Table Of ContentChristian Scholz/Joachim Zentes (Eds.)
Strategic Management - New Rules for Old Europe
Christian Scholz/Joachim Zentes (Eds.)
Strategic Management
New Rules for
Old Europe
GABLER
Bibliographic information published by Die Deutsche Bibliothek
Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie;
detailed bibliographic data is available in the Internet at <http://dnb.ddb.de>.
Univ.-Professor Dr. Christian Scholz holds the chair in Business Administration, in particular
Organisation, Human Resource Management and Information Management at Saarland University,
Germany. He is Director of the Institute of Management Competence and Director of the Europa-
Institut at Saarland University, Germany.
Univ.-Professor Dr. Joachim Zentes holds the chair in Business Administration, in particular Foreign
Trade and International Management at Saarland University, Germany. He is Director of the Institute
for Commerce & International Marketing and Director of the Europa-lnstitut at Saarland University,
Germany.
1st edition March 2006
All rights reserved
© Betriebswirtschaftlicher Verlag Dr. Th. Gabler I GWV Fachverlage GmbH, Wiesbaden 2006
Gabler is a company of Springer Science+Business Media.
www.gabler.de
No part of this publication may be reproduced, stored in a retrieval system or
transmitted, mechanical, photocopying or otherwise without prior permission of
the copyright holder.
Registered and/or industrial names, trade names, trade descriptions etc. cited in this publication
are part of the law for trade-mark protection and may not be used free in any form or by any
means even if this is not specifically marked.
Cover design: Ulrike Weigel, www.CorporateDesignGroup.de
Printing and binding: Wilhelm & Adam, Heusenstamm
Printed on acid-free paper
Printed in Germany
ISBN-10 3-8349-0211-X
ISBN-13 978-3-8349-0211-5
Preface
Perhaps it was not really meant the way it was said, but when Donald Rumsfeld used the
term "Old Europe" in his famous speech of January 22, 2003, he coined a phrase to de
pict not the birthplace of modem society, but a graveyard of old and outdated ideas.
Even though it is legitimate for many of us in Europe to oppose the underlying message
of going to war in Iraq, it makes absolute sense to examine the rules of the game which
Europe is currently playing and which it will play in the future.
In doing so, it becomes obvious that important changes are taking place: Strategic Man
agement - New Rules for Old Europe makes the hidden rules governing strategic man
agement in Europe transparent.
The book follows a "from - to" logic and takes the reader along the course of changing
conditions and contingencies. Europe has not only witnessed major transformations such
as the dramatic fall of the Iron Curtain, economic and monetary integration and the in
corporation of new member states: Fundamental change can also be perceived with re
spect to the corporate responses to these ongoing dynamic changes.
Strategic Management - New Rules for Old Europe is divided into four parts. Each of
these consists of several contributions, starting with the focus on people, then on culture,
then on systems.
The first part, "Changes in the Institutional Environment", describes how the European
labour markets are becoming more elastic (people), how the sense-making processes
around the European Constitution have reached a new stage (culture), how accounting in
Europe is converging to new standards (systems), how banking supervision in Europe is
proceeding to Basel II (systems), and how European entrepreneurship has evolved (sys
tems).
The second part, "Changes for Companies: Outside-Inside-Perspective", presents the ex
ternal market-driven movements for European companies. It investigates how customer
life cycle orientation is integrated in relationship marketing (people), how cross-cultural
branding can be assessed (culture), and how a European perspective in retailing is
reached (systems).
The third part, "Changes for Companies: Inside-Outside-Perspective", presents the inter
nal organisation-driven movements. It shows how European virtual team building has
advanced (people), how corporate culture in Europe uses the advantages of divergence
(culture), and how supplier relationship marketing advances to relational purchasing
(systems).
The fourth part, "Consequences for Germany", addresses the management and leader
ship challenges in Germany as one of the dominant European countries. It develops a
strategy map that intends to focus on offensive self-renewal (people/culture/systems).
VI Preface
The majority of literature in international management is still based on the United States
of America, with Americans as the underlying reference system. Given its focus on
Europe, this book goes far beyond the scope of domestically-oriented books on man
agement. Therefore, readers will become acquainted with some rather unfamiliar prac
tices answering to the description of international management behaviour. They can add
the distinct European perspective to their knowledge, and they can compare international
management literature to the specificities of the European approach with all of its con
temporary developments.
Strategic Management - New Rules for Old Europe expands the reader's understanding
of people, culture, and systems issues in management and gives valuable insights into
the complexity of today's European management.
Strategic Management - New Rules for Old Europe can be used by executives, man
agers, and (MBA) students in several ways: It is applicable to university teaching in stra
tegic management, marketing, and Human Resource Management as well as to manage
ment seminars with focus on Europe.
We would like to thank the many people who have contributed to this book, each from
his/her unique perspective and with his/her expertise. The authors are part of the faculty
of the Europa-Institut and show their outstanding commitment to our MBA programme
by their contribution. Special thanks go to Lambert Scheer, M.A., Jonas Bastian, Sabine
Herwig, Matthias Schu and the team of the Europa-Institut for their excellent editing of
this book.
