M A N A G E M E N T A C R O S S C U LT U R E S
Challenges, Strategies, and Skills
Fourth edition
In today’s highly competitive global economy, it is said that most
managers are – or soon will be – global managers. They may
work in their home country, but they are still influenced by global
events and have to manage a diverse workforce. As such, they
need both multicultural competence and global management skills
to work and manage successfully across cultures.
This new edition pairs a richly illustrated text with management
applications, key concepts, discussion questions, and web-based
cases and exercises aimed at current and aspiring managers.
Each chapter is accompanied by a Manager’s Notebook,
highlighting field strategies and encouraging students to develop
multicultural competence that will be highly valued by future
employers.
Exploring the challenges and opportunities facing global
managers, the authors examine the global manager’s cultural,
organizational, and managerial environments and help the reader
to develop a range of skills, from communication and leadership to
negotiation and global team management.
This text is designed for courses in International Management,
Cross-Cultural Management, and International HRM at advanced
undergraduate, Master’s, and MBA levels.
Richard M. Steers is the Kazumitsu Shiomi Professor of
Management and former Vice Provost for International Affairs at
the University of Oregon, USA. A past President and Fellow of the
1
Academy of Management, he has authored over two dozen books
and numerous research articles on topics ranging from employee
motivation
and
organizational
behavior
to
cross-cultural
management. He served as senior editor for the Journal of World
Business and co-editor of The Global Mindset (2007) and the
Cambridge Handbook of Culture, Organization, and Work (2009).
He has lectured extensively and served as a visiting professor at
Oxford University, Erasmus University, Nyenrode Business
University, Hanyang University, Yonsei University, University of
California, Irvine, and the University of Cape Town.
Joyce S. Osland is the Lucas Endowed Professor of Global
Leadership and Executive Director of the Global Leadership
Advancement Center at San José State University, USA. A Past
President of the Western Academy of Management, she has
authored over 150 publications on topics ranging from global
leadership
to
intercultural
communication
and
women
in
management. She coauthored Global Leadership: Research,
Practice, and Development (2017) and co-edits Advances in
Global
Leadership
(2018)
and
the
Sage
Handbook
of
Contemporary Cross-Cultural Management. She has lived and
worked in seven countries over sixteen years, including work in
international development in Latin America and West Africa,
served as a faculty member at INCAE, and is a consultant to
universities and global organizations worldwide.
2
There has never been a time in the history of the world when
cross-cultural understanding and skills were more important or
more necessary. Management Across Cultures is written by two of
the luminaries of the field and could not be a better guide for
managing in a global economy.
Nancy Adler, S. Bronfman Chair in Management McGill
University, Canada
It is a truism that there is no one theory of management that fits all
situations. The manager of today needs critical analytical skills
that take into consideration diverse operating environments and
cultural differences. This book provides a spectrum of cultural
perspectives in which contradictions are discussed rather than
rationalized, to emphasize the need for flexibility, in contrast to
reliance on traditional axioms.
Soon Ang, Goh Tjoel Kok Chair and Professor of Management,
Nanyang Technological University, Singapore
Management Across Cultures is a must read for any current or
aspiring leader. The days when leaders could just think about
domestic business are gone. Only those who understand and
have the skills to manage across cultures have any hope of
success. As a consequence, this book is one they should read
and have on their desk for frequent reference.
Stewart Black, Professor of Global Leadership and Strategy,
INSEAD, France
Steers and Osland are rock stars of research and teaching on
global management. A veritable dream team with years of
experience in writing texts, they joined forces for the latest edition
3
of Management Across Cultures and the result is simply superb! I
give this book my highest possible recommendation.
Nakiye Boyacigiller, Emerita Professor and former dean,
Sabanci University, Turkey; Past President of Academy of
International Business
In this fourth edition, the authors have brought all their expertise
from their distinguished careers and created a masterpiece of a
textbook. I am especially impressed with its strong focus on crosscultural skill-building in addition to knowledge conveyance and
case analysis. For any instructor who teaches an international
management course that focuses on developing skills in addition
to imparting knowledge, this book is the entire package.
Mark Mendenhall, J. Burton Frierson Chair of Excellence in
Business Leadership, University of Tennessee, Chattanooga,
USA
With theoretically sophisticated content and cutting-edge
management applications, this is likely the best cross-cultural
management textbook on the market. With its interdisciplinary
focus, a wealth of real-life examples, captivating cases and
practical exercises, the book is timely, relevant, and engaging for
both novice and expert audiences.
Betina Szkudlarek, Associate Professor of Management,
University of Sydney, Australia
4
M A N A GE M E N T A C R OS S
C U LT U R E S
Challenges, Strategies, and
Skills
Fourth edition
Richard M. Steers
Joyce S. Osland
5
University Printing House, Cambridge CB2 8BS, United Kingdom
One Liberty Plaza, 20th Floor, New York, NY 10006, USA
477 Williamstown Road, Port Melbourne, VIC 3207, Australia
314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre,
New Delhi – 110025, India
79 Anson Road, #06-04/06, Singapore 079906
Cambridge University Press is part of the University of Cambridge.
It furthers the University’s mission by disseminating knowledge in the
pursuit of education, learning, and research at the highest international
levels of excellence.
www.cambridge.org
Information on this title: www.cambridge.org/9781108493307
DOI: 10.1017/9781108681209
First edition © Richard M. Steers, Carlos J. Sanchez-Runde, and
Luciara Nardon 2010
Second edition © Richard M. Steers, Luciara Nardon and Carlos J.
Sanchez-Runde 2013
Third edition © Richard M. Steers, Luciara Nardon, and Carlos J.
Sanchez-Runde 2016
Fourth edition © Richard M. Steers and Joyce S. Osland 2020
This publication is in copyright. Subject to statutory exception and to the
provisions of relevant collective licensing agreements, no reproduction of
any part may take place without the written permission of Cambridge
University Press.
6
First edition 2010
Second edition 2013
Third edition 2016
3rd printing 2018
Fourth edition 2020
Printed in Singapore by Markono Print Media Pte Ltd. 2020
A catalogue record for this publication is available from the British
Library.
Library of Congress Cataloging-in-Publication Data
Names: Steers, Richard M., author. | Osland, Joyce, author.
Title: Management across cultures : challenges, strategies, and skills /
Richard M. Steers, University of Oregon, Joyce S. Osland, San Jos,
State University, California.
Description: 4th edition. | Cambridge, United Kingdom ; New York, NY,
USA : University Printing House, [2019] | Includes bibliographical
references and index.
Identifiers: LCCN 2019010791 | ISBN 9781108493307 (hardback : alk.
paper) | ISBN 9781108717595 (paperback : alk. paper)
Subjects: LCSH: Management–Cross-cultural studies. | International
business enterprises–Management.
Classification: LCC HD62.4 .S735 2019 | DDC 658/.049–dc23
LC record available at https://lccn.loc.gov/2019010791
ISBN 978-1-108-49330-7 Hardback
ISBN 978-1-108-71759-5 Paperback
Additional resources for this publication at www.cambridge.org/mac4
Cambridge University Press has no responsibility for the persistence or
accuracy of URLs for external or third-party internet websites referred to in
7
this publication and does not guarantee that any content on such websites
is, or will remain, accurate or appropriate.
8
Contents
List of Exhibits
List of Management Applications
List of Cases, Exercises, and Inventories
Preface
Part 1 Global Managers: Challenges and
Opportunities
1 Global Managers in a Changing World
The Changing World of Business
The Changing World of Management
Global Managers at Home and Abroad
Multicultural Competence
Manager’s Notebook: Developing Global
Management Skills
Chapter Review
Part 2 Culture, Organization, and
Management
2 Cultural Environments
Overview: Beliefs, Values, and Worldviews
Mapping National Cultures
Using the Models: Cultural Values
9
Refining the Models: Cultural Friction, Country
Clusters, and Cultural Tightness
Social Complexity, Biculturalism, and
Multiculturalism
Manager’s Notebook: Working Across Cultures
Chapter Review
3 Organizational Environments
Overview: Stakeholders, Strategies, and
Structures
Stakeholders and Global Strategies
Strategy and Structure: Regional Models
Participation and Decision-making
Corporate Culture and Collective Behavior
Manager’s Notebook: Working with Global
Organizations
Chapter Review
4 Managerial Environments
Overview: Work, Management, and Motivation
Managerial Role Expectations
Patterns of Managerial Thinking
Situational Contingencies and Managerial
Behavior
Work Values across Cultures
Management and Motivation
Women at Work
Manager’s Notebook: Managing Across Cultures
Chapter Review
10
Part 3 Developing Global Management
Skills
5 Cross-cultural Communication
Seeking Common Understanding
AIA Model of Interpersonal Communication
Culture, Information Processing, and
Communication
Culture, Communication, and Social Behavior
Providing Feedback across Cultures
Manager’s Notebook: Communicating across
Cultures
Chapter Review
6 Global Leadership
What Is Leadership?
Eastern and Western Leadership Traditions
GLOBE Leadership Model
Pyramid Leadership Model
Women Global Leaders and Diversity
Manager’s Notebook: Leading Global
Organizations
Chapter Review
7 Managerial Ethics and Social Responsibility
Ethical and Social Challenges
Ethical and Institutional Conflicts
Laws and Conventions Governing Ethical Behavior
Boundaries of Ethical Managerial Behavior
Corporate Social Responsibility
11
Manager’s Notebook: Managing Ethical Conflicts
Chapter Review
8 Global Partnerships and Negotiations
Building Global Partnerships
Preparing for Global Negotiations
Negotiating Strategies and Processes
Managing Conflicts and Compromise
Managing Agreements and Contracts
Manager’s Notebook: Building Global
Partnerships
Chapter Review
9 Global Teams
Global Teams
On-site and Virtual Teams
Managing Tasks and Team Processes
Creating Global Team Synergy
Challenges of Virtual Global Teams
Managing Virtual Global Teams
Leadership and Global Team-building
Manager’s Notebook: Managing Global Teams
Chapter Review
10 Global Assignments
Global Assignments
Benefits and Challenges of Global Assignments
Considerations in Living and Working Globally
Finding Your Way: Coping with Culture Shock
Finding Your Place: Acculturation Strategies
Managing Repatriation
12
Manager’s Notebook: Managing Global
Assignments
Chapter Review
11 Lessons Learned: A Review
What Have We Learned?
Where Do We Go from Here?
Appendix: Details of National Culture Models
Index
13
Exhibits
1.1 Changing world of business
1.2 Changing world of management
1.3 Characteristics of global managers
1.4 Types of global managers
1.5 Developing global management skills
1.6 Multicultural abilities and skills of effective managers
1.7 Learning model for developing global management
skills
2.1 Normative beliefs, institutional requirements, and
social control
2.2 Cultures and subcultures
2.3 Emic and etic patterns of Latin American cultures
2.4 Popular models of national cultures
2.5 Cultural values
2.6 Country clusters and cultural characteristics
(examples)
2.7 Cultural tightness scores for selected countries
2.8 Strategies for working across cultures
3.1 Key stakeholders for a typical business organization
3.2 Level of trust in national governments
14
3.3 Carlos Slim’s guiding business principles
3.4 Competitive strategies of German mittelstand firms
3.5 Regional models of organizing
3.6 Example of a traditional investor model
3.7 Example of a Chinese family model
3.8 Example of a Japanese keiretsu model
3.9 Kirin Brewery: Japanese kaisha (Mitsubishi keiretsu)
3.10 Example of a German codetermination model
3.11 Participation and decision-making processes
3.12 Antecedents and consequences of corporate culture
3.13 Strategies for working with global organizations
4.1 The global management work environment
4.2 Cultural influences on managerial roles
4.3 Managerial expectations (selected countries)
4.4 Managerial characteristics (selected countries)
4.5 Supervisory roles across cultures
4.6 Situational contingencies and managerial behavior
4.7 Culture, work values, and behavior
4.8 Average working hours in selected countries
4.9 Cultural influences on work motivation
4.10 Average CEO and employee compensation
4.11 Gender wage gaps in selected countries
15
4.12 Strategies for managing across cultures
5.1 AIA model of interpersonal communication
5.2 Cultural screens on interpersonal communication
5.3 Culturally mediated cognitions in communication
5.4 Most commonly spoken languages of the world
5.5 Native and non-native speakers
5.6 Culturally mandated communication behaviors
5.7 Communication in high- and low-context cultures
5.8 Upgrades, downgrades, and feedback across cultures
(British and Dutch example)
5.9 Strategies for communicating across cultures
6.1 Leadership patterns: East and West
6.2 Approaches to global leadership
6.3 GLOBE cultural perspectives on leadership
effectiveness
6.4 GLOBE leadership dimensions
6.5 Cultural beliefs about leadership styles
6.6 Pyramid model of global leadership
6.7 Pyramid model’s global leadership competencies
6.8 Percentage of women in senior corporate leadership
positions
6.9 Percentage of board of directors seats held by women
6.10 Strategies for leading global organizations
16
7.1 Ethical and social challenges facing managers and
organizations
7.2 Universalism, particularism, and ethical beliefs
7.3 OECD Guidelines for ethical behavior
7.4 Ten Principles of the UN Global Compact
7.5 Corruption Perception Index
7.6 Pressures for and against OECD guideline compliance
on bribery and corruption
7.7 Characteristics of ethical managerial behavior
7.8 Strategies for managing ethically
8.1 Benefits and challenges of global partnerships
8.2 Preparing for global negotiations
8.3 Key success factors in cross-cultural partnerships
8.4 Competitive and problem-solving negotiation
strategies
8.5 Examples of competitive and problem-solving
negotiation strategies
8.6 Sequential and holistic bargaining strategies
8.7 Bargaining tactics (Brazil, Japan, United States)
8.8 Negotiating strategies (Brazil, Japan, United States)
8.9 Conflict resolution strategies
8.10 Contracts and the doctrine of changed circumstances
8.11 Strategies for building global partnerships
9.1 Advantages and drawbacks of global teams
17
9.2 Characteristics of on-site and virtual teams
9.3 Managing tasks and team processes
9.4 Creating global team synergy
9.5 Global team design principles
9.6 Can people be trusted?
9.7 Challenges of virtual global teams
9.8 Different perspectives from global team members
(example)
9.9 Managing virtual global teams
9.10 IBM’s virtual development team (example)
9.11 Team-building process
9.12 Leadership and global team-building strategies
9.13 Developing mutual trust
9.14 Strategies for managing global teams
10.1 Reasons for using expatriates
10.2 Considerations in living and working globally
10.3 Family considerations in global assignments
10.4 Career considerations in global assignments
10.5 Stages in psychological adaptation to a new culture
10.6 Acculturation strategies to local cultures
10.7 Strategies for managing global assignments
11.1 Characteristics of global managers
11.2 Stages in developing global management skills
18
11.3 Cultural, organizational, and managerial
environments
11.4 Global management skills
A1 Edward Hall Model Dimensions and Scale Anchors
A2 Geert Hofstede Model Dimensions and Scale Anchors
A3 Hofstede Model Country Ratings (Examples)
A4 Fons Trompenaars Model Dimensions and Scale
Anchors
A5 GLOBE Model Dimensions and Scale Anchors
A6 GLOBE Model Country Ratings (Examples)
19
Management Applications
1.1 Local Consequences of Global Connectivity
1.2 Dermot Boden, Expatriate
1.3 Mary Gadams, Global Entrepreneur
1.4 Roos Dekker, Home Country Manager
2.1 Traffic Fines in Finland
2.2 Rubber Time in Indonesia
2.3 What Is Truth?
2.4 Seat Assignments to Tel Aviv
2.5 Multiculturalism in Singapore
3.1 Stakeholders and Strategies in Mexico’s Grupo Carso
3.2 Stakeholders and Strategies in Germany’s Mittelstand
Firms
3.3 Organization and Management in China
3.4 Organization and Management in Japan and Germany
3.5 Mt. Fuji and Corporate Culture at Dentsu
4.1 What Is a Supervisor?
4.2 Company Cars at Intel, the Netherlands
4.3 Extreme Work Values at Tesla
4.4 Lincoln Electric in Germany and Mexico
4.5 The Gender Wage Gap
20
5.1 Wall of Silence in Ecuador
5.2 Where Are We Meeting?
5.3 Working with Non-native Speakers
5.4 Cultural Logic in Brazil and Canada
5.5 Making Apologies in Japan and the UK
6.1 Symbolic Leadership in Japan
6.2 Leadership at Emerson Electric Suzhou
6.3 GLOBE Model: Leadership in Brazil
6.4 Pyramid Model: Halla Tómasdóttir
6.5 Women Leaders in India
7.1 Managing in an Imperfect World
7.2 IKEA in Saudi Arabia
7.3 Starting a Business in Mumbai
7.4 #MeToo Goes Global
7.5 Doing Well by Doing Good
8.1 Strategic Partnerships in the Commercial Aircraft
Industry
8.2 Conflicts in the Apple-Samsung-Ericsson Partnership
8.3 Tata’s New Factory in Gujarat
8.4 Bargaining Tactics in Brazil, Japan, and the US
8.5 Changed Circumstances at Cosco
9.1 Building French-American Teams
9.2 Managing Global Teams in Hong Kong
21
9.3 Building Global Team Synergy
9.4 Face Time for Virtual Teams
9.5 Virtual Global Teams at IBM Cloud Labs
9.6 Global Team Leadership at Intelehealth
10.1 Expatriate Survival Skills
10.2 Promotion to Kenya
10.3 Culture Shock in Luogang
10.4 Acculturation Strategies at Shell
10.5 Returning Home
22
Cases, Exercises, and Inventories
Cases and exercises are available on the instructor’s website
for use with this book.
23
Cases
1. Developing Global Managers at Google and IBM
2. Anna Håkansson – from Sweden to Bahrain
3. Can European-style Codetermination Be Exported?
4. Samsung’s Management Challenge in Mexico
5. Building Relationships at a Japanese Kaiseki
6. Leadership Succession at Alibaba, China
7. The World Runs on Batteries, Congo
8. Negotiating Energy Contracts in Nigeria
9. Building Global Teams at L’Oréal, France
10. Living the Dream in Hong Kong
11. Flexible Security in the French Workplace
12. Managing the Daichi Sankyo-Ranbaxy Partnership, India
13. Women, Work, and Economic Security in Germany
14. Playing Hide and SEEK, Australia and China
15. Developing Local Communities at Dilmah Tea, Sri Lanka
16. Perils of Being a Junior Manager, Japan and USA
17. The Rise and Fall of Carlos Ghosn
18. Garment Manufacturing in Bangladesh
19. Working with Virtual Partners, Netherlands and Argentina
20. Strategic Leadership at Toyota and Hyundai
24
Exercises
1. Mapping the Multicultural Classroom into Learning Teams
2. Cultural Preferences Baseline and Teamwork Implications
3. The Donor Services Role Play
4. Decision-making and Organizational Models
5. Mastering Direct and Indirect Communication
6. The Perfect Square
7. Global Business Code of Ethics
8. Growers versus Agribusiness
9. The Inner-outer Circle
10. The Expatriate Interview
25
Inventories
Information regarding third-party inventories is available on the
instructor’s website.
Diversity Icebreakers. Incorporates a questionnaire
assessing individual preferences for interaction,
communication, and problem-solving styles with a set of
unique group processes to develop a shared understanding
of how to capitalize on group diversity. Available in nineteen
languages.
GlobeSmart Profile. An online inventory to assess and
compare an individual’s preferred work style across five
cultural dimensions, and how this profile compares with
people from other cultures, countries, colleagues, and
teams. Available in thirteen languages.
Intercultural Effectiveness Scale. An online inventory to
assess an individual’s global management skills for
interacting with people from other cultures. Dimensions
include continuous learning, interpersonal engagement,
and hardiness. Includes pre- and post-measurements for
changes in multicultural competence. Available in seven
languages.
26
27
Preface
Success in the global economy requires a number of ingredients,
including
innovative
ideas
and
products,
cutting-edge
technologies, access to raw materials and competitive labor, solid
financing, savvy marketing strategies, and sustainable supply
chains. The central driver in this complex endeavor, however, is
the manager – who is perpetually caught in the middle of these
various forces. Indeed, no one ever said being a manager was
easy, but it seems to get more difficult with each passing year. As
competitive pressures increase across most industries and
services, so too do the pressures on managers to deliver results.
Succeeding against the odds often catapults a manager into the
higher echelons of an organization, with a concomitant increase in
personal rewards. Failure to deliver, however, often slows one’s
career advancement if it doesn’t stop it altogether. The stakes are
very high for managers and organizations alike.
In this pursuit, the difference between winners and losers is
often the ability of managers both to prepare for upcoming
challenges and opportunities and to recognize such opportunities
when they emerge. Seeing opportunities for the future without
adequate preparation or preparing for the future without adequate
study of emerging opportunities are both recipes for finishing in
second or third place.
28
Rationale for this Book
With this in mind, a logical question emerges: What do managers
need to know to survive and succeed in today’s complex and
turbulent global business environment? Certainly, they need the
business skills mentioned above, but there is something else.
Managers must understand how to work with other people and
organizations around the world to get the jobs done. They need a
capacity to build working relationships that facilitate mutual
benefit. We refer to this quality as multicultural competence, and it
is the focus of this book.
To
develop
multicultural
competence,
managers
must
improve their proficiencies in working across cultures, because
this is where most future threats and opportunities will be found.
They must develop an ability to distinguish between cultural
differences and similarities across borders, as well as differences
within single countries. They must develop an ability to tease out
the subtle contradictions and dualities that are rooted in various
cultures, and accept that easy answers may not exist. They must
also develop an ability to adapt traditional management skills,
such as leadership, negotiation, and communication, to fit crosscultural or multicultural venues. We refer to these as global
management skills, and herein lies the essence of effective global
management.
This book is aimed at managers from around the world. It
aims to explore managerial processes and practices from the
standpoint of managers from all regions of the globe – China and
Brazil, India and Germany, Australia and Singapore – as they
29
pursue their goals and objectives in the field. This is done in the
belief that the fundamental managerial role around the world is a
relative constant, even though the details and specifics of
managerial cognitions, situations, and actions may often vary –
sometimes significantly – across cultures. Our goal in this book is
to help managers develop an enhanced behavioral repertoire of
cross-cultural management skills that can be used in a timely
fashion when they are confronted with challenging and at times
confusing situations. It is our hope that, by better understanding
cultural realities on the ground and then using this understanding
to develop improved coping strategies, future managers will
succeed where many of their predecessors did not.
We draw heavily in this book on recent research in cultural
anthropology, psychology, economics, and management as they
relate to how managers structure their enterprises and pursue the
day-to-day work necessary to make a venture succeed. We
further emphasize differences and similarities across cultures,
since we believe that this approach mirrors reality. We explore the
psychological underpinnings that help shape the attitudes and
behaviors of managers, as well as their approaches to people
from other regions of the world. Most of all, though, we focus on
learning and providing a useful guide to both the intellectual and
the practical development of managers seeking global experience.
Our aim here was not to write a bias-free volume, as we
believe this would have been an impossible task. Indeed, the
decision to write this book in English, largely for reasons of
audience, market, and personal competence, does itself introduce
some bias into the learning process. Rather, our intent was to
write a book that simultaneously reflects differing national, cultural,
30
and personal viewpoints, in which biases are identified and
discussed openly instead of being hidden or rationalized. As a
result, this book contains few certainties and many contradictions,
reflecting our views on the life of global managers.
31
Learning Strategy
Throughout this book, our emphasis is on developing critical
analysis skills, not drawing arbitrary conclusions or selecting
favorites. This is done in the belief that successful global
managers will focus more on understanding and flexibility than
evaluation and dogmatism. Such understanding can facilitate a
manager’s ability to prepare and act in ways that are more in tune
with local environments. As a result, managers who are better
prepared for future events are more likely to succeed – period. By
integrating these two perspectives – explorations into both the
cultural drivers underlying managerial action and common
management strategies used in the field – it is our intention to
present a more process-oriented look at global managers at work.
To accomplish this, we propose a three-stage learning
strategy to guide managers in their developmental activities:
Stage 1. This strategy begins in Chapter 1 with an
exploration of the challenges and opportunities facing
global managers. Here we examine the changing nature of
global business and global managers. Basic global
business understanding represents the foundation upon
which management development is built. Various types of
global managers are reviewed. Finally, we introduce the
twin concepts of multicultural competence and global
management skills that form the basis for the remainder of
the book.
32
Stage 2. In Chapters 2–4, we explore the global manager’s
workplace, which incorporates three interrelated parts: the
cultural, organizational, and managerial environments.
Added to this is the need to recognize a variety of
situational contingencies or context variables that serve to
make virtually any global work environment unique.
Stage 3. Finally, in Chapters 5–10, we explore six critical
global management skills that are important for
interpersonal, as well as managerial, success in the global
workplace. These are cross-cultural communication, global
leadership, managerial ethics, global partnerships, global
teams, and global assignments. Chapter 11 then
summarizes what has been learned throughout the book
and discusses where we go from here. What are the future
challenges facing global managers?
Each chapter begins with clear learning objectives, and concludes
with a Manager’s Notebook that highlights specific strategies for
successful skill development and implementation and a Chapter
Review section that includes a summary, key concepts, and
discussion questions. Management applications are incorporated
into each chapter to illustrate how concepts work in the field.
Cases, exercises, and video clips are available on a companion
website for use with this book. Three third-party self-assessment
inventories are also available for added learning. Taken together,
it is our hope that we have provided a useful guide to developing
the skill set managers will require to tackle the challenges – and
opportunities – in the coming years.
33
Acknowledgements
In writing this book, we were able to draw on our research,
teaching, and consulting experiences in thirty-five countries
around the world. We also learned from our global colleagues,
strategic partners, and students, and believe that these
experiences have made this a better book. The field is fortunate in
having so many knowledgeable and committed scholars who are
dedicated to quality research and conscientious teaching. Indeed,
few projects of this magnitude could be successful without their
many contributions.
Any successful book is a joint venture between authors,
colleagues, instructors, students, and publishers. In this regard,
we were fortunate to have received help and support from
colleagues, instructors, and outside reviewers aimed at making
this volume useful for readers interested in global management.
This includes Luciara Nardon and Carlos Sanchez-Runde, who
helped create earlier editions of this volume but are now pursuing
other
academic
endeavors.
We
also
thank
Ramanie
Samaratunge, Subamaniam Ananthram, Di Fan, and Ying Lu, who
helped develop cases in support of this text. Student comments,
both in our own classes and those of others, have helped us
improve the final work.
We appreciate the helpful comments and suggestions on this
book made by our colleagues in the field, including Harold Bashor,
Cam Caldell, Ignacio Canales, Val Finnigan, Jerry Haar, Keith
Jackson, Jim Johnson, Yvonne McNulty, Asbjorn Osland, David
Palmer, Carol Reade, Jenny Rodrigues, Laurence Romani, Suk
34
Sakchutchawan, Andrea Smith-Hunter, Natalie Wilmot, and Ying
Zhang. Finally, we wish to recognize the support of the Donald
and Sally Lucas Family Foundation, the Global Leadership
Advancement Center at San José State University, the Lundquist
College of Business at the University of Oregon, and the
International Organizations Network.
We are also indebted to the team at Cambridge University
Press for their help and support throughout the revision and
production process. They lived up to their reputation as a firstclass group of people to work with. In particular, we wish to thank
Valerie Appleby, Nicola Chapman, Rosie Crawley, Caitlin Lisle,
Toby Ginsberg, Lucy Russell, Lisa Pinto, and Paula Parish for
their advice, patience, and support throughout this project.
Finally, we wish to express our appreciation for the
considerable help, love, and support from our families – Sheila,
Kathleen, and Allison for Richard, and Asbjorn, Jessica, Joe, Zoe,
Lucy, Michael, Anna, Jacob, Gavin, Katrina, Scott, Izzy, and June
for Joyce. Throughout, our families have been there for us in
every way possible, and for this we are indeed grateful.
Richard M. Steers
Joyce S. Osland
35
Part 1
◈
Global Managers: Challenges
and Opportunities
36
1
Global Managers in a
Changing World
◈
Chapter Outline
The Changing World of Business
Management Application 1.1 Local Consequences of
Global Connectivity
The Changing World of Management
Global Managers at Home and Abroad
Management Application 1.2 Dermot Boden, Expatriate
Management Application 1.3 Mary Gadams, Global
Entrepreneur
Management Application 1.4 Roos Dekker, Home
Country Manager
Multicultural Competence
MANAGER’S NOTEBOOK: Developing Global
Management Skills
Chapter Review
37
Learning Objectives
Examine the changing business environment.
Examine the changing management environment.
Explore different global management career options,
both at home and abroad.
Review learning strategies for developing multicultural
competence and global management skills.
In the future, the ability to learn faster than your competitors
may be the only sustainable competitive advantage.1
Arie de Geus
Royal Dutch Shell
During
a
dinner
meeting
in
Prague
between
marketing
representative Hiroko Numata and her Czech host, Irena Novák,
confusion quickly emerged when the Japanese guest went off to
find the restroom. She began to open the door to the men’s room
when her host stopped her. “Don’t you see the sign?” Novák
asked. “Of course I do,” Numata responded, “but it is red. In our
country, a red-colored sign means it’s the ladies’ room. For men, it
should be blue or black.” Novák returned to her table,
remembering that she too had looked at the sign but had focused
on what was written, not its color. She wondered how many other
things she and her Japanese colleague had seen or discussed but
interpreted very differently.2
38
Hiroko Numata and Irena Novák face the same challenge that
is shared by many others. We live in a contradictory and turbulent
world, in which there are few certainties and change is constant.
Over time, we increasingly come to realize that much of what we
think we see around us can, in reality, be something entirely
different. We require greater perceptual insight just as the
horizons become cloudier. Business cycles are becoming more
dynamic and unpredictable, and companies, institutions, and
employees come and go with increasing regularity. Much of this
uncertainty is the result of economic forces that are beyond the
control of individuals and companies. Much results from recent
waves of technological change that resist pressures for stability
and predictability. Even more results from the failures of
individuals and corporations to understand the realities on the
ground when they pit themselves against local institutions,
competitors, and cultures. Knowledge is definitely power when it
comes to global business and, as our knowledge base becomes
more uncertain, companies and their managers seek help
wherever they can find it.
Considering the amount of knowledge required to succeed in
today’s global business environment and the speed with which
this knowledge becomes obsolete, it is the thesis of this book that
mastering learning skills and developing an ability to work
successfully with partners in different parts of the world may well
be the best strategy available to managers who want to succeed.
Business and institutional knowledge is transmitted through
interpersonal interactions. If managers are able to build mutually
beneficial interpersonal and multicultural relationships with
partners around the world, they may be able to overcome their
39
knowledge gaps. The aim of this book, then, is to develop
information, learning models, and global skills that managers can
build upon to successfully pursue their job responsibilities,
corporate missions, and careers in the global workplace.
As managers increasingly find themselves working across
borders, their list of cultural contradictions continues to grow.
Consider just a few examples. Most French and Germans refer to
Europeans as “we,” while many British refer to Europeans as
“they.” To some Europeans, Japan is part of the “Far East,” while,
to some Japanese, Europe is part of the “Far East”; it all depends
on where you are standing. Many Central American organizations
do not define Belize as part of Central America, despite the
English-speaking country’s shared border with Guatemala and
southern Mexico. Criticizing heads of state is a favorite pastime in
many countries around the world but criticizing the king in
Thailand is a felony punishable by fifteen years in jail. Every time
Nigerian-born oncologist Nkechi Mba fills in her name on a form
somewhere, she is politely told to write her name, not her degree.
In South Korea, a world leader in IT networks, supervisors often
assume employees are not working unless they are physically
sitting at their desks in the office. When you sink a hole in one
while playing golf with friends in North America and Europe, it is
often customary for your partners to pay you a cash prize; in
Japan, you pay them. The head of Nigeria’s Niger Delta
Development Corporation was fired from his job after it was
discovered that he had paid millions of dollars of public money to
a local witch doctor to vanquish a rival. Finally, dressing for global
business meetings can be challenging: wearing anything made of
leather can be offensive to many Hindus in India; wearing yellow
40
is reserved for the royal family in Malaysia; and white is the color
of mourning in many parts of Asia.
When confronted by such examples, many observers are
dismissive, suggesting that the world is getting smaller and that
many of these troublesome habits and customs will likely
disappear
over
time
as
globalization
pressures
work
to
homogenize how business is done – properly, they believe –
across national boundaries. This may be incorrect, however. The
world is not getting smaller; it is getting faster, and managers
ignore this fact at their own peril. Many globalization pressures are
currently bypassing – and, indeed, in some cases actually
accentuating – divergent local customs, conventions, and
business practices, if for no other reason than to protect local
societies from the ravages of economic warfare. What this means
for managers is that many of these and other local customs will
likely be around for a long time, and wise managers will prepare
themselves to capitalize on these differences, not ignore them.
With this in mind, in this chapter we begin our exploration of
management across cultures by exploring four key topics aimed at
laying the foundation for developing global management skills:
the changing nature of business, with new relationships,
challenges, and uncertainties
the changing nature of management, with new strategies,
responsibilities, and opportunities
the diversity of global managers, with different skill sets,
locations, and responsibilities
41
a learning strategy for developing multicultural competence
and global management skills.
42
The Changing World of Business
Much of what is being written today about the changing global
landscape is characterized by a sense of energy, urgency, and
opportunity. We hear about developing global leaders, building
strategic alliances, launching global product platforms, leveraging
technological
breakthroughs,
first-mover
advantages,
global
venturing, outsourcing, sustainable supply chains, and, most of
all, making money. Action and winning seem to be the operational
words. Discussions about global business assume a sense of
perpetual dynamic equilibrium. We are told that nothing is certain
except change, and that winners are always prepared for change;
we are also told that global business is like white water rafting –
always on the edge; and so forth. Everything is in motion, and
opportunities abound.
At the same time, however, there is another, somewhat more
troublesome side to this story of globalization that is discussed far
less often, yet it is equally important. This side is characterized by
seemingly
endless
conflicts
with
partners,
continual
misunderstandings with suppliers and distributors, mutual distrust,
perpetual delays, ongoing cost overruns, political and economic
risks and setbacks, constant travel, personal stress, and, in some
cases, lost careers. Indeed, over 50 percent of international joint
ventures fail within the first five years of operation. The principal
reasons cited for these failures are cultural differences and
conflicts between partners.3
Problems such as these have several potentially severe
consequences for organizational success, especially in the area of
43
building workable global partnerships. Although it is not easy to
get a handle on all the changes occurring in the global
environment, three prominent changes stand out: the evolution
from intermittent to continual change, from isolation to increasing
interconnectedness, and from biculturalism to multiculturalism
(see Exhibit 1.1).
Exhibit 1.1 Changing world of business
44
Continuous Change
Change is everywhere. Companies, products, and managers
come and go. This turbulence increasingly requires almost
everyone, from investors to consumers, to pay greater heed to the
nature, scope, and speed of world events, both economically and
politically. Details of contracts and agreements have become more
important. Personal relationships in business, even though they
are under increasing strain due to the pace and nature of global
work, remain one of the last safe havens in an otherwise largely
unpredictable world. Across this changing environment – indeed,
as one of the principal causes of these changes – we can see the
relentless development and application of new technologies,
especially with regard to the digital revolution. Technology is
largely held to be a principal driver of globalization and the key to
national economic development and competitiveness. At the same
time, globalization has resulted in an increase in the transfer and
diffusion of technological innovation across borders, as well as
competition among nations to develop and adopt advanced
technologies. As business becomes more global, the need for
better and cheaper technology increases, pushing technological
development to new heights.
45
Increased Interconnectedness
Globalization is not a debate; it is a reality. This is not to say that
the challenges and potential perils of globalization are a recent
phenomenon. Indeed, quite the contrary is true; globalization has
always been a major part of commerce. What is new, however, is
the magnitude of globalization today and its impact on standards
of living, international trade, labor conditions, governments, social
welfare, culture and community, and environmental sustainability.
The economic and political power of India and China continues to
grow exponentially, and both are struggling to manage the positive
and negative consequences of growth and development. Russia
is trying to reassert itself politically and economically in the world,
overcome rampant corruption in its business sector, and reform its
economic system in order to build local companies that can
compete effectively in the global economy. Arab nations are
struggling for greater democracy and human rights, while South
Africa continues to struggle to shed the vestiges of its old
apartheid system and build a new stronger economy based on
more egalitarian principles. Brazil, once known for its leadership
and economic strength as an emerging BRICS economy, is
currently retrenching due to recession and political turmoil.4
Throughout, there is a swelling consumer demand for high-quality
but low-cost goods and services that challenge most governments
and corporations. In a nutshell, welcome to today’s increasingly
global economy. What are the ramifications of this increase for
organizations and their managers? What are the implications for
46
developed and less developed countries? Is there a role for
governments and public policy in this revolution?
47
Increased Multiculturalism
In the past, international business relied largely on expatriates
who were sent by their companies to live and work in foreign
countries, some of whom became bicultural as a result. Today,
however, the increasing intensity and diversity that characterize
the global business environment require managers to succeed
simultaneously in multiple cultures, not just one, regardless of
where they live. What exactly does this mean? Multiculturalism
is the view that cultures, races, and ethnicities, particularly those
of minority groups, deserve recognition of their differences within a
dominant social culture.5 That acknowledgement can take the
forms of recognition of contributions to the cultural life of the
community as a whole, a demand for special protection under the
law for certain cultural groups, or autonomous rights of
governance in cultures. Multiculturalism is both a response to the
existence of cultural pluralism in modern societies and a way of
compensating cultural groups for past exclusions. It seeks the
inclusion of the views and contributions of diverse members of
society while maintaining respect for their differences and
withholding the demand for their assimilation into the dominant
culture. And, perhaps most important for companies, it provides
an underutilized human resource in support of a company’s
mission and goals.
48
Local Consequences of Global Connectivity: Some
examples
To better understand how the increasingly complex business
environment can have local consequences and not just a global
one, take a look at some recent examples:
Postal strike in Canada. When unionized Canada Post
workers went on strike for better wages and working
conditions, their goal was to create sufficient customer
hardships that would force management to settle.6 Local
and international mail deliveries were halted for several
weeks. As a result, millions of people who were
accustomed to paying their bills through the mail simply
converted to electronic bill pay. E-mails replaced traditional
letter-writing. As a result, when the strike was settled,
Canada Post had lost millions of customers and the cost of
delivering a letter had increased because of the reduced
mail volume and increased delivery costs. Electronics had
replaced people.
Food prices in Egypt. Because of continued water
shortages, Egypt annually imports 90 percent of its wheat
from Russia. When wildfires and heat waves significantly
reduced Russia’s wheat crop, food prices in Egypt rose 30
percent. The results were disastrous for the Egyptian
economy, while Russia lost valuable export revenue.7
Cashew processing in India. For several hundred years,
Kollam, an Indian Ocean port city, was the world’s center
49
for cashew processing.8 Cashews were shelled by hand,
mostly by women. Kollam’s near-monopoly on processing
created wealth for some and stability for others. Wages
were low and working conditions were poor. But when
Indian workers began asking for improved wages and
conditions, entrepreneurs in Vietnam saw an opening. They
realized that cashew processing was essentially a
manufacturing job in which mechanization might provide an
edge. Inventing their own processing machines, Vietnam
quickly began to capture much of the cashew market,
eclipsing the Indian processors. Now, however, African
entrepreneurs are visiting Vietnam, wishing to purchase
cashew processing machines. The value chain is always
moving.
Ethanol and tortillas in Mexico. When the use of ethanol
as an additive to gasoline production increased significantly
in American and European markets, corn prices around the
world skyrocketed, and the price of tortillas in Mexico, a
staple food among Mexico’s poor, nearly doubled. A short
time later, however, the bottom fell out of the ethanol
market as oil prices dropped and the price of corn fell.9
Then, a year later, oil prices skyrocketed again, as did the
price of corn. Caught in the middle of all of this is the
Mexican peasant, trying to survive. Unintended, yet
nonetheless very real, consequences.
Trade barriers in the US. When the US government
increased import tariffs from other countries on steel and
aluminum in order to secure more favorable trade terms,
50
the affected countries quickly retaliated with trade barriers
of their own, mostly against US agricultural products. As a
result, American steel and aluminum companies prospered,
while many American farmers were decimated.10
51
Management Application 1.1 Local Consequences of
Global Connectivity
1. Based on your reading of these examples, did any
of these countries have a way of buffering themselves
from the global economic and technological changes
that confronted them?
2. Was there an alternative solution for the head of
Canada Post that would have been better for labor,
management, and consumers?
3. What could the Egyptian government administrators
have done to better protect their country’s food
supply? Why didn’t they do this?
4. If you were hired as an outside consultant, what
would you recommend that the Indian authorities do to
rebuild the crumbling economy in Kollam?
5. In the case of Mexico, do foreign companies have
an obligation, moral or otherwise, to consider the
economic, social, or environmental ramifications of
their actions beyond the confines of their own
borders? Realistically, what, if anything, can
executives do in such circumstances while still
complying with their legal obligations to their
stockholders?
6. Finally, if the US had a sound case to make against
what they saw as unfair trade practices by other
52
countries, was there a better and perhaps more
effective way to go about this?
Taken together, these three global business challenges –
continuous change, increased interconnectedness, and greater
multiculturalism – illustrate just how difficult it can be to work or
manage across cultures in today’s complex, uncertain, rapidly
evolving business environment. As management guru Peter
Drucker noted, “The greatest danger in turbulent times is not the
turbulence, but to act with yesterday’s logic.”11 Furthermore, the
old ways of communicating, negotiating, leading, and doing
business are simply less effective than they were in the past.
Thus, as noted earlier, the principal focus of this book is how to
facilitate management success in global environments by
becoming an effective global manager.
53
The Changing World of Management
What does all of this mean for managers? Things are changing
here, too. For starters, gone are the days when most international
managers prepared for long-term assignments in one country or,
at most, one region at a time. Today these same managers must
deal simultaneously with partners from perhaps a dozen or more
different cultures around the globe. As a result, learning one
language and culture may no longer be enough, as it was in the
past.
In
addition,
the
timeline
for
developing
business
relationships has declined from years to months – and sometimes
to weeks. This requires a new approach to developing managers.
This evolution from a principally monocultural or bicultural
business
environment
to
a
more
multicultural
or
global
environment presents managers with at least three new
challenges in attempting to adapt quickly to the new realities on
the ground:
It is sometimes unclear to which culture we should adapt.
Many multicultural encounters occur on short notice,
leaving little time to learn about the other culture.
Multicultural meetings increasingly occur virtually instead of
through more traditional face-to-face interactions.
All three of these challenges require speed in the absence of
knowledge – a situation not unfamiliar to many managers. As
such, managers require a change in mindset that involves
developing cultural understanding, global management skills, and
54
cultural adaptations skills, as discussed below and throughout this
book (see Exhibit 1.2).
Exhibit 1.2 Changing world of management
55
From Managers to Global Managers
Did you ever wonder what management really is beyond textbook
definitions? Consider two recent definitions: “Management
involves coordinating and overseeing the work activities of others
so that their activities are completed efficiently and effectively”;12
and: “Management is the process of assembling and using sets of
resources in a goal-directed manner to accomplish tasks in an
organizational setting.”13 These are the same definitions we would
have seen a century ago, which implies a certain stability in our
assumption that all managers do essentially the same work.
Indeed, in one of the most frequently cited studies of
management, Henry Mintzberg concludes that “managers’ jobs
are remarkably alike,” whether we are looking at foremen,
company presidents, or government administrators.14 In the end,
“the primary purpose of the manager is to ensure that his or her
organization serves its basic purpose – the efficient production of
specific goods and services.”
While all this may be correct as far as it goes, this line of
reasoning seems to ignore the challenges facing global managers
in performing these roles across cultures. As we discuss
throughout this book, cultural differences can play an important
role in both the conceptualization and practice of management
around the world. People’s conceptions of business management,
as well as their application of management principles, often result
from
a
combination
of
cultural
backgrounds,
personal
experiences, and the situations confronting them. Thus, we must
ask: would a typical Australian manager approach business
56
decisions and actions in the same way as their Indian, Chilean, or
French counterparts? If not, how might their approaches be
different? And how can global managers simultaneously deal with
such diverse worldviews and practices?
Intensifying globalization pressures, along with expanded
educational opportunities around the world, have created a new
reality in the world of management. Like it or not, in today’s
increasingly turbulent and complex business environment many
believe that most people are or are rapidly becoming global
managers, regardless of where they live and work. Perhaps this is
an exaggeration, but probably not much. A few years ago, people
focused considerable attention on the differences between British
managers, Japanese managers, Mexican managers, and so forth.
They were relatively comfortable with their well-intentioned
cultural stereotypes. Today these stereotypes have become
somewhat blurred, as the global economy becomes a reality and
most business is international. This is not to say that substantial
differences no longer exist between managers from various
countries or the ways in which they do business. Of course, they
do. Rather, it is to say that the very definition of effective
management has changed in ways that have little to do with
national origin. Most managers today have to engage with
customers, business partners, and employees from various
regions of the world. Success or failure depends on these
managers’ ability to communicate, negotiate, contract, lead,
organize, coordinate, and control activities across borders.
The responsibility of managers in all of this is to make things
happen – to maximize consumer benefit and the company’s
bottom line. At the same time, society asks – and often demands
57
– that managers pay fair wages, provide safe and equitable
working conditions for their employees, follow the laws and
regulations in the countries where they do business, protect the
environment, act in socially responsible ways, and abide by
ethical norms and professional standards. It is an understatement
to point out that accomplishing these often conflicting goals is no
easy task. In view of this, the question for today’s managers is
how they can best prepare themselves for this brave new world of
global business. Traditional models of management pay only
scant attention to cultural differences. The assumption is that
management is a largely universal pursuit and that the key to
good management is to follow prescribed rules and policies. What
is missing here is a serious consideration of how differences in the
work environment can – and often do – affect how management is
both defined and implemented.
In this regard, recent research findings by Allan Bird and
Joyce Osland suggest that what differentiates global managers
from traditional ones are the increased job demands that
accompany the position, including the following:15
a greater need for broad knowledge that spans both
national and functional boundaries
a strong requirement for wider and more frequent
boundary-spanning, both within and across organizational
and national boundaries
pressures to understand a wider array of stakeholders
when making decisions
58
a heightened need for cultural understanding within a
setting characterized by wide-ranging diversity
a more challenging and expanded list of competing
tensions, both on and off the job
a heightened ambiguity surrounding decisions and related
outcomes
more challenging ethical dilemmas relating to the effects of
globalization.
In view of these demands, it is no wonder that several observers
have noted that being a global manager is not for everyone.16
Clearly, the world of management is changing in directions that
increase both threats and opportunities for all.
59
Characteristics of Global Managers
Thomas A. Stewart, editor of the Harvard Business Review,
observed, “A global manager is set apart by more than a worn
suitcase and a dog-eared passport.”17 To the extent that this
observation is correct, the onus is clearly on managers to prepare
themselves for success in the future. Engaging with managers
and entrepreneurs from different cultures opens up considerable
opportunities to learn more about ourselves, discover new ways of
doing and thinking, and find creative solutions to problems both
old and new. It is clearly part of the developmental process for
most managers; and, in this pursuit, continual cognitive, analytical,
and experiential learning play a significant – and often
underappreciated – role.
Global managers come in all shapes and sizes, as well as
skills and abilities. Indeed, in today’s global economy, almost all
managers are involved in some form or another with global
management. As such, it is difficult – if not impossible – to
develop a precise definition that accurately encompasses all their
activities and responsibilities. As a starting point, however, we
define a global manager as someone who works with or through
people across national and cultural boundaries to accomplish
global corporate objectives. Inherent in this definition is the
assumption that many – if not all – of these managers work with
people from differing cultural backgrounds and, as such, must
somehow accommodate or respond to these differences. This
suggests that a global job title does not in and of itself qualify a
person as a global manager; instead this title depends upon the
60
degree of global complexity and interconnectedness demanded
by one’s job. Also inherent in this definition is the recognition that
some of these cross-cultural interactions may be across countries
with fewer cultural differences than others, such as Canada and
the United States as opposed to Canada and Saudi Arabia. (This
is referred to as cultural distance and is discussed in Chapter 2.)
Indeed, some of these cultural differences can often be found
within a single country, such as English-speaking as opposed to
French-speaking Canada.
Paramount to this definition is the assumption that global
managers are – and must be – different to more traditional
managers (see Exhibit 1.3). In particular, global managers must
first have a worldview, not a national one. In addition, global
managers must understand not just cultural differences, but also
the ways in which to navigate such differences to achieve
corporate
objectives.
They
must
also
be
able
to
seek
partnerships, not domination. Finally, global managers must be
able to exhibit both the competence and the confidence to work
with colleagues and partners from around the world.
Exhibit 1.3 Characteristics of global managers
61
Global Managers at Home and Abroad
Global managers are a heterogeneous bunch and have very
different corporate lifestyles. Some live abroad, some essentially
live in airplanes, and some live at home. Some do all three. Some
work for multinational corporations; some work for themselves.
For the sake of parsimony, and acknowledging that there are
obvious risks in categorizations, we suggest that these global
managers can be roughly divided into four somewhat overlapping
categories: expatriates, frequent flyers, global entrepreneurs, and
home
country
managers.
We
suggest,
further,
that
the
characteristics and cultural challenges of each of these types of
managers can be quite different (see Exhibit 1.4).
Exhibit 1.4 Types of global managers
62
Expatriates
Traditionally, the most common foreign assignments have
involved the long-term relocation of parent-company managers to
various countries in which the parent firm does, or wants to do,
business. Firms have often preferred to use expatriates for a
number
of
reasons,
such
as
needing
parent-company
representation and control in a distant location, providing
developmental opportunities for parent-country managers, or
plugging skill gaps which couldn’t be filled by local workers.18
Expatriates who are assigned to a parent-company’s corporate
headquarters for training or special work are often referred to as
inpatriates; that is, they come “in” to corporate headquarters
instead of going out. Today, however, along with companyassigned expatriates and inpatriates, we also see an increasing
number of self-initiated expatriates who voluntarily move to
another country and seek employment to gain important
experience or better employment opportunities (see Chapter 10).
For an example of a self-initiated expatriate at work, take a
look at Dermot Boden.19 When Korea-based LG determined to
become more globalized in their outlook and business practices,
they set about recruiting several highly experienced foreign
executives and placing them in positions of power where they
could lead a fundamental cultural change. These changes would
then cascade down through the organization from the top. One of
their first new hires was an Irishman named Dermot Boden, who
was given a three-year contract as the company’s new chief
global marketing officer. Boden had built an impressive marketing
63
career at Pfizer, rising to vice president and general manager in its
Japanese headquarters. His job would be to rebrand LG products
with an exciting new image. At the same time, LG hired several
other global executives, mostly from Europe, and soon Boden and
his colleagues represented a quarter of LG’s top management
team. Moving to Seoul, Boden and his colleagues approached
their new jobs with enthusiasm. To bring attention to LG as a “hip”
brand, Boden sought out partnerships with Formula 1 racing
teams and initiated the “Life is Good” branding campaign, a play
on the company’s initials, LG. Customers began to pay more
attention to the brand. Within a year, however, Boden and his
colleagues ran into trouble as LG’s Korean executives began to
chafe at changing their local customs and ways of doing business.
Complaints emerged that the foreigners’ management style was
incompatible with Confucian culture. There was too much conflict,
and insufficient respect for Korean traditions. The more combative
“shake-things-up”
management
style
of
the
new
foreign
executives had run afoul of the existing culture. After just three
years on the job, the contracts of Boden and his colleagues were
not renewed, and they left the company. LG returned to an allKorean executive suite.
64
Management Application 1.2 Dermot Boden, Expatriate
1. As a manager, what did Dermot Boden gain or lose
from his experience with LG?
2. How do you explain the rapid build-up, and equally
rapid termination, of the inpatriate managers at LG?
3. What did LG gain – and possibly lose – from its
three-year experiment with expatriate managers?
4. Overall, what lessons emerge from the LG
experience for other managers entering a self-initiated
expatriate experience?
65
Frequent Flyers
While extended expatriate assignments are often useful, some
have suggested that the days when managers prepared for a
long-term assignment in South Africa, Thailand, or Costa Rica are
rapidly being eclipsed by a new reality in which managers
sometimes seem to spend more time in the air than on the
ground. Enter the frequent flyer. Global assignments of shorter
duration – often accompanied by increased intensity – are usually
focused on specific tasks or projects, and, as such, can often
provide easier ways to assess results.20 In addition, there are
many managers who would not consider uprooting the family for
long-term expatriate assignments but would be interested in
shorter international opportunities. This increases the pool of
talent available for such postings – a big plus, since the demand
for highly qualified international assignees is often higher than the
supply.21 Employees often see short-term assignments as being
easier on their friends and family, as well as their home country
career opportunities.
The
main
challenge
facing
managers
on
short-term
assignments is that they often find themselves in a foreign country
without family and friends, and with a very short time to develop
relationships and become adjusted.22 Since assignees are usually
sent abroad for a short period in order to solve a specific problem
or perform a specific task, they are not given the time to learn the
ropes and adjust to the new locale, as would be the case for
traditional long-term expatriate assignments. Instead, frequent
flyers are often expected to perform as soon as they hit the
66
ground, which increases the challenges – and stresses – of such
assignments. Strong pressures to perform quickly, coupled with a
limited social and family life, frequently lead assignees to work
long hours, enduring high levels of stress and, at times, a poor
work–life balance. As a result, companies have experienced
considerable burn-out among their frequent flyers. One sales
executive observed, “I did a lot of commuting, basically every two
weeks between the United States and Europe,” while an
accounting firm chief executive officer (CEO) noted, “People ask
me why I retired. I was spending 75 percent of my time on
international travel!”23
67
Global Entrepreneurs
The third category of global managers is global entrepreneurs.
Traditionally, start-up companies expanded overseas only after
they had secured their home base. Not anymore. Today
companies are frequently born global. Entrepreneurs don’t
automatically buy raw materials from nearby suppliers or set up
factories close to their headquarters. Now they hunt for the world’s
best manufacturing locations because political and economic
barriers have fallen and vast amounts of information are readily
available. These managers look for talent across the globe, tap
investors wherever they may be located, and learn how to
manage operations from a distance – the moment they go into
business.
Global entrepreneurs cross borders for two reasons. One is
defensive: To be competitive, many ventures must globalize some
aspects of their business (e.g., manufacturing, service delivery,
capital sourcing, or talent acquisition) as soon as they start
operations. The other reason is offensive: Many new ventures are
discovering that a new business opportunity can span more than
one country, or that they can use geography and distance to
create new products or services.
RacingThePlanet was founded by Mary Gadams to sponsor
seven-day 250 km marathons in the world’s most hostile
environments.24 Her team works out of a small Hong Kong office,
but the company operates in the Gobi Desert in Mongolia, the
Atacama Desert in Chile, the Sahara Desert in Egypt, and
Antarctica. Distance has generated the opportunity: If the deserts
68
were accessible, participants and audiences would find the races
less attractive, and the brand would be diluted. RacingThePlanet
isn’t just about running, however; it is also about creating a global
lifestyle brand, which Gadams uses to sell backpacks, emergency
supplies, clothing, and other merchandise, as well as to generate
content for the multimedia division, which sells video for websites
and Global Positioning System (GPS). One idea; one global
entrepreneur; one more success story.
Management Application 1.3 Mary Gadams, Global
Entrepreneur
1. In the example of RacingThePlanet, what kind of
training or background experiences might help Mary
Gadams prepare for her chosen career?
2. What personal characteristics or attributes might
help support Mary in her business venture?
3. Where do global entrepreneurs get the ideas that
create new business opportunities?
69
Home Country Managers
Finally, there is a category of global managers that many people
often forget about. These are home country managers, who
typically work in their home country but nonetheless interact on a
regular basic with people from other countries and cultures. We
tend to think of global managers as traveling the world or living
abroad on behalf of their employers, and many do. But, in fact,
there are many global managers who never leave home. Despite
working in the home office, they live and work in a multicultural
world that includes both face-to-face and distant communications
with co-workers, suppliers, customers, clients, partners, and so
forth on behalf of corporate goals. Some of these people work
electronically through social media and other electronic tools to
manage international logistics with buyers and suppliers, while
others support customer service for current and prospective
customers. Still others conduct global research on future company
products and services. Some are hosts to company visitors from
around the world, while others support global media efforts. In all
cases, home managers also require global skills and multicultural
understanding to succeed.
Equally important here are home country managers who may
have
no
international
face-to-face
contacts
per
se,
but
nonetheless work in an environment consisting of colleagues and
customers from divergent cultural backgrounds. As such, an
understanding of multiculturalism is required at home, a theme
which is discussed throughout this book. These managers, too,
can benefit from an understanding of cultural differences and
70
cross-cultural skills. Thus, the argument advanced here is that
almost all managers in today’s global economy are global
managers, whether they think of themselves as such or not. And
all
require
similar
job
skills
to
fulfill
their
managerial
responsibilities.
One example of a home country manager is Roos Dekker.
Dekker is a logistics coordinator at Philips Healthcare, a division
of a large Dutch multinational. Her responsibilities include
coordinating global logistics for the company’s Healthcare@home
products, including supplies and product deliveries to and from
Latin America, Asia, and Africa. Dekker was born and raised in
the Netherlands and attended local schools. While she has
traveled throughout Europe, she has never left the continent. Like
many Dutch, she speaks fluent German and English, as well as a
little French, in addition to her native language. Dekker took the
job at Philips because she enjoys working with people from
different cultures, is a good problem-solver, and has good
communication skills. She had also studied logistics and supply
chain management as part of her business degree and was
confident this would help her in her daily challenges. However,
global travel would be difficult for Roos, for family reasons.
71
Management Application 1.4 Roos Dekker, Home
Country Manager
1. While Roos Dekker is multilingual, none of her
foreign language capabilities match those of her
overseas colleagues and partners in Latin America,
Asia, or Africa. Is this a problem and, if so, what could
she realistically do to mediate this situation?
2. How might global management skills differ for home
country managers like Roos Dekker compared to
managers working on foreign assignments such as
expatriates or frequent flyers?
3. What could Roos Dekker do to further develop her
global management skills without traveling beyond the
Dutch border?
4. What could her employer do to encourage and
support her as a global manager working in her home
country?
Once again, it is important to remember that these four
categories of global managers – expatriates, frequent flyers,
global entrepreneurs, and home country managers – represent
overlapping categories. Clearly, expatriates today spend time
back in their home offices, while many home country managers
must travel at times to do their work. Our purpose in differentiating
among these four categories, even in terms of general trends, is
to highlight differences in managerial responsibilities and
72
challenges in doing business across national borders. All such
managers,
however,
require
an
understanding
influences on human behavior in order to succeed.
73
of
cultural
Multicultural Competence
Globalization pressures are a serious challenge for businesses
and the way in which they conduct themselves in the global
economy, and they have a direct influence on the quality and
effectiveness of management. Globalization presents companies
with opportunities as well as challenges. The manner in which
businesses respond – or fail to respond – to such challenges will
in large measure determine who wins and who loses. Companies
that succeed will need to employ managers with sufficient
economic grounding, political and legal skills, and cultural
awareness to decipher the complexities that characterize their
surrounding environment. Tying this all together will be the
management know-how to outsmart, outperform, or outlast the
competition on a continuing basis. Although globalization seems
to be inevitable, however, not all cultures and countries will react
in the same way, and therein lies one of the principal challenges
for managers working across cultures.
In view of these myriad challenges, managers viewing global
assignments – or even global travel – would do well to learn as
much as they can about the world in which they will work. The
same holds true for local managers working in their home
countries, where the global business world is increasingly
challenging them on their own turf. Like it or not, with both
globalization and competition increasing almost everywhere, the
challenge for managers is to outperform their competitors,
individually or collectively. This can be attempted either by
focusing exclusively on one’s own company’s self-interests or by
74
building mutually beneficial strategic alliances with global
partners. Either way, the challenges and pitfalls can be significant.
Another important factor to take into consideration here is a
fundamental shift in the nature of geopolitics. No longer do global
business leaders focus on one or two stock markets, currencies,
economies, or political leaders. Today’s business environment is
far too complex and interrelated for that. Contrary to some
predictions, however, nation states and multinational corporations
will remain both powerful and important; we are not, in fact,
moving
towards
a
“borderless
society.”
Global
networks,
comprising technological, entrepreneurial, social welfare, and
environmental interest groups, will also remain powerful. Indeed,
global networks will increasingly represent power, instead of
traditional or historic institutions. Like future political, social, and
environmental
endeavors,
future
economic
and
business
endeavors will hopefully be characterized by a search for common
ground, productive partnerships, and mutual benefits. Whether or
not this turns out to be true remains to be seen.
75
Multicultural Competence and Managerial Success
As globalization pressures increase and managers spend more
time crossing borders to conduct business, the training and
development community has increasingly advocated more
intensive analyses of the criteria for managerial success in the
global economy. As more attention is focused on this challenge, a
growing cadre of management experts is focusing on the need for
managers to develop perspectives that stretch beyond domestic
borders. This concept is identified in many overlapping and
nuanced ways:
A global mindset is typically defined as a complex cognitive
structure, characterized by an openness to and articulation
of multiple cultural and strategic realities on both global and
local levels, and the cognitive ability to mediate and
integrate across this multiplicity.25
Cultural intelligence is a related term, generally referring to
a person’s capability to function effectively in situations
characterized by cultural diversity.26
As discussed below, we prefer the term multicultural
competence because of its simplicity and lack of jargon.27
Whatever it is called, its characteristics and skills are in increasing
demand as firms large and small, established and entrepreneurial,
strive for global competitiveness.
The concept of multicultural competence and how it can be
developed is at the heart of this book. The skills and abilities
discussed throughout this volume represent an effort to develop
76
such competence. The fundamental challenge of multicultural
competence isn’t whether or not managers possess it; rather, it is
a question of how much they possess. It is a question of degree.
Simply put, better trained managers – especially those with higher
levels of multicultural competence – tend to succeed in
challenging foreign environments more often than those with
lower levels of competence. It is as simple as that.
The challenges discussed throughout this chapter are more
successfully met by hard work, critical analysis, serious reflection,
and attentive behavior than any of the readily available quick
fixes. To accomplish this, managers will need to develop some
degree of multicultural competence as an important tool to guide
their social interactions and business decisions, and prevent
themselves from repeating the intercultural and strategic mistakes
made by so many of their predecessors. Clearly, working and
managing in the global economy requires more than cross-cultural
understanding and skills, but we argue that, without such skills,
the manager’s job is all the more difficult to accomplish. If the
world is truly moving towards greater complexity, interconnections,
and corporate interrelationships, the new global manager will
obviously need to play a role in order for organizations and their
stakeholders to succeed.
Former
Swiss-based
ABB
chairman
Percy
Barnevik
observed, “Global managers are made, not born. This is not a
natural process.”28 Becoming a global manager is the result of a
process, a career path streaming through different assignments
and cultures. It is a journey, not an end state. Throughout, we
suggest that what differentiates effective global managers is not
so much their managerial skills – although this is obviously
77
important – but the combination of these skills with additional
multicultural competencies that allow people to apply their
managerial skills across a diverse spectrum of environments (see
Exhibit 1.5). It is this synergistic integration of basic management
skills working in tandem with a deep understanding of how
organizations and management practices vary across cultures
that differentiates the successful from the less successful global
managers.
Exhibit 1.5 Developing global management skills
Whether relocating to a foreign country for a long stay,
traveling around the world for short stints, or dealing with
foreigners in one’s home country, managers often face important
cultural challenges. Different cultures have different assumptions,
behaviors,
communication
styles,
and
expectations
about
management practice. The ability to deal with these differences in
ways that are both appropriate and effective is at the heart of
multicultural competence. It represents the capacity to work
successfully across cultures. Multicultural competence is more
than being polite or empathetic to people from other cultures; it is
getting things done through collective efforts by capitalizing on
cultural diversity.
78
Characteristics of Multicultural Competence
Multicultural competence can be seen as a way of viewing the
world with a particular emphasis on broadening one’s cultural
perspective as it relates to cross-cultural interpersonal behavior
(see Exhibit 1.6).29 In other words, it asks the question: What can
we learn from people around us from different cultures that can
improve our ability to function effectively in a multicultural world?
This includes elements of curiosity, awareness of diversity, and
acceptance of complexity. These abilities and skills incorporate
both personal work styles as well as general perspectives about
life and well-being (see Exhibit 1.6).
Exhibit 1.6 Multicultural abilities and skills of effective
managers
Moreover, people with multicultural competence tend to open
themselves up by rethinking boundaries and changing their
behaviors. They are curious and concerned with context,
possessing an ability to place people, current events, and tasks
into historical and probable future contexts alike. They accept
inherent contradictions in everyday life and have the ability to be
comfortable with continual change. And they are committed to
diversity, consciousness and sensitivity, as well as valuing
79
diversity itself. Behaviorally, they exhibit a willingness to seek
opportunities in surprises and uncertainties, including an ability to
take moderate risks and make intuitive decisions. They focus on
continuous improvement, with a capacity for self-improvement and
helping others develop. They take a long-term perspective on
activities and plans, focusing on long-term results and not
obsessing on short-term problems or results. Finally, they strive to
maintain a systems perspective in their lives and jobs, including
an ability to seek out interdependencies and cause–effect
relationships. Developing these qualities is a tall order for any
manager, but success in these areas will go a long way towards
becoming that successful manager that companies seek and
require.
80
Manager’s Notebook Developing Global Management
Skills
It seems clear that as the world of business draws closer
together, companies in all countries will require managers
who can work in a truly global environment. In this
environment, successful managers bring a deep and broad
understanding of how to capitalize on cultural differences in
ways that enhance corporate goals and also employee
welfare. In large measure, this is what distinguishes
managers
who
can
succeed
only
in
their
local
surroundings from those who can succeed in the global
economy. They have also developed a way of thinking
about the world that is flexible and inclusive, and guides
their behavior across cultures and national boundaries. In
this regard, we view global management skills as
representing
the
integration
and
application
of
management and cross-cultural interpersonal skills in ways
that capitalize on both skill sets to achieve corporate goals
and managerial responsibilities.
We view the development of these skills as consisting
of three developmental stages (see Exhibit 1.7):
Stage 1. Understand global business and the
challenges facing global managers. Managers must
recognize the complex nature of the global business
environment and the role played by managers in
navigating this environment, as discussed in this
chapter. This includes a fundamental understanding of
81
the characteristics of the global business environment
(e.g., how the global economy works, an
understanding of global logistics, etc.), as well as a
recognition of both the changing nature of business
and the changing nature of management.
Stage 2. Understand cultural, organizational, and
managerial environments. Managers must also
grasp the intricacies and interrelationships between
the cultural, organizational, and managerial
environments (see Chapters 2–4). It is important here
to understand the cultural milieu in which people live
and work. Organizations in many ways represent
microcosms of these cultural environment. Work and
work values derive from our cultural foundations and
collective socialization processes, as do our disparate
approaches to management hierarchies and practices.
And throughout, situational contingencies such as
personal characteristics, location, and timing often
play a critical role. Taken together, this knowledge and
understanding provide useful guidelines for today’s
global business managers.
Stage 3. Develop multicultural competence and
global management skills. Finally, managers must
develop a capacity to adapt traditional management
skills to an increasingly global environment (see
Chapters 5–10). In particular, they need to understand
where and how to use the following interpersonal skill
set: communication skills; leadership and change
82
skills; ethical and social responsibility skills;
negotiation and partnering skills; on-site and virtual
global team skills; and global living and working skills.
Taken together, we view these three strategies as a
roadmap for developing both multicultural competence and
the requisite global management skills necessary for
managerial success in the global economy. It is around this
model that the book has been organized.
Exhibit 1.7 Learning model for developing global
management skills
83
Chapter Review
84
Summary
Considering the amount of knowledge required to succeed
in today’s global business environment and the speed with
which this knowledge becomes obsolete, mastering
learning skills and developing an ability to work
successfully with partners in different parts of the world
may well be the best strategy for managers who want to
succeed.
The world of business is changing in at least three ways
towards continuous change, increased interconnectedness,
and increased multiculturalism. The old ways of
communicating, negotiating, leading, and doing business
are simply less effective than they once were.
The world of management is also changing towards
increased understanding of cultural influences in the
workplace, increased global management skills, and
increased cultural adaptation skills. Like it or not, in today’s
increasingly turbulent and complex business environment,
everyone is now or is rapidly becoming a global manager,
regardless of where they live and work.
Today’s global managers possess a number of key skills,
including: an ability to view the world from a holistic
standpoint, taking a worldview, not a national one; an
understanding of cultural differences and an ability to
navigate these differences to achieve corporate objectives;
an understanding of the difference between seeking
partnerships and seeking domination; and an ability to
85
demonstrate both competence and confidence in working
with global partners and colleagues.
Four types of global managers were identified –
expatriates, frequent flyers, global entrepreneurs, and
home country managers. Each requires different skills and
has different responsibilities, but all require basic global
management skills to be successful.
What differentiates effective global managers is not so
much their managerial skills – important though these
obviously are – but the combination of these skills with
additional multicultural competencies that allow people to
apply their managerial skills across a diverse spectrum of
environments. In other words: global management skills =
managerial competence + multicultural competence.
Being multiculturally competent is more than just being
polite or empathetic to people from other cultures; it is
getting things done through collective efforts by capitalizing
on cultural diversity.
A learning model is proposed here consisting of three
stages: developing basic global business skills;
understanding cultural, organizational, and managerial
environments; and developing global management
interpersonal skills.
86
Key Concepts
expatriate
frequent flyer
global entrepreneur
global manager
global management skills
home country manager
inpatriate
management
multicultural competence
multiculturalism
self-initiated expatriate
87
Discussion Questions
1. It was suggested in this chapter that the world is not getting
smaller; it is getting faster. Do you agree or disagree with this
statement? If so, what does this mean for global managers?
2. Experts seem to agree that for most businesses, globalization
is the pathway to survival and success. But most does not mean
all. What are the characteristics of businesses that can thrive
without globalization? Explain.
3. Over 50 percent of international joint ventures fail within the first
five years of operation. What, if anything, can managers do to
reduce this failure rate?
4. Swiss and German firms have long played a leading role in
technological innovation, electronic design, and precision
engineering, yet they play only a marginal role in the huge global
market for mobile phones, tablets, and laptop computers. Why is
this?
5. Three characteristics of the changing global landscape were
discussed in this chapter: from intermittent to continuous change;
from isolation to increasing interconnectedness; and from
biculturalism to multiculturalism. Do you believe each of these
characteristics is inevitable, or might future events serve to nullify
or change the direction of one or more of these trends? Why?
88
6. It has been repeatedly suggested that managers must think
globally, but act locally. But simple observations tell a different
story; that is, many managers – and politicians – actually think
locally, but act globally. What are the implications of this for the
long-term development of the global economy and global
companies?
7. Is it useful to divide global managers into several categories
such as expatriates, frequent flyers, and so forth for the purposes
of analysis?
8. Like societies, corporations are moving towards increasing
multiculturalism. What are the positive and potentially negative
consequences of this trend for corporations, employees, and
societies at large?
9. What does ABB’s Percy Barnevik mean when he says that
global managers are made, not born, beyond the obvious
implications for training? Is there a suggested developmental
process at work here?
10. What are the key challenges facing global managers in the
coming decade? How can they prepare for these challenges?
11. In view of the complexity of the global environment, it is
suggested here that a three-stage approach to developing global
managers may be useful: 1) understand the challenges facing
89
global managers; 2) understand the cultural, organizational, and
managerial contexts in which global managers operate; and 3)
develop multicultural competence and global management skills.
What are the potential advantages and drawbacks of using such a
model?
12. In your view, what are the three most important lessons from
this chapter for global managers? Explain.
90
Notes
1. Arie de Geus, “Planning as learning,” Harvard Business
Review, March 1988.
2. Personal communication.
3. Arnaud Leroi and Philip Leung, “The secrets to successful
joint ventures,” Forbes, April 11, 2017.
4. BRICS is a term referring to five key emerging economies:
Brazil, Russia, India, China, and South Africa. For many years,
it was called BRIC until South Africa joined. BRICS nations
represent over 40 percent of the world’s population and 23
percent of the global economy.
5. Jennifer Eagan, “Multiculturalism,” in Encyclopedia
Britannica. London: Britannica, 2017.
6. Anita Elash, “Canada Post strike: residents ask if they really
need a postman,” Christian Science Monitor, June 23, 2011, p.
1; Niki Anastasakis, “Possible Canada Post strike could impact
municipalities that rely on mail-in ballots,” Global News,
September 21, 2018, p. 1.
7. M. Reza Benham, “Water and peace in the Middle East,”
Register-Guard, April 1, 2018, p. G1.
8. B. Spindle and V. Agarwal, “Cashews: the snack built by
globalization,” The Wall Street Journal, December 2, 2017, p.
A1.
91
9. Spencer Jakab, “Refiner’s bankruptcy highlights flawed
ethanol system,” The Wall Street Journal, April 3, 2018, p. B12;
Timothy Wise, The Cost to Mexico of US Corn Ethanol
Expansion, Global Development and Environment Institute,
Tufts University, May 2012.
10. Dominic Rushe, “American farmers worry they’ll pay the
price of Trump’s trade war,” The Guardian, June 3, 2018, p. 1.;
Tom Polansek and P. J. Huffstrutter, “Trade war backfire: steel
tariff shrapnel hits US farmers,” Reuters, April 12, 2018.
11. Peter F. Drucker, Managing in Turbulent Times. New York:
Harper & Row, 1980.
12. Stephen Robbins and Mary Coulter, Management, 9th edn.
Upper Saddle River, NJ: Pearson/Prentice Hall, 2006, p. 7.
13. Michael Hitt, Stewart Black, and Lyman Porter,
Management, 2nd edn. Upper Saddle River, NJ:
Pearson/Prentice Hall, 2004, p. 8.
14. Henry Mintzberg, The Nature of Managerial Work. New
York: Harper & Row, 1973, p. 55.
15. Allan Bird and Joyce Osland, “Global competencies: an
introduction,” in Henry Lane, Martha Maznevski, Mark
Mendenhall, and Jeanne McNett (eds.), Handbook of Global
Management. Oxford: Blackwell, 2004, pp. 57–80.
16. Joyce Osland, Allan Bird, and Gary Oddou, “The context of
expert global leadership,” in William Mobley, Ying Wang, and
Ming Li (eds.), Advances in Global Leadership, vol. 7. London:
Emerald Group Publishing, 2012, pp. 107–24.
92
17. Thomas A. Stewart, cited in Philip Harris, Robert Moran,
and Sarah Moran, Managing Cultural Differences. Amsterdam:
Elsevier, 2004, p. 1.
18. Marja Tahvanainen, Denice Welch, and Verner Worm,
“Implications of short-term international assignments,”
European Management Journal, 2005, 23(6), pp. 663–73.
19. Ed Owen, “LG parts company with global marketing chief,”
Campaign US, January 17, 2011; Avi Don, “Amid market
turmoil, Citi’s Dermot Boden has his eye on the brand,” Forbes,
August 7, 2011.
20. Carla Joinson, “Cutting down the days: HR can make expat
assignments short and sweet,” HR Magazine, April 2000, pp. 93
–7.
21. “Traveling more lightly: staffing globalization,” The
Economist, June 24, 2006, pp. 23–4.
22. Helene Mayerhofer, Linley Hartmann, Gabriela MichelitschRiedl, and Iris Kollinger, “Flexpatriate assignments: a neglected
issue in global staffing,” International Journal of Human
Resource Management, 2004, 15(8), pp. 1371–89.
23. Joyce Osland, Allan Bird, Gary Oddou, and Asbjorn Osland,
“Expert cognition in high technology global leaders.” Paper
presented at NDM8, 8th Naturalistic Decision-Making
Conference, Monterey, CA, June 2007.
24. Daniel Isenberg, “The global entrepreneur,” Harvard
Business Review, December 2008.
93
25. Orly Levy, Sully Taylor, Nakiye Boyacigiller, and Schon
Beechler, “Global mindset: a review and proposed extensions,”
in Mansour Javidan, Richard M. Steers, and Michael A. Hitt
(eds.), The Global Mindset. Amsterdam: Elsevier, 2007, pp. 11–
48 (p. 29); Orly Levy, Sully Taylor, and Nakiye Avdan
Boyacıgiller, “On the rocky road to strong global culture,” MIT
Sloan Management Review, 2010, 51(4), pp. 20–2.
26. Soon Ang, Linn Van Dyne, and C. Koh, “Personality
correlates of the four-factor model of cultural intelligence,”
Groups and Organization Management, 2005; P. C. Earley and
Soon Ang, Cultural Intelligence: Individual Interactions Across
Cultures. Palo Alto, CA: Stanford University Press. 2003; P. C.
Earley and E. Mosakowski, “Cultural intelligence,” Harvard
Business Review, 2005, 82, pp. 139–53.
27. Richard M. Steers, Carlos J. Sanchez-Runde, and Luciara
Nardon, Management Across Cultures: Challenges and
Strategies. Cambridge University Press, 2010; Osland, Bird,
and Oddou, “The context of expert global leadership.”
28. Percy Barnevik, cited in Philip Harris, Robert Moran, and
Sarah Moran, Managing Cultural Differences. Amsterdam:
Elsevier, 2004, p. 25.
29. Mansour Javidan, Richard M. Steers, and Michael Hitt. The
Global Mindset. Amsterdam: Elsevier, 2007.
94
Part 2
◈
Culture, Organization, and
Management
95
2
Cultural Environments
◈
Chapter Outline
Overview: Beliefs, Values, and Worldviews
Mapping National Cultures
Using the Models: Cultural Values
Management Application 2.1 Traffic Fines in Finland
Management Application 2.2 Rubber Time in Indonesia
Management Application 2.3 What Is Truth?
Management Application 2.4 Seat Assignments to Tel Aviv
Refining the Models: Cultural Friction, Country Clusters, and Cultural Tightness
Social Complexity, Biculturalism, and Multiculturalism
Management Application 2.5 Multiculturalism in Singapore
MANAGER’S NOTEBOOK: Working Across Cultures
Chapter Review
Learning Objectives
Explore the dynamics of cultures, subcultures, and multiculturalism.
Learn how to use cultural models to better understand cultural differences – and
similarities.
Understand the limitations of cultural models, as well as recent efforts to improve
how we view cultural differences.
Recognize and work to reduce cultural stereotypes.
Explore the challenges and opportunities of cultural diversity and multiculturalism.
The stranger sees only what he knows.
African proverb
96
Grasshoppers are considered pests in North America, pets in China, and appetizers in
Thailand. What does this suggest about the influence of local differences on perceptions of
even the lowly insect? Indeed, what does this suggest about how and why tastes in general
can differ so starkly across nations and regions? If different cultures can have such differing
views about grasshoppers, imagine what they can do with people!
We are a product of our cultures, and these cultures lead us to adopt different
conceptions of reality. Without understanding how to navigate diverse cultural beliefs, values,
and traditions, managers are left to take their chances in today’s high-stake and everchanging environment. From a managerial standpoint, turning in one direction can lead to
success; turning in the other can lead to failure. As a first step, managers can ask two
questions: First, what is meant by the rather amorphous term, “culture”? And second, what is
the relationship between culture, contexts, attitudes, and behaviors? Managers who
understand these issues are typically better prepared to compete and build successful
partnerships.
Philosophers and social scientists have long noted that if you want to understand why
people – including employees and managers – behave as they do, a good place to begin is a
serious look at the cultural environment in which they work. Think about the following three
observations:
Talmud. According to the Talmud, an ancient book of wisdom, “We do not see things
as they are; we see them as we are.”1 This observation is as true today as it was when
it was initially written over two thousand years ago. Culture influences our perceptions
of world events and thereby our values, attitudes, and behaviors. It tells us what is
acceptable and what is not. If cultures differ, though, so do our perceptions, values,
and judgments. What may be pleasant, attractive, agreeable, or acceptable in one
culture may not be in another.
Three Character Classic (San Zi Jing). More than 700 years ago, Chinese scholar
Wang Yinglin compiled a volume of ancient wisdom thought to be from Confucius in
which he observed that “all people are basically the same; it is only their habits and
environments that differ.”2
GLOBE Project. Much more recently, management researcher Robert J. House
observed that the cultures of the world are getting more and more interconnected and
that the business world is becoming increasingly global. “As economic borders come
down, cultural barriers will most likely go up and present new challenges and
opportunities for business. When cultures come in contact, they may converge in
some aspects, but their idiosyncrasies will likely amplify.”3
The Talmud, a Confucian scholar, and a modern-day business professor, each coming
from a very different time and place in history, all understood what has too frequently eluded
many contemporary managers: culture can make a difference in determining how we think
and behave. This is equally true in our personal lives as it is in our work lives. Unfortunately,
97
too many managers have ignored even the most rudimentary cross-national differences while
working overseas or in multicultural or diverse settings, and, as a result, have missed
significant opportunities both for themselves and their companies.
With this in mind, this chapter opens Part 2 of this book and explores several dimensions
of culture and cultural differences, including the following:
the nature and characteristics of cultures and subcultures
an overview of several contemporary models of national cultures
a look at how managers can use these models to better understand organizational
behavior
a look at several refinements to the models and how they can help managers
understand some of the nuances of cultural differences
the challenges and opportunities of cultural diversity and multiculturalism.
Following this discussion, the remainder of Part 2 will focus on organizational and
managerial environments.
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Overview: Beliefs, Values, and Worldviews
In many ways, the cultural environment of global management incorporates much of the
macro environment in which organizations operate. That is, it includes prevailing local social
norms, beliefs, and values, or how societies identify what they stand for. It also includes
patterns of social organization, or how societies organize themselves – for example, is the
society decidedly individualistic or collectivistic? It includes the character and characteristics
of a society’s social institutions, or how societies work to reduce social uncertainty through
legal and religious beliefs. Included here are prevailing legal systems and political processes.
And finally, the macro environment also includes cultural diversity, or how societies deal with
cultural and ethnic differences and challenges within their own communities.
The better that managers can understand the characteristics of the unique cultural
environment in which they find themselves, the more prepared they are to move forward with
new business ventures, contract negotiations, team-building assignments, and more.
Communication becomes easier, as does supervision. Potential ethical or institutional
conflicts can also be more transparent and easier to comprehend and respond to. On the
other hand, without this knowledge, adjusting to local thought patterns and behaviors can
become problematic to the point of failure. In other words, this understanding is not
something to be ignored or treated lightly. We begin our exploration of the cultural
environment with a simple question: What is culture? Unfortunately, this question is not as
simple as it may appear.
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What Is Culture?
Culture is both simple and difficult to understand. It is simple because definitions abound that
are easily understood by any reader. At the same time, however, culture can be difficult to
comprehend, because of its subtleties and complexities. The ancient Chinese Taoist
philosopher Lao Tzu once observed that “water is the last thing a fish notices,” using water as
a metaphor for culture.4 In other words, most people are so deeply immersed in their own
culture that they often fail to see how it affects their patterns of thinking or their behavior; they
are too close to it. It is only when we are “out of the water” that we become aware of our own
cultural biases and assumptions.
A key issue in dealing with different cultures relates to how we recognize culture when
we see it. What do we mean by the term culture? One of the main challenges managers face
when working across cultures is teasing out cultural influences from other phenomena in the
world surrounding us. For example, where does culture end and personality begin? What is
universal behavior and what is not? In this regard, finding a suitable working definition of
culture can be challenging.
Hofstede defines culture as the collective programming of the mind that distinguishes the
members of one human group from another.5 Meanwhile, cultural anthropologist Clyde
Kluckhohn defines culture as the collection of beliefs, values, behaviors, customs, and
attitudes that distinguish the people of one society from another.6 Researchers in the Global
Leadership and Organizational Behavior Effectiveness (GLOBE) project define culture as
shared motives, values, beliefs, identities, and interpretations or meanings of significant
events that result from common experiences of members of collectives that are transmitted
across generations.7 Fons Trompenaars defines culture as the way in which a group of
people solves problems and reconciles dilemmas.8 Noted sociologist Ann Swidler also takes
a problem-solving approach, viewing culture as a “toolkit” of symbols, stories, rituals, and
worldviews that help the people of a culture survive and succeed.9 Finally, cultural
anthropologist Clifford Geertz defines culture as the means by which people communicate,
perpetuate, and develop their knowledge about attitudes towards life.10 Culture is the fabric of
meaning, in terms of which people interpret their experience and guide their actions.
While each of these definitions are useful and share a great deal in common, they all
have nuanced differences that may mean more to academicians than managers. Taken
together, these definitions suggest that, from the standpoint of global management, culture is
perhaps best thought of as addressing three questions: Who are we, how do we live, and
why do we work? These three questions focus attention on individuals, environments, and
work norms and values, and the answers to these questions allow us to draw some inferential
conclusions about work and society, and how managers in general should behave as they
work across cultures.
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Characteristics of Cultures
Three characteristics of culture common to these definitions are particularly salient for our
discussion here:
Culture is shared by members of a group, and, indeed, sometimes defines the
membership of the group itself. Cultural preferences are neither universal around
the world nor entirely personal; they are preferences that are commonly shared by a
group of people, even if not by all members of the group. The fact that most Koreans
and Mexicans like spicy food does not require that all of them prefer such cuisine, nor
does it require that all Dutch and Canadians avoid it.
Culture is learned through membership in a group or community. Cultures, in the
form of normative social behavior, are learned from elders, teachers, officials,
experiences, and society at large. Religion often also plays a major role in such
learning. We acquire values, assumptions, and behaviors by seeing how others
behave, growing up in a community, going to school, and observing our family.
Culture influences the attitudes and behaviors of group members. Many of our
innate beliefs, values, and patterns of social behavior can be traced back to our
particular cultural training and socialization. Neuroscience shows that our cultural
learning as a child even shapes our brains.11 After we grow up, culture still tells us
what acceptable and unacceptable behavior is, attractive and unattractive, and so
forth. As a result, culture heavily influences socialization processes in terms of how we
see ourselves and what we believe and hold dear. This, in turn, influences our
normative behavior, or how we think those around us expect us to behave.
Culture often sets the limits on what is considered acceptable and unacceptable
behavior; it pressures individuals and groups into accepting and following normative behavior.
In other words, culture determines the rules of the road that guide what people can do.
Indeed, newspapers and periodicals are filled with examples of people who set out to break a
“culture barrier.” Rightly or wrongly, these barriers are typically established to ensure uniform
practice, stability, and security among members of a society, and, as a result, societies often
take a dim view of people who buck the system.
Culture’s influence on societal behavior is also evident within institutions, such as legal
systems, public policies, and regulations. As will be discussed in Chapter 3, culture and
institutional requirements often go hand in hand in helping shape both the strategies and the
structures of global organizations. Indeed, they are frequently mutually reinforcing. As
illustrated in Exhibit 2.1, societal beliefs, norms, and values systematically encourage what is
seen as correct (normative) behaviors. These behaviors, in turn, are reflected in laws,
regulations, and public policies. As a result, “correct” behaviors typically follow that serve to
reinforce cultural norms.
101
Exhibit 2.1 Normative beliefs, institutional requirements, and social control
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Culture and Normative Beliefs at Mitsukoshi: An Example
To regard an example of how culture can frame our experiences and behaviors, think about
customer service in your favorite department store. Now consider, is customer service the
same all over the world? Yes, in the sense that customers are served (some better than
others, of course), but also no, in the sense of the mindsets and information processing of the
customer service representatives. For example, foreign observers have long noted how naïve
Western customers in their home countries can sometimes be in responding favorably to
widespread promises of customer satisfaction. By contrast, many Japanese sales clerks such
as those at high-end Mitsukoshi Department Store do not guarantee customer satisfaction;
instead, they aim to do their best and believe that satisfaction will follow. But no guarantees.
For many Japanese managers, a guarantee of satisfaction sounds too pretentious, almost
like an invasion of privacy. “Who are we to judge whether customers will really be satisfied?”
the logic goes.
This behavior is related to differing images concerning the relationship between buyer
and seller. In the West, this is seen as a horizontal exchange among equals. The Japanese,
however, tend to view the relationship with customers in more hierarchical terms, in which the
buyer is more like a master and the seller like a servant. Expressions often heard in the West,
such as “The customer is always right,” make little sense within a hierarchical framework,
because the very assessment of right and wrong implies a position of superiority by those
making the assessment. If customers are always right in the West, they are beyond right and
wrong in Japan. As a consequence, commercial relationships in the West focus on the
transaction and its balance for both buyers and sellers, while caring for the relationship and a
mixture of loyalty and interdependence is generally stressed in Japan.
Finally, sales clerks in Japan typically take buyers’ complaints, remarks, and requests at
face value, while trying to understand exactly what they want. This is done with a lack of
personal involvement that Westerners often see as too cold or lacking in emotion. The
Japanese salesperson presents product information without drawing conclusions for the
customer, unlike Western tactics, whereby, in what often resembles a contest of wills, sellers
try to persuade customers of the need to purchase the product – preferably immediately,
because it is “on sale.” In Japan, sales clerks who interject themselves into the sale too much
lead to customer doubts about the quality of the product or service. Instead, they will
frequently take themselves out of the buyer’s equation and let the product speak for itself.
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Cultures and Subcultures
Understanding cultures requires time, effort, and reflection. We also need to recognize that
looking at national or even regional cultures only gets us so far in understanding and working
with people from different homelands. Why? Because almost everyone is a member of
multiple cultures, including political, family, religious, and professional cultures, and each has
an influence on human behavior (see Exhibit 2.2). Thus, working on an engineering project
with team members from Belgium requires other team members to recognize the education
and standards of the engineering profession, cultural and language differences depending
upon which region of the country they come from, their political beliefs and affiliations, and
their family backgrounds.
Exhibit 2.2 Cultures and subcultures
To continue with our example from Belgium, most citizens see their cultural affiliation in
three ways. First, they are citizens of Belgium and share common national traditions and
beliefs. Second, however, they also have regional affiliations based on geography and
language. Dutch-speaking Flemish set themselves apart from French-speaking Walloons.
Finally, Belgians tend to view themselves as an integral part of European culture and are an
important force within the European Union. Similar regional affiliations can be seen in a
variety of countries, East and West.
Moreover, when attending international meetings, it doesn’t take long before
accountants, engineers, or teachers realize they share common beliefs and professional
standards with their professional colleagues regardless of their country of origin. People with
liberal or conservative political beliefs, or with different religious affiliations, also frequently
cross national and cultural divides. All of this serves to confound sincere efforts to develop
effective working relationships across cultures. The challenges never seem to end. The key
question for managers here is how to capitalize on these differences across subcultures in
104
ways that allow people to experience genuine affinity with groups and organizations and feel
willing to participate in goal-directed endeavors.
105
Emic and Etic Perspectives
Suppose you are an entrepreneur hoping to establish a new chain of fusion restaurants in
Latin America. One of your first challenges is to learn more about the people and places in
this vast diversified region. You do some research and learn that there are two ways to
approach this understanding: emic and etic. An emic perspective tries to understand how
Latinos and Hispanics, in this example, see their own culture and view the world. This is
largely an insider’s view. People who were born and brought up in one culture have been
socialized to the emic perspective of that culture. They have acquired a view of the world
which provides explanations for most of what they experience, as well as providing motives
for their own and other’s actions. An outsider to the culture can learn an emic perspective, but
it takes both time and the suspension of ethnocentrism.
By contrast, an etic perspective focuses on how outsiders describe these cultures. To
gain an etic perspective on a culture requires a bit more work. Not only do you need to
understand the emic perspective of the culture in question, you must also be able to
emotionally detach yourself from that culture in order to arrive at an objective description that
explains observed behaviors and beliefs. This is an outsider’s view in the sense that it
requires one to become a detached, objective, scientific observer of that culture.
Most people from outside a culture will not have an emic perspective about it; they will
have an ethnocentric perspective, interpreting behavior and beliefs in light of their own
culture. Likewise, most people from inside a culture will not have an etic perspective about it;
they will have an ethnocentric perspective, interpreting behavior and beliefs in light of their
own culture. Therein lies the challenge for cross-cultural interactions.12
With this in mind, you begin your search for knowledge and discover that a number of
experts have compiled a list of adjectives that aim to describe general tendencies in
Latino/Hispanic cultures, as summarized in Exhibit 2.3. You see a few strange words, such as
simpatia, palanca, and machismo, but other than that, the patterns offer you a series of
descriptive terms that can be useful. Based on this information, your next step is to put these
descriptions together in a way that creates a composite look at the cultural tendencies in the
region. But how do you do this in a way that is useful for both understanding and application
in the field?
Exhibit 2.3 Emic and etic patterns of Latin American cultures
Emic patterns (inside view)
Etic patterns (outside view)
106
Communication
patterns
Emic patterns (inside view)
Etic patterns (outside view)
Interpersonal orientation:
Respect
Dignity
Loyalty
Simpatia
Behavioral patterns:
Cooperation over competition
Avoidance of criticism and
negative behaviors
Reliance on interpersonal
connections (palanca)
Personalistic attention
High-power distance between
supervisors and employees
Highly differentiated gender
roles (machismo)
Family-centered
Collectivistic over
individualistic
Shame over guilt
Focus on present, not future
Multitasking over sequential
tasks
Mastery of nature
Expressiveness over stoicism
Avoidance of uncertainty
Communication
patterns
Politeness important
Highly networked
High value on music
and art
Context of
communication
important
Compared to US
patterns:
Speak louder and
more frequently
Little direct eye
contact
Use of gestures
Stand closer
Touch others more
often
Source: Based on R. D. Albert, “A framework and model for understanding Latin
American and Latino/Hispanic cultural patterns,” in D. Landis and R. Bhagat (eds.),
Handbook of Intercultural Training. Thousand Oaks, CA: Sage, 1996, pp. 327–48.
107
Mapping National Cultures
Based on what we have learned, the next logical step is to try to tease out both differences
and similarities between cultures to further our understanding and future actions. To
accomplish this in a systematic way, many researchers suggest we use some kind of tool or
mechanism with which to compare cultural and subcultural differences and similarities. Such
a mechanism can provide a heuristic to gain conceptual entry into why some people think
and act differently from others. Many researchers – and many global managers – begin by
comparing cultures on various cultural dimensions, such as hierarchical or egalitarian,
individualistic or collectivistic, and so forth. Although comparing cultural dimensions may
provide only a thumbnail sketch of some general trends between two or more cultures, it can
be useful as a starting point for cross-cultural understanding.
Even this simple strategy is not without its problems, however. As noted cultural
anthropologist Edward Hall once observed,
I have come to the conclusion that the analysis of culture could be likened to the task of
identifying mushrooms. Because of the nature of the mushrooms, no two experts
describe them in precisely the same way, which creates a problem for the rest of us
when we are trying to decide whether the specimen in our hands is edible.13
Hall makes an important point here. While the success of global managers frequently rests
on their understanding of cultures and cultural differences, the experts who advise them are
not always in agreement. To apply Hall’s metaphor, however, managers have to decide which
mushrooms are edible and which are not. They need to know which practices or behaviors
will create barriers to conducting business and which will open a path to partnership.
For many managers, the study of culture often begins with a comparison of different
countries using several cultural dimensions (e.g., individualism–collectivism). For example, if
a manager from Paris is traveling to Budapest, it can be quite helpful to understand
differences in cultural trends between the two locales prior to arrival. While such models
clearly do not explain everything managers need to know to succeed, they can be a useful
starting point.
A number of such models are available and have been widely adopted (see Exhibit 2.4).
These include the works of Edward T. Hall, Geert Hofstede, Fons Trompenaars, and Robert
House and his GLOBE project associates.14 Each model attempts to capture the essence of
cultural differences through the use of multiple dimensions or measures. In doing so, each
model highlights different aspects of societal beliefs, norms, and/or values. Below, we briefly
summarize each of the four models (see Appendix for further details).15
Exhibit 2.4 Popular models of national cultures
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Hall
Hofstede
Trompenaars
Context: Extent
to which the
context of a
message is as
important as
the message
itself.
Space: Extent
to which
people are
comfortable
sharing
physical space
with others.
Time: Extent to
which people
approach one
task at a time
or multiple
tasks
simultaneously.
Power distance: Beliefs
about the appropriate
distribution of power in
society.
Uncertainty avoidance:
Extent to which people
feel threatened by
uncertain or unknown
situations.
Individualism–collectivism:
Relative importance of
individual vs. group
interests in society.
Masculinity–femininity:
Assertiveness vs.
passivity; material
possessions vs. quality of
life.
Time orientation: Longterm vs. short-term
outlook on work, life, and
relationships.
Indulgence–restraint:
Societal emphasis on
enjoyment and need
gratification vs. strict
social control to suppress
or regulate gratification.
Universalism–particularism:
The degree to which rules
are uniformly or
situationally applied.
Individualism–collectivism:
Do people derive their
identity from within
themselves or their group?
Specific vs. diffuse: Are an
individual’s various roles
compartmentalized or
integrated?
Neutral vs. affective: Are
people free to express their
emotions or are they
restrained?
Achievement vs. ascription:
How are people accorded
respect and social status?
Time perspective: Do
people focus on the past or
the future?
Relationship with the
environment: Do people
control the environment or
does it control them?
109
GLOBE
project
Power
distance:
Degree to
which people
expect power
to be
distributed
equally.
Uncertainty
avoidance:
Extent to which
people rely on
norms, rules,
and
procedures to
reduce the
unpredictability
of future
events.
Humane
orientation:
Extent to which
people reward
fairness,
altruism, and
generosity.
Institutional
collectivism:
Extent to which
society
encourages
collective
distribution of
resources and
collective
action.
In-group
collectivism:
Extent to which
individuals
express pride,
loyalty, and
cohesiveness
in their
organizations
and families.
Hall
Hofstede
Trompenaars
GLOBE
project
Assertiveness:
Degree to
which people
are assertive,
confrontational,
and aggressive
in relationships
with others.
Gender
egalitarianism:
Degree to
which gender
differences are
minimized.
Future
orientation:
Extent to which
people engage
in futureoriented
behaviors such
as planning,
investing, and
delayed
gratification.
Performance
orientation:
Degree to
which high
performance is
encouraged
and rewarded.
Source: Based on Edward T. Hall, The Silent Language. New York: Anchor Books, 1981;
Edward T. Hall and Mildred R. Hall, Understanding Cultural Differences. Yarmouth, ME:
Intercultural Press, 1990; Geert Hofstede, Culture’s Consequence: International
Differences in Work-Related Values. Thousand Oaks, CA: Sage, 1980, rev. 2001; Fons
Trompenaars, Riding the Waves of Culture: Understanding Cultural Diversity in Global
Business. London: McGraw-Hill, 1993; Robert House, Paul Hanges, Mansour Javidan,
Peter Dorfman, and Vipin Gupta, Culture, Leadership, and Organizations. Thousand
Oaks, CA: Sage, 2004.
