International Project Management - Chances and Risks and the Impact of Intercultural Differences on Projects of the HSH Nordbank AG

Table of Contents

Abbreviations

Table of Figures

List of Tables

1. Introduction
1.1. Objectives
1.2. Scope
1.3. Thesis Structure

2. Presentation of HSH Nordbank AG

3. Theoretical Foundations
3.1. Project Management
3.1.1. Project
3.1.2. Management
3.1.3. Project Management Tasks
3.1.4. Classic Project Management
3.1.4.1. Phase I: Concept
3.1.4.2. Phase II: Planning
3.1.4.3. Phase III: Controlling
3.1.4.4. Phase IV: Termination
3.1.5. Success Factors
3.2. Cultural Dimensions
3.2.1. Power Distance
3.2.2. Individualism / Collectivism
3.2.3. Masculinity / Femininity
3.2.4. Uncertainty Avoidance
3.2.5. Long-Term Orientation
3.2.6. International Comparison
3.3. International Project Management
3.3.1. Management Style and Motivation
3.3.2. Cultural Preparation
3.3.3. Team Analysis
3.3.4. ERPG Concept
3.4. Impact of Multiculturality
3.4.1. Chances / Opportunities
3.4.2. Risks / Disadvantages

4. Status Quo Analysis
4.1. Project Management at HSH Nordbank AG
4.1.1. Management Concept
4.1.2. Method and Approach
4.1.3. International Projects
4.2. Intercultural Differences
4.2.1. Hofstede’s System of Cultural Classification
4.2.2. Interview Findings by Nationality
4.2.2.1. Germany vs. USA
4.2.2.2. Germany vs. Great Britain
4.2.2.3. Germany vs. Denmark
4.2.2.4. Germany vs. Singapore
4.3. Human Resources Development
4.3.1. Language Training
4.3.2. Project Management Training
4.3.3. Intercultural Training

5. Target Concept
5.1. Unifying International Project Management
5.1.1. Project Management Departments within the Branches
5.1.2. Worldwide Training in Project Management
5.2. Promotion of Cultural Diversity
5.2.1. Change in Management Concept
5.2.2. Development of Culture-Oriented Methodologies
5.3. Cultural Preparation for International Projects
5.3.1. Language Training
5.3.2. Intercultural Training
5.4. Team Development
5.4.1. Team Development Workshop
5.4.2. Match Set-up

6. Economical Evaluation
6.1. Benefits
6.1.1. Material Benefits
6.1.2. Non-Material Benefits
6.2. Costs
6.2.1. Unifying International Project Management
6.2.2. Language and Cultural Training
6.2.3. Team Development
6.3. Calculated Key Figures

7. Summary

Appendices

Bibliography

Abbreviations

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Table of Figures

Figure 1: HSH Nordbank AG –Ownership Structure

Figure 2: HSH Nordbank AG –Worldwide Branches and Offices

Figure 3: The Magic Triangle of Project Management

Figure 4: Planning Sequences

Figure 5: Work Breakdown Structure

Figure 6: Capacity chart

Figure 7: Schedule for a Work Package

Figure 8: Example of a Cultural Team Analysis

Figure 9: ERPG Concept

Figure 10: Share of Involvement in International Projects

List of Tables

Table 1: Project Features

Table 2: Project Categories

Table 3: Project Management Functions

Table 4: Categories of Project Success Criteria

Table 5: Cultural Dimensions In International Comparison

Table 6: Comparison of HSH Survey Values to Hofstede’s Values

Table 7: Material Benefits

Table 8: Non-Material Benefits

Table 9: Implementation Costs

Table 10: Calculated Payback Period

Table 11: Calculated Benefit-Cost Ratio

Table 12: Calculated Return of Investment

1. Introduction

These days, many companies are no longer content to market their products and services on a national level alone; with increasing frequency, they are turning toward the world market as well. The dynamics and conditions at the global level are constantly in flux, making unstable business environments unavoidable and reiterative customization and realignment necessary. Accompanying these variable dynamics at the global level are two other factors: tighter deadlines and a greater number of international collaborations. The logic of global expansion means that ever more employees are working together with colleagues from other countries on projects they need to finish ever more rapidly.

