Applied Research Report

Causality of Productivity: Culture or Life Quality?

Comparison between Canada, Morocco and the United States

MBA 506

Research Methods and Consulting Skills

Spring 2010

Directed by: Dr. Robert (Bob) Willis

Student: Jawad Aarji

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Executive Summary:

The existing socio-economic disparity between countries and organizations encourages a

research on the causality of productivity. Advanced countries like Canada and the U.S.

enjoy a high quality of life, and have a different culture from that of less developed

countries like Morocco. Therefore, the central question emphasises on the causality of

productivity. Accordingly, human productivity might be correlated to the cultural

dimensions and life quality of each country. For instance, Morocco has a high Distance of

Power and Uncertainty Avoidance Index, compared to Canada and the United States. On

the other hand, Canada and the U.S. have a higher individualism index than Morocco.

Having close cultural dimension scores, Canada and the U.S. enjoy also a high Labor

Productivity per Person (LPP) and Human Development Index (HDI). Furthermore, the

growth rate over 20 years of HDI in these countries is not proportional to the growth

rate of their LPP. Hence, there is no direct correlation between human productivity and

life quality. The application of Hofstede cultural dimensions in this comparison shows

that culture impacts human productivity, which in turn affects life quality. Further

research can be made at this level to compare the productivity regarding organizational

cultures between countries.

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Contents

List of Acronyms..............................................................................................................................4

1. Introduction............................................................................................................................5

2. Literature Review....................................................................................................................7

3. The Research Methods:.........................................................................................................10

4. Results...................................................................................................................................12

5. Discussion:.............................................................................................................................15

List of References:.........................................................................................................................17

Appendices:...................................................................................................................................18

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List of Acronyms

C.B.: Conference Board

I.C.: Individualism / Collectivism

GDP: Gross Domestic Product

HDI: Human Development Index

LPP: Labor Productivity per Person

M.F.: Masculinity / Feminity

P.D.: Power Distance

U.A.: Uncertainty Avoidance

U.S.: United States

U.N.D.P.: United Nation Development Program

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1. Introduction

The title “Causality of Productivity” comes from the willingness to compare the

perception of productivity from different cultural perspectives. Productivity is an

economic indicator of how an economic factor achieves effectively and efficiently its

function. Studying the labor productivity of different countries may provide insights on

the causality of economic disparities. Hence, the present applied research paper aims to

compare the human productivity between developed countries like Canada and the

United States (U.S.) with that of less developed countries like Morocco. What is the

source of productivity in management practices? Is it culture or quality of life? Is culture

a determinant factor of productivity? Is quality of life the source or the consequence of

productivity? All these questions aim to answer the problematic situation of countries,

companies and individuals, which is how to cultivate productivity. Answering to this

question will indeed provide insights on how productivity can be achieved more

efficiently, just by adjusting the critical cultural dimensions or enhancing human

development parameters.

With the existing socio-economic disparities between countries and organizations,

making a research on the correlation between productivity, culture and quality of life

will help understanding why and how social behaviour might impact the economic

outcomes. The present research is important not only for individuals, but also for

communities and societies in all over the world, because human being and organization

seek to improve continuously, following the social, cultural and economic trends.

Accordingly the present topic is a multidimensional issue that aims to enhance

awareness of productivity, culture and life quality.

The purpose of the present applied research report is to explain the causality of human

productivity, in terms of cultural dimensions and Human Development Index (HDI).

Comparing the productivity in Canada and the United States, with the labor productivity

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in Morocco will indeed explain the correlation between culture, life quality and

productivity. In order to reach this goal, a literature review of related findings, specific

statistics and analytical associations are combined.

Accordingly, the present research report is structured as follows: Section-2 analyzes

previous findings of related topics, and selects one case study, which will support the

method used and the thesis. Section-3 discusses the methodology and the time horizon

of the study, explaining the approach and the alternative methodologies that would

have been selected for the same issue. In addition, a brief theoretical framework on

Hofstede cultural dimensions is introduced; and other analytical frameworks are listed

for data analysis. Section-4 summarizes the results and the findings, and illustrates the

selected data. Section-5 discusses the statistical findings, makes linkage of the results,

critiques the limitations of the research, and recommends further studies for more

results.

