Uncertainty Avoidance Dimension in Organizations

The aim of this report is to discuss the uncertainty avoidance dimension present in the organization. This particular dimension deals with the tolerance of the society for ambiguity and uncertainty (Frijns, Gilbert, Lehnert, & Tourani-Rad, 2013). This refers to the search for the ultimate truth in working in a situation. This also indicates to what extent the couture of a country programs builds the mentality of its members so that they can feel either comfortable or uncomfortable in the unstructured situations.

This issue is important for discussion as based on this the organisations operating in the global market get the best idea to understand the expectation of the employees in one hand and their style of working in the global market (Slawinski, Pinkse, Busch, & Banerjee, 2017). This uncertainty avoidance decides how much risks the employees or the market of a particular place can tolerate. This is the reason why uncertainty dimension based on the cultural theory of Hofstede is used to model the characters of the organisation. This manipulated the loyalty, rules and the power structure of the organisations.

This issue is important for gaining efficiency in cross cultural management as it mainly identifies the risk tolerance of the firms. The global companies like Woolworths when enters one particular market, need to follow the traditions and culture of that particular place otherwise conflicts arise and the firm fails to do business in that market (Chavis, 2012). Different culture has different planning method, creativity and politics which build the psychology of the people of that particular culture. The firms when enter the market actually try to grab that essence of the culture so that it can motivate the employees, attract the customers and form a dependable bond with the supply chain of that particular market.

In the decision-making procedure, proper understanding of the uncertainty avoidance is required otherwise the companies cannot properly utilise their workforce. To Broekhuizen, Giarratana and Torres (2017) the firms’ uncertainty avoidance dimension can affect the product innovation and brand trademark protection activities. The firms with higher uncertainty avoidance are less competitive in the product innovation and development phase but more competitive in the brand trademark protection stage and produce more durable brands (Broekhuizen, Giarratana, & Torres, 2017). Giebels et al. (2017) on the other hand examines how uncertainty avoidance manages the employees to tolerate the unknown or uncertain situations impacting on the communication alignment in the crisis negotiations. The data collected and interpreted by the researchers, reveals that the negotiators face issues while communicating with the other cultures and make decisions based on the positive alliance (Giebels, Oostinga, & Taylor, 2017). Proper understanding of how effectively the stakeholders will respond to the communication, the companies like Woolworths operating in the different culture can make decisions and implement rule and policies based on this (Zhang & Zhou, 2014).

Importance of Uncertainty Avoidance Dimension in Global Market

Frijns et al. (2013) examines that the role of the national culture has direct connection with the corporate takeover decisions. These authors argue on the managerial risk tolerance and decision making because higher the uncertainty avoidance, lower the risks. It is important because the corporations while entering a market make various decisions mainly related to the production, hiring, takeovers and employee creativity (Frijns, Gilbert, Lehnert, & Tourani-Rad, 2013). The firms cannot make decisions if feel threatened by the unknown situations and ambiguity. This is the reason why the corporations try to do business with the firms where the beliefs and institutions are prepared to avoid any type of risks.

Uncertainty refers to the state in which the conditions and outcome both remain unknown as well as unpredictable. Some employees and organisations remain more comfortable with the uncertainty with the others as this completely depends upon the national culture of the companies and people (Hwang & Lee, 2012). On the contrary the degree to which the people participate in the certain behaviours for staying in the comfortable situations is referred as uncertainty avoidance. Uncertainty avoidance reflects the extent to which the security intentionally embraces as well as avoids the unseen or unknown. The culture which has a high uncertainty avoidance dimension actually value risk taking mentality, ambiguity and limited structure (Broekhuizen, Giarratana, & Torres, 2017). The people from uncertainty avoiding culture tend to have a low tolerance capacity for the conflicts. These cultures value security over risks. The societies which have experience of military conflict, war, political instability and repression, possess the population with low uncertainty avoidance.

In this regard, the examples of high uncertainty avoidance in the organisations and their response to the day to day business can be elaborated. The organisational culture of Latin America, Germany and Japan are some examples which have high uncertainty avoidance factor in their operations and mentality (De Mooij, 2013). In this culture, the employees stay with the one organisation for longer period of time and the decisions are made by the consensus of all. In this organisational culture the job roles require higher level of expertise as well as creativity so that any type of uncertainty or issue does not emerge (Slawinski, Pinkse, Busch, & Banerjee, 2017). On the contrary, the low uncertainty avoidance is quite open to the new and creative ideas. This is the reason why there is an amplified readiness and willingness to take risks. The people in this particular organisational culture approach their projects from different angles as well as perspectives. They possess more flexible attitude to the deadlines (Giebels, Oostinga, & Taylor, 2017). The organisations possessing this outlook allow the employees to indulge in the informal activities and enjoy flexible rules to enhance the productivity and creativity of the firms. The countries like the United Kingdom, United States and Denmark follow these low levels of uncertainty avoidance (Minkov & Hofstede, 2014).