Ensuring that international projects can be realized efficiently and successfully requires rigorous and precise project management (see Burghardt, 7, Foreword). And ensuring rigorous and precise international project management requires knowledge of intercultural differences, experience in intercultural communication as well as good collaboration and team development. Most problems in intercultural projects do not arise because of wrong objectives or management techniques, but because of intercultural misunderstandings (see Kiesel, 22, P. 7). In a world in which companies are increasingly operating on a global scale, cultural understanding has thus become a prerequisite for sustainable development (see Walker / Schmitz, 43, Foreword).

1.1. Objectives

HSH Nordbank AG assesses projects based on compliance with planned levels of budget, time, and quality (among other criteria). Unfortunately, actual results often deviate significantly from target figures. This is especially the case with international projects. The question thus arises whether such variations result from intercultural differences and, if so, how project managers might diminish the likelihood of their occurrence—or even use them to their advantage.

The aim of this thesis is to highlight the significant role played by cultural differences in international projects and to evaluate the impact of those cultural differences on the international projects of HSH Nordbank AG. After compiling and evaluating the opportunities and risks associated with cultural difference, I will then recommend several courses of action, outline a target concept, and assess its economic benefits.

1.2. Scope

Due to the limited scope of this thesis, I will be unable to address all the aspects relevant to project management. At present time, the teams of the HSH Nordbank AG are predominantly composed of members from Germany, the USA, England, Singapore, and Denmark. For this reason, I will focus on these cultures in particular. When discussing classic project management, moreover, I will only discuss those aspects that serve as a framework for international project management. Other issues, e.g., different forms of project organization or leadership within virtual teams, will not be included. Because those I interviewed asked to remain anonymous, names and position details have not been provided in the text or bibliography.

1.3. Thesis Structure

Having introduced the theme and stated my objectives and scope, I will now provide a brief outline for my thesis:

In Chapter 2, I present HSH Nordbank AG, addressing its size, its worldwide locations, its number of employees ans its business areas.

In Chapter 3, I will assemble the theoretical foundations necessary for my work. I will begin by describing the classic project management in more detail and illustrating its success factors. Next, to provide a better understanding of the influence of different cultures on project management, I will elaborate on Geert Hofstede’s cultural model and its dimensions. Having described the basic aspects of classic project management and cultural differences, I will turn to particular methods and instruments of international project management. Finally, I will assess the impact of multiculturality as well as the chances and risks that accompany it.

In Chapter 4, I will conduct a status quo analysis. As a part of this analysis, I will draw on the results of a cultural survey I conducted at HSH Nordbank AG according to Hofstede’s cultural model. Additionally, I will present the results of interviews I held with HSH project managers, project members, and the management of the company.

In Chapter 5, I will develop my target concept for the HSH Nordbank AG. I will compare theoretical foundations with the results of the status quo analysis and, on this basis, recommend appropriate improvements.

In Chapter 6, I will evaluate my recommended improvements on an economic basis. In doing so, I will estimate the quantitative and qualitative advantages of my recommendations compared to the status quo.

In Chapter 7, I will include a conclusion with general reflections on my results.

2. Presentation of HSH Nordbank AG

With approx. 4,400 employees worldwide and a balance sheet total of circa 189 billion Euros, the HSH (HSH Nordbank AG) is among the leading credit institutions in Germany (see Company Portrait, 51, P. 1). The bank was formed in the June 1, 2003 merger with the Hamburgische Landesbank and the Landesbank Schleswig-Holstein; its registered offices are located in Kiel and Hamburg. Because its business strategy, location, and synergy are shaped by the fusion of two state banks, HSH plays a critical role among the corporate banks of northern Europe.

