Chapter 3 Organizational Behavior in a Global Context

Chapter 3 Organizational Behavior in a Global Context Michael A. Hitt C. Chet Miller Adrienne Colella Slides by Ralph R. Braithwaite 3 -1

Mc. Donald’s Thinks Globally and Acts Locally • What are your thoughts on Mc. Donald’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 Mc. Donald’s example? Exploring Behavior in Action 3 -2

Knowledge Objectives 1. Define globalization and discuss the forces that 2. 3. 4. influence this phenomenon. Discuss three types of international involvement by associates and managers and describe problems that can arise with each. Explain how international involvement by associates and managers varies across firms. 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. 3 -3

Forces of Globalization – 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 3 -4

Culture Shared 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. “Many fear that unique cultures around the world will disappear over time if the world becomes one unified market for goods and services. ” Thoughts? 3 -5

Opportunities and Challenges Political Risks Growth Diversification of Risk Economic Risks Challenges Opportunities Economies of Scale Managerial Risks Location Advantages Exhibit 3 -1: Opportunities and Challenges for Firms with International Involvement 3 -6

Risks Political Risks Economic Risks Managerial Risks 3 -7

Internationally Focused Jobs Well suited to associates who thrive on challenge Typically member of geographically dispersed teams Individual Issues Virtual Teams Swift Trust 3 -8

Learning About a Counterpart’s Culture • 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 3 -9

Foreign Job Assignments Expatriates Culture Shock Ethnocentrism Building Relationships Effectiveness Spousal at Adjustment Adjusting to Local Culture Developing a Feeling of Being at Home 3 -10

Training 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 3 -11

After Arrival • Additional training • Continued language training • Social support • Reintegration process 3 -12

Glass Border • Historically, fewer international assignments • • for women Results in issues of development and knowledge for higher-level jobs Impact on human capital 3 -13

Are Asian Women Breaking the 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? Experiencing Strategic OB 3 -14

Foreign Nationals as Colleagues Some issues involve different: Values Ways of Thinking Norms Thought Patterns Working Styles Decision Styles 3 -15

Context Cultures High-context culture • Value personal • • relationships Develop agreements based on trust Favor slow, ritualistic negotiations Japan South Korea Low-context culture • Value performance and • • expertise Develop formal agreements Engage in efficient negotiations United States Germany 3 -16

Time Orientation Monochronic Polychronic • Prefer to do one task in • Comfortable doing more • • a give time period Dislike multi-tasking Prefer to do one task without interruption Prompt, schedule driven and time-focused North America Northern Europe Many Japanese • • 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 3 -17

Cultural 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. 3 -18

Opportunities for International Participation Multi-domestic strategy Global strategy Transnational strategy 3 -19

Local 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/High Adapted from Exhibit 3 -3: International Approaches and Related Organizational Characteristics 3 -20

Organizational Design Multi-domestic Global Transnational Delegation of power to local units High Low Medium/Low Inter-unit resource flows between and among local units 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 3 -21

International Participation Opportunities for Associates and Managers Multi-domestic Global Transnational Low High Adapted from Exhibit 3 -3: International Approaches and Related Organizational Characteristics 3 -22

Dimensions of National Culture Power Distance Individualism Uncertainty Avoidance In-group Collectivism Gender Egalitarianism Assertiveness National Culture Future Orientation Exhibit 3 -4: Dimensions of National Culture Humane Orientation Performance Orientation 3 -23

National Cultures Culture Dimension India Germany United States 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 H/M L M Uncertainty avoidance Power distance Humane orientation L – Low M – Medium H – High Adapted from Exhibit 3 -5: National Culture in India, Germany, and the United States 3 -24

Managing Diverse Cultures What are your thoughts about Hofstede’s studies on culture? Geert Hofstede What are your thoughts about the cultural issues in the companies mentioned? Experiencing Strategic OB 3 -25

National Culture and High-Involvement Management Must be implemented according to a country’s cultural characteristics. Information sharing and decision power can be adapted to different levels of: • • Power-distance Uncertainty avoidance Individualism Assertiveness 3 -26

National Culture and High-Involvement Management Information Sharing Decision Power and Individual Autonomy Decision Power and Self-Managing Teams What are your thoughts regarding AES’s process? 3 -27

Ethics in the International Context Principles of proper conduct focused on issues such as: Corruption Exploitation of Labor Environmental Impact 3 -28

Absence of Corruption Rankings Top Five Bottom Five 1. Iceland 155. Turkmenistan 2. Finland 155. Myanmar 2. New Zealand 155. Haiti 4. Denmark 158. Bangladesh 5. Singapore 158. Chad United States 17 Adapted from Exhibit 3 -6: Absence of Corruption in Select Countries 3 -29

Managerial Advice Caux Round Table: Ethical Principles for Business Responsibilities Economic and Social Impact Business Behavior Respect for Rules Support for Multilateral Trade Respect for the Environment Avoidance of Illicit Operations 3 -30

The 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? 3 -31

Questions 3 -32