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European cultures and management styles

Article  in  International Journal of Asian Management · December 2004


DOI: 10.1007/s10276-004-0016-y

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International Journal of Asian Management (2004) 3: 1–26
DOI 10.1007/s10276-004-0016-y

Article
European cultures and management styles
Manfred Perlitz and Frank Seger
Department of International Management, University of Mannheim, Mannheim, Germany
e-mail: perlitz@rumms.uni-mannheim.de, seger@rumms.uni-mannheim.de

Abstract After the establishment of the Common Market in Europe, many companies
from abroad opted for a single European headquarters and searched for European
managers. That leads to the question whether one can really speak of a common European
management style. The article at hand examines this issue. To do this, the legal framework
and Corporate Governance background of individual European countries are assessed.
Furthermore, cultural differences in Europe are considered. Referring to studies of
cultural dimensions in European countries, the authors propose five different cultural
areas in Europe. This leads to a concluding discussion of management styles in these
regions.

Key words Culture · Management · Corporate governance · Europe · Leadership

1 Is there a European management?


In the last decades, specific success models of management were often related to
different countries. So, in the 80s the Japanese management was “en vogue,” and
the whole world admired the lean production concept as it had been introduced
in Japan. The Japanese management model was seen as the most successful way
to reduce costs, especially in the area of production. This led to a change in the
Western paradigm that higher quality always has to be related to higher costs,
because the Japanese model showed that higher quality and cost reductions
can go together. Following the collapse of the bubble economy in Japan, the
American management model took over. After the breakdown of the “New
Economy” and the scandals dealing with the “creative” ways to use the American
accounting system, this model also is now more and more questioned. This is
especially true for the shareholder value concepts that were seen as the success
model for American companies.
With the development of the European Union, a common market was created
in Europe. This led to the creation of many European headquarters of non-
European companies. In the literature a European manager was required to be
able to efficiently run the European business (Berger 1998). However, something
like a European management model never existed after World War II. The
German model of a social market economy and the Scandinavian welfare state
concept were interesting models from the 50s to the 70s, but they were never seen
2 M. Perlitz and F. Seger

as a pan-European way to manage economies or companies. As far as manage-


ment is concerned, Europe is not a monolithic bloc of countries. Its strength
and weakness at the same time is its variety of management styles and cultures.
European managers are still facing very different business environments, cul-
tures, and corporate governance issues. Being successful in Europe therefore
depends very much on the knowledge of these differences. Management styles
that work in Germany may not work in France, Italy, or The Nordic countries.
Management cultures of the Middle and Eastern European countries and Russia
are difficult to identify, because there Western style management has been un-
heard of for a long time. The following article tries to describe both the differ-
ences and the similarities of European management styles.

2 Differences in European management


2.1 Legal origins and governance issues
To understand why European management shows so many differences, one has
first to study the dissimilarities of the legal frameworks in Europe. There are four
different legal backgrounds to distinguish from their origin: the civil laws of
French, German, and Scandinavian origin and the common law approach of the
Anglo-Saxon countries. Table 1 shows for the western European countries the
legal origins of their companies’ acts.
In addition, one also finds very different corporate governance codes in
Europe. Some European countries emphasize cooperative relationships and con-
sensus, while other countries focus on competition and market processes in their
corporate governance frameworks. Anglo-Saxon countries are often character-
ized as more market oriented, with a higher value placed on competition.

Table 1. Legal Origins (Weil et al. 2002)


Country Legal origin
Austria Civil law, German origin
Belgium Civil law, French origin
Denmark Civil law, Scandinavian origin
Finland Civil law, Scandinavian origin
France Civil law, French origin
Germany Civil law, German origin
Greece Civil law, French origin
Ireland Common law
Italy Civil law, French origin
Luxembourg Civil law, French origin
Netherlands Civil law, French origin
Norway Civil law, Scandinavian origin
Portugal Civil law, French origin
Spain Civil law, French origin
Sweden Civil law, Scandinavian origin
Switzerland Civil law, German origin
UK Common law
European cultures and management styles 3

Table 2. Structure of the board (Weil et al. 2002)


Employee
representation in Separate supervisory and
Country Structure of the board supervisory body managerial leadership
Austria Two-tier Yes Yes
Belgium Unitarya No Not required
Denmark Two-tier Yes Yes
Finland Unitarya Articles may provide Yes
France Unitarya Articles may providec Not required
Germany Two-tier Yes Yes
Greece Unitarya No Not required
Ireland Unitary No Not required
Italy Unitaryb No Not required
Luxembourg Unitary Yes Not required
Netherlands Two-tier Advisory Yes
Portugal Unitaryb No Not required
Spain Unitary No Not required
Sweden Unitary Yes Yes
UK Unitary No Not required
Norway Two-tier Yes Yes
Switzerland Two-tier No Yes
USA Unitary No No
Japan Unitary No Yes
a
Other structure also available
b
Board of auditors also required
c
And Advisory

Germany and Austria are countries where the civil law origins from a German
background traditionally value co-operation and consensus. This point is under-
pinned by the role of employee codetermination and works councils, but also by
the rights given to employees of certain sized companies to obtain information
about the economic and financial situation of the company and major plans for
organizational changes, such as mergers (Weil et al. 2002).
The structure of the board in companies shows three different forms in Euro-
pean countries: we find unitary boards, two-tier boards, and a mixture of both.
The participation of the employees in the supervisory or nonexecutive board is
also diverse in European countries. Table 2 shows the differences as far as the
structure of the board, the representation of the employees in the board, and the
separation from the supervisory and the management board are concerned.
Table 2 indicates that the countries where the civil law is of German origin, but
also the German neighbors Denmark and the Netherlands, have a two-tier
structure of the board, employee representatives in the supervisory board, and a
separate supervisory and managerial leadership system.
There are several possibilities to describe general differences in corporate
governance models, which are shown in Table 3.
These three items are often taken to distinguish the Anglo-Saxon from the so-
called Rhineland model. While the Anglo-Saxon model is very much market and
4 M. Perlitz and F. Seger

Table 3. Typical descriptions of corporate governance models


(Weil et al. 2002)
market-oriented bank-oriented
outsider-dominated insider-dominated
shareholder-focused stakeholder-focused

shareholder oriented, the Rhineland model is more concerned with meeting


the expectations of the different stakeholders of a company, and it is said to be
based on a network structure of different insider groups and banks. As experi-
ence shows, for managers from an Anglo-Saxon culture it is often very difficult
to understand the specifics in the decision-making process in the Rhineland-
model, and vice versa. Especially in management decisions, where the interests of
a network of stakeholders has to be taken into account, the understanding how
the decision-making process has to be prepared is very difficult if a manager
comes from a different culture. Thus, in the following these differences will be
analyzed.

