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International Business Strategy, Performance,and Management
Bryan Christiansen, Senior InstructorPRYMARKE BUSINESS ACADEMY(Istanbul, Turkey)
Academic Background
B.S. in Marketing, University of the State of New York
M.B.A. in General Business, Capella University
Ph.D. in Economics, University of Sunderland (Pending)
Expertise
2014-Present: PryMarke Business Academy (Istanbul, Turkey); Senior Instructor
2004-2014: PryMarke, LLC (Michigan, USA); Chairman and President
2012-2013: Gumushane University (Turkey); Senior Lecturer / Special Advisor to Rector
Miscellaneous
Fluent in Chinese, Japanese, Spanish
Experience in Start-up & Turnaround Operations
Travel to 40 Countries; Long-term Residence in China, Costa Rica, Japan, Panama, Russia, and Turkey
Member of Academy of Management
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 1: Theory of Cultural Dimensions
Module 1: What are Cultural Dimensions?
Bryan Christiansen, Senior Instructor
What are Cultural Dimensions?• The foundation of a significant portion of
comparative cross-cultural business research
• Provide guide posts as to where and how cultures might differ significantly in a globally-connected world
• Focus on values and attitudes to conceptualize the similarities and differences between cultures to overcome stereotypes
Major Theorists• Geert Hofstede (59%)
• Clyde Kluckhohn
• Edward Hall
• Fons Tropenaars
• Ronald Inglehart
• Harry C. Triandis
Hofstede Model• Hofstede is a Dutch-born social
psychologist who published “Culture’s Consequences” in 1980 based on the extensive surveys he conducted with IBM employees during the 1970s
• His six cultural dimensions include:▫ Uncertainty avoidance index▫ Individualism vs. collectivism▫ Masculinity vs. femininity▫ Long-term vs. short-term
orientation▫ Indulgence vs. restraint▫ Power distance index
The GLOBE Project (2004)• Stands for Global Leadership and Organizational Behavior Effectiveness (GLOBE)
• Conceived in 1991 by Robert J. House of the Wharton School of Business at the University of Pennsylvania
• Based on results from 17,300 middle managers in 951 organizations in 62 countries
• Study identified nine cultural dimensions
•First study published in 2004. Second expanded study included 25 countries published in 2007
The GLOBE Project (Continued)• Performance orientation• Institutional collectivism• Gender egalitarianism• Uncertainty avoidance• In-group collectivism• Future orientation• Human orientation• Assertiveness• Power distance
For consideration….Dividing cultures into a set of dimensions makes them comparable….
Theory of cultural dimensions remains the only coherent framework for cross-cultural comparisons.
….but does not provide a holistic picture.
GLOBE study (2004) considered the current state-of-the-art with regards to studying cultural dimensions.
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Usefulness of Cultural Dimensions in International Business Research
(Christiansen, 2012, p. 16)
Summary: Cultural Dimensions• Ask questions and seek
answers in an orderly and prescribed manner regarding cross-cultural management
• Provide guide posts regarding what to do in cross-cultural situations
• Only coherent framework for cross-cultural comparisons
International Business Strategy, Performance,and Management
Lesson 1: Theory of Cultural Dimensions
Module 2: Intercultural Competence
Bryan Christiansen, Senior Instructor
What is Intercultural Competence?
• Enacted capability developed through social interaction and experience with dominant local and minority cultures
• Using a knowing-as-practice perspective, the study of intercultural experts can develop this area of knowledge
• Highly connected to the concept of Cultural Intelligence (CI)
Two Main Sources of CompetenceNew Immigrants Third Culture Individuals
• Connection with host country and country of origin
• Equipped with language skills and contacts usually beyond the native population of host country
• Can provide the missing link to hard-to-penetrate markets
• People born in one country but raised largely or entirely during their formative years in another country usually with a different language involved
• Typical examples include children of diplomats, military personnel, missionaries, and international school teachers
• Often have high cultural intelligence (CI)
Other Sources of Competence • Extensive international
travel from early age
• Foreign language training
• Employment overseas
• Study overseas
• Interaction with local ethnic communities
What is Cultural Intelligence (CQ)?
