10 minutes with Geert Hofstede on Long versus Short Term Orientation 01032015

Summary

The video discusses the concept of long-term versus short-term orientation, introduced as the fifth dimension of societal differences by the speaker in 1991. Initially based on data from 23 countries, this expanded to 93 with Dr. Michael Minkov's discovery of a correlating dimension in the World Value Survey. Long-term oriented societies emphasize future rewards like perseverance and thrift, while short-term societies value traditions and social obligations. The Long-Term Orientation Index (LTO) measures this on a scale from 0 to 100. Examples of societal factors correlating with LTO include educational performance, savings rates, investment preferences, and economic growth, particularly in poorer countries.

Takeaways

• 📊 Long-term vs. Short-term orientation is a cultural dimension introduced by the speaker in 1991, initially based on data from 23 countries.
• 🌐 This dimension was later expanded to 93 countries with the help of Dr. Michael Minkov, who found a significantly correlated dimension in the World Value Survey data.
• 🌱 Long-term orientation is characterized by fostering pragmatic virtues such as perseverance, thrift, saving, and adapting to change for future rewards.
• 🌪️ Short-term orientation emphasizes virtues related to the past and present, including national pride, respect for tradition, preservation of faith, and fulfilling social obligations.
• 🔄 Long-term oriented societies view good and evil as relative and changeable, while short-term societies see them as absolute and constant.
• 🧘‍♂️ In long-term cultures, a superior person is one who adapts to circumstances, whereas in short-term cultures, they are consistent and unchanging.
• 🏦 Long-term oriented societies tend to have higher savings rates and are more focused on long-term profits and market share, unlike short-term societies that prioritize short-term results.
• 📈 The Long-term Orientation Index (LTO) measures societal values on a scale from 0 (short-term) to 100 (long-term), with notable differences among countries.
• 🏫 In long-term oriented societies, secondary school students perform better in mathematics but tend to underestimate their abilities, contrasting with short-term societies.
• 💹 Economic growth in poor countries is faster if they have a long-term orientation, whereas short-term oriented poor countries often experience slower growth.
• 🌟 Long-term orientation scores are relatively stable over time and are influenced by values passed down from parents to children, showing little change even with technological advancements.

Q & A

Who introduced the concept of long-term versus short-term orientation?

The concept of long-term versus short-term orientation was introduced by the speaker in 1991.

What was the initial number of countries for which data was available when the long-term versus short-term orientation dimension was first introduced?

Initially, there was data available for 23 countries.

How did the number of countries with available data increase for the long-term versus short-term orientation?

The number of countries with data increased to 93 when Dr. Michael Minkov discovered a significantly correlated dimension in the World Value Survey data from 1995 to 2004.

What does long-term orientation represent in a society?

Long-term orientation represents the fostering of pragmatic virtues oriented towards future rewards, such as perseverance, thrift, saving, and adapting to changing circumstances.

What are the characteristics of short-term orientation in a society?

Short-term orientation is characterized by fostering virtues related to the past and present, such as national pride, respect for tradition, preservation of faith, and fulfilling social obligations.

How does the perception of good and evil differ between long-term and short-term oriented societies?

In long-term oriented societies, good and evil are seen as relative and can change over time, whereas in short-term oriented societies, they are viewed as absolute and always the same.

What is the difference in how superior individuals are perceived in long-term versus short-term oriented societies?

In long-term oriented societies, a superior person is someone who knows how to adapt to circumstances, while in short-term oriented societies, a superior person is someone who is always the same.

How does long-term orientation influence economic growth in poor countries?

Long-term oriented poor countries tend to have faster economic growth compared to short-term oriented poor countries, which often stagnate.

What is the Long-Term Orientation Index (LTO) and how is it measured?

The Long-Term Orientation Index (LTO) is a scale from 0 to 100 where 0 stands for short-term orientation and 100 stands for long-term orientation, used to measure the differences between societies.

How does the educational performance in mathematics of secondary school students differ between long-term and short-term oriented societies?

In long-term oriented societies, secondary school students tend to score higher in mathematics but rate their own results lower, while in short-term oriented societies, they perform relatively poorly but tend to overrate their own math results.

Do the LTO scores change over time, and if so, how?

LTO scores reflect values transferred from parents to children and tend to remain consistent over time. Research shows that values acquired in childhood rarely change in later life, and there are no significant worldwide shifts or changes in the relative positions of countries over time.

