Showing papers in "Journal of International Business Studies in 1983"

The cultural relativity of organizational practices and theories

Abstract: This paper summarizes the author's recently published findings about differences in people's work-related values among 50 countries. In view of these differences, ethnocen- tric management theories (those based on the value system of one particular country) have become untenable. This concept is illustrated for the fields of leadership, organization, and motivation. * A key issue for organization science is the influence of national cultures on INTRODUCTION management. Twenty or even 10 years ago, the existence of a relationship be- Management and tween management and national cultures was far from obvious to many, and it National Cultures may not be obvious to everyone even now. In the 1950s and 60s, the dominant be- lief, at least in Europe and the U.S., was that management was something univer- sal. There were principles of sound management, which existed regardless of na- tional environments. If national or local practice deviated from these principles, it was time to change local practice. In the future, the universality of sound manage- ment practices would lead to societies becoming more and more alike. This ap- plied even to the poor countries of the Third World, which would become rich as well and would be managed just like the rich countries. Also, the differences be- tween management in the First and Second World (capitalist and socialist) would disappear; in fact, under the surface they were thought to be a lot smaller than was officially recognized. This way of thinking, which dominated the 1950s and 60s, is known as the "convergence hypothesis." During the 1970s, the belief in the unavoidable convergence of management prac- tices waned. It was too obviously in conflict with the reality we saw around us. At the same time supranational organizations like the European Common Market, which were founded very much on the convergence belief, had to recognize the stubbornness of national differences. Even within existing nations, regional dif- ferences became more rather than less accentuated. The Welsh, the Flemish, the Basques, the Bangladeshi, the Quebecois defended their own identity, and this was difficult to reconcile with a management philosophy of convergence. It slowly became clear that national and even regional cultures do matter for management. The national and regional differences are not disappearing; they are here to stay. In fact, these differences may become one of the most crucial problems for man- agement-in particular for the management of multinational, multicultural orga- nizations, whether public or private.

Methodological and Theoretical Issues and Advancements in Cross-Cultural Research

Abstract: This paper summarizes the issues and concerns of critics of cross-cultural research, and discusses how they are being addressed by researchers. Given the state of the art and the complexity of this field of research, the author recommends more inductive research and the pursuit of appropriate, but not overambitious sampling designs, so as to increase our understanding of cultures and encourage the building of richer theory bases. Taking an optimistic view of the field, the author predicts useful contributions by researchers which will enrich the art and science of cross-cultural management.

A Typology of Management Studies Involving Culture

Abstract: As a methodological review, this paper delineates 6 approaches to researching cross-cultural management issues: parochial, ethnocentric, polycentric, comparative, geocentric, and synergistic. For each approach, assumptions are discussed concerning the similarity and difference across cultures and the extent to which management phenomena are or are not universal. The primary types of management questions which can be addressed using each approach are clarified. Main methodological issues which must be addressed are listed.

Exporting: Does Sales Volume Make a Difference?

Abstract: This research examines the effect that the size of a firm has on export activities, perceived problems in exporting, and attitudes toward exporting. The results indicate that broad generalizations concerning the size of firms and exporting appear to be inappropriate.

The Transfer of Organizational Culture Overseas: An Approach to Control in the Multinational Corporation

Abstract: Organizational control has traditionally been described within the framework of the ideal type of Weberian bureaucracy, in which rules and regulations specify desired behavior, and rewards are based on explicit performance measures. This paper describes an alternative organizational ideal type that relies on an organizational culture for control. In this type of system, behavior is specified by the organizational culture, and performance is maintained via mechanisms of social pressure. An example of this letter type of control is found in the Type Z organization, an American organizational form similar in many ways to the Japanese form. Particularly interesting is the way in which a Type Z organization manages overseas subsidiaries: by establishing the organizational culture in the subsidiary. The process by which this is accomplished and by which control is maintained are described in a comparative empirical study of the headquarters and subsidiary of a firm representative of each control type. The implications of this approach for management of the multinational firm and for the host country are also discussed.

