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vii
CONTENTS
Figuresix
Tablesxi
PART 1
The role of culture in organizational behavior 3
PART 2
Leading people and teams across cultural boundaries 131
PART 3
Building and managing a global workforce 245
Index385
ix
FIGURES
1.1 International Strategy Options: Horses for Courses 21
1.2 Ensuring Fairness in International Strategy Development 24
2.1 Countries and Regions in Hofstede’s Culture Maps 44
2.2 Mapping Individualism–Collectivism & Power Distance 45
2.3 Mapping Uncertainty Avoidance & Masculinity–Femininity 46
2.4 Mapping Power Distance & Uncertainty Avoidance 47
2.5 Cultural Dimensions from the GLOBE study 53
3.1 A Typology of Common Conflict Styles across Culture 101
5.1 Ratings of Leadership’s Importance across Global Regions
and Selected Countries 164
5.2 Leadership Attributes across Cultures: Examples of the Good,
the Bad . . . and the Different 166
5.3 Ratings of Leadership Effectiveness across Country 180
6.1 How a Fair Decision-Making Process Improves Strategic Success
in Foreign Subsidiaries 219
7.1 Common Types of International Staff and their Possible
Movement across Countries 254
7.2 A Process for Understanding the Selection and Development
of International Employees 258
7.3 A Recommended Process for Effective Selection and Evaluation
of Potential Expatriates 266
8.1 The Balance Sheet Approach to Expatriate Compensation:
Keeping Employees “Whole” 318
9.1 Views about the Trade-off between Jobs and the Environment 341
9.2 Public Expenditures on Labor Market Programs as a Percentage
of GDP, 2003 & 2013 354
xi
TABLES
1.1 The Top 20 Most Competitive Nations in 2016 & 2010 13
1.2 International Organizational Behavior for Managers: Desired Skills
and Attributes 15
1.3 Typical Developmental Stages in Company Internationalization 18
2.1 Long-Term or Short-Term Orientation for Selected Countries 48
2.2 The Eye of the Beholder: Time across Countries 60
2.3 Differences between Monochronic and Polychronic Time Orientations 62
2.4 Comparing American and Thai Business Values 66
3.1 Indices of Global Language Influence 82
3.2 How to Say “No” in Japanese 88
3.3 Differences in the Approach to Common Communication Issues 89
3.4 Comparing High- and Low-Context Cultures 95
3.5 The Road to Conflict is Paved with Misinterpretation: A Conversation
between a Greek and an American 98
3.6 Examples of Differences in Approaches to Conflict in Five
Different Countries 100
3.7 Behavior in the Stages of Negotiation: Differences across
Low- and High-Context Cultures 110
3.8 Some Elements of the Stereotypic American Negotiating Style 114
3.9 Examples of Differences in Negotiating Features in Five Different
Countries 117
4.1 Partner or Boss? How Employees in European Countries
View their Supervisors 137
4.2 What Drives Attraction to a Firm and Engages Employees
Once they are There? 150
5.1 Great Expectations: The Potential Gap between American
and Mexican Managers 172
5.2 Leader Behavior Dimensions: Effectiveness and Prevalence
across Cultural Boundaries 177
5.3 Adding Cultural Contingencies to Path–Goal Theory: Identifying
Compatible Leadership Styles 179
5.4 Some Hard Truths about Soft Skills: Suggestions for Building
a Global Leadership Pipeline 182
5.5 Comparing Transnational and Traditional Skills for International Managers 185
5.6 Individual and Corporate Suggestions for Developing Transnational
Leadership Skills 185
6.1 Rankings of the Top 30 Countries on “Gender Gap” 201
6.2 Benefits & Costs of Diversity for Multinationals 204
6.3 Three Approaches to Managing Cultural Diversity 205
6.4 Managing Common Problems in Multicultural Teams 209
6.5 Common Stages in the Process of Corporate Internationalization 220
xii TABLES
CHAPTER 1
INTERNATIONAL
ORGANIZATIONAL BEHAVIOR:
CHALLENGES AND OPTIONS
FOR MANAGEMENT
“People need to come first in the mix. As companies seek to build local operations
in countries such as Brazil, Russia, India and China, identifying and tapping local
talent pools becomes increasingly important. Striking the right balance between
standardization and localization is always a work-in-progress, but the vast cultural and
language gaps from country to country demand it. The days of overseas operations
run exclusively by expats are over.”
—Miles White, CEO of medical/pharmaceutical firm Abbott
“If one day you’re asked to manage a supply chain in Malaysia, the next day you’re
managing your virtual team in China, and the next you’re optimizing your company’s
call center in India, you know that it’s just not possible to be an expert in every
culture or geography in which you do business. What is possible is developing
the mindset of a globalist—or, in other words, mastering cross-cultural core
competency.”
—Denise Pirrotti Hummel, former CEO of Universal Consensus, a cross-cultural
advisory firm helping businesses to succeed across cultures1
“The aspects that I see motivating in global work are the excitement of how we
overcome small misunderstandings and other common challenges [of cross-cultural
collaboration], witnessing the people from totally different cultural backgrounds
getting together for a common goal and succeeding together.”
