AylorBonnie_Unit9a1_FinalProject_CaseStudy.docx

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Siemens AG acquires Dresser-Rand: A Study of
Contingency Leadership Models in Change
Management Ease of Transition
THESIS · JUNE 2015
DOI: 10.13140/RG.2.1.2403.4400
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Bonnie Renee Aylor
Capella University
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Siemens AG acquires Dresser-Rand:
A Study of Contingency Leadership Models in Change Management Ease of Transition
By: Bonnie Aylor / 2030815
For: BMGT8610 / Spring 2015 / Unit9a1 / Dr Toni Greif

Siemens AG Acquires Dresser-Rand Sunday, June 14, 2015 1 of 32
Abstract
Recently Siemen's AG announced plans to acquire a merger with Dresser Rand. Both
companies work in the engineering and gas, oil and energy sectors. Siemen's specializes in
technological innovations while Dresser-Rand specializes in rotary equipment and after-market
products that are used in all of the company’s designs. Dress-Rand will benefit through the
merger by taking advantage of Siemen's capability to take risk and allow stocks to drop, then
increase above levels prior to the risk taking action. Siemens will benefit from the ability to
utilize Dresser-Rand's cost savings advantage with aftermarket products, and a new way to
innovate energy products with the use of Dresser-Rand's rotary equipment. The companies are
looking at a quick transition period during which it is integral to the success of the merger so
production is not interrupted and leadership styles are able to cohere as a single unit. Siemen's
has an opportunity to administer the transition through a path-goal dominant leadership style
using the recent promise of energy development provisions within an underdeveloped region of
Egypt at the EEDC. This case study will seek out methods for integrating Dresser-Rand’s
management style into Siemen's current use of contingency theories to create action potentials
that will increase the level of ease for transition.

Table of Contents
Abstract............................................................................................................................................1
Introduction......................................................................................................................................3
Company Overview .........................................................................................................................5
Contingency Model .....................................................................................................................6
Current Situation..............................................................................................................................8
Incentives for Acquisition ...........................................................................................................9
Closing the Acquisition .............................................................................................................11
Specific Problem or Problems .......................................................................................................12
Siemen's Historical Change Agents Program............................................................................13
Leadership Failure.................................................................................................................14
New Program.............................................................................................................................15
Current Needs............................................................................................................................16
Culture at Siemens.........................................................................................................................17
Organizational Culture Across Regions - USA & Germany.....................................................20
Suggestions for Moving Forward - Integration .........................................................................21
Action Alternatives........................................................................................................................21
Knowledge Integration ..............................................................................................................22
Cultural Assimilation.................................................................................................................23
Conclusion .....................................................................................................................................25
Reference .......................................................................................................................................27

Introduction
A March, 2007 news report announced the confession of officials working at Siemen’s
AG, as members of an Argentine Bribery Scam that was hosted through the same company
(Calgary, 2007). Shortly after, CEO Klaus Klienfielder stepped down from his position and a
new CEO was appointed – Peter Loescher (Webb, 2013). Siemen’s AG lost profits as a result of
these challenges and operations took a downfall under Loescher (Webb, 2013). Loescher was
unable to recover losses from the scandal and created even more losses over his six year term,
calling for the need to begin searching for a CEO replacement in July of 2013 (Webb, 2013).
The new CEO took office in August of 2013 – Joe Keaser (Siemen’s, 2015). Kaeser was already
the chairman of the finance committee (Webb, 2013) and came into office with a specific agenda
in mind (Larson, 2014). Many of Kaeser’s activities emulate the constructs of the leadership
contingency model, which is a model that is also represented throughout the operations of the
entire establishment of Siemens AG.
Siemens AG is an engineering firm that specializes in energy, mobility and computerized
products (Siemens, 2015). The company holds headquarters in Germany with regional
headquarters all over the globe (Siemen’s, 2015). Aside from just providing engineered capital
products, Siemen’s project procurement team tends to obtain contracts in developing areas where
designs pertain to a social goal, however the true purpose of the designs belongs purely to the
general workings of the firm (Siemens, 2015). With Siemen’s engineering teams’ short project
style of operations, underwritten by the procurement team’s constant ability to create new case
issues, the company appears to be an indulgent source of leadership case research. The

individual project cases help to create examples of how the contingency model in operation at
Siemen’s AG works, including the individual aspects of the leadership model.
The contingency model is well known as the model that requires leaders to consider the
contextual factors of the leadership environment in determining the direction of organizational
management conditions (Fiedler, 1971). According the Fiedler (1971), the contingency model
entails three leadership contexts – relational context, power context, and the task structure
context. These situations are flexible determinant on the amount of stress in the work
environment, and the perceptions that followers have of the leader (Fiedler, 1971). DeRue &
Ashford (2010) posit that the relationship between the leader and the follower consists of one
member of the relationship claiming their position, while the other member has to grant that
claim. In a study by Bryman (1996), it was found that among a group of officers – when the
leader closely matched the follower’s perception of a leader then the followers were more willing
to accept the leader’s style as effective. Furthermore, top leadership officials felt the same way
regarding the relationship of lower leadership to regular employees (Bryman, 1996). Miller et al
(2004) determined that followers who express the contingency model of followership produce
the same contextual elements as leaders do. However, Miller et al (2004) find an exception in
followers since in low stress situations followers tend to lean towards a more relationship
dominant model rather than the task structure illustrated by leaders. This case study will explore
the expression of the contingency model at Siemen’s AG by studying the transition of leadership
into the governance of CEO Joe Kaeser and his resultant plans to transform the vision of the
corporation, taking on the acquisition of Dresser-Rand, and agreeing to the provision of electrical
construction in Egypt at Beni Suif (Larson, 2014) during the Egypt Energy Development

