When you hear the name Whirlpool, what comes to mind? Whirlpool is a large US manufacturer of appliances such as washers, dryers, and refrigerators. That description is somewhat correct, but Whirlpool activities are not confined to the United States. It is also the top manufacturer and distributor of appliances in Latin America, Europe, and Asia.
In terms of the changing global environment, the spread of capitalism makes the world a smaller place. Business has new markets to conquer. And well trained and reliable workers in such countries as Hungary, Slovakia, and the Czech Republic become a rich source of low cost labor for organizations everywhere. The implementation of free markets in Eastern Europe further underscores the growing interdependence among countries and the potential for goods, labor, and capital to move easily across national borders.
US managers once held a rather parochial view of the world of business.
Parochialism: Refers to a narrow focus in which one sees things solely through one’s own view and from one’s own perspective.
Parochialism is narrow focus: these managers saw things solely through their own eyes and from their own perspectives. They believed that their business practices were the best in the world. They did not recognize that people from other countries had different ways of doing things or that they lived differently from Americans. In essence, parochialism is an ethnocentric view. Of course, this view cannot succeed in a global village nor is it the dominant view held toady. Changing US managers’ perceptions however first required understanding the different cultures and their environments.
All countries have different values, morals, customs, political and economic systems, and laws. Traditional approaches to studying international business have sought to advance each of these topic areas. However, a strong case can be made that traditional business approaches need to be understood within their social context. That is, organizational success can come from a variety of managerial practices, each of which is derived from a different business environment. For example, status is perceived differently in different countries. In France, status is often the result of factors important to the organization, such as seniority, education, and the like. This emphasis is called ascribed status. In the United States, status is more a function of what individuals have personally accomplished achieved status. Managers need to understand societal issues (such as status) that might affect operations in another country. Countries also have different laws. For instance, in the United States, laws guard against employers taking action against employees solely on the basis of an employee’s age. Similar laws do not exist in all other countries. One issue for organizations is that viewing the global environment from any single perspective may be too narrow and potentially problematic. A more appropriate approach is to recognize the cultural dimensions of a country’s environment. An illuminating study of the differences in cultural environments was conducted by Geert Hofstede.
Hofstede’s framework for assessing cultures is one of the most widely referenced approaches for analyzing variations among cultures. He surveyed more than 116,000 IBM employees in 40 countries about their work related values.
Future orientation: The extent to which a society encourages ad rewards future oriented behavior such as planning, investing in the future, and delaying gratifications.
Gender differentiations: the extent to which a society maximizes gender role differences.
A boundary less world introduces new challenges for managers, such as managing in a country with a different national culture. The specific challenge is recognizing the differences that might exist and finding ways to make interactions effective. One of the first issues to deal with, then, is the perception of “foreigners”.