In the 80’s Geert Hofstede developed Cultural Dimensions Theory to compare the culture of different countries. The values in the culture are measured along certain dimensions. In the beginning, Hofstede put forward four dimensions, but later added two more dimensions.

Evaluation of culture is made on the following dimensions —

Power Distance Index :Here the centralisation or high index and decentralisation or low index of power is considered from the point of those who do not have power. In centralised power, a few make decisions and the rest follow them. In decentralised system, everyone expresses opinions. Thus in short, how equality is valued is measured from the viewpoint of those who suffer from inequality.

Individualism and Collectivism : Individualism keeps an individual and his rights at the centre. In collectivism the group rights are important. In individualism, an individual seeks to be self-reliant.

Uncertainty Avoidance Index : Here it is seen how a culture handles uncertainty. Some societies avoid uncertainty by making rules, laws and customs to govern the behaviour. Some accept uncertainty with an open mind.

Masculinity and Femininity : Masculinity refers to success, wealth, fame and physical comforts. Femininity refers to co-operation, care for the weaker sections and the tendency to lead a fruitful life. Indian society tends to lean forwards masculinity. Sweden, Norway, Netherland are more forwards femininity.

Long-term Orientation and Short-term Orientation : Whether the behaviour of people is guided by long term effects in future or by short-term effects in the past? The US does not save for the future. They have short-term orientation. Japan things long term, and employment is seen as a life-term commitment.

Restraint and Indulgence : How much you are allowed to enjoy life? The US scores higher. Religious societies score lower.

The above factors are useful in international trade, in MNCs. The theory assumes one type of culture across the country, but it is not so.