Available via license: CC BY
Content may be subject to copyright.
Copyright © 2018, ISSN: 2407-5434; EISSN: 2407-7321 249
Accredited by Ministry of
RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship, Vol. 4 No. 3, September 2018
Permalink/DOI: http://dx.doi.org/10.17358/IJBE.4.3.249
Available online at http://journal.ipb.ac.id/index.php/ijbe
1 Corresponding author:
Email: sok.handoyo@unpad.ac.id
DOES NATIONAL cULTURE MATTER?
AN EXPLORATORy STUDy ON THE RELATIONSHIP Of NATIONAL
cOMPETITIVENESS AND NATIONAL cULTURE
Sok Handoyo*)1
*) Faculty of Economic and Business, Universitas Padjadjaran
Jl. Dipati Ukur 35, Bandung, 40132
Abstract: The purpose of the study is to examine empirically the relationship between national
competitiveness and national culture. The study applied exploratory research design with national
culture and national competitiveness treated as two independent variables. Hofstede’s national
culture categorization namely masculinity, individualism, uncertainty avoidance, power distance,
and long-term orientation was adopted. Cultural Index by GLOBE study and Global Competitiveness
Index (GCI) by the World Economic Forum were used for the measurement. Descriptive statistic
along with bivariate correlation analysis was used in this study. A number of samples involved in
this study was 58 countries. The study concludes that national competitiveness is positively and
signicantly associated with national culture namely long-term orientation, uncertainty avoidance,
and individualism. National competitiveness has a negative association with power distance national
culture. However, national competitiveness was indicated no association with masculine national
culture. The ndings conclude that in general, national culture is a factor that explains why there are
differences in national competitiveness among countries around the world. A suggestion for future
similar research is that control variable such national income as well as the application of more
sophisticated statistical analysis method should be included.
Keywords: exploratory study, global competitiveness index, national culture; national
competitiveness; national culture index
Abstrak: Tujuan dari penelitian adalah menguji secara empiris hubungan antara daya saing negara
dengan budaya negara. Penelitian mengunakan pendekatan ekplorasi dengan variabel daya saing
negara dan budaya negara diperlakukan sebagai dua variabel bebas. Penelitian mengadopsi
model budaya negara dari Hofstede yang meliputi pengkategorian budaya kedalam masculinity,
individualism, uncertainty avoidance, power distance dan long-term orientation. Pengukuran
variabel budaya negara mengunakan indek budaya negara yang diterbitkan oleh GLOBE study. Indek
daya saing global yang diterbitkan oleh World Economic Forum adalah proksi untuk pengukuran
daya saing negara. Jumlah sampel penelitian yang dilibatkan adalah 58 negara. Hasil penelitian
menunjukan bahwa daya saing suatu negara berhubungan postif dan signikan terhadap kategori
budaya negara long-term orientation, uncertainty avoidance, dan individualism. Sedangkan daya
saya negara mempunyai hubungan negatif dengan kategori budaya negara power distance. Namun
demikian, daya saing negara tidak mempunyai korelasi dengan budaya negara kategori masculine.
Hasil penelitian secara umum dapat di simpulkan bahwa budaya negara adalah salah satu faktor
yang menjelaskan adanya perbedaan daya saing negara-negara di dunia. Saran untuk penelitian
sejenis di masa mendatang adalah memasukan variabel pengendali seperti halnya pendapatan
nasional dan juga mengunakan model analisis statistik yang lebih komprehensif.
Kata kunci: budaya negara; daya saing negara; ekplorasi; indek budaya negara; indek daya saing
global
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
250
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
INTRODUcTION
International competitiveness is a key element for the
country to achieve sustainable economic development
(Apsalone and Sumilo, 2015). A tremendous concern of
study has been addressed to understand the correlation
among diversity of national cultural, value systems of
the country and national competitiveness (Rosselet,
2014). National culture is a pivotal factor in determining
national competitiveness (Bosch and Prooijen, 1992).
Because of the increasing number of companies
operating globally, it is important to understand the
national culture of the country where the companies
are established. National culture has been believed to
have a pivotal role in international business, therefore,
its attributes become a major interest of multinational
rms to be understood (Michaela et al. 2011, Moon and
Choi, 2001, Mac-Dermott, 2015). In order to obtain
benets of globalization, the multinational rms must
consider how to deal with and utilize national culture
as the power to maximize their business performance
(Bayias and Assimakopoulos, 2011).
National culture is believed as a determinant that
explains why a certain country is more developed than
another even though located in the same region (Mihaela
et al. 2011). Rosselet (2014) argues that the country’s
national heritage is a factor that can drive sustainable
economic development. Tradition and value system
are considered to have a positive inuence on working
ethics, and it can increase national competitiveness
(Mihaela et al. (2011). National culture provides a
country with its uniqueness value, and it can be used
as an advantage opportunity to increase national
competitiveness (Apsalone and Sumilo, 2015). The
values derived from national culture will determine
how individual in society behave both in private and
governmental organizationa. National culture can be an
impediment to national development if the society does
not have values and beliefs that support the spirit of
competitiveness (OECD, 2003).
