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Culture's influence on business as illustrated by German business culture.

It is still quite common to hear business people assert that business is the same all over the world because all companies need to operate at a profit. In Germany, many business managers are still convinced that an excellent product sells itself. And indeed, if one were to look at the economic statistics, one would tend to assume that this is the case because German companies continue to be very successful with their exports. In fact, Germany has been and currently continues to be the leading export nation in the world (DIHK, 2008, August 18). One would, therefore, be inclined to agree with German business managers that culture is essentially irrelevant in the world of business today. But closer inspection reveals that the influence of culture does play a role in the world of business; a role that is often not apparent at first glance because the influence of culture is often indirect, hidden. Even if the root cause of an existing problem is culture, it is often not perceived as such because other factors are used to provide an explanation for these difficulties (Harris & Moran, 1996; Hofstede & Hofstede, 2005; Trompenaars & Hampden-Turner, 1998). The failed DaimlerChrysler merger may serve as a prominent example: While U.S. media cited cultural differences as the primary reason for the failure, even quoting Zetsche, DaimlerChrysler's CEO, in this context (Edmunds Auto Observer, 2007, May 17), German media explained the failure either due to costs (Spiegel Online, 2007, May 14; Capital, 2007, March 3) or disagreement on car models (Capital, 2007, March 3). While the U.S. media are somewhat sensitized to the topic of intercultural communication, German media are typically not; case in point, even though the EU had officially proclaimed 2008 to be the "Year of Intercultural Dialgue," Gemany proclaimed 2008 to be the "Year of Mathematics." This clearly demonstrates that if one is not sensitized to a particular subject, one will not consider it as a factor in the analysis of phenomena and instead consider other explanations (Hinner, 2005).

For most people culture is not an apparent issue if the participants appear to be fairly similar to each other (Chen & Starosta, 1998; Gudykunst & Kim, 1997; Samovar et al., 1998). It seems that people need to associate culture with something tangible and visible to realize that differences do exist. And indeed, culture is exhibited through the visible artifacts it creates, including language (Gudykunst & Kim, 1997; Klopf, 1998; Samovar et al, 1998). So when people speak different languages or dialects, it is easier for most people to perceive a (linguistic) difference. However, in today's global economy many international business partners are fluent in English, wear similar business clothes, and often work in similar office environments so that "surface" differences tend to blend into a similar style (Harris & Moran, 1996; Hofstede & Hofstede, 2005; Samovar et al,1998; Trompenaars & Hampden-Turner, 1998). But culture is more than external appearance and mere artifacts. Culture also includes sociofacts and mentifacts that are not always readily apparent to the observer but are expressed by the actions and behavior of people as well as in the thinking and decision making process (Chen & Starosta, 1998; Gudykunst & Kim, 1997; Klopf, 1998; Martin & Nakayama, 1997; Samovar et al, 1998). These "hidden" differences, though, often emerge and cause problems in the day-to-day routine of constant interaction (Hofstede & Hofstede, 2005; Klopf, 1998; Samovar et al, 1998).

If, however, the external differences are striking, then the participants of an intercultural encounter will probably expect to encounter difficulties since these differences are perceivable (Chen & Starosta, 1998; Gudykunst & Kim, 1997; Klopf, 1998; Martin & Nakayama, 1997; Samovar et al, 1998). But one does not expect to encounter difficulties if there are few external differences and/or the actors appear to exhibit similar behavior. All the more surprising then if differences are encountered when least expected. Because these differences are not anticipated, they become all the more surprising due to their unexpectness. And this is the crux of culture: People tend to associate cultural differences with exotic differences, and few expect culture to play any role in modern international business relationships (De Mooij, 2007; Harris & Moran, 1996; Hofstede & Hofstede, 2005; Trompenaars & Hampden-Turner, 1998); especially if two Western cultures are involved in an international business transaction as is, for example, the case with Germans and U.S. Americans who share a long tradition of contact and interaction.

Culture is deeply rooted in history and historical developments, and it is embodied and reflected in all aspects of a society so that business culture mirrors its macroculture as well (Chen & Starosta, 1998; Gudykunst & Kim, 1997; Hofstede & Hofstede, 2005; Klopf, 1998; Martin & Nakayama, 1997; Samovar et al, 1998). That is why many international corporations had to adjust their products to local tastes. The American fast food restaurant McDonald's, for example, includes beer in its program of beverages in Germany; something it does not offer to its customers in the USA. And Coca Cola adapted the taste of its soft drinks to German taste buds; in particular, Fanta and Cherry Coke (Hinner, 1998). The average Bayer aspirin tablet sold in Germany has a higher dosage than in the USA which, in part, explains why aspirin is usually only sold in pharmacies in Germany (Hinner & Rulke, 2002). These product differences rest in cultural differences (DeMooij, 2007; Hinner, 1998, Hinner, 2004; Hinner & Rulke, 2002).

