global managers: developing a mindset for global competitiveness

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Global Managers: Developing A Mindset For Global Competitiveness Ben L. Kedia Ananda Mukherji There is increasing evidence that large scale globalization is rendering traditional ways of doing business largely irrelevant. There is a growing need for managers to become global managers with a global perspective. We suggest that a global perspective consists of a global mindset supported by appropriate skills and knowledge. Managers have a number of mindsets that range from the domestically-oriented defender, and continuing on to the explorer, the controller, and the globally- oriented integrator. For global managers to be effective, they need to develop the global mindset of an integrator. A global mindset allows meaningful global strategizing that requires managers to effectively integrate the three global forces of (1) global business, (2) regional/country pressures, and (3) worldwide functions. A global mindset and a holistic global strategy should create conditions to build the worldwide organization characterized by specialization, interdependency, and coordination. A global outlook is a process of moving an organization’s structure, process, people, and culture from a set of highly autonomous business units to one that becomes an integrated and effective global network. A s the focus of business shifts from the domestic environment to the global, business leaders and managers will have to increasingly look for ways to redefine their strategies and realign their organizations to the new and more complex global realities. This, essen- tially, is the challenge for global managers—to articulate a viable global strategy, facilitate and develop support- ive processes by which globalization can be managed, and create appropriate conditions by which the overall strat- egy, process, culture, and structure can be meaningfully aligned to achieve or- ganizational effectiveness. The chal- lenges of global competition, corporate downsizing, industrial renaissance, and economic dislocation are the new watchwords of American business (Ju- sela, 1994). The challenges, however, are not restricted to meeting changes in the global competitive environment, but also to look at ways to improving orga- nizational performance and increasing Ben L. Kedia, The Robert Wang Center for Inter- national Business, 220 Fogelman Executive Cen- ter, The University of Memphis, Memphis, TN 38152 . Ananda Mukherji, Department of Man- agement and Marketing, Texas A&M International University, 5201 University Boulevard, Laredo, TX 78041. 230 Journal of World Business / 34(3) / 1999

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Page 1: Global managers: developing a mindset for global competitiveness

Global Managers: DevelopingA Mindset For Global

CompetitivenessBen L. Kedia Ananda Mukherji

There is increasing evidence that large scale globalization is rendering traditional ways of doingbusiness largely irrelevant. There is a growing need for managers to become global managers with aglobal perspective. We suggest that a global perspective consists of a global mindset supported byappropriate skills and knowledge. Managers have a number of mindsets that range from thedomestically-orienteddefender, and continuing on to theexplorer, the controller, and the globally-orientedintegrator. For global managers to be effective, they need to develop the global mindset of anintegrator. A global mindset allows meaningful global strategizing that requires managers to effectivelyintegrate the three global forces of (1) global business, (2) regional/country pressures, and (3)worldwide functions. A global mindset and a holistic global strategy should create conditions to buildthe worldwide organization characterized by specialization, interdependency, and coordination. Aglobal outlook is a process of moving an organization’s structure, process, people, and culture from aset of highly autonomous business units to one that becomes an integrated and effective global network.

A s the focus of business shifts fromthe domestic environment to the

global, business leaders and managerswill have to increasingly look for waysto redefine their strategies and realigntheir organizations to the new and morecomplex global realities. This, essen-tially, is the challenge for globalmanagers—to articulate a viable global

strategy, facilitate and develop support-ive processes by which globalizationcan be managed, and create appropriateconditions by which the overall strat-egy, process, culture, and structure canbe meaningfully aligned to achieve or-ganizational effectiveness. The chal-lenges of global competition, corporatedownsizing, industrial renaissance, andeconomic dislocation are the newwatchwords of American business (Ju-sela, 1994). The challenges, however,are not restricted to meeting changes inthe global competitive environment, butalso to look at ways to improving orga-nizational performance and increasing

Ben L. Kedia, The Robert Wang Center for Inter-national Business, 220 Fogelman Executive Cen-ter, The University of Memphis, Memphis, TN38152 . Ananda Mukherji, Department of Man-agement and Marketing, Texas A&M InternationalUniversity, 5201 University Boulevard, Laredo,TX 78041.

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individual development simultaneously(Porras & Silvers, 1991).

In a world where communication andtransportation technology have reducedbarriers considerably, an additionalchallenge is to develop a mindset that isglobal to increase organizational effec-tiveness, and yet maintain efficientbusiness operations. The question reallyis, what are firms to do to enhance theircompetitive abilities in the face of in-creased pressures of global competition,and yet maintain their long term viabil-ity as effective business entities? Thereis considerable evidence that large scalechanges are taking place in the globalarena. Although economic growth ratesfor developed countries have sloweddown and stabilized between 2 and 4%,the growth rates of newly industrializedcountries are burgeoning between 5 and11% (Fortune, 1995). In an earlier re-port, the World Bank has forecastedthat by the year 2020, the five largesteconomies, based on purchasing powerparity, would be China, the US, Japan,India, and Indonesia (World Bank,1992), displacing Germany and Francefrom the ranks of the top five. Theemerging economic reality with its newplayers implies that existing conceptsmay have to be seriously reviewed andreconsidered. For any business, the con-ventional model will no longer have thesame validity, and the greatest opportu-nities and challenges would be from theglobal market and its attendant chal-lenges to operate differently (Rhine-smith, 1993).

According to Yip (1992), the global-ization phenomenon is taking placeon account of four globalization dri-vers, and managers need to be cogni-

zant of these drivers. These are marketdrivers, cost drivers, competitive driv-ers, and government drivers. (1)MarketDrivers—Although more salient in in-dustrialized nations, per capita incomehas been increasing worldwide. Thishas resulted in greater purchasingpower and an increased demand forgoods worldwide. There has also been aconvergence in lifestyles, tastes, aspira-tions, and expectations of consumers.Increased global travel has also createda new class of global consumers. (2)Cost Drivers—Another set of factorsimpacting globalization is loweredmanufacturing and production costs.Consequently, economies of scale,availability of low labor costs, acceler-ated technological innovation, and im-proved transportation have been a partof cost drivers. (3) CompetitiveDrivers—Competitive drivers affectingglobalization are new global competi-tors, increased formation of global stra-tegic alliances, and more countries be-coming competitive battlegrounds. (4)Government Drivers—Globalization isalso impacted by government drivers.These include factors like the emer-gence of trading blocks, large scale pri-vatization, and reduction in trade barri-ers.

