Global Business Management: Strategies, Roles, and Cultural Dynamics

Posted on Apr 3, 2025 in Public Administration, Management, and Governance

Globalization and its Drivers

Globalization, according to Ohmae (1995), is the absence of borders and barriers to trade. What drives the upsurge in globalization?

  1. Increased customer demands and access to competing products and services:
    • More for less!
    • Global brands vs. local brands
    • Access to global distributors
  2. Increased technological innovation and application:
    • Improved ICT
    • Access to markets, partners, global networks
  3. Increased power and influence of emerging markets and economies.
  4. Increased globalization of financial markets.
  5. Shared R&D and global sourcing: Companies spread their research across multiple countries. Outsourcing is more of a rule than an exception.
  6. Evolving government trade policies: Governments try to attract foreign investments.

Pros and Cons of Globalization

PROS

  • Free trade objective (no borders, less tariffs, low prices, cost reduction, open markets)
  • More employment (new jobs, internationalization of products)
  • Development of poor countries or regions
  • Communication improvements (open lines of communication, we all gain a greater perspective about the world, everything is nearer to us (products, places…))
  • Improve labor conditions

CONS

  • Rich become richer, poor become poorer.
  • The majority of new jobs come from underdeveloped countries.
  • Political system where the bigger and the richer have the power.
  • Security problems because of the global image and communications development.
  • Lack of identity; we all become the same.

10 Management Roles (Mintzberg)

1. Interpersonal Roles

Building and leading effective groups and organizations

  1. Figurehead: In some countries has symbolic value, but in others, being a figurehead is not seen as a compliment.
  2. Leader: Individualistic cultures prefer take-charge leaders. Collectivistic cultures prefer.
  3. Liaison: Some countries prefer informal contacts based on long-standing personal relationships; others prefer to use official representatives.

2. Informational Roles

Collecting, organizing, and disseminating useful information in a timely fashion

  1. Monitor: Culture often influences both: the extent of information monitoring and which specific information sources receive greatest attention.
  2. Disseminator: The context surrounding a message is more important than the message itself in some cultures; in others, the reverse is true.
  3. Spokesperson: Culture often influences who is respected and seen as a legitimate spokesperson for an organization.

3. Decisional Role

Making strategic and tactical decisions and securing broad-based support for such actions

  1. Entrepreneur: Some cultures are highly supportive of innovation and change; others prefer the status quo and resist change.
  2. Disturbance handler: Some cultures resolve conflict quietly; others accept and at times encourage a more public approach.
  3. Resource allocator: Hierarchical cultures support differential resource allocations; Egalitarian cultures prefer greater equality/equity in distributions.
  4. Negotiator: Some cultures negotiate all items in a proposed contract simultaneously; others negotiate each item sequentially.

Differences of Supervisors:

  • Germany: Supervisor as overseer and expert; technical competence (Meister)
  • UK, USA: Supervisor as boss; formal authority (Supervisor)
  • JAPAN: Supervisor as organizer, role model, and parent; social authority (Kacho)
  • MEX: Supervisor as patron and boss; personal authority (Capataz or Jefe)

3 Types of Global Managers

Expatriates:

  1. Principal management focus: Managers are either assigned to reside in a foreign country to oversee company operations or hired to bring special expertise to a foreign firm.
  2. Degree of cultural embeddedness and technological dependence: High cultural embeddedness; low technological dependence.
  3. Primary mode of communication and interaction: Largely face to face.
  4. Key success factors for work across cultures: Typically requires deep knowledge of the culture(s) and culture-business relationships where they live and work; bilingual or multilingual skill important; understanding global issues – not just local ones – is also critical.
  5. Typical cultural challenge (Global Myopia): Regional myopia: overemphasis on local or regional issues and business practices at the expense of global issues and overall corporate objectives.

Frequent Flyers:

  1. Short-term face-to-face management, where managers with particular expertise are flown in to plan, implement, or control specific operations.
  2. Moderate to low cultural embeddedness and technological dependence.
  3. Balance of face to face and virtual.
  4. Typically requires moderate understanding of cultural differences and dynamics in general and culture business relationships around the globe; multilingual skill important; deep understanding of global issues critical.
  5. Global myopia: overemphasis on global issues and overall corporate objectives at the expense of local customs and business practices.

