Cross-Cultural Differences - Japanese and German Management Styles from the German Perspective

Table of Contents

CHAPTER ONE
1.1. Introduction
1.2. Statement of the problem
1.3. Research question

Chapter Two
2.1. International Management and its Cultural Context
2.1.1. Culture
2.1.2. Cross-cultural Communication
2.2.2. Cross-cultural Management
2.2.3. Significance for Organization
2.3. Success Factors of International Business
2.4. Culturally Comparative Management Research
2.4.1. Management-oriented Cultural Research
2.4.2. Cultural Dimensions according to Hofstede
2.4.2.1. Dimension of power distance
2.4.2.2. Dimension of collectivism versus individualism
2.4.2.3. Dimension of masculinity versus femininity
2.4.2.4. Dimension of uncertainty avoidance
2.4.3. The Dimension of the Confucian Dynamic
2.4.4. Further Dimensions of Culture
2.4.4.1. Basic dimensions of culture according to Adler
2.4.4.2. Dimensions of culture according to Trompenaars
2.5. The socio-cultural background of Japanese managers
2.5.1. Japanese Confucianism
2.5.2. Corporate collectivism: The uchi mentality
2.5.3.Consensus and participation in management
2.6. The present relationship between Germany and Japan
2.6.1. General and political relationships
2.6.2. The Economic Relationships
2.6.2.1. Relationships to the European Union (EU)
2.6.2.2. Foreign Trade between Germany and Japan
2.6.2.3. Special Features
2.6.3. Cultural Contacts
2.7. Leadership Styles
2.7.1. Definition and aspects of leadership
2.7.2. Differencies in the leadership beliefs of managers across countries
2.7.2.1. Short review of literature
2.7.2.2. Leadership and cultural dimenions
2.7.3. Female Managers
2.7.3.1. Management and Masculinity
2.7.3.2 The preference of male and female characteristics
2.7.4. Female managers in Japan

Chapter THREE
3.1. Objective of the Study
3.2. Sample
3.3. Instrumentation
3.3.1. Management features
3.3.2. Reliability and Dimensions of the CDLI
3.3.3 Implementation
3.4. Analysis Procedures

CHAPTER FOUR
RESULTS
4.1. HYPOTHESIS
4.2. HYPOTHESIS
4.3. HYPOTHESIS
4.4. HYPOTHESIS
4.5. HYPOTHESIS
4.6. HYPOTHESIS

CHAPTER FIVE
5.1. Quality Criteria
5.2. Analysis of results
5.2.1. Hypothesis 1 CDLI-I
5.2.2. Hypothesis 2 CDLI-P
5.2.3. Hypothesis 3 CDLI-U
5.2.4. Hypothesis 4 CDLI-M
5.2.5. Hypothesis 5 CDLI-C
5.2.6. Hypothesis
5.3. Implications and Limitations of the Study
5.4. Suggestion for Future Research

References

FIGURES

Figure 1: Levels of mental programming according to Hofstede

Figure 2: Manifestations of Culture on various plains

Figure 3: Culture as Normal Distribution

Figure 4: sample groups of the questionnaire

Figure 5: CDL Inventory construction overview

Figure 6: Mean gender/individualism

Figure 7: Mean Japan experience

Figure 8: Mean individ/Jap. exp

Figure 9: all group comparison/individualism

Figure 10: Mean gender/power distance

Figure 11: Mean Japan experience/power

Figure 12: power distance/Jap. exp

Figure 13: all group comparison/power distance

Figure 14: Mean gender/uncertainty

Figure 15: Mean Japan experience/ uncertainty

Figure 16: Mean power distance/Japan exp/uncertainty

Figure 17: all group Comparison/uncertainty avoidance

Figure 18: Mean gender/masculinity

Figure 19: Mean Japan experience/ masculinity

Figure 20: Mean power distance/Jap. exp./masculinity

Figure 21: all group comparison/masculinity

Figure 22: Mean gender/confuzian

Figure 23: Mean Japan experience/masculinity

Figure 24: Mean power distance/Japan exp./confuzian

Figure 25: all group Comparison/confuzian dynamic

Figure 26 : Mean gender/leadership style

Figure 27: Mean Japan experience/ leadership style

Figure 28: Mean leadership/gender/experience

Figure 29: all goup comparison leadership

TABLES:

Table 1: Cross-Cultural Evolution (Adler, 1991)

Table 2: Power Distance Index (Hofstede, 1997)

Table 3: Individualism Index (Hofstede, 1997)

Table 4: Masculinity Index (Hofstede, 1997)

Table 5: Uncertainty Index (Hofstede, 1997)

Table 6: Index Confucian Dynamic (Hofstede, 1997)

Table 7: Competitive Advantages (Hofstede, 1997)

Table 8 Foreign Trade balance (IN-Press, Inter Nationes, 1999)

Table 9: Aspects of Leadership

Table 10: Cultural Dimensions & Aspects of Leadership related to the survey

Table 11: Summary of the Findings: Ideal Images of Managers

Table 12: Example from the questionnaire

Table 13: Cultural Dimensions & Aspects of Leadership related to the survey

Table 14: Anova gender/individualism

Table 15: Anova Japan experience/individualism

Table 16 : Anova gender/Japan experience

Table 17: multiple analysis of variance: group comparison Individualism/Collectivism

