Question

How do ethical practices differ in the United States, and in European countries such as France and Germany? What implications does your answer have for U.S. multinationals operating in Europe?

Answer 1

American and European business practices differ in many aspects. Work-life balance is an important part of the corporate culture in Europe. Europeans laws are often framed in a manner that allows enough leisure time to people. According to a OECD 2015 survey, French worked an average of 1482 hours a day in 2015 while Americans worked about 1790 hours. Further, it was found that Americans took 73% of their vacation time while French and Germans took almost entire vacation time.( Source: Time magazine article on American -French working style).

Advertising practices also differ across countries. In Europe, for instance, companies use television and online media for their target markets; billboard advertising, a popular mode of mass communication in USA, isn't prevalent in Europe. ( Source: bizfluent.com - Differences in culture and business ethics in USA and Europe)

Germany doesnt allow premuims on products and has a strict policy relating to nutrition and health claims. Comparative advertising is restricted in many EU nations ( Source : Germany and France Country Commercial Guide- export.gov)

Considering the differences in business practices in USA and Europe, businesses would be better off following a polycentric approach; international policies can be framed in accordance with the country specific regulations. This way risks would be minimized as blending in with the local rules and regulations would pay off well in the long run. Following a polycentric approach to management would allow corporates to stay informed about the local rules and continuously monitor its policies to minimize risks. Expatriates who are transferred to these countries should be educated on the local laws to enable them better understand the working environment. The compensation policies for an American company in Europe would be different too. In Finland, for instance, maternity leave for women are very accommodating and men are allowed eight weeks of paid leave ( Source: independent co.uk - article on American work habits). As such, American companies operating in Europe need to take into account these factors while framing country specific policies to provide better job satisfaction to employees and thus increase its retention capacity.

Staying aloof to the working culture of its international interest, can prove to be disadvantageous for the company seeking to establish a long term presence in that country. Attending international trade fairs can enable companies to bridge information gaps and find opportunities for expansion.