That is why this paper looks at how a country's culture influences and, to some degree, determines the business culture of that country. After all, business people are also members of a society at large and its culture and, thus, affected by the same cultural factors that influence all other members of that society. In this analysis, Germany shall serve as an example for comparison and contrast with American culture to demonstrate how two relatively closely related cultures are actually quite different from one another in how their businesses are organized, how their business people interact with one another, and how they solve problems. The examination of German culture will reveal many particulars of German culture and, thus, help explain the artifacts, sociofacts, and mentifacts of German business culture.

German culture

As noted above, culture is rooted in and influenced by history. Germany's location in the heart of Europe has placed it in the center of conflict for a very long time (Herrmann, 1988; Jankuhn et al, 1983; Zentner, 1980). The conflicts go back to classical antiquity and only stopped recently with the Fall of the Berlin Wall in 1989 (Facts about Germany, 1996). These ceaseless wars and the resultant chaos are often cited as a reason for the great desire to avoid uncertainty in Germany and the need to establish order (Lord, 1998). Consequently, many rules and regulations were created in Germany in order to reduce uncertainty as much as possible (Hofstede & Hofstede, 2005). It is generally assumed in Germany that these rules and regulations have proven their worth because they help minimize risks in advance which, in turn, leads to the successful accomplishment of the task at hand (Schroll-Machl, 2002).

History of political disunion

Germany has also a long history of regional autonomy (Facts about Germany, 1996; Herrmann, 1988; Jankuhn et al, 1983; Zentner, 1980). In fact, a unified country did not exist until 1871 which was divided again into two separate states for slightly more than 40 years after World War II (Facts about Germany, 1996, Herrmann, 1988). In other words, Germany has only been unified as country for less than one hundred years. With such political disunion, Germany has a very different tradition than neighboring countries like France or Denmark, for example (Zentner, 1980). Over time, this strong regional diversity led to many regions being associated with specific characteristics. For example, Swabians, who live in Southwestern Germany, are said to be frugal, Bavarians, who live in Southeastern Germany, are said to be jovial, and Northern Germans are said to be taciturn. The long history of political disunion also helps explain why to this day German companies have fairly autonomous departments and business units with little or no communication between the various organizational compartments of a company (Opitz, 2003).

Linguistic diversity

This traditional division of Germany is also expressed in linguistic differences. The German language has three principal dialect groups, namely Low German in the north, Middle German in the center, and High German in the south (Konig, 1989; Waterman, 1976). The primary difference between the principal dialects is expressed by the consonant shift of p, t, k to f, s, ch so that Low German peper, water, maken become High German Pfeffer, Wasser, machen (Konig, 1989; Waterman, 1976). The dialect difference is actually more complex and includes many regionally unique words and phrases and grammatical differences which make mutual understanding very difficult (Konig, 1989; Waterman, 1976). For example, the word butcher can be Fleischer, Fleischhacker, Metzger, or Schlachter depending on where one lives and works in Germany (Konig, 1989). And the grammatical gender of the noun Cola can be feminine, i.e. die Cola, or neuter, i.e. das Cola (Duden, 2006). In fact, it is often easier for a person from Northern Germany to understand a native of the Netherlands than a fellow German from Southern Germany. Since language is a symbolic expression of culture and classified as a cultural artifact (Klopf, 1998; Samovar et al, 1998), this linguistic variety of Germany clearly expresses the degree of regional cultural diversity in Germany.

Companies seeking to enter the German market need to take this linguistic diversity into consideration especially when the product names could result in misunderstandings, confusion, or even rejection. For example, the potato is called Kartoffel in Standard German as well as some parts of Northern Germany, but it is called Grumbeere in some parts of Western Germany, Erdapfel in Southeastern Germany, Nudel in parts of Northeastern Germany to name only some variations (Konig, 1989). One can well imagine what the consequences would be for a distributor of potatoes in Germany because the regional names are often unknown outside the respective regions.

