1 The travel of organization Göran Ahrne and Nils Brunsson Draft version Dec 2011. Comments welcome! In the contemporary world there are more interaction and communication among people at great distances than ever before. Interaction and communication both reinforce and are reinforced by strong global similarities. It is indeed increasingly difficult to find differences in appearance and life at various places – even extremely long air travels lead to cities that are amazingly similar to each other. There is an increasing number of categories that are used worldwide. For example, there are states, firms and unions almost everywhere and they tend to nurture similar ideas and behave in similar ways. Their similarity makes it possible to differentiate among them by global status orders: there are world champions in sports or among universities, for instance. Organizations far apart tend to introduce similar structures and procedures. An increasing number of organizations depend more and more on the coordination of their activities with organizations in other parts of the world than organizations in the local community. These characteristics of the contemporary world are easily observable. The processes that lead to these effects are more difficult to observe and sometimes they even remain unnoticed. It is popular to range them under the general concept of globalization but such a ranging under one concept risks hiding significant differences. Globalization is far from a unitary process that shapes everything in its way in the same form. There are different roads to a globalized world and the roads are more or less visible and have different impacts on the outcomes. Ideas have been described as travelling (Czarniawska-Joerges and Joerges 1996), but so do organizations and organization. In this chapter we describe three forms of organized globalization: the travel of formal organizations, partial organization and meta-organizations. We compare them to 2 each other as well as to globalization through the travel of ideas in terms of flexibility, visibility and their global impact. The liability of foreignness One pertinent issue in globalization processes is whether something is perceived as global or local. Although an external observer may categorize an innovation in a local context as emanating from the outside, it is not sure that people within that context draw the same conclusion. They may think that it was invented within the local community, organization or even by themselves. It may even become institutionalized: people take it for granted rather than thinking about its origin and how it could be different. Whether an innovation is classified as foreign or local has implications for how it is evaluated. In some contexts and under some circumstances foreignness constitutes a negative value while local innovations have a higher prestige. An example would be the syndrome of “not invented here” that has been argued to characterize some organizations. But more generally, modern individuals and organizations are constructed as entities that are and should be autonomous and special. They are expected to find their own ways of doing things rather than imitating others, which makes importation of innovations somewhat problematic for their identity. Modern states claim the same characteristics: they request and pretend sovereignty and have actively propagated ideas of local similarities of their “nation”. (Krasner 1999; Billig 1995) In other cases it is the other way round. Individuals and organizations with little self-esteem may find innovations suggested or tried elsewhere more prestigious than ideas suggested by themselves or their own organization. In malfunctioning or new states citizens may prefer administrative forms by foreign prestigious states rather than accepting those that have been invented by their own representatives (Badie 2000, Westney 1987). The same goes for firms. While Japan actively and explicitly imitated state structures and procedures from the West in the 19th century, firms in the West tried to imitate “Japanese management” during the Japanese business success of the 1980ies (Boyer et al 1998). 3 The issue of whether something is perceived as foreign or not highlights the importance of how travels of ideas or organizations happen in the local community; how and to what extent local organizations are involved and whether they are threatened or empowered. ?? Travel of ideas One process of globalization is the spread of ideas from one place to another. The spread of ideas among organizations is a well-studied phenomenon, not least in the tradition of institutional analysis. One example is the spread of various ideas about how to manage organizations (Sahlin-Andersson and Engwall 2002, Rvik 2007). Such ideas may slowly diffuse in networks of organizations or organizational fields by organizations imitating each other (DiMaggio and Powell 1983). When there exist global networks and fields they may produce much diffusion of ideas. But the spread of ideas does not presuppose contact or knowledge among organizations. In modern societies various mass media covering events far from home are the main source of foreign ideas. New and old ideas fly easily to all corners of the world. Or there are mediating organizations or people who fly: For example, management ideas can be spread by management consultants or gurus who like modern St Pauls travel from one organization to another preaching the gospel. But the basic notion in this tradition is that ideas travel but organizations stay at home. As long as ideas are just ideas - perceptions and communications of what there are and can be or what can be done - they are highly flexible. In order for them to affect organizational practice they have to be translated into a local context (Czarniawska-Joerges and Joerges 1996, Sahlin-Andersson 1996) and in that process their origin or similarity with their origin may become