Hofstede's National Culture as a Guide for Sales Practices Across ...

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Hofstede’s National Culture as a Guide for Sales
Practices Across Countries: The Case of a MNC’s
Sales Practices in Australia and New Zealand
by
William H. Murphy†
Abstract:
When the multinational considers the global strategic sales effort, the
temptation is to aggregate practices across seemingly similar countries. While
this eases administration, it can lead to sub-optimal local practice. This
research focuses on the attitudes of a multinational’s sales forces in Australia
and New Zealand toward the various practices that are used to train, coach,
and motivate the sales force. Scores on Hofstede’s national culture dimensions,
along with other criteria, suggest similarities between the countries that could
lead to the expectation that similar practices will have similar effectiveness in
each of the countries. However, the findings suggest that the multinational still
needs to customise practices in distinct aspects of the sales system. The findings
lend credence to the claim that sales practices need to be adapted to local
needs—despite potential temptations for transferring practices across
(seemingly) like countries.
Keywords:
SALES MANAGEMENT, GLOBAL, MNC, NATIONAL CULTURE

†
Babson College, Babson Park, Massachusetts 02457 USA.
The author thanks the Babson College Board of Research for providing funding so that this research could be
pursued. He also thanks the faculty of the University of Auckland for their encouragement and insights and
management of both the Australian and New Zealand subsidiaries of the participating multinational. He also
thanks the reviewers and editor for their helpful guidance in the development of this manuscript.
Australian Journal of Management, Vol. 24, No. 1, June 1999, © The Australian Graduate School of Management
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1.
Introduction
s Hunt and Morgan (1995) attest, “competition is the constant struggle
among firms for a comparative advantage in resources that will yield a
A marketplace position of competitive advantage and, thereby, superior
financial performance” (p. 13). While pursuing this advantage in subsidiary
countries, a key issue for multinational corporations (MNC’s) is the conduct of the
sales effort. At every stage of the MNC’s drive to grow in served markets, sales
practices should be chosen that give the MNC comparative advantage vis-à-vis
competitors.
MNC’s have a number of considerations in working to give the foreign sales
effort comparative advantage. One consideration is the extent that home office
management should be “hands on” in managing this effort as opposed to giving
room for local management to make key decisions. Another is the extent that sales
practices that are effective in a given country should be transferred to other
countries. The motivation for transferring practices is clear—a history of success
with particular practices grows confidence in the use of similar practices in new
markets. Further, continuity of practices across countries provides ease of
administration for the MNC’s management team. Still, with the goal of heightening
sales force productivity in each country, management should not assume that
practices can be successfully transferred. Thus, a challenge facing the MNC is how
to determine best practices and across which countries the transfer of practices
should take place.
The seminal work on national culture of Geert Hofstede suggests strongly
that decisions regarding organisational practices should be made on the basis of
scores for a country across four national culture dimensions (power distance,
uncertainty avoidance, individualism–collectivism, masculinity–femininity). The
knowledge that all people are culturally conditioned (e.g. Hofstede 1980a) and
that culture affects how salespeople in subsidiary countries respond to sales
practices provides home office management with appropriate caution in
developing sales practices across its domain. It also suggests that knowledge of
the cultural similarities and dissimilarities across countries provides an awareness
of where sales practices can be effectively transferred.
After 30 years of development and use, Hofstede’s national culture
dimensions are familiar to many in academia, consulting, and management,
providing guidance for understanding differences in the “collective mental
programming of people” (Hofstede 1980b) and for determining organisational
structure and managerial practices.1 In this manuscript I extend the application of
these dimensions to hypothesise effective sales practices dependent on country
scores on these dimensions. Further, I empirically test the notion that a MNC can
confidently use scores on the dimensions to determine whether transfer of sales
practices across subsidiary countries will be effective.
With the enthusiastic cooperation of a MNC, sales groups in two countries
were chosen for this research, Australia and New Zealand. These countries have
considerable similarity across the national culture dimensions (both have moderate

1.
Clearly, Hofstede offers but one framework that allows MNC management to cluster countries according
to national culture. Numerous other cultural clustering efforts have been undertaken as a means to guide
MNC managers in selecting practices and communicating with subsidiary personnel (see Ronen (1986)
for review and synthesis).
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scores on uncertainty avoidance and masculinity, somewhat low power distance,
and high individualism). In addition, they have geographic and psychic closeness,
characteristics also thought associated with successful transfer of practices (e.g.