Religious differences

In addition to linguistic variety, German regional differences are also expressed by traditional religious differences. Germany has been divided roughly into a Protestant north and a Catholic south and west since the Reformation in the 16th century (Herrmann, 1988; Jankuhn et al, 1983; Zentner, 1980). And with German reunification, an atheistic east must be added--a legacy of 40 years of communism (Facts about Germany, 1996). While most children in West Germany celebrate either communion or confirmation, i.e. Christian ceremonies, most East German children celebrate the Jugendweihe, i.e. a secularized ceremony to admit adolescents into adult society. Religion is an important factor in forming a culture's belief and value system because it can determine, for example, whether an individual feels obliged to help others or sees poverty as a sign of punishment (Klopf, 1998; Samovar et al, 1998). This regional difference results in different public holidays throughout Germany because the majority of legal holidays in Germany are religious holidays. Consequently, a predominately Protestant state will be closed for business on different days throughout the year than a Catholic state. In the predominately Catholic Rhineland, for example, virtually all businesses shut down during the Karneval, i.e. Mardi gras, season which lasts for about a week. And the dichotomy of the German work ethic, i.e. working very hard on the job but also having six weeks of paid vacation per year and strictly separating work from pleasure, may also be explained by the broad mix of the Protestant work ethic and the Catholic joie de vivre found within Germany.

East and West Germany

East Germany looks back on 40 years of communism preceded by 12 years of Nazi dictatorship; this means that three generations of East Germans lived under totalitarianism. In West Germany, the 12 years of Hitler and the Holocaust were followed by 60 years of democracy and early integration into Western alliances such as NATO and the European Community (Facts about Germany, 1996). It is, therefore, not surprising that new regional differences evolved after World War II as well. While East Germans also point to differences among Saxons and Brandenburgers, there is also a transcending issue of East vs. West Germans, i.e. Ossis and Wessis. This difference between East and West is reflected in a number of opinion polls and election results. The former communist party of East Germany still racks up about a quarter of all the votes in East Germany while in West Germany it gets less than five percent of all votes. During the last federal elections in 2005, for example, the former communist party got 25.3% of the votes in East Germany and only 4.9% of the votes in West Germany which is 8.7% for all of Germany (www.wahl.tagesschau, 2005) since the population in West Germany is more than three times larger than the East German population. Similarly, the majority of East Germans do not identify themselves with the Federal Republic of Germany while the majority of West Germans do according to a recent survey (Siemon, 2007, March 22).

This political division has created a different approach to work. While most West Germans would not work on Sundays or public, i.e. religious, holidays, East Germans typically do work on those days without such reservations. Compared to East Germans, most West Germans would be willing to take more risks which explains the greater proportion of entrepreneurship in West Germany. On the other hand, the many years of scarcity in East Germany resulted in more improvising ability among East Germans than West Germans (Facts about Germany, 1996)

Consensus and parity

These strong regional differences probably also contributed to the use of so many rules and regulations in Germany because otherwise it would not have been possible to reach any consensus. In fact, Standard German can be considered an artificial dialect that combines a number of aspects from the principal dialects to achieve some degree of mutual comprehension (Konig, 1989; Waterman, 1976). But it also helps explain why consensus is so important to German culture because it helped establish a unified national identity. The concept of consensus and parity is even anchored in the German constitution, the Grundgesetz, i.e. the Basic Law (Facts about Germany, 1996). After World War II, when the Basic Law was written in West Germany, the notion of shared fiscal revenues was applied to the principle of state parity, i.e. the so-called Landerausgleich. This constitutional provision specifies that the rich federal states have to allocate a certain portion of their revenues to poorer states in order to assist the poorer states. This redistribution of wealth was designed to create economic parity among all the federal states so that no inhabitant would be forced to live in a state that offers fewer amenities than the other states (Facts about Germany, 1996). This principle of economic parity reaches down to the county level because in Germany, richer municipalities have to help finance poorer communities within the same county (Sachsische Zeitung, 2007, March 27).

East Germany under communism went a step further and implemented a rigorous program of identical services and products throughout the entire country. Hence, irrespective of regional traditions, a centralized system of uniformity was introduced and enforced in East Germany, and the social class system officially abolished (Facts about Germany, 1996; Herrmann, 1988). After German reunification, the principle of parity was extended to the new federals states in East Germany with the introduction of the Solidarity Pact which includes a special tax to help finance the enormous costs of German reunification so that the East German infrastructure is raised to West German standards in addition to the usual Landerausgleich (Facts about Germany, 1996). Consensus and parity are so ensconced in German thinking that it is also present in many aspects of German business culture including corporate policy and governance.

