Chapter 22
Globalisation and the Cross-national Organisation
What the Chapter Covers
Cross-national organisations are the most recent addition to the long list of topics that make up the
subjects of Organisational Behaviour and Analysis. The globalised economy has established a need
for organisations to operate outside their countries of origin. Since this means that they have to
change, there is a clear link between this chapter and Chapter 21 and because one of the most
significant differences between organisations in different countries is the cultural contexts within
which they operate, there is also a strong link with chapter 19. In outline terms the chapter covers:
 the growth of international business, and the emergence of global organisations
 pressures to engage in cross-national activity
 types of cross-national organisation
 structure and the cross-national organisation
 culture and the cross-national organisation
 dimensions of cultural difference
 classifying different cultures
 cross-national differences in organisational behaviour
The chapter closes with an overview section that reviews its contents and in addition to material
that addresses the learning outcomes set-out at its start, the chapter has a single unifying theme.
This is that differences between national cultures have a strong impact on the functioning of an
organisation, and so cross-national organisations might need to adjust their processes and practices in
order to accommodate to cultures in their different operating locations.
New Concepts Introduced in Chapter
Country Focused Strategy and Structure: primarily geared to serving a wider set of markets by
producing goods or services in overseas subsidiaries for sale in local markets
Domestic Organisation: one that mainly trades within the borders of its country of origin
Ethnocentricity: a frame of reference in which members of a cultural group view their culture as
superior to all others
Globally Integrated Strategy and Structure: a diffuse network of highly interdependent
subsidiaries, each of which specialises in some degree, but none of which has the capability to
operate as a totally independent and autonomous business unit
Global Organisation: one that is not tied to a single nation, but operates worldwide as an
independent set of subsidiaries coordinated by a headquarters
International Organisation: one that is primarily located and managed from its country of origin,
but also either exports to, or produces identical or similar goods and services in overseas subsidiaries
1
International Trade Strategy and Structure: one that is primarily geared to serving a wider set of
markets by exporting goods or services from the home country
Multinational Organisation: one that is primarily located and managed from the country of its
origin, but produces goods or services in relatively autonomous overseas subsidiaries to meet the
needs of local markets
Transnational Organisation: one that operates simultaneously as an International, Multinational
and Global organisation
Time Out Exercises: Hints for Completion
Exercise on page 714: Job Offers in Cross-national Organisations
Before starting on this exercise make sure that you are conversant with and understand the
differences between the types of organisation. These are discussed on pages 712-714 of the chapter
and summarised in Table 22.1. It is important that you think analytically and systematically in
answering the questions. To this end try to ensure that your answer to question 2 reflects the
differences between types of organisation, and that the one you opt for has characteristics that you
prefer in some way, i.e. try asking yourself ‘what is it about this type of organisation (rather than the
others) that makes it a place in which I would prefer to work’?
Exercise on page 719: Comparison of Roles in Different Types of Cross-national
Organisation
A prerequisite to answering these questions is a clear understanding of the structures of the different
types of cross-national organisation, which are given on pages 715-719 of the chapter. It is worth
noting that structure is strongly connected with control mechanisms, in this case the degree of
control and the mechanisms used by the parent company to exercise control over its overseas
subsidiaries. If you have difficulty in making a start on answering the questions, a useful hint is that
for all three roles:
 autonomy and freedom to innovate will tend to be lowest in international organisations
 medium in multinationals
 highest in globalised organisations
Now explore the material in the chapter and try to identify why this is likely to be the case.
Exercise on page 724: National Cultures
This exercise is designed to get you thinking about culturally induced emotional and behavioural
differences. One way that you can answer the questions is to use the material on pages 721-724 of
the chapter, which gives a number of ways in which national cultures can prompt differences in
behaviour. This gives a convenient set of headings under which you can categorise any differences
you identify.
2
Supplementary Illustrative Materials
In what follows two additional OB in Action features associated with Chapter 22 are provided. The
first is associated with the material on pages 706-709 of the chapter. It illustrates one of the
difficulties faced by organisations who engage in cross-national business activities.
OB in Action: The Value of Overseas Work Experience
So fast is the growth of international business that there is a burgeoning demand for executives who
have experience beyond the boundaries of their country of origin. Indeed, organisations that
previously tended to regard overseas subsidiaries as simply ‘distant outposts of empire’ now take a
more global view of matters, which acknowledges that getting the best from human resources on an
international basis means having people who are conversant with the demands of managing in
overseas locations.
