IBUS330 midterm chapter 1-7

Need for cultural knowledge

1. Avoiding ethnocentricity · Ethnocentricity is the belief that one's own ethnic group or culture is superior to that of others. It causes people to view other culture in terms of their own and overlook beneficial aspects of other cultures. · Ethnocentricity can undermine business can undermine business projects when employees are insensitive to cultural nuances. 2. Developing cultural literacy · Managers working directly in international business should develop cultural literacy—detailed knowledge about a culture that enables a person to function effectively within it. · Cultural literacy brings a company closer to customer needs and improves competitiveness.

Kluckhohn-Strodtbeck Framework

1. Do people believe that their environment controls them, that they control the environment, or that they are part of nature? 2. Do people focus on past events, on the present, or on the future implications of their actions? 3. Are people easily controlled and not to be trusted, or can they be trusted to act freely and responsibly? 4. Do people desire accomplishments in life, carefree lives, or spiritual and contemplative lives? 5. Do people believe that individuals or groups are responsible for each person's welfare? 6. Do people prefer to conduct most activities in private or in public? a. Dimensions of Japanese Culture: i. Japanese believe in a delicate balance between people and environment that must be maintained. ii. Japanese culture emphasizes the future. iii. Japanese culture treats people as quite trustworthy. iv. Japanese are accomplishment oriented for employers and work units. v. Japanese culture emphasizes individual responsibility to the group and group responsibility to the individual. vi. The culture of Japan tends to be public.

Six Key Dimensions of International Business

1] Globalization of markets 2] International trade 3] International investment 4] Risks 5] Participants: Firms, distribution channel intermediaries, facilitators, and governments. 6] International entry strategies, including exporting and direct investment

Born global firms

A born global firm is a company that adopts a global perspective and engages in international business from or near its inception. · Some small Internet companies reach customers solely through the Web (e.g., Vellus Products, Weekend in Italy).

Multinational Corporations

A multinational corporation (MNC) has direct investments abroad in multiple countries. They generate significant jobs, investment, and tax revenue for the regions and nations they enter. Profiling the largest multinationals · Some MNCs have more employees than small nations have citizens (e.g., Walmart has 2.2 million employees globally). · If Walmart were a country, it would rank third behind Norway in terms of economic power. Entrepreneurs and Small Businesses · They are increasingly active in international business by exporting earlier and growing faster with help from technology.

Subculture

A subculture is a group of people who share a unique way of life within a larger, dominant culture. It can differ from the dominant culture in language, race, lifestyle, values, attitudes, and so on. Companies must be mindful of subcultures when formulating business strategies. Decisions regarding product design, packaging, and advertising must consider distinct cultures. Subcultures also can extend beyond national borders.

Aesthetics

Aesthetics is what a culture considers to be in "good taste" in the arts, the imagery evoked by certain expressions, and the symbolism of colors. Appropriate colors for advertising, product packaging, and even work uniforms can enhance success. Blunders can result from selecting inappropriate colors and symbols for advertising, product packaging, and architecture. Music is deeply cultural and must be considered in promotions. It is also an important consideration in marketing over the Internet

Attitude

Attitudes are positive or negative evaluations, feelings, and tendencies that individuals harbor toward objects or concepts. Learned from role models and formed within a cultural context. More flexible than values.

Body Language

Body Language: Communicated through unspoken cues, including hand gestures, facial expressions, physical greetings, eye contact, and the manipulation of personal space. Communicates information and feelings and differs among cultures. Most is subtle and takes time to interpret. Proximity is an element of body language; standing too close may invade personal space and appear aggressive

How Employees and the Organization Treat Other Economic Agents

Bribery, pricing, financial disclosure, and advertising practices are all areas where practices vary from one culture to another. In all these instances, managers may be confronted with accusations of unethical behavior.

