An Exploratory Examination of the Influence of National Culture

on Gross-National Product Diffusion

Group 2Nandana Zubair

Irum Rehman

This study examines the direct influence of national culture on the cross-national diffusion of innovations.

The link between four dimensions of culture are discussed:◦ Individualism◦ Masculinity◦ Power distance◦ Long term orientation

Abstract

This article examines the influence of culture on the cross-national diffusion of innovations.

Diffusion patterns of new products and technologies provide international marketers with the critical understanding of how products are adopted by a society-an understanding of the degree to which a new product will be successful keeping in mind the effect of culture on the buying pattern of buyers.

Impetus for conducting this study

Firms are increasingly trying to expand their marketing efforts in pursuit of new sales opportunities in foreign countries. Thus, it has become important to determine how consumers in different countries may respond to new product introductions - this response varies from country to country.

A product may be rapidly accepted in one country but it may take substantially longer time to gain acceptance in the other country to prevent this marketers are required to have an insight which could enable them to study the diffusion patterns at cross national level.

Conceptual Development

Rogers (1983)- Product diffusion is the process by which a product innovation is communicated and accepted through certain channels among the members of societal system over time.

There have been many related studies conducted having focus several key issues:◦ Impact of macro level-country specific effects on

products diffusion◦ Interaction effects between two countries- “lead-lag”

time effect◦ Changes in effect over time – understanding of

diffusion at global level of analysis

Cross-National Product Diffusion

1. Takada and Jain’s (1991) study focused on the culture’s impact on the cross national diffusion of products, exploring the influence of high context verses low context aspects of culture.

◦ On their study a hypothesis was form that “the rate of diffusion is greater in countries that are characterized by a high context culture and homophilous communication. That culture was shown to influence diffusion was a significant contribution to the diffusion and culture literature”.

Cross National Diffusion and Culture

2. Helsen, Jedidi and DeSarbo (1993) evaluated national diffusion patterns with respect to country segmentation models. (3 consumer products in 10 European countries)

◦ They found little support for an association b/w diffusion based country segmentation and the high/low context cultural framework classification

3. Kumar, Ganesh and Echambadi (1998) attempted to replicate the studies. They concluded that although the culture does have an impact on the diffusion of products but there is limited evidence yet.

Continued..

Ganesh, Kumar and subramaniams study is of particular intrest to the current study because they operationalize the contrusct of cultural similarity using four of HOTSTEDE’S cultural dimensions◦ Power distance◦ Individualism◦ Uncertainty avoidance◦ Masculinity

Our current study is also based on these dimensions and their effect on the product diffusion.

Several diffusion studies indicate that consumers in different countries respond in different ways to the introduction of a new product.

1.Lindberg 1982- suggested that such disparities in the diffusion process are the result of differences in several variables including national economies, inflation, population and other macro- or socioeconomic factors- high standards of living are also associated with quick adoption rates

The Role of National Culture in Product Diffusion.

2. Helsen, Jedidi and DeSarbo (1993) Argue that macro level, socioeconomic variables alone do not fully explain differences in diffusion patterns of new product innovations across national boundaries.

3. Clark (1990) People of each country posses a “national character”, that is a specific and stable pattern of behavior and/or personality characteristics. (National differences between consumer populations should also exert some influence on the diffusion patterns of innovations)

Continued..

4. Hofstede (1991) supports the notion stating that countries are “a source of a considerable amount of common mental programming of their citizens.”

5. (With respect to adoption of innovations) Steenkamp, Hofstede and Wedel (1999) “consumers in some countries may be on average higher in innovativeness than consumers in other countries."

Continued..

There fore, National culture is fundamental

factor that distinguishes consumers of one country

from those of another.

Hall’s conceptualization of culture as a one-dimensional construct in which countries are grouped into two or sometimes three categories (i.e. high/low or high/medium/low context cultures) may be too board of a classification approach for a concept as complex as culture at least within the domain of empirically driven, cross-culture diffusion studies.

Our study however attempts to overcome this “broad stroke” approach to culture by employing Hofstede’s culture model.

Whether dimensional elements of a society culture offer additional explanation for the differences in diffusion patterns observed across countries

We also examine and discuss the relationship between national diffusion rates of technological innovations and Hofstede's five national culture dimensions.

HYPOTHESIS DEVELOPMENT

“culture is the collective programming of the mind when distinguishes the members of one group or category of people from another.”

