Confucius Connection

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The power behind the recent surge in Asia's economy may have developed from the tenets of one of that continent's earliest philosophers. The Confucius Connection: From Cultural Roots To Economic Growth Geert Hofstede Michael Harris Bond n 1968, the late Nobel-prize-winning econo- mist Gunnar Myrdal published a book entitled Asia}i Drama that described his investiga- tions into the failure of economic develop- ment policies in South and Southeast Asia. Twenty years later, we are experiencing a very different kind of Asian drama: Japan, South Korea, Taiwan, Hong Kong, and Singapore are now outperforming the United States and Western Europe economically. Western mar- kets are flooded with high-quality, high- technology products "made in Asia"; the production of cameras, TV sets, and domes- tic appliances has all but ceased in many Western countries, the automobile business has suffered severely, and President Reagan has had to violate his free-trade principles to save the U.S. microchip industry. It is true that most of the competition is from East, rather than from South or Southeast Asia; however, some South and Southeast Asian countries besides Singapore, such as India, Malaysia, Thailand, and Indonesia (the very scene of Myrdals drama), also show signs of an economic takeoff. World Bank data on the average an- nual growth rate of per capita gross national product (see Exhibit 1) confirm the East Asian lead. The Five Dragons, as these countries are sometimes called, are heading the list, with average annual sustained-growth percentages over a 20-year period of 7.6% for Singapore, 7.2% for Taiwan, 6.6% for South Korea, 6.1% for Hong Kong, and 4.7% for japan. These compare with rates for Western Europe of between 3.5% for Austria and 1.6% for Britain; for Latin America of between 4.3% for Brazil and —2.1% for Nicaragua; of 2.4% for Canada; and of 1.7% for the United States.

Transcript of Confucius Connection

Page 1: Confucius Connection

The power behind the recent surge in Asia's economy may have developed from thetenets of one of that continent's earliest philosophers.

The Confucius Connection:From Cultural RootsTo Economic Growth

Geert HofstedeMichael Harris Bond

n 1968, the late Nobel-prize-winning econo-mist Gunnar Myrdal published a book entitledAsia}i Drama that described his investiga-tions into the failure of economic develop-ment policies in South and Southeast Asia.Twenty years later, we are experiencing a verydifferent kind of Asian drama: Japan, SouthKorea, Taiwan, Hong Kong, and Singaporeare now outperforming the United States andWestern Europe economically. Western mar-kets are flooded with high-quality, high-technology products "made in Asia"; theproduction of cameras, TV sets, and domes-tic appliances has all but ceased in manyWestern countries, the automobile businesshas suffered severely, and President Reaganhas had to violate his free-trade principles tosave the U.S. microchip industry. It is truethat most of the competition is from East,rather than from South or Southeast Asia;

however, some South and Southeast Asiancountries besides Singapore, such as India,Malaysia, Thailand, and Indonesia (the veryscene of Myrdals drama), also show signs ofan economic takeoff.

World Bank data on the average an-nual growth rate of per capita gross nationalproduct (see Exhibit 1) confirm the East Asianlead. The Five Dragons, as these countries aresometimes called, are heading the list, withaverage annual sustained-growth percentagesover a 20-year period of 7.6% for Singapore,7.2% for Taiwan, 6.6% for South Korea,6.1% for Hong Kong, and 4.7% for japan.These compare with rates for Western Europeof between 3.5% for Austria and 1.6% forBritain; for Latin America of between 4.3%for Brazil and —2.1% for Nicaragua; of 2.4%for Canada; and of 1.7% for the UnitedStates.

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WHY EAST ASIA?

Few economists predicted the staggering eco-nomic rise of the East Asian countries, andmany failed to recognize it even when it waswell under way. For example, an economicforecast by Hollis B. Chenery and Alan M.Strout published in the American EconomicReview of September 1966 did not even in-clude Hong Kong and Singapore because theywere considered insignificant in this respect.The future performances of Taiwan and Ko-rea were heavily underrated, and those of In-dia and Sri Lanka were overrated. Fifteenyears later, Singapore with a population of2.5 million exported more than India did witha population of 700 million.

Not only was the success of the FiveDragons unpredicted, but even after the facteconomists have no explanation of why theseparticular countries were so successful. Why,for example, did South Korea outperformColombia, which seemed to be in a betteistarting position? In 1965, Colombia's percapita income ($280) was about twice SouthKorea's ($150). In 1985, South Korea's percapita income ($2,150) was about one-and-a-half times Colombia's ($1,320). U.S. garmentbuyers, however, chose South Korea —eventhough Colombia is nearer —because of bet-ter selection, better quality, lower prices, andmore reliable delivery times. Better manage-

ment was obviously also involved, but thisis too easy an explanation for two reasons.First, the quality of management depends onthe qualities of the people to be managed; sec-ond, the quality-of-management explanationbegs the question of how an entire nation cancollectively produce better management thananother nation. For the real explanation, wemust turn to the domain of culture.

