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Michael A. Hitt

C. Chet Miller

Adrienne Colella

Chapter 3 Organizational Organizational Behavior in aBehavior in a

Global ContextGlobal Context

Slides by Ralph R. Braithwaite

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McDonald’s McDonald’s Thinks Globally andThinks Globally and

Acts Locally Acts Locally• What are your thoughts on McDonald’s approach to

international business?

• What about their concept of thinking globally but acting locally. Why is it a good idea?

• What can other businesses learn from McDonald’s example?

Exploring Behavior in Action

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Knowledge ObjectivesKnowledge Objectives1. Define globalization and discuss the forces that

influence this phenomenon.

2. Discuss three types of international involvement by associates and managers and describe problems that can arise with each.

3. Explain how international involvement by associates and managers varies across firms.

4. Describe high-involvement management in the international arena, emphasizing the adaptation of this management approach to different cultures.

5. Identify and explain the key ethical issues in international business.

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Forces of GlobalizationForces of GlobalizationGlobalization – The trend toward a unified global economy involving free trade and a free flow of capital between countries• Products, services, people, technologies, and financial

capital move relatively freely across national borders

• Tariffs, currency laws, travel restrictions, immigration restrictions, and other barriers to these international flows become less difficult to manage

• Unified world market in which to sell products and services, and acquire resources

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CultureCultureShared values and taken-for-granted assumptions that govern acceptable behavior and thought patterns in a country and that give a country much of its uniqueness.

Thoughts?

“Many fear that unique cultures around the world will disappear over time if the world becomes one unified market for goods and services.”

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Opportunities and ChallengesOpportunities and Challenges

Exhibit 3-1: Opportunities and Challenges for Firms with International Involvement

Diversification of Risk

ChallengesChallenges

Political Risks

Political Risks

Economic Risks

Economic Risks

Managerial Risks

Managerial Risks

GrowthGrowth

Location Advantages

Location Advantages

OpportunitiesOpportunities

Economiesof Scale

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RisksRisks

Political Risks

Economic Risks

Managerial Risks

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Internationally Focused JobsInternationally Focused Jobs

Individual Issues

Virtual Teams

Swift Trust

Well suited to associates who thrive on challenge

Typically member of geographically dispersed teams

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• Don’t attempt to identify another’s culture too quickly

• Beware of the Western bias toward taking actions

• Avoid the tendency to formulate simple perceptions of others’ cultural values

• Don’t assume that your values are the best for the organization

• Recognize that norms for interactions involving outsiders may differ from those for interactions between compatriots

• Be careful about making assumptions regarding cultural values and expected behaviors based on the published dimensions of a person’s national culture

Adapted from Exhibit 3-2: Learning about a Counterpart’s Culture

Learning About a Learning About a Counterpart’s CultureCounterpart’s Culture

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Foreign Job AssignmentsForeign Job Assignments

ExpatriatesExpatriates Culture ShockCulture Shock EthnocentrismEthnocentrism

Spousal Spousal AdjustmentAdjustment

Building RelationshipsBuilding Relationships

Adjusting to Local CultureAdjusting to Local Culture

Developing a Feeling of Developing a Feeling of Being at HomeBeing at Home

Effectivenessat

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Training for ExpatriatesTraining for Expatriates

• Train the entire family, if there is one

• Departure orientation• Key cultural

information• Conversational

language training• Convince busy

families of need for training

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After ArrivalAfter Arrival• Additional training

• Continued language training

• Social support

• Reintegration process

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Glass BorderGlass Border• Historically, fewer international assignments

for women

• Results in issues of development and knowledge for higher-level jobs

• Impact on human capital

3-14ExperiencingStrategic OB

Are Asian Women Breaking the Are Asian Women Breaking the Glass Border?Glass Border?

• What role do cultural values and traditions still play in the Asian business world?

• Are more Asian women taking on leadership roles? How will this impact business in the future?

• What are the potential negative consequences for Asian companies that do not make the best use of all their human capital?

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Foreign Nationals as ColleaguesForeign Nationals as ColleaguesSome issues involve different:

ValuesValues Ways of ThinkingWays of Thinking

NormsNorms Thought PatternsThought Patterns

Working StylesWorking Styles Decision StylesDecision Styles

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Context CulturesContext CulturesHigh-context culture• Value personal

relationships

• Develop agreements based on trust

• Favor slow, ritualistic negotiations

Low-context culture• Value performance and

expertise

• Develop formal agreements

• Engage in efficient negotiations

Japan South Korea GermanyUnited States

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Time OrientationTime OrientationMonochronic

• Prefer to do one task in a give time period

• Dislike multi-tasking

• Prefer to do one task without interruption

• Prompt, schedule driven and time-focused

Polychronic • Comfortable doing more

than one task at a time

• Not troubled by interruptions

• Time is less of a guiding force

• Plans are flexible

Latin America

Southern Europe

South Asia

Southeast Asia

North America

Northern Europe

Many Japanese

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Cultural IntelligenceCultural Intelligence

The ability to separate the aspects of behavior that are based in culture as opposed to unique to the individual or all humans in general.