Companies are now confronted bythe rapid globalization of markets andcompetition, the increasing importanceof speed and flexibility as key sourcesof competitive advantage, and thegrowing proliferation of partnership re-lations with suppliers, customers, andcompetitors (Ghoshal, Arnzen, &Brownfield, 1992). The prevailing con-ditions in the global environment makeit necessary for companies to respond

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with radically different management ap-proaches to succeed. Over the last fewyears there have been a number of writ-ers who have helped define, develop,and better understand the mindset forglobal managers (see Jusela, 1994; Ke-falas & Neuland, 1997; Rhinesmith,1993; and Tichy, 1992). Similarly, therehave been a number of articles on thestrategic demands and challenges to-day’s managers face in the global envi-ronment (Bartlett & Ghoshal, 1992;Murtha, Lenway & Bagozzi, 1998; andPrahalad & Lieberthal, 1998). Based onan extensive review of the literature, wepropose to do two things. One, is todevelop the essentials of the globalmindset based on available literatureand suggestions made by various schol-ars in the field. In this process, we pro-pose to examine those mindsets that wefeel are less useful in today’s highlycompetitive and turbulent global envi-ronment. Two, is to briefly outline theforces facing managers in today’shighly competitive global environment,and how our proposed global mindsetmay be useful in balancing and integrat-ing the various forces and multiple chal-lenges emanating from global business,regional/country pressures, and world-wide functions. The issues we specifi-cally address in this paper are:

● changing orientation of managers● developing a global perspective● role, qualities, and requirements of

global leadership● evolution of managerial mindsets● strategizing and integrating globally

Globalization can be conceptualizedas a situation where political borders

become increasingly more irrelevant,economic interdependencies are height-ened, and national differences due todissimilarities in societal cultures arecentral issues of business. The world,on account of these complex anddynamic forces, becomes a “globalmarketplace” (Lane, DiStefano &Maznevski, 1997). This requires globalmanagers to possess a global perspec-tive. A global manager is one who hasreorganized his or her way of thinkingand has an altered mindset. Lane et al.,(1997) suggest that thinking globallymeans extending concepts and modelsfrom one-to-one relationships to hold-ing multiple realities and relationshipsin mind simultaneously, and then actingskillfully on this more complex reality.Thus, to be globally competitive, globalmanagers need to have openness thatallows a global mindset to form, evolve,and develop.

CHANGING ORIENTATION OF MANAGERS

Over the last decade or so, with notablechanges taking place in the global com-petitive environment, the orientation ofmanagers has changed considerably.This change has taken place both interms of levels, and in terms of priori-ties. From a level perspective, most tra-ditional training focused on the individ-ual executive with the objective ofbroadening the perspective of managerswith the hope that individuals willsomehow find ways to influence choicesand actions within their corporations(Ghoshal et al., 1992). The focus hasshifted from the level of the individualmanager to that of teams and groups,

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and indeed the target now is the entireorganization that needs to be trainedand reoriented to face the emergingglobal challenges (Tichy, 1992).

Other than level of training, manag-ers were traditionally trained in whatmay be defined as “hard” as opposed to“soft” issues (Tichy, 1992: p. 210). Thefocus in “hard” issues training was tobecome the low cost producer. Conse-quently, the “hard” issues were orientedtoward drivers of the bottom line, andthe emphasis was on budgets, manufac-turing, marketing, distribution, headcount, and finances. However, in theface of reduced market power and in-creased global competition, the focus isnow shared with “soft” issues that em-phasize the need to be creative and todeliver innovative products simulta-neously. The orientation, consequently,has shifted toward drivers of the top lineand the emphasis is on values, culture,vision, leadership style, innovative be-havior, and risk-taking. The frameworkgiven in Figure 1, adapted from Tichy

(1992), illustrates this changed orienta-tion of levels and of priorities. The chal-lenge for global managers is the abilityto focus on hard and soft issues simul-taneously.

Earlier theoretical contributions sug-gested that the fundamental interna-tional problem facing managers was toreconcile the conflicting pressures ofadapting to a standardized technologyand product, or to respond to local mar-ket needs and requirements (Murtha etal., 1998). These conflicting pressureswere considered to be mutually exclu-sive and existed linearly in terms ofzero-sum trade-offs, that Fayerweather(1982: p. 211) termed as “unification”or “fragmentation” strategies.

However, technological and theoreticaldevelopments have indicated that interna-tional business strategy can be conceptu-alized along multiple dimensions. Ratherthan conceive strategy along one dimen-sion, researchers (Doz & Prahalad, 1991;Prahalad & Doz, 1981, 1987) have sug-gested that strategy consists of balancing

Figure 1

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the twin pressures of global integrationand local responsiveness concurrently.Consequently, paying simultaneous atten-tion to various dimensions of strategy(Murtha et al., 1998) is considered to bean appropriate way to balance theseforces. Organizational capabilities to ex-ploit the full strategic potential of thesecomplex pressures of integration, respon-siveness, and coordination (Murtha et al.,1998) require global mindsets that equil-ibrate these forces rather than predisposedecisions in favor of one dimension at theexpense of the others (Prahalad & Doz,1987). Bartlett and Ghoshal’s (1989) def-inition of a transnational mentality im-plies the ability to balance these complexforces in pursuit of a unique strategy thatblends them. It is worth mentioning thatthe organizational context, in terms ofculture, corporate policies, and motiva-tion, must be geared toward forming andsustaining a holistic global outlook. Inother words, a transnational mentality or aglobal mindset is a completely differentway of looking at the world and synthe-sizing the many complex forces.

