Why Do Startups In Egypt Suffer? (Part 1/2)

A look into the Egyptian culture’s characteristics and its impact on the consumer

The business owner: Hey Raafat we want to increase sales through our website - competitors are taking over the market!

Raafat: Mr.Mohsen, we make special offers every week and we get many visits to our website.

Mr. Mohsen: And do the visitors buy anything?

Raafat: They look into our products and this is good for sales

Mr. Mohsen: We want to improve the website’s interface.

Raafat: But we made a new design two months ago and we paid thousands of pounds on it.

Mr. Mohsen: Okay did you try to put ads on Facebook and Google?

Raafat: We spend 20K pounds monthly on ads.

Mr. Mohsen: Okay good. But do we have a variety of diversified products? And are their prices reasonable?

Raafat: We have more than 2000 categories and some of our products won’t be found in any other store in Egypt.

Mr. Mohsen: Then, where is the problem?!! ‘

Mr. Mohsen’s question is logical and has a logical answer, but it needs first a look into the Egyptian culture’s characteristics according to Hofstede's cultural dimensions theory.

Who’s Hofstede?

Gerard Hendrik (Geert) Hofstede is a Dutch social psychologist, former IBM employee, and Professor Emeritus of Organizational Anthropology and International Management at Maastricht University in the Netherlands. He’s well-known for his pioneering research on cross-cultural groups and organizations.

His most notable work has been in developing cultural dimensions theory, where he describes national cultures along six dimensions: Power Distance, Individualism, Uncertainty avoidance, Masculinity, Long Term Orientation, and Indulgence vs. restraint. You can read more about Hofstede on Wikipedia, or on this specialized website for Hofstede's theory. 

The economic impact of Hofstede’s theory is the main focus of this article

The first dimension Hofstede talks about is Power Distance, he measures the extent to which the less powerful members of a society accept and expect that power is distributed unequally, which means the higher the index value of a society, the more the society believes in the power distance within institutions and organizations, for example between the manager and the subordinates, or between the father and the mother in the house. And this power distance is strongly demonstrated by the consideration of examples of countries according to Hofstede’s power distance index scale, which ranges from 0 to 120, and the greater the value of the indicator, the greater the society believes in the idea of power distance.

For example, we find that Denmark is at the very low end of this dimension compared to other countries with a score of 18, which indicates that the Danish people don’t believe there are major differences in power between managers and subordinates, as well as power between men and women in the house. And if we move south to a neighbor country like Germany, we’ll find that the score gets higher to be 35, which means that the German people venerate more the power distance. While in Russia, a country not geographically far away, the indicator jumps to 93. It’s one of the highest countries in the index, which means that the Russian people view the power differences in the society as a well-established fact.

Egypt scores 70 in this index, it’s an average number in the world’s cultures but it tends to rise and make us from the cultures that highly believe in power differences and distance.

This part of the article covered Hofstede’s theory and the power distance index, readers should now be able to understand what is this index and where do Egypt stand on it. Then in part 2 of the article, readers will know the relation between the power distance index and startups, and how to apply and use this index in Egypt to help Egyptian startups succeed and get into the market easily. The whole article aims to reduce the sufferings of Startups in Egypt. Stay tuned for part 2. 

This article was translated in English by Allaa Ghanem