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TopplingThe Cultural TowerOf Babel

Strategic design that fails to account for cultural differences may snarl execution and drain the bottom line.

In Italy for 30 years under the Borgias, they had warfare, terror, murder, bloodshed-they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, 500 years of democracy, and peace, and what did that produce? The cuckoo clock.

                                                                                                                Orson Welles

As an effective leader, you may think you have figured out and even transformed your company’s corporate culture. But are you being too parochial? Are you presuming your man in Brazil is going to behave in the same way as your man in Germany? To what extent does national culture influence corporate culture, and vice versa?

Answer these questions correctly, and the result may he a bigger bottom line. Answer incorrectly, and conflict is inevitable. Understanding differences in national culture plays a vital role in decision making and management. It influences our ways of perceiving, thinking, feeling, and evaluating. There is enormous cultural diversity in attitudes toward business and work. How do executives from various cultures regard such factors as power, authority, formalization, and hierarchy? How do their responses differ?

Chief executives with interests abroad must assess the big picture and ensure that their companies’ culture is flexible enough to work successfully in countries where they do business. In some cases, CEOs can smooth ruffled feathers or seek to mediate disputes.


The Disney Corp.’s experience with EuroDisney in France is a good example of what can go wrong when a company tries to create a new venture in a foreign country without taking the context of the national culture into consideration. The problems Disney has encountered continue to he front-page news, and it can be argued that the cultural arrogance of American Disney executives has contributed to the company’s woes. Apparently, these executives were reluctant to heed advice from their French counterparts concerning national customs and tastes. The Americans had a formula that succeeded in the U.S., and they saw no reason to tamper with it.

However, problems arose almost immediately, when the company applied this formula at EuroDisney. They were caused by minor things, from the unpopular employee dress code, which prohibited facial hair and limited the use of make-up and jewelry, to the policy of not serving alcohol in the park-this in a country where a glass of wine at lunch is almost as necessary as a fork. Other problems involved the excessive use of lawyers in negotiations. This rigid legal approach was offensive to the French, who, like most Europeans, consider depending on lawyers to reach a conclusion to be a last resort. Disney executives continued stepping on toes, annoying employees, bankers, contractors, tour and travel agents, and thirsty visitors.

The question that springs to mind is why these cultural differences occur, and why they can become such a sensitive issue. I hypothesize that they result from variations in basic perceptions about the different degrees of control people think they have over their natural environment. If you feel helpless vis-a-vis external forces, it is likely you will perceive power, authority, hierarchy, and ways of decision making differently than someone who possesses a strong sense of control.

These fundamental perceptions derive from variations in child rearing in different cultures. If parents in one culture insist children should do as they say and not ask why, children feel consistently helpless, because they are deprived of control over their actions. This sense of impotence persists throughout life and colors adult behavior. In terms of management, the most interesting question is how these uncertainties are expressed at the corporate level.


Here are some examples: Organizational politics mean different things to Scandinavians and to people from Latin countries. For the former group, politics are of limited importance, while Latin Europeans and Latin Americans expend considerable time and energy on political maneuvering and the pursuit of power. To them, organizations are political entities, and they aim to maintain their power base and control. Organizations are not considered in a more instrumental way, as bodies designed to accomplish tasks. In Latin countries, therefore, much more attention is devoted to personal relationships than to tasks and functions. Achieving objectives often seems to be a secondary consideration. As many newcomers to the Latin European or Latin American scene have discovered the hard way, you ignore these cultural differences at your peril.

Take the example of a German general manager of the Mexican subsidy of a German multinational corporation. The firm was trying to get a contract from a major Mexican client, who insisted on meeting the general manager before making any commitments. The German agreed, planning on spending an hour or two negotiating details, then signing the contract.

However, he soon learned otherwise. Instead of opening the discussion promptly and proceeding efficiently to a contract signing, as the German expected, the Mexican plied him with food and beer and talked about everything but business through breakfast, lunch, and after a change of venue, dinner. Only after the German participated in a local bullfight after dinner was the Mexican willing to discuss business. For him, establishing a personal relationship with the German was paramount. The German left that night with a contract drawn up on a paper napkin, and a check for $375,000. Fortunately, he was able to “learn on the job” and adapt to the Latin negotiating style. Otherwise, he certainly would have lost a contract with a major client.

Executives from various national cultures also look differently at issues of authority. For the French and Italians, for example, it is important to know who has authority over whom. Authority is much more personal; it is an attribute of the individual. Functional and personal authority cannot be differentiated. In other cultures, such as the U.S. or Switzerland, authority tends to be more position-related; it is an attribute of the task. In such instances, authority derives from role or function. Working across cultures, the choice between tailoring the person to the job or the job to the person becomes obvious.


The same problems occur when we consider organizational hierarchy and formal processes. Job descriptions are important in some countries but carry much less weight in others. Well-defined roles and responsibilities preoccupy people in Sweden to a much lesser extent than people in France, Switzerland, or Germany. In some countries, such as the People’s Republic of China, it is a major faux pas to bypass the hierarchical line. In others, executives cannot understand why it is such a big deal. Imagine the effects of trying to introduce structures where subordinates have two bosses in countries such as France, Italy, Indonesia, or the People’s Republic of China. Such efforts to implement organizational design will not improve your standing in the corporation. So much for the idea of introducing matrix structure. Given the ways in which attitudes toward work differ from culture to culture, in the global corporation, this organizational type can quickly lead to serious constipation. To make it work, you must engage in a dramatic cultural sensitization program, something designed to help people cope with the ambiguity such a structure implies.

