Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Đề cương khoá luận, bài tập Global Context, Exercises of Economics

Đề cương khoá luận, bài tập Global Context

Typology: Exercises

2020/2021

Available from 11/17/2021

trang-chip
trang-chip 🇻🇳

5

(1)

6 documents

1 / 55

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
Advanced International Management –
Articles
LECTURE 1 2
LESSARD, LUCEA AND VIVES (2013) – BUILDING YOUR COMPANYS CAPABILITIES THROUGH GLOBAL
EXPANSION 2
LU & BEAMISH – INTERNATIONAL DIVERSIFICATION AND FIRM PERFORMANCE: THE S-CURVE HYPOTHESIS
5
LECTURE 2 8
BRANNEN (2004) – WHEN MICKEY LOSES FACE: RECONTEXTUALIZATION, SEMANTIC FIT, AND THE
SEMIOTICS OF FOREIGNNESS 8
HONG & DOZ – L’ORÉAL MASTERS MULTICULTURALISM 12
MEYER – NAVIGATING THE CULTURAL MINEFIELD 14
BRANNEN & SALK – PARTNERING ACROSS BORDERS: NEGOTIATING ORGANIZATIONAL CULTURE IN A
GERMAN-JAPANESE JOINT VENTURE. 15
LECTURE 3 19
BREMMER (2005) – MANAGING RISK IN AN UNSTABLE WORLD 19
GHEMAWAT (2001) – DISTANCE STILL MATTERS: THE HARD REALITY OF GLOBAL EXPANSION 21
PORTER (1998) – CLUSTERS AND THE NEW ECONOMICS OF COMPETITION 24
LECTURE 4 27
HENNART & REDDY (1997) - THE CHOICE BETWEEN MERGERS/ACQUISITIONS AND JOINT VENTURES: THE
CASE OF JAPANESE INVESTORS IN THE US. 27
HARZING (2002) – ACQUISITIONS VERSUS GREENFIELD INVESTMENTS: INTERNATIONAL STRATEGY AND
MANAGEMENT OF ENTRY MODES 29
PAN & TSE (2000) – THE HIERARCHICAL MODEL OF MARKET ENTRY MODES 32
LECTURE 5 36
BEGLEY & BOYD – THE NEED FOR A CORPORATE GLOBAL MIND-SET 36
KUMAR & PURANAM (2011) – HAVE YOU RESTRUCTURED FOR GLOBAL SUCCESS? 39
GHEMAWAT (2007) – MANAGING DIFFERENCES: THE CENTRAL CHALLENGE OF GLOBAL STRATEGY 42
GHOSHAL – GLOBAL STRATEGY: AN ORGANIZING FRAMEWORK 45
LECTURE 6 47
FROST, BIRKINSHAW & ENSIGN (2002) – CENTRES OF EXCELLENCE IN MULTINATIONAL CORPORATIONS47
GOVINDARAJAN & GUPTA (2001) – BUILDING AN EFFECTIVE GLOBAL BUSINESS 49
FABRIZIO & THOMAS – THE IMPACT OF LOCAL DEMAND ON INNOVATION IN A GLOBAL INDUSTRY 50
MIHALACHE, JANSEN, VAN DEN BOSCH & VOLBERDA – OFFSHORING AND FIRM INNOVATION: THE
MODERATING ROLE OF TOP MANAGEMENT TEAM ATTRIBUTES 52
1
pf3
pf4
pf5
pf8
pf9
pfa
pfd
pfe
pff
pf12
pf13
pf14
pf15
pf16
pf17
pf18
pf19
pf1a
pf1b
pf1c
pf1d
pf1e
pf1f
pf20
pf21
pf22
pf23
pf24
pf25
pf26
pf27
pf28
pf29
pf2a
pf2b
pf2c
pf2d
pf2e
pf2f
pf30
pf31
pf32
pf33
pf34
pf35
pf36
pf37

Partial preview of the text

Download Đề cương khoá luận, bài tập Global Context and more Exercises Economics in PDF only on Docsity!

