Module 2

GLOBALIZATION, DIVERSITY AND ETHICS

Module Introduction
It is an inescapable fact that the emergence of concerns and issues relating to the
increasing globalization, existence of diversity in the workplace and ethics in a global context
are already part of every business organization today. Organizational behavior plays a
significant role in addressing how the individuals and groups can cope up to this trend. OB
also aims to look at these concerns as an advantage rather than a challenge.
Globalization demands the human resources to be more competitive beyond their
national borders. As globalization opens the boundaries between countries, this leads to the
rise of a more diversified workforce, embracing cultures and individual differences within
the international firms. Consequently, diversity and globalization had led to the concept of
ethics and ethical behavior in organizations. This concern has been less discussed and with
only a little attention in organizational behavior. But now, the emerging perspectives on
ethics have brought up moral issues and choices as well as the deals with right and wrong
behaviors. As you go along the chapter, you will get to understand how these three concepts
go together in the context of human behavior in organizations. Moreover, these can now be
viewed as issues to make the management rethink about their approaches to their
organization’s operations and workforces.

Topic Outcomes
After reading and understanding this module, students will be able to:
1. Explain the strategic importance of human behavior in organization in a global
context
2. Explain diversity and diversity management
3. Discuss emerging perspectives on ethics

ORGANIZATIONAL BEHAVIOR IN A GLOBAL CONTEXT

Today, globalization is one of the major environmental aspects that creates a huge
impact on organizations. This paradigm shift has also challenged the organizations to
respond both in internal and external environments. In the context of OB, we understand
that individuals think, behave and act differently around the world. We may have
similarities but have differences as well. This is actually related to the next topic in this
chapter, i.e. diversity.
Let us first discuss globalization. This refers to the internationalization of business
organizations leading to a global economy. It is a trend whereby the national boundaries
become less relevant.

Globalization and Foreign Job Assignments

 The increasing globalization has paved way to the foreign job assignments of its
human resources. Multinational firms assign employees to operate the businesses across
countries. Individuals who are tasked to work outside their home countries are known as
expatriates or “expats”. For expatriates, this is an exciting experience as an opportunity for
learning and growth but at the same time, is a challenge to take. Common problems
encountered by the expats include culture shock or the stress brought about by the
individual’s difficulties and challenges in coping with the requirements of life outside their
home country. This is particularly related to how one should behave and act in a new
country.
Culture, as defined, is a way of life, varies from one country to another. Some
acceptable behaviors in a given country may not be appropriate or morally right to the
culture of other nations. Aside from the challenging experience through a foreign job
assignment, this can also be considered as a rewarding one. Working with individuals
coming from different countries around the world is an opportunity for learning. Differences
may be apparent, but so as new ideas and creativity.
Cultural effects on international working relationships can be viewed through high-
context and low-context cultures. Countries with high-context cultures tend to
communicate and understand individuals through contextual elements. They consider
looking at the underlying meaning, gesture and tone in a message. They focus on valuing
personal relationships and trust. Most Asian countries like Korea, China, Japan and
Philippines. On the other hand, countries like Germany, the United States of America and
Canada exhibit low-context cultures. This means that they communicate through an
established system. They prefer no room for confusion. The purpose of low-context cultures
is to make a message clear to everyone so that it will not slow down the process. They value
messages in black and white rather than contextual clues.
In addition, there are some more related aspects of culture such as monochronic and
polychronic time orientation. Monochronic time orientation is manifested by individuals
who prefer working on tasks one at a time. They do not engage in multitasking and do not
divert attention from a planned task to minimize interruptions. Contrary to that, individuals
with polychronic time orientation work well even with multiple tasks at a given time. They
have more flexible plans and are not distressed by interruptions.
In most cases, individuals who differ as to high-context and low-context cultures have
difficulties dealing with one another; the same is true to those who work with monochronic
and polychronic time orientation. However, these issues may be resolved through proper
training as regards cultural differences. The outcome of the said training is known as cultural
intelligence. It is an individual’s ability to understand and adjust with the behaviors of people
outside his/her culture. For example, individuals may opt to learn foreign languages or may
prefer working in teams.

International Participation : Multidomestic, Global and Transnational Firms

Organizations that engage in foreign markets have more opportunities for growth yet
require understanding of which international approaches and related organizational
characteristics to consider.

