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Electronic copy available at: http://ssrn.com/abstract=1600949
European J. International Management, Vol. 1, No. 3, 2007 16
7
Copyright © 2007 Inderscience Enterprises Ltd.
Towards identifying the unity in European corporate
cultures
Nigel Holden
Department of Strategy and Innovation,
Gr262, Greenbank Building,
Lancashire Business School,
University of Central Lancashire,
Preston, PR1 2HE, UK
E-mail: njholden@uclan.ac.uk
Gerhard Fink
Europainstitut Vienna University of Economics
and Business Administration,
Althanstrasse 39-45, 1090 Vienna, Austria
Fax: +43 1 31336 758
E-mail: Gerhard.fink@wu-wien.ac.at
Vlad Vaiman
FH JOANNEUM,
University of Applied Sciences,
Eggenberger Allee 9-11, A-8020 Graz, Austria
Fax: +43 316 5453 9 6827
E-mail: vlad.vaiman@fh-joanneum.at
Biographical notes: Nigel Holden is Professor of Cross-Cultural Management
at the Lancashire Business School, UK. He has previously held professorial
appointments in Denmark and Germany and is a Visiting Professor at the
Vienna University of Economics and Business Administration and the
Danube University in Krems, Austria. His publications embrace cross-cultural
management, knowledge management, international marketing, management
change in Russia, marketing in Japan and intercultural business
communication. He has co-edited special issues of several journals, including
Academy of Management Executive and Journal of Managerial Psychology and
given more than 100 Guest Lectures and keynote addresses in several European
countries as well as the USA, Japan and Taiwan.
Gerhard Fink is Jean Monnet Professor for Applied Micro-economics
in European Integration and Director of the Doctoral Programme at
Wirtschaftsuniversität Wien. He was Chairman of the Business Faculty
at Wirtschaftsuniversität Wien during 2001–2002 and Director of the Institute
for European Affairs (Jean Monnet Centre of Excellence) during the period
1997–2003. He is author or co-author of about 200 publications in learned
journals and has authored or (co-) edited about 15 books; in 2005 he was
Guest Editor of the Academy of Management Executive, one of the leading
management journals in the USA.
Electronic copy available at: http://ssrn.com/abstract=1600949
168 N. Holden, G. Fink and V. Vaiman
Vlad Vaiman holds a Doctorate in Business Administration from the University
of St. Gallen in Switzerland. His academic experience includes teaching
undergraduate, graduate, and executive courses in top universities around the
world, such as Helsinki School of Economics (Finland), University of Graz
(Austria), Oslo University College (Norway), California Lutheran University
(USA), Danube University of Krems (Austria), etc. His research interests
include issues of both organisational behaviour and international management
and particularly, matters of cultural differences and their influences on
leadership, motivation and talent management in multinational companies.
He is also an active member of the International Association of Management
Consultants and its Canadian chapter.
1 Introduction
In the first sentence of the introduction to the very first issue of EJIM we noted that
European management was exceedingly difficult to define. Much the same can be said of
the notion of ‘corporate Europe’. But, if something defies definition that is not the same
as saying that it can not be clarified. In this introduction, we attempt to clarify the term
corporate Europe in such a way as to set the scene for the five contributions in this issue.
Corporate Europe is a term that can appear to embrace too much, but be at the same
time meaningful. We are on safe ground if we say that corporate Europe refers to aspects
of business and economic life in the context of the European Union and its antecedent
forms that can be traced back to the Common Market as ushered in by the Treaty of
Rome in 1957. Historically speaking, however, an interesting point is that awareness of
Europe as distinctive corporate landscape was triggered by external rather than internal
factors. The first of these factors concerns the USA. It was in 1925 that US President
Calvin Coolidge famously declared: “The business of America is business”. And in many
ways business – especially big business – has remained one of the great defining features
of US life.
In the Europe of 1925, still recovering materially and psychologically from the
ravages of the First World War, it would have been inconceivable for a European
political leader to have pronounced: “The business of Europe is business” – not least
because two leading European countries, France and Great Britain, were more concerned
about their favourable economic links with their far-flung empires than anything
approaching a pan-European economic entity. Indeed such a declaration, if made today,
would probably not accelerate the European heartbeat. In the 1920s there were economic
liberals in Europe who did dimly envisage a European economic order. An articulate
proponent was the remarkable interwar German Chancellor and Foreign Minister – and
Atlanticist – Gustav Stresemann (1878–1929).