Table 18: Post-hoc Japan experience/German LS/ Japanese LS/ individualism

Table 19: Anova gender/power distance

Table 20: Anova Japan experience/power distance

Table 21: Anova gender/Japan experience/power distance

Table 22: multiple analysis of variance: group comparison Power Distance

Table 23: Post-hoc Japan experience/German LS/ Japanese LS/power distance

Table 24: Anova gender/ uncertainty

Table 25: Anova Japan experience/uncertainty

Table 26 : Anova gender/Japan experience/uncertainty avoidance

Table 27: multiple analysis of variance: group comparison uncertainty

Table 28: Post-hoc Japan experience/German LS/ Japanese LS/uncertainty avoidance

Table 29: Anova gender/ masculinity

Table 30: Anova Japan experience/masculinity

Table 31 : Anova gender/Japan experience/masculinity

Table 32: multiple analysis of variance: group comparison masculinity

Table 33: Post-hoc Japan Experience/German LS/ Japanese LS/power distance

Table 34: Anova gender/confuzian

Table 35: Anova Japan experience/confuzian

Table 36 : Anova gender/Japan experience/confuzian dynamic

Table 37: multiple analysis of variance: group comparison confuzian

Table 38: Post-hoc Japan experience/German LS/ Japanese LS/confuzian dynamic

Table 39: Anova gender/ leadership

Table 40: Anova Japan experience/ German leadership

Table 41: Anova gender/Japan experience/leadership

Table 42: multiple analysis of variance: group comparison leadership

Table 43: Post-hoc Japan experience/German LS/ Japanese LS/uncertainty avoidance Running head: HOFSTEDE´S DIMENSIONS APPLIED ON LEADERSHIP STYLES Cross Cultural Differences- Japanese and German Management Style from the German Perspective Hofstede’s Dimensions applied on German and Japanese Managers’ Leadership Styles Ludwig-Maximilians-University of Munich

Abstract

As the idea of Japan as a leader in management styles and the mythos 'collectivism' as a key to high quality performance and productivity is still in mind of German managers, this work tries to compare actual leadership styles of Japanese and German managers on the level of cultural dimensions (Hofstede 1984). In the study the sample consisted of 119 persons in middle management positions (82 male and 37 female), 60 persons with work experience in Japan and 59 without experience. Participants were asked to complete a questionnaire regarding 52 leadership characteristics (e.g. the ability to assert oneself, to cooperate or to delegate) within five cultural dimensions. Participants then rated the importance of this characteristic for the specific category. Findings of the study showed significant differences in experienced and estimated management styles between the countries as well as significances regarding management traits of the german culture after working in Japan.

CHAPTER ONE

Overview of the research

1.1. Introduction

Many businesses are no longer thinking and planning solely on a national scale, but also on an international scale. A growing number of mergers, takeovers, and strategic alliances are occurring on a national as well as international level because businesses neither wish to nor are able to face the competition of the international market alone, i.e. only based on their internal growth. The international consulting firm Booz, Allen & Hamilton estimates that three-quarters of every 32,000 alliances formed worldwide in the last three years are formed across the borders. (The Economist, 1998,p. 28) The amount of exports of many businesses is increasing and there are more and more investments in foreign countries being made. The term "globalization" has been coined to express the internationalization of the economy. This term has existed since the mid 1980s and for the last several years not a day goes by that a leading politician, economic leader or researcher does not use this word and emphasize its meaning. Globalization can be defined as follows:" The production and distribution of products and services of a homogeneous type and quality on a worldwide basis. " (Hodgetts/Luthans, 1994p.597) Yet the exact meaning of this term is as disputed as its effects. But one thing seems certain: despite the increased use of international strategies, there still does not exist a global market . "It is still necessary to adapt the global strategy to the local conditions" (Handelsblatt,1998, p.K10), according to Professor Jolly of the IMD in Lausanne. Trade barriers, legal and political basic conditions, investment aids and other regulations, along with socio-culturual differences, have motivated businesses to emphasize the local dimension. The complexity of the correlations to be taken into account effects a variety of areas. International businesses not only make high demands of companies and managers who want to become internationally successful with relation to strategies, logistics, purchase, sales and many other areas of business – whether it be through the export of products, technology, or through direct investment. These companies and managers deal now more than ever before with businesses and people from foreign cultures. Most of today's scientists and practicians in the area of international management agree that taking the cultural influences of the more or less foreign environment into consideration often makes a successful business activity in a foreign country be even possible. For example, an international study carried out by Coopers & Lybrand in 1995 on four continents, examined the relevance of cultural factors within the framework of international joint-ventures. The result was that in particular not taking the cultural factors into consideration with regard to communication, organizational structure, and goal-setting negatively effects success in business (Engelhard,1997, p.99). Cultural differences are very often underestimated. As Hofstede (1994) writes:

One of the reasons why so many solutions do not work or cannot be implemented is because differences in thinking among the partners have been ignored. Understanding such differences is at least as essential as understanding the technical factors. (p.4)

Although during this era of globally linked information systems everyone is connected with one another by the information highway, and communication around the world takes place at speeds much faster and more intense than ever before, the technical requirements do not guarantee the necessary understanding of one another. But especially for the Republic of Germany, the second largest export country in the world with a share in world trade of 10%, the understanding of consumers and economic partners with different cultural backgrounds is crucial today and in the future not only for maintaining its position in the existing markets but also for developing new ones. (Handelsblatt, 1998, p.12)