One of the earliest cultural models was developed by Edward T. Hall, a noted cultural
anthropologist. Hall proposed a model based on his ethnographic research in several
Western cultures, including Germany, France, the United States, and Japan.16 The focus of
110
his efforts was on how cultures approach interpersonal communication, but his work also
explored personal space and time. These three cultural dimensions are summarized in
Exhibit 2.4 below. Many of the terms used today in the field of cross-cultural management
(e.g., monochronic and polychronic) are derived from his work. Hall’s model, especially as it
related to intercultural communication, will be discussed in Chapter 5.
A second important model has been proposed by Dutch management researcher Geert
Hofstede.17 In his classic book, Culture’s Consequences, Hofstede compares culture to the
“software of the mind” that differentiates one group or society from another. While people all
have the same hardware, their brains and patterns of thinking and behaving can be very
different. Hofstede’s model was derived from a study of employees from various countries
working for major multinational corporations and assumed that different cultures can be
distinguished on the basis of differences in what they value. As such, people in some cultures
place a high value on equality among individuals, while people in other cultures place a high
value on hierarchies or power distances between people. Similarly, some people value
certainty in everyday life and have difficulty coping with unanticipated events, while others
have a greater tolerance for ambiguity and seem to relish change. Through these
comparisons, Hofstede suggests that it is possible to gain considerable insight into organized
behavior across cultures on the basis of these value dimensions. Initially, Hofstede asserted
that cultures could be distinguished along four dimensions, but later he added a fifth
dimension focusing on long- and short-term orientation, based on his research with Michael
Bond. More recently, a sixth dimension was added: indulgence versus restraint (see Exhibit
2.4).
Building on the work of Hofstede, Dutch management researcher Fons Trompenaars
developed a somewhat similar approach to the study of cultural differences based on a study
of Shell and other managers.18 The emphasis of his model is on variations in both values and
personal relationships across cultures and includes seven dimensions, as shown in Exhibit
2.4 above. The first five dimensions focus on relationships among people, while the last two
focus on time management and society’s relationship with nature.
The fourth model we will examine here was developed by Robert House and an
international team of researchers. Their investigation was called the GLOBE study. The
emphasis in this study focused largely on understanding the influence of cultural differences
on leadership and leadership processes.19 The researchers identified nine cultural
dimensions (see Exhibit 2.4 above). While several of these dimensions have been identified
previously (e.g., individualism–collectivism, power distance, and uncertainty avoidance),
others are unique to this project (e.g., gender egalitarianism and performance orientation).
The GLOBE researchers then collected information from individuals from sixty-two
countries and compared the results. Clear differences were discovered in leader behavior
across the cultures. Participatory leadership styles that are often accepted in the
individualistic West were of questionable effectiveness in the more collectivistic East. Asian
managers place a heavy emphasis on paternalistic leadership and group maintenance
111
activities. Charismatic leaders can be found in most cultures, although they may be highly
assertive in some cultures and passive in others. A leader who listens carefully to their
subordinates is more valued in the United States than in China. Malaysian leaders are
expected to behave in a manner that is humble, dignified, and modest, while American
leaders seldom behave in this manner. Indians prefer leaders who are assertive, morally
principled, ideological, bold, and proactive. Family and tribal norms support highly autocratic
leaders in many Arab countries. Taken as a whole, a major contribution of the GLOBE project
has been to systematically study not just cultural dimensions but also how variations in such
dimensions affect leadership behavior and effectiveness.
In the study of culture and cultural differences, each of the models offers a well-reasoned
set of dimensions along which various cultures can be compared. Each model offers us a
form of shorthand for cultural analysis. We can break down assessments of various cultures
into power distance, uncertainty avoidance, and so forth, allowing us to organize our thoughts
and focus our attention on what otherwise would be a monumental task.
Critics of this research point out – with some justification – that all four models and the
research underlying their creation and use focus too much on comparing central tendencies
between cultures and not enough on comparing the differences within each culture. In other
words, are all Indonesians or Kenyans or Bulgarians alike? Obviously not. Moreover, is it
inaccurate to suggest that there are only a few differences between the peoples of either East
Asia (Chinese, Korean, Japanese) or Western Europe (Dutch, French, Germans, Italians).
Again, the answer is “No.” Do these criticisms hold up? Do they change the basic argument
about cultural differences influencing the way people see the world and respond to it?
Probably not. As already noted, however, although the use of cultural dimensions is certainly
helpful, it should be considered as only the beginning of a more detailed study.
112
Using the Models: Cultural Values
The models reviewed here (and in the Appendix) focus on different aspects of societal
beliefs, norms, or values and, as such, convergence across the models seems somewhat
limited. This lack of convergence presents important challenges both for researchers
attempting to study cultural influences on management and for managers trying to
understand new cultural settings. Instead of advocating one model over another, we believe
the best approach for managers is to see how various aspects of these models can be useful
in work settings. In this regard, we suggest that the most productive approach is to
disaggregate these models to highlight key cultural values that can help managers better
understand business and management in cross-cultural settings. In doing so, we have
organized these values into six categories: environment, power distribution, interpersonal
relationships, time orientation, action, and sources of truth (see Exhibit 2.5).
Exhibit 2.5 Cultural values
Environment
How individuals view and relate to people, objects, and issues within their sphere of
influence
Mastery-based
Internal locus of control
Trustworthy human nature
Mutable human nature
Harmony-based
External locus of control
Untrustworthy human nature
Immutable human nature
Power distribution
How individuals view differential power relationships
Hierarchical
Egalitarian
Interpersonal relationships
How people relate to one another and define their identity and status
Individualistic
Achievement-based
Universalistic (rule-based)
Collectivistic
Ascription-based
Particularistic (relationship-based)
Time orientation
How individuals perceive the nature of time and its use
Sequential (monochronic)
Past focus
Synchronic (polychronic)
Future focus
Action
How individuals conceptualize actions and interactions
Being
Relationships
Doing
Tasks
113
Sources of truth
How do people determine what is right or wrong
Experts
Experience
Source: Adapted from Allan Bird and Joyce Osland, “Making sense of intercultural
collaboration,” International Studies of Management and Organization, 2005, 35(4), pp.
115–35.Note: Each of these sets of adjectives (e.g., Mastery-based vs. Harmony-based)
should be viewed on a continuum.
114
Environment
Most models of culture include a dimension generally referred to as environment, which
describes how individuals view and relate to the people, objects, and issues in their sphere of
influence. Regarding their relationship with the surrounding world, they may see themselves
as either mastering their environment or seeking to live in harmony with it. Mastery cultures
tend to be more dynamic, competitive, and likely to use technology to manipulate the
environment and achieve goals. Harmony cultures believe in understanding and integrating
with the environment, rather than attempting to change it. This view extends to how people
think they should control each other in the workplace. An understanding of this dimension can
help managers determine how to structure work plans and incentive plans, and may even
influence leadership style. For example, most employees in a mastery-oriented culture will
respond to challenges and personal incentives; they will strive for success. Employees in
more harmony-oriented cultures will more likely focus their attention on building or
maintaining group welfare, personal relationships, and environmental sustainability. They
tend to be more committed to social progress. As such, they will likely be more responsive to
participative leadership and more skeptical of proposed change. Managers who understand
this are in a position to tailor their leadership style to fit the situation.
A related dimension relating to the environment is locus of control, which refers to
beliefs about how much people either control their own destiny (internal locus of control or
inner-oriented) or are at the mercy of uncontrollable forces, such as fate or luck (external
locus of control or outer-oriented). These values can influence how proactive people and
organizations are in their strategy and planning efforts, and how accountable employees are
for their actions. For example, employees with an internal locus of control are more likely to
take initiatives to succeed because they believe they control much of their own destiny.
Employees with an external local of control will likely show less initiative since they believe
that achievement is largely beyond their own control. Locus of control is closely related to
uncertainty avoidance (one of Hofstede’s dimensions) and has been shown to be an
important factor in assessing the willingness of various cultures to take risks or initiate
change. Specifically, cultures with an external locus of control tend to fear change because of
the uncertainty it might bring and, as a result, are often hesitant to take initiatives.
Two additional environmental factors can influence interpersonal relationship and
workplace behavior. The first is a trustworthy–untrustworthy value that often influences how
long it takes to establish trust. If members of a culture assume that human nature is basically
untrustworthy, they will approach new business relationships with more caution and employ
more control mechanisms to guard against unethical behavior. The second is a general belief
about whether human nature is mutable or immutable – subject to change or set in stone. If a
culture believes that people cannot change, this determines who is hired (people who are
fully developed versus those who simply show potential) and how much opportunity
employees are given to learn more acceptable workplace behaviors.
115
Power Distribution
All societies have normative beliefs governing how power and influence should be distributed
and used. Typically, these norms are expressed in terms of whether power should be
clustered at or near the top of a hierarchy or distributed in a more egalitarian fashion. In other
words, is the culture more hierarchical or egalitarian? In hierarchical cultures, the social fabric
is maintained by a hierarchy of ascribed roles. This is accompanied by an acceptance that
power is distributed unequally (what Hofstede calls high-power distance). Those at the top
have a greater voice and more freedom to act as they wish. In contrast, egalitarian cultures
(similar to Hofstede’s low-power distance value) assume that people are equal and that
power should be distributed more evenly. People are socialized to make commitments to
bosses on a more voluntary basis, rather than responding to their role in the hierarchy. This
value dimension influences how many layers we find in the organizational structure, who has
a voice in decisions, and whether superiors are automatically respected or expected to earn
that respect. Questions pertaining to this dimension include the following. Should authority
ultimately reside in strong centralized governments or in the people themselves? Should
organizations be structured vertically (e.g., tall organizational structures) or horizontally (e.g.,
flat organizational structures, or even networked structures)? Is decision-making largely
autocratic or participatory? Are leaders chosen because they are the most qualified for a job
or because they already have standing in the community? Are leaders elected or appointed?
Are people willing or reluctant to question authority?
An example of how egalitarian cultures work can be found in Finland, a country that
stresses egalitarianism with a passion. Many Finnish laws are universalistic and based on the
principle of equity if not equality. For example, traffic fines vary based on personal income;
the more you make, the more you can afford to pay. Police departments maintain direct
computer access to internal revenue files to calculate the fines on the spot. Hence, when
Jaako Rytsola, a young Finnish entrepreneur, was stopped driving his BMW at 43 miles per
hour in a 25 mile per hour zone, his speeding ticket cost him $72,000. Similarly, when 27year-old millionaire Jussi Salonoja, also in a BMW, was caught driving 40 miles per hour in a
25 mile per hour zone, he was fined $225,000. A government minister noted that this was a
“Nordic tradition.” They have both progressive taxation and progressive punishment.
However, another driver fined $60,000 for going 10 miles over the speed limit had a different
opinion. “Finland is impossible to live in for certain kinds of people,” he noted.20
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Management Application 2.1 Traffic Fines in Finland
1. From the standpoint of government decision-makers, is tying traffic fines to
personal income fair? Why, or why not? Is there a better way to do this to
accomplish the same goal?
2. In your culture, do you think the kind of car you drive influences whether or not
you get stopped by the police?
3. Would you enjoy being a manager in a country that genuinely stresses equality
– including equality with your subordinates? Explain.
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Interpersonal Relationships
Three important cultural values focus on interpersonal relationships and how identity and
status are determined: individualism–collectivism, achievement–ascription, and universalism–
particularism. The concept of individualism–collectivism is the most extensively studied
cultural value. Individualism is a cultural pattern found in most Northern and Western regions
of Europe and in North America. It is defined as the extent to which people are responsible
for taking care of themselves and giving priority to their own interests. Collectivism is
characterized by individuals who subordinate their personal goals to the interests of some
collective. In the latter case, individuals give their loyalty to a group and, in return, the group
takes responsibility for the individual. Collectivism is common in Asia, Africa, South America,
and the Pacific. By contrast, people in individualistic cultures define themselves as an entity
that is largely separate from the group. There is an emphasis on personal goals and less
concern and emotional attachment to groups. Successes are individual successes whereas
in collectivist cultures, successes are group successes. Competition is interpersonal in
individualistic cultures, but intergroup in collectivist cultures. People in collectivist cultures
define themselves as part of a group. They are concerned for the integrity of the group and
have an intense emotional attachment to the group.
A second source of identity found within both societies at large and work groups
concerns how cultural members gain status – via achievement or ascription. In achievement
cultures, people are expected to accomplish things to earn status (e.g., working hard,
becoming successful). Ascription cultures bestow (ascribe) status on their members based on
their family, age, class, gender, or education. In achievement cultures, the first question one
generally asks a stranger is “What do you do?” In an ascription culture, the questions are
more likely to be “Where are you from? Are you related to so-and-so? Where did you go to
school?” If you think you can find both of these values in the same culture, that is correct. The
context determines which cultural values are more prominent in a specific circumstance. But
comparing one culture to another, we find marked tendencies to give greater importance to
one end of this value dimensions than another. For example, American culture tends to value
achievement (the Horatio Alger myth of pulling oneself up by the bootstraps); nevertheless,
some people benefit greatly from ascribed status. Despite low grades, their family name and
wealth enable them to attend Ivy League schools where they make connections that advance
their career. When asked about their success, however, they are likely to attribute it to their
personal achievements, an explanation more in keeping with the dominant cultural belief.
Finally, the universalistic–particularistic dimension refers to cultural beliefs about how
norms and rules affect interpersonal relationships. Universalistic (or rule-based) cultures
believe that the rules apply equally to everyone, resulting in the same treatment.
Particularistic (or relationship-based) cultures expect one’s relationship to influence the
treatment that one receives, and, therefore, exceptions for friends or important people are
normal. These values often impact personnel decisions at work and ethical practices in the
118
form of either similar or different rules for different people. In essence, this issue focuses on
the means of social control.
Universalistic cultures believe that social values and standards take precedence over
individual needs or claims by friends and relations; rules are intended to apply equally to the
whole “universe” of members. Exceptions serve only to weaken the rule of law. For example,
a rule that people should bear truthful witness in a court of law or give their honest judgment
to an insurance company concerning a payment it is about to make is more important than
particular family or friendship ties. This is not to say that particular ties are unimportant in
universalistic cultures; rather, universal truth as embodied in the law is believed to be more
important than these relationships. By contrast, particularistic cultures see the ideal culture in
terms of human friendship, extraordinary achievement, unique situations, and close personal
relationships. The spirit of the law is deemed to be more important than the letter of the law.
Clearly, there are rules and laws in particularistic cultures, but these are designed simply to
codify how people relate to one another. Rules are needed (if only to be able to make
exceptions to them for particular cases), but people need to be able to count on their friends.
As a result, in universalistic cultures there is a tendency to promulgate a multitude of
laws, rules, regulations, bureaucratic procedures, and strict social norms in an attempt to
control as many unanticipated events or behaviors as possible. People tend to conform to
officially sanctioned constraints because of a moral belief in the virtue of the rule of law, and
will often obey directives even if they know violations will not be detected. Waiting for a red
light in the absence of any traffic is a good example here. Rules and laws are universally
applied (at least in theory), with few exceptions for extenuating circumstances or personal
connections. There is a strong belief in the use of formal contracts and rigorous recordkeeping in business dealings. Things are typically done “by the book,” and infractions often
bring immediate sanctions or consequences. Finally, decisions tend to be made on the basis
of objective criteria to the extent possible. All this is aimed at creating a society with no
surprises.
By contrast, particularistic cultures tend to use influential people more than abstract or
objective rules and regulations as a means of social control. This personal control can come
from parents, peers, superiors, supervisors, government officials, and so forth – anyone with
influence over the individual. In this sense, circumstances often influence the manner in
which formal rules are applied to individuals or groups in particularistic cultures. In addition,
greater emphasis is placed on developing mutually beneficial interpersonal relationships and
trust as a substitute for strict rules and procedures. There is generally less record-keeping,
and things tend to be done on an informal basis. There is also greater tolerance for
noncompliance with bureaucratic rules, in the belief that formal rules cannot cover all
contingencies and that some flexibility is often required. Finally, decisions tend to be made on
the basis of a combination of objective and subjective criteria, and with less formality.
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Time Orientation
The fourth key cultural value focuses on time and its use. Two factors are important here: the
use of time (synchronic vs. sequential) and the focus on time (past, present, and future).
Cultures often have very different beliefs about time that are generally referred to as
synchronic (also called polychronic) time versus sequential (also called monochronic) time. A
synchronic approach to time means that people do several things at the same time.
Employees may easily work on a variety of projects at once while receiving different
individuals or groups in their office whom they deal with simultaneously. This practice can be
disconcerting to employees working in a sequential culture who are more likely to expect “first
come, first served” norms. A sequential approach means that people tend to divide activities
in a sequence, focusing more on one aspect at a time. Many jobs today involve multitasking,
but we would expect to find more efforts to carve out blocks of uninterrupted time to dedicate
to only one activity in sequential cultures.
Another time-related belief concerns whether people take their cues in everyday life from
the past, present, or future. For example, in making decisions, a focus on the past implies
that more attention is given to following precedents and tradition, whereas a present
orientation may lead to more immediate, short-term considerations. A future orientation raises
more consideration of the long-term consequences of decisions. Similarly, a leader focused
on the past will likely draw on past examples of company or country greatness, while a futureoriented leader will focus more on future challenges and change.
Wendy Bone, a Canadian writer living in West Java, provides a unique example of how
people view time in Indonesia by recalling a recent bus trip she took through the Sumatran
jungle.21 Halfway through the trip, the bus suddenly came to a halt and all the passengers
were asked to get off. When Wendy anxiously asked how soon they would be on the road
again, the bus driver simply smiled and said, “Jam karet,” or “rubber time” in English –
“Everything happens in its own time.” At first, this inefficiency troubled her, but she gradually
came to accept that many things in Indonesia – and many other countries from Mexico to
Moldova – can move at glacial speed but eventually get done. So, what do you do when the
bus breaks down, or it rains, or the power goes out? Relax, advises Wendy. Take things in
your stride. Understand that in the Indonesian language, verbs have no other tense but the
present. The phrase jam karet is derived from the planting and harvesting of rubber trees in
the area, where each tree is carefully scarred to release the white inner sap, and coconut
shells are secured to the trunks to collect it slowly, drop by drop. The entire process takes
time and patience. More than anything, however, rubber time is also about building
harmonious relationships. Almost without exception, every house has a front porch with
chairs and a table where people can sit and chat for hours. While walking in her village,
neighbors often called out hello and invited Wendy to join them. She saw this as a lost art of
living seldom experienced in her frenetic, wired world in Canada.
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Management Application 2.2 Rubber Time in Indonesia
1. As a foreign manager on assignment to West Java, how would you attempt to
adapt to local community norms? How might you change your behavior?
2. If you were personally confronted with rubber time on an assignment that you
needed to complete for your employer, what would you do?
3. Latin America’s word “mañana” is similar in effect to the Indonesian concept of
rubber time. There is a theory that suggests that such slow approaches to life and
work are tied to geography; that is, both Indonesia and Mexico exist in humid and
often hot climates, while the more punctual Nordic countries exist in cold climates.
Do you think there is any merit to this theory? If so, what other cultural
characteristics might also be tied to geography?
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Action
Cultures tend to conceptualize their primary mode of activity in terms of being or doing. In
being cultures (what Hofstede calls feminine cultures), the emphasis is on enjoying life in the
moment and nurturing others, whereas doing cultures (Hofstede’s masculine cultures)
emphasize achievement, assertiveness, and materialism. This dichotomy is often described
as working to live (being) versus living to work (doing). These values influence how
employees perceive work rewards; doing cultures are comfortable rewarding good
performance, while being cultures may express concern that merit pay or bonuses could
have a negative impact on their co-workers or the work environment (see Chapter 4).
A second aspect of action focuses on tasks versus relationships. To illustrate how this
works, consider the experience of a second-grade teacher who asked her students to solve
this problem: “There are four blackbirds sitting in a tree. You take a slingshot and shoot one
of them. How many are left?” “Three,” answered the seven-year-old British student with
certainty. “One subtracted from four leaves three.” “Zero,” answered the seven-year-old
Italian student with equal certainty. “If you shoot one bird, the others will fly away.” The British
student saw the teacher’s question as a hypothetical situation that required a literal answer
(task). By contrast, the Italian student focused on the relationship among the birds and the
predictable behavior that would result from a shot (relationship). In some cultures, such as
the United States, Australia, and the UK, task is the primary focus and people quickly get
down to business. In many other cultures, such as in Italy, Senegal, and Ecuador, people
expect to establish a relationship first so they can trust one another enough to do business
with them. Like the students’ answers, one orientation is not better than the other; they are
simply different and must be taken into consideration when working across cultures.
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Truth
Finally, cultures can vary in their views of what anthropologists call the “source of truth.”
Some cultures believe that the right answers are obtained from experts while others trust
their own experience. Do people believe that truth comes primarily from scientific research,
legal precedent, the opinion of experts, tradition, personal experience, or trial-and-error
experimentation? For example, Americans value expert opinion, but they are more likely to
question authority than many cultures and to rely, instead, on their own experience; they
generally believe in science but not all of its findings (e.g., climate change, children’s
vaccines, and genetically modified organism (GMO) enhanced foods).
One way to get to the heart of cultural differences and normative behavior in this regard
is to ask a simple question: What is truth? What do people believe to be correct and true
beyond question in this world? While we can easily see different responses to this question
within a particular culture, imagine the differences we can see between cultures. Every day
managers are faced with moral or ethical dilemmas relating to conflicting personal and
societal beliefs and values. This arena includes both societal norms in general about right
and wrong, as well as religious beliefs about what people “should” or “must” do. Many
philosophers on this topic have been rather parochial in their conscious ignorance of other
cultural traditions. They have routinely assumed the universal validity of their ethical values.3
That is, many of these writers have assumed that ethics represents a universal phenomenon,
and that the challenge is to discover the “correct” set of values and social norms. Obviously,
this approach is both naïve and unsatisfactory, which most successful global executives
understand.
At the center of this debate is people’s conception of “truth.” British communications
consultant Richard Lewis has suggested, only partly in jest, “For a German and a Finn, the
truth is the truth. In Japan and Britain, it is all right to tell the truth if it doesn’t rock the boat. In
China, there is no absolute truth. And in Italy, the truth is negotiable.”22 And British actor
Peter Ustinov observed, again only partly in jest, “In order to reach the truth the Germans
add, the French subtract, and the British change the subject. I did not include the Americans,
since they often give the impression that they already have the truth.”23 To the extent that
these observations have merit, it would appear that truth is clearly in the eye of the beholder.
That is, “truth” is not always “the truth.” At the very least, we have to conclude that, at times,
there are no universals when it comes to being truthful. What is your opinion?
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Management Application 2.3 What Is Truth?
1. As a manager working across borders, do you believe that on a fundamental
level, there is a universal truth about some things that most people would agree
with, or are these truths situational or contingent in nature? Explain.
2. When other people disagree with your conception of fundamental truths, how
do you usually respond? Why?
3. If there is no agreement on fundamental truths across cultures, how can you as
a manager do business ethically?
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Caveats About Using Cultural Values
So, what does all this mean for managers? It means that managers are more likely to
succeed to the extent that they are able to focus on the specifics of each situation
surrounding a cross-cultural encounter. They cannot simply look for macro-level cultural
variables (e.g., power distance, gender role orientation, etc.) because the impact of culture on
behavior does not happen in a vacuum. It occurs within a context made up of an
organizational reality with specific actors involved. As Ann Swidler observed, “The debate
over whether or how much culture influences action obscures a crucial insight: culture’s
influences vary by context.”24 For many managers, context, not culture, represents their
biggest challenge in succeeding in global transactions (see Chapter 4).
To see how conflicts can be not just cross-cultural but also multicultural within one
“culture,” consider a recent flight by US carrier Delta Airlines from New York to Tel Aviv.
Context is clearly important here. As airplanes become more crowded and passengers
experience less room and poorer service, increased conflicts are both predictable and
frustrating for both passengers and flight crews. One recent example illustrates this point as it
related to cultural differences.25 During the boarding process of a fully booked Delta Airlines
flight from New York to Tel Aviv, a group of Haredi men refused to sit in their assigned seats.
Haredi Judaism is a stream of Orthodox Judaism characterized by a rejection of modern
secular culture. Haredim regard themselves as the most religiously authentic group of Jews,
and their religious beliefs forbid them from touching members of the opposite sex unless they
are close relatives or a spouse. When the men announced that they could not sit next to two
women, the flight attendant asked the women – also from Israel – to change seats with other
male passengers. They refused, saying that they had reserved and paid for their particular
seats and were not moving. They also claimed sex discrimination. There were no open seats
on the entire aircraft so at least four passengers would have to be moved to resolve the
problem. The flight attendant reported to the captain, but neither knew what to do, and the
surrounding passengers became impatient.
125
Management Application 2.4 Seat Assignments to Tel Aviv
1. How would you describe the nature of the conflict at Delta Airlines? What is its
root cause?
2. If you were the flight attendant or captain, and realizing that you must take
concrete action, what exactly would you do and why? What are the potential
ramifications of your chosen action?
3. Should Delta Airlines or the International Air Transport Association leaders
work to create policies to manage similar potential conflicts in the future? If so,
what might these policies look like?
4. What are the broader lessons to be learned from this example that might be
applied to other situations of cross-cultural and multicultural conflict?
Going one step further, in addition to viewing culture as a constellation of values,
anthropologists also note that culture reflects the answers which different groups have found
to the basic problems that confront all humankind. Old age represents an inescapable
challenge for every society, but how people deal with it derives primarily from particular
cultural values and beliefs about medicine, the afterlife, the prestige and respect due the
elderly, family obligations, and so forth. Culture provides us with ready-made solutions to
basic human issues and a sense of identity. Each culture has an internal logic that makes
sense once it is understood. Outsiders, however, tend to see “strange” behavior through the
lens of their own cultural norms and assumptions, and often misunderstand what they see.
With this in mind, we close this section on cultural values by suggesting a few caveats
when applying this material. We noted before that not everyone fits cultural norms. Think of
each value dimension in Exhibit 2.5 as a bell-shaped curve with a central median or norm at
the highest point that characterizes the majority of culture members, but remember that there
are also outliers at both tails – people who are very low or very high with respect to each
value. Thus, we can expect to see a good deal of variance within cultures. We also know that
personality differences are responsible for even more varied behavior within cultures, and
many other factors determine culture, such as history, geography, and so forth. Therefore, we
can’t attribute everything we observe to cultural values. And we can’t assume absolute
consistency of these values because cultures are also context-specific and have different
behavioral scripts for different situations. We have to expect what appears to be paradoxical
behavior that does not fit the norm. For example, the Japanese act in a highly formal manner
during office hours, while their behavior with friends and colleagues after-hours in a bar is
often much more informal and surprisingly uncensored. Does this mean we should not bother
to learn the cultural values? Not at all. They are the ABCs of multicultural competence. We
need them as the basis for understanding and decoding cultural behavior, which is essential
126
for all global managers, but they don’t explain all the words or nuances of every situation. If
we rely solely on these cultural values, we risk stereotyping whole cultures.
In summary, we encourage managers to do the following:
1. Approach learning another culture like a scientist who holds conscious stereotypes
and hypotheses in order to test them.
2. Seek out cultural mentors and people who can explain why people behave as they do.
3. Learn how to act appropriately by adopting the cultural scripts that locals use in
different contexts.
127
Refining the Models: Cultural Friction, Country
Clusters, and Cultural Tightness
Models of national and regional cultures are of necessity very general. It is left to others to
refine these models in ways that best suit the users. In recognition of this fact, several
researchers have suggested ways to modify these models to help managers glean more
useful information from them. Three such refinements are introduced here.
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Cultural Distance and Friction
The first refinement relates to cultural distance, an assessment of the differences between
the cultural values of one country compared to another. This has been used extensively in
studies using Hofstede’s measures. Thus, we can say for example that China and Japan
have a lower cultural distance than China and Canada. However, at best, cultural distance
only provides us with conceptual, or very general, differences.26 It is not a scientific measure.
As noted by Oded Shenkar, the concept has considerable conceptual and measurement
problems associated with it.27 He proposes an alternative, called cultural friction, that
attempts to assess the relationship between two different cultures, as well as their distance.
Thus, we might say that the cultural friction between the UK and China is “disruptive,”
meaning considerable friction between the two country’s underlying cultures, while the
cultural friction between the UK and Australia is “synergistic,” meaning a great deal of
compatibility between the two countries. Perhaps both cultural distance and cultural friction
are best viewed as conceptual attempts to tease our cross-cultural differences and
similarities for general comparisons. Their lack of scientific justification suggests caution in
placing too much confidence in them.
129
Country Clusters
In their recent work, Simcha Ronen and Oded Shenkar have expanded the notion of how one
culture relates to another with the introduction of country clusters, in which they group
countries based on their cultural similarities.28 This model makes use of an adaptation of the
GLOBE dimensions. Country clusters identified by the researchers are Aegean, Arab, Latin
American, East European, Latin European, Nordic, Germanic, sub-Saharan African, Anglo,
Confucian, and South Asian. Examples of their findings are illustrated in Exhibit 2.6.
Exhibit 2.6 Country clusters and cultural characteristics (examples)
Cultural
factors
Anglo
Arab
Confucian
Latin
American
Nordic
SubSaharan
African
Focal actor
Individual
Group
Group
Group
Individual
Group
Deference
Medium
low
Medium
high
Medium
high
Medium
high
Low
Medium
high
Intolerance for
ambiguity
Low
High
Medium
High
Medium
Medium
high
Gender making
Medium
Medium
High
High
Low
High
Performance
orientation
High
Low
High
Low
Medium
Medium
Future
orientation
High
Low
High
Low
High
Medium low
Human
leadership
Medium
Medium
High
Medium
Low
Medium
high
Charismatic
leadership
Medium
High
Low
High
Medium
Medium
high
Team
leadership
Medium
High
Low
High
Medium
Medium
high
Participative
leadership
High
High
Low
High
High
Medium
high
Autonomous
leadership
Low
Low
High
Low
Medium
–
Self-protective
leadership
Low
Medium
High
Medium
Low
–
130
Source: Adapted from Simcha Ronen and Oded Shenkar, Navigating Global Business: A
Cultural Compass. Cambridge University Press, 2017, pp. 245–332.
131
Tight versus Loose Cultures
A third effort to refine culture models is found in the concept of loose and tight cultures.29 If a
culture is characterized by strong and pervasive norms and sanctions for deviating from
these norms, it is considered a tight culture. In tight cultures, people’s values, norms, and
behavior are similar to each other, and values are strongly held. Thus, cultural tightness can
be conceptualized as strong homogeneity in values, norms, and behaviors. By contrast, in
loose cultures, norms and values are less deeply held, and greater variations around norms
are permitted and sometimes even encouraged.
The concept of tight and loose cultures is based on strong empirical evidence as a
means of teasing out differences across cultures. Much of this research was conducted by
cultural psychologist Marilyn Gelfand and her colleagues.30 Based on their findings, it is
possible to suggest relative cultural tightness or looseness in different countries, as shown in
Exhibit 2.7. Again, however, these are only estimates to guide one’s thoughts and initiate
one’s more detailed assessment. Still, we can draw some tentative conclusions. Cultures
strong in collectivism are often seen as tight cultures, while more individualistic cultures are
often described as loose. Hence, it is not surprising that Pakistan (12.3) and Malaysia (11.8)
are described as having strong cultural tightness, while countries such as Ukraine (1.6) and
Estonia (2.6) are described as having loose cultures. However, this is not always the case.
Norway (9.5), for example, has a strong individualistic culture, but it also has a very tight
culture; that is, individualistic beliefs are strongly held among its citizens.
Exhibit 2.7 Cultural tightness scores for selected countries
Country
Cultural
tightness
Country
Cultural
tightness
Country
Cultural
tightness
Australia
4.4
Iceland
6.4
Pakistan
12.3
Austria
6.8
India
11.0
Poland
6.0
Belgium
5.6
Israel
3.1
Portugal
7.8
Brazil
3.5
Italy
6.8
Singapore
10.4
China
7.9
Japan
8.6
South Korea
10.0
Estonia
2.6
Malaysia
11.8
Spain
5.4
France
6.3
Mexico
7.2
Turkey
9.2
Germany
6.5
Netherlands
3.3
Ukraine
1.6
Greece
3.9
New Zealand
3.9
United Kingdom
6.9
Hungary
2.9
Norway
9.5
United States
5.1
132
Source: Based on Michelle Gelfand, Rule Makers, Rule Breakers: How Tight and Loose
Cultures Wire Our World. New York: Simon & Shuster, 2018.
Taken together, however, these refinements (cultural friction, country clusters, and
cultural tightness) allow us to capitalize on the benefits of general cultural models while still
narrowing their focus for more serious critical analysis.
133
Social Complexity, Biculturalism, and Multiculturalism
A Canadian sociologist once observed that the principal difference between American and
Canadian cultural images is that American culture creates the image of a “melting pot,” where
everyone strives to be an “American,” while Canadian culture creates the image of a
“mosaic,” where cultural differences are constantly on display. Maybe true; maybe not. In any
case, understanding cultural differences only takes us so far in navigating cross-cultural
interactions because each situation is unique. While culture itself obviously matters, it can
matter in different ways across different situations. Thus, while understanding how business
is conducted in Saudi Arabia, for example, may be interesting, it provides us with little
guidance when trying to negotiate a contract with a Saudi manager working for a French
company in Peru. And learning about French and Peruvian cultures, again while useful, still
leaves us short in understanding what to do in the current situation.
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Challenges of Biculturalism and Multiculturalism
This example may seem a bit extreme, but it illustrates at least three commonplace
challenges in cross-cultural encounters:
1. There is often more than one culture involved in an interaction, and it is not
always clear how each one plays out or is dominant in a particular situation. In our
illustration, is it the Saudi cultural background of the individual, the company culture
perhaps influenced by the French business culture, or the local Peruvian culture where
the interaction takes place that determines appropriate – and inappropriate – behaviors?
2. People often behave differently in cross-cultural situations than they do in intracultural situations. Think about it: While you are trying to figure out how to deal with
your Saudi counterpart and adjusting your behavior as best as you can, what do you
think your counterpart is doing? The same thing.
3. Cultures are fragmented, and even within a particular cultural environment
different behaviors can be often observed in different subgroups. In order for
cultural information to be useful, it is often important to be specific as to which subgroup
we are dealing with.
This brings us to the related concepts of biculturalism and multiculturalism. If we think
about it, most societies are bicultural or multicultural, whether through historic ethnic
groupings and traditions or through immigration. From a managerial standpoint, at home and
abroad, inclusion of divergent ethnic peoples has emerged as a major political and economic
force throughout the world, as well as a resource base for managerial talent. Challenges are
ever-present, however, and instances of ethnic conflicts are commonplace (see Chapter 1).
The irony here is that bicultural societies seem to experience more ethnic conflicts and
discrimination than multicultural ones. This is curious in view of the increased societal
complexity of the latter. Perhaps countervailing forces in multicultural societies serve to blur
the black and white divisions (us vs. them) in bicultural ones. In any case, as we are
increasingly seeing, the future belongs to multicultural societies.
So, just what is multiculturalism and how does it work? Beyond the obvious,
multiculturalism refers to the existence of ethnically or racially diverse segments in the
population of a society and includes the notion that such differences have some social
significance.31 Healthy multicultural societies strive for the mutual benefit for all. In this
regard, Canada stands out as a country working diligently towards this goal. Another example
is Singapore.
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Multiculturalism in Singapore: An Example
For an example of a country that is committed to multiculturalism as a political and cultural
imperative, consider the country of Singapore. Singapore is widely recognized as a highly
successful multicultural society. Its population of about five million consists of roughly 74
percent Chinese, 13 percent Malays, 9 percent Indians, and the rest Eurasians and others.
Together they represent numerous diverse religious faiths – Buddhist, Christian, Muslim,
Taoist, Hindu, Sikh, and Jewish – all crammed into an area of a little over 700 km2, making it
one of the most densely populated countries in the world. This diversity of peoples living in
close proximity to one another is potentially explosive but, remarkably, Singapore is
distinguished by a high level of social and cultural harmony.32 From its inception, Singapore
has sought to integrate the various racial and cultural groups into a peaceful, workable
society, with a unifying identity. Without this, many understood that this small state, with few
natural resources, would likely not have survived. How did the new government accomplish
this? Mainly through a high degree of state centralization and intervention; separation of state
and religion; maintaining a secular neutralism vis-à-vis religion; recognition of the languages
of the major communities, Malay, Chinese (Mandarin), and Tamil, as well as English; a
system of meritocracy as opposed to one of nepotism and cronyism; and what some
opponents call a de facto one-party government, which has ensured continuity of government
policy.
A principal tool the government uses to forge cultural and religious harmony is the
education system. Instruction in the public schools is in English, although pupils also study
their mother tongues. A sense of national pride and identity, as well as racial, religious, and
cultural consensus, is instilled through a broad-based social studies program. Another means
to bring the various groups together was an ethnic integration policy in which each of the
major cultures were given a representative quota of homes in various housing blocks. Once
that limit has been reached, no further sale of flats to that ethnic group was allowed.
According to one survey, Singaporeans rate citizenship higher than the demands of their
religion because of the high degree of religious tolerance, both between government and
religions, and between the religions themselves. Second, the main state language, English,
does not conflict with the “languages of religion.” Third is the lack of a clear ethno-linguisticreligious majority, which prevents the political dominance of a particular group.
Lastly, Singapore’s phenomenal economic success and prosperity have served both to
minimize tensions and to motivate the various groups to work together to maintain the state’s
position as one of Asia’s more dynamic economies. While not all the citizens of the country
are rich, the standard of living is comparable to that in North America and Western Europe. A
recent survey found that 11.4 percent of Singaporean households are considered
millionaires, the largest proportion in the world.
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Management Application 2.5 Multiculturalism in Singapore
1. Why do outside observers describe Singapore as a successful multicultural
society?
2. Are these characteristics easily transferrable to other multi-ethnic societies?
Why, or why not?
3. What are the challenges facing Singaporeans living and working in a
multicultural society? Explain.
4. What are the implications for managers working in this society?
137
Manager’s Notebook Working Across Cultures
We have now come full circle, from looking for general dimensions with which to
compare cultures to understanding that cultures are indeed complex and at times
contradictory. What can we take away from this discussion? Cultures are not easily
pigeonholed into groups and categories. As Edward Hall notes, “Culture hides much
more than it reveals, and strangely enough what it hides, it hides most effectively from
its own participants.”33 Caution is certainly in order.
Added to this is an understanding of the important role that culture and context
play in influencing managerial action. These complexities and contradictions raise the
intriguing question of how managers should act or react when they find themselves in
the middle of cultural tension or change. A major challenge here is that different
cultures often require very different behaviors from their managers, and what is
acceptable in one country may be offensive in another. This is not surprising, but it
nevertheless presents real challenges for managers when interacting with – and
sometimes managing – a global workforce. How should managers behave, and will
they be accepted when they are charged with accomplishing corporate objectives in a
foreign culture? Should managers be themselves or try to adapt their management
style to fit local customs and expectations? Fundamentally, how can they survive and
succeed when they don’t understand the rules of the game, and the rules that they do
understand change often, or do not apply to the specific individuals or contexts they
are dealing with?
To aid this understanding, we can summarize several strategies that may help
managers as they try to make sense of the “strange” behaviors of others (see Exhibit
2.8). More specifically, we discuss three management strategies: avoid cultural
stereotyping; focus honestly on understanding other cultures; and enhance one’s
cognitive and perceptual skills for deeper insights into cultural differences and
similarities.
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Exhibit 2.8 Strategies for working across cultures
1 Avoid cultural stereotyping
Understanding the influence of culture on management practices is an important first
step. Managers who are able to understand the ways that culture can influence
behavior and know how cultures differ are better able to identify cultural phenomena
and identify solutions to deal with them. In this regard, the role of cultural
stereotypes is clearly relevant.
Nancy Adler offers some sound advice on how to avoid making cultural
stereotypes or overgeneralizations about the people from any culture:34
Cultural descriptions, by their very nature, contain limited information. Keep in mind
that such generalizations often mask other useful information about cultural
diversity.
Cultural descriptions should be limited to describing members of various groups as
objectively as possible, and should not include an evaluative component (e.g., “This
is good,” “That is bad”).
Cultural descriptions should provide an accurate description of the beliefs, values,
and social norms of a group.
Cultural descriptions should be considered a first best guess about the behaviors of
a cultural group, prior to developing more specific information about individual
members of the group.
Cultural descriptions should be modified over time, on the basis of new information
gained through observation or experience.
When describing cultures and identifying cultural differences between two or more
groups, some caution may be in order, for at least two reasons. First, while common
sense would suggest that bigger cultural differences are harder to deal with than
smaller ones, experience suggests that this is not always the case. In some situations,
139
managers moving between countries perceived as culturally similar (e.g., the
Netherlands and Belgium) find that “small” differences are just as hard to deal with as
“big” ones. Worse, these small differences are frequently overlooked and not dealt
with until some damage is done. Second, what may initially seem like a large cultural
difference may be overcome by some smaller similarities. For instance, in a recent
joint venture between a Brazilian company and a Chinese one – companies from two
very different cultures – members found sources of similarity that facilitated the
relationship, such as the similar levels of development, and the importance of context
and relationships in partnerships. In the words of one Brazilian managing director,
“The Chinese are the Brazilians of Asia.”35
2 Focus honestly on understanding other cultures
In addition, cultural differences are not a bad thing in the managerial world; they just
require a bit more work at times. In many cases, depending on the task at hand, a
degree of cultural difference is often seen as leading to improved managerial decisionmaking and action. For example, a recent study found that Portuguese managers
perceived business activities with Brazilians and Spaniards (with whom they are
culturally more similar) to be riskier and more difficult than business activities with
Scandinavians (culturally very different). It is worth noting, however, that the same
managers also felt more “at home” with Brazilians and Spaniards and preferred to
socialize with them.36
What this suggests is that cultural differences are not inherently good or bad, but
they can be perceived positively or negatively depending on the situation. Additionally,
sometimes differences are not perceived the same way by the two parties. A manager
from Portugal may appreciate Danish punctuality, while the Danish manager may find
Portuguese tardiness annoying. On the other hand, the Danish manager may
appreciate Portuguese flexibility (particularistic or low-rule orientation), while the
Portuguese manager may find the Danish obsession with rules frustrating.
Most importantly, it is difficult to predict how these identifiable differences will play
out when two cultures meet. As a starting point, cultural frameworks create limitations
on our ability to think and perceive the environment, suggesting that individuals from
different cultures will have different understandings of the situation, and will probably
act differently. As individuals interact with each other and the new environment around
them, however, new understandings may emerge and new behaviors may be called
for. It would be naïve to think that, in a cross-cultural situation, individuals will continue
behaving in the same way they would at home for a long period of time. Over time,
either they will negotiate a new way to relate or the relationship will not continue.
Unfortunately, it is impossible to predict what will work for a particular context and
relationship, since several other factors besides culture come into play. For example,
who has power? Who are the majority? Who has the money? What is the personality
of the ones in power? What is the goal of the relationship? Are there also historical
140
issues between both cultural groups that may lead to predispositions, or perceptions
of superiority, inferiority, or sameness? Referring to the Chinese–Brazilian partnership
above, a Chinese manager noted,
My opinion is that working with Brazilians is easier than working with North
Americans, with French, or even with people from Singapore. It’s amazing,
because people from Singapore have the same cultural roots that we have. But,
with Brazilians, it’s easier because we treat each other as being on the same
level. This may be more important than having the same cultural roots or
speaking the same language.37
3 Enhance cognitive and perceptual skills for deeper insights
Finally, when facing the complexities of cultural influences and the unpredictability of
cultural encounters, an obvious question arises: what can global managers do? An
often-overlooked response to this difficult question rests on the speed with which
managers can learn and adjust their behavior to fit each unique situation. Here, we do
not mean adjusting the behavior to fit the other culture; we mean adjusting the
behavior to fit the situation, as discussed in Chapter 4. Sometimes, what is in order is
adjusting to the other culture as closely as possible. At other times, though, this
behavior would be counterproductive. Knowing the difference is what separates
successful global managers from the rest. As a result, efforts to enhance both
cognitive and perceptual skills can help to achieve deeper insights into cultural
differences and similarities. To this end, several important learning skills can be
suggested for global managers:
Self-awareness. Global managers need to understand that they are complex
cultural beings and that their values, beliefs, assumptions, and communication
preferences are a product of their cultural heritage.
Empathy. Global managers must understand that others are also complex cultural
beings, whose actions are a product of deep-seated cultural values and beliefs.
When misunderstandings occur, competent global managers will search for cultural
explanations of confusing or offensive behavior, before judging it.
Information-gathering and analysis. Managers have to uncover hidden cultural
assumptions to become aware of how culture is shaping the perceptions,
expectations, and behaviors of all involved parties.
Information integration and transformation. Managers must assimilate the
information gathered into a coherent theory of action.
Behavioral flexibility. Managers need the ability to engage in different behaviors,
to switch styles, and to accomplish tasks in more than one way.
141
Mindfulness. Global managers must be mindful of themselves, the other, and the
interaction. They must pay close attention to their feelings and actions, and others’
actions and reactions.
In summary, managers must be keenly aware of their biases (and the biases of
others) in their ways of looking at the world. This is not easy, because it requires a
continual effort to move from our own perspective to the perspectives of others – or, at
least, to try to do so. Understanding others requires – and allows – us to de-center our
own self-centered points of view, thereby expanding our personal worldviews.
Throughout the remainder of the book, we discuss in detail several ways in which
culture matters, highlighting how culture leads to different perspectives and
understandings, and drawing out their implications for management practice. It is our
hope that these discussions will help managers identify their own biases in
management understanding and facilitate the recognition of potential cultural
problems on the ground.
142
Chapter Review
143
Summary
Culture has many definitions, including the collective programming of the mind that
distinguishes the members of one human group from another; the collection of beliefs,
values, behaviors, customs, and attitudes that distinguish the people of one society
from another; the shared motives, values, beliefs, identities, and interpretations or
meanings of significant events that result from common experiences of members of
collectives that are transmitted across generations; and the way in which a group of
people solves problems and reconciles dilemmas. Taken together, these definitions
suggest that, from the standpoint of global management, culture is perhaps best
thought of as addressing three questions: Who are we? How do we live? Why do we
work?
Almost everyone is a member of multiple cultures, including political, family, religious,
and professional cultures, and each has an influence on human behavior.
Several models of national cultures (Hofstede, Hall, GLOBE, Trompenaars), along with
their cultural values, are available to help understand cultural differences on a general
level. But these models are only a starting point in trying to understand how cultures
work and how to work with cultures.
Cultures are not homogeneous or necessarily stable over time. As such, studying
cultures requires a recognition of cultural complexities and contradictions that serve to
cloud efforts to seek clarity in understanding cultural variations.
Cultural differences are not a bad thing in the managerial world; they just require a bit
more work at times. In many cases a degree of cultural difference is often seen as
leading to improved managerial decision-making and action. When two or more
cultures come into contact, the starting point for interaction is usually what these
cultures bring to the table. The end result, though, will more likely depend on their
interactions, the actors and organizations involved, the power differential, and the
exchanges that take place.
Culture models have been refined through the addition of assessments such as
cultural distance, cultural friction, and country clusters, and tight–loose cultures.
Multiculturalism is, and will continue to be, an important aspect of understanding and
working across cultures.
144
Key Concepts
biculturalism
country clusters
cultural distance
cultural environment
cultural friction
cultural stereotypes
cultural values
culture
emic vs. etic perspectives
GLOBE culture model
Hall culture model
Hofstede culture model
internal vs. external
locus of control
mindfulness
multiculturalism
normative behavior
tight vs. loose cultures
Trompenaars culture model
145
Discussion Questions
1. In what ways can a better understanding of cultural environments prepare managers for
foreign assignments? Provide an example to illustrate your point.
2. What is your definition of culture as it relates to global management? How might this
definition help us to understand how managers succeed or fail in the global economy?
3. Normative beliefs and institutional requirements both aim to solidify social control, stability,
and continuity. In doing so, they often create forces against change. In view of this, how
would you proceed if you were trying to modify the laws in a particular country to provide
more equitable employment opportunities for women or minorities? What would be your
strategy?
4. Referring to the example of Mitsukoshi Department Store, what is your definition of good
customer service? Is this definition consistent across countries? If so, how could cultural
differences influence this definition?
5. What are the relative strengths of each of the four culture models reviewed here? In your
view, which model would be most useful for global managers, and why?
6. Identify two countries from Hofstede’s country ratings in the Appendix and build thumbnail
sketches of each country. Now, take the GLOBE country ratings from the Appendix and build
two new sketches of these same two countries. Are your sketches the same or similar? If not,
why not?
7. Some people claim that national culture models are overly simplistic and therefore clearly
misleading. Do you agree or disagree with this assertion? What are the benefits and
drawbacks of using such models?
8. A number of similarities can be found across various culture models. In your view, what is
missing from these models that could be of use to managers seeking to better understand
their business partners or competitors?
9. Some countries or regions have what is called tight cultures, meaning that their core
beliefs are deeply and widely held across community members, while other countries have
146
what is called loose cultures, where belief systems allow for more variability. What accounts
for such differences, and what are the implications for managers working in these cultures?
10. We tend to paint cultural differences across countries with a broad brush and talk, for
example, of the Russian culture or the Thai culture. Obviously, there are individual, regional,
and other differences within each country. What might managers do to seek out these
differences and improve their understanding prior to a foreign assignment?
11. Singapore is a good example of a thriving multicultural society with strong representation
of Chinese, Malay, Indian, and Anglo cultures working together. How might a manager
prepare for an assignment to this country compared to an assignment to a country with less
cultural diversity, such as Korea or Japan? Is there any difference here?
12. In your view, what are the three most important lessons from this chapter for global
managers? Explain.
147
Notes
1. The Talmud is a record of rabbinical discussions pertaining to Jewish law, ethics,
customs, and history.
2. Wang Yinglin, Three Character Classic (trans. Herbert Giles). Shanghai: Kelly & Walsh,
1910. The Three Character Classic, Trimetric Classic, or San Zi Jing is one of the classic
Chinese texts. It was probably written in the thirteenth century and attributed to Wang
Yinglin (1223–1296) during the Song Dynasty, but has also been attributed to Ou Shizi
(1234–1324). Some writers have attributed the original wisdom collected in this volume to
Confucius, although there is no conclusive evidence on this.
3. Robert J. House, “Introduction,” in Robert J. House, Paul J. Hanges, Mansour Javidan,
Peter W. Dorfman, and Vipin Gupta, Culture, Leadership, and Organizations: The GLOBE
Study of 62 Societies. Thousand Oaks, CA: Sage, 2004, pp. 1–2 (p. 1).
4. Lao-Tzu, or Laozi, was a philosopher of ancient China and is a central figure in Taoism.
Laozi literally means “Old Master” and is generally considered an honorific. Laozi is
revered as a god in religious forms of Taoism. Taishang Laojun is a title for Laozi in the
Taoist religion, which refers to him as “One of the Three Pure Ones.” Lao Tzu, Tao Te
Ching (trans. John Minford). New York: Penguin, 2018.
5. Geert Hofstede, Culture’s Consequences: International Differences in Work-Related
Values. Thousand Oaks, CA: Sage, 2001.
6. Clyde Kluckhohn, “Culture and behavior,” in Gardner Lindzey (ed.), Handbook of Social
Psychology. New York: McGraw-Hill, 1951, pp. 921–76.
7. House et al., Culture, Leadership, and Organizations.
8. Fons Trompenaars, Riding the Waves of Culture: Understanding Cultural Diversity in
Global Business. London: McGraw-Hill, 1993.
9. Ann Swidler, “Culture in action: symbols and strategies,” American Sociological Review,
1986, 51(2), pp. 273–86.
10. Clifford Geertz, The Interpretation of Cultures. New York: Basic Books, 1973.
11. E. A. Reynolds-Losin, M. Dapretto, and M. Lacobono, “Culture in the mind’s mirror: how
anthropology and neuroscience can inform a model of the neural substrate for cultural
imitative learning,” Progress in Brain Research, 2009, 178, pp. 175–90.
12. James Olive, “Reflecting on the tensions between emic and etic perspectives in life
history research: lessons learned,” Forum: Qualitative Social Research, 2014, p. 15.
148
13. Edward T. Hall, An Anthropology of Everyday Life: An Autobiography. New York:
Anchor Books, 1992, p. 210.
14. Space limitations preclude exploring other models of culture. The interested reader is
referred to F. Kluckhohn and F. L. Strodtbeck, Variations in Value Orientations. Evanston,
IL: Row, Peterson, 1961; T. Parsons and E. Shils, Toward a General Theory of Action.
Cambridge, MA: Harvard University Press, 1951; S. H. Schwartz, “Universals in the content
and structure of values: theoretical advances and empirical tests in 20 countries,” in M.
Zanna (ed.), Advances in Experimental Social Psychology, 25, pp. 1–66. New York:
Academic Press, 1992; and H. C. Triandis, R. Bontempo, M. J. Villareal, M. Asai, and N.
Lucca, “Individualism and collectivism: cross-cultural perspectives on self-ingroup
relationships,” Journal of Personality and Social Psychology, 1988, 54(2), 323–38.
15. See Luciara Nardon and Richard M. Steers, “The culture theory jungle: divergence and
convergence in models of national culture,” in Rabi S. Bhagat and Richard M. Steers
(eds.), Cambridge Handbook of Culture, Organizations, and Work. Cambridge University
Press, 2009, pp. 3–22.
16. Edward T. Hall and Mildred R. Hall, Understanding Cultural Differences. Yarmouth, ME:
Intercultural Press, 1990.
17. Hofstede, Culture’s Consequences.
18. Trompenaars, Riding The Waves of Culture.
19. House et al., Culture, Leadership, and Organizations.
20. “Speeding while rich,” This Week, March 4, 2015, p. 4.
21. Wendy Bone, “It’s rubber time in Indonesia,” Inspiration Travel Writing Contest,
available at www.wesaidgotravel.com/author/inspiration/, February 5, 2014. Accessed
March 1, 2019; Daniel Ziv, Jakarta Inside Out. Jakarta, Equinox Publishing, 2004.
22. Richard Lewis, When Cultures Collide. London: Nicholas Brealey Publishing, 1999, p.
8.
23. Peter Ustinov, quoted in Richard Hill, EuroManagers. Brussels: Europublications, 1998,
p. 230.
24. Swidler, “Culture in action: symbols and strategies.”
25. Sarah Gordon, “Delta Airlines flight from New York’s JFK Airport was delayed after
ultra-Orthodox Jewish passengers refuse to sit next to women,” Daily Mail, April 15, 2015.
26. Sjoerd Beugelsdijk, Robbert Maseland, Marjolijn Onrust, and Andre van Hoorn,
“Cultural distance in international business and management: from mean-based to
variance-based measures,” International Journal of Human Resource Management, May
30, 2014, pp 165–91, available at tandfonline.com. Accessed March 1, 2019.
149
27. Oded Shenkar, “Cultural distance revisited: towards a more rigorous conceptualization
and measurement of cultural differences,” Journal of International Business Studies, 2001,
32, pp. 519–35.
28. Simcha Ronen and Oded Shenkar, Navigating Global Business: A Cultural Compass.
Cambridge University Press, 2017, pp. 245–332.
29. Irem Uz, “The index of cultural tightness and looseness among 68 countries,” Journal
of Cross-Cultural Psychology, December 25, 2014; M. J. Gelfand, L. Nishii, and J. L.
Raver, “On the nature and importance of cultural tightness–looseness,” Journal of Applied
Psychology, 2006, 91, pp. 1225–44; J. R. Harrington and M. J. Gelfand, “Tightness–
looseness across the 50 united states,” Proceedings of the National Academy of Sciences
of the United States of America, 2014, 111, pp. 7790–5.
30. Gelfand et al., “On the nature and importance of cultural tightness-looseness”; M.
Gelfand, J. Raver, L. Nishii, L. Leslie, J. Lun, and B. Lim, “Differences between tight and
loose cultures: a 33-nation study,” Science, 2011, 332, pp. 1100–4; Mert Aktas, Michelle
Gelfand, and Paul Hanges, “Cultural tightness-looseness and perceptions of effective
leadership,” Journal of Cross-Cultural Psychology, 2015; Michelle Gelfand, Rule Makers,
Rule Breakers: How Tight and Loose Cultures Wire Our World. New York, Simon &
Shuster, 2018.
31. Jennifer Eagan, “Multiculturalism,” in Encyclopedia Britannica. London: Britannica,
2017.
32. “Singapore: model of a pluralistic multicultural society,” 2012, available at http://berylpieces-asia.blogspot.com/2012/03/singapore-model-of-pluralistic.html. Accessed March 1,
2019; Tom Benner, “Singapore’s road to multiculturalism,” Fair Observer, September 27,
2016; and Neo Chai Chin, “Multiculturalism: a cornerstone of Singapore identity,” Today
Online, February 5, 2017.
33. Edward T. Hall, The Silent Language. New York: Anchor Books, 1990, p. 29.
34. Nancy J. Adler, International Dimensions of Organizational Behavior, 5th edn. Mason,
OH: Thompson, 2008.
35. Guilherme Azevedo, “Brazilian management in China and a theory of the formation of
hybrid organizational cultures.” Paper presented at the European Group of Organizations
Studies (EGOS) conference, Amsterdam, July 12, 2008.
36. Susana Costa e Silva and Luciara Nardon, “An exploratory study of cultural differences
and perceptions of relational risk.” Paper presented at the European International Business
Academy conference, Catania, Italy, December 15, 2007.
37. Azevedo, “Brazilian management in China.”
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3
Organizational Environments
◈
Chapter Outline
Overview: Stakeholders, Strategies, and Structures
Stakeholders and Global Strategies
Management Application 3.1 Stakeholders and Strategies in Mexico’s
Grupo Carso
Management Application 3.2 Stakeholders and Strategies in Germany’s
Mittelstand Firms
Strategy and Structure: Regional Models
Management Application 3.3 Organization and Management in China
Management Application 3.4 Organization and Management in Japan and
Germany
Participation and Decision-making
Corporate Culture and Collective Behavior
Management Application 3.5 Mt. Fuji and Corporate Culture at Dentsu
MANAGER’S NOTEBOOK: Working with Global Organizations
Chapter Review
151
Learning Objectives
Explore relationships between stakeholders, strategies, and global
structures.
Recognize strategy–structure relationships in different geographic regions.
Examine the role of national cultures in organizational decision-making and
strategic implementation.
Explore differences in corporate cultures and their effects on employee
behavior.
Organizations are symbolic entities; they function according to implicit models in
the minds of their members, and these are culturally determined.1
Geert Hofstede
Maastricht University
Employee layoffs and redundancies are a fact of organizational life in many parts of
the world. In 2018, for example, San Francisco-based Wells Fargo Bank announced
it would rid itself of 26,000 employees, of 10 percent of its global workforce, as part
of a new “effectiveness and efficiency initiative” aimed at reducing annual operating
cost by $4 billion.2 The bank’s CEO was also forced out a short time later. Smaller
companies routinely take similar actions for similar reasons.3 In such cases,
company stock prices typically increase significantly following the announcements.
Why? Because key stakeholders – investors – approved the actions to reduce costs,
increase efficiency, and increase stock prices. It was good business.
However, this sequence of events would have been less likely in Western
Europe or most of Asia – and this tells us a lot about how and why organizations can
be markedly different across cultural environments. In difficult economic times, when
demand declines for services or products, companies around the world face the
same challenge: what to do with excess employees. While the challenge may be the
same, corporate responses are not. In much of North America, like the situation at
Wells Fargo, reduced demand for services often leads logically – and culturally
consistently – to employee layoffs. Although widely recognized as causing hardship
to people, layoffs are often deemed to be a prudent business and management
response to a financial crisis. It is the right thing to do since executive decisionmakers have a legal obligation to do what is best for stockholders, not employees.
152
By contrast, in Germany, the Netherlands, and other parts of Western Europe,
long-standing social legislation makes it much more difficult – and costly – to
downsize employees. As a result, these companies will often seek other remedies,
such as seeking early retirements or job sharing. The legal framework of
organizations speaks very differently here.
Finally, in Japan, layoffs are rare (although they still occur, mostly among
temporary workers), since organizations risk losing their public reputation, which can
affect their business and future hiring opportunities. There are far fewer legal
constraints, mostly because social pressures eliminate the need for them. Layoffs
violate fundamental Japanese social norms regarding paternalism in the workplace.
As a result, Japanese companies will frequently decide to transfer redundant
employees to other parts of the organization or its subsidiaries, even if they too are
overstaffed.
What do we see in these three examples? Actually, we see the same problem,
but with very different strategic and organizational responses. So it is with
organizations and organizational environments around the world. To understand this,
we need to explore why companies in different regions of the world can and often do
make very different decisions when faced with similar problems. As such, we focus in
the chapter on organizational environments, with particular attention to
stakeholders, strategy–structure relationships, organizational decision-making, and
corporate cultures. More specifically, we will explore the following topics:
how cultures can influence the relationship between stakeholders and
strategies around the world
how the relationship between strategy and organizational structure can be
influenced by local regional differences
how national and regional cultures can influence decision-making processes
in organizations
how corporate cultures are created and reinforced by cultural, organizational,
and situational factors.
153
Overview: Stakeholders, Strategies, and
Structures
Organizations come in many shapes, sizes, and forms. But organizations are also so
much more. They provide managers with a set of rules, policies, procedures, and
norms of behavior to guide action in the form of standard operating procedures and
organizational cultural norms. This can be thought of as the micro environment in
which managers work, and it is heavily influenced by prevailing national cultures and
institutions. Managers need to understand the type of organizations they are working
with, the types of solutions they have found to deal with their environments, and the
implications of these solutions for managers. In other words, organizations
themselves put pressures on managers by defining what is both expected and
required.
First, however, let’s begin with the basics: What is an organization? Simply put,
an organization is a system of consciously coordinated activities of two or more
persons aiming to achieve common objectives. While this is a fairly simple definition,
in our view no one has come up with a better one. Organizations prosper or fail in
line with the extent to which they – and their managers – are successful in achieving
both effectiveness and efficiency in the common pursuit of these goals.
Organizations are not just about how to put people into boxes or cubicles. Instead,
they serve as a principal command and control system for focusing human, financial,
and physical resources on the accomplishment of valued tasks. And organizational
designs live or die on the basis of their ability to assist managers with their
responsibilities to meet the demands of their various stakeholders.
Since no two organizations are alike, the study of organizations is both complex
and contradictory. Still, to explore this topic, we need to establish some parameters.
Our approach here is to examine three interrelated topics: stakeholders, strategies,
and structures. That is, who are the individuals, groups, and institutions that have a
stake in particular organizations, and what are their expectations? In addition, how
do these organizations approach strategic planning and implementation? And finally,
how do these organizations organize themselves to pursue their stated objectives
and strategies in an effort to satisfy their various stakeholders? As we proceed
through this discussion, look for interactions between these three key variables as
they influence organizational behavior and corporate outcomes.
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Stakeholders and Global Strategies
Simple logic – not always a good guideline for global interactions – suggests that
strategy-making follows a relatively predictable format, often referred to as the
strategic management cycle. The relationships involved in this cycle have been seen
largely in terms of a one-way causal relationship. That is, mission determines
strategy, which in turn determines structure, which governs management practice,
which ultimately determines the extent to which the organization succeeds in
achieving its mission.
However, recent evidence suggests a far more complex and interactive
relationship. Specifically, while mission and values may help determine an
organization’s initial strategy and goals – at least in the early years of the venture –
organizational design and even management practices can also influence strategy in
significant ways, especially as the organization matures and is confronted by new
challenges and economic realities. Likewise, strategy can influence structure, but so
too can management practices. Finally, these interactive relationships are played out
in a business environment that is itself multifaceted and interactive. This includes
such external factors as geographic location; the cultural milieu(s) in which the
organization works; legal conventions and local customs; variations in political and
institutional support; a country or region’s factor endowments; the specific sector of
the economy where the organization does business (e.g., industry vs. services);
available investments, technologies, and markets; and environmental challenges and
goals. In other words, the simple strategy-structure-management paradigm is found
to be sorely lacking in explanatory power as organization theory crosses borders. In
particular, what is lacking here is recognition that the key issue in organizational
success may not be its strategy; it may be its stakeholders.
Not surprisingly, a company’s stakeholders (e.g., investors, customers,
regulators, employees, etc.) can have a major influence on both the determination of
the company’s mission and its strategy (see Exhibit 3.1). Various stakeholders place
demands, expectations, and constraints on enterprise activity and, obviously, these
demands frequently differ across the various stakeholders, some wanting better
return on their investment and others wanting a more socially or environmentally
responsible organization. Most strategists understand this. However, what many
global managers fail to comprehend is that the nature and power of a stakeholder
group can be influenced by the predominant culture in which the enterprise does
business, as discussed below.
155
Exhibit 3.1 Key stakeholders for a typical business organization
For example, some companies routinely face a stakeholder group where power
and influence are fairly centralized. In Korea, Mexico, the United Kingdom, and the
United States, for example, investors, customers, and governments often have
considerable influence over enterprise mission and strategy, while employees and
the public at large do not. At the same time, in Germany, Japan, and Sweden, the
opposite situation exists. That is, investors, customers, and governments still have a
major influence over missions and strategies but so do employees and the public at
large. Moreover, American or British firms that do business in Sweden or Germany,
for example, face this broader or more distributed stakeholder group and must
accommodate these different constituencies. And, increasingly, social activists
including nonprofit organizations are becoming important stakeholders in business
organizations around the world.4
The power of stakeholders in influencing corporate strategies can be seen in
several different ways. We provide three very different examples here. The first
below focuses on institutional environments, the realm of business–government
relations. The second comes from a statement of strategy and organizing principles
from a major closely held Mexican conglomerate where ownership and power are
centralized. And the third illustrates the power and influence of distributed
stakeholders in Germany. Note the different implications of these stakeholders for
organization and management.
156
Institutional Environments and Corporate Strategy: An Example
Culture and institutional environments go hand in hand. Indeed, they are frequently
mutually reinforcing. The institutional environment generally consists of the legal–
political environment, which either encourages or discourages individuals and
companies from pursuing certain strategies that governments or society at large
either support or oppose. Governments obviously have considerable power to control
organizations through the passage of laws and policies, technology transfers to
favored companies, financial support, legal strictures on investment policies, importexport policies and constraints, and so forth. This arena is sometimes referred to as
business–government relations, and a major debate in international business is the
extent to which business and government should have an adversarial relationship or
a cooperative one.
Nowhere is this difference more notable than when comparing the institutional
environments and business–government relationships between Japan and the
United States. If there is a principal difference in the business strategies of Japanese
and US firms, it is Japan’s preoccupation with gaining market share, as opposed to
the US preoccupation with achieving short-term net profits or higher stock prices.
This fundamental difference results from several differences in the two business
environments, which allow many Japanese firms to take a longer-term perspective
than their US competitors.
First, consider the institutional environment in which most US firms operate.
Distant and often adversarial business–government relations are common, including
having the government as the principal regulator. The principal purpose of the
company is to maximize stockholder wealth. Investors stress short-term transactions
and returns on investment. A clear link exists between earnings per share and stock
price. Managers are frequently offered stock options and large bonuses for superior
performance. Finally, undervalued companies are frequently subject to hostile
takeovers.
Now consider the very different institutional environment found in Japan. In
contrast to much of the West, Japan’s institutional environment is characterized by a
strong and ongoing cooperative business–government relationship that permeates
the core business environment, including government targeting of strategic industries
and support for local industries. The principal purpose of a company is to build value
over the long term to benefit investors, employees, and the nation. Investors stress
long-term stock appreciation instead of earnings per share. Dividends are paid at a
157
constant rate as a percentage of the par value of the stock, not as a percentage of
profits. Managers are seldom offered stock options or large bonuses for superior
performance. Few outside board members are present to defend stockholder
interests. Finally, undervalued companies are typically protected by sister companies
from outside takeovers.
As a result of these differences, Japanese firms are better positioned to focus
their attention on attaining strategic objectives (such as beating competitors) instead
of financial objectives (such as keeping stockholders happy). This competitive
advantage occurs for three principal reasons. First, low profits and high retained
earnings support growth. Second, close relationships with banks allow the use of
high levels of debt to support growth. Finally, Japanese stockholders routinely accept
low dividends and management’s absolute control of the firm.
With such a close business–government relationship in Japan compared to the
US, we would expect that people in Japan would have greater trust in their
government, but such is not the case. As illustrated in Exhibit 3.2, people in both
countries place little faith in their government institutions. Indeed, people in Turkey,
India, and China exhibit considerably more trust in institutions than most people in
the West. Why is this?
Exhibit 3.2 Level of trust in national governments
Country
People who trust their
government (%)
Country
People who trust
their government (%)
China
84
Germany
43
India
70
Japan
37
Turkey
51
United
Kingdom
36
Canada
46
Spain
34
South Korea
45
France
33
Russia
44
United States
33
Source: Adapted from 2018 Edelman Trust Barometer; and Niall McCarthy, “The
countries that trust their governments most and least,” Forbes, January 22,
2018.
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Stakeholders and Strategies in Mexico’s Grupo Carso: An Example
Carlos Slim Helú is estimated by Forbes to be the fifth richest person in the world,
with assets estimated at $61 billion.5 Along with his family, he controls and manages
Mexico’s Grupo Carso, a global conglomerate leading the way in such industries as
telecommunications, construction, consumer goods, mining, and real estate. Being a
closely held grupo in a traditional Mexican culture, Slim can do pretty much as he
sees fit with corporate strategy and structure. He has divided his companies among
family members, which reinforces his close control. He summarizes what he
considers to be Grupo Carso’s business principles in ten points, which guide his
employees every day, and could be the reason of the continued success of his
companies (see Exhibit 3.3).6
Exhibit 3.3 Carlos Slim’s guiding business principles
Business
strategies
Competitive advantage
Simple
organizational
structure
Always have simple organizational structures, minimal
hierarchical levels; provide human and in-house development
of the executives; maintain flexibility and fast decision-making
capability; work with the advantages of a small company.
Austerity in good
times
Maintaining austerity in good times strengthens, capitalizes,
and accelerates the development of the company, and averts
the bitter and drastic adjustments needed in times of crisis.
Continuous
improvement
Stay focused on modernization, growth, training, quality,
simplification, and the continuous improvement of production
processes. Increase productivity and competitiveness; reduce
costs and expenses, judge performance based on global
benchmarks.
Think big
Companies should never be limited by the size of the owner or
manager. Do not feel big in a small corral. Minimize investment
in non-productive assets.
Teamwork
There is no challenge that we cannot overcome by working
united, and with clear vision in the goals and knowing the
tools.
Reinvest profits
Money that leaves the company evaporates; this is why we
reinvest profits.
159
Business
strategies
Competitive advantage
Corporate
creativity
Corporate creativity is not only applicable to business, but also
to solving many of society’s problems. This is what we do
through the Group’s Foundations.
Optimism
Firm and patient optimism always yields its rewards.
Work
All times are good times for those who know how to work and
have the means to do so.
Long-term
orientation
Our premise is and has always been that we leave with
nothing; that we can only do things while we are alive and that
entrepreneurs are creators of the wealth they temporarily
manage.
Source: Based on Dolia Estevez, “Mexican billionaire Carlos Slim’s 10 business
principles,” Forbes, April 29, 2014; and Gerardo Dada, “10 business lessons
from Carlos Slim,” The Adaptive Marketer, January 23, 2016.
Why has Slim been so successful? Many reasons account for this. First, he
came from an impoverished background. His father immigrated to Mexico from
Lebanon, and Slim had to build something out of nothing. He was fortunate to have
inherent entrepreneurial skills and a strong work ethic. He thought strategically and
never stopped working with new ideas. He was careful to own and closely control his
own business. He was also politically smart in a region where connections count.
Slim was a risk-taker, but his risks were carefully considered. He and his company
grew at a time when Mexico needed heroes who could get things done in a country
rife with corruption and pessimism. He became a hero even to the lower classes,
who continue to admire him to this day because he uses his wealth to provide muchneeded services to the poor. Like many other wealthy entrepreneurs (e.g., Mark
Zuckerberg, Jeff Bezos), Slim has created a foundation that has benefited millions of
people through high-impact social programs focused on the most vulnerable
populations throughout Latin America.
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Management Application 3.1 Stakeholders and Strategies in Mexico’s
Grupo Carso
1. As a manager, what is your assessment of Carlos Slim’s ten guiding
business practices? Are these principles specific to Mexico or would they
work in other countries? Explain.
2. What explains Slim’s considerable success in a country and region
characterized by widespread poverty?
3. Is Carlos Slim a global entrepreneur or a Mexican entrepreneur? In
other words, are his business principles unique to Mexico or global in
nature? Explain.
4. As Carlos Slim passes management control of his businesses to his
children and grandchildren, how can he ensure that the company’s basic
philosophy and corporate culture goes forward unchanged?
161
Stakeholders and Strategies in Germany’s Mittelstand Firms: An Example
Most people are familiar with the names of a number of large and successful German
companies, including Siemens, BMW, Volkswagen, Daimler, Beyer, and BASF. What
many people fail to realize, however, is that that the real strength of the German
economy actually relies less on these large companies and more on its 2.5 million
small and medium-sized firms. These so-called mittelstand firms (small to mediumsized) account for over two-thirds of the nation’s economy and over 80 percent of its
private-sector employment. Examples of mittelstand firms include Rational (high-end
restaurant ovens), Trumpf (computer-based machine tools), and Playmobil
(educational toys).
Germany’s mittelstand firms compete in the global marketplace through a global
strategy that has served them well for several decades (see Exhibit 3.4).7 To make
this strategy work, however, it is necessary to have broad buy-in from multiple
stakeholders, including managers, employees, banks, and governments. To the
extent that this can be achieved, the mittelstand model is a formidable model for
long-term strategy implementation.8
Exhibit 3.4 Competitive strategies of German mittelstand firms
Business strategies
Competitive advantage
Focus on a specific up-scale
market niche
Customers in up-scale markets tend to focus on
quality and service over cost, precisely where
mittelstand firms with their higher operating
costs are best able to compete.
Produce only high-quality
products
German products are recognized for highquality, advanced engineering, and superior
craftsmanship, making it easier for new German
entrants to capitalize on this reputation.
Ensure complete customer
satisfaction
Local representatives of mittelstand firms tend to
be highly skilled in both sales and service,
providing customers with ready access to aftersale support when needed.
Emphasize employee selection
and training
Employees are hired for their skills and longterm potential, not their cost, and receive
ongoing training and skills upgrades throughout
their careers.
162
Business strategies
Competitive advantage
Maintain strong employee
commitment and involvement
Employees at all levels tend to remain with
mittelstand firms for long periods and are
encouraged to take an active role in
manufacturing, quality control, and service.
Take a long-term approach to
market development
Private ownership and close relations with
lenders allow managers to make sizable up-front
investments in technology and new products,
and to recoup investment over the long term.
Source: Based on Richard M. Steers, Luciara Nardon, and Carlos SanchezRunde, “Culture and organization design: strategy, structure, and decisionmaking,” in Rabi S. Bhagat and Richard M. Steers (eds.), Cambridge Handbook
of Culture, Organizations, and Work. Cambridge University Press, 2009, pp. 71–
106; Karan Girotra and Serguei Netessine, “Extreme focus and the success of
Germany’s mittelstand,” Harvard Business Review, February 12, 2013; and
Winfried Weber, “Germany’s midsize manufacturers outperform its industrial
giants,” Harvard Business Review, August 12, 2016.
Unfortunately, recent increases in the cost of labor and production in Germany
have increasingly threatened the competitiveness of many of these mittelstand firms.
As a result, some firms are beginning to curtail their German-based operations in
favor of manufacturing facilities in other lower-cost countries (notably in Asia and
Eastern Europe). Increasing emphasis is being placed on using technology to
increase productivity. Even so, the future remains highly uncertain. Despite their
current success, many worry that mittelstand firms might eventually price themselves
out of global markets in the future because of their high-cost structure. In the final
analysis, how much will customers pay for German craftsmanship? On the other
hand, if quality has been the long-term basis of a firm’s competitiveness, what are
the risks of changing (or devaluing) this strategy?
163
Management Application 3.2 Stakeholders and Strategies in Germany’s
Mittelstand Firms
1. From what you have learned about mittelstand firms, who are the
principal stakeholders, and what are their expectations?
2. How might the nature of mittelstand firms influence their strategymaking processes?
3. As a manager, what are the benefits and drawbacks of working in a
mittelstand firm?
4. As globalization increases, what do you think is the future for
Germany’s mittelstand firms?
164
Strategy and Structure: Regional Models
Much has been written about multinational corporations (MNCs), most of which
focuses on teasing out specific organizational designs suitable for each company’s
strategic objectives. For many entrepreneurial firms, the choice of an appropriate
design for conducting global business evolves over time as firms increase their
involvement in global activities. This evolutionary process sometimes begins with
some form of domestic organizational design, in which international activities are
largely an appendage to the more central domestic activities, and evolves over time
into a more integrated global organizational design that places international business
at the center of the organization’s strategy. (By contrast, other organizations are born
globally.) Domestic organizational designs usually continue in place while a national
firm begins to export a product that it has long made for the home market, another
common characteristic of entrepreneurial firms. This endeavor requires some
structure to oversee successful implementation, but, because the venture is new and
may not be successful, most organizations approach it with caution, using trusted
local managers.
As firms grow, more complex designs are explored. Companies go to great
lengths to identify designs that will best support the firm’s strategic objectives. As
such, an appropriate organizational design should help the firm integrate four types
of strategic information in order to facilitate successful competition:
Area knowledge. An understanding of the local area’s culture, economics,
and social conditions.
Product knowledge. An understanding of local customer needs and possible
markets for company products.
Functional knowledge. Local access to expertise in the various functional
areas of business, such as finance, marketing production, etc.
Customer knowledge. An understanding of each customer’s particular needs
for sales and service.
In today’s complex world, many of the traditional MNC designs have been
replaced by various network and web-based organizations that break the
organization into groups with loose links, relying on regional groupings, regional
headquarters, and the creation of teams and projects that link different units around
the world. Transportation company Uber is a good example of this trend. Web-based
165
networks are also popular in coordinating the efforts of multiple companies who
coordinate their technologies and patents to create single products (e.g., high-tech
products). These teams are frequently highly dynamic, thus changing the relationship
among the units over time. The design of born-global multinationals, such as Uber, fit
their global strategy from the moment they were founded.
All of this is widely known and written about in management textbooks. What is
seldom explored, however, is a series of unique region-specific organizational
designs that suit local manufacturers and service providers by increasing their
operating efficiency, resource allocation, and human resources (HR) in ways that
bring competitive advantages to the firms. In a very real sense, organizations are
reflections of their cultures. We saw this in the examples of Grupo Carso and
mittelstand firms, but there is much more to explore here, and we now choose to
focus on these unique and often highly effective organizational designs.
Managers can learn a great deal about both strategy and structure by studying
culturally based local or regional trends in organizational design. These designs can
identify the primary beneficiaries of an organization, who holds power and influence,
the rights and privileges of rank-and-file employees, managerial role obligations, and
how decisions are made. In many ways, a company’s organizational design is like its
own unique fingerprint; no two are ever alike and each provides clues about
organizational identify and managerial intent. Comparing these designs can help us
understand how cultural differences can influence the way in which businesses
operate and management is conducted. This can also help managers who have to
work with highly diverse organizations from multiple countries.
While a country-by-country discussion is beyond the scope of this book, it is
possible to identify four of the more common models, based on the central question
of who derives the greatest benefit from an organization’s operations.9 Obviously, all
regional organizations have multiple stakeholders, and many major or minor groups
benefit in various ways (e.g., investor returns, employment, local community
development). The question here, however, is: Who stands to gain the most as a
general trend? What we find when we begin exploring the role of cultural differences
in organizational design is that there are systematic differences across countries and
regions, not only in management style but also in principal beneficiaries. This is not
to say that all organizations within a single culture share common objectives and
principal beneficiaries – they don’t – but trends can nevertheless be discovered that
can help us understand why companies look different and operate in different ways
across various regions of the world.
166
We examine four regional models of organizing here as examples of the
diversity in building strategy–structure relationships: traditional investor model,
Chinese family model, Japanese keiretsu model, and German codetermination
model (see Exhibit 3.5). Obviously, differences exist in organizing frameworks within
each country model, but pay particular attention to the differences between each
model.
Exhibit 3.5 Regional models of organizing
Characteristics
Traditional
investor
model
Chinese
family model
Japanese
keiretsu
model
German
codetermination
model
Primary
beneficiaries
Stockholders
and
investors
Extended
family
members
Company
stakeholders,
including
stockholders,
employees,
sister
companies
Company
stakeholders,
including local
communities
Center of power
and influence
Centralized
power
largely held
by investors
and
stockholders,
and
delegated to
top
executives
Centralized
power held
by family with
government
backing and
tightly
controlled
through
family
management
Moderately
distributed
power held
by investors,
sister
companies,
key banks,
unions, and
government
Widely
distributed power
held by investors,
partners,
managers, works
councils, unions,
and government
Management
selection
Professional
education
Family
membership
Seniority
Technical
mastery
Decisionmaking
Top-down
centralized
management
common, but
not universal
Top-down
centralized
management,
often with
government
involvement
and support
Consultation
with
employees
up, down,
and across
hierarchy,
but final
decisions
typically
made at top
Collaboration
among
managers, works
councils, and
unions on key
decisions
167
Characteristics
Traditional
investor
model
Chinese
family model
Japanese
keiretsu
model
German
codetermination
model
Employee rights
and job security
Weak legal
protection of
employee
rights and
job security
for all
employees
Weak legal
protection of
employee
rights and job
security for
all employees
Weak legal
but strong
social
protection of
employee
rights and
job security
for all
“permanent”
employees
Strong legal
protection of
employee rights
and job security
for almost all
employees
Source: Based on Richard M. Steers, Luciara Nardon, and Carlos SanchezRunde, “Culture and organization design: strategy, structure, and decisionmaking,” in Rabi S. Bhagat and Richard M. Steers (eds.), Cambridge Handbook
of Culture, Organizations, and Work. Cambridge University Press, 2009, pp. 71–
106.
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Traditional Investor Model
Many books on the topic of organizational design and management structure assume
that managers organize their resources in fairly similar ways. Typically, what they are
talking about here is what may be described as a traditional investor model of
organization. A good example of this approach to organization and control can be
found in what are often described as predominantly “Anglo” cultures (e.g., Australia,
Canada, New Zealand, the United Kingdom, and the United States), although
variations of this model can be found throughout the world. Most companies in this
cluster make use of some type of investor structure as their chief organizing
framework. In other words, the investors typically exert significant power and
influence over the organization, management, and ultimate destiny of the firm, and
recoup most of the profits or return on investment for themselves as owners. Indeed,
in the United States, for example, commercial law requires that executives manage
the firm for the exclusive benefit of investors (within legal and regulatory limits). They
are therefore not allowed, for example, to provide greater benefits to employees or
customers unless they can demonstrate that such actions clearly benefit investors. It
is simply against the law.
Identifying a “typical” company in any culture is a challenge, but perhaps
nowhere is this challenge greater than with respect to American firms. As elsewhere,
American companies reflect the culture(s) in which they do business, and since the
United States is strongly multicultural it is not surprising to find major differences
across companies – even in similar industries. All the same, it is possible to develop
a general portrait of what such a company looks like in terms of its basic
organizational structure and management processes (see Exhibit 3.6). Based on
what we know about prevailing American cultural patterns, consider how we might
describe a typical American firm.
Mastery-oriented. Many investor organizations stress individual or group
achievement and responsibility, control over the environment, a linear
approach to decision-making, respect for rules and policies and a sense of
order, and a belief that, at least in theory, anyone can rise to the top.
Powerful CEOs. CEOs and company presidents often get most of the credit
for company successes and much of the blame for failure. CEOs tend to have
considerable power as decision-makers and leaders so long as they succeed.
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Professional management. Companies typically make use of “professional
managers.” This is not to imply that other forms of management are not
professional; rather, it is to emphasize that such companies rely heavily on
outside, professionally trained, and presumably impartial managers (e.g., free
from nepotism) to run their companies.
Fluid organizational design. Organizational design tends to be rather fluid,
including many alliances and partners, and is restructured when the need
arises. Many corporate functions (e.g., market research, legal services,
human resource management (HRM)) are outsourced. Manufacturing and
service companies often rely on outside suppliers and distributors that have
only a tenuous relationship with the company.
Low employee job security. Employees on all levels are often viewed as
factors of production, rather than valued members of the organization. Indeed,
in some companies, so-called “permanent” employees are routinely hired and
fired on the basis of variations in workloads. Moreover, the use of contingent
workers is extensive, partly to save money on benefits but also to increase
operating efficiency and flexibility. As a result, employee commitment to
organizations is on the wane. This is not always the case, however, with
privately held companies or publicly traded companies who have convinced
their boards of directors that satisfied, long-term employees are essential to
their success. For example, the annual list of the 100 Best Companies to Work
For highlights those firms who manage to satisfy both their stockholders and
their employees.
Exhibit 3.6 Example of a traditional investor model
It would be a mistake to assume that organization and management practices
are identical – or even similar, in some cases – across the broad so-called “Anglo”
170
cluster.10 For example, Nigel Nicholson has noted that typical governance rules in
the United Kingdom are quite different to those in the United States.11 As a rule,
British companies are far less tolerant of power aggregation than are their American
counterparts. For example, they tend to oppose unitary boards of directors and
strongly prefer the separation of the roles of chairman and CEO between two people,
unlike the tendency in the United States to integrate these two roles into one person.
They also dislike dual-share voting systems and have rules that prevent banks from
owning major shares in companies. British firms are also far less encumbered with
layers of lawyers, spend far less money on government lobbying, and have generally
weak trade associations. In general, then, Nicholson notes that British firms tend to
be more liberal than their US counterparts, and maintain more liquidity and fluidity in
ownership. If British firms are more liberal in ownership and governance, however,
they tend to be more conservative in management policies and practices. The ethos
of
British
management
is
highly
pragmatic,
achievement-oriented,
and
entrepreneurial, but is often opposed to “out-of-the-box” thinking – weak on
leadership, strong on financial management, and frequently poor on vision,
community, and integration.
At the same time, systematic differences between the United States and Canada
can also be noted. Nancy Adler offers the following observations.12 Compared to
Americans, Canadians tend to understate their strengths and perhaps overstate their
weaknesses. They do not usually claim to be the best at something. Canadians
strongly believe in collegiality. For example, Canada is one of the leaders in creating
middle-country initiatives, whereby a group of countries in the world tries to get
something done (instead of trying to go it alone). Canadians tend to be more formal
than Americans – titles and family names are important. Canadians are generally
more polite and less confrontational than their American counterparts. Canadians are
also less explicitly and publicly religious. Finally, Canadians believe in more collective
responsibility across society in such areas as education and healthcare. All this is not
to say that overlaps do not occur; obviously, they do. Assuming, however, that
Americans and Canadians live identical lifestyles or share identical values can only
lead to lost opportunities for global managers.
171
Chinese Family Model
Two-thirds of all the businesses in the world are family enterprises. They are
responsible for 70–90 percent of global gross domestic product (GDP) and for 50–80
percent of jobs globally.13 Here we examine a typical family model from China as an
example of how such models are organized, but there are obviously many variations.
A distinguishing characteristic of the Chinese family model of organization is the
centrality of family members in the routine operations of the firm. Frequently, multiple
family members hold different positions in the corporate hierarchy. Such firms are
typically run by the head of the family – often, although not exclusively, male.
Moreover, family members are the principal beneficiaries of corporate operations and
success. The family model can be seen in numerous variations. We focus here on
the example of China, although this model can be found in many places throughout
the world (e.g., Latin America, Southeast Asia, the Middle East).14
When Westerners attempt to describe Chinese culture, they invariably begin –
correctly or incorrectly – with Confucianism.15 Confucius promulgated a code of
ethical behavior that was meant to guide interpersonal relationships in everyday life.
This code was summed up in the so-called five cardinal virtues. These consist of filial
piety, absolute loyalty to one’s superiors, strict observance of seniority, subservience
to superiors, and mutual trust between friends and colleagues. Although these
principles suggest a way of living in the broader society, they also have implications
for business practices today. Confucius and his followers saw the universe – and
hence society – as a hierarchical system ruled by an educated aristocratic elite.
Concepts such as democracy and equality were disdained, while learning and
education were highly prized. Confucian society stressed the virtues of selfdiscipline, hard work, diligence, and frugality.16 Hence the fundamental nature of
human relationships is not interactions among equals but, rather, interactions among
unequals. In other words, correct interpersonal behavior is determined by one’s age,
gender, and position in society, and a breach in this social etiquette carries with it
severe penalties.
These five cardinal virtues are reinforced by several social patterns that
characterize traditional Chinese society, as well as business practices.
Guānxi. This represents a strong personal relationship between two people
with implications of a continual exchange of favors.17 Two people have guānxi
(pronounced “guan-she”) when they can assume that each is conscientiously
committed to the other regardless of what happens. This bond is based on the
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exchange of favors (i.e., social capital), not necessarily friendship or
sympathy, and it does not have to involve friends. It is more utilitarian than
emotional. Failure to meet one’s obligations under this arrangement causes a
severe loss of face, however, and creates the appearance of being
untrustworthy.
Face. Face is largely interpreted to mean dignity, self-respect, and prestige.18
This is based both on the upholding of correct relationships between
individuals and on the protection of one’s face. All social interactions must be
conducted in a manner in which no party loses face. Hence, if an individual
cannot keep a commitment, however small, they lose face. Similarly, people
lose face when they are not treated in accordance with their station or position
in society. Thus, a senior manager will lose face if it becomes known that a
junior colleague is earning a higher salary or was promoted ahead of him or
her.
Rank. Confucian principles were designed to recognize hierarchy and
differences between class members. As a result, the behavioral requirements
of individuals differed according to who was involved in the relationship.
Among equals, certain patterns of prescribed behavior existed. You can see
this today when two strangers discover upon meeting for the first time that
they both attended the same high school or university. An instant bond
emerges and there is a sense of immediate camaraderie. On the other hand,
for people from outside this common background or clan, frequently there is
hostility or distrust. Foreign observers note that some people can be very blunt
and impolite when talking with total strangers, yet very hospitable and
generous when dealing with friends or acquaintances. It is a question of
belonging and self-identity with in-groups.
Harmony. Within one’s broad circle of acquaintances, there is a clear
responsibility for maintaining group harmony. Again, this principle stresses
harmony among unequals – that is, it links persons of unequal rank in power,
prestige, or position. Since strong personal relationships outside the family
tend to occur only between persons of equal rank, age, or prestige, harmony
is the means of defining all other necessarily more formal relationships. It is
everyone’s responsibility to maintain this harmony continually among one’s
acquaintances and family members, and considerable effort is invested in
doing so, including gift-giving.
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In view of China’s strong cultural traditions, it is not surprising that its companies,
both large and small, reflect this heritage. Chinese companies are generally called
gong-si (pronounced “gong-suh”).19 Although the term originally referred to private
family-owned enterprises, recent Chinese corporate law now uses this term to refer
to all companies, regardless of whether they are large or small, family-owned or
state-owned. To clarify this difference, smaller and medium-sized family-run
enterprises are often called jia zu gong-si. An illustration of a typical Chinese familyrun company is shown in Exhibit 3.7. In brief, its characteristics are as follows:
Flat and informal structure. Gong-si companies have little formal structure,
few standard operating procedures, and little specialization.20 While they lack
formal structure and procedures, personal relationships are likely to take
precedence over more objectively defined concerns, such as organizational
efficiency. Who one knows is often more important than what one knows, and
employee loyalty is sometimes preferred over actual performance.
Relationship-based. Decisions are frequently based either on intuition or on
long-standing business exchange relationships. According to Ming-Jer Chen,
if these family firms have a competitive advantage, it lies in their small size,
flexibility, network of connections, and negotiation skills.21
Family management. Top management positions are often filled with family
members, sometimes despite a lack of managerial competence.22
Business as private property. Business owners tend to regard the business
as the private property of the core family (not an individual) and are therefore
reluctant to share ownership with outsiders or to borrow from individuals or
organizations unrelated to the family in some way.
Family revenue. Following from Confucian thought, the family is the most
fundamental revenue and expenditure unit. Within a family, each member
contributes their income to a common family fund. Each member then has a
right to a portion of this money, while the remainder belongs to the family as a
whole. The interests of the entire family take precedence over individual
members and others outside the family.
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Exhibit 3.7 Example of a Chinese family model
Management Application 3.3 Organization and Management in China
1. Why are family businesses so common in the world? What do you
think are their benefits and disadvantages, compared to multinationals?
2. As a foreign company trying to enter the Chinese market, how would
you go about trying to compete with gong-si businesses? What might be
your competitive edge? What will be your shortcomings?
3. If your foreign company sought to form a partnership with a gong-si,
what cautions might be in order? What would you do to reduce potential
problems?
4. Do you think the Chinese family model (gong-si) could be successful in
cultures not heavily influenced by Confucianism? If so, what other
conditions would need to be present?
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Japanese Keiretsu Model
Next, we look at the Japanese keiretsu model of organization. An overview of
Japanese culture includes a strong belief in hierarchy, strong collectivism, a strong
harmony orientation, moderate monochronism, and strong particularism. Hierarchy
beliefs in Japan can be seen in the deep respect shown to elders and people in
positions of authority. In many circumstances, their directives are to be obeyed
immediately and without question. This belief follows from early Confucian teachings
(see above). Indeed, the concept of authority in Japan differs from that typically found
in the West. Western views of authority see power generally flowing in one direction
– down – although that authority often must be earned. The supervisor or manager
gives directions; those below them follow. Authority is a one-way concept. In Japan
and many other Asian countries, by contrast, power still flows downwards, but those
exercising power must also look after the welfare and well-being of those they
manage. In other words, a supervisor expects their directives to be followed without
question but will also spend considerable time guiding, coaching, and teaching
subordinates so that they can progress in their careers. Subordinates – and in many
cases their families too – will be looked after. Thus, authority here is seen as a twoway street; both sides (superiors and subordinates) have a role to play. By deferring
to those above you, you are in essence asking them to look after you.
Japan is also a highly collectivistic nation. Groups generally take precedence
over individuals, and people gain their personal identity through their group
membership. An old saying, “The nail that sticks out will be hammered down,” best
exemplifies the importance of this belief. Contrast this to the old American and British
saying, “The squeaky wheel gets the grease.” As a result, employees naturally
gravitate towards groups at work, and group achievement surpasses individual
achievement on the job. Seniority-based or group-based rewards are frequently
preferred over performance-based individual rewards.
Harmony – both with other people and with nature – is also a strong
characteristic. Japan’s respect for its surrounding environment is legendary. This is
not to say they refrain from changing or challenging nature; rather, they typically
attempt this in ways that do as little harm as possible to the environment. Likewise,
most Japanese will go to great lengths not to offend anyone or create open conflict or
argumentation. As a result, communications in Japan tends to emphasize context at
least as much as content. Nonverbal signs and signals are frequently used to convey
thoughts in cases when words may be inappropriate. Finally, many observers have
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noted that Japanese society tends to be highly particularistic: while clear rules of law
pervade society, exceptions are routinely made for friends and family or for powerful
and influential people.
Japan’s large and highly diversified companies represent a unique approach to
organization that served their members and their country fairly well in past decades,
although they are coming under increasing scrutiny today.23 These organizations are
referred to as keiretsu. This refers to a uniquely Japanese form of corporate
organization, consisting of a network of affiliated companies (kaisha) that form a
tight-knit alliance to work towards each other’s mutual success (see Exhibit 3.8). The
design of these types of organizations is rooted in Japanese history and is successful
largely because it is congruent with the national culture.24 Japanese keiretsu typically
consist of a group of interlocking companies clustered around one or more banks, a
lead manufacturer (such as heavy industry), and a trading company, overseen by a
president’s council consisting of the presidents of the major group companies. These
group companies assist one another in developing, manufacturing, and distributing
the groups’ goods and services. Hence, Kirin Brewery, a Mitsubishi group company,
is likely to get most of its supplies (paper, aluminum cans, glass bottles, transport
vehicles, etc.) from various sister companies of Mitsubishi, as shown in Exhibit 3.9.
Exhibit 3.8 Example of a Japanese keiretsu model
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Exhibit 3.9 Kirin Brewery: Japanese kaisha (Mitsubishi keiretsu)
Common features of keiretsu include the following:
Internal financing. Financing is most likely to come from inside the Japanese
conglomerate’s own financial institutions (e.g., main banks or insurance
companies), while market research and even legal advice is frequently carried
out within the group. Within each horizontal keiretsu, a member bank or banks
perform several functions, including internal financing for company operations
and new ventures.
Trading companies. Japanese companies tend to have large and highly
competent trading companies (sogo shosha). These organizations provide
member companies with ready access to global markets and distribution
networks, and maintain offices throughout the world to continually look out for
new or expanded markets. At the same time, their field offices collect and
analyze market and economic intelligence that can be used by member
companies to develop new products or otherwise get a jump on the
competition. They frequently assist member companies with various marketing
activities as well, and facilitate imports into Japan for their business
customers.
Executives as consensus builders. Compared to many other companies
around the world, executives appear to have less power, and decision-making
is distributed throughout the firm. But Japanese executives are prized for
being consensus builders more than autocratic decision-makers. They can
exert influence through the nemawashi process through behind-the-scenes
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coalition and consensus-building efforts on particular initiatives, which are then
simply rubber-stamped in the organization’s formal decision-making process.
Long-term employees. In contrast to many of their Western counterparts,
Japanese firms tend to treat their employees as a fixed cost, not a variable
cost, and relationships with suppliers tend to be closer and more stable over
time. Japan used to be known for “lifetime employment” for many of its whitecollar employees, but this security is slowly disappearing.25
Enterprise unions. Japanese unions, called enterprise unions, tend to be
company unions and are more closely associated with company interests than
is the case in the West.
In recent years, global investors have increasingly criticized what they see as
monopolistic practices and closed markets that follow from keiretsu cross-ownership
and management patterns, and change is coming. Nissan’s then-CEO Carlos Ghosn,
for example, concluded that both the keiretsu and lifetime employment concepts had
outlived their usefulness for his firm, and while he saw its positive benefits, he was
able to convince his employees that a different structure would be more effective.26
In addition, in 2018, the Japanese government passed new legislation aimed at
forcing these conglomerates to open themselves up to outside investment. As a
result, many of the larger conglomerates have begun selling some of their suppliers
to outside interests, foreign and domestic.27 One example here is the recent
purchase of Calsonic Kansei, a Nissan affiliate, that private equity firm KKR bought
for $4.4 billion. The world of global investments is changing.
