Summary

Chapter 4: International Management

  1. 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 licensing, exporting, local warehousing and selling, local assembly and packaging, joint ventures, and 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. In contrast, 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.
  2. An ethnocentric attitude is home-country-oriented, whereas a geocentric attitude is world-oriented. Managers in the global economy need the flexibility and adaptability associated with a geocentric attitude.
  3. 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, top-down collectivism, bottom-up collectivism, assertiveness, gender equality, future orientation, performance orientation, and humane orientation.
  4. 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 IBMIBM 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. Cross-cultural studies of work goals and leadership styles uncovered a great deal of diversity. Thus, international contingency approaches to motivation and leadership are recommended.
  5. Culture shock is a normal part of expatriate life. Job performance issues, family and/or individual culture shock, and homesickness are the leading reasons why U.S. expatriates go home early (a costly problem). 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.
  6. North American women fill a growing but still small share of foreign positions. The long-standing assumption that women will fail on foreign assignments because of foreigners’ prejudice has turned out to be false. Women from the United States and Canada have been successful on foreign assignments but face two major hurdles at home: self-disqualification and prejudicial managers. Culture, not gender, is the primary challenge for women on foreign assignments. The situation for African Americans parallels that of women.