Management Across Cultures
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 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.
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
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 cross-cultural 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
Management Across Cultures
Challenges, Strategies, and Skills
FOURTH EDITION
Richard M. Steers
Joyce S. Osland
University Printing House, Cambridge CB2 8BS, United Kingdom
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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.
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 this publication
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
Contents
List of Exhibits
List of Management Applications
List of Cases, Exercises, and Inventories
Preface
Part 1 Global Managers: Challenges and Opportunities
1
2
3
page x
xiii
xv
xvii
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
3
6
10
15
20
24
25
Part 2 Culture, Organization, and Management
29
Cultural Environments
Overview: Beliefs, Values, and Worldviews
Mapping National Cultures
Using the Models: Cultural Values
Refining the Models: Cultural Friction, Country Clusters, and Cultural
Tightness
Social Complexity, Biculturalism, and Multiculturalism
Manager’s Notebook: Working Across Cultures
Chapter Review
31
33
39
44
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
55
58
61
65
71
73
74
81
96
101
105
107
viii
Contents
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
113
115
118
122
124
127
132
140
143
145
Part 3 Developing Global Management Skills
151
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
153
155
158
161
171
178
180
184
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
188
190
194
199
205
212
216
219
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
Manager’s Notebook: Managing Ethical Conflicts
Chapter Review
224
226
231
235
246
249
252
255
Contents
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
259
262
267
272
282
285
289
290
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
295
297
301
302
306
310
315
319
325
329
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
Manager’s Notebook: Managing Global Assignments
Chapter Review
334
335
340
342
348
355
359
361
365
11
Lessons Learned: A Review
What Have We Learned?
Where Do We Go from Here?
370
371
377
Appendix: Details of National Culture Models
Index
381
389
ix
Exhibits
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
4.1
4.2
4.3
4.4
4.5
Changing world of business
Changing world of management
Characteristics of global managers
Types of global managers
Developing global management skills
Multicultural abilities and skills of effective managers
Learning model for developing global management skills
Normative beliefs, institutional requirements, and social control
Cultures and subcultures
Emic and etic patterns of Latin American cultures
Popular models of national cultures
Cultural values
Country clusters and cultural characteristics (examples)
Cultural tightness scores for selected countries
Strategies for working across cultures
Key stakeholders for a typical business organization
Level of trust in national governments
Carlos Slim’s guiding business principles
Competitive strategies of German mittelstand firms
Regional models of organizing
Example of a traditional investor model
Example of a Chinese family model
Example of a Japanese keiretsu model
Kirin Brewery: Japanese kaisha (Mitsubishi keiretsu)
Example of a German codetermination model
Participation and decision-making processes
Antecedents and consequences of corporate culture
Strategies for working with global organizations
The global management work environment
Cultural influences on managerial roles
Managerial expectations (selected countries)
Managerial characteristics (selected countries)
Supervisory roles across cultures
page 7
11
14
15
22
23
24
36
38
40
42
45
57
58
62
75
77
78
80
84
85
89
92
92
95
98
103
105
116
118
120
121
123
Exhibits
4.6
4.7
4.8
4.9
4.10
4.11
4.12
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8.1
8.2
8.3
8.4
Situational contingencies and managerial behavior
Culture, work values, and behavior
Average working hours in selected countries
Cultural influences on work motivation
Average CEO and employee compensation
Gender wage gaps in selected countries
Strategies for managing across cultures
AIA model of interpersonal communication
Cultural screens on interpersonal communication
Culturally mediated cognitions in communication
Most commonly spoken languages of the world
Native and non-native speakers
Culturally mandated communication behaviors
Communication in high- and low-context cultures
Upgrades, downgrades, and feedback across cultures
(British and Dutch example)
Strategies for communicating across cultures
Leadership patterns: East and West
Approaches to global leadership
GLOBE cultural perspectives on leadership effectiveness
GLOBE leadership dimensions
Cultural beliefs about leadership styles
Pyramid model of global leadership
Pyramid model’s global leadership competencies
Percentage of women in senior corporate leadership positions
Percentage of board of directors seats held by women
Strategies for leading global organizations
Ethical and social challenges facing managers and organizations
Universalism, particularism, and ethical beliefs
OECD Guidelines for ethical behavior
Ten Principles of the UN Global Compact
Corruption Perception Index
Pressures for and against OECD guideline compliance
on bribery and corruption
Characteristics of ethical managerial behavior
Strategies for managing ethically
Benefits and challenges of global partnerships
Preparing for global negotiations
Key success factors in cross-cultural partnerships
Competitive and problem-solving negotiation strategies
126
128
130
134
137
141
144
159
161
162
163
166
172
174
179
181
195
199
200
201
202
208
210
213
214
217
229
232
239
240
242
244
246
253
263
267
268
274
xi
xii
Exhibits
8.5
8.6
8.7
8.8
8.9
8.10
8.11
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11
9.12
9.13
9.14
10.1
10.2
10.3
10.4
10.5
10.6
10.7
11.1
11.2
11.3
11.4
A1
A2
A3
A4
A5
A6
Examples of competitive and problem-solving
negotiation strategies
Sequential and holistic bargaining strategies
Bargaining tactics (Brazil, Japan, United States)
Negotiating strategies (Brazil, Japan, United States)
Conflict resolution strategies
Contracts and the doctrine of changed circumstances
Strategies for building global partnerships
Advantages and drawbacks of global teams
Characteristics of on-site and virtual teams
Managing tasks and team processes
Creating global team synergy
Global team design principles
Can people be trusted?
Challenges of virtual global teams
Different perspectives from global team members (example)
Managing virtual global teams
IBM’s virtual development team (example)
Team-building process
Leadership and global team-building strategies
Developing mutual trust
Strategies for managing global teams
Reasons for using expatriates
Considerations in living and working globally
Family considerations in global assignments
Career considerations in global assignments
Stages in psychological adaptation to a new culture
Acculturation strategies to local cultures
Strategies for managing global assignments
Characteristics of global managers
Stages in developing global management skills
Cultural, organizational, and managerial environments
Global management skills
Edward Hall Model Dimensions and Scale Anchors
Geert Hofstede Model Dimensions and Scale Anchors
Hofstede Model Country Ratings (Examples)
Fons Trompenaars Model Dimensions and Scale Anchors
GLOBE Model Dimensions and Scale Anchors
GLOBE Model Country Ratings (Examples)
275
277
278
279
282
287
289
299
303
304
307
308
309
311
314
317
318
319
320
322
325
336
342
346
347
352
356
362
372
373
374
376
381
382
383
384
385
387
Management Applications
1.1
1.2
1.3
1.4
2.1
2.2
2.3
2.4
2.5
3.1
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
4.5
5.1
5.2
5.3
5.4
5.5
6.1
6.2
6.3
6.4
6.5
7.1
7.2
7.3
7.4
7.5
8.1
Local Consequences of Global Connectivity
Dermot Boden, Expatriate
Mary Gadams, Global Entrepreneur
Roos Dekker, Home Country Manager
Traffic Fines in Finland
Rubber Time in Indonesia
What Is Truth?
Seat Assignments to Tel Aviv
Multiculturalism in Singapore
Stakeholders and Strategies in Mexico’s Grupo Carso
Stakeholders and Strategies in Germany’s Mittelstand Firms
Organization and Management in China
Organization and Management in Japan and Germany
Mt. Fuji and Corporate Culture at Dentsu
What Is a Supervisor?
Company Cars at Intel, the Netherlands
Extreme Work Values at Tesla
Lincoln Electric in Germany and Mexico
The Gender Wage Gap
Wall of Silence in Ecuador
Where Are We Meeting?
Working with Non-native Speakers
Cultural Logic in Brazil and Canada
Making Apologies in Japan and the UK
Symbolic Leadership in Japan
Leadership at Emerson Electric Suzhou
GLOBE Model: Leadership in Brazil
Pyramid Model: Halla Tómasdóttir
Women Leaders in India
Managing in an Imperfect World
IKEA in Saudi Arabia
Starting a Business in Mumbai
#MeToo Goes Global
Doing Well by Doing Good
Strategic Partnerships in the Commercial Aircraft Industry
page 9
16
18
19
48
51
53
54
61
79
81
90
96
104
123
127
132
139
142
158
164
166
170
177
193
198
203
212
216
227
234
243
248
252
264
xiv
Management Applications
8.2
8.3
8.4
8.5
9.1
9.2
9.3
9.4
9.5
9.6
10.1
10.2
10.3
10.4
10.5
Conflicts in the Apple-Samsung-Ericsson Partnership
Tata’s New Factory in Gujarat
Bargaining Tactics in Brazil, Japan, and the US
Changed Circumstances at Cosco
Building French-American Teams
Managing Global Teams in Hong Kong
Building Global Team Synergy
Face Time for Virtual Teams
Virtual Global Teams at IBM Cloud Labs
Global Team Leadership at Intelehealth
Expatriate Survival Skills
Promotion to Kenya
Culture Shock in Luogang
Acculturation Strategies at Shell
Returning Home
266
276
281
288
301
306
310
315
319
325
344
348
351
358
360
Cases, Exercises, and Inventories
Cases and exercises are available on the instructor’s website for use with this book.
Cases
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Developing Global Managers at Google and IBM
Anna Håkansson – from Sweden to Bahrain
Can European-style Codetermination Be Exported?
Samsung’s Management Challenge in Mexico
Building Relationships at a Japanese Kaiseki
Leadership Succession at Alibaba, China
The World Runs on Batteries, Congo
Negotiating Energy Contracts in Nigeria
Building Global Teams at L’Oréal, France
Living the Dream in Hong Kong
Flexible Security in the French Workplace
Managing the Daichi Sankyo-Ranbaxy Partnership, India
Women, Work, and Economic Security in Germany
Playing Hide and SEEK, Australia and China
Developing Local Communities at Dilmah Tea, Sri Lanka
Perils of Being a Junior Manager, Japan and USA
The Rise and Fall of Carlos Ghosn
Garment Manufacturing in Bangladesh
Working with Virtual Partners, Netherlands and Argentina
Strategic Leadership at Toyota and Hyundai
Exercises
1.
2.
3.
4.
Mapping the Multicultural Classroom into Learning Teams
Cultural Preferences Baseline and Teamwork Implications
The Donor Services Role Play
Decision-making and Organizational Models
xvi
Cases, Exercises, and Inventories
5.
6.
7.
8.
9.
10.
Mastering Direct and Indirect Communication
The Perfect Square
Global Business Code of Ethics
Growers versus Agribusiness
The Inner-outer Circle
The Expatriate Interview
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.
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.
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
xviii
Preface
exist. They must also develop an ability to adapt traditional management skills, such
as leadership, negotiation, and communication, to fit cross-cultural 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 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, 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.
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
Preface
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.
• 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.
xix
xx
Preface
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 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 first-class 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
PART 1
Global Managers: Challenges
and Opportunities
1
Global Managers in a
Changing World
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.
CHAPTER OUTLINE
• The Changing World of Business
• MANAGEMENT APPLICATION 1.1 Local Consequences of
Page
Global Connectivity
6
9
• The Changing World of Management
• Global Managers at Home and Abroad
10
• MANAGEMENT APPLICATION 1.2 Dermot Boden, Expatriate
• MANAGEMENT APPLICATION 1.3 Mary Gadams, Global
16
Entrepreneur
• MANAGEMENT APPLICATION 1.4 Roos Dekker, Home Country
Manager
15
18
19
• Multicultural Competence
• MANAGER’S NOTEBOOK: Developing Global Management Skills
20
24
• Chapter Review
25
4
Global Managers in a Changing World
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
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 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
Global Managers in a Changing World
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 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
• a learning strategy for developing multicultural competence and global management skills.
5
6
Global Managers in a Changing World
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 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).
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
The Changing World of Business
Towards continuous
change
(e.g., new technologies;
product obsolescence;
trade conflicts; pressures
for social change; new
currencies and
investment patterns)
Towards increased
interconnectedness
(e.g., global markets;
trade agreements;
mergers and acquisitions;
strategic alliances; virtual
communications)
Towards increased
multiculturalism
(e.g., mobile workforce;
outsourcing and
offshoring; immigration;
expatriates and global
entrepreneurs)
Exhibit 1.1 Changing world of business
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.
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
7
8
Global Managers in a Changing World
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 developed and less developed countries? Is there a role for governments and public policy in this revolution?
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.
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
The Changing World of Business
•
•
•
•
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 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, 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
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?
9
10
Global Managers in a Changing World
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 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.
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 longterm 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
The Changing World of Management
Towards increased
understanding of
cultural influences in
the workplace
(e.g., cultural influences
on social norms and
behaviors; ethical and
social challenges)
Towards increased
global management
skills
(e.g., communication and
negotiation skills; global
leadership skills;
multicultural team skills)
Towards increased
cultural adaptation
skills
(e.g., managing global
assignments,
acculturation strategies,
repatriation)
Exhibit 1.2 Changing world of management
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 cultural adaptations skills, as discussed below and throughout this book (see
Exhibit 1.2).
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
11
12
Global Managers in a Changing World
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 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 – 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.
The Changing World of Management
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
• 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.
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
13
14
Global Managers in a Changing World
An understanding
of cultural differences
and an ability to
navigate and
leverage these
differences to achieve
corporate objectives
An ability to view the
world from a holistic
standpoint, taking a
worldview, not a
national one
An understanding of
the difference
between seeking
partnerships and
seeking domination
Characteristics
of global
managers
An ability to
demonstate both
competence and
confidence in working
with global partners
and colleagues
Exhibit 1.3 Characteristics of global managers
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 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.
Global Managers at Home and Abroad
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).
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 company-assigned
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
Expatriates
Assigned or self-initiated longterm residential assignments to
manage local operations
Frequent flyers
Short-term travel assingments
to network with branches,
customers, or suppliers
Types of global
managers
Home country managers
Local/home assignments with
international or multicultural
responsibilities
Exhibit 1.4 Types of global managers
Global entrepreneurs
Independent business people
traveling the world in search of
new global opportunities
15
16
Global Managers in a Changing World
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 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 all-Korean executive suite.
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?
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
Global Managers at Home and Abroad
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 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 burnout 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
Global Entrepreneurs
The third category of global managers is global entrepreneurs. Traditionally, startup 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
17
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Global Managers in a Changing World
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 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?
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
Global Managers at Home and Abroad
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 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.
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?
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Global Managers in a Changing World
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
challenges in doing business across national borders. All such managers, however,
require an understanding of cultural influences on human behavior in order to
succeed.
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 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,
Multicultural Competence
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.
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 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
21
22
Global Managers in a Changing World
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 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.
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.
Managerial
competence
Planning,
organizing,
directing,
coordinating,
controlling
Multicultural
competence
Ability to
understand and
capitalize on
cultural diversity
Exhibit 1.5 Developing global management skills
Global
management
skills
Integration and
application of
management and
cross-cultural
skills
Multicultural Competence
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 crosscultural 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).
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 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.
Personal work style
High “cultural quotient”
Flexibility and open-mindedness
Effective global communicator and collaborator
Skills in being a global team player
Ability to balance global and local goals, behaviors, and management
practices
General perspectives
Ability to take broad, long-term systems perspective
Emotional resilience and personal autonomy
Ability to embrace and support change
Ability to work across organizational boundaries
Ability to operate seamlessly in cross-cultural and cross-functional
environments
Thirst for global learning as a path for career development
Exhibit 1.6 Multicultural abilities and skills of effective managers
23
24
Global Managers in a Changing World
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 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
Stage 1. Understand the global business environment and the
challenges facing global managers (Chapter 1)
Stage 2. Understand the cultural, organizational, and
managerial contexts in which global managers operate
(Chapters 2–4)
Stage 3. Develop multicultural competence and global
management skills (Chapters 5–10)
Exhibit 1.7 Learning model for developing global management skills
Chapter Review
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 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.
Chapter Review
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 demonstrate both competence and confidence in working with global partners and colleagues.
25
26
Global Managers in a Changing World
• 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.
KEY CONCEPTS
expatriate • frequent flyer • global entrepreneur • global manager • global
management skills • home country manager • inpatriate • management •
multicultural competence • multiculturalism • self-initiated expatriate
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?
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
Chapter Review
7.
8.
9.
10.
11.
12.
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?
