Notes On Belgium: “Erasmus in Retrospect – an Academic and Cultural Experience”

Studying on the Masters in International Business course at Vlekho, Brussels as part of my Erasmus year abroad was highly important to my development both academically, culturally and as a person in general. Through facing new challenges in a foreign country and overcoming them through the assistance of new friends from various cultures I have acquired new perspectives on life and a new found strength.

Nervous about my understanding of French I studied in Belgium because of its English courses, offering me a safety net of learning as I feared not being able to follow courses in French effectively enough. This had unforeseen consequences, as I was obliged to study over half of my courses at masters level. On top of that, seeing as I normally study Economics and Politics at Exeter University the majority of these courses at this Belgian business school were fresh to me. I had a great opportunity to learn courses taking ins Accounting, Finance and Law.

In Exeter, England my courses would be more complex, with time given to wrestle academically in order to reach a more complete view of the world. Vlekho was different, as the demanding number of courses forced me to learn the essential pieces of information quickly, understand and then explain to others. As a result I now have a broader base and am able to act more pragmatically. Crucially, the emulation of the working environment at Vlekho has resulted in me having a greater understanding of what is expected of me when I graduate and I have managed to iron out some of my flaws in a safe learning environment, rather than during my first job after graduation.

One of my greatest challenges at Vlekho was cultural. English education is very individualist compared to my Belgian experience, as in England students work alongside each other, whereas in my Belgian business school they worked together. Previously I had been used to working with groups in societies but there position or rank would engineer a hierarchical framework with which I could effectively work. In Vlekho’s more collective climate my honest intentions to work hard and get the best results produced unexpected responses which often affected my relationships with colleagues. For example, in my first group my desire to raise the collective group grade made me unpopular, as my attitude alienated my team members. As a result even though the group had managed to scrape a reasonable grade as a consequence of me dragging it kicking and screaming I failed as my peer evaluation was negative. I had to examine myself after that incident and although not perfect I feel that I have developed considerably through the advice of teaching staff, friends and personal meditation.

Despite these troubles I had a very enjoyable period studying there. Having been the only English student at the business school for a number of years there was a deal of interest in me, especially as England appears to be one of the countries that the Belgians like the most. The interest and hospitality shown to me makes it very unfortunate that Belgium is ignored by people from Britain when considering where to go or visit.. I'm convinced that next years group of six English students will not get as strong an impression of the country or other cultures compared to me, as I was the only person that most people from Brussels knew from England. As a result, I was their sole point of contact for cultural discussions regarding Britain and people seemed highly interested to talk to me, if only to improve their English from a native speaker!

Although not unique for their appetite the Belgian’s enthusiasm for learning languages and cultures was humbling. Their attitude that everybody should speak over two languages and converse in the other person’s language, if possible was incredible to witness. I think the strongest example of the attitude was witnessing a beggar outside an expensive shopping arcade would listen out for the language and then beg to them in their tongue. I managed to him speak at least four languages to the passers by in just a couple of minutes.

Despite struggling to learn French throughout my life I was determined to learn as much of the language as possible. Consequentially I tried always trying to start in French. However, I would constantly get replies in English as a result of my poor language skills, friendliness or the desire to practice their English with a native speaker. I judged my language development by the increasing frequency and complexity of French development. I predominantly learnt my language from an Italian friend who couldn’t speak any English and no desire to learn it and the fact I was living in a Moroccan and Turkish ghetto (Scaerbeck), where English was not usually understood so well.

People usually had negative opinions towards my area, citing the poverty, high crime levels and intolerance of the Arabs residing there. I didn’t see that, especially as coming from London I had experienced worse. I had also fallen in love with the cultural contrast, as I felt like I was stepping into a completely new city when I made my way home from the centre of town. It was interesting to see the limits of people’s tolerance, as despite being a very international city there had not been enough development in my opinion to accommodate, respect and live alongside people beyond European borders, who I had grown to admire more and more despite the poor economic and social advantages that they are currently experiencing.

I was the first non Belgian or Dutch person to work in my student bar, a Flemish outpost in the ghetto which I was living in. It was an honour to be able to spend so much time with them rather than work in some O’Reiley’s in town serving pints to English tourists. As a result, I improved my understanding of the Flemish culture and language significantly, being able to serve customers speaking in their tongue. Although not being able to converse I feel confident enough to learn Flemish, Dutch or German relatively well in the future, as the many hours of hearing the customers has enabled me to differentiate words and pronounce relatively well, despite not necessarily knowing what was being said.

It was interesting observe cultural traits firsthand. One of then was the seeming confidence of the Flemish as a people, with the northern, Flemish part of the country developing economically and socially successful. On the other hand they felt increasingly disenfranchised with their city (Brussels) becoming increasingly Wallon (the French speaking, south Belgian region), as slower economic growth in the south encouraged migration to the capital city, as well as the majority of immigrants being Francophone, rather than Flemish speaking. I felt that Flemish people didn’t feel like Brussels was their city any longer and more a place that they would commute to from Antwerp or Ghent in order to work. As a result there was the feeling of entrenchment and that they needed to keep bars like theirs Flemish.

A couple of the older regulars held strong opinions on the Moroccans and Turks who ventured in from time to time to drink at our bar. These were often people who merely wanted one or two drinks but who were instantly marked out by some customers or barmen as being suspicious. I ignored such misgivings as their communities had enamoured myself to them. The response from trusting and being courteous to people who others would ignored was positive for me, with these people sharing insights and views of what prejudices they experience and what they like about their home culture. I also made friends with Moroccan neighbours in my building, who would show me all the best places to eat out in Scaerbeck. As a result of not just restricting my cultural exchanges to fellow students or Belgians I have gained tremendously compared to people who erect barriers to discussion. This is a belief that I hope to maintain and I will be able to use personal experiences to shoot down peoples prejudices in the future.

Before I spent my year living in Belgium my viewpoint was restricted to what I had experienced in London and Exeter and from visiting my Irish relatives. I don’t consider my Belgian experience to have ended but ongoing. Being offered a unique opportunity to develop in a new cultural and academic environment has shown me new viewpoints and enable me to develop a better perspective of the world. Academically I had the unique opportunity to work with groups from all around the world on courses I never assumed I would be taking in life. I'm convinced that this experience has done me only good and as given me the confidence to live in Belgium or anywhere in the world that I choose.

This piece was written by Jonathan McHugh in October 2006

Hofstede’s Analytical Framework

The backbone of Hofstede’s work is that culture mentally programs everybody, both consciously and unconsciously, with society forming peoples values as a result of symbols (words, gestures, pictures, or objects), heroes (people living or not highly prized in a culture) and rituals (unnecessary collective activities carried out for their own sake. Presented in the form of an “Onion” (below), which shows the interrelationship and the steps that form values and how each group is visible (the furthest away from the centre).

From research in the 1970s on cross cultural differences among IBM’s global network of employees Hofstede developed his five dimensions of High vs Low Power Distance, Individualism vs Collectivism, Masculinity vs Feminism, High vs Low Uncertainty and Long vs Short Term orientation in order to help differentiate national characteristics.

High vs Low Power Distance

Country Score Rank

France 68 27 – 29

Belgium Walloon 67 30 – 31

Belgium Flemish 61 39 - 40

Spain 56 45 – 46

Netherlands 38 61

Germany 35 63 – 65

Great Britain 35 63 - 65

The dimension of High vs Low Power Distance has been able to differentiate between countries desire for either highly regarded figures, whether private, public or communal or the ability to question authority and expect more from them.

Individualism vs Collectivism

Country Score Rank

Great Britain 89 3

Netherlands 80 4 – 6

Belgium Flemish 78 8

Belgium Walloon 72 12

France 71 13 – 14

Germany 67 18

Spain 51 30

Individualism vs Collectivism highlights how people and groupings prioritize themselves, with individualist countries favouring personal ambition, whereas collectivists put a greater emphasis on group priority. This enables analysis as to why America is more individualist compared to Japan and offer ways to deal with this.

Masculinity vs Feminity

Country Score Rank

Germany 66 11 – 13

Great Britain 66 11 – 13

Belgian Walloon 60 21

Belgian Flemish 43 47 – 50

France 43 47 – 50

Netherlands 14 72

Masculinity is described as a method of achieving results no matter what the costs, whereas Femininity is the belief in allowing other things to be prioritized in society than material gain. With this tool the book was able to detail why masculine countries such as the USA had such an aggressive form of capitalism and countries such as Sweden prefer a more caring welfare state.