—Oliver, an Italian employee working in a Finnish multinational corporation2
Collectively, these comments capture both the common management and talent challenges
facing multinational companies today as well as the satisfaction and learning that can occur
when people solve cross-cultural workplace challenges. They also hint at the complexities
associated with managing culturally diverse teams that may be scattered around the world,
given that rapidly growing countries such as India and China are where multinationals
see the biggest opportunities. Indeed, successfully expanding overseas requires a variety of
critical management skills and abilities, including being adaptable and innovative. It also
means being able to recruit, develop, motivate, and coordinate a far-flung global workforce,
including multicultural teams, that might be operating across dozens of countries. In doing
so, international managers must somehow grasp and then bridge myriad cultural differences
while scouring the planet for the best talent and spurring innovation. At the same time,
6 CULTURE IN ORGANIZATIONAL BEHAVIOR
they must also fight off nimble competitors who pop up overnight with new products and
services driven by the latest technology. Successfully managing organizational behavior in
today’s dynamic international environment is a tall order.3
Indeed, technology enables 24/7 business operations. And since employees anywhere
can interact at any time, recruiting people from all corners of the world, as well as
offshoring jobs, is easier than ever. Not surprisingly, the process of globalization—the
increasing interconnectedness of national economies around the world—is fueled, in part,
by technological advances. Over the long haul, globalization should continue to spur
international business growth.4
But the interdependence that globalization brings also means that problems in one part of
the world can quickly spread elsewhere. Moreover, rapidly growing nations such as China
and India are producing home-grown companies in recent years that are challenging the
dominance of multinationals based in developed markets, in everything from product
innovation to hiring the best talent. Several developing countries now have a total gross
domestic product (GDP) over $2 trillion, with China arguably surpassing the U.S. in
2015, at least when purchasing power parity is taken into account ($19.4 trillion versus
$17.9 trillion, respectively). Small wonder then that increased international competition
and the loss of key talent were listed among the top five threats executives said they were
most concerned about.5
of FDI were developing countries, including China and Brazil (the U.S. was the only
developed nation in this group). Indeed, Brazil, Russia, India, China, and South Africa have
been tagged as the “BRICS,” an acronym underscoring their status as developing countries
on the move. That said, nothing in international business is static and the BRICS countries
also face a variety of ongoing challenges, from corruption to slower economic growth.
Other developing countries such as Indonesia, Malaysia, and Mexico may emerge as the
next set of economic high flyers. In short, the BRICS acronym may need to be rewritten.
Regardless, in 2014 developing nations received more than 50% of the world’s total FDI
compared to just 30% in 2005.6
By 2020 or so, the rise of developing nations may create more than 700 million new
members of the middle class. In short, developing countries will have a citizenry that is
more affluent and has more disposable income to spend than ever. No wonder established
multinationals view them as huge potential sources of new customers. For instance,
McDonald’s is hoping to build 1,500 new restaurants in China, Hong Kong, and South
Korea over the next few years—thanks, in part, to China’s burgeoning freeway system and
love affair with cars.7
As they look for opportunities around the world, multinational firms are increasingly
looking to developing countries in Asia (e.g., Indonesia, Vietnam) and Africa. Speaking
of which, Africa is one of the last great frontiers for international business. There are
huge unmet market needs, young populations with growing incomes, impressive natural
resources, and aggressive local firms to work with. This explains why companies as diverse
as General Electric, French food giant Danone SA, and restaurant holding company Yum
Brands have all made significant moves into African markets in recent years. To put this in
perspective, Yum Brands’ CEO noted that “Africa wasn’t even on our radar screen 10 years
ago, but now we see it exploding with opportunity.”8
Many multinational firms see developing countries as more than just sources of cheap labor
or increasingly affluent markets. They also offer talented “frugal innovators”—people
who can create on the cheap because of their extensive experience with local constraints
(e.g., lack of access to capital or the latest technology). Especially attractive in developing
countries are innovative home-grown products that are priced to match incomes of local
citizens. For instance, in recent years Indian firms like Tata have been designing and selling
$100 stoves and refrigerators. Established companies from developed nations have started
paying attention, creating locally designed products for emerging markets (e.g., GE’s ultra-
cheap ultrasound equipment).9
More than ever, developing countries are also producing world-class companies that are
challenging their more established developed country brethren. For instance, how many
Europeans and Americans would have recognized names like IT giant Infosys (India) or
home appliance maker Haier (China) a decade ago? Today, these firms, and others like
them, are giving more established companies such as U.S.-based IBM and Whirlpool
a run for their money. In 2016, over 100 of the 500 biggest firms in the world were
8 CULTURE IN ORGANIZATIONAL BEHAVIOR
headquartered in China, a total second only to America’s. Compare that to 1997, when
only one firm on the list of the world’s 500 biggest companies was headquartered in a
developing country.10
Of course, this is easier said than done. Consider China, a complex place where business
is driven by relationships based on mutual reciprocity and dispensing of favors (known
as guanxi, pronounced “gwan-shee”) more than policies or laws. Establishing those
relationships can be frustrating for impatient foreigners who would rather “get down to