Religion

Christianity founded in Palestine 2,000 years ago among Jews who believed that Jesus of Nazareth was the messiah. With 2 billion followers, it is the world's single largest religion. More than 300 denominations but most are Roman Catholic, Protestant, or Eastern Orthodox. Roman Catholics are to refrain from placing materialism above God and people. Protestants believe that salvation comes from faith in God and that hard work gives glory to God. Christian organizations sometimes get involved in social causes that affect business policy. Islam founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—the holy city of Islam. World's second largest religion with 1.3 billion adherents. Word Islam means "submission to Allah" and Muslim means "one who submits to Allah."Religion strongly affects the goods and services acceptable to Muslim consumers. Hinduism founded 4,000 years ago in present-day India, where more than 90 percent of its nearly 900 million adherents live. Some say it is a way of life rather than a religion. Caste system is integral to the Hindu faith. Believe in reincarnation—rebirth of the human soul at the time of death. Do not eat or willfully harm living creatures as they may be reincarnated human souls. Cows considered sacred animals so eating beef is not allowed (e.g., McDonald's replaces beef with lamb). Buddhism founded 2,600 years ago in India by a Hindu prince named Siddhartha Gautama. About 380 million followers, mostly in Asia: China, Tibet, Korea, Japan, Vietnam, and Thailand. Promotes a life centered on spiritual rather than worldly matters. Buddhists seek nirvana (escape from reincarnation) through charity, modesty, compassion for others, restraint from violence, and general self-control. Confucianism founded 2,500 years ago by exiled politician and philosopher Confucius. China is home to most of the 225 million followers. Confucian thought ingrained in the cultures of Japan, South Korea, and nations with large numbers of ethnic Chinese, including Singapore. South Korean business practice reflects Confucian thought in its rigid organizational structure and reverence for authority (e.g., Korean-style management in overseas subsidiaries). For centuries, people despised merchants because earning money violated Confucian beliefs. Many Chinese moved to Indonesia, Malaysia, Singapore, and Thailand to do business. Judaism founded more than 3,000 years ago and 18 million followers. Was the first religion to teach belief in one God. Orthodox ("fully observant") Jews make up 12 percent of Israel and constitute an increasingly important economic segment. Important observances are Rosh Hashanah (the Jewish New Year), Yom Kippur (the Day of Atonement), Passover (the Exodus from Egypt), and Hanukkah (a victory over the Syrians). Employers must be aware of Jewish holidays. Because Sabbath lasts from sundown on Friday to sundown on Saturday, work schedules might need adjustment. Marketers must take into account foods banned among observant Jews (e.g., pork and shellfish prohibited, meat stored and served separately from milk) and "kosher" foods. Shinto means "way of the gods" and arose as the native religion of the Japanese. Teaches sincere and ethical behavior, loyalty and respect toward others, and enjoyment of life. Shinto claims about 4 million strict adherents in Japan.Shinto beliefs are reflected in the workplace through lifetime employment (although this is waning today) and the traditional trust extended between firms and customers. Japanese competitiveness in world markets has benefited from loyal workforces, low employee turnover, and good labor-management cooperation.

Guidelines and Codes of Ethics

Codes of ethics are written guidelines that detail how employees are to treat suppliers, customers, competitors, and other constituents. A multinational must make a decision as to whether to establish one overarching code for all of its units around the globe, or whether it should tailor each code to its local context.

Why you should study international business

Competitive advantage for you and your firm! international business is both a cause and a result of increasing national prosperity.

How Employees Treat the Organization

Conflicts of interest. A conflict of interest occurs when a decision potentially benefits the individual to the possible detriment of the organizations. For example, in some cultures, giving and receiving gifts from suppliers is acceptable, while in others it is not. · Secrecy and confidentiality. In many cultures, there are laws restricting the disclosure of sensitive information by a firm's employee to competitors. In China, noncompetition clauses in contracts (where an employee is prohibited for a certain time from "working for the competition") are difficult to enforce. · Honesty is at the heart of many of these ethical issues. For example, is it okay to use the company telephone for personal calls? The answer to that question may vary from one culture to another.

Intensified competition

Continued globalization is taking companies into previously isolated markets and increasing competitive pressures worldwide. · As it gets easier and less costly to manage widely dispersed marketing and production activities, new opportunities and threats emerge. Wages and Jobs · Low wages are not all that draws investment by multinationals. A location must offer low-cost, adequately skilled workers in an environment with acceptable levels of social, political, and economic stability. · Labor mobility is increasing with globalization—depressing wages in some job categories but developing new job opportunities in others.