High vs Low Uncertainty

Country Score Rank

Belgian Flemish 97 5

Belgian Walloon 93 9 – 10

France 86 17 -22

Spain 86 17 -22

Germany 65 43

Netherlands 53 53

Great Britain 35 66 -67

High verses Low uncertainty countries responses to events and groups of people were considered to be highly different as a result of differing needs for stability and fear of unknown groups or events. Hofestede’s analysis was used to justify situations such as why it may have been possible for racism in Germany in the 1930s and a low amount of laws in relaxed countries such as Australia.

Short vs Long Term Orientation

Country Score Rank

Netherlands 44 13 -14

France 39 19

Belgium total 38 20 – 21

Germany 31 25 – 27

Great Britain 25 32 – 33

Spain 19 35 – 36

The fifth dimension, Short vs Long Term Orientation describes how and why some cultures have their eye on the future, such as China, whereas countries such as the United States are very much focused on the now. This assumption is used to justify policies ranging from why Americans do not save enough to factors underlining what people desire from relationships.

Extracted and summarised by Jonathan McHugh in July 2006 from:

Cultures and Organizations: Software of the Mind

Geert Hofstede and Gert Jan Hofstede

McGraw-Hill 2005

A Comparison Between UK and Belgian Culture

There are clear differences between Belgian and British attitudes that emerge in all areas of life. For example, the delicacies of Belgium being created through the fusing of least three communities, its historical vulnerability compared to neighbouring countries and its need to trade internationally have all contributed to forming the attitudes of its people, their structures and institutions. As a result, authors such as Hofstead are able to distinguish and attempt to qualify why countries such as Britain are more individualist and relate it to areas, such as Britain’s imperialist past in order to reveal patterns. This report is divided into three areas, politics and economics; education and employment; and society in order to allow for an overview of the countries’ differing cultures and relations to institutions.

Politics and Economics

The complexity of Belgium’s consensus political system helps to balance the needs of both the Wallons and the Flemish. This would be considered to be a more low power distance political system than Britain’s Westminster model, which is based on one party forming the executive. However, this appears to be contrary to Hofstede’s conclusions, either from an underestimation of the effects of institutions (or political institutions) or it gets accommodated by other aspects of culture. The first reason is more likely, as the political framework is designed to balance the needs of Flemish and Wallon interests and disperse pressures which may attempt to divide the country.

Britain is considered the most individualist of all European countries, partly as a result of left wing socialism being drowned out by Thatcherism in the 1980s and an acceptance by the Blair government of the importance of a certain level of inequality in order to encourage economic growth throughout the economy. This continuation under New Labour, a left wing group too frightened by their long absence outside government to aggressively reduce income inequalities, as it would be contrary to what the general population (or at least the swing voters) have become used to under the right wing economics of the 1980s. The reduction in people’s reliance on the state has also reduced the power distance in Britain, as people were forced to support themselves.

In terms of income distribution Belgium is more collective than Britain. Similarly, there is a lot lower difference in wages between the highest and lowest paid workers compared to in England. For example, the highest rates of personal income tax is 65.6% and corporate income tax is 40.2%, where in England it is 60% and 35%.[1]

Belgium’s military police force, although not as extreme as other forces does highlight a more fearful side of Belgian society compared to the moderate British police force. The larger groups of patrolling police officers compared to Britain are also armed, both as a signal of deterrent to would be offenders and to reassure the general public. Judging by the relatively lower levels of crime in Belgium compared to Britain it could be case of departmental capture, whereby the police have argued for more officers than necessary to increase their influence beyond what is economically optimum. However, it could also be the case that Belgian society has a more feminine stance that the benefits of heavy policing outweigh the economic costs of policing (albeit through using one of the more traditionally masculine institutions possible).

However, the Belgian officers seem reasonably tolerant and are out in smaller numbers in larger occasions compared to in Britain. Although it should be mentioned that the ease of use for football fans to take over Bourse to celebrate their victories during the World Cup and the calm of the police officers at the spectacle is probably more to do with Britain’s higher rate of hooliganism than differences abroad.

Britain is undoubtedly more short-term than Belgium politically and economically. The first past the post system encourages governments to fine-tune the economy and policies before elections, even to the detriment of the country in order to get elected. Although not being able to comment in depth, Belgium’s consensus based system should theoretically make it less urgent for governments to ‘fiddle the books’ as much as in Britain.

Although also closely linked with uncertainty avoidance the UK’s reasons to refuse to join the Euro and participate as much in European affairs highlight a disgust at making sacrifices for potential gain in the future. This is not such a problem for Belgium, as the country’s need for consensus as a result of its own fragility culturally and size compared to neighbouring countries makes it more prepared to negotiate and make sacrifices in order to guarantee future security, which can help to explain why Belgium is one of Europe’s most pro EU countries.

Conclusions

Britain and Belgium’s political and economic institutions show clear differences in approaches between the two countries. The most important piece to examine these differences is Britain’s shedding of once core values during the long Conservative government of the seventies created huge repercussions which affected many areas from civic pride, investment decisions favouring short term growth to longer term restructuring and the fear of engagement in European affairs. Belgium’s more relatively stable political system has not experienced such shocks in recent decades, which when combined with its smaller country status internationally helps to explain why more traditional values, such as favouring more cooperation both domestically and internationally and more short-term sacrifices in order to make greater gains in the future.

Education and Employment

The most substantial differences between the studies offered in Exeter and Vlekho is that one is a university and the other is a business school. Whereas Exeter University is more of the traditional academic structure which focuses students’ attentions on a small amount of topics to encourage speciality Vlekho encourages students to know a shallow amount on a larger range of topics to gain a broader experience. As a consequence it is often difficult to make any broader comments about the two countries, although different attitudes do emerge.

In Britain there are most lectures contain hundreds of students and class participation is low (i.e. low power distance). This is compensated by small tutorial groups ranging from sizes usually between 10 and 20 per class which is focused on discussion.

Vlekho has a structure which offers medium sized lectures, usually averaging between 30 and 70 students and no tutorials. Discussion tends to be highly welcomed, although many Belgian students have admitted finding it difficult adjusting to this new structure of teaching at Vlekho. Personally, I have had problems as a result of one Vlekho professor expecting too much a degree of compliance than expected of me both from at my home university and of his peers in Brussels. This might suggest that perhaps the majority or at least some of the students (and some professors) have higher power distances than the revised smaller class size Vlekho educational structure[2] and probably more in line with the British educational structure.

England’s university structure is focused on private study. Courses are graded according to a combination of essays, presentations and exams. Vlekho includes these as well, of course. However, more recently there has been a growing importance on making the education process closer to the environment of the workplace.

One of the developments resulting was that group projects take a higher significance than more individual assignments. Now students’ grades are dependent on the group’s success in projects and not their own personal contribution. This is collectivist thinking even extends to peer evaluation on certain courses which can be the difference between a student getting a respectable grade or failing (no matter his contribution in certain circumstances). In English education is would be highly unorthodox and would be dismissed as blurring how the teacher would understand each individual students understanding of the course.

In both systems there is a different method of encouragement in higher education. In England the system is developed so that individual effort (or laziness), through working on projects alone is more easily distinguished. In Belgium, on the other hand the teacher’s assessment is focused more on cohesion within the group, rather than on individual strengths.

The results structure of Vlekho is different to Exeter Universities in terms of their grade weighting. In England grades are offered as a percentage, with 40% being the lowest pass grade and 70% being the top grade. Over 60% on average is required in order to get an acceptable strong degree level. Vlekho’s more collective grading system results in the pass level being 10 out of 20 (50%) and it being much harder for students to get very high grades. This is because the emphasis, as in the Netherlands is not in isolating and rewarding the more outstanding students but ensuring that all the students complete the minimum. From personal experience I have not come across any students with aspirations to getting high grades, as most people are more concerned with merely passing.

Vlekho’s higher minimum pass rate than in Britain could highlight the need to weed out the less capable students, such as making it hard to pass accounting exams to ensure that accountants are highly accomplished rather than knowledgeable in their profession.

English universities tend to be more flexible than Vlekho’s approach, which although it has declined in the last few decades permits more free developmental time than Belgian higher education. This is clearly differentiated by the existence of a large Union structure in English universities, which supports the creation of societies. In Vlekho there really only exist Pro Gaudio and Cleopatra, which are effectively drinking societies.

The Belgian system of making students sit more modules and takes multiple styles of evaluation (such as exams, presentations, orals, etc..) should ensure that the students results are less prone to error and bad luck than English exams, which rely on big exams to determine results (and even future careers).

However, it has to be noted that societies and groupings do exist but outside the institutions of education, serving the needs of society rather than the bubble of university. However, it is difficult from experience to qualify the differences in these post education differences.

