Hofstede’s Model and Negotiation of Two Companies

Executive Summary:

This report provides an analysis and evaluation of an intercultural negotiation between USA’s Brown Casual Shoes and China’s Chung Sun Manufacturing, provides a literature review of a prominent theory from the field and suggests recommendation to improve the process of intercultural communication between these two countries and companies.

As the Case Study was identified as subpar negotiation, all issues from the Case Study were allocated into Intercultural, Verbal and Nonverbal.

Following this, Hofstede’s Cultural Model was introduced in the literature review and critically analysed.

This model included five dimensions:

  1. Uncertainty Avoidance
  2. Power Distance
  3. Masculinity vs. Femininity
  4. Individualism vs. Collectivism
  5. Short Term vs. Long Term

Some strengths of the model included a large sample size, indexes for all nations and easily formulated hypotheses. Alternatively, some limitations were an alleged sample misrepresentation, not adequately analysing people on an individual level and a time lapse since dimension formulation.

Major issues from the negotiations were then further investigated and included:

  • Rushing the negotiations and failing to form an adequate relationship
  • Causing offence by giving a gift to the Chinese representative
  • Not respecting the hierarchy of the Chinse culture
  • Failing to hire an interpreter for the negotiations
  • Touching the Chinese associates inappropriately

Recommendations suggested preventing further intercultural issues and fixing current issues as noted above included:

  • Hiring an interpreter and cultural adviser
  • Translating all written materials into Chinese
  • Creating transparency within the negotiations process by asking for a joint strategy


Intercultural communication is becoming increasingly important within a global context for businesses.

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In one study within China – the country being analyzed, all respondents to a survey agreed that it is critical to the success of the organization (73.9 strongly & 26.1 moderately) (Goodman & Wang, 2007). In the following report, the success of an intercultural negotiation between China and USA will be assessed to ascertain all issues occurring across intercultural, verbal and nonverbal and how they can be fixed. This will be done by providing recommendations based on current literature in the field. Additionally, The issues of the case will be identified and analysed and a literature view will be undertaken of a relevant prominent theory in the field.

Identification of Problems/Issues

Within the negotiations between Brown Casual Shoes and Chung Sun Manufacturing, there were several intercultural communication issues that offended the Chinese through what appeared to be a blatant disregard for their cultural barriers. These issues have been partitioned into three sections general, verbal and nonverbal.

Intercultural Issues

The first error in their intercultural interaction was the letter given by Mr Brown to Mr Deng. In addition to gift giving in the Chinese business culture being unacceptable due to it being seen as bribery (UONI, 2011), it is especially offensive for a gift to be wrapped in white paper – as red is the norm (Kwintessential, 2013). The fact that Mr. Deng refused the gift three times before opening it aligns with the fact that Chinese may refuse a gift three times before opening it – but not a fourth (Kwintessential, 2013). Another contributing factor is the point that Chinese don’t like to say no, and will often say yes just to save face (World Business Culture, 2013). The following mistake made by Mr. Brown was offering the first toast of the evening. In Chinese cultulre, it should always be the host who makes the first toast of the evening (Kwintessential, 2013).

Additionally, Mr Brown’s lack of knowledge on who should leavbale the meeting first may have caused offence. As per Chinese culture, the foreigner should always leave first when a meeting is finished (UONI, 2011). Mr Browns misunderstanding of this could have caused discomfort for the Chinese. Mr Brown’s perception that the initial meetings with the Chinese would have resulted in a negotiation early was a fundamental misunderstanding – as he failed to realise that the Chinese often forge relationships with individuals before partaking in business (Goodman, 2013).

Intercultural Verbal Communication Issue

Although Mr Brown and his team participated in lots of small talk with Mr Deng, further small talk could be encouraged to avoid causing offence and giving the impression that the negotiators only care about time – and not forging a lasting relationship (UONI, 2011). An additional verbal error made by Mr. Brown was his failure to hire a interpreter. In China, this is often viewed as a sign of disrespect for their culture (Fang & Faure, 2010). This lack of an interpreter and an overall lack of comprehension of English could have been the reason for the large amount of questions rather than the impression formulated by Mr. Brown that they were not serious about the business (World Business Culture, 2013). Furthermore, the fact that Mr Brown and his team didn’t make the effort to learn any Chinese at all for the negotiation might give off the impression that they are ethnocentric about their culture (Goodman, 2013).

Intercultural Nonverbal Verbal Communication Issues

Although there were not many nonverbal communication errors, one fundamental nonverbal communication error made by Mr. Brown was his touching of the arm of Mr. Deng. Culturally, Chinese dislike being touched by strangers (Gao et al, 1996). As they were only just meeting and not yet properly acquainted, this may have been perceived as offensive.

