83 Conclusion
Th ese developments seem to refl ect the idea put forward by Ferreira et al. (2013) that the rising middle class did not appear to pursue an ideological agenda in terms of equality or democracy but tended to operate out of pragmatic self-interest.
Th e essentially authoritarian nature of Latin American society is still present: the patron in whatever form still exerts considerable power in all aspects of daily life, whether it be in politics, the church, agriculture or business generally. With his high status he can command unquestioning loyalty from those beneath him. According to Romero (2004) the ‘patron’ is the traditional Latin American leader who can be described as autocratic and directive and is expected to be assertive and aggressive. He seldom delegates work or uses teams, prefers a formal top-town communication as the normal mode of communication while being very relationship-oriented and confl ict-avoiding. According to McIntosh and Irving (2010), this predominant leadership style in Latin America is said to come from the Spanish and Portuguese conquests, a style which persisted through the colonial and early independence periods.
Whether this style of leadership is changing as a result of the ongoing economic develop- ment and modernisation is as yet unclear. Romero (2004) envisaged a possible shift from the
‘patron’ to a modern-style leader through high levels of interaction with multinational fi rms and more economically developed countries. Th e rapid rise of ‘multilatinos’ – internationally operating companies in Latin America – entails increasing exposure to leadership styles in other countries, could well result in changes in the long term. A further factor could also bring signifi cant changes to the nature of leadership through domestic social unrest – exemplifi ed by the street protests in Brazil – which bypasses political parties and movements.
Conclusion
This chapter has examined some of the characteristics that bring together a number of European countries as well as other countries in the world which are historically linked to Europe. It has also shown that countries which may share certain similarities do not necessarily enjoy a harmonious co-existence.
Chapter 3 Business cultures in the Western world
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The first concept of this chapter considered culture clusters in Europe, including East Europe. It gave examples of the cultural features that countries within each cluster share.
It showed how the European clusters in question, although aligned within European institutions, remain ambivalent concerning the extent to which countries should strive for some kind of unity. The difficulties involved in drawing Europe’s boundaries were also addressed, particularly with regard to countries such as Russia and Turkey. The second concept of this chapter gave a brief overview of the Americas and Australasia, highlighting key cultural features of the regions and their reflection in business practice.
Points for reflection
1. Mention has been made in the two concepts of the Anglo-Saxon approach to business.
How would you summarise this approach? Why do you think this approach often comes under criticism? Refer to any current business and/or political events.
2. It has been argued that, since both countries span the continents of Europe and Asia, Russia and Turkey are each in fact two countries: one belonging to Europe, the other belonging to Asia.
Can Russia and Turkey, therefore, each be assigned to a particular cultural cluster?
Give arguments to explain your answer.
3. Do you think the whole continent of America could be seen as having one business culture? Refer to the information in the chapter.
4. Which of those multicultural societies mentioned in this chapter do you consider to have been most successful in dealing with the issue of multiculturalism. Give your reasons.
Further reading
Chhokar J.S., Brodbeck, F.C. and House, R.J. (eds) (2008) Culture and Leadership Across the World:
the GLOBE Book of In-Depth Studies of 25 Societies , New York, NY: Lawrence Erlbaum Associates.
This is the second volume of articles to emerge from the GLOBE project (described in Chapter 2 ). The first (House, R.J., Hanges, P.J., Javidan, M., Dorfman, P.W. and Gupta, V. (eds) (2004) Leadership, Culture and Organizations: the GLOBE Study of 62 Societies , Thousand Oaks, CA: Sage) was referred to in Chapter 2. This second volume focuses on quantitative and qualitative data from 25 of the countries covered in the first volume and contains in-depth analyses of these cultures from different per- spectives. It provides a detailed understanding of similarities and differences between these cultures in terms of leadership practices and values.
References
Boisot, M.H. (1993) ‘Spain: the revolution from outside: Spanish management and the challenges of modernization’, in Hickson, D.J. (ed.), Management in Western Europe: Society, Culture and Organization in Twelve Nations , Berlin: Walter de Gruyter: 205–228.
