Introduction
When comparative management studies first emerged as a recognized discipline and body of research the implicit assumption often was that there were universal management styles and practices that could and should be transferred anywhere in the world. Inevitably these styles and practices were based upon US experiences since the United States played a dominant role in global trade and most of the research and commentary on the subject came from the United States. However, as time has gone by it has become clear that a manager from one country cannot assume that he or she will be able to seamlessly transfer and embed management styles, practices, processes, and expectations from his or her country into another country and that his or her effectiveness as a manager will depend on developing a profile of the national societal culture that identified differences, which must be taken into account in acting as a manager.
In general, the national societal culture includes the various norms, behaviors, beliefs, and customs that can be found among the people of a particular country. A wide range of dimensions have been suggested for use as the basis for identifying and comparing differences between societal cultures in various countries that might eventually influence the effectiveness of managerial behaviors and the expectations of subordinates regarding the actions taken by their superiors. Overlapping dimensions used by Hofstede and the GLOBE researchers included power distance, uncertainty avoidance, institutional collectivism versus individualism, and gender differentiation (i.e., the masculinity–femininity pole), and the GLOBE researchers also suggested and analyzed four additional dimensions: assertiveness, future orientation, performance orientation, and humane orientation. Many of the dimensions identified by Trompenaars were similar to those used by Hofstede and the GLOBE researchers; however, he added several other potential variables including obligation, emotional orientation, privacy, and the source of power and status.
Regardless of which dimensions are used to identify and analyze cultural differences between countries, it is agreed that the differences are a function of deeply rooted values that permeate all aspects of life in the country including the workplace and the ways in which business relationships are formed and managed. For managers, awareness of the national business culture is essential to knowing what subordinates expect of their organizational leaders and developing a style and set of behaviors that will be effective in satisfying subordinates and motivating them to perform their jobs in a way that achieves the goals and objectives of the business. National business cultures include not only the values and norms that form the societal culture but also include the consensus among the population regarding the role of economic and political institutions that impact commerce.
An understanding of the applicable national business culture should be coupled with an awareness of the dominant traits and characteristics of customary management styles and practices. While many have argued that the increasing rate of globalization in the business arena is causing convergence among management styles that is overriding cultural differences, researchers continue to explore the characteristics of specific national management styles.1 Some studies focus specifically on one country, a process referred to by anthropologists as ethnography and which includes in-depth analysis and description of the customary social behaviors of a single identifiable group of people using techniques such as participant observation; however, a good deal of what appears in more recent assessments of national management styles is based on the practice of ethnology, which is the comparative study of two or more cultures that looks at a narrower set of data related to a particular topic and seeks to compare and contrast the various cultures.
There are several different models of management style that may be used for descriptive and comparative purposes. One method for modeling a manager’s style and practices focuses on a small set of specific characteristics and activities such as supervisory style, decision making style and processes, communication patterns, control mechanisms, management of interdepartmental relationships, and, finally, the strength of paternalistic orientation when interacting with subordinates.2 Another method of describing “management styles,” which may be particularly useful when studying developing countries is the model created by Khandwalla after studying 90 organizations in India, research that caused him to recognize and describe ten categories of management styles: conservative, entrepreneurial, professional, bureaucratic, organic, authoritarian, participative, intuitive, familial, and altruistic.3
National Business Cultures
Managers in every country must act within the boundaries of various institutions and values that, taken together, form what can usefully be referred to as the “national business culture” for that country. A unique national business culture arises due to differences in major social institutions, differences in approaches to economic organization, and ownership and control of resources (e.g., “capitalism” versus “socialism”) and, of course, variations between countries with respect to the values underlying their societal cultures and the political systems that have been adapted to govern the citizens and promulgate and enforce the laws that regulate activities within the country. National business culture is also impacted by history, including colonial occupation, religion, the availability of capital, the availability of natural resources, human capital, technology, demographic factors, and communications with other societies. All in all, national business culture is heavily influenced by a wide array of behavioral and institutional elements that also impact the way in which managers act and the effectiveness of those actions in furthering the achievement of organizational goals.4 The sections that follow provide an overview of American, European, and Asian business cultures.
