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Contents
Preface ix
Acknowledgements xiv
Index 435
Preface
This is the first edition of our book and, needless to say, we are excited to pres-
ent it to you! This is especially the case because the study of international
organizational behavior (IOB) has been growing and evolving rapidly in recent years—
encompassing everything from how cultural differences shape employee attitudes, to
why conflicts arise in internationally diverse work groups, to the tricky task of manag-
ing alliances between firms from different countries. IOB is also an inherently complex
area, where actions in corporate contexts are often hard to fathom, thanks to cultural
differences in perspectives as well as the simple fact that the motivations behind those
actions are not directly observable. Consequently, the management challenges associ-
ated with understanding, much less responding to, IOB issues are significant.
The theme of our book is reflected in its subtitle—Transcending Borders and Cul-
tures. Managers and employees alike need to be able to transcend the challenges
that inevitably arise when borders—and cultural boundaries—are crossed. Indeed, in
today’s increasingly diverse, multicultural business world, managers and employees
alike need to move across borders (literally or figuratively) and grasp a wide variety of
cultural nuances on a routine basis. Doing this well requires both a sophisticated un-
derstanding of cultural differences and a repertoire of skills and management tactics
that can be brought to bear to build and maintain a competitive global workforce.
Our book provides both the conceptual framework needed for a transcendent
understanding of culture and plenty of practical advice for managing international
challenges with organizational behavior. In doing so, we emphasize that firms need
to develop corporate leaders with cross-cultural management skills. This first ed-
ition is designed to help both employees and managers better understand and ef-
fectively respond to IOB issues. Clearly, employees and managers must build their
international skills in ways that provide the adaptability and flexibility they need
x Preface
The book is made up of 12 chapters, within three parts, which provide balanced
coverage and flow while complementing and improving on other texts on the mar-
ket. Specifically, each part of the book includes four interrelated chapters. First is
Part 1—The Role of Culture in Organizational Behavior. In this first section, we
lay the groundwork for the rest of the text—providing the essential foundation for
Preface xi
Up-to-Date and Quality Sources. Our book relies on the most recent and most
prestigious publications available from both a practitioner (e.g., The Economist,
Harvard Business Review) and academic perspective (e.g., Journal of International
xii Preface
Coverage of Emerging Issues in IOB. The text covers how culture impacts em-
ployee behaviors associated with important emerging issues. For example, we cover
the challenges of managing international labor relations as well as those related to
interacting with employees or contractors in outsourced or off-shored roles. Like-
wise, we examine management challenges associated with various types of alliances
as well as international employee performance appraisal and compensation.
Other Features and Support for Professors. Each chapter concludes with Chap-
ter Summary and Discussion Questions sections, designed to help students review
the important points of the text and to facilitate conversations about chapter ma-
terial. The extensive use of exhibits throughout the book makes it easier to digest
important information as well as to increase readability and visual appeal. For pro-
fessors, our book includes a support package consisting of an Instructor’s Manual,
PowerPoint presentations, and a Test Bank. Such a comprehensive support package
is rarely found with concise texts.
Acknowledgments
Behind every successful book are professionals who provide the support, guidance,
and advice needed to make everything click. We are most grateful for the review-
ers who kindly contributed their time, energy, and academic expertise toward the
development of this first edition:
Likewise, we owe a huge debt of gratitude to John Szilagyi and his entire team
at Routledge. We admire John greatly—he is a consummate professional and knows
the ins and outs of business books better than anyone. Indeed, we have learned
a tremendous amount and gained many new insights about the publishing busi-
ness from John in the 15 years that we have known him. We also wish to thank a
very patient—and very persistent—Lauren Athmer and her editorial colleagues at
LEAP Publishing Services for helping to keep us on track and get things done. We
are grateful for their help.
Par t 1
International
Organizational Behavior
Challenges for Management
Chapter Summary 25
Discussion Questions 26
4 The Role of Culture in Organizational Behavior
People need to come first in the mix. As companies seek to build local
operations in countries such as Brazil, Russia, India and China, identify-
ing and tapping local talent pools becomes increasingly important. Strik-
ing 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.