Belgium invests a considerable amount more per student than in Britain in education, as it is considered that the benefits both in terms of future tax revenue as a result of a more productive workforce and net society gains as a result of a more conscientious population.

From my experience working at Den Bisnis I have noticed differences from various forms of employment (both skilled and unskilled) to English employment. One of the most noticeable was the reward structure. Most bar professions involve tips. When I worked in a coffee shop it was pooled every month, as the automation involved meant that one customer would be served by at least one employee. In Den Bisnis there is only one barnman serving, normally for half the day. Despite this tips are pooled across all employees for the year, so that it meant no difference how hardworking an employee is or popular he is with the customers he will still receive the same return as the rest. Not only this but the money is actually spent on one day out, where all the barmen go drinking for the whole day. This provision, although unlikely to be representative of Belgium in general and all forms of work does highlight subtle cultural differences in the way table service operates between countries.

Belgian employees tend to be more professional than in Britain. Although not directly celebrated a higher minimum is expected, which appears to filter through most areas of society, even down to the kebab shop seller, who makes the effort in most cases to maintain a level of care. This is partly as a result of pride in their output, as a consequence of Belgium’s trading history and a greater sense of responsibility.

Unfortunately in Britain effort is looked down upon, almost as a form of cheating. The professional slacker is becoming more of a major problem in companies, with an increasing number of employees preferring to cheat than contribute to their system, a negative effect of the individualist and masculine business environment.

On the other hand, British customer service is of a lot higher standard, as the Belgian customer-employee relationship is because of its falsity and having been less exposed to ideas of American human resources and marketing.

In the workplace, despite the English habit of people hiding their emotions through degrees of sarcasm and protocol there is a greater degree of criticism of peers and authority figures than in Belgium. Criticism does exist in Belgium but does not tend to get told directly to the people involved but rather as a complaint to confidents, as a result of a lower power distance existing within the workplace.

Conclusion

The main between British and Belgian education and working practices is the level of individualism which affects the assessment of people and consequentially furthers patterns of behaviour through rewards or punishment. For instance, as a business school Vlekho has been keen to adopt many US and UK originated ideas. Despite this there are hidden characteristics which exist to encourage more conscientious practices. In the UK this is felt to be less important, as there are felt to be greater benefits from encouraging people to compete more against each other. One concern for Britain is that the emphasis on success through individual and masculine methods is that its incentives often encourage underperformance and cost cutting, which helps to create negative effects in the workplace and society in general.

Society

In Britain there is a lot less respect for strangers and family ties than in Belgium. These low power distance characteristics can be seen in many forms, such as youths hanging around street corners intimidating passers-by. This is regarded as part of the ‘Decline In British Values’ that has been deteriorating, partly as a result of the rise of individualism under the Thatcher government. Although rough areas are mentioned by Belgians there tends to not be any problems on the streets, although I do hear personal stories from female friends of mine who have experienced problems with Arab youths causing them grief. However, I haven’t been witness firsthand enough to comment sufficiently how large this problem is and it would certainly not be any worse than in England.

Belgium’s (especially Brussel’s) influx of Turkish and Moroccan immigrants are posing newer problems, as they are less willing than previous southern European migrants to assimilate into Belgian culture, as well as increased cultural differences to bridge. As a consequence there is a greater sense of caution towards them because of a fear of the unknown. This has happened in England (especially London) previously and although it is difficult to determine which created a greater degree of uncertainty it has to be mentioned that it does occr in both countries but that England is at a different stage.

A clear distinction can be made by different controversial issues that have been settled and considered the norm in some countries and others which are still shocked by them. Issues on drugs, sexuality and pluralism appear almost on a sliding scale, with the more feminine Netherlands accepting many issues, Belgium tolerating some through non policing and Britain tending to assume that society’s fabric will unwind if certain issues are treated softly.

In Belgium I find it amusing how all Belgian’s seem to return every weekend without fail to see their parents. British students tend to embrace their freedoms a lot more, seeing it as a further step towards independence. It appears that Belgian’s links towards their families are stronger and that British students tend to prefer to cut some of their collective bonds to have more freedom and discover newer sides to themselves at university.

One of the most interesting differences between British cities and Brussels is the relative lack of advertising boards. In Brussels these are then predominantly for cultural events, highlighting a more feminine outlook, as the cultural prospects of the street are favoured over marginal profitability. However, a large billboard recently constructed by Botanique by a British advertising company may be heralding a shift in brand advertising in Belgium. Normally, the majority of company advertising has been through sponsoring cultural events, so as to be included in on street posters.

Belgian architectural rules give preference to designers ideas, preventing other designers being able to replicate features in other buildings. As a result there is only one street in Brussels where the houses are the same and that is only on one side of the street. As a consequence of a lack of uniformity there is greater architectural spontaneity of design on a single street (albeit quite subtly), in terms of size, materials and architectural features, which would highlight an individualist mindset. However, on the other hand this is also coupled with both architects and town planners’ desires to incorporate future buildings in line with existing structures, especially in height and proportion in order to create more of a continuous theme, even in cases where the materials and periods are different. The result is a city where the buildings, although reflecting individual preferences and budgets is still restrained by the collectivist notions of previous styles and the local neighbourhood.

Brussels public works such as metros or government buildings tend to reflect their attitude that it is easier to plan and prepare for future demands and capacity rather than constantly having to deal with expedients. An interesting comparison would be comparing the size of the metro stations in Brussels to London’s Underground. In the Belgian case the stations are built so that capacity will not need to be enlarged in order to deal with future population sizes. In London all stations tend to be overcrowded and usually over capacity, with stations often being closed temporarily, as it would be unsafe to allow more people inside. Although Brussels’ transport is overcrowded it is merely a case of the pricing structures with the companies running them and not providing enough carriages platforms could easily accommodate twice the amount of carriages than currently offered.

Conclusion

Belgian society’s open-mindedness and collectivism reverberates especially in Brussels, reflected in the diverse range of communities, beliefs and architectural ideas that exist. Belgium’s beliefs towards inclusively is being challenged by minorities more prepared to be distinct than previous generations. British society, which had experienced similar immigration has overcome most of these questions over time, partly as an unmentioned debt to these as a result of imperial aggression in the past and a homogenising idea of what it is to be British. This final reason although speeding up the process of integration results in the island paranoia of immigrants intentions never disappearing, even with descendents eventually excluding future immigrants to a small extent.

General Conclusions

In terms of marketing potential the variations in culture as a result of subtle characteristics of values, rituals, heroes and symbols between the UK and Belgium require slightly different approaches to a company or organisation promoting itself. For example, a commercial which emphasises more individualist values, such as the go getting male who gets the girl over his mates at the nightclub because of some accessory would be more successful at tapping into UK instincts more than in Belgium. Similarly, an advert showing the potential for play as a result of an accessory within a group would be more successful to Belgian audiences. However, this observations still need to be taken with a pinch of salt, as Belgium and UK differences are fairly close to each other on a global scale, as European characteristics will be much close compared to characteristics in other countries. International comparisons between Belgium and Japan would reveal Belgian’s to be more independent, for example. On the other hand, there are clear differences between the UK and Belgium, enough to benefit any marketers who want to gain the most exposure for their products.

This report was written by Jonathan McHugh in August 2006

---

[1] OECD in Figures Statistics on the Member Countries, 2002.

[2] Although I suspect in the case of my professor it is more a comedown from previously working high up in business, where he was the absolute authority.

Book Review of Cultures and Organizations: Software of the Mind.

Authors: Geert and Gert Jan Hofstede 2005 McGraw Hill

Geert and Gert Hofstede’s revised book, Cultures and Organizations: Software of the Mind contains three different approaches to understanding cultures and management throughout the world and thus need to be examined separately. The first reintroduces and builds upon Geert’s work in the 1970s on cross cultural differences among IBM’s global network of employees using his five dimensions of High vs Low Power Distance, Individualism vs Collectivism, Masculinity vs Feminism, High vs Low Uncertainty and Long vs Short Term orientation in order to help differentiate national characteristics. Part Two is an attempt to create a similar language for different business cultures in organizations. This is done through documenting similar methods to Geert’s IBM research, measuring the differences between employees within an organization, differing company goals and attempting to show how nationality can influence the value held. Part Three is intended to be a practical guide for recognizing and dealing with cultural differences and shocks and advice for differing groups to use, such as multinationals, politicians, media groups and parents. Its methodology, particularly in the first half of the book is to start from a statistical framework for highlighting differences and then justifying it with real world experience and academic research. This is where its success lies. However, as the book develops it becomes too general and as a consequence holds less authority, as it becomes less scientific, too broad and more effectively covered by other textbooks.

