Your SlideShare is downloading. ×
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Chapter 03: The Institutional Context of Multinational Management
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Chapter 03: The Institutional Context of Multinational Management

1,861

Published on

Multinational Management: A Strategic Approach …

Multinational Management: A Strategic Approach
4th Edition
Authors: John B. Cullen, K. Praveen Parboteeah

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,861
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
52
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Chapter Copyright© 2004 Thomson Learning All rights reserved 3 The Institutional Context of Multinational Management
  • 2. Copyright© 2005 South-Western/Thomson Learning All rights reserved Learning Objectives • Understand the national context and how it affects the business environment • Understand the influence of the institutional context of countries • Understand how social institutions influence both people and organizations • Understand the national context and how it affects the business environment • Understand the influence of the institutional context of countries • Understand how social institutions influence both people and organizations
  • 3. Copyright© 2005 South-Western/Thomson Learning All rights reserved Learning Objectives • Understand the basic economic systems and influence on multinational operations • Understand industrialization and implications for multinationals • Understand the world’s basic religions • Develop an understanding of education • Understand the basic economic systems and influence on multinational operations • Understand industrialization and implications for multinationals • Understand the world’s basic religions • Develop an understanding of education
  • 4. Copyright© 2005 South-Western/Thomson Learning All rights reserved Learning Objectives • Understand the convergence perspective on organizations • Understand the importance of the national context and its connection with other international management areas • Understand the convergence perspective on organizations • Understand the importance of the national context and its connection with other international management areas
  • 5. Copyright© 2005 South-Western/Thomson Learning All rights reserved Institutional Context • Includes other elements besides national culture that can produce important differences • Understanding the institutional context is therefore extremely important for better multinational management • Includes other elements besides national culture that can produce important differences • Understanding the institutional context is therefore extremely important for better multinational management
  • 6. Copyright© 2005 South-Western/Thomson Learning All rights reserved Social Institutions • Complex of positions, roles, norms, and values organizing stable patterns of human resources to sustain important societal structures • Three key social institutions • Economic systems • Level of industrialization • Religions • Complex of positions, roles, norms, and values organizing stable patterns of human resources to sustain important societal structures • Three key social institutions • Economic systems • Level of industrialization • Religions
  • 7. Copyright© 2005 South-Western/Thomson Learning All rights reserved Social Institutions and Influence on Society • Regulative social institution: constrains behaviors through rules • Cognitive social institution: widely shared knowledge regarding how things are done • Normative social institution: values and norms promulgated by the social institution • Regulative social institution: constrains behaviors through rules • Cognitive social institution: widely shared knowledge regarding how things are done • Normative social institution: values and norms promulgated by the social institution
  • 8. Copyright© 2005 South-Western/Thomson Learning All rights reserved Social Institutions and Influence on Organizations • Organizational isomorphism: pressure to follow similar paths in management practices • Organizational isomorphism: pressure to follow similar paths in management practices
  • 9. Copyright© 2005 South-Western/Thomson Learning All rights reserved Organizational Isomorphism • Coercive isomorphism: forces that coerce organizations to adopt certain practices • Mimetic isomorphism: organizations purposefully copy the strategies of the most successful organizations • Normative isomorphism: conformance to professional and technical norms • Coercive isomorphism: forces that coerce organizations to adopt certain practices • Mimetic isomorphism: organizations purposefully copy the strategies of the most successful organizations • Normative isomorphism: conformance to professional and technical norms
  • 10. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic Systems • Economic systems: system of beliefs, activities, organizations, and relationships that provide the goods and services of a society • Important implications based on • Type of economic systems • Market transitions • Privatization • Economic systems: system of beliefs, activities, organizations, and relationships that provide the goods and services of a society • Important implications based on • Type of economic systems • Market transitions • Privatization
  • 11. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic Systems • Capitalist/market economy: production is decentralized to private owners • Owners perform activities to make profits • Socialist/command economy: production resources are owned by the state • Production decisions centrally coordinated • Mixed economy: combines aspects of capitalist and socialist economies • Ex., Sweden, France, Denmark, Italy, and India • Capitalist/market economy: production is decentralized to private owners • Owners perform activities to make profits • Socialist/command economy: production resources are owned by the state • Production decisions centrally coordinated • Mixed economy: combines aspects of capitalist and socialist economies • Ex., Sweden, France, Denmark, Italy, and India