Like much of strategy research oncognitive issues (Prahalad & Bettis,1986; Grant, 1988), we focus on themindset of the global manager whoseimpact is felt at the organizational level.We take the liberty of shifting our levelof analysis from the manager to theorganization in the belief that organiza-tional actions, in terms of strategies andpostures, are an aggregation of themindset of the key and dominant deci-sion makers. Like Prahalad & Bettis(1986), who used the manager’s domi-nant logic to establish a linkage be-tween the pattern of diversification andperformance, we propose to use the

mindset of global managers to explainactions and strategies of organizationstaken in international business.

FRAMEWORK TO DEVELOP A GLOBAL

PERSPECTIVE

For managers to orient themselves andtheir priorities to the changed interna-tional realities, we suggest that a triadconsisting of a global mindset, knowl-edge, and skills, is needed by managersto be globally competitive. Although aglobal mindset is a state of being essen-tially characterized by openness, and anability to recognize complex intercon-nections, global managers need a cer-tain set of supportive knowledge andskills to sustain the mindset. Knowl-edge and skills are needed to meet thechanging, emerging, and increasinglycomplex conditions associated withglobalization (Rhinesmith, 1993). Fig-ure 2 provides an illustration of howglobal mindset, knowledge, and skillsare interrelated.

Global Mindset

A global mindset, according toRhinesmith (1993: p. 24), “is a way ofbeing rather than a set of skills. It is anorientation of the world that allows oneto see certain things that others do not.A global mindset means the ability toscan the world from a broad perspec-tive, always looking for unexpectedtrends and opportunities that may con-stitute a threat or an opportunity toachieve personal, professional or orga-nizational objectives.” A global mindsetis for each manager to realize his or herfirm’s interdependence on the global

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economy even when the firm’s activi-ties are seemingly confined to the do-mestic environment. However, to sus-tain and develop a global mindset, amanager also needs knowledge andskills.

We conceptualize a global mindsetfor global managers to be a necessarycondition to effectively handle globalcompetition, however, it is not a suffi-cient condition. The sufficient condi-tions that enhance and sustain a globalmindset are knowledge and skills. A

manager needs to have knowledge ofdifferent aspects of the interdependentworld. Skills, on the other hand, arecertain human and behavioral abilitiesthat managers have that help them to dotheir work more effectively in theglobal context. It is this unique combi-nation of global mindset, knowledge,and skills that is necessary and suffi-cient for the making of global manag-ers.

Given the changed level of trainingand the new priorities for global man-

Figure 2

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agers, coupled with knowledge andskills required for a global mindset,global managers have to play a leader-ship role. To do this, global managershave to define their role, and developcertain qualities that make them trueglobal managers (Kets de Vries &Mead, 1992). The primary role of theglobal manager, according to Kets deVries and Mead, is to act as a catalystwithin the organization. Here the globalmanager has to be sensitive to culturaldiversity, and to manage cultural diver-sity. An effective global manager is onewho values diversity and is able to le-verage differences in a meaningful way.Apart from a catalytic role, global man-agers need to develop and possess cer-tain important traits. One, is the capac-ity for envisioning and being able togive meaning to the vision. Two, is tobe able to understand increasingly com-plex environments, and the ability torecognize complex patterns in the envi-ronment. Three, is to be able to instillvalues and to inspire others. Finally, aneffective global manager should be ableto build and maintain organizationalnetworks at the global level.

In a general way, many requirementsof global management may not differfrom those of the non-global manage-ment mindset. At an abstract level, ef-fective management, whether in theglobal or domestic environment, re-quires traits like creating vision and in-stilling values. However, apart from acommon set of traits, global manage-ment requires a set of specialized skills,capabilities, and competencies that arenot part of the traditional education sys-tem and managerial experience. Our fo-cus is on this emerging set of capabili-

ties that is increasingly assumingsalience. A global mindset, to distin-guish it from a non-global mindset, isone that is characterized by unique timeand space perspectives, and a generalpredisposition (Kefalas & Neuland,1997). A unique time perspective is oneof taking a long-term view when deal-ing with international business activi-ties. Similarly, a unique space perspec-tive is one where managers with aglobal mindset will extend their per-sonal space well beyond their immedi-ate surroundings, both in terms of ge-ography as well as in real and potentialrelationships with other people. Also,managers with a global mindset willexhibit a general predisposition by be-ing more tolerant of other peoples andcultures, consider cultural diversity anasset, thrive on ambiguity, balance con-tradictory forces, and rethink bound-aries (Kefalas & Neuland, 1997; Rhine-smith, 1993).

In addition, other characteristics of aglobal mindset include emotional con-nection, capacity for managing uncer-tainty, ability to balance tensions, andsavvy (Gregerson, Morrison, & Black,1998). The first of these is a genuineemotional connection with peoplethroughout the organization’s world-wide operations. The second is to havethe capacity to manage under conditionsthat are constantly changing and inher-ently complex. The third is to confrontand balance the various tensions ofglobal integration and local responsive-ness (Prahalad & Doz, 1987). Finally,to exhibit business savvy and organiza-tional savvy (Gregerson et al., 1998),where business savvy enables a man-ager to recognize worldwide market op-

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portunities, and organization savvy im-plies intimate knowledge of the firm’scapabilities, and the ability to mobilizeworldwide resources to capture marketopportunities.

Knowledge for a Global Mindset

Knowledge is more attuned towardfactual information rather than cogni-tive and behavioral skills. Knowledge isappreciation of the existence of differ-ences, and it is the appropriate use ofknowledge that requires skills. In thisparticular case, knowledge is to do witha number of factors that make a globalmanager’s work more effective. Onecritical area of knowledge is masteryover technology, and the ability to usetechnology, information systems, andtelecommunications effectively in anorganization’s global activities. An-other important knowledge-based issueis to know about socio-political factorsof different countries, and how thesesocio-political factors impact businessoperations. A third area of knowledge isthat of culture and cross-cultural issuesthat impact management.