THE NEO-CONFUCIAN HYPOTHESIS

Futurologist Herman Kahn has labeled thecultures of the East Asian countries "neo-Confucian"— that is, rooted in the teachings ofConfucius. Kahn saw himself as a "culturist":He, like the authors of this article, held thebelief that specific nations have specific cul-tural traits that are "rather sticky and difficultto change in any basic fashion, although theycan often be modified." The authors like todefine culture as "the collective programmingof the mind that distinguishes the membersof one category of people from those of an-other." This definition applies to national aswell as to corporate cultures, but we will stayat the national level. Kahn's neo-Confucianhypothesis is that the countries of East Asiahave common cultural roots going far backinto history, and that under the world-marketconditions of the past 30 years this cultural in-

Tew economists predicted the staggeringeconomic rise of the East Asian countries^and many failed to recognize it even whenit was well under way!'

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Exhibit 1

ECONOMIC GROWTH FOR SELECTED COUNTRIES AND GROSS NATIONAL PRODUCT (GNP) PER CAPITA

SingaporeTaiwanSouth KoreaHong KongJapanBrazilAustriaColombiaWest GermanyCanadaNetherlandsSwedenIndiaUnited StatesGreat BritainPolandSwitzerlandNicaragua

1965-85Ave. AnnualGNP/capitaGrowth Rate

7.67.26.66.14.74.33.52.92.72.42.01.81.71.71.61.51.4

-2 .1

1965GNP/capitaU.S. $ and

(Rank)

550 (12)220 (16)150 (17)590 (11)780 (10)240 (15)1180 (8)280 (14)1810 (5)2260 (3)1520 (7)2160 (4)

90 (18)3420 (1)1580 (6)840 (9)

2310 (2)330 (13)

1985GNP/capitaU.S. $ and

(Rank)

7420 (10)3600 (12)2150 (13)6230 (11)11300 (5)1640 (15)9120 (8)1320 (16)10940 (6)13680 (3)9290 (7)

11890 (4)270 (18)

16690 (1)8460 (9)2050 (14)16370 (2)

770 (17)

Source: World Development Report 1987 and other statistics

heritance has constituted a competitive ad-vantage for successful business activity.

Cultural inheritances are not geneti-cally transferred; they can in principle be ac-quired by any human being who is at the rightplace at the right time. We begin to acquirethe mental programming we call culture fromthe day we are born, and the process contin-ues throughout our life in a particular society.Cross-cultural developmental psychologistswho have studied the behavior of children indifferent societies have shown that a childlearns patterns of cultural behavior very earlyin its life. For example, Japanese male infantsof 3 to 4 months are noisier than Japanese fe-male infants of the same age, whereas in theUnited States the opposite is true. Sex rolesare only one aspect of our cultural program-

ming; thus from generation to generation, allkinds of cultural traits are transferred. Withthis in mind, let us begin to look at the teach-ings of Confucius.

CONFUCIUS AND HIS TEACHINGS

Kong Fu Ze, whom the Jesuit missionaries re-named Confucius, was a high civil servant inChina around the time of 500 B.C. Knownfor his wisdom, he was always surrounded bya host of disciples who recorded what weknow of his teachings. He thus held a positionvery similar to that of the Greek philosopherSocrates, who lived just 80 years later. Con-fucius' teachings are lessons in practical ethicswithout any religious content; Confucianism

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GEERT HOFSTEDE IS professor of organizational

anthropology and international management atthe University of Liwburg at Maastricht, theNetherlands. He is also director of the Institutefor Research on hitercultural Cooperation,which recently moved to the same universitf/.He has lectured and published internationallyand acts as an international consultant to com-panies and organizations.

is not a religion but a set of pragmatic rulesfor daily life, derived from what Confuciussaw as the lessons of Chinese history. The fol-lowing are the key principles of Confucianteaching:

1. The stability of society is based on un-equal relationships between people. The "wulun," or five basic relationships, are ruler/subject, father/son, older brother/youngerbrother, husband/wife, and older friend/younger friend. These relationships are basedon mutual, complementary obligations: Thejunior partner owes the senior respect andobedience; the senior owes the junior partnerprotection and consideration.

2. The family is the prototype of all socialorganizations. A person is not primarily anindividual; rather, he or she is a member ofa family. Children should learn to restrainthemselves, to overcome their individualityso as to maintain the harmony in the family

(if only on the surface); one's thoughts, how-ever, remain free. Harmony is found in themaintenance of an individual's "face," mean-ing one's dignity, self-respect, and prestige.The use of our own word "face" in this sensewas actually derived from the Chinese: Losingone's dignity, in the Chinese tradition, isequivalent to losing one's eyes, nose, andmouth. Social relations should be conductedin such a way that everybody's face is main-tained. Paying respect to someone else iscalled "giving face."

3. Virtuous behavior toward others con-sists of treating others as one would like to betreated oneself: a basic human benevolence —which, however, does not extend as far as theChristian injunction to love thy enemies. AsConfucius said, if one should love one's ene-mies, what would remain for one's friends?