Outlines

00:00

🌟 Introduction to Long-term vs. Short-term Orientation

The concept of long-term versus short-term orientation was introduced by the speaker in 1991 as a fifth dimension of cultural difference. Initially, data was limited to 23 countries, but it expanded to 93 countries with the discovery of a correlated dimension in the World Value Survey. Long-term orientation is characterized by fostering pragmatic virtues aimed at future rewards, such as perseverance, thrift, saving, and adapting to change. Conversely, short-term orientation emphasizes virtues related to the past and present, including national pride, respect for tradition, preservation of faith, and fulfilling social obligations. The speaker explains the societal implications of these orientations, such as views on good and evil, adaptability, self-perception, learning from others, and the treatment of traditions. The video also touches on the correlation between long-term orientation and practical outcomes like economic growth in poorer countries and educational performance in secondary school students.

05:02

📊 Measuring Long-term Orientation Index (LTO)

The Long-term Orientation Index (LTO) is a scale from 0 to 100, where 0 represents short-term orientation and 100 represents long-term orientation. The speaker provides examples of countries with high and low LTO scores, such as East Asian countries like Japan and China, and Western countries like Germany and Russia on the higher side, and countries like the United States, Mexico, and Australia on the lower side. The LTO index correlates with various societal factors, including academic performance in mathematics, savings rates, investment preferences, and corporate focus on market share versus short-term profits. The speaker also notes that in poorer countries, long-term orientation is associated with faster economic growth, while in wealthier countries, the relationship between LTO and economic growth diminishes. The video emphasizes that LTO scores are stable over time and are influenced by values passed down from parents to children.

10:05

🌐 Impact of Long-term Orientation on Economic Development

The final paragraph emphasizes the role of long-term orientation in the economic development of poor countries. It suggests that poor countries with a long-term orientation tend to develop faster economically compared to those with a short-term orientation, which often face stagnation. The speaker concludes by highlighting that despite significant technological advancements and global information systems, the use of technology varies between societies based on their pre-established values. This implies that while technology can influence private habits and business practices, it does not necessarily lead to uniformity in values or practices across different cultures.

Keywords

💡Long-term vs. Short-term Orientation

Long-term vs. Short-term Orientation is a cultural dimension introduced by the speaker in 1991, representing the fifth dimension of difference among national societies. It contrasts societies that foster pragmatic virtues oriented towards future rewards, such as perseverance, thrift, and adaptability, with those that emphasize virtues related to the past and present, like national pride and respect for tradition. This concept is central to the video's theme, as it influences various societal factors and behaviors, as illustrated by the examples given, such as educational performance and economic growth.

💡Pragmatic Virtues

Pragmatic virtues are future-oriented values that emphasize practicality and effectiveness in achieving long-term goals. In the context of the video, these virtues are associated with long-term orientation, where societies encourage perseverance, thrift, saving, and adapting to changing circumstances. This is exemplified by the speaker's assertion that long-term oriented societies tend to have higher savings rates and prioritize long-term profits over short-term gains.

💡National Pride

National pride is a sentiment that reflects short-term orientation, where societies place a high value on their past achievements and current status. The video suggests that short-term oriented societies are more likely to foster a sense of national pride and respect for tradition, which can sometimes hinder adaptability and change. This is in contrast to long-term oriented societies that may be more willing to adapt traditions to suit new circumstances.

💡Adaptability

Adaptability refers to the ability to adjust and respond effectively to changing circumstances. The video highlights adaptability as a key virtue in long-term oriented societies, where individuals and organizations are more likely to embrace change and innovate. This is in line with the video's broader message that long-term orientation can lead to more sustainable and flexible economic and social development.

💡Thrift

Thrift is the practice of being economical and avoiding waste, which is a virtue associated with long-term orientation. The video connects thrift to the tendency of long-term oriented societies to save more and thus have more funds available for investment. This behavior is seen as contributing to economic stability and growth, as opposed to the short-term spending habits that can characterize short-term oriented societies.

💡World Value Survey

The World Value Survey is a global research project that provides data on societal values and beliefs. In the video, the speaker mentions that data from this survey was instrumental in expanding the number of countries for which long-term and short-term orientation scores were available, from 23 to 93. This data is crucial for understanding cultural differences and their impact on various societal factors.

