The term Anglo-Saxon is often used to describe a particular institutional model and to distinguish a particular form of liberal, uncoordinated market economy. The UK is often held up as one such Anglo-Saxon economy. Since the 1980s, the UK has adopted the American free market model in applying supply-side macro-economic policies with a focus on producing shareholder value. However, whereas the U.S. is considered the exemplifier of the Anglo-Saxon model, Dicken (2007: 210) suggests that the UK occupies an intermediate position between the virtually pure market capitalism of the U.S. and the kind of social market capitalism practised in continental Europe. The UK remains more interventionist than the U.S. but has strongly adopted economic policies of privatization and deregulation, for example in relation to the labour market. This has led to the UK often being at odds with continental Europe over social policy and opting out of some of the social provisions of the EU.

The free market reliance on short-term investment capital and the imperative to seek high profits for shareholders is reflected in a short-term perspective in the area of employment leading to low levels of investment in human resources and low employee productivity rates compared to many leading economies. The Anglo-Saxon model also relies on competition by low-wage mass production, which in turn requires a flexible labour market and wage structure, supported by a liberal welfare state with low social benefits. Short-termism is also reflected in a lack of long-term investment in infrastructure, research and development and human capital, resulting in a skill deficit in the labour force. This is compounded by relatively unregulated labour market conditions which discourage the development of strong internal labour markets and of skills flexibility in favour of numerical flexibility and ‘hire and fire’ approaches to employment. In the absence of a coordinating role for the state, the industrial relations system is fragmented, uncoordinated and decentralized. Despite a strong trade union tradition, since the 1980s restrictions placed on union activity, particularly industrial action, the extent of coverage of collective bargaining and union membership, have declined significantly. However, union membership and presence are still strong in the public sector and certain private sector industries.

In line with the Anglo culture cluster identified by Hofstede, Tayeb (2005) describes UK culture as being highly individualistic and aggressive where autonomy, liberty and privacy are prized, yet where caring for one’s community is common and engagement in collective action (for example, in trade union activity) is accepted. The UK displays a low power distance, yet there is deference and acceptance of inequality, based on traditional class divisions. Tayeb (2005) further suggests that people tend to be characterized as conservative, represented by distrust and dislike of change and uncertainty, and reflected in a past orientation; and as reserved with a propensity towards self-control and self-discipline, honest, trustworthy and with high standards of conduct both for themselves and others, but insular with a dislike of ‘others’. This tends to be reflected in the evidence of discrimination among employees on the basis of age, socio-economic group, gender or ethnicity and in ethnocentric attitudes towards foreign counterparts. As well as being tenacious, the British tend to be pragmatic and flexible, with a willingness to bend the law when it does not suit them, albeit within a broad adherence to rules.

These cultural characteristics are translated into employment and management practice in a number of ways. Both inherent individuality and an acceptance of inequality/deference to authority are reflected in the derivation of job satisfaction from both a personal sense of achievement and a superior’s recognition of individual contribution. Leadership style is persuasive and negotiative and senior managers expect commitment, initiative, ownership, responsibility and honesty from their subordinates. However, a relatively relaxed approach and a willingness to work things out as one goes along lead to management in the UK often being described as ‘amateur’. The emphasis on autonomy and freedom in British society is reflected in the voluntarism at the heart of its industrial relations system and broad rejection of widespread state intervention in business activity. This voluntarism also reflects the relative comfort of the British with a minimal amount of rules and procedures, a trait of cultures who display low uncertainty avoidance. The separation of work and personal life evident in UK culture is reflected in the view that a job is a task to be performed impersonally and informs the approach to selection where an emphasis is placed on a pragmatic assessment of an individual’s potential to contribute to the tasks of the organization (by measuring their intelligence and skills) rather than person–group fit as in southern European countries. The class distinction in wider society is reflected within the workplace in the form of a hostile them-and-us attitude between management and labour.