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German Codetermination Model
A fourth approach to organization and management can be seen in the German
codetermination model of organization. This model is common in Germany, the
Netherlands, and the Nordic countries and, once again, it is derived from the longstanding cultural traditions found in this region of the world.28 This model is based on
societal assumptions about collective participation and the common good. We focus
here on Germany as one variation on this model.
A number of social scientists have attempted to describe German culture in
general terms. Hofstede, for example, has described the typical German as relatively
individualistic (although not so extreme as Americans), high on uncertainty
avoidance and masculinity, and relatively low on power distance.29 Hall and Hall add
that Germans tend to be very punctual about time, follow schedules closely, demand
order, value their personal space, respect power and position, and seek detailed
information prior to decision-making. Indeed, Hall and Hall quote a French executive
as saying that “Germans are too busy managing to think creatively.”30 Cultural
anthropologists suggest that the dominant German culture includes a mastery
orientation, moderate individualism and egalitarianism, a strong rule-based
orientation, and a monochronic approach to time.
To foreign observers, Germans tend to be conservative, formal, and polite.31
Formal titles are important in conversations, and privacy and protocol are valued. In
business, Germans tend to be assertive, but not aggressive. Although firms are often
characterized by strict departmentalization, decisions tend to be made on the basis
of broad-based discussion and consensus-building among key stakeholders.
Negotiations are based on extensive assessments of data and plans, and, since
Germany is a low-context culture (where message clarity counts – see Chapter 6),
communication is explicit and easily understood by foreigners.
As with companies in any country, it is difficult to generalize about the nature or
structure of a typical large German company (konzern). Nevertheless, a
representative model is presented in Exhibit 3.10.
Supervisory and management boards. German firms are typically led from
the top by two boards. At the very top is the supervisory board (Aufsichtsrat),
which, much like a board of directors in US firms, is responsible for ensuring
that the principal corporate objectives are met over the long term. Its members
are typically elected for five years and can only be changed by a vote of 75
percent of the voting shares. The supervisory board, in turn, oversees the
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activities of the management board (Vorstand), which consists of the top
management team of the firm and is responsible for its actual strategic and
operational management.
Codetermination and works councils. A major feature of codetermination
structures is the enhanced power that employees at various levels of the
organization have in decisions affecting the future of the organization. In
Germany, this is called codetermination (Mitbestimmung). As part of this,
works councils, elected from rank-and-file employees, are represented on
company supervisory boards and participate significantly in both strategy
formulation and management practice. Indeed, it was the power of the
employee-based works council that helped remove Volkswagen’s CEO
recently and replace him with one more favorable to labor.32
Meister. From the first-line supervisor (usually held by a meister, or master
technician) upward, managers are respected for what they know rather than
who they are. They tend to be less controlling than many of their counterparts
in many other countries. Instead, it is assumed that workers and supervisors
will meet deadlines, guarantee quality and service, and do not require close
supervision. Independence within agreed-upon parameters characterizes the
working relationship between managers and the managed.
Technik. Behind the organizational facade of German firms is a particular
notion of technical competence commonly referred to as technik. This
describes the knowledge and skills required for work.33 It is the science and
art of manufacturing high-quality and technologically advanced products. The
success of technik in German manufacturing is evidenced by the fact that over
40 percent of Germany’s GDP is derived from manufacturing. Indeed,
Germany is responsible for over half of all EU manufactured exports. For this
reason, knowledge of technik is a principal selection criterion for supervisors
and managers.
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Exhibit 3.10 Example of a German codetermination model
Management Application 3.4 Organization and Management in Japan and
Germany
1. Based on what you have learned, what are the principal advantages
and disadvantages of a typical Japanese keiretsu system compared to a
traditional investor organization found in the West? Explain.
2. What are the principal advantages and disadvantages of a typical
German codetermination model compared to a traditional Chinese family
business? Explain.
3. How do each of the four organization models (investor, family, keiretsu,
and codetermination) affect managerial work responsibilities?
4. Under which model would you prefer to work or manage? Why?
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Participation and Decision-making
Making timely, relevant, and – hopefully – wise decisions concerning the future
directions of a firm is clearly a principal function of management. Critical to this
process is where, when, and how information is sourced for optimum results. In other
words, who has useful and important information or viewpoints that can lead to better
decisions, and who can be ignored, for reasons either of confidentiality or efficiency?
Clearly, there are considerable and often heated disagreements on this issue. At the
heart of this disagreement are the twin issues of management control and employee
involvement or participation in decision-making. While this topic deserves a booklength exploration, space limitations require just a look inside decision processes to
see how different regional approaches can lead to different outcomes.
If we look at a typical decision-making process in many of the so-called “Anglo”
countries as mentioned earlier, we often find a process that centralizes power
squarely in the hands of line managers (see Exhibit 3.11). Here, the initial problem
identification is largely a managerial or supervisory responsibility; workers’ opinions
are often ignored or not offered in the first place. Once a problem or issue has been
identified, it is management’s responsibility to analyze and resolve it, often with the
help of senior managers or outside specialists and consultants. Decisions are then
passed down to lower-level employees in the form of changed work procedures. Not
surprisingly, since the people at the bottom of the hierarchy often have little
understanding of management’s conclusions or intents, decision implementation
tends to be slow, as management now has to persuade workers to go along with the
decision. Frequently, extrinsic rewards (i.e., externally administered rewards, such as
pay or bonuses) need to be used instead of intrinsic rewards (i.e., internally
administered rewards, such as pride in accomplishment or job satisfaction) as a
result of this process.
Exhibit 3.11 Participation and decision-making processes
Traditional and family
decision process
Ringi-sei decision
process
Codetermination
decision process
1 Problem identification
somewhere in hierarchy.
1 Problem identification
somewhere in hierarchy.
1 Problem identification
somewhere in hierarchy.
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Traditional and family
decision process
Ringi-sei decision
process
Codetermination
decision process
2 Problem sent up
hierarchy and then
assigned to specific
managerial level for
analysis and resolution.
2 Nemawashi: Broadbased discussion – often
on the shop floor – of
problem and possible
solutions.
2 Lower-level
employees begin
working with supervisors
to help identify
underlying cause of
problem, as well as
possible solutions.
3 Managers take lead in
analyzing problem and
possible solutions;
discussions may include
affected employees.
3 Expert advice added to
mix; drive for consensus
as to future actions.
3 Department heads,
section chiefs, and
supervisors meet to
develop possible
solutions.
4 Manager recommends
solution for approval by
superior. If approved,
decision announced.
4 Ringi-sho document
developed, reviewed, and
approved by successive
levels of command as it
moves up hierarchy.
4 Technical experts and
works council members
consulted to achieve the
best possible outcome.
5 Ringi-sho document
reaches upper
management with broadbased support from rankand-file employees;
decision announced.
5 Problem and possible
solution passed up
hierarchy. Management
discusses the problem
and possible solution
widely and then makes a
formal decision, often in
consultation with works
council and local union.
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Traditional and family
decision process
Ringi-sei decision
process
Codetermination
decision process
Impact:
Traditional: Rapid
managerial decision, but
often slow acceptance
and slow implementation
due to low employee
participation, lack of
company loyalty, and
individualistic culture.
Family-owned: Rapid
managerial solution and
often broad acceptance
and rapid implementation
due to moderate
employee loyalty,
incentives, and
collectivistic hierarchical
culture.
Impact:
Broad decision acceptance
and often rapid
implementation due largely
to employee participation
and ownership of decision,
company loyalty, and
collectivistic hierarchical
culture.
Impact:
Broad decision
acceptance due largely
to high employee and
union participation,
company loyalty, and
egalitarian culture, but
often relatively slow
implementation due to
widespread and timeconsuming involvement
at all levels in hierarchy.
Meanwhile, the decision process described above is not dissimilar from that
commonly found in Chinese gong-si, or family-based companies (see Exhibit 3.7).
Despite being a collectivistic country, China is still hierarchical, leading to centralized
power in decision-making. Problem identification is typically carried out either by
supervisors or owner-managers using fairly rigid management and production control
systems. The owner-managers then discuss and analyze the problem, often in
consultation with extended family members or guānxi relationships. Because of the
autocratic decision style, the rapid announcement of a decision to rank-and-file
employees by management is possible. Rapid acceptance and implementation of an
owner-manager’s decision by largely contingent employees is also possible, because
of a combination of loyalty to the owner-manager and fear of the consequences of
noncompliance. Employees’ intrinsic motivation to implement decisions may be high,
due to custom and loyalty to the firm, but extrinsic motivation may also be high, due
to the importance of job security and income.
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Ringi-sei Decision Process
Managerial decision-making in a typical Japanese kaisha reflects Japanese culture
and is seen by many observers as being quite distinct from that in the West. Not
surprisingly, Japanese firms endorse the concept of problem-solving on the basis of
consensus up and down the hierarchy.34 The system by which this is done is usually
called ringi-seido (often shortened to simply ringi-sei), or circle of discussion (see
Exhibit 3.8 above).
When a particular problem or opportunity is identified, a group of workers or
supervisors will discuss various parameters of the problem and try to identify
possible solutions. At times, technical experts will be brought in for assistance. If the
initial results are positive, employees will approach their supervisor for more advice
and possible support. The whole process is generally referred to in Japan as
nemawashi. This word is derived from a description of the process of preparing the
roots of a tree for planting.35 The concept here is that if the roots are properly
prepared, the tree will survive and prosper. Similarly, if a proposal is properly
prepared, it too should survive and prosper.
When a group has achieved informal consensus, a formal proposal is then
drafted for submission up the chain of command. This formal document, known as a
ringi-sho, is reviewed by successively higher levels of management. If a manager
agrees with the proposal, they stamp their name on it; if not, they either refrain from
stamping it or stamp it on the reverse side. By the time the document reaches upper
management, it has become clear whether it has broad-based support or not. If it
does enjoy support, in all likelihood top management will formally adopt the proposal.
In this way, upper management frequently has little input into the decision-making
process. If a proposal has universal support up the chain of command, top managers
will be hard-pressed to oppose it.
While discussions concerning a particular decision or course of action are
proceeding, two seemingly contradictory processes often occur that tend to confuse
many Westerners. In Japan, doing or saying the right thing according to prevailing
norms or social customs is referred to as tatemae, while doing or saying what one
actually prefers to do (which may be difficult) is referred to as honne.36 Thus, in a
conversation or meeting, to some Westerners a Japanese manager may speak in
contradictions, or, worse, speak insincerely. In reality, the manager may simply be
saying what they believe they are obliged to say, while hoping that through subtle
signals the recipient of the message will discover their true desire or intent. This can
186
be confusing to many Westerners and requires them to listen carefully and observe
body language (e.g., reading someone’s face) as well as formal speech. After all,
Japan is a high-context culture (see Chapter 5), while most Western nations are not.
A key point to remember here is that the ringi-sei process tends to result in slow
decisions, which can be a disadvantage in a fast-paced and competitive global
business environment. This process, however, yields considerable support for and
commitment to the emergent solution when it is achieved. By contrast, many Western
decisions are typically made unilaterally much higher up in the management
hierarchy, but, once they have been made, they frequently face considerable
opposition or apathy as managers and workers attempt to implement them. As a
result, strategic planning tends to be accomplished more quickly in the West, while
strategic implementation is likely to be accomplished more quickly in Japan.
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Codetermination Decision Process
The decision-making process found in many German, Dutch, and Nordic firms tends
to be more participative than any country in either the Anglo or the Asian clusters.
This is due in large measure to the presence of codetermination laws and works
councils, discussed above. We use Germany as an example here, although similar
trends can be found in many parts of Western Europe.
Collaborative decision-making can be highly complex on account of the
knowledge and power of the various stakeholders (see Exhibit 3.10 above). In this
process, problems are most frequently identified either by supervisors or workers
through a combination of job experience and sophisticated production control
processes. Lower-level employees in a section or department begin by working with
supervisors to help identify the underlying causes of the problem, as well as possible
solutions. Next, department heads, section chiefs, and supervisors meet to discuss
and develop a proposal to remedy the situation. Technical experts and works council
members are frequently consulted as needed to achieve the best possible solution.
The problem and possible solutions are then passed up the management hierarchy.
Management discusses the problem and possible solutions widely and then makes a
formal decision, often in consultation and negotiation with works council members
and the local industrial union leadership.
The resulting decisions are likely to be widely accepted by rank-and-file
employees, because of the representative process through which they were made;
workers at all levels have had a voice throughout the process. As a result, decision
implementation typically proceeds at a moderate pace, although union resistance
may still occur because of structural or contract issues. Employees’ intrinsic
motivation to implement the decision is typically reasonably high, since their
representatives had a voice in determining it and the decision typically does not
threaten job security.
All of this sounds very much like the ringi-sei system in Japan, but there is one
key difference. In Japan, the ideas and recommendations of employees up and down
the hierarchy are consultative; that is, they are in essence recommendations. Top
management makes the final decision. In Germany (and the Netherlands and
Scandinavia), the process is more collaborative. What does this mean? It means that
employees lower in the hierarchy have considerably more input or power in actually
making the final decision, largely through their works council and other stakeholder
groups. Top management has little power to act alone.
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In summary, as we have seen throughout this discussion on decision-making,
much is heard about the role of employee participation and involvement. In some
countries, employee participation is a preciously guarded right; it is assumed. In
other countries, workers have no expectations of employee participation; indeed,
they often see managers who seek their opinions as being weak. In still other
countries (some include Canada, Australia, and the United States in this category),
participation is often honored more in rhetoric than in actual practice. In other words,
although many companies may proclaim their interest in the opinions of
subordinates, they are often more interested in results than in process.
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Corporate Culture and Collective Behavior
Creating an organizational structure or a strategic plan is one thing; getting such
efforts to work can be quite another. The behavioral manifestations of organizational
design and strategic plans are typically brought to life through a firm’s corporate
culture (also known as organizational culture). As such, corporate cultures reflect
the personality of organizations, not just their skeletons. As goal-directed entities,
managers of organizations set forth rules, procedures, control systems, and other
means aimed at facilitating goal attainment and operational efficiencies. But the
resulting cultures are not solely a manifestation of an organization’s design or its
policies. They also reflect the national culture where the facility is located, the nature
and quality of the organization’s employees, the industry in which the facility
operates, and the technologies in use. In the final analysis, however, these factors
come together through the actions, standards, and symbolism of the managers
running the show. As such, leadership must be recognized as a key factor in the
creation and sustainability of corporate cultures.
A good example of corporate culture can be seen in many companies – both
large and small – in Korea (and elsewhere), where a concept called gapjil prevails.
Gapjil describes the imperious sense of entitlement that bosses feel over their
subordinates, whom they expect to wait on them and cater to their every whim, both
personal and work-related.37 Such behavior can often lead to various forms of
employee exploitation. At the same time, Korean employees are typically expected
both to arrive before and leave after their boss, leading to some of the longest
working hours in the world. These long hours, combined with gapjil, leave many
employees open to significant stress-related mental and physical health problems.
Each year, over 500 employees in Korea commit suicide as a result (see discussion
on karoshi in Chapter 4).
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Inside Corporate Cultures
Corporate cultures may replicate, reject, or ignore national culture values and norms,
creating a micro environment in which national norms are reinforced or do not apply.
For example, even though a country may embrace a polychronic time orientation, an
organization in that country may reject this cultural norm and enforce punctuality in
its activities. Indeed, many global organizations deal with the challenges posed by
multiple national cultures by creating clear behavioral guidelines across the
organization. In intra-organizational interactions, organizational norms and rules may
serve to reduce the impact of multiple institutional environments. In interorganizational relationships, the organizational environment may exacerbate
differences. Through the development and reinforcement of norms of behavior,
organizations define what is expected of managers.
But here is the important part: corporate cultures are created in the minds of
employees; they represent perceived realities. This is not to suggest that they are
imaginary; in fact, there are very real. However, their influence on employees rests
on how they are seen and experienced by employees, and these perceptions are
heavily influenced by managers from the top of the organization to the bottom. In
other words, the people who implement corporate policies, strategies, and reward
systems – i.e., leaders and managers – help determine how the workplace is seen.
We observed this in the previous section with regard to various decision-making
systems, where employees could see firsthand the differences in the amount of
participation allowed.
Culture expert Edgar Schein suggests several characteristics in the work
environment that collectively create an organization’s unique culture.38 These
include:
Symbols and behaviors. Observe the manifestations of culture through the
presence of artifacts and patterns of behavior. Organizations look and feel
different to one another. Upon arriving at a new organization, we can observe
symbols or physical characteristics that can provide important information. For
example: are there separate offices or is it one open floor? Are doors open or
closed? Is the environment formal or informal? How are people dressed? We
can also observe patterns of behavior. Are there particular ways in which a
number of people behave and others seem to treat as normal (e.g.,
interrupting in meetings, arriving late, answering the phone)?
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Power distribution. Study the power structure of the organization and seek to
understand how a person can obtain, maintain, or lose power. This will point to
what is really valued in this organization. Another cue here is an organization’s
reward and punishment system. In other words, who or what gets rewarded or
punished, and why?
Problem-solving processes. Analyze how an organization confronts
problems. How do they respond? Are they primarily proactive or reactive? Do
they panic quickly or are they ready for almost any change or challenge?
Esprit or team spirit. How close are team and organizational members?
People may not like their jobs, but do they exhibit considerable camaraderie
and loyalty to the group, or are they uninterested and isolated?
So, how does this work? As illustrated in Exhibit 3.12, influences on corporate
cultures come from a variety of disparate sources, including the structure of the
organization (e.g., hierarchical or egalitarian), management policies and practices
(e.g., degree of employee involvement in decision-making), characteristics of the
workforce and work environment (e.g., professional environment, unionized
workforce), and company history and traditions (pride in company goals or
accomplishments, admiration of company founder). This combination can be an
intoxicating brew for good or for bad and, once formed, is difficult to change.
Depending on the circumstances, the emerging corporate culture can lead to such
positive outcomes as increased self-efficacy or self-image, group camaraderie,
increased employee commitment and job performance, and reduced absenteeism
and departures. But the opposite can also be true. Because of the important
behavioral ramifications of cultures, it is no wonder that managers and supervisors
go to such great lengths to create a culture that supports a company’s short- and
long-term goals and aspirations.
Exhibit 3.12 Antecedents and consequences of corporate culture
192
Corporate Culture at Dentsu: An Example
We already saw an example of how Carlos Slim and Grupo Carso worked to create a
productive corporate culture (see pp. 78–9). But there are other examples. Take a
look at Japan’s advertising giant Dentsu, probably one of the most creative firms on
the planet, and definitely one of the most exhausting to work for.39 Dentsu has
attempted with considerable success to build an aggressive and creative workplace
culture through moderate risk-taking and physical hardship. Creating physical
challenges for junior managers is nothing new, but the verve with which companies
pursue it seems to be on the rise.
Every July since 1925, the Japanese-headquartered company – which owns
huge global agencies including Carat, Isobar, and McGarry Bowen – has sent all its
new hires and recently promoted executives to climb the country’s 12,388-foot
mountain, Mount Fuji. This is the message to new hires: “Welcome to the company.
Now climb this mountain.” Mt. Fuji is not considered a particularly dangerous peak,
but a few climbers die each year from high winds, exposure, and falls. At the summit,
the amount of oxygen in the air is only two-thirds of that at sea level, and ropes and
crampons are required: it’s a daunting task.
Hundreds of Dentsu employees begin the trek up the volcanic mountain in the
afternoon, finally reaching the summit for sunrise at around 4:30 a.m. Everyone that
is physically able is required to take part, from senior executives to junior staff
straight out of college. When they finally reach the top of their ascent, Dentsu’s
weary team members write postcards to their clients, sending them from a
conveniently located post office at the summit. Climbers also pray in front of the
Shinto shrine for the company’s future growth. Christopher Demetrakos, who worked
at Dentsu in Japan for thirteen years, explained the thinking behind the climb: “The
message is: ‘We are going to conquer the one symbol that represents Japan more
than anything else. And, once we do that, it will signify that we can do anything.’”
Group cohesion is the foundation.
Dentsu’s headquarters in downtown Tokyo is also emblematic of its ambition: the
agency’s 6,200 employees are spread across 45 of the building’s 48 floors in an
effort to isolate teams working on various creative accounts and stop them from
interacting with other teams. Elevator use is not encouraged.
193
Management Application 3.5 Mt. Fuji and Corporate Culture at Dentsu
1. How would you describe the corporate culture of Dentsu? What makes
it unique? What makes it successful?
2. Culturally, why is Japan’s Mt. Fuji so important in creating a suitable
corporate culture for Dentsu?
3. As a manager, do you believe that this culture serves Dentsu’s longterm corporate objectives? Explain.
4. How is it possible for a company such as Dentsu to retain its corporate
culture for such a long time?
5. Recently, the president of Dentsu resigned to take responsibility for the
suicide of a twenty-five-year-old employee who complained repeatedly
about overwork and alleged harassment by her bosses. On the month
prior to her death, she logged over a hundred hours of overtime, making
her average workday close to fourteen hours.40 Now what is your
evaluation of the corporate culture at Dentsu? Explain.
194
Manager’s Notebook Working with Global Organizations
From what we have learned, three general strategies can be identified for
improving our ability to work with organizations across the globe. These
strategies
involve
working
to
understand
interrelationships
between
stakeholders, strategies, and structures across cultures; learning more about
the dynamic processes within organizations; and building greater multicultural
and global management skills (see Exhibit 3.13).
Exhibit 3.13 Strategies for working with global organizations
1 Understand relationships between stakeholders, strategies,
and structures
This chapter has explored the interrelationships between stakeholders, global
strategies, and organizational structures across cultures. We have seen how
variations in cultural environments can shape not only the composition of the
stakeholders of an organization, but also their goals. Consider, for example,
Germany’s mittelstand firms, where owners share power both with employees
and local communities to determine goals and priorities. Compare this to a
typical family firm where the owners are largely in control of these matters, or
typical investor firms where investors rule. Understanding these relationships
– who is in charge and what they want – can provide useful information for
managers, especially when they are new arrivals.
Recognize, too, that organizing frameworks are continually changing in
many parts of the world. In the West, the traditional rigid hierarchical
195
organization is rapidly being replaced by more free-form designs where
employees are often free agents and job security approaches zero.
Think for a moment about two global managers from competing
companies each trying to secure a contract with a particular firm in, say,
Ghana. One has collected information about the local cultures and traditions,
as well as how this has influenced stakeholder composition, interests, and
strategy–structure relationships; the other manager has not. Who do you think
has a better chance of securing the contract?
2 Understand dynamic processes within organizations
Organizational processes – the internal dynamics of an organization – are the
means by which rigid organizational structures come alive. Some people refer
to these processes as the glue that holds an organization together; others
refer to it as the oil that keeps an engine moving. Metaphors aside, a
knowledge of the inner workings of organizations provides insight into how
strategies are formulated and implemented, and how people come together to
complete their tasks.
In this chapter, we focused on two aspects of these processes. First, we
discussed decision-making processes with special attention to the role of
employee participation. Second, we explored the dynamic concept of
corporate culture and the role it can play in securing or inhibiting employee
involvement, commitment, and performance. Both of these issues are largely
culture-based, although a lot of variations can be found.
Why is this important to managers? Consider this: working for or with a
Japanese company without understanding the ringi-sho decision system
invites failure. Likewise, working for Dentsu without understanding the
symbolic value of Mt. Fuji is similarly doomed. Regardless of whether you
work inside the company as an employee such as Dermot Boden at LG (see
Chapter 1) or outside the company such as Mary Gadams trying to build
partnerships (again, see Chapter 1), significant benefits accrue to global
managers who understand the inner workings of their employer’s or partner’s
business.
3 Build multicultural and global management skills
Finally, as introduced in Chapter 1 and to be discussed throughout this book,
developing multicultural competence and global management skills relates not
just to individual behavior but also to organizational behavior. That is, a global
196
manager equipped with greater awareness of the world and how to work
successfully within it is logically better able to succeed. This is the basic
premise of this book, and looking at organizational environments is a good
example of how this applies.
Although managers may be familiar with the operations of their own firm,
understanding the general trends – and idiosyncrasies – of various local firms
can be far more difficult than may first appear. To the extent that this is
correct, what frames of reference can managers use when trying to
understand the organizational models in other countries? From a managerial
standpoint, action recommendations emerge from this analysis that must be
resolved for managers to work successfully with organizations across
cultures: managers must develop an understanding of cultural trends,
organizational patterns, and management styles in their own country. This is
often easier said than done. We often assume that we already know this, but
looking deeper might reveal that we have something to learn here. Based on
this local understanding, managers must develop sufficient insight into and
understanding of the other countries and cultures with which they or their
companies do (or wish to do) business. Managers must continue to develop
their management and multicultural skills so that they can successfully bridge
these two cultures and help meet corporate objectives.
Throughout this endeavor, managers should strive to understand the
subtle – and not so subtle – rules of behavior within organizations.
Understanding the general behavioral patterns of a national culture is not
enough; managers need also to understand the rules of behavior within the
particular organization with which they are doing business. Developing the
skills to quickly observe patterns of behaviors and gather information about
expectations is critical for survival in such a multicultural business
environment. As illustrated above, organizations that can outwardly appear to
be similar may conceal significant differences in what is acceptable and what
is expected. To the extent that managers can gain insight into this by doing
their homework prior to arrival, their ease in making the rules play to their
advantage is enhanced.
197
Chapter Review
198
Summary
Organizations are complex entities, and frequently not easily understood.
They serve as a principal command and control system for focusing human,
financial, and physical resources on the accomplishment of valued tasks.
Globalization requires a diversity of answers, not a one-size-fits-all approach
to organization and management. This includes having a global vision and
strategy, but it also means tailoring organizational designs to fit both local
conditions and the available resources.
Organizational designs live or die on the basis of their ability to assist
managers with their responsibilities.
Organizations are reflections of their cultures, and we saw in this chapter that
regional differences in organizational designs can be profound. Four such
designs were reviewed, including the traditional investor model, Chinese
family model, Japanese keiretsu model, and German codetermination model.
Each builds upon its local culture and heritage and, as such, each is uniquely
positioned for its environment.
Although the organizing models discussed here represent central tendencies
in various countries, wide variations can be found. As a result, while these
frameworks may be instructive for the purposes of general comparisons
across cultures, they are not intended to represent universal patterns of
organization.
Making timely, relevant, and wise decisions about the future directions of a
firm is a principal function of management. Critical to this process is where,
when, and how information is sourced for optimum results. Who has useful
and important information or viewpoints that can lead to better decisions and
who can be ignored, for reasons either of confidentiality or of efficiency? At the
heart of this disagreement is the issue of employee involvement and
participation in decision-making.
Corporate culture (also referred to as organizational culture) reflects the
norms, values, and approved behaviors of particular companies, divisions, or
departments within organizations. It may either replicate or reject national
culture values and norms, creating a micro environment in which national
norms are either reinforced or do not apply.
199
Key Concepts
Chinese family model
codetermination
Confucianism
corporate culture
enterprise unions
face
gapjil
German codetermination model
gong-si
guānxi
honne vs. tatamae
institutional environment
Japanese keiretsu model
kaisha
keiretsu
konzern
management board
Meister
Mittelstand firms
nemawashi
organizational environment
organization
ringi-sei
ringi-sho
sogo shosha
stakeholders
200
supervisory board
Technik
traditional investor model
works councils
201
Discussion Questions
1. Geert Hofstede argues that organizations are symbolic entities and function
according to implicit models in the minds of their members, and these are culturally
determined. Do you agree or disagree with this assertion? Why? Provide an example
of how this assertion may be correct.
2. In what ways can a better understanding of organizational environments prepare
managers for foreign assignments? Provide a specific example to illustrate your
point.
3. What factors influence the relationship between strategy and structure in global
organizations? Why might knowledge of this be important for global managers
working in the field? Explain.
4. Who are the key stakeholders in a typical mittelstand firm? How does this differ
from the composition of stakeholders for firms in other regions of the world? How
might these differences affect how the companies approach strategy and structure?
5. Why might we say that a company’s unique management structure is like its own
personal fingerprint? To the extent that this statement is correct, how might it
influence managerial development and managerial behavior? Explain.
6. What are the strategic and managerial advantages and potential drawbacks of
each of the four regional organizing models discussed here (investor, family, keiretsu,
and codetermination)? In which type of organization would you personally prefer to
work, and why?
7. The organizational design and managerial practices of many traditional Chinese
(and some other Asian) companies are heavily influenced by Confucian principles.
As the world continues to globalize and competitiveness increases in importance, are
these principles helpful or detrimental to long-term organizational prosperity? Why?
202
8. Outside observers have argued that Japanese keiretsu structures are so close-knit
that they represent unfair competition for foreign companies. That is, it is difficult –
some would say impossible – to penetrate the network and get a piece of the
business. Is this a fair criticism? What might foreign companies do to penetrate these
closely held networks?
9. What is your opinion of the role of employee participation or some form of
codetermination in organizations around the world? Is employee participation an
inalienable or human right, or is it simply a management technique used in some
countries to improve performance? Explain.
10. Corporate cultures vary considerably, both within and across national borders.
Why should global managers care about such variations, so long as they know the
specific individuals within a company that they need to work with?
11. In your view, what are the three most important lessons from this chapter for
global managers? Explain.
203
Notes
1. Geert Hofstede, Cultures Consequences: International Differences in WorkRelated Values. Thousand Oaks, CA: Sage, 2001, p. 373.
2. Emily Glazer and Josh Beckerman, “WellsFargo will cut jobs as much as 10%,”
The Wall Street Journal, September 21, 2018, p. B1.
3. Allison Prang, “Under Armour sheds 400 jobs to cut costs,” The Wall Street
Journal, September 21, 2018, p. B3.
4. Stephen Kobrin, “Multinational corporations, the protest movement, and the
future of global governance,” in Alfred Chandler and Bruce Mazlish (eds.),
Leviathans: Multinational Corporations and the New Global History. Cambridge
University Press, 2005, pp. 219–36.
5. Dolia Estevez, “Mexical tycoon Carlos Slim biggest dollar gainer among top 10
billionaires,” Forbes, April 18, 2017.
6. Dolia Estevez, “Mexican billionaire Carlos Slim’s 10 business principles,”
Forbes, April 29, 2014; and Gerardo Dada, “10 business lessons from Carlos
Slim,” The Adaptive Marketer, January 23, 2016.
7. The term mittelstand normally refers to German, Austrian, or Swiss small and
medium-sized enterprises (SME). However, precisely defining what constitutes a
mittelstand firm is difficult, since the word actually directly translates as “middle
class.” Mittelstand firms are typically owned and managed by a family, either
owned by family but run by an outside management team, or partially owned by
family but with outside shareholders. German mittelstand firms employ over 70
percent of all employees in private business, according to the Institut für
Mittelstandsforschung.
8. Karan Girotra and Serguei Netessine, “Extreme focus and the success of
Germany’s Mittelstand,” Harvard Business Review, February 12, 2013; and
Winfried Weber, “Germany’s midsize manufacturers outperform its industrial
giants,” Harvard Business Review, August 12, 2016.
9. Richard M. Steers, Luciara Nardon, and Carlos Sanchez-Runde, “Culture and
organization design: strategy, structure, and decision-making,” in Rabi S. Bhagat
and Richard M. Steers (eds.), Cambridge Handbook of Culture, Organizations, and
Work. Cambridge University Press, 2009, pp. 71–106.
204
10. It should be remembered that the term “Anglo” came into widespread use by
cultural anthropologies and social psychologists in the 1970s and 1980s to
describe this cluster, and much has changed in the intervening years.
11. Personal communication.
12. Nancy Adler, International Dimensions of Organizational Behavior, 3rd edn.
Cincinatti, OH: Southwestern Publishing, 1997.
13. Family Firm Institute, 2017. Global Data Points, available at my.ffi.org.
Accessed November 27, 2017.
14. Ming-Jer Chen, Inside Chinese Business: A Guide For Managers Worldwide.
Boston, MA: Harvard Business School Press, 2001.
15. Confucius (551 B C E –479 C E ) (Kŏng Fūzĭ), literally “Master Kong,” was a
Chinese thinker and social philosopher whose teachings and philosophy have
deeply influenced Chinese, Korean, Japanese, Taiwanese, and Vietnamese
thought and life. His philosophy emphasized personal and governmental morality,
correctness in social relationships, justice, and sincerity. These values gained
prominence in China over other doctrines, such as Legalism or Taoism, during the
Han Dynasty (206 B C E –220 C E ). Confucius’ thoughts have been developed into a
system of philosophy known as Confucianism. It was first introduced into Europe
by the Jesuit Matteo Ricci, who was the first to Latinize the name as “Confucius.”
His teachings may be found in the Analects of Confucius, a collection of “brief
aphoristic fragments,” which was compiled many years after his death. Modern
historians do not believe that any specific documents can be said to have been
written by Confucius, but for nearly 2,000 years he was thought to be the editor or
author.
16. Wenzhong Hu and Cornelius Grove, Encountering the Chinese: A Guide for
Americans, 2nd edn. Yarmouth, ME: Intercultural Press, 1999.
17. Guānxi describes the basic dynamic in the complex nature of personalized
networks of influence and social relationships, and it is a central concept in
Chinese society. In Western media, the pinyin romanization of this Chinese word
has tended to oversimplify the meaning of this term into “connections” or
“relationships.” Neither of these terms sufficiently reflects the wide cultural
implications that guānxi describes. At its most basic, guānxi describes a personal
connection between two people in which one is able to prevail upon another to
perform a favor or service, or be prevailed upon. The two people need not be of
equal social status. Guānxi can also be used to describe a network of contacts,
which an individual can call upon when something needs to be done, and through
205
which they can exert influence on behalf of another. In addition, guānxi can
describe a state of general understanding between two people, in which both
parties are aware of the other’s needs and wants, and take these into account
when making decisions or taking action. The term is not generally used to describe
relationships within a family, although guānxi obligations can sometimes be
described in terms of an extended family. The term is also not generally used to
describe relationships that fall within other well-defined societal norms (e.g., boss–
worker or teacher–student friendship). The relationships formed by guānxi are
personal and not transferable. When a guānxi network violates bureaucratic
norms, it can lead to corruption, and guānxi can also form the basis of patron–
client relations.
18. Christopher Earley, Face, Harmony, and Social Structure: An Analysis of
Organizational Behavior Across Cultures. New York: Oxford University Press,
1997.
19. Based on Steers, Nardon, and Sanchez-Runde, “Culture and organization
design,” pp. 107–15.
20. Sameena Ahmad, “Behind the mask: a survey of business in China,” The
Economist, March 20, 2004, pp. 3–19.
21. Chen, Inside Chinese Business.
22. S. Gordon Redding, The Spirit of Chinese Capitalism. Berlin: Walter de
Gruyter, 1995.
23. Toyohiro Kono and Stewart Clegg, Trends in Japanese Management:
Continuing Strengths, Current Problems, and Changing Priorities. London:
Palgrave, 2001; Masahiko Aoki and Ronald Dore (eds.), The Japanese Firm:
Sources of Competitive Strength. Oxford University Press, 1994.
24. James Abbeglen and George Stalk, Kaisha: The Japanese Corporation. New
York: Harper & Row, 1985.
25. Megumi Fujikawa, “Japan’s jobs for life culture fades,” The Wall Street Journal,
April 12, 2018, p. A7.
26. Jusuke J. Ikegami, Martha Maznevski, and Ota Masataka, “Creating the asset
of foreignness: Schrödinger’s Cat and lessons from the Nissan revival,” Cross
Cultural & Strategic Management, 2017, 24(1), pp. 55–77.
27. Kosaka Narioka, “Japan’s conglomerates streamline,” The Wall Street Journal,
August 1, 2018, p. B1.
206
28. Steers, Nardon, and Sanchez-Runde, “Culture and organization design,” pp.
107–15.
29. Hofstede, Culture’s Consequence.
30. Edward T. Hall and Mildred Reed Hall, Understanding Cultural Differences:
Germans, French and Americans. Yarmouth, ME: Intercultural Press, 2000.
31. Richard Hill, We Europeans. Brussels: Europublications, 1997.
32. William Boston, “VW picks chief after boardroom coup,” The Wall Street
Journal, April 13, 2018, p. B1.
33. Ingrid Brunstein (ed.), Human Resource Management in Western Europe.
Berlin: Walter de Gruyter, 1995.
34. Hiroki Kato and Joan Kato, Understanding and Working with the Japanese
Business World. Englewood Cliffs, NJ: Prentice Hall, 1992.
35. Nemawashi is an informal process of quietly laying the foundation for some
proposed change or project, by talking to the people concerned, gathering support
and feedback, and so forth. It is considered an important element in any major
change, before any formal steps are taken, and successful nemawashi enables
changes to be carried out with the consent of all sides. Nemawashi literally
translates as “going around the roots,” from ne (root) and mawasu (to go around
something).
36. Honne and tatemae are Japanese words used to describe recognized social
phenomena. Honne refers to a person’s true feelings and desires. These may be
contrary to what is expected by society or what is required according to one’s
position and circumstances, and they are often kept hidden, except from one’s
closest friends. Tatemae, literally meaning “facade,” is the behavior and opinions
one displays in public. Tatemae is what is expected by society and required
according to one’s position and circumstances, and these may or may not match
one’s honne. This honne/tatemae divide is considered to be of paramount
importance in Japanese culture. The very fact that the Japanese have single
words for these concepts leads some Japanese experts to see this
conceptualization as evidence of greater Japanese complexity and rigidity in
etiquette and culture. Honne and tatemae are arguably a cultural necessity,
resulting from a large number of people living in a relatively small island nation.
Even with modern farming techniques, Japan today domestically produces only 39
percent of the food needed to feed its people, so close-knit cooperation and the
avoidance of conflict remain of vital importance today, as they did in ancient times.
For this reason, the Japanese tend to go to great lengths to avoid conflict,
207
especially within the context of large groups. The conflict between honne and giri
(social obligations) is one of the main topics of Japanese drama throughout the
ages. In such dramas, the protagonist would typically have to choose between
carrying out his obligations to his family or feudal lord and pursuing a forbidden
love affair or other personal interest. In the end, death would often be the only way
out of the dilemma.
37. Su-Hyun Lee and Tiffany May, “Go home, South Korea tells workers, as stress
takes its toll,” The New York Times, July 28, 2018.
38. Edgar H. Schein, Organizational Culture and Leadership. San Francisco, CA:
Jossey-Bass, 1988.
39. Business Insider, Laura O’Reilly, May 5, 2015.
40. Peter Landers and Alexander Martin, “Dentsu’s chief to quit after probe into
suicide,” The Wall Street Journal, December 29, 2016, p. B3.
208
4
Managerial Environments
◈
Chapter Outline
Overview: Work, Management, and Motivation
Managerial Role Expectations
Patterns of Managerial Thinking
Management Application 4.1 What Is a Supervisor?
Situational Contingencies and Managerial Behavior
Management Application 4.2 Company Cars at Intel,
Netherlands
Work Values across Cultures
Management Application 4.3 Extreme Work Values at
Tesla
Management and Motivation
Management Application 4.4 Lincoln Electric in
Germany and Mexico
Women at Work
Management Application 4.5 The Gender Wage Gap
MANAGER’S Notebook: Managing Across Cultures
Chapter Review
209
Learning Objectives
Explore managerial role expectations across cultures.
Examine patterns of managerial thinking.
Recognize situational contingencies affecting managerial
behavior.
Explore work values and global patterns of work
motivation.
Examine the role of gender in the global workplace.
You get very different thinking if you sit in Shanghai or São
Paulo or Dubai than if you sit in New York.1
Michael Cannon-Brooks
IBM
On a chilly winter morning, the senior executives at the Californiabased headquarters of Kia Motors America left their warm offices
to stand outside in near-freezing cold to await the arrival of Byung
Mo Ahn, the president of Kia Motors in Korea. The group
organized itself into a receiving line and stayed in formation until
Ahn’s arrival. Standing in line to greet top brass – even in the cold
– has always been an important ritual at Kia and its parent
company Hyundai Motors Group, even in America. Upon his
arrival, Ahn thanked the executives for their excellent work and for
Kia’s success. Three days later, at the end of his visit, Ahn
performed another ritual that has become commonplace at Kia
and Hyundai: he fired the entire American leadership team.2 This
210
marked the fourth major shake-up of Kia’s US operations in three
years, and the fourth in five years for its sister company, Hyundai
Motors America. Each time the pattern was the same; executives
were fired either en route or during the company’s annual meeting
with its dealers. Context is as important as content, and few
people missed the message.
In addition to the myriad of former executives, many
Americans who stay with Kia complain that its corporate culture is
suffocating. According to several current and former managers,
senior executives run the company in a far more authoritarian
manner than do most American executives. These critics add that
their Korean overseers micromanage too many details, rarely
listen to their advice, and display little tolerance for disagreement.
“It’s a very feudal approach to management,” noted one former
sales executive. “There’s a king, he rules, and everyone curries
his favor. It’s very militaristic.”
A particular annoyance for US managers at Kia is the role of
so-called “coordinators,” Korean overseers whose job it is to keep
an eye on American managers and report back to Seoul. Culled
from the ranks of up-and-coming stars in Seoul, they sit alongside
American managers in what in essence is a dual management
hierarchy (American and Korean), monitoring decision-making
and results. They must agree to major decisions and sometimes
minor ones, such as whether to award vacation holidays to
dealers who hit sales goals. (Japanese automakers abroad also
have coordinators, but they play more of an advisory role.) A Kia
spokesperson responded to this criticism by noting that the
coordinators serve a valuable purpose by bringing the corporate
vision from Seoul to the United States and then relaying the needs
211
of the local market back to headquarters. Since few American
employees speak Korean, the coordinators also act as translators.
While acknowledging that Kia has a Confucian-influenced
corporate culture in which “father knows best,” the company
spokesperson argued that coordinators were not the principal
source of conflict with American executives. Instead, he attributed
the tension to Korean managers’ greater comfort with “stretch
goals.” At the moment, the stretch goals seem to be stressing the
American managers to the breaking point.
This chapter addresses a simple question: What do
managers do, and why? As we shall see, while this question may
be simple and straightforward, the answer is significantly more
complex. On the surface, most managers look pretty much alike.
Some are Asian, some are Anglo, some are Latino, and so forth.
Some are men; some are women. Yet regardless of their outward
appearance, we often assume – incorrectly, as André Laurent
points out – that these people are basically the same on the inside
when they manage. A manager is a manager is a manager.
Indeed, we often believe that we can define the roles of managers
in ways that transcend cultural differences. Such is not the case,
however, as noted by Honda’s co-founder Takeo Fujisawa, who
observed that “Japanese and American management is 95
percent the same and differs in all important respects.”3 Cultural
patterns and belief structures frequently influence managerial
perceptions (what they see), managerial cognitions (what they
think about it), and managerial actions (what they do about it).
And if this is correct, then it necessarily follows that prepared
managers understand how such differences can affect their
212
relationships – and success – with partners and competitors
sitting on the other side of the global table.
To explore this topic, we examine several aspects of work
and management which vary across cultures, including:
how people’s expectations about suitable managerial
behavior can differ
how situational differences can also influence managerial
behavior
how beliefs about work and leisure vary across cultures
what motivates people at work in different situations and
environments
how gender and gender roles can play out in the
workplace.
213
Overview: Work, Management, and
Motivation
As illustrated in the example of Kia, if managers in different
regions of the world think differently, what does this mean for
managing
people,
negotiating
and
building
successful
partnerships, building global teams, or motivating employees from
different cultures? As companies face an increasingly complex
global business environment, a logical question arises: Can
organizations today be managed in the same way they were in the
past? In other words, does a changed environment – one
characterized by multiple economic and political systems,
divergent social norms and values, and highly diverse educational
and skill levels – require us to reassess both the managerial role
in general and management practices in particular? Indeed, is the
very definition of management changing? Moreover, how should
today’s
managers
best
prepare
themselves
for
greater
involvement in global assignments in this new world? The key to
success here will be their ability first to understand changes in the
managerial role and global workplaces as played out across
cultures, and then adapt accordingly.
One way to understand this challenge from a global
perspective is to consider managers as working across – and
coordinating – four aspects of the workplace simultaneously, as
illustrated in Exhibit 4.1:
Cultural environment. The first component consists of the
cultural environment and its related forces. This includes
214
prevailing norms, values, and acceptable behaviors, as well
as forces – and opportunities – created by subcultures and
multiculturalism. For example, a collectivistic workplace
would look and run quite differently to a more individualistic
one. At the same time, a subculture consisting of engineers
would be different to one consisting of marketing
representatives. Beliefs about time, power distribution,
uncertainty reduction, and other factors discussed in
Chapter 2 play a role here. Implications for different
approaches to management follow from this.
Organizational environment. The organizations in which
managers find themselves can also be quite different, as
was discussed in Chapter 3. This environment includes
various internal and external stakeholders, such as
investors, customers, employees, and government
regulators, as well as issues relating to business strategies
and organizational design. For example, what external
forces impact how the organization does business,
including stakeholder influence, and economic and political
realities? How do organizations approach their markets and
customers? Do the managers work for a bureaucratic or a
networked organization? How are people structured to
complete their work? How ethical is the organization? What
are the rules, policies, and sanctioned practices of the
organization? How do decisions get made? And what is the
prevailing corporate culture?
Managerial environment. The managerial environment is
quite literally where the work gets done. This includes
215
managerial role expectations and responsibilities – what is
expected of them at various levels in the organization, a
factor that often varies by culture. It also includes
perceptions and patterns of thinking by both managers and
employees alike. It includes workplace challenges, such as
variations in work values and motivational challenges, that
can facilitate or inhibit managerial success. Workplace
diversity is also a key factor in these dynamics. Finally, it
includes the extent to which managers possess sufficient
multicultural competence and requisite global management
skills to get the job done.
Situational contingencies. Running throughout these
three environments is a series of situational or contextual
factors (to be discussed below) that serve to make almost
any work environment unique in its own way. For example,
what personalities and people problems are involved?
What geographic challenges or historical sensitivities exist?
What crises have surfaced recently? Is the work done in an
office or a factory? Locally or globally? Face to face or
virtually? Is the work technology-driven or people-driven? It
is here in this often unknown domain that the real
management challenge typically surfaces.
216
Exhibit 4.1 The global management work environment
Applying this model to the example of Kia managers and
executives above, we might suggest that the culture was conflated
between the Korean collectivistic and the American individualistic
environment. This creates a conflict almost before anyone starts
working. At the same time, the quasi-militaristic organizational
environment was one of high-power distance and centralization.
Meanwhile, both electronic technology and people seem to drive
workplace
processes
and
activities
in
this
largely
office
environment. Managers had little job security. Finally, at Kia we
have situational contingencies such as the personalities of those
involved, the location of the facility, and the confusion and
resentment related to the dual hierarchy reporting system. Put this
together and you can see the challenge facing both the Korean
and the American managers.
Viewing the global work environment in this way raises a key
question: How can managers use their talents and experiences to
217
build
on
the
cultural
and
organizational
environments,
accommodate situational uniqueness, and capitalize on prevailing
work environments to achieve corporate objectives? Not an easy
task, but a necessary one for success as a global manager.
218
Managerial Role Expectations
Henry Mintzberg has suggested that a manager’s job is best
understood as serving ten managerial roles.4 While this model is
very general in nature, it can be adapted to help us understand
how such managerial roles can change depending on where the
managers are located – that is, their cultural environment. Exhibit
4.2 illustrates how each of the ten managerial roles can be
influenced by cultural differences. For instance, considerable
research has indicated that most people in individualistic cultures
prefer managers who are more consultative, while most people in
collectivistic cultures prefer managers who make unilateral
decisions. Similarly, managers in high-context cultures frequently
make extensive use of the context surrounding a message to get
their point across, while managers in low-context cultures tend to
rely almost exclusively on specific and detailed messages, and
ignore much of the message context. In short, managerial roles
often change – not necessarily in major ways, but certainly in
important ways – as we move across borders. For example, an
American expatriate manager working in a remote Colombian
town is expected to attend the weddings and baptisms of all their
employees. As the patrón, they must carry out more paternalistic
responsibilities – and convince their spouse (who likely has their
own career) that they too must attend all celebrations.
Exhibit 4.2 Cultural influences on managerial roles
219
Managerial
roles
Differences across cultures
Interpersonal
roles
Figurehead
Figureheads have considerable symbolic
value in some cultures; in others, being
described as a figurehead is not seen as a
compliment.
Leader
Individualistic cultures prefer highly visible
“take charge” leaders; collectivistic cultures
prefer more consultative leaders.
Liaison
Some cultures prefer informal contacts based
on long-standing personal relationships;
others prefer to use official representatives.
Informational
roles
Monitor
Culture often influences both the extent of
information monitoring and which specific
information sources receive the greatest
attention.
Disseminator
In some cultures, the context surrounding a
message is more important than the message
itself; in others, the reverse is true.
Spokesperson
Culture often influences who is respected and
seen as a legitimate spokesperson for an
organization.
220
Managerial
roles
Differences across cultures
Decisional
roles
Entrepreneur
Some cultures are highly supportive of
innovation and change; others prefer the
status quo and resist change.
Disturbance
handler
Some cultures resolve conflict quietly; others
accept and at times encourage a more public
approach.
Resource
allocator
Hierarchical cultures support differential
resource allocations; egalitarian cultures
prefer greater equality or equity in
distributions.
Negotiator
Some cultures negotiate all items in a
proposed contract simultaneously; others
negotiate each item sequentially.
Mintzberg studied domestic American managers; later
research revealed that these roles vary by culture, level of
industrialization, and whether a manager’s job is domestic or
global.5
221
What Is an Ideal Manager?
With this grounding, we can dig deeper and look for differences in
the expectations that employees and companies have about their
managers. If people across borders can vary in their thoughts and
habits, so too can they vary in their expectations concerning
appropriate managerial roles. So, we ask the question, what is an
ideal managerial role?
First, consider how people in various cultures describe their
ideal manager. André Laurent conducted one of the more
interesting studies on this topic.6 He focused his attention on
understanding the normative managerial role (i.e., what is
expected of managers) and discovered significant differences
across cultures. He asked managers from different cultures a
series of questions dealing with effective management. Laurent’s
results demonstrate wide variations in responses across cultures.
To illustrate his findings, compare the results on managerial
expectations from four countries: China, Indonesia, Sweden, and
the Netherlands (see Exhibit 4.3). When managers from these
countries were asked whether they must have answers to most
questions asked by subordinates, 74 percent of Chinese
managers and 73 percent of Indonesian managers said yes, while
only 10 percent and 17 percent, respectively, of Swedish and
Dutch managers agreed. Similarly, when asked if a managerial
chain of command is important so that workers know who has
authority, 83 percent of Indonesian and 70 percent of Chinese
managers agreed while, again, Swedish and Dutch managers
demurred (30 percent and 31 percent, respectively). Finally, when
222
managers were asked if it is acceptable to bypass the chain of
command to get something done efficiently, results from all four
countries began to merge: China agreed at 59 percent, Indonesia
at 51 percent, Sweden at 26 percent, and the Netherlands at 44
percent. Still different, but closer.
Exhibit 4.3 Managerial expectations (selected countries)
Percentage of managers who agree with each
statement
Country
Managers
must have
the answers
to most
questions
asked by
subordinates
The main
reason for a
chain of
command is so
that people
know who has
authority
It is OK to
bypass
chain of
command
to get
something
done
efficiently
China
74
70
59
France
53
43
43
Germany
46
26
45
Indonesia
73
83
51
Italy
66
–
56
Japan
78
50
–
Netherlands
17
31
44
Spain
–
34
74
223
Sweden
10
30
26
United
Kingdom
27
34
35
United
States
18
17
32
Source: Data from André Laurent, reported in John Saee,
Managing Organizations in a Global Economy. Mason, OH:
Thompson/Southwestern, 2005, pp. 39–42.
According to these findings, managers in countries such as
China and Indonesia tend to have more authority – and power –
than their European counterparts. Managers from other countries
in this study, including France, Germany, Italy, Japan, Spain, the
United Kingdom, and the United States, expressed responses
somewhere in between these extremes. The conclusion seems
pretty clear: if managers from different countries differ so much in
their descriptions of the correct managerial role, it is no wonder
that significant differences can be found in actual management
style across national boundaries.
A second and equally important study, conducted by Charles
Hampden-Turner and Fons Trompenaars, also found significant
differences across managers based on culture (see Exhibit 4.4 for
results from selected countries). This time the study focused on
the qualities of the ideal manager across cultures. As can be
noted, managers in the United States, Sweden, Japan, Finland,
and South Korea saw themselves as demonstrating more overall
drive and initiative than leaders in Portugal, Norway, Greece, and
the United Kingdom. Note that Canadian managers placed less
224
emphasis on managerial drive and initiative than their US
counterparts. At the same time, managers in Sweden, Japan,
Norway, Canada, and the United States saw themselves as being
more willing to delegate authority than leaders in Greece,
Portugal, Spain, and Italy. These findings, along with those of
André Laurent, suggest clearly that effective managerial behavior
can easily vary across cultures.
Exhibit 4.4 Managerial characteristics (selected countries)
Country
Manager’s
sense of drive
and initiative
(% of
agreement by
managers)
Country
Manager’s
willingness to
delegate
authority (% of
agreement by
managers)
USA
74
Sweden
76
Sweden
72
Japan
69
Japan
72
Norway
69
Finland
70
USA
66
South
Korea
68
Singapore
65
Netherlands
67
Denmark
65
Singapore
66
Canada
64
Switzerland
66
Finland
63
Belgium
65
Switzerland
62
225
Country
Manager’s
sense of drive
and initiative
(% of
agreement by
managers)
Country
Manager’s
willingness to
delegate
authority (% of
agreement by
managers)
Ireland
65
Netherlands
61
France
65
Australia
61
Austria
63
Germany
61
Denmark
63
New
Zealand
61
Italy
62
Ireland
60
Australia
62
UK
59
Canada
62
Belgium
55
Spain
62
Austria
54
New
Zealand
59
France
54
Greece
59
Italy
47
UK
58
Spain
44
Norway
55
Portugal
43
Portugal
49
Greece
38
Source: Charles Hampden-Turner and Fons Trompenaars,
The Seven Cultures of Capitalism. New York: Doubleday,
1993, ch. 1.
226
The key question here is how these differences across
cultures emerged. One answer is to say that cultures are different,
but this explanation fails to provide managers with any guidance
on how to understand situations or how to behave. To gain a
better grasp on this challenge, we need to dig deeper and
examine patterns of managerial behavior to the extent that
research will allow us to do so. And we need to begin by
recognizing a number of situational contingencies that affect what
managers actually can do, not just what they ought to do.
227
Patterns of Managerial Thinking
Being conscious of cognitive differences across cultures is
important for global managers for several reasons. First, a better
understanding of social dynamics in international and culturally
diverse business contexts allows managers to take a broader view
in such managerial activities as international negotiations or team
decision-making. Managers who cannot read the mind of their
international business associates run the very real risk of
managing blindly. Hence, it is probably desirable for managers to
be continually on the lookout for such differences in business
transactions across borders. Second, understanding that different
people can contribute different thinking patterns and styles can
prove helpful in organizational staffing decisions. For example,
when people from around the globe who may think differently are
involved in new product decisions, a broader array of ideas (and
criticisms) emerge concerning new product features and their
global market potential. And finally, as we will see in the second
part of this book, accounting for cultural differences in the design
and implementation – and management – of most organizational
activities can become critically important where employees and
colleagues, with their culturally specific cognitive endowments, are
involved. Global organizations working in a complex global
environment require global employees who are equally complex
and possess a global mindset, defined as “the ability to develop
and interpret criteria for personal and business performance that
are independent from the assumptions of a single country, culture,
or context; and to implement those criteria appropriately in
228
different countries, cultures, and contexts.”7 Unfortunately, there is
no cookie-cutter that quickly replicates a complex global mindset
in all employees.
Research in social psychology has found that our cognitions
(thought processes) and subsequent behaviors (e.g., working
hard) are heavily influenced by what are called our cognitive
schemas. Cognitive schemas are simply mental repositories of
knowledge that store representations about what things are, their
characteristics, and what they might be related to.8 They include
people’s knowledge base, expectations, experiences, and biases
– that is, how people make sense out of their world. They do not
need to be correct or accurate; they are based simply on what we
believe to be accurate. For example, when we hear the word
“entrepreneur,” we frequently have in our mind an own idea of
what entrepreneurs look like, what characteristics they have, and
what
activities
they
typically
engage
in.
We
might
see
entrepreneurs as being young or male or Asian. Again, none of
this has to be true; it is only what we see in our mind. The content
of such schemas is culture-based as we typically learn about
things and events within our own cultures. However, they are also
highly personal, and individual experiences can modify previous
mindsets with new ones as the result of new experiences,
changed expectations, or education. As we apply our cognitive
schema in real life, we are likely to learn new things through trial
and error, and modify our knowledge base accordingly.
To see how this works, consider a simple question: What is a
supervisor? There is considerable research demonstrating that
there is no such thing as a stereotypical manager or supervisor.
Instead, managerial responsibilities and expectations vary not just
229
across individuals but also across cultures. They are formed by
cognitive
schema.
In
English
–
and,
indeed,
in
many
predominantly Anglo cultures – the word “supervisor” carries with
it connotations of authority, control, and power; a supervisor is a
boss (see Exhibit 4.5). In Japanese, by contrast, the word often
assumes a more familial connotation; a supervisor is a senior role
model and protector of subordinates, much like parents. Indeed,
kachou in Japanese means “supervisor” (or, more accurately,
“section chief”), but it also means “patriarch” or “family head.” In
German, the word supervisor carries strong connotations of
technical competence and expertise. Indeed, a supervisor is
sometimes referred to as meister (or master technician). German
supervisors are generally chosen for their knowledge, technical
competence, and training abilities, and not necessarily for their
ability to control others. And in Mexico and many Hispanic or
Latino cultures, a supervisor is considered to be a patrón who
looks after the interests of their employees in exchange for
allegiance and obedience. Same word basically – supervisor – but
very different meanings and sometimes very different behavioral
consequences.
Exhibit 4.5 Supervisory roles across cultures
230
Management Application 4.1 What Is a Supervisor?
1. What are the implications of these different
meanings for the supervisory role in the workplace and
for those who report to these supervisors? Explain.
2. What is your personal definition of a “supervisor”?
Where did your definition come from? How did it
develop?
3. If you were assigned to meet with several
supervisors from other countries (e.g., Turkey, Kenya,
or Chile), how would you learn about the supervisory
role in those locations prior to your meeting?
4. How can cognitive schemas such as the one
discussed here limit or liberate women who work in
supervisory roles?
5. Can you think of another cognitive schema in the
workplace that may vary across cultures?
231
Situational Contingencies and
Managerial Behavior
While both research and practical experience suggest that culture
does matter, research and practical experience also suggest that
culture alone is not sufficient to explain the behavior of our foreign
counterparts.9 Remember Ann Swidler’s observation from Chapter
2: “The debate over whether or how much culture influences
action obscures a crucial insight: culture’s influences vary by
context.”10 For this reason, we must be cautious in our
interpretation of cultural phenomena. Strong preconceptions about
the role (or lack thereof) of culture may blind us to the ways in
which culture often does matter. Understanding the role of culture
in management practice requires a way of thinking about culture
that will help to identify cultural influences and inform the best
course of action to deal with them. In other words, we need to
understand what culture is and what it does, how our own culture
has influenced our way of thinking in terms of working
assumptions, and personal and group biases, and how to acquire
a sufficient understanding of how culture works to be able to tease
out cultural influences on various situations in which we find
ourselves. Most of all, we need to understand context and
unexpected local differences that often help shape realities on the
ground.
What is the lesson here? Less experienced managers tend to
overlook the differences in their surroundings when they are in the
field and try instead to “focus on business.” In many cases, this is
232
an unwise strategy. In reality, the situation facing a manager at
any given point in time is the stage on which action is determined.
As the opening quote suggests, people frequently think or act
differently and such actions are often caused by a host of
situational contingencies. What may be seen as funny at a
party may be considered rude in a business meeting, and so forth.
Behaviors that feel natural with people of our own culture may feel
uncomfortable with foreigners. Indeed, research has found that
people often behave differently when they are in cross-cultural
situations than when they are among people of their own culture.
The norms of behavior towards people of our own culture are
different to the ones guiding our behavior towards foreigners. For
example, research on women expatriates suggest that even
though local women in Asia may not have as many opportunities
as their male counterparts, this difference seldom applies to
foreign women, particularly from the West. They are first and
foremost a gaijin (“foreigner” in Japanese) and, as such, receive
different treatment to local women.11 While national culture is a
major force in influencing behavior, the impact of culture on
behavior does not happen in a vacuum. Situations and contexts
differ, and these differences are important for understanding
behavior.
National history, another determinant of cultural mindset and
behavior, also has to be taken into consideration. Countries can
be extremely sensitive about historical events or perceived insults.
For example, a major American company brought wine from their
headquarters in Connecticut to France for the celebration of a
merger with a French company. The French were insulted, and
the merger got off to a rocky start. Had the American executives
233
possessed a minimum of knowledge about French history, pride,
and the symbolic importance of their wine industry, they could
have avoided this situation. As Carlos Slim, Mexican entrepreneur
once said, “If you’re in business, you need to understand the
environment. You need to have a vision of the future, and you
need to know the past.”12
In other words, a part of how managers behave in unfamiliar
foreign settings is determined by the particular situations they find
themselves in. This can be seen most directly at the point of
contact between people with different backgrounds, goals, and
responsibilities when they come together to do business. It is
largely represented by differences in people, goals and tasks,
roles and responsibilities, and locations (see Exhibit 4.6). It is
embedded within national and organizational cultures and history,
but also carries its own unique characteristics and challenges.
This is where the managerial performance happens, and it is often
very situation-specific.
Exhibit 4.6 Situational contingencies and managerial behavior
234
As managers work to understand the critical dimensions that
characterize a particular situation, as well as its managerial
implications, several key situation-specific questions come to mind
that can help determine what a manager says or does –
regardless of their cognitions:
Who is involved in an interaction, and what does each party
want? What is the nature of the relationship?
What is each party trying to accomplish, individually or
collectively?
Who are the various parties responsible to? Who is in
charge?
What are the potential opportunities and constraints? Who
has the technology? Who has the financial resources? Why
do we need each other?
Who makes the first move? Where are we meeting?
These are just some of the countless situational contingencies
affecting our interactions with others. The point here is not to
develop an exhaustive list, but rather develop a keen awareness
of the existence of such factors when trying to understand the
behavior of other people or remain cognizant of one’s own limits
and opportunities.
For an example, let’s examine a high-tech start-up in the
Netherlands. A small Dutch high-tech firm was recently acquired
by US electronics giant Intel. Consistent with Dutch tradition, the
small company had long provided many of its middle managers
with company cars to offset the country’s high tax rate on personal
incomes. In the eyes of its employees, this was part of their
235
compensation package. To many outsiders, however, the
proliferation of new Mercedes and BMWs among the managers of
the small start-up seemed rather excessive. After the acquisition
of the company by Intel Corporation, Intel’s HRM executives
sought to rescind the Dutch company’s car policy, since it was far
more generous than that of the parent company back in the
United States. Following a number of complaints and several key
resignations, however, the parent-company policy change was
dropped. This example illustrates the conflicts and challenges
faced by many of today’s global managers. From their standpoint,
the Intel executives were seeking equality in their employee
personnel policies across the two countries, but from the Dutch
standpoint the company cars were part of this equality, since their
income tax rate on salaries is substantially higher than that for
their US counterparts. Again, as has been suggested, situation is
everything.
236
Management Application 4.2 Company Cars at Intel, the
Netherlands
1. Should reward systems within a multinational
company be the same across the globe or tailored to
each country or region? What problems can each of
these two approaches create?
2. Sitting in the corporate headquarters of a
multinational firm, how could you as a manager learn
what level of compensation and benefits is both fair
and functional across a company’s operations?
3. As a supervisor, how would you explain to Intel’s
American managers why Dutch employees at the
same level receive cars but they do not? Would you
use a different explanation in another country that you
are familiar with?
4. Other than compensation, what other aspects of a
multinational company might have to be localized
rather than standardized across all countries in which
it operates?
237
Work Values across Cultures
Work environments are where employees and supervisors come
together and create or produce the goods and services,
innovations, and discoveries that drive the global economy. In this
endeavor, the quality of the people, and the workplace they
create,
determines
success
or
failure.
Recently,
global
entrepreneur Elon Musk, founder of SpaceX, Tesla Motors, and
PayPal, observed: “Starting and growing a business is as much
about the innovation, drive, and determination of the people who
do it as it is about the product they sell.”13 To the extent that this is
correct, the quality and drive of a company’s workforce becomes a
critical competitive variable. But do people really want to work? If
so, why?
238
Why Do People Work?
Let’s start with a fundamental question: Why do people work?
This question lies at the heart of the topic of personal work values.
What is it about work, if anything, that people genuinely value?
What motivates people to go to work? Work values reflect
individual beliefs about desirable end states or modes of conduct
for pursuing desirable end states. As such, they serve a useful
function by providing individuals with guidelines and standards for
determining their own behavior and evaluating the behavior of
others. Personal work values are important because they signal
what individuals and groups of employees see as being most
important about their work efforts. They also influence the actual
quality and focus of employee endeavors and the ways in which
various employees may respond to work motivation strategies and
tactics (see Exhibit 4.7). Throughout, the focus here is on
understanding
how
personal
values
influence
employee
willingness and preparedness to contribute towards the attainment
of organizational goals.
239
Exhibit 4.7 Culture, work values, and behavior
Personal work values have been studied systematically from
a cross-cultural perspective for many years. One of the earliest
studies was conducted by George England.14 He and his
colleagues focused on the impact of such values on employee
behavior, and found significant differences across managers in the
five countries they studied. American managers tended to be high
in pragmatism and achievement orientation, and demanded
competence. They placed a high value on profit maximization,
organizational efficiency, and productivity. Japanese and South
Korean managers also valued pragmatism, competence, and
achievement, but emphasized organizational growth instead of
profit maximization. Indian managers stressed a moralistic
orientation, a desire for stability instead of change, and the
importance of status, dignity, prestige, and compliance with
organizational directives. Finally, Australian managers tended to
emphasize a moralistic and humanistic orientation, an emphasis
on both growth and profit maximization, a high value on loyalty
and trust, and a low emphasis on individual achievement,
success, competition, and risk.
240
This initial work by England and his colleagues formed the
basis for a subsequent international study of managerial values
called the Meaning of Work project. This study sought to identify
the underlying meanings that individuals and groups attach to
work in six industrialized nations: Belgium, Germany, Israel,
Japan, the United Kingdom, and the United States. Japan was
found to have a higher number of workers for whom work was
their central life interest compared to both Americans and
Germans, who placed a higher value on leisure and social
interaction. A high proportion of Americans saw work as a duty, an
obligation that had to be met. Japanese workers also showed less
interest in individual economic outcomes from work than their
European and American counterparts.
Although personal work values are often discussed in terms
of being reasonably stable attributes, they are not set in concrete
and can evolve over time. We can witness this in recent
allegations that younger workers in many countries (e.g., Canada,
Japan, France, United States, etc.) are losing their traditional work
ethic. Instead, they seek more balance between work and family
or work and leisure. At times, moreover, they simply seek less
work. Their commitment and dedication to their employers have
decreased, while their job expectations in terms of compensation
and responsibility have increased in some cases. However, their
changing work ethic could also have its roots in the changing
psychological contract their parents experienced in some
countries – employers who demonstrated less commitment to
employees by outsourcing jobs, restricting pension plans, and
increasing work demands. Whether these trends are accurate,
universal, or reversible is open to debate. The point to be made
241
here is that managers have a dual responsibility both to avoid
stereotypes (e.g., “South Koreans are hard workers”; “All young
workers are less committed”) and to learn to adapt when
necessary to changing conditions. Flexibility and awareness of our
natural tendency to stereotype are crucial.
At the same time, work environments and managerial
expectations are also changing, however slowly. For example,
employees in some countries are increasingly demanding greater
participation in major organizational decisions that affect them and
their colleagues. New labor legislation in some countries (e.g.,
South Korea) tends to reinforce this trend. At the same time,
however, other governments are moving in the opposite direction
by attempting to reduce employee benefits, work rules, and
security (e.g., France and the United States).
242
Work and Leisure
A second question we must ask here is: How central is work in the
lives of employees? Put more bluntly, do people live to work or
work to live? An example of this comes from a Danish manager
who suggested that the fundamental difference between Danes
and Germans is that the Germans live to work while the Danes
work to live. (One wonders what the response of Germans might
be?) Moreover, we sometimes hear that Americans work harder
than Europeans – a comment more likely to be heard in New York
than in London or Berlin. We hear, too, that Japanese and South
Koreans work harder than anyone else – a comment heard in
many places, East and West. Indeed, everyone seems to have an
opinion about who works the hardest.
While work hours are only one indicator of how hard people
work, they do provide one piece of hard evidence. So, how many
hours do employees actually work in various countries?
Information on this question comes from recent data published by
the Organisation for Economic Co-operation and Development
(OECD), as shown in Exhibit 4.8. What does this information show
us? First, Mexican employees on officially average longer work
hours than anyone else in the entire OECD survey, followed by
Greek and Korean employees. Those working the lowest number
of hours include employees from Germany, Denmark, and France.
This discrepancy in work hours and the stress which long hours
can cause recently led the Korean government to legislate a
maximum work week of fifty hours, which is still twelve hours
243
longer than the official American and British working week and
fifteen hours longer than is typical throughout much of the EU.15
Exhibit 4.8 Average working hours in selected countries
Country
Hours
Country
Hours
Country
Hours
Australia
1669
Greece
2035
Russia
1974
Belgium
1551
Hungary
1761
South
Korea
2069
Canada
1703
Ireland
1878
Spain
1695
Czech
Republic
1770
Japan
1713
Sweden
1621
Denmark
1410
Mexico
2255
Switzerland
1590
Finland
1621
New
Zealand
1752
UK
1676
France
1472
Poland
1928
USA
1783
Germany
1363
Portugal
1842
OECD
average
1763
Source: Data derived from OECD, Paris, 2018. Caution is in
order when interpreting these data, since they do not include
unrecorded (“free”) overtime, non-productive work time, or
overall employee productivity.
But what do these numbers really mean, and what are they
not telling us? For example, according to one study, Japanese
and American employees officially work about the same number
of hours. However, these data ignore the fact that many
244
employees in both countries work considerable overtime. In
Japan, this is called free overtime – it is required but not
compensated. Indeed, it is estimated that almost half of Japanese
workers between the ages of thirty and forty work over sixty hours
per week, while being paid for only forty.
We also see variations in official vacation policies across
countries, ranging from one or two weeks annually in many Asian
countries to four or five weeks in much of Europe. The
unanswered question here, however, is whether working long
hours is a badge of honor, a sign of necessity, or, worse still, a
sign of some deep psychological malfunction. For example, a
recent poll of American workers found that, given a choice of
receiving an extra $10,000 a year or four extra weeks of vacation,
66 percent of those surveyed preferred the extra income.16
Moreover, consider the effects of prolonged work on employee
stress and well-being. It might be suggested that while many
Europeans load up on vacation time, many Americans load up on
consumer products as their pace of work quickens. Health-related
problems are on the rise, most notably heart problems among
both men and women. Japan has a word, karoshi, for death
caused by overwork or job-related exhaustion, and the Japanese
government has tried for many years with little success to reduce
its prevalence. The pressure to succeed and concern about the
economy and job security frequently lead American and Japanese
workers in the opposite direction, however, towards more work
and less play.
245
Work Values at Tesla: An Example
Headquartered in Palo Alto, California, Tesla builds both electric
cars and solar batteries for a wildly enthusiastic market. It recently
announced plans to build a sister plant in China. What drives
people who work at Tesla? One factor is an unrelenting pressure
to perform, where the example is set from the top.17 When a
technical problem slowed the production line, Elon Musk,
company CEO, moved a cot onto the factory floor so he could
work on the problem 24/7. Employees who don’t share this
passion quickly leave, but there are plenty of applicants to replace
them. Each year, almost half a million people apply for jobs at
Tesla, the most applicants of any company in the US.
Tesla’s stated mission of accelerating the world’s transition to
sustainable energy and its strong leadership from the top appeals
to many of its 45,000 employees, who are sometimes willing to
work 100-hour shifts and eschew many of the common perks of
technology companies, such as free food. Instead, many
employees report that they run on adrenaline, stock options, and a
shared passion with company leaders to change the world. Kiran
Karunakaran, at twenty-nine, passed up higher-paying offers from
Apple and Alphabet to join Tesla. “What really attracts young
people to Tesla is instant gratification,” he said. “You see
incredible things you’ve worked on come to fruition, on the road, in
months.” Meanwhile Anusha Atluri, a second-year MBA student
working on a summer internship, spotted a way to tweak a step on
the manufacturing line that she thought might speed up
production. She suggested to her supervisors that they consider
246
her suggestion during the next week. “They were like, why not just
try it tomorrow?” One manager left Tesla to have a baby but was
soon back on the job. “Life isn’t about working less,” she
observed. “Everybody should have more work than they can
possibly finish at all times.”18
As Tesla moves to build its new Chinese factory, questions
emerge about whether the company will attempt to replicate its
value system overseas or seek to accommodate local work
values.
247
Management Application 4.3 Extreme Work Values at
Tesla
1. In your view, could Tesla’s high-individualism/highperformance work environment succeed in other
countries? Which countries, and why?
2. Tesla has what one might describe as an “extreme”
work environment where performance trumps
everything else, including a work–life balance. What
are the potential short- and long-term consequences
of such an environment for both the company and its
employees?
3. Would you like to work at Tesla? Why, or why not?
4. As Tesla prepares to open a new factory in China,
would it be wise to attempt to replicate its work culture
in this new setting? What are the potential benefits
and pitfalls of such an attempt?
5. How difficult would it be to establish Tesla factories
in other parts of the world (e.g., Europe, Latin
America) without changing the corporate culture? And
if Tesla changed its corporate culture, what would
happen to the company? Would it still be Tesla?
Explain.
248
Management and Motivation
Advice about motivating employees in the global workplace is
readily available. In Thailand, for example, we are told that the
use of individual merit bonus plans run counter to societal norms
about group cooperation, and can actually lead to a decline rather
than an increase in productivity from employees who refuse to
openly compete with each other. In the Netherlands, you cannot
persuade the Dutch to compete with one another publicly. In
Mexico, everything is a personal matter; but a lot of foreign
managers don’t understand this. To get anything done, the
manager has to be more of an instructor, teacher, or parent figure
than a boss.
We are further told that to improve managerial performance in
the UK, managers should focus more on job content than on job
context. Job enrichment programs are more likely to improve
performance in societies such as Britain, where intrinsic rewards
are valued and satisfaction tends to be derived from the job itself,
than in France, where job context factors, such as security and
fringe benefits, are more highly valued. British and Canadian
companies motivate their employees primarily through financial
incentives, while German and Dutch companies focus on
providing employment stability and employee benefits. And at the
same time, Indonesian and South Korean companies prefer rigid
and often autocratic organizational hierarchies in which everyone
knows their place, while Swedish and Norwegian companies
stress informality, power-sharing, and mutual benefit in the
workplace. Some countries, such as Germany, even combine
249
formality and rigid hierarchies with power-sharing and an
emphasis on securing mutual gain for all employees.
Unfortunately, although there are many models of employee
motivation, few incorporate serious consideration of differences
across borders.19 What, therefore, should managers do? To
begin, they can prepare themselves by expanding their
understanding of the local work environment. As already
discussed, this can include understanding local work values and
history. In this way, they enhance their chances of succeeding in
global operations. While many managers assigned to work in
other cultures may never become insiders, the simple knowledge
of how the local workplace functions will likely make their jobs
both easier and more productive.
250
Cultural Influences on Work Motivation
What can we learn from existing research about how cultural
differences
and
socialization
processes
affect
employee
motivation in the workplace? Exhibit 4.9 summarizes much
research concerning the motivational implications of several
cultural values discussed in Chapter 2: individualism–collectivism,
hierarchy–egalitarianism,
mastery–harmony,
sequential–
synchronic (also known as monochronic–polychronic), and
universalism–particularism.20
As
can
be
seen,
at
least
conceptually, each of these dimensions can represent drivers for
employee motivation in one direction or another. For example, we
would generally expect that people in largely individualistic
societies might prefer a competitive work environment, or at least
competitive reward systems (e.g., Canada, Australia), while
people in more collectivistic societies might prefer the opposite
(e.g., Japan, Thailand). Meanwhile, people in universalistic
societies might generally insist that rules and policies be applied
equally to everyone (e.g., Germany, Sweden), while people in
particularistic societies might be more understanding or accepting
of rules and policies that are applied differentially based on
personal relationships and power (e.g., Indonesia, Mexico).
Exhibit 4.9 Cultural influences on work motivation
Cultural
dimensions
Influences on work motivation
251
Cultural
dimensions
Influences on work motivation
Individualistic vs.
collectivistic
cultures
Individualistic cultures tend to
emphasize: extrinsic rewards tied to
personal achievement; individually based
incentives; personal responsibility for
accomplishment; viewing employees as
performers; and providing employees
with autonomy and opportunities for
advancement.
Collectivistic cultures tend to emphasize:
intrinsic rewards (e.g., meaningful work)
tied to commitment and loyalty; groupbased incentives; group norms and moral
persuasion; viewing employees as family
members; and building teams and
networks focused on task performance.
Hierarchical vs.
egalitarian cultures
Hierarchical cultures tend to emphasize:
extrinsic rewards; large salary
differentials; clear directives to
subordinates; decisive and powerful
leaders; and rewards for complying with
managerial directives.
Egalitarian cultures tend to emphasize:
intrinsic rewards; minimal salary
differentials; participative or consultative
decision-making; flexible or collaborative
leaders; and rewards for creativity and
constructive feedback.
252
Cultural
dimensions
Influences on work motivation
Mastery-based vs.
harmony-based
cultures
Mastery-based cultures tend to
emphasize: competitive environments
within the organization to stimulate best
efforts; using performance-based
incentives with monetary rewards;
showcasing high performers;
encouraging thinking big and conquering
the environment; and assertiveness
training programs.
Harmony-based cultures tend to
emphasize: group harmony and team
efforts for collective results; seniority or
membership-based incentives;
showcasing team efforts and
organization-wide accomplishments;
encouraging respect for traditions and
the environment; and encouraging
continued membership for the entire
workforce.
253
Cultural
dimensions
Influences on work motivation
Sequential vs.
synchronic cultures
Sequential (monochronic) cultures tend
to emphasize: providing people with
simple sequential directions; providing
strict time limits for each project with
intermittent updates; focusing on the job;
and keeping personal relations to a
minimum.
Synchronic (polychronic) cultures tend to
emphasize: greater flexibility in how tasks
are approached; flexible time limits for
various tasks; progress checks through
personal discussions; and greater focus
on personal relations as a means of
succeeding on the job.
Universalistic vs.
particularistic
cultures
Universalistic (rule-based) cultures tend
to emphasize: clearly acknowledged
rules and regulations; universal
enforcement; providing people with
certainty and security; rewards tied to
compliance; and decisions based on
objective criteria.
Particularistic (relationship-based)
cultures tend to emphasize: building
interpersonal trust as a basis for
relationships; investing time meeting with
employees; building informal networks;
using influential people to help motivate
others; recognizing extenuating
circumstances in rule enforcement; and
decisions often based on personal ties.
254
Source: Based on Carlos Sanchez-Runde and Richard M.
Steers, “Culture, context, and work motivation,” in B.
Szkudlarek, J. S. Osland, D. Caprar, and L. Romani (eds.),
Handbook of Contemporary Cross-Cultural Management.
Thousand Oaks, CA: Sage, in press.
In making such generalizations, however, we must remember
the role of individual differences across peoples. All Germans and
Swedes do not share universalistic beliefs, nor do all Indonesians
and Mexicans share particularistic beliefs. Moreover, we must also
recognize societal evolutions over time. For example, individually
based merit pay systems are becoming more popular in
collectivistic countries such as Japan and Korea, while teambased merit pay systems are becoming more popular in the
United States and Australia.
255
Culture, Motivation, and Distributive Justice
Many merit-based, or pay-for-performance, incentive systems that
are in use around the world (particularly in the West) attempt to
link financial compensation and promotional opportunities directly
to individual, group, or even corporate performance. Managers
employing such systems view them as a statement of equity, if not
equality. In other words, the higher one’s performance, the greater
the rewards – a simple performance-reward contingency. Other
cultures believe compensation should be based on group
membership or group effort, thereby emphasizing equality.
Everyone is deserving of more or less the same rewards. To
understand the logic underlying such differences, it is helpful to
understand the concept of distributive justice across cultures.
This concept relates to how people see the fairness of the
distribution of rewards. One example of this can be seen in an
effort by a US multinational corporation to institute an individually
based bonus system for its sales representatives in a Danish
subsidiary. The sales force rejected the proposal because it
favored one group over another. The Danish employees felt that
all employees should receive the same amount of bonus instead
of being given a percentage of their salary, reflecting a strong
sense of egalitarianism.21
Similar results were found for Indonesian oil workers;
individually based incentive systems created more controversy
than results. As one manager commented: “Indonesians manage
their culture by a group process, and everybody is linked together
as a team. Distributing money differently amongst the team did not
256
go over that well; so, we’ve come to the conclusion that pay for
performance is not suitable for Indonesia.”22 Similar results were
reported in studies comparing Americans with Chinese, Russians,
and Indians. In all three cases, Americans expressed greater
preference than their counterparts for rewards based on
performance instead of equality or need.23 However, most of
these observations came from Western managers.
It is interesting to note that the basis for some incentive
systems has evolved over time in response to political and
economic changes. China is frequently cited as an example of a
country that is attempting to blend quasi-capitalistic economic
reforms with a reasonably static socialist political state. China’s
economy
has
demonstrated
considerable
growth,
as
entrepreneurs are increasingly allowed to initiate their own
enterprises largely free from government control. Within existing
and former state-owned enterprises, moreover, some movement
can be seen towards what is called a reform model of incentives
and motivation. In this regard, a distinction can be made between
the traditional Chinese incentive model, in which egalitarianism is
stressed and rewards tend to be based on age, loyalty, and
gender, and the new reform model, in which merit and
achievement receive greater emphasis and rewards tend to be
based on qualifications, training, level of responsibility, and
performance. Some researchers have suggested, however, that
the rhetoric in support of the reform model far surpasses actual
implementation to date. China is one of the countries in which
CEO compensation is under-reported; in reality, CEOs can receive
from twice to fifty times more than their stated compensation, in
the form of expenses for housing, entertainment, and so forth.
257
Reward systems in the United States can be quite different.
With a strong emphasis on individualism, many US companies
prefer merit compensation systems for their managers but fixed
compensation
for
lower-level
employees,
sometimes
accompanied by bonuses. This is done under the assumption that
managers have the capacity to make things happen, while
employees should largely follow directions. This philosophy is
evidenced by the stark differences in compensation levels
between high-level managers and rank-and-file employees. One
example of this can be seen in the average CEO compensation in
American companies compared to average employees, as
illustrated in Exhibit 4.10.24 No other countries have such a wide
pay gap, which can be explained as follows. American companies
tend to be larger and their CEOs may have greater assumed risk
(compensation in stocks). Their pay is set by boards whose
members may have close ties and reciprocal “You scratch my
back, and I’ll scratch yours” relationships with the CEO. In
contrast, other countries limit CEO pay with a national cap on
CEO salary (Germany), or a capped CEO–lowest worker pay ratio
(France), or by giving workers a voice, such as representation on
the boards that set compensation (Germany) or allowing
shareholder input.
Exhibit 4.10 Average CEO and employee compensation
Country
Average
annual CEO
compensation
($)
Average
annual
employee
compensation
($)
258
Average ratio
of CEO to
employee
compensation
Country
Average
annual CEO
compensation
($)
Average
annual
employee
compensation
($)
Average ratio
of CEO to
employee
compensation
Australia
4.2 million
45,000
93:1
Austria
1.6 million
44,000
36:1
Czech
Republic
2.2 million
20,000
110:1
Denmark
2.2 million
46,000
48:1
France
4.0 million
38,000
104:1
Germany
6.0 million
40,000
147:1
Israel
2.2 million
29,000
76:1
Japan
2.4 million
35,000
67:1
Norway
2.6 million
44,000
58:1
Poland
0.6 million
20,000
28:1
Portugal
1.2 million
23,000
53:1
Spain
4.4 million
34,000
127:1
Sweden
3.4 million
38,000
89:1
Switzerland
7.4 million
50,000
148:1
United
Kingdom
3.8 million
45,000
84:1
259
Country
Average
annual CEO
compensation
($)
Average
annual
employee
compensation
($)
Average ratio
of CEO to
employee
compensation
United
States
12.3 million
35,000
354:1
Source: Adapted from Jena McGregor, “Companies reveal
gigantic CEO-to-worker pay rations,” The Washington Post,
February 21, 2018, p. A1; and Amders Melin, “Executive pay,”
Bloomberg Business Week, January 22, 2018.
In Japan, meanwhile, efforts to introduce Western-style merit
pay systems have often led to an increase in overall labor costs.
Since the companies that adopted the merit-based reward system
could not simultaneously reduce the pay of less productive
workers for fear of causing them to lose face and disturb group
harmony (wa), everyone’s salary tended to increase.
Similar results concerning the manner in which culture can
influence reward systems as well as other personnel practices
emerged from a study among banking employees in South
Korea.25 Two South Korean banks were owned and operated as
joint ventures with banks in other countries, one from Japan and
one from the United States. In the American joint venture, US
personnel policies dominated management practice in the South
Korean bank, while in the Japanese joint venture, a blend of
Japanese and South Korean HRM policies prevailed. Employees
in the joint venture with the Japanese bank were significantly
more committed to the organization than employees in the US
260
joint venture. Moreover, the Japanese-affiliated bank also
demonstrated significantly higher financial performance. However
you look at it, employees do not always seek the same rewards
and outcomes for job performance.
261
Distributive Justice at Lincoln Electric: An Example
A good example of distributive justice can be found in the
experience of Lincoln Electric, an American company widely
known for its successful pay-for-performance system. By any
measure, Lincoln is a success story. The company’s business
strategy is simple: sell high-value, high-quality products at
competitive prices and provide outstanding customer service. The
key to Lincoln Electric’s success is its stable, hardworking, and
highly skilled workforce that is compensated on a strict piece rate
system. On average, its shop floor employees make twice the
national average for their trades.
After its American success, Lincoln Electric decided to
expand its operations internationally and become a bigger player
in the emerging global economy.18 It set its sights on Germany,
buying a small German arc-welding equipment manufacturer.
None of the US executives involved in the acquisition had any
international experience, but they believed that because they had
been so successful in the United States, success would likewise
follow elsewhere. One of their first decisions was to retain the
local German managers, on the grounds that they best
understood local customs and work practices. It assumed that the
Lincoln Electric compensation system would be adapted to fit local
conditions, leading to increased productivity through heightened
individual motivation. It quickly became apparent, however, that
the local German managers were either unable or unwilling to
introduce the company’s highly individualistic incentive plan
among workers used to a more collectivistic work culture.
262
Finally, out of exasperation, US headquarters ordered it to be
implemented. The response of the employees was quick and
decisive.
Employee
grievances
and
even
lawsuits
arose
challenging the newly imposed system, which was seen by many
as exploitative and even inhumane. Workers were being asked to
work ever harder with little consideration for their quality of life.
Many workers rejected the piece rate concept on principle, while
others preferred extra leisure time over higher wages and were
not prepared to work as hard as their US counterparts. Compared
to the Americans, German workers had a different psychological
contract, the mutual expectations that arise between managers
and workers. As Lincoln Electric’s president observed,
Even though German factory workers are highly skilled and,
in general, solid workers, they do not work nearly as hard or
as long as the people in our Cleveland factory. In Germany,
the average factory workweek is thirty-five hours. In contrast,
the average workweek in Lincoln’s US plants is between
forty-three and fifty-eight hours, and the company can ask
people to work longer hours on short notice – a flexibility that
is essential for our system to work. The lack of such flexibility
was one of the reasons why our approach would not work in
Europe.26
Lincoln Electric’s disappointment in Germany was soon replaced
with optimism following its experience with a Mexican subsidiary
that occurred about the same time. The company had purchased
a unionized manufacturing plant near Mexico City. Despite the fact
that piece rate systems are generally rejected by Mexican workers
(like their German counterparts), Lincoln introduced its system
263
gradually and only following discussions with workers in the plant.
Initially, when employees expressed reservations about the
Lincoln plan, executives asked for two Mexican volunteers to testdrive the system. They were guaranteed that they would not lose
money under the system during the trial period but could keep any
additional income they earned. Two employees reluctantly agreed
to try the system. Soon, as the two workers began making more
than their colleagues, other employees asked to join the plan.
Over the next two years everyone in the plant gradually asked to
join. Today, the Mexican facility continues to prosper under the
Lincoln incentive system.
The local environment may also have played a role in the
Mexican adoption of piece work pay at Lincoln. Mexicans
generally welcomed the many American companies that set up
operations in their country and went along with new management
practices because it meant they could support their families. The
psychological contract for Mexicans had changed over time from
less emphasis on job security to more emphasis on career
opportunity, which included competitive salary and training to
enhance professional growth. However, foreign companies still
had to be skillful when introducing new management practices in
Mexico, as was Lincoln Electric.
From its experience in Germany and Mexico, Lincoln Electric
concluded that moving across borders must be done slowly and
only after a thorough understanding of local cultures. Moreover,
they learned that transplanting ideas – whether they relate to
incentive systems, management practices, or anything else –
would succeed only after a thorough dialog with the workers who
are directly involved.
264
Management Application 4.4 Lincoln Electric in
Germany and Mexico
1. Use the global management workplace framework
discussed above to evaluate the nature of the conflict
at Lincoln Electric. What emerges as the key issues
needing to be addressed by management?
2. How did job and reward expectations, and
perceptions of distributive justice, differ between the
US and German operations at Lincoln Electric?
3. What could US and German managers have done
to improve the motivational environment in the
Germany operation? How successful do you think
such an attempt might be?
4. What did the American managers learn from the
German experience that they were able to apply in
Mexico? Was it successful?
5. How do you think the psychological contracts in the
United States, Germany, and Mexico differed? What
was the effect of these differences on job
performance? What was the effect of these differences
on supervisory behavior?
265
Women at Work
The World Economic Forum’s annual Global Gender Gap Report
found that women’s talents are often underutilized at work, and
women are frequently paid less than their male counterparts.
Although such pay gaps are declining, the report estimates that it
could take decades before women and men are paid equally.27
This is discouraging news, given the long and difficult struggle for
equal opportunity in the workplace in many nations of the world.
To some extent, societal and corporate practices regarding equal
rights are embedded in our core beliefs and values. For example,
some cultures stress gender role differentiation. In other words,
men and women are expected to play different roles in society,
and, as such, should be treated differently. Other cultures have
increasingly stressed minimizing gender role differentiation,
believing that men and women should share responsibilities both
at home and at work. For example, Sweden’s government-funded
preschools are trying to “counteract traditional gender roles and
gender patterns” by encouraging non-traditional behavior. These
gender-neutral preschools were also responsible for something
linguists have never seen before – the creation of a genderneutral pronoun “hen” that was rapidly adopted by Swedish
culture.
Research shows that women often work harder, work more
hours, are terminated more frequently, and experience more
harassment on the job than do men. Many of the problems
encountered by women in the global workplace are discussed
elsewhere in this book, so we would like to explore just one facet
266
of this problem here: global pay inequities. We begin with the
simple premise that in most countries, significant differences can
be found in pay levels between men and women. This raises a
common question: Are we discussing disparities between the pay
of men and women in similar jobs (e.g., assembly line workers,
marketing representatives, healthcare providers, etc.) or in
different jobs that someone has determined to be on a par with
each other in terms of the skills or qualifications required (e.g., a
teacher and a manager) – the issue of comparable worth? To
make global comparisons, researchers and policy makers simply
focus on gender wage gaps, as shown below.
A recent study by OECD found gender-based wage gaps in
all the countries studied, ranging from a low of 6 percent wage
disparity in New Zealand to a high of 40 percent disparity in South
Korea (see Exhibit 4.11).28 Gender pay differences were even
found in countries known for their support of equal employment
policies such as Germany and Switzerland, where there is a 22–
24 percent pay gap between men and women.29 Some of these
disparities can be explained by the fact that women are more
likely to be found in contingent labor categories, which typically
pay less than permanent job status. Other disparities can be
explained by differing sex role expectations and norms in some
countries. Some can be explained by simple job discrimination. In
this regard, it is interesting to note that in no country do men on
average make less than women, disputing the notion that such
wage differences are random in nature.
Exhibit 4.11 Gender wage gaps in selected countries
267
Country
Wage
gap
(%)
Country
Wage
gap
(%)
Country
Wage
gap
(%)
Australia
15
Greece
12
Russia
37
Belgium
9
Hungary
12
South
Korea
40
Canada
22
Ireland
20
Spain
17
Czech
Republic
19
Japan
32
Sweden
15
Denmark
14
Mexico
16
Switzerland
22
Finland
20
New
Zealand
6
UK
20
France
12
Poland
11
USA
21
Germany
24
Portugal
19
OECD
average
18
Note: Numbers indicate the percentage difference between the
average wage of men and women by country, expressed in terms
of men’s wages.
Source: Data derived from OECD, Gender Wage Gap. Paris:
OECD, 2018; and Nina Adam, “German economy leaves
women behind,” The Wall Street Journal, February 26, 2018,
p. A9.
To remedy the gender gap in the United Kingdom, all large
organizations were required in 2018 to report what they pay men
and women in a public “name and shame” process.30 Australia
268
and Germany have also required transparency in gender pay.
After all Icelandic women walked off the job to protest the gender
wage gap in 2016, Iceland went a step farther. Their government
promised to close the pay gap by 2022 and requires external
audits to prove that companies are paying women and men
equally.
The gender pay gap can be viewed as a hurdle or an
opportunity. For example, Japan has one of the largest gender
gaps among developed, industrialized countries. A higher
percentage, 68 percent, of Japanese women are now working,
and fewer leave the workforce after having children. However,
there are few role models of women at the top – there are no
women leaders of companies in the Nikkei Index and only 10
percent of lawmakers are women. After studying this situation,
Japanese automaker Nissan set a target of 10 percent women
managers and plans to benefit by attracting the very best women
in Japan.
In recent years China has been generally recognized as
being more open to women than other East Asian countries.
Women make up 46 percent of China’s labor force, a higher
proportion than in most Western countries. In large part, this can
be traced back to Mao Zedong’s efforts to get more women into
the workforce with his famous dictum, “Women hold up half the
sky.” If women expect to be taken seriously, as one Chinese
female investment banker in Beijing puts it, “We do not come
across as deferential.”31 Young Chinese women have been
moving away from the countryside in droves and piling into the
electronics factories in the booming coastal belt, perhaps leading
dreary lives but earning more money than their parents ever
269
dreamed of. Others have been pouring into universities, at home
and abroad, and graduating in almost the same numbers as men.
Once they have navigated China’s highly competitive education
system, they want to get on a career ladder and start climbing.
Here are just two examples.
Pully Chau spent eight years working for the Chinese office of
a large international advertising agency and never got a pay rise;
there was always some excuse. “It was stupid of me not to ask,”
she says. “If I had been a Caucasian man, I would have done
better.”32 She stayed around because she liked the idea of
working for a company that was well known in China and hoped to
learn something. Eventually she got fed up and took a job with
another Western agency for which she is now chairman and CEO
for Greater China. Highly confident and with boundless energy,
today she could pick and choose from any number of jobs. There
are lots of opportunities for women in China, she says – but, in
business, life is still easier for men.
A second example is Iris Kang, who heads the business unit
for emerging markets at Pfizer. Kang trained to be a doctor in a
state-owned hospital, but soon changed careers by moving to the
global pharmaceutical industry. She says there is less sex
discrimination in multinationals than in Chinese companies, and
the number of women in senior posts in her firm is rising rapidly.
Hers is another tale of relentless self-improvement. Soon after
joining the private sector, Kang took an executive MBA at one of
China’s leading business schools, CEIBS in Shanghai. Last year
she gained a Master’s degree in pharmaceutical medicine, all the
while heading a team of 120 people in her job with Pfizer.
270
Management Application 4.5 The Gender Wage Gap
1. Statistics suggest that women in China have greater
opportunities on the management ladder than their
counterparts in Japan, Korea, and other Asian
countries. What might account for this difference?
2. When global managers are assigned abroad, what
is (or should be) their philosophy on compensation
policies? Should they abide by prevailing local wage
patterns (e.g., paying women lower salaries than men
doing similar work), or should they apply the equalpay-for-equal-work policies that may prevail in their
home countries? Why?
Beyond pay, there are also issues with a lack of opportunities
in the workplace for women. Long-standing gender discrimination
is endemic around the world, particularly in developing countries.
Women frequently lack opportunities for education and job
training, which precludes them from even applying for jobs in the
first place. Once hired, they are often treated differently. In recent
years, some governments and corporations have worked hard to
resolve this inequity. In support of these efforts, a number of nongovernmental organizations (NGOs), such as the Global Fund for
Women, have supplemented these efforts with local training,
advocacy, and development grants.
In addition to gender differences, many countries also have
differential pay for ethnic groups. A recent study by the Equality
271
and Human Rights Commission in the United Kingdom found little
progress in reducing pay gaps among ethnic groups. Non-white
British citizens also had lower employment rates. Just to get an
interview, applicants with equivalent qualifications but with African
or Asian surnames had to submit twice as many resumes.
Elsewhere, we can find ethnic groups working in circumscribed
job categories. For instance, the majority of the Qatar population,
87 percent, consists of foreign nationals who work in specific
occupations. For example, women from Ethiopia, Uganda,
Tanzania, and the Philippines work as domestics. Men from
Nepal, Bangladesh, the Philippines, and Africa tend to be workers.
People from other countries in the Arabian peninsula are more
likely to work in education or white-collar jobs.
Analyzing the role and situation of gender and ethnic groups
in the workplace is one of the first ways in which global managers
can understand workforce issues in a foreign country, and the first
step towards figuring out how to best utilize its HR in an effective
and equitable fashion.
272
Manager’s Notebook Managing Across Cultures
So, what have we learned here that can help managers
succeed? If there is one principal lesson, it is the
importance of understanding environments and processes
prior to initiating actions (see Exhibit 4.12). This requires
that individuals work hard to understand both themselves
and others to the fullest extent possible.
