Globalization Exam 3 Review

The Nature of Culture

Acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences action. Shared "programming of the mind" in a given society

Alienation

Alienated returnees are at the other end of the spectrum. While abroad, they tend to 'go native' and over time begin to reject the values of their home country in favor of the values of their host country. Hence when they return home they feel alienated.

Organizational culture

organizational culture can legitimize unethical behavior or reinforce the need for ethical behavior

Host-country nationals:

residents of the host country where the company has its local operations.

Technoscapes

Fluid global configurations of technology and the fact that both hi- and low-tech, mechanical and informational now moves at high speeds across what used to be boundaries; driven by the increasingly complex relationships among money flows, political possibilities, and availability of both unskilled and highly-skilled labor

Robertson (sociologist)

Globalization is a process by which we come to experience, or become aware of, the world as a single place.

McNamee (venture capitalist)

Globalization is the environment in which we live. We've got one world. Get used to it. Make the most of it.

Friedman (columnist):

Globalization is the inexorable integration of markets, nation-states, and technologies to a degree never witnessed before. It is an international system.

Stiglitz (economist)

Globalization is the removal of barriers to free trade and the closer integration of national economies.

Dicken (geographer):

Globalization is the umbrella term for the complex set of transformative processes and outcomes that dialectically, and relationally, interact with places and people.

Steger (political scientist)

Globalization refers to a multidimensional set of social processes that create, multiply, stretch, and intensify worldwide social interdependencies and exchanges

Organizational Practices

How universal are management principles? Is management more an art than a science? Firms around the world show both similarities and differences in their management practices e.g., how they plan, negotiate, lead, etc. As organizations spread their operations around the world, they must choose what management practices they will adopt locally and what they will transfer from elsewhere.

Cultural Influences on Accounting

Importance of Culture & Historical roots on accounting systems is increasingly being recognized Culture is considered an essential element in the understanding norms / values Culture/Societal values at nat'l level permeate organizational/occupational subcultures Accounting systems and practices can influence/reinforce values

Power distance

Less powerful members accept that power is distributed unequally - High power distance countries: people obey superiors; centralized, tall structures (e.g., Mexico, South Korea, India) - Low power distance countries: flatter, decentralized structures, smaller ratio of supervisor to employee(e.g., Austria, Finland, Ireland)

Individualism

People look after selves and immediate family only -High individualism countries: wealthier, protestant work ethic, greater individual initiative, promotions based on market value (e.g., U.S., Canada, Sweden) - High collectivism countries: poorer, less support of Protestant work ethic, less individual initiative, promotions based on seniority (e.g., Indonesia, Pakistan)

Global staffing model

The global staffing model strives to hire the best person for the job regardless of where he or she comes from. Parent-country nationals, host-country nationals, and third-country nationals are all treated as one group, and the company determines which individual brings the best combination of attributes to a particular job.

Enlightened Self-Interest

The idea that actions for the common good also meet individual needs.

Ethnoscapes

The landscape of persons who constitute the shifting world in which we live: tourists, immigrants, refugees, exiles, guest workers and other moving groups... more persons or groups deal with the realities of having to move or fantasies of wanting to move

Which Ethical Issues Are Most Relevant To International Firms?

The most common ethical issues in 1) business involve 2) employment practices 3) human rights 4) environmental regulations 5) corruption 6) the moral obligation of multinational companies

Managing repatriation 2

To reduce the difficulties associated with reentry, many companies create various mechanisms by which expatriates can keep in touch with their colleagues back home. These can include special newsletters, regularly scheduled home visits, special Web pages focusing on expatriate concerns, and assigning HR specialists to oversee both overseas assignments and repatriation activities.

Huntington's thesis depicts

alternative forces for localization that will spawn clashes between civilizations along cultural fault lines. These forces include: Culture, Community, Nationalism, Security

Ethical systems

are a set of moral principles, or values, that are used to guide and shape behavior

Business ethics

are the accepted principles of right or wrong governing the conduct of business people

How Do Religious And Ethical Systems Differ?

Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred -Religion and ethics are often closely intertwined -Four religions dominate large segments of global society Confucianism is also important in influencing behavior and culture in many parts of Asia Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior

Managing repatriation

Repatriation refers to the process of returning expatriates to their home countries. It can at times cause as much culture shock as expatriation. When going home, managers can face reverse culture shock.

International assignments

can help multinational companies: -Enhancing operational control and coordination -Increasing information gathering -Developing managerial skills

Friedman's thesis (and many globalization scenarios)

depict an inevitable movement toward global integration fueled by economic incentives and new technologies.