highly ambiguous. A propagator of an idea has considerable leeway in choosing to present it as related to ideas in distant places or firmly rooted in or even invented in the local context. In fact, and as all scholars know, it is not a trivial task to determine if or to what extent one’s ideas are invented by oneself or by someone else. For example, for external observers it is clear that public sector administrative reforms have been strikingly similar in many countries during the 80ies and 90ies; observers have even given them the common name of New Public Management (Hood 1995). But at least in the Swedish debate, reformers have extremely seldom presented their ideas as originating from other countries. And it is conceivable that they were in fact local inventions in each country (Brunsson 2000). The 4 flexibility of ideas makes them difficult to criticize on the ground that they are foreign or local. The travel of ideas is without doubt an important source of globalization and has huge consequences for organizations, but their globalization does not only happen through the travel of ideas among them but also through their own travels. The travel of organizations, however, is another kind of journey. Travel of organizations Much earlier globalization happened by the travel of organizations. States were conquering other states or colonizing areas with more or less of previous state organization. These processes had significant consequences for the building of similarities, coordination and communication among distant places, sometimes very distant. Contemporary globalization is to a considerable extent driven by multinational corporations that establish subsidiaries or buy existing firms far from their home base. Some multinational corporations have become symbols of a rapid globalization. For example, McDonald’s and IKEA have spread their businesses to many corners of the world in a rather short period of time and they both have a high visibility. Both McDonald’s and IKEA are examples of companies with innovative and clear concepts of what products to sell and how to sell them. They are to some extent associated with new lifestyles and they have been seen as something new in the local contexts. Although both and IKEA have encountered resistance and have had somewhat to adjust to local practices (Ahrne and Papakostas 2002, Watson 1997), the various establishments are surprisingly similar all over the world. Unlike conquering states they do not preclude competition from other organizations, but the McDonalds restaurant becomes a sort of foreign enclaves in various local contexts all over the world. Companies’ international expansion is not a process without difficulties, however. One problem that companies may meet is what has been termed “the liability of foreignness” (Zaheer 2002). The concept sums up the many disadvantages that companies may be confronted with when they try to establish themselves in a new business environment. These disadvantages can be described as structural costs such as a lack of networks and linkages to 5 important local actors as well as poorer access to local information. There are also “institutional costs” in the form of legitimacy and acceptance of the foreign firm. In the research about the liability of foreignness a great variation in these factors has been found and it can be concluded that foreignness in some cases may be an advantage (Nachum 2003). Yet the liability of foreignness is still recognized as an issue that has to be addressed and how travelling firms or states are perceived in the local context is always of importance for understanding globalization processes. Like all organizations firms are decided orders (Luhmann 2000, March and Simon 1958) that have access to the organizational elements of membership, hierarchy, rules, monitoring and sanctions (Ahrne and Brunsson 2011). Multinational corporations such as McDonalds introduce their own version of an organizational, decided order into a local context. The central hierarchical top of the organization makes many significant decisions for what the local units shall do. It decides to use much of the same rules in their foreign restaurants as they do at home. They decide to monitor the employees in the same way and they use the same collection of sanctions (Ritzer 1993). When foreign firms organize in conflict with local values and norms they may be seen as unwelcome intrusions into the order at home. And their character of decided orders make them easy victims of objections and protests. When organizational structures and procedures are decided or at least perceived as decided, it becomes obvious that the order could be different –the firms could decide to adapt their rules, monitoring and sanctions to local values and norms. So objections are valid. And there are specific people responsible for having made the wrong decisions, so that there is someone to whom one can direct one’s objections. And in fact, McDonalds is an example of a foreign firm that has met objections and even street protests (Smart 1999). Such effects make it tempting to expand in less visible ways than McDonalds and IKEA have done, by letting acquired local companies maintain their original names and brands, as Electrolux and Unilever have done (Jones 2005). In a local context such a process of globalization may remain unnoticed except for insiders such as the employees of the company. Yet it is a process of organizational travel and if the new conditions are revealed it may also arouse similar reactions. 