4. Virtue with regard to one's tasks in lifeconsists of trying to acquire skills and educa-tion, working hard, not spending more thannecessary, being patient, and persevering.Conspicuous consumption is taboo, as is los-ing one's temper. Moderation is enjoined inall things.

THE NEW SCIENCE OF CULTURE MEASUREMENT

If culture is as important in determining thefate of nations as Kahn and others assume itto be, how then do we learn about culture?Mere description will not do; we need anapproach that allows comparisons betweencountries-that is, an identification of cul-tural variations.

Cultural differences can be mea-sured indirectly; that is, they can be inferredfrom data about collective behavior, such asthe way a country's national wealth is dis-tributed over Its population; the mobilityfrom one social class to another; or the fre-quency of political violence or labor con-

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flicts, traffic accidents, or suicides. All ofthese can tell us something about a country'sculture, but it is not always clear how theyshould be interpreted.

We can avoid this problem by tak-ing direct measures of culture through askingwell-designed questions about people's valuesor beliefs. For this type of measurement, weshould have access to matched samples ofrespondents from a number of different coun-tries (the more the better, but preferably atleast 15). "Matching samples" means that therespondents should be people who are assimilar as possible in all aspects of their livesexcept for their nationality. For example, ten-year-old schoolchildren, female medical stu-dents, or business managers attending spe-cific training courses can all form suchmatched samples. It is not necessary to haverepresentatii^e samples from whole nationalpopulations such as public opinion polls, al-though these, too, can be used.

We usually ask the same set of atleast 30 or 40 questions of all our subjects invarious countries. In comparing the answers,we try to find the patterns of values and be-liefs that distinguish countries from eachother. We use one of several statisticalmethods that have been developed for thispurpose; this procedure supplies us with sug-gested dimensions of culture on which we canlocate our various countries. If our researchhas succeeded, such dimensions should beeasy to interpret: They should represent fun-damental problems of human societies forwhich there is no one solution but a range ofsolutions, of which each country's culturerepresents one particular choice.

A Case of Culture Measurement:The IBM Studies

A unique opportunity for culture measure-ment arose in the early 1970s when the IBM

MICHAEL HARRIS BOND IS senior lecturer in psy-

chology at the Chinese University of HongKong. He also acts as a cross-cultural manage-ment trainer for multinational corporations inHong Kong, where he has lived since 1974. Hisresearch and publications are devoted to a com-parison of the psychological and social func-tioning of the Chinese people with people fromWestern countries.

Corporation made its databank on interna-tional employee attitude surveys available foracademic research. IBM had been holdingworldwide comparative attitude surveys of itsemployees since 1967; by 1973, more than116,000 questionnaires in 20 different lan-guages from 72 countries had been collected.Employee attitude surveys have of coursebeen held in many companies, but most ofthem are not internationally standardizedand they contain only questions about satis-faction at work ("How do you like your boss,pay, working conditions," and so forth),which are not very suitable as cultural indices.

However, IBM's international ques-tionnaire contained about 60 questions (outof a total of about 150) on the employee's ba-sic values and beliefs that were eminently fitfor measuring culture. They included suchquestions as "How important are each of thefollowing to you in an ideal job?" followed by

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a list of 14 job characteristics such as earn-ings, job security, challenge, freedom, coop-eration, and so forth. In addition, questionswere included on the preferred style for one'sideal manager (from very directive to laissez-faire). Finally, judgments were asked aboutgeneral issues at work, such as "Competitionamong employees usually does more harmthan good." Employees were asked to ratetheir responses from "strongly agree" to"strongly disagree."

The IBM employees represented ex-tremely well-matched subsets from eachcountry's population: same company, job,and education, but different nationality. Ifanything, cultural differences among coun-tries outside the corporation should be largerthan they would be inside, so the nationalculture differences found inside IBM shouldbe a conservative estimate of those existingfor the countries at large.

Out of 72 countries covered, the na-tional culture analysis at first used data from40 of them, ignoring the smaller IBM subsidi-aries. Later on, it became possible to use data

from another 10 countries, while those of 14more were grouped into three regions —EastAfrica, West Africa, and the Arab-speakingcountries —that brought the total number ofcultures targeted for comparison to 53.

The IBM studies revealed that these53 cultures differed mainly along fourdimensions:

1. Power Distance — that is, the extent towhich the less powerful members of organiza-tions and institutions (like the family) acceptand expect that power is distributed unequally.This represents inequality that is definedfrom below, not from above; it suggests thata society's level of inequality is endorsed byits followers as much as by its leaders. Powerand inequality are of course very fundamen-tal aspects of any society, and any individualwith some international experience is awarethat all societies are basically unequal, butsome are more unequal than others.

