Strategic Organizational Behavior

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Chapter 3 Organizational Behavior in a Global Context

Michael A. Hitt C. Chet Miller Adrienne Colella Slides by R. Dennis Middlemist


Knowledge Objectives 1. 2.

3.

Define globalization and discuss the forces that influence this phenomenon. Discuss three types of international involvement by associates and managers and describe problems that can arise with each. Explain how international involvement by associates and managers varies across firms.


Knowledge Objectives 4.

5.

Describe high-involvement management in the international arena, emphasizing the adaptation of this management approach to different cultures. Identify and explain the key ethical issues in international business.


Forces of Globalization Globalization  The trend toward a unified global economy where national borders mean relatively little – –

Products, services, people, technologies, and financial capital move relatively freely across national borders Tariffs, currency laws, travel restrictions, immigration restrictions, and other barriers to these international flows become less difficult to manage Unified world market in which to sell products and services, and acquire resources


Effects on Culture ď Ź

Culture –

Shared values and taken-for-granted assumptions that govern acceptable behavior and thought patterns in a country and that give a country much of its uniqueness


Opportunities and Challenges Growth Growth

Political Political Risks Risks

Diversification of Risk Opportunities Opportunities

Challenges Challenges

Economies Economies of of Scale Scale Location Location Advantages Advantages

Managerial Managerial Risks Risks

Exhibit 3-1: Opportunities and Challenges for Firms with International Involvement

Economic Economic Risks Risks


Internationally Focused Jobs 

Individual Issues – –

Well suited to associates who thrive on challenge Typically member of geographically dispersed teams    

Members may have different working and decision styles due to cultural differences Complex set of communication tools (virtual teams) Swift trust—quick development of trust based on positive, reciprocated task-related communications Need for team members to identify with the team Training in international negotiation and conflict resolution – Team members jointly develop unified vision – Spend some time in face-to-face meetings –


Learning about a Counterpart’s Culture     

Don’t attempt to identify another’s culture too quickly Beware of the Western bias toward taking actions Try to avoid the tendency to formulate simple perceptions of others’ cultural values Don’t assume that your values are the best for the organization Recognize that norms for interactions involving outsiders may differ from those for interactions between compatriots Be careful about making assumptions regarding cultural values and expected behaviors based on the published dimensions of a person’s national culture

Adapted from Exhibit 3-2: Learning about a Counterpart’s Culture


Foreign Job Assignments 

Expatriate –

Culture shock – –

Individual who leaves his or her home country to live and work in a foreign land Stress reaction involving difficulties coping with the requirements for life in a new country Spousal adjustment

Ethnocentrism –

The belief that one’s culture is better than others


Overcoming Expatriate Stress Before Departure

After Arrival

Screening

Training

Training

Social support

Returning to Home Country Social support

Adapted from Exhibit 3-2: Learning about a Counterpart’s Culture


Training for Expatriates Recommendation Description Train the entire family

If spouse and/or children are unhappy, expatriate assignment is more likely to be unsuccessful

Departure orientation

One to two months before departure provide orientation information prior to packing and closing up a home

Key cultural information

Provide side-by-side cultural comparisons of the home and host cultures, challenges to be faced, lifestyle information and cultural issues likely to play a role in success

Conversational language training

Ability to converse with individuals is more important than the ability to fully understand grammar or to write in the foreign language

Convince busy families of need for training

Families with little foreign experience may not recognize the value of training prior to departure


Factors Affecting Cross-Cultural Working Relationships 

High-context culture – –

Use of contextual clues Value trust and personal relationships

Which countries listed are highcontext cultures and which are low-context cultures?

Low-context culture – –

Rely on direct questioning Value efficiency and performance

Germany Japan South Korea United States


Factors Affecting Cross-Cultural Working Relationships 

Monochronic time orientation – –

Prefer to focus on one task per unit of time Prefer to complete that task in timely fashion

Which cultures listed have monochronic time orientation and which have polychronic time orientation?

Polychronic time orientation –

Willing to juggle multiple tasks per unit of time and have interruptions Unwilling to be driven by time

Latin America South Asia Northern Europe Southeast Asia


International Approaches 

Multidomestic strategy –

Global strategy –

Firm tailors its products and services to the needs of each country or region and grants great deal of power to managers and associates in those regions Firm provides standard products and services to all parts of the world and maintains strong degree of central control in the home country

Transnational strategy –

Firm tailors its products and services to some degree but also seeks some degree of standardization for cost purposes


International Approaches Exhibit 3.3

International Approaches/Related Organizational Characteristics Multidomestic Global Transnational

Local Responsiveness Local production Local R&D Local product modification Local adaptation of marketing