6 Compared to ideas organizations are not as free-floating and flexible as ideas. Their origin is clearer and more difficult to hide. Organizations cannot be translated and edited without asking for permission. It is more useful to mobilize protests against an organization than an idea. Decisions may be scrutinized and those who protest may suggest alternative solutions. Travelling organizations always have a connection to their roots and their origin and history is in principle well known. Their records may be investigated. Their foreignness is more obvious. Thus we can expect travels of organizations to be slower and less frequent than travels of ideas. Multi-national corporations are not the only examples of contemporary organized globalization. There are other ways of spreading organization globally and other organizations involved. Instead of expanding a formal organization, organizations decide on one or a few organizational elements. Partial organization Organization does not have to be confined to formal organizations, such as states or firms. It is possible and common to use one or a few of organizational elements at a time in order to try to organize people or organizations. Even though these elements are not used together with all the other elements they have all the characteristics of organization. They are decided among several options, they are related to people who are responsible for the decisions, and they are liable to contest (Ahrne and Brunsson 2011). One example is global standards, a kind of rules concerning such things as measures, products or organizational structures and procedures. Many of such standards are set by international standard organizations such as ISO, ETSI or CEN. Unlike a multi-national corporation setting rules for its subsidiaries, standardization organizations do not have the authority to set binding rules for anyone. On the other hand their standards reach out far beyond a single formal organization. International standards have a huge impact when it comes to creating worldwide similarities of measurement procedures, industrial products and organizations. Many of these similarities are essential for achieving coordination over long distances. Standards are sometimes complemented and reinforced by other organization elements. There may be various monitoring activities that shall check whether standards are complied with or 7 not. And when they are, “certifications” or “accreditations” may be given to the standard follower, which can be interpreted as a kind of positive sanction. For example, companies can let others inspect their quality or environment work and become certified ISO 9000 or ISO 14 000 adopters. States are observed by Human Rights Watch whether they comply with standards for human rights or not, and if not they are publicly criticized. Status can be transferred by various kinds of awards and prizes. And the combination of standards and monitoring sometimes creates global status orders, as is the case with various global ranking systems. By choosing to comply to organizational elements with a global reach, a local organization can create or reinforce a global identity. By complying with a global standard for environment protection a company can demonstrate that it belongs to the category of environment aware firms, a category known all over the world. By accepting being ranked in the category of a business school, a school can pose as belonging to this global identity. On the other hand, local organizations that do not want to be standardized can defend their local particularities against international standards in at least three ways. Large corporations in many industries spend much effort at influencing standard decisions in order to get standards that fit to the individual corporation’s own local needs, production processes or product development plans. Second, they may participate in standardization processes with the purpose of stopping any decisions on international standards in the relevant realm. And, third, they may refuse to comply with a standard they do not like. This is not to say that they always succeed. In many cases, they have to comply with product standards in their own products in order to coordinate their own production with that of other firms or with organizations standards (such as ISO’s standard 9000) in order to be considered a respectable or at least acceptable partner by foreign organizations. For people and organizations that are not directly involved in international standard setting, some international standards may go largely unnoticed. Consumers of mobile phones may not reflect on the fact that most of its components are determined by international standards, even if the phone is produced in their home country. In other cases the foreignness of international standards and any ensuing monitoring and sanction activities is observed as well as their effects on local life. And as elements of organization they can stimulate and direct objections. But compared to the same elements in a formal organization it is less clear who shall be 8 blamed. Standards need two decisions to be complied with – the decision to set a certain standard and the decision by an individual organization to comply with the standard. In this way responsibility is diluted by being shared between setter and adopter. And in fact, there tends to be less of institutionalized structures and procedures for complaint about standards than for binding rules in organizations. The same responsibility dilution and its effects arises for those monitoring and sanction activities that are partly decided by the organization that is monitored or sanctioned, for example those that seek a certification. And even those who are given a prize they have not applied for may be seen as partly responsible because they are seen as able to decide to refuse accepting it. Concluding, when globalization is initiated by organizational elements outside one formal organization, foreignness tends to become somewhat less visible and somewhat more difficult to object to than when formal organizations expand over the globe. They do not constitute such a brutal a reminder of global similarities, connections and interdependencies as states or multinational firms invading local contexts with alien practices. But in comparison with ideas without organization