But it took yet another catastrophic war to significantly move Europe towards the
path of economic union. As of 1945 European politicians grasped that Europe could only
survive through partnership between France and Germany. Winston Churchill – another
Atlanticist – declared that conviction in Zürich in 1946 in a famous speech which
“marked the opening of his campaign for a united Europe” (Jenkins, 2001). On 9 May
1950, Robert Schuman made his famous declaration which is considered to be the
‘birth certificate’ of the European Union and in 1952 under the Treaty of Paris Jean
Towards identifying the unity in European corporate cultures 169
Monnet became the first president of the European Coal and Steel Community (ECSC),
which we may regard as the EU’s founding organisation.
Yet Britain, after it became a member of the EU (then the European Economic
Community) in 1973, never felt at home among its European partners (Schubert, 2003).
It is then ironic that British companies should be heralded in 2007 as ‘pioneers of
globalisation’ thanks to the UK’s more US-like business culture and finance system in
terms of transparency (The Economist, 2006). On the matter of transparency it should be
mentioned that the sort of executive cover-up that was behind the Enron scandal and
other large-scale business failures has triggered a vigorous discussion among scholars
and practitioners in the USA about business ethics and governance practices. In his
posthumously published cri de coeur: “Bad Management Theories are Destroying Good
Management Practices” Ghoshal (2005, p.81) demanded to know: “Why do we not
fundamentally rethink the corporate governance issue”. We should note that quite a
few of the measures proposed in that impassionate discussion used to be standard
in European countries during the 1980s and early 1990s, but were given up to foster
global liberalisation of financial markets and corporate expansion across the Atlantic.
After the Second World War the USA emerged as the supreme victor, “as beacon
and … as crusader” (Kissinger, 1994) for liberty to those in the free world. Until the
Vietnam War (1965–1975) and even for a good many years after that conflict, the USA
was admired for its energy, optimism and wealth. It was of course US corporations that
were the great drivers of this wealth. In a world in which no other country gloriously
idealised business and regarded management as a science, it was only too easy for
US people – and perhaps not only for US people – to believe that the US way of doing
business and managing corporations both great and small were the keys to all other
countries’ economic good fortune.
So, it was that US people and internationally scattered admirers latched on the much
disputed notion of convergence, according to one shibboleth of which it was logical for
firms of all countries to pursue efficiency based on management principles. The USA was
seen as the shining model, though US people were to learn then that the US model might
actually be an unwanted divergence from the development paths of other countries even
in the free, non-communist world. One such country was France, whose fears of
Americanisation – and European apathy – led to the publication of Servan-Schreiber’s
(1967) iconic book le défi Américain.
But this idea of convergence qua Americanisation is by now out of date. Today, just
as Pugh and Hickson (1996) expressed it more than ten years ago “The subject of
organisational convergence is concerned with how far organisations have travelled along
a path to global convergence in operations and management”. This means that European
firms cannot just benchmark themselves against the best US corporations. They must also
do so against the backdrop of globalisation, that Scylla and Charybdis of economic
integration and national responsiveness (Bartlett and Ghoshal, 1998). As it happens,
European firms are exceptionally strong in the globalisation stakes. In a league table
compiled by Fortune not less than 16 out of the world’s 30 largest corporations by
revenue in 2005 were headquartered in Europe (The Economist, 2007).
Until, let us say, the mid-1970s, the word management virtually denoted the USA:
the USA with its auto giants, its renowned business schools, its celebrated industrialists.
While one could at that time talk of US management, there was no concept of
European management, let alone British or French or Spanish management as
culturally distinct forms. Referring to the 1970s, Thurley and Wirdenius (1989) noted:
170 N. Holden, G. Fink and V. Vaiman
“if ‘British management’ or ‘German management’ meant little, ‘European management’
meant even less”. But, as of mid-1970s things began to change. Japan emerged, to use
US historian John Dower’s crisp phrase, “at the cutting edge of management and
technology” (Dower, 1986). By the early 1980s Japanese corporations were not only
sweeping world markets with their cameras, cars, motorbikes and electronic gadgetry, but
were also setting up wholly owned subsidiaries, manufacturing plants and eventually
research centres in the USA and Western Europe. Japan after the USA was the second
major external factor to influence not so much the nature of European corporate culture
as Europeans’ own perceptions of it.