• CQ is the ability to function effectively in culturally diverse situations
• Includes four dimensions: behavioral, cognitive, megacognitive, and motivational
• Motivational CQ has definite impact on the corporate bottom line (Chen, Liu, & Portnoy, 2012)
• Still an emerging field (Gelfand et al., 2012)
Recap: Intercultural Competence
Intercultural competence is the
enacted capability developed
through social interaction and
experience with dominant local
and minority cultures. It is highly
related to cultural intelligence
which is the ability to interact
effectively in a variety of
culturally diverse situations.
International Business Strategy, Performance,and Management
Lesson 1: Theory of Cultural Dimensions
Module 3: Bicultural Managers
Bryan Christiansen, Senior Instructor
Bicultural Individuals
• Strictly defined as those persons who have internalized two cultures which guide their thoughts, feelings, and behavior
• Capable of combining cultural norms of both groups and switching between them in response to cultural stimulus (Hong et al., 2000)
Biculturalism and CQ• Biculturalism may contribute to cultural
intelligence, but CQ does not necessarily require biculturalism.
• CQ focuses on one’s ability to work in foreign cultures
• Biculturalism refers to the presence within a person of two cultural systems
• Bicultural competence can have a bigger impact than CQ on the cognitive, behaviorial, and emotional flexibility within the individual’s first and second culture (Friedman & Liu, 2009)
Bicultural Managers• Often highly capable of understanding different
(business) cultural viewpoints for negotiations, etc.
• Usually the mediator in international business conflicts and other situations
• Biculturalism does not automatically include conflict solution / translation skills
• Can usually build ties with others easily• Dual language proficiency generally provides
competitive advantage in the global job market
Bicultural (and TCI) Managers• Both groups should receive special consideration
in Global Human Resource Management (GHRM) due to their unique qualities and backgrounds
• More of these individuals should be promoted through the managerial and executive ranks in an era of global hypercompetition
• Development of the Transcultural Organization in which those of diverse backgrounds operate efficiently as an integrated team for sustainable, competitive advantage
Lesson 1 Recap
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 2: Business Performance
Module 1: Organizational Culture and Effectiveness
Bryan Christiansen, Senior Instructor
What is Organizational Culture?
• The underlying values, beliefs, and principles that serve as a foundation for an organization’s management system (Denison, 1996)
• Shared basic assumptions learned while solving problems of external adaptation and internal integration (Schein, 1992)
What is Organizational Effectiveness?• An organization that
effectively converts differences in work values and beliefs into a sustainable, competitive advantage in an era of global hypercompetition (Christiansen, 2015)
• Examples can include Cargill, Coca-Cola, McDonald’s, Siemens, and Walmart
• Denison (1990), Fisher (1997)
Denison Model• Measures four business culture
traits:▫ Mission
▫ Involvement
▫ Adaptability
▫ Consistency
Denison Model (Continued)• Mission refers to the degree to which an organization
has clear goals and vision over the long-term
• Involvement refers to the degree in which a firm is interested in persuading its employees to share the same direction with the company
• Adaptability refers to the company’s ability to respond quickly to external stimuli and customer demands
• Consistency refers to the firm’s systems and processes that are engaged in achieving corporate goals
Recap: Organizational Culture / Effectiveness
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 2: Business Performance
Module 2: Firm Performance
Bryan Christiansen, Senior Instructor
What is Firm Performance?• Measured in many ways:
• Profitability• Sales per Input• Total Factor Productivity• Return on Assets (ROA)• Lerner Index• Amoroso-Robinson
Relation• Herfindal Index• Economic Profit (EP)• Leverage• Market Capitalization
(Size)• Others (Net Asset Values)
Fundamental Research QuestionHow do changes in international competition affect the performance of firms, industries, and ultimately the overall welfare of countries or regions?
Some Typical Questions…• What is the company’s Break-Even Point? How
does this compare to your industry standard? Is this sustainable over the next 2 to 3 years?
• Which product / service lines have the highest and lowest profit margins? Why is this the case?
