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IMR
24,2
164
Received April 2006
Revised October 2006
Accepted October 2006
International Marketing Review
Vol. 24 No. 2, 2007
pp. 164-180
q Emerald Group Publishing Limited
0265-1335
DOI 10.1108/02651330710741802
Are Hofstede’s and Schwartz’s
value frameworks congruent?
Siew Imm Ng, Julie Anne Lee and Geoffrey N. Soutar
Graduate School of Management, University of Western Australia,
Crawley, Australia
Abstract
Purpose – The purpose of this study is to propose an alternative basis for calculating cultural
distance scores using Schwartz’s cultural values.
Design/methodology/approach – Cultural distance scores were calculated for 23 countries, based
on the two most common measures of cultural difference (four cultural dimensions and Schwartz’s
1994 culture level values), following Kogut and Singh’s formula. Correlation analysis was used to
assess the congruency between these two bases of cultural distance. In addition, their relationship with
international trade figures was assessed, to understand how well each framework predicts the amount
of trade between countries.
Findings – Inter-country distances between 23 countries suggest that the two bases of cultural
distance were not congruent. While the correlation between both cultural distance measures and
international trade suggested a negative relationship, as expected, only cultural distance based on
Schwartz’s values was significantly related to international trade ( p , 0.05). It would appear that, at
least in a trade context, Schwartz’s values may play a more significant role than do Hofstede’s
dimensions.
Originality/value – To date, most cultural distance scores have been based on Hofstede’s cultural
dimensions. This paper provides the first analysis of cultural distance based on Schwartz’s country
level values. The paper shows that the two measures are not congruent and that, at least in the context
of trade, cultural distance measures based on Schwartz’s may be superior. Thus, researchers should
carefully consider which cultural base is most appropriate for use in their study.
Keywords Culture, International trade
Paper type Research paper
Introduction
National culture has long been recognized as important in explaining behaviour and
differences in national culture have been suggested as an important explanation of
people’s attitudes towards different countries. Indeed, aspects of national culture have
been related to many areas of organizational behaviour, such as foreign investment
decisions (Tahir and Larimo, 2004), entry mode decisions (Arora and Fosturi, 2000) and
research and development decisions (Muralidharan and Phatak, 1999), as well as
international consumer behaviour, including consumer innovativeness (Steenkamp
et al., 1999), impulsive buying (Kacen and Lee, 2002) and negotiation behaviour (Leung,
1988).
However, determining the influence of culture on behaviour is not easy, as culture is
a complex and broad construct that is difficult to accurately measure. In order to
This research was supported by an Australian Research Council Linkage Grant with Tourism
Western Australia.
simplify its operationalization and to allow at least some aspects of culture to be more Hofstede’s and
easily applied, researchers have suggested using cultural indices (Hofstede, 1980) or Schwartz’s value
individual level self reports (Rao and Schmidt, 1998; Wan et al., 2003). These cultural
indices have often been converted into cultural distance scores. Cultural distance frameworks
scores, measure the extent to which one country’s culture is similar to, or different
from, another country’s culture (Clark and Pugh, 2001; Shenkar, 2001). They have been
widely used in cross cultural research. Indeed, 90 articles were found in the Proquest 165
Online Database that mentioned cultural distance scores. Of these, 25 articles
calculated cultural distance scores using one of four methods (Table I). As can be seen
from Table I, 19 or approximately 75 per cent of the studies used an index that was
based on Hofstede’s (1980) dimensions, as operationalised by Kogut and Singh (1988).
Kogut and Singh’s (1988) cultural index is clearly the most popular approach to
measure cultural distance. The index is calculated as the arithmetic average of the
variance-corrected differences between Hofstede’s (1980) four cultural dimensions’
scores for the two countries of interest, as can be seen in equation (1):
X4
{ðI ij 2 I ia Þ2 =V i }
CDj ¼ ð1Þ
i¼1
n

where: CDj ¼ cultural difference between the ath and jth country; Iij ¼ jth country’s
score on the ith cultural dimension; Iia ¼ ath country’s score on the ith cultural
dimension; Vi ¼ variance of the ith dimension; n ¼ number of cultural dimensions.
The studies that used Hofstede’s (1980) dimensions to compute cultural distance
scores have not always found significant or expected relationships with variables of
interest (Shenkar, 2001; Elango, 2003; Kim, 2003). For instance, Shenkar (2001)
reviewed the influence of cultural distance on joint venture (JV) performance and found
inconsistent empirical results. Some studies reported that JVs with culturally distant
foreign partners were more likely to fail (Li and Guisinger, 1991), while others reported
the reverse (Park and Ungson, 1997). Similarly, Elango (2003) did not find the predicted
relationship between cultural distance and US reinsurance operations. In fact, Kim
(2003) found that a socio-cultural index predicted internet firms’ internationalization
processes better than cultural distance scores. As such, it may be argued that cultural
distance scores condense culture into a form that may be overly parsimonious. Indeed,
Hofstede’s dimensions, on which most cultural distance scores are based, have been
criticized as out of date and too condensed to capture culture (McSweeney, 2002;