CORPORATE SOCIAL RESPONSIBILITY IN CROSS-CULTURAL AND INTERNATIONAL CONTEXTS

Corporate social responsibility is the set of obligations an organization undertakes to protect and enhance the society in which it functions. Ethics relates to individual employees. Social responsibility relates to the organization itself.

Globalization and culture

Critics say globalization homogenizes our world and lets MNCs destroy cultural diversity and wipe out small local businesses. · Yet globalization allows nations to: (1) specialize and trade for goods they do not produce, (2) import other peoples' cultural goods, and (3) still protect deeper moral and cultural norms. Globalization and National Sovereignty Globalization: menace to democracy? · Supranational institutions with international goals and appointed officials undermine national sovereignty and democracy. · Elected officials undercut democracy and local and regional authority with "international" agreements on citizens' behalf. Globalization: guardian of democracy? · Globalization has helped spread democracy worldwide (e.g., more democratic nations than ever). · Some losses of sovereignty have had positive social impacts, as in human rights, workers' rights, and discrimination.

important trends that have characterized globalization.

Cross-border transactions- unprecedented growth rates - from $100 billion per year in1960 to current numbers of $14 trillion annually ◘ Trade = Substantial international flows of capital, technology, and knowledge ◘ Development of highly sophisticated global financial systems to facilitate the cross-border flows of products, money, technology, and knowledge. ◘ Greater collaboration among nations through multilateral regulatory agencies such as the World Trade Organization and the International Monetary Fund.

When Companies Change Culture:

Cultural Imperialism is the replacement of one culture's traditions, folk heroes, and artifacts with substitutes from another.

Cultural Change

Cultural trait is anything that represents a culture's way of life including gestures, material objects, traditions, and concept

WHAT IS CULTURE?

Culture is the set of values, beliefs, rules, and institutions held by a specific group of people. Main components include: aesthetics, values and attitudes, manners and customs, social structure, religion, personal communication, education, and physical and material environments.

Global Sustainability, Three Markets, Three Strategies

Developed markets are solidly middle class and people can consume almost any product desired. A firm may use the latest technologies to develop sustainable products in a sustainable manner. · Emerging markets are racing to catch up to rich nations and are overloading infrastructures. Resource constraints can force companies to develop sustainable production methods. · Traditional markets have mostly rural populations for whom poverty and corruption prevail. Here, sustainability means teaching safe farming practices, environmental stewardship, and disease awareness.

DIFFICULTIES OF MANAGING CSR ACROSS BORDERS

Different countries have different expectations as far as corporate behavior. What is socially acceptable behavior in one country may not be acceptable in another. Furthermore, corporations play very different roles in the political process of individual countries. Dutch CSR experts Tulder and Van der Zwart suggest that the interplay among the state, the market, and civil society lead to three regional behaviors toward CSR. · The Anglo-Saxon approach views the state, market, and civil society as separate, competitive, and antagonistic. · The Asian approach believes in a close collaboration between the state and the market, with a lesser role for civil society. · The Continental European approach sees all three actors as relatively equal collaborators.

Globalization of Production:

Dispersal of production activities to locations that help a company to minimize costs or maximize quality · Access lower-cost workers to cut overall production costs · Access technical expertise · Access production inputs unavailable or more costly at home

Against Globalization

Eliminates jobs in developed nations as good-paying manufacturing jobs go abroad to developing countries. Low-priced goods are not worth lost jobs. · Lowers wages in developed nations by causing worker dislocation that gradually lowers wages. New jobs that replace lost manufacturing jobs often pay less. · Exploits workers in developing nations who work cheaply servicing western consumers.

Ethics

Ethics is defined as "an individual's personal beliefs about whether a decision, behavior, or action is right or wrong." Ethical behavior usually refers to behavior that conforms to generally accepted social norms. Unethical behavior describes behavior that does not conform to generally accepted social norms. · These definitions suggest the following generalizations: · Individuals have their own personal belief systems about what constitutes ethical and unethical behavior. · Common cultural contexts usually lead to similar views on ethical and unethical behavior. · Individuals are able to rationalize behavior based on circumstances. · Individuals may deviate from their own belief systems based on different circumstances. · Ethical values are strongly affected by national cultures and customs. Values are the things a person feels to be important. · Members of one culture may view a behavior as unethical, while members of another may view that same behavior as perfectly reasonable.