American Business Culture
Profiles of American culture have emphasized characteristics such as goal and achievement orientation, desire, and passion for freedom, self-reliance, work orientation, and competitiveness. A profile of American culture developed by Linowes was built around three fundamental characteristics: action, freedom, and equality.5 Specific attitudes and behaviors associated with each of these characteristics included the following:
- Action: Man controlling nature, risk-taking, bold initiative, spontaneity, improvisation, outspokenness, critical thinking, logical reasoning, clarity and frankness, decisiveness
- Freedom: Individuality, individual independence, legal safeguards, righteous indignation, being heard, chaotic anarchy, proving oneself
- Equality: Level-playing field, industrial competition, track record, rewarding performance, specialists, opportunities, autonomy, ambiguous/informal ranking, racial and gender equality
As such, it is not surprising that American business culture has long exemplified, and glorified, a sort of “rugged individualism” that has evidenced itself in what are perceived as relatively high levels of tension and confrontation within and between companies and between the business community on the one hand and legislative and regulatory bodies on the other hand. There has been, in general, a marked level of distrust between business and government in the United States and this has often led to extensive attempts to regulate the activities of corporations in a number of areas including antitrust, consumer protection, securities regulation, and, most recently, corporate governance. All this contrasts markedly with the close business–government relations in other parts of the world such as Europe and Asia, which have often been criticized by US policy makers and endlessly debated in countless international forums on global trading matters.6
Interestingly, while “rugged individualism” is definitely part of the overall business environment in the United States, the traditional model for designing the organization structure of American businesses has been quite formalistic and relies heavily on hierarchical structure, standards, and systems and focused specialization among workers. In what almost seems to be a concerted effort to regulate “individualism” in the workplace, US companies have generally been more likely than their counterparts in foreign countries to create formal and defined organizational structures, prepare detailed written job descriptions, promulgate and monitor quantifiable performance standards, and issue lengthy policies and manuals covering all aspects of operational activities carried out within the company. American public companies, as well as privately held emerging companies with professional investors such as venture capitalists, have also emphasized short-term financial performance as the key measure of how their strategies and structures are working. This preoccupation with “making the numbers” on a monthly, quarterly, and annual basis, and demonstrating continuous improvements in growth and profitability, has been fostered by several other American institutional factors—the demands of US financial markets and investors for quick returns and impatience with investment projects that have long “payout” periods and the greater emphasis that has traditionally been placed on quantitative analysis in US business schools as they train the future managers of US companies.
One specific characteristic of American business that has an important impact on organizational structure is the historical emphasis on specialization. As noted earlier, US companies have typically relied heavily on specific job descriptions and settling well-defined responsibilities for managers and employees at all levels within the company. This approach parallels the development of education, training, and certification in the United States and one can easily recognize the importance and prevalence of professional and technical specialties and specialized educational programs in accounting, finance, law, engineering, and the sciences that are accompanied by extensive postgraduate networking that reinforce the specialty connections. Many American managers began their careers as specialists, as opposed to “general management,” and usually spend their formative years in the corporate world working in fairly narrow functional areas and responsibilities. In general, American companies looking to bring on new recruits will populate their offices by reference to specialist needs as opposed to selecting persons who may not have the currently required background yet is more likely to emerge as a leader in the future. The focus on specialization also means that US companies are usually comfortable with recruiting and hiring from outside the current worker population if necessary to access particular specialist skills.
American businesses are also well known for their emphasis and fascination with the concept of “professional management.” As evidenced by the respect afforded graduate management training, the “MBA” in particular, US companies have generally accepted the idea that corporations and other for-profit and not-for-profit organizations can be effectively managed through the application of generic concepts and techniques. This belief has fostered the development of a whole cottage industry of constantly changing management techniques that are delivered and disseminated by countless management consultants and “gurus.” Through the magical use of mass-marketing techniques American managers have been bombarded with a continuous stream of new tools and ideas to fulfill their responsibilities including calls for commitment to vague and general concepts such as “excellence,” “quality,” “innovation,” “customer satisfaction,” and “culture.” In fact, much of the discussion regarding organizational structure and design has been updated to incorporate buzzwords such as “value chains,” “strategic business units,” “diversification,” and “portfolio management.” While some of this information has been interesting, topical, and innovative, there are numerous examples of “new theories” that are simply recycled versions of earlier ideas. Moreover, the American bias toward short-term results often leads to poorly thought out decisions to quickly embrace a new “fad” without carefully analyzing the underlying foundations and determining whether it is best suited to the activities and culture of the specific organization. It is not surprising that “one-minute managing” found a welcome audience among managers of US companies. It should be noted that, in general, managers outside the United States view these new management theories and ideas as interesting background reading and something to ponder as opposed to a specific blueprint that needs to be implemented immediately.