Braudel, F. (2008) Grammaire des civilisations , Collection Champs. Paris: Flammarion.
Cavusgil, S.T., Ghauri, P.N. and Akcal, A.A. (2013) Doing Business in Emerging Markets , 2nd edition, London: Sage.
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the GLOBE Book of In-Depth Studies of 25 Societies , New York, NY: Lawrence Erlbaum Associates.
Cooke, A. (1973) Alistair Cooke’s America , London: British Broadcasting Corporation.
Davis, S. (2007) ‘Wiring design faulted for Airbus A380 production delays’, http://power.elecdesign.com , article 14634, accessed 1/10/2010.
d’Iribarne, P., Henry, A., Segal, J.P., Chevrier, S. and Globokar, T. (1998) Cultures et mondialisation , Paris: Editions du Seuil.
Dufour, C. (1990) A Canadian Challenge – le défi québecois , Lanzville, BC: Oolichan Books & Halifax NS: Institute for Research on Public Policy.
Duroselle, J.-B. (2004) L’Europe: Histoire de ses peuples , Collection Pluriel Paris: Hachette Litératures.
Ferreira, F.H.G., Messina, J., Rigolini, J., López-Calva, L.-F., Lugo, M.A. and Vakis, R. (2013) Economic Mobility and the Rise of the Latin American Middle Class , Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/11858 License: CC BY 3.0 IGO.
Gilbert, P. (2008) ‘Panorama des théories et outils de la gestion des ressources humaines’, in Schmidt, G. (ed.) Management , Auxerre: Sciences Humaines Editions.
Grachev, M.V., Rogovsky, N.G. and Rakitski, B.V. (2008) ‘Leadership and culture in Russia: the case of transitional economy’, in Chhokar, J.S., Brodbeck, F.C. and House, R.J. (eds), Culture and Leadership Across the World: the GLOBE Book of In-Depth Studies of 25 Societies , New York, NY: Lawrence Erlbaum Associates: 803–822.
Hickson, D.J. and Pugh, D.S. (2001) Management Worldwide , London: Penguin.
Hillmert, S. (2002) ‘Labour market integration and institutions: an Anglo-German comparison’, Work, Employment & Society , 16: 675–701.
House, R.J., Hanges, P.J., Javidan, M., Dorfman, P.W. and Gupta, V. (eds) (2004) Leadership, Culture and Organizations: the GLOBE study of 62 societies , Thousand Oaks CA: Sage.
McIntosh, T.A. and Irvin, J.A. (2010) ‘Evaluating the Instrumento de Contribución al Liderazgo de Siervo (ICLS) for Reliability in Latin America’, The Journal of Virtues & Leadership , 1.1: 30–49.
Michailova, S. and Worm, V. (2003) ‘Personal networking in Russia and China: blat and guanxi’, European Management Journal , 21: 509–519.
Morin, E. (1987) Penser l’Europe , Paris: Gallimard.
Motel, S. and Patten E. (2013) Statistical Portrait of Hispanics in the United States, 2011 , Pew Research Hispanic Center, http://www.pewhispanic.org/2013/02/15/statistical-portrait-of- hispanics-in-the-united-states-2011/ , accessed 10.3.2013.
Papalexandris, N. (2008) Greece: ‘From ancient myths to modern realities’, in Chhokar J.S., Brodbeck, F.C. and House, R.J. (eds) Culture and Leadership Across the World: the GLOBE Book of In-Depth Studies of 25 Societies , New York, NY: Lawrence Erlbaum Associates.
Péron, M. (2002) ‘Réflexion sur la transdisciplinarité dans la pensée managériale’ in Péron, M. (ed.), Transdiciplinarité: fondement de la pensée managériale Anglo-Saxonne? Paris, Economica.
Romero, E.J. (2004) ‘Latin American leadership: el patrón & el líder moderno’, Cross Cultural Management: An International Journal , 11(3): 25–37.
Semprini, A. (2000) Le multiculturalisme, Paris: Presses Universitaires de France.