Conference (EEDC). The study will evaluate the viability of Keaser’s tactics and suggest any
actions that can be taken to ease the transition utilizing the contingency model framework.
Company Overview
The case begins at the onset of Joe Keaser’s transition into his CEO position at Siemen’s
AG. Siemens AG has been around since 1847, with personnel providing services to clients all
over the world - including Europe, Asia, South and Central America, Africa and North America
(Siemens, 2015). The case appears to begin in October of 2014 when leaders running business at
American owned Dresser-Rand decide to sell-out into a merger with Siemens AG (Economist,
2013). However, consensus among researchers finds that when leaders are working with the
contingency model, leaders will strategize during periods of high stress (Dunphy & Stace, 1988;
Dunphy & Stace, 1993; Fiedler, 1971) in such a way that mergers, acquisitions (Mandipour,
2012), and restructuring becomes imperative (Dazin & Van De Van, 1985; Pennings, 1975).
The acquisition only exemplifies Keaser’s vision for the company, as evidenced by the fact that
employees of Dresser-Rand specialize in the design and manufacture of rotating equipment and
aftermarkets products (Dresser-Rand, 2014), a perfect complement to Siemens structural change
to a focus on becoming “electrified” (Economist, para 1, 2015). While Dresser-Rand’s products
are slightly different from Siemens, they make the perfect addition to Siemens oil and gas
industry products, and Siemens executives hope that the Dresser-Rand leadership team will be
able to take over that sector of the company (Dresser-Rand, 2014). Mysteriously, this
acquisition does not come as a single project of its own rite, however is can be said that this
strategy conveys perfectly with the contingency model - capturing many of the multitudinous
versions thereof.

Other projects at Siemen’s coincide wonderfully with the Dresser-Rand acquisition to
round out the model of contingency within Keaser’s visionary plan. Between March 13 through
15 of 2015, Siemens leadership team attended the Egypt Economic Development Conference
(EECD) in Sharm El-Shiek, along with employees from the company's industry competitor - GE.
Representatives from both companies made promises to engage in the development of energy
products inside of some of the lower developed regions of Egypt - specifically Beni Suif, on
behalf of the commitment of Siemens representatives (Larson, 2015). At the same time, March
15, Willi Miexner was appointed CEO of the power and gas segment of Siemen's AG (Siemens,
Press, 2015). During the meeting, GE’s leadership team promised to include wind turbines in
their portfolio of energy developments along the region. Siemen's CEO of the wind powers and
renewables divisions, Markus Tacke, commented about his grievance regarding the competition
(Larson, 2015). Not only do Dresser-Rand engineers specialize in rotary equipment and
aftermarket products, they also specialize in wind energy solutions (Dresser-Rand, 2015) -
indicating a close fit for this particular project. These are all clear examples of the contingency
model in practice.
Contingency Model
The contingency models works like architecture during times of high stress. One
interesting aspect of the contingency model is the ability for leaders to connect small pieces of a
structural program to many different particulars of the program so that it sinks into the entire
structure (Mandanipour, 2012). Drazin & Van de Van (1985) determined that during times of
stress, contingency theory encourages leaders to look at all the small parts, cross compare, and
find similarities so that the similarities can be combined. According to Mandanipour’s (2012)
model, leaders will make a goal and then set a different task that will be used to accomplish that
goal – to each A requires the accomplishment of B. The agreement at EEDC was made five

months after Kaeser’s decision to finally acquire Dresser-Rand. This is a clear image of the
connectivity factor of the contingency model. Like architecture, the contingency model builds
upon itself into an almost artistically designed program of organizational change.
Another aspect of the stress-reduction mode of the contingency model is the tendency to
fall into the task structure of management (Fiedler, 1971). Pennings (1975) states that this task
structure allows the leader to derive order out of the situation. Van de Van (1985) further imply
that this task structure invites a little bit more than just structural change – it also invites tasks of
monitoring, fiscal analysis, cross comparisons of departments, and solicitation of employee
input. With the acquisition of all of this data bringing about the topic of knowledge
management, Beccara-Fernendez & Saberhwal (2001) suggest that the task structure of the
contingency model of knowledge management requires the attainment of more knowledge
derived from external rather than internal entities - when such task structure has to do with
broad, content focused knowledge management during times of crisis. To be more precise, these
tasks involve activities of organizing information into libraries, creating best practices, and
communicating particular learning experiences (Baccara-Fernandez & Saberwhal, 2001) from
sources outside of the company. These specific tasks fall closely in line with Keaser’s goal of
restructuring into automation and a technological infrastructure, and will be suited to an
acquisition of Dresser-Rand due to the similarity of the industry mixed with the technological
variation of the information that will be acquired. Therefore, the current priorities at the firm
connote a definite indication of the attempt towards a task-structure orientation by Siemen’s
leadership personnel.