Many are turning their attention towards Asia in their search for new markets and production sites. In spite of the crisis in the "Tiger States" of South East Asia in 1997, from which they have yet to fully recover, many specialists agree that the importance of this economic area will increase in the near future (Handelsblatt, 03.98, p.11). Colleges and universities have even recently set up majors focusing on Asia in order to prepare future managers for the new demands they will have to face (FAZ, 03.1998, p. 53). It has been estimated that the Asian middle-class, with the exception of Japan, will grow to between 800 million and 1 billion by the year 2010. (Naisbitt, 1995, p. 82) The percentage of the world trade of the Tiger States of East Asia increased between 1950 and 1996 from 17% to almost 40% (Der Spiegel, 1998, p. 20). The economic rise of Japan and the other Southeast Asian "Tiger States", as well as the recent rise of the People's Republic of China, can be attributed to the cultures of these countries. However, the activity and investments of German businesses in these countries is comparatively low. One reason is the lack of information about life in Asia, which functions according to different laws. Uncertainty also prevails with regard to the economic and legal conditions. Political lobbying does, however, prove helpful for the large companies in this area.

1.2. Statement of the problem

The problems that arise are not solely of an economic nature, however. Often the different cultures of the business partners pose a larger obstacle. Successful business activities therefore require not only management know-how but also knowledge of the influential factors of the culture and a well-developed capacity for understanding. Ever since the recent, somewhat shocking events that took place in the economic wonderland of Japan, the human side of things once again plays an enormous role when attempting to bring clarity into the leadership styles and ideologies of the Japanese economy.

A large portion of this thesis will be devoted to the presentation of the theoretical foundations of cross-cultural management. The research results presented here mainly come from the area of management research which compares and contrasts cultures. These results are from present studies and studies which have been recognized to a great extent in practice and in science. The explanation of the dimensions of culture will be emphasized in particular.

The second portion of this thesis will describe the cultural context of international management based on the example of the Japanese cultural area. First, the present political and economic situation will be fundamentally explained, and the status of the relations to Germany will be presented. The largest portion of the explanation will therefore be the presentation of the cultural dimension of the leadership styles of Japanese and German managers, which will be illuminated in Section 2.7. First, the research results, presented in Part 1, will be correlated with the practical realities of culture. Then the difficulties and peculiarities in the culturally most sensitive business areas of marketing and personnel management will be explained and described. In these two areas the "human variable" has a special meaning. According to Perlitz (1995)" ...the culture does not influence all of the areas of a business equally, but rather especially effects the areas related to people and behavior." (p.321). The problems which exist through the partially extreme cultural and societal differences for businesses have until now only been dealt with to a small extent and not rarely without the appropriate theoretical background. The "discrepancy of the internationalization of business activity and the available knowledge about cross-cultural management" (Engelhard, 1997, p. 56) is being increasingly more observed both practically and scientifically. The purpose of this thesis is also to assist in closing these gaps, at least to the limited extent allowed by the specific topic of this paper. The goal here is to present the theoretical foundations of cross-cultural management in order to create a deeper understanding of the necessity of focusing intensively on this topic. In addition, the author has found that literature on this topic is limited to advise on behavior and etiquette on the one hand, and highly theoretical, non practice-oriented and scientific discourses on the other hand. It will therefore be attempted to connect these two areas. A further goal is to highten sensitivity regarding the Japanese culture, in particular the cultural backgrounds which are extremely important for businesses when dealing with this region. Regarding the methodology, the author will especially base the first section on the scientific literature on cross-cultural management. In addition, various practice-oriented advise books were taken into consideration. Due to the international nature of this topic, literature in German and English has been cited. This includes a large amount of books, articles from journals, newspapers, and magazines, as well as reports found on the internet. All of the information used here is current. This is of great importance particularly in regard to the practical significance of the information, and is justified by the rapid development of the Asian culture.

The purpose of the study is to consider the Dimensions according to Hofstede from a viewpoint which has not yet been considered in research up to now. Hofstede's Cultural Dimensions have hitherto been evaluated from the intra- and inter-cultural viewpoint. The goal of this study, however, is to carry out an extra-cultural evaluation. It will primarily investigate how the cultural dimensions are evaluated from viewpoints different from that of one's own culture and how the amount of presumed and actual knowledge of cultures other than one's own therefore presents itself. Knowledge, judgements, and "hear-say" are of particular import here and influence economic and private decisions to an especially high degree without, however, being measurable. The question is therefore, whether or not the Hofstede Culture Index shifts when considered from a viewpoint other than one's own culture, and if so, in which direction. The resulting question arises of which possible consequences in the area of education and assessment of employees who are to be sent to work in a foreign country with a culture different than their own could result from this shift. Since middle and upper managers are most frequently sent abroad, it would appear sensible to direct particular attention to the management styles of superiors, seeing as they make decisions with far-reaching implications, which could in some cases influence the future of the company.

1.3. Research question

The research question is: Do German employees who have already been to Japan notice fewer differences in Hofstede's Cultural Dimensions and in the management styles of their superiors than German employees who only know about Japan from "hear-say".

