»history«

[p.19]
Germany as Hofstede sees it, is much influenced by its mediaevel guild system which in modern times lead to the system of apprenticeship. In a number of fields on the shop floor as well as on the office level the apprentice gains an occupational certification. Along with the qualification comes an occupational pride. Consequently, managers are not needed for motivation. They are to assign tasks and to resolve technical problems.
Compared to British or French organization, Hofstede declares Germany to have "the highest rate of personnel in productive roles and the lowest number both in leadership and staff roles". He estimates two thirds of the population to have successfully undergone apprenticeship. At the same time there are no traditional business schools.
Hofstede understands the raise of the German economy as an example that "a strong concept of management might have been a liability rather than an asset."


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• The United States
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[p.20]
Hofstede relies on Phillipe d'Iribarne (1989) who compared France, the States and the Netherlands to differentiate three principles of management.

Business in France is based on honor. In a quiet stratified (geschichtet) society everybody is aware of his/her position in the hierarchy. Nevertheless each group carries its own pride.
While it is very rare to cross ranks from non-cadre to cadre, it is only by attending the right school that you become a member of the cadre. This automatically assigns you with privileges of a higher social class and puts you in leadership positions.


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In Japan Hofstede sees the core of every enterprise to be the permanent worker group. Those workers are hired for all practical purposes in general and strive for life-long employment. On the contrary there are non-permanent work groups which are easily laid off if necessary. University graduates would first join a worker group and wait to later be assigned to various other tasks. Payment is structured according to seniority (Dienstalter) rather than position. Decisions are made in group consultations. This might take rather long but proves implementation to be much easier.

Hofstede tells about the research done by J.Tobin, D.Wu and D.Danielson of the University of Hawaii. They filmed two pre-school classes, one in Japan, one in the States. While the ratio teacher-kids in the States amounted to 1:9, it amounted 1:29 in Japan. In both classes there was a troublesome kid. When a Japanese kid alarmed the teacher of the other kid's misbehavior the teacher was reported to have answered: "what are you calling me for? Do something about it?" The American kid, on the other hand, when behaving badly was put in the corner and thus punished by the teacher.

Hofstede picks this example up to show how early structures of hierarchy are already implemented. He concludes that in Japan control of situations is guaranteed by groups, respectively peers. Consequently the Japanese conducted their own theories about leadership. These base on the ideas of performance and maintenance by which the latter refers to maintenance of social stability.


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[p.21]
Enterprises are usually small and family-owned. When needed they undergo cooperations with other small businesses to which they are interrelated through personal networks. Hofstede sees them to mainly focus on one market/one product, aiming on a "growth by opportunistic diversification". The process of decision-making is usually centralized to the head of the family. Family members are absolutely loyal and wait till they get the chance to prove themselves in new ventures. Sons and sometimes daughters will be send to prestigious business schools abroad but are expected to return to the family business. The idea of management is based on Confucian values, such as loyalty, thrift (Wirtschaftlichkeit, Sparsamkeit) and persistence.
Hofstede describes the historical base for this idea of business and management as a "society, in which there were no formal laws, only formal networks of powerful people guided by general principles of Confucian virtue." Authorities and their opinions could change daily which made the family to be the only reliable institution. This effect is further deepened by the fact that the overseas Chinese in the respective countries always formed an ethnic minority.


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Geert Hofstede: Cultural Constraints in Management Theories

[p.18]
"Verité en-deça des Pyrenées, erreur au-delà" - There are truths on this side of the Pyrenées which are falsehoods on the other [quoting Blaise Pascal].

Hofstede's point is clear: "there are no such things as universal management theories",all theories are always bound to the cultural environment of the theorist. He proves his thesis by introducing management practices as conducted in different countries and by integrating them into a historical context.

Hofstede starts off by clarifying the etymological background of the words to manage, manager and management. The eldest record is to be found in Shakespeare's "Love's Labour's lost" from 1588: "Adieu, valour! rust, papier! be still, drum! for your manager is in love; yea, he loveth." The stem is based on the latin "manus" for hand and the italian "maneggiare" for training the horses in the manege. Later this idea was transferred to skillful handling in general. Hofstede makes also a connection to the french "menage" as in running the household.
Scott Adam Smith (1776) uses the group of words to describe the process (=management) as well as the people (=manager) involved in operating joint stock companies.
In the American sense - and at this point Hofstede already emphasizes the cultural constraints of definitions - management is understood as a class of people. "This class
(1) does not own a business but sells its skills to act on behalf of the owners and
(2) does not produce personally but is indispensable for making others produce, through motivation."

In contrast to the American idea of management he gives an overview over several countries:

• Germany
• France
• Japan
• The Netherlands
• The United States
• The Overseas Chinese

Hofstede also gives an overview over Russia and China. I will leave this out since he relies his assumptions only on literature.

[p.22]
Hofstede summarizes his findings that "Local management is part of this [= the cultural] infrastructure; it cannot be imported in package form. Assuming that with so-called modern management techniques and theories outsiders can develop a country has proven a deplorable arrogance. At best, one can hope for a dialogue between equals with the locals, in which the Western partner acts as the expert in Western technology and the local partner as the expert in local culture, habits, and feelings."