MANAGING ETHICAL BEHAVIOR ACROSS BORDERS

Even though ethics reside in individuals, many companies try to manage the ethical behavior of their employees by clearly specifying what the company considers to be ethical or unethical. This clear specification often takes the form of ethical guidelines or codes, ethics training, organizational practices, and/or corporate culture.

Education Level:

Excellent basic education attracts high-wage industries that invest in training and increase productivity. Skilled, well-educated workforce attracts high-paying jobs; a poorly educated one attracts low-paying jobs. Newly industrialized economies in Asia owe much of their economic development to solid education system

International Business

Expansion of international business activities. Spreading value creation activities across international boundaries.

Ethics training

Given that it is probably impossible to foresee all potential ethical dilemmas and cover them in a code, some multinational corporations address ethical issues proactively, by offering employees training on how to cope with ethical dilemmas. For expatriates in particular, it is important that they receive some training in the business practices and values of the society where they are stationed.

Inequality within Nations

Globalization critics claim that income disparity in rich nations is increasing as firms move factory jobs to poor nations. · Evidence is mixed, but poor people in developing nations seem to benefit from an open economy.

The Global Business Environment

Globalization is transforming our societies and commercial activities. It also increases competition everywhere, forcing companies to be vigilant. · Each national business environment consists of unique cultural, political, legal, and economic characteristics. Companies must be attentive to nuances and adapt products and practices as needed. · The international business environment influences how business is conducted so firms must closely monitor events. · Context of international business management is defined by the characteristics of the national and international business environments. Managers must abide by the prevailing rules in each market in which it operates.

Inequality within Nation

Globalization opponents say it is widening the gap in average incomes between rich and poor nations. · Looking closely at the evidence, we see that open nations are benefiting from trade whereas closed ones are not

For globalization

Globalization's Impact on Labor, the Environment, and Markets Labor standards · Trade unions claim that firms continually move to nations with low labor standards, which reduces labor's bargaining power and forces overall labor standards lower. · But studies of developing nations' export processing zones instead find evidence that contradicts such claims. Environmental protection · Globalization opponents say it creates a "race to the bottom" in environmental conditions and regulations: countries compete in reducing environmental protection laws. · But evidence shows pollution-intensive U.S. firms tend to invest in countries with stricter environmental standards. Also, closed economies historically are the worst polluters. Future markets · Protesters claim international firms pay locals the lowest possible wage and export their goods back to the home country. · Today, firms want to build local markets in developing nations, not simply exploit workers and foment local animosity.

The internet

Helps firms sharpen forecasting, lower inventories, improve communication with suppliers, and communicate quickly and cheaply with distant managers · Reduces the cost of reaching an international customer base, which is essential for the competitiveness of small firms

How an Organization Treats Its Employees

Hiring and firing. In some countries, ethical and legal guidelines suggest that hiring and firing decisions should be based solely on an individual's ability to perform the job. In other countries, it is perfectly legitimate to give preference to some individuals based on gender, ethnicity, age, or other factors. · Wages and working conditions. Similarly, what constitutes appropriate working conditions and a fair wage differs across countries. Protection of employee privacy rights, for example, may vary widely.

RELIGION

Human values often derive from religious beliefs. Different religions take different views of work, savings, and material goods. Beliefs influence competitiveness, economic development, and business strategies

Individualism versus Collectivism:

Individualism versus Collectivism: Identifies the extent to which a culture emphasizes the individual versus the group. Individualist cultures value hard work, entrepreneurial risk taking, and freedom to focus on personal goals.Collectivist cultures feel a strong association to groups, including family and work units. The goal is to maintain group harmony and work toward collective rather than personal goals.

Power distance

Identifies the degree to which a culture accepts social inequality among its people. Large power distance is characterized by inequality between superiors and subordinates. Organizations are hierarchical, with power derived from prestige, force, and inheritance. Small power distance means equality, with prestige and rewards equally shared between superiors and subordinates. Power derives from hard work and is considered more legitimate. Refer to Figure 2.2. Tight grouping of nations within the five clusters (plus Costa Rica): African, Asian, Central and South American, and Middle Eastern nations in Quadrant 1 (cultures with large power distance and lower individualism). Quadrants 2 and 3 include Australia and the nations of North America and Western Europe (cultures high in individualism and smaller power distance scores).