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Vidal, F. (1992) Le management à l’italienne , Paris: InterEditions.
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Chapter 3 Activities
ACTIVITY 3.1
Airbus
This activity involves examining developments which have taken place since 1970 within Airbus – and its mother-company – which involve a number of issues, many of which could be considered to be cultural in nature.
You will be asked to address a number of questions relating to:
● the problems experienced by Airbus in developing its new aircraft;
● a proposed merger between a British company (BAE Systems) and EADS, the European consortium of which Airbus is the major component.
Read first the account given below, as well as the various articles included.
1. Airbus: from consortium to company
Airbus SAS, based in Toulouse, France, is a major airplane manufacturer, producing around half of the world’s jet airliners. It was formally established in 1970 as a European consortium whose goal was to gain a share of the aircraft construction market dominated till then by the US. It began as a consortium of French and German companies, to be joined later by Spanish and British companies.
In 2000, the Airbus consortium became an integrated company, 80 per cent of it being owned by EADS , the European Aeronautic Defence and Space Company NV. EADS itself came into being in the same year as a result of a merger between a German aerospace and defence company, a Spanish aircraft company and a French aerospace company. EADS develops and markets civil and military aircraft, as well as communications systems, missiles, space rockets, satellites, and related systems. The remaining 20 per cent of Airbus was at the time owned by BAE systems (the acronym is derived from British Aerospace Engineering), successor to a number of British aircraft, defence electronics and warship manufacturers.
The Airbus website ( http://www.airbus.com ) gives a detailed account of the development of the company and of the aircraft it has produced. The company has become global in nature, with fully owned subsidiaries in the United States, China, Japan and in the Middle East, spare parts centres in Hamburg, Frankfurt, Washington, Beijing and Singapore, training centres in Toulouse, Miami, Hamburg and Beijing, and more than 150 field service offices around the world. Apart from the importance of technology, the website refers to the special experience and expertise that come from more than 100 nationalities represented among its 59,000 employees.
For an Airbus employee it is usual to work side by side with people from a range of cultures. Career advancement within the company can take an employee not just to another floor or another building – but to another country.
Airbus takes pride in the diversity of its employees, valuing the special experience and expertise people from different backgrounds bring to the industry. The company thrives on the mix of ideas, vision and knowledge such a
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87 Activity 3.1 combination of cultures creates. At the same time, it encourages employees to develop their individual talents and experience and to be proud of their roots.
Source: http://www.airbus.com/company/people-culture/ , accessed 1/3/13
The company has produced a series of successful aircraft, including the world’s first twin-engine wide-body double-deck A380, the most technologically advanced plane in the world today.
The development of such highly sophisticated aircraft required a reorganisation of the company to improve co-ordination, reduce the costs of production and the time between conception of planes and their intro- duction into service. The French, German, British and Spanish partners, who had operated independently, merged their plane-making assets in 2001 to form Airbus SAS.
2. Delays in production
Nevertheless, there were considerable problems in bringing a major new product, the A380, to the market.
A two-year delay and a consequent loss in profits of €2 billion forced the company to make drastic cuts in the size of its workforce, to close plants and to outsource many more aircraft parts.
The extract below is taken from an article written by Xavier Vives, a professor of economics and finance at IESE Business School, Barcelona, Spain, It focuses on the role of ‘economic patriotism’ in the running of Airbus.
Traditionally, the workforce at the aircraft manufacturer is geographically distributed in proportion to national own- ership stakes. It is hard to make sense of this from the point of view of productive efficiency. It is an instance of economic nationalism, whereby governments distort private transactions among economic actors by dis criminating against foreigners in the name of the national interest.
Economic motives include the preservation of employment or the attraction of economic activity to a certain area.
Strategic motives include national security or attempts to capture rents abroad in monopolistic markets. In many circumstances the patriotic approach proves ineffective because it conflicts with economic efficiency, but its endur- ance derives from protection of the interests of local lobbies. Politicians benefit from the revolving door between political office and the boardroom or by catering to a clientele with a view towards re-election. [. . .]
