Global Business Cultural Analysis: Germany

Global Business Cultural Analysis: Germany
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Abstract
Culture is the programming of the mind in a collective manner that makes members of one group different from another group, and this programming is passed from one generation to the next. In collective programming, culture differentiates one individual from the other. Culture is part and parcel of every society and, therefore, affects each and every member of society and extends even to the societal activities. A culture is unique to a particular society, community, and country. Therefore, every member of that community or country is required to respect the cultural norms, values and beliefs inherent in the country/community’s culture. With the advent of globalization, different cultures are increasingly interacting with each other socially, economically, politically, and in many more dimensions. In business, successful operations require an understanding of the foreign culture the business intends to operate in. Brian Satterlee provides nine elements and dimensions that are present in every culture and affect cross border commerce. This paper is a global cultural analysis that compares cultures of the USA and Germany. Therefore, this paper discusses the nine elements and dimensions of culture in relation to Germany and provides a description of how these elements are integrated by locals (Germans) in conducting business. This paper, in addition, discusses the differences between the US and Germany on the basis of the elements and, finally provide a description of the implications of businesses in the United States intending to operate in Germany
Introduction
A time existed when Coca-Cola was the benchmark of a global company selling its products in nearly every country and in almost all languages. However, today, the world has gotten fond of MacDonald’s that sells its hamburgers in Hong Kong, Karachi, and Beijing. Pick-up trucks and salon cars from Toyota are in every road globally, and Sony televisions are found in almost every home globally (United Nations, 2000).
The times we are living in are regarded as "the golden age for business, trade, and commerce." There has never been a time in history where opportunities to buy and sell as many goods as are sold to people today. Even though the big companies may dominate the global business, even the smaller emerging companies are today experiencing an explosion. For example, the handmade hammock made by the indigenous Guyana people is marketed via the internet. This is due to the current instant information and communications platforms, the slightly over 50 people found on the remote Pitcairn Island can now sell their handicrafts in any part of the world (United Nations, 2000).
Tradeoffs have been in existence since time in memorial between countries and societies, but never to the scale that exists today. Reduced trade barriers, financial liberalization, and revolutions in technology have changed the natural state of business in almost all industrialized and today, industrializing countries.
Due to globalization, countries today are exporting approximately ten times more than they did in 1950, today, over $150 trillion moves across borders in a single day, and more people are travelling today than any time before in history. In addition, cheaper telephone calls are being made today than any time in the world indicating the unstoppable force of globalization (United Nations, 2000).
Globalization
While the term globalization has been popularized and used, it is not a single concept that can be defined and contained within a certain period of time or its processes defined with specific start and end points. Moreover, the term cannot be defined with certainty to all the people, all facets in society, and all situations (Al-Rodhan & Stoudmann, 2006). Globalization comprises of economic integration; policy transfers across different borders; knowledge transmission; cultural stability; reproduction, relationships, and power discourses. Therefore, it can be viewed as a global process or concept or even a global market establishment that is devoid of neither social nor political control (Al-Rodhan & Stoudmann, 2006).
Globalization includes all these aspects and; therefore; it is a concept that over time is defined with connotations that relate to progress, development, stability, integration, and cooperation and in some instances has been used to refer to regression, colonialism, and destabilization (Al-Rodhan & Stoudmann, 2006). According to Held et al. (1999), globalization is found in a continuum with local, national, and regional components. At one end there are the social and economic relations that lie at one end of this continuum including networks and relationships organized locally or nationally. On the other end, there are the social and economic relationships and networks crystallizing on the wider regional and global interactions (Faulconbridge & Beaverstock, 2008). Therefore, operational globalization is the spatiotemporal change process that underpins transformations in the affairs of human through linkage and expansion of human activities across regions and continents (Faulconbridge & Beaverstock, 2008). In business and trade, globalization can be defined as "the processes of increasing and speeding up the connectivity and interdependence of the world’s markets and business and other institution" (p.7) (Irani & Noruzi, 2011).
Culture
The definition of culture is extremely difficult and in 1952, for example, Kroeber, an American sociologist reviewed the concepts and definitions relating to culture and; consequently, identified 164 different definitions (Oatey, 2011). According to Hofstede (1980), culture is the programming of the mind in a collective manner that makes members of one group different from another group, and this programming is passed from one generation to the next (Belshek, 2006). Culture, however, is constantly changing as each generation adds a new element before passing it to the proceeding generation (Belshek, 2006). These are people that are mutually interacting and have negotiated, shared values, beliefs, norms, lifestyles, understandings, and perception on place in the world. It is the totality of all behavior, arts, beliefs, and institutions including other products of human work and thought that are socially transmitted (Tharp, 2009).