Multidomestic Firms
 These are organizations that utilize multidomestic strategy. Firms operate in such a
way that they respond to the needs in particular of each country. Products are tweaked to
suit the preference of a specific market. Nestle is a classic example of a multidomestic firm. It
uses specific and unique sets of strategies like marketing and sales approach. It caters to the
local taste of a given country and offers different products for different markets. In general,
multidomestic firms have low integration but of high responsiveness. Company employees
then have less chances of being deployed outside their countries.

Global Firms
These firms are characterized by high integration and low responsiveness. The
strategy of the organization is to offer standards and common products across different
countries and regions in the world. They seek to maintain centralization in the mother
country while maximizing efficiency through reduced costs. Global firms oppose
multidomestic firms. Commonly, pharmaceutical and luxury goods companies belong to this
type of firm. These firms often send expatriates across the organization.

Exhibit 2.2
Bartlett and Ghoshal’s Typology of Multinational Companies:
Global, Transnational, International and Multidomestic Strategy
Transnational Firms
Transnational firms use transnational strategy in becoming highly responsive to
specific needs of a country and at the same time, high in global integration. These firms
somehow exhibit the characteristics of both multidomestic and global firms. They try to tailor
fit the products to some degree to cater the needs of various countries but also seek to
standardize to some extent for cost efficiency. International travels and meetings and foreign
job assignments are also evident in this type of firm.

International Firms
These firms are not actually considered strategic as they have low levels of local
responsiveness and global integration. This is much known as an exporting strategy.

Dimensions of National Culture

One of the significant contributions to organizational behavior made by Geert
Hofstede, a social scientist, is the four dimensions of culture, i.e. Power Distance, Uncertainty
Avoidance, Individualism and Masculinity. This resulted from his research among 40
countries. Several scientists and researchers followed after him and identified some more
dimensions of national culture.
Researchers under The Global Leadership and Organizational Behavior Effectiveness
(GLOBE) Project generated nine units of measurement or Cultural Dimensions. This research
was made across 162 countries.
1. Power Distance. It refers to the degree to which the power and status privileges are
accepted by people to be unequally distributed in the society. Countries that score
high on this dimension are those who expect a more centralized or autocratic
leadership. Russia is one example for high power distance. Members of this country
respect their titles and status.
2. Uncertainty Avoidance. It refers to the degree to which people do not feel like taking
risks in unpredictable outcomes. In high uncertainty avoidance countries, people
focus on following specific rules and put everything in order. Germany and Japan are
countries that score high on this.
3. Assertiveness. Hofstede identified this as “masculinity” in his four dimensions of
culture. This refers to the degree to which people are aggressive and confrontational.
It reflects the strong personality of individuals in high assertiveness countries. Often,
those who have low-context cultures score high on assertiveness. Germany and the
United States are high assertiveness countries as opposed to the Philippines where
people are asked and consulted before making decisions.
4. In-group collectivism. It refers to the degree to which people take pride belonging to
their organizations and families. China scores high on this as they exhibit a strong
distinction between the members and non-members of their group or family.
 5. Institutional Collectivism. It refers to the degree to which integration of groups and
organization is being encouraged. This means that countries who have high
institutional collectivism oppose individualism. Individualism is one dimension
identified by Hofstede as the degree to which individuals feel good when they are self-
reliant and focused in their personal goals. Germany and Italy have low institutional
collectivism but score high on individualism. People in these countries are rewarded
for their personal efforts and outcomes. Japan and Singapore on the other hand have
high institutional collectivism.
6. Performance Orientation. It refers to the degree to which excellence is recognized
and being rewarded. Innovation and competitiveness are encouraged in countries
with high performance orientation. They appreciate excellent performance thus, they
value the training and reward system. Singapore and the United States score high on
this, while Russia has low performance orientation.
7. Humane Orientation. It refers to the degree to which people value fairness, kindness
and altruism in the country. The Philippines is one nation with high humane
orientation. Singapore and Germany on the other hand have low humane orientation.
8. Gender Egalitarianism. It refers to the degree to which equality for men and women
is actualized. When gender egalitarianism is evident in a country, women are given
opportunity to achieve power and positions. Japan scores low on this. Women in this
country are less recognized and have lower status as regards work.
9. Future Orientation. It is the degree to which individuals value investing in plans for
the future. People value long-term gains in countries with high future orientation.
Russia scores low on this while Canada, Switzerland and the Netherlands are high on
this.

