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"Enabling Internationalization Excellence for Family Enterprises"

IFE, 2017

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We thought this must be the best way – but we should always remember it is just one way and there is also a mid-way

My newest publication* deals with how SMEs are able to build international network ties wisely to an institutionally different foreign market. We investigated eight Finnish SMEs who had exports via agents / distributors, sales subsidiaries, or a production subsidiary in the French market. We interviewed both Finnish managers and their French collaborators. We used the concept of institutional logics to find out about the cultural and material practices typical of Finnish and French business culture / SMEs.

As regards institutional logics, every organization is embedded in a system of specific values, beliefs, and rules derived from the surrounding culture. How they are largely define how organizations and actors interpret their social surroundings and how they aim to act, such as network internationally. This obviously is very different in Finland and France, which are culturally very different countries, although they are geographically quite close to each other.

The best outcome was reached by those two SMEs which, at first, allowed two institutional (Finnish and French) logics to co-exist, and then formed a cross-institutional consensus with features from both institutional logics. This allowed them stronger and more trustworthy relationships and the building of a wider range of networks for future needs. The other six SMEs experienced significant behavioral tensions related to institutional logics, and were therefore unable to develop either moderately strong ties or more numerous weak ties in the institutionally distant market.

We actually did not observe any of the French or Finnish managers would have done anything with the purpose of being mean – they just acted the way they were used to act. They thought it must be the best way – but we should always remember it is just one way and there is also a mid-way! Whatever the culture a Finnish SME is entering, it is very important to study some features of the culture and language and give understanding and space for the other culture, too. What we see as the best way of doing and seeing things, might be the opposite in the case of foreign collaborators, since they were born in a totally different cultural heritage and institutional logics.

How are the French and Finnish individuals typically different?

  • The French are collectivist, while Finns individualist; The French are likely to take other people into consideration, and they tend to be strongly attached to their families.
  • In France, there is a high power distance and large hierarchies, whereas they are quite low in Finland. In France the tasks are clearly assigned and differentiated, and the compartmentalizations may not be readily understood by people from Northern Europe. Furthermore, decision-making in French firms generally takes place at the highest level of the hierarchy. Hence, French are relatively punctilious regarding titles, statuses, and protocols, and sensitive to the possibility of being underestimated by their partners.
  • The French tolerate uncertainty, while the Finns not. The French tend to focus on problems that are immediately pressing rather than develop long-term strategies. By contrast, in the Nordic countries, uncertainty is avoided to a significantly greater extent, indicating a desire to plan strategies well in advance.
  • In France a customer is not merely a customer as in the Nordic countries: for the French, a customer also represents a relationship that may develop into a friendship;
  • The French are flexible and expect to do several things simultaneously, frequently without planning matters in advance. Past, present, and future co-exist, and punctuality is a relatively insignificant factor. In the Nordic countries, by contrast, people tend to do one thing at a time, according to a plan.

What the two SMEs with cross-institutional consensus did was that they contacted their collaborators and customers much more often than they would usually do. They started always asking from the highest possible boss, since they understood they would not get an answer from the subordinates. The French counterparts gave up the need to use titles in every occasion and the need to meet often. They reported more punctually than they would usually do and the Finns understood that being a bit late was part of their culture. The Finns went to meet the French face-to-face somewhat more often they would usually do and they fostered the feeling of “us together” instead of “you there and we here”.

*Leppäaho, T. & Pajunen, K. (2017). Institutional Distance and International Networking. Entrepreneurship and Regional Development, available online. DOI: 10.1080/08985626.2017.1407365