2. Individualism on the one side versus itsopposite (Collectivism) on the other. Thisdescribes the degree to which individuals areintegrated into groups. On the individualist

'7/ culture is as important in determiningthe fate of nations as [Herman] Kahn andothers assume it to be, how then do we learnabout culture? Mere description will not do; weneed an approach that allows comparisonsbetween countries—that is, an identification

10 of cultural variations."

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side, we find societies in which the ties be-tween individuals are loose: Everyone is ex-pected to look after himself or herself and theimmediate family. On the collectivist side, wefind societies in which people from birth on-ward are integrated into strong, cohesive in-groups; often their extended families (withuncles, aunts, and grandparents) continueprotecting them in exchange for unquestion-ing loyalty. The word "collectivism" in thissense has no political meaning: It refers to thegroup, not to the state. Again, the issue ad-dressed by this dimension is an extremelyfundamental one, involving all societies inthe world.

3. Masculinity versus its opposite. Femi-ninity. The distribution of roles between thesexes is another fundamental issue for anysociety that may involve a range of solu-tions. Analysis of the IBM data revealed thatwomen's values differ less among societiesthan do men's values. Further, if we restrictourselves to men's values (which vary morefrom one country to another), we find thatthey contain a dimension from very assertive,competitive, and maximally different fromwomen's values on the one side, to modestand nurturing and similar to women's valueson the other. We have called the assertive pole"masculine" and the nurturing pole "femi-nine." The women in the feminine countrieshave the same nurturing values as the men; inthe masculine countries they are somewhatmore assertive and competitive, but not asmuch so as the men, so that these countriesshow a gap between men's values and women'svalues.

The three dimensions described sofar all refer to three types of expected socialbehavior: behavior toward people higher orlower in rank (Power Distance), behavior to-ward the group (Individualism/Collectivism),and behavior according to one's sex (Mascu-linity/Femininity). The values corresponding

to these cultural choices are obviously bred inthe family: Power Distance by the degree towhich children are encouraged to have a willof their own, Individualism/Collectivism bythe cohesion of the family with respect toother people, and Masculinity/Femininity bythe role models that the parents and olderchildren present to the younger child.

If we compare the three dimensionswith the Confucian teachings we describedearlier, it will be no surprise that neo-Confucian countries generally score fairlyhigh on Power Distance, low on Individual-ism, and mid-range on Masculinity/Feminin-ity (except Japan, which scores quite high onMasculinity).

4. A fourth dimension found in the IBMstudies refers not to social behavior but toman's search for Truth. We called it "Uncer-tainty Avoidance"; it indicates to what extenta culture programs its members to feel eitheruncomfortable or comfortable in unstructuredsituations. "Unstructured situations" are de-fined as novel, unknown, surprising, or dif-ferent from usual. Uncertainty-avoiding cul-tures try to minimize the possibility of suchsituations by adhering to strict laws and rules,safety and security measures, and (on thephilosophical and religious level) a belief inabsolute Truth: "There can be only one Truth,and we have it." People in uncertainty-avoid-ing countries are also more emotional and aremotivated by inner nervous energy. Uncer-tainty-accepting cultures are more tolerant ofbehavior and opinions that differ from theirown; they try to have as few rules as possible,and on the philosophical and religious levelthey are relativist, allowing many currents toflow side by side. People within these culturesare more phlegmatic and contemplative; theirenvironment does not expect them to expressemotions.

Exhibit 2 lists scores for the 53 cul-tures in the IBM research, thereby permitting 11

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each country to be positioned on each of thefour dimensions (plus a fifth that we will de-scribe in the next section). These scores arerelative: We have chosen our scales in such away that the distance between the lowest- andthe highest-scoring country is about 100 points.

At the company level, differencesamong cultures in these four dimensions havemany consequences for management prac-tices. For example, both Power Distance andIndividualism affect the type of leadershipmost likely to be effective in a country. Theideal leader in a culture in which Power Dis-tances are small would be a resourceful dem-ocrat; on the other hand, the ideal leader ina culture in which Power Distances are largeis a benevolent autocrat (or "good father"). InCollectivist cultures, leadership should re-spect and encourage employees' group loyal-ties; incentives should be given collectively,and their distribution should be left up to thegroup. In Individualist cultures, people canbe moved around as individuals, and incen-tives should be given to individuals.

Masculinity and Uncertainty Avoid-ance affect peoples motivations: Competi-tion is more effective in a masculine culture,and personal risk is more acceptable if Uncer-tainty Avoidance is low. Power Distance andUncertainty Avoidance together affect theimage people form of what an organizationshould be; larger Power Distances are associ-ated with greater centralization, while strong-

14

er Uncertainty Avoidance is associated withgreater formalization.

At the national economic level. In-dividualism and national wealth (per capitagross national product in dollars) are quitestrongly related. We have tested whether caus-ality went from wealth to Individualism (peo-ple in wealthier countries becoming moreindividualist) or the other way round (indi-vidualist cultures becoming wealthier). Wewere able to test this because most of the IBMpopulation was surveyed twice, with a four-year interval, so over this period we knew thechanges in both wealth and Individualism.The data show convincingly that the arrow ofcausality goes from wealth to Individualismand not vice versa. If the resources in a coun-try allow people to "do their own thing," theywill start doing just that.