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2. Literature Review

The identification of the key factors affecting productivity presents certain challenges.

Factors like culture, education, professionalism and development remain subjective, and

comparing the weight of these variables between countries is fairly complex. Earlier

research discussed similar topics such as the correlation between “cultural dimensions

and social behaviour” by Basabe and Ros (2005, p.208), stating that hard working is an

attribute that is taught to children of collectivist and high distance of power cultures.

This means that productivity might be related to education and cultural dimensions

rather than economic development. In the present study, comparing the productivity

between Canada, the United States and Morocco is fairly interesting, since there are

certain similarities between these countries. Cultural differences might be a key

determinant of productivity as high income countries, like in Western Europe and North

America, have relatively cultural common points.

Knowing that cultural differences present certain challenges in international business

(Jucevičienė & Mozūriūnienė, 2007, p.577), culture is indeed a critical factor that affects

economic productivity. As reported by Jucevičienė & Mozūriūnienė (2007, p.577), the

employees’ cultural attributes influence organizational culture, which in turn impacts the

enterprise competencies. Moreover, Nouiga, Gautier, and Truchot (2005, p.670)

distinguish between the national culture, the company culture and the quality culture

for implementing a quality program in a Moroccan company. Therefore, culture is a

multidimensional trait that affects individuals, employees and citizens as an element of

productivity.

Another aspect of culture is religion, which was argued that is a driver of productivity.

Tosi and Greckhamer (2004, p.659) indicate that strong religious beliefs encourage

growth as they support sustainability of social behaviour, which in turn improve

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productivity. The same study uses the framework shown in figure-1 to illustrate the

interrelation between the environment and socio-organizational behaviour.

Figure#1 Causality of Culture

(Organization Science, 2004)

Accordingly, the cause of culture consists of the atmosphere where individuals liv; and

the effects of culture are firstly personal and then organizational. This demonstrates

how culture is embedded in social behaviour.

As seen in figure-1, different external forces drive the reference framework of societies

and individuals. This illustration considers the value system developed by Hofstede in

1980, and which is used in current social and business studies. Hofstede theory

underlines four parameters of culture: Power Distance (P.D.), Uncertainty Avoidance

(U.A.), Masculinity / Feminity (M.F.), and Individualism / Collectivism (I.C.) (Clark, 2003,

p.152). Another factor is also discussed in current research, which is the long / short-tem

orientation; however, this variable will not be included in the present research because

of the lack of data regarding Morocco.

Other variables are approached in the present study. In fact, McSweeney (2002, p.107)

argues that “Within each country there is a single national culture, not merely a single

national work-place culture.” Accordingly, contrasting only the above-mentioned

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cultural dimensions with the productivity of each country may present certain

constraints. The other factor included in the present study is the human development

index (HDI) in which, the weight is expected to support Hofstede theory for comparing

productivity between Canada, Morocco, and the United States. Though certain

opponents may argue against Hofstede’s model, it remains an appropriate framework as

it scores each country - subject of the study in terms of cultural dimensions.

Before discussing the methodology and the methods that will be applied in the present

research, defining each variable is necessary. Below a brief definition of each factor,

considered as having a tight correlation with human and organization productivity:

Productivity : the level of efficiency by which inputs are transformed into outputs

(Statistics Canada, 2009); therefore, labour productivity corresponds to how efficient

are human involvement and participation in the concretization of the enterprise

success.

Culture : “a complex whole which includes knowledge, religious beliefs, art, moral

values, customs as well as every disposition or experience acquired by man living, in

a society’’ (Nouiga, Gautier & Truchot, 2005, p.670). Hence cultural dimension is the

extent to which culture define one parameter for human attitude.

Masculinity: Indicator of the relationship between personal and professional goals.

“Working for living” or “Quantity of life”

Feminity: Degree of task performance oriented in cooperation with others. “Living

for working” or “Quality of Life”

Individualism : The level of self-esteem in terms of person’s own success over the

group.

Collectivism : The extent to which a subject is more motivated by group success

rather than ego.

Distance of Power : The extent to which individuals perceive hierarchy and social

superiority within society.

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Uncertainty Avoidance: The level of ambiguity and uncertainty acceptance by

society’s members. (Jucevičienė & Mozūriūnienė, 2007, p. 579)

Human Development Index : Measure of life quality across countries.