💡Economic Growth

Economic growth is a central theme in the video, with the speaker discussing how long-term orientation can influence the rate at which poor countries develop economically. The video suggests that long-term oriented societies, particularly those that are poor, tend to experience faster economic growth compared to their short-term oriented counterparts, which often stagnate.

💡Relative Virtues

Relative virtues are the idea that what is considered good and evil can change over time, a concept associated with long-term orientation. The video contrasts this with the absolute virtues of short-term orientation, where good and evil are seen as fixed and unchanging. This distinction is important for understanding how different societies approach moral and ethical decision-making.

💡Superior Person

The concept of a 'superior person' varies between long-term and short-term oriented societies. In the video, the speaker explains that in long-term societies, a superior person is one who can adapt to circumstances, while in short-term societies, a superior person is consistent and unchanging. This reflects the different values placed on adaptability and consistency across cultures.

💡Fundamentalism

Fundamentalism is characterized by a strict adherence to basic principles or doctrines, often with an unwillingness to compromise. The video associates short-term orientation with fundamentalism, suggesting that societies with this orientation may be more likely to adopt extreme positions, whether religious, ideological, or political, rather than seeking middle ground or compromise.

💡Long-term Orientation Index (LTO)

The Long-term Orientation Index (LTO) is a measure used to quantify a society's orientation towards long-term or short-term values. The video explains that this index ranges from 0 to 100, with 0 representing short-term orientation and 100 representing long-term orientation. The LTO is used to compare countries and understand how their cultural values may influence various aspects of society, such as education, economics, and social behavior.

Highlights

The concept of long-term versus short-term orientation was introduced in 1991 as a fifth dimension of cultural differences.

Initial data was limited to 23 countries, expanding to 93 countries with the discovery of a correlating dimension in the World Value Survey.

Long-term orientation is associated with fostering pragmatic virtues like perseverance, thrift, and adaptability.

Short-term orientation emphasizes virtues related to the past and present, such as national pride and respect for tradition.

Long-term oriented societies view good and evil as relative and changeable, unlike the absolute view in short-term societies.

In long-term societies, a superior person is one who adapts to circumstances, contrasting with the consistent superior person in short-term societies.

Long-term orientation promotes humility and learning from other countries, in contrast to the self-pride and nationalism of short-term orientation.

Traditions are seen as changeable in long-term societies, while they are sacred and unchangeable in short-term societies.

Long-term orientation values integrating opposing truths into something new, whereas short-term orientation sees a clear contradiction.

Long-term societies prioritize common sense and the middle way, while short-term societies may lean towards fundamentalism and extremism.

The Long-Term Orientation Index (LTO) measures societal orientation on a scale from 0 (short-term) to 100 (long-term).

East Asian countries like Japan and China score high on long-term orientation, while the United States and Australia score low.

Long-term oriented societies tend to have higher savings rates and more funds available for investment.

In long-term societies, companies focus on market share and long-term profits, unlike short-term societies that emphasize quarterly results.

Investor preferences in long-term societies lean towards family businesses and real estate, contrasting with a preference for shares and mutual funds in short-term societies.

In poor countries, long-term orientation correlates with faster economic growth compared to short-term oriented countries.

LTO scores reflect stable values passed from parents to children and show little change over time, even with technological advancements.

Long-term orientation plays a crucial role in the economic development of poor countries, with those scoring high developing faster.

Transcripts

[Music]