Hill, Still & Boya 1991). As suggested by these similarities, the MNC uses very
similar practices across these countries but had been doing so without an
examination as to whether these practices were leading to desired outcomes in
each country. That is, while the MNC management group understood that they
were meeting financial goals in these countries, they also wanted to know
whether they were using practices that engendered positive attitudes from their
sales groups (i.e. perceived effectiveness of sales supervisors, satisfaction,
commitment).
I begin with a discussion of the issues faced by firms when determining sales
practices in foreign markets. This is accompanied by a discussion of why an
understanding of culture is crucial to successful sales management practice across
countries. With Hofstede’s national culture dimensions as the orientation,
expectations are given for effective sales practices. I then introduce the study,
discussing the data collection procedure, characteristics of the sample, and
methods. Then, the results of the study are discussed, providing insight into the
strengths and possible limitations of Hofstede’s dimensions, along with ideas for
effective sales management practices in Australia and New Zealand.
Allowing for the exploratory nature of the study and my focus on a single
MNC (while controlling for company culture, sample size and representativeness
were concerns), the findings suggest that sales practices should be customised
across even similar countries. As this implies, Hofstede’s national culture
dimensions may need to be used with a degree of caution when determining sales
practices between countries.
2.
Issues in Foreign Market Sales Practices
As suggested above, in seeking to gain comparative advantage over rivals (Hunt
& Morgan 1995), MNC’s strive to design organisational practices that gain
desired goals, including financial (e.g. sales, market share, profits), attitudinal (e.g.
employee satisfaction, commitment) and behavioral (e.g. employee effort, intent to
stay). As a starting point for the choice of practices, the MNC should decide the
degree of corporate influence on local sales management policies and issues.
Regarding these decisions, evidence suggests that the subsidiary should maintain
most of the decisions when (1) personal selling is a relatively minor part of the
promotion mix; (2) ‘tradition’ drives markets; (3) underlying conditions include
intensive distribution and/or long sales channels; and (4) product synergies are
lacking. The decision also includes such concerns the often large differences in
market potential, the inability to gain similarly educated and/or skilled sales
personnel, effects on compensation system choices due to local legalities, rules,
customs, etc., and differences in human relations (Hill, Still & Boya 1991). As
suggested earlier, decisions regarding practices should ultimately be attentive to
national culture, the collective mental programming of the people in a country that
makes them distinct from the people of other countries (Hofstede 1980a).
After deciding on the degree of corporate influence, MNC’s still need to
determine preferred practices in subsidiary countries (even if simply to approve
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subsidiary decisions). To this end, MNC’s often have a high ranking official (such
as Asia-Pacific Vice President) assigned specific countries, usually within a
geographic region, and/or post officials from the home office to better familiarise
the MNC with subsidiary markets and to serve as mentors to subsidiary efforts.
Assigning responsibility on a regional basis can provide operational and logistic
synergies for the MNC, along with the opportunity to better discern whether sales
practices should be transferred between countries.
MNC’s are able to gain an appreciation of the kinds of sales practices that
might be suited for subsidiary countries through an increasing body of literature
including country/industry specific research and national culture research. For
instance, country specific research on sales practices includes the work by
Avlonitis, Manolis and Boyle (1985) who reported on sales practices in the United
Kingdom. Specifically, they focused on the manufacturing sector and examined
common practices used by manufacturers in such areas as selection criteria and
sources of recruitment as well as deployment, training, and compensation. Insights
from studies such as this provide direction for designing subsidiary sales practices.
Unfortunately, country/industry specific studies provide only a case by case
understanding of potentially effective practices; they do not transfer well across
countries.
The second source for guiding practice has been national culture research.
This has been a rich source for guidance, especially since MNC’s are increasingly
aware that universal managerial practices are often not successful across countries
(Popp & Davis 1986). National culture research has added relevance today, with
increasing numbers of companies involved in the global market. Clearly, a
consciousness to cultural differences allows firms to adapt appropriately and to
improve communication between executives of different cultures (Tse, Lee,
Vertinsky & Wehrung 1988) and the MNC can better determine best practices by
understanding the culturally determined perceptions and attitudes of people in
these markets.