For all of the generalizations made earlier about American businesses, it is only fair to note that one can still find tremendous diversity with respect to the cultures that have been adopted in successful US corporations. Certainly there are numerous examples of corporations that have interpreted “rugged individualism” to mean that managers and other employees must continuously compete internally for resources and assignments and that the spoils will go only to those that prove to be the “fittest.” On the other hand, confrontation and internal competition is tempered in many companies by attempts to cultivate a sense of “family” and belonging through training and other human resources programs designed to assist and support managers and employees in their efforts to improve and contribute to the company on a long-term basis. Some companies measure performance, and distribute rewards, strictly “by the numbers,” while other make a great effort to identify and reward more intangible contributions such as “creativity” and “innovation.” Dominant management styles also vary—“hierarchical” at one end to “participative” at the other end—and studies of organizational culture within emerging companies have noted the significant role that founders play in defining and establishing a management culture for their firms that remains in place long after the founders have been replaced by professional managers who were not involved in the initial launch of the company. Even more challenging is the attempt by many larger organizations with diverse business lines to allow for cultures and management approaches to vary from division to division as necessary to achieve strategic objectives (i.e., “intrapreneuring”).
The dramatic and well-publicized successes and failures among companies in Silicon Valley have captured the interest of legions of researchers and consultants interested in defining and understanding the management styles deployed in those companies. In the 1980s, Rogers and Larsen found that the primary reason for the failure of high-technology companies in Silicon Valley was poor management, as opposed to lack of capital, technical difficulties with products, or poor human resources. In turn, the successful firms were those in which senior management delegated authority and closely monitored all products and systems.7
Many books and articles have traced the development of the “Silicon Valley approach” to management and the stories generally begin back in the 1940s and 1950s with iconic firms such as Varian Associates and Hewlett Packard (“HP”). Important managerial characteristics of these companies included the removal of restrictions on pursuit of new ideas and innovations; employee participation in the company’s successes through the use of stock options, a strategy intended to foster cooperation and enthusiasm throughout the workforce; emphasis on teamwork; and the ability to manage rapid change. A famous story, often retold, about the beginnings of Silicon Valley focuses on the decision in 1957 of eight employees of Shockley Labs to abandon the firm led by William Shockley, a Nobel Prize-winning co-inventor of the transistor, to form Fairchild Semiconductor to escape Shockley’s intense micromanagement and forge their own company based on “open communications, laissez-faire management styles, flat organizational structures, and generous distributions of stock options.”8 Bernshteyn argued for the proposition that successful Silicon Valley firms operated under a nontraditional management style that fostered growth, creativity, innovation, and employee retention and relied on a “bottom-up” approach that began with finding and hiring the brightest and most nimble managers and employees, finding the right place in the organizational structure to maximize their strengths, and empowering those employees by avoiding excessive direction and rulemaking from the top.9
HP is often held out as the premier example of the original Silicon Valley management style and the management philosophy articulated by the founders of HP, Bill Hewlett and David Packard, became known as the “HP Way” and included respect and trust for the individual, hiring the best people and matching them to the right job; contribution to the customer and the community, integrity, teamwork, innovation, and continuous learning with the help of customer feedback.10 Carly Fiorina revised and updated the HP Way as the “Rules of the Garage” in 1999 and admonished HP employees to believe they could change the world; work quickly, keep their tools unlocked, and work whenever; know when to work alone and when to work together; share tools and ideas and trust their colleagues; set aside politics and bureaucracy; accept that it is the customer that defines a job well done; acknowledge that radical ideas are not bad ideas; invent different ways of working; make a contribution every day; and believe that together HP employees could do anything.