Cultural distance measurement Frequency

1. Kogut and Singh’s (1988) cultural index, which is based on Hofstede’s (1980) four
cultural dimensionsa,b 19
2. Self-rating scales in which respondents rated the cultural differences between a home
and a number of target countriesc 4
3. Ronen and Shenkar’s (1985) nine cultural clusters, based on eight studies, including
Hofstede’s (1980) study, which describe work attitudes differences across countriesa,b 2
4. West and Graham’s (2004) Linguistic-based measure of cultural distancea 1 Table I.
Ways in which cultural
a b
Notes: Based on secondary data; one article used these two approaches, making the total 26 distance has been
although only 25 articles calculated cultural distance; cbased on primary data measured
IMR Shenkar, 2001; Smith et al., 2002) even before they are reduced into a single cultural
24,2 distance score.
However, it would be hasty to dismiss the use of cultural distance scores as they
have been found to be useful in many instances. For instance, expected and significant
relationships were found between cultural distance scores and an organization’s direct
foreign investment approach (Tahir and Larimo, 2004), a subsidiary’s attachment to its
166 parent company (Luo, 2001) and an organization’s foreign acquisition performance
(Morosini et al., 1998). Thus, it may be that there are specific contexts in which cultural
distance scores based on Hofstede’s dimensions are appropriate and other contexts in
which other forms of cultural distance may be more appropriate. As such, it is worth
examining alternative ways to operationalise culture.
One alternative that has not been previously suggested is the use of Schwartz’s
(1992, 1994) cultural values framework as a basis from which to calculate cultural
distance. Schwartz (1994) suggested seven cultural domains based on universal human
value types. Schwartz’s value dimensions offer several potential advantages compared
to Hofstede’s dimensions (Schwartz, 1994), namely:
.
Schwartz’s values are theoretically derived.
.
They are more comprehensive sets of value dimensions.
.
They have been tested with more recent data (collected between 1988 and 1992)
with two matched samples (student and teacher samples).
.
The samples were obtained from more diverse regions, including socialist
countries (e.g. former Eastern European bloc countries).

Schwartz’s value dimensions, which he argues include Hofstede’s dimensions

(Schwartz, 1994), offer an alternative way to compute cultural distance that may be
more appropriate in some contexts. For instance, Jackson (2001) argued that Hofstede’s
individualism dimension is oversimplified and suggested that Schwartz’s egalitarian
dimension might be more appropriate in explaining the ethical attributions in countries
classified as more individualist.
In order to investigate the usefulness of Schwartz’s cultural distance scores, it is
necessary to understand the underlying dimensions of both frameworks. If the
frameworks shared the same underlying dimensions, findings should be the same. If
this is so, Schwartz’s (1994) cultural distance scores would provide no added
advantage. On the other hand, if there are differences in the underlying dimensions,
researchers need to be cautious when selecting a cultural base upon which to calculate
cultural distance. The purpose of the present study is to look at this issue by examining
the congruency, or lack of congruency, between Hofstede’s (1980) and Schwartz’s
(1994) cultural frameworks by:
.
Reviewing the theoretical background of the frameworks and examining any
overlap between them.
.
Assessing the similarity or dissimilarity of the underlying dimensions
quantitatively.
.
Testing the appropriateness of the two cultural frameworks in predicting trade
between countries.
A comparison of the two frameworks Hofstede’s and
Both Hofstede (1980) and Schwartz (1994) attempted to identify national cultural Schwartz’s value
dimensions that could be used to compare cultures. Hofstede derived his framework
empirically, while Schwartz developed his framework theoretically. Both scholars frameworks
have empirically examined their frameworks using large-scale multi-country samples.
They found greater cultural differences between countries than within countries,
suggesting the frameworks could be used to compare countries. 167
Hofstede’s (1980) original research focused on IBM employees in 72 nations and two
period of time (1967-1969 and 1971-1973). However, only data from the 40 nations with
reasonable sample sizes were used to develop the cultural framework reported in his
original book (Hofstede, 1980). Schwartz’s (1992, 1994) original research focused on
teacher and student samples in 38 nations that included 41 cultural groups, collected
between 1988 and 1992. Each of the frameworks is described in the following sections.

Hofstede’s framework
More than 50 years ago, Kluckhohn (1951) noted that cultures shape and influence
individuals and provide distinct answers to the same questions. This insight inspired
Hofstede (1980) to search for cultural solutions to organizational problems. He collected
responses to 32 values statements from more than 117,000 IBM employees in 40 nations
between 1967 and 1969. The following four cultural dimensions were derived from this
data (Hofstede, 1983) and remain at the heart of much cultural research:
(1) Power distance. The extent to which people accept that power in institutions
and organizations is distributed unequally.
(2) Uncertainty avoidance. The extent to which people feel uncomfortable with
uncertainty and ambiguity.
(3) Individualism. A preference for a loosely knit social framework in which
individuals take care of themselves and their immediate families. Collectivism is
the alternative and is a preference for a tightly knit social framework in which
individuals expect relatives, clan, or other in-group to look after them, in
exchange for loyalty.
(4) Masculinity. A preference for achievement, heroism, assertiveness, and material
success rather than femininity, which is a preference for relationships, modesty,
caring for the weak, and quality of life.

