International Marketing

Sociopolitical and Behavioral Aspects

Erdener Kaynak

• Publisher: Routledge
• Year: 1991
• ISBN:
  9781136777639
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

Social, economic, political, business, and cultural environmental factors affect the international marketing operation and performance of international firms. This highly insightful volume focuses on four of the most significant forces with which companies must deal on an international level--macro international marketing issues, sociopolitical int

SECTION III:
SOCIOPOLITICAL
INTERNATIONAL
MARKETING ISSUES

Chapter 5

Learning from Corporate Leaders: A Modern Sociocultural Development of International Management Interactions in the Philips, Holland

Nico J. Vink

NEEDED: A DYNAMIC PARADIGM

Introduction

This treatise deals with the question of decision making processes in situations of external and internal change of managements at different levels of multinational corporations, and the importance of teaching and learning on the way. The first section deals with theory, the second one with applying theory to the actual practices within the Philips corporation in the sixties to eighties.

Our basic assumption is that most theoretical paradigms are not adequately fit for analyzing and managing decision making processes in situations of major change. We need a new theoretical composite model. In order to develop such a model, we will look at some key paradigms in theories of organization, management and marketing. We will also look into social responsibility and business ethics thinking, because so many businesses have been blamed for not responding properly to external changes.

Organization Theory

With Simon and March (1957 and 1958) organizational decision making has been virtually reduced to individual managers freely choosing problems and solutions, however limited the number of alternatives, and the “bounded rational” ways in which these alter natives are chosen, may be. Conflicts may hamper rationality, but they are only considered to be exceptions to the rule of harmony.

In Cyert and March's thinking (1963) corporate behavior gets prime focus. Corporations are managed by voluntarily chosen shifting coalitions of actors. In this more realistic approach, each management level has its own environmental uncertainties and perceptions. Conflicting interests are normal and decision making is therefore very much a political process. Decision making is also considered to be a form of organizational learning. They also made it clear how companies respond to uncertainty. In spite of this, however, “power” and “morale” are still being treated in a “black box” way. Moreover, they greatly seem to overestimate corporate freedoms of choice and responsiveness. Actor relationships are treated like logics and rational divisions of labor, not as social processes.

According to system theoreticians like Emery and Trist (1965, pp. 21–32) corporations react to uncertain market conditions or outside "stakeholders" (1972). Other system theoreticians are not only interested in the way corporations react to environments, but are also concerned about the way information needed on the way is being processed (Terreberry, 1968, pp. 590–614). Interface functions are differentiated, attention is paid to non-market relationships (Broden, 1976, pp. 46–49), relative corporate autonomy is seen to depend upon the type of environment (Rhenman, 1973, p. 190), and a different type of environment may require a different type of response. In contingency theory, attention is also paid to corporate structures that must fit the environment (Burns and Stalker, 1961, pp. 119–121, and Lawrence and Lorsch, 1967–1, p. 209, and 1967–2, pp. 1–47). The more a company differentiates its interface functions, the more it will also have to integrate all its sub-functions. Organizations may have an organic or mechanistic structure. Child (1972, pp. 2–23) observed that maybe there was no such thing as just one solution per type of problem. Others, such as Starbuck (1975, pp. 1069–1124) made it clear that the relationship between a corporation and its environment often is a two-way street. Some times large companies can even afford to have mechanistic structures in turbulent environments (Schryögg, 1978, p. 78 and pp. 282–283). Particularly interesting is Thompson's approach, his central theme of uncertainty as the essence of the administrative process in corporations (1967, p. 159), and his detailed analysis of “dependency relationships.”

Management Theory

Ansoff s evolution of thinking since 1965 may be considered to represent developments of management theory at large. In a way these theories are variations on the organization-environment theme in which top-management tries to decrease its dependence and uncertainty by making strategic decisions, formulating objectives and how to achieve them.

At development stage one attention was focused on formulating strategy. This formulating approach then developed into a planning one, focusing on systematic procedures. Following the first oil crisis– and aware why strategic planning based on rational problem solving and decision making (Ansoff, Declerck and Hayes, 1974, p. 64) had failed—top-managements realized that it was also necessary to maintain good relationships with non-market stakeholders. Ansoff started to perceive rational planning processes as part of complex socio-dynamic, learning processes. He began to understand that in successful management systems, the human actor is just as important as decision making technology. So strategic planning developed into strategic management. As from the seventies, strategic surprises and paradoxical situations greatly increased. Increasingly companies were forced to develop an “after the fact responsiveness” (crisis management) or a “before the fact strategic preparedness” (Ansoff, 1975, p. 2). If companies are waiting to respond until the moment that a signal has become strong, the situation may have become critical. In order to prevent too early or too late a response, it is better to reformulate a response sequentially, and develop internal responsiveness accordingly.

Finally Ansoff also began to pay attention to the implementation side of policies, notably to strategic behavior. Over the years, cor porate attention added the entrepreneurial sub-environment (integrating a longer term profit focus) to the competitive sub-environment (aimed at short term profits). After that, the political sub-environment was added, aimed at realizing societal legitimacy. Increasingly companies cannot do without a blend of responsive nesses anymore, such as market responsiveness, cost efficiency responsiveness, strategic responsiveness (when technological and economical discontinuities occur), structural responsiveness (see “structure follows strategy,” Chandler, 1962), as well as internal socio-political responsiveness and societal responsiveness (Ansoff, 1974, p. 3). Policy can no longer be separated from implementation. In spite of all theoretical renewals over the years, Ansoff still put the accent on a normative approach, in which corporations should analyze problems and develop technical solutions and ("sophisticated") management systems “objectively.”