Literature Review

Hofstede’s model has been used as it was utilized a starting point for many additional cultural models. Below, figure one shows the convergence of this model with other notable ones from the field of cultural communication studies. It can be deduced from this that Hofstede’s model is the most diverse and complete framework as it encompasses all factors of other relevant models and shows evidence for the theoretical relevance. Figure 2: Comparison of Hofstede’s cultural framework with other models

Source: Soares, Farhangmehr & Shoham, 2007, p. 281

One assumption of this model is defining identity through nation. Many scholars (Steenkamn et al, 1999l Hofstede, 1984; Parker, 1994; Hoover et al., 1978) support this approach.

Literature Review

Hofstede’s cultural dimension is a model crafted to identify the key differences across different cultural workplace values. Gert Hofstede formulated this model through complex statistical analysis on more than 100,000 IBM employees across the world. The results of this suggested that five dimension anchors could be used to describe most important differences among cultures worldwide. These anchors provide points of comparison for each culture and allow different nations cultures to be contrasted and their disposition measured based on key traits (Lewicki, Saunders & Barry, 2011). These anchor points are: Individualism/Collectivism, Power Distance, Masculinity/Femininity, Uncertainty Avoidance and Short Term/Long Term. Figure 1 below shows how this is commonly measured.

The first dimension of the model is Power Distance. Power distance reflects the attitude a society holds on power inequality and authority relations in society. This anchor can influence hierarchy, dependence relationships and organizational context (Soares et al, 2007). A low score is indicative of a society with little respect for unequally distributed power and decisions are often spread through the organisation with feedback to bosses appropriate. Alternatively, a high score shows that the society depends highly on hierarchical structures and may concentrate decision making at the top (Hofstede, 1980). Uncertainty avoidance is the second dimension of this framework. This dictates the extent to which people feel threatened by uncertainty and ambiguity and due to this avoid situations that may cause these feelings to occur (Hofstede, 1991). People with high uncertainty avoidance often have well defined rules for prescribed behaviours (Soares et al, 2007) and if these are not in place for new situations, they will strive to immediately move towards establishing them. Alternatively, those with low scores on this anchor will be less affected by situations that may be ambiguous (Lewicki, Saunders & Barry, 2011).

The next dimension – individualism vs. collectivism, describes the relationships people have in each culture (Soares et al, 2007). In individualistic societies, people tend to act independently and look after only themselves and their direct families. In collectivist societies, members of the society hold a large degree of interdependence (Hofstede, 1980) and take care of their group in exchange for loyalty.

Masculinity vs. Feminity is the scale anchor that differentiates societies where achievement and success is paramount (high – masculine) and those where caring for others and quality of life is more important (low – feminine) (Hofstede, 1994). Feminine societies are ones where quality of life is often more desirable than standing out from the crowd (Hofstede, 2014). Lastly, Long-term vs. Short Term is the dimension, which shows countries preference towards future rewards and perseverance or towards short-term gain and fulfilling past or present traditions (Hofstede and Bond, 1988).


Some strengths of Hofstede’s model is the thoroughness and time points of his research – which includes 116,000 empirical questionnaires from over 60,000 respondents across seventy countries in various decades (Hofstede, 1984; Hofstede, 1991; Hofstede, 2001). This is the most robust model in terms of sample size and variety (Smith et al., 1996). He links his dimensions with various external and internal factors, such as demographic, geographic, economic and political, and assigns indexes to every nation – a feature unmatched by other frameworks (Kale & Barnes, 1992).

In addition, the framework is highly useful in formulating easy hypothesises across a range of purposes and it continues to be the norm used in international marketing, psychology, management and sociology studies (Engel, Blackwell & Miniard, 1995; Sondergaard, 1994).


Although some critique Hofstede’s research due to its alleged sample bias and its lack of inclusivity of the richness of cultures due to its sample size being based only on those working at IBM (Lewicki, Saunders & Barry, 2011), they fail to take into account further revisions of the model by Hofstede. At the International Institute for Management Development Hofstede administered the test to international managers from over 30 countries from a variety of both private and public organisations. The results yielded in these proved significantly similar to those in his original sample – solidifying his original hypothesis (Geert, 2008). Another prominent critique is the fact that in both of these cases, there was a disproportionate level of males, members of the middle class were over represented and education levels were much higher than average (Lewicki, Saunders & Barry, 2011), Additionally, some argue that in the model nation differences only account for 2 to 4 percent of variance in individual values, leaving at least 96 percent- if not more, unexplained.