Since, Hofstede’s framework was developed on the basis of a sample of IBM employees,
its generalisability to different data sets was important. Hofstede (1980) noted
approximately 90 significant and independent correlations of variables or indicators
with his four dimensions, including cross validations with different samples, country
GNP per capita and income inequality. To further validate the dimensions, Hofstede
(1983) replicated and extended his study to include a total of 50 nations, finding the
same dimensions. In a more comprehensive review of published articles using his
cultural dimensions, Hofstede (2001) noted 140 non-IBM data studies that validated his
cultural indexes. For example, Best and Williams (1998) found that an “individualistic”
psychological trait correlated significantly with Hofstede’s individualism index (0.41),
while Van Oudenhoven (2001) found that company bureaucracy correlated
significantly with power distance index (0.66) and uncertainty avoidance index (0.63).
IMR On the other hand, several researchers (McSweeney, 2002; Shenkar, 2001; Smith et al.,
24,2 2002) have criticized Hofstede’s dimensions as being derived from old data, lacking
generalisability and being too condensed to capture culture. Hofstede (2002, p. 1356)
responded to their criticisms by arguing that the IBM data were obtained from well
matched samples and that:
. . . the dimensions found are assumed to have centuries-old roots; only data which remained
168 stable across two subsequent surveys were maintained; and they have since been validated
against all kinds of external measurements; recent replications show no loss of validity.

Schwartz’s framework
Schwartz (1994, p. 88) defined human values as “desirable goals, varying in
importance, that serve as guiding principles in people’s lives” consistent with
definitions suggested by Kluckhohn (1951) and Rokeach (1973). Schwartz values are
based on needs derived from:
.
Individuals’ requirements as biological organisms.
.
Society’s requirement for coordinated social interaction.
.
Groups’ requirement for survival and support (Schwartz, 1992).

Schwartz’s value types were derived from a set of items “developed to measure
the content of individual values recognized across cultures” (Schwartz, 1994, p. 88).
Schwartz claimed that the items were close to an exhaustive set of etic cultural
dimensions and that Hofstede’s four dimensions were included within these
dimensions (Schwartz, 1994).
A total of 56 values items were developed and distributed to 87 teacher and student
samples from 41 cultural groups in 38 nations between 1988 and 1992. Respondents
were asked to rate the importance each value served as a guiding principle in their
lives. Since, individual values reflect an individuals’ unique experience (individual
level value), as well as normative cultural influence (cultural level value), they can be
analysed at individual and cultural levels (Schwartz, 1994).
At an individual level, sets of value priorities are said to reveal the trade-offs an
individual makes in order to pursue a particular value. That is, respondents emphasize
important values, while downplaying less important or opposing values. Using a
two-dimensional smallest space analysis, Schwartz (1992) found individual level
values are organized along two basic dimensions, which he termed conservation to
openness to change and self-transcendence to self-enhancement. Within these two
dimensions, ten individual values dimensions were identified that represented likely
conflicts and compatibility between values. These individual level value types are
described below (Schwartz and Bardi, 2001, p. 270):
(1) Power. Social status and prestige, control or dominance over people and resources.
(2) Achievement. Personal success through demonstrating competence according to
social standards.
(3) Hedonism. Pleasure and sensuous gratification for oneself.
(4) Stimulation. Excitement, novelty, and challenge in life.
(5) Self-direction. Independent thought and action – choosing, creating, exploring.
 (6) Universalism. Understanding, appreciation, tolerance, and protection for the Hofstede’s and
welfare of all people and for nature. Schwartz’s value
(7) Benevolence. Preservation and enhancement of the welfare of people with whom frameworks
one is in frequent personal contact.
(8) Tradition. Respect for, commitment to, and acceptance of the customs and ideas
that traditional culture or religion impose on the self.
169
(9) Conformity. Restraint of actions, inclinations, impulses likely to upset or harm
others and to violate social expectations or norms.
(10) Security. Safety, harmony, and stability of society, of relationships, and of self.

At a cultural level, the mean scores for each value are said to reveal the different solutions
that cultures might use to solve universal human problems (Schwartz, 1994). Since,
individuals and cultures use the values scale differently, Schwartz (1994) adjusted raw
score of each value dimensions for all countries. For instance, in calculating Chileans’ value
dimension, first, the mean for all respondents from Chile on all 57 items were computed,
say 4.5. Then it is compared to the international mean of 4. Since, it is 0.5 point higher then
international mean, all national raw score value dimensions of Chilean are subtracted with
0.5 point. Only 45 of the value items were found to have consistent meanings across
cultures at the individual level and, thus, only these 45 items were used in national level
analysis (Schwartz, 1994). Schwartz (1994) used multidimensional scaling procedures to
examine the intercorrelations between the values dimensions and found seven culture
level value types, which were summarized into three dimensions, namely:
(1) Embededness versus autonomy.
(2) Hierarchy versus egalitarianism.
(3) Mastery versus harmony (Schwartz, 1999).