Exhibit 4.12 Strategies for managing across cultures
1 Learn about managerial role expectations and
cognitions
We have all had the experience of dealing with someone
and coming away wondering what planet they are from.
We have also seen a number of metaphorically titled books
such as Men Are from Mars, Women Are from Venus and
EuroManagers and Martians.33 These experiences and
books are based on a simple belief that different groups
behave differently in systematic ways. The French are
273
different to the British, while the Japanese are different to
the Chinese. The degree of truth in these stereotypes is
open to question. Still, such perceptions encourage – or
should encourage – us to look seriously at the people we
are dealing with, including in the realm of global
management and international business.
Take a serious look at the work environments in which
various colleagues, partners, competitors, etc., operate.
We saw, for example, how managers in one country qualify
for company cars, while similar managers elsewhere do
not. Why is this? Moreover, understand how cultural and
organizational differences can help shape managerial roles
and responsibilities, as we saw above with respect to
supervisory behaviors. And understand how these on-theground
realities
influence
managerial
thinking.
Of
importance here is the concept of cognitive schema, or
how people try to make sense of the events around them.
2 Explore situational contingencies
Taken together, this and the two previous chapters offer a
model that characterizes the environment in which global
managers work, whether they have a desk job or a plane
ticket. The model offers a framework for assessing the
challenges and opportunities they face in their particular
jobs. Sometimes this model may be helpful in preparing for
a particular overseas assignment; sometimes it may be
more elusive. In either case, it points to several issues that
should be addressed prior to action. A look at the example
of Lincoln Electric in Germany and Mexico illustrates this
274
point,
where
cultures,
organizational
norms,
and
managerial imperatives came together to create two very
different work environments for managers from the same
company.
Likewise, a wide array of situational contingencies can
affect both managerial roles and behaviors. Location is a
key example, again with reference to Lincoln Electric. So
are personalities, job technologies, goals, seniority, gender,
and so forth. The existence of these situational variables
perhaps
provides
the
strongest
reason
to
avoid
stereotypes. Spending years studying Chinese language
and culture does not guarantee that we will know the
different operating procedures or corporate cultures of
Alibaba, Baidu, Huawei, or Xiaomi, to name just a few.
More homework is required.
3 Develop culture-based motivational strategies
Finally, when managing local employees, another set of
guidelines emerges suggesting that managers must come
to understand local work values and motivational bases of
performance. Incentives or rewards values by one group
(e.g., merit-based compensation) may be seen as unfair to
another. Assuming that work is a central life interest may
also be a mistake. And diverse sets of employees –
women and minorities, for example – sometimes want to
see different options in the reward package, whether it is
more
time
off
or
greater
access
to
promotional
opportunities. However, in the final analysis, research
275
shows that most groups don’t want to be treated differently;
they want to be treated fairly.
276
Chapter Review
277
Summary
A global management workplace model was suggested at
the beginning of this chapter to illustrate both the
complexity of managerial work but also how this work is
influenced by very different, and sometimes conflicting,
forces. This includes cultural, organizational, and
managerial environments, plus situational contingencies
that make each work environment somewhat unique.
We often assume – incorrectly – that all managers are
largely the same on the inside when they manage. Cultural
patterns and belief structures frequently influence
managerial perceptions (what managers see), managerial
cognitions (what they think about it), and managerial
actions (what they do about it). If this is correct, then it
necessarily follows that prepared managers understand
how such differences can affect their relationships with
partners and competitors.
If people across borders can vary in their thoughts and
habits, so too can they vary in their expectations
concerning appropriate managerial roles. André Laurent
wrote about understanding the normative managerial role
(i.e., what is expected of managers) and discovered
significant differences across cultures. Charles HampdenTurner and Fons Trompenaars also found significant
differences with respect to the qualities of the ideal
manager across cultures.
278
Being conscious of cognitive differences across cultures is
important for global managers for several reasons.
Cognitions (thought processes) and subsequent behaviors
(e.g., working hard) are heavily influenced by our cognitive
schemas. These are simply mental repositories of
knowledge that store representations about what things
are, their characteristics, and what they might be related
to.34 They include people’s knowledge base, expectations,
experiences, and biases – that is, how people make sense
out of their world. They do not need to be correct or
accurate; they are based simply on what we believe to be
accurate.
Part of how managers behave in unfamiliar foreign settings
is determined by the particular situations they find
themselves in. These are referred to as situational
contingencies. These contingencies can be seen most
directly at the point of contact between people with different
backgrounds, goals, and responsibilities when they come
together to do business, and are largely represented by
differences in people, goals and tasks, roles and
responsibilities, and locations.
Many merit-based, or pay-for-performance, incentive
systems that are in use around the world (particularly in the
West) attempt to link financial compensation and
promotional opportunities directly to individual, group, or
even corporate performance. Managers employing such
systems view them as a statement of equity, if not equality.
In other words, the higher one’s performance, the greater
279
the rewards – a simple performance-reward contingency.
Other cultures believe that compensation should be based
on group membership or group effort, thereby emphasizing
equality. Everyone is deserving of more or less the same
rewards – this is called distributive justice.
Research shows that women often work harder and for
more hours, are terminated more frequently, and
experience more harassment on the job than men. Culture
can play a significant role in gender roles – and equitable
treatment – at work, regardless of where this takes place.
280
Key Concepts
cognitions
cognitive schemas
distributive justice
dual management hierarchy
free overtime
karoshi
managerial environment
managerial roles
psychological contract
situational contingencies
work values
281
Discussion Questions
1. Research and experience both show that cognitive schema
about the role of supervisors can differ across regions of the
world. What is the implication of these differences for motivating
employees in their home countries?
2. As a marketing representative about to meet a new potential
client in a country different to your own, how can you learn more
about the situational contingencies facing that manager?
3. Work motivation across borders can be influenced by very
different factors. If you were launching a new start-up, how would
you accommodate these differences in your incentive and rewards
strategies?
4. Some countries (e.g., Denmark, Sweden) adopt more of a work
–life balance than other countries (e.g., Korea, Japan). In an
increasingly competitive global business environment, how will
companies in these Scandinavian cultures compete over the long
term?
5. Individual differences both within and between cultures are
discussed throughout this book. Is there an ethical concern if
companies require their employees to either adopt the work
values of their leaders or leave the company?
282
6. Psychological contracts are based fundamentally on trust. For a
company entering a new foreign market, what steps can it take to
build such trust with its new local employees?
7. Employee motivation is often influenced by a combination of
extrinsic and intrinsic rewards. While companies and managers
have considerable control over extrinsic incentives, what if
anything can they do to help build intrinsic incentives? Are global
companies able to adjust intrinsic incentives between locations to
accommodate local values and work practices? If so, how?
8. Toyota’s chief competitive officer, Didier Leroy, makes three
times as much as his boss, company CEO Akio Toyoda ($9.4
million vs. $3.5 million for 2019). Leroy is from France and
previously worked for Renault. Toyota claims it offers pay that is
“competitive,” taking into consideration “the remuneration
standards of each country and region.”35 What is your opinion
about this pay differential and its effects on the company?
9. Relating to the Lincoln Electric example in the text, how did the
job and reward expectations – and perceptions of equity – differ
between the American company and its German employees?
What, if anything, could the American and German managers
have done to improve the motivational environment in their
German operation?
10. As a foreign manager overseeing a local factory, how might
you seek to convince local workers and managers to increase the
283
diversity of their workforce (e.g., more women, more minorities)?
What local conditions might be conducive to your success? What
local conditions might suggest imminent failure?
11. When global managers are assigned abroad, what should be
their philosophy on gender and compensation policies? Should
they abide by prevailing local wage patterns that may pay women
lower salaries than men doing similar work, or should they apply
an equal-pay-for-equal-work policies that may prevail in their
home countries but not locally? In other words, should global
managers strive to play by local rules as defined by local cultures
(i.e., particularism) or be agents of change as defined by their
home country beliefs and values (i.e., universalism)?
12. In your view, what are the three most important lessons from
this chapter for global managers? Explain.
284
Notes
1. Cited in Luciara Nardon, Richard M. Steers, and Carlos J.
Sanchez-Runde, “Developing multicultural competence,” The
European Business Review, May 9, 2013.
2. David Welch, David Kiley, and Moon Ihlwan, “My way or the
highway at Hyundai,” Business Week, March 6, 2008.
3. Richard Tanner Pascale and Anthony G. Athos, The Art of
Japanese Management. New York: Simon & Schuster, 1986.
4. Henry Mintzberg, Nature of Managerial Work. New York:
Harper & Row, 1973.
5. J. J. Van Muijen and P. L. Koopman, “The influence of
national culture on organizational culture: a comparative study
between 10 countries,” European Work and Organizational
Psychologist, 2008, pp. 367–80.
6. André Laurent, “The cultural diversity of Western conceptions
of management,” International Studies of Management and
Organization, 1983, 13(1/2), pp. 75–96.
7. L. Maznevski and H. W. Lane, “Shaping the global mindset:
designing educational experiences for effective global thinking
and action,” in N. Boyacigiller, R. M. Goodman, and M. Phillips
(eds.), Teaching and Cross-Cultural Management: Lessons
from Master Teachers. London: Routledge, 2004, pp. 171–84.
8. P. DiMaggio, “Culture and cognition,” Annual Review of
Sociology, 1997, 23, p. 269.
285
9. K. Leung, R. Bhagat, N. Buchan, M. Erez, and C. Gibson,
“Culture and international business: recent advances and their
implications for future research,”Journal of International
Business Studies, 2005, 36(4), p. 357.
10. Ann Swidler, “Culture in action: symbols and strategies,”
American Sociological Review, 1986, 51(2), pp. 273–86.
11. Nancy Adler with Allison Gundersen, International
Dimensions of Organizational Behavior. Cincinnati, OH:
Cengage, 2007.
12. Carlos Slim, The World’s Richest Man: Carlos Slim in His
Own Words, Tanni Haas (ed.). Chicago: Agate Imprint, 2014.
13. Quotefancy.com. Accessed March 1, 2019.
14. George England, “Personal value systems of American
managers,” Academy of Management Journal, 1967, 10, pp. 53
–68.
15. Su-Hyun Lee and Tiffany May, “Go home, South Korea tells
workers, as stress takes its toll,” The New York Times, July 28,
2018.
16. Poll watch, This Week, July 24, 2015, p. 15.
17. Kelsey Gee and Tim Higgins, “Tesla is a big draw to young
jobseekers despite demands,” The Wall Street Journal,
November 26, 2018, p. B4.
18. Quotefancy.com. Accessed March 1, 2019.
19. Carlos Sanchez-Runde and Richard M. Steers, “Culture,
context, and work motivation,” in Betina Szkudlarek, Joyce
286
Osland, Dan Caprar, and Laurence Romani (eds.), Handbook of
Contemporary Cross-Cultural Management, Thousand Oaks,
CA: Sage, in press.
20. Ibid.
21. Richard M. Steers and Carlos Sanchez-Runde, “Culture,
motivation, and work behavior,” in Martin J. Gannon and Karen
L. Newman (eds.), The Blackwell Handbook of Cross-Cultural
Management. Oxford: Blackwell, 2002, pp. 190–216.
22. Ibid.
23. Ibid.
24. Jena McGregor, “Companies reveal gigantic CEO-to-worker
pay rations,” The Washington Post, February 21, 2018, p. A1;
and Amders Melin, “Executive pay,” Bloomberg Business Week,
January 22, 2018.
25. Sang Nam, “Culture, control, and commitment in an
international joint venture,” International Journal of Human
Resource Management, 1995, 6(3), pp. 553–67.
26. Donald F. Hastings, “Lincoln Electric’s harsh lessons from
international expansion,” Harvard Business Review, 1999,
77(3), pp. 163–78 (p. 164).
27. Ricardo Hausmann, Till Alexander Leopold, Vesselina
Ratcheva, Klaus Schwab, Richard Samans, Laura D’Andrea
Tyson, and Saadia Zahidi, “Key findings,” in Michael Fisher
(ed.), The Global Gender Gap Report 2017. Switzerland: World
Economic Forum, 2017, p. 25.
287
28. OECD, Gender Wage Gap. Paris: OECD, 2018; Nina Adam,
“German economy leaves women behind,” The Wall Street
Journal, February 26, 2018, p. A9.
29. Ibid.
30. O. Khan, “Employers admit there’s a gender pay gap. What
about race?” The Guardian, March 4, 2018, available at
www.theguardian.com/commentisfree/2018/mar/04/employersgender-pay-gap-race-ethnic-minority. Accessed March 1, 2019.
31. “Women in China: the sky’s the limit,” The Economist,
November 28, 2011, pp. 14–16.
32. Ibid.
33. John Gray, Men Are from Mars, Women Are from Venus.
New York: HarperCollins, 1992; Richard Hill, EuroManagers and
Martians. Brussels: Europublic, 1998.
34. DiMaggio, “Culture and cognition,” p. 269.
35. Sean McLain, “Frenchman gets top Toyota pay,” The Wall
Street Journal, June 26, 2018, p. B2.
288
Part 3
◈
Developing Global
Management Skills
289
5
Cross-cultural Communication
◈
Chapter Outline
Seeking Common Understanding
Application 5.1 Wall of Silence in Ecuador
AIA Model of Interpersonal Communication
Culture, Information Processing, and Communication
Application 5.2 Where Are We Meeting?
Application 5.3 Working with Non-native Speakers
Application 5.4 Cultural Logic in Brazil and Canada
Culture, Communication, and Social Behavior
Application 5.5 Making Apologies in Japan and the UK
Providing Feedback across Cultures
MANAGER’S NOTEBOOK: Communicating across
Cultures
Chapter Review
290
Learning Objectives
Examine the role of communication in managerial
effectiveness.
Recognize various cultural screens and barriers in
interpersonal communication.
Explore how culture influences information processing
and action.
Understand the relationship between culture,
communication, and social behavior.
Learn how to give feedback to colleagues and coworkers.
Learn how to communication more effectively across
cultures.
Silence is a form of speech, so don’t interrupt it.1
Richard Lewis
Communications consultant
Sirikit Chainarong, a recent graduate from Thailand’s prestigious
Chulalongkorn University, was fortunate to secure an internship in
London working with a joint British-American engineering firm.
Internships
can
provide
considerable
firsthand
business
experience, as well as in-depth English language training. But at
times they can also create considerable confusion. At a meeting
with her strategy team, Sirikit was surprised when a British team
291
member who had just returned from Oman said he would like to
table a motion for the company to explore a possible joint venture
there. His American colleague listened intently and then replied
that he completely disagreed with his colleague’s proposal and
suggested the motion be tabled. Sirikit thought to herself, what is
going on here? Is my English really that bad? After the meeting, a
friend told her that a proposal to “table a motion” means the exact
opposite in the two English-speaking countries. In England,
tabling a motion means to put an issue or proposal on the table for
discussion, whereas in the United States it means to take a
proposal off the table for possible later discussion. And this
phrase is not unique. British-American dictionaries that translate
thousands of words and terms between the two “languages” are
common.2 Irish playwright George Bernard Shaw is quoted as
saying, “The United States and Great Britain are two countries
separated by a common language.”3 In addition, many regions
within the United Kingdom often speak differently and use different
words to communicate – as do Canadians, Australians, New
Zealanders, and so forth. The irony here is that if native English
speakers use different words, accents, and linguistic patterns
when conversing with one another, imagine what happens when
people from other countries and language groups such as Sirikit
get involved?
On the other side of the world, namasté is a common greeting
used on the Indian subcontinent. It is a term that Thais such as
Sirikit would be very familiar with. It literally means “I bow to you,”
and it is used as an expression of deep respect in India and Nepal
by Hindus, Jains, and Buddhists. In these cultures, the word (from
the ancient Sanskrit) is spoken at the beginning of a conversation,
292
accompanied by a slight bow made with the hands pressed
together, palms touching and fingers pointed upwards, in front of
the chest. This silent gesture can also be performed wordlessly
and carry the same meaning, as is often done at the close of a
conversation. As such, namasté is a form of both verbal and
nonverbal communication. When used appropriately, it signals to
the parties in a conversation that the people involved likely
understand something about prevailing social norms and values.
They are one of “us,” and a bond is easily formed. It may be only
one word, but it carries significant symbolism.
Table a motion and namasté – two very different terms with
important meanings for people working around the world, but this
is
only
the
beginning.
More
terms,
more
syntax,
more
interpretations, and more cautions are to come as we explore
cross-cultural communication. But first, let’s pause for a moment
to see where we have been and where we are going in our global
quest. With this chapter, we enter Part 3 of this book that focuses
squarely on developing global management skills. This section
builds upon earlier chapters that focused on culture, organization,
and management. In this transition, we move from an emphasis
on understanding to an emphasis on doing, with particular focus
on interpersonal behavior.
In the present chapter on cross-cultural communication, we
consider the following topics:
why cross-cultural communication is important
how cultural screens influence interpersonal
communication
how culture shapes information processing
293
how culture, combined with communication practices,
influences interpersonal behavior
how to provide colleagues and co-workers with culturally
sensitive feedback
how managers can improve their cross-cultural
communication skills.
294
Seeking Common Understanding
Language, communication, and shared meaning are the essence
of good management, and are crucial for organizational
effectiveness. But it is surprising how difficult it can be to
communicate with others. When managers are asked to identify
their most serious challenge in the field, the response is almost
universal: communicating effectively across cultures. Simple and
often unintended words, behaviors, signs, and symbols can lead
to misunderstandings, embarrassment, conflict, and even lost
business opportunities. A recent study found that 50 percent of
the
companies
surveyed
identified
communication
misunderstandings as the principal reason they had lost major
cross-border opportunities, such as sales, contracts, mergers, or
foreign investments.4
A recent Cadillac advertisement illustrates this challenge,
especially in the area of global marketing. In an effort to portray its
car as elite, Cadillac’s advertisement featured a wealthy, confident
white male, and the message seemed to be that only Americans
deserve a car like this because, unlike other countries, Americans
are visionaries, hard workers, and only take two weeks annual
vacation. The ad was immediately criticized as being pretentious,
insensitive, and ethnocentric. Meanwhile, Ford launched a counter
advertisement, featuring a young middle-class African American
woman extolling hard work in order to make the world a better
place, not move up the economic food chain. Although both ads
ended with a cheeky n’est pas?, their messages and receptions
could not have been more different.5 It’s hard to see how Cadillac
295
thought its ethnocentric ad would help their international
marketing effort.
Whatever their intent, global managers sometimes come
across to people in other cultures as impatient, condescending, or
just plain rude. From a managerial standpoint, such behavior
serves only to erect barriers to organizational success. To
communicate
effectively
both
within
and
across
cultures,
managers need to understand the fundamental influences on both
effective and ineffective communication, as well as strategies for
reaching a higher level of mutual understanding between people.
Such is the purpose of this chapter.
296
Mindful Communication
Communication is all about conveying meaning to others. It is the
principal way we reach out to others to exchange ideas and
commodities, develop and dissolve relationships, and conduct
business. Even within our own culture or language group,
communication can often be problematic – particularly across age
groups, geographic regions, and gender. These problems pale
into insignificance, however, in comparison to the challenges of
communicating across cultures where we have to decode and
adapt to the expectations of people with very different
organizational and cultural backgrounds. Even interpreters can
simply add confusion to this process if they are not equally skilled
at translating culture as well as words.
A major challenge is when we only hear what we want to
hear. Our frames of reference and personal experiences – and
even our worldviews – can all work to filter how we receive (and,
of course, transmit) and interpret messages. As we noted earlier,
a West African proverb says, “The stranger sees only what he
knows.” Because of perceptual screens, our hearing also attends
to and remembers what we know best. Financial analysts tend to
pick up threads of conversation involving money, while sales
managers pick up on market opportunities. And then we interpret
what we managed to hear through our own cultural lens. It is no
wonder that confusion and mistakes result. Because of these
difficulties, managers have increasingly been advised to develop
their skills in mindful communication which, simply defined,
means developing one’s situational awareness and being present
297
in the moment.6 In other words, when engaging in a conversation
with others, show up! If there is one key to improving interpersonal
relations across cultures, this is probably it.
Recognizing the importance and difficulty of cross-cultural
communication, academics, consultants, and fellow managers
have long sought to provide advice to those setting off for global
assignments and foreign locations. Much of this advice focuses on
learning dos and don’ts when dealing with people from other
cultures. Managers are told that communication is an interactive
process between senders and receivers in which senders encode
their messages into a medium and then transmit them through
often noise-infested airways to receivers, who, in turn, decode the
messages, interpret them, and respond appropriately. Throughout
this process, cultural differences and potential cross-cultural
misunderstandings are typically categorized as noise. The more a
manager can reduce this noise, the greater the message’s clarity.
Although this advice is useful as far as it goes, it neglects two
major impediments to effective communication: attention and
interpretation. In other words, messages are effective only to the
extent that recipients are both paying attention to them and
capable of processing the information in ways that facilitate
common meaning. Lumping everything into a catch-all noise
category makes it easier to overlook these two critical influences
on effective message construction, transmission, understanding,
and response in cross-cultural communication.
298
Summer Internship in Ecuador: An Example
Take the case of Shipa Patel. Indian-born and Spanish-educated,
Shipa spent her summer MBA internship in Ecuador, working for a
nonprofit ecological foundation.7 Upon arrival, she quickly realized
how little she knew about the organization, its workings, its
people, or its context. She felt like a complete stranger. So, she
asked the managing director of the foundation to introduce her to
its members, about forty Ecuadorians. She thought it would be a
good idea to convene a general meeting so that she could explain
her work plans and ask her new colleagues about the principal
challenges of their jobs. The general manager agreed and most
members attended the meeting where, to her surprise, she faced
a wall of silence. No one seemed receptive to her or her ideas;
she began to wonder what had gone wrong and whether they
really wanted her there or liked her.
Afterwards, she ran into one of her colleagues in the street
and they began talking. Soon, he began to open up about his
opinions.
Shipa
started
having
more
conversations
with
colleagues, either one at a time or in groups of two or three. She
was surprised by how much more forthcoming and vocal people
were individually or in very small groups in a non-formal setting,
compared to their silence in the meeting. In retrospect, Shipa
realized that she had put her colleagues in a very uncomfortable
position in the large meeting by asking them to voice their
concerns in front of others. She also suspected that she had
intimidated them by taking notes. To her this was just an efficient
way of recording impressions and ideas. The Ecuadorians,
299
however, felt threatened by this and were extremely reserved in
the little they said, probably because they neither knew nor trusted
Shipa at this point.
What would she do with those notes, and what repercussions
could this have? Shipa changed her tactics and found that oneon-one
conversations
outside
the
office
were
extremely
informative, allowing her to develop a basic understanding of the
organization and its problems. Commenting on her experience,
she concluded:
Personal exchanges, in pairs or small groups, often take a lot
of time and patience on the part of the outsider, but it is an
essential part of integrating in a close-knit community. It is a
normal part of the ritual of relationship-building in some
cultures, and an important precursor to effective
communication that will then eventually happen.
300
Management Application 5.1 Wall of Silence in Ecuador
1. Everyone at the Ecuadorian nonprofit knew that
Shipa Patel was a foreigner and new to the country.
Why didn’t they offer her more help in the meeting
when she was trying to get to know them and asking
about the challenges in their jobs?
2. How were Shipa and the Ecuadorians making
different interpretations about their interactions? Is it
possible that the local Ecuadorians were perhaps wary
about publicly identifying problems, which could be
taken as public criticism of someone else in the room?
3. If you were in Shipa’s place with little knowledge of
Ecuador, what could you have done differently upon
your arrival?
4. What are the lessons here for global managers
traveling to a new location? Explain.
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AIA Model of Interpersonal
Communication
We can also analyze Shipa’s experience using the attention–
interpretation–action model, or AIA model, to illustrate the
fundamental processes used in communication (see Exhibit 5.1).8
This
model
highlights
three
key
ingredients
in
effective
interpersonal communication.
1. Attention. First, when messages are sent, recipients must
notice them – that is, they must select out the intended
messages from a barrage of other often simultaneous
messages for particular attention. The basic question here is:
“What do I see or hear?” Hence the challenge for the global
manager is how first to capture the attention of the other
party.
2. Interpretation. Second, once a message is selected out
for attention, the recipients must interpret or decode it. Here
the questions are: “What does this message mean to me?
How do I make sense out of it?” Again, cultural differences
can play a crucial role during this phase.
3. Action. Finally, the recipient must decide whether or not to
take action (verbally or nonverbally) and, if so, how to
construct and transmit a response. The question in this stage
is: “What is an appropriate response?”
302
Exhibit 5.1 AIA model of interpersonal communication
Source: Adapted from Luciara Nardon, Richard M. Steers,
and Carlos Sanchez-Runde, “Seeking common ground:
strategies for enhancing multicultural communication,”
Organizational Dynamics, 2011, 40, pp. 85–95.
303
Communication Interference
Throughout this process, numerous factors in the communication
environment can serve to reinforce, attract, or distract attention
towards or away from some messages at the expense of others.
These factors include other competing messages, the particular
languages in use, visual and audible noise, the nature of
interpersonal relationships, the power relationship between
speakers, the degree of shared knowledge among speakers,
attitudes and perceptions, and pressing needs experienced by
both parties. In addition to attracting or deflecting attention, these
factors can often serve to influence message interpretation and
analysis,
as
well
as
message
construction
and
delivery
mechanisms.
Let’s apply this model to Shilpa’s case discussed above. Of
the plethora of new stimuli she was bombarded with in Ecuador,
she paid special attention to the Ecuadorian’s silent and reserved
meeting behavior. She wondered what it meant and came up with
one interpretation (“They may not like me or want me here.”).
Fortunately, she did not act on that interpretation but began to pay
attention to the different and more helpful behavior she observed
in small group conversations with colleagues. She adapted by
increasing those conversations, which allowed her to be effective
in her work. Now put yourself in the shoes of the Ecuadorians.
What were they attending to in the large meeting, and what
interpretations could they have made? Based on what you know
about Ecuadorian culture, how do the interpretations you identified
lead to their actions?
304
Cultural Screens on Interpersonal Communication
The AIA approach gives weight not just to what people are doing
or saying, but also to what they are thinking. Language and
culture not only provide a guide to acceptable and unacceptable
behavior; they also focus attention on different parts of the
exchange and provide parameters for interpreting information. To
better understand this, we focus here on the two interrelated
cultural screens, or lenses, that can affect both interpersonal
interactions in general and multicultural communications in
particular:9
Culturally mediated cognitions in communication. The
first screen involves cultural influences on people’s
information processing (or cognitions) during
communication episodes. This includes how people and
messages are often evaluated and processed in the minds
of senders and receivers alike.
Culturally mandated communication behaviors. The
second screen involves cultural influences on required
social behaviors, including how we construct our messages
in ways that may be culturally consistent for us but, we
hope, not problematic for others.
These two screens often emerge as a result of cultural
differences between senders and receivers, and they can have
important implications for how various parties to a conversation
receive, interpret, and respond to messages (Exhibit 5.2). Cultural
screens can perhaps be best understood as part of the
305
communication
environment;
they
represent
potential
impediments or barriers in the basic AIA model discussed above.
In other words, culture routinely influences both how we think and
how we behave, and nowhere is this influence more evident than
with respect to communication processes. As a result, we suggest
that
managers
committed
to
improving
multicultural
communication need to dig deeper and work harder to understand
the
underlying
cultural
forces
at
play
in
interpersonal
communication.
Exhibit 5.2 Cultural screens on interpersonal communication
Source: Adapted from Luciara Nardon, Richard M. Steers,
and Carlos Sanchez-Runde, “Seeking common ground:
strategies for enhancing multicultural communication,”
Organizational Dynamics, 2011, 40, pp. 85–95.
306
Culture, Information Processing, and
Communication
As noted earlier, when people receive messages from others, they
routinely screen and interpret what they hear and see to
determine how to respond. Sometimes they will categorize
messages based on their sources (“Is the source believable?”).
Other times they will prioritize messages based on the degree to
which they think the messages are important (“Do I need to
respond immediately or can this wait?”). This information
processing requires both senders and receivers to pay attention to
intended messages; it requires cognition (see Chapter 4). At
least four commonly used culturally mediated cognitions can
be identified: language and linguistic structures, selective
perception, cognitive evaluation, and cultural logic (see Exhibit
5.3).
Exhibit 5.3 Culturally mediated cognitions in communication
307
Language and Linguistic Structures
Think about it: there are nearly 7,000 languages spoken
throughout the world.10 In fact, English is only the third most
common language after Mandarin and Spanish (see Exhibit 5.4).
What do all these languages mean for our understanding of others
in global commerce and for managing a multicultural workforce? If
communication is at the heart of good management, what are the
challenges and caveats of managing global communication?
Exhibit 5.4 Most commonly spoken languages of the world
Language
Native speakers (first
language)
World
population
(%)
1. Mandarin
955 million
14.1
2. Spanish
405 million
5.8
3. English
360 million
5.5
4. Hindi
310 million
4.5
5. Arabic
295 million
4.2
6. Portuguese
215 million
3.2
7. Bengali
205 million
3.1
8. Russian
155 million
2.4
9. Japanese
125 million
1.9
10. Punjabi
100 million
1.4
308
Source: Adapted from Stephen Anderson, “How many
languages are there in the world?” Linguistic Society of
America, 2018.
Consider the challenges posed by language differences, or,
more specifically, language incompetence. When two American
tourists were traveling on a bus in Stuttgart and one of them
sneezed, a German passenger turned around and said,
“Gesundheit.” One visitor looked at the other and noted, “How
nice that they speak English here.”11 Or, consider the name
chosen for a new multiracial primary school built on the outskirts
of Cape Town, South Africa. The owners wanted a school name
that portrayed it as a classical school based on the ancient Greek
concept of brotherly love. Knowing little Greek, however, they
overlooked the word agape (brotherly love) and instead chose
eros (carnal love). So, the next time you are in Cape Town keep
an eye out for Eros Primary School.12
Whether it is correctly or poorly used, humorous or serious,
language is central to human communication. It plays an
important role in initiating conversations and conducting most
aspects of human affairs. It facilitates socialization, organization,
and management. It also allows us to express our feelings and
facilitate problem-solving by thinking, both silently and vocally.
Moreover, it is due to language that we are able to retain our
histories, passing knowledge from one generation to the next. In
this regard, language and linguistic structures (i.e., the manner in
which words, grammar, syntax, and the meaning of words are
organized and used) are closely linked to cultures, because, while
culture provides the meanings and meaning-making mechanisms
309
underlying existence, language provides the symbols to facilitate
the expression of such meanings.
Language is always a potential obstruction to effective crosscultural communication. In this regard, there are two issues that
are worthy of note. First, which language should be used in a
conversation? Some argue that English is increasingly becoming
the lingua franca of global business; as such, everyone should
speak English.13 In fact, at least 1.5 billion people in the world
currently speak English,14 but not everyone agrees that all global
business should be done in English. Indeed, both Mandarin
Chinese and Spanish have more native speakers around the
world than English. Why shouldn’t everyone speak Chinese or
Spanish? Others have suggested that the language to be spoken
should be determined by who has the money – consistent with the
oft-cited phrase, “Serve the customer.” If the French are buying, it
is logical for both parties to speak French. This debate may never
be resolved, since, among other things, mass conversions to a
foreign language can threaten the cultural integrity of a country or
region. Nevertheless, more and more companies are starting to
require all of their employees to work in English, regardless of
their native tongue or geographic location.15 They are willing to
suffer the short-term pressures and disadvantages this can create
for some employees, who may resent feeling like expatriates
within their own country in order to be more successful globally.16
Nissan and Siemens were among the first to require English for
their workers, many years ago.
Languages and their associated linguistic structures are
intricately intertwined with the cognitive processes that affect
managerial and employee behaviors. Italian film director Federico
310
Fellini observed, “A different language is not just a dictionary of
words, sounds, and syntax. It is a different way of interpreting
reality.” Languages can also vary considerably in their precision.
Take English and Chinese, for example. Like other European
languages, English consists of over a million words, each of which
has a relatively constant and precise (though certainly not
universal) meaning. By contrast, Chinese is an ideographic
language that consists of only about a quarter as many words –
or, more accurately, characters. As a result, each character must
“work harder” – that is, Chinese characters create meaning
through the images and concepts they stimulate, not through
dictionary-type definitions. Everything that is written is open to
multiple interpretations. Often one Chinese symbol will contain
eight or ten different meanings. As a result, using nonverbal
signals to support your verbal messages takes on added
significance in creating shared meanings, compared to the West.
Think for a moment how even clear translation of words can
still carry different meanings and hence lead to confusion. When a
group of Americans attend a meeting scheduled on the “fourth”
floor of a New York office complex, they in fact go to the fourth
level in the building, since Americans typically use the terms
“ground” and “first” floors interchangeably. Not so the British and
most Europeans, who distinguish between the ground and first
floors and would thus likely go to the fifth level of the building in
London, Paris, or Berlin. When foreign travelers attend a meeting
on the “fourth” floor of a Seoul office building, even the more
experienced travelers can become puzzled. While the number
four (pronounced sa in Korean, using traditional Chinese
characters) is not in itself unlucky, as many believe, its oral
311
pronunciation sounds very similar to the word for “death” –
something that is seldom, if ever, discussed in local society. As a
result, many South Korean buildings either use the English letter
“F” (“fourth”) for this floor or they simply don’t have one. And note
that many older high-rise buildings in the United States and
elsewhere don’t have a thirteenth floor, because that number
tends to be perceived as unlucky.
Management Application 5.2 Where Are We Meeting?
1. What does something as simple as the location of
the first or fourth floor in a building tell us about crosscultural communication processes?
2. Can you identify a similar example from your own
culture, in which a particular word or phrase carries an
entirely different meaning elsewhere?
3. What would you do as a manager to avoid similar
misunderstandings in interpersonal communication?
Languages also provide subtle yet powerful cues about what
to account for in our dealings with other people (respect, social
distance, and so forth). For example, languages vary in the
number and type of forms of address available to people when
meeting others. In English, for example, there is typically only one
word for “you.” Native speakers use this same word when
speaking to almost any person, regardless of age, gender,
seniority, or position. On the other hand, Romance languages,
such as Spanish and French, distinguish between a formal and an
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informal mode of address (usted/tú in Spanish, vous/tu in French).
The formal version is used with elders, teachers, strangers, and
acquaintances; the informal version is used with friends, family,
peers, and children. If Spanish speakers decide your relationship
has progressed to the informal level, they will switch from usted to
tú, signaling that you have to do likewise. This, of course, requires
paying very close attention to which pronoun and its respective
verb tense others are using with you. In Japanese, there are many
equivalent words for “you,” depending on someone’s age,
seniority, gender, family affiliation, and position. The implication of
these linguistic differences is that, depending on the language
being spoken, managers must attend to different cues and focus
on different aspects of their context and message.
Those who are not conscious of these differences risk
missing key information about situations facing them, leading to
further communication errors. Needless to say, knowledge of the
other party’s language helps to develop understanding that goes
beyond the content of the messages exchanged. Indeed, learning
the language of the host country is one of the most common
recommendations offered by intercultural experts and experienced
global managers for understanding a different culture.
Finally, the choice of language in cross-cultural conversations
can serve as a major barrier to successful job completion, when,
for example, everyone in a team or organization is required to
speak in the dominant language.
With this in mind, what happens when an Anglo-American
supervisor
meets
with
their
Eastern
European
product
development team, consisting of members from Romania,
Slovakia, and Slovenia? (We use English as an example here, but
313
any other language would yield similar results.) As illustrated in
Exhibit 5.5, our native English-speaking supervisor will likely have
an easier time in the exchange than her Eastern European
counterparts. This, in turn, might lead the supervisor to conclude
that the non-native speakers are less educated, less bright, less
committed, more obstinate, and so forth. At the same time, the
European non-English speakers may face numerous frustrations
in trying to make themselves heard and understood, with
potentially serious, if unintended, consequences. Their lack of a
broad vocabulary can often lead to the use of simple sentences to
discuss complex issues, with predictable results. Moreover, when
two non-native speakers talk together in a third language (e.g.,
English), the possibilities for confusion multiply even further if they
are not fully fluent.
Exhibit 5.5 Native and non-native speakers
Native speaker
Non-native speaker
Thinks in native local
language; no need for
translations or interpretations
Thinks in different language;
must process thoughts into
local words
Access to extensive local
vocabulary and forms of
expressions
Limited access to local
vocabulary to either
understand or explain
Understands – and often uses
– language subtleties
Often lacks sensitivity to
language subtleties
314
Native speaker
Non-native speaker
Since messages are usually
clear, responses and action
implications are also typically
clear
Since messages are not
always clearly understood,
responses and action
implications can often be
unclear
Rapid speed of conversation
possible, if desired
Rapid speed of conversation
often not possible
In this regard, communication expert Tsedal Neeley has
suggested several ways to improve communication with nonnative speakers, as follows:17
Fluent speakers: Slow down the pace of conversation and
use familiar language. Refrain from dominating the
conversation. Ask if the other person understands what you
are saying. Listen actively.
Less fluent speakers: Resist withdrawal or other
avoidance behaviors. Refrain from reverting to your native
language. Ask if the other speaker understands what you
are saying. If you don’t understand others, ask them to
repeat themselves or explain.
Team leaders: Monitor participants and strive to balance
their speaking and listening. Actively draw contributions
from all team members. Solicit participation from less fluent
speakers. Be prepared to define and interpret content.
315
Management Application 5.3 Working with Non-native
Speakers
1. Based on what you have learned, how can you train
both yourself and your colleagues to slow down and
listen more attentively when you meet with someone
who is not fully fluent in your language? Explain.
2. Your company team has been asked to work with a
second company team from Costa Rica to develop a
new marketing plan for your Latin American markets.
Your team does not speak Spanish, and the English
fluency of the Costa Rican team varies from poor to
moderate.
a. How will you structure your conversations when
the two teams meet so everyone can maximize
their level of understanding?
b. What actions will you take formally?
c. What actions will you take informally?
d. What should you be monitoring to ensure the
success of this team meeting?
e. What will success look like for each team?
3. Let’s say you speak English in addition to your own
native language. Would you invest your time and effort
in learning a third or perhaps fourth additional
language? Why, or why not?
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Selective Perception
Since people cannot simultaneously focus on all the stimuli and
events surrounding them at a given time, a process called
selective perception filters the information our senses receive,
which determines what we focus on and also what we ignore. As
such, the information that becomes important is in the eye of the
beholder – the information they are expecting or looking for –
while other potentially useful information never makes it onto their
radar screen. For example, expatriates who have attained a
moderate level of fluency in the local language sometimes notice
a new word they have never heard before. After mastering the
word, they may be embarrassed to realize just how frequently it is
used. Selective perception varies both individually and culturally.
Cultural differences play a key role in this process, especially
with respect to nonverbal communication. While nonverbal
communication such as silence is commonly used throughout
much of Asia as a way to convey information with subtlety (e.g.,
rejecting a request without anyone losing face), many Westerners
simply fail to notice it. They are not looking for it. In fact, many
managers in the West much prefer to hear and speak plainly and
publicly, guided by the maxim, “Say what you mean and mean
what you say.” As a result, Asians often believe they have
communicated a message (nonverbally) when in reality it was not
received, while Westerners believe no communication was
transmitted since they did not hear any words. Both sides can
experience
frustration.
To
overcome
317
such
problems,
communications expert Richard Lewis reminds us, as noted
above, “Silence is a form of speech, so don’t interrupt it.”18
Selective perception and nonverbal communication can be
seen in many different ways. What may be comfortable to one
person may be offensive to another. Consider the plight of a
visiting British professor who was reading to his poetry class at
the prestigious Ain Shams University in Cairo. Reflecting on what
he was reading, the professor became so relaxed that he
inadvertently leaned back in his chair and crossed his legs,
thereby revealing the sole of one of his shoes to his students. In
much of the Muslim world, this is an insult. The following morning
the Cairo newspapers carried banner headlines about the student
demonstrations that resulted. They denounced what they saw as
British arrogance and demanded that the professor be sent home
immediately.
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Cognitive Evaluation
When people see or hear something, they tend to categorize the
information so they can make judgments about its authenticity,
accuracy, and utility. They try to relate it to other events and
actions so they can make sense out of it and know how to
respond. This process is called cognitive evaluation, and it too is
strongly influenced by culture. For example, research has shown
that Americans, raised in an individualistic society, often rely on
the isolated properties of people or objects they are examining in
order to attach meaning or enhance understanding. As a result,
when they see an individual they tend to mentally classify them as
a man or woman, black or white, professional or blue-collar, and
so forth. By contrast, Chinese people, raised in a more collectivist
environment, tend to classify people on the basis of criteria that
emphasize relationships and contexts. As a result, they are more
likely to see someone first as a member of a particular group,
clan, or organization, instead of focusing on their individual
characteristics.
People also tend to have better recall of information when it is
consistent with their cultural knowledge and values. For example,
many managers from mastery-oriented cultures tend to recall the
specific successes of their subordinates that involved sales or
financial achievements, but not their interpersonal or teambuilding successes. In more harmony-oriented cultures, managers
tend to recall more about their subordinates’ interpersonal or
team-building successes, regardless of their sales or financial
successes.
319
When inferring the mental states of other people, research
indicates that several cultures in North America and Western
Europe emphasize a norm of authenticity (i.e., a belief that
external actions and emotional displays are, or should be,
generally consistent with internal states), while East and
Southeast Asian societies often tend to consider such beliefs as
immature, impolite, and sometimes bizarre.19 For example,
“speaking one’s mind” or “telling it like it is” is generally viewed in
a positive light by many Westerners, but not by most Asians.
Indirect communication is more common in Asia and many other
parts of the world. In those cultures, one would never expect to
hear the person conducting a wedding ceremony telling guests to
“Speak now or forever hold your peace.” Their focus would be on
keeping the peace by remaining silent, regardless of their
concerns about the marriage, to save face.
Finally, reasoning processes also play out differently in
communication across cultures. In other words, when people face
the possibility of alternative interpretations of specific events (e.g.,
the success of a work team), they will almost invariably choose
the interpretation that is most consistent with their own cultural
outlook. For example, managers from highly individualistic
cultures will typically attribute team success to the team leader’s
skills and efforts, while managers from more collectivistic cultures
will typically attribute it to the skills and efforts of the entire team.
Likewise, managers in individualistic cultures will often attribute
team failure to the team members, while managers from more
collectivistic cultures will accept blame for such failures. These
examples illustrate the power of cognitive evaluations in terms of
320
what is said and what remains unsaid, and how both are
interpreted.
321
Cultural Logic
Interpersonal communication is an interactive process, requiring
two or more people to exchange thoughts, ideas, emotions,
questions, proposals, and so forth in an effort to find common
ground. A key component of this process is the cultural logic that
underlies any message.20 (Some refer to this process as “cultural
logics,” to emphasize the fact that this process consists of a series
of logical assumptions that do not necessarily represent a unified
whole – that is, cultures have a variety of logics relating to
different aspects of social interaction.) When people converse with
one another, they often rely on these culture-based logical
assumptions to facilitate the conversation.
Cultural logic is the process of using one’s own assumptions
about normative behavior to interpret the messages and actions of
others, thereby hypothesizing about their motives and intentions.
It’s how we attribute meaning to the words and actions of others
on the basis of the local meanings embedded within their own
culture. Cultural logic provides people with a system of
assumptions about what is mutually known and understood
among individuals (i.e., a common ground). People often rely on
this logic to facilitate communication and reduce what needs to be
said to a manageable level, since it is often too difficult and timeconsuming for people to express all the thoughts and assumptions
behind everything they say. A shared cultural logic helps people
fill the gaps left by what is unsaid, thereby facilitating the process
of creating a shared meaning. It also allows for simplified and
rapid communication.
322
When moving across cultures, however, there is often an
assumption of common knowledge that, in fact, is not common. In
Korea, for example, it is often considered impolite for someone of
“lower” status to try to make an appointment with a second person
of “higher” status. The logic here is that the person with lower
status is obligating the person with higher status to be somewhere
at a particular time, which is a constraint on their behavior and
certainly impolite. As a result, the person with lower status will
simply show up at the other person’s door and hope that they will
be received. However, when this tradition is transferred to many
countries in the West, the opposite logic applies; that is, it is
widely considered impolite to simply show up, and an appointment
is preferred.
From Korea, let’s go to Brazil and consider a recent
interchange between a Canadian sales representative and her
potential Brazilian customer. In order to schedule an appointment
with Sergio, Sarah contacted him to propose a meeting in her
office the following Monday at 9:00 in the morning. In doing so,
she created a mental image of the message she was trying to
convey, using her own cultural logic (in this case, relying on her
Canadian emphasis on punctuality). To do so, however, she
required some form of verbal shorthand – that is, she needed to
make some assumptions about what was in Sergio’s mind, or else
her message might become excessively long and risk being
ignored. To this end, she assumed that Sergio would make the
same assumptions about the use of words that she was making.
For example, she would have assumed that “9:00” meant 9:00,
not later in the morning, when she had other appointments. She
also assumed that Sergio would understand her message, and his
323
agreement to the meeting indicated that he would arrive at 9:00
a.m. sharp.
While Sarah was making her assumptions, however, so too
was Sergio, and his assumptions about the message differed
considerably. Following his own cultural logic (particularly the
Brazilian perception of time), Sergio assumed that “9:00” was only
a targeted or approximate time, and that slippage in the time
schedule was perfectly acceptable, given traffic and other
commitments around the same time. He further assumed that
Sarah was also flexible and that she would agree with his loose
interpretation of when the meeting would begin. After all, since
she had invited him, she must have understood his culture.
The end result of this episode is predictable. Using their own
very different cultural logics, both Sarah and Sergio ran the risk of
being disappointed or frustrated when they met. Had both parties
– or even one party – understood their variability in cultural logic,
perhaps the results would have turned out differently. Instead, due
to a miscommunication regarding what time the meeting should
actually take place, Sarah risked coming away from this
experience thinking that Sergio was unreliable, while Sergio risked
concluding that Sarah was too rigid. The result could easily have
been a lost business opportunity.
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Management Application 5.4 Cultural Logic in Brazil and
Canada
1. How could both Sarah and Sergio have prevented a
potential misunderstanding with respect to time?
2. If the meeting was the disaster we predicted, what
should Sarah and Sergio do next? How could each of
them save the business relationship?
3. Have you personally experienced a similar event in
which cultural logic led to conflict or confusion? How
did you handle it, and what was the result? Could you
have been more effective in any way?
Together, these four cultural screens on cognition – language
and
linguistic
structures,
selective
perception,
cognitive
evaluation, and cultural logic – are likely to influence the
communication process. Referring back to the AIA model
discussed above, languages help determine the structures and
meanings underlying intended messages; selective perceptions
guide people’s attention to particular parts of intended messages;
cognitive evaluations guide the process of attaching meaning to
received messages; and cultural logic guides senders’ choices of
what needs to be communicated and receivers’ interpretation of
the message. Managers who understand how these cultural
screens can influence the process of attention–interpretation–
message creation can greatly improve their chances of finding the
325
common ground necessary for effective communication and
productive exchanges.
326
Culture, Communication, and Social
Behavior
All cultures and subcultures foster socio-normative beliefs and
values that guide members’ thoughts and actions. These beliefs
include what members can and can’t do, as well as what they
should and shouldn’t do. This is a world of obligations,
responsibilities,
and
privileges,
which
together
form
the
interpersonal foundations of a culture. Not surprisingly, these
norms and values influence how we prefer to converse with
others. Each culture has a variety of expected communication
behaviors – often called protocols – such as appropriate topics for
discussion, message-formatting, conversational formalities, and
acceptable behaviors (see Exhibit 5.6).21 These culturally
mandated communication behaviors also influence what
people attend to in a message, how they interpret it, and how they
respond.
Exhibit 5.6 Culturally mandated communication behaviors
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Appropriate Topics for Discussion
What people can and cannot talk about varies by culture.
Consider just one example that happened to one of the authors.
When asked by a South Korean friend how the family was doing,
the American visitor replied that his younger brother had recently
died. The Korean friend looked puzzled, and there was an
awkward moment of silence. Then he responded, “Did you see
the baseball game last night?” This was obviously not a subject he
wished to discuss.
In some cultures, it is perfectly acceptable to ask about one’s
family and their health; indeed, it is often considered impolite not
to ask. In other cultures, however, this topic is off limits. Likewise,
some cultures prefer not to talk about illness or bad fortune,
perhaps in the belief that not talking about something will make it
less likely to happen. Many cultures find it acceptable to ask
someone how much they earn, but this is a cultural taboo in the
United States. While some Americans brag about how much they
earn, most Americans would never bring up that topic with anyone
outside family or close friends – confusing, we know. In some
cultures, it’s acceptable for business people to brag about how
they used questionable tactics to make a sale to anyone who will
listen; others prefer not to discuss this, even if true. It is typically
inappropriate to discuss money in France or personal matters in
the United Kingdom. Moreover, people are expected to talk about
themselves in South Asia and Latin America, but not in Germany
or the Netherlands. At the beginning of the workday in many Latin
American countries, managers greet employees individually,
328
walking around the office shaking hands and asking about families
and themselves, literally asking “How did you wake up?” This is
the precursor to work topics.
Equally important here is the order of conversational topics
that are discussed. This is called conversation sequencing.
Hence, while many Western managers believe in avoiding “small
talk” and getting right down to business (“Time is money!”),
managers in South America and East and Southeast Asia typically
believe that conversations must first be warmed up with broad or
general discussions on topics other than business. Only then
should serious conversations about business commence. In some
parts of the world, business people are expected to be broadly
educated and converse knowledgeably on art, history, and global
affairs; elsewhere, they simply discuss professional sports and
business.
329
Message-formatting: Content and Context
Communication is so pervasive in our everyday lives and so
intertwined with culture that some researchers argue that it is
impossible to separate communication from culture. For them,
culture is communication. For instance, noted anthropologist
Edward Hall points out that people communicate with each other
through behaviors, not just words, suggesting that cultural
assumptions in general are often part of a silent language used to
convey meaning without words. Silent communication is the use
of nonverbal or visual communication (e.g., facial expressions,
gestures, the use of personal space, opulent surroundings, etc.) to
convey messages to senders or receivers alike. Such messages
are typically subtle in nature and can be difficult to notice unless
one is looking for them. Senders usually intend such messages to
be received or discovered by others, however. In fact, to someone
who can “read” these silent messages, they sometimes scream
very loudly. Or as British communication consultant Richard D.
Lewis says,
whatever the culture, there’s a tongue in our head. Some use
it, some hold it, and some bite it. For the French it is a rapier,
thrusting in attack; the English, using it defensively, mumble a
vague and confusing reply; for Italians and Spaniards it is an
instrument of eloquence; Finns and East Asians throw you
with their constructive silence.22
The importance of silent, or nonverbal, communication is
obvious. One study estimated that only about 7 percent of
330
communication is verbal (spoken words), while 55 percent is
nonverbal and 38 percent is voice tone.23 (Whether voice tone is
verbal or nonverbal, as the study claims, is open to debate, but
the 55 percent body language remains important.) This finding
suggests that paying attention to nonverbal communication is
clearly important when communicating across cultures. Further,
research also suggests that when verbal and nonverbal messages
contradict each other, we are more likely to believe the latter.24
As was discussed in Chapter 2, Hall’s model of cultural
differences suggests that this difference lies in how much
message context
surrounds
the
message
content.25
Hall
distinguishes between high- and low-context cultures, as shown in
Exhibit 5.7. These are viewed as on a continuum from very high to
very low, and are not meant to typecast people into two distinct
categories. Indeed, most people are probably distributed pretty
evenly along the continuum.
Exhibit 5.7 Communication in high- and low-context cultures
331
In relatively low-context cultures, such as Germany,
Scandinavia, and the United States, the context surrounding the
message is far less important than the message itself (see Exhibit
5.7). People in low-context cultures learn to focus primarily on
words and to a lesser degree on nonverbal messages that
reinforce the message of the words. They pay less attention to
context. As a result, speakers have the greater responsibility in
the communication exchange and must take pains to send clearly
worded messages, often accompanied by written documents and
information-rich advertising explaining the context for receivers.
Language precision is critical, while assumed understandings,
innuendos, and body language play a more limited role.
By contrast, in relatively high-context cultures, such as
those found in many parts of Asia, the Middle East, and Africa, the
context in which the message is conveyed – that is, the social
cues surrounding the message – is often as important as the
message itself. Indeed, the way something is said can be even
more important in communicating a message than the actual
words that are used. Communication is based on long-term
interpersonal relationships, mutual trust, and personal reputations.
People know the people they are talking with, and reading
someone’s face becomes an important – and necessary – art;
sometimes they also know more about the actual situation based
on their networks. As a result, less needs to be said or written
down. But, people in high-context cultures learn to scan the
context carefully for meaning, which means they are used to
working harder to figure out the message. In contrast, the
subtleties in communication patterns often go unnoticed by many
332
outsiders, who listen very carefully to every word that is spoken –
only to miss the real message.
For example, in ethnically diverse Nigeria, communication
styles vary considerably across regions. In the southwest, where
the
people
are
largely
from
the
Yoruba
tribe,
people’s
communication employs proverbs, sayings, and songs to enrich
the meaning of what they say. This is especially true when
speaking their native language, although many of the same
characteristics have been carried into their English language
usage. The Yoruba often use humor to prevent boredom during
long meetings or serious discussions. They believe that
embedding humor in their message guarantees that what they say
is not readily forgotten. By contrast, Nigerians who live in other
regions of the country, including the Igbo and Hausa, tend to
speak more directly. Nigerians also make extensive use of
nonverbal behavior (e.g., facial expressions) to communicate their
views. In discussions, Nigerians frequently begin with a general
idea and then slowly move to the specific, often using a somewhat
circuitous route. Their logic is often contextual – that is, they tend
to look for the rationale behind behavior and attempt to
understand the context. Thus, behavior is viewed in terms of its
surrounding context, and not simply in terms of what has been
observed. As a result, what is not said is often more important
than what is. Additionally, because direct criticism or feedback is
not usually acceptable in Africa and other high-context cultures,
managers may utilize intermediaries to send the message; this
creates a triangular feedback model in which a trusted
intermediary can carefully convey the message more directly to
both parties.26
333
Experienced managers understand that how a message is
constructed can have a profound impact on how it is received.
Should a message be explicit and direct, or subtle and perhaps
even obtuse? To what degree should messages be communicated
through verbal or nonverbal mechanisms? To what extent is
message content more – or less – important than message
context? Some cultures emphasize rigid written communication,
while others prefer the more flexible spoken communication.
Some cultures prefer messages from outsiders to come through
“proper” channels (e.g., up the formal chain of command), while
others prefer the use of informal channels (e.g., close associates
or friends) or third parties. The principal challenge for managers
here is sending clear and meaningful messages that are
understood by other parties without offending them. An equally
important challenge, however, is conveying these messages in
culturally appropriate ways that may be unfamiliar to the message
senders. Switching from high- to low-context communication and
vice versa is not simple. It is an art form to be studied and
practiced, again suggesting the importance of ongoing learning
and reflective experience, and finding a cultural mentor to provide
feedback.
334
Conversational Formalities
Every culture puts constraints on how, when, and where we speak
to others. These conversational formalities are formal or implicit
guidelines and rules governing acceptable or preferred formal
conversational etiquette. They include the use of titles, the
manner in which ideas or proposals are presented, and the role of
apologies. They are invaluable to global managers who want to
avoid cultural blunders. For instance, a global manager was
nervous about meeting the reigning King of Thailand and, for
some inexplicable reason, he had not done his homework on
greeting protocol. Because he’d spent time working in France
previously, he instinctively kissed the king on the cheek; then,
even more nervous, he kissed the king on the other cheek,
thinking “in for a penny, in for a pound.” Touching the king is not
culturally allowed, but fortunately the businessman was forgiven.
The typical greeting in Thailand is a short bow accompanied by
hands touching in a prayer position, called the wai. The higher the
position of the hands, the greater the sign of respect. There are so
many rules for the wai that we recommend you look them up
before going to Thailand – and don’t touch anyone’s head.
It is easy to say that some cultures are more formal than
others, but it is necessary to ask what this means. There is
typically an underlying purpose in the use of formalities. The use
of titles, for example, can represent a sign of respect or a sign of
power – not necessarily the same thing. Similarly, an absence of
titles can indicate an egalitarian culture that eschews artificial
status-based boundaries or a close relationship between parties.
335
Clearly, the informed manager needs to understand these
differences.
Conversational formalities also include knowing when and
where apologies are required. Formal apologies are used
throughout much of East and Southeast Asia to restore harmony
after an unpleasant incident or crisis. They demonstrate empathy
and acceptance of responsibility. By contrast, apologies in many
Western countries are often used to admit guilt, and, as a result,
are used only sporadically.
To understand how this works, consider the public apology by
Toyota CEO Akio Toyoda before a US congressional investigation
over a series of safety problems involving the company’s cars.
Toyoda drew widespread attention, because few people could
remember when a Western CEO had done such a thing. Toyoda
apologized not only to his customers but also to stockholders for
the company’s declining profits and to employees for recent
layoffs. He observed:
In the past few months, our customers have started to feel
uncertain about the safety of Toyota’s vehicles, and I take full
responsibility for that. Today, I would like to explain to the
American people, as well as our customers in the U.S. and
around the world, how seriously Toyota takes the quality and
safety of its vehicles.
Japan’s Asahi Shimbun, one of Japan’s largest newspapers,
wrote in an editorial that Toyoda’s testimony “not only determines
Toyota’s fate, but may affect all Japanese companies and
consumer confidence in their products. President Toyoda has a
heavy load on his shoulders.”27
336
In the West, such behavior by a CEO is often interpreted as a
sign of weakness or lack of confidence – or, worse still,
acceptance of legal responsibility. Witness the actions by British
Petroleum CEO Tony Hayward, also before a US congressional
investigation, following an oil spill in the Gulf of Mexico. Hayward
offered
a
tepid
apology
and
downplayed
the
long-term
environmental implications. Some of his statements were: “I think
the environmental impact of this disaster is likely to have been
very, very modest”; “There is no one who wants this over more
than I do. I would like my life back”; and “What the hell did we do
to deserve this?” He also stressed that many other companies
were also involved in the oil leak, not just BP. The Toyota apology
reflects the firm’s collectivist roots while the BP apology is more
self-oriented and individualistic. Two crises, and two very different
public responses.
337
Management Application 5.5 Making Apologies in Japan
and the UK
1. Why is the symbolism underlying the apologies from
these two companies so different? How do you
interpret this?
2. Should either Toyota or BP have handled this
situation differently? Why, or why not?
3. In working across cultures, what is your opinion of
the proper role of apologies? That is, when are they
appropriate and when are they inappropriate? Explain.
4. In managerial circles, how common or widespread
do you think either of these two CEO’s responses
would be? Is each response representative of its own
culture? Explain.
338
Acceptable and Prohibited Behaviors
Finally, cultures often place constraints and expectations on what
are considered to be acceptable behaviors that accompany
interpersonal interactions. For example, research has shown that
managers in North America are often expected or encouraged to
be assertive and take the initiative in conversations; in much of
Asia, by contrast, managers are often expected to remain silent
and wait for an invitation to speak. Managers in North America are
frequently allowed to leave a conversation once the main topic is
finished; managers in Spain are generally expected to linger
awhile and talk about other things before departing. Many North
American managers tend to communicate linearly, with explicit
links between topics and ideas, favoring a planned approach to
communication; Asian managers tend to prefer a more nonlinear
approach, following a circular pattern of communication; and
many managers from the Mediterranean region tend to favor a
zigzag approach, in which tangential ideas may be explored and
elaborated before returning to the main point.
Moreover, it is not uncommon for more than one manager to
speak at the same time throughout much of Latin Europe, while
managers in Northern Europe are more likely to wait until another
speaker finishes. Conversations in much of Latin America tend to
have very few lapses of silence – indeed, silence or “dead air”
often makes such people uncomfortable, forcing them to speak
again. By contrast, silent periods are very common in East and
Southeast Asia, and are not a source of discomfort. In Asia
339
silence can signal respect and consideration of what was just
said.
Finally, disagreements throughout much of Asia may also be
communicated by silence; disagreements in Spain are often
communicated through emotional outbursts; and disagreements in
Northern Europe tend to be clearly, calmly, and directly stated and
discussed. Similarly, praise is a common motivational strategy for
many supervisors in North America but is typically reserved for
extraordinary
accomplishments
in
Russia.
In
France
and
Indonesia, by contrast, praise is sometimes considered offensive
to employees, because it suggests that the supervisor was
surprised that the employees had done so well.
340
Providing Feedback across Cultures
A number of years ago, a British Airways plane flew through a
cloud of volcanic ash over Indonesia and lost power to all four of
its engines. The British pilot calmly informed the passengers:
“Good evening again ladies and gentlemen, this is the captain
here. We have a small problem in that our engines have failed.
We’re doing our utmost to get them going and I trust you’re not in
too much distress, and would the chief steward please come to
the flight deck.” Fortunately, the plane was able to glide far
enough and make a safe landing at a nearby airport. The
captain’s announcement has since become a classic example of
British understatement, demonstrating one of the ways the British
commonly give negative feedback.
Following the work of Erin Meyer, a useful way to gauge how
a culture handles negative feedback is by listening to the types of
words people use.28 People from cultures that tend to be more
direct with criticism typically use what linguists call upgraders,
words preceding or following negative feedback that make it
sound stronger, such as “absolutely,” “totally,” or “strongly.” For
instance: “This is absolutely inappropriate,” or “That is totally
unacceptable.” By contrast, other cultures are less direct, relying
more heavily on downgraders while dispensing criticism in order
to soften the blow. Those include “kind of,” “sort of,” “a little,” “a
bit,” “maybe,” and “slightly.” Sometimes downgraders come as
deliberate understatements such as “We are not quite there yet,”
when what you really mean is “This is nowhere close to
completion.”
341
An example of this can be seen in statements attributed to
British and Dutch communicators (see Exhibit 5.8). While this
example looks at only two European countries, similar challenges
can be found elsewhere. For example, in Japan, if a prospective
partner says they “will positively consider” your proposal, it means
“no.” Stop the conversation. Contrary to indication, it does not
mean your proposal will be considered. An interesting question in
this regard is how new global managers are supposed to learn
how to decode such messages.
Exhibit 5.8 Upgrades, downgrades, and feedback across cultures
(British and Dutch example)
What the British say
What the British
mean
What the
Dutch
understand
With all due respect …
I think you are wrong.
He is listening
to me.
Perhaps you could
think about it … I
would suggest …
This is an order. Do it
or be prepared to
justify yourself.
Think about
this idea and
do it if you
like.
Oh, by the way …
The following
criticism is the
purpose of this
conversation.
This is not
very
important.
I was a bit
disappointed that …
I am very upset and
angry that …
It really
doesn’t
matter.
342
What the British say
What the British
mean
What the
Dutch
understand
Very interesting …
I don’t like it.
He is
impressed.
Could you consider
some other options?
Your idea is not a
good one.
She has not
yet decided.
Please think about that
some more.
It’s a bad idea. Don’t
do it.
It’s a good
idea. Keep
developing it.
I’m sure it’s my fault.
It’s not my fault.
It’s her fault.
That is an original point
of view.
Your idea is stupid.
He likes my
idea.
Source: This exhibit is based on Erin Meyer,
http://knowledge.insead.edu/blog/insead-blog/givingnegative-feedback-across-cultures; see also: Erin Meyer, The
Culture Map: Breaking Through the Invisible Boundaries of
Global Business. New York: Public Affairs, 2014.
The use of upgraders and downgraders can often lead to
confusion and conflict with people from other cultures. A German
finance director named Marcus Klopfer learned this the hard way.
A soft-spoken manager in his forties, Klopfer described how his
failure to decode a message from his British boss almost cost him
his job:29
In Germany, we typically use strong words when giving
negative feedback or criticizing in order to make sure the
343
message registers clearly. During a one-on-one, my British
boss “suggested that I think about” doing something
differently. So, I took his suggestion. I thought about it and
decided not to do it. Little did I know that his phrase was
supposed to be interpreted as, “change your behavior right
away or else”. And I can tell you, I was pretty surprised when
he called me into his office to chew me out for
insubordination.
Klopfer subsequently learned to analyze messages by ignoring
the downgraders and focusing his attention on the raw message
in the middle. He also considered how his British staff might
interpret his messages, which he had been delivering without any
softeners at all. Today, Klopfer tries to soften the message when
giving negative feedback to British counterparts. “I try to start by
sprinkling the ground with a few light positive comments and
words of appreciation. Then I ease into the feedback with ‘a few
small suggestions,’” he said.
Take another example. Kwang Young-Su, a Korean manager,
had been working in the Netherlands for six years.30 As Kwang
explained:
The Dutch culture is very direct, and we Koreans do not like
to give direct negative feedback. So, when I first came to the
Netherlands, I was shocked at how rude and arrogant the
Dutch are with their criticism. When they don’t like something,
they tell you bluntly to your face. I spoke to another Korean
friend who has been in the Netherlands for a while, and he
told me that the only way to handle this is to give it right back
344
to them. Now I try to be just as blunt with them as they are
with me.
Kwang’s Dutch colleagues later complained that they found him
so aggressive and angry that they were practically unable to work
with him.
Here’s the lesson: When giving negative feedback to people
from different cultures, be culturally sensitive. In other words,
consider not only how many upgraders or downgraders you are
using, but also whether to wrap positive feedback around negative
feedback. Although Americans are stereotyped around the world
for their directness, if you give negative feedback in the US by
launching into the criticism (as would be common in many
European countries), you may find that your American counterpart
is anything but receptive. A preferred approach would be to
explicitly state something that you appreciate about the person or
the situation before moving onto what you’d like that person to do
differently. In addition, work at being balanced in the amount of
positive and negative feedback you give. If you notice something
positive a colleague has done, say it there and then, with explicit
appreciation. Then, if you need to criticize them later, your
comments are more likely to be heard and considered rather than
rejected out of hand.
Above all, think about the norms of the culture you are
working with, and consider how that might impact the way your
criticism is received. Reactions and preferred styles differ
dramatically from one society to another. The Thai manager has
been taught never to criticize a colleague openly or in front of
others, while the Dutch manager has learned always to be honest
345
and to give the message straight. Americans are trained to wrap
positive messages around negative ones, while the French are
used to criticizing passionately and providing positive feedback
sparingly. The key message here is to use caution and common
sense.
346
Manager’s Notebook Communicating across Cultures
As this chapter illustrates, a lot can go wrong when
communicating across cultures if environmental factors are
ignored. This is not a new conclusion. Over 2,000 years
ago the Roman poet Horace observed, “A word, once sent
abroad, flies irrevocably.”31 Differences in language,
cultural logic, expectations, and interpretations regarding
message content, context, and communication protocols
may distort meanings and jeopardize communications.
With this in mind, in this Manager’s Notebook, we address
the issue of what global managers can do to reduce such
barriers to clear communication. As noted above, although
cultural processes are multifaceted, complex, and at times
secretive, there are nonetheless concrete strategies that
managers can initiate to adapt to such differences in their
interactions with others. In this regard, managers have at
least three choices or strategies to pursue in order to
improve the likelihood of finding common ground with other
parties (see Exhibit 5.9). They are all doable for managers
committed to learning and skills-building.
347
Exhibit 5.9 Strategies for communicating across cultures
1 Expand your knowledge and understanding of
cultural dynamics
If managers are serious about improving their global
communication skills, an important step that has been
discussed throughout this book is investing the time and
energy required to learn more about how the world of work
differs across cultures and understanding the implications
for managers. In practice, this is not as difficult as it may at
first appear. Exploring other cultures is not unlike learning
computer games; at some point it becomes intuitive,
allowing the manager to work almost seamlessly in settings
that previously seemed alien. Of particular importance here
is knowledge of how local beliefs, values, and behavioral
expectations can differ across cultures and how managers
can prepare themselves for such differences. Much of this
learning can be accomplished through independent
reading and study, sponsored programs on cross-cultural
issues, discussions with foreign nationals, and focused
observations of what others are doing.
348
Multicultural learning can also be facilitated by
language study. Understanding the language of one’s
counterparts can go a long way towards capturing the
essence of cultural differences – an important factor in
working successfully across borders. Although it is often
noted that “everyone” speaks English, there is ample room
for misunderstandings and missed cues when people are
forced into an unfamiliar language, as we have seen
above.
Finally, in expanding cultural knowledge, it is also
important not to forget one’s own culture. Frequently
managers take their own culture for granted and fail to
realize that their own social environment creates its own
screens that affect communication. Self-awareness about
one’s culture can serve as a useful point of departure for
better understanding others. It can also serve to enhance
one’s understanding of how one is viewed by others.
2 Recalibrate your perceptual and critical
analysis skills
Based on this expanded knowledge and understanding of
cultural differences, a second communication strategy
emerges that involves seeking a better understanding of
the cognitive processes underlying the comments and
actions of others. This is not as extreme as it may sound.
We are not suggesting altering basic cognitive processes;
rather, we suggest recalibrating them. In other words, on
the basis of their newly acquired multicultural awareness
and understanding, managers should be in a position to
349
use somewhat modified cognitive templates or frames of
reference when trying to understand why people with
different cultural backgrounds do or say what they do.
Recent research has shown that experienced global
managers often exhibit an ability to look behind external
appearances or behaviors and try to understand the
“why’s?” and not just the “what’s?” They work to
understand interpersonal interactions through the eyes and
ears of others. They look for subtleties and nuances in
social interactions that may help explain what others are
thinking. They observe more than they judge. To a large
extent, these are learned behaviors that motivated
managers can develop with practice.
At the same time, successful global managers seek to
understand their own beliefs and values, assumptions,
biases, and perceptions. Stepping outside one’s comfort
zone allows managers to take a fresh look at situations
that confront them. Are their assumptions about certain
situations correct, or are there alternative assumptions that
are equally valid? Developing shared meanings requires
letting go of previous judgments and understandings, and
tolerating uncertainty until a new understanding can be
created. The point for managers to understand is that they
may be “right” with respect to something, but in a crosscultural environment, “right” is relative. Arriving at a
common meaning requires an ability to tolerate uncertainty
and ambiguity in order to seek a deeper understanding of
what one’s counterparts are trying to say or do.
350
3 Enhance your applied communication skills
Finally, on a very practical level, managers can improve
their knowledge of various communication protocols, which
can vary from culture to culture. In addition to knowing
where or when certain languages are preferred or required
(discussed above), developing message-formatting skills
by learning how to adopt the communication styles of other
cultures can be critical to successful communication,
especially
as
communication
it
relates
to
techniques,
the
such
use
as
of
nonverbal
reading
facial
expressions and other forms of body language. Numerous
cultures use such techniques as a core communication
strategy, and misreading these – or ignoring them
completely – can lead both to missed signals and missed
opportunities.
Manager also need to broaden their knowledge of
what topics may be required or forbidden in certain
conversations or messages (e.g., talking about money,
illness, or families), what formalities are required or
preferred in various communication arenas (the use of
titles, bowing, dress codes, seating arrangements), and
what behaviors are acceptable or unacceptable (e.g.,
raising one’s voice, interrupting, verbal rejections, touching
someone). In this regard, many companies offer their
employees extensive training programs in local business
practices and social etiquette prior to sending them on
overseas assignments. Some companies sponsor entire
corporate “universities” aimed at developing an extensive
managerial and cultural skills set for global managers.
351
Others purchase web-based educational tools that include
information on every country.
Finally, developing active listening skills has long been
recommended for managers facing ambiguous situations.
This is particularly important in cross-cultural settings,
when communication failures can be commonplace.
Recognizing such failures – not always an easy task – and
finding a remedy can be key to saving a conversation and
a possible business deal. Again, corporate training
programs as well as executive coaches can be of great
assistance here.
We
began
this
chapter
by
pointing
out
that
multicultural communication is frequently cited as one of
the most serious challenges facing global managers. We
close by observing that cross-cultural communication is
also one of the most important sources of business
opportunity. It is through communication that relationships
are formed, conflicts are resolved, and innovative ideas are
created and shared. While the perils of poor cross-cultural
communication may appear daunting at first glance, we
believe that increased awareness of the ways in which
cultural differences can affect how meaning is constructed
in interpersonal interactions is an important first step
towards improved communication. We further believe that,
in order to succeed, managers must be willing to make the
effort and risk some initial missteps and perhaps
embarrassment.
In
the
end,
effective
multicultural
communication is a matter of personal commitment and a
willingness to learn. Above all, however, it is a willingness
352
to listen. As the Venetian explorer Marco Polo reportedly
observed long ago, “It is not the voice that commands the
story; it is the ear.”32
353
Chapter Review
354
Summary
Cross-cultural communication is frequently cited as one of
the most serious challenges facing global managers. It is
also one of the most important sources of business
opportunity. Through communication, relationships are
formed, conflicts are resolved, and innovative ideas are
created and shared. While the perils of poor cross-cultural
communication may appear daunting at first glance,
increased awareness of the ways in which cultural
differences can affect how meaning is constructed in
interpersonal interactions is an important first step towards
improved communication. In order to succeed, however,
managers must be willing to make the effort and risk some
initial missteps and perhaps embarrassment. In the end,
effective multicultural communication is a matter of
personal commitment and a willingness to learn. Above all,
however, it is a willingness to listen.
In any cross-cultural exchange between managers or
employees from different regions, the principal purpose of
communication is to seek common ground – to seek out
ideas, information, customers, and sometimes even
partnerships between the parties. But communications are
effective only to the extent that recipients are both paying
attention to the message and capable of processing the
information in ways that facilitate common meaning.
The AIA model highlights three key ingredients in effective
interpersonal communication: attention, interpretation, and
355
message (or response).
Cultural screens are potential impediments or barriers in
the AIA process. Two cultural screens that affect both
interpersonal interactions in general and multicultural
communications in particular involve:
1. cultural influences on individual cognitions surrounding
communication episodes – that is, how people and
messages are often evaluated and processed in the
minds of senders and receivers alike; and
2. cultural influences on communication protocols, or
required behaviors, such as how we construct or shape
our messages in ways that may be culturally consistent
for us but, hopefully, not problematic for our intended
receivers.
If managers are serious about improving their global
communication skills, they must invest the time and energy
required to learn more about how the world of work differs
across cultures, as well as the implications of such
differences for communication effectiveness. Of particular
importance here is knowledge of how local beliefs, values,
and behavioral expectations can differ across cultures and
how managers can prepare themselves for such
differences. Much of this learning can be accomplished
through independent reading and study, sponsored
programs on cross-cultural issues, discussions with foreign
nationals, and focused observations of what others are
doing.
356
Key Concepts
AIA model
cognition
cognitive evaluation
conversation sequencing
conversational formalities
cultural screens
culturally mandated communication behaviors
culturally mediated cognitions
cultural logic
high- vs. low-context cultures
mindful communication
nonverbal communication
norm of authenticity
selective perception
upgraders vs. downgraders
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Discussion Questions
1. What can managers do to enhance their mindful
communication skills?
2. How can managers apply the AIA model as they prepare for a
series of negotiation sessions with a potential global partner?
3. This chapter discussed two types of cultural screens: culturally
mediated cognitions and culturally mandated protocols. Choose a
negative intercultural incident involving communication, and apply
these screens to analyze what occurred and how the situation
could be resolved, in part with the help of these screens.
4. In what ways, both positive and negative, have virtual
communication techniques such as text messaging or Skype
changed the way companies conduct business communication?
What is gained here? What is lost?
5. What can managers do to improve communication processes
with non-native speakers who are members of a global team?
6. Do you believe global managers must speak multiple
languages to succeed? Why, or why not?
7. Can you provide your own example of how cultural logic works?
358
8. Looking back to Chapter 3, which cultural value dimensions
seem to relate to high- and low-context communication? Explain
your reasoning.
9. How would you organize a workshop on the topic of increasing
people’s nonverbal communication skills? What would you do?
10. How could you help a project team recalibrate their perceptual
and critical analysis skills, as discussed in the Manager’s
Notebook section of this chapter? Provide an example of why this
is needed and how it could be accomplished.
11. You have been assigned to tell a junior colleague from a
different country that her ideas for a new project are unacceptable
and cannot be fixed. How would you go about conveying this
message?
12. In your view, what are the three most important lessons from
this chapter for global managers? Explain.
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Notes
1. Richard Lewis, When Cultures Collide. London: Nicholas
Brealey Publishing, 2006, p. 63.
2. Norman Schur, British English, A to Z. New York: Harper,
1991.
3. Attributed to George Bernard Shaw, Reader’s Digest,
November 1942.
4. Economic Intelligence Unit, Competing Across Borders: How
Cultural and Communication Barriers Affect Business, 2012.
5. Mike Fromowitz, “Hall of shame: more multicultural brand
blunders,” February 10, 2017, available at
www.campaignlive.com/article/hall-shame-multicultural-brandblunders/1423941. Accessed September 8, 2018.
6. Melinda Fouts, “How to become more mindful of your
communication,” Forbes, June 5, 2018.
7. We thank IESE MBA graduate Shipa Patel for sharing this
experience.
8. Luciara Nardon, Richard M. Steers, and Carlos SanchezRunde, “Seeking common ground: strategies for enhancing
multicultural communication,” Organizational Dynamics, 2011,
40(2), pp. 85–95.
9. Ibid., p. 86.
360
10. Stephen Anderson, “How many languages are there in the
world?” Linguistic Society of America, 2018, available at
www.linguisticsociety.org/content/how-many-languages-arethere-world. Accessed March 1, 2019.
11. Larry A. Samovar, Richard E. Porter, and Edwin R.
McDaniel, Communication Between Cultures. Belmont, CA:
Thomson/Wadsworth, 2007, pp. 165–7.
12. Personal experience of one of the authors.
13. Lingua franca (from Italian, literally meaning “the Frankish
language”) is a language that is systematically used to
communicate between persons not sharing a mother tongue, in
particular when it is a third language, distinct from both persons’
mother tongues. “Lingua franca” is a functionally defined term,
independent of the linguistic history or structure of the
language. It may also refer to the de facto language within a
more or less specialized field. A synonym for “lingua franca” is
“vehicular language.” Whereas a vernacular language is used
as a native language in a single speaker community, a vehicular
language goes beyond the boundaries of its original community,
and is used as a second language for communication between
communities. For example, English is a vernacular in England,
but is used as a vehicular language (i.e., a lingua franca) in the
Philippines.
14. Dylan Lyons, “How many people in the world speak English
and where is it spoken?” Babbel Magazine, July 26, 2018,
available at www.babbel.com/en/magazine/how-many-peoplespeak-english-and-where-is-it-spoken/. Accessed September 8,
2018.
361
15. Bryan Borzykowski, “The international companies using only
English”, BBC, March 20, 2017, available at
www.bbc.com/capital/story/20170317-the-internationalcompanies-using-only-english. Accessed September 8, 2018.
16. Tsedal Neeley, The Language of Global Success: How a
Common Tongue Transforms Multinational Organizations.
Princeton University Press, 2017.
17. Ibid.
18. Lewis, When Cultures Collide, p. 63.
19. “Authenticity,” in Stanford Encyclopedia of Philosophy.
Stanford University Press, 2014.
20. Nick Enfield, “The theory of cultural logic,” Cultural
Dynamics, March 2000, pp. 35–64.
21. Nardon, Steers, and Sanchez-Runde, “Seeking common
ground.”
22. Lewis, When Cultures Collide, p. 94.
23. Lucy Debenham, “Communication: what percentage is body
language,” Body Language Expert, May 15, 2018.
24. Samovar, Porter, and McDaniel, Communication Between
Cultures, pp. 165–7.
25. Edward T. Hall, The Silent Language. New York: Anchor
Books, 1981.
26. Stella Ting-Toomey and Tenzin Dorjee, Communicating
Across Cultures. New York: Guilford Press, 2019.
362
27. Laurie Kellman and Stephen Manning, “Toyota CEO
apologizes for recall, accidents,” Seattle Times, February 24,
2010.
28. Erin Meyer, The Culture Map: Breaking Through the
Invisible Boundaries of Global Business. New York: Public
Affairs, 2014.
29. Erin Meyer, Giving Negative Feedback Across Cultures,
INSEAD, September 16, 2015, available at
http://knowledge.insead.edu/blog/insead-blog/giving-negativefeedback-across-cultures-4259#Tm2wh0kq5F3BbAOU.99.
Accessed March 1, 2019.
30. Ibid.; see also Meyer, The Culture Map.
31. Horace, The Satires, Epistles, and Art of Poetry (trans. John
Conington). Oxford University Press, 2010.
32. Marco Polo, cited in Laurence Bergreen, Marco Polo: From
Venice to Xanadu. New York: Vintage Books, 2007, p. 1.
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6
Global Leadership
◈
Chapter Outline
What Is Leadership?
Management Application 6.1 Symbolic Leadership in Japan
Eastern and Western Leadership Traditions
Management Application 6.2 Leadership at Emerson Electric Suzhou
GLOBE Leadership Model
Management Application 6.3 GLOBE Model: Leadership in Brazil
Pyramid Leadership Model
Management Application 6.4 Pyramid Model: Halla Tómasdóttir
Women Global Leaders and Diversity
Management Application 6.5 Women Leaders in India
MANAGER’S NOTEBOOK: Leading Global Organizations
Chapter Review
Learning Objectives
Explore what makes global leaders different.
Examine cultural differences that influence leadership.
Compare leadership traditions between East and West.
Explore what can be learned from two different global models of leadership.
Review gender diversity in global leaders.
Learn how to improve global leadership skills.
The two most popular words in the business lexicon today are “global” and “leadership.” Put
them together and people in suits start to salivate.1
The Economist
World Economic Forum
A recent World Economic Forum in Davos, Switzerland, brought together over 1,000 corporate
executives, 50 heads of state, and 300 cabinet ministers to discuss world challenges ranging from
364
deficits to competitiveness to deadly diseases. At the conclusion of the conference, an observer
from The Economist characterized the meeting as having one overriding theme: the importance of
developing global leaders – in corporations, nation states, and NGOs. Anyone who works across
cultures needs to master the basics of global and comparative leadership.
More books have been written about leadership than any other topic in the field of
management. Many of these books examine various theories of leadership, comparing the relative
advantages and disadvantages of each. Other books represent serious empirical studies of actual
leader behavior. Still others are popular books that seem to offer a secret elixir designed to
transform ordinary managers into extraordinary leaders. What most of these books fail to do,
however, is to recognize that leadership processes can vary significantly across geographic regions
and that global leadership is a more complex animal than domestic leadership. In other words, much
of what is written about leadership views it largely in terms of Western beliefs, values, and cultures,
and then offers a model to the world as a precursor to managerial success, a viewpoint that is
unhelpful to managers charged with the responsibility to get things done globally or even to those
whose bosses hail from different cultures.
Consider two observations on leadership, one from Western leadership expert Warren Bennis
and one from ancient Chinese philosopher Lao Tzu, both interesting and each diametrically
opposed to the other:
Leadership is like beauty; it is hard to define, but you know it when you see it.2
A leader is best when people barely know he exists, who talks little, and when the work is
done and the aim fulfilled, people will say, we did this ourselves.3
What do these two observations tell us? Research has consistently demonstrated that some
cultures (e.g., France, Russia, and the United States) prefer leaders who take charge and are visible
and assertive, while others (e.g., China and Japan) prefer leaders who are much less visible and
move behind the scenes to accomplish things. Some cultures (e.g., Mexico and Spain) prefer
leaders who stand above the crowd and command respect, while others (e.g., Malaysia and Laos)
prefer leaders who are humble and remain part of the crowd. Despite strong cultural preferences
like these, there will always be successful leaders in every country who do not exactly fit the cultural
stereotype; to borrow Adler’s advice once again, these stereotypes can function as your “first best
guess”4 about leaders as long as you’re willing to modify the stereotype as you gather more
information.
Here is the challenge. Whether in Thailand or Morocco, Australia or Costa Rica, global leaders
up and down the hierarchy face the same problem: how and when to adapt their leadership style to
fit local circumstances in order to achieve corporate objectives. When managers turn to the myriad
materials written on the topic of leadership, however, they are often hard-pressed to find meaningful
support. As managers around the globe increasingly face the challenges of leading employees from
multiple, different cultural backgrounds with divergent expectations about hierarchy, power, and
interpersonal relations, it becomes all the more important for them to understand how cultural
dynamics can influence effective leadership. With this in mind, in this chapter we will explore several
aspects of global leadership, including the following:
What is meant by the term global leadership?
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How do Eastern and Western leadership traditions differ?
What can we learn about leadership from the GLOBE project?
How can the Pyramid model help us develop global leadership skills?
What is the role of gender in determining leader behavior and success?
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What Is Leadership?
We begin by looking at an age-old debate in the management community, which centers on the
difference between management and leadership. To some, there are stark distinctions between the
constructs of leadership and management; to others, these differences are negligible. Why? Some
people see management as focusing on the operational issues involved in getting things done
through people (e.g., planning, decision-making, controlling, coordinating, etc.), while leadership
involves the influence processes through which managers accomplish this (i.e., “lead”). One seems
more mundane; the other sounds more exciting. Leadership guru Warren Bennis stated that
“Managers do things right, but leaders do the right thing,” which implies that leaders are really
change agents. Others, however, see management and leadership as being so closely intertwined
that it becomes almost impossible to separate the two: good managers are good leaders, and vice
versa. It’s not enough to come up with a great strategy if no one makes sure it is executed or if it’s
even possible to execute in the first place. For this reason, management thought leader Robert
Sutton added a helpful corollary to Bennis’ famous quotation: “To do the right thing, a leader needs
to understand what it takes to do things right, and to make sure they actually get done.”5
In our view, leadership is defined as the ability of a manager to influence, motivate, and enable
others within the organization to contribute towards the effectiveness and success of the enterprise.
Western leadership scholars identified various styles of leadership, which are used in research and
training. The most common are transformational leadership (sometimes called charismatic
leadership), whereby managers work to create a universally accepted values-driven vision of where
the group or organization should be directed; then they use moral persuasion to reinforce this
mission. In contrast, transactional leadership is a concrete exchange relationship with employees
who are rewarded (good performance appraisals, bonuses, etc.) for performing in accordance with
the manager’s clearly communicated goals and expectations. The problem here is that recent
research by Ishikawa found that neither of these approaches is very effective in Japan.6
Transformational leaders are often perceived by the Japanese as being too abstract, while
transactional leaders are sometimes seen as being too mercenary – and both are criticized for being
too manipulative. Instead, successful Japanese managers tend to prefer something called gatekeeping leadership, in which they work to reduce the barriers to successful performance among
their subordinates. We always have to question whether theories developed in one part of the world
are universally applicable the world over, especially before rolling out “worldwide” leadership training
programs. Let’s take a deeper dive into cultural influences on leadership in the study of comparative
leadership.
One of the most interesting subfields of leadership is comparative leadership, which studies the
differences and similarities in the indigenous leadership styles of countries and regions (see
discussion below). Comparative leadership research often measures and compares the cultural
values we studied in Chapter 2, as well as how countries differ with respect to traditional leadership
styles (e.g., transformational, transactional, authoritarian, participative, laissez-faire, etc.) or unique
emic styles (see Chapter 2). National or regional leadership patterns are largely determined by
history, geography, economic development, technological status, institutions, and, of course, culture.
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Leadership as a Cultural Construct
First and foremost, it is important to recognize that leadership is a cultural construct. Its meaning is
embedded in the diverse cultures in which it is exercised and varies accordingly. Most importantly, it
is not a Western construct that is easily expanded to global dimensions, because leadership means
different things to different people. In most Anglo-Saxon countries (e.g., the United Kingdom, the
United States, Australia), leadership generally has positive connotations. Leaders tend to be
respected, admired, and, indeed, sometimes revered, whether they are in the political or business
arena. Clearly, this is not a universal truth. The opposite view of leaders can also be found in many
countries (e.g., Mexico, Egypt, Romania), where widespread distrust and fear of power or the dislike
of privilege prevail.
The problems start when we look for a direct translation of the word “leader” into different
languages. Some languages do not even have a word for the concept. In others, the translation
invokes a variety of images, including dictator, parent, expert, and first among equals. Some of
these terms have strong connotations of highly directive or authoritarian styles of leadership that
many people reject. Leaders are not necessarily to be trusted, and people wonder about their
motives and true goals, or about other potentially undesirable behaviors and characteristics.
To make matters even more complex, not only does the term “leader” translate differently
across various cultural groups, but the meanings that are construed from these translations can also
differ, sometimes significantly. For example, in individualistic societies (e.g., Australia, Canada, the
United Kingdom) leadership typically refers to a single person who guides and directs the actions of
others, often in a very visible way. In more collectivistic societies (e.g., South Korea, Japan, and
China), however, leadership is often less associated with individuals and more closely aligned with
group endeavors. In hierarchical societies (e.g., Saudi Arabia, Mexico, Indonesia) leaders are often
seen as being separate and apart from their followers, while in more egalitarian societies (e.g.,
Sweden, Denmark) they are more approachable and less intimidating. The rather common AngloAmerican celebration of the accomplishments of various leaders stands in stark contrast to Lao
Tzu’s ancient observation cited above, that effective leaders work quietly and let workers (or
employees) take the credit.
Cultural differences also influence followership. In many egalitarian societies, terms such as
“followers” or “subordinates” are seen as being inappropriate. For instance, in the Netherlands the
preferred term is co-workers (medewerkers) instead of subordinates, and leaders are careful to
avoid appearing condescending.
With such a diversity of opinion concerning the characteristics of effective leaders, how is it
possible to reach agreement on even a simple definition of leadership? Moreover, what does this
diversity of views suggest about our ability to apply largely Western-based leadership theories
across borders, and to build or implement leadership development programs that will work all over
the world? Furthermore, what does this say about so-called leadership “gurus” who travel the world
with their packaged leadership programs?
Another good example of how culture can influence local leadership is symbolic leadership.
We saw this is the resignation of Dentsu’s CEO over the suicide of one of their employees (see
Application 3.5 in Chapter 3). Symbolic leadership occurs when people – usually senior executives
or CEOs – accept full responsibility for setbacks or crises on behalf of the entire organization. This is
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commonplace throughout much of Asia, for example, and sometimes offered even when the
executives are not at fault. The belief here is that through voluntary resignation, harmony is restored
and the organization can move forward. Not surprisingly, symbolic leadership is seldom seen in the
West when things go wrong. Indeed, it can be seen as a sign of weakness.
When companies succeed, it is commonplace to reward managers – and, hopefully, other
employees. What happens when companies fail, though? What is management’s responsibility? In
some countries, the decline in stock prices or other setbacks can signal the demise of CEOs by
disgruntled stockholders. In others, CEOs are seldom held accountable, even if they were directly
responsible for the failure.
What happens, however, if a company experiences a natural disaster for which it is not
responsible? Should company CEOs be held accountable? This is what happened at Tokyo Electric
Power Company (TEPCO) several years ago in the wake of Japan’s worst natural disaster in
memory. Some 20,000 people died and over a million were left homeless as a result of an
earthquake, followed by a tsunami, followed by a nuclear meltdown in Fukushima. Many people
were angry that TEPCO did not do more to prevent or resolve the crisis. Anger mounted as people
watched helplessly when their fortunes and futures vanished. In an effort to ameliorate the situation
and restore harmony, TEPCO executives publicly accepted responsibility for the problems and
announced that their executives would take a 50 percent pay cut, with this money helping recent
victims of the natural disaster. Company employees also agreed to a 25 percent pay cut. All told, the
power company expects to save about $660 million annually, which it will use to compensate victims
of the natural disaster. A short time later, in an act of symbolic leadership, TEPCO president
Masataka Shimizu resigned in disgrace following the largest financial loss in the company’s history.
The key word here is “resignation,” not “termination,” as might have happened in the West. One
wonders how many executives in other countries (perhaps in the West) would have taken a similar
course of action.
Management Application 6.1 Symbolic Leadership in Japan
1. In your view, should Masataka Shimizu have resigned his post as president over this
crisis? Why, or why not?
2. Why is symbolic leadership, as illustrated here, common in some countries, but not
others?
3. Looking beyond TEPCO, what in general is the potential value, and potential
drawback, of the exercise of symbolic leadership?
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Leadership Expectations
Another concern with existing approaches to leadership focuses on the expectations surrounding
the behavior of successful leaders, including the cultural underpinnings of such expectations. These
expectations arise from society at large, local circumstances, subordinates, co-workers, and the
leaders themselves. The GLOBE study (discussed below) greatly increases our awareness of varied
clusters of expectations, but we still need to understand more concerning the fundamental
normative beliefs and processes underlying a leader’s behavior. In other words, we need to have a
better understanding of the “why’s?” and “how’s?” underlying the process, not just the “what’s?” or
“who’s?”
If there is any doubt about the systematic variability in what constitutes effective leader
behavior, we need look no further than the observations by various managers and employees from
different countries. In the West, the French expect their leaders to be cultivated – highly educated in
the arts and mathematics. As a result, the majority of their top leaders are graduates of les Grandes
Écoles, a handful of the most prestigious universities in France. The Dutch stress egalitarianism and
are skeptical about the value and status of leaders. Terms such as “leader” and “manager” can even
carry a stigma in some organizations. Americans are often schizophrenic in their choice of leaders;
some like leaders who empower and encourage their subordinates, while others prefer leaders who
are bold, forceful, confident, and risk-oriented.
By contrast, in the East, Chinese leaders are expected to establish and nurture personal
relationships, practice benevolence towards subordinates, be dignified and aloof but sympathetic,
and treat the interests of employees like their own. Japanese leaders are expected to focus on
developing a healthy relationship with their employees, as employees and managers share the
same fate. And Malaysians expect their leaders to behave in a manner that is humble, modest, and
dignified. In short, expectations concerning appropriate leader behaviors can vary considerably
across cultures. This is a point not lost on experienced expatriates and frequent flyers.
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Eastern and Western Leadership Traditions
When Western managers interact with Eastern managers, they generally often come away from the
experience confused and frustrated. Common Western responses include perceptions that Asian
leaders refuse to act decisively, fail to respond candidly, are ambiguous about their goals and
objectives, and generally don’t act like “leaders.” To many Western executives, this behavior
appears to be ineffectual or even deceitful, making it difficult to build good working relationships. If
we examine leadership through a cross-cultural lens, however, the picture looks quite different.
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Leadership Foundations
The different foundations of leadership in Eastern and Western traditions can be traced to ancient
Chinese and Greek thought. These foundations are based on the separate paths these two
civilizations followed in their efforts to make sense out of human behavior (see Exhibit 6.1). What is
generally referred to as Western civilization traces its origins to the culture, beliefs, and traditions of
ancient Greece. The Greeks developed the concept of eîdos (ideal), as a perfect form that humans
should aspire to and achieve as télos (goal). In this scheme, the work of a leader consists of
bridging the gap between télos as an ideal state and reality (or actual practice) with a goal of
achieving perfection.
Exhibit 6.1 Leadership patterns: East and West
Leadership
characteristics
Western traditions
Eastern traditions
Beliefs
Seek to achieve ideal end state (eîdos
and télos)
Seek to balance countervailing
forces (yin and yang)
Goals
Establish and pursue aspirational
goals; manage the results
Create conditions conducive to
success; manage the process
Logic
Logic of application; articulate
objectives and determine reasonable
means to desired ends
Logic of exploitation; place oneself
in a position to exploit opportunities
as they emerge
Preferences
Preference for action; capture the
initiative
Preference for patience; let events
come to you
Source: Adapted from Carlos Sanchez-Runde, Luciara Nardon, and Richard M. Steers,
“Looking beyond Western leadership models: implications for global managers,” Organizational
Dynamics, 2011, 40, pp. 207–13.
By contrast, the concept of an ideal or archetype that could serve as a model for action and a
desirable final state of affairs never developed in ancient China or in much of Asia. Instead, reality in
the ancient East was seen as a process emanating from the interaction between opposing and
complementary forces, or yin and yang. Order did not result from an ideal to be accomplished but
from a natural propensity of processes already in motion. Because the emphasis was on current
processes evolving here and now, Eastern thinking focused on very concrete and specific situations
of everyday life, rather than abstractions of the essence of an ideal form. Since Eastern thinking did
not abstract and generalize in the search for an ultimate eîdos, traditional Chinese language did not
include words for essence, god, being, ethics, and the like. Indeed, even today’s modern Chinese
and several other Asian languages incorporate these concepts only to translate them from Western
languages.
Understanding this difference helps explain the separate paths of social thought and practice in
these two divergent regions of the world. In many cases, Western thinking is difficult to understand
or interpret without reference to concepts such as “the ideal.” Current management thought, as
taught in many parts of the world, is based on the original Greek concept of the ideal and purposeful
372
action. Strategy is conceived as the art of arranging means towards desired end states. Corporate
vision and mission make for a concrete definition of organizational ideals. Executives manage by
objectives, and leaders strive actively to move the firm closer to achieving business goals and ideals
that are carefully and publicly defined and implemented.
Eastern tradition, on the other hand, emphasizes positioning oneself in the flow of reality in a
more passive way, so that we can discover its coherence and benefit from its natural evolution.
Rather than establishing a set of objectives for action, one has to flow within the potential of each
situation and the dynamics that the situation affords. A common metaphor that can be found in
traditional Chinese texts tells of a general and his soldiers benefiting from a given evolution of
events, rather than behaving with particular heroism or bravery. As such, leaders must locate
themselves so that the desired path of events becomes the only viable alternative, the same way
that they do not force the enemy (militarily or commercially) into a situation in which their only
alternative is to behave bravely against them.
Performance in the Western tradition results from minimizing the gap between the goal and the
achievement, the planned and the attained. Action in the West is seen as a separate entity, an
external disruption to the natural order of things. In Eastern Asia, by contrast, performance results
from a minimization of action itself, leaving the situation to achieve its full potential in terms that
benefit the organization. Eastern leaders thus focus on continual processes following their own
internal dynamics, uninterrupted. Western action is seen from the Asian perspective as being
extemporaneous, quick, direct, and costly, while the Eastern “effortless action” is slow, indirect,
progressive, and natural. Western leaders act, while Asian leaders transform. Transformation – as
opposed to action – extends itself through time, as if without beginning or end, imposing itself albeit
in natural ways. Because it comes from the inside of the situation, it imposes itself softly, without
resistance. Changes emanate by themselves and do not require heroic efforts and determination, as
they are part of a continuous progression that is barely noticed.
This does not mean that the concept of action is not present in traditional Eastern thought. It is
a subdued type of action, though: slow, subtle, anticipatory, and naturally inserted in the natural flow
of events. Rather than sudden action, occasions are anticipated, providing for the outcome of what
will naturally appear.7 As a result, Chinese leaders and those from many other Asian countries
pursue objectives in modest ways, silent and almost anonymous, vis-à-vis the grandiloquent
apparatus and appearance of the heroic decision-maker often seen or imagined in the West. Action
is freed from activism and becomes discrete and subtle, confounded in the course of events,
ignorant of particular protagonists.