In general, global business must understand that the functions and practices in
managing human resources are common, but the approach on how these will be performed
shall vary from one country to another. Effective management ensures that they are attuned
with their cultural surroundings.

MANAGING DIVERSITY IN THE WORKPLACE

Diversity: What is it?

The differences between and among individuals and groups are often viewed as
sources of conflict in the workplace. However, given the fact that everyone is unique and
people are heterogeneous, effective managers now consider diversity as an advantage. Esty,
et.al defined diversity as acknowledging, understanding, accepting, and valuing differences
among people with respect to age, class, race, ethnicity, gender, disabilities, etc.
A huge factor that brought about diversity is the changing demographics. These
changes are best exemplified with the changing role of women in the society and new family
roles, equal employment opportunity and organizational restructuring. Moreover,
technological advancement and globalization also led to new workplace practices.
 Organizations who are able to manage diversity make it beneficial to both employer
and employees. Embracing diversity minimizes discrimination and consequent legal
liabilities. Diversity promotes a continuous learning environment, creativity and innovation
in the workplace.

Barriers to Achieving Diversity

Although managing diversity has been advantageous to groups and individuals,
organizations still encounter problems related to roadblocks and obstacles in creating an
inclusive workplace. The barriers and challenges to achieving diversity include:
1. Prejudice and Discrimination. Prejudice is an unjustified and negative attitude of
individuals towards others who belong to social or cultural groups outside their own.
Example of this is racism and sexism. Prejudice influences the way a person thinks
about a certain group. Prejudiced views, if not at all times, often lead to
discrimination. Discrimination is the negative behavior resulting to unfair treatment
towards people based on individual’s social or cultural membership. Some prejudiced
persons do not act their attitudes. But for those who do, discrimination is manifested
on three common examples - racial discrimination, age discrimination and gender
discrimination. For instance, a married woman was not promoted in her job because
the management thinks that the roles of women at home are more prioritized than
job. Another example is an old-aged man who was not hired for the job without
looking at his credentials and simply decided on the grounds of age. Prejudice and
discrimination are roadblocks to diversity. Aside from it results in injustice and
lawsuits, these barriers prevent an organization from fostering creativity and
innovation from diversity.
2. Stereotyping. It refers to the generalized beliefs towards individuals belonging to a
certain group. This means that a person is judged based on what is perceived about a
given group. For example, black people are viewed and generalized as poor and
underqualified. People with Disabilities are considered weak. Whenever people think
that members of a group have the same characteristics, this is already a pre-
judgement, without seeing whether a certain member is really of the same
characteristics with their group. Thus, stereotyping becomes a barrier to diversity and
stereotypes end up with false judgements.
 3. Differences in Social Identity. Social identity theory was proposed by psychologist,
Henri Tajfel. He defined social identity as a person’s sense of who they are based on
their group membership. In social identity theory, individuals take pride as they
belong to a certain group. The world was divided “them” and “us” based through a
process of social categorization (i.e. we put people into social groups). Religion,
nationality, sexual orientation and ethnic groups are examples of social groups.
Affiliation to any of this boosts self-esteem of an individual which sustains the social
identity. However, the differences in social identity became a barrier to diversity.
When an individual’s social identity is too prominent, the person becomes more
aware of being different from the rest of the group where he or she does not belong.
Thus, the situation may result in stress and dissatisfaction. Similarly, those from
minority groups feel stressed and fear about losing their social identity when the
majority seem to indirectly “check their identity at the gate”. Hence, people who
belong to a common group think that they are better than those who do not. This now
can also result to stereotypes and discrimination.
4. Power Differentials. Power often comes from status and expertise of an individual.
When one seems to be of higher level than the other, say in terms of knowledge and
skills, he or she may gain individual power. This actually makes no problem when
ethical behavior is considered by those people in power. Although, power differentials
often exist and eventually creates a barrier to diversity. There is a tendency to have
factions and those who belong in low-status groups get frustrated as they often feel
harrassed and are not free to speak up. While, those in higher status tend to ignore
and belittle the others. Power inequality does not embrace diversity.
5. Poor Organizational Design and Structural Integration. Good organizational
design creates a fair distribution of authority, workload and functions of individuals
and groups within the organization. This also ensures an effective organizational
structure. Structural integration likewise shows how men and women are
represented in the positions in the organization. A poorly integrated integration
reflects what is being coined in organizational behavior as glass ceiling. This term
refers to the barriers that hinder minorities and women from reaching their career
aspirations. In addition, glass border refers to the barrier that discriminates against
women by not providing opportunities to be given foreign job assignments. Lastly,
glass floor or also known as sticky floor refers to a barrier that hinders an even lateral
movement into other positions at the basic level.
6. Communication Barriers and Resistance to Change. Miscommunication and
resistance to change have also hindered the achievement of diversity.