Virtual Managers:

  1. Virtual technical management, often areas, where managers perform most of their tasks and responsibilities via information networks and digital technologies.
  2. Low to no cultural embeddedness; high technological dependence.
  3. Largely virtual.
  4. Typically requires at least a modest understanding of cultural differences and variations in business practices around the globe, although a deeper understanding is preferred; multilingual skills often useful.
  5. Technological myopia: ignorance of the impact of cultural differences on the local uses, misuses, and applications of communication and information technology.

Why Cultures Differ and Persist

  1. Assumptions about a society’s interactions with the environment
    • There are a number of common human problems for which all peoples must find solutions (e.g., feeding, clothing, housing, educating its people, etc.)
    • (1) There are a limited number of alternatives for dealing with these problems. (2) All alternatives are present in a society at all times, but some are preferred over others. (3) Each society has a dominant profile or value orientation but also has numerous variations or alternative profiles. (4) Based on these assumptions, elements of culture evolve in terms of different solutions to common environmental problems.
  2. Language: Language has a powerful role in shaping behavior because we use language for interaction with others.
  3. Religion
    • The extent to which a particular religion is dominant or state sanctioned
    • The importance that society places on religion
    • Degree of religious homogeneity in the society
    • Degree of tolerance for religious diversity in society
  4. Topography
  5. Political boundaries
  6. Economic systems
  7. Climate

//NATIONAL CULTURE: shared meaning, unconditional relations, born into it, totally immersed. ORG CULTURE: shared behaviors, conditional relations, socialized into it, partly involved.

Selective Perception or Avoidance

  1. Perception: The process by which people interpret the messages received from their senses and give meaning to their environment. People can be presented with the same stimulus and perceive it differently. Our perception is influenced by our culture.
  2. Key to perception: A person is categorized as an in-group or out-group member.
  3. Factors in categorizing in-group/out-group members
    1. Race and gender: universal indicators of group membership.
    2. Distinctiveness against the social field, i.e., when the number of distinctively different others is small.
    3. The extent to which a person is prototypical of a particular group.
    4. Deviations from normal speech (e.g., accents)
    5. History of interactions with other groups of people (e.g., historical conflicts)
  4. Selective avoidance: When confronted with information contrary to our existing views, we tune it out by diverting our attention elsewhere.
  5. Perceived similarity: Perceptions of similarity lead to personal interaction: Status, Attitude, Religion & Race. We are attracted to people whom we perceive to be similar with because this similarity validates our view of the world (consensual validation).

How to Deal with Stereotypes

Categorization of the characteristics and behaviors of a group

  1. Schemas:
    • Guide memory of what we’ve done/seen
    • Direct our attention
    • Help fill in missing information
    • Predict behavior/events
  2. Stereotypes:
    • Beliefs about the attributes, characteristics, and behaviors of members of various groups
    • Sources of data: Agencies, reports, Journalism articles, Outsiders & Relationship with insiders.

STEREOTYPES (first step in acknowledging other culture) VS GENERALIZATION:

  • Stereotypes: Contradictory info is rejected, amplified, based on perception and refusal to learn.
  • Generalization: A principle or a statement having general application, a hypothesis to be tested and confirmed. All data are included and analyzed, hypotheses are constantly tested and refined; based on open attitude, openness to learn.

What are the advantages and disadvantages of using outsiders? And insiders?

Communication: AIA Model

COMMUNICATION 70% of time.

AIA Model:

  • Attention: When messages are sent, recipients must notice them. The challenge is how first to capture the attention of the other party.
  • Interpretation: Once a message is selected out for attention, the recipients must interpret it. Cultural differences can play a crucial role.
  • Action: The recipient must decide whether or not to reply and, if so, how to construct and transmit a response.

Develop a Negotiation Strategy

  • Start with the end in mind
  • Help the other side to prepare
  • Treat alignment as a shared responsibility
  • Send one clear message
  • Manage negotiations like a business process

(FALTA BARGAINING STRATEGIES)

Stages in Negotiation

Competitive Bargaining:

  1. Preparation: Identify current economic and other benefits your firm seeks from the deal. Prepare to defend your firm’s position.
  2. Relationship goals: Look for weaknesses in your opponent’s position. Learn about your opponent but reveal as little as possible.
  3. Information exchange: Provide as little information as possible to your component. Make your position explicit. Make a hard offer that is more favorable to your side than you realistically expect to achieve.
  4. Persuasion: Use dirty tricks and pressure tactics when appropriate to win.
  5. Concession: Begin with high initial demands. Make concessions slowly and grudgingly.
  6. Agreement: Sign only if you win and then ensure that you sing and ironclad contract.

