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Working Papers IEF Working Paper Nr. 45

GERHARD FINK / NIGEL HOLDEN Collective culture shock: contrastive reactions to radical systemic change October 2002

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Collective culture shock: contrastive reactions to radical systemic change

Collective culture shock: contrastive reactions to radical systemic change Gerhard Fink

Nigel Holden

Jean Monnet Professor Institute for European Affairs Vienna University of Economics and Business Administration

Professor of Cross-Cultural Management Kassel International Management School Tel: +49 561 5203 451 (main) Tel: +49 561 5203 425 (direct) Fax: +49 561 5203 454 E-mail: [email protected] or [email protected]

Tel: +43 1 313 36 4137 Fax: +43 1 313 36 758 E-mail: [email protected]

October 2002 The authors thank Sandor Nagy, Budapest Business School and Fritz Breuss, WU-Wien for critical comments. A former version of the paper was presented at the Southern Management Association, 7-12 November 2000 at Orlando, Florida and an extended summary was published in the CD-R Proceedings of that meeting. Abstract Many countries are going through severe transitions as they move from one system of economic management to another, experiencing a traumatic state which we term collective culture shock. Taking a cue from psychology, we suggest that collective culture shock can be seen as comprising four components: integration, assimilation, separation, and marginalisation. The movement towards free market economic systems calls for complex institutional adjustments, but these seem very difficult for societies to introduce in a systematic way. In order to exemplify collective culture shock, we examine four countries (including one country group): Russia, East Central Europe, South Africa, and Japan. Our treatment of these countries will show how collective culture shock is the product of complex economic, social and political forces specific to each situation. We hope to demonstrate that the phenomenon of collective culture shock is an important conceptual tool for managers responsible for international business strategy to help them to understand the complexities of change – or rather resistance to change – in transitional economies. Keywords: cross cultural studies, systemic change, economies in transition JEL classification: F02, Z13, F15

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IEF Working Paper Nr. 45

Table of Contents 1. Radical system changes challenge international firms.......................................5 2. Collective culture shock is a pattern of extremely slow adjustment to new contexts........................................................................7 3. Central Europe (CE): culture shock vis-à-vis the European Union..................13 4. Russia: seeming immunity to collective culture shock because of recurring shocks...........................................................................................16 5. South Africa: culture shock with vengeance....................................................18 6. Japan: the shock of falling back before becoming Number One......................19 7. Similarities, but also differences in the adjustment process.............................21 8. Traditional management principles are not valid in rapidly changing societies.............................................................................................22 9. References.........................................................................................................23

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1. Radical system changes challenge international firms In the latter two decades of the 20th century numerous countries experienced radical systemic change, involving movement – as yet far from complete - from closed to open societies, from command to market economies. In virtually every case the change was the direct consequence of lasting economic crises which could not be solved within the given economic and political system. In numerous instances previous inhumane systems were dismantled without resort to revolutionary force and bloodshed on a vast scale, as the disintegration of the communist system in Eastern Europe and the former Soviet Union and the apartheid regime in South Africa clearly attest. Many new states have come into being, enjoying independence and at least the trappings of democratic rule. Full freedom and prosperity for all now seem to be in reach, but the transition is nevertheless painful. Overall it can be argued that the U.S.- West European model of democracy, freedom and prosperity scored a triumph over the alternative system: the communist model, which, one might say, collapsed under its own weight. As Burton-Jones (2000) has put it: ‘Since the overthrow of communism … free market capitalism is the only game in town.’ But in passing we should note that this radical systemic change was not restricted to countries with totalitarian governments. Both Japan and Korea have discovered that their rigid systems of command-economy capitalism, based on life-time employment and promotion fixed to length of service, were simply not sustainable. Countries experiencing radical systemic change become transitional economies and more open to foreign investment in the widest sense. Many firms want to seize the opportunities offered by the new, emergent markets hungry for Western products and know-how, and the perceived first mover advantage is still the driving force for many investments in these transitional markets. But many of these firms have discovered that people in these societies have reacted differently than expected to the radical system change. After the initial euphoria people become disillusioned. Not only is the path to the free market economy long and laborious, but the free market becomes associated with crude money-making, creating a new breed of unscrupulous nouveaux riches. Foreign firms, far being examples of all that is best about the free market system, become identified as exploiters: ‘exactly as Lenin said’, to quote an aggrieved Russian, not getting an expected pay rise (Wilson and Donaldson, 1996). Local businesses, although espousing free market ideas, often seem incapable of taking initiatives, preferring to wait for prosperity without taking decisions. While foreigners move in to be the first, the local people are inclined to remain passive, missing market opportunities on their own doorstep, and blaming foreign firms for cornering them. Consider the massive vodka market in Russia, which is now dominated by foreign producers. U.S. and West European firms rush in only to experience society in slow motion: nothing seems to be expedited; there is endless talking, endless negotiations at all levels. Unfortunately, when the new governments dismantled the old system, they forgot to set up and implement new rules. Thus the only driving force for systemic change comes mainly from a need to respond to external bodies such as the EU, where eventual membership is seen as a political and economic necessity, or the WTO or IMF which insist on high levels of conformity to rules. In this paper we argue

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that these countries in transition are suffering from a phenomenon which we call collective culture shock, which is a general, complex concomitant of radical systemic change. In order to put these issues into context and to exemplify the nature of collective culture shock, we will examine four countries (including one country group): Russia, East Central Europe, South Africa, and Japan. All the countries concerned are experiencing collective culture shock. The same outward signs are apparent: businesses have problems adjusting to the new conditions; political leaders lack the will to push through reforms which are generally seen to be necessary; the population at large is disillusioned, if not disoriented. But our treatment of these countries will show how collective culture shock is the product of complex economic, social and political forces specific to each situation. It is a commonplace in the management literature to see references to change. But the word ‘change’ appears to refer to the need for, or the inevitability of, kinds of potentially disorienting organizational rearrangements in the light of new circumstances such as the impact of globalisation or the rapid onward march of e-commerce. The marketing literature frequently qualifies the word ‘change’ by (once) arresting adjectives like ‘turbulent’ or ‘volatile’. In other words, the term ‘change’ is becoming a cliché, an item of management speak. Change is hardly ever seen in the management literature as seismic jolts which convulse entire societies, unleashing new destructive behaviours, bringing forth pent-up anger, and disillusionment with governments and platitudinous supranational bodies like the IMF, the EU or the UN. When countries are in such a state of recklessness and unruliness, they can be a menace to themselves and to other countries. As actual or potential business partners, they pose serious problems for corporation managers of international business strategy. Not only can long-term investments be jeopardised, but life for expatriate managers - and local staff - can be intensely frustrating and even downright dangerous. A recent issue of The Economist highlighted the challenge of ‘doing business in difficult places’, noting that ‘few executives from Tokyo or Zurich, say, would trade their comfortable offices and predictable lives for power cuts in Lagos, threats by mobsters in Moscow, or chaos in the Congo', adding nevertheless that ‘brave firms can profit where others tremble to tread’ (Economist, 2000). What history shows is that countries which are ‘difficult places’ do not make the transition to relative stability in a matter of days or months. The process can take years even decades, but it seems to follow a characteristic pattern. The logic question for strategy managers is: ‘when can we expect our investments to be less risky?’. The following concept of collective culture shock was developed after comparing several international comparative culture related studies on East Central Europe which were undertaken in course of the 1990s (Fink and Feichtinger 1998, Fink and Meierewert 1999) and after studying the literature on the issues of acculturation/impatriation of individuals, on identifying appropriate persons for expatriate assignments, and on psychological adjustment of individuals to assignments abroad (Black, Mendenhall and Oddou 1991, Birdseye and Hill 1995, Brett 1980, Dunbar 1994, Feldman and Thomas 1992, Fisher 1986, Gudykunst 1998, Harvey 1997, Jones 1986, Louis 1980, Parker and McEvoy 1993, Pinder and Schröder 1987, Rogers and Ward 1993, van Maanen and Schein 1979, etc).