There are various denitions and models of national
model proposed by Geert Hofstede is the most frequently
cited and recognized in the academic literature (Moon
and Choi, 2001). Hofstede and Hofstede (2005) argue
that each individual belongs to a group, and it will culture
that have been dened and developed by respected
international scholars. However, national culture be
recognized as a symbol of identity. Geert Hofstede
proposed national culture into ve categories, namely,
Uncertainty Avoidance, Individualism vs Collectivism,
Masculinity vs femininity, Power Distance, Long-
term Orientation vs. Short-term Orientation. National
culture index released by GLOBE study is an indicator
to measure national culture, and lately it has gained
its popularity due to its improvement of national
culture measurement previously initiated by Hofstede
(Globalproject, 2007).
National competitiveness is a fundamental aspect
to survive in the globalization era. World Economic
Forum (WEF) emphasizes national competitiveness
denition as productivity of the country (Porter
& Schwab, 2008). OECD (2003) denes national
competitiveness as the country’s ability to produce
goods and services that pass the international standard.
Meanwhile, National Competitiveness Council views
national competitiveness as the ability of the country
to compete in an international market that leads
to improvement of a country’s standard of living
(Ketels, 2016). International Institute for Management
Development’s (IMD) sees the prosperity of the country
as an indicator to measure national competitiveness as
a result of capability in managing total competencies.
Beliefs and values existing in a society are a key factor
to dene national culture. National culture becomes
identity, norms, and codes of conduct of the society
and a symbol of the character of the nation (Rosselet,
2014). Beliefs and value rooted from national culture
act as unwritten rules and regulations to guide
actions and behaviors of the society (Apsalone and
Sumilo, 2015). A strong national culture that supports
national competitiveness can be a social capital for
the country. National culture is the identity of the
country and represents the behavior of society in that
country. National culture has the capacity to inuence
the individual in terms of the view of thinking and
behavioral action (Moon and Choi, 2001). National
culture is a fundamental aspect that makes countries have
differences including their national competitiveness
(House, 2004).
Impact of cultural differences on business organization
has been studied by many scholars (Moon and Choi,
2001). In the marketing eld of study, Steenkamp (2001)
studied the role of national culture in international
marketing and conducted a study on advertising
sensitivity to the business cycle. Shore and Cross (2005)
explored the role of national culture in international
project management. Lewellyn and Bao (2017) studied
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
251
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
national culture on earning management and corruption
in rms in 26 countries. Chen et al. (2017) studied
national culture and corporate innovation. However,
attention to study the relationship of national culture
on the country capability especially competitiveness
is not sufciently enough. It can be identied from
limited literature reviews and empirical evidence
available that discuss the role of national culture on the
aspect of national level. Previous studies on the role
of national culture in national level focused more on
the governance perspective. Seleim and Bontis (2009)
study the role of national culture on corruption on the
national level.
Curiosity toward cultural involvement in national
competitiveness is driven by the fact the countries
located in the same geographical area showed
differences in national competitiveness. In order to
prove whether there is a cultural inuence on national
competitiveness or not, this study applies empirical
analysis to understand that. Objects of the study are
national culture and national competitiveness. Since
relatively limited literature reviews related to the
study are available, this study aims to understand the
association between national culture and national
competitiveness using an exploratory approach. The
countries involved as the subject of the investigation
are limited to those registered in cultural index
released by GLOBE study. This study is expected to
answer remaining curiosity about the role of national
culture as an inherent factor that determines national
competitiveness.
METHODS
Global Competitiveness Index (GCI) is an indicator
to measure national competitiveness developed by
World Economic Forum (WEF). The index is stated in
an interval scale from 1 (Minimum) to 7 (Maximum).
GCI is measured using many different components of
national competitiveness pillars. These components
are grouped into 12 interrelated pillars of national
competitiveness. The pillars of national competitiveness
in GCI consist of infrastructure, quality of institutions,
health and primary education, labor market efciency,
higher education and training, technological readiness,
nancial market development, market size, business
sophistication, innovation, goods market efciency,
and macroeconomic environment.
The variable national culture was measured using
Cultural Index published by GLOBE study. Meanwhile,
National competitiveness variable was measured using
the Global Competitiveness Index (GCI) released by
the World Economic Forum and both indexes have 7
point interval scale (1 = Minimum, 7 = maximum). The
data were obtained directly from the open publication of
ofcial website of GLOBE study and World Economic
Forum.
The population of this study was the countries listed
ofcially in United of Nations. A total number of
samples involved in this study were 58 countries. The
time period of investigation was the year of 2016. Due
to the consideration of the availability of specic data
at the specic time period of investigation, purposive
sampling technique was adopted. The study used
secondary data collected through ofcial website of
World Economic Forum and GLOBE study. The study
applied exploratory research approach because the
research was categorized as a preliminary research.
The descriptive statistical analysis was used to give a
basic explanation of the data analyzed. In order to get
justication proposed hypotheses, Pearson Bivariate
Correlation was applied in this study.
Individualistic society is a society that believes that
each individual is responsible for themselves and
they do not need to be emotionally dependent on
other individuals or groups (Davis and Ruhe, 2003).