Governmental system

Germany is a federal republic, and regional differences play an important role in the German governmental system. The nationally elected parliament is called the Bundestag, and the party or parties having a parliamentary majority head the federal government under the leadership of the Federal Chancellor (Facts about Germany, 1996). The Chancellor, thus, automatically has a parliamentary majority in the Bundestag. All federal bills must be passed by a majority vote in the Bundestag (Facts about Germany, 1996). All legislation affecting the interests of the states must additionally be approved by the Bundesrat, the other legislative body which represents the interests of the states (Facts about Germany, 1996). The German Bundesrat "does not consist of elected representatives of the people but of members of the state governments or their representatives" (Facts about Germany, 1996, p. 174). After a bill has passed the appropriate legislative chamber(s), it must be signed by the Federal President to become a law (Facts about Germany, 1996). The Federal President heads the German state but not the federal government which is headed by the Federal Chancellor as noted above (Facts about Germany, 1996). Germany has, thus, two separate and distinct executive offices for state and government matters unlike the USA which unites both executive positions in the office of the US President. This division of the executive office into two separate offices with distinct duties and responsibilities is a feature that is repeated in many other German administrative organizations such as schools and universities as well as corporations while this is not the case in the USA.

Legal system

German law is code based while U.S. law is case based (Facts about Germany, 1996; Howard, 1965). In fact, German law seeks to anticipate illegal actions which have to be listed expressly in the legal code to be deemed illegal. If an action has not been anticipated and, thus, is not included in the legal code, it is not considered to be illegal. The German legal code, therefore, has to be constantly amended in order to keep abreast of changes in society or technology. This is different from US law which applies the principle of analogy (Howard, 1965). Thus, for example, legal provisions regulating horse drawn carriages were interpreted to also include automobiles when cars first appeared since both are road vehicles. In Germany, the traffic law had to be amended expressly to also include automobiles. German law also seeks to establish great precision which usually results in very comprehensive legal texts. Hence, the German legal principle conforms to the general concept prevalent in Germany of attempting to break everything down to the most precise subcategory possible which is designed to reduce uncertainty. By breaking everything down to the smallest possible category, it is assumed that the size of the problem is also reduced and, thus, making the problem more manageable. This direct link between culture and laws of a country is, of course, not surprising because laws are designed to regulate the interactions of members within a society.

Educational system

Education is important in shaping and transmitting culture (Chen & Starosta, 1998, Gudykunst & Kim, 1997; Klopf, 1998, Samovar et al, 1998). Not surprisingly, the German educational system reflects the regional differences of Germany as well because education is a matter of the individual states as specified by the Basic Law (Facts about Germany, 1996). These regional differences are particularly noticeable at the secondary level since the states have different curricula. Consequently, it is difficult for children to overcome this educational gap which is why most German parents are wary of moving their families to a different state. At the same time, though, there are also a number of similarities for all German states that are, to some degree, quite unique to Germany. Most German states decide during the fourth grade, i.e. when children are nine or ten years old, which type of secondary school a child is to attend. There are typically three types of secondary school in Germany: The Hauptschule, which is to prepare students for vocational careers, the Realschule, which is to prepare students for clerical positions, and the Gymnasium, which is to prepare students for university studies (Facts about Germany, 1996). Theoretically, it is possible for students of both the Hauptschule and Realschule to also attend universities (Facts about Germany, 1996), but in practice it does not happen very often. Thus, effectively barring the majority of students from university studies which is one reason why the UN criticized the German secondary education system (Sachsische Zeitung, 2007, March 22).

Labor market

This educational segmentation is also continued in the apprenticeship and trainee programs in which adolescents are trained for a very specific, albeit highly qualified vocation (Facts about Germany, 1996). Even the university education is typically based on narrowly focused degrees which revolve around curricula that only contain courses of the subject in question. Thus, the German educational system--at the primary, secondary, vocational, and college level--produces highly specialized professionals while essentially shunning a general, broader, interdisciplinary education. (1) Because German employees have been typically trained in very narrowly defined vocations and professions, it is often difficult to switch job fields since the employees do not have comparable skills and training in another occupation. (2) This, in part, explains why some unemployed in Germany have become chronic unemployed because these people had originally been trained in vocations for which there are no longer sufficient jobs available since these occupations have been superseded by new technology and/or outsourced to countries with lower wages. At the same time, Germany lacks skilled employees in other job fields--typically in newly created high tech vocations for which the educational system has not been able to generate sufficient graduates yet.