Is it useful to divide global managers into several categories such as expatriates,
frequent flyers, and so forth for the purposes of analysis?
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?
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?
What are the key challenges facing global managers in the coming decade?
How can they prepare for these challenges?
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 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?
In your view, what are the three most important lessons from this chapter for
global managers? Explain.
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.
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.
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Global Managers in a Changing World
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.
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 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.
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.
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.
PART 2
Culture, Organization,
and Management
2
Cultural Environments
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.
CHAPTER OUTLINE
• Overview: Beliefs, Values, and Worldviews
• Mapping National Cultures
Page
• 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?
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48
51
53
• MANAGEMENT APPLICATION 2.4 Seat Assignments to
Tel Aviv
54
• Refining the Models: Cultural Friction, Country Clusters,
and Cultural Tightness
55
• Social Complexity, Biculturalism, and Multiculturalism
• MANAGEMENT APPLICATION 2.5 Multiculturalism in
Singapore
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61
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Cultural Environments
• MANAGER’S NOTEBOOK: Working Across Cultures
• Chapter Review
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The stranger sees only what he knows.
African proverb
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 ever-changing 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
1
things as they are; we see them as we are.” 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
Overview: Beliefs, Values, and Worldviews
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, 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.
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
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Cultural Environments
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.
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 problemsolving approach, viewing culture as a “toolkit” of symbols, stories, rituals, and
9
worldviews that help the people of a culture survive and succeed. Finally, cultural
anthropologist Clifford Geertz defines culture as the means by which people communicate, perpetuate, and develop their knowledge about attitudes towards life.10
Overview: Beliefs, Values, and Worldviews
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.
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
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Cultural Environments
Normative beliefs and values
Beliefs, norms, and values that
society deems to be correct
and proper
Reinforcement of normative
beliefs and values
“Correct” outcomes reinforce
continuity of normative beliefs
and values
Institutional requirements
Laws, regulations, and public
policies aimed at reinforcing
societal norms and values
Social control, stability, and
continuity
“Correct” social behavior occurs
that is consistent with societal
needs and goals
Exhibit 2.1 Normative beliefs, institutional requirements, and social control
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.
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;
Overview: Beliefs, Values, and Worldviews
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.
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.
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
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Cultural Environments
Organiza
-tional
cultures
Religious
cultures
Professional
cultures
Cultures and
subcultures
Family
cultures
Ethnic
minorities
Political
coalitions
Exhibit 2.2 Cultures and subcultures
geography and language. Dutch-speaking Flemish set themselves apart from Frenchspeaking 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 ways that allow people
to experience genuine affinity with groups and organizations and feel willing to
participate in goal-directed endeavors.
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
Mapping National Cultures
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?
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
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Cultural Environments
Exhibit 2.3 Emic and etic patterns of Latin American cultures
Emic patterns (inside view)
Etic patterns (outside view)
Communication patterns
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
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.
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.
Mapping National Cultures
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,
14
and Robert House and his GLOBE project associates. 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
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 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
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Cultural Environments
Exhibit 2.4 Popular models of national cultures
Hall
Hofstede
Trompenaars
GLOBE project
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?
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.
Assertiveness: Degree to
which people are
assertive,
confrontational, and
aggressive in
relationships with
others.
Gender egalitarianism:
Degree to which
gender differences are
minimized.
Mapping National Cultures
43
Exhibit 2.4 (cont.)
Hall
Hofstede
Trompenaars
GLOBE project
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.
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 sixtytwo 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 activities. Charismatic leaders can be found in most cultures,
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Cultural Environments
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 wellreasoned 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.
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
Using the Models: Cultural Values
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
Harmony-based
Internal locus of control
External locus of control
Trustworthy human nature
Untrustworthy human nature
Mutable 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
Collectivistic
Achievement-based
Ascription-based
Universalistic (rule-based)
Particularistic (relationship-based)
Time orientation
How individuals perceive the nature of time and its use
Sequential (monochronic)
Synchronic (polychronic)
Past focus
Future focus
Action
How individuals conceptualize actions and interactions
Being
Doing
Relationships
Tasks
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.
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,
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Cultural Environments
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.
Using the Models: Cultural Values
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 27-year-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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Cultural Environments
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.
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
Using the Models: Cultural Values
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 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 record-keeping in business
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Cultural Environments
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.
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 future-oriented leader will
focus more on future challenges and change.
Using the Models: Cultural Values
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.
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?
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
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Cultural Environments
(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 coworkers 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.
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
Using the Models: Cultural Values
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?
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?
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
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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.
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
Refining the Models
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 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.
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
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managers glean more useful information from them. Three such refinements are
introduced here.
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
27
considerable conceptual and measurement problems associated with it. 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.
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.
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
Refining the Models
Exhibit 2.6 Country clusters and cultural characteristics (examples)
Cultural factors
Anglo
Focal actor
Deference
Intolerance for
ambiguity
Gender making
Performance
orientation
Future
orientation
Human
leadership
Charismatic
leadership
Team
leadership
Participative
leadership
Autonomous
leadership
Self-protective
leadership
Arab
Confucian
Latin
Nordic
American
Sub-Saharan
African
Individual Group
Medium
Medium
low
high
Low
High
Group
Medium
high
Medium
Group
Medium
high
High
Individual Group
Low
Medium high
Medium
Medium high
Medium
High
Medium
Low
High
High
High
Low
Low
Medium
High
Medium
High
Low
High
Low
High
Medium low
Medium
Medium
High
Medium
Low
Medium high
Medium
High
Low
High
Medium
Medium high
Medium
High
Low
High
Medium
Medium high
High
High
Low
High
High
Medium high
Low
Low
High
Low
Medium
–
Low
Medium
High
Medium
Low
–
Source: Adapted from Simcha Ronen and Oded Shenkar, Navigating Global Business: A Cultural
Compass. Cambridge University Press, 2017, pp. 245–332.
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 con30
ducted by cultural psychologist Marilyn Gelfand and her colleagues. 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
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Cultural Environments
Exhibit 2.7 Cultural tightness scores for selected countries
Country
Cultural
tightness
Country
Cultural
tightness
Country
Cultural
tightness
Australia
Austria
Belgium
Brazil
China
Estonia
France
Germany
Greece
Hungary
4.4
6.8
5.6
3.5
7.9
2.6
6.3
6.5
3.9
2.9
Iceland
India
Israel
Italy
Japan
Malaysia
Mexico
Netherlands
New Zealand
Norway
6.4
11.0
3.1
6.8
8.6
11.8
7.2
3.3
3.9
9.5
Pakistan
Poland
Portugal
Singapore
South Korea
Spain
Turkey
Ukraine
United Kingdom
United States
12.3
6.0
7.8
10.4
10.0
5.4
9.2
1.6
6.9
5.1
Source: Based on Michelle Gelfand, Rule Makers, Rule Breakers: How Tight and Loose Cultures
Wire Our World. New York: Simon & Shuster, 2018.
(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.
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.
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
Social Complexity, Biculturalism, and Multiculturalism
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.
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
intra-cultural 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
31
social significance. 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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Cultural Environments
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 ethnolinguistic-religious 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
Manager’s Notebook
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.
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?
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?
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Cultural Environments
1. Avoid cultural
stereotyping
•Cultural descriptions
contain only limited
information.
•Cultures are neither good
nor bad, just different.
•Be as objective as
possible in describing
other cultures.
•Cultural descriptions
should be considered a
first guess and a trigger to
further exploration.
•Cultural descriptions can
change over time.
2. Focus honestly on
understanding other
cultures
3. Enhance cognitive and
perceptual skills for
deeper insights
•Be aware that cultural
models are only rough
estimates of local realities.
•Recognize that most
cultures are complex and
contradictions can often
be found in values,
beliefs, attitudes, and
behaviors.
•Recognize the role of biand multiculturalism in
local situations.
•Try to view people and
situations through the
eyes of others.
•Look for situational
differences such as cultural
friction or tightness.
•Self-awareness
•Empathy
•Information-gathering and
analysis
•Information integration
and transformation
•Behavioral flexibility
•Mindfulness
Exhibit 2.8 Strategies for working across cultures
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.
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.
Manager’s Notebook
• 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, 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
decision-making 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
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Cultural Environments
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 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 cul•
tural beings, whose actions are a product of deep-seated cultural values and
Chapter Review
•
•
•
•
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.
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.
Chapter Review
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?
65
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Cultural Environments
• 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.
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
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
Chapter Review
4.
5.
6.
7.
8.
9.
10.
11.
12.
the laws in a particular country to provide more equitable employment opportunities for women or minorities? What would be your strategy?
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?
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?
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?
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?
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?
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 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?
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?
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?
In your view, what are the three most important lessons from this chapter for
global managers? Explain.
NOTES
1. The Talmud is a record of rabbinical discussions pertaining to Jewish law, ethics,
customs, and history.
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Cultural Environments
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.
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.
Chapter Review
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 variancebased measures,” International Journal of Human Resource Management, May 30, 2014,
pp 165–91, available at tandfonline.com. Accessed March 1, 2019.
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.
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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.”
3
Organizational Environments
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.
CHAPTER OUTLINE
• Overview: Stakeholders, Strategies, and Structures
• Stakeholders and Global Strategies
Page
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74
• MANAGEMENT APPLICATION 3.1 Stakeholders and
Strategies in Mexico’s Grupo Carso
79
• MANAGEMENT APPLICATION 3.2 Stakeholders and
Strategies in Germany’s Mittelstand Firms
81
• 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
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96
101
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Organizational Environments
• MANAGEMENT APPLICATION 3.5 Mt. Fuji and Corporate Culture at Dentsu
• MANAGER’S NOTEBOOK: Working with Global Organizations
104
• Chapter Review
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105
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 decision-makers have a
legal obligation to do what is best for stockholders, not employees.
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.
Overview: Stakeholders, Strategies, and Structures
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.
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.
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Organizational Environments
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.
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,
Stakeholders and Global Strategies
Owners and
stockholders
Social activists,
NGOs
Government
agencies and
regulators
Customers and
consumer
advocates
Banks and other
lenders
Key
stakeholders
Management
Employees and
unions
Exhibit 3.1 Key stakeholders for a typical business organization
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.
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
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Organizational Environments
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.
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, import-export 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
Stakeholders and Global Strategies
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 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
India
Turkey
Canada
South Korea
Russia
84
70
51
46
45
44
Germany
Japan
United Kingdom
Spain
France
United States
43
37
36
34
33
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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Organizational Environments
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
Austerity in good
times
Continuous
improvement
Think big
Teamwork
Reinvest profits
Corporate
creativity
Optimism
Work
Long-term
orientation
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.
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.
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.
Companies should never be limited by the size of the owner or manager.
Do not feel big in a small corral. Minimize investment in nonproductive assets.
There is no challenge that we cannot overcome by working united, and
with clear vision in the goals and knowing the tools.
Money that leaves the company evaporates; this is why we reinvest profits.
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.
Firm and patient optimism always yields its rewards.
All times are good times for those who know how to work and have the
means to do so.
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.
Stakeholders and Global Strategies
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.
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?
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
medium-sized) account for over two-thirds of the nation’s economy and over
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Organizational Environments
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
8
long-term strategy implementation.
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.
German products are recognized for high-quality,
advanced engineering, and superior craftsmanship,
making it easier for new German entrants to
capitalize on this reputation.
Local representatives of mittelstand firms tend to be
highly skilled in both sales and service, providing
customers with ready access to after-sale support
when needed.
Employees are hired for their skills and long-term
potential, not their cost, and receive ongoing training
and skills upgrades throughout their careers.
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.
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.
Produce only high-quality
products
Ensure complete customer
satisfaction
Emphasize employee selection
and training
Maintain strong employee
commitment and involvement
Take a long-term approach to
market development
Source: Based on 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; 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.
Strategy and Structure: Regional Models
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?
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 strategy-making
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?
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
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Organizational Environments
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
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
Strategy and Structure: Regional Models
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.
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.
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
83
Centralized power held by
family with government
backing and tightly controlled
through family management
Centralized power largely
held by investors and
stockholders, and
delegated to top
executives
Professional education
Center of power
and
influence
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
Consultation with employees
up, down, and across
hierarchy, but final decisions
typically made at top
Seniority
Company stakeholders,
including stockholders,
employees, sister companies
Moderately distributed power
held by investors, sister
companies, key banks,
unions, and government
Japanese keiretsu model
Strong legal protection of
employee rights and job
security for almost all
employees
Collaboration among
managers, works councils,
and unions on key
decisions
Technical mastery
Company stakeholders,
including local
communities
Widely distributed power
held by investors, partners,
managers, works councils,
unions, and government
German codetermination
model
Source: Based on Richard M. Steers, Luciara Nardon, and Carlos Sanchez-Runde, “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.
Employee
rights and
job security
Top-down centralized
management, often with
government involvement and
support
Top-down centralized
management common,
but not universal
Family membership
Extended family
members
Stockholders and
investors
Primary
beneficiaries
Management
selection
Decisionmaking
Chinese family model
Traditional investor model
Characteristics
Exhibit 3.5 Regional models of organizing
Strategy and Structure: Regional Models
Banks and
other lenders
Principal power
holder; pressure
for quarterly
earnings
Board of Directors
CEO
Powerful executive; return-oninvestment principal goal;
performance-based tenure
Stockholders
Principal power
holder; pressure
for quarterly
earnings
Profesional Managers
Centralized top-down
management; rule-based; masteryoriented; individual incentives
First-line Supervisors
Selected based on job skills,
seniority, or supervisory abilities
Employees
Low two-way commitment; weak
job security
Industrial
Unions
(where present)
Affiliated with
national unions;
focus on wages
and benefits
Exhibit 3.6 Example of a traditional investor model
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.
• 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,
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Organizational Environments
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.
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”
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
Strategy and Structure: Regional Models
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.
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
self-discipline, hard work, diligence, and frugality.16 Hence the fundamental nature
of human relationships is not interactions among equals but, rather, interactions
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Organizational Environments
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
17
implications of a continual exchange of favors. 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
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.
18
• Face. Face is largely interpreted to mean dignity, self-respect, and prestige.
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.
Strategy and Structure: Regional Models
Family Head/CEO
Flat organization structure
with family owner-managers
Absolute loyalty, relationship-based,
centralized top-down management
Guānxi network
Based on long-term mutual
exchange and benefit
Supervisors
Employees
Seniority-based, group incentives,
subservience, low wages and job security
Exhibit 3.7 Example of a Chinese family model
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, familyowned or state-owned. To clarify this difference, smaller and medium-sized familyrun enterprises are often called jia zu gong-si. An illustration of a typical Chinese
family-run 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
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Organizational Environments
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.
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?
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
Strategy and Structure: Regional Models
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 two-way 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
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.
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Organizational Environments
Member construction
company (kaisha) with
affiliated supplier networks
Member steel company
(kaisha) with affiliated supplier
networks
Member insurance company
(kaisha) with affiliated supplier
networks
Member financial institution
(kaisha) with affiliated supplier
networks
Keiretsu core management
Main bank
c
Member real estate company
(kaisha) with affiliated supplier
networks
Principal
industrial
company
Sogo shosha
(trading
company)
Member mining company
(kaisha) with affiliated supplier
networks
Member plastics company
(kaisha) with affiliated supplier
networks
Member manufacturing
company (kaisha) with
affiliated supplier networks
Member manufacturing
company (kaisha) with
affiliated supplier networks
Member manufacturing
company (kaisha) with
affiliated supplier networks
Exhibit 3.8 Example of a Japanese keiretsu model
Mitsubishi
Construction
Mitsubishi
Trading
Company
Mitsubishi
Motors
Mitsubishi
Aluminium
Kirin Brewery
(kaisha)
Mitsubishi
(keiretsu)
Mitsubishi
Plastics
Mitsubishi
Paper
Asahi Glass
Bank of
TokyoMitsubishi
Exhibit 3.9 Kirin Brewery: Japanese kaisha (Mitsubishi keiretsu)
Strategy and Structure: Regional Models
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 coalition and consensusbuilding 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 white-collar
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 crossownership 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
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Organizational Environments
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.
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.
31
To foreign observers, Germans tend to be conservative, formal, and polite.