However, none of the four dimen-sions is related to national economic growth.Only for the wealthy countries (all of whichtend to be individualist) is more Individual-ism associated with slower economic growthand vice versa. If everybody does his or herown thing, the economy grows less quicklythan it would if at least some individualsworked for collective purposes. But this studyrevealed no relationship between culture andeconomic growth that holds true for all coun-tries, including the poor ones that need suchgrowth the most.

A Second Case of Culture Measurement:The Chinese Value Survey

The Rokeach Value Survey is a well-knownquestionnaire developed by psychologist Mil-ton Rokeach for measuring values in Ameri-can society. In 1979, a group of academicresearchers from nine Asian and Pacific coun-tries administered a modified version of thissurvey to 100 psychology students (50 malesand 50 females) in each of ten different coun-tries. The results of the survey were published

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about the same time as those of the IBM stud-ies. When the two were compared, it appearedthat all four dimensions identified in the IBMmaterial, in addition to a fifth that we havenot been able to interpret, were also presentin the student data.

The overlap between the two re-search projects was demonstrated on thescores of six countries that were representedin both samples. This overlap is remarkablebecause the two projects used completely dif-ferent questionnaires on different populationsin different years in only partly overlappingsets of countries. The agreement between thetwo projects was strong support for the uni-versality of the four IBM dimensions.

We were troubled, however, by an-other concern: the influence of the research-ers' own culture on the results. Our datashowed that people in different countries haddifferent mental programming; this conclu-sion obviously also applies to the people whoconceive the questionnaires and do the re-search. The IBM questionnaires evolved fromwork by U.S., British, Dutch, French, andScandinavian researchers — all of them fromWestern countries. The Rokeach Value Sur-vey was a purely U.S. instrument; thusrespondents in non-Western settings wereasked to answer questions that had beenmade up by Western researchers. Can we as-sume that the respondents' answers accu-rately reflect the essence of their own cul-tures? Some of the questions may have beenirrelevant to them; others that were relevantmay not have been included. These concernsled to the development of the Chinese ValueSurvey (CVS).

Michael Bond, based in Hong Kong,asked a number of Chinese social scientists toprepare a list of basic values for Chinese peo-ple. This led to the creation of a 40-itemChinese questionnaire that was subsequentlytranslated into English. Through an interna-tional network of interested colleagues, this

Chinese Value Survey was administered to 100students (50 males and 50 females) in a vari-ety of disciplines in each of 22 countries se-lected from all five continents. Wherever pos-sible, translations into the local languagewere made directly from the Chinese. Toa Western mind, some of the items seemedstrange, such as "filial piety" (which was ex-plained as "honoring of ancestors and obe-dience to, respect for, and financial supportof parents"). Of course, to the Chinese mind,some of the items on the Rokeach Value Sur-vey or IBM questionnaire may have seemedequally unusual.

A statistical analysis of the 22~coun-try Chinese Value Survey results based on therelative importance attached in a country toeach value as opposed to the other valuesagain yielded four dimensions. Twenty out of22 countries were covered earlier in the IBMstudies: thus we could compare the scores ofthe countries on each CVS dimension withthose for the IBM dimensions. Our findingswere striking: One CVS dimension was verysimilar to Power Distance, another to Indi-vidualism/Collectivism, and a third to Mas-culinity/Femininity - this again in spite of thecompletely different questions, different pop-ulations, different time periods, and differentmix of countries.

The three dimensions common tothe Chinese Value Survey and the IBM stud-ies are the ones that refer to three types of

15

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expected social behavior: behavior towardseniors or juniors, toward the group, and asa function of one's sex. These represent cul-tural choices so fundamental to any humansociety that they are found regardless ofwhether the values surveyed were designedby a Western or an Eastern mind. They aretruly universal human traits in the sense thatall societies share the same problems, butdifferent societies have "chosen" (historicallyrather than consciously) different solutions tothese problems.

One dimension from the IBM stud-ies, however, is missing in the CVS data: Wedid not find a CVS dimension related to Un-certainty Avoidance. We earlier associatedthis dimension with man's search for Truth; itseems that the Chinese do not believe this tobe an essential issue. However, we did findanother quite clearly marked dimension madeup of the values indicated in Exhibit 3.

For countries scoring high on thisdimension, the values on the left side of theexhibit are relatively more important; forcountries scoring low, those on the right aremore important. In fact, both the values onthe right and those on the left are in line withthe teachings of Confucius as we describedthem earlier. However, the values on the leftselect those teachings of Confucius that are

more oriented toward the future (especiallyperseverance and thrift), whereas those onthe right select Confucian values orientedtoward the past and the present. We havecalled this dimension "Confucian Dynamism"to show that it deals with a choice from Con-fucius' ideas and that its positive pole reflectsa dynamic, future-oriented mentality, where-as its negative pole reflects a more static,tradition-oriented mentality.

