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Introduction
Overview
One of the most peculiar aspects of post-industrial living is the fact that, during the course of few recent decades, the pace of technological progress in the field of informational technologies, had attained a clearly defined exponential momentum. In its turn, this created objective preconditions for the growing number of commercial entities to face the prospect of undergoing an organizational change, as the main prerequisite of retaining their competitiveness.
What it means is that, within the context of managers addressing their professional duties, their ability to provide proper evaluation of associative risks will become increasingly indispensible. After all, the proper functioning of free-market economy cannot be ensured if those in charge of managing commercial organizations are being incapable of perceiving the full scope of positive and negative effects, deriving out of organizations exposure to risk.
However, given the fact that the qualitative subtleties of how managers go about assessing operational and restructuring-related risks often reflect the particulars of these managers ethno-cultural affiliation (Douglas 2007), the risk-related decision-making, on their part, cannot be referred to as completely rationale-driven, in classical sense of this word.
A number of empirical studies, conducted on the subject matter (Al-Olayan & Karande 2000; Culp 2001; Hofstede 1980; Nair 2010) do support the validity of an earlier articulated idea as practice shows, while indulging in executive decision-making; managers subconsciously resort to culturally defined methods of rationalization. In other words even though the managerial risk-related choices are being often assumed rational de jure (De jure is a classical Latin expression that means concerning law, as opposed to de facto, which means concerning fact), they can rarely be considered rational de facto.
Moreover, given the fact that peoples understanding of the very concept of rationality extrapolates the inner workings of their mentality, the qualitative functioning of which is being predetermined by the specifics of their social upbringing and their genetic constitution, the manner in how they approach risk managing often appears unpredictable (Gupta 1992). The sheer acuteness of an earlier described conundrum (a logical postulation that evades resolution) comes out particularly visible today, when Western societies grow increasingly multicultural.
After all, as practice shows, even though that todays managers do strive to endow employees with the respect towards the concept of multiculturalism, the fact that ethnically diversified employees executive decision-making seem to be affected by the very essence of these peoples cultural makeup, is being rarely taken into consideration. As a result, risk assessment and evaluation differs from one person to another in the same project, which causes conflict between team members.
This conflict, however, can be creative if management recognize cultural differences from the beginning and manage them positively. And, in order for the recognition of employees cultural differences to be practically beneficial, it represents the matter of crucial importance for managers to possess an understanding of not only technical aspects of how ones culture affects his or her cognitive and perceptional patterns, but to also be endowed with the insight on why culture affect peoples existential modes, in the first place.
In addition, because an ongoing process of Globalization presupposes the standardization of managerial practices, managers from transnational corporations must be aware of what will account for regional representatives likelihood to choose in favor of a particular course of action, when faced with potentially risky situations. For that, they would have to be aware of the main provisions of Cultural Risk theory (Thompson, Ellis & Wildavsky 1990), and also of Hofstedes Cultural model of risk perception.
In this study, I will aim to test strengths and weakness of an earlier articulated thesis (in order for the recognition of employees cultural differences to be practically beneficial, it represents the matter of crucial importance for managers to possess an understanding of not only technical aspects of how ones culture affects his or her cognitive and perceptional patterns, but to also be endowed with the insight on why culture affect peoples existential modes, in the first place) and to explore how cultural theories of risk interconnect with other scientific perspectives on what defines peoples ability to adequately address lifes challenges, associated with taking/avoiding risks.
The testing of the thesis will be done by the mean of studying relevant academic literature and by the mean of conducting an empirical research onto what can be defined as culturally motivated differences in risk-perception, on the part of British and Saudi Arabian mid-level managers.
Project aim and objective
This researchs foremost objective is to define what accounts for cultural particulars of peoples perception of risk and to substantiate the idea that the proponents of Cultural Risk theory have indeed made a good point when assuming that, while assessed through perceptional lenses of ones cultural affiliation, the potential implications of taking/avoiding risk will emerge qualitatively different. Moving forward, this study will have a specific aim that needs to be achieved by the end of the project comparing two different cultures in the way they perceive and assess risk (i.e. Saudi culture and British culture).