Focusing on individual achievement is a characteristic
of a society with high individualism. They judge an
individual based on skill and achievement, not by
gender, seniority or social status. Individualistic society
adheres to equality, avoids discrimination based on
hierarchy, and respects for individual achievement
(Moon and Choi, 2001). Collectivist societies are
identied as a society with high social bonding,
emotional dependence on the group and rely on group
decisions (Davis and Ruhe, 2003). Individual who lives
in a collective society can only accept criticism sourced
from the group. Collective society considers values
that implies rules and regulation as a representation
of the group. Each group has different values and
beliefs; therefore, applying different standards is the
best option when evaluating different group. Research
nding from the previous study leads to the conclusion
that high score of individualism national culture
is closely associated with the competitive country
(Mihaela et al. 2011). It is because a society with
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
252
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
individualistic national culture puts high appreciation
on the performance of the individual. If the standard
of achievement is individual performance; therefore,
in accumulation it will be reected on the national
level. Therefore, the hypothesis is proposed as follows:
Hypothesis 1: National competitiveness is associated
with individualism national culture, so the more
masculine the national culture, the more competitive
the nation.
High power distance national culture is the culture
with a characteristic such as the existence of inequality,
dependency on a leader, and hierarchical social structure.
A society with high power distance acknowledges the
leader as a legitimate power; therefore, they would
respect higher level hierarchy. Meanwhile, low power
distance society, superiors, and subordinates show
narrow gap personal relationship; thus, it results
in a harmony and cooperative environment. Titles,
status, and formality command are less important in
low power distance society (Davis and Ruhe, 2003).
Individuals who live in countries with low power
distance category are familiar with the empowerment
of low-level hierarchy, cross-functional organization
and simple structure organization (Wursten and
Jacobs, 2014). High power distance culture tends to
have a society that obeys the order from higher level
hierarchy with no demand for further justication
(Hofstede, 2001) Elite’s individual is a representation
of total population and leaving important decisions to
be made by the high-level hierarchy. Inequality in high
power distance culture is a reection of authority as
a central value (Tabellini, 2009). An individual who
lies in the low-level hierarchy of society rarely has a
chance to express ideas and suggestion. Williamson
and Mathers (2010) suggest that society with a high
degree of obedience on the higher level hierarchy is
not supporting national competitiveness due to lack of
empowerment. Therefore, the hypothesis is proposed
as follows: Hypothesis 2: National competitiveness is
associated with low power distance national culture,
so the lower power distance national culture, the more
competitive the nation.
A society with uncertainty avoidance national culture
is a society with a characteristic that prefers to avoid
ambiguous situations and more comfortable with
certainty and predictability environment (Davis and
Ruhe, 2003). An individual with high uncertainty
culture avoidance seems to avoid risk and individuals
who live in low uncertainty avoidance are identied as
risk takers (Hofstede, 2001; Kovačić, 2005). A society
with uncertainty culture prefers to avoid ambiguous
circumstances, especially for business organizations
(Bosch and Prooijen, 1992). Firms whose business
operation located in countries and are identied as
high-level uncertainty avoidance culture prefer to use
legal contracts as the basis for a business relationship.
Calculating risk and being resistant to change are
two common characters found in high uncertainty
avoidance culture. A society with low uncertainty
avoidance national culture is relatively open to new
ideas and beliefs. On the other hand, a society with high
uncertainty avoidance culture is relatively protective
and prudent toward inuences from outside and have
less willingness to leave their own safe environment.
A society with strong uncertainty avoidance prefers
the relationship with the predicted outcome; therefore,
they are very prudent in making a decision. Bosch and
Prooijen (1992) argue that a society with low-level
uncertainty avoidance, tends to be more open toward a
relationship with others. However, a society with high
uncertainty avoidance use calculation risk and benet
to deal with a business partner; therefore, potential risks
that will be faced in the future can be managed. Based on
the explanation above, the hypothesis can be proposed
as follows: Hypothesis 3: National competitiveness is
associated with lower uncertainty avoidance national
culture, so the lower uncertainty avoidance national
culture level, the more competitive the nation.
A society with a masculine culture is identied to have
a characteristic such as assertiveness, materialism,
selshness. People who live in masculine culture have
higher concerns with an opportunity for high earning,
recognition for a job achievement, promotion, and
challenges, competitiveness, success, status, wealth,
material success, ambition, and achievement (Moon
and Choi, 2001, Wursten and Jacobs, 2014). A society
with masculine culture tends to have perfectionism
orientation in terms of performing their job or duties
(Wursten and Jacobs, 2014). Bosch and Prooijen
(1992) argue that a masculine society has values such
as the spirit of struggling and competing. A society with
feminism national culture considers that individual
relationships, empathy, and quality of life are important
(Adler, 2002). They tend to put social needs as a priority
over the productivity (Adler, 2002). People living in
feminism national culture nd that job satisfaction and
exibility are more important than the achievement
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
253
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
of challenging job or duties (Miroshnik, 2002). A
feminine society does not have much target orientation,
enjoys life with ows and has a jargon such as small is
beautiful and better late than never (Hofstede, 1997).
Therefore, the hypothesis can be formulated as follows:
Hypothesis 4: National competitiveness is associated
with masculine national culture, the more masculine
national culture level, the more competitive the nation.
A society with national culture which is identied as
Long-term orientation has the character identity of
perseverance and thrift. Perseverance is an individual
character with a characteristic such as determination
and consistency effort to achieve goals. The visionary
individual is a representation of society that lives in the
long-term orientation of national culture. Meanwhile,
the life of a society with a short-term orientation culture
and having no a long-term objective relatively ows
smoothly and lacks of pressure. People who live in
short-term national culture tend to be grateful and have
no high ambition involved. Research nding indicates
that managers who run the companies located in a
country with high long-term orientation culture tend to
have a strong orientation on building a market position
(Deleersnyder et al. 2009). A society with long-term
orientation cultures concerns about future orientation
and have ambition in achieving economic success.
