Societal Culture and Management [Reprint 2012 ed.] 9783110856064, 9783110122114

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de Gruyter Studies in Organization 44 Societal Culture and Management

de Gruyter Studies in Organization International Management, Organization and Policy Analysis

An international and interdisciplinary book series from de Gruyter presenting comprehensive research on aspects of international management, organization studies and comparative public policy. It covers cross-cultural and cross-national studies of topics such as: — management; organizations; public policy, and/or their inter-relation — industry and regulatory policies — business-government relations — international organizations — comparative institutional frameworks. While each book in the series ideally will has comparative empirical focus, specific national studies of a general theoretical, substantive or regional interest which relate to the development of cross-cultural and comparative theory will also be encouraged. The series is designed to stimulate and encourage the exchange of ideas across linguistic, national and cultural traditions of analysis, between academic researchers, practitioners and policy makers, and between disciplinary specialisms. The volumes present theoretical work, empirical studies, translations and 'state-ofthe art' surveys. The international aspects of the series are uppermost: there is a strong commitment to work which crosses and opens boundaries. Editor: Prof. Stewart R. Clegg, University of St. Andrews, Dept. of Management, St. Andrews, Scotland, U.K. Advisory Board: Prof. Nancy J. Adler, McGill University, Dept. of Management, Montreal, Quebec, Canada Prof. Richard Hall, State University of New York at Albany, Dept. of Sociology, Albany, New York, USA Prof. Gary Hamilton, University of California, Dept. of Sociology, Davis, California, USA Prof. Geert Hofstede, University of Limburg, Maastricht, The Netherlands Prof. Pradip N. Khandwalla, Indian Institute of Management, Vastrapur, Ahmedabad, India Prof. Surenda Munshi, Sociology Group, Indian Institute of Management, Calcutta, India Prof. Gordon Redding, University of Hong Kong, Dept. of Management Studies, Hong Kong

Societal Culture and Management Editor: Theodore D. Weinshall

W DE

G_ Walter de Gruyter · Berlin · New York 1993

Editor

Theodore D. Weinshall Professor Emeritus of Organization and Management, Tel-Aviv University, Tel-Aviv, Israel

With 31 figures and 45 tables ® Printed on acid-free paper which falls within the guidelines of the ANSI to ensure permanence and durability Library of Congress Cataloging-in-Publication

Data

Societal culture and management / editor Theodore D. Weinshall. p. cm. — (De Gruyter studies in organization ; 44) Includes bibliographical references and indexes. ISBN 3-11-012211-1 (Germany : acid free paper), - ISBN 0-89925-614-7 (U.S. : acid free paper) 1. Industrial management — Cross-cultural studies. I. Weinshall, Theodore D. II. Series. HD31.S612 1993 306—dc20 92-37993 CIP

Die Deutsche Bibliothek — Cataloging-in-Publication

Data

Societal culture and management / ed.: Theodore D. Weinshall. - Berlin; New York : de Gruyter, 1993 (De Gruyter studies in organization ; 44 : International management, organization and policy analysis) ISBN 3-11-012211-1 NE: Weinshall, Theodore D. [Hrsg.]; GT

© Copyright 1993 by Walter de Gruyter & Co., D-1000 Berlin 30. All rights reserved, including those of translation into foreign languages. No part of this book may be reproduced in any form — by photoprint, microfilm, or any other means nor transmitted nor translated into a machine language without written permission from the publisher. Typesetting and Printing: Arthur Collignon GmbH, Berlin. — Binding: Dieter Mikolai, Berlin. — Cover Design: Johannes Rother, Berlin. — Printed in Germany.

Contents General Introduction

1

The Objectives of the Book and its Possible Lessons —Conceptual and Ethical Problems in Comparing Managerial Cultures of Different Countries — The Managerial Culture of Americans and the U.S.A. — What is there in this Book? Part One Relating Societal Culture and Management A. Introduction

19

B. Some General Issues

23

1. Do Cultures Vary?

23

Nancy J. Adler (published before in Adler, N.J., International Dimensions in Organizational Behaviour, Boston: Kent Publishing, 1986:1 - 2 8 (Chapter 1).

Cross-Cultural Management - Parochialism - International versus Domestic Organizations - What is Culture? - Cultural Orientations - Cultural Diversity - How Do Cultures Vary? — How People See Themselves - People's Relationship to Their World - Personal Relationships: Individualism or Collectivism - Activity: Doing or Being - Time: Past, Present, or Future - Space: Public or Private Summary — Questions — Notes — References 2. Time is the Essence

47

Edward T. Hall

3. Cross-National Organizational Research: The Grasp of the Blind Men Karlene H. Roberts and Nakiye A. Boyacigiller (published before in Research in Organizational Behavior, Vol.6, 1984:423 — 475 [shortened]).

If a Field is to be a Field: Suggested Criteria for Cross-national Organizational Research — Summary — Three Major Issues — Culture — The Role of Time in Organizations and Organizational Theories — The Static Nature of Static Studies — An' Example — Conclusion — References

51

VI

Contents

4. The Onslaught on Social, Cultural and Organizational Consequences by Technological Innovation

70

Theodore D. Weinshall (published before in Twiss, B. C. and T. D. Weinshall, Managing Industrial Organizations, Pitman Publishing, 1980). Introduction — The Dynamics of Technology — The Dynamics of Employment — Possible Dynamic Solution for a Technology-employment Balance — Discussion and Conclusions — Notes — References C. Some General Effects

87

1. Cultural Differences in Attitudes and Values

87

Derek S. Pugh and The Open University Course Team (published before in Wider Perspectives of Managing in Organizations, The Open University Press, 1985:55-61). The Power-Distance Dimension — The Uncertainty-Avoidance Dimension — The Individualism Dimension — The Masculinity-Feminity Dimension — Interpreting the Dimensions — Classifying Cultures by the Dimensions — Reference 2. Thinking Internationally: A Comparison of How International Executives Learn

94

Indrei Ratiu (published before in International Studies of Management and Organization, Vol.XIII, No. 1 - 2 , 1983:139-150). "International" Views of What it is to be "International" — "Internationals" Assumptions about the World and Themselves — "Internationals'" Ways of Dealing with Stress — "Internationals'" Ways of Making Sense of New Experience — Conclusion — Recommendations — Acknowledgements — References 3. Negotiators Abroad — Don't Shoot from the Hip

103

John L. Graham and Roy A. Herberger (published before in Harvard Business Review, July-August, 1983: 160-168). "Shoot First; Ask Questions Later" — The John Wayne Style — How to Negotiate in Other Countries — Training Implications — Thoughts on Negotiation — Notes — References Part Two Culture and Management in Particular Societies A. Introduction

119

Contents

VII

Β. U.S.A and Western Europe

125

1. Cultural Differences in Organizational Behavior

125

Derek S. Pugh and the Open University Course Team (published before in Wider Perspectives of Managing in Organization, The Open University Press, 1985:49-55). French and German Factory Comparisons — The Arab Executive — Japanese Work Organization — The British Managerial Culture — Perfectibility: Doing better is a Good Thing — Class Position: The Legitimacy of Hierarchical Authority — Personal Trust: The Neglect of Other Forms of Evaluation — References 2. Body Ritual Among the Nacirema

134

Horace Miner (published before in The American Anthropologist, Vol. 58, 1956:503-507). 3. How to D o Business with a Frenchman

139

Russell Eggers (published before Weinshall, Τ. D. (ed.), Culture and Management, London: Penguin, 1977:136—139 [condensed from Harpers Magazine, August 1965]). C. U.S.S.R. and Eastern Europe 1. Emerging East—West Ventures: The Transideological Enterprise

143 . 143

Howard V. Perlmutter (published in T. D. Weinshall (ed.), Culture and Management, London: Penguin, 1977:140 — 162 [excerpt from The Columbia Journal of World Business, September — October 1969]). Only One Side Can Win — Power is All — Never the Twain — Mutual Discovery — A Fourth Option — The Case for Emergence — It will Happen — Notes — References 2. Understanding the Cultural Environment: U.S. —U.S.S.R. Trade Negotiations 160 Edward Beliaev, Thomas Mullen, Betty Jane Punnett (published before in California Management Review, XXVII, No. 2, Winter, 1985:100-112). Cultural Influences on Negotiation — The Soviet License Negotiation Process — Discussion of the Schema — Conclusion — Notes — Acknowledgement 3. Back-Drop to the Evolution of Management in Socialist Countries Bohdan Hawrylyshyn (presented at a symposion on 'Management in Socialist Countries' at the International Academy of Management Conference, Barcelona, Spain, September 1987).

174

VIII

Contents

4. Eastern Europe after Perestroika and Glasnost: The Cases of the U.S.S.R. and Hungary 176 Sandor Richter, Theodore D. Weinshall, and Ilya Zemtsov (working paper in the International Center on Contemporary Society, Jerusalem, Israel, April 1990) Introduction — The Communist Countries of Eastern Europe — Perestroika and Glasnost in the Soviet Union — The Transition Process in Hungary: From Central Planning to a Market Economy — Karl Marx was Right after All — a Summary — Notes — References D. South-east Asia

203

1. H u m a n Resources Management in Asia: The Way through Recession 203 Henry-Claude de Bettignies (published before in Euro — Asia Business Review, Vol.5, No.2, April, 1986:19-22). Corporate Effectiveness in Turbulent Times — HRM versus Personnel Management — HRD: Success in Asia — HRM: A Way to Define Problems — Appropriate HRM in Asia — HRM and the Management of Change — A New Role for Asian HRD Managers — Partners in HRD — The HRD Manager Today and Tomorrow — Notes 2. Market Research in a Non-Western Context: The Asian Example

210

J. M. Kushner (published before in Journal of the Market Research Society, Vol.24, No.2, 1982: 116-122) Research Superstructure — Sampling — Demographics — Language — Field Control — Data Processing — Analysis — Conclusions— Reference 3. Cultural Effects on the Marketing Process in South-east Asia . . .

217

S. Gordon Redding (published before in Journal of the Market Research Society, Vol.24, No.2, 1982:98-114). Asian Psychological Need Structures — Asian Interpersonal Norms — Asian Social Relationship Patterns — Business Practices — Intuitive Decision-making — Informal Organisation Structure — Nepotism, Cliques and Patronage — Perceptions of the Buying/Selling Situation — Implications for Marketing — References 4. Cultural Consequences for Organization Change in a South-east Asian State: Brunei 233

Contents Peter Blunt (published before in The Academy of Management Vol.11, No. 3, 1988:235-240).

IX Executive,

Some Background Information — Regional Values and Organizational Behaviors — High Power Distance — Uncertainty Avoidance — Low Individualism — Masculinity/Femininity — Cultural Impediments to Organization Change — Implications for Organization Development — Notes E. China

243

1. The Psychology of Chinese Organizational Behaviour

243

S. Gordon Redding and Gilbert Υ. Y. Wong (published before Redding, S. G., G. Υ. Y. Wong, and Μ. H. Bond [eds.], The Psychology of the Chinese People, Oxford: Oxford University Press, 1986:267-195).

Introduction — The Regional Context — Problems of Explanation — Building Culture into an Explanation — The Post-Confucian Hypothesis — A Framework for Analysis — Organization Structure — Ownership — Size — Technology and Structure — Management Processes — Leadership and Decision Making — Management Control — Organizational Members — Social Stability — Materialism — The Special Nature of Chinese Organizational Psychology — References 2. Symbolism in Cross-Cultural Trade: Making Chinese Symbols Work for You 271 Hugh Baker (published before in Euro —Asia Review, Vol.4, No.2, May, 1985:32-25).

Cross-Cultural Misinterpretation — Asian Gaffs— Western Blunders — Make Symbols Work for You — Yin and Yang — 8 Means 'Get Rich' — The Five Agents — Red - The Most Lucky Colour — The Most Popular Animal: The Dragon — Narcissi Bring Good Luck — 'Tongue' Puns into 'Loss' — Take a Compadore — Notes 3. Culture and the Problems of Chinese Management Martin Lockett (published before in Organization Studies, Vol. 9/4, 1988:475 — 496).

Introduction — Problems of Chinese Management — Organizational Structure — Managerial Skills — Party and Management — Operations — Motivation and Labour Discipline — Summary — Key Aspects of Chinese Culture — Respect for Age and Hierarchy — Group Orientation — 'Face' — Relationships — Summary — The Impact of Culture — Reinforcing Effects — The Undermining of Legitimacy — New Management Methods — Summary — Conclusion: A Chinese Management Model? — References

279

χ

Contents

4. The China Trade: Making the Deal Work

301

Steven R. Hendryx (published before in Harvard Business Review, July — August, 1986:75-84).

When Things just don't Make Sense — Push for Coordination — When no One will Decide Anything — Establish your Decision-making Rights 5. Human Resource Practices in the People's Republic of China . . . 310 Irene Hau-Siu Chow and Oded Shenkar (published before in Personnel, December, 1989:41-47).

Up Through Reform — About the Survey — The HR Department's Place in China — Do Chinese HR Services Differ? — Modernization Without HR? - Note F. Japan

325

1. Abacus and Formula Thinking

325

Isaiah Ben Dasan (published before in Ben Dasan, I., The Japanese and the Jews, New York and Tokyo: Weatherhill, 1972:177-193).

2. Does Japanese Management Style Have a Message for American Managers? 335 Edgar H.Schein (published before in Sloan Management Review, Fall, 1981: 55-68).

Some Historical Perspective: Indoctrination — Human Relations and Participation — Human Relations and Japanese Style — Theory Ζ — Implications of Theory Ζ — Integrating the Seven S's — The Japanese Style — Interdependance — Superior-Subordinate Relationships — Individualism and Authority — Implications for U.S. Management — Knowing What is Cultural — Levels of Culture — Some Key Assumptions of U.S. Culture. "Man's" Relationship to Nature: Proactive Optimism — "Man's" Relationship to "Man": Individualistic Egalitarianism — Acknowledgements — Notes 3. Management in Japan — What Can, and Cannot, be Copied in the West 354 Theodore D. Weinshall (published before in European Management Journal, Vol.4, No. 1, 1986:38-40).

The Multistructure — Scientific Know How — Cultural Differences — Non-Transferable Japanese Advantages — The Ringi Decision Making

XI

Contents

Process — Life Long Employment — Unlimited Responsibility — Low Remuneration — Japanese Shortcomings — Nationalism/Racism — Protectionism — Government/Management Linkages — Note 4. Cultural Differences at Work: Japanese and American Managers

359

Jill Kleinberg

Changing Perceptions of Japanese Management — Contrasting Assumptions about the Job — How American Managers Conceptualize their Position — How Japanese Managers Conceptualize their Position — The Intercultural Dynamic — Accomodation to Cultural Differences — Reference Part Three Culture and Management in Contrasting Societies A. Introduction

369

B. Contrasting Cultures — National and Organizational

373

1. The Methuselahs in Action

373

Theodore D. Weinshall (to be published in Weinshall, Τ. D., The Methuselah Criterion: How to Thrive and Survive in Business, forthcoming).

The Roman Catholic Church: The Oldest Conglomerate — The Mafia: A Surviving Freedom Fighting Organized Crime Syndicate — The Family: Biological, Neither Spiritual nor Crime Family — The Japanese Zaitatsu: operating on a Different Cultural Plane 2. The Managerial Structure of a Nationally Mixed Organization in Japan: A Sociometric Case Study 395 Theodore D. Weinshall and Jitsuo Tawara (published before in Journal of Organization and Administrative Sciences, Vol.8, No.4, Winter, 1978:209 — 217).

Introduction — Describing the Nationally Mixed Organization — The Research Methodology — The Informalogram Technique for Establishing Managerial Structure — "Star Lines" Data Processing, Analysis and Findings — Relating the Findings to Previous Observations of Japanese Management — Findings and Managerial Structure Implications — The Ringi Decision Making Process and Formal-Informal Relationships in Japanese Organizations — Implications for Future Research — Summary — Note — References

XII

Contents

3. The Clark-Volvo Joint Venture Russell L. Ackoff (published before in Ackoff, R. L., Management Doses, New York: Wiley and Sons, 1986:192-194).

406 in Small

4. Entrepreneurs: A Balanced View of their Role in Innovation and Growth 408 Theodore D. Weinshall and Lister Vickery (published before in European Management Journal, Vol.5, No.4, 1987:257-267).

Entrepreneurs: Destroyers of their Own Creations? — Introduction — Entrepreneurs and Entrepreneurial Behaviour — Entrepreneurial Aides and their Characteristics — The Entrepreneurial Structure — Entrepreneurs: Harnessing their Value — Who Can Run Entrepreneurs? — Life Cycle for Entrepreneurs - from Creating Small Organizations to Operating Within Large Companies — Conclusions — References C. Contrasts in Management

425

1. Organizational Context and Structure in Various Cultures

425

Derek S. Pugh, David Hickson, and the Open University Course Team (published before in Wider Perspectives of Managing in Organizations, Aston: The Open University Press, 1985:42-49).

Dimensions of Organization Structure — The Relationship of Organizational Structure to Context — The Relationship of Structure to Context in Different Countries — Selected Bibliography 2. A Multinational Study of Decision-Making: The Relation between Competence and Participation 436 Frank Heller (condensed from F. Heller, Competence and Power in Managerial Decision Making, New York: John Wiley and Sons, 1981).

Introducing the Problem — Policy Relevant Findings — Competence and Influence Sharing — Counter-intuitive Results — Antecedents of Participative Behaviour — Consequences of Participation — Underutilization of Competence — A Model Linking Competence to Participation — Conclusions — Notes — References 3. Management Control in France, Great Britain, and Germany . . . 445 Jacques H. Horovitz (published before in Columbia Journal of World Business, Summer, 1978:16-22).

Unique Data Base — Clear Differences Do Exist — Interdependence of Control with Organization and Planning — Organization Patterns —

Contents Planning Processes — Implications for Managers Multinational Corporations

XIII — Implications

for

4. Organizational and Managerial Roles in British and West German Companies: An Examination of the Culture-free Thesis 455 John Child and Alfred Kieser (published before in Lammers, C. and D. Hickson (eds.), Organizations Alike and Unlike, New York and London: Routledge, 1979:251-271). The Culture-free or Contingency Argument — The Culture-specific Argument — Sample of Companies in Britain and West Germany — Procedure — Contingency Theory: The Nexus between Context, Structure and Managerial Roles — Cultural Specificity: Differences in Authority Relations and Managerial Roles — Conclusion: A Framework for Cross-cultural Studies of Organizations — Notes — References D. Managing across Cultures

479

1. The Methuselah Criterion: H o w to Thrive and Survive in Business

479

Theodore D. Weinshall (to serve as Introduction in Weinshall, Τ. D., The Methuselah Criterion: How to Thrive and Survive in Business, forthcoming). 2. The Cross-Cultural Puzzle of International H u m a n Resource Management 490 Andre Laurent (published before in Human Resource Management, Vol.25, No. 1, Spring, 1986:91-102). International Human Resource Management: A Field in Infancy — HRM Practices as Institutionalized Preferences for the Management of People— National Differences in Management Assumptions: A Research Inquiry — Discussion — Steps Toward the International Management of Human Resources — References 3. Negotiating with Foreigners Nancy J.Adler (published before in Adler, N.J., International Dimensions in Organizational Behaviour, Boston: Kent Publishing, 1986:149 - 1 9 0 (Chapter 7). Negotiating Internationally — Successful Negotiations: The People, the Situation, and the Process — Qualities of a G o o d Negotiator — Negotiation Contingencies: Characteristics of the Situation — The Negotiation Process — Negotiation Strategy: A Culturally Synergistic Approach — The Stages of a Negotiation — Negotiation Tactics — Verbal Tactics — Nonverbal Tactics — Dirty Tricks — Summary — Questions — N o t e — References

501

XIV

Contents

Ε. The Multinational Corporations

537

1. The Impact of the Multinational Corporations

537

Derek S. Pugh and The Open University Course Team (published before in Wider Perspectives of Management in Organizations, Aston: The Open University Press, 1985:62-66). Conclusions — References 2. The Training of Multinational Managers

540

Theodore D. Weinshall and Yael A. Raveh (published before in Weinshall, Τ. D., and Y. A. Raveh, Managing Growing Organizations — A New Approach, New York: John Wiley and Sons, 1983: 256-269). Multinational Managers - the Ingredients which Make Them — How to Develop Multinational Executives — Notes — References 3. Some Personal Thoughts on the Implications and Consequences of 1992 in the E.E.C 558 Theodore D. Weinshall (presented at the BAM [British Academy of Management] Third Annual Conference at UMIST, Manchester, England, September 1989) Postscript Indexes Name Index Subject Index . . . . Communities Index

563 569 576

General Introduction Theodore D. Weinshall

This general introduction deals with three topics. It first presents the objectives of this book of readings, and the ways in which the readers could be helped in their management in different countries. Subsequently, the problem of cultural stereotyping is discussed. As this book is meant to a large extent for North American readers, the last part of this general introduction is devoted to the managerial culture of Americans and the US. It is followed by a short description of the contents of the three parts of the book and, finally, words of thanks to those who helped me to bring it together. However, let us first recount two anecdotal stories which illustrate on the one hand the optimistic chances of managing successfully in different cultures and on the other hand the possible clashes among cultures of different countries. Back in 1965/66 industrial visits for the students of INSEAD (European Institute of Business Administration) were organized in and around Paris. For one section of 50 students several trips were arranged to the same French subsidiary of a U.S. electronic components manufacturer called AMP. Upon meeting its PDG (President-Directeur-General — Chief Executive), the professor in charge of the production management course was convinced that the PDG was American because of his accent and because of what he said about the company. However, when the INSEAD professor visited the plant, the PDG spoke like a Frenchman, using even words in argot (the common folks language) He also behaved like a Frenchman while strolling through the plant, looking at the professor on his left while nevertheless shaking hands on the right with everyone they passed. While this handshaking was 'typically' French, it seemed to the INSEAD professor that such familiarity with workers was akin to American cultural behavior. Later the Professor asked the PDG if he was French or American, at which point the latter smiled and told him the story of his life. He came from a wealthy industrial family in Bordeaux. When he was admitted to both the Ecole Politechnique and MIT, his father said to him. "Son, there is no bright future for you in France. Go to the U. S. and stay there after you graduate from MIT". He followed his father's advice. Years later, however, his organization decided to spread internationally and establish a plant in France, and he became its PDG. He was asked whether his father was right or if he felt pleased with his decision to become PDG in France, he answered, "You are somewhat

2

Theodore D. Weinshall

acquainted with industry in France and know that we are retarded when compared to the U. S., especially in our managerial culture. You saw, on the other hand, my plant in which everything is run according to the American way. Without such small beginnings there is no chance for France to become what I and my father would have liked it to be. Let's hope." This anecdote illustrates one of the forerunners of the multinationals taking over industries in countries all over the world. Throughout the readings in this book, it is clear that the hope of this French-American PDG is becoming the reality of the nation states of the world. Nevertheless, despite movement in the direction of "multinational culture", which is fostered by scientific and technological developments, the nation states will stay with us for quite some time. One can imagine a leader-follower situation in terms of the time lag and distance between the science-technology-cultural manifestations of every country and those of the U. S. One nation state could be fifty years "behind" the U. S. while another is lagging "behind" only twenty years. This is why I feel that there is really no need for technological and scientific forecasting organs, except for the U. S. The only thing to be considered regarding nation states when looking into the crystal ball is the length of time, in terms of years, the country's situation is behind that of the U. S. This is an oversimplification but, on the whole, almost all countries progress in this fashion. There are exceptions to the rule, and those are the countries which seem to be stagnating in terms of science and technology, and especially the 'multinational culture'. The most obvious recent example is that of the Iran of Ayatollah Khomeini. This case, like that of Khadafi's Libya, indicates the penetration of modern science and technology accompanied by a cultural retreat into Middle Age religious fanaticism. It seems that all the countries and communities which do not adhere to the science-technology-culture sequence are those which stick to fundamentalist religious practices. This is even apparent in Israel with the ultrareligious sects, but even more so with the two main streams of Islam — the Shiites and Sunnis. In fact, the most violent and bloody secterial outbreaks in the Soviet Union have happened in the Muslim republics like Azerbaijan, Buchara, Uzbekistan, etc. ... The following story deals primarily with Baku, the capital of Azerbaijan. Apropos, let me share another personal anecdote directly relevant to the concept of: "Managing in Cultures of Different Countries." My late father, Eliezer (Ilyusha) Weinshall (1896 — 1940) was born and raised in Baku, during the last years of Tzarist Russia, until the age of 18.1 vividly remember when he used to tell me stories of his childhood in Baku. One story of his was that Baku was the safest place for Jews to live in, free of any outbursts of anti-semitism. Every few years, the Muslim Tartars

General Introduction

3

(as the Azerbaijanis were called at the time) butchered the Christian Armenians; subsequently, several years later, the Armenians massacred the Tartars. The only community spared by the killing was that of the Jews! In 1984 while attending a conference in Yerevan, Armenia's capital, I had the opportunity of visiting Baku. Before leaving I asked our Armenian hosts how their relationship with the Azerbaijanis had been since World War I. They answered quite confidently that they had been getting along fairly well with each other, and that bygones were bygones. I had my doubts. Indeed, a short while later the wave of killings of Armenians by Azerbaijanis at Nagorni-Karabach erupted. Since then, and especially in 1989, nationalistic feelings mingled with religious fanaticism have occurred all over Eastern Europe and the Soviet Union, particularly in the case of the Caucasus where massacres are once again the order of the day. So it seems doubtful that the heterogeneous 12 nations of the Western European Single Market will ever attain a "Fortress Europe," even with Central, Northern and Eastern Europe joining together.

The Objectives of the Book and its Possible Lessons This book is the heir to my Culture and Management book of readings published by Penguin Books in the U. K. many years ago, in 1977. However, as heirs go, the present book does not necessarily have the same exact characteristics, content structure, or objectives as the preceding book, nor does it cover only the countries that its predecessor did. Indeed, substantial space is given in the present book to China and Japan, and other countries in Asia, as well as to the Soviet Union. Nevertheless, the present book, like its predecessor, focuses on the effects of culture on management. That is to say that the primary objective of both books is to help managers function within countries and among managers with cultures different to their own. Also, national cultures evolve and change quite slowly over the years, even when their scientific and technological environments evolve and change much faster. This is why two of the readings in the original Culture and Management are carried over into this book. Another thing which has been maintained in the present book is the way in which the readings for the major part of the book have been chosen. Most of the readings consist of a comparison among two or more countries studied by one research methodology, e. g., based on a participant observer study or on a specific attitudes questionnaire. However, some of the more general readings, like those in the first part of the book ("Relating Societal Culture and Management") do not follow this approach. Also, most of the new readings on China, Japan and the Soviet Union appearing in Part Two

4

Theodore D. Weinshall

of the book ("Culture and Management in Particular Societies"), concern themselves only with the observed country, without comparing it to others; the reason for those exceptions are given in the Introduction to Part Two. Although the structure of the present book has been definitely altered, the editing and division into the different parts still follow the ideas and concepts of the Total Organizational System (TOS), described in the following paragraphs. The importance of the TOS is primarily due to the dynamics of organization and management with which the Total Organization System deals. These dynamics are occurring in every possible culture; even in the "other cultural planet" of Japan (Japan is described as such when compared to all the other managerial cultures of the world in the "Management in Japan — What Can, and Cannot, be Copied in the West" reading of the section on Japan in Part Two of the book). The TOS 1 is a set of interrelated organizational systems presenting the continued dynamics of organization over time, navigated by management. It serves primarily analytical purposes and leads to a better understanding and evaluation of the state of an organization at a given point in time. Its other major contribution is in enabling the strategic planning of all its component systems and/or their effects on each other. The TOS is about what organizations must do to survive, and what they must do to avoid stagnation and collapse. The dynamics of management and organizations over time are described and analyzed by way of the TOS. This notion of total organizational system assures a dynamic relationship between the management of the organization and the environment, both of which are affected by changing conditions of size, place, and human nature. Any change in one part of the total system affects the other parts and the survival of any organization is continually threatened by the changes brought about by growth, which in itself is essential for survival. The TOS (see Figure 1) is composed of the immediate environment, the wider environment, the organizational strategy, the scope of decision making, the managerial structure, and the managerial characteristics. The immediate environment is the human factor of managers, workers, trade unions, bankers, shareholders, suppliers, customers, government, etc. The wider environment includes the systems of the employment market, money market, supply and demand market for materials and products, as well as the technology and socio-cultural systems. The scope of decision making is the total amount and complexity of the decisions imposed upon the management by their own organizational strategy, influenced by both the immediate and wider environments. Managerial structure refers to the actual way in which the decision making is carried out, formally or informally. The managerial characteristics are the leadership and followership characteristics of managers, from the chief executive down.

5

General Introduction

Immediate environment

Wider environment

The Decision Making main sub-system

The Management main sub-system

S D M - S c o p e of d e c i s i o n m a k i n g MS -

» - M a i n links b e t w e e n p r i n c i p a l s y s t e m s

Managerial structure

MC - M a n a g e r i a l c h a r a c t e r i s t i c s

Additional links between p r i n c i p a l s y s t e m s —

Comporative bases for appropriateness

( l e a d e r s h i p , f o l l o w e r s h i p , and other interpersonal characteristics)

Figure 1

The Total Organizational System and its six principal sub-systems

The dynamics of these two last systems of the main sub-system of management, namely the managerial structure and characteristics, result in two major trends. First, the organization in its essential growth process (which is the outcome of the dynamics of the above described main subsystem of decision making, namely the immediate and wider environments, the organizational strategy, and the scope of decision making) has to move over time from one managerial structure to another. It is created in an "entrepreneurial", informally centralized structure. From there it progresses through a "functional", formally centralized structure, to a decentralized

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Theodore D. Weinshall

"product/service line" structure. It finally reaches a so called "multistructure", which is a federation of the basic managerial structures — the entrepreneurial, functional and product/service line structures. Secondly, the dynamics of the managerial structure and characteristics result in a necessary turnover of managers, especially key position managers from one structure to another — otherwise the organization cannot thrive and survive. This is so because the managerial characteristics are part of their personality traits; thus the roles that managers can best play are limited, and each manager is ideally suited only to one type of managerial structure. Thus, for example, a manager with entrepreneurial managerial characteristics would best head the organization only as long as it should be run in an entrepreneurial structure. In summary, while organizations have to be flexible in moving from one managerial structure to another, the managers serving in them can try and change their management styles as best they can, but usually cannot change the managerial characteristics. They should therefore desirably stick to organizations with structures requiring their characteristics. Multinational corporations have three aspects none of which are to be found in national corporations. First, they operate in two or more countries different in their national cultures from one another. Secondly, they are not committed nor loyal to any of the countries in which they operate. Finally, they are managed in multistructures, the federated structures which are the final outcome of the dynamics of managerial structure, as has been just described. This is one of the basic reasons why the existence of multinationals is inevitable, and why they are consequently growing to evermore dominant positions in the world, as described in various readings in this book. Organizational systems are actually contingency systems; that is to say that the different components are contingent upon each other. A major change in one sub-system may affect not only what is happening in other systems, but may also change the basic rules of the game. "Principles" which have governed management education, its teaching and writing, have until recent times been based on false assumptions. Thus, all of the following "principles" turn out to be absolutely wrong: — There is a "good" and desired organizational structure in which organizations should operate at all times. — There are "good" or "bad" managers, i. e. a "good" manager will always be good and a manager who has completely failed in an organization could never succeed in the same and/or in another organization. — It is desirable to have people continue to work in the organization as long as possible, and the organization should do whatever it can not to lose employees who had previously been doing well. — There are rules, somewhat flexible and within limits, but still rules, which should govern the organizational structure. One of these rules is the so-

General Introduction

7

called "Span of Control", i. e. the number of subordinates that a manager can control. — Organizations, whether small, medium or large, differ principally from one another according to the number of their employees, the scope of their operations (e. g., sales turnover), or the size of capital invested in them. — One could train and develop managers in courses, programs, workshops, etc., so that they would voluntarily function in a basically different way from before. This book is primarily intended for students of management, and managers whose roles involve them in work beyond their national boundaries. This would include all those interested in international business, whether they be managers in multinational corporations or in national organizations which come into contact with people of other countries. This book would also be of interest to those studying the relation between culture and management, and of what is today referred to as comparative management, or comparison of managerial behavior and other aspects of management in different countries. The book could also serve people who are merely interested in culture and in the behavior of people dissimilar to themselves, either because they travel to other countries (for pleasure or on business) or because they are curious about culture and its relation to organizational management. Its main objective is, therefore, to help people to distinguish "culturebound" behavior from what one could refer to as "universal" behavior, namely that part of behavior which is affected to a lesser degree by the environmental culture. An organizationally appropriate example could be the difference in mode of communication between, say, France and the United States. Let us imagine two similar organizations, in the U. S. and France, each headed by an entrepreneur and managed in an entrepreneurial structure, the chief executive communicating with the managers at various levels of the management, rather than only with those directly underneath him. This is a "universal behavior" proposition. However, if we consider the communication behavior of the two entrepreneurs in terms of the intensity of their oral interactions with their managers, we may fall into a "culturebound" trap. We should discover that the American entrepreneur widely interacts with managers throughout the organization, whereas with the French entrepreneur, such interaction is much less frequent. Likewise, we would discover that the French chief executive uses much more written communication than his American colleague. This may lead us to the mistaken impression that the Frenchman is a bureaucratic leader of a formally centralized functional structure, while a closer look would reveal that he actually runs an entrepreneurial structure but in a different culture

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of communication behavior. For this reason, the readings were chosen according to how the reader could benefit from them in two ways: 1. Conceptual and analytical tools which could serve him whenever he has to evaluate manifest behavior and distinguish the "universal" from the "culture-bound" elements. 2. As many examples as possible of some specific managerial behavior in several different cultures, measured with the aid of the same analytical aid/or research tool. The importance of studying the relation between culture and management has grown enormously during the last decade. This is a result of such recent events as the expansion of the European Community, the growing links of Russia and of China with Western countries, the wave of nationalism, clericalism and antisemitism in Eastern Europe, and the unity between the two Germanies. The evergrowing involvement of the U. S. A. in different parts of the world has caused major trends in world politics and economics, favoring the gradual obliteration of national borders. The multinational corporation to which a few readings in the book are devoted, especially in its last section, is probably one of the most important phenomena of the second half of the twentieth century and is likely to have a major effect on the pattern of the world in the twenty-first. Its advent has accelerated the obliteration of national boundaries and the movement of people from one country to another. All this has been accompanied by revolutionary innovations in transportation, communication and mass media which are not only permitting quicker, easier and less expensive transit from one culture to another, but bringing different cultures and other managements into homes and organizations. It should be noted that all these are quite recent developments. Until the nineteenth century, organizations used to be fairly simple entities in which the manager-owner was dominant. He did not have to share his power with decision-making factors such as workers, trade unions, shareholders, bankers, customers, suppliers, and governments. The culture of management was to a large extent that of the country to which the organization belonged, even if geographically it happened to operate outside its borders. In those days, the only way to find out about the possible effect of a culture on management was to get acquainted with the former through anthropological research. Anthropologists, however, preferred to devote their time and resources to primitive and "out of the way" cultures rather than to those of industrialized countries. The reasons for this preference were several. First, the more primitive the culture, the easier it is to encompass it and study it as a total system. Secondly, and closely related to the first reason, was the fact that the far-away cultures were "pristine" and

General Introduction

9

undisturbed by the influence of colonial or organizational expansion. It was only after the Second World War that anthropologists began to take interest in the more industrialized countries. By that time, organizations had become much more complex in their decision-making processes and much more advanced in their management structures. In fact, it seems nowadays very difficult to differentiate between culture and management.

C o n c e p t u a l a n d Ethical Problems in C o m p a r i n g M a n a g e r i a l Cultures of Different Countries Several readings about the managerial cultures of single countries were introduced in the present book. This was found to be essential because it is relatively difficult to compare the managerial cultures of countries like China, Japan and Russia with those of other countries using the same research methodology. Indeed, it would be almost impossible, considering the present state of affairs in these countries, even to study them by prolonged anthropological participant observer research. This author also believes that proper case study and other clinical behavior research should be primarily based on the perceptions of those involved in the cases, and not on the perceptions of the researchers. In three countries, China, Japan, and to a lesser extent, the Soviet Union, it has been almost impossible to utilize open, non-directive, interviews. This is primarily so because one can neither conduct nor, at least in the case of Japan, interpret open interviews. What remains, and this is to a large extent what the readings on these three countries consist of, are the personal impressions and evaluations of the writers. These in turn are drawn mainly on the basis of the writers' own cultures, even when they have been involved for prolonged periods of time with the peoples and cultures they are describing. This is what we have available and, hopefully, some of the best of such readings were chosen for the book. Nevertheless, this fact of one's own culture influencing the descriptive evaluations of other countries' cultures raises problems of so-called stereotypes, and even possible accusations of racism. One should first find out what is meant by stereotypes and if they could or should be avoided. According to both the Webster and New Oxford dictionaries, the origins of the word "stereotype" are to be found in the identically reproduced printing press plates. According to the latter dictionary, in 1850 "stereotype" emerged out of the printing press to mean "something continued or constantly repeated without change; a stereotyped phrase or formula, stereotyped diction or usage." As late as 1909, according to the New Oxford dictionary, it was connected with insanity as the Webster Dictionary defined it: "Fre-

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Theodore D. Weinshall

quent, almost mechanical repetition of the same posture, movement, or form of speech, as in the mannerisms of dementis praecox." A stereotype, as we refer to it in this book, is a behavioral difference between two groups of people which is generalized and magnified over the whole group. In any case we can logically establish what seems to me the major difference between cultural behavior and stereotyped behavior, according to our above-mentioned present day definition. While the culture of a group of people may change slowly over time, stereotypes hardly change at all. In this sense cross-cultural differences are not exactly stereotype differences. However, as the distinctions between the two may be blurred, at least in the perceptions of members of a group of people (say a country, religion, nation, etc.) whose culture is described or even cross-culturally compared with those of other groups, let us address ourselves to this problem of evaluating the values, beliefs and manifest behavior of different cultures. If we refrain from analysing and comparing the cultures of different countries, because we may be labeled as "stereotypers," we may as well forget about any organizational and cultural intergroup comparisons. Evaluating the behavior of and attitudes towards men as compared to women, and of conservatives against liberals or of oldtimers versus newcomers and of professionals compared to unskilled employees in organizations, could be equally regarded as using stereotypes. In other words, if we are worried about being accused of stereotyping, we should stop all comparative behavioral research. On the other hand, one should be very careful involving one's innermost national, social, political, sexual and religious feelings when studying one's own or the opposing group's behavior. This may produce biases, whether in the form of overpraising or derogatory opinions. This is what is usually referred to as racism nowadays. The term "race" came about in 1500, according to the New Oxford Dictionary, meaning "a group of persons, animals or plants, connected by common descent or origin." According to the same dictionary, only in 1680 did "race acquire behavioral characteristics of speech, writing, etc. — a peculiar and characteristic, style or manner, especially liveliness, piquancy." It was in 1862 that the term "racialism, racially" came about, meaning, according to the New Oxford Dictionary, "belonging to, or characteristic of race", while according to a Webster Dictionary published after World War Two, the following terms meant: Racialism Racialist

— Racial characteristics, tendencies, prejudices, or the like, specifically, race hatred — One promoting or animated by racialism; especially one who maintains that some races are inherently superior to others.

General Introduction

11

The present forms of racism and racist are of course the shortened ones of racialism and racialist and are recent creations. I can reliably quote somebody considered a managerial cultural scientist saying somewhat humorously in response to being implicated using stereotypes: "No, I do not like using cultural stereotypes, but neither do I like the French." In other words, first, you cannot evaluate the behavior of any group of people without establishing the specific findings or impressions of their behavior, sometimes perceived as stereotypes. Secondly, if the statement about not liking the French is meant seriously, one should not try to analyse and evaluate that their behavior as it may, rightly so, be regarded as racist. This is why it has been stated that it would be better that people who are deeply involved with their reference groups should try and refrain from describing and analysing their own or opposing groups. Thus, it would be better that Catholics would not study the Roman Catholic Church, Kibbutzniks not study the kibbutz, women not study women, Arabs not study Islam, Mafiosi not study the Mafia, and Jews not study Israel. This, however, is not always feasible; sometimes it is a dicotomous situation, like in the case of women, where the alternative is that men study them. Or there may be problem of entry difficulties, where non-Catholic, non-Kibbutz or nonMafia people would find it difficult to be accepted to study clinically these groups' organizational behavior. Then, there are groups in which an outsider would find it difficult to understand and ascertain what is happening with them, even if he masters their languages. This holds true especially in regard to the Japanese, and could also apply to a culture like that of the Arabs.

The Managerial Culture of Americans and the U. S. A. Finally in this Introduction some aspects of U. S. culture and managerial culture will be discussed so that the American readers will be able to realize in which of their cultural characteristics they may be different from the national cultures presented in this book, and be better equipped to size them up. The description of these aspects of U.S. cultures are wholly my own. They are based on my experience and observations of American culture, on living next to and among Americans for short and long periods of time for over 30 years, and having been exposed all this time to readings about U.S. business and general culture (such readings are rare in the present book because it is primarily meant to be for, rather than about, American managers). In other words, the following paragraphs are my own summarized cultural observations, stereotypes about the U. S. culture relevant to this book. The United States is a vast country, on the one hand, and an advanced industrial country on the other hand. This makes for an enormous geo-

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graphical mobility of people, especially college graduates as the majority of Americans are, within these United States. In this respect, the U. S. and Americans are unique, for even in the other large countries of the world, like China, India or the Soviet Union, there is almost no mobility, mainly because of their being agrarian or based on local industry at best. Early in my 'connaissance' of the U. S. I was told by a Harvard Business School colleague: "Unlike the rest of the world, we lack the institution of grandparents." Memory of their grandparents is limited in adulthood years to a Christmas — New Year's trip to visit the mother's parents perhaps some 600 miles away, and a trip of, say, 1 000 miles to visit the father's parents at Easter. This is because the young men and women may go to college in a different state than their own; they may marry and move to another state, usually one which is neither the husband's nor the wife's. In other cultures, including such countries as France, Israel, Italy and many others, the grandchildren are usually brought up next to their grandparents, who may have much more patience for the children than their parents have. The grandparents can thus bestow upon the children much more of their experience, knowledge and wisdom (and they have more time to devote to it) than many of their busy, overloaded and impatient parents. Another consequence of the relatively frequent geographical and organizational mobility of Americans is their ability and need to socialize. When I first went with my family to the U.S. back in 1958, my elder daughter was nine years old. During her first year in school she made some three or four good friends in her class. However, when she returned to school for her second year, she discovered that all the parallel classes were shuffled, and none of her friends were in her class anymore. When I questioned it, the school psychologist (which we did not have in Israel at the time) answered me: "This is the way in which we train them to socialize." I told him that I understood the need for such training for people who would be "parachuted" into different geographical and organizational environments a few times over their lifetime. However, I added that I stayed together with almost all the same children from kindergarten to the end of high school, and had been "trained" for friendship; indeed some of my few closest friends are from my very early schooling years. So while on the whole Americans socialize easily and have many acquaintances, most non-Americans socialize with more difficulty and have a few close friends. I believe that this also accounts for the fact that Americans are more inclined to democracy and less to racism, while other national cultures are more socially stratified and more inclined to segregation. The tendency towards social egalitarianism, however, is also affected by the degree of cultural pluralism within the national culture, of which there is a lot more not only in the U. S., but also in a small country like Israel. It seems to me that the above mentioned aspects of U. S. culture tie in with what I would refer to as a "Ten Commandments Morality" and a

General Introduction

13

simplistic patriotism, which are unifying aspects of the pluralistic American society. What do I mean by "Ten Commandments Morality?" Let us consider as an example the "Thou Shall Not Lie" dictum. If we examine the two biggest political storms of post Second World War American society — the Watergate and Irangate scandals — we discover that their main common denominator is not the anger about what Presidents Richard Nixon and Ronald Reagan did in actually breaking into and stealing from the political opponents' headquarters, and in supplying armaments to a leading terrorist country while urging others not to collaborate with terrorists. They worry, rather, about "cover-ups." What bothered and outraged the American public opinion was that their Presidents were possibly or actually liars. The same happened with Senator Gary Hart who might have been elected as the U.S. President in November 1988 had he not had to withdraw his candidacy for the Democratic nomination because of alleged sexual relationships with young women. Again, what primarily bothered the American public was not that their future President might be a philanderer (and perhaps a subject of extortion, even by political and national foes), but rather that he did not disclose his amorous relationships. A more recent occurrence of "thou shalt not lie" was that of the U. S. Senate nomination of Judge Clarence Thomas to the U. S. Supreme Court by the smallest majority ever (52:48), in mid-October 1991. Judge Thomas was accused by Professor of Law Anita F. Hill, who had been ten years earlier his subordinate in a Washington D. C. government office, of verbal sexual harrasment at that time; accusations which Judge Thomas vigorously denied. Obviously one of them was lying, and as there were no witnesses, it was impossible to prove anything one way or another. Again, the main issue was not an unsatisfactory procedure of the Senate for confirming nominations, nor even the mere issue of sexual harrassment, but rather who was lying; the US public opinion split into two — the womens rights organizations and most of the Democrats believed that Professor Hill was telling the truth, and most of the Republicans claimed that Judge Thomas was the truthful one. Both Hill and Thomas being black, the following is what a prominent black leader said after Clarence Thomas' nomination to the Senate: "It really doesn't matter whether Judge Thomas is guilty or innocent. It doesn't matter whether Ms. Hill has credibility or not. What the image throughout the world is, is that we are not credible, truthworthy people, but vulgar shiftless — I could go on." The tendency towards social egalitarianism, however, is also affected by the degree of cultural pluralism within the national culture, of which there is a lot more not only in the U. S., but also in a small country like Israel. I hope that these personal observations about the American culture will help rather than hinder the readers of this book to be able to distinguish between "culture-bound" and "universal" behavior of the people from other cultures with whom they come in contact.

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Theodore D. Weinshall

W h a t is there in this Book? Following are some considerations as to the geographical coverage of the readings and their organization in the book: — As a result of considerations of space and availability, the present book does not include any specific readings about African and Latin American countries. The editor of this book is less familiar with the Latin American managerial cultures than with others parts of the world. It is also assumed that the U.S. reader, to whom this book is directed as much at to anyone, is relatively more acquainted with his Latin neighbors in the American hemisphere. — A division has been made between readings concerning crosscultural differences (i.e. the differences between managerial cultures in different countries), and those readings which deal with the organizations and their management in different countries. Thus, the first part includes all the readings which discuss the conceptualization of managing in cultures of different countries. The next two parts, however, consist of readings which study the actual culture and management in different countries. — Since there are readings which could have belonged to more than one section, and even in another part of the book, their place in the book was decided arbitrarily. The introductions preceding each of the three parts of the book attempt to guide the reader not only among the contents of the readings in that part and its section but also of other readings in different parts of the book dealing with similar topics. Let me now briefly describe the contents of the three parts of the book, each of which is preceded by an introduction describing the readings included in it: Part One: Relating Societal Culture and Management. The 7 readings in two sections present various writers' ideas on the relation between culture and management, as well as their evaluations of the research work done to date in this area. This includes a description of the effects of innovation and advanced technology on employment aspects of Culture and Management. This part also includes some of the research and findings regarding the effects of values, beliefs and behavior on management in different countries. Part Two: Culture and Management in Particular Societies. These are readings about the actual effects of culture on management in different countries. The continents covered by the 20 readings in five sections are primarily Asia and Europe. As mentioned earlier, the book does not include specific readings about African and Latin American countries. Part Three: Culture and Management in Contrasting Societies. Its 14 readings are organized in four sections, this part deals with the varying circumstances

General Introduction

15

that organizations encounter in different managerial cultures. It then proceeds to consider how organizations structure themselves, adapt to, and, sometimes, overcome the hurdles of operating in different countries. Subsequently it deals with groups of similar organizations rather than the individual ones, therefore, some of the best known comparative crosscultural research is included in it. Finally it discusses the culture and management of the multinational corporations. Let us conclude this last part of the general introduction with acknowledgements which are due to several people. In chronological order of their assistance in motivating me and helping me collect the readings, their contributions to the editing and final preparation for publication, they are the following people: Theodore {Ted) Lang, who is now approaching his 100th birthday, is a true multinational academic. Originally from Eastern Europe, he spent his adolescent years in Switzerland and in France and then immigrated to the U. S. during World War I. He graduated from Harvard University and then from my own almamater, Harvard Business School, before I was even born. For the past 35 years, he has contributed enormously to the management education field in Israel, especially in helping Israeli academics prepare English papers and books to be published. He has contributed a great deal to my own publications over the last twenty years; Henri-Claude de Bettignies is the only person on this list of people whom I have already thanked in my 1977 Culture and Management book, as he was primarily responsible for bringing me into this inspiring field of comparative management; Susan Schneider whose reading list for her course at Fontainebleau and the reprints she supplied me with served as a basis for the readings which I have chosen for this book; John Child, who took off time from his busy schedule as the head of the Beijing business school at the time following Tianamen Square, to advise me on the readings on China in the book; Derek Pugh helped me tremendously with his advice regarding the book, and introduced me to — David Hickson who wrote to me out of the blue asking whether I was still interested in publishing a new version of Culture and Management. He then referred me to — Bianka Ralle, of Walter de Gruyter, who together with members of her staff, specifically Elisabeth Abu-Homos, have helped me beyond their line of duty at de Gruyter's;

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Jennifer Friedman-Lang for her devotion and concentrated contribution in the final stages of the manuscript. Last but not least, I would like to thank two persons who over the last ten years were considering my offer to join me as coeditors of this book. Although they opted out because they were writing their own books, they helped me with the organization of the material: Nancy Adler who collaborated with me in the beginning of the 1980s; Indrei Ratiu who collaborated with me for a short period during the latter part of the 1980s. I am pleased that chosen extracts of the work of Adler, de Bettignies, Hickson, Pugh and Ratiu constitute readings of this book. I am grateful to all the above mentioned for their help and support. Note 1 A comprehensive description and discussion of the dynamics of organization and management by way of the TOS, with references to many business and other types of organizations (including such organizations as the Roman Catholic Church, the Mafia, and the nation-state of Israel) is to be found in: Managing Growing Organizations — A New Approach, by T. D. Weinshall and Y. A. Raveh (John Wiley and Sons, 1983).

Part One Relating Societal Culture and Management

A. Introduction This being the first of three introductions to the three parts of the book, it is necessary to begin with a few clarifications. The reader is referred to different readings in the book which are designated by a three digit code — a Roman numeral for the Part in the book, a capital letter for the Section in the Part, and a number (Arabic numeral) for the Reading in the Section. Thus IB 1 is the first reading of Section Β in Part I, which happens to be Nancy Adler's "Do Cultures Vary?". Each of the three introductions starts with general comments as to the contents of that part, followed by a sequential presentation of the main highlights of the individual readings. There are three main aspects of culture and management which reappear in various readings of the book, notwithstanding the topic of the reading or which countries it deals with. These are discussed in order of their appearance in the book. The subject of time first appears in Part One, multinational corporations are first discussed in Part Two, and democratization and "nationalistification" appear in various readings of Part Three. 1. Time. Time is sometimes referred to as "the limited factor of management". A example of the role of time in managerial cultures is the so called principle of "span of control". One can increase or decrease the number of subordinates to one manager; the time which the manager could devote to supervising his subordinates, however, is not as flexible. Imagine a manager who devotes ten hours a week to supervision. The time he will devote to each subordinate depends on how many he supervises — 5 hours each with 2 subordinates, 1 hour for each of 10 subordinates, or 15 minutes per person per week with 40 subordinates. We can see that the greater the number of subordinates, the less centralized the formal supervision of the manager. Thus the managerial structure could be better understood by the "limiting factor of management" — i. e. time! The first four readings in Part One deal with attitudes towards time in different countries. The last reading focuses uniquely on the attitudes to time in one national culture, specifically Japanese attitudes towards time. 2. Multinational Corporations (or multinationals). The inevitable development and growth of the multinationals, as well as their definition and their distinction from international companies, are discussed in various readings throughout the book, and specifically in the last Section III E, with Pugh's "The Impact of the Multinational Corporations", Weinshall and Raveh's "The Training of Multinational Managers" and, finally, with Weinshall's personal thoughts on the implications and consequences of 1992 in the EEC.

20

Introduction

However, at the very beginning of the book they play an important role in Nancy Adler's IB 1 reading "Do Cultures Vary?". These readings stress the role of the multinational corporation in the democratization process of nation states, and their opening up to the world economy. The dynamics of organization and management behind the formation of multinationals are described in the General Introduction to the book in the section describing the Total Organizational System (Pages 4ff.). 3. Democratization and "Nationalistication"1. These two seemingly contradictory aspects of national cultures and of management have appeared hand in hand during the events which followed Mikhail Gorbachev's Glasnost and Perestroika, first in the Soviet Union, and later in Eastern Europe. They are discussed in Section C of Part Two, but they are already mentioned in the readings of Part One. Indeed, the mere fact that this book is concerned with national cultures, and that Part Two is divided according to national regions, clearly implies that democratization and nationalistication are not contrary to each other. Democratization and nationalistication processes are occurring not only in national cultures of countries, but also within organizational cultures. In the dynamics of the TOS a basic change which occurs in organizations when moving from entrepreneurials all the way to multinationals is that they are necessarily becoming more and more democratic. Also, the most essential prerequisite of a multinational corporation is that it must have a supranational culture, something which a country with an ultra-nationalistic culture could and would not accept. There are seven readings in the two sections of Part One. Let us examine what these readings are all about, first as to the conceptualization of the relation between culture and management·. IB I. Do Cultures Vary? — is the introductory reading to the book, and consequently covers almost every area of culture and management, including among others: Time. — Adler says, for example, that North Americans are future oriented while Europeans are past oriented. Multinational corporations. — Although international business has existed for centuries, the world has recently entered an era of increasing global economic activity, including world-wide production and distribution. Cultural orientation of a society — reflects interaction of values, attitudes, and behaviors of its members.

Introduction

21

Understanding ways in which cultures vary — is necessary in order to understand differences between domestic and international management. IB 2. Time is the Essence. Hall writes that time is a special kind of language and an organizing frame within which all activities must fit. The language of time is linked to all cultures and is unique to each. Hall claims that since business involves people, the time spent getting acquainted with others may be the most efficient use of time. North Americans have difficulty in understanding this because of their "time is money" orientation. IB 3. Cross National Organizational Research: The Grasp of the Blind Men. This is a presentation by Roberts and Boyacigiller of the most important research in the field of culture and management. Included is an update of Karlene Roberts' "On looking at an elephant: An evaluation of crosscultural research related to organizations" which originally appeared in Psychological Bulletin in 1970. The reading about attitudes towards four cultural values in this book is an effort to follow Roberts and Boyacigiller criteria for cross-national organizational research, and refers widely to their work on the grasp of the blind men. IB4. The Onslaught on Social, Cultural and Organizational Consequences by Technological Innovation. This is a description of the increasingly grave situation caused by, on the one hand, a dwindling number of employment opportunities and, on the other, a growing number of would-be employees. This is predicted to lead to a sharing of the same productive job by different employees at the same time. It could possibly start to take effect within a lew years time. Let us now consider the readings in Section C, about the effects of values, beliefs and manifest behavior on management. IC1. Cultural Differences in Attitudes and Values. This is the first of four readings which were selected from Wider Perspectives of Managing in Organizations, prepared by Derek S. Pugh and the Open University Course Team; the others are the IIB 1, IIIC1, and HIE 1 readings. This reading deals with Geert Hofstede's universal research, which is also described in the Roberts and. Boyacigiller IB 3 reading. Hofstede's was a systematic study of work-related attitudes carried out among the employees of a multinational corporation in 40 countries throughout the world. He identified and rated (from high to low) four basic dimensions — (a) power-distance, (b) uncertainty avoidance, (c) individualism, and (d) masculinity-feminity. One of Hofstede's main findings is the climatic effect, measured by the distance of a country's capital from the equator, on the individual and organizational behavior in different countries.

22

Introduction

IC 2. Thinking Internationally: A Comparison of How International Executives Learn. Ratiu compared executives attending INSEAD (the European Institute of Business Administration, in Fontainebleau) with those at the London Business School, distinguishing the "most international" from the "other international managers" among the 250 young executives whom he interviewed in 1976 — 1977. Certain differences emerged when comparing the first group with the second in their: (a) view of what it is to be "international", (b) assumptions about the world and themselves, (c) ways of dealing with stress, (d) ways of making sense of new experience. IC3. Negotiators Abroad — Don't Shoot from the Hip. John L. Graham says that due to American history and socialization, the naive 'shoot first — ask questions later' attitude and education system, Americans will encounter difficulty at an international negotiations table. Lack of knowledge of cultures loses business for Americans overseas. Graham therefore suggests creating a training program, investing in potential business traders. He proposes a long term plan for freshmen and sophomores to train, teach a foreign language, and perform a tour of duty in a foreign country. Note 1 A term coined here in order to distinguish the process of becoming more nationalistic from the process of "nationalization," which is something completely different. While "nationalistication" is not contrary to democratization, nationalization is the antithesis of democratization, which is identified amongst others with the process of becoming more of a market oriented economy.

Β. Some General Issues Do Cultures Vary? Nancy

J. Adler

Verite eti-defa des Pyrenees, erreur au-dela (There are truths on this side of the Pyrenees which are falsehoods on the other) 1 Blaise Pascal Capital raised in London in the Eurodollar market by a Belgium-based corporation may finance the acquisition of machinery by a subsidiary located in Australia. A management team from French Renault may take over an American-built automotive complex in the Argentine. Clothing for dolls, sewn in Korea on Japanese supplied sewing machines according to U. S. specifications, may be shipped to Northern Mexico for assembly with other components into dolls being manufactured by a U. S. firm for sale in New York and London during the Christmas season. A California manufactured air bus ... is powered by British ... engines, while a competing air bus ... flies on Canadian wing assemblies. A Frenchman is appointed president of the U. S. domiciled IBM World Trade Corporation, while an American establishes ... a Swiss-based international mutual fund (15:1—2).

The increasing importance of international business activity cannot escape the observer of contemporary economic events. The past twenty years have seen a major expansion of world trade. From 1948 through 1972, world exports grew from $51.4 billion to $415.2 billion,2 representing a sevenfold increase in monetary terms and a fourfold increase in volume (11:23). In just five years, from 1975 to 1979, world trade increased by about 32 percent in real terms (19). By 1980 international trade volume exceeded one trillion U. S. dollars as compared with US $800 billion in 1975 (19). In one decade the aggregate value of the goods and services exported by free world countries grew from $281.8 billion in 1970 to over $1.5 trillion by 1979 (12:1). By 1982 world exports amounted to $1,845 billion (20). As shown in Table 1, ten of the leading trading countries more than doubled their total trade between 1972 and 1977 (11:31). The importance of multinational enterprises (MNEs) in today's economy cannot be underestimated. By 1973, almost ten thousand firms had one or more foreign affilliates, with the majority based in the United States and the European Economic Community (notably, the United Kingdom, France, and West Germany) (27:16-4). In 1976 the United Nations estimated that the affiliates of all industrial MNEs worldwide accounted for $670 billion

24 Table 1

Nancy J. Adler Increases in Total Trade between 1972 and 1975 by Ten Leading Countries Total Trade (in Billions of U. S. Dollars)

Country

1972

1975

1977

United States West Germany France United Kingdom Japan Canada Italy Netherlands Belgium—Luxembourg USSR

104.3

209.1 164.2 106.4 97.3 114.0 66.3 73.3 70.1 60.0 70.3

275.7 218.4 133.9 121.1 151.0 80.7 91.5 89.3 77.5 85.9

86.0

52.5 52.2 52.1 38.8 37.8 33.7 31.7 31.4

Source: John D. Daniels; Ernest W. Ogram, Jr.; and Lee H. Radebaugh, International Business·. Environments and Operations, 3rd ed. (Reading, Mass.: Addison-Wesley, 1982), p. 31.

in sales (excluding intrafirm sales) (27:16-4). Yet even this substantial amount underestimates the unprecedented growth and spread of transnational corporations. Estimates for the United States, for instance, show that intrafirm transactions in 1970 accounted for roughly one-third of imported and exported manufactured products. Furthermore, the developed market economies stock of direct investment abroad, commonly associated with the extent of MNE operations, grew from $105 billion in 1967 to an estimated $287 billion by 1976 (27:16-5). Although international businesses have existed for centuries, the world has recently entered an era of unprecedented global economic activity, including worldwide production and distribution. Examples of new international operations abound, and many firms earn more in international than in domestic operations. Multinational companies such as IBM, Mobil Oil, British Petroleum, and Gulf Oil do business with more than fifty countries each (22:3). The United States and Canadian economies are inextricably linked to the world economy. North America:

The Dimensions

of

Globalization

As shown in Table 2, United States exports and imports have increased more than ten times in the last two decades (22:3). Seven hundred of the one thousand largest industrial companies in the United States expect their growth abroad to exceed their domestic growth in the next five years. With foreign production currently accounting for more than 25 per cent of their domestic production, United States multinationals

D o Cultures Vary? Table 2 Year 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

25

Economic Indicators of Internationalization in the United States A 51,792 56,560 61,907 68,093 75,480 82,760 89,878 101,313 110,078 124,050 136,809 149,848 167,804 192,648

Β 5,259 5,605 6,592 7,649 8,169 9,159 10,949 16,542 19,156 16,595 18,999 20,081 25,165 37,815

C 3,467 3,847 4,152 4,819 4,992 5,983 6,416 8,384 11,379 8,547 11,303 12,795 13,696 19,400

D 1,791 1,757 2,440 2,830 3,176 3,176 4,532 8,158 7,777 8,048 7,696 7,286 11,469 18,414

Ε 1,163 1,354 1,431 1,533 1,758 1,927 2,115 2,513 3,070 3,543 3,530 3,793 4,775 5,042

A is Foreign District Investment Position (in millions) of U. S. Corporations. Β is Income C is Interest, Dividends, and Earnings of Unincorporated Affiliates D is Reinvested Earnings of Incorporated Affiliates Ε is Fees and Royalties Source: U. S. Department of Commerce, Survey of Current Business, vol. 60, no. 8 (August 1980), pp. 2 4 - 2 5 . have a great stake in production abroad (18). United States companies own over $350 billion in assets abroad, whereas foreign investors own about $275 billion in the United States (18). As Table 2 illustrates from 1950 to 1976 total direct investment abroad increased almost twelvefold, f r o m $11.8 billion to $137.2 billion (15:12). In the decade f r o m 1966 to 1975, sales by majority-owned foreign affiliates of United States companies increased from $100 billion to over $450 billion (15:29). In the last decade, overseas sales increased at a rate of 10 percent per year (11:16). After adjustments for inflation, these increases remain substantial. A decade ago, many industries began establishing significant operations overseas. By 1974, twenty-five of the top five hundred United States industrial corporations made more than 50 per cent of their profits abroad, including International Harvester (75 %), Gillette (61 %), Otis Elevator (60 %), Pfizer (60 %), Coca-Cola (59 %), and Dow Chemical (57 %) (8). Since then, overseas sales have been increasing at an average of 10 per cent, and the future remains very promising. Today, some multinationals total sales exceed the gross national products (GNPs) of many nations. For example, with 1980 sales exceeding $100 billion, Exxon, the largest M N E , surpassed the sum of the G N P of approximately forty-five African countries (3:5). If nations and industrial firms are ranked together by G N P and total sales respectively, thirtyseven of the first one hundred on the list are industrial corporations (10). In some ways, the Canadian economy provides an even more dramatic example of the growing importance of international business activity. Today, over five hundred

26

Nancy J. Adler

Canadian-based companies have foreign subsidiaries, 43 per cent more than in 1974 (14). Nearly a quarter of all goods consumed by Canadians are imported from other countries, and a slightly larger percentage of Canada's GNP is exported abroad. Foreigners own more than half of Canada's manufacturing capacity (12:1).

Cross-cultural Management The growing importance of world trade creates a demand for managers sophisticated in international business and skilled at working with people from other countries. Cross-cultural management studies the behavior of people in organizations around the world and trains people to work in organizations with employee and client populations from several cultures. It describes organizational behavior within countries and cultures, compares organizational behavior across countries and cultures, and, perhaps most importantly, seeks to understand and improve the interaction of co-workers from different countries and cultures. Cross-cultural management thus expands the scope of domestic management to encompass the international and multicultural sphere. Parochialism Parochialism means viewing the world solely through one's own eyes and perspective. A person with a parochial perspective does not recognize other people's different ways of living and working, nor that such differences have serious consequences. People in all cultures are, to a certain extent, parochial. Recently, journalists, politicians, and managers alike have decried Americans' parochialism. 3 Americans speak fewer foreign languages, demonstrate less interest in foreign cultures, and are more naive in international business situations than the majority of their trading partners. In The Tongue Tied American (33), United States Congressman Paul Simon deplored the shocking state of foreign language illiteracy in the United States and emphasized the heavy price Americans pay for it diplomatically, commercially, economically, and culturally. His message was a "shocking indictment of the complacent, potentially catastrophic monolingual arrogance of ... [the United States], from top government leaders to the man in the street." Echoing Simon's sentiments in reference to South America, former United States Congressman James W. Symington said that the problem is Americans' fundamental, dogged, appalling ignorance of the Latin mind and culture. Foreign students and statesmen refresh their perceptions of the United States by reading our poets, essayists, novelists and humorists. But our approach is like that of the man who, when asked which hurt most, ignorance or apathy, replied, "I don't know and I don't care." Such indifference cannot be justified by our otherwise commendable concern for what people do rather than what they think ... Preoccupied with action,

Do Cultures Vary?

27

we seldom miss opportunities to ignore thought. [Perhaps, in the future]... diplomats — possibly even presidents — might know something of the cultural lessons that stir out neighbors' hearts (34).

Many business leaders predict that the next generation of top executives will have to have an international assignment to reach the top (6: Β18). This has not been true in the past. A 1975 Dun's survey found that only a handful of the eighty-seven chairmen and presidents of the fifty largest American multinational corporations could be considered career internationalists. Sixty-nine of the eighty-seven top executives had had no overseas experience at all, except for inspection tours (14). Why have many Americans ignored the need to internationalize? Americans' parochialism is understandable and, at the same time, unfortunate. Because the United States has such a big domestic market (over 225 million people) and English has become the international business language, many Americans assume that they do not need to speak other languages or go to other countries to succeed in the corporate world. This parochial assumption is certainly not true for young Swedes, Israelis, or Thais. The United States' former political and technological dominance has also led many Americans to believe that they can conduct business strictly from an American perspective. In many fields where American technology has been the only advanced technology available, potential foreign clients and trading partners have had no option but to "buy American." International business expertise becomes unnecessary because the product sells itself. In the public sector, technology transfer projects from the United States to third world countries further encouraged viewing the world from an American perspective. An Indonesian's comments about Americans' views of Third World people capture this technologically based parochialism: The questions Americans ask me are sometimes very embarrassing, like whether I have ever seen a camera. Most of them consider themselves the most highly civilized people. Why? Because they are accustomed to technical inventions? Consequently, they think that people living in bamboo houses or having customs different from their own are primitive and backward (32).

The academic community has reinforced management's tendency toward American parochialism. The vast majority of management schools are in the United States; the majority of management professors and researchers are American trained; and the majority of management research focuses on the United States. In reviewing over eleven thousand articles published in twenty-four management journals between 1971 and 1980, I found that approximately 80 percent were studies of the United States conducted by Americans (1). Fewer than 5 percent of the articles describing the behavior of people in organizations included the concept of culture. Fewer than one percent focused on the work interaction of people from two or more cultures,

28

Nancy J. Adler

a crucial area for international business. The manager about to negotiate a major contract with a foreign national (a citizen of another country), the executive about to become a director of operations in another country, and the newly promoted vice president for international sales all receive little guidance from the available management literature on how to conduct business with foreigners. The United States will continue to have a large domestic market, English will continue to be the language of international business, and technological excellence will continue to typify many American industries. Nonetheless, the domain of business is rapidly moving beyond national boundaries; the limitations of monolingualism are becoming more apparent; and technological superiority across many industries has become a cherished memory. Global competition in the 1980s makes parochialism self-defeating. No nation can afford to act as if it is alone in the world (parochialism) or better than other nations (ethnocentrism). The United States' economy is inextricably linked to the health of other economies. Like businesspeople the world over, Americans must now compete and contribute on an international scale. International Versus Domestic Organizations The two fundamental differences between international and domestic organizations are geographic dispersion and multiculturalism. The term geographic dispersion refers to the operation of international organizations over vast global distances. Whether organizations produce in foreign countries or only export to them, whether employees work as expatriates or only travel abroad, whether legal ownership involves joint ventures or wholly owned subsidiaries, international firms must manage despite the added complexity of working in more than one country. Geographic dispersion confronts organizations with foreign currency exchange, transportation costs, customs regulations, and many other issues involving distance and national boundaries. Multiculturalism, the second fundamental dimension of an international firm, means that people from more than one culture (and frequently more than one country) interact regularly. Domestic firms can be multicultural if their employee or client populations include more than one culture. For example, many organizations in Quebec have Anglophones (English speakers) and Francophones (French speakers) working within the same organization, and many companies in California have Hispanic as well as AngloSaxon employees. Multiculturalism adds to the complexity of international firms by increasing the number of perspectives, approaches, and business methods. Whereas most international business books have focused on understanding and managing geographical dispersion, this book focuses pri-

Do Cultures Vary?

29

marily on multiculturalism, and raises such questions as: Do people vary across cultures? Do cultural differences affect organizations? Do international managers recognize cultural differences? What are the best strategies for managing corporate multiculturalism?

What is Culture? To understand the differences between domestic and international management, it is necessary to understand the primary ways in which cultures vary. Anthropology has produced a literature rich in description of alternative cultural systems, containing profound implications for managers working outside their native countries. Anthropologists have defined culture in many ways. Culture is "that complex whole which includes knowledge, belief, art, law, morals, customs, and any capabilities and habits acquired by a man as a member of society" (34:1). It is "a way of life of a group of people, the configuration of all of the more or less stereotyped patterns of learned behavior, which are handed down from one generation to the next through the means of language and imitation" (4:4). After cataloging more than one hundred different definitions of culture, Kroeber and Kluckhohn (24:181) offered one of the most comprehensive and generally accepted definitions: Culture consists of patterns, explicit and implicit of and for behavior acquired and transmitted by symbols, constituting the distinctive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i. e. historically derived and selected) ideas and especially their attached values; culture systems may, on the one hand, be considered as products of action, on the other as conditioning elements of future action.

Culture is therefore (7:19) (a) Something that is shared by all or almost all members of some social group (b) Something that the older members of the group try to pass on to the younger members, and (c) Something (as in the case of morals, laws and customs) that shapes behavior, or ... structures one's perception of the world.

Managers frequently see culture as "the collective programming of the mind which distinguishes the members of one human group from another ... the interactive aggregate of common characteristics that influences a human group's response to its environment" (21:25). In general, we see people as being from different cultures if their ways of life as a group differ significantly, one from the other.

30

Nancy J.Adler

Cultural Orientations The cultural orientation of a society reflects the complex interaction of the values, attitudes and behaviors displayed by its members. As shown in Figure 1, individuals express culture and its normative qualities through the values that they hold about life and the world around them. These values in turn affect their attitudes about the form of behavior considered most appropriate and effective in any given situation. The continually changing patterns of individual and group behavior eventually influence the society's culture, and the cycle begins again. What are the differences among values, attitudes, and behavior?

Figure 1 The Influence of Culture on Behavior

Values. A value is that which is explicitly or implicitly desirable to an individual or a group, and which influences the selection from available modes, means, and ends of action. Values can be both consciously and unconsciously held (23). Values are, therefore, relatively general beliefs that either define what is right and wrong or specify general preferences (7:23). Research has shown that personal values affect corporate strategy (17) and that managerial values affect all forms of organizational behavior (16; 28), including selection and reward systems (7), superior/subordinate relationship (25), and group behavior, communication, leadership, and conflict levels. For example, Latin American managers consider one's family to be very important — a value that leads them to hire members of their own family whenever possible. American managers strongly believe in individual achievement — a value that emphasizes a candidate's performance on qualifying exams rather than family membership. Both of these examples illustrate behavior influenced by a value. Attitudes. An attitude is a construct that expresses values and disposes a person to act or react in a certain way toward something. Attitudes are present in the relationship between a person and some kind of object. For example, market research has shown that French Canadians have a positive

Do Cultures Vary?

