What Is the Power-Distance Index (PDI)?

The power-distance index (PDI) is a measurement of the acceptance of a hierarchy of power and wealth by the individuals who make up the general population of a nation, culture, or business. Developed by Dutch social psychoܫlogist Geert Hofstede, the PDI ultimately provides insight into the extent to which regular citizens, or subordinates, accept or challenge the authority of the person or people in charge.

Hofstede’s PDI𝔍 is lower in countries and organizations where authority figures work closely with subordinates. The PDI is higher in 🗹places with a strong hierarchy.

Understanding the Power-Distance Index (PDI)

The power-distance index focuses on increasing understanding between people from different cultures in a business setting. An American car manufacturer planning to open a factor in Latvia, for example, will find that Latvians tend to show respect and deference towards management but younger workers, in particular, value an open and collaborative work environment. Latvia's PDI is a relatively low 44.

Highly structured businesses, societies, and institutions have high indices. A high index i꧃ndicates that the hierarchy is clearly defined, pre🤪sent, and unchallenged. 

A low index indicates a less rigid or authoritarian system. The people in a low-index society or group are willing to challenge authority and readily interact with authority figures in the expectation that they can influence decisions.

PDI and Cultural Dimensions Theory

The power-distance index is one component of Hofstede’s cultural dimensions theory, which was the first attempt to quantify the differences among cultures. This theory is now applied extensively in fields including cross-cultural psychology, cross-cultural communication, and international business.

Driven by factor analysis, the cultural dimensions theory in its original form was based on the results of Hofstede’s global survey of the values of IBM employees. Testing and collection of the results were conducted between 1967 and 1973.

Based on these and other results, Hofstede determined that there are six distinct dimensions to every culture: power distance, uncertainty avoidance, individualism versus collectivism, short-term versus long-term, masculinity versus femininity, and self-restraint versus indulgence.

The original model had only four dimensions but was later expanded to six. Long-term versus short-term was added after Hofstede performed independent research in Hong Kong, and indulgence versus self-restraint was added in 2010.

Business and the PDI

Hofstede's theory gained considerable notoriety because of its analysis and conclusions about cultural and national differences. It has been particularly influential in the business world. With the growth of the global economy, the PDI and the factors that contribute to it have been used to foster an understanding of cultural differences and how they affect international business dealings.

The differences in perception of power seem particularly relevant during business negotiations. For example, Austria has a power distance index of approximately 11, while many Arab nations have indices of around 80. Employing Austrian business practices or management styles in an Arab country may be counterproductive, or at the very least can produce a degree of culture shock. 

The United States, by the way, has a PDI of 40.

The Bottom Line

The power-distance index can provide useful information to people doing business abroad about the work culture of foreign employees. However, one should be careful to avoid over-generalizing or using these metrics to stereotype other cultures. It may be true that some cultures are more or less deferential to authority structures, but that doesn't mean that they're less capable of independent thought and aspirations. Not only would such generalizations be grossly offensive, they could also lead to bad business decisions.