One scholar from the Academy of Management suggested that the model was incongruent with his own knowledge on psychological phenomena and suggests that an alternative methodology be drafted (Ailon, 2008) to account for this 96 percent. Some academics claim that Hofstede’s culture dimensions are flawed due to their categorizations of people into national stereotypes rather than individual character. This is especially applicable for people living in ethnically diverse countries. (Venaik & Brewer, 2013). Lenartowicz and Roth (1999), however, contend that no single methodology across any model is able to address the inclusive set of criteria relevant to cultural assessment in business studies. Lastly, it could be suggested that due to the time that the initial dimensions were formulated was so long ago they may be out-dated and no longer relevant. Others argue that the change in cultures occurs so slow that significant changes would not likely affect the model for a long period (Sivakumar and Nakata, 2001) – perhaps until 2100 (Hofstede, 2001).

Case Analysis

Five issues have been chosen out of the initial ones identified and have been linked up with their relevant theories.

Issue 1

The first issue is Mr Brown’s rush to finalise the negotiation and his final comment suggesting impatience with the negotiations. As China’s culture is predominantly long-term orientated (87 vs USA’s 26) the Chinese representatives may take longer to finalise the negotiations due to having a disposition towards long term relationships (Zhang & Toomey, 2009). In addition to this, Chinese negotiators often need to form a relationship due to their low temperament to individualism – 20 vs USA’s 91 (Hofstede, 2014). This haste showed great disrespect for the Chinese’s efforts to form a long-term relationship with the company, an aspect commonly necessary for business arrangements to succeed in China (Fang & Faure, 2010).

Issue 2

As China is a highly particular culture on Trompenaars seven dimensions of culture model (Luthans & Doh, 2009), meaning that deciding on what is right and wrong or acceptable and unacceptable is highly dependant on the exact situation and relationships involved (Trompenaars, 1997) it was a grave issue not to hire a translator to help overcome this barrier. Hofstede provides support for this theory by ranking China very low on the uncertainty avoidance scale (30), meaning that their rules may be very flexible and unique culturally (Hofstede, 2014).

Issue 3

As China is a high context society (Hall, 1985), the failed gift-giving incident could correspond with a clash of this high context. Hall notes that within a high context culture messages are often covert and implicit, there is much non-verbal communication and the expression of reaction is frequently reserved and inward. The message that Mr. Deng did not want to accept the gift was most certainly covert and non-verbal and his reaction to the incident stayed reserved and inward – most likely to save face (Goodman, 2013).

Issue 4

Hall’s theory additionally links to an important issue within the negotiation process. As Mr. Brown continually touched Mr. Deng’s arm during negotiations, this may have been perceived as breach of Space (Hall, 1985). The proxemics of the Chinese culture dictates that touching is rarely acceptable (Communication Studies, 2014).

Issue 5

Another issue arising from the negotiations is both Mr. Brown toasting first at the dinner and him not leaving the dinner first. What he failed to consider when doing this was China’s high power distance (80 vs USA’s 40) (Hofstede, 2014). This suggests that China strongly values hierarchical institutions. Toasting first and disrespecting the Chinese cultural norm of the guests leaving dinner first could be perceive as disrespectful to the order of the Chinese leadership and their subsequent authority.


Three recommendations have been suggested to improve Brown’s Casual Shoe’s negotiation with China in analysis of the Case Study

Recommendation 1

The first and most important recommendation for Mr. Brown would be to hire a corporate communicator or interpreter. Although it would not be wise to hire a complete agent – as it may detract from the personal relationship needing to be crafted between both parties for successful business undertakings, USA negotiators should hire an interpreter at the least or a cultural adviser at best to cut through the high context culture of the Chinese, show the Chinese that they care about their culture and to offer priceless advice on the negotiation process to ensure an optimal outcome for both parties (Lewicki, Saunders & Barry, 2011).

Recommendation 2

The USA negotiators should in future hire a translator to succinctly translate all of their written material including business cards, marketing presentations, business proposals, company history, product information and anything else relevant to the trip to Chinese using simplified characters (Fang & Faure, 2010, p. 138). This takes away room for misinterpretation on any element of business and eliminates any concept of ethnocentricity that could have been perceived as well as showing respect for their culture and language (Kwintessential, 2013).

Recommendation 3

The final recommendation is to identify whether either parties or both parties will adjust their style of negotiation to the other parties cultural style. Confusion can sometimes arise when both parties are trying to adjust to the others negotiation style (Lewicki, Saunders & Barry, 2011, p. 245). A simple affirmation of whether this will be done can save much confusion and create an air of transparency. In many cases a secure middle ground (sometimes called joint strategy) can be agreed upon. This could be asked through an email or letter prior to negotiation commencement, or if this is not appropriate, they could ask to speak privately with the highest authority of the Chinese party to respect their hierarchical institutions. To do this, you could simply stay around after a meeting and ask personally to speak with the leader to help him save face (Goodman, 2013, p. 177).


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Hofstede’s Model and Negotiation of Two Companies. (2016, Apr 24). Retrieved from https://studymoose.com/hofstedes-model-and-negotiation-of-two-companies-essay

Hofstede’s Model and Negotiation of Two Companies

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