International Business Essay
People from different cultures are brought up in different environments with different values, norms and practices that shape their mindset accordingly. A difference in mindset is an influence of various acting elements within a culture and which further affects the behavior and the way of thinking of that person. As a result of these differences, managers who are apt to working in a certain country will starkly differ from managers in other countries. In this paper, we look into what differences lay between managers from Greece and managers from America. There are different managerial aspects that need to be explored in order to gain a better understanding of the business environments in the two countries and how they are shaping the mindsets of the managers in the specific region.
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The cultural differences have the most impact on the managers and their way of thinking. In America the social structure allows individuals to exercise more freedom, independence and liberty. This is often reflected in the fact that men and women are often let out to stand on their own two feet once they reach the age of eighteen and sometimes even earlier than this age. The American culture is more apt to developing people internally on their own basis without the support of peers or family. This often tends to make them self-focused and lead lives on their own sustenance with the primary focus on reaching success heights for own self (Heifetz & Linsky, 2008). So in America, success is strictly dependent on a person’s own abilities, his involvement in business and his own enthusiasm for success. As a result, the norms, values and practices for one-self are determined pretty much by the individual himself and he applies them in his own way on his own rules (Daft, 2001). Family relationships, values and bondage weigh a lesser priority in the American culture than in the other culture and therefore the stress is more towards individualism and independence.
This starkly differs from Greece, located in southeast of Europe near Asia and Africa. The Greek culture is one where family is top priority. The cultural values, family relationships, bondage and association are highly ingrained in the business environment. In Greece, often generations of families are seen to be living together and people believe in remaining in close contacts with extended families and contacts. Independence, liberty and individuality are not considered worthwhile solution for people when family structures exist. The focus is on taking forward the family culture and heritage instead of digressing in a different direction to achieve a certain career dream. Family support and sustenance are seen as necessary for an individual (Robbins & Judge, 2004).
Although pursuing ones dreams is not hindered, but if a family business is already in practice, it will not be seen as a good deed to embrace independence and putting family on the backseat. As a result, Greek values tend to be more family centered rather than giving people the autonomy and liberty which they desire or should embrace. This is consequence also hinders the personal development of a person by constraining his wishes. Greeks are major advocates of education and especially their males family members especially to acquire high and quality education. However, it is observed that Greek families generally do not send their children to universities in UK or US even though the world’s best universities reside there. Even though the culture has adapted with time, the cultural values and practices described above are the traditional and inherent elements of the Greek and American region (Heifetz & Linsky, 2008).
The business structure in America and Greece differ strictly. In America, especially in recent years, single owned businesses have opened up either physically on the land or online. The previously run family businesses in America are now being owned and run by professional managers who have the necessary talents and skills. Owing to greater autonomy and freedom, businesses are managed by groups of people who independently come together with a range of capabilities and skills to reap the benefits of success. People can start as early as possible depending on their own wish and often people tend to switch between jobs or workplaces to either gain more experience or to fulfill their needs better and to develop their personal abilities (Daft, 2001).
In Greece, with a traditional focus on family structures, many businesses are owned and run by family relationships. Business organizations primarily tend to be ‘paternalistic’ which reflects the strong family ties and ethnic values that bind all Greeks together. People are inherently expected to join family businesses when they come of age instead of pursuing their won wishes and dreams. Businesses are seen as family successions where the retiring CEO will pass his responsibilities to his offspring, relative or some other individual.
American businesses tend to reflect a non-rigid hierarchal structure with managers leading groups of subordinates below him. Autocratic organizations with a demanding influence are not very typical of American organizations (Heifetz & Linsky, 2008). Teams and group work is an essential part of organizational structures where people can showcase their team work abilities. Groups such as quality circles or societies headed by a manager are pretty much inherent in the system.
Greek organizations tend to reflect a more family-oriented hierarchal structure wherein often family relationships and family positions dictate the position of an individual in an organization. There is a more rigid business structure in which family values and respect are expected to be observed by subordinates and lower level managers up to the CEO. Such structures tend to confuse the personal relationships with business work which in certain circumstances may not be favorable for the business.
Role of Managers
The role of managers is pretty much defined by business environment and structure. In American businesses, top management places a lot of stress on basic Human Resource concepts of expanding the role of individuals and granting them more and varied responsibilities. The concepts of autonomy, freedom, liberty and empowerment are the main driving forces in today’s American business environment (Robbins & Judge, 2004). Managers are encouraged to show more decision making abilities and help subordinates develop and groom their capabilities and to put them in a way to which is in line with the strategic direction. The role of managers is more towards grooming individuals, helping them, allowing them more participation and freedom and guiding them rather than imposing decisions and portraying an extremely authoritative managerial nature.
In Greece, the individual responsibilities of managers and workers are clearly defined. Being a part of a family structure, a lot depends on your family position as well. The scope of an individual’s tasks may not be increased and expanded to add autonomy and empowerment. Managers traditionally will have to be given clear instructions on what they have to do otherwise directions to them will remain very vague and will not be able to be understood. The decisions or statements taken by the elderly group members holding a high position in the business are deemed to be paramount with no room for influence or change from others (Daft, 2001). This is directly related to the concept of strong and in-built family ties where the elder members of the family often dictate their instructions and expect them to be followed as they are. The concepts of employee empowerment, autonomy and independence are weak and constrained primarily due to family pressures and structures.