Chapter Two

Review of the Literature

2.1. International Management and its Cultural Context

In this section the foundations will be explained which are necessary for understanding the theoretical explanations in particular. The terms "Culture" and "cross-cultural Communication" will be generally described. The explanations concerning the term "Cross-cultural Management" will then include the business level and expound on the significance of this topic for the economy.

2.1.1. Culture

As of 1952 more than 150 different definitions for the term "culture" already existed in scientific literature, stemming mostly from the disciplines of Anthropology and Sociology, and in the recent decades several hundred have been added. (Trompenaars, 1994, p. 3) This clearly shows that using culture as an explanatory variable in international management is difficult partly because it is so difficult to grasp. Depending on the discipline and perspective of the person using this term, the definition can vary greatly. For this reason a satisfactory clarification of culture appears next to impossible.

In colloquial language "culture" usually includes the external phenomena and traditions one can observe, for example buildings, customs and clothing, as well as literature, music, and art. This explanation is, however, not sufficient because a definition in the context of scientific research would include elements such as language, religion, values, and behaviors, since " the essence of culture is not what is visible on the surface." ( Trompennaars, 1994, p. 3) For this reason it first needs to be explained, which underlying premises are the basis for the term "culture" as used in this thesis. In addition, a few examples of definitions will be explained that are in accordance with the meaning used in this thesis.

In literature on management from Great Britain and America a short, succinct definition is usually used: "Culture is the acquired knowledge that people use to interpret experience and to generate social behavior. " (Rugman and Hodgetts, 1995, p.145) Although this definition captures the essence of the term culture, more extensive explanations will be given to ensure a better understanding. This appears sensible due to the complexity of the facts, particularly in connection with the necessary basis for comprehension to be reached for this thesis.

Although many people who deal with the problems of international management realize that the cultures of those doing business together have a level of influence on the success of the business endeavors which is not to be ignored, there are still many scientists who negate the significance of cultural influence. For example, many advocates of the globalization of the markets fall into this category. They negate the complex diversity of the markets due to the cultures involved (Usunier/WalIiser, 1993, p.V).

Many experiences in international marketing and in international personnel management demonstrate the necessity of heightened awareness in this area. This opinion is predominantly supported. Considering for instance the commercialization of the American fast-food chain McDonalds, which is described as a "Global Player", one will notice that different products are marketed in addition to the usual product line according to consumer taste in the various countries. The difficulty here can also be explained by the fact that one's own culture is taken for granted, and that a confrontation with this problem often first occurs when contact with other cultures takes place. A culture provides a set of thought patterns, values, and behaviors, which lead to certain behaviors in any given situation. The conduct and patterns of interpretation and assessment which are suitable in one's own culture usually fail when confronted with people from other cultures. When considering the various explanations of the term culture, it must be taken into account that a culture is not an isolated, static object.

Culture can not be understood as a historical one-time achievement or as the final product of an epoch to be seen in a museum, but must rather be understood as a dynamic, functional, and most of all adaptable system. (Warthun, 1997, p. 9)

A culture is constantly exposed to external influences, of which there is an ever increasing number in this age of technology. The boundaries between cultures are fluid, but for this very reason there is the tendency in many countries to fight to retain the culture of the nation and the cultural identity. At times, however, drastic measures are taken for this cause. One way this manifests itself is through the isolation of a country from the outside world, for instance in the case of Iran over the past 20 years, which often has political as well as religious reasons. Or in the case of Japan, which by decree cordoned itself off from all external cultural influences from the 17th until the middle of the 19th century. Today it can be observed in Europe that an attempt to retain a cultural identity is being made, especially in view of internationalization. France, for instance, only allows a certain percentage of foreign music to be played on the radio.

The negotiations concerning the international investment agreement MAI were slowed due to France expressing concern regarding the exertion of cultural influence from the outside. It must also be taken into consideration that not all behavior is a result of the culture, but that there is always the possibility that a person could divert from his or her "mental program" (Hofstede, 1997, p. 2), and react in a new and unexpected manner. It is therefore always necessary to be aware of the individual and not only to see the person as a representative of his or her culture with behaviors shaped by that particular culture. As Wood states, "it is easy to overlook individual differences among managers from the same country or similarities among managers from different countries", and warns not to compartmentalize. (Handelsblatt, 11.1997, p. K10) The wealth of knowledge of a nation's people can also not be considered homogenous in all areas. There are small, homogenous subgroups. (Warthun, 1997, p. 9) The previously mentioned "mental programming presents patterns in thought, feelings, and potential behaviors", and can also be described as "the collective programming of the mind, which distinguishes the members of a group or category of people from others" (Hofstede, 1997, p. 4). When explaining the concept of "culture", this is more applicable to societies rather than to states, and the term nation must therefore be used primarily with caution. In this manner the nationality criterion used in most theses can be applied here merely for purposes of simplification, and serves for expediency. Nevertheless it can be assumed as a basis for comprehension that "affiliation with a nationgoes along with sharing certain values, norms, stereotypes, and attitudes." (Warthun, 1997, p. 9)

According to Hofstede (1997):

Culture is always a collective phenomenon, because it is at least partly shared with people who live or lived within the same social environment, which is where it was learned. It is the collective programming of the mind which distinguishes the members of one group or category of people from another Culture should be distinguished from human nature on one side, and from an individual's

personality on the other, although exactly where the borders lie between human nature and culture and between culture and personality, is a matter of discussion among social scientists. (p. 5)

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Levels of mental programming according to Hofstede