business” than spend time relationship-building to build trust with prospective Chinese
partners. At the same time, China is changing rapidly, with younger workers becoming
more individualistic, more willing to embrace risk and less dependent on networks of
relationships.12
And that’s just for starters. Foreign firms in China face major regional differences
in culture and languages as well as a host of competitors and a shifting regulatory
environment that can prove frustrating. And while it is modernizing at an amazing rate,
incomes in much of rural China are still too low to buy expensive electronics, cars, and
homes. At the same time, the pace of competition in China is frenetic. Over 660,000
foreign companies were operating there in 2009—nearly double the number in 2000—
plus millions of local firms. For instance, foreign consumer products companies may face
thousands of small local competitors in a major city like Shanghai. Overall, economic
power has been shifting China’s way. For more on this point, read the accompanying
Culture Clash box.13
C U LT U R E C L A S H
T H E N E W E C O N O M I C C E N T E R : T I LT I N G E A S T T O W A R D C H I N A
Interactions between the U.S. and China on economic issues have been prickly
in recent years, with sniping back and forth about the value of China’s currency,
CHALLENGES AND OPTIONS FOR MANAGEMENT 9
trade imbalances, and so on. Especially interesting is how harshly Chinese officials
sometimes react to economic comments made by their American counterparts (e.g.,
as “uncontrolled” and “irresponsible”). The harsher tone of Chinese officials may
reflect China’s rising power and its pent-up resentment about the last 500 years of
Western predominance. Flash back to Beijing half a millennium ago and you would
be in the capital of a Ming dynasty that exerted influence across Asia. Foreign
trade was expanding and times were good in the newly built Forbidden City. That
description is just as apt now to China in the twenty-first century. Clearly, China
is headed where countries like South Korea and Singapore have gone before,
becoming richer in the process.
Yet China’s rise has been fastest of all. How did this happen? One view is that the
Chinese government decided to “download” the economic “killer apps” used
by Western powers for years. In China this is referred to as the pursuit of the Four
Mores: more consumption, more importing, more investing abroad, and more
innovation. In terms of consumption, China passed the U.S. as the world’s largest
auto market several years ago. And, by 2035, China will consume one fifth of all
energy used worldwide, a 75% increase since the late 2000s. By consuming more,
China will reduce trade imbalances with other countries and makes friends along
the way, especially in other developing nations. And consuming more also means
that China imports more. For example, China imports more goods from Australia
than any other nation and is a significant importer of Brazilian, Indian, Japanese,
and German products. China is increasingly a market for other countries’ goods,
allowing it to wield more influence.
Regarding China’s drive for more innovation, the country recently overtook
Germany and is closing on others in total patent applications. In fact, in 2008, the
total number of patents from China, India, Japan, and South Korea exceeded those
from Western nations. And in certain industries, China is already a world leader.
Good examples include wind turbine and photovoltaic panel technologies—areas
strategically important given China’s massive energy needs. All of this helps explain
why China may feel entitled to a new global swagger. Still, it’s not completely clear
if we are coming to the end of hundreds of years of Western economic prominence.
But a major power shift is occurring and the focus is on China as the world tilts
east.14
Yet natural hedging means that companies must manage more facilities in a wider variety
of countries. That can produce new challenges, especially those related to managing talent
effectively across borders. Firms operating internationally need to build a workforce with
productive, innovative employees to compete successfully. And many firms scour the world
for the best possible employees at the best possible price. We tackle some of these talent-
related issues next.17
Offshoring involves sending jobs abroad, often to places where labor is cheap. Both large
and small firms have been engaging in offshoring for decades. Traditionally, companies
based in developed nations with expensive labor have sent jobs to cheaper countries to cut
personnel costs (up to 75% in some cases). Major firms that have offshored jobs from the
U.S. include Hewlett-Packard, Hilton, and JPMorgan Chase. Among popular offshoring
destinations are China, Mexico, and the Philippines.18
India is another common offshoring recipient. In many ways, India is an ideal offshoring
destination, with a deep reservoir of inexpensive, highly educated technical talent with
good English-speaking skills. Not surprisingly, many firms, including General Electric,
Microsoft, and Intel, have set up R&D operations in India. On top of that, some 200 of
the largest international companies in the world offshore their IT work to leading Indian
firms like Infosys and Wipro. And these Indian IT powerhouses are not content to just be
offshoring recipients—instead, they also compete against foreign multinationals like IBM
for IT consulting and IT systems integration contracts.19
But offshoring comes with management challenges. Difficult logistics, poor work
quality, lousy customer service, high shipping costs, long delivery times, intellectual
property theft, cultural differences, and communication problems are common
offshoring issues. As a result, some firms have shifted offshored jobs back home. This
trend, labeled onshoring, occurs when firms conclude that the costs outweigh the
benefits of offshoring (in a recent survey of manufacturers, 55% were dissatisfied with
offshoring). Indeed, this led General Electric to shift water heater production from a
plant in China back to the U.S. Similarly, Dell Computers moved call center operations
back to the U.S. from India because of rising customer complaints. Yet in an ironic
CHALLENGES AND OPTIONS FOR MANAGEMENT 11
twist, technology may now be working against call centers and prompting some firms to
move work back home. For more on this, see the accompanying Global Innovations box.
