International Perspectives on Organizational Behavior

Betty Jane Punnett

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351019521
• Edition: 4
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

The book examines the international, cross-cultural environment faced by international firms, detailing how this environment affects behavior at both the individual and organizational levels.

Fully updated to incorporate the latest research in the field, Punnett has also invested in several new features that will make this book even more appealing to students and instructors:

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• Expanded and new coverage of several key topics, including diversity, multi-cultural teams, virtual teams, global careers, global talent management, global value chains, ethics, and millennials.

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• New pedagogy—learning objectives, chapter summaries, lessons learned, cases, mini-cases, and discussion questions—to help students consolidate learning and encourage critical thinking.

Clearly written and concise, International Perspectives on Organizational Behavior helps students of international organizational behavior and cross-cultural management classes understand the many differences that managers face when operating cross-nationally, and provides them with practical tools to tackle these differences.

Chapter 1

The Management World in the Twenty-First Century

LEARNING OBJECTIVES

The purpose of this chapter is to introduce the overall focus of the book and to give an overview of the topics to be covered. Specifically, the chapter will:

• • Discuss the meaning of globalization and how attitudes to globalization are changing;
• • Examine the current state of the international business environment and how this environment is likely to change in the future;
• • Look at the reasons for convergence and divergence in values and behaviors among countries around the world;
• • Give a brief picture of the changing workplace, including the millennial workforce and the role of technology in international business today and in the future;

Introduction

About four thousand years ago, the technologically advanced Minoan civilization flourished on the Greek island of Crete. This society had amenities like flush toilets and drainage and road systems, which still function today. The Minoans also had a well-developed system of foreign trade and investment, and very sophisticated artwork. Around 1450 B.C.E., for reasons that are unclear today, most of their infrastructure was destroyed and the civilization returned to a much less advanced level of technology and art, with little foreign trade or investment.

The Minoan experience reminds us that the world can change suddenly and dramatically. There is no question today that the effects of environmental changes, often referred to as climate change or global warming, could have an equally dramatic impact on our world. The world’s very dependence on the Internet and electronic communication could cause major problems if the Internet were shut down for an appreciable time. These changes might mean that well-thought-out plans made today become essentially meaningless in the future. While we cannot plan for unexpected discontinuities, an effective international manager makes a conscious effort to be aware of changes occurring around the world and the potential impact on the enterprise. This book is about managing businesses that operate across national boundaries. The particular focus of the book is on organizational behavior and human resource management. These aspects of management are crucial in international companies because people in different locations are different. International managers need to deal with these differences effectively. There are many stories about managers making mistakes or failing internationally because they assumed that “their way was best,” yet they could not function effectively in a foreign environment. For example:

• • It was reported in the 1980s that North American managers negotiating with the Japanese often found the Japanese predilection for silence disconcerting. Some Americans and Canadians, seeking to fill the silence, would apparently agree to unnecessary concessions. The Japanese were simply considering the situation (although it is also believed that they learned to use silence effectively to their advantage). The North Americans were not getting the best deal they could because they did not understand the communication context.
• • A Nepalese academic visiting a Canadian colleague commented that she was surprised to find that Canadians were very religious. The Canadian was surprised at the comment because Canadians do not generally see themselves in this light. Further discussions revealed that it was Halloween and all the houses, shops, and gas stations were decorated with ghosts and carved pumpkins that the Nepalese visitor saw as evidence of religious devotion. Of course, the custom is based on religious traditions, but these have largely disappeared from Canadian thinking.
• • A report by Finaccord (2017) based on the ExpatriateBASE dataset provides an overview of the global expatriate population, and estimated that worldwide this was expected to reach 56.8 million by 2017. According to Punnett (2018), companies continued to report that a number of expatriates are “failures”; that is, they return early or do not perform well on assignments abroad. Studies suggest that a major reason for failure is an inability to adjust to the new cultural environment, on the part of either the expatriate or their spouse and family. Expatriates are costly to companies, and their success or failure is important to the company’s effectiveness; thus, high levels of failure are a concern for international companies, as well as host countries seeking international investment and local employment.

These cases illustrate the importance of understanding the environment in different countries. Effective managers are ones who pay attention to the variations across national borders and adjust to and manage these variations. The objective of this book is to provide managers with ways to understand, adjust to, and manage cross-national variations.

The world of work is changing and the future of work may be quite different to what it is today. Various forms of artificial intelligence (AI) are likely to become more common in the next decades and it may well be that people will work alongside AI, posing a new cultural challenge. Millenials, as those born around the turn of the century are often called, have different expectations about work and travel, and this will also influence approaches to management internationally.