Impact of Uncertainty Avoidance on Decision-making and Risk Tolerance

The theories applied in roper understanding of uncertainty avoidance, the cross-cultural theory of Greet Hofstede and Edward Hall can be discussed. According to the cross-cultural theory of Hofstede, there are six dimensions based on which, the organisational culture of the firms in a market can be identified. This uncertainty avoidance dimension by Hofstede relates to the degree to which the individuals of one particular society or an organisation work comfortably with uncertainty as well as unknown situations (Minkov & Hofstede, 2014). To Hofstede, the countries that display a strong uncertainty avoidance index, behave as well as behave in the strict manner. The individuals in this particular culture avoid unconventional process of thinking as well as behaving. The weaker uncertainty avoidance index organisations show more acceptances with change and uncertain situation (Zhang & Zhou, 2014).

According to the cultural dimension theory of Greet Hofstede, there are numerous ways for detecting where the market has higher tolerance with the risks and uncertainties (Hwang & Lee, 2012). Typically, the usage of formalities in the interactions with other people, dependence on the formalised procedures, resistance of the change and the intolerant behaviour for the usage of untraditional processes are the chief characteristics of the high uncertainty avoidance. To this theory, the people with higher level of uncertainty avoidance factors, often afraid to accept those people who are different from them (Kong, 2013). For instance, the societies like Portugal, Greece and Guatemala have limited level of changes in themselves for which, the innovation in the social structure and administration along with business, the countries cannot change themselves hence come under economic problems like recession (Qu & Yang, 2015). The countries with low uncertainty avoidance have lower level of informality both in their communication as well as decision making process. This culture relies on the informal norms as well as behaviours in most of the matters. In addition to this, they also show moderate level of resistance to change. This type of societies of culture do not have any problem to interact or comfy others, different from them (Frijns, Gilbert, Lehnert, & Tourani-Rad, 2013).

In this regard, the theory of culture by Edward Hall can be associated. As mentioned by Hofstede, the communication system of the low uncertainty tolerant countries is more formal than the high uncertainty avoiding countries. To Hall, these cultures have similarities with the low context cultures where the members are outspoken and straightforward (Chavis, 2012). Each of their messages is simple to understand and clear. This low context cultures are more focussed on the verbal language so that any issue of ambiguity does not arise. The members react in a visible and outward manner (Kong, 2013). In this culture, the task has more importance than the relationships so that any conflict does not arise and create scope for uncertainty. Time in this culture is also given utmost importance so that any type of threat or risk does not arise in the firms.

Product Innovation and Brand Trademark Protection Activities

On the other hand, the cultures which are quite comfortable with taking risks mainly transmit their ideas through indirect and non-verbal ways (De Mooij, 2013). Most of the members in this particular context indulge in gestures as the means of expressing their own opinions. This is the reason why the possibility of risk arises if the listeners do not pay attention to the messages properly. On the other hand, the information passes among the members quite spontaneously and in a wide network hence the information flow works quickly among the members (Minkov & Hofstede, 2014). This is the reason why the organizations focus and analyse the culture of the market before they enter the market of the country. This helps the organizations to understand the expectations, style of working, values and traditions of the employees and other stakeholders.

The culture with low uncertainty avoidance has some features which can be seen in the communication, decisions and actions of its members. The culture follows its conventional ideas and believes on them solely (Minkov & Hofstede, 2014). The members of this type of culture are loyal to the established institutions for example, the customers of this culture show more loyalty to one brand for which they are loyal. As this culture does not allow any type of uncertainty, follow a strict systemization of predictable rules. The power structure of this couture is also different from the others (Chavis, 2012). This culture has power imbalance in the society where the subordinates cannot question the authorities. To avoid any type of anxiety, the culture clearly defines roles for each of the individuals.

From this above analysis it has been found that there are some features poses by both the cultures having high uncertainty avoidance as well as low uncertainty avoidance (Zhang & Zhou, 2014). From the theories of cultural dimension, some features of high uncertainty avoiding cultures have been understood. These include-

• Conservative, structured and rigid society with limited flexible attitude
• Numerous societal conventions
• People are energetic as well as expressive. They are allowed to display their emotions(Minkov & Hofstede, 2014).

In order to enter and operate in such a culture, the business organizations need to follow some very important measures which include-

• Being clear as well as concise regarding goals.
• Encouraging creativity
• Recognizing that there are numerous unspoken rules according to the cultural expectations
• Recognising the emotions of the members and understanding that showcasing of anger and hand gestures can be part of conversation.

On the contrary, the culture with low uncertainty avoidance shows the features like-

• Openness to innovation and changes
• Generally an inclusive society
• More inclined to the open ended learning as well as decision making
• Lesser sense of urgency

The business organisations operating in the low UAI societies need to follow some steps which include-

• Negotiation, collaboration and input from all the levels are grated to be the success factors
• Felicity in the workplace and balance between work and life is important for the members
• Proper utilisation of risk taking mentality is needed so that success rate heightens.