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
Strategy and Structure: Regional Models
Supervisory Board (Aufsichtsrat )
Board of directors; half appointed
by outside investors, half elected
by works council; 5-year terms
Investors,
banks, and
institutions
Long-term and often
subsidized
financing
Management Board (Vorstand )
Top management team
appointed by Supervisory Board
Works Council
Elected by
workers;
focuses on
working
conditions
Line and Staff Management
Typically promoted through the
ranks; uses collaborative decisionmaking
First-line Supervisors (Meisters)
Selected based on job skills and
knowledge of Technik
Industrial
Unions
Affiliatedwith
national unions;
focus on wages
and benefits
Permanent employees
Contingent workers
Exhibit 3.10 Example of a German codetermination model
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
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
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Organizational Environments
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.
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?
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 book-length exploration, space limitations require just a look inside
decision processes to see how different regional approaches can lead to different
outcomes.
Participation and Decision-making
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.
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.
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
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Organizational Environments
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.
2 Problem sent up hierarchy
and then assigned to specific
managerial level for analysis
and resolution.
1 Problem identification
somewhere in hierarchy.
2 Nemawashi: Broad-based
discussion – often on the shop
floor – of problem and possible
solutions.
3 Managers take lead in
analyzing problem and
possible solutions;
discussions may include
affected employees.
4 Manager recommends
solution for approval by
superior. If approved,
decision announced.
3 Expert advice added to mix; drive
for consensus as to future
actions.
1 Problem identification
somewhere in hierarchy.
2 Lower-level employees begin
working with supervisors to
help identify underlying cause
of problem, as well as possible
solutions.
3 Department heads, section
chiefs, and supervisors meet to
develop possible solutions.
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.
4 Ringi-sho document developed,
reviewed, and approved by
successive levels of command as
it moves up hierarchy.
5 Ringi-sho document reaches
upper management with broadbased support from rank-and-file
employees; decision announced.
Impact:
Broad decision acceptance and
often rapid implementation due
largely to employee participation
and ownership of decision,
company loyalty, and
collectivistic hierarchical culture.
4 Technical experts and works
council members consulted to
achieve the best possible
outcome.
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.
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.
Participation and Decision-making
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 ringisho, 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
36
what one actually prefers to do (which may be difficult) is referred to as honne.
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 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.
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
Corporate Culture and Collective Behavior
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.
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 goaldirected 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).
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
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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 inter-organizational 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)?
• 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?
Corporate Culture and Collective Behavior
Influences on
corporate cultures
● Organizational design
● Business sector
● Management policies
and practices
● Characteristics of
workforce and work
place
● Company history and
traditions
Characteristics of
corporate cultures
● Symbols and
patterns of behavior
● Power distribution
● Problem-solving
processes
● Esprit or team spirit
Potential influences
on employees
● Self-efficacy and selfimage
● Group camaraderie
● Employee commitment
● Effort and performance
● Absenteeism and
departures
Exhibit 3.12 Antecedents and consequences of corporate culture
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.
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
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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.
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 long-term
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.
Manager’s Notebook
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).
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 organization is
1. Understand
relationships between
stakeholders, strategies,
and structures
•Understand how culture
can shape stakeholder
composition and interests,
along with the managerial
implications of these
differences.
•Consider the role of
cultural differences in
strategy–structure
relationships.
•Learn how organizational
designs are evolving
around the world.
2. Understand dynamic
processes within
organizations
3. Build multicultural and
global management
skills
•Understand how decisions
are typically made in
different regions of the
world, including the role of
employee involvement.
•Understand cultural
constraints on
organizational decisionmaking processes and
outcomes.
•Understand differences in
corporate cultures across
regions and companies,
including power
distributions and problemsolving mechanisms.
•Learn more about the
relationship between your
own culture and local
organizations, including
your own.
•Use this understanding to
compare your situation
with comparable
situations in other regions
of the world.
•Continue to develop your
multicultural skills to be
prepared for differing
environments.
•Ask yourself what specific
management skills would
help you do a better job
globally.
Exhibit 3.13 Strategies for working with global organizations
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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 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
Chapter Review
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.
Chapter Review
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
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Organizational Environments
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.
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 • supervisory board •
Technik • traditional investor model • works councils
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.
Chapter Review
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?
8. Outside observers have argued that Japanese keiretsu structures are so closeknit 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.
NOTES
1. Geert Hofstede, Cultures Consequences: International Differences in Work-Related
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.
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Organizational Environments
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 mediumsized 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.
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 BCE–479 CE ) (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 BCE–220 CE ). 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
Chapter Review
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
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.
Wenzhong Hu and Cornelius Grove, Encountering the Chinese: A Guide for Americans,
2nd edn. Yarmouth, ME: Intercultural Press, 1999.
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 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.
Christopher Earley, Face, Harmony, and Social Structure: An Analysis of Organizational
Behavior Across Cultures. New York: Oxford University Press, 1997.
Based on Steers, Nardon, and Sanchez-Runde, “Culture and organization design,”
pp. 107–15.
Sameena Ahmad, “Behind the mask: a survey of business in China,” The Economist,
March 20, 2004, pp. 3–19.
Chen, Inside Chinese Business.
S. Gordon Redding, The Spirit of Chinese Capitalism. Berlin: Walter de Gruyter, 1995.
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.
James Abbeglen and George Stalk, Kaisha: The Japanese Corporation. New York: Harper
& Row, 1985.
Megumi Fujikawa, “Japan’s jobs for life culture fades,” The Wall Street Journal, April 12,
2018, p. A7.
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.
Kosaka Narioka, “Japan’s conglomerates streamline,” The Wall Street Journal, August 1,
2018, p. B1.
Steers, Nardon, and Sanchez-Runde, “Culture and organization design,” pp. 107–15.
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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, 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: JosseyBass, 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.
4
Managerial Environments
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.
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
Page
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• MANAGER’S Notebook: Managing Across Cultures
• Chapter Review
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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 California-based 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 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
Overview: Work, Management, and Motivation
the needs 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 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.
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
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Cultural
environment
(beliefs, values, and
worldviews)
Organizational
environment
(stakeholders,
strategies, and
structures)
Situational contingencies
(personalities, location,
historical sensitivities,
timelines, crises)
Managerial environment
(work, management, and
motivation)
Exhibit 4.1 The global management work environment
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 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.
Overview: Work, Management, and Motivation
• 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 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.
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.
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Viewing the global work environment in this way raises a key question: How can
managers use their talents and experiences to 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.
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
Exhibit 4.2 Cultural influences on managerial roles
Managerial roles
Interpersonal roles
Figurehead
Leader
Liaison
Informational roles
Monitor
Disseminator
Spokesperson
Decisional roles
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
Differences across cultures
Figureheads have considerable symbolic value in some cultures; in
others, being described as a figurehead is not seen as a compliment.
Individualistic cultures prefer highly visible “take charge” leaders;
collectivistic cultures prefer more consultative leaders.
Some cultures prefer informal contacts based on long-standing
personal relationships; others prefer to use official representatives.
Culture often influences both the extent of information monitoring
and which specific information sources receive the greatest
attention.
In some cultures, the context surrounding a message is more
important than the message itself; in others, the reverse is true.
Culture often influences who is respected and seen as a legitimate
spokesperson for an organization.
Some cultures are highly supportive of innovation and change; others
prefer the status quo and resist change.
Some cultures resolve conflict quietly; others accept and at times
encourage a more public approach.
Hierarchical cultures support differential resource allocations;
egalitarian cultures prefer greater equality or equity in
distributions.
Some cultures negotiate all items in a proposed contract
simultaneously; others negotiate each item sequentially.
Managerial Role Expectations
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.
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
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
6
Laurent conducted one of the more interesting studies on this topic. 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
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
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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
France
Germany
Indonesia
Italy
Japan
Netherlands
Spain
Sweden
United Kingdom
United States
74
53
46
73
66
78
17
–
10
27
18
70
43
26
83
–
50
31
34
30
34
17
59
43
45
51
56
–
44
74
26
35
32
Source: Data from André Laurent, reported in John Saee, Managing Organizations in a Global
Economy. Mason, OH: Thompson/Southwestern, 2005, pp. 39–42.
agreed at 59 percent, Indonesia at 51 percent, Sweden at 26 percent, and the
Netherlands at 44 percent. Still different, but closer.
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 emphasis on managerial drive and initiative than their US counterparts.
At the same time, managers in Sweden, Japan, Norway, Canada, and the United
Managerial Role Expectations
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
Sweden
Japan
Finland
South Korea
Netherlands
Singapore
Switzerland
Belgium
Ireland
France
Austria
Denmark
Italy
Australia
Canada
Spain
New Zealand
Greece
UK
Norway
Portugal
74
72
72
70
68
67
66
66
65
65
65
63
63
62
62
62
62
59
59
58
55
49
Sweden
Japan
Norway
USA
Singapore
Denmark
Canada
Finland
Switzerland
Netherlands
Australia
Germany
New Zealand
Ireland
UK
Belgium
Austria
France
Italy
Spain
Portugal
Greece
76
69
69
66
65
65
64
63
62
61
61
61
61
60
59
55
54
54
47
44
43
38
Source: Charles Hampden-Turner and Fons Trompenaars, The Seven Cultures of Capitalism. New
York: Doubleday, 1993, ch. 1.
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.
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.
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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 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
Patterns of Managerial Thinking
Germany
Supervisor as overseer and
expert; technical authority
(meister)
UK, US
Supervisor as motivator and
controller; formal authority
(boss)
Supervisory roles
across cultures
Japan
Supervisor as organizer, role
model, and "parent"; social
authority (kacho)
Mexico
Supervisor as protector;
personal authority (patrón)
Exhibit 4.5 Supervisory roles across cultures
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 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.
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?
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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?
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
9
to explain the behavior of our foreign counterparts. 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 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
Situational Contingencies and Managerial Behavior
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 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 situationspecific.
As managers work to understand the critical dimensions that characterize a
particular situation, as well as its managerial implications, several key situationspecific 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
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Managerial Environments
• Clarity of purpose;
knowledge of topic
under discussion;
understanding of
limits and timelines
• Personality;
gender; cultural
patterns; power
distribution;
tolerance for
ambuguity;
assertiveness
Individual
differences
Goals and
tasks
Location
Roles and
responsibilities
• Geographic
location; meeting
location (e.g., office
or restaurant);
language in use
• Buyer or seller;
rank and seniority;
decision autonomy;
company policies
Exhibit 4.6 Situational contingencies and managerial behavior
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 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.
Work Values across Cultures
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?
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?
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
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Managerial Environments
Cultural background
Social, religious, and family
environment governing
general beliefs and values
Cultural reinforcement
Appropriate behaviors elicit
social and self-approval that
reinforces cultural values
Work values
Personal beliefs about
appropriate work-related
attitudes and behaviors
Behavioral consequences
On-the-job behaviors (e.g.,
work effort, commitment
to firm)
Exhibit 4.7 Culture, work values, and behavior
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.
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.
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
Work Values across Cultures
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 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).
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
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Exhibit 4.8 Average working hours in selected countries
Country
Hours
Country
Hours
Country
Hours
Australia
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
1669
1551
1703
1770
1410
1621
1472
1363
Greece
Hungary
Ireland
Japan
Mexico
New Zealand
Poland
Portugal
2035
1761
1878
1713
2255
1752
1928
1842
Russia
South Korea
Spain
Sweden
Switzerland
UK
USA
OECD average
1974
2069
1695
1621
1590
1676
1783
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.
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 longer than the official American and British working week and
fifteen hours longer than is typical throughout much of the EU.15
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
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
Work Values across Cultures
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.
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 higherpaying 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 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
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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.
MANAGEMENT APPLICATION 4.3 Extreme Work Values at Tesla
1. In your view, could Tesla’s high-individualism/high-performance 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.
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
Management and Motivation
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 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
19
incorporate serious consideration of differences across borders. 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.
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).
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 team-based merit pay systems are becoming more
popular in the United States and Australia.
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Managerial Environments
Exhibit 4.9 Cultural influences on work motivation
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;
group-based incentives; group norms and moral persuasion;
viewing employees as family members; and building teams
and networks focused on task performance.
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.
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.
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 (rule-based) cultures tend to emphasize: clearly
acknowledged rules and regulations; universal
Hierarchical vs. egalitarian
cultures
Mastery-based vs.
harmony-based cultures
Sequential vs. synchronic
cultures
Universalistic vs.
particularistic cultures
Management and Motivation
Exhibit 4.9 (cont.)
Cultural dimensions
Influences on work motivation
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.
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.
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 go over
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Managerial Environments
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.
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.
Management and Motivation
Exhibit 4.10 Average CEO and employee compensation
Country
Average annual
CEO compensation
($)
Average annual
employee compensation
($)
Average ratio of CEO to
employee compensation
Australia
Austria
Czech Republic
Denmark
France
Germany
Israel
Japan
Norway
Poland
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
4.2 million
1.6 million
2.2 million
2.2 million
4.0 million
6.0 million
2.2 million
2.4 million
2.6 million
0.6 million
1.2 million
4.4 million
3.4 million
7.4 million
3.8 million
12.3 million
45,000
44,000
20,000
46,000
38,000
40,000
29,000
35,000
44,000
20,000
23,000
34,000
38,000
50,000
45,000
35,000
93:1
36:1
110:1
48:1
104:1
147:1
76:1
67:1
58:1
28:1
53:1
127:1
89:1
148:1
84:1
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 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.
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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.
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
Management and Motivation
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 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 test-drive 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.
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?
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Managerial Environments
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?
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 governmentfunded 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
gender-neutral 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 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
Women at Work
Exhibit 4.11 Gender wage gaps in selected countries
Country
Wage gap (%) Country
Wage gap (%) Country
Wage gap (%)
Australia
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
15
9
22
19
14
20
12
24
12
12
20
32
16
6
11
19
37
40
17
15
22
20
21
18
Greece
Hungary
Ireland
Japan
Mexico
New Zealand
Poland
Portugal
Russia
South Korea
Spain
Sweden
Switzerland
UK
USA
OECD average
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.
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.
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 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
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Managerial Environments
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 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.
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 equal-pay-for-equal-work policies that may
prevail in their home countries? Why?
Manager’s Notebook
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 non-governmental 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 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.
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.
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 different
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Managerial Environments
1. Learn about
managerial role
expectations and
cognitions
•Take a serious look at
components of, and
forces within, various
managerial work
environments.
•Understand how culture
and organizations help
shape managerial roles
and responsibilities.
•Understand variations in
managerial thinking and
why these differences
occur.
2. Explore situational
contingencies
•Consider how cultural,
organizational, and
managerial work
environments fit together
to create unique
challenges and
opportunities for
managers.
•Look for situational
variations and how these
factors might influence
behavior, success, or
failure.
3. Develop culture-based
motivational strategies
•Study variations in work
values as they affect
attitudes and behaviors.
•Explore how culture and
orgnizational processes
influence employee
motivation and
performance.
•Understand the concepts
of fairness and distributive
justice – as seen by
employees.
•Recognize diversity in
developing incentive
programs.
Exhibit 4.12 Strategies for managing across cultures
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-the-ground 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 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
Chapter Review
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 shows that most groups don’t want to be
treated differently; they want to be treated fairly.
Chapter Review
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 Hampden-Turner and Fons Trompenaars also found significant differences with respect to the qualities of the ideal manager across cultures.
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Managerial Environments
• 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 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.
KEY CONCEPTS
cognitions • cognitive schemas • distributive justice • dual management
hierarchy • free overtime • karoshi • managerial environment • managerial
roles • psychological contract • situational contingencies • work values
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?
Chapter Review
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?
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 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
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Managerial Environments
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.
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.
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.
Chapter Review
19. Carlos Sanchez-Runde and Richard M. Steers, “Culture, context, and work motivation,”
in Betina Szkudlarek, Joyce 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 CrossCultural 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.
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/employ
ers-gender-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.
149
PART 3
Developing Global
Management Skills
5
Cross-cultural Communication
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 co-workers.
• Learn how to communication more effectively across cultures.
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
Page
155
158
158
161
164
166
170
171
• APPLICATION 5.5 Making Apologies in Japan and the UK
• Providing Feedback across Cultures
177
• MANAGER’S NOTEBOOK: Communicating across Cultures
• Chapter Review
180
178
184
154
Cross-cultural Communication
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 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, 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,
Seeking Common Understanding
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
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.
•
•
•
•
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,
4
mergers, or foreign investments.