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We believe that the concept of collective culture shock which is exhibited next in this paper also could be useful for the study of cultural issues in cross border mergers and acquisitions where important factors which cannot be influenced by the merging organisations so far were not explicitly conceptualised. Cartwright and Cooper 1996 distinguish the categories power culture, role culture, task culture, and person culture. Parker and McEvoy (1993) only consider the contextual factors urban/rural location, family/spouse adaptation, and culture novelty. To these we add the notion of collective culture shock.

2. Collective culture shock is a pattern of extremely slow adjustment to new contexts Culture shock as experienced by the individual has been described as being: ‘precipitated by the anxiety that results from losing all our familiar signs and symbols of social intercourse. These signs or cues include the thousand and one ways in which we orient ourselves to the situations of daily life: how to give orders, how to make purchases, when and when not to respond. Now these cues which may be words, gestures, facial expressions, customs, or norms are acquired by all of us in the course of growing up and are as much a part of our culture, as the language we speak or the beliefs we accept. All of us depend for our peace of mind on hundreds of these cues, most of which we are not consciously aware’ (Oberg. quoted by Harris and Moran, 1979). At the societal level collective culture shock is manifested as more than accumulations of these ‘psychologically disorienting experiences’ (Ferraro, 1994). It appears to induce a form of social paralysis characterised by passivity, endless discussions and hesitant decision-making regardless of the society. It is apparently not even a question of whether people want to adjust or not. It appears to be the case that large sections of the population including political leaders have difficulty coping with change on this scale. The people feel extremely uncertain. They may even react arrogantly, but they shrink from taking determined action. It is not entirely surprising therefore that firms, entering transitional markets, find that they must adjust their management principles and normal practices. Foreign firms are challenged to combine management by confidence building, provide orientation, and support the self-esteem of local businesses and institutions. Management by objectives, as traditionally conceived, is often out of place. Similar trauma and confusion may arise on a vaster scale when whole nations succumb to a radical system change caused by a real - or collectively perceived - change in the situational context of the whole nation. The adjustment to the new circumstances can be confusing and traumatic (See, for example: Black, Mendenhall, Oddou 1991, 298; Ward 1996). Such a condition is hardly new in human affairs, as the study of societies after wars clearly shows. For example, Germany at the time of the Weimar Republic (191933) and smarting under the shocking terms of the Treaty of Versailles, has been described as suffering from ‘mass psychohistorical trauma’ (Loewenberg. Quoted in: Rosenbaum, 1999). The USA experienced trauma at the time of the Vietnam War. As Henry Kissinger (1994) has noted: ‘In the crucible of Vietnam, America’s

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exceptionalism – the belief in the universal application of American values, began turning in on itself and adopting a kind of moral scorched earth policy.’ Such changes may be generated by interaction between nations (states), international or multinational institutions and nations (states), or new groups assuming and exercising power over a nation (within a state). For convenience we are using the word ‘institution’ as a general term covering the notions of nations, states, multinational organisations, and large groups (segments of population) within a state. Under conditions of change, whether internally or externally induced, institutions can interact in four principal ways, similar as individuals can adjust to new situations: integration, assimilation, separation and marginalisation (Berry et al. 1989). We shall regard these four factors as constituent elements of collective culture shock for analytical purposes. Each of these terms is now discussed. Integration describes processes where resources of the interacting institutions are voluntarily combined and a new common culture is developed. The resource base of the interacting institutions is widened and used more efficiently. The new culture mostly contains new elements which previously did not exist. The initial process of the European Economic Community can be described this way. The participating six founding states generated a new organisation and new rules which were different from the organisation and rules of the founding states. While old rules are not valid anymore within the integrating societies it takes time to adopt and implement new rules and to adapt behaviour at the national level. For instance, the European Commission is regularly reporting implementation gaps of member states. The processes within the World Trade Organisation (WTO), the OECD (Organisation for Economic Cooperation and Development, Paris), the International Monetary Fund (IMF), and other supranational organisations can be described in a similar way. Assimilation describes processes where one institution adjusts completely to the rules and organisation of another institution. German unification may provide a recent example for that. Law, organisation, rules and money of the Bundesrepublik were transposed to (imposed on) the former GDR. In a similar vein LDCs have to adjust to the so called “Washington Consensus” of IMF and World Bank. Other examples give the various enlargements of the European Economic Community/European Union. At all enlargements new applicants had to accept and implement the then given acquis communautaire. This also applies to the present member candidates. Before being admitted as new members they have to comply with the rules and organisation already established by the European Union. After having assimilated to the existing rules and having become member they can participate in the further integrative process; by which time they may be said to have been acculturated ie the apparent domination by one group has either been nullified or diffused through democratic processes (for a discussion of the term acculturation, see: Berry, 1980) Separation characterises processes which are designed to establish a clear divide between institutions. The former cold war world divide between “us” the West and “them” the East, and vice versa illustrates the principle of separation. Also separation was experienced by ‘the working class’ under communism. The working class, in

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whose name the very revolution took place, were not permitted to enjoy various privileges – such as access to well-stocked Party shops or the opportunity to travel abroad – which were overwhelmingly vouchsafed to ‘top comrades.’ The term marginalisation can be used to describe the processes of classical colonialism with the sole aim of exploitation of resources, but also to describe the processes when terrorist or totalitarian regimes take over the power within an institution (a state). Dictators have no interest in letting the people participate in power or set up their own organisation. The sole aim of the dictator is to get rich and powerful by exploiting all available resources. But whatever the regime, marginalised people lose out socially and economically (though some such as mafia bosses may be immensely rich and powerful) and obtain relatively less benefits from the successes of society (for example, in the provision of education or healthcare) than more mainstream social groups. From the perspective of resource utilisation integration is the superior strategy as in an innovative process all resources of the integrating institutions are mobilised and more efficiently used. Assimilation means that knowledge and resources of the assimilating institution will not be fully mobilised, but only adjusted to an already existing system. Separation means that there will be no combination of resources and marginalisation that resources of the inferior institution are just exploited i.e. rather destroyed than developed. All four processes lead to radical system changes which cause confusion for large groups within an existing institution. Any institution has a distinct culture as a frame of reference for taking action and response (Thomas 1993: 380). After a radical system change the existing culture is not applicable any more. Old knowledge becomes immediately obsolete, but new knowledge does not yet exist. It has yet to be generated. New rules and organisations have to be set up according to the principles of the new system. When an individual enters into another institution (change of firms or assignment abroad) he has to learn rules, adequate behaviour and to understand the organisation of the for him new institution which, however, does already exist. This makes an important difference. Collective adjustment to new (international) challenges takes necessarily much longer than individual adjustment as new rules and organisation have to be invented. Graph 1 illustrates the processes of dismantling old rules and learning new rules. The emerging regulation-adaptation gap can be considered as the major cause of the shock syndromes.

