Societal Culture and Leadership in Germany: At the Interface between East and West. Felix C. Brodbeck & Michael Frese

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1 Societal Culture and Leadership in Germany: At the Interface between East and West Felix C. Brodbeck & Michael Frese In this chapter we provide an analysis of culture and leadership in Germany based on the GLOBE study and relevant data from other sources. The first section describes the German societal culture by considering German history, politics, economy and social issues. We begin with a historical analysis of the changing meaning of "German" and "Germany". Then, we concentrate on the two German Nations that emerged as a result of World War II: the former German Democratic Republic (East Germany) and the Federal Republic of Germany (West Germany). The German Reunification process and its economical and societal consequences are described subsequently. The section ends with a description of contemporary German societal culture by considering GLOBE data from East and West German middle managers and relevant cultural artifacts. The second section concentrates on leadership issues and leadership perceptions in Germany. It begins with a description of leadership practice and research in East and West Germany. Then, culturally endorsed perceptions of excellent leadership in East and West Germany are described. For this, results from the GLOBE questionnaire survey are presented and supplemented by results from content analyses of print media, semi-structured interviews, focus group discussions, job postings analyses and biographical analysis of popular leaders in Germany. 1

2 Section I: Societal Culture 1.1 The Changing Meaning of "German" and "Germany" The words "Deutsch" (Engl.; German) and "Deutschland" (Engl.; Germany, German Nation) underwent considerable semantic changes in history. Their changing meanings document the various roots of the idea of a German Nation (cf. Berschin, 1993). Its contradictory nature is intimately related to the dramatic societal and political changes in Central Europe associated with World War I and II. In 786, "theodiscus" (Engl.; "German". Ger.; "Deutsch") is first documented to mean the language spoken by ordinary people in contrast to the Latin language spoken by the scholars at the court of Karl the Great. In 1090, "diutischin liute" (Engl.; "German People". Ger.; "Deutsches Volk") is first documented to mean the German people that live in the East Franconian Empire. Until the nineteenths century the somewhat more general meaning of "German" i.e. "the people of German language and where they live" remains unchanged. The idea of a singular German Nation (Germ.; "Deutschland") does not appear before the sixteenth century. Usually the plural form, "German Countries" (Germ.; "Deutsche Lande"), is used. It means, "the people of German language and the regions where they live". Until the nineteenth century, "Deutschland" and "Deutsche Nation" (Engl.; German Nation) means the geographical area inhabited by the people that speak German, no matter to what national state the geographical area they inhabit belongs to. In combination with "German" the word "Nation" did not refer to the idea of a political unit or a singular state. 2

3 It rather meant the cultural unity of German speaking people in various states. During 1770 to 1830 German was one of the predominant languages in which Central European intellectuals expressed their humanistic, liberal and cosmopolitan ideals. However, during the nineteenth century the cultural concept of "German" changed into a political one, partly due to the necessity to defend German territory in the Napoleon Wars and partly due to the German National Movement against feudalism that resulted in the Constitutional Convention in Frankfurt in The practical impossibility of a German Nation as a cultural and political unit became apparent when the German Empire was founded in Many people of German culture and language were not part of it (e.g. Germans in Switzerland or in Austria) and some people of other than German culture and language formed ethnical minorities within the geographical boarders of the German Empire (e.g. French, Danish and Polish minorities). In order to avoid difficulties with the term "German nationality", an Austrian Germanic Scholar suggested in 1876 to use the ethnic principle of biological descendent (Ger.; "vˆlkisch"). Rather quickly this concept became popular, especially in the Wilhelmenian Period of the German Empire ( ). During the first three decades of the twentieth century, the concept of a German Nation was highly ambiguous and allowed for interpretations in various directions. First, it could mean the "narrow" German state that was enforced after World War I (Weimarer Republic, ). Second, it could mean the territory of German culture, including the geographical areas that belonged to the German Empire before World War I. Third, it could 3