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
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Cross-cultural Communication
cheeky n’est pas?, their messages and receptions could not have been more different.5 It’s hard to see how Cadillac 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.
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 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
Seeking Common Understanding
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.
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, 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.
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What would she do with those notes, and what repercussions could this have?
Shipa changed her tactics and found that one-on-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.
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.
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.
AIA Model of Interpersonal Communication
Person 1
Attention
(What do I see or
hear?)
Person 2
Action
(How should I
respond?)
Person 2
Interpretation
(What does it
mean?)
Communication
environment
Competing messages
Visual and audible noise
Interpersonal relationships
Power relationships
Knowledge distribution
Attitudes and perceptions
Pressing needs
Cultural screens
Person 1
Interpretation
(What does it
mean?)
Person 1
Action
(How should I
respond?)
Person 2
Attention
(What do I see or
hear?)
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.
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?”
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
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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?
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 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
Culture, Information Processing, and Communication
Person 1
Attention: What is heard or
seen?
Interpretation: How is it
interpreted?
Action: What is the
response?
Cultural screens:
Culturally mediated
cognitions
Culturally mandated
behaviors
Cultural screens:
Culturally mediated
cognitions
Culturally mandated
behaviors
Person 2
Attention: What is heard or
seen?
Interpretation: How is it
interpreted?
Action: What is the
response?
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.
committed to improving multicultural communication need to dig deeper and work
harder to understand the underlying cultural forces at play in interpersonal
communication.
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).
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Cross-cultural Communication
Language and linguistic skills
Language-in-use; formal and
informal language; native and nonnative speakers
Selective perception
Focusing on immediate
demands; sensing or missing
nonverbal messages
Culturally
mediated
cognitions
Cultural logic
Assuming that others think and act
in the same manner as we do
Cognitive evaluation
Attaching meanings to messages;
norm of authenticity
Exhibit 5.3 Culturally mediated cognitions in communication
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?
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
11
English here.” 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 problemsolving 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 underlying existence, language provides the symbols
to facilitate the expression of such meanings.
Culture, Information Processing, and Communication
Exhibit 5.4 Most commonly spoken languages of the world
Language
Native speakers (first language)
World population (%)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
955
405
360
310
295
215
205
155
125
100
14.1
5.8
5.5
4.5
4.2
3.2
3.1
2.4
1.9
1.4
Mandarin
Spanish
English
Hindi
Arabic
Portuguese
Bengali
Russian
Japanese
Punjabi
million
million
million
million
million
million
million
million
million
million
Source: Adapted from Stephen Anderson, “How many languages are there in the world?”
Linguistic Society of America, 2018.
Language is always a potential obstruction to effective cross-cultural 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
16
successful globally. 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 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
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Cross-cultural Communication
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 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 cross-cultural 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
Culture, Information Processing, and Communication
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 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 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.
In this regard, communication expert Tsedal Neeley has suggested several ways to
improve communication with non-native speakers, as follows:17
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Cross-cultural Communication
Exhibit 5.5 Native and non-native speakers
Native speaker
Non-native speaker
Thinks in native local language; no need for
translations or interpretations
Access to extensive local vocabulary and
forms of expressions
Understands – and often uses – language
subtleties
Since messages are usually clear, responses
and action implications are also typically
clear
Rapid speed of conversation possible, if
desired
Thinks in different language; must process
thoughts into local words
Limited access to local vocabulary to either
understand or explain
Often lacks sensitivity to language subtleties
Since messages are not always clearly
understood, responses and action
implications can often be unclear
Rapid speed of conversation often not
possible
• 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.
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?
Culture, Information Processing, and Communication
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?
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 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
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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.
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 masteryoriented 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.
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.
Culture, Information Processing, and Communication
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
what is said and what remains unsaid, and how both are interpreted.
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 time-consuming 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.
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
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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 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.
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?
Culture, Communication, and Social Behavior
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 common
ground necessary for effective communication and productive exchanges.
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, messageformatting, 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.
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
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Cross-cultural Communication
Appropriate or inappropriate
topics for discussion
Family and health issues; personal
wealth; conversation sequencing
Message-formatting
Message content; message context
Culturally
mandated
behaviors
Acceptable and unacceptable
behaviors
Interruptions; emotional displays
Conversational formalities
Use of titles; speaking order; use
of apologies
Exhibit 5.6 Culturally mandated communication behaviors
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, 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.
Culture, Communication, and Social Behavior
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 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.
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
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Cross-cultural Communication
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 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
Low-context cultures
Characteristics:
- Overt message content; frank and
to the point
- Nonverbal cues often unimportant
- Message typically more important
then medium
- Status differences can affect
message or medium
High-context cultures
Characteristics:
- Subtle message content; indirect or
hidden
- Nonverbal (contextual) cues often
very important
- Medium often more important than
message
- Status differences often affect both
message and medium
Countries: Germany, Netherlands,
Australia, Denmark, Norway,
Sweden, Canada, United Kingdom,
United States
Countries: Japan, China, Ghana,
Thailand, Malaysia, Nigeria,
Indonesia, Singapore, Saudi Arabia,
Korea, Tunisia
Example: Declining a request by
saying “no”
Example: Declining a request with
vagueness, avoidance, or body
language
Exhibit 5.7 Communication in high- and low-context cultures
Culture, Communication, and Social Behavior
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
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.
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
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Cross-cultural Communication
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. 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
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
Culture, Communication, and Social Behavior
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 selforiented and individualistic. Two crises, and two very different public responses.
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.
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
silence can signal respect and consideration of what was just said.
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Cross-cultural Communication
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.
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.”
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.
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
Providing Feedback across Cultures
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 . . .
Perhaps you could think about
it . . . I would suggest . . .
Oh, by the way . . .
I think you are wrong.
This is an order. Do it or be
prepared to justify yourself.
The following criticism is the
purpose of this conversation.
I am very upset and angry
that . . .
I don’t like it.
Your idea is not a good one.
He is listening to me.
Think about this idea
and do it if you like.
This is not very
important.
It really doesn’t
matter.
He is impressed.
She has not yet
decided.
It’s a good idea. Keep
developing it.
It’s her fault.
He likes my idea.
I was a bit disappointed that . . .
Very interesting . . .
Could you consider some other
options?
Please think about that some
more.
I’m sure it’s my fault.
That is an original point of view.
It’s a bad idea. Don’t do it.
It’s not my fault.
Your idea is stupid.
Source: This exhibit is based on Erin Meyer, http://knowledge.insead.edu/blog/insead-blog/
giving-negative-feedback-across-cultures; see also: Erin Meyer, The Culture Map: Breaking
Through the Invisible Boundaries of Global Business. New York: Public Affairs, 2014.
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 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:
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Cross-cultural Communication
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 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 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.
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 irrevoc31
ably.” 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
Manager’s Notebook
1. Expand knowledge and
understanding of cultural
dynamics
• Develop a greater
understanding of your own
culture and its common
communication patterns.
• Develop in-depth knowledge
of the beliefs, values, and
behavioral expectations of
other key cultures.
• Expand relevant foreign
language skills for both
increased understanding and
improved communication.
• Seek advice from local
cultural experts, when
appropriate.
2. Recalibrate perceptual
and critical analysis skills
3. Enhance applied
communication skills
• Examine your own
reasoning, as well as the
reasoning of others.
• Explore the assumptions you
make about others.
• Use your expanded cultural
knowledge to view situations
through the eyes of others.
• Look for subtleties and
nuances in interpersonal
interactions that explain what
others are thinking.
• Seek to understand the
“why’s?,” not just the
“what’s?,” in the comments
and behaviors of others.
• Focus on mindful
communication skills.
• Broaden your messageformatting skills, including
nonverbal communication
skills.
• Develop country-specific
knowledge of appropriate
topics, formalities, and
behaviors.
• Develop your active listening
skills, with particular
attention to common
communication failures
across cultures and possible
resolution strategies.
Exhibit 5.9 Strategies for communicating across cultures
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.
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.
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.
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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 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 cross-cultural 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.
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
Manager’s Notebook
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 it relates to the use of nonverbal communication techniques, such as
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. 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 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
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Chapter Review
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 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.
Chapter Review
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
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?
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.
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.
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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-brand-blun
ders/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 Sanchez-Runde, “Seeking common
ground: strategies for enhancing multicultural communication,” Organizational Dynamics, 2011, 40(2), pp. 85–95.
9. Ibid., p. 86.
10. Stephen Anderson, “How many languages are there in the world?” Linguistic Society of
America, 2018, available at www.linguisticsociety.org/content/how-many-languagesare-there-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/howmany-people-speak-english-and-where-is-it-spoken/. Accessed September 8, 2018.
15. Bryan Borzykowski, “The international companies using only English”, BBC, March 20,
2017, available at www.bbc.com/capital/story/20170317-the-international-companiesusing-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.
Chapter Review
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.
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-negative-feedbackacross-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
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.
CHAPTER OUTLINE
• What Is Leadership?
• MANAGEMENT APPLICATION 6.1 Symbolic Leadership in Japan
Page
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193
• Eastern and Western Leadership Traditions
• MANAGEMENT APPLICATION 6.2 Leadership at Emerson Electric Suzhou
194
• GLOBE Leadership Model
• MANAGEMENT APPLICATION 6.3 GLOBE Model: Leadership in Brazil
199
• Pyramid Leadership Model
• MANAGEMENT APPLICATION 6.4 Pyramid Model: Halla Tómasdóttir
205
• Women Global Leaders and Diversity
• MANAGEMENT APPLICATION 6.5 Women Leaders in India
212
• MANAGER’S NOTEBOOK: Leading Global Organizations
• Chapter Review
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203
212
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219
Global Leadership
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 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,
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Global Leadership
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?
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?
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
What Is Leadership?
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 gate-keeping 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.
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
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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 Anglo-American 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
What Is Leadership?
or crises on behalf of the entire organization. This is 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.
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.
Eastern and Western Leadership Traditions
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.
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.
Exhibit 6.1 Leadership patterns: East and West
Leadership
characteristics
Western traditions
Eastern traditions
Beliefs
Seek to achieve ideal end state (eîdos
and télos)
Establish and pursue aspirational
goals; manage the results
Logic of application; articulate
objectives and determine
reasonable means to desired ends
Preference for action; capture the
initiative
Seek to balance countervailing
forces (yin and yang)
Create conditions conducive to
success; manage the process
Logic of exploitation; place oneself
in a position to exploit
opportunities as they emerge
Preference for patience; let events
come to you
Goals
Logic
Preferences
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.
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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 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
Eastern and Western Leadership Traditions
West. Action is freed from activism and becomes discrete and subtle, confounded in
the course of events, ignorant of particular protagonists.
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
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developing mutual relationships (guānxi). This, in turn, facilitated problem resolution. By contrast, the Americans often preferred the more confrontational “trialstyle” 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 shortterm recognition of results. By contrast, their Chinese counterparts, who had no
goals of leaving either China or Emerson, preferred a long-term 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 short-term 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?
GLOBE Leadership Model
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-fitsall 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.
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
Exhibit 6.2 Approaches to global leadership
Comparative leadership approach
Global leadership approach
Example: GLOBE model
Focus: Descriptive model; illustrates how
leader behaviors can differ across cultures;
promotes understanding of cultureleadership relationships
Key variables in understanding:
• Leadership styles (autonomous,
charismatic, humane, participative, selfprotective, team)
• Leadership traits (universally positive,
universally negative, culturally
contingent)
Example: Pyramid model
Focus: Developmental model; illustrates
how managers can build leadership
capabilities that can be used across
cultures
Key variables in development:
• Fundamental business knowledge
• Threshold traits (e.g., integrity, resilience)
• Multicultural competence
• Global management skills
• System skills (organizing,
boundary-spanning, change skills)
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Global Leadership
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).
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 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.
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,
GLOBE Leadership Model
Exhibit 6.4 GLOBE leadership dimensions
GLOBE
leadership
dimensions
Characteristics of dimensions
Regions where leadership dimensions
are widely endorsed
Autonomous
leadership
Individualistic, independent,
unique
Charismatic/
value-based
leadership
Visionary, inspirational, selfsacrificing, decisive,
performance-oriented
Humane
leadership
Modest, tolerant, sensitive,
concerned about humanity
Participative
leadership
Active listening, non-autocratic,
flexible
Self-protective
leadership
Team-oriented
leadership
Self-centered, procedural, statusconscious, face-saving
Collaborative, integrating,
diplomatic
Endorsed in Eastern European and
Germanic clusters; weaker
endorsement in Latin American
cluster
Endorsed in all regions, but
particularly in Anglo, Asian, and
Latin American clusters; weaker
endorsement in Arab cluster
Endorsed particularly in Anglo,
Asian, and sub-Saharan African
clusters; less so elsewhere
Wide variations in endorsements
across all regions, but less so in
Arab and Latin American clusters
Wide variations in endorsements
across all regional clusters
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.
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.
Meanwhile, the other leadership styles were found to be more culturally contingent. Humane leadership was strongly endorsed in the Asian, Anglo, and subSaharan 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 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
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Exhibit 6.5 Cultural beliefs about leadership styles
Country
Autonomous
leadership
Charismatic
leadership
Humane
leadership
Participative
leadership
Selfprotective
leadership
Team
leadership
Australia
Brazil
*
Canada
China
Denmark
Egypt
Greece
India
Ireland
Israel
Japan
Mexico
Nigeria
Philippines
Poland
Russia
Singapore
South Korea
Spain
Sweden
Thailand
Turkey
UK
USA
3.95
2.27
3.65
4.07
3.79
4.49
3.98
3.85
3.95
4.26
3.67
3.86
3.62
3.75
4.34
4.63
3.87
4.21
3.54
3.97
4.28
3.83
3.92
3.75
6.09
6.01
6.16
5.57
6.01
5.57
6.02
5.85
6.08
6.23
5.49
5.66
5.77
6.33
5.67
5.66
5.95
5.53
5.90
5.84
5.78
5.96
6.01
6.12
5.09
4.84
5.20
5.18
4.23
5.14
5.16
5.26
5.06
4.68
4.68
4.71
5.48
5.53
4.56
4.08
5.24
4.87
4.66
4.73
5.09
4.90
4.90
5.21
5.71
6.06
6.09
5.05
5.80
4.69
5.81
4.99
5.64
4.96
5.08
4.64
5.19
5.40
5.05
4.67
5.30
4.93
5.11
5.54
5.30
5.09
5.57
5.93
3.05
3.50
2.96
3.80
2.82
4.21
3.49
3.78
3.01
3.64
3.61
3.86
3.90
3.33
3.53
3.69
3.32
3.68
3.39
2.82
3.91
3.58
3.04
3.16
5.81
6.17
5.84
5.57
5.70
5.55
6.12
5.72
5.82
5.91
5.56
5.75
5.65
6.06
5.98
5.63
5.77
5.53
5.93
5.57
5.76
6.01
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.
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.
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
GLOBE Leadership Model
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.
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
10
be – charismatic, participative, and team-oriented. 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.
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
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Global Leadership
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/value-based 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.”
Pyramid Leadership Model
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
14
called “extreme” leadership.
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.
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
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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 code-switching we do in cross-cultural settings to fit in, make
others feel more comfortable, and to be more effective. 16
Pyramid Leadership Model
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.
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
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Global Leadership
System skills:
Develop stakeholder,
community, organizing,
boundary-spanning,
change, and ethical skills
Global management skills:
Develop mindful communication,
trust-building, multicultural
teaming
Multicultural competence:
Develop cognitive complexity and
cosmopolitanism
Threshold traits:
Develop core human values of integrity, humility,
inquisitiveness, resilience
Fundamental knowledge of global busines:
Develop understanding of economic, political, social, and
technological environments
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.
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
Pyramid Leadership Model
behavioral repertoire to enact appropriate actions suitable to situations. Of
particular note here are mindful communication (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 boundary-spanning skills (see Exhibit 6.7 for definitions).
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
19
designed to be used in conjunction with a global leadership effectiveness cycle.
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.