The empirically obtained qualitative/quantitative data, in regards to how British and Saudi managers tend to reflect upon risky decision-making, should highlight what may account for appropriateness/inappropriateness of managerial strategies, designed to be deployed in British and Saudi Arabian commercial organizations, in general, and to specify the affiliates of both cultures likelihood to choose in favor of one or another risk-addressing method, in particular.
In their turn, the insights as to peoples varying capacity to enjoy emotional/cognitive comfortableness, while exposed to risk, which will be obtained during the course of conducting this research, should help transnational corporations to adopt appropriate approaches towards managing culturally diverse employees. While conducting present study, I will strive to find evidence as to the fact that, as compared to what it is being the case with Saudi managerial culture; British managerial culture is more risk-welcoming.
Literature Review on Risk Perception
What is risk?
As of today, the field of risk research continues to be affected by two methodologically different approaches to defining the very concept of risk and to reflecting upon risks perceptional emanations. These approaches can be generally categorized as psychometric (cognitive), on one hand, and cultural (social), on another. One of the prominent advocates of psychometric approach Slovic (1992) defines risk as: The probability of an event occurring, combined with an accounting for the losses and gains that the event would represent if it came to pass (p. 118).
According to the author, it is namely peoples varying ability to rationalize potential hazards/opportunities, associated with what appears as particularly risky course of action, which defines qualitative subtleties of their attitude towards such an action. At the same time, the proponents of psychometric theory point out to the fact that the workings of ones sub-consciousness play rather important role in how he or she perceives the gravity of a particular risk.
For example, an individual would be likely to disregard the chance of dying in plane crash, when being exposed to statistical probability of such an occurrence. Nevertheless, after having been exposed to documentaries that contain explicit scenes of people dying in plane crashes, he or she will most likely to end up thinking of such a probability as being of rather clear and present nature.
The proponents of cultural approach refer to the concept of risk as essentially social construct, which cannot be discussed outside of what represents the essence of predominant socio-political, economic and cultural discourses in a particular society. Oltedal et al. (2004) outlined the theoretical premise behind this idea with perfect clarity: Humans are influenced by their surroundings and the environment affects cognition as well as behavior and individual decisions (p. 7).
This is the reason why definitions of risk, provided by the proponents of cultural theory, emphasize societal aspects of how people perceive surrounding reality. As it was pointed out by Thompson, Ellis, and Wildavsky (1990): Subjectivity need not rule out regularity as long as different sorts of people feel subjective in similar ways with regard to similar objects (p. xiii).
Given the fact that there is a plenty of empirical evidence as to the fact that the specifics of peoples ethno-cultural/social affiliation do affect their risk-related attitudes, the cultural definition of risk appears academically legitimate. This definition can be reformulated as follows: risk is what socially functioning mindset of a particular individual perceives as appropriate/inappropriate ratio between actions associative dangers and benefits.
Given the nature of a researched subject matter, during the course of conducting consequential phases this study I will make point in referring to specifically this definition of risk as being the most contextually appropriate.
Risk perception/assessment models
Even though that, as I have mentioned earlier, just about all approaches to conceptualizing risk can be classified along the lines of Cultural (social) and Psychometric (cognitive) theories, the classification of what different researchers suggest should account for practically valuable risk perception models represents much more challengeable task. The reason for this is simple as I am going to illustrate, many of these models feature both: the elements of cultural and psychometric risk-related theorizing, as their integral components. Nevertheless, it is still possible to outline the procedural matrix of six major risk models, as defined by Renn (1990).