4 mean the even greater territory inhabited by people of German language and cultural background. And fourth, it could mean the "extended" territory inhabited by people of German descendent. The ideal of an "extended" German nation became more and more popular when the ethnical and territorial interpretations of "German" were combined ("Ein Volk, ein Reich", Engl.; "One Nation, One Empire") in the megalomaniac political program of the "Third Reich" by Adolf Hitler and his followers resulting in the Holocaust! Cross-cultural research from the early sixties to the eighties suggests the existence of a Germanic cultural cluster in Central Europe (for a review, see Ronen & Shenkar, 1985), comprising Austria, Switzerland and West Germany (before 1990 data from former East Germany were seldom reported). Even though, some cultural differences between these countries are identifiable their citizens seem to share work attitudes and leadership perceptions to high extend, so that they are distinguishable as a cultural unit from other cultural regions in Europe (cf. Jago, et al., 1993). Of particular interest in this chapter is the comparison of the two German Nations that emerged as a result of World War II because their citizens were socialized in two rather different economical and ideological systems for a period of about 40 years. 1.2 The Two German Nations As a result of the second World War and the beginning of the cold war between the communist and the western world, two rather different German states emerged that were devided by economic system and ideology: The Federal Republic of Germany (FRG, Germ.; "Bundesrepublick Deutschland", also termed West Germany), embedded 4

5 in the western economic system and the NATO military alliance, and the German Democratic Republic (GDR, Germ.; "Deutsche Demokratische Republick", also termed East Germany) embedded in the Communist Economic System (COMCON) and the Warsaw pact. In 1949 the concept of one German Nation, meaning the territorial unity of the two German states within the boarders that resulted from World War II, was made part of the West German Constitution (Germ.; "Wiedervereinigungsgebot", Engl.; "Constitutional Law of Reunification"). In the same year the Federal Republic of Germany ( ) and the German Democratic Republic ( ) were founded. The constitutional "Law of Reunification" formed the legal basis on which the German unity, initiated by the highly symbolic act of the fall of the wall in Berlin ( ), was executed ( ). The political and economical systems of Germany today are basically the same as for the Federal Republic of Germany before 1989 (see below). Thus, for the West German citizens the world hasn't changed that much. However, the former East German citizens were subject to dramatic changes in their political, economical and social environment West Germany The political system of the Federal Republic of Germany was - and still is - a constitutional, representative and pluralistic democracy, similar to other western democracies. In the early days after World War II, the western allies, especially the United States of America, took major parts in helping the West Germans to build a modern democracy. The GARIOA scheme (Government and Relief in Occupied Areas) and most well known the Marshall Aid (ERP, i.e. the European Recovery Program) granted financial aid, stability 5

6 and favorable conditions for building a constitutional democracy granting the basic rights of freedom of opinion, freedom of the press, liberty, and protection of the private sphere and their recoverability by law. The German constitution, though not specifying any particular economic system, constrains a completely free market economy. The doctrine of social market economy (Germ.; "soziale Marktwirtschaft") defines legal obligations for the government, the trade unions and the companies for maintaining public welfare (e.g. education, health, retirement) social justice (e.g. social security, equal opportunities, protection of minorities), and cooperative industrial relations (e.g. the codetermination or industrial democracy system). A key feature of industrial relations is exemplified in the wage bargaining process. It is simple in structure (only two partners, one trade union and one employer), it is predictable (a time-table of industries and states is sequentially followed) and it is stable (wage bargaining has the force of law, and strikes inevitably occur in particular seasons of the year, cf. Lawrence, 1994). Another key feature of industrial relations is the system of codetermination that is regulated by law. It grants mutual control and participation for employees by defining rights and duties for worker representatives in the companies supervisory boards, for labor director in the companies executive committees, and for the elected employee representatives on the work council. The social market economy is one important factor for the stable and solid economical and social developments in Germany. To some foreigners this system appears to be overburdened with formal procedures. However, the strengths are its high reliability, straight forwardness, and 6