31

attitude toward pleasant or sweet smells while English Canadians prefer smells with efficient or clean connotations. Advertisements for Irish Spring soap directed at French Canadians therefore stressed the pleasant smell rather than the inclusion of effective deodorants stressed in ads for English Canadians. 4 Behavior. Behavior is any form of human action. For example, based on their culture, Middle Easterners stand closer together (a behavior) than North Americans, while Japanese stand farther apart than either North Americans or Middle Easterners. Latin Americans touch each other more frequently during business negotiations than North Americans, and both touch more frequently than do Japanese. People's behavior is defined by their culture. Cultural Diversity Diversity exists both within and between cultures, but within a single culture certain behaviors are favored and others repressed. The norm for a society is the most common and generally most acceptable pattern of values, attitudes, and behavior. For example, in international business a man wearing a gray business suit reflects the norm through a favored behavior, whereas a man wearing a green business suit does not. A cultural orientation describes the attitudes of most of the people most of the time, not of all of the people all of the time. Accurate stereotypes refer to societal or cultural norms. Societies enforce norms by communicating disapproval toward transgressors — people who engage in prohibited behavior. Some norms, such as laws, are very important, whereas others, such as customs and habits, are less important. A norm's importance is measured by how severely society condemns those who violate it. In the United States, for example, an important norm proscribes bribery. Companies caught using bribery to increase business are publicly prosecuted and fined through a severe sanction. A less important norm in the United States has people say "Good morning" when greeting colleagues at the beginning of the day, but if I fail to say "Good morning" one day, it is unlikely that I will be severely punished. At worst, my colleagues may assume that I am preoccupied or perhaps tired. Anthropologists Kluckhohn and Strodtbeck (23) discuss a set of assumptions that allows us to understand the cultural orientations of a society without doing injustice to the diversity within that society.5 The six assumptions, as adapted by Rhinesmith (30), are that: 1. "There are a limited number of common human problems for which all peoples at all times must find some solutions". For example, each society must decide how

Nancy J. Adler

32

to clothe, feed, and house its people. It must decide on systems of communication, education, transportation, health, commerce, and government. 2. "There are a limited number of alternatives which exist for dealing with these problems". For example, people may house themselves in tents, caves, igloos, singlefamily dwellings, or apartment buildings, but they cannot survive the winter without some form of housing. 3. "All alternatives are present in all societies at all times, but some are preferred over others". 4. "Each society has a dominant profile or values orientation and, in addition, has numerous variations or alternative profiles". For example, people may cure disease with chemotherapy, surgery, acupuncture, acupressure, prayer, or nutrition. The Chinese tend to prefer acupressure and acupuncture; the British chemotherapy and surgery; and the Christian Scientists prefer prayer. 5. "In both the dominant profile and the variations there is a rank-ordering of preference for alternatives". 6. "In societies undergoing change, the ordering of preferences will not be clear cut". For example, as the computer revolution changes society, organizations' preferences to communicate using telex, telephone, electronic mail, or the postal system become unclear; different organizations make different decisions. These assumptions emphasize that cultural descriptions always refer to the norm or stereotype; they never refer to the behavior of all people in the culture, nor do they predict the behavior of any particular person.

H o w do Cultures Vary? As shown in Table 3, six basic dimensions describe the cultural orientatiens of societies: people's qualities as individuals, their relationship to nature and the world, their relationship to other people, their primary type of activity, and their orientation in space and time. The six dimensions answer the questions: Who am I? How do I see the world? How do I relate to other people? What do I do? and How do I use space and time? Each orientation Table 3 Values Orientation Dimensions Perception of:

Dimensions

Individual World Human Relations

Good Dominant Individuals

Activity Time Space

Doing Future Private

Good & Evil Harmony Laterally Extended Groups Controlling Present Mixed

Evil Subjugation Hierarchical Groups Being Past Public

33

Do Cultures Vary?

reflects a value with behavioral and attitudinal implications. As summarized in Table 4, this section presents the six value dimensions with management examples for each. Because most of us know United States business customs fairly well, I will highlight differences between the United States and various other countries. How People See Themselves What is the nature of the individual: good or evil? Americans traditionally see people as a mixture of good and evil, capable of choosing one over the other. They believe in the possibility of improvement through change. Other cultures see people as basically evil — as reflected in the Puritans' orientation — or as basically good — as reflected in Utopian societies throughout the ages. Societies which consider people good tend to trust people a great deal, whereas societies which consider people evil tend to suspect and mistrust them. In high-trust societies, people leave doors unlocked and do not fear robbery. In low-trust societies, people bolt their doors. After making a purchase, people in high-trust societies expect to receive the ordered merchandise and correct change; they do not expect to be cheated. In low-trust societies, caveat emptor ("let the buyer beware") rules the marketplace; one can only trust oneself. In many countries, people are more trusting in rural communities than in urban centers. Today many citizens of the United States and Canada lament that their fellow citizens cannot be trusted the way they used to be. For example, a Toronto hotel now posts a sign reminding guests that "Love is leaving the towels." A Los Angeles gas station, to ensure that motorists will not drive away without paying, requires customers to pay twenty dollars or sign a credit slip before filling their gas tanks. A Minneapolis firm, National Credential Verification Service, makes a profitable business of exposing resume deception. Out of 233 personnel officers responding to a survey of Fortune 500 companies, only one said that deception by executive post applicants was diminishing (26:85). To add to this mistrust, many people find it more difficult to trust foreigners than citizens of their own country. Can a Yugoslavian

Trust a Canadian

Working in Sweden?

A young Canadian in Sweden found summer employment working in a restaurant owned by Yugoslavians. As the Canadian explained, "I arrived at the restaurant and was greeted by an effusive Yugoslavian man who set me to work at once washing dishes and preparing the restaurant for the June opening". "At the end of the first day, I was brought to the back room. The owner took an old cash box out of a large desk. The Yugoslavian owner counted out my wages for the day and was about to return the box to the desk when the phone rang in the front room. The owner hesitated: should he leave me sitting in the room with the money or take it with him? Quite simply, could he trust me?"

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"After a moment, the man got up to answer the phone, leaving me with the open money box. I sat there in amazement; how could he trust me, someone he had known for less than a day, a person whose last name and address he didn't even know?" This incident contrasts perceptions of individuals as good or evil. The Yugoslavian manager saw individuals as good and inherently trustworthy. For this reason, he could leave the employee alone with the money without worrying that it would be gone when he returned. The employee's surprise that this stranger trusted him with the money is a reflection of a N o r t h American's values orientation toward individuals. Believing that people are capable of both good and evil, North Americans are cautious. If the Canadian were in the owner's shoes, he probably would have taken the cash box with him to the other room to answer the telephone, fearing that the money would be stolen. 6

Perhaps because of our fear of the unknown, we frequently tend to misattribute evil in cross-cultural settings. For example, Canadian government officials thought the Inuits, a native people, were evil when they burned down the doors on public housing projects. The officials misinterpreted the act as vandalism and therefore evil, whereas the Inuits had actually altered the houses to fit their normal — doorless — lifestyle. The Canadian government condemns the destruction of property, whereas closed doors, which separate people from their families and neighbors, are condemned by the Inuits. Apart from their tendencies toward good or evil, can human beings improve themselves? Societies and organizations vary in the extent to which they believe that individuals can change or improve. For example, organizations that believe people can change emphasize training, whereas organizations that believe people are incapable of change emphasize selection systems. With today's microcomputer revolution, some organizations choose to hire information systems experts, while others decide to train their current employees to use new technology. The first strategy — hiring new employees — assumes that change is not possible, and the second strategy — training present employees — implies that change is possible. North Americans' emphasis on Μ . B. A . educations and executive training programs strongly reflects their belief that change is possible. People's Relationship to Their World W h a t is a person's relationship to the world? Are people dominant over their environment, in harmony with it, or subjugated by it? North Americans see themselves as dominant over nature. Other societies, such as the Chinese and Navaho, live in harmony with nature. They see no real separation between people and their natural environment, and their beliefs allow them to live at peace with the environment. In contrast to both of these orien-

Do Cultures Vary?

37

tations, a few remote societies see people as subjugated by nature. In these cultures people accept, rather than interfere with, the inevitable forces of nature. "Feng

Shui"

When a North American bank in Hong Kong moved to a new location, one of its expatriate executives was asked to choose between two offices. He chose the one which was larger, regularly shaped, and adjacent to the vice president's office. His Chinese clients, however, were uncomfortable visiting him in his new office. One client with whom he was particularly friendly explained why: "The room has bad feng shui." Feng shui or 'wind water' are earth forces which the Chinese believe can cause success or failure. Feng shui reflects the belief that people and their activities are affected by the layout and orientation of their workplaces and homes. The goal is to harmonize with the environment. The expatriate executive faced a dilemma. As a reflection of status in the North American context, he had chosen his new office because of its size and proximity to the seat of power. In contrast, the Chinese clients believed that it was a poor location because it had bad feng shui, and predicted bad business unless he changed offices. Ultimately, the executive moved into a smaller office where the space was awkwardly cut by a pillar. On the advice of his Chinese clients he placed a mirror on the pillar to overcome this drawback. There were no dire consequences or business failures; his clients were comfortable with the new office and continued to visit him. North American and Chinese perceptions of the world clearly differ. North Americans want to control nature whereas the Chinese want to harmonize with it. The expatriate executive had originally chosen his office based on reasons which appeared rational from his dominance perspective — he wanted to maximize status and influence through office size and proximity. But to the Chinese his decision was not rational; the room was unlucky because it lacked harmony with nature. The expatriate was sensitive to Chinese cultural values and changed rooms. 7

How does an organization see its environment? Are the relevant external environments — economic, social, cultural, political, legal, and technological — seen as stable and predictable or as random, turbulent, and unpredictable? Does an organization assume that it can control its environment, that it must harmonize with it, or that it will be dominated by it? The dominance orientation is exemplified in North Americans' approach to agriculture. Based on the assumption that people can and ethically should modify nature to enhance their own well being, dominance-oriented agribusiness executives use fertilizers and insecticides to increase crop yield. By contrast, harmony-oriented farmers attempt only to plant the "right" crops in the "right" places at the "right" time of the year in order to maintain the environment's good condition. Farmers subjugated by nature hope that sufficient rain will fall, but they do not construct irrigation systems. They hope that pests will not attack the crops, but they do not use insecticides. Some other examples of the North Americans' dominance orientation include astronauts' conquest (dominance) of space, economists' structuring

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of the market, sales representatives' attempts to influence buyers' decisions, and, perhaps most controversial today, bioengineering and genetic programming. Perhaps the contrasting relationships become clearer in the sayings of three societies: 1. Ayorama: "It can't be helped" (Inuit-Canada) reflects subjugation. 2. En Shah Allah: "If God is willing" (Moslem-Arabic) reflects harmony with nature and submission to God. 3. Can Do: "I will do it" (American) reflects dominance.

Personal Relationships: Individualism or Collectivism Americans are individualists; they use personal characteristics and achievements to define themselves, and they value individual welfare over that of the group. By contrast, in group-oriented societies people define themselves as members of clans or communities and consider the group's welfare most important. Lateral group membership includes all who are currently part of the family, community, or organization; hierarchical group membership includes those group members from prior generations. The United States is strongly individualistic and weak on groups, teams, and communities. For example, Americans praise their sports heroes by singling out individual excellence: "Mark Smith and the team trounced the opposition." Compared with people in more group-oriented societies, Americans have more geographic mobility and their relationships, especially with co-workers, are less permanent. Due to its individualistic orientation, the United States has been described as a temporary society with temporary systems, uprootedness, unconnectedness, non-permanent relationships, and mobility (5). More group-oriented societies such as Japan, China, and the Israeli Kibbutzim emphasize group harmony, unity, and loyalty. Individuals in these societies fear being ostracized for behavior which deviates from the norm. Personnel policies also follow either individual or group orientations. Individual-oriented personnel directors tend to hire those best qualified to do the job based on personal skills and expertise. Individualistic applicants will therefore submit resumes listing personal, educational, and professional achievements. Group-oriented personnel directors also tend to hire those most qualified, but their prime qualifications are trustworthiness, loyalty, and compatibility with co-workers. They hire friends and relatives of people already working for the organization. Therefore, rather than sending wellprepared resumes listing personal achievements, applicants seek introductions to the personnel director through a friend or relative, and initial discussions center on mutual friends and family or community members. The management of a group-oriented company in Ghana believes that only people who are known by other employees in the company can be trusted to act responsibly.

39

Do Cultures Vary?

Personnel managers' actions can appear biased, illogical, and unfair when viewed from the perspective of a contrasting culture. Many individualistic North Americans see group-oriented hiring practices as nepotism because they are only seeing these practices from their own perspective. The Germans

Won't Hire His Yugoslavian

Daughter

Rad, an engineer who had immigrated to Germany from Yugoslavia, worked for a reputable German engineering firm. His daughter, Lana, had recently graduated from a prestigious German university. Rad considered it his duty to find his daughter a job, and he wanted his German boss to hire Lana. Although the boss felt Lana was extremely well qualified for the open position, he refused to have a father and daughter working in the same office. The very suggestion of hiring family members was repugnant to him. Rad believed that his boss was acting unfairly — he saw no problem in his daughter's working with him in the same office. The unfortunate outcome was that Lana was neither considered nor hired; the boss lost respect for Rad; and Rad became so upset that he requested a transfer to a new department. Neither Rad nor his boss understood that the conflict was caused by the fundamentally different values orientations in the two countries.8

The organization of firms in individualistic and collective societies differs. In individualistic societies such as those of Canada and the United States, organization charts generally specify individual positions, each with a detailed job description listing formal duties and responsibilities. By contrast organization charts in more group-oriented societies such as Hong Kong, Indonesia, and Malaysia, tend only to specify sections, departments, and divisions except for the top one or two positions (29). Group-oriented societies describe assignments, responsibilities, and reporting relationships in collective terms. The individual versus group orientation also influences decision making. In North America, individuals make decisions. Decisions therefore are made relatively quickly, although implementation frequently gets delayed while the decision is explained and concurrence gained from other members of the organization. By contrast in Japan, a group oriented culture, many people make the decision rather than one. The group process of decision making is less flexible and more time-consuming than the individualistic system because concurrence must be achieved prior to making the decision. But, since all parties already understand and concur, they can implement a decision almost immediately. Activity; Doing or Being Americans' dominant mode of activity is doing or action. They stress accomplishments measurable by standards believed to be external to the individual. Managers in doing-oriented cultures motivate employees with

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promotions, raises, bonuses, and other forms of public recognition. The contrasting orientations are being and control. The being orientation finds people, events, and ideas flowing spontaneously; the people stress release, indulgence of existing desires, and working for the moment. If managers in being-oriented cultures do not enjoy their colleagues and current projects, they quit; they will not work strictly for future rewards. People in a control oriented society restrain their desires by detaching themselves from objects in order to allow each person to develop as an integrated whole. The do-er is more active, the be-er more passive. The do-er actively tries to achieve the most in life; the be-er wants to experience life. Kashmir Versus Sweden In 1981 a Swedish army officer was appointed as an observer for the United Nations in Kashmir. His j o b was to travel around the turbulent province situated between Pakistan and India looking for troop movements on each side. The officer and his family moved into a houseboat on the river in Srinagar, the capital of the province. As is customary for Europeans working in Kashmir, the family employed a "boy" — a servant — to perform all the household services during their stay. The servant was always very polite and pleasant, cooked delicious meals, and kept the houseboat neat and clean. The family was very pleased with his work, and after a short time decided to give him a raise. Surprisingly, the servant did not turn up for work the next day, and his little brother arrived in his place. On his new higher salary the servant had employed his younger brother to work for the family. With the raise he could keep his desired standard of living without having to work, and help his younger brother. Because the Kashmir servant was a Hindu he did not believe that he could improve his standard of living in his lifetime. So by being good and not disturbing the harmony of the circumstances (i. e. by simply being) he believed he could be reincarnated into a higher position in his next life. This natural tendency to accept life with no expectations of material goods contrasts with the Swedish family's notion of working hard to achieve goals and improve one's material lot in this life (i. e. their doing orientation). The Swede's surprise at seeing the younger brother arrive for work reflects this contrast. 9

The doing and being orientations affect planning differently. The being orientation views time as generational, so planning should allow for the long time needed for true change to occur. Major projects often need a generation, or certainly a decade, to achieve significant results. Be-ers allow change to happen at its own — often slow — pace. They do not push or rush things to achieve short-term results. By contrast, doers believe that planning can speed up the change process if plans are carefully outlined, specific target dates set, and frequent progress reports made (31). The beer believes that this type of planning is possible but unwise, since it rarely works immediately and is fruitless in the long run.

41

Do Cultures Vary?

The activity orientation also explains why people work. To achieve goals, doers maximize work; to live life fully, be-ers minimize work. Increasing the salaries of doers and be-ers has the opposite effect. Doers are motivated to work more hours because the rewards are greater; be-ers are motivated to work fewer hours because they can earn enough money in less time and still enjoy life (see story on page 40). American expatriate managers (doers), using salary as a motivational tool, made a severe mistake when they raised the salaries of a group of Mexican workers (be-ers), only to discover that by doing so they had decreased the total hours that the Mexicans wanted to work. Similarly, Canadians working in Malaysia found workers were more interested in spending extra time with their family and friends than in earning overtime pay bonuses. Time: Past, Present, or Future What is the temporal focus of human life? How do societies use time? Are they oriented to the past, the present, or the future? Past-oriented cultures believe that plans should be evaluated in terms of the customs and traditions of society and that innovation and change are justified only according to past experience. By contrast, future-oriented cultures believe that plans should be evaluated in terms of the projected future benefit to be gained from a specific activity or project. Future-oriented people justify innovation and change in terms of future economic payoffs, and have less regard for past social or organizational customs and traditions. Bus Schedules in the

Bahamas

In the Bahamas the bus service is managed similarly to many taxi systems. Each driver owns his bus and collects fares for his salary. There is no set schedule and no set time when the bus will run or arrive at a particular location. Everything depends on the driver. The bus drivers are present-oriented; what they feel like doing on a particular day at a particular hour dictates what they actually do. For example, if the bus driver feels hungry, he will go home to eat lunch without waiting for a pre-set lunch hour. The drivers see no need to repeat yesterday's actions today and no need to schedule for tomorrow according to the needs and patterns of today. This present orientation starkly contrasts with the orientation of bus drivers in New York City, Toronto, Paris, London, and most other urban centers of the Western world. Drivers in these cities have planned schedules which are — to the best of the driver's ability — followed.10

In contrast with North Americans, most Europeans are past-oriented. Most Europeans believe that preserving history and continuing past traditions are important, whereas North Americans give tradition less importance. North American businesspeople focus on the present and near future; they may talk about achieving five- or ten-year plans·, but they work toward achieving

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this quarter's results. Similarly, North American employment practices are also short-term. Managers who do not perform well during their first year on the job are fired or at best not promoted. They are not given ten years to demonstrate their worth. By contrast, Japan has a very long-term, futureoriented time horizon. When large Japanese firms hire employees, the commitment of both parties is for life. Japanese firms invest in years of training for each employee because they expect the employee to work with the firm for thirty to forty years. North American firms invest less in training because a lifetime commitment is not assumed between the company and the employee. The Long-term,

Short-term

Contract

The directors of a Japanese and a Canadian firm met in 1984 in Vancouver to negotiate the sale of coal shipments from British Columbia to Japan. The companies reached a stalemate over the length of the contract. The Japanese, ostensibly to reduce the uncertainty in their coal supply and to assure continuous, stable production in Japan, wanted the Canadians to sign a ten-year contract. The Canadians, on the other hand, did not wish to commit themselves to such a lengthy agreement in the event that they could find a more lucrative offer in the interim. Whereas the Japanese wanted to reduce the level of risk in their coal supply, the Canadians were willing to take the risk of losing a steady buyer for the potential benefits of a more profitable future buyer. The negotiations had hit a snag. Unless the time frame of the contract was resolved, no contract would be signed. The deal, which would benefit both parties, had a distinct possibility of remaining unconsummated.11.

Societies have different standards of temporal precision. What defines when people are late and when they are on time for work, for meetings, or for business lunches? How much variation is allowed? How long are scheduled appointments — five minutes or two hours? What is the typical length of an assignment — one week or three years? An American engineer working in Bahrain was surprised by the response to his apologetic explanation that unfortunately, due to unforeseen delays, the planned school would not be ready to open until six months after the scheduled date. His Arab colleague's response was: "We have lived for thousands of years without this school; we easily can wait another six months or a year. This is no problem." Diversity exists within societies as well as between societies. Past-, present-, and future-oriented people exist within every society. Comparing lawyers and economists in the United States highlights this temporal diversity. American lawyers use a past orientation to cite precedent to adjudicate the outcome of cases, while economists use a future orientation to conduct cost benefit analyses to predict the possible outcomes of alternative corporate and governmental strategies.

Do Cultures Vary?

43

Space: Public or Private How do people use physical space? Is a conference room, an office, or a building seen as a public or private space? When can I enter an office directly and when must I wait outside for permission to enter? The public versus private dimension defines the arrangement of organizational space. North Americans give private offices to more important employees, and even open offices have partitions between desks. They hold important meetings behind closed doors, usually in the executive's large, private office, and generally with minimal interruptions. The Japanese, by contrast, have no partitions dividing desks; bosses often sit together with their employees in the same large room. Middle Easterners often have numerous people present during important meetings. Both Middle Easterners and Japanese have a more public orientation than do North Americans.

Summary Cultures vary in distinct and significant ways. Our ways of thinking, feeling, and behaving as human beings are not random or haphazard, but are profoundly influenced by our cultural heritage. Until we leave our community we are oblivious to the dynamics of our shared culture. As we come in contact with people from other cultures we become aware of our uniqueness and we begin to appreciate our differences. In interacting with foreigners, we learn to recognize and value our fundamental humanity — our cultural similarities and dissimilarities. For years people have thought that organizations were beyond the influence of culture and that they were only determined by technology and task. Today we know that work is not simply a mechanistic outgrowth of either technology or task. At every level culture profoundly influences organizational behavior. In this chapter we have looked at what culture is and how it varies. Using Kluckhohn and Strodtbeck's (23) six dimensions, we have focused on the most important aspects of cultural variation: how people see themselves, their environment, their relationship to other people, their primary mode of activity, and their orientations to time and space. Based on these six dimensions, we have examined some of the fundamental differences in how people organize and work. Questions 1. Discuss various solutions to the snag in negotiations between the Japanese and the Canadians over the length of the contract for the sale of coal shipments.

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2. A l o n g what three dimensions d o individuals associate with a given culture? 3. Define and state the significance of past, present, and future oriented cultures in negotiations. 4. W h a t are some of the organizational properties of corporations that are affected by culture? 5. Discuss the statement, "In the 1980s global competition makes parochialism self-defeating." D o y o u agree or disagree? State your reasons.

Notes 1 Blaise Pascal Pensees, 60 (294), in Geert Hofstede, Culture's Consequences (Beverly Hills, Calif.: Sage Publications, 1980). 2 Unless otherwise stated, all dollar figures are in U. S. dollars. 3 Although the term American literally refers to all peoples from North and South American, it will be used in this book as a shorthand way to refer to citizens of the United States of America. 4 As conducted and cited by Jim Cornell et al., "Cultural Aspects Influencing Advertising Messages Aimed at French Canadians" (Paper, McGill University, 1982), interview with Jacques Grenier of Publi Plus, Inc., March 10, 1982. 5 Kluckhohn and Strodtbeck reflect a North American perspective in their work. Their framework of questions is therefore most accurate in describing Western cultures. 6 Stig-Eric Gruman, BCom, McGill University, 1984. 7 Anne H. Whetham, MBA, McGill University, 1984. 8 Ismail Elkhaby, MBA, McGill University, 1984. 9 Matts Franck, MBA, McGill University, 1984. 10 Yuk Tsui Grace Seto, BCom, McGill University, 1984. 11 John Clancy, BCom, McGill University, 1984.

References 1. Adler, Nancy J. "Cross-Cultural Management Research: The Ostrich and the Trend," Academy of Management Review, vol. 8, no. 2 (April 1983), pp. 226 — 232. 2. Adler, Nacy J. " D o MBAs Want International Careers?." International Journal of Intercultural Relations, vol. 10, no. 3 (1986). 3. Ball, D. Α., and McCulloch, W. H. International Business: Introduction and Essentials (Piano, Tex.: Business Publications, Inc., 1982). 4. Barnouw, V. Culture and Personality (Homewood, 111.: The Dorsey Press, 1963). 5. Bennis, W., and Slater, P. The Temporary Society (New York: Harper & Row, 1968), p. 124. 6. Brown, Linda Keller. "For Women in Business, No Room in the Middle," New York Times (December 28, 1981), Β 18. 7. Brown, M. A. "Values — A Necessary but Neglected Ingredient of Motivation on the Job," Academy of Management Review, vol. 1 (1976), pp. 15 — 23.

Do Cultures Vary?

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8. Business and International Education (Washington, D.C.: American Council of Education, 1977), pp. 9 - 1 0 . 9. Carrol, Michael P. "Culture," in James Freeman, ed., Introduction to Sociology: A Canadian Focus (Scarborough, Ontario: Prentice-Hall, 1982), pp. 19 — 40. 10. "Corporate Scoreboard." Business Week (July 21, 1980), p. 118; and 1980 World Bank Atlas (Washington, D.C.: The World Bank, 1981). 11. Daniels, John D., Ogram, Ernest W., and Radebaugh, Lee H. International Business Environments and Operations, 3rd ed. (Reading, Mass.: Addison-Wesley, 1982). 12. Dhawan, K. C., Etemad, Hamid, and Wright, Richard W. International Business: A Canadian Perspective (Reading, Mass.: Addison-Wesley, 1981). 13. DiStefano, Joseph. "A Conceptual Framework for Understanding Cross-Cultural Management Problems" (London, Ontario: School of Business Administration, University of Western Ontario 1972), unpublished paper. 14. Dun & Bradstreet, Canada, Ltd. Canadian Book of Corporate Management, 1980 (Toronto: Dun & Bradstreet, Canada, Ltd., 1980). 15. Eiteman, David K., and Stonehill, Arthur I. Multinational Business Finance, 2nd ed. (Reading, Mass.: Addison-Wesley, 1979). 16. England, G. W. The Manager of His Values: An International Perspective (Cambridge, Mass.: Ballinger, 1975). 17. Guth, W. D., and Taguiri, R. "Personal Values and Corporate Strategies," Harvard Business Review, vol. 43 (1865), pp. 123 — 132. 18. Hamrin, Robert D. Managing Growth in the 1980s (New York: Praeger Publishers, 1980). 19. International Monetary Fund and ACLI International, Inc. Wall Street Journal (28 May 1981), p. 50. 20. International Monetary Fund, International Financial Statistics, United Nations, Monthly Bulletin of Statistics, and national statistics as cited in International Trade, 1982/83, Contracting Parties to the General Agreement on Tariffs and Trade, Geneva, 1983, Appendix Table A4. 21. Hofstede, Geert Culture's Consequences: International Differences in Work-Related Values (Beverly Hills, Calif.: Sage Publications, 1980), p. 25. 22. Kim, S. H. International Business Finance (Richmond, Va.: Robert F. Dame, 1983). 23. Kluckhohn, F., and Strodtbeck, F. L. Variations in Value Orientations (Evanston, 111.: Row, Peterson, 1961). 24. Kroeber, A. L., and Kluckhohn, C. "Culture: A Critical Review of Concepts and DefinitionsPeabody Museum Papers, vol. 47, no. 1 (Cambridge, Mass.: Harvard University, 1952), p. 181. Reprinted with permission of the Peabody Museum of Archaeology and Ethnology, Harvard University. 25. Mankoff, A.W. "Values - Not Attitudes - Are the Real Key to Motivation," Management Review, vol. 2, pp. 23 — 24. 26. McCain, Mark. "Resumes: Separating Fact from Fiction." American Way (December 1983), p. 85. 27. Parry, Thomas G. "Foreign Direct Investment and the Multinational Corporation," in Ingo Walter, ed., Handbook of International Business (New York: John Wiley & Sons, 1982), Chapter 16, pp. 4 - 5 .

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28. Posner, Β. Ζ., and Munson, J. M. "The Importance of Values in Understanding Organizational Behaviour," Human Resource Management, vol. 18 (1979), pp. 9-14. 29. Redding, S. G., and Martyn-Johns, T. A. "Paradigm Differences and Their Relation to Management with Reference to South-East Asia," in England, G. W.; Negandhi, A. R.; and Wilpert, B., eds., Organizational Functioning in a CrossCultural Perspective (Kent, Ohio: Kent State University Press, 1979). 30. Rhinesmith, Stephen. Cultural Organizational Analysis·. The Interrelationship of Value Orientations and Managerial Behavior (Cambridge, Mass.: McBer Publication Series Number 5, 1970). 31. Rhinesmith, Stephen H., and Renwick, George W. Cultural Managerial Analysis Questionnaire (New York: Moran, Stahl & Boyer, 1982). 32. Scarangello, Anthony, ed. American Education Through Foreign Eyes (New York: Hobbs, Dorman, & Co., 1967). 33. Simon, Paul. The Tongue Tied American: Confronting the Foreign Language Crisis (New York: Continuum Publishing Corp., 1980). 34. Symington, James W. "Learn Latin America's Culture," The New York Times (September 23, 1983). Copyright © 1983 by The New York Times Company. Reprinted by permission.

Time is the Essence Edward T. Hall

Is there a person alive who hasn't been tailgated by someone else driving or walking too fast? Or remember another common annoyance (for those who trace their origins to Northern Europe), being kept waiting or being delayed on your way to an appointment. Reflect a moment on how you felt when you were subjected to these temporal harrassments. It was not pleasant, was it? On a more positive note, recall those times when on the spur of the moment you decided to take some time off and go fishing or just lie under a tree by a stream on a warm summer afternoon. How wonderful it felt to be completely free of the constraints and pressures of time! In the Western world, carefree is timefree. Or think about rhythm, which is a form of time. Remember the magic of dancing with someone in perfect sync — heaven! Just seeing the performance of Fred Astair and Ginger Rogers dancing as one can induce shivers in the spine. Extraordinary, isn't it? Yet behind these thrills and chills, pressures and releases, lies an element that is the very stuff of success and failure both at home and abroad. American business executives are used to thinking in numbers — profits per share, earnings per share, retained earnings, return on capital, debt to equity ratios, and the like. As a consequence, businesses, as well as those who occupy chairs in leading business schools, make light of a "soft" approach to doing business. They relegate as trivial anything that can't be expressed in numbers directly related to an effect on the bottom line. Nevertheless, in the final analysis, business is conducted solely by and between people. It is the people part that is the focus of this brief essay. Why? Because when people work together, their feelings, emotions, work habits, in fact, all the little things we take for granted (the hidden dimension of culture) must be dealt with. Cultural differences are extraordinarily difficult to come to grips with and to analyze, largely because these differences reside in people, and the most bothersome cultural differences lie safely buried in the recesses of our subconscious. Regardless of what accountants and the numbers people in business schools say, it is people who buy things, who meet at bargaining tables, who supervise and are in turn supervised. People plan, organize, make decisions, create strategies, and, most important, people who work together communicate. Nothing can be produced without the active participation and cooperation of human beings communicating with each other. By communicating, I mean everything that people do and everything they do

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Edward Τ. Hall

not do as well. People must be motivated or provided a managerial or physical environment in which they can motivate themselves, and regardless of the management approach, interpersonal communication is at the very heart of all business. And it may come as a surprise (until you really think about it) that an important building block in the edifice of interpersonal communication is the way in which people use different modes of rhythm and the unconscious language of time. My own special kind of research has been to identify and dissect the microevents that constitute the basics of relations between different national groups. My work has led me to the inescapable conclusion that the mastery of the time and rhythm systems in any social environment is as important to success and understanding as mastery of the language. Not only is time a special kind of language, but it is also an organizing frame within which all activities must fit. The language of time is linked to the rest of culture and, quite surprisingly, is unique to each culture. For instance, the North American who insists on strict delivery schedules in South America or in the Middle East must learn that he must do more than rant and rave about meeting deadlines; there will be local ways of getting things done, but these local ways will probably not include adherence to rigid schedules. Or consider the French manager, who comes from a culture where the schedule is not king. If he goes to work in Germany, he will encounter another language of time entirely. Should he intrude on his secretary's coffee break or keep subordinates late in the office, he will gain a reputation as a selfcentered narcissist who has no consideration for others, and he may even hear from the company's works council. On the other hand, the German who arrives in Paris to negotiate a contract with his French supplier will probably have to give up his preconceived notions of setting to work at 9:00 am and concluding in time to return to Frankfurt that night. He will be appalled by finding himself in a virtually empty office at 9:00 am, waiting for his French colleague, who may arrive shortly before 10:00 and who will spend much of the morning deciding, after lengthy consultation with everyone present, where to eat lunch. The German does not speak the French language of time, which requires evoking the whole gustatory apparatus and setting the proper interpersonal relationship before business can be taken up. If the German insists on adhering to a rigid schedule, the French will label him uncouth, a man with little appreciation for life and no feeling for people. Strange as these examples may seem to the average American business executive, it is important to understand that there is nothing frivolous or trivial about such situations. The principles for behavior which must be observed are in many respects just as binding as the principles of engineering, for example. The French, like other Mediterranean peoples, live and work according to a system of time that is termed "polychronic" — doing many things at

Time is the Essence

49

once, which seems to be linked to right brain thinking. The Germans, like most of their American cousins, are "monochronic" — doing one thing at a time, a left brain function. Monochronism is a time system intimately linked with scheduling, originally a prerequisite in our part of the world to the creation of assembly lines. The differences in time systems between Germany and France (except for Alsace and Lorraine) are so great that my partner and I advise anyone who has business with the French to allow several days (at least three) for their French colleagues to adjust to their physical presence in Paris or Lyon or wherever. This time frame allows the French to rearrange life accordingly, and the Americans can use the first few days to schedule activities that are not specifically related to business. This will be time well spent. It allows Americans to make their presence known and to become acquainted. Talking informally about matters other than business during the first few days will content everyone and will pay off later. One must observe these rules for behavior in France because a characteristic of polychronic cultures is a deep involvement with people. Monochronic cultures are much more concerned with procedures and agendas. If, when doing business in Mediterranean or Latin or South American countries, you find yourself spending more time on procedures than on people, your local colleagues may be polite but they will likely classify you in their own minds as not only undependable but unsympathetic. You will seem undependable because, in a polychronic world, commitments based on personal contacts and friendship are frequently more binding than written contracts. From this perspective, how can you trust someone you haven't had time to get to know, enjoy, and depend on as a friend? Making friends and getting to know people on a personal basis may seem irrelevant and time-consuming, but let me assure you it is important. The week before I began writing this paper, I was in Frankfurt addressing some prominent German business executives. After the talk, a tall, thin, taciturn German approached me and said, "You know, what you said was very interesting. I, myself, am an example of your principles. I grew up in Cuba, but my parents were German." He seated himself beside me during lunch and I listened with fascination as he reminisced about doing business in Latin America. I noted that as he recalled his experiences, his imagery became more vivid and his face went through a complete metamorphosis — from a stern, serious German demeanor to a warm, mobile Latin face! It was at this point that he told me how it was possible to sell millions of dollars worth of advertising on television in one afternoon simply because the two parties involved in the negotiations already knew and trusted each other both in terms of business judgment and as human beings. Their friendship meant that they could make decisions with a minimum of discussion and very little time. We parted in that Frankfurt

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hotel dining room with a warm Latin abrazo and a comment on his part that he had never earned money with so little effort and so much enjoyment as he had in polychronic Latin America. Because North Americans measure and evaluate time in terms of how much they have accomplished that is concrete and quantifiable, they do not count having fun with other human beings as a business accomplishment. It is exceedingly difficult to get American management to take seriously and act upon the idea that time spent getting acquainted with other people can be the most efficient use of time. Regardless of this attitude, however, it is a fact that it's virtually impossible to do business in much of the world without making real friends with one's business associates. In the United States, however, we must deal with the reality that the accountant's mentality holds sway. American business views time as money and performance as measurable in dollars and sales. Therefore, it is difficult to justify the necessity of learning a foreign language in the face of a numbers-oriented viewpoint, since learning new languages takes a long time (and therefore is costly). But such an attitude is ridiculous. Would we buy from a German salesman in this country if he or she did not speak English? Would American workers on an assembly line take orders from a foreign supervisor if that person spoke only Arabic or French? Not on your life. Yet that is exactly what people in other countries are expected to put up with when they deal with American businesses. The point I wish to make is that there are many ways of doing business, many languages of behavior that must be mastered. There is much more to the conduct of business than can be expressed in numbers. There really is a hidden dimension of culture that can help or hinder the international business executive. There is so much more to be said, so many things to know. The need is very great. 1 Note 1 For further information on this little-known side of human nature and its pervasive influence on every aspect of life, I refer the reader to my bibliography of published works, especially Beyond Culture, The Dance of Life, How to Communicate with the Germans, and Hidden Differences'. Doing Business with the Japanese.

Cross-national Organizational Research: The Grasp of the Blind Men Karlene H. Roberts and Nakiye

A.

Boyacigiller

Until the 1950s, systematic research and theorizing about organizations was confined to Great Britain and the United States. Despite Udy's (1961) and Crozier's (1964) early forays into cross-national work there was virtually no follow-up. Hydebrand's 1973 edited compilation of thirty organizational studies, considered by many as an excellent representation of the work at that time, contained only one cross-national investigation. Harbison and Myers (1959) first studied cross-national management, and Haire, Ghiselli, and Porter (1966) did the first systematic large-scale survey of managers cross-nationally. Early cross-national forays were limited primarily to Western Europe and the United States. While more recently Japan has been included, the focus still remains narrow. All of this is understandable against the following backdrop: Today between fifteen and thirty of the 120 countries of the world with less than one-third of its population, possess practically all of its science (von Alleman, 1974).

If all science is practiced in fewer than thirty of the world's nations, then all social science is practiced in still fewer, and all organizational science in still fewer yet. Against that record, it seems unlikely solutions will be found for the severe social and political problems that are increasing worldwide at a geometric rate. It is not our purpose here to provide a comprehensive review of the crossnational organizational literature. A number of those exist (Bhagat and McQuaid, 1982; Child, 1981; Ferrari, 1974; Negandhi, 1974). Rather, our purpose is to go back to a recommendation made earlier by one of the authors of this paper (Roberts, 1970) that until some fundamental issues are dealt with, a retrenchment should occur in cross-national organizational research. That statement was made within the framework of the parable of the blind men and the elephant, each man "seeing" only a part of the elephant. Here we address some basic questions regarding criteria that should be met by a body of cross-national organizational research, examine the assets and liabilities of some existing large-scale studies, and offer some suggestions about the kind of research and theory building we think will be most fruitful in the near future. This essay begins by taking seriously the following comment: We can continue along the present lines by conducting largely eclectic studies that may have very different theoretical, methodological domain and intent bases, and

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hope that individually and collectively they are sufficient and sufficiently additive to make a science of organizations. There are many virtues and many proponents of such an approach. Conversely, a sufficient number of scholars and researchers could decide that the field is essentially floundering and needs integrative model building and conceptualizing before research can become meaningful and additive. This would imply that many of our best minds should focus on the search for and development of such integrative models which would hopefully move us to another level of research ... The extent to which these proponents can and will do the job is certainly problematical (England, Negandhi, and Wilpert, 1979, p. 13).

First, what does cross-national research seek to do? Based on existing research, it appears its raison d'etre is to extend variance on setting characteristics to understand their impacts on organizations, on organizational members, on a variety of relationships within organizations. These relationships can be among individual characteristics, organizational characteristics, or relations between the two. The purpose of this approach to organizational research is to find universalism or divergence in these various kinds of relationships across settings. This is represented in Figure 1. Figure 1 diagrams virtually all the kinds of relations we have seen studied in crossnational organizational research.

Figure 1

Relationships studied in cross-national organizational research Source: Roberts, Κ. H. and Boyacigiller (1984; p. 427).

Cross-national organizational research is no different from any other organizational research in which setting characteristics are attended — with one exception. Some single national researchers are beginning to examine the impact of organizations on limited parts of their environments. For

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example, researchers have looked at such things as conditions that foster the takeover of one firm by another (Demsetz, 1982; Pfeffer, 1972). Most cross-national researchers, to the contrary, focus on outside-in causal linkages and that is exactly what they should do because the field is, as yet, too underdeveloped and fragmented to warrant spreading the research effort any thinner. When one compares the quality of cross-national research with single nation organizational research which examines setting, single nation work generally wins. The reasons are clear. In cross-national organizational research, all the problems of single national studies are exacerbated by two conditions. The first is the extension on the independent variable. Setting characteristics are difficult to conceptualize and even more difficult to measure. The usual external organizational variables seen in cross-national organizational research are either undefined entirely or their definitions are sufficiently amorphous so that they are unclear. This is particularly true in moving from explication to operation. The second condition is the Tower of Babel created when researchers attempt to investigate settings in which there are different values and heritages, and often use research teams whose members also differ from one another on these dimensions. Such differences require compromise and often the end result seeks the lowest common denominator of research standards.

If a Field is to be a Field: Suggested Criteria for Cross-national Organizational Research Here we discuss some criteria that would characterize a good paradigm in cross-national organizational research as an area of study. All of these criteria cannot be met in each and every study. Rather, the mosaic of the field should acknowledge the importance of each criterion and studies should overlap one another in terms of standards of excellence, much as in the fish scale model proposed by Campbell (1969). Many issues discussed here are as true for single nation as for cross-national organizational research; the two are inextricably linked. Here we focus on those points we feel are more crucial to cross-national than to single nation research, indicate something about why we feel the situation is as it is, and recommend some strategies for moving on. The criteria and their discussion follows. 1. A good paradigm will either specify a definition of culture or replace it with a set of measurable variables that might together reflect potentially important setting impacts on organizations Most criticisms of cross-national organizational research, of all cultural anthropological research, and cross-national psychological research, begin

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with the problem of lack of definition of the term culture (Beres and Portwood, 1981; Dachler, 1979; Evan, 1975; Kroeber and Kluckhohn, 1952). Some of these criticisms end with the suggestions that we eliminate the term entirely because it lacks heuristic value (see, for example, Bhagat and McQuaid, 1982; Dixon, 1977; Heller, Wilpert, Docherty, Fourcade, Fokking, Mays, Roig, Weinshall and t'Hooft, 1981; Negandhi, 1974). Obviously this problem is at the heart of all cross-national organizational research, but is irrelevant to some kinds of single nation studies in which investigators can be impervious to anything outside the skin of the organization. Progress might be made by thinking simultaneously about institutional, market, and normative setting characteristics that fall in the bailiwick of many social science disciplines. Attention might also be given to historical constructs external to organizations and to the simple impact of time on organizational development and operation. In some respects, this kind of extension to a larger set of environmental characteristics boggles the mind in terms of our ability to understand their impact on organizational life. However, we are struck with pursuing this needed extension because it is now clear that a small number of relatively amorphous variables, derived from an examination of man-made constructs that typically focus on values and norms, is insufficient for explaining variance in organizations. At the onset this is a theoretical not an empirical issue. Researchers should look for the setting characteristics that are most likely to influence organizations and then think about the relation of those characteristics to one another and their probable impact on organizations. That the Tower of Babel may grow is a possibility. Strategies for ameliorating against this are discussed later. 2. An adequate paradigm will integrate multidisciplinary views of organizations in any single research project and/or in reviews of existing research The second most frequent criticism we hear is that cross-national organizational research is provincial because each researcher applies the constructs and methodologies typical to the academic domain in which he or she was trained or works. Clearly fragmentation came about as knowledge accumulated in the various social sciences. As more information is obtained, social forces for differentiation and fragmentation grow in the scientific community. Yet, if cross-national research is as depicted in Figure 1, by its very nature, it must draw at least from anthroplogy, economics, political science, sociology, and various brands of psychology. It is simply too much of an elephant not to. While it cannot be expected that any single study will draw from all the social sciences, it should show a recognition of how the problem under investigation might be viewed from different perspectives.

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Surely integrative reviews should go even farther. This issue is clearly not true for some kinds of single nation investigations. Examples are studies of human resource issues that draw legitimately and heavily on paradigms offered by industrial psychologists. What can be done to make progress toward integration and counter forces of differentiation? If, by definition, good cross-national and organizational research includes ideas of many people, who speak different disciplinary languages and have different blinders, implementation of social psychological prescriptions about good group problem solving and decision making is needed. The application of good management practices might work toward integrating ideas and honing research projects likely to produce quality results. Who is better qualified to do this across scientific communities than management researchers? 3. Good research in this area will reflect agreement about sets of variables that should be studied The kinds of activities discussed thus far provide suggestions on how to meet this criterion. At least camps of workers would agree among themselves about sets of variables that would most profit from empirical study. These camps could then set out to do the kind of strong inference research discussed by Piatt (1964), developing studies in which competing hypotheses are tested within investigations. In the hard sciences, for example, there is at least a pattern of agreement within each discipline about what it is legitimate to study. In cross-national organizational research today, everything is up for grabs because there is no agreement. While this may be more true of crossnational research than of single national organizational research or of research in disciplines contributing to both of these areas, cross-national researchers cannot shoulder the blame alone for this lack of focus. 4. An adequate paradigm will reflect agreement about appropriate strategies or methodologies for conducting research Historically, cross-national organizational research has borrowed heavily from the structuralist and static approaches developed in economics, psychology, sociology and, to a lesser extent, from the more fluid process approaches of anthropology and some aspects of sociology. Particularly because there is no agreement among the contributing disciplines about the appropriateness of one approach over another, there probably can be no agreement about this in cross-national organizational research. One might hope for technological breakthrough to resolve conflict about research strategies. That is not a far-flung hope in an age of increasingly flexible high-speed computers that can be used for both data collection and analysis. Computers can be programmed to collect both process and static

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data or any other kind of information researchers think is interesting. We need mechanisms to analyze and integrate several kinds of data. 5. All organizational research needs to reduce reliance on rationalistic views of organizations This criterion is certainly not limited to cross-national organizational research. In fact it is particularly applicable to United States-based single nation research. Rationalistic models, drawn primarily from economics, are so pervasive that their influence on cross-national work needs to be stressed. Attempts by some sociologists and political scientists to counter this influence may one day provide a more balanced set of models in organizational research in general. Perhaps infusion of this kind will be a smaller problem for cross-national researchers than for United States single nation researchers because some cross-national researchers embrace neo-Marxist positions to a greater extent than do the single nation researchers who are usually United States bred and trained. 6. Adequately designed cross-national organizational research will include the role of history Thinking about historical impacts on organizations, such as institutional, political, or religious changes that influence organizations and are influenced by them, is important to both single nation and cross-national organizational research. It is all the more important in cross-national organizational research because it might uncover clues about the gamut of external organizational variables likely to influence organizational activity. As an example, we know but rarely document the fact that an organization's form is, in great part, determined by the social technologies available at the time of its birth (Stinchcombe, 1965). Obviously, to the extent we heed this criterion, we also include process in our work and heed the following criterion. 7. Time must be increasingly accounted for in all organizational research We fail to include theories of time in our research, which results in the measurement of "things" at one's convenience or when one is allowed into organizations. With the advent of time series studies, the situation has worsened in that the time intervals used to appear, for the most part, to be random. Often there are natural benchmarks to guide theoretical development with regard to introducing time into our research: semester and grade report intervals in schools, seasons in resorts, etc. In cross-national organizational research the role of time is possibly more important than in single nation studies because time is thought about and perceived differently in different nations (Hall, 1973; McGrath and Rotchford, 1983).

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8. Studies should build upon one another so that a world view of organizations emerges If cross-national research met both the first four criteria concerned with research strategy, and the next three criteria concerned with content, this last criterion would also be met. As stated previously, it is not expected that all criteria discussed here will be met in any single research effort. It is hoped, though, that a more coherent field can emerge that generally meets these criteria. By definition, cross-national research seeks a world view and without it, such research cannot address the very real problems of survival faced by organizations and their members. It appears to us that cross-national researchers have been studying in Petri dishes problems that simply do not fit into Petri dishes. The scope of the problems of interest in cross-national organizational research is simply larger and more complex and must be studied in different arenas with tools that reflect its size and complexity. Obviously, single nation researchers should not be under mandate to provide a world view to the degree that their cross-national colleagues are. Summary It is a tragedy that, for the most part, those of us trained in management skills have not applied them well to ourselves. One reason is that we infrequently have the resources to do real multidisiplinary large-scale work in which coordination and control problems are so crucial. Alternatively, even when we have the intellectual resources of good teams, we fail to take seriously in our everyday research activities that would encourage the emergence and discussion of different ideas, reduce posturing behavior, encourage creative problem solving, create team structures that encourage novel solutions, etc. If we could better grapple with the overlay of interpersonal social issues in research team activities, at least camps of researchers might reach greater integration about definitions of specific setting characteristics and appropriateness of materials contributed from a number of disciplines. Cross-national organizational research might then reflect the obvious fact that organizations are composed as much of people as they are of roles and role interactions, structures, etc. Both psychologists and sociologists would have equal time in identifying internal organizational relations and a responsibility to merge their thinking. None of this can be accomplished without attention to changing reinforcement contingencies that operate in many research shops (perhaps more in the United States and Canada than in other parts of the world). Developmental efforts such as those recommended require considerable time. Many academicians are on a publish-or-perish clock to tenure and cannot afford to engage in such activities. Additionally, the entire social science

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research community operates under a norm in which everyone must answer correctly the question, "How much did you publish last year?" It is difficult to publish a great deal when one must not only think through a problem, collect, analyze, and interpret data, but learn the languages of colleagues in other fields, and from other nations, as well.

Three Major Issues Short of calling for a moratorium on cross-national organizational research, what can be done? Progress will be slow until (a) underlying contributing disciplines are better developed, (b) researchers borrow more carefully from those disciplines, and (c) they develop theory and avoid the pitfalls in translation of concepts to data gathering and interpretation. The rest of this paper addresses these issues. Rather than focusing on all eight criteria for good scientific cross-national organizational research simultaneously, a seemingly impossible task, we discuss three issues we feel should be tackled first. These issues are chosen because they emerge in criterion development. Obviously, other important issues are ignored. For example, while it is important to find ways to develop a truly multidisciplinary approach to the area and avoid aggregation problems, this is not discussed in this paper. Instead we address those issues which we think have the greatest possibility of immediate payoff. They are also selected because, while we agree that each is important in single-nation organizational research, we think they are vastly more important in crossnational research for reasons stated previously. The issues are: 1. The tendency of cross-national organizational research to focus more specifically on environments in which organizations exist. This is often not true of single-nation organizational research. 2. The introduction of serious time problems. Time is used differently in different cultures. Researchers usually compound this problem by failing to specify theories of time underlying their work, gathering data over randomly selected intervals, and measuring and relating variables that reflect different time intervals. 3. Static studies that cannot assess the permeability of organizations by their environments.

Culture As we stated previously, definitions of culture inherited from anthropologists are not often heuristically valuable to organizational researchers. Often this is because they cannot be made operationally independent of the very organizational constructs in which we are interested. Second, they tend to cast a qualitatively different net than the one cast by issues in which cross-

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national organizational researchers are usually interested. When cross-national organizational researchers borrow definitions of culture from anthropologists or develop their own, they typically do not worry about correspondence rules between those external organizational constructs and internal constructs of interest to them. Then too, when systems are organized according to different principles, their treatment as a single system of environed and environing events is problematic (Klausner, 1971). Thus, for example, the notion of man/machine systems is imprecise because the two, man and machines, are organized around different principles. If one system is the environment for another, it must naturally influence it and boundary interaction mechanisms must be specified. Physical facts, says Klausner, have physical environments, but physical and chemical facts may have social interpretation and share boundaries with social and psychological facts. Klausner states that "social organization is borrowed from the British anthropologists as a generic term referring to the whole complex of relations which connect members of a society" (1971, p. 37). If man and nature are related as parts of an organic system, independent definitions of them are not feasible. One must look at one in relation to the other. A problem with all organizational research is that it fails to do this. The cross-national organizational researcher is in an ideal position to remind his or her singlenation research brethren of this necessity. If we are to pursue cross-national organizational research, we cannot wait for the wish of true interdisciplinaries to come true. As a stopgap measure, we offer here a simple set of specifications one might follow. These specifications emerge from examining several frequently invoked definitions of culture, which include the following: "Culture is best seen not as complexes of concrete behavior patterns — customs, usages, traditions, habit clusters ... but as a set of control mechanisms, plans, recipes, rules, instructions for the governing of behavior" (Geertz, 1973, p. 44). "'Culture' refers to the learned repertory of thoughts and actions exhibited by members of social groups — repertories transmissible independently of genetic heredity from one culture to the next" (Harris, 1979, p. 47). "Most cultures and the institutions they engender are the result of having to evolve highly specialized solutions to rather specific problems" (Hall, 1981, p. 5). The common element in these definitions is that they impose constraints on human behavior. Thus, it is difficult to differentiate those constraints discussed by anthropologists from those discussed by organizational/environmental researchers. We might say, then, that from an organization's perspective, culture is the sum of a set of external constraints that permeate it and influence its micro and macro responses. But because of its breadth, this definition of culture is heuristically useless. How can one narrow this broad definition to give it heuristic value? A general rule is to select an organizational problem of interest and then

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borrow or develop a theoretical argument relating this problem to a set of relatively proximal external constructs. Proximal setting characteristics should be focused on first because their links with organizational characteristics are less likely to be interfered with by other unknown constructs than are linkages of distal setting and internal organizational characteristics. Once those constructs are identified, the search for boundary interchange mechanisms can begin. In the long run, as organizational science develops an agreed-upon set of substantive issues for examination and requisite methodologies, the field will provide real building blocks for cross-national research. Alternately, a paradigm shift will occur and most of what we have said will fall by the wayside. In the short run, pockets of researchers will define pockets of organizational constructs and into these pockets cross-national researchers can place external environmental constructs. N o t only should they look to previous cross-national research for identification of these constructs but to the organizational-environmental literature, as underdeveloped as it is. Existing large-scale economic and political data banks can be pursued to enhance theoretical development since it is unlikely even pockets of researchers have resources to collect large-scale national data. The Role of Time in Organizations and Organizational Theories "Only when time is a part of our research designs is it possible to move from a static to a process view of organizations" (Roberts, Hulin and Rousseau, 1978, p. 92). These authors go further and warn us that time series studies can generate misinterpreted results if the wrong time interval is chosen. Here we face two problems relevant to incorporating time into our thinking and research. The first has to do with how time is conceptualized in organizations and nations and the second has to do with time issues to which we, as cross-national researchers, are particularly susceptible in our research. McGrath and Rotchford (1983) provide philosophical review of the nature of time in organizations. They note that each culture develops a dominant conception of time. "The general context underlying recent and current western, industrialized societies is a context ... within which we ... are embedded. That culture generally views time as: homogeneous, divisible, linear, measurable, singular, objective, and abstract" (p. 7). It is thought that these conceptualizations about time were set down and constrained by the cultural and organizational constraints existing at the time of the industrial revolution. It is not clear to us that this particular view of time is correct in all organizational life even within a single culture, much less across cultures. While the form and function of manufacturing organizations of the indus-

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trial revolution may have molded our view of time, the current cultural forces in nations into which those organizations have expanded may have modified this view. On the cross-national organizational researcher's agenda should be the issue of whether or not this is true, and if true, to what extent. Here is an area in which cross-national research can feed back into mainstream single-nation organizational knowledge. Cross-national organizational researchers should be best equipped to ask questions about the degree to which various conceptualizations of time and time usage in organizations are a function of factors external to the organization or characteristics of the organization itself. Exciting research possibilities abound now because organizations are shifting from a manufacturing/industrialized production mode to service and high technology modes, and at the same time are spreading to parts of the world grossly out of synchronization with both older and newer forms of modern organizations. We caution against researchers and theoreticians in our area engaging in finely articulated existential discussions of time. The mesh of that kind of philosophical net is woven more finely than needed to catch the typical organizational fish. Rather, researchers should examine carefully how organizational participants think about and use time and weave the results of these examinations into their cross-national theorizing (see, for example, Graham, 1981). McGrath and Rotchford (1983) indicated that organizations attempt to resolve time problems through scheduling, synchronizing, or coordinating segregated parts and activities and by allocating time across different sets of activities. A starting point for cross-national organizational researchers — might be to examine the differential degrees to which these three activities may be focused on or given attention to at all in organizations of different national settings. In terms of their own use of time and inclusion of it in their research, cross-national organizational researchers must attend a quite different set of issues. First, it may be that incorporating time into our theories will clarify whether our science is a mere reflection of history designed to perpetuate current Western values (Gergen, 1973, Ekehammer, 1974). Then, in thinking about problems to be examined in any investigation, researchers must ask themselves if the problem itself or the organizational form in which it is stuck have any natural time benchmarks. Such natural benchmarks should be explicated and worked into theory and empirical exploration. For example, if one were interested in the impact of pay and benefit packages on employee behavior, it might be advisable to tie empirical data collection to periods of change with regard to these variables, perhaps based on renegotiation of union contracts. Alternatively, one might have theoretical reasons to tie data collection to periods of stability. In addition, too often we see data on one set of variables collected a one time and under one set of conditions correlated either directly in a single study or indirectly

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in discussions across studies with data on another set of variables collected at a different time and under a different set of conditions (see, for example, Hofstede, 1980). Researchers should examine the socio-technical forms of organization available at the period of a particular organization's birth and ask whether these forms make some different predictions about the use of time than did organizational and social forms available to early builders of modern production organizations. This needs to be done since we know that organizations, once established, are difficult to change. As Roberts, Hulin, and Rousseau (1978) state, at least three problems emerge in research when we fail to consider time in our theorizing. First, data collected for samples at different points in time are often combined — with little attention given to whether supposedly similar conditions for all samples are, in fact, similar. This easily occurs more in cross-nation than single-nation organizational research for a number of reasons. When multidisciplinary teams work to design research they tend to control for factors such as industry type, organizational size, etc., but fail to control for factors heavily associated with time like the business cycle (see, for example, Heller and Wilpert, 1981). When they go cross-national, researchers are likely to extend data collections over lengthy time intervals in which virtually anything can happen in one setting and not in another. A second problem is that there is considerable research comparing measurements of the same variables across arbitrary intervals (see, for example, Hofstede, 1980). This problem relates back to the issues of time and theory previously discussed. A theoretically specified causal interval is never mentioned. This is particularly important in cross-national research if one thinks that environmentally determined cycles, like annual representation of some culturally important phenomenon, influence organizational life. Some sort of interactionist perspective laid atop structural views, as mentioned before, may help here. The third problem discussed by Roberts, Hulin, and Rousseau is more directly related to the nature of measurement itself. Data points related to one another may reflect vastly different time frames. For example, when one correlates job satisfaction and productivity, the satisfaction measures may stretch over a much longer period of remembered time than the two weeks in which productivity data were obtained. Lack of synchronization among measures is likely to result. It is our hope that future research will bring into synchrony issues relating time to organizational life through focus on the envelopes of time associated with both environmental and organizational variables. The Static Nature of Static Studies More than any other kind of organizational research, cross-national organizational research is concerned with the permeability of organizations to

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their settings and to the values and issues people in those organizations bring with them. Thus, studies in this area should take on a relational character if we are ever to obtain a more complete picture of organizational life. Few of them do; most are of a rigid statistical nature. But try we must if we are ever to obtain a more complete picture of organizational life. Typically, relational theorizing has been of a higher quality than the data generated by such theorizing. The cross-national researcher then has the double problem of trying to integrate with existing structural data a more fluid theoretical perspective and deriving from that perspective strong observations. One suggestion might be to impose on cross-national studies a multiple level of analysis framework and see if progress can be made in the design and conduct of future research. For example, if participation continues to be a "hot topic" in cross-national research, one might impose a social information processing model (Salancik and Pfeffer, 1978; Weick, 1979) on issues such as participation and power sharing at the individual managerial level. This would focus attention in different ways on aspects of participation, such as information availability, that are of interest to researchers like Heller and Wilpert and their colleagues (1981). It would also focus attention on different issues. At the organizational level, a symbolic interactionist overlay a la Glaser and Strauss (1968), or a relational interactionist perspective a la Crozier and Freidberg (1980), would draw attention to different correlates of participation than, for example, the hierarchies that interest researchers like Tannenbaum and his colleagues (Tannenbaum, Kavcic, Rosner, Vianello and Wiesner, 1974). As Crozier and Friedberg remind us, "once we have accepted diversity we must then go on to investigate why certain rules, relational arrangements and game constructs are in force rather than others. Cultural analysis is an answer to this question" (1980, p. 101). Unfortunately these authors fail to deal further with culture. Crozier provides one metatheory that might be paralleled by the clever cross-national researcher to our structural data bases in order to provide richer data sets. For example, following Crozier we would look at the power games that indirectly structure the strategies actors can devise and perhaps gain a better understanding of the relation of hierarchy and control. At the national or societal level, a thick description approach (Geertz, 1973) might help us better understand the permeability of organizational boundaries. At the very least it would caution us against the error of viewing environments as one-way causal influences on organizations and direct our attention more specifically to reciprocal relations between organizations and their environments.

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An Example As an example of how one might proceed, we use the issue of participation which manifests itself in different ways and at different levels of organizations. Participation seems particularly alive and well in cross-national organizational research (Heller, et al. 1981; Tannenbaum et al. 1974). Our first task is to think about ways participation manifests itself throughout organizations. One might come up with a list of macro organizational manifestations that includes such factors as representation on committees, centralization of decision making, job titles of participants in critical decision making, representation on boards of directors, etc. Consistent with our earlier caution in thinking about including time in our theorizing, one might work into a theory of participation notions such as lengthening time for decision processes as a corollary to shortening time for decision implementation. At the micro level of organizational analysis, participation could manifest itself in perceptions that job incumbents have about the degree to which they participate, the broadness or narrowness of individuals' views of organizations that may be corollaries of their own participation beyond the scope of a single job, the degree to which individuals are active in work activities, etc. The appropriateness of this or some other list of manifestations of participation depends on the list maker's theoretical orientation and his or her reliance on findings from past studies. One might begin with such a list and think about probable importance of the various entries on it, honing and pruning to develop a tight conceptual network. Researchers will have to think about how to make translations such that both static and process methodologies can be evoked. Some aspects of participation (and anything else) lend themselves more to one approach than the other but effort should be given to blending the two. The next task is to think about external factors that potentially influence participation. Again, it is important to keep separate the micro and macro aspects of participation so that variables proximal to each will be thought about and so that dimensionally similar variables are examined together. For example, it makes intuitively better sense to examine the relation of something like regional rather than national employment levels to something like job scope. Job scope in any organization may be influenced by the available local labor pool. It is less likely influenced by more aggregate national data. Again, the list of constructs generated is dependent on the theoretical bent of the researcher and on contributions from past research. These characteristics categorized as macro might be societal and institutional variables while proximal characteristics might include industry factors. With regard to the macro organizational participation characteristics discussed here, it appears to us that one reasonable societal institutional

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factor to look at initially is the impact of legislative systems. Thus, one should examine relationships of legislation across settings to the macro manifestations of participation in organizations in those settings. Legislation may also have an historical conseqeunce for organizations. For example, one might hypothesize that it would be difficult to find high participation in organizations which are not in democratic settings. This would lead to developing an external organizational network of variables that somehow consider isms, (capitalism, socialism, communism, etc.) and borrow from comparative economics. In examining societal relations with organizations, one cannot ignore the convergence-divergence argument so often seen in the literature (Meyer, 1970; Meyer, Boli-Bennet, and Chase-Dunn, 1975; Kerr 1983). Kerr (1983) provides the most well-developed version of convergence and some of his nine dimensions along which convergence should be assessed might well be examined in relation to organizational participation. The dimensions are content of knowledge, mobilization of resources of production, organization of production, patterns of work, patterns of living, patterns of distribution of economic rewards, economic structure, political structure, and patterns of belief. Kerr states that worldwide convergence is occurring on the first six and divergence on the last three dimensions. While we do not agree with Kerr's assessment, the dimensions he offers and the data bases he cites might be considered in developing a theoretical position with regard to environmental influences on participation. As indicated above, it appears to us that economic and political structures influence organizational participation. That such macro characteristics are difficult to measure and enormously subject to error (see Morgenstern, 1963) almost goes without saying. Perhaps this is why economists have been unsuccessful in their attempts to solve worldwide economic difficulties. Until we merge constructs drawn from diverse bodies of thought, we really will not maximally benefit from what various social science disciplines have to contribute to cross-national organizational research. More proximal to organizations, one might think the existence of institutional precedents for sharing power would influence organizational participation. Industry level analyses could be used to flush out such potential influences. Additionally, one could abstract from the organizational environmental literature, as we have seen done in previous studies, a notion like industry turbulence or uncertainty. Conceptualization should not forget the role of time which may be reflected in market changes, such as concentration, that are surrogates for uncertainty (Pfeffer and Leblebici, 1973). In conceptualizing micro aspects of organizational life (the things people do in organizations), one must focus on a different set of inputs. It makes intuitive sense to include values and beliefs (drawn from society) about such matters as authority relations or the salience and importance of work in

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one's conceptualization. Level of individual education, or the content of knowledge available, following Kerr, are variables potentially related to individual manifestations of organizational participation. One could, too, draw from Triandis' (1981) seventeen dimensions of culture a set of those factors that appear most relevant for understanding participation. The most likely candidates appear to us to be past-present-future orientation, the degree to which human nature is perceived as changeable, whether human nature is perceived as good, bad, or neither, and finally three dimensions Hofstede also uses: power distance, inequality, and uncertainly avoidance. As with other sets of variables we have discussed, some of these lend themselves better to process and some better to static appraisal. Process appraisal forces a concern for time. It is probably easier to develop some sort of relational interactionist perspective at this level of concern than it would be in thinking about societal macro organizational relationships. This appears to us a good place to start. Here we have offered a set of outcropping of participation that seem both important and fairly easily translated into measurement. Our perusal of past cross-national organizational research, recent organizational environmental work, and some work in political economy and comparative economics suggests a set of potential external influences on participation. It seems possible to us to take a limited set of variables such as this and develop well-reasoned theory and hypotheses about them and translate these into measurement, thus meeting some of the criteria elaborated previously. A danger is in eding up with a plethora of variables (see, for example, Farmer and Richman's (1970) seventy-six by twenty-nine matrix of economic and political country indices). This can be avoided by careful attention to theory construction.

Conclusion A perusal of major issues in cross-national organizational research suggest both the negative and positive aspects of this kind of research. On the negative side, researchers from various disciplines have not yet been pushed into jointly developed theoretical systems with agreed upon exemplars, styles of inquiry, and major substantive issues. They are still confusing science and engineering and are generally conducting static and largely eclectic studies that have "different theoretical, methodological, domain, and intent bases" (England, Negandhi, and Wilpert, 1979, p. 13), and typically carry a made-in-the USA label (Boyacigiller and Adler, 1991). As a result, an adequate feel has yet to be obtained for what constitutes appropriate internal organizational and external environmental constructs of interest, much less boundary interaction mechanisms between them. The roles of society, cul-

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ture, nation state, time, and history are neglected. By no means is all of this to be blamed on cross-national researchers. They are victims of constraints imposed by the more basic contributing social science disciplines. On the more positive side, we do not feel cross-national organizational research is as heavily dominated by elite managerial concerns as is singlenation United States organizational research. Following Doob (1980) the investigations generally do reach a little higher than they might have if the author's gaze had been fixed on only one society. There is always the problem of team research seeking the lowest common denominator, and most cross-national organizational research will have to be of the team variety. Compared to ten years ago, current research is more ambitious and pays more attention to theory. More interesting questions are posed and greater attention is given interrelated sets of issues. Some decentering is occurring. What does all of this say about the elephant? First, the six blind men are now sixty-six and the elephant is larger. More attention has been given to the whole of the elephant, possibly because researchers are beginning to examine contiguous parts, possibly because they are less blind. On the other hand, not much is known about characteristics that comprise the elephant and we are totally deficient when it comes to predicting his behavior. With regard to addressing and solving pressing societal problems, we are making all the speed of a glacier in a world that requires much more. In addition to the more specific suggestions offered here, we close by suggesting renewed effort in developing a true science that can address these problems. References Beres, Μ. E. & Portwood, J. D. Sociological Influences on Organizations: Analysis of Recent Research. In A. R. Negandhi & B. Wilpert (Eds.), The Functioning of Complex Organizations. Cambridge, MA: Oelgeschlager, Gunn & Hain, 1981, 313-341. Bhagat, R. S., & McQuaid, S. J. Role of Subjective Culture in Organizations: A Review and Directions. Journal of Applied Psychology, 1982, 67, (5), 653 — 685. Boyacigiller, N. A. & Adler, Ν. J. The Parochial Dinosaur: Organizational Science in a Global Context. Academy of Management Review, 1991, 16 (2), 262 — 290. Campbell, D. T. Ethnocentrism of Disciplines and the Fish-scale Model of Omniscience. In M. Sherif (Eds.), Interdisciplinary Relationships in the Social Sciences. Chicago: Aldine, 1969, 3 2 8 - 3 4 8 . Child, J. Organization Structure and Strategies of Control: A Replication of the Astron Study. Administrative Science Quarterly, 1972, 17, 163 — 176. Child, J. Culture, Contingency, and Capitalism in the Cross-national study of Organization. In L. L. Cummings and Β. M. Staw (Eds.), Research in Organizational Behavior (vol. 3). Greenwich, CT: JAI, 1981. Crozier, M. The Bureaucratic Phenomenon. Chicago: University of Chicago Press, 1964.

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Crozier, M., & Friedberg, Ε. Actors and Systems: The Politics of Collective Action. Chicago: University of Chicago Press, 1980. Dachler, H. P. Constraints on Current Perspectives for the Cross-cultural Study of Organizations. Presented at 39th annual meeting of the Academy of Management, Atlanta, 1979. Demsetz, H. Antitrust: Problems and Proposals. In J. F. Weston & Μ. E. Granfield (Eds.), Corporate Enterprise in a New Environment. New York: K. C. G. Productions, 1982. Dixon, K. Is Cultural Relativism Self-refuting? British Journal of Sociology, 1977, 28, 7 5 - 8 8 . Doob, L. W. The Inconclusive Struggles of Cross-culture Psychology Journal of Cross-culture Psychology, 1980, 11, 5 9 - 7 3 . Ekehammar, B. Interaction in Personality from a Historical Perspective. Psychological Bulletin, 1974, 81, 1026-1048. England, G. W., Negandhi, A. R., and & Wilpert, B. Organizational Functioning in a Cross-cultural Perspective. Kent, OH: Kent State University Press, 1979. Evan, W. M. Measuring the Impact of Culture on Organizations. International Studies of Management and Organization, Spring 1975, 5, 91 — 113. Farmer, R. N., & Richman, Β. M. Comparative Management and Economic Progress. (2nd ed.). Bloomington, IN: Cedarwood Press, 1970. Ferrari, S. Cross-cultural Management Literature in France, Italy, and Spain. Management International Review, 1974, 14 (4 — 5), 17 — 23. Geertz, C. The Interpretation of Cultures. New York: Basic Books, 1973. Gergen, K. J. Social Psychology as History. Journal of Personality and Social Psychology, 1973, 26, 309-320. Glaser, Β. G., & Strauss, A. L. The Discovery of Grounded Theory. London: Weidenfeld and Nicolson, 1968. Graham, R. J. The Role of Perception of Time in Consumer Research. Journal of Consumer Research, 1981, 7, 335 — 342. Haire, M., Ghiselli, E., & Porter, L. W. Managerial Thinking: An International Study. New York: Wiley, 1966. Hall, Ε. T. The Silent Language. New York: Anchor Press/Doubleday, 1973. Beyond Culture. Garden City, New York: Anchor Press, Doubleday, 1981. Harbison, F., & Myers, C. A. Management in the Industrial World: On International Analysis. New York: McGraw-Hill, 1959. Harris, M. Cultural Materialism: The Struggle for a Science of Culture. New York: Random House, 1979. Heller, F. Α., Wilpert, B., Docherty, P., Fourcade, J. M., Fokking, P., Mays, R., Roig, B., Weinshall, Τ., & t'Hooft, W. Competence and Power in Managerial Decision-making: A Study of Senior Levels of Organization in Eight Countries. New York: Wiley, 1981. Hofstede, G. Culture's Consequences: International Differences in Workrelated Values. Beverly Hills: Sage Publications, 1980. Hydebrand, W. V. Comparative Organizations: The Results of Empirical Research. Englewood Cliffs, NJ: Prentice-Hall, 1973. Kerr, C. The Future of Industrial Societies: Convergence or Continuing Diversity? Cambridge, MA: Harvard University Press, 1983.