2.2 Cultural differences


The term “culture” has been very much discussed in the literature, and there are
many studies to find criteria to classify countries according to cultural factors
(Trompenaars and Hampden-Turner 2000). However, if one talks about typical
cultural differences amongst countries, one has to understand that one is talking
about a “normal distribution function,” meaning that there are of course pos-
sibilities of overlapping cultural aspects. However, the focus of the analysis is
usually based on the differences of means (Hofstede 1991). Of course, one can
find a very humorous German and a Frenchman who does not like French food.
Thus, one has to understand that talking about differences in cultures always
implies a danger of simplification and that the behavior of people can be surpris-
ingly different from what is generally assumed to be typical for a specific culture.
Hofstede’s research on cultural differences is a interesting way to analyze
cultures according to the following four criteria:
Power Distance
Individualism
Masculinity
Avoidance of Uncertainty (Hofstede 1991)
In spite of some criticism of his research, it is still intriguing to use his results
for a classification of western European management styles. In the following, first
the four criteria Hofstede uses are briefly described, and then 15 western Euro-
pean countries are classified and contrasted to the USA and Japan. Unfortu-
nately, a similar study does not exist with regard to middle and eastern European
countries or Russia. Their management styles will be dealt with in a more ex-
plorative way. In the next step, different management cultures will be character-
European cultures and management styles 5

ized. As some of them are very close, but in one aspect different in relation to the
four factors of Hofstede, Trompenaars’ classification will be used to propose five
different management cultures in Europe.
Power Distance is defined as the extent to which the less powerful members of
institutions and organizations within a country expect and accept that power is
distributed unequally. This index informs about the dependence relationships in
a country. High scores mean that the Power Distance is very significant (Hofstede
1991).
Individualism is contrasted to Collectivism. Individualism is described as the
relationship between the individual and the collectivity prevailing in a society. It
is reflected in the way people live together. Individualism pertains to societies in
which the ties between individuals are rather loose: everyone is expected to look
after himself or herself and his or her immediate family. Collectivism, as its
opposite, relates to societies in which people from birth onwards are integrated
into strong, cohesive in-groups, which throughout people’s lifetime protect them
in exchange for unquestioning loyalty. High values refer to a high Individualism
in the specific culture.
The third criterion used by Hofstede is the difference between Masculinity and
Femininity. Masculine societies are more assertive, and feminine societies are
said to be more caring and nurturing.
The fourth criterion is the Avoidance of Uncertainty. It reflects to what extent
people accept uncertainty. There are cultures that can comfortably live with the
fact that the future is uncertain. Others try to deal with uncertainty by setting
clear rules and attempt to achieve a security for their work force.
Figure 1 summarizes the results of Hofstede with respect to the factors
Power Distance and Individualism. This chart indicates already that the southern
European countries and Belgium show a higher Power Distance than the
Anglo-Saxon, Germanic, and Nordic countries. On the other hand, there is a
similarity in that, apart from Portugal, a high Individualism is characteristic of all
western European cultures. Compared with the western European countries,
apart from Portugal, Japan is very different, while both the US and the UK
are much more individualistic than the other countries. These findings are highly
relevant to understanding that doing business in southern European countries is
done much more by a top-down than a bottom-up approach. In France the
“patron” (a word which is hard to translate in English, since besides the meaning
of “boss” it also includes some elements of “caring about subordinates”) has
the say, which means that management is quite patriarchic and bureaucratic.
The decision process is very centralized, and the opinion of the “patron” is
nearly undisputed. Clear hierarchies exist, and subordinates try “to delegate
upwards.” Doing successful business in the southern European countries
depends heavily on getting the right contacts to the superiors and the bosses.
The elite of these countries often attended highly regarded schools and
universities (e.g., École nationale d’administration (ENA) or Haute Études
Commerciales (HEC) in France) and form network structures that dominate the
business.
6 M. Perlitz and F. Seger

Fig. 1. Power Distance-individualism matrix


A, Austria; B, Belgium; DK, Denmark; F, France; Fin, Finland; Ger, Germany; Gr,
Greece; I, Italy; Ire, Ireland; J, Japan; NL, Netherlands; Nor, Norway; Por, Portugal; Sp,
Spain; Swe, Sweden; Swi, Switzerland; UK, United Kingdom; USA, United States of
America

Figure 2 summarizes the results of the criteria Masculinity-Avoidance of


Uncertainty matrix. The clusters among western European countries are very
different. While the Anglo-Saxon cultures are characterized by high Masculinity
and low Avoidance of Uncertainty, the Germanic cultures show high Masculinity
and Avoidance of Uncertainty.
The Nordic cultures are mainly to be found in the area of low Masculinity and
low Avoidance of Uncertainty. Only Finland shows a relatively high Avoidance
of Uncertainty. The southern European cultures are all characterized by a high
Avoidance of Uncertainty, but show differences in the degree of Masculinity.
While Italy has a high Masculinity, France, Spain, and Portugal score low in that
factor. Nevertheless, there is a clear distinction between the different cultures
in western Europe. Interestingly, the US scores are similar to those of the UK
and Ireland, while Japan is similar to the Germanic cultures with regard to
Masculinity and Avoidance of Uncertainty.
Table 4 summarizes the results of Figs. 1 and 2. There are clear country clusters
for the Anglo-Saxon countries UK and Ireland. In the same cluster one can find
the USA. The Germanic cluster, with Germany, Switzerland, and Austria, is also
European cultures and management styles 7

Fig. 2. Masculinity-Avoidance of Uncertainty matrix

Table 4. Classification of western European countries using Hofstede’s results. MAS,


Masculinity; AoU, Avoidance of uncertainty; PD, Power Distance; IND, Individualism
MAS low/ MAS low/ MAS high/ MAS high/
AoU low AoU high AoU low AoU high
PD high/ Portugal Greece
IND low (For comparison:
Japan)
PD high/ France Italy Belgium
IND high Spain
PD low/ Denmark Finland Ireland Austria
IND high Sweden Netherlands UK Germany
Norway (For comparison: Switzerland
USA)

very distinct. The group of Denmark, Sweden, and Norway indicates that there is
a Nordic cluster. The other countries do not fit into one specific cluster.
Other research conducted by Trompenaars and Hampden-Turner (in the
following cited as “Trompenaars”) bases the cultural differences on six cultural
dimensions (Trompenaars and Hampden-Turner 2000):
Universalism vs. Particularism
Individualism vs. Communitarianism
Specificity vs. Diffuseness
8 M. Perlitz and F. Seger