Advanced International Management –

Articles

LECTURE 1 2 LESSARD, LUCEA AND VIVES (2013) – BUILDING YOUR COMPANY’S CAPABILITIES THROUGH GLOBAL EXPANSION 2 LU & BEAMISH – INTERNATIONAL DIVERSIFICATION AND FIRM PERFORMANCE: THE S-CURVE HYPOTHESIS 5 LECTURE 2 8 BRANNEN (2004) – WHEN MICKEY LOSES FACE: RECONTEXTUALIZATION, SEMANTIC FIT, AND THE SEMIOTICS OF FOREIGNNESS 8 HONG & DOZ – L’ORÉAL MASTERS MULTICULTURALISM 12 MEYER – NAVIGATING THE CULTURAL MINEFIELD 14 BRANNEN & SALK – PARTNERING ACROSS BORDERS: NEGOTIATING ORGANIZATIONAL CULTURE IN A GERMAN-JAPANESE JOINT VENTURE. 15 LECTURE 3 19 BREMMER (2005) – MANAGING RISK IN AN UNSTABLE WORLD 19 GHEMAWAT (2001) – DISTANCE STILL MATTERS: THE HARD REALITY OF GLOBAL EXPANSION 21 PORTER (1998) – CLUSTERS AND THE NEW ECONOMICS OF COMPETITION 24 LECTURE 4 27 HENNART & REDDY (1997) - THE CHOICE BETWEEN MERGERS/ACQUISITIONS AND JOINT VENTURES: THE CASE OF JAPANESE INVESTORS IN THE US. 27 HARZING (2002) – ACQUISITIONS VERSUS GREENFIELD INVESTMENTS: INTERNATIONAL STRATEGY AND MANAGEMENT OF ENTRY MODES 29 PAN & TSE (2000) – THE HIERARCHICAL MODEL OF MARKET ENTRY MODES 32 LECTURE 5 36 BEGLEY & BOYD – THE NEED FOR A CORPORATE GLOBAL MIND-SET 36 KUMAR & PURANAM (2011) – HAVE YOU RESTRUCTURED FOR GLOBAL SUCCESS? 39 GHEMAWAT (2007) – MANAGING DIFFERENCES: THE CENTRAL CHALLENGE OF GLOBAL STRATEGY 42 GHOSHAL – GLOBAL STRATEGY: AN ORGANIZING FRAMEWORK 45 LECTURE 6 47 FROST, BIRKINSHAW & ENSIGN (2002) – CENTRES OF EXCELLENCE IN MULTINATIONAL CORPORATIONS 47 GOVINDARAJAN & GUPTA (2001) – BUILDING AN EFFECTIVE GLOBAL BUSINESS 49 FABRIZIO & THOMAS – THE IMPACT OF LOCAL DEMAND ON INNOVATION IN A GLOBAL INDUSTRY 50 MIHALACHE, JANSEN, VAN DEN BOSCH & VOLBERDA – OFFSHORING AND FIRM INNOVATION: THE MODERATING ROLE OF TOP MANAGEMENT TEAM ATTRIBUTES 52

Lecture 1

Lessard, Lucea and Vives (2013) – Building Your Company’s Capabilities Through

Global Expansion

To create and sustain a global competitive advantage, companies need a systematic approach to exploiting, renewing and enhancing their core capabilities. What critical questions do global strategists need to answer before committing their companies’ resources to new markets? They developed a framework to help strategists answer the two most crucial questions of any global strategy. Those questions are:

  1. Will a company’s current capabilities provide competitive advantage in a target market?
  2. Will that new location give the company the opportunity to enhance its capabilities? The task of the global strategist is to build a platform of capabilities culled from the resources, experiences and innovations of units operating in multiple locations; to transplant those capabilities wherever appropriate; and then systematically upgrade and renew them – ahead of competition. Our research suggests that global winners typically create and sustain their international competitiveness through a systematic process of exploiting, renewing and enhancing their core capabilities. Exploit existing capabilities The simplest way in which a company can gain advantage in foreign markers is by exploiting capabilities first developed at home. The exploitation of capabilities can also take place through acquisition of companies abroad. But not every transplant takes root. Two crucial questions every strategist must ask are how well the company’s capabilities will travel and where they might be best replicated. One way to answer these questions is to use the RAT-Test; Rat stands for relevant, appropriable and transferable. It helps identify whether a particular market is suitable for the successful deployment of one company’s home-market business. It answers three questions:
  3. Are the capabilities developed in the home market relevant to customers in the target market? (Create value for customer)
  4. IF deployed in a foreign market, would these capabilities be appropriable? (Capture of value, are there barriers to imitation etc.)
  5. Are the capabilities transferable? (Can the company deploy capabilities without sacrificing too much vale creation and capture potential?) In some occasions, entering a particular country meets with failure not because the company’s capabilities are not relevant for the customer, but because the company cannot appropriate the value it is generating in that market. The Rat test focuses on how to avoid such missteps and successfully exploit a company’s existing capabilities in a new context.