In American culture, the superior-subordinate relationship tends to be democratic rather than influential and autocratic. Managers and subordinates can interact personally; air their views, concerns, opinions and problems freely and without hesitations. In fact they are encouraged to act in a participative and involving manner. Decision making is encouraged and channels are designed to involve managers more in this process. This gives managers a felling of worth and is a means of motivating them. Channels of communication tend to be more personal and often managers can come and talk to one another face to face or on phone whenever a need arises. Resorting to memos and letters is less and this reflects the more participative, informal and interactive business culture. On the contrary, in the Greek business environment, superior subordinate role is clearly defined with in-built obligations and expectations. Superiors and managers have to give clear-cut instructions to subordinates, with minimal scope for interaction or feedback. The decisions dictated by managers are seen as having a paramount value that cannot be changed or influenced (Heifetz & Linsky, 2008). A strict organizational structure follows with more of an autocratic rule wherein room for participation is very less. Managers in Greek culture tend to demand loyalty from subordinates due to the highly in-grained relationship bonds in the run in Greek culture. Manager-subordinate relationship is pretty much reciprocal wherein the manager will support and look after the interests of his subordinates only if he receives the esteemed recognition and respect (Robbins & Judge, 2004).
Composition of males and females
In the American culture, both women and men are seen as having capabilities to advance the cause of the business and display their talents and creativity to take the business to great heights. As a result, in America, men and women are both given equal opportunities for jobs, education and for promotions. Moreover, women’s pay and other monetary benefits have also now been set in line with males and with the usage of more bonuses and performance-related pays, women are being given the motivation they need to work and excel. Women are encouraged to take up fields that were previously frowned upon and they have truly displayed their talents and business spirit by taking an enthusiastic and proactive business approach. So with equal opportunities, males and female composition in business organizations is almost equal (Heifetz & Linsky, 2008).
However, in Greece, businesses primarily remain male-dominated with little scope and motivation for women to enter the business field. Even though there are some successful women managers working in Greece, the businesses mainly remain dominated by males. The male composition is more than 85% in businesses whereas females come in scanty numbers. The efforts and encouragement that seem to be taken in the American culture to progress the cause of women in the business environment do not seem to be taking pace in Greece.
Leadership is often confused with management and administration. So firstly, we would distinguish between the three terminologies. Leadership is about developing a vision and direction and then having the inner ability to pursue it and energizes others with it too. Management is about achieving the vision through the allocation of resources and to reach certain degree of profit or surplus. Administration is about procedures, guidelines and rules to ensure that they are being followed in the proper manner. Administration tends to be more general and remains same more or less worldwide. It is leadership that undergoes changes and evolves (Daft, 2001).
However, even though leadership and management may differ in meanings, in practice it is the mangers who have to take on the role of a leader in an organization. Therefore it is important to understand the leadership roles that are most dominant in America and Greece (Heifetz & Linsky, 2008).
In America, leadership has evolved since inception. Firstly family owned businesses were the norm where leadership was passed down from fathers to sons and siblings. However, this practice has now changed and American organizations are now being owned and ruled by professional mangers and businesses later taken on by other professional managers. More sophisticated businesses now have programs to develop CEOs within the company. Capital is raised through capital markets instead of from the family’s own funds. A CEO has an average of 30 years with the firm and about 4% of the company’s ownership. Since these are not family based businesses, there is less freedom for action for CEOs and boards in America than in Greece where family CEOs have much greater power and authority.
In Greece, since businesses are mostly family owned, power lies with the family owners instead of capitalists who have invested in the firm and thus enjoy less influencing power. However, the greater share of the company they own, the more the influence and decision making they can be a part of in America. The difference lies that in Greece, businesses and leaderships are generally passed on ‘sons’ or ‘relatives’ basis whereas in America, people have to strive through year’s experience and training to reach the desired place in the business organization (Robbins & Judge, 2004).
In America, the main leadership styles pursued by managers are:
- Directive leadership where the leader is very much in charge and stresses that the manager directs and leads people with less scope for autonomy for people. However, this trend is pretty much declining in America even though previously it used to be the norm. • Participative leadership whereby teamwork and group work is stressed a lot. However, this is more common in Europe and Japan than in America. Even though Greece is a part of Europe, it is not typical of European business style.
- Empowering leadership is the newer concept gaining a lot of force and momentum in recent years. It is about delegating tasks and responsibilities to individuals and giving them the authority to do work by their own ways without too much of influence and accountability. This means giving employees a broader work scope which improves their job satisfaction. Jack welsh once commented “You may be a great manager, but unless you can energize other people, you are of no value to General Electric as a leader.” This shows the significance of leadership plus empowerment in the top US organizations (Daft, 2001).
- Charismatic leadership whereby people follow someone because of his magnetism and his charming personality. People do not follow him because he allows participation, or empowers people and gives them great freedom, but people follow him because of who he is (Heifetz & Linsky, 2008).