A study of US, Japanese, and Korean electronics industry salespeople
illustrates the importance of understanding cultural differences (Dubinsky, Kotabe,
Lim & Michaels 1994). Across these countries, differences in expectancy,
instrumentality, and valence toward awards were found—with implications for
training, coaching and rewarding salespeople. For instance, lower expectancy
estimates in Japan and Korea led to the observation that, “...special attention
needs to be focused on illuminating...where salespeople’s efforts should be
directed and how much effort is needed in those alternative tasks” (p. 182). As
this suggests, sensitivity to culture needs to be integrated into management
thinking. That is, knowledge of the culturally determined differences in
perceptions and attitudes that should be anticipated across countries is important
to developing successful sales practices.
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3.
National Culture
Culture has been referred to as:
…the whole set of social norms and responses that condition a population’s
behavior…culture is acquired and inculcated. It is the set of rules and behavior
patterns that an individual learns but does not inherit at birth…this
process…,called enculturation, conditions individuals so that a large proportion of
their behavior fits the requirements of their culture yet is determined below the
level of conscious thought. (Robock & Simmonds 1989, p. 408)
In essence, “what society has impressed upon the person forms the basis from
which individual characteristics grow, which in turn make an individual unique
among other members of society (Kolland 1990, p. 322). Thus, while differences
exist between individuals within a society (leading some to assert that multi-modal
personalities may more appropriately describe national character; e.g. Biervert
1975), the acquisition of culture creates a national character that represents the
enduring personality characteristics found in particular nation states (Clark 1990).
In what has become a classic study of cross-cultural difference, Hofstede
(1980a) surveyed the values and perceptions of respondents (the employees of a
MNC) across 53 countries. By examining between-country differences in values
and perceptions, four cultural dimensions emerged: power distance, uncertainty
avoidance, individualism (collectivism), and masculinity (femininity). Hofstede
suggests that differences in these dimensions between countries represent the
modal personality for the respective nations.
The dimensions are defined as follows (Hofstede 1991):
Power Distance. The extent to which the less powerful members of institutions
and organisations within a country expect and accept that power is distributed
unequally. (p. 28)
Uncertainty Avoidance. The extent to which the members of a culture feel
threatened by uncertain or unknown situations. (p. 113)
Individualism/Collectivism. Individualism pertains to societies in which the ties
between individuals are loose: everyone is expected to look after himself or herself
and his or her immediate family. Collectivism as its opposite pertains to societies in
which people from birth onwards are integrated into strong, cohesive groups,
which throughout people’s lifetime continue to protect them in exchange for
unquestioning loyalty. (p. 51)
Masculinity/Femininity. Masculinity pertains to societies in which social gender
roles are clearly distinct (i.e. men are supposed to be assertive, tough, and focused
on material success whereas women are supposed to be more modest, tender, and
concerned with the quality of life); femininity pertains to societies in which social
gender roles overlap (i.e. both men and women are supposed to be modest, tender,
and concerned with the quality of life). (pp. 82/83)
Hofstede’s work has received considerable attention, with numerous studies
providing validation of the dimensions and exploring theoretical and practical
contributions (Bochner 1994). In response to the relevance of the dimensions
today, Hofstede (1991) relates that even though scores within countries may
change (in particular, that power distance globally may be lowering), differences
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between countries remain. A challenge to the nation’ personality concept has
been the increasing cultural diversity within nations due to global population
shifts. However, within-country diversity has thus far proven to be a further
opportunity to validate Hofstede’s findings albeit in single, multi-cultural settings
(e.g. Bochner & Hesketh 1994). Agreed by all in the discussion is that by attuning
to country differences (in nation personality), the MNC can better determine the
practices that guide personnel toward high productivity. Each of the dimensions
and their implications for sales practice follow.
3.1 Power Distance
In societies with greater power distance personnel expect, and accept, that power
is distributed unequally (Hofstede & Bond 1988), leading to a tendency toward
submissiveness in superior-subordinate relationships. With these cultural
conditionings in place, subordinates in countries with high power distance tend to
be more submissive toward their superiors and, with regard to preferred
management styles, prefer a more autocratic/paternalistic superior (Hofstede
1980a). An implication of this preference is that “individuals from high power
distance countries would be more likely to subscribe to McGregor’s (1960)
Theory X, that people are inherently lazy and dislike work” (Bochner & Hesketh
1994, p, 236).
The conduct/character of effective superior-subordinate relationships in low
power distance countries may be quite different. In these countries, personnel
likely value equality, with a preference toward democratic processes. These
personnel may tend to prefer a decentralised management structure, particularly
since this structure would tend to be a sign that superiors trust them to perform
well (Nakata & Sivakumar 1996). Additionally, personnel in low power distance
countries view superiors as being similar to them and accessible (Hofstede 1980a).