White’s comments succinctly capture some of the common management and tal-
ent challenges facing multinational companies today. They also underscore where
multinationals see the biggest growth opportunities—in rapidly developing coun-
tries such as India. 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, one that might be operating in dozens of countries worldwide.
In doing so, international managers must somehow grasp and then bridge myriad
cultural differences while scouring the planet for the best talent. At the same time,
they must also fight off nimble competitors that can pop up overnight with new
products and services driven by the latest technological innovations. In short, suc-
cessfully managing organizational behavior in today’s dynamic international envi-
ronment is a tall order.2
Advances in technology have made it possible to operate businesses around the
world 24/7—simultaneously lowering barriers between nations while enabling
firms to manage their global supply chains with maximum flexibility. And since
employees anywhere can interact at any time, recruiting people from all corners of
the world, as well as sending jobs offshore, is easier than ever. Indeed, the process
of globalization (the increasing interconnectedness of national economies around
the world) is fueled, in part, by technological advances. Over the long haul, glo-
balization should continue to spur international business growth and reduce trade
barriers.3
That said, optimistic scenarios can be derailed quickly. The interdependence
that globalization brings also means that problems in one part of the world can
have ripple effects elsewhere. Moreover, rapidly growing nations such as China and
India are producing homegrown companies in recent years that are giving multi-
nationals from established markets such as Japan, Europe, and the United States
competitive fits. This growth is challenging established multinationals’ ability to
International Organizational Behavior 5
keep up in everything from innovation to hiring the best talent. Several developing
countries now have a total gross domestic product (GDP) over $1 trillion, with
China surpassing Japan in 2010 to become the world’s second-largest economy be-
hind the United States. Indeed, experts predict that China will overtake the United
States for the top spot in less than two decades. Small wonder, then, that in a recent
survey, increased international competition and the loss of key talent were listed
among the top five business threats executives said they were most concerned
about.4
half of the GDP growth in the world and be home to 700 million new members of
the middle class. In short, this means that developing countries will have a citizenry
that is more affluent and has more disposable income to spend than ever. No won-
der established multinationals view developing nations as huge potential sources of
new customers. For instance, McDonald’s is hoping to build several hundred new
drive-through restaurants in China over the next few years as that nation’s love af-
fair with the automobile deepens (thanks, at least in part, to 30,000 miles of new
freeways constructed in the past 10 years).6
But while BRIC nations garner a lot of attention, multinational firms are in-
creasingly looking to countries such as Indonesia, Turkey, and Vietnam for new
opportunities in the developing world. Africa is one of the last great untapped
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 Elec-
tric (GE), French food giant Danone SA, restaurant holding company Yum Brands,
and retailing powerhouse Wal-Mart have all made significant moves into African
markets in recent years. Yum Brand’s KFC restaurant unit wants to double sales in
Africa to $2 billion by 2014. To put this in perspective, Yum Brand’s CEO noted
that “Africa wasn’t even on our radar screen 10 years ago, but now we see it explod-
ing with opportunity.”7
Indeed, many large international firms see developing countries as more than
just sources of cheap labor. They offer increasingly affluent populations eager for
better products and services. They also offer talented “frugal innovators”—people
who can create on the cheap because of their extensive experience with local con-
straints (e.g., lack of access to capital). Not surprisingly, these are individuals both
local and international companies are eager to employ. Especially attractive in de-
veloping countries are innovative homegrown products that are priced to match
the lower incomes of local citizens. For instance, in recent years Indian firms such
as Tata Motors have been designing and selling $2,000 cars as well as $100 stoves
and refrigerators. And established companies from developed nations have started
paying attention, creating locally designed products for emerging markets (e.g.,
GE’s ultra-cheap ultrasound equipment).8
More than ever, developing countries are also producing world-class companies
that are challenging their competitors in more developed countries. For instance,
how many Europeans and Americans would have recognized names such as Infosys
(the information technology giant of India) or Haier (the home appliance maker
in 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 2010, 139 of the 500 biggest firms in the world were U.S. companies compared
to 185 firms in 2002. Conversely, developing countries had just a single represen-
tative among the 500 biggest companies back in 1997. But in 2010, there were
67 firms among the world’s largest 500 firms—just from BRIC countries alone.9
International Organizational Behavior 7
CULTURE CLASH
Tilting East: China as the New Economic Center
Interactions between the United States and China on economic issues have been prickly
in recent years, with plenty of sniping back and forth about the value of China’s currency,
trade imbalances, and so on. Especially interesting is how harshly Chinese officials some-
times react to economic comments made by their U.S. counterparts (for example, certain
U.S. suggestions have been called “uncontrolled” and “irresponsible”).