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Klausner, S. Z. On Man in his Environment. San Francisco: Jossey-Bass, 1971. Kroeber, Α., & Kluckhohn, C. Culture: A Critical Review of Concepts and Definitions. Cambridge, MA: Peabody Museum, 1952. McGrath, J. E., & Rotchford, N. L. Time and Behavior in Organizations. In B. Staw & L. Cummings (Eds.), Research in Organizational Behavior (Vol. 5). Greenwich, CT: JAI Press, 1983, 57-101. Meyer, A. G. Theories of Convergence. In C. Johnson (Ed.), Cange in Communist Systems, Stanford, CA: Stanford University Press, 1970, 313-341. Meyer, J.W., Boli-Bennett, J., & Chase-Dunn, C. Convergence and Divergence in Development. Annual Review of Sociology, 1975, 1, 223 — 246. Morgenstern, Ο. On the Accuracy of Economic Observations. Princeton, NJ: Princeton University Press, 1963. Negandhi, A. R. Cross-cultural Management Studies: Too Many Conclusions, Not Enough Conceptualization. Management International Review, 1974, 14 (6), 59 — 67. Pfeffer, J. Merger as a Response to Organizational Interdependence. Administrative Science Quarterly, 1972, 17, 382-394. Pfefifer, J. & Leblebici, H. The Effect of Competition on Some Dimensions of Organizational Structure. Social Forces, 1973, 52, 268-279. Platt, J. R. Strong Inference. Science, 1964, 46, 347-353. Roberts, Κ. H. On Looking at an Elephant: An Evaluation of Cross-cultural Research Related to Organizations. Psychological Bulletin, 1970, 74, 327 — 350. Roberts, Κ. H. & Boyacigiller, N. A. Cross-national Organizational Research: The Grasp of the Blind Men. In L. L. Cummings & Β. M. Staw (Eds.), Research in Organizational Behavior (Vol. 6). Greenwich, CT: Sai Press, 1984, 423-475. Roberts, K. H., Hulin, C. L., & Rousseau, D. M. Developing an Interdisciplinary Science of Organizations. San Francisco: Jossey-Bass, 1978. Stinchcombe, A. L. Social Structur in Organizations. In James G. March (Ed.), Handbook of Organizations. Chicago: Rand-McNally, 1965. Tannenbaum, A. S., Kavcic, B., Rosner, M., Vianello, M., & Wiesner, G. Hierarchy in Organizations. San Francisco: Jossey-Bass, 1974. Triandis, H. Some Dimensions of Intercultural Variation and their Implications for Interpersonal Behavior. Technical Report. Department of Psychology, University of Illinois at Champaign-Urbana, 1981. Udy, S. H. Technical and Institutional Factors in Production Organization: A Preliminary Model. American Journal of Sociology, 1961, 67, 247 — 254. von Alleman, H. International Contacts of University Staff Members: Some Problems in the Internationality of Science. International Social Science Journal, 1974, 26, 445-457. Weick, K. The Social Psychology of Organizing (2nd ed.), Reading, MA: AddisonWesley, 1979.

The Onslaught on Social, Cultural and Organizational Consequences by Technological Innovation 1 Theodore D. Weinshall

Introduction The exponential growth in scientific and technological innovation since the Industrial Revolution and especially during the 20th Century has brought in its wake enormous changes in humanity's social, cultural and organizational life. Since World War Two it has been habitual among behavioral scientists to proclaim that this evergrowing pace of innovations left necessary adaptive changes in the way of life behind. Thus it seems that many of the effects of technological innovation were "dysfunctional" in such areas as employment, as well as individual and organizational behavior, as we do not seem to be able to overtake and adapt ourselves to the rate of innovations in these areas. It is predicted that within a very short period of time the divergance between scientific and technological innovation and its social, cultural and organizational consequences in the Highly Industrial Countries,2 followed by the rest of the world, will reach such dimensions that one will have to embark upon the process of re-structuring the whole employment market. This technology employment process will lead to an ever growing ratio of leisure days to working days in our lives. The paper is divided into three parts. The first discusses the dynamics of technology since the Industrial Revolution. The second part deals with the dynamics of employment, mainly the attitudes towards work and leisure. The third part suggests possible dynamic solutions for a technology — employment balance.

The Dynamics of Technology Figure 1 presents, in a dramatic way, the technological consequences of the Industrial Revolution. Throughout history, until the Industrial Revolution, innovations had been opposed and frequently rejected by humanity. People do not like change. As long as life revolved around individuals, families, tribes and nations who could survive by themselves without any technological changes, human beings fought even the suggestion of the slightest shift in the way they had been living or thinking. Indeed, they would put

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innovators, discoverers and revealers to the fire rather than even listen to their 'heresy.' This was the epoch of 'as things have been, things remain.' 3 The Industrial Revolution put an end to all that because it made individual, family and national survival dependent on the survival of the industrial organization. Not only are our standards of living dependent on the survival of our business organizations, but so are our ways of life — values, customs, mores and all other things which constitute our cultures. Thus, the only way to ensure our personal integrities is to ensure the survival of our industrial organizations. The evergrowing competitive pressures of organizations — fighting one another for the continued cooperation of their workers, customers, suppliers, shareholders and all their integral human factors, without whom they cannot survive — make it essential for them to change all the time. They are either leaders or followers in innovation, but they cannot be indifferent to the changes which keep on occuring in other organizations which compete with them for one or more of their integral factors. If they ignored such changes,

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they would soon feel the repercussions. The consequences of the introduction of new technologies enable the innovative organization to afford better rewards for one or more of its constituent factors — managers, and/or workers, and/or shareholders, and/or bankers, and/or customers, and/or suppliers, and/or government, and/or trade unions. In so doing, the innovative company undermines the cooperation of the same integral factors in other organizations which do not follow suit, and continue to reward as previously. The people who are now offered better rewards elsewhere — be they better salaries, wages, dividends, rates of interest, prices, qualities, delivery terms, and the rest — are tempted and eventually succumb to the pressure to move to organizations where the benefits to them are greater. This process has been accelerating at an exponential rate ever since the Industrial Revolution. It is indeed the only explanation for the phenomena of the schematic curve presented in Figure 1. In whatever way we measure the slow rate of innovation from the dawn of humanity until the Industrial Revolution, it had been occasionally interrupted by a dramatic discovery such as the making of fire or the invention of the wheel. These occasional innovations are represented by humps in the pre-Industrial Revolution rate of innovation. One of the ways to construct such a curve of the rate of innovation is to note the number of famous innovators living at certain points in time, as a percentage out of all the great innovators in history up till now. Thus, however, Figure 1 is continued the general shape of the curve comes out the same and represents probably the most amazing and crucial out-come of the Industrial Revolution. There may be, however, different interpretations of the universal significance of this rate of innovation, as well as whether anything should be done about it and if so, what? On the one hand, we find people to whom we may refer as the 'prophets of doom.' They claim that if this rate of innovation were allowed to continue, a whole set of catastrophes will befall mankind within 50 years, perhaps even within a much shorter period of time. These catastrophes include over-pollution of the atmosphere, exhausting the natural resources of food, heat and transportation, and a population explosion. The prophets of doom broadly include two different groups of people: quantitative scientists, who base their claims on mathematical extrapolative techniques,4 and humanists and naturalists, who oppose the continued growth because they believe that 'small is beautiful.' 5 Ours is, however, a completely different and basically optimistic interpretation of the rate of innovations presented in Figure 1. The sudden shift in the rate of innovation which occurred in the 19th century and the spectacular growth which has followed since, are proof of the inexhaustible innovative capabilities of human beings. The fact that relatively very little had changed for thousands of years until towards the end of the second millenium AD, can only be a result of a lack of motivation and pressures

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for change, rather than an inability to innovate. Indeed, the three interrelated things to which we have referred have been happening simultaneously, prompted by the Industrial Revolution. These are: the dependence of human beings on the survival of their organizations; the escalating growth in innovations on which this organizational survival depends; and the everincreasing acceptance of innovations by human beings. Under such conditions of change, it is not reasonable to extrapolate existing conditions into the future. If anything, the curve in Figure 1 proves that things do not remain stationary. Therefore, if any predictions can be made from this curve, they are that the new technologies will be less pollutive, will use different resources for heat and transportation energy, will find new resources for food, and will help to avoid a population explosion. Already at the turn of the last century, it was foolish to make forecasts, ignoring unforeseen developments in such areas as transportation. Following is a humorous story about forecasting the growth in the number of carriages and horses. This was a serious research project carried out around the end of the 19th century. On the basis of his extrapolation of the growing number of horses, the researcher warned his readers that the streets of cities such as Paris and London would be smothered to a great height with manure in so many years. It seems to be equally unreasonable to make similar forecasts when approaching the end of this century. Thus, the only prediction that one ventures to make is that the trends of innovation will follow the needs of humanity rather than persist in directions which will eventually turn out to be detrimental and destructive. We may feel personally that 'small is beautiful,' but however strongly we feel about it, evidence would suggest that this concept will never be valid in many areas of human endeavour. We cannot turn the technological clock back, or stop it. Even if some aspects of earlier life may seem beautiful to us (and, surely, many aspects of life in previous centuries were not beautiful at all), they are not essential for a reasonable survival of humanity. Anyway, they do not appear to present practical solutions to most of our problems.

The Dynamics of Employment Employment is a relatively new concept, which owes its presentday meaning to the organizational developments since the Industrial Revolution. 6 The most important connotation of employment is the behavioural value attached to it, namely that one has to work during a major part of one's free time. This is not only a problem of earning one's living. Employment also has 'dignity,' and 'self respect,' while unemployment is 'shameful,' 'degrading,' etc.

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This employment culture has been specially strengthened since the appearance of socialism. At the beginning, in the 19th and early 20th centuries, it revolved mainly around the economic aspects of employment. However, since the creation of the so-called welfare state, which undertook to care for the well-being of all its citizens whether employed or not, the social rather than the economic significance of employment assumed its present day proportions. In the Soviet Union, for example, post-Revolution children used to accuse their mothers or, later on, their grandmothers of having been parasites, because they had never been employed in their lives. The role of socialist doctrines and of the welfare states of the industrial countries in having created this employment culture, is closely linked to the undisputed commitment of the trade unions to it. It is of primary importance to realize the implications of the present-day employment structure and culture, because most probably we shall have to change it drastically in the not too distant future. The reasons for such drastic changes in employment and their possible directions are discussed further on in this section. The first major aspect of the present-day employment structure and culture is educational. Our whole education is based on the notion that 'God blessed the seventh day and sanctified it: because in it He had rested from all His work' (King James' Bible, Genesis 2:3). Until the 19th century, the only activities allowed by Christans, Jews and Moslems on the rest day were related to performing the rites of their religions. Today, even in those countries where the weekend rest period has increased from one to two days, the time utilization of the Sabbath has been extended in most cases to include only family activities, rather than individual leisure outside one's family. Consequently, present-day education advocates the merits of employment, preparing people for a certain kind of one or two days' nonemployment, but not preparing them for longer and different types of leisure. The second implication of the present employment structure is its impact on the life and role of the employed person within his or her family. As the majority of employed people are men, let us consider the situation of married men (the problem is similar with employed married women). Present-day family culture and relationships are based on the time the husband and father spends at home during every working day and on his weekends. His relationships are evidently based also on his physical and mental state when he is at home. This is the main reason why the shift from a one to a twoday weekend was something of a revolution for those involved. One can imagine what a revolution a three-day weekend could constitute in family life, if and when introduced. It may mean a major shift of roles within the family. The husband and father spending half of his time away from his place or employment could very well result in families undergoing traumatic experiences for better or for worse.

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Possible Dynamic Solution for a Technology-employment Balance The integrated solution which I support and forsee is that of moving gradually but determinedly towards a fifty-fifty work-leisure week and, subsequently, beyond it. In the first half of the week, half the employed population will be at leisure while the other half works; and in the second half of the week, the other half of the employed population will be at leisure, while the first half works. Every job will have two persons in one shift — while one works, the other is at leisure. We have, in fact, already moved towards such a solution by prolonging our weekends from one to two days. This has happened since the Second World War, the two-day weekend having become a reality for most people in the more technologically advanced countries of the world. It seems, however, that both governments and managements in the countries where employment slowly turns into a malignant social tumor, have been hesitant and sometimes even reluctant to embark on a Decision Making Process leading towards a fifty-fifty work — leisure week. This problem area seems to be shadowing the approach to the third millenium AD, its predicted solutions being somewhat of a structural and cultural revolution for our industrial world and organizations. This is why we shall now embark upon a more detailed discussion of the possible solutions, their impacts and implications. The enormity of the problems associated with a fifty-fifty work-leisure week, and eventually to an even higher proportion of leisure, is indeed quite forbidding. Let us consider what the main problems of such a process will be. I shall start by making explicit two assumptions upon which the possible solutions are based. I had these assumptions in mind when preparing the various solutions presented in Figure 2. The first assumption is that industrial organizations, as well as national economies, would want to utilize their manufacturing facilities as much as possible, preferably in one, two or three shifts every day. Secondly, we assume that future patterns of employment structure should reduce the pressure on leisure facilities to a minimum, avoiding, if possible, situations in which the whole population will be at leisure simultaneously. The area in which one would probably encounter the greatest difficulties is in educating and training people to use their increased leisure time. The difference between a two-day weekend and a three, four or more days' leisure period per week could be quite traumatic, it has already been pointed out that people do basically the same things when their weekend expands from one to two days. But there is a shift in the time distribution of their activities as they settle into a two-day weekend.

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However, the addition of one or two days to the already abundant twoday weekend must raise the question: 'What does one do with all this spare time?'. One way of tackling this question is to divide it into two further questions: 'What does one do with much more time for the family?' and 'How does one utilize the remaining available time?'. So, let us consider separately the possible implications and utilization of all this surplus time at home and elsewhere. Perhaps the most crucial problem would be in the relationships with one's spouse and children. This is closely linked to two interrelated developments which have already been stressed: the increasing rates of women's entry into the employment market, and the changing patterns of female-male relationships, both inside and outside marriage, and with and without children. This whole subject is beyond the scope of the present paper. Let us hope that family and sex psychologists and sociologists will catch up with the changes which will inevitably occur in the employment structure as the work-leisure ratio changes.7

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As for how to spend the remaining available time, the responsibility for providing the answers to this question would probably fall mainly on the shoulders of educators and educational institutions. This will be a specially difficult task, because our present educational system prepares only a small fraction of the population for prolonged leisure and even that is done partially. Unfortunately, those who would know best how to utilize additional spare time, would be precisely those who would be granted relatively less surplus time in the future. What we refer to as 'scarce managerial and professional personnel' in Figure 2 usually includes people who have been trained to enjoy additional reading and learning, as well as the performing arts — painting, sculpture, music, theatre and ballet. Some have been educated as performers and not only as spectators and listeners. The remaining bulk of employees, with evident exceptions, have had very little training and preparation for either additional reading and learning, or for the performing arts. Until now, we have mentioned the following two-day weekend activities: relaxing (including reading, mainly newspapers and journals), playing, and spending time with one's family and close friends (including short trips, picnics, and attending an occasional sporting and/or performing art event). The additional leisure activities anticipated for the longer weekly leisure time include more intensive reading and learning, greater involvement in the performing arts and sports and games, and more travel. In the latter two major areas of leisure activities — sports and games, and travel — the bulk of the employees (those referred to as 'manufacturing level employees' in Figure 2) have had relatively more preparation than in the performing arts. However, even in the preparation for their role as spectators rather than as performers in sports and games, there is still much to be desired. For example, we are only too well aware of unsporting behaviour, sometimes resulting in widespread violence in football, etc. A similar situation exists with regards to travel. The bulk of the employees are better attuned to the idea of extensive travelling than to the idea of involvement in the performing arts. Nevertheless, much more is needed to enable them to increase their travelling both within and outside their own country. Geography, history and languages are the main areas which have been neglected in the education of people, whose interest, curiosity and knowledge of cultures different from their own would have to be augmented to encourage their future additional travelling. All this means that the content and spirit of education should be drastically changed. Otherwise we shall not be able to prepare the future generation properly for a life in which only half of their time will be spent in the trades, skills and professions for which they are being prepared today. We could, therefore, predict that whatever the general trend of schooling — whether in a more liberal humanistic direction, a more scientific direction,

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or towards a more particular training in specific trades — the education will have to include a substantial portion of studies in the performing arts and in human behaviour. Another training trend will be able to prepare people for 'do-it-yourself skills, which would help individuals to do for themselves tasks for which they formerly employed others, or make things which they formerly bought from others. The second major problem is financial. The move to a situation in which two, and later three persons will occupy each job, would require radically changing the existing system of prices and incomes. For example, industrial organizations will have to pay full incomes (salaries and wages) to two persons for the work formerly done by one person over the same period of time. Taxes will also have to be adjusted accordingly. The third major problems involves accommodating the religious traditions of countries. We can see from Figure 2 that the six-day and eight-day week are more easily arranged into full working days when moving into improved leisure — work ratios. Maintaining the seven-day week would mean that employees in fully utilized manufacturing facilities (equipment utilized every day) would work every week — in the first stage for 3 Vi days, in the second stage for 2Vi days, and in the third stage for only 1% days. In order to avoid changing over in the middle of a shift, it would be possible to devise different weekly lengths of work and leisure, rotation in cycles of two, three and four weeks. Thus, for example, in a fifty-fifty work-leisure ratio, the first week in a two-week cycle would be composed of four days work and three days leisure, while the second week would be composed of three days work and four days leisure. However, in a fully utilized sevenday week, part of the population (one half, or a third, or a quarter) would be working during a religious day of the week, be it Friday (for Moslems), Saturday (for Jews), or Sunday (for Christians). It is interesting to note the arrangements in the British Mandatory Government of Palestine between 1919 and 1948, the bureaucracy of which was divided among Christians, Jews and Moslems. Each official was formally off on his religious resting day. This arrangement demonstrated both a religious tolerance towards all and a very efficient approach to work and leisure, because it guaranteed the continuous functioning of government offices during the weekends. The only possibility of having a uniform day of rest for the whole population is, of course, to give up the fully utilized week. This, however, will complicate, and may overload, the utilization of the leisure facilities which will have to accommodate all those who will want to use them during the rest day. This may especially overburden the traffic facilities and therefore could result in the imposition of traffic restrictions on that day. Nevertheless, as long as religions have even only a partial following among the populations of the countries introducing increased leisure (which

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would eventually cover the whole world, including countries with relatively large employee populations), the sevenday week solution would have to be adhered to. This could be done by following the 'fully utilized manufacturing facilities' model (appearing of the left-hand side of Figure 2), and/or by adapting the 'partially (six days in seven) utilized manufacturing facilities' model (at the bottom of Figure 2). When we say that it is possible to adapt the fully and/or partially utilized manufacturing facilities sets of solutions, we mean that employing organizations could simultaneously make use of both alternatives. Thus, for example, if the economy were to operate mainly on a fully utilized manufacturing facilities basis, individual employing organizations which insist on not operating their facilities on the religious day could maintain in their plants partially (six days in seven) utilized manufacturing facilities. On the other hand, if an economy were to run mainly on the partially utilized manufacturing facilities basis, those industries which have to be continuously operated (steel, glass and other highly capital intensive facilities, e.g., airlines) could go on functioning in a fully utilized manufacturing facilities mode. The descriptions of schematic restructuring of the work-leisure ratio presented in Figure 2 have been somewhat elaborated. The reader should realize that whatever way is chosen for moving to an improved work-leisure ratio, the whole economy should be made to operate on a similar, if not identical, basis. Let us bear in mind that the whole purpose of moving from one work-leisure ratio to another is to ration work. This, I believe, is the only way to keep a balance between technology and employment. Therefore, any exceptions could only be allowed by way of formalized permits granted in response to special requests. Solutions of rationing work by pensioning off employees at 60, and earlier, in order to create employment for school leavers, seem to be missing the point and by-passing the problem. Work has to be rationed to those who are prepared for it and are able to carry it out. If people who are working five or six days a week should be retired when their energy is still high, they would be completely frustrated, finding themselves suddenly obsolete and unprepared for full leisure. The economy would thus lose some of its best employees at their prime. Exceptional permissions would be granted primarily in cases of scarce managerial and professional personnel. Even so, it would be advisable to make such cases formally explicit by legislation, regulating them on a separate basis from the 'manufacturing level personnel.' An example of how these two populations could be formally handled is presented in the upper part of Figure 2. The trades, skills and professions privileged to have higher employment contents in their work-leisure ratio because of their scarcity, should be formally specified by being included in a 'scarce managerial and professional personnel' list, which will be updated occasionally according to prevailing conditions.

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Another important aspect of restructuring the work-leisure ratios is the implications for the annual vacations of employees. Until now, there has been a large concentration of vacations in very specific periods of the year, especially during the summer months. The best known phenomenon of this sort occurs in France, where during the July —August vacation (Les vacances) the economics pace is drastically reduced, bringing many businesses to a complete standstill. Thus, for example, Paris is almost empty of its citizens. Employees who continue to work in either July or August usually leave their families wherever they are holidaying. Often, in such cases, the families prolong their vacation to two months. This is why there are relatively more French men than women in Paris in the summer. The tourists, therefore, find it difficult to secure the necessary services except for the strictly tourist ones (e. g., hotels). It seems that, at least for the majority of employees listed in Figure 2 as 'manufacturing level personnel,' one month's vacation a year would be reasonable enough considering the evergrowing leisure content in their work-leisure ratio. Such annual vacations would probably be spent with one's family away from home. With quickly expanding air travel and the equally rapid drop in fares, those interested could fly cheaply, whenever they wanted to, to their desired environment, be it sunny beaches or wintry mountains. However, a more even scheduling of vacations should be arranged, mainly to ensure continuous utilization of the manufacturing facilities and of the running of all businesses, especially those engaged in providing services. The losses due to substantial paralysis of business and industry during a two months' period, such as Les Vacances in France are devastating. Vacation planning similar to that in Figure 2 would incur enormous savings to individual organizations and to whole national economies. Figure 3 presents several possible variations for restructuring the pattern of vacations, spreading them more evenly over the year. Each of these variations will require well in advance internal arrangements for planning the annual vacation of all the employees in every organization. These arrangements may include such things as assuring the same vacation month for both wife and husband (and sometimes the sons, daughters and close friends who may want to spend it together). It may also involve changing one's vacation month over the years, because some months may be considered better than others; and the rotation of vacations throughout the labor force might be necessary. The sun-tanning cult makes July and August by far the most attractive months for vacations in countries north of the Equator. However, recently doctor's warnings against exposure to the sun have been growing in force. It may well be that the fear of skin cancer will slowly bring white-skinned people to believe that it is more beautiful to have a white skin than a tanned one, as they once did believe. Last but not least, the vacation facilities have also to be planned, which is largely an international matter rather than a national internal arrange-

81

The Onslaught of Technological Innovation

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ment. The planning of vacation facilities may be contrary to the way that things run in their respective countries. An example of this are the summerresort islands off the northern shores of the German mainland. Their high season is in the summer. Therefore, by special decree, the schools on these islands are in session during the high season, when all other German schools are on vacation. This arrangement solves two problems. First, the children are at school when their parents are busy with the tourists who fill the islands; also the children are prevented from mixing too much with the tourists when their parents are least able to keep an eye on them. Secondly, the school vacation is postponed to periods when the children are able to spend it with their parents. Maintaining uniform work-leisure ratios and vacations patterns throughout the economy will enable us to improve dramatically the planning and utilization of leisure facilities. The responsibility for planning and providing such facilities will have to be shared between industrial, business and other types of organization, on the one hand, and the central and local governments of the nation states on the other. However, the preparation of all

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citizens for a greater leisure life would be the prime responsibility of the nation states involved. The involvement of business corporations in various aspects of the life of communities within which they operate will grow continuously. They will take over more and more public functions which are now considered within the nation-state responsibility and domain. It seems, however, that the general education will remain within government jurisdiction. Those nation states which have the foresight, courage and willingness to restructure drastically their work-leisure ratios will have an evident advantage over other nation states which prefer to ignore the perils of the unabated dynamics of technology — employment — trade unions. Britain would seem to be one of the countries in which the public debate of these issues ventures into and approaches bold solutions. Also, one of the first universities which undertook to explore this area is British, namely, Salford University, where a center for the study of Leisure has been operating for some time. Likewise, those industrial organizations which pioneer the introduction of sweeping changes in the work-leisure ratios of their employees will have obvious advantages over other organizations which are lagging behind, postponing the inevitable changes as long as possible. The organizational changes will have to include such things as training two employees for every job. Eventually, they will have three and even four employees for a single-shift job. Plants continuously operating on a threeshift basis may have up to 12 employees alternating on the same job every week. The managements of such enlightened organizations would also have to start restructuring their cost-wages-income systems, as well as participating in the leisure arrangements for their employees, including helping to prepare them for their prolonged leisure. Better management would therefore include following the development in this area and keeping abreast of the evolving changes.

Discussion and Conclusions It seems to be only a matter of time until the world reaches the stage in which basic changes in the employment structure become inevitable. This could happen in several scores of years, most probably not later than the first half of the 21st century. The process of organizing employment first on a 50 % work — 50 % leisure basis could even start before the end of this milleneum. I believe that the first industrial country 8 which embarks upon this process will have an enormous advantage over the others. It will have to be a country which combines free enterprise and a partially planned economy. Free enterprise because in order to enable enterprises to fully remunerate people who work only half time, the government will have to reduce the taxes imposed on

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those enterprises accordingly. On the other hand in order to organize life according to work-leisure time tables, and to maintain the social, educational and leisure institutions which go along, a certain amount of central planning should be maintained. This country would come from among the "highly industrialized" countries. As there are less than twenty of these countries, it would be possible to make a fair guess who will be the first country. Other industrial countries 9 will soon follow it, the transfer from a 50 % work — 50 % leisure stage to the stages of Ά work — 2A leisure and the next ones will be much easier and less painful. I believe that by the end of the 21st century the scientifically and technologically more advanced countries of the world could already reach the % work — V* leisure employment structure. This process coincides with two other monumental ones, also linked to and being the outcome of the dynamics of the TOS (Total Organizational System). The TOS deals with what organizations must do to survive, what they must do to avoid stagnation and collapse. The dynamics of management and organization over time are described and analysed by way of the TOS. This notion of a total organization system assumes a dynamic relationship between management of the organization and the environment, both of which are affected by changing conditions of size, place, and human nature. Any change in one part of the total system affects the other parts and the survival of any organization is continually threatened by the changes brought about by growth, which in itself is essential for survival. The TOS is composed of the immediate environment, the wider environment, the organizational strategy, the scope of decision making, the managerial structure, and the managerial characteristics. The immediate environment includes the organizations competing for the organizational cooperation of the human factors of managers, workers, trade unions, bankers, shareholders, suppliers, customers, government, etc. The wider environment includes the systems of the employment market, money market, supply and demand market for materials and products, as well as the technology and socio-cultural systems. The scope of decision making is the total amount and complexity of the decisions imposed upon the management by their own organizational strategy, influenced by both the immediate and wider environments. Managerial structure refers to the actual way in which the decision making is carried out, formally or informally. The managerial characteristics are the leadership and followership characteristics of managers, from the chief executive down. Consequently, organizational systems are actually contingency systems; that is to say that the different components are contingent upon each other. A major change in one subsystem may not only affect what is happening in other subsystems, but may also alter the rules by which these systems are governed. It could be shown therefore, that principles which, until quite

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recently, have governed management education, its teaching and writing, are based on false assumptions. Thus all of the following principles turn out to be absolutely wrong: — there exist a 'good' and desirable organizational structure in which an organization should operate at all times. — there are good and bad managers, i.e., a good manager will always be good and a manager who has completely failed in one organization or another could never succeed in the same or in any other organization; — it is desirable to have people continue to work in the organization as long as possible, and the organization should do whatever it can to hold on to employees who are doing very well today; — there are rules which should govern the establishment of organizational structures. One of these rules is the so-called 'span of control'; it represents the number of subordinates that a manager can control. There are two other processes, in addition to the technology employment process described in this paper, which could have also been predicted (and were forseen by myself and others since the 1960s) through the understanding of the dynamics of organization and management (of which the TOS is a wholesome way of description and analysis). They are the evergrowing economic dominance and universal power of the multinational corporations on the one hand, and the collapsing boundaries and political differences among the nations of the world.10 Thus it seems most likely that already during the first half of the 21st Century in addition to the technologyemployment phenomena (i. e. the creation of a work-leisure employment structure), two additional sets of phenomena will occur. The multinationals will overpower the nation states in all matters concerned with their economics and foreign affairs, while the nation state will stand united among themselves in not enabling the multinationals to pollute the environment, to enable terrorism and the distribution of drugs. The phenomenon of the collapse of boundaries among the nations of the world will begin with the custom walls among all nations. However, what has been happening among the countries in Eastern Europe during 1989 means that we are also approaching the situation of democratization in all countries of the world and the cessation of hostilities among them, namely universal peace. Notes 1 Presented under the name of "Employment Pendulum at the End of the Twentieth Century — The Scientific Revolution Requires Drastic Changes in Individual and Organizational Behavior," presented at the Fourth International Conference on Psychological Stress and Adjustment in Time of War and Peace," in Tel-Aviv, January 1989. This paper is primarily based upon previous work of the author

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3

4

5

6

7

85

in the area of the effects of advanced technology and automation on organization, e.g., Weinshall 1965 and 1976, Weinshall and Twiss 1973, Twiss and Weinshall, 1980. It has also been influenced by the most quoted authors in the book which summarizes the Total Organizational System (TOS), i. e. the dynamics of organization and management (Weinshall and Raveh 1983) — Chester I. Barnard (1938), John d. Glover (1954), Derek S. Pugh (1963), Fritz Roethlisberger (and Dickson, 1939), John M. Stopford (1968), Alvan Toffler (1970), Joan Woodward (1958). One of the ways in which nation states could be classified is into three levels of industrialization — Developing, Industrialized and Highly Industrialized countries. The different countries according to this classification are discussed in a section on Various types of Nation States (Weinshall and Raveh, 1983, pp. 212 — 229). In summary, the following definition is given to the rate of industrialization: The greater the industrial development of the country, the less affinity there is between national and organizational culture. The general explanation for this is related to the effects of multinational corporations on nations. As the pace of industrial development increases the indigenous national culture is transformed into a multinational one. Developing nations are obsessed by their indigenous cultures and have an overwhelming effect on the religions operating within them. This is demonstrated by an identification of the religion with the state, usually accompanied by an extreme intolerance towards other religions. This quotation comes from a poem by Arthur Hugh Clough (1819 — 61), which was made famous by Winston Churchill, in one of his most memorable speeches delivered during the darkest phase of Britain's isolation in the Second World War. The first verse of the poem is: Say not the struggle naught availeth, The labour and the wounds are vain, The enemy faints not, nor faileth, And as things have been, things remain. The most popular of these is probably the group of 'futurologists' named the Club of Rome. Another 'futurologist' center which has been basing its predictions to a large extent on extrapolative techniques is the Hudson Institute (Kahn and Wiener, 1967). This is the name of a book which became a bible for the followers of 'back to nature' (Schumacher, 1976). The efforts of people to try and stop the growth of business organizations, by highlighting their ugly and damaging aspects were described by Glower (1954). The Oxford English Dictionary's definition of 'employment' was up until the Second World War: 'One's regular trade' (Fowler and Fowler, 1946). The definition of'Employment' 17 years later (Hornby, 1963), is 'being employed; one's regular work.' The focus is not any more on the training and the skill, but rather on being occupied and on working, without any references to what one is doing when employed. The literature on leisure has expanded considerably in recent years. One comprehensive paper is 'Work and leisure,' by Stanley Parker and Michael A. Smith who refer their readings to books published as follows: 2 in the 1930's, 2 in the 1940's, 20 in the 1950's, 41 in the 1960's and 67 in the 1970's. Taking the 1970's

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as the percent base, we find that 60 percent were published in the 1960's, 30 percent in the 1950s, and only 3 percent in the 1940s and the 1930s. 8 see Fn. 2 9 see Fn. 2 10 The approaching situation of the dominance of the multinationals over nation states, the open economic borders among countries, and the cessation of hostilities among them are described in two papers included in this book: "Some Personal Thoughts on the Implications and Consequences of 1992 in the EEC" (in Part 5, Section E), and "Easter Europe after Glasnost and Perestroika — The Cases of Hungary and the U. S. S. R." (in Part Two, Section C).

References Barnard, C. I., The Functions of the Executive, Harvard University Press, Cambridge Mass., 1938. Fowler and Fowler, The Pocket Dictionary of Current English, revised edition, 1946, p. 262. Glover, J. D., The Attack on Big Business, Divison of Research Graduate School of Business Administration Harvard University, Boston, 1954. Hornby, A. S. et al., The Advanced Learners Dictionary of Current English, Oxford University Press, 1963, p. 324. Kahn, Η. and Wiener, A. I., The Year 2000: A Fianance Work For Speculation in The Next 33 Years, MacMillan, 1967. Parkers, S. and Smith, Μ. Α., "Work and Leisure," Handbook of Work Organization and Society, Robert Dubin, ed., Rand Mcnally, 1976, pp. 39 — 62. Pugh, D. S., "A Conceptual Scheme for Organizational Analysis, Administrativ Science Quarterly, Vol. 8, 1963, pp. 289-315. Roethlisberger, J. F. and Dickson, W. J., Management and the Workers, Harvard University Press, Boston, 1939. Schumacher, E. F., Small is Beautiful. Economics As If People Mattered Harper and Row, New York, 1976. Stopford, J. M., Growth and Organizational Change in the Multinational Firm, Arno Press, New York, 1980). Toffler, Α., Future Shock, Random House, New York, 1970. Twiss, B. C. and Weinshall, Τ. D., Managing Industrial Organizations, Pitman Publishing, London, 1980. Weinshall, Τ. D., The Role of Automation in The Future of Israel, INSEAD, Fontainebleau, 1965 (also in French); appeared as No. DC3GD05 — Intercollegiate Case Bibliography of the Clearing House, Harvard Business School, Soldiers Field, Boston. Mass., 02163, 1970. Weinshall, Τ. D., The Industrialization of a Rapidly Developing Country — Israel, in: Handbook of Work Organization and Society, edited by Robert Dubin, Rand McNally, Chicage, 1976. Weinshall, Τ. D. and Raveh, Υ. Α., Managing Growing Organizations — A New Approach, John Wiley and Sons, Chichester, 1983. Weinshall, Τ. D. and Twiss, B. C., Organizational Problems in European Manufacture, Text and Cases in Two Volumes, Longman, London, 1973. Woodward, J., Management and Technology, London, HMSO, 1958.

C. Some General Effects Cultural Differences in Attitudes and Values Derek S. Pugh and the Open University Course Team

In this section we shall be examining a major systematic study of workrelated attitudes carried out by Dr. Geert Hofstede (1980), a Dutch social psychologist. The study is based on two questionnaire surveys which produced a total of over 116,000 questionnaires from forty countries, making it by far the largest organizationally based study ever to have been carried out. The respondents are all employees of a multinational corporation which operates in over a hundred countries in the world. For greater comparability, only the sales and service employees of this corporation (code-named HERMES) were considered and data collected in thirty-nine countries, in each of which the HERMES subsidiary is staffed entirely by indigenous employees. (A Yugoslav self-managed organization was added; though not a subsidiary, it markets and services HERMES products.) Within the sales and service department, all types of employee were surveyed (unskilled workers, professional scientists, top managers, etc.) using the language of each country: a total of twenty language versions of the questionnaire had to be made (Hofstede, 1980). This design enables several factors to be controlled. All the respondents were doing the same tasks (selling and servicing HERMES products) within the same general overall framework. Thus the technology, jobs and some formal procedures were the same. Their age categories and sex composition were similar; only their nationalities differed. The differences in attitudes and values could therefore be said to be related to cultural differences rather than organizational ones. The survey was repeated, with stable results, underlining the cultural nature of the differences found. Hofstede identifies four basic dimensions of the differences between national cultures. Each of the forty national cultures can be rated from high to low on each of the four scales, and is thus given a distinctive classification. The four dimensions are 1. power — distance rating: high (distant) 2.

uncertainty-avoidance rating: high (risk avoiders)

low (close) low (risk takers)

88 3.

Derek S. Pugh and the Open University Course Team individualism

rating: 4. masculinity

rating:

high (individualistic)

low (collectivistic)

—femininity

high (masculine)

low (feminine)

The Power-Distance Dimension This dimension is concerned with how far the culture encourages superiors to exercise power. In a high power-distance culture (e.g., the Philippines, India) that is what being a boss means. Inequality is accepted: 'a place for everyone and everyone in his place.' Subordinates consider superiors as different kinds of people; indeed, it is felt that those in power should try to look as powerful as possible. In addition there is latent conflict between the powerful and the powerless. Other people can rarely be trusted because they pose potential threats to one's power; having power over someone, and being dependent on someone, are the bases for collaboration. In a low power-distance culture (e.g., Austria, Israel) superiors and subordinates consider each other to be colleagues and both have values that inequality in society should be minimized. So those in power should try to look less powerful than they are and since a latent harmony exists, trust is possible. Superiors are accessible because organization members are interdependent with each other. Insert 1 (A) gives examples of the questions asked. In high power-distance cultures, employees are frequently afraid to express disagreement, and prefer to work for managers who take decisions (and responsibility) and then tell them what to do. In lower power-distance cultures employees are seldom afraid to disagree, and expect to be consulted before decisions are made.

The Uncertainty-Avoidance Dimension The second dimensions is the degree to which the culture encourages risktaking. All organizations face environmental change and uncertainty and try to adapt to them. This is true in all countries, but Hofstede found a considerable range across cultures in peoples' attitudes to risk and abilities to tolerate uncertainty. In a strong uncertainty-avoidance culture (e. g., Greece, Portugal) people feel threatened by uncertain situations, and higher anxiety and stress are experienced. This is combated by hard work, career stability and intolerance of deviancy. There is a search for ultimate values and a great respect for age. In a weak uncertainty-avoidance culture (e. g., Denmark, Singapore)

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the uncertainty inherent in life is more easily accepted and each day is taken as it comes — which means that less stress is experienced. The need for rules is less and a very pragmatic view is taken about keeping or changing those rules in existence. Insert 1 (B) gives sample questions. In strong uncertainty-avoidance cultures, employees agree that rules should not be broken and look forward to staying with the firm until they retire.

The Individualism Dimension This is the degree to which the culture encourages individual as opposed to collectivist group concerns. In an individualist culture (e. g., USA, Britain) identity is based on the individual. The emphasis is on individual initiative or achievement and everyone is supposed to take care of himself/herself plus only the immediate family. Everybody has the right to a private life and opinion, and may well have only a calculating involvement with work organization. A collectivist culture (e. g., Pakistan, Peru) is characterized by a tighter social framework, where people are members of extended families or clans which protect them in exchange for loyalty. The emphasis is on belonging and the aim is to be a good member (whereas in the individualist culture the ideal is to be a good leader). The collectivist involvement with the work organization is a moral one, and there is a belief in group decisions. The value standards applied to members of your own group/clan/organization can differ considerably from those applied to others. Insert 1 (C) gives some sample questions. In the individual culture it is very important to have time for personal and family life, and of little importance to have job training, since it increases commitment to the company. In a collectivist culture the opposite views hold. Employees there value good physical working conditions, while finding personal challenge in work of little importance.

The Masculinity-Femininity Dimension The final dimension of differentiation between cultures Hofstede calls 'masculinity' at one end to contrast with 'femininity' at the other. In the 'masculine' cultures (e.g., Australia, Italy) performance is what counts; money and material standards are important, ambition is the driving force. Big and fast are beautiful, 'machismo' is sexy. In the 'feminine' cultures (e. g., the Netherlands, Sweden) it is the quality of life that matters, people and the environment are important, service provides motivation, small is beautiful and unisex is attractive. As may be expected, a major difference between the cultures at the two ends of this dimension is the relationship

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of men to women. In 'masculine' cultures the sex roles are clearly differentiated. Men should be assertive, dominating; women should be caring, nurturing. A dominant woman is regarded as unfeminine — although she can manipulate in the background. In 'feminine' cultures the sex roles in society are more flexible, and there is a belief in equality between the sexes. It is not 'unmasculine' for a man to take a caring role. Insert 1 (D) gives some questions. It is very important in a masculine culture to have an opportunity for high earnings, but of little importance to work with a cooperative group, while in the feminine culture it is the reverse on both these issues. In addition, the feminine culture values living in a pleasant area, and puts little value on the need to get recognition for a good job done.

Interpreting the Dimensions Equipped with measurements which locate the forty cultures along the four dimensions, Hofstede then offers 'a set of cultural maps of the world.' Two points have to be emphasized in interpreting these results. The first is that the descriptions given above in the previous section are of the extremes of the dimensions. This is to help us understand what the concepts are, but we must not forget that the cultures are spread out along the scales from one end on the other. So we must not think in terms of dichotomies. Cultures are not only masculine like Italy or feminine like Sweden; there are also many countries in between: Belgium exactly in the centre; Britain on the masculine side, France on the feminine one. Similarly with uncertainty-avoidance: Japan is very high on this dimension and Singapore is very low, but Thailand is in between; as is West Germany compared with Greece (high) or Denmark (low). The second important point to remember is that the values given for the various dimensions are averages for all the respondents in that particular country. Characterizing a national culture does not mean that every person in the nation has all the characteristics ascribed to that culture — there are bound to be many individual variations. There are, for example, many Japanese who are risk takers and many Singaporeans who avoid uncertainty; many Philippinos with low power-distance values and many Israelis with high power-distance attitudes. What these scales are doing is describing the common values of the central core of the culture. This comes about through the 'collective mental programming' of a number of people (a tribe, a nation or a national minority) who are conditioned by the same life experience and the same education. Although this will not make everybody the same, a country's nationals do share a cultural character — which is indeed more clearly visible to foreigners than to themselves.

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Classifying Cultures by the Dimensions Insert 2 gives a classification of the cultures arranged according to the four dimensions, together with the summary names allocated to them. The forty cultures are arranged in eight culture areas according to a statistical technique known as 'cluster analysis," which forms the clusters by putting together cultures which are as alike each other as possible while being as different as possible from the other groups. Remember that the clusters were formed entirely on the basis of the answers to the questions on the four work values and the scores on the four dimensions calculated from them. The area names were given after the clusters had emerged from the analysis. The first thing that strikes you about this classification is that it does in general put together groups which appear to belong in geographical, linguistic and historical terms. The two obvious mismatches are Italy (put with the Germanic group) and Yugoslavia (put with the less developed Latin cluster). These are issues which need further exploration, but in general the relationship to historical development is most impressive. This gives the whole exercise conviction, since it is from these characteristics that we should expect work attitudes to derive. Secondly, the results suggest that culture really does matter in relation to work attitudes, since the differences are shown up so clearly and systematically. As regards the characteristics, it will be seen that high power-distance unites the Latin and the Asian areas as against the Germanic/Anglo/Nordic ones. Uncertainty avoidance has quite a different pattern, linking Latin with Germanic and Near Eastern. Individualism is a characteristic of developed countries, while developing countries have a collective orientation. The Germanic and Anglo groups, with their high masculinity, differ sharply from the Nordics. Japan is in a group of its own, not being sufficiently close to any other culture in the study. Since a culture's work-related values are so distinctive and different, it is to be expected that its processes and behaviour would be so too. Hofstede argues very strongly that we should not expect the same conceptions and prescriptions about management, for example, to be appropriate in all these culture areas. They would need to be culture-specific, since each group would have its own implicit model of organizational functioning. The less developed Asian group, with its high power-distance and low uncertainty avoidance, would have an implicit model that the organization is like a family it will cope with whatever comes along through the power of the leader/father figure. By contrast, in the Germanic group (low power-distance, high uncertainty avoidance) organization members will look for ways of coping by designing rules and procedures which if carried out will avoid

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the need for personal exercise of power, the implicit model here being a well-oiled machine. In the A n g l o group (low power-distance, low to medium uncertainty avoidance) the implicit model would be a market, in which coping is achieved flexibly by continuous bargaining a m o n g members. In the high power-distance, high uncertainty-avoidance of the Latin and N e a r Eastern groups, both the power relationships and the work processes will be prescribed, and the implicit organizational model will be a pyramid. Hofstede concludes that we should not expect convergence of leadership styles or management practices across these different cultural forms, since they are dependent o n the implicit model of organizational functioning prevalent in the particular culture. The models in turn are generated by the mental programming to which the culture into which we are born exposes us from birth. Changes in culture are inevitably, therefore, very slow.

Insert 1: Sample questions of Hofstede cultural dimensions A.

Power—distance

(i) How frequently in your experience, does the following problem occur: Employees being afraid to express disagreement with their managers; very frequently/frequently/ sometimes/seldom/very seldom. (ii) Which type of manager would you prefer to work for? one who — makes decisions and then tells staff — makes decisions and explains reasons fully to staff — consults with staff before making decisions B.

Uncertainty-avoidance

(i) Company rules should not be broken — even when employees think it is in the company's best interests Strongly agree/agree/undecided/disagree/strongly disagree (ii) How long do you think you will continue working for this company? till I retire/ more than five years/2 —5 years/up to 2 years C.

Individualism

(i) How important is it to you to have a job which leaves you sufficient time for your personal or family life? of utmost importance/very important/of moderate importance/little importance/very little or no importance (ii) How important to you are training opportunities to improve your skills or to learn new skills? very little or no importance/little importance/moderate importance/ very important/utmost importance D.

Masculinity—femininity

How important is it to you to: (i) have an opportunity for high earnings? utmost importance/very/moderate/little/very little or no importance (ii) work with people who cooperate well with one another? very little or no importance/little/moderate/very/utmost importance

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Insert 2: Country clusters and their characteristics I: More developed Latin

II: Less developed Latin

high power-distance high uncertainty-avoidance high individualism medium masculinity

high power-distance high uncertainty-avoidance low individualism whole range on masculinity

Belgium France Argentina Brazil Spain

Columbia Mexico Venezuela Chile Peru Portugal Yugoslvavia

III: More developed Asian

IV: Less developed Asian

V: Near Eastern

medium power-distance high uncertainty-avoidance medium individualism high masculinity Japan

high power-distance low uncertainty-avoidance low individualism medium masculinity

high power-distance high uncertainty-avoidance low individualism medium masculinity

Pakistan Taiwan Thailand Hong Kong India Philippines Singapore

Greece Iran Turkey

VI: Germanic

VII: Anglo low power-distance low to medium uncertainty-avoidance high individualism high masculinity

VIII: Nordic

Australia Canada Britain Ireland New Zealand USA

Denmark Finland Netherlands Norway Sweden

low power-distance high uncertainty-avoidance medium individualism high masculinity Austria Israel Germany Switzerland South Africa Italy

low power-distance low to medium uncertainty-avoidance medium individualism low masculinity

Reference Hofstede, G. (1980). Culture's Consequences: International Differences in Workrelated Values. Beverly Hills: Sage Publications.

Thinking Internationally: A Comparison of How International Executives Learn Indrei Ratiu

There is a widespread view among managers working in transnational corporations that some people may be more interculturally adaptable than others. Who are these "internationals?" Do they really exist? If they do exist, then what is special about them, and can we learn from them? Just as major steps have been made in our understanding of creativity, entrepreneurism, and sporting skills through study of the highly creative, the entrepreneurial, and sportsmen, why not study people believed to be interculturally adaptable as an empirical basis for furthering our understanding of intercultural adjustment? The growing body of research on adaptation and effectiveness has thus far neglected this simple comparative approach. (See Hawes and Kealey, 1981, for a recent review.) Who, then, in management are considered to be "most international", and what is special about them? I asked this question of 250 young executives attending two of Europe's leading schools for international managers in two different European countries: INSEAD, Fontainebleau, France, in 1976; and the London Business School, England, in 1977. Most of those questioned had had at least three years' overseas experience with their previous employers. Their average age was 27 years. All spoke at least two languages, and all wished to continue international careers. The environments constituted by the two business schools the executives were attending were themselves multicultural. Thirtyfive different nationalities were represented. The content of much of the subject matter under study was specifically international in orientation. If "international man" exists in the management sphere, I believed, then my chances of tracking him down here were high. The initial results were encouraging. In an anonymous survey, fully 10 per cent of the 250 were considered by at least 4 of their peers to be "most international." The most common grounds offered were such criteria as "adaptable", "flexible", "open-minded", "has many friends of different nationalities", "speaks with others in their own language", etc. Interestingly, not all these criteria were entirely positive. They included such ambiguous terms as "chameleonlike" and "unplaceable." Even in multicultural environments, it seems, to be considered international is not necessarily entirely positive, a reminder that in times of national retrenchment, societies have occasionally punished "internationalism" or "cosmopolitanism" by law. The more surprising insights came in the form of answers to my second question: "What key learning experiences do you associate with your be-

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coming more internationally minded?" Answers were gathered in unstructured interviews, lasting between 60 and 90 minutes each, with a total of 5 mixed and 5 unmixed groups of those considered "most international" and those not so identified. The average group size was five persons. The transcripts of these discussions have been reviewed by a total of 12 independent observers to date, and the patterns presented here are those on which a number of observers have agreed. The patterns that distinguish those considered "most international" from other international managers are: (1) their view of what it is to be "international"; (2) their assumptions about the world and themselves; (3) their ways of dealing with stress; and (4) their ways of making sense of new experience.

"International" Views of what it is to Be "International" Paradoxically, the very people identified by their peers as "most international" deny that "internationals" exist. Other managers, on the other hand, attribute to these "most international" people the kind of skills that Hoopes (1979), for example, associates with "multiculturalism": "the skills necessary to feel comfortable and communicate effectively (1) with people of any culture encountered and (2) in any situation involving a group of people of diverse cultural backgrounds" (emphasis added). These "international" skills, other managers say, include patience, flexibility, broad-mindedness, empathy, etc. Such words are, however, not even part of the vocabulary of the very people who are supposed to possess such skills. For those considered to be "most international", being "international", in the sense of being highly adaptable, is something that happens in specific situations and is by no means an outcome they can rely on in all situations. The approach to such specific situations that they describe involves considerable observation and listening, experimentation and risk-taking, and, above all, active involvement with others. Whereas other managers talk about their involvement with and their learning about whole "cultures", the so-called "most international" talk only about their relations with individual people. In the words of one manager, "You're forever testing. Even when you're saying it, you watch how they're reacting; and if you're getting into something that's not coming across, then you either back away or ..." The so-called "most international" describe themselves as learning from their international experience in ways that observers, having reviewed transcripts of their discussions, summarize as intuitive, empirical, relational, and immediate. In contrast, the other managers describe themselves as learning from their experience in ways that observers summarize as analytical, conceptual, theoretical, and even withdrawn.

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"Internationals" Assumptions about the World and Themselves The so-called "most international" tend to be subjective and relative in their assessments, and to see others' views in the same way. They see themselves as changing and their impressions as changing: the world and oneself are not phenomena that one can "know" in any stable, objective sense. The other managers speak of themselves and the world as if they were relatively stable phenomena on which objective data can be gathered: the world is made up of cultures rather like a jigsaw puzzle; the picture of the whole can be expected to emerge from the sum of its parts. An example of this contrast is in the managers' different use of stereotypes. All those interviewed use cultural stereotypes to some degree. But the socalled "most international" use them self-consciously and tentatively, as if recognizing the stereotype as no more than a temporary hold on an elusive reality. For example, "I can't help it, but when I first meet people, I stereotype, I stereotype a whole country..." This use of stereotypes — let us call it "private stereotyping" — suggests that although a person may encounter new people, places, or things in stereotypical terms, he or she does not relate to them in such terms. The other managers use cultural stereotypes unselfconsciously and conclusively, suggesting that the stereotype is indeed a valid and stable categorization that is somehow inherent in the world "out there". For example: "But what would you expect ... South Africans are just like that." This confusion of categorizations with reality we shall refer to as "public stereotyping." The other managers, but not the so-called "most international" ones, frequently relate or compare one culture with another. It is as if they assumed that cultures are quantitatively different from one another and are therefore directly comparable on similar dimensions. For example: "XYZ is basically the same as Britain, only much hotter." The hidden assumption is that somewhere (unrevealed or yet to be discovered) is a stable model of cultural differences, within whose terms of reference all cultures can be compared, because it embodies different degrees of similar characteristics incorporated within the one macromodel of human behavior. The hidden assumption shared by those considered to be "most international" seems to be that no such stable macromodel exists, but rather an accumulation of shifting individual models, each with its own coherent, but not necessarily conscious, rationale. The so-called "most international" manager is not, however, interested in these rationales as such, but only in correctly "reading" the behaviors they produce. For example: " Joe — now he really threw me. His appearance threw me in one direction, his accent in an entirely different direction ... he just threw me ..." Or another example: "I suppose I'm forever shifting my frame of reference, depending on the situation."

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When confronted with so-called "most internationals" apparently shifting views of themselves, other managers are alternately admiring and shocked: "What is the true you? I mean, are you ever sort of honest, or do you always tailor yourself to your audience?" To other managers there is something almost immoral and potentially dangerous both to the self and to others about such a relativistic view of oneself and the world.

" I n t e r n a t i o n a l s " Ways of Dealing with Stress Another distinguishing feature of the so-called "most international" managers is the ease and readiness with which they can recall and discuss the stress symptoms indicative of culture shock. The other managers claim either never to have experienced culture shock or else refer to it only obliquely, and with discomfort. This observation supports Adler's (1975) hypothesis regarding culture shock as a positive learning experience and Ruben and Kealey's (1979) observations of the adjustment of Canadian technical assistance experts in their Kenya study. The so-called "most international" have "stability zones" to which they can temporarily withdraw. Examples of such stability zones include diaries and favorite pastimes, or meditation and religious practice. Such temporary withdrawals produce a rhythm of engagement and withdrawal in the "most international" managers' involvement with unfamiliar environments. The other managers report either low stress, associated with low involvement in unfamiliar environments, perhaps by seeking out exclusively the more familiar company of their compatriots, or a single case of withdrawal that, when it occurs, can be as radical as resignation or early return.

" I n t e r n a t i o n a l s ' " Ways of M a k i n g Sense of N e w Experience In making sense of new experience, the so-called "most international" seem to be concerned with getting a hold on what is going on in the unfamiliar environment. Their concern is with descriptions and interpretation rather than explanation. As a way of making sense of new experience this approach is essentially forward-looking, its key component being a projective labeling and relabeling of that experience with pictures, impressions, or the "private stereotypes" referred to earlier. For the "most international", — things are assumed to be not what they seem: the pictures he or she mentally forms are inherently unreliable, and need to be constantly checked and rechecked against the new data of unfolding events. For instance: "I've been finding out more and more ... Arabs absolutely abound in this country, much more than I thought possible. And I mean, a Bristol man

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is not a Sheffield man, is not a Darlington man, is not a "you know ... it's incredible." Or a similar relabeling process in recollection: "If I meet somebody and he tells me where he's from, I then ask a couple of probing questions to check out the 'normal profile' (laughter), because he really varies from the normal profile; and then if he does have a bit of French or a bit of whatever, I adjust accordingly ..." The other managers report asking why things occur the way they do. Their emphasis is less on data collection and more on early explanation and rapid conclusions. This approach is essentially backward-looking: what further data they pick up from the new experience are data that tend to confirm their previous conclusions. For example: Why was it that every time there was a technical hitch on site, a breakdown of some kind, I was quite unable to get it across to the operators, both Yemenis, that there was a perfectly straightforward technical reason? For them it was always God's will: "Nothing to be done about it, because God has willed it so." At first, I just couldn't understand it. But living out in the desert for centuries as these people have, subject to the kind of harsh climate that they are used to, and with little or no control over its effects, you would expect them to adopt this kind of attitude. To us it seems very passive, but it's really quite understandable. Later I moved to Saudi Arabia. And sure enough, people there behaved in exactly the same way. I wonder if this sort of passivity isn't typical of Arabs generally.

Compared with the approach of the so-called "most international," the questions asked here are strikingly ambitious; the manager who reports this approach is not content with the raw data of experience alone, but requires a theory or "public stereotype" that can somehow explain the events he has experienced. These differences in approach between the "most international" and the other international managers are summarized in the accompanying table, which contrasts an objective "macrostrategy" with a subjective "microstrategy" for learning in cross-cultural situations. Are these strategies evidence of personality differences? Of fundamental orientations in learning style? The 12 independent observers and subsequent groups of international managers, reflecting on their own learning styles, suspect these strategies are neither. Instead, they see them as different facets of a fundamental learning cycle, similar to that identified by Kolb and Fry (1975) and conveniently relabeled the "red and blue loops" (see Figure 1). These different facets are themselves probably analogous in the crosscultural situation of left- and right-brain specialization (Ornstein, 1972), the dialectic between assimilation and accomodation identified by Piaget (1966), or the unity of opposites implicit in the Taoist Yin/Yang configuration. By implication, both the intuitive, micro, blue loop and the more analytical, macro, red loop are constantly in operation to a greater or lesser degree.

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Thinking Internationally Thinking Internationally Blue loop (raicrostrategy)

Red loop (macrostrategy)

Description, impression, "private" stereotype

Explanation.theory, " public" stereotype

\

/

What is happening?

\

Figure 1

Modification

/

Experience

/

Why is this happening?

X

Confirmation

Experience

Different Facets of a Fundamental Learning Cycle

International executives reviewing the original data along with their own learning strategies point out that every time they jump to conclusions or make assumptions in unfamiliar environments, they are effectively "redlooping". They associate this approach with reassurance, familiarity, feelings of safety — and costly cultural error. Both the Yemenis and the European in the example quoted above are locked into their own red-loop explanations of a breakdown on site. Culturally speaking, both explanations fail to account for all the data: the "technical" hitch and the different human responses to that hitch. In contrast, "blue-looping" is associated with extensive observation, hesitation, delay — and feelings of personal confusion. It is the so-called "most international", it was noted earlier, who more readily recall the stress symptoms indicative of culture shock. In this way both loops can be seen to have their costs and their benefits. A person's preference for one loop rather than another for dealing with particular classes of experience will evolve over time, without his or her necessarily making conscious choices in the matter. The so-called "most international" managers do not deny the relevance of macro, red-loop learning in cross-cultural situations. It simply does not condition their response to other human beings. For other managers who report this very way of learning interculturally as preferable, even in social situations, the micro, blue-loop approach seems risky, even irresponsible.

Conclusion The simple comparative approach adopted in this study is itself "redlooping". Neither strategy is unique to any person working internationally. But the process, first, of people's attempting to conceptualize how they learn and, second, of observers' attempting to conceptualize these differences inevitably

100 Table 1

Indrei Ratiu Differences in Approach between the "Most International" and the Other Managers Other managers: an objective macrostrategy

"Most international" managers: a subjective microstrategy

Goal

Adaptation to society, to the macroculture

Adaptation to individual people, to the microculture

Requirements

Special skills required for adaptation, such as patience, flexibility, broadmindedness, empathy, honesty, etc.

No special skills required, instead, adaptation is seen as dependent on the pragmatics of the situation

Assumptions

Objectivity, stable aspects of the world are objective, externally recognizable facts.

Subjectivity, stable aspects of the world are subjective, internally recognizable impressions.

A macromodel for describing culture exists.

Macromodel does not exist for describing culture.

Process of adapting to a new culture

Experience

Experience

Question

Why is this happening? Search for explanations and reasons

What is happening? Search for descriptions, interpretations, and meaning

Relevant data

Facts are the relevant information, external information known about country from past experience or present situation.

Feelings and impressions are relevant information, internal personal reactions from previous similar situations and present situation.

Process

Comparison and evaluation: attempt to differentiate new culture quantitatively from known culture(s)

Description: attempt to differentiate cultures qualitatively without comparing them

Result: internal

Confirmation of stereotypes, theories, and models

Modification of stereotypes, clarification of impressions, pictures, and interpretations

Result: behavioral

Socially withdrawn, intellectualizing, judgmental

Socially open

engaged,

flexible,

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produces a highlevel (red-loop) model of what these differences are. Such an approach makes it tempting to draw high-level red-looping conclusions, for example, that so-called "most international" managers exclusively blueloop in intercultural situations, whereas other managers exclusively redloop. But a more accurate view is that of appropriateness. It seems that macrolevel red-looping is appropriate in intercultural and multicultural situations for developing that sense of psychological safety and control without which many people cannot function. On the other hand, microlevel blue-looping seems to be appropriate to developing the sense of personal rapport that characterizes social adjustment in an unfamiliar environment. The circumstances in which this study was carried out provided precisely the kind of multicultural social situation that tends to arouse blue-loop responses in some people and redloop responses in others. Other situations might well arouse very different responses. In the words of one of those identified as "most international": "I simply cannot predict how I will respond in a particular situation. This situation is fine. Another situation might throw me completely." In other words, "internationals" who consistently blue-loop throughout every social situation simply do not exist.

Recommendations How can we use these conclusions? This study supports the view that training courses that seek to incorporate cultural-awareness issues need both redand blue-loop components. Recent research into cultural difference in the management sphere has generated powerful (red-loop) models of cultural differences, such as those of Laurent and Hofstede. Models such as these can be complemented by simulations and more experientially based learning environments in which people can (a) identify both their analytical (redloop) and more intuitive (blue-loop) resources, (b) monitor their own tendency to reproduce either blue-loop or red-loop responses in cross-cultural situations, (c) reach decisions on what are appropriate responses for them, and (d) implement whatever decisions they reach under relatively low-risk simulation conditions. Blue-loop experimentation does, however, require a blue-loop approach. There is a gap between intention and practice that ensures that people can intend to delay judgment, to be open to as much new data as possible, but in practice find themselves jumping immediately to (red-loop) conclusions. "Bridges" that seem to help people maintain a blue-loop strategy in cross-cultural situations in which they feel such an approach may be appropriate include: — keeping "in touch with" their feelings; — experimenting in numerous small ways rather than a few big ways;

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— watching and listening very carefully; — "tuning in" to the atmosphere, or tone, of social situations; — following the "flow" of people and events, for example, in public transportation or in crowd situations; — creating opportunities for "letting go". Acknowledgments I should like to thank Nancy J. Adler, of McGill University, Montreal, who first summarized these strategies in table form, and Julia Pilkington, of the Cancer Help Centre, Bristol, England, who initiated the multiple observer validation process reported here. References Adler, P. S. (1975) "The Transitional Experience: An Alternative View of Cultureshock." Journal of Humanistic Psychology, 15 (4), 13 — 23. Hawes, F., and Kealey, D. J. (1981) "An Empirical Study of Canadian Technical Assistance." International Journal of Intercultural Relations, 5, 239 — 58. Hofstede, G. (1980) Culture's Consequences. Beverly Hills, Calif.: Sage Publications. Kolb, D., and Fry, R. (1975) "Towards an Applied Theory of Experiential Learning." In C. L. Cooper (ed.), Theories of Group Process. Chichester, England: Wiley. Ornstein, R. E. (1972) The Psychology of Consciousness. San Francisco: W. H. Freeman. Piaget, J. (1966) The Origin of Intelligence in the Child. London: Routledge and Kegan Paul. Ruben, B. D., and Kealey, D. J. (1979) "Behavioural Assessment of Communication Competences and the Prediction of Cross-cultural Adaptation." International Journal of Intercultural Relations, 3, 15 — 47.

Negotiators Abroad — Don't Shoot from the Hip John L. Graham and Roy A. Herberger, Jr.

Picture if you will the closing scenes of John Wayne's Academy Awardwinning performance in True Grit. Sheriff Rooster Cogburn sitting astride his chestnut mare, a Colt .45 in one hand, a Winchester .73 in the other, whiskey on his breath, reins in his teeth, stampeding across the Arkansas prairie straight into the sights and range of the villains' guns. A face-toface shootout with four very bad men erupts. How often has this scene been played before our eyes? And, sure enough, the John Wayne character comes through again. Great entertainment, yes! We know it's all fantasy and that in real life Sheriff Rooster Cogburn would have ended up face down in the blood and dust, alongside his dead horse. But it's more fun to see it the other way. There's just one problem. Such scenes from movies, television, and books influence our everyday behavior — in subtle, but powerful ways. Many of us model our behavior after such John Wayne figures. And when everyone else plays the same game, often the bluff and bravado work. We need only look to Washington, D. C. to see examples. A problem arises when we sit face-to-face across the negotiating table with business executives from other lands. Our minds play out the same Western scene again. Here, instead of six-guns and bowie knives, our weapons are words, questions, threats and promises, laughter and confrontation. And we anticipate the taste of victory, despite the odds — four against one is no problem. But, unfortunately, this time it's real life. At stake are the profits of our companies, not to mention our own compensation and reputation. But, like the "real life" Rooster, we lose. Such scenes repeat themselves with increasing frequency as U. S. enterprise becomes more global. The John Wayne bargaining style that may have served us well in conference rooms across the country does us a great disservice in conference rooms across the sea. That this style may be hurting us is not a new idea. Back in the 1930s Will Rogers quipped, "America has never lost a war, and never won a conference." Twenty-three years ago in another HBR article, anthropologist Edward T. Hall warned: "When the American executive travels abroad to do business, he is frequently shocked to discover to what extent the many variables of foreign behavior and custom complicate his efforts." 1 More recently, the former chairman of the Senate Foreign Relations Committee, J. William Fulbright, said, "Our linguistic and cultural myopia is losing us friends, business, and respect in the world." 2 The notion that

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our negotiating style doesn't work well overseas may not be new, but it needs new emphasis in light of our growing interdependence with foreign trading partners.

"Shoot First; Ask Questions Later" Probably no single statement better summarizes the American negotiating style than "shoot first; ask questions later." Though the approach is right out of a Saturday afternoon Western, the roots go much deeper. Some basic aspects of our cultural background, in particular our immigrant heritage, our frontier history, and finally much of the training in our business and law schools, all contribute to the American negotiating style. Throughout its history, the United States has been, and still is today, influenced by its immigrants. Certainly this continuous mixing of ideas and perspectives has enriched all our experiences. And every newcomer has had to work hard to succeed — thus the powerful work ethic of America. Another quality of our immigrant forefathers was a fierce independence — a characteristic necessary for survival in the wide open spaces. This latter quality is a disadvantage, however, at the negotiating table. Negotiation is by definition a situation of interdependence, a situation Americans have never handled well. Our frontier history has encouraged this immigration-for-independence mentality. "Don't try to work things out — move out West where you don't have to see your neighbors so often, where there's elbow room." So runs one strain of the conventional wisdom of the first 150 years of our nation's existence. For Americans there was always somewhere else to go if conflicts couldn't be resolved. And the long distances between people allowed a social system to develop not only with fewer negotiations but also with shorter negotiations. A daylong horseback ride to the general store or stockyard didn't favor longdrawn-out bargaining. "Tell me yes, or tell me no — but give me a straight answer." Candor, "laying your cards on the table," was highly valued and expected in the Old West. It still is today in our boardrooms and classrooms. What goes on in the classrooms in our business and law schools strongly influences our negotiating style. Throughout the American educational system, we are taught to compete — both academically and in sports. Adversary relationships and winning are essential themes of the American male's socialization process. But nowhere in the U. S. educational system are competition and winning more important than in a case discussion in our law and business school classrooms. The student who makes the best arguments, marshals the best evidence, or demolishes the opponents' ar-

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guments wins the respect of classmates and receives high marks. Such skills will be important at the negotiating table. But neither business nor law schools emphasize the most important bargaining skills. We don't teach our students how to ask questions, how to get information, how to listen, or how to use questioning as a powerful persuasive tactic. Yet these latter skills are critical at the international negotiation table. Few of us realize that, in most places in the world, the one who asks the questions controls the process of negotiation and thereby accomplishes more in bargaining situations. Thus it becomes clear that by nature and training Americans will have difficulty at the international bargaining table. We are inherently competitive, argumentative, and impatient — a bad combination indeed when the negotiation game is being played in a boardroom in Rio or in a Ginza night club, and when the other side is playing the game by Brazilian or Japanese rules. Before we discuss specific aspects of the negotiating style that get us into trouble in international business negotiations, we must make a disclaimer. So far, we hope it is obvious that we are talking about the average or dominant behavior of American negotiators; we recognize that not every American executive is impatient or a poor listener. Nor is every American manager argumentative. Most of us do have trouble, however, in international negotiations when compared with business people from other countries.

The John Wayne Style A combination of attitudes, expectations, and habitual behavior comprises our negotiating style. We call it the John Wayne style for short, but it reflects the influences of immigrants and educational philosophies. Though we discuss each characteristic separately, each factor interacts with others to form the complex foundation for a series of negotiation strategies and tactics that are typically American. 1. I can go it alone. Most U. S. executives are convinced they can handle any negotiating situation by themselves. "Four Japanese versus one American is no problem. I don't need any help. I can think and talk fast enough to get what I want and what the company needs." So goes the rationalization. And there's an economic justification, "Why take more people than I need?" as well as a more subtle reason, "How can I get the credit if I've brought along a gang of others to help? They'll just confuse things." So most often the American side is outnumbered when it begins. Being outnumbered or, worse, being alone is a terrible disadvantage in most negotiating situations. Several activities go on at once — talking,

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listening, thinking up arguments and making explanations, and formulating questions, as well as seeking an agreement. Greater numbers help in obvious ways with most of these. Indeed, on a Japanese negotiation team one member often has the sole duty of listening. Consider how carefully you might listen to a speaker if you didn't have to think up a response. But perhaps the most important reason for having greater, or at least equal, numbers on your side is the subtle yet powerful influence of nodding heads and positive facial expressions. Negotiation is very much a social activity, and the approval and agreement of others (friend and foe) can determine the outcome. Also, numbers can be an indicator of the seriousness and the commitment of both parties to a successful outcome. 2. Just call me John. Americans, more than any other national group, value informality and equality in human relations. The emphasis on first names is only the beginning. We go out of our way to make our clients feel comfortable by playing down status distinctions such as titles and by eliminating "unnecessary" formalities such as lengthy introductions. All too often, however, we succeed only in making ourselves feel comfortable while our clients become uneasy or even annoyed. For example, in Japanese society interpersonal relationships are vertical; in almost all two-person relationships a difference in status exists. The basis for this distinction may be any one of several factors: age, sex, university attended, position in an organization, and even one's particular firm or company. For example, the president of the "number 1" company in an industry holds a higher status position than the president of the "number 2" company in the same industry. Each Japanese is very much aware of his or her position relative to others with whom he or she deals. There are good reasons behind these distinctions. In Japan, knowledge of one's status dictates how one will act in interpersonal relations. Thus, it is easy to understand the importance of exchanging business cards — such a ritual clearly establishes the status relationships and lets each person know which role to play. The roles of the higher status position and the lower status position are quite different, even to the extent that the Japanese use different words to express the same idea depending on which person makes the statement. For example, a buyer would say otaku (your company), while a seller would say on sha (your great company). Status relations dictate not only what is said but also how it is said. Americans have a great deal of difficulty in understanding such conventions. In the United States we can perhaps get by with our informal, egalitarian style when we are dealing with foreigners. However, U. S. executives only make things difficult for themselves and their companies by saying to executives in Tokyo, Paris, or London, "Just call me John [or Mary]."