The relative importance of the RAT and the CAT Tests, and the pace at which this dynamic cycle operates, will depend on a company’s maturity, its stage of internationalization and the overall state of the industry. For companies based in a rapidly evolving industry, RAT opportunities to transfer their home-market model to other countries will likely to be relevant. However, companies in businesses characterized by a multiplicity of competitive markets should be more focused on CAT opportunities.

Lu & Beamish – International Diversification and Firm Performance: the S-Curve

Hypothesis

A proposed theoretical framework for the study of multinationality and performance included both benefits and costs of geographical expansion over different phases of internationalization. Data on several firms show a consistent horizontal S-shaped relationship between multinationality and performance. Also, firms investing more heavily in intangible assets achieved greater profitability gains from growth in foreign direct investment. Findings Returns from a geographic diversification strategy are related to costs and benefits that varied depending on the extent of a firm’s internationalization. This association was show in a horizontal s-curve, which at first showed a performance decline with increasing internationalization, followed by a positive relationship between geographic diversification and firm performance, which then declined at very high levels of multinationality. Also, firms with strong technology or advertising asset advantages achieved higher returns to geographic expansion. Benefits from Geographic Diversification Geographic diversification provides exploration and exploitation benefits. It enables firms to realize economies of scale and scope. It helps it reduce fluctuations in revenue by spreading its investment risks over different countries. It helps reduce costs and increase revenues by increasing a firm’s market power over its suppliers, distributors and customers. A firm can gain above-normal returns by exploiting its firm-specific assets, especially intangible ones. Costs Related to Geographic Diversification The costs of geographic diversification are typified by the problems and liabilities of newness and foreignness. When making a foreign investment, a firm’s managers contend with many challenges related to a new operation, such as purchasing and installing facilities, staffing and establishing international management systems and external business networks. These challenges can put a new subsidiary in a disadvantageous position. Also, transaction- and coordination costs increase with the degree of geographic diversification. Geographic Diversification and Firm Performance The above review identifies the exploitation and exploration benefits for geographic diversification while outlining the costs associated with being new and foreign and managing dispersed operations across borders. Figure 1 shows how the integration of these benefits and costs leads to the nonlinear relationship between geographic diversification and performance.

The process At the initial stages of international expansion ( phase 1 ), a firm encounters liabilities of newness and foreignness in which it must pay some ‘tuition’ in the for of reduced profits resulting from such disadvantages. With increasing international expansion, experiential learning about how to establish a subsidiary efficiency in a host country reduces the costs associated with being new and foreign. At the same time, growing geographic diversification enables asset advantages to be exploited across a greater spread of markets, which occurs alongside the development of new capabilities in international markets. The result is phase 2 , in which increasing levels of geographic scope are associated with growth in a firm’s profitability/ Although the costs related to newness and foreignness are being reduced, during phase 2, the second set f costs we depict, those for governance and coordination, begin to rise. As a firm’s network becomes more extensive, governance and coordination costs escalate to the point where costs can again surpass the benefits of geographic diversification. and the firm performance declines, marking phase 3. Putting above arguments together, we hypothesize a horizontal S-shaped relationship between the extent of a firm’s foreign direct investment (FDI) and performance. Interaction Effects of Intangible Assets and Geographic Diversification One important dimension that can moderate the exploitation benefit of an internationalization strategy is a firm’s intangible assets (technological know-how, patents, management skills, brands etc.). Transactions with such assets, both buying and selling, are subject to market failure. For efficient exploitation, the cross0border exchange of these assets must be internalized. An intangible asset’s value is not likely to depreciate significantly over time when it is applied in different markets. Given the resource and time costs of developing such assets, the efficiency of and return to their exploitation is greater when their scope of use is greater. Hence, one way to exploit an intangible asset to its full value is to deploy it in a broad range of markets, such as in a geographic diversification strategy. Consequently, firms with intangible assets should be able to generate abnormal high returns from their FDIs through scale and scope economies and trough exploitation of market imperfections in the trade of intangible assets.