Following are the seven culture level value types as they were defined and labelled by
Schwartz (1994):
(1) Conservatism. A society that emphasizes close-knit harmonious relations, the
maintenance of status-quo and avoids actions that disturb traditional order.
(2) Intellectual autonomy. A society that recognizes individuals as autonomous
entities who are entitled to pursue their own intellectual interests and desires.
(3) Affective autonomy. A society that recognizes individuals as autonomous entities
who are entitled to pursue their stimulation and hedonism interests and desires.
(4) Hierarchy. A society that emphasizes the legitimacy of hierarchical roles and
resource allocation.
(5) Mastery. A society that emphasizes active mastery of the social environment
and individual’s rights to get ahead of other people.
(6) Egalitarian commitment. A society that emphasizes the transcendence of
selfless interests.
(7) Harmony. A society that emphasizes harmony with nature.

In order to test the generalizability of the cultural framework Schwartz calculated

national value scores for the seven cultural value types using student samples from
IMR 26 nations and urban adult samples from seven nations. The results obtained were
24,2 consistent when cross validated against each other. In an effort to further validate the
cultural level value types, Schwartz (1999) extended his data to include more than
35,000 respondents from 122 samples in 49 nations and reported a consistent structure
for the seven culture level value types. Further, when the 49 nations were clustered
(based on absolute differences of all seven value types) separately for teacher and
170 student samples, very similar clusters of countries were obtained. He concluded that
the seven value types “efficiently captures the relations among national cultures”
(Schwartz, 1999, p. 38).
Subsequent studies have examined the relationships between the culture level value
types and such variables as specific sources of guidance on which managers rely
(Smith et al., 2002). Interestingly, Smith et al. (2002) examined the relationship between
reliance on sources of guidance and both Hofstede’s and Schwartz culture level
dimensions among others. For instance, they found that reliance on vertical sources of
guidance was associated with Hofstede’s collectivism, power distance and masculinity,
and also with Schwartz’s embeddedness, hierarchy and mastery. When the values were
regressed on a verticality index the two values that contributed significantly to the
equation were Hofstede’s power distance and Schwartz’s mastery. Thus, at least in this
case Schwartz cultural values seem to both overlap and add to those of Hofstede’s
dimensions.

Correlations between Schwartz’s cultural domains and Hofstede’s cultural dimensions

There have been some efforts to assess the relationship between Schwartz’s and
Hofstede’s frameworks. Although Schwartz (1994, p. 117) argued that his value types
were different to Hofstede dimensions, as they were:
. . . based on different theoretical reasoning, different methods, a different set of nations,
different types of respondents, data from a later historical period, a more comprehensive set
of values, and value items screened to be reasonably equivalent in meaning across cultures.
He also suggested that his framework included Hofstede’s dimensions. Schwartz (1994)
reported that Hofstede’s individualism score was positively correlated ( p , 0.05) with
his affective autonomy (0.46), intellectual autonomy (0.53) and egalitarian (0.51)
dimensions, and was negatively correlated with conservatism (2 0.56) and hierarchy
(2 0.51). Hofstede’s power distance score was positively correlated with conservatism
(0.45) and negatively correlated with his affective autonomy (2 0.45) dimension.
Further, Hofstede’s uncertainty avoidance score was positively correlated with
harmony (0.43) and Hofstede’s masculinity score was positively correlated
with mastery (0.56).
Smith et al. (2002) also found significant correlations ( p , 0.05) between
Schwartz’s (1999) three higher order dimensions and Hofstede’s dimensions.
Hofstede’s individualism was positively correlated with Schwartz’s
autonomy-embeddedness (r ¼ 0.64) and egalitarianism-hierarchy (r ¼ 0.50)
dimensions. Hofstede’s power distance was negatively correlated with Schwartz’s
three dimensions (autonomy-embeddedness (r ¼ 2 0.52), egalitarianism-hierarchy
(r ¼ 2 0.41), and harmony-mastery (r ¼ 2 0.29)). Hofstede’s uncertainty avoidance
was positively correlated with Schwartz’s egalitarianism-hierarchy (r ¼ 0.29)
dimension.
 Steenkamp (2001) used factor analysis to assess possible overlap between the Hofstede’s and
dimensions included in the two cultural frameworks. Using value ratings from Schwartz’s value
the 24 countries included in both Hofstede’s (1980) and Schwartz’s (1994) studies,
Steenkamp (2001) found four dimensions, which he termed autonomy versus frameworks
collectivism, egalitarian versus hierarchy, mastery versus nurturance and uncertainty
avoidance. The first dimension was related to Schwartz’s intellectual autonomy (þ ),
affective autonomy (þ ) and conservatism (2 ) dimensions and Hofstede’s 171
individualism (þ ) and power distance (2 ) dimensions. The second factor was
related to Schwartz’s egalitarian (þ ), harmony (þ ) and hierarchy (2 ) dimensions.
The third factor was related to Schwartz’s mastery (þ ) dimension and Hofstede’s
masculinity (þ ) dimension. The fourth factor was related to Schwartz’s harmony (þ )
dimension and Hofstede’s uncertainty avoidance (þ ) dimension. As such, three of the
four factors were related to dimensions from both frameworks.
While the evidence presented above illustrates some overlap, there also appears to
be many differences between these two frameworks that warrant closer investigation.
The present study, which is discussed in the next section, was undertaken for this
purpose.

