisco:
Jossey-Bass.

6.2 Articles

Chan, Ka Wai, Huang, Xu and Ng, Peng Man (2007), “Managers’ conflict management styles
and employee attitudinal outcomes: The mediating role of trust”, Springer Science + Business
Media, LLC 2007, Asia Pacific J Manage (2008) 25:277-95

Javalgi, Rajshekhar G. and Martin, Ch. L., (2007) “Internationalization of services:

identifying the building-blocks for future research”, Journal of Services Marketing, 21(6),
391-97

Pang, Chee K., Roberts, D., and Sutton, J., (1998) “Doing business in China – the artof war?”,
International Journal of Contemporary Hospitality Management, 10/7, 272-82