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
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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
Level 2: Threshold
traits
Integrity
In-depth understanding of how the global
economy works, including a knowledge of
cultural, management, business practices, and
organizational differences across countries and
regions
Commitment to sound moral character and belief
in commonly accepted moral and ethical
principles
Recognition that the beliefs and actions of others
are equally valuable to our own, and we need to
be open to learning from others
Commitment to continual learning about peoples
and places of the world
Capacity to work under stress and unfavorable
conditions and bounce back from adversity
Ability to see situations from multiple viewpoints
and tolerate ambiguities and contradictions
Externally oriented; comfortable in multiple
settings and free of local or provincial prejudices
Ability to use culturally appropriate verbal and
nonverbal communication in diverse settings
Ability to inspire others to believe in oneself and
one’s actions and plans
Ability to work effectively with teams from
diverse cultural backgrounds
Ability to bring together a far-flung organization
and build alliances and support from diverse
community members
Ability to build bridges across organizational
boundaries; gaining support from disparate
groups
Ability to build and manage effective
organizational structures and processes
Ability to lead others to engage in new ways of
thinking and acting
Ability to align the interests of various
stakeholders towards a common goal
Ability to make decisions based on a clear set of
values and accepted standards of behavior
Humility
Inquisitiveness
Resilience
Level 3: Multicultural
competence
Cognitive complexity
Cosmopolitanism
Level 4: Global
management skills
Mindful communicator
Trust-builder
Multicultural team-builder
Level 5: System skills
Community builder
Boundary spanner
Organizer
Change manager
Stakeholder liaison
Ethical decision-maker
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.
Pyramid Leadership Model
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 BTeam, 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
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management skills from team-building to communications to trust-building. And
she has mastered such system skills as community builder, 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?
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
22
limited. 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
23
corporations are women.
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.
Women Global Leaders and Diversity
213
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
2. Indonesia
3. Latvia
4. Philippines
5. Lithuania
6. China
7. Thailand
8. Estonia
9. Armenia
10. Georgia
11. Peru
12. Poland
13. Botswana
14. New Zealand
15. Belgium
43
41
41
40
39
38
38
37
35
35
35
34
32
31
30
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
30
30
29
29
28
26
26
26
26
25
25
25
24
24
23
31. Ireland
32. Singapore
33. Australia
34. Brazil
35. Spain
36. USA
37. UK
38. Denmark
39. Germany
40. India
41. UAE
42. Switzerland
43. Netherlands
44. Japan
23
23
22
22
22
22
20
14
14
14
14
13
10
9
Chile
Italy
Finland
Greece
Mexico
South Africa
Sweden
Taiwan
Vietnam
Argentina
Malaysia
Turkey
France
Norway
Canada
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
26
Exhibit 6.9). 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.
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.
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Global Leadership
Exhibit 6.9 Percentage of board of directors seats held by women
Board seats held by women
>20%
0–20%
5–10%
<5%
Finland
Norway
Sweden
UK
Australia
Austria
Canada
Denmark
France
Germany
Israel
Netherlands
Poland
South Africa
Turkey
Switzerland
USA
Belgium
Brazil
China
Greece
Indonesia
Ireland
Italy
Malaysia
Mexico
New Zealand
Singapore
Spain
Thailand
Bahrain
Chile
India
Japan
Kuwait
Oman
Portugal
Qatar
South Korea
Russia
Saudi Arabia
Taiwan
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.
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?
Women Global Leaders and Diversity
• 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 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 two-wheelers 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).
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Global Leadership
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?
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-size-fits-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.
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
Manager’s Notebook
1. Understand yourself
as a leader
2. Clarify leadership
expectations
3. Manage leader
behaviors
•Understand how you get
things done working with
others.
•Use the GLOBE model
to understand your own
particular leadership
style.
•Use the Pyramid model
to develop additional
leadership skills where
needed.
•Clarify the expectations
you have about yourself
as a leader.
•Clarify the expectations
you have about others
as followers.
•Clarify the expectations
others have about you
as a leader.
•Be authentic, but mindful
of local conditions.
•Tie available rewards to
followership.
•Be honest and
transparent in your
leadership efforts.
•Continually listen for
feedback about your
leadership effectiveness.
Exhibit 6.10 Strategies for leading global organizations
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,
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.
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Global Leadership
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 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.
Chapter Review
Chapter Review
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
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Global Leadership
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 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.
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
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?
Chapter Review
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 subinvestigators, 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 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.
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.
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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.
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.
Chapter Review
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
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.
CHAPTER OUTLINE
• Ethical and Social Challenges
• MANAGEMENT APPLICATION 7.1 Managing in an Imperfect World
Page
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227
• Ethical and Institutional Conflicts
• MANAGEMENT APPLICATION 7.2 IKEA in Saudi Arabia
231
• Laws and Conventions Governing Ethical Behavior
• MANAGEMENT APPLICATION 7.3 Starting a Business in Mumbai
235
• Boundaries of Ethical Managerial Behavior
• MANAGEMENT APPLICATION 7.4 #MeToo Goes Global
246
• Corporate Social Responsibility
• MANAGEMENT APPLICATION 7.5 Doing Well by Doing Good
249
• MANAGER’S NOTEBOOK: Managing Ethical Conflicts
• Chapter Review
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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.
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, 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.
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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 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?
Ethical and Social Challenges
• 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 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.
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 these conflicts rest squarely on
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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 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.
Ethical and Social Challenges
Bribery and corruption
Ethnocentrism and
extreme nationalism
Discrimination and
social injustice
Economic development
and sustainability
Ethical and social challenges
Exhibit 7.1 Ethical and social challenges facing managers and organizations
2. Ethnocentrism and extreme nationalism. A second major challenge can be
found in extreme ethnocentrism. If 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 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
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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).
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.
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
Ethical and Institutional Conflicts
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.
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.
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
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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
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, acesaving 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).
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.
Universalism
Truth is absolute.
Society requires certainty and
predictability.
Right or wrong determined by
religion, rules, and laws.
Particularism
Truth is subjective.
Society can tolerate ambiguity.
Right or wrong determined by
circumstances and relationships, not
just religion, rules, and laws.
Exhibit 7.2 Universalism, particularism, and ethical beliefs
Ethical and Institutional Conflicts
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 terms. It only becomes correct or incorrect when we
interject our own value systems into the picture.
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 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
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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). In-house 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 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.
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.
Laws and Conventions Governing Ethical Behavior
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 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.
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
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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 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
process requests and documents, and to compete more readily against firms from
15
countries where bribery was not illegal.
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
Laws and Conventions Governing Ethical Behavior
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
• 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.
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
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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 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.
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.
2. Engage in or support where appropriate private or multi-stakeholder 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.
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
Laws and Conventions Governing Ethical Behavior
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 co-operation 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.
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.
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
sub-contractors, 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.
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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
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.
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.
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 anticorruption. 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, and public sector organizations in 160 countries have voluntarily signed
the UN Global Compact.
Laws and Conventions Governing Ethical Behavior
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.
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.
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
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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
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
Egypt, 32
El Salvador, 33
Estonia, 71
Finland, 85
France, 70
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
Malaysia, 47
Mexico, 29
Moldova, 31
Morocco, 40
Myanmar, 30
Netherlands, 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
South Africa, 43
South Sudan, 12
Somalia, 9
Spain, 57
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.
Source: Adapted from Transparency International, Corruption Perceptions Index, www
.transparency.org, 2018. Higher numbers indicate greater transparency.
a bribe to fulfill their side of the bargain even after being paid. Finally, new startups 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.
Laws and Conventions Governing Ethical Behavior
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?
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.
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
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Pressures to comply with OECD guidelines:
● Builds corporate reputation for honesty and
integrity
● Avoids prosecution for illegal activities by local
or home countries
● Protects employees from outside pressures
● Identifies illegal behaviors early through
continual monitoring
● Supports corruption-free local governments
Pressures to ignore OECD guidelines:
● May threaten new local business opportunities
● Risks government retaliation for non -payment of
bribes
● May fail to protect firm against corrupt or illegal
actions by competitors
● Can ultimately threaten corporate revenues and
profitability
Exhibit 7.6 Pressures for and against OECD guideline compliance on bribery and corruption
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.
To see how this works, suppose you work for a company that wants to build a
stronger business presence in a country with fast-growing 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 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
Laws and Conventions Governing Ethical Behavior
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 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 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
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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 short-term 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.
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.
Ethical behavior
Concern for honesty and integrity
in business dealings with
colleagues, customers, and
partners
Social responsibility
Concern for economic fairness and
social justice in local and global
communities
Ethical managerial
behavior
Environmental stewardship
Concern for enviromental
sustainability and quality of life both
at home and abroad
Fair employment practices
Concern for equal opportunity,
workplace safety, and employee
development
Exhibit 7.7 Characteristics of ethical managerial behavior
Boundaries 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 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
19
began trending. And in the Middle East the phrase is #MosqueMeToo.
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 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
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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
23
seeking to share their experiences. An Israeli woman was sued for making a
similar accusation against an executive at a broadcast network.24
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 system 25 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:
• 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?
Corporate Social Responsibility
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.
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 lowerranked 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 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
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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 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, 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.
Corporate Social Responsibility
• 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 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 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.
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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?
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).
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
Manager’s Notebook
1. Develop ethical
awareness
•Understand the mission
and core values of the
firm, especially as they
relate to local cultures
and communities.
•Understand the limits of
universalism.
•Identify the root causes
of ethical conflict when
they emerge.
•Understand diverse
perspectives in ethical
conflicts and the logic
behind them.
2. Develop ethical
application skills
•Learn to say “no.”
•Use the “ethics warning
system” (e.g., golden
rule) when making
decisions affecting
others.
•Learn to recognize and
critically analyze
questionable proposals,
agreements, or actions.
•Consider when you must
draw the boundary
around your personal
concerns in an ethical
issue.
3. Take the lead
•Build co-worker and
corporate support for
ethical actions.
•Research legal and
institutional factors prior
to any actions or
agreements.
•Publicize your
company's ethical
standards, along with
your own professional
standards.
•Be proactive in seeking
out opportunities for
corporate social
responsibility.
Exhibit 7.8 Strategies for managing ethically
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.
• 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.
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35
• Use an “ethics warning system” when making decisions affecting others. 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
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:
• 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 coworkers 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
Chapter Review
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 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.
Chapter Review
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.
• 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
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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.
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
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 of this observation for
managers working across cultures?
7. What is the difference between a bribe, a performance bonus, and a sales
commission?
Chapter Review
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 long-standing 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?
12. In your view, what are the three most important lessons from this chapter for
global managers? Explain.
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
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.”
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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 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,” 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/en-gb/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.
8
Global Partnerships and
Negotiations
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.
CHAPTER OUTLINE
Page
• Building Global Partnerships
• MANAGEMENT APPLICATION 8.1 Strategic Partnerships
in the Commercial Aircraft Industry
• MANAGEMENT APPLICATION 8.2 Conflicts in the
Apple-Samsung-Ericsson Partnership
• Preparing for Global Negotiations
• Negotiating Strategies and Processes
262
264
266
267
272
• MANAGEMENT APPLICATION 8.3 Tata’s New Factory in
Gujarat
276
• MANAGEMENT APPLICATION 8.4 Bargaining Tactics
in Brazil, Japan, and the US
281
• Managing Conflicts and Compromise
• Managing Agreements and Contracts
• MANAGEMENT APPLICATION 8.5 Changed Circumstances
at Cosco
282
285
288
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Global Partnerships and Negotiations
• MANAGER’S NOTEBOOK: Building Global Partnerships
• Chapter Review
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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, 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 harddriving, mission-oriented Americans from Upjohn routinely clashed with the more
consensus-oriented Swedes from Pharmacia. The Americans wanted more costcutting 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, the Upjohn-based CEO kept his
managers on a tight leash and required frequent reports, budgets, and staffing
Global Partnerships and Negotiations
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
3
start running.” 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
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
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• how to recognize and manage conflicts during the negotiation process
• how to manage contracts and agreements once achieved.
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.
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.
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 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
Building Global Partnerships
Benefits of global partnerships:
Promote growth
Acquire new technologies
Respond to government pressures
Take advantage of exchange rates
Respond to economic changes
Reduce operations costs
Get closer to clients
Diversify operations and markets
Opportunities for vertical integration
Challenges to global partnerships:
Overlooking long-term objectives
Underestimating cross-cultural differences
Difficulty of merging organizational cultures
Lack of long-term commitment
Resistance to share key personnel or technology
Conflict over benefit distributions
Potential loss of local control
Failure to learn and adapt
Changing business conditions negating original
reasons for partnership
Exhibit 8.1 Benefits and challenges of global partnerships
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
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
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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?
Drawbacks to Global Partnerships
While numerous benefits of global partnerships can be identified, it is equally
12
important to recognize some potential drawbacks. 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, deep-seated 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.
Building Global Partnerships
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.
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
15
partner.
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
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
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accusations of bad faith after Suzuki sourced engines from a competitor. The FiatChrysler 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 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.
MANAGEMENT APPLICATION 8.2 Conflicts in the
Apple-Samsung-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?
Preparing for Global Negotiations
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?
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).
Select the right
partner
•Seek compatible
goals
•Seek
complementary
resources and
cultures
•Seek mutual
commitment
•Seek
philosophical
and operational
compatibility
•Seek
trustworthiness
Develop a
negotiating
strategy
•Consider end
state
•Help other side
prepare
•Identify
responsibility
•Send clear
message
•Take businesslike approach
Exhibit 8.2 Preparing for global negotiations
Manage the
negotiation
process
•Focus on long
term
•Understand
other’s goals
•Avoid cultural
stereotypes
•Be sensitive to
timing issues
•Be flexible
•Plan carefully
•Listen, don’t just
speak
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Global Partnerships and Negotiations
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 long-standing 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 ventures in East Asia based on its previous success in Japan.
Complementary
corporate
cultures
Strong
commitment to
the partnership
from both sides
Strong
philosophical
and operational
compatibility
Complementary
value-creating
resources
Compatibility of
strategic goals
and tactics
Successful
global
partnerships
Exhibit 8.3 Key success factors in cross-cultural partnerships
Ability to learn
and adapt
quickly
Preparing for Global Negotiations
3.
4.
5.
6.
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.
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 Ford-Mazda alliance ultimately failed.
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.
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 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.
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
21
internal and external competences to address rapidly changing environments.”
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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
relationship-building 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 imple22
mentation, not just negotiation. 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 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.
Preparing for Global Negotiations
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
and post-negotiation reviews. They track and resolve problems quickly.
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 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!
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Global Partnerships and Negotiations
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 shortterm 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
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.
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
Negotiating Strategies and Processes
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.
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.
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
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Global Partnerships and Negotiations
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.
2. Relationshipbuilding
Look for weaknesses in your
opponent’s position. Learn about
your opponent, but reveal as little
as possible.
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.
4. Persuasion
Use dirty tricks and pressure tactics
when appropriate to win.
5. Concessions
Begin with high initial demands.
Make concessions slowly and
grudgingly.
6. Agreement
Sign only if you win and then ensure
that you sign an iron-clad
contract.
Define the long-term strategic
interests of your firm. Prepare
to overcome cross-cultural
barriers to defining mutual
interests.
Adapt to the other side’s culture.
Separate the people involved in
negotiation from the problems
and goals that need to be
solved.
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.
Search for new creative options
that benefit the interests of both
parties.
Search for mutually acceptable
criteria for reaching accord.
Accept cultural differences in
starting position and in how
and when concessions are
made.
Sign when the interests of your
firm are met. Adapt to cultural
differences in contracts when
necessary.
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.
There are three important points to keep in mind when choosing whether to use
competitive or problem-solving bargaining strategies:
Negotiating Strategies and Processes
(First company) Can
we get a better deal
than them?
Competitive strategy
(Second company)
Can we get a better
deal than them?
Bargaining strategies
(Two companies)
Problem-solving
strategy
(Both companies) Can
we both get a better
deal by working
together?
Exhibit 8.5 Examples of competitive and problem-solving negotiation strategies
1. Understand cultural environments. It is very easy in cross-cultural 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 longterm solutions 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
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Global Partnerships and Negotiations
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 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?
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.
Negotiating Strategies and Processes
Sequential
bargaining:
Agreement on
item #1
Agreement on
item #2
Agreement on
item #3
Holistic bargaining: Both parties negotiate the entire contact (items 1–3) as a whole,
moving back and forth across items until they are fully satisfied with the entire document.
Exhibit 8.6 Sequential and holistic bargaining strategies
Much of Asia, however, takes a holistic approach to bargaining and concessionmaking. 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 counter-proposals
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.
