The truth: most European corporations still want little part of Anglo-American “liberalization,” or the dog-eat-dog corporate culture that goes with it. Despite fashionable talk of the American model, embracing everything from the English language to the greed incentive embodied in stock options, most corporations on the continent are still happy to operate within the stable cocoon created by European regulation. They can do without the life-and-death merger battles that color the corporate scene in Britain or America. They are happy to keep getting quiet subsidies from their governments, and to keep union peace with their workers. Says Clive Pinder of the business consultancy Metrius Europe: “Liberalization can be a threat or an opportunity: it all depends on your mind-set.”
America’s appeal to Europe isn’t always what it seems. Last year the Europeans closed a record 453 acquisitions in North America, a 20 percent increase on 1999. Some recent buyers, like Alcatel of France, declared the intent to “Americanize” their corporate cultures. They vowed to learn from the entrepreneurial spirit of their Californian acquisitions. The problem, says Ramona Liberoff, a consultant on several transatlantic mergers, is that as many as 70 percent of such mergers founder or fail, often due to culture clash. Battered by the telecom downturn, Alcatel is laying off workers and selling plants in the United States.
Now, smart companies are merging only at arms length. Last week, when the Mars Corp. of the United States bought Royal Canin pet foods of France, the two said they would collaborate only in a few areas such as research and development. “What we have done is to build an Iron Curtain,” says Canin chairman Henri Lagarde. “We have decided to operate as two parallel groups.” Lagarde is grateful that Mars is still a family-owned company: like many Europeans, he deplores the short-term thinking that goes with a market listing. Now that the U.S. market is down, the fascination with America’s “equity culture” is fading as well.
Old-fashioned European teamwork between governments and business never really went out of style. These days, one of the continent’s most resented predators is the state-owned Electricite de France, which has been snapping up foreign energy companies even as Paris obstructs foreign outside players from buying into France. Despite pressure from the EC, governments like those of Italy and Spain have refused to give up “golden shares” in former state monopolies, which protect these massive companies from raiders.
Most European boardrooms still praise the long tradition of give-and-take between bosses and workers on the continent. When the European Union recently revived and formalized the century-old institution of worker councils, which gives workers a say in company decisions, only British business dismissed the notion out of hand. Most others didn’t object. Says Renate Hornung-Draus of the Federation of German Employers: “There are lots of positives to the U.S. model but also lots of negatives–namely a lack of loyalty to the company.”
Even the British, often lumped with Americans as part of a Darwinian “Anglo” business culture, are less eager partners than this implies. The recent history of the City of London provides a sobering lesson. An American-led buying spree since the “Big Bang” deregulation of 1987 has left the Square Mile, once the heart of the British financial empire, without a single major investment bank in British hands. “[Europeans] look at what happened to the financial-services sector in Britain and they don’t like what they see,” says Karel Lannoo of the Centre for European Policy Studies in Brussels. The British are now leery of too close association with the American Way. “When we try to promote aspects of the U.S. model, our European colleagues think we are advocating a totally deregulated labor market and a lack of basic standards. In fact, we just want to look at what works,” says John Cridland, head of the Confederation of British Industry. “What we need are home-grown solutions.” That, in a phrase, is what all Europe is looking for.