Sweden is an exemplifier of the Nordic model both in respect of its institutional framework and its cultural roots. The Nordic model is characterized by a ‘universalist’ welfare state and has the economic objective of full employment. Similar to the Germanic model, the export-dependent, high-quality, high-skill industrial sector in Sweden is sustained by a financial system with neo-Keynesian macro-economic steering and long-term patient capital through state-financed cooperative loans. There is reliance on close collaboration between business, government and labour, most notably in sustaining a system of centralized bargaining between well-organized unions with high levels of membership and employer associations. This results in relatively high and equalizing ‘solidaristic’ wage structures that press firms into finding productivity gains in means other than wage cutting. The labour market is characterized by well-developed employment rights, high wages, high female labour force participation, widespread part-time work and a large public sector. Social partners are also involved in the development of wider social policy. Employment law and collective agreements provide relatively high job security which provides an incentive to invest in skills.

Jackson (2002, citing Furness and Tilton, 1979) suggests that economic and political democracy within the Swedish social democratic political model, stresses six fundamental values: equality, freedom, democracy, solidarity, security and efficiency. Jackson suggests that these values still predominate despite a move towards decreased state planning and welfare and towards more economic competition. In particular, there is a continued pressure from private sector firms to decentralize collective bargaining and calls for labour market deregulation along neo-liberal lines. Culturally, Jackson (2002) characterizes Swedes as ‘unemotionally practical, believing that problems can be solved rationally through the application of reason’, resulting in a uniquely sensible way of life which is calm and well ordered. Reflecting the moderate levels of individualism in Nordic cultures, extensive redistributive state intervention and high public spending are accepted as the basis for a just society free from the inequalities created by free market capitalism, despite this having driven taxation and social contributions to the highest level in Europe. In contrast with the individualism characteristic of Anglo cultures, which is often focused on competition and material achievement, ‘success’ in Swedish culture is connected to a person’s own self-development and self-dependency. Correspondingly, quality of life is important, and the achievement orientation of Swedes is often directed towards jobs which are developmental or that are intrinsically interesting. As such, the importance of work is seen to be relatively low, which Gannon et al. (1994) associate with an unwillingness of employees to do overtime and with excessive absenteeism and sick leave compared to other nations.

The low power distance in Swedish culture is reflective of a wider emphasis on equality manifest in complex systems of state welfare provision and relatively narrow income differentials across society. Within firms, the importance of equality and a low power distance is reflected in flatter organizational hierarchies, decentralized decision-making and a focus on team working. Egalitarianism in the workplace is viewed as a prerequisite for the operation of industrial democracy and co-determination precludes authoritarian management and a ‘them-and-us’ attitude. The majority of employees are members of independent trade unions, partly because trade unions play an important social role (for example, in administering unemployment benefit) but also because of the enshrinement of extensive consultation and representation rights for unions. Informal and consensual management predominates and decision-making and communication processes are often viewed as being lengthy, leading to accusations of indecisiveness. The high femininity associated with Swedish culture, along with other Nordic nations, is reflective of a high degree of equality between men and women.

Germany is both an exemplar of Rhenian capitalism (along with Austria, Belgium and the Netherlands) and of Hofstede’s Germanic cultural cluster. Within a high-value growth strategy, Rhenian capitalism, instead of relying solely on market mechanisms, enforces collectively imposed ‘beneficial constraints’ such as high wages set and imposed through collective bargaining which compel employers to seek efficiency through investment in technology and training, rather than in the degradation of terms and conditions of employment. For workers, lifelong employment, high wages, long-term career prospects and access to further training in case of technical change are important motives to continually update skills. The system of interdependency between employers and employees is institutionalized in the ‘social partnership’ between well-organized unions and employer associations which play a significant role in industrial regulation and coordinated wage bargaining. Due to relatively consensual industrial relations, firms can profit from an absence of industrial unrest which would be particularly harmful to a quality production strategy. At workplace level, statutory works councils have institutionalized forms of worker participation in the form of co-determination. Worker representatives can secure employment rights, mediate in case of grievances and codetermine technological change. The state has an accepted role in providing the needed infrastructure for business and social protection for workers.

The high uncertainty avoidance evident among the Germanic group is evident in the financial system. Rather than the short-term focus on shareholder value, the close relationship between organizations and banks results in patient long-term investment capital. Moreover, the German system is reflective of stable producer–supplier ties. This institutional framework tends to reflect the promotion of the collective good (‘Deutschland Inc.’).