Uncertainty Avoidance:

Identifies the extent to which a culture avoids uncertainty and ambiguity. Cultures with large uncertainty avoidance value security, place faith in strong systems of rules and procedures, have lower employee turnover, formal rules for employee behavior, and more difficulty implementing change. Low uncertainty avoidance cultures are more open to change and new ideas. Refer to Figure 2.3. Quadrant 4 contains nations characterized by small uncertainty avoidance and small power distance, including Australia, Canada, Jamaica, the United States, and many Western European nations. Quadrant 2 contains many Asian, Central American, South American, and Middle Eastern nations—nations having large power distance and large uncertainty avoidance indexes.

Masculinity versus Femininity:

Identifies the extent to which a culture emphasizes masculinity versus femininity. Cultures scoring high are characterized by personal assertiveness, accumulation of wealth, and entrepreneurial drive. Cultures scoring low have relaxed lifestyles, with more of a concern for others than material gain.

Informal Dimensions of Social Responsibility

In addition to the formal dimensions of managing corporate social responsibility listed above, leadership, organizational cultures, and how an organization responds to whistle- blowers also shape people's perceptions of the organization's stance on social responsibility.

Material Culture

Includes all technology a culture uses to manufacture goods and provide services, and can measure a culture's technological advancement. A firm enters a market under one of two conditions: (1) demand for its products has developed, or (2) the market is capable of supporting its production operations. Changes in material culture can change other aspects of culture. Many nations display uneven levels of material culture across geography, markets, and industries.

Long time orientation

Indicates a society's time perspective and an attitude of overcoming obstacles with time. It attempts to capture the differences between Eastern and Western cultures. Cultures scoring high (strong long-term orientation) value respect for tradition, thrift, perseverance, and a sense of personal shame. Cultures scoring low are characterized by individual stability and reputation, fulfilling social obligations, and reciprocation of greetings and gifts.

Globalization

Integration, interdependency & interconnectedness of internationalization (the 4 I's) ... for example -- Increasing exports vs. Sourcing value-chain activities strategically around the globe to leverage factor efficiencies. Globalization of markets (or the globalization of economies) refers to ongoing economic integration and growing interdependence of countries worldwide. Facebook is an example. Integration/interdependence/interconnectedness are central to globalization, which has resulted in the widespread diffusion of products, technology, and knowledge worldwide.

two types of international investment:

International portfolio investment (typically short-term) is the passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns. ■ Foreign direct investment (FDI) (typically long-term) is a foreign-market entry strategy that gives investors partial or full ownership of a productive enterprise. The firm establishes a physical presence abroad through the acquisition of productive assets such as capital, technology, labor, land, plant, and equipment. Asset ownership and long time frame is the ultimate commitment-level of internationalization, and thus this text focuses primarily on FDI (most common mode of entry strategy) as opposed to International Portfolio investment. Know the Motivations for firm FDI: Know how these fit into the value chain.

Company intranets and extranets

Intranets are private networks of company Web sites and other information sources that allow employee access to information from distant locations. · Extranets are computer networks that give distributors and suppliers access to a company's database so they can place orders or restock inventories electronically and automatically.

Perceptions of Time:

Latin American and Mediterranean cultures are casual about time; people in Japan and the United States arrive promptly for meeting and keep tight schedules. Americans strive toward workplace efficiency and may leave work early if their work is done because they value individual results. Japanese look busy even when business is slow to demonstrate dedication—an attitude grounded in cohesion, loyalty and harmony

Managing Compliance

Legal Compliance is the extent to which the organization conforms to regional, national, and international laws. · Ethical Compliance is the extent to which the members of the organization follow basic ethical (and legal) standards of behavior. · Philanthropic Giving is the awarding of funds or gifts to charities or other social programs.

