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Hofstede’s Cultural Theory and Amazon’s EU Market Performance
The theory of cultural dimensions by Hofstede provides a persuasive elucidation model of the cultural distinctions in the degree of Amazon achievement in markets in the European Union, particularly in evaluating the performance of the firm in Poland, Germany, and the Netherlands. According to Hofstede (2011), cultural dimensions are value orientations that are fundamental and determine the consumer behavior and the market acceptance pattern in different national orientations. This theoretical approach can be applicable with reference to an example of Amazon, which penetrates the market in a variety of ways, as the company has achieved in Germany with a revenue of over 31.6 billion, and, conversely, it has failed in Poland, where the domestic Allegro corporation occupies a bigger share of the market.
To answer these gaps, cultural aspect of power distance may be valuable as Germany has a low power distance rating of 35 that suggests that it is a society, which is open to organsational flats and does not accept traditional hierarchies and the German consumers are also adaptable to foreign firms that can defy some retail trends. Conversely, Poland scores higher in the power distance acceptance which means that consumers are more submissive to the current market leaders hence the preference of the local players.
Another important dimension of uncertainty avoidance shows that the difference in the way European consumers perceive new players in the market is another decisive factor in the divergent success of Amazon. Uncertainty avoidance plays a crucial role in the way societies are accepting or resistant to disruptive technologies and foreign business practices as it has been evident in the overall analysis provided by Kirkman, Lowe, and Gibson (2006). The high uncertainty avoidance score of 65 in Germany first seemed an issue in the entry of Amazon in the market but the systematic nature in its logistics, product information and consistency in service delivery actually fitted the German culture of having predictability and structured experiences. This cultural fit enabled Amazon to build confidence among the German consumers who prefer accuracy in making purchases. The uncertainty avoidance patterns of Poland indicate that consumers are interested in using platforms that they already know and to the extent that they can trust, and this could be the reason why Polish consumers have failed to embrace Amazon despite its international image.
The individualism-collectivism scale is also an extra factor that can explain why Amazon has different results in terms of shopping behavior and brand loyalty in Europe. According to Hofstede (2011), individualistic societies consider personal choice and self-determination whereas collectivistic cultures focus on relationships within the community and community decision making. The individualism score of 67 in Germany is perfectly in line with the Amazon business model that allows customers to experience personal shopping online and have the power of individual consumers to review products in detail. German consumers love Amazon to be able to meet personal preferences and offer personal experiences, which are associated with their need to be independent. Poland follows other tendencies with a higher focus on the community values and interpersonal relations that give priorities to social connections in local brands.
The implications of the strategy help to understand why Amazon won in Germany with a standardized approach where the cultural fit was perfect and failed in Poland where it met opposition. The European experience of Amazon shows how operational excellence may not lead to a successful performance of the company in the market when cultural dimensions lead to misfit between business models and expectations of consumers. A successful cultural adjustment is demonstrated by the corporate domination in Germany, and lack of success in Poland shows the need to know the local taste in favor of traditional hierarchies and shopping with friends and trusted home brands.
Reference
Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online Readings in Psychology and Culture, 2(1). https://doi.org/10.9707/2307-0919.1014
Kirkman, B. L., Lowe, K. B., & Gibson, C. B. (2006). A quarter century of Culture’s Consequences: A review of empirical research incorporating Hofstede’s cultural values framework. Journal of International Business Studies, 37(3), 285-320.