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Graph 1

Level of regulation after radical system change

level of regulation

100 80 60 40

old rules dismantled

20

new rules learning

0

level of regulation

time

The degree of confusion of a collective culture shock may be influenced by interests, gaps between the actual and the perceived change, expectations, learning capabilities, and available resources. For example, a country in transition will be dismantling old rule and regulations – even institutions, and introducing new ones, or if not, creating vacuums. A manifestation of confusion in societies in which such vacuums occur is crime. We certainly have to distinguish between desired and undesired change (interest). People (large groups of the population) will be much more open to change when an undesirable state of affairs is brought to an end. The most important recent example is the collapse of communist power in central Europe in 1989/90. The opposite will happen in a hostile take over or when a terrorist regime assumes power. New uncertainty will emerge which cannot be resolved. There is no way for the whole population to assimilate to a totally terrorist regime – nobody would be left to be suppressed. Terrorist regimes have to keep significantly large groups to be excluded from integration or assimilation. A hostile take over creates a lasting adjustment gap, but also a source of newly emerging and lasting resistance by groups which are mostly first separated and then marginalised. The overall level of satisfaction can never be the same as in an integrative democratic society. Gaps between actual and perceived change influence expectations. Expectations become unrealistic when actual changes are much more pronounced than perceived, but also when actual changes are much less pronounced than perceived Unrealistic expectations may contribute to confusion if the change is desired and seems to make sense, but the outcome is far off the expectations. Surprise after euphoria enhances confusion and dissatisfaction. When the expected and desired outcome does not materialise questions come up: “What was wrong?” “Should we have behaved differently?” “Did we chose the wrong leaders?” Although the initially taken steps may

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have been the best choice, dissatisfaction may lead to making bad second decisions in a new trial and error process. In a desired change realistic expectations reduce confusion as the outcome will be up to the expectations and confirms previous adjustment. In case of undesired change confusion will emerge in any case. For a while unrealistic expectations may be nourished by the assumption “It will not become as bad!” But even when expectations were more realistic, questions will come up as: “How could we have avoided this?” “Should we behave differently?” “Did we chose the wrong leaders?” The final question is “What alternatives do we have, now?” mostly at the point of time when virtually there are hardly alternatives left. Learning capabilities of institutions depend first of all on interest. If a change is desired learning is easier. Not to learn means refusal. Refusal can be caused by three facts: The change is unacceptable and thus, the affected institution remains separated. The affected institution is marginalised and not permitted to participate in the change. Learning is not possible as the technological, ideological, intellectual or information gap may be too large. Assimilation and integration require role innovation. In both cases willingness to accept changes and their consequences and access to information facilitate adjustment. Fast learning individuals may exhibit new learned behaviour and the artefacts of success. Acceptance of success accelerates role innovation. If behaviour and success are not accepted by large groups of the population role innovation will become more difficult. Interest conflicts among different groups which compete for success (wealth, power) also delay role innovation and the establishment of generally accepted new rules and organisation. Resources may be rather employed for conflict strategies than for integration or assimilation. The process can be facilitated by broad participation in successful business operations and political processes. In case of adjustment to new international rules this means broad participation in international business and international political processes. The process is slowed down by lack of (international) experience. Integration strategies can be accelerated when all participating institutions mobilise resources and information. Assimilation strategies can be facilitated when the dominant institution provides additional resources and broadly disseminates information for those who want to adjust (innovation of rules and roles). At this point also the issue of guidance comes up. Too much of guidance rather leads to custodial responses. Double standards may emerge: “How do you want me to be” versus “This is how I am”. Too little guidance leads to more confusion. Positive anticipatory adjustment is of importance in the case of individual adjustment to new (international) assignments of managers (Fisher 1986). Knowing where the new assignment will be an individual has a chance to collect information and to prepare better for the new situation. Previous findings indicate that advance adjustment shortens the period of adjustment and reduces the level of confusion (Black, Mendenhall, Oddou 1991). In case of EU enlargement advance adjustment is of particular relevance as

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applicants have to undergo a screening process before being admitted as new members. Starting from a dismantled planned economy for the central European member candidates the adoption and implementation of the acquis communautaire is not an easy task to be met within a few years. Drawing on Fisher (1986) we argue that until 2010 the central European EU member candidates will go through three stages: anticipatory adjustment, encounter stage (beginning to understand and master their tasks), and “role management” (becoming a fully accepted member). We argue here that the confusion following a radical system change will be less pronounced if: • • • • • •

an integrative strategy is pursued the change is desired expectations are realistic resources are devoted to cope with the change information is broadly available the visible wealth increase of early role innovators is broadly accepted.

In this case we posit a high level of acceptance and overall satisfaction can be reached. Against that the process to overcome confusion is becoming more difficult and longer if: • • • •

non-integrative strategies are pursued (assimilation, separation, marginalisation) the change is not desired negative expectations prevail or positive expectations are exaggerated (euphoria, illusions), resources and information are not available visible wealth effects of change are not broadly accepted.

In this case we believe that it is not possible to reach a high level of satisfaction. There remains a potential for lasting/permanent resistance. Collective adjustment processes take much longer than individual adjustment as at the turning point mostly rules and organisation of a “the new” system do not exist. Information about the new system is not available. The system yet has to be created. While individuals can go back home, institutions can never simply return to the old system. We can turn to our sample countries.

3. Central Europe1 (CE): culture shock vis-à-vis the European Union We have to remind ourselves that communist power would not have collapsed if it had been economically successful. The history of East/Central Europe under communist 1

After the collapse of communism the formerly called East European states preferred to be called “Central European” in order to mark the difference. We report general developments notably in the 10 EU member candidate countries Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

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power is a history of recurring revolutions and aborted economic reforms (Brus 1987); and in the wider historical context communism was just another form of discontinuity experienced over the centuries by the peoples of Central Europe, for whom over several centuries national aspiration has never found satisfactory expression (Schöpflin, 2000: 58). In the end the communist leaders and dictators tinkered around with the system which they had imposed on the people, failing to resolve their chronic dilemma: whether to keep people under control and lose ground against western market economies or to increase economic efficiency by implementation of crucial changes which “may threaten the ability of the Party center to remain in power.” (Fink 1987, 396). The final collapse of communist power began in Poland and Hungary, but both the catalyst and the grey eminence behind the changes was Soviet leader, Mikhail Gorbachev, who accepted that the reunification of Germany would have to happen and that the Communist Party of the Soviet Union would have to give up its monopoly of power. Like the US President, Ronald Reagan, Gorbachev also had a strong desire to eliminate nuclear weapons (Brown, 1996). His outlook, so refreshingly different from his predecessors combined with his active encouragement of new policy ideas, was a critical factor shaping the great transformations ahead. After persistent strikes during 1987/8 in Hungary, Poland, and the German Democratic Republic (GDR) communist leaders first in Hungary (January 1989) recognised their inability to keep people under control without recurring to arms and slaughter and gave up the monopoly of power. In Poland the forbidden trade union Solidarnosc was readmitted in April 1989 and finally won the elections. In September 1989 Mr. Mazowiecki became the first non communist prime minister in East Central Europe after 1948. However, the true symbol of the collapse of communist power was the opening of the borders of the GDR and the fall of the Berlin wall on November 9, 1989. Millions of people from East and West spontaneously and euphorically shared to celebrate regained freedom. “Freedom” they dearly wanted. This aspiration was clearly recognised by Mikhail Gorbachev and was a factor in his dealings with Roland Reagan. Within four months almost 500.000 people migrated to Western Germany. When in February 1990 upon advise of Gorbachev the CPSU (Communist Party of the Soviet Union) finally also gave up its power monopoly this just completed what was inevitable at that time, but seemed unthinkable a year before. The initial EU support for Central European states was the 1989 PHARE programme, which was designed to provide finance for economic policy advisors and business consultants to be sent to Poland and Hungary. This program was stepwise extended to all the other transition economies as communist power was dismantled. Simultaneously a system of bilateral “Europe Agreements” was envisaged to provide a distant perspective of future EU membership and to give immediate access to the EU markets for Eastern products by an asymmetric reduction in tariffs and quotas. Contrary to the beliefs of Sartori (1991), it was not the Zeitgeist which made the countries of the capitalist West attractive with the proven superiority of their democratic institutions, market economies which sponsored both the prosperity and freedom of their peoples. The post-communist governments of Central European realised that they,