The increased testiness and 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
8 The Role of Culture in Organizational Behavior
good in the newly built Forbidden City. That description is just as apt now to China in the
twenty-first century. While per capita income in China was still only 19% of that in the
United States in 2010, it is still a sharp improvement over the 3% figure back in 1980.
Clearly, China is headed where countries such as 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 con-
sumption, more importing, more investing abroad, and more innovation. In terms of con-
sumption, China recently passed the United States as the world’s largest auto market. 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 coun-
tries and make friends along the way, especially in other developing nations. Consuming
more also means that China imports more. For example, China imports more goods from
Australia than any other country and is also a significant importer of Brazilian, Indian,
Japanese, and German products. Indeed, because it now accounts for one-fifth of global
growth, China is increasingly a market for other countries’ goods, allowing it to wield
more influence in the process.
Regarding China’s drive for more innovation, the country recently overtook Germany
and is closing on others in total patent applications. 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 swag-
ger. Having just passed Japan in total GDP, China is positioned to overtake the United
States relatively soon. Still, it is not completely clear whether the United States is 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.13
swings if they want to avoid sudden losses. Some managers use currency hedging
to protect against big currency swings. In essence, they are buying what amounts
to an insurance policy that effectively freezes currency rates for a fixed period.
Currency hedging is expensive, though, and hardly foolproof. For instance, a South
Korean company may buy a hedge to protect its earnings in Europe against a fall-
ing euro, only to see the euro rise instead. Another option for reducing the impact
of currency volatility is to make products where they are sold, relying on local
suppliers in the process. This natural hedging is used by many big firms to insulate
themselves from currency problems. For example, Honda makes most of the cars it
sells to Americans in U.S. factories, meaning that it can protect U.S. revenues from
a rising yen.15
Of course, using natural hedging means that companies must manage more facili-
ties 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 and innovative employees to compete
successfully. Today, many firms look worldwide for the best possible employees at
the best possible price. We tackle some of these talent-related issues next.16
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 United States in 2011. Similarly, Dell
Computer returned some call center operations to the United States from India
because of rising customer complaints. Some firms are trying to capitalize on this
trend by offering themselves as alternatives to offshoring. For more on this, see the
accompanying Global Innovations box. Of course, offshoring can work if manage-
ment bridges cultural and communication differences, provides sufficient support,
and sets clear expectations. Firms need to think carefully about what work should
be offshored and then search diligently to hire the best foreign employees.19
GLOBAL INNOVATIONS
Out of India? An Onshoring Alternative to Bangalore
With its large, well-trained, and inexpensive English-speaking workforce, Indian compa-
nies have raked in roughly $50 billion in revenue in the IT and customer service industries,
just to name a few, while serving foreign multinationals. Moreover, Indian companies will
likely grow their share of this lucrative business in the years ahead.
Yet in the background, some U.S. firms are onshoring IT service work back to the
United States. More surprising is that onshoring activity is being promoted in small,
rural communities around the United States. Among other places, Pendleton, Oregon;
Duluth, Minnesota; and Joplin, Missouri, seem to be on the leading edge of what may
become an innovative new trend in onshoring. Consider Pendleton-based IT firm Cay-
use Technologies. Cayuse is 100% owned by the Confederated Tribe of the Umatilla
Indian Reservation (CTUIR). The CTUIR partnered with Accenture to develop Cayuse
Technologies; the goals were to help diversify the local economy and create living-
wage jobs for tribe members and the community. It is working; sales soared 700%
from 2007 to 2009, hitting nearly $8 million, with plans for additional expansion in
the works.