Method
A study was undertaken to examine potential similarities and differences between the
two frameworks. In order to do this the following analysis was undertaken:
.
Cultural distance scores were calculated between a set of countries for which
Hofstede and Schwartz data were available. In both cases, Kogut and Singh’s
(1988) formula was used to calculate the relevant scores for each of the
frameworks.
.
Relationship between the two frameworks was assessed using Australia (one of
the common countries) as the target country. A cultural distance index from
Australia to each of the other countries was calculated for each of the
frameworks and the correlation between the two cultural distance scores was
computed.
.
Overall, congruence between the two frameworks was assessed by comparing
the correlation between the two obtained sets of inter-country distances.

Publicly available national level information for both frameworks was available for
23 countries, which are listed in Hofstede (1980) and Schwartz (1994). These data were
used to compute the required cultural distance scores. As previously mentioned, most
past studies have used Kogut and Singh’s (1988) cultural distance index based on
Hofstede’s (1980) four dimensions but, to date, no one has calculated a cultural distance
index based on Schwartz’s seven culture level dimensions. Kogut and Singh (1988)
developed their cultural distance construct to provide a simple, standardized, tangible,
convenient quantitative tool to measure cultural differences between countries. Since,
the formula considers all of the dimensions’ differences in each framework, it enables a
comparison of overall similarity, or difference, between the frameworks.
Thus, using Australia as target country, cultural distance scores from Australia
were calculated using Hofstede’s (1980) and Schwartz’s (1994) indices basing on Kogut
and Singh’s (1980) formula (equation (1)). The results obtained are shown in Table II.
IMR
Hofstede (1980) Schwartz (1994)
24,2 Country Score Ranking Score Ranking

USA 0.02 1 0.25 2

New Zealand 0.16 2 0.47 5
Switzerland 0.27 3 2.89 22
172 West Germany 0.31 4 1.41 18
Italy 0.48 5 1.52 19
Finland 1.23 6 0.95 15
Israel 1.31 7 0.87 13
France 1.44 8 2.75 21
Spain 1.61 9 1.85 20
The Netherlands 1.69 10 0.50 6
Brazil 1.99 11 0.09 1
Denmark 2.11 12 1.09 17
Turkey 2.24 13 0.66 9
Hong Kong 2.39 14 0.60 7
Japan 2.49 15 0.60 8
Taiwan 2.64 16 0.41 3
Mexico 2.91 17 0.43 4
Thailand 2.92 18 0.94 14
Greece 3.06 19 1.00 16
Table II. Singapore 3.56 20 0.72 11
Cultural distance scores Portugal 3.78 21 0.69 10
measured from Australia Malaysia 4.19 22 0.73 12

The correlation between the two sets of cultural distance scores was 2 0.34. Although
this was not significant ( p . 0.10), it was surprising to find that the correlation was
negative as the scores were calculated using Kogut and Singh’s (1980) formula within
which a high score suggests a difference between countries and a low score suggests a
similarity between countries. Thus, the analysis suggests the two cultural frameworks
are not congruent.
As a further test of congruence, distance scores were calculated for each pair of
countries. Thus, a total of 253 scores were calculated (23 £ 22/2 pairs). The correlation
between these inter-country scores can be used as a measure of the congruence
between the two frameworks (Green and Rao, 1972). Again, the correlation was not
significant (r ¼ 0.05), suggesting that the two frameworks are not congruent and that,
despite Schwartz’s (1994) suggestion that Hofstede’s framework was contained within
his values model, they seem to produce different measures of cultural distance. This
suggests that researchers need to be careful when selecting a basis for cultural
distance. The next section examines the relationship between the two cultural distance
scores and international trade between countries.