Actuarial/Statistical model
This model is based upon the assumption that the potential risks, associated with a particular social, economic, political or environment-affecting activity, can be well predicted for as long as this activity remains spatially extended for long enough. For example, it does not represent much of a challenge to figure out what may account for ones chances to die in a car accident. In order to calculate these chances, the researches would have to work out a formula, where the number of cars on the roads and the extensiveness of a traffic at given location will serve as an independent variable, and the subtleties of individuals reliance on its car, as the method of transportation, will serve as a depended variable.
The foremost characteristic of this risk perceptional model is its systemic nature that is, it can only accurately predict risks associated with systems functioning as a whole. The foremost characteristic of this risk perceptional model is its systemic nature that is, it can only accurately predict risks associated with systems functioning as a whole (Pierce 1998). In its turn, this exposes two major shortcomings of actuarial/statistical risk assessment model:
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its predictions are too vague and statistically dependent, which implies that this model cannot be utilized to assess individual risks in every particular case,
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actuarial/statistical risk assessment model only provides long-term and never short-term predictions.
Epidemiological model
From conceptual point of view, this model is quite similar to previously mentioned one. Models theoretical premise is based upon an assumption that is quite possible to figure out the number and the qualitative essence of potential hazards to peoples health, which may originate in the functioning of a number of commercial, scientific and governmental organizations. While studying what accounts for the risks to peoples health, associated with the potentially hazardous situation, researchers project their knowledge of what may account for chemical/biological agents harmful effects onto exposed population. In its turn, this allows them to evaluate risks, associated worst case scenario.
The apparent drawback of this specific model is that researches often lack information as to spatial effects of an exposure. What also adds to the problem is that the extent of peoples physiological well-being is the subject of numerous interpretations.
Engineering model
This specific risk perception model is being primarily utilized within the context of ensuring safety of a number of technical projects, such as constructing houses, for example. In its turn, this implies that it is being just as systemic as the ones mentioned earlier. This particular model is based upon the assumption that the successful completion of a technical project cannot be accomplished without making sure that such projects structural elements occupy proper systemic niches, as the extent of projects structural integrity relates to the extent of its safety in geometrical progression (Lowrance, 1976).
That is the more research is being conducted on how projects elements will react to the exposure to force majeure circumstances, the higher would be the overall extent of an associative safety. This is why engineering risk perception model relies upon the utilization of probabilistic risk assessments (PRA), as its methodological tool. Nevertheless, just as it is being the case with the rest of technical approaches to risk perception/assessment, this particular model appears particularly prone to the factor of uncertainty.
For example, even though both WTO towers in New York were rightly deemed absolutely safe (they were designed to sustain earthquakes of 8.0 8.5 points on Richter magnitude scale), it never occurred to the providers of associative PRAs that anyone would attempt to fly passenger planes into these buildings. As the result, in the aftermath of 9/11 attacks, both WTO towers were proven unsafe.
Economic model
The foremost feature of this risk perception model is that it does not associate the concept of risk with the objective notion of physical harm, as much as it associates it with rather subjectively defined notion of economic satisfaction (Smith 1986). In its turn, the qualitative essence of how a particular individual perceives such a satisfaction is being largely depended on the inherited and socially defined subtleties of such individuals psychological constitution.
After all; whereas, one person may consider it being economically justified to indulge in heavy physical labor in exchange for being paid as little as $5 per day (as it is being the case with the majority of people in Third world countries), another person will consider making less than $5.000 per day a loss, due to such income being lesser then the daily cost of conducting business, for example. Therefore, the effective deployment of economic model for risk perception/assessment depends in finding a so-called common denominator a commonly shared criteria for evaluating the extent of economic activitys profitability, in relation to the scope of associative risks (Merkhofer 1984).
What adds even more complexity to the issue is that fact that, just as it is being the case with the notion of economic profitability, the notion of related costs (risks) is highly subjective. Nevertheless, because the foremost principle of free-market economys functioning (generation of monetary profit) continues to be universally recognized across the globe, there can be few doubts as to the economic risk perception models applicational legitimacy, for as long as the qualitative evaluation of economic risks is being concerned.
