Analysis and Comparison of German and Indian Culture with a Special Focus on Decision Making Strategies

Table of Contents

Abbreviations

Table of Figures

1. Introduction

2. Analysis and Comparison of Cultures
2.1 Analysis of the German Culture
2.2 Analysis of the Indian Culture
2.3 Comparison of the German and Indian Cultures

3. The Impact on Decision Making Strategies

4. Conclusion

Bibliography

Abbreviations

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Table of Figures

Figure 1: Comparison of the German and Indian Cultures

1. Introduction

Whereas the process of globalisation brought wealth to many countries over the past century, others could not participate in the accelerating environment. Moreover the proceeded industrialisation dilated the gap between rich and poor countries.¹ On the one hand industrial countries benefit as the world inexorably grows together, while on the other hand there are many countries that cannot keep up.² Thus there is a shift in cultural, social, political and economic interdependencies between countries worldwide.

Subject to the condition that the process of globalisation is determined by the decisions the people in each country took, the question rises whether how the decision making strategies differ from one country to another and why. Does culture provide the explanatory approach?

As a result of the increasing demand for taking the right decisions in globally competing companies as well as in countries on the whole, the first chapter of this assignment addresses Geert Hofstede´s “Dimensions of National Cultures”. The dimensions are illustrated by the analysis and comparison of German and Indian culture. Subsequently the outcome of the analysis will be transferred to decision making strategies in order to make a proposal for possible future improvements in terms of developing and threshold countries.

2. Analysis and Comparison of Cultures

The variety of cultures worldwide encouraged numerous researchers to establish theories that organise and illustrate the differences between national cultures by defining subgroups. As one of the leading experts social psychologist Geert Hofstede reached comprehensive understanding with one of the most current theories.³ Hofstede defines culture as “the collective programming of the mind distinguishing the members of one group or category of people from others.”⁴

In collaboration with IBM the Dutchman examined 116,000 employees from more than 70 different countries between 1967 and 1973.⁵ The objective of the survey was to figure out why some motivation concepts did not succeed similarly in every country and how values in the workplace are influenced by culture. Based on the results of the survey, Hofstede originally set up four dimensions.

Those are “Power Distance Index”, “Individualism versus Collectivism”, “Masculinity versus Femininity” and “Uncertainty Avoidance”. The dimensions arise from values that differentiate national cultures of one another in terms of thinking, feeling and acting.⁶

1991 a fifth dimension was added. Assisted by Hofstede, Michael Harris Bond adopted the “Long-Term Orientation” to 23 countries which is based on Confucian thinking. 19 years later Michael Minkov revised the fifth dimension as “Long Term Orientation versus Short Term Orientation” and applied it to more than 90 countries. In that year a sixth dimension was deployed as well. “Indulgence versus Restraint” first appeared in the 2010 edition of “Cultures and Organizations” written by Geert Hofstede, Gert Jan Hofstede and Michael Minkov together.⁷

In terms of investigating the connection between culture and decision making, both cultures will be examined by following three dimensions. In the first instance the “Power Distance Index” will be applied. It describes “the degree of inequality in power between a less powerful individual and a more powerful other.”⁸ The first of six dimensions alludes to the issue how the country´s society copes with inequality between people. For example the relationship between employee and employer in that country illustrates whether it scores a high or a low degree.

A high degree deduces from acceptance for hierarchical order. Hierarchy is a system of super and under ordination.⁹ Every individual takes its place without scrutinising or undermining superior instructions.¹⁰ However, individuals in societies that constitute lower degrees attempt to equalise division of power and claim justification for recognised inequalities.

Secondly “Individualism versus Collectivism” has recourse on the relationship between an individual and the collective that represents its society.¹¹ Individualism describes the self-perception of an individual as egocentric. People care for themselves as well as for their direct social group. Individualism is the high side of this dimension. On the other hand collectivism manifests itself in a strong and usually lifelong belonging to a coherent community.¹² This is the low side of the dimension.

In addition the third dimension regarding the following analysis is the “Long Term Orientation versus Short Term Orientation”. Hereby it is illustrated how cultures deal with their past, present and future. While long term oriented countries are pragmatic and encourage thrift and efforts to prepare for the future, short time oriented countries are suspicious for upcoming changes compared to their past.¹³

2.1 Analysis of the German Culture

The application of Hofstede’s six dimensional model shows that Germany scores low on the dimension “Power Distance Index” by achieving 35 points. Accordingly the people are not confronted with hierarchical systems and do not need to expect unequal distribution of power. Thus subordinates and superiors have equal rights. This is considered essentially in the federal republic of Germany.¹⁴

Germany´s economic driver is the middle class. The highly decentralised work environment also includes that making a decision does not only take superior´s opinions into account. Likewise subordinates discuss and contribute to decision making processes. This is evident in political decisions as well as in German companies.¹⁵

