As a result of the economic crisis, countries around the world are attacking their own debt problems with austerity measures. A mixture of culture, value systems and tradition play a role in how these measures actually are received by the citizens. Based on the fact that both the U.K. and France have adopted changes in their pension systems, how are these changes being received in the context of each country’s cultural values?
The President of France, Nicolas Sarkozy has taken some bold steps at improving of France’s economic situation. The measure which has met the most resistance by the citizens of the country is moving the retirement age from 60 to 62. This measure would save significant money in pension payouts over the years to come. What is the reaction to this? Over the last week, the French people have taken to the streets, blocking fuel supplies and crippling the economy in Paris. On the other side of the fence, people in the U.K. have had similar measures underway and there has been very limited resistance. Not one protest has arisen.
What explains these two different responses from countries that share similar geographic locations? The differing cultures between these countries provide some great insight into the why behind these diverging behaviors and their implications to international business.
A well-known cultural framework developed by an academic researcher called “Hofstede’s 5” helps to explain the differences in culture. This framework measures societal distinctions across five main categories. For the purpose of discussion, two of these categories help to explain why each country has reacted differently to similar actions in government policy. The first is the amount of comfort one country has with uncertainty. The U. K. is relatively comfortable with the ambiguity, and thus, more likely to partake in riskier ventures. France is on the other end of the spectrum being highly uncomfortable with uncertainty. In the context of changes to a pension system, the French are more likely to view this as a threat to the stability of their future retirement than people in the U.K.
The second dimension that explains why reactions are so different is the value placed on overall societal well-being. In France, the society places a high value on social welfare and caring for their own. In the United Kingdom, the society is more independent, competitive and assertive. This would explain why the French people are more concerned with the change in the pension than the people of the U.K.
This small snippet of how different countries are reacting to similar actions provides a great reminder for international businesspeople. The success of a product and the approach used to market it is highly contingent upon the society and circumstances where the product is being launched. For more information on cultures, check out the globalEDGE culture section.