Business update: Comparing US and EU business cultures

How similar are the US’s and The EU’s Business Cultures in 2021? Let’s find out

There are currently a plethora of similarities between the business culture found in the EU and in the US

Indubitably, business owners and aspiring entrepreneurs can learn a lot from the varying ways that these two colossals conduct and organise their economies and business activities. Having said that, there are (of course) a variety of differences that analysts have recently revealed.

Let’s take a look at some of the most significant comparisons between the two entities.

Financing a Business Endeavour

Finding adequate financing so as to initiate a business project is arguably handled much more ‘’responsibly’’ within the EU. This is because, in the U.S., businesses tend to finance their initial costs by uptaking prolific debt and loans from private banks and other financiers, whereas this is seldom seen in most thriving EU member states.

Contrarily, entrepreneurs within the EU generally adopt  a ‘’dual strategy’’ mechanism that incorporates both: a) equity distribution, and b) individual-funding. This allows them to rely on family and friends initially, whilst maintaining the ability to rely on external investment in the future if they see an adequate degree of growth and prosperity- decreasing their overall risk.

Having said that, U.S startups generally thrive in comparison to their UK counterparts, as they generally find it a lot easier to find prolific sources of financing and funding that- albeit increasing their risk significantly, allows them to expand faster and more adequately.

Wages & Salaries

The United States indubitably takes the cake in this area, as the country’s salary structure is indubitably a lot higher.

For example, the average annual salary in the U.S is approximately $53,490, in the U.K (after currency conversions) this is approximately $35,000.

Whilst this may not seem like a significant gap, when considering the significant income-tax disparities that exist between the countries the U.S seems to unequivocally be in a more favourable place. In the U.S, the top income tax brackets pay approximately 35% of their annual salary (if they are making more than $398,000 per annum), whereas in the U.K individuals making more than £42,000 pounds a year are subject to a 40% income tax rate).

This means that, on average, U.S workers are not only making significantly more money, but they also lose a lot less to taxes.

The EU and the U.S also differ significantly in relation to their internal business structures. 

European businesses, for example, can (and usually do) have a plethora of different owners, and the Chief Executive of a Corporation will commonly be a part-owner. In the U.S, this is seldom the case. 

Recent reports show that ownership and power at a business level tends to aggregate towards a few individuals in the U.S, and- if it spreads out, it is done so in an aggressive way (where a minority ‘’forces’’ a majority shareholdership). 

Diversity and differences in business culture

As the United States size differs greatly to that of most EU member states, it tends to be quite more diverse- encapsulating a variety of different cultures and languages. Obviously, this changes when comparing the EU as a whole to the U.S, which is made up of 27 distinct countries- all with different cultures and histories. 

When it comes to business, however, there are a few notable similarities in EU and U.S culture. This is particularly the case when considering the general ‘’work ethic’’ and philosophy that is adopted in most transnational and large-scale corporations in both entities. 

Having said that, Europe is composed of a plethora of different countries, and this means that its general set of values, corporate ethos, and business ethics can vary significantly depending on the country in question. Even within European countries (like the U.K), for example, such cultures can differ significantly depending on the region or county in focus.

Final thoughts

So, we have delineated the most significant similarities and differences between the EU and the US’s business culture. 

It should be noted, however, that both entities share non-economic similarities and differences as well, particularly when considering their shared cultural values and ethics, as well as their shared influence on a global level.

We hope you enjoyed reading.