German business culture

It is, thus, not surprising that most German businesses tend to have a fairly strict division among its staff into blue and white collar employees, and also between white collar clerical positions and management posts (Hofstede & Hofstede, 2005). Trompenaars and Hampden-Turner (1998), therefore, classify German corporations as bureaucratic organizations in which personal relations play a minor role because the focus is on the tasks at hand. According to Trompenaars and Hampden-Turner (1998), German corporate careers are based on professional qualifications. "Manpower planning, assessment centers, appraisal systems, training schemes and job rotation all have the function of helping to classify and produce resources to fit known roles" (Trompenaars & Hampden-Turner, 1998, p. 174). Since one of the tasks of education is to provide the right training of potential employees for the job market, this explains why the German educational system pursues a highly segmented educational approach so that these specific occupations can be filled with employees having the right qualifications.

Problem solving

The problem solving methods conveyed in German schools focus not so much on finding a solution; instead, emphasis is placed on outlining and following the proper steps to a solution. Thus, the actual solution to a math problem, for example, will be awarded with only a small percentage of the points for the right answer while the majority of the points will go to the application of the right steps. This explains why in a business context, so much emphasis is put on finding the right steps to a solution. Most Germans are also interested in finding long-term solutions. This may be best illustrated by the approach to house building. While many houses in the USA are built with frame construction, dry walls, and asphalt roof shingles in a relatively short period of time, most German houses are built with reinforced concrete, bricks, and cement roof tiles. Consequently, house construction typically takes much longer in Germany than in the USA. In Germany, most people still feel that a house has to be built to last for a long time so that future generations can continue to live in it as well. From a German perspective, this makes sense since the marked regional differences traditionally led many people to stay close to their home because it is there where people speak the same dialect and practice the same religion. While this has been changing, most Germans would still prefer to stay in the home region if given a choice. (3)

Business organizations

Traditionally, stock markets played a minor role in the acquisition of capital in Germany. Consequently, only a small proportion of businesses in Germany is organized as a corporation (Wentges, 2002). Other reasons for the relatively small percentage of corporations in Germany include the many corporate regulations, the partial loss of control, tax disadvantages, and considerable codetermination of employees in Germany (Nassauer, 2000). Most of the capital for German businesses is provided by banks (Emmons & Schmid, 1998). It was actually the German banks which provided the capital to the growing industrial enterprises in the 19th century when German industrialization began. Since private citizens did not have the capital, and well developed stock markets did not yet exist, banks were the only source of capital in Germany at that time (Nassauer, 2000). Consequently, banks often have direct influence on German companies that goes well beyond the typical American creditor-company relationship, for example (Emmons & Schmid, 1998).

German corporations

German corporations are controlled by two boards, the Vorstand, i.e. management board, which is responsible for managing the company, and the Aufsichtsrat, i.e. supervisory board, which exercises control over the management. According to German corporate law, management and control of a company must be exercised separately in companies having more than 500 employees (Facts about Germany, 1996; Nassauer, 2000). The assumption is that management does not necessarily pursue the interests of shareholders and, therefore, requires an independent board which acts as a counterbalance to management's power (Facts about Germany, 1996; Nassauer, 2000); thus, applying the principle of parity.

The Vorstand is empowered to run the business and, thus, formulates and implements the business strategies. It also represents the company externally (Conyon & Schwalbach, 1999; Facts about Germany, 1996; Wentges, 2002). The Vorstand can consist of one or more executives. Generally, all members of the Vorstand are jointly responsible for decisions or actions of a corporation. In practice, though, each member of the Vorstand has special duties and competencies in specific business sectors (Wentges, 2002) which conforms to the German desire to segment everything according to areas of expertise. The members of the Vorstand are appointed by the Ausichtsrat for a maximum term of five years (Conyon & Schwalbach, 1999; Emmons & Schmid, 1998). Reappointments are possible (Emmons & Schmid, 1998). Once a year, the Vorstand has to report to the Ausichtsrat on the current state and the intended business policy (Conyon & Schwalbach, 1999).

