Moving to a Global Economy

1. Moving to a Global Economy Some researchers argue that America was never competitive after World War II, but rather had effortless economic superiority and a lack of foreign competition. US multinational corps dominated world trade. Vernon (1966) proposed a simple three-phase model for understanding firms' development based on the product life cycle. Adding a fourth phase to capture the complexities of today's highly competitive global environment, these phases could be labeled domestic, international, multinational, and global. 

2. Phases of Globalization • Domestic - firms focus on developing and producing unique new products in and for the domestic market. • International - firms focus on marketing. They expand their markets internationally: first by exporting their domestically produced products, next by assembling the products abroad, and finally by producing these products abroad.

3. Phases of Globalization • Multinational - firms face a much more competitive multinational environment. They emphasize price, that is, developing least-cost integrated production systems. Standardization becomes important. • Global - firms must operate globally as top-quality, least-cost, state-of-the-art producers and distributors to survive. Strategically and structurally, they must develop flexible systems that are globally coordinated and integrated while remaining highly differentiated and nationally responsive.

4. OrganizationalCulture • Economic/ technological setting • Political/ legal setting • Ethnic background • Religion • Societal culture • Customs • Language • Personal values/ethics • Attitudes • Assumptions • Expectations OrganizationalBehavior Cultural Influences on Organizational Behavior Source: Adapted in part from BJ Punnett and S Withane, “Hofstede’s Value Survey Module: To Embrace or Abandon?”in Advances in International Comparative Management, vol 5, ed SB Prasad (Greenwich, CT: JAI Press, 1990), pp 69-89.

5. Ethnocentrism: “The belief that one’s native country, culture, language, and modes of behavior are superior to all others.” For class discussion: What evidence of ethnocentrism can you detect in the popular media, the press, and the behavior of those around you? What impact can this have on your country’s ability to compete successfully in the global economy?

6. Cross-Cultural Management • The study of the behavior of individuals in organizations around the world. • Behavior within countries and cultures – understand differences • Compares organizational behavior across countries and cultures – culturally appropriate management practices • Attempts to understand and improve the interaction and behavior of employees, customers, clients, suppliers, and partners – cross-cultural management lessions

7. Global Strategy • Strategic Skills • Team-Building Skills • Organization Skills • Communication Skills

8. General Guidelines for Effective Cross-Cultural Communication • No matter how hard one tries, one cannot avoid communicating • Communication does not necessarily mean understanding • Communication is irreversible • Communication occurs in a context

9. Low-Context Cultures: meaning conveyed primarily through written and spoken words explicit vigilance quick to decide markets High-Context Cultures: situational and nonverbal cues convey primary meaning implicit trust slow to decide kinship/networks High/Low Context

10. Proxemics • Related to “Proximity” (distance) • Physical distances appropriate to business and social interactions • Interpersonal discomfort a function of space (e.g. not “getting in my face” • Related issues: physical contact

11. Cultural Dimensions in the Hofstede-Bond Research (Country scoring highest) • Power Distance: Expected social inequality? (Philippines) • Individualism-Collectivism: Loose or tight social bonds? (U.S.) Individual vs. Group Needs • Masculinity-Femininity: Expression of competitive or nurturing traits? Dominance, assertiveness, independence. (Japan) • Uncertainty Avoidance: Preference for structured or unstructured situations? (Japan). Behavior motivated to some degree by fear of the unknown. • Long-Term Versus Short-Term Orientation (Confucian values): Save for the future and be persistent or “live for today?” (Hong Kong)

12. Issues in the Hofstede Research • Cross-level inferences are not supported (e.g. from culture to organization or from culture to individual) • Western European bias in terms of what dimensions are relevant • Only studied one organization. • Can a survey accurately assess all cultural dimensions?

13. Individualism-Collectivism (+) Group Size (-) Identifability (+) Shared Responsibility (-) Cooperation Wagner (1995) Individualism - Collectivism Results of group size, identifiability, and shared responsibility were in expected directions. I-C showed both direct and moderator effects. Individualists who feel independent and self-reliant are less likely to engage in cooperative behavior; collectivists who feel interdependent and reliant on groups are more likely to cooperate. IC also moderates relationships between group size and identifiability; group size and identifiability have greater effects on cooperation of individualists than on the cooperation of collectivists.

14. Wagner (1995) Individualism - Collectivism Cooperation is the willful contribution of personal effort to the completion of interdependent jobs. Wagner proposes that the level of identifiability and shared responsibility will influence cooperation. Specifically, he proposed that identifiability will influence cooperation in groups in such a way that members perceiving themselves as having a high level of identifiability will cooperate more than those perceiving a low level of identifiability. Shared responsibility reflects the changes in feelings of personal responsibility that individuals in a group sometimes experience as a result of the presence of other members. Members with a sense of personal responsibility feel that their behaviors can make the difference between success and failure for their group. Strong feelings of shared responsibility reduce personal disposition to engage in cooperation. Therefore, Wagner’s proposition suggests that shared responsibility will influence cooperation in groups in such a way that members perceiving themselves to have a low level of shared responsibility will cooperate more than members perceiving a high level of shared responsibility. Differences described by the individualism-collectivism dimension will moderate the degree to which group size, identifiability, and shared responsibility influence cooperation because those variables are all expected to affect cooperation by curtailing people’s proclivities to pursue personal interests, which is a behavioral tendency of individualists and not collectivists. Therefore, Wagner puts forth that individualism-collectivism will moderate effects of cooperation, in that group size, identifiability, and shared responsibility will have greater influence on cooperation of individualists than on cooperation of collectivists.

15. Global Skills for Global Managers • Global Perspective: Focus on global business • Cultural Responsiveness: Become familiar with many cultures • Appreciate Cultural Synergies: Learn multicultural dynamics • Cultural Adaptability: Live and work effectively in different cultures • Cross-Cultural Communication: Daily cross-cultural interaction • Cross-Cultural Collaboration: Multicultural teamwork • Acquire Broad Foreign Experience: Series of foreign career assignments

16. Most Culturally Appropriate Leadership Behaviors Country Directive Supportive Participative Achievement Australia X X X Brazil X X Canada X X X France X X Germany* X X X Great Britain X X X Hong Kong** X X X X Japan X X X Sweden X X United States X X X *Former West Germany ** Reunited with China A Contingency Model for Cross-Cultural Leadership

17. Foreign Assignment Cycle Home Country Experiences Foreign Country Experiences 1. Selection and training “Unrealistic expectations” 2. Arrival and adjustment “Culture shock” Reassignment 4. Returning home and adjusting “Reentry shock” 3. Settling in and acculturating “Lack of support”

18. Reasons Why US Expatriate Managers Fail in Foreign Assignments • Manager’s spouse cannot adjust to new physical or cultural surroundings • Manager cannot adapt to new physical or cultural surroundings • Family problems • Manager is emotionally immature • Manager cannot cope with foreign duties • Manager is not technically competent • Manager lacks proper motivation for foreign assignment