Achieved vs. Ascribed Status


Inner vs. Outer Direction
Sequential vs. Synchronous Time

Trompenaars’ first item is Universalism vs. Particularism. Universalism means


that people believe that certain rules and truths can be precisely identified
and should then be applied everywhere. In business dealings, universalism
would stress a legalistic perspective operationalized through formal contracts.
Particularism means that business partners avoid formal contracts and rely on
building trusting relationships over time.
Individualism vs. Collectivism is the second cultural dimension Trompenaars
looked at. Business negotiators in individualistic cultures tend to make decisions
on the spot and take personal responsibility. Collectivist cultures, on the other
hand, focus on group decisions, and group members assume joint responsibility.
The third cultural dimension is Specificity vs. Diffuseness. This dimension
relates to the degree of involvement or intimacy individuals are comfortable with
in dealing with other people. In specific cultures, people are outgoing and allow
considerable open public space, but they closely guard their private space. In
diffuse cultures, individuals appear very cool and detached, but when outsiders
are allowed to enter into their private lives they tend to be very open.
Achievement vs. Ascription is the fourth dimension that is used by
Trompenaars to distinguish cultures. This aspect describes how status and power
are gained: achieved (earned) through competitive hard work or ascribed by
birthright, age, or gender.
The fifth cultural dimension is Inner vs. Outer Direction. Inner Direction
conceives virtues as inside each of us—in our souls, wills, convictions, principles,
and core beliefs—in the triumph of conscious purpose. Outer Direction con-
ceives virtues as outside each of us in natural rhythms, in the beauties and power
of nature, in aesthetic environments and relationships. It refers also to how
emotions are expressed. In inner-directed cultures, emotions are held in check
and not publicly displayed. In outer directed cultures, emotions are considered
natural and should be openly shown.
Trompenaars’ last cultural dimension is Sequential vs. Synchronous Time. In
Sequential Timing cultures, individuals follow the clock time like an arrow.
Synchronous Timing refers to a recurrent or cyclical perception of time.
Table 5 summarizes the findings of Trompenaars. It should be noted that he did
not classify all countries with respect to all cultural dimensions.
If one accepts that only one criterion of Hofstede (high vs. low Avoidance of
Uncertainty) can be different, then there is a clear Nordic culture, including
Denmark, Sweden, Norway, Finland, and the Netherlands. Trompenaars’ find-
ings support this. Table 5 shows that all these countries score at the same level
in all the different cultural factors. Trompenaars’ factors clarify that there is a
Nordic culture.
It is not easy to classify the other countries and find some common clusters.
Hofstede showed that France and Spain are in the same cluster, whereas
European cultures and management styles 9

Table 5. Characteristics of countries according to Trompenaars (Peterson 1993)


Achieved Inner Sequential
Country Universalism Individualism Specificity status direction time
Austria
Belgium Low High High Low
Bulgaria Low High High
Czech Republic Low High High
Denmark High High High
Finland High High High
France Low Low High Low High Low
Germany High High High Low High Low
Greece Low Low Low
Hungary High High High
Ireland High Low/High High
Italy High High High Low High
(Japan) Low Low Low Low High Low
Netherlands High High High Low High High
Norway High High High High
Poland Low High High Low High High
Portugal Low Low Low
Romania High High
Russia Low High Low Low Low High
Spain High High Low High
Sweden High High High Low High High
Switzerland High High High Low High Low
UK High High High Low High High
(USA) High High High High High High
Yugoslavia Low High Low Low

Trompenaars’ factors are very different for these two countries. Portugal is in a
different cluster, and so are Belgium, Italy, and Greece. Italy differs in two
factors from France and Spain, but in only one criterion (high Power Distance)
from the Anglo-Saxon countries.
With reference to the cultural factors of Trompenaars, it seems that France,
Portugal, and Greece have the most in common. The same is true for Italy and
Spain. As far as Hofstede’s and Trompenaars’ findings are concerned, Belgium
is very close to the Germanic culture. As will be shown later, the affinity and
similarity among France, Spain, Portugal, and Greece are relatively high. Thus,
we put them into the same cluster as the frankophile culture. Since Italy forms
a cluster of its own with regard to Hofstede’s factors, and since it is also very
different from the frankophile countries in Trompenaars’ classification, it will be
considered as a culture of its own.
With the results of this research, one can distinguish five different manage-
ment cultures based on the four criteria of Hofstede and the six criteria of
Trompenaars:
Anglo-Saxon culture (Ireland, UK, and USA)
Nordic culture (Denmark, Norway, Netherlands, Sweden, and Finland)
10 M. Perlitz and F. Seger

Germanic culture (Austria, Belgium, Germany, and Switzerland)


Frankophile culture (France, Greece, Portugal, and Spain)
Italian culture
In his study, Hofstede included Yugoslavia as the only middle or eastern
European country, whereas some of Trompenaars’ factors also comprise Russia,
Bulgaria, Poland, Hungary, Romania, and the Czech Republic. As there are
many differences, these countries will be dealt with separately.
Cultural diversity is one reason why we find different western European
management styles. These differences of the five western European cultures are
discussed in the following. At the end we will focus on the middle and eastern
European countries.

3 Impact of culturals differences on western European management styles


3.1 Anglo-Saxon cultures
In spite of a lower Power Distance, the Anglo-Saxon system still can be charac-
terized by a clear cutoff between the bosses and the workers and amongst the
different vocational trainings of workers (Heidenreich 1997). The dividing line
is between different functions in companies, e.g., production, maintenance,
R&D, and higher management, as well as between qualified and unskilled labor.
Amongst the different skilled labor groups, there are clear differences. The
closer you come to engineering and production, the lower is your status in the
company.
There are essentially two social classes in Anglo-Saxon countries, the middle
classes and the working classes. The upper middle class consists of higher mana-
gerial and professional persons, followed by lower managerial and administrative
groups. The lower middle class consists of skilled or supervisory nonmanual
workers (Halsey 1981). It is not by chance that the English word “engineer”
derives from the word “engine.” This refers to something from which one gets
dirty hands. That is one reason why knowledge of production in the higher
management of Anglo-Saxon companies and the status of an engineer are rela-
tively low. However, British managers tend to be more focused on technology
than to be market-oriented. The ideal manager is seen as the classically educated
and cultured generalist who is able to cope with any contingency. Specialists are
often met with suspicion. Inherited legitimacy (e.g., titles) partly explains why
social origin can be more instrumental for promotion than technical competence.
British cultural traditions continue to include the belief that managers are born,
not made (Banai and Gayle 1993).
For each profession, there is a different labor union. This leads to fragmented,
decentralized trade unions whose power has been weakened dramatically since
1979. But there are still many conflicts in the employer-employee relationship.
There is also a lack of confidence toward each other (Heidenreich 1997).
The low Power Distance and the high Individualism scores indicate that on the
one hand the willingness to accept that the power is unevenly distributed is
European cultures and management styles 11

relatively low and individuals are quite self-confident. On the other hand, there
is a clear “class system” between higher management and the workers in compa-
nies. This is one reason for labor disputes. The high Masculinity score reflects that
these labor disputes are settled in a rather hostile way.
The “class system” in companies leads to a situation in which the top man-
agement considers itself as a class of its own, owing most responsibility to the
shareholders. Thus, the shareholder value approach suits this culture very well.
The primary target group for the published accounting data is the shareholders.
Moreover, there is a tendency toward “window dressing,” which means that the
evaluation in balance sheets is more optimistic than in Germanic cultures. Fur-
thermore, one finds a tendency to please the shareholder in the short term. Often,
Anglo-Saxon managers seek short-term profit at the expense of long-run market
positions, failing to recognize the dynamics of competition (Banai and Gayle
1993). By contrast, French managers, for instance, tend to be oriented more
toward model building and the development of long-term perspectives (Adler
1991).
The Anglo-Saxon culture is also characterized by a low Avoidance of Uncer-
tainty. Consequently, there is always some optimism about the future. Thus, it is
not astonishing that Anglo-Saxon managers are mostly more satisfied with their
job with respect to security and social need than managers from other cultures
(Haire et al. 1966). The confidence that the country will be successful in dealing
with problems and that the individual is responsible for his or her destiny is
typical of Anglo-Saxon cultures.
Whereas other cultures, as we will see, try to regulate many contingencies by
general law, the Anglo-Saxon countries rely more on single cases. This is why
legal practices are based on cases, and precise contracts are often very tricky to
formulate.
As we can see from Table 2, the company structure in Anglo-Saxon countries
is a one-tier system, with a board consisting of executive and nonexecutive
members. There are no worker representatives on the board.