Current Situation
Siemen’s is already displaying the conventional contingency style of leadership in the
way that they have enthusiastically displayed their thoughts about the new expertise that Dress-
Rand will be bringing into the firm. Browsing Siemen's Features website (2015), guests may
find an article about a record breaking electric rotating motor that is built from components of
previous motors that were optimized for use in this design. Dresser-Rand (2015) is a company
that specializes in rotary equipment and aftermarket parts - a remarkable similarity to the new
aircraft motor trophied on the front of Siemen's (2015) feature page. This can be explained by
one aspect of Beccara-Fernandez & Saberwhal’s (2001) model - the act of knowledge
management externalization, which is the visual or symbolic representation of what the newest
knowledge is perceived to mean. Then further represented by one aspect of Mandanipour’s
(2001) model that has to do with the institutional integration of relationships involved in change,
as displayed through technological and functional representation, or else through structural or
political inferences. This process further involves the act of making as many connections
between the two change agents as possible (Beccara-Fernandez & Saberwhal, 2001). Finally, in
Dunphy & Stace’s (1988) contingency model of organizational change, the authors noted that
rapid change derived from an organizational fitness crisis that requires immediate action will
oftentimes involve technological breakthroughs and rapid changes in technology. It is becoming
apparent the increased level at which Siemen's (2015) is celebrating their merger acquisition of
Dresser-Rand.
One way to find out about the health of a firm, or even its amount of weakness to sell out
or acquire, is to review the activity of the company stock. Currently Dresser-Rand has a closing
stock at 86.87 points on the New York Stock Exchange (NYSE) (Dresser-Rand, 2015). This

leads to a positive 0.19 points over the previous rating, pulling the stock at a 0.230% upturn
(Dresser-Rand, 2015). The company has experienced continuous growth since 2010 with an
exchange rate of 42.59 points in 2010, increasing to an exchange rate of 81.50 points in 2014
(Dresser-Rand, 2014). Siemens is currently closing stock at 102.22 points, with a positive of
0.02 from the previous term and an upswing of 0.02% over the last closing rate (MSN, 2015).
The five-year span for Siemens sees some ups and downs, with an all-time low of 70.35 points
per share in the beginning and end of 2012 and an all-time high of 115.87 points in April of 2015
(MSN, 2015). While Dresser-Rand’s stock shows a constant steady growth, Siemen's stock
displays a tipsy tubby effect by which the stock constantly takes a downfall and then overcomes
so that the stock rate comes out further on top, displaying a larger dividend.
Incentives for Acquisition
Both Dresser-Rand and Siemen’s have incentives for the acquisition. For instance,
Dedman & Filatochev (2008) find that corporations with low ability to overcome risk have a
decreased chance of survival and have to lean on the external change environment in order to
maintain a continued existence. As mentioned in Husted’s (2000) Contingency Theory for
Corporate Social Performance, when a firm matches strategies and structures with market
performance they will experience economic growth, however the same factors must also match
up with social issues even though social issues sometimes differ from the market environment.
He then goes on to show four factors of contingent social governance – total agreement between
stakeholders, general disagreement between the facts, general disagreement between what is and
what ought to be, and a disagreement between the firm and its stakeholders (Husted, 2000).
When social issues do not line up with market conditions, disagreement between the firm and
stakeholders may exist even after the firm resolves ambiguities regarding the factual data and
any conflict between what is and what ought to be (Husted, 2000). This inability to make

agreements between firm and stakeholders may lead to the inability to imbue risk. Diamond
(2009) indicated the biggest issue that organizations have in preventing and overcoming crisis is
the inability of leaders and stakeholders to believe that the firm is strong enough to overcome
risk. Dresser-Rand’s incentive to sell out to Siemen’s has clear implications of future goals
towards risk management.
Siemen’s leadership team has their own incentives for undergoing the merger. Begin
with, Drazin & Van de Van (1985) demonstrate that during times of crisis, the contingency
model allots that leaders will do auditing of finances, expenses and regular operating costs and
cross compare with a running budget in order to minimize, consolidate, and restructure the
organization to fit into a newly idealized budget. This is supported when Dunphy & Stace
(1988) explain how capital intensive firms undergoing crisis may be experiencing an innovation
block due to cost structures and will engage in contingency restructuring practices, such as to
take on new ventures in order to overcome the cost setback and induce new technologies. Then
Husted (2000) notes that when there is a conflict between social issues and market processes,
firms will compensate by incorporating financial optimization practices in order to avoid conflict
between the stakeholders and the firm. To further this, Ju et al (2005) examine contingent
strategies for technology alliances, and find that corporations will converge by acquiring external
technological ventures in order to provide a cost structure conducive to greater amounts of
innovative competition. Finally, Siemen’s AG governance team has one other reason to cut
budgetary costs - in a special conference with Joe Kaeser, Ibrahim Mahlib, Egypt’s prime
minister, asked that Siemen’s management team reduce costs and stick to a specific budget when
implementing the electricity generation development program to be offered in Beni Suif (PM
Egypt, 2015). Siemen’s AG financial department can derive great benefit by allowing the new