Scores for Confucian Dynamismfor the countries surveyed with the CVS arelisted in the last column of Exhibit 2. In dis-cussing the IBM studies, we showed that noneof the four IBM dimensions was associatedwith economic growth across all countries;however, we were stunned to discover thatour new dimension, Confucian Dynamism, isstrongly associated with economic growthover the period between 1965 and 1985 acrossall 22 countries, rich or poor, that werecovered.

CONFUCIUS AND ECONOMIC GROWTH

A glance at Exhibit 2 shows that four of theFive Dragons —Hong Kong, Taiwan, Japan,and South Korea —hold the top positions onthe "Confucian Dynamism" scale. The next

16

"The overlap between the IBM studies and theChinese Value Survey is remarkable because thetwo projects used completely different question-naires on different populations during differentyears in only partly overlapping sets of countries."

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Exhibit 3

VALUES ASSOCIATED WITH CONFUCIAN DYNAMISM

The relative importance of:

Persistence (perseverance)

Ordering relationships by statusand observing this order

Thrift

Having a sense of shame

But the relative unimportance of:

Personal steadiness and stability

Protecting your face

Respect for tradition

Reciprocation of greetings,favors, and gifts

highest scores are found for Brazil, India,Thailand, and Singapore. The Netherlands,Sweden, and West Germany take a middleposition. On the lower side we find tbeEnglish-speaking countries Australia, NewZealand, the United States, Britain, andCanada; the African countries Zimbabwe andNigeria; and the Philippines and Pakistan,

Let's do a quick recap of what hap-pened: Chinese social scientists composed avalues questionnaire and this was adminis-tered to male and female students in 22 coun-tries. We learned from their answers thatsome values were preferred in some coun-tries, while other values were preferred inothers. We could form dimensions, clusters ofvalues that appeared to be associated; one ofthese dimensions we called "Confucian Dyna-mism." Thus far, this was a completely psy-chological exercise; it was concerned, notwith business or with economics, but withculture. It then appeared that the countryscores on Confucian Dynamism derived fromthis exercise are strongly associated withthose countries' economic growth. Thus wehave found a cultural link to an economicphenomenon.

As in the case of the association be-tween wealth and individualism, the causalitycould have gone either way. However, the val-

ues that compose the dimension of "ConfucianDynamism" do not seem to be recent develop-ments caused by the fast economic develop-ment of certain countries (although they mayhave been reinforced by it). The Chinese andJapanese peoples were known to value thriftand perseverance before the present boomstarted; their belief in tradition and "face"(negative on the "Confucian Dynamism" scale)was heavily shaken by the events of the 1940sand 1950s; therefore, we assume the values tobe at least part of the cause, and economicgrowth to be the effect.

The logical link between the two isEast Asian entrepreneurship. We do not meanthat the values we found are held only by en-trepreneurs; rather, the way in which wefound them (by surveying student samples)suggests that they are held broadly within en-tire societies, among entrepreneurs and fu-ture entrepreneurs, among their employeesand their families, and among members of thesociety as a whole.

Let us look again at the values thatcompose our "Confucian Dynamism" dimen-sion (see Exhibit 3). If this dimension is some-what puzzling to the Western readers, theyshould not be surprised. The dimension iscomposed precisely of those elements thatour Western instruments had not registered; 17

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a Westerner would nol normally find themimportant. Thus we will try to explain themfurther.

At the outset, we must note that thelabel "Confucian" could be somewhat mis-leading. The values associated with the posi-tive (left) side are also found in non-Confu-cian countries such as India or Brazil. Inaddition, a number of core Confucian valuessuch as "filial piety" are not associated withthis factor at all; and finally, the values on thenegative (right) side, as we argued earlier, areas "Confucian" as those on the positive side.

Having issued this disclaimer, weshould acknowledge that the shared value of"ordering relationship by status and observ-ing this order" is quintessential Confucianismin action. As we showed earlier, hierarchicaldualities and interrelatedness lie at the heartof the Chinese conception of being human(the "wu lun"). This sense of hierarchy andcomplementarity of relations undoubtedlymakes the entrepreneurial role easier to play.

The value of having a "sense ofshame" supports interrelatedness throughsensitivity to social contacts. The value of"thrift" leads to savings, which means avail-ability of capital for reinvestment, an obvi-ous asset to economic growth; economistshad been struck by the high savings quotas inthe Five Dragon countries. Finally, "persis-

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tence" or "perseverance" suggests a general te-nacity in the pursuit of whatever goals a per-son selects for himself or herself, includingeconomic goals.