The ownership structure is as follows: The City State of Hamburg holds 35.38% of the shares, while the State of Schleswig-Holstein holds 20.02 %, the Savings Banks Association for Schleswig-Holstein 18.02 % and Seven Trusts (advised by J.C. Flowers & Co. LLC) 26.58%. HSH is the first state bank whose shares are partly in the hands of private investors.

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Figure 1: HSH Nordbank AG –Ownership Structure

(Basis Presentation, 50, P. 6)

The core business areas of HSH are shipping and real estate finance, corporate banking, credit investments, and funding. Along with its position as a market leader in corporate banking in Northern Germany, HSH is also a strong corporate bank in Northern Europe and the largest foreign bank in the Baltic Sea region. Furthermore it is the world’s largest ship financier and a leading provider of financial services to the transport industry as well as a professional partner in international capital markets and real estate (see Basis Presentation, 50, P. 11).

HSH Nordbank supports their customers from 5 locations in Germany and from 17 additional international locations (displayed in the figure below). The 11 branches are domiciled in Berlin, Copenhagen, Helsinki, Hong Kong, London, Lübeck, Luxembourg, New York, Shanghai, Singapore, and Stockholm. Additionally, representative offices are located in Amsterdam, Hanover, Hanoi, Oslo, Paris, Riga, San Francisco, Tallinn, and Warsaw.

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Figure 2: HSH Nordbank AG –Worldwide Branches and Offices

(Basis Presentation, 50, P. 10)

As HSH is well positioned along the global trade flows, 60% of the earnings are generated from international business. The degree of international alignment has rapidly increased since the 2003 merger and is expected to climb even more in the future.

3. Theoretical Foundations

To gain a general level of understanding to support my thesis objectives, I elaborate below several fundamental terms and concepts.

3.1. Project Management

3.1.1. Project

According to the German Institute of Standardization (hereafter referred to as DIN [Deutsches Institut für Normung e.V.]), projects can be characterized according to uniqueness, clarity of scope, duration, finances, personnel, complexity, the differentiation to other measures and strategies, and organizations involved (see Deutsches Institut für Normung e.V., 11). However, there is a wide range of other definitions found within the literature as well. In general, one speaks of a “project” as long as one or more of the following features are present (further elaboration would go beyond the scope of this thesis):

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Table 1: Project Features

In today’s practice, a variety of different project types exist. These can be categorized by various criteria, e.g. strategic significance, size, content, degree of recurrence, the stand of the sponsor, or the involvement of different organizational units. A short overview is given in the following table.

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Table 2: Project Categories

(see Süß / Eschlbeck, 42, P. 6)

3.1.2. Management

So far, nearly every country in the world has adopted “management” as a general business term. It is defined as the act, manner, or practice of managing; handling, supervision, or control.

In general, management refers to the act of decision-making and enforcement of human resources (see Aggteleky / Nikolaus, 2, P.45). It is a clearly-defined process—composed of planning, organization, enforcement, and control phases—that aims to reach project goals by strategic personnel assignments (see Litke, 27, P.18). Accordingly, project management refers to a concept of human resources management that facilitates the execution of projects and the optimal use of the resources assigned to it. It comprises the entirety of all managerial functions, organizations, techniques, and remedies for the handling of a project (see Deutsches Institut für Normung e.V., 11).

3.1.3. Project Management Tasks

The primary task of project management is to plan, organize, execute, and control a project. The optimal achievement of objectives depends on three interdependent factors: quality, budget, and time. This interdependency has been described as the “magic triangle of project management.” Below is a depiction (see Litke, 28, P. 18):

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Figure 3: The Magic Triangle of Project Management

Each project has an objective, which is to be achieved at a desired quality, within a predefined period of time, and according to a given budget. Balance between the factors is of utmost importance. If, for example, the completion date is moved forward, quality decreases; if the budget is reduced, the completion date will be pushed back.