technologies acquired by Dresser-Rand to work as a tool in improving budgetary costs related to
electrified innovations.
Closing the Acquisition
While both company leaders express eagerness towards the merger, the closing of the
merger is not expected to happen until Summer of 2015. Even so, Siemen's executive teams are
remaining rather active towards preparation for the merger. The company financial committee
agrees to pay a dividend each month until the merger closes in June, and the board of directors of
the company already withholds dividends to offer to a junior stock for the hybrid business of the
merger (Dresser-Rand, 2015). Siemen’s executives are experiencing a replacement of the
former power and gas division CEO with Willi Miexner (Siemens, Press, 2015). The
replacement of leadership personnel during crisis mitigation and restructuring processes has
remained a common theme throughout contingency model literature (Dedman & Filatotchev,
2008; Drazin & Van de Van, 1985; Dunphy & Stace, 1988). An explanation of these theories
can derive an appreciation for Kaeser in implementing the change.
One major aspect of the contingency model deals with the restructuring and convergence
of operations both internal as well as external to the firm. Drazin & Van de Van (1985) stated
that the firm will look at cross structural relations and the performance aspects of individual
departments to find congruencies in leadership style to departmental specialties - which may
entail the restructuring of departmental focus and the moving around of leadership personnel. As
exemplified by Dunphy & Stace (1988), during practices of reorganization leadership personnel
will be matched to positions displaying their optimal levels of capacity, which may entail a
changeover of leadership in specific areas of the firm. Furthermore, Dedman & Filatotchev
(2008) denoted that during industry reorganization, corporate governance boards will look to
optimize their presentation - which may include a changeover in leadership of specific areas of

the firm where department heads are required to exercise positions on the board. These theories
are exemplified when realizing that the gas and power division that Willie Miexner now operates
a CEO position for (Siemens, 2015) is a part of the company's energy sector - the business that
Siemen's is hoping to integrate fully out to Dresser-Rand during the closing of the acquisition,
and a major factor in the company’s reorganization plan. The transition into the merger with
Dresser-Rand accompanies some major leadership concerns.
Specific Problem or Problems
Any time there is a merger or acquisition, there are obstacles to overcome. In this
situation, Siemen's management teams are working to overcome the obstacles related to the new
reorganization of the firm, the transition into ownership of Dresser-Rand, and then any
challenges that may arise with managing a new platform for the fulfillment of their promise at
the EEDC for Egypt (Larson, 2015) as an immediate outcome of the new hybrid organization
being formed by the merger. Dresser-Rand representatives list a few of the immediately
perceived obstacles related to the ownership transition in a company newsletter providing a
summary of the same (Dreser-Rand, 2015). These obstacles include the risks associated with
differences in operating practices, differences in safety and monitoring practices, and
complications with the smooth running of the businesses during the transition process –
including side effects related to the interrelation of differing business cultures (Dresser-Rand,
2015). Many of these concerns are already a part of the natural progression of the contingency
model during periods of stress.
There are still a few other problems to consider during a corporate restructuring. One
such problem relates to the sayings of Becarra-Fernandez & Sabherwal (2001) that a major
concern of knowledge management is the ability to turn tacit knowledge into explicit knowledge

so that is can be shared with the rest of the firm. Dunphy & Stace (1988) also recognize that
contingency models for change management include collaborative methods of sharing broad
contextual knowledge – including developing the means such as through knowledge libraries and
facilitative technologies. Ju et al (2005) suggest that one major factor in the success of a
technology alliance is the ability to increase competitive advantage through the situational
specific modeling of alliance strategies, that is developed through shared knowledge. Drazin &
Van de Van (1985) say it well when they explain how organizations will study the cross
comparison of corporate departments and integrate monitoring, knowledge tracking, and
information sharing practices that fit well with the current situation. Kaeser has already planned
to integrate automation and technology into the major firm processes (Larson, 2014). Although
this is a step in the right direction, budgetary factors may also be a top concern throughout the
program’s implementation process – which coincides well with the common recognition that
new acquisition is a source of budgetary optimization within the framework of the contingency
model (Becarra-Fernandez & Saberwhal, 2001; Ju et al, 2015). The two companies must work
together throughout the transition in order to foster smooth administration of the new ownership.
Siemen's Historical Change Agents Program
Siemen’s leadership learn from past experience what works well within the firm for
development of leadership and employment skills. Siemen's leadership previously operated a
change management program during the company's merger from Siemen's Nixdorf into just
Siemen's AG (Dover, 2002). Through this program certain representatives from different
employment departments of Siemens Nixdorf are required to attend a workshop to prepare them
to be examples and leaders of knowledge as agents of change within their departments (Dover,
2002). These employees are trained in specific areas of leadership, knowledge about the
company, and knowledge about different characteristics specific to dealing with change, so that