This first chapter provides an overview of the business world in the second decade of the twenty-first century. It considers the concept of globalization and different views of globalization by examining some economic events and trends around the world. This discussion illustrates the international nature of business today and, through this, the need for managers to focus on understanding organizational behavior and managing human resources cross-nationally. The chapter concludes by discussing the forces for convergence and divergence in today’s business environment, and sets the stage for the topics covered in the subsequent chapters.

Overview of the Book

Cross-national distinctions exist for many reasons. Cultural values can vary greatly from country to country. One focus of this book will be culture—that is, cultural values, cultural similarities and differences, and the role of culture in behavior. Culture is not, however, the only variable that makes countries different and that affects behavior and human resource choices cross-nationally. This book will also consider the role of politics and regulations, history and geography, language and religion, and economics and demographics. Culture will be introduced and covered in Chapter 2; the other topics will be covered in Chapters 3, 4, 5, and 6. These are all related to culture, but each has its own impact on management, and it is important to look at this impact. These chapters provide a description of the cross-national environment in which international firms operate. Chapters 7, 8, and 9 consider the impact of this environment on specific aspects of management, motivation, leadership, and communication and negotiation. They explore the links between culture, politics, and other environmental factors and organizational behavior. Chapters 10 and 11 consider human resource issues, including cross-national workforce choices and managing expatriates. The final chapter, Chapter 12, focuses on special issues, especially gender, race, and religion internationally, as well as ethical issues for international managers, including issues of universality and contingency in decisions that have an ethical dimension.

Throughout the book, sophisticated concepts and theories are explored, but every attempt is made to discuss these in plain and understandable language. Research is reported, wherever possible, to support the contentions put forward. There is little research, however, that specifically links such variables as cultural values or political systems to behavior and human resource management, so these discussions are often based on logically reasoning what relationships can be expected. It is important to note, as well, that the majority of research on organizational behavior and human resource management has focused on North America, Europe, and Japan (Punnett 2018), the three countries that had in recent history accounted for much of the world’s trade and investment. More recently the People’s Republic of China (often referred to as the PRC or simply China) became the world’s largest trading nation, and interestingly there has also been a substantial increase in management literature that includes China. Nevertheless, this means that there is relatively little research to draw on when other parts of the world are discussed. For example, Das and colleagues (2009) found that research papers published in mainstream economics journals were linked to level of development. They found that countries with the lowest incomes and weakest economies received the least attention in the literature—over a twenty-year period they identified four papers on Barundi and more than 37,000 on the United States. Similarly, in management, Baruch (2001) commented that examinations of management have focused on locations in the industrialized world, particularly North America and Western Europe, resulting in management theories that are biased. Bruton (2010) said that there was limited research on the poorer countries of the world, and identified only a small number of articles dealing with issues associated with poor countries in the past decades.

Other parts of the world are becoming increasingly relevant to international firms, as markets as well as supply sources and locations for operations, and this book does include substantial reference to these “forgotten locations” as Thomas (1996) called them. The People’s Republic of China (the PRC or China) is particularly relevant here. As China has expanded its global reach to markets and for resources and supplies, it has become a major force in trade and foreign direct investment. At the same time, Chinese academics in management have grown substantially. This combination has resulted in a growing number of studies and publications which include China.

More recently, countries such as Mexico have received more research attention than in the past, probably reflecting their growing business importance to the United States. In addition, the BRICS countries (Brazil, Russia, India, China, and South Africa) have recently become of interest to researchers because of the increasing importance of their economies in the world. Other countries and regions, such as the Caribbean and the Middle East, have indigenous researchers who conduct management research locally, but this is not widely available to managers in other parts of the world. The advent of the Internet has increased the number of global research teams looking at a variety of management issues, and we can expect that in the future, management research will be more all-encompassing.

In 2017, Italy hosted the meeting of the G7 leaders and the focus was on foreign policy, the global economy and the reduction of inequalities, and the migration crisis. Traditionally the G7/G8 group has consisted of the richest countries of the world, and they have met regularly to discuss global economic issues. The rest of the world questions this tradition. Similar concerns have been raised about the legitimacy of the Security Council of the United Nations. The recent round of World Trade Organization talks—the Doha round—has continued slowly, largely because the poorer countries of the world would not simply agree to the demands of the wealthier countries. These developments all suggest that managers will need to be knowledgeable about a wider array of countries and international institutions in the future than they have been in the past.

