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