the dimension longterm versus short-term

orientation was introduced by me in

1991 for a fifth dimension of difference

between National

societies I had found four

dimensions but there was a research

project by Professor Michael bond from

Hong Kong who had researched with a

questionnaire made by Chinese Scholars

and that questionnaire produced a

dimension which we didn't have yet and

this Dimension I introduced as The Fifth

and I called it long for a shortterm

orientation

we only had data for 23 countries and it

was only in

2010 when Dr Michael minkov my

collaborator discovered in the world

value survey 1995 till 2004 data a

dimension which was significantly

correlated with this long-term versus

short-term data we had already for the

countries which we had in both studies

and now suddenly the number of countries

for which we had data jumped to 93 more

than four times as many and those are

the scores we use

now now long-term orientation stands for

the fostering in a society of pragmatic

virtues oriented to Future rewards in

particular

perseverance same as persistence Thrift

saving and adapting to changing

circumstances and the opposite poll

shortterm orientation stands for the

fostering in the Society of Virtues

related to the past and the present such

as national pride respect for tradition

preservation of faith and fulfilling

social

obligations what it relates to long-term

orientation what relates to short-term

orientation uh by the data we got from

the world value survey we could extend

our list of the correlates of long-term

and short-term orientation and we found

that on the long-term side the feeling

is that good and evil are

relative they can change over time what

is good and what is evil whereas on the

shortterm side the feeling is that good

and evil are absolute and always the

same which means that on the long-term

side which Norms apply depends on the

situation whereas on the shortterm

orientation side fixed Norms always

apply whatever the

circumstances in long-term oriented

societies a superior person is somebody

who knows to adapt to the

circumstances in the shortterm oriented

Society the Superior person is someone

who is always the

same in the long-term orientation we

should be humble about ourselves whereas

on the shortterm orientation we seek

positive information about

ourselves in the long-term side we want

to learn from other countries on the

shortterm side we are proud of our own

country on the long-term side Traditions

can be changed on the shortterm side

tradtions are sacr

San on the long-term side when two

truths oppose each other they may be

integrated into something new in the

shortterm orientation there is always an

contradiction between A and B if they

are not the

same and finally long-term orentation

you can say that what is very very

important to resolve a problem is common

sense and certainly choosing the middle

way in the shortterm side we find more

fundamentalism which is choosing the

extreme and there there could be

religious fundamentalism but also

ideological fundamentalism political

fundamentalism how do we measure long

and shortterm

orientation there is again no absolute

standards we can measure the differences

between

societies and the position is measured

in an index the long-term orientation

index

lto and we have scores for this index on

a scale from 0 to 100 where 0 stands for

shortterm orientation and 100 stands for

long-term orientation

let me give you an example again from

the 93 countries for which in this case

we have data a picked again uh 14

countries seven on the high side seven

on the low side and uh on the high side

we find first of all East Asia Japan and

China but also relatively high is

Germany and

Russia uh somewhat lower but still on

the higher side we find the Netherland

and France and Italy and on the brink

Sweden now on the low side but

relatively close to the higher side we

find Britain we find India and shortterm

orientation we find Israel the United

States Mexico

Australia Nigeria and other African

countries and finally very short Egypts

and other Islamic countries

what can we do with this long-term

orientation index what does it correlate

with well I'll give you some examples of

societal factors that can be measured

elsewhere and that do correlate with

long-term short-term

orientation and first of all there is an

interesting difference between the

performance of secondary school students

at mathematics which are regularly

measured in UNESCO research in long-term

oriented societies Secondary School

students tend to score higher at

mathematics but to rate their own

results

lower in the shortterm oriented

societies Secondary School students

perform relatively poorly at mathematics

but they tend to overate their own math

results on long-term oriented Society I

is there is a larger savings quote and

funds are available for investment and

the short-term oriented societ is there

is a smaller savings quotes and there is

little money for

investment on the long-term oriented

side companies seek market share and

long-term profits on the shortterm side

the companies report quarterly results

and very important is the bottom line

which is the results in that particular

period in the longterm oriented

societies investors prefer family

business and real estate in the

short-term oriented societies there is

more preference for shares and mutual

funds and finally uh but this is only

true for poorer countries uh we found

that in uh poor countries that are

long-term oriented economic growth go

goes faster in poor countries that are

short-term oriented economic growth goes

slow and this is no longer true when

countries become wealthy because then

there is no difference anymore don't

these lto scores change over time scores

again reflect values transferred from

parents to children there has been a

research project where the same values

were studied for 15 year olds across a

number of countries and we discovered

that we get the same country differences

for 15y olds as we got for the entire

population values acquired in childhood

change rarely in later

life we have looked at the research by

Professor burgl who compared answers to

the same questions for two age cohorts

30 years apart from the world value

serve

but for this Dimension there was no

worldwide shift and there were no

changes in the relative position of

countries now this is true in spite of

the enormous technological changes that

we have seen in the past period with the

introduction of Global Information

Systems which do affect private habits

and which do affect business practices

but the way they do so tends to vary

between societies according to the

pre-established values so same

technology does not mean that it is used

in the same way and

finally uh long-term orientation plays

an important role in the economic

development of poor

countries poor countries with a

long-term orientation develop

economically faster than poor countries

with a shortterm orientation which more

often stagnate

[Music]