Thus, the psychological ‘gap’ between supervisors and employees is expected to
be small, with salespeople in these countries likely valuing a close relationship to
their supervisors.
3.2 Uncertainty Avoidance
Societies with greater uncertainty avoidance tend to feel threatened by ambiguity.
Among other things, ambiguity is reduced through career stability and by
establishing more formal rules (Hofstede 1980a). With regards to sales practices, it
might be expected that salespeople in these societies would feel better about their
jobs under conditions where compensation is structured with a low at risk portion
(bonus/commission) and where behavior controls and outcome controls are in
place. These practices would provide a high degree of clarity regarding
performance expectations.
Meanwhile, in societies with low uncertainty avoidance, ambiguity is much
more tolerated and salespeople could be expected to work well under very
different conditions. For instance, salespeople in these countries could be
expected to have less apprehension about pay at risk. These salespeople would
have a greater tendency to appreciate the potential that pay at risk provides rather
than being disturbed by the uncertainty associated with this compensation
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structure. Also, these salespeople may tend to prefer fewer controls, particularly
behavior controls, thereby providing them with greater flexibility in determining
how to accomplish goals.
3.3 Individualism/Collectivism
Societies that are highly individualistic tend to focus on the “I”, desiring
autonomy and viewing their identity from the self rather than from organisations
to which they belong. This notion of self leads people in these societies to be more
independent and self-contained, valuing their independence (Bochner 1994).
Also, this orientation affects one’s psychological contract with the firm (Schein
1986), leading to a relationship that is calculative and utilitarian (Bochner &
Hesketh 1994).
Meanwhile, in societies that are collectivist, identity tends to be much more
connected to the organisation (social network). This orientation leads to valuing
membership and identification with networks to which one belongs. Further,
group processes and decisions are greatly valued and the desire is to help the
network (clan) succeed by pulling together toward the common purpose of
strengthening the group.
The implications of these thoughts for effective sales practices are numerous.
First, salespeople in collectivist nations, desiring to feel close to the group, seem
likely to prefer that their supervisor works with them frequently and that
communications between themselves and the firm are numerous. With these
practices in place, salespeople in highly collectivist nations could be expected to
have higher affective commitment to the firm and be more satisfied with their jobs
because these practices help them feel close to the group. Also, these salespeople
may be expected to prefer opportunities to work on teams, as well as having a
dislike of situations where they have to compete with their peers. In societies with
high individualism, the reverse could be expected. The focus on the “I” creates a
preference for autonomy and individual-based reward mechanisms, along with a
more calculative relationship to the firm.
3.4 Masculinity
Societies with high masculinity tend to admire qualities such as ambitiousness,
achievement, and assertiveness, with an understanding that performance is the
means to gain wealth and admiration (Hofstede 1980). In these societies, one
might expect individuals to strive aggressively to advance their careers, both by
performing well and by gaining recognition from their superiors. It also seems
possible that the ambitious striving for advancement might be associated with less
attentiveness to customer needs since short-term gains may be the mark of rapidly
advancing high performers.
Meanwhile, in societies with lower masculinity scores, more nurturing of
relationships can be expected, with a valuing of the interdependence of people.
Also, these societies are associated with a patience with the way things
are—motivation comes from a desiring to serve and work is viewed as a necessity
for living rather than the focus of life (Hofstede 1980a).
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To summarise this discussion, Hofstede’s national culture dimensions of
power distance, uncertainty avoidance, individualism, and masculinity can
provide insights for characteristics of effective sales practices. That is, for a firm to
gain desired outcomes (financial, as well as positive sales force attitudes and
behavior), sales practices may need to vary in ways identified by Hofstede’s
national culture dimensions. As part of this thesis, it can be expected that countries
with similar scores on the national culture dimensions can have similar sales
practices in place to gain similar outcomes from their salespeople. Next, I examine
this expectation by focusing on a MNC’s sales practices in Australia and New
Zealand.
4.