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like governments of many other European states too, gain legitimacy by being accepted into the membership of important institutions, such as the EU and NATO, which are identified as key symbols of the prosperous part of the world. But the path to membership requires assimilation to existing rules and forms of organisation, and aspiring members have to learn how to participate in the integrative processes which set up new rules and organisation based on compromises achieved among the EU member states. Dispassionate economists knew what had to be done to promote institutional and economic policy change (Siebert 1992, Lavigne 1995), but in Central Europe many policy measures were taken only slowly, hesitantly, inconsistently, half heartedly and late. For example, it took several years to negotiate and ratify the Europe agreements. The first one was put in force in 1992 the last one in 1996. So it was that in 1994 the eminent historian and philosopher Ivan Berend expressed how deeply he and most of the people in CE were disappointed after the initial euphoria over the collapse of communism: „Central and Eastern Europe, which is presently going through history’s most dramatic and spectacular transition process of marketization and privatization, is also suffering the most destructive consequences of that transition” (Berend 1994: 52). By this time already billions of Ecu had been spent by the EU and thousands of consultants despatched eastwards often with no visible effect. Freedom was there, but where was prosperity? Compared with other more distant post-communist states, notably Russia, the Central European states show the greatest similarity in their bureaucratic setting with the EU (Kyvelidis 2000). Yet, despite significant adjustments, 13 years after the collapse of communist power we have to note that still a few of the member candidates are not yet ready for EU accession. There was not sufficient progress in advance assimilation. The European Union belatedly learned to recognise that, although independently acting all Central European governments and parliaments – each of them individually – for quite a long time were not able to cope with the problem of preparing for accession. They were not able to take determined action and to prepare with timely measures for EU membership. In June 1993 at the Copenhagen Summit the European Council adopted the principles of enlargement. But at precisely the time that the European Commission was satisfied with progress on this front, the Central European economies suffered from a deep slump in economic activity. Aggregate GDP was 20 per cent, industrial output 40 per cent lower than in 1989. We can safely say that by 1993 the Central European nations were showing pronounced signs of collective culture shock. Nor, no matter how keen they might be to join the EU, would they relish the prospect of integrating into their national law the contents of 80,000 (eighty thousand) pages of EU directives, regulations and other texts covering all aspects of economic and social life (Riccardi, 2000). Since business people were foremost confronted with the symptoms of this collective culture shock in Central Europe, it was leading European industrialists who took an important initiative to alleviate the stress and strains. Under the leadership of Carlos Ferrer, Spain, then chairmen of the European Economic and Social Council, and Umberto Agnelli, Italy, the “International Vienna Council” (IVC) united 45 economists

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from 11 European countries and 250 industrialists from 20 European countries. The resulting “Vienna Recommendations” promoted the idea of a so-called White Book on EU Enlargement and were submitted to all heads of state in Europe and to the president of the European Commission. A few weeks later the European Council of Corfu in 1994 asked the European Commission to prepare a White Book on Enlargement to be submitted to the European Council at Essen (December 1994). The White Book, which was eventually issued in May 1995, did not contain any guidance on the sequence and timing of measures to be taken by the associated member candidate countries. Again at meetings at Brussels and Trieste the “International Vienna Council” proposed a “Schedule for Europe”, according to which EU sponsored consultants would be made liable for accelerated structural change and economic transformation in the member candidates (Altmann, Andreff, Fink 1995). This initiative was finally adopted by the European Commission in its Agenda 2000. Since then the PHARE programme is closely linked to support the implementation of the acquis communautaire (i.e. the system of laws and organisation of the EU) by the member candidate countries. Since 1998 each year a screening by the Commission takes place to identify progress in the adoption and implementation of the acquis. Together with the individual member candidate countries the European Commission defines reform priorities. Further financial support is linked to progress in the implementation of the earlier defined reform priority measures. It was only after being made aware of the symptoms of a collective culture shock in Central Europe that the European Union slowly took measures to reduce the risk of international marginalisation of post-communist Central Europe. Then it took the EU eight years to find a determined strategy to provide coherent information, support and guidance for the member candidates. Yet without advance assimilation to the existing rules and organisation EU membership of Central European countries would not be feasible. The possible future participation of the member candidate countries in the truly integrative process required the EU to take the lead during the pre-accession period and to link support closely with reform progress. During that period only the EU could tell the Central European governments what to do first and what next. The collective culture shock in Central Europe is not an abstract societal phenomenon. It affects all sectors of society, some groups being more harder hit than others. There is evidence, for example, that the shock is seriously impacting on managers. Fink and Meierewert (1999) analysed about 200 narrative interviews with Austrian and German managers undertaken in seven independent studies between 1991 and 1998. 40 % of the interviewed persons noted critical incidents in business relations with Central European counterparts that can be regarded as manifestations of the symptoms of a culture shock experienced by their business partners within their own societies. The Fink and Meierewert study identified such factors as lack of orientation, lack of trust and self confidence, apathy, passivity, lack of initiative, hesitancy to take action, defensive attitudes, withdrawal, and palliation of the past. These reflexes, which were particularly marked in the first half of the 1990s and which are still pronounced today, permit us to identify collective culture shock as a major constraint on management behaviour throughout Central Europe.