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3. Pardon my French. Americans aren't much good at speaking foreign languages, and often we don't even apologize about it. We correctly argue that English is the international language, particularly when it comes to technology and science, and anywhere we go we expect to find someone who speaks English. But sometimes we don't, and we find ourselves at the mercy of third-party translators or middlemen. Even when the other side (our clients or suppliers) does speak English we are at a big disadvantage at the negotiating table, for three reasons. First, the use of interpreters gives the other side some great advantages. For example, we have observed the following pattern of interaction between U.S. managers and business people from several other countries. Often high-level foreign executives use interpreters even when they have a good understanding of English. In one case a Chinese executive asked questions in Mandarin. An interpreter then translated the questions for the American executive. While the interpreter spoke, the American turned his attention to the interpreter. The Chinese executive, however, gazed at the American so he could unobtrusively observe the American's non-verbal responses (facial expressions, et cetera). When the American spoke, the Chinese executive had twice the response time. Because he understood English, he could formulate his response during the translation process. Bargaining in English puts a second, powerful negotiating tool in the hands of our opponents. On the surface, bargaining in our first language appears to be an advantage — we can more quickly formulate and articulate powerful arguments. But even the best argument fizzles when the other side responds, "Sorry, I'm not sure I understand. Can you repeat that, please?" Bargainers listening to a second language can use the tactic of selective understanding. It also works when they speak. Previous commitments are more easily dissolved with the excuse, "Well, that isn't exactly what I meant." A third disadvantage has to do with our assumptions about those who speak English well. When facing a group of foreign executives we naturally assume that the one who speaks English best is also the smartest and most influential person in the group, and therefore we direct our persuasive efforts to that member. But this is seldom the case in foreign business negotiations, so our argument suffers. 4. Check with the home office. American bargainers get very upset when halfway through a negotiation the other side says, "I'll have to check with the home office" — that is, the decision makers are not even at the bargaining table. The Americans feel they have wasted time or have even been misled. Limited authority among negotiators is common overseas, however, and can be a very useful bargaining tactic. In reality the foreign executive is

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saying. "To get me to compromise you not only have to convince me; you've also got to convince my boss, who is 5,000 miles away." Your arguments must be most persuasive indeed. Additionally, this tactic lets the home office make the final decision. This tactic goes against the grain of the American bargaining style. Indeed, Americans pride themselves on having full authority to make a deal. John Wayne never had to check with the home office. 5. Get to the point. As we mentioned earlier, Americans don't like to beat around the bush; they want to get to the heart of the matter quickly. Unfortunately, what is considered the heart of the matter in a business negotiation varies across cultures. In every country we have found that business negotiations proceed in the following four stages: (1) non-task sounding, (2) task-related exchange of information, (3) persuasion, and (4) concessions and agreement. The first stage, non-task sounding, includes all the activities that establish rapport but it does not include information related to the "business" of the meeting. The information exchanged in the second stage of business negotiations concerns the parties' needs and preferences. The third stage, persuasion, involves negotiators' attempts to modify one another's views through various persuasive tactics. The final stage involves the consummation of an agreement that often is the result of a series of concessions or smaller agreements. From the American point of view, the "heart of the matter" is the third stage — persuasion. We have a natural tendency to go through the first two stages quickly. We may talk about golf or the weather or family, but we spend little time on these subjects relative to other cultures. We do say what our needs and preferences are, what we want and don't want; and we're quick about that too. We tend to be more interested in logical arguments than the people we're negotiating with. But in many other countries the heart of the matter, the point of the negotiation, is not so much information and persuasion as it is to get to know the people involved. In Brazil much time is spent in developing a strong relationship of trust before business can begin. Brazilians cannot depend on a legal system to iron out conflicts, so they depend on personal relationships. Americans new to the Brazilian way of doing business are particularly susceptible to the "wristwatch syndrome." In the United States looking at your watch most always gets things moving along. However, in Brazil, impatience causes apprehension, thus necessitating even longer periods of non-task sounding. American impatience causes problems in the second stage of negotiations also. Like no other cultural group, Americans tend to start bargaining at a price pretty close to what they want and expect to achieve — what they

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consider a fair price. Almost everywhere else in the world bargainers leave themselves room to manceuver. A Chinese or Brazilian bargainer expects to spend time negotiating and expects to make concessions. Americans do not have the same expectations and are often surprised and upset by the other side's "unreasonable" demands. But the demands are unreasonable only from the perspective of the American's slam-bang, "Old West" bargaining style. To the Oriental or Latin American it makes perfect sense to ask for a lot initially. 6. Lay your cards on the table. Americans expect honest information at the bargaining table. When we don't get it, negotiations often end abruptly. We also understand that like dollars, information must be traded. "You tell me what you want, and I'll tell you what I want." Sounds logical, doesn't it? The problem is that in other countries people have different attitudes and values about "honest" information. For example, in Brazil, being tricky is a less serious transgression of negotiation ethics. It's even expected if a strong personal relationship between negotiators does not exist. Brazilian executives explain that such attitudes and values are changing, but the tradition is strong. In Japan, it can be difficult to get a straight answer for two reasons: first, the Japanese team often has not decided what it wants out of the deal, so a representative cannot give a definite yes or no. His group must be consulted, and he cannot yet speak for the group. If the answer is no, the Japanese side is unlikely to use that specific word. Even if the American demands, "Tell me yes or tell me no," the Japanese will sidestep, beat around the bush, or even remain silent. It is the Japanese style to avoid conflict and embarrassment and to save face at all costs. We misread and often feel misled by the subtle negative responses characteristic of the Japanese bargaining style. Japanese executives, particularly the younger ones (educated after World War II) with international experience, say they are learning to value directness, but here too the tradition is long-standing and has a powerful influence on behavior at the negotiation table. 7. Don't just sit there, speak up. Americans don't deal well with silence during negotiations. It seems a minor point, but often we have seen Americans getting themselves into trouble (particularly in Japan) by filling silent periods with words. The Japanese style of conversation includes occasional long periods of silence — particulary in response to an impasse. The American style consists of few long silent periods (that is, of ten seconds or more). We have found that American negotiators react to Japanese silence in one of two ways: either they make some kind of a concession or they fill the space in the conversation with a persuasive appeal. The latter tactic has counterproduc-

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tive results — the American does most of the talking, and he learns little about the Japanese point of view. It should be noted what while handling silent periods is a problem for American negotiators, for Brazilians it is even worse. American conversational style is orderly and efficient — that is, each speaker takes his or her turn, with few silent periods. In Brazilian conversational style, particularly during the persuasion stages of negotiations, bargainers often speak simultaneously, fighting for the floor. To the American eye Brazilians appear to be poor listeners and rather rude. Seldom indeed would an American bargaining with a Brazilian executive have to say: "Don't just sit there, speak up." 8. Don't take no for an answer. Persistence is highly valued by Americans and is part of the deeply ingrained competitive spirit that manifests itself in every aspect of American life, particularly every aspect of the American male's life. We are taught from the earliest age never to give up. On the playing field, in the classroom, or in the boardroom, we learn to be aggressive, to win; thus, we view a negotiating session as something you win. Like a game, the negotiation should have a definite conclusion — a signed contract. We are dissatisfied and distressed if negotiations do not end with the biggest piece of pie going to our side. But even worse than losing a negotiation is not concluding it. We can take a loss ("We'll do better next time"), but not the ambiguity of no decision. Our foreign clients and vendors do not necessarily share this competitive, adversarial, persistence-pays view of negotiation. Many countries see negotiations as a means of establishing long-term commercial relations that have no definite conclusion. They see negotiations more as a cooperative effort where interdependence is manifest, where each side tries to add to the pie. When these two views (cooperative and competitive) meet across the table, difficulties naturally crop up. Americans tend to use tactics such as threats and warnings — pushing too far even when the other side is clearly signaling no. One can imagine what happens when a Japanese client, for instance, gives a subtle negative response. The Americans do not back off. They expect minds to be changed at the negotiation table, when in many situations attitudes and positions can change only with time. In some circumstances Americans might do better to take no for an answer while preserving the all-important relationships among people and companies. 9. One thing at a time. Americans usually attack a complex negotiation task sequentially — that is, they separate the issues and settle them one at a time. For example, we have heard U. S. bargainers say, "Let's settle the quantity first and then discuss price." Thus, in an American negotiation, the final agreement is a sum of the several concessions made on individual

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issues, and progress can be measured easily: "We're halfway done when we're through half the issues." In other countries, particularly Far Eastern cultures, however, concessions may come only at the end of a negotiation. All issues are discussed with a holistic approach — settling nothing until the end. Because the other side never seems to commit itself to anything, U. S. executives invariably think that they are making little progress during crosscultural negotiations. Agreements may come as a surprise, and they often follow unnecessary concessions by impatient American bargainers. 10. deal is a deal. When Americans make an agreement and give their word, they expect to honor the agreement no matter what the circumstances. But agreements are viewed differently in different parts of the world. W. H. Newman describes this problem: "In some parts of the world it is impolite to refuse openly to do something that has been requested by anothers person. What a Westerner takes as a commitment may be little more than a friendly conversation. In some societies, it is understood that today's commitment may be superseded by a conflicting request received tomorrow, especially if that request comes from a highly influential person. In still other situations, agreements merely signify intention and have little relation to capacity to perform; as long as the person tries to perform he feels no pangs of conscience, and he makes no special effort, if he is unable to fulfill the agreement. Obviously, such circumstances make business dealings much more uncertain, especially for new undertakings." 3 11. I am what I am. Few Americans take pride in changing their minds, even in difficult circumstances. Certainly John Wayne's character and behavior were constant and predictable. He treated everyone and every situation with his action-oriented, forthright style. He could never be accused of being a chameleon. Many American bargainers take the same attitude with them to the negotiation table, but during international business negotiations, inflexibility can be a fatal flaw. There simply is no single strategy or tactic that always works; different countries and different personalities require different approaches.

How to Negotiate in Other Countries Now let us map out an action strategy to deal with such problems. Americans must adjust their negotiation behaviors to fit the style of the host country executives. The following prescriptions correspond to each element of the bargaining style we have discussed.

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1. I can go it alone. Use team assistance wisely. Don't hesitate to include extra members on your team such as financial or technical experts. The extra expense may be an excellent investment. Also, observation of negotiations can be a valuable training experience for younger members of the organization. Even if they add little to the discussion, their presence may make a difference. 2. Just call me John. The way to make foreign clients more comfortable is to follow their traditions and customs. American informality and egalitarian views are simply out of place in most countries in the world. Status relations and business procedures must be carefully considered with the aid and advice of your local representatives. 3. Pardon my French. Ideally, U.S. negotiators should speak the local language, although in practice this is seldom possible. Americans usually travel overseas for short trips, and the investment in executive time for extensive language training appears unwarranted. However, American representatives should recognize the conversational disadvantages when foreign executives use an interpreter even though they understand English. Even a rudimentary knowledge of key foreign terms or numbers may aid the American. 4. Check with the home office. An important part of the preparations for any negotiation is the determination of authority limits — both theirs and yours. Americans should weigh the disadvantages of having full authority against the expenses of communication with the home office. Not having the final say may be a useful strategy for maintaining the proper interpersonal relationship and harmony, particularly in international negotiations. 5. Get to the point. We Americans depend on tightly written contracts and corporate lawyers for protection against the unscrupulous. Since in many places in the world legal systems are not as dependable, foreign executives invest much time in establishing personal relationships. Americans bargaining in foreign countries must be patient and plan to spend more time in non-task sounding. Let the other side bring up business and put your wristwatch in your coat pocket. Moreover, remarks such as "We will need to get our legal staff to review this proposal" can quickly sour international deals. Other countries see us as a nation of lawyers in a world where law is used to handle business agreements that are in trouble, not at the beginning of the discussions. Be careful of open references to "legal review." For the foreigner, it may be a signal that the business relationship will be short-lived.

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6. Lay your cards on the table. Foreign executives seldom lay their cards on the table. They are more likely to hold an ace or two in reserve. Often, initial demands will be irritatingly high from the American point of view. Most foreign executives expect to spend more time negotiating and expect to make concessions. You should adjust your initial offer accordingly and anticipate having to ask the same questions in several ways to get what we would call straight answers. 7. Don't just sit there, speak up. Recognize that silence can be a much more powerful negotiating tool than good arguments. Consider its uses, but in particular be aware of its use against you. Look at your notes, fiddle with your pen, anything, but let them break the silence. 8. Don't take no for an answer. Take the situation in Japan as a good example. The correct strategy for Americans negotiating with Japanese or other foreign clients is a Japanese strategy: ask questions. When you think you understand, ask more questions. Carefully feel for pressure points. If an impasse is reached, don't pressure. Suggest a recess or another meeting. Large concessions by the Japanese side at the negotiation table are unlikely. They see negotiations as a ritual where harmony is foremost. In Japan, minds are changed behind the scenes. 9. One thing at a time. Avoid making concessions on any issue until the group has fully discussed all issues. This is good advice for bargaining with American clients too. Also, do not measure progress by the number of issues that have been settled. In other countries different signals may be much more important. 10. A deal is a deal. Recognize differences in what an agreement means across cultures. A signed contract does not mean the same thing in Tokyo, Rio, or Riyadh as it means in New York. 11. I am what I am. Flexibility is critical in cross-cultural negotiations. Americans must adapt to the circumstances of world economic interdependence. Our power at the international negotiation table will continue to erode as our trading partners develop industrially. We must change our negotiating style accordingly.

Training Implications The American negotiating style is part of a larger problem — our entire approach to export trade. With the dramatic growth in international business activity during the last ten years, U. S. industry has slowly adjusted business approaches to foreign markets. Early on, U. S. companies sent their exec-

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utives to live overseas and deal directly with foreign clients. The point of contact for the two cultures was often between an American sales representative and foreign client personnel. Thus, Americans had to operate in a new environment and had to promote communication and understanding not only between cultures but also between organizations — a demanding task. This strategy has proved unsuccessful. In response to these difficulties and others (such as unfavorable tax laws) American corporations are increasingly hiring foreign nationals to represent their interests overseas. This moves the point of cross-cultural contact into the company where it can be more effectively managed. Consequently, the trend is for American executives (managers and technical experts) to take only short trips to other countries. Such a strategy for marketing our products and services overseas neatly avoids the serious problem of training executives to live in other cultures, but we must now focus our attention on teaching executives how to negotiate with people from other countries. Such training is not easy — for two reasons. First, knowledge and experience in another culture do not necessarily help in understanding still others. Various writers have tried to generalize about doing business in "similar" cultures, but their contributions are limited.4 Second, executives' time has practical limitations. Often management or technical people must participate in sales negotiations in other countries on short notice. The focus is on commercial and technical issues, not on how to communicate effectively with foreigners. Given these two constraints — the need for knowledge of several cultures and time limitations — what can be done to better prepare our representatives? Both short- and long-term actions can help American companies solve such problems. Our lack of knowledge about other cultures is losing us business overseas. Ideally, a prerequisite for work in international operations would be participation in an experiential training program involving cross-cultural interactions in a low-risk environment. Feedback from foreign participants and videotaped sessions would aid in building an awareness of one's own negotiation behavior and values, as well as those of foreigners. If experiential training is not practical, videotape as a training medium is the next best thing. Most large companies with international clients have a few people with knowledge and experience in individual cultures who have learned to overcome the natural tendencies of the American negotiating style. The cost of sitting these people down in front of a videotape camera, with an expert in cross-cultural communication to lead a discussion on important aspects of negotiation (language, nonverbal behavior, values, and decision processes), say, in Saudi Arabia, is minimal. Larger companies might develop a library of such training tapes for management and technical people embarking on short-notice and short-term foreign assignments.

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The long-run solutions to the cultural myopia of our business community are more challenging. If we are to take advantage of our technology, creativity, and other natural resources, we must invest in the education and training of our potential business leaders. This training must start early, for true understanding of another culture comes from total immersion in it. Ideally, training for U. S. multinational executives of the future would begin in high school. During their freshman and sophomore years they would learn a foreign language (of one of our major trading partners). They would spend their junior year living with a family in a foreign country where the language they have studied is spoken, as part of the exchange programs now available. Students would continue their language training in college and again spend one year in a university in the country of focus. Finally, initial assignments in the multinational corporation would include a tour of duty in the foreign country. Through such a program, American executives of the future would gain an understanding of our foreign trading partners and their environment, a bicultural competence that would open the many doors that foreigners frequently shut in our faces. Such a long-term plan sounds idealistic; however, the leaders of our large corporations are beginning to recognize our weaknesses in the world marketplace. These same executives must make the commitments to invest in high school and college foreign exchange programs and language training programs that look forward to the growth of international trade rather than back to a part of our own cultural heritage.

Thoughts on Negotiation Keep strong, if possible. In any case, keep cool. Have unlimited patience. Never corner an opponent, and always assist him to save his face. Put yourself in his shoes — so as to see things through his eyes. Avoid self-righteousness like the devil — nothing so selfblinding.

Basil Henry Liddell Hart Deterrent or Defense, 1960 "Advice to Statesmen"

America cannot be an ostrich with its head in the sand.

Woodrow Wilson Speech given in Des Moines, Iowa February 1, 1916

Americans are people who prefer the Continent to their own country, but refuse to learn its languages

Edward Verrall Lucas Wanderings and Diversions, 1926 "The Continental Dictionary"

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I have with me two gods, Persuasion and Compulsion. The speech of man is like embroidered tapestries, since like them this too has to be extended in order to display its patterns, but when it is rolled up it conceals and distorts them.

Themistocles From Plutarch, Lives Sections 21 and 29

In America getting on in the world means getting out of the world we have known before.

Ellery Sedgwick The Profession, 1946 Chapter 1

Men are never so likely to settle a question rightly as when they discuss it freely.

Thomas Babington, Lord Macaulay Southey's Colloquies, 1830

Let us not be blind to our differences — but let us also direct attention to our common interests and the means by which those differences can be resolved.

John Fitzgerald Kennedy Address given at American University Washington, D. C. June 10, 1963

Happy

Notes 1 2 3 4

Hall (1960, p. 87). Newsweek (1979, p. 15). E.g., Massie, Luytjons, and Hazen (1972). Eward T. Hall and others suggested clarifying cultures into two categories — high context and low context. Such a concept is useful, but does not hold for negotiation style. For more details see Keegan (1980, p. 86).

References Hall, E.T. (1960). "The Silent Language in Overseas Business," HRB May-June. Keegan, W. J. (1980). Multinational Marketing Management. Englewood Cliffs, Ν. Y.: Prentice Hall. Massie, J. L., J. Luytjons, and N.W. Hazen (eds.) (1972). Management in International Context. New York: Harper and Row. Newsweek (1979, July 30).

Part Two Culture and Management in Particular Societies

A. Introduction The readings dealing with specific countries and/or geographical regions are divided into the following five sections: (B) U.S.A. and Western Europe; (C) U.S.S.R. and Eastern Europe; (D) South-east Asia; (E) China; and (F) Japan. There are only three readings in Section B, and the fact that one of these remains topical despite having been written decades ago indicates the managerial cultures of the United States and Western Europe have not changed significantly since the 1977 Culture and Management book appeared. The readings about the Soviet Union and Eastern Europe in Section C are arranged in chronological order from the 1960's to the present. Despite the radical changes that will occur with the break up of the USSR, the basic economic and behavioral problems of the people will continue to dominate their lives. The third readings — Section D, is about South-east Asia. Here things will probably also change following Britain's handing over of Hong Kong to China in 1997. Conditions in the Indo-China peninsula have alternately simmered and boiled since the time of French rule in Vietnam in the early 1950's. The situation has been further destabilized as a result of recent events in the USSR and China. It will be further affected by what happens north in Mongolia and Korea where the involvement of the USSR, China, and Japan has been increasing over the last sixty years. For North and South Korea the winds of democratization and nationalistication (i. e. becoming more nationalistic) have a special omen. At the southern end of China, Tibet, another national-culture of ancient times is re-awakening and trying to disengage itself from Chinese communist domination. With the Soviet Union busy with its overwhelming problems it is mainly the situation in China which will have an effect on what happens in South-east Asia in the 1990's. All four readings in Section D are about the time before the Gorbachev era, and when China was taking its first steps towards a market economy — before Tiananmen Square. The greatest difficulty in choosing the readings for this book occurred with the selection of papers about China in Section E. Not only was China the only region covered in the book with which the Editor had no first hand acquaintance; but in the midst of selecting the cases, the bloody repression of Tiananmen Square erupted and it seemed that the entire progress that China had been making towards democratization and market economy had been turned upside down. It seems that Deng Xiaoping and his old-age guard would like to have their cake and eat it too. In USSR terms, he wants Perestroika (building anew, i. e. market economy) without Glasnost (openness, i. e. democratization). This is, of course, impossible, but so is eternal life for Deng and his elderly associates.

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Consequently, some but not all readings which deal with how businessmen from other countries could adjust themselves to the intricacies of the Chinese centralist decision making process were not included. On the other hand, readings about Chinese behavior, especially organizational behavior, were retained. All the readings in Section Ε were written between 1985 and 1989, before Tiananmen Square. Finally, Section F includes readings about Japan. They are arranged in chronological order of their publication. Throughout the readings of this book there are references to the managerial culture of Japan, usually extolling us to copy Japanese management as it is so successful. However, the Japanese managerial culture is quite different from those of other countries, and therefore difficult and problematic to emulate. Thus, all four readings deal with differences in management between Japan and other countries. Let us now proceed to examine the readings of Part Two, section by section: Section B. U.S.A. and Western Europe IIB1. Cultural Differences in Organizational Behavior. This reading by Pugh et al serves not only as an introduction to Section B, but to the whole of Part II, as it discusses studies in organizational behavior in different areas of the world. It covers: — — — —

French and Germany factory comparisons; The Arab executive; Japanese work organization; and The British manager.

Two of the studies discussed by Pugh et al. of the British Open University are about organizational behavior in Europe, hence this reading 'belongs' in Section B. IIB 2. Body Ritual among the Nacirema. This classic piece by Horace Miner is the oldest reading in the book. It seems that the consumer behavior of the people described in this reading has not changed for many decades. The country of these people will not be revealed now, lest the story lose its punch. IIB 3. How to do Business with a Frenchman. The third reading in this section, by Rüssel Eggers, is like champagne. Like reading IIB 2 it is old (1965), and it is, in fact, one of the two surviving readings from the previous Culture and Management (Penguin, 1977) and is definitely amusing. As to the contents of this reading by Eggers, one can say about French organizational behavior, "plus ?a change, plus c'est la meme chose" — the more it changes, the more it remains the same!

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Section C. U. S. S. R. and Eastern Europe IIC1. Emerging East-West Ventures: The Transideological Enterprise. This, like its predecessor IIB 3, is the other surviving reading from Penguin's 1977 Culture and Management. Written by Howard Perlmutter in 1969, it represents the period when the Capitalist West tried doing business with Communist Eastern Europe. This reading, which is also a classic of sorts, is a proper opening for Section C, which is arranged in chronological order of events occuring in the USSR and Eastern Europe. Although written over twenty years ago, the reading is apropos today's changing environmental world systems. IIC2. Understanding the Cultural Environment: U. S. — U. S. S. R. Trade Negotiations. This paper was published in 1985, the year that Glasnost and Perestroika and Mikhail Gorbachev came into power, but it is clearly a prePerestroika reading. The authors, Beliaev et al., present four cultural values which have a great impact on US—USSR negotiations — individualism, time, human risk aversion, and results orientation. Thus, they say that while Americans are time conscious, future oriented, and "time is money" dominated, the Soviets have difficulty in meeting exact schedules, and their state plan is a measure of time, that is to say that state organizations control time. IIC 3. Back Drop to the Evolution of Management in Socialist Countries. Bohdan Hawrylyshyn presented this paper during the rosy days of Glasnost and Perestroika in 1987. A short while later the first pogroms between Azerbaijanis and Armenians started in Nogorni-Karabakh, followed by nationalistic outbursts all over the USSR. His predictions regarding the enormous hurdles on the Soviet Union's road away from Socialism and towards Capitalism are amazing. He also asserted that China has a greater opportunity for liberation than the USSR because Confucious is a more conducive philosophy for this than Marxism is. Hawrylyshyn failed, however, as most Sinologists did, to, forsee the Tianenmen Square obstructions to liberalism by Deng-Xiaoping and his collaborators. IIC4. Eastern Europe After Glasnost and Perestroika. Richter et al. present the situation in Eastern European countries in 1990, and their prediction of developments. The reading is divided into four parts. First, all the Communist countries of Eastern Europe are described and discussed. Second, the Perestroika and Glasnost of the USSR are considered, along with other Soviet aspects and terms such as 'democratization', 'acceleration', 'second economy', 'self-supporting economy', and 'pricing'. The third part deals with the transition process in Hungary, from central planning to market economy. In the last part, the collapse of socialism is discussed under the title, "Karl Marx was Right After All."

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Section D. South-east Asia IID1. HRM in Asia — The Way through Recession. This first reading in Section D, by Henri-Claude de Bettignies, is actually an introduction to this and the following two sections about China and Japan, de Bettignies claims that the rate of growth of both the US and western Europe is slow, and that Japan's growth is only "moderate." Growth of the ASEAN region, that is the South-east Asian countries, and of the whole Pacific basin, has also slowed down after an amazing growth towards what de Bettignies calls the Pacific Century, namely the 21st century. In order to overcome this recession, it is necessary for the Pacific Asia group region countries where management skills are in short supply to make HRD Human Resource Development their top priority. This paper is about that development these countries need in order to overcome recession. IID 2. Market Research in a Non-Western Context: the Asian Example. Basically Kushner writes that what works in London may not work in Hong Kong. He therefore feels that market research should help Asian countries to develop worldwide markets. This he presents in short sections about research superstructure, sampling, demographics, language, field control data processing, and analysis. IID 3. Cultural Effects on the Marketing Process in South-east Asia. Gordon Redding's paper explains the cultural background which should be considered when doing what Kushner proposes in the IID 2 reading. Redding discusses Asian cultures at the individual, interpersonal, and organizational behavior levels, dealing separately with the following areas: Asian psychological need structures, Asian interpersonal norms, Asian social relationship patterns, business practices in the region, perceptions of the buying/selling situation, and implications for marketing. IID 4. Cultural Consequences for Organization Change in a South-east Asian State: Brunei. This reading by Peter Blunt describes the results of research using Geert Hofstede's methodology and approach, the findings of which seem to be applicable to the Three Islamic states in SE Asia — Brunei, Malaysia and Indonesia. Section E. China IIEI. The Psychology of Chinese Organizational Behavior. This reading by Redding and Wong could easily have fitted into the previous section about South-east Asia, as it actually focuses on the organizational behavior of Overseas Chinese rather than on their behavior in the People's Republic. HE2. Symbolism in Cross-Cultural Trade·. Making Chinese Symbols Work for You by Hugh Baker. The first three readings in this section about China

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present the behavioral aspects of the Chinese (namely their culture) while the last two readings deal with their management. Baker's paper is divided into the following parts: 'Cross-cultural misinterpretation,' 'Make symbols work for you,' 'Yin and Yang,' 'Red — the most lucky colour,' 'Narcissi bring good luck,' 'Tongue' puns into 'loss' and 'Take a compradore.' IIE 3. Culture and the Problems of Chinese Management. This article by Martin Lockett analyzes the relationship between problems of management in the People's Republic of China and Chinese culture in five areas: a) organizational structure, b) management skills and succession, c) party/ management relations, d) operations, e) motivation and labor discipline. Lockett analyzes four key features of Chinese culture and how they explain possible problems, namely: respect for age and hierarchical positions; group orientation, i. e. family; the concept of face; the importance of relationships. IIE4. The China Trade: Making the Deal Work by Steven Hendryx. This is the first of two readings about management in China, rather than about Chinese culture, as were the previous three readings. Hendryx was the business executive who launched the Otis Elevator Company as a joint venture in China. Following are sayings and headings from Hendryx's paper: "The real problems start after you sign the contract:" "When things just don't make sense, push for coordination;" "When no one will decide anything;" and "Establish your decision-making rights." IIE5. HR Practices in the People's Republic of China, by Irene Hau-Siu Chow and Oded Shenkar. All the readings on China had been written before the bloody events in Tiananmen Square. Hau-Siu Chow and Oded Shenkar, however, came the closest timewise to Tiananmen Square in 1989. They conducted a study of eight enterprises in Beijing. It showed that China is willing to embrace western technology. They also found, however, that this did not extend to western state-of-the-art practices in human resources. Section F. Japan IIF1. Abacus and Formula Thinking. The first reading in this section, The Japaneses and the Jews, was at the top of the Japanese best seller list for three years. Isaiah Ben Dasan is a pen name, and Japanese readers claimed that the author could only have been Japanese because of his insights into Japanese culture. This reading deals primarily with the Japanese notion of time. IIF2. Does Japanese Management Style have a Message for American Managers? Edgar Schein wrote this paper with two similar but slightly different objectives in mind. The first goal is to gain an understanding of how Japanese

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management is perceived by American managers. Schein then has the further objective of illustrating what American managers can actually learn from Japanese management. Edgar Scheins's paper was selected for two reasons. First, to see how Japanese management style is perceived by American Managers. Second, to put non-Japanese writers like William Ouchi, Richard Pascale and Anthony Athos into the proper perspective when they write about Japan. This paper was written before In Search of Excellence was published (Peters and Waterman, Harper and Row, New York 1982), which has become the best seller of all the management books in the 20th century. This reading however, with the reverse objective of that book, namely what the Japanese can learn from American management. This paper has the same objective that the two other books have — Ouchi's Theory Ζ — How American business can meet the Japanese challenge (Addison Weisley, 1981) and Pascale's and Athoses The Art of Japanese Management (Simon and Schuster, 1981), which is what American managers can learn from Japanese management. IIF3. Management in Japan — What Can, and Cannot, be Copied in the West. Weinshall claims that Japan is on one cultural planet, with all the other national cultures on a different planet. Weinshall points out that the primary advantage of Japanese management is in its notion of "responsibility unlimited;" namely that committed Japanese managers feel absolutely responsible for whatever happens in their organization, even if it has nothing to do with them. IIF4. Cultural Differences at Work: Japanese and American Managers. Kleinberg is an anthropologist who lived in Japan and studied Japanese, similar to her famous predecessor, Ruth Fulton Benedict. Her observations are drawn from research conducted on Japanese firms operating in the US.

Β. U.S.A. and Western Europe Cultural Differences in Organizational Behaviour Derek S. Pugh and the Open University Course Team

We turn to a different approach to the question of convergence. We shall now examine some of the considerable number of differences in organizational functioning and the behaviour of members in different cultures, and ask: 1. How important are these differences? 2. Are they fortuitous, or how far do they reflect the national cultural differences in which the organizations operate? 3. Can these differences be systematically related to enduring factors in current societies? If they can, of course, they are likely to have a greater and longer-term impact in preventing — or, at least, slowing down — the world-wide convergence. In this section we shall examine some of the evidence of differences in organizational behaviour in various countries which have been attributed to cultural differences between societies. The argument here is that even though the context (and even the structure) may be the same, people in different cultures are different. So the organizational processes may be different and the same structures may be used in different ways. We shall be examining aspects of French, German, Arab, Japanese, American and British organizational cultures in order to evaluate the magnitude of the differences between them.

French and German Factory Comparisons In this sub-section we shall consider a comparative study carried out by Professor Marc Maurice and his colleagues at Aix-en-Provence into the relative status and wage payments of workers and managers in comparable factories in France and Germany (Maurice, 1979). In order to control (by screening out) factors such as size, industrial sector and technology, the researchers compared only factories in equivalent industries (such as iron and steel and paper and cardboard products) who used the same technology and were comparable in size. They were thus able to focus on national differences in hierarchy job structures, and payments.

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Their results showed clear differences between the French and German firms. These included: 1. There were considerably more staff not employed directly on physically making the product in French than in German firms, and they were relatively better paid. 2. The wage differential between the lowest and the highest paid of all employees is much greater in French than German firms. Indeed, the difference was such that there was no overlap: the largest differential found in a German firm was still less than the smallest differential found in a French firm (2.7 times as against 3.7). 3. The number of levels in the production hierarchy is greater in French than in German firms (5 compared with 3) because there are more middle level managers in French firms. Maurice relates these results to differences in the educational systems of France and Germany. More top managers in France hold higher degrees, usually from the 'grandes ecoles.' These are very high status University Institutes which provide high-level technical and scientific education, and which by their very highly selective intake provide an elite of high status managers for French organizations. Graduates from them are recruited directly into upper levels of firms and are paid much greater comparative salaries than in Germany. This means that there is a group of less qualified supervisors and managers who can expect to be promoted only through the middle ranks of the organization. They can never realistically aspire to join the top management 'Cadres', or set. In Germany, equivalent top managers are often promoted from within the firm which they join lower down with fewer general and more technical qualifications. Thus at the lower levels German supervisors are comparatively better qualified and better paid than their French equivalents. They can also take more technical decisions and are given more professional autonomy. In summary, the differences show French firms to be run more bureaucratically, with orders and procedures set from above, while German work organization relies more on the professional expertise which derives from the trained knowledge and skill of the more junior employees.

The Arab Executive The increasing economic impact of the Arab world with its oil-based wealth has led to the growing importance of the Arab business executive (as distinct from the Arab trader, who has a commercial tradition that dates back many centuries). The executive directs and is responsible for the operations of a

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manufacturing or service business which may be owned privately or by the government. Dr. Farid A. Muna conducted a survey of the number of leading Arab executives — all men, for women have not entered this sphere yet. He asked them about their practices and their views on the nature of management (Muna, 1980). If you come to do business with an Arab executive, Muna reports, he will invariably engage in social talk for what seems, to a Westerner, to be a long time. After partaking of drinks (coffee, tea or drinks, of course) there would then be a period of up to fifteen minutes when you and the executive would talk about several topics of interest, provided they are not to do with the business in hand. It would be regarded as impolite and rather shocking to start immediately with a business discussion. This ritual might seem to be merely a quaint survival from more spacious days. In fact, it is one particular manifestation of a very important value that runs throughout Arab society. The value concerns the importance given to personal relationships as distinct from role- or task-oriented ones. In the Arab culture, it matters who you are — not just what your job is. The conversation is to allow exploration on a person-to-person basis, to establish interpersonal trust, to evaluate you as a person and to locate you precisely in the business, national and family network. If you are already known, the talking cements and builds on the relationship. Arab executives dislike impersonal, role-based, or transient relationships when something as important as business activity is involved. This means that there can be no basic separation of business affairs from social or personal life. Executives are on call from employees, clients or government officials, at home and over the weekends — precisely because these people are not just employees, clients, officials, but individuals with whom a relationship has been built up. They run an open-door policy; any employee can come with a problem to the top executive, and there is a low level of delegation of decisions, although consultation and discussion takes place before the decision is made. Friends will drop in at the office for chats over coffee, drawing on the personal relationship and its concommitant norm of hospitality. Even though he has work to do, it would be unethical for the executive to refuse to see visitors. Loyalty and trust are rated much more highly than efficiency in performance. There is a strong kinship structure in all parts of Arab society based on the clan (in tribal communities) and the extended family in rural and urban milieux. So what we in the West would call nepotism is right and proper, and executives accept that they have a duty to hire relatives in their organizations. They use family (and are used by them) as contacts and pressures on other organizations and Government departments, to expedite, advance and influence the course of events in their favour. It is, of course,

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a give-and-take process and the executive would have in his mind a balance sheet of credits and debits of favours given and taken, in regard to each of his relationships. Money can also enter into this balance, and paying money for favours does not have the same connotation of bribery as it does in a systematic procedure-oriented culture. From the Arab point of view, everybody is 'bribing' everybody else all the time, after all. That is how the personal relationships are nourished.

Japanese Work Organization In this sub-section, I shall draw on a number of studies of Japanese organizations. Dore (1973) is a classic comparative study of Japanese and British industrial relations systems. Ouchi (1981) is an examination by a Japanese-American academic of what American business can learn from Japanese organization, given that it cannot expect to adopt their practices completely. Ballon (1983) is the latest insighted analysis of a French Jesuit priest who has been Professor of Management at a Japanese (Christian) university for many decades. I have, in addition, also had the opportunity of discussing the nature of Japanese organization with a number of visiting Japanese professors of management, including Professors Sasaki, Okamoto and Kono. Kono (1984) has also provided many insights. Since Japan's recent economic and industrial successes a lot has been written about Japanese work organization, much of it with overtones of selling the 'miracle ingredient' to Western countries. But it is important to understand that Japanese organization stems from Japanese culture and its values. The first important value is concerned with collectivism: the Japanese welcome homogeneity and interdependence. Their initial identification is with the country; it is their fate to be Japanese, and alike in so many respects. Out of a population of over 115 million, only 700,000 are nonJapanese. (We may compare this with the UK, where 6.6 percent of the usually resident population were born abroad over ten times the Japanese percentage.) In recent public opinion surveys, 90 per cent identify themselves as belonging to the middle class. The second identification is in terms of work — but not, as it would be in the West, by what work they do (trade, profession, skill) but by where they do it. The Japanese term for 'workplace' means much more than the physical location. A Japanese who tells you that he works in the Hitachi company at the Taga factory is telling you much more than an Englishman who says he works for GEC at Acton. The Japanese is giving you an identification of himself in the eyes of society the nearest British analogies being with the Armed Services or the Police.

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This degree of identification leads the members of the work organization to look upon their goals and those of the organization as being fundamentally in agreement. As they see it, the survival of the organization is necessary for their own survival, so the difference between owners and workers is not an overriding consideration or a barrier to motivation. The achievement of success benefits everybody: shareholders, managers, workers, customers, suppliers, the government. Everyone is working towards the same goal, so egalitarian work practices mark the approach. Managers, engineers and workers wear the same uniform, eat in the same canteen, work the same hours. Offices are open plan, with everybody participating and aware of what is going on. The superior is in direct and constant interaction with his subordinates, and everyone can actually see what the informal interaction system is and who is influential. This degree of identification is possible because the norm, in large organizations, is that of permanent employment. It is a life process: organizational birth (entering the company on leaving school or university), aging (building up seniority, experience, wisdom) and death (mandatory retirement at fiftyfive years old). This norm helps us to understand the Japanese view of their organizations, although it only operates in the large organizations, perhaps half the male work force. It does not apply to smaller organizations who do not have the economic stability to retain workers in the face of falling revenue; neither does it apply to women workers, who are expected to leave on marriage. While they may return when the family has started full-time schooling, they are regarded as temporary and are used as a buffer in work fluctuations. Another component of the organizational identification is that unions are specific to the organization. About thirty per cent of employees are union members and over ninety per cent of these unions represent all the workers in an enterprise up to the level of manager. 'Blue collar' and 'white collar' workers in the same firm belong to the same union. In a university, professors, technicians, and catering personnel belong to the same union. The principle is 'one enterprise, one union.' If the company goes out of business, so does the union. The union is thus committed to the development of the enterprise, while retaining the specific interest in the employment, security and development of its members. For example, unions support automation as a means of upgrading their members' jobs. The second key Japanese cultural value is that of the respect and status given to age. Japan is a 'gerontocracy' — i. e. ruled by the aged. Seniority — the Japanese use the term 'the merit of years' — is the basis of pay and promotion. The salary system is always complex and flexible. It has little to do with the work done as measured by job evaluation, piece rates and individual incentive bonuses. These are unacceptable because they could lead to younger people being paid more than older ones. The salary is based

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on (1) years of service (which correlates very closely with age) (2) qualifications obtained and (3) a company-wide bonus based on the performance, not of the individual, but of the enterprise as a whole. This bonus is quite considerable, forty to fifty per cent of salary. It thus increases the commitment of the employees to the success of the firm, since they have a large financial stake in it. It also helps to maintain the lifetime employment system, since in a bad year a firm could pay a small bonus or even forgo it altogether, thus saving, say, a quarter of the labour costs with no redundancies required. It would then be in a good position to expand when required in a later year. In good years the bonuses are high and employees save them, the rate of capital formation in Japan being four times that in the US. In economic terms what such a bonus scheme does is to transfer part of the entrepreneurial risks of the business from the shareholders to the employees, who take the risks and get the benefits. No wonder nearly all the Japanese regard themselves as middle class. One important effect of this method of payment is that it is not necessary to define roles or jobs very precisely. This means that organization structures are 'softer.' A person will be appointed to a department, not necessarily with a specific job title or description, and will be expected to do whatever is required. So there is considerably greater overlap among jobs, a much greater emphasis on communication, and decision-making by consensus. The 'softness' of the organization means that there is intentional ambiguity about who is responsible for which decision, since this encourages joint responsibility. This means that decisions take longer to make, but what matters for the Japanese manager is not the decision but the implementation. From his point of view (there are hardly any Japanese women managers — yet) an ideal decision is one where, after there has been full discussion with all concerned about the implementation of possible options, the decision (and the commitment to implementation) takes itself. As a physical manifestation of this generation of commitment, a document proposing a change may typically show the seals of approval of twenty or more managers before the Director puts his final seal on it. One final important cultural value in Japan has been mentioned in an earlier section: the high respect for education. This includes technical training, on-the-job training, and management development. The way up through the organization is by training and experience. Managers are rotated around to different departments. Most managers have worked on the factory shop floor. Workers learn all the jobs carried out in their section in order to increase flexibility of working. Their role is not just to follow instructions of the supervisors. Their task is to see that the equipment contributes optimally to the production process. They are concerned with maintenance and with quality (through quality control circles), and they contribute suggestions to suggestion schemes at a rate two orders of magnitude greater than in Britain and the US.

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Japanese employees, however, do not appear to show great satisfaction with these work systems. In terms of number of complaints, they complain more than British and American workers. Since work is so closely integrated into their lives, they have high aspirations and they continually see things which should be improved.

The British Managerial Culture In this section we shall be considering British managerial culture from the point of view of how it strikes two American academics. They both started from the premise that British management is failing as Britain falls behind in economic terms. In 1983, for example, for the first time ever, Britain imported more manufactured goods than she exported. But it was in the 1970s that Professor Robert Dubin of the University of California, Irvine, and Dr. Fritz Steele of Harvard University spent various periods observing British managers. Their views reflect their own personal impressions, but since they both formed and published these independently (Dubin, 1970; Steele, 1977) the amount of overlap in their comments is impressive. Here are some of the characteristics in which they see British managers differing from American and which might be contributing to Britain's economic decline. 1. Perfectibility: Doing Better is a Good thing American managers believe that present ways of doing things will inevitably be replaced by even better things. They are optimists who consider that the future holds much promise, and are willing to change to discover better possibilities of operation. British managers value security and continuity, and think that 'we must be doing all right now or we wouldn't be here' (not necesarily true the inadequacies may not have become critical, yet). They are pessimists, well aware of the costs of change and requiring proof that it will work before it is adopted. But proof can often only be supplied after the change is carried through. So innovations are much less likely in Britain than America. 2. Class Position: The Legitimacy of Hierarchical Authority British managers can be characterized as middle class men (and some women) who have had a 'proper' education. What is strange for Americans is that 'proper,' in the British understanding, seems to be defined in terms of where you got your education, not what you studied. Recruiters are seen as more interested in the fact that the applicant went to a public or grammar school than how many A levels he obtained. They are more concerned that

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the candidate went to a 'good' university than with the class of his degree. Of course, the children of working-class parents can get to university, qualify and be selected as managers — but by then they are middle class anyway. There is much less awareness than amongst Americans that there is a pool of talent at lower levels in the organization, a pool of people who are quite capable of being developed into successful managers. In the UK they are neglected on class grounds, since they do not fit the supposed social requirements. This waste carries on because there is a deep sense of the legitimacy of hierarchical authority in British organizations, which stems from the class divisions. This is why the socially acceptable gifted amateur is regarded as much more desirable than the average professional for top positions. 3. Personal

Trust: The Neglect

of Other Forms of

Evaluation

British managers place much more emphasis on personal trust and loyalty in their subordinates. It is often the prime criterion in valuing them. 'Trust' does not just mean that they will not be found with a hand in the till, it is much more than that. It means that you trust them to be 'sound,' to 'do the right thing' even in your absence, in fact, to think and act like you. The problem is that this sort of trust acts as a great pressure towards conformity, both in thought and action. Trustworthy subordinates rarely surprise their superiors with innovative actions that would risk being thought of as 'unsound.' The same process happens in America but to a much smaller degree, because of the much greater emphasis on universalistic criteria both for selection and evaluation. In America these criteria are, to a much greater degree, independent of the particular views of the present boss. They are set for the organization as a whole in terms of operational and financial achievement. Universalistic criteria are necessary because there are more frequent job changes at all levels in American organizations. In theory the British practice of personalizing the criteria should mean the exceptions are made for exceptionally good people who don't 'fit' as well as poor ones. But in the event, the manager is almost always having to call on potential. This approach also relieves the boss of having to make the hard decision to get rid of inadequate subordinates. In America the 'bottom line' of profit achieved, output produced, etc., is more central to the evaluation. For these authors, the implication of their analysis is that British firms should become more like American ones in these repects,otherwise the likelihood of adaptation and self-renewal is small. Indeed, successful firms are already more 'American' in their practices. In this section we have described a number of differences in organizational processes and behaviours and have seen how far these differences can be

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related to the cultural values of the country. Clearly, some of these differences are important and we would need to take account of them in operating in organizations in different cultures. But they have been based on examination of specific cultures, or pairwise comparisons. They have not provided the global argument and systematic comparative data across a large number of countries that we saw in previous sections. It is to such a global study of cultural differences that we now turn. References "Non-Western Work Organization," Asia Pacific Journal of Mangement, Vol. I, pp. 1 - 1 4 , 1983. Dore, R. British Factory — Japanese Factory. George Allen and Urwin, 1973. Dubin, R. "Management in Britain: Observations of a Visiting Professor," The Journal of Management Studies, Vol. 7, pp. 183-198, 1970. Kono, T. Strategy and Structure of Japanese Enterprise. Macmillan, 1984. Maurice, M. "For a Study of Societal Effect: Universality and Specifity in Organizational Research," in C. J. Lammers and D. J. Hickson (eds.), Organizations Alike and Unlike. Routledge and Kegan Paul, 1979. Muna, F. A. The Arab Executive. Macmillan, 1980. Ouchi, W. Theory Z: How American Business Can Meet the Japanese Challenge. Addison-Wesley, 1981. Steele, F. "Is the Culture Hostile to Organizational Development: the UK Example," in P. H. Mirvis and D. N. Berg (eds.), Failures in Organization Development and Change. Wiley, 1977.

Body Ritual Among the Nacirema Horace Miner

The anthropologist has become so familiar with the diversity of ways in which different peoples behave in similar situations that he is not apt to be surprised by even the most exotic customs. In fact, if all of the logically possible combinations of behavior have not been found somewhere in the world, he is apt to suspect that they must be present in some yet undescribed tribe. This point has, in fact, been expressed with respect to clan organization by Murdock. In this light, the magical beliefs and practices of the Nacirema present such unusual aspects that it seems desirable to describe them as an example of the extremes to which human behavior can go. Professor Linton first brought the ritual of the Nacirema to the attention of anthropologists twenty years ago, but the culture of this people is still very poorly understood. They are a North American group living in the territory between the Canadian Cree, the Yaqui and Tarahumare of Mexico, and the Carib and Arawak of the Antilles. Little is known of their origin, although tradition states that they came from the east. ... Nacirema culture is characterized by a highly developed market economy which has evolved in a rich natural habitat. While much of the people's time is devoted to economic pursuits, a large part of the fruits of these labors and a considerable portion of the day are spent in ritual activity. The focus of this activity is the human body, the appearance and health of which loom as a dominant concern in the ethos of the people. While such a concern is certainly not unusual, its ceremonial aspects and associated philosophy are unique. The fundamental belief underlying the whole system appears to be that the human body is ugly and that its natural tendency is to debility and disease. Incarcerated in such a body, man's only hope is to avert these characteristics through the use of the powerful influences of ritual and ceremony. Every household has one or more shrines devoted to this purpose. The more powerful individuals in the society have several shrines in their houses and, in fact, the opulence of a house is often referred to in terms of the number of such ritual centers it possesses. Most houses are of wattle and daub construction, but the shrine rooms of the more weathly are walled with stone. Poorer families imitate the rich by applying pottery plaques to their shrine walls. While each family has at least one such shrine, the rituals associated with it are not family ceremonies but are private and secret. The rites are normally only discussed with children, and then only during the period when they

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are being initiated into these mysteries. I was able, however, to establish sufficient rapport with the natives to examine these shrines and to have the rituals described to me. The focal point of the shrine is a box or chest which is built into the wall. In this chest are kept the many charms and magical potions without which no native believes he could live. These preparations are secured from a variety of specialized practitioners. The most powerful of these are the medicine men, whose assistance must be rewarded with substantial gifts. However, the medicine men do not provide the curative potions for their clients, but decide what the ingredients should be and then write them down in an ancient and secret language. This writing is understood only by the medicine man and by the herbalists who, for another gift, provide the required charm. The charm is not disposed of after it has served its purpose, but is placed in the charm-box of the household shrine. As these magical materials are specific for certain ills, and the real or imagined maladies of the people are many, the charm-box is usually full to overflowing. The magical packets are so numerous that people forget what their purposes were and fear to use them again. While the natives are very vague on this point, we can only assume that the idea in retaining all the old magical materials is that their presence in the charm-box, before which the body rituals are conducted, will in some way protect the worshipper. Beneath the charm-box is a small font. Each day every member of the family, in succession, enters the shrine room, bows his head before the charm-box, mingles different sorts of holy water in the font, and proceeds with a brief rite of ablution. The holy waters are secured from the Water Temple of the community, where the priests conduct elaborate ceremonies to make the liquid ritually pure. In the hierarchy of magical practitioners, and below the medicine man in prestige, are specialists whose designation is best translated "holy-mouthmen." The Nacirema have an almost pathological horror of and fascination with the mouth, the condition of which is believed to have a supernatural influence on all social relationships. Were it not for the rituals of the mouth, they believe that their teeth would fall out, their gums bleed, their jaws shrink, their friends desert them, and their lovers reject them. They also believe that a strong relationship exists between oral and moral characteristics. For example, there is a ritual ablution of the mouth for children which is supposed to improve their moral fiber. The daily body ritual performed by everyone includes a mouth-rite. Despite the fact that these people are so punctilious about care of the mouth, this rite involves a practice which strikes the uninitiated stranger as revolting. It was reported to me that the ritual consists of inserting a small bundle of hog hairs into the mouth, along with certain magical powders, and then moving the bundle in a highly formalized series of gestures.

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In addition to the private mouth-rite, the people seek out a holy-mouthman once or twice a year. These practitioners have an impressive set of paraphernalia, consisting of a variety of augers, awls, probes, and prods. The use of these objects in the exorcism of the evils of the mouth involves almost unbelievable ritual torture of the client. The holy-mouth-man opens the client's mouth and, using the above mentioned tools, enlarges any holes which decay may have created in the teeth. Magical materials are put into these holes. If there are no naturally occurring holes in the teeth, large sections of one or more teeth are gouged out so that the supernatural substance can be applied. In the client's view, the purpose of these ministrations is to arrest decay and to draw friends. The extremely sacred and traditional character of the rite is evident in the fact that the natives return to the holy-mouth-men year after year, despite the fact that their teeth continue to decay. It is to be hoped that, when a thorough study of the Nacirema is made, there will be careful inquiry into the personality structure of these people. One has but to watch the gleam in the eye of a holy-mouth-men, as he jabs an awl into an exposed nerve, to suspect that a certain amount of sadism is involved. If this can be established, a very interesting pattern emerges, for most of the population shows definite masochistic tendencies. It was to these that Professor Linton referred in discussing a distinctive part of the daily body ritual which is performed only by men. This part of the rite involves scraping and lacerating the surface of the face with a sharp instrument. Special women's rites are performed only four times during each lunar month, but what they lack in frequency is made up in barbarity. A s part of this ceremony, women bake their heads in small ovens for about an hour. The theoretically interesting point is that what seems to be a preponderantly masochistic people have developed sadistic specialists. The medicine men have an imposing temple, or latipso, in every community of any size. The more elaborate ceremonies required to treat very sick patients can only be performed at this temple. These ceremonies involve not only the thaumaturge but a permanent group of vestal maidens who move sedately about the temple chambers in distinctive costume and headdress. The latipso ceremonies are so harsh that it is phenomenal that a fair proportion of the really sick natives w h o enter the temple ever recover. Small children whose indoctrination is still incomplete have been known to resist attempts to take them to the temple because "that is where you go to die." Despite this fact, sick adults are not only willing but eager to undergo the protracted ritual purification, if they can afford to do so. N o matter how ill the supplicant or how grave the emergency, the guardians of many temples will not admit a client if he cannot give a rich gift to the custodian. Even after one has gained admission and survived the ceremonies, the

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guardians will not permit the neophyte to leave until he makes still another gift. The supplicant entering the temple is first stripped of all his or her clothes. In everyday life the Nacirema avoids exposure of his body and its natural functions. Bathing and excretory acts are performed only in the secrecy of the household shrine, where they are ritualized as part of the body-rites. Psychological shock results from the fact that body secrecy is suddenly lost upon entry into the latipso. A man, whose own wife has never seen him in an excretory act, suddenly finds himself naked and assisted by a vestal maiden while he performs his natural functions into a sacred vessel. This sort of ceremonial treatment is necessitated by the fact that the excreta are used by a diviner to ascertain the course and nature of the client's sickness. Female clients, on the other hand, find their naked bodies are subjected to the scrutiny, manipulation and prodding of the medicine men. Few supplicants in the temple are well enough to do anything but lie on their hard beds. The daily ceremonies, like the rites of the holy-mouth-men, involve discomfort and torture. With ritual precision, the vestals awaken their miserable charges each dawn and roll them about on their beds of pain while performing ablutions, in the formal movements of which the maidens are highly trained. At other times they insert magic wands in the supplicant's mouth or force him to eat substances which are supposed to be healing. From time to time the medicine men come to their clients and jab magically treated needles into their flesh. The fact that these temple ceremonies may not cure, and may even kill the neophyte, in no way decreases the people's faith in the medicine men. There remains one other kind of practitioner, known as a "listener." This witchdoctor has the power to exorcise the devils that lodge in the heads of people who have been bewitched. The Nacirema believe that parents bewitch their own children. Mothers are particularly suspected of putting a curse on children while teaching them the secret body rituals. The counter-magic of the witchdoctor is unusual in its lack of ritual. The patient simply tells the "listener" all his troubles and fears, beginning with the earliest difficulties he can remember. The memory displayed by the Nacirema in these exorcism sessions is truly remarkable. It is not uncommon for the patient to bemoan the rejection he felt upon being weaned as a babe, and a few individuals even see their troubles going back to the traumatic effects of their own birth. In conclusion, mention must be made of certain practices which have their base in native esthetics but which depend upon the pervasive aversion to the natural body and its functions. There are ritual fasts to make fat people thin and ceremonial feasts to make thin people fat. Still other rites are used to make women's breasts larger if they are small, and smaller if they are large. General dissatisfaction with breast shape is symbolized in

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the fact that the ideal form is virtually outside the range of human variation. A few women afflicted with almost inhuman hyper mammary development are so idolized that they make a handsome living by simply going from village to village and permitting the natives to stare at them for a fee. Reference has already been made to the fact that excretory functions are ritualized, routinized, and relegated to secrecy. Natural reproductive functions are similarly distorted. Intercourse is taboo as a topic and scheduled as an act. Efforts are made to avoid pregnancy by the use of magical materials or by limiting intercourse to certain phases of the moon. Conception is actually very infrequent. When pregnant, women dress so as to hide their condition. Parturition takes place in secret, without friends or relatives to assist, and the majority of women do not nurse their infants. Our review of the ritual life of the Nacirema has certainly shown them to be a magic-ridden people. It is hard to understand how they have managed to exist so long under the burdens which they have imposed upon themselves. But even such exotic customs as these take on real meaning when they are viewed with the insight provided by Malinowski when he wrote: "Looking from far and above, from our high places of safety in the developed civilization, it is easy to see all the crudity and irrelevance of magic. But without its power and guidance early man could not have mastered his practical difficulties as he has done, nor could man have advanced to the higher stages of civilization."

How to do Business with a Frenchman Russell Eggers

Obviously, there are problems in measuring Frenchmen by the standards of American industry. And vice versa. As one Frenchman put it, "You Americans are well-trained executives of well-run corporations in the U. S. But abroad you are not clever enough, not flexible enough, not debrouillard (talented, resourceful, literally smart enough not only to pull strings but to disentangle them) enough to really get along in France. You are not French." For a more balanced look at the problem, consider the following laws, which pinpoint some basic differences between an American businessman and his opposite number in France: 1. Whereas the American tries to think in a straight line, the Frenchman insists on thinking in a circle. The American mistrusts complex things and tends to over-simplify. The Frenchman, by inclination and education, mistrusts simple things and tends to over-complicate. It is for this reason that no Frenchman, by American standards, can ask a simple, straightforward question when speaking in public. By French standards, no American speaker can give a full, sophisticated answer. A Frenchman tries to define the question; the American tries to answer it. All this might be summed up in a hypothetical translation of Hamlet's soliloquy. In American business jargon, the soliloquy would probably come out: "To be or not to be? Fine. Let's take a vote." A Frenchman would say, "Etre ou ne pas etre. C'est la la question. Mais la question est malposee" which freely translated means you cannot put the question that way. 2. A French businessman mistrusts the very things in which an American businessman has the most confidence. Examples? The Frenchman is innately suspicious of the figures on a balance sheet, of the telephone, of his subordinates, of the law, of journalists and of what he reads in the press, of investment banks, and, above all else, of what an American tells him in confidence. The American, au contraire, has trust in all these things. 3. An American executive tends to forget what he's said in a letter. A Frenchman never forgets what he's purposely left out. This particular law of communication explains why negotiations often break down at a distance. After a meeting in Paris the American will write a letter so factual and so detailed that, in his own mind at least, it doesn't even require an answer. The Frenchman would consider any letter he addressed to a company in the U.S. as the beginning of a long correspondence in which he would gradually elaborate on the nuance contained in the second line of paragraph

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three. The American will say about the French letter, "It's very polite but what the heck is he trying to say?" The Frenchman will ponder the American letter. "There are many details, mais qu'est-ce que ςa veut dire!" What's he trying to tell me? 4. An American will probably lose his typical enthusiasm for a project before a Frenchman gets over his typical reservations. The business lunch in Paris is a case in point. The American executive rushing through on a two-day stop-over in France wants to talk business and then sit down to a quick snack. His potential French partner wants to eat his way graciously and cautiously to a few business remarks with the coffee. Sophisticated American negotiators know that no Frenchman can digest a new business proposition until dessert or, as the French put it, "entre la poire et le fromage." 5. A French company prepares its balance sheet and profit-and-loss statement not to show its stock-holders how much money it has made, but to show the tax authorities how little. An American businessman considers his tax return a legal obligation to pay. But a Frenchman doen't pay, he negotiates his taxes. The tax return is merely his opening offer. 6. A Frenchman's thoughts are packaged in small and more specific sizes than an American's. This is due partly to the metric system and partly to the fact that the French economy is only 13 per cent the size of the American economy. As a consequence, a Frenchman firmly believes that a small company is more efficient than a giant corporation, that custom-built products are of better quality than mass production, that the margin of profits is more important than volume of sales and profits, that details are more important than the big picture in corporate planning. It is no accident that 'economy size' in French as seen printed on a box of soap flakes (for example), that is about the size of a transistor radio, generally means a small, not a large, package. 7. To a Frenchman, economic prosperity is a series of non-durable pleasures of lasting value. To an American, prosperity is a tangible product with constant model changes. Two items account for over 50 percent of the average Frenchman's budget: food and vacations. Two items account for almost 50 percent of the average American's budget: housing and the automobile. A Frenchman will not buy and does not really understand American refrigerators (particularly the un-refrigerated compartment for bananas) or automatic washing machines (with one of the special inside racks for the hand laundry). An American does not understand that the Frenchman's only doit-yourself hobby is eating. 8. A Frenchman feels as ill at ease with anything mechanical as an American does with a domestic servant. It is surprising to what degree of suspicion

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and superstition a Frenchman will go to divorce himself as a person from strictly mechanical objects. To illustrate: in reply to a surprised comment from her American boss that she had been somewhat rude to a client on the telephone, an Ordinarily charming French secretary said, 'But, Monsieur, I was not mad at him. I was mad at the telephone.' 9. An American businessman treats his company like a wife: a Frenchman treats each of his companies like a mistress. This is particularly true when a firm decides to set up a new subsidiary with a foreign partner. The American wants 100 per cent exclusivity and control over the long run. The Frenchman wants 100 per cent flexibility and freedom over the short. 10. The word 'immoral' in English refers to what people do; in French it can apply to what companies do. An American is shocked at the public love affair of a well-known businessman, at the fudging of tax returns, at taking back under the table what has been formally promised in an agreement. What shocks a Frenchman? A food firm that produces frozen chickens whose growth has been accelerated by hormone injections. A manufacturer in France who closes down his plant and lays off workers without warning to all concerned, especially the government. 11. When a Frenchman is polite he is very, very polite and when he is rude, he is very, very French. But a Frenchman is rude only in public places — waiting for a taxi, in a restaurant, behind the wheel of a car. He is supremely polite in private places — in a letter, at a dinner, when he's being introduced. The typical Frenchman can make a pre-arranged telephone call to a good acquaintance and apologize three times during the conversation for calling. The same Frenchman could dial a wrong number at three in the morning and swear at the person whom he woke up. The two extremes of politeness give a Frenchman a sense of social equilibrium, and he is sure that it is more important to have discriminating manners rather than democratic ones. 12. To the Frenchman a business career is usually a means to an end. To an American it is often an end in itself. There are three sharp contrasts between a business career in France and the U. S. (a) The so-called 'poly-technician' — one of France's educated elite, the dominating class in French industry and goverment — considers his university career the toughest job he ever had; he'll never work that hard again. The American looks at his college days as the best time he'll ever have; he'd better start to work, (b) The ambitious young Frenchman will go to work for his government so that later in his career he can, to use the French expression, 'parachute' into a well-paying job in French industry. His counterpart in the U. S. will go to work for a large corporation so that later in his career he can afford to work in Washington. (3) A Frenchman's idea of real success in Industry is not to have a brilliant career within his company but make a fortune outside it.

C. U. S. S. R. and Eastern Europe Emerging East-West Ventures: The Transideological Enterprise Howard V. Perlmutter

Consider the following six arrangements between Eastern and Western enterprises: 1. IKEA, a Swedish furniture store chain, supplies to associates in Poland machinery and designs under its technical control for the semi-manufacture of furniture, which is then shipped to Sweden for finishing by IKEA. 2. Italy's Official Meccaniche Gaetana Zocca has set up with Bulgaria's Macheneoxport, the foreign trade organization handling industrial machinery, a 50 — 50 trading company in Switzerland to sell grinding machines world-wide. Zocca will receive unfinished machines from Bulgaria, add parts (about 40 per cent of final value), finish the equipment and then turn the machines over to the trading company. Zocca will service all sales outside the East bloc, the Bulgarian supplier doing the same within the bloc not only for the grinding machines but also for all of Zocca's other products that are sold to bloc countries. 3. The U. S.-based Simmons Machine Tool Corporation has agreed with Czechoslovakia's Skoda to have the latter produce a line of specialized heavy equipment under the Simmons-Skoda trademark. The U. S. firm has exclusive sales rights in the Western Hemisphere, but there are no other territorial limitations for either side. Simmons reports that delivery time is reduced from 14 months to 3 —5 weeks because the Czechs are willing to carry the machines in inventory, a practice contrary to normal free enterprise tenets of doing business at a profit. 4. Krupp of Essen, Germany, and the Csepel machine tool factory of Hungary have jointly developed digitally-controlled short lathes based on German designs and drawings, which are to be exported to Germany and other markets. 5. La Precision Industrielle, a French manufacturer of highly specialized machine tool equipment, signed a full-fledged licensing contract with Hungary's Licencia for the production of hydraulic chucks. The deal consisted of two separate contracts. The first, for sales in Hungary only, contained an option whereby the Hungarians within six months could obtain the rights to sell the tool in other Eastern countries. The option was exercised, and a

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second contract was signed covering the whole of Eastern Europe except Albania and Yugoslavia. 6. France's Pechiney-St Gobain (PSG) has signed an agreement with Progress-Invest of Belgrade. The principal activity of the joint venture is to be the construction and delivery of turn-key plants for fertilizer, fluoride chemicals, organic chemicals and plastics. The plants will be built in France, Yugoslavia and in third world countries.1 How can one reconcile these long-term agreements with present concerns about nuclear balance of terror and East-West ideological incompatibility? Are they a confirmation of the persisting but long-time-perspective claim for the eventual identity of economies, described now as command- or market-oriented? How do builders of world-wide institutions like the multinational enterprises sort out their own role relative to political and military leaders whose primary concern is with national security and defence? In our view, the builders of world-wide business recognize that it is in the interest of all to understand the prospects for increasing economic interdependence between the East and West. They need to examine on what assumptions the world economic and industrial system is being built. The prospects for building truly world-wide or geocentric enterprises become promising only when the firm can function anywhere in the world. It is useful to distinguish four different assumptions that underpin the building of a world-wide industrial system as they are evidenced in the policies and practices of business leaders in the East and West. These assumptions or conceptions have significant consequences for the success of Western entrepreneurs in East-West ventures, and indeed for the whole planet. They are worthy of analysis and articulation and may be identified as: (1) submergence theory, (2) divergence theory, (3) convergence theory and (4) emergence theory.

Only One Side Can Win It is inferred from existing policies and practices that the ultimate aims of either or both the Western bloc (United States and its allies) and the Eastern bloc (the Soviet Union and Eastern Europe) are to submerge the other's political system by military and other means. Coexistence, competitive and peaceful, detentes, temporary and long-term are viewed as screening the basic driving force of the other side: to build a world empire in which the other is a subordinate sub-system. However crude, dangerous and provocative submergence theory may appear, the adherents are not few in East and West. Thus the support for pre-emptive war, psychological, political and economic warfare — including incitement to insurrection in each other's

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territory, are evidences today of the contemporary popularity of submergence theory. Submergence theorists hold that there are really no common interests between East and West. For them, the world is an arena where power must back up ideology and where softness towards the enemy is seen as potentially disastrous. Thus submergists see Capitalism and Communism as engaged in mortal combat. Few compromises are envisaged in this apocalyptic struggle. Khrushchev, who was not known for his submergist theory in action — at least compared with Stalin — expressed the essence of this theory in his famous threat: 'We shall bury you.' An equivalent kind of morality is contained in the conclusion by some Western leaders; 'The only good Communist is a dead Communist.' Stalinism and submergist theory fit together. For submergism of the East feeds on an ideology of revolutionary Marxism, overcoming the evils of capitalistic-bourgeois society through class war and violence. Obviously submergist theorists are not receptive to supporting joint ventures between the East and West or even conducting trade unless this trade has subversive objectives. Two quotes from U. S. businessmen seem based on the belief that the Soviet Union has submergist assumptions. The president of a New Jersey manufacturing company said: 'Trade with Soviet bloc nations will come home to roost as our trade with Japan did in 1941. It is our considered opinion that no trade of any sort — import or export — should be carried on with Soviet bloc countries.' Or another: Ί firmly oppose wheat deals or any other trade with Russia or its satellites. Everything they do has but one ultimate goal — our defeat and subjugation.' 2 Thus submergists see coexistence as a screen for gaining advantages through bringing the other side's guard down; the ultimate resolution must be based on the power and ideology of one side or the other. The NATO community was based on submergence theory or at least the belief that in Western unity there is a deterrence against submergist theories of the East. Reciprocally, monolithic Stalinism was a strategy for Eastern unity based on submergist theory. In game theory terms, submergence theory is based on what is called the zero-sum premises. Between the East and West there can be only one winner. The game is over when the other side 'loses,' e. g., all must come around to the kind of thinking that the winner proposes. Military interventions by the United States and the Soviet Union are seen as evidence for submergence theory. The large expenditure on arms and armies is also consistent with these premises. Under submergist theory, the Eastern European countries can be bound together by the fear of a common 'imperialist enemy' and may be more willing to reduce differences in national

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view and accept Soviet leadership of a united bloc against imperialistic capitalism. The mirror image is found in an Atlantic community, spurred on by U. S. leadership 'keeping its powder dry' and bringing former enemies like France and Germany together to resist the Communist enemy from within and without. The submergence theory premises do not always exist at the forefront of consciousness of leaders in times of relative tranquillity. But they are sleeping leopards to be awakened under slight provocation from without. The military intervention by the Soviet Union in Czechoslovakia probably produced new submergence theorists (although fewer than at the time of the Hungarian revolt). Submergists in the West felt justified again to point out that the spots of the Soviet leopard had not changed and never will.

Power is A l l Thus under the submergist assumption all contact must be evaluated in politico-military terms. Trade is economic warfare, and the ultimate method for gaining world markets is world conquest. Power must back up ideology. Communism is the next Utopia for the East and the scourge of mankind for the West. A Western submergist believes that the Soviet Union means what it states, repeatedly and officially, that its aim is to destroy the liberal free enterprise system throughout the world and to replace it with an authoritarian, Soviet Marxist system. The Soviet Union's coexistence policy is consequently viewed as an attempt to maintain a hostile, not a peaceful, state of coexistence, with the aim of gradual encroachment and final victory. In the West, submergist thinking is more likely to be reactive: 'If the Russians say they want to dominate us, we must be prepared to beat them, to make sure that our "free enterprise" economic system is the winner.' It would appear that to the degree that submergist theory prevails, the prospects for East—West trade are dim and the likelihood of a movement towards developing East—West corporations even dimmer. For the submergist theory flourishes in an atmosphere of mutual suspicion and distrust. Western-based multinational enterprise can only be suspect in the East, as a tool of the home country, a symbol of exploitative capitalism, a purveyor of Trojan horses. Multinational enterprise in our times is unlikely to flourish in a world where political and military leaders of East and West believe that the only way to optimize the use of human and material resources in the world-wide system is to own the system as a whole!

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Never the Twain Divergence theory maintains that the United States and the Soviet Union are in fact further away from each other now than in earlier periods. It is based on the assumption that the continued separation of the Western and Eastern socio-economic systems will produce a hardening of differences, and that, rather than move towards one another, the contrasting ideological premises are more sharply held. The irreconcilability of Eastern and Western ideologies leads to a polarization but with these differences from submergence theory: 1. Divergence theorists do not presume that each system attempts to prevail over the other. 2. East-West relationships do not need to be proselytizing since each recognizes that convincing the other (especially through nuclear war or subversive methods) is either unrealistic, too risky or too costly. 3. In an age of balance of terror, separation of ideological systems is feasible and desirable from a political and an economic view. 4. A world industrial system can be built of two different and isolated socio-political communities. In fact, a world community based on adaptive segregation of East from West is viable and the best compromise, given the discomforting propensity of submergists on both sides for confrontations. To back up the divergent world view, the West builds EEC and the Atlantic Community, the East builds COMECON. Divergence theory is based on the proposition that each side has a genuine horror of nuclear disaster and that each side sees submergence efforts as unrealistic, dangerous and provocative. An era of competitive coexistence is not only compatible with divergence theory, it is indispensable. One needs an enemy not for war but as a common base for comparison. Under these conditions the two systems grow more different. East-West trade should not be constructed as indicating a shift in orientation towards a more international view. It is an opportunity to demonstrate the relative strengths of the socialist and capitalist states but not necessarily how the socialist state will prevail over capitalist countries, or vice-versa. Divergent theorists consider any similarities between the two systems to be of less consequence than the differences. The recent movement towards Libermanism is seen as very far, as Thorelli puts it, from liberalism, because there is no marked tendency in the Soviet Union to: 1. permit or even force unprofitable state enterprises to go out of business; 2. allow manufacturers of similar goods to compete in selling to the same distributive channels and stores; 3. permit pressure from the market to emphasize consumer goods industries at the cost of heavy industry and producer goods;

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4. enact anti-trust legislation; 5. allow stores to integrate backward or allow manufacturers to integrate forward and create their own outlets; 6. permit free labour markets; 7. tolerate such seemingly necessary ingredients of free markets as mass advertising, brands and trademarks. 3 The characteristics of East-West trade of the 'one-shot deal' variety appear compatible with divergent thinking. Distrust and suspicion are not as intense as in submergist thinking, but there is a strong desire to keep each side ideologically pure. Thus coproduction ventures are likely to be frowned upon by divergists as beginning a dangerous trend towards ideological dilution or being soft by submergist standards. The ultimate purpose of divergists is to optimize the resources within a network of ideologically compatible countries. For the East this means within COMECON or the 'Socialist Commonwealth' countries; for the West within the Atlantic Community. Each colludes to build a world industrial system of two large blocs whose interdependence is very small. East is East, West is West, and never the twain shall meet ...