Psychological model
As the very name of this particular risk perception model implies, it is being is embedded in methodological framework of psychology. Models foremost objective is to expose cognitive/heuristic motivations behind risky decision-making (Tversky 1972; Lopes 1983). According to models theoretical premise, people do resort to rationalizing, when required to make decisions that involve taking risks.
Their rationalizing, in this respect, sublimates itself in peoples tendency to consider indulging in risky behavior if such behaviors potential benefits appear particularly high. However, this tendency is being counter-balanced by peoples aversion of what they perceive as the high probability of sustaining loss, as the consequence of choosing in favor of risky decision-making. Hence, a certain paradox the extent of an individuals likelihood to think twice, before making a risky decision, often reflects upon the same individuals tendency to overlook risks, while deciding in favor of adopting a particular course of action, for as long as he or she expects its risky behavior, in that respect, to yield unusually high payoffs (Kahneman & Tversky 1974).
In other words, just as it is being the case with theoretical premise of quantum mechanics, which refers to an atom as such that can simultaneously exhibit the traits of a particle and a wave, the psychological/cognitive model presupposes peoples ability to assess the significance of a particular risk in essentially ambivalent manner. That is, depending on qualitative essence of affiliated circumstances, people would be equally capable of referring to the same method of tackling a concrete lifes challenge as risky or safe.
Cultural model
The main conceptual tenet of this particular model is that it addresses peoples tendency to indulge in a variety of risky/non-risky behaviors as such that is being correlative with the particulars of their ethno-cultural and social affiliation (Douglas 1966; Rayner & Cantor 1987). The foremost problem with cultural model of risk perception is that its practical application cannot always be appropriate within the context of defining single individuals risk-related behavioral pattern.
Moreover, models procedural subtleties are being of clearly stereotypical essence that is, this model rests upon the assumption that persons culture does affect his or her risk-related attitudes in a definitive way, which presupposes that there can be no exemptions from this rule (Rowe 1977). At the same time, there can be few doubts as to the fact that its theoretical premise is indeed being consistent with the actual realities of how people from different ethno-cultural and social groups tackle risk, in statistical sense of this word (for as long as defining the risk-related attitudes of large groups of people is being concerned).
Even though that the earlier outlined models risk-assessment models are meant to apply to specific types of risk, the theoretical premise upon which they rest derives out of the idea that it, despite risks metaphysical essence, it is indeed possible to measure/evaluate risk. In its turn, this explains why practical deployment of just about any earlier mentioned risk-assessment model usually features the elements of other models theoretical premises.
In the next sub-chapter of this study, I will explore the qualitative correlation between peoples ethno-cultural affiliation and the particulars of how they perceive risk at length.
Culture and risk perception
The validity of an idea that ones culture does exert a strong influence on individuals positioning in life is now being considered absolutely legitimate by the majority of psychologists and social scientists. Partially, this is due to the fact that ideas legitimacy can be well proven by empirical observations in the context of social interactions. For example, it has been noticed that Western and Oriental practices differ rather drastically in how parents go about helping their children to develop cognitive skills.
When a typical Western mother tries to familiarize its child with the notion of car, she would be most likely to describe car as something that has innate characteristics: Look at this car it has four wheels, it is red and shiny.
Oriental mother, on the other hand, would be most likely to introduce its child to the notion of car by pointing at cars contextual characteristics: Look at this car it allows passengers to enjoy fast and comfortable ride (Yiyuan et al., 2005). Apparently, unlike what it is being the case with Western psyche, Oriental psyche it utterly eclectic, because people of East Asian descent tend to perceive universe and their place in it as being mutually interconnected to the point where it cannot even be ascertained whether emanations of surrounding reality should be referred to as such that exert external influence onto concerned individuals existential mode.
Hence, Asians culturally predetermined tendency to think of causes and effects as such that derive out of each other in cyclical (contextual) rather than in linear (dispositional) manner. For an individual, strongly affiliated with one of Oriental cultures, the full scope of probable consequences resulting from what he or she perceives as non-action, appear to be just as acute as the effects of even particularly volatile action.
