Cultural Orientations and Their Impact on Business Management in Germany: Power, Individualism and Competitiveness in German Business

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Cultural orientations and their impact on
business management in Germany:
Power, Individualism and Competitiveness in German Business

By Anna Schmähling

Edited for:
Cross-Cultural Comparative Management
Master Course in Spring Semester 2011
At Vilnius University

Vilnius, 2011


Hierarchy with strong departmental influence
From the author´s experience as a German citizen power is associated with strength, masculinity, trust, confidence. Beneath the often not flexible hierarchical society, like in business, it is important to have good negotiation skills. Maybe it is a rudimental left-over need from the times when the German tribes elected their leader, who was a strong but fair decision maker, who tried to find the best solution for all individuals. The Dutch Sociologist Hofestede actually investigated that the Power Distance is moderate (35 points). This fact may be caused by some immanent collective elements in the German Society. Gannon describes Germany with the metaphor “The German Symphony” and he also said that “Germany tends to cluster with those countries that are less accepting of an unequal distribution of power, status, and material rewards in society.“ There proceeds to mention that: “The music and their performers are brought together by the conductor.” So a very great part is playing by the conductor, in business this will be the manager and the CEO at the top. Different from other countries, “the German CEO will generally tell the American to see his or her German counterpart responsible for making decisions in this area”. The “extreme centralization” like in France or in the United States is not used in German business organizations. One can see that the great leader is just responsible for the strategic decisions. He decides what are the “big” goals and objectives of the company. So he needs skills mostly in general management and business. That is why the Germans “prefer a visionary leader who is mature and strong enough to delegate responsibility and decision making to competent subordinates throughout the hierarchy.” He also must be able to lead the consensus, which can be called the German way of decision making and can waste several periods of time. But after this process, the decision will be “quickly implemented”. The several department managers are supposed to make the practical decisions for their part of expertise. ”Departmental manager generally has much more authority” than in other Western countries and the “responsibility usually stays within departmental bounds”. Also for playing a great symphony with many different human beings, it is necessary to have strict rules, which can be mistaken as a strict hierarchal order, like Gannon mentioned. But actually there is not too much space for individuals to develop, because they have to fulfill their function in the society. Also there seems to be a preference for male leaders, especially in business. A statistic points out that out of the 160 top German companies (stock exchange companies) just one company is ruled by a women. A possible explanation can be that women are supposed to be too emotional (not rational enough) and not strong enough to handle all the attacking problems. That is why the government is arguing about implementing a quota for women. Maybe this interpretation of “male strength” is caused of the fact that in former times the leader has to protect the society mainly in a military way and this probably doesn’t fit the picture of the “weaker” gender.


Individualistic with some collective elements
As already mentioned the German Society has some collectivistic elements like the interventions of the government, for example in the social policy. Gannon states that “even though Germans cluster with other cultures that emphasize individualism, they are far less individualistic than almost any other country in this category, particularly the United States”. And he also points out that “as in...
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