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Findings from an empirical study Issue 04/2008 Page 2
- An efficient adaptation process can lead to a more efficient business relationship.
- Closer business relationships between business partners lead to more intensive adaptation processes
- The degree of adaptation is related to the age: the older a business partner is the more he or she adapts.
- Men and women are equally (non) efficient in constructing intercultural cooperation.
- Germans are ‘Adaptors’ as opposed to the Americans as ‘Cultural Cowboys’.
- Germans although generally follow Adaptor culture, tend to adapt less with business partners which have high masculinity like Japan.
- Mother firms and their abroad subsidiaries: core issues linked to ‘Cowboy’ behavior of the mother firm.
- The correlation between intensity of business relationship and adaptation is predominant for external partners.
- There are three main barrier groups to effective international business relationships: culture (national an corporate), language/communication and legal/political restrictions.
- Adaptation, although important, is not the only key determinant.
- Cultural trainings are costly, but even more costly can be cultural failures in international business: only analysis of the real situation determines if adaptation is a necessity.
Findings from an empirical study Issue 04/2008 Page 3
A) The Challenge
Some dreams are just not meant to be! Take for example the celebrated merger of the German automobile company Daimler Benz with the American Chrysler AG in 1998. Shortly after the acquisition had taken place, it turned out to be that the American subsidiary faced a restructuring case. Despite revitalization attempts by the Germans, it came to a separation after 10 years. This separation cost Daimler Benz
2.5 billion Euros. How could this happen? Were the cultural differences to great? Could a cross culture manager have prevented this problem from ever happening?
On the one hand, cultural differences are unpreventable and are present in all cross border business activities.
“Misunderstanding, cultural peculiarities (fear of uncertainty of Indians, brusque behavior of Germans, apparent openness of Chinese).”
Quote 1: A German that works for an American company as a consultant in Canada
This statement, merely confirms the clichés that exist today in the international business context. Such stereotypes and judgments are constructed in the practice and have an influence on the culture within all international operating companies. But needless to say, although companies are aware of these potential difficulties, companies still go abroad in order to grow and benefit from the competitive advantages.
“Earlier, differences in language, culture, tradition were the major difficulties. Now due to globalization, many of such differences are fading.”
Quote 2: An Indian who cooperates with a German company
1) It depends on the culture you live in
But we have to ask ourselves, which of the contrasting positions is in fact the correct position? Perhaps both positions have an overall important influence.
With the effects of increasing internationalization within the global market, the way in which firms operate internationally is becoming more and more influenced by the various cultural standards of different countries. There are two key questions that arise: On the one side there is the level of adaptation which possibly leads to an efficient business activity relationship abroad, however the question that arises: “Does it make sense and is it efficient to adapt to the partners
Findings from an empirical study Issue 04/2008 Page 4 illustration not visible in this excerpt
B)The Survey illustration not visible in this excerpt
2) The “Cowboys” and the “Adaptors”
In order to answer these questions, we as students from the MBA program at the University of Saarland, conducted a survey. We took two different strategies in regards to the type adaptation that can be made use of when dealing with companies from different nations. The first one is the ‘Cultural Cowboys Approach’ and the second one is the ‘Adaptor Approach’. The ‘Cultural Cowboys Approach’, focuses on an ethnocentric attitude in regards to international cooperation. The question is, if one belongs to a certain culture and believes that their culture is the only one that makes sense, the notion of adapting to other cultures essentially becomes irrelevant. In terms of the “Adaptor” approach, in contrast to the ‘Cultural Cowboys Approach,’ one would adapt to the behavioral and cultural realities of a partner-enterprise.
“Most people think that the "audible" part of a foreign language is the most important while in reality, non-verbal communication is much more important, especially in some cultures (think southern Europeans, or South Americans for example). Additionally, people do not realize that, beyond the language, there is a culture. You're much better off if your language skills are average but your cultural sensitivity is superior, than the other way around.”
(A French employee cooperating with an Italian company)
In the modern business world that faces internationalization in light of globalization, where going international and effectively collaborating internationally is a necessity in order to illustration not visible in this excerpt
Findings from an empirical study Issue 04/2008 Page 5 survive and above all to be successful. Essentially companies have to determine if working with international partners is important, does it lead to the efficiency and whether adaptation truly leads to a better performance.
The survey was sent via email to various international networks. It was to be answered in either English or in German. 191 respondents participated on the survey from which 24 nationalities were represented. The respondents consisted of HR managers and CEOs of various international operating companies with a majority of respondents from America and Germany.
The first result which is highlighted in the survey focuses on the actual intensity of the cooperation between the respondent and their foreign partners as well as the targeted intensity. The second question asks about the degree in which the respondents adapt to their foreign partners and whether this adaptation is sufficient or not.
These answers and their correlations show the different ways of behavior between the business partners. In addition, they try to figure out the efficiency of the adaptation.
From the survey, we determined that the Germans can be categorized as the ‘Adaptors’. Because they believe that the more intense the adaptation is, the more intense the adaptation should be further developed.
3) The very basics: Adaptation follows relationship
By means of the gathered data from the student’s survey, it was determined that the more intense the relationship between the respondent and its foreign partner is, the more significant the degree of adaptation is.
Generally said, with a greater efficiency in regards to the adaptation, a greater efficiency of the business relationship is provoked. Needless to say it is seen that approximately 6.2 percent of the respondents desire a more intensive relationship with their respectable foreign partner(s). In contrast to this fact, only 3.7 percent of the respondents believe that they need to adapt more to their foreign partners. For the most part the respondents (58,1%) consider the intensity of the business relationship on a middle and high level. This is exactly seen with regards to the adaptation of behavior towards the foreign partner (74,9%).