While the Silicon Valley management style has been widely praised, and attempts to emulate it have proliferated around the world, some have expressed concerns about some of the consequences of focusing too much on managing change through flexibility and embracing “lean and mean” resources management strategies. Pfeffer, for example, began with the premise that the model of Silicon Valley management that had emerged by the early 2000s was based on four basic ideas: a “free agent” model of employment that demanded that employees look out for themselves and be prepared and willing to move on—change jobs—at a moment’s notice; extensive reliance on teams of outside contractors that could be expanded or reduced quickly and efficiently; use of stock options as an important element of compensation; and the belief that value to the organization was measured by the number of hours worked (i.e., working long hours was the norm).11 He noted that companies built on these principles would presumably be well positioned to pivot quickly as their environments shifted; however, he suggested that the free agent mentality created excessively high turnover that was actually quite costly to companies in terms of having to recruit and train new staff, manage and minimize disruption to relationships with customers and other strategic partners, and worry about whether former employees were using their ideas in new jobs with competitors. Pfeffer also questioned whether outsourcing was conducive to building a sustained competitive advantage since a large portion of the knowledge generated during outsourcing arrangements resided outside of the company.
European Business Culture
For all the talk and action associated with integration of European economic activities, it remains likely that the management cultures of European companies will continue to hark back to their specific national roots.12 As such, when observing and defining the management culture for a particular European company, it is essential to identify and understand the impact of environmental factors such as language, history and tradition, educational systems, and social class systems in its home country regardless of how the geographic reach of its operational activities may have expanded into other countries and regions. In fact, within the membership of the European Union one can probably identify a number of different “country clusters” of similar business cultures including Anglo (e.g., United Kingdom), Germanic (e.g., Germany, Austria, and Switzerland), Latin European (e.g., France, Italy, and Spain), Nordic (e.g., Denmark, Finland, Norway, and Sweden) and Near Eastern (e.g., Greece and Turkey)13; however, while these categories do have some utility any attempt to derive universal rules and expectations regarding managerial practices and employee attitudes should be undertaken with caution.
There is some degree of truth to generalizations made about British, French, German, and Italian managers and the companies that they oversee. For example, it has been said that the characteristics of management culture in the UK include a stress on common sense, adaptability, and resourceful pragmatism along with class and club-consciousness. Traditionally, UK companies had little interest in formal business training for their managers and opted for “gentlemen amateurs” with either no degree or a liberal arts degree as their foundation for taking on a management role. However, beginning in the early 1990s accounting began to emerge as a preferred specialist background in the UK and there was also a definite movement toward management training in universities and colleges. Explanations of German management culture include an emphasis on order, discipline, and efficiency and a respect for professional expertise. Comments on management of Italian companies include references to charisma and spontaneity and non-Italians claim that managers of Italian companies lack the necessary discipline in discharging their responsibilities.
For all of the national differences, and it is also impossible to make generalizations about a particular country given that social and economic conditions may vary from region-to-region within a specific national border, it appears to be true in general that European managerial styles are less formal than what is typically observed in the United States. Job descriptions and organizational charts in European companies are less detailed and specific than those used by US companies. European companies also tend to fall in the middle between the individualism prized by US companies and the strong group orientation found among Japanese companies. Similarly, business–government relations in Europe are less adversarial than in the United States yet one generally does not see government acting as a strong “guiding hand” along the lines of certain countries in Asian countries. Exceptions can be seen, however, in those countries such as France and Italy that have often given strong governmental support to certain domestic companies and industries. One interesting distinction in Europe is the degree of protection given to personal time and employment security, a value that is embedded in governmental regulation of vacation time and other personal leaves and lay-offs caused by mergers and internal corporate restructuring.
Asian Business Culture
Much of the earliest writing about Asian businesses emphasized and discussed management cultures within Japanese and Korean corporations, since these were the two countries that had the greatest initial success following World War II in entering global markets and challenging the previously assumed dominance of American and European management principles.14 As is the case with companies around the world, the business culture preferred in Japan and Korea has often been indistinguishable from the dominant national cultural values and it is not surprising to see that multinational companies domiciled in these countries have emphasized consensus, seniority, and deference to authority. Executives and managers within Japanese and Korean corporations have typically been products of the broader class hierarchy within the national culture and drawn from a group of “elites” that have completed their education at leading universities at which they forged the social ties that follow them through the business careers. It is well known that, at least until quite recently, a bedrock principle within Japanese multinationals was lifetime employment that created unequivocal corporate loyalty among employees. Employees expected to spend their entire careers with one company and, as such, were willing to subordinate their personal ambitions and family lives to the needs of the company. In fact, the social status of managers and employees among their peers was strongly influenced by the company that they worked for and the position that they occupied within the company. Since Asian multinationals, particularly in Japan, generally did not welcome job candidates who had already spent part of their career at other companies, employees generally had no choice but to accept the decision made by their employers about their careers given that there was little or no chance they could move elsewhere in the event that they were not satisfied with their progress.