Australia and New Zealand
As suggested, Hofstede’s national culture dimensions may be effective for
discerning needed differences in sales practices between nations. For Australia
and New Zealand, Hofstede (1980a) found:
Power
Uncertainty
Individualism
Masculinity
Distance
Avoidance
Australia
36
51
90
61
New Zealand
22
49
79
58
Range of Scores for
50 Countries in IBM
11–104
8–112
6–91
5–95
Study
As this indicates, Australia and New Zealand are in close proximity for each of the
dimensions, with differences that might be meaningful only for power distance and
for individualism. Despite these differences, both exhibit low power distance,
moderate uncertainty avoidance, high individualism, and moderately high
masculinity. The suggestion from these scores is that their national cultures are
quite similar and that the MNC should be able to encourage similar sales practices
in both countries with expectations for similar outcomes (e.g. extent that desired
goals including financial, attitudinal, and behavioral are met).2 Next, I focus on the
sales practices used by a MNC in Australia and New Zealand and examine the
extent that sales practices between the two countries are similar. I then focus on
the attitudinal outcomes of the system and discuss whether these outcomes would
have been anticipated according to the expectations for effective practices
discussed above.

2.
The similarities between these countries occur on other dimensions as well. For instance, though
dissimilar in land mass and population, Australia and New Zealand each represent relatively small
markets (19 million and 3.5 million respectively), are in geographic proximity, with similar market
development, and with an historic affiliation with Great Britain, similarly affecting their political and
legal climates.
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5.
Method
5.1 Sample Characteristics
The sampling frame consisted of salespeople from the Australia and New Zealand
sales forces of a US based MNC whose involvement in each country spanned
commercial, industrial, and health care products. The decision to include only one
company in the study had the advantage of controlling for company culture, with
the accompanying disadvantage of lack of power for analyses (small sample).
However, given the exploratory nature of this effort, the advantage of controlling
for company culture was compelling—it meant that differences between countries
could more readily be attributed to sales practice effects than if this were a multi-
company study (Hofstede 1980a).
For each country, management provided mailing lists, along with a
supportive letter (encouraging response and assuring anonymity). Three weeks
after the initial mailing a reminder letter was sent to the entire sample. This letter
stressed the importance of the study to the management groups involved and
again encouraged participation. After eight weeks there were 52 responses for the
Australian group and 23 for the New Zealand group, a response rate of 32 and 48
per cent respectively.
5.2 Survey Preparation
After discussing with management the intent of the research and gaining
agreement as to the particular sales practices to include in the study (components
of the system were selected based on their apparent relevance to Hofstede’s
dimensions discussed above), a survey was prepared. Then, management from
each country reviewed the survey. In some instances, revisions were requested
and changes were made. Between country differences in the finished survey were
minor, reflecting local (English) language variations. Then the surveys, along with
the management provided supportive letter, were mailed to salespeople, along with
postage paid return envelopes.
5.3 Survey
The first section of the survey contained self-report items related to the
respondent’s position. Sales system items included span of control,
communications received, frequency manager works with salesperson,
compensation structure, and special incentives. The second section included multi-
item measures of satisfaction, organisational commitment, and relationship to
supervisor. The third section included multi-item measures of behavior controls,
outcome controls and the respondent’s desire to stay in sales for their career. To
finish, the fourth section of the survey asked salespeople to respond to
demographic items.
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5.4 Respondent Demographics and Sales System
The demographics and sales system characteristics of the respondent groups are
shown in Table 1 and Table 2. As shown, the only demographic that is
significantly different between Australia and New Zealand is gender, with
Australia having a greater percentage of males in the respondent group (p < .05).
Similarities in the sales system include compensation structure (percent that is
salary/at risk), frequency that sales managers work with salespeople, and number
of communications sent to the sales force (Table 2). However, in New Zealand the
span of control of sales managers tends to be smaller (p < .05). Also, with regard to
control measures, in New Zealand salespeople are more likely to indicate that the
number of sales calls they make, as well as their sales performance are being
closely monitored (p < .05).
Table 1
Demographics
Australia
New Zealand
n = 48
n = 23
Position
NS
Trainee/Junior Level
8%
4%
Regular Level
25%
39%
Advanced Level
67%
52%
Years in Sales
NS
3 years or less
27%
53%
4 to 10 years
31%
30%
11 to 20 years
29%
13%
21 or more years
13%
4%
Age
NS
under 30
10%
26%
30 to 39
30%
30%
40 to 49
35%
17%
50 to 59
23%
22%
60 or older
2%
0%
Education
NS
Secondary
33%
4%
Some tertiary
28%
31%
Tertiary
25%
48%
Post Graduate
12%
9%
Gender
Male
90%
61%
A > NZ*
Note: p < .05
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