Long term orientation

Long term orientation
See also
Internal marketing Cross-cultural leadership Forced distribution method Charismatic leadership Innovative thinking Personal ethics Benefits of innovation Organizational culture and project management Ability to work in a team

Long term orientation is term used by Geert Hofstede in 1991 to describe particular type of difference in different national societies. Main characteristics of long term orientation are:

• emphasis on persistence and tradition
• common norms apply in all situations
• high role of status in relationships
• people must adapt to societal norms and not vice versa
• personal time is not important
• thriftiness is valued trait
• investments in real estate is seen as good
• long term employment and good relationships with employer
• individuals are willing to compromise and value conflict resolution

Long term aspects

• view of the future – predicting the future in order to achieve long term goals and benefits
• basis for taking action – setting the predetermined goals and finding the optimal solutions to gain the best result
• predisposition toward risk/ resources – keeping the control of the risk and using affordable resources in the most efficient way
• attitudes toward unexpected contingencies – detailed planning, predicting carefully and focusing on target in order to avoid unexpected contingencies.

Long term orientation in countries

People who are oriented in long term, they look towards to the future. According to some surveys (firstly done by Hofstede) the most long term oriented cultures come from Asia (China, Hong Kong, Taiwan), middle-ranked are European ones (France, Italy) and the lowest places (meaning short-term oriented) belong to Pakistan society. The highest score in the survey means that country culture encourages to self discipline and diligent that allow to better preparing for coming time.

Long term orientation in business

Long term orientation has an impact on behavior of participants in business process like trade. Due to its assumptions, it excludes interference in relationships through strong conflicts or competitions. Subordinates are self disciplined and ready to comply because they believe that it is in their interests as a whole society. Long term oriented people are more focus on learning and developing their work skills and they are aware of real-world consequences. In literature there are distinguished six aspects of trade in which long term orientation plays an important role:

• partner selection – traders are interested in creating long lasting relationship and they would not deal with a stranger in order to make one time deal
• trade strategy selection – people do not trade products that they are not sure about their quality, they follow a thrifty strategy to keep their relations and avoid the risk of losing the partner
• negotiation behavior – traders are very patience, they do not overreact and overcharge
• truthful or untruthful delivery – people always deliver high-quality commodities and they do not take advantage of possibility to send lower quality to make an extra profit
• trust or distrust – traders do not easily trust new partners and the time is needed to develop the relations
• maintenance of beliefs about partners – they keep their opinions about collaborators and it is difficult to change it

Time horizons have a foremost importance in other business decisions like setting goals or investing in initiatives that can create firm value. The managers that are long-term oriented manage the different area of company as below:

• Human Resource Management – knowledge and skills of experienced workforce is one of the most valuable company's asset, there is difficult to replace those employees so there is important to develop and take care of them
• Business Portfolio Management – cool-headed and balance approach to any mergers or acquisitions, balanced portfolio development strategy and continuation of activities
• Corporate Investment Behavior – re-investment of profits into business in stable and continuously way

Examples of Long term orientation

• In East Asian countries such as China and Japan, long term orientation is a core cultural value. People in these societies prioritize long-term goals over short-term gains, looking for ways to benefit their family, community, and country over the course of generations. They also have a greater emphasis on reputation, respect for tradition, and respect for elders.
• In the United States, long-term orientation is valued, but not as highly as in East Asian countries. Here, the emphasis is more on individual success, short-term goals, and quick results.
• In India, long-term orientation is also an important cultural value, with an emphasis on saving for the future, maintaining good relationships with others, and respecting traditional values.
• In some African countries, long-term orientation is also an important cultural value, with a focus on communal goals such as the well-being of the tribe or village, rather than individual success.

Advantages of Long term orientation

Long term orientation is a value system that is based on the idea that it is better to plan and invest for the future than to worry about immediate results. This value system is found in some cultures, such as China, and can have many advantages. These advantages include:

• Improved financial stability. Long term orientation encourages people to make investments for the future, allowing them to accumulate more wealth and financial stability over time.
• Improved relationships. By focusing on long-term goals, people tend to be more patient and understanding with others, helping them to form stronger relationships and trust with those around them.
• Increased focus on education. Long-term orientation encourages people to invest in education, helping them to acquire the skills and knowledge needed to achieve their long-term goals.
• Improved decision-making. By taking the long-term view, people are better able to make informed decisions and plan for the future, helping them to avoid short-term pitfalls.

Limitations of Long term orientation

Long term orientation has a number of limitations. These include:

• Difficulty in adapting to changing circumstances - Long term orientation can limit an organization's ability to respond quickly to changes in the market or its environment. This can leave them ill-equipped to compete in an ever-evolving world.
• Overinvestment in projects – Long term plans can lead to a company investing too much into a particular project, only to find that it has become obsolete or unprofitable before completion.
• Unwillingness to take risks – Organizations may become too conservative in their business decisions and be unwilling to take risks that could lead to new opportunities.
• Overreliance on tradition – Long term orientation can lead to an overreliance on traditional methods which may not necessarily be the best course of action in the current environment.
• Unsustainable growth – Long term plans can lead to unsustainable growth and over-expansion which can cause financial difficulties in the long run.

Other approaches related to Long term orientation

Long term orientation is term used by Geert Hofstede in 1991 to describe particular type of difference in different national societies. Other approaches related to Long term orientation include:

• The Confucian Dynamism Scale, which measures the extent to which individuals are oriented towards the future or the past.
• The Long-Term Orientation Scale, which measures the extent to which individuals are focused on achievement and growth versus conservation and respect for tradition.
• The Need for Achievement Scale, which measures one’s need for success, status, and recognition.
• The Long-Term Orientation Index, which measures the extent to which individuals are oriented towards the future or the past.

In summary, Long term orientation is a concept that has been studied by various approaches, including the Confucian Dynamism Scale, the Long-Term Orientation Scale, the Need for Achievement Scale, and the Long-Term Orientation Index. These approaches attempt to measure the extent to which individuals are oriented towards the future or the past, and their need for success, status, and recognition.

References

• Brauer M.F, (2013), The Effects of Short-Term and Long-Term Oriented Managerial Behavior on Medium-Term Financial Performance: Longitudinal Evidence From Europe, Journal of Business Economics and Management, 14(2), 389-392
• Brigham, K. H., Lumpkin, G. T., Payne, G. T., & Zachary, M. A. (2014). Researching long-term orientation: A validation study and recommendations for future research, Family Business Review, 27, 1
• Hang Y., (2015), The Influence of Long Term Orientation on Entrepreneurial Decision Making Processes in China, University of Twente, 14-17
• Hofstede G., Jonker C.M., Verwaart T., (2008), Long-term Orientation in Trade, Wageningen University, 2-5
• Nevins, J. L., Bearden, W. O., & Money, B. (2007). Ethical values and long-term orientation, Journal of Business Ethics, 71, 3
• Zhang L., (2012), The Hofstede’s Culture Difference Research in the Chinese Mergers and Acquisitions International Company, Universitas Bergensis, 68

Footnotes

Author: Justyna Kurnik