Thus, apart from the socio-political,economic, and cultural dimensions ofthe global environment and other coun-tries, global managers need to be awareof the technical dimensions of knowl-edge. This does not only include thetechnologies associated with communi-cation, information, and computers, butalso the impact of technology on theglobal operations of the firm. The factthat technology drives business in sub-tle and powerful ways is something aglobal manager has to be aware of.Technology impacts the firm’s produc-

tion processes such as new and im-proved computer numeric control ma-chines that drastically improve quality,to flexible manufacturing systems thatmake scale economies and long deliv-eries irrelevant. However, it is thepower of technology to make certainproducts, processes, or services obso-lete much faster today than it was a fewyears ago that is of critical importance.Moreover, with decreased product lifecycle and increased and more expensiveproduct development cycles, globalmanagers are faced with a challenge ofunderstanding technology, and assess-ing its impact on the global operationsof the firm.

Increased global competition has im-pacted a number of areas, most notablymanufacturing and communications.The role and function of manufacturingin the global environment have increas-ingly become a competitive weapon.Some of the more prevalent practicesinclude total quality management(TQM), just-in-time (JIT), factory auto-mation, employee involvement, andoutsourcing (Fatehi, 1996). Communi-cation and information technology arecritical factors in the operations andsuccessful performance of MNCs.Crossing national borders, MNCs areparticularly vulnerable to multiple po-litical, cultural, and economic systemswithin which they operate, and an ef-fective management information systemis crucial for the success of MNCs(Fatehi, 1996).

Knowledge requirements for globalmanagers are the basic building blockstoward a global perspective, and aglobal mindset. Constantly striving fora bigger, better picture will expand

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one’s knowledge (Rhinesmith, 1993),and that a global manager’s technical,business, and industry knowledge is themost fundamental quality that allowshim or her to successfully manage thecompetitive process, both domestic andforeign. This knowledge must be broadas well as deep, and must include awell developed international dimensionthat includes constant scanning ofinformation, and competitive and mar-ket conditions on a global basis. An-other important area is country-specificknowledge that implies some under-standing of social, political, and eco-nomic development and policies of theconcerned countries (Lane et al., 1997).This suggests that the relationship be-tween trade, export, industrial, and ag-ricultural development policies are im-portant, as is information on taxation,banking, exchange rules, currency repa-triation, and so forth.

As mentioned earlier, country-relatedinformation has to be complemented bycross-cultural knowledge as well. Thisis a true challenge for global managersin that they not only learn about theworld and application of business prin-ciples, technology, and competitivenessto the international arena, but ultimatelya challenge that becomes deeply per-sonal in accepting and adjusting to othervalues, experiences, and lifestyles(Rhinesmith, 1993). One key to being asuccessful manager in a global organi-zation is to understand cultural differ-ences that exist among different nationsand societies. Only an awareness of thecomplex phenomenon of culture willallow managers to become open-minded enough to move to the nextlevel that allows an understanding the

different dimensions of culture, andhow behaviors are affected.

Skills for a Global Mindset

Skills are the ability to put knowl-edge into action. Managers may beknowledgeable, say for example aboutculture, but may not possess the com-plex skills to use that knowledge effec-tively. The skill in this case is to knowhow behavior is affected, and what thedimensions of culture are. Knowledgeand understanding should be the basisto take action (Lane et al., 1997), asintellectual action may not transfer di-rectly and automatically into a high de-gree of skill unless considerable prac-tice is involved. Putting knowledge intopractice is the essential way to developskills. One important skill for the globalmanager is the need for acculturation ofother cultures. Another important skillis the ability to lead and indeed leveragediversity to the advantage of the com-pany.

The human factor may ultimatelycome to represent the new competitiveedge for the global corporation, morethan physical and other resources(Baird, Briscoe, Tuden, & Rosansky,1994). The presumed strength of USfirms in the quality of their managementand their leadership training may in factbe their disguised weakness (Rhine-smith, 1993). A major shift affectingcorporate America is from vertical val-ues, such as individualism and auton-omy, to horizontal values, such as inter-dependence and networking. It is atransformation from a predominantlymasculine value system to an androgy-nous one. The new value set calls for

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each person to have both masculine andfeminine characteristics. The nurturingstyle of expressing power, along withthe sharing perspective of empower-ment, seems to encourage productivityin high-performing organizations. In re-inforcing the process perspective,Ribbens (1996) found in an empiricalstudy that the most effective managerswere those who changed their behavioror explained their actions. Managerswho tried to influence the expectation ofothers or who avoided conflicting ex-pectations were regarded as less effec-tive.

The challenges for global managersis one of acculturation, followed by de-veloping skills to lead and motivate adiverse workforce. In today’s dynamicinternational environment, there is greatneed to be flexible and responsive. Theworld that managers face is one that isfilled with complexity and contradic-tions. The earlier model of efficiency,hierarchy, control, and centralization isbeing replaced by a model of respon-siveness, decentralization, partnership,and teamwork. To be globally compet-itive, organizations have to become in-creasingly more organic in structure,and more fluid in their responses. Struc-tures in organizations have becomemore and more fuzzy, with ill-definedboundaries. To be globally competitiveand responsive in this organic manner,strong process mechanisms need to bedeveloped to support these needs alongwith a well developed global mindset.

The challenge for global managers isto understand what culture means, andlook for creative ways to leverage di-versity at the workplace towards greaterorganizational effectiveness, and higher

levels of performance. American at-tributes of individualism, and goal- andachievement-orientation, along with be-ing competitive and aggressive have tobe accommodated with priorities ofother cultures that stress shared goalsand a communitarian outlook. Cultureis a deep-rooted characteristic of per-sons and groups, and rather than thinkof changing other people’s cultures,global managers should consider howbest to use the different cultures of oth-ers to meet organizational objectives.Because culture and language are soclosely connected, global managerscould improve their skills by learningone or more languages. This is likely toincrease their effectiveness when usinga language that is understood by thepeople the global manager is managing.

Globalization will obviously requirestrategic thinking that involves identify-ing different ways for people to meettheir goals and determine which actionswill get them where they want to be(Stumpf, 1989). Given the increasedcomplexity that a highly competitiveglobal environment creates, Stumpfsuggests that strategic thinking involvesa number of key process-oriented fac-tors. These involve a manager’s ability,given the changed global circum-stances, to know the business and mar-kets, manage subunit rivalry, find andovercome threats, stay on strategy, bean entrepreneurial force, and to accom-modate diversity. Awareness and un-derstanding of culture and being able touse diversity of people effectively isessentially a form of strategic thinking.