there are still significant differences. Foreign organizational elements tend to be stronger reminders of global connections than the travel of ideas. It is more difficult to hide the origin of partial organization for those who are really interested. There are not only local but also foreign decision-makers to hold responsible. And organizational elements are less flexible: There is less room for local translation, especially when standards are combined with monitoring and sanctions. Someone has decided about these elements, and this party as well as others interested in the effects. For example, both the standard-setter and other standard compliers are interested in how organizations referring to the standard actually comply with it. However, there is a second form of relatively soft global organization, international metaorganizations, to which we now turn. Meta-organizations 9 Most partial organization is directed towards formal organizations – it is such entities that are expected to comply with standards and that are monitored and sanctioned. When yet two other organizational elements, membership and hierarchy, are added to the other three elements we get a meta-organization, an organization with other organizations as its members. Well-known meta-organizations such as the United Nations (EU), the Fédération Internationale de Football Association (FIFA) and International Chamber of Commerce (ICC) are essential parts and drivers of globalization, but so are also thousands of less well-known international metaorganizations such as the International Association of Universities (IAU), International Fertilizer Industry Association (IFA) or United Cities and Local Governments (UCLG) (Ahrne and Brunsson 2008). Meta-organizations are associations, which means that membership is voluntary and that all members are considered equals (Warren 2001). The members of meta-organizations, however, do not have to be associations, but just as well other kinds of organizations such as states or firms. Or the members may be other meta-organizations: Often organizations form a national meta-organization which then becomes a member of an international one. The members of meta-organizations are still autonomous organizations and they have the possibility to leave the organization if they would want to. A meta-organization cannot decide to close down one of its members or to move it. Membership in an international meta-organization offers organizations unique opportunities to take part in a process of globalization without expanding their own business or moving their boundaries. In contrast to the travel of organizations, the formation of a metaorganization does not mean that local organizations move to new places. As members of meta-organizations local organizations remain local and keep their local identity, at the same time as they become part of an expanding organization with a global reach. Sometimes organizations form or join a meta-organization in order to avoid and seek protection from local organizers, such as national governments. In other cases they seek protection from partial organization with a global reach. For example, meta-organizations can choose their own standards and they do not to the same extent have to be exposed to attempts from other less understanding organizations to set rules for them. Also, membership in a meta-organization provides an opportunity to influence others. A member can use its membership to influence the decisions of the meta-organization and thus indirectly the practices of other members. For organizations that have little chance to expand or move meta- 10 organizations offer a means for getting a global reach. For most contemporary states conquering other states is not an option, but states have thousands of meta-organizations to join. Empires are not popular any longer and some empires have been turned into metaorganizations, as is the case with the British empire (now the Commonwealth of Nations) or the Soviet empire (now the Commonwealth of Independent States – CIS). Meta-organizations contribute to processes of globalization in other ways as well. Within their respective fields many meta-organizations are active in facilitating interaction and communication among their members, as do for instance the Universal Postal Union (UPI) since 1874 as well as Internet Society (ISOC) since 1992. Also, some meta-organizations contribute to global status orders by being restrictive in what members they accept: even if an organization clearly belongs to the relevant category it may not be good enough to be accepted as a member. Other meta-organizations invest much work in providing global status orders, by distributing awards to successful members (Golden Eggs and the like) or, as in sports, by arranging world championships in order to tell who of their members or their members’ members are the best. Local or foreign For international meta-organizations the balance between the foreign and the local is fundamental. The tension between these two levels is built into the organization itself: the meta-organization represents the global aspect and the members the local one. The tension now partly becomes one of competition among organizations but within the framework of one organization. Because both the members and the meta-organization are organizations they compete with each other and have to strike a balance as to which organization is the most important in various situations. Shall the international meta-organization that is foreign in all local contexts be the one with greatest authority and visibility or that is emphasized or shall the local member organizations be the important ones? The very idea of meta-organizations is to constitute workable connections between the local and the global. Members of meta-organizations need to appear as autonomous and independent organizations in front of their own members or customers in the local community, who