Problem-Solving Bargaining:

  1. Define the long-term strategic interests of your firm. Prepare to overcome cross-cultural barriers to defining mutual interests.
  2. Adapt to the other side’s culture. Separate the people involved in negotiation from the problems and goals that need to be solved.
  3. Give and demand to receive objective information that clarifies each party’s interests accept cultural differences in speed of response and type of information needs. Make firm but reasonable first offer.
  4. Search for new creative options that benefit the interests of both parties.
  5. Search for mutually acceptable criteria for reaching accord. Accept cultural differences in starting position and in how and when concessions are made.
  6. Sign when the interests of your firm are met. Adapt to cultural differences in contracts when necessary.

Cultures, Information Exchanged, and Initial Offer Resulted:

  • EAST ASIAN/RUSSIANS: Extensive request for proposal details and technical information. Assumption that all details of the proposal must be discussed before agreement can be reached. 10-20%/50-50% below their desired end result.
  • LATIN AMERICANS/MIDDLE EASTERNERS: Focus more on information about the relationship and less on technical details of the proposal. Preliminary discussion focus on why we should do business together, not how we should do it. 20-40/20-50%.
  • NORTH AMERICANS: Information is provided directly and briefly, often through multimedia presentations. Assumption that, if an agreement can be reached in principle, details can be reached. 5-10% below their desired results.

Unethical Issues

Example: When IKEA entered the conservative Islamic Saudi market, it faced a new market reality. In a country where women dress in conventional black Saudi attire, IKEA wanted to avoid antagonizing the local population – and government regulators – and deleted images of women from their advertisements used in that country. But while the Saudi market was apparently satisfied, IKEA came under strong criticism from its home country – and the Swedish government – for selling out its traditional Swedish commitment to gender equality. IKEA’s strong egalitarian corporate culture was called into question. IKEA is an absolute champion in terms of the number of court cases it has had in Russia. The register of arbitration cases contains over 200 lawsuits against the Swedish concern, while the total number of court cases involving it has exceeded 560.

AC&MT: Contracts

Contracts under the doctrine of fixed circumstances:

  1. Personal relationships follow contracts (universalism)
  2. Contracts specific and inflexible, regardless of changing circumstances
  3. Long, detailed, and legalistic
  4. Contracts backed by national and international legal systems.

Contracts under the doctrine of changed circumstances:

  1. Contracts follow personal relationships (particularism)
  2. Contracts general and flexible, based on changing circumstances
  3. Short, general, personalistic
  4. Contracts backed by personal integrity, trust, and relationships

Leadership Dimensions

Leadership is an ability to influence, motivate, and enable others within the organization to contribute towards the effectiveness and success of the enterprise.

  1. Strategic leadership: Corporate mission, objectives, and organizational culture; manage corporate mission.
  2. Ethical leadership: Ethical behavior and social responsibility; Manage corporate values.
  3. Managerial leadership: Operational control and accountability; Manage performance.
  4. Team Leadership: Team cohesion, direction, and performance manage processes.

HOFSTEDE: 1) Power distance 2) Uncertainty avoidance 3) Individualism vs. Collectivism 4) Masculinity vs. Femininity 5) Long-term vs. short-term orientation

GLOBE: 1= 2= 3=) institutional collectivism, ) in-group collectivism ) human orientation 4=) performance orientation ) assertiveness ) gender egalitarianism 5) future orientation.

TRUMPERAAS: 1) universalism-particularism 2) diffuse-specific 3) individualism vs. communitarianism 4) neutral-emotional 5) achievement-adscription 5) sequential time-sychronic time 5) internal-external control.

Western and Non-Western Theories

Western Theories:

  • Trait theories: The so-called great man theories of the early 1900s failed to consistently identify traits that are necessary and sufficient for leadership.
  • Behavioral theories: A shift in focus from what leaders are to what they actually do. The assumption that leaders are born changes: leaders could be developed. The influence of subordinates and the situation is ignored.
  • Contingency theories: The first contingency model of leadership is Fiedler’s (1967): the situation moderates the relationship between the leader’s style and effectiveness (leader-member relations; task structure; position power)
  • Implicit theories: Define leadership as the process of being perceived as a leader. Individuals are perceived as leaders by the extent to which their behavior matches the behavior expected of a prototypical leader. That is, specific leader behaviors do not make a person a leader unless that person is perceived as a leader by followers.