• How are the company’s product life and business cycles being affected by competitive pressures brought on by contemporary globalism?
• How are technological advances in your industry potentially affecting future revenues in your current markets?
Market Capitalization (Size)• Research indicates size is consistently the most
significant measurement of a firm’s true value at a specific point in time (Sharma & Kesner, 1996; Mitchell, 1994)
• Firm size is a basis of competitive advantage due to efficiency (especially in larger companies due in part to economies of scale)
Essential Components of Performance Analysis
(Rossett, 2009, p. 34)
Rummler’s Anatomy of Performance(9 Variable Framework)
(http://www.rummler-brache.com/the-nine-boxes-model)
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 2: Business Performance
Module 3: Regionalization vs. Globalization
Bryan Christiansen, Senior Instructor
What is Regionalization?There are two parts to this concept:1)Micro-component which includes the regionalization of the Multinational Enterprise (MNE)2)Macro-component which includes the regionalization of countries into trading blocks such as BRIC, CAFTA, CIVETS, or MENA
Regionalization of the MNE•Rise in Regional Headquarters (RHQs)
•Can be considered an optimal strategy between a multi-domestic strategy and a global strategy to balance responsiveness to local markets with the integration benefits of central control
Regionalization of Countries
•BRIC (Brazil, Russia, India, China)
•CAFTA (Central American Free Trade Agreement)
•CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa)
•MENA (Middle East and North Africa)
What is Globalization (today)? • Has always existed (Nye,
2003)
• More correct term to use today is CONTEMPORARY globalization
• Main difference exists in the speed of development and use of technology worldwide that drives global markets
Major Effects of Globalization• Business and Product Life Cycles drastically altered• Corporate capital and liquidity buffers must be increased
for unexpected developments in global markets• Industry uncertainty due to technological advancements• Global inflation• Era of Knowledge Worker and Global Labor Pool• Global hypercompetition and demographics have caused
an increasing shortage of critical skills worldwide• Demands higher levels of education and continued
training never experienced or required in past years
Peter Drucker’s Five Certainties•Global competitiveness
•Redefinition of corporate performance
•Collapsing birthrates in developed economies•Growing incongruence between global
economic and political realities
•Shifts in the distribution of disposable income
Lesson 2 Recap
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 3: Foreign Business Environments
Module 1: Internationalization of Emerging Markets
Bryan Christiansen, Senior Instructor
Some Emerging Markets
•Baltic Corner (Estonia, Latvia, Lithuania)
•BRIC (Brazil, Russia, India, China)
•CIVETS (Colombia, Indonesia, Vietnam,
Egypt, Turkey, South Africa)
•MENA (Middle East & North Africa)
•MIST (Mexico, Indonesia, South Africa,
Turkey)
Important Fact--Emerging Markets•The first half of the 21st century will be
the first time in 200 years when emerging
market nations will contibute more to
growth than the developed economies
(McKinsey Global Institute, 2012)
Definitions of Internationalization•The process of increasing involvement of
enterprises in international markets
•The process of planning and
implementing products and services so
they can be easily adapted to specific
cultures and languages
Country-of-origin Effect
•The influence that cultural values exert
over management practices and
organizational behavior
Internationalization Theories
•Divided into traditional approaches, trade
theories, and further theories
•Trade theories include 10 aspects
•Traditional approaches include nine
aspects
•Further theories include eight aspects
Trade Theories•Absolute cost advantage (Adam Smith,
1776)•Comparative cost advantage (1817)•Gravity model of trade (1954)•Leontief paradox (1954)•Linder hypothesis (1961)•Heckscher-Ohlin model (1966)•Location theory•Market imperfection theory•New trade theory
Traditional Approaches•Diamond Model (Michael Porter)•Diffusion of Innovations (Everett Rogers)•Foreign Direct Investment (FDI) and
Portfolio Investment Theory (Stephen Hymer)