The management must ensure implementation of effective diversity management

programs not only to minimize legal consequences, but to recognize each of the individuals
as they are. Effective managers should take into account two important programs, i.e.
affirmative action programs and diversity management programs. However, the latter
provides a more inclusive working environment. Shown in Exhibit 2.3 is the comparison of
the two programs.

Exhibit 2.3
 Affirmative Action versus Diversity Management
(Hitt, Miller and Collela, 2012)

Basically, affirmative action programs were created by the government to eliminate

discrimation, thus promoting equal employment opportunities. However, this often does not
address the real problem but simply focuses more into the legal aspects. Diversity
management on the other hand responds to the needs of individuals and groups in terms of
fostering a greater inclusion in the workplace regardless of different backgrounds. It is
likewise more strategic as it also considers diversity as a source of competitive advantage.
Some organizations comply with AAPs just to minimize lawsuits; while organizations
promoting diversity management are voluntary in nature. Diversity management is
proactive. It allows individuals to learn from the views and perspective of other groups. This
is more than AAPs and EEOs.

Diversity looks at the differences of individuals, not the group’s. Hence, each one is
definitely unique and judging them based on their group preference and membership will be
helpful as they do not actually represent a group in particular. Hasty generalization leads to
discriminations and conflicts. There is no best practice to manage diversity. Each
organization must assess and understand what works best for them based on the dynamics
of the workplace. Personal awareness and empathy are keys to managing diversity
effectively through individual approach. For organizational approach, training programs are
effective techniques.

ETHICAL PERSPECTIVE ON ORGANIZATIONAL BEHAVIOR

Ethics is a moral principle about what is right or wrong. Ethical values of individuals
guide them in creating decisions and making necessary actions. This has become an issue in
organizational behavior as these ethical values and behavior differ from the influences that
individuals consider.
 1. Cultural Influences. Examples of this includes family, religion, and friends. How
people are raised leads to personal ethics. Since personal ethics is apparently diverse,
professional ethics and organizational ethics shall help the organization in
establishing the guidelines to follow in the workplace.
2. Organizational Influences. These are the company policies and practices, codes of
ethics, reward and punishment systems. These are implemented in the entire
organization and attempts to create a company image behaving ethically.
3. External Environment. These forces include political, legal, economic and
international developments as well.

Ethics in the context of Globalization

Ethics can make a reputation of an organization. Ethical behaviors reflect an
organization's honest and just professional endeavors and activities. Employees even become
more productive when they think they belong and work for organizations that practice fair
business activities.
Ethical issues concern every individual in various countries all over the world. In
organizational behavior, ethics play an important role in several HR practices including
employee recruitment and selection, performance management, retention decisions and
labor relations. Since cultural influences differ from one country to another, corporate
cultures are significantly taking a big part in guiding the ethical principles of the
organizations. The human behavior in organizations and the ethical corporate cultures
should go hand in hand to win in the global market. The way the individuals behave in the
organizations make up the representation of the companies as a whole. Thus, the
management must ensure that the organization maximizes the economic outcomes without
violating legal obligations and moral standards, more importantly if one company operates
outside its national border. Global responsibility is an emerging concern today. Stakeholder-
centered organizations look at the impacts of company decisions on the multiple groups of
stakeholders, inside and outside the organizations. This is likewise very vital since there is no
single universal recipe nor view of what is generally accepted as right or wrong in the world.
To address the different ethical perspectives, ethical awareness must be embraced in each
and every organization.