Introductionary Section

The backbone of Hofstedes’ book is that culture mentally programs everybody, both consciously and unconsciously, with society forming peoples values as a result of symbols (words, gestures, pictures, or objects), heroes (people living or not highly prized in a culture) and rituals (unnecessary collective activities carried out for their own sake. Presented in the form of an “Onion” (below), which shows the interrelationship and the steps that form values and how each group is visible (the furthest away from the centre).

Geert’s work considers this to be self replicating, with one generation passing down its fundamental beliefs, which although slightly changing as a result of individual personality and contemporary developments in the world will still continue.

This notion is even stretched into the context of social Darwinism, with a belief that differing cultural patterns exists for different groups of apes and chimpanzees. The differing forces put on man, it is explained forced man to live with differing values to others, as climate and differing challenges forced communities across the world to employ different priorities in order to be more successful. Gradually developing throughout the periods of man, Darwinism sits comfortably with Hoftedes’ cultural reasons as to why some people took on certain characteristics, even explaining why some races disappeared, declined in influence and why there were some major events in history, such as the reformation. This is obviously creates a form of analytical bias, which forms a more of an social evolutionary framework than political, economic or even religious (often too heavily criticized, possibly from a scientific bias) analysis of world events and development.

The attempts to highlight the methods of research draw an interesting insight into the process of analysis. The procedure of validating, i.e. drawing assumptions from the real world in order to justify statistics can be dangerous, as it can result in people seeing validation everywhere, despite having misleading information. However, the text is well research is well balanced, with views from Europe (particularly French), S.E Asia (particularly China) and America clearly represented and balanced satisfactorily.

Part One: Dimensions of National Cultures

Geert Hofstead’s research into IBM employees from around the world was an attempt to understand the differing values that people hold and to create some language or tools for understanding why this exists and how this can effect future actions. The aforementioned dimensions of High vs Low Power Distance, Individualism vs Collectivism, Masculinity vs Feminism, High vs Low Uncertainty and Long vs Short Term provide highly interesting conclusions to different thinking patterns.

The dimension of High vs Low Power Distance has been able to differentiate between countries desire for either highly regarded figures, whether private, public or communal or the ability to question authority and expect more from them. This method was able to differentiate between groups of countries, such as the Scandinavian block, which favored a more democratic process and more authoritarian countries such as China, which preferred leaders to exercise more authority

Individualism vs Collectivism highlights how people and groupings prioritize themselves, with individualist countries favoring personal ambition, whereas collectivists put a greater emphasis on group priority. This enables analysis as to why America is more individualist compared to Japan and offer ways to deal with this.

Masculinity is described as a method of achieving results no matter what the costs, whereas Femininity is the belief in allowing other things to be prioritized in society than material gain. With this tool the book was able to detail why masculine countries such as the USA had such an aggressive form of capitalism and countries such as Sweden prefer a more caring welfare state.

High verses Low uncertainty countries responses to events and groups of people were considered to be highly different as a result of differing needs for stability and fear of unknown groups or events. The data collection was used to justify why it may have been possible for racism in Germany in the 1930s and a low amount of laws in relaxed countries such as Australia.

The fifth dimension, Short vs Long Term Orientation describes how and why some cultures have their eye on the future, such as China, whereas countries such as the United States are very much focused on the now. This assumption is used to justify policies ranging from why Americans do not save enough to factors underlining what people desire from relationships.

The success of this strain of analysis is to highlight not only differences more obvious between continental cultures but also subsets, highlighting differences between (for example) North European and Southern European as a result of different climates, resources, history forming habits. As a result conclusions as to the similarities between Austria and Germany and Spain and Portugal both using statistics of IBMs employees and analysis appears highly insightful.

The method of analysis using validation from an evolutionary perspective has been very well used. However, many assumptions, although appearing correct become misleading after detailed analysis. For example, bracketing the growth of Protestantism in England and Germany together as a cultural movement is misleading, as it was politically top down (ie Henry VIII) in England and bottom up (as a result of the Gettysburg Press). So much emphasis is put on culture by the authors that it forgets that there are moments in history where cultures are formed as a result of institutions (such as the growth of English Protestantism) or from major events that cause shifts in cultures (although briefly mentioned more could have been made on the potential effects of the September 11^th attacks on America’s uncertainty avoidance for example.

Part Two: Cultures in Organizations

Satisfied by the analysis of why different cultures have alternative beliefs and habits, Part Two attempts to do the same in terms of work culture and management. However, its emphasis on summarizing other works and integrating them into the authors’ own viewpoint shows a lack of confidence and less of a coherent method of cutting across the thinking and processes of individual companies than in Part One.

Highlighting works such as Mintzberg’s Cultural and Organizational Structure help to understand organizations, such as the five configurations (The Simple Structure, The Machine Bureaucracy, The Professional Bureaucracy, The Divisionalized Form and the Adhocracy). This can help highlight how an organization coordinates, standardizes and monitors processes. Again, there is felt to be some sort of correlation between his conclusions and that of the IBM inter country research, with the idea that certain countries would hold preferences for certain structures, such as the United States preferring the Divisionized form and France the Bureaucracy as a result of certain cultural preferences.

Similarly, the summary of the different Corporate Goals of national companies similarly offers an interesting look as to how companies govern themselves. The rankings of the six greatest priorities of businessmen also seem to correlate well with Geert Hofstede’s Five Dimensions Theory.

Hofstedes’ conclusions over risk and accountancy practices seem to fit rather well, with differences in Power Distances and Uncertainty enabling for a suitable point of discussion for differing accounting practices. The notion of symbols is also used well as a tool to differentiate the differences in the value of money and the conventions held between bankers and accountants.

In their analysis, Geert and Gert Jan reference American management theories very rarely. Whilst discussing leadership and motivation they feel the need to mention it but as European academics are keen to distance themselves, with only one American quotation in the whole text. Their cynicism is seen when highlighting the situations which enable American models to be successful but also showing how the differences that exist between countries (as shown in the 5 dimensions) highlight a poor fit of cultural styles. Later they back this up, citing the failure of organizational culture theories when adapted to France. This is well reasoned, with their philosophy of cultural inclusiveness giving clues but beneficially offering no concrete answers, in order to foster personal customization, suggesting that there is no single formula for developing successful managers that can be used in all cultures.

The more original research into organizational cultures find six dimensions, namely Handling People vs Handling Things (comparing the roles or nurses and engineers in who or what they deal with); Specialist vs Generalist (a psychologist would be more specialist than a politician, say); Disciplined vs Independent (a police officer would have less discretion than a shopkeeper); Structured vs Unstructured (a systems analyst would have more of a defined role than a fashion designer); Theoretical vs Practical (a professor would be more academic than a salesman) and Formative vs Pragmatic (where procedures were more important than results, such as in the public sector).

This is built upon when these results were used to distinguish between Elephants, slow bulky but self confident companies and Storks, reliable, caring and transporting companies. Subcultures are more easily understood when tied in with further theories on Alienation, Commitment to work, a personal need for achievement, personal masculinity, orderliness and authoritarianism.

Similar to Geert Hofstead’s 5 dimensions of national cultures the 6 dimensions of organizations are non discriminatory, merely being tools to analyze the differences between companies and possibly help judge the possible suitability. Although useful as a result of not focusing entirely on cultural issues the topic feels like a shoe-in of new management theories into Geert Hofstede’s cultural dynamics philosophy covered in Part One. As a result the theory is useful, although not revolutionary.

Part Three: Implications

The third part offers a range of situations, such as diplomacy or in business, which helps to highlight flaws in cross cultural misunderstanding. For example, dangers to international mergers and acquisitions have been highlighted in situations such recognizing both areas for at least an interim period and the necessity of charasmatic leadership

Problems of culture shock are summarized well in the Acculturation Curve (below), which summarize a tourist or expatriate worker over time. This is divided into Euphoria (A), the positive experience of finding something new, Culture Shock (B) the readjusting to new norms, Acculturation (C), the coming to terms with a new environment and A Stable Set (D), where the experience settles and is either positive, neutral or negative.

Time

The book suggests that failures from cultural shocks are overestimated, with statistics quoted usually being echoed from unreliable sources. It also appears correct in addressing that problems that do occur and suggests useful methods to limit this. In the case of businesses the advice of forcing expats to integrate more and give them adequate cultural teaching (if language training is too difficult given the time) is helpful but not too illuminating.

Conclusion

This book is an interesting and broad introduction to the challenges of organization and individuals dealing with other beliefs and processes. The development of cross cultural understanding using the language of Hofstede’s five dimensions mentioned in Part One can be a highly powerful tool for analysis. The management advice in Part Two for looking at organizations and comparing is useful, although not revolutionary. Similarly, the Third Part creates a useful insight into the challenges created from dealing with other cultures, although it is not as distinct as the advice offered in other texts. Ultimately the three part approach to cross culture is interesting but flawed. The quality of writing at the beginning was so much more thought out than the final two parts that the authors would have benefited from more of an integration of ideas or treated as three separate topics in different books.