Low endorsement of the values onthe right side of our "Confucian Dynamism"dimension facilitates economic growth. "Pro-tecting ones face," if widely shared as a con-cern, would detract from getting on with thebusiness. The "reciprocation of greetings,favors, and gifts" is a social activity more con-cerned with good manners than with perfor-mance. Too much "respect for tradition" im-pedes innovation; part of the secret of theFive Dragons' economic success is the easewith which they have accepted Westerntechnological innovations. Finally, "personalsteadiness and stability," if overstressed,would discourage the initiative, risk seeking,and changeability required of entrepreneurstrying to exploit the vicissitudes of worldtrade.

Culture in the form of certain domi-nant values is a necessary condition for eco-nomic growth; however, culture alone is notsufficient for such growth to occur. Two othernecessary conditions are the existence of amarket and a political context that allows de-velopment. The first condition explains whythe growth of the Five Dragons started onlyafter 1955, when for the first time in historythe conditions for a truly global market werefulfilled. The supportive political context wasfulfilled in all Five Dragons, although in quitedifferent ways, with the role of governmentvarying from active support to laissez-faire.Labor unions were weak and company-ori-ented in all five countries, and a relativelyegalitarian income distribution meant thatsupport for revolutionary social changes wasweak. The Confucian sense of moderation af-fected political life as well, in spite of occa-sional outbreaks of unrest and violence.

The influence of the political con-text is evident in the country that was the cra-dle of Confucianism, the People's Republic of

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China. So far, data on the Chinese Value Sur-vey for the People's Republic are missing. Wecan only infer that in spite of Maoism, manyConfucian values remain strong in the Peo-ple's Republic, and that those on the left sideof our "Confucian Dynamism" dimension arecurrently boosted at the expense of those onthe right side.

The economic growth of the People'sRepublic was obviously hampered by politi-cal factors. The Cultural Revolution of 1966-1976 was a period of economic shrinkage;nevertheless, the average annual rate of eco-nomic growth in the People's Republic overthe 20-year period that included the Revolu-tion was still 4.8% or higher than that of Ja-pan. It also seems that under the leadership ofDeng Xiaoping, the People's Republic has leteconomic expediency prevail over politicalpurity. It is obviously more difficult to turnaround a nation of 1,000 million people thanit is to turn around a nation such as Singa-pore, which has a population of 2.5 million.So it is not unlikely that the People's Republicwill follow the success of the Five Dragons —albeit at some distance —and eventually be-come the sixth —and most powerful —dragonof them all.

WESTERN MINDS AND EASTERN MINDS

It is remarkable that the values dimension as-sociated with the economic success of EastAsiatic cultures over the past 20 years was notfound with questionnaires developed by West-ern researchers. It took the Chinese ValueSurvey —an Eastern instrument—to identifythis dimension. This is a powerful illustrationof how fundamental a phenomenon culturereally is. It not only affects our daily practices(the way we live, the way we are brought up,the way we manage, and the way we are man-aged); it also affects the theories we are ableto develop to explain our practices. Culture'sgrip on us is complete.

What did our studies tell us aboutthe difference between Western and Easternminds? Besides the three previously men-tioned dimensions common to both Westand Hast (Power Distance, Individualism/Collectivism, and Masculinity/Femininity)we found one uniquely Western dimension:Uncertainty Avoidance. As we argued, thisdimension deals with a society's search forTruth; uncertainty-avoiding cultures believein an absolute Truth, and uncertainty-accept-ing cultures take a more relativist stance. Wealso found one uniquely Eastern dimension,Confucian Dynamism; we believe that thisdimension deals with a society's search forVirtue. It is no accident that this dimensionrelates to the teachings of Confucius; as wedescribed them earlier, he was a teacher ofpractical ethics without any religious content.He dealt with Virtue, but left the question ofTruth open.

There is a philosophical dividingline in our world that separates Western fromEastern thinking. The West, in this case, in-cludes the countries that are traditionallyJudaean, Christian, or Muslim —three reli-gions that are very much concerned withTruth. Throughout history, these religionshave been split between fundamentalist, in-tolerant currents that believe they have theone Truth and all others are wrong, and lib-

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eral, tolerant currents that put a concern withhumanity, also present in all three religions,above doctrine.

These two trends in thinking corre-spond to the two poles (strong or weak) of theUncertainty-Avoidance dimension. The East,represented by Confucianism but also byHinduism, Buddhism, Taoism, and Shinto-ism, does not assume that any one human be-ing can have the Truth. Human truth is seenas partial, so that one truth does not excludeits opposite. This is why people in the Eastcan easily adhere to more than one religionor philosophical school at the same time;Shintoism and Buddhism, for example, coex-ist in many Japanese households. Along thisline of thinking, a practical, nonreligiousethical system like Confucianism can becomea cornerstone of society —more so than in theWest, where we tend to derive ethics fromreligion.

During the Industrial Revolutionthat has shaken mankind for the past 200years, the Western concern for Truth was atfirst an asset. It led to the discovery of thelaws of nature, which could then be exploitedfor the sake of human progress. It is surpris-ing that Chinese scholars, despite their highlevel of civilization, never discovered New-ton's laws; they were simply not looking forthem. The Chinese script also betrays thislack of interest in general laws; It needs 5,000different characters, one for each syllable,while by splitting the syllables into separateletters Western languages need only about 30signs. We could say that Western thinking isanalytical, while Eastern thinking is synthetic.

