Power distance is one of the eight cultural dimensions used to help understand characterizations that make up a culture. These dimensions can also be used to make comparisons between cultures. The GLOBE project sets out to do just that. According to Nothouse (2019), the primary purpose of the GLOBE project is to “increase our understanding of cross-cultural interactions and the impact of culture on leadership effectiveness” (p. 437). One of the measures the GLOBE project used is power distance which is a measure of the degree that members of a group “expect and agree that power should be shared unequally” (Northouse, 2019, p. 438). How does power distance impact leadership effectiveness and how can it inform about conflicts?

Power distance measures the various levels separating people based on various factors like wealth, power, or authority (Northouse, 2019, p. 437). One example is a company with a very formal organizational structure where you have workers, managers, middle managers, executives, and an executive board. The levels in this organization are created by authority and the acceptance that the members of that organization expect and agree that power should be shared unequally with the power distance in that organization. A fortune 500 company with a very formal organizational structure with many management levels would have high power distance meaning the members of the group accept that those above them in the organization have more power. A fortune 500 company with a strong union representing the worker levels with direct negotiations with leadership would likely have a lower power distance meaning there is less acceptance that upper management holds power unequally

Cultural differences have an impact on multinational companies which by their nature are made of people from many cultures with varying levels of power distance (Oudenhoven et al., 1998, p. 440). In business, cultural conflict can be productive or destructive requiring conflict management to influence behavior to resolve conflict (Oudenhoven et al., 1998, p. 443). For example, Denmark, a Nordic country, is low in power distance meaning they think power should be shared more equally and that decisions should be participative (Oudenhoven et al., 1998, p. 443). Regionally, the Nordic countries, also including Sweden and Finland, are a region cluster of low power distance, meaning those countries have similar views of power sharing (Northouse, 2019, p. 441-442). Oudenhoven et al. (1998) found that countries low in power distance, like Denmark, resulted in higher problem solving behavior with supervisors versus high power distance countries, like Spain, who show less problem solving behavior (p. 450). The level of sharing of ideas is tied to the view of status and acceptance that the highest paid person opinion (HiPPO) must be right. 

Figure 1: Power distance in Europe. (Hofstede, n.d.)

Low power distance countries prefer consultation between groups with different statuses with an overall low emotional distance between employees where employees often approach or even contradict those above them (Vegt et al., 2005, p. 1174). By contrast, high power distance countries prefer autocracies or majority rule when making decisions with trust issues for difference statues in power resulting in a less likelihood that opinions or alternative ideas will not be proposed (Vegt et al., 2005, p. 1174). In general, low power distance countries are more participative where ideas are expressed more freely than high power distance countries which rely on hierarchical decision structure and less sharing of ideas. Vegt et al. (2005) found that organizations with low power distance generated a higher innovation climate among members with high tenure and members with high skill levels (p. 2004). Conversely, high power distance organizations created less innovative climate with high tenure and high skilled employees (Vegt et al., 2005, p. 2004). 

Power distance can also be a factor in laws. Laws typically reflect the values of a society. Laws are the practices that most people in a society agree are common. Fereidouni and Tajaddini (2017) looked at landlord laws as compared to a country’s power distance and found that high power distance countries tended to have pro-landlord laws (p.634-635). In countries where hierarchy is favored and inequalities are accepted and expected, laws tend to favor those in power. For multinational companies, understanding a country’s power distance can give some insight into how laws affect the company and its workers.

Power distance is a measurement for understanding the degree to which people in a country or a company view inequality. For a multinational company, conflicts can occur when power distances mix at the cultural boundaries. Being aware of these cultural views of power is important for conflict resolution and for understanding local laws. Applying different management styles, like participative management for low power distance organizations, can reduce conflicts. Even identifying property investment and development can be affected by power distance. Power distance is a window into understanding how decision making can be influenced and how to handle potential conflicts where cultural boundaries mix.  

 

References

Fereidouni, H. G., & Tajaddini, R. (2017). Power distance and landlord-tenant practices across countries. International Journal of Housing Markets and Analysis, 10(5), 628-640. doi:http://dx.doi.org.ezaccess.libraries.psu.edu/10.1108/IJHMA-01-2017-0008

Hofstede, G. (n.d.). Dimension data matrix. Retrieved from https://geerthofstede.com/research-and-vsm/dimension-data-matrix/.

Northouse, P. G. (2019). Leadership (8th edition). SAGE Publications.

Van Der Vegt, G. S., Van De Vliert, E., & Huang, X. (2005). Location-level links between diversity and innovative climate depend on national power distance. Academy of Management Journal, 48(6), 1171-1182. https://doi.org/10.5465/AMJ.2005.19573116

Van Oudenhoven, J. P.,Mechelse, L., & De Dreu, C. K. W. (1998). Managerial conflict management in five european countries: The importance of power distance, uncertainty avoidance, and masculinity. Applied Psychology, 47(3), 439-456. https://doi.org/10.1080/026999498377935