expect them to be able to make their own decisions. Thus the authority of a meta-organization vis-à-vis its members has to be limited in comparison with a complete organization with individual members, such as a multinational firm. Even if a meta- 11 organization has the right to use all organizational elements that are expected from complete organizations they may not be able to use them. In order to balance between the authority of the members and the one of the meta-organization it is common that members have veto rights or that qualified majorities are required for making decisions. Members who want to block decisions on certain rules, monitoring or sanctions are likely to succeed. Therefore, meta-organizations tend to avoid binding decisions letting the members themselves decide whether they shall comply or not. Rules are often formulated as standards, monitoring is voluntary and negative sanctions are avoided. So the influence of a meta-organization on specific members is in many ways restricted in comparison with what is usual in individual based organizations. The local order is under less threat than in the case when states and multinational corporations move. But over time the members influence each other in order to be able better to interact with each other. The similarities in what they do and how they do things tend to increase, thus stripping member organizations of some of their local characteristics. Meta-organizations are reinforced by the threat of alternative forms of organization. In order to defend themselves organizations have to refer to the rules, monitoring etc that the metaorganization now provides and that makes other forms of organization unnecessary. And as a member it is more difficult to openly reject even a voluntary organizational element decided by one’s meta-organization than a voluntary element that is not connected to membership but decided by parties seen as wholly external. Yet they cannot translate and use the rules of the meta-organization at their own will without expecting reactions from the other members. If an organization has made too far-reaching interpretations of their own, it may even be excluded from the meta-organization, as has, for instance, happened in the Liberal International and the Socialist International. On the other hand, if the members agree, a meta-organization may also be able in practice to soften the organizational elements compared to a situation of external partial organization. Organizations are highly capable to keep a difference between what they do and what they say (Brunsson 2007). To some limit, their standards may be less restrictive, the monitoring may be shallower and the sanctions less draconic in practice than they claim in relation to a sceptic audience that had perhaps preferred truly external interventions. 12 At a certain point in time there are meta-organizations with very little authority and impact on their members. They are a kind of clubs where other organizational elements than membership are very rudimentary or non-existent. Maybe several of their members have joined in order to block the organization to become important. Such meta-organizations contribute little to globalization. Other meta-organizations have a large impact; adapting their members to the purpose and tasks of the meta-organization, most often by creating similarities among them that facilitate coordination, communication or common forceful action. Such meta-organizations are significant contributors to globalization. In some cases they may even over time take on some characteristics of individual-based organizations (which is the case of the contemporary EU) or even wholly turn into an individual-based organization (as the US did over a hundred year period). Meta-organizations also vary in the extent to which they affect the identity of their members. Most meta-organizations build on similarity among the members: they recruit members that are similar in some aspect. And this similarity is not changed by the membership: in most meta-organizations there is no division of labour among the members and the core activities of the members remain intact; what changes is how they do things. An organization that becomes a member of a meta-organization maintains its old, local identity but it adds a new global one as well. One can say that the member adds a last name to its original first one. The last name is the name of the meta-organization that indicates its relationship and strong affinity with a wider world and the other members. In comparison with partial organization a membership in a meta-organization gives a stronger new identity. Adding membership to other elements such as rules or monitoring increases the trustworthiness of the new identity, the last name, since it implies that the organization has been recognized by other similar organizations as an equal It becomes easier to convince others about a certain identity and may even bring about a higher status. For example, to ensure or stabilize an identity as a liberal party, membership in the Liberal International helps. Having access to two names gives the member opportunities to manipulate how it is looked upon in the local community. If an organization believes that foreign connections would cause any suspicions or protests, it can use only its first name in relations with its members, customers or other external parties. Then their membership and new last name does not have to generate much attention and their new global connections may remain almost unnoticed. . 