This review was written by Jonathan McHugh in April 2006

The Differences In Between Multinationals and International Companies

Clear differences in cultures around the world create challenges for human resource management, particularly companies which operate in radically different countries. Global companies have tended to choose between two main philosophies in business, the multinational, localised method for human resource management and the international method, which is more centralised. Each of them have their own distinct strengths and advantages, with the most effective option being dependent on the breadth of cultural differences in the company and the tasks and relationships of workers (both between each other and with their employer).

Globalisation
Globalisation has extended international business’s scope, from merely exchanging goods between companies and organisations between borders to corporations which have many physical operations and services in many countries of the world. Geography is no longer as important factor to these global companies, who are able to move their resources across continents.

Culture
However, despite the relative ease of transferring factors of production or capital to other countries cultural differences distinct effects as a result of different norms and values are still significant and crucial for high levels of profit. Differences are especially more pronounced between western and eastern countries. For example, Japanese employees are highly collective (work as a team and have huge respect for authority (high power distance). On the other hand, an American employee is highly individualistic (values themselves over their team) and have a low power distance (as they feel entitled to challenge authority figures and possibly ridicule). This creates challenges for human resources and a number of solutions

Multinational Method: The Local Approach
For multinational companies there is a priority of using local strengths and characteristics and ensuring that they are employed with the company’s global vision.. This hands-off method is often used by companies who accept these differences between their home country and their foreign subsidiary. In such a situation the affiliates would have significant local authority in human resource policies such as recruitment and remuneration. In this case only human resources control from headquarters would be financial.

Often this is because it is considered that there are specific benefits as a result, such as bridging cultural differences within the organisation. In these cases there are felt to be more benefits to build on what employees know and are comfortable with as a result of cultural conditioning than to force them to change their natural viewpoint and structure. This method allows the affiliates to concentrate more on their clients more effectively, allowing them to be highly responsive to movements in the markets. This method tends to get used more in situations where social cultural diversity is more significant than technical and product operation as these reflect cultural norms more easily. Equality of the recruitment in the developing world is going to be highly important in the future. The developing worlds labour force is no longer cheap labour but highly skilled, especially given the lower wages. Because of the more positive emphasis put on local customs and experience it is much easier for multinational companies to recognise the benefit of local knowledge compared to hiring expensive expat employees to perform the same task.

However, if business and human resource policy is too focused on local trends this results in the subsidiary following the principle goals of the parent company. As a result the decentralised company fails to improve international coordination in projects, one of the main benefits of global business. Also, the possible benefits that made the parent company so successful initially may be mistranslated by the subsidiary offshoots in other countries with not enough centralisation.

International Method: The Global Approach
International companies have a unified approach to business which extends to human resource systems. They have more centralised processes, such as recruitment remuneration and promotion as the perceived wisdom on managerial theory was so successful in the parent company (and possibly other countries) that its values should be exported despite possible costs in restructuring and reducing local flexibility.

This method is particularly useful in more technical procedures and product operation as these methods can usually be introduced with little disruption to what the workers are used to. For example, cultural factors make less impact on decisions to introduce more western processes in a Chinese factory than in a Chinese computer software company.

On the other hand, the assumption that a company’s philosophies are so great that they can be exported everywhere can create a level of arrogance that is easily observable in human resources. These tend to be highly expensive as a result of expecting lots of perks to match their previous earnings in another country and it is difficult to encourage them to stay with the company when they return home as they become used to their levels of responsibility abroad. The over reliance of expats to implement policy in other countries creates a bias and makes companies undervalue the potential labour that they already employ locally. This can have significant effects on morale in the workforce if it becomes clear to some workers that they will be overlooked for promotion, not to mention that the more qualified employee may be overlooked. However, these cultural biases are decreasing over time.

Conclusion
There are significant differences between multinational and international companies and is highly important for international human resource managers to consider. Levels of cultural differences between the countries involved and the tasks required result in careful examination of the benefits and costs. However, both policies’ strengths and weaknesses are slowly being utilised in future international business structures, as some countries are becoming so large that they will be able to shed the skins of nationality and cultural preferences. However, until then businessmen and human resource managers will have to find some compromise.

This report was written by Jonathan McHugh in January 2006

Cross Cultural Business Behaviour and CSR

I) Introduction

When an organization goes international it will be confronted with new and potentially unique standards of legal and ethical conduct. More specifically a company needs to look at the relationship between business and society. International business is conducted through international trade agreements, parent country laws, and host country regulation of foreign enterprises. In practice however, these rules and guidelines differ seriously between different countries as companies can abuse these differences to gain more profit. For example, environmental regulation is weaker in many countries around the world than in Europe or the United States. (Marketing book) In such a situation the multinational European or American company is confronted with the choice between lowering the cost, no matter the damage to the environment, or to protect the environment. Environmental aspects form only one element of the relationship between the company and society. Other examples of misconduct by the company in order to maximize profits are: child labour, no respect for human rights, bad working conditions, production of dangerous products, destruction of animal habitats, … (movie melissa) In fact, a lot of these activities are strictly legal and officially these companies don’t do anything wrong. But the world has changed. Stakeholders and especially customers are more aware of how companies behave themselves. Companies need to achieve “Corporate Sustainability” by aligning their activities with the stakeholder expectations. (PWC) The media and internet are the main reasons of the increased awareness. Important players within this process are NGO's. An NGO is defined as:

“…group whose stated purpose is the promotion of environmental and or social goals”

(Bendell,2000,p.16) zie boek intb

To go on with environmental issues, Greenpeace forms a multinational NGO that scrutinizes companies that damage the environment. (boek int b) Customers have more power than ever. They receive information via the media and they can organise themselves over the internet. This results in pressures and even boycotts of companies that misconduct in their point of view. Because of this, shareholders also put pressure on the companies to prevent a loss of sales and eventually a loss of profit.(article cabrera). This is called shareholder activism.

Recently companies reacted on this evolution in order to conserve their image. They are now hoping to get good press instead of bad press by investing in social issues. A lot of companies voluntary signed declarations of good conduct and most of them publish an annual CSR-report on their website to convince shareholders of their good intentions. Economic theories that state that a company just has to focus on maximizing profits have become dated.

II) Definition CSR

What does Corporate Social Responsibility really mean? Different organisations and different authors often give different but more or less common definitions. One of them is the following:

"Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

(Holme & Watts, Making Good Business Sense, WBCSD, 2000)

The following illustration can be used to place CSR within the culture of a company.

Nowadays it is important that companies consider the following two aspects of their activities. First of all, the quality of their management and second the impact of the operations on society. These aspects are represented in the illustration as the inner and outer circle. The company is pressured by multiple parties to take the outer circle into consideration. One of these parties for example are the NGO’s that focus on the environment. When companies take into account social and environmental issues besides their financial issues we can speak of “Corporate Citizenship”. (Zadek S., “The Civil Corporation”, Earthscan, London, 2001,p.7) This corporate citizenship is part of a company’s business culture and we can illustrate this culture with the following pyramid.

Instruments to manage companies in a responsible way are for example: Ethical Auditing & Accounting, Social Reporting and Sustainable Development.

The Centre for Corporate Citizenship (Boston College, website?) defines the essence of “Corporate Citizenship” through four elements:

1) Minimize harm: This means minimizing the negative impact on all stakeholders (employees, customers, shareholders, society, nature,…)

2) Maximize benefit: Not only financial benefits for the shareholders, but benefits for all stakeholders

3) Be accountable and responsive to stakeholders

4) Support strong financial results: Returning profit to shareholders is an obligation to society

In general we can speak of five main CSR topics:

• Human Righ

• Employee rights

• Environmental protection

• Community involvement

• Supplier relations

(Holme & Watts Making Good Business Sense, WBCSD, 2000, p.10)

3 Arguments against CSR

Because of the increased pressure of stakeholders, multinational firms need to take a new role in promoting social and environmental objectives. Companies that have a global brand are in, our current media focused society, very sensitive for social issues. The downfall of Arthur Andersen is an example of how something that goes wrong in one part of the world can destroy your entire global operations (article Cabrerra). But there still exists two main reasons why companies object to their new social roles:

• The only purpose of business is to make profit; and they should not pursue other objectives

· Ethical considerations are different between countries, and companies are facing the dilemma to which national ethical system to follow.