The frameworks and trade

An analysis was undertaken to see which of the suggested cultural frameworks was a
better predictor of international trade between countries, as international business
researchers have suggested cultural distance negatively influence imports and exports
between countries. For example, Yu and Zietlow (1995) found cultural distance was a
significant indicator of bilateral trade in the Pacific Basin. Sharing a similar culture not
only led people in different countries to consume similar goods, but also reduced the Hofstede’s and
cost of doing business. Martinez-Zarzoso (2003) also found countries that shared a Schwartz’s value
common language traded much more, than countries speaking different languages.
Further, as Wong and Lamb (1983) noted, similarities in cultural and belief systems frameworks
were likely to foster positive country of origin images, thus increasing trade. In short,
there should be a negative relationship between cultural distance and trade volume.
Secondary trade data were obtained for four of the countries included in the 23 for 173
which data were available for both the Hofstede and the Schwartz frameworks
(Malaysia, Hong Kong, Mexico and Thailand). Total imports and exports between
these four countries and the other 22 countries were extracted from International Trade
Statistic World Trade Organization (2003) and are shown in columns two and three of
the Appendix. Since, import and export data of each country was reported only for
principal trading partners, any of the 22 countries not reported as principal import or
export partners were assumed to have insignificant trading volume, and were coded as
zero. The cultural distances between each pair of countries were also calculated for
each of the two cultural frameworks and these scores are shown in columns four and
five of the Appendix.
Given the very wide variation in the trade data (varying from 0 to 127,821
million US$ for imports and 0-140,685 million US$ for exports), the relationship
between the cultural distance measures and the trade figures was determined by
computing Spearman’s rank correlation. In both cases, the correlation was negative
for exports and imports, as would be expected, despite the lack of congruency
between the two frameworks. That is, the greater the cultural distance between
two countries, the less the trade between them. Interestingly, however, the
correlations between the cultural distance scores based on Hofstede’s dimensions
and exports and imports (2 0.04 and 2 0.14, respectively) were not significant,
while the correlations between the cultural distance scores based on Schwartz
cultural values and exports and imports (2 0.24 and 2 0.28, respectively) were
both significant ( p , 0.05). Thus, it would appear that, at least in a trade context,
Schwartz’s values may play a more significant role.

Conclusions
Past research has suggested that cultural distance scores based on Hofstede’s
dimensions do not always find significant or expected relationships with variables of
interest. This study proposed an alternative way of calculating cultural distance scores
based on Schwartz’s cultural values. Using Kogut and Singh’s (1988) formula, cultural
distance scores based on both Hofstede’s and Schwartz’s frameworks were calculated
and an analysis was conducted to assess the congruency between both frameworks.
Results suggested that the two frameworks were not congruent.
An analysis of trade statistics was also undertaken to see how well cultural distance
scores based on each framework predicted the amount of trade between countries.
In both cases, the correlation between the cultural distance scores based on Hofstede’s
and Schwartz’s was negative for exports and imports, as was expected, although the
correlations were not significant for the scores based on Hofstede’s dimensions
( p . 0.05). That is, the greater the cultural distance between two countries (based on
Schwartz’s culture level dimensions), the less the trade between them. It would appear
that, at least in a trade context, Schwartz’s values play a more significant role.
IMR Discussion and implications
24,2 Previous research suggests that Schwartz’s cultural values capture more aspects of
culture than those of Hofstede’s (Kagitcibasi, 1997; Schwartz and Ros, 1995;
Steenkamp, 2001). For instance, Schwartz and Ros (1995) found that Western European
countries and the USA, categorized as individualistic cultures according to Hofstede
(1980), were significantly different on six of Schwartz’s (1994) seven cultural values.
174 Thus, Schwartz’s values may have the potential to explain greater cultural variation
than Hofstede’s values.
While there is overlap between Schwartz and Hofstede’s values, Steenkamp (2001)
found that Schwartz values included elements of culture that are not captured by
Hofstede’s values. Specifically, Steenkamp (2001) factor analysed Hofstede’s (1980) and
Schwartz’s (1994) dimensions and found four factors, of which three were related to
both Hofstede’s and Schwartz’s dimensions. However, one factor, egalitarianism
versus hierarchy was only comprised of Schwartz’s dimensions. This additional factor
represented how people within a society consider the interests of others and how they
coordinate with them. This factor was negatively related to Schwartz’s hierarchy and
positively to egalitarianism and harmony values. Specifically, egalitarianism suggests
a society that emphasizes the transcendence of selfless interest to promote the welfare
of others. Harmony suggests a society that emphasizes harmony with nature.
Hierarchy suggests a society that emphasizes the legitimacy of unequal distribution of
power, roles and resources. These dimensions appear to have elements that are not
captured by Hofstede’s dimensions.
The congruence of these values is likely to influence trade. For example, Breet and
Okumura (1998) used Schwartz’s six items to measure individualism versus
collectivism and seven items to measure hierarchy versus egalitarian finding that an
incompatibility of these values was related to intercultural negotiation failure between
USA and Japanese firms. This suggests that Schwartz’s additional dimensions of
hierarchy and egalitarianism add to the explanation of cultural differences between
countries.
It is also likely that the congruence of values, such as egalitarianism will influence
other marketing activities, such as the type of products society values. For instance,
products with harmful side effects to society (e.g. cigarettes) may have more barriers
imposed by countries high on egalitarianism and products which promote the
preservation of harmony with nature (e.g. bicycles) may be more strongly encouraged
by countries high on harmony. This would be an interesting avenue for future
research.
Researchers intending to use cultural distance as an explanatory variable should
carefully examine the basis or underlying dimensions behind their calculation, in order
to capture the relevant differences. They should not only review Schwartz and
Hofstede’s dimension as potential bases, but also other cultural dimensions, including
the following dimensions:
.
High context versus low context communication and polychronic versus
monochronic time dimensions (Hall, 1976).
.
Affectivity versus affective neutrality, self versus collectivity orientation,
universalism versus particularism, ascription versus achievement and specificity
versus diffuseness (Parsons and Shils, 1951).
 .
Human nature (good-bad), human position towards nature (subjugation-mastery), Hofstede’s and
time (past-future), activity (being-doing) and relational (linearity-individualism) Schwartz’s value
(Kluckhon and Strodbeck, 1961).
. The cultural dimensions identified by GLOBE projects of uncertainty avoidance,
frameworks
power distance, societal collectivism, in-group collectivism, gender egalitarian,
assertiveness, future orientation, performance orientation and humane
orientation (House et al., 2004). 175
.
Paternalism dimension which refer to the extent to which it is appropriate for
managers to take a personal involvement in the private lives of workers
(Dorfman and Howell, 1988).