The abovementioned variables are expected to demonstrate the driving forces of labour

productivity. Therefore, the method and methodology should be discussed in order to

elaborate effectively the research in question.

3. The Research Methods:

Comparing the culture of productivity between Canada, Morocco and the United States

is an exploratory research, as it aims to explain the causality of productivity. In fact, the

present study analyses statistics data and other researchers’ findings; hence, it is a

mixed method of quantitative and qualitative research. The first method consists of a

primary source from the Conference Board (CB), which includes statistics regarding labor

productivity per person (LPP) across countries. These data is collected and selected to be

compared for a time horizon of 20 years (1980-2009). Unfortunately, the number of

hours worked in Morocco is not available, which would have made the study more

concise by comparing even the productivity per hour. In this study, productivity labor

per person is the independent variable, which is crossed with the HDI as a dependant

variable that is provided by the United Nations Development Program (UNDP). This will

demonstrate the correlation between productivity and life quality in each country within

a longitudinal time horizon of 20 years.

The main dependent variables are Hofstede cultural dimensions, which constitute a

secondary source that compares countries subject of the study. These variables are

critical as they answer the central question, regarding the correlation between cultural

dimensions and productivity. These variables may present certain limitations since they

are available only for 2001. Aiming to reach the objective of this quantitative analysis,

setting hypothesis is necessary:

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Hypothesis 1: Labor productivity has a close correlation with culture, as cultural

dimensions influence human behaviour, which in turn impact national and

organizational performance.

Hypothesis 2: Labour productivity is more dependent to HDI, as this latter consists of

a series of variables like education, literacy and life expectancy, which indeed impact

human efficiency.

Hypothesis 3: Both the cultural dimensions and the HDI are determinants of labour

productivity, but one has more influence than the other.

Hypothesis 4: Cultural dimensions or HDI might be whether the cause or the

consequence of labor productivity.

Alternative research methodologies might be exploratory, which would be used to

initiate deeper research, or descriptive, aiming to describe the behaviour and motives of

productive individuals across cultures. Selecting an explanatory approach will support

the thesis, not only by identifying the right hypothesis, but also by approving the

Hofstede theory of cultural dimensions.

On the other hand, the qualitative study consists of a case study of a Moroccan

company, in addition to other analysts’ appreciations. These secondary sources are

supportive to the quantitative analysis as they compensate the lack of data regarding

Morocco, aiming to enrich the research work.

The analysis of data in the present research is supported by the Hofstede theoretical

framework of cultural dimensions, aiming to know more about the relevancy of this

theory on measuring the impact of culture on productivity. As said earlier, Hofstede

theory on cultural values will be evaluated for comparing the labor productivity of the

abovementioned countries. Additionally, the use of specific statistics, LPP and HDI, and

other findings will support the research on the correlation between productivity and life

quality. The analysis of the gap of LPP and HDI between Canada, the United States and

Morocco is indeed an analytical approach for answering the central question.

To sum-up, the following methods will be used to analyze the data:

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Specific Statistics

Case study

Gap Analysis

Matrix Diagram

4. Results

Knowing that the CB and UNDP are reliable sources for public statistics, the following

explain the components of each variable:

LPP = GDP per Person Employed according to 2009 U.S. dollar value

HDI = (Life Expectancy Index + Education Index + GDP Index)/3

According to the CB`s data, the LPP in Canada and the U.S are much higher than that in

Morocco. As seen in figure-2, there is an important gap between productivity in Canada

and the U.S comparing to that of Morocco. Certainly this might be due to either the

cultural dimensions of Morocco or to its medium HDI.

1,9791,982

1,9851,988

1,9911,994

1,9972,000

2,0032,006

2,009

0

20,000

40,000

60,000

80,000

100,000

Figure 2: LPP of Canada, Morocco and the U.S.

LPP MoroccoLPP CanadaLPP US$

For a reconciliation of this data, measuring the growth rate of productivity in these

countries is supportive, because it leads to assess the average growth rate over 20 years.

Below the mean LPP growth rate per country:

Morocco: 1.9% Canada: 1.2% The U.S.: 1.6%

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Source: (Conference Board, 2010)

Accordingly, the LPP in Morocco is growing relatively faster than the LPP in Canada,

which is growing slightly lower than that in the U.S; therefore, the results show that

Americans` productivity is increasing faster than Canadians` one, which still is the

highest among countries.