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4. Russia: seeming immunity to collective culture shock because of recurring shocks Russia's twentieth century has been one of sorrow and slaughter, turmoil and tragedy; of ideals that went wrong and a vision that became perverted. The sense of anguish and bewilderment felt by many Russians was articulated by the great writer, Alexander Sozhenitsyn (1991): "For seventy years in laboured pursuit of a purblind and malignant MarxistLeninist utopia, we have lost a full third of our population ...We have forfeited our earlier abundance, destroyed the peasant class together with its settlements, deprived the raising of crops of its whole purpose and the soil of its ability to yield a harvest, while flooding the land with man-made seas and swamps. The environs of our cities are befouled by the effluents of our primitive industry, we have poisoned our rivers, lakes, and fish, and today we are obliterating our last resources of clean water, air and soil, speeding the process by the addition of nuclear death, further supplemented by the storage of Western radioactive waste for money. Depleting our natural wealth for the sake of grandiose future conquests under a crazed leadership, we have cut down our luxuriant forests and plundered our earth of its incomparable riches - the irreplaceable inheritance of our greatgrandchildren - in order to sell them abroad with uncaring hand. We have saddled our women with backbreaking, impossibly burdensome labour, torn them from our children, and have abandoned the children themselves to disease, brutishness, and a semblance of education. Our healthcare is utterly neglected, there are no medicines, and we have forgotten the meaning of a proper diet. Millions lack housing, and a helplessness bred of an absence of personal rights permeates the whole country." With the collapse of the communist system in 1991 Russians now live in a country which 'does not correspond to any previous "Russia" in history' (Applebaum, 1995). This new Russia is the product of what Yergin and Gustafson (1994) term Russia's 'triple transition' which followed the disintegration of the Soviet Union. The three transition processes are: • • •

from dictatorship to democracy from centralised economy to free market from four-century-old empire to nation-state

In 1992 the St Petersburg mayor, Anatoly Sobchak (1992) described the legacy of the totalitarian system as ‘a minefield built into both the country's social structure and the individual psychology of its citizens'. In the eight intervening years the features of this minefield, which stunt democratic development, blight economic reform and abet ‘parasitic business actvities’ (Åslund, 1999), are clearly discernible: ‘ingrained lawlessness’ which is the result of centuries of bad government, and ‘an alarming overlap between corrupt officials, gangsters and industrialists’ (Lucas, 1999).

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At the beginning of the transition period it was easy - or at least relatively uncomplicated - for foreigners to see Russia as having thrown off the shackles of communism and now embarking on a quest to introduce a new way of life based on market-economy principles. If at that time the market was ‘the Great Feared Unknown’ (Holden and Cooper, 1994), today for many Russians the market is an increasingly despised system that exploits them, is creating huge cleavages between rich and poor, and is again and again forcing Russia to be irksomely dependent on the deeply mistrusted West for money and know-how. Yet they can hardly blame foreigners for ‘Russia’s arduous regulations and pitiless [tax] inspectors, which limit competition and do not impede the powerful’ (Åslund, 1999). Russia has simply become a land of ‘illicit enrichment and tax evasion’ (Knott, 1999). It has been estimated that real wages fell 78% from 1991 to 1997 and that 40% of the population suffers from chronic malnutrition, not mention increases in the incidence of serious infectious diseases and the sharp decline in male life expectancy, which has now dropped to below what it was at the end of the 19th century (Shenfield. Quoted in: Koretz, 1999). The calamitous plight of the Russian people has been likened to their suffering during the Second World War, during the Stalinist period of forced industrialization and collectivization, and in human terms has been said to resemble that experienced by the American people during the Great Depression’ (Shenfield. Quoted in: Koretz, 1999). No wonder that thousands of well-educated members of the middle class, which has ‘never ceased to see the state as an adversary’, are quitting Russia, anticipating at best ‘a future of solitude’, at worst ‘total darkness’ to descend on their country (Gessen, 1998). New Kremlin boss Vladimir Putin, fearing that Russia runs ‘the danger of lurching into a second-world and possibly third-world status’, is ominously calling for ‘a strengthening of supreme power’ (Spiegel, 2000), while Russian citizens retain ‘a fundamental lack of confidence’ (Economist, 2000) about the way their country’s economy is being run. No other nation in the world has the long-suffering patience of Russians in the mass: lashed by the knout of the Tsars, throttled under the notorious article 58 of the Soviet penal code, or brutalised today by the experience of capitalism in its crudest manifestation, Russians have a remarkable capacity to accept whatever fate flings in their faces. In a country where ‘change won’t change anything’ it is far too simplistic to describe Russians as in a state of collective culture shock. Theirs is an altogether more complex and disturbing reaction: it is their seeming immunity to any new shock. Russians may well be said to be under permanent culture shock.

5. South Africa: culture shock with vengeance In the 1980s economic, cultural, and sporting sanctions damaged the economy of South Africa and led to its virtual pariah status in the world community. Until the collapse of the apartheid system in 1994, the colour of one’s skin ‘was the most important determinant of a person’s chances in life’ (Economist 1999a). Everything favoured the white minority: even ‘otherwise unemployable whites’ were virtually guaranteed jobs in state enterprises (Economist, 1999b). But now that apartheid has been overthrown, South Africa, a multi-racial state of 43.8 million comprising 27 nationalities and 11 languages, faces ‘monstrous problems’ (Economist 1999c): crime, the spread of AIDS,

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widespread poverty, and unemployment, and the lack of an educationally inclined culture. The apartheid government burdened South Africa with a collection of state enterprises ‘on an almost Soviet scale’, but the twin aims to privatising and creating ‘black empowerment’ appear elusive (Economist, 1999b). Not that everyone believes that these two aims are isomorphic, including South Africa’s increasingly truculent trade unions, who see the country’s economic ills more in terms of government incompetence than a result of the apartheid system. Business people and entrepreneurs, especially those the government is keen to sponsor: namely the so-called ‘previously disadvantaged’ blacks, cannot look to the economy with much optimism. A major cause of underdevelopment in both the long and short term is the quality of education, which is ‘abysmal for blacks and declining for others’, whereby ‘majority-black schools are mismanaged and ridden with crime’ (Thompson, 1999). As for crime, South Africa has the highest incidence of rape in the world and the murder rate is nearly 10 times the USA. According to Thompson (1999) ‘half the population feels unsafe, and 83 percent think that the government has little or no control over crime.’ In short: ‘Colonialism and the horrors of apartheid’ have left behind ‘a tragic legacy: Racist thought …and … racist behavior’ (Thompson, 1999) Not surprisingly, there is a lack of an ethical framework for business, one indicator of which is a 67% increase in fraud between 1992 and 1998 (Van Zyl and Lazenby, 1999). The confusions, the sense of outrage and simmering injustice – whether experienced under the apartheid system or in the new openly multi-racial South Africa or both - are differentiably attributable to extremes of inequality connected with race, education, standard of living, and demography. The new South Africa has skewed the old extremes in even more complex and arguably even more explosive mixtures than in the days of apartheid. For many South Africans of whatever background theirs is a country poised on the brink of serious disorder, including possibly civil war. Until two years ago it could be said that a hall-mark of South African culture shock was that it was not just a reaction the collapse of the brutal apartheid regime, whereby people in the main felt that they were fleeing something morally sickening. It was culture shock mixed with a nightmarish apprehension of a backlash, which may or may not happen; but if it did, the government might not be able to control the rage hell-bent on settling old scores within single racial groups as well as among them. But, despite the acute problem of crime, the fear of a racially motivated backlash appears to have receded: one indicator of confidence is foreign direct investment supplied by major corporations such as Volkswagen, Daimler-Chrysler, Ford, Dow, and Hoechst (Investor’s Guide to South Africa, 1999; South Africa Business Guidebook, 1999). In the last two years the government has made considerable strides to deliver housing and basic services such as water, electricity and free medical help to the most deprived members of South African society. The Truth and Reconciliation Commission has been a major source of healing (Graham, 1999). Furthermore South Africa’s business leaders are upbeat about the country’s long-term prospects, taking advantage of one beneficial

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legacy of the past: the country’s international trade infrastructure – ‘excellent … in the context of the developing world’ (Moore, 1999) – and sophisticated financial markets. But the critical issue behind the general indicators of economic and social progress is whether the nation at large can create what Nelson Mandela (1998) called ‘a new morality’, without which interracial unity - and ultimately sustained nation-building and economic growth - cannot be achieved. Mandela (1998) was more than aware that disaffected groups, especially those able to influence political processes and the media, could exploit ‘the fear, uncertainty and anxiety of certain communities about the transition’. Another aspect of that was highlighted by Thabo Mbeki (1999) in his inaugural address as President in June 1999. He said: ‘The challenge remains for us all to get to know the real South Africa and, in this context, to fight back to defeat a frame of mind which drives some among us to hope and pray for failure and to celebrate such failure whenever it has occurred.’ The words of the two presidents give us a clue as to a key characteristic of the South African culture shock: a cross-racial defeatist streak, which could easily undermine the aspirations, efforts and achievements of those from all communities and walks of life who are working for a new society based on human dignity, non-racialism, rule of law and universal adult suffrage2; and those dedicated people know it. In short, the South African culture shock may be said to spring from a fissure between those in the country, regardless of racial affiliation or social background, who working for the new South Africa and those who are cynically against it, and possibly violently so.