  • 12. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic Systems: Implications • Decisions to operate in a country can be made based on the dominant economic type • In mixed economies, multinationals should expect to subordinate its economic goals and respect social objectives. • Decisions to operate in a country can be made based on the dominant economic type • In mixed economies, multinationals should expect to subordinate its economic goals and respect social objectives.
  • 13. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic Systems: Implications (cont.) • Multinationals should expect to develop more formal relations with the government in mixed economies. • Index of economic freedom can be used to determine the extent of governmental intervention • Multinationals should expect to develop more formal relations with the government in mixed economies. • Index of economic freedom can be used to determine the extent of governmental intervention
  • 14. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.2: Selected Country Scores on Index of Economic Freedom
  • 15. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic System: Market Transitions • Changes societies experience as they move from socialism to a market-based economy • Multinational implications • Need to turn around inefficient, formerly state- owned companies to perform business functions • Motivational issues with workers • Changes societies experience as they move from socialism to a market-based economy • Multinational implications • Need to turn around inefficient, formerly state- owned companies to perform business functions • Motivational issues with workers
  • 16. Copyright© 2005 South-Western/Thomson Learning All rights reserved Economic System: Privatization • Privatization: transfer of state ownership to private individuals • Implications • Significant opportunities to invest in companies • Opportunities to access new markets and cheap labor • Privatization: transfer of state ownership to private individuals • Implications • Significant opportunities to invest in companies • Opportunities to access new markets and cheap labor
  • 17. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.3: Selected Countries and the Amount of Money Raised by Privatization
  • 18. Copyright© 2005 South-Western/Thomson Learning All rights reserved Industrialization • How production is organized and distributed in society • Types • Pre-industrial • Industrial • Post-industrial • How production is organized and distributed in society • Types • Pre-industrial • Industrial • Post-industrial
  • 19. Copyright© 2005 South-Western/Thomson Learning All rights reserved Industrialization • Pre-industrial society: agriculture dominates the economic environment • Industrial society: dominance of the secondary or manufacturing sectors • Post-industrial society: emphasis on the service sectors • Pre-industrial society: agriculture dominates the economic environment • Industrial society: dominance of the secondary or manufacturing sectors • Post-industrial society: emphasis on the service sectors
  • 20. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.4: Distribution of Production Activities by Sectors
  • 21. Copyright© 2005 South-Western/Thomson Learning All rights reserved Implications of Industrialization • Direct correspondence between industrialization and economic development • Industrial societies favor growth and innovation • Favorable environment for business • Industrial societies present significant market size and growth • Direct correspondence between industrialization and economic development • Industrial societies favor growth and innovation • Favorable environment for business • Industrial societies present significant market size and growth
  • 22. Copyright© 2005 South-Western/Thomson Learning All rights reserved Industrialization • Pre-industrial countries provide cheap labor and untapped markets • Post-industrial societies • Emphasis on quality-of-life as opposed to economic achievement • Pre-industrial countries provide cheap labor and untapped markets • Post-industrial societies • Emphasis on quality-of-life as opposed to economic achievement
  • 23. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.5: Materialist Scores of Selected Countries
  • 24. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.6: Post-materialist Scores for Selected Countries
  • 25. Copyright© 2005 South-Western/Thomson Learning All rights reserved Religion • Shared set of beliefs, activities, and institutions that have basis upon faith in supernatural forces • Forms the foundation of human society • Provides individuals with guidelines to deal with issues • Christianity, Islam, Hinduism, and Buddhism are followed by almost 71% of the world’s population • Shared set of beliefs, activities, and institutions that have basis upon faith in supernatural forces • Forms the foundation of human society • Provides individuals with guidelines to deal with issues • Christianity, Islam, Hinduism, and Buddhism are followed by almost 71% of the world’s population
  • 26. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.7: Distribution of Religions Around the World
  • 27. Copyright© 2005 South-Western/Thomson Learning All rights reserved Christianity • Religion based on the life and teachings of Jesus • The most practiced religion around the world • Protestantism emphasizes wealth and hard work for the glory of God • Ten commandments provides the basis for ethical behaviors • Religion based on the life and teachings of Jesus • The most practiced religion around the world • Protestantism emphasizes wealth and hard work for the glory of God • Ten commandments provides the basis for ethical behaviors