Of course, offshoring can work if management bridges cultural and communication
differences, provides sufficient support, sets clear expectations, assesses all the costs, and
can hire top-notch foreign employees.20
G L O B A L I N N O VAT I O N S
S O F T W A R E B O T S : A T H R E AT T O O V E R S E A S C A L L C E N T E R S
AND A BOON TO ONSHORING?
With their large, well-trained, and inexpensive English-speaking workforces, India
and the Philippines dominate overseas call centers, accounting for half of all
such jobs worldwide. In doing so, millions of mostly younger employees answer
questions and provide various business services by phone for foreign companies,
mainly from America or Europe. Overseas call centers have helped to fuel a
burgeoning middle class in developing countries—which explains why many
shopping centers, cafés and gyms have sprung up around call centers, eager to
cater to their new employees who are well paid by local standards.
Perhaps nowhere is the scope of the call center phenomenon more impressive
than in the Philippines. Thanks to their hard-to-label English accents and deep
knowledge of American culture, Filipinos are especially popular with U.S. firms
seeking offshored customer service centers—which helps explain why the
Philippines’ share of the call center market is actually a bit larger than India’s, which
has 12 times the population. Overall, about 1.2 million Filipinos work in call centers,
producing some 8% of their nation’s GDP in the process. About 70% of the Filipino
call center workforce serves U.S. firms. Even some Indian firms are impressed. Indian
IT titans like Infosys and Tata have actually moved some phone service work to call
centers in Manila.
And while other developing nations such as South Africa are keen to emulate the
Philippines’ call center success story, technological advances are poised to disrupt
the industry worldwide, or even wipe out parts of it over time. Much of the basic,
repetitive work typically handled by overseas call centers can now be done cheaper
and faster by sophisticated software that responds to calls as well as emailed and
online chat questions. Some software systems, such as those built by Britain’s
Celaton, actually learn as they go and can handle increasingly tough questions
automatically. Eventually, only the most complicated issues may need to be
addressed by live employees. Moreover, software can make traditional call centers
more efficient by retrieving data faster and displaying more of it on employees’
screens. The result? Fewer transferred calls, quicker response times, and, in the end,
possibly fewer employees needed.
12 CULTURE IN ORGANIZATIONAL BEHAVIOR
Potentially troubling for places like the Philippines is that increasing software
automation may also result in jobs being onshored back to developed nations. In fact,
the U.S. share of call center jobs worldwide has risen from 19% to 21% in the past few
years. As more basic call center roles are made obsolete by technology, those that
remain will demand much better language and technical skills, from employees who
will sell more complicated products and handle more challenging service complaints.
For instance, American banks have been pulling call center work back to the U.S. in
recent years, thanks in part to increasing complex financial regulatory requirements.
Most likely, offshoring will not completely vanish anytime soon. Many executives view
offshoring as part of the global competition for jobs and talent. For example, Spain’s
Telefonica has thousands of employees based in Morocco who take service calls from
European customers.22
Indeed, firms are increasingly offshoring sophisticated work, including new product
development and innovation. Moreover, the motivation, particularly when complex work is
involved, has less to do with cutting labor costs than being able to hire the best employees
in the world, developing the firm into a global power, achieving faster revenue growth,
and entering foreign markets quicker. The bottom line is that skilled knowledge workers,
especially given globalization, technology advances, and intense competition, are at a
premium. That helps explain why many of the employees who work for General Electric
in India are professionals and scientists (over 5,000 work at one R&D center in Bangalore
alone). Put simply, skilled professional jobs in a variety of scientific areas are increasingly
found in “centers of excellence” around the world.23
As we have discussed, developing countries like India are increasingly sources of highly
skilled technical talent. Indeed, the most competitive and talented workforce usually
wins—and keeps the lion’s share of the best jobs. There’s no simple answer about what
constitutes a world-class workforce, but training, educational quality, motivation, and
having cutting-edge skills are part of the equation. But the quality of a nation’s workforce
relates to how competitive that country is, with respect to both job creation and the ability
CHALLENGES AND OPTIONS FOR MANAGEMENT 13
to produce outstanding global companies. Table 1.1 lists the top 20 most competitive
nations for 2016, with 2010 data shown to illustrate changes over time. One common
characteristic shared by top nations is the quality of their workforces. Yet sophisticated
work can be done anywhere with a good supporting infrastructure (e.g., high speed internet
connections) and employees who are properly trained and educated (witness the success of
India and Mexico in attracting jobs from abroad, though neither is in the top 20).24
Table 1.1 The Top 20 Most Competitive Nations in 2016 & 2010
Nation 2016 Ranking 2010 Ranking
China/Hong Kong 1 2*
Switzerland 2 4
USA 3 3
Singapore 4 1
Sweden 5 6
Denmark 6 13
Ireland 7 22
Netherlands 8 12
Norway 9 9
Canada 10 7
Luxembourg 11 11
Germany 12 16
Qatar 13 15
Taiwan 14 8
UAE 15 18
New Zealand 16 20
Australia 17 5
U.K. 18 22
Malaysia 19 10
Finland 20 19
* In 2010, China (#18) and Hong Kong (#2) were rated separately.