To achieve this balance, project management has to fulfill several subtasks, which, as the following sample table shows, can be allocated to management functions:

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Table 3: Project Management Functions

(see Patzak / Rattay, 31, P. 9)

3.1.4. Classic Project Management

There are several different definitions given for the phases of a project in management literature. Depending on their complexity, projects are differentiated by type and industry. Over the course of time, even different phase models were developed (see Hoehne, 15, P. 221). Some authors refer to the project as a product with its own life-cycle and conclude that, in general, the project phases should be described as concept, development, implementation, and termination (see Burke, 8, P. 129). More frequently, however, the major phases are concept, planning, controlling, and termination. For this reason, the latter terminology will be used for this thesis and the text it describes.

3.1.4.1. Phase I: Concept

A project often arises as a result of strategic considerations, customer inquiries, or a change of business environment (e.g., new software standards). While not every project has the same priority for the company, within the first phase all requested projects are ranked and the “right” ones authorized. To this end, a profitability analysis of all projects is first conducted, comparing all estimated costs and revenues. The profitability analysis and comparison must include figures from the whole life-cycle of the project, from idea to termination (see Blume, 5, P. 612).

The ranking occurs based on a rough estimate of the expected total utility and the expected total costs. These estimations are based on experience values from databases or benchmarks. Normally, if revenues exceed costs, a project will be authorized (see Madauss, 29, P. 302). As for the HSH Nordbank AG, there are two additional and indispensable criteria a project has to meet before further steps are undertaken: the NPV (Net Present Value) and the payback period have to be positive.

If the total of all positively-evaluated projects exceeds what is possible within a specific time period, companies often re-evaluate them within a portfolio. Additional criteria, e.g. technical probability of success or degree of innovation, then determine their priority for authorization (see Blume, 5, P. 612).

3.1.4.2. Phase II: Planning

After a project is authorized, the planning phase begins. This phase is generally structured into five different sequences: structure planning, workflow planning, capacity planning, scheduling, and cost planning:

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Figure 4: Planning Sequences

(see Zielasek, 44, P. 122)

Structure Planning:

In structure planning, the high complexity of a project is broken down into its diverse subtasks and work packages by means of a WBS (Work Breakdown Structure) (see Heeg / Frieß, P. 498). Work packages are the smallest tasks of a project and are often literally described as “jobs.” The WBS can be set up during the project phase, using either a time-based or (more commonly) a functionality-based organization of the phases. All work package executives will be listed in the WBS (see Schreckeneder, 40, P. 43). A WBS is designed top-down or bottom-up (see Kiesel, 22, P. 67). If the top-down method is used, the project manager identifies and defines all work packages. This approach saves times and avoids conflict. Using the top-down system with highly-complex projects, however, might lead to some jobs being overlooked, especially in the case of new assignments. In these cases, it is useful to incorporate the bottom-up method into the structuring process. This approach seeks to include a maximum number of persons by asking specialists and team members for their contributions. In this way, responsibility is largely delegated to the contributors. Next, the results of each method are summarized and checked for plausibility. Afterward, a WBS is created, such as the following:

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Figure 5: Work Breakdown Structure

(Kiesel, 22, P. 68).

Each additional planning activity—e.g. workflow planning, capacity planning, scheduling, and cost planning—refers to the given work packages of the WBS. For this reason, it is extremely important that all jobs are included. This document is one of the main steering instruments of project management.

Workflow Planning:

The aim of workflow planning is to transfer the work packages of the WBS into a plan of procedures. First, all jobs are sorted by theme and chronological order; then, dependencies between subtasks and work packages are identified (see Rackelmann, 36, P. 523). Because some jobs can be done simultaneously, processes are parallelized in order to reduce total duration of the project. As a pre-condition for an adequate workflow, time efforts for each job have to be estimated. This is usually done by a network plan, which calculates the earliest possible start and end of each job, the buffers, and the path of the whole workflow plan. Finally, a workflow plan is set up, in which each work package of the WBS is considered. The WBS is then transferred into procedures.

Capacity Planning and Scheduling:

After the workflow plan is drawn up, each job and work package has to be assigned to a resource, after which the constructed workflow plan is put into a calendar for scheduling. To minimize costs of human resources, to keep the projects duration as short as possible, and to avoid idle time, the capacity of each resource is optimized. As often happens in practice, resource capacity may overload in the first run of the planning (as shown in the figure below).