Cayuse is one of a growing number of small to medium-sized U.S. IT companies that
deliberately locate in rural America and offer themselves as an alternative to offshoring.
It is not that rural onshorers like Cayuse are cheaper than popular offshore locations—on
paper they cost 10% to 150% more for their services. But that does not tell the whole story.
For example, offshored work carries plenty of hidden expenses because of the significant
management oversight needed (e.g., to bridge culture gaps). In the end, the total cost dif-
ference between offshoring work to India and onshoring work to firms such as Cayuse can
be negligible. Indeed, this is the sweet spot for Cayuse and other small onshoring firms
located in rural U.S. settings. These small companies can undercut bigger U.S. competitors
on prices because, among other things, places such as Pendleton, Duluth, and Joplin are
cheaper places to do business in than Los Angeles, New York, and Boston. Add these cost
International Organizational Behavior 11
savings to the hefty challenges of managing offshored work, and firms such as Cayuse
have a compelling value proposition.
And the Cayuse phenomenon is gaining steam, with dozens of similar companies
now also in this niche. Examples include Saturn Systems, RuralSourcing, and Onshore
Technology Services—all U.S. firms with around 150 employees that have enjoyed nearly
triple-digit growth in the past few years. American customers find them easy to work with
because there are no culture barriers and few worries about data security. And when total
costs are factored in, customers find rural onshorers attractive. For example, Ascensus,
a firm that creates retirement planning software, decided to onshore some of its work to
Duluth-based Saturn Systems. Saturn was more expensive up front than Indian competitors,
but what tipped the balance in Saturn’s favor were the considerable added hassles and
costs of managing work done on the other side of the world.
While rural onshorers are still dwarfed by offshoring activity, they are growing at a
faster rate. Moreover, they could benefit over time from rising labor costs in places such
as India and China. That said, rural outsourcers face challenges, too, not the least of
which is the availability of skilled employees in places like Bedford, Indiana. On the other
hand, some 60 million Americans live in rural settings—many of who are hungry for work.
And nimble rural onshorers are capitalizing on this large pool of labor by retraining
unemployed workers from other industry sectors using boot-camp style programs. Look out
Bangalore, here comes Duluth.20
The reality is that the practice of offshoring is not going away anytime soon.
Many executives view offshoring as part of the global competition for jobs and
talent. Millions of customer service–related jobs are expected to be offshored from
developed nations to places like Russia, the Philippines, India, and China over the
next few years. For example, Spain’s Telefonica has thousands of employees based
in Morocco who take service calls from European customers.21
And while many offshored jobs involve basic service support, firms are in-
creasingly 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 more quickly. The bottom
line is that skilled knowledge workers—especially given globalization, technol-
ogy advances, and intense competition—are at a premium. That helps explain
why IBM performs considerable software development work in India, something
that leverages the large pool of skilled local programmers there. Indeed, many
of the more than 17,000 employees who work for General Electric in India
are professionals and scientists. Put simply, skilled professional jobs in a variety
of scientific areas are increasingly found in centers of excellence around the
world.22
Another random document with
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nach dem Tschimen-tag über eine Kette von Vorbergen auf einem
bequemen Passe, auf dem der Schnee eine zusammenhängende
Decke bildete. Die Löcher der Murmeltiere waren zur Hälfte vom
Schnee verstopft, in welchem auch keine Spuren von diesen Tieren
zu sehen waren. Sie waren schon für den Winter zu Bett gegangen
und hatten es gut und warm in ihren Höhlen. Sie tun wohl daran.
Nordtibet ist schon im Sommer so unfreundlich, daß man gut tut, es
im Winter zu meiden.
Der Hauptpaß, der uns über den Tschimen-tag selbst führte, war
sehr bequem und bestand aus weichen, abgerundeten Hügeln ohne
anstehendes Gestein. Auf seiner Südseite gelangten wir in dasselbe
Längental, das wir im Juli weiter oben im Osten gekreuzt hatten.
