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Uncertainty Avoidance and Risk

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1. What is meant by uncertainty avoidance?

2. What are the elements of risk involved in uncertainty avoidance?

3. What are some of the possible social and organizational problems caused by not concentrating on risk reduction? Justify your answer using appropriate reasoning and examples.

4. In cultures with high uncertainty avoidance, emotions are displayed in a way that everything different is dangerous. People resist changes and worry about the future. The fact the majority of the population does not know what will happen from one day to the next creates high levels of anxiety.

5. How can international leaders motivate local cultures to accept change? How can international managers help to quell the fear and elevate the anxiety of local communities where they operate?

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Solution Summary

What is meant by uncertainty avoidance is determined. The elements of risk involved in uncertainty avoidance is determined.

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Uncertainty Avoidance: International Leadership

Uncertainty avoidance defined
Because of complexity in operations, companies that are engaged in international operations have more uncertainty than their domestic ones (Daniels and Radebaugh, 2000). These complexities, according to these authors may have been brought by greater number of operating environments and different requirements for different markets. Uncertainty must have to be handled because the more uncertainty there is, the more difficult to plan.
According to Certo (2000), there are three conditions in which decisions are made, depending on the degree on which the future outcome of a decision alternative would be realized. Uncertainty is defined by Robbins and Coulter (2005) as a situation in which a decision maker has neither certainty nor reasonable probability estimates available about the outcomes of a decision. To these authors, uncertainty avoidance refers to the degree to which people tolerate risk and prefer structured over unstructured situations.

Elements of risk involved in uncertainty avoidance

The following are the four elements of risk as discussed in an online source (http://www.sei.cmu.edu/reports/06tn014.pdf):

1. Context. It is the background, situation, or environment in which risk is being viewed. It defines which actions and conditions are relevant to that situation. It therefore provides the background information about the company and the situation before the action that triggered or caused the occurrence of risk was made. As applied to the case at hand, this may be the desire of the company to expand its operations or avail of an opportunity in one part of the global market. The context may ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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