The Meaning of Globalization for Managers

Globalization is no longer a buzzword or considered a fad; it is now an accepted fact of the business world. Virtually every business and management publication, whether academic or popular, includes discussions of the global nature of the business world and the spread of global trade and investment. Essentially, globalization refers to growth of trade and investment, accompanied by the growth in international businesses and the integration of economies around the world. The globalization concept is based on a number of relatively simple premises, which continue to hold true and accelerate:

• • Technological developments have increased the ease and speed of international communication and travel.
• • Increased communication and travel have made the world seem smaller.
• • A smaller world means that people are more aware of events outside of their home country and are more likely to travel to other countries.
• • Increased awareness and travel result in a better understanding of foreign opportunities.
• • A better understanding of opportunities leads to increases in international trade and investment and the number of businesses operating across national borders.
• • These increases mean that the economies around the world are more closely integrated.
• • Many larger companies have developed globally integrated supply systems, where they rely on companies in foreign locations to provide the inputs needed for production at home or in some central location.

The World Trade Organization (WTO) continues to encourage global free trade, and many regional trade agreements have been signed in recent years, all leading to increases in trade and investment. The Trans Pacific Partnership (TPP) was signed by twelve countries that border the Pacific Ocean (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam) in February 2016, representing roughly 40 percent of the world’s economic output. The United States withdrew from the agreement but the other eleven TPP countries agreed in May 2017 to revive it and reached agreement in January 2018.

There have also been events that suggest that trade and investment may decline in coming years. Two notable events were the vote in the United Kingdom to exit the European Union (EU)―often called Brexit, and the election of President Trump in the United States. The first raised questions about the continued viability of the EU which had previously been seen as a symbol of free trade and investment, as well as the free movement of people across borders The second raised questions about the U.S.’ role in international trade and investment, because President Trump expressed concerns regarding regional trade agreements, including the North American Free Trade Agreement (NAFTA) and the TPP.

Managers at the beginning of the twenty-first century are faced with the reality of globalization. Whether they are in a major, global organization or a small, domestic one, whether operating from the U.S. superpower base or from a tiny island state in the Pacific, globalization is the reality of their business environment. The impact in 2008 of the subprime loans in the United States was clearly felt around the world, as it was discovered that questionable loans had been bought by investors from Australia to Zanzibar. Although globalization can be described as a reality, some people question whether there are real benefits to globalization. Developed countries experienced low levels of growth, or recession, including high levels of unemployment, through to 2012. Developing countries fared better, but these countries have been affected by the slow growth in the more developed countries. By 2018, developed countries were doing well, with stock markets rising to new highs, economies growing well, and low unemployment levels. In spite of changing economic times, trade and investment has continued at high levels. This means that international business continues and managers manage across national and cultural boundaries.

Managers must be conscious that markets, supplies, investors, locations, partners, competitors, and so on can exist anywhere in the world. Successful businesses will exploit opportunities wherever they are and will be ready for the threats from wherever they come. This can be described as having a “global philosophy”—seeing the world as the place to do business and making decisions in this context. Even where a company’s strategy is to remain essentially local, this should be a conscious strategy, having considered the global possibilities. Successful managers in this environment need to understand the similarities and differences across national boundaries in order to exploit the opportunities and deal with the threats. For example:

• • Consumers in Africa may want a different kind of Internet access from consumers in the United States. In some locations, speed is valued; in others unrestricted access is more important.
• • Suppliers in Europe may provide different credit terms from suppliers in Latin America. In some countries liberal credit terms are the norm (payment in six months); in others payment in advance is expected.
• • Negotiations in the People’s Republic of China (PRC) will be different from negotiations in Canada. Some people negotiate from extreme points and expect each side to give concessions; others begin where they expect to end and do not give concessions.
• • Motivating employees in Latin America will be different from motivating employees in Japan. In some cultures, people like to work individually and are motivated by individual rewards; in other cultures, people prefer to work closely with their peers and look for group recognition and rewards.

The objective of this book is to give readers a thorough understanding of the factors that are important in managing across national boundaries, particularly those factors that influence people’s behavior and human resource choices. We begin in the following section by considering different attitudes toward globalization.

Understanding Changing Attitudes to Globalization

The phenomenon of globalization arouses passionate responses, both positive and negative, from different groups. These different responses are bri...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Dedication Page
• About the Author
• 1 The Management World in the Twenty-First Century
• 2 The Cultural Environment and Organizational Behavior
• 3 The Political Environment and Organizational Behavior
• 4 History and Geography and Organizational Behavior
• 5 Language and Organizational Behavior
• 6 The Economic Environment and Organizational Behavior
• 7 Motivation and Organizational Behavior in an International Context
• 8 Leadership and Organizational Behavior in an International Context
• 9 Communication and Negotiation in an International Context
• 10 Human Resource Management in an International Context
• 11 Managing the Expatriate Experience
• 12 Special Behavioral Issues in an International Context
• Index