For global managers to be accultur-ated requires that they develop greatersensitivity to foster greater levels of un-

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derstanding. There are considerablebenefits that are likely to accrue whenmanagers are sensitive to culture, andhave the skills to use this knowledge tobenefit both the organization as well asthe individual. In short, a combinationof knowledge and skills will go a longway in increasing managerial effective-ness in international operations, devel-oping cosmopolitan organizational rep-resentatives, improving cross-culturalskills of employees in general, and en-hancing job effectiveness. Given thedynamics of today’s complex world, aglobal manager has to have a globalmindset based on knowledge and skillsso that organizations can survive andgrow.

Developing a Global Mindset

“Constantly crossing cultural, lan-guage, political, social, and economicborders makes global business complexand uncertain, . . . and constant learningis required for success” (Gregerson etal., 1998, p. 23). Other than constantlearning, these authors suggest globalmanagers require adventuresomeness,curiosity, and open-mindedness, amongother characteristics. However, the keyquestion is how to develop and sustainthe characteristics required for success-ful global managers? There are a num-ber of strategies for developing success-ful global leaders (Gregerson et al.,1998), and include:

● Foreign travelto put potential lead-ers in the middle of a country so asto absorb its culture, economy, po-litical system, market, and other cru-cial details.

● Establishteamsin which individualswith diverse backgrounds and per-spectives work closely together.

● Purposeful training developedaround an effective and structuredlearning environment

● Transfers to foreign locations tolive, work, and learn from the expe-rience of overseas assignments.

THE CHANGING MINDSET OF

MANAGERS

The terms globalization and global out-look have been increasingly used inbusiness literature. As Rhinesmith(1993: p. 2) observes, “Globalizationhas arrived in the world but not in mostof the world’s organizations.” He goeson to state that there is little doubt thatto be viable during the next century, allorganizations, whether international ordomestic, will need to be more global intheir outlook if not in their operations.There is increasing appreciation of thefact that more emphasis has to be placedin developing the human mind and,consequently, business organizations toremain competitive in the face of glob-alization.

The important question is, in whatways has managerial outlook evolved inthe context of thinking globally?Among managers in western nations,there is one fundamental characteristicin the evolution of the global mindset.European managers, for historical, cul-tural, and political reasons, are gener-ally exposed to a multitude of cultures,regions, languages, and customs. Inshort, they have far greater environmen-tal heterogeneity to contend with.American managers, on the other hand,

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are usually exposed to a relatively morehomogeneous environment. Americanmanagers, generally, are faced withlesser variety in terms of language andculture. One may use Chakravarthy andPerlmutter’s (1985) framework ofeth-nocentrism, polycentrism, regiocen-trism, andgeocentrismto explain man-agerial mindsets (see Table 1).

The initial mindset of managers, es-pecially those from a more homoge-neous environment, when thinking glo-bally is one of ethnocentrism. In thismindset, managers use a home-countrystandard as a reference point in manag-ing international activities. The outlookis one of centralized decision-makingand high control over operations. Man-agers with such a mindset may followan international strategy of maintainingcontrol from the home-country, andreplicating home-country systems andprocedures abroad. The next level ofevolution is one ofpolycentrismor re-giocentrism, and here, as internationalinvestment and involvement increase,the host-country culture and practicesassume salience. This may be extendedto include a number of similar countriesin the region, and host-country stan-dards are used as a reference point inmanaging company operations. Thestrategies typically followed are likely

to be multinational strategies that em-phasize decentralized and autonomousglobal operations. For the evolutionaryprocess to reach the level of a globalmindset, ageocentricmindset has to bereached. Here the managerial outlook isone of creating a global network and apreference for following a transnationalstrategy that is integrative and interde-pendent.

MANAGERIAL MINDSETS

There has been a great deal of evolutionand change in the perspectives of busi-ness managers. Here we will outlinesome typical mindsets that managershave and can be used to explain howthese unique mindsets impact analysisof the environment and drive businessdecisions. The mindsets that have beenconceptualized and developed here, andexplained in the sections that followhave been adapted and modified fromBaird (1994). The intent is not so muchto chart a historical path but to providean insight into different kinds of mind-sets that currently exist, and how muchwork is involved in moving from onemindset to another. As competition, cul-ture, and nation-states are closelybounded together, this exposition of

Table 1The Changing Managerial Perspectives

Mindset Outlook Strategy

Ethnocentrism: Home-country perspective Centralized/Controlled International

Polycentrism/Regiocentrism: Host-countryperspective

Decentralized/Autonomous Multinational

Geocentrism: Global perspective Networked/Interdependent Transnational

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four mindsets we provide will makeclear that some mindsets are less effec-tive in today’s world of heightenedglobal competition and increased eco-nomic interdependencies. The fourmindsets are also closely associatedwith a firm’s strategy that may rangefrom the least global to the most globalmindset, and are also indicative of thelevel of development of a global per-spective consisting of a global mindset,knowledge, and skills. The four mind-sets we classify and explain in somedetail are: (1) Defender; (2) Explorer;(3) Controller; and (4) Integrator.

The Defender

The defenderis a traditional mindsetthat is internally focused, and is essen-tially oriented to the domestic marketand its needs (Baird, 1994). Thede-fenderis basically uninterested in othermarkets and cultures, and assumes anyforeign element in the domestic marketto be an unwanted and a temporary ab-erration. If the activities of foreignersbecome significant or threatening to anydegree, thedefenderlooks to the gov-ernment and other collective represen-tations to protect itself and its markets.It is not uncommon for thedefendertoask for trade barriers, quotas, duties,laws, and special agreements to obtainprotection, and all this is done with thehope of discouraging foreigners fromsharing the domestic market. Thede-fenderis satisfied with its domestic op-erations, and is generally uninterestedin making foreign forays.