they can be integral leaders of change within their specific departments (Dover, 2002).
However, due to some obscurities in who the leader is and what the change agent's position is
within the firm, the program is currently dissolved (Dover, 2002).
Leadership Failure
One of the major elements causing failure of the change agents program is that the
program administers a model pf path-goal leadership that is different from the firm’s individual
model of leadership. By following the leadership theories of House (1971) and Evans (1974)
researchers can recognize aspects of the path-goal style of leadership implemented through the
change agents program, and the way in which it effects the ability to induce change at Siemen’s.
In the particular situation with Siemens, change management is initiated by leadership personnel
through a requirement to join the training (House, 1971). These change leaders play the role of
mentors who have access to resources at the firm and positional advocacy between department
employees and higher level authorities (Evens, 1974). As they progress through the program,
they exercise their position within their departments and are then able to have trainers redirect
methods that are weak or failing (House 1971). This falls into perfect alignment with the path-
goal theory, which is unlike Siemen’s contingency model design.
The program’s conflict is present because the employees that are chosen to administer the
program in their departments are just regular employees, and their positional acuity within those
departments begin to diminish as they are required to lead the change (Evans, 1974). The entire
situation is a mismatch to Fiedler's (1971) contingency theory because as the ability to delineate
the program’s leader becomes obscure, change agents lose respect for executive leaders, creating
a break in the power relationship between leader and follower. One of Fiedler’s (1971) major
factors of leadership effectiveness is for followers to recognize the power relationship. It is
important to note that within the study of followership, researchers have found that when a leader

makes a claim of leadership, the followers must grant that claim for it to hold true (DeRue &
Ashford, 2010). However, follower’s ability to grant the claim of leadership becomes
diminished as they also begin to practice leadership skills among their peers and begin to wonder
about their positions in relation to those skills (DeRue & Ashford, 2010). This program
eventually transitions into a full affiliation of Siemen's AG, where change agents became
entrepreneurs for the firm and a new set of full time employees began to work as internal agents
of the firm (Dover, 2002). This serves as an indication of a true internal transformation into
leadership maturity for the original agents, but an inadequate leader-member relationship within
the firm.
New Program
When Siemen's dissolves the change agents program, training personnel begin to offer a
new form of leadership development that deals with change through one on one mentorship
programs and constant on-the-job exposure to change situations. The new program addresses
change through on-the-job experiences that are not expressed directly as change (Siemens,
Careers, 2015). The new program resolves leader-member relations issues by integrating the
leader-exchange theory explained by Graen & Ulh-Bien (1995) into the path-goal attainment
plans so that each developing leader has a mentor. According to a study by Miller et al (2004),
contingency model of followership entails the same factors as the contingency model of
leadership, except for one thing – in low stress situations followers prefer the relational style of
management over the task-structure style. Coupling the mentorship with the on-the-job training
aspect of the new leadership development program indicates attempts by company leaders to
develop new ways to compensate for differences between leaders and followers contingency
needs through integration of the mentorships. Although this mentored relationship emphasizes
the leader's goal reinforcement behaviors required by House’s (1971) theory, and may constitute

as an example of the clarity aspects required in Evan's (1974) path-goal attainment theory, it
further enhances the idea of respect required for ease of the leader's position in Fiedler's
contingency theory (1971). Siemen's new leader development system proves very valuable in
the development of leaders equipped for change within Siemen's global atmosphere.
Current Needs
In this transitory system, leaders need to analyze the differences between both firms in
order to discover a point of convergence and areas that may require change for the newly
designed firm to successfully combine. Leaders of both firms must look to the cultural concerns
across company borders in order to discover adequate ways to integrate social order, knowledge
management, and accuracy to perceived intelligence of either firm. According to a study
conducted by Bryman (1996), when employees perceptions of what a leader is closely match the
actual leadership style of company leaders, these employees have an increased perception
regarding the effectiveness of the firm. DeRue & Ashford (2010) also find that followers are
more willing to grant a leadership claim when the style of leadership more closely confers with
their own perceptions of what a leader should be. Their study further emphasizes that the
cultural aspects that define that leadership perception must be in line with the leadership style for
followers to be open to acceptance of it (DeRue & Ashford, 2010). In a study by Mulksyc &
Holt (2008) regarding contingency model of culture, it was found that although it is important to
align structural and business factors during corporate integration processes, it is also important to
ensure that specific cultural attributes of the employees are in line with the leadership style in
order for that leadership style to be effective within the organization (2008). Siemen’s AG will
need to determine different methods for aligning leadership styles, leadership preferences, and
employee cultural associations to the leadership styles at Siemen’s AG in order for the company
to exercise effective governance over both firms.