Note: Competitiveness ranking is based on four main factors (economic performance, government
efficiency, business efficiency, & infrastructure), each of which has several sub-factors. Over 300
criteria help determine IMD rankings.
Adapted from: The International Institute for Management Development’s (IMD) 2016 World
Competitiveness Scoreboard (see http://worldcompetitiveness.imd.org).
14 CULTURE IN ORGANIZATIONAL BEHAVIOR
Thanks to the global hunt for talent, workforces today are an increasingly complicated
mix of cultures, backgrounds, and ethnic groups. Demographic changes within countries
are also contributing to greater workforce diversity. For example, Hispanics are expected
to make up nearly 30% of the U.S. population in 2050, up from just 14% in 2005. While
diversity brings challenges, it also offers opportunities to leverage differences for the
benefit of the firm. Moreover, a diverse workforce makes it easier for companies to reach
important customer populations. In the U.S., for instance, Hispanics’ buying power is
roughly $1.5 trillion—customers Procter & Gamble was able to sell to more effectively
after establishing a bilingual team of employees to reach them.25
Still, managing workforce diversity isn’t easy, particularly when outdated attitudes can
derail firms’ best efforts. For instance, since many important decisions are made in cross-
functional teams of employees with diverse backgrounds, effective interaction is critical.
Moreover, building cultural diversity into decision-making teams is difficult, yet essential
for making the best decisions in the long run, raising the stakes for management to make
the process work. Sadly, relatively few firms take diversity management seriously—despite
the fact that failure is an expensive proposition.26
So how should international managers approach issues related to workforce diversity, the
global talent hunt, and employee motivation, just to name a few? How can they adapt in
the face of cultural values, languages, and business practices, all of which can change across
(and sometimes within) countries—a backdrop that impacts all aspects of management?
And imagine the difficulty of managing people in far-flung corporate operations that
literally circle the globe. For example, in 2015 consumer products giant Procter & Gamble
operated in over 180 nations, had over $76 billion in revenues (38% of which came from
developing countries), and employed over 100,000 people.27
To be effective across borders, executives must have deep multicultural experience, embrace
diversity, be comfortable sharing information, and collaborate with local employees to
succeed in local markets. They also need to offer high-performing employees everywhere
good pay, excellent development opportunities, and recognition. International managers
will struggle if wedded to a “command and control” mentality—something that doesn’t
fully leverage local employee know-how nor allow for rapid reaction to change. Put simply,
companies need mature, sophisticated, and experienced international managers who are
comfortable with ambiguity and change.29
CHALLENGES AND OPTIONS FOR MANAGEMENT 15
As we have suggested, culture can impact just about everything associated with managing
people. International management expert Geert Hofstede defined culture as “‘the collective
programming of the mind which distinguishes one group or category of people from another.’ We infer
this ‘programming’ by observing people behave and culture’s conceptual usefulness depends
on how well it can predict people’s actions. Complicating matters is that managers may
not fully recognize the impact of culture on their own views and behaviors, much less their
subordinates.”30
Culture’s components and manifestations include everything from values and attitudes
to manners, customs, social structure, business practices, communication norms, and even
what is considered “good taste” (e.g., in the arts). Moreover, large cultural differences
may exist within countries. And recent research suggests that it might be better to view
cultural differences as embedded in a mosaic of dimensions that should shape and inform
strategies for managing employees across borders. These could include how economic,
financial, legal, and political systems vary across countries as well as national differences in
demographic characteristics and knowledge production.31
More specifically, culture can shape everything from how employees expect to be treated
to how expatriates adapt, to the international strategies executives create and even to the
dividends that firms pay. Likewise, human resource practices, organization structures,
negotiation tactics, and leadership styles are impacted by culture and can vary widely
across countries. Cultural differences in beliefs about the importance of work may
shape employee motivation in ways that are reflected in national economic growth rates.
Even the reasons that entrepreneurs start new firms may reflect cultural influences. In
Indonesia, for instance, interest in entrepreneurship tends to be more linked to concerns
about social status (e.g., gaining face from being successful) than it is in the U.S. Yet the
impact of cultural differences depends, in part, on how managers respond. For example,
not understanding how to motivate foreign employees can result in bad outcomes while
adapting management styles to match local values may lead to outstanding performance.