The attitudes and beliefs of thede-fender follows the theme that what isdifferent, in terms of culture and people,

is dangerous. Thedefenderacknowl-edges that others exist, but is uninter-ested in their existence. Faced with lim-ited foreign advertising, production, ordistribution, the defender makes noconscious effort to cultivate or under-stand foreign clients, competitors, ormarkets. Thedefenderis unaware thatthere exists a connection, in many casesa strong one, between the activities offoreign competitors and the future ofthe domestic market. When faced withincreased competition, thedefenderprefers to retreat within the protectivecustody of the domestic legal and polit-ical system rather than aggressivelyconfront the foreign competition. Thereis almost no international element in thebusiness strategies that thedefenderfor-mulates and implements.

A classic example of thedefendermindset is the reaction of the Americansteel industry that was faced with asteep decline between the 1960s and the1980s. Mueller (1985: p. 214) statesthat “The mid-1960s also marked thestart of a political response by the largeAmerican steel producers to the increas-ing presence of foreign competition intheir home markets. For this purpose,US producers arranged a truce withtheir traditional adversary, the UnitedSteel Workers union (USW), and en-listed its support in vigorous publicityand lobbying campaigns against im-ported steel. These and subsequent ef-forts had considerable success in ob-taining government intervention in thequantities and prices of steel broughtinto the United States. . . . . . ” Anotherexample of adefenderreaction is theattempt by the US footwear industry toobtain import protection (that was de-

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nied by President Reagan) in the mid-1980s to combat severe competitionfrom foreign producers. The attemptsby the U.S. textile and machine toolsindustries to seek government relief andintervention in the mid-1970s whenfaced with stiff foreign competition in-dicates the working of adefendermind-set.

The Explorer

The explorer, although largelyinward-looking like the defender, isaware that business opportunities mayexist in foreign markets. Theexplorerisaware that there are differences acrossnationalities and cultures around theworld, but does not necessarily considerforeign cultures to be dangerous or to beavoided. To theexplorer, foreign mar-kets, notwithstanding the different cul-tures, present opportunities for increas-ing sales and expanding distribution ofproducts (Baird, 1994). Theexplorer,however, treats its international forayswith a lot of caution while moving intoforeign markets to find new customersfor its products and services. Theex-plorer also focuses on closely studyingthe foreign environment to help in-crease its own business. However, theinternational forays of theexplorerarerelatively small when compared to thesize of its domestic business.

As long as the mindset is that of theexplorer, the domestic market will al-ways predominate. The foreign or inter-national business of theexplorer,whether it be manufacturing, distribut-ing, or selling, is controlled from thehead office located in the home country.

The foreign forays theexplorer under-take serve to provide intelligence to thehead office to estimate foreign compet-itive threats, assess political changes,and monitor competitors. The foreignoperations of theexplorerare centrallymanaged from head office usually withhighly centralized decision-making andoperational control to oversee the com-munication and distribution lines estab-lished abroad. Theexplorer prefers tofollow strategies like exporting andfranchising, and has limited investmentcommitments overseas.

Attempts made some years ago byLotus Corporation to go internationalindicate anexplorermindset. AlthoughLotus officials assumed from the startthat business productivity software hada natural global market (Yoffe, 1990),nothing substantial materialized untilthe hiring of Digate as CEO. AlthoughLotus had considered international is-sues, its initial international ventureswere basically a gigantic mess. Lotustook some lighthearted forays into in-ternational markets and its first attemptat an international plan “was bizarre,and needless to say it went nowhere”(Yoffe, 1990: p. 39). Similarly Seiko,the Japanese electronics giant, exhibitedan explorer mindset in its initial inter-national forays. Seiko’s managementmade a number of trips to the UnitedStates and Europe to study productionmethods used in these locations (Yoffe,1990). Seiko, however, was quick tolearn and developed a more aggressivemindset from that of anexplorerto onethat was interested in developing long-range global plans and a dominant mar-ket share.

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The Controller

Thecontroller is more externally ori-ented than theexplorer. The controllerwishes to dominate the overseas mar-kets through well developed systemsand procedures that have worked verywell at home. Unlike theexplorer, thecontroller is willing to make a largerinvestment commitment internationally,and the proportion of foreign sales todomestic sales is considerable. Thecon-troller, however, follows an ethnocen-tric mindset (Chakravarthy & Perlmut-ter, 1985). Ethnocentrism implies thatstrategic decisions are guided by thevalues and interests of the parent com-pany in its international activities. Thecontroller establishes full-scale devel-opment, production, and distribution fa-cilities abroad (Baird, 1994). Becauseof a multitude of interactions in differ-ent foreign markets on account of theneed to produce and sell abroad, thecontroller is forced to understand thenature of culture, and how it impactsbusiness. Thecontroller would, how-ever, like to impose the home cultureand practices on its foreign operationswherever possible. The foreign culturesand markets must be used to the extentthat it furthers the interests of the parentcompany.

Thecontrollermay follow some vari-ations of its unique mindset to furtherits own ends. One such variation is apolycentric mindset which implies thatstrategic decisions are tailored to suitthe cultures of the various countries inwhich thecontroller operates, or a re-giocentric mindset where decisions areblended between the interests of thecontroller and its subsidiaries on a lim-

ited regional basis (Chakravarthy &Perlmutter, 1985). The culture of thecontroller, however, is the dominantone in business operations and strategicdecision making. Thecontroller, whileallowing for a certain degree of inde-pendence in the activities of its manydispersed units, maintains financial andstrategic control. Most often it is in theform of payment to the parent company,or in the parent company making im-portant transfer pricing decisions, distri-bution of corporate overhead charges,and allocation of resources. Most im-portantly, thecontroller’s head officespends much time and resources onmechanisms for controlling, and tolesser extent coordinating, diverse unitsand geographic distribution. The ap-proach is that the parent company issupreme, and all important decisionsmust have the approval and sanction ofthe head office.

