Tuesday, February 24, 2009

Uncertainty Avoidance Index

Uncertainty Avoidance is the tendency for a culture to shy away from risk. Countries with a high Uncertainty Avoidance tend to value rules, structure, and low risk situations. Malaysia has an Uncertainty Avoidance Index of 36, and the U.S. comes in at 46. These numbers are relatively low (compared to other countries which rank between 8 and 112). This means that they are more likely to value situations that lead to high payoffs and larger rewards, even if more risk is involved.

These numbers also tell us that Malaysia values risk somewhat more than the U.S. These numbers definitely makes sense. As we stated earlier, the country ranks #1 in Ease of Getting Credit and #4 in Protecting Investors (as opposed to the U.S., which ranked #5 in Ease of Getting Credit and #5 in Protecting Investors). So while Malaysia has a lower Uncertainty Avoidance, both countries have a history of encouraging people to invest and take risks.

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