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
30
American managers. In this study, managers from the three countries were paired
cross-culturally 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?
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.
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
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Exhibit 8.7 Bargaining tactics (Brazil, Japan, United States)
Bargaining tactics
Brazil
Japan
USA
Giving orders
Interrupting
Saying “no”
Silent periods
Touching others
14
29
83
0
5
1
13
6
6
0
6
10
9
4
0
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 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
Negotiating Strategies and Processes
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
Ideal negotiating
climate
Risk orientation
Communication style
Impromptu; difficult
to generalize
Risk-averse
High-context; both
direct and indirect;
frequently
emotional;
sometimes
exaggerates
Emotional sensitivity
highly valued;
strong personal
relationships
critical for success
Oblique and at times
personal
Risk-averse
High-context;
indirect; seldom
blunt; extensive
use of technical
language
Emotional sensitivity
avoided; strong
personal
relationships
critical for success
Decisions often tied
to emotional or
family
considerations
Face-saving critical;
embarrassing
either party to the
negotiation should
be avoided, if
possible
Decisions usually
made on costbenefit basis for
the long term
Face-saving critical;
embarrassing
either party to the
negotiation should
be avoided at all
costs
Passionate
arguments, but
uncomfortable
with serious, open
conflict
Seldom
argumentative;
uncomfortable
with serious
conflict
Short-term
profitability,
often with
personal benefit
for negotiator
Straightforward
and impersonal
Risk-oriented
Low-context;
direct;
frequently
blunt;
sometimes
exaggerates
Emotional
sensitivity
avoided;
negotiators
often avoid
close personal
relationships
Decisions usually
made on a costbenefit basis for
the short term
Face-saving not
critical;
embarrassing
opponent may
lead to an
advantage in
negotiations
At times
argumentative,
especially when
put on the
defensive
Emotional sensitivity
Basis of decisions
Importance of
face-saving
Conflict
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
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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 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 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
Negotiating Strategies and Processes
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.
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 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.
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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
35
with conflict that focus on both process and people.
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?
Accommodate
Collaborate
Importance of relationship
Compromise
Avoid
Importance of outcome
Exhibit 8.9 Conflict resolution strategies
Compete
Managing Conflicts and Compromise
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 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 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
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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.
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, 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
Managing Agreements and Contracts
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, energyconsuming 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.
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.
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
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Global Partnerships and Negotiations
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 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.
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),
Managing Agreements and Contracts
Contracts under the doctrine of
fixed circumstances
Contracts under the doctrine of
changed circumstances
Personal relationships
follow contracts
(universalism)
Contracts follow personal
relationships (particularism)
Contracts specific and
inflexible, regardless of
changing circumstances
Contracts general and
flexible, based on changing
circumstances
Long, detailed, and
legalistic
Short, general, and
personalistic
Contracts backed by
national and international
legal systems
Contracts backed by
personal integrity, trust, and
relationships
Exhibit 8.10 Contracts and the doctrine of changed circumstances
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.
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
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(or even unwritten) contracts in one part of the world frequently mean something
very different in another part, and 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 drybulk 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.
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?
Manager’s Notebook
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 well-considered
actions at the table should serve to clarify both what managers attempt to do and
how well they accomplish their task.
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 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
1. Manage preparations
•Select a suitable partner
with complementary
mission and long-term
goals
•Develop a negotiation
strategy with clear
objectives
•Organize the negotiation
process with clear
guidelines and goalposts
2. Manage negotiations
•Build initial relationships
•Exchange information
honestly
•Bargain in good faith
(e.g., competitive or
problem-solving
strategies)
•Make concessions that all
parties can live with (e.g.,
sequential or holistic
bargaining)
•Finalize agreement and
secure buy-in from all
parties
Exhibit 8.11 Strategies for building global partnerships
3. Manage the
partnership
•Build mutual trust and
interest for the long term
•Live within the contract
and quickly address
disagreements
•Recognize the need for
contract flexibility where
appropriate (e.g.,
changed circumstances)
•Continue relationshipbuilding throughout
partnership
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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.” 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.
Chapter Review
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
Chapter Review
•
•
•
•
•
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 problem-solving. 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;
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?).
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Global Partnerships and Negotiations
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
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.
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?
Chapter Review
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?
11. In your view, what are the three most important lessons from this chapter for
global managers? Explain.
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.
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.
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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.
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 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.
9
Global Teams
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.
CHAPTER OUTLINE
• Global Teams
• MANAGEMENT APPLICATION 9.1 Building French-
Page
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
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306
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315
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• Leadership and Global Team-building
• MANAGEMENT APPLICATION 9.6 Global Team Leadership at Intelehealth
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• MANAGER’S NOTEBOOK: Managing Global Teams
• Chapter Review
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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 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 cross-cultural 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
Global Teams
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 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.
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
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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.
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 high-level
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 single-nation)
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
Global Teams
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 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.
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.
Advantages of global teams:
Frequently more creative in developing ideas and
solutions
Decisions are often more comprehensive, realistic, and
acceptable to all
Often lead to better understanding of multinational
employees
Often increase understanding of global markets.
Often more effective in working with international
customers
Drawbacks of global teams:
Often more difficult to develop closely-knit groups
Frequently take longer to make decisions or reach
consensus
Action plans can take longer to implement
Different expectations and work habits can lead to
conflicts and misunderstandings
Exhibit 9.1 Advantages and drawbacks of global teams
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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 consensusbuilding, 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
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 selfinterest, 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
On-site and Virtual Teams
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 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?
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,
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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
e-mail, 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).
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
Managing Tasks and Team Processes
Exhibit 9.2 Characteristics of on-site and virtual teams
Global team
characteristics
On-site teams
Virtual teams
Team location
and working
patterns
Team members work regularly in
close proximity; considerable
reliance on face-to-face
interactions.
When face-to-face discussions are
important and possible; when
building trust and relationships
are important.
Team members work separately
from various locations;
considerable reliance on virtual
communication and technology.
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.
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 cross-cultural
understanding and sensitivity
from a distance; developing
productive working relationships
from a distance; understanding
communications and reaching
decisions in a largely computermediated environment.
Emphasis on interpersonal,
intercultural, and technical
skills.
Sensitivity to cross-cultural
differences; accommodate
divergent viewpoints; coordinate
computer-mediated group
dynamics and keep members ontask; master intercultural
communications by reading
between the lines on written
messages and
videoconferencing; lead group
efforts to achieve targeted
objectives.
Principal uses
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).
Required skills
for interaction
Emphasis on interpersonal and
intercultural skills.
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.
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Global Teams
Managing tasks:
Mission and goals
Task structuring
Roles and responsibilities
Decision-making
Accountability
Managing team processes:
Team-building
Communication
Participation
Innovation
Boundary management
Conflict
Performance evaluation
Exhibit 9.3 Managing tasks and team processes
fundamental challenges in order to accomplish their mission: managing tasks and
managing processes (see Exhibit 9.3).
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 ontime deliverables.
Managing Tasks and Team Processes
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.
Guaranteeing everyone a voice; balancing quiet and more vocal
Participation.
•
members; getting the best from everyone.
Encouraging creative solutions that take into consideration a wide
Innovation.
•
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; one-way
•
versus two-way evaluations; role of feedback; who evaluates performance.
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
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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.
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?
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
Creating Global Team Synergy
Team structure
and leadership:
purpose,
performance,
people,
processes, and
practices
Team attitudes
and beliefs:
group cohesion,
self-identity,
psychological
safety, and trust
Global team
synergy
Exhibit 9.4 Creating global team synergy
designing optimal global teams and creating the team processes that lead to member
buy-in and commitment (see Exhibit 9.4).
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.
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
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Global Teams
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.
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.
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.
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.
Ensure continued high-quality work by routinely reflecting on their
performance, identifying skills needed to succeed, and making
efforts to acquire them.
Performance goals and
measures
People
Results-driven
processes
Practice
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
Creating Global Team Synergy
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. 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
Exhibit 9.6 Can people be trusted?
Country
Agreement (%) Country
Agreement (%) Country
Agreement (%)
Brazil
Turkey
Romania
Slovenia
Latvia
Portugal
Chile
Nigeria
Argentina
France
7
10
16
17
18
23
24
24
24
24
32
34
35
35
35
37
38
42
43
44
44
44
47
52
54
58
60
64
67
68
Austria
Mexico
South Korea
Spain
India
Russia
Germany
Japan
Switzerland
Iceland
United Kingdom
Ireland
United States
Canada
Netherlands
Denmark
China
Finland
Norway
Sweden
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, 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.
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Global Teams
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.
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.
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.
•
•
•
•
•
•
Challenges of Virtual Global Teams
Virtual global team
efforts to meet
everyday
challenges and
goals
Impediments to
team effectiveness:
● Lack of mutual
knowledge and
context across
members
● Overdependence
on technology
● Loss of useful
details
Impact on virtual
global team
effectiveness
Impediments can
lead to inaction or
unwarranted
assumptions about
people, goals, and
situations
Exhibit 9.7 Challenges of virtual global teams
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
23
effectiveness (Exhibit 9.7).
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
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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 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.
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.
Challenges of Virtual Global Teams
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 energyconsuming 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
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 individ26
uals communicating verbally exchanged an average of 1,702 words. 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
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Global Teams
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 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
28
caused by distance in virtual teams. 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.
Managing Virtual Global Teams
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?
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
30
richer the communication medium required. 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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Global Teams
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
31
important parts of their reality, such as other projects or pressures they are facing.
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.
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
face-to-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 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
Managing Virtual Global Teams
Exhibit 9.9 Managing virtual global teams
Team components
Management strategies
People
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.
Select tasks that are appropriate for virtual work.
Use richer media for more complex problems.
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.
Tasks
Processes
Source: Based on Martha L. 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.
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.
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
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Global Teams
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.”
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
Japanese team
members
(Polychronic,
collectivistic,
high-context)
Korean team
members
(Polychronic,
collectivistic,
high-context)
Project: New
IT system for
South Korean
bank
British team
members
(Monochronic,
individualistic,
low-context)
US team
members
(Monochronic,
individualistic,
low-context)
Chinese team
members
(Monochronic,
collectivistic,
high-context)
Exhibit 9.10 IBM’s virtual development team (example)
Leadership and Global Team-building
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?
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,
Team inputs
Team goals, team design,
membership, culture, time
frame, and technology
Exhibit 9.11 Team-building process
Team processes
Task and socioemotional
processes
Team outputs
Performance,
bonding, and
capacity-building
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Global Teams
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.
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.
Select
members
based on
skills
Recognize
and build on
differences
Provide clear
direction
Leadership
and teambuilding
Tie rewards to
performance
Build positive
team culture
Build team
camaraderie
Exhibit 9.12 Leadership and global team-building strategies
Leadership and Global Team-building
• 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 ontask 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.
• 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
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).
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Global Teams
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.
Trust expectations
Explorations and
expectations about
ways in which the
other party might be
trusted
Trust-related
outcomes
Joint efforts (e.g.,
performance,
problem-solving);
revision of trust
expectations in future
Trust judgment
Observation and
judgment about the
trustworthiness of the
other party
Trust behaviors
Openness of
communication or
relaxation of control
based on mutual trust
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.
Leadership and Global Team-building
This trust judgment leads to trust behaviors (e.g., increased openness with members,
fewer demands for costly control systems or oversight, etc.) and subsequent trustrelated outcomes (e.g., increased efficiency, cost reductions, 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.
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.
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.
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 cofounder 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 start-ups 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
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Global Teams
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 front-end 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 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.
Manager’s Notebook
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.
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).
1. Build a foundation
for team success
•Develop a team charter,
identifying team goals
and norms, roles and
responsibilities, work
procedures, and conflict
resolution techniques.
•Help members become
acquainted to develop
psychological safety and
enhance communication.
•Provide necessary
training for members in
support of team
activities.
2. Build team trust and
engagement
•Build trust through faceto-face interactions,
where possible, and by
emphasizing equity and
fairness in day-to-day
operations.
•Use MBI model
(mapping-bridgingintegrating) to develop
cohesive team.
•Take special measures
to keep virtual team
members engaged.
Exhibit 9.14 Strategies for managing global teams
3. Maintain team
effectiveness
•Develop and monitor
global team synergy.
•Recognize and resolve
problems quickly.
•Seek win–win outcomes.
•Build long-term team
competencies.
•Foster shared
leadership.
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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 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 teambuilding stage. This involves identifying everything that could possibly go wrong
and brainstorming ways to pre-empt 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 dayto-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
- Mapping. Mapping is engaging the differences between people. It is literally
drawing a picture of the similarities and differences in the team, and then
Manager’s Notebook
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 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
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Global Teams
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 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 short- and 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
Japanese-style 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
Chapter Review
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.
Chapter Review
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.
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• 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 taskrelated 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.
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
Chapter Review
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?
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.
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.
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Global Teams
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.
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%20Survey-Executive%
20Summary–Final%20(2018).pdf. Accessed March 1, 2019.
22. Martha 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.
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.
24. Catherine D. Cramton, “The mutual knowledge problem and its consequences for virtual
collaboration,” Organization Science, 2001, 12(3), pp. 346–71.
Chapter Review
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.
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-virtual-teams-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.
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10
Global Assignments
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.
CHAPTER OUTLINE
• Global Assignments
• Benefits and Challenges of Global Assignments
Page
335
340
• Considerations in Living and Working Globally
• MANAGEMENT APPLICATION 10.1 Expatriate Survival Skills
342
• MANAGEMENT APPLICATION 10.2 Promotion to Kenya
• Finding Your Way: Coping with Culture Shock
348
• MANAGEMENT APPLICATION 10.3 Culture Shock in Luogang
• Finding Your Place: Acculturation Strategies
351
• MANAGEMENT APPLICATION 10.4 Acculturation Strategies at Shell
• Managing Repatriation
344
348
355
358
359
• MANAGEMENT APPLICATION 10.5 Returning Home
• MANAGER’S NOTEBOOK: Managing Global Assignments
360
• Chapter Review
365
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Global Assignments
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, 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.
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
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Global Assignments
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.
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.
A second reason for sending expatriates is connected to control and problemsolving. 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 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 highlevel global positions, which is one of the most common reasons for sending
Establish a company,
market, or subsidiary
•Establish new operations
•Enter new markets
•Instill company culture in a subsidiary
Control or problemsolving
•Ensure standardized global operations
•Troubleshoot or turn around initiatives
Build global capacity
•Transfer knowledge
•Develop high-potential global managers
•Fill local skills gaps
Exhibit 10.1 Reasons for using expatriates
Global Assignments
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.
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
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
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Global Assignments
support of a home organization or employer. They are called self-initiated 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 “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 selfinitiated 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. 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
Global Assignments
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.
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 short- and 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 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
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Global Assignments
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 long-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.
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
Benefits and Challenges of Global Assignments
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 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
18
work abroad does not guarantee they will succeed in a global assignment. 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
• 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.
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Global Assignments
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 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.
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).
Personal Considerations
• Spouse expectations
and employment
opportunities
• Family adaptation to
local environment
• Local educational
opportunities
• Quality of family life
in new location
Exhibit 10.2 Considerations in living and working globally
Career considerations
• Motivation for a
foreign assignment
• Relational abilities
• Personal
characteristics
• Prior international
experience
• Foreign language
ability
Family 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
Personal considerations
342
• Basis of performance
evaluation in new
assignment
• Maintaining links to
home company
• Capitalizing on
foreign experiences
• Opportunities to
return to home
company or other
employment
opportunities
Considerations in Living and Working Globally
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 crosscultural skills? Can the manager accept other people as they are, or do they try to
change them to fit a predetermined mold?
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.
Does gender matter when selecting expatriates? Not at all. But surprisingly,
24
women expatriates comprise only 14 percent, on average, of OEs. 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
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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 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.
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?
Considerations in Living and Working Globally
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.
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
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may also jeopardize the success of the assignment (see Exhibit 10.3). The two are
typically highly intertwined.
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
Exhibit 10.3 Family considerations in global assignments
Managers
Spouses
Children
Long-term assignments
Short-term assignments
Some companies prefer managers with
overseas experience for promotion
consideration.
Manager may lose friends and
connections, both at parent company
and in local community.
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.
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.).
