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Managing Globalization: Crossing borders? Then expect culture clashes
Daniel Altman - International Herald Tribune
Tuesday, June 27, 2006

One of the great engines of globalization is the expansion of companies across borders through mergers, acquisitions, joint ventures and subsidiaries. You might have expected these link-ups to result in a sort of standardized corporate culture, but clashes of culture are persisting, and even multiplying.

"What I see is a growing convergence around some kind of minimum standards, but around that there's still a lot of variety in the corporate and national culture", said Lynn Paine, a professor at Harvard University.

There is no set formula for exporting a style of management from one country to another, Paine said. Every case is different. Often the problem has to do with how hierarchies are traditionally structured.

"One American company had a very egalitarian culture,” she said. "Going into China, and trying to replicate the same egalitarian organization, it just wouldn't take. Groups of people would organize themselves into hierarchies almost spontaneously."

The gaps are so wide, Paine said, that what seems egalitarian in one country may appear authoritarian in the next.

Methods for motivating employees can also be very different. "The Anglo-Saxon and Scandinavian countries tend to be more individualistic, whereas the Asian and Latin American cultures tend to be more group-oriented," she said. Putting an emphasis on individual performance, therefore, can be a mistake in a place where the team is viewed as paramount.

Day-to-day interactions can also be sources of cross-cultural friction. Melissa Petri, a numerical analyst from the Philippines, works at Fuji Electric, a Japanese company, in Frankfurt.

"We're having problems now, because most of my colleagues are German, and we got used to it before with a German boss," she said. "Recently we changed to a Spanish boss, and it's very different. The way he runs things, the Germans don't think it's how it should be done." She said that her German boss was very direct, whereas her Spanish boss might say one thing to smooth over an argument but end up doing something else.

For companies in developing countries, Paine said, the pressure to adhere to Western norms can be especially strong. For example, a company hoping for investment from the West might install a code of ethics that prohibits conflicts of interest in supply contracts. But in many countries, doing business with companies owned by family members is standard practice.

Thanks to the globalization of companies, however, some cases can be more straightforward than they first appear. This month, BASF bought Engelhard, a metals specialist based in New Jersey.

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Managing Globalization