Globalization and Culture
Per Tomlinson (1999), "Globalization lies at the heart of modern culture; cultural practices lie at the heart of globalization" (p.1). Globalization comprises of the expansion of the worldwide flow of material objects and symbols contained within certain cultures and at the same time the proliferation of institutions and organizations that have a global reach and that structure the flows. World culture is the cultural complex that contains the foundational assumptions, knowledge form, and prescriptions underlying globalized flows, organizations, and institutions. It contains significant factors spanning the global society and order including the models and methods assumed to be significant and applicable, therefore, used to organize the social life (Chalmers, 2001). Globalization links different cultures together on a variety of levels that are economically, politically, socially including other different dimensions (Matthes, 2010).
Culture and International Business
There is an increasing interdependence between nations, business, and people. This has occasioned the rise in the importance of national cultures. Culture as indicated above can be defined as the behaviors, norms, beliefs, and values of a certain community or nation that are socially transmitted over time. Therefore, culture has an influence on how we think, communicate, and behave (Shimutwikeni, 2010).
International business describes any situation where production and or distribution of goods and or services across borders of different countries (cross border commerce). As the world shifts towards globalization, an interdependent and integrated global economy creates more opportunities to conduct business internationally (Ofosu, 2011). This form of globalization can take place in markets, production, and distribution. Culture affects our daily activities and lives, and they vary in different nations. The success of any business, therefore, on a global scale, requires the executives to have some prior knowledge of the host nation’s culture so as to function properly in the business environment (Ofosu, 2011). Cross border commerce does not take place in a vacuum hence an understanding of the particular country of interest’s culture by a firms is central to its success. This firm should be in a position to identify, appreciate, and adapt to the cultural diversity that exists in the global foreign market. While this might seem challenging, it also provides the business with an opportunity to grow and to expand its reach (Ofosu, 2011).
Cultural Dimensions
According Brian Satterlee (2009), a savvy global manager is a manager that seeks to comprehend the cultural dimensions of the host nation. These dimensions have a significant impact on the decision-making process and outcomes, negotiations, and the operational activities that are at the centre of the business’ success in the long run (Satterlee, 2009). Satterlee provides 9 cultural dimensions that a manager requires to be conversant with for the success of the business. These include, "Communication, Religion, Ethics, Values and Attitudes, Manners, Customs, Social Structures and Organizations, and Education" (p. 40) (Satterlee, 2009).
Cultural Perspectives of Doing Business in Germany
It is almost miraculous how Germany managed to survive the 2008 recession, and this reveals the country’s underlying strength in its economy that is mainly based on manufacturing. The rates of unemployment are lower than they were before the crisis and exports for the country have significantly increased. There was global distress especially from the more industrialized countries and the European Union (EU) that the economic model Germany was using was unsustainable. There was pressure on the leaders to make instant changes in order to survive the existent competition from other low wages countries (China and India). However, despite such challenges, its economy proves to be in great health. Therefore, to learn and understand the business model Germans use it is necessary to assess the cultural elements and dimensions in Germany as required by "any savvy manager."
The Major Elements and Dimensions of Culture in Germany
Due to globalization, the economic, social and political conditions of many countries have changed over the years including Germany. Germany, shifting from its traditional iron fist approach to doing business has transformed and is now allowing change in the way it conducts its activities including business; it is discouraging intolerance, and promoting equality among all members of its country and abroad. However, while they are accepting change, they remain focused in their traditional culture. Brian Satterlee (2009) as indicated earlier provides 9 cultural element and dimensions of culture. These dimensions are applicable each and every culture globally from Germany to the United States.
The differences in cultural dimensions between the Germany and the US may create enmity and tension between the two countries, and similarities create friendship and cooperation. Regional similarities occur in regards to the cultural dimensions that are often based on historical backgrounds. For example, Iran and Iraq have similar religions, the US and UK similar ancestors, Germany and Austria similar languages. They may also share similar economic approaches and policies, for example, German’s proven prominence as an EU member through is role in the management of adversity as it was in Greece recently, honoring traditions and competition for recognition internationally.
Elements and Dimension of Culture
Technology
The evaluation of cultures in the 20th century would be incomplete if the technological aspect is not addressed. According to the World FactBook (2012), Germany has approximately 65.125 million internet users (CIA, 2012). This means that the internet users can be influenced culturally especially through the social media. Social media has opened up countries like China, Japan, North Korea, and as indicated earlier Germany that were initially reserved, secretive, and locked up from external countries and cultural influences. Some of these countries have attempted to censor what residents view on the internet, but according to Bawaba (2012), residents usually find means of circumnavigating the censorships, for example, in Jordan. For china, this has been the norm since the establishment of internet connection in 1994. However, studies by the China Internet Network Information Center (CNNIC) indicate that despite this, there is an increasing penetration in internet users. The numbers rose to 384 million users by 2010. This has resulted into a cultural change in china and created a shift in how business is managed (zhang, 2010).