Spoken and Written Language:

Linguistically different segments of a population are often culturally, socially, and politically distinct. Companies have made language blunders in their international business dealings. A lingua franca is a third or "link" language that is understood by two parties who speak different languages. Some languages are dying out, whereas some languages are growing, including Mandarin, Spanish, and English.

Advancements in transportation technologies

Make global shipping more efficient and dependable (e.g., GPS)

exporting

Manufacturing a product or service in one country and selling it to another. (Outbound activity) - entry strategy involving the sale of products/services to customers located abroad.

KEY PLAYERS IN INTERNATIONAL BUSINESS

Multinational Corporations、born global firm

National Culture

Nation-states support and promote the concept of a national culture by building museums and monuments to preserve the legacies of important events and people. Nation-states intervene to help preserve their national cultures. Companies get involved in supporting culture, in part, for the public relations benefit.

The natural environment

Not long ago, many organizations indiscriminately dumped sewage, waste products from production, and trash into streams and rivers, into the air, and onto vacant land. Today legal standards and social expectations have changed. Still, abuses continue and the socially responsible firm continues to seek ways to protect the natural environment.

Family

Nuclear family consists of immediate relatives, including parents, brothers, and sisters. Prevails in Australia, Canada, United States, and in Europe. · Extended family includes grandparents, aunts and uncles, cousins, and relatives through marriage. More important in Asia, Middle East, North Africa, and Latin America.

Global inequality

Opponents of globalization say it is widening income inequality among all people of the world. · Studies tend to agree that global inequality has fallen in recent decades, though they disagree on the extent of the decline

Organizational Practices and the Corporate Culture

Organizational practices and corporate culture contribute to establishing the ethical climate of the firm. If top leaders in a firm behave in an ethical manner and violations of ethical standards are promptly and appropriately addressed, the rest of the organization quickly understands the expectations for their own behavior. · In particular countries, bribery is practically a way of life. Organizations need to be very clear about their practices in such environments if they wish their employees to adhere to company standards instead of local standards.

Organizational Stakeholders

Organizational stakeholders are those people and organizations that are directly affected by the practices of an organization and that have a stake in its performance. Primary stakeholder groups include customers, employees, and investors. Organizations that are socially responsible try to treat all the groups with fairness and honesty.

AREAS OF SOCIAL RESPONSIBILITY

Organizations may exercise social responsibility toward their stakeholders, toward the natural environment, and toward general social welfare. Some organizations acknowledge their responsibilities in all three areas and strive diligently to meet each of them, while others emphasize only one or two areas of social responsibility. And a few acknowledge no social responsibility at all.

Evaluating Social Responsibility

Organizations that are serious about social responsibility track their efforts to ensure they are producing appropriate results. Many organizations choose to conduct formal evaluations of the effectiveness of their social responsibility efforts through routine collection of information in the form of a corporate social audit. This audit, usually undertaken by top-level managers, evaluates the firm's social performance and makes suggestions for improvement.

Globalization of Markets

Reduces marketing costs by standardizing activities · Creates market opportunities abroad if home is small or saturated · Levels uneven income streams for global seasonal products · Yet companies must not overlook local buyers' needs · Need for global sustainability—development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The Policy Agenda

Rich nations could open their markets, slash agricultural subsidies, and increase development aid. Poor nations could improve their investment climates and improve social protection for the poor. · Rich nations could offer workers their wage insurance, subsidized health insurance if out of work, and improve education. Rich nations could help enforce labor standards, help clarify environmental agreements, and research the environmental implications of trade agreements.

Social Mobility

Social mobility is the ease with which individuals can move up or down a culture's "social ladder." · Caste system: people are born into a social ranking, with no opportunity for social mobility. · Class system: personal ability and actions decide status and mobility. Highly class-conscious cultures can offer less mobility but experience more class conflict.

Social status

Social stratification is the process of ranking people into social layers according to family heritage, income, and occupation. · Top layer: royalty, government officials, and business leaders. Middle layer: scientists, medical doctors, and others with a university education. Bottom layer: manual and clerical workers with vocational training or secondary-school educations. · Rankings can and do change over time.

SOCIAL STRUCTURE

Social structure embodies a culture's fundamental organization, including groups and institutions, social positions and relationships, and resource distribution.