High High High High

Organizational Design Delegation of power to local units High Inter-unit resource flows between and among local units Low International resource flows from and/or controlled by corporate HQ Low International Participation Opportunities for associates and managers

Low

Exhibit 3.3 International Approaches and Related Organizational Characteristics

Low Low Low Low/Medium

Medium Medium Medium/High Medium/High

Low

Medium/Low

Low/Medium

High

High

Low/Medium

High

High


High-Involvement Management Power Power Distance Distance

Individualism Individualism

Uncertainty Uncertainty Avoidance Avoidance

In-group In-group Collectivism Collectivism Gender Gender Egalitarianism Egalitarianism

Exhibit 3-3: Dimensions of National Culture

Assertiveness Assertiveness

National National Culture Culture

Future Future Orientation Orientation

Humane Humane Orientation Orientation Performance Performance Orientation Orientation


Nine Cultural Dimensions Exhibit 3.5 National Culture in India, Germany, and the United States Culture Dimension India Germany United States Uncertainty avoidance

Medium

High

Medium

Power distance

Medium/High

Medium

Medium/Low

Individualism

Medium

High

Medium

Assertiveness

Low/Medium

High

High

In-group collectivism

High

Low/Medium

Medium/Low

Gender egalitarianism

Low

Medium/Low

Medium

Future orientation

Medium

Medium

Medium

Performance orientation

Medium

Medium

High

Humane orientation

High/Medium

Low

Medium

Exhibit 3.5 National Culture in India, Germany, and the United States


National Culture and High-Involvement Management 

The degree to which the organization shares information and decision power, or grants individual autonomy and creates self-managing teams depends on cultural factors – – – –

Uncertainty avoidance Assertiveness Individualism Power-distance


International Ethics 

Issues of importance –

Corruption 

Exploitation of labor 

Bribing foreign public officials Forced use of prison labor, unreasonably low wages, poor working conditions

Environmental impact  

Pollution Overuse of scarce resources


International Ethics Exhibit 3.6 Rank Country

Absence of Corruption in Select Countries Rank Country Rank Country

1

Finland

10

Netherlands

2

New Zealand

11

United Kingdom 129 Iraq

133 Turkmenistan

3

Denmark

12

Canada

129 Kenya

140 Azerbaijan

4

Iceland

13

Austria

129 Pakistan

140 Paraguay

5

Singapore

14

Luxembourg

133 Angola

142 Chad

6

Sweden

15

Germany

133 D. R. of Congo

142 Myanmar

7

Switzerland

16

Hong Kong

133 Cote d’ Ivoire

144 Nigeria

8

Norway

17

Belgium

133 Georgia

145 Bangladesh

9

Australia

18

Ireland

133 Indonesia

145 Haiti

Adapted from Exhibit 3.6 Absence of Corruption in Select Countries

129 Cameroon

Rank Country 133 Tajikistan


Caux Round Table: Ethical Principles for Business 1 Responsibilities Responsibilities

• The value of a business to society - Wealth and employment it creates - Marketable products and services it provides to consumers at a reasonable price commensurate with quality

A topic in need of discussion!


Caux Round Table: Ethical Principles for Business 2 Economic Economicand and Social SocialImpact Impact

• Businesses established in foreign countries to develop, produce, or sell should also - Contribute to the social advancement of those countries by • Creating productive employment • Helping to raise the purchasing power of their citizens - Contribute to human rights, education, welfare, and vitalization of the countries in which they operate


Caux Round Table: Ethical Principles for Business 3 Business Business Behavior Behavior

• While accepting the legitimacy of trade secrets, businesses should recognize that sincerity, candor, truthfulness, the keeping of promises, and transparency contribute to - Their own credibility and stability - The smoothness and efficiency of business transactions


Caux Round Table: Ethical Principles for Business 4 Respect Respect for for Rules Rules

• Businesses should respect international and domestic rules • Businesses should recognize that some behavior, although legal, can still have adverse consequences


Caux Round Table: Ethical Principles for Business 5 Multilateral Multilateral Trade Trade

• Businesses should - Support the multilateral trade systems of the General Agreement in Tariffs and Trade (GATT) World Trade Organization, and similar international agreements - Cooperate in efforts to promote progressive and judicious liberalization of trade - Work to relax domestic measures that unreasonably hinder global commerce, while respecting national policy objectives


Caux Round Table: Ethical Principles for Business 6 Respect Respect for forthe the Environment Environment

• Businesses should - Protect and, where possible, improve the environment, promote sustainable development - Prevent the wasteful use of natural resources


Caux Round Table: Ethical Principles for Business 7 Avoidance Avoidanceof of Illicit IllicitOperations Operations

• Businesses should - Not participate in or condone bribery, money laundering, or other corrupt practices - Not trade in arms or other materials used for terrorist activities, drug traffic, or other organized crime


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