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Leadership at Emerson Electric Suzhou: An Example
When Emerson Electric opened its new manufacturing facility in Suzhou, near Shanghai, the initial
aim of the facility was to be the company’s showcase operation throughout East and Southeast
Asia. When it opened, an American-educated Taiwanese manager, supported by a small group of
American expatriates, led the initial management team. Although the operation became an early
success in meeting its production quotas, cross-cultural conflicts and leadership issues began to
emerge from the very beginning. These issues were centered in three principal areas: the nature of
team dynamics, the focus on leadership initiatives, and divergent views of time.
The American view of team dynamics favored team diversity, encouraging multiple viewpoints
in team meetings to tease out alternative solutions to complex problems. Along with this diversity of
opinions came the predictable interpersonal conflicts. Members were encouraged to confront such
conflicts head-on in the hopes of leading to more creative innovative solutions. Better results, rather
than the quality of personal interactions, signaled the success of the operation. For the Chinese,
however, this created an uncomfortable work environment that they were not used to. To many
Chinese people, teams should have a single, clear, and unified vision, transmitted through a single
voice established by the leader. Conflict indicated poor understanding and leadership of the
situation. It was something to be avoided, for it signaled a lack of direction and might cause
someone to lose face.
In addition, these prevailing team dynamics rested on a particular approach to leadership that
was more Western than Eastern. The Americans followed a largely functionalist approach to
management and interpersonal relations, in which leader competence was viewed in terms of task
accomplishment, which was seen as instrumental for success. By contrast, the Chinese approach to
leadership was largely “personalist” in nature. In other words, it was the personal integrity of each
manager that was deemed instrumental for the success of the new plant. The Chinese valued
personal integrity in an effort to win the trust and respect of their followers, while the Americans
valued job competence and expected their followers to perform well on the tasks at hand. Chinese
management rested on individual commitment, often of a personal nature, whereas the Americans
valued professional competence.
These different approaches to team leadership also influenced the way managers dealt with
confrontation and misunderstandings. In line with the more personal Chinese approach,
interpersonal exchanges among participants provided a basis for developing mutual relationships
(guānxi). This, in turn, facilitated problem resolution. By contrast, the Americans often preferred the
more confrontational “trial-style” alternatives. They emphasized company policies and rules, rather
than personal interactions. They saw formal behavior as a sign of professionalism. The Chinese saw
this approach as being childish, since, in their view, norms and regulations seldom allowed for the
complexity that was required to actually resolve complex issues and problems.
Finally, time perspectives also affected the quality of the interactions between the Chinese and
the Americans. In particular, American managers usually favored relatively short time horizons,
since they were expatriates who saw their positions as stepping stones to further career
advancement. To advance, they needed short-term recognition of results. By contrast, their Chinese
counterparts, who had no goals of leaving either China or Emerson, preferred a long-term
374
perspective. They largely believed that results would follow from setting the proper course of events
in motion. Results would then happen naturally; they did not need to be forced.
As a result of these differences, conflicts and misunderstandings continued until Emerson
stepped in and largely replaced the American management team with Chinese leaders who were
more attuned to local conditions. If there is a lesson to be drawn from this example, it is that local
cultures and conditions can have a profound influence on the success of global ventures.
Management Application 6.2 Leadership at Emerson Electric Suzhou
1. How did the Chinese and Americans involved in this case each view leadership and
leadership effectiveness? As a manager, what could you have done to try and leverage
these cultural differences to resolve this issue?
2. Differences in time perspectives were also a problem in this case. To the Chinese, the
Americans seemed obsessed with short-term results, which disturbed continuity and
long-term performance. To the Americans, the Chinese seemed too laissez-faire about
scheduling, which jeopardized their position with senior executives who expected shortterm results. Both sets of pressures were to some degree beyond the control of the
people at Emerson. Again, as a manager, what might you have done to reach a
satisfactory resolution on this issue?
3. What does this example teach us about the limitations of creating global teams across
cultures?
4. What are the primary lessons of this case for global managers?
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GLOBE Leadership Model
What can we conclude from this about the meaning and application of leadership across cultures?
To start, we hope you’ve learned to be wary about a one-size-fits-all portrait of successful leaders,
and to realize that leadership is in the eye of the beholder since our cultural expectations influence
perceived effectiveness.
Two major approaches to leadership in global settings back this up. Interestingly, both projects
were conducted by multicultural teams of researchers, giving these efforts added credibility. The first
approach is referred to as the comparative leadership approach, and was introduced above with
respect to China and the West. It is largely descriptive in nature and illustrates how leader behaviors
can differ across cultures (see Exhibit 6.2). The second approach, to be discussed below, is the
global leadership approach. This approach illustrates how managers can develop leadership
capabilities that can be used across cultures. These are not competing models. That is, while each
model has a different focus, both can be used in tandem to help develop global leadership skills.
Exhibit 6.2 Approaches to global leadership
Comparative leadership approach
Global leadership approach
Example: GLOBE model
Example: Pyramid model
Focus: Descriptive model; illustrates how leader
behaviors can differ across cultures; promotes
understanding of culture-leadership relationships
Focus: Developmental model; illustrates how
managers can build leadership capabilities
that can be used across cultures
Key variables in understanding:
• Leadership styles (autonomous, charismatic,
humane, participative, self-protective, team)
• Leadership traits (universally positive,
universally negative, culturally contingent)
Key variables in development:
• Fundamental business knowledge
• Threshold traits (e.g., integrity, resilience)
• Multicultural competence
• Global management skills
• System skills (organizing, boundaryspanning, change skills)
The comparative leadership approach is illustrated by the GLOBE project (see Chapter 2). This
project was conducted by Robert J. House, Paul J. Hanges, Mansour Javidan, Peter W. Dorfman,
and Vipin Gupta. The GLOBE leadership model examines the relationship between culture and
successful leadership and management patterns in sixty-two countries around the world.8 The
project members’ initial research led them to propose the nine GLOBE cultural dimensions: power
distance, uncertainty avoidance, humane orientation, institutional collectivism, in-group collectivism,
assertiveness, gender egalitarianism, future orientation, and performance orientation.
Based on this, the researchers then identified twenty-two leadership attributes that were widely
seen as being, in their view, universally applicable across cultures (e.g., encouraging, motivational,
dynamic, decisive, having foresight) and eight leadership dimensions that were seen to be
universally undesirable (e.g., uncooperative, ruthless, dictatorial, irritable).9 Several other attributes
were found to be culturally contingent, however – that is, their desirability or undesirability was tied
to cultural differences (see Exhibit 6.3 for details). These included characteristics such as being
376
ambitious and elitist.10 Here it was found that people in some cultures favored traits in leaders that
people in other cultures rejected. For example, some cultures (e.g., those in the United Kingdom,
Germany, France, and the United States) often romanticize their leaders and give them exceptional
privileges and prestige; they are held in high esteem. At the same time, however, other cultures
(e.g., those in the Netherlands and Switzerland) denigrate the very concept of leadership and are
often suspicious of people in authority. They worry about abuse of power and rising inequality.
Exhibit 6.3 GLOBE cultural perspectives on leadership effectiveness
Traits universally
considered facilitators of
leadership effectiveness
Traits universally
considered impediments to
leadership effectiveness
Culturally contingent traits of
beliefs about facilitators of
leadership effectiveness
Trustworthiness
Visionary
Inspirational
Team-builder
Self-protective
Non-cooperative
Autocratic
Individualistic
Status-conscious
Risk-taker
Source: Based on Mansour Javidan, Peter W. Dorfman, Mary Sully de Luque, and Robert J.
House, “In the eye of the beholder: cross-cultural lessons in leadership from Project GLOBE,”
Academy of Management Perspectives, 2006, 20(1), pp. 67–90 (pp. 73–6).
377
GLOBE Leadership Dimensions
The GLOBE researchers distilled their findings into six relatively distinct GLOBE leadership
dimensions: autonomous, charismatic/value-based, humane, participative, self-protective, and
team-oriented (see Exhibit 6.4). Two of these leadership styles (charismatic/value-based leadership
and team-oriented leadership) were strongly endorsed in all regional country clusters used in the
study. Even so, the magnitude of this endorsement varied across regional country clusters. For
example, both charismatic/value-based and team-oriented leadership styles were most widely
accepted in the Anglo, Asian, and Latin American clusters. They were still accepted in other regions
of the world, but with less intensity.
Exhibit 6.4 GLOBE leadership dimensions
GLOBE
leadership
dimensions
Characteristics of dimensions
Regions where leadership
dimensions are widely endorsed
Autonomous
leadership
Individualistic, independent,
unique
Endorsed in Eastern European and
Germanic clusters; weaker
endorsement in Latin American cluster
Charismatic/
value-based
leadership
Visionary, inspirational, selfsacrificing, decisive, performanceoriented
Endorsed in all regions, but particularly
in Anglo, Asian, and Latin American
clusters; weaker endorsement in Arab
cluster
Humane
leadership
Modest, tolerant, sensitive,
concerned about humanity
Endorsed particularly in Anglo, Asian,
and sub-Saharan African clusters; less
so elsewhere
Participative
leadership
Active listening, non-autocratic,
flexible
Wide variations in endorsements
across all regions, but less so in Arab
and Latin American clusters
Self-protective
leadership
Self-centered, procedural, statusconscious, face-saving
Wide variations in endorsements
across all regional clusters
Team-oriented
leadership
Collaborative, integrating,
diplomatic
Endorsed in all regions, but particularly
in Anglo, Asian, and Latin American
clusters; less so in Arab cluster
Source: Adapted from Robert J. House, Paul J. Hanges, Mansour Javidan, Peter W. Dorfman,
and Vipin Gupta, Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies.
Thousand Oaks, CA: Sage, 2004; Peter Dorfman, Mansour Javidan, Paule Hanges, Ali
Dashmalchian, and Robert J. House, “GLOBE: a twenty-year journey into the intriguing world of
culture and leadership,” Journal of World Business, 2012, 47, pp. 504–18.
Meanwhile, the other leadership styles were found to be more culturally contingent. Humane
leadership was strongly endorsed in the Asian, Anglo, and sub-Saharan African clusters, and less
strongly endorsed in the Latin American and Nordic clusters. Autonomous leadership was generally
seen as neither facilitating nor inhibiting a leader from being effective. Within the Eastern European
378
and Germanic clusters, however, this leadership style was considered to be more positively related
to outstanding leadership than in other culture clusters. Finally, for self-protective leadership and
participative leadership, there was substantial variability in the degree to which these styles were
endorsed within the different country clusters. For more details and country breakdowns using the
GLOBE methodology, see Exhibit 6.5.
Exhibit 6.5 Cultural beliefs about leadership styles
Country
Autonomous
leadership
Charismatic
leadership
Humane
leadership
Participative
leadership
Selfprotective
leadership
Team
leadership
Australia
3.95
6.09
5.09
5.71
3.05
5.81
Brazil
2.27
6.01
4.84
6.06
3.50
6.17
Canada*
3.65
6.16
5.20
6.09
2.96
5.84
China
4.07
5.57
5.18
5.05
3.80
5.57
Denmark
3.79
6.01
4.23
5.80
2.82
5.70
Egypt
4.49
5.57
5.14
4.69
4.21
5.55
Greece
3.98
6.02
5.16
5.81
3.49
6.12
India
3.85
5.85
5.26
4.99
3.78
5.72
Ireland
3.95
6.08
5.06
5.64
3.01
5.82
Israel
4.26
6.23
4.68
4.96
3.64
5.91
Japan
3.67
5.49
4.68
5.08
3.61
5.56
Mexico
3.86
5.66
4.71
4.64
3.86
5.75
Nigeria
3.62
5.77
5.48
5.19
3.90
5.65
Philippines
3.75
6.33
5.53
5.40
3.33
6.06
Poland
4.34
5.67
4.56
5.05
3.53
5.98
Russia
4.63
5.66
4.08
4.67
3.69
5.63
Singapore
3.87
5.95
5.24
5.30
3.32
5.77
South
Korea
4.21
5.53
4.87
4.93
3.68
5.53
Spain
3.54
5.90
4.66
5.11
3.39
5.93
Sweden
3.97
5.84
4.73
5.54
2.82
5.57
Thailand
4.28
5.78
5.09
5.30
3.91
5.76
Turkey
3.83
5.96
4.90
5.09
3.58
6.01
379
Country
Autonomous
leadership
Charismatic
leadership
Humane
leadership
Participative
leadership
Selfprotective
leadership
Team
leadership
UK
USA
3.92
3.75
6.01
6.12
4.90
5.21
5.57
5.93
3.04
3.16
5.71
5.80
*
English-speaking population.
Source: Robert J. House, Paul J. Hanges, Mansour Javidan, Peter W. Dorfman, and Vipin
Gupta, Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies. Thousand
Oaks, CA: Sage, 2004; Peter Dorfman, Mansour Javidan, Paule Hanges, Ali Dashmalchian,
and Robert J. House, “GLOBE: a twenty-year journey into the intriguing world of culture and
leadership,” Journal of World Business, 2012, 47, pp. 504–18.
In this exhibit, scales range from 1.0 to 7.0, depending on how important each society on
average sees the six dimensions for leadership effectiveness, with 1.0 being very unimportant and
7.0 being very important. Two things should be remembered here. First, these are mean scores, and
considerable variations can be found within them. Second, it is probably more useful to look at these
numbers as relative differences, not numeric ones. In any case, these results and the GLOBE study
in general provide some evidence that acceptable managerial behaviors – including leader
behaviors – are to some degree culturally contingent. To see how this works in actual practice,
consider an example from Brazil.
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Leadership in Brazil: An Example of the GLOBE Model
According to the findings of the GLOBE study, Brazilian managers tend to be – or try to be –
charismatic, participative, and team-oriented.10 A manager’s personal style is considered of great
significance, and one’s vision and bearing are typically seen as being of equal importance to their
technical abilities. Relationships are of critical importance in this culture, and the boss and
subordinates make great efforts to foster a relationship based on trust and respect for personal
dignity. Still, managers are expected to manage. The boss is expected to give direct instructions and
it is expected that these instructions will be carried out without too much discussion or debate. If
there is debate, it is done privately to avoid showing any public disrespect to the manager.
On an operational level, while managers in many countries value advance planning, Brazilian
managers often rely on luck and improvisation. They rely on a practice called jeitinho, which
corresponds to a last-minute approach to find solutions to problems, and may include breaking
rules, asking for favors, or creative fixes. Brazilian leaders are expected to have jogo de cintura; that
is, finding creative and improvisatory solutions to deal with problems. It is a general belief that there
is no need to worry about obstacles, as almost everything can be arranged in the end. This
“arrangement of things” is mostly related to exemption to certain rules and the use of favors. In this
sense, personal contacts play an important role. For example, if a manager missed a deadline to
turn in a document to the HR department but has a friend working in this department, the manager
could easily ask the friend to slip in the document so it is not obvious that it was late. Thus, even
though the manager missed the deadline, all will be well. Such an approach might drive managers
from some other countries crazy, but it works well in Brazil; it gets the job done.
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Management Application 6.3 GLOBE Model: Leadership in Brazil
1. How does the GLOBE framework help explain leadership in Brazil as described here?
2. For many people, waiting until the last minute to solve problems and then bending the
rules to help accomplish this sounds more like chaos or perhaps irresponsibility than
leadership. What is your opinion of this seeming contradiction?
3. How easy would it be to transfer this leadership style to other cultures or countries?
As part of your answer, consider which cultural values in Chapter 2 seem to be most
aligned with jeitinho. In what other countries might this approach work? Why? And
where would this approach definitely not work?
4. Consider: Your team has been sent to work with a small Brazilian tech firm in São
Paulo to help the Brazilian company complete the development of a new technology that
your firm hopes to exploit for global markets. Your employer has advised you that
building a working relationship – and completing development of the new technology – is
critical. However, when you meet your new Brazilian team leader, you are met with a
series of impromptu, autocratic, and at times volatile comments that cause you to lack
confidence in their ability to deliver. You are not sure you can trust them. Still, you have
been sent to secure the rights to the technology, and the team leader seems to have the
upper hand. What steps can your team take to verify that your team and the team leader
are “on the same page” in terms of timely technology development?
5. What steps might your team take so that both sides can learn more about each
other’s working habits and styles, and begin building a long-term productive
relationship?
The most recent phase of the GLOBE project examined whether national culture influences
executive leadership processes, by interviewing 40 CEOs from 24 countries and surveying 1,000
CEOs and 5,000 of their direct reports. The following conclusions emerged from this study:11
1. National culture does not predict leadership behavior, but it does influence leadership
expectations. So, the message for us is “Roman leaders lead in a manner expected in Rome.”
2. Leaders are more likely to be perceived as effective if their behavior fits their country’s
leadership expectations. Thus, “Roman leaders best do as the Romans do.”
3. There are universal, consistent leadership actions that lead to effectiveness and success, as
shown in Exhibit 6.5. “When in Rome and you don’t know what to do, exhibit charismatic/valuebased leadership,” which is the leadership style most closely linked to these universal actions.
4. Both the fit and degree of leadership behavior determine effectiveness (dedicated top
management teams and corporate performance). “Woe be to the CEO who falls short of
society’s expectations.”
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Pyramid Leadership Model
As noted above, while the GLOBE study focuses on describing successful leader behavior within
individual countries and clusters (comparative leadership), the second approach focuses on leaders
who successfully lead followers from many countries, which is called global leadership. The global
leadership approach is exemplified in the Pyramid leadership model, which focuses on developing
leadership talents. That is, how can we help train global managers to become better leaders? The
Pyramid model was originally developed via a modified Delphi technique utilized with international
management scholars from various countries; it was later mapped against global leadership
competencies.12
Researchers Sebastian Reiche, Allan Bird, Mark Mendenhall, and Joyce Osland worked to
create a definition that distinguishes global leadership from comparative leadership (refer back to
Exhibit 6.2 above).13 Remember that comparative leadership explores the differences and
similarities in the indigenous leadership styles across countries and regions. By contrast, global
leadership can be looked upon as “the processes and actions through which an individual influences
a range of internal and external constituents from multiple national cultures and jurisdictions in a
context characterized by significant levels of task and relationship complexity.” In this view,
comparative leadership and global leadership share some important characteristics, but the major
difference between them lies in the greater complexity inherent in the global context. For this
reason, global leadership has sometimes been called “extreme” leadership.14
To understand this difference, let’s unpack the metaphor of traditional and extreme sports. Most
extreme athletes begin with traditional sport, just as global leaders begin by learning leadership
skills in their own country. Extreme athletes move on to more risky, challenging, and novel sports
(e.g., parkour, slacklining, base jumping), sometimes involving travel to other countries. Extreme
sports are defined as “a competitive activity within which the participant is subjected to natural or
unusual physical and mental challenges such as speed, height, depth or natural forces and where
fast and accurate cognitive perceptual processing may be required for a successful outcome.”15
Similarly, compared to one’s home country, the global context is riskier, more challenging, and
places greater cognitive and behavioral demands on global leaders.
383
From Global Managers to Global Leaders
Thus, the critical question becomes: How can domestic leaders make the transition to become
global leaders, and what does this shift entail? To this we must add a second question: How can
companies help employees from varied cultural backgrounds develop global leadership skills?
Remember that this transition may be made more difficult because each country or region has its
own mental map of the ideal leader, as we saw previously. Domestic leaders who dutifully learned
how to be an effective leader in their own country will no doubt have to “unlearn” some lessons in
order to be successful with other cultures.
One way to start your own transition to global leadership is by taking jobs that are increasingly
complex. Here are three examples: multicultural team leader, expatriate leader, and global leader.
We’ll go into greater detail on the teams and expatriates in later chapters, but let’s consider what
these jobs demand:
Multicultural team leaders, who may or may not live in their own country, have to learn to
lead teams, be aware of the preferred leadership expectations of team members from a
number of cultures, and learn to work virtually. One of their biggest challenges is making sure
everyone on the team feels included and heard so as not to lose the benefits of a diverse
team.
Expatriate leaders have to understand and adapt to the leadership expectations of the
country or region in which they are posted. For example, they might have to master different
communication styles and learn the behavioral scripts – a sequence of expected behaviors
for a given situation – used by successful leaders in that part of the world. For instance, in
Spanish-speaking countries, at a bare minimum, this means learning to use the imperative
verb tense especially designed just for giving orders.
Global leaders still have to manage at least one multicultural team with whom they work very
closely, but their job scope and responsibilities are much more far-reaching and complex. It is
not uncommon for high-level global leaders in California’s Silicon Valley to have forty direct
reports, most of whom are from different cultures. They cannot fulfill the leadership
expectations of so many people or take the time to develop an in-depth understanding of forty
cultures, so what do they do? They develop a style that comes closest to being universally
acceptable and that fits their organizational culture and industry. Then they also adapt in
small ways when dealing with individuals from different cultures. This adaptation is called
code-switching. The term was originally used to explain how African Americans switched
from one communication style to another for survival reasons – from the Ebonics dialect used
with fellow African Americans to the speech patterns used by white people in formal settings
such as work. All of us code-switch as we consciously or unconsciously modify our language
and behavior to deal with people in different roles and settings. (Think about how you
described your last vacation to your best friend, mother, and boss.) Scholars such as Andrew
Molinsky have expanded the meaning of this term to describe all the behavioral codeswitching we do in cross-cultural settings to fit in, make others feel more comfortable, and to
be more effective.16
384
Leading a small global work team often requires different strategies and approaches (perhaps
more interpersonal relationship-building skills) than leading a global conglomerate (perhaps more
strategic and large-scale change agent skills), even if the long-term objectives of the firm are the
same. Leadership is not a glove that fits all sizes or occasions; it must be tailored to accommodate
the characters and the context in which it is exercised. No matter the context, leading across
cultures always requires a willingness to learn and quickly adapt to diverse and often rapidly
changing demands.
385
Competency Building Using the Pyramid Model
Early global leadership research focused primarily on identifying the unique competencies global
leaders developed as a result of their job demands. Some of these competencies were novel, such
as global mindset and cultural intelligence, discussed in Chapter 1. Today, over 200 global
leadership competencies have been identified, which Allan Bird mapped into three overarching
categories: business acumen, managing relationships, and managing self.17 These categories relate
to our global leadership definition (see above), which goes beyond formal job titles to include any
person who influences a range of internal and external constituents from multiple national cultures,
reflecting an increase in the number of individuals across different organizational levels engaged in
leadership activities.18 Simplified, this definition of global leadership incorporates four key elements:
Scanning. Paying close attention to global events, trends, and opportunities.
Attentiveness. An openness and attentiveness to multiple realms of action and meaning.
Articulation. An ability to understand and articulate cultural and strategic dynamics, which
involves understanding when culture does and does not matter.
Integration. An ability to integrate ideals and actions oriented towards global and local levels
alike.
With this in mind, how can we use the Pyramid model to help develop these four key elements? To
accomplish this, the model incorporates five successive skill-building components arranged, not
surprisingly, in a pyramid format – that is, it is an additive model that begins with foundational issues
and proceeds to more advanced elements of both cognition and behavior (see Exhibit 6.6). The five
levels in the developmental pyramid are as follows:
Level 1: Global business knowledge. Leadership starts with understanding the
environment in which people find themselves (see Chapter 1). Not surprisingly, then, the
Pyramid model begins by stressing the importance of learning about the global business
environment in all its complexities, which includes an understanding of economic, political,
social, and technological dimensions. It further comprises fundamental knowledge of cultural,
organizational, and managerial differences across regions, as discussed in Chapters 2
through 4.
Level 2: Threshold traits. Threshold traits are personality variables (see Chapter 4) that are
used to select global leaders because they are both essential and more difficult to train than
many other traits. They are: integrity, humility, inquisitiveness, and resilience.
Level 3: Multicultural competence. Referred to by some as a global mindset or cultural
intelligence, multicultural competence has been discussed throughout this book, beginning in
Chapter 1, and represents a key variable in global leadership. Of particular importance in this
regard are cognitive complexity and cosmopolitanism (see Exhibit 6.7 for definitions).
Level 4: Global management skills. Interpersonal skills are also important here. As
discussed throughout this book, global management interpersonal skills allow managers to
take what they have learned and use the skills drawn from their behavioral repertoire to enact
appropriate actions suitable to situations. Of particular note here are mindful communication
386
(see Chapter 5), trust-building (discussed in Chapter 8), and the ability to build successful
multicultural teams (discussed in Chapter 9).
Level 5: System skills. Finally, successful global managers require what can be called
system skills, capstone skills that are based on the entire pyramid of abilities and knowledge
that are used to make the system work. Included here are ethical decision-making,
stakeholder relations, change management, community building, organizing, and boundaryspanning skills (see Exhibit 6.7 for definitions).
Exhibit 6.6 Pyramid model of global leadership
Source: Adapted from Allan Bird and Joyce Osland, “Global competencies: an introduction,” in
Harry Lane et al. (eds.), Handbook of Global Management. Oxford: Blackwell, 2004, pp. 57–80;
and Joyce Osland in M. E. Mendenhall, J. S. Osland, A. Bird, G. Oddou, M. Maznevski, M.
Stevens, and G. Stahl (eds.) Global Leadership: Research, Practice, and Development.
London: Routledge, 2017.
Exhibit 6.7 Pyramid model’s global leadership competencies
Pyramid levels
Key competencies
Explanation
Level 1: Fundamental
knowledge of global
business
Economic, political,
social, and technological
understanding
In-depth understanding of how the global
economy works, including a knowledge of
cultural, management, business practices,
and organizational differences across
countries and regions
Level 2: Threshold
traits
Integrity
Commitment to sound moral character and
belief in commonly accepted moral and
ethical principles
Humility
Recognition that the beliefs and actions of
others are equally valuable to our own, and
we need to be open to learning from others
Inquisitiveness
Commitment to continual learning about
peoples and places of the world
387
Pyramid levels
Level 3: Multicultural
competence
Level 4: Global
management skills
Level 5: System skills
Key competencies
Explanation
Resilience
Capacity to work under stress and
unfavorable conditions and bounce back
from adversity
Cognitive complexity
Ability to see situations from multiple
viewpoints and tolerate ambiguities and
contradictions
Cosmopolitanism
Externally oriented; comfortable in multiple
settings and free of local or provincial
prejudices
Mindful communicator
Ability to use culturally appropriate verbal
and nonverbal communication in diverse
settings
Trust-builder
Ability to inspire others to believe in oneself
and one’s actions and plans
Multicultural team-builder
Ability to work effectively with teams from
diverse cultural backgrounds
Community builder
Ability to bring together a far-flung
organization and build alliances and support
from diverse community members
Boundary spanner
Ability to build bridges across organizational
boundaries; gaining support from disparate
groups
Organizer
Ability to build and manage effective
organizational structures and processes
Change manager
Ability to lead others to engage in new ways
of thinking and acting
Stakeholder liaison
Ability to align the interests of various
stakeholders towards a common goal
Ethical decision-maker
Ability to make decisions based on a clear
set of values and accepted standards of
behavior
Source: Adapted from Allan Bird and Joyce Osland, “Global competencies: an introduction,” in
Harry Lane et al. (eds.), Handbook of Global Management. Oxford: Blackwell, 2004, pp. 57–80;
and Henry Lane and Martha Maznevski, International Management Behavior: Global and
Sustainable Leadership. Cambridge University Press, 2019.
388
Leadership Effectiveness Cycle
While the Pyramid model helps us identify the basic building blocks of global leadership, it does not
by itself accurately describe the dynamic nature of leader behavior when managers interact with
their environments. In fact, the model was designed to be used in conjunction with a global
leadership effectiveness cycle.19 This cycle represents an effort to describe what effective global
managers do at the most basic level, and consists of three stages:
1. Understand situation. Perceive, analyze, and diagnose to decode the situation, which
involves matching characteristics of the current situation to past experiences and scanning for
clues or their absence, framing the situation in terms of experience and expectation, and setting
plausible goals for outcomes.
2. Identify potential solutions. Accurately identify effective managerial action – given the
situation and desired outcome, which nuanced actions would be the most effective? This
judgment relies on global knowledge, experience, situational contingencies, and an ability to
imagine and predict the outcomes of various responses.
3. Initiate action. Apply skills from one’s learned behavioral repertoire, along with flexibility, to
resolve the situation. In this stage, the emphasis moves from cognition to behavior.
389
Halla Tómasdóttir: An Example of the Pyramid Model
To see how the Pyramid model can be used to better understand how global leadership works, let’s
take a look at a unique situation from Iceland. Leading as a global manager is much easier said than
done, especially when the world seems to be collapsing around you. The 2008 global economic
collapse provides a good case in point. During this crisis, the small country of Iceland, with a
population of just over 300,000 people, was overwhelmed.20 As general director of Iceland’s
chamber of commerce Halla Tómasdóttir observed, “A lot had gone wrong, some things didn’t make
sense and it couldn’t go on that way. We warned it would happen.” But no one listened so she left
the chamber and launched her own company together with banker Kristin Petursdottir, a former
manager at the British subsidiary of the crisis-stricken Icelandic bank Kaupthing. Together, they
formed Audur Capital, a financial and investment company that would take a new path. Today,
Audur Capital is one of the few firms in the Icelandic finance sector that is actually turning a profit.
At Audur Capital, executives and employees alike use a simple formula for success: combining
multicultural competence with a common-sense approach to investing. Ardur focuses on sustainable
investments in projects that make as much sense socially and environmentally as they do for the
investors themselves. They are not interested in investments that quickly generate high yields but
with social or environmental costs.
Tómasdóttir notes that the company is run based on five core “feminine” values.21 The first core
value is risk awareness, not investing in anything they don’t understand. The second value is profit
with principles, seeking a positive social and environmental impact and not just economic profit. The
third value is emotional capital. Under this approach, investments are proceeded by what is called
emotional due diligence. This is a check on the company by looking at their people and at whether
the corporate culture is an asset or a liability. The fourth value is straight talking, making the
language of finance accessible to all and not part of an alienating nature of banking culture. Finally,
the last core value is a focus on helping women become financially independent, because this can
lead to greater freedom and independence for women so they can make their own investment
decisions.
Men are in a minority at Audur, but Tómasdóttir is keen to hire more. “There are fewer of them,
but they are not tokens; we have hired them on merit. Now, if we have two equally competent
people, we would positively discriminate in favor of the man because we want balance,” she says,
without a flicker of irony.
But Tómasdóttir’s career did not end here. In 2016, she ran for president of Iceland and only
narrowly lost. Then in 2018, she was appointed CEO to the B-Team, replacing Richard Branson of
the Virgin Group. The B-Team consists of a group of global business and society leaders committed
to using their collective voice to address social problems, including climate change, good
governance and transparency, responsible tax principles, and global human rights. The B-Team is
her next step in global leadership.
Throughout her career, Halla Tómasdóttir has led by example. She demonstrated early on at
Audur her business acumen and her multicultural competence (see Chapter 1). Both at Audur and
now the B-Team, she has made use of her global management skills from team-building to
communications to trust-building. And she has mastered such system skills as community builder,
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boundary spanner, organizer, and change manager. If we are looking for an exemplar for the
Pyramid model of leadership, here is a good place to begin.
Management Application 6.4 Pyramid Model: Halla Tómasdóttir
1. Is the concept of “emotional capital” consistent with the idea of multicultural
competence? Why, or why not?
2. Do you believe men and women generally have different values in business, such as
those discussed at Audur Capital? If so, how do they differ?
3. In your opinion, why might the “female” values at Audur have led to greater success in
the highly competitive global banking and investments industry than those of their male
counterparts?
4. What leadership lessons can we draw from this case for global managers in other
countries?
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Women Global Leaders and Diversity
Today, more and more women around the world are becoming managers and business owners,
although their role at the very top of corporations remains very limited.22 According to the
International Labour Organization (ILO), the proportion of women managers has increased over the
last twenty years in 80 percent of the countries they studied. Still, only 5 percent of the CEOs of the
world’s largest corporations are women.23
Looking globally, a recent study by Thornton International Business Report in forty-five
countries found that the percentage of women leaders in both large and small public and private
companies ranged from a high of 43 percent in Russia to 9 percent in Japan (see Exhibit 6.8).24
Commenting on the report, Erica O’Malley, Thornton’s managing partner of diversity and inclusion,
suggests that it is no longer feasible for global businesses to adopt a sit-and-wait policy when it
comes to promoting women to senior management roles, particularly when so many other nations –
developed and emerging – are more rapidly realizing the benefits of diverse senior leadership.25
Still, Thornton also reported that the vast majority of organizations worldwide aren’t taking the time
to train women for leadership roles. Only one in ten businesses globally have a program to support
and mentor women; 70 percent of companies are not even considering starting such programs.
Exhibit 6.8 Percentage of women in senior corporate leadership positions
Country (and
rank)
Women
leaders (%)
Country (and
rank)
Women
leaders (%)
Country (and
rank)
Women
leaders (%)
1. Russia
43
16. Chile
30
31. Ireland
23
2. Indonesia
41
17. Italy
30
32. Singapore
23
3. Latvia
41
18. Finland
29
33. Australia
22
4. Philippines
40
19. Greece
29
34. Brazil
22
5. Lithuania
39
20. Mexico
28
35. Spain
22
6. China
38
21. South
Africa
26
36. USA
22
7. Thailand
38
22. Sweden
26
37. UK
20
8. Estonia
37
23. Taiwan
26
38. Denmark
14
9. Armenia
35
24. Vietnam
26
39. Germany
14
10. Georgia
35
25. Argentina
25
40. India
14
11. Peru
35
26. Malaysia
25
41. UAE
14
12. Poland
34
27. Turkey
25
42.
Switzerland
13
13. Botswana
32
28. France
24
43.
Netherlands
10
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Country (and
rank)
Women
leaders (%)
Country (and
rank)
Women
leaders (%)
Country (and
rank)
Women
leaders (%)
14. New Zealand
31
29. Norway
24
44. Japan
9
15. Belgium
30
30. Canada
23
Source: Chad Brooks, Thornton International Business Report, cited in Business News Daily,
March 11, 2014, p. 2; see also: Judith Warner and Danielle Corley, “The women’s leadership
gap,” Center of American Progress, May 21, 2017; “Women in management,” Catalyst, July 30,
2018.
At the same time, women represent more than 20 percent of board members in just four
countries – Finland, Sweden, Norway, and the United Kingdom – the ILO says, citing a Catalyst
report covering board seats in forty-four countries (see Exhibit 6.9).26 But the study also noted that
when it comes to a woman being the chairperson of a company board, the percentages decline
sharply. While data from different sources vary, they generally show the small degree to which
women are leading boards – generally in the range of zero to only a few percentage points.
Exhibit 6.9 Percentage of board of directors seats held by women
Board seats held by women
>20%
0–20%
5–10%
<5%
Finland
Australia
Belgium
Bahrain
Norway
Austria
Brazil
Chile
Sweden
Canada
China
India
UK
Denmark
Greece
Japan
France
Indonesia
Kuwait
Germany
Ireland
Oman
Israel
Italy
Portugal
Netherlands
Malaysia
Qatar
Poland
Mexico
South Korea
South Africa
New Zealand
Russia
Turkey
Singapore
Saudi Arabia
Switzerland
Spain
Taiwan
USA
Thailand
UAE
Source: Judith Warner and Danielle Corley, “The women’s leadership gap,” Center of American
Progress, May 21, 2017; “Women in management,” Catalyst, July 30, 2018.
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According to the ILO study, women own and manage almost a third of the world’s independent
businesses. And they represent around a quarter of all employers in all regions, except the Middle
East and North Africa, where their numbers hover around 6 percent. However, women tend to be
concentrated more in micro and small enterprises. And while women are gaining access to more
and higher levels of leadership and management, there is a tendency for them to be clustered in
particular managerial functions, particularly in areas that are not on a path to the CEO role. These
include HR, public relations, and accounting. When executive positions become available – again,
especially in larger organizations – corporations tend to look for people in legal affairs, marketing,
and general management, and these people are typically male, although this is changing.
Looking at the available data, several studies have found that having more women at the top
can often help the bottom line.27 In fact, there may not be a direct causal link here because
companies that promote women to top jobs are often those that invest in research, innovation, and
technology. But the ILO study found that several studies have concluded that women’s participation
in decision-making has positive results for business outcomes. One study by McKinsey & Company
found that European companies with more women in their top management teams had higher stock
price growth, and that their average operating profit was almost double their industry average. And a
recent Credit Suisse study based on 2,300 companies found that over a six-year period, companies
with at least one female board member performed better than those with no women, in terms of
share price performance.28 Thus, while cause–effect relationships are difficult to establish firmly, the
evidence seems to demonstrate very clearly that including women in positions of power helps
organizations to succeed.
However, these studies leave three key questions unanswered:
If the numbers are correct, why is it that women leaders can change the bottom line for global
firms? Is there a type of distinctiveness in women’s leader style that facilitates success?
Will women be given the opportunity to serve as leaders at or near the top of corporations
around the world?
If the trend towards more women leaders around the world continues, what are the
implications for developing better theories of leadership that account for gender differences?
A recent meta-analysis of research on the business case for women collected and analyzed all
existing studies measuring the impact of women directors, CEOs, or top management team
members on firm performance, and discovered mixed results. They found that women leaders may
affect performance in general, and sales in particular. Women CEOs were more likely to improve
firm performance in gender egalitarian cultures.29
A good example of the changing role of women in international management can be found in
India, a land of strong tradition but also of dynamic change. One of the more notable changes is the
increasing number of women who hold leadership positions in local companies or who have begun
their own entrepreneurial firms. Over the years, women have quietly broken through the traditional
barriers of upward mobility to become successful entrepreneurs and executives. In recent years,
however, this stream has become a tsunami.
Indu Jain is a good example.30 Jain leads Bennett Coleman, India’s largest media company.
She is also listed on the Forbes list of billionaires. At the same time, Simone Tata built one of the
first indigenous cosmetic brands, while Anu Aga turned around the ailing Thermax Group to become
394
a highly profitable venture. Kiran Mazumdar-Shaw started Biocon, one of India’s first biotech
companies, while Lalita Gupte and Kalpana Morparia run India’s second largest bank. And Sulajja
Firodia Motwani of Kinetic Motor worked with South Korean, Italian, and Taiwanese companies to
develop her company from a niche moped manufacturer to manufacturing a full range of twowheelers and auto components.
The key to their success is reasonably clear: a long tradition of valuing education. As a result,
women who achieve academically are valued by industry. But there is also a second reason
according to Indira Parikh of the Foundation for Management Education: “What really made them
successful is their sheer determination to break through.”31 Their formula for success is identical to
that of their male counterparts: skills, drive, and opportunity. Finally, there is little evidence that these
women leaders in India behave differently from their male counterparts.
Consistent with the GLOBE findings, their behaviors are more Indian than female or male,
although this finding may not be true around the world. In working with subordinates, they are
described as encouraging, motivating, dynamic, and decisive – which, again, is consistent with
GLOBE’s overall view of effective leaders. And consistent with the Pyramid model, these women
also exhibit the traits of global leaders in terms of their business knowledge, threshold traits (e.g.,
integrity, inquisitiveness), multicultural competence (cosmopolitanism), interpersonal skills (e.g.,
team-building), and system skills (e.g., boundary-spanning, change skills).
Management Application 6.5 Women Leaders in India
1. What are the lessons from this example of Indian managers?
2. In general, do you believe that gender or national culture represents a more
significant influence on leadership style and effectiveness around the world? Why?
3. If you were responsible for increasing the number of women at the top of companies,
what steps would you recommend?
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Manager’s Notebook Leading Global Organizations
In this chapter, we have reviewed the concept of global leadership, compared leadership
traditions between East and West, explored a comparative leadership model (GLOBE) and a
global leadership model (Pyramid), and considered some of the gender challenges at work in
the exercise of leadership. Based on this, what strategies can be identified on a general level
about becoming more effective global leaders? What are the take-aways? At least three
factors come into play here: the personal traits of both leaders and followers; the
expectations of both leaders and followers, including the extent to which these expectations
match up; and the actual leader behaviors on the ground. These factors suggest that
managers placed in leadership roles might profitably begin by making sure that they
understand themselves as potential leaders, as well as the characteristics of the followers
and the situations in which they will find themselves.
1 Understand yourself as a leader
First, it can be highly instructive for managers facing global jobs and assignments to think
about how they conceptualize leadership and managing people (see Exhibit 6.10). What
does the concept of leadership mean to them as managers? Do they believe in a one-sizefits-all approach to leadership or a more tailored approach that recognizes local differences?
Finally, is there a better – perhaps broader – way to do this? Spending some time
considering just what leadership means can go a long way towards preparing managers for
success in upcoming global assignments. We saw a good example of this when comparing
Chinese traditions and leadership patterns with those of the West, but there are many more
examples that come to the same conclusion.
Exhibit 6.10 Strategies for leading global organizations
A related part of this consideration is the particular leadership skills that individual
managers need to develop as part of their overall approach to management. How complete
are their communication or negotiation skills? How much do they understand – or can they
learn – about the environment in which they work? It goes without saying that the more
managers can understand how they approach leadership, as well as the skills they possess
to do the job, the greater the likelihood of success. In this regard, as noted above with
respect to the Pyramid model of leadership (see entire model above), we can identify six
leadership skills that research has shown to be critical in building relationships, closing deals,
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supervising people, and building successful global careers.32 These are system skills that
may be viewed as a capstone of both leadership development and leadership effectiveness:
Community builder: An ability to build a community and partnerships among disparate
groups and individuals for mutual benefit.
Boundary spanner: An ability to create and maintain linkages across and within
organizational boundaries.
Organizer: An ability to build and maintain workable organizational structures and
processes to facilitate global goals.
Change maker: Build learning organizations in ways that encourage individuals and
groups to discover new ways of thinking, organizing, and performing tasks.
Stakeholder liaison: An ability to work with often conflicting stakeholders and help secure
their collective support for mutual benefit.
Ethical decision-maker: An ability to make honest and straightforward decisions and
initiate actions that bring credit to the organization.
These six skills have been discussed throughout this book and represent the most
recent research on how leaders set themselves apart from followers. They also provide a
useful framework for untangling the various global leadership models discussed in this
chapter. And taken together, they reinforce the argument made in Chapter 1 that success in
the global workplace is heavily influenced by both multicultural competence and the
development of global management skills.
2 Clarify leadership expectations
With this understanding – and with their antenna out – global managers can and should go
the extra mile to understand the uniqueness of foreign environments and work to
accommodate cultural differences when they exist. Understanding environments – cultural,
organizational, and situational – represents a necessary first step in preparing to lead
multicultural groups or organizations. In fact, there are many ways to accomplish this,
including reading books about particular cultures, talking with people who are familiar with
various cultures, and keeping one’s eyes open when traveling to new locations. However it is
accomplished, the global manager either learns quickly about how leadership processes
work or runs the risk of suffering the consequences.
A major part of this challenge deals with expectations. Specifically, what are managers’
expectations about their own leadership capabilities? What do they expect from others and,
equally, important, what do others expect of them? Expectations clarify rules and roles and
can support efforts to reduce employee anxieties about how their boss (their leader) will
operate. As such, the power of these expectations – as well as efforts to clarify them all
round – should not be ignored or downplayed.
3 Manage leader behaviors
Global managers are well advised to be authentic – that is, be themselves to the extent that
local conditions will allow. “Going native” often risks losing authenticity as a manager, leading
to confusion and even distrust among subordinates. Indeed, there are many examples of
397
foreign leaders who were chosen largely because they would approach their jobs in radically
different ways, not local ones. So, the challenge for global managers is to try to understand
local conditions and then act in authentic ways that are compatible, but not necessarily
synonymous, with local expectations. Being unique can often prove to be a successful
behavioral strategy, so long as such behavior is clearly understood by others to be supportive
of local goals and objectives, and not contradictory to cultural values and expectations. In
this regard, global managers who are well prepared in advance of their assignments may
have greater leeway in the exercise of leadership than they might imagine. For this to occur,
however, a solid understanding of local conditions must come first.
Finally, it is important to remember the simple fact that working with people from different
cultural backgrounds can be very challenging, but it can also potentially be very rewarding.
For many managers, though, it doesn’t happen easily. To the extent that this is correct, the
onus is on managers to prepare themselves for success in the future. Leading people from
different cultures – and, in fact, being led by people from different cultures – opens up
considerable opportunities to learn more about ourselves, discover new ways of doing things,
and find creative solutions to problems both old and new. It is clearly part of the
developmental process for managers. In this pursuit, continual learning plays a significant –
and often underappreciated – role.
398
Chapter Review
399
Summary
Leadership can be viewed as an integral part of good management. Some managers may be
charismatic; others may be participative; and still others may be highly directive. What
matters is how individual managers see and understand the situational and cultural realities,
and then capitalize on their own unique personal skills and abilities, including their
approaches to leadership, to get the job done.
Leadership is a cultural construct. Its meaning is embedded in the diverse cultures in which it
is exercised, and changes accordingly. Most important, it is not a Western construct that is
easily expanded to the global arena, as demonstrated by the GLOBE study.
Different foundations of leadership in Eastern and Western traditions can be traced to ancient
Chinese and Greek thought. These foundations are based on the separate paths these two
civilizations followed in their efforts to make sense out of human behavior. In Western
traditions, the work of a leader consists of bridging the gap between an ideal state and reality
(or actual practice) with a goal of achieving perfection. By contrast, the concept of an ideal or
archetype that would serve as a model for action and a desirable final state of affairs never
developed in ancient China. Instead, reality in China has historically been seen as a process
emanating from the interaction between opposing and complementary forces, or yin and
yang. Order did not result from an ideal to be accomplished but from a natural propensity of
processes already in motion. Because the emphasis was on current processes evolving here
and now, Chinese thinking focused on very concrete and specific situations of everyday life,
rather than abstractions of the essence of an ideal form.
Business success in the global arena is predicated on achieving and maintaining a
competitive edge. In this endeavor, managers are charged with the responsibility of
outperforming their opponents using the toolkit that is available to them. Simply put, the better
the toolkit, the greater the probability of success. In particular, the more that managers can
understand the environment in which they work, as well as themselves as potential leaders,
the greater their odds of success.
Leadership effectiveness can be influenced in no small way by what local cultures mean by
leadership. Do they want leaders who are subtle or overt? Do they base leadership on rules
or relationships? How are leaders chosen? Similarly, the ownership patterns of an
organization can determine who becomes a leader, as well as what is expected of them.
Owner-managers sometimes become leaders by definition, while leaders in investor firms
may have to fight their way into leadership positions or use charisma to gain attention and
support. As discussed in Chapter 9, leadership patterns are also often influenced by whether
the group or team is on-site (face to face) or virtual. Each location here can require very
different behaviors. Finally, trust levels between leaders and followers are often important,
and are often earned in different ways. The lesson for leaders here is to consider the
environment as a source of multiple contingencies that must be met with the leadership style
that is used or allowed.
Two approaches to leadership were introduced here, comparative and global leadership.
Each is illustrated by the GLOBE and the Pyramid models. While the first is largely
400
descriptive and concerns comparative leadership, the second is largely developmental and
focuses on global leadership. Both offer guidance for managers intent on furthering their
global skills and careers.
At least three factors come into play here: the personal traits of both leaders and followers;
the expectations of both leaders and followers, including the extent to which these
expectations agree; and the actual leader behaviors on the ground. These factors suggest
that managers placed in leadership roles might profitably begin by making sure that they
understand themselves as potential leaders, as well as the characteristics of the followers
and the situations in which they will find themselves.
401
Key Concepts
code-switching
comparative leadership vs. global leadership
emotional capital
gate-keeping leadership
global leadership effectiveness cycle
GLOBE leadership dimensions
GLOBE leadership model
leadership
Pyramid leadership model
symbolic leadership
transactional vs. transformational leadership
yin vs. yang
402
Discussion Questions
1. There is an age-old debate on whether leaders lead from the front or the rear. Two quotes early in
this chapter illustrate this dichotomy: “Leadership is like beauty; it is hard to define, but you know it
when you see it” and “A leader is best when people barely know he exists, who talks little, and when
the work is done and the aim fulfilled, people will say, we did this ourselves.” Under what
circumstances should leaders be highly visible or largely invisible? Explain.
2. The interrelationship between management and leadership can be confusing, particularly in the
global arena. Part of this issue is semantic, but part is very real. In your view, under what
circumstances must managers be leaders, and when can managers just be managers?
3. It was noted in this chapter that leadership processes in China (and much of East and Southeast
Asia) stem from ancient Chinese traditions, while many of the leadership practices in the West
(notably Europe and North America) stem from ancient Greek traditions. After hundreds of years of
global trade and other interactions between these two regions, as well as recent globalization
activities, why have we not seen more movement towards a merger of these two trends in
leadership practices?
4. If you were tasked to organize and conduct the GLOBE leadership research project, which
consisted of five principal investigators, numerous sub-investigators, and sixty-two different
countries, what leadership principles would you employ to accomplish this task? Explain.
5. What to you are the three or four critical lessons for managers that follow from the GLOBE
research project?
6. What to you are the three or four critical lessons for managers that follow from the Pyramid
model?
7. Compare and contrast the GLOBE and Pyramid models in terms of how they contribute to our
understanding of leadership processes across cultures.
8. In your view, do men and women tend to approach leadership in fundamentally different ways? If
so, is culture or gender more important in determining a leader’s style and effectiveness?
9. Going a step further, Facebook’s CEO, Sheryl Sandberg, argues that in the future there will be no
female leaders, only leaders. Do you agree with this? Why, or why not?
10. The three strategies for leading global organizations summarized in Exhibit 6.10 suggest that
successful leadership requires actions – and trust – on the part of both leaders and followers. How
403
can managers work to better understand themselves and their expectations as leaders when
working across borders? How can managers work to better understand and meet the expectations
of their subordinates?
11. In your view, what are the three most important lessons from this chapter for global managers?
Explain.
404
Notes
1. “Davos man and his defects,” The Economist, January 26, 2013.
2. Warren G. Bennis, On Becoming a Leader. Reading, MA: Addison-Wesley, 1989, p. 1.
3. William G. Boltz, “Lao Tzu Tao Te Ching,” in Michael Loewe (ed.), Early Chinese Texts: A
Bibliographical Guide. Berkeley, CA: Institute of East Asian Studies, 1993, pp. 269–92.
4. Nancy Adler with Allison Gundersen, International Dimensions of Organizational Behavior.
Cincinnati, OH: Cengage, 2007.
5. Robert Sutton, “True leaders are also managers,” Harvard Business Review, August 11, 2010,
available at https://hbr.org/2010/08/true-leaders-are-also-managers. Accessed March 1, 2019.
6. Jun Ishikawa, personal communication.
7. Chao-Chuan Chen and Yueh-Ting Lee, Leadership and Management in China. Cambridge
University Press, 2008.
8. Robert J. House, Paul J. Hanges, Mansour Javidan, Peter W. Dorfman, and Vipin Gupta,
Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies. Thousand Oaks, CA:
Sage, 2004; Peter Dorfman, Mansour Javidan, Paule Hanges, Ali Dashmalchian, and Robert J.
House, “GLOBE: a twenty-year journey into the intriguing world of culture and leadership,” Journal
of World Business, 2012, 47, pp. 504–18.
9. Robert House, Peter Dorfman, Mansour Javidan, Paul Hanges, and Mary Sully de Luque,
Strategic Leadership Across Cultures: The GLOBE Study of CEO Leadership Behavior and
Effectiveness in 24 Countries. Thousand Oaks, CA: Sage, 2014.
10. Ibid.
11. Ibid.
12. Joyce Osland, “An overview of the global leadership literature,” in M. E. Mendenhall, J. S.
Osland, A. Bird, G. Oddou, M. Stevens, M. Maznevski, and G. Stahl (eds.), Global Leadership:
Research, Practices, and Development. New York: Routledge, 2018, pp. 57–116.
13. Sebastian Reiche, Allan Bird, Mark Mendenhall, and Joyce Osland, “Contextualizing
leadership: a typology of global leadership roles,” Journal of International Business Studies, 2017,
48, pp. 552–72.
14. Joyce Osland, Allan Bird, and Gary Oddou, “The context of global leadership,” in William
Mobley, Ying Wang, and Ming Li (eds.), Advances in Global Leadership, vol. 7. London: Emerald
Group Publishing, 2012, pp. 107–24.
15. Rhonda Cohen, “The relationship between personality, sensation seeking, reaction time and
sport participation: evidence from drag racers, sport science students and archers,” PhD thesis,
Middlesex University, 2012.
405
16. Andrew Molinsky, Global Dexterity: How to Adapt Your Behavior Across Cultures Without
Losing Yourself in the Process. Cambridge, MA: Harvard Business Press, 2013.
17. Allan Bird, “Mapping the content domain of global leadership competencies,” in M. E.
Mendenhall, J. S. Osland, A. Bird, G. R. Oddou, M. J. Stevens, M. L. Maznevski, and G. K. Stahl
(eds.), Global Leadership: Research, Practice, and Development. London: Routledge, 2018, pp.
119–42.
18. Allan Bird and Mark Mendenhall, “From cross-cultural management to global leadership:
evolution and adaptation,” Journal of World Business, 2016, 51(1), pp. 115–26.
19. Allan Bird and Joyce Osland, “Global competencies: an introduction,” in H. Lane, M.
Maznevski, M. Mendenhall, and J. McNett (eds.), Handbook of Global Management. Oxford:
Blackwell, 2004, pp. 59–61.
20. Manfred Ertel, “Cleaning up men’s messes: Iceland’s women reach for power,” Spiegel, April
22, 2009, pp. 23–6.
21. The Guardian, “After the crash, Iceland’s women lead the rescue,” February 22, 2009.
22. The Guardian, “Women rising up global management stakes, but rarely to the very top,”
January 12, 2015.
23. Chad Brooks, Thornton International Business Report, cited in Business News Daily, March
11, 2014, p. 2; “Women in business and management,” International Labour Organization, July 2,
2017; “A global snapshot: women leaders and managers in employers’ organizations,”
International Labour Organization, May 1, 2017.
24. Chad Brooks, Thornton International Business Report.
25. Ibid.
26. Judith Warner and Danielle Corley, “The women’s leadership gap,” Center of American
Progress, May 21, 2017; “Women in management,” Catalyst, July 30, 2018.
27. The Guardian, “Women rising up global management stakes.”
28. Ibid.
29. J. M. Hoobler, C. R. Masterson, S. M. Nkomo, and E. J. Michel, “The business case for
women leaders’ meta-analysis, research critique, and path forward,” Journal of Management,
2018, 44(6), pp. 2473–99.
30. Megha Bahree, “India’s most powerful businesswomen,” Forbes, September 1, 2006;
Christina Vuleta, “Power women 2018,” Forbes, December 4, 2018.
31. Bahree, “India’s most powerful businesswomen.”
32. Bird and Osland, “Global competencies: an introduction,” pp. 59–61.
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7
Managerial Ethics and Social
Responsibility
◈
Chapter Outline
Ethical and Social Challenges
Management Application 7.1 Managing in an Imperfect
World
Ethical and Institutional Conflicts
Management Application 7.2 IKEA in Saudi Arabia
Laws and Conventions Governing Ethical Behavior
Management Application 7.3 Starting a Business in
Mumbai
Boundaries of Ethical Managerial Behavior
Management Application 7.4 #MeToo Goes Global
Corporate Social Responsibility
Management Application 7.5 Doing Well by Doing Good
MANAGER’S NOTEBOOK: Managing Ethical Conflicts
Chapter Review
407
Learning Objectives
Explore reasons behind unethical behavior in global
business.
Examine the relationship between culture, bribery, and
corruption.
Develop an awareness of various laws and conventions
aimed at curbing unethical behavior.
Learn what managers and companies can do to facilitate
a more transparent ethical and socially responsible
global business environment.
Develop global ethical skills.
Integrity has no need of rules.1
Albert Camus
French philosopher and journalist
Every summer, Svetlana and her family pack up their car and
drive from her adopted Germany through Poland and Ukraine to
visit friends and relatives in her native Moldova. And each time
she returns to Germany, she has no regrets about leaving her
native country for a better life.2 “People are now very poor in my
country and everything is so expensive. Above all, it’s the
corruption. I can’t stand it. You even have to pay a bribe to get an
appointment with a doctor. This is why I left,” she says.
408
Svetlana’s experience reveals a great deal about the impetus
for the mass migration of people from Eastern to Western Europe,
and the consequences for the people and countries left behind.
Hundreds of thousands of young people have left Central,
Eastern, and Southeastern Europe (known as CESEE) for a better
life in Western Europe. In fact, in the last twenty-five years, nearly
20 million people from CESEE countries have left their
homelands, or about 6 percent of the population, according to the
International Monetary Fund.3 This migration is not just motivated
by people’s desire for better living conditions and employment
opportunities; it is also driven by firsthand experience with
corruption and exploitation. People want to escape, lest they
become part of this institutional network of corruption. And in
leaving, they reinforce the power of the corrupt elites, who do not
want a vibrant, educated civil society that seeks change,
transparency, and democracy.
Meanwhile, most Western Europeans see inward migration
from CESEE countries as a benefit for their own economic
development efforts, although some also see it as a threat to their
cultural and economic security. Western countries get access to
highly motivated and often well-educated people, even if many of
these people work well below their previous levels of training.
Svetlana, for example, has a university degree, but works in a
laundry. “I worked in the interior ministry. I saw what was
happening. You criticize, then you are kicked out or won’t get
promoted. I ran out of energy. Hats off to those who remain and
try to change things.”4
Svetlana’s experience illustrates both the challenges and the
importance of acting ethically in global commerce. In this chapter,
409
we will build on this example and explore the following issues:
key ethical and social challenges facing both companies
and managers
the nature of ethical and institutional conflicts
laws and conventions on ethical behavior
hallmarks of ethical managerial behavior
the importance of corporate social responsibility.
410
Ethical and Social Challenges
It is not difficult to understand why Svetlana and her family left
Moldova. What is difficult to understand, however, is why Moldova
has not moved more aggressively to reduce its corruption levels
and stem the loss of its young educated talent. Every country
experiences corruption in one way or another. From the
standpoint of managers involved in global trade, the issue is the
extent to which such adverse behavior interferes with legal and
honest business. The challenge to managers is simple, yet
complex: How do you decide what is corruption and what is simply
inconvenient bureaucracy? What is an ethical conflict? What is
moral? And what happens when our view of ethics or morals are
different to someone else’s? Consider four examples:
Insider trading in the United Kingdom. An investment
trader who had worked for both UBS and Citigroup was
indicted for trying to rig a Libor global benchmark interest
rate that underpins everything from mortgage rates to giant
corporate loans.5 He rigged the rates to make more money
off trades. While several banks had pleaded guilty to similar
charges, none of their executives were sent to jail, and this
was the first criminal indictment of an individual.6 In his
defense, the trader argued that his behavior was in line
with industry standards, his bosses knew about and
condoned what he was doing, and he never realized his
behavior was improper. He was convicted and sentenced
411
to fourteen years in prison. Is this an example of unethical
behavior? Why, or why not?
Money and politics in the US. In 2010, the US Supreme
Court ruled that it was unconstitutional to limit how much
individuals, unions, and corporations could spend on
federal election campaigns. Subsequent spending in
support of favored candidates increased geometrically,
reaching $6.5 billion during the 2016 presidential and
congressional races and $5.2 billion during the 2018
congressional races alone.7 In 2020, it is expected to be
more. Is any of this an example of unethical behavior?
Why, or why not?
Customs clearances in Mexico. A small package arrived
by Federal Express in Mexico City from the United States
and was sent to customs for clearance. Nothing happened.
After repeated unsuccessful attempts to complete the
delivery, it was suggested to the intended recipient of the
package that a bribe to a customs agent would likely
resolve the problem. She refused and requested that the
package be returned to its original sender. Again, nothing
happened. Then it was suggested that a bribe might be
necessary to have customs release the package so it could
be returned to its original sender.8 Is this an example of
unethical behavior? Why, or why not? What would you
advise the sender of the package to do?
Income taxes in Italy and Finland. A major Italian city
accidentally posted its tax rolls on a website so everyone
could see what every citizen paid in taxes. A moral outrage
412
erupted, but with a curious twist: half of the city was morally
outraged because so many of their fellow citizens flagrantly
avoided their tax obligations, while the other half was
equally outraged because the city’s error caused
embarrassment to its non-taxpaying citizens.9 Meanwhile,
each year the government of Finland publishes personal
tax data on all of its citizens online.10 This is done in the
belief that it supports greater transparency – and possibly
equality – throughout the country. Comparing the two
situations, is there an example of unethical behavior here?
If so, where? Is there a moral imperative for national
governments to keep personal income tax information
confidential? Why, or why not?
Do any or all of these examples involve unethical behavior, or
are they just practices with which we may or may not agree, or for
which others are responsible? How do you decide which answer
is correct? One way is to try and understand the roots of ethical
and unethical behavior, why it is so prevalent, and what managers
can do to improve the situation. It all begins with learning.
413
Management Application 7.1 Managing in an Imperfect
World
1. What, if anything, do these examples of
questionable behavior have in common?
2. Which of these examples seem less serious to you?
That is, can you rank them in order of their
perniciousness? What criteria did you use to create
your ranking?
3. Why are such behaviors so endemic to global
business?
4. Taken together, what lessons emerge for global
managers?
5. In your view, are there legitimate ways to reduce the
prevalence of such behavior in global commerce, or is
this just the way the business environment works and
will continue working? Explain.
Ethical conflicts are a fact of organizational life today. One
has to look no further than the Financial Times, Wall Street
Journal, Economic Times of India, Nihon Keizai Shimbun, The
Straits Times, or Handelsblatt to see daily examples of alleged or
demonstrated
unethical
business
activities
caused
by
unscrupulous managers, companies, and entrepreneurs. Such
behavior can be found in all countries and among all sectors of
the population. Money, power, and position are powerful
motivators and the number of susceptible people is large. Many of
414
these conflicts rest squarely on how different people see the world
– their view of reality and what is acceptable. One person’s view
of the facts or of morality itself often differs from that of another.
But this situation is nothing new. Seventeenth-century French
philosopher Blasé Pascal long ago observed “there are truths on
this side of the Pyrenees that are falsehoods on the other.”11
Pascal was pointing out that throughout history, the people of
Spain and France (divided by the Pyrenees mountains)
sometimes look at the same facts and draw very different
conclusions about what is true and false.
Spain and France are not alone, and this observation is as
true today as it was four centuries ago. Clearly one of the major
sources of conflict facing managers today in working across
borders is how to deal with differences in perceptions of what is
right or wrong, legal or illegal, ethical or unethical. Must everyone
adhere to the same standards or is there flexibility in this regard –
and what if the people you are working with adhere to different
standards? Managing in an imperfect world has many challenges,
including bribery and corruption, fair employment practices, and
environmental stewardship. Finding a way to succeed in business
while remaining true to both your core ethical beliefs and
institutional or legal requirements is no easy task. And it doesn’t
take much effort to identify examples of unethical or socially
irresponsible behavior today (see Exhibit 7.1):
1. Bribery and corruption. When people discuss ethics and
social responsibility, they typically think first of bribery and
corruption. Such a discussion can be complicated, however,
because these terms can have very different meanings – and
415
different means of implementation – across borders.12 Think
about it: what is the difference between a bribe, a gratuity,
and a commission? Are there fundamental ethical differences,
or is everything in the eye of the beholder? In Russia, for
example, “business” is not a concept that is naturally
expressed in the Russian language. There is no original
Russian word for it. Biznez, as it is incorporated into the
language, carries with it strong cultural baggage dating from
communist times, and it is still associated with ideas such as
exploitation and corruption. Unlike some Westerners,
Russians differentiate between ethics and corruption.
Corruption is seen as institutionalized, hierarchical behavior
that falls out of the control of individuals. Included here is
kleptocracy, government by those who seek status and
personal gain at the expense of the governed, as we saw in
the example of Moldova above. Ethics, on the other hand, is
seen as the set of principles that should guide one-on-one
relationships between individuals. According to this cultural
reasoning, corruption refers more to the institutional
environment in which individuals, like it or not, must operate.
It is neither good nor bad as seen by this culture; it is just
necessary, and individual behavior is not commensurate with
the presence or absence of corruption. If one partner steals
from another partner, there is a breach in ethical behavior, but
not an incidence of corruption. Other countries and cultures
see things differently.
2. Ethnocentrism and extreme nationalism. A second
major challenge can be found in extreme ethnocentrism. If
416
cultures tell us who we are, they also tell us who we are not,
and therein lies a challenge. Cultures at all levels (e.g.,
national, regional, professional, religious, etc.) often create
us-versus-them situations, partly out of self-defense and
partly for self-aggrandizement. We are proud to be x, and you
are not part of x, so the logic goes. This is generally referred
to as ethnocentrism, a belief in the inherent superiority of
one’s own ethnic group or culture. One result of
ethnocentrism can be extreme nationalism. On one level,
nationalism represents loyalty and devotion to a nation. On
another level, however, this loyalty can morph into a sense of
national consciousness, exalting one nation above all others
and placing primary emphasis on the promotion of its culture
and interests as opposed to those of other nations or
supranational groups. When taken to extremes, such beliefs
can lead to discrimination against subcultures, religions,
outsiders, or any group with which we disagree. Such
behavior can be seen in ethnic clashes in Europe between
long-standing “natives” and recent immigrants from the
Middle East. It can also be seen in discrimination against
ethnic minorities around the world, including the Christian
Yazidis in Iraq, Muslim Rohingya in Myanmar, Muslim
Uyghurs in China, Sami in Norway, Zapotecs and Tlapanecs
in Mexico, and African, Latin, and Native Americans in the
US. A related factor in this us-versus-them mix is xenophobia,
the fear or dislike of foreigners, people from different cultures,
or strangers. Found in both large and small countries, fear or
dislike of the customs, dress, etc. of people who are culturally
different to oneself can often lead to overt or covert
417
discrimination, or worse, and represents one more challenge
faced by managers in global business when such attitudes
impact hiring and promotion or co-worker relations.
3. Discrimination and social injustice. A common outcome
from over-zealous ethnocentrism is discrimination, the
distinctions or treatment, in favor of or against, a person
based on the group, class, or category to which that person
belongs rather than on individual merit. The roots of
discrimination are easily understood and typically emerge
when a group of people feel threatened or when there is a
fundamental conflict between core beliefs. Thus, richer
communities sometimes wall themselves off from poorer
ones, while members of one religion may guard against the
beliefs of another religion. If there is a threat to
multiculturalism, this is it. While globalization has broken
down barriers among countries, it has also created winners
and losers, increasing equality in some areas and inequality
in others. What is the most suitable role, if any, for global
companies in helping to achieve social justice, particularly in
developing nations? What is the responsibility of global firms
in helping to develop social infrastructure, fairness, and
improved quality of life in those places where they have
operations? Indicators of social justice include poverty
prevention, access to education, labor market inclusion,
social inclusion and non-discrimination, health, and
intergenerational justice. We’ll address this issue later on in
the section on corporate social responsibility (CSR).
418
4. Economic development and sustainability. Finally,
several ethical and social challenges facing managers today
are rooted in their relationship to developing countries where
they do business. MNCs have been routinely criticized for
ignoring what some perceive as their economic development
responsibilities and exerting monopolistic powers in
developing countries to such an extent that many smaller
nations lose their political sovereignty. Companies dictate the
terms of building factories in developing nations and
governments can either agree or lose the jobs and economic
development that such factories create. At times, the deals
struck by MNCs are more beneficial to corrupt locals than to
the developing country as a whole. Furthermore, due to the
growing power of both MNCs and global institutions such as
the World Trade Organization and the World Bank, whose
officials are not popularly elected, national sovereignty to
pursue a chosen destiny may at times be lost to the
impersonality of globalization forces. Indeed, national cultures
may themselves be threatened as foreign companies bring in
their wealth, their power, and their customs. One result of
such efforts is often a threat to environmental sustainability.
Environmental stewardship means exactly what it says,
taking care of the environment where companies do business
– especially in extraction industries – for future generations.
Sustainability is the key word here. In recent years, global
companies have understood the importance of this and have
gone to great lengths to be part of the solution, not just the
problem.
419
Exhibit 7.1 Ethical and social challenges facing managers and
organizations
The implications of these four challenges are important. If
institutions systematically behave in a corrupt, dysfunctional, or
socially irresponsible manner, global business engenders more
resistance and protests. Even more, when corruption and lack of
local responsibility become part of the business environment,
concepts such as guilt and shame lose some of their saliency
because free will by individuals regarding corrupt behavior may
have disappeared altogether. When corruption and irresponsibility
become part of the institutional fabric, it becomes “business as
usual.” However, all parties to a deal or partnership should
understand the causes, nuances, and results of ethical conflicts.
Not surprisingly, many global managers with little or no experience
in this area can easily be taken in.
420
Ethical and Institutional Conflicts
Individuals and groups often see the same “facts on the ground”
and come to very different conclusions about who is right or
wrong, or what should be done. Their perception is influenced by
cultural factors and religious beliefs, political affiliations, family
histories, geographic locations, and personality, as well as biases
and prejudice. Sometimes our deeply held beliefs and values
prevent us from actively seeking to discover the facts or see all
sides in an ethical conflict. But we are more likely to find good
resolutions if we dig deeper to understand the roots of ethical
conflicts. Cultural differences and local realities are a good
starting point.
421
Universalism, Particularism, and Ethical Conflicts
Clearly, one of the major sources of conflict facing managers
today in working across borders is how to deal with differences in
perceptions of what is right or wrong, ethical or unethical. Ethical
conflicts represent disagreements that arise when two or more
people (or groups) disagree on what is morally or philosophically
ethically correct. This disagreement is often posed in terms of
right and wrong, moral and immoral, and each group gets to
decide its own version of these two polar opposites. And if ethical
questions within a single homogeneous society are complicated,
imagine how these challenges multiply when we look at the
intersection of two or more cultures!
In Senegal, an expatriate named Michael was the director of
an international development agency. To his surprise, he could not
advertise in the local paper for employees; instead all job requests
went to the labor ministry and employees were referred to him by
their local representative. This representative naturally held a
great deal of power and occasionally “requested” items such as
office supplies. Michael became concerned when the labor official
began referring only attractive young women with no obvious job
skills. The consensus of the local employees was that one could
only turn down a limited number of these candidates before
incurring the wrath of the labor official – or having to bribe him to
obtain better job candidates. There was also some question about
whether these young women were forced to somehow repay the
official for any jobs they were offered, or if their families had called
in a favor. After pondering several actions, Michael initiated job
422
tests for all potential candidates. This gave him a bureaucratic
reason for turning down candidates without insulting or angering
the official. Shortly thereafter, the parade of attractive young
women halted. Michael effectively resolved the problem because
he attempted to understand the local situation and find a creative,
ace-saving way to remove himself from an ethical quandary. He
was saved by a universalistic bureaucratic procedure based on
the idea that everyone should be qualified for their jobs. While the
official did not appear to operate in accordance with this view at all
times, he was willing to accept it once he understood how
important it was to Michael’s agency.
Consider: Are ethical standards rigid or flexible? Must
everyone adhere to the same standards or is there flexibility in this
regard? What if the people you are working with adhere to
different standards? Finding a way to succeed in business while
remaining true to your core ethical beliefs and institutional or legal
requirements is no easy task. Simply put, do people believe that
truth is a universal fact or situational? This is really the difference
between universalism and particularism, as discussed in
Chapter 2. Some people believe that what they hold to be true is
universally correct. Others believe that truth is in the eye of the
beholder and depends on circumstances and relationships (see
Exhibit 7.2).
423
Exhibit 7.2 Universalism, particularism, and ethical beliefs
Thus, universalists tend to emphasize norms, values, and
predictability, while particularists tend to favor relationships,
flexibility, and sometimes ambiguity. There is nothing intrinsically
ethical or unethical about either of these preferences, even if they
obviously lead to contrasting, even contradictory, behaviors
towards others. Performance appraisal in organizations, for
instance, can be practiced through objective, pre-established
standards that will be equally applied to each employee. Not
coincidentally, this is the preferred method in mostly universalistic
Western countries, as well as in most HRM books.
In
other
more
particularistic
cultures,
the
specific
circumstances regarding each employee may be given a more
salient role in assessing performance and behavior. An employee
who contributes less at work may receive a bonus due to need or
a closer relationship with the boss, while a better worker does not.
Is this inherently wrong? The answer is not so much who is right
or wrong, but rather what frames of reference are used in making
the assessment. From a purely objective standpoint, treating
people “equally” regardless of who they are (as universalists
propose) or “differently” based on group memberships (as
particularists propose) is, strictly speaking, neutral in ethical
424
terms. It only becomes correct or incorrect when we interject our
own value systems into the picture.
425
Ethical versus Institutional Conflicts
While ethical conflicts focus on what is moral, institutional
conflicts focus on what is legal. One has spiritual or moral
implications;
the
other
has
enforcement
or
punishment
implications. Institutional conflicts represent differences over what
is legal or consistent with legitimately determined public policy. In
addition to laws, governments and public agencies also sanction a
number of public policies that are designed for the common good.
For example, many governmental organizations issue edicts,
recommendations, or targets on issues relating to social policy
(e.g., automobile emissions, greenhouse gases, and child labor).
Some of these public policies are backed up by enforcement
mechanisms, while others are enforced only by social pressure.
Many institutional requirements (laws, regulations) are
implemented to reinforce a society’s normative (moral) beliefs. For
example, if social norms or religious beliefs forbid theft, laws are
often enacted to back this up by making such actions illegal. As a
result, normative beliefs and institutional regulations tend to
correlate highly with one another in most societies, particularly
those that are relatively homogeneous. Moreover, in some
cultures, legal requirements are directly integrated into religious
beliefs – such as Islam’s sharia law, often defined as a system of
divine law governing beliefs and practices. Even so, what is moral
or legal in one society may not necessarily be so in another. Take
the case of insider trading, where corporate officers and others
close to the executive wing use confidential information that is not
publicly available to general stockholders to purchase or sell
426
shares before news affecting stock prices becomes public. Some
Western countries consider this to be both unethical and illegal.
Others see such behavior as inevitable (i.e., how can society
expect executives not to act on future knowledge about their
firms?) and therefore do not attempt to proscribe it.
The major practical implication of this separation of the ethical
and the legal is that only the most fundamental parameters of
human behavior (e.g., major crimes against society) are
mandated by the law and oftentimes punished, while ethical
misbehavior is left to self- or group regulation, and largely
excluded from direct government intervention.
Now we come to an interesting question: What should
managers do when confronted with a conflict between their ethical
beliefs, on the one hand, and local laws and regulations, on the
other? When all reasonable efforts to reconcile these conflicting
forces fail, some companies encourage employees to give priority
to doing what is right (e.g., observing the basic principles of
human rights and environmental protection over local laws). Inhouse programs at Motorola, for example, advise their global
managers to check out whether the consequences of applying the
law in various countries violate these basic principles prior to
acting.
Global managers sometimes take the laws of their home
country more seriously than those of foreign nations. Business
travelers to Iran will often lie to Iranian authorities about ever
having visited Israel, since this would automatically prohibit their
entry. (Some even have two passports – one for Israel and one for
the rest of the world.) But these same travelers, when asked how
they feel about similarly violating the immigration laws of their own
427
country, typically show a clear reluctance to break the law.
Generally speaking, obeying the laws of foreign countries is very
important; only when the laws go against one’s ethics or the laws
of one’s own country must business people carefully consider the
ethics involved.
Consider the following controversy. Sweden’s global retailer
IKEA prides itself on its Scandinavian flair, with simple and clean
lines throughout its product lines and its avant-garde advertising
campaigns. But when the company entered the conservative
Islamic Saudi market recently, it faced a new market reality. In a
country where women dress in conventional black Saudi attire,
IKEA wanted to avoid antagonizing the local population – and
government regulators – and so deleted images of women from
their advertisements used in that country.13 But while the Saudi
market was apparently satisfied, IKEA came under strong criticism
from its home country – and the Swedish government – for
“selling out” its traditional Swedish commitment to gender equality.
IKEA’s strong egalitarian corporate culture was called into
question.
428
Management Application 7.2 IKEA in Saudi Arabia
1. IKEA seems to be trapped between two cultures. As
a manager at IKEA, what options do you have to
finding a resolution that would ameliorate the Swedish
government and public opinion while protecting your
Saudi market?
2. What would you recommend IKEA do? What are
the likely consequences of your recommendation?
3. Can you identify another example where companies
and their managers are trapped in a conflict between
two distinct cultural environments? What might they do
to ameliorate this situation? Explain.
429
Laws and Conventions Governing
Ethical Behavior
Efforts to encourage ethical behavior and curb unethical
behavior are obviously not new. They can be found in a myriad of
religious tracts, political documents, professional associations,
public and private organizations, and universities. Ironically, while
most of these documents share common positions on unethical
behavior, problems still persist. Understanding the cultural roots of
many of these conflicts can be helpful, but we can also explore
how countries have banded together in an effort to reduce such
behavior, especially in global business. The underlying philosophy
of many of these efforts is strength in numbers; that is, to the
extent that countries and institutions can band together to pass
and enforce regulations covering large areas of global commerce,
the more likely they are to have the desired impact. Having a
united front clarifies and strengthens their position. Sometimes it
also ensures that companies can afford to do the right thing
without losing out to competitors. For example, companies that
grow bananas shroud banana stalks in plastic treated with
fungicides as they grow. Individual companies operating in Central
America then allowed this plastic to enter the waterways, polluting
and harming sea life. They claimed it was too expensive to find a
solution because their bananas would cost more than their
competitors who continued to pollute. This argument became
moot once an environmental pact was signed by all companies.
This raises the point that some companies do the right thing
430
regardless of cost because it is part of their company ethos and
values; others agree only when others address their business
concerns.
There are many successful institutional efforts to curb
unethical behavior, some regional in scope such as laws
emanating from both the US and the EU, and some more global in
scope such as those promulgated by the OECD and the United
Nations. There are also efforts to rate countries based on the
transparency of their business environments, such as the
Corruption Perception Index by Transparency International. We
briefly examine each of these.
431
Regional Laws and Conventions
Several regions of the world have enacted their own laws and
conventions concerning unethical or illegal behavior. Two notable
ones are the US Foreign Corrupt Practices Act and the EU
Criminal Law Convention on Corruption. The United States was
one of the first countries to identify activities they deem either
illegal or unethical with the passage in 1977 of the US Foreign
Corrupt Practices Act (FCPA).
Previously, it was not illegal for US companies to bribe foreign
government officials, but it was illegal to hide the expenditure from
shareholders. An investigation in the mid-1970s by the US
Securities and Exchange Commission found that 400 US firms
had spent $300 million bribing foreign governments. Lockheed,
the largest offender, had frequently featured in the news for bribes
to obtain weapon sales. The final straw that drove Congress to
create the FCPA was news that United Brands Company bribed
the Honduran president and other officials to lower an export tax
on bananas. This news also drove the president and CEO Eli
Black of United Brands to leap to his death from his forty-fourth
floor office window in New York City.
The law prohibits American firms or agencies from paying
bribes to foreign officials to obtain or retain business. This can
apply to prohibited conduct anywhere in the world, and extends to
publicly traded companies and their officers, directors, employees,
stockholders, and agents. Agents can include third-party agents,
consultants, distributors, joint venture partners, and others. The
FCPA also requires issuers to maintain accurate books and
432
records, and have a system of internal controls sufficient to,
among
other
things,
provide
reasonable
assurances
that
transactions are executed and assets are accessed and
accounted for in accordance with management’s authorization.
Sanctions for FCPA violations can be significant and can include
civil enforcement actions against issuers and their officers,
directors, employees, stockholders, and agents for violations of
the anti-bribery or accounting provisions of the FCPA. Companies
and individuals that have committed violations of the FCPA
typically must give up their ill-gotten gains, plus pay prejudgment
interest and substantial civil penalties. Companies may also be
subject to oversight by an independent consultant. At Chiquita
Brands, for example, executives had to sign a form every quarter
stating that they had not heard, seen, or done anything illegal,
because of the company’s history of unethical business practices.
One complaint against the FCPA from American businesses
is that this law only applies to American companies and their
affiliates and agents, not non-American competitors unless the
business is done on American soil. The OECD countries outlawed
foreign government bribes twenty years later in 1997. Until then,
foreign bribes were not only legal in countries such as Germany,
but also tax-deductible business expenses.14 The FCPA has
significantly reduced a number of illegal and unethical activities,
and has served as a model for similar legislation elsewhere. Later,
however, this law was amended to allow US companies to make
facilitation payments, small payments to grease business
transactions; this allowed them to pay the unofficial fees
demanded by government bureaucrats in some countries to
433
process requests and documents, and to compete more readily
against firms from countries where bribery was not illegal.15
In recent years, many companies have increasingly focused
on their core competencies and outsourced more critical business
functions to external contractors. Under the FCPA, however,
businesses are still accountable for the actions of these third-party
providers, despite the fact that they do not have direct control over
them. This exposes MNCs to regulatory and reputational risk of
FCPA violations. Companies that operate internationally, or that
engage third parties in countries with a high Corruption
Perceptions Index (see below) are especially at risk of FCPA
violations and sanctions.
The European Union has also worked hard to reduce
unethical behavior in business and government. Several laws and
conventions exist, but the most prominent is probably the EU
Criminal Law Convention on Corruption, an effort to codify
criminal actions concerning a large number of corrupt practices
across EU members. It also provides for complementary criminal
law measures and for improved international cooperation in the
prosecution of corruption offenses. The Convention, which is open
to non-member states, is wide-ranging in scope and complements
existing legal instruments. It prohibits the following forms of
corrupt behavior:
bribery of domestic and foreign public officials
bribery of national and foreign parliamentarians and of
members of international parliamentary assemblies
bribery in the private sector
434
bribery of international civil servants
bribery of domestic, foreign, and international judges and
officials of international courts
trading in influence (influence peddling)
money-laundering of proceeds from corruption offenses
accounting offenses connected with corruption offenses.
Member countries are required to provide for effective sanctions
and measures, including jail and potential extradition. Legal
entities are also liable for offenses committed to benefit them, and
are subject to effective criminal or non-criminal sanctions,
including monetary sanctions. The Convention also incorporates
provisions concerning aiding and abetting, immunity, criteria for
determining the jurisdiction of countries, liability of legal persons,
the setting up of specialized anti-corruption bodies, protection of
persons collaborating with investigating or prosecuting authorities,
gathering of evidence and confiscation of proceeds. It provides for
enhanced
international
cooperation
(mutual
assistance,
extradition, and the provision of information) in the investigation
and prosecution of corruption offenses.
435
OECD Guidelines for Multinational Enterprises
While nations and trading blocs have moved forward with such
ethical codes and laws, an ambitious effort by the Paris-based
OECD is also worthy of study, principally because it goes beyond
unethical behavior and incorporates both social responsibility and
sustainability in its charter. The OECD’s goal is to promote
market-oriented economic growth and development around the
world. The organization has thirty-four member states, including
Australia, Austria, Belgium, Canada, Chile, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico,
the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak
Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the
United Kingdom, and the United States, plus an additional five
“key partners” who agree to abide by the OECD’s policies (Brazil,
China, India, Indonesia, and South Africa).
As part of its activities, and because of its moral force in the
economic community, the OECD has long promoted ethical and
socially responsible behavior by companies of its member states,
primarily through the OECD Guidelines. These guidelines
represent a set of normative, yet voluntary, guidelines for global
managers and their firms that are aimed simultaneously at
developing the economies of less developed nations while
protecting them from exploitation by large and rich companies
from the industrialized world. Distinctly universalistic in nature,
these guidelines aim to ensure that the operations of these
enterprises operate in harmony with local government policies, to
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strengthen the basis of mutual confidence between global firms
and the societies in which they operate, to help improve the
foreign investment climate, and to enhance the contribution to
sustainable development made by global companies.16
The Guidelines incorporate concerns in a number of areas,
including
bribery
and
corruption,
employment
relations,
environmental stewardship, technology transfer, and general
business practices, as summarized in Exhibit 7.3.
Exhibit 7.3 OECD Guidelines for ethical behavior
1. Contribute to economic, environmental and social progress
with a view to achieving sustainable development.
2. Respect the internationally recognized human rights of
those affected by their activities.
3. Encourage local capacity building through close cooperation with the local community, including business
interests, as well as developing the enterprise’s activities in
domestic and foreign markets, consistent with the need for
sound commercial practice.
4. Encourage human capital formation, in particular by
creating employment opportunities and facilitating training
opportunities for employees.
5. Refrain from seeking or accepting exemptions not
contemplated in the statutory or regulatory framework related
to human rights, environmental, health, safety, labor, taxation,
financial incentives, or other issues.
437
6. Support and uphold good corporate governance principles
and develop and apply good corporate governance practices,
including throughout enterprise groups.
7. Develop and apply effective self-regulatory practices and
management systems that foster a relationship of confidence
and mutual trust between enterprises and the societies in
which they operate.
8. Promote awareness of and compliance by workers
employed by multinational enterprises with respect to
company policies through appropriate dissemination of these
policies, including through training programs.
9. Refrain from discriminatory or disciplinary action against
workers who make bona fide reports to management or, as
appropriate, to the competent public authorities, on practices
that contravene the law, the Guidelines or the enterprise’s
policies.
10. Carry out risk-based due diligence, for example by
incorporating it into their enterprise risk management
systems, to identify, prevent and mitigate actual and potential
adverse impacts as described in paragraphs 11 and 12, and
account for how these impacts are addressed. The nature
and extent of due diligence depend on the circumstances of a
particular situation.
11. Avoid causing or contributing to adverse impacts on
matters covered by the Guidelines, through their own
activities, and address such impacts when they occur.
438
12. Seek to prevent or mitigate an adverse impact where they
have not contributed to that impact, when the impact is
nevertheless directly linked to their operations, products or
services by a business relationship. This is not intended to
shift responsibility from the entity causing an adverse impact
to the enterprise with which it has a business relationship.
13. In addition to addressing adverse impacts in relation to
matters covered by the Guidelines, encourage, where
practicable, business partners, including suppliers and subcontractors, to apply principles of responsible business
conduct compatible with the Guidelines.
14. Engage with relevant stakeholders in order to provide
meaningful opportunities for their views to be considered in
relation to planning and decision making for projects or other
activities that may significantly impact local communities.
15. Abstain from any improper involvement in local political
activities.
Source: Adapted from
www.oecd.org/daf/investment/guidelines.
In addition to these fifteen guidelines, the OECD also
encourages companies to do two additional things:
1. Support to the extent possible cooperative efforts in the
appropriate forums to promote Internet freedom through
respect of freedom of expression, assembly, and association
online.
439
2. Engage in or support where appropriate private or multistakeholder initiatives and social dialog on responsible supply
chain management, while ensuring that these initiatives take
into account their social and economic effects on developing
countries and existing internationally recognized standards.
440
UN Global Compact
The United Nations Global Compact aims to mobilize a
worldwide movement of sustainable companies and stakeholders
to create a safer, more tolerant, sustainable society by
encouraging companies to align their strategies and operations
with their Ten Principles on human rights, labor, environment, and
anti-corruption (see Exhibit 7.4). The Ten Principles are derived
from: the Universal Declaration of Human Rights; the International
Labour Organization’s Declaration on Fundamental Principles and
Rights at Work; the Rio Declaration on Environment and
Development; and the United Nations Convention Against
Corruption.
Exhibit 7.4 Ten Principles of the UN Global Compact
Human Rights:
Principle 1: Businesses should support and respect the
protection of internationally proclaimed human rights; and
Principle 2: make sure that they are not complicit in human
rights abuses.
Labor:
Principle 3: Businesses should uphold the freedom of
association and the effective recognition of the right to
collective bargaining;
Principle 4: the elimination of all forms of forced and
compulsory labor;
Principle 5: the effective abolition of child labor; and
441
Principle 6: the elimination of discrimination in respect of
employment and occupation.
Environment:
Principle 7: Businesses should support a precautionary
approach to environmental challenges;
Principle 8: undertake initiatives to promote greater
environmental responsibility; and
Principle 9: encourage the development and diffusion of
environmentally friendly technologies.
Anti-corruption:
Principle 10: Businesses should work against corruption in
all its forms, including extortion and bribery.
Source: Adapted from www.unglobalcompact.org/library.
The philosophy underlying these Ten Principles is that
corporate sustainability begins with a company’s value system
and a principles-based approach to doing business. This means
operating in ways that, at a minimum, meet fundamental
responsibilities in the areas of human rights, labor, environment,
and anti-corruption. Responsible businesses enact the same
values and principles wherever they have a presence and know
that good practices in one area do not offset harm in another. By
incorporating the Ten Principles of the UN Global Compact into
strategies, policies, and procedures, and establishing a culture of
integrity,
companies
are
not
only
upholding
their
basic
responsibilities to people and planet, but also setting the stage for
long-term success. To date, over 12,000 companies, nonprofits,
442
and public sector organizations in 160 countries have voluntarily
signed the UN Global Compact.
443
Corruption Perception Index
Headquartered in Berlin, Transparency International (TI) is a
global NGO that promotes transparency in both public and private
organizations. Their mission is a world in which government,
business, civil society, and the daily lives of people are free of
corruption. For our purposes here, TI’s most useful contribution to
the fight against corruption is the Corruption Perception Index
(CPI), based on data it collects on a hundred countries from
expert assessments and opinion surveys, as shown in Exhibit 7.5.
A fundamental motivation behind TI is the belief that corruption
can be reduced, if not eliminated, through open access to data
and the subsequent social pressures for change that result. So,
what do these scores mean for managers and their companies?
Primarily, the CPI gathers and processes considerable data, and
offers what it considers to be relatively objective measures on
corruption levels in a wide array of countries. Companies can then
use this information when making decisions about new plant
locations, possible sales agreements, or developmental loans.
Exhibit 7.5 Corruption Perception Index
Country, CPI
score
Country, CPI
score
Country, CPI
score
Country,
CPI score
Afghanistan, 15
Albania, 38
Algeria, 33
Angola, 18
Argentina, 39
Australia, 77
Egypt, 32
El Salvador,
33
Estonia, 71
Finland, 85
France, 70
Malaysia, 47
Mexico, 29
Moldova, 31
Morocco, 40
Myanmar, 30
Netherlands,
South Africa,
43
South
Sudan, 12
Somalia, 9
Spain, 57
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Country, CPI
score
Country, CPI
score
Country, CPI
score
Country,
CPI score
Austria, 75
Azerbaijan, 31
Bahamas, 65
Bahrain, 36
Barbados, 68
Belarus, 44
Belgium, 75
Bhutan, 67
Botswana, 61
Brazil, 37
Bulgaria, 43
Cambodia, 21
Canada, 82
Chile, 67
China, 41
Colombia, 37
Costa Rica, 59
Croatia, 49
Cuba, 47
Cyprus, 57
Czech
Republic, 57
Denmark, 88
Ecuador, 32
Georgia, 56
Germany, 81
Ghana, 40
Greece, 48
Haiti, 22
Honduras, 29
Hungary, 45
Iceland, 77
India, 40
Indonesia, 37
Iran, 30
Iraq, 18
Ireland, 74
Israel, 62
Italy, 50
Jamaica, 44
Japan, 73
Jordan, 48
Kenya, 28
Kuwait, 39
Latvia, 58
Liberia, 31
Lithuania, 59
Luxembourg,
82
82
New Zealand,
89
Nicaragua, 26
Nigeria, 27
North Korea,
17
Norway, 85
Oman, 44
Pakistan, 32
Panama, 37
Peru, 37
Philippines,
34
Poland, 60
Portugal, 63
Qatar, 63
Romania, 48
Russia, 29
Rwanda, 55
South Korea,
54
Saudi Arabia,
49
Senegal, 45
Serbia, 41
Singapore, 84
Slovakia, 50
Slovenia, 61
Sri Lanka,
38
Sudan, 16
Sweden, 84
Switzerland,
85
Syria, 14
Taiwan, 63
Tanzania, 36
Thailand, 37
Tunisia, 42
Turkey, 40
UAE, 71
Uganda, 26
Ukraine, 30
United
Kingdom, 82
United
States, 75
Uruguay, 70
Uzbekistan,
22
Venezuela,
18
Vietnam, 35
Yemen, 16
Zambia, 37
Zimbabwe,
22
Note: Scores range from 1 to 100.
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Source: Adapted from Transparency International, Corruption
Perceptions Index, www.transparency.org, 2018. Higher
numbers indicate greater transparency.
The fundamental issue here is risk. In general, investments in
Western Europe are more secure – that is, less potential for
corruption – than Eastern Europe, while the Baltic States (Estonia,
Lithuania, and Latvia) are more secure than neighboring Russia or
Ukraine. Thus, if a company was seeking to build a new
distribution center in Latin America, for example, Chile (score 67)
or Costa Rica (score 59) may be more attractive alternatives than
Venezuela (score 18) or Nicaragua (score 26), based on these
scores. This is not to suggest that other types of data should not
be used, but the CPI provides one fairly reliable data point in the
decision process.
To see how this can work, consider India. With highly
educated workers and low wages, this developing nation has
become a haven for outsourcing, information technology, and a
variety of high-tech industries, and could be positioned to play a
major role in global business. For all of its global assets, however,
India can be a tough place for entrepreneurs. Indeed, the World
Bank’s Ease of Doing Business Index ranks India 165th out of 183
countries in ease of launching a new business. And India scores
182nd out of 183 in terms of government or legal enforcement of
contracts. Its CPI is a poor 40 compared to Denmark’s 88 (see
Exhibit 7.5). Why? A large part of the answer to this question lies
in a culture filled with red tape and, at times, nonsensical permits,
policies, and procedures. Sometimes entrepreneurs cannot even
discover what the rules are until they are snagged.
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In Mumbai, for example, there are thirty-seven procedural
hoops to jump through just to gain approval to build a warehouse.
Meeting these requirements can routinely take up to a year to
complete. Moreover, many of these rules differ across regions,
increasing the confusion for foreigners. Added to this is India’s
endemic corruption, often exemplified by an unwillingness or
inability of many recipients of a bribe to fulfill their side of the
bargain even after being paid. Finally, new start-ups often have
difficulty finding or retaining sufficient qualified employees to staff
their operations. Employee turnover is rampant, and companies
are expected to invest heavily in training. This combination of
multiple, ambiguous, and often conflicting rules, coupled with
pervasive rule-breaking, raises the degree of uncertainty and
ambiguity for numerous would-be investors. As with other
countries experiencing rapid globalization, the future may be
bright, but it is far from certain.
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Management Application 7.3 Starting a Business in
Mumbai
1. As an entrepreneur considering opening a business
in India to take advantage of its cheap and educated
labor force, how would you assess its appeal as a
place to do business?
2. How transparent is India’s business environment?
What does this tell you as an entrepreneur?
3. What other information would you need about the
Indian business environment to make an informed
decision about possibly siting there, and how might
you get this information?
4. In general, what situational factors can influence the
success or failure of a new venture in India or
elsewhere?
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How Ethical Conventions Work: An Example
Most business ethicists write that failure to follow the conventions
and guidelines listed above represent a breach of moral integrity
for which there is little or no excuse. Ethical doctrines are to be
followed, period. However, as noted by British philosopher Alfred
North Whitehead, “People think in generalities, but they live in
detail.”17 Experienced global managers readily observe that
ethical standards can vary from one culture to another, which
raises an interesting question: Who gets to determine what is
ethical for global business? The fact that the OECD Guidelines
were approved by a group of industrialized (and mostly wealthy)
nations may help to illustrate this. Nigeria is not a co-signer,
possibly because it loses more than it gains by agreement or
because internal consensus could be difficult to attain. In short,
implementing these guidelines can be more difficult than it seems.
Indeed, there are numerous pressures for both supporting and
opposing these guidelines. And the global manager is caught in
the middle. This is not to suggest than the guidelines are not a
sign of progress in international trade and management. Rather, it
is to highlight the difficulty of doing business in multiple and often
conflicting environments.
Finally, there is the issue of enforcement. The lax
enforcement of these guidelines only adds to the managerial
dilemma of what to do. With few penalties, and ongoing corporate
competitive pressures for results, it is little wonder that graft and
corruption – however defined – are so prevalent.
449
If these conventions and guidelines were universally followed,
many believe we would move towards a more perfect world.
However – and unfortunately – in many circumstances managers
face a series of countervailing forces that make a clear picture
fuzzy. To help global managers better understand ethical
dilemmas and arrive at decisions, they can do a force field
analysis, a mechanism that simply identifies pressures for and
against a value, belief, attitude, or action. As shown in Exhibit 7.6,
the decision to remain ethical (as defined by one’s culture) is at
times challenged by several pressures to act unethically. The
example here addresses the decision either to follow or ignore the
OECD guideline on bribery and corruption, but this force field
technique can be used with all types of ethical dilemmas.
Exhibit 7.6 Pressures for and against OECD guideline
compliance on bribery and corruption
To see how this works, suppose you work for a company that
wants to build a stronger business presence in a country with fastgrowing consumer markets. Suppose further that your promotion
and future career with this company is heavily dependent upon
your success in securing this deal. Suppose you are aware that
450
the foreign government has lax oversight regulations, poor
inspections, and only minimal enforcement procedures across a
wide range of the products it makes or sells. Finally, suppose that
your own government consistently turns a blind eye to such
consumer abuses because it does not want to risk alienating an
important trading partner. Question: How would you approach
your company’s objective – and your personal responsibility – to
secure a new business deal? Where do you draw the line? What
is an acceptable risk here? And would you be willing to jeopardize
your job and take a strong position against any such deals?
This same issue can be seen with respect to environmental
sustainability or social responsibility. One of the principal liabilities
here
involves
increased
costs
associated
with
increased
regulation and reporting. Here, good intentions by local
governments – or their distrust of multinational firms – have
caused many global companies to pick and choose their local
operating sites based upon who has the lightest regulations. This
is not necessarily to say that such firms are socially irresponsible;
rather, many firms seek to do the right thing (again, as defined by
their own cultures), but see excessive regulations as being too
limiting to guarantee the fulfillment of their corporate mission. In
other words, the fundamental challenge here is a balancing act
that both corporations and local governments must perform to
seek mutual benefit: job creation and sustainable economic
development versus corporate returns on their investments.
Without both sides securing benefit, it is difficult to imagine a
successful partnership.
Thus, there are a number of forces at work both for and
against heeding these guidelines. Pressures exist to both adhere
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to and ignore such guidelines and, as is typical, managers and
their companies are faced with a juggling act in an uncertain and
competitive environment. What happens, for example, if a
company follows these guidelines but their competitors do not?
How do they compete? What is also interesting here, however, is
the decision point where HR policies are determined. Are these
policies set in Berlin, Santiago, or Singapore by executives in
corporate headquarters, or by local and regional managers who
are more sensitive to local conditions and requirements?
