What is the 'Power-Distance Index - PDI'
The power-distance index (PDI), developed by Dutch social psychologist Geert Hofstede, is a metric for the distribution of power and wealth between individuals in a business, culture or nation. The PDI ultimately provides evidence of the extent to which regular citizens, or those working under another, will follow the whims of an authoritative figure. Hofstede’s PDI is lower in countries and organizations where authority figures are working closely with subordinates; the PDI is higher in places where a stronger hierarchy of authority exists.
BREAKING DOWN 'Power-Distance Index - PDI'The PDI is sometimes considered comparative of the link between the fortunate and the not-so-fortunate. Organizations and societies that are strictly structured — those with high PDI valuation — are dependent upon figures of authority for decision making; there is a distinct separation between authority figures and those they govern. When low PDI individuals/businesses work in conjunction with clients and organizations that have high PDIs, it is vital to remain cognizant of the fact that in order to make decisions, an authoritarian role will almost always need to be established.
The Cultural Dimensions Theory
Power distance and the PDI are one portion of Hofstede’s cultural dimensions theory — the earliest theory about the perceived differences between cultures to be quantified. This theory is applied extensively in a number of fields, primarily cross-cultural psychology, cross-cultural communication and international business. Driven by factor analysis, the cultural dimensions theory’s original form was based on the results of Hofstede’s global survey of IBM employee values. Testing and collection of results was conducted from 1967 to 1973. Using the results from this testing, Hofstede determined that there are six different dimensions to every culture: power distance, uncertainty avoidance, individualism vs. collectivism, short term vs. long term, masculinity vs. femininity, and self-restraint versus indulgence. Hofstede’s original model only had four dimensions but was redeveloped over time; long-term orientation (short-term versus long-term) was added after Hofstede performed independent research in Hong Kong and indulgence versus self-restraint was added in 2010.
Business and the PDI
Hofstede is of vast importance because of his introduction of cultural differences, specifically in the arena of business. As the global economy integrates more and more every second, understanding the role that the PDI plays in the context of business becomes ever more significant. The idea of power relationships and how they are viewed affects an individual’s actions during business negotiations, both employees and managers. For example, it will likely be counterproductive for a low power distance manager or negotiation approach to be used on an individual that is used to a high power distance point of view.