The power-distance index (PDI) is a concept thought up by Geert Hofstede, a prominent Dutch social psychologist of the 21st century. The central idea can applied to any organizational structure for human activity whether in business or society overall, and is designed to gauge the effects that occur when there is an unequal distribution of wealth and power. The illustration that the power-distance index focuses on is how much subordinate groups submit to authority figures as a direct result of how authoritarian the leaders of a group are in managing its activities. The PDI has been applied to social behavior in many modern nations and tends to be a much lower number in nations where there is extensive cooperation between authorities and everyday citizens concerning important decision-making activities.
When the power-distance index is applied to families or broader behavior in culture and the PDI number obtained is low, this is seen as an acknowledgment by children or minority groups in a society that they accept the inequality and relative powerlessness of their situations. Societies that promote individual values such as the US and western European nations have higher cultural PDI levels than societies focused on collective values such as Taiwan and other Asian nations. These trends towards egalitarian views in culture also extend to a national level, where Denmark is a power-sharing society with a very low PDI of 18, and the US is one of more power stratification with a PDI of 40.
In the corporate hierarchy, a lower power-distance index reflects the fact that lower-level employees feel that they have the right to approach the head of the company in informal situations and expect to be treated as equals, which is common in many western businesses. Countries with more autocratic or feudalistic structures like Thailand or Pakistan tend to have businesses, however, where the senior staff is considered to be off-limits in all respects to everyday laborers. A corporate leader in a nation where the power-distance index is high may also find that he or she is immune to questioning by everyday government officials such as police, as there is a sense that the business leader is above the law, and this can contribute to ingrained levels of corporate corruption.
On a national level, a power-distance index of 35, which was Germany's rating as of 2009, is considered to be fairly average and represents a society where the gap between rich and poor is modest and cultural beliefs in equality for all are strong. Nations where the index shows a high level of difference in levels of wealth and power between authority figures and lack of representation for the needs of the common man or woman are Mexico, with a rating of 81, and India, with a rating of 77. Countries that show remarkably low power-distance index values are Israel, with a rating of 13, and Austria, with a rating of 11. Mexico itself has a high rating among the neighboring nations of Central America, which has an average power-distance index of 70, and the Netherlands, where Hofstede himself is from, has a PDI of 38 as of 2009.