Saarbriicken, January 2006 Christian Scholz and Joachim Zentes
Contents
Preface V
Changes in the Institutional Environment
Udo Broil / Sabine Hansen
European Labour Markets: From Low to High Labour Demand Elasticities 3
Wichard Woyke
Sense-Making Processes in the Council of Ministers: From the ECSC to the Euro
pean Constitution 25
Karlheinz Kiiting / Matthias Heiden
Accounting in Europe: From National Accounting Charts to Globally Converging
Standards 41
Hartmut Bieg / Gregor Kramer
Banking Supervision in Europe: From Basel I to Basel II 73
S. Ramakrishna Velamuri / Marc Sosna
European Entrepreneurship: From Deterministic Government Policy to Market
Experimentation 83
Changes for Companies: Outside-Inside-Perspective
RalfTerlutter / Peter Weinberg
Relationship Marketing in European Consumer Goods Markets: From Marketing
Mix Orientation to Customer Life Cycle Management 123
VIII
Benoit Heilbrunn
The Delights and Dangers of Global Branding: From Worldwide Brands to a
Global/Local Dialectic 137
Bernhard Swoboda / Sandra Schwarz
Dynamics of the Intemationalisation of European Retailing: From a National to a
European Perspective 159
Changes for Companies: Inside-Outside-Perspective
Volker Stein
European (Virtual) Team-Building: From Optimism to Efficiency 203
Christoph I. Barmeyer /Eric Davoine
International Corporate Cultures: From Helpless Global Convergence to
Constructive European Divergence 227
Hanna Schramm-Klein /Dirk Morschett
International Supplier Relationship Management: From Transactional to
Relational Purchasing 247
Consequences for Germany
Christian Scholz /Joachim Zentes
A Strategy Map for Germany: From Passive Self-Pity to Offensive Self-Renewal 273
Index of Authors 303
Index of Subjects 309
Changes in the Institutional
Environment
European Labour Markets: From Low to High
Labour Demand Elasticities
Sense-Making Processes in the Council of
Ministers: From the ECSC to the European
Constitution
Accounting in Europe: From National Account
ing Charts to Globally Converging Standards
Banking Supervision in Europe: From Basel I to
Basel II
European Entrepreneurship: From Deterministic
Government Policy to Market Experimentation
Udo Broil and Sabine Hansen
European Labour Markets: From Low to High
Labour Demand Elasticities
1. Introduction
2. Unemployment in Europe
2.1 Overview
2.2 Hysteresis
2.3 Unemployment and Unionisation
3. Intemationalisation of Economic Relationships
3.1 Overview
3.2 Trade Economists vs. Labour Economists
3.3 European Trade Patterns and FDI
4. Elasticity of Labour Demand
4.1 Overview
4.2 Labour Demand with One Input
4.3 Labour Demand with Two Inputs
5. Impact of a More Elastic Labour Demand on the Domestic Workforce
5.1 Overview
5.2 Incidence of Non-Wage Costs
5.3 Volatility
5.4 Bargaining
6. Conclusion
References
Udo Broil / Sabine Hansen
1. Introduction
Unemployment has always been a topic of economic concern. It became of particular
interest from the late 1980s on, when most OECD countries were hit by high and grow
ing unemployment rates, which, in addition, turned out to be persistent. Part of the de
cline in employment was due to changing economic structures, i.e. the transition from
traditional manufacturing industries to services (see e.g. Blanchard 2004). Increasingly
globalisation, understood as the international integration of the goods and capital mar
kets, is claimed to be one source of the evil, with the primary losers the low and un
skilled workers. They may either lose their jobs more easily due to foreign competition,
or their jobs may be exported with greater ease. Over the past decades, the worldwide
integration of markets has indeed proceeded at a great pace, bringing about a well-
known range of economic advantages and disadvantages. Empirical studies document
that the real-wage gap between low-skilled and high-skilled workers has widened over
the past decades and keeps on widening. There is a skill premium that comes along with
a substitution process between skilled and unskilled workers. But what if the skill pre
mium no longer pays? A recent phenomenon is that white-collar employees, too, increas
ingly fear losing their jobs in an internationally integrated world.
One problem in assessing the impact of globalisation on the domestic labour market lies
in how to measure it. There is consensus that the most important channels of globalisa
tion in the goods market are exports and foreign direct investment (see Nicoletti et al.
2003). Whereas these two are directly observable and measurable, their impact on do
mestic labour markets is not, i.e. it is rather indirect or secondary. Furthermore, labour
markets in particular are characterised by domestic regulations and institutions such as
minimum wages and unions. In Europe, in contrast to the US, wages at the bottom end
of the wage scale have risen more than those at the upper end at the expense of jobs. Put
differently, in many European countries wages are rather rigid in the sense that rather
than adjust, they result in unemployment. The way wages are set is one example of
where union power is of importance. In a very recent contribution, Hellwig (2004) inves
tigates whether, among other things, aggressive wage setting has a considerable effect on
the relation between real wage rates and employment.
Many empirical studies that aim at assessing the effects of trade on the participating
economies are based on the Heckscher-Ohlin framework. Another way to measure the
impact of both international trade and foreign direct investment (FDI) on the domestic
labour market is via the elasticity of labour demand. The more substitutable the domestic
workforce becomes for foreign workers, the more elastic the demand for the former be
comes: there is a shift from low to high labour demand elasticities. Rodrik (1997) shows
that the elasticity approach allows an explanation for a range of consequences present in
the labour markets which can be attributed, in part, to globalisation, namely the inci
dence of non-wage costs, the volatility of earnings, and unions' bargaining conditions.
