Analysis and Comparison of Chinese and German Business Culture with Special Focus on Effective Leadership in China
Term Paper 2015 12 Pages
Table of Contents
2 Choice of Theory
3 Analysis of German and Chinese Business and Leadership Culture
3.1 German Leadership Culture
3.2 Chinese Leadership Culture
4 Comparison of German and Chinese Leadership Culture
5 Recommendations for German Managers in China
Economic relations between China and Germany have a long historical tradition. How- ever, during the last two decades trade has increased significantly. From a German point of view high potential growth opportunities and untapped market niches attracted companies to enter the Chinese market. Nevertheless, those entries did not occur with- out difficulties for business leaders and their workforce due to cultural differences and thus, diverging styles of doing business. As a result, channelling knowledge of the two leadership cultures has become a relevant field to discover helpful aspects of interaction when managing Chinese operations or negotiations as well as cross-border mergers, acquisitions and alliances in China. Against this background, this paper aims for a description of both Chinese and German business culture with a specific focus on lead- ership in order to improve current understanding of effective leadership in China. In this context, this paper builds on findings of the GLOBE study, which serves as the main scientific basis. First, it will be reasoned why GLOBE study establishes a reasonable fundament for the subject at hand. Second, German and Chinese business and leader- ship culture will be presented. Third, based on this description a comparison will be drawn in order to reveal applied learning potentials, which will be the fourth part of this paper preceding the conclusion.
2 Choice of Theory
The GLOBE study was elected to be the basis of this seminar paper as the study specifically addressed leadership in different cultural contexts. Therefore, not only a strong but also specific link between content of the study and the leadership focus of this paper could be established. Moreover, the largest information base for cross- cultural leadership establishes a strong research fundament for reasonable conclusions concerning intercultural competencies.1 Furthermore, the results of the GLOBE project 2007 can be considered relatively new, so that they also allow for interpretations against the current background. As a result, such interpretations are not only relevant but might also result in a value-adding contribution to leadership in practice. Consequently, GLOBE study offers potential for applied learning results and not only theoretical advice. However, the long-term study also builds on leading research findings from the past such as important studies published by Hofstede in 1980. As a result, GLOBE study presents a relatively comprehensive framework in intercultural studies. Finally, the study includes specific sections referring to Germany and China and thus, offers a precise fit to the topic of this paper.
3 Analysis of German and Chinese Business and Leadership Culture
The following analysis comprises the results of GLOBE Study for Germany and China. Similar to the study also this paper builds on the specific assumption that “leader effectiveness is contextual and that it is embedded in the societal and organizational norms, values and beliefs of the people being led.”2 Put differently, the findings, which will be presented, mirror central aspects of the respective business culture while focus- ing on effective leadership.
3.1 German leadership culture
Even though, the GLOBE project identified leadership traits, which can be considered universally desirable German data also revealed unique results. Those allow distinguish- ing the German-style management from most other countries or regions in the world. Moreover, what determines German leadership also establishes challenges for respective managers when being confronted with other cultural backgrounds.
The most important outcome from GLOBE study concerning Germany’s cultural values is an overwhelming focus on performance orientation. However, this relates more to achievements of the individual person as Germany ranks relatively low on collectivism scales. Furthermore, business practices are influenced by exceptionally high levels of uncertainty avoidance as well as assertiveness, while humane orientation is much less promoted than in other countries in the world. Moreover, according to the GLOBE study the German workplace is dominated by low compassion as well as interpersonal relationships, which are direct, simple and strict. In addition, research results suggested that conflict and controversy could be regarded as rooted German societal culture. Based on this cultural background leadership excellence in Germany should indicate similar values as the environment, in which it is built in.
Generally, the GLOBE project verified this assumption in the German case. A leader’s effectiveness stems from “high performance orientation, low compassion, low self pro- tection, low team orientation, high autonomy and high participation”3. In this context, most measures follow the societal and organizational practices. For example, low team orientation and low compassion pick up on the characteristic of limited humane orienta- tion in the German society. Besides, in a highly developed capitalistic economy the in- dividual leader is precisely measured against the fulfilment of personal benchmarks and other performance indicators in order to determine the respective effectiveness. As a result, numeric accomplishments of the individual seem to be regarded more contributing to outstanding leadership than establishment of humane relationships.