6. Japan: the shock of falling back before becoming Number One In the 1980s ‘the Japanese economy had been the envy of the world and its financial markets the source of spectacular strength … Foreigners … flocked to Japan, where the firms were studied as models of efficiency and innovation, and their ideas of employee involvement, quality control, and design were copied around the world’ (Reid, 1999). But with the bursting of the so-called bubble economy in 1989, Japan ceased to fascinate and perturb the rest of the world. The once seemingly invincible colossus, likened by Seagrave (1999) to ‘a crippled supertanker …slowly coming to a halt’, had crashed, and as much anything through its inability or unwillingness to restrain its economic empire-building. Its business executives no longer bestrode world markets ‘like lords of the universe’ (Business Week, 1999); its massive trade surplus went into severe decline, and the economy embarked on a period of dramatic readjustment. Even so the Japanese economy is still the second most powerful on the planet after the USA. Japan is still the world’s biggest donor of aid to poor countries and is the biggest investor in Asian economies. The ‘old’ Japanese economy with its ‘unique design for fast growth that worked differently from established models of the Western political economy’ (Mroczkowski 2

Derived from the basic provisions of the constitution of the Republic of South Africa, 1996.

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and Hanaoka, 1998) had been structurally rigged to benefit producers more than consumers. It was a quasi-command economy in the sense that the Japanese government and agencies cosily guided the national economic effort in a system of ‘collusive rivalry’ (Johnson, 1982), between intensely competitive firms; in the sense that employers in the public and private sectors gave ‘jobs for the boys’; and in the sense that there was a powerful ideological motivation behind Japan’s nation-building activities, nmely – and literally - to outperform the rest of the world. But, exactly as in the old socialist economies, it was debatable whether being at the workplace was really synonymous with productive activity. It certainly looked that way during the Japan’s three glorious decades of ‘spectacular manufacturing growth of Japan’ (Dicken 1999), which the semi-collapse of the economy of 1989 so dramatically retarded. In the 1980s huge corporations abstained from getting rid of long-serving staff under the guise of ‘life-time employment.’ But, although it is generally agreed that lifetime employment has ceased, ‘in-house’ unemployment is still prevalent. Indeed the Economist Intelligence Unit (1998) estimated that this may be at least one million or 1.5% of the workforce. This is just one indication of how painful it is for Japan to switch to practices associated with free-market economies. The three great pillars of the Japanese management system have been seriously called into question: consensus-oriented decision-making, life-time employment, and promotion based on service rather than capability. If life-time employment has been largely abandoned, the other two pillars have not yet crumbled, but they surely will. The signs are there: new distribution structures are being forged; outsourcing based on competitive pricing not on ‘special relationships’ is on the increase; the long overdue deregulation of the financial sector is now a reality; and a new business mentality is in the making. Even so, most big Japanese firms, according to a recent despatch in The Economist (1999d) are ‘light years away’ from practices like promotion on merit, providing for childcare and maternity leave, The consequences are enormous and extend well beyond the economic sphere. First, as they make redundant more and more of the old-style generalists, the kaisha will cease to be psychological centre of the life of hundreds of thousands of Japanese men. This will give rise to male rootlessness on a scale never seen in the country’s history. Second, the demand inside companies for a new entrepreneurialism among employees is predicated on the infusion of young people with a desperately needed commodity, creativity; and creativity is the very thing that Japan’s ultra-conservative education system, with its emphasis on rote learning and conformity, will hardly be able to deliver. Third, the move to a market-economy system is creating thousands of business able to create niche markets ignored by the kaisha. Fourth, the biggest untapped source of business brain-power is becoming a force in the market-place: women, who like their well educated peers in other countries, want to be something more than decorative accessories to men. Fifth, the Japanese economy will increasingly open itself to foreign participation and specifically in the management of Japanese companies. The most dramatic example of the latter concerns the recent Nissan-Renault merger in October 1999.

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In the 1980s there was a great fear in Japan that the new generation – the shinjinrui – would spoil Japan’s glittering economic achievements because they had only experienced them as ‘mere’ beneficiaries. Ironically, it is, not to point too a fine a point on it, the reckless greed and deceptive sense of invincibility on the part of the old brigade running the government, the kaisha, and especially the banks, who ruined the 1990s for all the Japanese. The result is that Japan is now undergoing a quiet revolution, which will go to the core of Japanese values. Is there really a place in Japan for behaviours and attitudes which, collectively unchecked, led to the banking collapse of 1927-29, the folly of the Pacific War, and the partial wrecking of the Japanese economy in 1989? Shortly after the partial implosion of the Japanese economy, the Far East Editor of The Economist observed that Japanese banks are ‘profoundly conservative institutions locked into rigid business relationships,, and he added that they ‘smack of a former, more authoritarian era’ (Wood, 1992). Nearly a decade on, despite collapses, near-collapses and mergers, the Japanese banking system still appears not to dramatically shrugged off its old ways. How can we characterise Japanese culture shock? A key feature is disillusionment with the prevailing post-war system, which was run for the benefit of big corporations rather than people in general, and which has led to ‘accumulated unhappiness’ (Economist, 1999d) among thousands of executives. Whereas the traditional way to remedy problems in Japan is simply to work harder or bury one’s head in the sand, neither course is an option today. With youth employment running at 10%, double the national average, and with a huge and increasing number of ever-older pensioners to look after, Japan needs more and more people able to think and act independently. In other words, the new conditions are forcing on the Japanese a greater need to ‘reject the herd instinct’ (Economist 1999e), and breaking with conformity goes against the grain of Japanese history and culture. Thus, it is no exaggeration to say that Japan’s collective culture shock is a complex struggle to understand what the purpose of Japan is. ‘Japan’s “big bang” of financial reforms begun in 1998 with the promise of “free, fair and global markets’, but has not lived up to the rhetoric (Economist, 2000c).