Examining Performance of U.S. Multinationals in Foreign Markets

Abstract: In the U.S., a basic tenet of business philosophy is that profitability is related to market share. The generality of this finding in markets outside the U.S. is examined based on a sample of product businesses drawn from the PIMS (Profit Impact of Marketing Strategy) data base. All businesses belong to firms whose corporate headquarters are located in the U.S. The relation between 7 marketing mix variables and market share and ROI (return on investment) is compared. In general, the relationship between market share and ROI appears to hold in European and other foreign markets. The marketing mix variables associated with these measures of performance, however, as well as the strength of the relationship, vary by market area.

Foreign and Domestic Divestment and Investment Decisions: Like or Unlike?

Abstract: The managerial literature on foreign investment and divestment is much less developed than the economic literature on foreign direct investment theory. Nevertheless, surveyed with the purpose of better understanding foreign divestment decisions, the research to date reveals some noticeable differences between investment and divestment divisions—whether foreign or domestic—and even more substantial differences between foreign divestment and domestic divestment decisions. Additional research, however, is clearly in order.

Brazilian, Japanese, and American Business Negotiations

Abstract: The determinants of the outcomes of business negotiations in 3 cultures are investigated in a laboratory experiment. The outcomes of negotiations between Japanese businessmen result primarily from a situational constraint—the role of the negotiator (buyer or seller). Representational (problem-solving oriented) bargaining strategies, a measure of the process of the interaction, is the most important variable in American negotiations. In negotiations between Brazilian business people, deceptive bargaining strategies—also a process measure—is the key variable affecting outcomes.

Performance of Transnational Corporations in Less Developed Countries

Abstract: This study analyzes the determinants of the performance of a sample of 153 TNCs in 6 light manufacturing industries in the 5 ASEAN countries. Firm profitability increased as the firm’s market share, advertising, and R&D intensity increased and as the market shares of the 2 largest firms in the industry and tariffs increased. Profitability decreased as the market share of the third largest firm in the industry increased, as import penetration increased, as the growth in the firm's sales increased, and as the number of home countries of the TNCs in the industry increased.

The Utility of Annual Reports: An International Study

Abstract: This article reports on a major study which is part of ongoing international research into the use and usefulness of financial statements for investment decisions. The survey reported covered 4,000 individual investors, 900 institutional investors and 900 financial analysts, in 3 countries. It was found that the 3 groups in all 3 countries revealed a strong belief in the importance of financial statements for investment decisions whether “buy” or “hold/sell.” It was also found that the individual investor group was far less homogeneous than previous research has assumed, and that cultural or social differences between countries do exist in this field.

Cross-Cultural Management Research: Trend and Future Directions

Abstract: U The historical perspectives on cross-cultural studies outlined in the following HISTORICAL pages are based on Negandhi [1975] and England, Negandhi, and Wilpert [1979]. PERSPECTIVE The emerging field of cross-cultural studies on organizational functioning is largely a result of partial integration between the cross-cultural comparative management field and organization theory areas. Although some cross-cultural organization studies were conducted prior to the 1950s, the large-scale projects on industrialization of developing countries at 4 major universities (MIT, Chicago, California, and Princeton) during the 1950s provided a major impetus to the comparative management area. Scholars from various social disciplines-psychology, sociology, social and cultural anthropology, economics, and political sciences-contributed toward these efforts. The differing backgrounds of these scholars are reflected in their conceptualizations and methodologies as well as in their specific findings [Harbison and Myers 1959]. The conceptual and methodological approaches used by the comparative management theorists can be divided roughly into the following groups: the economic development orientation; the environmental approach; and the behavioral approach.

A Cross-Cultural Comparative Study of Managerial Job Attitudes

Abstract: Effective managerial performance is influenced by the types of rewards which managers seek in their work environment and by their perceptions of the degree to which their job expectations are being satisfied. This research provides empirical evidence on the nature of job-related values and outcomes in 4 countries: Canada, France, Japan, and the UK. The survey data reveal that the types of job outcomes sought by managers differ significantly from one culture to another. The results should be of practical value to companies seeking to develop more effective management motivational devices in the countries studied. Moreover, the approach and methodology may provide a useful model for further cross-cultural studies.