Some industries, dictated by the na-ture of their products and unique busi-ness operations, take on acontrollerlike mindset. Typically industries thathave a high proportion of franchising inthe food industry are likely to exhibit acontroller mindset. For example, Coke,McDonald’s, and Pizza Hut are firmsfrom the fast food industry that, per-haps, exemplify managing and strat-egizing with a controller mindset. Acontroller mindset could also be asso-ciated with the traditional multinationalcorporations where foreign offices andinvestments were made to replicatehome country cultures, systems, andprocedures. For instance, McDonald’sclosing down of its India operations,and Pizza Hut shutting down its Mos-cow property may indicate shortcom-

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ings associated with acontroller mind-set. Recently, Coke overestimated thestrength of its brand name among In-dia’s consumers as it based its advertis-ing strategy on its worldwide image,only to find the advantage slip to Pepsithat had customized its campaign andspecifically tailored it for the Indianmarket (Prahalad & Lieberthal, 1998).To cite a Coke executive, “We’re sosuccessful in international business thatwe applied a tried and true formula . . .and it was the wrong formula to applyin India” (quoted from Prahalad &Lieberthal, 1998, p. 72).

The Integrator

The integrator, we argue, is the man-ager with a global perspective with areal global mindset based on heightenedawareness (knowledge), and enhancedabilities (skills). Theintegrator holds amultiple cultural perspective and cre-ates a worldwide web of relationshipswith suppliers, developers, designers,distributors, competitors, and customers(Baird, 1994). The integrator alsoweaves together a complex web of part-nerships, alliances, and relationshipsthat shift and reconfigure over time asnew threats and opportunities appear.The integrator is able to use his or herknowledge skillfully in actions leadingtoward organizational effectiveness.The integrator is typified as one who isaware, who understands, and who iscompetent. Theintegrator creates aglobal perspective or global mindset byobtaining information about the world,using the information experientially,and develops abilities and skills by be-ing totally immersed in the dynamics of

the complex environment. Theintegra-tor has the ability to first understand theexternal world with its unique differ-ences and opportunities. Theintegratoris also able to bridge differences in ameaningful way, and finally is able tomanage the differences between people,values, and cultures.

The integrator is able to leverage dif-ferences and synergistically integratethe many disparate elements in his orher complex world. The integratorknows not only how to deal with asecond party, but is also aware how thesecond party deals with the third, andhow the third party deals with the sec-ond (Baird, 1994).Integrators coordi-nate more than they control, and spenda lot of their time and resources improv-ing coordination and cooperationamong the different elements of theworldwide system. Theintegrator seeshis or her role as that of creating effec-tive and embedded networks, which inturn allows appropriate linking and le-veraging. The key to network buildingis active management of cross-companyand cross-cultural issues (Hagel, 1996).A critical function for managers is todevelop and sustain mechanisms forknowledge flow and transfer from onepart of the global system to another.Integrators, in a sense, create informa-tion networks to manage mutual inter-dependencies and to increase the payofffrom diversity. Integrators understandthat competitive success comes from awin-win strategy (Brandenburger &Nalebuff, 1993), and not from the oldwin-lose (zero sum game) that may be apart of the mindset ofdefenders, explor-ers, and controllers. The integrator ismore interested in leveraging than re-

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straining, integrating than empire build-ing, coordinating than controlling, andmanaging change than creating stabil-ity.

Attempts by Toyota of Japan may beexamples of an integrator mindset.Toyota is not merely a company but aconfederation of firms more properlycalled the Toyota Group (Yoffe, 1990).It is part of a keiretsu whose distin-guishing trait is the links among mem-ber firms that may be described as athick and complex web of relationshipsnot matched elsewhere. As Yoffe(1990) mentions, Toyota is at the apexof a hierarchy of firms worldwide thatconsist of primary, secondary, and ter-tiary suppliers and subcontractors.Toyota, along with Nissan, Hitachi,Mitsubishi, and other large Japanesefirms, represents anintegrator mindsetin its outlook and strategy which is oneof leveraging, sharing, and developingcomplementarities. However, Toyota,while following more of anintegrator’smindset in some of its domestic opera-tions, still retains acontroller’s mindsetwhen operating overseas2 in attemptingto impose its culture and practices on itsforeign operations.

Some of the illustrations providedhere have been discussed in articles byPrahalad and Lieberthal (1998) whenthey suggest that organizations need todiscard their imperial mindset regardinginternational business. The actions ofFiat of Italy is a classic attempt atevolving into and practicing with anintegrator’s mindset. Ford recently in-troduced its Escort model in India andpriced it around $21, 000, putting itstraightaway into the luxury car market,and far away from the real market and

competition offered by the dominantand popular Maruti–Suzuki priced at$10, 000. Fiat, with its experience inBrazil, another big emerging marketlike India, had already designed a car,the Palio, for the demanding Brazilianmarket. Fiat is now on the verge oftransferring its knowledge and experi-ence to India to compete with Maruti–Suzuki rather than Ford. Similarly, Phil-ips Electronics introduced a two-in-onevideo-CD player in China that has soldover 15 million units. This product andits marketing is likely to be successfulin other emerging Asian economies.Yet the same product has no market inthe developed world. In contrast, bothRevlon and Kellogg have found it dif-ficult to succeed in China and Indiabecause these companies did not ap-proach their markets in a holistic man-ner. As Prahalad and Lieberthal (1998,p. 72) state, “Tailoring products to thebig emerging markets is not a trivialtask. Minor cultural adaptations or mar-ginal cost reductions will not do the job.Instead, to overcome an implicit impe-rialism, companies must undergo a fun-damental rethinking of every element oftheir business model.”

From an evolutionary or develop-mental perspective, thedefenderhas lit-tle or no global orientation, and also haslimited skills and knowledge to effec-tively operate in a globally competitiveenvironment. Theexplorer has knowl-edge about the international environ-ment, and a restricted set of skills tooperate in the global environment in alimited manner. Because of its manylimitations and inadequacies, theex-plorer is able to pursue only a verylimited range of international business

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activities on account of its surface levelglobal perspective. Thecontroller hasmore knowledge of the global environ-ment as well as considerably more skillsabout the international marketplace.The controller, however, has a limitedglobal mindset, and consequently it hasan ethnocentric-efficiency orientation inits international operations. Thecon-troller has an intermediate level globalperspective. Theintegrator, we suggest,has a well developed and a deep levelglobal perspective. Theintegratorhas atrue global mindset with the appropriatelevel of knowledge and skills.