7. Similarities, but also differences in the adjustment process At the outset of this contribution we suggested that the manifestation termed ‘collective culture shock’ can be analysed in relation to four tendencies which directly affect the utilisation of knowledge and resources available to a country: integration, assimilation, separation, and marginalisation. To a greater or lesser extent all countries display these tendencies and the interplay among them is both changing and complex. This conviction is borne out by the experiences of the countries specifically highlighted above. In so far as all the countries are in transition to the market economy as stated policy aims of their governments, the countries are in various stages of remove from integration, which we termed ‘the superior strategy.’ In our sample only Japan has a history of demonstrating integration, but ironically it has shown a tendency to marginalisation, too. This refers to the Japanese propensity to marginalise its resources into complex structures – the keiretsu being the outstanding example – and other forms of preferential inter-organisational relationships whereby the structure is sustained as long as sufficient money is pumped into it. This means that

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Japan must employ unusual strategies at government and firm level to facilitate the assimilation of practices which are incompatible with, or represent a direct threat to, consensus-oriented decision-making, life-time employment, and promotion based on service rather than capability. Thus Japanese-style marginalisation is remarkably different from the nature of marginalisation in Russia or South Africa, which is based historically on ideologically (racialistically) motivated separation. In the case of the Central European countries, but not Russia, the collective culture shock arises from an underestimation of the complexities and long-term nature of the assimilation to EU institutions: deep loathing of the discredited communist system and a widely held belief in democracy (ie multiparty governance) have not been sufficient accelerators of adjustment. As we noted, the EU also underestimated the scale of the problem.

8. Traditional management principles are not valid in rapidly changing societies At the individual level culture shock is, of course, a personal experience. At the societal level collective culture shock tends to be represented or thought of in economic terms. This is logical because it is possible to obtain and analyse vast amounts of historical economic data about all the countries we have considered. Yet the admittedly brief information we have presented in this contribution strongly suggests that we have to take account of complex social and psychological motivations which inform the economic data but are not necessarily deducible from them. In other words, economic data on collective culture shock without adequate social and psychological underpinning can only provide an overly simplified or at best partial account of the progress through the transition. What are the policy implications of our findings and discussion? First, we present implications on the premise that there can be in any society complex counter-currents towards the repair of national economies. For example, Japan’s dithering post-bubble economic and fiscal policy has been subjected to considerable criticism in and outside the country. The Japanese government has shown great reluctance to tackle one of the country’s plagues: its banks, which are still largely protected by the ruling Liberal Democratic Party, which almost specialise in unprofitable business and have yet to grasp what the ‘new talk about shareholder value and customer focus really means for how they are run’ (Economist, 1999f). Russia, for its part, is resorting to anti-Western postures, the result of which is more likely to be less FDI and continued Russian marginalisation from the mainstream world economy. But, against all that, we hold that the concept of collective culture shock – making use of the four key factors, integration, assimilation, separation, and marginalisation – can help investors and policy makers to: a) distinguish how two seemingly fairly similar countries – say, Hungary and the Czech Republic – differ in their experience of, and reaction to, the movement toward the market economy and eventual membership of the EU;

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b) base their investment criteria or development aid programmes on economic trends and associated societal tendencies which normally fall outside strictly economic evaluations; c) discern where investment – especially from governments both in-country and external – needs to be directed to mitigate the particularly negative societal effects of, say, marginalisation in a given country (marginalisation has massive consequences for access to education or health-care, for example). d) gain practical insight into handling a major societal issue in countries experiencing radical economic change: namely how to readjust to, and work with, the learning capability of institutions Policy amelioration in these areas would, we believe, lead to better investment decisions and help to ensure that investments flow into sectors of society where it is most needed to facilitate the longer term economic health of countries and greater prosperity for their peoples. For investors and policy-makers there is, we believe, a very strong case for understanding and applying the concept of collective culture shock, which can usefully highlight why one country’s path to the free market economy is more straightforward than another, but also more complex owing to the make-up of economic, social and political forces specific to each situation. We hope to have demonstrated that the phenomenon of collective culture shock is an important conceptual tool for understanding change – or rather resistance to change – in transitional economies.

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Bisher erschienene IEF Working Papers 1 2 3 4

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Gerhard Fink, A Schedule of Hope for the New Europe, Oktober 1993. Gerhard Fink, Jutta Gumpold, Österreichische Beihilfen im europäischen Wirtschaftsraum (EWR), Oktober 1993. Gerhard Fink, Microeconomic Issues of Integration, November 1993. Fritz Breuss, Herausforderungen für die österreichische Wirtschaftspolitik und die Sozialpartnerschaft in der Wirtschafts- und Währungsunion, November 1993. Gerhard Fink, Alexander Petsche, Central European Economic Policy Issues, July 1994. Gerhard Fink, Alexander Petsche, Antidumping in Österreich vor und nach der Ostöffnung, November 1994. Fritz Breuss, Karl Steininger, Reducing the Greenhouse Effect in Austria: A General Equilibrium Evaluation of CO2-Policy-Options, March 1995. Franz-Lothar Altmann, Wladimir Andreff, Gerhard Fink, Future Expansion of the European Union in Central Europe, April 1995. Gabriele Tondl, Can EU's Cohesion Policy Achieve Convergence?, April 1995. Jutta Gumpold, Nationale bzw. gesamtwirtschaftliche Effekte von Beihilfen - insbesondere Exportbeihilfen, April 1995. Gerhard Fink, Martin Oppitz, Kostensenkungspotentiale der Wiener Wirtschaft - Skalenerträge und Kostendruck, August 1995. Alexander Petsche, Die Verfassung Ungarns im Lichte eines EU-Beitritts, September 1995. Michael Sikora, Die Europäische Union im Internet, September 1995. Fritz Breuss, Jean Tesche, A General Equilibrium Analysis of East-West Migration: The Case of Austria-Hungary, January 1996. Alexander Petsche, Integrationsentwicklung und Europaabkommen EU Ungarn, Juli 1996. Jutta Gumpold, Die Ausfuhrförderung in der EU, Juni 1996. Jutta Gumpold, Internationale Rahmenregelungen zur Ausfuhrförderung, Juni 1996. Fritz Breuss, Austria's Approach towards the European Union, April 1996. Gabriele Tondl, Neue Impulse für die österreichische Regionalpolitik durch die EU-Strukturfonds, Mai 1996. Griller, Droutsas, Falkner, Forgó, Klatzer, Mayer, Nentwich, Regierungskonferenz 1996: Ausgangspositionen, Juni 1996. Stefan Griller, Ein Staat ohne Volk? Zur Zukunft der Europäischen Union, Oktober 1996. Michael Sikora, Der „EU-Info-Broker“ – ein datenbankgestütztes Europainformationssystem im World Wide Web über die KMUFörderprogramme der Europäischen Kommission, November 1996. Katrin Forgó, Differenzierte Integration, November 1996.