Lecture 2

Brannen (2004) – When Mickey Loses Face: Recontextualization, Semantic Fit, And

The Semiotics of Foreignness

Using semiotics – the study how language systems convey meaning – and the Walt Disney Company’s experience in internationalization, the notion of semantic fit as a necessary complement to strategic fit is developed. Also a conceptual model of recontextualization is formalized. This is the process by which firm assets take on new meanings in distinct cultural environment. One of the biggest concerns MNEs face regarding internationalization is assessing the fit of what they wish to transfer abroad with the new host environment. If the parent company is significantly foreign form its subsidiary, the transferred firm assets may not fit the receiving context in the host country. This liability of foreignness has been a fundamental assumption in the MNE literature and has become a central focus in theory building. Problems resulting from the liability of foreignness in MNEs abound. Complex cultural misalignments when entire systems of organizations are transferred do happen. For example, in Walt Disney Company’s lawsuits in France, at Disneyland Paris, because of the lack of fit between personnel policies and the French employees charged to enact them. The MNE literature suggests a variety of conditions that can mitigate the negative effects of foreignness. Foremost among these is previous experience in internationalization. Several cultural paradoxes concerning the Disney Case

  1. First, foreignness was an asset, not a liability, in Disney’s attempt at theme park internationalization, into Tokyo.
  2. The role of experience in internationalization and the host country context did little to mitigate the liability of foreignness in the case of Disney’s consequent attempt at internationalization in Paris. Disney drew the wrong conclusions from the problem-free “cope-exactly” strategy it used in Japan.
  3. Cultural distance, considered a key indicator of firm foreignness, had a reverse effect in Disney’s cases of internationalization; there begin greater cultural distance between the U.S. and Japan than between the U.S. and France. These paradoxes suggest that although we know a lot about foreignness, strategic fit, and differences in host country environments, there is something about the role of the cultural context in the transnational transfer of firm assets that we are missing. What is missing in our knowledge base is an understanding of the process of recontextualization – how transferred organizational assets take on new meanings in distinct cultural contexts. In order to understand this phenomenon, we need to not only examine the process of transnational transmission, but also develop a deeper understanding of the dynamics of host country reception. Organization carry out both these processes – transmission and reception – through the vehicle of language. Therefore, language is a key aspect of the cultural context that directly affects foreignness and firm assets.

Consider the same black-and-white kimono worn by a Western woman as an outer wrap to a party in the U.S. Severed from its complex chain of signification particular in Japan, in this new context, the signifier might simply connote a certain cosmopolitan chicness. Further, a Japanese observer attending the party might make assumption about the Western woman wearing a kimono, if he or she were to use the Japanese system of signification associated with kimono protocol (funeral clothes). Such mistaken assumptions about the signified connotations of a sign are due to a lack of semantic fit. Semiotics identifies three levels of semantic meaning:

- Conceptual  meaning at the deepest level of core values and assumptions, and is most abstract. (Mickey as ideal American boy, Malificent as the embodiment of evil) - Narrative  meaning that is actualized through value-laden stories. (Disney’s fairy tales that put forth certain life-goals, such as goodness and wealth in the case of Cinderella) - Discursive  meaning that is generated figuratively by attaching values to words, and generally does so by appealing to the five senses. (Disney’s Cinderella happiness expressed in capturing the love of a handsome prince, and wealth expressed in grand balls and elaborate coaches). Lack of semantic fit might occur at any one or a combination of these three semantic levels of signification. Considering again the transnational example of the case of the displaced kimono, the lack of semantic fit takes place at the conceptual level – the basic association between the signifier of the black-and-white formal kimono to the abstract signified of the funeral in U.S. context has been lost. Recontextualization The second critical contribution of semiotics to international management is the understanding of the process by which signs evolve in social contexts. The emphasis on the role of the historical, political and cultural contexts of the society in attributing meaning to signs provides an important foundation for the process by which firm assets take on distinct meaning in new cultural contextsrecontextualization. Figure 3 is a graphic representation of the rudimentary aspects of recontextualization identifying three key triggers of semiosis in transnational transfer.