In terms of cultural dimensions, figure-3 illustrates how Americans and Canadians are

respectively more individualists than Moroccans by nearly two times. The

masculinity/Feminity Index is relatively high in the U.S.; however, this parameter is not

decisive as the gap is not important, as compared to other variables. Also, Moroccans

have the highest Distance of Power (DP) and Uncertainty Avoidance (UA) Indexes.

Power DistanceInc. Avoidance

Individ./Collect.Masc/Feminity

7068

46 5339 48

80

5240 46

91

62

Figure 3: Cultural Dimensions by Country

Morocco Canada United States

Reading these results, assumptions can be made on the most determinant cultural

dimensions, which are power of distance and individualism indexes. On the other hand,

the HDI for Canada is slightly higher than that of the U.S., and both are higher than that

of Morocco. As seen in Figure-4 difference between quality of life in the U.S. and Canada

is quasi-unapparent.

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Source: (McSweeney, 2002)

1980 1985

1990 1995

2000 2005

2006 2007

00.20.40.60.8

1

Canada

Morocco

Figure 5 Human Development Index

CanadaUnited StatesMorocco

Perc

enta

ge

According to the data, Canada’s and the U.S. quality of life have been always slightly

equal. In fact the growth rate of this indicator is as follows:

Morocco: 38.27% / Canada: 8.54% / The U.S.: 6.94%

As a result, Moroccan`s life quality has been grown at a faster pace Canada’s index,

which has been greater than that of the U.S. Currently, Canada is ranked 4th best HDI in

the world, followed by the U.S. (13th), and Morocco (130th) (UNDP, 2010). Furthermore,

the key determinants of this difference consist of the GDP and Education Index, which

are higher than that of Morocco. Hence, there is close correlation between LPP, HDI and

cultural dimensions, at the level of individualism and distance of power in one hand, and

education and economic development on the other. However, although Morocco’s HDI

has grown at an exponential level, this has not affected productivity, which has

increased slightly. To sum up, table-1 compares the cultural dimension and the growth

rate of LPP and HDI between Canada, Morocco and the United States.

Country /

Variables

LPP Hofstede Cultural Dimensions HDI

Growth

Rate

Power

Distance

Uncertainty

Avoidance

Individualism

/ Collectivism

Masculinity

/Feminity

Growth

Rate

Morocco 1.90% 70 68 46 53 38.27%

Canada 1.60% 39 48 80 52 8.54%

United

States 1.20% 40 46 91 62 6.94%

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Source: (UNDP, 2010)

As summarized in the table above, the gap between the growth rates of LPP in Morocco,

Canada and the United States is low; and the HDI growth rate is very high in Morocco.

Also, the most determinant cultural dimensions per importance order are: Individualism-

Collectivism, Distance of Power, and Uncertainty Avoidance. The Masculinity/Feminity

Index is not influent comparing to the other variables. However, the growth rate in this

result has just normalized the units since, the disparity of productivity between Canada,

the U.S., and Morocco is high. Moreover, Morocco is considered as less developed;

hence, the HDI growth rate should be high.

5. Discussion:

The results show evidence of the correlation between productivity and culture,

particularly individualism and distance of power Index. The HDI is considered as a result

of productivity rather than its source, because the growth rate of the HDI is much higher

than that of the LPP. Additionally, the similarities between Canadian and American

cultural dimensions justify the correlation between productivity and culture as the gap

between their LPP is fairly low. As a result, life quality is considered as the product of

labor productivity, rather than its cause.

To lead the discussion more in-depth, a matrix diagram will simplify the analysis of the

Hofstede variables because they are the main cause of LPP. The UA index is high in

Morocco, illustrating that Canadians and Americans take more risk, and accept more

ambiguity. As the crucial cultural dimensions are IDV and PDI, the matrix diagram is

presented as follows:

Figure-4: Matrix Diagram for HDI and Hofstede Index

Individualism Collectivism

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High

Morocco

The United States

Canada

Accordingly, low distance of power and high individualism increase labor productivity,

which in turn enhance quality of life. This conclusion supports the latest hypothesis,

confirming the correlation between culture and productivity as a lever of life quality.