Likewise, foreign subsidiaries perform better when employees are managed in ways aligned
with local culture.32
Unfortunately, many international managers underestimate the difficulty and time needed
to effectively bridge cultural differences. Culture is complex and always evolving—a good
example is the increasing individualism of many younger Chinese employees. Indeed,
individuals may not espouse the values of their “traditional” cultural groups. For instance,
it’s not hard to find Americans who have a collectivistic outlook (versus being self-
absorbed individualists) or Japanese who are obsessed with individual achievement (versus
being group-oriented conformists).33
Put simply, international managers should resist oversimplifying culture. For instance,
some feel that it’s possible to manage everyone the same way everywhere. Yet the belief
that people everywhere are increasingly thinking and acting alike, referred to as cultural
CHALLENGES AND OPTIONS FOR MANAGEMENT 17
convergence, is unlikely to be achieved anytime soon. To the contrary, globalization and other
forces have actually intensified the desire of employees to adhere to their cultural traditions
in some cases.34
Perhaps the most common oversimplification is when managers treat cultural differences
as broad-brush labels that can be applied to people with little or no analysis. While easy
to use for giving managers a rough impression of different cultures, relying on labels
is problematic to say the least. Part of the problem is that in developing guidance for
managers, experts sometimes reduce cultural complexities to generic categories that are
easier to grasp. Nevertheless, categories and labels, however helpful, do not fully describe
the nuances and complexities associated with specific cultures.35
MULTINATIONALS
In this last section, we discuss the history and evolution of international corporations before
presenting basic strategic options for tackling global markets. A general grasp of how
companies approach international markets should prove helpful as you read subsequent
chapters.
Some multinationals compete in industries where they can basically sell the same
products everywhere, while others must tailor their products extensively to meet
local demands. Multinationals may also operate differently within industries. Some
embrace standardization, using similar structures, technologies, and management
practices everywhere. “Home” is the country where the headquarters resides and
where key decisions are made. Other multinationals give local subsidiaries freedom
to make decisions and better serve local needs. Headquarters may offer guidance, but
local managers make operational decisions rather than expatriates from the home
country.37
Regardless, multinationals have evolved considerably over the past century. From 1900 to
1960, multinationals usually did all innovating in their home countries. Later, they began
to realize that good ideas can come from anywhere. Starting in the 1970s and 1980s, firms
began setting up R&D units overseas to capture ideas in key markets. Still, such outposts
sometimes had trouble attracting headquarters’ attention. Since the 1990s, multinationals
have pursued new ideas in a more “democratic” fashion, especially from parts of the firm
18 CULTURE IN ORGANIZATIONAL BEHAVIOR
directly connected to customers. Today, many multinationals feel their best ideas will
come from the periphery of the company, rather than its center. Nevertheless, how best to
leverage such ideas remains an important challenge for management.38
Many companies evolve through stages as they expand their international footprints.
As they gain experience overseas, firms’ involvement in international markets grows,
allowing them to tackle more complex foreign operations. Small companies often step into
international markets by exporting, an option not requiring expensive foreign facilities.
Eventually, some companies transition from exporting to building facilities overseas. That
said, firms may jump over developmental stages or not follow a clear series of development
steps (e.g., by making overseas acquisitions). Indeed, some multinationals from emerging
economies have taken a more rapid developmental path than their counterparts in
developed countries—something we will explore later. Nevertheless, many firms develop
through distinct stages as they become more sophisticated internationally. Again, these
stages will be covered in more detail later in the book.39
STAGE 3: CONTRACTING/SUBCONTRACTING/FRANCHISING/LICENSING
Another option is licensing, a contractual agreement in which one firm (the licensor)
sells a foreign company (the licensee) the right to use its brand names, trademarks,
copyrights, patents, manufacturing technology, or any other intellectual property. For
instance, Harley-Davidson has licensed logos and its brand name to clothing manufacturers
around the world. Franchising is a more elaborate version of licensing. Imagine having
an agreement that allows a foreign entrepreneur or firm to operate a business using the
methods, procedures, products, trademarks, and marketing strategies created by another
company. McDonald’s is a good example of a well-known franchisor operating all over
the world. Another popular option is contract manufacturing—which allows companies to
outsource some or all of their manufacturing operations to foreign firms, thereby avoiding
the expense of owning factories and the employees needed to run them. For instance,
California-based Vizio, Inc., a provider of inexpensive flat panel TVs, relies completely on
Asian contract manufacturers to make its products.42
Another challenging set of options for the most sophisticated multinationals involves
connecting with other firms to mutually leverage combined resources, be they people,
technology, expertise, or facilities. For example, joint ventures are separate entities created
and resourced by both partnering firms. These are a popular type of partnership because
they give multinationals access to resources that are too expensive to secure alone. Car
20 CULTURE IN ORGANIZATIONAL BEHAVIOR
companies have repeatedly formed joint ventures to develop new engines, tapping
their collective expertise while reducing costs. Less formal arrangements may include
partnerships or alliances aimed at solving specific technical challenges or completing special
projects that are mutually beneficial. For instance, Wal-Mart’s partnership with Indian
retailer Bharti Enterprises allowed it to gain a toehold in the Indian market. Building trust
is a big challenge with international alliances and partnerships, particularly when cultural
differences exist. Overcoming trust issues increases the odds that alliances and partnerships
will flourish.45
Multinationals that grew up in developing countries where many disadvantages exist (e.g.,
political instability, lousy infrastructures, weak legal systems) may not evolve through the
stages we sketched out above. But the adversity they face in their home markets may make
multinationals from developing countries stronger and nimbler competitors. Multinationals
based in developing countries are often very quick to expand overseas, aggressively building
their capabilities by acquiring or forming partnerships with more established multinationals
from developed nations. That’s exactly what Chinese energy firms, including Chinalco,
China National Petroleum Corp, CNOOC, and Sinopec, have done in recent years, often
to impressive effect.46
Multinationals face various levels of pressure for local responsiveness. For some industries
such as food, tailoring to meet market-specific customer preferences is critical. Food
preferences vary widely and reflect cultural differences. While pizza is found in many
countries, squid is a topping found mostly in Asia. Sometimes local customization pressures
come from nation-specific regulations governing certain products (e.g., pharmaceuticals).