Japan emerged as the most intensely studied nation in the annals of management
education and research with respect to the impact of culture on management thought
and behaviour. The Dutch commentator von Wolferen (1989) was right to say that
“Explaining Japan to the world has spawned a formidable subindustry of writing and
publishing”. (In the way of the world this subindustry, like many other industries, has
moved to China). Wherever in their resplendent 1980s the Japanese set foot, they
would consciously bring “the unique Japanese management style”, declaring it to be
different from the US management style, the British management style, the French
management style and so on. The Japanese then were referring to different styles of
management in Western Europe before Europeans did. But these different European
styles did not constitute anything approaching a perceived Europe-wide phenomenon.
More importantly, perhaps, the Japanese introduced a style of management that
was visibly different in approach and execution to the US model. Worse, from a
US perspective, it directly rivalled it on a global basis.
But it was not just the Japanese who made Europeans more aware of their national
management styles. In 1980 a book was published, which more than any other work to
date, has put management and culture both on management scholars’ intellectual agenda
and on practitioners’ own list of concerns. Hofstede’s book Culture’s Consequences, so
admired but later subjected to more and more scholarly criticism, made it possible for
Europeans as managers and as employees to realise that their entangled cultural and
linguistic differences were distinctively related to economic behaviour on both the
individual and the corporate levels.
On the political front meanwhile the Schengen Agreement of 1985 facilitated the
systematic abolition of border controls. This was followed by the Single European Act
in 1986 and the Maastricht Treaty of 1993, which gave birth to the European Union,
helped to create a business environment in Europe in which corporations became
challenged by the issue of ‘unity within diversity’ in their way of conducting business
and running companies. The year 2002 saw the introduction of the Euro, arguably the
EU’s most successful measure to integrate the European economies.
In passing we should note that the study of corporate culture was stimulated by the
publication of Peters and Waterman’s (1982) In search of Excellence and of Deal
and Kennedy’s (1982) Corporate cultures in the same year. Since then there has
emerged in Europe a notable tradition, which has attempted to determine to what extent
national culture and corporate culture influence each other and account for significant
differences in performance or even underperformance (see Koen, 2005 for an overview).
The divergence among national cultures and possible confluence among corporate
cultures, however, weakly or strongly they were perceived to interact, gave rise in the
mid- and late 1980s to a debate about the European management. More specifically
there was a quest for the so-called Euro-manager. But it is a sign of the times that,
Towards identifying the unity in European corporate cultures 171
if today you insert ‘Euro-manager’ into Google, the first hits refer to video games
(two years ago the first hits concerned management of the Euro currency).
In the 1980s, European companies found themselves being positioned in terms of
management style in a continuum with the USA at one extreme and Japan at the other
(Calori and de Woot, 1994; Wilkinson, 1990; see also Thurley and Wirdenius (1989).
However, as Thurley and Wirdenius (1989) noted, Europe’s various dilemmas
about management at the macro- and micro-level were not going to be solved “by the
wholesale acceptance of US ‘enterprise culture’ or Japanese-type company commitment”.
These authors recognised that there had to be a reappraisal as to what European
management actually was in the light of the ever closer economic and political union in
(at the time) Western Europe. The debate is still going on but with a major difference: no
such appraisal can be undertaken without reference to globalisation that was not on the
agenda at the end of the 1980s.
In the inaugural issue of EJIM the renowned scholar Ikujiro Nonaka (Holden, 2007)
noted that he – a non-specialist on European business – also saw Europe at this
notional midpoint between the USA and Japan. Yet, in a recent survey The Economist
has declared that “European business has improved out of recognition” even if “From
microchips to microbes, poor old Europe seems to trail in the USA’s and Asia’s wake”.
Asia, note, no longer Japan as Asia’s sole champion. Incidentally, it was noted more than
ten years ago that Britain itself was a midway point between Europe and the USA with
respect to management style (Calori and Dufour, 1995). Many would argue that this still
remains the case.