One of the main reasons for sending people on overseas assignments is the transfer of skills that
occurs. For example, the aim in posting a manager to an overseas subsidiary is often to export skills
and knowledge from the home country, by training or developing employees in the host country.
Nevertheless, and even though it might not be envisaged as part of the original plan, this often results
in a two-way transfer process, in which the expatriate also acquires new skills and competencies.
For this reason, firms that plan to increase their level of international business activities are
increasingly seeking people who have a degree of overseas experience. Importantly a number of
executive recruitment agencies report that many of their clients view overseas experience in an
increasingly favourable way. Indeed, many large organisations now regard the successful
completion of an overseas assignment as a desirable, if not essential experience for potential
promotion to the top echelons of management in the home country.
SOURCE Fenby, J (2000) Make that foreign posting your ticket to the boardroom, Management
Today July; 48-53
The second OB in Action feature is associated with material on pages 738-739 of the chapter and
contrasts decision making styles in two countries.
OB in Action: Decision Making in French and British Organisations
As the European Community (EC) becomes more and more a fact of life to its member countries, the
number of cross-border mergers and take-overs has steadily increased. In the past five years for
example, a significant number of mergers or take-overs have occurred between French and British
companies, which in some respects is surprising, because it has long been recognised that British and
French managers can find it difficult to work together.
Both countries have their own management traditions, and these give rise to differences in what is
considered to be the normal way to conduct business; something that is nowhere more apparent that
in the making of decisions. In France for example, important decisions are only made after what the
French like to feel is a logical process that involves extensive exploration of the wider implications
of a decision. British managers however, seem to take a more restrictive focus that deals with a
problem in isolation. To some extent this is because decisions in Great Britain tend to be driven by
3
short-term, bottom-line considerations that focus on the results that external suppliers of capital (the
City) will require, whereas in France investors adopt a much longer term perspective.
Since there is a very strong sense of hierarchy in most French organisations, decision making
tends to be the prerogative of those at the top, who make their decisions in isolation. Thus while
there are meetings that are apparently concerned with making decisions, in reality these occur to
rubber-stamp a decision already made by the boss. British managers however, expect meetings of
this type to be concerned with actually reaching a decision and so there is a strong expectation that
there will be a debate, to which everybody has an opportunity to contribute.
While decision making is only one area of management activity, it is one that illustrates how
different management practices can be in the two countries. Needless to say if a merger is to be
successful, it is necessary to resolve these differences in some way.
SOURCE
Senter, A Cross channel culture club, Management Today February 1999; 72-74
Useful Sources of Additional Material
For those who enjoy exploring study materials on the internet, given below are a number of
potentially useful websites that give further information on the topics and issues covered in the
chapter.
http://www.imf.org/external/np/speeches/2000/101300.htm
Reprint of a recent speech by the Deputy Managing Director of The International Monetary Fund,
which highlights the development of and current state of the globalised economy, and some of the
concerns that it gives rise to.
http://bobbycogan.tripod.com/literaturereview.html
A paper which is part an exploration of the appropriate structure for an international multi-business
organisation, and part a literature review of topic in the area.
http://www.onepine.demon.co.uk/phof.htm
A short synopsis of the ideas of Geert Hoftede on the characteristics of national cultures.
http://www.ed.ac.uk/usgs/forum/Leverhulme/LEVB3.html
An interim report on research sponsored by the Leverhulme Trust, which gives insights into some of
the questions that still remain unanswered about the effects of national cultures on the behaviour of
people in organisations.
http://www.cabinet-office.gov.uk/innovation/2001/workforce/motivation.shml
A short article by David Guest of King’s College, London, entitled Motivation for Workforce
Development: The Role of National Culture. As the title suggests the paper explores the role of
national culture as a factor that influences the appropriateness of different motivational techniques.
http://www.immi.se/intercultural/nr2/ticehurst.htm
A paper entitled Professional Communication in Asia/Pacific Organisations: A Comparative Study.
In essence the paper explores differences in communication in three organisations located in three
different countries that have different national cultures: Australia, Thailand and Korea.
4
http://www.bmc-online.com/journal/Competitive_Climate.html
Reprint of an article entitled Project Management in a Competitive Climate, which comes from the
in-house journal of a commercial (consultancy) firm. While most of the article deals with the
intricacies of project management, there are interesting observations about the ways in which
national cultures have an impact on whether the technique is easily used in an organisation.
5