7 legally enforced procedural justice. All these criteria meet the formal and task oriented interaction style maintained in West German companies (Lawrence, 1994) Former East Germany The constitution of the German Democratic Republic (according to its revision from ) described a socialistic state of workers and farmers under leadership of the marxistic-leninistic unitary party, SED (Germ.; "Sozialistische Einheistpartei Deutschland). Legally, this party was constructed according to the principle of "democratic centralism", practically centralism dominated. The polit-office, and its first secretary, decided about the political, economical, educational and cultural life in former East Germany by controlling the trade unions (the so called "transmission belt of the party") in which 95 percent of German work force were members, the German youth organization (FDJ) in which about 70% of German year olds were organized, the people's own companies (VEBs and Combines), the educational system (University entry was based on a subject quota basis, graduates were located to jobs by the state) and the media (e.g. no foreign print media, TV or Radio was officially allowed to be consumed). The basic rights, freedom of opinion, freedom of the press, liberty, and protection of the private sphere were constitutional, however, practically they were not recoverable by law. In contrast, the basic social rights, the right to work, the right for health protection and the right for education were highly estimated in theory and in practice. 7

8 The planned economy system determined the level of productivity to be fulfilled by the VEBs and the aggregates of VEBs (Combines) in all industries. Research and development activities were also performed in VEBs and Combines. The structure was centralist, meaning groups of Combines reported to industry ministers, the ministers in turn reported to the Plan Commission which was an organ of the SED polit-office. The planned market was controlled the reverse way, the Plan Commission defined the expected productivity output per industry and the Combines and VEBs had to fulfill the plan. About 98% of the industries were "publicly owned" in this manner, and only some private economy was allowed for a very small proportion of entrepreneurs (e.g. craftsman) and private gardeners. 1.3 The German Reunification As a result of the German Reunification in 1990 the former German Democratic Republic was no longer part of the COMCON and the Warsaw Pact. It became part of the Federal Republic of Germany. The two German nations did not merge, rather did West Germany take over in all respects. As a consequence, the productivity level of East German companies dropped drastically and unemployment - unknown in the former East-Germany - raised strongly. A significant problem was the privatization of the state owned VEBs and Combines. Until the end of 1994 more than organizations were transformed. From 1991 to 1995 West Germany transferred about Billion DM (about 650 Billion US $) to East Germany, from which 25% percent went into the economy and 11% were spent for developing infrastructure (e.g. transport, telecommunications etc.). The largest proportion, however, went 8

9 into unemployment, health care and social welfare fonds. The German Reunification exhausted the West German economy and private households to considerable extend. However, the markedly lower income level of East Germans as compared to West Germans (47% in 1991; 67% in 1994), justified by the lower productivity levels in East Germany, created problems of differential social status between East and West Germans and feelings of unfairness on part of the East Germans. The cultural change and social psychological consequences of the German Reunification mainly concern the East Germans. They carried the primary share of change ("modernization shock"). On the one hand, they gained the basic constitutional rights as they are practically implemented in western democratic societies and they could hope that their living standard would raise in the near future. On the other hand, the process of reunification lead to disillusionment and to experiences of high uncertainty. The procedure of privatization resulted in deindustrialization and mass unemployment in many East German regions. Not seldom did criminal activities and management errors result in destruction of healthy organizations. The mass restitution of formerly expropriated possession (2.7 million titles had to be processed) created feelings of injustice. The enormous transfer of money to East Germany along with a significant stagnation in economical and financial growth created feelings of disillusionment and helplessness, on both sides. Women, who were highly integrated in the former East German work force, were more and more forced into unemployment and family work (e.g. the well developed East German Kindergarden system was deconstructed). One of the darkest chapters in East German history was made public and millions of 9