In 1990, Hofstede and coauthors published a paper in Administrative Science
Quarterly concerning organisational cultures (Hofstede et al., 1990). These scholars
proposed that while there is no consensus about its definition,
“most authors will probably agree on the following characteristics of the
organisational/corporate culture construct: it is
• holistic
• historically determined
• related to anthropological concepts
• socially constructed
• soft
• difficult to change.”
According to Hofstede, it is the founders of firms who establish corporate cultures.
Thus, among the largest firms in the world we might find a variety of styles of corporate
cultures influenced by the founder’s ideas, personality and their national cultures.
But, the driving forces of international markets, globalisation and of EU integration and
enlargement may induce shifts in those corporate cultures. While most charismatic top
managers do believe that their strategic decision to invest abroad would be the most
positive exception to the otherwise observed mixed evidence (Porter, 1987, Meschi and
Metais, 2006), Hofstede emphasised in the EJIM inaugural issue that changing corporate
cultures is often taken too lightly (Hofstede and Fink, 2007).
Yet, it surely remains the case that the study of corporate culture in Europe
can not entirely be divorced from comparison with the USA and Asia let alone
from intra-European comparisons. This is just one of many factors that make the
172 N. Holden, G. Fink and V. Vaiman
investigation of European corporate culture absorbing if elusive and certainly
frustrating. This conviction in turn bears out the observation of two leading US scholars
that, from whatever vantage point we survey Europe, “its diversity is overwhelming”
(Puffer and McCarthy, 2005). However, it may be that non-Europeans are more
overwhelmed than Europeans, for whom diversity is part of everyday life. But diversity is
never static. It confronts Europe again in a new guise. This time it concerns an issue that
is touched upon briefly by the contributors of this issue of EJIM. This concerns the
accession of several former socialist countries into the EU. The two waves of accession
in 2004 and 2007 created more than 100 million new EU citizens and widened market
opportunities dramatically for some (there are millions for whom the material benefits of
EU membership have yet to happen).
But, not only is there a large disparity in the overall standard of living between the
‘old’ EU countries and the new entrants from Central and East Europe, but there is also
ample evidence that it has taken the former socialist countries far longer than anticipated
on either side of the old Iron Curtain to absorb and apply market-economy concepts of
governance and accountability. Hence, when we talk about corporate culture in Europe,
any discussion must take account of the fact that there is in the EU at large a sizeable
region in terms of population and potential for economic development that forces us for
the time being to be aware that we still live with the consequences of the postwar division
of Europe. It is being played out daily in thousands of former socialist enterprises and
even new businesses. A recent Economist survey of Poland noted that even in a
country that is said to be among the most successful on the path to the market-economy
system, the idea of being a boss is “still sitting in a big office being rude to people”.
This attitude is not confined to Poland among the former socialist countries. Thus, a wide
interpretation of European corporate culture must perforce embrace the evolution of
market-economy thinking and practices in countries that are in the process of catching up
with the older EU member states.
It is against this background that we introduce and commend to our readers the
contributions to the third issue of EJIM. We have pleasure in publishing the paper of
Lilach Sagiv and Shalom Schwartz, as it provides many interesting insights into the
sources of societal influence on the organisational culture, which may be used as a basis
for further research in this area. In particular, this paper examines how the cultural values
of the society, in which an organisation is nested, affect the cultural values of the
organisation. Three key sources of influence on the cultural values of organisations are
discussed:
• the value culture in the surrounding society
• the personal value priorities of organisational members
• and the nature of the organisation’s primary tasks.
The authors contend that
“the societal culture influences organisational values directly and also
indirectly through its impact on members’ values and on the nature of
organisational tasks.”
Cultural diversity, they argue, is both a challenge and a source of problems for
organisations; but value heterogeneity also brings with it opportunities and advantages
including greater creativity, flexibility and more diverse resources to deal with rapidly
Towards identifying the unity in European corporate cultures 173
changing environments. Understanding value-based cultural differences and realising
their implications for potential conflicts within and between organisations is an important
first step towards developing ways to “cope with and take advantage of value
heterogeneity in organisations”.
In a conceptual paper, Wolfgang Mayrhofer deals with one particular segment
of international management research: European comparative management research.