Culture at Siemens
In order to integrate leadership styles between the two firms, it is important to understand
the cultural differences between them. There are some clear pieces of evidence that lead to a
description of the Siemen's leadership culture, as well as some basic research outcomes for
German businesses in general. First of all, Siemen's current CEO, Joe Kaeser, has dealt with his
transition into leadership in a way that evidences a basic set of traits that indicate a clear
leadership style (Larson, 2014). The leadership style is more autocratic than democratic
(Dickson et al, 2002) because there is a clear hierarchy in relations at Siemens AG (Siemen's
2015). Keaser exercises a clear style of masculinity in that he remains separate from the rest of
the firm, is focused on monetary ideals, and clearly directs the group in which way to go -
offering them consequences for not following (Larson, 2014; Dickson et al, 2002; Gerber et al,
2011) (Larson, 2014; Dickson et al, 2002; Gerber et al, 2011). He also does not hesitate to
communicate his goals and what he means, even if this entails hiring on a new personnel to carry
out his objective (Larson, 2014; Dickson et al, 2002; Gerber et al, 2011). These are all clear
indicators of the task structure style of the contingency model as expressed by Fiedler (1971),
Drazin & Van de van (1985), and Dunphy & Stace (1988) in that Keaser is staying focused on
the data and implementing plans of action according to that data.
There are some similarities within the regular employee culture and Joe Keaser’s
individual cultural contribution, as well as in some areas where the leader-follower relationship
differentiates a little to a slightly more feminine style. This switch to the relational style is
represented through Miller et al’s (2004) model of contingency followership that states that the
follower will differentiate from the leader in low stress environments in such a way that the
follower will need a relational style rather than a task structure style of leadership – indicating

that a leader needs to induce a stressful situation in order for the follower to recognize the
leadership relationship. In this respect, it is important to first illustrate the power distance
structure at Siemen’s AG to decide the amount of stress that needs to occur.
There are sure signs of a power-distance style of leadership at Siemen’s AG. Siemen's
exercises a clear structure of power distance (Dickson et al, 2002) in that leadership employees
go through years of training before they are offered their final position, they sit on boards which
are separated according to the level of leadership and influence, and leaders are required to be
able to exercise mobility while followers are only expected to stay in one region for the duration
of their employment, unless changing positions (Siemen's, 2015). However, some of that power
distance is closed in (Dickenson et a, 2002) when considering such aspects of the leadership
atmosphere as the inclusion of a certain number of regular employment representatives required
to exercise a position on the management board (Siemens, 2015). The gap is even further filled
during leadership development while employees are entertained by individual mentors that hold
close affiliation with leaders throughout their training program (Siemen’s, 2015). These are clear
indicators of a power distance structure.
Another cultural aspect exercised at Siemen's AG is uncertainty avoidance. Uncertainty
avoidance is described by Dickenson et al (2002) as a culture in which employment is more
stable than flexible, the need for education is high, and the power structure is relatively high. At
Siemen's, leaders are required to have at least a Master's Degree, where there are two programs
for leadership depending on if a Master's degree has already been obtained or if the potential
future leader will be obtaining a Master Degree through Siemen's Master Degree education
program (Siemen's, 2015). On Siemen's website, management credentials are displayed for upper
level management personnel that clearly depict the requirement for higher education, as well as

the longevity of employment typically displayed by leadership personnel at the firm (Siemens,
2015). Furthermore, Keaser immediately came into office with an assortment of data previouly
collected in relation to the health of the firm and implemented a clear plan for the firm’s
direction regarding this data (Larson, 2014). Keaser exercises a power structure in regards to
this program by requiring the change or else engaging in merger to the larger firm (Economist,
2015), and through B and A goal attainment (Larson, 2015; Mandanipour, 2010). Regardless,
any engineering firm will require higher expertise and a clear plan of action. Siemen's clearly
displays the requirements that match an uncertainty avoidant culture.
Siemen's also exercises a mixed culture relating to collectivism and individualism. For
instance, the organization is split into different departments according to areas of expertise and
then teams complete projects based on cross departmental assortment, depending on the expected
outcomes of the projects (Siemens AG, 2015). Extenuating on this, Dickensen et al (2002) and
Geber et al (2011) find that collectivist cultures establish teamwork and then gear goals towards
the team or organization. However, Siemen's also requires that the leaders of individual
departments administer company goals according to their own way of doing things, their own
expertise, and their own agendas that match those company goals (Larson, 2014; Siemens, 2015)
- a clear example of the aspects of individualism (Dickenson et al, 2002). In this reference,
researchers would have to view the individualism-collectivist culture on a multidimensional
framework (House et al, 2003) and consider that the true culture may be an authoritative
structure of vertical collectivism (Dickenson et al, 2002). Siemen's leadership exercises
individualism in leadership decision across the horizontal, yet a clear indication of collectivism
in vertical positions ascending from the horizontal leadership atmosphere. Culture remains fixed
along the same foundational construct of masculinity as Kaeser displays indivudally, accept that