By receiving rough guidelines instead of clear instructions Germans are independent on how they fulfil their requirements at work.¹⁶ Business communication is direct and formal but outright. Not concurring opinions are common¹⁷ as they are usually linked with constructive alternatives.¹⁸ Furthermore management style is consultative and control is not wanted at any level.¹⁹

Scoring 67 points in the dimension “Individualism versus Collectivism”, the German culture tends to be individualistic.²⁰ Individuals are independent. Striving for freedom over equality is one of the main characteristics of individualistic societies. Besides it is important for Germans to live freely and safely and to develop without limits.²¹

The relationship between employee and its employer is contract based and therefore neutral and non-personal.²² Nevertheless, mutual respect and reliability are particularly important. Communicating in an open and honest way is essential in terms of learning lessons from mistakes.²³

In their job employees are considered “economic persons”. The personal interests should match the employer’s interests to pull together.²⁴ Delegated tasks must be challenging so that personal sense is accomplished.²⁵ Moreover accomplishment prevails over relationship.²⁶

Referring to the dimension “Long Term Orientation versus Short Term Orientation” Germany features a pragmatic approach due to scoring high 83 points and therefore ranks 10th globally.²⁷ Especially the post war period changed the thinking. Also this dimension “correlates strongly with recent economic growth and thus predicts future growth” in Germany.²⁸

The federal republic encounters environmental changes with the ability for adaption of tradition and modern education. This prepares Germany for the future. Also people are convinced the truth depends on their individual situation as well as the country´s situation and furthermore context and time are relevant.²⁹

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¹ Mario Telò, Globalisation, Multilateralism, Europe: Towards a Better Global Governance?, New ed. (Ashgate Publishing Group, 2014), p. 251.

² The Hindu, http://www.thehindu.com/news/national/karnataka/india-yet-to-keep-pace-with- advanced-countries/article7042305.ece, accessed July 2015.

³ The Hofstede Centre, “Geert Hofstede,” http://geert-hofstede.com/geert-hofstede.html, accessed July 2015.

⁴ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for Survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p.516.

⁵ Geert Hofstede, Culture ’ s Consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations (Thousand Oaks: Sage Publication, 2001), p. 41.

⁶ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for Survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p.5.

⁷ The Hofstede Centre, “National Culture”, http://geert-hofstede.com/national-culture.html, accessed July 2015.

⁸ Hofstede, Culture ’ s consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations (Thousand Oaks: Sage Publication, 2001), p. 83.

⁹ Gabler Wirtschaftslexikon, “Hierarchie”, http://wirtschaftslexikon.gabler.de/Definition/hierarchie.html, accessed July 2015.

¹⁰ Geert Hofstede, Lokales Denken, globales Handeln - Interkulturelle Zusammenarbeit und globales Management, 5th edition. (Munich: Deutscher Taschenbuch Verlag, 2011), p. 57.

¹¹ Hofstede, Culture ’ s consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations (Thousand Oaks: Sage Publication, 2001), p. 209.

¹² Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p.92.

¹³ Hofstede, Culture ’ s consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations (Thousand Oaks: Sage Publication, 2001), pp. 259-361.

¹⁴ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p. 74.

¹⁵ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p. 60.

¹⁶ Sylvia Schroll-Machl, Doing Business with Germans: Their Perception, Our Perception, (Göttingen: Vandenhoeck & Ruprecht GmbH & Co. KG, 2013), p. 107.

¹⁷ The Hofstede Centre, “Country Comparison Germany,” http://geert-hofstede.com/germany.html, accessed January 2015.

¹⁸ Mike Nicks and Barry Tomalin, The World's Business Cultures and how to unlock them, (London: Thorogood Publishing, 2007), p. 233.

¹⁹ The Hofstede Centre, “Country Comparison Germany,” http://geert-hofstede.com/germany.html, accessed January 2015.

²⁰ Geert Hofstede, Lokales Denken, globales Handeln - Interkulturelle Zusammenarbeit und globales Management, 5th edition. (Munich: Deutscher Taschenbuch Verlag, 2011), p. 101.

²¹ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p. 128.

²² Ibid.

²³ The Hofstede Centre, “Country Comparison Germany,” http://geert-hofstede.com/germany.html, accessed January 2015.

²⁴ Geert Hofstede, Geert J. Hofstede, and Michael Minkov, Cultures and Organizations: Software of the Mind; Intercultural Cooperations and its Importance for survival, 3rd ed. (United States of America: Mc Graw-Hill, 2010), p. 119.

²⁵ Ibid., p. 92.

²⁶ Ibid., p. 124.

²⁷ Ibid., p. 255.

²⁸ Ibid., p. 236.

²⁹ The Hofstede Centre, “Country Comparison Germany,” http://geert-hofstede.com/germany.html, accessed January 2015.