Masculinity

dominant social values are success, money, and things - High masculine countries: stress earnings, recognition, advancement, challenge, wealth; high job stress (e.g., Germanic countries) - High feminine countries: emphasize caring for others and quality of life; cooperation, friendly atmosphere, employment security, group decision making; low job stress (e.g., Norway)

Third-country nationals:

employees of a firm who are citizens of neither the country where the firm is headquartered nor the foreign operations where they are assigned.

Unrealistic performance expectations

encourage managers to cut corners or act in an unethical manner

Culture shock

feeling of distress in response to immersing oneself in a new environment. It is often a result from information overload and a breakdown in one's capacity to make sense of the environment

Leadership

helps establish the culture of an organization, and set the examples that others follow when leaders act unethically, subordinates may act unethically, too

Ethical strategy

is a strategy, or course of action, that does not violate these accepted principles

Uncertainty avoidance

people feel threatened by ambiguous situations; create beliefs and institutions to avoid them - High uncertainty avoidance countries: high need for security, strong belief in experts and their knowledge; structure organizational activities, more written rules, less managerial risk taking (e.g., Germany, Japan, Spain) - Low uncertainty avoidance countries: people more willing to accept risks of the unknown, less structured organizational activities, fewer written rules, more managerial risk, higher employee turnover, more ambitious employees (e.g., Denmark, UK)

Personal ethics

the generally accepted principles of right and wrong governing the conduct of individuals - expatriates may face pressure to violate their personal ethics because they are away from their ordinary social context and supporting culture -managers fail to question whether a decision or action is ethical, and instead rely on economic analysis when making decisions

Decision-making processes

the values and norms that are shared among employees of an organization -organization culture that does not emphasize business culture encourages unethical behavior

How Are Ethics Relevant To Human Rights?

Basic human rights are taken for granted in developed countries -freedom of association -freedom of speech -freedom of assembly -freedom of movement What are the responsibilities of firms in countries where basic human rights are not respected?

Schools of Ethical Thought

Categorical Imperative Legalism Cultural Relativism Enlightened Self-Interest Utilitarianism Light-of-Day

Issues in Contemporary Cultural Economy

Central problem of today's global interactions: Tension between cultural homogenization and cultural heterogenization New global cultural economy: Complex, overlapping, disjunctive order that cannot be understood any longer through center-periphery models Complexity of the current culture: Has to do with fundamental disjunctures between economy, culture and politics

Financescapes

Disposition of global capital, mysterious, rapid and difficult to follow, currency markets, national stocks exchanges, and commodity speculations move megamonies at blinding speed... global relationships among ethnoscapes, technoscapes, and financescapes are disjunctive and unpredictable... each act as constraint and parameter for movements in the others

Mediascapes

Distribution of the electronic capabilities to produce and disseminate information, now available to a growing number of private and public interests throughout the world, and the images of the world created by these media... provide images in which the world of commodities and the world of news and politics are deeply mixed...lines between realistic and fictional become blurred by distance between audience and direct experiences portrayed

Adaptation

During this stage, expatriates begin to understand the new culture and adjust to everyday living. Although they still experience mood swings, but their magnitude and intensity are less pronounced than during the disillusionment stage.

Expatriates

Employees who take assignments in other countries.

What Are Ethical Dilemmas?

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear cut

What Is Ethics?

Ethics refers to accepted principles of right or wrong that govern -the conduct of a person -the members of a profession -the actions of an organization

Four basic staffing models:

Ethnocentric Polycentric Regiocentric Global staffing models

Biculturalism

Finally, during the biculturalism stage, expatriates begin believing (sometimes incorrectly) that they now understand local people and customs, and they begin venturing out to learn more about their new home

Home-country nationals

(also called parent-country nationals): citizens of the country where the company is headquartered who are assigned to one of its foreign operations.

Professionalism vs. Statutory Control

Accountants are perceived to have independent attitudes throughout the world Public regulation or self regulation - U.K. - rely on judgment of accountant - France and Germany - implement detailed legal requirements Link to societal values - Professionalism: -Individualism -Weak uncertainty avoidance -Small power distance -Masculinity -Short-term orientation

International Accounting: The Challege

Adapt past effective techniques to meet the demands of the global market. - Must understand traditions and heritage - Multiple GAAPs

Disillusionment

After the honeymoon period is over, the differences in lifestyles, lack of familiar food, and difficulties in coping with the uncertainties of new environment cease to be amusing and become irritating. The disillusionment stage is the most difficult stage in the cultural adaptation process. Many expatriates give up at this stage and return home, while others remain in the foreign surroundings but withdraw emotionally. Some may even adopt dysfunctional coping behaviors such as excessive drinking or drug use.