However, two aspects deserve attention and more elaborate explanation. Firstly, highly participative leadership indicates a unique mix of German values. On the one hand, it shows the importance of the individual. On the other hand it displays, a collectivistic tendency, which stems from the German social justice system, which allows for dis-tinctive participation of labour representatives. Additionally, co-workers and sub-ordinates are expected to contribute to decision-making at management level. Simi- larly, it is common that responsibility is delegated and is not exclusively exercised by top-level executives. Consequently, a somewhat twofold character trait of leadership exists, which establishes a counterweight in an individual-centred culture.
Secondly, GLOBE outcomes revealed that leadership culture in Germany includes con- flict and controversy and thus, interacts closely with general societal practices. It follows that a manager, who tries to save his face by acting self-protectively, cannot achieve outstanding leadership in Germany. This is due to the fact that the respective character trait would simply inhibit confrontation in interpersonal relationships. As a consequence, GLOBE researchers have characterized the leadership style, which has lead to the German economic success story after World War Two as “tough on the issue, tough on the person”4.
3.2 Chinese leadership culture
For several reasons China cultural values and organizational patterns emphasize distinctive dimensions as reported by the GLOBE study. Consequently, also leadership traits important in China closely relate to this particular background and thus, can be distinguished from other regions of the world.
First of all, it stands out that in China particularly humane oriented organisational practices are favoured. The importance of interpersonal relationships is specifically in- cluded in the idea of guanxi. According to this concept a person’s status stems from the respective ties and relationships5. In line with that, collectivism ranks particularly high since China is described as mainly in-group oriented culture6, which prefers group harmony. It follows from this background, that assertiveness is much less promoted whereas Confucian manners dominate organizational communication. This means that indirect language, which avoids confrontation and aggressiveness plays a significant role in business.
However, Chinese business culture is founded on hierarchical structures with high institutional orientation, which is extraordinarily represented by the role of the state and the communist party. Therefore, GLOBE researchers determined: “Chinese business structure can be directly linked to the history of patriarchy: the owner or manager plays the father’s role, and the subordinates or employees play the son.”7
1 Michael H. Hoppe, Regina Eckert, “Leader Effectiveness and Culture: The GLOBE Study,” Center for Creative Leadership, 2014, http://www.ccl.org/leadership/pdf/ assessments/GlobeStudy.pdf, accessed February 2015
2 Douglas Riddle, Emily R. Hoole, and Elizabeth C.D. Gullette: The$CCL$Handbook$of$ Coaching$in$Organizations$ (New York: John Wiley & Sons, 2015), google eXbook, p. 251
3 Venkatesh Rao: Human$Resource$Management$ (New Delhi: Excel Books India, 2010), google eXbook, p. 827
4 Felix C. Brodbeck, Michael Frese, and Mansour Javidan, „Leadership made in Germany: Low on compassion, high on performance,“Academy$of$Management$ Executive,$ Vol. 16, No. 1, 2002, p.1, https://bschool.nus.edu/Departments/ManageX mentNOrganization/publication/MichaelFreseJournal/brodbeck%20frese%20 javidan%20ame02%20germany%20globe.pdf, accessed February 2015
5 Mansour Javidan et al., “In the Eye of the Beholder: Cross Cultural Lessons in Leadership from Project GLOBE,” Academy$of$Management$Perspectives,$Vol.$20,$No.$ 1,$ 2006, p.83, http://business2.fiu.edu/1315548/www/Spring_2010_MAN6626_RF2/ ..%5C..%5Cmydocs%5Cglobe_leadership_amp.pdf, accessed February 2015
7 Anuradha DayalXGulati, Angela Y. Lee: Kellogg$on$China:$Strategies$for$Success$ (Evanston: Northwestern University Press, 2004) p.97