Chapter 1: What is the Role of a Global Manager?

“Dramatic shifts in economics, politics and technology shape the role of the international manager. These shifts are often encapsulated in the term ‘globalization’.” (Thomas and Peterson, 2015)

1.1 ‘Globalization’

Globalization = A process whereby worldwide interconnections in virtually every sphere of activity are growing. Some of these interconnections lead to integration/unity worldwide; others do not. The increase in interconnections is the result of shifts that have taken place in technological, political, and economic spheres.

Four categories of change that illustrate the process of globalization:

1. Growing economic interconnectedness; Causes of a greater degree of interconnectedness are:

• The establishment of free trade areas. The three largest trade groups are the European Union, the North American Free Trade Agreement, and the Asia-Pacific Economic Cooperation.

• The World Trade Organization established with the goal of reducing tariffs and liberalizing trade across the board. Therefore, local economic conditions are no longer the result of purely domestic influence.

• The gap between regional GDP growth rates of the fastest-growing and least dynamic regions of the world has begun to narrow.

• The level of FDI also has a globalizing effect. FDI, as a percentage of the world GDP, doubled between 1985 and 1994. The result of these changes in trade and FDI flows is a shift in the economic center of the world away from North America and Western Europe.

Effects of greater degree of interconnectedness are

• Organizational boundaries are not limited by a country’s boundaries. Certain parts of the organization might be located in different countries to capitalize on certain location specific advantages.

This effect is stimulated by the emergence of virtual organizations (Recap: Information Systems Management) in which employees do not meet face to face but are linked by computer technology.

• Multinational firms now manufacture and sell globally on an unprecedented

scale, and the expansion of international production continues to gather momentum.

2. More complex and dynamic work environment; Causes of globalization that affect the stability of the work environment within organizations are

• Downsizing.

• Number of permanent migrants is changing the composition of the workforce in countries. As boundaries to migration become more permeable, migration resulting from economic, political, and social factors increase. Recent migration trends are 1) the number of women migrants is increasing, and 2) the traditional migration pattern after World War II was low-skilled workers from less developed to more developed countries.

• The trend of privatization. Privatization makes formerly government-controlled enterprises available for purchase by foreign firms, thus reducing boundaries. These enterprises are often noncompetitive, and therefore privatization has a dramatic effect on the work life and management in these firms.

• As a solution to productivity problems, organizations are increasingly looking at the formation of teams of workers. There occur demographic changes, such as increased cultural diversity, because of the ease of movement of workers of all skill levels across borders, the rising average age of employees, and the addition of more women to the workforce. It is difficult and complex to introduce teams in these increasingly multicultural workplaces.

3. Increased use and sophistication of information technology; Effects of the use of IT are

• Multinational firms can now communicate all types of information throughout their geographically dispersed enterprise instantaneously.

• Access to information, resources, products, and markets is influenced by improved information technology.

4. More and different players on the global stage; The players on the international business stage were originally the firm and its foreign constituency, but they were soon joined by home country and host country governments and, more recently, by special interest groups, international agencies, and economic alliances.

Furthermore, the characteristics of these actors have changed over time. Besides that, technology is facilitating the entry of small business into the international arena. Lastly, one should not forget the international gangs and terrorists on the global stage. For example, transport illegal drugs.

1.2 ‘Global management environment’

The elements of the global manager’s environment can be divided into four categories: economic, legal, political, and cultural.

• Economic; Managers must understand the economic strategies of countries in which one is conducting business.

• Legal; Complexity arises from the variety of laws and regulations.

• Political; Political systems are the structures and processes by which a nation integrates the parts of society into a functioning unit.

• Culture; Important because 1) the economic, legal, and political systems are derived from a country’s culture and history. 2) Culture is largely invisible unlike the economic, legal, and political aspects. Managers often overlook the influence of culture since it is difficult to detect. 3) The practice of management focuses largely on interpersonal interactions.

1.3 ‘What global managers do’

Management = Managers have formal authority over their organizational unit and this status divides their activities into interpersonal, informational, and decisional role categories. Mintzberg’s framework identifies ten role categories of managers.

“Global managers face interactions with people who are culturally different.”

1.4 ‘Cross-Cultural management studies- an evaluation’

For practicing managers and management scholars to continue to improve and elaborate their understanding of management in our current dynamic environment, it is of great importance that the study of management across cultures continues to improve.

Limitations in present management studies:

• Only about 5% of the published articles focuses on international or cross-cultural studies.

