“What are the potential risks in the different levels of formality in behaviour and communication between German and American business people?“
Yes, Germans are more formal than Americans. And yes, there are risks involved if the differences are not recognized, understood, and managed well. Here are three risks (certainly there are more):
Neither side feels fully comfortable with the other. For Americans, German formality can come across as stiff, not loose, not relaxed. It can also intimidate Americans when they observe how well Germans can carry themselves in formal situations.
For Germans, American informality is difficult to read. Is it true openness, friendliness, a letting down of the barriers between people? Or is it just a facade, a mask? And often the relaxed and natural way in which Americans behave is disarming, a bit unsettling, for Germans.
Based on how the two sides read (interpret or misinterpret) each other, they may or may not communicate effectively with each other. Understand. Not understand. Signals sent. Signals received. But signals not understood.
It happens all the time between Americans and Germans. Don’t be fooled by the use of a common language, English. For Americans it is their mother tongue. For Germans it is not. Their mother tongue is German.
We all can imagine what the effect is on the relations between two individuals, groups, organinzations – and nations – when those interacting feel that the other side does not respect them, or even worse, purposely insults them.
Important is to be aware of when the differences between formal and informal can lead to any of the three above, and then to take corrective action. If you feel uncomfortable, let the other side know so that they can correct.
If you suspect that the other sides feels uncomfortable with you, address it so that you can correct. Who wants to feel uncomfortable, or make others feel uncomfortable?