This essay aims to explain the importance of intercultural competencies and to describe the specific characteristics of German culture and values, which need to be considered by foreigners when doing business in Germany.
Working in and managing international teams became an integral part of today’s corporate world. Over the last few decades, the number of cross-border business activities increased, and global business structures became more difficult to manage. Nowadays, companies not only have to deal with foreign legal standards, markets, and languages, but they must also take intercultural matters into account. Especially in cross-border collaboration, in which colleagues and partners from diverse backgrounds and nationalities work together, the variety of cultures and values can become a complex matter. Therefore, when it comes to doing business abroad, factors like lack of cultural awareness, misunderstanding of non-verbal signals, and not showing respect appropriately, can affect the outcomes of business relations tremendously.
How important is intercultural behaviour in deciding outcomes in international business and what should foreigners know about German culture and behaviour when doing business in Germany?
December 18, 2021
Working in and managing international teams became an integral part of today’s corporate world. Over the last few decades, the number of cross-border business activities increased, and global business structures became more difficult to manage. Nowadays, companies not only have to deal with foreign legal standards, markets, and languages, they must also take intercultural matters into account. Especially in cross-border collaboration, in which colleagues and partners from diverse backgrounds and nationalities work together, the variety of cultures and values can become a complex matter. Therefore, when it comes to doing business abroad, factors like lack of cultural awareness, misunderstanding of non-verbal signals, and not showing respect appropriately, can affect the outcomes of business relations tremendously.
For this reason, the following essay aims to explain the importance of intercultural competencies and to describe the specific characteristics of German culture and values, which need to be considered by foreigners when doing business in Germany.
Importance of intercultural behaviour and competencies
When doing business abroad or with foreign business partners, there is no doubt that foreign language competencies and country and culture competencies are much needed tools to work successfully in an international environment. The question that often arises here is: is that all? There is no denying the fact that intercultural competencies and the ability to understand different beliefs and principles are significant personal qualities that enable managers and members of international teams to avoid misunderstandings and therefore, to achieve better outcomes. However, besides basic knowledge of the other culture, one also need to know about certain attitudes, behaviours, skills and finally, about one’s own culture. This knowledge cannot only be attained through learning and training, it must be attained by experience which in most cases, helps to strengthen one’s intercultural competence and the ability to cope with intercultural issues.
Especially since the rise of former developing countries like the People’s Republic of China, Japan or South Korea, the role of intercultural awareness and behaviour gained a new meaning. With a growing number of international business activities - not only with far eastern markets but also around the globe – it became obvious for Western companies that handling and managing contrasting cultural values is a complex matter. As mentioned before, the differences between cultures are not only limited to the foreign language, different food and well-known stereotypes, they are also related to different forms of social organizations, non-verbal communication and different time conceptions.
Many managers tend to underestimate the importance of these factors. Understanding and reflecting on these differences is not only crucial to building relationships with foreign business partners, but it is also important to achieve better outcomes in international negotiations and projects. One example, that often leads to negative outcomes in business relations is disregarding and ignoring the role of hierarchy. In some countries, such as Australia and Canada, hierarchy does not play an important role as in others. The organizational culture of these countries is typically characterized by a small power distance, as Hofstede calls it. According to him, power distance is defined as “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally”1. Therefore, besides societies with a relatively small power distance, some societies are characterized by a large power distance in their organizational structure. Societies that tend to be more traditional than others, like India for example, may therefore believe that people should be aware of their place and position in an organization and accept their role. Typically, hierarchical societies like these show greater respect for power and authority. Additionally, hierarchical societies tend to give more meaning to privileges and status symbols than less hierarchical societies. While status symbols like expensive jewellery and cars for bosses are expected and accepted in large power distance cultures, they are rather disapproved of in small power distance cultures.
The differentiation between both concepts enables us to understand different behavioural patterns between supervisors and subordinates across cultures and at the same time, it explains the correlation to other cultural phenomena like diverging salary differentials, the concentration of power and information or the extent of inequalities in societies. By being aware of both concepts, managers who work internationally can more easily adapt to the foreign business environment and avoid cross-cultural faux pas.
When it comes to managing people and performance across cultures, another important aspect that needs to be considered is the distinction between collectivist and individualist cultures. One significant feature of collectivist cultures is the fact that harmony and consensus in societies and groups are ultimate goals. Communication in most collectivist countries like Thailand, Ghana or Brazil, is mostly high context, which means that communication style is very indirect and lies are accepted in groups if they aim to avoid conflicts. Collectivist people are integrated into strong and cohesive groups, which require unquestioning loyalty. Japanese proverbs like “The nail that stands out must be hammered down.”2 may sound extreme for individualists but are perfectly normal for collectivist societies. On the contrary, in individualist cultures, the identity of a person is based on the individual and not on the group. Individualist cultures value honesty and communication style tends to be very direct and low context. in a business context, tasks are more important than building and maintaining relationships. Compared to collectivist thinking, employer-employee relationships are based on a contract, rather than on trust. Moreover, people in individualist cultures tend to achieve things alone and take sole responsibility instead of sharing it with the group.