10 secret personal files collected and used by the former East German state security system (Germ.; Staatssicherheit) were released to the people that were subject to prosecution. Thus, in addition to the modernization shock, many East Germans learned that their best friends, neighbors, co-workers or whoever were reporting highly private and personal details to the "Staatsicherheit". In short, the whole past and future life of many East Germans was questioned - for some of them totally and virtually over night. The dramatic changes in East Germany have not lead to instant adaptation of the western culture. Expressions of an East German cultural identity can be seen in their voting behavior. The PDS party, a successor of the former SED, was elected in the German Federal Parliament and in all of the East German state parliaments, not so, however, in the West German state parliaments. Furthermore, in our survey of about 400 West German and 50 East German middle level managers, the East German managers tend to disagree with questionnaire statements like, "Citizens of the former East Germany should learn as quickly as possible from West Germans", West German managers tend to agree. On the other side, East German managers tend to agree to statements like "Citizens of the former East Germany should consider the strengths of the former East German culture", West German managers tend to disagree. An East versus West polarization became visible, most strongly during the first few years of the Reunification process. Stereotyped attributions of responsibility for the social and economical problems were often expressed in public media. West Germans stereotyped East Germans as being lazy, unproductive and as having a mentality of "passively taking from but not actively 10

11 giving to society". On the other hand, East Germans stereotyped West Germans as pretending to know everything better, but not actually knowing it better, as highly individualistic and as less concerned with others. Today, these stereotypes are less often expressed in public - as far as we can perceive it from our West German perspective. 11

12 1.4 Germany Today Today, Germany is the country with the highest population in the European Union (81 million citizens). About 9% are foreigners (mainly from Turkey, former Yugoslavia, Italy, Greece and Poland). About 28 million confess to the Roman Catholic church, 28 million to the Protestant churches, and about 2 million are Muslim. The Gross National Productivity of Germany ranked on the third to fifths positions in the world during the last few decades, and the life standard is one of the highest in the world. The former West Germany was, and the reunited Germany is, a pluralistic, federalist, liberal, democratic, social market oriented modern western society. Economically and politically, it is one of the leading countries in the European Union. And, its central position, at the interface between East and West Europe, is not only geographically rooted but also historically and politically. As was described above, historically there is no one-to-one relationship between the German Nation and the German Culture. There seems to be a Germanic cultural cluster identifiable in Central Europe, mainly comprising Switzerland, Austria, and Germany (e.g. Ronen & Shenkar, 1984). Therefore, the reader is advised to refer to the country chapters from German speaking Switzerland and Austria (***this volume) for more detailed information about these countries societal culture and leadership perceptions. East and West Germans in the reunited Germany may constitute somewhat different societal cultures due to the differential political, economical and societal environments they lived during the 40 years of the cold war. Thus, they may perceive their current environment differently and they may prefer different 12

13 cultural values as a consequence of their differential experiences. However, one should keep in mind, that the process of Reunification created an asymmetric situation. The reunification was not a cultural merger, instead, the East German system was substituted by the West German system - virtually over night. Thus, the East Germans s views about the reunited Germany may be also determined by what was above described as the "modernization shock". In contrast, the West German respondents mainly represent the cultural perceptions and values of the West German society dominating after the Reunification. 1.5 The GLOBE Dimensions of Societal Culture In the GLOBE research program, societal culture is operationally defined by measuring the agreement among members of a collective with respect to manifestations of commonly experienced, observed and reported practices of entities such as families, schools, work organizations, economic and legal systems, political institutions, ideological belief systems and ethnic heritage. Two emphases are distinguished, one is on values (Kluckholm & Strodtbeck, 1961), measured by indicators assessing "what should be", the other emphasis is on perceptions of modal practices, measured by indicators assessing "what is" or "what are" common behaviors, prescriptions and institutional practices. Value-Belief theories of culture suggest that the commonly shared values and beliefs held by members of a collective (e.g. an organization, a nation, a cultural region) influence the behavior of individuals, groups and institutions, and the degree to which the behavior shown is viewed as legitimate, acceptable and effective (Hofstede, 1980; Triandis, 1995). In accord with 13