3.2 Nordic cultures


Nordic cultures show extremely low Power Distances and very low Masculinity
scores. Hierarchical thinking is relatively uncommon compared with other coun-
tries. The model of management in the Nordic countries has a more egalitarian
approach (Selmer 1993). These countries can be characterized as consensus-
seeking societies. This is also reflected in companies that try to combine produc-
tivity and human objectives. However, in a world of fiercer competition, it is more
and more difficult to achieve such a combination. The Nordic management style
is very decentralized and democratic. The business organizational chart is gener-
ally horizontally structured. There are almost three times fewer hierarchical
echelons than in France, and the Power Distance between people is very low.
Typical for Nordic cultures is understatement. The desire to appear as a
“big chief” seems to be totally removed from the Scandinavian mentality.
12 M. Perlitz and F. Seger

Furthermore, there is a relaxed attitude toward professional promotion (Tixier


1996).
The further north one travels in Europe, the more people are reserved and the
less they talk to outsiders. For non-Nordic people, the Norwegians often appear
to be a cold, distant, and reserved people. They do not seem to seek contact, and
they have a hard time communicating. As with the Finns, the perfect day for a
Norwegian is one in which nobody is encountered (Tixier 1996). The Danes have
a reputation for being happier, more open, and friendlier than the Swedes and
the Norwegians. They are also more individualistic and more creative, and there-
fore less disciplined, less formal, and also less professional than the Swedes. The
Danes prefer Norwegians, as they find them pleasant. As for the Finns, they are
serious people and very reserved. They live close to Russia, and the other three
Scandinavian countries, except perhaps for Sweden, misunderstand them.
The Finnish management is more autocratic than, for example, that in Sweden.
Hierarchies exists and are respected, but without excessive formality. Subordi-
nates are used to receiving orders. However, this picture has changed lately. A
younger generation of managers delegates more power to employees. Foreigners
often see Finland as a closed world. Numerous elites of all sorts are rather tightly
knit, and it is difficult to be accepted by a society with fixed boundaries, which is
conservative and young, very organized and in transition at the same time (Tixier
1996).
There is one general principle of communication applicable throughout Scan-
dinavia: less is more. The body language of Nordic managers is, in contrast to that
in francophile culture countries or in Italy, rather low key. In addition, they do
not regard silence as negative, since the partner may be reflecting on a point of
the opposite number. An immediate first reaction is unusual for Nordic cultures.
There is usually a calm and cautious climate during business negotiations. Thus,
one has to have patience about the decision-making process of Scandinavian
executives. Decisions are taken in a group consensus and are not achieved on the
basis of stand-alone choices on the spot. The mode of dealing with each other
is very team oriented, and no one will contradict colleagues openly. Contracts
are often made as oral agreements, and there is trust in each other. Thus,
Scandinavian countries are less legalistic than Germanic or Anglo-Saxon coun-
tries, for instance. Within negotiations, profit plays an important role, but one
should avoid the impression of being overambitious and extremely profit-
oriented. Aggressive bargaining for prices is not seen as appropriate and would
leave the impression of lack of seriousness (Frank 2002a).
Except for Denmark and Norway, all the other Nordic countries have a unitary
system of the board, as shown on Table 2. In most companies there are employee
representatives on the supervisory board. The egalitarian approach also prevents
Scandinavian companies from having a class structure inside the company, as is
the case in Anglo-Saxon countries. Because of this, managers from Nordic coun-
tries show the highest degree of satisfaction in the need for Autonomy and for
Self-Actualization in relation to all the other cultures (Haire et al. 1966). Like the
Americans, the Danes have a rather linear approach to problems and have a
European cultures and management styles 13

direct business culture oriented toward results. The Danes have always been
more rapid in laying off uneconomic personnel than the Swedes and the Norwe-
gians. This resulted in a rapid rotation of positions before the recession set in.
Especially in Norway, trade unions are perceived as partners, not as enemies, and
the labor legislation is one of Europe’s most protective (Tixier 1996).
Swedish and Norwegian managers report a very high degree of job fulfilment.
Danish managers are relatively high in fulfilment of Autonomy and Self-
Actualization but are considerably below average in Social and Esteem need
fulfilments. Managers from Nordic countries also show a high degree of job
satisfaction (Haire et al. 1966).
All in all, the Scandinavian management style is perceived as being very
balanced and professional, being both flexible and reasonable. The humanism of
Nordic countries makes excessive professionalism more difficult. The latter is
always restrained by social democracy. Scandinavians combine several American
and German managerial characteristics, to which they voluntarily refer. The
Finns’ mentality is strikingly close to that of the Germans (Tixier 1996).
Even though the lifestyle in Scandinavian countries is rather similar, the char-
acteristics of their managerial culture are still different. Similar to the relations
among Germany, Switzerland, and Austria, there is an enduring unfriendliness
among Scandinavian countries. For this reason, Finns have had many problems
when they bought businesses in Sweden or Denmark. However, the other
Scandinavian countries have had difficulties with their direct foreign investments
in neighboring countries as well.
As shown before, the Netherlands has a very similar management culture to
that of the Scandinavian countries. Unlike the Anglo-Saxon and Germanic
countries, the Masculinity index is low, and unlike Denmark and Sweden, the
Avoidance of Uncertainty index is high. As employee orientation prevails in
the Netherlands (Drenth et al. 1979), it may be closer to the Nordic than to the
Anglo-Saxon culture. The participative decision-making process is therefore
more similar to Nordic cultures than to Anglo-Saxon cultures (Drenth et al.
1979). Table 6 displays the most important factors affecting the differences in the
corporate governance systems of the UK and the Netherlands (DWS 2000).
As in the other Nordic countries, in the Netherlands we have a more egalitar-
ian approach. Workers are more acknowledged than in the Anglo-Saxon cultures
(Drenth et al. 1979).