Utilitarianism

An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers

Ethnocentric staffing model

An ethnocentric staffing model emphasizes the use of home-country nationals, often sent from company headquarters to staff most, if not all, of the senior managerial positions throughout a firm's global operations.

Legalism

Assumes that morality is coded in the laws. Already reflected in our laws.

Religion

a system of shared beliefs and rituals that are concerned with the realm of the sacred Religion and ethics are often closely intertwined Four religions dominate large segments of global society Christianity Islam Hinduism Buddhism

Light-of-Day

able to tell your spouse or parents about the situation and your involvement in it; mind if full story appeared in Wall Street Journal

Fertile Ground of Deterritorialization

...

Characteristics of Culture

Learned Shared Trans-generational Symbolic Patterned Adaptive

International Pressures for Change

-Growing international interdependencies -Harmonization of the regulatory framework internationally -Centrally planned economies embrace of market-oriented approach -New opportunities for international investment, joint ventures, and alliances -Role of UN, EU and OECD

How Can Managers Make Ethical Decisions?

1) Hire and promote people with a well grounded sense of personal ethics 2) Build an organizational culture that places a high value on ethical behavior 3) Make sure that leaders within the business articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric 4) Develop moral courage 5) Put decision making processes in place that require people to consider the ethical dimension of business decisions

Hiring global managers: Three choices

1) Home-country nationals 2) Host-country nationals: 3) Third-country nationals

Managing cultural adaptation

1) Honeymoon 2) Disillusionment 3) Adaptation 4) Biculturalism

Functions of Culture

1) Influences action 2) Provides a lens to interpret the world 3) Defines boundaries 4) Creates a sense of identity 5) Works as "social glue" 6) Creates "taken for granted"understandings

Globalization- Key Debates

1) Meaning: Process vs. Project 2) Interpretation: New Era vs. Continuance 3) Evaluation: Good vs. Bad 4) Explanation: "Hard" vs. "Soft" 5) Political: End vs. Revival of Nation-State 6) Cultural: Sameness vs. Difference

Reverse culture shock may result from one or a combination of the following factors:

1)Dissatisfaction with the job or the old way of life in the home country 2) The excitement of foreign travel is gone 3) The expatriate's skills are no longer useful or valued due to major changes that the employer may have undergone 4) Family and friends may have moved or acquired new interests, and are no longer as available as they were before departure 5) The expatriates themselves have changed as a result of incorporating new values, habits, and worldviews that may be at odds with their old friends at home

Confucianism

A philosophy that adheres to the teachings of the Chinese philosopher Confucius. It shows the way to ensure a stable government and an orderly society in the present world and stresses a moral code of conduct.

Polycentric staffing model

A polycentric staffing model emphasizes the use of host-country nationals in managing overseas operations in the belief that local managers can be more effective in negotiating local customs, laws, traditions, and political intrigues to makes the local venture succeed.

Regiocentric staffing model

A regiocentric staffing model is one in which multinational firms organize their HRM policies and staffing criteria by geographic region instead of by a particular country within that region.

International staffing models

A staffing culture or philosophy reflects corporate beliefs and policies about how best to staff overseas operations.

Categorical Imperative

A term invented by Immanuel Kant to refer to a command that orders us to do something unconditionally.

The scapes: A Way to Understand

Central problem of today's global interactions: Tension between cultural homogenization and cultural heterogenization New global cultural economy: Complex, overlapping, disjunctive order that cannot be understood any longer through center-periphery models Complexity of the current culture: Has to do with fundamental disjunctures between economy, culture and politics "Landscapes" with fluid irregular shapes; perspectival constructs influenced by the historical, linguistic and political location of different sorts of actors; navigated by agents who both experience and constitute larger formations. Building blocks of "imagined worlds" constituted by the historical imaginations of people and groups spread about the world.