(Hofstede: Cultures and Organizations, p. 6)

According to Hofstede, a culture includes and is shaped by norms, values, and behaviors. Bartlett and Goshal have also written that the "culture of a nation...[pervades] all of the aspects of a country, including the norms, values, and behaviors of the managers in a company" (Bartlett/Goshal , 1990, p. 65). This description also clearly shows that the term culture can be related on other levels as well. Besides national cultures there are also cultures of businesses or professions. The reasons for the difficulties for international managers are partly to be found in the environments of the different cultures, which partially overlap. This is made clear by Trompenaars' (1994) statement:

International managers have it tough. They must operate on a number of different premises at any one time. These premises arise from their culture of origin, the culture in which they are working, and the culture of the organization which employs them. (p. 3) To summarize, the most important characteristics of culture will now be named, since a renewed attempt at defining culture appears not to be sensible due to the heretofore mentioned difficulties. A summed up list of the most important features follows:

- Culture is learnable and expresses itself in rituals, symbols, and language
- these are shaped by deep-seated values
- Culture is not an isolated object, but an open system
- Culture controls behavior through norms and rules and helps the members of a society to communicate
- an individual carries with him- or herself culturally shaped patterns of thought, feeling, and behavior, which form a system for orientation and terms of reference
- the cultural framework sets standards for perception, thought, behavior, and judgement
- culture distinguishes the members of a group or category from people of another group or category, and can be described respectively as a collectively shared infrastructure

In addition, two more examples for the definition will be mentioned. These descriptions given by Hofstede and Trompenaars make it easy to comprehend the phenomenon of culture.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Manifestations of Culture on various plains

(According to Hofstede: Lokales Denken, Globales Handeln, p. 8)

Hofstede describes culture using the terms symbols, heroes, rituals, and values. Values form the core of the culture, the first three form the practices. Trompenaars offers a different presentation of culture. His description is that of a normal distribution.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Culture as Normal Distribution

(Source: Trompenaars: Riding the Waves of Culture, p. 27)

People in a culture do not all have identical sets of artifacts, norms, values, and as-sumptions. Within a culture there is a wide spread of these. This spread does have a pattern around an average. ... the variation around the norm can be seen as a normal distribution each culture shows the total variation of its human components.

(Trompenaars, 1994, p. 27)

This thesis will view this term in respect to the level of national culture. This will not only be justified by the agreement of the majority of publications on the topic of Cross-cultural Management achieved by this level, but rather also contributes to the comprehension of the thesis.

2.1.2. Cross-cultural Communication

"Only a dead fish has an open mouth" (Japanese expression)

"Empty vessels make the most noise"( Trompenaars, 1994, p. 73) (English expression)

These expressions indicate the differences in judging communication. In Japan and many other Asian cultures, verbal extrovertism tends to be judged negatively. This contrasts with the behavior of North Americans and the judgement is therefore the opposite. In order to better understand this problem, the difference between low-context cultures and high-context cultures needs to be explained. High-context cultures are mainly Asian cultures in which a larger part of the message depends on the context and nonverbal communication. The opposite is true for low-context cultures, which are mainly found in North America and Western Europe, in which communication is largely made up of explicit verbal components. (Chanes/Martin , 1995, p. 65) Various studies have shown that managers spend between 50% and 90% of their time communicating verbally. The value depends on the manager's position. (Bergemann/ Sourisseaux, 1992, p. 229) That is to say, that the higher the position in an organization, the higher the amount of communication during daily working hours. Another supporting fact is that those sent on business trips abroad are usually chosen for leadership tasks. This group is especially high in the hierarchy of the company and therefore tends to spend a larger portion of the work day with communication than managers on the middle level of the hierarchy. The result is that the managers working in foreign countries are confronted with cross-cultural communication to a great extent. In addition to the "usual" problems, such as time pressure and the gathering and selecting of information, a manager must face physical and psychological difficulties in the international environment. Communication difficulties in a foreign environment play an especially large role. As a basis for cross-cultural communication and a requirement for understanding other cultures, one must consider the language. "To express yourself in another language is a necessary, if not a sufficient, condition for understanding another culture. "(Trompenaars, 1994, p. 76)

Communication is therefore an extremely critical factor especially in international management. Mistakes not only have a negative effect on business at the time, but can also be obstacles for future opportunities.

Communication that does not coincide with writing fundamentally consists of verbal (speech), paraverbal (intonation, volume), and nonverbal (mimic, gestures, eye-contact, posture) communication. These various forms usually happen simultaneously and are strongly influenced by the culture, according to the unanimous opinion of experts. Research has shown that up to 75% of all communication is verbal. How high the percentage is depends on the culture. Removing the natural language barrier is not a guarantee for mutual understanding because in many cultures the other above mentioned elements play a large role in the meaning of the message, which, especially in the cross-cultural context, is not to be underestimated. As Adler (1991) states: "Communication does not necessarily result in understanding. Cross-cultural communication continually involves misunderstanding caused by misperception, misinterpretation, and misevaluation."( p. 66)

The English language as Lingua Franca of the business world:

The English language forms the prevailing verbal basis for understanding in the framework of international business relations, and is therefore to be described as the lingua franca of international business. One could conclude that through the basis of one common language, the most important problems in cross-cultural communication would be done away with. Yet this seemingly logical argument does not take several problems into account. First of all, not everyone can communicate on the same level of language capability. Even if they could, there is the danger of misunderstandings due to different cultural backgrounds, as for example in the case of an American and an Englishman. Therefore the definition of cross-cultural communication being communication in which at least one of the participants is speaking a foreign language, cannot be considered sufficient. When communicating in English, the problem arises that in different cultures different varieties of the English language prevail. In German-speaking countries, for example, British English is taught and with that the British socio-cultural conventions of communication. American English is taught in Japan, for example, and with it the communication conventions that exist in America. A basis of a common language is therefore no guarantee for trouble-free verbal understanding.