Table 6. Factors affecting corporate governance systems in the UK and the Netherlands
UK The Netherlands
Market culture Consensus culture
Market-oriented Network-oriented
Short-term strategy Long-term strategy
Relatively more reliance on equity Relatively more reliance on debt
Stock exchange relatively large Stock exchange relatively small
Relatively high influence of controlling Relatively low influence of controlling
shareholder(s) shareholder(s)
14 M. Perlitz and F. Seger

3.3 Germanic cultures

For the Swiss and Austrians, it is hard to accept that they belong to the Germanic
culture. The relationship among the three countries is characterized for the
smaller countries as fear of being dominated by the “big brother” Germany.
Thus, there are many resentments against Germany. Nevertheless, Hofstede’s
study showed that there are hardly any cultural differences in the four criteria he
used to characterize countries. It is a bit astonishing how close Belgians are to the
Germanic culture.
The similarity already starts in the structure of companies. There is a two-tier
system with a management board and a supervisory board. In Belgium there is
the possibility of having a unitary or a two-tier system. Differences can be found
in the staffing of the supervisory board. In Germany the Co-Determination Law
leads to a situation that in stockholding companies there are workers who are
elected members of the supervisory board. In big corporations, 50 percent of the
members of the supervisory board in Germany come from the employees’ side.
In Austria and Switzerland there is not a similar regulation with regard to the
supervisory board. However, in Austria there are, in contrast to Switzerland and
Belgium, workers’ representatives on the supervisory board. The supervisory
board appoints the members of the management board. Because the representa-
tives of the employees are part of the electorate, the top management has to
consider shareholder and employee interests at the same time.
This is one reason why in Germanic cultures the stakeholder is more relevant
than the stockholder approach. To please all stakeholders is a difficult task. Thus,
top managers try to deal carefully with these problems. There are network
structures in which the stakeholders try to cooperate. For this reason, one often
talks about “Germany Inc.” These network structures are also to be seen in the
other Germanic countries.
Austria, Switzerland, and Germany have a low Power Distance index. Austria
has the lowest score of all countries studied by Hofstede. This translates into
consultative decision making, solidarity, hierarchy as a means of convenience,
and a stress on expert power.
The Austrian as well as the German social partnership system contains an
institutionalized approach of solving social and economic problems through com-
promise and consensus rather than through confrontation, which nicely mirrors
this low Power Distance. Therefore, if there are conflicts, they are dealt with in a
very confrontative way. However, once the conflict or the discussion is over, one
immediately goes back to normal. Industrial democracy is a way to bridge dif-
ferent interest groups. Besides, the codetermination in decision making, the
structuring of activities, the way to find the right types of compensation, and the
selection and recruitment of managers are also means to control conflicts (Haiss
and Schicklgruber 1993).
In addition to the participation of workers on the supervisory board, there are
also workers’ councils in Germanic countries that are involved in many decisions
concerning the workplace.
European cultures and management styles 15

Both the search for compromises and the tendency to avoid uncertainty imply
that the decision-making process is relatively slow and characterized by compro-
mises. The Avoidance of Uncertainty also leads to rather formalized ways to run
the business. Many details have to be put in contracts, and the law is highly
formalized. This often leads to an overregulated economy. Even labor disputes
have to follow specific legal procedures. It also results in a greater dependence of
citizens on authorities, more elaborate legal systems, standardization, structur-
ing of activities, emphasis on details and rituals, and risk-aversion (Haiss and
Schicklgruber 1993).
There are some differences between the Swiss and the Austrians or Germans.
The rather democratic behavior and the close involvement of the individual in
the political decision-making process leads to different attitudes toward authori-
ties in Switzerland.
For all countries, it is typical that goals are not imposed down the ranks but
are agreed upon through discussions. However, the reliance on experts and the
importance of regularity, mechanisms, and rituals are impediments to change
and progress. The interaction of low Power Distance and high Uncertainty
Avoidance leads to the fact that the idea of openly disagreeing with lawful
superiors generally does not occur. Conflicts, therefore, are not dealt with
directly, but through formation of working groups, whereby the topics are di-
vided for subworking groups that develop rituals for mutual understanding of the
other party’s point of view. In doing so, networking among the inner circles is of
utmost importance for successful managerial behavior (Haiss and Schicklgruber
1993).
In relation to the Anglo-Saxon countries, in Germanic countries there is a high
respect for technology and production. Engineers are highly regarded. The
German word for engineer is “Ingenieur” and derives from the Latin word
“ingenium,” which means the ingenious potential of a person.
The Germanic class system is very much based on education. The more highly
educated you are, the higher is your social standard. Thus, Germanic companies
put a lot of effort into the education of employees. The dual system of education,
which means that apprentices learn on the job and have to go to school at the
same time and finish their apprenticeship with an exam, is unique in the world.
Management is seen more as a function than as a profession. Even top managers
often consider themselves more as a engineers, chemists, or business administra-
tors than as managers. The Management is “hands-on” rather than at “arm’s
length”: weak on delegation, marketing, and strategy, but strong on personal
responsibility and the organization of production and operational details. Above
all, a manager is often seen more as a specialist than a generalist. People are
selected, placed, and advanced on the grounds of their specialist knowledge,
experience, and skills. The emphasis on technology frequently leads to neglect of
thinking in market opportunities. There is a lot of innovative potential in the
Germanic cultures, which is reflected in the high numbers of patents (Switzerland
has the highest patent per head ratio in the world). Yet, the ability to bring
innovation successfully to the market is rather weak.
16 M. Perlitz and F. Seger

Managers from Germanic cultures see relatively small differences in the com-
parative similarity of high- and low-status positions (Haire et al. 1966). This is
also reflected in the relatively low Power Distance index, where Austria shows
the lowest value of all countries.
Managers from Nordic and Germanic cultures have high fulfilment with their
jobs but are relatively low in their social needs. In contrast, managers from
francophile cultures feel a low degree of fulfilment with their jobs (Haire et al.
1966).
The Germanic management style can also be characterized by formal
behavior. The Avoidance of Uncertainty results in a corporate policy that every-
thing has to be taken down in minutes, and planning plays an important role to
try to keep the future free of surprises. This way of thinking can also be seen in
the way accounting data are published. Especially in Germany, the main target
group for the balance sheet is not, as in the Anglo-Saxon countries, the share-
holder, but the debtor. Thus, it is in the interest of the debtor if the annual
account is prepared in a cautious way, which means that the evaluation is done
rather conservatively. There is a tendency to hide profits, which in worse times
can be disclosed to improve the balance sheet.