•Eclectic Paradigm (John Dunning) •Monopolistic Advantage theory (Stephen
Hymer)•Non-availability Approach (Irving Kravis)•Technology Gap Theory of Trade (Posner)•Uppsala Model
Further Theories•Behavioral theory of the firm•Contingency theory•Contract theory•Economy of scale•Internationalization theory•Product life cycle theory•Transaction cost theory•Theory of the growth of the firm
Market Frictions •Includes various types:
• Financial• Labor (Growing global skills gap)• Employment• Trade• Frictionless Markets: Financial markets
without transaction costs
Search Theory•Studies buyers and sellers who cannot
instantly find a trading partner (Microeconomic)
•Macroeconomists have extended the studies above to include “Matching theory”
Recap: Emerging Markets
Internationalization
Theories: Tradition, Trade, Further
Market & Search Frictions
Country-of-origin Effect
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 3: Foreign Business Environments
Module 2: Entry Mode Choice
Bryan Christiansen, Senior Instructor
Entry Mode Choice• Defines what activities are internalized in the
firm and how the firm interacts with external environment in different host countries
• Considered one of the core aspects of International Business (IB) research (Oortwijn, 2011)
• At least four different choices:• Partnership• Trade• Joint Venture (JV)• Wholly-owned Enterprise (WOE)
Firm Experience
•A major obstacle to the development of international operations is a lack of knowledge of foreign markets and uncertainty for business performance (Johanson & Vahlne, 1977)
•Differences between home and host countries magnify difficulties in collecting, interpreting, and organizing information for decision-making (Meyer, 2001; Henisz, 2005)
Primary Issues of Entry Mode Choice •Characterized by varying degrees of:
• Resource Committment• Managerial Control• Risk Exposure• Profit Return• Involvement of Local Parties
•Organizational modes listed below manage international business activities differently which ultimately impacts performance and the cultural distance paradox
Major Entry Mode ChoicesPartnership Joint Venture (JV) WOE
Pros• Shared resources such as distribution channels, manufacturing capacity, or capital• Agreed upon set of goals between the two entities
Pros• Founding firm partners remain indepenent legal entities• New entity has resources and equity contributed by both partners• Risks and costs shared
Pros• Owned 100% by the foreign parent compamy• Managed directly by the foreign company• Return-on-Investment (ROI) usually higher in the long-term
Cons• No separate legal entity• Some loss of control• Occasional coordination issues
Cons• Loss of hierarchial control• Organizational flexibility decreases while costs increase• Joint decision-making more complicated across country borders
Cons• Does require additional investments in terms of equity, human resources, and time• Knowledge and access to local market must be acquired
Cultural Distance and Mode Choice
•Entry mode choice highly influences in what manner a company is exposed to cultural differences when conducting business abroad
•Difficulties often encountered when managing a cultural distance labor force within the firm
•Relationships with suppliers, buyers, and government institutions external to the firm become more complicated (Agarwal, 1994)
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 3: Foreign Business Environments
Module 3: Corporate Social Responsibility: China and Japan
Bryan Christiansen, Senior Instructor
China and Japan Facts
•China is now second largest economy in the world with 1.6 billion people in this vast emerging market (CIA Factbook, 2015)
• Japan is an advanced economy which has one of the fastest growing aging populations in the world (CIA Factbook, 2015)
• Japan has been an extremely active investor in China since 1989 and is the second largest source of Foreign Direct Investment in China
China and Japan Facts (Continued)
•The two countries share a complex and thorny past: the two are often referred to as ‘Cold in politics but hot in economics’
•Fairly recent political issues surrounding the Senkaku Islands in the South China Sea have not significantly altered their economic ties that include extensive technology transfer (Toyota)
•Major question is what will occur if China does not continue its economic growth in the future?
