Gearing, Culture and Management Style

Over the last few decades, ideas about management styles have been dominated first by the American management model and later by the Japanese. The underlying assumption has always been the existence of a country specific management model as a result of the national cultural heritage. Does it seem viable to claim that management style is highly influenced by deep-rooted cultural forces of a nation? Do the French in general manage their enterprises differently from the Danes? Are German managers always engineers and like everything ‘ordered’?

The variety of cultures has influenced the national style of management, however, talking about a national management style should be done with caution because it operates with stereotypes based on an average view of society.

Some countries have a legal system that relies upon a limited amount of statute law, which is then interpreted by the courts, which build up large amounts of case law to supplement the statutes. Such a ‘common law’ system was formed in England primarily after the Norman Conquest, by judges acting on the King’s behalf. It is less abstract than codified law; a common law rule seeks to provide an answer to a specific case rather than formulate a general rule for the future. This naturally influences company law that traditionally does not prescribe rules to cover the behaviour of companies. Other countries have a system of law that is based upon Roman Law. Here, rules are linked to ideas about justice and morality; they become a doctrine. The word ‘codified’ is associated to such a system. This has an important effect upon company law in that it is much more regulated with detailed rules

The prevalent types of business organization and ownership also differ. In Germany France and Italy, capital provided by the banks is very significant, (high geared companies) as are the small family-owned business. By contrast in the United Kingdom there are a large number of companies that rely on millions of private shareholders for finance (low geared companies).

Incidentally, the country with the longest history of ‘public’ companies is the Netherlands. Although it has a fairly small stock exchange, many multinationals (Unilever, Philips) are listed on it.

In such countries as Germany, France or Italy, the banks or the state will, in many cases, nominate directors and thus be able to obtain information and affect decisions.

How do you think this affects the business strategy?

Over the next few weeks it is my intention to examine this. Your input to this discussion is welcome!

Peter