By the middle of the 20th century,the Western concern for truth gradually ceasedto be an asset and turned instead into a liabil-ity. Science may benefit from analytical think-ing, but management and government arebased on the art of synthesis. With the resultsof Western, analytically derived technologies

20 freely available. Eastern cultures could start

putting these technologies into practice ac-cording to their superior synthetic abilities.What is true or who is right is less importantthan what works, and how the efforts of indi-viduals with different thinking patterns canbe coordinated toward a common goal. Japa-nese management, especially with Japaneseemployees, is famous for this pragmatic syn-thesis. The strategic advantage, in this periodof Eastern cultures that practice virtue with-out a concern for truth, is part of what our re-search has illustrated.

THE QUEST FOR GLOBAL MANAGEMENT

SYNERGY

The IBM values study, in which nationalcultural differences were measured acrossdifferent subsidiaries within the same mul-tinational corporation, shows that nationalculture does not stop at the gate of the foreigncompany. Whether they like it or not, theheadquarters of multinationals are in thebusiness of multicultural management.

Cultural differences among nationalsubsidiaries easily lead to conflicts over cor-porate policies. Such conflicts arise not onlybetween headquarters and local managers inthe subsidiaries, but also between headquar-ters and expatriates from the home countrynationality. In one U.S. corporation we know,the head of a headquarters staff departmentcomplained bitterly to the president aboutthe noncompliance with certain rules by theEast Asian regional manager, who was an ex-patriate American. "I fully agree," said thepresident. "His behavior is stupid and againstcompany policy. I have only one question.From the time he worked in headquarters, Ihave known Mr. X to be an intelligent man.How can a man be so intelligent in Los An-geles and so stupid in Hong Kong?"

Policy conflicts are less likely to oc-cur in technology and finance, which are rel-

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atively culture-independent, and more likelyin marketing and personnel, where culturaldiversity is largest. Multinational corporatecultures handle cultural diversity among sub-sidiaries according to the level of UncertaintyAvoidance in their headquarters. At one ex-treme is the position that "there is only onecorporate truth, and we have it"; at the oppo-site extreme the subsidiaries are run at arm'slength, without much attempt at integration.The president whom we quoted was a wiseman who steered a middle way. He saw thatcultural differences can easily go unrecog-nized by overzealous headquarters staff andcan be interpreted as personality defects ofthe people in the subsidiaries, whether theyare locals or expatriates.

National cultures can undoubtedly

be complementary. Our experiences with theChinese Value Survey are in themselves an ex-ample of cultural synergy, because the surveyused a Western research approach with a Chi-nese questionnaire. We can also consider theeconomic success of the five Dragons a caseof cultural synergy, since it was based on theexploitation of technology originally devel-oped in the West according to Eastern princi-ples. Although there is no patent for develop-ing cultural synergy, managers can be helpedto recognize local cultural patterns. This op-portunity may help them overcome the ideathat the cultural choices of their own countryare necessarily superior to those of othercountries. Such an attitude is a luxury thatthe management of a multinational corpora-tion can no longer afford.

SELECTED BIBLIOGRAPHY

Herman Kahn has formulated the neo-Confucianhypothesis in his book World Economic Develop-ment: 1979 and Beyond (Croom Helm, 1979). Onthe failure of economics to predict or explain thedevelopment of the Five Dragons, we recommendan article by George L. Hicks and S. Gordon Red-ding, 'The Story of the East Asian 'Economic Mira-cle' " {Euro-Asian Business Review), Issues 3 and 4,1983). Michael Harris Bond is the editor of a recentbook entitled The Psycholog]/ of the Chinese Peo-ple (Oxford University Press, 1986), which con-tains discussions of and references to the psycho-logical aspects of Confucianism.

Geert Hofstede's description of the IBMstudies can be found in his book Culture's Co)isc-quences (Sage Publications, 1984). Hofstede is alsothe author of a relevant article, "The Cultural Rela-tivity of Organizational Practices and Theories"(]oumal of International Business Studies, Fall1983). The four dimensions associated with the

IBM studies were first described in the same au-thor's article "Motivation, Leadership, and Organi-zation: Do American Theories Apply Abroad?"(Organizational Dynamics, Summer 1980).

Geert Hofstede and Michael Harris Bondcompared the IBM studies with the modifiedRokeach Value Study in their article "Hofstede'sCulture Dimensions: An Independent ValidationUsing Rokeach's Value Survey" (Journal of Cross-Cukural Psychology. December 1984). Bond wasalso a member of "The Chinese Culture Connec-tion, " the group of authors of an article on the Chi-nese Value Survey entitled "Chinese Values and theSearch for Cuiture-Free Dimensions of Culture"Uouma) of Cross-Cultural Psychology, June 1987).

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