Chapter 4: International Management
Global Organizations for a Global Economy
The Internationalization Process
From Global Companies to Transnational Companies
Toward Greater Global Awareness and Cross-Cultural Competence
Beware of an Ethnocentric Attitude
Comparative Management Insights
Made-in-America Management Theories Require Cultural Translation
Lessons in Leadership from the Globe Project
Staffing Foreign Positions
Why Do U.S. Expatriates Fail?
What About North American Women on Foreign Assignments?
Relying on Local Managerial Talent
international management pursuing organizational objectives in international and cross-cultural settings.
global company a multinational venture centrally managed from a specific country.
transnational company a futuristic model of a global, decentralized network with no distinct national identity.
ethnocentric attitude view that assumes the home countrys personnel and ways of doing things are best.
geocentric attitude world-oriented view that draws upon the best talent from around the globe.
culture a populations taken-for-granted assumptions, values, beliefs, and symbols, which foster patterned behavior.
high-context cultures cultures in which nonverbal and situational messages convey primary meaning.
low-context cultures cultures in which words convey primary meaning.
individualistic cultures cultures that emphasize individual rights, roles, and achievements.
collectivist cultures cultures that emphasize duty and loyalty to collective goals and achievements.
monochronic time a perception of time as a straight line broken into standard units.
polychronic time a perception of time as flexible, elastic, and multidimensional.
comparative management the study of how organizational behavior and management practices differ across cultures.
culture shock negative feelings triggered by an expectations-reality mismatch.
cross-cultural training guided experience that helps people live and work in foreign cultures.
Learning Objective Summary
Learning Objective 1: Describe the six-step internationalization process, and distinguish between a global company and a transnational company.
• The study of international management is more important than ever as the huge global economy continues to grow.
• Doing business internationally typically involves much more than importing and/or exporting goods.
• The six stages of the internationalization process are:
- Local warehousing and selling
- Local assembly and packaging
- Joint ventures
- Direct foreign investments
• The main distinction between global companies and transnational companies is the difference between reality and a futuristic vision.
- A global company does business simultaneously in many countries but pursues global strategies administered from a strong home-country headquarters.
- A transnational company is envisioned as a decentralized global network of productive units with no distinct national identity. There is growing concern about the economic and political power of these stateless enterprises as they eclipse the power and scope of their host nations.
Learning Objective 2: Explain from a cross-cultural perspective the difference between high-context and low-context cultures, and identify at least four of the GLOBE cultural dimensions.
• An ethnocentric attitude is home-country-oriented, and a serious roadblock in the global economy.
• Communication in high-context cultures such as Japan is based more on nonverbal and situational messages
than it is in low-context cultures such as the United States.
• The nine cultural dimensions identified by the GLOBE project are:
- Power distance
- Uncertainty avoidance
- Institutional collectivism
- In-group collectivism
- Gender equality
- Future orientation
- Performance orientation
- Humane orientation
Learning Objective 3: Explain what Hofstede’s research has to say about the applicability of American management theories in foreign cultures, and summarize the leadership lessons from the GLOBE project.
• Comparative management is a new field of study concerned with how organizational behavior and management practices differ across cultures. A unique study by Geert Hofstede of 116,000 IBM employees in 40 nations classified each country by its prevailing attitude toward four cultural variables. In view of significant international differences on these cultural dimensions, Hofstede suggests that American management theory and practice be adapted to local cultures rather than imposed on them.
• According to the GLOBE researchers, the two most widely accepted leadership styles around the world are the charismatic/value-based and team-oriented styles.
• The participative and humane-oriented styles have mixed applicability.
• The self-protective style is the least acceptable across the world’s cultures.
• Global managers need a flexible repertoire of leadership styles that they use selectively
Learning Objective 4: Discuss why U.S. expatriates fail and what can be done about it, and summarize the situation of North American women on foreign assignments.
• Culture shock is a normal part of expatriate life.
• When U.S. expatriates go home early (a costly problem), it is normally due to:
- Job performance issues
- Family and/or individual culture shock
• Systematic cross-cultural training—ideally including comprehensive development of language skills—is
needed to help reduce the expatriate failure rate.
• Use of local managerial talent is also a possible solution, depending on the situation.
• North American women fill a growing but still small share of foreign positions:
- Women from the United States and Canada have been successful on foreign assignments but face two major hurdles at home: self-disqualification and prejudicial home-country managers.
- Culture, not gender, is the primary challenge for women on foreign assignments.
- The situation for African Americans parallels that of women.
Test Prepper 4.1
True or False?