Yahoo business ethics sorely lacking

By Ephraim. Schwartz
InfoWorld |

Source: Retrieved from https://www.infoworld.com/article/2645247/yahoo-business-ethics-sorely-

lacking.html,
August 02, 2020
The latest news that Yahoo
turned over private emails to
the Chinese government
which led to the conviction
and ten-year sentence of Shi
Tao, an editorial department
head at the Contemporary
Business News in China's
Hunan province turns my
stomach.
Yahoo claims, according to
Dan Nystedt , at the IDG News
Service, "Just like any other
global company, Yahoo must
ensure that its local country
sites must operate within the
laws, regulations and customs
of the country in which they
are based," said Mary Osako, a
Yahoo Spokeswoman.
"Does the fact that [Yahoo]
operates under Chinese law
free it from all ethical
considerations?" asked a press
advocacy group called
Reporters without Borders.
Tao's crime was sending an
email to a New York-based
Web site regarding the
Chinese government warning
to its governmental
representatives to watch for
dissident activity during the
15th anniversary of the
Tiananmen Square massacre.
If Yahoo, and there are plenty
of other companies as well,
are not expected to have a
conscience when it comes to
doing business with
whomever, then should we
believe that they have a
conscience when it comes to
dealing with us, right here in
the U.S.?
We all talk about different
corporate cultures and how it
pervades everything a lower level PR person to make
company does. Well, if a
company's behavior reflects
the attitude that making
money is more important than
ethical behavior doesn't that
attitude become part and
parcel of their corporate
culture? Doesn't that tell us
about what they believe in
and how they do business?
When a company behaves like
that and then turns around
and tells us the customer
comes first is there any reason
why we should believe them?
Shi Tao was a customer wasn't
he?
Do you think Yahoo will treat
your emails with anymore
more discretion if it threatens
their bottom line?
This is a major issue for every
corporation, especially as
companies more often than
not are partnering with
totalitarian governments.
It should not be left to some
glib pronouncements that,
"just like any other global
company, Yahoo must ensure
that its local country sites
must operate within the laws,
regulations and customs of the
country in which they are
based."
Shi Tao and the rest of us
deserve better.
Copyright © 2005
IDG Communications, Inc

End of Chapter Test

Chapter Review

I. Essay. Briefly answer the following questions in not more than five sentences.
1. Compare and contrast Affirmative Action Programs and Diversity Management. How
does each of the two address diversity in the workplace?
2. Explain the dimensions of national culture. Discuss why it is important in
organizations with international participation.
3. In the context of organizational behavior, explain the concept of “Think Globally, Act
Locally” in maintaining a global brand. You may relate this with discussion of the
dimensions of culture.

A Question of Ethics
Source: George, J. M., & Jones, G. R. (2012). Understanding and Managing Organizational
Behavior (6th ed.). Pearson Education Inc.
Emotional intelligence—the ability to understand and manage one’s own and other people’s
moods and emotions—can be increased through training. When people are high on
emotional intelligence, they are better able to understand and use emotions to influence
others. However, people can be influenced in positive and negative ways. As an example of
the latter, historical atrocities and cult tragedies have been attributed to the ability of certain
individuals to have high levels of influence over others. (George and Jones, 2012, p.61)

Questions
1. What are the ethical implications of emotional intelligence training?

2. What steps can organizations take to ensure that employees’ emotional intelligence is
put to good use and not used for personal gain or unethical purposes?

References

Black, S., Gardner, D. G., Pierce, J. L., & Steers, R. (2019). Organizational Behavior.
OpenStax Rice University.

George, J. M., & Jones, G. R. (2012). Understanding and Managing Organizational

Behavior (6th ed.). Pearson Education Inc.

Hitt, M. A., Miller, C. C., Colella, A., & Triana, M. (2017). Organizational Behavior (5th
ed.). Wiley Global Education

Hitt, M. A., Miller, C. C., and Colella, A. (2012). Organizational Behavior (3rd ed.). Wiley
Global Education

Luthans, F. (2010). Organizational Behavior (12th ed.). McGraw-Hill Education.

Mullins, L. J. (2010). Management and Organisational Behaviour (9th ed.). Pearson

Higher Ed.

Electronic References

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https://www.tlu.ee/~sirvir/IKM/Leadership%20Dimensions/globe_project.html

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https://www.yourarticlelibrary.com/organization/ethics-and-organizational-behavior/45114

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https://courses.lumenlearning.com/wmopen-organizationalbehavior/chapter/business-ethics-
in-organizational-behavior/

Retrieved August 02, 2020, from https://www.infoworld.com/article/2645247/yahoo-business-

ethics-sorely-lacking.html

Retrieved August 06, 2020 from

https://leeiwan.wordpress.com/2007/06/18/difference-between-a-global-transnational-
international-and-multinational-company/