• Historical factors have perpetuated parochialism in management studies.

Parochialism = A lack of awareness of alternative contexts, models, research, and values.

• Culture influences the way scholars perceive and think about the world they are investigating. Three particularly aspects of the U.S. perspective that limit the ability of U.S. management theories to explain organizational phenomena in cultures with contrasting orientations:

  1. Extreme individualism

  2. A belief that individuals are in control of their own circumstances and can, to a great degree, influence their environment and future events.

  3. Low-context communication.

• Theories indigenous to other cultures, which might show what is being missed by applying U.S. approaches abroad, are rare.

Types of international management research

For a summarizing table for all types of management research, their cultural assumptions and key research questions, Refer to Table 1.3 on page 14.

• Domestic research = Studies that are designed and conducted within a single country without regard for the boundary conditions set by the cultural orientation of the country. Constraint in both its ability to advance theory and its practical application.

• Replication research = Studies that are conceived and managed by a researcher in one country and then repeated in other countries by the originator or by local collaborators. They assume that the responses in the two cultures can be compared directly.

• Indigenous research = Studies that focus on the varied ways in which managers behave and organizations are run in a variety of specific cultural settings. They assume cultural differences and the research is conducted within a single country.

• Comparative research = Studies that seek to find both the similarities and the differences that exist across cultures regarding a particular management issue. Important is that researchers do not present one cultural perspective as dominant.

• International research = Studies that focus attention on multinational enterprises. They do recognize both similarities and differences across cultures. However, cultural context is not very present.

• Intercultural research = Studies that seek to understand the interactions between culturally different individuals in organizational settings.

It considers the culture of all parties in the interaction and contextual explanations for observed similarities and differences.

Cross-Cultural research and its issues

Studies that involve two or more cultures share several common methodological issues that are not present in purely domestic research. Methodological issues in cross-cultural research:

• Equivalence = The opportunity for bias caused by cultural differences in values, attitudes, and normative behavior is staggering. Equivalence means that culturally different participants understand equally the conce3pt and its relationship to other concepts in the study. Cross-cultural equivalence cannot be assumed at any stage of a cross-cultural study, and it must be established at three key points: the conceptualization of the theoretical constructs, the study design, and the data analysis.

  1. Conceptual/construct equivalence relates to the extent to which the concepts examined in cross-cultural research have the same meaning in different countries.

  2. Method equivalence relates to whether the measurement unit is the same in all groups.

  3. Metric equivalence is the extent to which questions have similar measurement properties across different groups.

• Sampling = Its goal is to conduct research with a small number of participants who accurately represent the population about which we want to make conclusions. The ability to select a truly representative sample in cross-cultural research is difficult.

  1. To prove the universality of a phenomenon requires a random sample of countries.

  2. Because of subcultural variation within countries, any sample selected from a specific geographic region does not necessarily represent the country.

  3. Inconsistencies in the availability of sampling frames across cultures can affect the sample.

  4. Practical considerations override some of the conditions of theoretical sampling, and convenience samples are used.

• Data collection = The most common methods are 1) questionnaires, 2) interviews. Difficulties are:

  1. People in different cultures differ in how familiar they are with particular research methods and in how ready they are to participate.

  2. Some differences between people are obvious (variation in literacy rates). However, some of them are more subtle.

  3. The researchers’ purpose is suspect by participants.

  4. Respondents may not have a frame of reference from which to respond to questions. For example, give a concrete example of a certain situation.

  5. An interview has an extra disadvantage, which is the possible interaction between interviewer and respondent. The characteristics of the interviewer, the interviewer’s technique might influence respondent answers, and the interviewer can selectively perceive or anticipate the respondent’s answers.

Overview of critiques of international and cross-cultural research:

1. Lack of a theoretical base

2. Parochialism

3. Heavy reliance on convenience samples

4. Lack of relevance

5. Reliance on a single method

6. Bias toward studying large companies

7. Reliance on a single organizational level

8. Limited to a small number of locations

Chapter 2: Describing Culture - The Basics

Culture = Consists of patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values.

2.1 ‘Features of culture’

1. Culture is shared; Individuals carry in their mind three levels of programming about how they interact with their environment, See Figure 2.1 on page 22. Culture is between human nature and personality.

2. Culture is learned; Over time, the people in a society develop patterned ways of interacting with their environment. For instance; language, systems of government, forms of marriage, and religious systems. These patterns are transmitted to the new entrants.