Corporate Social Responsibility (CSR)•Definition of corporate social responsibility
is a company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates
•Practiced in a variety of countries as a source of competitive advantage
• Coca-Cola• IBM• Siemens• Toyota
Corporate Social Responsibility: China•Part of China’s ‘Harmonious Society’
policy •Increasing in the country due to:
• Rate of Chinese products in Western nations has increased dramatically, a fact which has subjected China to Western standards of production
• China’s entry into the World Trade Organization (WTO) has subjected Chinese firms to various rules and regulations governing international trade and investment
Corporate Social Responsibility: Japan•Country has long engaged in CSR within Japan
due largely to its collectivist society•Operating in China has posed some
challenges:• Anti-Japanese demonstrations in 2005 showed
Japanese firms did not recognize the growing importance of business-society relations in the Chinese marketplace
• Difficulty in hiring and retaining skilled personnel• Roadblocks to understanding the full power and
role of the Chinese media on local consumers
Lesson 3 Recap
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 4: Miscellaneous
Module 1: Social Capital
Bryan Christiansen, Senior Instructor
Social Capital• Defined as the networks together with shared
values, and and understandings in society which facilitate cooperation within or among groups (OECD, 2014)
• Social capital has earned an increasingly important place in economic development over the past 20 years (Cartwright & Singh, 2014)
• Sobel (2002) states that social capital is an attribute of an individual in a social context which can be transformed into conventional economic gains.
• Social capital varies from country to country, and can also act as a conduit for non-economic benefits (Woolcock, 1998).
Social Capital Assets and Liability of Foreignness
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 4: Miscellaneous
Module 2: Workplace Conflict
Bryan Christiansen, Senior Instructor
Workplace Conflict
•A specific type of conflict that occurs in workplaces due to personality clash or differences of opinion about tasks
Workplace Conflict (2)
•Recent research shows that managers typically spend about 30% of their time contending with workplace conflict (Ross, 2010)
•There are five common responses to conflict (Rahim, 1983):
• Integration• Domination• Compromise• Submission• Avoidance
Workplace Conflict (3)
•Hofstede’s work on cultural dimensions provides managers involved in international operations a frame of reference for understanding the adaptations required to succeed in cross-border relationships
•The degree of such adaptive response required depends on the degree of divergence between the two cultures (Giacobbe-Miller, Miller, Zhang, & Victorov, 2003)
International Business Strategy, Performance,and Management Lesson 1: What is Human Performance Technology?
Lesson 4: Miscellaneous
Module 3: Global Human Resource Management
Bryan Christiansen, Senior Instructor
Global Human Resource Management• A function in organizations designed to
maximize employee performance of an employer’s global strategic objectives
• HRM is primarily concerned with the management of people within organizations, focusing on policies and systems
• HR departments and units in organizations typically undertake a number of activities, including employee recruitment, training and development, performance appraisal, and rewards
Global Facts on Human Resources• Growing global competition for talent
• Australia: Over 51% of 2,000 respondents said middle-managers had the largest skills gap
• Canada: Approximately 44% of businesses reported finding qualified labor
• China: Fewer than 10% of job candidates are suitable to work in a foreign company
• India: Shortage of 500,000 professionals to fill available positions
• USA: American universities will graduate only 198,000 students to replace 2 million Baby-boomers who will retire by 2018
Lesson 4 Recap
Video Presentation in ReviewCultural Variations
Business Performance
Foreign Business Environments
Misc. Topics
• Theory of Cultural Dimensions
• Intercultural Competence
• Bicultural Managers
• Organization Culture and Effectiveness
• Firm Performance
• Regionalization vs. Globalization
• InternationalizeEmerging Markets
• Entry Mode Choice
• China and Japan – CSR
• Social Capital
• Workplace Conflict
• Human Resource Management (HRM)
• The world has become increasingly complex in an age of global hypercompetition
• The major determinant of long-term national growth (especially today): productivity
As organizations are confronted with the need to engage with stakeholders from a variety of different cultural backgrounds, the need to understand the ways in which cultural imperatives play into individual and collective performances becomes increasingly paramount. This need ultimately provides the ability for organizations to sustain a competitive advantage and to remain profitable over time.
The seven “intangibles” (Anderson & Wong, 2013): •radical innovation and first mover advantages•firm strategy and positioning•intangible resources and competencies•relational optimality•network effects and externalities•organizational ambidexterity•transaction cost efficiency
International Business Strategy, Performance,and Management
Bryan Christiansen, Senior InstructorPRYMARKE BUSINESS ACADEMY(Istanbul, Turkey)
THANK YOU!