3.4 Francophile cultures


France and Spain are, according to Hofstede, placed in the same category, while
Portugal shows a relatively lower Individualism and Greece a lower Individual-
ism and a higher Masculinity Index. The francophile culture is very much
characterized by a high Power Distance. This results in highly hierarchical,
bureaucratic organizational structures. The decision-making process is very
centralized. This often leads to inflexibility, and there usually are “leaks in the
system” that are used by the employees to bypass the formal structure. The
control span in francophile companies is much lower than in other cultures.
That is the reason why supervision is more intensive and the possibilities for
the employees to make decisions on their own are much lower. The high
Power Distance and the high Individualism are also reflected in the educational
system.
The system of higher education in France has traditionally been a monopoly of
the state. It is divided between the universities, which are oriented toward the
pursuit of knowledge, questioning, and inquiry, and the “écoles,” which focus on
a more practically oriented training. The écoles were created by the successive
governments of France, predating the Revolution and the Napoleonic era (Rojot
1993). The top management is usually educated in elite schools and universities.
On the pinnacle of the status and income pyramid are the engineers and the
academics educated in one of the “grands écoles” (“cadres”) or bureaucrats who
attended the ENA (Ecole Nationale d’Administration). The importance of hav-
ing gone to the best schools and universities is also high in the other francophile
countries. Three-quarters of France’s top 200 companies originate from rich
families. As the upper echelon of French business is a tight-knit elite who studied
European cultures and management styles 17

at the same grands écoles and whose families probably have known each other
for generations, they form a close network structure. All this leads to a highly
stratified class system, in which one’s identity is based on social standing, not
occupation (Newton 2000). In Spain this trend is also reflected in the way the
unitary board is composed: there are no independent directors, there is an exces-
sive number of members, and some directors are chosen for other than profes-
sional reasons. In francophile countries shares are normally held by banks and
family fortunes (Rapoport et al. 1993).
French, as well as Spanish organizations consist of clearly differentiated levels
in which members of a given level have a clear understanding of their appropriate
hierarchical rights and duties. Initially, Spanish culture seems masculine, risk-
averse, and hierarchical. What is difficult to determine is whether Spaniards
are individualists or collectivists. On the one hand, Spaniards have strong family
ties and regional identities, which makes them individualistic. On the other hand,
large bureaucracies in government and corporations make Spaniards appear
like collectivists. Therefore, one has to be careful in generalizing at this point
(Rapoport et al. 1993). Spain is especially focused on the prestige of a higher-
status position, and hierarchical distinctions are much more prominent than
they are in the Nordic, Anglo-Saxon, and Germanic countries and the other
Romanic countries (Haire et al. 1966). However, in Spain and France there is
little communication or sharing of understanding across hierarchical levels
(Rojot 1993).
The middle management is usually staffed from technicians or foremen. The
lower management consists of commercial clerks and workers. Those who come
from the elite schools and universities have a much higher chance of being
promoted in companies than those who have already worked there for a long
time and who attended schools or universities of a lesser assessment. Francophile
management style is therefore much more “scientific” and “systematic” than in
other cultures. This is, for instance, reflected in the way French managers ap-
praise logical thinking. This also leads to a preference for qualitative over quan-
titative information, which is often subjective and personal or which emanates
from authorities. Therefore, a logical analytical approach will prevail over a
mathematical decision model (Rojot 1993).
Because the elite forms a network structure, the cooperation among politi-
cians, research institutes, and companies is very close. Negotiations mostly start
with a discussion about general problems and possible strategies. First, one
agrees on the purpose of the business, then on the applicable principles, followed
by the broad content of the discussion, and finally on the details. This is seen as
part of the logic French business people want to follow during negotiations.
French managers apparently enjoy prolonging negotiations and pride themselves
on their logic. Presentations are usually loaded with facts and figures. Unlike the
Portuguese, French managers may interrupt during presentations to question
ideas. One should not be confused by high-pitched voices and arms waving
with anger. This is probably only animated interest (Newton 2000). During
negotiations it may happen that French managers without any obvious reason
18 M. Perlitz and F. Seger

jump from one theme to the other. This is often part of the “inspiration” or
“improvisation” which should reflect the flexibility of French business people
(Weil et al. 2002).
Francophile managers have problems facing conflict, particularly when it is
face-to-face, and they also have difficulties developing group leadership. There-
fore, subordinates will avoid having to deal directly with superiors in order to
avoid face-to-face conflicts. Seen from the top, the risk of face-to-face conflict
must also be avoided. Since the superior’s authority is absolute, it cannot conceiv-
ably be challenged, and it is impossible even to run the risk of such a challenge.
The organizational solution to the dilemma of avoiding face-to-face conflict rests
on the creation of rules. From the top, where rules are issued, they confirm higher
management’s capacity of sovereign power. Those rules are impersonal, which
from below reinforces the sense of following an abstract order and not bowing to
absolutism. From the above follows the rational model of “one best way” of
ruling absolutely over one’s domain without having to be bothered to make
unnecessary allowances for individual peculiarities. In this context, it is no sur-
prise that the efforts to introduce Management by Objectives in francophile
countries failed, because this technique implies a high danger of a face-to-face
conflicts (Rojot 1993).
The francophile leadership concept of authority is absolutist, omnipotent, and
universalist. The owner of authority knows no limits to his power and no con-
straints in exerting it, beyond narrowly interpreted legal ones that in any case are
difficult to enforce in a relationship of subordination (Rojot 1993). Therefore, it
is not surprising that the fulfilment need out of their jobs and the satisfaction
managers have with their jobs are relatively low in francophile countries (Haire
et al. 1966).
The importance of trade unions is limited, as they represent specific political,
religious, or working group interests. In France, for example, there are the
Communist, the more Socialist-oriented, and the Roman Catholic trade unions.
The trade unions for leading executives are quite important. Among the single
unions, there are often tensions that paralyze their power. The traditional trade
unions for steel, coal, cars, and shipbuilding have lost their importance
(Heidenreich 1997).
Portugal differs with respect to the Individualism index from France and Spain.
The bureaucracy is often rather heavy, and red tape may also delay transactions.
As in the other francophile countries, hierarchies are also important, not only in
the public but also in the private sector. The power and the authority of a CEO
result from his position. Therefore the principle of the top-down approach pre-
vails. Due to the low Individualism index, entrepreneurial spirit on many levels is
not as popular as in other European countries. Often the paternalistic entrepre-
neur still reigns over the company. As in all other francophile countries, personal
communication is vital. Business has to be dealt with personally and not by phone
or other electronic media. The decision-making process in Portugal takes a lot of
time. As in France, to look for quick results in Portugal leaves the impression that
you want to take advantage. Spontaneous ideas and quick thinking, in terms of
European cultures and management styles 19

brainstorming, often prevail in the discussion. To finalize a negotiation, Portu-