Non-Western Theories:

  • Performance-maintenance theory: Japanese researcher Misumi’s (1985) PM theory identifies 4 types of leaders depending on their scores on 2 dimensions: (1) The (P) dimension: pressure-type and planning type; (2) The (M) dimension: group preservation leadership
  • Leadership in the Arab world: Strongly influenced by the Islamic religion and tribal traditions. Authoritarian and patriarchal approach to leadership called sheikocracy. Hierarchical authority, subordination of efficacy to human relations and personal connections, and conformity to rules and regulations based on the personality and power of those who made them.
  • Paternalism: A hierarchical relationship between the leader and followers in which the leader, like a parent, provides direction in both the professional and private lives of subordinates in exchange for loyalty. Paternalistic leadership is based in traditional values of familism, Confucian ideology, and feudalism and is common in cultures with high power distance: Pacific Asian societies, Africa.

Global Teams (GT)

GT: group of heterogeneous employees from two or more countries, or two or more companies, who work together to coordinate, develop, or manage some aspect of a firm’s global operations.

Companies use GT when:

  1. Specific cross-cultural expertise on some aspect is needed.
  2. A partnership with a foreign firm is developed.

/GT can provide an opportunity to incorporate widely differing social, cultural, and business perspectives into key decisions affecting the success of international operations.

Advantages of GT:

  1. Frequently more creative in developing ideas and solutions.
  2. Frequently takes longer to make decisions or reach consensus, but resulting decisions are often more comprehensive and acceptable to all.
  3. Often leads to a better understanding of multinational employees.
  4. Often increases understanding of global markets.

Disadvantages:

  1. Often more difficult to develop closed-knit groups.
  2. Frequently takes longer to make decisions or reach consensus, but resulting decisions are often more comprehensive and acceptable to all.
  3. Action plans can take longer due to conflicts and misunderstandings.
  4. Different work habits can lead to conflict and misunderstandings.

GT Characteristics:

1-Co-located GT:

  1. Team location and work patterns: Team members work regularly in close proximity; considerable reliance on face-to-face interactions.
  2. Principal issues: When face-to-face discussions are important and possible; building trust and relationships are important, and decision time horizons can vary.
  3. Principal team challenge: Communicating, making decisions, and taking actions in a largely face-to-face environment, in which interpersonal styles can differ significantly.
  4. Required skills for interaction: Emphasis on interpersonal and intercultural skills.
  5. Principal leader challenge: Sensitivity to cross-cultural differences. Accommodate divergent viewpoints. Coordinate interpersonal group dynamics and keep members on-task. Master intercultural communications by listening for contextual messages behind context messages. Lead group efforts to achieve targeted objectives.

2-Dispersed GT:

  1. Team members work separately from various locations; considerable reliance on virtual communication.
  2. When key players are unable to collocate, when contextual information from different locations is important, when tasks are well defined and can be accomplished independently, when ambiguity is low.
  3. Communicating, making decisions, and taking actions in a largely dispensed and often computer-mediated environment, in which interpersonal styles, communication, and body language may be largely unseen. Developing cross-cultural understanding and sensitivity from a distance. Developing productive working relationships from a distance. Understanding communications and reaching decisions in a largely computer-mediated environment.
  4. Emphasis on interpersonal, intercultural, and technical skills.
  5. Sensitivity to cross-cultural differences. Accommodate divergent viewpoints coordinate computer-mediated group dynamics and keep members on-task. Lead group efforts to achieve targeted objectives.

Tasks and Teamwork Process:

1 Managing Tasks:

  1. Mission and goal setting. Identifying objectives; performance expectations.
  2. Task structuring. Agenda setting; creating operating rules and procedures; time management procedures.
  3. Roles and responsibilities: Division of labor; responsibility charting; team interdependencies; role of leader.
  4. Decision-making. Delegation of authority; selection and role of a leader; how decisions should be made. -Accountability. Who is responsible for task accomplishment.