In facing global competitiveness, theexplorer is the least effective, thecon-troller is somewhat more effective, andthe integrator is the most effective. Wesuggest that a given mindset is associ-ated with a particular world view andperspective, and with a specific type ofstrategy. For mindsets and strategies tochange, appropriate training effortshave to be made to move it from onemindset to another. Table 2 provides anoverview of the four mindsets within aglobal perspective.

Readers may be concerned over ouradvocacy of theintegrator mindset asbeing appropriate and relevant in to-day’s complex global reality. With

competition likely to take place in thebig emerging markets of Brazil, China,and India, MNCs will no longer be ableto consider these as new markets forexisting products. In short, MNCs willhave to discard their “imperialist mind-set” (Prahalad & Lieberthal, 1998, p.69), so as to adapt, design, manufacture,and market products that suit the uniquerequirements of these markets. Themindsets ofdefenders, explorers,andcontrollers will simply not be able toassess, understand, and react to the newglobal realities. It is only theintegratorswho have developed the mindset, skills,and knowledge to be dynamic and ef-fective players in the global arena. Ourargument is that the global mindset is anevolutionary process. Some managersand organizations remain at an earlystage of the evolution, and progress tothe level of a defender, explorer,orcontroller. Other managers and organi-zations evolve quickly through the var-ious stages, or move effortlessly tomindset ofintegrators.We contend thatintegrators have the required mindset,capability, and flexibility to adapt andmanage in today’s complex global en-vironment. Having any of the otherthree mindsets implies both limitations

Table 2The Four Mindsets and Global Perspectives

Mindsets3 Defender Explorer Controller Integrator

LEVEL OF GLOBALPERSPECTIVE

None Surface level Intermediatelevel

Deep level

GLOBAL IDENTITYSELF

Maintain selfsufficiency

Define differences Redefine self Integrate

OTHERS Acknowledge Explore Control Leveragediversity

Notes: Adapted from Baird, 1994.

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and a lack of capabilities in effectivelymanaging today’s complexities.

STRATEGIZING AND INTEGRATING

GLOBALLY

The important issue in having a trueglobal mindset is not to be able to do allthings, rather it is to be able to under-stand the complexities of managing aninterdependent and complex global net-work, and in playing the required partwithin the network to ensure high de-grees of coordinating, leveraging, andintegrating. Bartlett and Ghoshal (1992)have suggested that the key functions ina global environment are a combinationof specialization and integration. Theability of a manager to integrate comesfrom having a global mindset that isbased on requisite knowledge and skillsneeded to operate effectively in the

global context. Researchers argue thatkey aspects of international strategic ca-pabilities derive from managers’ cogni-tive processes that balance competingbusiness, country, and functional con-cerns (Perlmutter, 1969; Prahalad &Doz, 1987; Kogut, 1985; Bartlett &Ghoshal, 1989, and Hedlund, 1993).

This view is supported by Bartlett &Ghoshal (1992) who suggest that thereare three fundamental dynamics ofglobal operations (see Figure 3). One, isglobal scale efficiency and competitive-ness, and this is the responsibility of theglobal business manager. The globalbusiness manager’s role is to be a strat-egist, architect, and coordinator. Two, isnational level responsiveness and flexi-bility, and this is the responsibility ofthe country or regional manager. Thecountry or regional manager’s role isone of being a sensor, builder, and con-

Figure 3

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tributor. Three, is worldwide leveragingand learning capability, and this is theresponsibility of the worldwide func-tional manager. The worldwide func-tional manager’s role is that of scanner,cross-pollinator and champion. Thesethree dynamics correspond to the busi-ness, country, and functional concernsmentioned earlier, and are, according toBartlett & Ghoshal (1992), the triad onwhich global strategies can be built.The critical part is the meshing of theseforces which entails integrating differ-ent perspectives, view balancing, re-source leveraging and sharing, and ca-pabilities building (Bartlett & Ghoshal,1992). The higher the degree of integra-tion, the more global and effective thestrategy. Traditionally, there would be ahigh degree of coordination betweentwo of these three forces, resulting inless than optimal global strategies. Withmanagers developing a global mindset,we suggest that all three forces of strat-egizing globally can be meaningfullyintegrated resulting in true and effectiveglobal strategies. All three roles requirea global mindset, but there is also theneed to integrate the multiple pressuresand challenges of business, function,and region, and here the manager with aglobal mindset, irrespective of the levelor position within the company, plays acrucial role. In short, a global mindset isrequired not only at the business, re-gional, and functional levels, but also atthe crucial corporate requirement to in-tegrate all three forces. In addition,managers with a global mindset willneed to balance and integrate the forcesconsisting of scale economies, respon-siveness and flexibility, and resourceleveraging and capability building.

CONCLUSION AND DISCUSSION

Based on the dynamic changes takingplace, there is a need to have globalmanagers with a global perspective.This global perspective consists of amindset, knowledge, and skills. Aglobal mindset, in its simplest form willallow a manager from one part of theworld to be comfortable in another onaccount of knowledge and skills that arebased on understanding and awareness.A global mindset, in other words, willmake a manager more competent andeffective. A global manager must beable to lead and motivate diverse workteams, and this skill comes from know-ing and using knowledge of cultural dif-ferences. Global managers have tocoach teams as well as to lead. Globalmanagers must seek out and acquireknowledge. Not only must he or sheknow how to use high technology inmanagerial activities, but also to under-stand and assess the impact of technol-ogy on the global activities of the firm.

We suggest that globalization haspreceded, in many cases, the abilities ofmanagers to grasp with the new andcomplex realities. As we have stated,there are still many managerial mind-sets that are completely out of tune withthe requirements of today’s global busi-ness requirements. The challenge is toidentify which mindsets managers be-long to, and to understand how theirmindsets are inhibiting them from beingeffective. The next challenge is to cre-ate an appropriate environment to movemanagers from a relatively dysfunc-tional mindset to one that creates aglobal perspective.

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NOTES

1. A version of this paper was presented at theNIBS International Seminar, Rennes Interna-tional School of Business, France in March,1997.

2. We are grateful to one of our anonymous review-ers for pointing out why corporations like Toyotamay simultaneously pursue different mindsets.

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