Geert Hofstede conducted an extensive program of research on cultural dimensions in international business. Hofstede examined data on values that had been gathered from more than 100,000 IBM employees around the world, and more than 50 cultures were included in the initial study. Statistical analysis of these data suggests that four dimensions could be used to describe the important differences among the cultures in the study: individualism/collectivism, power distance, career success/quality of life, and uncertainty avoidance.

1. Individualism/Collectivism

The individualism/collectivism dimension describes the extent to which a society is organized around individuals or the group. Individualistic societies encourage their young to be independent and to look after themselves. Collectivistic societies integrate individuals into cohesive groups that take responsibility for the welfare of each individual. Hofstede suggests that the focus on relationships in collectivist societies plays a critical role in negotiations – negotiations with the same party can continue for years, and changing a negotiator changes the relationship, which may take a long time to rebuild. Contrast this with individualistic societies, in which negotiators are considered interchangeable and competency (rather than relationship) is an important consideration when choosing a negotiator. The implication is that negotiators from collectivist cultures will strongly depend on cultivating and sustaining a long-term relationship, whereas negotiators from individualistic cultures may be more likely to swap negotiators, using whatever short-term criteria seem appropriate.

2. Power Distance

The power distance dimension describes “the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.” According to Hofstede, cultures with greater power distance will be more likely to concentrate decision making at the top, and all-important decisions will have to be finalized by the leader. Cultures with low power distance are more likely to spread the decision making throughout the organization, and while leaders are respected, it is also possible to question their decisions. The consequences for international negotiations are that negotiators from comparatively high-power distance cultures may need to seek approval from their supervisors more frequently, and for more issues, leading to a slower negotiation process.