As it was noted by Peng and Knowles (2003): Americans (Westerners) favor internal/dispositional explanations for nonsocial events more than do Chinese, whereas Chinese prefer external/contextual explanations more than do Americansn (Westerners) (p. 1282). For example, unlike what it is being the case with Western advertisement posters, which usually feature an advertised product at the very centre, advertisement posters designed to appeal to Oriental consumers rely mainly upon contextual approached towards conveying a commercial message, which is why in these posters the promoted products are being usually situated in the corners.
In its turn, this explains why, as of today, taking into consideration the specifics of peoples ethno-cultural affiliation became an integral part of advertisement practices, designed to appeal to the workings of targeted audiences subconscious psyche.
Nevertheless, the fact that, as it was mentioned earlier, peoples cultural differences do affect the patters of their cognition, does not explain why it is being actually the case. Moreover, it also does not explain why, even though there are many cultures in the world, when it comes to analyzing their influence on affiliated populations perceptional modes, this influence ends end being conceptualized within the context of how it increases peoples individualistic (Western) drives, on one hand, and collectivist (non-Western) drives, on the other. In other words, there is a certain dilemma despite world cultures apparent plurality, their influence on peoples behavioral patterns appear to have essentially dual subtleties.
The partial clue to this dilemma can be found in the works of famous French anthropologist Lucien Levy-Bruhl (1928). According to the author: Identity appears in non-Western collective representations& as a moving assemblage or totality of mystic actions and reactions, within which individual does not subjectualize but objectualize itself (p. 120). What it means is that there are objective preconditions for people affiliated traditional non-Western cultures to be endowed with well-developed sense of utilitarian practicality and to rely on this sense, when it comes to addressing lifes challenges.
As it was shown in Bruhls book, after having been asked to exclude semantically unrelated word out of wordily sequence axe hammer saw log, natives from Vietnams remote rural areas were experiencing a particularly hard time, while dealing with the task. In their eyes, the earlier mentioned sequence made perfectly good sense as it was, simply because they considered every of these objects useful. The fact that the words axe, hammer and saw could be categorized as instruments, on one hand, and that the word log could be categorized as material, on another, never even occurred to these people. Apparently, the fact that non-Western cultures are being concerned with exploring specifically contextual aspects of realitys manifestations, points out at these cultures pre-logical essence.
What has been said earlier directly relates the risk-related discourse, as it points out to the fact that ones strongly defined aversion of risk is nothing but an extrapolation of his or her existential atavism. Apparently, people whose claiming up the ladder of evolution has not been particularly fast are being naturally predisposed towards avoiding risk at any possible cost. (Intellectually underdeveloped individuals usually experience a hard time, while subjectualizing themselves against natural environment, because they are being cognitively predisposed to think of themselves as natures integral parts. Hence, their tendency to avoid taking risks as an activity that challenges nature).
The reason for this is simple these peoples well-known affiliation with the so-called traditional values, sublimated in their strong sense of religiosity, their ritualistic-mindedness, their hypertrophied respect towards higher authority, and their often well-defined psychological sameness (hence, their collectivism), are the emanations of their intellectual inflexibility.
In other words, it is not due to their cultural uniqueness as thing in itself that people associated with traditionalist non-Western cultures seem to always choose in favor of avoiding risk, if circumstances allow, but due to their subconscious realization of the fact that, while exposed to risk, they will not be able to adequately address it these peoples mental rigidness create objective preconditions for this to be the case. Therefore, the more a particular person is being intellectually flexible, the more will he or she feel comfortable, while faced by such an unknown.
In this respect, a parallel can be drawn with a chess player the more possible combinations as to how to address its opponents next move is being stored in such players mind, the better are going to be his or her chances to come out winner. Chess players ability to promptly switch from one combination to another, while deciding upon its response to newly emerged threat, on the part of an opponent, is what preconditions his or her success in the game.