14 Hofstede s work, GLOBE investigates the cultural dimensions of Collectivism, Uncertainty Avoidance, Power Stratification and Masculinity. Collectivism refers to the tendency of people to work in groups and to identify with the larger social group to which they belong, with the opposite of this being Individualism. In GLOBE, the Collectivism scale from Triandis (1995) is used because in recent studies the unidimensional nature of Hofstede's dimension of Individualism - Collectivism has been criticized (cf. Triandis, 1993). Uncertainty Avoidance refers to a culture's tolerance of ambiguity. Power Stratification refers to the way people deal with inequalities among themselves. Hofstede s Masculinity dimension, the degree to which differential role expectations are associated with gender, is substituted as a result of the GLOBE research by Gender Egalitarianism and Assertiveness (cf. House, et al., 1998). In addition to these five scales, three dimensions relevant to cultural environments are derived from McClelland's (1961, 1985) theories of implicit human motivation and economic development: Humane Orientation, Performance Orientation and Future Orientation. The altogether eight societal level cultural dimensions were measured with two different emphases ("as is" versus "should be") by using the standardized GLOBE questionnaire (House et al., 1998). 1.6 Sample and Procedure The samples for East and West Germany were drawn during the years 1995 and They comprise middle managers in 18 companies from three different industries (Food, Finance, Telecommunications). Respondents were either citizens of the former East Germany (N = 53, average age 46 years, 30% women) or 14

15 citizens of the former West Germany (N = 403, average age 42 years, 19% women). The GLOBE standard questionnaire was used (cf. House et al., 1998). Subjects were asked to rate statements about societal culture (likert type scales from one to seven) while considering reunited contemporary Germany. Furthermore, they were asked to indicate on a rating scale from one to seven how strongly each of about 100 leadership attributes facilitates or inhibits outstanding leadership. Results about the societal culture in East and West Germany are reported next. Results about perceptions of excellent leadership are reported in the second section of this chapter. 1.7 Dimensions of Societal Culture in East and West Germany Figure 1a presents data for the cultural dimensions "As is". Figure 1b presents data for the cultural dimensions "Should be". In each Figure, East and West Germany s country means and their positioning relative to each other and to the distribution of all 61 countries sampled by GLOBE are presented with Box-plot statistics. A Boxplot graphically displays the summary statistics of a distribution, its median (vertical center line), quartiles (< 25%, 25% - 50%, 50% - 75%, > 75%) and the largest and lowest observed values that aren't outlier or extreme values (whiskers). Figures 1a and 1b about here For each dimension of societal culture "As is" and "Should be" results for East and West Germany are compared to the characteristics of the total sample of N = 61 countries (the exact 15

16 country mean values per dimension and the criteria for meaningful differences between East and West Germany are described in Appendix 1). Additional data from unobtrusive measures about economical, political and societal characteristics of former East and West Germany are supplemented for interpretative purposes Collectivism versus Individualism The Triandis Collectivism scale measures the degree to which people in society are perceived ("As is") and expected ("Should be") to work in groups and to identify with the larger social group to which they belong, with the opposite of this being Individualism (High values = Collective Orientation). Results obtained by the GLOBE study indicate that the East Germans (rank 46) perceive higher collectivism ("As is") than the West Germans (rank 55) do (see Figure 1a). Both rank near or below the 25th percentile which indicates a common perception of comparatively low collectivism. Furthermore, East and West Germans rate Collectivism "Should be" higher than Collectivism "As is". Thus, in both parts of Germany there is an expectation of more collectivism than is perceived as the current status quo. However, when compared to all other countries the Collectivism "Should be" rankings are again low (East: rank 52, West: rank 53, both are below the 25th percentile, see Figure 1b). The family is considered to be a central unit of German society and it is specifically protected by law (e.g. tax reductions). Help among family members and neighbors (especially in rural areas) is quite common. However, family and neighbor help is not perceived as a substitute for the institutionalized support Germans are expecting from the social welfare system. Since the 16

