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An Introductory Essay to the Special Issue
The idea for a special issue on the Pedagogy and Domain of International Management was germinated at a workshop on the subject held at the San Diego annual meeting of the Academy of
Management in 1998 1 . Since its inception in the 1970s, the International Management (IM) Division of the Academy had, for two decades, preached its gospel in a wilderness of academic insularity. Before the
1990s there had hardly been an article on the international dimension of management in the canonical outlets of Academy of Management Journal and Academy of Management Review.
Suddenly, starting in the late 1980s, converts to internationalization flocked into the church in large numbers. It seemed that everyone, from Secretaries of Education, to Deans, to ordinary faculty, discovered the need to internationalize the business curriculum and management research. The new converts gleefully appropriated some of the division’s scriptures, claimed them as their own, and took them back to their own fields of inquiry. The international dimension is, today at least in some measure, addressed in work done in the twenty-one other divisions of the Academy, as well as in other functional areas 2 . Does this reduce the IM division’s own distinctive competence and domain? What continuing raisons d’etre are there for International Management as a field of study?
What Distinguishes International Management Studies?
International management is the organizational and strategic response to continued differences across nations in culture or mindset, in prices, costs, regulations, standards, distribution methods, and valuation measures (such as currency or accounting standards) to name only a sub-set of differences. At the start of the twenty-first century, the world remains a fragmented planet. Levitt’s (1983) article on
“globalization” whose principal theme was the worldwide convergence of markets, consumer tastes and standards, remains a distant utopian prospect.
Does the existence of differences in itself, justify International Management as a field of study?
After all, there can also be differences within a country, in prices or costs, for example. Segmentation of markets is a well known concept in domestic marketing studies. But differences within nations are typically small compared to those across countries. Moreover, it is not merely a question of the degree of difference. As Boddewyn (1998) points out, differences across countries go beyond differences of degree, to differences of kind. Sunderam and Black (1992) identify “unique MNE
3 attributes,” four of which are fundamental differences of kind and not just of degree, that distinguish multinational from domestic operations:
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
Multiple currencies and valuation (accounting) conventions

Multiple governments and regulatory environments

Country-specific factor endowments
 Multiplicity of corporations within the umbrella of the “international firm” (i.e. the local perspective in each nation, voiced by locally-empowered executives and agents)
A comparative study of the nature of these differences is one continuing aspect of the field.
However, to the international manager the question is how to cross or transcend these differences. This involves at least four types of activities. The first involves arbitrage -- which affects commodity, labor, as well as finished product markets. The second involves foreign market entry or the internationalization process, which includes the crucial question of choosing the optimal organizational mode for such foreign entry. The third involves working around or reducing the regulatory, economic, or social barriers to entry in the host nation. The fourth involves the transfer of firm-specific advantages to other locations, advantages such as technology or knowledge, organizational skills, and intellectual property.
Cross-Border Issues and Globally Integrated Perspectives
The above issues reflect mainly “cross-border” or “comparative” perspectives. These will continue to be a necessary subject of International Management studies. But from the corporate head office or global optimization perspective, the focus of international management is on the totality of all countries -- a view that oversees an uneven landscape. It is a multinational, multi-segmented landscape with administrative units differentiated by location, level, ownership (such as in joint ventures), personnel, product coverage, and so on. Most company operations are run under a system of nationally incorporated subsidiaries, whose managers are subject to the contrary pulls of local versus head office mandates.
Finding the optimum middle ground between local and global mandates is complicated enough on each decision, or dimension of management. Take for instance the “old chestnut” where a firm has to decide on how many different product designs or models it chooses to introduce for one product worldwide. Just for this single product design question impinge issues such as R&D costs, the location of design laboratories, production costs, consumer preferences across markets, transport costs, tariffs, intrafirm transfer, learning and governance costs, to name but a few considerations. There is an entire literature on this one issue of the globally optimum number of designs or models 4 . But this is only for one decision in the global company. Similarly (and simultaneously) the firm must decide on the optimum number of production locations worldwide, the optimum number of brands, the optimum number of advertising agencies it will retain, the optimal number of suppliers for each component, and so on.
Within a single company, the optimum number of R&D facilities worldwide may be three, and the optimum number of product designs may be eight. It may choose a single source component supply from a trusted joint venture partner, but have twenty different advertising campaigns, with radically
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different messages in different nations for the same item. In brief, each firm has to analyze the local adaptation vs. global standardization question separately for each piece of its value chain. Moreover, the various optima are hardly set in stone, but vary over time as the economic, regulatory and cultural environment shifts.