The Ausichtsrat monitors the activities of the Vorstand. In order to match the requirements of separating the decision making process and control, the Aufsichtsrat is not empowered to run a business (Facts about Germany, 1996; Wentges, 2002). Nevertheless, some activities by the management do require approval of the Aufsichtsrat. The Aufsichtsrat consists of 3 to 21 members, depending on the size of the corporation (Facts about Germany, 1996; Nassuer, 2000). While the members of the Aufsichtsrat are classified as non-executives, many former CEOs of the company usually chair the Aufsichtsrat (Emmons & Schmid, 1998).

The Mitbestimmungsgesetz, i.e. the codetermination act, of 1976 introduced the requirement to have employees in the Aufsichtsrat. In corporations of more than 500 employees, one third of the Aufsichtsrat have to be employees; in corporations of more than 2,000 employees, that number increases to half (Conyon & Schwalbach, 1999; Facts about Germany, 1996; Nassauer, 2000). The remaining members of the Aufsichtsrat are elected by the shareholders at the annual shareholder's meeting. This principle of including employees in corporate governance conforms once again to the German principle of consensus and parity. The main duties of the Aufsichtsrat are the nomination and discharge of the members of the Vorstand and the appointment of the corporate auditor (Wentges, 2002). The Aufsichtsrat has considerable rights to receive information in order to effectively monitor the Vorstand's activities and fixes the compensation of the corporate executives (Nassauer, 2000).

Wages and salaries

Wages and salaries of German employees are typically fixed by so-called collective tariff agreements which are negotiated between trade union representatives and the representatives of the employers' association of a particular industrial and/or service branch; for example, the metal industry which includes the automobile industry (Facts about Germany, 1996). These agreements regulate, for example, the wages and salaries, the working hours, holidays, minimum notice, overtime rates, and apply them to all enterprise of that particular branch in that particular region of Germany (Facts about Germany, 1996). Thus, establishing parity among all employees in the same sector. This system essentially serves to keep employees tied to a particular employer since it would make little sense to switch employers because one would continue to earn the same pay for the same occupation elsewhere. And since German employees are typically qualified for a specific job field, it is not easy to switch to another job field without proper qualifications as noted above. Likewise, the tariff system reduces the need for strikes which helps reduce uncertainty for both sides. Compared to other European countries, Germany has relatively few strikes. This is usually ascribed to the collective tariff system and the principle of codetermination (Facts about Germany, 1996), i.e. consensus.

Thus, it is not surprising that German business culture reflects many aspects of German culture. Indeed, national culture often serves as a model for corporate culture. So it is not surprising that German corporations are headed by two distinct governing bodies which mirrors the division of power in the German executive branch while US corporations only have one governing body which reflects the single executive branch in the USA. And it is also not surprising that the notion of parity and consensus is incorporated into German corporate governance, i.e. the representation of the employees in the Aufsichtsrat, since it is a fundamental principle of the German Basic Law.

The interrelationship of culture and business conduct

While people may take note of the differences in corporate structure and organization, few people would assume that work routines would differ dramatically and, thus, might lead to problems in working effectively and efficiently together across cultures (Hofstede & Hofstede, 2005; Trompenaars & Hampden-Turner, 1998). However, the following example taken from Schroll-Machl (1995) shall illustrate how cultural differences can influence the interaction of Germans and Americans in a typical business context; and how such subtle differences can lead to misunderstanding, frustration, and even anger. In a large international electronics firm, Germans and Americans had to work closely together to solve a number of problems. Both Americans and Germans were frustrated because meetings often did not lead to any concrete results. The American participants complained that the Germans seemed to talk too much and too long while also focusing too much on individual details instead of seeing the larger picture. The Germans, in contrast, felt that the Americans were too unfocused and asked too many questions; especially after the meeting was over. The Germans accused the Americans of being too superficial because they constantly updated and changed projects and concepts. The Americans accused the German supervisors of not providing enough feedback (Schroll-Machl, 1995).

Task oriented

Germans, like U.S. Americans, are very task oriented. But in Germany, as noted above, the specific expertise of individuals is also considered to be very important because such expertise leads to the best possible results. Consequently, Germans will usually argue and try and convince others with facts and data (Schroll-Machl, 2002). This explains why German presentations (and applications) will contain as many facts and as much data as possible because the more facts and data one presents, the more convincing one will be. Germans do not like to make mistakes because they are expected to be experts in their field of specialization. Should, therefore, someone present the wrong facts and figures, then that person will be disrespected because that person occupies a position for which he or she does not have sufficient expertise. Consequently, most Germans do not like to admit to having made a mistake (Lord, 1998) because mistakes could result in uncertainty--something most Germans would like to avoid. Emotions are frowned upon because they are neither tangible nor objective. While Americans will also use facts and figures, they will also appeal to people's ideals and emotions; especially if they are attempting to motivate others (Lewis, 2000).


