Europublic Blog

There are as many different business cultures in Europe as there are national (or sub-national) cultures. Anthropologists, sociologists and others have helped us identify a series of parameters for determining differences between cultures, but they only tell us part of the story.

It is true that many of the cultures of northern and northwestern Europe are essentially issue-focused (or task-oriented, depending on whom is doing the talking), but they demonstrate this characteristic in varying degrees. The people of southern and eastern Europe, by contrast, tend to be relationship-focused, but even here there are important differences of degree.

But there are other differences too, what I call the ‘Macro-Divides’, of which I know three: the Island-Continent Divide, the East-West Divide and what I choose to call the South-North Incline.

The Island-Continent Divide is the most obvious one, particularly to the British/Irish side! There is something about islands. Maybe because you have so many people rubbing shoulders in a relatively confined space, they tend to produce strict social hierarchies. But there is another thing, too, namely that the English and the Irish have an approach to life that is fundamentally different from that of many continentals. (Note that I say the English, the word 'British' being a political and not a cultural definition. The Scots in particular diverge to some extent from the English tradition.) Continentals tend to be 'regulatory-minded', whereas the English/Irish approach to life is characterised by a relatively laissez-faire, laid-back attitude and a significant tolerance of ambiguity - something that Continentals tend to fight shy of. No doubt a number of reasons account for this, in particular the influence of Roman Law or the Civil Code, which applies in most Continental countries in one form or another, and even applies to Scotland. It also owes something to the fact that the English have been spared invaders and occupiers for nearly 1,000 years.

Depending on how far you extend the eastern frontiers of Europe (to the Urals?), The East-West Divide virtually splits Europe in half. Many of the people to the west of this dividing line are - together with the North Americans, the Australians, the New Zealanders and the South Africans - members of a global minority: the individualist, issue-oriented folk who make up perhaps no more than ten per cent of the world's population. The people to the east of this line are, like most other people in the world, collectivist in spirit and relationship-oriented

The South-North Incline, less self-evident than the others, is the third major feature of the European Peninsula. As you move northwards from the Mediterranean littoral, the social constraints experienced largely at an almost subconscious level by southern cultures emerge further north as clearcut, expressly stated and universally held social attitudes. This 'incline' has to do with values like accountability and transparency, which are much more integral to everyday life in the countries of the North. This South-North Incline pops up time and time again in national statistics. For example payment delays in business, where the promptest payers are the Finns and the slowest are the Greeks

One exception is how people do business. All European cultures work on their connections - this is an understandable human reaction to the complexities of earning a living. Some degree of chronyism is evident in every European country, just as everywhere else. The Americans prefer to call it 'networking', but it comes to the same thing. Even the relatively puritanical countries of northern Europe - the Netherlands or Sweden - tacitly condone chronyism as a fact of life. The relatively small size of their communities (no more than ten million people) means that everybody of any importance knows everybody else.

The ‘Nerve Ends’ of international business

A number of factors are crucial in the development of good business relationships across frontiers. The first of these ‘Nerve Ends’ is interpretation of time. Some of us Europeans, particularly the Germans and the Swedes, are long-termist. Others like the British and the Italians tend, for different reasons, to be short-termist. Northerners, to use a phrase coined by the American anthropologist Edward Hall, are generally 'monochronic', doing things one at a time and often in a sequential or linear way. Southerners, by contrast, tend to be 'polychronic', which means they can happily jump from one thing to another in any sequence and will cheerfully tolerate interruptions.

For Anglo-Saxons, Nordics and to some extent Germanics, 'time is money'. Latins, on the other hand, will dedicate all the time necessary to discuss the issues and get the job done - deriving as much pleasure from the process of decision-making, because it is a relationship-focused experience, as from the decision itself.

The second Nerve End to be aware of is other people's attitudes to authority and hierarchy: in business confrontations, be sure to understand the 'pecking order' of the other side.

A third Nerve End is how people share and use information. Latins, poorly motivated by the 'time is money' argument, are likely to put more emphasis on another motivation, 'information is power'. So your assumption that your partners will make good use of the information you give them and share it with their associates may well be ill-founded.

Related to this is a fourth issue, namely how and in what ways your foreign partners communicate with you. The French don't particularly like putting things in writing. The Finns rarely use anything but e-mail or a mobile phone...

Yet another Nerve End is differences in how people interact. The Nordics tend to avoid interrupting whereas many Italians indulge in relentless ‘conversational overlap’. The Finns are comfortable with the kind of silence that would drive a Frenchman mad. Major contracts have been lost just because of this simple difference…

Finally, there is the Nerve End of the personal-professional interface. Keep the two well apart - until your foreign host makes the first move. Then accept with grace and gratitude.