General social welfare

Some argue that, in addition to treating their stakeholders and the environment responsibly, business organizations should also promote the general welfare of society. This can be done through philanthropy, taking a role in public health and education, and attempts to correct social inequities (such as global poverty). Much remains to be done in this area.

View of work

Some cultures have a strong work ethic, others stress a balanced pace in work and leisure. Many European nations are trying to foster an entrepreneurial spirit to achieve the job growth realized in the United States.

MANAGING SOCIAL RESPONSIBILITY ACROSS BORDERS

Some people advocate a greater social role for organizations, while others argue that the role is already too large. Likewise, firms adopt a wide range of positions on social responsibility. Most of these positions can be incorporated into four different "stances." See also, People, Planet and Profits.

Technological Innovation E-mail and videoconferencing

Speed information flows and ease the tasks of coordination and control, which are complicated by operating across borders. · Driving growth in videoconferencing are lower-cost bandwidth and equipment, and decreased travel for cost or safety reasons.

Brain Drain

The "Brain Drain" Phenomenon: Brain drain: departure of highly educated people from one profession, geographic region, or nation to another. Reverse brain drain: professionals return to their homelands

REGULATING INTERNATIONAL ETHICS AND SOCIAL RESPONSIBILITY

The Foreign Corrupt Practices Act, passed by the U.S. Congress in 1977, prohibits U.S. firms from paying or offering to pay bribes to any foreign government officials so that they may influence the officials' actions or policies in order to gain or retain business. However, the FCPA does not disallow routine payments (however large) to government officials in order to expedite normal commercial transactions. · The Alien Tort Claims Act was passed by the United States in 1789. Under some recent interpretations of the law, U.S. multinationals may conceivably be held responsible for human rights abuses by foreign governments in the companies benefited from those abuses. · The Bribery Act was passed in Britain in 2010. The Act applies to corrupt activities performed anywhere in the world by firms with a business presence in the United Kingdom. · The Anti-Bribery Convention of the Organization for Economic Cooperation and Development was developed in and ratified by Canada in 2000. A total of 33 other countries have ratified it since then. Its centerpiece mandates jail time for those convicted of paying bribes.

Hofstede Framework

The Hofstede Framework grew from a study of more than 110,000 people working in IBM subsidiaries by Dutch psychologist Geert Hofstede. He developed five dimensions for examining cultures

The International Labor Organization (ILO)

The International Labor Organization (ILO) has become the major watchdog for monitoring working conditions in factories in developing countries. ILO inspections of factories in developing countries helps multinational corporations looking for responsible business partners in developing countries and helps certify that overseas operations of

Measuring Globalization

The KOF Swiss Economic Institute's Globalization Index ranks nations on their economic, social, and political engagement. · Richest nations are the most global, with many in Europe. The United States ranked 32nd. · The least global nations are found in Africa, East Asia, South Asia, Latin America, and the Middle East. Low technological connectivity slows global integration.

The business custom of gift giving

The business custom of gift giving- Although giving token gifts to business and government associates is customary, the proper type of gift varies. Cultures differ in their legal and ethical rules regarding bribery. The U.S Foreign Corrupt Practices Act prohibits companies from giving large gifts to win business favors, applies to U.S firms operating at home and abroad

BOTTOM LINE FOR BUSINESS Harnessing Globalization's Benefits

The most global nations tend to have the greatest equality, robust environmental protection, inclusive political systems, lowest levels of corruption, healthiest lifestyles, and be where women have achieved the most social, educational, and economic progress. · The debate has opened a dialogue on how globalization can be harnessed to make its benefits exceed its costs.

Proactive Stance.

These are firms that truly take to heart the arguments in favor of corporate social responsibility. They view themselves as citizens in a society and proactively seek opportunities to contribute. They go beyond accommodative firms and take the initiative in performing socially responsibly.

Obstructionist Stance.

These are organizations that do as little as possible in the area of social responsibility and would try to hide or cover up any behavior that might be criticized by outsiders.

Defensive Stance.

These firms are one step removed from the obstructionists. They see their responsibility as being to play by the rules - that is, to obey the law but nothing more. For example, such a firm would install pollution control devices on their equipment if required by law, but only to the extent required by law.