[p.23]
Establishing a theory of culture in management Hofstede concludes that management has a different meaning in all cultures. To understand the idea of particular management, its processes and problems one needs "considerable historical and cultural insight into local conditions. [...] Management cannot be isolated from other processes taking place in society." Management reflects and integrates the cultural specific ideas of family, politics, religion, science, ... To reveal cultural differences Hofstede conducted several dimensions characterizing cultures:
[p.24]

• power distance: in how far do people feel to be equal
• individualism - collectivism
• masculinity - feminism: the first assembling values such as assertiveness, performance, success, competition, while the latter refers to values such as warm personal relationships, service, and solidarity)
• uncertainty avoidance: are clear rules needed, are new things anticipated openly or rejected
• long-term - short-term orientation

While I had read another paper about these dimension already before starting my thesis, I leave Hofstede's statistics out at this point. I find the dimensions rather abstract and not helpful for understanding a culture. Much prefer anecdotes and stories. But that, of course, does not match with Hofstede who at this point wants to transfer practice into theory.


in: D.C.Thomas: Readings and Cases in International Management; Thousand Oaks: Sage, 2003.

(thanks to my mother here a quick update on history....I know you need it ;-)

The medieval guilds in Germany had basically the function to suppress competition and see to it that their members were sufficiently secure. The leaders of the guilds decided on the number of their members and how many people worked in the master's business ( they decided how many apprentices and how many "Gesellen" - journeymen). Moreover, the quality of the products were controlled by the patricians (= the members of the city council), who were entitled to judge the economic worth of the product. Most of the production was due to orders - so consequently the market did not have the function to provoke competition.

So it makes sense to maintain that due to the control of the quality and - to some amount - the quantity of production organizers ( = managers) were not really needed.

As far as I know conditions were not really different in England; but in Germany the guilds were the decisive form of organization and had the control up to the time when Napoleon's troops occupied the land and reforms were established (about 1810, some earlier, some later; cp: Steinsche Reformen in Prussia).

patricians, patriciate - the latter is the name for this social shift. Just as you were born into the nobility you were born into the patriciate. Nevertheless there was competition among them. They were the merchants that traded with far away regions; so one might speak of international business. In the big international market places the successful merchants used to have their own offices and their own money in the currency of the city (like Venice, Bruges, Cologne, Rome to name just a few.). So it was up to them how to value the products they sold or purchased. Naturally the merchant dealing on such a scale was not able to be present in these different market places but had their representatives - often relatives -, who acted on their behalf and were responsible for their actions.

The fact that the patriciate was something like a closed shop is reflected in the story of the Fuggers in Augsburg. When they were the most successful business in Augsburg and even lent money to the Kaiser they applied for being a member of the Augsburg patriciate. The August city council, which consisted only of members of the patriciate, was not pleased at all and only the influence of the Kaiser opened the door for the Fugger family to the council.

So you may say that among the closes circle of the patriciate competition was possible but the patricians saw to it that they had a common basis which they decided on as members of the political body. As you may remember the guilds rebelled against this economic and social structure and in the course of the 15th century the guild masters got their access to the councils which then had two chambers and only when both chambers agreed on a draft this could become a law.

All this applies only to the free towns which were only under the Kaiser and no other authority.

As the reform bills under von Stein and Hardenberg show it was the king who decided on the liberties of the towns and in the early 19th century many Prussian town were entitled to decide on their economic activities.

[p.20]
Holland on the other side - following d'Iribarne is driven by the "need for consensus among all parties". Consensus is reached without regard towards contractional relationships or class membership. The ideal is an "open-ended exchange of views and balancing of interests".
Further research (Hofstede et al.) among American and Dutch business students on their expectations on the ideal job, showed the Dutch students to strive for:

• freedom to adopt their own approach,
• being consulted by their boss in his/her decisions,
• training opportunities,
• contributing to the success of their organization,
• fully using their skills and abilities, and
• helping others.

[p.21]
Hofstede sees the roots for this careful balancing of interests in the Dutch history: As the first republic in Western Europe (1609-1810), the Netherlands had to handle a multi-party system.

The down-sides of this system of consensus Hofstede sees to be mediocrity and jealousy. He critizes, too, that consultations nowadays only seem to hold up the face of cooperation and modesty while in fact they are only time-consuming.


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• Japan
• The United States
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Even though Hofstede does not dedicate a sub-chapter to the States, I want to summarize the points he made in contrast to France and Holland.

Based on d'Iribarne all business in America is based on the idea of the market. Employer and employee join interests in a contract: the worker is selling his/her labor for earnings and career opportunities. With the contract the employer is assigned certain privileges.

In the research conducted by Hofstede himself, the American students asked about their ideal job put an emphasis on the following:

• earnings,
• advancement,
• benefits,
• good working relationships with their boss, and
• security of employment.

Learn more about:

• Germany
• France
• Japan
• The Netherlands
• The Overseas Chinese

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