Communication Communication is an activity, skill, and art form incorporating all the lessons learnt across the broad spectrum of human knowledge. Therefore, to communicate effectively one must prepare, practice, and be persistent in learning how to communicate well (Shelby, 2011). Communication is among the major building blocks that forms the foundation of any culture. It functions to influence the behavior and knowledge of the receiver by providing motivation and guidance including socialization (Voinea, Naidin, & Dumitru, 2011). Cultural identity is based on language and communication and maintenance of a cultural definition for a particular group of people, requires maintenance of a common means of communication (Shelby, 2011).
Paying attention especially to human resource management, communication becomes a vital point of discussion regarding cross border commerce. There are four influential factors regarding Human Resource Management (HRM) in Multinational Corporations (MNCs), and these include the country of origin, effects of dominance, need to integrate internationally, and the factors and effects within the host country (Almond et al., 2005). Unification of the East and Western Germany implied that the means of conducting business between the two regions should also change and, they did. Companies from both the East and West had to change their operations so as to accommodate the new population and political systems to survive within the unified country. Therefore, MNCs should take consideration of all cultural drivers of the country if they want to operate there.
Germans disregard diplomacy in their speech and prefer directly stating the truth as understanding and believing the underlying fact is more crucial and they believe that personal emotions erode the truth in speech. This may come out as being rude in certain cultures. However, to Germans it is an indication of respect and an inquisitive search to a problem’s solution. Germans are also often accused of being arrogant; this is, as a result, of using direct speech that has little belittlement of themselves and seems to be coded language. However, this is just a misinterpretation as they give true statements of themselves, and their capabilities and due to these one can actually take a German at his/her word compared to other cultures that have vague approaches to communication and use of language.
Germans have highly developed a sense of humor, which is often interpreted as a lack of it. However, this is not true as differences depend on the positioning and style of expression. An important factor to note is that the perceived sense of humor may vary across cultures where something that is perceived as funny in one culture may anger, bore, or be perceived as nonsense in another. For Germans, humor is not appreciated during serious business. During presentations in Germany, detailed supporting evidence should be provided to strengthen the presentation’s credibility and a lack of evidence significantly weakens the credibility of the presentation and argument.
Religion
Globally and historically religious traditions are concerned with relationships between individuals and the community. They offer belief systems and practices that contribute to answering human beings’ questions regarding the nature of this relationship. They require specific frameworks for conception, advocate for certain behaviors, and provide models for solving the existing puzzle and hence improve the quality of life for those who adhere to it.
In the past, religion and spirituality were always perceived as being a private matter and had no position in the corporate world. However, as the world and companies embrace the expanding global economy, and outsource for global candidates, an increase of diversity in religion is increasing. Moreover, more employees and business people are now taking spirituality to their workplace and, therefore, religion and spirituality are part of their daily lives. For them, spirituality is a lifestyle (SHRM, 2008).
In the 50s over 96% of the German population belonged to a single of the major Christian confessions. Fifty percent were Protestants, and approximately 46% were Catholics. It was until the early 60s that this changed and the Christian confessions were on a decline with a significant number of people leaving the churches (Korioth, 2009). Even in the midst of such developments, a large portion of Germany’s population culture comes from the originally predominant Christian religious beliefs and practices and currently 31% of the population being Catholic and 30% being Protestants – 61% of Germans are Christians. Therefore, Christianity remains to be the predominant religion in the country followed by Islam then Buddhism and Judaism with approximately a third of the population not being part of any confession (Korioth, 2009).
The religious belief a society’s members have influences institutions internally because individuals as indicated above carry their beliefs to workplaces and the religious values determine wrong and right within the society. Failure to act as per the set religious values attracts a punishment on earth or in a supernatural planet that they believe in. Christianity is concerned with all of man’s activities, wealth distribution, income and employment disparities, and economic contractions. Therefore, human needs must be attained through love which is central to ethical factors in Christianity.
Muslims, on the other hand, have a sense of duty and obedience; therefore, do not focus on income, growth, indicators of human development, but on duty to Allah and obedience (Hillman, 2007). Several studies reveal a positive relationship between ethical standards and religion. For example, Terpstra, Rozella, and Robinson studied undergraduate business students and found out that religious beliefs were crucial determinants of ethical attitudes among the students. In addition, Smith and Oakley found out that those students whose religious beliefs were very important, ethical standards when reacting to certain hypothetical scenarios in business were strong (Emerson & McKinney, 2010).