High levels of stress due to combined
pressures from home and abroad,
and limited social support while
abroad.
Spouse typically remains at home,
while manager-partner is
continually on the road.
Ongoing stress between partners can
result from repeated separations.
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 re-entry
problems for children.
Expatriate may damage relationship
with or lose influence over
children due to repeated absences
unless keeps in constant touch.
Considerations in Living and Working Globally
more than half of short-term assignments are 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.
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.
Difficult to keep up with home office
changes (e.g., changes in processes or
technology), possibly making it more
difficult to return.
Out of sight, out of mind. May miss out on
important promotion or other
opportunities.
International experience and opportunity to
develop multicultural competence may be
an important asset for future career
advancement.
Have more time to learn and adjust to
foreign culture, but need to adjust is more
acute as success depends on establishing
local connections.
Need to maintain responsibilities and
relationships at home office while abroad,
leading to a double workload.
Need to hit the ground running; no time to
learn about the new country; must get
down to work quickly.
Limited time to learn and adjust. High
pressures to perform can lead to stress and
possible failure.
Good way to gain international experience
without unsettling the family or making
long-term commitments.
Breadth of knowledge acquired from various
short-term international assignments may
be an asset back home.
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At the same time, short-term assignments also have pluses and minuses. As
already noted, many managers sent on short-term 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, 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?
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
Finding Your Way: Coping with Culture Shock
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 culture: psychological adjustment and acculturation. We begin with an
important question: What is psychological adjustment, and how is it accomplished?
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
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starting point for psychological adjustment. As such, the question is not how to
avoid culture shock, but how to manage it.
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 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
Finding Your Way: Coping with Culture Shock
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 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.
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?
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
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Global Assignments
Honeymoon
Arrival; excited;
overly positive
attitudes; high
expectations
Disillusionment
Early days;
setbacks; unmet
expectations;
negative attitudes
Adaptation
Settling in;
learning to cope;
developing realistic
expectations
Biculturalism
Accommodation;
feeling
comfortable;
realistic
expectations
Exhibit 10.5 Stages in psychological adaptation to a new culture
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
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.
Finding Your Way: Coping with Culture Shock
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
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).
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
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Global Assignments
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 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 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.
Coping with Culture Shock
Culture shock cannot be avoided, but it can be alleviated to some degree through
37
proper advanced preparation. 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
Finding Your Place: Acculturation Strategies
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.
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
39
another culture, such as adopting new cultural practices or learning the language.
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-on-one 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 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.
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.
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Home culture
Separation
Retain home
culture
Local culture
Integration
Balance home
and local cultures
Assimilation
Join local
culture
Exhibit 10.6 Acculturation strategies to local cultures
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 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
Finding Your Place: Acculturation Strategies
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 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.
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 some cases, their shared cultural heritage might make it
easier for Americans to “pass” as Europeans and avoid attention.
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).
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Global Assignments
2.
3.
4.
5.
Harm done to a spouse’s career and employment.
Failure to recognize and involve spouses in the relocation decision.
Failure to provide adequate information and assistance regarding relocation.
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 recommends schools and medical facilities, and provides housing
advice and up-to-date information on employment, overseas study, selfemployment, 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?
Managing Repatriation
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?
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
42
changed with people and things that had remained the same at home.”
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.
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Global Assignments
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 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 three-year 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 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.
Manager’s Notebook
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.
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 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.
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
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Global Assignments
1. Prepare before
departure
•Begin learning about the
new environment.
•Reach out to prospective
contacts in the new
location.
•Get cross-cultural training.
•Learn basic vocabulary in
a foreign language.
2. Build in-country
initiatives
•Make friends and get
yourself/family involved.
•Find a cultural mentor.
•Be prepared for culture
shock.
•Continue learning and
developing multicultural
competency.
•Learn the local language.
•Maintain work contacts.
3. Plan in advance for
re-entry
•Manage expectations.
•Earn trust and acceptance.
•Find a well-suited re-entry
job.
Exhibit 10.7 Strategies for managing global assignments
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 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.
Manager’s Notebook
• 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 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
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extremely useful because it can answer the expatriate questions and dilemmas in
real time. Expatriates need to 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.
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-entry job. If that is not the
case, they can readily find a more suitable job in another global firm.
Chapter Review
Chapter Review
SUMMARY
• There is no such thing as a “standard” global assignment. In addition to shortand 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 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
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Global Assignments
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 the return on their investment if repatriates seek
a job elsewhere that allows them to utilize their global expertise.
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
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?
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?
Chapter Review
9. In your view, what are the three most important lessons from this chapter for
global managers? Explain.
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-the-secretive-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.
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-expat-numbers-set-to-soar-to-875m-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.eca-international.com/insights/articles/may-2016/the-decline-ofthe-traditional-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.
16. Mark Mendenhall and Gary Oddou, “The dimensions of expatriate adjustment: a
review,” Academy of Management Review, 1988, 10(1), pp. 39–47.
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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-expatriate-failure. 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.”
23. Gilad Chen, Bradley Kirkman, Kwanghuyan Kim, and Crystal Farh, “When does crosscultural 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/art
icle/Expatriate-Management-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.
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 crosscultural 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.
Chapter Review
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].
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.
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11
Lessons Learned: A Review
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.
CHAPTER OUTLINE
• What Have We Learned?
• Where Do We Go from Here?
Page
371
377
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 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
What Have We Learned?
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
process-oriented 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 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.
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
4
worn suitcase and a dog-eared passport. 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.
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Lessons Learned: A Review
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.
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
An understanding of
cultural differences
and an ability to
navigate and
leverage these
differences to achieve
corporate objectives
An ability to view the
world from a holistic
standpoint, taking a
worldview, not a
national one
An understanding of
the difference
between seeking
partnerships and
seeking domination
Characteristics
of global
managers
Exhibit 11.1 Characteristics of global managers
An ability to
demonstate both
competence and
confidence in working
with global partners
and colleagues
What Have We Learned?
Stage 2.
Understand the
context in which
global managers
operate
Stage 3.
Develop multicultural
competence and
global management
skills
Stage 1.
Understand the
challenges facing
global managers
Exhibit 11.2 Stages in developing global management skills
suggested a three-stage 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).
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, 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.
373
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Lessons Learned: A Review
Cultural
environment
(beliefs, values, and
worldviews)
Organizational
environment
(stakeholders,
strategies, and
structures)
Situational contingencies
(personalities, location,
historical sensitivities,
timelines, crises)
Management environment
(work, management, and
motivation)
Exhibit 11.3 Cultural, organizational, and managerial environments
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 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
What Have We Learned?
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.
• 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.
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 cross-cultural 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. 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
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Lessons Learned: A Review
Cross-cultural
communication
skills
Cross-cultural and
global leadership
skills
Global assignment
adaptation skills
Global
management
skills
Cross-cultural
negotiation and
partnering skills
Cross-cultural and
global team skills
Global ethical and
social responsibility
skills
Exhibit 11.4 Global management skills
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
cross-cultural conflicts are so pervasive throughout the world, the bases of crosscultural 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 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
Where Do We Go from Here?
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 team-building, 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.
• 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.
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
5
from the mistakes of their predecessors are destined to repeat them.” 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
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Lessons Learned: A Review
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
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.
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 buy-in. 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 longterm 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.
Where Do We Go from Here?
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
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.
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: crosscommunication, 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?
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Lessons Learned: A Review
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 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?
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.
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.
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.
Center of power: territorial;
need for clearly delineated
personal space between
themselves and others.
Monochronic: sequential
attention to individual
goals; separation of work
and personal life; precise
concept of time.
High-context: much of the
meaning in
communication is
conveyed indirectly
through the context
surrounding a message.
Center of community:
communal; comfortable
sharing personal space
with others.
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.
382
Details of National Culture Models
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.
Uncertainty avoidance:
degree of uncertainty
that can be tolerated and
its impact on rulemaking.
Individualism/collectivism:
relative importance of
individual vs. group
interests.
Masculinity/femininity:
assertiveness vs.
passivity; material
possessions vs. quality of
life.
Long-term vs. short-term
orientation: outlook on
work, life, and
relationships.
Indulgence vs. restraint:
relative emphasis on
individual happiness,
leisure, and personal
control.
Low uncertainty avoidance:
tolerance of ambiguity; little
need for rules to constrain
uncertainty.
Collectivism: group interests
generally take precedence
over individual interests.
Masculinity: value material
possessions, money, and the
pursuit of personal goals.
Short-term orientation: past
and present orientation;
value traditions and social
obligations.
Indulgence: societal emphasis
on enjoyment and need
gratification.
High-power distance: belief
that people in positions
of authority should have
considerable power
compared to their
subordinates.
High uncertainty
avoidance: intolerance of
ambiguity; need for
many rules to constrain
uncertainty.
Individualism: individual
interests generally take
precedence over group
interests.
Femininity: value strong
social relevance, quality
of life, and the welfare of
others.
Long-term orientation:
future orientation; value
dedication, hard work,
and thrift.
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.
Details of National Culture Models
383
Exhibit A3 Hofstede Model Country Ratings (Examples)
Country/
Region
Power
distance
Uncertainty
avoidance
Individualism
Masculinity
Long-term
orientation
Indulgence
Argentina
Australia
Bahrain
Brazil
Canada
China
Egypt
Finland
France
Germany
Greece
India
Indonesia
Israel
Italy
Japan
Malaysia
Mexico
Netherlands
Nigeria
Philippines
Russia
Saudi Arabia
Singapore
South Korea
Spain
Sweden
Thailand
Turkey
UK
USA
49
36
95
69
39
80
70
33
68
35
60
77
78
13
50
54
100
81
38
80
94
93
95
74
60
57
31
64
66
35
40
86
51
80
76
48
30
–
59
86
65
100
40
48
81
75
92
36
82
53
55
44
95
80
8
85
86
29
64
85
35
46
46
90
25
38
80
20
25
63
71
67
35
48
14
54
76
26
26
30
80
30
32
39
25
20
18
51
71
20
37
89
91
56
61
60
49
52
66
45
26
43
66
57
56
46
47
70
95
50
69
14
60
64
36
60
48
39
42
5
34
45
66
62
20
21
36
44
36
87
7
38
63
83
45
51
62
38
61
88
41
24
67
13
27
81
36
72
100
48
53
32
46
51
26
62
71
52
59
68
24
4
57
48
40
50
26
38
–
30
42
57
97
68
84
42
20
52
46
29
44
78
45
49
69
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.
384
Details of National Culture Models
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.
Individualism/collectivism:
extent to which people
derive their identity from
within themselves or their
group.
Specific/diffuse: extent to
which people’s various
roles are
compartmentalized or
integrated.
Neutral/affective: extent to
which people are free to
express their emotions in
public.
Achievement/ascription:
manner in which respect
and social status are
accorded to people.
Time perspective: relative
focus on the past or the
future in daily activities.
Relationship with
environment: extent to
which people believe they
control the environment
or it controls them.
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: focus on
individual achievement
and independence.
Collectivism: focus on group
achievement and welfare.
Specific: clear separation of
a person’s various roles.
Diffuse: clear integration of
a person’s various roles.
Neutral: refrain from
showing emotions; hide
feelings.
Affective: emotional
expressions acceptable or
encouraged.
Achievement: respect for
earned accomplishments.
Ascription: respect for
ascribed or inherited
status.
Past-/present-oriented:
emphasis on past events
and glory.
Inner-directed: focus on
controlling the
environment.
Future-oriented: emphasis
on planning and future
possibilities.
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.
Details of National Culture Models
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.
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.
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.
Institutional collectivism:
extent to which society
encourages collective
distribution of resources
and collective action.
High: individuals integrated
into strong cohesive
groups; self-viewed as
interdependent with
groups; societal goals often
take precedence over
individual goals.
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.
In-group collectivism:
extent to which
individuals express pride,
loyalty, and cohesiveness
in their organizations and
families.
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.
Low: tendency to be more
informal in social
interactions; rely on word
of people they trust; be
less concerned with
orderliness and recordkeeping; rely on informal
norms of behavior.
Low: self-interest
important; value
pleasure, comfort, and
self-enjoyment; high
need for power and
possessions; more
psychological and
pathological problems.
Low: individuals largely
responsible for
themselves; self-viewed
as autonomous;
individual goals often
take precedence over
societal or group goals.
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.
385
386
Details of National Culture Models
Exhibit A5 (cont.)
Dimensions
Scale anchors
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.
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.
Future orientation: extent
to which people engage
in future-oriented
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.
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: prefer modesty and
tenderness to
assertiveness; sympathy
for the weak; value
cooperation; often
associate competition
with defeat and
punishment; value facesaving in communication
and action.
Low: low participation of
women in the workforce;
fewer women in positions
of authority; women not
accorded equal status in
society.
Low: less emphasis on
economic success;
propensity for instant
gratification; value
extrinsic motivation;
organizations tend to be
bureaucratic and
inflexible.
Low: value harmony with
environment over
control; emphasize
seniority, loyalty, social
relationships, and
belongingness; value
who people are more than
what they do.
Source: Robert House, Paul Hanges, Mansour Javidan, Peter Dorfman, and Vipin Gupta, Culture,
Leadership, and Organizations. Thousand Oaks, CA: Sage, 2004.
Power
distance
5.64 +
4.74
5.33 +
4.82
5.04
4.92
4.89
5.28 +
5.25
5.40 +
5.47 +
5.18
4.73
5.43 +
5.11
5.17
5.22
4.11 –
5.80 +
5.44 +
5.10
5.52 +
4.99
Countries
Argentina
Australia
Brazil
Canada
China
Egypt
Finland
France
Germany
Greece
India
Indonesia
Israel
Italy
Japan
Malaysia
Mexico
Netherlands
Nigeria
Philippines
Poland
Russia
Singapore
3.65
4.39
3.60
4.59
4.94
4.06
5.02
4.43
5.22
3.39
4.15
4.17
4.01
3.79
4.07
4.75
4.18
4.70
4.29
3.89
3.62
2.88
5.31
–
+
+
+
–
+
+
Uncertainty
avoidance
3.99
4.28
3.66
4.49
4.36
4.73
3.96
3.40
3.40
3.34
4.57
4.69
4.10
3.63
4.30
4.87
3.98
3.86
4.10
5.12
3.61
3.94
3.49
–
+
–
+
–
–
–
–
+
Humane
orientation
3.66
4.29
3.83
4.38
4.77 +
4.50
4.63 +
4.93
3.79
3.25 –
4.38
4.54 –
4.46
3.68
5.19 +
4.61 +
4.06
4.46
4.14
4.65 +
4.53
4.50
4.90 +
Institutional
collectivism
Exhibit A6 GLOBE Model Country Ratings (Examples)
5.51
4.17
5.18
4.26
5.80
5.64
4.07
4.37
4.02
5.27
5.92
5.68
4.70
4.94
4.63
5.51
5.71
3.70
5.55
6.36
5.52
5.63
5.64
+
+
–
+
+
+
+
+
+
+
–
–
+
+
–
+
–
In-group
collectivism
4.22
4.28
4.20
4.05
3.76
3.91
3.81
4.13
4.55
4.58
3.73
3.86
4.23
4.07
3.59
3.87
4.45
4.32
4.79
4.01
4.06
3.68
4.17
+
+
+
+
+
+
+
+
+
+
Assertiveness
3.08 –
4.09
3.81
4.44 +
3.75
3.86
4.24
3.48
4.27
3.40
4.19
3.86
3.85
3.25
4.29
4.58 +
3.87
4.61 +
4.61 +
4.15
3.11 –
2.88 –
5.07 +
3.49
3.40
3.31
3.70
3.05
2.81
3.35
3.64
3.10
3.48
2.90
3.26
3.19
3.24
3.19
3.51
3.64
3.50
3.01
3.64
4.02
4.07
3.70
+
+
+
+
+
+
+
+
+
+
+
Future
orientation
Gender
egalitarianism
4.36 +
3.65 –
4.04
4.49 +
4.45 +
4.27
3.81
4.11
4.25
3.20 –
4.25
4.41 +
4.08
3.58 –
4.22
4.34 +
4.10
4.32 +
3.92
4.47 +
3.89
3.39 –
4.90 +
Performance
orientation
5.61
5.52
4.85
5.63
5.57
5.15
4.88
South Korea
Spain
Sweden
Thailand
Turkey
UK
USA
3.55
3.97
5.32 +
3.93
3.63
4.65
4.15
Uncertainty
avoidance
3.81
3.32 –
4.10
4.81 +
3.94
3.72
4.17
Humane
orientation
5.20 +
3.85
5.22 +
4.03
4.03
4.27
4.20
Institutional
collectivism
5.54 +
5.45 +
3.66 –
5.70 +
5.88 +
4.08 –
4.25 –
In-group
collectivism
4.40
4.42
3.38
3.64
4.53
4.15
4.55
+
+
+
+
Assertiveness
2.50 –
3.01
3.84 +
3.35
2.89
3.67 +
3.34
Gender
egalitarianism
3.97
3.51
4.39
3.43
3.74
4.28
4.15
Future
orientation
4.55 +
4.01
3.72
3.93
3.83
4.08
4.49 +
Performance
orientation
Note:
than Australia
at 4.74.