On the other hand, computer chip companies can sell identical products anywhere. The
pressure for global integration also varies. In some industries, multinationals face powerful
competitors that cause them to pursue tremendous efficiencies and economies of scale
(e.g., concentrating production in low-wage locations) to cut costs and respond quickly
CHALLENGES AND OPTIONS FOR MANAGEMENT 21
to competitive threats. When multinationals have superior products and face weak
competition, however, there is little pressure for integration, at least not until stronger
competitors emerge. In short, the five corporate strategies typically used by multinationals
are a direct response to industry pressures for global integration and local responsiveness.
Figure 1.1 presents these strategies graphically.48
HIGH
Central control,
Global Strategy Transnational Strategy
integration across
operations needed for Industry example: Industry example:
increased efficiency Computer chips Pharmaceuticals
LOW
Cost reduction and International Strategy Multidomestic Strategy
efficiencies associated Industry example: Industry example:
with central control, Some industrial equipment Certain food products
integration not
imperative
LOW HIGH
Identical products or Products or services
Industry Pressure for
services can be sold must be tailored to
Local Responsiveness
everywhere in the demanding market-
same fashion specific preferences
worrying too much about costs. Customers seek out these German firms, such as KUKA, a
robotics company, for specific industrial needs.49
That said, the need to respond to different local preferences may offset any advantages
from centralized or integrated operations. For instance, centralized manufacturing of food
products makes little sense for Nestlé and Unilever. Shipping costs would wipe out savings
from economies of scale while centralization would make it much harder to tailor products
to begin with.51
With the global strategy, firm headquarters keeps control over worldwide operations to
maximize efficiencies, economies of scale, and product quality. For example, chip giant Intel
concentrates plants in a few countries (e.g., China, United States, Ireland), but ships the
same products worldwide. Intel must support its most important customers while keeping
costs low and margins high.53
Boeing also centralizes its design and manufacturing process. The firm’s center in Moscow
designs plane parts and coordinates the activities of foreign suppliers such as Mitsubishi. All
Boeing planes are assembled in the U.S. (with many parts coming from foreign suppliers
and partners) and then exported to airlines on a global basis.54
20–3856
20–5788
The booklet contains an address delivered by Viscount Grey at the
Harvard union, December 8, 1919. He enumerates a number of
things that make for happiness of which one is a degree of leisure
and knowing what to do with it. He speaks of the forms of recreation
most enjoyed by himself, certain games and sport and gardening but
most of all books read for pleasure. Enjoyment of nature also finds a
place and calls up a memorable walk he took with Colonel Roosevelt
for the purpose of observing birds.
“In depicting the incident [of Roosevelt’s visit] Lord Grey allows
the Baconian clarity of his earlier pronouncements to take on poetic
warmth and color.”
“The one who has attained such an appreciation of the real place of
recreation in life deserves to be called by a word which is very
frequently abused—‘cultured.’”
20–2265
Milt Dale loves the silence and the romance of the mountains.
There he lives in solitude, hunting animals for his food, and finding
thorough happiness and contentment, until accidentally he
overhears an unscrupulous plot against the property and safety of a
young girl, newly arrived from the East. To save her and her sister he
hides them in his woodland camp, entertaining them with hunting
trips and riding expeditions to keep their minds from brooding.
When, however, Helen Rayner and her pretty sister Bo leave the
camp, Dale finds it an empty, unsatisfying place. And Helen, mistress
of a great ranch, which a conscienceless “greaser” is trying to take
from her, keeps longing for the lonely man from the mountains. Her
troubles reach their climax just after the long winter, and Dale,
coming out of the forests, helps her in the most terrible moment.
“Bo’s cowboy” is instrumental in completing the collapse of the
“greaser”; and afterward, Dale’s camp witnesses an unusual
honeymoon.
“Few romances make better business out of the wilds of the West
than Mr Zane Grey: and he is well up to his mark in this stirring
tale.”
20–13979
The first two chapters of the book are devoted to the author’s Swiss
ancestors, their home in Switzerland in the shadow of the mountains,
where it was finally burled by an avalanche, and later their American
home in Pennsylvania whence they had brought their customs and
traditions and, above all, the fairy tales of their native country. Some
of these tales are: The wonderful alpine horn; The mountain giants;
Two good natured dragons; The frost giants and the sunbeam fairies;
The yodel carillon of the cows; The fairy of the edelweiss; The alpine
hunter and his fairy guardian; The white chamois; The siren of the
Rhine.