The damage caused by economic nationalism includes inefficiency and poor corporate governance. When EADS, parent company of Airbus, was created, it was headed by two chief executives, German and French. In spite of the fact that tensions flourished, the twin-headed structure was maintained even after the crisis caused by problems in the development of the A380 began. As a result, Airbus’s reputation has been dented and it has fallen behind Boeing.
In other cases, cost-cutting measures are delayed as state aid comes to the rescue of the champion, or competition is distorted because government-supported companies have privileged access to infrastructure and procurement contracts. The market for corporate control suffers as takeover threats from potentially more efficient foreign com- panies are removed. Finally, national efforts end up being self-defeating as other countries react in kind, neutralizing the initial attempt to gain an advantage.
Source: extract from ‘Airbus and the damage done by economic patriotism’, 2/3/07, Financial Times (Vives, X.)
One of the causes of the delay in the production of the A380 was the design of the complex wiring system for the aircraft. Sam Davis gives an insight into co-ordination problems.
You wouldn’t expect a wiring problem to delay delivery of an airplane, but that is what has happened.
To understand why wiring is critical, you have to know that there are almost 1,200 functions to control the plane, which takes 98,000 wires and 40,000 connectors. The digital design system has 500,000 models, and all those must be kept in sync by mismatched computer-design systems in different countries.
Further complicating aircraft design – nose sections are built in France, fuselages in Germany, wings in Great Britain and tails in Spain, Airbus’ A380 aircraft sections will be transported on a special ship from sites in Broughton (UK), Hamburg (Germany), Puerto Real (Spain) and St. Nazaire (France) for final assembly in Toulouse (France).
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Chapter 3 Business cultures in the Western world
As reported in the January 2007 IEEE Spectrum article, ‘Manufacturing Mayday,’ by Alexander Hellemans, designing the aircraft was much more difficult than anticipated. Engineers in Germany and Spain used the older V4 version of the CAD program to design the wiring whereas engineers in France and England used the newer V5 version. Although the software developer said the two versions were compatible, data was lost when transferring files from one system to the other. Another complication: the French were familiar with the software whereas the Germans did not have as much experience with it.
Because of the wiring design software compatibility issues, problems arose when incorporating wiring changes in the fuselage sections in Germany.
Source: Davis, S. (2007) ‘Wiring design faulted for Airbus A380 production delays,’ http://power.elecdesign.com/Articles/
index.cfm?ArticleID=14634&stylename=maroon , accessed 1/3/13
3. A proposed merger
In 2012, EADS devised a plan to merge with BAE systems, the company which had once owned 20 per cent of EADS’s Airbus subsidiary. BAE had taken partial ownership when Airbus became an integrated company in 2000. EADS took the remaining 80 per cent. In 2006, however, BAE had sold its stake in Airbus. At the time, UK commentators generally considered this to be a smart move since it looked as if the civil aircraft business was about to enter a cyclical decline. The sale would allow BAE to increase its funding of acquisitions, especially of companies in the massive US defence sector. Some observers also considered BAE’s withdrawal to be related to its inability to have a real say in the way EADS was being run. EADS was said to be too heavily influenced by the national interests of the dominant French and German partners. Although heavily involved in the construction of Airbus aircraft, BAE’s influence on decision-making in the boardroom was limited. There was also, it was felt, one more factor involved in BAE’s departure: the UK’s ‘special relationship’ with the USA.
The company wanted to maintain and extend this relationship: wasn’t a tie-up with US concerns preferable to a partnership within a European consortium?
So BAE left Airbus and went its own way to become a major defence, security and aerospace company with operations worldwide. It is, at the time of writing, one of the largest suppliers to the United States Department of Defence. However, it still maintains its important manufacturing role in Airbus, being respon- sible for the construction of the wings for all Airbus aircraft.
In 2012, the British government rethought its position with regard to the future of BAE systems. The follow- ing article from the Financial Times describes the circumstances surrounding the British change of mind.