Power-Distance Index - PDI
Categories: Metrics
Power and money: who has it? How much do they have? What do they do with it? And how do those without much of either...feel about it?
These are the types of questions that the “power-distance index,” or PDI, attempts to answer. Specifically, this index, developed by a Dutch social psychologist named Geert Hofstede, tells us how cool a culture is with the wealth and power hierarchy that exists within it. The PDI ranges from 1 to 120, and the higher the score, the more autocratic and rigid the hierarchy within that culture tends to be.
Generally speaking, a country or organization with a high PDI will tend to have a larger degree of wealth separation (i.e., a bigger gap between the “haves” and the “have-nots”) and a more strict hierarchy and system of rules in place to keep it that way. When those in charge—the “haves”—make decisions or issue proclamations, they tend to be adhered to without too much muss or fuss. Many Middle Eastern and Central American countries have high PDIs.
Anyone wondering which country has the lowest PDI? Wonder no more—it’s Austria. They’ve got a PDI of 11 (compare this to Malaysia’s PDI, which is a whopping 104). The United States has a PDI of 40. So...why is this all important? Well, because here in our 21st-century global economy, it’s not unheard of for an American country to do business in both Malaysia and Austria. But if we want to do good business, it’s helpful to understand the culture in those places and how it might differ from our own. Though the PDI is only one of Hofstede’s cultural indicators (there are six total), it can help us understand another country or organization’s power dynamic, and how that might play out when it comes to buying, selling, and making deals.