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Opportunities for International Opportunities for International ParticipationParticipation

Multi-domestic strategy

Global strategy

Transnational strategy

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Local ResponsivenessLocal Responsiveness

Local Multi-domestic Global Transnational

Production High Low Medium

R&D High Low Medium

Product Modification

High Low Medium/High

Adaptation of Marketing

High Low/Medium Medium/High

Adapted from Exhibit 3-3: International Approaches and Related Organizational Characteristics

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Organizational DesignOrganizational DesignMulti-domestic Global Transnational

Delegation of power to local units

High Low Medium/Low

Inter-unit resource flows between and among local units

Low Low/ Medium High

International resource flows from and/or controlled by corporate HQ

Low High Low/ Medium

Adapted from Exhibit 3-3: International Approaches and Related Organizational Characteristics

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International ParticipationInternational Participation

Adapted from Exhibit 3-3: International Approaches and Related Organizational Characteristics

Multi-domestic Global Transnational

Opportunities for Associates and Managers

Low High High

3-23Exhibit 3-4: Dimensions of National Culture

Dimensions of National CultureDimensions of National Culture

National Culture

National Culture

Power Distance

Power Distance IndividualismIndividualism

Assertiveness

Assertiveness

Humane Orientation

Humane Orientation

Performance Orientation

Performance OrientationFuture

Orientation

Future Orientation

Gender Egalitarianism

Gender Egalitarianism

In-group Collectivism

In-group Collectivism

Uncertainty Avoidance

Uncertainty Avoidance

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National CulturesNational Cultures

Adapted from Exhibit 3-5: National Culture in India, Germany, and the United States

Culture Dimension India Germany United States

Uncertainty avoidance M H M

Power distance M/H M M/L

Individualism M H M

Assertiveness L/M H H

In-group collectivism H L/M M/L

Gender egalitarianism L M/L M

Future orientation M M M

Performance orientation M M H

Humane orientation H/M L M

L – Low M – Medium H – High

3-25ExperiencingStrategic OB

Managing Diverse CulturesManaging Diverse Cultures

Geert Hofstede

What are your thoughts about Hofstede’s studies on culture?

What are your thoughts about the cultural issues in the companies mentioned?

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National Culture and National Culture and High-Involvement ManagementHigh-Involvement Management

• Power-distance

• Uncertainty avoidance

• Individualism

• Assertiveness

Must be implemented according to a country’s cultural characteristics. Information sharing and decision power can be adapted to different levels of:

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National Culture and National Culture and High-Involvement ManagementHigh-Involvement Management

InformationInformationSharingSharing

Decision Power andDecision Power andIndividual AutonomyIndividual Autonomy

Decision Power andDecision Power andSelf-Managing TeamsSelf-Managing Teams

What are your thoughts regarding AES’s process?

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Ethics in the International Ethics in the International ContextContext

Principles of proper conduct focused on issues such as:

CorruptionCorruption ExploitationExploitationof Laborof Labor

EnvironmentalEnvironmentalImpactImpact

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Absence of Corruption RankingsAbsence of Corruption Rankings

Adapted from Exhibit 3-6: Absence of Corruption in Select Countries

Top Five Bottom Five

1. Iceland

2. Finland

2. New Zealand

4. Denmark

5. Singapore

155. Turkmenistan

155. Myanmar

155. Haiti

158. Bangladesh

158. Chad

United States

17

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Caux Round Table: Ethical Caux Round Table: Ethical Principles for BusinessPrinciples for Business

ResponsibilitiesResponsibilitiesResponsibilitiesResponsibilities

ManagerialAdvice

Economic and Economic and Social ImpactSocial Impact

Economic and Economic and Social ImpactSocial Impact

Support forSupport forMultilateral TradeMultilateral Trade

Support forSupport forMultilateral TradeMultilateral Trade

BusinessBusinessBehaviorBehavior

BusinessBusinessBehaviorBehavior

RespectRespectfor Rulesfor RulesRespectRespectfor Rulesfor Rules

Respect for the Respect for the EnvironmentEnvironment

Respect for the Respect for the EnvironmentEnvironment

Avoidance of Avoidance of Illicit OperationsIllicit OperationsAvoidance of Avoidance of

Illicit OperationsIllicit Operations

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The Strategic LensThe Strategic Lens

1. Given the complexity and challenges in operating in foreign countries, why do organizations enter international markets?

2. How can understanding and managing cultural diversity among associates contribute positively to an organization’s performance?

3. How can being knowledgeable of diverse cultures enhance an individual’s professional career?

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QuestionsQuestions