guese business partners usually prefer written papers to verbal understandings, in
order to improve documentary evidence during the development of the negotia-
tion process and to avoid misunderstandings. This attitude is typical of the high
Avoidance of Uncertainty index of all francophile countries. During presenta-
tions it is seen as impolite to interrupt your counterpart unless one has a substan-
tial question. In all discussions it is important that the personal climate remains
pleasant and amicable. As in France (Newton 2000), the tone of the meeting is
low key, diplomatic, and serious. The Portuguese like to bargain for prices and
see the bargaining process as a social occasion (Frank 2002b).
As in other francophile countries, soft factors are very important in Portugal.
One has to find a jointly positive basis. If one tries to exploit the partner’s
gentleness, negotiations can turn out to be extremely difficult. The negotiation
team, due to the high Power Distance index, usually consists of only a few
members, or one even negotiates with just a single person. Inside companies,
most of the participation of workers in the decision-making process or the
introduction of quality circles is mainly promoted by the management, and the
representatives of the trade unions hardly play a role in this process.
The high Avoidance of Uncertainty is also represented in the legal system. The
laws are clearly defined and very detailed. There is not a very explicit shareholder
orientation. The published accounting data are often difficult to get. Specific
companies have in the past specialized to make them available for the public.
For readers from nonfrancophile cultures, the company reports are often very
difficult to understand.
In the francophile countries one can find a unitary board system. However,
there is the possibility in France, as in Belgium, of having a two-tier system.
Although in France corporate articles may allow workers to be advisory mem-
bers of the board, this is not the case in Spain.
A special aspect of the francophile cultures refers to timing. Neither business
nor social gatherings start on time, but punctuality is expected. Thus, one often
has to wait for 30 minutes to one hour outside an office or in a restaurant.
According to the Hofstede study, Greece is different from the typical cultures
of France and Spain, but also from Portugal. It shows a high Masculinity and
Avoidance of Uncertainty index (of all countries, Greece shows the highest score
in the Avoidance of Uncertainty index). The “ego needs” of self-esteem and
status through wealth, which largely coincide with the national character of
the Greek people, are important. There is a clear distinction of attitudes to do
business according to the “in-group” and the “out-group.” Within the in-group
there is a warm acceptance of people with authority, and behavior is cooperative
and given to self-sacrifice. Toward the out-group there is a cold rejection of
authority, and behavior is suspicious, hostile, and extremely competitive. Thus,
Greek “antiauthoritarianism” is a by-product of the distinction between in- and
out-groups. In general, however, as in all other francophile countries, a more
autocratic leadership style is favored over a participative style. Greek-owned
companies tend to follow less rational and formalized decision-making processes
20 M. Perlitz and F. Seger

than companies from other countries. As in all other francophile countries, the
concentration of power and control is in the hands of top management, and there
seems to be a lack of modern systems to support strategic decisions. Therefore, it
is often said that Greek management can be characterized as a Western-type
management style that has not yet reached a high level of modernization and
adoption of scientific and analytical methods and techniques (Bourantas and
Papadakis 1996). This is also due to the fact that the private business sector in
Greece is still dominated by small, family-run companies.

3.5 Italy
The Italian economy can be segmented into traditionally organized small and
medium-sized family-run companies and very modern large corporations that are
mainly located in northern Italy. Especially in the middle part of Italy, the small
and medium-sized companies have developed regional network structures. Actu-
ally, there are three different Italys: the highly industrialized and developed
northern Italian region, the small- and medium-sized company-oriented middle
Italy, and the still underdeveloped South of Italy. Northern Italy is generally very
focused and swift in doing business, whereas in the southern parts of the country,
the so-called Mezzogiorno, business attitudes may be more relaxed. Different
manners apply in Rome than in the business and industrial centers of Milan
and Turin. The companies in the middle of Italy (Veneto, Emilia Romana, and
Tuscany) mostly operate locally. In these mainly family-run companies, business
discussions are mainly done with the senior partner or possibly with a couple of
family members (Frank 2001). As the North of Italy developed faster then the
South, this has led to an high flow of workers coming from the southern part of
Italy to work in the North (Berry 1970).
The high Power Distance leads to very hierarchical organizational structures.
There is an extensive division among the planning, controlling, and executive
functions in companies. Traditional firms tend to have a rather strong hierarchy,
with little visible fraternization between the ranks. However, communication
within the ranks is vital, and top partners are in steady communication with
associates who play an important role in the decision-making process (Berry
1970).
After the riots in autumn 1968 and 1969, the rights of the trade unions have
been increased and workers’ councils have been introduced. With the authoritar-
ian leadership system, the potential of conflict between the top management of
companies and the trade unions is quite high. However, in companies there are
different trade unions that compete with each other. This competition results in
radical demands of a trade union to differentiate itself from other trade unions
(Heidenreich 1997). There are many political strikes, which are, for example,
forbidden by law in Germany.
Business in Italy is very relationship-focused. For an Italian partner, the build-
ing of a personal relationship is rather important. Thus, socializing is an impor-
tant aspect of Italian business life. For non-Italians, the communication is often
European cultures and management styles 21

very confusing. Frequently, participants in a meeting may speak simultaneously.


Discussions therefore often take longer, but negotiating partners are very adept
in rhetoric and persistency. In the decision-making process, they are very creative
and flexible. They do not approach terms in a dogmatic way but communicate in
a rather pragmatic and purposeful manner. In this context, it is remarkable that
discussants are uncomfortable in articulating critical issues and are unwilling to
address them publicly, because this may possibly lead the participant to lose face
(Frank 2001).
Italian law is of French origin. The board has a unitary structure, and a Board
of auditors is also required. Workers have no representation on the board.

3.6 Central and eastern european cultures


With the collapse of the Soviet Union, central and eastern European countries as
well as Russia moved to a more Western-style management system. Unfortu-
nately, very little research has been done so far on the management cultures of
the different central and eastern European countries. The first problem is to
recognize that there is a considerable diversity in the emerging countries of
central and eastern Europe. Describing the management environment in these
countries is very difficult, as it is changing nearly every day. The only common
bond is that they were all under a Communist-based centrally planned economy
and all are now struggling to make the transition to a market economy. There still
is a dilemma that, on the one hand, people want the social and economic benefits
they had under the Communist regime, such as full employment, avoidance
of recessions and cyclical instability, and generous welfare entitlements, and
on the other hand, they also want to rid themselves of the overcentralized,
oversocialized, excessive, and often brutal concentration of political power and
inefficient economic planning. With respect to the speed of transition, there are
three categories of countries to distinguish (Luthans et al. 1995):
In the clear lead is the Czech Republic, followed by Hungary and Poland.
More than half of the people in these three countries work in private busi-
nesses. Hungary’s transition approach has been quite different. It had begun to
convert to a market economy long before the fall of the Wall (“Schaszlik
Communism”), but it has subsequently undergone a very slow and cautious
transformation.
In the middle tier are Slovenia, Slovakia, the Baltic countries, and possibly
Russia. This middle group seems committed to privatization. Almost three-
fourths of the total economy in Russia is now privately held.
The bottom tier of central and eastern European countries are the former Soviet
Republics such as Ukraine and Kazakhstan, the Balkan countries, Bulgaria,
and Romania. They have been the slowest to implement political and eco-
nomic reforms.
There are only a few studies on cultural differences of the central and eastern
European countries concerning management. Trompenaars is so far one of the
22 M. Perlitz and F. Seger

