Globalization Globalization: Is the flow of goods and services, capital, and knowledge across country borders Enhances economic interdependence among countries and organizations Has changed the competitive landscape
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Institutional Environment: A country’s rules, policies, and enforcement processes
Economies are classified as either:
Extent to which people accept power and authority differences among people
High power distance = people accept power differences
Low power distance = people like to regard themselves as more or less equal
Extent to which things need to be clear or ambiguous
High uncertainty avoidance = prefer clear norms that govern behavior (i.e., avoid uncertainty)
Low uncertainty avoidance = have fewer rules and are comfortable in ambiguous situations (i.e., can accept uncertainty)
Extent to which people’s identities are self-oriented; people take care of themselves and immediate family
High emotional independence
Emphasize and reward individual achievement
Extent to which a people’s identities are a function of the group(s) to which they belong (family firm, community, etc.)
Emotional dependence on institutions
Emphasize group membership
Extent to which people in a country value masculine or feminine traits
Masculine = activities leading to success, money, possessions
Feminine = activities showing caring of others and enhancing quality of life
Manufacturing products in a firm’s home country and shipping them to a foreign market.
Arrangements that allow a
local firm in the new market
to manufacture and
distribute a firm’s product.
New types of alliances:
Cooperative arrangements between two firms in which they agree to share resources to accomplish a mutually desirable goal.
Acquisitions of local firms made by foreign firms to enter a new international market.
Direct investments to establish a business in a foreign market in which the business is 100% owned and controlled by the focal firm; also called Greenfield Venture.
Centralized to home office
Decentralized to subsidiaries
Centralized and decentralized
Cultural context: degree to which a situation influences behavior or perception of “appropriateness”
Neither high- nor low-context cultures are right or wrong, just different
People pay close
attention to the
situation and its
various elements in
Situation may or may
not make a difference
in what is considered
Challenges to managing multi-cultural teams:
Global mindset: cognitive attributes that allow an individual to influence individuals, groups, and organizations from diverse socio-cultural and institutional environments