These dimensions largely account for cross-cultural differences in people’s values, beliefs, and behavior patterns worldwide.

These dimensions as mentioned before are:◦ Uncertainty avoidance◦ Individualism-collectivism◦ Masculinity-femininity◦ Power distance◦ Long term orientation

Hofstede's Cultural dimensions

Uncertainty avoidance is “the extent to which members of a culture feel threatened by uncertain or unknown situations”

Cultures that are high in uncertainty avoidance possess an intolerance for anxiety toward uncertain or ambiguous situations thus members reduce their activities that provide desired predictability to their lives.

Culture that are low in uncertainty avoidance accept uncertainty and its inevitability: members wants variety in their lives.

Low uncertainty avoidance cultures are more prepared to give benefit of doubt to unknown situations, peoples, and ideas.

Uncertainty Avoidance

A technological product innovations functional attributes are both new and unproved compared with produces that have previously been introduced and used by consumers- “unknown entities”◦ High uncertainty avoidance culture may be un sure of

the benefits the innovation provides thus they may delay the purchase.

The uncertainty that is related to innovations should increase in high-uncertainty avoidance cultures whereas low uncertainty avoidance cultures more readily tolerate uncertainty have willingness to take risks.◦ High uncertainty avoidance- “what is different is

dangerous”◦ Low uncertainty avoidance- “what is different is curious”

H1: The culture dimensions of uncertainty

avoidance is negatively associated with the

diffusion rate of a technological product

innovation

Individualism–collectivism is related to the degree to which the interests of the group prevail over those of the individual.

Individualist cultures are characterized by loose ties among people and the expectation that people primarily take care ofthemselves and their immediate family.

Members of collectivist cultures are integrated into strong, cohesive groups that are characterized by loyalty and trust, as well asa focus on the extended family

Individualism-Collectivism

The two extremes of the individualism–collectivism continuum can be contrasted as the “we” society versus the “me” society

Communication in high-context cultures is such that much of a communication’s information resides in the context of the communication as opposed to the explicit spoken message.

In low-context cultures, the message is explicit in the spoken (or written) aspect of the communication

Continued..

“High context communication fits the collectivist society, and low context communication is typical of individualist cultures.”

Takada and Jain (1991) find that the diffusion rates in countries with high-context cultures are faster than the diffusion rates in countries with low-context cultures, thus providing an indication that the degree of individualism embraced by a society should have a negative association with the diffusion rate of a country.

The rate of diffusion of a product innovation is highly dependent on the communication process of the consumers.

The collectivist culture provides a communication context in which the acceptance of new product innovations is enhanced; the opposite phenomenon is true in an individualist culture.

H2: The cultural dimension of individualism is negativelyassociated with the diffusion rate of a technologicalproduct innovation.

Masculinity–femininity refers to traditional, stereotypical gender roles of society in which:◦ assertiveness and competitiveness define

masculinity ◦ nurturing, caring, and a focus on quality of life

distinguish femininity. In a masculine culture, these roles are clear

and distinct across male and female members, whereas in a feminine culture, both female and male members possess equivalent qualities of each role

Masculinity–Femininity

Hofstede (2001) observes that, in general, people in a masculine society believe that a person “lives to work,” whereas people in a feminine society more widely adopt a “work-to live” philosophy.

In masculine countries, “money and things are important.” Achievement is measured in terms of wealth and the

recognition that it buys. The materialistic, possession-oriented nature of masculine

cultures suggests that the acquisition of goods and, in particular, new products is valued in these societies. Thus, the adoption of new product innovations is more likely accelerated in such societies compared with the less materialistic, person oriented, quality-of-life emphasis of feminine societies.

Continued..

H3: The cultural dimension of masculinity is positively

associated with the diffusion rate of a technological

product innovation.