Both from the cultural dimension theory by Hofstede and cultural context theory by Hall, it can be understood that the global organisations if want to operate in the different markets in different countries need to have proper understanding of the organisational cultures of that region otherwise they will not be able to grab the attraction of the customers, build connection with the supply chain and result in the conflict among the local employees (Giebels, Oostinga, & Taylor, 2017).

High and Low Uncertainty Avoidance Cultures

Conclusion:

Therefore, it can be concluded that different companies situated in different part of the world have different culture and values. These cultures affect the operation of the organisations in the market. These also affect the understanding, decisions and actions of these companies which are quite different from the other. This is the reason why the organisations operating in all over the world needs to have proper information of that market before entering there. These described theories of UAI help to find various ways to mange to issue of uncertainty avoidance so that any type of issues regarding cultural mismatch can be avoided. This help them to understand the style of working of the employees thus mitigate any type of conflicts in the workplace. This also helps to negotiate with the supply chain of that region without the support of which the companies cannot do business successfully in that particular market. Uncertainty avoidance factor is associated with the risk-taking mentality of the societies based on which the international companies decide which way they must follow to operate successfully matching their needs which creates scope for further research on the effectiveness of the organizational culture. For some companies high UAI culture is needed and for the other, low UAI society. Hence to avoid loss, proper knowledge about this is mandatory.

References and Bibliography 

Brouthers, L. E., Marshall, V. B., & Keig, D. L. (2016). Solving the single-country sample problem in cultural distance studies. Journal of International Business Studies, 47(4), 471-479.

Broekhuizen, T. L., Giarratana, M. S., & Torres, A. (2017). Uncertainty avoidance and the exploration-exploitation trade-off. European Journal of Marketing , 51 (11/12), 2080-2100.

Chavis, A. M. (2012). Social learning theory and behavioral therapy: Considering human behaviors within the social and cultural context of individuals and families. Journal of Human Behavior in the Social Environment , 22 (1), 54-64.

de Bellis, E., Hildebrand, C., Ito, K., & Herrmann, A. (2015). Cross-national differences in uncertainty avoidance predict the effectiveness of mass customization across East Asia: a large-scale field investigation. Marketing Letters, 26(3), 309-320.

De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.

Frijns, B., Gilbert, A., Lehnert, T., & Tourani-Rad, A. (2013). Uncertainty avoidance, risk tolerance and corporate takeover decisions. Journal of Banking and Finance , 37 (7), 2457-2471.

Giebels, E., Oostinga, M. S., & Taylor, P. J. (2017). The cultural dimension of uncertainty avoidance impacts police-civilian interaction. Law and Human Behavior , 41 (1), 93-102.

Hwang, Y., & Lee, K. C. (2012). Investigating the moderating role of uncertainty avoidance cultural values on multidimensional online trust. Information & management , 49 (3-4), 171-176.

Kong, D. T. (2013). Examining a climatoeconomic contextualization of generalized social trust mediated by uncertainty avoidance. Journal of Cross-Cultural Psychology , 44 (4), 574-588.

Mazanec, J. A., Crotts, J. C., Gursoy, D., & Lu, L. (2015). Homogeneity versus heterogeneity of cultural values: An item-response theoretical approach applying Hofstede’s cultural dimensions in a single nation. Tourism Management, 48, 299-304.

Minkov, M., & Hofstede, G. (2014). A replication of Hofstede’s uncertainty avoidance dimension across nationally representative samples from Europe. International Journal of Cross Cultural Management , 14 (2), 161-171.

Qu, W. G., & Yang, Z. (2015). The effect of uncertainty avoidance and social trust on supply chain collaboration. Journal of Business Research , 68 (5), 911-918.

Slawinski, N., Pinkse, J., Busch, T., & Banerjee, S. B. (2017). The role of short-termism and uncertainty avoidance in organizational inaction on climate change: A multi-level framework. Business & Society , 56 (2), 253-282.

Vitell, S. J., King, R. A., Howie, K., Toti, J. F., Albert, L., Hidalgo, E. R., & Yacout, O. (2016). Spirituality, moral identity, and consumer ethics: A multi-cultural study. Journal of business ethics, 139(1), 147-160.

Yeo, B., Serenko, A., Palvia, P., Sato, O., Sasaki, H., Yu, J., & Guo, Y. (2018). Exploring Job Satisfaction of IT Workers in Taiwan, Japan, and China: The Role of Employee Demographics, Job Demographics, and Uncertainty Avoidance.

Zhang, X., & Zhou, J. (2014). Empowering leadership, uncertainty avoidance, trust, and employee creativity: Interaction and a mediating mechanism. Organizational Behavior and Human Decision Processes , 124 (4), 150-164.