11.2.1.3 Individualism versus collectivism

Individualism versus collectivism is the third bi-polar dimension in Hofstede’s cultural framework. The issue involved in this dimension is the relationship between the individual and his fellow individuals (Hofstede 1983: 79). Individualism denotes a preference for a loosely knit social network with attention primarily focused on themselves and their immediate family, whereas collectivism denotes a preference for a tightly knit social network with attention for a much broader group of people which the individual will take care of in exchange for loyalty (Hofstede 1984a: 83). Since members of an individualistic society are more concerned with their own self-interests, a board of directors with relatively high levels of board independence signals that the interests of all shareholders and stakeholders are looked after. Therefore, companies in countries with high levels of individualism are expected to have high levels of board independence, whereas companies in countries with low levels of individualism (high levels of collectivism) are expected to have low levels of board independence (Li and Harrison 2008b: 378).