Cultural Pitfalls in International Business Development and ...

After having had a look at decision making processes in Turkey, Italy, and Spain in the previous part of this article, we?ll move further north now.

Going over the border to France the book ?Managing Cultural Differences? by Moran, Harris and Moran gives an impression about the corporate decision making process:

?The lesser emphasis on delegation of responsibility [in France] limits accountability and contributes to a more rigid organizational structure. As a consequence, decisionmaking is more centralized in French companies, and it may take longer before decisions are reached and applied.

This may be a source of frustration for foreign executives (especially lower- and middle-management executives) who are working with French executives from a comparable level.?

Foreign business people also report that there is a marked divide between Paris and the rest of the country concerning decision-making power of middle managers; companies in Paris tend to be more influenced by modern management techniques. They also report that younger French managers, especially those who had spent some time abroad, tend to get to the core of the matter more directly and quickly than older executives.

The situation changes slightly when you go to Belgium or the Netherlands.

In Belgium fast decision making will depend on whether you negotiate with a Walloon or a Flemish company.

Companies with flat hierarchies, participative management and consensus decisions predominate in Flanders; empowerment is important and your meeting partner may have enough authority to decide many things on the spot. Walloons prefer formal organisations, clear hierarchical structures, and directive leadership which implies that rank and function are important; decision processes may be prolonged if these do not correspond with the nature and weight of the object of negotiation.

The Dutch have a long history of being risk-taking, seafaring merchants with a marked business acumen (?Nederlandse Handelsgeest?) and worldwide contacts. So it is not really surprising that hierarchies are flat and that executives usually have considerable decision power although your counterpart might prefer to involve colleagues and superiors in order to arrive at a consensus decision.

Leaving the continent for a short stint to the UK and Ireland, we?ll find two different business cultures.

The British have had a global impact in the past, then have retreated to their island kingdom and some remaining small territories, and during the same period had an influx of people from their Commonwealth, all adding to a multicultural society which ultimately has had its impact on a diverse business life. Regional differences add to this.

In general, British companies tend to be structured comparatively hierarchical with a noticeable division in departments with own fields of responsibility.

This may make it easier to arrive at certain business development agreements provided that the BD department is vested with enough authority for the matter under consideration.

The Irish work environment is hierarchical and sometimes even dictatorial which is why business negotiations should be conducted at a high level.

Early negotiation stages can be accompanied by a certain superficiality. Negotiations are often conducted in a tenacious manner but decisions are frequently made intuitively and fast if you are dealing with the right (leading) person. If not, decisions will probably not happen.

At partnering events it is important to know your counterpart?s position in the company; if it is not a leadership position, a meeting may not reach beyond information exchange and any verbal agreement should be understood as tentative until the negotiation is continued at a higher level.

Back on the continent again, we take a look at Germany, the largest European economy.

Although published reports on German economic activities suggests otherwise, the vast majority of the German GNP is delivered by medium-sized companies, either limited liability companies owned by several private investors or shareholders and run by an employed managing director, or family-owned and run by a member of the family.

Many of these medium-sized companies have an astonishing worldwide presence which implies that managers responsible for geographic regions or for a particular product are in the driver?s seat when it comes to their area of responsibility, often because there is no one else around who would know better. This means that the top management frequently has no choice but to delegate responsibilities top down.

On the other side, German managers are quite often fanatics of detailed and meticulous planning and implementation. This excludes quick shots. The authors Alexia and Stephan Petersen say it all on the Executive Planet (http://www.executiveplanet.com/index.php?title=Germany):

?Decision-making in German business culture is slow, protracted, and every detail relating to your proposal will be painstakingly examined. Therefore, do not expect substantial decisions to be made spontaneously at the table. However, once a decision is finally made, it is extremely difficult to change.?

The situation is not dissimilar to what you?ll find in Scandinavia and Finland and what is described here for Sweden may well go for the entire area. Hierarchies in Sweden are flat and upper management usually makes a decision upon the recommendation of subordinate specialists who are treated like colleagues whose opinion values highly. That means even if the VP Business Development should not be present at a meeting you are dealing with managers who ultimately determine or greatly influence the decision. But decisions sometimes take time.

To complete the roundtrip through Europe, we will have a look at Poland.

In Poland, the course and speed of a negotiation is determined by high-ranking management who also has the power of decision although they leave it to specialist personnel to do the detail work. This implies that you will rarely meet a decision maker at a partnering event but a knowledgeable specialist who will try to find answers to all questions and work out the details required for a decision. The decision-making process itself is said to be slower than in North America or Germany, but at euroPLX Meetings we have seen decision makers accompanied by specialists, thereby expediting the process.

In conclusion we may say that the heterogeneity of European culture is reflected by a corresponding heterogeneity of business models. Although it might be an undue generalisation one could say that management hierarchies flatten out the more you move from south to north, accompanied by increasing responsibility and decision power of the middle management which does not necessarily mean much faster decision making. Family owned companies anywhere keep the decision power with the (often personally liable) patriarch.

by Dr. Norbert Rau, RauCon business development

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