Mutual Discovery In recent times, a recurring theme in East-West relations is based on what might be called convergence theory. Considerable evidence with an admixture of hope has been mustered to demonstrate that communist and free economies show a converging pattern. The arguments begin by citing the changes that have occurred in the communist system since the Russian Revolution. Jan Tinbergen's observations make this clear: 1. 'The belief that "workers" could take care of management functions is decreasing in prevalence. There is recognition that management is a specialized set of activities.' 2. 'Attempts to equalize incomes did not work. Wages are now dependent on productivity.' 3. For some time planning was done in terms of physical quantities and not in terms of money values. Gradually the use of money as a common denominator penetrated into the planning system and the significance of prices and costs was more and more recognized.4 Additional changes in the Soviet system include the introduction of the concept of interest, the increase in emphasis on consumption, the use of mathematical methods associated with capitalists, and changing concepts of international trade to include trade between communist and free economies.

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In the meantime, the so-called free economies have also undergone changes: 1. The public sector is now considerably larger than it was in the nineteenth century — especially in Western Europe. 2. Taxes have been used to redistribute wealth. 3. Free competition has been limited. 4. Education has gradually been made available to an increasing portion of the population. 5. Market forces have been eliminated or modified in some cases as, for example, international commodity agreements. 6. Planning has been given a larger role in industry and government. The key idea of convergists is that industrialism imposes its own rules, which lead to uniformities between economies at similar stages of advancing economic development. Industrialism requires similar political, social and economic institutions, regardless of the ideological base. In the long term, it may contribute to a depoliticization and de-ideologization process. Convergence theory is the most threatening to submergist ideologists; in the Soviet Union, it is counter-revolutionary. Convergence theory implies gradual opening of Soviet society to Western ideas and a more rational evaluation of the Soviets by Western economists: a phase of 'mutual discovery' which must be contrasted with the attitudes of the divergence theorists. Convergence theorists expect that common interests will continue to grow. Convergence will be hastened by the polycentric tendencies in Eastern Europe, which legitimize many routes to communism, from the hard-liners of East Germany to the liberals of Yugoslavia. Because there are many communisms, there should be more similarities than differences between the East and the equally diverse economies of the West. Convergence involves the view that East and West are both on an experimentation course that will evolve into similar if not identical solutions to national economic and industrial problems. The climate for convergence thinkers is on the whole more ambiguous since the reciprocal borrowing process frequently requires a defensive denial by the submergist ideologists that one can learn much from the other. This is particularly true in the East, despite open admiration for U. S. managerial skills. The kind of world economic system being constructed is based on largely separate systems which are nontheless similar to each other, separate systems which are nontheless similar to each other, which learn from each other but will for a long time maintain separate identities. Their underlying similarities are likely, say the convergists, to make them friends, despite the evidence to the contrary between China and the Soviet Union. To the degree that convergence prevails, the entrepreneurial strategies are largely pragmatic arrangements where trade is favoured and communication of knowledge is valued. In a document which caused a major stir in the

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Irene Hau-Siu Chow and Oded Shenkar

The H R Department's Place in China The lack of a separate HR budget in most of the enterprises we surveyed suggests that human resources management is still not highly developed in Chinese organizations. We also found that most HR managers spend less than half of their time working as HR specialists because they have many responsibilities outside HR. However, HR managers in collective units tend to have longer work experience than do their counterparts in state-owned enterprises. The increasing importance of collective firms in the Chinese economy suggests further professionalization of the human resources function.

Do Chinese H R Services Differ? HR departments in the survey provide a wide range of services, from recruitment, selection, and training to wage administration and performance appraisal. They also must stay in touch with the Labor Bureau to measure the quality of employees, and they maintain contacts with other HR managers. Chinese HR managers keep records, promote health and safety, and organize recreational and sport activities as well. They attend political meetings and see to it that employees have proper political attitudes. Larger manufacturing enterprises tend to be better HR providers than are service enterprises, whereas collectives seem to provide better and more comprehensive services than their state-owned counterparts. State-owned units focus on wages, labor relations, benefits, and services; collective units focus on recruitment, selection, and training. Planning. Collective enterprises are more likely to use job descriptions and job analysis conducted by job analysts, plant managers, and immediate supervisors. Human resources planning, on the other hand, is conducted by most organizations. This is a departure from past patterns when planning for the development and deployment of human resources was largely a state responsibility. Most of the organizations studied have undertaken formal manpower forecasting and planning on an annual basis. Staffing. Reforms expected to remedy problems of overstaffing and low productivity by decentralizing recruitment and selection decisions have not been completely successful. The findings show that three enterprises — fully half of the state-owned units — are not involved in staffing decisions. Two of these units are in the service sector, which is lagging behind in reforms. In contrast, both collective units appear to make recruitment and selection decisions. Performance appraisal. Among the organizations surveyed, only the collectives and large state-owned enterprises have formal performance evalu-

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ation systems. Performance appraisals are used mainly for salary determination, promotion, and transfer purposes. Seldom are they used for identifying training needs or determining the amount of bonuses. Collective units make more extensive use of performance appraisal. One such unit includes in its appraisal ethical and ideological qualities, organizational skills, managerial ability, and performance outcomes. Compensation system. Wage administration is conducted by all HR departments in the survey, but most did not consider it to be a major activity. Wages are still largely set by the central government. The post-Mao emphasis on incentives has yet to be translated into actual practices at the enterprise level. A bonus system, for instance, lost its impact once bonuses were distributed to more than 80 % of the employees and became part of their basic wages to compensate for low salaries. Health and safety programs. Safety is a major problem in China, and the organizations we surveyed use a variety of means to increase employee awareness of safety issues. These include bulletin boards, pamphlets, posters, contests, special awards, and regular safety meetings for foremen, supervisors, and middle managers. Safety inspections are conducted by trained experts who dispense formal disciplinary penalties for violating regulations. Five of the eight enterprises in the survey have in-house medical staff, but only one-half of these keep a record of loss through accidents. Heavy industry and collectives are more effective in enforcing health and safety rules. Career planning. Formal career counseling programs are not popular in Chinese enterprises. Although collectives have formal career counseling programs, sessions are held only when necessary. Career planning, however, reflects a departure from nearly exclusive political determinants for promotion used in the past. To be promoted today in China, it helps to be young, well-educated, qualified to serve in the new economic system as an engineer or a manager, and in political harmony with current reforms. Training and development. Following the Cultural Revolution, a tremendous shortage of managers developed in China. To compensate for this, training is now given greater emphasis in Chinese enterprises. Most of the enterprises surveyed offer both on-the-job and off-the-job training, including entry-level orientation as well as training in occupational, professional, and high-level technical skills. Both in-house and outside professionals are in charge of training. Service industry organizations put lower priority on training and development than do their manufacturing counterparts. Employee-management communication. The most popular communication media include staff meetings and bulletin board notices. Regularly published materials such as newsletters, newspapers, messages, and employee handbooks are also used, although the two collectives did not mention any of

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these channels. Six of the eight enterprises, including the two collectives, have a suggestion box on their premises. Suggestions from employees on improvements generally are encouraged. Employee participation. Participation in management decision making in China is less open than Western observers might expect. The number of employees who participate in management decisions is not very high, although the scope of issues includes sales and business plans, production operation decisions, wages and bonuses, employee benefits, housing allocations, transfer of funds, and termination of problem employees.

Modernization Without HR? The results of our survey suggest that the "soft" technologies of human resources management have had substantial difficulties in being introduced to China. As O. Schnepp et al have pointed out in "China Technology Transfer: Problems and Solutions" (unpublished paper, 1987), in contrast to more easily quantifiable technologies such as accounting, finance, production, and management information systems, behavioral-based technologies such as organization development and human resources management have not been readily received in China. China's human resources practices continue to lag behind those of industrialized countries, and our survey suggests that this is particularly true in state-owned enterprises. Despite some economic reforms, HR management in China remains solidly linked to socialist ideology, and progress continues to suffer from a lack of managerial know-how. This situation is complicated by the government's reaction to the student protests in June 1989. Yet, without progress on the HR management front, China's dreams of rapid modernization will remain elusive. Note 1 Our data was collected before the events in Tianmen Square. Although it is very difficult to predict what changes are ahead, it seems likely that the movement toward Western-style HR practices has halted. In this respect, it is especially disconcerting that the current Communist Party leadership has decided to curb the movement toward collective enterprises, which tend to be more innovative than state-owned enterprises.

F. Japan Abacus and Formula Thinking Isaiah Ben Dasan

In Japanese restaurants, parsley is on every plate, but no one ever eats it. Once at a conference between Israeli leaders and some Japanese financial experts, simple sandwiches were served as light refreshment. After everyone had finished the snacks, the Jews noticed that on each of the white plates lined up in front of the Japanese members of the party the parsley garnish remained untouched, whereas some of the Jews had eaten theirs. With typical reference to rule, the puzzled Jews asked the Japanese if they had some law against eating parsley. But of course this could not be true, for in such a case, parsley would not have been served at all. Could it be that coincidentally all of the Japanese belonged to an organization that forbids the consumption of parsley? Perhaps all of the men happened to dislike the vegetable. None of these suppositions, however, is true, although the correct answer is very simple. The Japanese require trimming, or the softening addition of a garnish, which they never attempt to put to more practical use. The garnish effect alone is sufficient. For example, one of the luxury foods in Japan is sashimi, sliced raw fish, which is invariably served with ornamental leaves or other pleasing additions that are later thrown away. Unlike the salads that Westerners design to be both attractive and nutritious, the ornamental dainties served with sashimi are unrelated to food value. It might be argued that since the fish is the important thing the sensible way to serve it would be unadorned. Indeed, from the Jewish standpoint, the presence of detracting elements on the plate prevents the diner from savoring fine foods to the fullest measure. In short, the content, not the accoutrement, is the important thing. The Japanese, however, do not agree; and I believe that one of the reasons they do not read Hebrew literature is that although the content is of the purest gold, the container is clay and ungarnished into the bargain. The Japanese find this bare and unappealing. In theory, if the gold of the content is pure, no handsome serving dish or elegant trimming can increase and no mean vessel can reduce its value as gold. But this is theory, and as I have said, the Japanese generally reject theorizing. In short, they require a garnish element, no matter how excellent the fare. This desire is reflected in aspects of Japanese life other than culinary ones. The young lady who studies English literature at a university is garnishing herself to become a bride. The practical uselessness of what she learns is

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beside the point. Furthermore, it is only natural that she not flaunt her education, since it is fundamentally no more than trimming. As a matter of fact, other Japanese would find her very distasteful should she treat her educational finery as a source of pride. On a wider scale, universities themselves garnish society, since they provide individual human beings with appealing, if not always practical or profitable, ornaments. Perhaps the largest and most interesting group of people whose function is similar to that of trimmings on plates of food is that of the professional critics. I shall deal with them in some detail because their garnish function bridges the gap between the traditional Japanese way of thinking and the Western ideas that the people of Japan have been importing for the past century. Japan has more professional critics than any nation in the world, and the subject matter that they criticize extends over a surprising range. In the West the critic is generally confined to comments on and evaluations of artistic matters: the theater, motion pictures, books, paintings, sculpture, and so on. But in Japan critics on medicine, economics, and other nonartistic fields abound. Even when their readers are not as numerous as in Western countries, Japanese critics exert important influences on national life in all things from chopsticks to fancy automobiles. Oddly enough, most of them are armchair philosophers although I prefer to call them poolsiders. At many swimming pools some persons, seated comfortably in deck chairs beside the water, make informed comments on all the fine points of swimming though they themselves would scream for help from the lifeguard if they so much as fell into the shallow end. These are the poolsiders. In Japan, it is not unusual to find a man whose own business has gone bankrupt serving as economic critic for an important periodical. Having taken the plunge into business and nearly perished, such men have retired to the deck chairs: they have become poolsiders. But far from despising such a man, many Japanese maintain that he probably has very interesting things to say. As a Jew disagreeing with this viewpoint, I sometimes object: "But a man who can't swim also can't tell another person how to swim. And if this is so, only a critic who knows what he is talking about is worth listening to." To this my Japanese friends reply that in a sense I am correct but that critics, whether successes or failures in their lines, deserve to be heard. "Well," I go on in this imaginary colloquy, "if you take the bankrupt economic critic's advice and as a result follow him into bankruptcy, is it his fault?" The reply I can expect to receive is this: "Such things may happen, but when they do, it is the fault of the person who blindly follows the critic's advice. After all, no one makes him heed what the writer says." All of this leads to the conclusion that critics are not responsible for what they say. Because I see a strong connection between freedom and responsibility, to me the lack of one suggests an impairment of the other. On the

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contrary, the Japanese contend that it would be an encroachment on the critic's freedom to hold him responsible for his words. If what he says offends, it ought to be ignored. But he must be allowed to say what he likes. This attitude seems excessively disinterested, but the phrase "Let him say what he likes" recurs with such frequency in Japanese conversations that I am convinced that it signifies much more than its superficial meaning. When the Old Testament says "Hear, Ο Israel," it means that Israel is to hear, understand, and obey. The Japanese sometimes obey what they hear — or read — but because they do not believe in infallible authorities, they always select what to heed and what to disregard on the basis of the exigencies of the situation. Consequently, critics may write sense or nonsense; the Japanese will choose what they need and discard the rest. This attitude makes possible the existence of multitudes of critics in Japan and makes my objections to them seem immature and frivolous. To pursue this point a little further, I might ask this question. If the Japanese can and do select the good from the bad in what critics say, why are so many critics needed? Is it not conceivable that over a period of time, Japanese selection would weed out the worthless, leaving only the astute and valuable? The answer is no, because of the nature of the Japanese critic's role, which I can metaphorically describe in two ways. First, the critic in Japan is like a fashion model. It is sometimes said of these slender ladies that they wear their fine trappings with such ease and grace that they might have been born in them. The fact is, of course, that their shoes, gloves, and gowns have been designed and made by someone else. The models wear them elegantly but lack the ability to produce them. Critics, intellectuals, and men of culture in Japan often resemble fashion models in that they deck their brains in the latest Western ideas and do so with such consummate skill that they seem to have been thinking that way since their births. Again, like models, when the fashion changes, they shed the old and don the new, filling the costume-change interim with various entertainments. In this way they manage to stay on stage all of the time. But their function is display; they have no responsibility for the effects of their philosophical apparel. A woman may buy the fashionable long skirt displayed by a model. But if, while wearing it, the customer trips and breaks her leg, it is not the model's fault. Similarly, the Japanese critic is not to blame if someone blindly follows his borrowed Western ideas to bankruptcy and ruin. Japanese critics, college professors, and others who make public pronouncements probably have at-home wardrobes of ideas too, but the proper way to interpret their fashion-show philosophies — and every Japanese of sense knows this — is to accept the acceptable and reject the rest. In short, this is the meaning of "Let him say what he likes." The second metaphor that illuminates the part the critic plays in Japan is that of the garnish. As I have said, Hebrew literature is too unadorned

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to be readily welcomed by the Japanese. The same thing may be said for many of the Western ideas the Japanese have adopted, but it has been the critic who has acted as the garnishing element converting bare ideas into palatable commodities. In order to explain how he achieved this, I must first explain why such a role is necessary in the light of the disparate Western and Japanese approaches toward what I shall call subconscious education. Children willy-nilly learn certain attitudes and philosophies from their parents by absorption. No matter how much they may rebel against parental authority, their very rebellion constitutes a kind of parent-inspired education in that it at least signifies awareness of the things the parents stand for. It is unfair to ask a people to explain the workings of their subconscious education, because they are by and large unaware of them. My experience, however, allows me to know how different subconscious education is in the cases of the Japanese and the Jews. My parents were stubborn orthodox Jews, but I was born in Japan. All of our neighbors were Japanese, and I went to a Japanese primary school. For these reasons, I knew what kinds of things young Japanese learned, though in my own home, where I was the only person who spoke Japanese, I learned quite different things. If individual children inevitably fall under the formative influence of their immediate environment, a whole nation too can be molded in many respects by the cumulative national experience. In the case of the Japanese, two important parts of traditional subconscious education have had far-reaching effects on the way of thinking of the whole people. One of those has to do with training in numbers and the other with lack of training in words. In the West, the adding machine came into being after long centuries in which calculations were done on paper. In Japan, however, the abacus was widely used to perform such operations long before the importation of Arabic numerals and written mathematics of which they are the basis. So widely used is the abacus even today that department store clerks and many other people whose work involves a certain amount of figuring consider it an essential tool of their trades. Foreign visitors to Japanese stores are usually startled by the speed and accuracy with which salesgirls add up sums on their abacuses. Though of course today Arabic numerals and mathematics are important aspects of all formal education, the tradition of the abacus persists in the national experience as a vital part of subconscious education. And as such, it has played a role in conditioning the Japanese way of thinking. A mathematician working with written numbers must concentrate his whole mind. He must be careful and persevering in his work. His mind must be filled with what he is doing and must never wander. A Japanese working with the abacus must adopt the opposite approach. Instead of thinking consciously, he must rid his mind of awareness of the problem and, becoming almost absent-minded, allow his fingers to fly over the beads

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until the correct answer emerges. And the Japanese think of the answer precisely as emerging of itself instead of being the outcome of a conscious process of calculation. An archer must allow the arrow some life of its own; if he aims too deliberately, he spoils his shot. A ballet dancer forgets everything during a performance and, riding on the music, simply dances. These psychological states and that of the Japanese working with the abacus resemble the thought-less condition that is the core of the teaching of Zen Buddhism. I have a friend who is so expert with the abacus that he does not require the physical presence of the device itself to do highly complicated calculations. It is true that he must consciously conjure up his mental abacus; but once he has done so, he proceeds to calculate with it the virtually absentminded state required. His special feat of mental calculation is difficult and rare, but the surprising thing to the Westerner is probably not so much his unusual talent as the very idea of calculations made thoughtlessly. Nevertheless, answers of the greatest accuracy emerge from the abacus. If verification of a sum is necessary, it cannot be done by checking back figure by figure, since there is nothing written to check. Instead one must either redo the sum oneself or have another person do it. If the answers agree, they are correct. All Japanese children are trained in numbers, at any rate in the use of the abacus. Oddly enough, however, no Japanese children are subjected to similar training in the employment of words. When a mother tells her child to say something correctly, she is referring not to grammar, but to the intricate levels of courtesy involved in speaking Japanese. Once a young Japanese girl remarked to me in a tone of surprise that Latin, which she was studying at the time, reminded her more of mathematics than of language. In order to understand her feeling, it is imperative to realize that the Japanese language is totally unrelated to such inflected languages as those of the Indo-European group. Instead of consciously selecting from a wide range of possibilities to express a fixed grammatical number, case, or tense, the Japanese add words in what is called an agglutinative process. Of course, there are rules to follow in Japanese, but in comparison with the elaborate, almost mathematical formula-style grammars of languages like classical Latin or modern Russian, these rules play a less important part. What does count for a great deal, however, is the way things are said; that is, the attitude of the speaker, his intonation, and his regard for matters of courtesy. When a mother corrects her child's language in Japan these are the things she has in mind. In other words, speaking in broad general terms, I might say that the Indo-European languages strive to express content with clarity as a result of adherence to prescribed grammatical rules. Japanese, on the other hand, prefers to concentrate on form. I might illustrate my meaning by referring to one of the dialogues of Plato. The dialogue as a literary form is conspicuously absent in Japanese

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letters. The late novelist Yukio Mishima once commented on this and remarked that even were the Japanese to attempt literature in the dialogue style, it would necessarily be limited to satire. In the Crito, Socrates, on the eve of his death, advocates obedience to the law and refutes Crito, who hopes to convince Socrates to flee from prison. At the opening of the dialogue Socrates is reclining, as is only natural, since it is night. Nowhere does Plato say that Socrates arose, adjusted himself in a dignified manner, and proceeded to discourse in an attitude suitable to the gravity of his words. It is the clear reasoning of what he says, not how he says it, that matters; and in all likelihood he remained in a reclining position until the conclusion of the discussion. But Japanese language training is based on the idea that attitude, deportment, and above all accurate selection of the courteous forms suited to the occasion are of the utmost importance. For a person of consequence to deliver a significant talk in a careless, let alone reclining, posture would violate decorum and, from the Japanese viewpoint, be as serious a fault as ungrammatical language. A learned discourse delivered by a conservative college professor or the firebrand arguments of radical students shouted over loudspeakers in front of train stations employ the same level of courteous language thought appropriate for a speaker addressing a group of people. In short, the form remains constant, though the content may vary dramatically. In addition to the difference in emphasis on content and form, the nature of words themselves in the West and in Japan are very different. In languages like Hebrew, French, Greek, or Russian, words are invariably bound to some concrete meaning. I think of the individual word in these languages as a cone with a secure base of definite meaning and an abstract or associative pinnacle. No matter how abstract the Western speaker may wish to be, he cannot divest the individual word of its concrete content. The Japanese, on the other hand, can do exactly that, with the result that their words sometimes resemble spheres devoid of concrete meaning. The nature of their words enables them to do a number of amazing feats of abstract writing and speaking almost totally devoid of real content or laden with bewildering abstract contradictions. This is especially notable in translations and commentaries on the Bible. Japanese specialists in these matters often say things like: "The virgin birth and the Resurrection cannot be called true, but it is a fact that they are a kind of truth." In translation such a statement is ludicrous, whereas when spoken in Japanese it seems to make a sense of its own. To this point I have said that the Japanese always prefer things garnished instead of served unornamented, no matter how excellent the thing itself. I have also shown that, instead of being a mathematically precise language oriented toward the attainment of clarity of expression, Japanese tends to abstraction and to an emphasis on correctness of form in place of lucidity.

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Before leaving the nature of the Japanese language, however, I must hasten to correct the impression that it is a tool of such fuzziness and inconvenience as to be useless in conveying ordinary information. This patently is not the case, for if the language were that impractical, Japanese society could not have reached its present level of sophistication. On the contrary, the Japanese language suits the needs of the Japanese people to perfection because it requires the same abacus-style thinking that I have discussed in connection with mathematics. Their words, as round as the beads of an abacus, require unconscious, untrammeled manipulation. Just as an abacus operator who thinks too much about what he does virtually paralyzes his fingers and makes his work impossible, so the manipulator of the Japanese language cannot afford to get bogged down in the grammatical niceties on which inflected languages depend for meaning. In metaphorical terms, the mental abacus of my talented friend represents the Japanese way of thinking. In both the West and in Japan, words are the raw material of thought. The Westerner martials his store of words in grammatical patterns similar in some respects to algebraic formulas. The structure of his language and centuries of training in logic-oriented thought have made it imperative for him to do so. But the Japanese uses a verbal abacus over which his mind dances, like the fingers of the person working with the real abacus. His words are perfectly adapted to this kind of thinking because they are round, ball-like objects that roll about in disorder if one attempts to arrange them in Western formula-style patterns. After the Meiji Restoration, the Japanese imported Western ideas in massive doses, and the influx has not ceased yet. But if Japanese words do not lend themselves to the expression of these ideas, some kind of interpreter becomes essential. This brings me back to the poolsider, the critic, and the commentator. I have said that they are fashion models parading in borrowed finery, but they are also the garnish that makes unpalatable lumps of ideas more appealing. And most important, they are the people whose duty it is to arrange Western formula thoughts in a way that is comprehensible to abacus-style thinkers. For such a role, originality is unessential. The bankrupt economics expert can present borrowed ideas in an abacus-style conversion that makes sense to his readers. The skillful abacus operator works unconsciously; he is unable to explain the process by means of which he arrives at his answers. Similarly, though incapable of saying how he does it, a person with a certain knowledge of Western thoughts can convert them into abacus thinking and perform the reverse process, as well. Such a person is not a Western formula-style thinker any more than a Westerner who lived in Japan for a only few years would ever become truly proficient in the abacus. Both are part of the unconscious educational patterns of two different worlds of thought. In order for a person from one world to master the patterns of the other, he would have to begin his education, both

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conscious and — if it were possible — unconscious, all over again. People who do no more than interpret the rules of one system in terms of the other, however, fulfill a valuable function: they can give the abacus experts hints that might detonate totally novel ways of using this calculating device. This is the most important task of the poolsider, and it does not matter that his work — like the garnish on a plate of sashimi — may be destined for the trashcan. In Japan today, the old abacus educational system has given ground to the new formula one. The most successful modern Japanese are the ones who, having thoroughly mastered the abacus way of doing things, can verify its results by means of the formula-style process of deliberate and conscious thought. Such people are not numerous. At the other end of the scale are the failures who master neither system. Often these are the people who have traveled abroad to study and while there have lost their own national personalities without acquiring new ones of any significance. I know a university teacher who falls into this category. Since he is skillful at a foreign language, he interprets for politicians and men of business affairs. Once he said to me that anyone who interprets and thus meets intelligent people from other countries loses sympathy with the weakheadedness of Japanese businessmen. While in middle school, I read of a man who visited a foreign country where he learned a new way of walking. So well did he learn that when he returned to his homeland he found that he had forgotten his own native stride. Unable to use his newly acquired gait and no longer capable of walking as his countrymen did, he was compelled to crawl. My interpreterteacher is in this predicament. He has abandoned his own intellectual background for a foreign education and is now an intellectual cripple in his own land. Fortunately his position in the world is neither influential nor responsible, and the damage he can do is slight. There have been instances in the past, however, when people of authority and power have shared his ailment, with disastrous results for their subordinates and superiors alike. Oddly enough, among cases that I know, the people causing the trouble generally managed to come out either unscathed or in improved circumstances. The long and short of the matter, however, is that no one — not a Jew, nor a Japanese, nor a European Christian — can consciously cancel the subconscious part of his education. For this reason, most Japanese will go on following neither the pure abacus-style nor the unadulterated formulastyle of thinking. Instead they will use the latter to verify the former and thus make new discoveries that will ultimately find expression in society. The side by side operation of these fundamentally irreconcilable ways of thinking has already taken a toll in victims. Some of the sacrifices have been people who simply fell by the wayside, unable to do anything because of the confusion born of the conflict between the two patterns. Others have

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suffered because o f a similar inability on the part o f people in authority. Nonetheless, in the light o f conditions as they exist now, it seems that the Japanese will not alter their position o f balance between an old deeply rooted tradition and a new philosophy requiring semantic conversion for the sake o f comprehensibility. M y friend w h o can operate the abacus mentally would deride any attempts to convince him that his imaginary calculating device does not exist. Perhaps it is intangible, but it has a very real existence. Moreover, it can give accurate answers to problems, in that w a y can influence all aspects o f daily life, and finally can be the source from which judgments evolve. O f course, I am talking about the abacus as a symbol o f the entire Japanese w a y o f thinking as it manifests itself in pragmatism, conformity to the exigencies o f the moment, and preference for forms with highly varying contents. Indeed in this sense the abacus does exist. In a very similar way, the Jew would refuse to countenance attempts to prove that because the physical existence o f G o d and the L a w cannot be demonstrated they are mere fictions. F o r the Jews, G o d is the abacus producing answers in the f o r m o f the L a w , which is immutable and definitive. M y abacus specialist feels no need to announce that he believes in an invisible calculating device whose answering powers he knows. Unlike the Christians, the Jews d o not need to assert their belief in an invisible G o d . The abacus principle, like that o f humanity, is shared by all Japanese to the extent that they are often unaware of it. Consequently they have never been called on to suffer for holding this belief. T h e Jewish experience, in this as in m a n y other phases o f life and history, is different. The Christians, like fakes in the presence o f the true thing, have screamed loud and long that they believe in G o d . Yet they have demonstrated the weakness of their faith by persecuting the Jews, whose faith is too strong to need proclamation. The concept behind the abacus principle for every Japanese is humanity. This is not a physical flesh-and-blood humanity, but a guiding idea, intangible yet very real, as are G o d and the L a w f r o m the standpoint of the Jews. Interestingly enough this kind o f humanity does not exist for the Westerner, just as the Western and Hebraic concepts o f G o d d o not exist for the Japanese. Furthermore, Westerners can no more comprehend a world based on this concept o f humanity than they can grasp the abacus w a y o f thinking. B o o k s h o p s in T o k y o are lined with volumes containing Japanese writers' impressions o f A m e r i c a and of various European countries. Each work claims to be an accurate record o f the facts o f life about another country, because the writers, holding to the naive belief that objectivity is in the mind o f the observer, ignore distortions that arise f r o m u n c o m m o n backgrounds and divergent cultural training. This belief is nonsense, especially when one is comparing Western nations with Japan.

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For instance, cash registers are sold in both America and Japan, but the reasons salesmen put forth to persuade prospective customers to buy are entirely different. Deeply convinced that humanity is sinful, Americans consider it evil to put temptation in a man's way. Therefore, an American salesman would expect to sell more cash registers by saying that his product is guaranteed to keep the clerks in a shop honest by making it impossible for them to filch from the till. If a Japanese salesman were to adopt such a line he would probably be out of a job within a week. A shopkeeper once explained to me that all human beings make mistakes — unintentionally — and that the cash register is a convenient way to prevent suspicion of error and a consequent lowering of morale in a shop. (As I have pointed out elsewhere, Japanese are pragmatic but they always strive to preserve harmony in human relations.) The fact of the need for a cash register is the same, but the interpretations of the need reflect quite dissimilar approaches to life. Unfortunately, many Japanese writing about foreign nations do so in the conviction that close contact breeds mutual understanding in spite of cultural differences. According to this point of view, the world is growing smaller in the age of the jumbo jet and supersonic transport; soon everyone will have come to know each other and will work side by side in harmony. In short, to know is to remove barriers to incomprehension. But I believe this is fallacious, and in closing this book I feel impelled to warn the Japanese that their optimism in this respect is dangerous. For thousands of years the Jews have lived in contact with the gentile populations of the world, and we all know how much mutual understanding that proximity has brought about.

Does Japanese Management Style Have a Message for American Managers? Edgar H. Schein

A commentary on Ouchi, William, Theory Z: How American Business Can Meet the Japanese Challenge, Reading, MA: Addison-Wesley; and on Pascale, Richard T. and Anthony G. Athos, The Art of Japanese Management Applications for American Executives, New York: Simon and Schuster.

One of the greatest strengths of U. S. society is our flexibility, our ability to learn. When we see a problem, we tinker with it until we have it solved, and we seem to be willing to try anything and everything. One of our greatest weaknesses, on the other hand, is our impatience and short-run orientation. This leads to fads, a preoccupation with instant solutions, a blind faith that if we put in enough effort and money anything is possible, and an inability or unwillingness to see the long-range consequences of some of the quick fixes which we try. Complicated solutions which require long-range planning, resolute implementation, and patience in the face of short-run difficulties are harder for us to implement. 1 The tension between flexibility and faddism can be seen clearly in the current preoccupation with Japanese management. Two recent books, Ouchi's Theory Ζ and Pascale and Athos's The Art of Japanese Management, are currently on the New York Times best sellers list. Why this sudden interest and what are the implications for management theory? I would like to examine some of the theses of these two books and to put those theses into a historical perspective. From this perspective I will draw some tentative conclusions about cultural themes in the U. S. and the implications for U. S. management. Some Historical Perspective: Indoctrination In 19611 published an article called "Management Development as a Process of Influence" which attempted to show that many of the socialization methods used by some of our largest corporations (such as IBM and General Electric) were essentially similar to processes of indoctrination which one could observe in many other settings. 2 Such socialization methods were under strong attack by W. H. Whyte (in The Organization Man) and others who saw in them a tendency to create "men in grey flannel suits" who would cease to think for themselves and just parrot the corporate line, thus reducing the innovative and creative capacity of the organization and the

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individuality of the employee.3 Ironically, the companies which had built such indoctrination centers (such as IBM at Sands Point, Ν. Y. and General Electric at Crotonville, Ν. Y.) were very proud of the spirit and common way of thinking which they could induce in their employees and managers. Such spirit was viewed as one of the key sources of strength of these enterprises. But the pendulum swung hard during the 1960s, and it became the fashion to move away from producing conformity toward stimulating self-actualization. 4 "Indoctrination" either moved underground, was relabeled, or was replaced by "development" programs which emphasized opportunities for the integration of individual goals with organizational goals. Models of development shifted from the engineering model of "molding or shaping people to fit the organization" to more agricultural models of permitting people to flourish according to their innate potential; the obligation of the organization was to provide sunshine, nutrients, water, and other environmental supports. (Little is said in this model about pruning, transplanting, and uprooting, by the way.) The IBM songbook was put away, and managers who used to be proud of their ability to motivate people by inspiring them through common rituals and activities were made to feel ashamed of using "manipulative" tactics. In the 1970s we discovered the concept of "organizational culture" and have begun to rethink the issue once again. 5 Even if a company does not deliberately and consciously indoctrinate its new employees, its important beliefs, values, and ways of doing things will, in any case, powerfully socialize anyone who remains in the organization and wishes to move upward and inward in it.6 Such socialization processes and their effects in producing either conformity or innovation have been described and analyzed, and the tactics which stimulate innovation have received special attention. 7 Now, with the "discovery" that some Japanese companies are effective because of their ability to involve and motivate people, and the assertion that such involvement results from socialization tactics which induce a high degree of loyalty and conformity, we may be headed back toward the ideology of indoctrination which we so forcefully put aside a mere twenty years ago. Human Relations and Participation A similar pendulum swing can be identified with respect to two other human relations values: whether or not one should treat people wholistically and whether or not one should make decisions from the bottom up by participation and consensus mechanisms. Many Americans have grown up with a tradition of bureaucracy, of strong bosses, of hiring people as "hands" to provide certain activities in return for certain pay and benefits. But most

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students of industrial relations systems note that there has been a historical trend in such systems from a period of autocracy through a period of paternalism toward the present more consultative and participative models.8 In the paternalistic phase American companies have treated employees very wholistically: building company towns; funding company sports activities; providing country clubs, counseling services, day care centers, medical facilities, uniforms, and so on. Indeed, one of Ralph Nader's most powerful films deals with the town of Kannapolis, N. C., where the Cannon Mills Co. not only provides lifetime employment but owns all of the housing, uses its own security force as the town police force, and provides all the services needed by the town. What alarmed Nader was the possibility that the citizens of this town were not developing any skills in self-government, which would leave them very vulnerable if the company should move or cease to be so totally paternalistic. We may also recall that one of the major results of the now historic studies of the Hawthorne plant of the Western Electric Company was the recognition that employees were whole people who brought their personal problems with them to their place of work. In the 1930s the company launched a counseling program which involved company-employed counselors to help employees deal with any personal problems on a totally confidential basis.9 Though it has been a tradition in our military services not to fraternize with the men (presumably because it might be difficult to be objective when individuals must be sent into dangerous situations), there is not such tradition in industry generally. Office parties, company picnics, and other forms of fraternization have been considered legitimate and desirable in many organizations and by many managers, though they are clearly not as institutionalized in the U. S. as they are in Latin America and Japan. The human relations training programs for foremen which were rampant in the 1940s were clearly aimed at teaching managers to treat their employees as whole people, to consider their needs, to fight for them when necessary, and to build strong loyalty and team spirit. The leadership and sensitivity training which flourished in the 1960s was similarly aimed at truly understanding the needs and talents of subordinates, peers, and bosses, so that appropriate levels of participation could be used in solving increasingly complex problems in organizations.10 The writings of McGregor on Theory Y showed the importance of trust and faith in people; the writings of Argyris showed the necessity of permitting people in organizations to function as adults instead of reducing them to dependent children.11 Likert argued cogently for System 4, a more participative form of organization in which consensus management plays a big role; and Maslow first introduced the idea of Theory Z, a self-actualizing organization. 12 Many managers saw the point immediately, and either felt reinforcement for what they were already doing or began to retrain themselves and their

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organization toward some o f the new values and technologies o f participative decision making. But as a total ideology this approach clearly has not taken hold. M a n y organizations discovered: — T h a t high morale did not necessarily correlate with high productivity; — T h a t autocratic systems could outproduce democratic systems (at least in the short run); — T h a t high productivity even when achieved by autocratic methods could build high morale; — T h a t the costs in terms o f time and effort which participation entailed were often not affordable in certain kinds o f environments. H u m a n Relations and Japanese Style N o w the pendulum appears to be swinging once again on the issue o f paternalism, managing the whole worker, and creating worker involvement through participation. We are told that the Japanese are extremely paternalistic and wholistic in their approach to employees, that they tend to employ people for life, and that supervisors take care o f the personal as well as the w o r k needs o f subordinates (sometimes even helping an employee find a wife). The Japanese use bottom-up consensual decision making and encourage high levels o f trust across hierarchical and functional boundaries.

Theory Ζ Ouchi has for some time been arguing that the essential differences between American (Theory A ) and Japanese (Theory J) management systems lie in some key structural issues and cultural values which make it possible for certain kinds o f management styles to flourish. Specifically, he points out that m a j o r Japanese companies: — E m p l o y their key people for "life" (i. e. until forced retirement at the age o f fifty-five to sixty); — Rotate them through various functions; — Promote them very slowly and according to more o f a seniority than merit system; — Place responsibility on groups rather than on individuals (a value o f the Japanese culture). These determinants make it possible for Japanese companies: — To treat their employees as total people; — T o build the kind o f trust that facilitates bottom-up consensual decision making; and

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— To control employees in a subtle, indirect manner. In contrast, Ouchi points out, the bureaucratic model often associated with pure American management methods emphasizes: — Employment contracts which last only as long as the individual is contributing; — Specialization of function with rotation reserved only for people on a general manager track; — Little concern for the total person; — Rapid feedback and promotion; — Explicit formal control systems; — Individual responsibility (a strong cultural value in the U. S.); — Individual top-down decision making. The crucial insight which Ouchi provides is to identify another model, which he calls Theory Z, which is found in many American companies, which fits into our culture, and which combines certain features of the A and J models. Such companies have: — — — — — — —

Liftetime employment; Slower rates of promotion; Somewhat more implicit, less formal control systems; More concern for the total person; More cross-functional rotation and emphasis on becoming a generalist; Some level of participation and consensual decision making; A continued emphasis on individual responsibility as a core value.

Though he does not give much evidence in his book, Ouchi has shown in other papers that a U. S. company which approximates the Theory Ζ criteria generated higher morale, higher loyalty, and generally more healthy, positive feelings at all levels of the hierarchy than did a comparable Theory A company. What is missing, however, is convincing evidence that those companies which fit the Theory Ζ model are more effective than comparable companies which operate more on the Theory A bureaucratic model. Furthermore, Ouchi acknowledges, that the Theory Ζ companies he has studied generate less professionalism, have a harder time integrating mavericks into their ranks because they generate strong conformity pressures (leading them to be sexist and racist), and may only be adaptive for certain kinds of technological or economic environments. In fact, the only way a Theory Ζ company can manage the instabilities which are inherent in running a successful business in a turbulent environment is to limit lifetime employment to a small cadre of key people and to keep a large percentage of the labor force in a temporary role which resembles more closely the bureaucratic A model. In order to survive, it may be necessary for Theory Ζ

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companies to subcontract much of their work or to rely on a set of satellite companies to absorb the instabilities. (The latter is the typical Japanese pattern.) Implications of Theory Ζ After describing how this notion of an industrial "clan" can facilitate certain kinds of long-range involvement on the part of employees, Ouchi argues strongly that U. S. companies should think seriously about becoming more like clans, and lays out a program of how to do it. Neither the argument that a company, should be more like Z, nor the proposed steps for how to get there are at all convincing, however. The theoretical sophistication which is displayed in the analysis of types of organizational control is followed by naive and superficial prescriptions about how one might think about a change program designed to help a company to become more like a clan (if, indeed, this is even possible). In effect, the manager is invited to be more open and trusting and to involve his or her people more. Little attention is given to the issue of why a given organization would be less trusting and participative in the first place, and to the problem of taking managerial values from a culture in which they fit very well to one in which the fit is not at all clear. But Ouchi makes a strong sales pitch, and it is here that our tendency to embrace the quick fix may get us into trouble. If someone tells us that Theory Ζ is closer to the Japanese model, and that the Japanese are getting a lot of mileage out of their model, do we all get on the bandwagon and give our employees tenure, push decision making down the hierarchy, and slow down promotions? Do we turn everyone into a generalist, throw out formal control systems, and treat each person as a total human being? If we do, will our productivity shoot right back up so that we can regain our once dominant economic position? Sounds too simplistic, does it not? Unfortunately that is just what it is, because it takes into account neither the uniqueness of Japanese culture nor the uniqueness of U. S. culture, nor the technological and environmental conditions which ultimately will dictate whether an A, a Z, or some other form will be the most effective in a given situation. What the Ouchi book leaves out, unfortunately, are criteria which might help a manager to decide whether or not a Z, an A, or some other form is appropriate. On the positive side, the analysis focuses on the importance of the human factor, and Ouchi's seven criterion categories are certainly an important grid for assessing the options for managing people. The identification of the clan mechanism as a way of organizing and controlling people brings us back to what many companies know intuitively — "we are one big family in this organization" — and legitimizes the kind of indoctrination which

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used to be more common. We can see more clearly that between autocracy and democracy there lies a full range of choices, and that a high degree of paternalism in not necessarily incompatible with bottom-up consensual, participative decision making. The manager can also see that the way people feel about an organization can be explicitly managed even if the relationship to long-range effectiveness is not completely clear. As Etzioni noted long ago, a person can be involved in an organization in a variety of ways, ranging from the "alienated prisoner" or calculative employee to the participating member who is fully and morally involved.13 Two serious questions to consider are whether U. S. economic organizations can claim moral involvement (as some Japanese firms apparently do) and whether such levels of involvement are even desirable in our culture. The Ouchi analysis closes with a useful reminder that what ties the Japanese company together is a company philosophy, some dominant values which serve as criteria for decisions. What permits bottom-up consensual decision making to occur is the wide sharing of a common philosophy which guarantees a similarity of outlook with respect to the basic goals of the organization. Ouchi provides some case examples and displays a method by which a company can determine its own philosophy.

Integrating the Seven S's Pascale and Athos make their argument at a different level of analysis, though they also stress the importance of managing people as key resources and the importance of superordinate goals, sense of spirit, or company philosophy. Ouchi is more the social scientist, presenting a theoretically grounded sociological argument for a structural approach to human resource management. Pascale and Athos are less theoretical and more didactic. They are the teachers/consultants, distilling some of the wisdom from the analysis of the Japanese experience, and they try to transmit that wisdom through a more down-to-earth writing style. The managerial reader will learn more from this book, while the social scientist will learn more from the Ouchi book. As already indicated, Ouchi has seven basic criteria for distinguishing A from J. Pascale and Athos (with due apologies for the gimmicky quality of the scheme) draw on a formulation developed by the McKinsey Co. which includes the following seven basic variables: 1. 2. 3. 4.

Superordinate goals, Strategy, Structure, Systems,

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5. Staff (the concern for having the right sort of people to do the work), 6. Skills (training and developing people to do what is needed), and 7. Style (the manner in which management handles subordinates, peers, and superiors). Within this structure, Pascale and Athos identify what they term the "soft S's" and the "hard S's." and explain that the superordinate goals are critical in tying everything together. They argue that Japanese companies are effective because of their attention to such integration and their concern for those variables which have to do with the human factor, the soft S's. These are the factors which American managers allegedly pay too little attention to: staff, skills, and, most importantly, style. The hard S's (which complete the Seven S model) are: strategy, structure, and systems. Through a detailed comparison of the Matsushita Corp, and ITT under Geneen, the authors bring out the essential contrast between Japanese attention to the soft S's and Geneen's more "American" preoccupation with very tight controls, autocratic decision making, and concern for the bottom line. Yet the Geneen story also illustrates that a system which is as internally consistent as ITT's was, can be very effective. Its weakness lay in its inability to survive without the personal genius of a Geneen to run it. The Japanese Style Following this dramatic contrast, Pascale and Athos analyze the Japanese management style and explain how a culture which values "face" and is collective in its orientation can breed managerial behavior which makes the most of ambiguity, indirection, subtle cues, trust, interdependence, uncertainty, implicit messages, and management of process (instead of attempting to develop complete openness, explicitness, and directness in order to minimize ambiguity and uncertainty). "Explicit communication is a cultural assumption; it is not a linguistic imperative," they remind us.14 The lesson for American managers here is diametrically opposite in the two books. Ouchi's proposal for how to get to Theory Ζ is to be more open; Pascale and Athos imply (from their positive case examples of U. S. managers who use indirection, implicit messages, and non-decision as strategies) that we might do well to learn more of the arts of how to be less open. Though we in the U. S. often imply that to worry about "face" is a weakness and that it is better to "put all the cards on the table," in fact, there is ample evidence that Americans no less than Japanese respond better to helpful facesaving hints than to sledgehammers. "When feedback is really clear and bad, it's usually too late." 15 "The inherent preferences of organizations are clarity, certainty, and perfection. The inherent nature of human relationships involves ambiguity, uncertainty, and imperfection. How one

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honors, balances, and integrates the needs of both is the real trick of management." 16 The analysis of face-to-face communication, drawn from an article by Pascale called "Zen and the Art of Management," is full of valuable insights on the subtleties of how and why indirection, tact, and concern for face are not merely niceties but necessities in human relations. It is crucial to recognize, of course, the distinction between task relevant information (about which one would be as open as possible in a problem-solving situation) and interpersonal evaluative information (about which it may be impossible to be completely open without running the risk of permanently damaging relationships).17 Sensitivity training in which people attempted to tell each other what they thought of each other only worked in so-called "stranger groups," where people did not know each other before and knew that they would not have to work or live with each other after the program. 18 Interdependence Pascale and Athos supplement their analysis of face-to-face relations with an excellent analysis of groups and the dilemmas of interdependence. Noting that the American tradition is one of independence and that the Japanese tradition (based on their limited space and the technology of rice farming) is one of interdependence, they show how groups and meetings can work in this context by members being more restrained, self-effacing, and trusting. As Ouchi points out, getting credit in the long-run, instead of worrying (as Americans often do) about being recognized immediately for any and all accomplishments, is made possible by the knowledge of lifetime employment, i. e. if people have to work with each other for a long time, true contribution will ultimately be recognized. Both books indicate that such group relationships combined with lack of specialization of careers give the Japanese company the ability to integrate better across key functional interfaces, because everyone has more empathy and understanding for other functions. Superior-Subordinate Relationships Long-term relationships and a culture in which everyone knows his or her place in the status hierarchy lead to a different concept of superior-subordinate relationships in Japan. The boss is automatically more of a mentor, teaching through subtle cues rather than blunt feedback, exercising great patience while the subordinate learns how to interpret cues and to develop his or her own skills, and reinforcing the basic company philosophy as a conceptual source that helps subordinates to decide what to do in any given situation. This point is critical, because it highlights one of the most important functions of superordinate goals or organizational philosophy. If everyone understands what the organization is trying to do and what its

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values are for how to do things, then every employee who truly understands the philosophy can figure out what his or her course of action should be in an ambiguous situation. No directives or explicit control systems are needed because the controls are internalized. Individualism and Authority Pascale and Athos take the issues of power and authority into the cultural realm in a more subtle fashion than does Ouchi, who merely labels J companies as having collective responsibility and A and Ζ companies as having individual responsibility. But we must ask what individual or collective responsibility means in each culture. Can we assume that the American model of individual rights, independence, equal opportunity under the law, and related values and norms is in any sense the opposite of or even on the same dimension with the Japanese notion of group responsibility? Is the issue simply that the group would be sacrificed for the individual in the U. S., while the individual would be sacrificed for the group in Japan? A more appropriate formulation is to assume that in every culture and in every individual there is a core conflict about the self-seeking or selfeffacing to be for the sake of one's group or organization. At the extremes where either nationalism or anarchy is involved, the conflict is easier to reduce but in a pluralistic society (such as in the U. S.) it is a genuine dilemma. (This is exemplified in U. S. sports organizations which try to create a team while maximizing the individual talents of the players.) In a recent analysis of individualism, Waterman has indicated that in political and social science writings there have always been two versions of individualism: one which focuses on selfishness and takes advantage of the group and one which focuses on self-actualization in the interest of maximizing for both the individual and the group the talents latent in the members.19 Those writers who argue for a humanistic solution to organizational problems are espousing the second definition which assumes that integration is possible. In my experience the effective organization is neither individualistic nor collective; rather, it attempts to create norms and procedures which extol stardom and teamwork equally. The manager's job (just like the good coach's) is to find a way to weld the two forces together. The Japanese solution to this dilemma appears to be aided immensely by the fact that basic traditions and cultural values strongly favor hierarchy and the subordination of the individual to those above him or her. However, this solution has potentially negative consequences, because it reduces the creative talent available to the organization. One might suspect, however, that the effective organization in Japan finds ways of dealing with this dilemma, and that the highly talented individual is not as pressured to conform as the less talented individual.20

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The Japanese company in the Ouchi model could be expected to be more innovative on those tasks which require group solutions, while the American company could be expected to be more innovative on those tasks that require a high level of individual expertise and creativity. Company effectiveness would then depend on the nature of the tasks which face it, its ability to diagnose accurately what those tasks are, and its flexibility in transforming itself, what I have termed an "adaptive coping cycle."21 Whatever its human virtues and in spite of its ability to integrate better, a Theory Ζ organization might have more trouble both in seeing changes in its environment and in making the necessary transformations to adapt to those changes. Because of its strong commitment to a given philosophy and the pressure for everyone to conform, it is more likely to produce rigid paradigms for dealing with problems. Implications for U. S. Management Both books call for a re-examination of U. S. paradigms of how to organize and how to manage. While one can only applaud this challenge and use the models which the books present to gain perspective for such re-examination, one must be concerned about the glibness of the lessons, recommendations, and advice given the meager data base on which they are based. Neither book makes much of an effort to decipher what may be happening in our own culture and society which would explain our tendency toward Theory A (if, indeed, it can be shown that such a tendency exists). Why do we have difficulty with some of the solutions which the Japanese apparently find natural and easy, and, most importantly, what are the strengths in the U. S. system which should be preserved and built upon? For example, Ouchi is quick to point out the negative consequences of the American tendency to try to quantify everything. Most of us would agree that for managing the human system of the organization, quantification may be more of a trap than a help, but one might also argue that our desire to quantify reflects some of the best traditions of western science and rationalism. The trick is to learn what to quantify and to know why quantification is helpful. In the design of quality control circles or in the setting of sales targets, it may be crucial to state a goal in quantifiable form in order to measure progress toward the goal. On the other hand, attempting to quantify managerial traits as part of a performance appraisal system may distort communication and reduce the effectiveness of the whole system, because people would begin to feel like "mere numbers." The effective manager in any cultural system would be the one who knows what to quantify. Many of the formal control systems which have become associated with the concept of bureaucracy (and which are seen by Ouchi, Pascale, and

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Athos as dysfunctional relative to the more indirect controls associated with the Japanese style) imply that all organizations face similar control problems. One might suspect, however, that controlling the design and building of a large aerospace system might require more formal control mechanisms than the control of an R & D organization in a high technology industry. Ouchi's comparison of formal bureaucratic with informal clan mechanisms misses the point that Galbraith made so effectively: as any organization evolves, it develops organizational structures which are needed at that stage to deal with its information processing and control problems. A geographically dispersed organization dealing with local variants of a given market has different problems than a high technology company which has standard products that work more or less in any market. Galbraith's analysis reveals at least six or seven variants of control systems from simple rules to complex matrix structures.22 But the most important issue to examine before we race into new organizational paradigms is whether or not we even have the right explanation for Japanese success. Neither Ouchi nor Pascale and Athos present much evidence to justify the premise that the Japanese organizations cited are successful because of the management system described. In addition, no evidence is shown that such organizations are, indeed, the most successful ones in Japan. For example, it may well be that both Japanese productivity and management style are the reflection of some other common historical, economic and/or sociocultural factor(s) in Japan.23 Neither book tells us enough about the following important issues: — — — — —

— —

—

The role of postwar reconstruction; The opportunity to modernize the industrial base; The close collaboration between industry and government; The strong sense of nationalism which produces high levels of motivation in all workers; That lifetime employment is possible for roughly one-third of the employees in some Japanese organizations because of the system of temporary employment for the rest of the employees and the existence of satellite companies which absorb some of the economic fluctuations; That all employees retire fairly early by U. S. standards (in their mid- to late fifties); That many of the best companies are family dominated and their strong company philosophies may be a reflection of founder values which might be hard to maintain as these companies age; That the cultural traditions of duty, obedience, and discipline strongly favor a paternalistic clan form of organization.

Neither book refers to the growing literature which compares managerial style and beliefs in different countries and which contradicts directly some

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of the books' assertions about U. S. and Japanese management approaches. 24 For example, although both books extol the virtues of Japanese indirection, subtlety, and ability to live with uncertainty and ambiguity, Hofstede found in a sample of forty countries that U. S. managers reported the highest levels of tolerance of ambiguity, while Japanese managers reported some of the lowest levels. On many dimensions U. S. and Japanese managers are surprisingly similar in their orientation which suggests that the real answer to organizational effectiveness may be to find those combinations of strategy, structure, and style which are either "culture free" or adaptable within a wide variety of cultures.

Knowing What is Cultural If we are to have a theory of organizations or management which is culture free or adaptable within any given culture, we must first know what culture is. This is surprisingly difficult because we are all embedded in our own culture. What can we learn from Japanese managers if we cannot decipher how their behavior is embedded in their culture? Can we attempt to adapt managerial methods developed in other cultures without understanding how they would fit into our own? The first and perhaps the most important point is that we probably cannot really understand another culture at the level of its basic world view. The only one we can really understand is our own. Even understanding our own culture at this level requires intensive analysis and thought. One cannot suddenly become aware of something and understand it if one has taken it completely for granted. The true value of looking at other cultures is, therefore, to gain perspective for studying one's own culture. By seeing how others think about and do things, we become more aware of how we think about and do things, and that awareness is the first step in analyzing our own cultural assumptions and values. We can use analyses of Japanese management methods and their underlying cultural presumptions to learn about the hidden premises of U. S. managerial methods and our own cultural presumptions. If we can grasp and become aware of our own premises and values, we can then examine analytically and empirically what the strengths and weaknesses of our own paradigm may be. This process of self-analysis is subtle and difficult. Not enough research has been done on managerial practices in our own culture; thus, the methods of analysis and tentative conclusions presented below should be treated as a rough first cut at analyzing our own cultural terrain. 25

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Edgar Η. Schein Basic assumptions S premises Man & nature

- Taken for granted - Invisible - Preconscious

Time Space Man & man (rules of interaction)

I

Values & ideology Ideals S goals

i?

Means (how to get there,e.g., heroic paths,sins, virtues.vices)

Greater level of awareness

Artifacts & creations Language Technology Art

Stratification & status system Sex rules & family

Visible but often not decipherable

Figure 1 The Levels of Culture

Levels of Culture In thinking about culture, one should distinguish surface manifestations from the essential underlying premises which tie together the elements of any given culture. As shown in Figure 1, there are at least three interconnected levels: 1. Artifacts and creations are the visible manifestations of a culture (which include its language, art, architecture, technology, and other material outputs) and its visible system of organizing interpersonal relationships, status levels, sex roles, age roles, etc. Though this level is highly visible, it is often not decipherable in the sense that the newcomer to the culture cannot figure out "what is really going on," what values or assumptions tie together the various visible manifestations. 2. Values and ideology are the rules, principles, norms, values, morals, and ethics which guide both the ends of a given society (group) and the means by which to accomplish them. Values and ideological statements usually define what national goals, intergroup relationships, and interpersonal relationships are appropriate to strive for; they are taught to children and reinforced in adults. Generally the level of culture we first encounter is how to achieve the goals (i.e. the appropriate rules of conduct which govern relationships between nations, groups, and individuals within the society). This is also where differences are felt most strongly because of the penalties

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associated with behaving inappropriately. This level of culture, although partly conscious and partly unconscious, can be revealed if people reflect analytically about their own behavior. 3. Basic assumptions and premises are the underlying and typically unconscious assumptions about the nature of truth and reality, the nature of human nature, "man's" relationship to nature, "man's" relationship to "man," the nature of time, and the nature of space.26 These assumptions create the cultural core or essence, provide the key to deciphering the values and artifacts, and create the patterning that characterizes cultural phenomena. It is also this level, however, which is hardest to examine, because it is taken for granted and, hence, outside awareness. If we analyze U. S. culture and managerial assumptions in terms of some of the categories around which basic assumptions are built, what perspective does this provide, and how does this help us to learn from Japanese managerial practices?

Some Key Assumptions of U. S. Culture "Man's" Relationship to Nature: Proactive Optimism It is a premise of most western societies (particularly of the U. S.) that nature can and should be conquered, that "man" is ultimately perfectible, and that anything is ultimately possible if we put enough effort into it. "Where there's a will there's a way," buttressed by "Every day we do difficult things; the impossible just takes a little longer," sets the tone for how we approach tasks. We feel constrained by the environment only if we do not have the knowledge or technology to control or alter it, and then we proactively seek whatever knowledge or technology is necessary to overcome the obstacle. Such proactive optimism underlies the values surrounding equality of opportunity in that we take it for granted that anyone might be able to accomplish anything, if given the opportunity. In other words, man is ultimately perfectible, as the thousands of self-help books in airport book shops proclaim. The notion of accepting one's "fate" (limiting one's aspirations by one's social position or some other non-technological constraint) is simply not part of the underlying ideology, however much empirical data might argue to the contrary. 27 Given this core assumption, what kinds of organizational forms are possible in the U. S.? Can an industrial clan (a Theory Ζ organization) with its intrinsic conservative orientation survive in a cultural environment which emphasizes change, progress, innovation, and novelty? Or would this cul-

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tural orientation begin to erode the very core of such an organization — the stability which produces the comfort? Similarly, can a culture which encourages people to find better ways to do things independently, to resist arbitrary authority if it interferes with pragmatic problem solving, and to value individual accomplishment produce an integrated system like the Pascale/Athos Seven S model? Perhaps the most notable characteristic of U. S. managerial practice is that we are never satisfied and are forever tinkering to find a better way. This will always undermine efforts toward integration. For many U. S. managers, integration equals stagnation; I have observed repeatedly that as soon as a system becomes routine, managers begin to think about "reorganization." Perhaps we deeply mistrust stability and are culturally "pot stirrers." "Man's" Relationship to "Man": Individualistic Egalitarianism Every society or group must resolve the issue between individualism and collectivism. The underlying U. S. assumption appears to be that the individual always does and should do what is best for himself or herself, and is constrained only by respect for the law and the rights of others. The rule of law implies that there are no philosophical and moral principles which can ultimately determine when another's rights have been violated, and, therefore, the legislative and judicial process must decide this on a case-bycase basis through a confronting, problem-solving process judged by a jury of peers. Buried in these assumptions is a further assumption that the world can only be known through successive confrontations with natural phenomena and other people; that the nature of truth resides in empirical experience, not in some philosophical, moral, or religious system; and that the ultimate "philosophy," therefore, might as well be one of pragmatism. Ambition, maximizing one's opportunities, and fully utilizing one's capacities become the moral imperatives. These assumptions, in turn, are related to the western rational scientific tradition which emphasizes experimentation; learning from experience; open debate of facts; and a commitment to truth, accuracy, measurement, and other aids to establish what is "real." The openness and pluralism which so many commentators on America emphasize are closely related to the assumption that truth can only be discovered through open confrontation and can come from anyone. The lowest level employee has as good a chance to solve a key problem as the president of the company, and one of the worst sins is arbitrary authority ("Do it because I am the boss, even if you think it is wrong" or "If I'm the boss, that makes me right"). Yet teamwork is an important value in U. S. sports and organizational life. It is not clear to me how to reconcile the need for teamwork with the assumptions of individualism, and neither Ouchi nor Pascale and Athos

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offer much guidance on how consensual methods (such as those advocated) can be fitted to the notions of individual responsibility which U. S. managers take for granted. One of the greatest fears that U. S. managers have of groups is that responsibility and accountability will become diffused. We need to be able to identify who is accountable for what even when the realities of the task make shared responsibility more appropriate. According to Ouchi, and Pascale and Athos, the Japanese deliberately blur individual responsibility and adapt their decision making to such blurring. If that is so, their version of the consensus method may have little to teach us. Participatory methods can work in the U. S., but they must be based on a different premise: the premise that teamwork and participation are better ways to solve problems, because knowledge, information, and skills are distributed among a number of people. We must, therefore, involve those people who have relevant information and skills. But the goal in terms of U. S. assumptions is better problem solving and more efficient performance, not teamwork, consensus, or involvement per se. Unless Japanese consensus methods are built on the same premise of effective problem solving, they are in many senses culturally irrelevant. Similarly, the Japanese concern for the whole person may be based on premises and assumptions which simply do not fit our core assumptions of individualism and self-help. U. S. managers are scared of paternalism and excessive involvement with subordinates, because they see them as "invasions of privacy." If an individual is taken care of by an organization, he or she may lose the ability to fight for himself or herself. Our whole system is based on the assumptions that one must "be one's own best friend" and that the law is there to protect each and every one of us. Dependency, security orientation, and allowing others to solve our problems are viewed as signs of failure and lack of ambition, and are considered to be undeserving of sympathy. On the other hand, if it is necessary to take care of the whole family in an overseas transfer in order to enable the primary employee to function effectively, then we do it. Pragmatism, necessity, and efficiency override issues of what would be more humane, because of the underlying belief that we cannot philosophically agree on basic standards of what is "best" for everyone. What is best for people must be decided on the basis of negotiation and experience (ultimately expressed in laws, safety codes, and quality of work-life standards). A culture based on such premises sounds harsh and cold, and the things we are told we should do to "humanize" organizations sound friendly and warm. But cultures are neither cold nor warm, because within any given culture both warmth and coldness have their own meaning. We may not like certain facets of our culture once we discover their underlying premises, and we may even set out to change our culture. However, we cannot produce such change simply by pointing to another culture and saying that some of

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the things they do there would be neat here. We have not yet begun to understand our own culture and the managerial paradigms which it has created. This paper is a beginning attempt to stimulate such self-understanding, and such understanding is a prerequisite for any "remedial" action.

Acknowledgements The author would like to acknowledge the Centre D'Etudes Industrielle, Geneva, Switzerland for its support in developing the ideas on culture. This paper was developed from a project supported by the Chief of Naval Research, Psychological Sciences Division (Code 452), Organizational Effectiveness Research, Office of Naval Research, Arlington, VA 22217 (under contract N00014-80-C0905; N R 170-911). Special thanks go to Gibb Dyer who helped to develop the ideas on how to analyze cultures.

Notes 1 See P. Slater, The Pursuit of Loneliness (Boston, MA: The Beacon Press, 1970). 2 See: Ε. H. Schein, "Management Development as a Process of Influence," Industrial Management Review (now Sloan Management Review), May 1961, pp. 59-77; Ε. H. Schein, Coercive Persuasion (New York: Norton $ Co., 1961). 3 See W. H. Whyte, Jr., The Organization Man (New York: Simon & Schuster, 1956). 4 See: C. Argyris, Integrating the Individual and the Organization (New York: John Wiley & Sons, 1964); A. H. Maslow, Motivation and Personality New York: Harper & Row, 1954); D. M. McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960). 5 See: S. Silverzweig and R. F. Allen, "Changing the Corporate Culture," Sloan Management Review, Spring 1976, pp. 33 — 49; A. M. Pettigrew, "On Studying Organizational Cultures," Administrative Science Quarterly (1979): 570 — 581; H. Schwartz and S. M. Davis, "Matching Corporate Culture and Business Strategy," Organizational Dynamics, Summer 1981, pp. 30 — 48. 6 See: Ε. H. Schein, "The Individual, the Organization, and the Career: A Conceptual Scheme," Journal of Applied Behavioral Science (1971): 401 —426; Ε. H. Schein, Career Dynamics: Matching Individual and Organizational Needs (Reading, MA: Addison-Wesley, 1978). 7 See: J. Van Maanen and Ε. H. Schein, "Toward a Theory of Organizational Socialization," in Research in Organizational Behavior (Vol. 1) B. Staw, ed. (Greenwich, CT: JAI Press, 1979). 8 See, for example, F. Harbison and C. a. Myers, Management in the Industrial World (New York: McGraw-Hill, 1959). 9 See: W. J. Dickson and F. J. Roethlisberger, Counseling in an Organization: A Sequel to the Hawthorne Researches (Boston: Division of Research, Harvard Business School, 1966); H.W. Johnson, "The Hawthorne Studies: The Legend

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and the Legacy," in Man and Work in Society, E. L. Cass and F. G. Zimmer, eds. (New York: Van Nostrand Reinhold, 1975). 10 See Ε. H. Schein and W. G. Bennis, Personal and Organizational Change through Group Methods (New York: John Wiley & Sons, 1965). 11 See: McGregor (1960); Argyris (1964). 12 See: R. Likert, The Human Organization (New York: McGraw-Hill, 1967); A. H. Maslow, The Farthest Reaches of Human Nature (New York: The Viking Press, 1971). 13 See A. Etzioni, Complex Organizations New York: Holt, Rinehart, and Winston, 1961). 14 See R. T. Pascale and A. G. Athos. The Art of Japanese Management: Applications for American Executives (New York: Simon & Schuster, 1981), p. 102. 15 Ibid., p. 106. 16 Ibid., p. 105. 17 See Ε. H. Schein, Process Consultation (Reading, MA: Addison-Wesley, 1969). 18 See Schein and Bennis (1965). 19 See A. S. Waterman, "Individualism and Interdependence," American Psychologist (1981): 762-773. 20 See J. McLendon, Rethinking Japanese Groupism: Individual Strategies in a Corporate Context (unpublished paper, Harvard University, 1980). 21 See Ε. H. Schein, Organizational Psychology, 3d. ed. (Englewood Cliffs, NJ: Prentice-Hall, 1980). 22 See J. Galbraith, Designing Complex Organizations (Reading, MA: AddisonWesley, 1973). 23 See: W. M. Fruin, "The Japanese Company Controversy," Journal of Japanese Studies (1978): 267 — 300; B. S. Lawrence, Historical Perspective: Seeing through Halos in Social Research (unpublished paper, M.I.T., 1981). 24 See: G. Hofstede, Culture's Consequences·. International Differences in WorkRelated Values (Beverly Hills, CA: Sage Publications, 1980); G. W. England, The Manager and His Values (Cambridge, MA: Ballinger, 1975). 25 Some excellent efforts in this direction can be found in: W. H. Newman, "Cultural Assumptions Underlying U. S. Management Concepts," in Management in an International Context, J. L. Massie and Luytjes, eds. (New York: Harper & Row, 1972); J. J. O'Toole, "Corporate Managerial Cultures," in Behavioral Problems in Organizations, C. L. Cooper, ed. (Englewood Cliffs, NJ: Prentice-Hall, 1979); England (1975). 26 See F. R. Kluckhohn and F. L. Stodtbeck, Variations in Value Orientations (Evanston, IL: Row, Peterson, 1961). 27 See J. M. Evans, America: The View from Europe (Stanford, CA: The Portable Standord, 1976).

Management in Japan — What Can, and Cannot, be Copied in the West Theodore D. Weinshall

The cultural differences between Japan and the West are vast and despite Japan's significant economic progress, it is unwise to believe that Japanese management practices are automatically transferable. This short paper examines a number of current management practices in Japan and discusses their transferability (or otherwise) to the West. In particular, it highlights the idea of multistructure as a successful organizational form, contending it to be particularly evident in Japan and capable of emulation elsewhere. In addition, it argues that the West, like Japan should use slack time, i. e. time not committed to production, for managerial training and development and the updating of skills. On the other hand there are Japanese organizational behaviour aspects which give them a large advantage over their non-Japanese competitors, but which are not transferable to Western national and multinational corportations. Finally, the paper presents a few aspects of Japanese culture which constitute constraints and shortcomings for the Zaibatsu, their large business corporations, when operating out of Japan.

The Multistructure The organizational structure which is a natural outcome for the successful growth of large multinational and multi-product service corporation is the multistructure. To this author at least, it seems most advanced within Japanese Zaibatsui. As shown in Diagram 1, it combines both formal (functional as well as product line and area decentralized) and informal (entrepreneurial) sub-structures. As a result, entrepreneurial, functional, product/services line and area structures are able to exist within the same organization. Other advantages of the multistructure are as follows: — There is no need for the interorganizational mobility of key executives; — On the contrary, if managers stay for long periods of time (or throughout their work lives) in the same organization, the top managers know their managerial characteristics and are therefore able to optimise their placement and utilization. As a result, increased motivation, satisfaction and performance is likely. — Multistructured organizations can operate simultaneously in situations of growth and stabilization. This enables top management to regulate almost at will the extent to which the corporation is increasing its rate

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Ο ° Ο ο ο ο Sub-organisations, some decentralised by product lines, others by geographical areas

CE's own Chief executive Entrepreneuriol organisation

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Independent entrepreneurs whose organisations,when formalised,would be incorporated either in one of the two decentralised structures or in the functional structure

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Diagram 1 The Multistructure Managerial Structure of growth or, alternatively, slowing down. In turn, in the case of Japan, it has assisted the whole Japanese economy to adapt to periods of economic boom or, alternatively, to World recessions. Scientific Know How In Western Science based industries (e. g., R & D organizations, consulting firms or software service companies), the so-called "Matrix Structure" has been tried, in order to try to overcome the inability of their short term

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project managers to assume full responsibility and authority for the functions required for effective operation. Implicit to this structural form is the assumption that satisfactory economic performance requires fully occupied personnel — that slack-time is disfunctional. In Japan, however, because of the commitment to lifelong employment, and because of the intraorganizational mobility of managers within the multistructure, there are necessarily periods of time when people are not fully occupied. Such slack periods are accepted as normal, and are used to send employees out for managerial, technical and scientific training. If Western managers could abandon their obsession with an idea of full productive utilization, they too could use slack time as an opportunity to bring their employees up to date in their scientific, technological and managerial know-how. This can be done, for example, by the creation of groups of technically and scientifically aligned projects, very much like the division of products within a decentralised product line structure. In different time periods, every such project group will require different numbers of people in each of the required skills or professions. For example, for the hydraulic engineering project group of a software service organization, different numbers of hydraulic engineers, mathematicians, statisticians, programmers and systems engineers would be required. This will turn a project group structure into a product line structure, apart from the fact that, due to the considerable variations in the types of skill required, certain qualified people in different areas, such as hydraulic and system engineers, will not be engaged on projects for weeks, and sometimes months at a time. The introduction of this type of approach would, however, ensure that top management emphasized the updating of knowledge and know how through the use of slack time for different sorts of training.