The interesting question here is why companies from so
many
countries
voluntarily
follow
these
conventions
and
guidelines when they are not legally required to do so. Actually,
the reasons for their compliance are fairly clear. Ethical and social
responsibility guidelines and conventions can:
support the sincere goal of many companies to be
responsible citizens in the marketplace and in local
communities
allow companies to compete on a relatively even playing
field, to the extent that competitors generally comply
provide companies with positive media coverage to
illustrate they are responsible citizens in the community
provide useful and objective metrics concerning company
progress in the community
increase corporate profitability where customers are willing
to pay more for environmentally sensitive products, where
environmental solutions facilitate increased efficiencies or
452
cost reductions, or where customers choose businesses
based on their ethical reputation
stave off more severe requirements or penalties.
In short, in many cases being ethically and socially responsible is
simply good business. No company wants to show up on a
magazine cover identified as one of the country’s worst
manufacturing polluters or as the least ethical bank. Furthermore,
once a culture of corruption becomes embedded within a
company (or country), it is very difficult to eradicate. But doing the
“right thing” is not always easy, as we will see below. In the final
analysis, managers should remember two things about this ethical
challenge. First, with different names and in different forms,
bribery and corruption can be found throughout the global political
and business environment; it is not the exclusive province of poor
countries. Second, managers typically have a choice in how they
respond to corruption. In some cases, governments can help to
minimize such practices. When this is not the case, companies
can choose not to reinforce such behavior and hold their ground
or do business elsewhere. While this may at times lead to shortterm losses, it typically leads to long-term gains. The bottom line
for managers and their companies is understanding what they
stand for and not sacrificing principles for short-term promises.
The next two sections take a closer look at current ethical
challenges and managerial responses.
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Boundaries of Ethical Managerial
Behavior
Over time, MNCs and their managers have grappled with this
question: What is the scope of corporate and managerial
responsibility for the ethical, social, and environmental challenges
around them? Does their responsibility end with their employees’
welfare and actions solely? Or should they draw a wider boundary
of concern to include community, environmental, societal, and
even global issues? This takes us back to questions raised in
Chapter 4 about the company purpose and beneficiaries. One
might expect that publicly traded investor firms would not want
resources to be devoted to issues not directly related to profit. Yet
many global firms of all types have opted for a wider boundary
that includes these four interrelated challenges facing managers
working across cultures and borders: (1) ethical behavior; (2)
social responsibility; (3) fair employment practices; and (4)
environmental stewardship (see Exhibit 7.7). Since many of these
challenges have been discussed throughout this volume, here we
focus specifically on fairness in employment relations as an
example of the larger issue of what makes an ethical manager.
454
Exhibit 7.7 Characteristics of ethical managerial behavior
A major reason global firms build facilities overseas is to
reduce operating costs. This typically takes the form of
significantly lowering labor costs. In spite of this, numerous
corporations from around the world have stepped forward to
create work environments characterized by employee fairness
and safety. They find support in both the UN Global Compact and
OECD Guidelines on creating and preserving fair employment
practices. Included here are provisions:
upholding freedom of association and the effective
recognition of the right to collective bargaining;
contributing to the effective abolition of child labor; and
eliminating discrimination in respect of employment and
occupation.
A good example of this issue can be found in the HR policies of
Sony and Samsung in their electronic assembly plants in
Thailand.18 While Sony applies HR policies dictated largely from
Tokyo and treats local employees largely as outsourced workers,
Samsung takes a more local approach that is largely determined
within Thailand and treats local employees more as members of
the Samsung Group. Data suggest that subsequent employee
455
commitment, job attitudes, and productivity are higher in the
Samsung facilities. This is not to say that there is a universal
conclusion here, since it is not always the case that higher
adherence to ethical standards will necessarily lead to higher
performance; rather, it highlights the need for local managers to
monitor the impact of corporate HR policies as they relate to local
conditions.
Sometimes workplace problems bubble up from within, and it
is up to companies and their managers to play catch-up. So it was
with the emergence of the #MeToo movement against sexual
harassment and discrimination, both on and off the job. This
movement began in Hollywood but quickly went both viral and
global. Sparked by widespread feeling that nothing concrete was
being done to stop predatory and often violent behavior against
women (primarily although not exclusively), the movement invited
victims to identify their harassers publicly, often resulting in the
accused losing their jobs. This campaign spread very quickly
across the globe, with women in eighty-five countries using the
hashtag to call attention to pervasive sexual harassment and
workplace discrimination. In the United Kingdom, the defense
secretary was forced out of his job following revelations that he
had
lunged
at
a
journalist.
In
France,
the
hashtag
#BalanceTonPorc was conceived of by a French journalist. Italians
began tweeting #QuellaVoltaChe. In Spain, #YoTambien began
trending. And in the Middle East the phrase is #MosqueMeToo.19
While
this
movement
was
largely
employee-inspired,
companies have flocked to demonstrate their support by
tightening fair employment practices and pushing out wrongdoers.
Still, the #MeToo campaign has been somewhat less visible in
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some parts of the world than in others. According to CNN, experts
believe that the burden of harassment and abuse is commonplace
throughout the globe, but that the voices heard are sometimes few
and far between. Lina Abirafeh, director of the Institute for
Women’s Studies in the Arab World in Lebanon, suggests that
there are many reasons behind this silence, but mainly that
people are scared, in part due to norms that attach stigma and
shame to speaking out.20 At the same time, #MeToo has not
caught on in several Asian countries where speaking out often
draws criticism rather than sympathy, even from other women.21
In Japan, for example, a woman was fired when she said online
that some of her customers expected sexual favors in return for
business.22 And in China, government censors have moved
quickly to tamp down public media discussions of sexual
aggression by deleting posts by those seeking to share their
experiences.23 An Israeli woman was sued for making a similar
accusation against an executive at a broadcast network.24
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Management Application 7.4 #MeToo Goes Global
1. As a senior manager in a global firm, what would
you do if you learned about employees engaging in
sexual harassment outside the workplace? Do you
have any authority or responsibility for such behavior
outside of work? Explain.
2. What role, if any, does culture or cultural difference
play in efforts to eliminate sexual discrimination and
harassment in the workplace?
3. What situational contingencies (see Chapter 4)
other than culture might affect a company’s ability to
seriously address sexual discrimination and
harassment in the workplace?
4. If you were an advisor to a global firm, what advice
would you give them about concrete efforts they could
take to reduce such behavior in their global
operations?
One technique to prevent such problems, both on a corporate
and interpersonal level, is to use something called the ethics
warning system25 when making decisions on the job. This
system basically integrates ethical considerations into the
decision-making process as decisions are being made, avoiding
post-decision problems or regret. This system suggests managers
ask themselves three questions as they work on issues or
decisions that may be problematic:
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Golden Rule: Are you treating others as you would want to
be treated? Or is the Platinum Rule more appropriate: Are
you treating them as they want to be treated?
Publicity: Would you be comfortable if your reasoning and
decision were to be publicized? How would it look on social
media or on the front page of a newspaper?
Kid on your shoulder: Would you be comfortable if your
children were observing you?
This is only one technique to encourage ethical thinking; there are
others. The point here is to force managers to slow down
sufficiently to allow them time to reflect on what they are doing, as
well as what is at stake. Such systems are becoming increasingly
common in ethics training programs at major corporations.
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Corporate Social Responsibility
In 2018, The Wall Street Journal undertook a study to rank global
firms in terms of the managerial excellence. Companies were
ranked in terms of their innovation, financial strength, employee
engagement, and customer satisfaction. One finding from this
study stands out: The top 50 best managed companies had an
average rating of 75 percent on overall corporate social
responsibility; the lower-ranked companies had an average rating
of 44 percent. Draw your own conclusions.26
The topic of corporate social responsibility is generally
subsumed under the broad umbrella of ethical behavior. However,
in view of its importance for both social and environmental
development, we examine some of the key points here. The
Financial Times defines CSR as efforts “aimed at encouraging
companies to be more aware of the impact of their business on
the rest of society, including their own stakeholders and the
environment.”27 This represents an approach to business that
contributes to sustainable development by delivering economic,
social, and environmental benefits for all stakeholders. As a
concept, it has multiple definitions and practices, and the way it is
understood and implemented can differ substantially across
companies and countries. Moreover, CSR is a broad concept that
addresses many and various topics such as human rights,
corporate governance, health and safety, environmental effects,
working conditions, and contributions to economic development.
The purpose of CSR is to drive change towards sustainability and
moral behavior. CSR is first and foremost a value proposition for
460
companies to adopt and serve as a guide in their strategic and
managerial actions.
Global companies are often criticized for being insensitive to
environmental needs and, indeed, many companies choose to
locate factories in countries that have lax pollution and
environmental laws. By the same token, however, many other
companies spend millions each year in reclaiming environmental
lands, and reducing air and water pollution. Research suggests
that in many but not all industries, it may actually pay to be
“green.”28 Companies that are good environmental stewards also
tend to be more profitable than their competitors, especially in
more dynamic industries. Such findings add substance to the
assertion that socially responsible managers frequently find ways
to support sustainability and environmental quality as part of their
corporate strategies, not in spite of them, and that integrating
environmental and sustainability perspectives into business
practices can lead to improved overall corporate performance. As
Unilever
CEO
Niall
FitzGerald
notes,
“Corporate
social
responsibility is a hard-edged business decision. Not because it is
a nice thing to do or because people are forcing us to do it, but
because it is good for our business.”29 Indeed, the list of
environmentally responsible companies is longer than many
people think. Consider just four examples.
Unilever. British-Dutch Unilever is a huge multinational
corporation in the food and beverage industry with a
comprehensive CSR strategy. The company has been
ranked “food industry leader” in the Dow Jones
Sustainability World Indices for eleven consecutive years
461
and ranked seventh in the “Global 100 Most Sustainable
Corporations in the World.” One of their unique initiatives is
the sustainable tea program, where a partnership-based
model with the Rainforest Alliance (an NGO) aims to
source all of its Lipton and PG Tips tea bags from
Rainforest Alliance Certified farms. The Rainforest Alliance
Certification offers farms a way to differentiate their
products as being socially, economically, and
environmentally sustainable.
Royal Dutch Shell. Shell is a huge multinational with
numerous extraction and refining operations around the
globe. Initiatives undertaken by Shell in Nigeria, for
example, include external aspects such as environmental
protection, community relations, and human rights, as well
as internal aspects such as principles and codes of
practice, product stewardship, stakeholder and employee
rights, and transparency.30 Shell has also supported
community development through programs in education,
health, construction, commerce, agriculture and transport,
etc., benefiting local communities.31 This has been
facilitated by Shell’s community development program that
for a traditional petroleum company offers a paradigm shift
to environmental responsibility, social welfare, human
rights, and political responsibility.32 This approach entails
greater stakeholder engagement bringing together many
entities including NGOs, state and local governments, and
community leaders in identifying and implementing
projects, ensuring increased local ownership, transparency,
462
and accountability. Shell has also taken the initiative in
such areas as the community health insurance programs,
enterprise development programs, and water and electricity
supply. The company has been widely recognized for its
efforts in a variety of public and private ratings, including
the United Nations Global Compact, Dow Jones
Sustainability Indices, and the Carbon Disclosure
Leadership Index. Good ratings in these indices can be
seen as beneficial in shoring the company’s reputation
across the globe, enhancing its corporate value and
standing of its brand.
LEGO. This Danish toy maker was recently ranked number
one in CSR by the well-respected Reputation Institute.
Commenting on the result, Marjorie Lao, chief financial
officer of the company, said:
We are honored to see that our efforts to positively
impact the planet resonate with people all over the
world. We feel a huge sense of responsibility to inspire
and develop children through play while leaving a
significant positive impact on the world children will
inherit. It is part of our DNA as a company, and we will
continue to set the bar high for ourselves to do
better.33
How did LEGO become #1 in CSR? There are many
reasons. LEGO recently set records for its energy
conservation, increasing its efficiency per LEGO brick
produced by more than 12 percent. It also engaged with
key suppliers to reduce their carbon emissions in the full
463
supply chain. It joined the World Wildlife Fund’s Climate
Savers Program, and met or exceeded all the program’s
climate targets. It invested $900 million (800 million euros)
in two offshore wind farms and in research and
development to build more sustainable materials. After four
years of effort, the LEGO Group achieved its ambition to
balance 100 percent of its energy use with energy from
renewable sources. To celebrate, LEGO built the largest
ever LEGO brick wind turbine, a Guinness World Records
title, and challenged children around the world to create
their own renewable energy solutions.
BMW. Germany’s BMW recently achieved the highest
score ever given in the automobile industry in the Carbon
Disclosure Project, scoring 96 out of a possible 100
points.34 “Our corporate sustainability strategy is based on
three pillars: economics, environment, corporate social
responsibility,” stated BMW chairman Dr. Norbert Reithofer.
“Climate protection serves an important role in this strategy.
As part of our focus on climate protection, we continue
reducing vehicle and production facility emissions around
the world. By protecting the climate, society as a whole
also benefits and it just makes good business sense for the
BMW Group.”
The Carbon Disclosure Project acknowledgement is one
of the most prestigious ratings in the realm of sustainability.
BMW’s rating further emphasized their long-term efforts in
climate protection along the entire value chain and also
reinforces their decision to embrace sustainability as part of
464
its corporate strategy. The Carbon Disclosure Project listing
comes on the heels of the designation BMW received as
the industry leader in the Dow Jones Sustainability Indices,
making it the world’s most sustainable automobile
manufacturer. The company continues to win such
recognition as a result of the development of fuel-saving,
alternative vehicle concepts, clean production processes,
and green recycling practices. BMW is also involved in
promoting education and road safety worldwide, as well as
in projects to fight HIV and AIDS.
465
Management Application 7.5 Doing Well by Doing Good
1. Unilever CEO Niall FitzGerald argues that CSR is a
good business decision not because it is a nice thing
to do or because people are forcing them to do it, but
because it is good for business. If CSR is such a good
thing, why is it so difficult to convince some companies
and industries to be more socially responsible? What
would you suggest to change this situation? Explain.
2. Select one of the above four company examples
and conduct a force field analysis (see p. 244) of the
pressures for and against greater company efforts in
CSR.
3. If you owned a small manufacturing company in
Vietnam, how would you balance the pressures to
become environmentally sustainable with the
pressures for rural job creation and economic
development?
466
Manager’s Notebook Managing Ethical Conflicts
Organizations can create ethical standards and CSR
goals, hire and reward ethical employees, and fire
employees who behave unethically, but at the end of the
day, ethical standards reside largely within people. We
close this chapter by examining the managerial lessons
that
follow
from
both
the
ethical
and
institutional
perspectives discussed here. More specifically, what can
global managers learn here to enhance their ability to
behave responsibility in the world of work? In our view,
based on their ethical beliefs, as well as their tolerance for
the beliefs of others, global managers and their employers
have a responsibility to build a consensus regarding how
they define ethical behavior across cultures and nations. In
this pursuit, the following points may be germane (see
Exhibit 7.8).
Exhibit 7.8 Strategies for managing ethically
467
1 Develop ethical awareness
Clearly the first order of business is to develop a solid
grounding in what constitutes ethical behavior as it relates
both to managers and to their firms. Several strategies are
available to help accomplish this:
Understand the mission and core values of the firm,
especially as they relate to local cultures and
communities. It seems reasonable to expect that firms
operating in different countries, with different tastes,
practices, and values, will need to work diligently to
preserve a core set of beliefs that encourages both unity
and commonality. Employees also need strategies for
dealing with diverse beliefs, and they need to know their
limits and degrees of flexibility in doing business across
cultures and regions.
Understand the limits of universalism. Flexibility and
tolerance are key to success across borders. Managers
have to recognize that while all of their partners may
oppose company theft as a general principle, their
perspectives concerning what constitutes theft may vary.
For example, is taking home minor office supplies theft
or not?
Identify the root cause of an ethical conflict. What
exactly is the basis of the conflict? Rather than becoming
distracted by superficial issues, seek to understand the
root cause of the conflict.
468
Understand all perspectives in ethical conflicts and
the logic behind them. Instead of leaping to judgment,
assume that different perspectives make more sense if
one understands the history and cultural logic behind the
position and behavior of different parties.
2 Develop ethical application skills
The key to success for global managers wishing to help
facilitate a more just society is creating and implementing a
set of ethical application skills, or pocket rules, that guide
everyday behaviors. These rules should likely include the
following:
Learn to say “No.” As obvious as it may seem, having
the courage or foresight to reject inappropriate offers is
crucial. Company reputations are often jeopardized –
and sometimes destroyed – by individual employees
looking for shortcuts or side considerations.
Use an “ethics warning system” when making
decisions affecting others.35 This has three questions:
Are you treating others as you would want to be treated
(golden rule)? Would you be comfortable if your
reasoning and decision were to be publicized (e.g., how
would it look on social media or on the front page of a
newspaper?) Would you be comfortable if your children
were observing you?
Learn to critically analyze questionable proposals or
actions. There is an old saying that if something looks
too good to be true, it probably is. Ethical managers
469
learn to develop their critical analysis skills in such a way
that they can spot illicit offers of personal or corporate
gain. Many ethical breaches are not caused by overt
corruption, but rather by people’s laziness or sloppiness
in considering the details of proposals or transactions.
The ability to stand back and consider the short-term, as
well as long-term, consequences of individual actions
allows participants to make sure their actions are
warranted, justified, and defensible.
Consider where you have drawn the boundary
around your personal concerns in an ethical issue.
Another reason for ethical breaches is an overly narrow
focus on one’s personal interests (e.g., wealth, status,
promotion, power) rather than a concern for one’s
colleagues, organization, community, country, or the
environment. Just as corporations have broadened the
boundary of their ethical responsibility, so should
individuals consider the broader implications of their
behavior. For example, effective expatriates understand
that unethical, inappropriate behavior on their part
reflects poorly on their organization and could also harm
the perception and treatment of future expatriates.
3 Take the lead
Finally, show some leadership as it relates to ethical and
socially responsible behaviors. This can be done in several
ways:
470
Build co-worker and corporate support for ethical
actions. There is obviously strength in numbers in many
areas of human activity. One of the best ways to protect
against unsolicited unethical offers is by ensuring that a
manager’s co-workers and company are all on the same
page with regards to what is appropriate and
inappropriate behavior.
Research legal and institutional factors prior to any
actions or agreements. Global managers and their
companies are well served by researching the details –
the legalities – of contracts, offers, and agreements to
ensure their appropriateness. A little bit of prior research
can go a long way towards protecting companies from
subsequent lawsuits or prosecutions.
Make sure your company’s ethical standards are
public, along with your own professional standards.
When companies go public with their vision of ethical
behavior, people and institutions working on the shadier
side of business are less likely to try to make
connections. Publicity also makes it easier for individual
managers alone out in the field to say no. When
employees know that individual global managers are
highly ethical from their words and actions, this
information spreads into the community, further limiting
corrupt offers.
Be proactive in seeking out opportunities for CSR.
Finally, managers need to recognize that many corrupt
initiatives, particularly in developing countries, are the
471
result of poverty. CSR projects such as job creation, job
training, fairness in working conditions, and sustainable
environmental practices can help reduce the necessity
for some corrupt behaviors.
472
Chapter Review
473
Summary
Ethical challenges such as bribery, kleptocracy, cronyism,
and other forms of corruption are a fact of organizational
life today. So too are ethnocentrism, extreme nationalism,
discrimination, and xenophobia. The question for managers
and their companies is the extent to which they are willing –
and able – to mitigate the occurrence of these behaviors.
Examples of exemplary, disappointing, and sometimes
downright illegal managerial behaviors can be found
throughout the business environment. As a result, many
experts in business ethics argue that all firms, but
especially global ones, need a clearly stated and
sanctioned ethical compass to guide their organizational
actions in ethical ways.
This dichotomy of views suggests that either there are
universal truths that transcend all cultures, or that concepts
such as right and wrong are embedded within cultures and,
as such, different cultures can define them differently.
Where is the educated global manager in all of this?
Probably caught somewhere in the middle. This conflict
captures the essence of good management, nationally and
globally. Managers must frequently act in the absence of
concrete information and in the face of uncertain outcomes.
Nonetheless, they must act, and they will be judged based
on the outcomes. As such, in terms of ethical behavior,
managers require a moral compass, but one which is
neither self-serving nor xenophobic.
474
Ethical standards reside largely within people. Although
organizations can certainly create and maintain a culture
that fosters ethical behavior, their members in the field –
executives, managers, and rank-and-file employees –
largely determine whether or not a particular company will
act ethically or responsibly at any given point in time.
Several regional and global efforts have been made to
reduce the occurrence of unethical and socially
irresponsible behaviors, including the EU Criminal Law
Convention on Corruption, the US FCPA, OECD
Guidelines, the UN Global Compact, and corruption
measures such as TI’s CPI. These efforts succeed to the
extent that they are broadly supported and backed with
significant sanctions.
We can identify four major challenges facing managers
working across cultures: ethical behavior; social
responsibility; fair employment practices; and
environmental stewardship.
CSR has led companies to be more aware of their impact
on the rest of society, their stakeholders, and the
environment. There is a business case for CSR in that
companies believe they can do well by doing good.
475
Key Concepts
biznez
corporate social responsibility
Corruption Perception Index
ethical behavior
ethical vs. institutional conflict
ethics
ethics warning system
EU Criminal Law Convention on Corruption
force field analysis
insider trading
kleptocracy
OECD Guidelines
particularism vs. universalism
sharia law
UN Global Compact
US FCPA
476
Discussion Questions
1. Realistically, what could the government of Moldova do to
reduce corruption in its society and retain more of its younger
talent? If you ran a business there, what steps could you take as a
business person to contribute to this effort?
2. Pascal’s observation points out that what some cultures believe
to be true others may believe to be false. Can you provide an
example of this from the business world?
3. The chapter opens with four examples of potentially unethical
behaviors from three different countries. In your view, which of
these actually represent unethical (as opposed to illegal) behavior,
and why?
4. What do you think are the principal determinants of ethical or
unethical behavior in the world of global business? How are you
defining the term “unethical”?
5. If you had to choose, would you agree with the concept of
universalism or particularism as it relates to determining what
constitutes ethical standards? That is, are ethical standards
universal or situational? Explain.
6. British philosopher Alfred North Whitehead observed that
people think in generalities but live in detail. What is the meaning
477
of this observation for managers working across cultures?
7. What is the difference between a bribe, a performance bonus,
and a sales commission?
8. The UN Global Compact and other conventions guarantee
employees the right to unionize, freedom from coercion, and equal
opportunity. Should such guidelines take precedence over longstanding and deeply held cultural beliefs opposing such
guarantees? Explain.
9. What are the pressures for and against companies taking the
lead in being good environmental stewards in areas where they
do business? Do firms have an ethical or moral responsibility to
be good environmental stewards? Why, or why not?
10. OECD Guidelines are aimed at providing managers with some
clear guidelines for ethical and socially responsible behavior in the
global workplace. If this is correct, why have so few countries
adopted these guidelines?
11. What are the limits of CSR? For example, hunger and
starvation is a worldwide problem affecting close to one billion
people, mostly in developing countries. Are global companies
responsible for helping to resolve this crisis? Why, or why not?
478
12. In your view, what are the three most important lessons from
this chapter for global managers? Explain.
479
Notes
1. Susan Radcliff (ed.), Oxford Essential Quotes. Oxford
University Press, online version, 2014.
2. Judy Dempsey, “How corruption is driving Eastern Europe’s
brain drain,” The Washington Post, September 9, 2016.
3. Ibid.
4. Ibid.
5. David Enrich, “Trader guilty of rigging rates,” The Wall Street
Journal, August 4, 2015, p. A1.
6. Maria Armental, “UBS settles Libor claims,” The Wall Street
Journal, December 24, 2018, p. B9.
7. Christopher Ingraham, “Someone just put a price tag on the
2016 election,” The Washington Post, April 14, 2017.
8. Personal communication.
9. Brad Plumer, “Why is tax evasion so bad in Italy?” The
Washington Post, November 25, 2011; and “Italians are
Europe’s worst tax cheats,” The Local, September 7, 2016.
10. Ellen Barry, “Happy ‘National Jealousy Day’! Finland bares
its citizens’ taxes,” The New York Times, November 1, 2018.
11. Blaise Pascal, Pensées: Thoughts on Religion and Other
Subjects. New York: Washington Square Press, 1965, p. 90.
This popular version of Pascal’s quotation is a modern
480
interpretation of the original translation from French that reads,
“Three degrees of latitude reverse all jurisprudence; a meridian
decides the truth … A strange justice that is bounded by a river!
Truth on this side of the Pyrenees, error on the other side.”
12. Eileen Morgan, Navigating Cross-Cultural Ethics. London:
Routledge, 2011.
13. “Ben Quinn, Ikea apologizes over removal of women from
Saudi Arabia catalogue,” The Guardian, October 10, 2012.
14. Martine Milliet Einbinder, “Writing off tax deductibility,”
available at
http://oecdobserver.org/news/archivestory.php/aid/245/Writing_
off_tax_deductibility_.html. Accessed March 1, 2019.
15. “Birth of the FCPA: this bribery is positively bananas,”
Whistleblower Justice Network, available at
https://whistleblowerjustice.net/birth-of-the-fcpa/. Accessed
March 1, 2019.
16. www.oecd.org/daf/investment/guidelines.
17. Alfred North Whitehead, Stanford Encyclopedia of
Philosophy, available at plato.ford.edu. Accessed March 1,
2019.
18. Won Shul Shim, Hanyang University, personal
communication, 2008.
19. Daisy Khan, “The #MosqueMeToo movement,” The Wall
Street Journal, June 29, 2018, p. A15.
20. Catherine Powell, “#MeToo goes global and crosses
multiple boundaries,” Council on Foreign Relations, December
481
14, 2017.
21. “Saying ‘Me Too’ in Japan carries risks,” Register-Guard,
February 28, 2018, p. A5.
22. Ibid., p. A6.
23. Te-Ping Chen, “China students clamor ‘#MeToo,’” The Wall
Street Journal, April 23, 2018, p. A10.
24. Ruth Eglash, “The backlash is coming,” The Washington
Post, March 5, 2018.
25. Adapted from Michael Josephson, Making Ethical
Decisions. Marina Del Ray, CA: The Josephson Institute of
Ethics, 1993, p. 40.
26. “What powers the best of the best,” The Wall Street Journal,
December 3, 2018, p. R3.
27. Definition of corporate social responsibility, Financial Times,
available at Ft.com/lexicon. Accessed March 1, 2019.
28. James Macintosh, “If you want to do good, expect to do
badly,” The Wall Street Journal, June 29, 2018, p. B1.
29. Larry Elliott, “Interview: Niall FitzGerald, co-chairman and
chief executive, Unilever,” The Guardian, July 4, 2003.
30. U. Idemudia, “Oil Extraction and Poverty Reduction in the
Niger Delta: A Critical Examination of Partnership,” Working
Paper, 2009.
31. D. Olowu, “From defiance to engagement: an evaluation of
Shell’s approach to conflict resolution in the Niger Delta,”
482
African Journal of Conflict Resolution, 2011, 10(3), pp. 75–100.
32. United Nations Global Compact, Supply Chain
Sustainability, 2011, available at
www.unglobalcompact.org/Issues/supply_chain/index.html.
Accessed March 1, 2019.
33. “Lego Group ranked number 1 on 2017 global CSR
RepTrak100,” 2018, available at www.lego.com/engb/aboutus/news-room. Accessed March 1, 2019; Karsten
Strauss, “The companies with the best CSR reputations,”
Forbes, February 8, 2018.
34. Don Bain, “BMW’s environmental stewardship lauded by
carbon disclosure project,” Torque News, September 15, 2011;
Karsten Strauss, “The 10 companies with the best CSR
reputations for 2017,” Forbes, September 13, 2017.
35. Adapted from Josephson, Making Ethical Decisions, p. 40.
483
8
Global Partnerships and
Negotiations
◈
Chapter Outline
Building Global Partnerships
Management Application 8.1 Strategic Partnerships in the
Commercial Aircraft Industry
Management Application 8.2 Conflicts in the AppleSamsung-Ericsson Partnership
Preparing for Global Negotiations
Negotiating Strategies and Processes
Management Application 8.3 Tata’s New Factory in Gujarat
Management Application 8.4 Bargaining Tactics in Brazil,
Japan, and the US
Managing Conflicts and Compromise
Managing Agreements and Contracts
Management Application 8.5 Changed Circumstances at
Cosco
MANAGER’S NOTEBOOK: Building Global Partnerships
Chapter Review
484
Learning Objectives
Explore the advantages and disadvantages of global
partnerships.
Examine different approaches to bargaining and global
negotiations.
Explore the role of culture in global negotiations.
Recognize symptoms of conflict and conflict resolution
strategies.
Understand the pitfalls of managing global agreements and
contracts.
Learn how to negotiate more effectively across cultures.
Getting Americans and Japanese to work together is like mixing
hamburger with sushi.1
Atsushi Kagayama
Panasonic
Did you ever wonder how Pfizer built such a successful global
pharmaceutical
empire?
In
part
by
absorbing
other
failed
pharmaceutical companies such as Pharmacia and Upjohn that had
the technologies and patents but not the necessary global
management know-how to succeed. Several years ago, Sweden’s
Pharmacia and America’s Upjohn Pharmaceutical began working on
a merger. The goal was to combine both companies’ strengths and
become a stronger player in the highly competitive global
pharmaceutical industry. When the original merger was proposed,
485
however, early disagreements arose among the executives over
where to locate their new corporate headquarters.2 Upjohn had long
been headquartered in Kalamazoo, Michigan, and suggested that
the new venture be run from there. Not surprisingly, Pharmacia,
headquartered in Stockholm, had a different idea and suggested
Sweden as its preferred location. After considerable negotiation,
neither side would yield, so it was decided to move the new
headquarters and its 100-person executive staff to London instead.
The new venture would be known as Pharmacia Corporation.
Principal manufacturing centers for the new 30,000 employee
company would remain in Kalamazoo, Stockholm, and Milan (a
major pharmaceutical hub), and division managers from these
operations would fly back and forth to London as needed. It was an
inauspicious beginning.
Additional
clashes
between
the
parties
began
almost
immediately. The hard-driving, mission-oriented Americans from
Upjohn routinely clashed with the more consensus-oriented Swedes
from Pharmacia. The Americans wanted more cost-cutting and
accountability, while the Swedes wanted to keep their employees
informed and sought feedback on how to move the company
forward. American managers scheduled meetings throughout the
month of August, a common holiday time for the Swedes. At the
same time, the more internationally experienced Swedes were
surprised by the parochial manner and lack of sophistication of their
American counterparts. Swedish managers had long worked with
people from across Europe and tended to be more adaptable and
flexible than their American counterparts. Upjohn’s culture had
banned smoking and required drug and alcohol testing of its
employees, while Pharmacia’s culture served liquor in the company
cafeteria and provided ashtrays in each conference room. Finally,
486
the Upjohn-based CEO kept his managers on a tight leash and
required frequent reports, budgets, and staffing updates. Swedish
members of the executive team considered this detail of reporting to
be a waste of time and soon simply stopped complying until the CEO
finally resigned. Meanwhile, the Swedes concluded that the
Americans were trying to take over the partnership and began
resisting calls for cooperation. No one was happy.
To put the conflict into perspective, a Swedish executive
observed, “I see in America a more can-do approach to things. They
try to overcome problems as they arise. A Swede may be slower on
the start-up. He sits down and thinks over all the problems, and once
he is reasonably convinced he can tackle them, only then will he
start running.”3 Another Swedish executive added, “The Swedish
approach is more the engineering approach: ‘Tell me why and how
this thing works.’ The American approach is much more direct. Their
attitude is: ‘Don’t teach me to be an expert, just tell me what I need
to know to do my job.’”4
The original impetus behind the merger was the compatibility of
product lines of the two companies. Together, the new company was
well placed in the global marketplace with a broad range of highly
competitive pharmaceutical products. However, the ongoing cultural
conflicts between members of the executive team led to lost
opportunities and less than anticipated sales and profits. In the end,
New York-based Pfizer acquired Pharmacia (including Upjohn),
closed its London headquarters, and fired most of its top executives.
What went wrong? Much of the conflict could have been
avoided if the parties involved shared superordinate goals and
were willing to put these goals ahead of short-sighted self-interest.
Cultural differences clearly played a role in this conflict. Conflicting
goals, self-interests, and perceptions regarding how things should be
487
done jeopardized the partnership before it actually began, creating
conflicts that were difficult to resolve. Compounding the problem was
the “us-versus-them” climate that quickly emerged. Management and
problem-solving styles were dramatically different. Think about it: Did
one side – or both sides – commit errors that caused the failure of a
potentially mutually beneficial partnership? Would they recognize
these errors as errors? Or was this partnership an idea that was just
not going to happen, and neither side could do much about it?
Challenges such as these are actually fairly common. The
failure rate for global partnerships is around 50 percent.5 Promising
partnerships fail to get off the ground due to conflicts and
misunderstandings during the negotiation process. Others flounder
shortly after the ink on the contract is dry, again due to conflicts,
misunderstandings, and promises between partners that are not
delivered. The crucial question then is how to do it better, which is
our focus in this chapter. Here, we will explore the following topics:
how companies build successful global partnerships
how to approach global negotiations, including developing
strategies and processes
how to recognize and manage conflicts during the negotiation
process
how to manage contracts and agreements once achieved.
488
Building Global Partnerships
Negotiating agreements and building global partnerships can be a
perilous enterprise. The stakes are often very high, both for the firms
and for the negotiators.6 Indeed, problems often begin as soon as
negotiations are opened, with each side trying to gain an advantage
at the other’s expense (e.g., lower prices, royalty distributions,
proprietary technology, market access, and so forth). If and when a
contract is signed, the problems only multiply. How do we manage
the partnership? Who is in charge? How do we build trust between
the partners? How do we harmonize our long-term interests? How
do we merge two different organizational cultures? Indeed, what is
the meaning of the contract on which the partnership itself is based?
Throughout the process, moreover, the personalities and private
agendas of the principal negotiators and their teams and
organizations have different goals, demands, and constraints, which
can also play a significant role in determining success or failure. And
once the agreement is signed, new problems emerge on the horizon.
489
Benefits of Global Partnerships
In today’s turbulent business and technological environment, many
contemporary global firms from around the world often have no
choice but to seek, secure, and successfully manage various
international joint ventures and strategic alliances if they intend to
survive and succeed over the long haul. Indeed, there are many
reasons for this, most of which are based on corporate responses to
opportunities and threats in the global business environment.7 In
particular, the major benefits of global partnerships can be
summarized as shown in Exhibit 8.1.
Exhibit 8.1 Benefits and challenges of global partnerships
What does this long list of benefits have in common?
Collectively, these actions serve the long-term interests of the
partner
firms
by
providing
growth
opportunities,
operating
efficiencies, protection from external threats, and, at the end of the
day, increased revenues and profits. No wonder that strategic
partnerships have become so popular in recent years. As
management expert Peter Drucker observed, “alliances, joint
490
ventures, minority stakes, know-how agreements, and contracts will
increasingly be the building blocks of successful firms in the future.”8
A good example of how global partnerships can work to a
company’s advantage can be found in the commercial aircraft
manufacturing industry. While there are many companies in this
industry, four dominate the field: Airbus, Boeing, Bombardier, and
Embraer. All four have built broad and complex global alliances. For
example, Boeing, with 140,000 employees worldwide, has 13,000
suppliers from 57 countries.9 From this, they manufacture airplanes
consisting of over two million parts, such as the Boeing 787. (Can
you imagine a management plan to assemble a product with two
million parts?) This aircraft includes wing and tail sections from
Japan, Italy, South Korea, Canada, and Australia; cargo and
passenger doors from France and Sweden; and engines from the
UK. The numbers at Airbus are similar (e.g., 12,000 global partners).
Airbus has even built a special plane, Airbus A300–600ST Super
Transporter (known as the Beluga), to transport sections of its
aircraft across borders for final assembly in France. And while
Canada’s
Bombardier
and
Brazil’s
Embraer
are
smaller,
proportionately they have largely the same make-up.
The question here is why the complexity in organizational
structure. There are two principal reasons. First, it is necessary to
seek parts, supplies, and technologies where you can find them and,
since these qualities are globally distributed, it is necessary to
globally source what is needed. But there is a second reason: to
spread employment to countries that purchase their planes. Japan is
a major purchaser of 787s and has a corresponding employee base
in the project. China, on the other hand, is more interested in other
Boeing aircraft and has a major employee stake in these ventures.10
In today’s environment, such global partnerships have become a
491
strategic marketing imperative. And partnership strategies can
become political very quickly. When Bombardier began preparing to
sell its new C Series passenger jet in the US, Boeing at first
objected. In response, Bombardier formed a last-minute strategic
partnership to manufacture part of its new plane at an Airbus facility
located in the US and to market the new plane through this larger
company, even though the entire design and most of the
construction was Canadian. The new plane, renamed the Airbus
A220 was born. Boeing’s objection evaporated.11
Management Application 8.1 Strategic Partnerships in the
Commercial Aircraft Industry
1. Can you identify another industry where global
strategic partnerships are also important?
2. Can you identify another industry where they are far
less important?
3. Does the size of the company or complexity of the
product influence the necessity of creating a global
partnership? Explain.
4. Why do you think Bombardier agreed to change the
name of its latest and most technologically advanced
aircraft to Airbus?
492
Drawbacks to Global Partnerships
While numerous benefits of global partnerships can be identified, it is
equally important to recognize some potential drawbacks.12 In the
haste to create a global partnership, long-term objectives and
aspirations can sometimes remain ill-defined, leading eventually to
an incompatibility of goals as the partnership gets down to managing
details. The example of Pfizer illustrates how this can happen.
When considering whether or not to partner, many firms
underestimate the importance and enduring influence of both
national and corporate culture. The Pharmacia and Upjohn example
had red flag “lack of fit” problems in both these areas that were not
addressed or resolved. As Peter Drucker also noted, “culture eats
strategy for breakfast.”13 No matter how brilliant the strategy, deepseated organizational values are stronger. For this reason, part of
due diligence before agreeing to partner is identifying cultural value
differences of both types and devising a plan to deal with them from
the very beginning.
Partnerships can also fail because of a lack of long-term
commitment by one or both partners. The question here is how much
a partner is willing to invest in time and resources to ensure success.
As Howard Perlmutter observes, “If you [a typical Western company]
have a joint venture with a Japanese company, they will send
twenty-four people here to learn everything you know, and you will
send one person there to tell them everything you know.”14 This
hardly sounds like a strategy for success.
Negotiated partnerships can flounder because one or more
partners resist providing key – and often proprietary – information
relating to the operations of the venture to their partners.
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Conflicts can emerge over how earnings are distributed. Some
partners may wish to reinvest earnings in research on future
products, while others may wish to return all earnings to
stockholders or equity partners. This happened when US-based
Rubbermaid broke off an alliance with Dutch DSM Group to
manufacture and distribute its products throughout Europe, Africa,
and the Middle East because DSM refused to reinvest earnings in
future product development, a key to the long-term success of the
venture as Rubbermaid saw it.
A major pitfall to successful partnerships is the threatened loss
of local control by one partner to another. In point of fact, any
partnership involves some loss of autonomy, and in many cases a
partner realizes – sometimes too late – that it has lost control over
decisions that it values. One partner may wish to continually
introduce new products, while the other partner may wish to push
older products as long as possible. In other cases, partnerships can
lead to one partner buying out the other. One study found that of 150
terminated joint ventures involving Japanese firms, three-quarters
ended because the Japanese partner bought out the other partner.15
Failure to learn and adapt quickly is another challenge. This is a
reason for failure on the individual level among global leaders, as
mentioned in the last chapter. When we compound this at the
organizational level, and see leaders and employees in two partner
firms who cannot quickly adjust to the inevitable problems that arise
in global alliances, failure is essentially guaranteed.
Finally,
some
partnerships
falter
because
the
business
conditions change, suggesting more productive strategies for one or
both partners. Economic conditions or customer tastes require
companies to reassess their business practices, and at times
494
previous cooperative arrangements no longer serve the needs or
objectives of the firm.
A good example highlighting the challenges facing companies
trying to build global partnerships and alliances can be seen in the
global automobile industry. As reported in The Wall Street Journal,
global automobile alliances have a “spotty record.”16 Numerous
attempts have failed, largely due to culture clashes, turf wars, and
difficulties integrating technologies across vehicle lineups, according
to industry experts. Companies often have problems trying to blend
management teams, while engineers are often protective of their
work and unwilling to adjust to new approaches. There are also
concerns that too much blending of parts and plans can blur
distinctions between brands, making models look too similar.
Daimler’s merger with Chrysler lasted less than ten years in part
because leaders struggled to bridge cultural gaps between the
German and American companies. Volkswagen paired with Suzuki,
only to dissolve the partnership six years later following mutual
accusations of bad faith after Suzuki sourced engines from a
competitor. The Fiat-Chrysler partnership continues but with a
weakened leadership structure and an uncertain future. And the
famous Renault-Nissan-Mitsubishi alliance was also weakened in
the light of both political and financial intrigue. Such mergers and
partnerships represent huge risks for executives and stockholders,
consume enormous amounts of resources, and tend to have short
lives. The question of interest here is not why there are so many
failures; the question is how there could have been more successes.
A second example of some of the drawbacks of global
partnerships comes from a decade-long conflict between Apple,
Samsung, and Ericsson. While iPhones are popular worldwide,
Apple does not actually make them. The components come from a
495
variety of suppliers, including Korean-based and rival cellphone
manufacturer Samsung Electronics, which provides some of the
phone’s most important components. Together, these account for
over a quarter of the component cost of an iPhone. This puts
Samsung Electronics in the somewhat unusual position of supplying
a significant proportion of one of its main rival’s key products in the
cellphone market. Supplying Apple is actually part of Samsung’s
overall business model: acting as a supplier of components for
others gives it the scale to produce its own products more cheaply.
For its part, Apple was happy to let other firms handle component
production and assembly, because this left it free to concentrate on
its strength of designing elegant, easy-to-use combinations of
hardware, software, and services. Still, Apple has sued Samsung on
several occasions over the design of Samsung handsets and tablets,
claiming that Samsung copied hardware and design features from
Apple products. Samsung retaliated by countersuing. Then,
Swedish-based rival – and third partner – Ericsson sued both Apple
and Samsung, claiming its own patent infringements and claiming
tens of millions on unpaid licensing fees from both firms. Still, the
three-way
alliance
continued,
and
in
2018
Apple
and
its
rivals/partners settled their legal differences.17 Their alliance
continues.
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Management Application 8.2 Conflicts in the AppleSamsung-Ericsson Partnership
1. From a managerial standpoint, how is it possible for
three companies to work closely together in global
strategic alliances when they are not only direct
competitors in the marketplace, but also suing one
another in court?
2. What does this global partnership tell you about the
future of global strategies and competitiveness in
dynamic industries such as consumer electronics?
3. What are the management challenges for Apple,
Samsung, and Ericsson in making this long-term
relationship work?
4. Are there lessons from this strategic partnership for
other global companies? Explain.
5. What skill sets would leaders of these three
companies need to make this alliance successful?
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Preparing for Global Negotiations
So, what have we learned about successful global partnerships?
And what have we learned about relationship-building and working
with global partners? British management consultant Charles Handy
has observed that the most important skills that will be needed in the
organizations of the future will be “the ability to win friends and
influence people at a personal level, the ability to structure
partnerships, and the ability to negotiate and to find compromises.
Business will be much more about finding the right people in the right
places and negotiating the right deals.”18 If this is correct, what can
managers do to prepare themselves and avoid becoming another
cautionary tale of global alliance failure?
Successful negotiations, both locally and globally, begin with
preparation. In this regard, we can identify three basic initial steps
preceding any serious bargaining process (see Exhibit 8.2).
Exhibit 8.2 Preparing for global negotiations
498
Step 1. Selecting the Right Partner
In view of the high “divorce rate” among international joint ventures
and strategic alliances, a key question emerges concerning how and
where to find the right partners and then negotiate a workable
partnership. This challenge faces many, if not most, global
partnerships today. In this regard, consider what it is that a company
most requires in partners in order to expand its business in ways that
are both efficient and effective, and support its overall mission. Six
key success factors can be identified (see Exhibit 8.3):
1. Compatibility of strategic goals and tactics. First and
foremost, among these factors is ensuring that prospective
partners have goals and objectives that mutually reinforce each
another’s long-term objectives and short-term tactics. Without
this congruence, organizational and managerial efforts are likely
to dissipate while each partner expends time and resources
trying to go its own separate way. We saw this problem with the
Rubbermaid-DSM alliance above.
2. Complementary value-creating resources. In addition,
partners’ approaches to methods, systems, inputs, and
distribution channels should be similar and therefore
understandable and comfortable to each partner. Moreover,
ideally each partner would contribute assets to the partnership
that the other partner may not have in abundance. The longstanding alliance between Samsung Electronics and Corning
Glass is a case in point. When Samsung decided to enter the
television market, it had little understanding of critical glass
technologies that were critical to manufacturing success. At the
same time, Corning was looking to expand its overseas
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ventures in East Asia based on its previous success in Japan.
Both needed partners. As a result of the partnership, Samsung
provided a highly educated workforce and capital to match
Corning’s highly sophisticated glass technology. Both learned
from each other and complemented one another through their
particular resource contributions to the enterprise.
3. Complementary corporate cultures. Successful partners
typically have complementary corporate (or organizational)
cultures. Partnering with a firm that has a secretive
organizational culture is likely to be unsustainable for a
company that thrives on openness. Ford and Mazda had this
problem in the early years of their alliance. This is not to say that
successful partners must have open and cooperative cultures,
although this certainly makes partnerships more likely to
succeed. Rather, it means that whatever the cultures are, they
should at least be compatible in their characteristics. The FordMazda alliance ultimately failed.
4. Strong commitment to the partnership from both sides. A
major factor in selecting successful partners is the degree to
which both partners have a strong interest and commitment to
creating and managing a successful partnership.
5. Strong philosophical and operational compatibility.
Finally, successful partnerships tend to share a common
philosophical outlook, as well as strong operational capabilities.
They share things in common and, as organizations, often look
alike in many ways. At the same time, they frequently share
basic philosophies of operational and human resource
management. For example, when US-based Davidson
Instrument Panel was looking for a British partner, they sought
500
and found in Marley PLC a viable partner who shared many
common characteristics that they felt would be required in order
for the venture to succeed.19 Both used consensus-style
management. Both were part of a larger organization that was
highly decentralized. Both desired to move to the Continent with
a manufacturing presence. Both had similar views on how to
grow the business. Both had similar philosophies about both
running the business and managing human resources. Both
sought an open and fair relationship. As a result, the two
partners got Davidson-Marley off to a good start and began
business farther along the learning curve than most alliances.
6. Ability to learn and adapt quickly. Strategy expert Yves
Doz found that enduring alliances engaged in evolutionary
cycles of learning and adaptation with respect to the
environment, task, process, skills, and goals.20 They also
engage in mutual learning, but this is only possible when
communication, trust, and commitment are present. When
conflicts or problems occur, for instance, there has to be a
mechanism for surfacing and communicating them, followed by
a willingness to dig down and identify the causes, quickly find a
solution, and make whatever changes are needed. Sometimes
this involves developing or hiring new competencies in the
workforce. An ability to adapt includes the idea of dynamic
capabilities, “the firm’s ability to integrate, build, and
reconfigure internal and external competences to address
rapidly changing environments.”21
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Exhibit 8.3 Key success factors in cross-cultural partnerships
502
Step 2. Developing a Negotiating Strategy
Finding suitable partners in any aspect of our lives is never easy.
Again, the marriage metaphor can be useful in understanding this
mating game. Once a potential partner has been identified and due
diligence has failed to uncover any red flags, companies turn their
attention to the negotiation process with the aim of building a useful
partnership. The negotiation process is the first step in relationshipbuilding and represents an opportunity for both parties to determine
the nature, scope, and ground rules for the partnership. As
discussed above, despite the many benefits of a global partnership,
there are also challenges and drawbacks. Partners must obviously
work hard to make it work. During the negotiation process, partners
have an opportunity to learn about each party’s organizational and
national cultures, their interests, commitments, and potential
synergistic opportunities to create value.
Unfortunately, when negotiating such a partnership, negotiators
frequently commit the mistake of focusing exclusively on signing the
deal, assuming that once the contract has been signed, everything
else will follow smoothly. Given the high rate of failure in global
partnerships, the real challenge is not signing the contract but putting
the deal into practice. Companies that are able to use the negotiation
process to get to know their future partners can often foresee and
prevent future problems, and avoid undue hardships. For these
situations, negotiations expert Danny Ertel suggests that negotiators
need a new implementation mindset focused on implementation,
not just negotiation.22 He notes that the product of a negotiation isn’t
a document; it’s the value produced once the parties have done what
they agreed to do. Negotiators who understand that prepare
503
differently to dealmakers. They don’t ask, “What might they be willing
to accept?” but, rather, “How do we create value together?” They
also negotiate differently, recognizing that value comes not from a
signature but from real work performed long after the ink has dried.
To this end, he suggests five approaches towards an implementation
mindset.
1. Start with the end in mind. Think about how the deal will
work twelve months after it has been signed. How will you know
when it is successful? What can go wrong? These questions
focus negotiations on the implementation phase, making the
partnership work after the deal has been signed.
2. Help the other side to prepare. Surprising the other party in
order to win concessions is likely to backfire, as the other party
will not be able to deliver on its promises and both sides will
lose.
3. Treat alignment as a shared responsibility. If your interests
are not properly aligned, problems will likely emerge at some
time in the future. It is worthwhile investing in time to gain
acceptance by all those involved in the deal, who will have to
make the deal work later on.
4. Send one clear message. Share information with everyone
involved in the deal. Withholding information may create early
wins, but it will cause problems in the implementation phase if
one of the parties feels deceived.
5. Manage negotiations like a business process. Signing a
contract is just the first step; the implementation of the deal
brings with it important associated costs. To ensure that the
implementation is smooth, negotiators use careful preparation
504
and post-negotiation reviews. They track and resolve problems
quickly.
505
Step 3. Managing the Negotiation Process
Successful international negotiators are comfortable in multicultural
environments
and
are
skilled
in
building
and
maintaining
interpersonal relationships. A career in this arena is not for the faint
of heart, however; this is a difficult job that requires a number of very
specific skills, as well as an ability to handle significant amounts of
conflict and stress. Successes come slowly and failures are
commonplace. Even so, it is possible to identify a number of
personal factors that often differentiate successful from unsuccessful
negotiators: a tolerance of ambiguity; patience, patience, patience;
flexibility and creativity; a good sense of humor; solid physical and
mental stamina; cultural empathy; curiosity and a willingness to learn
new things; and a knowledge of foreign languages.
Among these recommendations, the one suggesting knowledge
of a foreign language is perhaps the most controversial. Specifically,
how important is it to speak two or more languages? Moreover, when
negotiating with a foreign partner, which language should be used?
And when should it be used? Consider the peril when someone
speaks only one language and uses an interpreter for negotiations. A
British manager was recently on a business trip to Mexico City and
her local host took her to visit the famous Teotihuacán pyramids
outside the city.23 Near the great Pyramid of the Sun, they ran
across a Mexican street vendor who was selling silver jewelry. The
manager found something she liked, and her Mexican host offered to
help her negotiate. The vendor made an initial offer, and the visitor’s
host translated and then suggested a low counter-offer. “If we
counter with this, he will then counter with that,” said the host. Not
surprisingly, the vendor rejected the counter-offer and offered only a
506
slightly lower price. The host then suggested a higher counter-offer,
again explaining that, if she offered x, the vendor would likely come
back with y. Bidding and counter-bidding went on like this for several
minutes. Finally, the frustrated visitor, who had made little headway
in gaining an advantageous price, gave in and agreed to pay almost
full price for the item. At that, the poor Mexican vendor looked at the
British manager and asked, in near-perfect English, “Would you like
to charge this on your Visa card?” The lesson here is very simple: if
you do not understand the local language, at least know with whom
you are bargaining – and who is doing your translation!
Beyond these personal qualities, experts suggest several
general strategies that have been found to facilitate successful
negotiations, including the following:24
1. Concentrate on building long-term relationships with
your partner, not short-term contracts. Long-term
partnerships usually yield greater long-term results for both
parties.
2. Focus on understanding the organizational and personal
interests and goals behind the stated bargaining positions.
What do the various parties to the negotiation hope to gain from
an agreement?
3. Avoid over-reliance on cultural generalizations. Although
there may be cultural trends within specific countries, no nation
is monolithic, and people can vary widely in their personal
characteristics. In this regard, management researchers Nancy
Adler and John Graham investigated negotiation behaviors in
both domestic and cross-cultural bargaining, and found that
people behave differently when they are negotiating with people
from their own culture compared to another culture.25
507
4. Be sensitive to timing. Some cultures – and some
negotiators – require considerable patience in working towards
an agreement, while others demand prompt resolution of all
issues or they will go elsewhere.
5. Remain flexible throughout the negotiations.
Circumstances, available information, and opportunities often
change, and success sometimes hinges on being both prepared
and alert.
6. Plan carefully. Nowhere is the old adage “Knowledge is
power” more apt than in understanding international
negotiations. Extensive preparation on all aspects of the
negotiation can make all the difference.
7. Learn to listen, not just to speak. Develop good listening
skills to understand both the content and the context of the
message. Use body language and facial expressions to identify
informal or subtle cues signaling intentions and concerns.
508
Negotiating Strategies and Processes
In many cultures, business is built on long-standing personal
relationships. This is as true in Belgium, Kenya, and Chile as it is in
China and India. People do business with partners they know,
people they can trust. As such, many international negotiations begin
with both sides trying to establish a personal bond. This does not
necessarily mean they plan to become lifelong friends; rather, each
side needs to determine if the other party is sufficiently trustworthy to
conclude an agreement and stick with it. In many countries, it is
insulting (as well as unproductive) to begin a business discussion
until after such relationships have been firmly established. In these
cultures, it is often said that business relationships must be “warmed
up” before getting down to serious negotiations. This is a good
principle to remember.
Ironically, the one place where such relationships, while
important, are not necessarily critical to a successful negotiation is
the United States, where legal contracts are frequently seen as a
substitute for personal relationships (see below). As a result, US
negotiators are notorious for wanting to get down to business
immediately – a practice that frequently leads to frustration and
failure. More successful US negotiators understand the critical
importance of subtleties and patience, not brashness and drive.
Accordingly, most successful international managers – regardless of
their home country – invest considerable time and effort in getting to
know their prospective partners. This frequently includes a variety of
social activities (dinners, golf, etc.), at which it is often inappropriate
to discuss any business whatsoever. The stage is being set.
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Competitive versus Problem-solving Strategies
Generally speaking, there are two basic strategies for negotiation:
competitive negotiation and problem-solving negotiation. The
competitive approach views negotiations as a win–lose game, while
the problem-solving approach seeks to discover a win–win solution
from which both sides can benefit, if at all possible. Exhibit 8.4
illustrates how these two different strategies are played out during
negotiation.
Exhibit 8.4 Competitive and problem-solving negotiation strategies
Stages in
negotiation
Competitive bargaining
Problem-solving
bargaining
1.
Preparation
Identify current economic
and other benefits your
firm seeks from the deal.
Prepare to defend your
firm’s position.
Define the long-term
strategic interests of
your firm. Prepare to
overcome crosscultural barriers to
defining mutual
interests.
2.
Relationshipbuilding
Look for weaknesses in
your opponent’s position.
Learn about your
opponent, but reveal as
little as possible.
Adapt to the other
side’s culture.
Separate the people
involved in negotiation
from the problems and
goals that need to be
solved.
510
Stages in
negotiation
Competitive bargaining
Problem-solving
bargaining
3.
Information
exchange
and first offer
Provide as little
information as possible
to your opponent. Make
your position explicit.
Make a hard offer that is
more favorable to your
side than you realistically
expect to achieve.
Give and demand to
receive objective
information that
clarifies each party’s
interests. Accept
cultural differences in
speed of response and
type of information
needed. Make firm but
reasonable first offer.
4.
Persuasion
Use dirty tricks and
pressure tactics when
appropriate to win.
Search for new
creative options that
benefit the interests of
both parties.
5.
Concessions
Begin with high initial
demands. Make
concessions slowly and
grudgingly.
Search for mutually
acceptable criteria for
reaching accord.
Accept cultural
differences in starting
position and in how
and when concessions
are made.
6.
Agreement
Sign only if you win and
then ensure that you sign
an iron-clad contract.
Sign when the
interests of your firm
are met. Adapt to
cultural differences in
contracts when
necessary.
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In competitive negotiation, each side tries to give as little as
possible. They frequently begin with unrealistically high demands
and make concessions only grudgingly. Competitive negotiators will,
at times, use dirty tricks or other tactics that allow them to win. Little
thought is given to building a long-term relationship between the
parties. Since starting from inflexible positions often leads to
outcomes that satisfy neither side, each side often develops negative
attitudes towards the other. As a result, losers in the agreement often
seek revenge, such as reneging on parts of the contract at a later
date or substituting inferior-quality materials in production orders.
Thus, the danger with competitive negotiation is that one can “win
the battle but lose the war.”
By contrast, problem-solving negotiation begins with the
basic tenet that negotiators must separate positions from interests.
Instead of defending a company’s position as a major goal in the
negotiation process, problem-solving negotiators seek mutually
satisfactory solutions that are beneficial to the interests of both sides
(see Exhibit 8.5). Dirty tricks are avoided because they poison the
development of long-term mutually advantageous relationships.
Objective information is preferred whenever possible as a basis for
discussion and problem-solving efforts, instead of unrealistic sales
pitches or hyperbole. Often problem-solving negotiation facilitates
the identification of creative new ways to provide both parties with
what they want to achieve. Furthermore, even when mutually
advantageous solutions are not found, both sides leave the table
believing that sincere efforts were made on both sides. This leaves
open the possibility of returning to the bargaining table in the future
when another opportunity presents itself.
512
Exhibit 8.5 Examples of competitive and problem-solving
negotiation strategies
There are three important points to keep in mind when choosing
whether to use competitive or problem-solving bargaining strategies:
1. Understand cultural environments. It is very easy in crosscultural negotiation to misread the intentions of the other party.
Hence a detailed understanding of the cultural backgrounds of
the other party becomes critical in determining whether they are
stating a highly inflexible position or offering a genuine
opportunity to strike a deal. This is why many successful
international negotiators always have advisors at their side who
are intimately familiar with the culture and traditions of the other
party.
2. Recognize what you are doing. Culture sometimes
predisposes negotiators to select one approach over the other.
For example, observers note that some American managers
believe there has to be a winner and a loser, while many
Japanese managers prefer a problem-solving approach. The
smart bargainer understands this and adjusts their strategy
accordingly.
3. Look to the long term. When possible, most experts on
international negotiation recommend a problem-solving
approach, because it tends to lead to better long-term solutions
513
and relationships. This is particularly true in negotiating global
partnerships. Winning now may mean big losses later. It is
important to remember that the failure of the partnership may be
more expensive than small concessions given during the
negotiation process.
Sometimes governments use different approaches with different
parties in the same negotiation, with confusing and negative
repercussions. Several years ago, India’s Tata Motors was searching
for a location in which to assemble its micro car, the Nano.26 The
Nano is designed to be the world’s cheapest car and is squarely
aimed at developing nations. In searching for a suitable site, Tata
was encouraged by local administrators in West Bengal to locate its
new $300 million factory in Singur. The new facility would help
stimulate economic development in a very impoverished region by
ultimately creating 10,000 new jobs, plus perhaps another 10,000
jobs for local suppliers. However, as the factory neared completion,
local farmers began demanding that the company go elsewhere. In
particular, they objected to losing farmland that had traditionally
supported the local economy. Moreover, many farmers claimed that
the local government had forced them to sell their lands. Despite
government
backing
and
Tata’s
reputation
for
social
and
environmental consciousness, local farmers continued to protest. As
a result, Tata decided to close its nearly completed factory and move
everything to Gujarat Province. As a result, even ten years after the
failed negotiations, Singur in West Bengal remains a largely
impoverished farming region, while Gujarat is moving closer to its
ambition to lead India in economic development.27 One lesson here
is that companies have to look at the history of the initiative and
514
consider all the stakeholders involved, instead of relying solely on
governmental negotiators.
There is an unfortunate postscript to the story of the Nano. Due
to declining sales, Tata stopped production in 2018. Why? Several
reasons, but a major one is that while the Nano was aimed at the
lower-income Indian market, it became a novelty car among the
wealthy, and just as quickly as they adopted it they lost interest. Now
Tata is trying to convert the Nano to an electric car. Meanwhile, the
factory in Gujarat remains idle.28
Management Application 8.3 Tata’s New Factory in Gujarat
1. In your view, which type of negotiations were involved
with the different stakeholders and counterparts in this
example, and why? What is your evidence?
2. Did the farmers in West Bengal misplay their hand in
the negotiation process? Explain.
3. What did the government and Tata lose in this failed
negotiation?
4. What lessons does this example highlight for global
negotiators?
5. What does the Nano’s ignominious end say for future
private-public partnerships?
515
Bargaining and Concessions
Clearly, the ultimate goal of a negotiation is to arrive at a mutually
agreed contract that is legally binding in both countries. To achieve
this, concessions must be made, and sometimes culture influences
how these concessions are determined. In North America, for
example, companies frequently use what is called a sequential
approach to bargaining and concession-making (see Exhibit 8.6).
In other words, they prefer to go through a proposed contract item by
item, and reach agreement on each item as they proceed
sequentially through the proposals.
Exhibit 8.6 Sequential and holistic bargaining strategies
Much of Asia, however, takes a holistic approach to
bargaining and concession-making. In this the two parties work their
way through the entire proposed agreement but do not agree to
anything until they have completed their review. They then discuss
the contract in its entirety, and make final proposals and counterproposals aimed at reaching a complete agreement. The holistic
approach frequently perplexes novice North American negotiators
when they learn that a point they thought was already agreed upon
resurfaces, to be discussed later by their Asian counterparts.
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Bargaining in Brazil, Japan, and the US: An Example
Jean Brett and her colleagues have demonstrated that culture plays
an important role in determining which tactics negotiators select.29
Let’s begin with their interesting and well-crafted study of bargaining
tactics among Brazilian, Japanese, and American managers.30 In
this study, managers from the three countries were paired crossculturally in 20-minute negotiation sessions, and the investigators
simply counted the number of times managers from each country
used either a verbal or nonverbal negotiation tactic. They found
significant differences in both verbal and nonverbal bargaining or
negotiating tactics (see Exhibit 8.7). Notice, for example, how often
negotiators from each country said “no” during just 20 minutes (83,
6, 9, for Brazil, Japan, United States, respectively), touched their
opponents (5, 0, 0), or had silent periods during which they said
nothing (0, 6, 4). What does this say about cultural variations in
negotiations?
Exhibit 8.7 Bargaining tactics (Brazil, Japan, United States)
Bargaining tactics
Brazil
Japan
USA
Giving orders
14
1
6
Interrupting
29
13
10
Saying “no”
83
6
9
Silent periods
0
6
4
Touching others
5
0
0
517
Going a step further, consider what cultural anthropologists and
management researchers have discovered when analyzing some of
the cultural drivers underlying negotiating strategies of these three
countries (see Exhibit 8.8). These findings illustrate clearly some of
the principal challenges of negotiating and building successful global
partnerships across cultures.
Exhibit 8.8 Negotiating strategies (Brazil, Japan, United States)
Negotiating
strategies
Brazilian
firms
Japanese
firms
American
firms
Ultimate goal
Long-term
mutually
beneficial
relationships
Long-term
profitability,
usually without
personal
benefit
Short-term
profitability,
often with
personal
benefit for
negotiator
Ideal
negotiating
climate
Impromptu;
difficult to
generalize
Oblique and at
times personal
Straightforward
and
impersonal
Risk orientation
Risk-averse
Risk-averse
Risk-oriented
Communication
style
High-context;
both direct
and indirect;
frequently
emotional;
sometimes
exaggerates
High-context;
indirect;
seldom blunt;
extensive use
of technical
language
Low-context;
direct;
frequently
blunt;
sometimes
exaggerates
518
Negotiating
strategies
Brazilian
firms
Japanese
firms
American
firms
Emotional
sensitivity
Emotional
sensitivity
highly valued;
strong
personal
relationships
critical for
success
Emotional
sensitivity
avoided;
strong
personal
relationships
critical for
success
Emotional
sensitivity
avoided;
negotiators
often avoid
close personal
relationships
Basis of
decisions
Decisions
often tied to
emotional or
family
considerations
Decisions
usually made
on cost-benefit
basis for the
long term
Decisions
usually made
on a costbenefit basis
for the short
term
Importance of
face-saving
Face-saving
critical;
embarrassing
either party to
the
negotiation
should be
avoided, if
possible
Face-saving
critical;
embarrassing
either party to
the negotiation
should be
avoided at all
costs
Face-saving
not critical;
embarrassing
opponent may
lead to an
advantage in
negotiations
Conflict
Passionate
arguments,
but
uncomfortable
with serious,
open conflict
Seldom
argumentative;
uncomfortable
with serious
conflict
At times
argumentative,
especially
when put on
the defensive
519
One key factor in determining whether to do business with
someone in Japan is shinyo. This refers to the mutual confidence,
trust, and honor that are required on both sides for a business
relationship to succeed. Unless you trust your partner implicitly, it is
not wise to pursue a business relationship. When the Japanese have
dealings with individuals or businesses, choosing someone they can
trust is extremely important. Of course, everyone wants to deal with
people and companies they believe will do right by them, but in
Japanese society the idea of only working with trustworthy entities is
elevated to a much higher cultural level.
One way to make sure you’re working with people you can trust
is the concept of shokai, a kind of introduction whereby someone
who is already trusted by a third party will formally introduce you to
them, in effect sharing the goodwill they’ve already established with
both you and the third party. Because both parties are involved in a
trust relationship, they have an obligation to make sure everything
goes smoothly to avoid “stepping on the face” (to use the Japanese
phrase) of the person that brought you together. This trust-based
relationship system is ubiquitous in Japanese business; time and
time again managers find themselves depending on people who
have been formally introduced to them by someone else they
trusted.
These related concepts of shinyo and shokai, while easy to
understand, are nonetheless difficult for some foreigners to
implement. This is in part because of many Westerners’ fervent
belief in the power of the legal contract over the importance of a
personal relationship.
Not surprisingly, Brazil’s culture – and its approach to
negotiation – differs from that of Japan. In contrast to Japan’s
position as a long-established industrial power, Brazil is often
520
described as one of the world’s most attractive emerging markets,
although it has had difficulties in recent years.31 It is a member of the
BRICS economies (Brazil, Russia, India, China, and South Africa).
Multinationals from various countries are increasingly establishing
subsidiaries or doing business in Brazil in one way or another. In this
environment, knowing how to negotiate with Brazilians is crucial for
any ambitious global manager. In other words, we are more likely to
succeed when negotiating with Brazilians if we have educated
ourselves about the country and understand its culture, its way of
doing business, and its negotiation style.
It is difficult to characterize Brazilians because this large country
has many regional differences and subcultures. Nevertheless, the
typical negotiating style of Brazilian managers is summarized in
Exhibit 8.8, in comparison to typical Japanese and American
approaches. Because of their Portuguese roots, Brazilians do not
identify themselves as Latin Americans; they refer to themselves as
South Americans. At the heart of the Brazilian negotiating style is its
emphasis on building, maintaining, and capitalizing on one’s
personal relationships. Brazilians are often seen as being highly
engaged with their opponents or prospective partners during
negotiation. They tend to believe that regardless of what happens
during and after the negotiation, making friends and enjoying life is
important. This focus on relationships leads Brazilians to avoid
conflict and attempt to please the other party to the extent possible.
There is also a tendency to use indirect language, hide unpleasant
information, make false promises, and at times embellish the truth.32
The Brazilian tendency towards improvisation and flexibility is
also clear in their negotiation style. Many Brazilians do not follow
linear steps in a negotiation, and instead may jump back and forth
between topics. Risk-averse, Brazilians are likely to bargain and
521
negotiate for long periods of time. They enjoy the process of
negotiating and may not be in a hurry to make a deal. And they
seldom make decisions based solely on analysis. Most likely, they
consider emotions and instinct personal as well. In a recent article, a
prominent Brazilian magazine interviewed successful Brazilian
managers about their views.33 Among other things, the managers
agreed
that
successful
negotiations
are
typically
conducted
informally and with spontaneity. They are guided by intuition, and not
by reason alone. And finally, real negotiations seldom happen at the
negotiation table. Instead, they take place in parallel informal
meetings, where the relationship is developed. To be successful in
negotiating with Brazilians, foreigners need to be both friendly and
patient.
Finally, it is interesting to consider differences between Brazilian
and Japanese negotiating styles. The above review suggests that
both cultures would have few problems negotiating with each other.
Both emphasize building strong personal relationships, emotional
sensitivity, trust, pride, confidence, and a personal sense of honor. In
addition, both communicate indirectly, using context as much as
content. And both are uncomfortable with high degrees of conflict.
However, these characteristics are very general and allow for
important variations. Brazilians develop relationships by clearly
expressing emotions, hugging, and touching the other party, often
using exaggerations and euphemisms, and behaving in informal and
open ways. By contrast, the Japanese are often hesitant to display
emotions, remain silent and physically distant from others, and
stress respect and formality when interacting. Thus, while both
cultures’ values are similar (e.g., strong personal relationships), they
are expressed in different ways. Moreover, while both Brazilians and
Japanese communicate indirectly and expect the other party to
522
understand innuendos and subtleties, this does not guarantee that
both sides will understand one other. Indirect communication relies
on culturally established codes that communicate difficult information
without causing embarrassment. However, since these codes are
culturally embedded, two indirect communicators from different
cultures may have a hard time understanding each other and
correctly interpreting cues.
This study of negotiating tactics in Brazil, Japan, and the United
States raises some interesting questions. First and foremost, how
can global managers learn about these differences before sitting
down at the negotiation table? How are they expected to know what
to do? And should they try to adapt their own negotiation style to fit
local circumstances, or simply follow their own cultural lead and be
themselves? With so much riding on negotiations, these questions
deserve consideration by managers prior to sitting down at the table.
523
Management Application 8.4 Bargaining Tactics in Brazil,
Japan, and the US
1. If you were a manager from a fourth country, how
might you approach a bargaining session differently with
Brazilians, Japanese, or Americans? Why?
2. What factors might determine whose bargaining
tactics one follows – yours or those of your counterpart –
in a dual-country negotiation? Are there any other
options?
3. In bargaining with managers from other countries, how
do you know when you have reached the best deal you
can get? Explain.
Successful (and unsuccessful) negotiators can be found in all
countries and cultures. In this section, we focused on typical
bargaining behavior in Brazil, Japan, and the United States.
Similarities and differences were noted as an illustration of how
culture may influence negotiating behavior. However, it is important
to remember that not all Japanese or Brazilians necessarily fit this
pattern. People are complex and do not necessarily follow the rules
of their culture all the time; regional differences and personality
differences are also a source of wide variation within cultures.
Besides, cultural norms are cued more strongly in some situations
than others. For instance, an American negotiator is more likely to
behave according to American negotiation norms when working in
the United States with other Americans than when negotiating in
Japan with Japanese counterparts. People adjust – more or less
524
successfully – their behavior depending on the context in which they
find themselves.
This leads us to a perennial question in global negotiations:
Who should adapt to whom and why? Sometimes this is determined
by the degree of both counterparts’ familiarity with the other
culture.34 If only one of the counterparts is very familiar with the
other culture, this person usually does the adapting. If both are
moderately familiar with each other’s culture, they may negotiate the
process subtly or explicitly. For example, based on their fluency
levels, a pair of government negotiators each spoke in their native
language. They had more faith in their listening ability and could
avoid struggling to speak a foreign language in which neither was
completely fluent. If neither counterpart is at all familiar with the other
culture, it might be time to hire an advisor or mediator.
525
Managing Conflicts and Compromise
Despite well-intended efforts to develop a smooth bargaining
process and eliminate sources of conflict, conflicts are still likely to
emerge at various points throughout the negotiation process. Not
only are such conflicts often inevitable, they can at times be helpful
in forcing both parties to look deeply into what each side is actually
trying to accomplish. The important issue is this: when conflicts
between partners or prospective partners emerge, what are
managers supposed to do? A long tradition of studies on conflict
management points to several common strategies for dealing with
conflict that focus on both process and people.35
526
Process Strategies for Resolving Conflicts
To begin with, consider five common process strategies for
resolving conflicts, along with some factors that may help
managers decide which one fits best the specifics of their unique
situation (see Exhibit 8.9). These strategies are accommodation,
collaboration, competition, avoidance, and compromise. From a
negotiation standpoint, determining which of these strategies may be
most suitable is influenced – though not exclusively – by two factors.
First, how important is the relationship? Is it highly valued (perhaps
essential), or just convenient? What would happen if this relationship
were broken? Second, how important is the outcome? Is this
contract or partnership essential for your organization’s goals and
objectives, or are there alternative ways to accomplish them?
Exhibit 8.9 Conflict resolution strategies
Let’s think about the options.
1. Accommodate. In some situations, developing and nurturing
a relationship may be more important than the specific outcome
of a particular issue of conflict. In these cases, strong assertive
strategies may be counterproductive, and accommodating the
527
other party may be the best strategy. Small losses may
represent big wins later on, as they will strengthen a relationship
that is critical for success.
2. Collaborate. At other times the relationship is important, but
so too is the outcome of the particular issue on the table. In
such cases, perhaps the most successful strategy is to look for
ways of collaborating; jointly looking for a solution to the
problem that represents a win–win for all involved.
3. Compete. There are times when the relationship is not that
important, yet the outcome may be critical. These are occasions
when competition is most appropriate.
4. Avoid. There are times when a conflict is just not worth
bringing forward. The issue itself may not be that important and
the relationship may not be not critical. At such times the advice
is “Don’t sweat the small stuff,” and avoid the conflict altogether.
5. Compromise. In situations in which both the relationship and
the outcome are reasonably important, but time does not allow
negotiators to engage in a collaborative problem-solving
exercise, parties may decide to compromise, or split the
difference in a solution that is acceptable to everyone.
Obviously, these five strategies are not always as clear-cut as they
might at first appear, and other approaches may combine a variety of
strategies to work more effectively. Moreover, several contingency
factors can also enter into decisions concerning the most appropriate
conflict resolution strategy. These include the following:
1. How crucial is a particular solution to one or more team
members? If reaching a solution is crucial, a short-term
imposition of a solution or long-term educational efforts are likely
528
to make more sense than avoidance, negotiation, and
accommodation. Of course, experienced global managers also
need to understand that taking actions such as the unilateral
imposition of a solution can have adverse consequences. For
example, causing someone to lose face in many Asian countries
presents very real risks for the long-term viability of the team.
2. How much power does each party have vis-à-vis the
others? Stronger team members, for instance, can afford
competitive strategies to which weaker members may have to
acquiesce and be accommodating, while similarly powerful
members may need to engage in collaborative forms of
negotiation.
3. The viability of a given strategy is also dependent on the
timing with which a solution needs to happen. Urgent action
may be easily compatible with avoidance and accommodation
strategies, but less so with collaboration or compromise, which
can be more time-consuming.
4. It is also important to think about any precedents that
may be created by negotiators looking for expediency. For
example, accommodation by a negotiator in order to secure a
contract or partnership quickly may limit future options because
expectations would have been created that may be difficult to
modify.
The first two contingencies in this list seem to be compatible with
imposing a solution. However, never forget that winning the battle
may result in losing the longer-term war; when conditions change
and contracts end, counterparts may choose to partner with
companies that seek win–win solutions and mutual respect.
529
People Strategies for Resolving Conflicts
Taking a somewhat more applied viewpoint, conflict resolution expert
Nick Carstarphen suggests several people strategies for resolving
conflicts to consider when dealing with conflicts during the
negotiation process.36
1. Prepare people. Preparing successful negotiators includes
fostering a positive and open attitude towards dialog, focusing
on commonalities, not differences. People are central to any
conflict, and in order to find common ground “we” must replace
the attitude of “us-versus-them.” “We-verses-the-problem” is a
better approach.
2. Assess the situation. Preparing the negotiation process
means fully assessing the situation, identifying the parties that
should be present and the appropriate interventions to deal with
the conflict. For instance, is it necessary to ask for outside help
or can the conflict be solved with the people at the table? Is the
conflict widespread or concentrated on a particular person?
3. Explore past and present. Exploring the past and the
present, the origins of the conflict and its current dynamic, helps
uncover cultural assumptions and meanings that may be
obstructing collaboration. Giving negotiators an opportunity to
explore how things were in previous meetings and what
frustrates them now may make it possible to identify the real
issues causing the conflict.
4. Envision the future. By asking negotiators to imagine a
common future, creativity and imagination may help to find
solutions to the conflict. By envisioning a future together,
530
common values and needs are likely to become salient, and a
common solution and shared superordinate goals may emerge.
5. Create win–win solutions. Resolving conflicts is not just
about envisioning possibilities; it is also about taking action that
does not irreparably harm the relationship. Here, negotiators
must identify concrete actions to be taken to ease the conflict,
and then take those actions, evaluating their effectiveness along
the way and adjusting them if necessary.
6. Rejuvenate and reflect. Dealing with conflicts is an
intensive, energy-consuming endeavor. It is important to pause
from time to time, to reflect, regroup, and recover energies
before the process can continue. It is also important to take time
to celebrate successes and give a boost to morale.
7. Don’t forget relationships. Finally, conflicts are often about
relationships between individuals or groups. It is the extreme
interdependence among people and their companies that can
create conflict, and no solution will be found if this
interdependence is not acknowledged and fostered.
531
Managing Agreements and Contracts
If countries often approach negotiating strategies so differently, it is
not surprising that other aspects of building and managing
partnerships can also be quite different. Consider contracts. In most
Western countries, a contract – especially a written contract –
represents a company’s most effective tool against uncertainty and
risk. This is not surprising in view of the largely monochronic
orientation of these countries, where message content is often far
more important than message context. Every dictionary in the world
gives roughly the same definition of a contract: an agreement
between two or more parties that establishes rules governing their
business transactions.37 Contracts typically spell out levels of
investment, areas of responsibility and accountability, cost data
when
appropriate,
control
over
proprietary
technology,
and
procedures for sharing the benefits (and losses) of the enterprise. As
such, most managers from most countries believe that written
contracts are far superior to the proverbial handshake among
honorable people.
532
Mutual Trust and Contract Interpretation
Nevertheless, in many regions of the world, much business is
conducted on the basis of personal relationships and mutual trust, as
in the case of guānxi in China (see Chapter 3). Because contracts
are unnecessary among trusted friends in these regions, written
contracts are often perceived as a sign of distrust. As you might
imagine, these regions have fewer lawyers. The Japanese, for
example, historically avoided taking people to court because they
would be humiliated, thereby disrupting harmony.38 Israel and the
United States have the most lawyers per capita.39 Japan and China
have many fewer lawyers, as one would expect given their
avoidance of doing business with those they do not trust.40 It is very
easy for this divergence across cultures to create a dilemma for
global managers. What do they do when trying to develop a secure
business relationship in countries where written securities are not
commonplace? Or, conversely, when a handshake is not enough?
In theory, a contract is a legally binding instrument that
guarantees for all parties to the contract what will happen and when
(e.g., what each item or product will cost, when materials will be
delivered, the costs of technology transfer, etc.). Also, in theory,
certain penalties are stipulated for noncompliance with the contract
(e.g., financial penalties for late payments, criminal penalties for
fraud or theft, etc.). Good negotiators are adept at capturing the
essence,
as
well
as
the
details,
of
contracts
in
clearly
understandable wording. Moreover, experienced negotiators typically
use specialized attorneys to ensure that contracts are internally
consistent (i.e., there are no vague or conflicting clauses within the
contract) and comply with local and international laws. They will also
533
often have contracts translated into all the languages of the parties
to it, so that the details and provisions are clear to everyone.
Unfortunately, most experienced managers know that there can
be a sharp difference between what a contract says and what it
actually means. At times local governments will refuse to implement
a contract for various reasons, or will support the local partner to an
agreement. As a result, there is a critical need for all parties to a
contract to trust each other’s personal integrity and corporate
intentions. This is when culturally based practices such as guānxi
come into play. A written contract between strangers represents a
conflict waiting to happen in much of the world. This is why
successful global negotiators invest so much time in getting to know
their partners and nurturing this relationship after the contract is
signed and implemented. As a result, the importance of doing
business with long-term and trusted partners should not be
underestimated.
534
Doctrine of Changed Circumstances
One of the principal reasons for contract disputes around the world is
the cultural variation in the meaning of a contract. To many
Westerners (e.g., people in the United Kingdom, Australia, Germany,
Canada, the United States), a contract is a legal document that
spells out the obligations of all the parties. It is the culmination of a
successful negotiation process. And it must be in writing. In the
West, where people tend to have an internal locus of control (i.e.,
they believe that they largely control their own fate), a contract is a
contract. It can be renegotiated upon expiration, but not until then
unless otherwise specified in advance. As a result, Western
negotiators have to anticipate and prepare for every conceivable
future problem, leading to rather lengthy business contracts.
Elsewhere in the world, where people tend to have a more
external locus of control (i.e., they believe that the future is largely
influenced by fate or karma), many businesses accept something
called the doctrine of changed circumstances (see Exhibit 8.10).
This doctrine holds that when circumstances beyond the control of a
business partner change (e.g., hurricane damage, changes in
government policies, price increases for raw materials), both
partners are obliged to renegotiate the original contract so that
neither party loses materially. Under this doctrine, which can be
found throughout much of Asia, Africa, and Latin America, a contract
is thought of as a written recognition of a personal relationship
between the two parties. As such, it is the beginning, not the end, of
the process of mutual benefit as a result of working together.
535
Exhibit 8.10 Contracts and the doctrine of changed circumstances
Experienced negotiators note that Westerners think in terms of
concrete solutions to specific problems, while the Chinese think in
terms of a process that has no culmination.41 Indeed, many Asian,
African, and Latin American companies prefer to have only very brief
general contracts (perhaps two or three pages in length), in the belief
that it is impossible to anticipate all future circumstances that may
affect the contract. As circumstances change, it is often expected
that the contract will be modified to fit the new situation. After all, an
honorable person would not take advantage of their partner if
changes occur that were not caused by the two partners. Honorable
people look after each other’s interests.
In the East, the doctrine of changed circumstances is
supposedly designed to maintain harmony among partners; in the
West, it violates the pursuit of mastery over one’s environment. This
fundamental difference underlying both contract negotiations and
contract implementations between global partners often represents a
major threat to the long-term prospects of global partnerships.
Consider: If written (or even unwritten) contracts in one part of the
world frequently mean something very different in another part, and
536
two parties are negotiating an international joint venture, how can
either side have confidence, predictability, and trust in their
agreements? And what happens to the rookie manager who fails to
understand this?
It is not unusual for companies that charter ships to fail to pay
their owners, and for the owners to have these vessels and their
cargoes impounded. Normally, though, this is either because the
company is in financial trouble or because of disputes over delays. It
is rare for a charter company to insist that it could pay but won’t,
simply because shipping rates have gone down since it signed the
contract. That is exactly what China Shipping (Cosco) does on a
regular basis, however.42 China’s largest shipping firm is a major
owner as well as a charterer of the huge dry-bulk vessels that feed
China’s appetite for raw materials. In recent years it has signed
numerous long-term contracts to carry goods around the world.
When contract rates dropped, however, the company sent word to its
partners that it needed to renegotiate their contracts. When partners
balked, Cosco began withholding payments on the contracts,
describing this as a normal “market-based” approach for the
company. The company, owned by the Chinese government, clearly
had an ability to pay.43 Instead, however, it used its market position
and refusal to meet its financial obligations to exact revised contracts
that were more favorable to the company. In the West, such behavior
borders on the illegal or unethical; in this case, apparently, it
represents sound business practices. The logic is simple: conditions
have changed, so we must renegotiate the contract.
537
Management Application 8.5 Changed Circumstances at
Cosco
1. This example illustrates that contracts can have
different meanings to different parties (or countries) to an
agreement. Contractual meanings are embedded in
societal cultures and not easily changed. It is easy to
take sides in this dispute but, in fact, both sides are trying
to secure stability and an ability to plan; they just
approach this challenge differently. From a managerial
standpoint, what are the advantages and disadvantages
of each approach?
2. In view of this, if your European firm had an existing
contract with Cosco and both sides wanted to extend the
contract, what would you recommend to ensure that your
firm was not surprised again with unexpected changes in
the future?
3. What recourse do Cosco’s partners or customers have
in this dispute?
4. How can managers build trust with partners who live
and work under different assumptions about what
constitutes trust?
538
Manager’s Notebook Building Global Partnerships
This chapter has examined how various cultural and
situational factors can influence global negotiations and
partnering. By way of summary, we can group these issues
into three strategies for global management (see Exhibit
8.11): preparations, negotiations, and agreements. Once
again, the interplay between understanding the environment
in which these negotiations take place and taking wellconsidered actions at the table should serve to clarify both
what managers attempt to do and how well they accomplish
their task.
Exhibit 8.11 Strategies for building global partnerships
1 Manage preparations
First, we have already discussed several preparation issues,
including selecting a partner, developing a negotiation
strategy, carrying out due diligence on cultural fit, educating
yourself on all relevant issues that could impact the
negotiation, and preparing to the extent possible to manage
the negotiation process. This last requirement suggests that
539
managers should consider multiple options or negotiation
scenarios prior to actual negotiation, so that they can move
quickly as circumstances or positions change. Since
negotiations are dynamic by nature, experienced managers
typically view them much like a chess game. It is usually
advantageous to have several moves identified in advance. It
is also wise to look for subtle or even silent moves that may
help explain future actions (see Chapter 5).
2 Manage negotiations
The second issue involves the negotiation process itself.
Various aspects of this process have been discussed in detail
in the chapter, including management strategies and tactics.
Two key points should be made here. The first involves the
importance
of
building
relationships
prior
to
serious
negotiation. Getting to know one’s prospective partners can
avoid considerable problems either later in the negotiation
process or after an agreement has been signed. The second
involves ethical behavior. Definitions of acceptable ethical
behavior often vary by culture. The problem is that many
managers don’t realize this and insist on applying their own
standards to situations around the globe, which is naïve.
Worse, one could suggest that this is dangerous, because
such managers may be impervious to subtle suggestions or
actions that could become problematic later. This reality
suggests that managers would be well advised to avoid
anyone who talks or acts in ways that give rise to questions
about their ethical standards. Working with such individuals –
or companies – is much like the proverbial “playing with fire.”
540
It is simply not worth the risk, either to your reputation or the
reputation of your company.
3 Manage the partnership
A third and final issue also emerges that people tend to
ignore. Once a formal contract or agreement has been
signed, it is not the end of the process; it is actually only the
beginning. Contracts are living documents. As noted earlier,
while some cultures believe a written and signed contract
represents a permanent document, others believe it remains
flexible. Understanding this in advance is crucial. Beyond this,
relationships are never set in stone; they are always changing
and evolving, and global agreements are no exception. They
must be nurtured and managed through time if they are to
succeed. Indeed, one of the principal responsibilities of many
frequent flyers is to visit partners on a regular basis to renew
the relationship and resolve disagreements before they get
out of hand and cause genuine harm.
All of this clearly requires considerable time and
suggests a straightforward conclusion: global partnerships
should be pursued only when and if all parties to the
agreement see genuine mutual advantage and are willing to
devote the time and effort to make them succeed. If corporate
goals
are
compatible
and
trust
can
be
developed,
partnerships can be fruitful for all parties. Lacking this, they
become risky propositions that should, more often than not,
be avoided.
541
Chapter Review
542
Summary
Experts have suggested that the most important skills that will
be needed in the organizations of the future will be an ability
to win friends and influence people on a personal level, to
structure partnerships, and to negotiate and find compromises
when possible. Business in the future will be much more
about finding the right people in the right places and
negotiating the right deals.
People do business with partners they know and trust. As
such, many international negotiations begin with both sides
trying to establish a personal bond. This does not necessarily
mean that they plan to become lifelong friends but, rather, that
each side needs to determine if the other party is sufficiently
trustworthy to conclude an agreement and stick with it.
Negotiating strategies can be either competitive or problemsolving. They can also make use of sequential or holistic
bargaining techniques. These choices can be influenced by
cultural differences, as was illustrated in the example of
Japan, Brazil, and the United States.
Successful negotiators are comfortable in multicultural
environments and are skilled at building and maintaining
interpersonal relationships. Successes come slowly and
failures are common. Nonetheless, it is possible to identify a
number of personal factors that differentiate successful from
unsuccessful negotiators: a tolerance for ambiguity; patience,
patience, patience; flexibility and creativity; a good sense of
humor; solid physical and mental stamina; cultural empathy;
543
curiosity and a willingness to learn new things; and a
knowledge of foreign languages.
In most Western countries, a contract – especially a written
contract – represents a company’s most effective tool against
uncertainty and risk. This is not surprising, in view of the
largely monochronic orientation of these countries, where
message content is often far more important than message
context. Even so, in many regions of the world, most business
is conducted on the basis of personal relationships and
mutual trust, as in the case of guānxi in China. In these
regions, prospective partners often see written contracts as a
sign of distrust; they are viewed as unnecessary among
trusted friends.
Throughout the negotiation process, several types of
situational constraints help determine the choices or options
that are available to managers. For example, a culture based
on harmony or rules will likely require different managerial
behavior to one based on mastery or relationships. Similarly,
managerial behavior in the field can be influenced by the
degree of centralization in one or more organizations (e.g.,
who makes the decisions?), as well as whether the
organizations in question – and their managers – are riskaverse or risk-oriented. Finally, managerial action can be
constrained by such factors as the degree to which the
negotiating partners have mutual or competing goals, where
the negotiations are taking place, and the time pressures
involved (i.e., do negotiators have sufficient time to build a
personal relationship or not?).
544
Key Concepts
competitive vs. problem-solving negotiation strategies
doctrine of changed circumstances
dynamic capabilities
holistic vs. sequential approach to bargaining
implementation mindset
people vs. process strategies for resolving conflicts
shinyo
shokai
superordinate goals
545
Discussion Questions
1. The Pfizer example at the beginning of the chapter illustrates what
appears to be poor partnering decisions and actions by corporate
leaders. What might account for this? Are there lessons here for
managers and executives trying to build productive partnerships?
Explain.
2. Are any special management skills and dynamic capabilities
required for companies that make significant use of global alliances
and partnerships? If so, what are these skills?
3. Management consultant Charles Handy suggests that the most
important skills that will be needed in the organizations of the future
will be an ability to win friends and influence people at a personal
level, an ability to structure partnerships, and an ability to negotiate
and to find compromises. In today’s highly competitive and, some
would say, destructive business environment, do you agree with his
assertion? Why, or why not?
4. Exhibit 8.2 outlines a process for preparing for cross-cultural
negotiations. This process obviously takes time and considerable
effort. In today’s fast-paced business environment, can companies
streamline or bypass some of these suggested processes? Explain.
5. How would you train junior managers to become experienced
negotiators? Explain.
546
6. If most joint ventures fail within five years, and business and
technology change so quickly, why is it important to negotiate such
detailed contracts?
7. Is a problem-solving bargaining strategy always preferable to a
competitive strategy, or are there times when a competitive approach
to bargaining is more useful? Explain.
8. Information exchange is an important part of the negotiation
process. What can managers do when they realize that their
prospective partners are using a different standard of information
exchange, perhaps by being less open or exaggerating their
potential contributions? What are the long-term effects for building a
mutually beneficial partnership?
9. Is it always necessary for both parties to an agreement to believe
that the agreement is equitable? Why, or why not? Are there
circumstances when inequitable agreements may be the best
solution for both parties?
10. If two parties to a negotiation use different bargaining strategies
(e.g., sequential versus holistic) or have different concepts of how an
agreement should be implemented (e.g., doctrine of changed
circumstances), how can negotiations continue? What might be
some appropriate managerial strategies when such a situation
occurs?
547
11. In your view, what are the three most important lessons from this
chapter for global managers? Explain.
548
Notes
1. Personal communication.
2. Based on Randall Schuler, Susan Jackson, and Yadong Luo,
Managing Human Resources in Cross-Border Alliances. London:
Routledge, 2004, pp. 92–3.
3. Ibid., p. 93.
4. Ibid.
5. Margherita Russo and Maurizio Cesarani, “Strategic alliance
success factors: a literature review on alliance lifecycle,”
International Journal of Business Administration, 2017, 8(3), pp. 1
–9.
6. Jean Brett, Brian Gunia, and Brosh Teucher, “Culture and
negotiation strategy: a framework for future research,” Academy of
Management Perspectives, 2017, 31, 288–308.
7. Schuler, Jackson, and Luo, Managing Human Resources in
Cross-Border Alliances. This is an excellent resource for people
interested in the HRM implications of global partnerships.
8. Peter Drucker, “The next society,” The Economist, November 3,
2001, p. 5.
9. Tom Brabant, “Boeing honors suppliers for outstanding
performance,” Boeing Corporation, April 12, 2018; Julie Johnsson
and Peter Robinson, “Boeing is killing it by squeezing its
suppliers,” Bloomberg Businessweek, February 14, 2018.
549
10. Trefor Moss, “Boeing opens plant for top China buyer,” The
Wall Street Journal, December 17, 2018, p. B3.
11. Ben Mutzabaugh, “Say so long to Bombardier’s C Series jets;
they’re now Airbus A220s,” USA Today, July 10, 2018.
12. Schuler, Jackson, and Luo, Managing Human Resources in
Cross-Border Alliances.
13. Andrew Cave, “Culture eats strategy for breakfast. So what’s
for lunch?” Forbes, November 9, 2017.
14. Andrew Kupfer, “How to be a global manager,” Fortune, March
14, 1988, pp. 52–8.
15. Jeremy Main, “Making a global alliance work,” Fortune,
December 17, 1990, pp. 121–6.
16. Chester Dawson, “Auto alliances have spotty record,” The Wall
Street Journal, December 12, 2018, p. B1.
17. Maria Armental, “Apple, Samsung call end to fight,” The Wall
Street Journal, June 28, 2018, p. B4.
18. Charles Handy, Business: The Ultimate Resource. London:
Bloomsbury, 2002, p. 75.
19. Schuler, Jackson, and Luo, Managing Human Resources in
Cross-Border Alliances, p. 44.
20. Yves Doz “The evolution of cooperation in strategic alliances:
initial conditions or learning processes?” Strategic Management
Journal, 1996, 17, pp. 55–83.
21. David Teece, Dynamic Capabilities and Strategic
Management. Oxford University Press, 2009.
550
22. Danny Ertel, “Getting past yes: negotiating as if
implementation mattered,” Harvard Business Review, 2004,
82(11), pp. 60–8.
23. Personal communication.
24. Gary Ferraro, Cultural Dimensions of International Business,
4th edn. Upper Saddle River, NJ: Prentice Hall, 2002; PON staff,
“Overcoming cultural barriers in negotiations and the importance
of communication in international business deals,” Program on
Negotiation, Harvard Law School, July 17, 2018.
25. Nancy J. Adler and John L. Graham, “Cross-cultural
interaction: the international comparison fallacy?” Journal of
International Business Studies, 1989, 20(3), pp. 515–37.
26. Eric Bellman, “Tata to shift production of minicar after
protests,” The Wall Street Journal, October 8, 2008, p. A-14.
27. Ishita Ayan Dutt, “Ten years after Tata Motors exit, Singur in
West Bengal still a wasteland,” Business Standard, September 24,
2018.
28. Kamakshi Ayyar, “Is it the end of the road for the world’s
cheapest car?” Time, July 31, 2018.
29. Brett, Gunia, and Teucher, “Culture and negotiation strategy.”
30. John Graham, “The influence of culture on the process of
business negotiations,” Journal of International Business Studies,
1983, pp. 84–8.
31. Kenneth Rapoza, “This is where Brazil’s economy is a failure,”
Forbes, September 7, 2018.
551
32. Luis A. C. Junqueira, “The Brazilian way to deal with the crisis
and recovery,” available at the website of the Instituto MVC,
www.institutomvc.com.br/english/articles.htm. Accessed March 1,
2019.
33. Cynthia A. Rosenburg, “A arte do aperto de maos,” Revista
Exame, 2003, 37(8), pp. 106–18.
34. Stephen Weiss, “Negotiating with ‘Romans’ – Part 1,” Sloan
Management Review, Winter 1994, pp. 51–62.
35. We rely here on the work of Paul F. Buller, John J. Kohls, and
Kenneth S. Anderson, “When ethics collide: managing conflict
across cultures,” Organizational Dynamics, 2000, 28(4), pp. 52–
66.
36. Nick Carstarphen, “A map through rough terrain: a guide for
intercultural conflict resolution,” in Michelle LeBaron and Venashri
Pillay (eds.), Conflict Across Cultures: A Unique Experience of
Bridging Differences. Yarmouth, ME: Intercultural Press, 2006, pp.
137–201.
37. Helen Deresky, International Management: Managing Across
Borders and Cultures, 2nd edn. Upper Saddle River, NJ:
Pearson/Prentice Hall, 2008.
38. Donald Uchtmann, Richard Blessen, and Vince Maloney, “The
developing Japanese legal system: growth and chance in the
modern era,” Gonzaga Law Review, 1987, 23, pp. 350–9.
39. Tomer Zarchen, “Israel first in the world for lawyers per capital,
study finds,” Haaretz, 2018, available at
www.haaretz.com/1.5039519. Accessed October 22, 2018;
Statista, “Number of lawyers in the United States from 2007–
2018,” 2018, available at
552
www.statista.com/statistics/740222/number-of-lawyers-us/.
Accessed October 22, 2018.
40. Uchtmann, Blessen, and Maloney, “The developing Japanese
legal system.”
41. “The change of the English language,” March 12, 2012,
available at Wenku.baidu.com. Accessed March 1, 2019.
42. The Economist, “Can pay, won’t,” August 27, 2011, p. 57.
43. Jimmy Ding, “Cosco shipping profit up,” The Standard, August
28, 2018.
553
9
Global Teams
◈
Chapter Outline
Global Teams
Management Application 9.1 Building French-American Teams
On-site and Virtual Teams
Managing Tasks and Team Processes
Management Application 9.2 Managing Global Teams in Hong Kong
Creating Global Team Synergy
Management Application 9.3 Building Global Team Synergy
Challenges of Virtual Global Teams
Management Application 9.4 Face Time for Virtual Teams
Managing Virtual Global Teams
Management Application 9.5 Virtual Global Teams at IBM Cloud Labs
Leadership and Global Team-building
Management Application 9.6 Global Team Leadership at Intelehealth
MANAGER’S NOTEBOOK: Managing Global Teams
Chapter Review
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Learning Objectives
Explore the role of global teams in facilitating organizational
performance.
