Why is it that you approach decisions differently from your peers? Do you ever wonder why you may be more prone to taking risks in teamwork than your group member? Although there are a host of explanations for this, an important one may lie in individual differences in cultural upbringing. This essay will explore how exactly these cultural differences can significantly shape decision-making processes, including risk-taking behaviour, whilst contextualising these processes in real-life team environments.
One main theory that underlies research into culturally-based decision making differences is of Hofstede’s (1980) cultural dimensions. Hofstede (1980) proposed 4 dimensions that could explain cultural variations in behaviour, and hence, decision making, with each country falling along each continuum of each dimension. These dimensions are ‘Power Distance’, ‘Uncertainty Avoidance’, ‘Individualism/Collectivism’, ‘Masculinity/Femininity’; fifth and sixth dimensions of ‘Long/Short Term Orientation’ and ‘Indulgence/Restraint’.
The dimensions of ‘Power Distance’, ‘Uncertainty Avoidance’ and ‘Individualism/ Collectivism’ may be particularly relevant in explaining decision-making. ‘Power Distance’, “the extent to which less powerful members of organisations and institutions accept and expect that power is distributed unequally” (Hofstede, 2011, p. 9), portrays countries low on this dimension as defining inequality in a bidirectional manner, with power hierarchies being upheld by the subordinate followers as much as the leaders. Such scores may be higher for East European, Latin, Asian, and African countries, indicating that individuals from these cultures may prefer centralised decision-making structures where most decision power is held by those at the top of the social and organisational hierarchies, and lower for English-speaking Western cultures (Hofstede et al., 2010). Similarly, for those in high ‘Power Distance’ scoring countries, the cultural respect for authority may mean that the role of social positioning may override that of actual experience when judging an individual’s suitability to make important decisions.
Hofstede’s dimension of ‘Uncertainty Avoidance’ refers to a society’s ability to withstand ambiguous, unstructured circumstances. This is distinguished from a society’s tendency to take risks (Hofstede, 2011), instead relying more on how members of this society react to the chance of unpredictability; do they attempt to take control, or instead let ambiguous situations run their natural course? Testing this across 76 countries, Hofstede et al. (2010) found that such scores are higher in Eastern/Central European countries, German speaking countries, and Japan, whilst being lower in English speaking, Nordic, and Chinese cultured countries. Interestingly, it has been suggested that high uncertainty avoidance reflects a tendency to choose uncertain outcomes when involving possible gains, where uncertainty may lead to a positive outcome, a finding which does not extend to situations where possible losses (unfavourable outcomes) are implied through accepting uncertainty (Ladbury & Hinsz, 2009). This may demonstrate that although certain cultures may avoid uncertainty more than others, this avoidance is variable and can be dependent on the implications of such uncertainty.
One other dimension explored by Hofstede (1980) is the individualism/collectivism distinction. This refers to the tendency of cultures to view themselves as autonomously responsible for their own needs (individualist) or to consider themselves responsible for the needs of their communities as well (collectivist). In a seminal paper, Hsee and Weber (1999) aimed to extend this research into discovering whether risk preferences vary based on countries’ collectivist/ individualist status, assessing the responses of Chinese (collectivist) and American (individualist) participants. These results led them to develop a “cushion hypothesis”, where members of collectivist cultures may be more protected against the potentially negative consequences of a risky option because of their willing support system, and thus are more willing to take risks, while members of individualistic cultures will have to bear the load of this alone. These findings have been observed in financial situations; one survey found that only 6.4% of Americans are willing to take financial risks, compared to 8.9% of Chinese (Fan and Xiao, 2005). However, the distinction between individualist and collectivist cultures exists on a continuum, and studies involving American and Chinese populations represent just two points along this spectrum. Therefore, the generalisability of these findings about risk-taking behaviour may be improved with replications from populations hailing from other individualist/ collectivist countries.
Although Hofstede’s cultural dimensions have been validated through several replications (Hofstede et al., 2010, p.35), they still may not be fully comprehensive in explaining every aspect of cultural variation, as is the case with attempting to reduce complex phenomena into only a select few dimensions. Thus, another marker of cultural differences in decision making, unexplored by Hofstede’s framework, is time perception.
Time orientation, referring to where certain individuals place their temporal focus when considering present decisions that need to be made (Zimbardo & Boyd, 2014), varies across cultures, thus possibly leading to clashes in decision-making approaches. Past-oriented cultures evaluate current conditions by comparing them to previously encountered experiences and traditions. Present-oriented cultures focus on the immediacy of the issue and short-term consequences, whilst future-oriented cultures approach decision-making through looking at long-term implications (Kluckhorn & Strodtbeck, 1961). One study, examining the degree to which future orientation is practiced across 62 countries, suggested that Western countries score highly on this future orientation domain, with Arab, Latin American, Eastern European and Latin European countries scoring lower (House et al., 2004). Asian societies may be more past-oriented (Block et al., 1996), while Western societies may be more present-oriented (Brislin & Kim, 2003).
These distinct orientation preferences naturally lead to different approaches regarding planning and execution of tasks. Thus, if one is working in a multi-national team or organisation, then such perceptual differences in time-management may have implications for the efficacy of the decisions made within this team. Research has suggested that alignment in temporal patterns of task execution is linked to higher team performance (Tschan, 2002), whilst, conversely, discordance in such time perceptions can lead to conflict between members of a group and decreased productivity (Mohammed & Nadkarni, 2011). Future research should focus on developing strategies to address such conflicts effectively.
In conclusion, research cultural variations in decision making is highly useful in understanding why individuals approach problems from a certain angle, varying in their willingness to take risks and perception of information as either opportunities or threats (Yates & Oliviera, 2016). One should be mindful, however, that such classifications can never fully explain all cultural intricacies. Still, these frameworks can be useful in helping to mitigate cross-cultural clashes in group-decision making, with a greater understanding of these facets possibly leading to enhanced productivity and harmony within a team.
References
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