As with all research, there are limitations to be considered in evaluating this study.
One potential limitation of the study relates to the sample representativeness. Hofstede
(1980) and Schwartz (1994) used respondents from different demographic
backgrounds, IBM employees for the former and teachers and students for the
latter. Thus, it could be argued that the frameworks are incomparable, although both
Hofstede and Schwartz stressed that the matched samples were used to control for
possible demographic effects, so that the resultant cultural scores reflect pure country
differences on cultural emphasis.
Second, with only 23 common countries (with published country ratings available
for both frameworks) used in this study, we could not fully test Schwartz’s and
Hofstede’s frameworks which were originally developed based on 38 and 50 nations,
respectively. Nevertheless, we provide an empirical example that supports the
differential use of these frameworks in predicting trade between countries.
Third, although Kogut and Singh’s (1988) formula was selected for use in this study
to reflect a simple, standardardised, tangible, and quantitative way to compare culture,
the adoption of this formula in calculating a single cultural distance score is debatable.
For instance, Hofstede (1989) warned that the cultural dimensions are not linearly
additive, as certain dimensions can be more or less important in a specific context.
Further, Holden (2004) stressed that the concept of culture is complex and it is not
appropriate to compress it into just a few dimensions. In other words, a single score is
unlikely to be sufficient to represent the complexities of culture. Despite this,
researchers continue to use cultural distance scores and this research provides some
guidance for researchers who would otherwise use the commonly accepted basis of
Hofstede’s dimensions.
Finally, both Hofstede’s and Schwartz’s frameworks could be argued as obsolete,
given that their data were collected 34 and 14 years ago, respectively. During this
period, substantial modernisation has taken place in most of the surveyed countries.
It has been argued that there have been significant shifts in cultural values (Fernandez
et al., 1997; McDonagh, 1999). For instance, McDonagh (1999) claimed that
modernisation brings about an increase in individualism values. Consistently,
Ralston et al. (1999) found that new generation managers in China were more
individualistic and tend to work more independently compared to their predecessors.
The above limitations suggest a few areas for future research. First, future research
is needed to confirm our suggestions that Schwartz’s cultural distance score is more
appropriate for use in trade contexts. Second, research is needed to assess the contexts
in which one or other cultural basis may be more strongly related. For instance,
IMR Schwartz’s framework may be more appropriate than Hofstede’s for use in non-work
24,2 related contexts. Third, other cultural bases should be examined. For instance, the
cultural dimensions proposed by the GLOBE project (House et al., 2004) could be used
to calculate a single cultural distance score (using Kogut and Singh’s formula) based on
their published country ratings of these dimensions. Since, they claimed that their
cultural dimensions were more up-to-date and more methodologically sound than
176 either Hofstede’s or Schwartz’s frameworks (Husted, 2000), it would be interesting to
compare the resultant cultural distance measure. Fourth, future researchers are
encouraged to identify other measures of cultural distance (e.g. the linguistic distance
of West and Graham, 2004), in addition to Kogut and Singh’s method.