Table 7. Cultural dimensions in former Czechoslovakia and the Commonwealth of Inde-


pendent States (Luthans et al. 1995)
Commonwealth of
Cultural dimensions Former Czechoslovakia Independent States
Universalism High Low
vs. Particularism Low High
Individualism High High
vs. Collectivism Low Low
Neutral vs. Middle Middle-low
Affective relationship Middle Middle-high
Specific vs. Middle Middle-low
Diffuse relationship Middle Middle-high
Achievement Middle-low Middle-low
vs. ascription Middle-high Middle-high

few researchers who has studied the management attitude of managers from
former Czechoslovakia and the Commonwealth of Independent States (“CIS,”
the former USSR).
One study looks at the differences between the former Czechoslovakia and the
CIS (Luthans et al. 1995). Its results are shown in Table 7. Unlike Trompenaar,
Luthans et al. speak of Neutral vs. Affective Relationships instead of inner or
outer directions. The sixth dimension of Timing is missing in the study.
Table 7 shows that the legal perspective (high Universalism) is high in former
Czechoslovakia and that the relationship management (high Particularism) is
typical for the CIS.
Contrary to the conventional wisdom, Table 7 shows that both Czechoslovakia
and the CIS are high on Individualism and low on Collectivism. On the first two
dimensions, Czechoslovakia and the CIS scored either high or low. On the other
three dimensions, they both rank more or less in the middle, and there is no clear
difference between the two countries. Both Czechoslovakians and people in the
CIS lean somewhat toward the Ascription end of the continuum, but not to the
point of its being a dominant cultural characteristic. CIS people tend to be a bit
more Affective than Czechoslovakians. Table 7 indicates that CIS people seem to
be be a little bit more Diffuse than the Czechs.
Because the Czech Republic is the most advanced central and eastern
European country, there are some more observations to be made. Czechs are
often seen as similar to the Scandinavians. Czech business partners are likely to
attach great importance to accuracy and will never keep you waiting, and one is
well advised to be on time for any meeting. Personal contacts or small talk with
negotiating partners may be less important for successful business transactions in
the Czech Republic. They do not show great emotion, and they are rather
conservative and reserved. The body language is also quite restrictive. Bargaining
is not very common in the Czech Republic, and to speak too loudly or to show off
is not well received. Formality and hierarchy may play an important role in the
European cultures and management styles 23

Czech Republic. People are rather formal and address their business partners by
their titles. This is very similar to Austrians and Germans (Frank 2002c).
Hierarchical values are exemplified primarily in the top-down management
approach. Although Czech business partners tend to have some reservations,
business is still conducted on a personal basis. As in Germanic and Nordic
cultures, empathy and patience are appropriate. In the Czech Republic the soft-
sell approach in a negotiation will also help (Frank 2002c).
So far there are no extensive and representative research studies concerning
the system of values of managers in Poland. Only a few observations are men-
tioned in the literature. One study points out, that aspiration to promotion,
career, and success are not common among Polish managers (Halsey 1981).
Nevertheless, it is said that Polish managers are primarily task oriented, and that
the higher the management level, the stronger the task orientation is. Attitudes
emphasizing efficiency and pragmatism of action were moderate and reduced
for ideological and political reasons. Under normal conditions, they seem to be
lacking in endurance and enthusiasm. Poles also have a strong feeling for dignity
and seek independence and autonomy. Therefore, they painfully feel any
restrictions in these fields. They are recognized as individualists, and one can
suppose that their experience with a collectivized economy has not significantly
reduced this characteristic. This is also reflected in the Individualism and
Particularism factor in Trompenaars’ research (see Table 4). It seems that
the higher the level in the social hierarchy, the lower the level of egalitarianism.
Poles characteristically identify themselves with small social groups and the
nation.
Table 8 summarizes the links between societal values and behavior and atti-
tudes preferred by Polish managers (Kozinski and Listwan 1993). How much
these values and attitudes will change in the coming years when Poland will join
the European Union will have to be seen.
How Russian management will change is very difficult to generalize. The
development of Russia is sometimes related to the situation in the time of the
great Depression in the USA in the 1930s (Rapoport et al. 1993).
Russian culture embodies two main principles: first, a communitarian, egalitar-
ian ethic that favors democratic decision making, and second, an authoritarian
ethic that favors strong centralized control. Russian management has reconciled
these two principles through the concept of democratic centralization. Members
of an organization discuss and agree on major policy decisions, including the
appointment of leaders, and the leader is then accorded the legitimacy to carry
out these jointly decided policies in a firm, authoritarian manner in order to
expedite action. Thus, two opposing principles are united into a dynamic tension
by moving alternately between democratic and centralized modes of power
(Rapoport et al. 1993). Russians tend to be loyal to family and friends but
distrustful of outsiders. There is even today a strong belief among Russians that
a strong government is needed to prevent chaos.
Hofstede analyzed the former Yugoslavia and found that the culture there is
characterized by a high Power Distance index, a low Individualism index, a low
24 M. Perlitz and F. Seger

Table 8. Characteristics of the Polish culture


Value Preferred managerial behavior and attitude
Dignity Emotional way of action
Aspiration for formal authority
Attachment to formal ranks and degrees
Individualism Resistance to uniform, standardized patterns of action
Particularism of action, putting interests of internal units
before interests of entreprises
Independence and autonomy Positive relation to the increase of freedom for units under
command
Tendency toward ignoring abilities and knowledge of higher levels
Tendency toward ignoring formal rules
Egalitarianism Reduced tolerance for different behavior of others
Lack of acceptance of material disparities, especially for lower
management
Modern efficiency Low flexibility in action
and pragmatism Aversion to risky decisions and activities
Insufficient cooperation in organized activities
Aversion to development of managerial skills and knowledge
(once acquired education treated as sufficient for the whole
duration of the professional activities)
Moderate aspiration Need for employment safety
for success and career Moderate optimism in action
Moderate aspiration for promotion
Caution in action
Aversion to duties requiring sacrifice in personal life
Immobility (aversion to change of employer and occupation)
Identification with Loyalty to close persons
family and the nation Conformity
Looking for esteem and friendship among collaborators
Activity in informal groups
Getting things done through informal contacts
Persons before essence in problem solving
Local or national patriotism before economic efficiency
Efficiency in extreme Lack of endurance and regularity under normal conditions
situations Good results in case of extraordinary challenges
Need for fame and striking effects
Enthusiasm for novelties
Creativity Capability of solving nonroutine problems
“No impossible problems” attitude
Source: Kozinski and Listwan (1993), pp. 188ff

Masculinity index, and a high Avoidance of Uncertainty index. This country


would fall in the same category as Portugal and would be closest to the francphile
cultures.
In general, one has to be aware that it is necessary to be very culture-specific
with each central and eastern European country, and one must rid oneself of
old stereotypes, such as collectivism (Luthans et al. 1995). Central and eastern
European cultures and management styles 25

European countries are applying to join the European Union. This will lead to
many additional changes in the business environments of these countries.
Therefore, the transition from a command to a market economy is a still ongoing
process. How this process will go on and to what final result it will lead to is still
to be seen in the future.

4 Summary
A unitary European management approach does not exist. Therefore, what
is often ask for, to have a “European manager,” is completely misleading.
European management consists of many very distinct management cultures. All
have their pros and cons. This diversity is a strong point in a world where there
is nothing like black and white only. Perhaps that is the reason why “European”
companies in which one finds a mixture of different cultures are often doing well.
To run a business successfully in Europe, one needs a deep understanding of the
differences that exist in this region of the world. A country-specific management
approach is needed, and a sensible way to deal with these differences may lead to
a competitive advantage.

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