Mac-Dermott and Mornah (2015) argue that in an Inter-
organizational relationship, economic opportunity and
expectation of long-term sustainability relationship are
the two fundamental aspects that determine motivation.
Therefore, the hypothesis can be formulated as follows:
Hypothesis 5: National competitiveness is associated
with long-term orientation national culture, so the more
long-term orientation national culture level, the more
competitive the nation
Each country has a stronger culture with very intense
accents either of individualism or collectivism, big
or small power distance, uncertainty control and
masculinity or femininity (Mihaela et al. 2011).
Strong culture of the country will be a social capital
for the country to improve national competitiveness.
Porter's diamond theory (1990) explained that MNEs'
international success was a result of the competitive
advantages embedded in their home bases, and it refers
to national culture. National culture differences across
countries are believed to be the fundamental factor that
makes one country more advanced compared to other
countries. National culture is a system (believe) that
is reected in the individual attitude and becomes a
character of the society. Positive attitude and character
of the individual in a certain society in a certain
country will be a valuable capital for the country in
the development and improvement of its national
competitiveness. The framework of this research is
presented in Figure 1.
RESULTS
Descriptive Statistics
In this study, national culture referring to the denition
of national culture was developed by Hofstede. It refers
to ve classications of national culture terminology,
namely, uncertainty avoidance, short-term/long-term
orientation, power distance, individualism/collectivism,
masculinity/femininity, and national competitiveness.
The total of the countries involved in this study was 58
countries and the descriptive statistic of national culture
score is presented in Table 1. The descriptive statistic
analysis was intended to get a basic understanding on
the ve national cultures of the samples involved in this
study. Information presented in Table 1 indicates that
national culture consisting of power distance, short-
term/long-term orientation, uncertainty avoidance,
individualism/collectivism, and masculinity/
femininity was at a relatively moderate value (mean
value lies between 3.39 and 5.14). It implies that the
level of national culture of the samples is relatively
homogeneous. It also indicates that the countries that
have been categorized into certain national culture
categorization have no signicant differences in their
national culture score.
Value of coefcient variation of national culture
indicates that the data used in the study were normally
distributed (Coefcient Variation Value < 30%).
Low coefcient variation (<30%) means that the gap
between the highest score and lowest score of each
categorization of national culture is relatively narrow.
It means that there is no outlier of the data processed
in this study (an extreme low and an extreme high of
national culture score). It also gives us understanding
that based on Hofstede national culture model, there is
no superiority or inferiority of national culture score for
each categorization. In each categorization of national
culture, it tends to have a moderate value of national
culture. Based on the basis descriptive statistics as a
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
254
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
justication of variation of national culture, it can be
concluded that countries around the world may be
from one culture originated back many previous years.
Geographic separation along with the development
of civilization may affect each country so that it will
have a different characteristic in its national culture.
However, the hypotheses need to be proven empirically
and further studies involving more countries around the
world are necessary.
Regarding the national competitiveness score adapted
from the Global Competitiveness Index (GCI)
by the World Economic Forum (WEF), national
competitiveness index of the countries involved in this
study is on the moderate level. Information, as stated
in Table 1, indicates that the mean value of national
competitiveness index of 58 countries is 4.55. With
the consideration that minimum value is 1 and the
maximum value is 7, it can be justied that national
competitiveness index of countries involved in this
study is on a moderate level. GCI has the coefcient
of variation value of 15% (<30%), and it justies
that the samples have no indication of signicant
differences in the level of national competitiveness
index. Furthermore, the results of the coefcient of
variation value indicate that the data used in the study
were normally distributed. Statistically, there is no
indication that the samples have a tendency to have an
extreme value of national competitiveness (extreme
worst or extreme best).
Descriptive statistic of national competitiveness
score as depicted in Table 1 justies that national
competitiveness of the countries involved in this study
is on a moderate level. However, it is a fact that a number
of developed countries are far less than developing
and under-developed countries. The average value of
national competitiveness score may not represent all
of the population countries in the world. Furthermore,
there is a certain condition that the economic gap
between developed countries with developing and
underdeveloped countries is very wide. Therefore, if all
of the countries in the world are involved, the average
value of national competitiveness score has a high
possibility to be below the moderate value (< 4.55)
and coefcient of variation value is higher than 30%.
Therefore, to understand the relationship of national
culture and national competitiveness comprehensively,
future studies must consider the representation of
countries based on their economic classication
(developed countries, developing countries and under
developing countries).
Figure 1. Research framework
Phenomenon:
The differences of National Competitiveness level among countries located in the same region
Variables Observed
( Hofstede National Culture
Model)
Conceptual Framework
( Mihaela et al. 2011 &
Porter, 1990)
Variable Observed
(World Economic Forum - Global
Competitiveness Index)
The culture is, in most
of the cases, the main
explanation of the
fact that one country
is developed quicker
than other. competitive
advantages embedded in
their homebases
National Competitivenes
Individualism National Culuture
Power Distance National
Culture
Uncertainty Avoidance
National Culture
Masculine National Culture
Longterm Orientation
National Culture
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
255
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
Correlation Analysis
This study has an objective to examine the relationship
or association between two independent variables i.e.
national culture and national competitiveness. The
focus of this study is not to examine the inuence of
one variable on another variable, but the relationship
between variables. In order to understand the
relationship between national competitiveness and
national cultures, this study applied correlation analysis
procedure. Pearson Correlation Product Moment
was applied because the data were a combination of
ratio scale and interval scale. Correlation analysis
is a statistical procedure intended to understand the
relationship between two independent variables. The
results of the Pearson correlation Product Moment
between national cultures and national competitiveness
are presented in Table 2.