Power Distance

Measures the extent to which less powerful members of organizations accept the unequal distribution of power

It measures:◦ How far social inequalities are accepted by a

society

Power Distance

Low-Power Distance Culture:

• Inequality is considered an undesirable condition

• Powerful people should attempt to appear less powerful

• “Status symbol are FROWNED (sign of disapproval) upon”

High-Power Distance Culture:

• Powerful are entitled to privileges and aim to impress others

• Believes in Visible signs of status, “their status is enhanced by symbolic behavior which makes them look as powerful as possible”

Power Distance

Low-Power Distance Culture:

Attempt to minimize social inequality

High-Power Distance Culture:

Powerful people tend to preserve, if not increase, their power and should predisposed to acquiring new products to display their power and position

In countries high in power distance

Less powerful have dependence on those with power who influences the diffusion of innovations

Powerful members influences the less powerful member in purchase decisions in acquisition of new product innovations

Powerful

Treat

PowerfulWith respect & obedience

Citizens of…

Low-Power Distance

countries: Less confidence Often distrust the

press

High-Power Distance

countries: More confidence From the influence

of media◦ Take quick notice◦ Pay close attention◦ Place trust in new

product information• In turn, enhancing new product diffusion

rates in high-power-distance countries

Cont…

Low-Power Distance cultures:

More modest expectations on benefits of technology

High-Power Distance cultures:

Adoption of new product technological innovations is more rapid

H4: The cultural dimension of power distance is positively associated with the diffusion rate of a technological product innovation

Long-Term Orientation

Long-term Orientation

Persistence (perseverance)

Ordering relationships by status

Thrift Having a sense of

shame A steady progression

toward long-term goals

Short-term Orientation

Personal steadiness and stability-Protecting your ‘face’-Respect or tradition-Reciprocation of greetings, favors, and gifts

Expect quick results Experiences materialist

consumption pressures (overspending)

Related to culture’s orientation to the future

Long-term Orientation

Cultures emphasize savings and cautious use of resources

More comfortable with slow adaptation of tradition to a modern context

Short-term Orientation

Countries show a sensitivity to social trends in consumption

Have likening of adopting new product innovations ◦ Focus on status

obligations◦ Material acquisition

positions Accept new products

that enhances their social status

H5: The cultural dimension of long-term orientation is negatively associated with the diffusion rate of a technological product innovation.

Methodology:Scope Of Study Selected 7 technological innovations of high

purchase value Product penetration date obtained from 13

European countries because:◦ Have long history of developed capitalist markets

Tellis Stremersch Yin 2003

◦ Thus reliable data on product introductions are available for this region

Methodology:Scope Of Study Product penetration date obtained from 13

European countries because:◦ European countries have unique cultural identities◦ Providing variation across focal construct of

national culture We used penetration data to operationalize

the models and outline the culture at nation-state level, so using country as a substitute for culture for practical purposes

Methodology:Scope Of Study Hofstede (2001) argues that cultural data

should indeed be collected at the national level

Hofstede (1980) and Clark (1990) note that the country is a political entity

Methodology:Scope Of Study Use the effect of a key socioeconomic

aspect of a country’s economic infrastructure, real gross domestic product (GDP) per capita, as a control variable in this study (Lenar-towicz and Roth 1999)

Models

used the Mansfield model to measure the diffusion rate

Mansfield (1961) illustrates:◦ The growth over time in the number of consumers

who adopt an innovation should conform to a logistic function, an S-shaped growth curve, as follows (Blackman 1974):

whereFj(t) = the proportion of households in country j that adoptthe innovation by time t;aj = a constant that positions the curve of innovation incountry j on the time scale;bj = the growth rate coefficient of the innovation incountry j; andFj = the ultimate penetration that the innovation cancapture in country j in the long run, given by Maxt[Fj(t)] (Olshavsky 1980).

Results Tested the first four hypotheses using

hierarchical regression National culture dimensions of:

◦ Uncertainty avoidance (H1)◦ Individualism (H2)◦ Masculinity (H3)◦ Power distance(h4)

Discussion And Implication Prior research (e.g., Helsen, Jedidi, and

DeSarbo 1993; Kumar, Ganesh, and Echambadi 1998; Takada and Jain 1991; Tellefsen and Takada 1999) has found mixed results

We did not find an association between uncertainty avoidance and the rate of diffusion

Discussion And Implication

This study supports Takada and Jain’s (1991) theory, which predicts a slower diffusion rate for low-context cultures than for high-context cultures

individualism is negatively related to the diffusion rate

Hofstede (1991) states that Hall’s (1976; Hall and Hall 1987) low-context culture is closely related to an individualist culture

Discussion And Implication Masculinity had a positive association with

the diffusion of technological innovations supports Rogers’s (1983) observation of

traditional societies values compared with the more modern cultural types

Discussion And Implication results indicate negative relationship exists

between the cultural dimension of long-term orientation and the diffusion rate

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