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The EU shoulders a big part of the blame for possible failure. It should have recognized Greece’s weaknesses from day one and either not allowed it to join the EU, or taken measures to educate Greece in the European mentality.The Associated Press

Much has been written in strategy journals about culture and strategy, with some research suggesting that culture trumps strategy. For example, many mergers fail to create value for shareholders not because of bad strategies, but rather because of incompatible cultures and cultural differences. Differences in culture, defined as the blend of philosophy, values, mission, and interpersonal and business-related behaviours, causes friction that impedes decision-making, hampers the operation of the combined organization and makes blending the two cultures difficult. This brings me to the European project, called the European Union.

Companies are a microcosm of countries. Culture to a company and a country is what personality, character and temperament are to an individual. The European project is faltering not because of lack of strategy, but mainly because of a misunderstanding of cultural differences – even though an argument can be (and has been) made that there is not much strategy either when countries are invited to join a monetary union without an accompanying fiscal union.

The EU shoulders a big part of the blame for possible failure. It should have recognized Greece's weaknesses from day one and either not allowed it to join the EU, or taken measures to educate Greece in the European mentality. But the EU did not do this. In fact, it facilitated corruption and inefficiencies in government and the public sector, exacerbating Greece's weaknesses. Those mistakes may now force Greece to exit the EU and the euro zone, with a lot of collateral damage.

The culture of a country with a long history such as Greece cannot be changed to become like Germany's overnight. It takes time. To illustrate the folly of attempting something like this, consider what is happening with U.S. policy in the Middle East – it has backfired. The U.S. tried to introduce American values and its version of democracy to old, inflexible, cultures that it did not understand.

Joe Tye, CEO of Values Coach Inc., writes of "the futility of sending a modern high-tech army to fight in a country that has a culture where people are willing to blow themselves up to kill their enemies and where their time horizon for the conflict is not measured in years but in generations. In such a war, culture will always devour strategy."

The same principle applies in the case of Greece. Culture has provided resilience for Greece in tough times – 400 years of Ottoman rule, Nazi German occupation, and so on. Through it all, Greeks kept their culture, which shielded them against the many turbulent times throughout their history. This very same culture is now preventing it from integrating fully within Europe. Trying to force on Greeks the European way of thinking in a short time period has not worked and will not work.

The European Union must understand that cultural problems cannot be fixed with strategic solutions. When the two clash, culture will prevail.

As former IBM chairman Lou Gerstner wrote in his book Who Says Elephants Can't Dance: "Culture isn't just one aspect of the game, it is the game."

George Athanassakos (gathanassakos@ivey.uwo.ca) is a professor of finance and holds the Ben Graham Chair in Value Investing at the Ivey Business School, Western University. He is also the director of the Ben Graham Centre for Value Investing (www.bengrahaminvesting.ca).

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