Germans tend to strictly separate business relationships from private relationships. A friendly atmosphere at work and getting along with others in a business context is considered to be a nice side effect, but it is not really essential for a successful interaction in Germany (Schroll-Machl, 2002). Indeed, it is not uncommon for German colleagues to use the formal Sie and the last name with title when addressing and conversing with one another even though they may have worked together for many years. The use of titles is another expression of uncertainty avoidance and also of a larger power distance. If someone has a title or titles, then that person will be addressed by that/those title(s). Titles appear on bank cards, driver's licenses, and ID cards, etc. Titles identify a person's status and background; thus, identifying a person's qualifications, competence, and rank within a corporate and social hierarchy.

Time management

Germans are very punctual and tend to be very monchronic in their work routine. In business appointments, most Germans would expect an apology if one is more than one minute late. Time is considered to be very important like in the USA, but it also leads most Germans to consider small talk to be a waste of time in a business context since it has nothing to do directly with the task at hand. Consequently, presentations and meetings will commence immediately with the business at hand (Lewis, 2000). When Germans make appointments, they do not reconfirm them--even if the appointment is made half a year in advance; this reinforces reliability and avoids uncertainty. One usually only contacts the other party if one needs to cancel or postpone the appointed meeting. Germans tend to first finish a particular task or assignment completely before commencing with another task or assignment (Lewis, 2000). This tenacious approach is often also found in product development which translates into product improvement in Germany. The aim is to achieve absolute perfection and precision in any product or product family. Hence, the reputation of German precision products and engineering in many parts of the world.

Information flow

Another typical German characteristic is the monopolization of information. Consequently, there is little free flow of information between departments of a company, i.e. horizontal communication, and between the various hierarchical levels, i.e. vertical communication. Proudfoot Consulting calculated lost productivity due to improper or faulty organizational communication in German corporations to be $ 223.1 billion in 2001 which translates into 14.9 % of the then German GDP (Opitz, 2003). German companies are traditionally very compartmentalized and often closed to outsiders. This might also explain why office doors are usually closed in German companies unlike American companies where employees walk down the hall to exchange information with their colleagues (Lewis, 2000). Viewed from the perspective of the perceptual process, this different "door policy" illustrates how cultural patterns influence people's thinking and behavior. When, for example, American visitors enter a typical German office building and encounter closed doors, the Americans may assume that the office doors have been closed because no one is to overhear the conversations inside the offices as might be the case in the USA. If those American visitors came to the German company to negotiate a deal, then the visitors may think that the Germans are deliberately trying to hide something from them. Consequently, the Americans may assume that the negotiations will be difficult, troublesome, and tricky. During the subsequent meeting, this negative predisposition of the Americans could result in a negative interpretation of everything the Germans say or seem to say and do even though that is not the intention of the Germans. Hence, making for a difficult meeting because the Americans will be wary and suspicious while the Germans will be wondering why the Americans are behaving so strangely. This could make the Germans wary and suspicious of the Americans' intentions.

Business negotiations

As noted above, Germans like to be well prepared for a meeting which often, though, translates into a lack of spontaneity. Not surprisingly, brainstorming sessions are quite rare in Germany (LeMont Schmidt, 2001). Because Germans have researched a subject and prepared themselves in great detail for a meeting, they are often inflexible in responding to unanticipated questions. When, for example, it comes to negotiating the price, most Germans are only willing to consider a divergence of 10% from the asking price since they will have considered all aspects and determined precisely the exact price of an item in advance (Otte, 1996; Hill, 1998). This reduces the uncertainty of a bargaining session.

Group work

Germans like to have an initial and comprehensive understanding of all aspects associated with a problem. This means that any and all details, including potential possibilities, are considered. Hence, existing approaches and solutions play an important role while new ideas are considered and evaluated critically. This evaluation process is carried out within a group. When it is assumed that all aspects have been considered and discussed, then tasks will be assigned to the team members according to their field of expertise and experience. This ends the planning phase (Schroll-Machl, 1995). Next follows the execution phase during which everyone works alone with little or no exchange of information. There is little or no need to meet and talk because everything had been discussed during the initial planning phase, including anticipated possibilities. Therefore, repetition would be a waste of valuable time. And since everyone is a specialist in their own field, there is little need to talk with others because the others would not be able to make a valuable contribution as they lack expertise outside their field of specialization. Subsequent meetings are, thus, only necessary if an intermediate meeting had been scheduled previously, or if there is an unanticipated problem. But alterations to any previously fixed details are rarely done and not liked since it indicates that the initial planning had been insufficient and, therefore, inexpert (Schroll-Machl, 1995; Gibson, 2000).

