11.2.1.1 Power distance

Power distance is defined as the extent to which people in a society accept unequal distribution of power; it is a measure for the way people handle inequalities among people in a country (Hofstede 1984a: 83). Besides power, other examples of inequalities in a society are wealth, privileges, social status and prestige (Hofstede 1984b: 67). People in large power distance societies accept a hierarchical order and do not need justification for the inequalities, whereas people in small power distance societies strive to equalise the inequalities and ask justifications for inequalities (Hofstede 1984a: 83). Organisations with high power distance are typically characterised by high levels of control, a weak work ethic, autocratic decision-making by top management and tall organisational structures. On the other hand, organisations with lower power distance are characterised by managers who consult subordinates before making decisions, a strong work ethic, people who value independence and organisational structures that are rather flat (Hofstede 1983: 81; Hodgetts and Luthans 1993: 43). Therefore, companies in countries with high power distance are expected to have relatively low levels of board independence, whereas companies in countries with low power distance are expected to have relatively high levels of board independence (Li and Harrison 2008b: 378-379).