Japan can be regarded as the archetypal development state in which the government’s economic role has been very different from that in most Western countries. Japan’s post-war economic development has been built on a long-term consensus between major interest groups on the need to create a dynamic national economy. Post-war Japanese economic development began with essential industries such as steel, electrical power and shipbuilding, followed by the progressive development of the automobile, electronic and petrochemical industries. In the process, Japan shifted from a low-value, low-skilled economy to a high-value, capital-intensive economy.

The Japanese model is reflective of Rhenian capitalism in that it is characterized by patient long-term investment capital, relatively consensual employment relations and stable producer–supplier ties. However, Japan represents an even more centralized economic system, a coordinated market economy where state direction strongly influences diverse economic activity within a broad stakeholder approach. Whilst there is relatively little state-owned enterprise in Japan and generally a much smaller public sector than in the West, the state plays an active role in guiding the operation of a highly competitive domestic market economy. Whilst market decisions are the right of private companies, there is close liaison with public agencies and banks hold a strong influence. Government guides economic activity through the power to provide or to withhold loans, grants, subsidies, licenses, tax concessions, government contracts and import permits. However, in contrast to Germany, state social policy is less well developed and there is greater acceptance of the role of the organization in meeting social and welfare needs. At the core of the Japanese model is a combination of government–industry cooperation and private sector coordination in the context of long-term relationships between firms and labour, between firms and banks, and between different firms. Collectivist values have produced cooperative industrial business arrangements in the form of keiretsu where formally independent organizations are closely tied together through cross-shareholdings, inter-organizational alliances, interlocking directorates and all kinds of informal coordination arrangements. There is a long-term focus based on the strategic allocation of ‘patient capital’ from banks as opposed to stock markets, not to achieve a high short-term return on investment, but to gain market share to maximize long-term returns. These attitudes, coupled with the view of the nation as a family, allow government to influence business, and businesses work hard not only for their own profits but also for national well-being.

The Japanese approach to industrial relations has, therefore, been described as ‘welfare corporatism’. This system is based on collaborative relationships of mutual interest between industrial actors – the state, employers and employees – reflecting the cultural influence of ‘Confucianism’. The values of Confucianism are particularly important to management practice, in particular the importance of interpersonal relationships, a respect for age and hierarchy, the need for harmony and the concept of ‘face’. In particular, this philosophy is reflected in the emphasis on cooperation and management by consensus, as opposed to individualism, and trade unions lack a strong political and social role. Strong leadership is, therefore, characterized as the ability to build consensus rather than assertiveness and quick decision-making. Employment management in Japan is characterized as ‘corporate paternalism’, which has been traditionally based on three key tenets: enterprise unionism for all employees; lifetime employment, with strong internal and high intra-firm mobility; a seniority system, involving advancement based on a combination of seniority and ability. The loyalty developed through an identification with their employers and a strong work ethic – the Japanese have a culture of long working hours and low take-up of holiday allocation – which characterizes Japanese workers has traditionally been repaid with job security, large investment in training, good benefits and comparatively high wages.

The organizing principle of Japanese society is a sense of group identity and of being part of a much wider community. Compared with western societies, Japan is a dense lattice-work of responsibilities and obligations within the family, the workplace, the school and the community. There is a strong emphasis in work processes on team working and competition between teams and work groups rather than within them. This family and team ethos is also important socially as work is a principal source of social networks and activity. However, this model of labour management tends to only characterize that which exists in large organizations for a core of workers. Outside of this core, there exists a peripheral workforce often made up of women, who have less job security and less access to such terms and conditions of employment. This partly reflects a rigid and traditional sexual division of labour. Hausmann et al. (2007) reported in a survey of the global gender gap (using an index based on female economic participation and opportunity, educational attainment, political empowerment and health and survival) that Japan ranked 91st out of 128 countries – a very low ranking for a developed nation. Japan was ranked particularly low in the areas of political empowerment and economic attainment and opportunity.

China is unique in the global economy as representing a communist-capitalist system. An increasingly open capitalist system is combined with a highly centralized political system and planned economy in which state-owned enterprises still account for a substantial proportion of urban employment and industrial output. Given that China is the largest country on Earth, with a population of 1.3 billion people, it is unsurprising that it is a very diverse nation in terms of ethnicity, language and regional culture. Tayeb (2005) identifies, however, a number of common cultural threads through many of the values and attitudes held as a result of a long imperial history, the influence of Communism (since the 1920s), the predominance of the ‘Han’ ethnic group and the influence of the Confucian philosophy.