Semiosis consists of three phases:

  1. First, there is initial semiosis (S1), as local existing meanings or pre-existing meanings are attached to the assets. Firm assets are transferred into new environments that are not blank slates but rather have ample interconnections with home culture and often have pre-existing knowledge of a firm’s assets. (Example of initial semiosis is the foreign understanding of sushi as raw fish. In de Japanese context sushi is understood as pickled rice. Sashimi is the term used for raw fish is Japan. In the West, where fish generally is served cooked, the strangeness of eating raw fish fixed recipient attention on the fish rather than the rice, thereby giving way to the recontextualized understanding of sushi as raw fish)
  2. Second, Ongoing semiosis (S2) , in which the meanings of the firm assets evolve as they are utilized and made sense of in the new context. As the firm assets are implemented and then intermixed within the new host environment, they continue to undergo recontextualization.
  3. Third, there is reflective semiosis (S3) , as the new meaning associated with the firm assets are repatriated to the home context. (An obvious example of this is having the California roll becoming a standard sushi offering in Japan) Thus, shifts in meaning due to recontextualization can occur at he onset (S1)l over time, as the firm assets receive unexpected and emergent signification in their new cultural context (S2); and reflexively, as cross-cultural innovations of the firm assets are repatriated into the original home context (S3). In sum, recontextualization is the process by which the consumer or transferee makes sense of the product, practice, or service transferred from abroad into his or her own culture. Figure 4 provides a framework for analysing recontextualization as semiotic patterns in cross-national shifts in systems of signification. IT shows two country contexts with two distinct systems of signification: (1) the country of origin, to (2) an arbitrary host country, designated X.

A person rooted in more than one culture is usually able to spot and reconcile differences in understanding and communication, serving as a buffer both within teams and more broadly in the organization. In addition, he or she will probably be more open to adapting to multiple mind-sets and communication modes. These skills equip L’Oréal’s multiculturals to play five critical roles:

  1. Recognizing new-product opportunities  L’Oréal Paris finds that multiculturals are better placed than others to raw analogies among cultural groups.
  2. Preventing losses in translation  cross-cultural semantic differences can cause confusion. What the person initiating a communication means is not necessarily what the person receiving the communication hears.
  3. Integrating outsiders  teams staffed with people who are not multicultural find it hard to assimilate newcomers with different behaviours and modes of communication, particularly when the team has developed its own norms or its members belong predominantly to one culture. Given the intensity of a team’s internal interactions, incumbent team members can quickly resort to stereotypes about a newcomer. The presence of a multicultural can help prevent this.
  4. Mediating with bosses  the role of cultural buffer is important at L’Oréal Paris, especially for reducing the potential for conflicts between the multicultural product-development teams and the people they report to, who are, fort he most part, French.
  5. Bridging differences between subsidiaries and headquarters  multicultural managers have frequently diffused acrimonious communications between an subsidiary and L’Oréal Paris. AS MARKETS AND COMPETENCIES have become more dispersed and differentiated with the strategic thrust into emerging regions, companies need to reverse the old knowledge flows (from their home country to far-flung subsidiaries) and instead learn how to learn from their peripheries. Culturally this is difficult. It calls for a shift from an ethnocentric approach to a truly global network. L'Oréal's strategic use of multicultural managers provides a shortcut: These managers can integrate knowledge from many locations to develop successful new products and minimize conflict between home-country and international executives. It's an approach that can transfer easily to other industry and functional contexts, in which complex knowledge from multiple cultures must be coordinated and shared,

Meyer – Navigating the Cultural Minefield

Culture is too complex to be measured meaningfully along just one or two dimensions. I have built on the work of many in my field to develop a tool called the Culture Map. It is made up of eight scales representing the management behaviours where cultural gaps are most common. By comparing the position of one nationality too another on each scale, the user can decode how culture influences day-to-day collaboration. The Culture Map The eight scales on the map are based on decades of academic research into culture from multiple perspectives. The scales and the metrics are:

