# Understanding Power-Distance Index (PDI): Definition and Global Examples

## What Is the Power-Distance Index (PDI)?

The Power-Distance Index (PDI), developed by psychologist Geert Hofstede, evaluates how power and wealth are accepted and distributed within nations, businesses, or cultures. A high PDI score reflects strict hierarchies, while a low score indicates more interaction and influence among authority figures and subordinates.

### Key Takeaways

*   The Power-Distance Index (PDI) measures the degree to which individuals from different cultures accept hierarchical structures in power and wealth.
*   Developed by Geert Hofstede, the PDI is a crucial component of his cultural dimensions theory, which analyzes cultural differences.
*   Countries or organizations with high PDIs often exhibit strong, unchallenged hierarchies, while lower PDIs indicate more collaborative environments.
*   International business strategies can benefit from understanding the PDI to effectively navigate cultural differences during negotiations and operations.  
    

## How to Interpret the Power-Distance Index (PDI)

The power-distance index focuses on increasing understanding between people from different cultures in a business setting. An American car manufacturer planning to open a factor in Latvia, for example, will find that Latvians tend to show respect and deference towards management but younger workers, in particular, value an open and collaborative work environment. Latvia's PDI is a relatively low 44.

Highly structured businesses, societies, and institutions have high indices. A high index indicates that the hierarchy is clearly defined, present, and unchallenged. 

A low index indicates a less rigid or authoritarian system. The people in a low-index society or group are willing to challenge authority and readily interact with authority figures in the expectation that they can influence decisions.

### Exploring the PDI Within Hofstede’s Cultural Dimensions Theory

The power-distance index is one component of Hofstede’s cultural dimensions theory, which was the first attempt to quantify the differences among cultures. This theory is now applied extensively in fields including cross-cultural psychology, cross-cultural communication, and international business.

Driven by factor analysis, the cultural dimensions theory in its original form was based on the results of Hofstede’s global survey of the values of IBM employees. Testing and collection of the results were conducted between 1967 and 1973.

Based on these and other results, Hofstede determined that there are six distinct dimensions to every culture: power distance, uncertainty avoidance, individualism versus collectivism, short-term versus long-term, masculinity versus femininity, and self-restraint versus indulgence.

### 40

The PDI of the United States

The original model had only four dimensions but was later expanded to six. Long-term versus short-term was added after Hofstede performed independent research in Hong Kong, and indulgence versus self-restraint was added in 2010.

## Influence of the Power-Distance Index on Global Business Practices

Hofstede's theory gained considerable notoriety because of its analysis and conclusions about cultural and national differences. It has been particularly influential in the business world. With the growth of the global economy, the PDI and the factors that contribute to it have been used to foster an understanding of cultural differences and how they affect international business dealings.

The differences in perception of power seem particularly relevant during business negotiations. For example, Austria has a power distance index of approximately 11, while many Arab nations have indices of around 80. Employing Austrian business practices or management styles in an Arab country may be counterproductive, or at the very least can produce a degree of [culture shock](https://www.investopedia.com/terms/c/culture-shock.asp). 

The United States, by the way, has a PDI of 40.

## Does the U.S, Have a High or Low PDI?

The U.S. has a PDI of 40, according to the Power-Distance Index. This relatively low score is seen as reflecting a focus on equal rights. In American business, it concludes, managers rely on individuals and teams and management is accessible to employees. Communication is "informal, direct, and participative."

## What Nation Has a Very High PDI?

Russia has a very high PDI of 93. Power holders are remote from the people. Political and financial power are highly centralized in Moscow. Any business interactions are expected to take a top-down approach.

## Which Nation Has a Very Low PDI?

Denmark scores an 18 on the PDI scale. "Danes do not lead," the summary states, "they coach and employee autonomy is required." Danes have a highly egalitarian mind-set and expect to be consulted, not ordered around.

## Practical Implications of the Power-Distance Index

The power-distance index can provide useful information to people doing business abroad about the work culture of foreign employees. However, one should be careful to avoid over-generalizing or using these metrics to stereotype other cultures. It may be true that some cultures are more or less deferential to authority structures, but that doesn't mean that they're less capable of independent thought and aspirations. Not only would such generalizations be grossly offensive, they could also lead to bad business decisions.

> **Article Sources**
>
> 1.  Hofstede Insights. "[Country Comparison](https://www.hofstede-insights.com/country-comparison/the-usa/)."
>     
> 2.  Hofstede Insights. "[National Culture](https://hi.hofstede-insights.com/national-culture)."
>     
> 3.  Hofstede Insights. "[What We Do at Hofstede Insights](https://hi.hofstede-insights.com/what-we-do)."