The shift to a social market economy from the late 1970s – including increasingly decentralized planning, the privatization of state-owned enterprises and the opening of trade doors to overseas investors – has led to changing employment practices. Yet, the influence of Confucianism and Communism remain strong, reflected in the continued influence of traditions in people management, such as a belief in a job for life (fie fan wan), the notion of eating out of one pot (da you fan) reflected in egalitarian payment systems and de-emphasized status differences, respect for elders (chang bei) manifest in access to senior positions on the basis of acquired wisdom, and hierarchically based, highly centralized enterprises. Labour law in China has, however, been subject to significant reform. For example, legislation passed in 1995 sought to outlaw child labour, to give workers greater freedom to choose jobs and receive minimum pay, to formalize redundancy arrangements, to limit working hours to 44 per week and an eight-hour working day, and to provide greater equal opportunities protection.

Management tends to be centralized, authoritarian, personalized, hierarchical and consensus-seeking (bargaining is central to decision-making), with a reliance on rules and procedures. This reflects authoritarian, yet paternalistic, state intervention, manifest in the notion of cradle-to-grave welfare (danwei). Despite no independent trade unions in China (the All China Federation of Trade Unions has traditionally acted as an agent of the state), trade union officials can still exert considerable pressure on managerial decision-making, reflecting the prior party structures which existed within every plant or firm. Local government has considerable power over internal HRM practices within firms, particularly worker mobility between companies or across regions, and has the ability to veto recruitment decisions. China has a largely unsophisticated legal system, a lack of technology and capital, underdeveloped infrastructure, a large population, low average education level, low to medium living standard and a short supply of local managerial and technical skills.

As well as the influence of Confucian values, as discussed for Japanese culture above, Tayeb (2005) notes that the yin and yang philosophy – the acceptance of the simultaneous existence of opposite values and beliefs within a person – is also influential as it shapes the acceptance of differences in behaviour dependent on specific circumstances and situations. For example, depending on the context, the Chinese can be either reserved, collectivist and long-term oriented or individualistic, expressive and short-term oriented. Given the huge changes in Chinese society that have taken place over the last decade or so, it is unsurprising that a distinction must be made between the attitudes to work and management of the older and younger generations. Older workers are not proactive or bold when making decisions and tend not to offer independent opinions in contrast to the more adaptable younger generation. However, older members expect younger members to respect them and age and seniority are accorded some priority in discussions and decisions.

Central to conducting business in China is the notion of guanxi – using extended family and other developed relationships and connections to gain cooperation and to get things done, along with a strong sense of personal loyalty (for example, to a senior manager). Broweays and Price (2008) suggest that guanxi is a reflection of the Confucian notions that individuals, as social beings, each have a place in a hierarchy of relationships and that their importance appears to have developed on a large scale as a way of dealing with state bureaucracy and to have flourished during the recent opening up of the Chinese market and consequent economic development. At the heart of guanxi is the moral and social obligation to help others within a network in order to maintain one’s dignity and that of others (mianzi). This is particularly important in China, as not doing so entails loss of face, prestige and reputation, all of which are central to one’s standing within society and organizations. The importance of maintaining face and consideration for the reputation of others means that direct criticism or confrontation in relation to work damages both the mianzi of the person who has made the criticism and that of the person criticized. Subsequently, trustworthiness and other people’s confidence are admired characteristics in Chinese culture, ensuring that transactions made between people in close relationships do not need to be made in contractual form. Guanxi goes further than simply network, to the granting of favours and the expectation of such favours in return, eventually. The development of a strong network of guanxi is often the preoccupation of Chinese managers, rather than organizational goals and how to achieve them, and is viewed as the secret of business success. Given its importance, understanding guanxi is crucial for firms entering the Chinese market as the development of such networks is indispensable as a source of information and expertise, and as a way of developing relationships, finding business partners and eventually new deals. For Western firms, this often means maintaining good relations with customers and suppliers, local authorities, financial institutions and tax offices.