The influence of the global leadership and organizational behavior effectiveness project’s cultural dimensions on strategy execution: the example of German companies in India and Indian companies in Germany

Abstract

As globalization has changed the way we live and the way we work, a wide array of research has examined its effects on business. Many researchers have discussed the influence of cultural variables, with the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project being one of the cornerstones in this field. The GLOBE project proves that countries are culturally different and that these differences influence the preferred leadership approaches. However, the study does not reveal if and how these differences influence organizational and managerial behavior when expanding into a culturally distant country. The research objective of this research therefore is to examine how differing cultural variables affect the strategy of a company expanding from one country into a culturally distant country. The study focuses on the example of German companies expanding into India and vice versa. Due to significant differences in cultural dimensions disclosed by the GLOBE project, one would expect business collaborations between Germans and Indians to face many obstacles. It was furthermore assumed that the host country’s culture would be anticipated and adopted to a high degree within the expanding companies. However, a qualitative case study based on in-depth interviews could not confirm this. German managers in India and Indian managers in Germany were interviewed and asked about their perceptions and experiences with working in the respective host country. Although participants are aware of the cultural differences and learn to cope with them, their managerial behavior and their organization’s culture strongly reflect the cultural norms of their country of origin. Furthermore, local employees from the host country adapt to the foreign organization’s culture. As expatriate managers learn to partially anticipate the host country’s culture over time and since it is impossible for local employees to abandon their own culture, a new patchwork culture influenced by both countries emerges within organizations. Nonetheless, the company’s original culture dominates the host country’s culture in this convergence. Additionally, certain governances and policies prevail in large multinational organizations, which set a global framework for business decision making. Furthermore, this suppresses cultural influences on decision making. This research thus shows by the example of Germany and India that, although countries might be culturally distant, these differences do not have strong implications for strategy execution in companies expanding from one country to another.