Cultural Differences On the other hand, the fact that Japan is different culturally from the West should be recognised. Culturally, the U S A is much closer to Russian than to Japan. Western cultures tend to be "either/or" in their characteristics. The Japanese, on the other hand are "both/and." One way of describing, analysing and establishing the interpersonal behaviour of people is to do it along scales of behavioural attributes like those of kindness (from cruel to kind), gentleness (from rough to gentle) or courage (from courageous to cowardly). Thus in Western and other non-Japanese cultures, individuals could either be kind or cruel, or somewhere in between. Equally, they might be either gentle or rough or somewhere in between. The Japanese, on the other hand, could and would be on different occasions, for instance,

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Cruel and Kind; Rough and Gentle; Courageous and Cowardly; Loud and Quiet; Proud and Modest; Autocratic and Democratic; Socially segregating and Egalitarian; Formal and Informal;

As an example while Japanese organizational structures show a clear formality in the tradition of hierarchical progression, their informal structures are also very significant: top managers will regularly drink Saki with groups of lower level managers, for instance.1

Non-Transferable Japanese Advantages Given these, and other, cultural differences there are a number of apparently successful Japanese management practices that cannot be exported. Here are some examples. The Ringi Decision Making Process This secures accuracy in the quality of decisions, as well as commitment to them. It is not transferable, however, since Western management is not used to giving the time that ringi requires in decision making. Nor do most Western companies have the required formal and informal structures. Thus while in Western organizations, the top executive first takes a decision and then it is being made downwards throughout the hierarchy, in Japanese organization it is first being made up the hierarchy and finally taken by the top executive. Life Long Employment This, while offering both employers and employees advantages in terms of commitment and understanding, is anachronistic to Western habits and practices. Then there are two less well known and less widely discussed aspects of Japanese management which may explain a lot of the relative advantage that Japanese companies have had over their Western competitors. Here they are: Unlimited Responsibility The Japanese have a sense of an unlimited commitment to their responsibilities. Such things as passing the buck, namely transferring and pushing responsibility to somebody else, do not exist in Japan. Neither would they

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turn to and use a force majeure excuse, explaining a failure by unavoidable disasters. They take full responsibility for anything which may go wrong, whatever the reason for the failure. Low Remuneration The Japanese employee's standard of living is significantly lower than that of his Western counterparts. So are wages and salaries. Japanese Shortcomings While the commercial competitive success of Japan has been undeniable, the country has certain traits which could, if exploited, be turned to the advantage of the West. Included among these are: Nationalism/Racism The Japanese are highly nationalistic and may experience a growing problem of accommodation in other countries. Protectionism Wherever possible, the West should emulate Japanese practices of import restrictions by the introduction of similar restrictions. In the long term, this might help to make the Japanese lift their restrictions. Government/Management Linkages While the informal linkage between Government/Ownership/Management has been a great advantage to Japanese companies, it obstructs them from being multinational. As a result, if and when the anomaly of national/ multinational comes to be felt, the triangular alliance will probably disappear. Note 1 See for this T. D. Weinshall and J. Tawara, "The Managerial Structure of a Nationally Mixed Organization in Japan," in this book pp. 395—405.

Cultural Differences at Work: Japanese and American Managers Jill Kleinberg

Japanese firms operating outside Japan, what can be called binational firms, pose special challenges for all members of the organization. Not only must workers bridge a language gap, they must also bridge national differences in work cultures and, increasingly, a chasm created by trade frictions. The challenges require special skills and knowledge for both chuzaiin managers sent from the Japanese home office and host country employees. The observations in this article are drawn from research done with Japanese firms located in the United States (Kleinberg, 1989). While the specifics will vary from one national setting to another, the broad principles which govern a cross-cultural work setting remain constant.

Changing Perceptions of Japanese Management When journalists and academicians first turned their attention to America's Japanese firms in the 1970s, early reports tended to depict a cohesive, monolithic "Japanese style" of management that was well received by American personnel. Certain stereotypical features were emphasized, such as a humanistic concern for employees, an egalitarian philosophy, collective values and consensus decision making. As the number of Japanese firms has increased and stories from the field have multiplied, it becomes clear that, contrary to the popular view, America's Japanese firms do not share a common "Japanese" management style. Moreover, many employees, American and Japanese, would deny the presumed harmony of the workplace. Judging from journalistic commentary, Japanese management — and most binationals are managed by chuzaiin at the top or even middle levels — has been most successful overseeing blue-collar workers. Production workers exhibit the greatest satisfaction and productivity. Moreover, certain of the large manufacturing organizations, at least with regard to assembly line personnel, most closely resemble the pattern commonly thought of as "Japanese." They carefully select workers, train them in the techniques that have contributed to high productivity at home, and give considerable attention to maintaining performance and morale over time. Binationals provide a more problematic work setting for white collar employees. Little attention is given to the question of how to manage

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managers, professionals and secretarial staff. Americans on a managerial track in particular find it difficult to satisfy their work expectations and achieve their career goals within a binational firm.

Contrasting Assumptions about the Job More than one Japanese executive has conveyed to me the opinion that, by definition, a manager should know how to manage, whatever his nationality. This seems a valid assumption, until you consider that Japanese and American views of what it means to be a manager differ in significant ways. The result: the American's idea of common sense behavior clashes with the Japanese manager's notion of common sense behavior. The following paragraphs explore some of the areas where Japanese and American managers are most likely to view the world of work differently.

How American Managers Conceptualize their Position Most Americans, especially managers, expect the parameters of their job to be clearly delineated. This theme recurrs among Americans employed in binational firms. As one manager puts it, "each person should have clear goals and responsibilities and know what his job is." Knowing the parameters of the job includes knowing the kinds of matters on which the manager has authority to make decisions. In fact, in the United States, there is a common view that a manager is someone who makes decisions. Business school curricula inculcate future managers with this notion. The business school experience also reaffirms the common wisdom that a formal, job description will document the requirements and rights associated with a particular job. In addition, Americans take for granted that there exists a proper correspondence among job title, responsibilities, authority and pay. Americans consider that their "position" is represented by their job title, be it president, sales manager or secretary. Within any specific industry, from automobile manufacturing to banking, employees anticipate that positions will be categorized systematically and that the catgories will correspond to familiar models. In turn, Americans associate a given title with a particular set of responsibilities and discretionary rights as well as a particular pay scale. They expect to see a hierarchy of familiar positions to which they can aspire within a firm. Given the emphasis on demarcating job parameters and on proper correspondences among job title, duties and rights, it is not surprising that Americans tend to think in terms of "my job" as distinct from "your job."

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A sense of territoriality generally accompanies this sort of dichotomy. That is, many Americans feel extremely protective about their own area of responsibility and authority, resenting perceived infringements on their territory. These assumptions and perspectives make sense when viewed in the context of other aspects of the organizational environment. For example, how do you get ahead in the American corporate world? The focus is on individual performance: how well a person carries out his or her designated responsibilities. Americans expect timely recognition, in the form of praise, a pay raise or promotion for a job well done. On the other hand, according to the conventional wisdom, if something goes wrong, "someone is to blame." Once again, the person who is "responsible" expects timely action, the most extreme being termination of employment. The American business culture assumes that effective action proceeds from everyone knowing and doing his own job. Moreover, it is a long held belief that a person can reasonably be held responsible only for activities over which he has corresponding authority. The absence of that authority or the fear that someone is encroaching on your job creates a strong sense of personal risk and, therefore, anxiety for the American manager.

How Japanese Managers Conceptualize their Position In contrast to the Americans' concern with getting their title, responsibilities, authority and pay right, chuzaiin managers are preoccupied with the notion of responsibility. This is understandable since, in the Japanese organizational context, responsibility is the key to an increasingly challenging job and to expanding prestige. A t home, even the relative fast-tracker expects to progress slowly and sequentially up the rungs of the management ladder. His pay, by and large, increases with seniority. After fifteen or more years, he might have attained the functional position of section chief (kacho), a pivotal position straddling lower and middle management. Nonetheless, as with all managerial jobs, neither his responsibilities nor his rights are narrowly defined or legitimated by a written job description. A manager may indeed have decision making authority. This authority is limited however by unwritten norms which emphasize group processes aimed at building consensus and cooperation. Within accepted limits for any job title, specific responsibilities are assigned according to individual ability. The configuration of responsibilities can change suddenly depending on the organization's needs. The principle of flexibility in large part guides the way chuzaiin managers map responsibility, and flexibility has several important dimensions One, as

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mentioned above, centers on flexibility in task allocation. The Japanese president of one binational explains: The American way is the organization chart. It is like hiring a pre-fixed box on the organization chart. In Japan, the person is first, and then you make the box under him. ... Job descriptions and responsibilities are only based on the person, not the box. Flexibility of action is a second dimension of responsibility. To the Japanese manager this means the willingness to go outside the circle of assigned tasks in order to get a job done. It could also mean spending countless evenings in work-related activity, at the office or at an after- hours entertainment spot. A third, related, dimension emphasizes responsibility for co-workers. Expected behavior ranges from beinjg a concerned mentor for younger employees to helping develop co-workers' job skills and positive work attitudes. For example, the Japanese president of another binational tells an accounting manager who is having trouble with a procrastinating procurement manager (both Americans): Writing a letter is a clerical job. You have to do more than this. The important things is how to develop the procurement manager's mind to make him think, "Oh. I have to do this job by this date." That's the manager's job. In addition to stressing flexibility, the Japanese view responsibility as a group concern. In Japan, most tasks are assigned to work groups rather than to individuals. Outstanding individual performance is recognized and rewarded in future assignments; however, an important indication of individual competence is one's abiltity to be a good team member. Thus ambitious Japanese managers must strike the right balance between their self-interest and the welfare of the group. With rare exception, the successful executive is one whose public image is consonant with the idea that group welfare comes first. Furthermore, managers must demonstrate the human skills essential to effective group process.

The Intercultural Dynamic The assumptions which Americans and Japanese make about such things as title, responsibility, authority and pay guide their informal, on-the-job behavior. When thrown together in the workplace, each tends to find the other's attitudes and behavior strange or even disturbing. Our cultural expectations influence our perceptions of people and events. When people do not behave the way we expect, or the way we think they should, we tend to form a negative opinion of their intentions and capabilities. Consciously or unconsciously, cultural assumptions about work also influence formal organizational structures and practices. For example,

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Americans often enter a binational where they are not provided with a job description or, if job descriptions exist, the descriptions as well as job titles have little in common with accepted practice in American industry. That is, they lack cultural relevance. This happens because top [Japanese] management does not comprehend fully the meaning these guideposts for action have for Americans. Structural constraints of this sort exacerbate tensions that can arise from informal interaction. A number of other structural constraints frequently impede Americans' perceived ability to do their job properly or advance in the company. American managers, in general, perceive a ceiling on their promotion opportunities, feeling that key positions are reserved for chuzaiin managers. In addition, many talk about a "shadow" organization; this is made up of Japanese coordinators or advisers who are outside the formal reporting relationships and whose presence makes Americans unsure about the exact allocation of responsibility and authority. Another common concern is that "Japanese only" meetings, often held after Americans have gone home, exclude Americans from critical information and decisions. And finally, Americans talk about the interpersonal and organizational problems created because work relationships must be retooled frequently as chuzaiin managers come and go. All too many Americans express negative perceptions. Management which fails to define jobs clearly contributes to the perception that the Japanese do not have clear objectives and goals. As a product marketing manager hired without a job description puts it, "I felt like I had a position with no [clear] responsibilities. I was here, but what was I all about." Many also perceive that the Japanese do not trust or respect them enough to give them authority. One American responded in the following way to being reprimanded by his Japanese superior when he went on a business trip without consulting the superior: There's a tendency for them [the Japanese] to treat you like a clerk ... In my position, as a manager, you'd be somewhat autonomous [in an American firm]. As a manager, I am above a clerk. I don't feel I need to seek permission to do business related things.

When, as often happens, the employee receives a higher title but no accompanying pay raise, Americans are likely to feel "confusion, frustration and animosity." A production manager explains it this way: If a person is successful, [in an American firm] he'll be rewarded accordingly. That's a problem with the Japanese because the Japanese are not into money. ... Advancement in position is a form of reward. But if you are advanced in position, [financial] reward should just follow. Not so in this corporation.

Japanese managers, on the other hand feel that an American preoccupation with job titles, job parameters, promotions and raises overshadows

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the more critical issue of responsibility. Moral indignation frequently colors their response, especially when they interpret American behavior as selfserving concern with getting ahead. The product marketing manager mentioned previously, for example, spent a month hammering out a job description with his Japanese boss. The boss's reaction to the American's persistent efforts to define his responsibilities and authority is: I didn't review his record and character and personality well enough. Judging from experience, I see his character better. ... It is hard to adjust himself to the organization, yet he has a strong inside ambition to be regarded as a big shot. ... He always spends more time on expanding his own responsibilities than on doing the job.

Although aware of the conventional wisdom that Japanese are generalists and Americans specialists, most Japanese object to the perceived inflexibility of Americans. A sense of morality again seeps in when a company president interprets Americans' reluctance to go beyond "the job area which you have to do" as a strategy for avoiding risk ("don't do anything to be blamed"). In all, Japanese managers believe that Americans do not understand teamwork; if they did understand it, they would be far more effective workers. The discussion of cultural differences dwells on the tensions and misperceptions that characterize binational organizations. In reality the situation is not unrelentingly negative; nevertheless a definite "us" versus "them" distinction does tend to develop, with each group thinking its way of doing things is right and the other group's way is wrong.

Accommodation to Cultural Differences Recently, Japenese corporation and the Japanese government have stressed the internationalization (kokusaika) of overseas operations. This objective is more narrowly called "localization" (genchika) or, in the United States, "Americanization." The impetus to localize comes from several sources: the specter of class action lawsuits charging discrimination on the basis of gender or national origin, growing friction surrounding Japan's trade surpluses, and the need to take advantage of local expertise as market competition intensifies. In the United States, the movement shows two broad responses. The first aims at placing more locally hired personnel in influential, high level positions while, in some cases, developing a business base independent of Japan. The second response focuses on efforts to systematize job categories, job descriptions, salary scales and job evaluations so that they conform to American industry standards. Internationalization should result in a more familiar and, therefore, more comfortable work environment for local personnel. Nevertheless, actual

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behavior may well deviate from the formal prescriptions. As many an American manager who eventually secured a job description can attest, having it on paper does not ensure that the Japanese boss will adhere to it. Tacit assumptions about proper behavior change slowly. Cultural differences will cease being a serious problem only when two conditions have been met. One, chuzaiin and host country employees alike must understand their own and the other party's expectations about work. Two, they must understand how differences in expectations shape mutual perceptions and, ultimately, affect job satisfaction and performance. Even now, many employees, American and Japanese, thrive on the challenges of the cross-cultural work environment. They enjoy piecing together an understanding of one another's societal and work cultures and using this knowledge to solve problems and create synergistic work strategies. Reference Kleinberg, Jill, "Cultural Clash Between Managers: America's Japanese Firms," Benjamin S. Prasad, editor, Advances In International Comparative Management, Vol. 4, Greenwich, CT: The JAI Press, 1989: 2 2 1 - 2 4 3 .

Part Three Culture and Management in Contrasting Societies

A. Introduction This part consists of four sections of readings dealing with the cultural framework of organization and management. Section Β distinguishes between national and organizational cultures. This distinction is at the base of the difference between universal behavior, organizational behavior that does not differ from country to country, and culture bound behavior, organizational behavior which varies from one national culture to another. Each of the four readings of Section C (Contrasts in Management) presents a research project carried out in different countries, using the same research methodology. The first two readings deal with a world-wide assortment of countries. The other two readings cover only a few West European countries. The three readings of Section D (Managing Across Cultures) are concerned with managerial problems facing organizations operating in different cultures. Finally, the three readings of Section Ε (The Multinational Corporations) consider the growing dominance of the multinationals in the second half of the 20th century. Let us now consider one by one the fourteen readings in this part about the cultural framework of organization and management:

Contrasting Cultures — National and Organizational HIB 1. The Methuselahs in Action. This is one of two readings in Part III, selected from a forthcoming book which is based on the lessons organizations and managements can learn from the "Methuselahs," the long living organizations of the Catholic Church, the family social organization, the Mafia crime organization, and the Japanese Zaibatsu organizations. III Β 2. The Managerial Structure of a Nationally Mixed Organization In Japan — a Sociometric case study. This paper describes a managerial structure study of a foreign owned Japanese organization. This shipping company was divided into separate units — an agency, in which the entire management was Japanese; and the operations, the executives of which were non-Japanese. III Β 3. The Clark-Volvo Joint Venture. This very short reading from Russ AckofFs revealing book is about the joint venture of Clark Michigan and Volvo BM. Ackoff thinks this story merits a book but succeeds in condensing it into a brief commentary.

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III Β 4. Entrepreneurs:

A Balanced

View of Their Role in Innovation

and

Growth. The managerial culture of entrepreneurs is considered in this paper by Teddy Weinshall and Lister Vickery. First the entrepreneurs are described when starting new organizations. Then they are considered when operating within large multistructured corporations. Examples of various types of entrepreneurs like Henry Ford I, Admiral Hyman Rickover, and others, are given.

Contrasts in Management IIIC1.

Organizational

Context and Structure in Various Cultures. This is a

summary of the first comprehensive and most important research program in organizational behavior conducted by the Aston research team, headed by Derek Pugh, and prepared by him and his closest collaborator for the past thirty years, David Hickson. The paper reports the results of the studies carried out in more than twelve countries, using the Aston conceptual schemes of contingency and their research methodology, originally introduced in the early 1960s. The main findings and conclusions of the paper are: — Many interesting differences between the managerial structures of organizations in different countries were found with regard to specialization, formalization, and centralization. — Certain relationships among these variables remained stable in all the countries studied by the Aston research group. — Differences between organizations within one country are greater than the average differences between countries.

IIIC2.

A Multinational

Study of Decision Making:

The Relation

between

Competence and Participation. This study was designed and led by Frank Heller. It primarily measured the participation of the upper managerial levels in the organizational decision making process. This was also done in another separate and different international study on so-called "industrial democracy," led by Heller, by way of what has been referred to as InfluencePower-Continuum (IPC). The data collection was carried out using a technique developed by Frank Heller, called Group Feedback Analysis (GFA). Sixteen hundred senior executives were studied in the two levels below the chief executive belonging to 129 organizations in Britain, France, Germany, Israel, the Netherlands , Spain, Sweden, and the USA. IIIC3.

Management

Control in France, Great Britain, and Germany. Jacques

Horovitz's research was carried out in 16 to 18 companies in each country, 52 organizations in all. They were all aproximately of the same business magnitude, chosen from among the same range of industries, so as to

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minimize the effect of size and technology. Horovitz's findings shed light on the managerial national culture differences between the three countries. He found that French and German management control is, on the whole, similar to each other and quite different from the British. IIIC4. Organizational and Managerial Roles in British and West German Companies — An Examination of the Culture-Free Thesis. In their research, John Child and Alfred Kieser examined David Hickson's conclusion (1974) that relationships between context and organizational structures (as per the Aston studies dealt with in above reading IIIC1) are free of cultural influence. They reached the conclusion that the culture-free thesis is of limited significance and is based on unproven causality.

Managing Across Cultures HID I. The Methuselah Criterion: How to Thrive and Survive in Business. This is the introduction to Weinshall's above named forthcoming book, a chapter of which appears as reading HIB 1. It insists that the only proof that an organization survives and thrives is its longevity. The histories of the Catholic Church, Japanese Zaibatsu, and the Mafia are recounted in this reading. HID 2. The Cross-Cultural Puzzle of International Human Resource Management. Andre Laurent has studied INSEAD participants in executive development programs. The purpose of this paper is to contribute to the forming of the new domain of international Human Resource Management. The main finding of Laurent's research was that an individual's nationality has three times more influence on shaping his managerial assumptions than any other characteristic (age, education, function, type of company, etc.). IIID 3. Negotiating with Foreigners. Nancy Adler, whose other reading, IB 1, serves as the introductory reading to this book, deals here with the crucial problem of helping people of different national cultures communicate with, advise and help each other. Adler presents the three areas on which the success or future of a negotiation is based, namely individual characteristics, situational contingencies, and strategic and tactical processes. She identifies the individual characteristics of a good negotiator as seen by American, Japanese, and Brazilian managers.

The Multinational Corporations HIE 1. The Impact of the Multinational Corporations. This last reading of four abstracts from Derek Pugh et al.'s Wider Perspectives of Managing in Organizations (The Open University Press, 1985), considers what role the

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multinational corporations play in the convergence process, and whether they are the ultimate convergers (the term "convergence" is taken from Howard Perlmutter, whose paper appears as reading IIC1). This reading reveals many international aspects of organizational functioning, and evaluates the strength of the arguments and evidence on the convergence issue. III Ε 2. The Training of Multinational Managers. This is an extract from the book referred to by Pugh in reading HIE 1 by Teddy Weinshall and Yael Raveh. This reading is based on Weinshall's research among INSEAD (the European Institute of Business Administration, in Fontainebleau) participants in the MBA program on Multinational Business Education (MBE). The first MBE research project was about the attitudes of INSEAD participants towards the motivations of participants from various countries and professions, and the roles they play in the learning process at INSEAD. The second MBE research project was about the social structure of INSEAD partcipants. It was found that the way in which they socially mix is affected by the formal learning and living structure imposed on them by INSEAD, rather than by their demographic background (age, marital status, profession and national identity). III Ε 3. This concluding paper of the book discusses the evergrowing importance of the multinationals in the world. It considers the possible role of the multinational corporations in such events as the democratization and nationalization processes in Eastern Europe, and the Gulf War against Iraq in 1990 — 1991. The paper compares the role of Germany in the European Community with that of Russia in the Soviet Union and of Serbia in Yugoslavia.

Β. Contrasting Cultures — National and Organizational The Methuselahs in Action Theodore D. Weinshall

The world of business, its activities, its priorities, its self-interest, is often depicted as a cold impersonal world where the better human qualities are surplus to requirements. There is even a common notion that in order to be a success in business one needs to be a bit of a bastard, the more unfeeling the better. This gives the impression that business runs successfully on the baser human traits and provides an image of the business operative as cold-eyed and hard-nosed, someone who will use others, then discard them without a thought and trample everyone underfoot in a relentless drive for the top. Any validity this image has is only as an outward affectation or as a handy one-dimensional character for pulp fiction. In the real live world of business, what makes for success are the best human qualities, not the worst. This does not necessarily mean the kindest or the softest, but certainly the most intelligent, perspicacious and adventurous.

The Roman Catholic Church: The Oldest Conglomerate Practical intelligence is very evident in the running of the four Methuselah organisations which are the models for this paper. This may, however, seem to run counter to the image the world has of them. For instance, the image of the Roman Catholic Church, especially among non-Catholics, is of a rigid, archaic structure ordering the lives of its adherents and demanding from them blind faith and total obedience: in other words, a tyranny of the most all-embracing kind which seeks to control spiritual and emotional as well as routine everyday life. This image of the Church is, in everything that most matters, completely false. Far from being ossified by its traditions, the Church has always known how to change itself in tune with the times and how to respond to popular aspirations while retaining the adherence of its members. It realised long ago that change is vital for survival and survival is paramount above all. Survival has become of even greater importance in the twentieth century because of the huge number of people who now depend on the Church and

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the increased powers of influence and activity offered by the world of today. The revolutions which our century has seen in transportation, communications and international and multinational enterprise have been eagerly embraced by the Church. As a result, in business terms, the scope of decisionmaking which it now has at its disposal is enormous, for its immediate and wider environments cover almost every country throughout the world. Around the globe, there are nearly seven hundred million Catholics, more than there are members of any other religion. No other can claim a similar concentration of adherents in a comparable area to the Catholic population of South and Central America, and none can claim the world stature for its leader which the present Pope enjoys. None employs so many people, either. The Catholic Church has half a million priests and more than twice that number of monks and nuns who work mainly in education hospitals and charitable institutions. Except for involvement in transportation and communications, the Church resembles a nation-state, and even has a hand in politics and labor relations through its network of affiliated parties and trade union federations. The Church's business and industrial interests are on a similar scale, although their actual extent is not precisely known. There are no official figures detailing its wealth. No accounts are published and the cardinals who have this knowledge are sworn to secrecy. In the mid nineteen sixties, it was estimated by outside sources that the papal investment portfolio contained shares valued at over £12 million, not counting investment in highly valuable properties around the world. The accuracy of this figure has never been confirmed or denied. However, some idea of the wealth that is controlled by the Vatican lies in the considerable spread of its investments, which include banking, housing and fruitful commercial enterprises, such as Perrier, the French mineral water firm, and the San Remo casino. The Vatican's banking activities are another indication. The papal enclave has its own bank, the Banco di Santo Spiritu, and from there, connections to the Italian Banco di Roma, Hambro's Bank, London, the Morgan Bank in New York and the Credit Suisse in Switzerland. All this activity naturally has one central purpose: the support, growth and survival of the Roman Catholic religion. Church investments are vital to the continuance of its parishes, churches, monasteries, convents and the social and educational work that stems from them. These, in turn, bolster the Church and enable it to persist. Riches alone cannot ensure survival, though. The religion, the Church's product and service line, has to be perpetuated in a way that will gratify Catholics, the Church's customers, and keep it ahead of the competition which exists in its environments. In this area, the Church has more and longer experience than any other organisation.

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Twice, when the Church appeared to be endangered by competition — in the sixteenth century Protestant Reformation and by the rise of nationalism in nineteenth century Italy — the product has been re-examined, redefined and otherwise strengthened to ensure survival. On those two occasions, the Church's answer to the challenge was more discipline and fresh dogmas, and an even more exalted persona for the pope. On the third and most recent occasion, at the Vatican Council of 1962/3, the reforms went the other way, moving towards greater liberalisation and towards the conceptualization of a pope who was no longer an absolute monarch but a member of a papal team — primus inter pares, first among equals, almost. The author of this revolutionary change was John XXIII, who had been elected more as a stop-gap pope than anything else, after the death in 1958 of the ascetic Pius XII. John XXIII was seventy-six, old even for a job which normally goes to men of advanced age. The intention in electing him was, it appears, to give his eventual successor, Paul VI, time to acquire more experience and status before he took over the Keys of St. Peter in his turn. Far from just keeping the papal throne warm for Paul, John XXIII revolutionised the Church to such an extent that even his most recent predecessors would not have recognised it. Despite his age, Pope John was able to diagnose the feeling of the times. These were the "permissive" 1960s, when the old practice of automatic obedience to authority was being shifted by a quest for greater freedoms. There were demands for more self-expression, and the world witnessed the rise of the new youth culture, the peace movements and civil rights movements. In such fluid circumstances, Pope John saw that the Church could become archaic and would lose adherents if it did not acknowledge the radical mood of the times. The Vatican Council he convened in 1962 let fresh air into the Church by relaxing certain prohibitions, such as no meat on Fridays, and the ban on Catholics joining the Masons and other previously prescribed groups. The Bible was reassessed from a more modern viewpoint, as a work containing pagan myths and literary exaggerations. A friendly hand was extended towards other Christian churches — a far cry from the charge of heresy formerly levelled against them. Papal pomp and pageantry was reduced. Latin was dropped as the obligatory language for prayer and rites, so allowing the use of national tongues. The charge of deicide against the Jews was abandoned and the Index Expurgatus of prohibited books abolished. Now that the Vatican had opened doors previously locked, bolted and barred, the inevitable first reaction was an extreme one. The new freedoms led to loud demands for more, for permitting family planning and birth control, for allowing women to become priests, for priestly celibacy to be relaxed. However, neither John XXIII nor any of his successors were willing

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to go this far. So, under Vatican II, the Church altered enough to retain allegiance and reduce the element of paradox which had arisen in the personal and religious lives of many Catholics. That was as far as it went, but it was enough to boost the Church into the new late twentieth century world of media publicity and internationalism. Because of the spread of Catholicism around the world, the Church has long been multinational in the physical sense. With Vatican II, it moved towards multinationalism in the business sense as well. John XXIII opened up the College of Cardinals to non-Italians and extended to the bishops a share in the authority over the Church which had once been the papal monopoly. Pope Paul VI continued the process with his extraordinary Synod of Bishops in 1969 which was convened to discuss the introduction of democratic parliamentary procedures into Church management. Today, through the Synod, its myriad individual contacts, the various dioceses and religious communities which comprise its area and service line structures and its smaller entrepreneurial groups the Pope and the Curia, the central structure, keep up to date with the mood and status of its worldwide federation of sub-structures. Formerly, when the Vatican and the Pope gave only pronouncements from on high, there was little interest in consultation and discussion. Only twice before, in 1545 and 1869, did a pope call an ecumenical council. More often an exchange of views and information occurred only when a pope died and the cardinals convened in conclave to elect a new one. Today's Roman Catholic Church therefore has all three features required of a multinational organization: a very widespread scope of decision-making, a managerial multistructure, and also a supra-national attitude. This last point has been apparent since the end of the Second World War in 1945, in the Iron Curtain era with its East-West rivalries, and the great mass of the Third World struggling with poverty, instability and more than its fair share of natural disasters. The Church has carefully steered itself above post-War controversies and the Pope acts in public as expected of a religious leader. He inveighs against war, violence, immorality, poverty, racism and other global evils, but rarely names names or openly takes sides in specific conflicts. When it acts directly, the Church does so on a non-controversial level, such as health and education in Third World countries. The long survival of the Roman Catholic Church cannot, however, be explained only by its multistructure or by its supranational approach. The Church's structure at any time in its long history has always been guided by three practices which, between them, have made for survival. The first is confession, which is not just good for the soul, but also makes for personal understanding within the Church's ranks. Confession is a great leveller; from the Pope right down to the humblest Catholic peasant, all have their confessors. The effect is cathartic, relieving tensions and fears,

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sharing problems and above all promoting trust. A particularly damaging feature of organisations in general is the inclination of managers to withold from each other most of their thoughts and feelings; this, in its turn, engenders distrust and suspicion. Of course, no one would seriously suggest that executives, managers and employees should tell all to each other or parade personal troubles in a business context. All the same, the openness and basic humility which characterises confession does no harm in the boardroom or on the shop floor, and top management can only benefit by finding out the real thoughts and feelings of those who occupy lower levels in the hierarchy. People throughout the organisation would likewise benefit from knowing the thoughts and intentions of top management. The need for catharsis, as necessary to the mind and soul as food and drink are to the body, has been recognised by several organizations over the last forty years, notably in the employment of psychological counsellors But generally speaking, the frontiers of undue secrecy have not yet been pushed back very far. The second survival practice employed by the Church lies in the choice of new popes, or more particularly their age on selection. The present Pope was considered young at age fifty-eight when he was elected in 1978. Pius XII, who reigned from 1939 to 1958, was sixty-three on election; Paul VI, elected 1963, was sixty-six. Allowing for the lesser life expectancy in past centuries, popes, when chosen, have generally been at or near an age when other men are contemplating retirement. Obviously, the experience, authority and indepth knowledge which can be reached only by accumulating years play an important part in the choice, as do the leadership qualities and personal dynamism which clearly put a candidate ahead of his peers by the time all of them have reached old age. However, to look at it more brutally, an older pope is likely to have a shorter reign. The longest pontificate was the thirty-two years from 1846 to 1878 when Pius IX wag pope. However, the average overall has been no more than eight years. Even in our own longer living century, the average papal reign has been only about twelve years, not counting that of Pope John Paul I who died suddenly a few weeks after his election in August 1978. A shorter pontificate has obvious advantages for the Church. The basic problem of appointing young or relatively young chief executives to head business corporations is that once they become entrenched, and if or when their leadership characteristics become unsuitable for the successful management of the organisation, it is extremely difficult to go on accommodating them. Conversely, the limited reign of an older pope can be a much more practical enterprise: he will, in not too much time, be honorably removed from the scene before he can become too much at variance with the changing leadership needs of the Church. The Church's third survival practice lies in its two simultaneous managerial structures. Both are involved in decision-making, but do so at different

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levels. One structure is the managerial multistructure, with up to eight hierarchical levels. This deals with routine everyday decisions and makes those decision by referring to the Church's stated policies. The other structure, organized at three levels, is headed by the Pope, to whom all the bishops, including cardinals and archbishops, report. All the different types of priest report directly to their bishops. The three-level structure deals with policy and non-routine non-policy decisions. An example of this might be a decision made by special bodies of the Catholic clergy to grant divorces in specific cases. The Church's policy is strictly against divorce, so that a petition granted in a special case will not alter that policy, nor is it a decision that is routinely or often made. These two managerial structures interlock without interfering with one another. A priest with a problem he cannot solve from existing Church doctrines will turn to the bishop at the top of the eight-level managerial structure. If the bishop cannot solve it either, he has the right, in fact the duty, to take the problem directly to the Pope. Conversely, and more often, a Pope wishing to disseminate a new policy is able to pass it down to all the bishops and through them directly to all the priests. The success of the Church's dual structure relies on two important prerequisities. One is lack of departmental jealousy. When a priest goes directly to the bishop who heads his pyramid, the superiors he bypasses not only accept the move, but encourage the priest to go further up or to the top. Except for the Japanese, no other management will so readily concur in this by-passing process. Secondly, the Church formalises into policy as many problems as possible. This means that routine instructions are created to handle them. The organisation does not, therefore, get stuck in the same jam twice, which makes for smoother running and greater clarity all round The prime protection against clogging channels with routine or trivia is the high standard of knowledge — doctrines, existing policy, dogma — expected of everyone in all levels of the hierarchy. Ideally all of them, however humbly placed, are experts and the Church aims to achieve this ideal by lifelong training of its clergy. The Mafia: A Surviving Freedom Fighting Organized Crime Syndicate The Roman Catholic Church could hardly have a greater contrast than the Mafia when it comes to organizational example. Their disparate purposes — benign on the one hand, malign on the other — provide only the most obvious of these contrasts. Others, however, are just as fundamental. Unlike the Church, which has grown in complexity to become the world's first multinational, the Mafia began as an entrepreneurial enterprise and has remained so to this day. The self-appointed protector of Sicilians in the

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past, it is still so now, and that applies to Sicilians wherever they may be. Embroiled early on in crime and terror, the Mafia still is. The early Mafia habitually resorted to violence and killing to achieve its ends. The modern Mafia still does. In practice, its essential characteristics simplify life for the Mafia, because they enable the organisation to discount four of the five features of the wider environment which affect their law-abiding counterparts. The ultimate effect is to shrink the Mafia's scope of decision-making. An organization which operates on the right side of the law must take account of environmental systems which limit, for the sake of good order and good reputation, the successful development of its organizational strategy. These systems comprise conditions of supply and demand existing in the employment, money and consumer product markets which are directed primarily by government, as well as the technological and scientific abilities of the country's manpower, the cultural and social ways of life of its population and the legal, judicial and executive mores which are generally acceptable to all. The Mafia, by contrast, is a law unto itself. It imposes its own rules, usually larded with physical force, and otherwise bribes or threatens its way round political and judicial obstacles. The Mafia acts in similar summary fashion towards its customers. The legitimate business woos consumers, aims to please them and by its efforts attract and retain their brand loyalty. The Mafia treats customers like a spider treats a fly it has lured into its web. Whether customers buy an apartment in a Mafia property, take Mafia loans at extortionate rates or purchase some item not available elsewhere, like drink during Prohibition in the U.S.A., they must accept whatever the Mafia provides without complaint. If required to buy more, whether this is wanted or not, they must do so. The only alternative is a violent one. This applies particularly to the Mafia protection racket, that form of extortion in which the customer must buy protection from the Mafia itself. The Mafia has equally firm control over employment. A legitimate organisation has to deal with the realistics of the employment market and the trades unions. The Mafia has its own trades unions and controls the manpower in them, fixes its own wages and demands its own commission. As for the money markets, the Mafia is unencumbered by shifts on the stock exchange, varying interest rates or the problems of loans and credit. It has its own banking system and vast amounts of money for investments which it accrues from its shady activities, such as drug-trafficking, prostitution, loan-sharking, the black market, gambling, protection and sundry other murky doings. The Mafia's only problem here is the "laundering" of dirty money which it acquires, very successfully, through various transfers into legal activities and by other similar manipulations. Having divested itself of legal, cultural, consumer, manpower and financial strings, the only system the Mafia is obliged to face on a par with its

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legitimate rivals is the technological and scientific system. T h e level o f technology an organisation employs is one of the criteria for its growth and survival. A b s o r b i n g new technologies in the late twentieth century, the age o f the second Industrial Revolution, is therefore a vital necessity for the M a f i a , and their strategy has to take this into account. It must also do so because of the new world which technology and science have created for the next generation o f potential M a f i a leaders. T h e men w h o will lead the M a f i a in the future are growing up in a "high-tech" environment and so regard it as a natural part o f life. Because o f their parents' wealth and desire for respectability, M a f i a sons are likely to enjoy a top-class education, perhaps attend the best business schools or m a y leave their M a f i a b a c k g r o u n d behind and take o f f in their o w n more respectable direction. T h e M a f i a succession is not always dynastic. Sons do not inevitably follow in father's footsteps. In fact, due to their higher level o f education and values, relatively few do so. A greater reserve o f future M a f i a leaders lies at the M a f i a source, Sicily, where virtually every little urchin forced on the streets by family poverty has the chance to become an entrepreneur in crime at a very early age. C o s a N o s t r a , the M a f i a in the United States, has long drawn its new leaders f r o m this ragamuffin reservoir. However, Sicily has also been caught u p in the high-tech revolution and the M a f i a leaders o f the immediate future are likely to be a curious hybrid o f ruffian and technologist. Eventually, it is likely that respectability and its values will permeate the M a f i a to the point where living by crime is no longer acceptable. A t that juncture, the M a f i a as the last eight centuries have k n o w n it m a y well disappear. Nevertheless, as the situation still stands today, ignoring the first four features of the wider environment has not only shrunk the M a f i a ' s scope o f decision-making, but has enabled that scope to be accommodated within an informal entrepreneurial structure. Individual mafiosi have been predominantly entrepreneurs or entrepreneurs' aides because in a poor, depressed area like Sicily self-reliance and self-help are the only means by which people can heave themselves out o f the mire o f destitution. Generally, the economic structure in such regions is so lacking in resources and opportunities that the would-be entrepreneur must emigrate and put his talents to work in richer countries, such as the United States. Here, the materials are available for initiating and maintaining entrepreneurial structures. These stark facts explain the mass emigrations to America, the land of opportunity, during the nineteenth and early twentieth centuries, and also, to a lesser extent, the movement o f peoples f r o m former European colonies to their respective mother-countries. Several large organisations with the potential for multinationalisation have been founded in Britain, for instance, by Indian immigrants, while the humble entrepreneurial beginnings o f the Rockefeller, Carnegie, Kennedy

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and other famous fortunes demonstrate a similar progress in America. Such growth is possible only when an enterprise is legitimate. The criminal functions of the Mafia continue in entrepreneurial fashion because in conglomerate or multinational form, those features of the wider environment which the mafiosi presently ignore would press in on their activities. The smaller, usually family-based entrepreneurial arrangement is far more effective for the clandestine nature of Mafia functions and also protects mafiosi from public accountability. A conglomerate of crime would shed too much light on both counts. As a result, inividual Mafia capi, or heads, operate rather like local barons. Each has his agreed geographical or crime serviceline boundaries and normally observes them scrupulously. Within these boundaries, a capo is free to operate as he will. The loyalty and trust that exists within a family group is vital to Mafia operations, for it gives emotional force to their need for absolute secrecy. Even when Mafia groups acquire legitimate businesses these loyalties remain crucial. A mafioso planted to watch over such enterprises must conceal the true nature of their backing from the authorities and see to it that no disgruntled customer or over-inquisitive official rocks his particular boat. Above all, he must be able to solve problems independently and deal with contingencies on his own so that direct contact with the Mafia is reduced and, with that, the danger that Mafia interest will be identified. As further defence against undue interference, Mafia groups are selfcontained financial, capital and earnings entities. There is, though, a Mafia top management and even a Chief executive of sorts who watch over the various family groups in order to maintain their Sicilian culture and values, correct their behaviour where necessary and help them defend themselves against outside crime organisations. The capi, heads of the families, chaired by the Capo-di-Capi, the "head of heads", and accompanied by their consiglieri, or advisers, and bodyguards, do not meet on any regular basis and normally come together only when some special requirement forces a meeting. This might be the allocation of lines of activity or the delineation of borders between the families or the need to choose a new family capo. However, the capi structure is not commensurate with a top management in the true sense of the term. All its members are entrepreneurs and so are unlikely to accept subordination, especially to others of the same kind. Whereas entrepreneurs within a federated structure, the so called "multistructure," enjoy financial backing from their corporations, operate in a foreign or far-distant environment and generally have assignments outlined for them, the Mafia capi work in areas close to one another, deal in similar services and are expected to run their activities and finances on their own. As an organisational example, the Mafia demonstrates three important points. The first is the effect on organisations, one might even term them

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restraints, exercised by the wider environment, most of which the Mafia eludes. The second, following from the first, is the extent to which an organisation's scope of decision-making can decrease when those environmental factors are neutralised. The third is the way in which the managers available for Mafia activities make their mark on the organisation. Since they are entrepreneurs, the Mafia is, perforce, entrepreneurial in character.

The Family: Biological, Neither Spiritual nor Crime Family The family is a special kind of Methuselah. There are families with geneological trees which go back hundreds of years. Indeed in this way they are similar to the other Methuselahs in this paper — the Roman Catholic Church, the Mafia, and the Japanese Zaibatsu, whose individual members come and go while the organization continues. However, we are primarily concerned with the family in another sense. The social organization of the family, including the nature and the duration of its interpersonal relationships, has survived since the beginning of human history; therefore, instead of discussing the history of this Methuselah as we have with the previous two, we will proceed directly to the nature of the organizational patterns which have survived for thousands of years. Like the other Methuselahs the family posesses the two main systems of the TOS (Total Organizational System, described in the General Introduction). Thus the family can help us understand how business organizations can thrive and survive. The family nature of the enterprise tends to keep it so, for activities which take place within a small, exclusive group are naturally, restricted by those bonds. Where the Roman Catholic Church scores in this context is in its spiritual family which can be similarly united, but on a much broader based scale. Proximity is not essential for control as it is in the Mafia. It is not surprising that family characteristics should appear in these and other organizations. The family is the only social grouping with which almost everyone is personally familiar. It is also the logical group when it comes to survival; the adults guard and guide the children, ushering them to maturity and eventually see them take off on their own and perpetuate the process. Where this progression occurs smoothly and successfully, the key is always the positive response of parents to various signals which arise as their children grow. Like a business organization, the family goes through different relationship structures among its members. At the start, when children are under five or six years old, parents have to be entrepreneurs, and lead them on an ad hoc piecemeal basis. They must protect the children from the dangers of everyday life: no crossing the street on their own, no

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pills or medicines in their vicinity in case they mistake them for sweets, no talking to strangers in case the latter have nefarious intent. At this stage, the parents' scope of decision-making is total, and they do not generally relinquish any of it until children have absorbed the lessons they must learn in order to progress to the next stage. Meanwhile, the curiosity of the children has been aroused. Even while they are under the complete protection of their parents, they will express wishes and preferences. They may, for example, prefer strawberry ice-cream to vanilla, or perform that curious childhood rite of not stepping on the cracks between paving stones. N o harm can come from such choices, so the wise parent gratifies the child. On the other hand, the child who wants to cross the road alone before he or she is ready to do so safely has to be restrained. This is comparable to an entrepreneur in business who will allow his aides some latitude in carrying out his policies, but will not let them go so far as to get beyond control. In families, the entrepreneurial stage is abandoned and the structure becomes centralised and formal when children are able to demonstrate certain skills. They learn to tell the time. They are able to understand the connection between the red-yellow-green sequence of traffic lights, and the behaviour of traffic on the road. They are taught social priorities — sharing toys with other children or proper mealtime behaviour. They become aware of the adult relationships within the family and learn how to behave towards their elders. Gradually, like a junior executive growing towards an increasing contribution to a business, children learn to use their own initiative in certain areas. They become strong enough to carry the shopping. They offer the sandwiches and cakes when visitors come to tea. They act as workmate to father when he repairs the family car, and know which tool he wants when he asks for it. This, in business terms, is a child's functional growth within the family. When children first start to function like this, they have not yet reached the cross-over point between dependence and independence. Even so, a formally centralised control is gradually loosening. The child may now go out alone, but has to be home at a certain time. He or she is given pocket money, to be spent at will, but there is no more until next week. Children may join clubs or undertake hobbies that interest them, but only if their parents are assured that these are right and acceptable. Eventually, around age sixteen to eighteen, children are no longer children in any practical sense. They now choose their own friends, undertake their own activities and, if working, have their own money. If they live where there is military conscription, as in Israel or Switzerland, or if they go away to college or university they also have lives of their own, quite separate from those of their parents.

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The only restraints on them which remain are those which everyone ought to observe out of consideration for others. For the youngster still living at home, this may mean not coming home so late that it disturbs other members of the family. For youngsters at home or away, it can mean not becoming embroiled in activities, such as drugs, which could cause the family shame and distress. At this final stage, the family has become formally decentralised rather like managers in an organisation who have attained full responsibility and autonomy. From then on, the children, and the managers, enter a stage of decentralised growth. The dependence of children on their parents decreases and may progress to the point where they visit home or maintain contact less and less frequently. Physical distance, especially in vast countries like the United States or Canada, can reduce family visits to once a year only. Similarly, in decentralised business organisations, where subordinates work at their own product line or in a distant area, they meet their chief executive at long intervals, such as every six or twelve months. Ultimately, once a family has progressed to decentralised growth, the relationship between parents and grown-up children should be loving and emotionally supportive even if distance keeps them apart. Through each stage, ideally, children develop their own traits or talents within a beneficial and encouraging structure, so that they emerge on their own in the wider world as well-balanced and confident adults. The vital word here is "ideally." Sadly, families, like other organisations, can suffer shortfalls along the path to growth which may stunt the whole operation. Parents who fail to see the signals which show children are ready for the next stage of their development can cause the same frustration as chief executives who miss the signs that a junior manager has outgrown his job and is ready for something more challenging. Equally, parents who cling to power long after they should have relinquished it may face rebellion as surely as an entrepreneur who keeps all the reins in his own hands long after his organisation, if it is to survive, should have formalised, centrally or decentrally. Within the family, the signals for change have always been simple and clear cut. It is perfectly obvious to parents when their children are able to use knowledge they have acquired, whether it is telling the time, or understanding traffic lights. Unless there is some other factor involved, such as a busy main road to cross, this is the time to let children take themselves to a nearby school, where their watches will let them know if they are on time. Signals for the start of functional growth usually center around the social activity of children, since they are still financially dependant on their parents. They cannot, for example, pay for their own holidays, but they can join a trip organised by their school or accept invitations to spend vacations with the parents of their friends.

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Ultimately, when decentralisation starts, children will organise their own holidays with their own friends. Whether the parents foot the bill or the children provide the money perhaps by working part-time, the young people go away from home on their own responsibility, an important rehearsal for their independent future. Marriage is the clearest of all signals for decentralisation. In industrialised societies, this means that newlyweds will want to set up in a home of their own. Even where this is not immediately possible, living in their parents' home is regarded as a transitory stage. Freedom does not come so early or so completely in older, more agrarian societies. These societies are strongly patriarchal. Until the father dies, the common signal for decentralisation to start, the sons especially are bound to the family home and land. They may be aged around forty by this time, and could themselves be fathers or even grandfathers. On marriage, their wives would have been expected to joint their husband's family and live in the family home under the overall control of their father-in-law. Millions lived this way in the patriarchal societies of China and Turkey and many still do today. Even in industrialised Europe pockets of patriarchy still exist. One, significantly is in Sicily, the birthplace of the Mafia which perpetuates patriarchy in its own organisation. Whether the signals for change come earlier or later, their message is clearly understood, even though the immediate effect may be negative. Fathers who fight against the marriage of their daughters, for instance, are fighting natural change. Mothers who dislike parting with their sons when the time comes for them to attend college or university are doing the same thing. Neither really wants to hold their children back, but all the same, they dread the effect change is going to have on the status quo. Preserving the status quo is a very strong human instinct. This is why the history of social change has always meant pioneers bludgeoning their way through established traditions and prejudices. The resistance is fierce and change often a long time coming. This applies just as much to business organizations, but with one extra refinement. Unlike the family, organizations generally have not developed clear signals for change in their managerial structures and so all too often miss the cue that can facilitate a timely and orderly change from one structure to the next. Even where those signals are known, they are frequently ignored or the response is so laggard that the survival of the organization can be put in jeopardy. For instance, when a child is able to make the transition between entrepreneurial guidance from parents to a more functional structure, the industrial equivalent is a move into more advanced technology, allowing, of course, that the rate of change from one relationship structure to another depends on the rate of technological and scientific progress. Fail to see the signal and neglect to make that move, and the organisation falls behind its rivals. This failure may be due to the fact that an entrepreneur is unable

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fully to utilise the expensive technology and technologists which are necessary at the time. A family with children choosing different career patterns or getting married to various types o f spouses resembles an organization which diversifies into two or more different product lines. If diversification does not take place where it is feasible and desirable, once again the organisation will fall behind. Eventually, if failures to change accumulate sufficiently, the organization could cease to function or fall prey to take-over. People in business frequently talk about being " o n e big happy family." Big, perhaps. Happy, maybe. But a family? Generally no, not in the true organisational sense. O n e cannot, naturally, expect people w h o w o r k in an organisation however friendly they m a y be, to be b o u n d by the emotional ties that preserve the family. Nonetheless, it is just as much in the interests o f an organisation as it is of the family for individuals to be flexible, generous, occasionally magnanimous and above all to see and act upon signals for change. A tall order? Possibly. But then a successful business, like a successful family, is a high aim.

T h e Japanese Z a i b a t s u : O p e r a t i n g o n a D i f f e r e n t C u l t u r a l P l a n e A i m i n g high is a cardinal business purpose in the Zaibatsu conglomerates, as in all other business enterprise in Japan. N o Zaibatsu manager w o u l d call tall any order to m a k e a m a x i m u m effort for the sake of the company. This is not simply part o f the Japanese w o r k ethic, powerful though that m a y be. T h e Japanese tend to see themselves not just as workers in an organisation, but as its servants, duty b o u n d to nurture and care for it. This applies just as much to executives and managers as it does on the shop floor. A l l identify themselves completely with the company. T h e Zaibatsu manager sees the c o m p a n y ' s aims — growth, a high rate o f sales, healthy profitability — as his o w n aims. Should there be a shortfall o f any kind, he regards it as a personal failure and a shaming blow to his personal prestige. Failure means that his promotion, a vital aim a m o n g the Japanese, might be at stake, and his ambitions curtailed. It would not occur to him to pass the buck or plead force of circumstance to explain a w a y the crisis. Concepts like this, in which full responsibility is assumed no matter where the real fault lies, are difficult for non-Japanese to comprehend, and their reaction could be a cynical one. This is hardly surprising when culturally, spiritually and morally, the Japanese are out on their own. F o r example, unlike most other peoples except perhaps the Germans, they have a duality in their natures which encompasses both extremes o f behaviour. T h e Japanese can be sensitive, as their love o f art and beauty shows. Y e t they can

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also be brutal, as demonstrated by the conduct of the Japanese forces during the Second World War. In samurai times, in fact, it was not unusual for a warrior capable of beheading a peasant in the street for not showing sufficient deference, to attend parties where the main purpose was to admire exquisite cherry-blossom trees. Japanese respect for hierarchy can go hand in hand with the classlessness of the company restaurant where executives, managers and workers all eat together. Similarly, an innately conservative social attitude exists side by side with innovation, as can be seen from the eagerness with which the Japanese handle advanced technology. Despite a great respect for age and authority, company decisions, except for the most important, are not made in the boardroom, then passed down the lower ranks. Instead, through the Ringi Decision-Making Process, proposals can be transmitted through peers and superiors up the hierarchy. Every manager en route, if agreeing with the proposal, indicates this with his stamped initials. Any manager, at whatever level of the hierarchy, can initiate such a Ringisho, a proposal for a decision. If finally reaches the top executive who takes a decision based on the opinions he has received from below. Duality is also evident in the Japanese attitude toward foreigners. Being an inward-looking, strongly nationalistic society, they may keep themselves aloof from foreigners. In business, this could lead to problems of communication in countries where they have set up overseas branches. Yet, the Japanese have long been fascinated by things foreign. Some thirteen centuries before they modernised along Western lines, they made their first wholesale import of foreign ideas from China. The Japanese adopted the Chinese calendar, principles of government, the Chinese land system and most seminal of all, the philosophy of Confucius, the greatest of all Chinese sages. Confucian philosphy combined stoicism with the duty to aspire to excellence, perfect virtue with perfect order achieved through moral striving. These concepts had a profound effect upon the Japanese, an effect which has lasted to this day. As a result, the Japanese are fatalistic, but also highly self-disciplined and self-conscious. Maintaining "face" is of the greatest importance, so that active prevention of undesirable situations and with that the exercise of social judgment characterise a large part of Japanese business behaviour. Thus, a meticulous attitude to work is a gratifying end in itself. Accuracy, loyalty, giving maximum effort, honesty in individual dealings, respect for authority — all these, in Japanese eyes, are required of themselves as a matter of course. In general, self-aggrandisement, wealth, comfort, which are such strong aims in Western society, have little significance in Japan. Honour and prestige have greater value than money in the bank. This austere image, itself hard enough for foreigners to understand, has become even more of a curiosity and a puzzle now that it is seen to work

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so brilliantly in the modern business environment. The phenomenal rise of Japanese enterprise after 1945 cannot be easily explained in Western terms. Nor can it be dismissed by the notion, still current after all these years, that the Japanese are merely clever copyists mimicking Western business practice and technology. At the time it occurred, the copying stage was fundamental, but once the lessons had been absorbed, they formed a marinade with the older cultural mores of Japan. From this they emerged as characteristically Japanese rather than a carbon copy of the West. It was against this background that the Zaibatsu played their crucial part in the modernisation of Japan after 1867. Of the ten clans presently in the Zaibatsu, six — Okura, Asano, Nissan, Nomura, Furukawa and Nakijima — did not form until the 1930s. It was therefore the four traditional clans — Yasuda, Sumitomo, Mitsui and Mitsubishi — who became the main contractors to the Meiji government and acted as the core of both economic affairs and industrial development. At the same time, the government played a major role in Zaibatsu affairs and took over a substantial part of their scope of decision-making. Despite this neo-nationalisation, the Zaibatsu retained the vital elements of free enterprise: innovation, growth, financial management and free cooperation between the human factors in decision-making, such as managers, workers, bankers, suppliers, and customers. Where the Zaibatsu scored over their counterparts in fully free enterprise economies was in the absence of active shareholders and the pressure they can exert. Shareholders exist in the Zaibatsu, but their function is anachronistic. A shareholders' meeting is little more than a ritual, in which decisions pre-fixed by the directors are voted in as a matter of course. Certain manager-shareholders preside, ask the expected rhetorical questions — usually embarrassing ones — and close the meeting in less than an hour. To Western eyes, this procedure seems laughable and futile. But ritual has great meaning for the Japanese, and providing a company with the obligatory shareholders, however formalized their use may be, gratifies the Japanese sense of performance and order. The basic concepts for change from the pre-Meiji state of the Zaibatsu into their modern form came from the only source available at the time: the West. In 1888, Mitsui stated in its constitution a principle that stood for all clans of the Zaibatsu: "It is our duty to study the rapid changes of [our] time and start or liquidate our enterprises so that we shall not lag behind the progress of the world."

Sons of the clan families were sent abroad, to study business administration and banking in the United States and Britain. The ideas they brought home enabled the Zaibatsu to recast themselves in the modern image, and by 1888, Mitsubishi had established its structural principles. The company's

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activities were divided into three departments: sales, accounting and general issues — and into three functions — production management, sales and raw materials supply. From these beginnings, Mitsubishi expanded and ultimately diversified. The company went into docks and shipping and into banking, separated its coal and metals departments and by 1908 re-organised into "self-supporting divisions." Eight years later, each department of Mitsubishi became an independent company of the joint stock company, while Mitsubishi and Partners, founded in 1893, became a holding company. Expansion continued, into aviation, machinery, electrical appliances and into research, where Mitsubishi anticipated by several years the research associations of the United States. The other traditional clans followed similar development, and by the early years of the present century, they had reached a size and diversity which made it necessary to create a multistructure if growth, the paramount survival factor, was to be maintained. In this, as will be seen, the Japanese demonstrated an important lesson for all large organizations: that they could operate in different countries and, while running existing product and service lines in certain parts of their operation, could simultaneously innovate and expand their activities in others. This was not a lesson learned from the West, which had little to teach at the time it was required. Instead, the Japanese fell back on their own ingenuity in order to progress. This is how the multistructure came to be largely a Japanese idea. So was life-long employment. Around 1912 the Zaibatsu came to the conclusion that this was the best way to eliminate their enormous turnover of employees. When life-long employment, termed shushun koya, was introduced, the result was a pool of managers whose abilities and characteristics became thoroughly understood over the years by the Chief Executive and top management. It therefore became easier to pick the right manager for the right department whenever changes were needed within the multistructure. Until this time the Zaibatsu had been directed by samurai or samurai descendants who had long been the chief proponents of Confucian principles. This was how their new modern business enterprise could be partWestern in origin, yet pure Japanese in spirit. The abolition of the samurai class in 1869 could only be cosmetic. Seven centuries of samurai culture and influence could not be wiped away even by the pen of a divine emperor. The samurai simply persisted in another guise. Formerly committed to war and the service of their warlords, the samurai quickly perceived that the battleground in modernised Japan was commerce and industry. The foreign devils they must now resist were no longer the hapless shipwrecked sailor or the hated Christian missionary but their competitors in the West. The business managers of the Meiji era therefore cast aside their outlandish samurai battle armour, their two swords, and the painted faces

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designed to inspire terror and substituted business suits and the outward appearance of Organization Man. Yet beneath the thin skin of modernity, they were still motivated by the ancient imperatives of service to country, esprit de corps and by a marked lack of economic individualism. The long centuries of self-imposed isolation had added a belief in their own moral superiority and a fierce pride in being Japanese. It was also to the advantage of the Zaibatsu that their progress into the modern business world had not been dogged by the upheavals that had given birth to modern Europe. There, confrontation had become a norm over the centuries. Europe was scarred by religious, national and imperial rivalries. It had been torn apart by political and social revolutions. In commerce and especially industry, owners and managers had battled against trade unionism, the efforts of philanthropists to improve the lot of workers, the rising power of the working class, and most acts of emancipation which sought to detach the work force from management control. This was, among other things, the source of the "us and them" mentality still common and still damaging especially in Britain. In Japan, by contrast, there was only "us." This unity, together with an element of democratic selflessness sadly lacking in many Western organisations, was stated in the Doyukai declaration published in 1956, when Japan was still in the early stages of its postwar development. Termed "The Social Responsibility of Business Leadership," the declaration set out the basic principles on which organizations should conduct themselves. The first of its six sections laid down the need to recognise that modern organizations are public instruments. A manager should spread his loyalties wide, to include not only those within his own company but also suppliers, consumers and the wider community. The prosperity of a company was not for the benefit of individuals but for the company as a whole and for the business community in general. A healthy competitive atmosphere should be created, as opposed to cut-throat rivalries. While seeking out stable profits, an organization should develop markets and technology and ensure that workers in the production effort were properly reared. Finally, the importance of developing management methods and training for managers was stressed. The network of allegiances which all this implies is well illustrated by the way the Zaibatsu perform in their wider environment. Employees enjoy not only lifelong employment, a special feature of the Zaibatsu, but also nenko joretsu — salary and promotion according to seniority — kigyozotsu kumiai — freedom to participate in labor union organizations, and special instruction, such as gymnastics and exercises for health improvement. In return, employees are bound to show loyalty to their employers, for example by working extra hours or, where necessary, curtailing holidays. One notable case of such loyalty occurred when a company lost money due to a world shipping crisis. Voluntarily, manager and employees chose to

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draw only half their salaries for a year in order to help the company recover. The Chief Executive of the organisation to which the ailing company belonged was not Japanese and he was taken aback by this unprecedented self-sacrifice. However, no protest on his part had any effect. The decision stood and the manager and employees lived on half-pay for the next twelve months. In Japan, the family aspect of employment in large corporations is very marked, so that this self-sacrifice looks less remarkable in its fuller context. An employee is treated more as an adopted child than just another worker, and the Zaibatsu companies take care to ensure that the newcomer is fit to be a member of the family. The standard of his education receives very high priority. In the Meiji period, this was already considered the surest way to close the gap between Japan and the West. As early as 1871, the newlyformed Ministry of Education was setting up a system which was in tune with the needs of commerce and industry. Today, several Japanese universities are affiliated to the Zaibatsu and provide the graduates who enter the conglomerates as managers. Even production workers are expected to be of high or intermediate school standard. Highschool graduates start as clerks and retire as managers. Whatever the level of a prospective employee, the company investigates his personal background, family, friends, past activities, parents, schoolteachers. Medical checks are required and there is even a report from a psychiatrist. Once all these hurdles have been overcome, the newcomer is greeted into the company with a special ceremony, nyusha-shiki, which may be held in a Confucian or Buddhist sanctuary, or at the company's own shrine. At this juncture, an employee considers he has entered a "real life" and it is one which embraces not only him but his family as well. The company provides medical centers, schools, sports-clubs and the employee enjoys company-organised excursions and parties at which drinking is much in evidence. The system is paternalistic and to Western observers it may appear that employees are virtually owned by their companies. However, the result is that high degree of self-identification which links the welfare of the company to the welfare of the employee and produces a firm sense of solidarity. So much so that employees will refer to themselves not by name, but as workers for their company. After a year of instruction under the guidance of an informal supervisor, who is something of a godfather figure, an employee can choose which department he wishes to join. As long as the manpower demands of that department are in accord, these wishes are usually granted. Every major subsidiary of a Zaibatsu has its own trades union organization. This exists to protect the rights of lifelong employees and will get tough only when those rights are threatened. More often, the company and

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the unions work together, and the unions are consulted before important decision are implemented. Unions are given adequate places for meetings and activities, and are fully informed of the status of the company, its problems, its finances and its needs. The aim here is harmony and smooth running of the company for the benefit of all, and given the goodwill which company procedure is designed to nurture, the result is usually harmonious. Similar relations are maintained with just as much care with a network of sub-contractors who together comprise an appreciable enterprise in their own right. About one third of the Japanese labour force is employed in the sub-contracting area. These small firms employed by the Zaibatsu have, through connections lasting twenty or more years, assumed the status of extensions to the large conglomerates. Sub-contractors benefit the Zaibatsu in numerous ways, mostly by applying an entrepreneurial edge to their conglomerate without tying up investment funds or managerial capacity. These are therefore free to venture into new areas of the world or into new non-technically advanced products and service lines. Sub-contractors are actively involved in advanced technology, a vital element in a technocracy like Japan. In addition, they are experienced at acquiring their own risk capital and use it to boost technological innovation. On the employment side, they can also absorb retired employees of the Zaibatsu. Men normally retire at 55, women at 45, but can still be in their working prime. In effect, the sub-contractors re-cycle these workers so that the conglomerates retain their expertise. A further area where mutual allegiances are strong, lies between Zaibatsu and their customers. Brand loyalty is pronounced in Japan and in practice means the loyalty of women to a particular manufacturer. As in the West, wives have the greatest influence on what is purchased for the family home, so that design must be geared to priorities which they value. Here, the long isolation of Japan still has its effects even though it ended well over a century ago. Homogeneity of products is important and so is a certain conservatism in design. Artistic appeal is also vital, for in isolation, the Japanese developed a perfectionist love of beauty and elegance which was pure in the sense that it was largely unaffected by outside influences. The Japanese government, recognising this need for aesthetic appeal, has resisted liberalism in trade and art, and has championed the more traditional. The influence exerted by the government on the Zaibatsu is still considerable. But, even more so, although there is no monolithic link between them, the structure of close cooperation exists at the highest level. On the government side, a few ministries are involved — Finance, Industry and Interior — together with the Prime Minister's Office and the Diet, or Japanese parliament. The representatives of business include the Keidanren,

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the Zaibatsu's unifying body, trade organizations, the Head of Trades Unions and the management of companies. The government role lies chiefly in the guiding and encouragement of business and industry and also in building up its ability to stand up to outside competition. Government capital may be granted to certain companies at times of money shortage, and there are also tax advantages on offer for selected areas of industry. Development and environmental policies take business needs into account and the government also oversees the creation of secure investments abroad and the allocation of resources for industry's benefit. For the Zaibatsu, all these are enviable advantages. There is, in effect, collusion between government and the Zaibatsu which creates for the conglomerates favourable conditions for long-term planning in which they outline their general objectives over the next five or ten years, as well as for their prospects in the wider environment. In these and other ways, Japanese methods in business and organizations are so different from those prevalent in the West that the lessons to be learned from them have to be selective. The Ringi Decision-Making Process is, for instance, a pain in the neck for effective long range planning and takes too much time to be easily used in a Western business context. All the same, consultation with junior managers, which boosts incentive and morale and increases loyalty and a sense of responsibility, is open to any organization. Lifelong employment is largely unsuitable for Western organizations. Mobility of labour or economic financial pressures could make it an albatross around the necks of both management and workers. However, one of its results, the slack time when employees are not fully occupied, is used in Japan to send them out for managerial technical and scientific training. Japanese managers travel abroad for refresher training a good deal more than their American counterparts, for example, and so enjoy greater exposure to the international business scene. Also the Japanese send only their formal managers to formal training programs and education. Their entrepreneurs and entrepreneurs' aides, who are informal types of managers, are sent only to visit and explore new and unknown enterprises, so as to "fill their innovative batteries." This in itself is worth emulating in the West, to keep employees there similarly up-dated with the latest know-how. More overseas experience might even help with the problems that arise for Westerners trying to understand the Japanese. It has never been easy to cross cultural barriers and as the end of the century comes in sight, obstacles and prejudices persist from the past. The Second World War is not far back in history, and its hatreds live on. The Japanese themselves are not easy for Westerners to deal with. For instance, many Western businessmen, accustomed to decisiveness and firm reslove at home, have been baffled and infuriated by the Ringi Decision-Making Process.

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It is also hard to forget that the Japanese, once the pupils of the West, came from behind to overtake and outpace their tutors. For a long time, Western managements and organizations barely considered the idea of learning from the Japanese. This was why it took the Americans forty years to adopt the multistructure, which the Zaibatsu had employed in Japan since 1912. Today, with Zaibatsu success rampant on the world business scene, no one has that much time to waste any more.

The Managerial Structure of a Nationally Mixed Organization in Japan: A Sociometric Case Study Theodore D. Weinshall and Jitsuo Tawara

Introduction Describing the Nationally Mixed Organization This paper describes a managerial structure study in a foreign-owned Japanese shipping organization. The organization consisted of two distinct parts, one running the shipping lines of the company and the other serving as its shipping agents. It so happened that while the shipping agency's management was exclusively Japanese, the two top managerial levels running the shipping lines were completely non-Japanese. These non-Japanese were mostly nationals of the western country where the owning shipping company was located and to whose headquarters the operations centered in Japan were weakly linked. We shall refer to the organization as Star Lines, calling the shipping company Star Line Shipping (SLS) and the shipping agency company, Star Line Agency (SLA). The headquarters of Star Line Shipping, which was a wholly owned subsidiary of its non-Japanese holding company was in Tokyo. The head office of Star Line Agency was in Osaka; it had, however, its biggest branch in the same office which served as SLS's headquarters in Tokyo. SLA was overwhelmingly owned by SLS, but the Japanese chief executive had a minority share-holding, while a few of his senior staff had even smaller, minute, share-holdings than his in SLS. Both SLS and SLA had operating units in the ports of Yokohama and Kobe. The units in each port were separated from each other and, unlike the Tokyo case, were located in different offices. The two chief executives of the SLS and SLA, had the title of President. The President of SLA, whom we shall call Mr. Komo, was nevertheless a subordinate of Mr. Tivon, the name chosen for SLS's President. For the purpose of this study SLS and SLA are not considered as separated from each other. There are many cases in the shipping business when a shipping agency company in indeed an independently owned and operated company. This, however, was not the case with Star Lines and although the sociometric studies were carried out separately at SLS and SLA, the two were treated in the data processing stage as one organization. There are only two persons identified by their disguised names on the Organization Chart — the two Presidents. The others are coded by numbers.

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This paper does not explore the attitudes of the managers of Star Lines, nor more detailed perceptions of their relationships; we shall, therefore, not deal with individual managers in it. It concerns itself only with the relationship structure which enables one to deduce the managerial structure. The paper is divided into three parts — the first describing the research methodology, the second presenting the results, and the third trying to explain the findings in light of what we already know of Japanese management, terminating the paper with a few implications and conclusions.

The Research Methodology The Informalogram Technique for Establishing Managerial Structure The Star Lines managerial structure was studied by way of the Informalogram (Weinshall, 1976). This methodology is meant to establish the managerial structure when it is defined by two parameters — the degree of clarity of the formal managerial structure (or Degree of Formalization) and the Degree of Autonomy of the units operating under the chief executive. Defined by these parameters, the two by two matrix makes four basic managerial structures possible, three of which are considered to be desirable at different times for the survival of the organization when it progresses from one stage of its growth to another — the Entrepreneurial, Functional and Decentralised (by product/service lines or by area) structures (Weinshall, 1971). There are, of course, a variety of modifications and combinations of these structures possible: these could be measured as we shall presently see, by way of the Informalogram. The Informalogram is based on the measurements of actual relationships among the managers by way of one single sociometric question: name the persons with whom you generally work most closely, regardless of their position in the organization. The matching of the responses of the various managers provides the Mutually Perceived Working Relationships (MPWRs), i. e. the relationships between pairs of managers who mention each other in response to the above mentioned question. It is on the basis of these MPWRs that the managerial structure is established by way of the Informalogram.

"Star Lines" D a t a Processing, Analysis and Findings The organization charts of SLS (Star Line Shipping — the non-Japanese management organization) and of SLA (Star Line Agency — the Japanese

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management organization) were given to the researchers by Mr. Tivon, SLS's President, and Mr. Komo, SLA's President. The answers to the Informalogram question ("Name the persons with whom you generally work most closely, regardless of their position in the organization") were acquired from Mr. Tivon and Mr. Komo during personal interviews. The answers were acquired from the remaining managers during Group Feedback Analysis data collection sessions (Heller and Wilpert, 1977). The non-Japanese managers responded in English while the Japanese managers responded to the Japanese translation of the same question in Japanese. The Informalogram responses are used in the paper for the establishment of the managerial structure of Star Lines (non-Japanese) organization and only Level 1 of the SLA (Japanese) organization. The results of the SLA Level 2 are excluded from this paper because, for the purpose of comparison, Mr. Komo is considered as Mr. Tivon's subordinate, belonging to level 1 of the total Star Line management, while the SLA Level 1 is parallel to Level 2 of the SLS. The MPWRs (Mutually Perceived Working Relationships — when two persons mention each other in response to the Informalogram question) were charted and produced in "1971 InformalogramOrganization J" appearing in Figure 1. Four structural measurements have been calculated for the whole of Star Lines, and, separately for SLS (shipping) and SLA (agency). The results of these Structural Measurements appearing in Figure 2, which includes for comparative reasons results from another six organizations in four different countries, are as follows: 1. Informal Activity: The informal activity is measured by way of the average number of MPWRs per manager. This is one of the two measurements for establishing the Degree of Formalization. The Japanese figure (4.00 MPWRs per manager) is over three times higher than the figure for the non-Japanese (1.25). 2. Coverage of Organigram by Informalogram: This is measured by the percentage of required relationships which are covered by MPWRs out of the total number of the relationships required by the Organigram (the organization chart). The coverage of the Japanese managers (67 per cent) is over six times higher than that of the non-Japanese (11 per cent). 3. Independence of Chief Executive: Observing Figure 2, we see that none of the Japanese managers are "independent" of Mr. Komo by our definition, and hence a 0 per cent Japanese independence figure. Similarly, we can see that all the SLS managers are either directly connected or once removed from Mr. Tivon, the President of SLS (the only manager who has a MPWR with Mr. Tivon, is in the Japanese SLA). This means that 100 per cent of the SLS Managers are independent of the Chief Executive. The total Star Line independence of the Chief Executive (see figure 1) is based on the CE (Mr. Tivon, Nr. 1) having a MPWR with No. 16 and another six once removed MPWRs (with Nos. 10, 13, 14, 15, 17 and 18). This means that 10 out of the 17 managers, or 60 per cent, are independent of the CE.

398 Figure 1

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4. Independence of Other Units: Finally we have measured the proportion of MPWRs within the Sub-units to the MPWRs between sub-units. The difference in this measurement between the Japanese group (0.7) and the non-Japanese group (0.4) is much smaller than in the previous measurements.

Relating the Findings to Previous Observations of Japanese Management Findings and Managerial Structure Implications The following conclusions could be drawn from the results of the four measurements in Figure 2 as to the managerial structures of SLS, SLA and their joint organization.