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Figure 6: Capacity chart

(Kiesel, 22, P. 73)

In this example, the resource „X“ is assigned to seven different work packages (No. 0 – No. 6) during week 21 to 29. His authorized time for this project varies between 4 and 5 hours per week. From the chart, one can easily see that his capacity is overloaded with work package 2 in week 23, while elsewhere there is idle time. It is the task of the project manager to optimize the capacity plan in order to create an efficient schedule.

In this sense, scheduling depends on resource capacity. The final schedule is usually displayed as a histogram showing each work package as well as the workflow and the project milestones. At first, schedules often have to be modified by additional buffers after the workflow plan is put into a calendar and the resource capacity is considered. For example, public holidays can be identified in the schedule, signaling to project manager how work packages within this time should be extended or shifted.

During project implementation, the schedule is an extraordinarily useful instrument for ongoing steering. It can be used in particular for identifying delays at an early stage.

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Figure 7: Schedule for a Work Package

As can be seen above, a delay emerged early during the execution of job 1 in week 1 and has grown ever since. If this delay cannot be reduced, the planned end date in week 10 cannot be kept and the expected end date (milestone) becomes week 12 instead.

Cost Planning:

At this stage of the planning phase, the internal and external costs for each work package are evaluated (see Jenny, 21. 109). Costs are differentiated between labor costs, materials expenditures, investment costs, overhead expenses, and project management costs (e.g. travel expenses). The aim is to produce a detailed cost plan.

To create a chronological plan, all expenses per work package are estimated. Several methods could be used for this estimation, e.g. algorithmic methods, comparison methods, indices methods, or expert estimations (see Süß / Eschlbeck, 42, P. 117). With the aid of the planned workflow and schedule, the estimated costs are planned stage by stage and distributed over the total duration of the project. Finally, the periodical sums are indicated in the project cost plan.

3.1.4.3. Phase III: Controlling

Project controlling refers to the ongoing steering of results to meet the requirements of time, budget, and quality (see Meier, 30, P. 133). Within this phase, actual values are collected, compared with target values, and analyzed for deviations. Afterward, countermeasures are taken and the planning is updated.

To receive the actual status of each work package, executives issue reports with progress information and hold status meetings. Then they compare targets with actual values, commenting on deviations and proposing measures for their reduction (see Blume, 5, P. 635).

The analysis of deviation within the schedule is of particular importance. Milestones are project goals companies represent to clients and other companies; in addition, they often serve to motivate the project team as well. Comparison of the report period with planned milestone dates reveals whether they are in sync or deviate from one another (see Kiesel, 22, P.. 82). The presence of deviations can erode credibility. If deviations exceed a certain level, the project manager has to intervene. This intervention is mostly made by increasing resources or overtime in order to keep to the timetable, or by postponing low priority work packages. Also common is the minor modification of sub-tasks, the reduction of functionality or quality, and the change from in-house production to external production to adapt to the schedule and cost plan (see Platz / Schmelzer, 35, P. 232).

If, however, deviations become too great, the entire planning will have to be revised. Because project owners may decide not to approve changes in planning, projects plagued by deviations may end up being abandoned.

3.1.4.4. Phase IV: Termination

The final phase of a project is referred to as its termination. A successful termination includes a project closure report for a proper handover to company management or client, a project closure analysis, experience backup, and the termination of any project specific organization (see Turowski, 48, P. 5).

In this phase, success is judged by comparing the target values with the realized time, budget, and quality values. Project managers must note any deviations and document their internal and external causes and consequences. Then, they must review experiences made with middle men, satisfaction with internal and external suppliers, and the project management process. In this way, project managers ensure an exchange of information that can be utilized in future projects.