_____ 1. Buying a foreign company is the only way to do international business.
_____ 2. Foreign direct investment is the first stage in the internationalization process.
_____ 3. Experts suggest that patience is important for successful international joint ventures.
_____ 4. A transnational company, by definition, is a multinational venture centrally managed from a specific country.
_____ 5. _____ is not one of the stages of the internationalization process.
a. A joint venture
b. Bilateral cooperation
c. Local assembly and packaging
e. Direct foreign investment
_____ 6. International joint ventures have tended to be fruitful for _____ companies but disappointing for _____ partners.
a. European; Japanese
b. African; Japanese
c. North American; Latin American
d. Japanese; American
e. American; European
_____ 7. Which of the following best characterizes a transnational company?
a. Centralized authority and distinct national identity
b. Decentralized authority and distinct national identity
c. Decentralized authority and no distinct national identity
d. Centralized authority and no distinct national authority
e. Part centralized and part decentralized authority with a distinct national identity
Test Prepper 4.2
True or False?
_____ 1. An ethnocentric CEO from France would insist that French be spoken in all the firm’s worldwide offices.
_____ 2. Culture involves actual behavior, not taken-for-granted assumptions about behavior.
_____ 3. Researchers from the University of Michigan concluded that the world is indeed moving toward a uniform “McWorld,” where American culture prevails.
_____ 4. People are expected to communicate their precise intended meaning through written and spoken words in low-context cultures, such as the United States and Germany.
_____ 5. The nine cultural dimensions form the GLOBE project include two types of collectivism.
_____ 6. The appropriate interpersonal distance is about 18 inches when transacting face-to-face business anywhere in the world.
_____ 7. In _____ organizations, authority and decision making are headquarters-centered.
_____ 8. Culture is best described as
a. the meaning of life.
c. universal language.
d. taken-for-granted assumptions.
e. one’s native language.
_____ 9. _____ is (are) vital to communication in high-context cultures.
a. Being on time
b. Nonverbal and situational cues
c. Being polite
d. Having family ties
e. Written contracts
_____ 10. Which of these is not one of the GLOBE project’s nine cultural dimensions?
b. Power distance
c. Future orientation
d. Religious orientation
e. In-group collectivism
_____ 11. The concept of monochronic time is best described as
Test Prepper 4.3
True or False?
_____ 1. Hofstede found American management theories to be universally applicable around the world.
_____ 2. Humane-oriented leadership was found to be the most widely applicable style by the GLOBE project researchers.
_____ 3. A self-protective leadership style is the least acceptable style, regardless of the culture, according to the GLOBE project.
_____ 4. What is the practical conclusion from Hofstede’s 40-country study?
a. Japanese management practices will likely fail in North America.
b. American management practice traces to Northern Europe.
c. Management theory and practice need to be adapted to the local culture.
d. American management theory and practices are applicable worldwide.
e. Japanese management is superior.
_____ 5. Katerina is viewed by coworkers as being compassionate, generous, considerate, and supportive. According to the GLOBE leadership styles, what type of leader is she?
_____ 6. According to the GLOBE leadership matrix, which two leadership styles have the greatest cross-cultural applicability?
a. Team-oriented and humane-oriented
b. Charismatic/value-based and team-oriented
c. Humane-oriented and self-protective
d. Self-protective and charismatic/value-based
e. Team-oriented and participative
Test Prepper 4.4
True or False?
_____ 1. Mentors can help reduce culture shock for those on foreign assignments.
_____ 2. When selecting someone for a foreign assignment, it is a good idea to put the person’s entire family through an orientation.
_____ 3. North American women have enjoyed above average success on foreign assignments.
_____ 4. The leading reason for the comparatively high failure rate of U.S. managers on foreign assignments is
a. poor job performance.
b. excessive aggressiveness.
c. emotional immaturity.
d. poor language ability.
e. inability of a spouse to adjust.
_____ 5. _____ can be defined as feelings of anxiety, self-doubt, and isolation brought on by an expectations-reality mismatch.
a. Culture shock
b. Culture drain
c. Jet lag
d. Travel weariness
e. Travel trauma
_____ 6. Which technique is appropriate when managers have short notice of a foreign assignment and need to be trained quickly?
a. Virtual transfer
b. Culture assimilator
c. Language instruction
d. Sensitivity training
e. Field experience
_____ 7. Which of these is true about North American women on foreign assignments?
a. Most foreign executives simply refuse to work with women.
b. Gender is a bigger hurdle than culture.
c. The greatest barrier to foreign assignments for North American women has been self-disqualification and prejudice among home-country managers.
d. North American women have suffered an above-average failure rate on foreign assignments.
e. Canadian women have proven to be twice as successful as U.S. women.
Test Prepper Answer Key
1. F 2. F 3. T 4. F 5. b 6. d 7. c
1. T 2. F 3. F 4. T 5. T 6. F 7. e 8. d 9. b 10. d 11. a
1. F 2. F 3. T 4. c 5. d 6. b
1. T 2. T 3. T 4. a 5. a 6. b 7. c