Pedantry and Meaning
At this point, some readers may wonder at the use of the word “international” versus “global” or
“transnational.” At one time there was an attempt to demarcate “international” as signifying a crossborder or comparative management perspective; “multinational” as depicting a federated collection of semi-autonomous corporations under the ownership of a company whose shares were traded mainly in one nation; and “global” or “transnational” as firms whose top managers actively strove to integrate, rationalize and optimize across all their worldwide units 5 . Bartlett (1986) tried to distinguish between
“global” as depicting firms with a high degree of global integration versus “transnational” as companies seeking an optimal balance between the forces of global integration and national responsiveness.
However the term “global” has been so tortured by countless luncheon speakers, and inexact academics, as to have practically lost all meaning. Perhaps more significantly, the above pedantic classifications hardly fit companies exactly. Except for the very early stages of internationalization when the focus is merely on crossing borders, most companies have established foreign affiliates on a federal structure, with varying degrees of cross-unit standardization or integration. And relatively few companies are “global” in the Bartlettian sense of having highly standardized units.
The International Division at the Academy of Management may as well therefore live with its existing name, and in this paper, the term “international” is broadly used to describe any firm having operations in more than one nation.
One aspect of international management is the continuous search for optima along each dimension or piece of a company’s value chain. A second aspect of the field is the strategic management of the overall differentiation/integration issue. What distinguishes strategic management in a transnational company from Lawrence and Lorsch’s (1967) differentiation/integration typology is a vastly greater level of complexity, which justifies the study of such companies as a separate field of study. Related questions include the geographic span of control and the organizational structure of international firms.
The Mission of a Separate International Management Division at the Academy of Management
When we consider that there are three principal dimensions to a firm (i) the product or service type, (ii) function and (iii) geography or location, what is wrong if one division out of twenty-two in the
Academy of Management puts special emphasis on the geographic or locational dimension? Moreover, while the missionary efforts of the IM Division have partially succeeded in having other divisions incorporate the international dimension into their work, this process is far from complete 6 .
Another justification for International Management (IM) as a separate field of study is that because IM scholars are more alive to the differences between nations, they have been the first to spot trends that have evolved outside the US 7 . Among the trends is the sudden explosion of interest in alliances, joint ventures and interfirm cooperation starting in 1990, and cross-cultural (as in international) management, which may have antedated the interest in multicultural (as in domestic) management.
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The International Management Division continues to retain two distinctive attributes
1) A unique or differentiated institution, namely the international or transnational firm, whose operations are different in kind, and not just degree, from the operations of single-nation companies.
2) A comparative advantage in the study of location-specific attributes or differences such as culture or economic geography.
Overlaps With Other Areas
Certainly, there will always be encroachment, or overlap from other divisions of the academy.
But this has not prevented other divisions from existing and thriving. Consider a hypothetical example: a paper on evolving careers in the healthcare sector, changing as a result of new technologies including
Information Technology. Such a paper would cross the domain of at least four divisions of the Academy, namely,
1) Health Care Management (HCM)
2) Technology and Innovation Management (TIM)
3) Careers (CAR), and
4) Human Resources (HR)
But this is the nature of business. The practice and study of management are necessarily eclectic, multidimensional and matrix-oriented. To assert that management studies in general, or even so-called
“functional” areas like marketing or accounting are “disciplines” is academic sophistry, and flies against the fact that the practice of business is, by its very nature, multifunctional, interdisciplinary and eclectic.
Are Multi-Disciplinary or Eclectic Approaches to the Study of Management a Virtue or a Vice?