The results presented in Table 2 indicate that the
countries that fall into the category of uncertainty
avoidance tend to have a long-term orientation national
culture (r=0.768, p<0.01), low power distance (r= -507,
p<0.01) and individualism national culture (r=0.451,
p<0.01). Meanwhile, the countries with long-term
orientation national culture tend to have a characteristic
as low power distance national culture (r = -0.441,
p<0.01) and individualism national culture (r = 0.476,
p<0.01). The countries with high power distance tend to
have collectivism national culture (r = - 0.279, p<0.01)
and masculinity national culture (r = -0.310, p<0.01).
The correlation analysis based on the correlation
analysis in Table 2 may not represent the population of
the countries in the world. This study only involved 58
countries or only 30% of the total countries registered
as a member of the United Nations. Since Hofstede
national culture score only limited to 58 countries and
collected in early 1990, there is a concern in the future
to conduct a recent study on national culture assessment
and involve more countries. By using the recent surveys
of national culture and involving more countries in the
world, it is expected the results of the study become a
reection of current condition and representation of the
total population of the countries registered in United
Nations today.
Table 1. Descriptive statistics
Variables N Minimum Maximum Mean Std. Deviation Coefcient of Variation
Uncertainty Avoidance 58 2.88 5.37 4.15 0.59 0.14
Short-term/ Long-term/ Orientation 58 2.88 5.07 3.83 0.47 0.12
Power Distance 58 3.59 5.80 5.14 0.46 0.09
Individualism/Collectivism 58 3.25 5.22 4.25 0.43 0.10
Masculinity/Femininity 58 2.50 4.08 3.39 0.38 0.11
National competitiveness 58 2.88 5.67 4.55 0.70 0.15
Table 2. Correlation Matrix
Variables 1 2 3 4 5 6
Uncertainty Avoidance 1
Long-term orientation 0.768** 1
Power Distance -0.507** -0.441** 1
Individualism/Collectivism 0.451** 0.476** -0.279* 1
Femininity/masculinity -0.049 -0.066 -0.310** -0.074 1
National Competitiveness 0.618** 0.585** -0.389** 0.410** 0.021 1
**)Correlation is signicant at the 0.01 level (1-tailed); *) Correlation is signicant at the 0.05 level (1-tailed).
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
256
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
Based on information presented in Table 2, it implies
that the countries that have prudent behavior and risk-
averse ( uncertainty avoidance) tend to have long-term
relationship orientation, equality of hierarchical of social
status (low power distance) and strategic orientation
with other countries. Additionally, the countries that
have uncertainty avoidance national culture are more
individualistic in a social relationship. The majority
of the developed countries have a characteristic of
uncertainty avoidance and tend to have long-term
orientation, low power distance, and individualism. It
implies that even though the survey of national culture
conducted by Hofstede is already out of date (early
1990), if it is associated with the current situation, it is
still relevant in certain aspects. The correlation analysis
also shows that the countries that are categorized as
having power distance national culture tend to have a
character as a collective country (r = 0.279, p<0.05)
and feminine country (r=0.310, p<0.01). It implies that
the countries that apply hierarchical in their structural
life tend to live in togetherness (collective) and comfort
with peacefulness environment (Feminism). Indonesia
is one example of the country with a high power distance
national culture and a collective society. Moreover,
to some point, it has an orientation on society with
peacefulness.
The correlation analysis results revealed that national
culture based on the classication of Hofstede may
fall into two categorization clusters associated with
its national competitiveness. The rst cluster is
a categorization of national culture that supports
national competitiveness, and in the second cluster, it
is a categorization that is not supported with national
competitiveness. The rst cluster refers to national
culture categorization of uncertainty avoidance national
culture, long-term orientation national culture, low
power distance national culture, individualism national
culture and masculinity national culture. Meanwhile,
the second cluster refers to short-term orientation
national culture, high power distance national culture,
collectivism national culture, femininity national
culture. In order to obtain a detailed understanding
of the validity of the clustering of national culture,
correlation analysis between each categorization of
national culture is required. The degree of correlation
will determine whether there is an association between
national culture and national competitiveness. Detail
analysis of the relationship of national culture with
national competitiveness is presented in the hypothesis
testing section.