This forms more or less the view of Milton Friedman. Thirty five years ago he wrote the article “The Social Responsibility of Business Is to Increase Its Profits.” in the The New York Times Magazine (http://www.reason.com/0510/fe.mf.rethinking.shtml). He stated that there is only one social responsibility of business: to use its resources and energy in activities designed to increase its profits so long as it stays within the rules of the game. Friedman also argued that firms do not have the expertise to get into solving social problems. Specialized institutions such as government agencies or charities are in much better position to engage in social and environmental objectives. Even though, Friedman’s point of view is extreme, there are still people that support his ideas. For example, referring to oil companies, they stated that companies are not the right organizations for furthering moral causes, their strengths lie not in devotion to democracy and human rights but in finding, extracting, and distributing oil. Some managers also share the idea that CSR can damage the economic development of firms and nations, not only because business are forced to operate less efficiently, but also because new forms of interventionism arising out of the adoption of CSR, which include closer regulation, narrow the domain of competition and economic freedom.

4 CSR and Ethical conduct pays off

“Should firms spend money on improving their social and environmental performance?

Should companies take on CSR action based on moral grounds?

Is taking care of stakeholder groups an area of responsibility for companies or governments?

(EurActiv: http://www.euractiv.com/Article?tcmuri=tcm:29-117141-16&type=Analysis article: Social and environmental responsibility does pay off Published: Tuesday 8 April 2003)

We just looked at why some people think that CSR is bad for a company, but this only one side of the story. The purpose of this part is to show that international companies can also profit from being socially responsible. The focus doesn’t always have to be on sales and profits. Companies with a high corporate responsibility score are everyone’s interest and have a higher value in society. It gives a company a better public image. Also pressure groups play an important role in encouraging companies to expand CSR efforts. But that is not all, it also turns out to be more profitable for the company. There is a growing body of empirical studies which demonstrate that CSR has a positive impact on business economic performance, and that it is not harmful to shareholder value. (Towards an understanding of Corporate Social Responsibility: http://www.indianngos.com/corporate/l&t/csr1.htm )

Organizations that are socially responsible have a better image. This is because financial and business performance is not the key to getting good brand equity. They are important factors because they provide information about the internal health of the company, but the real reputation of the company comes from the way it behaves in terms of its responsibilities as a citizen and from her interaction with the rest of the world. The following chart shows that as many as 56 % people believe that a company's attitude towards its employees, environment etc. are more important than its quality or financial performance. (toward an…)

Source: MORI, 1999

Another important factor are the already explained pressure groups. As the result of pressures from customers, suppliers, employees, communities, investors, activist organizations and other stakeholders, companies have been encouraged to adopt or expand CSR efforts. After all, the corporation is an important actor in modern democracies. Companies, with an apparent lack of accountability to stakeholders affected by corporate activities have sparked intense controversy. Campaigns by consumers, shareholders and protestors focusing on individual acts of corporate irresponsibility, and on an agenda of globalization and business liberalization perceived as being driven by corporations, have without doubt had discernible impacts. (Toward an …)

From a growing number of studies it also became clear that CSR is not only good for the public image of the company but that it also has a positive influence on their financial performance.

The recent study by the Institute of Business Ethics (IBE) “Does Business Ethics pay?” researched if companies that display a clear commitment to ethical conduct outperform companies that do not display this ethical conduct. To achieve this they compared CSR with financial performance measures over a period of four years. They took between 41 and 86 UK companies from the FTSE 350, for which full and comparable company data was available for the years 1997-2001. Then they were divided into two groups: those companies who have had codes of ethics/conduct/principles for five years or more and those who explicitly said they did not have them. After that seven indicators were chosen - four of corporate financial performance [Market Value Added, Economic Value Added, Price Earnings Ratio and Return on Capital Employed] - and three of corporate responsibility [having a code of ethics, ratings for managing socio/ethical risks and being cited consistently in the annual list of Britain's Most Admired Companies].

As a result of this research it turned out that there is a positive relationship between CSR and financial performance. Some of the results are:

· Regarding financial performance, from three of the four measures of corporate value used in the study (EVA, MVA and P/E ratio) it was found that those companies in the sample with a code of ethics had, over the period 1997-2001, out performed a similar sized group who said they did not have a code.

• Companies with a code of ethics generated significantly more economic added value (EVA) and market added value (MVA) in the years 1997 - 2000, than those without codes.
• Companies with a code of ethics experienced far less P/E volatility over a four year period, than those without them. This suggests that they may be a more secure investment in the longer term. Other research has suggested that a stable P/E ratio tends to attract capital at below average cost; having a code may be said to be a significant indicator of consistent management.
• The indicator that showed a different result pattern to the others was Return on Capital Employed. No discernible difference was found in ROCE between those with or without a code for 1997-98. However, from 1999 to 2001 there was a clear (approximately 50%) increase in the average return of those with codes while those without a code fell during this period.

· The data also indicates that in the years 1997-2001, those with an explicit commitment to doing business ethically have produced profit/turnover ratios at 18% higher than those without a similar commitment.

We can conclude from this that larger UK companies with codes of ethics almost invariably outperform companies that do not display ethical conduct.

(IBE: institute of business ethics: http://www.ibe.org.uk/DBEPsumm.htmSimon Webley and Elise More WEBLEY, S. and MORE, E. Does Business Ethics pay?,London, 2003.Executive Summary)

This is not the only study that provided a positive relation. Another example is the work “Added values” from Imagination and Governance Consultancy Lintstock (Londen 2004). They also conducted research regarding this topic. To do so the authors took over 1,000 publicly listed companies from a range of different countries. They compared the more than 200 listed companies that are on the S&P 1200 and that use sophisticated CSR reporting methods against the remaining companies that don't. The areas on which the companies where compared, were: share price volatility, five-year revenue growth and five-year operating profit margins. It turned out that GRI users enjoy lower share price volatility on average, and higher operating profit margins despite slower revenue growth.

(IR on the net: http://www.ironthenet.com/newsarticle.asp?articleID=3430)

To go on, a research based on the 100 Best Corporate Citizens shows that it does pay of to be social responsible. The overall financial performance of the 2001 list of the 100 Best firms was significantly better than the remaining companies in the S&P 500, according to an analysis by Elizabeth A. Murphy and Curtis C. Verschoor. For their research they used the Business Week's ranking of firms by financial performance (based on factors like sales growth, profit growth, and return on equity).It turned out that the mean ranking of the 100 Best was more than 10 percentile points higher than the other firms. The 100 Best Corporate Citizens also had a significantly better reputation among corporate directors, security analysts, and senior executives. This was based on the 2001 Fortune magazine survey of most admired companies. Again, we conclude that good citizenship really does pay off on the bottom line. (toward an …)

Main concussion of this overview: Organizations that are socially responsible have a better image, a better customer retention and are able to consistently perform better than others, which don't take social responsibility seriously.

5 Positive steps towards CSR

Over the past decade, more and more companies have recognized that CSR can be beneficial for them. This experience is bolstered by a growing number of empirical studies who confirm that being socially responsible pays of. On top off that they are encouraged by pressure groups. As a result, CSR has grown dramatically in recent years, with companies of all sizes and sectors developing innovative strategies. What follows are some examples of positives steps that have been taken toward CSR.

(Towards an …)

In 1999 the UN challenged business leaders to join the Global Compact, an international initiative to advance ten universal principles in the areas of human rights, labour, the environment, and anti-corruption. The participants are required to communicate with their stakeholders on an annual basis about progress in implementing the Global Compact principles. As of May 2005, 2028 companies from over 80 countries have joined the Global Compact. ( “Communicating Progress on Implementing the UN Global Compact Principles.” Business and the Environment. Von XVI, No 7, July 2005.)