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Alexander Petsche, Die Kosten eines Beitritts Ungarns zur Europäischen Union, Januar 1997. Stefan Griller, Dimitri Droutsas, Gerda Falkner, Katrin Forgó, Michael Nentwich, Regierungskonferenz 1996: Der Vertragsentwurf der irischen Präsidentschaft, Januar 1997. Dimitri Droutsas, Die Gemeinsame Außen- und Sicherheitspolitik der Europäischen Union. Unter besonderer Berücksichtigung der Neutralität Österreichs, Juli 1997. Griller, Droutsas, Falkner, Forgó, Nentwich, Regierungskonferenz 1996: Der Vertrag von Amsterdam in der Fassung des Gipfels vom Juni 1997, Juli 1997. Michael Nentwich, Gerda Falkner, The Treaty of Amsterdam. Towards a New Institutional Balance, September 1997. Fritz Breuss, Sustainability of the Fiscal Criteria in Stage III of the EMU, August 1998. Gabriele Tondl, What determined the uneven growth of Europe´s Southern regions? An empirical study with panel data, März 1999. Gerhard Fink, New Protectionism in Central Europe - Exchange Rate Adjustment, Customs Tariffs and Non-Tariff Measures, Mai 1999. Gerhard Fink, Peter Haiss, Central European Financial Markets from an EU Perspective. Review of the Commission (1998) Progress Report on Enlargement, Juni 1999. Fritz Breuss, Costs and Benefits of EU Enlargement in Model Simulations, Juni 1999. Gerhard Fink, Peter R. Haiss, Central European Financial Markets from an EU Perspective. Theoretical aspects and statitical analyses, August 1999. Fritz Breuss, Mikulas Luptacik, Bernhard Mahlberg, How far away are the CEECs from the EU economic standards? A Data Envelopement Analysis of the economic performance of the CEECs, Oktober 2000. Katrin Forgó, Die Internationale Energieagentur. Grundlagen und aktuelle Fragen, Dezember 2000 Harald Badinger, The Demand for International Reserves in the Eurosystem, Implications of the Changeover to the Third Stage of EMU, Dezember 2000. Harald Badinger, Fritz Breuss, Bernhard Mahlberg, Welfare Implications of the EU’s Common Organsiation of the Market in Bananas for EU Member States, April 2001 Fritz Breuss, WTO Dispute Settlement from an Economic Perspective – More Failure than Success, Oktober 2001 Harald Badinger, Growth Effects of Economic Integration – The Case of the EU Member States (1950-2000), Dezember 2001

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Gerhard Fink, Wolfgang Koller, Die Kreditwürdigkeit von Unternehmen im Hinblick auf die Wirtschafts- und Währungsunion – Wien im österreichischen Vergleich, Jänner 2002 Harald Badinger, Gabriele Tondl, Trade, Human Capital and Innovation: The Engines of European Regional Growth in the 1990s, Jänner 2002 David Blum, Klaus Federmair, Gerhard Fink, Peter Haiss, The Financialreal Sector Nexus: Theory and Empirical Evidence, Oktober 2002. Harald Badinger, Barbara Dutzler, Excess Reserves in the Eurosystem: An Economic and Legal Analysis, September 2002. Gerhard Fink, Nigel Holden, Collective Culture Shock: Constrastive Reactions to Radical Systemic Change, Oktober 2002. Harald Badinger, Fritz Breuss, Do small countries of a trade bloc gain more of its enlargement? An empirical test of the Casella effect for the case of the European Community, Oktober 2002. Harald Badinger, Werner Müller, Gabriele Tondl, Regional convergence in the European Union (1985-1999). A spatial dynamic panel analysis, October 2002.

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Bisher erschienene Bände der Schriftenreihe des Forschungsinstituts für Europafragen 1

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(Zu beziehen über den Buchhandel) Österreichisches Wirtschaftsrecht und das Recht der EG. Hrsg von Karl Kori-nek/Heinz Peter Rill. Wien 1990, Verlag Orac. XXIV und 416 Seiten. (öS 1.290,-) Österreichisches Arbeitsrecht und das Recht der EG. Hrsg von Ulrich Rung-galdier. Wien 1990, Verlag Orac. XIII und 492 Seiten. (öS 1.290,-) Europäische Integration aus österreichischer Sicht. Wirtschafts-, sozial und rechtswissenschaftliche Aspekte. Hrsg von Stefan Griller/Eva Lavric/Reinhard Neck. Wien 1991, Verlag Orac. XXIX und 477 Seiten. (öS 796,-) Europäischer Binnenmarkt und österreichisches Wirtschaftsverwaltungsrecht. Hrsg von Heinz Peter Rill/Stefan Griller. Wien 1991, Verlag Orac. XXIX und 455 Seiten. (öS 760,-) Binnenmarkteffekte. Stand und Defizite der österreichischen Integrationsfor-schung. Von Stefan Griller/Alexander Egger/Martina Huber/Gabriele Tondl. Wien 1991, Verlag Orac. XXII und 477 Seiten. (öS 796,-) Nationale Vermarktungsregelungen und freier Warenverkehr. Untersuchung der Art. 30, 36 EWG-Vertrag mit einem Vergleich zu den Art. 13, 20 Freihandelsabkommen EWG - Österreich. Von Florian Gibitz. Wien 1991, Verlag Orac. XIV und 333 Seiten. (öS 550,-) Banken im Binnenmarkt. Hrsg von Stefan Griller. Wien 1992, Service Fach-verlag. XLII und 1634 Seiten. (öS 1.680,-) Auf dem Weg zur europäischen Wirtschafts- und Währungsunion? Das Für und Wider der Vereinbarungen von Maastricht. Hrsg von Stefan Griller. Wien 1993, Service Fachverlag. XVII und 269 Seiten. (öS 440,-) Die Kulturpolitik der EG. Welche Spielräume bleiben für die nationale, insbe-sondere die österreichische Kulturpolitik? Von Stefan Griller. Wien 1995, Service Fachverlag. Das Lebensmittelrecht der Europäischen Union. Entstehung, Rechtsprechung, Sekundärrecht, nationale Handlungsspielräume. Von Michael Nentwich. Wien 1994, Service Fachverlag. XII und 403 Seiten. (öS 593,-) Privatrechtsverhältnisse und EU-Recht. Die horizontale Wirkung nicht umge-setzten EU-Rechts. Von Andreas Zahradnik. Wien 1995, Service Fachverlag. (öS 345,-) The World Economy after the Uruguay Round. Hrsg von Fritz Breuss. Wien 1995, Service Fachverlag. XVII und 415 Seiten. (öS 540,-)

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European Union: Democratic Perspectives after 1996. Von Gerda Falkner/ Michael Nentwich. Wien 1995, Service Fachverlag. XII und 153 Seiten. (öS 385,-) Rechtsfragen der Wirtschafts- und Währungsunion. Hrsg von Heinz Peter Rill und Stefan Griller. Wien 1997, Springer Verlag Wien/New York, 197 Seiten. The Treaty of Amsterdam – Facts Analysis, Prospects. Von Stefan Griller, Dimitri P. Droutsas, Gerda Falkner, Katrin Forgó, Michael Nentwich. Wien 2000, Springer Verlag Wien/New York, 643 Seiten. Europäisches Umweltzeichen und Welthandel. Grundlagen, Entscheidungsprozesse, rechtliche Fragen. Von Katrin Forgó. Wien 1999, Springer Verlag Wien/New York 1999, 312 Seiten. Interkulturelles Management. Österreichische Perspektiven. Hrsg von Gerhard Fink und Sylvia Meierewert. Wien 2001, Springer Verlag Wien/New York, 346 Seiten. Staatshaftung wegen Gemeinschaftsrechtsverletzung: Anspruchsgrundlage und materielle Voraussetzungen. Zugleich ein Beitrag zur Gemeinschaftshaftung, Birgit Schoißwohl, Springer Verlag Wien / New York 2002, 512 Seiten. The Bananana Dispute: A Comprehensive Legal Analysis supplemented by an Economic Analysis of Welfare Effects. Von Fritz Breuss, Stefan Griller, Erich Vranes (Hrsg.), ca 300 Seiten (erscheint demnächst, 2002). External Economic Relations and Foreign Policy in the European Union, Stefan Griller und Birgit Weidel. Wien 2002, Springer Verlag Wien/New York, 500 Seiten.

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