Examine different types of global teams and the roles played by each.
Explore strategies for creating global team synergy.
Consider special challenges of virtual teams and how to manage them.
Identify ways of developing global team leadership skills.
Learn how to work more effectively with global teams.
If you want to walk fast, walk alone; if you want to walk far, walk together.
African proverb
One of the earliest recorded experiences of global multicultural teams in an
industrial setting occurred in the 1990s involving IBM, Siemens, and Toshiba. The
three companies created a partnership to jointly develop new state-of-the-art
chips for the next generation of computing. To accomplish this, all three
companies decided to bring their best people together, share their knowledge,
and leapfrog the competition. Scientists from all three companies were brought to
a brand new research facility in New York. Unfortunately, each group of scientists
quickly identified problems with the joint venture. German scientists from Siemens
were shocked to find their Toshiba colleagues closing their eyes and appearing to
sleep during meetings. They failed to understand that such behavior is common
practice in Japan for concentrating on what is being said. At the same time, the
Japanese scientists from Toshiba, who were used to working in groups, found it
uncomfortable to sit in small individual offices all day and speak English. And the
US scientists from IBM complained that the Germans planned too much and the
Japanese wouldn’t make clear or decisive decisions. Intergroup trust evaporated
as suspicions began to circulate that some researchers were withholding their
best information from the group. Over time, the well-intentioned alliance simply
melted away.
Now fast-forward to the present, and we see the same three companies in
the forefront of global strategic alliances – including with each other. Not only
555
have all three companies learned the strategic importance of global teams in both
engineering and marketing, but they have also seen to it that their global teams
are now less insular and more multicultural by design. All three companies now
have extensive training programs aimed at improving managers’ abilities to work
across cultures, including not only cross-cultural communication but also crosscultural conflict resolution. Moreover, much of their multi-company work is now
done virtually instead of face to face. Each company has learned from its past
mistakes and now works to face the global economy as a partner instead of a
competitor whenever possible. Global teams have come a long way, but
numerous roadblocks remain.
International success once meant having employees and factories on the
ground from Kuala Lumpur to Ciudad Juárez to Windhoek. Coordinating their
activities was a deliberately planned effort, managed from a hierarchy at corporate
headquarters. Today the challenge is very different and includes transforming
sizable, globally virtual workforces into superfast, efficient organizations. Given
the conflicting needs of global staff and the swiftly shifting nature of competition
brought about by the Internet, some think that this has become an almost
impossible task. Meanwhile, getting global employees to collaborate instantly –
not tomorrow or next week, but now – required nothing less than a management
revolution. Complicating matters even further is the fact that the very idea of a
company is evolving from a single outfit with full-time employees and a
recognizable hierarchy to something much more fluid, with a classic corporation at
the center of an ever-shifting network of suppliers and outsourcers, some of which
join the team only for the duration of a single project. Furthermore, one in five
employees worldwide are employed by the gig economy.1 In sum, teams no
longer consist solely of permanent employees from one organization or one
location.
In order to adapt, global firms are hiring social scientists to unlock the secrets
of teamwork among colleagues who have never met one another. They are
arming staff with an arsenal of new tech tools to keep them perpetually
connected. This includes software to help engineers co-develop 3D prototypes in
virtual worlds, and services that promote social networking to track employees
and outsiders who have the skills needed to nail a job. Using GPS locators has
become commonplace. Corporations are investing lavishly in extravagant
556
campuses, crafting leadership training centers, and offering thousands of online
courses to develop pipelines of talent.
While the experiment at Siemens, Toshiba, and IBM may have been ahead of
the learning curve, most firms now make some use of on-site or virtual teams to
manage and operate various aspects of their global operations. They couldn’t
remain competitive without them. Although companies also have many
homogeneous teams in each country, our focus in this chapter is on multicultural
global teams, consisting of sometimes highly diverse members from different
countries or cultures and working together either on-site or virtually.
To explore this topic, we look at global teams from several angles, including:
how global teams work
management challenges in global teams
how to develop global team synergy
special challenges of managing virtual global teams
leadership challenges and global team-building.
557
Global Teams
The term global team has many meanings, so it is important to deal with
definitions up front. We use this term to identify a group of heterogeneous
employees from two or more countries, and sometimes two or more companies,
who work together to coordinate, develop, or manage some aspect of a firm’s
global operations.2
Companies usually turn to global teams either when they need specific crosscultural expertise on some aspect of the business (e.g., developing a new product
marketing strategy for a particular geographic region) or when they partner with a
foreign firm (e.g., form a strategic alliance or international joint venture). Many
firms prefer using such teams because they can often do a better job than
homogeneous teams consisting exclusively of either home or host country
nationals. Global teams can provide an opportunity to incorporate widely differing
social, cultural, and business perspectives and skills into key decisions affecting
the success of international operations, as discussed below.
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Types of Teams
Teams come in a variety of forms, including the following:3
Action teams. Teams with a defined duration and clear deliverables;
created from a network of possible members; team members work together
in a rapid fluid manner to implement specific tasks or goals (e.g., rapid
response team for emergencies).
Management teams. Teams with an indefinite duration and clear highlevel deliverables; core membership typically represents different
departments; coordination and communication are their primary functions
(e.g., supervisory board in a German konzern – see Chapter 3).
Production or work teams. Teams with an indefinite duration, clear
membership, and specific deliverables; team works together on a regular
basis to ensure managed outcomes (e.g., quality control team).
Project teams. Teams typically with a defined duration and clear
deliverables; core membership and networking with experts and other
stakeholders outside the group (e.g., new product development team).
Service teams. Teams with an indefinite duration and clear membership;
their function is providing regular and ongoing support to others and
helping them achieve their deliverables (e.g., IT support team).
Despite their name, most MNCs typically have more national (or singlenation) teams than global teams. This is not surprising, since, in many ways,
multinationals are collections of multiple companies with multiple local operations.
For example, if we look at marketing teams within Velux America, a division of the
Danish manufacturer of skylights and solar water heaters, it is not surprising that
most of these teams are comprised exclusively of Americans. The same can be
said for Velux Company Ltd., the division covering the United Kingdom and
Ireland. Team members are almost exclusively English, Irish, Scottish, or Welsh.
Indeed, within this sphere, all the local marketing teams in Ireland are specifically
Irish. This practice makes sense in terms of understanding and serving local
markets. Within the larger Velux operations headquartered in Denmark, however,
global marketing strategies and coordination across various local divisions require
teams composed of people from across the company’s marketing regions. In the
559
high-tech industry, in cosmopolitan locations such as Silicon Valley, “local” teams
are comprised of various nationalities who have emigrated or been expatriated to
these areas. They are multicultural teams, but their work focus is not always
global.
560
Advantages and Drawbacks of Global Teams
Global teams come in a variety of shapes, forms, and sizes. Some companies
use multicultural/transnational development teams or product launch teams to
help develop or refine products that are aimed at multiple international markets.
Other firms use multicultural functional business teams in such areas as
international marketing or core R&D technology development. Global teams bring
cultural diversity to help solve specific challenges, and exist naturally in both the
regional and the global headquarters of many multicultural firms, and in various
international strategic alliances and joint ventures. Global teams also bring
international expertise to decision-making and managerial actions that can
otherwise be missing in less diverse teams. These benefits – and some
disadvantages – are summarized in Exhibit 9.1. According to Erin Meyer, culture
plays a major role in how teams function.4 In Sweden, for example, teams learn to
make decisions through lengthy consensus-building, which can span many
meetings but eventually leads to strong buy-in and rapid implementation. In
France, the Descartes-inspired education system teaches that debate and
confrontation are necessary elements of any decision-making process. In the
United States, managers are trained to solicit input from a team, choose a
direction quickly, and adjust as the project moves forward. And in Japan,
decisions tend to be made in informal one-on-one discussions before a formal
group meeting takes place. These approaches all have their pros and cons, of
course, but what happens if we put these groups together in multicultural teams?
Based on his experience managing both Americans and Japanese, Panasonic
vice president Atsushi Kagayama observed, “Getting Americans and Japanese to
work together is like mixing hamburger with sushi.”5 And former Swiss-based ABB
CEO Percy Barnevik notes, “When we sit together as Germans, Swiss,
Americans, and Swedes, with many of us living, working, and traveling in different
places, the insights can be remarkable. But you have to force people into these
situations.”6
561
Exhibit 9.1 Advantages and drawbacks of global teams
562
Working With French and American Managers: An Example
Consider what challenges you might face if you were to try and build a global
team consisting of French and American members. One insight into this challenge
can be seen in a study by cultural anthropologists Edward and Mildred Hall that
compared French and American managerial roles – both Western cultures. In his
study, American managers were often critical of working with French managers.
Not surprisingly, many French managers felt the same about Americans. Why is
this? According to the study, many American managers criticized their French
managerial counterparts for a number of reasons: they won’t delegate or keep
their subordinates informed; they don’t feel a sense of responsibility towards their
subordinates; they refuse to accept responsibility for things; they are not team
players; they are overly sensitive to hierarchy and status, and are highly
authoritarian; they are not interested in improving their job skills or knowledge;
they are primarily concerned with their own self-interest, and they are less mobile
than Americans.7 Obviously, there are variations in such observations but,
according to the study, this is the gist of American opinion.
At the same time, the study cites several French managers who hold similarly
negative opinions about their American counterparts:8 American managers in
Europe are not creative – they are too tied to their checklists; success is not
achieved by logic and procedure alone; American executives are reliable and
hardworking, and often charming and innocent, but they are too narrow in their
focus – they are not well rounded; they have no time for cultural interests and lack
appreciation for art, music, and philosophy; too many American executives are
preoccupied with financial reporting – this syndrome produces people who avoid
decisions; and Americans don’t know how to present themselves – they sprawl
and slouch, and have no finesse.
Who is right here? Perhaps perceptions by both sides are correct to some
extent. Clearly, one factor that may help explain these differing perceptions is the
fundamental difference between French and American cultures in terms of their
time orientation. As noted above, most American are decidedly sequential (or
monochronic), meaning that they tend to stress a high degree of scheduling in
their lives, with concentration of effort being on one activity at a time, and build
elaborate codes of behavior around promptness in meeting obligations and
appointments. Put more simply, many Americans tend to be rather linear in their
563
thinking and behavior, always focusing on the ultimate goal. By contrast, most
French are synchronic (or polychronic), stressing human relationships and social
interaction over arbitrary schedules and appointments, and engaging in several
activities simultaneously with frequent interruptions. To many French managers,
the journey is probably more important than the ultimate destination. To many
American managers, however, it is all about the goal.
Management Application 9.1 Building French-American Teams
1. In this study, why do you think it was so easy for both French and
American managers to create stereotypical descriptions about each
other’s management style? Explain.
2. If you were building a new team consisting of French and American
managers or employees, what would you do in advance to better
understand possible differences in management trends and working
arrangements across the two cultures?
3. Based on what you discovered, what strategies would you use to
get people from these two countries to work together more effectively?
4. Could these same strategies be used when building teams
consisting of members from other countries and cultures? Why?
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On-site and Virtual Teams
So far, we’ve only considered the cultural make-up and tasks of global teams, but
they also vary by team member. At one extreme, members are all located in the
same place and meet face to face to accomplish most tasks. At the other
extreme, members are virtual around the globe and seldom – or never – meet
face to face. Instead, tasks are accomplished largely virtually, with greater use of
information
and
communication
technology,
such
as
videoconferencing,
telepresence, messaging, and even e-mails. Each approach has its own unique
advantages and challenges. In other words, it is possible to identify two basic
types of global teams based on location, communication, and coordination
processes:
On-site teams. Also called co-located teams, these are all located
together for face-to-face discussions, possibly at corporate headquarters or
in one of the company’s regional locations.
Virtual teams. Also called geographically dispersed teams, distributed
teams, or remote teams, these usually refer to a group of individuals who
work together from different geographic locations and rely on newer
communication technologies in order to collaborate. Such members adopt
the concept that team members can engage in and fulfill projects with little
or no direct physical cooperation with other participants, allowing
multinational companies to draw on the broadest talent pool available
among their worldwide employee base.
In real life, however, teams may not always fit neatly into these boxes. For
instance, on-site teams may meet face to face periodically, but accomplish a
significant number of tasks independently and communicate primarily through email, text, and telephone, even though they are working in the same building.
Likewise, most virtual teams meet face to face at various times for coordination
and relationship-building. Still, general differences can be identified, leading to
some variations in how these two groups are managed (see Exhibit 9.2).
Exhibit 9.2 Characteristics of on-site and virtual teams
565
Global team
characteristics
On-site teams
Virtual teams
Team location
and working
patterns
Team members work regularly
in close proximity;
considerable reliance on faceto-face interactions.
Team members work
separately from various
locations; considerable
reliance on virtual
communication and
technology.
Principal uses
When face-to-face
discussions are important and
possible; when building trust
and relationships are
important.
When key players are
unable to co-locate; when
contextual information from
different locations is
important; when tasks are
well defined and can be
accomplished
independently; when
ambiguity is low.
Principal team
challenges
Communicating, making
decisions, and taking actions
in a largely face-to-face
environment, in which
interpersonal styles can differ
significantly (e.g., nonverbal
communication; language
subtleties; preserving or losing
face).
Communicating, making
decisions, and taking
actions in a largely virtual
and often computermediated environment, in
which interpersonal style,
communication, and body
language may be largely
unseen; developing crosscultural understanding and
sensitivity from a distance;
developing productive
working relationships from a
distance; understanding
communications and
reaching decisions in a
largely computer-mediated
environment.
Required skills
for interaction
Emphasis on interpersonal
and intercultural skills.
Emphasis on interpersonal,
intercultural, and technical
skills.
566
Global team
characteristics
On-site teams
Virtual teams
Principal
leadership
challenges
Sensitivity to cross-cultural
differences; accommodate
divergent viewpoints;
coordinate interpersonal group
dynamics and keep members
on-task; master intercultural
communications by listening
for contextual messages
behind content messages;
lead group efforts to achieve
targeted objectives.
Sensitivity to cross-cultural
differences; accommodate
divergent viewpoints;
coordinate computermediated group dynamics
and keep members on-task;
master intercultural
communications by reading
between the lines on written
messages and
videoconferencing; lead
group efforts to achieve
targeted objectives.
567
Managing Tasks and Team Processes
Any good discussion of global teams eventually comes around to the critical
question of how they can best be organized and managed. Two factors are
important here. First, managers must recognize the principal challenges facing
such teams, including how to manage tasks and processes. Second, managers
need to understand what they can do to facilitate team performance. In other
words, what are the key success factors here? In this endeavor, getting global
teams off to a good start emerges as an essential requirement.
Recruiting and staffing global teams is the first challenge faced by global
firms. We have to get the right people on the team and ensure that their skills are
adequate for the specific job. Beyond this, strategies and mechanisms must be
developed to create truly effective work teams – to get members from divergent
cultures to successfully work together as a team. Thus, global teams face two
other fundamental challenges in order to accomplish their mission: managing
tasks and managing processes (see Exhibit 9.3).
Exhibit 9.3 Managing tasks and team processes
568
Managing Team Tasks
First, global teams must identify their areas of responsibilities and organize their
members. Managing tasks involves making sure that all team members
understand why the group was formed. This includes clarifying the mission and
goals of the team, setting a clear agenda and operating rules for team
management, clarifying individual roles and responsibilities, clarifying how
decisions
will
be
made,
and
identifying
who
is
responsible
for
task
accomplishment.
Mission and goal setting. Identifying team mission, goals, and objectives;
identifying performance expectations.
Task structuring. Agenda setting; creating operating rules and
procedures; time management procedures.
Roles and responsibilities. Division of labor; responsibility charting; team
interdependencies; role of leader.
Decision-making. Delegation of authority; selection and role of a leader;
how decisions should be made.
Accountability. Identifying who is responsible for task accomplishment
and on-time deliverables.
569
Managing Team Processes
Second, global teams must put in place productive group processes to facilitate
collective efforts towards goal attainment. Managing group processes includes
developing and completing team-building activities, understanding communication
flows and patterns among group members, facilitating participation across team
members, encouraging innovation, managing boundaries with other teams and
entities, specifying methods of conflict resolution, and clarifying how and when
performance will be assessed.9
Team-building. Team-building activities; clarifying how the team will work
together, trust-building; cross-cultural understanding; opportunities for
social interaction.
Communication patterns. Selection of a working language; challenges of
language fluency; checking and rechecking for understanding; appropriate
use of information technologies.
Participation. Guaranteeing everyone a voice; balancing quiet and more
vocal members; getting the best from everyone.
Innovation. Encouraging creative solutions that take into consideration a
wide variety of alternatives and criteria for evaluating them.
Boundary management. Ensuring that the team has adequate
relationships with other teams and external parties to provide the team with
resources, information, and cooperation when it comes to implementing
solutions.10
Conflict resolution. Accommodating legitimate differences of opinion;
managing constructive conflict; eliminating destructive conflict; strategies
for compromise.
Performance evaluation. How and when to evaluate performance; oneway versus two-way evaluations; role of feedback; who evaluates
performance.
570
Working with Australians and Hong Kong Chinese: An Example
Australian-born Samantha Mitchell worked for an American Internet services
company in both Australia and the US, when she was transferred to a managerial
position in Hong Kong.11 There she was assigned to head a work team consisting
of six Hong Kongese, two Australians, and two Americans charged with gaining
new clients for the firm. Her first prospective client was an IT department in the
Hong Kong government. Upon her arrival, Samantha scheduled an introductory
meeting with her ten-member staff to get to know one another and establish team
goals. The meeting began well, with various members talking about their family
status, hobbies, and children’s achievements. At the end of the meeting,
Samantha asked each team member to prepare a short presentation for her for
the next day with their ideas for the new business proposal for the government.
While the Australians and Americans said they would be ready, the Hong Kong
members seemed reluctant to commit although they still said yes. After the
meeting, Samantha was told that the Hong Kong group might need more time to
complete the presentation, but she thought everyone should be okay because
they had committed to it.
The next day at the office, Samantha received short presentations from the
Australians and Americans on the staff, but the Hong Kong group indicated that
they had not had a chance to organize a group meeting in order to get everyone’s
ideas for the initial proposal. She asked why they had not told her in the previous
day’s meeting that they needed more time and when they could be ready. The
staff seemed unwilling to respond directly and kept largely silent. She later
learned that the local staff wanted time to develop a consensus among their team
members, not just provide their own ideas. Having learned her lesson, she asked
the Hong Kong contingent to have their presentation ready for the following week,
giving them more time to prepare. At the same time, she asked the Australians
and Americans to organize meetings to get their team members’ ideas. When the
time came, all the presentations were ready and Samantha realized that she had
many good ideas for presentation to her prospective client.
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Management Application 9.2 Managing Global Teams in Hong Kong
1. How would you describe the cultural differences between Australia
and the residents of Hong Kong?
2. How did Samantha manage team and task processes, as described
above?
3. Why do you think Samantha divided her team of Australians,
Americans, and Hong Kongese into three groups to complete their
assignments? Was this a wise decision on her part? Why, or why not?
4. How might Samantha have better managed the situation here?
Explain.
5. What lessons for global managers can you draw from this example?
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Creating Global Team Synergy
As Alibaba founder and former CEO Ma Yun (Jack Ma) notes, “If we are a good
team and know what we want to do, one of us can defeat ten of them.”12 When
teams perform well, they are greater than the sum of their parts. We call this
global team synergy. To accomplish this, however, managers must be in the
forefront of both designing optimal global teams and creating the team processes
that lead to member buy-in and commitment (see Exhibit 9.4).
Exhibit 9.4 Creating global team synergy
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Global Team Structure and Leadership
Paula Caproni suggests that teams in general achieve global team synergy by
building on five foundations or facilitators: purpose, performance measures,
people, process, and practice (Exhibit 9.5).13 We refer to these as global team
design principles. These principles apply to a wide variety of global teams.
Global teams that make use of such techniques to manage both tasks and
processes typically have an easier time completing their assigned responsibilities
in a creative and productive manner. Group objectives, responsibility-tasking, and
ground rules are clearly understood by members. By contrast, groups that fail to
manage these activities tend to do less well, because they spend needless time
assessing and reassessing goals and objectives, and reinventing solutions to
recurring problems that could have been dealt with more easily had a structure
and a process been squarely in place to guide behavior.
Exhibit 9.5 Global team design principles
Team design
principles
Contribution to global team synergy
Clear, engaging
purpose
Provides direction, inspiration, and motivation to team
members. A clear purpose keeps the team together in
difficult situations.
A powerful purpose should be consistent with
organizational values and missions, create a sense of
urgency, be positive and inspiring, be easily understood
and remembered, be performance-based, and be
flexible, attainable, but challenging.
Performance goals
and measures
Provide specific and measurable performance goals to
evaluate the team’s progress, focus the team’s efforts
on results, enable team members to see how they
contribute to the team’s goals, and create milestones
that build team commitment, confidence, and
competence.
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Team design
principles
Contribution to global team synergy
People
Selecting the right people guarantees team members
with complementary skills who together have all the
skills needed to accomplish a task.
Team members should also be committed to the team’s
purpose, have a specific expertise or skill set to
contribute to the team, and possess problem-solving,
decision-making, and implementation skills. They
should also have relationship skills, including the ability
to deal with conflict, communicate effectively, be
adaptive, and be aware of their own strengths and
weaknesses.
Results-driven
processes
Allow teams to identify problems and opportunities,
generate solutions, make trade-offs, agree on
decisions, implement solutions, evaluate the
consequences of their decisions, and coordinate their
efforts to accomplish complex tasks.
Teams also need relationship processes to help them
deal with conflict and develop trust, a sense of
cohesiveness, and commitment.
These processes rest on norms of behaviors that can
be implicit and well assimilated in the team’s culture or
explicit and well documented in a team contract.
Practice
Ensure continued high-quality work by routinely
reflecting on their performance, identifying skills needed
to succeed, and making efforts to acquire them.
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Global Team Attitudes and Beliefs
In addition to these design principles for creating group synergy, there are crucial
attitudes and beliefs among team members that team leaders should encourage
and model.
The first is cohesion, defined as “attraction to the group, satisfaction with
other members of the group, and social interaction among group members.”14
Two aspects of cohesion that influence group synergy are psychological safety
and social identity. Psychological safety occurs when members care about one
another and therefore can take risks in the group. For example, they can admit
when they don’t know something or when they need help, but they are also free to
question and challenge others. For these reasons, psychological safety correlates
with team learning and innovation.15 Social identity is the degree to which one’s
sense of self includes being a member of a social group(s).16 We all belong to
various groups, but not all of them figure strongly into how we define ourselves.
When people’s social identity includes their work team, they behave in ways that
promote group synergy – more participation, cooperation, coordination, and
information-sharing. Both psychological safety and social identity are fostered by
effective communication, careful conflict resolution that does not result in winners
and losers or long-lasting feuds, and boundary management.17
Another crucial factor is trust that team members will act in the best interests
of the team, and do what they say they will do. With trust comes vulnerability and
risk. For instance, team members put their career success into another’s hands
when they delegate a task or build upon a team member’s work. They have to
trust that other team members do not slack off or cut corners, because no one has
time to check everything a team member produces or redo substandard work.
This explains why trust is a key success factor in global teams.18
One observer noted, “When you meet your workmates by the water cooler or
photocopier every day, you know instinctively who you can and cannot trust. In a
geographically distributed team, trust is measured almost exclusively in terms of
reliability.” So, how can cultural or regional differences affect this? Exhibit 9.6
compares trust levels by country (see also discussion of trust levels in national
governments in Chapter 3).19 As can be seen, the belief that people in general
can be trusted varies somewhat by region and country. Trust is lowest (less than
10 percent believe people can be trusted) in Colombia, Brazil, Ecuador, and Peru.
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However, trust is higher in Mexico (34 percent). Trust is highest (>60 percent) in
Norway, Sweden, and Finland, but lower in other European countries, particularly
France (24 percent). The World Values Survey, the source of this data, has been
tracking trust in people, police, government, and the legal system for forty years.
They note that levels of trust can also change over time. For example, US trust in
government declined markedly to 37 percent over the forty-year period, while
China’s increased by 27 points to 84 percent. Worldwide, people with college and
post-graduate education are more trusting, and people who trust others are more
likely to be trustworthy themselves.
Exhibit 9.6 Can people be trusted?
Country
Agreement
(%)
Country
Agreement
(%)
Country
Agreement
(%)
Brazil
7
Austria
32
United
Kingdom
44
Turkey
10
Mexico
34
Ireland
44
Romania
16
South
Korea
35
United
States
47
Slovenia
17
Spain
35
Canada
52
Latvia
18
India
35
Netherlands
54
Portugal
23
Russia
37
Denmark
58
Chile
24
Germany
38
China
60
Nigeria
24
Japan
42
Finland
64
Argentina
24
Switzerland
43
Norway
67
France
24
Iceland
44
Sweden
68
Source: World Values Survey, University of Michigan, Institute for Social
Research, reported in Nancy R. Buchan, “The complexity of trust:
understanding the influence of cultural environment on the nature of trust and
trust development,” in Rabi S. Bhagat and Richard M. Steers (eds.),
Cambridge Handbook of Culture, Organizations, and Work. Cambridge
University Press, 2009, pp. 373–417; Mark Saunders, Denise Skinner,
577
Graham Dietz, Nicole Gillespie, and Roy Lewicki, Organizational Trust: A
Cultural Perspective. Cambridge University Press, 2010; and Stella TingToomey and Tenzin Dorjee, Communicating Across Cultures. New York:
Guilford Press, 2019.
Management Application 9.3 Building Global Team Synergy
1. Think of the best global or local team you’ve ever been a member
of. What made it special?
2. Did your best team have any of the five global team design
principles identified above? Did it have team member buy-in?
3. Alibaba’s former CEO Jack Ma asserts, “If we are a good team and
know what we want to do, one of us can defeat ten of them.” Could
this statement relate to cohesion, psychological safety, social identity,
and trust? If so, how?
4. List all the ways in which a global team leader can foster trust.
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Challenges of Virtual Global Teams
An increasingly popular approach to global teams today is the virtual global team.
These teams take advantage of technology to draw knowledge and resources
from different parts of the organization and different geographical locations
without relocating workers.20 A 2018 study of virtual teams found that 89 percent
of respondents worked in virtual teams and 80 percent said they were critical to
their productivity. However, 58 percent said their team leaders were not
adequately prepared and only 22 percent had ever received team training.21 The
survey went on to identify what team members felt were their biggest challenges
in working in virtual teams:
88 percent reported challenges working across time zones
86 percent reported difficulty in communication
86 percent reported problems in managing or resolving conflicts
86 percent reported difficulties in building relationships
80 percent reported problems relating to timelines and responsiveness
80 percent reported difficulties in understanding different accents of team
members
76 percent reported concerns about lack of participation from all team
colleagues.
Successful global managers understand that technology alone will not do the
trick. It does not matter how good the technology is, and how effectively the task
may get done; it is important to remember that individuals are behind the
computer. As such, human dynamics and relational issues are just as important
as the technology and the task-related issues at hand.22 In other words, the
leader in a virtual team is a social problem-solver who needs to create the
conditions for workers to succeed in a virtual environment.
In view of this, three particular impediments to virtual team effectiveness
should be recognized that can all lead to a lack of shared understanding and
reduced team effectiveness (Exhibit 9.7).23
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Exhibit 9.7 Challenges of virtual global teams
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Lack of Mutual Knowledge and Context Across Team Members
First, consider the lack of mutual knowledge. Mutual knowledge refers to the
common basis of information that does not have to be repeated when
communicating. Virtual team members work in different contexts, live in different
time zones, and have access to different information.24 Thus, they can take
advantage of these differences to obtain and use knowledge from multiple,
diverse contexts. By contrast, on-site teams must search for and may miss
important market, cultural, and contextual information. The downside is that virtual
team members share less mutual knowledge or “common ground,” which can
obstruct the flow of information.
People working across time zones also tend to omit context or contextual
information from their messages and discussions, erroneously assuming
similarities between locales. For example, one individual repeatedly asked a team
member working in a different country for copies of a document to be mailed to
HQ but never received either a response or the document. After some time, he
discovered that the overseas team member did not have access to a photocopier.
To make matters worse, when contextual information is communicated, it is
frequently ignored or forgotten. This usually occurs because it doesn’t relate to
our perceptual schemas – we lack a relevant “file” in our brains. It is difficult to
imagine remote partners’ contexts, and even harder to update our mental picture
of their contexts as their situation changes. This difficulty also hinders our ability to
identify which aspects of our own situation need to be explained. Lack of mutual
knowledge frequently creates conflict, as remote partners misunderstand why
others fail to honor deadlines, insist on particular points, or drop out of
communication without warning. For example, if we have an on-site meeting at
8:00 a.m. on a particularly bad weather day and a local colleague is late, we
quickly assume traffic is the culprit. But when an online colleague does not show
up at the scheduled time and has no way of getting in touch, we have no
contextual information to make sense of the absence and may erroneously
attribute it to a lack of interest or responsibility. Similarly, while we do not expect
an answer during an important local holiday, we may not be aware of other
countries’ holidays and may misinterpret the other side’s silence.
Another challenge of virtual teams is attending to cultural differences and
decoding them in the absence of visual cues. In face-to-face cross-cultural
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situations, managers are advised to “read” contextual information (e.g., body
language, expressions, silence) in order to make sense of the communication. In
virtual communications without video, however, such contextual information is not
available, and we may not be looking for it, despite the fact that it is still there.
If we were to fly to Johannesburg, for example, we might quickly notice that it
is not home. The architecture, the smells, the way the people dress and talk, the
accents, and the gestures would all remind us that we are in a foreign
environment and therefore should suspend judgment, pay attention, and assume
nothing. However, when we receive an e-mail from someone in South Africa, we
may fail to realize that we are in a cross-cultural situation. We hear no accent and
see nothing that is different. The chances are that our South African counterpart
has been influenced by their culture while writing the e-mail and has embedded
meaning in their communication that we may fail to detect or decode. This is an
example of operating on autopilot, as one does in one’s own culture, rather than
constantly scanning for cultural differences.
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Overdependence on Technology
Second, an overdependence on technology can often create problems.
Technology brings both beneficial and detrimental influences to virtual teams.
Information
technology
has
made
virtual
teams
possible
by
allowing
instantaneous information exchange, regardless of geographic location. Teams
transmitting information electronically may benefit from the fact that information is
recorded prior to transmission, providing a record of transactions. Additionally, the
ability to hand over work to teammates across time zones allows work to continue
around the clock.
Technological dependence for communication may lead to some problems,
however, and these shortcomings curtail understanding, experimentation, and
creative problem-solving. Unfortunately for all of us, text messages sometimes fail
to reach their final destinations, attachments may not be delivered, and different
versions of documents may be erroneously circulated. Sometimes members
mistakenly send information to only one team member but assume that everyone
has received it. Even when messages get through, members can’t control how
others will read or interpret their messages.
When communicating face to face, we indicate what we consider to be
important through changes in the tone of voice, facial expressions, and nonverbal
gestures. Bear in mind that, according to one study, only 7 percent of the meaning
in communication among members of the same culture comes from words, which
is often all one receives in virtual communication. Likewise, in face-to-face
communication, receivers signal their understanding by nodding their heads,
gesticulating, or making brief verbalizations. These signaling activities are more
time- and energy-consuming in technology-mediated communication, and
emoticons are sometimes of little help; the rest comes from vocal inflection and
nonverbal
communication.
Despite
the
greater
difficulty
of
completely
understanding virtual communications, people seldom check their understanding
of message context when receiving or writing e-mails or texts, and omit saying
something to the effect of “I read your text, and this is what I understood. Is that
what you meant?”25
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Loss of Useful Details
Third, virtual teams often experience a loss of useful detail. When communicating
via text-based media, such as e-mail, electronic chat, and text messaging, not
only is less information richness transmitted (e.g., body language or facial
expressions), but less is also explained. Writing down details tends to be
laborious, so individuals do not write as much as they would say, hence
oversimplifying communication and omitting important information. For example,
how much information would you provide to a colleague who missed an important
meeting if their request for the information came in person, a telephone call, or a
text message? If you’re like us, the text answer would be the bare minimum. And
even when someone takes the time to write all the details into a coherent e-mail
or message, many details could be missed as the receiver skims for critical
context or simply erases the message entirely. For instance, one study found that,
in similar circumstances, individuals communicating via text-based e-mail
technology exchanged an average of 740 words, while individuals communicating
verbally exchanged an average of 1,702 words.26 Text messaging, Facebook, and
other social media obviously lead to even shorter messages. This, of course, is
understandable, as it is very difficult to know what information is important, and it
takes a lot of work to write down the details of our everyday reality, not knowing
which parts of it may be relevant to our virtual team members.
As businesses expect more managers to both oversee more far-flung teams
and spend more time with distant clients, face time has become a precious
commodity – and a source of professional stress.27 Technologies such as
videoconferencing and enterprise social networks claim to enable true connection
over great distances, but the reality is often far from perfect. When it comes down
to it, there is still no good substitute for being in the same room with a direct report
or a high-level boss, many executives say.
Yet a distant boss with a sudden desire for face-to-face encounters may meet
with resistance from their subordinates. This happened to a senior manager at an
environmental consulting firm. The manager realized she had been too hands-off
with her team, missing meetings due to conflicting client demands. She began
scheduling half-hour sessions with each team member. Several staffers bristled at
the sudden outreach, complaining that she was micromanaging them. She then
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convened a meeting to explain how her increased engagement could be helpful. “I
want you to help me help you,” she said. Her team adjusted over time.
Management researcher Tsedal Neeley provides a good example of the
challenges caused by distance in virtual teams.28 She studied a marketing team
of a major multinational pharmaceutical company that had seventeen members in
four different locations: Boston (where the group leader resided), London,
Singapore, and Moscow. Each part of this global team saw things quite differently,
as paraphrased by Neeley in Exhibit 9.8. The team was performing but obviously
had undercurrents of mistrust, fear, and perhaps envy that served to limit its
overall long-term effectiveness.
Exhibit 9.8 Different perspectives from global team members (example)
Boston, HQ
(8 members)
London (5
members)
Singapore (3
members)
Moscow (1
member)
“We do the
important
work and
have easy
access to the
boss.”
“We represent the
most challenging
regions in terms of
diversity and
institutional hurdles.
The Boston team
really doesn’t
understand our
markets.”
“Our opinions are
often ignored. It’s so
difficult to find a
good time to
exchange ideas,
and even if we do
manage to connect,
we can’t get a word
in edgewise.”
“I am all on my
own here and at
the mercy of the
Boston group. I
need to make
sure the boss has
my back.”
Source: Adapted from Tsedal Neeley, “Global teams that work,” Harvard
Business Review, October 2015.
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Management Application 9.4 Face Time for Virtual Teams
1. How can a virtual team leader such as Ramesh Tainwala balance
the need for control and coordination of team efforts with the need to
provide team members with sufficient autonomy to do their jobs? What
actions would you take in this regard?
2. How can new virtual technologies be used to improve both the
performance and sustainability of global teams?
3. Are special skills required to be a successful virtual team leader, as
opposed to a successful on-site team leader? Explain.
4. Have you ever been a member of any kind of virtual team? If so,
what were the principal challenges your team faced? How did your
team address these challenges?
5. Consider: Your team has been asked to develop some general
guidelines that team leaders and members could agree to about how
and when team members and leaders should communicate. These
are not meant to be “rules,” but rather suggestions that people can
agree to in order to facilitate both team development and
productiveness. What would your guidelines look like?
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Managing Virtual Global Teams
Working with – or, indeed, managing – a virtual global team with workers around
the globe suggests a need to select members carefully with the right skills,
abilities, and motivation to work in a highly complex and often ambiguous
environment. It also suggests a need to provide these individuals with extensive
training in technology use, virtual communication, virtual work, and cultural
sensitivity. In addition, expectations and reward systems ought to be consistent
with the goals and nature of virtual or distributed work. Managers can’t control the
behavior of virtual team members and members are not “seen” while at work.
Clear expectations and measurable goals are a better way of judging employees’
performance and assigning rewards.29
Not all tasks can be accomplished virtually, and successful virtual managers
understand this. Some tasks are very difficult to accomplish using traditional
media and may require members to meet face to face, at least for an initial phase,
so that participants can get to know each other and negotiate ways to interact. As
a rule of thumb, the higher the level of decision process or the more complex the
message, the richer the communication medium required.30 In other words,
simpler tasks can easily be accomplished through lean media, while some tasks
are better saved for on-site teams. In cases when insights from several regions
are required, global teams may be assigned temporarily to a common location to
work on a task.
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Process Issues in Virtual Global Teams
Once managers have identified the right tasks, the right people, the right
technology, and the right reward systems, they must work on processes to enable
coordination, shared understanding, and trust. Managers can ease the challenges
caused by a lack of common context by actively working in disseminating
information. For example, periodic face-to-face meetings may be arranged when
possible. If it is impossible or too costly to have all members visit each other, one
member of each location may visit remote locations and share information.
Additionally, video- and teleconferences can be utilized for information-sharing, at
which each member is invited to tell how they are doing. This will create the
conditions for contextual information to emerge, as members have the opportunity
to mention things that are important parts of their reality, such as other projects or
pressures they are facing.31
Managers also have to facilitate communication among members. They can
help members’ communication by making communication norms explicit,
providing intercultural communication training, and developing team-building
interventions that help participants to develop communication rules and build
mutual understanding.32 Managers also need to make sure that individual
members do not feel isolated in remote locations. The key word here is
communication. Frequent short messages may go a long way to making members
feel valued and feel they belong to the team. Exhibit 9.9 summarizes the key
issues managers must take into consideration when managing virtual teams.
Exhibit 9.9 Managing virtual global teams
Team
components
People
Management strategies
Selection of members with right skills, abilities, and
motivation.
Provide training on technology use, virtual communication,
and cultural sensitivity.
Align reward systems with nature of virtual work.
Set clear expectations and measurable goals for
performance appraisal purposes.
588
Team
components
Management strategies
Tasks
Select tasks that are appropriate for virtual work.
Use richer media for more complex problems.
Processes
Disseminate information among team members.
Arrange periodic face-to-face meetings when possible.
Allow time for information-sharing in video- and
teleconferences.
Make communication norms explicit.
Provide intercultural communication training.
Develop team-building interventions.
Make sure individuals do not feel isolated.
Communicate frequently with all members.
Source: Based on Martha L. Maznevski and Nicholas Athanassiou,
“Designing the knowledge-management infrastructure for virtual teams,” in
Cristina B. Gibson and Susan G. Cohen (eds.), Virtual Teams That Work:
Creating Conditions for Virtual Team Effectiveness. San Francisco, CA:
Jossey-Bass, 2003, pp. 196–213.
Working virtually requires learning a new way of relating and interacting.
Success in working virtually as a manager or collaborator requires learning to
communicate information that maybe we would not have communicated in a faceto-face interaction. Members must communicate task-related information (details
about what has to be done), social-related information (the personality, styles, and
reputation of those directly or indirectly involved in the task), and context-related
information (the type of support available, equipment, competing responsibilities,
cultural norms, holiday schedules, office layouts, local rules, expectations, and
regulations).
The conundrum facing virtual teams is that while they often need more
information than on-site teams, they usually share less, because members do not
realize what information is important, take their own context for granted, assume
589
similarity between locations, have a difficult time imagining what is different for
other members, and because it takes a lot of time and effort to write down or
communicate everything. Nonetheless, context affects behavior in ways we may
not anticipate. For example, one member may feel pressured to finish a task
quickly because they are under pressure to tackle another task. Another member
may be experiencing technological problems, however, that may be slowing them
down. In summary, succeeding in a virtual environment requires taking the time to
communicate in a variety of ways all the elements that may be affecting the work
and work environment. It may include details about progress on the task, how you
and other team members work, upcoming holidays, the planned construction on
your building, or server shutdowns. In short, everything you know that helps you
to do your job is likely to help your counterpart to do their job as well.
As technology continues to evolve and globalization pressures increase, it is
likely that organizations around the world will continue experimenting with new
work arrangements and new ways to take advantage of resources available in
different locations. The challenge for global managers is to keep up with these
changes and adapt their management styles accordingly.
590
Managing Virtual Global Teams at IBM Cloud Labs: An Example
Willy Chiu was parked outside a Seven-Eleven store in Palo Alto, California, early
one evening when he heard the ping of an instant message arriving.33 It was the
Tokyo-based head of IBM’s Asia operations, with urgent news: a major competitor
was honing in on a pivotal project IBM had been chasing. The job, to develop a
new IT system for a South Korean bank, could be worth up to $100 million. Chiu,
who runs IBM’s worldwide network of elite cloud labs, was needed to help
develop a pilot product. The plea ignited a flurry of online, Galaxy, and iPhone
conversations across four continents. Within minutes Chiu had eighteen chat
windows open simultaneously on his laptop (see Exhibit 9.10). “How do we
mobilize resources worldwide?” he typed in one message to the head of
worldwide operations in San José. “I’ll take the lead,” responded IBM’s country
manager in Seoul. Chiu dashed off a note asking a team in Beijing to free up staff
and quickly received confirmation that they were on the case. Then a banking
specialist from England chimed in: “Our team can provide reference cases from
Spain.” Chiu to his administrative assistant: “Stella, please change my flight to a
later time tonight. Also, looks like I may go to Korea again in a few weeks.” Chiu
to his wife: “Will be working late.”
Exhibit 9.10 IBM’s virtual development team (example)
591
IBM aims to set itself apart, with a spate of web-based services that make it
easier for its 360,000-member staff to “work as one virtual team,” says Chiu. The
company has launched what it calls an innovation portal, whereby any
employee with a product idea can use online chat boxes to organize a team, line
up resources, and gain access to market research. Developers in IBM cloud labs
around the world can then collaborate on prototypes and testing. This way,
enterprising staff can build a global team in as little as half an hour, and cut the
time to start a business from at least six months to around thirty days.
To see how this works, IBM organized a twenty-member group including staff
from Japan, Brazil, and the United Kingdom for a major US telecom client that
needed a web-based tool to launch new services, such as video streaming for
cellphones. IBM staff experts built a working prototype in two weeks and delivered
a finished product in two months.
Management Application 9.5 Virtual Global Teams at IBM Cloud Labs
1. In the example of IBM Cloud Labs, is being virtual an advantage or
a drawback over assembling people at a single location? Why?
2. What special qualities as a manager, if any, must people such as
Willie Chiu possess to carry out their responsibilities?
3. If your company had technically competent people like Willie Chiu,
how would you help them develop the global managerial talents
required to succeed? Explain.
4. What is your opinion of IBM’s innovation portal as a means of
encouraging and supporting productivity among global teams?
592
Leadership and Global Team-building
Leading successful global – or any – teams require knowing how to build them, as
well as understanding the team-building process (see Exhibit 9.11). This is no
easy task if concrete results and ultimate success are important. Successful
teams are not generally constructed from whoever in the organization or division
is not busy or is otherwise available. Nor are they typically constructed through a
“Noah’s ark” approach of appointing a member or two from every country
represented. Rather, creating effective global teams requires considerable
thought, attention to detail, and, above all, an understanding of purpose. What is
the principal goal of this team? Who can best facilitate this goal? Who is best
qualified to organize and supervise this team through goal accomplishment?
These are not simple questions, nor can they be resolved in an expedient way.
Exhibit 9.11 Team-building process
593
Team Leader Responsibilities
A team leader’s responsibilities are critical in helping global teams develop the
foundations for high group cohesion and job performance. As might be expected,
managers need to create the right context for teams to succeed, rather than try to
intervene and manage group behavior. To this end, managers and coordinators
may productively focus their efforts on the following areas (Exhibit 9.12):
Select members on the basis of skills. Select members for their skills
and invest in global team members’ development: teams need the skills to
accomplish their tasks and to work together. Team members should be
carefully selected to make sure all necessary skills are available, or, if not,
are developed.
Provide clear direction. Provide global teams with direction, purpose, and
clear performance goals: team members must believe they have a
worthwhile purpose to accomplish and have common expectations
regarding their performance goals.
Build a positive team culture. Help nurture a positive team culture: as
discussed above, groups develop cultures on the basis of their first
experiences and the solutions they find to the problems they encounter.
For this reason, the creation of a global team must be carefully managed,
as members are monitoring each other and the leader’s behavior carefully
to infer rules that will inform future behavior. Clear rules of behavior need to
be developed at the outset of team formation, with the team purpose in
mind.
Build team camaraderie. Encourage global teams to take time to know
one another. Teams need to develop a sense of trust and camaraderie that
will facilitate creative exchanges. Teams need to spend time together, not
only on-task but also building relationships and getting to know each other.
Tie rewards to performance. Develop milestones and provide feedback
and rewards throughout the project duration, and not just at the end of it.
This will help global teams to reflect on their performance, celebrate small
wins, and take action to deal with shortcomings.
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Recognize and build on differences. Heterogeneity of cultures and
points of view may be a fundamental source of advantage (more
knowledge, different perspectives, better problem-solving) if used properly
but a major challenge if not managed (conflicts and misunderstandings).
Teams that recognize their differences and use those differences to their
benefit will perform better than homogeneous teams.34
Exhibit 9.12 Leadership and global team-building strategies
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Building Mutual Trust
The issue of trust was discussed above. In reality, this issue permeates any
discussion of teams, global or otherwise. Earlier, we saw a comparison of trust
levels across countries. Now consider another comparison of trust levels, this time
just within the European Union. A study found that nearly half the people in the
European Union trusted citizens from their own countries, but only 20 percent
trusted citizens of other EU countries.35 In one example of this, German farmers
and politicians quickly blamed Spanish farmers for selling diseased cucumbers to
them, even though it was later found that the problem originated in Germany.
Another example can be seen in the recent finger-pointing across the EU
concerning who is really to blame for the ongoing economic problems facing
Europe. These same trends can be found within other regions of the world (e.g.,
Latin America, Asia) – and especially across regions (e.g., Asia versus North
America).
Considering this disparity across countries and regions in general trust levels,
the issue of trust in global teams raises two questions. First, what is the process
by which trust between team members is developed? Second, what can team
members do to facilitate or enhance this trust over time? To answer the first
question, consider a simplified model of trust development as shown in Exhibit
9.13. As shown here, a principal ingredient in trust development is the
foundation upon which it is based. In this regard, three trust expectations can be
identified:
competence-based trust – the degree to which members believe the others
can deliver on their commitments
incentive-based trust – the extent to which each member believes the
others are sufficiently motivated to deliver on their commitments
benevolence-based trust – the extent to which each member believes the
others are making an effort in good faith to meet their commitments.36
Following the model, team members weigh each of these three expectations and
calculate an overall expectation that the other members of the team can be
trusted. This trust judgment leads to trust behaviors (e.g., increased openness
with members, fewer demands for costly control systems or oversight, etc.) and
subsequent trust-related outcomes (e.g., increased efficiency, cost reductions,
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goal attainment, etc.). While no model can capture the entirety of a complex
process such as the development of trust, this model does serve to highlight
several of the key factors in the process.
Exhibit 9.13 Developing mutual trust
Source: Based on Nancy R. Buchan, “The complexity of trust: understanding
the influence of cultural environment on the nature of trust and trust
development,” in Rabi S. Bhagat and Richard M. Steers (eds.), Cambridge
Handbook of Culture, Organizations, and Work. Cambridge University Press,
2009, pp. 373–417.
As might be expected, when trust development has to occur between team
members from significantly different countries and cultures, the challenges of
working can increase exponentially. In point of fact, a number of strategies can be
identified that, though simple, can nonetheless be effective. To start, team
members must be open and candid in their communications with the other
members. One misrepresentation of the facts can destroy months of stability and
success. This is not to say that all proprietary information (e.g., trade secrets)
must be shared; rather, it suggests that other members must know when and why
information is proprietary. If such information has little to do with the goals of the
team project, there is little reason for honest members to push for answers in
these confidential areas. On the other hand, when one member keeps to
themselves confidential information relating to the operation and success of the
team, the commitment of other members will likely decline.
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Finally, successful teams are universally characterized by mutual benefit for
the various individual members. No one likes to remain willingly in an inequitable
relationship. When members see others working diligently on behalf of the
collective good, however, and not just for their own personal goals, openness and
trust will logically follow.
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Building a Virtual Global Team at Intelehealth: An Example
So, how do you build and lead a successful global team? Take a look at
Intelehealth. Neha Goel describes herself as a tech entrepreneur and social
activist.37 She is co-founder and CEO of Intelehealth, a technology nonprofit that
builds telemedicine solutions for improved access to last-mile healthcare; that is,
the actual interface between the healthcare provider and the patient. Based on
her experience, she notes that in today’s environment it is not unusual for startups to have global teams far before they have reached an international scale. In
fact, global virtual teams are becoming the norm in start-up cultures, particularly in
tech nonprofits and social enterprises focused on global impact. If leveraged the
right way, Goel argues, virtual teams increase efficiency, strengthen client
relationships, reduce your organization’s carbon footprint, and save money.
Intelehealth has clients in different parts of the world, from India to Haiti, and
in order to meet their demands the team needs to be globally distributed as well.
While working side by side can be helpful, Goel suggests that it is not necessary.
While some types of business functions do perform better if team members work
out of the same office space, with the right management tools in place, a virtual
team can work just as effectively with huge cost savings on overheads and
operations. However, there are still challenges. Goel suggests five things to avoid
in building and leading virtual global teams:38
Don’t recruit the wrong people. When recruiting for virtual teams, make
sure you find people who are self-sufficient, comfortable working without
much direction or constant support, and excellent communicators.
Don’t tune out conflict. When misunderstandings inevitably occur, don’t
wait for the irritation to blow over or expect colleagues to work things out
themselves. Take action immediately.
Don’t discredit time zone differences. Place team members who work
on related projects in the same or similar time zones. For example,
Intelehealth’s front-end development team is based in India with their field
team. This works well because the field team spends the most time with
the company’s users and, as a result, often relays feedback to the frontend developers as they build new features into the product. Meanwhile, the
company’s back-end technical support team is based in the US and in
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India. This means that when one team member is asleep the other is
awake and on-call, allowing 24/7 support for clients as a start-up. This
means that all technical support executives work a day shift, which
dramatically improves retention.
Don’t disregard cultural differences. Companies – especially start-ups –
need to be able to anticipate cultural diversity across the team, and make
room for it. Fostering a truly inclusive environment is critical when your
team is spread across the globe. Diversity and inclusion must be built into
the organization’s culture from the very beginning.
Don’t rely strictly on text-based communication. Whether it’s making
sure the entire team gets together on video chat once a month to
brainstorm or chat, or whether you develop a cultural exchange-type travel
program so that your team members can get together in one country, say
once a year, make sure everyone gets to know everyone else dedicated to
moving your organization’s mission forward. That sort of face-to-face
interaction is required to keep everyone motivated and engaged.
So, when building a globally distributed team, lean in to the strengths of this
model while thoughtfully mitigating potential pitfalls. The most powerful feature of
global virtual teams as an organizational structure is its ability to scale rapidly
across geographies, making for a nimble, efficient, and diverse organization.
Management Application 9.6 Global Team Leadership at Intelehealth
1. Why does Neha Goel suggest establishing global teams even
before a start-up has reached an international scale?
2. Goel argues that virtual global teams can increase efficiency,
strengthen client relationships, reduce the organization’s carbon
footprint, and save money. Why might this be the case? Under what
circumstances might this not be true?
3. How might the characteristics of a virtual global team leader differ
from a team leader in a face-to-face global team? Explain.
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Manager’s Notebook Managing Global Teams
The African proverb mentioned at the beginning of this chapter – “If you
want to walk fast, walk alone; if you want to walk far, walk together” –
resonates when we consider the practical question of leading global
teams. Managers are responsible for helping global team members walk
together, which is no small challenge. Remember that the benefits of
global teams are only realized if they are well managed and well led.
Earlier in the chapter we addressed many of the challenges and success
criteria for effective global teams. We looked at team processes. Now, to
tie these issues together, we suggest three take-aways related to
managing effective global teams (see Exhibit 9.14).
Exhibit 9.14 Strategies for managing global teams
1 Build a foundation for team success
After the members have been selected for a global team, it is important to
lay the groundwork for team success during the initial launch period. The
following three strategies are critical in this regard.
Successful managers lead their team through a team-building process
that clarifies goals, roles and responsibilities, procedures, and
interpersonal norms. For example, in terms of procedures, a team could
clarify the technology they want to use and rules about how quickly they
should respond to communications. Interpersonal norms relate to how
team members agree to treat one another; if ground rules relating to
601
respect, participation, punctuality, etc. are established from the
beginning, it is more likely that members will follow them and avoid
unnecessary conflict. Some teams also decide in advance how they will
handle any conflicts that could arise, and agree to do post-mortems after
key deliverables to improve future teamwork. Finally, teams can also do
pre-mortems during the team-building stage. This involves identifying
everything that could possibly go wrong and brainstorming ways to preempt potential problems. The written agreement on all these items is
called the team charter. Its purpose is to clarify members’ expectations
of one another and of the team leader, and surface cultural differences in
those expectations. As we saw in the discussion of employee motivation
in Chapter 4, people tend to perform better when expectations are clear.
Successful managers also take the time to help team members get to
know one another and build relationships. Not only does this develop the
psychological safety mentioned earlier, but it also facilitates
communication. We are more likely to share our thoughts, ideas, and
concerns with people we know. Furthermore, the better we know our
teammates, the greater the likelihood that we will interpret their
communications accurately.
This early stage of team formation is also a good time to provide any
technical or interpersonal training to group members needed to facilitate
group performance.
2 Build team trust and engagement
Managers can further contribute to team effectiveness by devoting time
and attention to trust and engagement in ways that also develop
multicultural competence.
Trust is most easily built through face-to-face interactions characterized
by open, honest communication, and by emphasizing equity and
fairness in day-to-day operations. Martha Maznevski recommends a
framework to address cultural as well as other differences found in
diverse global teams in order to build more effective teams. It is called
the MBI approach, which stands for mapping, bridging, and
integrating.39
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- Mapping. Mapping is engaging the differences between people. It
is literally drawing a picture of the similarities and differences in the
team, and then working to understand what implications these
differences have. There are several different dimensions that can be
mapped by managers and team members alike. For example, we
might want to map cultural differences among different team
members in terms of values, expectations, and preferences about
teamwork. We might also want to map differences in personality, in
function, in different business units – all the different perspectives
that people bring to the team. Research has shown that teams that
do this end up performing better, because it fosters open
communication as well as mutual respect and understanding. If
done with sensitivity, mapping is a good team-building activity for
developing trust and cohesion.
- Bridging. In essence, bridging is communicating effectively to
understand and leverage the differences. There are three steps to
bridging. The first step is approaching or preparing – being
motivated and wanting to understand other people from their points
of view. The second step is decentering, or putting ourselves in the
other person’s place, speaking and listening from their point of view.
This involves the important skill of perspective-taking. The third step
is recentering, or finding commonalities and developing common
norms, common definitions of the situation, and common objectives.
- Integrating. The final step involves using the differences among
team members to create new ideas, build participation, resolve
conflicts, and create a more innovative work environment.
Taken together, these three strategies help build well-integrated teams
committed both to team cohesiveness and to team performance.
Teaching a new team to use the MBI early in the team’s trajectory
helps leaders avoid conflicts and fault lines, and get the most out of
team efforts.40 The MBI contributes to their intercultural learning and
arms team members with a tool they can use whenever differences of
any type surface throughout the life of the team. It can also set the
norms for psychological safety and further team trust. Members can
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make themselves vulnerable by sharing information about themselves.
The manner in which such information is received and used is a good
indication of the trustworthiness of the leader and members.
Good virtual teammates prove they are trustworthy by demonstrating a
number of characteristics, including being collaborative; sharing
information; proactively engaging with others; being organized; providing
useful feedback; having good social skills; and aiding team members.41
Successful team leaders both model and encourage these behaviors in
team members.
Research shows that many regular employees are not engaged or
heavily involved in team activities (the disengagement rate in US
employees overall is 68 percent), so the challenge of building
engagement in virtual teams is very important and requires some
creativity. Managers can set up a “virtual water cooler” where employees
can interact informally. They also send out a weekly photo-share or a
personal question for everyone answer, just to build cohesion. Some
teams use a deliverables dashboard so everyone can “see” both
accountability and progress, and they celebrate when key goals are
reached. Recognition of member accomplishments is crucial, as are
individual one-on-one coaching sessions with each team member.42
3 Maintain team effectiveness
This chapter emphasized the importance of building global team synergy,
but managers also have to focus on maintaining synergy and team
effectiveness. Business organizations of all kinds are apt to fall apart
unless they are carefully tended. Even the most successful teams can
falter if managers fail to pay attention. Thus, successful managers are
constantly monitoring not just task accomplishment but also team synergy.
They check to see if improvements or tweaks are needed regarding the
purpose, people, process, practice, and, of course, performance
measures. They keep an eye on team culture, camaraderie, and trust
levels.
If problems or conflict occur, good team leaders quickly find a resolution
so that problems do not fester and harm team cohesion and
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performance. It’s important to look for win–win solutions to avoid
resentment.
Another maintenance strategy is building long-term team competencies.
A good work team is like a good professional sports team – it consists of
well-trained people in every position who’ve been taught and coached to
do their best for the good of the team. Managers have to consider the
roster and what skills are needed to enable the team to respond to shortand long-term challenges and opportunities. However, as we’ll see in the
following strategy, there is one important way in which global business
teams are not at all like professional sport teams, which have captains
and coaches who call the plays.
Successful leaders of global teams are more likely to foster shared
leadership, described in Chapter 6. The greater complexity of global
team tasks and the rapid changes in the global context make it difficult
for one leader to be responsible for all decisions and leadership roles.43
Instead, roles are shared and decisions made in participative fashion.
Remember in Chapter 3 that one of the advantages of the Japanesestyle ringi-sei decision system is that members are typically involved
early in actions that can affect them, thereby increasing their
commitment to the outcome. Global team members step into and out of
leadership roles as needed, and members with different types of
expertise play a larger role in different decisions. Mary Parker Follett, an
early writer on management, was the first to describe this type of
leadership. She did not believe that leadership was rooted in power over
others. Instead, she wrote and lectured about the authority of expertise
and the law of the situation, in which the search for solutions to
management problems should be governed by the demands of the
situation rather than by reference to any traditional line authority or
bureaucratic principle. For Follett, the situation is the boss, although this
can be threatening to many traditional supervisors.44 She also believed
that the most essential work of leaders is to create more leaders, which
is what good team leaders do. Fostering shared leadership in global
teams builds long-term team competencies and promotes greater
engagement.
605
Chapter Review
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Summary
The use of teams – both on-site and virtual – has increased significantly in
recent years as a result of two pressures. First, the move towards
increasing globalization has required companies and their managers to
work more closely with people from different regions or the world in order to
accomplish their goals and objectives. Second, major changes in
communications and computer technologies have created new
environments in which global teams can operate and new tools for them to
use. It only seems logical that these two changes will continue. As such, an
understanding of how global teams work, as well as how they can be
successfully managed, probably represents one of the most important tools
in a manager’s repertoire of skills.
A global team was defined here as a group of employees selected from
two or more countries who work together to coordinate, develop, or
manage some aspect of a firm’s global operations. Companies usually turn
to such teams either when they need specific cross-cultural expertise on
some aspect of the business or when they partner with a foreign firm. Many
firms prefer using global teams because they can often do a better job than
homogeneous teams consisting exclusively of either home or host country
nationals.
Global teams must identify their areas of responsibilities and organize their
members. Managing tasks involves making sure that all the team members
understand why the group was formed. This includes clarifying the mission
and goals of the team, setting a clear agenda and operating rules for team
management, clarifying individual roles and responsibilities, clarifying how
decisions will be made, and identifying who is responsible for task
accomplishment.
Global teams must also develop productive group processes to facilitate
collective efforts towards goal attainment. Managing group processes
includes developing and completing team-building activities, understanding
communication flows and patterns among group members, facilitating
participation across team members, specifying methods of conflict
resolution, and clarifying how and when performance will be assessed.
607
While cultural differences can play a role in the acceptance and use of
technologies and work arrangements, technology also influences culture
and norms of behavior in a reciprocal fashion. As people incorporate
technologies into their lives, they develop new ways of dealing and relating
to tasks and people. The way – and frequency – with which we receive
information has changed. For managers, this means great opportunities,
but also challenges. Working virtually requires learning a new way of
relating and interacting. Success as a manager or team member requires
learning to communicate information that maybe we would not have
communicated in a face-to-face interaction. Members have to
communicate task-related information, social-related information, and
context-related information.
Emerging electronic technologies have led to an explosion of virtual work,
including virtual teams. Although such teams promise improved
productivity and can even outperform local teams, this can occur only when
such teams are well managed and well led. Leaders have to convert the
challenges in such teams into opportunities.
As businesses expect more managers to both oversee more far-flung
teams and spend more time with distant clients, face time has become a
precious commodity – and a source of professional stress. Technologies
such as videoconferencing and enterprise social networks claim to enable
true connection over great distances, but the reality is often far from
perfect. There is still no good substitute for being in the same room with a
direct report or a high-level boss, many executives say. Yet there is little
consensus about how much face time it takes to manage effectively.
Trust among members of global teams is both important and elusive.
Without trust between members, the likelihood of long-term team success
is significantly reduced. Indeed, a review of the research on successful
teams reveals clearly that trust represents one of the key success factors.
Several trust-building strategies, though simple, can nonetheless be
effective. Teams must be open and candid in their communications with the
other members. A misrepresentation of the facts or a failure to warn that
one cannot meet a deadline can destroy months of stability and success.
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Key Concepts
action teams
authority of expertise
boundary management
global team design principles
global team synergy
global team
innovation portal
law of the situation
management teams
MBI approach to building effective teams
on-site teams
production/work teams
project teams
service teams
team charter
team leader responsibilities
trust development
virtual teams
609
Discussion Questions
1. How does a manager know when they have an effective global team? What are
the indicators?
2. What contingencies determine when virtual teams should meet face to face?
Why?
3. In what ways can global team synergy be developed and sustained over the
long run?
4. What criteria influence whether a global team should be on-site or virtual in
order to be most effective?
5. Three special challenges for virtual global teams were discussed in the chapter
(lack of mutual knowledge and context, overdependence on technology, and loss
of useful details). What actions can team leaders or more senior managers do to
alleviate some of these challenges? Explain.
6. What would be the equivalent of the active listening (e.g., checking for meaning
and feelings) we do in person on a virtual team?
7. If your boss asked you to develop a two-day team-building workshop for
members of several new virtual global teams, how would you structure the
program? What would you include, and why?
8. In your view, what are the principal qualities for a global team leader? Are these
leadership qualities the same or different for on-site and virtual teams? Why?
9. Consider: You have just been assigned to create and then lead a small virtual
global team. What specific actions would you take to build engagement among
the team members, since this is one of the effectiveness measures of virtual
teams?
610
10. What are the strengths and possible drawbacks of the mapping-bridgingintegrating approach to building high-performance global teams?
11. How could you apply the MBI approach to student project teams or your own
multicultural teams?
12. In your view, what are the three most important lessons from this chapter for
global managers? Explain.
611
Notes
1. https://nation1099.com/freelance-survey/. Accessed March 1, 2019.
2. Anil Gupta and Vijay Govindarajan, Global Strategy and Organization. New
York: Wiley, 2004.
3. Henry Lane and Martha Maznevski, International Management Behavior.
Cambridge University Press, 2019.
4. Erin Meyer, The Culture Map. New York: Public Affairs, 2014.
5. Personal communication, Atsushi Kagayama, Panasonic Corporation,
Osaka, Japan.
6. Bill Taylor, “The logic of business: an interview with ABB’s Percy Barnevik,”
Harvard Business Review, March–April 1991.
7. Edward T. Hall and Mildred R. Hall, Understanding Cultural Differences.
Yarmouth, ME: Intercultural Press, 1990; Shana Lebowitz, “8 things that drive
French people nuts about American offices – and vice versa,” Business Insider,
August 1, 2017; and Pamela Druckerman, “The miserable French workplace,”
The New York Times, May 11, 2016.
8. Hall and Hall, Understanding Cultural Differences.
9. Susan Schneider and Jean-Louis Barsoux, Managing Across Cultures, 2nd
edn. London: Prentice Hall, 2003.
10. Martha Maznevski, “Leading global teams,” in M. E. Mendenhall, J. S.
Osland, A. Bird, G. R. Oddou, M. J. Stevens, M. L. Maznevski, and G. K. Stahl
(eds.), Global Leadership: Research, Practice, and Development. London:
Routledge, 2018, pp. 273–301.
11. This example has been provided by Professor Ying Lu, Macquarie
University, Sydney, Australia, 2017.
12. Frederick Allen, “What makes Alibaba’s Jack Ma a great innovator,” Forbes,
May 7, 2014.
612
13. Paula Caproni, Management Skills for Everyday Life. Upper Saddle River,
NJ: Prentice Hall, 2005, pp. 316–20.
14. Charles O’Reilly, David Caldwell, and William Barnett, “Work group
demography, social integration and turnover,” Administrative Science Quarterly,
1989, 34(1), p. 22.
15. Henrik Bresman and Mary Zellmer-Bruhn, “The structural context of team
learning: effects of organizational and team structure on internal and external
learning,” Organization Science, 2013, 24(4), pp. 1120–39.
16. Blake Ashforth and Fred Mael, “Social identity theory and the organization,”
Academy of Management Review, 14(1), pp. 20–39.
17. Maznevski, “Leading global teams.”
18. Nancy R. Buchan, “The complexity of trust: understanding the influence of
cultural environment on the nature of trust and trust development,” in Rabi S.
Bhagat and Richard M. Steers (eds.), Cambridge Handbook of Culture,
Organizations, and Work. Cambridge University Press, 2009, pp. 373–417.
19. Esteban Ortiz-Ospina and Max Roser, “Trust,” 2018, available at
https://ourworldindata.org/trust. Accessed March 1, 2019.
20. Nina Nurmi and Pamela Hinds, “Job complexity and learning opportunities:
a silver lining in the design of global virtual work,” Journal of International
Business Studies, 2016, 47, pp. 631–54.
21. “Virtual Teams Survey – Executive Brief 2018,” Cultural Wizard, 2018,
available at
https://cdn2.hubspot.net/hubfs/466336/Virtual%20Teams%20SurveyExecutive%20Summary--Final%20(2018).pdf. Accessed March 1, 2019.
22. Martha Maznevski and Nicholas Athanassiou, “Designing the knowledgemanagement infrastructure for virtual teams,” in Cristina B. Gibson and Susan
G. Cohen (eds.), Virtual Teams That Work: Creating Conditions for Virtual Team
Effectiveness. San Francisco, CA: Jossey-Bass, 2003, pp. 196–213.
23. Pamela J. Hinds and Suzanne P. Weisband, “Knowledge sharing and
shared understanding in virtual teams,” in Gibson and Cohen, Virtual Teams
That Work, pp. 21–36.
613
24. Catherine D. Cramton, “The mutual knowledge problem and its
consequences for virtual collaboration,” Organization Science, 2001, 12(3), pp.
346–71.
25. Ibid.
26. Susan G. Strauss, “Getting a clue: the effects of communication media and
information distribution on participation and performance in computer mediated
and face-to-face groups,” Small Group Research, 1996, 27(1), pp. 115–42.
27. Joann Lublin, “Managers need to make time for face time,” The Wall Street
Journal, March 17, 2015.
28. Tsedal Neeley, “Global teams that work,” Harvard Business Review,
October 2015.
29. Jeanne Brett, Kristin Behfar, and Mary Kern, “Managing multicultural
teams,” Harvard Business Review, November 2005.
30. Martha L. Maznevski and Katherine M. Chudoba, “Bridging space over time:
global virtual team dynamics and effectiveness,” Organization Science, 2000,
11(5), pp. 473–92.
31. Catherine D. Cramton and Kara L. Orvis, “Overcoming barriers to
information sharing in virtual teams,” in Gibson and Cohen, Virtual Teams that
Work, pp. 214–30 (p. 229).
32. Ibid.
33. Charles Babcock, “IBM talks up cloud computing,” Information Week, June
26, 2009.
34. Martha L. Maznevski, IMD: Leading Diverse Teams, Financial Times video,
available at http://video.ft.com/v/62063401001/IMD-Leading-diverse-teams.
Accessed October 1, 2018.
35. Pankaj Ghemawat, “Why can’t Europeans get along?” Fortune, December
26, 2011, p. 22.
36. Ibid. Mendenhall et al., Global Leadership.
37. Neha Goel, “Running a virtual team? Avoid these 5 mistakes,” Forbes, May
8, 2018.
614
38. Ibid.
39. Martha Maznevski, “Synergy and performance in multicultural teams,”
unpublished PhD thesis, University of Western Ontario, London, Canada, 1994;
and Henry Lane and Martha Maznevski, International Management Behavior,
Cambridge University Press, 2019.
40. Maznevski, IMD: Leading Diverse Teams.
41. Adam Schell, “Trends in global virtual teams,” RW3CultureWizard, 2016,
available at https://www.rw-3.com/blog/trends-in-global-virtual-teams. Accessed
March 1, 2019.
42. Michael Watkins, “Making virtual teams work: ten basic principles,” Harvard
Business Review, 2013, available at https://hbr.org/2013/06/making-virtualteams-work-ten. Accessed March 1, 2019.
43. Martha Maznevski, “Leading global teams.”
44. Mary Parker Follett, Dynamic Administration: The Collected Papers of Mary
Parker Follett, E. M. Fox and L. Urwick (eds.). London: Pitman Publishing,
1940.
615
10
Global Assignments
◈
Chapter Outline
Global Assignments
Benefits and Challenges of Global Assignments
Considerations in Living and Working Globally
Management Application 10.1 Expatriate Survival Skills
Management Application 10.2 Promotion to Kenya
Finding Your Way: Coping with Culture Shock
Management Application 10.3 Culture Shock in Luogang
Finding Your Place: Acculturation Strategies
Management Application 10.4 Acculturation Strategies
at Shell
Managing Repatriation
Management Application 10.5 Returning Home
MANAGER’S NOTEBOOK: Managing Global
Assignments
Chapter Review
616
Learning Objectives
Explore the opportunities and challenges of global
assignments.
Investigate the realities of living and working globally.
Understand cultural shock and psychological
adjustment.
Understand acculturation strategies and their impact.
Explore repatriation issues.
Learn how to live and work more effectively across
cultures.
Landing in a new country is like rebooting your life.1
Peeyush Agnihotri
Recent Canadian immigrant
During a recent voyage on Royal Caribbean’s massive cruise
ship, Allure of the Seas, two passengers discussed how much
they had enjoyed the voyage. As they rode the glass elevator to
the top of the ship’s eleven-story atrium, one turned to the other
and said, “I’ve been on this voyage for two days, and I haven’t
even seen the ocean yet.”2 This observation raises an interesting
question: What was the purpose of the cruise? Relaxation?
Adventure? Learning? A similar question can be asked about
managers who seek global assignments in their companies,
particularly those who want to live and work abroad. Surprisingly,
617
it is possible to work abroad without ever really “seeing” the host
country, which brings us to the all-important question of
motivation. What do expatriates seek to gain from their
experience? What will they actually see and learn as a result of
their assignment? Is it to be a voyage of discovery, a “life
experience,” or simply a calculated career move? What will their
employer gain from the experience and expense, come to that?
Then there is a very different question: What if the assignment
abroad is the company’s idea, not yours? How should you
evaluate this? And must you say “yes”? What is it like to live and
work abroad, and what is it like to come home?
With these questions in mind, this chapter explores what is
involved in global assignments, from moving abroad to returning
home, by exploring the following topics:
the purposes and types of global assignments
potential benefits and challenges of living and working
globally
dealing with culture shock
choosing an acculturation strategy
successful repatriation.
618
Global Assignments
Being an expatriate in today’s world is not for the faint of heart. It
is expensive, costing companies hundreds of thousands of dollars
a year per expatriate on average.3 One estimate is that the
average
expatriate
assignment
costs
companies
between
$250,000 and $1 million annually.4 In addition to salary, costs can
include transportation, moving expenses, home leaves, housing,
private education fees for children, vehicles, and tax liability. In
some locations, expatriates also receive extra compensation for
sacrifices related to their location, such as living with political
instability, terrorism, lack of sanitation, extreme weather or
remoteness, and restricted freedoms (e.g., women in Saudi
Arabia).5 At the same time, it also costs the employees
themselves, both in terms of added stress and unanticipated
expenses. This high cost of expatriation makes success both
important and uncertain. With this in mind, let’s explore the why’s
and how’s of living and working overseas.
619
Reasons for Using Expatriates
To get started, let’s consider the key reasons why companies use
expatriates (see Exhibit 10.1). First, some reasons relate to
countries where a company is not yet well established. For
example, many expatriates today currently work in emerging
market countries. Companies need someone to set up new
operations or enter new markets, to represent the parent
company, or to instill the company culture into the subsidiary. For
example, an expatriate director of a new office in Senegal had
daily meetings with key employees for several months. He
reviewed their work, explaining why it had to be done in certain
ways to satisfy headquarters and relating important stories about
the organizational culture. Thus, he communicated both global
standards and instilled cultural values.
Exhibit 10.1 Reasons for using expatriates
A second reason for sending expatriates is connected to
control and problem-solving. For example, companies may need
someone to ensure that a subsidiary or joint venture partner is
following its rules and regulations in a standardized way. Some
620
companies might require an outsider to troubleshoot and turn
around a problematic situation.
A third reason relates to capability-building. Companies might
want expatriates to transfer or learn skills and knowledge, which is
best done in person. Working abroad provides developmental
opportunities for managers being groomed for high-level global
positions, which is one of the most common reasons for sending
expatriates. Companies may also have to fill skill gaps if locals
cannot perform jobs themselves.6 This last reason, however, has
become somewhat less important for two reasons: skill gaps are
less common due to increased education and training levels
around the world; and global companies are highly motivated to
avoid the high cost of expatriation by relying more on local talent.
For
example,
Applied
Materials,
one
of
the
few
global
semiconductor companies that makes equipment for engineering
silicon chips, is strongly committed to recognizing and developing
local talent, and seldom uses traditional expatriates.
621
Types of Expatriates
Let’s talk briefly about how global managers become “global” in
the first place. In other words, how do they find their way into new
“foreign” assignments or jobs? Some people are assigned (or
requested) by their employers to move abroad for a particular job
assignment; others initiate the move themselves by accepting
employment
with
overseas
companies
that
offer
them
opportunities; and still others move abroad without a job or any
concrete idea of how they will make a living. Some want to join
established firms; others start their own businesses. Some go
abroad for a month; others for several years; still others become
nomadic, moving from country to country, or emigrating
permanently. Each unique combination of location, reasons for the
relocation,
length
of
assignment,
and
other
individual
characteristics creates constraints and opportunities for individual
workers and their families, as well as the local organization
employing them.
Our focus in this chapter is primarily on business expatriates,
defined as:
legally working individuals who reside temporarily in a country
of which they are not a citizen in order to accomplish a
career-related goal, being relocated abroad either by an
organization, by self-initiation, or directly employed within the
host country, some of whom are paid on enhanced terms and
conditions to recognize their being foreigners in that country.7
622
Over 56 million people are currently expatriates, and that figure is
expected to continue rising and reach 87.5 million by 2021.8 The
countries that host the most expatriates are the United Arab
Emirates (UAE), Saudi Arabia, and Germany. Expatriates hailing
from numerous countries comprise almost 88 percent of the
UAE’s total population; similarly, in Qatar, expatriates make up 70
percent of the population. Elsewhere, expatriates are usually in
the minority. India produces the highest number of expatriates,
followed by China.9
Traditionally, business organizations have relied primarily on
long-term international assignments. The employees they send to
foreign posts are specified as organizational expatriates (OEs).
More recently, large numbers of people have been choosing to
pursue international careers and move across borders without the
support of a home organization or employer. They are called selfinitiated expatriates (SIEs). They relocate on their own accord to
a foreign country in search of new career opportunities or a more
satisfying life. This relatively new breed of international workers
varies widely in skill sets and motivations, ranging from
adventurous travelers who perform low-level jobs in exotic
countries to those at the higher end of the job market. Some SIEs
seek better career opportunities or an opportunity to become a
global entrepreneur; many but not all come from developing
countries. Some are highly educated and experienced; many
others are not. In general, they are venturing forth and physically
moving to another country to enter the local economy without the
safety net provided by corporations and global nonprofits.
One expatriate described the transition from a traditional
expatriate career with numerous country transfers to an SIE job as
623
“leaving the mothership.” For the first time in her expatriate career,
she was completely at the mercy of a foreign organization that
asked her to sign a Spanish version of her employment contract
after she’d already signed a contract in English and moved her
family abroad. To her horror, she discovered that the Spanish
version had less favorable conditions. When she showed the
discrepancy to the director and asked him to remedy the problem,
he simply said that senior male employees resented her contract
so it had to be changed. There was no headquarters HR person to
whom she could complain. The overall job experience was
wonderful, but different management and HR practices were a
more challenging, growth-inducing aspect of this assignment.
By their nature, self-initiated assignments are unique to each
individual and circumstance, and the purpose and length of the
assignment vary widely. Employer-initiated assignments also vary
widely, but they share some important commonalities. In the
remainder of this chapter, we focus on organization-initiated
assignments because they are the most common and best
understood assignments in the business world. However, many of
their characteristics also apply to self-initiated assignments, as
well as other specific types of global workers.
When employees from a foreign country work for a
multinational company and are transferred from a foreign
subsidiary to the corporation’s headquarters, they are typically
called inpatriates. Another important subcategory of expatriates,
called third country nationals or TCNs, refers to expatriates who
do not share the same nationality as either the international parent
company or the host culture. Many TCNs have lengthy global
careers, working for a series of companies from other cultures.
624
These
different
types
of
global
workers
have
different
compensation packages and are subject to different legal
requirements. As you can imagine, large, sophisticated global
companies require a special category of HR personnel, called
global mobility specialists, who are experts on all aspects of
expatriation and who ensure that the company has a pipeline of
global talent sufficient to carrying out its global strategies. Global
mobility specialists also understand that the motivations and
expectations of the various types of expatriates mentioned may
differ, along with their commitment to be away from their home
culture for long periods of time. They also know that expatriate
assignments vary in terms of their difficulty and complexity, so it’s
important to select and train people accordingly.
We should mention one other important group that has to be
knowledgeable
about
expatriate
issues
– home
country
managers, who often supervise expatriates, inpatriates, and
repatriates (returning expatriates). As noted in Chapter 1, home
country managers must understand and empathize with various
corporate travelers and their unique challenges. Regardless of
whether or not you work in a foreign country, you will likely work
with people on global assignments. The rest of the chapter is
designed to help you understand what this is like.
625
Long-term and Short-term Assignments
On a general level, expatriate assignments can be categorized
into two groupings: managers who live overseas on permanent or
long-term assignments, and those who work overseas on
relatively short-term assignments. Another category is comprised
of those who commute regularly to a foreign office without moving
their home or family. This group, described in Chapter 1 as
frequent flyers, makes up 33 percent of global work done in other
countries.10 However, this section compares and contrasts shortand long-term assignments, which both involve a greater degree
of cultural immersion.
While long-term assignments require deep knowledge of a
particular country or region (culture-specific knowledge), shorter
assignments typically require broad knowledge of cultural diversity
(culture-general knowledge). Long term assignments usually imply
a more stable life, albeit in a foreign country or region; short-term
assignments tend towards a highly mobile lifestyle. Both play an
important role in global commerce.
Roughly 45 percent of expatriate assignments are long
term.11 Although the advantages of expatriate assignments are
fairly obvious, finding people who can actually succeed in
expatriate assignments can be problematic. For some, setting up
a household in a strange neighborhood where few people speak
your language, finding schools for the children, shopping in local
markets stocked with foods you can’t identify, and using public
transportation
is
overwhelming.
For
others,
these
same
experiences provide a sense of adventure and learning. The
626
challenge for managers – and their companies – is to discover
which type of person they are before buying them a plane ticket.
Long-term
international
assignments
are
particularly
challenging for managers with a family, especially when partners
have to put their own careers on hold and cannot find suitable
employment in the host country, or when children have special
education or health issues. The most frequent reason for turning
down an expatriate assignment is related to family issues.
Short-term global assignments are growing in popularity due
to the higher incidence of dual-career couples, the increased
availability of local talent in host countries, increasing pressures to
reduce costs, and the ease of transportation and communication
across countries. Currently, 22 percent of global assignments are
of shorter duration, generally with six-month contracts. They
usually focus on a specific task or project and, as such,
sometimes provide results which are easier to measure.12
Additionally, many workers who would not consider uprooting their
family for a long-term expatriate assignment are interested in a
shorter international opportunity. This increases the pool of talent
available for such postings, which is a major advantage. In some
companies, short-term assignments also make it easier for
employees to stay connected to the home country and keep
abreast of career opportunities.
The main challenge facing short-term assignees is being in a
foreign country without family and friends, with a very short time to
develop relationships and become adjusted.13 Since assignees
are usually sent abroad to solve a specific problem or perform a
specific task, they are not given the time to learn the ropes and
adjust to the new locale, as would be the case for traditional long627
term expatriate assignments. Instead, short-term assignees are
expected to perform as soon as they hit the ground, which
increases the challenges of the assignment. Strong pressures to
perform – quickly – coupled with a limited social and family life
can lead to long work hours and high levels of stress. The
resulting unsatisfactory work–life balance and high stress levels
may result in unwelcome side effects, such as alcoholism and
other destructive behavior.
628
Benefits and Challenges of Global
Assignments
If you’re motivated to seek a global assignment, open to the
experience, and willing to work at adjusting, fitting in, and figuring
out how to be effective at work, an international assignment is a
wonderful opportunity. Potentially, it’s a chance to advance one’s
career, make more money, and acquire valuable new knowledge
and skills. For some, it represents a personal challenge or a
transition to a more interesting life. There are numerous benefits
to an expatriate assignment for those who take full advantage of
the experience.
Many expatriates remark that they changed as a result of
their global assignment by becoming tolerant of ambiguity, patient,
open-minded, confident, adaptable, independent, creative, and, of
course, multiculturally competent. They developed a global
mindset, new managerial skills, and greater ability to work with
others. Most expatriates acquire a deeper appreciation for the
world as well as a broader understanding of business and cultural
differences. This is obviously good preparation for climbing the
corporate ladder of global companies, but when a group of
repatriates were asked if they wanted to return abroad, their
answers revealed the deeper essence of the experience – some
missed the excitement of being abroad, feeling “special,” more
alive, and more challenged.14
Exciting though it may be, living and working abroad can be
challenging, and it is not for everyone. Some expatriates never
629
fully adjust and therefore underperform, which can harm their
reputation and that of the company. In most cases, the blame lies
with companies that choose expatriates for their technical skills
but fail to screen them for the multicultural competencies that are
equally important.15 “Technical competence has nothing to do with
one’s ability to adapt to a new environment, deal with foreign
coworkers,
or
perceive
and
if
necessary
imitate
foreign
behavior.”16 Other expatriates do not realize that expatriate jobs
are different and demand more from an individual. Compared to
domestic jobs, they require deeper perceptual and social skills,
high-level reasoning ability, and personality traits that foster
adjustment and achievement so that they are hard-wired to
tolerate the uncertainty or discomfort they may encounter.17
Just because an employee is successful in their home
country or really wants to work abroad does not guarantee they
will succeed in a global assignment.18 The reported rates of
turnover of such people vary widely, from 6 to 50 percent.19 The
main reasons for going home early are:
poor selection practices – the company chose a person
who was not a good fit and lacked multicultural
competencies
failure to adequately prepare expatriates for the
assignment
lack of local support and infrastructure to help expatriates
adjust and be successful
disconnection from one’s home country
630
family concerns (e.g., adjustment difficulties of
partner/children, partner career concerns, children’s
education or special needs, quality of life, etc.).20
Family concerns are the most frequently cited reason for turnover.
However, this may also be the excuse that does the least damage
to the expatriate’s reputation and career; sometimes it’s the
expatriate, rather than the spouse, who actually wants to return
home.
Foreign assignments vary widely in terms of length,
challenge, and cultural distance between one’s home country and
the foreign assignment. Cultural distance is “the extent to which
different cultures are similar or different” as discussed in Chapter
2.21 All expatriates, however, have to enter and learn a different
environment with new cultural norms and rules, develop new skills
and behaviors, and adjust quickly to unexpected situations. When
the cultural distance is minimal, differences are often subtle and
apparent only after careful observation or experience. In other
cases, differences may be overwhelming and apparent at first
sight. For example, consider how different the experience would
be for a Nigerian manager assigned to Scotland or Ghana.
However, we have to be careful with expectations. Americans
might assume that an assignment to the United Kingdom will be
simple given the countries’ shared history and language. In fact,
there are many cultural differences that trip expatriates, even with
similar roots and language.
Expatriates, global entrepreneurs, and frequent flyers who
travel regularly to work in global operations often express the
same frustration before they become accustomed and develop the
631
requisite skills and expectations. Especially in the beginning of
foreign assignments, they often feel like outsiders, yet they must
find ways to “break into” the local culture simply to do their job.
This is not always an easy task, since local environments vary in
terms of how welcoming they are, and not all expatriates are
multiculturally competent.
632
Considerations in Living and Working
Globally
Should you accept a global assignment? Remember our earlier
question: If your boss wants you to work abroad, do you have to
say yes? Some companies require international experience for all
senior management positions as a way of globalizing the
company. That makes it harder to turn down an expatriate
assignment. When considering your decision, analyze the
personal, family, and career considerations described below (see
Exhibit 10.2).
Exhibit 10.2 Considerations in living and working globally
633
Personal Considerations
An important question for all companies is who to select for global
assignments.
Successful
companies
approach
overseas
assignments in a systematic way, beginning with employee
screening and selection, and progressing to cultural adaptation
programs for those finally selected. The first issue to be
addressed is what qualifications candidates for overseas positions
should
possess.
Fortunately,
a
great
deal
of
research,
summarized below, has been done on expatriate effectiveness,
which helps us predict who is most likely to succeed. Although
professional and technical competencies are also prerequisites for
most international assignments, the key selection criteria based
on expatriate success research are:22
1. Motivation for a foreign assignment. Is the manager
really interested in going abroad, or were they talked into it?
Why do they want to go? Are they motivated by career
concerns, company commitment, or personal goals? By
extrinsic reasons (e.g., money, advancement) or intrinsic
reasons (e.g., adventure, challenge, the actual job itself)?
Those who really want to work in a foreign country are more
likely to adjust to working conditions, which leads to higher
job performance.23
2. Relational abilities (e.g., nonjudgmental, behavioral
flexibility, emotional sensitivity, self-awareness). Does the
manager have good interpersonal and cross-cultural skills?
Can the manager accept other people as they are, or do they
try to change them to fit a predetermined mold?
634
3. Personality characteristics (e.g., openness,
conscientiousness, extraversion, agreeableness, emotional
stability, adaptability, curiosity, cosmopolitanism, tolerance of
ambiguity, self-confidence, optimism, non-stress tendency,
emotional resilience). Can the manager work independently,
accept setbacks gracefully, and adapt to new and strange
situations? Will they react in a mature manner or fall apart in
a stressful, foreign environment?
4. Prior international experience. In selection, the best
predictor of future behavior is past behavior. If someone has
already learned to adapt and succeed in a prior assignment,
they are likely to apply those skills again. However, people
with expatriate experience in one continent cannot always
adapt elsewhere unless they are really motivated to do so.
What exactly did they learn from prior international
experience? What were the major challenges they faced, and
how do they relate to a prospective assignment?
5. Foreign language ability. Learning local languages
facilitates learning local cultures. It also helps develop close
personal and business relationships abroad. Does the
manager speak the local language? Are they willing to learn?
These key factors do not guarantee success in an overseas
assignment, but they certainly enhance the likelihood of success.
What expatriate managers really need in order to succeed is a
combination of these skills, a supportive family, and a supportive
company. With these three mutually supportive factors, expatriate
managers can focus their energies and talents on running the
business for the benefit of all.
635
Does gender matter when selecting expatriates? Not at all.
But surprisingly, women expatriates comprise only 14 percent, on
average, of OEs.24 This figure varies by region and industry.
Gender diversity warrants a closer look because lack of
international experience is a career obstacle in global firms and
also helps explain the lack of diversity in the C-suite at some
firms. We’ve known for years that some views on women and
expatriation are simply myths. For example, the perception that
male-dominated cultures will not accept or respect women
expatriates has been disproven. In reality, most host country
locals see foreign women only as “foreigners” rather than women,
and do not hold the same behavioral expectations of them as with
local women.25 The idea that fewer women want to work abroad is
also untrue – more women than men are SIEs. It is true that family
obligations can prevent women from gaining global experience,
but some companies remedy this by providing more support and
flexibility. The main reason that women are not more frequently
selected for expatriate jobs comes down to organizational bias;
male and sometimes female colleagues sometimes overestimate
the problems they will face as female expatriates, or somehow fail
to perceive them as suitable or qualified.26
What is it like being a Chinese-American working for a US
financial services company in Shanghai? Ask Wei Hopeman of
Citi Ventures, a division of Citigroup.27 As managing director for
the Shanghai office of Citi Ventures, Hopeman leads a very busy
life. By day, she works with entrepreneurs throughout Asia to
identify their operational and financial needs. By night, she turns
her focus to the other side of the world, working a full shift with her
American colleagues, connecting those start-ups with Citi
636
business units. After eight years of dealing with the thirteen-hour
time difference and the fifteen-hour flights between Shanghai and
New York – not to mention numerous trips across China to India,
Hong Kong, Singapore, and Palo Alto – she has learned to adapt.
Along the way, Hopeman has picked up a few tricks concerning
the life of an on-the-go global executive. She calls them her
“survival skills.” First, since her working day is so long and
opportunities for jet lag so frequent, she simply ignores the clock;
she has learned to sleep in three-hour chunks of time. Second,
she prefers to stay in hotels near her current projects instead of
commuting from her home; it is easier to be close to her
customers. Third, she blends her work and private life. In much of
Asia, the boundary between professional and personal space is
much more blurred than in the West, and she is available 24/7. “I
make myself available. It’s how business gets done.”28 Fourth,
she does not ask what she is eating at business dinners, since
this can be seen as rude. Finally, she uses long flights as
relaxation time; they have become her sanctuary away from the
never-ending demands of her job.
637
Management Application 10.1 Expatriate Survival Skills
1. Would you like to have Wei Hopeman’s job? Why,
or why not?
2. What is your opinion about her global management
“survival skills”? Would these skills work for you?
3. What other survival skills can you identify that global
managers might find useful?
638
Family Considerations
Family considerations are as important as personal considerations
when deciding whether to accept a global assignment. Long- and
short-term assignments both carry risks and challenges, although
often of a different nature. For long-term assignments, spouses
typically
relocate
with
their
expatriate
partner,
possibly
accentuating dual-career challenges if the partner cannot work
virtually or find local work. The spouse may lose some contact
with extended family, friends, and support groups. At times,
considerable stress can still result from raising children in
unfamiliar settings. Although children can have numerous
opportunities to learn about other cultures, make new friends,
learn new languages and sports, etc., they can also experience
culture shock (see below). They too have to make significant
adjustments to the new location and changed circumstances (e.g.,
missing old friends, dislike of local foods, etc.). Children raised for
a significant part of their early development years in a culture
other than their parents’ or the country stated on their passport
are called third culture kids (TCKs)29 or global nomads. As you
would expect, they are good at entering new situations, socially
and culturally skilled, creative, and often mature for their age.
However, they may not identify so much with their native country
and they gravitate towards other TCKs. A repatriated high school
student who had spent most of her life in foreign countries felt the
need to watch a Jeopardy-like quiz show – she was embarrassed
by not knowing basic general knowledge and references in her
native country.
639
Parents responsible for the care of their own elderly parents
back home – an increasingly common phenomenon – also face
challenges. Thus, everyone in the family is affected. In view of the
complexities of interpersonal relationships – even within a single
family – decisions to move should not be taken lightly.
Different types of family challenges characterize short-term
assignments, unless the family can accompany the expatriate. If
that is not the case, the equilibrium of the family is disrupted by
the absence of a partner or parent. It may be hard for spouses to
comprehend the unfamiliar experiences confronting the expatriate.
As discussed above, the manager is likely to be working long
hours under pressure, and may be subject to high levels of stress,
further straining communication. Frequently the manager retains
some responsibilities back home, and after a long day at work
may spend hours in a hotel or apartment room, answering e-mails
and on the phone with the home country in a different time zone.
On the other hand, the spouse at home is left with the sole
responsibility for the house and family, and must pick up the slack
left by the partner and assume new roles. Not all couples can
manage this transition or adapt back when the assignment is over,
creating resentments on both sides. All of this may weaken family
ties, and a high divorce rate is associated with this type of
assignment. Of course, if the personal life of the manager
crumbles, it may also jeopardize the success of the assignment
(see Exhibit 10.3). The two are typically highly intertwined.
Exhibit 10.3 Family considerations in global assignments
640
Long-term assignments
Short-term
assignments
Managers
Some companies prefer
managers with overseas
experience for promotion
consideration.
Manager may lose
friends and connections,
both at parent company
and in local community.
High levels of stress
due to combined
pressures from home
and abroad, and
limited social support
while abroad.
Spouses
Spouse typically
relocates with expatriate
partner. Dual-career
challenges can be
accentuated significantly.
Spouse may lose contact
with extended family,
friends, and support
group.
While family may reside
together, considerable
stress can still result from
raising children in
unfamiliar settings.
Spouse typically
remains at home, while
manager-partner is
continually on the road.
Ongoing stress
between partners can
result from repeated
separations.
641
Long-term assignments
Children
Children frequently
relocate with parents;
keeps family together.
Children have numerous
opportunities to learn
about other cultures,
make new friends, learn
new languages, develop
multicultural competence,
etc.
Like parents, children
often go through culture
shock, requiring
significant adjustments to
new location and
changed circumstances
(e.g., missing old friends,
dislike of local foods,
etc.).
Also like parents, children
often go through stresses
of repatriation (e.g.,
readjusting to old school,
old friends, etc.).
Short-term
assignments
Children typically
remain at home with
one parent, friends,
and extended family,
but without traveling
parent.
Less change and
potential turmoil for
children.
No culture shock or reentry problems for
children.
Expatriate may
damage relationship
with or lose influence
over children due to
repeated absences
unless keeps in
constant touch.
An additional problem facing short-term assignees and
companies alike is that often the original assignment was
conceived for a short period and a specific project, but, as the
project develops, it is enriched and enlarged, or unforeseen
problems can emerge, resulting in extensions of the assignment.
It is estimated that more than half of short-term assignments are
642
extended to eighteen months or longer,30 and once the employee
is involved in the project and in the foreign location it may be
difficult to go back home. This creates a difficult situation in which
the manager may feel stuck in a foreign country and experience
family problems. From the company point of view, it is not
necessarily better, as the costs of the position may rise quickly.
Common concerns in this regard are taxes, social security
payments, and work permits – issues that are frequently
overlooked by managers making a decision to extend an
assignment, but ones that should be taken seriously by both the
assignee and the company.
643
Career Considerations
Finally, we have to consider the implications of global assignments
– both long and short term – on careers. As illustrated in Exhibit
10.4, long-term assignments have pros and cons. They may
cause managers to lose touch with their home base and home
network. Simply put, they might become forgotten. This is true
whether people work for global corporations or on their own as
entrepreneurs. Even so, such assignments can lead to learning
and skill development that may prove to be an asset back home.
Exhibit 10.4 Career considerations in global assignments
Long-term assignments
Short-term assignments
Difficult to maintain
connections, especially with
headquarters turnover,
possibly making it more difficult
to return.
Need to maintain
responsibilities and
relationships at home office
while abroad, leading to a
double workload.
Difficult to keep up with home
office changes (e.g., changes
in processes or technology),
possibly making it more difficult
to return.
Need to hit the ground
running; no time to learn
about the new country; must
get down to work quickly.
Out of sight, out of mind. May
miss out on important
promotion or other
opportunities.
Limited time to learn and
adjust. High pressures to
perform can lead to stress
and possible failure.
644
Long-term assignments
Short-term assignments
International experience and
opportunity to develop
multicultural competence may
be an important asset for future
career advancement.
Good way to gain
international experience
without unsettling the family
or making long-term
commitments.
Have more time to learn and
adjust to foreign culture, but
need to adjust is more acute as
success depends on
establishing local connections.
Breadth of knowledge
acquired from various shortterm international
assignments may be an asset
back home.
At the same time, short-term assignments also have pluses
and minuses. As already noted, many managers sent on shortterm assignments carry part of their home job assignments with
them, causing additional work and dividing their focus and
attention. Moreover, there is little time to adjust to the new culture
(or cultures, in the case of frequent flyers). Short-term
assignments often allow managers to experience foreign countries
and meet new people without actually moving overseas, however.
There are many good opportunities for personal and professional
development, as well as networking. Perhaps the critical issue
here is the extent to which global managers make use of their
assignments for the benefit of the various parties concerned,
personal and organizational alike. Both types of assignment allow
expatriates to develop global knowledge and a global network,
which are valuable career assets for future use.
Whenever an overseas assignment is a possibility, we have
to carefully study all three of these considerations – personal,
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family, and career. Think about it for a moment: If you were offered
an attractive promotion to go to Kenya to open a new field office
for your company, what would you need to ponder? Do you have
the right personal qualifications? Let’s say you have a spouse and
two middle-school children. How would it affect them (or your own
family)? Is the timing right? And, lastly, how does this affect your
career? How would you decide whether to accept the promotion?
If you accepted it, how would you prepare?
Management Application 10.2 Promotion to Kenya
1. As you consider the offer, what is the most
important information you will need to make a good
decision for yourself and your family?
2. How will you get accurate and useful information on
these issues prior to your departure?
3. What are the principal challenges you will face in
moving to Kenya? Explain.
4. After you arrive in Kenya, what will you do to get
yourself and your family settled?
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Finding Your Way: Coping with
Culture Shock
Living in a foreign country suggests that individuals are caught
between two cultures. On the one hand, there is the individual’s
culture of origin, which has provided them with assumptions,
skills, behavioral preferences, and ways of thinking that have
contributed to their position in life. For example, a manager
selected for a foreign assignment is often perceived as a
successful manager at home, and has achieved this position by
doing things in a particular way. On the other hand, behaviors that
have contributed to success at home may not be appreciated –
and may not be successful – in a foreign country. When two or
more cultures come into contact, cultural friction (see Chapter 2)
can result, requiring a process of adjustment.