Hypothesis Testing
There are ve hypotheses proposed in this research. The
rst hypothesis proposed that national competitiveness
is positively and signicantly associated with
individualism in the national culture. Analysis
correlation result concludes that the hypothesis is
supported. It is indicated by Pearson Correlation
Moment value ® = 0.410 and p<0.01. The second
hypothesis proposed that national competitiveness
is negatively and signicantly associated with power
distance national culture. Statistical correlation result
indicates Pearson Correlation Moment (r) = - 0.389 at
p<0.01. It means that the second hypothesis proposed
is supported. The third hypothesis proposed that
national competitiveness is positively and signicantly
associated with uncertainty avoidance the national
culture. Statistical correlation proved that the hypothesis
is supported (r = 0.618, p<0.01). The fourth hypothesis
proposed that national competitiveness is positively
and signicantly associated with masculinity. The
hypothesis, however, is not supported even though it
indicates slightly positive correlation (r=0.021) but no
signicant indication. The fth hypothesis proposed that
national competitiveness is positively and signicantly
associated with the Long-term orientation of national
culture. Pearson correlation analysis result proved that
the fth hypothesis is supported (r=0.585, p<0.01).
The summary of the hypotheses proposed and their
conclusion is presented in Table 3.
Based on the information stated in Table 3, it implies
that all of the hypotheses proposed are supported except
for hypothesis 4. Referring to the correlation results
between national culture and national competitiveness,
it can be concluded that national culture, in general,
does have a correlation with national competitiveness.
The countries that have uncertainty avoidance national
culture and long-term orientation national culture
have a strong association (r > 0, 5) with national
competitiveness. Meanwhile, the countries that have
individualism national culture and low power distance
national culture have moderate (r >5) correlation. A
typical national culture based on the categorization of
masculinity and femininity do not have a correlation
with national competitiveness. The results give us the
understanding that national competitiveness is not only
about capital, natural resources, technology, and other
physical things but also determined by the character of
the society of the country. In some cases, the character
of the society may be more important than physical
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
257
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
resources. The experience of Japan after World War
II is an example of how the character of society
pays a high contribution to the creation of national
competitiveness.
National culture is something inherent as the character
of the country since the society existed. It is, therefore,
national culture cannot be created or copy it and
implemented in certain society instantly. It seems that
the country that has unfavorable national culture may
have a barrier to be a competitive country. However,
we can learn from developed countries regarding their
national culture. The positive value of national culture
from a developed country that supports the process of
transforming toward a competitive nation should be
adopted. Through early education, the positive value
of developed countries must be initiated. Even though
it will take a long time, the transformation of national
culture from early education is the natural and permanent
way to change toward a national culture that supports
process toward the competitive nation. The process of
adoption positive value from developed countries in
order to get the positive impact of it is relevant with
the institutional theory which describes that something
is being part of the organization or institutionalized
through coercive isomorphism (forcing), mimetic
isomorphism (imitate) and normative isomorphism
(suggestion). Using perspective institutional theory,
the country that has weak national competitiveness
can imitate the character of the society of developed
countries and implement through early education. By
having a young generation with the same character
with people who live in the developed country, the
transformation being a competitive nation is wide
open.
Managerial Implication
On the side of the business organization, the result of
the study may help to provide valuable information
for fund managers in determining best location related
overseas expansion. Fund managers have traditionally
been reluctant to invest in markets far away both
geographically and culturally from their home markets
(Grifn et al. 2017). To avoid wrong decision-related
location of investment, fund managers can utilize
relevant information such as from empirical research
ndings. Referring to the ndings of the study, the
countries that have strong national culture such as
individualism, uncertainty avoidance, and long-term
orientation are the best option as a destination for
investment. Those countries will have a high probability
of beneting the business organization because of
having a strong national culture that supports business
organization competitiveness. There are studies
indicating that countries with low power distance
tend to have stronger innovation capabilities, which
might impact a company’s thinking about alternative
locations for work requiring high levels of innovation
(Ghemawat and Reiche, 2011; Sun, 2009).
Table 3. Summary of hypothesis testing
Hypotheses Pearson
Correlation
Conclusion
H1: National competitiveness is positively and signicantly associated with
Individualism national culture
0.410** Supported
H2: National competitiveness is negatively and signicantly associated with Power
distance national culture
-0.389** Supported
H3: National competitiveness is positively and signicantly associated with
Uncertainty avoidance national culture
0.618** Supported
H4: National competitiveness is positively and signicantly associated with Masculine
national culture
0.021 Not Signicant
H5: National competitiveness is positively and signicantly associated with Long-
term Orientation national culture
0.585** Supported
**) Correlation is signicant at the 0.01 level (1-tailed).
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
258
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
Understanding national culture and national
competitiveness may also help business managers
of the companies located in the country that have
low national competitiveness related benchmarking
decision (Noort et al. 2016). Hiring for adaptability
and investing in cross-cultural training can improve
workforce capability and exibility (Ghemawat and
Reiche, 2011). It is also relevant for business managers
to understand the culture of other countries for the
purpose of market penetration (Craig and Douglas,
2006). In order to understand acceptable product or
services in the overseas market, the business managers
have a responsibility to understand the national culture
of the target market. Marketing and organization are
areas where human culture is of particular importance in
the sense that marketing requires a deep understanding
of customers (Ghemawat and Reiche, 2011)). It is,
therefore, especially for multinational companies,
the existence of cross-cultural management is very
important (Testa, 2009). Firms that manage adaptation
effectively are able to achieve congruence in various
cultures where they operate while extending their
main sources of advantage across borders, and in
some cases even making cultural diversity itself is a
source of advantage (Ghemawat and Reiche, 2011). By
understanding the national culture of the target market,
the companies are expected to provide the products that
t with market expectation.
To achieve project goals and avoid cultural
misunderstandings, project managers should be
culturally sensitive and promote creativity and
motivation through exible leadership (Anbari et al.