17 60 s the three to four person family predominates. Grandparents, especially in industrialized regions, tended to not be part of an extended family. Today, as more women are working outside the family home, due to the fact that single income families cannot reach high economical status anymore, grandparents are often welcomed resources of child care. However, when family members are not available, which is quite common in the industrialized areas, professional services are sought, e.g. day care facilities, household services and the like. In former East Germany, public child and day care was 100% delivered because women were more strongly integrated in the work force than in former West Germany. However, this high standard was reduced to the lower West German standards during reunification. In summary, the GLOBE results and the cultural artifacts described speak to an individualistic German society which relies mainly on an institutionalized social welfare system Uncertainty Avoidance Uncertainty Avoidance measures the degree to which people in a society are perceived ("As is") and expected ("Should be") to rely on social norms and procedures to alleviate the unpredictability of future events (Low values = tolerant of uncertainty; High values = uncertainty avoiding). The GLOBE data indicates that East and West Germans perceive their society to by very high in Uncertainty Avoidance "As is" (East: rank 7, West: rank 5, both are above the 75th percentile, see Figure 1a). And, both parts of Germany aspire lower levels of Uncertainty Avoidance (West: rank 59, East, 52, both are below the 25th percentile, see Figure 1b). The discrepancies between "As is" and "Should be" measures of 17

18 Uncertainty Avoidance in both parts of Germany are among the highest compared to all other countries. Generally, societies with high Uncertainty Avoidance (e.g. Switzerland, Sweden, Finland, Austria, Germany, Great Britain) seem to share a Protestant work ethic (e.g. differed gratification pattern) and are highly developed in economy and public welfare. In Germany, attempts to reduce the unpredictability of future events based on formal principles and rules are quite common. For instance, insurance policies for every possible event in life are widely offered and consumed. The driving force of high uncertainty avoidance seems to be a high need for economic security and financial protection against unforeseen future events, rather than traditional and religious factors. Both major churches in West Germany, catholic and Protestant, are losing members. Inspection of singular scale items reveals the strongest discrepancies between "As is" and "Should be" for the following items to which Germans tend to agree moderately to strongly: "In this society people lead highly structured lives with few unexpected events" ("As is") versus, "I believe that a person who leads a structured life that has few unexpected events is missing a lot of excitement." ("Should be"); And, "Our society has rules and laws to cover almost all situations" ("As is") versus, "I believe that society should have rules or laws to cover few situations." ("Should be"). We have the impression that the discrepancies between Uncertainty Avoidance "As is" and "Should be" do not necessarily reflect strong ambitions to change the current status quo of high uncertainty avoidance. Instead, the "Should be" items seem to allow German respondents to express the psychological costs involved when high uncertainty avoidance is maximally 18

19 fulfilled. These costs seem to be feelings of less excitement and the feeling of being controlled by public regulations. The quantitative data of GLOBE does not allow to determine the preferences in a forced choice situation, e.g. by asking "Either security or excitement, what do you prefer?". We assume, the answer in East and West Germany is a clear preference for security Gender Egalitarianism and Assertiveness Gender Differentiation measures the degree to which a society is perceived ("As is") and expected ("Should be") to minimize gender role differences (Low values = emphasis on male role; High values = emphasis on gender equality). The Non-Assertiveness scale measures the degree to which a society is perceived ("As is") and expected ("Should be") to discourage decisive and assertive individual conduct (High values = low Assertiveness). The results obtained by the GLOBE study indicate that in East and West Germany female role equality "As is" (East: rank 47, West: rank 44) and Non-Assertiveness (East: rank 52, West: rank 49) are perceived to be low (below or near the 25th percentile) as compared to other countries (see Figure 1a). In sharp contrast is Germany's position when the respective cultural values are measured. The ranking for Gender Egalitarianism "Should be" (East: rank 14, West: rank 15) and Non-Assertiveness "Should be" (East: rank 17, West: rank 15) is much higher than for most of the other countries (near the 75th percentile, see Figure 1b). Thus, the trend for an ideally less sexist and less assertive society is strongly pronounced in both parts of Germany. 19

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