In addition, it cannot be ignored that very often it is only through the combination of the communicative elements, as mentioned earlier, that a complete message emerges. This means that the listener understanding the meaning put across by the speaker is not ensured by merely understanding the verbal elements in the process of communication. In the cross-cultural process of communication the appropriateness of the message must be considered. The following parameters play an important role here:

- who is communicating?
- with whom is one communicating? – the appropriate addressee
- what is being communicated? – the appropriate contents
- how is communication taking place? – the appropriate medium
- when is communication taking place? – the appropriate timing / period of time
- where is communication taking place? – the appropriate location

These criteria must be considered in detail when planning cross-cultural communication, so that the exchange of information according to the intended meaning of the communicator can take place.( Mead,1994, p.172) Communication can therefore be said to be the exchange of information in the form of words, ideas, or emotions. The form is, however, strongly influenced by the cultural backgrounds involved. The communicator must therefore meet higher demands in cross-cultural communication. Hofstede also describes how important the ability to successfully communicate with others is:

"International communication abilities can contribute to the success of negotiations, from the results of which the solutions of serious, global problems depend."(Hofstede, 1997,p. 228) This makes it clear that the significance of cross-cultural communication extends far beyond business relations, and that it is not only a requirement for companies' ability to survive.

2.2.2. Cross-cultural Management

It seems practically impossible to fully understand other cultures. This is partly due to the vast differences that exist among cultures. Research on culture and management research that compares cultures aim to make the similarities and differences measurable and comparable. In cross-cultural management the first goal is to realize what the differences between cultures are.

Cross-cultural problems are often a consequence of assuming there are shared similarities when dealing with foreign business partners, or a result of a lack of understanding and empathy for the respective cultures.( Perlitz, 1995, p. 319)

The goal is therefore to create understanding in order to make a common basis for communication possible. Cross-cultural management should accept and try to understand the differences among business partners, co-workers, and customers that arise from their varying cultures, in order to increase the acceptance of its own interests. An attempt is being made to bring economic success and cultural awareness together through understanding for the differences in behaviors, norms, and values that are shaped by culture. A poll taken from internationally active managers has shown that 70% of them see primarily disadvantages in cross-cultural cooperation. [1] (Peill-Schoelier , 1994, p. 10) A reason for this is above all ignoring the culturally influenced values and behaviors in relation to work. It is very often the case that the same demands are made of all the participants that come together from different cultures, without allowing for a critical reflection on these expectations. Yet globalization does not offer any other possibility other than to take cross-cultural cooperation as an opportunity. Cross-cultural management also accepts the fact that there is no " one best way to do business and to manage". Management abilities and tools produce exceptional results in one environment, but may not, however, be applicable or may lead to unexpected results in another. This is also true for modern management concepts like TQM, JIT, SBU, and KAIZEN, to name a few. Trompenaars (1994) poses the question: "... how universal are these management solutions ? Are these 'truths' about what effective management really is - truths that can be applied anywhere, under any circumstances?" and then provides the answer:

"Even with experienced international companies, many well-intended universal applications of management theory have turned out badly."(p. 3)

This is mostly due to the adoption of management techniques from other cultures without critically examining the cultural "fit". Examples of this are "payment-for-performance" and MBO (management-by-objectives). These instruments which stem from the American culture cannot be implemented in many of the Southern European countries without difficulty. Other motivation patterns are predominantly the reason for this.( Hofstede, 1997, p. 172) Through this the challenges faced by international managers have increased.

As markets globalize, the need for standardization in organizational design, systems,

and procedures increases. Yet managers are also under pressure to adapt their organi-

zations to the local characteristics of the market, the legislation, the fiscal regime, the

sociopolitical system, and the cultural system. This balance between consistency and

adaptation is essential for corporate success. (Trompenaars, 1994, p. 4)

Technology can be applied anywhere, yet as soon as interactions between people from different cultures play a role, universal attitudes are often no longer effective. Cross-cultural management demands special attention within the company and when dealing with customers. Along with cross-cultural encounters on the company–customer level, there are complex interactions within multinational companies. These very often intense cross-cultural encounters take place within another kind of culture – the corporate culture. They can facilitate or negatively influence communication. In this way the corporate culture allows the communication of co-workers to take place according to patterns shared by all. This can only happen, however, if the individuals have adopted the culture of the company and have applied it according to the pattern. If this is not the case, those participating in communication will resort to patterns from their own cultures. Problems arise here that should normally be avoided by having a common culture within the company. If the corporate culture is heavily influenced by the culture of a certain nation or group which is strongly represented in the company, the communication patterns of that culture will be adopted.( Hofstede, 1997, p. 195) This means that nothing new can be formed on the basis of different cultures, but rather that the employees from various cultures must adapt to a single culture. This problem of organizational cultures being strongly influenced by national cultures is described by Hofstede (1997):