2003). National culture has also been shown to have an
impact on manufacturing and supply chain practices,
which can be useful for business managers to consider
in a variety of contexts; analyzing manufacturing
footprints, managing multi-plant operations, assessing
competitors and suppliers and different countries
(Ghemawat and Reiche, 2011). Effective use of cross-
cultural teams can provide a source of experience
and innovative thinking to enhance the competitive
position of organizations (Anbari et al. 2000). The
business manager should initiate to improve the
alignment or congruence between management
practices and cultural contexts yields tangible business
benets (Ghemawat and Reiche, 2011). Emphasizing
individual contributions can improve organization
performance in more individualistic cultures and weak
performance in more collectivistic cultures. Managers
who wish to achieve signicant changes in high power
distance cultures are advised to put senior staff front
and center in communication efforts, use legitimate
authority, and “tell subordinates what to do (Ghemawat
and Reiche, 2011). In contrast, in lower power distance
cultures, it is more important to explain the reasons for
the change, “allow for questions and challenges” and
involve employees in guring out how to implement
the desired change (Bing, 2004)
cONcLUSIONS AND REcOMMENDATIONS
Conclusions
The study was designed to reveal the relationship
between national competitiveness and national culture
namely individualism, power distance, uncertainty
avoidance, masculinity, and long-term orientation.
All hypotheses proposed were supported except for
the fourth hypothesis which refers to the association
between national competitiveness masculinity national
cultures with. The results are already in line with
theory and literature used in this study. However, the
fourth hypothesis comes with an unexpected result and
contradictive with theory and literature. The countries
that have national culture individualism, uncertainty
avoidance, and long-term orientation have a potential
benet in terms of capability to compete with other
countries in international level. The ndings give us
understanding that national competitiveness is not only
about factors such as technological capability, economic
power or natural resources. A national culture which is
social value rooted and inherent in the society of the
country may also have a contribution to determine
national competitiveness.
National culture is inherent in the social value of
the country; therefore, it cannot be duplicated by
competitors. Benets obtained from the power of
national culture will be long-lasting. It is because of
national culture is hard to vanish from the society. The
countries that have national culture individualism,
uncertainty avoidance, and long-term orientation
are privileged countries. They can empower values
rooted from the national culture in order to get a better
position in terms of its competitiveness capability.
Referring to the result of the research, it implies that
national culture will determine competitiveness power
or capabilities of the country. For the countries that
have no national culture that is associated with national
competitiveness may use policy cultural adoption such
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
259
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
as through education abroad. It is expected that if more
and more human resources obtain experiences from
countries that have a national culture that supports
national competitiveness, they can transform it in their
home country. Results of this study are conrmatory
that the resources that support national competitiveness
are not only natural resources, nancial capital, and
technology, but also cultural capital.
Recommendations
In order to obtain a generalization of conclusion,
a suggestion for future research is to extend the
time period of investigations and add more samples
involved in the study. Furthermore, qualitative analysis
using case study is encouraged to be conducted for the
purpose of understanding in more detail the association
between national culture and national competitiveness.
Specically, understanding the inuence of the aspect
of national culture in a governmental institution or in a
private sector organization. This study was conducted
using an exploratory research approach focusing on the
analysis of two independent variables. Therefore, for
future research, causal research approach using multiple
regression analysis is strongly recommended. Adding a
control variable such as income categorization is also
strongly recommended for future similar research.
On the aspect of further understanding about the national
culture, assessing national culture in current context is
relevant. It is to answer the question of whether national
culture is changing over time or not. Hosftede national
culture score is out of date if we look at the rst time
national culture assessed (early 1990). Therefore, there
is an urgency to obtain the current status of national
culture based on the recent study. Furthermore, these
research ndings should be conrmed with another
model of national culture and another instrument of
national competitiveness instrument.
REfERENcES
Apsalone M, Šumilo Ē. 2015. Socio-cultural factors
and international competitiveness. Business,
Management, and Education 13(2): 276–291.
https://doi.10.3846/bme.2015.302.
Adler N. 2002. International Dimensions of
Organizational Behavior (4th ed.). South-
Western, Cincinnati, OH.
Anbari FT, Khilkhanova EV, Romanova MV, Umpleby
SA. 2003. Cross-Cultural Differences And
Their Implications For Managing International
Projects.https://www2.gwu.edu/~umpleby/
recent_papers/2003_cross_cultural_
differences_managin_international_projects_
anbari_khilkhanova_romanova_umpleby.htm
Bayias P, Assimakopoulos V. 2011. The signicance
of national culture differences for domestic
companies that expand to the international
environment. International Journal of Business
and Management Studies 3(2):237–247.
Bosch FAJ, Van D, Prooijen AAV. 1992. An emerging
competitive advantage of European Nation.
European Management Journal 10(4): 445–
448.
Bing JW. 2004. Hofstede's consequences: The impact
of his work on consulting and business practices.
Academy of Management Perspectives 18(1).
https://doi.org/10.5465/ame.2004.12689609.
Chen Y, Podolski EJ, Veeraraghavan M. 2017. National
culture and corporate innovation. Pacic-
Basin Finance Journal 43:173-187. https://doi.
org/10.1016/j.pacn.2017.04.006.