  1. Communicating  comparison of cultures on the Communication scale by measuring the degree to which they are high- or low-context. In low-context cultures, good communication is precise, simple, explicit and clear. Messages are understood at face value. In high-context cultures, communication is sophisticated, nuanced and layered. Messages are often implied but not plainly stated. More is left open to interpretation.
  2. Evaluating  this scale measures the preference for frank versus diplomatic negative feedback.
  3. Persuading  the traditional way to compare countries along this scale is to assess how they balance holistic and specific patterns.
  4. Leading  this scale measures the degree of respect and deference shown to authority figures, placing countries on a spectrum from egalitarian to hierarchical.
  5. Deciding  this scale measures the degree to which a culture is consensus- minded.
  6. Trusting  Cognitive trust (from the head) can be contrasted with affective trust (from the heart).
  7. Disagreeing  tolerance for open disagreement and inclination to see it as either helpful or harmful to collegial relationships.
  8. Scheduling  how much value is placed on operating in structured, linear fashion versus being flexible and reactive. The Culture Map shows positions along these eight scales for a large number of countries, based on surveys and interviews. These profiles reflect the value systems of society at large, not those of all individuals in it.

Research on culture There has been a lot of research on national cultural differences, but almost none of them say anything about the dynamic aspects of intercultural encounters and how managers in particular contexts deal with cultural differences. In the IJV analyzed in this article, situational elements and change mattered greatly in highlighting some kinds of differences and making certain forms of negotiated change desirable for team members. This article extends the approach of Strauss (1978) to the multicultural organizational arena. It is mentioned that usually one of the national cultural groups within a bicultural organization has a more dominant influence than the other in shaping the working cultures of IJVs teams. Assumption 1: The national cultural origins of IJV team members serve as initial anchors or points of departures for team members as sources of values, meanings and norms brought to the bicultural organizational context. The negotiated culture perspective sees national cultural traits brought to a venture as elements that, over time, can be recombined or modified through on-going interactions among team members. Assumption 2 : The structure of the IJV, the characteristics of its members and the relations of power and interdependence among them, and the specific issues and threats confronted by the team will shape which of the many cultural traits become salient in the social negotiation of the IJV working culture. Experiences in bicultural IJVs challenge members to see themselves, work situations and others in new ways. As such, the IJV provides experiences that also serve as selective mirrors for viewing oneself and one’s own culture. The ‘other’ and what makes it such, is therefore a product of how we understand the situation and ourselves, and is subject to learning and modification over time. What also is important with regard to understanding working culture formation is that there are differences within cultures. An individual’s culture of origin does not necessarily neatly reflect the general attributes of his or her representative cultural group. Assumption 3 : When members from two distinct national and organizational cultures come together a ‘negotiated culture’ emerges. For example: given culture A and B, the negotiated cultural outcome will neither be A nor B nor AB, but some other outcome more like a mutation containing parts of both parents as well as some aspects of its own idiosyncratic making. So to say an IJV is a contested terrain where groups compete to assert norms and practices. Assumption 4: The specific attributes of an IJVs’ working culture will be emergent and cannot be determined a priori Assumption 5: The cultural stances of organizational actors may map into ‘issue domains’ in unexpected ways.

The IJV setting and study The plant was founded in 1710 as a paper mill in a small German town; the plant has always belonged to one of the town’s chief employers. Before the JV, a small family owned company operated the plant. After the JV, it was also partially owned by a Japanese company, both have 47.5 per cent, it is now called Nutech, and another Japanese trading company took a 5 per cent ownership share. The reason for the JV was that the plant was suffering from chronic low productivity but management had been reluctant to close it simply for legal and social reasons. For this study interviews were the most important source of data. In total 17 subjects were interviewed: 6 Japanese and 11 Germans. There ware three phases.