3. Culture is systematic and organized; Cultures are integrated coherent logical systems. They are organized systems of values, attitudes, beliefs, and behavioral meanings related to each other and to the environmental context. Culture is neither genetic nor about individual behavior; it is contained within the knowledge systems of individuals. These systems are formed during childhood and reinforced throughout life. Schein identifies three levels of culture, See Figure 2.2 on page 25. Artifacts are the only visible part of culture, espoused values and basic underlying assumptions are the invisible parts. Furthermore, artifacts are consciously held values, while values and basic assumptions operate at an unconscious level.

2.2 ‘Reasons why cultures differ’

This section examines environmental elements that cause cultural differences.

• Survival; Cultural characteristics developed to aid the survival of groups in their environment. Cultural concepts that have their foundation in initial beliefs about survival or fundamental beliefs about right and wrong are probably programmed at a very deep level of consciousness. Additionally, once a cultural pattern is established, it is very resistant to change even when surrounding circumstances change.

• Language; It plays a prominent role in the way culture is transmitted. Language determines the content of a society’s mental representation of their environment. However, linguists disagree about the degree of control language exerts over perceptions, attitudes, and behavior. Besides that, language does not constrain thought. Language is an artifact of culture that helps perpetuate its values, attitudes, beliefs, and behavioral routines.

• Religion; It reflects beliefs and behaviors shared by groups of people that cannot be verified by empirical tests. The extent to which religion influences the cultural profile of a society depends on the extent to which a particular religion is dominant, the importance society places on religion, the degree of religious homogeneity in the society, and the degree of tolerance for religious diversity in the society. For an overview of the geographic distribution of the major religions around the world, See Table 2.1 on page 29. It also shows that some religions are concentrated in specific geographic regions.

• Other factors; Factors that contribute to cultural variation and persistence are

  1. Climate, topography, and the indigenous economy

  2. Proximity and topography: affect exchange of culture through natural barriers.

  3. Economic systems and technology

  4. Political boundaries

2.3 ‘Debates around culture’

Due to ambiguity several issues raised concerning culture. These issues are the concept of:

• National culture; The word nation is often used as a synonym for culture without any further conceptual grounding. Multiple cultures can exist within national borders, and the same cultural group can span many nations. Hofstede argues that since nations are political entities, they vary in their intuitions, forms of government, legal systems, etc. Additionally, most nations are characterized by one or more official languages, and many nations are small enough to have similar geographic and ecological conditions. These factors influence the way in which people interact with their environment and each other and thereby condition the way they think (their mental programming). So, nations are social systems and therefore can have cultures. Lastly, we all derive our self-identity in part from our nationality. A multinational often analyses the national culture, thereby creating two difficulties. First, when we compare national cultures, we risk ignoring the large number of subcultures. Second, we risk ignoring the variation, conflict, and dissent that exist within national cultures.

These issues can be addressed if we focus on characterizations of values, beliefs, and behavioral assumptions that individuals within a culture share.

• Convergence, divergence, or equilibrium; The extent to which cultures around the world are becoming more similar or more different. The argument for convergence of cultures is based on the fact that nations are not static entities but develop over time. This modernization results from a common economic orientation and eventually leads to a common society where differences in ideology will cease to exist. Inglehart, a proponent of the convergence perspective, identified two value orientations related to a country’s wealth, 1) materialist, 2) postmaterialist. As wealth increased, so did endorsement of postmaterialist values. Thus, as wealth gradually increases, cultural differences diminish. Additionally, sociologists suggest that to participate effectively in a modern society, people must possess a core set of psychological characteristics. The profile of a modern person is shown in Box 2.2. Smith and Bond point out an interesting reaction in developing countries. That is, as arguments for cultural convergence are popularized, many developing countries take action to distinguish themselves from the West and assert their cultural uniqueness. Another point is that a common goal, such as maintenance of the systems that support life on Earth, supports a growth in internationalism. Different opinions about cultural convergence and divergence:

  • Child: cultural convergence or divergence was a matter of level of analysis. He states that studies of macro-level issues of organizational structure and technology often indicate cultural convergence, whereas research indicating divergence was typically involved with the more micro-level issues of the behavior of individuals within organizations.

  • Yang: convergence only in the cultural characteristics that relate specifically to functioning more easily in a technological environment.

  • Ralston: identified a middle ground called crossvergence, to refer to the incorporation by individuals of influences from both national culture and economic ideology.

  • Cohen: although different environments produce different social systems, different environments can produce similar systems, and similar environments can produce vastly different cultures.