Craig CS, Douglas SP. 2006. Beyond national culture:
implications of cultural dynamics for consumer
research. International Marketing Review,
23(3):322–342.
Deleersnyder B, Dekimpe MG, Steenkamp, Jan-
Benedict EM, Leeang. 2009. The role of national
culture in advertising's sensitivity to business
cycles: an investigation across continents.
Journal of Marketing Research 46(5):623-636.
https://doi.org/10.1509/jmkr.46.5.623
Davis JH, Ruhe JA. 2003. Perceptions of country
corruption: antecedents and outcomes. Journal
of Business Ethics 43(4): 275–288.
Ghemawa P, Reiche S. 2011. National Cultural
Differences and Multinational Business.
Globalization Note Series, GLOBE course at
IESE Business School.
Globalproject. 2007. An overview of the 2004 study:
Understanding the Relationship Between National
Culture, Societal Effectiveness and Desirable
Leadership Attributes. http://globeproject.com/
study_2004_2007 [22 December 2017].
Grifn DW, Guedhami O, Kwok CCY, Li K, Shao L.
2017. National culture and the value implication
of corporate governance. SSRN: https://ssrn.
com/abstract=2400078 [22 December 2017].
House RJ, Hanges PJ, Javidan M, Dorfman PW, Gupta
V. 2004. Culture, Leadership, and Organizations:
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
260
P-ISSN: 2407-5434 E-ISSN: 2407-7321
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 3, September 2018
The GLOBE Study of 62 Societies. Sage
Publications, Thousand Oaks.
Hofstede G, Hofstede GJ. 2005. Cultures and
Organizations. Software for the Mind. 2nd ed.
New York: McGraw-Hill.
Kovačić ZJ. 2005. The impact of national culture on
worldwide eGovernment readiness. Informing
Science Journal 8:143–158.
Ketels C. 2016. An Analysis Conducted for the Irish
National Competitiveness Council. National
Competitiveness Council, Dublin, March.
Lewellyn KB, Bao SR. 2017. The role of national culture
and corruption on managing earnings around the
world. Journal of World Business. 52(6): 798-
808. https://doi.org/10.1016/j.jwb.2017.07.002.
Mac-Dermott R, Mornah D. 2015. The Role of
Culture in Foreign Direct Investment and Trade:
Expectations from the GLOBE Dimensions
of Culture. Open Journal of Business and
Management 3:63–74.
Miroshnik V. 2002. Culture and international
management: a review. Journal of Management
Development 21(7): 521-544. https://doi.
org/10.1108/02621710210434647.
Moon H, Choi E. 2011. Cultural impact on national
competitiveness. Journal of International and
Area Studies 8(2):21–36.
Mihaela H, Claudia O, Lucian B. 2011. Culture and
national competitiveness. African Journal of
Business Management 5(8):3056–3062.
Mathers RL, Williamson CR. 2011. Cultural context:
explaining the productivity of capitalism. Kyklos
64(2):231–252. https://doi.org/10.1111/j.1467-
6435.2011.00504.x.
Noort C, Reader TW, Shorrock S, Kirwan B. 2016. The
relationship between national culture and safety
culture: implications for international safety
culture assessments. Journal of Occupational
and Organizational Psychology 89(3): 515–538.
https://doi.org/10.1111/joop.12139.
OECD. 2003. Challenges/Obstacles Faced by
Competition Authorities in Achieving Greater
Economic Development through the Promotion
of Competition. Paris: OECD.
Porter ME, Schwab K. 2008. The Global Competitiveness
Report 2008–2009. World Economic Forum
Geneva, Switzerland.
Porter ME. 1990. The competitive advantage of
nations. Harvard Business Review. March–April
1990 Issue. https://doi.org/10.1007/978-1-349-
11336-1.
Rosselet S. 2014. Can a Nation’s Culture drive
Competitiveness?.http://www.globaltrends.
com/2014/12/01/can-a-nation-s-culture-drive-
competitiveness/
Shore B, Cross BJ. 2005. Exploring the role of national
culture in the management of large-scale
international science projects. International
Journal of Project Management 23(1):55–64.
https://doi.org/10.1016/j.ijproman.2004.05.009.
Steenkamp J, Benedict EM. 2001. The role of national
culture in international marketing research.
International Marketing Review 18(1): 30-44.
https://doi.org/10.1108/02651330110381970.
Sun H. 2009. A meta-analysis on the inuence of
national culture on innovation capability.
International Journal of Entrepreneurship and
Innovation Management 10(3-4): 353-360.
https://doi.org/10.1504/IJEIM.2009.025678.
Seleim A, Bontis N. 2009. The relationship between
culture and corruption: a cross-national study,
Journal of Intellectual Capital 10(1): 165-184.
https://doi.org/10.1108/14691930910922978.
Tabellini G. 2010. Culture and Institutions, Economic
Development in the Regions of Europe. Journal
of the European Economic Association 8(4): 677–
716. https://doi.org/10.1111/j.1542-4774.2010.
tb00537.x.
Testa MR. 2009. National culture, leadership, and
citizenship: Implications for cross-cultural
management. International Journal of
Hospitality Management 28(1): 78–85. https://
doi.org/10.1016/j.ijhm.2008.04.002.
Wursten H, Jacobs C. 2014. The impact of culture on
education: Can we introduce best practices in
education across countries? Club of Amsterdam
Journal :1–24.
