POWER DISTANCE INDEX AND ITS ROLE IN THE EFFICIENT FUNCTIONING OF MULTINATIONAL ORGANIZATIONS

Abstract

Enveloping a wide-range spectrum of political, cultural, and ethical aspects, the power distance index essentially summarizes the acceptance of hierarchical structures. The number of micro ecosystems in which hierarchy and power-centered forms of organization prevail is undoubtedly large, given the fact that authoritarian regimes have been mostly abolished and invalidated during relatively recent history, and many people are still unconsciously reminiscing on their unwritten rules of conduct. This paper intends to take a closer look into the impact that various power distance index values have on organizational culture, with multinationals being the niche thoroughly studied. By analyzing official performance reports in correlation with dr. Geert Hofstede’s premises, the author intends to give insight into how overall worker performance is affected by autocracy, inequality, and responsibility centralization, which are all consequences of high-power distance indexes.