3.1.5. Success Factors

The success of project management depends on the ability to identify and minimize risks. Success nowadays no longer only means reaching the scope with the expected level of quality within a predefined time and with the approved budget. It is also critical that projects meet expectations and receive confirmation by their environment (see Bundschuh, 6, P.187). To achieve this, a range of factors have to be taken into account:

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Table 4: Categories of Project Success Criteria

Next to the material factors (or “hard” factors), soft factors are becoming more and more important. Besides so-called non-material issues (e.g., the steering and the controlling of a project), human factors (e.g., communication and motivation) play a great role in the success of a project.

Hard factors and soft factors are interdependent. Neglecting one can jeopardize the entire project. Successful project management requires achieving a balance between them (see Corsten, 9, P. 43).

3.2. Cultural Dimensions

The term „culture“ derives from Greek and originally referred to the cultivation of soil for farming. Aside from its agricultural sense, however, there is no unified definition of what exactly culture means today (see Apfelthaler, 3, P. 28). One definition of culture is the sum of all values within a non-influenceable environment. These social values are individually internalized and thus shape action within a country or region (see Perlitz, 32, P. 279). In the 1950s, Clyde Kluckhohn examined the most common senses of culture. He found that culture generally describes the pattern of believing, feeling, and acting that are acquired and mulitplied by symbols. The essential foundations of a culture consist of traditional ideas and related values (see Kluckhohn, 23, P.86). Some cultural values that influence human behavior and traditions are materialism, national consciousness and pride, social organization, education, political life, understanding of time, and religion. What is more, these values mutually shape one another (see Meier, 30, P. 109).

Based on these definitions, a range of cultural models was developed. The most popular are the models of Edgar H. Schein, Edward Hall, Geert Hofstede, and Fons Trompenaars. In this thesis, I rely on the model developed by Geert Hofstede. He distinguishes between culture in the narrower sense and the “software of the mind.” In the narrower sense, culture refers to civilization or the refining of mind (education, art, and literature). “Software of the mind,” by contrast, comprises the collective programming of minds that differentiates members of one group from another (see Hofstede, 19, S. 3). Hofstede believes that underlying this collective programming are intercultural issues answered differently depending on the cultural area. These differences constitute aspects that can be measured between cultures (see Kiesel, 22, P. 36).

One of Hofstede’s most popular investigations was a survey of employees in comparable positions but different countries at IBM. Due to its extensive data base, the multitude of countries it considers, and its empirical basis, this study represents the most significant cultural investigations ever conducted (see Puck / Rygl / Exter / Holtbrügge, 34, P. 29). The following cultural dimensions are based on surveys of over 100,000 people in 67 countries with 60 different variables, from 1972 until today. Hofstede’s dimensions and descriptions shall be used for all further analysis in this thesis.

3.2.1. Power Distance

Power distance is defined as the acceptance of unequal power distribution and expresses the dependencies of individuals within cultures (see Kiesel, 22, P. 37).

Countries with a high PDI (power distance index), e.g. Latin-American, Asian, and African countries, regard their superiors as possessing more rights and powers. Accordingly, superiors are expected to provide clear orders that subordinates follow without discussion. Members of counties with a low PDI, e.g. USA, Great Britain, North and Central Europe, however, regard themselves as equal to their superiors and tend toward questioning hierarchies. The emotional distance is rather low. For the employee, the superior is always addressable and expressions of disagreement are common. Employees also expect to be involved in decisions pertaining to their work (see Hofstede, 19, P.73-74).

Within a project, a high PDI constrains equitable teamwork. All project members carefully deliberate about the political interests of all parties and carefully avoid snubbing authority figures. Problems and solutions are of lesser importance than manners and appearance toward superiors. Members are not upfront with each other and mistrust is common. Although the project manager is respected, information is carefully weighed before further distribution. There is no room for creativity and development (see Kiesel, 22, P. 38). Cultures with a low PDI tend to have long discussions and delayed decisions within projects. On the other hand, a low PDI usually indicates that project members can delegate tasks and take responsibility for their actions.

