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Culture is an essential part of managing business today. It may be defined as a shared psychosomatic programming of a group of people. Culture in management theory is divided into two distinct categories – organizational culture and national culture. Organizational culture relates to the unwritten norms and working condition within the organization while national culture relates to the rules, norms, customs, and habits of people belonging to a region/country/religion/ethnic background. National culture is one of the most essential concerns of doing business in a globalized economy. Hofstede (43) points out that the most countries have their own national character that the foreigners see more clearly than the inhabitants do. He categorized national culture based on four dimensions – power distance, uncertainty avoidance, individuality, masculinity, and long-term orientation (43).
Therefore, national culture may be categorized depending on the country’s respect for power and hierarchy, degree of masculinity among people, their individualistic or collective outlook, and degree of readiness to take risks. Given these characters it is evident some cultures are distinctly different from the others. For instance, in American culture, individuality is high while that in Chinese or Japanese culture collectivism is valued more than individualism. Given this difference between cultures, we now move on to understand three different structures of culture – multicultural, intercultural, and cross-cultural structure. Intercultural structure of a community shows that there exists a great degree of empathy and fairness within the culture. In a cross-cultural community, the effort of the community members is to reach beyond the boundaries of the parent culture. When two or more cultures live side by side in harmony and tolerance, they are multicultural communities.
Study of the cross-cultural organizational behavior and theory suggests that there are evident difference and similarities with cultures that may create opportunities and/or difficulties for interactive or joint operations. Therefore, an organization aiming to expand to a foreign destination often faces problems in operating abroad. These issues arise due to the influence of the national culture on the different levels organizational phenomenon. In other words, the problem of cross-cultural operation may be with individual units, teams, whole company, or interpersonal communication. Therefore, cultural issues plague organizations that aspire to operate beyond their national territories. In this paper, I will discuss a cross-cultural problem that Amazon.com faced in Germany in 2013.
Amazon.com one of the largest online retailing company faced a huge problem with the European Unions in 2013. Germany is Amazon’s second biggest market accounting for 14 percent of the company’s total revenue in 2012 (Wingfield and Eddy par. 17). The strike was conducted by a powerful union ver.di, which has around 2.3 million workers as their members and a large fund with which it can pay striking workers (Wingfield and Eddy par. 18).
The first strike took place in August 2013, when the trade union workers protested against low-paying jobs at the Amazon warehouse. If the status of the employees is changed from warehouse employees to retail employees each employee will earn $12000 more per year (Lobello par. 3). Their demand was to be “reclassified on the national pay scale” (Lobello par. 3). The initial reaction of Amazon was to refuse to negotiate or even communicate with the union, which created an anti-union image for the company.
Though apparently this issue may be observed as a problem over wage with the trade union, the cause of the issue, however, lies much deeper. A deeper analysis of the issue shows that the root cause is cultural difference. According to the German labor unions, Amazon had increasingly tried to implement American work culture in Germany, which they opposed. The business practices that the company promoted opposed formation of unions by its workers, which goes against the European regulations as well as German cultural norms. The wrath of the warehouse workers was more due to the company’s overt opposition to union formation and organization of strike than protesting for their demands. Amazon problematized the labor’s right to organize a strike that was not taken lightly by the unions who saw it as a hindrance to their fundamental right. Though Amazon’s policies and working conditions have been criticized in the US, but not as much as it has been Europe, where it faces greater issues with the antitrust and privacy laws (Wingfield and Eddy par. 5).
The main challenge is two sides working from two cultural perspectives – Amazon from American and the union from German cultural perspective. The company’s argument to oppose the rise of unionization is vested in their belief that an organized labor will disrupt the fast-moving innovative technology on which the company’s success is based on. According to Amazon’s corporate practices, a union is considered as an intermediary that would try to enforce power over every operational aspect of the company that would slow down the process. As Amazon’s success lies in its fast moving supply chain, a union would unnecessarily complicate the process and create hindrances: “Amazon views unions as intermediaries that will want to have a say on everything from employee scheduling to changes in processes for handling and packaging orders” (Wingfield and Eddy par. 7). According to Amazon, union will, reduce its ability to serve their customers better. Another possible reason is the company’s investment in the robotics technology and purchase of robots worth $775 million (Wingfield and Eddy par. 8). They want to deploy the robots in their warehouses. A strong union will definitely impose a problem in making this change, as this would imply fewer jobs to the warehouse workers.
Intuitively there are few basic issues with the situation that Amazon faced itself in 2013 – first, the company’s illogical move not to communicate with the union and its efforts to stop unionization and second, the company’s inability to recognize the culture of unionization in Germany. According to Amazon, they had allowed the formation of workers council in their warehouses that is responsible to handle grievances of the employees. However, it has forbidden the council, legally, to interfere in wage related issues. Further, the company did not pay Christmas bonuses, which is a common practice in Germany.
Amazon had thwarted efforts to unionize by its workers and customers in the US and had own many class action lawsuits that showed bad working conditions in their warehouses and other such labor related malpractices. However, the union culture in the US is not as strong as it is in Germany. Germany has a history of labor movement that dates back to two centuries. Hence, a strong labor union lies within the cultural percept of the Germans. Amazon’s intolerant reaction towards the union shows the company’s ignorance of German national culture.
Cultural Comparison of the US and Germany
A comparison of the US and Germany based on the cultural dimensions show (see figure 1) that Germany has a lower score in individualism than the US, indicating a more group oriented, collective culture. In uncertainty avoidance dimension, Germans score higher indicating they are low risk takers than the Americans. Higher score in pragmatism dimension demonstrates that Germans believe in practicality and rational communication.
From this dimensional study, it is evident that the Germans are more likely to be keen on organized workers unions, as they believe in collective good. They value pragmatism and hence would want a realistic offer from the company.
From the point of view of cross-cultural business strategy, Amazon has made a great mistake by not accepting a union in a nation, which has unionization in the very heart of its historical identity. Ethically, this is not correct as the company tried to thwart the workers to form an organization. The cultural gap between the American company and that of the German workers created difficulty to understand what aspects of the culture are important to either side. Collective action gains predominance in German culture that the managers of Amazon did not accept in the first place. Instead, they went ahead to thwart the process of union formation. This shows two mistakes on part of Amazon – first not to recognize a national trait that is important to the national identity formation and second, refusal to negotiate or come to a pragmatic solution aggravated the situation. Further, the unions faced problems with the work culture that Amazon promoted which they felt was an aping of the American culture and did not adhere to the German cultural norms. Amazon, ignorant of the strong German culture, went ahead to establish a warehouse network in Germany based on American norms. This was bound to create problems with the workers who would not feel comfortable working in culture, which they do not identify.
Hofstede, Geert. “Motivation, leadership, and organization: do American theories apply abroad?” Organizational Dynamics 9.1 (1980): 42-63. EBSCO. Web.
Lobello, Carnel. “Amazon’s anti-union strategy hits a snag.” 2013. The Week. Web.
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The Hofstede Center. 2014. Web.
Wingfield, Nick and Melissa Eddy. “In Germany, Union Culture Clashes With Amazon’s Labor Practices.” 2013. The New York Times. Web.