Unweit des Lagers heißt die Gegend A t t - a t t g a n (das erschossene
Pferd), weil dort ein Jäger, der längere Zeit Pech gehabt hatte und
am Verhungern gewesen war, schließlich sein Pferd hatte
erschießen müssen, um Fleisch zu bekommen. Unser Lagerplatz am
Flusse heißt M ö l l e - k o i g a n (der fortgeworfene Sattel), weil er hier
seinen Sattel im Stiche gelassen hatte.
Als wir auf der anderen Seite in ein schmales Tal eintraten, das
nach dem Kamm der Kalta-alagan-Kette hinaufführte, scheuchten
wir eine friedlich an den Abhängen weidende Yakherde auf. Sie
ergriff die Flucht und erschreckte ihrerseits eine Kulanherde, die sich
höher oben befand. Jetzt wälzten sich die schweren Bataillone
lawinengleich in Wolken von Sand und Staub den Berg hinab.
Im Süden des Passes haben wir einen steilen Abstieg in einer mit
Granitblöcken und Schutt besäten Talfurche. Nach dem Austritt aus
der trompetenförmigen Mündung des Tales schwenkt unser Weg
nach Südwesten und Westen ab und begleitet den Fuß der
Bergkette (Abb. 162, 163), deren Ausläufer und Verzweigungen von
Wetter und Wind in launenhafter Weise geformt worden sind. Sie
gleichen Tischen, Lehnstühlen, Schalen und Hälsen mit Köpfen, und
manchmal hat sich die Kraft des Windes quer durch dünnere Partien
durchgefressen.
Der A j a g - k u m - k ö l l blitzte am südwestlichen Horizont wie eine
riesenhafte Schwertklinge. Da aber der Weg dorthin noch weit war,
lagerten wir in der Einöde, wo trinkbares Wasser in 1,42 Meter Tiefe
gegraben wurde.
Während des Rasttages, der hier unseren Tieren geschenkt
wurde, erhielten Tscherdon, Togdasin, Islam Bai und Turdu Bai die
Erlaubnis, auf die Jagd zu gehen. Sie ritten in zwei Partien, aber nur
die beiden letztgenannten kamen abends wieder. Wir zerbrachen
uns natürlich sehr den Kopf darüber, was den anderen passiert sein
könnte, und als der Abend und die Nacht vergingen, ohne daß sie
etwas von sich hören ließen, fürchteten wir, daß sie sich verirrt
hätten. Erst am nächsten Morgen gegen 10 Uhr kamen sie in
traurigem Zustand im Lager an. Eine Archariherde verfolgend, waren
sie wilde Täler hinaufgeritten, hatten, als es gar zu steil wurde, ihre
Pferde zurückgelassen und waren über Block- und Geröllmassen
weiter geklettert. Auf einmal war Togdasin buchstäblich
zusammengebrochen und hatte über entsetzliche Kopf- und
Herzschmerzen geklagt. Er konnte keinen Schritt mehr gehen und
sich, als Tscherdon die Pferde geholt hatte, nicht einmal im Sattel
halten. Die Nacht verbrachten sie infolgedessen mitten im ärgsten
Geröll, wo sie nicht einmal Wasser zum Trinken hatten. Der Kranke
hatte den Kosaken gebeten, allein ins Lager zurückzukehren, da er
selbst auf alle Fälle bald sterben werde und es ihm ganz gleichgültig
sei, wo dies geschehe.
Beide blieben in der Kälte liegen, und Tscherdon rüttelte von Zeit
zu Zeit Leben in seinen Kameraden und hinderte ihn am Erfrieren.
Beim ersten Tagesgrauen machten sie sich wieder auf und
schleppten sich langsam nach dem Lager hinunter. Togdasin befand
sich in höchst bedauernswertem Zustande und mußte auf seinem
Pferde festgebunden werden, als wir nach dem Seeufer hinabritten
und in einer Gegend lagerten, die nur spärliche Jappkakbüschel und
kleine Eisschollen am Ufer aufzuweisen hatte (Abb. 161).
164. Turdu Bai und Kutschuk mit dem
zusammengelegten Faltboot. (S. 384.)
165. Der Verfasser im Faltboot auf dem Ajag-kum-köll. (S. 384.)