Most of the problems that arise in a company have structural as well as human aspects. The individuals affected reacted according to their mental software. Part of this mental software are the notions of how an organization should appear.( p. 196)

Personnel management is primarily responsible for solving problems in the area of interpersonal relations. In the practice-oriented section of this thesis, this area will be given greater attention. Outside contact is just as important as cross-cultural encounters within companies. The company – customer relationship plays an exceptionally large role here, but the relationships to other groups that make demands are to be formed according to the cultural conditions as well. Understanding the needs of the consumers is a fundamental prerequisite for success in business for a company. People's needs are not the same everywhere. Adler especially refers to this by examining the various motivation theories for their universal applicability which he ultimately negated.( Adler, 1991, p. 160)

This is, however, accepted in the American and European management teachings based on the Maslow Pyramid of Needs. The highest level is Self-realization. The cultural surroundings can be recognized here from which the model arose, that is the American middle class of the mid 20th century.

At this point it is necessary to draw attention to the differences between individualist and collectivist cultures.( refer to 2.4.3.) In Asian cultures, needs such as respect, harmony, and "saving face" have higher importance than in other cultures. It can then be assumed that the structure of needs is also different, or at least the levels of needs, which results in different strategies and measures for meeting the needs of consumers in various cultures. This problem must be taken into account through paying special attention to the marketing in other cultures. Motivation and leadership and the corresponding theories and concepts are just as culture-sensitive. These aspects will therefore be dealt with in depth in relation to the Chinese culture in the second section of this thesis.

2.2.3. Significance for Organization

Which implications arise out of the significance of cross-cultural management for organizations? First the question must be asked, whether the significance of different cultures decreases in the cooperation within an organization and if these cultures therefore do not become ever more similar. Adler (1991) answers this question as follows:

(...)organizations worldwide are growing more similar, while the behavior of people within organizations is maintaining its cultural uniqueness () found cultural differences more pronounced among foreign employees working within the same multinational organization than among employees working for organizations in their native lands.(p. 57/58)

Thus the cooperation of members of different cultures appears to strengthen that culture's expression rather than reduce it. The consequence is that effective managing of multinational companies is only possible if the differences are recognized and used to the advantage of the company. Hofstede finds that the extent of the international expansion of a company in particular has crucial significance. He differentiates among five forms of international expansion with respect to cultural consequences.(Hofstede, 1997, p. 314) The cultural risk is limited in "greenfield start", which is when a company creates a daughter company from scratch in a foreign country, because the company selects the employees carefully and can examine their adaptability to the structure of the parent company. In contrast, when a company takes over another company in a foreign country the cultural risk is very high, because a different organizational structure in the already existing company and elements of the national culture of the foreign country are combined. Here the preliminary analysis of the cultures of both companies appears to be of importance in order to carry out the takeover with the appropriate tact and sensitivity. In the case of an international merger (in which case it is assumed that the size and significance of the partners are approximately the same) the dangers are also very high according to Hofstede and the low success rate – under 25% according to a study (Hofstede, 1997, p. 316)– confirms this statement. A cultural integration plan is therefore recommended here.

Examples of successful international mergers are Shell and Unilever. Both have kept their headquarters in their respective countries of origin. To what extent the fact that both companies are British – Dutch plays a role has not entirely been explained. Possible clues are the similar positions of both countries in the Power Distance and the Uncertainty Avoidance index of Hofstede.( Hofstede, 1997, p. 197)

This model shows the positions of the countries in relation to the preferred company and organizational culture which is heavily influenced by the national culture. The merger of the combine Asea (Sweden) and BBC (Switzerland) in 1987 is also a prime example. (Handelsblatt, 05.1998, p. 2) An only slightly shaped distance in the Hofstede model can be seen here in relation to the preferred organization and company culture. Both examples therefore appear to confirm this model. Whether or not the largest merger striven for in industrial history, i.e. Daimler-Benz and Chrysler – is successful, remains to be seen (Handelsblatt, 05.1998, p. 2). If one considers the model, the prospects are promising because the positions are not far apart from one another. When forming an international joint-venture the companies involved bring their means with them into the new company. The cultural risk is in this case more limited than in the two latter named cases, because there is usually an agreement made from the start concerning which partner brings which resources into the joint-venture. In the case of cooperation of companies in respect to certain projects, the cultural risk is lowest because it can be seen as a kind of test, from the success of which the integration is deepened. On the whole it is to be noted that many attempts at international cooperation have resulted in a multitude of negative experiences. This leads to increased caution and at the same time facilitates the increased awareness of the factor of "culture".