The paper seeks to clarify the potential scope of such research and presents a framework
for a future research agenda in this field. After setting the scene by outlining what
European comparative management research means to both academics and practitioners
and indicating the uniqueness of the European context and recent global trends affecting
management, the author outlines the steps towards a meaningful research agenda by
identifying major building blocks of such an agenda and appraising their potential fit into
the proposed framework.
By combining three basic building blocks – core themes, units of analysis and
criterion of analyses – the paper outlines a three-dimensional framework that allows for
systematisation of past and future research efforts in the area of European comparative
management. This research framework can, according to Mayrhofer, be used in different
ways. For example, it can be used to sort and systematise existing research efforts
and results in order to diagnose their deficiencies and pinpoint uncharted territories.
The framework can also be used to locate new research topics and major themes as well
as indicating future efforts towards building a systematic research agenda in the field.
In the next contribution, Markus Pudelko and Anne-Wil Harzing reflect on whether
the term ‘European Management’ has real validity, or whether national differences
between management practices within Europe render this concept useless. After decades
of the virtually unchallenged US monopoly in setting the agenda for management
research and practice, “we might currently be at a turning point”. They argue that the
US economy is losing its grip on worldwide economic domination, while the European
and Japanese economies are picking up again and countries like Brazil, Russia, India and
China are set to shake up the comfortable supremacy of Western powerhouses. In this
Europe or at least selected European countries are strong contenders as a source of
inspiration in management not only within Europe itself, but also beyond its borders.
Pudelko and Harzing highlight Europe’s balanced, sensible and partnership-oriented
approach as one possible advantage that Europe has over its competitors in this respect.
The authors also point to Europe’s ‘inherent pluralistic set-up’, meaning the ability to
bring together opposite points of view and approaches while dealing with inconsistencies
in an effective manner. They argue that Europe’s internal linguistic and cultural
diversity, which far outweighs that of the USA or Japan, is a decisive factor in this
regard. One should anticipate that European management practices will become more
influential worldwide and the subject of considerable scholarly research.
Wilson and his fellow authors introduce a newly established pan-European research
project that investigates business responses to various institutional changes that have
occurred in Europe within the past 50 years. The aim is to analyse the causes and
consequences of these transformations and address some significant issues, such as
the identification of common corporate developments across European countries and
existence of a common European corporate identity.
The authors use the Strategy-Structure-Ownership-Performance (SSOP) approach in
order to unravel some of the most complicated developments in European business over
the last half a century, paying special attention to the degree of internationalisation and its
174 N. Holden, G. Fink and V. Vaiman
impact on performance. The authors claim that this approach will help to provide the
basis for much richer insights into the nature of European business evolution, adding
considerably to our knowledge base in terms of European management research,
education and corporate governance.
By way of contrast Chris Brewster provides a European perspective on human
resource management. The author adopts a tentative approach to the issue, striving
to reach audiences at both sides of the spectrum – those who believe in universality
of HRM as a science and those who believe that national and sub-national differences
within Europe play a more significant role than distinctions between Europe and
other regions of the world. In doing this, the paper investigates the growing field of
comparative HRM by exploring some of the conceptual methods used in studying the
topic and the various explanations for national differences that they advocate.
The paper also explores some important issues that make HRM in Europe clearly
distinctive from that of other world regions. This is masterfully done by
• examining the notion of Europe itself and the differences within it
• considering whether the variations within Europe and between Europe and other
countries are actually diminishing over time as a result of globalisation.
Brewster, whose aim is to identify whether there is such a notion as a European
perspective on HRM, argues that Europe offers a more multifaceted and critical concept
of human resource management.
In the concluding contribution Wilhelm Barner-Rasmussen, Rebecca Piekkari and
Ingmar Björkman explain the dynamic phenomenon of headquarters relocation. Drawing
on a multiple case study of Finnish multi-national corporations, the authors hypothesise
that headquarters relocation is an outcome of six key drivers, each involving pragmatic
and symbolic dimensions. Furthermore, the authors identify a diversity of relocation
arrangements such as direct, hidden, full, partial and virtual. Based on evidence of
extreme mobility in terms of repeated relocations and virtual headquarters, they argue
that under specific circumstances headquarters may be highly mobile. In general terms,
this paper aims at addressing a research imbalance created by the fact that management
has largely overlooked the issue of HQ relocation.
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