13 If, on the other hand, the member wants to demonstrate its foreign connections, it can emphasize its new last name. How a membership in a global meta-organization is perceived in a local community also depends on the identity of the meta-organization and what kind of interests it represents. Some meta-organizations avoid the label of organization, presenting themselves as loose networks for contacts among the participants; others present themselves in a similar way as firms and states do, as forceful actors. The Commonwealth of Nations seems less powerful or threatening than NATO. And no international meta-organization can completely conceal that they are international. Meta-organizations are important roads to globalization thanks to their unique way of connecting the local with the global. And many meta-organizations may in the long run become important global actors and develop into supra-territorial corridors of order linking geographically distant organizations with each other and breaking up local orders. Conclusions In order to understand, analyze and explain globalization we believe that it is crucial to clearly distinguish among different kinds of processes involved. In this paper we have described four processes of globalization and their differences. Two of them have raised much attention – the travel of ideas and the travel of complete organizations. However, it seems unlikely that such processes alone would create as much similarity as we actually can observe in the world today. They have weaknesses as homogenizers, although different ones. Ideas can travel fast and their origin is not easily observable. On the other hand ideas are flexible: those picking up the ideas may do it in their own way and translate them as they wish, which reduces their homogenizing potential. For the travels of complete organizations it is the other way around. Organizations are more inert but have a higher ability to maintain their forms even in a foreign environment. And they are more likely to encounter resistance. 14 The other two processes of globalization that we have discussed in this chapter, the use of partial organization and the creation of meta-organizations can be regarded as somewhat softer forms than the travel of complete organizations, which makes them more mobile. They constitute combinations of foreignness and localness. Local organizations can choose to what extent they relate to these kinds of organization. On the other hand, compared to ideas they are less free-floating. And even though one may attempt to conceal it, it is difficult completely to avoid noticing and presenting their foreign origin. They are less flexible. An extreme degree of acceptance of ideas or organization is institutionalization. Over time some ideas become taken for granted and the ensuing practices become institutionalized, which means that the origin of them are forgotten or become irrelevant. One may speculate that the possibility to adapt ideas to local needs and values facilitate such institutionalization. The lesser flexibility of organizational elements does not, however, prevent them to become institutionalized as well. Many international standards are no longer perceived as decisions with options but are taken for granted in many local contexts (David 1986). Some aspects of new technical products may even become almost immediately institutionalized – it becomes taken for granted that a mobile phone should largely look and function the way it does. It is more difficult to imagine how complete organizations, whether multinational firms or international meta-organizations, could become taken for granted and their origin forgotten. By distinguishing among the four kinds of globalization processes we can also discern their interaction. They may compete but also reinforce each other. Organization facilitates the travel of ideas. Multinational corporations are arenas in which ideas about innovations float more freely than outside (Kogut and Zander 1993). And within meta-organizations people with common interests have a chance to exchange ideas about the situation of their organizations and what to do about it. Meta-organizations constitute a common structure for the travel of ideas to all the members. They can be understood as global tracks for safer and more predictable journeys of common ideas. Moreover, there is an often less visible part of decisions of standard setting, monitoring and sanctioning. That is the decision to whom the organizational element is directed. Organizers make decisions on categories of people, organizations and situations to which their organization element applies. When the categories are less visible than the organizational element itself, they may draw less criticism and more easily become institutionalized. For 15 example, standards or rankings for business schools may be contested while the Anglo-Saxon concept of business school may become a taken- for granted label for various schools in different contexts and with different traditions and orientations. There may be criticisms of whether ISO’s standard 9000 in fact improves quality while the relevance and definition of quality may remain uncontested. In the same way, meta-organizations by defining who can be a member also create or reinforce certain categories, thereby spreading the same identities all over the world. Metaorganizations can also provide more detailed definitions of their membership category, which many can refer to. So we believe that it is important to observe that the similarities we see in the contemporary world are to a large extent the results of organization, but not primarily of organization in the traditional sense of formal organizations with individuals as their members, such as multinational corporations. Without partial organization and meta-organizations the world would be much less homogeneous than it is today. And it would be much more difficult to interact and communicate. The increase in similarities, interaction and communication the last fifty years has followed a strong increase in both partial organization and meta-organizations. For example, the International Standards Organization, which is just one of several international standardization bodies, has produced 18 500 standards since its inception in 1947. 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