Therefore, considering the cultural dimensions, ethics, attitudes and values, and religion have a close relationship. The definition of wrong and right, what is ethical or unethical depends on cultures three subject matters stated above. Ethical behavior definitions vary depending on the religion. Moreover, Christianity in Germany is different from that of America due to values and attitude differences. Therefore, any assumptions regarding religion by a manager would first require an in-depth study of all the dimensions in their culture. Ethics
Ethics is among the most intricate part of any business organization. Culture and ethics are usually discussed together as one is contained in the other. Ethics can be defined as sets of rules and abstract principles governing human behavior (Alhyasat, 2012). In international business, business ethics refers to a system of moral principles that are applicable to the commercial world that is behaviors a business adheres to in its daily operations globally (Velentzas & Broni, 2010).
Value systems in culture are linked to the understanding of moral or ethical issues and the expectations regarding moral behavior. Evidence exists that business ethics is understood and practiced differently between Germany and the United States. Per Ciulla (1991), the German ‘Wirtschaftsethik’ is loosely translated and means ‘the ethics of relationships between economics and the society’ is rooted to the Kantian philosophy that emphasizes social partnerships and view companies as social institutions (Martin, Resick, Keating, & Dickson, 2009). Therefore, according to van Lujik (1990), Germany has been traditionally strongly focusing on consensual or ‘communicative ethics’ (Dialogethik) where decisions lie with the moral community rather than the individual (van Luijk, 1990).
According to Charkham (1995), the focus on consensual ethics can be tied to the social market philosophy tenets and the stakeholder system of corporate governance in Germany. There is an issue regarding a possible convergence to the US style business models that are formalized (Martin, Resick, Keating, & Dickson, 2009). Ulrich et al. (1996) conducted to ascertain the convergence theory. The results revealed that respondents recognized the need for business ethics, they were reluctant to institute formal programs and CEOs pointed to the continued existence of a traditional company ethos. In this sense, Germany’s ethical behavior is taken as going beyond mere compliance and cannot be legislated for (Palazzo, 2002). Therefore, any business and manager intending to "set up shop" in Germany should first comprehend all the ethical aspects and perspectives.
Social Structures and Organizations
During the East and Western German separation the West went ahead and joined the European Union and was one of its founding members. Reunification of the two regions resulted into the becoming part of the union. The creation of this union led to the reformation of Germany’s social structure, and acted as an economic springboard as the disparities between East and West Germany were reducing and creating room for international trade. Focused on rules oriented to the market, the country will achieve greater prosperity as it is evident in research done on the country’s economy (Lumley, 1995).
In Germany, families are structured as in the United States with any business operations required to respect the structure of the family (Lamsfuß & Wallau, 2012). More women are making inroads into business and climbing up the corporate ladder to occupy senior positions; however, on a comparative scale, the country is still lagging behind in regards to women empowerment and provision of equal opportunity in this area compared to other EU countries. Moreover, men predominantly remain the breadwinners within their families (Holst, 2006). Germany’s corporations are dominated by engineers who are occupying almost all senior positions in companies and traditionally, very few women study engineering which further worsens the problem. However, introduction of new statutes by the EU and the demographic changes occurring in Germany, changes are expected in this area.
Today in Germany, there is a large number of community radio stations encouraging and supporting the creation of social groups despite the EU having considerable influence. Germans are today relying on "free radio" as part of the German culture and a medium of expression (Pinseler, 2008). Free radio gives the people a voice by allowing them to air their opinions, grievances regarding the pertinent issues in the society. At a local level, it allows the formation social groups that fight for the human rights (Pinseler, 2008). The EU resembles policies and practices as contained in the 50 states of the United States as it has 27 member states having democratic and secular governments, independent judiciaries, and corresponding to personal freedoms (Satterlee & Robinson, 2008).
Manners and Customs
The culture in Germany is relatively homogenous. The Eastern and Western parts of the country’s reunion introduced new cultural aspects as Germans from the East during the two generations of communist rule adopted different values. However, it is the influences from Western Germany that prevail in the business life (Katz, 2007). Business relationships are moderately important and not a prerequisite for initial business interactions as the counterpart may be intending to know you better as business progresses. Germans are cautious and reserved and at the same time proceed slowly in developing business partnerships (Katz, 2007). The private and business life of Germans are separate, therefore, making it possible to develop strong relationships with business partners, however, this might take a while and any attempts to speed-up the process raises suspicion. For Germans, honesty is crucial, and it is easy to lose their trust. They are often open and may tell the partners some unpleasant truths as an indication that they value the relationship and expect the same level of candidness (Katz, 2007).
They commonly shake hands and men are expected to wait for the women to extend their hands before shak...