These diverging perceptions of how certain cultures interact in organizations must be considered when doing business abroad. It is significant for managers of both individualist and collectivist cultures to be aware of the differences and to adapt to these cultural structures by being cautious with one’s behaviour and communication style. Although globalization led to a global mixture of different cultures and although plenty of information about different cultures is easily available, there is still a need for cultural sensibility to show appropriate respect and finally, to get positive outcomes of international business relationships.
Advantages of diverse teams
As described above, managing and working across cultures and in diverse teams can be experienced as more complex than working with team members and partners with shared values, languages and unspoken norms. However, besides the complexity and variety of cultures, experience and research shows that diverse teams are typically more creative. This has also been recognized by Carlos Ghosn, former CEO of Renault-Nissan: “When you have a very diverse team – people of different backgrounds, different culture […] – you are going to get a more creative team.”3 According to Comfort and Franklin, international teams generate more ideas compared to domestic teams.4 Moreover, studies have shown that international team members tend to be more satisfied with their teamwork than members of domestic teams. Although the effort to manage international teams may seem higher than managing domestic teams, the outcome of the performance of international teams is typically higher than the performance of domestic teams.
Due to this observation, there is no denying the fact that working across cultures or in diverse teams brings a lot of advantages for both, team members and the company.
Understanding German culture
When it comes to doing business in Germany, there are many stereotypes, which are well-known around the world. Germans, for example, are known for being exact, reserved, punctual and very direct. Therefore, for foreigners, who visit Germany for the first time and try to do business with Germans, these characteristics may be difficult to handle. Especially people from countries with opposing cultural values may struggle to “break the ice” and to build closer relationships with Germans. However, by paying close attention to German values and norms, misunderstandings and misconceptions can be avoided.
In this context, values are defined as principles and beliefs one culture thinks is important, while norms refer to certain behaviours and practices a culture prefers.
To understand German culture fully, one must understand that Germany has a highly individualistic culture and therefore, explicit and direct communication is the norm. Germans are not afraid to voice criticism and see feedback as necessary for improvement. This is because Germany has a rather low-context culture in comparison to other countries such as Italy and Spain. In low-context cultures, direct verbal communication is needed to properly understand a message. Consequently, Germans typically rely on explicit verbal skills and not so much on body language and the transmission of emotions. Besides directness, honesty is also highly valued in Germany.
In addition, another aspect that needs to be kept in mind when doing business in Germany is the relatively small power distance between subordinates and supervisors. Although the extent of power distance might differ from organization to organization, hierarchy in many organizations and companies is rather flat and less layered. Depending on the organization, subordinates usually expect to be consulted in important decisions and decision-making processes are, compared to large power distance cultures like China, more decentralized. Besides that, there are usually fewer supervisors and both subordinates and supervisors depend on each other. However, compared to very small power distance cultures like the US, hierarchical structures are still visible on certain occasions. For instance, Timothy Taylor, an employee of Henkel, Germany, recognized early that hierarchical structures in Germany differ from those in the US: “It’s very […] different from the US. […] We have an underlying equality feeling. It’s different in character here when you see the tables in the cafeteria, one table for management and one for non-management.”5
Another important aspect to be considered by foreigners is the relatively high-performance and achievement orientation which is expressed in business and management contexts. Germans typically like to reward performance and they attach more importance to assertiveness and competitiveness rather than to seniority and experience. Of course, since organizational cultures vary from company to company, the extent of performance and achievement orientation within companies may also differ. Nevertheless, most managers are qualified by their performance rather than by their background. Usually, German subordinates respect their bosses for how much they know and what they have achieved while respect for bosses in other cultures is expected automatically regardless of how much they know. In a business context, this perception may lead to a situation where the decisions of supervisors may get questioned by those with more task-related knowledge.
Finally, when doing business in Germany, foreigners should also be aware of relatively strict time orientation. Time is a valuable resource for Germans and almost like money, Germans think that they can waste and save time. Therefore, one should know that distractions by people are not well seen since many Germans tend to be very task-oriented. Generally, this results in preferring to focus more on doing one thing at a time, than doing many things at the same time. Lastly, one should also keep in mind that Germans adhere strictly to schedules and because of a relatively high sense of urgency, being late at business meetings is considered very unprofessional.
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1 Comfort and Franklin 2014: 56.
2 Comfort and Franklin 2014: 34.
3 Dubicka and O'Keeffe 2011: 120.
4 Comfort and Franklin 2014: 10.
5 Comfort and Franklin 2014: 27.
- Arbeit zitieren
- Anonym,, 2022, How important is intercultural behavior and what should foreigners know about German culture when doing business in Germany?, München, GRIN Verlag, https://www.grin.com/document/1264596
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