The Business Social Compliance Initiative (BSCI) is a program of European retail companies that was started by the Foreign Trade Association in 2002 to improve social performance in supplier countries trough uniform social standards. Their primary focus is not on the auditing process but on implementing recommended corrective actions and sustaining facility improvements. (“Think Locally; Act Globally: Developing common Codes of Conduct for International Supply Chains” Business and the Environment. Vol XVI, No. 9, sept. 2005)

The IT giants Hewlett-Packard, Dell and IBM were prompted to re-evaluate their CSR policies after an exposé about unsafe conditions at electronics manufacturing plants (January 2004). They collaborated whit other electronic manufacturers to develop a common electronic Industry (EI) Code of Conduct. This code was facilitated by Hewlett-Packard in October 2004 and covers labour and human rights, health and safety, environmental concerns, management systems, and ethics. (“Think Locally; Act Globally: Developing common Codes of Conduct for International Supply Chains” Business and the Environment. Vol XVI, No. 9, sept. 2005)

The Joint Initiative (Jo-In) on Corporate Accountability and Workers’ Rights is the first collaborative effort of the garment industry to clarify, simplify and unify supply chain EH&S and CSR standards. This spring, Adidas, Gap Inc., Gsus, Marks & Spencer, Nike, Otto Versand, Patagonia, and Puma signed on to the Jo-In as participants in a 30-month pilot project to test the implementation of a variety of conduct codes at garment factories in Turkey.(“Think Locally; Act Globally: Developing common Codes of Conduct for International Supply Chains” Business and the Environment. Vol XVI, No. 9, sept 2005 )

CSR Europe is a leading European business network for corporate social responsibility with over 60 leading multinational corporations as members. Since its inception in 1995 by the European Commission President Jacques Delors and leading European companies, the mission of CSR Europe has been to help companies integrate corporate social responsibility (CSR) into the way they do business. ( CSR Europe: http://www.csreurope.org/ )

The CSR Group is a consulting and communications firm that works with businesses and organizations to address issues of corporate social responsibility. They offer one-stop shopping for clients with diverse needs, utilizing a range of sophisticated tools and services, from stakeholder engagement to the development of complex strategies and management systems. Their services are delivered through a network of independent consultants and strategic partners. They serve clients from a diverse group of industries. Some examples of their clients are: Coca-Cola Africa Foundation, Capstone Turbine Inc., Electra Gold, Ltd, IBM Corporation, Taiwan International Medical Association, Ford Motor Company, Merck and Unilever.

(The CSR group: http://www.thecsrgroup.com/)

6 CSR and Cross Cultural Business Behaviour

6.1 National Differences and CSR

International business remains difficult even when companies decide to follow social or environmental objectives. For example, managers from different backgrounds have a different view on the same business issues. For managers in Hong Kong a survey (source) showed that taking credit for another person's work is the most unethical activity, whilst from Western managers the most unethical activity is bribing or acquiring competitor information. Despite globalization, when it comes to business, ethics issues between managers vary according their nationality.

One of the most popular ethical issue that is debated in international business is corruption. For example, the point of view of managers from one country where giving bribes to government officials is common and even sometimes is considered as a gift, vary widely from managers from another country where this is viewed as corruption. There are countries that have more tendencies for corruption, like Russia, where the tendency comes from its historical and polical factors. Also in countries like Nigeria and Indonesia corruption is a big issue, the German NGO Transparency International shows that these countries are ranked as the most corrupt countries in the world year after year and this by using their Corruption Perception Index. We can refer here to Schindler case with Silvio Napoli in India. From the moment he arrived he had to deal with bribery. Most of time this kind of bribery is normal and even necessary to get the things you need in time (Napoli case)

For these reasons, managers believe that business people should adapt to every country in where they are operating. When morality is relative to a particular culture or community this is called "cultural relativism”. Some managers believe that if paying a bribe is frequent in the host country, then they should follow the rules of this country. Not paying a bribe may damage business interests. For example, in the case of US, managers think that the Foreign Corrupt Practices Act of 1977; which prohibits US manager from giving bribes in foreign countries puts them in a competitive disadvantage compared to non-US firms in many countries. They think that if the only way to obtain a lucrative government contract is by paying a bribe; a US firm should be allow to do it, otherwise they may lose important business opportunities refusing to do this.

What cultural relativism suggests is that managers should not try to find morals in business but only follow the laws of the land where they are operating. For instance, an activist group in Britain or in the US can’t determine what a company should do in South Africa or Belgium, as managers have to follow South African or French laws and business traditions.

6.2 Different definitions of CSR

Like we already mentioned, The World Business Council for Sustainable Development (WBCSD) defined CSR as

“The continuining commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society as a large.”

This definition of CSR was developed in 1998. In 2000 they analyzed the meaning of seven countries on this definition. This resulted into remarks because of local differences. We give these results and try to link them to specific cross cultural behaviour characteristics.

In Taiwan, it was suggested that the definition should include:

• Benefits for future generations (seen as a collectivist characteristic, as it there is a greater emphasis on caring for society than personal success)
• Environmental concerns (damage prevention and remediation characteristics, as they are cautious to the dangerous effects of business and development. There is also inner-orientation for the same reasons, as they do not want interfere with their environment)

In the United States, people said:

• Should include more emphasis on the role of the individual (individualism)
• Reflect the need for greater transparency (universalism)
• The term “economic development” does not adequately capture the breadth of the economic role of business in society.

In Ghana, people suggested that the definition should include:

• A global perspective which respects local culture (low-power distances, as there is a greater desire for more control over their affairs)
• Teaching employees skills and enabling communities to be self sufficient. Also try and empower people and give them more ownership (low-power distance as Ghanaians want more control over their affairs).
• Improving access to information (low-power distance)
• Building local capacity leaving a positive legacy (collectivist characteristics, as there is a greater emphasis on society)
• Filling-in when government falls short (low-power distance, collectivist)
• Partnerships, because CSR doesn’t develop in a vacuum. (collectivist)

In Thailand, people thought that it should include:

• The concept that the bigger the company, the greater the obligation. (high power distance, collectivism)
• The importance of environmental mitigation and prevention and the awareness of and change in people’s attitudes towards the environment (inner-orientation, as the environment is of great concern)
• The need for transparency (universalism)
• The importance of consumer protection (universalism)
• The relevance of youth and gender issues (particularism, as these groups would be given greater priority

In the Philippines, it was proposed that it should focus on:

• determining the real needs of stakeholders
• defining ethical behaviour (universalism)
• partnerships
• a visionary and leading role

In Brazil, it was stressed that:

• all businesses, communities and stakeholders are responsible for sustainable development
• business should pursue high ethical standards both within their operations and within the broader community

In Argentina, participants felt that:

• CSR should stress business commitment and sustainable economic development

• stakeholder participation was essential.

(Holme & Watts, Making Good Business Sense, WBCSD, 2000, p.9-10)

These elements prove that there is not just one right definition of corporate social responsibility but many.

6.3 Where is CSR considered important?

In same study by the WBCSD, they also analyse the importance of CSR on the business agenda. In Taiwan CSR was not high on the agenda. The companies consider getting a long-term commitment on CSR a task for the government. In the US, CSR was, on the contrary, very high on the business agenda. This is because of the NGO pressure and because of the risk of creating bad press. They also fear the influence of socially responsible investment funds. In Ghana CSR has a lower priority because it’s considered too expensive and there is a lack of governmental control and pressure form external parties. In Thailand there is indeed attention for the environmental issues but in general they don’t focus on CSR. The companies have enough problems with surviving and don’t have money for anything else. In the Philippines CSR is more important and the media attention is one of the reasons for this. In Brazil only the multinational companies are aware of CSR, Smaller companies see it as a waste of money. Finally in Argentina the topic gets more, but they have still a way to go.

Holme & Watts, Making Good Business Sense, WBCSD, 2000, p.9-10)

These are only a few country related views on CSR. In order to give a bigger picture of CSR in the world we constructed an extensive table of thirteen countries from four continents which you can find as an appendice. In this table we give for each country what CSR means, what the parties are that take initiatives in those countries and what the CSR topics in these countries are. Next to this description we give a country profile base on the book “Riding the Waves of Culture” of Trompenaars. We look at power distance, individualism index, masculinity-femininty and uncertainty avoidance. Some concussions that we can make are that countries with high individualism have better CSR practices. Also CSR tend to be better in most countries with low power distance.

7 CASE: SHELL

Royal Dutch Shell is one of the largest multinational firms in the world. Despite of being such an important multinational company, its strategy had to change due to two events in 1995. This change was a result of actions of globally operating non-governmental organizations:

On April 30 1995, Shell managers were surprised when activists from the environmental group Greenpeace boarded the Brent Spar. The Brent Spar was a floating oil storage facility in the North Sea, which Shell planned to sink it in the Atlantic. This is an example of a firm practising an outer orientated and individualistic business approach. This is probably because Shell considered that they were justified in making an impact on the environment (in this case oil into the North Sea) given the amount of considerable savings on costs that they would make.

It is important to mention that Shell had a strongly support of The British government for its plans, but Greenpeace criticized Shell’s plan claiming that the Brent Spar contained harmful substances and advocated onshore disposal. Environmentalists are highly inner-orientated and feminist considering that it is very important to respect the environment around them, even at the expense of higher economic costs (which are more masculine traits). These groups tend to also be risk adverse and consider the need for greater rules and involvement to counterbalance the negative effects of business practices. As a result of failure to resolve this through legal matters demonstrators boarded the facility in the North Sea, demanding that it be disposed of onshore, as they felt that offshore decommissioning was harmful. This is an example of a high-context response following the failure of low-context negotiations breaking down. For almost 2 months this topic dominated the media reporting in UK and many other countries. There were public protests everywhere, but the strongest protests took place in Germany where Shell as a consequence of this negative publicity, faced a major decline in petrol sales. Finally, in June 1995, Shell announced a reversal of its decision to sink the Brent Spar; Greenpeace claimed victory and protests stopped.