Most people naturally and unconsciously adapt their behavior
in order to adjust to new external environments. But this
adaptation does not always improve the fit between individuals
and their environment. While most people change as a result of
living in a foreign country, it does not necessarily mean that they
change to be more like the people in the host culture.31 Indeed,
some people may become more attached to their original culture
and more ethnocentric than they were beforehand. Expatriate and
ethnic enclaves are not uncommon, and some people spend
many years in a foreign country without ever assimilating local
values or even learning the local language. For this reason, it is
helpful to understand two processes of adaptation to a foreign
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culture: psychological adjustment and acculturation. We begin
with an important question: What is psychological adjustment, and
how is it accomplished?
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Psychological Adjustment
Psychological adjustment is the process of developing a way of
life in the new country that is personally satisfying.32 This can be
challenging since immersing oneself in a new environment often
results in some level of stress resulting from information overload,
a breakdown in one’s capacity to make sense of the environment,
and the need to learn a new way to go about everyday tasks. In a
foreign environment, people cannot use their past experiences to
accurately interpret and respond to cues, and their behavior may
not produce the expected results, causing heightened anxiety and
frustration. In addition, seemingly minor things, such as an
inability to find one’s favorite food or perform simple tasks such as
understanding a menu, making a phone call, or using public
transportation, can cause confusion and a feeling of losing control.
Individuals can face a state of internal disequilibrium created by
the realities imposed by the new culture and the expectations
based on the old. This disequilibrium often forces them to
question their behavioral habits and can lead to emotional feelings
of anxiety, stress, and confusion that are often referred to as
culture shock.33
Culture shock can take many forms, from a psychological
sense of frustration, anxiety, and disappointment to full-fledged
chronic
depression.
Some
individuals
may
experience
physiological responses such as insomnia, headaches, or other
psychosomatic symptoms. Even so, culture shock is not a
disease. Rather, it signifies that an individual is trying to come to
terms with their new environment – a good starting point for
649
psychological adjustment. As such, the question is not how to
avoid culture shock, but how to manage it.
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Culture Shock in Luogang: An Example
When American journalist Peter Hessler was invited for lunch in
the rural Chinese village of Luogang in Guangdong province, he
was in for a surprise. After sitting down at a table in the Highest
Ranking Wild Flavor Restaurant, the waitress asked him bluntly,
“Do you want a big rat or a small rat?” Unsure of what to do,
Hessler asked the waitress what the difference was, and was
informed that the big rats eat grass while the small rats eat fruit.
Both tasted good, he was assured. As he contemplated his
choice, Hessler looked at the people sitting at the next table. A
young boy was gnawing on a rat drumstick, but he couldn’t tell
whether it was from a big rat or a small one. After asking himself
how he got into this predicament, he finally made a decision: a
small rat. He chose an item from the menu called Simmered
Mountain Rat with Black Beans. He selected this over other
possibilities, including Mountain Rat Soup, Steamed Mountain
Rat, Simmered Mountain Rat, Roasted Mountain Rat, Mountain
Rat Curry, and Spicy and Salty Mountain Rat.
The Chinese say that people in Guangdong will eat anything.
Besides rat, people at the Highest Ranking Wild Flavor
Restaurant can order turtle dove, fox, cat, python, and an
assortment of strange-looking local animals whose names don’t
translate
into
English.
Selecting
a
menu
item
involves
considerations beyond flavor and texture. You order cat not just
because you enjoy the taste but also because cats are believed to
impart a lively jingshen (or spirit). You order a snake because it
makes you stronger. You order the private parts of a deer to make
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you more virile. Why would you eat a rat? Because it will keep you
from going bald and make your white hair turn black.
After a few minutes, the waitress asked Hessler to come back
to the kitchen and select his rat. In the back of the kitchen, he saw
several cages stacked on top of one another. Each cage
contained about thirty rats. “How about this one?” the waitress
asked. “Fine,” Hessler replied. The waitress then put on a white
glove (presumably for hygiene purposes) and grabbed the chosen
rat. “Are you sure this is the one?” she asked. The rat gazed at
Hessler with its little beady eyes. He nodded his approval. Then
the waitress grabbed the rat by its tail and flipped her wrist,
thereby launching the rat through the air until it landed on its head
on the concrete floor with a soft thud. There was little blood.
Hessler was told that he could return to his table; lunch would
arrive shortly.
Waiting for his meal to come, Hessler had an opportunity to
speak with the owner of the restaurant. The first thing he noticed
was the owner’s full head of thick black hair. The owner said that
local people have been eating rat for more than 1,000 years. His
customers insist on eating rats from the mountains, however,
because they are clean; they won’t eat city rats, he insisted. He
assured Hessler that the government hygiene department came
by regularly to inspect his rats and had never found anything
wrong. Before walking away, the owner smiled and said that you
couldn’t find food like this in America.
When lunch was finally served, Hessler tried to think of this
as a new experience. He tried the beans first, and they tasted fine.
Then he poked around at the rat meat. It was clearly well done
and attractively garnished with onions, leeks, and ginger. Nestled
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in a light sauce were skinny rat thighs, short strips of rat flank, and
delicate tiny rat ribs. He hesitantly took his first bite and found the
meat to be lean and white without a hint of gaminess. It didn’t
taste like anything he had had previously. It tasted like rat.
Fortunately, he had lots of beer to wash it down.
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Management Application 10.3 Culture Shock in Luogang
1. Not everyone would have eaten something that is
not considered a food in their own culture, as Hessler
did. What made him willing and able to do this?
2. What would you do if you were faced with the
situation that Hessler experienced at the Luogang
restaurant, especially if an important Chinese client
had invited you to the restaurant?
3. Have you ever had a similar experience in another
culture when you were pressured to eat or do
something that was acceptable – or even required – in
the local culture but that you found uncomfortable?
What did you do? What considerations drove your
decision?
4. Are there aspects of your own home culture that
foreign visitors might find offensive or uncomfortable
for some reason? If you can’t think of any, ask people
from other cultures or search on the Internet. What
might you do to put your foreign guests at ease in this
situation?
5. Think about your eating habits and food
preferences. How easy would it be for you to live in a
foreign country with drastically different cuisine?
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Stages of Psychological Adaptation
The process of psychological adjustment to a new culture can be
quite personal and can vary widely depending on individual
characteristics, the cultures involved, and the particulars of the
situation. Nevertheless, knowledge of common stages in the
process of adaptation is helpful in coping and understanding one’s
feelings while abroad. One of the most popular models of
adaptation to a foreign culture suggests four distinct stages:
honeymoon, disillusionment, initial adaptation, and adaptation
(see Exhibit 10.5):34
1. Honeymoon. Upon first arriving at a foreign location,
expatriates may experience a great deal of excitement.
Things are interesting, sometimes beautiful, and often
amusing. The fascination with new things makes the
difficulties and differences encountered seem relatively minor,
and people often overestimate the ease of adjustment to the
foreign culture. This period can last from only a few days to
several months, depending on the person, the nature of the
assignment, and the degree of similarity between the home
and host countries. Many expatriates report that the
honeymoon happened before arrival at the foreign location, or
not at all. Some suggest that while many individuals
experience excitement upon arrival at the foreign location,
these feelings may be overwhelmed by the stresses
associated with settling in and coping with the differences in
lifestyle.35
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2. Disillusionment. After the honeymoon period is over and
the initial euphoria or excitement has faded, the differences in
lifestyle, lack of comfortable food, and difficulties coping with
the uncertainties of the new environment cease to be
amusing and become irritating. These difficulties can become
magnified, and people often feel overwhelmed and
psychologically exhausted. This is the most difficult stage in
the cultural adaptation process. Many individuals give up at
this stage and return home, while others remain in the foreign
surroundings but withdraw emotionally, refusing to speak the
local language or interact with locals. Some may even adopt
dysfunctional coping behaviors, such as excessive drinking or
drug use.
3. Initial adaptation. During the third stage of initial
adaptation, people begin to understand the new culture and
adjust to everyday living. This stage can still be characterized
by mood swings, but their magnitude or intensity is less
pronounced than during the disillusionment stage.
4. Adaptation and biculturalism. Finally, expatriates begin
to gain confidence in their ability to function productively in a
new culture and experience a sense of stability, comfort, and
competence. Biculturalism signifies comfort and proficiency
with both one’s heritage culture and the culture of the country
or region in which one has settled. Biculturals are more aware
of cultural differences, are good at mediating between other
cultures, have more social networks, are more creative and
innovative, and have greater career success than people who
identify only with their heritage culture.36
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Exhibit 10.5 Stages in psychological adaptation to a new
culture
Another way to think about culture shock is to consider that
the stress associated with adjusting to a new cultural environment
is not unlike other types of stress caused by a mismatch between
our internal capabilities and new demands of the environment
(e.g., starting a new job, starting college, or having a child). As is
the case with other types of stress, adapting to a new cultural
environment offers a unique opportunity to change and recreate
ourselves. As we strive to maintain a functional relationship with
our surroundings, we make internal changes and adjustments.
This process of adaptation and growth is cyclical and continual:
each stressful experience leads to some adaptation on the part of
the individual, which will often lead to internal growth. The stress–
adaptation–growth process continues as long as there are new
environmental challenges, but tends to be less severe over time
as the major changes are likely to be experienced in the early
stages of the foreign assignment (just as the first semester at
university may be more emotionally challenging than later years,
even if courses become harder and workload increases).
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The degree and pace of adjustment to the foreign culture will
vary from person to person, depending on many variables such as
individual
expectations,
personal
characteristics
and
circumstances, and the characteristics of the host environment.
Unrealistic expectations. Disillusionment is often
magnified by individuals’ unrealistic expectations about
what the experience in the foreign country is likely to be.
Many people find the prospects of living in an exotic
location appealing but fail to prepare for easy-to-know
realities of life such as the traffic, weather, and other
features of daily life. For example, a manager may find it
appealing to be surrounded by lush tropical vegetation but
fail to consider the mosquitoes that invariably come with it.
Individuals may also underestimate the cultural differences
or overestimate their own abilities to cope, adjust, and learn
a new language or ways to live in a new environment.
Personal characteristics. People are different in how
readily they adapt to new situations, how easily they
develop new relationships, and how comfortable they are
with ambiguity and temporary loss of control. Likewise,
individual circumstances vary widely and may help or
hinder adaptation. For example, individuals moving with
family may have higher emotional support, but face more
challenges in settling in a spouse and children than
someone moving alone. Individuals with prior experience in
the country and knowledge of the language may find it
easier to adapt than others. The expected length of the
assignment may also influence how culture shock is
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experienced. For instance, the difficulties in practicing a
favorite sport or hobby may not bring much frustration in a
three-month assignment, but may be a major source of
concern in a permanent relocation.
Host environment. The local host environment in which
the expatriate is immersed has an important role in shaping
the process and degree of adjustment. For example, some
countries are more open to foreigners than others and have
developed an infrastructure to support foreigners, in the
form of language training, information centers, and support
groups. There may also be important variation within the
same country. It may be relatively easy to speak English to
get around in large cities or tourist centers, but not in
smaller towns. Cultures also vary in the extent to which
they tolerate difference and embrace multiculturalism. In
some cultures differences are valued and appreciated, and
it is not expected that people will let go of their own cultural
norms, while in others a stronger emphasis is placed on
fitting in. The organization hosting the expatriate also plays
an important role. If a Canadian manager is in Thailand
working for a Canadian organization, the experience is
likely to be different if the same manager worked for a Thai
firm.
A key question surrounding the ease of adaptation is whether
expatriates can improve their adaptation skills after multiple
assignments. On the one hand, experience is helpful, because
individuals learn how to enter a new culture and cope with culture
shock, gain confidence, and may not feel as stressed by the
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prospects of settling in a foreign environment. On the other hand,
however, overconfidence may be a hindrance if one overlooks
important details and fails to prepare appropriately. Additionally,
some expatriates report fatigue after several international
assignments, and lose interest in learning yet another language
and culture, and taking the time to develop relationships in a
foreign country they expect to leave soon.
660
Coping with Culture Shock
Culture shock cannot be avoided, but it can be alleviated to some
degree through proper advanced preparation.37 This preparation
includes aligning expectations by understanding both the host
environment and oneself. The more that expatriates understand
about the local environment, including the local culture and
organizational demands, the easier the transition is likely to be.
Similarly, the more that expatriates know themselves and
understand why particular things upset them, the better they can
handle difficult situations. Making local friends and creating a new
life as quickly as possible helps to mitigate culture shock. The
Manager’s Notebook below contains other helpful strategies.
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Finding Your Place: Acculturation
Strategies
British author Robert Louis Stevenson observed that “There are
no foreign lands; it is the traveler only who is foreign.”38 Canadian
resident Peeyush Agnihotri’s comment at the beginning of this
chapter about rebooting your life certainly reinforces this
observation. At the heart of this challenge is a simple question:
How do people acculturate themselves to their new surroundings?
The process of successfully adapting to a new cultural
environment is referred to as acculturation, the psychological
and behavioral changes resulting from contact with another
culture, such as adopting new cultural practices or learning the
language.39 Through trial and error, people adjust their behaviors
to fit the new environment better, either by learning how to behave
like the locals or finding an alternative behavior that is both
comfortable and acceptable. For example, at home the individual
may be used to speaking bluntly, but the culture of the new
environment may be one that praises subtle and indirect
communication. Although some people may find it difficult to
speak indirectly, they may learn to look for contexts within the
foreign environment in which direct comments are more
appropriate, such as outside the office environment or in one-onone conversations (see Chapter 5). Thus, effective expatriates
also unlearn cultural practices from their home culture.
Another factor affecting acculturation is the extent to which
expatriates mingle with the local population. People usually vary in
662
the degree to which they are buffered from the local culture. For
example, some expatriates live, work, and socialize primarily with
other expatriates, while others are deeply involved with host
country nationals. Some of this is a matter of choice, but at other
times expatriates must get socially involved with local employees,
managers, business partners, and so forth, in order to do their
jobs effectively.
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Acculturation Strategies
If you take a close look at any expatriate community, you will see
very different ways of relating to the host country. Some
expatriates have local friends, live in a regular neighborhood, and
speak the local language. Others live buffered in expatriate
enclaves and have virtually nothing to do with the host culture
beyond work. Still others have “gone native” and avoid people
from their heritage culture. These are all examples of acculturation
strategies.
In reality, acculturation is seldom absolute. Even after many
years, people may incorporate host culture practices and fit in
perfectly at work and the community but still retain social values or
assumptions from their own culture in more private realms. For
example, people who seem to be completely acculturated may opt
to marry within their own culture and retain some aspects of their
original culture at home. This is an example of being publicly
assimilated with some degree of separation from the host culture
in private. Here are three strategies of acculturation available to
global managers (see Exhibit 10.6), but in reality, individuals might
navigate
among
these
strategies,
depending
on
specific
situations:40
Separation. At this extreme, managers can try to hold on
to their home culture and refuse to adopt practices or
interact with the local culture, limiting their interaction with
locals to the necessary minimum. These are expatriates
who prefer to live in expatriate enclaves, do not learn the
local language, and reconstruct a life that resembles the life
664
they would have at home. Managers adopting this strategy
may have a difficult time building rapport with the local
workforce and community. Depending on their job
requirements, however, they may very well be able to
perform their duties satisfactorily.
Assimilation. At the other extreme, managers can work to
assimilate in the local environment and “go native.” They let
go of their original cultural habits and assumptions, and
incorporate the habits and assumptions of the new cultural
milieu. Managers moving permanently to a foreign location
may find this strategy appealing, as it decreases the
opportunities for cross-cultural conflicts. On the other hand,
it may prove challenging to return home if needed.
Sometimes completely letting go of the home culture may
not be possible, and, depending on the reason for the
assignment, it may be counterproductive. Often managers
are sent abroad to promote changes in the foreign location,
and excessive assimilation of the local culture may be seen
as an obstacle.
Integration. In between assimilation and separation,
managers employing an integration strategy work to
integrate both cultures. They are able to retain important
aspects of their home culture while at the same time
building successful relationships in the local environment.
An undervalued aspect of cultural adaptation is that an
individual’s original culture can be an important resource.
Within each culture, people develop skills and habits that
can be useful in other circumstances and constitute an
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important advantage in the host environment. For example,
a Brazilian manager who is used to a polychronic
environment in which they are expected to perform many
tasks simultaneously may prove a useful resource in highly
dynamic situations. Integration is only possible, however,
with the participation and collaboration of the host culture. If
individuals in the host culture are unable to accept and
value the behaviors of the foreign culture, integration may
be difficult to achieve. Although at first glance it may seem
that integration is the best strategy and should be chosen
by all managers, host cultures vary in the degree to which it
is possible. Some cultures are open to multiculturalism
(e.g., in Canada) and make this option possible, while in
other environments the pressures to fit in are higher, and
managers who fail to assimilate tend to be separated from
the environment.
Exhibit 10.6 Acculturation strategies to local cultures
The most common strategies utilized by expatriates are
integration and separation. Acculturation can be influenced by
cultural distance. For instance, expatriate blogs by Americans
living in Asia revealed more “feelings of otherness” than those of
Americans living in Europe. Instead, the latter group was more
likely to report their efforts to look “less American” to fit in.41
Americans and Europeans have less cultural distance and, in
666
some cases, their shared cultural heritage might make it easier for
Americans to “pass” as Europeans and avoid attention.
667
Acculturation Strategies at Royal Dutch Shell: An
Example
Royal Dutch Shell is a global petroleum company with joint
headquarters in London and The Hague. The company employs
over 100,000 people, approximately 5,500 of whom live and work
abroad at any given point in time. Shell’s expatriate managers are
a highly diverse group, representing over seventy nationalities and
working in more than a hundred countries. The company supports
this because it realizes that as a global company, success
requires the international mobility of its workforce.
Over time, however, Shell found it increasingly difficult to
recruit and retain key personnel for overseas assignments. To
understand the problem, Shell surveyed 17,000 current and
former expatriate managers, expatriates’ spouses, and employees
who had declined international assignments. According to the
survey results, five key issues had the greatest influence on the
willingness of employees to accept an international assignment. In
order of importance, these were:
1. Separation from children during their secondary education
(the children were often sent to boarding schools in their
home countries while their parents were away).
2. Harm done to a spouse’s career and employment.
3. Failure to recognize and involve spouses in the relocation
decision.
4. Failure to provide adequate information and assistance
regarding relocation.
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5. Health-related issues, such as access to good hospitals, or
the ongoing ailment of a family member.
As a result of these findings, Shell implemented a number of
programs designed to make it easier for employees to go abroad.
To help with the education of children, Shell built elementary
schools for employees in locations with heavy expatriate
concentrations, such as Nigeria. For secondary education, they
worked with local schools, often providing grants to help upgrade
their facilities and educational offerings. They also offered
employees an educational supplement for parents wanting to
send their children to private schools in the host country. Helping
spouses find suitable employment proved to be a more vexing
problem. According to the survey, half of the spouses were
employed when the international assignment was made, but only
12 percent were able to find suitable work after arriving in their
new location. Shell established a spouse employment center to
address the problem. The center provides career counseling and
support in locating employment opportunities, both during and
immediately following the overseas assignment. The company
also agreed to reimburse up to 80 percent of the costs associated
with vocational training or reaccreditation.
Finally, Shell established a global information and advice
network, known as the Outpost, to provide support for families
contemplating
overseas
assignments.
The
Outpost
is
headquartered in The Hague and now runs forty information
centers in more than thirty countries. Staffed by spouses and fully
supported by Shell, this global network has helped more than
1,000 families prepare for overseas assignments. The center
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recommends schools and medical facilities, and provides housing
advice and up-to-date information on employment, overseas
study, self-employment, and volunteer work. Clearly, Shell is
working hard to provide a supportive work environment for its
global employees in a way that also facilitates the long-term
objectives of the company.
Management Application 10.4 Acculturation Strategies
at Shell
1. What is Shell’s acculturation strategy – separation,
integration, or assimilation? Why?
2. How have Shell’s actions helped facilitate the
acculturation challenge for the company’s employees
and their families?
3. What additional benefits accrue to Shell besides
taking better care of their expatriates and their
families?
4. How would you evaluate the actions taken by Shell
to make lives easier for expatriate employees and their
families? What other actions might Shell take to
improve the overseas environment for their
employees?
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Managing Repatriation
Repatriation refers to the process of returning expatriates to their
home countries. Occasionally this causes as much culture shock
as expatriation. When that happens, it is called reverse culture
shock. Unfortunately, organizations and managers alike often
overlook its effects because it is less understood than culture
shock.
Reverse culture shock may result from dissatisfaction with the
job or old way of life in the home country. The excitement of
foreign travel is gone. Sometimes an expatriate returns to their
previous job and feels demoted or bored. At other times the
employer
may
have
undergone
major
changes
and
the
expatriate’s skills are no longer useful or valued. In addition,
superiors and colleagues may not understand or value the
international experience or the skills acquired abroad. Re-entry
can also be challenging on a personal level. Family and friends
may have moved, made new friends, or acquired new interests,
and are no longer as available as they were before departure.
Finally, sometimes the expatriates themselves have changed
significantly. They have incorporated new values, habits, and
worldviews that may be at odds with their old friends at home. At
the extreme, they can become foreigners in their own land. As
one repatriate said after returning from a foreign internship, “the
hardest part for me [returning home] was reconciling how much I
had experienced and therefore changed with people and things
that had remained the same at home.”42
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To reduce the difficulties associated with re-entry, many
companies actively help expatriates keep in touch with their
colleagues back home at company headquarters. In some cases,
expatriates still participate in meetings virtually or continue
reporting to the same boss. Other mechanisms include special
newsletters, regularly scheduled home visits, special web pages
focusing on expatriate concerns, and assigning HRM specialists
to oversee both overseas assignments and repatriation activities.
Multinational firms that are concerned about retaining expatriates
try to avoid the “out of sight, out of mind” syndrome for
expatriates. Sometimes, however, the major responsibility falls on
the expatriates themselves to guarantee that this does not occur,
by keeping in touch and maintaining their network at the home
office.
Here’s a typical repatriation story in a company that,
unfortunately, had no repatriation policies in place. After working
as an entry-level marketing representative for an Australian
kitchen appliance company for three years, Andrea Walker was
offered a promotion and an overseas assignment to Belize as the
local marketing manager. She readily accepted the opportunity, in
order to gain both global business experience and greater
corporate recognition. She spent three years in Belize, developing
good contacts and building markets for her employer. She learned
a lot about culture and work procedures in the region around
Belize that she felt would be of use to her employer as a global
manufacturer of consumer products. When she determined that it
was time to return home for her daughter’s schooling, however,
her employer seemed less than enthusiastic. The executive who
had originally hired her was no longer with the company, and
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other managers at the home office preferred to work with their
own protégés. Some managers observed that they couldn’t
remember Andrea except through her periodic market summary
reports. Even so, Andrea had a written contract guaranteeing that
she could return to corporate headquarters following her threeyear assignment.
Management Application 10.5 Returning Home
1. If you were in Andrea’s position and concluded that
there was little enthusiasm for your return to corporate
headquarters, what would you do? Why?
2. If you were company management, and recognized
that few people were enthusiastic about Andrea’s
return, what would you do? Why?
3. What might the company have done differently to
take full advantage of Andrea’s work experience
abroad?
4. What might Andrea have done differently to retain
contacts and communications with the home office?
At the other extreme, repatriates in global companies with
good repatriation policies in place are highly valued. For example,
IBM hit upon a strategy of becoming a globally integrated
enterprise several years ago. They tried to align all aspects of the
organization with that strategy. As a result, when an international
lawyer was repatriated, he was welcomed with open arms and
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utilized as a source of valuable knowledge – not only by people in
his department, but by employees throughout IBM. He received
numerous calls from other work units around the world requesting
advice and information on a regular basis. IBM has an
organizational culture that promotes learning and sharing
knowledge, along with managers who value repatriates.
In a global knowledge economy, expatriates and repatriates
are a scarce and valuable resource. Yet, some companies
overlook them and fail to harvest their knowledge in any formal
way. As a result, the degree of repatriate turnover is a concern,
especially since the company investment in their development is
very expensive and they may end up working for competitors.
Among the reasons repatriates give for resigning is not being able
to use their global knowledge and skills. Only 18 percent of
companies in a large global mobility survey had a formal
repatriate strategy tied to career management and retention, and
only 19 percent had initiatives to provide greater opportunities for
repatriates to utilize their international experience.43 In other
companies, it is up to the repatriates to find a suitable re-entry job.
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Manager’s Notebook Managing Global Assignments
The key lesson for expatriates and repatriates is that you
have to be proactive about your assignment and career.
For example, if you are interested in a global assignment,
remember to communicate this frequently to your boss and
others in the company; this is how 90 percent of
expatriates obtained their assignment, according to
research. While having multicultural competence or prior
international
experience
might
make
you
a
better
candidate to be successful, research suggests that this is
not as important as reminding people that you want to work
abroad. Remember that not all companies have databases
with lists of potential expatriates, or have pre-departure
and in-country training, or carefully assign repatriates to
jobs that allow them to use their global experience. They
should, but if not, you can pick up much of the slack,
armed with the knowledge in this chapter. Once you’ve
been offered an assignment and accepted it after carefully
considering its personal, family, and professional impact,
it’s time to plan how to make the most of it.
In Alice’s Adventures in Wonderland, British author
Lewis Carroll makes an important observation: if you don’t
know where you are going, any road will take you there.44
So it is with international travel, living, and working. Goals
and plans in the pre-departure, in-country, and re-entry
periods are essential in order to succeed. The challenge
for global managers is to find a workable balance between
675
task accomplishment on behalf of the company, and
personal growth and development on behalf of themselves.
Ideally,
these
two
goals
should
be
mutually
complementary, but this seldom occurs without planning.
Exhibit 10.7 contains useful strategies.
Exhibit 10.7 Strategies for managing global assignments
1 Prepare before departure
There are many things that individuals – and families – can
do to prepare themselves for an easier transition. Most of
these are not difficult, although some take more effort (e.g.,
learning the local language). Nevertheless, the more that
people can learn about their new environment prior to
arrival, the more prepared they will be to settle and get
down to work.
Begin learning about the new environment. It’s
always wise to learn as much as possible in advance to
build realistic expectations. This ranges from knowing
what to pack to understanding the major challenges of
life and work in this particular foreign setting. Reading up
on the history of the country and educating oneself on
676
the culture, the political situation, current events, etc. is
very important. When possible, it helps to visit the host
country for a short period prior to moving there. A quick
visit goes a long way to shape expectations and help
expatriates to be better prepared psychologically for
what is to come. If nothing else, expatriates get a more
realistic understanding and feel for what the immediate
challenges will be – traffic, pollution, language, or food.
Talking with other expatriates who have experienced the
foreign country also helps to develop realistic
expectations. However, we should not rely excessively
on others’ accounts. People and situations are unique,
and it is likely that everyone’s experience will be
different. Our perceptions of other countries are colored
by our motivations for being there, our attitudes and
expectations, our unique personal experiences, and, of
course, the degree of multicultural competence we
possess.
Reach out to prospective contacts in the new
location. It’s reassuring to have people looking out for
new expatriates, both for social reasons and to ask
questions that aren’t always answered in country
descriptions. In addition to informal contacts one may
have, some companies assign a sponsor or mentor to
help incoming expatriates; others hire relocation services
to ease the transition and find housing, schooling,
children’s activities, and jobs/activities for a spouse.
677
Get cross-cultural training. Ideally, an expatriate would
learn at some point how all the topics covered in this
textbook relate to the country in question. Orientation
training should at least cover the cultural values,
intercultural communication styles, and realistic
expectations.
Learn basic vocabulary. If locals speak a language
other than yours, master the basic words for politeness
(greetings, please, thank you, excuse me) and survival
(asking for directions, bathrooms, and perhaps beer,
since many expatriates seem to brag about the number
of languages in which they can order beer!).
2 Build in-country initiatives
Make friends and get yourself/family involved. Local
friends and activities are a source of cultural learning
and social acceptance. They represent the first building
block to adjustment. At this stage, decisions have to be
made about your acculturation strategy. Your choice of
living situation, schools, social clubs, and activities all
determine whether you will be assimilated, integrated, or
separated. Expatriate communities are usually very
welcoming to all nationalities, because they understand
the need for belonging and involvement, especially for
spouses and children. An American couple in Munich
established a children’s soccer program solely to create
a community for expatriate children and parents of all
nationalities. At the other end of the spectrum, an
678
expatriate dealt with the shock of moving to Argentina by
hiding out and even sleeping in his office for the first two
months. Meanwhile, his wife was left to get the family
settled in by herself.
Find a cultural mentor. Look for someone who is willing
and able to provide answers when you have questions
about the local culture or your organization. Good
cultural mentors usually have international experience of
their own, allowing them to recognize and interpret
cultural differences as well as the reasons behind them.
Expatriates with cultural mentors often perform better at
work.45
Be prepared for culture shock. The first six to eight
months could be somewhat difficult until you become
adjusted and have all the moving logistics under control.
Getting settled and making local friends as quickly as
possible helps. It’s wise to avoid expatriates who always
complain about the country and its culture. Instead,
focus on positive aspects and avoid making negative
comparisons with your own country.
Continue learning and developing your multicultural
competency. The more you know about the other
country’s history, socio-economic situation, and culture,
the better your chances at accurately making sense of
their behavior. This, of course, helps in both adjustment
and being effective at work. In-country training is
extremely useful because it can answer the expatriate
questions and dilemmas in real time. Expatriates need to
679
understand local business practices and organizational
structures, ethical behavior, and how they lead,
negotiate, and behave in teams. In the process of
learning and adjusting, expatriates often discover a need
to develop specific multicultural competencies (e.g.,
openness, empathy, mindfulness, behavioral flexibility,
etc.) to be effective. Some manage to do this on their
own by setting goals; others seek the help of coaches or
mentors.
Learn the local language. As we’ve discussed earlier in
the chapter, some degree of fluency in the local
language is clearly a benefit for expatriates. Fluency
facilitates increased contact with locals and greater
understanding. Locals are often more receptive to
foreign visitors if they speak the local language, even if
only in a rudimentary way. Interestingly, research has
shown that learning new languages facilitates cognitive
flexibility – a critical asset for managers who work and
move around the globe.46 Language learning requires
time and effort. It may not be possible for short-term
assignments or regional jobs involving multiple
languages and frequent travel.
Maintain work contacts. Keep in mind the “out of sight,
out of mind” syndrome and maintain contact with people
at headquarters or your former worksite. Take advantage
of trips home to schedule meetings and explain your
work.
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3 Plan in advance for re-entry
Manage expectations. The return home is not always
what repatriates expect. Experienced repatriates, who
have returned more than once, treat going home as if
they were entering another foreign culture. They learn to
lower their expectations, expect surprises, and try to
move quickly beyond any failed expectations.
Sometimes expatriates idealize home, only to discover it
is not exactly as they remembered. Repatriates may also
learn that people at home are not necessarily riveted by
their fascinating foreign stories, especially if they have
no context to understand them.
Earn trust and acceptance. In companies without a
strong global emphasis and unskilled at managing
repatriates, managers may have to re-earn the trust and
acceptance of their work group and superiors. If they
have been forgotten while on assignment, co-workers
may not understand what an expatriate experience is
like or why repatriates are so valuable to a global
company.
Find a well-suited re-entry job. Repatriates are less
likely to resign if they are placed in a re-entry job that
allows them to utilize their global expertise, and if their
manager understands the valuable knowledge they bring
home. Furthermore, many expatriates enjoy the
challenges experienced abroad and are more
comfortable with a similar level of challenge in their re-
681
entry job. If that is not the case, they can readily find a
more suitable job in another global firm.
682
Chapter Review
683
Summary
There is no such thing as a “standard” global assignment.
In addition to short- and long-term assignments, some are
now virtual or commuter assignments. A growing number
are self-initiated rather than triggered by organizations.
Furthermore, the country or countries where global
assignments take place also vary. As such, the adaptation
process and the requisite skills for individual assignments
can be very different.
Expatriates have to be proactive about obtaining an
assignment, taking full advantage of the in-country
experience, and managing their re-entry.
Working abroad has numerous positive benefits and
opportunities such as personal development, learning, and
adventure. However, it can also involve challenges such as
difficulties in cultural adjustment, family adaptation, and
lack of local and social support. It is not a good fit for
everyone, and some assignments end early.
The most common reasons for expatriate turnover are
family adjustment difficulties, poor selection of candidates,
lack of preparation, and lack of local support and
infrastructure. A common error made by companies is
selecting expatriates for their technical skills rather than
also screening for multicultural competencies.
Before accepting a global assignment, one should carefully
consider the personal, family, and career implications. Is
there a fit between the job and living situation on the one
684
hand, and the individual’s motives and competencies on
the other? Does the family situation match the living
environment? What effect is the assignment likely to have
on the expatriate’s career, and how does this company
treat expatriates and repatriates?
Some expatriates spend many years in a foreign country
without ever assimilating local values or even learning the
local language. Their acculturation strategy is separation
from the local culture and strong attachment to their original
culture, which is why we commonly see expatriate
enclaves. Other expatriates work hard to assimilate by
joining the local culture and decreasing their ties to the
original culture. Between these two extremes we find
expatriates who utilize an integration acculturation strategy
that balances both local and home cultures.
To minimize re-entry problems for expatriates, some
companies establish mechanisms for keeping expatriates
in touch with colleagues at company headquarters,
including special newsletters, regularly scheduled home
visits, special web pages focusing on expatriate concerns,
and appointing HRM global mobility specialists to oversee
both overseas assignments and repatriation activities.
The key for most major multinational firms (and most
expatriates) is to ensure that expatriates do not get lost or
forgotten when they are out of their home country. Ideally,
expatriation has to be integrated into long-term career
plans, which includes a re-entry job that takes advantage of
their global experience. Otherwise, companies may lose
685
the return on their investment if repatriates seek a job
elsewhere that allows them to utilize their global expertise.
686
Key Concepts
acculturation
biculturalism
culture shock
expatriates
global mobility specialists
home country managers
inpatriates
organizational expatriates
psychological adjustment
repatriates
repatriation
reverse culture shock
self-initiated expatriate
third country nationals
third culture kids
687
Discussion Questions
1. A fundamental challenge for managers on a new global
assignment is that they often feel decidedly like outsiders, yet they
must find ways to break into the local culture simply to do their
job. What advice would you give to a colleague about to depart on
an assignment to facilitate this process?
2. Many people like to travel but working globally can be a
different experience to a holiday. In this regard, what are some of
the risks of taking a global assignment too early in one’s career?
How can a manager determine when they are “ready” for a global
assignment?
3. In your view, can gender or age differences influence how
managers adapt to a new foreign assignment? If so, in what
ways?
4. Have you ever experienced culture shock firsthand? If so, what
happened?
5. If you were asked to develop a two-day workshop for
minimizing culture shock among a group of employees about to
set off on their first global assignment, what would this workshop
look like?
688
6. What are the advantages and drawbacks of each of the three
acculturation strategies discussed in this chapter (separation,
assimilation, integration)?
7. Why might employees returning from a global assignment have
such a difficult time readjusting to their home country? Explain.
8. A number of coping strategies are discussed at the end of the
chapter (see Manager’s Notebook) regarding how to manage
global assignments. Which of these strategies are relatively easy
for a new manager to master? Which may be very difficult? Why?
9. In your view, what are the three most important lessons from
this chapter for global managers? Explain.
689
Notes
1. Peeyush Agnihotri, “Indian immigrants to Canada,” Voices,
2017.
2. Bill Newcott, “Big boat, little boat,” AARP The Magazine,
January 2012, p. 26.
3. PwC and Cranfield School of Management study, cited in
Katia Vlachos, “Making your expat assignment easier on your
family,” Harvard Business Review, 2017.
4. Yvonne McNulty, “Why expatriate compensation will change
how we think about global talent management,” in Y. Guo, P.
Dowling, and R. Hussain (eds.), Global Talent Management and
Staffing in MNEs. Bingley, UK: Emerald, 2016, pp. 123–48; and
AIR Inc., Mobility Outlook Survey. Cambridge, MA: AIR Inc.,
2018.
5. Mark Johanson, “The secret world of danger pay,” BBC, April
12, 2016, available at www.bbc.com/capital/story/20160411-thesecretive-world-of-danger-pay. Accessed March 1, 2019.
6. Marja Tahvanainen, Denice Welch, and Verner Worm,
“Implications of short-term international assignments,”
European Management Journal, 2005, 23(6), pp. 663–73.
7. Yvonne McNulty and Chris Brewster, “The concept of
business expatriates,” in Yvonne McNulty and Jan Selmer
(eds.), Research Handbook of Expatriates. Cheltenham:
Edward Elgar, 2017, p. 30.
690
8. “Global expat numbers set to soar to 87.5m by 2021,” July
16, 2018, available at
www.financialplanningtoday.co.uk/news/item/9023-global-expatnumbers-set-to-soar-to-87-5m-by-2021. Accessed March 1,
2019; and “Global expatriates: size, segmentation and forecast
for the worldwide market,” Finacord, 2018, available at
www.finaccord.com/Home/reports/Global-Expatriates-Size,Segmentation-and-Forecas. Accessed March 1, 2019.
9. Ibid.
10. Mark Harrison, “The decline of the traditional expat?” ECA
International, May 19, 2016, available at www.ecainternational.com/insights/articles/may-2016/the-decline-of-thetraditional-expat. Accessed March 1, 2019.
11. Ibid.
12. Carla Joinson, “Cutting down the days: HR can make expat
assignments short and sweet,” HR Magazine, 2000, 45(4), pp.
92–7.
13. Helene Mayerhofer, Linley C. Hartmann, Gabriela
Michelitsch-Riedl, and Iris Kollinger, “Flexpatriate assignments:
a neglected issue in global staffing,” International Journal of
Human Resource Management, 2004, 15(8), pp. 1371–89.
14. Joyce S. Osland, The Adventure of Working Abroad. San
Francisco: Jossey-Bass, 1995.
15. Barbara Anderson, “Expatriate selection: good management
or good luck?” The International Journal of Human Resource
Management, 2005, 16, pp. 567–83.
691
16. Mark Mendenhall and Gary Oddou, “The dimensions of
expatriate adjustment: a review,” Academy of Management
Review, 1988, 10(1), pp. 39–47.
17. Shung Shin, Frederick Morgeson, and Michael Campion,
“What you do depends on where you are: understanding how
domestic and expatriate work requirements depend upon the
cultural context,” Journal of International Business Studies,
2007, 38(1), pp. 64–83.
18. Dana Ott and Snejina Michailova, “Expatriate selection: a
historical overview and criteria for decision-making,” in Ying
Guo, Hussain G. Rammal, and Peter J. Dowling (eds.), Global
Talent Management and Staffing in MNEs. vol. 32. London:
Emerald Group Publishing, 2016, pp. 1–24.
19. “The five biggest reasons for expatriate failure”, Fidi, 2016,
available at www.fidi.org/blog/5-biggest-reasons-expatriatefailure. Accessed March 1, 2019.
20. Ibid.
21. Oded Shenkar, “Cultural distance revisited: towards a more
rigorous conceptualization and measurement of cultural
differences,” Journal of International Business Studies, 2001,
32, pp. 519–35 (p. 519).
22. Ott and Michaelova, “Expatriate selection”; Barbara
Anderson, “Expatriate selection: good management or good
luck?” The International Journal of Human Resource
Management, 2005, 16, pp. 567–83; Mendenhall and Oddou,
“The dimensions of expatriate adjustment.”
692
23. Gilad Chen, Bradley Kirkman, Kwanghuyan Kim, and
Crystal Farh, “When does cross-cultural motivation enhance
expatriate effectiveness? A multilevel investigation of the
moderating roles of subsidiary support and cultural distance,”
Academy of Management Journal, 2010, 53(5), pp. 1110–30.
24. Kate Bravery, Robert Baker, and Stephanie Roche,
“Expatriate management: women in the workforce,” Mercer,
available at
https://mobilityexchange.mercer.com/Insights/article/ExpatriateManagement-Women-in-the-Workforce. Accessed March 1,
2019; Maria Bastida, “Yes, they can do it! Exploring female
expatriates’ effectiveness,” European Research on
Management and Business Economics, 2018, 24(2), pp. 114–
20.
25. Nancy Adler, “Pacific Basin managers: a gaijin, not a
woman,” Human Resources Management, 1987, 26(2), pp. 169
–91.
26. Bravery, Baker, and Roche, “Expatriate management.”
27. Scott Gummer, “Citigroup’s Wei Hopeman transcends time
zones,” Fortune, January 16, 2012, p. 21.
28. Ibid.
29. David Pollock and Ruth Van Reken, Third Culture Kids: The
Experience of Growing Up Among Worlds. Boston: Nicholas
Brealey, 2009.
30. Sue Shellenbarger, “Separation anxiety: job transfers create
problems for families,” The Wall Street Journal, October 27,
2005, p. D1.
693
31. John W. Berry, “Acculturation: living successfully in two
cultures,” International Journal of Intercultural Relations, 2005,
29(6), pp. 697–712.
32. Colleen Ward, Yutaka Okura, Antony Kennedy, and
Takahiro Kojima, “The U-curve on trial: a longitudinal study of
psychological and sociocultural adjustment during cross-cultural
transition,” International Journal of Intercultural Relations, 1998,
22(3), pp. 277–91; Berry, “Acculturation.”
33. Young Yun Kim, “Intercultural personhood: globalization and
a way of being,” International Journal of Intercultural Relations,
2008, 32(4), pp. 359–68.
34. Adapted from Lillian H. Chaney and Jeanette S. Martin,
Intercultural Business Communication. Upper Saddle River, NJ:
Prentice Hall, 1995.
35. Lorraine Brown and Immy Holloway, “The adjustment
journey of international postgraduate students at an English
university: an ethnographic study,” Journal of Research in
International Education, 2008, 7(2), pp. 232–49.
36. Carmit T. Tadmor, Adam D. Galinsky, and William W.
Maddux, “Getting the most out of living abroad: biculturalism
and integrative complexity as key drivers of creative and
professional success,” Journal of Personality and Social
Psychology, 2012, 103(3), pp. 520–42.
37. Kim, “Intercultural personhood.”
38. Robert Louis Stevenson, Travels with a Donkey in the
Cévennes. Oxford University Press, 1993 [1879].
694
39. This framework builds on the work of Berry, “Acculturation,”
on the acculturation strategies of ethnocultural groups. In the
original framework, Berry identified a fourth strategy,
marginalization, when ethnocultural groups let go of their
original culture but fail to integrate with dominant groups. We
find that this strategy is less likely to be used successfully by
managers given their job requirements.
40. Ward et al., “The U-curve on trial”; Berry, “Acculturation.”
41. Sarah Balaz, “Blogging about acculturation: analyzing
acculturation strategies in sojourner blogs in Western Europe
and East Asia,” Master’s thesis. Erasmus University, Rotterdam,
2017; Ward et al., “The U-curve on trial”; Craig Storti, The Art of
Coming Home. London: Nicholas Brealey, 2003; Balaz,
“Blogging about Acculturation.”
42. Personal communication.
43. BGRS 2017 Talent Mobility Survey, “Changing the
conversation: transforming mobility for the future,” available at
https://bgrs.com/2017-talent-mobility-trends/. Accessed March
1, 2019.
44. Lewis Carroll, Alice’s Adventures in Wonderland. London:
Penguin Books, 1960 [1865].
45. Osland, “The adventure of working abroad.”
46. Harry C. Triandis, Culture and Social Behavior. New York:
McGraw-Hill, 1994.
695
11
Lessons Learned: A Review
◈
Chapter Outline
What Have We Learned?
Where Do We Go from Here?
Learning Objectives
Review what has been learned throughout this book.
Consider how managers can build on these lessons to
improve their global management skills.
Explore the role of global managers in the future.
The survival of mankind will depend to a large extent on the
ability of people who think differently to act together.1
Geert Hofstede
University of Maastricht
We began this book with a straightforward question: What do
managers need to know to survive and succeed in the complex
696
and turbulent global business environment? We saw that
managers need to understand how to work with other people and
organizations around the world to get their jobs done. They need
a global knowledge base, of course. But they also need a capacity
to build working relationships that facilitate mutual exchange and
mutual benefit. We refer to this quality as multicultural
competence. To facilitate this, the goal of this book has been to
help managers develop an enhanced behavioral repertoire of
cross-cultural management skills that could be used in a timely
fashion when they are confronted with challenging, and at times
confusing, situations. Our emphasis has been on developing
critical analysis, not drawing arbitrary conclusions or selecting
favorite theories. This was done purposely in the belief that
successful global managers will need to focus more on
understanding and cognitive and behavioral flexibility than on
evaluation and dogmatism. Such understanding can facilitate a
manager’s ability to both prepare and act in ways that are more in
tune with local environments and cross-cultural realities. As a
result, those who are better prepared for future events are more
likely to succeed. By integrating these two perspectives –
explorations into the cultural drivers underlying managerial action
and common management strategies used in the field – it has
been our intention to present a more down-to-earth processoriented look at global managers at work.
Futurists and their closely watched predictions abound in
these changing times, and nowhere is this trend more evident
than with regard to future economic trends and the future of global
business. Some experts forecast that past competitors will
become future partners, while other experts predict just the
697
opposite. Some predict increased economic integration brought
on by globalization, while others predict increased economic
fragmentation,
nationalism,
and
turmoil,
also
caused
by
globalization. Examples in support of all of these predictions can
be found.
For managers, there is plenty of advice available, but getting
good advice is more difficult. We have tried throughout this
volume to summarize what we consider to be good advice for
managers in the field. Why? Because, as Italian journalist and
author Alberto Moravia correctly observed, “When facts are
lacking, rumors abound.”2 Without solid, believable information
and good advice, managers are left to sink or swim on their own,
and relying on unsubstantiated rumors or unsupported opinions
improves no one’s chances of survival or success.
698
What Have We Learned?
The prospects of working with people from different cultural
backgrounds can be very challenging, but potentially it can also
be very rewarding. For many managers, though, it doesn’t happen
easily. Remember ABB CEO Percy Barnevik’s observation that
global managers are made, not born; it is not a natural process.3
Remember, too, Thomas A. Stewart’s observation that a global
manager is set apart by more than a worn suitcase and a dogeared passport.4 To the extent that these observations are correct,
the onus is clearly on managers to prepare themselves for
success in the future. Engaging with managers and entrepreneurs
from different cultures opens up considerable opportunities to
learn more about ourselves, discover new ways of doing things,
and find creative solutions to problems both old and new. It is
clearly part of the developmental process for most managers. In
this pursuit, continual cognitive, analytical, and experiential
learning plays a significant and often underappreciated role. This
balanced view on developing global managers has been the focus
of this book. Let’s recap the key lessons before tackling where we
go from here.
699
What Is Global Management?
As noted in Chapter 1, global managers come in all shapes and
sizes, as well as skills and abilities. Indeed, in today’s global
economy, almost all managers are involved in some form or
another with global business. Our definition of a global manager is
someone who works with or through people across national and
cultural boundaries to accomplish global corporate objectives.
Inherent in this definition is the assumption that many – if not all –
of these managers work with people from differing cultural
backgrounds and environmental settings. Somehow, they have to
accommodate and master these differences.
Paramount to this definition is the assumption that global
managers are – and must be – different to more traditional
managers (see Exhibit 11.1). In particular, they must have a
worldview, not a national one. In addition, they must understand
not just cultural differences, but also ways in which to navigate
and leverage such differences to achieve corporate objectives.
They must also be able to seek partnerships, not domination.
Finally, they must be able to exhibit both the competence and the
confidence to work effectively with colleagues and partners from
around the world.
700
Exhibit 11.1 Characteristics of global managers
701
How Can We Build Global Management Skills?
To develop global managers, we must obviously take a global
perspective. What can we learn from others? What can we learn
about ourselves? To achieve this, we have suggested a threestage approach to managerial development that incorporates
understanding the challenges facing managers, understanding the
context in which managers operate, and developing a specific skill
set focusing on multicultural competence (see Exhibit 11.2).
Exhibit 11.2 Stages in developing global management skills
Stage 1. Understand the challenges facing global
managers
The first task of managers is to understand the new global
realities, considering the changing nature of both global business
and global managers.
Global business. Globalization has become a fact, but it is
much more than this. Changes in the business environment
include increased globalization, a globalized workforce,
702
technological revolutions, political and regulatory volatility,
and economic opportunities and turmoil (e.g., the backlash
to globalization). We need to ask ourselves what this
means for contemporary global business. We introduced
the concept of multicultural competence in Chapter 1 as a
framework for understanding what skills managers must
develop in this uncertain global economy.
Global managers. We also explored how the
responsibilities of today’s managers differ from those in the
past. Global awareness and understanding have become
the litmus test of successful managers. We identified four
general types of global managers – expatriates, frequent
flyers, global entrepreneurs, and home country managers –
and how the global responsibilities and qualifications can
differ for each. And we examined a strategy for developing
global managerial talents.
Stage 2. Understand the context in which global
managers operate
In the second part of the book (Chapters 2–4), we focused on
better understanding the environment or context in which global
managers work. We broke this environment down into three topics
focusing on cultural, organizational, and managerial issues (see
Exhibit 11.3).
Culture. We discussed the various meanings of culture as
a concept. We noted that cultures affect managerial and
employee actions through prevailing work values and social
normative beliefs. For example, compared to people in
703
individualistic cultures, people working in collectivistic
cultures tend be value working in groups, sharing
information, and striving for group success and rewards
over individual performance. We explored several models
of national cultures, as well as how these models can be
operationalized. We emphasized that all cultures exist in
environments characterized by complexities and
contradictions, and cautioned that generalizations are often
misleading. In particular, we warned against relying on
cultural stereotypes. Finally, the concept of multiculturalism
was introduced as a means of better understanding how
people from diverse backgrounds can come together to
create functioning teams, organizations, and countries.
Organization. Managers also work within organizational
constraints, both those of their employer and their partners
or prospective partners. Because of this, it is important to
understand the relationships between stakeholders,
strategies, and structure. Different stakeholders place
various demands, expectations, and constraints on
enterprise activity – some wanting better return on their
investment and others wanting a more socially or
environmentally responsible organization. At the same
time, regional models of organizing can impact people –
employees and managers – in different ways.
Organizational design can also affect decision-making, and
the creation and maintenance of specific corporate
cultures.
704
Management. Finally, managers’ work environments can
vary widely across settings. These differences depend on
people, places, and type of work. For starters, we saw how
the expectations people hold for managers can vary. We
also saw how cognitive schemas and patterns of
managerial thinking differ. Situational contingencies only
add to this complexity. For example, negotiating a contract
or managing people in a location where the manager does
not understand the local language changes the work
environment equation significantly. Interpreters must be
used, considerable information can easily be lost, and
employees who speak the global manager’s language may
receive, perhaps undeservedly, special treatment and
promotion. And managers are not the only people to bring
diverse values, expectations, and beliefs into the picture.
Employees differ as much as managers in terms of their
motivational patterns, abilities, and personal
characteristics. Taken together, these factors almost
guarantee that every work environment will be somewhat
unique, despite a company’s best efforts at global
standardization through policies and procedures.
705
Exhibit 11.3 Cultural, organizational, and managerial
environments
Stage 3. Develop multicultural competence and global
management skills
Finally, in the third part of the book (Chapters 5–10), we moved
from understanding to action by focusing specifically on the more
pragmatic aspects of managing in the global economy. The global
management skills we explored appear in Exhibit 11.4.
Communicating across cultures. A model of crosscultural communication was introduced and used to
analyze how various environmental factors can influence
success in interpersonal relations. Cultural screens on
interpersonal communication were discussed, including
cognitive limitations on communication and communication
protocols. Content and context were explored as key
factors influencing verbal, as well as nonverbal, behavior.
706
Strategies for understanding and managing first encounters
were also discussed.
Leading global organizations. The pivotal role of
leadership and the shared leadership utilized in so many
global teams require close attention. We examined two
important fields of leadership in a global setting –
comparative leadership and global leadership – and
identified the historical bases of Eastern and Western
leadership traditions. The GLOBE study was introduced as
a framework for understanding and adapting to indigenous
leadership styles. We highlighted women global leaders
and explained the key points of global change before
providing ways to develop leadership in the global context.
Managing ethical conflicts and social responsibility.
Managing in an imperfect world has many challenges,
including bribery and corruption, fair employment practices,
and environmental stewardship. Finding a way to succeed
in business while remaining true both to your core ethical
beliefs and the institutional or legal requirements is no easy
task. We explored this dilemma by considering why crosscultural conflicts are so pervasive throughout the world, the
bases of cross-cultural conflict, ethical and institutional
conflicts, the influence of universalism and particularism,
ethical global leader behavior, and guidelines for ethical
managerial behavior.
Negotiating global partnerships. Negotiation and
bargaining across borders is another area in which cultural
differences play a major role. In many cases, they are even
707
hidden from view, leaving managers to work partially
blindfolded in a high-stakes game. The discussion ranged
from preparing for negotiations all the way through to
managing final contracts in the post-negotiation stage.
Ethics and the importance of building mutual trust – and
mutual benefit – emerge as key considerations when
seeking partners, negotiating agreements, and managing
the subsequent partnerships.
Managing global teams. Working with teams, global or
otherwise, can be both exhilarating and challenging for
managers. The exhilarating part stems from the positive
group dynamics that lead to creative and collaborative
efforts that are impossible when working individually or in a
domestic homogeneous team. Global teams can be
challenging when managers and teams are working from
different cultural scripts, don’t like each other, don’t trust
one other, or simply have opposing objectives. Accordingly,
team management becomes a critical skill. We explored
different types of global teams, as well as key success
factors. We highlighted the role of leadership in teambuilding, especially shared leadership, and the importance
of building mutual trust among members. Finally, we
examined strategies for resolving – or at least living with –
team conflicts. Throughout, it was suggested that highly
diverse teams, including global teams, can bring much to
the table and create truly creative solutions, but only if they
are managed well.
708
Managing global assignments. Finally, we explored the
potential benefits and challenges of living and working
abroad. We examined different types of expatriates and
looked at the advantages and disadvantages of short- and
long-term global assignments. We emphasized the
importance of screening potential expatriates for factors
related to expatriate effectiveness. Careful consideration of
personal, family, and career issues is essential before
accepting assignments. We discussed psychological
adjustment and culture shock, along with strategies for
managing both acculturation and repatriation.
Exhibit 11.4 Global management skills
709
Where Do We Go from Here?
Throughout this volume, an effort has been made to integrate
issues of culture with those of management, in the belief that
success in the global economy requires a detailed understanding
of both. Successful global managers move with ease across
international borders, and adapt readily to local changes and
challenges. They look for a competitive edge wherever they can
find it. Most of all, however, they continually learn from their
surroundings and apply these lessons to their work.
In this regard, perhaps a good place to begin this learning
process is with history. Spanish philosopher George Santayana
once observed, “Those who fail to learn from the mistakes of their
predecessors are destined to repeat them.”5 This may be true, but
it is equally correct that one of the benefits of studying history –
learning from the past – is that it alleviates the need to start from
scratch. History provides lessons as building blocks upon which to
build our own approach to management, as well as our own
careers. In this spirit, we offer two lessons that speak to business
managers, locally and globally.
The first lesson comes from the nonviolent Indian peace
activist of the twentieth century, Mahatma Gandhi. Gandhi was
fond of saying: “We must be the change we wish to see in
others.”6 In other words, the real challenge for global managers is
leadership, not followership. The challenge is how to build both a
more prosperous company and a more prosperous world. To
accomplish this, successful global managers must bring people
together in collaborative and symbiotic ways that create value for
710
the organization and its surroundings. In this endeavor, an
understanding of how cultures differ and how they influence
organizational and managerial processes alike emerges as an
essential ingredient in a successful global manager’s toolkit.
A second lesson comes from the global economic turmoil of
the past several years. We have heard much recently about
economic turmoil, trade wars, bankruptcies, extended litigation,
industrial spying, and unemployment. We have also seen a
number of people and institutions being blamed, including
bankers, lawyers, investors, manufacturers, offshore companies,
and politicians. We see leaders from one region blaming leaders
from other regions. The finger of blame is pointing in an almost
infinite number of directions. Finally, we have seen individual and
collective greed as never before. In the world of business,
regardless
of
geographic
location,
we
have
witnessed
entrepreneurs and managers alike desperately trying to find a
quick fix, a short-term competitive advantage that will allow them
to become wealthier than their competitors and colleagues.
Wealth is celebrated, even worshipped, in places. Meanwhile,
millions of people around the world in both developing and
industrialized countries lose their homes, jobs, security, health,
and even education for their children.
What has been lost in all this chaos is a fundamental premise
of a successful global enterprise: mutual exchange and mutual
benefit. Researchers and managers alike see successful global
negotiations as being based on people and companies coming
together to achieve their common objectives. Even in countries
where legal contracts reign supreme, the role of personal
relationships
is
not
undervalued.
711
Likewise,
successful
communication is typically seen as being best facilitated when all
parties share a common understanding – and a common cause.
Leaders are seen to be more effective when they strive to see that
everyone involved wins. Work motivation and performance are
best facilitated when employees at all levels see a reason for buyin. Equity, fairness, and stewardship are seen by most people to
be the most effective way to create a more ethical and sustainable
world order.
Certainly, these management processes become more
complex and challenging when companies cross borders, yet the
fundamental principles hold. The individual and corporate
selfishness of the past few years has demonstrated quite clearly
that greed is a short-term and unsustainable strategy for future
development and security, both at home and abroad. Breaking
faith with one’s stakeholders – whether they are customers,
investors, or employees – is invariably suboptimal in the long run.
Instead, global managers and their firms would be better advised
to seek long-term sustainable global strategies and partnerships,
and to incorporate a genuine stakeholder model as part of their
business plan: inclusion rather than exclusion; partnerships rather
than lethal competition.
We suggested earlier in this book that understanding culture
and cultural differences is critical to understanding managerial
thought and action. We also suggested that a productive way to
accomplish this is to approach intellectual discovery and
management development as part of an overall learning strategy.
Throughout, we must look to the future. By doing so, while
managers may not have the power to see into the future, they do
have an ability to better prepare themselves for it. Hyundai
712
founder Chung Ju Yung observed “the difference between winners
and losers in a highly competitive business environment is the
ability both to prepare for upcoming challenges and opportunities
and to recognize such opportunities when they emerge.”7
Preparation
and
recognition:
both
are
required.
Seeing
opportunities for the future without adequate preparation or
preparing for the future without adequate study of emerging
opportunities are both recipes for coming second or third.
To
accomplish
this,
global
managers
must
develop
proficiencies in working across cultures, because this is where
most future opportunities will be found. They must develop an
ability to distinguish between cultural differences and similarities
across borders, as well as differences within single countries.
They need to tease out the subtle contradictions and dualities that
are rooted in various cultures, and not look for easy answers
when none may exist. They must also develop an ability to adapt
traditional management skills, such as leadership, ethical
behavior, negotiation, team management, and communication to
fit cross-cultural or multicultural venues. And, perhaps most
important, they must continue to learn. As social philosopher Eric
Hofer said, “In times of change, learners will inherit the earth,
while the learned will find themselves beautifully equipped to deal
with a world that no longer exists.”8 Herein lies the essence of
effective global management.
713
Discussion Questions
1. Geert Hofstede argues that the survival of civilization depends
to a large extent on the ability of people who think differently to act
together. Bringing this down to a local level, what does this really
mean for today’s managers working for global firms?
2. In this book, we discussed six specific global management
skills: cross-communication, global leadership, cross-cultural
negotiations and partnering, ethical behavior and social
responsibility, managing global teams, and managing global
assignments. Can you identify a seventh or possibly eighth global
management skill that could be useful for global managers?
3. Mahatma Gandhi was fond of saying that we must be the
change we wish to see in others. What does this mean to you as
you continue to develop your management skills?
4. As you develop your own global management skills, how can
you help others (colleagues, teammates, partners, etc.) develop
theirs?
5. How can a company build the principle of mutual exchange and
mutual benefit into its corporate strategy and work environment?
6. If you were to develop a to-do list for your next several steps
towards becoming a successful global manager, what would be on
714
your list?
7. What two or three major challenges do you see on the horizon
that will possibly challenge your own success as a global
manager? What steps can you take now or in the near future to
prepare yourself to deal with these challenges?
8. Going forward, what are the most important lessons you will
take away from this book that can help you succeed as a global
manager?
9. If you choose to pursue a career in some aspect of global
management, where will you be in ten years? What will you be
doing? Where will you be living? And how do you plan to get
there?
715
Notes
1. Geert Hofstede, Culture’s Consequences: Comparing Values,
Behaviors, Institutions, and Organizations Across Nations, 2nd
edn. Thousand Oaks, CA: Sage, 2001, p. xv.
2. Alberto Moravia, The Indifferent Ones. New York: E. P.
Dutton, 1932.
3. Percy Barnevik, cited in Philip R. Harris, Robert T. Moran,
and Sarah V. Moran, Managing Cultural Differences: Global
Leadership Strategies for the 21st Century, 6th edn.
Amsterdam: Elsevier, 2004, p. 25.
4. Thomas A. Stewart, cited in Philip Harris, Robert T. Moran,
and Sarah Moran, Managing Cultural Differences. Amsterdam:
Elsevier, 2004, p. 1.
5. George Santayana, The Life of Reason or the Phases of
Human Progress: Reason in Common Sense. New York:
Charles Scribner & Sons, 1924, p. 284.
6. Mohandas Karanchand Gandhi, Gandhi: An Autobiography.
Boston, MA: Beacon Press, 1993.
7. Richard M. Steers, Made in Korea: Chung Ju Yung and the
Rise of Hyundai. London: Routledge, 1999.
8. Eric Hofer, Reflections on the Human Condition. New York:
HarperCollins, 1973.
716
717
Appendix
Details of National Culture Models
Exhibit A1 Edward Hall Model Dimensions and Scale Anchors
Dimensions
Scale anchors
Context: extent to which the
context of a message is as
important as the message itself.
Low-context: direct and frank
communication; message itself
conveys its own meaning.
High-context: much of the
meaning in communication is
conveyed indirectly through
the context surrounding a
message.
Space: extent to which people
are comfortable sharing
physical space with others.
Center of power: territorial;
need for clearly delineated
personal space between
themselves and others.
Center of community:
communal; comfortable
sharing personal space with
others.
Time: extent to which people
approach one task at a time or
multiple tasks simultaneously.
Monochronic: sequential
attention to individual goals;
separation of work and personal
life; precise concept of time.
Polychronic: simultaneous
attention to multiple goals;
integration of work and
personal life; relative
concept of time.
Source: Based on Edward T. Hall, The Silent Language. New York: Anchor Books, 1981;
Edward T. Hall and Mildred R. Hall, Understanding Cultural Differences. Yarmouth, ME:
Intercultural Press, 1990.
Exhibit A2 Geert Hofstede Model Dimensions and Scale Anchors
Dimensions
Scale anchors
Power distance: beliefs about
the appropriate distribution of
power in society.
Low-power distance: belief that
effective leaders do not need to
have substantial amounts of
power compared to their
subordinates.
High-power distance: belief
that people in positions of
authority should have
considerable power
compared to their
subordinates.
Uncertainty avoidance: degree
of uncertainty that can be
tolerated and its impact on rulemaking.
Low uncertainty avoidance:
tolerance of ambiguity; little need
for rules to constrain uncertainty.
High uncertainty avoidance:
intolerance of ambiguity;
need for many rules to
constrain uncertainty.
Individualism/collectivism:
relative importance of individual
vs. group interests.
Collectivism: group interests
generally take precedence over
individual interests.
Individualism: individual
interests generally take
precedence over group
interests.
718
Dimensions
Scale anchors
Masculinity/femininity:
assertiveness vs. passivity;
material possessions vs.
quality of life.
Masculinity: value material
possessions, money, and the
pursuit of personal goals.
Femininity: value strong
social relevance, quality of
life, and the welfare of
others.
Long-term vs. short-term
orientation: outlook on work,
life, and relationships.
Short-term orientation: past and
present orientation; value
traditions and social obligations.
Long-term orientation:
future orientation; value
dedication, hard work, and
thrift.
Indulgence vs. restraint:
relative emphasis on individual
happiness, leisure, and
personal control.
Indulgence: societal emphasis
on enjoyment and need
gratification.
Restraint: strict societal
control to suppress or
regulate gratification.
Source: Based on Geert Hofstede, Culture’s Consequence: International Differences in WorkRelated Values. Thousand Oaks, CA: Sage, 1980, rev. 2001.
Exhibit A3 Hofstede Model Country Ratings (Examples)
Country/Region
Power
distance
Uncertainty
avoidance
Individualism
Masculinity
Long-term
orientation
Indulgen
Argentina
49
86
46
56
20
62
Australia
36
51
90
61
21
71
Bahrain
95
80
25
60
36
52
Brazil
69
76
38
49
44
59
Canada
39
48
80
52
36
68
China
80
30
20
66
87
24
Egypt
70
–
25
45
7
4
Finland
33
59
63
26
38
57
France
68
86
71
43
63
48
Germany
35
65
67
66
83
40
Greece
60
100
35
57
45
50
India
77
40
48
56
51
26
Indonesia
78
48
14
46
62
38
Israel
13
81
54
47
38
--
Italy
50
75
76
70
61
30
Japan
54
92
26
95
88
42
719
Country/Region
Power
distance
Uncertainty
avoidance
Individualism
Masculinity
Long-term
orientation
Indulgen
Malaysia
100
36
26
50
41
57
Mexico
81
82
30
69
24
97
Netherlands
38
53
80
14
67
68
Nigeria
80
55
30
60
13
84
Philippines
94
44
32
64
27
42
Russia
93
95
39
36
81
20
Saudi Arabia
95
80
25
60
36
52
Singapore
74
8
20
48
72
46
South Korea
60
85
18
39
100
29
Spain
57
86
51
42
48
44
Sweden
31
29
71
5
53
78
Thailand
64
64
20
34
32
45
Turkey
66
85
37
45
46
49
UK
35
35
89
66
51
69
USA
40
46
91
62
26
68
Source: Adapted from Geert Hofstede, Culture’s Consequences. Thousand Oaks, Sage, 2001;
and Gert Jan Hofstede and Michael Minkov, Cultures and Organizations: Software of the Mind.
New York: McGraw-Hill, 2010.
Note: Higher scores indicate greater strength on a dimension. For example, Argentina at 49 has a
higher power distance score (preference for hierarchy) than Australia at 36. Caution is in order in
applying this information in the field since it reflects mean scores for each country and ignores
variations (sometimes significant) across individuals, groups, and subcultures.
Exhibit A4 Fons Trompenaars Model Dimensions and Scale Anchors
Dimensions
Scale anchors
Universalism/particularism:
relative importance of applying
standardized rules and policies
across societal members; role of
exceptions in rule enforcement.
Universalism: reliance on
formal rules and policies that
are applied equally to
everyone.
Particularism: rules must be
tempered by the nature of
the situation and the people
involved.
Individualism/collectivism: extent
to which people derive their
identity from within themselves
or their group.
Individualism: focus on
individual achievement and
independence.
Collectivism: focus on group
achievement and welfare.
720
Dimensions
Scale anchors
Specific/diffuse: extent to which
people’s various roles are
compartmentalized or integrated.
Specific: clear separation of a
person’s various roles.
Diffuse: clear integration of a
person’s various roles.
Neutral/affective: extent to which
people are free to express their
emotions in public.
Neutral: refrain from showing
emotions; hide feelings.
Affective: emotional
expressions acceptable or
encouraged.
Achievement/ascription: manner
in which respect and social
status are accorded to people.
Achievement: respect for
earned accomplishments.
Ascription: respect for
ascribed or inherited status.
Time perspective: relative focus
on the past or the future in daily
activities.
Past-/present-oriented:
emphasis on past events and
glory.
Future-oriented: emphasis on
planning and future
possibilities.
Relationship with environment:
extent to which people believe
they control the environment or it
controls them.
Inner-directed: focus on
controlling the environment.
Outer-directed: focus on
living in harmony with nature.
Source: Based on Fons Trompenaars, Riding the Waves of Culture: Understanding Cultural
Diversity in Global Business. London: McGraw-Hill, 1993.
Exhibit A5 GLOBE Model Dimensions and Scale Anchors
Dimensions
Scale anchors
Power distance: degree to
which people expect power to
be distributed equally.
High: society divided into
classes; power bases are stable
and scarce; power is seen as
providing social order; limited
upward mobility.
Low: society has large
middle class; power bases
are transient and sharable;
power often seen as a
source of corruption,
coercion, and dominance;
high upward mobility.
Uncertainty avoidance: extent
to which people rely on norms,
rules, and procedures to reduce
the unpredictability of future
events.
High: tendency to formalize
social interactions; document
agreements in legal contracts;
be orderly and maintain
meticulous records; rely on
rules and formal policies.
Low: tendency to be more
informal in social
interactions; rely on word of
people they trust; be less
concerned with orderliness
and record-keeping; rely on
informal norms of behavior.
Humane orientation: extent to
which people reward fairness,
altruism, and generosity.
High: interests of others
important; value altruism,
benevolence, kindness, and
generosity; high need for
belonging and affiliation; fewer
psychological and pathological
problems.
Low: self-interest important;
value pleasure, comfort, and
self-enjoyment; high need
for power and possessions;
more psychological and
pathological problems.
721
Dimensions
Scale anchors
Institutional collectivism: extent
to which society encourages
collective distribution of
resources and collective action.
High: individuals integrated into
strong cohesive groups; selfviewed as interdependent with
groups; societal goals often
take precedence over individual
goals.
Low: individuals largely
responsible for themselves;
self-viewed as autonomous;
individual goals often take
precedence over societal or
group goals.
In-group collectivism: extent to
which individuals express pride,
loyalty, and cohesiveness in
their organizations and families.
High: members assume they
are interdependent and seek to
make important personal
contributions to the group or
organization; long-term
employer–employee
relationships; organizations
assume major responsibility of
employee welfare; important
decisions made by groups.
Low: members assume they
are independent of the
organization and seek to
stand out by making
individual contributions;
short-term employer–
employee relationships;
organizations primarily
interested in the work
performed by employees
over their personal welfare.
Assertiveness: degree to which
people are assertive,
confrontational, and aggressive
in relationships with others.
High: value assertiveness,
dominance, and tough behavior
for all members of society;
sympathy for the strong; value
competition; belief in success
through hard work; value direct
and unambiguous
communication.
Low: prefer modesty and
tenderness to assertiveness;
sympathy for the weak;
value cooperation; often
associate competition with
defeat and punishment;
value face-saving in
communication and action.
Gender egalitarianism: degree
to which gender differences are
minimized.
High: high participation of
women in the workforce; more
women in positions of authority;
women accorded equal status
in society.
Low: low participation of
women in the workforce;
fewer women in positions of
authority; women not
accorded equal status in
society.
Future orientation: extent to
which people engage in futureoriented behaviors, such as
planning, investing, and
delayed gratification.
High: greater emphasis on
economic success; propensity
to save for the future; value
intrinsic motivation;
organizations tend to be flexible
and adaptive.
Low: less emphasis on
economic success;
propensity for instant
gratification; value extrinsic
motivation; organizations
tend to be bureaucratic and
inflexible.
Performance orientation:
degree to which high
performance is encouraged and
rewarded.
High: belief that individuals are
in control of their destiny; value
assertiveness, competitiveness,
and materialism; emphasize
performance over people.
Low: value harmony with
environment over control;
emphasize seniority, loyalty,
social relationships, and
belongingness; value who
people are more than what
they do.
722
Source: Robert House, Paul Hanges, Mansour Javidan, Peter Dorfman, and Vipin Gupta,
Culture, Leadership, and Organizations. Thousand Oaks, CA: Sage, 2004.
Exhibit A6 GLOBE Model Country Ratings (Examples)
Countries
Power
distance
Uncertainty
avoidance
Humane
orientation
Institutional
collectivism
In-group
collectivism
Assertiveness
Argentina
5.64 +
3.65
3.99
3.66
5.51 +
4.22 +
Australia
4.74
4.39
4.28
4.29
4.17 –
4.28 +
Brazil
5.33 +
3.60
3.66
3.83
5.18
4.20 +
Canada
4.82
4.59
4.49
4.38
4.26 –
4.05
China
5.04
4.94 +
4.36
4.77 +
5.80 +
3.76
Egypt
4.92
4.06
4.73 +
4.50
5.64 +
3.91
Finland
4.89
5.02 +
3.96
4.63 +
4.07 –
3.81
France
5.28 +
4.43
3.40 –
4.93
4.37
4.13
Germany
5.25
5.22 +
3.40 –
3.79
4.02 –
4.55 +
Greece
5.40 +
3.39 –
3.34 –
3.25 –
5.27
4.58 +
India
5.47 +
4.15
4.57
4.38
5.92 +
3.73
Indonesia
5.18
4.17
4.69
4.54 –
5.68 +
3.86
Israel
4.73
4.01
4.10
4.46
4.70
4.23 +
Italy
5.43 +
3.79
3.63 –
3.68
4.94
4.07
Japan
5.11
4.07
4.30
5.19 +
4.63
3.59
Malaysia
5.17
4.75 +
4.87 +
4.61 +
5.51 +
3.87
Mexico
5.22
4.18
3.98
4.06
5.71 +
4.45 +
Netherlands
4.11 –
4.70
3.86
4.46
3.70 –
4.32 +
Nigeria
5.80 +
4.29
4.10
4.14
5.55 +
4.79 +
Philippines
5.44 +
3.89
5.12 +
4.65 +
6.36 +
4.01
Poland
5.10
3.62
3.61 –
4.53
5.52 +
4.06
Russia
5.52 +
2.88 –
3.94
4.50
5.63 +
3.68
Singapore
4.99
5.31 +
3.49 –
4.90 +
5.64 +
4.17 +
South
Korea
5.61 +
3.55
3.81
5.20 +
5.54 +
4.40 +
Spain
5.52 +
3.97
3.32 –
3.85
5.45 +
4.42 +
723
Countries
Power
distance
Uncertainty
avoidance
Humane
orientation
Institutional
collectivism
In-group
collectivism
Assertiveness
Sweden
4.85
5.32 +
4.10
5.22 +
3.66 –
3.38
Thailand
5.63 +
3.93
4.81 +
4.03
5.70 +
3.64
Turkey
5.57 +
3.63
3.94
4.03
5.88 +
4.53 +
UK
5.15
4.65
3.72
4.27
4.08 –
4.15
USA
4.88
4.15
4.17
4.20
4.25 –
4.55 +
Note: Higher scores indicate greater strength on a dimension. For example, Argentina at 5.64 has a
higher power distance score (preference for hierarchy) than Australia at 4.74. The + and – signs
indicate GLOBE’s highest and lowest ratings according to their study. Note that the GLOBE ratings
for collectivism are the inverse of Hofstede’s ratings for individualism. Caution is in order in applying
this information in the field since it reflects mean scores for each country and ignores variations
(sometimes significant) across individuals, groups, and subcultures.
Source: Adapted from Robert House, Paul Hanges, Mansour Javidan, Peter Dorfman, and
Vipin Gupta, Culture, Leadership, and Organizations. Thousand Oaks, CA: Sage, 2004.
724
725
Index
Abirafeh, Lina, 247
acculturation
at Royal Dutch Shell, 357–359
strategies, 355–357
achievement cultural dimension, 49
action cultural value, 51–52
action teams, 298
Adler, Nancy, 86
Aga, Anu, 215
Agnihtri, Peeyush, 335, 355
AIA model of communication, 158–161
aircraft partnerships, 261
Alibaba, 307
Anderson, Stephen, 163
Apple, 266–267
Arab nations, 8
ascription cultural dimension, 49
assignment (global). See also expatriates
acculturation strategies, 355–359
benefits and challenges of, 340–342
considerations in, 342–348
culture shock in, 348–355
high cost of, 335–336
long- and short-term, 339–340
reasons for, 336–339
repatriation management, 359–361
types of, 15–17
Athanassiou, Nicholas, 317
726
Audur Capital, 209–212
Australia
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
team tasks and processes, 302–306
traditional decision-making process in, 83
traditional investor model (organization), 85
work hours in, 130
work values in, 128–129
Austria, 137
authority of expertise, 329
automobile partnerships, 265–266
bargaining (global partnership), 275–276
Barnevik, Percy, 22, 371
Belgium
gender wage gaps in, 141
work hours in, 130
work values in, 129
Bennett Coleman, 215
Bennis, Warren, 189
biculturalism, 59, 353
Biocon, 215
Bird, Allan, 13, 45, 205, 207–208, 210
biznez, 228
BMW, 251
Boden, Dermot, 15–16
boundary management, 305
Brazil
bargaining tactics in, 277–281
727
cultural logic in, 170–171
leadership dimensions in, 203–204
leadership styles in, 202
recession in, 8
Brett, Jean, 277
BRICS, 7, 278
British Airways, 178
British Petroleum, 176–177
Brooks, Chad, 213
Buchan, Nancy R., 309, 322
Cadillac, 156
Camus, Albert, 225
Canada
cultural logic in, 170–171
culture affecting management, 121
gender wage gaps in, 141
leadership styles in, 202
performance motivation in, 133
postal strike in, 9
traditional decision-making process in, 83
traditional investor model (organization), 85–86
trust in government, 78
work hours in, 130
work values in, 129
Cannon-Brooks, Michael, 114
Caproni, Paula, 307
China
Chinese family model (organization), 87–90
comparative leadership approach, 199
cultural shock in, 351
728
doctrine of changed circumstances in, 288
Emerson Electric Suzhou, 197–198
family decision process in, 97
gender wage gaps in, 141–142
leadership expectations in, 194
leadership styles in, 202
managerial expectations in, 120
performance motivation in, 136
power of, 8
trust in government, 78
China (Hong Kong), 302–306
Chinese family model (organization)
examples of, 89–90
principles of, 87–89
Chiu, Willy, 317–319
Chung, Ju Yung, 379
Citigroup, 344
code-switching, 206
codetermination decision-making process, 95, 100–101
cognitions
culturally mediated, 161–171
defined, 122, 161
cognitive evaluation, 168–169
cognitive schemas, 122–124
cohesion (global team), 307
collectivism cultural dimension, 48, 91, 134
communication
AIA model of, 158–161
cultural language processing in, 161–171
cultural social behavior in, 171–178
emic and etic patterns in, 38–39
729
providing feedback in, 178–180
seeking common understanding in, 155–158
virtual, 312–314
comparative leadership model, 199
competitive negotiation strategy, 273–276
Confucianism, 87–88, 91, 111, 115
considerations (expatriate)
career, 347–348
family, 345–347
personal, 342–344
continuous change, 6–7
contract (defined), 285
conventions (ethical), 243–246
conversation sequencing, 172
conversational formalities, 175–177
Corley, Danielle, 213
corporate culture
defined, 101
inner workings of, 101–103
women in, 212–216
corporate social responsibility, 249–252
corruption, 228
Corruption Perception Index, 241–242
Cosco, 288
country clusters, 56–57
cultural distance, 56
cultural environment
in global work environment, 116
and macroenvironment, 33
and managerial roles, 118–121
cultural friction, 56, 349
730
cultural intelligence, 21
cultural logic, 169–170
cultural models
refinements to, 55–58
types of, 39–44, 68
cultural screens
cognitive evaluation, 168–169
cultural logic, 169–170
culturally mandated behaviors, 171–172
culturally mediated cognitions, 161–170
defined, 160–161, 170–171
languages, 163–185
selective perception, 167–168
cultural stereotypes, 12, 62–63
cultural values
action, 51–52
biculturalism versus multiculturalism, 59
categories of, 44–45
caveats about, 53–55
environment, 46
in global partnerships, 275
interpersonal relationships, 48–49
power distribution, 47–48
time orientation, 50–51
truth, 52–53
culturally mandated communication behaviors, 171–172
culturally mediated cognitions, 161–171
culture shock, 348–355
cultures (national)
affecting global teams, 299–300
characteristics of, 35–36
731
contradictions between, 4–5
defined, 34–35
dimensions of, 32–33
emic/etic perspectives in, 38–39
expatriate conflict and, 15–16
subcultures in, 37–38
work and management varying across, 115
work motivation and, 134
work values across, 127–132
Culture’s Consequences (Hofstede), 41
Czech Republic
executive compensation in, 137
gender wage gaps in, 141
work hours in, 130
de Geus, Arie, 4
decisional roles, 118
Dekker, Roos, 19
Delta Airlines, 54
Denmark
egalitarianism in, 135
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
work hours in, 130
Dentsu, 103–104
discrimination and social injustice, 229–246
distributive justice
across cultures, 135–137
at Lincoln Electric, 138–140
defined, 135
732
doctrine of changed circumstances (contract), 286–288
Dorfman, Peter W., 200–202
downgraders, 178–180
Drucker, Peter, 264
dual management hierarchy, 114–115
dynamic capabilities, 269
Ecuador, 157–158
egalitarian culture, 47–48, 134, 136
Egypt
food prices in, 9
leadership styles in, 202
Emerson Electric Suzhou, 197–198
emic perspective, 38–39
emotional capital, 211–212
employees
global work values, 127–132
job security, 86
women, 140–143
England, George, 128–129
enterprise unions, 93
environment. See also organizational environment
corporate social responsibility and, 249–252
cultural values, 46
economic development, 230
stewardship of, 230
Ericsson, 266–267
Ertel, Danny, 270
ethical behavior
characteristics of, 246–249
laws and conventions governing, 235–246
733
ethical conflict, 231–234
ethics
corporate social responsibility and, 249–252
defined, 228
global commerce and, 225
institutional conflict and, 231–234
laws and conventions governing, 235–246
social challenges and, 226–231
ethics warning system, 248–249
ethnicity and compensation, 143
ethnocentrism, 229
etic perspective, 38–39
EU Criminal Law Convention on Corruption, 237
expatriates. See also assignment
defined, 337
in global manager, 15–16
home country nationals and, 339
inpatriates and, 339
leadership and, 206
organizational and self-initiated, 337–339
reasons for, 336–339
repatriates and, 339
third country nationals and, 339
face (Chinese family model), 88
face time, 315
family decision process, 97
Finland
culture affecting management, 121
egalitarian culture in, 48
gender wage gaps in, 141
734
tax ethics in, 227
work hours in, 130
five cardinal virtues, 87–88
force field analysis, 244
Ford, 156
France
executive compensation in, 137
gender wage gaps in, 141
leadership expectations in, 194
management teams culture, 300–301
performance motivation in, 133
trust in government, 78
work hours in, 130
work values in, 129
free overtime, 130
frequent flyers (expatriate), 16–17
Fujisawa, Takeo, 115
Gadams, Mary, 18
Gandhi, Mahatma, 377
gapjil, 101
gate-keeping leadership, 191
Geertz, Clifford, 35
Gelfand, Marilyn, 56–58
Germany
codetermination decision-making process, 94–96, 100
employee downsizing, 72
executive compensation in, 137
gender wage gaps in, 141
global teamwork in, 296
Lincoln Electric in, 138
735
performance motivation in, 133
stakeholders in, 76, 79–81
supervisor role in, 123
trust in government, 78
upgrader and downgrader communication, 178
work hours in, 130
work values in, 129
global business challenges
continuous change, 6–7
contradictory and turbulent, 4–5
increased interconnectedness, 8–9
increased multiculturalism, 8
global change
from intermittent to continuous, 6–7
from isolation to interconnectedness, 7–8
from monoculturalism to multiculturalism, 8
global commerce ethics, 225
global entrepreneurs, 17–18
Global Gender Gap Report, 140
global leadership. See also global management
as a cultural construct, 191–193
Eastern and Western traditions of, 194–198
expectations of, 194
team-building and, 319–325
women in, 212–216
global leadership effectiveness cycle, 209–212
global leadership models
comparative leadership model, 199
GLOBE leadership dimensions, 200–204
GLOBE model, 199–200
Pyramid leadership model, 205–212
736
global management. See also global leadership
cultural value navigation in, 55
expectations of, 119–121
future of, 377–379
multicultural competence and success in, 21–22
performance motivation in, 133–140
role expectations in, 118–121, 123
thinking patterns in, 122–124
transition to global leaders, 205–207
and women, 140–143
working across cultures, 61–65
global management skills
building stages, 372–377
cognition and perception in, 64–65
skills development, 24–25
global manager learning
characteristics/definition of, 13–14
cross-cultural communication, 154–180
differences between, 115
job demands in, 13
learning model, 24–25
managing four aspects of the work environment, 115–118, 124–
127
strategies for working with global organizations, 105–107
transition from traditional management to, 12–13
global manager types
expatriates, 15–16
frequent flyers, 16–17
global entrepreneurs, 17–18
home country managers, 18–19
overview of, 15
737
global mindset, 21
global mobility specialists, 339
global partnerships
agreement and contract management, 285–288
benefits and drawbacks of, 262–267
conflict and compromise management, 282–285
negotiation strategies and processes, 272–282
pharmaceutical, 260–261
preparation, 267–272
superordinate goals, 261
global team design principles, 308
global team synergy, 307–310
global teams
advantages and drawbacks of, 299–300
attitudes and beliefs, 307–310
defined, 297–298
evolution of, 296–297
leadership in, 319–325
managing tasks and processes in, 302–306
on-site and virtual, 301–303
synergy creation and design principles, 307–310
types of cultural, 298–299
virtual, 310–319
with French and American managers, 300–301
globalization
global management requirement for, 12–13
multicultural competence and, 20–21
speed of, 6–10
technology transfer and, 6–7
GLOBE leadership dimensions, 200–204
GLOBE leadership model, 41–44, 56, 199–200, 385–388
738
GLOBE project, 32–33, 35
Goel, Neha, 323–325
Goldwyn, Samuel, 260
gong-si (Chinese family model), 89, 97
Greece
culture affecting management, 121
gender wage gaps in, 141
leadership styles in, 202
work hours in, 130
Grupo Carso, 78–79
guanxi (Chinese family model), 88, 97, 111, 198, 285
Gupta, Vipin, 200–202
Gupte, Lalita, 215
Hall culture model, 41–42, 381
Hall, Edward, 40, 61, 94, 173–174, 300
Hall, Mildred Reed, 94, 300
Hampden-Turner, Charles, 120–121
Handy, Charles, 267
Hanges, Paul J., 200–202
harmony cultures, 46, 88, 91, 134
Hayward, Tony, 176–177
hierarchical culture, 47, 134
high-context cultures, 174
Hofer, Eric, 379
Hofstede culture model, 41–42, 56, 382–383
Hofstede, Geert, 35, 72, 370
holistic approach to bargaining, 276–277
home country managers, 18–19, 234, 339
Honda Motors, 115
honne, 99, 112
739
Hopeman, Wei, 344
House, Robert J., 200–202
Hungary
gender wage gaps in, 141
work hours in, 130
Hyundai Motors Group, 114–115
IBM, 296, 317–319, 360
Iceland, 209–212
IKEA, 234
implementation mindset, 270
India
cashew processing in, 8–9
Corruption Perception Index and, 241–243
global partnerships in, 275–276
leadership styles in, 202
power of, 8
trust in government, 78
women in leadership in, 215
work values in, 128
individualism, 134
individualism cultural dimension, 48
Indonesia
egalitarianism in, 136
managerial expectations in, 120
performance motivation in, 133
time concept in, 51
informational roles, 118
innovation portal, 318
inpatriates, 15, 339
insider trading, 226
740
institutional conflict, 233–234
institutional environment
corporate strategy and, 76–77
defined, 76
Intel Corporation, 126–127
Intelehealth, 323–325
interconnectedness
global, 7–8
GLOBE project, 32–33
local consequences for, 8–9
International Labour Organization, 213–214
interpersonal relationships cultural value, 48–49
interpersonal roles, 118
Ireland
gender wage gaps in, 141
leadership styles in, 202
work hours in, 130
Israel
contracts in, 286
executive compensation in, 137
leadership styles in, 202
work values in, 129
Italy
culture affecting management, 121
tax ethics in, 227
Jain, Indu, 215
Japan
bargaining tactics in, 277–281
corporate culture in, 103–104
cultural norms in, 36–37
741
culture affecting management, 121
employee downsizing, 73
executive compensation in, 137
gender wage gaps in, 141
institutional environment, 76–77
karoshi, 130–131, 286
keiretsu model (organization), 90–94
leadership expectations in, 194
leadership styles in, 202
partnerships in, 265
ringi-sei decision-making process, 97–99, 103–104
stakeholders in, 76
supervisor role in, 123
trust in government, 78
work hours in, 130
work values in, 128–129
Javidan, Mansour, 200–202
jia zu gong-si, 89
kaisha, 91–92
karoshi, 130–131
keiretsu model (organization), 90–94
Kia Motors America, 114–115
Kinetic Motor, 215
kleptocracy, 228
Kluckhohn, Clyde, 35
konzern, 94
Korea
cultural logic in, 169–170
culture affecting management, 121
dual management hierarchy in, 114–115
742
expatriates in, 15–16
gapjil, 101
gender wage gaps in, 141
leadership styles in, 202
performance motivation in, 133
stakeholders in, 76
trust in government, 78
upgrader and downgrader communication, 180
virtual teams, 317–319
work hours in, 130
work values in, 128
languages
as barrier to success, 165–167
cognitive processes in, 163–164
confusion with, 164
importance in communication, 162
social cues in, 164–165
variety of world, 163
which to use, 163
Lao Tzu, 34, 68, 189
Laurent, Andre, 115, 119–120
law of the situation, 329
leadership
defined, 190–191
foundations of, 195–197
Lego, 251
leisure time, 129–131
Lewis, Richard, 53, 154, 173, 233
LG, 15–16
Lincoln Electric, 138–140
743
lingua franca, 186
Lockheed Corporation, 236
locus of control, 46
loose cultures, 56–58
low-context cultures, 174
Ma, Jack (Ma Yun), 307
macro environment (business), 33
Malaysia, 194
management
defined, 11–12
environment, 117
roles, 118–121
transition to global environment, 12–13
management board, 95
management challenges
traditional versus global job demands, 13
transition to global environment, 10–11
management teams, 298
manager’s notebook
cross-cultural communication, 180–183
ethical conflict management, 252–255
global assignments, 361–364
global leadership guidance, 216–218
global management skills, 24–25
global organizations, 105–107
global partnerships, 289–290
global teams, 325–329
understanding managerial environment, 143–145
working across cultures, 61–64
mastery cultures, 46, 134
744
Maznevski, Martha L., 317
Mazumdar-Shaw, Kiran, 215
MBI approach to building effective teams, 326–328
Meaning of Work project, 129
meister, 95–96
Mendenhall, Mark, 205
Mexico
customs ethics in, 226
ethanol prices in, 9
gender wage gaps in, 141
leadership styles in, 202
Lincoln Electric in, 139–140
performance motivation in, 132
stakeholders in, 76, 78–79
supervisor role in, 123
work hours in, 130
Meyer, Erin, 178, 300
Microsoft India, 215
mindful communication, 156–158
mindfulness, 65
Mintzberg, Henry, 118–119
Mitsukoshi Department Store, 36–37
mittelstand firms (Germany), 79–81, 110
monochronic time, 50
Morparia, Kalpana, 215
Motwani, Sulajja Firodia, 215
multicultural competence
abilities and skills in, 23
defined, 370
importance of, 20–21
managerial success and, 21–22
745
multiculturalism
international need for, 8
leadership and, 206
in Singapore, 60–61
teamwork, 296–297
versus biculturalism, 59
multinational corporations
environmental ethics and, 230
strategy and structure evolution of, 81–83
Musk, Elon, 127
mutable/immutable cultural value, 47
Nardon, Luciara, 84, 161, 195
national cultures
affecting global teams, 299–300
characteristics of, 35–36
contradictions between, 4–5
defined, 34–35
dimensions of, 32–33
emic/etic perspectives in, 38–39
expatriate conflict and, 15–16
subcultures in, 37–38
work and management varying across, 115
work motivation and, 134
work values across, 127–132
national history and cultural mindset, 125
nationalism (extreme), 229
Neelam Dhawan, 215
negotiation strategies, 273–276
Nelley, Tsedal, 314
nemawashi (ringi-sei decision-making process), 99, 112
746
Netherlands
codetermination decision-making process, 100
employee downsizing, 72
managerial expectations in, 120
performance motivation in, 132
situational contingencies, 126–127
upgrader and downgrader communication, 179–180
New Zealand
gender wage gaps in, 141
traditional decision-making process in, 83
traditional investor model (organization), 85
work hours in, 130
Nicholson, Nigel, 86
Nigeria
communication styles in, 174–175
leadership styles in, 202
Nissan, 93–94, 141
nonverbal communication, 167–168, 173–175
norm of authenticity, 168
normative behavior
culture and, 35–37
and situational contingencies, 125
social protocols in, 171–178
truth and, 52–53
Norway
culture affecting management, 121
executive compensation in, 137
performance motivation in, 133
OECD, 141
OECD Guidelines (ethics), 237–238, 243, 258
747
on-site teams, 301–303
organization (defined), 73
organizational culture. See corporate culture
organizational environment. See also environment
complexity of structure in, 262–264
decision-making processes in, 96–101
external factors affecting, 74–75
in global work environment, 117
regional models of, 83–96
stakeholder global strategy, 74–81
strategy and structure evolution of multinational corporations,
81–83
organizational expatriates, 337
Osland, Joyce, 13, 45, 205, 208, 210
particularism
as cultural dimension, 50, 134
and ethical beliefs, 232
Pascal, Blasé, 228
people strategies for resolving conflict, 284–285
performance motivation, 133–140
Perlmutter, Howard, 264
Pfizer, 142
Philippines, 202
Poland
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
work hours in, 130
polychronic time, 50
Portugal
748
culture affecting management, 121
executive compensation in, 137
gender wage gaps in, 141
power distribution cultural value, 47
problem-solving negotiation strategy, 273–276
process strategies for resolving conflict, 282–284
production/work teams, 298
project teams, 298
psychological adjustment, 339, 349–354
RacingThePlanet, 18
rank (Chinese family model), 88
Reiche, Sebastian, 205
repatriates, 339
repatriation, 359–361
reverse culture shock, 359
ringi-sei decision-making process, 97–99
Ronen, Simcha, 56–57
Royal Dutch Shell, 4, 250, 357–359
Rubbermaid, 265
Russia
business corruption in, 228
gender wage gaps in, 141
leadership styles in, 202
power assertion in, 8
trust in government, 78
work hours in, 130
Samsonite, 314
Samsung, 247, 266–267
Sanchez-Runde, Carlos, 84, 135, 161, 196
749
Santayana, George, 377
Saudi Arabia, 234
Schein, Edgar, 102
selective perception, 167–168
self-initiated expatriates, 15–16, 337–339
sequential approach to bargaining, 276–277
sequential time, 50
sequential time cultures, 134
service teams, 298
sharia law, 233
Shenkar, Oded, 56–57
shinyo, 277–278
shokai, 278
silent communication, 173–175
Singapore
leadership styles in, 202
multiculturalism in, 60–61
situational contingencies
in global work environment, 117
managerial behavior and, 124–127
Slim Helú, Carlos, 78–79, 125
sogo shosha, 93
Sony, 247
South Africa, 8
Spain
culture affecting management, 121
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
trust in government, 78
work hours in, 130
750
stakeholders
in Germany’s mittelstand firms, 79–81
in Mexico’s Grupo Carso, 78–79
power of, 76
in typical business organization, 74–75
Steers, Richard M., 84, 135, 161, 195
Stevenson, Robert Louis, 355
Stewart, Thomas A., 13, 371
strategic management cycle, 74
Sully de Luque, Mary, 200
superordinate goals, 261
supervisory board, 95
Sweden
culture affecting management, 121
executive compensation in, 137
gender neutrality in, 140
gender wage gaps in, 141
global partnerships, 260–261
IKEA in, 234
leadership styles in, 202
managerial expectations in, 120
performance motivation in, 133
stakeholders in, 76
work hours in, 130
Swidler, Ann, 34–35, 124
Switzerland
executive compensation in, 137
gender wage gaps in, 141
work hours in, 130
symbolic leadership, 192
synchronic time, 50
751
synchronic time cultures, 134
Tainwala, Ramesh, 314–315
Talmud, 32, 67
Tata Motors, 275–276
Tata, Simone, 215
tatemae, 99, 112
team charter, 326
team leader responsibilities, 295–321
technik, 96
technology transfer, 6–7
Tesla, 131–132
Thailand
business ethics in, 247
conversational formalities in, 176
leadership styles in, 202
performance motivation in, 132
Thermax Group, 215
third country nationals, 339
third culture kids, 345
Thornton International Business Report, 213
Three Character Classic (San Zi Jong), 32, 68
tight culture, 56–58
time orientation cultural value, 50–51
Tokyo Electric Power Company, 193
Tómasdóttir, Halla, 209–212
Toshiba, 296
Toyoda, Akio, 176
Toyota, 176
traditional investor model (organization), 83–87
transactional leadership, 191
752
Transparency International, 241–242
Trompenaars culture model, 41–43, 384
Trompenaars, Fons, 35, 120–121
trust development (global team), 321–323
trustworthy-untrustworthy cultural value, 47, 309
truth cultural value, 52–53
Turkey
leadership styles in, 202
trust in government, 78
US Foreign Corrupt Practices Act, 235–237
UN Global Compact, 238–240
Unilever, 250
United Kingdom
culture affecting management, 121
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
performance motivation in, 133
stakeholders in, 76
traditional decision-making process in, 83
traditional investor model (organization), 85–86
trust in government, 78
upgrader and downgrader communication, 179
work hours in, 130
work values in, 129
United States
bargaining tactics in, 277–281
contracts in, 286
culture affecting management, 121
election ethics, 226
753
Emerson Electric Suzhou and, 197–198
executive compensation in, 136
gender wage gaps in, 141
global partnerships, 260–261
institutional environment, 76–77
leadership styles in, 202
management teams culture, 300–301
performance motivation in, 136
trade barriers in, 9
traditional decision-making process in, 83
traditional investor model (organization), 85–86
trust in government, 78
work hours in, 130
work values in, 129
universalism and ethical beliefs, 232
universalistic cultural dimension, 49–50, 134
upgraders, 178–180
Upjohn Pharmaceutical, 260–261
Ustinov, Peter, 53, 234
vacation policies, 130–131
Velux, 298
virtual teams
challenges of, 310–315
defined, 301–303
IBM Cloud Labs, 317–319
Intelehealth, 323–325
management of, 315–317
Warner, Judith, 213
web-based organizations, 82
754
Wells Fargo Bank, 72
Whitehead, Alfred North, 243
women
expatriates, 343
in global leadership, 209–212
in global workforce, 140–143, 212–216, 247–248
work environment model, 115–118
work values
across cultures, 127–132
at Tesla, 131–132
work hours and vacation time and, 129–131
works council, 95
World Bank, 230
World Economic Forum, 140, 189
World Trade Organization, 230
xenophobia, 229
yin and yang, 195–196
755