Analyzing Foreign Financial Statements: The Use and Misuse of International Ratio Analysis

Abstract: Financial ratios, which may be appropriate measures of financial risk and return, are often misused when applied to foreign companies. This is due partly to explainable differences in international accounting principles. A more serious problem, however, is that even when ratios are based on U.S. GAAP, they are misinterpreted because the U.S. investor does not understand a particular foreign environment that influences all financial ratios in that environment. Using Japan and Korea as country examples, this paper analyzes the problem of misuse of international ratio analysis with the hope that investors, security analysts, regulatory authorities, and international business researchers will become more aware of the pitfalls.

Some Methodological and Analytic Considerations in Cross-National Comparative Research

Abstract: This article demonstrates one methodological approach to aid in the complex process of making inferences about the meaning and usefulness of observed national differences. By using data from an international study of “The Meaning of Working,” 3 points are made: 1) it is important to use multiple methods of measurement for conceptual ideas or domains; 2) it is important to use intra-country reference group comparisons; and 3) it is important to use some form of relative position analysis in addition to score analysis.

The Instability of Governments and the Instability of Controls on Funds Transfers by Multinational Enterprises: Implications for Political Risk Analysis

Abstract: This article represents a departure from previous empirical political risk studies: it explicitly focuses on the association between specific governmental policy changes and other forms and political instability. A cross-national study of 115 countries finds positive but weak relationships between policy instability and other indicators of political instability. The findings indicate the need to reconsider common assumptions about political risks.

Japanese and American Management: Theory Z and Beyond

Abstract: This article analyzes studies comparing Japanese and American managers, workers, and societies in order to consider questions raised by William Ouchi's book, Theory Z: How American Business Can Meet the Japanese Challenge. The analysis results in 2 general observations: 1) Theory Z management is not likely to become the accepted norm in American companies to the extent that it has in Japan, and 2) the major conceptual or theoretical lesson we can learn from the Japanese is the potential values of developing a management system that is internally consistent, that fits societal norms and expectations and that obtains support from the major institutional actors in the world of work.

An Exploratory Study of Managerial Practices in the Arabian Gulf Region

Abstract: This study determined the management system [Likert and Likert 1976] operating in 10 organizations in the Arabian Gulf region and correlated the system with the resultant effectiveness of these organizations. Managers in the region operated in a Management System 3 mode, but at a lower participatory level than desired by managers and at a lower level than their American counterparts. Effectiveness was found to be related to the operative management system; organization climate was the most potent determinant of effectiveness.

The Product Life Cycle Theory: Empirical Evidence

Abstract: This paper presents 3 empirical tests of the product life cycle theory based on U.S. trade data and on a relatively new data series providing information about a larger number of products and at a lower level of aggregation than the data used previously. The results of the tests strongly support the hypothesis that industrial product groups behave in the manner predicted by the product life cycle theory on world markets. In the case of individual products, however, the results provide less support for the theory. The policy implication is that development strategies should rely on industrial sectors rather than on individual commodities.

Are Multinational Corporations Superior Investment Vehicles for Achieving International Diversification

Abstract: International portfolio diversification is advantageous to the investor from a risk reduction viewpoint. Investing in MNCs and direct investing in foreign firms are 2 methods of diversifying internationally. Two issues are examined in this paper: Are there barriers to direct international diversification by investors? Do MNCs enjoy certain unique economic and financial advantages? Positive responses to both of these questions indicate that MNCs are in fact superior investment vehicles for achieving international diversification.

The Education of a Modern International Manager

Abstract: This article is based upon a speech delivered by Mr. Jacques G. Maisonrouge, Senior Vice President, IBM Corporation, and Chairman of the Board, IBM World Trade Corporation, at the Annual Meeting of the Academy of International Business, Washington, DC, on 28 October 1982 when he became the first recipient of the International Business Leader of the Year award and was elected an Honorary Member of the Fellows of the Academy of International Business.

Explanatory Concepts of Managerial Strategic Behavior in State-Owned Enterprises: A Multinational Study

Abstract: Explanatory concepts of managerial strategic behavior in SOEs—based on the areas of government control, management orientation, and market environment—are explained. Three explanatory variables are proposed based on these concepts. The paper discusses the behavioral explanations which are associated with each variable and reports the results of an exploratory survey of 50 managers of state-owned enterprises in 14 countries. The explanatory contributions are analyzed and compared based on the empirical findings.