"With that the aim at cross-cultural cooperative abilities must be seen as an additional central task of the management in companies..." (Stüdlein, 1997, p. 7)

2.3. Success Factors of International Business

Anyone who deals with the topic of "International Management" realizes that not only "technical" factors are responsible for the success of business activities in foreign countries. As Perlitz (1995) states:"Differences arising from culture such as national traditions or attitudes towards important issues of company policy determined by religion must be taken into consideration by the company's management and can influence the company's goal system."( p. 70) There are numerous examples of businesses whose misjudgments with respect to partners in negotiations, consumers, and employees have lead to unexpected reactions which have interfered with the success of the business. These misjudgments are often based on a misunderstanding of cultural factors which influence business life in other countries. A simple example from the area of marketing demonstrates how necessary it is to consider seemingly unimportant things: McDonalds used a white-faced clown in its commercials in Japan without considering the fact that the color white is associated with death in Japan (Fuchs, www.publica.net). The factor of culture is of course only a determinant of the amount of success, yet the importance is increasing through the internationalization of the economy. If managers have an understanding for other cultures it is possible to make predictions concerning possible reactions and behaviors of the members of other cultures in normal situations.(Hofstede, 1997, p. 3) Even given the fact that many products such as Coca-Cola are globally marketed, this still means that cultures are different, which Trompenaars (1994) indicates: "There are, indeed, many products and services becoming common to world markets. What is important to consider, however, is not what they are, and where they are found physically, but what they mean to the people in each culture." (p. 3)

Not only does the practical meaning of culture play an important role, but also the relevance of cultural roots for all aspects of life are emphasized. It can then be assumed that the phenomenon culture influences the theories that explain "our ability to develop our practical life. No area of our life goes uninfluenced by culture " (Hofstede,1997, p. 239). This also includes the organizational models designed by people to solve problems in the framework of business. The term business culture is used, although the culture of the businesses expresses itself less in the values of the people living in it, "but rather in the more superficial forms of common symbols, heroes, and rituals" (Hofstede, 1997, p. 329). The significance of the cultural differences for businesses is dependent upon various internal and external factors:

As we investigate the influence of cultural diversity on multinational firms, it becomes clear that national cultural differences are important, but that their relative impact depends on the stage of development of the firm, industry, and world economy.(Adler, 1991, p. 6)

The significance of cultural differences for businesses is frequently judged depending on the extent of the international activity of the business. (see also 1.1.3.) Diverse terms and explanations can be found in the literature on this subject, depending on the author. The most frequently used differentiations are: global, international, multinational, and transnational in relation to the business activities. A division of these differentiations limited to the most important factors can be seen below.

Table 1: Cross Cultural Evolution

Abbildung in dieser Leseprobe nicht enthalten

Table 1 Cross-Cultural Evolution (Source: Adler: International Dimensions of Organizational Behaviour, 1991, p. 7/8)

Cross-cultural Management as Opportunity

It is necessary to not just consider cross-cultural management as a possibility of avoiding problems. New opportunities and advantages result from it as well. Market potentials can be better obtained, new markets can be won, and synergies arise in the cooperation within the company through the correct managing of the multinational personnel. To quote Mead (1994):

The successful management of diversity brings economic benefits. The organisation's ability to attract, retain and motivate people from diverse cultural backgrounds gives it competitive advantages in cost structures, creativity, problem-solving, and adapting to change. (p. 14)

Especially when a multinational team works together, there are multiple difficulties which first must be overcome. Studies have shown, however, that these teams achieve better results in certain areas with time than culturally homogenous teams. This is especially due to the increased level of creativity resulting from the cultural complexity and to the increased necessity to give the other team members one's time and attention. Much better solutions and decisions as well as higher efficiency are the result. (Adler, 1991, p. 95ff.) The difficulties that emerge often stand out, however, as in the case of the increasing number of international mergers, takeovers, and multinational joint-ventures. Usually the financial standpoints are a deciding factor in the different types of business mergers. There are numerous examples of failures when businesses attempt cooperation at the international level. Many multinational mergers and takeovers have proven to be huge mistakes. According to a study done in the US, the success rate for international mergers is merely 25% (Hofstede, 1994, p. 227). An example for a failed alliance is the attempted merger of the automobile combines Renault and Volvo. Swedish and French managers are very different with regard to the established dimensions of culture. Not only do the differences of the national cultures play a role, but the differences in the organizational and corporate culture are also difficult to overcome. These differences are, as has been proven, also strongly influenced by the national culture. The cultural differences become very apparent in business relations in the international environment. One cannot assume that both negotiating parties have the same values and objectives. The cultural peculiarities and problems should therefore be granted the same weight as the financial considerations which often take precedence. The foundations for a sensible and necessary confrontation of culture, cross-cultural communication and cross-cultural management are put forth in this section. The problems described here are of increasing significance especially with respect to the integration of the national markets in Europe. Hofstede even takes it so far as to describe the "European Community as the largest experimental laboratory in relation to cross-cultural cooperation in today's world"(Hofstede, 1997, p. 204). Cross-cultural management is one of the most important prerequisites for leading the integration of Europe to success on the economic level. This requires further awareness on the part of those in charge in the business world. The theoretical foundations for such understanding will be elaborated upon.

2.4. Culturally Comparative Management Research

It must first be noted that problems exist in cultural research and in culturally comparative management research, whose roots are in the object of research itself, i.e. in culture. Scientist like Hofstede, Trompenaars or Adler even acknowledge the fact that cultural influences on the part of the scientists become apparent when, for example, designing a questionnaire for the identification of cultural dimensions. Hofstede, for example, only found four dimensions in which cultural differences express themselves in his research. It was not until a questionnaire was developed and applied by Asian scientists that a fifth dimension was found. The cultural shaping of the western researchers' questionnaires manifested itself through their own way of thinking. These "cultural biases in the researcher's mind" (Hofstede, 1994, p. 160) are next to impossible to avoid. One solution lies in the development of alternative questionnaires by researchers whose way of thinking is differently influenced.

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