While the life of the typical Japanese employee often seemed to harken back to feudal times, Japanese companies did take some efforts to create a pleasant and fulfilling work environment. For example, Japanese employees have long been exposed to a constant stream of training and education to provide them with new skills and knowledge. A sense of belonging and connection is fostered through group exercises and company rituals as well as a focus on cooperation and harmony. While Japanese employees may not have had much real autonomy, they have nonetheless been included in the procedures used to discuss issues and problems and reach decisions that are agreeable to, and supported by, all persons directly involved in the matter. It should be noted, however, that while this time-consuming process, the so-called “ringi system,” appeared to be more inclusive than the methods used in American and European companies, the fact is that the decisions were often made at the top and then politely but firmly explained and sold to those who are lower in the organizational hierarchy. One important byproduct of the internal socialization process in Japanese companies has been the development of shared cultural values that reduce the need for those companies to create detailed rules and procedures of the type relied on by US companies.
In contrast to the American preoccupation with specialization, management careers in Japanese companies have traditionally emphasized development of generalist skills. In fact, as a general matter all employees in Japanese companies are told that they are expected to work for the entire organization, as opposed to a particular functional or product division, and that they will be asked to perform a wide range of roles during their relationship with the company. Human resources policies and practices, and management development programs in particular, at Japanese companies reflect a commitment to long-term development and socialization of employees and this focus can be observed in the way that training programs are carried out and in the choices made with respect to ensuring that employees are rotated through a variety of assignments so that they can see how the business works from a number of perspectives. The willingness to make long-term investments in human resources is consistent with the way that Japanese companies and investors are willing to take a long-term view of financial performance as opposed to following the way of US companies in tracking on short-term results.
Cooperation and the desire to build and maintain a sense of community also has a powerful impact on business-government relations in many Asian economies. The important role of Japanese ministries and other governmental agencies in providing direction to domestic corporations and industry sectors is well documented. For example, governmental agencies in Japan have had broad authority and discretion with respect to granting licenses and other types of approvals that are necessary for the conduct of certain business activities and also have exerted substantial power to impact commercial activities by approving or denying subsidies, tax holidays and reductions, and/or loans on favorable terms. In addition, the Ministries of Finance and International Trade and Industry have both been known for their practices of issuing “administrative guidance” to domestic companies as a tool to ensure that Japanese firms were positioned to be competitive in international markets.
While much of the writing about Asian multinationals, and Japanese companies in particular, has created a perception that they are all quite similar, in fact one can observe striking differences in the way that major corporate groups are organized and in the cultural values that they choose to emphasize. For example, while the culture of the Mitsubishi group strongly emphasized the organization as a whole and the parent company exerted a strong role, the Mitsui group appeared to allow for a good deal of autonomy for its various divisions and affiliates. Also, not surprisingly, Japanese multinationals have adopted different strategies to achieve comparable objectives with respect to recruiting and developing competent international managers.
Interest in Asian business culture has obviously expanded beyond Japan and Korea and the existence of a recognizable Far Eastern business culture has been postulated for a cluster of Asian countries other than Japan (e.g., Hong Kong, Singapore, Taiwan, Thailand, and Vietnam); however, the dynamic economic renaissance of Japan after World War II has been such that most commentators have treated Japanese management principles as an independent phenomenon separate from its geographic neighbors.15 A relatively recent phenomenon has been the emergence of Chinese companies as strong competitors in the global marketplace and the tighter engagement of American and European companies with China as a market for their products and services and a source of financial and human capital and technology. Certainly China and Japan share not only geographical proximity but also similar religions and value systems; however, their national business cultures have diverged significantly for various reasons including, perhaps most notably, differences in the path and content of their economic policies.16
1 Information on management styles and practices in various countries is available in the Regional and Countries Studies materials prepared and distributed by the Sustainable Entrepreneurship Project (www.seproject.org).