After this crisis, Shell faced another criticism over its operations in the Ogoni area of Nigeria. For many years the Ogonis; which are at ethnic minority of 500,000, had complained about major environmental damage caused by Shell and demanded greater benefits from oil operations for the local people. This community suffered from oil spills and other harmful side effects of oil production, while little money flowed back to the local people. This is a similar example of individualism, and outer orientated business thinking, as Shell held little regard for the environment and its local inhabitants. It is also an example of a high power distance relationship, as Shell (the multinational) benefited from exerting huge inequalities of power and benefit from the local population. After local protests (both low and high-context) led by the Movement for the Survival of the Ogoni People (MOSOP), Shell left the Ogoni area in 1993. But in November 1995 there were new protests from non-government organizations into supporting the Ogoni cause.

As a result of these two crises, Shell started a major transformation in the company. Sir Mark Moody Stuart; chairman of the committee of Managing Directors wrote:

“We have learned the hard way that we must listen, engage and respond to our stakeholders groups.” In 1996 Shell started its transformation. The first step was to initiate a project that it called “The Society's changing expectations project”, which was a sophisticated audit of the views of the company’s stakeholders. The second step was to go through The Shells group's statement of general business principles, which was revised to include statements in support of fundamental human rights and sustainable development. In order to complete its major transformation, Shells internal organization had to change too and Social Responsibility Committee was established at the highest corporate levels of the two parents companies. Another change was in the Company's strategies for expansion. Thanks to these transformations, nowadays Shell has become more outer oriented and an important global player in renewable energy. The company now owns wind farms and is involved in solar energy and hydrogen development.

Through the experience of Shell and the activist campaigns against this company there was a positive result, because this experience made managers of other companies to realize and re-evaluate the relationship between business and society. Some of the Shells mistakes in this both cases was to rely only on the British and Nigerian government and not to scan the wider external business environment for opportunities and threats. Shell's actions were legal, this is the reason why they though they were doing nothing wrong, but they didn’t take into account that new and important actors are emerging in the global business environment in order to re-evaluate company’s strategies.

These important actors are the NGO’s (Non-government organizations). As we have already mentioned NGO’s are groups whose purpose is the promotion of environmental and or social goals. These organizations don’t have economic interests and are considered politically independent from government. NGO’s are often multinational and operate in many different countries, with complex structures and modern techniques with their strategies often global in scope. For example, Greenpeace, the organization that started the protest against Shell in the UK, has a presence in 40 countries across Europe, Asia and its Pacific; its major activities campaigns are global in nature. One of the main objectives of these organizations is to persuade companies to become more socially responsible.

(Sources: Jedrzej George Frynas, Oil in Nigeria; Conflict with litigation between oil companies and Village Communities (Munster: LIT, 2000); Tony Rice and Paula Owen, Decommissining the Brent Spar (New York: Spon, 1999); Richard Boele and Heike Fabig “Shell, Nigeria and the Ogoni”).

8 CASE: NIKE

Nike is another example of a company with corporate social irresponsibility. Examining the Nike case of child labour in Pakistan (1996) we can see that ignoring CSR can have a negative effect on the company’s image. Until 1996 when people talked about Nike, the first thing that came to their mind was the good name of the company, their good reputation that was connected whit names of famous stars like Michael Jordan, Tiger Woods, little Penny. But when you then have "beaten workers" and "child labour" as symbols of the company image it affects the company.

Tradition of child labour in Pakistan

The per-capita income in Pakistan is $1,900 per year. This means that a person survives on $5 per day. But that's not all, Pakistan has a traditional culture where the earning of one person goes on feeding 10 mouths. With the high rate of inflation it becomes difficult for a low income population to survive. Child labour is spread all over Pakistan but has the greatest impact in Sailkot, in the north-west of the Punjab province. But this province is also one of the world’s most important centres for production of sporting goods. About half of the world's soccer balls are made in Pakistan, and each one of them passed through a process of production where child labour was involved.

Nike soccer balls

Nike is known for making its equipment in countries which are in the developing phase. They usually have very cheap labour, an authoritarian government and a lack of human rights appeal and union movement. In doing this Nike succeeds in making great margins on the cost of their workers, whom they have to pay only a couple of cents.

But Nike does not launch its production directly into such a developing country like Pakistan. To protect themselves they subcontract the production to a local firm, in this case SAGA sports. This firm should abide to Nike's international rules and regulations when producing its goods. And Nike on the other hand has the responsibility to monitor its subcontracted production units. In reality both Nike and SAGA sport seek to minimize the cost and maximize the profits. But when you ask questions about the child labour at Nike the answer is that they are not involved in it but that it is the subcontractor. But of course Nike is well aware of this and went especially to Pakistan because of the favourable conditions including child labour and they have taken no precautions whatsoever to prevent the use of child labour in the production of its soccer balls.

Result

But in June 1996 the game was over. In Life magazine appeared an article about child labour in Pakistan. It showed the photo of 12-year-old Tariq surrounded by the pieces of a Nike soccer ball which he would spend most of a day stitching together for the grand sum of 60 cents. As a result of this Nike has become one of those global companies targeted by a broad range of campaigning NGOs and journalists as a symbolic representation of the business in society and they have been forced to change there policies. Though it took them many years and the process is not jet complete Nike has developed a considered response, supported by corporate website reporting and their recent involvement in the Jo-In project. However, this will still affect the public image of Nike for a very long time.

_(Sources)

9 CASE: Van De Velde

Van de Velde, a Belgian women underwear corporate takes corporate social responsibility seriously into consideration. More specifically, they aim to find a balance between the interests of various stakeholders and their economic aspects of business on the one hand and the social, ethical, and environmental aspects on the other. Van de Velde gives high priority to the social aspects of employment, ensuring that its employees are given opportunities to develop themselves and their careers and that the environment is not hampered as a result of the company's activities.

Because of their responsible behaviour, Van De Velde received a lot of positive media attention. It also holds the SA8000 label for its Belgian, Tunesian and Hungarian sites. Their Chinese site holds a so called WRAP label which is similar to SA8000. SA8000 stands for Social Accountability 8000. The internationally recognised label was issued by the US based Social Accountability International. Among other things, the lbel is based on conventions of the International Labour Organisation, the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child. The standard was drawn up in consultation with NGOs, collective industrial organisations, industry and labelling bodies. The label was awarded after a comprehensive social audit by the Swiss company SGS. The label guarantees the application of ethical values throughout the whole production chain and protects minimum working standards in the manufacture of a product or the provision of a service.

The main elements that are revised in the social audit are:

• no child labour,
• no forced labour,
• health and safety in the working environment,
• freedom of association and the right to collective bargaining,
• no discrimination, no disciplinary measures,
• respect for maximum working hours, respect for maximum working hours, monitoring of management systems

Van de Velde is conscious of its social role. This is expressed in a sustainable enterprise policy and has also resulted in a number of commitments undertaken by its directors (sources)

10 Conclusion

Corporate social reasonability in business is becoming more and more important for international companies. For many years corporate branding and internationalism has increased companies’ profits without too much scrutiny. However, there is a trend for larger companies to hold greater responsibilities, particularly as many feel that contemporary governments hold less influence in their daily affairs. This is partly to do with NGOs and the Internet helping to make consumers more aware and demanding of what they expect from companies when they purchase something. NGOs have filled the vacuum of governments’ perceived inability to interfere in global trading standards and most businesses unwillingness to change the status quo. As a result it has fallen on NGOs and consumers to be the arbiters of companies’ ethics and hold up a mirror to companies’ practices companies, such as Nike and Shell who were forced to reform their practices or face smaller profits as a result of negative publicity in the 1990s.

However, we must remember that there is no uniform definition to corporate social responsibility. Cultural factors and economic and political factors put different pressures on every country. Social irresponsibility occurs everywhere and on different levels. However, it has become easier to measure larger scale levels of irresponsibility with the increase in internationalism. The clash of cultures and economic and political priorities from global trade has resulted in new questions for companies, governments, civil society and consumers. However, the differing priorities from the world’s communities mean that there will be many answers, something which NGOs as well as businesses need to be aware of.

This report was written by Annick De Troyer, Jonathan McHugh, Yifei Zhang, Santos Melisa and Ruben De Meyer in December 2005