in the contingency style of management exercised at Siemens, followers require a relational style
of leadership during low stress periods (Miller et al, 2004). However, this same construct is
counteracted with the short lived project timeframe exercised as a regular part of the Seimen's
culture – a feministic leadership attribute (Dickenson, 2002). The leadership style is relatively
mixed, but indicates some dominate styles that cannot be ignored across cultures.
Organizational Culture Across Regions - USA & Germany
When doing business on the multinational atmosphere, it is important to consider cross-
cultural attributes of leadership. There are some important considerations to take into account
between the USA and Germany when conducting a cross cultural analysis of Siemens & Dresser-
Rand. First of all, while Siemens does exercise a clear power-distance relationship, it has been
evidenced that US firms exercise low power distance (Dickenson et al, 2002), however both
German and US firms are known for their participative leadership attributes. Although there is
not much research representing the uncertainty avoidance (UA) relationship of US firms, review
of the characteristics mentioned by Dickenson et al (2002) and Gerber et al (2011) can lead one
to assume that the US displays mixed attributes of uncertainty, leading to the belief that more
research could review the way that the UA characteristics displayed in US firms are related to
UA or to some other cultural aspect that crosses borders with UA. This is because US firms are
well known for their use of intellectual capital - connoting a large need for specialization and
education which is a UA characteristic according the Dickenson et al (2002). However, US
firms also work best in a competitive atmosphere that requires risk-taking, innovation, and
mobility - characteristics of low uncertainty avoidance (Gerber et al, 2011). German firms like
to plan things out, exercise work stability, and are high on education in order to avoid risk -
apparent high uncertainty avoidance characteristics (Dickenson et al, 2002; Gerber et al, 2011).
However, stock performance at Dresser-Rand indicates a higher uncertainty avoidance than most

US nationally headquartered firms (Dresser-Rand, 2015) in that it continually grows, but there is
no indication of risk taking behavior that would cause a drop in growth. US firms and German
firms display similar levels of collectivism and masculinity, exercising a more vertically-
collective society with dominant traits of masculinity over feminism (Dickenson et al, 2002).
This indicates a clear ability to find convergence.
Suggestions for Moving Forward - Integration
There are several areas of convergence between Siemens and US owned Dresser-Rand.
For instance, both German firms and US firms exercise participative leadership. Also, Dresser-
Rand may be more willing to adhere to the measures of uncertainty avoidance distributed
throughout German owned Siemens AG due to their currently avoidant culture in relation to
expenditures, expansion, and level of expertise. Collectivism and masculinity levels at each firm
are expected to be on equal terms, which will help with a smooth transition into one company.
Overall, both companies are already at an optimal level of pairing according to House et al’s
(2003) multi-dimensional cross regional analysis model. Very slight measures may be needed
for the integration according to management frames (Gerber et al, 2011), however the transition
is almost already set within the foundational culture of each company. Siemen’s may only need
to work on its mutual awareness of Dresser-Rand.
Action Alternatives
The two companies have many alternatives that they can consider in attempting to
implement the necessary actions towards the merger. Contingency model literature dealing with
change offers a number of solutions for effectively leading new policies and restructuring within
organizations. Siemen’s AG has a number of transition related challenges to overcome.

Knowledge Integration
The first challenge deals with the integration of knowledge between the two firms.
Siemens CEO Joe Kaeser has already mentioned that he wants the firm to be restructured for
automation and technology (Larson, 2014). This method has been mentioned by various
contingency model theorists when knowledge integration involves a broad set of knowledge over
a collaborative atmosphere (Becarra-Fernandez & Sabherwal, 2008) where rapid change is
expected to provide immediate relief to a fast changing culture involving crisis (Dunphy &
Stace, 1988). Drazin & Van de Van (1985) also show that during the context of restructuring,
organizational leadership personnel must monitor and store data for future use. In highly
technical environments, Drazin & Van de Van (1985) mention that knowledge must be presented
in such a way that it is it simplistic and readily understood by general employees of the firm.
According to Ju et al (2005), technology alliances tend to be chosen based on similar learning
structures and similar operational functionalities that ease the complexity of transition – namely
the efficiency of communicating shared knowledge. This research theory serves as an ample
guide to creating action alternatives.
It is important that Siemen’s performs a cross examination of learning functions and
facilitations offered at Dresser-Rand compared to those offered through Siemen’s AG. Once
such a determination is made, leadership teams can begin to match gaps in learning abilities to
proper methods of knowledge sharing in order to facilitate an increased ability to integrate
knowledge proprieties between the two firms. Furthermore, Seimen’s personnel should
implement automation through techniques such as bar coding publications, working in
knowledgeable teams, and integrating a company website with knowledge repositories that
employees can easily access. According to Becerra-Fernandez & Sabherwal (2008), a major
aspect of knowledge integration is the ability to transform tacit knowledge into explicit