This is also confirmed by the case study, stating that socio-cultural dimensions have an

important weight on implementing a quality project (Nouiga, Gantier and Truchot, 2005,

p.677). Though this is not related directly to the LPP variable, it proves how important

the cultural factor in management practices, which indeed serves enterprise

productivity.

The main limitation of the present study is its focus on only Hofstede cultural dimension,

which does not cover other cultural dimensions such as locus of control, and

objectivity/subjectivity. Appendice-1 illustrates the other possible cultural dimensions,

which were discussed in the case study. Moreover, LPP and HDI are evaluated for a time

horizon of 20 years; yet, Hofstede theory currently covers only 2001. The case study is

also limited to Morocco and to a specific project related quality. Analyzing more case

studies comparing these countries would have given more insights. Another key element

is that LPP represent the national productivity, rather than the organizational one; hence

considering this aspect would have made the results more precise. Despite these

limitations, the method has answered the central question, by affirming that there is a

correlation between productivity and culture, which impact life quality.

Accordingly, going deeper in the topic with further studies and for more findings is

recommended. For instance, measuring the extent to which individualism and distance

of power affect productivity within companies in different countries will give more

insights on labor productivity and management practice. This will require concrete

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Low

Distance of

PowerZone of Productivity

qualitative studies such as focus group or in-depth interviewing. Further research

regarding other cultural dimensions should be considered, as seen the example given in

the case study (Appendice-2). Hence this model will require to be normalized according

to the comparison between countries. Surveying also employees in different countries

will help to understand their culture of productivity, their motives and their behaviour of

how they become more productive. Investigating in-depth this topic will indeed enhance

individuals, citizens and employees’ culture of productivity for a better life quality.

List of References:

Basabe, N. & Maria R. (2005) Cultural Dimensions and Social Behavior Correlates: Individualism-Collectivism and Power Distance. Revue Internationale de Psychologie Sociale [Internet], April, pp.189-226. Available from: < http://www.ehu.es/ pswparod/pdf/articulos/Basabe1801.pdf > [Accessed 30 March]

Clark T. (2003) Culture's Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations, 2d ed. Journal of Marketing [Internet]. April, 67(2): 151-153. Available from < http://web.ebscohost.com. ezproxy.viu.ca > [Accessed 3 April]

Conference Board (2010) Total Economy Database [Internet]. Available from < http://www.conference-board.org/economics/database.cfm > [Accessed 12 February]

Jucevičienė P, & Mozūriūnienė V. (2007) The Employees' Cultural Characterstics as a Factor of Organization's Knowing. Economics & Management [Internet]. August, pp.576-584. Available from < http://web.ebscohost.com. ezproxy.viu.ca > [Accessed 3 April]

McSweeney B. (2002) Hofstede's Model Of National Cultural Differences And Their Consequences: A Triumph Of Faith — A Failure Of Analysis. Human Relations [Internet]. January, 55(1), pp.89-118. Available from < http://web.ebscohost.com. ezproxy.viu.ca > [Accessed 3 April]

Nouiga M, Gautier & Truchot (2005). Taking into Consideration the Sociocultural Dimension in the Drive for Change Through Quality: Application to the Moroccan Company. Quality Engineering [Internet]. October, 7(4), pp. 669-677. Available from < http://web.ebscohost.com. ezproxy.viu.ca > [Accessed 3 April]

Statistics Canada (2009) Revisions to Canada and United States Annual Estimates of Labour Productivity in the Business Sector [Internet]. . Available from <

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http://www.statcan.gc.ca/pub/15-212-x/2009000/part-partie1-eng.htm > [Accessed 3 April]

Tosi L.H. & Greckhamer T. (2004) Culture and CEO Compensation. Organization Science 15(6), pp. 657–670, Available from < http://web.ebscohost.com. ezproxy.viu.ca > [Accessed 3 April]

United Nations Development Program (2009) Statistics of the Human Development Report [Internet]. Available from < http://hdr.undp.org/en/statistics/ > [Accessed 3 April]

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Appendices:

Appendice-1

Appendice-2

19

20

(Nouiga M, Gautier & Truchot, 2005)

(Nouiga M, Gautier & Truchot, 2005)

(Nouiga M, Gautier & Truchot, 2005)