International Accounting

Classification aids in: 1) Describing, analyzing, and predicting the development of accounting systems 2) Strategic planning and control decisions 3) International systems integration

Ideoscapes

Connected images often directly politically and frequently having to do with state ideologies and the counterideologies of movements oriented to capturing state power or a piece of it. Composed of elements of the modern worldview... a chain of ideas, terms, and images such as freedom, welfare, rights, sovereignty, representation and, specially, democracy, changing in meaning as things move along

Conservatism vs. Optimism

Conservatism seen as a fundamental value: -Strongly conservative: - Japan, France, Germany, Switzerland Less conservative: -U.S., U.K., the Netherlands -Changing post Sarbanes Oxley Link to Culture Dimensions - Conservatism -Strong uncertainty avoidance -Long-term orientation -Collectivism -Femininity

Culture Shock 2

Culture shock can take many forms, from a psychological sense of frustration, anxiety and disappointment to full-fledged chronic depression. Yet culture shock is not a disease. Rather, it means that an individual is trying to come to terms with his or her new environment, which is a good starting point for cultural adaptation.

Coping with culture shock

Culture shock cannot be avoided, but it can be alleviated to some degree through proper advance preparation. This preparation includes: 1) Understanding both the host country and oneself 2) Visiting the host country for a short period prior to moving there 3) Learning the local language 4) Looking for mentors or cultural translators

Cultural Relativism

Principle that people's beliefs and activities should be interpreted in terms of their own culture

Optimistic traveler

Proactive returnees return home with a conviction that they can succeed in melding the two cultures in positive and productive ways. They realize that they have changed personally as a result of their overseas assignment and want to make use of what they have learned. They often seek out new friends or colleagues with similar experiences or they launch new projects or adventures.

Accounting & Societal Values

Professionalism versus Statutory Control: - Preference for individual professional judgment / self regulation Uniformity versus Flexibility - Preference for enforcement of uniform practices Conservatism versus Optimism: - Preference for cautious approach / less risky approach to measurement. Secrecy versus Transparency: -Preference for confidentiality v. transparency

Re-socialization

Re-socialized returnees are people who attempt to fit in back in the home culture by ignoring or rejecting what they learned in their overseas assignment.

Why Do Managers Behave Unethically?

Several factors contribute to unethical behavior including 1) Personal ethics - the generally accepted principles of right and wrong governing the conduct of individuals 2) Decision-making processes - the values and norms that are shared among employees of an organization 3) Organizational culture - organizational culture can legitimize unethical behavior or reinforce the need for ethical behavior 4) Unrealistic performance expectations - encourage managers to cut corners or act in an unethical manner 5) Leadership - helps establish the culture of an organization, and set the examples that others follow

How Are Ethics Relevant To Environmental Regulations?

Some parts of the environment are a public good that no one owns, but anyone can despoil The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation What happens when environmental regulations in host nations are far inferior to those in the home nation? Is it permissible for multinationals to pollute in developing countries simply because there are no regulations against it?

Secrecy vs. Transparency

Stems from management and accountants Closely related to conservatism: - Secrecy relates to disclosure - Conservatism relates to measurement Secrecy: High - Japan, France, Germany, Switzerland Low - U.S. and U.K. Link to Cultural Dimensions - Secrecy -Strong uncertainty avoidance -High power distance -Collectivism -Femininity

How Are Ethics Relevant To Employment Practices?

Suppose work conditions in a host nation are clearly inferior to those in the multinational's home nation Which standards should apply? -home country standards -host country standards -something in between

Semi-Globalization

Tension between globalization and localization Semi-globalization means that both forces of globalization and localization are taking place at the same time This tension is the fundamental source of uncertainty in the world, as we are neither completely globalized nor completely localized

How Are Ethics Relevant To Corruption? Part 2

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions adopted by the Organization for Economic Cooperation and Development (OECD), obliges member states to make the bribery of foreign public officials a criminal offense

How Are Ethics Relevant To Corruption?

The U.S. Foreign Corrupt Practices Act outlawed the practice of paying bribes to foreign government officials in order to gain business

Factors of Complete Globalization

Total cross border integration of markets: Technology Openness/Liberalization Market Opportunity Collective Goods and Global Governance

Inpatriates

Traditional term used to describe employees brought in from another country to work in the headquarters country for a specified period.

Semi Globalization

Two extremes: Complete Localization and Complete Globalization

Hofstede's Dimensions

Uncertainty Avoidance Power Distance Individualism - Collectivism Masculinity - Femininity Long-term vs. Short-term Orientation (aka Confucian Dynamism) Proposed: Indulgence vs. Restraint

Uniformity versus Flexibility

Uniform accounting plan and imposition of tax rules for measurement purposes

Honeymoon

Upon first arrival at a foreign location, expatriates frequently experience a great deal of excitement. This period can last from only a few days to several months, depending on the person, the nature of the assignment, and the similarity between the home and host countries.

Factors of Complete Localization

Zero cross border integration of markets: Culture/ civilizations Administration/ politics Geographical Differences Economic Differences