Change, an Action-Sociological Approach

Silverman (1986, pp. 233–234 and 1970, p. 150) has been amongst the first not to approach organizational change one sidedly. Organizations are systems of power, as well as value systems. His action oriented model clearly perceives that in each company role systems, patterns of interaction, and a number of (outdated) “rules of the game” have developed over the years. It is very important to know how actors are orienting themselves, how they perceive their situation and their goals, and how they expect others to see theirs. It is also of interest to know whether actions and interactions may lead to new situations, meanings, goals, means, the use of power and new outside interventions. Contrary to system approaches, in which actors are implicit factors or are supposed to function in pre-arranged ways aimed at normative goals, Silver man's action oriented thinking also, and particularly, tries to understand what has really happened in a situation and why actors behaved the way they did. What matters m'ost in Silverman's approach is actors' behavior: (1) do actors (succeed to) change the rules, or (2) do they behave according to existing rules. Interactions between actors may follow from or lead to change. But how to proceed from this analysis model to a management model of change remains unanswered.

System theory assumes that corporations can only be managed effectively, if and when management has adequate information and an adequate set of management tools. Inspired by Dutch human resource sociologist Van Dijck (1979 and 1981), in situations of major change business goals are not normally formulated in an ex plicit and specified way. In those situations business managers have room to maneuver. Often they have different opinions about response goals and means. For effective management, managers must also have a managerial stimulus-response model at their disposal. In situations of major change this nearly always is an illusion.

In short, whenever explicit goals are lacking and interests and preferences vary widely, conflict is the rule and harmony the exception. Then rational management thinking can only explain decision making to a small extent. Then we cannot do without additional cultural and political paradigms.

Pettigrew gave power a central place in organizational decision making in situations of major change. He has shown (1973) why innovative decisions are far from rational in many ways. Not so much because of lacking information or an inability to “translate” information into new response policies, but particularly so because of power and interest relationships. In political arenas actors jointly seek new balances, with or against each other.

To a large extent organizations in situations of change are “political systems” not so much as dominant management coalitions, because then we would simplifyingly turn the situation into an “objective” problem, looking for “technical” alternatives before deciding. If we did just that, we would be looking for the normative views of the dominant actors without explicitly dealing with the decision making process, and without opening up the “black box.” We are not following these lines of the technically objective variation of the political system approach (Easton, 1965 and Dye, 1972). What we need is an integrated model (see amongst others Jenkins, 1978 and Van Dijck, 1981, pp. 25–26). A model that actor orientation integrates the rational, “decision-logic” approach of most of the economically oriented organization and management theories with a socio-cultural and political approach. Such an actor oriented system approach especially pays attention to the dynamics inside the networks of actors. Some of the core elements of that blended approach are:

1. Top- and upper-level managements are managing decision making and learning relationships with other relevant outside and inside actors. Interactions greatly depend upon the specific power culture and power dynamics of a company.
2. In-company and external corporate response intentions and behavior take place in “multi-way streets,” and follow from or lead to change inside and outside.
3. Policy decisions are important, but what matters most is what is being implemented and how and with what results. To which extent do these relationships determine the nature of the decision making process, and how can managers (learn to) better manage them.
4. Perception, vision, preference, choice and action are often strongly culturally interwoven with ideologies, values and beliefs, norms and attitudes. When company managers and outside actors express their views with regard to goals, means and results, at a close look one can pinpoint whether their respective interests are in harmony or in conflict.
5. When too many new problems arise and have to be tackled in too short a time, management may feel overtaxed in terms of learning, financing and mobilizing an organization. And may (instinctively) overreact by doing nothing.

Why Is Marketing Theory Not Actor Oriented?

Entrepreneurs and managers have been practicing action-sociology for ages, consciously as well as intuitively. That was not recognized by sociologists before the seventies however. Neither have organization studies shown much interest in these theoretical developments. Child (1973) noticed that the media have been “more alert to the political nature of organizational decision-making than many professional social writers on the subject” so far. In marketing theory and empirical studies the situation is not much different. We cannot leave marketing aside, because in addition to theory we will be studying how top and upper management levels of the national sales company of Philips in Holland and how the CEO top management level of the Group of Philips companies are learning to manage decision making processes more responsively and more interactively. We specially deal with marketing, because it plays a dominant role in these studied processes.

Apart from some interesting exceptions (see Turnbull and Cunningham, 1981, and Hakansson, 1982) in industrial marketing, nearly all theoretical marketing approaches follow a positivist, decision logical, rational and objectivistic line (one example out of many: Kotier, 1973, 82, and 1967 through 1988). “Traditional” theory in fact abstracts from actors who largely base their behavior upon “constructed meanings.”

Second, “traditional” marketing theory very much thinks in a structural and functional way, and implies that “intellectualism” will mechanistically lead to implementation. The structural concepts, models and elements therefore remain empty typifications. They do not try to explain how to fill in the professional and organizational specifics to make things work. “Traditional” marketing theory tells students and managers that management must be responsive, must change strategies, programs and activities, or should purposefully decide just not to change. In that way theory tends to be normative and assumes that archetypical, ideal operational settings prevail. In situations of major change the contrary normally holds true. “Traditional” marketing theory does not therefore fit we...

Table of contents

• Cover
• Half Title
• Full Title
• Copyright
• Contents
• Foreword
• Preface
• SECTION I: INTRODUCTION
• SECTION II: MACRO INTERNATIONAL MARKETING ISSUES
• SECTION III: SOCIOPOLITICAL INTERNATIONAL MARKETING ISSUES
• SECTION IV: INTERNATIONAL MARKETING STRATEGIES
• SECTION V: SPECIAL INTERNATIONAL MARKETING TOPICS
• Index