This is why there can be no mentally inflexible chess players by definition. (This parallel is meant to explain the actual mechanics behind peoples varying attitudes towards the risk apparently, what may appear as irrationally defined risk-welcoming attitude, on the part of a particular individual, is nothing but an extrapolation of his or her existential superiority, as someone knowledgeable enough (such persons mind stores a multitude of effective responses to potential changes of circumstances), and as someone capable of swiftly appropriating a proper response (intellectual flexibility).
What it means is that, even though peoples attitudes towards risk are being indeed affected by their culture, this culture is itself appears to be nothing but a by-product of its affiliates evolutionary positioning. In other words, individuals behavioral patterns (including risk-related attitudes) reflect the inner workings of his or her mentality, which in turn are being defined by the extent of individuals biological and socio-cultural advancement (Wildavsky 1979).
For example, there are good reasons to believe that, given highly individualistic nature of Western societies, most people affiliated with these societies would be naturally predisposed towards taking risks, while addressing existential challenges.
The reason for this is simple the term individualism is essentially synonymous to the notion of risk taking. As it was pointed out by Adams (1995): Individualism accords with a benign nature that provides a supportive context for the individualists entrepreneurial, trial-and-error way of life (p. 36). Alternatively, people affiliated with strongly collectivist/traditional societies (Saudi Arabian) that do not tolerate the emanations of individualistic industriousness (Huntington 1999), would be naturally inclined to adopt more cautious attitude, while facing risks.
Im not convinced by the points put forward& consider the development of Asian economies over the last fifty years and Asian cultures over several millennia. (The fact that, during the course of 20th centurys second part the economies of so-called Eastern Tigers (China, Japan, Korea, Malaysia, Taiwan) experienced an amazing economic boom cannot be discussed outside of what were objective preconditions for this to happen. And, the foremost precondition was the inflow of Western technologies, Western financial investments and Western human capital. Without it, Asian economic miracle would have been impossible).
Given the fact that behavioral patterns, in regards to risk-taking, appear culturally predetermined and spatially consistent, it makes logically legitimate sense for researchers to strive to classify them. According to Schwarz and Thompson (1990) and Hofstede (1980), there are four distinctive categories of people, whose perception of risk features qualitatively distinctive features:
Individualists
These people tend to adopt active stance in life, while acting as existential sovereigns (this notion refers to people capable of exercising a complete mastery over their own lives). Their foremost psychological traits are: intellectual flexibility, rationalistic mindedness and entrepreneurial industriousness. The possession of earlier mentioned psychological traits causes these people to think of risk-taking as an integral part of their lives, because they are naturally inclined to think of risk in terms of an opportunity.
For them, taking risks is the integral part of life, which is why even after risk-taking, on their part, proves counter-productive, they nevertheless continue to act in essentially voluntarist manner. Traditionally, individualism has been considered the most distinctive psychological trait of Westerners. According to Watson & Morris (1994): A self-contained individualism theoretically dominates Western personality structures and is defined by sharp self-other boundaries, a high internal sense of personal control, and an exclusion of others from ones own personal self-definition (p. 289).
The foremost proof as to the fact that Westerners are indeed being endowed with rather acute sense of individualism can serve the fact that, unlike what it appears to be often the case with non-Westerners, the popular political ideologies that appeal to Westerners, can be defined as anything but as such that thrive on evoking the anxieties of ethnic or religious solidarity in these people. [Todays Westerners are being deprived of the strong sense of ethnic/racial/religious solidarity, which explains why most of them do not actively resist the implementation of policy of multiculturalism in their countries] Apparently, on subconscious level, every Westerner consider itself a universe within, which is why he or she does not experience an urge to be uniting with mind-likes.
Egalitarians
Most individuals that belong to this particular group, are being endowed with collectivist-idealistic mentality, which presupposes their lessened ability to explore their industriousness. These people belie
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