2 Managing Team:

  1. Team-building. Trust building; cross-cultural understanding; opportunities for social interaction.
  2. Communication patterns. Selection of a working language and information technologies (applications). -Participation. Guaranteeing everyone a voice; balancing quiet and more vocal members; getting the best from everyone. -Conflict resolution. Accommodating legitimate differences of opinion; managing constructive conflict;
  3. Performance evaluation. How and when to evaluate performance; one-way versus two-way evaluations;

Types of Global Assignments

  1. Locals: Local beliefs, norms, and work procedures. Members of group within the comfort zone. Little pressure to adapt. (Local employees, Local suppliers and distributors, Local partners and clients, Local banks and services, neighborhood).
  2. Outsiders: Foreign beliefs, norms, work procedures. Non-members, outside of comfort zone. Pressure to adapt. (Outsider, expatriate, entrepreneur, frequent flyer)

Implications for Individual (Managers, Entrepreneur, Global Worker)

  1. EMPLOYER-INITIATED GLOBAL ASSIGNMENT:
    • Employee may not want the assignment but feel pressed to accept in order not to jeopardize future career advancements.
    • Employee may not be able to select the location of the new assignment.
    • Employee should have relative job security while abroad.
    • Employee may negotiate a financially interesting expatriate package, including trips home, foreign living allowances, support for partner and family.
    • Employee may negotiate terms of repatriation.
    • Employers vary widely in the amount of support they provide and how well they manage the expatriation process.
    • The employer is typically responsible for legal arrangements, such as visas and licenses.
  2. SELF-INITIATED GLOBAL ASSIGNMENT:
    • Individual can choose where and when to relocate.
    • The individual takes the responsibility for finding a job and relocating the family.
    • The individual may take a long time to establish local relationships and credentials.
    • The individual may need to take a job below that was used to in the home country.
    • In many cases, limited expatriate support is provided.
    • At times, the individual may negotiate attractive packages when the organization can’t find local talent, but most times must accept local standards – or less.
    • The individual may need to deal with work visa and other legal requirements on their own.

Challenges

  1. Personal considerations:
    • Motivation for a foreign assignment
    • Physical and emotional health
    • Maturity and relational abilities
    • Language capability
  2. Family considerations:
    • Spouse expectations and employment
    • Family adapt to local environment
    • Local education opportunities
    • Quality of family life in new location
  3. Career considerations:
    • Basis of performance evaluation in new assignment
    • Maintaining links to home company
    • Capitalizing on foreign experiences
    • Opportunities to return to home company

Adjustment

culture shock, differences:

  1. Psychological adjustment: the process of developing a way of life in the new country that is personally satisfying.
  2. Socio-cultural adjustment: an individual’s ability to interact competently with the host culture. When in a foreign environment, people frequently cannot use their past experiences to interpret and respond to cues, and their behavior may not produce the expected results, causing heightened anxiety and frustration. Seemingly minor things can cause confusion and a feeling of loss of control. Internal disequilibrium created by the realities imposed by the new culture and the expectations based on the old. This disequilibrium often forces them to question their behavioral habits and can lead to emotional feelings of anxiety, stress, and confusion.

Social Culture Adjustment:

The point when global travelers begin to feel at home and better integrated into the local community. Involves:

  • Acculturation: the acquisition of new cultural practices in wide-ranging areas, including the learning of a new language.
  • Deculturation: the unlearning of at least some of the old cultural practices in the sense that new responses are needed in situations that previously would have evoked old ones.

SCA Types:

  • Separation: retain culture home (limited interaction with locals)
  • Integration: balance local and home cultures (might not be possible in every culture)
  • Assimilation: join local culture (go “native”)

Influences on Accumulation Success:

  1. Cultural knowledge: understand norms, rules, and expectations.
  2. Cultural distance: similarity between home and local cultures
  3. Intergroup attitudes: positive attitudes of local culture
  4. Multicultural competence: capacity to work successfully across cultures
  5. Individual roles: job duties and responsibilities, including access to local people.

Culture Shock

Culture shock can take many forms, from a psychological sense of frustration, anxiety, and disappointment to full-fledged chronic depression. Some individuals may experience physiological responses such as insomnia, headaches, or other psychosomatic symptoms. -It signifies that an individual is trying to come to terms with his or her new environment -The question is not how to avoid culture shock, but how to manage it.

Stages:

  1. Honeymoon: Arrival; excited; overly positive attitudes; high expectations.
  2. Disillusionment: early days; setbacks; unmet expectations; negative attitudes:
  3. Adaptation: setting in; learning to cope; developing realistic expectations.
  4. Biculturalism: Accommodation; feeling comfortable; realistic expectations. Stages. 1ºCHALLENGES OF CULTURE SHOCK (1-2): -Mind and body trying to come to terms with new environment (symptoms: anxiety, disappointment, insomnia) 2º BUFFERING EFFECT ON CULTURE SHOCK (3): -learn about local environment and language; – explore local surrounding 3º IMPROVED WORK AND WELL-BEING (4).