- Celebrity leadership is very different and involves looking outside the company to the impact on others. This requires an appeal on the part of the CEO who sort of becomes a celebrity with a charisma, a dramatic influence having the flair and ability to interact with the media. Such CEOs gain a lot of media coverage. In America, often managers employ a mix of these leadership styles. But mostly, they apply the relevant style according the need of the time and the circumstances. In Greece, managers also tend to employ a mixed leadership strategy. However, in Greece, the most predominant leadership styles are can be seen are
- Transformational leadership is one where the leader takes up a visionary position and inspires other people to follow. Transformational leaders can motivate people in the right direction and can encourage them to transcend their own interests in the name of the organization if and when needed. They can be catalysts for change creating an atmosphere of change. Managers with transformational leadership style are mostly seen equipped with emotional intelligence (EQ) which is a person’s ability to understand and be aware of one’s own and others thinking and feelings and have the potential to influence and guide their behavior and thinking pattern. Having emotional intelligence allows managers to understand the needs of their subordinate and counterparts respond to their emotional stages and design a solution or a vision to help them overcome the emotional waves (Robbins & Judge, 2004).
- Transactional leadership brought about by Max Weber is one in which the managers work through the patterns of rewards and punishments to gain compliance from their subordinates. Even though the rewards maybe clearly stated, punishments are not explicitly mentioned but are still well-understood. In the organization, formal systems of discipline are intact and in place. Transactional leadership puts in practice the concept of contingency, whereby, rewards or punishments are contingent upon performance.
Whereas transformational leadership is one that has a ‘selling’ impact, transactional leadership has a more ‘telling’ impact. In Greece, the trend is to use transactional than transformational leadership styles together. However, transformational leadership is seen to be more influential as it is the main means of dissolving conflicts in Greek organizations. It is the manager’s EQ capabilities of social skills, empathy and motivation that interact positively with the subordinates integrating style and is the key to conflict management in Greek organizations (Heifetz & Linsky, 2008). Leadership is what brings together the direction of an organization and directs it towards the strategic vision. In almost all companies people look up to a role model who has this ability and who filters it down the vision to his people. In America, this role model is most commonly the corporate CEO. In Germany this role model is often the head of the family.
In America, personal development is seen extremely important for people to groom themselves so as to take on higher positions in the organization. They tend to switch between jobs in order to gather up different in-sights and job experiences. People strive on their own basis and take up opportunities that come their way. All this helps them deliver better when they achieve the post of their manager. It is observed that in America, managers tend to be more interested in getting money out of the business by giving in their full instead of wanting and striving for the overall success of the business (Heifetz & Linsky, 2008). Even though CEOs comment that they are driven by a need to excel in today’s competitive environment to reach a winning position, we cannot give them much credit owing to the handsome salary packages that have started being offered in the past decade to CEOs and managers.
In Greece, managers strive for the overall success for the firm as they want their business to be taken forward by their family successors and so they work for the overall wellbeing of the business instead of focusing on just their self-interests. In Greece, however, family support matters a lot and in some organizations may be a way of getting to higher positions. Also, if a person sees someone else take up a higher position, he personally dislikes him and also becomes victim to that unsettling feeling of not being recognized for what he has. In recent years, in Greece, performance has been stressed on a lot more and businesses are now becoming performance oriented.
After exploring the different aspects of management in both Greece and America, we can draw out some major conclusions about the mindset of American and Greek mangers. This will help us in identifying what hurdles lie in the way of mangers if they switch countries because they are used to a different environment and also different business practices.
In Greece, the traditional Greek values, culture and practices are pretty much inherent in the business environment where majority businesses tend to be family owned and run and rely pre-dominantly on their family members’ skill rather than undertaking a recruitment program to hire professional managers and people (Heifetz & Linsky, 2008). Managers require a lot of support from their family members and elderly managers demand and expect respect, loyalty and compliance from their subordinates.
On the other hand, the American business environment judges people on their capabilities and hires then on that basis instead of any personal associations. This makes the environment competitive and geared towards the achievement of strategic goals. Primary focus is on personal development and success rather than overall business success. If a person from America was to find himself in a Greek organization in Greece, he would have to change his practices and behaviors. In America, things are open, loyalty or obligations seem to be not the norms of business and self-interest is a driving factor. The concept of family is not even that strong in America as it is in Greece which would mean adapting to the cultural changes of Greece. However, Americans maybe able to do this in a bit of less effort than that required from Greek managers having to work in American style businesses because they are groomed in any way to take on new challenges and to have that adaptability factor.
A person from Greece taking up a managerial post in US will face the hurdles as in US, the business environment tends to be driven by self-interest with a very challenging competitive atmosphere. Striving higher depends on the own skills and capabilities rather than support or influence from peers or noteworthy relationships and contacts. However, businesses in Greece are now moving towards a ‘convergence’ or ‘culturaltransparency’ so as to leave their cultural practices in businesses behind and make businesses run in a more American or typical European style. Greek businesses that are practicing in US have adopted the US managerial style and norms and are running successfully.
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