3.2.2. Individualism / Collectivism

This dimension refers primarily to the relative importance ascribed to individuals vs. groups. If the interest of a group is subordinated to the interest of an individual, the culture is described as collectivistic. A more individualistic culture prioritizes the interest of each individual (see Hofstede, 19, P. 100). Individualistic cultures, which Geert Hofstede calls “I-cultures,” are predominantly located in the West. Individualists always seek to uphold their independence from the group. Team orientation is counted as a weakness, while value is placed on freedom, recognition, and progress. Furthermore, individualists tend to force his point in order to climb the hierarchy and maximize his own profit. Their own point of view is holy and an enormous amount of time is spent convincing counterparts of just that. Individualism is a low-context culture: there are no common values; within conversations there is no need for proper rhetoric; the only thing needed is content.

Collectivistic cultures, which Hofstede calls “we-cultures,” are mostly located in the East. Members of these cultures see their identity anchored in the affiliation to a group, which can be the family, the company, or the ethnical group. Loyalty to the group is extremely pronounced (see Hofmann / Schoper, 16, P. 27). Collectivists subordinate their own interests to those of the group. No distinction is made between business life and private life, so that workers are expected, for instance, to have dinner with the group after work, while companies offer recreational activities for employees and their families. Collectivists expect a long-term commitment in return for their loyalty to the group. Values are harmony, saving face, group obligations, and strict subordination. As a result, there is no competition within the group but strong competition between different groups instead. Conflicts are avoided, issues are only discussed indirectly, and differences of opinion are not expressed. Instead, the focus lies on how things could be understood by the opponent. Collectivism is a high-context culture based on a variety of ideals. Disregarding those ideas has negative consequences.

As far as the project management is concerned, collectivism seems to be much more efficient than individualism. The project is promoted and supported by the whole group. As a side note, individualism and power distance negatively correlate. Many countries that have a high PDI have a low IDV (Individualism Index) and vice versa. An explanation could be that cultures in which people often depend on groups also depend on authority figures (see Hofstede, 19, P. 111).

3.2.3. Masculinity / Femininity

This dimension concerns whether cultures exhibit masculine and feminine properties. Individualism is often mistaken as an inherently masculine trait. But in fact individualism refers to independency of, rather than dependency on, groups—the “I” and the “We.” Masculinity refers to the ego and one’s relationship to others, whereby a single person is given more value than the group. Within masculine cultures, the role of men and women are strictly defined. Masculine cultures are assertive, keen, and materially oriented. Values are income, credit for good work, promotions, and challenges (see Kutschker, 25, P. 709). Cultures with a high MAS (masculinity index) are Japan, Germany, Great Britain, and the USA.

Feminine cultures are more social, sensitive, and non-materially oriented. These cultures emphasize social thinking, pleasant working atmospheres, and cooperation (see Hofstede, 19, P. 164). Scandinavian countries, in particular, have feminine cultures and a very low MAS.

Within projects, both masculinity and femininity can be successful. Feminine components help nurture relationships. Masculine aspects are necessary to remain resolute in the face of pressures from superiors and external parties.

Studies by Ronald Ingelehart show that a high IDV can be related to a low MAS (see Hofstede, 18, P. 266). One of his explanations for this was that a culture’s well-being increases its feminine and individualist factors. By contrast, in places where basic survival is still an issue, cultures tend to be more masculine and collectivistic. The PDI and the MAS correlate negatively. The higher the PDI the lower the MAS and vice versa.

3.2.4. Uncertainty Avoidance

Uncertainty avoidance can be defined as the degree to which members of a culture feel threatened by uncertain and unknown situations (see Perlitz, 32, P. 284).

Cultures with a high UAI (uncertainty avoidance index) contain many formal and informal rules to determine behavior, make the future predictable, and reduce equivocalness. To this end, these cultures structure their organizations, institutions, and relations in such a way so as to provide maximum prediction and clear interpretation. Members of these cultures appear more busy, anxious, emotional, aggressive, and active due to the permanently high levels of stress and fear. Companies tend to regulate work procedures in the smallest detail and have large bureaucracies. They do not tolerate abnormal behavior and reject unforeseeable events. A long but smooth-going process is much more important than making quick decisions. Workers gladly follow strong leaders and dissenters are fought as enemies. Countries with a high UAI are Japan, Russia, and Central Europe.