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The SLS (Non-Japanese) and the SLA (Japanese) structures are so different from one another that it would be misleading to consider them as a unified and uniform structure. The joint structure is a so-called Multistructure Structure, which is a combination (but not integration, i. e. not a matrix structure) of several different basic structures. Such Multistructure Structures are sometimes temporarily found in organizations which move from one basic structure to another or in very large organizations, usually multinational corporations, which operate in several national and cultural environments (Weinshall, 1975). The SLS organization is on the whole in a Functional Structure because the structure is formalized ("low" Informal Acitivity) and the units are dependent on each other (Low Independence of Other Units). It is operating to some extent in an informal way because of the "Low" Coverage of Organigram, which probably means that it is in a growth period of the Functional Structure. It is, however, decentralised with regard to the Chief Executive ("very high" Independence of Chief Executive). We could conclude that the SLS has a Functional Structure which has been partially decentralised in the relationship between the Chief Executive and the management, without the occurrence of a larger decentralization of responsibilities, which apparently is impossible under present conditions. The Japanese SLA organization is operating in a different cultural context than the SLS non-Japanese. Therefore, some of the general structural findings which we could have deduced had it been a Western managerial structure, are not pertinent to the Japanese situation. We shall discuss our findings in relation to the Japanese Management in the next section. Let us now just give an example of a structural relation which holds true in Western organizations. The relation between the degree of Informal Activity and Formal Clarity has been found constant (the larger the informal Activity, the smaller the Formalization, i. e. the Formal Clarity, and vice versa), in those Western organizations where it has been studied (Weinshall, 1973). This, however, does not hold true and is not relevant to Japan as we can see from Figure 2, in which both the informal Activity and the Coverage of Organigram by Informalogram are very high for the Japanese SLA. We can see that all three structural measurements, except for Informal Activity, indicate a Functional Structure, in which the Japanese group operates. However, all three indicators should also be regarded as being primarily influenced by Japanese culture, and therefore, one should be careful in drawing too many managerial structure conclusions from it. We shall dicuss the cultural aspects of our findings in the following section.

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The Ringi Decision Making Process and Formal-Informal Relationships in Japanese Organizations Japanese management and organizational behaviour have been studied and described extensively during the last fifteen years since Abegglen's book first appeared (Abegglen, 1958) and especially during the late 1960's. Some of the more recent work includes descriptions of cultural values and behavioral norms, which could explain the structural differences between the Japanese and the non-Japanese management of the Star Line organization described in our paper (Yoshino, 1968: Drucker, 1971). Two aspects of Japanese managerial behavior which we have drawn from Yoshino and Drucker are, according to them, typical of the behavior within the large Zaibatsu organizations. Star Lines is a relatively small organization when compared to some of the larger Japanese shipping organizations, and even more so when compared to even the smaller Zaibatsu combinates. Nevertheless we shall describe these two Japanese managerial aspects, drawn from Yoshino and Drucker, because their equivalents in one way or another, even if in quite different ways, are present in smaller organizations. The so-called Ringi decision making process accounts for most of the differences between the Japanese and the non-Japanese management groups discovered in this study. This Ringi process has been described by Michael Yoshino as follows: "The word 'ringi' consists of two parts — rin, meaning 'submitting a proposal to one's superior and receiving his approval' and gi, meaning 'deliberations and decision.' The ringi system has, indeed, all of these features — the lower-echelon managerial staff member must follow a certain procedure. He must draft a document known as a ringisho. In this document he must describe the matter to be decided and his recommendation as to what ought to be done. By complex and circuitous paths, the ringisho slowly works its way up to top management, eventually reaching the president. When the president approves the ringisho by affixing his seal, the decision is final. The ringi document is then returned to the original drafter for implementation." The Ringi process accounts for the very much higher rate of Informal Activity (see Figure 2) of the Japanese managers (4.00 MPWRs per manager), when compared to the non-Japanese ones (1.25 MPWRs per manager). Usually the Informal Clarity is in inverse proportion to the Degree of Formalization. However, in the Japanese case, the Informal Activity and the Degree of Formalization are at a much higher level than those of the non-Japanese managers. This is reflected not only by the higher coverage of Organigram by Informalgram (67 per cent versus 15 per cent in Figure 2) which in our case was very much influenced by the high degree of Informal Activity of the Japanese group, but likewise by independent measurements of the Formal Clarity (i. e. the Degree of Formalization) based on socio-

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metric questions relating to the Formalogram (Weinshall, 1973). One link between the informal and formal structures of large Japanese organizations are the informal advisors who are sponsored by top management, and remain in touch with top management, advising their advisees both as to their informal activity and their formal standing. The phenomenon of an informal advisor for new employees, who accompanies them throughout their careers, is described by Drucker as follows: "Top management is still vitally concerned with the young. It discharges this concern through an informal network of senior middle-management people who act as 'godfathers' to the young men during the first ten years of their careers in the company. The godfather is never a young man's direct superior, and, as a rule, he is not anyone in a direct line of authority over the young man or his department. He is rarely a member of top management and rarely a man who will get into top management; the godfather is expected to be in close touch with his 'godchild' even though in a large company he may have 100 such 'god-children' at any one time. He is expected to know the young man, be available to him for advice and counsel, and in general, look after him." Thus the findings of this sociometric study in the Star Line organization were very much in line with previous behavioral descriptions of the Japanese management and its divergence from western managerial behaviour. Implications for Future Research There have been several studies concerning these differences between Japanese and western management. Some of these include implications for western business corporations operating in Japan or in conjunction with Japanese organizations. For example, Yoshi Tsumuri brings our attention to several false assumptions that U. S. organizations make when operating in Japan (Tsumuri, 1971). It would be worthwhile to continue to repeat this sociometric study and other studies on decision-making processes and managerial structures in Japan, and wherever possible, to perform them in organizations where Japanese and non-Japanese management are operating under the same environmental conditions. The use of the Informalogram in future managerial research in Japan could likewise help one to study differences between different types of Japanese organizations. The differences in managerial behaviour between the small Japanese business organizations and the larger Zaibatsu are, in our estimation, more substantial than between small and large organizations in the West (Glover, 1954). Thus, the behavioral norm of "anti-interorganizational managerial mobility" is much more flexible in Japan than in any Western country. This "anti-mobility" norm was introduced into Japanese industry only after about 1912, following a very substantial and severe

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labour interorganizational mobility during the previous period (Yoshino, 1968). The so-called "Lifetime Employment" is very strict in the larger Zaibatsu organizations, but is pursued to a much lesser extent in small Japanese business organizations: this allows the progress of Japanese organizations, growing through Entrepreneurial and Functional structures, before they reach the Multistructures of the Zaibatsu type organizations (Weinshall, 1971). This hypotheses could serve as the basis for future Informalogram research in Japan.

Summary This study was carried out in one foreign owned shipping company operating in Japan, which was divided into two separate managerial units, each responsible for a different part of the decision making process — one composed of Japanese managers and the other of non-Japanese managers. The sociometric study of the management of the Star Lines organization showed completely different styles of management in the Japanese and the non-Japanese groups. While managerial behavior in the non-Japanese group was, to a large extent, similar to western managerial behavior in organizations structured similarly to Star Lines, the managerial behaviour of the Japanese management group was not. The Japanese group behaved in a similar way to what has been described qualitatively by various writers on Japanese management during the last fifteen years, especially in the way in which it performed its decision making process. Western management groups usually follow, more or less, the pattern of "the more informal activity the less the formalization (the clarity of the form structure), and vice versa." It was found that the Japanese group of Star Lines, however, performed its decision making process with both high informal activity and in a formalized way. It is our opinion that it would be worthwhile to continue such a sociometric study of Japanese and non-Japanese managerial groups operating in Japan in order to further our knowledge about the differences between the two and what we can best learn in order to mutually benefit from such differences. Note 1 This paper is condensed from Working Paper No. 143/72, June 1972 (Modified 1976), Tel Aviv University. The Leon Recanati Graduate School of Business Administration, ISRAEL.

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References Abegglen, J. C. (1958). The Japanese Factory. Glencoe, III.: Free Press. Drucker, P. F. (1971). "What We Can Learn from Japanese Management." Harvard Business Review. March —April. Glover, J. D. (1954). The Attack on Big Business. Boston: Division of Research. Graduate School of Business Administration, Harvard University. Heller, F., and B. Wilpert (1977), Managerial Decision Making in Different Countries. Tsurumi, Y. (1972). "Myths That Mislead U. S. Managers in Japan." Harvard Business Review, July—August. Weinshall, Τ. D. (1966). "The Communicogram — A Method for Describing the Pattern, Frequency and Accuracy of Organization and Communications." In J. R. Lawrence, (ed.), Operational Research and the Social Sciences, Tavistock Publications. Weinshall, Τ. D. (1971). Applications of Two Conceptual Schemes in Case Study and General Organizational Research. Papers in Management Studies, Ashridge Management Center, England. Weinshall, Τ. D. (1973). "The Informalogram as an Indicator of Structure." Leon Recanati Graduate School of Business Administration, Tel Aviv University, Working Paper No. 167/73. Weinshall, Τ. D. (1975). "Multinational Corporations — Their Development and Universal Role." Management International, Vol. 15 No. 2/3. Yoshino, M. (1968). Japan's Managerial System Cambridge. Mass.: The MIT Press.

The Clark-Volvo Joint Venture Russell L. Ackoff

On Wednesday, January 28, 1985, the Clark Equipment Corporation and AB Volvo of Sweden announced their intention to merge the Clark Michigan and Volvo BM divisions. This has since been done. Clark and Volvo have created one of the world's largest construction and mining equipment corporations. It is called VME, which are the initials of Volvo, Michigan, and Euclid. The story behind this joint venture merits a book. A brief commentary can hardly do it justice, but it is worth a try. In 1983 Clark Michigan, which had not performed well during the recession, initiated a major effort to plan itself out of its mess. It began by formulating that mess: the future that it would face if it continued its then current practices and policies and if its environment changed only in expected ways. The future that was revealed by this analysis spelled doom for the division. In the time it had available it could neither generate nor acquire the resources required to redirect its future. Rather than give up in despair, Clark Michigan's management designed without any constraints an ideal competitor of the two giants that dominate its industry — Caterpillar and Komatsu. Again without constraints, Clark Michigan's management selected those companies in its industry that, with itself, would most closely approximate the ideal company it had designed. Three were identified. These organizations, together with Clark Michigan, resided in four different countries on three different continents. Armed with this concept and design, Clark approached Daimler-Benz, which owned the Euclid Truck Company, and in almost record time arranged to acquire that company. Clark had already begun discussing a joint venture with Volvo BM, the construction equipment division of AB Volvo. Volvo displayed interest in the concept but had a number of reservations. Clark responded by proposing that a team be formed to address these reservations by preparing a detailed design of the proposed joint venture and evaluating its financial prospects. Volvo agreed. A 10-man team, which consisted of the general managers of Clark Michigan and Volvo BM and their production, marketing, financial, and engineering managers, was formed. This team began by producing a detailed idealized design of the Cark — Volvo joint venture. It drew up as nearly feasible an approximation of this design as it could. Finally, it made a financial comparison of the feasible design and the sum of two companies taken separately. This revealed that the proposal had potential financial advantages. The design team also felt that it had taken care of all of Volvo's reservations.

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The feasible design was presented to the executives and boards of the two parent companies in the autumn of 1984. The design was approved and at the end of that year a commitment was made to implement it. In addition to producing a creative and exciting design, the team members welded themselves into a homogeneous management group that overcame all the major cultural differences that were initially of great concern to both parties. By working closely for six months they even reached agreement on who should occupy each executive position in the new company. With this cooperative design process the team anticipated and dealt with almost every problem that can arise in a joint venture. The process as well as its product enable the two parent corporations to make their commitments with a degree of confidence that seldom characterizes such efforts.

Entrepreneurs: A Balanced View of their Role in Innovation and Growth Theodore D. Weinshall and Lister Vickery

Entrepreneurs: Destroyers of their Own Creations? Introduction Throughout history, entrepreneurs have been the driving force behind the creation of many aspects of our civilisation. In the world of business, all firms (from the Fortune 500 on down) own their origins to entrepreneurial drive, and all new product launches need an entrepreneur behind them. But the influence of entrepreneurs is much more pervasive — the positive, creative aspect of entrepreneurship can be seen in major historical figures, such as religious or political leaders and great explorers. They include Moses, who led the Israelites out of Egypt and integrated their religion with their nationhood; Napoleon, who combined military brilliancy with the imposition of a legal code that is still in wide use and a renovation of the administration of the conquered countries; and Columbus, whose discovery of America is often cited as one of the first venture-capital financed businesses! The general public has long admired entrepreneurs. Biographies of entrepreneurial leaders vastly outnumber those about bureaucratic leaders. Lately, the need for entrepreneurial activities within large business corporations has been stressed by books such as In Search of Excellence. As a result, very many business managers are seeking to become more "entrepreneurial" themselves — this may prove to be easier said than done. We believe that entrepreneurship is vital to economic development, but equally it is not a universal panacea and it can prove to be a "mixed blessing" in many business situations. Our experience suggests that there are no "ideal" organisations or managers, but the most appropriate organisational structure and choice of people depend on the specific circumstances of the business and its environment. In particular, there are circumstances in which entrepreneurs can be as destructive as they can be creative and innovative. They can exhibit a disquieting inclination to kill their own "babies," as well as a disturbing tendency to disregard the laws of the country they operate in. The Mafia is clearly the prime example of an entrepreneurial organisation committed to crime.

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The purpose of this article is to contribute to a more balanced view of entrepreneurs and their role in creating and developing businesses and to counter the undue idealisation of entrepreneurship in much of the literature. Entrepreneurs and Entrepreneurial Behaviour We subscribe to Schumpeter's concise definition: "The carrying out of new combinations we call 'enterprise;' the individuals who carry them out we call 'entrepreneurs' ..." (Schumpeter, 1959). In the business world, entrepreneurs can thus gather together the required resources to create new firms, or to launch new products and services within existing firms, or to re-direct and re-vitalise failed or stagnating companies. The "value" of the entrepreneur derives from his ability to activate or to create these new combinations of business resources. Particularly when he is breaking radically new ground, the entrepreneur relies on a style of leadership and a managerial structure which may be best described as "informally centralised." The entrepreneur occupies a central position and takes all decisions, on even quite minor matters. In many cases, his personnel merely execute his instructions. Good entrepreneurs surround themselves with "Entrepreneurial Aides" (see below), who can act as their scouts and troubleshooters, forming ac hoc project teams to handle new situations or crises as they arise. Entrepreneurs are predominantly informal leaders, compared with other types of leaders who manage organisations through the formal structure. We would suggest that the vital factor that allows an entrepreneur to "manage" an informal organisation is his manipulative ability. It is this manipulative trait which allows him to gather together the resources to launch new ventures, often on shoe-string budgets and at short notice. When this is carried off successfully, with little hurt feelings and only minor infringement of the rules and legislation, there is general admiration. However, the borderline between "honest" and "dishonest" entrepreneurs is often blurred. When business scandals hit the headlines, they are generally caused by entrepreneurs who have improperly manipulated their environment. There can be little doubt that organised crime is entrepreneurially managed. Generally, there are no established procedures or reporting hierarchy. If the immediate environment is formalised, the entrepreneur will manipulate, bypass or ignore the rules. The entrepreneur expects to be kept informed about everything that happens in the organisation and will go to substantial lengths to ensure this, even when the company has grown to a reasonable size. In one Norwegian company with 200 employees, the management team met every morning in the founder's office for a ceremonial opening of the mail; while an examination of a similarly-sized French company which had gone into bankruptcy revealed that at least a dozen highly paid staff had no apparent function other than to keep the President informed.

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Although this article will concentrate on entrepreneurial behaviour and favorable organisational structures, we recognise the importance of personality differences between entrepreneurs and non-entrepreneurial managers. A recent study reported: "... entrepreneurs tend to respond negatively 'when compared with non-entrepreneurial managers' to conformity, inter-personal affect, harm avoidance, and succorance ... They also tend to respond positively to ambiguity, risk-taking, social adroitness, autonomy, and change. Although the traits are considered positive aspects for the initiation of an entrepreneurial venture ..., some may be discordant with regard to the organisational behaviour and management style necessary to be a capable executive" (Sexton and Bowman, 1985). Let us examine four examples of 20th Century entrepreneurs. The first three are American — Henry Ford and Hyman Rickover are quite wellknown, while Joe Foster was the focus of a thorough study by one of the authors (Weinshall, 1960). The fourth example is of Pinhas Sapir, who ran the Israeli economy in an entrepreneurial fashion for 25 years. Henry Ford (1863 — 1947) was the son of Irish immigrants. He moved to Detroit at the age of 16 to work for Thomas Edison, first as a mechanic, and later as an engineer. In 1899, he left Edison to set up car manufacturing, but went bankrupt within two years. Undaunted, he set up the Ford Motor Company in 1903, which reached its peak 15 years later with 50% of the total US car output. Ford's entrepreneurial drive pushed him beyond cars into many other products and into a wide geographical spread. The company integrated production from raw materials to finished cars and tractors, as well as covering the whole of the US and establishing operations overseas. Such a strategy of vertical integration and selfsufficiency is difficult to manage, but Henry Ford's managerial structure remained as it had been at the very start — highly centralised and informal. By the end of the 1920s, this organisation was not merely a major obstacle to the growth and development of the Ford Motor Company, but was becoming a menace to its survival. By 1940, Ford's market share had fallen to 20 %. The inadequacy of the decision-making process was being felt not only among senior executives, but throughout the organisation and also by dealers and customers. Only in 1945, following the death of his son, Edsel, and shortly before his own, was Henry Ford I replaced by his grandson, Henry Ford II. Had this not happened, it is doubtful that the organisation would have survived (Weinshall and Raveh, 1982). Admiral Hyman Rickover (1900 — 1986) is a very interesting example of an entrepreneur outside the business world. His parents immigrated to the US from Russia when he was 6. Having graduated from the Annapolis Naval Academy and studied electrical engineering, he rose to be head of the

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electrical department of the Bureau of Ships in World War II. In 1946, he was posted to the Oak Ridge Nuclear Laboratory for training in nuclear physics, before heading the Navy programme for nuclear propulsion. He pioneered the development of nuclear submarines in the US Navy, leading to the launching of the word's first atomic powered submarine, the Nautilus, in 1954. Rickover did not adhere to the formal constraints imposed on an officer in the US Navy (regulations about uniform, saluting, respecting the established hierarchy). He operated in an entrepreneurial manner, keeping his men on edge in order to obtain the maximum from them. He would work with whoever he felt was most useful to attain his goals, regardless of his rank or position. This disregard of formal procedures made him notorious in the Navy, and even in the public's eye, and led to his promotion to the rank of Admiral being refused by his superiors because of "unfitting" behaviour. On the other hand, as a result of his achievements, which could not have been realised without his entrepreneurial behaviour, his service was prolonged for over 20 years beyond his official retirement and he continued serving until the age of 82. Joe Foster of Foster-Grant. In the early 1950s, Foster-Grant a US industrial corporation in petrochemical and plastic end-products, experienced rapid growth under the leadership of its founder, Joe Foster. The son of immigrants from Eastern Europe, Joe had run the company for almost 40 years. Judging that the company needed to adopt a more formalised managerial structure, he introduced an Executive Vice-President, who brought in other new executives, but these newcomers were not able to change the structure and were ultimately forced out by the CEO and his long-standing entrepreneurial aides. In the mid 1960s, Joe Foster and some of his close aides moved to Europe to entrepreneur Foster-Grant's expansion. The transition towards a more suitable managerial structure was favoured by this absence of the founder from the United States. However, Joe Foster's subsequent ill-health made him abandon his European ventures and return with his team to Foster-Grant's headquarters. There, he and his aides re-established control of the company and led it in an entrepreneurial fashion until Joe Foster's death in the early 1970s. Foster-Grant was unable to survive the forced change and was taken over by a major petrochemical company. Pinhas Sapir (1907 — 1975). He chose to emigrate to Palestine from Poland in 1930 in order to play an active role in establishing the state of Israel. He became a trade-union leader, chief executive of the country's water utility and head of the weapon acquisition (or "scrounging") organisation in Europe during the War of Independence (1947 — 1949). Immediately afterwards he became Director General of the Ministries of Defence and Finance. From this position, he began to build Israel's enormous entrepreneurial structure in the 1950s, during the so-called "Sapir Regime." He successively

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held the positions of Minister of Trade and Industry, Minister of Finance, and, finally, until his death in 1975, Chairman of the Jewish Agency. Throughout this quarter of a century (a significant part of Israel's history as a sovereign state), Pinhas Sapir was the Israeli entrepreneur, with thousands of entrepreneurial aides around him. These aides were in fact the CEOs of all business organisations as well as Government ministers and trade union leaders. Every one of these men and women was operating his organisation as if it were an assignment received from the entrepreneur of the Israeli economy at the time. Gradually, all the aspects of the informally centralised, entrepreneurial structure appeared throughout Israel. Despite the short-term advantages, a number of long-term negative effects became apparent. The absence of a stable regulatory infrastructure discouraged potential investors; the presence of a strong central entrepreneur encouraged entrepreneurial aides, but deterred creative entrepreneurs (entrepreneurs do not generally cooperate well with each other); and this entrepreneurial style was not conducive to proper law enforcement as regards business dealings. When Pinhas Sapir died, the loss of the central entrepreneur led to an anarchic structure, which Israel has been trying to resolve ever since. Entrepreneurial Aides and their Characteristics As we have noted above, the management style of the entrepreneur is centralised and informal. He organises the work in the organisation in a manner similar to the way a soccer coach works with his team. The players stand in a circle, with the coach in the middle. The coach then throws the ball to one of the players, who can pass it to anyone else. The coach may throw another ball to any player and he may ask that the balls be passed back to him at any time. The result is that play proceeds between the players, but the coach initiates, pushes and directs the game. To succeed, such an organisation requires a special sort of manager. We use the term Entrepreneurial Aides, since they share a number of characteristics with entrepreneurs. Like entrepreneurs, these aides prefer informal, centralised working conditions and procedures and do not work well in formal environments. There are two main differences between entrepreneurial aides and entrepreneurs: firstly, the former apply their imagination and initiative to carrying out the latter's ideas and projects; and, secondly, the former enjoy working for the latter, and they respond well to the somewhat paternalistic leadership and guidance of the entrepreneur. While they need creativity and energy to be effective, they do not seem to possess the entrepreneur's overriding passion for pioneering his own projects. The entrepreneur will assign to his aides in very general terms, leaving the aide considerable latitude in implementation. The aide will constitute

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an ad hoc team to carry out the task, drawing on such resources within (or outside) the organisation as appear appropriate. The aide accepts that the entrepreneur may require a progress report at any time (literally!) and that he may change or re-specify the assignment. He also recognises that his imagination and initiative are to be applied to implementing the entrepreneur's ideas and not to developing his own ideas, which would be perceived as challenging the entrepreneur's central position in the organisation. In a young company known to one of the authors, the founder appears to regard one of his aides as an "adoptive son" (even though he has several children, whom he is keen to bring into the business). This aide has been charged with pioneering, under the founder's supervision, many of the new ventures the company has launched. As these businesses grow, they are passed over to other managers and a more formal structure. Let us consider the entrepreneurial aides in three of the examples presented earlier in this article: Henry Ford's "henchmen." The story of top management at Ford is already part of industrial history. The succession of legendary, or infamous, "henchmen" — such as Willys, Mayo, Hiebold, Lee, Martin, Sorenson or Knudsen — is characteristic of Henry Ford's entrepreneurial style. Each aide performed the role of the entrepreneur's favourite, being hailed as "genius" and made (provisional) head of the organisation, before falling into disgrace and being replaced. Even Edsel Ford was forced through the same cycle by his 80-year-old father. These "henchmen" were only a part of Henry Ford's network of hundreds, perhaps thousands, of entrepreneurial aides throughout the organisation, with whom Henry Ford maintained direct "informal relationships" (and entrepreneurial control), regardless of the official organisation chart. Joe Foster. Like most entrepreneurs, Joe Foster drove his aides hard, and they admired him in return (especially if they were not his immediate subordinates). Foremost among the aides was Jack Chatkis, a lawyer who became a personal friend of Joe and who carried out many tasks within the company, becoming head of End Products Manufacturing in the late 1950s. Abe Zaleznik, who supervised Weinshall's research, and who specialises in psychoanalysing human relationships in organisations, drew attention to the "father—son" relationship between Foster and Chatkis (Zaleznik, 1967). When Joe Foster went to Europe in the mid 1960s, to poineer a new venture with a large German chemical group, he took Jack Chatkis with him, as well as some of his closest aides (Weinshall and Raveh, 1982). Pinhas Sapir. Being a public figure, Sapir gave behavioural researchers ample opportunity for study of his entrepreneurial style. One of the most interesting occasions was a television interview, shortly before his death, in

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which he faced 20 people from all walks of life. Among these were a number whom Sapir knew personally, such as heads of industrial enterprises, trade union leaders and members of parliament. Others were common citizens, with whom he had no prior direct contact. During the programme, Sapir treated the former paternalistically, as if they were still his subordinates, and they responded by accepting his authority. On the other hand, the others persisted with their direct questions and stood their ground even when Sapir tried to silence them. One could thus easily distinguish between Sapir's aides — in the upper echelon's of the Israeli economy — and the wider Israeli public — outside his personal relationship and direct control. Entrepreneurial aides are also very valuable in formalised organisations, because they can be used as troubleshooters. Since they appear to be less self-centred and ego-driven than entreureneurs, it is possible to retain their loyalty to the central organisation — however, they must be provided with the continual stimulus and challenge of new tasks. The Entrepreneurial Structure There is a substantial body of management literature devoted to the question of managerial structures and the factors which determine the most appropriate structure. At the risk of over-simplifying, there is agreement that organisations must change their structures as they grow, and that the sequence of structures is common to most organisations and the transitions are a function of the size and complexity of the organisation. At "birth," an organisation is small and simple, led by the founding entrepreneur in an informal, centralised fashion. This structure is dependent on the close relationships between the managers and on the entrepreneur's ability to exercise direct personal control. As the organisation grows in complexity, this becomes increasingly difficult, and the organisation will tend to concentrate on short-term issues, or "fire-fighting." In making the transition to the second basic structure, the functional structure, two important changes are required: — the CEO reduces the number of his direct subordinates; — individual managers have their responsibilities defined.. The introduction of a formal, pyramidal hierarchy and the associated procedures allows the business to enter a new phase of growth. The organisation remains centralised, with the CEO at the top of the pyramid taking the final decisions. In due time, this structure becomes a limitation on further growth, usually because of business diversification or geographical

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Diagram 1 Degree of Autonomy

Degree of Formal Clarity Informal

Formal

Centralised

Fntreprenenrial

Structure

Functional Structure

Anarchic Structure

Geographic or Product Line

Decentralised

expansion, but also because decision-making becomes too slow, with the CEO becoming increasingly distant from the operations. The next structure is decentralised, with the organisation being divided on geographical, product or service lines, virtually into separate business units. The chief executive of any given area or product line will have a functional structure under him, but it must be clear that the role of the CEO of the overall business has changed radically from that of the founding entrepreneur. The above three basic organisational structures can be characterised by two parameters — the degree of autonomy and the degree of formal clarity. The first parameter concerns the autonomy given by a superior to a subordinate to carry out a task, and particularly the autonomy the CEO gives the senior managers. The second parameter concerns the extent to which tasks are clearly defined and formalised within the organisation. Diagram 1 shows the relative positions of the organisational structures. Diagram 1 illustrates clearly the relationship between the entrepreneurial structure and the anarchic one, basically through loss of the centralising force (the Entrepreneur). The arrows show the direction that organisations need to follow as they grow. It will be seen that this path does not lead through the anarchic structure (Diagram 2 illustrates the organisation charts of the two informal structures). An anarchic structure would be a disaster for organisational survival, if it prevailed for too long. One can see clearly from Diagram 2 that the removal of the entrepreneur from the entrepreneurial structure turns it into anarchy. This helps to explain the fragility of the entrepreneurial structure, which is sensitive not merely to major changes (the death of the founder or his dismissal), but also to prolonged absence (due to travel or ill-health). Even an effort for an orderly transfer from the entrepreneur to another CEO

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Entrepreneurial structure

Anarchic structure

Diagram 2

may pose a menace to the organisational survival. It is quite difficult for any type of CEO to take the reigns of the entrepreneurial structure into his hands, because of the highly personal nature of the relationships established by the previous entrepreneur. CEO succession in an entrepreneurial structure is the longest of all top management successions and may take several years. The succession time in a functional structure — where the CEO's control of his subordinates is about weekly — may take a few months. Only in the geographic or product-line structures — where the subordinates may be autonomous for several months — can a change of CEO be effective rapidly without the risk of slipping into anarchy. As the organisational structure changes, so it becomes necessary to have the appropriate managers in place, and this generally requires changing the people. Few leaders or chief executives relinquish their positions readily, even when it is clear that their way of managing an organisation is inappropriate or dysfunctional. The replacement of an entrepreneur is much more difficult than the replacement of other types of leaders, for two reasons. Firstly, the entrepreneur has a very strong psychological attachment to the organisation. He or she created it and regards it as "my baby." The entrepreneur remains attached to the organisation by a sort of umbilical cord, which proves very difficult to sever. Secondly, there are no arrangements for succession, even in the event of the entrepreneur's death. The entrepreneurs believes that he is indispensable and that the organisation could not survive his departure.

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Entrepreneurs: Harnessing their Value We have seen that entrepreneurs play a vital role in the economy, but that their efforts may need to be channelled and that one should not automatically expect them to remain permanently with the organisation they have pioneered. What are the ways in which the value of entrepreneurs may be most effectively harnessed? Who Can Run Entrepreneurs? Given their strong personalities and their desire for independence, entrepreneurs cannot be "run" in the narrow sense of being directed towards precise goals. This is not to say that they cannot be "guided" in broad terms. The success of experienced venture capitalists in guiding young, entrepreneurially-led firms demonstrates this. Entrepreneurs place great emphasis on the value of experience ("learning by doing") and thus they hold their peers, other entrepreneurs, in high esteem. In addition, as Kets de Vries (1985) has noted, they often have a deep-rooted sense of insecurity. As a result, they are prepared to listen to, and to be guided by, experienced and supportive entrepreneurs — preferably outside their own organisation. This can be seen most clearly in the way good venture capitalists work. Many successful venture capitalists are clearly entrepreneurial individuals, running informally centralised organisations on the fringe of the financial "Establishment." General Georges Doriot used to describe his role as being to "watch, push, worry and spread hope," showing sensitivity to the entrepreneur's needs, rather than merely responding to financial indicators. There are times, of course, when an entrepreneurial CEO is no longer the best man to be running the organisation and a different type of manager is needed. As we have noted above, it is generally a mistake to assume that the entrepreneur could formalise his organisation and continue running it in other than an informally centralised manner. The matter is made more complex by the fact that the entrepreneur's commitment to the organisation is strongly emotional (and the reverse is often equally true) and he may have a controlling share in the company. In such cases, the Board of Directors must endeavour to lead the entrepreneur to reach the conclusion that the best thing, both for himself and for the organisation, is that he vacates his post and moves elsewhere. This is often easier to achieve in North America, where it is generally recognised that no CEO is "a man for all seasons," than in Europe, where there is often a strong desire to retain the founder out of respect for his past contribution. This latter attitude makes it difficult to discuss clearly the entrepreneur's present contribution and future potential — even when

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the entrepreneur himself is increasingly dissatisfied with the growing "mismatch" between himself and the organisation. Two useful techniques which have succeeded in achieving desired changes are the use of Clinical Research Feedback and the Challenge and Replace Approach. The former is a direct approach, involving a consultant's study of the socio-communications network in the organisation, aimed at providing the CEO with an unscreened (but anonymous) view of internal attitudes and tensions in the organisation. It appeals to his desire to be fully informed about everything in his business, and we have shown a number of instances where it has led a CEO to decide to leave the organisation (including the Devon Corporation, cited above). The second approach involves enticing the entrepreneur to undertake a new challenge outside the business, while seeking a more appropriate manager to take over as CEO when the entrepreneur leaves. Let us consider each of the two approaches in more detail: Clinical Research Feedback (CRF). From among 19 CEOs in whose organisations a clinical research project was carried out and fed back to the CEO, 5 CEOs left their organisations within a relatively short space of time (two months to two years). All five were entrepreneurial leaders, while only one of the other 14 could be classified as an entrepreneurial leader (and, in his case, the CRF dates from 1985, so its impact may still appear). This shows in a striking fashion that entrepreneurial leaders are generally unaware of the true feelings their subordinates have of them, and it is only through their acceptance of the CRF findings that they become aware of the mismatch between their style and the company's needs. There are several reasons why CRF should produce such different reactions on entrepreneurial CEOs and on other CEOs. Firstly, entrepreneurial leaders generally encourage permanent, often fast, change. Their companies can thus move rapidly from a situation in which the leader is the "right man in the job" to one in which he is a serious threat to the organisation's survival. Secondly, the differences between different types of formal leaders are smaller than the differences between any formal leaders and entrepreneurial leaders. Thus, it is easier for a functional (formally centralising) CEO to lead an organisation requiring a product line (formally decentralised) organisation than for an entrepreneur to lead any form of formal organisation. Finally, formal leaders are more ready than entrepreneurs to open their organisations to outside examination and study, and thus they are regularly faced with feedback about the feelings within their organisation. Given the results quoted above, entrepreneurs may be justified in being reluctant about undertaking a CRF study, though those concerned were most grateful to have gone through the process! It will be clear that, in general, entrepre-

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neurial organisations will have a greater need for a C R F study than formal organisations, and it is up to those close to the entrepreneur (the Board of Directors, friends and associates) to encourage him when the need is apparent. The attitudes of the interviewees who are telling the entrepreneurial C E O , through the C R F consultant, may be roughly summarised as follows: — Y o u are a great leader. The whole country should be obliged to you for having created such a valuable organisation, with its economic impact. We are grateful to you providing us with challenging jobs and good salaries. However, if you continue to lead this company, you will destroy it. Y o u continually bring in consultants w h o regularly recommend the introduction of reporting and control systems, which you then do not implement or cannot use. Y o u also hire formal executives for some business areas, and then undermine their authority until they leave. W h y not turn this organisation over to a C E O who would be more appropriate for it, you could then leave to do what you love and do best — start a new organisation, or take over a company needing your style of leadership. That way you would have two organisations to your credit, instead of none. The Challenge and Replace Approach. A s we have already indicated, entrepreneurs often resent the intervention of outsiders in their organisations, even when their company is plainly in trouble. Such an entrepreneur can only be helped if there is someone we shall call a "personal counsellor" — a close friend, a trusted relative, an admired mentor — whose advice and guidance the entrepreneur is prepared to accept. The mediation of the personal counsellor will probably be solicited by those close to the entrepreneur within the organisation, who have concluded that the only hope for survival is for the entrepreneur to leave. If he accepts the task, the personal counsellor will have to identify two things in order to lead the entrepreneur towards the desired change: — Challenge. He should find a new challenge for the entrepreneur. This should not merely be perceived as an exciting j o b by the entrepreneur, it must also completely absorb him, preferably at some geographical distance from his present company. — Replace. He has to find a replacement C E O , w h o is both suitable for the type of organisation at that stage of development and acceptable to the entrepreneur, by virtue of his background, experience and personality. These two things have to take place simultaneously — a gap would leave the organisation in anarchy, while an overlap might allow the entrepreneur to undermine his successor (cf. the Joe Foster case, cited earlier).

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How to Train Entrepreneurs and Their Aides An interesting ambiguity is the observation that a majority of entrepreneurs express a belief in the primacy of "on the job" training, yet a majority also encourage their children to pursue their formal schooling — and will pay the steep fees of private colleges. Despite the prevalent myth that "real" entrepreneurs are self-taught and that formal educational level of the CEOs of the "Inc. 500" (the annual listing of the fastest growing young companies in the USA) and the significant proportion of MBAs from leading Business Schools (such as INSEAD and Harvard) who found their own business would suggest that entrepreneurial individuals can deepen their skills and widen their vision during formal education. We would expect to find that the case method of instruction enhances the learning of entrepreneurs, by virtue of its open, contingent approach, whereas the "modelistic" approach (using elaborate mathematical models) would appear to be of limited relevance to entrepreneurs. We are often asked if "entrepreneurship can be taught." Our reply is, "No, but it can be learned, through practice." If entrepreneurship is associated with the right side of the brain (responsible for synthetic-emotional or heuristic behaviour, as opposed to the left side, responsible for analyticrational behaviour), we should expect entrepreneurs and their aides to benefit from being exposed to new, unfamiliar environments. This allows the entrepreneur to consider new opportunities without the constraints of existing obligations or the security of established relationships. Galbraith has already underlined the relationship between mass immigration and new economic development, and one of the authors has observed a clear link between entrepreneurship amongst INSEAD MBAs and their international mobility (Vickery, 1982). There is good reason to believe that the Japanese large corporations, like Zaibatsu, distinguish between their entrepreneurs and their formal managers in career planning (Weinshall, 1986). The former appear to be sent to visit and to participate in entrepreneurial ventures in other parts of the world, so as to "recharge their batteries" with new ideas and approaches, as well as to permit a collective brain-storming process to take place between the entrepreneur and his aides during such visits. On the other hand, the formal managers are sent to Western MBA and executive education programmes. A further, vital input for entrepreneurs is through personal contact with their peers. These discussions enrich the entrepreneurs' reservoir of ideas, what ventures may (or may not) work, how and where they may be implemented. They also widen the entrepreneurs' vital network of reliable contacts — for potential customers, suppliers, financiers, or even partners. Finally, there is some evidence that hardship may be a positive stimulus for entrepreneurial individuals. Harper (1985) has reported on three training

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programmes in developing countries where high success rates are associated with quasi-military discipline. It is interesting to observe that Harvard Business School draws attention to the 7.30 a. m. start to its Owner-President Management Programme! Life Cycle for Entrepreneurs — from Creating Small Organisations to Operating Within Large Companies The fortunate entrepreneurs are those who can move from organisation to organisation every several years. Once they have contributed their creativity, innovation and change — and before their approach can become a handicap — they move on to new pastures, often taking with them their closest aides. Their organisations are also fortunate, since they continue to thrive with renewed leadership and appropriate management structures. On occasion, one observes exceptional situations in which the creator continues to lead it through significant growth, with diverse technology, many product or service lines and geographical dispersal. These unusual leaders, who successfully lead complex organisations, are not so much entrepreneurs as heads of multi-structures. A multi-structure is a federated managerial structure in which the CEO manages his different subordinates with different "durations of control." Diagram 3 illustrates such a multistructure. The CEO of a multi-structure may have an entrepreneurial sub-organisation, in which the perceived duration of control is one day, together with a functional (formally centralised) sub-organisation, in which the perceived duration of control is one week, and different decentralised sub-organisations, to handle different product lines or geographical areas, with perceived duration of control of many months. He might also have independent entrepreneurs reporting to him, establishing new technology, new products or services, in different countries of the world. An unusual case of a multistructure may be seen in some very active venture capital funds, where the venture capitalist exercises significant influence over very fast-growing and entrepreneurial organisations. It is much easier for an entrepreneur to operate within a multi-structure, where the CEO can provide him with the initial capital needs and other corporate resources. The CEO must avoid interfering directly in the entrepreneurial sub-organisation, until the entrepreneur reports "mission accomplished," and requests a new assignment, usually taking his aides with him. One such entrepreneur set up an industrial paints organisation for a US multinational in Holland around 1970. He reported that he had virtually no ties with the US headquarters, and his reporting requirements were limited to filing annual accounts for consolidation purposes. When asked if he expected to continue to benefit from such autonomy for long, he

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replied that he had virtually settled all the problems of creating the venture and was beginning to get bored. He planned to hand the company over to someone else and to request a new assignment from headquarters.

Conclusions This article has been concerned to provide a balanced view of the role of entrepreneurs in the business environment. They undoubtedly provide a vital impetus which is essential for innovation and for the renewal of businesses. In addition, their strong personalities enable them to mobilise resources and people to achieve their aims. However, these advantages should not blind us to two negative aspects: firstly, that the entrepreneur's aims may not necessarily be in the public interest; and secondly, that the entrepreneur may not remain "the right man for the job" as the business grows. It is thus important to understand entrepreneurial behaviour, in order to harness their talents effectively. We have firstly shown how entrepreneurs may "overstay their welcome" and actually become a destructive menace to the organisation they have successfully created and developed. We have then shown how an organisation should normally expect to grow from an entrepreneurial (informally, centralised) structure through a functional (formally, centralised) structure to formally, decentralised structures. We have also drawn attention to the fragility of the entrepreneurial structure, as measured by the risk of falling into the undesirable anarchic structure. We have also drawn attention to the importance of Entrepreneurial Aides, who perform an essential role in the development of entrepreneurial organisations and who can be of value in large organisations where entrepreneurs might be counter-productive. It is important to note that entrepreneurship is not a linear, but a cyclical process, involving constant renewal if creation is not to be followed by destruction. For the individual it can also be a constant growth and learning process, in which each renewal builds upon the last. Finally, an appropriate "career plan" for an entrepreneur might be to start by "learning the roles" in an entrepreneurial organisation before launching successive ventures, each aiming to attain greater, more difficult objectives. Armed with such a "track record," the entrepreneur could join a large multistructured organisation, or team up with a venture capitalist, to be able to mobilise substantially greater resources in successive new ventures.

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Ο ° Ο ο ο ο

CE 's own Chief executive Entrepreneurial organisation

Ο Ο

Sub-orgonisations, some decentralised by product lines, others by geographical areas

ο ο ο Functional organisation headed personally by CE

Product

Control

group A

Finance

Manufacturing

Marketing

Manpower

Product group Β Product group C Country

X Country

Y

J

oo

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Independent entrepreneurs whose organisations,when formalised,would be incorporated either in one of the two decentralised structures or in the functional structure

Country

Ζ Diagram 3: The Multi-Structure Organisation

References Harper, Malcolm, "Hardship, Discipline and Entrepreneurship," Working Paper 85.1, Cranfield School of Management, 1985. Kets de Vries, Manfred, "The Darker Side of Entrepreneurship," Harvard Business Review, 1985. Schumpeter, Joseph, The Theory of Economic Development, Harvard University Press, Cambridge, Mass. 1959, p. 74. Sexton, Donald and Bowman, Nancy, "The Entrepreneur, A Capable Executive and More," Journal of Business Venturing, Winter 1985, pp. 129 — 140.

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Vickery, Lister, "The Entrepreneurial Activities of Insead MBA Graduates," Working Paper 8 2 - 1 4 - INSEAD, Fontainebleau, 1982. Weinshall, Theodore D., "Effects of Management Changes on Organisational Relationships and Attitudes," unpublished doctoral dissertation, Harvard Business School, 1960. Weinshall, Theodore D., "Management in Japan — What Can, and Cannot, be Copied in the West," European Management Journal, Volume 4 No. 1, 1986, pp. 3 8 - 4 0 . Also in this book, pp. 354-358. Weinshall, Theodore D. and Raveh, Yael Α., "The Devon Corporation — An Organisational Example," Working Paper 704 — 82, The Israeli Institute of Business Research, Tel Aviv University, 1982 a. Weinshall, Theodore D. and Raveh, Yael Α., "Henry Ford I — An Organisational Example," Working Paper 706 — 82, The Israeli Institute of Business Research, Tel Aviv University, 1982 b. Weinshall, Theodore D. and Kyriazis, Harry C., "Behavioural Aspects in Outsiders Helping Managements to Improve their Organisations," presented at the International Association of Applied Psychology Conference, Jerusalem, July 1986. Zaleznik, Abraham and Jardim, Ann, "The Uses of Sociology in Establishments — Management," pp. 193 — 234 in The Uses of Sociology, Paul Lazasfeld, William H. Sewell and Harold L. Wilensky (eds.), Basic Books Inc. Publishers, New York, 1967.

C. Contrasts in Management Organizational Context and Structure in Various Cultures Derek S. Pugh, David Hickson, and the Open University Course Team

In this section we shall examine the evidence on the pressures or convergence based on an international research programme which has studied a large number of firms in a large number of countries. The studies are usually referred to as the Aston Programme of Research since they were inaugurated in the early 1960s at the University of Aston in Birmingham by Derek Pugh (now of the Open University) and David Hickson (now of the University of Bradford). After initial studies in Britain, the researches were then carried out with colleagues in many other countries. The data thus form a useful comparative base on which to investigate the degree of organizational convergence internationally (Pugh and Hickson, 1976; Hickson and McMillan, 1981).

Dimensions of Organization Structure The management structures of organizations may be looked upon as systems resulting from the continuous balancing by the directors of a number of conflicting pressures. Let us imagine that we are the Board of Directors, and look at some of the pressures we shall be exposed to in this regard. For example, we must consider how far tasks (both operational and managerial) should be split up, with specialists getting better and better at narrower and narrower jobs. The technical complexity of industrial and business life means that considerable efficiencies can accrue from allowing people to specialize in a limited field, but this may be at the expense of lessening their commitment to the overall objectives of the enterprise. How do we coordinate specialists to achieve the common goals of the organization? The problem is that specialists have specialist goals, not overall common ones. They tend to view the organization's functioning from the point of view of their group's immediate needs, which are always much more pressing than the more distant and hazy common goals of the organization as a whole. They also tend to regard their sub-unit as the most important and feel that other groups' activities should be adjusted to fit in with theirs. The classic conflicts of sales versus production, centre versus regions, skilled versus semi-skilled workers, etc., are typical of this.

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We cannot resolve the problem by simply opting for generalists who take an overall view, because they just do not have the requisite knowledge and skills. This basic tension between the need for specialist expertise and the need to achieve common goals generates the structural dimension of specialization. Some enterprises strike the balance by having the benefit of the expertise of relatively more specialists but pay the costs in greater problems of effective coordination; others may make a different cost benefit balance with more generalist and less specialist contribution. There will always have to be a balance with both cost and benefits at whichever point is chosen. Insert 1 (A) gives some examples of the questions which are asked in the Aston studies in order to measure, in a comparative way, the point in each organization where the balance is struck — the degree of specialization of roles in the organization's structure. Organizations vary from those which have a highly differentiated set of specialist roles (e. g., specialists in marketing, market research, advertising, and public relations) to those in which these activities are carried out — probably only in a rudimentary way — by a more generalist sales manager. By asking a set of standard questions, the Aston researchers were able to calculate a comparative numerical score for each organization which characterizes it on the specialization dimension. A second set of conflicting pressures is concerned with how much needs to be specified. Standard routines are obviously more efficient for those aspects of the work which are being repeatedly carried out. It would be very inefficient if we, as the Board of Directors, attempted to think out from first principles our reaction to situations which occur regularly and frequently. Thus we will develop rule books, price lists and computer programmes to deal with these repeated requirements. These may ensure greater uniformity of behaviour, but they bring the problem that frustration is caused when people 'hide behind the rules' even in situations when the rules are inappropriate or unhelpful, because this is the safe thing to do. Furthermore, members of an organization do not like to feel that they are just 'pairs of hands,' completely interchangeable — they do, in fact, feel that they have a distinctive contribution to make. But the more we emphasize standard routines the more we downgrade the personal contribution. This tension and the need to strike a balance between the costs and benefits involved generate another dimension of organization structure, namely, formalization. How far and in what detail should we specify — particularly in writing — the work that people have to do, and how far do we allow them to use their own initiative to see what contribution they can make? F. W. Taylor was the high priest of formalization and standardization and it was the motor industry which took his views to the furthest degree. The benefits in the interchangeability of parts led to mass production technology which brought with it the consumer society. But there are costs too. Costs in industrial unrest, in strikes, spanners in the works, ways in

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Insert 1 Sample questions of Aston structure dimensions A Specialization —the degree to which an organization's activities are divided into specialized roles. 1 Are the following activities performed by specialists — i. e. those exclusively engaged in the activities and not in the line chain of command? (a) activities to develop, legitimize and symbolize the organization's purpose (e. g., public relations, advertising). (b) activities to dispose of, distribute and service the output (e. g., marketing, sales, service). (c) activities to devise new outputs, equipments, processes (e. g., research, development). (d) activities to develop and transform human resources (e. g., training, education). (e) activities to acquire information on the operation field (e. g., market research). 2 What professional qualifications do these specialists hold? Β Formalization — the degree to which an organization lays down in writing standard rules, instructions, procedures. 1 Is there an employee handbook or rulebook? 2 Is there an organization chart and how widely is it circulated? 3 Are there written terms of reference or job descriptions? For which grades of employee? 4 Are there written operating instructions or manuals of operating procedures for direct workers? 5 Are there records of inspection performed? on the processes? on the output? C Centralization — the degree to which authority to take decisions is located at the top of the management hierarchy. 1 Which level in the hierarchy has the authority to: (a) establish labour force requirements (b) decide the price of the output (c) promote supervisory staff (d) decide buying procedures (e) select suppliers (f) spend unbudgeted money on capital items (g) decide marketing territories to be covered (h) alter the responsibilities or areas of work of departments 2 Who takes over in the Chief Executive's absence?

which employees are able to show that they have some influence on what is happening, even if only in a negative way. So again, a cost-benefit balance has to be made for an organization about the higher or lower degree of formalization, and Insert 1 (B) gives some examples of the Aston questions which are used to measure this.

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A third major dimension is that concerned with the tension between hierarchy and participation. In an organization without a hierarchy there would be considerable confusion and those coming for a decision might get a different one depending on whom they spoke to. Indeed, there is no known formal organization above a certain number of members which does not have a hierarchical structure (and that number is very small, in single figures). This is the argument for centralization. But a centralized hierarchical authority, while it may help to maintain a consistent policy, may also inhibit necessary initiative lower down. It puts a great weight of decision making at the top. We in the Board may be brilliant in some decisions, but we are also quite likely to be pigheaded, neglectful and wrong about others and thus reduce commitment and motivation among subordinates. We need, though, to have the maximum participation of the members of our organization, in order to draw on their abilities to the full. This not only improves our capacity, but also generates commitment and motivation. This is the argument for decentralization. So we have to look for an effective balance between hierarchy and participation when they pull in opposite directions and we want the benefits of both sides. This tension generates the structural dimension of centralization·. an organization which emphasizes the hierarchical aspects is called centralized; an organization which emphasizes the participative aspects is decentralized. Insert 1 (C) gives examples of the Aston scale questions for this dimension. The higher up the organization each of the decisions has to be taken, the more centralized is its structure. Equipped with these measures, the Aston Group made detailed comparisons of the structural characteristics of organizations. Figure 1 shows the distinctive profiles obtained for five organizations of different types. Organization A is a family-owned firm of retail shops employing 700 people. It has low specialization and low formalization (since the processes of retailing allow for generalists to carry out flexible procedures) but high centralization (control being exercised by many issues going higher up for decision). This is the opposite structural pattern to that of Organization B, a manufacturing subsidiary of a large publicly-quoted firm. Organization Β has high specialization (manufacturing requiring many technical specialists), high formalization (procedures have to be adhered to across the whole organization and indeed the parent owning group), but low centralization. (When the procedures have been set up and are being operated by specialists, then the decisions are delegated to them within the overall framework.) For privately owned organizations formalization and centralization may be regarded, in many ways, as alternative strategies of control. But in the large municipal public service which is Organization C the centralization required by the need for public accountability has not replaced a consid-

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Organizational Context and Structure in Various Cultures Speciolizotion

Formalization

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government

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manufacturing

public service

manufacturing

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6.500

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1.200

1.350

competitive

largest supplier

monopoly

major supplier

monopoly

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Examples of Structural Profiles

erable amount of formalization (just below the average); the central government Organization D is very high on both formalization and centralization, despite its small unit size. This contrasts very strongly with the family firm (E) which is bigger but has low scores on formalization and centralization since it relies on the technical knowledge and the traditional practices of the many specialists that it requires for its manufacturing technology.

The Relationship of Organizational Structure to Context In the previous section we began by talking in general terms about the pressures which generate the need for making decisions about organizational structure. We considered what, in principle, are the costs and benefits of, say, more or less formalization. But no organization exists in a vacuum; it is always located in a context, and contextural factors will have a great influence on where the balance is to be struck between, say, specialists and generalists.

430

Insert 2

Derek S. Pugh, David Hickson, and the Open University Course Team

Sample questions of Aston contextual scales

1 Size: the number of employees in the organization 2 Parent group size: the number of employees in the ultimate holding group 3 Technology: integration of the workflow (a) Is there automatic repeat cycle equipment? (b) Is there single-purpose equipment? (c) Is waiting time possible between operations? (d) Are the operations evaluated by measurement techniques against precise specifications? 4 Dependence (a) status of organization: branch/head branch/legal subsidiary/principal unit (b) public accountability: private company/unquoted company/quoted company/ international quoted company/government owned (c) organization size as a percentage of parent group size (d) integration with suppliers: ownership and tied suppliers/long term contracts/ regular contracts/single orders (e) dependence of organization on its largest customer: sole/major/medium/minor/ small outlet

For example, the introduction of mass-production processes into a manufacturing firm which was previously only concerned with jobbing and small batch production would require more specialization and formalization. How would that affect Organization E? (See Figure 1.) What would be the effects of doubling the size of the family retail shop (Organization A) compared with doubling the government factory D? Here we have to take account not only of size, but also of ownership patterns, and the dependence of the organization on others in its environment. Having a monopoly buyer who is also the owner will clearly entail a much higher degree of centralization about financial and pricing decisions in an organization, than that required in a family-owned firm in a competitive retail market. In the Aston research, the aspects of the context of organizations studied included ownership patterns, number of employees, purpose, the technology of the work processes, and the dependence of the organization on customers, suppliers, trade unions, and owning group. Insert 2 gives some examples of the questions asked to measure these characteristics. The Aston group then went on to explore in a systematic way the relationships between structure and context in a range of diverse organizations. Insert 3 gives the basic relationships as expressed in a correlation matrix between contextual and structural variables as obtained in the original Aston sample of thirty-one manufacturing organizations. A correlation coefficient is an index which varies from 0.0 to 1.0 where 0.0 means there is no relationship between the two variables and 1.0 means

431

Organizational Context and Structure in Various Cultures

Insert 3 The Relationship of Context to Organizational Structure (Original Aston Sample: Manufacturing Organizations only, η = 31) Correlation coefficients Specialization Size Parent group size Technology Dependence

0.75 0.40 0.25 -0.22

Formalization

Centralization

0.67 0.53 0.04 0.09

-0.47 0.10 -0.05 0.54

that the variables 'stick together' so closely that knowing an organization's score on one variable we can predict exactly what the score on the other variable will be. Thus a correlation of 0.75 means that knowing an organization' size we can predict to within relatively close limits what its specialization score will be — not perfectly, of course, since the correlation is not 1.0, but the relationship is quite strong. Correlations of about 0.5 and over are usually regarded as important in this type of research. (A negative sign means that the variables go in the opposite directions, i. e. greater size leads to less centralization — or rfe-centralization.) The sizeable stable relationships shown in Insert 3 were repeated in further studies in Britain. They are as follows: — — — —

size is related to specialization, formalization and Je-centralization; parent group size is related to specialization and formalization; technology has a definite but small relationship to specialization; dependence is related to centralization.

The Relationship of Structure to Context in Different Countries Following on the studies in Britain, members of the Aston team with new collaborators in many different countries have used the approach to characterize structures, mainly of manufacturing firms, all over the world. There have been studies in the USA, Canada, Germany, Sweden, Poland, Egypt, Jordan, India, Japan, Hungary, Brazil, Finland, etc., and others are under way. There are many interesting differences between the structures of organizations in different countries. Does that mean, therefore, that different cultures by their nature produce different organizational structures? Not necessarily. Let us take some examples.

432

Insert 4

Derek S. Pugh, David Hickson, and the Open University Course Team

The Relationship of Context to Organization Structure in Five Countries Specialization

Size

Dependence

Britain Jordan Poland Japan Sweden Britain Jordan Poland Japan Sweden

0.75 0.78 0.67 0.21 0.26 -0.22 0.18 0.12 0.18 -0.06

Formalization

Centralization

0.67 0.73 0.26 0.69 0.68 0.09 0.13 0.37 0.55 0.43

-0.47 -0.33 -0.35 -0.04 0.22 0.54 0.37 0.68 0.41 0.73

The average specialization and formalization scores of the organizations studied in Jordan are less than half of those in the British sample. Does this mean that Jordanian culture requires generalists who act informally? Before we jump to this conclusion let us consider the sizes of the organizations in the two samples. In Jordan, since it is a newly industrializing country, the organizations are much smaller (mean size 234, range 30 —1,511 employees) than in the British sample (mean size 3,411, range 284 — 25,052 employees). So maybe the low specialization and formalization is not due to the particular Jordanian culture but to the smaller size of the organizations. We can test this supposition quite directly because if it were true we would find that within Jordan, although the overall level is less, the relationship between size and specialization would be the same as within Britain. Thus, larger Jordanian organizations would be more specialized and formalized than smaller ones. Insert 4 shows the relationship and it will be seen that it is comparable to the British value. Or again, the Aston research in Poland shows that firms there are considerably more centralized than the British sample (average score over fifty per cent greater). Does this mean that there is something in the Polish culture which is conducive to centralized authority? (Well, after 'Solidarity' we are not likely to think that, anyway!) So what is the reason? Poland is a communist, centrally planned economy; organizations there have a much higher degree of dependence on suppliers, customers, the State, etc. If this is the reason for the high centralization, then again we would find that within Poland, although the overall level is greater, the relationship between dependence and centralization would be the same as within Britain. Thus more dependent Polish organizations will be more centralized than less

Organizational Context and Structure in Various Cultures

433

dependent ones. Insert 4 shows the relationship, and it is comparable to the British position. I have added the appropriate correlations for Japan and Sweden to Insert 4, so that we have a good range of countries to consider. It is clear that there are considerable stabilities in the relationships across this wide range of countries particularly in those columns which are boxed. Although there is some variation in values, the relationships all have the same sign, i.e. they are going in the same direction. Thus, within all these countries bigger organizations are likely to have structures with more types of specialists and more formalization (and this effect is increased if they are part of larger owning groups). Organizations more dependent on owning groups for money and services, and more tied in to particular suppliers and customers, are likely to be more centralized and to lose autonomy. They are also likely to be more formalized in their procedures. These relationships have remained stable in all the countries so far studied (as listed at the beginning of this section). They form a framework for understanding how organizations function world-wide, which converges because of the nature of the impact of the environmental context in which they operate. In all countries bigger organizations are more specialized and formalized in structure because everywhere growth means reaping economies of scale and expertise by dividing tasks further, and as specialists with their limited knowledge out-number generalists, formalized methods are required for control. Informal customs are inadequate to control large numbers of personnel. This process is accelerated where there is a large owning group, because the organization will develop specialists as counterparts to Head Office specialisms, and will take over group procedures and documentation. In all countries, too, organizations which are more dependent on others in their environment take decisions centrally and in addition lose autonomy to, say, a controlling board or ministry. This is because ties of ownership or contract are so important that the relevant resource decisions must be taken at the top. For example, if an enterprise purchases components from many different suppliers, decisions on each contract, including price, can be decentralized to the buying department, for some items even to junior buyers. But a contract for a year's supply of the major raw material is likely to require the chief executive's attention, thus leading to greater centralization. Dependent enterprises are also likely to have to take on the formalization of other units to which they are linked. The uniformity of these processes happening in all the countries studied is quite striking. Size and dependence become the bases for an explanation of the broad features of organizations world wide. It appears to be more important to know how large an organization is, who set it up and what its dependence on the environment is, than the country in which it is located. Certainly, the differences between organizations within one country are

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Derek S. Pugh, David Hickson, and the Open University Course Team

greater than the average differences between countries. For example, in spite of the general level, the most formalized Jordanian organization is much more formalized than the least formalized British enterprise. And the least centralized Polish firm is considerably less centralized than the most centralized Japanese one. As far as the context/structure relationship goes there would thus appear to be a clear convergence in all countries so far studied. But does it have to be like this? Is there a culture where these relationships do not hold, a country in which as organizations get bigger they get less formalized, or as they increase their dependence they de-centralize? It is very difficult to imagine what sort of a culture this might be, and the very failure of imagination underlines the fact that finding one would be a major limitation of the convergence thesis. The Aston group are still looking. Arrangements are in train for a study of firms in the People's Republic of China which have not so far been investigated in this way. Since the Chinese invented bureaucracy about 5,000 years ago (the oldest extant Chinese document sets out the rights and duties of the Grand Vizier; as a job description it contributes its share to the formalization score) we should not expect the relationships to be different — but we must wait and see the Aston results. But what about Hong Kong? That is an interesting case because the community is made up of a self-selected group of people who have deliberately rejected the over-control (as they would see it) of Chinese organizations with their consequent restriction of freedom. Maybe this unusual, and in a sense, artificial group has generated an organizational culture antipathetic to bureaucratic structural forms, based on generalists operating informally. If they were decentralized as well, then the enterprise would be more like an interacting market than an organization. If they were centralized, then the model would be that of the family with the owner-father providing the coordination and control. This is the pattern of Organization A in Figure 1, a small British family firm. But Organization A has 700 employees. Could you run a firm of 7,000 employees in this way? The Aston research has shown that the answer in Britain is no. But in Hong Kong? Pugh and colleagues are currently researching to find out whether there are Chinese organizations of large size in Hong Kong, and if so, how they are structured. We have now reviewed the arguments and evidence for the world-wide convergence of organizational structure and functioning through the logic of industrialism; the inevitable involvement of governments in the control of markets; and the effects of contextual characteristics, such as scale of operation and dependence on the environment, on the management structure of organizations in all cultures so far studied. The evidence in support of a

Organizational Context and Structure in Various Cultures

435

convergence in these aspects of organizational operations is considerable, although research is continuing to find what the limits of this generalization are. Selected Bibliography Hickson, D. J. and C. J. McMillan. Organization and Nation·. The Aston Programme IV, Gower Publishing, 1981. Pugh, D. S. and D. J. Hickson. Organizational Structure in its Context: The Aston Programme I, Gower Publishing, 1976.

A Multinational Study of Decision-Making: The Relation Between Competence and Participation Frank Heller1

Introducing the Problem Social scientists have often assumed that a manager's style of decisionmaking is largely a function of his personality. This could lead to quite pessimistic conclusions, at least in respect of top executives who have reached middle age but are expected to behave democratically. If personality is the main determinant of their decision-making behaviour, how can we ensure that they adapt to the participative methods advocated by social scientists and business schools? Participative decision-making was seen as one of the ingredients of American business superiority by analysts like Servan-Schreiber (1968) in the two decades following the second world war. In addition, a host of well known behavioural scientists have advocated democratic D —Μ on theoretical as well as empirical grounds (Haire et al., 1966; Likert, 1961, 1967). With theories of this kind in the ascendant, it becomes important to carry out cross-national comparisons of managerial behaviour in general and decision-making practices in particular. This has led to a number of studies, some of which will be reported in this chapter.

Policy Relevant Findings Various cross-national decision-making studies have been conducted over the last ten years. The three mentioned in this chapter have used a method of measuring participation by what has been called the Influence-PowerContinuum (IPC). It has five or six positions (see Figure 1) which, going from left to right, increase the amount of influence from zero (no information is given) to a maximum described as autonomy or delegation. It is important to recognize that what is popularly called participation, or decentralization of decision-making, actually has several identifiable variations, as shown in Figure 1.

437

A Multinational Study of Decision-Making Style 1

Style 2

Style 3

Style 4

O w n decision without

Own decision with

Prior consultation

• ι Joint decision-

explanation

explanation

Style 5 Delegation

making

Participation

Power

Influence

Figure 1

Table 1

The Influence-Power-Continuum

Objective Measures of Skills and Experiences of Managers in Six Countries* D

F

S

I

5.4 14.5

4.8 14.9

4.4 23.5

3.9 15.5

2.8 13.1

91.0 3.9

200.0 4.9

179.5 4.2

145.1 4.3

120.4 5.5

198.6 4.3

3.0 15.4 128.7 3.5

3.9 13.3 226.9 4.6

3.8 10.8 279.4 4.2

4.9 20.4 137.9 4.1

3.7 10.7 281.8 4.7

4.0 9.4 119.7 3.3

GB

NL

2.7 25.5

Level 1 — Top level 1 Educational level achieved 2 Years of membership of professional institutions 3 Teaching experience 4 Number of journals taken Level 2 — Senior level (Immediate subordinate) 1 2 3 4

Educational level achieved Years of membership Teaching experience Number of journals taken

*GB = Great Britain; N L = Netherlands; D = Germany;

F = France S = Sweden I = Israel

Competence and Influence Sharing During the eight country comparative study, (Heller, Wilpert et al., 1981), we asked 1,600 senior executives in 129 organizations to describe carefully how they made twelve specific decisions. One half of the sample were the senior immediate subordinates of top decision makers. Both levels described the same situations, which provided a useful check on the results. In addition to describing how decisions are made, we collected other material, particularly about skills, because we thought that there should be a relationship between participation and competence. Table 1 gives selected comparative information about skills and qualifications from the eight country sample.

438

Frank Heller

3.1

Israel (3.10)

3.0

Britain (2.97)

2.9

Spain ( 2 . 9 0 ) Germany

Average

2.8

OSA

(2.87)

(2.83)

Netherlands (2.81) 2.7

France

(2.7)

2.6 2.5

Figure 2

Sweden (2.5)

Country Scores on the Influence-Power-Continuum for Senior Managers (High Scores indicate centralised decision methods)

It shows that there are substantial differences, despite the fact that the executives were closely matched for level and type of industry. British managers, for instance, have lower educational qualifications and less teaching experience than other managers, but have long years of membership in professional institutions. This lack of high level training, compared with other countries, has often been noted ( N E D C , 1987) and is frequently identified as a factor in Britain's relatively poor economic performance. The eight countries' data on decision-making is summarized in Figure 2. The results of the two levels have been averaged. High numbers in the diagram indicate relatively centralized or autocratic behaviour. Low numbers refer to more participative styles.2 The following interpretations are put forward: — Israeli, Spanish and British managers use the most centralized or authoritarian methods of decision-making, while French and Swedish managers are significantly the most participative in our samples. — Dutch, American and German managers use moderately participative methods.

Counter-intuitive Results The results contradict at least three intuitive stereotypes. When groups of middle managers are asked to rank different national groups according to their perceived participativeness, the French are judged to be autocratic (Table 2). This is probably due to people's experience with lower level French bureaucrats, rather than with products of the 'grandes

A Multinational Study of Decision-Making Table 2

439

How British Students of Management Estimate the Decision Behaviour of Four Nationalities British manager

French manager

German manager

U.S. manager

1. Own decision without detailed explanation 2. Own decision with detailed explanation 3. Prior consultation with subordinate 4. Joint decision-making with subordinate 5. Delegation of decision to subordinate

21.25

31.9

32.1

13.1

29.4

23.8

24.0

20.6

29.4

17.5

18.1

20.0

10.6

15.6

15.8

19.3

9.4

10.7

9.9

26.9

Total

100 %

Managerial styles

100%

100%

100%

These results are based on data from a sample of 365 British middle management students attending management development programmes in London.

ecoles', which produce most of the managers reaching top positions in big companies or the civil service. German managers are also frequently judged to be very autocratic, but this stereotype is probably associated with the second world war and before (Table 2). Several writers, including Servan Schreiber (1968) have described American businesses and their managers as being particularly democratic. Our results do not support this view (see Figure 2) although this false stereotype exists in the judgment of many students of management (Table 2). It is, of course, the function of research to correct intuitive stereotypes of cultural differences based on unrepresentative experiences, and instead to obtain adequate explanations for findings and to test them through further research.

Antecedents of Participative Behaviour Some of the findings reported above have been tested in other studies using the Influence-Power-Continuum. The authoritarian tendency of British managers was confirmed in a longitudinal research on 217 tactical and strategic decisions which confirmed the relative position of Dutch and British decision practices shown in Figure 2 (Heller et al., 1988).

Frank Heller

440

Although these and several other studies have found different patterns of national decision-making practices, we have only recently made some progress in relating decision-making to antecedents and consequences. A major factor in developing this understanding is to look at the role of competence, by which we mean skills and experience. In Table 1 we have already shown one way of assessing competence by objective measures. A second approach is to ask each top level executive how long it would take his immediate subordinate to acquire the minimum competence to take over the boss's job. We asked the subordinate the same question, namely how long he would need to acquire the competence to take over the boss's job. In both cases, competence was assessed in relation to twelve specific skills and experiences. The anwers could vary from one month to 15 years. The results give us a fascinating picture of judgments about competence. The differences between these two senior levels were sometimes small, but on average, very large. Using the whole sample of 1600 managers, the top level estimated that their subordinate would need more than 18 months to achieve the minimum necessary level of competence. Their subordinates judged that it would take them only a fraction over five and a half months. National differences in these judgments of the two top levels are given in Table 3. In the American sample the difference was just under five months; in Sweden, just over eight months; but in the other countries the gap was very much larger.

Table 3

Differences in Judgment between to Senior Managerial Levels Question: What is the minimum time it would take the subordinate to acquire the skills and experience necessary for the senior job?

Country

Difference between L. 1 and L. 2 in months

Britain Sweden US Germany Spain Holland France Israel

14.0 8.2 4.9 10.8 16.2 18.8 14.3 13.0

Average all countries

12.9 months

The judgments were based on 12 aptitudes and skills thought to be essential for successful managerial performance.

A Multinational Study of Decision-Making

Figure 3

441

The Relationship between Low Perceived and Actual Competence and Styles of Decision Making

National differences are always interesting, but usually difficult to explain, but when we analyzed the results for each pair of boss-subordinates, we found a very significant relationship between judgments of competence and methods of decision-making. When a manager makes negative judgments about a subordinate's skills and experience, he will use quite centralized decision methods. The use of participative methods is associated with positive judgments about the subordinate's skills. Exactly the same statistical relationship emerges when we compare the objective skills of subordinates with the decision method used by the senior manager (Heller, Wilpert et al. 1981, pp. 112 — 115). These results are illustrated diagramatically in Figure 3.

Consequences of Participation We also asked our sample of managers what benefits they expected to get from the use of participative methods. Here, for once, the country results were almost identical. Ranking five reasons for participation, the responses of both levels show that managers in every country gave first place to "Improvements in the technical quality of decisions" (Table 4).

Under-utilization of Competence So far, we have considered the case where lack of skill and experience predisposes managers to avoid participation, but competence also plays another important role in the decision process, namely as an outcome. We have evidence that competent senior managers are often unable to use their skill and experience. This is an obvious loss of potential economic efficiency. In our research we asked each manager at both levels to estimate the under-utilization of their own job. The results for six countries are shown in Table 5.

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Frank Heller

Table 4 Reasons for Using Participative Decision Making The answers are average ranks indicating the preferences of managers from eight countries

To To To To To

increase satisfaction improve the technical quality of decision train subordinates improve communication facilitate change

Level 1

Level 2

3 1 4 2 5

4 1 3 2 5

This finding fits in very logically with the relationship between competence and participation illustrated in Figure 3. If the main objective of using participation is to improve the quality of the decision, then a lack of real or perceived competence in subordinates would reduce participation (Figure 3).

Table 5 Underutilization of Skills and Experience as Seen by two Senior Managerial Levels Top level 1 %

Senior level 2 %

Netherlands Germany France Sweden Israel Spain

17.7 18.5 17.7 22.4 15.7 27.6

15.4 16.8 28.1 23.5 14.4 25.1

Average

19.7 %

20.1 %

While the variation between countries is substantial, the important fact is that at this very senior level, under-utilization is about 20 percent on average for our total sample. If this is translated into salary costs, it obviously amounts to a substantial diseconomy. The situation is even more serious than the figures in Table 5 suggest, because the averages hide the fact that younger and more highly educated managers report significantly more under-utilization than older and less well qualified personnel (Heller, Wilpert et al., 1981: 1 2 1 - 1 2 2 ) . It is now tempting to speculate that authoritarian decision making methods are responsible for at least a substantial part of this underutilization. The assumption here is that people who have no or limited access to the decision process or are not consulted, cannot contribute their experience

A Multinational Study of Decision-Making

443

and skill. While this is difficult to test in cross-sectional research, a causal relationship between authoritarian decision styles and skill under-utilization emerged from a five year longitudinal study in three countries.

A Model Linking Competence to Participation We are now able to complete the model illustrated in Figure 3. Competence plays a dual role. On the one hand it influences the degree of participation, and on the other hand, the decision style influences the extent to which available competence is used (Figure 4). Figure 4 has been drawn to highlight the negative aspects of skill judgments and skill outcomes. The same evidence can, of course, be used to reverse the cycle: positive judgments about subordinate competence are associated with more participative decision-making and this, in turn, would allow a better utilization of the availabe human skill resources.