The 'Crunch Points' of international business

The first thing to be aware of, when getting down to the big issues, is that management styles can differ enormously even within Europe. Traditionally there have been at least three major schools of thought: those who think that a good manager is there to take the decisions, those who think that a good manager consults his or her team on everything, and those who think a good manager should master his subject better than the people below him.

A study by the UK's Cranfield School of Management in eight western European countries - the UK, France, Germany, Spain, Austria, Ireland, Sweden and Finland - identified four different management styles. The first, called 'inspirational' ("driven by beliefs concerning the future and supported by a charismatic leadership style"), was dominated by the Spanish, the British and the Irish. The second, the 'directive' approach ("focus... everything depends on what needs to be achieved, using an appropriate style to enhance the attainment of goals"), was cornered by the Germans and Austrians. The third, dubbed the 'consensual' style ("discussion with minimal constraint... involving all relevant parties irrespective of organisational position") was favoured by the Swedes and the Finns. The final approach, 'elitist' ("displaying a capacity for conceptual debate accompanied by a style of top-down leadership"), was monopolised by the French.

The second Crunch Point in international business is the creation of effective multicultural teams. In the words of Kenneth Blanchard: "none of us is as smart as all of us." Most management specialists hold to the belief that multicultural teams perform either much better or much worse than monocultural ones! The deciding factor is the care taken in both composing and motivating a multicultural team, and the time allowed for the chemistry to work. Provided everyone wins a rightful place and voice in the team, then everyone 'brings something to the party'.

Many cultures, with a historical preference for a particular type of education or professional activity, provide a particularly high standard of competence in their chosen domain. The English with their liberal education make good human resources people, while the Scots are famous for their accountants. The Italians, with their sense of the aesthetic, are great designers and marketing experts. The French demonstrate a sense of strategy, while the Germans make excellent mechanical engineers. International organisations can exploit such predispositions to their advantage. In commenting on France’s pioneering of 3D design software systems, Germany’s leadership in functional and integrated business systems, and the UK’s dedication to accountancy packages, Keith Woodcock of Nomura Securities commented that "Sage’s product is for a nation of small shopkeepers, Dassault’s product is for people who want to make big cultural statements, while Germany is famous for engineers and industry - and that’s where SAP is strongest."

The third Crunch Point in international business is the intercultural implications of negotiation. Negotiating between people of the same culture is difficult enough. How much more difficult it can be when the two parties come from different cultures, with different mother-tongues, different priorities and value systems! This applies as much within Europe as outside.

Nordics tend to come to the negotiating table in a spirit of "this is what we want, take it or leave it"

When it comes to simple buying/selling negotiations, all European cultures subconsciously view the seller as subordinate to the buyer. But, beyond that, negotiating patterns differ. The French and British both tend to use the bridge-building or problem-solving approach (PSA), while Germans often use a different approach which sociologists call distributive bargaining (carrot-and-stick, or concession/appeal/concession/appeal). Many foreigners say that the Germans are by far the toughest negotiators of all the Europeans. Humour and small talk doesn't enter into it. Business is... a serious business.

Researchers have found that something like 70 per cent of all unsuccessful European mergers, joint ventures and strategic alliances - the fourth Crunch Point - owe their failure to problems of culture, both national and corporate, or incompatibilities in individual human chemistry. These problems can be overcome but, again, it takes time. One solution is to approach the 'marriage' of two organisations through an intermediate 'engagement' period - and certainly by avoiding plunging headlong into a full merger. On the other hand, when the moment comes to take the plunge, then the process should be done fast to avoid the accumulation of inhibitions.

The fifth and final 'Crunch Point' in European business is the application of what I choose to call 'New Age' organisational structures and performance management techniques, many of them developed in the US. Some of them, such as time management and management by objectives (MbO), are not in fact as new as all that. Yet, precisely because they tend to enshrine value systems which are not always shared by the people exposed to them, they can be a trap.

Individual benchmarking with targets and performance reviews, as part of MbO, disturbs both the social and the personal sense of decorum of many Latins, in particular the Spanish. Time management and training in interview techniques may be seen by the French as an intrusion on their self-esteem. Matrix organisations tend to throw even the flexible Italians into a state of disarray. Most seriously, empowerment can be seen as a threat rather than an opportunity by people from cultures where high power distance and taking orders from others is ingrained in society. This is epitomised by the case of the Latin middle manager who, when told by his boss to think about how he could do his job better, retorted: "Why should I? That's your job!"

As anywhere else in the world, the international manager working in Europe will do well to remember the phrase coined by Ted Levitt: "Think Global, Act Local."

Richard Hill