Americans, in contrast, like to focus on the goal after having been assigned a task. This is usually done in form of brainstorming in which the team members present their thoughts and ideas. Once the goal has been determined, the team decides on a plan of action to solve the problem at hand. The team leader assigns the various tasks to the team members which ends the planning phase. The execution of the plan begins when every team member creates a detailed work plan. The experiences of the team members are applied in solving the problem. The team members often consult with one another on how to best solve the problem. This results in very active communication and a lively exchange of information among all team members while there is constant feedback on whether a solution leads to the goal or not. This exchange of information occurs also with one's superiors. The initial plan of action can be changed any time if it proves to be necessary and the goal becomes untenable (Schroll-Machl, 1995; Gibson, 2000).

Concluding remarks

The above example clearly illustrates that Germans and Americans use different approaches in tackling problems despite the fact that they are actually much closer to each other culturally than to Chinese or Japanese culture, for example. The brainstorming session would probably cause difficulties with German team members since it is not typically applied in Germany while the detailed discussion of possible and anticipated problems would seem to be too detailed for American team members. This attitude would be frowned upon by the German team members who would consider Americans to be too superficial and imprecise. The isolated work environment with little or no contact to other team members and one's supervisors with little or no feedback would seem problematic to Americans because information exchange and communication are of paramount importance in solving any problem. To the Germans, this need for communication and feedback would simply signify that either the initial planning was faulty and superficial, or that the American colleagues are not as expert as they claim to be; otherwise, they would be able to solve the problem at hand.

So it becomes apparent that the way things are done is critical not only in carrying out a task, but also vital in perceiving the methods others use and in evaluating their actions and behavior. If this insight is lacking, it can result in frustration because one is unaware of why the others are behaving and/or communicating the way they are. Viewed and evaluated from one's own cultural perspective, the other behavior can be seen as inefficient and ineffective, even wrong. Understanding can be a step in the direction of respecting differences. Understanding, though, is only possible if one is aware of the fact that differences do exist in different business cultures which influence how individuals conduct their business. That is why understanding is made possible by studying national cultures since many aspects of national culture, i.e. artifacts, sociofacts, and mentifacts, are also reflected in the respective business culture which will then foster awareness (Chen & Starosta, 1998). Thus, it is advisable that business managers familiarize themselves with the national culture of their prospective business partners in order to gain some insights and understanding of the partner's behavior and communication so that this knowledge can be used constructively to foster mutually profitable business relationships across diverse cultures.


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Michael B. Hinner

TU Bergakademie Freiberg


(1.) This is also expressed in German application documents. German resumes contain very detailed personal information including a photograph of the applicant, the date and place of birth, marital status and can even include the occupations of the parents and the applicant's religion. The education section describes in great detail all schools attended including the primary school while the employment section only mentions the dates of employment, the place of employment, and the job title. A detailed job description, so typical of American resumes, is not needed because the job title suffices since German employers will know exactly what qualifications and skills that job entails. In addition to the resume and cover letter, German applications include certified copies of any and all relevant documents, certificates, degrees, letters of reference, etc.

(2.) German employers look for job candidates who fit precisely the job description contained in the wanted ad because these descriptions had been created on the basis of the standardized occupational qualification. This is very different from the USA, where it is generally assume that not all applicants will be able to meet all specifications. Instead, it is assumed in America that candidates will be able to acquire the necessary skills in due time while learning on the job.

(3.) This information is based on a number of conversations with Germans in various regions. All expressed a strong attachment to their home region; in part, due to linguistic and religious reasons as well as due to close ties to family and friends. This regional attachment is even utilized by some state governments to convince employees who have moved to another German state in search of work to return to their home state as exemplified by the current "Sachse-kommzuruck" campaign of the Saxon state government (, n. d.).

Correspondence to:

Professor Dr. Michael B. Hinner

Fakultat fur Wirtschaftswissenschaften

TU Bergakademie Freiberg

D-09596 Freiberg/Sa., Germany

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