Figure 4

Competence as an Antecedent as well as Outcome of Decision-Making Style

Conclusions Evidence from several multinational research projects highlights the importance of competence in understanding the process of decision-making and the utilization of human resources. While country differences are always interesting and give rise to intuitive interpretations, the most significant results seem to go beyond national differences. Objectively measured skill differences as well as subjective judgment of competence, rather than personality differences, are the antecedents to decision-making leadership behaviour.3 Subjective skill judgments, as we have seen from Table 3, are often unreasonably negative and can be moderated in management development programmes (Heller, 1976). Objectively assessed skills can, of course, be improved through suitable training. Notes 1 The research reported in this chapter was supported by two substantial grants from the Economic and Social Research Council of the Tavistock Institute of Human Relations.

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Frank Heller

2 The figures are derived from the Influence-Power Continuum (IPC) by multiplying position 1 on the IPC by 5, position 2 by 4, and so on. The result of this weighting is then added up and divided by 100. This gives a single score to each manager for each of the 12 decisions. The average of these 12 scores is shown in Figure 2. 3 The more detailed evidence against personality as a major causal factor is reported in Heller, 1971; Heller, Wilpert et al., 1981; and Vroom and Yetton, 1973. References Haire, M., Ghiselli, E. and Porter, L. Managerial Thinking, John Wiley & Sons, New York, 1966. Heller, F. A. Managerial Decision Making: A study of leadership styles and power sharing among senior managers, Tavistock Publication, London, 1971. Heller, F. A. "Group feed-back Analysis as a Method of Action Research." In Alfred Clark (Ed.) Experimenting With Organizational Life: The Action Research Approach. Plenom Press, New York, 1976. Heller, F. A. (et al.) "Managerial Decsision Making and International Comparison," in England, G. W., Negandhi, A. R. and Wilbert, B. (Eds.), Functioning of Organizations in Cross-Cultural Perspective, Kent State University Press, Kent, Ohio, 1979. Heller, F. Α., Wilpert, B., Docherty, P., Fourcade, J. M., Fokking, P., Mays, R., Roig, B., Weinshall, Τ. D., and t'Hooft, W. Competence and Power in Managerial Decision Making: A study of senior levels of organization in eight countries, John Wiley & Sons, Chichester, 1981. Heller, F. Α., Drenth, P., Koopman, P. and Rus, V. Decisions in Organizations: A three-country comparative study, Sage, London, 1988. IDE (Industrial Democracy in Europe research group) European Industrial Relations, Oxford University Press, 1981 a. IDE Industrial Democracy in Europe, Oxford University Press, 1981 b. Likert, R. New Patterns of Management, McGraw-Hill, New York, 1961. Likert, R. The Human Organization, McGraw-Hill, New York, 1967. Lindenfeld, F. and Rothschild-Whitt. Workplace Democracy and Social Change, Horizon Books, Boston, 1982. MSC (Manpower Services Commission) The Making of Managers: A report on management education, training and development in the USA, West Germany, France, Japan and the UK, Manpower Services Commission, National Economic Development Office, Millbank, London, 1987. Ohmae, K. The Mind of the Strategist: Business planning for competitive advantage, Penguin Books, Harmondsworth, 1983. Ouchi, W. Theory Ζ — How American Business Can Meet the Japanese Challenge, Addison Wesley, Reading, Mass., 1981. Servan-Schreiber, J. J. The American Challenge, Hamish Hamilton, London, 1968. Vroom, V. and Yetton, P. Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh, 1973.

Management Control in France, Great Britain, and Germany Jacques H. Horovitz

Thermostats and Aircraft landing gear pay no attention to national boundaries. In contrast, managerial controls differ both in design and in response. Because people are involved — with their diverse attitudes, traditions, behavior patterns, and expectations — the practice of controlling does vary from country to country. Aside from anecdotal reports, surprisingly little is known about the nature and reasons for these differences in control behavior. Systematic comparisons of actual managerial practices in different countries are rare. Past studies have dealt predominantly with headquarters-subsidiary relations of multinational firms. But the prevailing norms in the respective local countries have either been ignored or lumped into generalizations about national characteristics. Reliable knowledge about differences in control practices between countries has several potential uses. (1) Local managers can learn from each other. What works well elsewhere? What seems to account for such emphasis? Where can local improvements be made? (2) Multinational managers can be much more adept in designing their management structures. (3) Management theory (not considered in this article) can be made more realistic by disproving some hypotheses and supporting others. The present article is directed especially at the first use — local managers learning from each other — because so little exchange of dependable data appears to be taking place. Nevertheless, the findings reported also are relevant to comparative management generally.

Unique D a t a Base Meaningful cross-national comparisons of a subtle process like managing are difficult to make. In the study reported here, several devices were employed to bring out significant similarities and differences. The countries considered — France, Great Britain, and Germany — each represent a different cluster of culture (Latin, Anglo-Saxon, and Nordic European). Within each country companies of approximately the same size were selected, they are in the top five hundred but not in the first one hundred. All are local, indigenous concerns; none is a part of a multinational complex which might have imposed an alien management philosophy. They

446

Jacques Η. Horovitz

are active in the same range of industries. Thus, the study minimizes the effect of size and technology, while focusing on national differences. To obtain a dependable grasp of control practices in each company, the sample was necessarily selective. From sixteen to eighteen companies were studied in each country — fifty-two in all. In most companies, four highranking executives were interviewed — the managing director, controller, senior marketing executive, and senior production executive. The average time per interview was about two hours; in addition, company control documents and procedures were examined. In this way the prevailing practice and the rationale behind it could be cross-checked. To the writer's knowledge, no comparable in-depth systematic comparison of actual managerial practice in three countries has been undertaken before.

Clear Differences Do Exist Managers in France, Great Britain, and Germany differ significantly in what they try to control and in the way they go about it. Let us first summarize these differences, and then turn to a discussion of each country. Key characteristics of top management control in the three countries are compared in Table 1. The purpose, frequency, tightness, formalization, and staff assistance are among the dimensions for which significant differences were found. Summarizing briefly, British managerial control practice is characterized by the following features: — Financial control is emphasized, and this is sophisticated. — At the top managerial level control is not detailed; rather, it focuses on exceptions and early warning systems. — Control is used more as a guiding instrument than a policing or surveillance instrument. — Much autonomy is delegated to product/market units, with little involvement from central staff.

In contrast, in Germany essentially the opposite view prevails: — Control at the top is very detailed. All variances are reported rather than only highlights and exceptions. — Much more emphasis is placed on production control, with stress on operational efficiency: — To achieve this centralized control, heavy reliance is placed on a large central staff to measure performance, analyze variances, and compile quantitative reports for senior executives. — Control is heavily used as a policing and surveillance instrument.

In France, the control systems are more like those used in Germany than the British. Primary emphasis is given to surveillance rather than to guiding,

Management Control in France, Great Britain, and Germany Table 1

447

Key Characteristics of Top Management Control Differentiating Countries*

Uses of Control — to stick to the plan — to police operations — to reward and/or sanction Primary Functional Emphasis Control Substantially Decentralized Degree of Detail Time Orientation Degree of Quantification Frequency Involvement of Central Staff Degree of Systematization and Standardization

Great Britain

Germany

France

medium low low Finance yes

high high low Production no

low high low Production no

overall future some qualitative month low high

very detailed past quantitative week high high

detailed past quantitative week high low

* high and low are only meant in relative terms. The basic measurements and analytical procedures on which this table is based are explained in the author's Ph. D. dissertation, A Cross National Study of Management Control Practices, Columbia University, 1978.

with the main focus on production control. Usually control is centrally administered. However, the typical French practice is less systematic and less sophisticated than the usual German system, as will be explained later.

Interdependence of Control with Organization and Planning Much of this observed variation in control practice can be ascribed to differences in managers' expectations about subordinates' behavior, to more or less engineering orientation derived from formal education, and to other "cultural" distinctions between the three countries. However, control should not be viewed as an independent activity. Analysis of the total managerial pattern in each of the fifty-two companies shows that control practices are closely related to the organization structure and to the planning processes being followed. In other words, the unique country characteristics impinge on the total management system of a company in addition to control per se. And these other managerial arrangements influence the kind of controls which are appropriate.

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Organisation Patterns Most companies studied in Great Britain are holding companies. A small central staff overlooks from twenty to fifty subsidiaries, each headed by a managing director, each having its own products, brands and markets, and the necessary logistics to operate (administration, accounting, personnel...). Many decisions are decentralized to the subsidiary level and below, while the central office staff and directors shape policy decisions at the group level, act as a bank for the subsidiaries, and monitor the performance of the subsidiaries. At the group level as well as the subsidiary level, top executives meet once a month to review performance and discuss policy matters. Usually, a group executive chairs the local subsidiary committee. Such a structure allows for flexibility, autonomy of operations, and entrepreneurship at the operational level, while orientation and loose control are supplied by group executives and a small staff. In German firms, the overall impression is one of "Hyperspecialization," even at the top. Although half of the companies studied are organized by large divisions, the others are organized by functions. The chief executive is in fact a team, in which each member has a functional specialization; and, even in those firms organized by division, each division is headed by two or more functionally specialized executives. Central staff functions, support activities, and services are quite extensive, providing assistance to local operations (functional and/or divisional) but also centralizing a number of decisions (such as buying). As already noted, central control over production is tight and frequent. Altogether, delegation of authority is low, much lower than in Great Britain. Neat and well-compartmented as this German structure is, executives are many times called by their number which refers to the office they hold. The top team will usually meet every week to coordinate functional specialization. The overall impression is not one of flexibility, but of operational efficiency. In France, most companies are organized by functions. Central staff and services are as extensive as in Germany. Instead of choosing a divisional structure when activities are diversified at the operational level, chief executives prefer to head commercial divisions responsible for the sales functions only, and product or geographical units for the production function. Many decisions are centralized at the top level, as in Germany, and committee management is scarce. The chief executive is often left with many final decisions when problems arise between functions. Much of the control is left to him personally. These differences in organizational patterns are reflected in Table 2.

449

Management Control in France, Great Britain, and Germany Table 2

The Basic Organization of Labor* Great Britain

Ν U Μ B Ε R Ο F

F I R Μ S

Germany

France

Organized by Functions

1

8

12

Organized by Large MultiProduct Divisions

4

6

3

11

3

1

2

1

0

18

18

16

Organized by Product/ Market Subsidiaries Organized by Region Total

* When comparing functional organizations vs. others (profit centres) χ 2 = 9, df = 1, α = 0.01.

Planning Processes Top level planning in each of the three countries is compatible with the control practices and organization structures already described. Most British firms have been doing long-range planning for six years or more, and many have set up a special department at the corporate level to collect individual plans coming from each subsidiary. Starting at least six months ahead of the first of a new year, such planning is essentially a bottom-up process whereby each individual managing director submits a 5-year plan which will be discussed individually at the corporate level, and then reshaped at the subsidiary level before being submitted again. An aggregate plan follows and is written before the budgetary sessions start. This process, which lasts about 4 to 5 months, involves about 100 people per firm; planning procedures and content requirements are usually specified in a standard planning manual. The plan deals with all facets of the unit; it is not solely concerned with operations but is also strategic in nature. Most German firms also engage in long-range planning but have not been doing so for as long as the British ones. As in Great Britain, a bottomup approach is typical. The process usually starts a little bit later than in Great Britain (4 months before its application). Shorter in horizon (3 years), it is much more oriented towards operations than towards strategy. The only standard manuals that may exist focus upon financial forecasts. Frequently there is no separate department for long-range planning; the controller is responsible for both long-range planning, budgeting, and controlling at the corporate level. As a result of this organization for planning,

450 Table 3

Jacques Η. Horovitz Number of Firms Engaging in Long-Range Planning Annually

Number of chief executives who report having a written long-range plan Number of chief executives who do not have a written long-range plan Total

Great Britain

Germany

France

13

14

5

5

4

11

18

18

16*

* χ 2 = 9.11, df = 1, significant at α = 0.01, mixing columns one and two.

sometimes long-range plans are prepared together with, or even after, the budget or annual plan. Usually, fewer people than in Great Britain participate in it (70 people). In contrast to the long-range planning just described. German companies do prepare stringent and detailed one-year production plans. These action programs feature key objectives, tasks, responsibilities, and deadlines — whereas in Britain short-run plans even at the subsidiary level are essentially budgets. Less than half of the French companies engage in long-range planning. For those who do, the so-called plan is often more like 3-year financial forecasting rather than being decisions today which can change the normal course of actions for tomorrow. The 1973 crisis seems to have disgusted some planners, and they have either stopped or become more suspicious about it. Thus, some firms have reduced the horizon (from 5 to 2 or 3 years); others abandoned planning altogether. Few people participate in the effort (50 people), and there is no planning manual to fix procedures or content requirements. As a result, the effort is short (work on it lasts for 2 months) and half of the companies who do it prefer to prepare the forecasts after the annual budget is settled.

Implications for Managers Having summarized above a set of interesting findings from our in-depth study of comparable companies in three countries, the article turns to implications for managers. The most striking observation is that managers in France, Great Britain, and Germany are not learning much from each other. At least with respect to managerial control, strengths are coupled with weaknesses. No company in our sample of not-so-large indigenous concerns is taking full advantage

Management Control in France, Great Britain, and Germany

451

of the potential combination of skills. So let us look briefly at each country — its characteristic strengths and its opportunity of learning from its neighbors. 1. British

Management

British firms seem well equipped for financial control and are doing a good job here. Measures of objectives as well as performance are not mixed with fiscal accounting, and control bears not only on the attainment of profit and cash flow targets but also comprehends the management of assets and especially cash, an important item in an inflationary economy. In addition, forward-rolling forecasts and highlights of main results provide managers with a guiding instrument. Long-range planning has been going on now for several years; and managers are stimulated through the planning process to think ahead, to make predictions so as to be able to correct decisions, if required. Manuals and procedures are quite impressive and advanced, and provide ample opportunities for line management to think in terms of the best allocation of resources. In maketing control, processes seem adequately decentralized to allow the responsible person to monitor performance and take whatever steps are necessary to reach formulated goals. On the other hand, British managers can learn something from the Germans about control of production. With engineering precision and disciplined management of operating conditions, the Germans plan and then control activities clear down to well-defined cost centers as small as a dozen workers. Moreover, they often establish management by projects which are an explicit step in a long-range plan. This kind of planning and control forces managers to determine key efficiency objectives, key tasks, key responsibilities, and key dates; it can be a vital tool for closing the gap between actual performance and strictly financial plans. Of course, the British managers neither can, will, nor should take over German production controls in toto. Major adjustments such as the following would be necessary. (1) The detailed planning and exercise of control can be done within each subsidiary — not centralized as in Germany. Nevertheless, group managers will have to take a much more active role in designing and monitoring the localized systems. Control via financial results alone — now typical of British firms — is too remote and indirect. (2) The manner of setting standards and requesting corrective action will have to be suited to local social relationships. Firmness and openness can go together. In addition. British senior managers can relate their controlling more effectively to strategic moves in the following ways: — Close the gap between long-range strategic plans and short-run efficient financial plans by one-year programming and project management, especially in the area of production.

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Jacques Η. Horovitz

— Emphasize more strategic control at the top managerial level, in order to evaluate a subsidiary not only by its cash and income statement, but also in terms of its long-term development. This may require less financial information but developing key indicators for each area (or activity) which can help both at the planning stage (e. g., probe the strategies presented by each activity) and at the monitoring stage.

2. German

Management

The main strengths of German control systems which may be inferred from the research are its orientation towards short-term operational efficiency especially in production, and its ability to work on and monitor projects dealing with such efficiency. As already noted, these controls are very effective. The typical German production control, however, does require a large central staff with a great mass of detailed data flowing into central headquarters. Past emphasis had been on close surveillance. A constructive shift is occurring in some, though not all, German companies from the old style "Kontrolle" to a new emphasis on "Control." The new pattern focuses attention on key figures and selectively highlights key problems; more emphasis is given to guidance rather than past performance. An aspect of this shift is — like the British planners — a separation of control from financial record-keeping. The main potential British contributions to German control systems involve (1) greater flexibility especially in dealing with untractable marketing problems, and (2) more attention to strategic moves. The British achieve these ends primarily through decentralization of planning, and also through a laxness in control itself — neither of which means it fits easily into the German management philosophy. Nevertheless, other ways of achieving similar ends can be devised. The following suggestions move in this direction. — Separate management control from accounting. Although the computer is handy for providing information on both, it is not required to handle management control in such a way, as the British case shows. Separating the two might allow a focus on information which is more important for decision-making as opposed to recording. — Put more emphasis on strategic planning and strategic control especially in those areas where international markets are becoming more competitive. In this area, separating the long-range planning process from the budgets and control department may be required. — Give more flexibility in the marketing area by specifying control characteristics which are different from production. Discipline, cost consciousness, and shortterm results may be in order in production, but marketing cannot be reduced to such quantitative measures.

Management Control in France, Great Britain, and Germany

453

3. French Management In France, a modern minority of firms have controls which tend to follow the German pattern but with some British features in the financial area. These companies are seeking a balance between German "tightness" and British "flexibility." As yet no clear reconciliation has emerged, partly because the typical French form of organization differs so widely from the British decentralized "holding" structure. For a large majority of French firms, however, the problem lies not so much in control as in planning. Without adequate planning, control becomes a rather diffuse task: it is a mixture of accounting, fiscal income statement surveillance, and informal power exercised by the chief executive. The lack of system is even more pronounced when companies are headed by the founder or held by a family: As long as the chief executive, through his personality, charismatic role, and sense of direction, can stay on top of things, especially in high-growth markets, a company can develop without much formal planning and control. Trouble arises when growth slows down and especially when the key executive drops out of the picture. The options then are either failure or professional management. This study provides some idealistic suggestions for such a newly appointed professional manager of a French company. For financial and marketing planning and control, draw on British practice; for production planning and control, turn to the newer German design centering on "control;" and for strategic planning and control, look to proposals for improving both designs (reflecting advanced U. S. practice). The obvious drawback of such a composite is that we found no organization model with provides the necessary support for the combined set of controls. In current practice, for companies of the size and nature covered in this study, French organization is much closer to the German pattern than the British pattern — functional departments and centralized. And current economic and social pressures in France push toward continuing centralization. Consequently, when the newly appointed professional manager takes over, he probably should look to the German pattern of control — but modified in the manner recommended above.

Implications for Multinational Corporations Besides country specific directions for improvement, this research study provides some implications for multinational corporations. The results tend to show that standard universal management principles should be applied differently in each country depending on the key characteristics of the planning structure and general management style which predominate in that

454

Jacques Η. Horovitz

particular country. By "applied differently" we mean that before standardizing the foreign affiliate's management design to meet headquarters' wishes in the control area, careful assessment should be made of the way local variables impact on the structure of planning and control. If there is quite a difference from the customary structure in the headquarters' country, then leads and lags in management sophistication should be recognized. For instance, acquiring a subsidiary in France may require training in marketing control and a longer time for people to learn how to decentralize and use planning than would be necessary in Great Britain. Examples of the local factors that should be assessed include: — The impact of current educational backgrounds on control emphasis: training may be needed in weak areas (production control in Great Britain, marketing control in France, for instance). — The impact of beliefs and attitudes towards authority and centralism: more time and effort may be required to decentralize in a country with strong habits of centralization. — The levels of sophistication in planning achieved: to fit headquarter's needs, more training might be needed in that area to arrive at adequate control.

At least by being aware of such variations, mistakes may be avoided in pushing too many new control mechanisms. Comparative in-depth studies of managerial practices in additional countries will, of course, provide more insights on "what works well where." The findings of the three-country study reported here were sufficiently rich to recommend enthusiastically that such studies be made.

Organizational and Managerial Roles in British and West German Companies: An Examination of the Culture-free Thesis John Child and Alfred

Kieser*

Many of those who have argued for comparison to be made between organizations in different societies see this as a method of bringing cultural differences into sharper focus. They believe that socio-cultural influences will be strongly manifested in patterns of organizational behaviour. Crozier, for example, in commenting on the lack of such comparisons, has stated that Intuitively people have always assumed that bureaucratic structures and patterns of action differ in the different countries of the Western world and even more markedly between East and West. Men of action know it and never fail to take it into account

(1964). In similar vein, Malinowski suggested in his later writings that 'institutions' would provide the ideal isolates for drawing comparisons between cultures (1960, esp. chs V and VI). In recent years, however, a contrary view has developed to the effect that patterns of organization will be free of cultural influence, especially in industry, because contingencies of scale, technological development and so forth impose a common logic of work and administration which it becomes functionally imperative to adopt in terms of institutional performance. This argument underlies the thesis advanced by Kerr et al. (1960), that the organizational and institutional patterns of industrial societies are converging. It is also reflected in Hickson et al.'s (1974) conclusion that relationships between context and organizational structures are free of cultural influence and in Inkeles' (1960) description of international 'industrial man.' The aim of this chapter is to examine these issues in the light of direct comparisons between business organizations in two countries — Britain and West Germany — which are at very similar stages of industrial development, but which have often been noted for their cultural and social differences. In the light of this examination the culture-free thesis will appear to be of only limited significance and based on unproven causality.

The Culture-free or Contingency Argument The best known thesis of this kind has been advanced by Kerr et al. in 'Industrialism and Industrial Man' (1960). These authors argue that there is a logic of industrialism, generating imperatives of an economic and

456

John Child and Alfred Kieser

technological nature, which is steadily moulding the development of industrial societies into a common pattern. Despite the diverse political, ideological and cultural origins of industrialized societies, their institutional frameworks are converging under the force of a common industrial logic. Galbraith, in 'New Industrial State' (1967), has, of course, advanced a comparable argument. It bears some affinity to the Marxist view that the form of social institutions is moulded by forces in the economic sub-structure. This line of reasoning was developed with more specific reference to forms of organization and management by Harbison and Myers in 'Management in the Industrial World' (1959). They argue that industrialization brings about an increasing specialization of functions within industrial organizations. Enterprises grow in internal complexity and they grow in overall size. Specialization and complexity create problems of co-ordination within organizations and in order to maintain order and control the employer is forced 'to cover the role of rule-maker'. At the same time, growing size and complexity make it increasingly difficult to retain all decision-making at the top of organizational hierarchies. Therefore, 'the logic of industrial development calls for increasing managerial decentralization as enterprises grow in size and complexity'. Appropriate authority relationships also shift from an authoritarian to a more constitutionally formalized and participative mode along with decentralization, with the employment of specialist experts and with rising employee expectations. Management itself has to become increasingly based on competence and professionalism. Harbison and Myers argue that the logic of industrialization prevails whatever the cultural setting, though they do recognize that cultural factors can impinge on the process and may slow it down. The thesis put forward by Hickson et al. that 'relationships between the structural characteristics of work organizations and variables of organization context will be stable across societies' (1974) can be seen to represent one chain in Harbison and Myers' earlier and more comprehensive argument. Hickson and his colleagues doubt that cultural setting will influence the nature of such relationships. The implication of the culture-free or contingency argument for a comparison of British and German organizations is the following. The two countries are at approximately the same stage of industrialization and have very similar economic structures (NEDO, 1976). Economic organizations within the two countries, if they are of similar size and share other contextual characteristics, should demonstrate no significant differences in structure or in the nature of their approach to management.

Roles in British and West German Companies

457

The Culture-specific Argument This argument notes how different societies exhibit distinct and relatively persistent cultures, i. e. widely shared patterns of thought and manners. This enduring strain of culture is internalized as each new generation passes through its process of socialization. People learn their own unique language, concepts, and system of values, and they also learn to regard as legitimate particular modes of behaviour. Therefore, it is argued, even if organizations located within different societies do face similar contingencies and adopt similar models of formal structure, deep-rooted cultural forces will still reassert themselves in the way people actually behave and relate to each other. Structure will remain purely formal if it is not consonant with culturally derived expectations. Within the Western world, the Germans have often been singled out for having a supposedly greater respect for authority and an inclination towards directive rather than participative relationships. One of the most striking examples of how this distinguishes between British and German populations is provided in Haire et al.'s comparisons (1966) between the meanings attached by managers in the two countries to the concepts 'to direct' and 'to persuade.' Among the samples of managers from fourteen countries included in the study, German managers scored the greatest degree of dissimilarity in the meanings they attached to the two concepts (1. 99), while British managers tended to perceive relatively little difference in their meaning (0.45). For German managers, directing had much greater prestige and involved far more firmness than did persuading. At the same time, persuading was for German managers less closely associated than directing with 'favourable' concepts of 'to decide,' 'to create' and 'to co-operate.' Persuading was more closely associated than was directing with 'unfavourable' concepts of 'to reprimand,' 'to make a mistake' and 'to cheat.' In both Britain and Germany, attitudes towards the two concepts did not vary much with managers' hierarchical positions. They would therefore seem to point to different philosophies, the German one being much more inclined towards authoritarianism and centralization. Hofstede (1974) in a study of middle managers attending courses at IMEDE, Lausanne, between 1970 and 1973 presents data which also suggest that German managers hold different value preferences to their British counterparts. In regard to work, the Germans tended to attach greater importance to orderliness and having clear-cut objectives, but less importance to achievement and challenge. In regard to relations with people, the British tended to value benevolence towards and receiving recognition from others more highly, while the Germans attached relatively greater value to having authority over other people.

458

John Child and Alfred Kieser

These findings are consistent with other research and discussion on British and German cultural differences, most of which, because of the Nazi trauma, concentrates on the German case (e.g., Erikson, 1965; McCelland, 1964). Compared to his counterpart in Britain, the German emerges as having a greater respect for authority, a stronger fear of displeasing his superiors and of failure, and a stronger desire for explicit and stable relationships. There is also evidence from previous studies to suggest that these broad cultural contrasts will be evident in the behaviour of managers and in the ways their roles and relationships are structured. For example, Ruedi and Lawrence compared six American plastics firm with a German counterpart and concluded that 'the evidence is abundant that the general features of the German culture did show up in the internal features of Plastik AG' (1970). The German management adopted 'the traditional and culturally ingrained view of organizations as authority structures, requiring explicit, stable and strong hierarchical relationships with "ultimate" authority at the top' (p. 81). Granick's comparative studies (1962, 1972) also lead to the conclusion that British managers enjoy a relatively high degree of decentralization of authority and influence, while German managers enjoy relatively less freedom of action. If culture does make for a difference between organization and management in Britain and Germany, the nature of the contrast to be expected seems pretty clear from the studies cited. German firms will, ceteris paribus, be more centralized. Their internal relationships will have a stronger emphasis on hierarchy and stability and this is likely to be reflected in higher degrees of routine, lower authority and less mobility between jobs at levels below top management. One of the most penetrating and graphic analyses of what this means for German managers has been provided by Hartmann (1959 a, 1959 b). Hartmann stresses that German top managers ('Unternehmer') are much concerned with their authority. Whereas management in most Western countries justifies its authority in terms of knowledge and technical ability, Hartmann states that the German top executive's system of authority consists of valueoriented or non-functional definitions based on notions of charisma, calling or trustee-ship. In contrast to the British ethos of a management team, many top German executives conceive of departmental managers ('leitende Angestellte') as being quite distinct from themselves: In this context, the major qualifications of the leitende Angestellte have been described as bureaucratic attention to detail and Sitzfleisch ('ability to sit it out'). It is considered proper management strategy that the Unternehmer retain for himself the function of leadership (Führung) and delegate only authority over routine operations (Leitung). The ensuing lack of legitimate power so strongly emphasizes the subordinate character of the leitende Angestellte that, by comparison with the top executive, they appear to have more in common with their own subordinates than with their ultimate superior (Hartmann, 1959 b, pp. 270 — 271).

Roles in British and West German Companies

459

Two opposing theories, then, provide an analytical framework within which a comparative study of British and German companies can be undertaken. As is often the case, both theories could be partially correct. Contingencies associated with industrialization, such as the economies of scale, could take a hand in shaping organizational variables together with cultural factors. Contingencies possibly bear more upon formal structural arrangements while culture may be reflected more at the level of how individuals activate their roles and relate to each other. What does the data suggest?

Sample of Companies in Britain and West Germany 1 Data for this study was drawn from eighty-two British companies and fiftyone West German companies. The British sample comprised fifty-five organizations located in four manufacturing industries — chocolate and sweets, electronics, daily newspapers and pharmaceuticals and twenty-seven organizations located in two service industries — advertising and insurance. The German companies were all manufacturing, located in a range of industries in Nordrhein-Westfalen. The British companies were selected to provide clusters around the following size levels: 150, 300, 500, 1,000, 2,500 and 6,000 employees. The range of organization sizes runs from 108 to 9,778 employees with a mean size of 1,542 employees. The German companies were selected on the same basis except that none were studied at the 6,000 employment level. The range of German organization sizes runs from 85 to 3,324 giving a mean of 895 employees. For certain comparative purposes a sub-sample of 71 British companies will be used, eliminating those clustering around the 6,000 level, and giving a mean size of 798 employees. In both British and German samples, the great majority of organizations were independent companies or subsidiaries operating under their own identity. A difference between the two samples lies in the fact that there are twentyseven service companies in the British sample. An examination of the interindustry differences in organizational and managerial variables indicated that the inclusion of the service companies does not significantly affect comparisons to be made, except in the case of a few variables which will be noted. It was decided therefore to retain the service companies in the sample.

Procedure Fieldwork was undertaken in Britain during 1967 to 1969 and in Germany during 1970 to 1971. Both investigations employed the relatively standardized Aston methods for measuring dimensions of organization structure and

460

John Child and Alfred Kieser

context developed by Pugh et al. (1968, 1969). These instruments were translated into German by Kieser who had previously studied in the USA. Data on organization structure and context were gathered from interviews with chief executives and a range of managers and specialists in each organization. Confirmatory documentary material was also collected where available. In order to gain an insight into managerial variables within each company, a self-administered questionnaire was used. This had also first been developed at the University of Aston, having been piloted by Inkson et al. (1968). Kieser translated the questionnaire into German. Completed questionnaires were received from 787 managers in 78 of the British companies and from 198 managers in 47 of the German companies. For these managerial samples, heads of departments in 13 specified functional areas were selected from each organization (where such posts existed), together with any other managers reporting directly to the chief executive. Personal assistants were excluded. Nearly all the managers were located at one or two levels below the chief executive. In short, both British and German samples can be compared through an identical conceptual framework and, with a few exceptions which will be noted, through the application of identical measurements.

Contingency Theory: The Nexus between Context, Structure and Managerial Roles The relationships found in both the British and German samples between contextual and structural variables do not appear to refute the logic of industrialization thesis. In both cases, the size of the organization and the size of a parent organization or group to which it might belong emerged as predictors of organization structure. Technology (as assessed by the integration and automation of workflows) was not a consistent predictor. A summary of these results is shown in Table 1. Other studies of organizations of different types in various countries have found similar size-structure relationships (cf. Child, 1973 a, Hickson et al., 1974). The British and German samples exhibited similar regression slopes for the measures of specialization as size increased, and also for the number of hierarchical levels in organizations (Kieser, 1973). While, however, German companies tended to have marginally lower values on these variables over most of the size ranges sampled, they had generally higher levels of decision-making centralization as we note shortly. It might be expected that a contextual factor such as size would relate to the nature of managerial roles through the general approach which a

461

Roles in British and West German Companies

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Roles in British and West German Companies

decisions of top managers (particularly the chief executive and members of the supervisory board), as opposed to their position being formally and 'objectively' defined in a somewhat legal-rational manner. In terms of Harbison and Myers' thesis (1959), German management has in this way tended to resist the 'logic' of development towards formalization. There are certain indications that these differences between British and German managers are culturally acceptable in their respective contexts, over and above the fact that they are consonant with contrasts drawn by others between the two societies. The level of job satisfaction expressed by German managers is higher — indeed, if the British service organizations are eliminated the contrast becomes greater since the British average is then lowered. This higher level of job satisfaction is not a consequence of lower conflict or a greater feeling of competence among German managers, for these variables do not discriminate between the two samples. It could, of course, reflect their higher rewards and the generally superior performance of German companies. However, most authorities would accept that the level of satisfaction with jobs is also a function of how compatible the intrinsic characteristics of those jobs are with the expectations of their incumbents. The higher job satisfaction of German managers could therefore indicate

Table 6

1

Comparison of Personal Orientation (198 West German and 787 British Managers)

Degree of preference for a varied work environment*

mean sd value of t

W. German managers

British managers

4.91 1.47 16.08

7.11 2.47 Level of confidence (p) < 0.001

*

Higher score indicates greater preference for a varied work environment.

2

Expectations regarding the questioning of authority*

mean sd value of t

*

W. German managers

British managers

10.54 2.35 11.05

13.38 5.47 Level of confidence (p) < 0.001

Higher score indicates less acquiescence with established authority.

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that the limited authority and variety which tends to characterize their jobs is expected and accepted as legitimate. Such acceptance would almost certainly be a product of social culture, and may go back to the dominant role of the German father in the childhood home which Erickson describes (1965). Further pointers to the presence of differential expectations in the populations of British and German managers are provided by Table 6. A multiitem measure of personal flexibility in the work context was completed by all the managers, and a similar first factor emerged from both samples. This was highly loaded on items which expressed whether or not respondents preferred variety and uncertainty in their work (preference for a varied work environment). It can be seen that German managers tended to be significantly less willing to face variety and uncertainty, and — this is quite consistent with the greater routine and reduced discretion they accepted in their jobs compared to British managers. Similarly, a measure of managers' expectations about questioning the system of authority in their firms suggests that German managers regard as appropriate a higher degree of acquiescence with established authority than is the case with British managers. Personal preferences and expectations such as these are likely to be culturally derived, and help to explain why German managers should be more satisfied with their restricted roles than are British managers with less restricted roles.

Conclusion: A Framework for Cross-cultural Studies of Organizations The research reported in this paper suggests that culturally specific factors such as people's expectations about authority will mediate between contextual variables such as size of organization and the nature of structures, roles and behaviour within organizations. The nexus of size, structure and role, posited by the logic of industrialization thesis, was apparent in both British and German firms. However, companies in the two countries displayed different patterns of decentralization — a major structural dimension — and different managerial role characteristics, which could not be ascribed in a consistent manner to size or indeed to any other immediately contingent factor. These contrasting patterns in structure and role were, on the other hand, predictable in view of the differences which commentators have drawn between British and German cultures, and which the authors have themselves experienced. There can be no question on the basis of this evidence that, contrary to the view implied in some recent writings, a sociologically valid theory of organization must take cultural settings into account. Even the modest consistencies in context-structure relationships which are cited as evidence for a culture-free or 'contingency' theory of organizational development are

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open to another interpretation. They may be due not simply to a process of causation whereby contingencies such as size lead to specialized, formalized and decentralized structures, but also to the designers of organization in different countries applying the same principles and philosophies. This could mean that while contingencies may be the product of industrial and social development, a communality in structural forms is the product of a transference of ideas as much as a consciously planned response to the contingencies. The transference of ideas argument gains some support when one examines the major sources in business literature which have been consulted by managers in Britain and Germany. Conceptually there is not a great deal of difference between the approach of Anglo-American writers such as Gulick and Urwick (1937) with their classical 'Principles of Management' school which exercised considerable influence in post-war British management, and the work of leading German writers on organization of the same period such as Nordsieck (1931, 1934), Henning (1934) and Ulrich (1949). Following the war, Anglo-American approaches to organization design were quickly adopted by German writers and by business practice. More recently, large consulting firms such as McKinsey with subsidiaries in all the main West European countries have also played their part in accelerating the transfer of organizational principles and techniques across national boundaries. The contingency argument would gain some support if it could be shown that the same context-structure relationships prevail in different countries even if the designers of organization hold different preferences on the matter of how structures and roles should be set up. In other words, if it could be shown that contingencies will have effect despite culturally derived preferences or that, where such preferences are allowed to influence organization, the performance of the institution suffers. In an earlier paper, we argued that it was not realistic to suppose top managers and administrators did not incorporate their own ideas and preferences into the strategic policies they formulated (Child, 1972). As it is, most of the dissimilarities we have noted between British and German companies could be interpreted on the basis of an assumption that German top managers prefer centralized decision-making. If it is allowed that both contingencies and cultural factors are likely to assist in the shaping of organization structure and roles, the question arises as to where these two streams of influence fit together. Our data suggests that the cultural factor has most bearing upon modes of individual conduct and interpersonal relationships, and it is precisely at this level that one would expect the products of socialization to be manifested most strongly. Granick (1972) has also presented some evidence on the way in which culturally different management philosophies bear particularly closely on the roles of managers.

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E a r l y d e v e l o p m e n t in family o n d s c h o o l ; previous work e x p e r i e n c e ; o t h e r f o r m a t i v e influences

Figure 1

A General Model of Cultural and Identional Variables Intervening in the Relationship between Context, Structure, Role and Behaviour

Studies of industrial workers (e.g., Goldthorpe et al., 1968; Kohn and Schooler, 1969; Kern and Schumann, 1970) have indicated that orientations to work roles are to some degree shaped by factors such as previous work experience, education, family situation, class affiliation and so forth. There is no reason to believe that the substance of these out-of-work factors, which will reflect societal differences, should not affect the orientations of managers towards their work roles. If managers in different countries have internalized qualitatively distinct attitudes and norms of conduct as a result of such experiences, then their interpretation of social reality and of their role within it is likely to vary also. If one attempts to draw some of the foregoing considerations together into a framework of analysis for cross-cultural organizational comparison, the result is along the lines shown in Figure 1. This diagram is based on a previously developed model implying an asymmetrical set of causal influences running from the context of organizations to their structures, to work roles and to behaviour (Child, 1973 b). The asymmetry of such a model is, of course, an over-simplification, but it does none the less represent the contingency view in its crude form. In the diagram, we suggest that philosophies of management are likely to enter primarily as a mediating influence on the design of structure and to some extent on the design of roles. The attitudes of managers towards concepts of work and authority are likely to affect the structuring of decision-making and the nature of individual roles. It is portrayed as mediating the relationship between structure and roles. A third point is that the interpretation of acceptable conduct is likely to mediate between the role a person occupies and the way he chooses to behave in that role. At every point, then, in the causal chain posited by culture-free contingency analysis, other influences, mostly cultural in origin, are likely to interpose. Most of these influences have already been identified and conceptualized by other writers (e. g., Oberg, 1963; Farmer and Richman, 1965;

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England, 1973 and Negandhi, 1973). Cultural variables have not, however, been incorporated into a model which systematically links together the analytical levels of context, structure, role and behaviour. Our comparison of data from British and German companies suggests that an extension of the basic contingency model through allowing for the influence of culture and ideas on managerial choice can result in a meaningful explanation of variations between the two countries as well as a plausible interpretation of similarities.

Notes * The authors would like to thank Andreas Budde, Arthur Francis, Steve Nyman, Otto Poensgen and Manfred Röber for their valuable comments on an earlier draft of this paper. 1 Centralization scores regarding strategic and major administrative decisions are inflated for companies in the British sample by two factors: 1. Relatively more German boards had a majority of executive members than did British boards; 2. the British sample contained a higher proportion of subsidiary companies. Details of the method of scoring are given in Table 4.

References Child, John (1972), Organization Structure, Environment and Performance: The Role of Strategic Choice, 'Sociology,' vol. 6, pp. 1 —22. Child, John (1973 a), Predicting and Understanding Organization Structure, 'Administrative Science Quarterly,' vol. 18, pp. 168 — 185. Child, John (1973 b), Strategies of Control and Organizational Behaviour, 'Administrative Science Quarterly,' vol. 18, pp. 1 — 17. Crozier, Michel (1964), 'The Bureaucratic Phenomenon,' Tavistock, London. England, George (1973), Personal Value Systems and Expected Behaviour of Managers — a Comparative Study in Japan, Korea and the United States, in Desmond Graves (ed.), 'Management Research: A Cross-Cultural Perspective,' Elsevier, Amsterdam. Erikson, Erik H. (1965), 'Childhood and Society,' Penguin, Harmondsworth. Farmer, Richard N. and Barry M. Richman (1965), 'Comparative Management and Economic Progress,' Irwin, Homewood, 111. Galbraith, John Kenneth (1967), 'The New Industrial State,' Hamish Hamilton, London. Goldthorpe, John H., David L. Lockwood, Frank Bechhoofer and Jennifer Piatt (1968), 'The Affluent Worker: Industrial Attitudes and Behaviour,' Cambridge University Press. Granick, David (1962), 'The European Executive,' Doubleday, New York.

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Cranick, David (1972), 'Managerial Comparisons of Four Developed Countries,' MIT Press, Cambridge, Mass. Gulick, Luther H. and Lyndall F. Urwick (eds.) (1937), 'Papers on the Science of Administration,' Institute of Public Administration, New York. Haire, Mason, Edwin E. Ghiselli and Lyman W. Porter (1966), 'Managerial Thinking: An International Study,' Wiley, New York. Harbison, Frederick and Charles A. Myers (eds.) (1959), 'Management in the Industrial World: An International Analysis,' McGraw-Hill, New York. Hartmann, Heinz (1959 a), 'Authority and Organization in German Management,' Princeton University Press, NJ. Hartmann, Heinz (1959 b), Management in Germany, in Harbison and Myers (eds.), 'Management in the Industrial World: An International Analysis,' McGraw-Hill, New York. Hennig, Karl W. (1934), 'Einführung in die Betriebswirtschaftliche Organisationslehre,' Springer, Berlin. Hickson, David J., Christopher R. Hinings, Charles J. McMillan and Joseph P. Schwitter (1974), The Culture-free Context of Organization Structure: A Trinational Comparison, 'Sociology,' vol. 8, pp. 59 — 80. Hofstede, Geert H. (1974), Nationality and Espoused Values, Working Paper 74 — 78, European Institute for Advanced Studies in Management, Brussels. Inkeles, Alex (1960), Industrial Man: The Relation of Status of Experience, Perception and Value, 'American Journal of Sociology,' vol. 66, pp. 1—31. Inkson, J. H., Clark Kerr, David J. Hickson and Derek S. Pugh (1968), Administrative Reduction of Variance in Organisation and Behaviour: A Comparative Study. Paper given to British Psychological Society Annual Conference. Kerr, Clark, John T. Dunlop, Frederick Harbison and Charles A. Myers (1960), 'Industrialism and Industrial Man,' Harvard University Press, Cambridge, Mass. Kern, Horst and Michael Schumann (1970), 'Industriearbeit und Arbeiterbewussten,' Europaische Verlagsanstalt, Frankfurt/Main. Kieser, Alfred (1973), 'Einflussgrößen der Unternehmungsorganisation,' Habilitationsschrift, University of Köln. Kohn, Melvin L. and Carmi Schooler (1969), Class, Occupation and Orientation, 'American Sociological Review,' vol. 34, pp. 659 — 678. McClelland, David C. (1961), 'The Achieving Society,' Van Nostrand, New York. Malinowski, Bronislaw (1960), Ά Scientific Theory of Culture and Other Essays,' Oxford University Press, New York. National Economic Development Council (DEDO) (1976), 'The UK and West German Manufacturing Industry 1955-1972,' M. Panic (ed.), HMSO. Negandhi, Anant R. (1973), A Model for Analyzing Organizations in Cross-Cultural Settings: A Conceptual Scheme and Some Research Findings, in Negandhi (ed.), 'Modern Organization Theory,' Kent State University Press, Ohio. Nordsieck, Fritz (1931), 'Die Schaubildliche Erfassung und Untersuchung der Betriebsorganisation,' Poeschel, Stuttgart. Nordsieck, Fritz (1934), 'Grundlagen der Organisationslehre,' Poeschel, Stuffgart. Oberg, W. (1963), Cross-cultural Perspectives on Management principles, 'Academy of Management Jornal,' vol. 6, pp. 129 — 143.

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Pugh, Derek S., David J. Hickson, Christopher R. Hinings and Christopher Turner (1968), Dimensions of organization structure, 'Administrative Science Quarterly,' vol. 13, pp. 65-105. Pugh, Derek S., David J. Hickson, Christopher R. Hinings and Christopher Turner (1968), The Context of Organization Structures, 'Administrative Science Quarterly,' vol. 14, pp. 91-114. Ruedi, Andre and Paul R. Lawrence (1970), Organizations in Two Cultures, in Jay W. Lorsch and Paul R. Lawrence (eds.), 'Studies in Organization Design,' Irwin & Dorsey, Homewood, 111. Ulrich, Hans (1949), 'Betriebswirtschaftliche Organisationslehre,' Haupt, Bern.

D. Managing across Cultures The Methuselah Criterion: How to Thrive and Survive in Business Theodore D. Weinshall

The Roman Catholic Church, the Mafia, the family and the Zaibatsu, the Japanese conglomerates, are not, except for the last, organisations which spring first to mind when considering models for success in business. No commercial enterprise can hope to replicate the spiritual force of the Church, nor the full range of emotional ties which hold the family together. None would seek to match the violence, contempt for law and wholesale dabbling in vice and crime which are the hallmarks of the Mafia. And given the cultural differences that lie between them, few Westerners are able to think like the Japanese. However, a sound model for success in business need not be salubrious, commercial or solely Western. Longevity is the true key. All four of these venerable Methuselahs have been thriving and surviving for many centuries. They have, therefore, a great deal to teach in terms of management, human relations, adaptability to change, diversification and most important of all, the proper handling of company growth. To learn how to grow is to learn how to survive. For this reason we are examining organisations with hundreds rather than tens of years behind them. They provide a truly solid measure of what represents success or failure in business. By inference, they also help define more accurately the root causes of mismanagement, that fatal disease which, if allowed to become terminal, can carry off a company and with it jobs, investment and the profits of suppliers, sub-contractors and services. The death of a business enterprise of any kind is much more than just closing the doors. The greatest cost is the human cost, and the failure of a corporation, together with the domino effect this failure sets up, can involve hundreds of thousands of people. Equally, the most important element in business success is human success. The interplay of personal relationships, foresight, resolve, intelligent understanding of trends, loyalty, patience, enterprise, courage — these and other positive qualities are the basic source of an organisation's dynamism, and the power that drives it forward. By their longevity alone, the Church, the Mafia, the family and the Zaibatsu have proved that they possess a self-perpetuating dynamism. They also demonstrate the collective skills of those who have run them over the

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centuries and the fact that those skills have been successfully passed from each generation of managers to the next. There have been too many books which have used as models organisations which, in business terms — forty or fifty years — are far too young to serve as reliable examples. Embarrassingly enough, several such companies have failed only a short while after the appearance of the books which featured them. This is hardly surprising since the Industrial Revolution, which lasted from about 1760 to 1840, and triggered off the rise of the large business corporation, is too close to our own time for organisations created since then to lay credible claims to longevity. In human terms, the fifty year old company is equivalent to an eight or nine year old, even when compared to the youngest of the Methuselahs, the Zaibatsu, founded in the early seventeenth century. It is an infant compared to the oldest, the Roman Catholic Church. No one would care to be dogmatic about the adult who will eventually develop from such young children. Similarly, none should be too sure that even after half a century of company development, there are no pitfalls or setbacks ahead which can make the difference between success and failure. In sorting out the difference, in surviving and thriving over the centuries, the Methuselahs have all built up steadily from small, often risky beginnings. True, they have enjoyed a certain amount of luck and have possessed the invaluable asset of serendipity, the good fortune to be in the right place at the right time. Their luck, however, has not been the sort that comes to cretins. It has been the way they seized and used their luck which has counted most. This was true even of the first of their four Methuselahs, the one which had little or no competition: the family. It could be said that humans were biologically pre-programmed to form families, but that is far from the whole story. As it evolved far back in prehistory, the family proved the best organisation for the survival of all its members at a time when staying alive, the whole purpose of existence, depended entirely on individual effort. Prehistoric families maximised that effort by developing a network of personal loyalties and mutual concerns, and through cooperation in all areas of activity: hunting food, preparing it, preserving it, setting up provisions and defending homes, protecting and directing the young, making use of technology and increasing its potential. All these have had their equivalents in successful organisations from that far distant time to the modern day. The family has come a very long way from the cave, its first permanent home, and the tasks of the hunter-gatherers of prehistoric times have been refined beyond recognition. The hunter has become the breadwinner. The homemaker operates in a totally different and much more comfortable environment. Technology means the electronic wonders of today, not the flinthead axe, spear or knife. Nevertheless, in purpose and essentials, the

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family has not changed, and it remains the building block of human society all over the world. There have been challenges to its primacy, but the family has fought them all off. The permissive society which challenged its legal and moral base failed to shift it. The so-called generation gap failed to split it. Political collectivism failed to abolish it. Even poverty and destitution, the most undermining experience individuals can undergo, have failed to break its spirit. On the contrary, the family has survived and still thrives, not only for its own purposes but to serve as the seminal example for other organisations. The spiritual family, brothers and sisters in Christ, is a vital concept of the Roman Catholic Church, our second example of a social giant and a formidably potent one. Originally a small persecuted sect, the Church eventually grew in power and influence to the point where it was able to capture the mammoth organisation of its time: the mighty Roman Empire which at its greatest extent stretched from Britain in the north to the deserts of Arabia in the south. In 313 A. D., the Roman Emperor Constantine was converted to Christianity and with that the Church became the official religious body of Rome. The Empire, the first of its kind in Europe, was an organisation of great longevity, over one thousand years, but within less than two centuries, by about 476 A. D., it finally failed in that which is essential for survival: successfully handling the competition. Assailed by barbarian invaders which weak emperors and the once powerful but now corrupt Roman Army were powerless to halt, the Empire disintegrated and its component parts became marooned in a savage chaos. In this situation, the Church based in Rome was the only organisation able, in time, to restore some sort of order to Europe. Gradually, out of the chaos of the Dark Ages which followed the fall of the Empire, the Church imposed its control over most of continental Europe through missionaries who converted pagan rulers and their peoples to Christianity. The last pagan king, who ruled Lithuania, became a Christian in 1387. Just over a century later, a new process of conversion began when the Spanish conquerors in America exported the faith and the authority of the Church into new realms overseas. Meanwhile, Christian Europe had become a form of federation, in which rulers were responsible for paying dues, called Peter's Pence, to the Church in Rome. Their duty was to follow the dicta of the Pope in religious matters, though several kings, notably in England, fought hard against this requirement. Nevertheless, the Pope for a long time exercised the power of religious life and death over his federal subjects and did not stint to use this power, in the form of excommunication, when individual kings challenged him too far. Only in a mass movement, the Protestant Reformation of the 15th and 16th centuries, did rulers, mostly in northern Europe, succeed in shaking

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off papal authority. Spain, France, Italy and other parts of southern Europe remained under the Catholic aegis, and the Church, though decimated, survived. It continued to survive, often battered but intact, as events in Europe forced fundamental changes. The Church had already learned at the time of the Reformation that survival meant redefining the product. At the Council of Trent, which sat from 1545 to 1563, resolutions were passed tightening up discipline and clearly defining doctrine and liturgy. There was also a centralisation of the power structure, with the Pope's powers greatly enhanced. In these ways, the Church strengthened itself for the fight against the Protestant competition. A similar redefinition of the product followed the challenge to papal authority posed by the rise of nationalism in Italy, which created a unified state by 1870. On September 20th of that year, the Papal States where the Pope had been sovereign for some sixteen centuries, were seized by the nationalist armies, and Rome itself was occupied. Now deprived of his temporal power, the Pope, Pius IX, sought to fortify his spiritual powers and so gave the product a new, more powerful edge. This was achieved with two fresh dogmas, the Immaculate Conception and papal infallibility, the most important decisions of the first Vatican Council. The Council, which took place in 1869 and 1870, gave notice that the Pope had no intention of surrendering to the secular power of the new Italy. Pius IX shut himself up in the Vatican and from then on the papacy sweated out a long and often acrimonious siege which lasted sixty years. Nevertheless, spiritually and socially, the popes were not cut off from the outside world. The prisoners of the Vatican formulated new doctrines which took account of modern popular aspirations and the advance of science as well as relations with foreign governments. With the fall of several absolute monarchies after the end of the First World War in 1918, the papacy had to deal with republicans rather than the sovereigns whose powers and positions had been more similar to the Pope's own. Yet, while retaining papal eminence, the papacy managed to modernise sufficiently to make itself acceptable in the new twentieth century era of the common man. The papacy was finally reconciled with the Italian state under the Lateran Treaty signed in 1929. The Pope, Pius XI, received compensation for the lost Papal States and the Vatican as his new domain. At that juncture, some sixteen centuries in the history of the Roman Catholic Church had seen its physical area of authority shrink from the greater part of Europe to the south of the continent to the one sixth of a square mile in the center of Italy's capital. Yet it had survived schism, siege and, due to the conduct of certain more worldly popes, a fair degree of scandal, as well as a host of moral issues in which its dicta had been vigorously challenged. Furthermore, the Church had survived with its pres-

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tige intact. Only a decade after the Lateran Treaty, a new Pope, Pius XII, was being canvassed by both sides in the Second World War for his approval of their cause. When he refused to choose between them and remained stubbornly neutral, both sides were furious and mortified, a tribute in itself to the value that was still placed after so many centuries on the sanction of the Roman Catholic Church. The Church did not, however, make the mistake of resting on such laurels. Pius XII's successor, John XXIII, pioneered further reassessment of papal attitudes at the second Vatican Council of 1962/3, where, in revolutionary fashion, he tuned the Church even further to the requirements of the modern world. Today, the Church's writ still runs world wide and the present pope, John Paul II, is a figure of international significance to Catholics and nonCatholics alike. Though many papal decrees and policies have an air of rigidity, the conduct of the Church's business and the nature of its structure have long observed that vital tenet of organisational survival: the need to change as the world changes, and from within rather than by waiting for the world to force change from without. That mistake is normally lethal, as too many organisations, from kingdoms to companies, have discovered to their own regret. The Mafia, which originated in Sicily some time in the twelfth century, resembles the Church and the family rather more than it seems polite to mention. In its modern form especially, it also stresses group loyalties and, like the Church, has traditions of morals and rules which all its members are bound to observe. The Mafia, too, was born out of chaos, or rather from the unquiet normality which afflicted Sicily. The island was never an independent state, though Sicilians acquired an independent-minded attitude and that hatred of intruders common to people conquered by a succession of foreign invaders. Over the last 2,500 years, Sicily has been Greek, Carthaginian, Roman, Arab, Norman, German, French, Spanish, Austrian, British and finally Italian. This parade of invasions was marked by wars, bitter rivalries, brutal dictatorships and retributive rule which planted in Sicilians a congenital distrust of authority, contempt for formal justice and a habit of mute non-cooperation with officialdom. The circumstances of Sicilian life also produced a guerilla mentality and it is possible that the Mafia originated as a secret society pledged to defend the people against foreign depredations. Small private armies, or mafie, were common in Sicily at this time and so was banditry, outlawry and all manner of violent crime. Those who stood to lose most in these conditions were the owners of latifundia, the large landed estates. They hired the mafie to protect their property and their crops and it was from this source that the early Mafia drew its membership. In time, the Mafia grew into a power in its own right, profiting from the way despotic foreign governments

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alienated ordinary Sicilians. Denied justice and protection by their rulers, Sicilians naturally turned to the mafia to fill the vacuum. An important part of the Mafia package, which was widely accepted in Sicily, was the omerta, a code of private justice which, as it were, outlawed the law: justice was never to be sought from the authorities, nor should they receive any aid in the detection of crimes. Breaking silence on such matters brought death or heavy punishment from the Mafia. This monopoly of law which the Mafia reserved for itself, together with the complaisance of the people and their own proclivity for violence, eventually enabled mafiosi to turn against the landowners whose interests they were supposed to protect. In the eighteenth and nineteenth centuries these landowners were the victims of the Mafia's taste for extortion, "protection", murder and mayhem. By 1900, the Mafia had progressed to local dictatorship, as Mafia families took control of markets, produce, services and other economic activities. Since 1860, when Sicily came under the aegis of the newly united Italy, many attempts have been made to expunge the Mafia and its activities. The Fascist government of Benito Mussolini, which came to power in 1922, came closest. Even this harsh regime, itself not above extreme violence, failed to complete the task, though thousands of mafiosi were imprisoned. No one doubts the malevolent nature of the Mafia, especially in our own age when terrorism has become an international and political issue of serious proportions. Even so, it has to be said that the organisation's longevity, second only to that of the Roman Catholic Church, has not been due entirely to its policy of violence and killing. Many other murder gangs terrorists and extortionist groups have come and gone while the Mafia has survived and thrived. Rather, it is tight organisation, whose diversification of activities, self-reliance and loyalty, all in themselves prime organisational virtues, do more to account for the continued presence of the Mafia in the twentieth century. The Zaibatsu of Japan — the name means "wealthy cliques" or "estate of wealth" — stand apart from the other three Methuselah organisations. Of the four, the Zaibatsu are the only organisations specifically formed for commercial purposes, but above all they are very distinctly Japanese and operate against a cultural background which is quite disparate from that of the West. Superficially, the greatest difference seems to lie in the individualism which informs Western society in general, and an apparent lack of it in Japan and Asia. There, the family or tribe has long been more important than any individual member. A much deeper difference, however, lies in the concept of personal responsibility which among the Japanese can transcend the value of life itself For example, in 1969 the manager of an overseas branch of a Japanese bank committed seppuku, the ritual suicide better known as hara-kiri,

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because the devaluation of the pound sterling caused a financial loss in his accounts. The Western mind says the manager was not personally at fault. What happened was due to outside events beyond his control. The Western procedure would be to report to the parent bank at home, explaining the situation and maybe suggesting ways in which the loss could be made good. The parent bank might in any case decide to write off the loss, and the branch manager would not normally be blamed and would most likely continue in his job. The Japanese mind, however, pays less attention to personal fault. The loss, however incurred, was the manager's responsibility in the sense that he was responsible for the prosperity and efficiency of his branch. It therefore impugned his honor and that of his employers. He had lost face and by inference so had they. The only honourable course, and the traditional one in such circumstances, was seppuku. Only that way could honour be redeemed. Basically, this spirit derives from Confucian philosophy and from the long centuries when the Samurai warriors were pre-eminent in Japan. The samurai code Susnido was deeply influenced by Confucian ideas and required an impeccable standard of conduct and honor. Samurai loyalties, particularly to the "divine" Emperor, were absolute and the slightest lapse could be the occasion for ritual suicide. In practical terms, the Emperor exercised no political power and was not even a puppet. More often the divinity idled away his days in petty pursuits and was a mere figurehead. The real decision-maker and ruler was the Shogun, the supreme daimyo or warlord, and shogunates were were necessarily bakafu, or military governments. It was during the last Shogunate — the Tokogawa which ruled Japan from 1600 to 1867, that the Zaibatsu, generally formed around a single family, made their first appearance. An early example was Sumitomo, today one of the four main Zaibatsu together with Mitsui, Mitsubishi and Yasuda. Sumitomo is now a loose consortium of independent companies involved in the electrical industry, shipbuilding, heavy machinery, metals, chemicals, pharmaceuticals and banking. The original Sumitomo enterprise, founded in the early years of the Tokugawa, was concerned with copper mining and refining, and soon established close relations with the Shogunate. These ties appear to have put Sumitomo in good stead when in 1636 the Shogun Iemitsu decreed Japan's total isolation from the rest of the world. This drastic move was prompted by Japanese fear of foreign and especially Christian missionary influence and it was thorough in its execution. All foreign travel and trade were banned. No oceangoing vessels could be built. Foreign literature was outlawed and all aliens, termed "gaikokujin-shinnyusha" or foreign intruders, were barred. Foreign traders in Japan were hounded out of the country and by 1636 only the Dutch were left. They were exiled to the island of Decima in Nagasaki Bay three years later, and were allowed out only once a year, when they travelled to Yedo, the Shogun's

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capital. There they were permitted to trade, though only after undergoing great humiliations which included trampling the Cross underfoot. For a small cabal close to the Shogun, the isolation was not as total as it was for the ordinary Japanese. Sumitomo, for instance, was allowed to export its copper, and in the more than two centuries that the decree was in force, high officials, through their own channels to the outside world, became well aware of the course Western society was following. By the mid-nineteenth century, Western progress had left Japan far behind in its medieval slumber. Western industrial, technological, social and political development had created a new world of which the Japanese as a nation had not the slightest comprehension. Then, in the summer of 1853, a token of this new world arrived in Yedo Bay in the form of four "kurofune" [dragons], in reality four American steamships commanded by Commodore Matthew Calbraith Perry. Perry had come to demand that Japan end her isolation, open up her ports to foreign trade and conclude a treaty with the United States. The reason for Perry's mission was a new Pacific Mail Steamship Company route, which included Japanese waters. The Japanese had long possessed a bad reputation for ill-treating foreign sailors and traders who fell into their hands. The Americans meant to force an end to isolation so as to obviate this menace. The Shogun, despite the protests of his more traditional samurai, had no choice but to agree. The only alternative was the fate which had already befallen China, where the emperor had attempted to keep out foreign traders, only to be defeated in war and forced to grant the foreigners extraordinary trade, territorial and personal privileges. Rather than have Japan similarly opened up by force, the Japanese preferred to do it for themselves. Once treaties with the Americans and also the British were signed in 1854, followed by similar agreements with Russia (1855) and the Netherlands (1855/6), the Japanese embraced drastic change not as a concession prised from them by interlopers, but as a brilliant opportunity. There were, of course, casualties. The samurai class was abolished in 1869, two years after the end of the Tokugawa shogunate. The Shogun who had so clearly failed to live up to his title of "barbarian-subduing-generalissimo" irretrievably lost face and resigned in 1867. In his place the young Emperor Matsuhito, known as Meiji, became the first emperor in nearly seven centuries to assume direct control of the government. Under Meiji, Japan modernised at such a phenomenal rate that the country leapt from medieval to modern in a tenth of the time the same process had taken in Europe. Though they had never known an industrial revolution, the Japanese acquired their first modern textile mill by 1869, and afterwards went on to develop steel, shipbuilding and engineering industries as well as banks and insurance companies. Railways were introduced in 1872, electric lighting in 1887, telephones in 1899, a public school

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system in 1872, elections and a Parliament in 1890, as well as a modern navy trained by the British and a new army trained by the Germans. In these ways, the Japanese converted themselves from an agricultural peasant society, employing primitive technology, into a modern industrial state of formidable vigor. The conversion was for a long time only skin deep, as demonstrated by the aggressions which reached their peak in the Second World War. Even so, Japan's modern status was firmly established in the years after the Meiji Restoration and led directly to the giant economic standing the country has attained today. Although foreign aid and advice was vital until at least the early years of this century, an instrumental role in Japan's rapid economic growth was placed by the Zaibatsu. The new manufacturing plants and processes were entrusted to them by the Meiji government, with whom the Zaibatsu had close links. Even Sumitomo, for so long identified with the disgraced Tokugawa, forged a relationship with the new leaders of Japan and began to diversify into copper products, steel making, chemicals and machinery. By the 1930s, Sumitomo was one of the largest Zaibatsu in Japan, controlling no less than 135 companies. The Zaibatsu were dissolved by the Americans who occupied Japan after the latter's defeat in the Second World War. However, their component parts reassembled once the occupation was over in 1951. These new Zaibatsu, at first known as kigyo shudan, or enterprise groups, differed from their predecessors in that they eschewed the old central control. Instead, they were loosely organised around leading companies or major banks and developed a cooperative stance with limited financial interdependency that helped make them a major factor in Japan's post-War economic miracle. What has not changed, and this is what puts Japan on a different cultural plane to that of the West, is the ancient code of discipline, loyalty, obedience to authority and respect for tradition which once formed the life of Samurai Japan and today powers its modern enterprise. Unchanged too is the fact that the Zaibatsu leaders are significantly older than the heads of new companies. This also applies, of course, to the Roman Catholic Church, for few popes attain their position before the age of about sixty, and to the Mafia, where the godfather figure, usually of grandparental age, guides and watches over the younger management. Youth, evidently, has its appeal, and numerous modern companies like to advertise themselves as young and vigorous. However, as the four Methuselahs prove, age and experience, together with resilience and wise judgment built up over the years, are better criteria for organisational survival. These more mature qualities have also made for long-term success which in managerial and corporate terms translates into the fact that all problems companies face derive from their own dynamic development. Acknowledging the dynamic and knowing how best to handle it are of paramount impor-

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tance in business. So is an awareness on the part of executives and managers of the changing demands which will be made on them. All too often, managements fail to identify the symptoms which dynamic development displays, and so neglect the imbalance that arises between the various factors of their Total Organisation System. The system has six arms. The four which comprise the decision-making main system, or central core of an organisation, are organisational strategy, scope of decision-making, managerial structure and the personal characteristics of managers. The other two are environmental factors, composing the outer shell: the immediate environment, that is, competition from other organisations for staff, services, suppliers, customers, and the wider environment including the employment market and capital, consumer, technological and socio-cultural systems. In such a complex system, it is all too easy for management to be unaware of problems. In their ignorance, it is hardly surprising that managers are also unaware of the solutions. This ignorance can often be compounded by the fact that while an organisation will change over a period of time, managerial characteristics do not. Ultimately, this can create a dangerous if not fatal divergence. In such circumstances, managements must either change in tune with organisational development, or they must be replaced by new blood which will embrace the new requirements. When organisations hit trouble, management consultants may be called in rather like doctors summoned to the bedside of a sick patient. Consultancy cures are not, however, panaceas, and any attempts to transfer lessons from other organisations are bound to fail. This is particularly true of individual executives who may be held up as role models for their counterparts in other organisations. However successful an individual may have been, there is no guarantee that he or she could perform equally well in another organisation or even in the same one at a different time. What all executives have in common is that they are all human, while all organisations are by definition distillations of human enterprise. However, this very humanity is what divides them, for each individual can be radically different from all the others in ways where it matters most: in perception, abilities, comprehension and every other way that makes each human being a unique creation. Management consultants who try to improve one organisation in the light of another will therefore ultimately fail to help. This is not to say, of course, that consultants have nothing to contribute. Far from it. The consultant can provide a fresh view, and hold up a mirror in which the organisation can look at itself with greater impartiality. The skilled outsider consultant can also encourage executives to open up and talk more frankly than they might to colleagues they fear to offend. The resultant mirror image can therefore be that much more effective, but the consultant can at best provide only an interpretation of what is wrong with a company, not directions on the means to put it right. That is up to the

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organisation, for self-help is more fruitful than any outside package, and "Physician heal thyself' more productive than "Take this medicine." Prevention, of course, is the best method of all. A cardinal concept to be kept in mind is that managements ought to be able to diagnose their own potential ills, spot trouble in its incipient stages and take their own evasive action. Sickness in a company or the symptoms of sickness need to be measured against a yardstick of normality. The normal development of organisations has been assessed over recent decades by business scientists, who have reached a consensus that its main stages proceed from creation to growth of one product or service line in one country, to subsequent status as a large conglomerate with many products and services, which, using advanced technology spreads across the world. We have presented an updated appraisal of these principles of organisational and management behavior, but diverge from mainstream thinking on such matters by identifying success with longevity. A century can usually be considered a respectible age for an organisation, but this book makes assurance doubly sure by offering examples of ongoing success which are very much older than that. There can hardly be greater proof of success than success itself, nor a better promise of sound lessons than those to be drawn from the Methuselah criterion.

The Cross-Cultural Puzzle of International Human Resource Management Andre Laurent

International H u m a n Resource Management: A Field in Infancy As noted by Tichy (1983), the human resource field appears to be in a process of gradual and uneven transformation, where different companies may be experiencing different phases of transition: "endings," "in-between," "new beginning." Against this background, what can be said as to the status of the emerging field of International Human Resource Management which is the topic of this Symposium? Is there such a field? Interestingly, the international dimension of H R M was apparently not retained among the important themes resulting from the previous H R M Symposium held at the University of Michigan two years ago. While the "importance of cultural phenomena" was selected (Tichy, 1983), this theme was framed more in terms of corporate cultures than in terms of national cultures and international implications. The organizers of this Fontainebleau Symposium must be credited for creative leadership in launching a symbolic event that calls the attention of both executives and researchers on an emerging reality that is neither systematically managed nor extensively researched. Recent labels like "Human Resource Management" or newer ones like "International Human Resource Management" obviously do not emerge by accident. Even though they often precede our understanding of what they mean, they are social productions that reflect some shared awareness of something important that has not been given enough attention in the past. When the new label is coined, it has the power of inviting people to wonder what it means and to inquire into the underlying reality which the label may be attempting to describe. In the field of organization studies, the concept of organizational culture seems to share a very similar history. From a more practical point of view, there are some indications suggesting that we are not all caught into some collective illusion. Many organizations are indeed confronted with the issues of managing human resources internationally. "Human Resource Managers" in such organizations are entitled to expect "Professors of H R M " to provide some useful insight on such processes. Yet these new international processes are so complex and so poorly defined and ill-understood at the moment that superficiality remains the mark of most current treatments, including the one attempted during this Symposium. As an illustration of this primitive state of affairs, would

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it be unfair to suggest that in many cases during this Symposium, participants have made a point of finishing their sentences with the four magic and official words: "within an international context." It remains to be assessed whether the former part of the sentences would have differed in the absence of that ending. If the field of H R M is in a stage of adolescence, International H R M is still at the infancy stage. The intent of this paper is to contribute to the framing of this new domain in building upon the author's inquiry into the cultural diversity of management conceptions across nations.

H R M Practices as Institutionalized Preferences for the Management of People Managers in organizations hold particular sets of assumptions, ideas, beliefs, preferences, and values on how to manage people toward the attainment of some organizational goals. Over time these various ideas get translated into particular policies, systems, and practices which in turn may reinforce or alter the original ideas. Furthermore, organizational members have sets of expectations related to those practices which may again reinforce or alter the existing policies. Through this complex process of mutual interaction between various actors' ideas and actions, certain preferred ways of managing people tend to emerge in some organized fashion which we may then call Human Resource Management. As different organizations have developed different ways of managing their human resources that seem to have been more or less successful, this observation has reinforced the intuition that more strategic thinking was required in this area and that some competitive advantage could be acquired through some form of excellence. Future historians of work organizations may well have a hard time understanding why it took so long to realize the strategic importance of the management of human resources. If H R M policies and practices reflect managers' assumptions about how to manage people, it becomes very critical to understand such assumptions in order to correctly interpret the meaning of particular policies and practices.

National Differences in Management Assumptions: A Research Inquiry In the past few years, we have been interested in systematically exploring management assumptions in an attempt to enrich our understanding of management and organizational processes. The initial research objective

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was not to explore national differences but to bring into focus some of the implicit management and organizational theories that managers carry in their heads (Laurent, 1981). As it is very difficult to inquire into beliefs that individuals take for granted, our research strategy has consisted in writing up a large number of possible assumptions about the management of organizations which we inferred from discussing organizational issues with managers. These assumptions were expressed in the form of statements within a standard questionnaire that would seek from respondents their degree of agreement/ disagreement with such statements. Typical survey statements read as follows: — The main reason for having a hierarchical structure is so that everyone knows who has authority over whom. — Most managers seem to be more motivated by obtaining power than by achieving objectives. — It is important for a manager to have at hand precise answers to most of the questions that his subordinates may raise about their work. — In order to have efficient work relationships, it is often necessary to bypass the hierarchical line. — Most managers would achieve better results if their roles were less precisely defined. — An organizational structure in which certain subordinates have two direct bosses should be avoided at all costs. Successive groups of managers participating in executive development programs at INSEAD (The European Institute of Business Administration) were surveyed. These managers came from many different companies and many different countries. When their responses were analyzed, it appeared that the most powerful determinant of their assumptions by far was their nationality. Overall and across 56 different items of inquiry, it was found that nationality had three times more influence on the shaping of managerial assumptions than any of the respondents' other characteristics such as age, education, function, type of company ... etc.. One of the most illustrative examples of national differences in management assumptions was reflected in the respondents' reaction to the following statement: It is important for a manager to have at hand precise answers to most of the questions that his subordinates may raise about their work.

As indicated in Figure 1, while only a minority of Northern American and Northern European managers agreed with this statement, a majority of Southern Europeans and South-East Asians did. The research results indi-

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It is important f o r a m a n a g e r to h a v e at h o n d p r e c i s e a n s w e r s to most of t h e q u e s t i o n s that his s u b o r d i n a t e s may r a i s e about their work.

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