International management is, or should be, the most eclectic of all. IM division scholars, more than most others, are prone to using variables from all three dimensions of the firm (product, function and geography) and combining methodologies. If eclecticism means mere dilettantism, then it is half-baked or worse. By the same token, a zealously narrow focus, such as Transaction Costs may make important theoretical advances, but can offer only partial explanations of empirical reality. Widely and deeplygrounded multidisciplinary approaches, on the other hand, can be theoretically rigorous and have superior explanatory power (in adjusted R 2 ). Take two examples: Dunning’s (1988) eclectic paradigm, and
Porter’s (1990) quadripartite paradigm explaining national advantage. These offer more complete explanations than single-track theories. Or take the question of choice of organizational mode in interfirm cooperation. It is by now agreed that robust explanations are derived by marrying the concepts of transaction costs (e.g. Hennart, 1988, and many others) with those of resource-based theory (e.g. Barney,
1991;Dierickx and Cool, 1989), with a particular focus on organizational capabilities (e.g. Teece, Pisano, and Shuen, 1997) -- particularly on imperfectly imitable, corporate-embedded knowledge as a wellspring
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of competitiveness and strategic differentiation (e.g. Grant, 1996; Kogut and Zander, 1993). Such unified approaches (e.g Contractor, 1990) offer a more balanced perspective and better explanatory power.
International Management scholars are best positioned to make such contributions.
International Management Versus International Business
Both the Academy of International Business (AIB) 8 and the International Management (IM) division 9 of the Academy of Management were set up to fill a gap in management studies, namely a focus on the international dimension. Without getting lost in definitional niceties, let us simply observe that the range of interests of the two bodies show a considerable overlap, but with a difference in emphasis, as shown in Figure 1.
International Aspects of
Other Functional Areas
(e.g. Finance, Accounting,
Marketing, etc.)
Alliances With
Other Firms
(Sub or HQ view)
Individual Actors
Employees
HRM
Culture
Negotiations
National Subsidiary
Foreign Mkt. Entry
Internationalization
Comparative Mgt.
Federated Firm
“Multinational”
Interaction Between
HQ and Subsidiaries
Optimization Seeking
Global Firm
(Top Level HQ view)
Policy/Law/
Environmental
Influences
International Regulations
International Law
INTERNATIONAL
BUSINESS
Figure 1: The Overlapping But Differentiated Domains of International Management and
International Business
The unit of analysis in Figure 1 increases in size from the individual actor (or employee) on the left hand side, to the supranational institution (e.g. WTO, World Bank, IMF) on the extreme right. The
International Management literature, for the most part, does not treat the interaction of the firm with supranational institutions. The rare exceptions include Boddewyn and Brewer (1994) and Hillman and
Keim (1995) 10 . By the same token, the International Business literature places greater emphasis on the right side of the spectrum in Figure 1. The International Business literature also, of course, includes the international aspects of other functional areas such as Finance, Accounting and Marketing which are absent in the IM literature. The article by Contractor (2000) in this issue, treats such examples, and distinguishes between International Management and International Business sub-topics at the micro
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curricular level. Even if International Management excludes Finance or Marketing articles, there are important inferences from these areas which affect strategy. An example would be the implications of foreign exchange risk management on strategy of the international firm. Such cross-functional articles are virtually absent in the Academy of Management Journal and Academy of Management Review . Both
International Business and International Management amply represent topics such as international alliances and interfirm cooperation.
Summary of Conclusions
To some extent, the mission of internationalizing management studies in the US has been partially accomplished. But there is a considerable distance to go in this process. The success of the internationalizing mission will inevitably mean that scholars in other fields will undertaken investigations and publish papers that formerly appeared mainly in the domain of International Management. Even if the internationalizing mission were to completely succeed, this by no means suggests a diminished role for the IM division in the Academy of Management – any more than a Careers Division needs to be disbanded because writers outside that division write about career paths 11 . Certainly, there may be even more encroachment on the domain of International Management, or overlap with other aspects of management in coming years. But this is actually commendable and desirable, as the practice of management, and therefore its study, are inherently cross-functional and multidimensional 12 .
The continuing raison d’etre of an International Management division, is because it identifies a particular theme or focal point that is vital to the practice of management. In the case of International
Management, two principal justifications that will continue to differentiate it are the existence of a unique institution called the international or multinational firm, and the fact that substantial differences remain across nations in economic geography, institutions and politics. These are unlikely to disappear in the foreseeable future.
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REFERENCES
Barney, J. 1991. “Firm Resources and Sustained Competitive Advantages,” Journal of Management, 17, pp. 99-120.
Bartlett. C. 1986. “Building and Managing the Transnational: The New Organizational Challenge,” in
Porter, M. (ed.), Competition in Global Industries, (Boston: Harvard Business School Press), pp.
367 – 404.
Boddewyn, J. 1999.”The Domain of International Management,” Journal of International Management,
Vol. 5, 1.