So how does the decision-making process work within different national cultures? Is it consensus-driven, as tends 1 to be the case in Japan, or more centralized, with decisions coming down from an individual, as we often see in Latin countries? In the former, decisions tend to be made on a step-by-step basis, less impulsively than is usually the case in the latter. Moreover, in Latin countries we find a more autocratic leadership style.

Of course, major strategic implications can be drawn from these differences. El Obviously, it takes some time to arrive at a decision in a Japanese company, while in many Western countries, decision making is rapid. The catch, however, is in the implementation process. While implementation is fast in Japanese companies (where consensus already has been reached), it takes some time in Western companies (where no consensus yet exists).             

A related question is whether the ultimate aim is for the good of the group, or whether the company’s philosophy is more that what is good for the individual will de facto be good for the group. This boils down to whether people in a particular country have a more individualistic orientation, meaning that people are supposed to take care of themselves, or whether it is the group that occupies center stage. Countries such as the U.S. or Australia tend to be very individual-oriented, whereas countries such as Indonesia, Singapore, or Japan are more group-oriented. However, while the Japanese work to establish a personal relationship with the decision makers, this way of operating is much less important in the U.S., where people try to keep the process more impersonal.

In decoding cross-cultural issues, we should keep in mind that constant confusion arises between what we say, what we do, and what we mean. In this context, I have always been fond of the expression “Look at their feet.” This means: Don’t take things at face value; consider other indicators.


I find it helpful to imagine a “culture pyramid,” at the pinnacle of which we find visible behavior. At the next level, a less visible one, we find the norms that determine the underlying systems, structures, rituals, and myths that characterize a national culture. Finally, at the base of the pyramid, we find the basic values and belief systems that form the foundation of a national culture. These are taken for granted and are unconscious.

Since we are all human, we have certain things in common. At the same time, each of us has unique characteristics. In this sense, cultures are no different than individuals. Given similarities in upbringing, it is likely that people from similar cultures have a greater overlap in specific characteristics than people from different cultures. Thus, the Germans and the French may share behavioral similarities, but members of each group probably look at things slightly differently. The “average” German has a certain amount of overlap with the “average” Frenchman, but the normal distribution of these characteristics is somewhat different. Cultural stereotyping, or ascribing certain ways of behaving and acting to individuals of a specific culture, is based on these common perceptions. So, we have stereotypes of Italians, Germans, the English, or the French. These vary depending on which culture is doing the stereotyping. For example, the French see Americans as industrious and energetic, while the Japanese see them as nationalistic. The British, meanwhile, view them as friendly and self-indulgent, and the Brazilians see them as intelligent, inventive, and greedy.

In trying to understand the way in which national culture influences corporate culture, I examine the kind of “language” spoken by each group. This is a perspective used by some anthropologists and psychoanalysts. Let me explain. To start off, there is what I call the language of language, the way people speak. Is the speech pattern a constant stream of words or is speech punctuated by many silences? For example, compare the differences in speech between a Mexican and a Finn. Some Finns, listening to a Mexican speech pattern, are bewildered. They may think the person is suffering from verbal diarrhea. On his part, the Mexican may think the Finn is constipated and, because of his impatience with the slow flow of words, he is likely to complete the Finn’s sentences for him. Depending on the culture, silence can be interpreted as a sign of respect, of giving the other party space (as in Finland), or as an indication of impoliteness (as in the U.S.).

There is also the language of food. Every country has idiosyncratic rituals built around eating and drinking. How should one eat? Who should be served first? How does one make a toast?

We also must consider the language of locomotion. What do certain postures, movements, hand gestures, facial expressions, and forms of eye contact mean in different cultures? For example, the uninformed observer interprets the way an Indian shakes his head as “no”, while it actually means “yes.”

Then there is the language of emotion. How are emotions dealt with in different cultures? The Japanese tend to hide emotions. They are not inclined to touch each other publicly. In contrast, people from Latin America tend to be emotionally demonstrative; touching and embracing are intrinsic parts of their culture.

What about the language of time? In some cultures, time is money: To be on time, therefore, is an overriding concern. In others, lateness is expected-in some cases preferred.

We also have the language of space. In the U.S., the more important an executive is, the bigger the office. And preferably, that office should be in a corner on the top floor. For the Japanese, the action tends to be centered around the middle of the building. Another question is what is an acceptable distance to be from another person while conversing? Some studies suggest that the regular distance in Western countries is five feet to eight feet, while in the more highly personal cultures, distance ranges from 20 inches to three feet.

And what can be said about the language of things? What do possessions mean in different cultures? To own a Rolls Royce or a corporate jet generally is a universal sign of success. But what about a dacha? Or a herd of cattle?

Finally, there is the language of agreement. In some countries, when a deal is made, it is written in stone. In others, it is simply a road map, the beginning of a relationship.

So, after this whirlwind tour around the Tower of Babel, where do you find yourself? Are you even more confused? If you are, it may be a good sign. Recognizing your own ignorance tends to be an excellent antidote to cultural arrogance.

Manfred F.R. Kets de Vries is the Raoul de Vitry d’Avaucourt Professor of Human Resource Management at Fontainebleau, France based-INSEAD, and is a psychoanalyst in Paris.

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