Cultures with a low UAI, e.g. Sweden, Singapore, and Great Britain, are more tolerant and accepting of different opinions and unfamiliar ideas. Spontaneity and pragmatism predominate. People in these cultures are more reluctant to follow rules, put greater value in their own initiative and responsibility, and tend to accept higher levels of risk and danger. New developments spark curiosity rather than fear (see Hoffmann, Schoper, 16, P. 28).

Cultures with a high UAI often have problems when it comes to projects. New tasks and teamwork with unknown persons often makes for a high degree of uncertainty. These project members are less creative and try to approve every step with their superiors. They try to establish clear structures and to orient themselves solely according to what has been specified. Cultures with a low UAI, however, see new projects in a positive light (e.g., variation and an intellectual challenge) (see Kiesel, 22, P. 42).

Masculinity and uncertainty avoidance cannot be described by correlation. Rather, their relationship must be thought of in terms of Maslow’s pyramid of human needs. The assortment of human needs and emplacement to a certain level of the pyramid for each culture determines the relationship between MAS and UAI, e.g. German culture prioritizes safety and appreciation (resulting in a medium value in both indices), while the USA prioritizes performance and appreciation (resulting in a lower UAI).

As for the relationship between uncertainty avoidance and individualism, there is clear interdependency. The higher the UAI, the lower the IDV. On a whole, collectivistic countries show a high degree of uncertainty avoidance while creating as many rules as possible. This often causes misunderstandings with highly individualistic countries (e.g., because the opening of the Japanese market for Western products is not formally written down in Japanese law, Japanese view such openings as impossible). This kind of misunderstanding underlies many international political conflicts today (see Hofstede, 19, P. 265).

Between PDI and UAI there is a positive correlation. A culture that has a high PDI generally also shows a high UAI. In most cases, this is due to the fact that responsibility within countries with a high PDI is obtained borne by superiors. Subordinated employees who accept a high degree of inequality often live in a culture with high uncertainty avoidance. In return for this inequality, workers receive safety and decreased levels of individual responsibility. A clearly structured organization, with a strong hierarchy and leader, serve this purpose (e.g., as is often the case in Russia and France). Countries with a low PDI mostly also have a low UAI (e.g, as is often the case in the USA and Great Britain). In the latter countries, workers regard chance as a challenge and see superiors as their equals.

3.2.5. Long-Term Orientation

Because the above cultural dimensions are all based on the Western way of thinking, Hofstede conducted an additional study, the Chinese value survey, to analyze long-term vs short-term orientations. The LTO (long-term orientation index) was then added to his original study.

Cultures with long-term orientation, e.g. Japan and China, align their behavior with long-term objectives and perspectives. Values are austerity, modesty, and acceptance of subordination. This orientation is characterized by the economical use of resources, e.g. Japanese cars are known for their low gasoline consumption, a high saving ratio, endurance, order, and a strong insistence on goal attainment. Arguments are pondered carefully and the decision-making process takes time. Loss of face is avoided by the considering all opinions. These cultures mostly show a monochromic^[1] understanding of time.

Short-term orientation is found in southern European countries as well as North and Central America. In these cultures, more emphasis is placed on the here and now than on the future. Most short-term orientated countries have an extremely high rate of inflation, as is the case in Kenya.

Within projects, cultures with a high LTO tend to build up exaggerated safety nets. Relationships within the team as well as to distributors clients are fostered and changes resisted. Cultures with a low LTO, however, often have a polychromic^[2] understanding of time. The long-term planning is disregarded and compensated by spontaneous, hectic planning (see Kiesel, 22, P. 43).

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^[1] A “monochronic” culture tends to plan schedules hierarchically and sequence activities and appointments. Often found in Germanic cultures.

^[2] A “polychronic” culture does not see appointments as binding. Activities are done in parallel and executed flexibly depending on priority. Often found in Asian, Arab, South American, South and Eastern European cultures.