  1. Start-up period emergent issue domains and negotiated outcomes
  2. Adjustment period negotiated outcomes and more emergent issue domains
  3. Stable growth period and more negotiated outcomes. Conclusion The negotiated culture gradually emerges at Nutech; in spite of a persistence of some individual and group differences. This study acknowledges the importance of national cultural attributes as conceptual anchors for venture team members. There are a range of cultural stances that members exhibit with respect to national cultural attributes ranging from marginal – to hyper normal orientations and show how these stances surface around particular organizational issues that arise at distinct stages in an international venture’s history (table 4). It is stated, which is important, that national culture attributes are important, but not effective determinants or organizational culture formation in complex cultural systems. National cultural traits are not reliable predictors of the issues and differences that are likely to emerge when mixed-culture organizations are formed and evolve. This study reveals that the importance of individual and contextual influences on organizational culture formation. The individual ones refer both to the variability of members’ cultures of origin as well as to the differences in cultural stances members exhibit with respect to their national cultures. The decision-makers in IJVs often deal with new situations for which in neither party has existing repertoires, it is likely that much of the working culture will evolve as a result of negotiated outcomes. It is stated that there is much difference within cultural groups with regard to the degree of internationalization of cultural attributes by individuals. So, cultural stances need to be weighted by an individual’s relative position of power in a venture to determine the amount of influence they might have on organizational culture

Lecture 3

Bremmer (2005) – Managing Risk in an Unstable World

As emerging markets generate greater shares of global supply and demand, companies need better methods to weigh political risk against financial reward. Companies fear unpredictable change, even as they seek profit from he opportunities change creates. To help weigh dangers against opportunities, corporations mulling foreign ventures routinely consult economic risk analysts. But basing global investment decisions without understanding the political context is like basing nutrition decisions on calorie count without examining the list of ingredients. Reassuring data on countries’ per capita income, growth, inflation often obscures potential threats from other sources. Iran’s parliament, for example, last year passed legislation that complicates foreign companies’ abilities to plant stakes in that country’s telecom sector. This is a example of political risk , broadly defined as the impact of politics on markets. Political risk is influenced by the passage of laws, the foibles of leaders, and the rise of popular movements – in short, all the factors that might politically stabilize or destabilize a country. Corporate leaders may lack the sophisticated understanding this very complex subject requires. Political risk analysis is more subjective than its economic counterpart and demands that leaders grapple not just with broad, easily observable trends, but also with nuances of society. This article will help corporate leaders become better appraisers of information about the myriad shifting influences on global investment. Armed with that understanding, business strategists can minimize the risks and seize opportunities far beyond their home shores. Politics is Everyone’s Business Any company with exposure in foreign markets needs early, accurate information on political developments. There are four principle reasons for this:

  1. International markets are more interconnected than even before.
  2. The U.S. is making the world a more volatile place, and that has changed risk calculations everywhere.
  3. The offshoring trend is growing. Businesses shift some operations to countries where labour is cheap – but the labour is cheap for a reason.
  4. The world is increasingly independent for energy on states troubled by considerable political risk – Saudi Arabia, Iran, Nigeria, Russia etc. It is difficult to imagine a business that is not affected by at least one or two of these developments. And corporations’ exposure will only grow as supply chains become more global and developing countries increasingly participate in international trade. Strength Against Shocks Two things determine a nation’s stability: - Political leaders' capacity to implement the policies they want even amidst shocks. - Their ability to avoid generating shocks of their own.

A country with both capabilities will always be more stable than a country with just one. Shocks themselves are another important concept of political risk. They can be either internal (demonstrations in Egypt; a transfer of political power in Cuba) or external (thousands of refugees from North Korea fleeing into China; the tsunami in Southeast Asia). Risk by the Numbers Speculation about the outcomes of these or other scenarios appear in numerous publications, but corporations debating operational or infrastructure investments abroad need more objective, rigorous assessments than those found in the op-ed pages. Companies can either:

- Buy political risk services from consultants, or - Develop the capacity in-house (Shell, AIG). Either way, a complete and accurate picture of any country’s risk requires: - Analysts with strong reportial skills; - Timely and accurate data on a variety of social and political trends; and - A framework for evaluating the impact of individual risks on stability. The Eurasia Group developed a tool that incorporates 20 composite indicators of risk in emerging markets. The DESIX scores risk variables according to both their structural and temporal components. Structural scores highlight long-term underlying conditions that affect stability. They then serve as a baseline for temporal scores, which reflects the impact of policies, events, and developments that occur each month. The indicators are organized into four equally weighted subcategories: - Government - Society - Security - Economy Ratings for all subcategories are aggregated into a single composite stability rating, which is expressed as a number on a scale of zero to 100 – from a failed state to a fully institutionalized, stable democracy.