+ El School J 21:157 O ’20 80w
+ Ind 104:380 D 11 ’20 40w
+ Springf’d Republican p9a O 17 ’20 180w
20–10074
“In writing for, but not down to, young people, I have dwelt rather
upon what was visible to, or interested, the Pilgrim boys and girls.
Yet I have endeavored, also, to make clear the formative principles
and impelling motives, as well as conditions and events; and this
without any special interest in genealogy.” (Preface) One of the
objects of the book is to show that the Puritans were “bona-fide
everyday Englishmen” and to further a deeper unity and closer co-
operation between all English-speaking people. The religious motive
prompting the Pilgrims is also emphasized. A partial list of the
contents is: How the world looked long ago; A mirror of English
history; Fun and play in the old home; A girl’s life in merrie England;
Puritan, Independent, Separatist, and Pilgrim; Brewster: the boy
traveler; Bradford: boy hero and typical Pilgrim; The decision to
emigrate and why; The new world: America; The first winter and the
great sickness; The Pilgrim republic; The Pilgrim inheritance;
Chronological framework of the story of a free church in a free state;
Index; Illustrations.
“Dr Griffis writes with enthusiasm, his writing discloses the most
careful study of his subject in its every phase, and especially does his
familiarity with the places trodden by the Pilgrims appeal to the
reader.” E. J. C.
20–10299
This work by a professor of industrial education in the University
of Illinois “is intended as a text for use in normal schools and
colleges. Its primary aim is to assist in the making of necessary
connections between the more general courses in educational
psychology and theory of teaching and the special work of practice
teaching in manual and industrial arts.” (Preface) Contents:
Introduction; Classification and differentiation of the manual arts;
Industrial arts; Instincts and capacities; Application of the principle
of apperception to manual and industrial arts teaching; Interest and
attention: Individual differences: the group system; Correlation and
association; The doctrine of discipline: Types of thinking inherent in
the manual arts: Teaching methods in manual and industrial arts;
The lesson; its component parts; Class management: discipline;
Standards and tests; Conditions which make for progress. There are
two appendices devoted to Special method procedure and Type
outlines.
A20–1264
“‘The lure of the manor’ reads unevenly and strikes the reader as
being considerably too long. Strengthening of the story could be
obtained through elimination of that which gives an impression of
being artificial and exaggerated.”
20–19507
This adventure story of the South seas has two mysteries, the
mystery of “Lady Mary” who walks up out of the sea and the mystery
of Ku-Ku’s island. Lady Mary is suffering from amnesia. She doesn’t
know who she is or how she came to her present plight. All that she
can remember is a meaningless string of words, which her listeners
rightly interpret as the directions for finding the half-legendary Ku-
Ku’s island, reputed to be rich in the valuable red shell that passes as
currency in the islands. The three men, with Sapphira Gregg and the
girl from the sea, set out in search of it and then begin their
adventures on the terrible island. In the end they conquer all
obstacles, including the mysterious blindness that inflicts those who
land on the island. Lady Mary’s memory is restored, and two
romances come to a satisfactory conclusion.
“It is a capital tale, quite novel in its plot and incident, and with
amusing character depiction as well as the thrill of adventure.”
“She shows her tact in the touches of individuality that she gives to
characters who have to be drawn broadly. So much is she in
sympathy with them, and so clearly does she see the situations in
which they find themselves, that they come to respond by creating
their own difficulties for her to write about. This seems to be the
secret of her fertility of invention. For a lady not in her first book she
is most prodigal of her good things.”
+ The Times [London] Lit Sup p85 F 5
’20 630w
20–7728
“They have the excessive cleverness of the young writer, who will
not tell a plain tale. Nevertheless the book is full of vitality; and
readers to whom this quality, even if it goes with some immaturity, is
the all-important one will enjoy the book.”
19–27517
[2]
GROVE, SIR GEORGE. Grove’s dictionary of
music and musicians; Waldo Selden Pratt, editor,
Charles N. Boyd, associate editor. il *$6 Macmillan
780.3
20–6493
20–17803
20–84
“At least the first two plays are distinctly above the average in their
realistic dialogue. The eloquent and sympathetic introduction by
Professor Baker, of Harvard, adds to the value of the book.”
[2]
GUILLAUMIN, EMILE. Life of a simple man;
tr. by Margaret Holden. *$2 Stokes
“The good brown earth, the sheep and the swine; stretches of
sparkling, bedewed meadows with perfumed masses of golden
broom, white daisies and honeysuckle.... From such a background
Emile Guillaumin has drawn ‘La vie d’un simple.’ Small wonder that
a simple man speaks from its pages. The book is called a novel. In
reality it is a biography and, as it happens, one with only a slight vista
into the realm of Eros. The author tells us that Tiennon is his
neighbor, but it is suggested in a foreword by Mr Garnett that
Guillaumin has attempted a portraiture of his own father. At any rate
it is interesting to observe that the book received an award from
l’Académie Française in 1904, and that the author is a peasant,
unschooled, in our modern sense of the word, whose life has been
spent in a town of some 1,800 inhabitants, and who has ‘remained
faithful to the soil’ in spite of literary laurels.”—N Y Times
20–3010