2 Culpan, R., and O. Kucukemiroglu. 1993. “A Comparison of US and Japanese Management Styles and Unit Effectiveness.” Management International Review, 33–27.
3 Khandwalla, P.N. 1995. “Effectiveness Management Styles: An Indian Study.” Journal of Euro-Asian Management 1, no. 1, pp. 43–46, 39.
4 Glunk et al. noted that “[[i]n order to provide a realistic picture of a national management style, one has to consider behavioral as well as institutional aspects of the business system”. Glunk, U., C. Wilderom, and R. Ogilvie. 1996. “Finding the Key to German-Style Management.” International Studies of Management and Organization 26, no. 3, pp. 93–108, 93 (citing Whitley, R. 1992. European Business Systems. London: Sage Publications; and Whitley, R. 1994. “Dominant Forms of Economic Organization in Market Economies.” Organization Studies 15, no. 2, pp. 153–82).
5 Linowes, R.G. November 1993. “The Japanese Manager’s Traumatic Entry into the United States: Understanding the American–Japanese Cultural Divide.” The Academy of Management Executive 7, no. 4, p. 24.
6 The discussion of American business culture in this section is adapted from Humes, S. 1993. Managing the Multinational: Confronting the Global-Local Dilemma, 113–16. Prentice Hall International (UK) Ltd., Hemel Hempstead, Hertfordshire UK. For discussion of business-government relations in the United States, see R. Porter, Government-Business Relations in the United States, Paper for Transatlantic Perspectives on US-EU Economic Relations: Convergence, Conflict and Cooperation at Harvard University John F. Kennedy School of Government (April 8, 2002).
7 Rogers, E.M., and J.K Larsen. 1984. Silicon Valley: Fever-Growth of High Technology Culture. Basic Books (AZ).
8 Berlin, L. September 2, 2005. “How the Valley Start-Up was Invented: William Shockley Drove His Team Nuts.” San Jose Mercury News http://leslieberlinauthor.com/wp-content/uploads/2011/05/HowtheValleyStart-UpwasInvented.pdf
9 Travios, D. June 15, 2012. “The Secret Sauce of Silicon Valley.” Forbes.
10 Towers, S. 2002. “The Silicon Valley Management Style.” http://itstime.com/apr2002.htm
11 Pfeffer, J. Spring 2001. “What’s Wrong With Management Practices in Silicon Valley? A Lot.” Sloan Management Review, http://sloanreview.mit.edu/article/whats-wrong-with-management-practices-in-silicon-valley-a-lot/
12 The discussion of European business culture in this section is adapted from Humes, S. 1993. Managing the Multinational: Confronting the Global-Local Dilemma, 118–21. Prentice Hall International (UK) Ltd. Hemel Hempstead, Hertfordshire UK.
13 Ronen, S., and O. Shenkar. 1985. “Clustering Countries on Attitudinal Dimensions: A Review and Synthesis.” Academy of Management Review 10, no. 3, pp. 435–54.
14 The discussion of Asian business culture in this section is adapted from Humes, S. 1993. Managing the Multinational: Confronting the Global-Local Dilemma, 116–18. Prentice Hall International (UK) Ltd. Hemel Hempstead, Hertfordshire UK. The existence of a recognizable Far Eastern business culture has been postulated for a cluster of Asian countries other than Japan (e.g., Hong Kong, Singapore, Taiwan, Thailand and Vietnam); however, the dynamic economic renaissance of Japan since the end of World War II has been such that most commentators treat Japanese management principals as an independent phenomenon separate from its geographic neighbors. See Ronen, S., and O. Shenkar. 1985. “Clustering Countries on Attitudinal Dimensions: A Review and Synthesis.” Academy of Management Review 10, no. 3, pp. 435–54.
15 See Ronen, S., and O. Shenkar. 1985. “Clustering Countries on Attitudinal Dimensions: A Review and Synthesis.” Academy of Management Review 10, no. 3, pp. 434–54.
16 Padmalingam, S. April 2002. “Differences in Economic Policies of Japan and China and the Impact on their Respective Societies.” http://econc10.bu.edu/economic_systems/Country_comparisons/japan_china3.htm (accessed December 31, 2018).