11.2.2 Cultural scores of the United Kingdom, the Netherlands and Sweden

The United Kingdom, the Netherlands and Sweden are also included in the analysis of Hofstede. Their scores on the four cultural dimensions – power distance, uncertainty avoidance, individualism and masculinity – are given in Table 11-1. Societies with high power distance scores, high uncertainty avoidance scores and individualism scores are expected to have higher levels of board independence. The opposite is true for masculinity; societies with high masculinity scores are expected to have lower levels of board independence. These levels of board independence are an indicator for the demand from society for independence as well as an indicator for the attributed importance.

Table 11-1: Hofstede’s cultural scores of the United Kingdom, the Netherlands and Sweden. Predicted sign gives the conjectured relationship by Li and Harrison (2008b) between the score on the bipolar cultural dimension and the level of board independence. The relative position of each country is given in parentheses. Data from Hofstede (1984b).

The scores show that for power distance and uncertainty avoidance, the Netherlands has the highest score, followed by the United Kingdom and Sweden. On the individualism dimension of culture, the United Kingdom ranks one, with the Netherlands and Sweden in second and third positions, respectively. High levels of these three cultural dimensions are expected to have a positive effect on board independence and the attributed importance. Based on these numbers, Sweden should have the lowest levels of board independence and the lowest attributed importance. The legal analysis in the previous part showed that the legal framework of Sweden has the highest number of weak links in its independence framework. This might be an indication of the low importance attributed to independence. The relatively low scores on these cultural dimensions might be an explanation for these leakages in the independence framework, but the masculinity cultural dimension seems to contradict this finding. The low level of 5, which is much lower than the United Kingdom with 66, is expected to have a positive impact on board independence and its importance.

It can be concluded that this small dataset of only three countries cannot be used to give a judgement on the relationship between culture and independence. However, it is interesting to see the differences in scores on the four cultural dimensions of Hofstede. Uncertainty avoidance does differ very much and ranges between 31 and 38, whereas masculinity varies within a bandwidth between 5 and 66. These differences show that the cultural values of the United Kingdom, the Netherlands and Sweden vary. If these cultural values are indeed a predictor of the way independence is perceived, the differences in legal frameworks might be caused by the different cultural values. It also proves the European Commission was right not to draft one European Corporate Governance Code, because the differences in preferences between the member states seem to be significant. Unfortunately, these numbers are not suitable for drawing conclusions.