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Appendix Hofstede’s and
Schwartz’s value
Year 2001 (values in million US$) Import Export Hofstede distance Schwartz distance frameworks
Malaysia 1. Australia 1,564.1 2,052.1 4.19 0.73
2. Brazil 192.9 161.9 1.38 0.65
3. Denmark 0 0 5.70 3.16 179
4. Finland 0 0 3.82 2.93
5. France 1,142.6 947.2 2.56 5.57
6. Greece 0 0 3.53 2.54
7. Hong Kong 1,892.4 4,026 0.74 0.40
8. Israel 0 0 5.51 0.44
9. Italy 753.7 469.1 3.44 3.20
10. Japan 14,211.2 11,711.3 4.30 1.22
12. Mexico 0 0 1.45 1.26
13. The Netherlands 649.1 4,060.4 4.50 1.99
14. New Zealand 342.2 296.8 4.73 1.81
15. Portugal 0 0 3.11 2.26
16. Singapore 9,292 14,913 0.82 0.55
17. Spain 0 295.6 2.50 4.34
18. Switzerland 938 0 3.75 5.42
19. Taiwan (China) 3,804.5 3,821 1.62 0.51
20. Thailand 2,926.6 3,360 1.37 1.06
21. Turkey 0 366.9 1.84 1.11
22. USA 11,838.7 17,816 3.93 0.81
23. West Germany 2,743.1 2,043.7 3.69 3.74
Hong Kong 1. Australia 1,826.7 2,257.4 2.39 0.60
2. Brazil 555.3 627.8 1.05 0.36
3. Denmark 396 598.3 3.51 2.56
4. Finland 388.2 0 2.30 2.40
5. France 3,064.9 2,984.1 2.34 4.56
6. Greece 0 0 2.99 2.33
8. Israel 710.7 645.3 3.13 0.29
9. Italy 2,832.1 2,051.3 2.20 2.89
10. Japan 22,701.7 11,246.9 3.03 0.93
11. Malaysia 5,027.7 1,633.3 0.74 0.40
12. Mexico 0 1,156.2 1.39 1.34
13. The Netherlands 1,392.8 3,245.6 3.26 1.24
14. New Zealand 354.2 0 2.41 1.35
15. Portugal 0 0 2.90 1.78
16. Singapore 9,374.1 3,852.1 0.28 0.51
17. Spain 427.9 1,424.4 1.87 3.54
18. Switzerland 2,632.9 1,287.3 1.80 4.58
19. Taiwan/China 87,455.6 70,346.2 0.86 0.61
20. Thailand 3,509.5 1,897.9 0.93 0.96
21. Turkey 0 0 1.49 0.95
22. USA 13,483.2 42,367.3 2.24 0.55
23. West Germany 4,280.5 7,202.7 1.86 2.89
Mexico 1. Australia 376.7 0 2.91 0.43
2. Brazil 2,281.8 585.1 0.41 0.39
3. Denmark 0 0 6.39 1.67 Table AI.
4. Finland 0 0 3.23 1.30 Imports and exports for
(continued) the relevant countriesa
IMR Year 2001 (values in million US$) Import Export Hofstede distance Schwartz distance
24,2
5. France 1,952.2 378.1 1.25 3.38
6. Greece 0 0 0.73 0.96
7. Hong Kong 484.4 119.8 1.39 1.34
8. Israel 0 0 3.01 1.86
9. Italy 2,581.6 240.9 1.34 0.97
180 10. Japan 10,722 623.3 1.03 0.79
11. Malaysia 2,202.2 0 1.45 1.26
13. The Netherlands 511.6 512.1 4.54 1.00
14. New Zealand 0 0 3.30 1.00
15. Portugal 0 0 1.45 0.77
16. Singapore 1,684.2 242.2 2.71 1.43
17. Spain 2,090.4 1,259.6 1.02 1.93
18. Switzerland 858.6 457.7 1.96 3.00
19. Taiwan (China) 4,420 281.8 0.84 0.64
20. Thailand 660.5 0 1.24 1.65
21. Turkey 0 0 0.57 0.91
22. USA 127,821.3 140,685.7 2.91 0.79
23. West Germany 6,668 1,506.7 1.77 1.67
Thailand 1. Australia 1,383.1 1,358.7 2.92 0.94
2. Brazil 267.5 0 0.37 0.81
3. Denmark 0 0 3.19 3.28
4. Finland 403.7 0 1.28 2.62
5. France 932.5 853 1.28 4.68
6. Greece 0 0 1.46 3.02
7. Hong Kong 825 3,299.7 0.93 0.96
8. Israel 0 455.5 2.06 0.98
9. Italy 667.9 673.4 2.33 4.24
10. Japan 13,878.9 9,958.7 3.41 0.87
11. Malaysia 3,077.3 2,722.8 1.37 1.06
12. Mexico 0 0 1.24 1.65
13. The Netherlands 523.6 2,024.5 2.10 2.24
14. New Zealand 0 0 2.80 1.72
15. Portugal 0 0 0.70 3.00
16. Singapore 2,850.5 5,289.5 1.52 0.89
17. Spain 0 525.4 0.65 4.18
18. Switzerland 835 670.6 2.34 4.63
19. Taiwan (China) 3,715.8 2,863.3 0.12 0.47
21. Turkey 0 0 0.39 0.83
22. USA 7,184 13,248.2 2.97 1.31
23. West Germany 2,562.5 1,566.1 2.06 3.22
Table AI. Note: aTrade data extracted from International Trade Statistic World Trade Organization (2003)

Corresponding author
Julie Anne Lee can be contacted at: julie.lee@uwa.edu.au

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