The EU, management and culture

I've been living in the United States of America for two years this month. I've been very lucky in being able to travel a bit and see different places in this nation, and it occurred to me how easy it is to cross State lines. Even though these States are comparatively huge in size, everything is the same - the language, the currency, available shops and restaurants. That's very different from where I grew up.

European countries’ leaders first started dreaming about  a “United States of Europe” in the 1950s, when the Treaty of Rome was drafted in 1957 and implemented in 1958. Following about 40 years of more plans and organizations and contracts to bring the European states closer together - for example, the European Coal and Steel Community in 1951 consisting of Germany, France, Italy and the Benelux countries - the Treaty of Maasricht in 1992 proved to be one big step forward in the direction of the European Union (EU) we know today. The Treaty of Maastricht “provides for a single European currency, common citizenship, common foreign and security policy, a more effective European Parliament, and a common labor policy.”

The Single Market has guaranteed the free movement of goods, services, capital and people since 1993 and was described as “the Union’s proudest achievement.” The implication for multinational companies now was to gauge what opportunities the new border-free Europe could offer them. The free movement of people in particular opened up new horizons regarding the staffing of European subsidiaries. Before 1992, work permits were needed and often were not easily attained. Nowadays, however, the executives of multinational corporations (MNCs) can decide freely whether to employ locals, send over expatriates or even third country nationals. I think it's interesting to remind ourselves that something we take for granted has only really been in place a very short time.

International trade and economic development (for example, the NAFTA and Single European market) have necessitated worldwide managerial operations. The number of multinational corporations has increased, as has the education offered for management and the use of information technology. Managing organizations seems to be a universal practice but approaches to management differ from one country to another. This fact bears the question whether management is culture free or culture specific. So far, two theories have dominated that discussion.

The Convergence Theory of the 1950s and 1960s promotes the universal application of management theory and practices because of technology and management education. Management is seen as a function and a set of techniques that can be used everywhere. The Divergence Theory argues against the transfer of management theory and practices due to the influence of the culture of the people practicing management. In other words, not all strategies that are successful in America will work in Japan, and vice versa. Furthermore, it argues that management thinking and practice reflect the level of economic development of the country in which they occur and that it is implemented within different legislative frameworks.

According to the Convergence theory, everyone could learn how to manage organizations and even the poorest countries should be on the same economic level as the rest of the Western world. The European Common Market was built on this assumption, but had to recognize the intractability of national differences. As all countries in the world cannot be considered economically equal yet, the Divergence theory appears convincing in that management theory and practice are culturally bound and reflect the ideological and political interests, as well as the level of economic and technological achievements of the people involved.Management techniques and models can be learned, but they are culturally bound, although not static, in the way they are interpreted and implemented in the different cultures.

Culture and especially communication preferences can be differentiated between high context (HC) and low context (LC) cultures. Context, in this case, explains “the information that surrounds an event; (that) is inextricably bound up with the meaning of the event." In other words, which bits of information are necessary for effective communication to occur but taken for granted, i.e. not explicitly explained between sender and receiver.

The culture differences within European countries have been studied before by writers like Trompenaars and Hampden-Turner (1997); Black and Mendenhall (1990), and Geert Hofstede (1980), whose work is quoted in many a management textbook. He conducted a study into corporate and national culture in 1980 and found four dimensions culture could be identified by:

Power distance, which can rate low to high and measures the “extent to which the members of a society accept that power in institutions and organizations is distributed unequally;"

Uncertainty avoidance, which can rate from weak to strong and measures a society’s fear of the unknown;

Individualism vs collectivism measures the degree to which a society considers that everyone has to look after himself or herself or is part of supportive extended family units; and

Masculinity vs femininity, which measures gender roles in society and whether they are more stereotypically male oriented: for example on materialism, profit and strength; or more stereotypically female oriented: for example on cooperation and quality of life.

Hofstede's work has been somewhat called into question more recently and called unrepresentative due to the size of his survey. Trompenaars and Hampden-Turner, on the other hand, continue their work and I will use another article to explain their seven dimensions in further detail.

Europe means many things to me, and I treasure the experiences of driving for a couple of hours and finding myself in another country, being greeted by a new language, dealing with different cultures. Hey, I even enjoyed collecting all the different coins and bills, but would I want to go back to them? No. Long live the monetary union. What does the Single Market or being able to cross US state lines mean to you? Do you realize what an achievement it is to be able to move about freely, have established import and export relationships, and the opportunity to look for jobs across borders? When you feel stuck and think you have no options, have you really considered everything?

Til next week, have a good one! Thanks to for the free pic.


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 Image by bitospud, flickr, Creative Commons license