Boddewyn, J. 1998. “The Domain of International Management: Mission statement Impossible?” Paper presented at the Pre-Convention Workshop on Exploring the Domain of International
Management at the Academy of Management annual meeting in San Diego, August 1998.
Boddewyn, J. and Brewer, T. 1994. “International Business Political BehaviorNew Theoretical
Directions.” Academy of Management Review, 19, pp. 119 –143.
Contractor, F. 1990. "Contractual and Cooperative Modes of International Business: Towards a Unified
Theory of Modal Choice," Management International Review, No. 1, 1990.
Contractor, F., 2000. “What ‘International’ Sub-Topics are Crucial to Business Education? A Survey of
Management School Professors” Journal of International Management, (Special Issue on the
Pedagogy and Domain of International Management), forthcoming Volume 6, March 2000.
Dierickx, I. And Cool, K. 1989. “Asset Stock Accumulation and Sustainability of Competitive
Advantage,” Management Science, 35.
Dunning, J. 1988. “The Eclectic Paradigm of International Production: A Restatement and Some Possible
Extensions,” Journal of International Business Studies, Spring, pp. 1 –32.
Grant, R. 1996. “Towards a Knowledge-Based Theory of the Firm,” Strategic Management Review, 17, pp. 109-122.
Hennart, J-F. 1988. “A Transaction Cost Theory of Equity Joint Ventures,” Strategic Management
Journal, 9, pp. 361-374.
Hillman, A. and Keim, G. 1995 “International Variation in the Business-Government Interface:
Institutional and Organizational Considerations.” Academy of Management Review, 23, pp.193 –
214.
Kogut, B. and Zander, U. 1993. “Knowledge in the Firm and the Evolutionary Theory of the
Multinational Firm,” Journal of International Business Studies, 24 (4), pp. 625-645.
Lawrence, P. and Lorsch, J. 1967.Organization and Environment. (Boston: Harvard Business School
Press).
Levitt, T.1983. “The Globalization of Markets,” Harvard Business Review, May-June, pp. 92 – 102.
Martinez, Z. and Toyne, B. 2000. “What is International Management and What is Its Domain?” Journal of International Management, (Special Issue on the Pedagogy and Domain of International
Management), forthcoming Volume 6, March 2000.
Perlmutter, H. 1969. “The Tortuous Evolution of the Multinational Corporation,” Columbia Journal of
World Business. January-February. Pp. 9-18.
Porter, M. 1990. The Competitive Advantage of Nations. (New York: The Free Press).
Sunderam, A. and Black, J. 1992. “The Environment and Internal Organization of Multinational
Enterprises,” Academy of Management Review, 17 (4), pp. 729 – 757.
Teece, D., Pisano, G. and Shuen, A. 1997. “Dynamic Capabilities and Strategic Management,” Strategic
Management Journal, 18 (7), pp. 509-533.
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ENDNOTES
1 Pre-Convention Workshop on Exploring the Domain of International Management , Academy of Management, San
Diego, August 1998.
2 This is illustrated by the compilation of articles in Table 2 of the paper by Martinez and Toyne (2000) in this issue of JIM . Several of the authors’ home base is in other divisions of the Academy.
3 MNE = Multinational Enterprise
4 This question goes back at least forty years in the International Marketing and International Business literatures, but continues to be revisited today because of its inherent complexity and a continuously shifting market environment which has the result of affecting the optimum.
5 Terms such as Perlmutter’s (1969) “geocentric” management have referred more to the mindset of senior managers rather than to the organizational structure of the worldwide enterprise.
6 The process is most advanced in the BPS (Business Policy and Strategy) division. Others still retain a mostly domestic management orientation. Witness continuing incentives such as the prize offered for the best
“international” paper.
7 The non-US membership of the Academy of Management may be growing faster than US membership, but
Americans still comprise well over three-quarters of the total.
8 Established in 1959. Current membership is approximately 2600 members.
9 Established in the early 1970s. Current membership is approximately 1800 members.
10 Even here the emphasis is more on national governments than on supranational institutions.
11 In fact, the domain Careers Division is completely overlapped by the Human Resources Division. Yet, the former exists because it sounds a sub-theme of particular interest to scholars and to the practice of management.
12 This does not diminish the great value of single track theory development, one of the signal achievements of academies. But single-lens theories cannot provide a complete picture of a multidimensional social phenomenon.
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