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Another way of doing world business?

About the author
Laura Sandys is chair of the European Movement UK and a former Conservative MP. She is a member and former Chairman of openDemocracy's board.
Europe was, and remains, an economic association. If a new Europe is to arise, it will have to do so commercially, as well as politically and culturally. Recently, I was surprised at being asked by four large international companies, in quick succession, about how they could be perceived as “more European”. They were not talking about becoming continental in terms of their investments, they were already “in” Europe. It was a question specifically relating to the need they felt to be associated with Europeanism – above and beyond nationality and unconnected to Brussels.

Their interest did not strike me as a fashion statement. Why then should significant and experienced companies have decided to pin down such a term so as to see if they could turn it into a business “value” and even a commercial philosophy?

There are straightforward commercial reasons behind the need to adopt a European perspective and attitude. Over the last four years there has been a significant growth in European quoted companies that held as many – if not more – investments outside their “home” country. This poses both management and communications challenges. In order for their management to be able to assimilate different cultures and purchasing habits, they have to share their decision making with their local operators who may be significantly lower down in the company’s hierarchy. This contributes to a business strategy and corporate culture that no longer can reside in one European country – and it needs a definition.

Despite these obvious corporate realities, it is the term “European” that is interesting here, as some of these companies also have US interests. I believe this awakening of a European identity is more about a business philosophy than a geographical definition.

A new corporate personality?

As the Finnish Foreign Minister, Erkki Tuomioja, said in issue 4 of openDemocracy, Europe cannot turn itself away from the fact and future benefits of “globalisation”; to do so would be naïve and regressive. The question is how Europe will respond to globalisation. In my view Europe can develop, and is already developing, a form of international commerce with its own specific character. It is a model that reflects a wider social and political European heritage.

Much of the talk about globalisation takes it to mean the expansion and intensification of a single commercial/financial system driven by dominant US corporations and Washington-based international bodies.

Globalisation, as practised by most of the major multi-nationals of today, has indeed adopted a monocultural approach to business based upon the US example, as developed in its home market. Its monoculture corporations and their emulators are now using the tools of modern communications to develop highly centralised command and control management techniques. They seek to eliminate the cultural and commercial differences experienced around the world. The extreme monocultural company is one that defines central strategies and merely utilises its global office network to “broadcast” central philosophy.

These global companies run on models similar to those used by the British to run the Empire. A couple of local employees are allowed to rise to the second in command, local initiatives are implemented for show purposes, but ultimately you know who is boss – and on the whole their first language is English.

Such globalised conglomerates are also a result of cost-efficient initiatives, with centralised policies cutting down on local replication. However, what they may be creating is a world of underpowered local managers who are decreasingly able to express their local knowledge, and strongly discouraging local entrepreneurialism.

While local managers of oil companies or large commodity companies are unlikely to be found on the streets of Genoa, they may show more interest if asked to convene at a meeting for the under-employed and disenchanted managerial factotum.

While the global conglomerate can be seen to be predominantly US in expression, there are several leading American companies whose approach to international activities is to maintain a strong local level of autonomy and respect for individual cultural interpretations.

Nonetheless, let me simplify. As against the American-style “global” corporation, European history and experience point to a different business model: that of the “internationalist” company.

The business of Europe is values

Internationalist organisations are multicultural and look for evolving strategies that reflect the diversity of their wide interests. This is not to say that these companies are anarchic. In many ways they have greater confidence at their core, enabling them to allow their subsidiaries to “express” themselves. Entrepreneurialism can thereby encourage respect for national characteristics.

Nor need such companies under-perform. They are run by hard-nosed business people who set clear targets that have to be met – it is just that they are more liberated in how each part achieves its targets.

I am describing the personality of an internationalist company. Unlike a globalised corporation, it is rooted in its respect for difference. While not uniquely European, empowering diversity is the real management challenge for pan-European corporations.

How else can you have a successful European corporation unless you start with national respect? In the main, each country is no more superior than any other, language and varying purchasing habits demand diverse approaches in each market, and established national operators have had long experience of operating their companies.

If we try to identify companies that fall into these two admittedly simplified categories, what I believe we are witnessing is some large European companies defining the internationalist model as European, and considering embracing it as they expand.

This desire to be explicit about a European business model is related to two factors: a growing European confidence, articulating European characteristics, which is drawing the continent together; and a more negative perception of Bush’s America.

While no European business wants to embark upon a trade war with America, a range of emotions surfaced when Big Bad Jack Welch of the US’s General Electric was sent packing by the modest and conciliatory EU Commissioner Mario Monti. When it forbade Welch his takeover of Honeywell, Europe asserted itself in a way that was seen and heard all over the business world.

Here were two US companies who, because of their global reach, found their proposed merger subject to European law and Brussels adjudication. While there is little love lost between bureaucrats and businessmen, there was a touch of admiration for the robust but courteous and polite stance taken by Monti when he ruled it out.

This has had a greater impact than merely a tactical competition defeat for the US. The decision has helped define the difference between the US and Europe in business practice, cultural roots and economic and social priorities. And a common European interest and identity became more clearly apparent under pressure of “external” circumstance.

The confidence of having a European competition model, in contrast to the corporate values of the US, may be a catalyst for a deeper understanding of how different societal values can be expressed.

The significance of the Commission’s decision on GE/Honeywell was reinforced by Europe’s committed position on Kyoto. Again, the position of the US hardened European policy, uniting and forcing greater convergence and commonality among diverse interests across the continent. Whether or not Kyoto in its present form has real teeth, the values that it represents reflect Europeanism. One US environmentalist stated that if the US continued to adopt unilateral positions on the world stage, Europe would need to step in as the leader in wider global politics. Perhaps it has started to do so.

The arrival of a European currency is also changing the nature of interdependency and is having a fundamental impact on people’s perception of their identity. Despite the hitherto low valuation of the Euro, the European economic force is now in the game – and it is only Europe as a whole, not its constituent parts, that make up this force.

The common currency has also resulted in a significant change in Europe’s level of confidence internationally. And, as with all markets, confidence is key to success. The coming recession may be bad for everyone, but it looks as if Europe will gain support for its enlarged currency in a period of general weakness.

While these events and developments have not defined Europeanism, they may have helped to bring about a clear difference in the two types of business models that will underline the difference between the two sides of the Atlantic. There are many business models – and several global business models. However, it appears that a distinctively European model is emerging, one that may be more flexible, more sustainable and more socially acceptable. Europeans need to nurture this potential. I believe the multiculturalism and respect for diversity that it assists are true values that can succeed in a world currently being dominated by commercial monocultures.

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