The +greater
and – signs
indicate
highest
and lowest ratings according to their study. Note that the GLOBE ratings for collectivism
Higher scores
indicate
strength
on a GLOBE’s
dimension.
For example,
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
Argentina at 5.64 has a higher power distance score (preference for
country and ignores variations (sometimes significant) across individuals, groups, and subcultures.
Source:hierarchy)
Adapted from Robert House, Paul Hanges, Mansour Javidan, Peter Dorfman, and Vipin Gupta, Culture, Leadership, and Organizations. Thousand
Oaks, CA: Sage, 2004.
+
+
+
+
Power
distance
Countries
Exhibit A6 (cont.)
Index
Abirafeh, Lina, 247
acculturation
at Royal Dutch Shell, 357–59
strategies, 355–57
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, 158–61
aircraft partnerships, 261
Alibaba, 307
Anderson, Stephen, 163
Apple, 266–67
Arab nations, 8
ascription cultural dimension, 49
assignment (global). See also expatriates
acculturation strategies, 355–59
benefits and challenges of, 340–42
considerations in, 342–48
culture shock in, 348–55
high cost of, 335–36
long- and short-term, 339–40
reasons for, 336–39
repatriation management, 359–61
types of, 15–17
Athanassiou, Nicholas, 317
Audur Capital, 209–12
Australia
executive compensation in, 137
gender wage gaps in, 141
leadership styles in, 202
team tasks and processes, 302–6
traditional decision-making process in,
83
traditional investor model (organization),
85
work hours in, 130
work values in, 128–29
Austria, 137
authority of expertise, 329
automobile partnerships, 265–66
bargaining (global partnership), 275–76
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, 207–8, 210
biznez, 228
BMW, 251
Boden, Dermot, 15–16
boundary management, 305
Brazil
bargaining tactics in, 277–81
cultural logic in, 170–71
leadership dimensions in, 203–4
leadership styles in, 202
recession in, 8
Brett, Jean, 277
BRICS, 7, 278
British Airways, 178
British Petroleum, 176–77
Brooks, Chad, 213
Buchan, Nancy R., 309, 322
Cadillac, 156
Camus, Albert, 225
Canada
cultural logic in, 170–71
culture affecting management, 121
gender wage gaps in, 141
leadership styles in, 202
performance motivation in, 133
390
Index
Canada (cont.)
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
doctrine of changed circumstances in, 288
Emerson Electric Suzhou, 197–98
family decision process in, 97
gender wage gaps in, 141–42
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), 302–6
Chinese family model (organization)
examples of, 89–90
principles of, 87–89
Chiu, Willy, 317–19
Chung, Ju Yung, 379
Citigroup, 344
code-switching, 206
codetermination decision-making process, 95, 100–1
cognitions
culturally mediated, 161–71
defined, 122, 161
cognitive evaluation, 168–69
cognitive schemas, 122–24
cohesion (global team), 307
collectivism cultural dimension, 48, 91, 134
communication
AIA model of, 158–61
cultural language processing in, 161–71
cultural social behavior in, 171–78
emic and etic patterns in, 38–39
providing feedback in, 178–80
seeking common understanding in, 155–58
virtual, 312–14
comparative leadership model, 199
competitive negotiation strategy, 273–76
Confucianism, 87–88, 91, 111, 115
considerations (expatriate)
career, 347–48
family, 345–47
personal, 342–44
continuous change, 6–7
contract (defined), 285
conventions (ethical), 243–46
conversation sequencing, 172
conversational formalities, 175–77
Corley, Danielle, 213
corporate culture
defined, 101
inner workings of, 101–3
women in, 212–16
corporate social responsibility, 249–52
corruption, 228
Corruption Perception Index, 241–42
Cosco, 288
country clusters, 56–57
cultural distance, 56
cultural environment
in global work environment, 116
and macroenvironment, 33
and managerial roles, 118–21
cultural friction, 56, 349
cultural intelligence, 21
cultural logic, 169–70
cultural models
refinements to, 55–58
types of, 39–44, 68
cultural screens
cognitive evaluation, 168–69
cultural logic, 169–70
culturally mandated behaviors, 171–72
culturally mediated cognitions, 161–70
defined, 160–61, 170–71
languages, 163–85
selective perception, 167–68
cultural stereotypes, 12, 62–63
cultural values
action, 51–52
biculturalism versus multiculturalism, 59
categories of, 44–45
caveats about, 53–55
Index
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,
171–72
culturally mediated cognitions, 161–71
culture shock, 348–55
cultures (national)
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, 127–32
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, 103–4
discrimination and social injustice, 229–46
distributive justice
across cultures, 135–37
at Lincoln Electric, 138–40
defined, 135
doctrine of changed circumstances (contract),
286–88
Dorfman, Peter W., 200–2
downgraders, 178–80
Drucker, Peter, 264
dual management hierarchy, 114–15
dynamic capabilities, 269
Ecuador, 157–58
egalitarian culture, 47–48, 134, 136
Egypt
food prices in, 9
leadership styles in, 202
Emerson Electric Suzhou, 197–98
emic perspective, 38–39
emotional capital, 211–12
employees
global work values, 127–32
job security, 86
women, 140–43
England, George, 128–29
enterprise unions, 93
environment. See also organizational
environment
corporate social responsibility and, 249–52
cultural values, 46
economic development, 230
stewardship of, 230
Ericsson, 266–67
Ertel, Danny, 270
ethical behavior
characteristics of, 246–49
laws and conventions governing, 235–46
ethical conflict, 231–34
ethics
corporate social responsibility and, 249–52
defined, 228
global commerce and, 225
institutional conflict and, 231–34
laws and conventions governing, 235–46
social challenges and, 226–31
ethics warning system, 248–49
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
391
392
Index
expatriates. (cont.)
home country nationals and, 339
inpatriates and, 339
leadership and, 206
organizational and self-initiated, 337–39
reasons for, 336–39
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
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, 300–1
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
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, 191–93
Eastern and Western traditions of, 194–98
expectations of, 194
team-building and, 319–25
women in, 212–16
global leadership effectiveness cycle, 209–12
global leadership models
comparative leadership model, 199
GLOBE leadership dimensions, 200–4
GLOBE model, 199–200
Pyramid leadership model, 205–12
global management. See also global leadership
cultural value navigation in, 55
expectations of, 119–21
future of, 377–79
multicultural competence and success in, 21–22
performance motivation in, 133–40
role expectations in, 118–21, 123
thinking patterns in, 122–24
transition to global leaders, 205–7
and women, 140–43
working across cultures, 61–65
global management skills
building stages, 372–77
cognition and perception in, 64–65
skills development, 24–25
Index
global manager learning
characteristics/definition of, 13–14
cross-cultural communication, 154–80
differences between, 115
job demands in, 13
learning model, 24–25
managing four aspects of the work
environment, 115–18, 124–27
strategies for working with global
organizations, 105–7
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
global mindset, 21
global mobility specialists, 339
global partnerships
agreement and contract management, 285–88
benefits and drawbacks of, 262–67
conflict and compromise management, 282–85
negotiation strategies and processes, 272–82
pharmaceutical, 260–61
preparation, 267–72
superordinate goals, 261
global team design principles, 308
global team synergy, 307–10
global teams
advantages and drawbacks of, 299–300
attitudes and beliefs, 307–10
defined, 297–98
evolution of, 296–97
leadership in, 319–25
managing tasks and processes in, 302–6
on-site and virtual, 301–3
synergy creation and design principles, 307–10
types of cultural, 298–99
virtual, 310–19
with French and American managers, 300–1
globalization
global management requirement for, 12–13
multicultural competence and, 20–21
speed of, 6–10
technology transfer and, 6–7
GLOBE leadership dimensions, 200–4
GLOBE leadership model, 41–44, 56, 199–200,
385–88
GLOBE project, 32–33, 35
Goel, Neha, 323–25
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, 200–2
Gupte, Lalita, 215
Hall culture model, 41–42, 381
Hall, Edward, 40, 61, 94, 173–74, 300
Hall, Mildred Reed, 94, 300
Hampden-Turner, Charles, 120–21
Handy, Charles, 267
Hanges, Paul J., 200–2
harmony cultures, 46, 88, 91, 134
Hayward, Tony, 176–77
hierarchical culture, 47, 134
high-context cultures, 174
Hofer, Eric, 379
Hofstede culture model, 41–42, 56, 382–83
Hofstede, Geert, 35, 72, 370
holistic approach to bargaining, 276–77
home country managers, 18–19, 234,
339
Honda Motors, 115
honne, 99, 112
Hopeman, Wei, 344
House, Robert J., 200–2
Hungary
gender wage gaps in, 141
work hours in, 130
Hyundai Motors Group, 114–15
IBM, 296, 317–19, 360
Iceland, 209–12
IKEA, 234
implementation mindset, 270
393
394
Index
India
cashew processing in, 8–9
Corruption Perception Index and,
241–43
global partnerships in, 275–76
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
institutional conflict, 233–34
institutional environment
corporate strategy and, 76–77
defined, 76
Intel Corporation, 126–27
Intelehealth, 323–25
interconnectedness
global, 7–8
GLOBE project, 32–33
local consequences for, 8–9
International Labour Organization, 213–14
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, 277–81
corporate culture in, 103–4
cultural norms in, 36–37
culture affecting management, 121
employee downsizing, 73
executive compensation in, 137
gender wage gaps in, 141
institutional environment, 76–77
karoshi, 130–31, 286
keiretsu model (organization), 90–94
leadership expectations in, 194
leadership styles in, 202
partnerships in, 265
ringi-sei decision-making process, 97–99, 103–4
stakeholders in, 76
supervisor role in, 123
trust in government, 78
work hours in, 130
work values in, 128–29
Javidan, Mansour, 200–2
jia zu gong-si, 89
kaisha, 91–92
karoshi, 130–31
keiretsu model (organization), 90–94
Kia Motors America, 114–15
Kinetic Motor, 215
kleptocracy, 228
Kluckhohn, Clyde, 35
konzern, 94
Korea
cultural logic in, 169–70
culture affecting management, 121
dual management hierarchy in, 114–15
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, 317–19
work hours in, 130
work values in, 128
Index
languages
as barrier to success, 165–67
cognitive processes in, 163–64
confusion with, 164
importance in communication, 162
social cues in, 164–65
variety of world, 163
which to use, 163
Lao Tzu, 34, 68, 189
Laurent, Andre, 115, 119–20
law of the situation, 329
leadership
defined, 190–91
foundations of, 195–97
Lego, 251
leisure time, 129–31
Lewis, Richard, 53, 154, 173, 233
LG, 15–16
Lincoln Electric, 138–40
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, 118–21
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, 180–83
ethical conflict management, 252–55
global assignments, 361–64
global leadership guidance, 216–18
global management skills, 24–25
global organizations, 105–7
global partnerships, 289–90
global teams, 325–29
understanding managerial environment, 143–45
working across cultures, 61–64
mastery cultures, 46, 134
Maznevski, Martha L., 317
Mazumdar-Shaw, Kiran, 215
MBI approach to building effective teams,
326–28
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, 139–40
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, 156–58
mindfulness, 65
Mintzberg, Henry, 118–19
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
multiculturalism
international need for, 8
leadership and, 206
in Singapore, 60–61
teamwork, 296–97
versus biculturalism, 59
multinational corporations
environmental ethics and, 230
strategy and structure evolution of, 81–83
Musk, Elon, 127
mutable/immutable cultural value, 47
395
396
Index
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, 127–32
national history and cultural mindset, 125
nationalism (extreme), 229
Neelam Dhawan, 215
negotiation strategies, 273–76
Nelley, Tsedal, 314
nemawashi (ringi-sei decision-making process),
99, 112
Netherlands
codetermination decision-making process,
100
employee downsizing, 72
managerial expectations in, 120
performance motivation in, 132
situational contingencies, 126–27
upgrader and downgrader communication,
179–80
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, 174–75
leadership styles in, 202
Nissan, 93–94, 141
nonverbal communication, 167–68, 173–75
norm of authenticity, 168
normative behavior
culture and, 35–37
and situational contingencies, 125
social protocols in, 171–78
truth and, 52–53
Norway
culture affecting management, 121
executive compensation in, 137
performance motivation in, 133
OECD, 141
OECD Guidelines (ethics), 237–38, 243, 258
on-site teams, 301–3
organization (defined), 73
organizational culture. See corporate culture
organizational environment. See also
environment
complexity of structure in, 262–64
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,
284–85
performance motivation, 133–40
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
culture affecting management, 121
executive compensation in, 137
gender wage gaps in, 141
power distribution cultural value, 47
problem-solving negotiation strategy, 273–76
process strategies for resolving conflict,
282–84
Index
production/work teams, 298
project teams, 298
psychological adjustment, 339, 349–54
RacingThePlanet, 18
rank (Chinese family model), 88
Reiche, Sebastian, 205
repatriates, 339
repatriation, 359–61
reverse culture shock, 359
ringi-sei decision-making process, 97–99
Ronen, Simcha, 56–57
Royal Dutch Shell, 4, 250, 357–59
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, 266–67
Sanchez-Runde, Carlos, 84, 135, 161, 196
Santayana, George, 377
Saudi Arabia, 234
Schein, Edgar, 102
selective perception, 167–68
self-initiated expatriates, 15–16, 337–39
sequential approach to bargaining, 276–77
sequential time, 50
sequential time cultures, 134
service teams, 298
sharia law, 233
Shenkar, Oded, 56–57
shinyo, 277–78
shokai, 278
silent communication, 173–75
Singapore
leadership styles in, 202
multiculturalism in, 60–61
situational contingencies
in global work environment, 117
managerial behavior and, 124–27
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
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, 260–61
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
synchronic time cultures, 134
Tainwala, Ramesh, 314–15
Talmud, 32, 67
Tata Motors, 275–76
Tata, Simone, 215
tatemae, 99, 112
397
398
Index
team charter, 326
team leader responsibilities, 295–321
technik, 96
technology transfer, 6–7
Tesla, 131–32
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, 209–12
Toshiba, 296
Toyoda, Akio, 176
Toyota, 176
traditional investor model (organization), 83–87
transactional leadership, 191
Transparency International, 241–42
Trompenaars culture model, 41–43, 384
Trompenaars, Fons, 35, 120–21
trust development (global team), 321–23
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, 235–37
UN Global Compact, 238–40
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, 277–81
contracts in, 286
culture affecting management, 121
election ethics, 226
Emerson Electric Suzhou and, 197–98
executive compensation in, 136
gender wage gaps in, 141
global partnerships, 260–61
institutional environment, 76–77
leadership styles in, 202
management teams culture, 300–1
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, 178–80
Upjohn Pharmaceutical, 260–61
Ustinov, Peter, 53, 234
vacation policies, 130–31
Velux, 298
virtual teams
challenges of, 310–15
defined, 301–3
IBM Cloud Labs, 317–19
Intelehealth, 323–25
management of, 315–17
Warner, Judith, 213
web-based organizations, 82
Wells Fargo Bank, 72
Whitehead, Alfred North, 243
women
expatriates, 343
in global leadership, 209–12
in global workforce, 140–43, 212–16, 247–48
Index
work environment model, 115–18
work values
across cultures, 127–32
at Tesla, 131–32
work hours and vacation time and, 129–31
works council, 95
World Bank, 230
World Economic Forum, 140, 189
World Trade Organization, 230
xenophobia, 229
yin and yang, 195–96
399