The Product Life Cycle and the Export Position of the United States

Abstract: The present study analyzed trade in 4-digit level manufacturing categories over time for 4 nations, including the United States, to ascertain the relevance of the product life cycle theory of such trade. The level of technological input was controlled for. The result indicate that the theory has at least some explanatory relevance for 3 of the 4 countries, including the United States.

The Management of the International Executive Compensation and Benefits Process

Abstract: Scant attention has been given to the organizational locations of the various tasks that comprise the management process responsible for the international compensation and benefits program of particular international firms. The organizational locations of 3 managerial tasks associated with these compensation and benefits programs are examined in this article: development of policies and procedures; financing; and supervision and control. The article examines the management of U.S. expatriate and third-country manager programs, based on the reported practices of U.S.-based firms representing a variety of industries. Management and theoretical implications of the findings are discussed.

Technology Strategy and Industrial Relations: Case Studies of Japanese Multinationals in the United States

Abstract: Eight case studies of U.S. manufacturing subsidiaries of Japanese multinationals are analyzed in terms of variations in competitive strategies and industrial relations practices. Based on data collected in 1980 during on-site visits, each firm is reviewed in light of the technology contributions coming from the Japanese parent and is categorized as having product-, process-, and/or management-centered technology strategies. The industrial relations practices are also grouped according to similarities observed. These groupings are then compared and contrasted. The findings are consistent with hypotheses that firms with management-centered strategies are more likely not to be unionized and to oppose unionization, to prefer a less stratified work force in terms of number of job classifications and specifically identified job assignments, to maintain flexibility in work-force management, to conduct considerable cross-training and to strive to avoid layoffs of production personnel. Conversely, the groupings indicated little relationship, if any, between technology strategy and compensation levels. The findings are interpreted in light of product-life-cycle and risk-aversion models of firm behavior. The question of whether technology strategy is a reasonably good predictor of industrial relations practices is also addressed.

International Technology Transfer Patterns in a Traditional Industry

Abstract: This paper examines the factors influencing the speed of transfer of 40 textile machinery innovations between the United States and leading foreign competitors. Statistical analysis is based on detailed data identifying the first U.S. and foreign producers to introduce innovations, and indicating the timing of their introductions. Empirical relationships suggest that the speed of international transfer has been greater as time has passed and as commercial transactions between industrialized nations have increased. The speed has been slower when the innovating domestic firm was technologically non-dominant and the imitating foreign firm was technologically dominant.

Suggestions for Research Themes and Publications

Abstract: With the volume of world trade over $2 trillion and the sales of foreign affiliates of U.S. companies over $500 billion, international marketing is a very large and complex activity. Yet, existing research in international marketing does not do justice to the size and complexity of the subject. In this note, 3 major areas of research in international marketing are sketched out: export marketing; international marketing by multinationals; and other topics. The outline will be suggestive rather than comprehensive. It does, however, indicate many areas where research is needed to expand our understanding of international marketing.

Will the “Real” Trade Balance Please Stand Up?

Abstract: m Probably most of the readers of this journal are aware that the United States INTRODUCTION: has been running a deficit in its merchandise trade account for some years. Ever When Is a Deficit since 1976, in fact, imports of merchandise have exceeded exports in every quarReally a Surplus? ter. In as much as the trade balance is a component of GNP, the deficit has been reducing the level of GNP by around $30 billion a year. Most of us are aware, also, that it is the high price of oil that has caused the deficit. We have been transferring some of our GNP to OPEC.

Political Sources of Risk in the International Money Markets: Conceptual, Methodological, and Interpretive Refinements

Abstract: Recent pioneering studies of “political risk” in international money markets are likely to prompt further interest and empirical analysis. This article recommends that future work be attentive to certain fundamental conceptual, methodological, and substantive issues. In particular, it suggests: 1. that the pertinent risks need to be defined and measured more precisely; 2. that analytically useful variables derivable from models of politics should be included in attempts to develop explanatory/predictive models of variations in risk; and 3. that the analysis of political sources of risk has significant implications for an understanding of market efficiency.