knowledge. Siemen’s leadership should implement methods to record knowledge as it develops
in tacit form, through monitoring and note-taking techniques, so that this knowledge can be
transferred into explicit publication and barcoded for recording within repositories and for use in
training through isolation as best practices.
Teamwork can be an integral piece to the knowledge management puzzle. Manidanipour
(2010) emphasizes the way in which a firm undergoing reorganization will enforce this
restructuring through a connectivity approach where employees must complete B in order to
accomplish A. The transference of tacit knowledge can also be implemented through the use of
knowledgeable work teams where project teams are varied according to multiple skills
attainment. Team members can be encouraged to transfer their independent intelligences among
the rest of the members of the group in order to facilitate the optimization of project completion.
This will allow for an ease of transition, and it will cohere evenly to Kaeser’s plan for company
automation and technology implementation.
Cultural Assimilation
The second level of concern introduces the need for cultural assimilation among the two
firms. According to Ju et al (2005), during technology alliance formation firms will ensure that
learning styles and managerial style are already at a close match before they will consider other
elements, short of technological capabilities. Although this may be true, Muczyk & Holt (2008)
show how cultures may change across regions, despite learning and managerial implementations.
According to the literature by Mucsyk & Holt (2008), US cultures, such as what would be
exercised by Dresser-Rand, are most attuned to the contingency methods relating to employee’s
participation in decision-making and goal setting or attainment, and monitoring behaviors.
Mucsyk & Holt (2008) also find that in Eastern European cultures (2006), such as would be
exercise through Siemens, the emphasis is on power-distance, collectivism, uncertainty

avoidance, an external environmental orientation, and a concern for production among various
short term projects. It is important to find methods to mitigate these differences.
Bujstad et al (2006) created a model for matching followership styles to leadership styles.
According to this model (Bujstad et al, 2006), styles between US cultures and Eastern European
cultures do not immediately match, however the model does provide a method for combining
them. While US cultures are more exemplary and participatory, Eastern European cultures are
more conformative and telling – however a good solution for combining the two cultures is
through the selling technique that mixes telling and participatory methods so that they gain more
confidence in the change (Bujstad et al, 2006). This method will allow for questioning of
leadership agendas that are transferred through directive actions (Bujstad et al, 2006). According
to the Dunphy & Stace (1988) contingency model of organizational change, organizations
experiencing isolated periods of change using collaborative methods are best to integrate the
change process through team building, goal setting appraisal, and management development
methods. Mandanipour’s (2010) connectivity model characterized cultural assimilation as
encouraged by task structure when teams are implemented towards the completion of the project
B that induces A’s attainment. Husted’s (2000) theory lays it out in illustrating that socialization
advances along the contingency model using computation and routine, then discovery, then
inspiration, and finally - bargaining and representation – all conducted within a team atmosphere.
Cultural theory represents adequate presentation of the way in which corporations can stretch
across national cultures to generate cohesion.
This research represents a clear path for alternative actions for integrating cultures
between Siemens AG and Dresser-Rand. It is important that Siemen’s leadership team continue
to implement project based teams in which current employees of both firms can work with each

other to discover new ideas, encourage each other to implement innovations related to new
knowledge, ask questions about directives, and bargain among each other in the final planning of
new projects. Siemen’s recent involvement in the EEDC (Larson, 2014) will provide a
connectivity in which teams can cross cultures between both firms to implement projects
directed by the development plan. With these programs in place, employees will have a direct
focus that will redirect their thoughts from differing cultures to the completion of goal B that will
facilitate that cultural integration.
Conclusion
Although Siemen's AG has been around since the mid-nineteenth century, the company
will need to use its leadership expertise to integrate some small measures used to ease the
transition of the company into the new vision and new acquisition of Dresser-Rand. The
company has worked with engineering and software since the onset of its existence, choosing to
mitigate relations between multi-national alliances. Studying the company dynamics, one could
conclude that the company thrives through a leadership administered using the contingency
theory with historical aspects of path-goal attainment. Recently, Siemen's has made plans to
acquire a merger with Dresser-Rand (2015) in order to integrate its power and gas division with
the capabilities of Dresser-Rand in the formation of a hybrid oil and gas division and an
increased level of ability towards Siemen's goal of electrification. These changes will need to be
accompanied by an action plan used to induce transition into the merger.
Siemen's is already reinforcing this merger with the introduction of a new CEO of the gas
and power division (Siemens, Press, 2015) and agreements at EEDC to utilize their firm to
provide energy sector development in underdeveloped regions of Egypt (Larson, 2015). The
company has to integrate its contingency style in order to induce knowledge sharing activities

and cultural assimilation that will enhance creativity towards the innovation of energy
development projects during the merging of Siemen’s with Dresser-Rand. They must do this by
taking steps to monitor and record information during episodes of tacit knowledge, integrating
multicultural teams for project implementation, and allowing automated technologies to provide
a platform for information repositories, best practices dissemination, and bargaining forums that
can later be turned into recorded data for knowledge management. Further research should be
implemented to test the ability for single aspects of the contingency model of organizational
change to compensate for cultural integration when cultures express differing aspects of the same
model, encouraging them to blend together. Furthermore, research should be conducted in the
ability to use the contingency model for social performance as a method to construe cultural
integration. Finally, an empirical study integrating the connectivity model of contingency theory
to the contingency model of cultural imperatives to study cultural integration would be a benefit
to contingency theories of cultural performance.

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