  • 28. Copyright© 2005 South-Western/Thomson Learning All rights reserved Islam • Religion based on the submission to the will of Allah (God) • The second largest of the world’s religions • Muslims live according to Islamic laws or Shari’ah • Based on five pillars • Religion based on the submission to the will of Allah (God) • The second largest of the world’s religions • Muslims live according to Islamic laws or Shari’ah • Based on five pillars
  • 29. Copyright© 2005 South-Western/Thomson Learning All rights reserved Islam (cont.) • Implications for multinationals • Accommodate praying five times a day • The Ramadan: a month of fasting • Natural concern with social justice • Prohibits the payment or receipt of interest • Gender roles • Implications for multinationals • Accommodate praying five times a day • The Ramadan: a month of fasting • Natural concern with social justice • Prohibits the payment or receipt of interest • Gender roles
  • 30. Copyright© 2005 South-Western/Thomson Learning All rights reserved Hinduism • Acceptance of the ancient traditions of India that are based on the Vedic scriptures • Currently 760 million Hindus living around the world • Belief in reincarnation • The caste system • Ethical behaviors; respect for parents • Acceptance of the ancient traditions of India that are based on the Vedic scriptures • Currently 760 million Hindus living around the world • Belief in reincarnation • The caste system • Ethical behaviors; respect for parents
  • 31. Copyright© 2005 South-Western/Thomson Learning All rights reserved Hinduism (cont.) • Implications for multinationals • Spiritual achievement is an important value for most Hindus • Caste system is very pervasive • Need to be aware of caste system, e.g.. lower caste supervising higher caste can be a problem • Implications for multinationals • Spiritual achievement is an important value for most Hindus • Caste system is very pervasive • Need to be aware of caste system, e.g.. lower caste supervising higher caste can be a problem
  • 32. Copyright© 2005 South-Western/Thomson Learning All rights reserved Buddhism • Religious tradition that focuses on the reality of world suffering and the ways one can be freed from suffering • Craving and desires produce suffering • Dominant religion in Asia • Religious tradition that focuses on the reality of world suffering and the ways one can be freed from suffering • Craving and desires produce suffering • Dominant religion in Asia
  • 33. Copyright© 2005 South-Western/Thomson Learning All rights reserved Buddhism (cont.) • Implications for multinationals • Encourages hard work; laziness is seen as negative • Emphasizes teamwork; all beings are interconnected • Emphasis on compassion and love • Implications for multinationals • Encourages hard work; laziness is seen as negative • Emphasizes teamwork; all beings are interconnected • Emphasis on compassion and love
  • 34. Copyright© 2005 South-Western/Thomson Learning All rights reserved Religiosity • Indication of the importance of acceptance of the core philosophies of religion in one’s life • Gives an idea of the degree of responsiveness needed to accommodate religion • Indication of the importance of acceptance of the core philosophies of religion in one’s life • Gives an idea of the degree of responsiveness needed to accommodate religion
  • 35. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.8: Religiosity of Selected Countries from the World Values Survey
  • 36. Copyright© 2005 South-Western/Thomson Learning All rights reserved Education • Education: organized networks of socialization experiences that prepare individuals to act in society • Central element in organization of society • Helps construct competencies, professions, and professionals • Education: organized networks of socialization experiences that prepare individuals to act in society • Central element in organization of society • Helps construct competencies, professions, and professionals
  • 37. Copyright© 2005 South-Western/Thomson Learning All rights reserved Education: Implications • Gives an idea of the skill level of workers in any society • The more educated, the more skills workers have • Multinationals can look at educational attainment scores to determine the nature of the workforce • Gives an idea of the skill level of workers in any society • The more educated, the more skills workers have • Multinationals can look at educational attainment scores to determine the nature of the workforce
  • 38. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.9: Educational Attainment Scores for a Selected Number of Countries
  • 39. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.10: Mathematics Scores for Top 10 Countries
  • 40. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 3.11: Science Scores for Top 10 Countries
  • 41. Copyright© 2005 South-Western/Thomson Learning All rights reserved Organizations Alike: Globalization and Convergence • Globalization is pushing organizations to be more similar • Global customers and products • Growing levels of industrialization and economic development • Global competition and global trade • Globalization is pushing organizations to be more similar • Global customers and products • Growing levels of industrialization and economic development • Global competition and global trade
  • 42. Copyright© 2005 South-Western/Thomson Learning All rights reserved Globalization and Convergence • Other convergence forces • Cross-border mergers, acquisitions, and alliances • Cross-national mobility of managers • Internationalization of business education • Other convergence forces • Cross-border mergers, acquisitions, and alliances • Cross-national mobility of managers • Internationalization of business education

×