Accommodative Stance.

These firms not only meet legal and ethical requirements but also will go beyond them in selected instances. They might match employee contributions to charity or donate to worthy causes (once they are persuaded the causes are worthy). They don't necessarily go out looking for ways to do good, but might respond positively when asked to go that extra step.

Values

Values are ideas, beliefs and customs to which people are emotionally attached. They affect work ethic and desire for material possession. Some culture value leisure others hard work.

What is HRM?

What is HRM? Human resource management refers to the activities that a company, whether solely domestic or thoroughly global, takes to staff its organization. Managing a company's human resources is a function of implementing its strategies. HRM and the Global Company. Factors that cause international human resource management to be more complex than the domestic function include environmental differences and organizational challenges.

Organization Leadership and Culture.

When top management at firms like Patagonia for years provide a consistent message to employees about the importance of responsible behavior toward stakeholders, employees can be expected to act, almost instinctively, in socially responsible ways.

whistle blowing

Whistle-Blowing is the disclosure by an employee of illegal or unethical conduct on the part of others within the organization. How an organization responds to whistle-blowing (whether it accepts the information and seriously investigates it or whether it considers it a betrayal to the organization) shapes the internal attitudes toward ethics and social responsibility

FORCES DRIVING GLOBALIZATION

World Trade Organization (WTO) is the international organization that enforces the rules of international trade. · WTO goals: (1) to help the free flow of trade, (2) help negotiate the further opening of markets, and (3) settle trade disputes. · WTO agreements are contracts committing members to fair and open trade policies. WTO dispute settlement system is the spine of the global trading system. Regional Trade Agreements · Smaller groups of nations also are integrating their economies (e.g., NAFTA, European Union). Trade and National Output · Effect of the WTO and regional trade pacts is greater global trade and cross-border investing (Map 1.1). · Trade growth has been faster than world output. · Gross Domestic Product (GDP) is the value of all goods and services produced by a domestic economy over a one-year period. Gross national product (GNP) adds income from international activities.

Topography

all physical features that characterize the surface of a geographic region. Cultures isolated by impassable mountains or large bodies of water are less exposed to the cultural traits of others and change slowly. Topography impacts product needs. Topography impacts personal communication (e.g., mountains and the Gobi Desert consume two-thirds of China). Climate affects where people settle and directs systems of distribution (e.g., Australian desert, jungles, and coastal areas). Climate plays a large role in lifestyle, clothing, and work habits, such as organizing production schedules for idled machines.

Imports

are goods and services purchased abroad and brought into a country.

Export

are goods and services sold abroad and sent out of a country.

importing (global sourcing)

buying products/services from abroad and bringing them back to the home country.

Foreign Direct Investment

capital, technology, labor, land, plant and equipment

Physical environment in culture

ese heavily influence a culture's development and pace of change.

portfolio investment

financial assets

Cultural diffusion

is the process whereby cultural traits spread from one culture to another. Globalization and technology are increasing the pace of cultural diffusion and change. Culture can force companies to adjust business policies and practices, such as using situational management. Rapid cultural diffusion and increased human interaction across borders cause cultures to converge. Convergence is taking place in some market segments for some products.

E-business (e-commerce)

is the use of computer networks to purchase, sell, or exchange products; service customers; and collaborate with partners.

Internationalization

refers to the tendency of companies to systematically increase the international dimension of their business activities.

THE KEYS TO GLOBAL SUCCESS

· Communicate effectively · Know the customer · Emphasize global awareness · Market effectively · Monitor the global environment

Gender

· Gender refers to socially learned traits associated with, and expected of, men or women. Sociologists regard gender as a category—people who share some status. · Countries vary regarding gender equality at work

who participates in international business

· The Multinational Enterprise (MNE) · Small and Medium-sized Enterprise (SME) · Born Global - entrepreneurial firm that is international from inception

Appropriate Behavior

—it is important to understand manners and customs to avoid mistakes abroad. In depth knowledge improves the abilities of managers. Manners are appropriate ways of behaving, speaking, and dressing in a culture. Customs are habits or ways of behaving in specific circumstances that are passed down through generations in a culture. Customs define appropriate habits or behaviors in specific situations