International Comparative Management all lectures 2020/2021
Lecture 1
- Management is embedded in society
- Organizations are different from one another
o We are interested in the influence of institutions and culture
Institutions at the level of society laws, rules, ‘generally accepted
ways of behaving and doing business’
- If we meet someone from another country, and that person is behaving in unexpected
ways, it is too easy to think this may be caused by his or her culture
o Situation, personality can also be causes of behaviour
Contingency factors
- Contingency Approach in organization theory
o Characteristics of management & organization depend on task environment
and related contingency factors
- There are a lot of factors that influence
management and organization
o If we want to single out the effect of
culture or institutions, we need to
take into account these
contingency factors
o Culture and institutions can also influence each other (!)
- A contingency is a circumstance or condition that may or may not apply
- Be aware of the danger of “cultural attribution”
o Assume that something is due to cultural differences, but we also need to
control for other factors (e.g. organization size, technology; contingency
factors)
- When looking for the influence of differences in institutional/cultural environment,
always control for differences in:
o Organization size; age
o Industry; technology
- Two strategies for dealing with contingency factors in empirical research: inclusion of
control variables and matching of samples
- Contingency factors can be direct (e.g. bigger firms are more formalized), but they
can also moderate
- Exam: ‘what are the variables of interest and what are the control variables?’
Contingency factors
- Strategy of “matched samples”
o Select narrow, but comparable subjects in the cultures to be compared
Specify on companies of certain size and industry within countries, so
not: all companies in the Netherlands compared to all companies in
Belgium
o Draw conclusions from this comparison regarding differences between the
cultures in general
, o Assumption: differences between the narrow samples are representative for
the general differences
What is ‘globalization’?
- A qualitative shift towards a global economic system that is no longer based on
autonomous national economies but on a consolidated global marketplace for
production, distribution, and consumption
- Countries and national economies become less important
o The boundaries become lower, and the world becomes one market place for
products, capital and labour
- As societies developed, the links between societies have become stronger
o These links have become global
- Globalization process is slowing down. Or is globalization even reversing? ‘
o Drop in 2007 – 2008: crisis
Forces promoting / impeding globalization
- Forces promoting (further) globalization:
o Decrease of transportation costs
o Decrease of communication costs
o Integration international financial markets
Capital can flow very easily from one country to another
o Mass media, social media
o International migration
Money stream/flow from migrated people back to the country of origin
- Forces impeding (further) globalization:
o Economic: Lower company profits outside home market; decreasing economic
gains of trade liberalization
o Social: Unbalanced distribution of benefits
o Cultural: Search for cultural authenticity
, o Political Limits of democracy
- Limits to globalization: economic
o Lower company profits outside home market
Companies become more hesitant to invest abroad
o Macro-economic
o At the country level globalization has two effects
Wealth creation pie gets bigger, everybody is better of
Wealth redistribution the pie gets bigger, but some can get smaller
pieces
Some people get richer, but some also get poorer, within the
same country
Compensate those people who lose
o The redistributive effects get larger relative to the wealth creation effects as
the level of trade liberalization increases
o What if the “losers from free trade” need to be compensated?
- Limits to globalization: social
o Unbalanced distribution of benefits
Distribution between capital and labour
The wealth created by globalization has gone to the
shareholders, and those who are dependent on labour income
are worse off
Benefits of globalization typically go not to the middle income groups in
Western society, their income is flat
o Ordinary workers in the USA have not profited from globalization
- Limits to globalization: cultural
o Search for cultural authenticity
Borrowing from other cultures is not always good might damage
your own culture
Globalization leads to a mix of cultures
o The issue of “cultural appropriation’’
It is bad if you take over elements of other cultures
You should not take elements of another culture and incorporate them
into you own culture
E.g. a Chinese dress as a prom dress
- Limits to globalization: political
o The trilemma of globalization, sovereignty and democracy
You can only have two of those, not all three
Scenarios of globalization
- Four possible scenarios:
1. Convergence
2. Specialization
3. Incremental adaptation
4. Hybridization
, Scenario 1: Convergence
- The world will look more alike
- The Anglo-American version of capitalism will be adopted worldwide (as in Europe
after WW-II) Anglo-American version of capitalism = countries will start to look
more alike
- But: contradicted by successes of, e.g., Japan, Korea, China
Scenario 2: Specialization
- Economies will specialize in where they have a comparative advantage, e.g., based
on Porter’s “diamond” factors
- But: a large proportion of trade is intra-industry trade
o That is not a sign of specialization
Scenario 3: Incremental adaptation
- Countries tend to evolve in the direction of the most efficient system and practices
o They don’t all move at the same pace
- However, cultures and institutions constrain countries & firms in this process
Scenario 4: Hybridization
- Parts of the economy/society become part of the global system
- Other parts may remain largely unaffected, e.g.:
These parts are not mobile
o Healthcare
o Education
Most education is nationalized / organized on the national scale
o Personal services
You need face-to-face interaction
o Construction
Process of construction is often localized; subcontract local
constructors
Summary
- Globalization is a qualitative shift towards a more integrated social and economic
world system
- Globalization seems to have come to a halt
- There are economic, social, cultural and political factors that play a role in this
- Further globalization in the future can follow different scenarios
Lecture 2
What is culture?
- Culture is difficult to define, because it encompasses so many elements:
o Ideas and values
o Patterns of behaviour
Lecture 1
- Management is embedded in society
- Organizations are different from one another
o We are interested in the influence of institutions and culture
Institutions at the level of society laws, rules, ‘generally accepted
ways of behaving and doing business’
- If we meet someone from another country, and that person is behaving in unexpected
ways, it is too easy to think this may be caused by his or her culture
o Situation, personality can also be causes of behaviour
Contingency factors
- Contingency Approach in organization theory
o Characteristics of management & organization depend on task environment
and related contingency factors
- There are a lot of factors that influence
management and organization
o If we want to single out the effect of
culture or institutions, we need to
take into account these
contingency factors
o Culture and institutions can also influence each other (!)
- A contingency is a circumstance or condition that may or may not apply
- Be aware of the danger of “cultural attribution”
o Assume that something is due to cultural differences, but we also need to
control for other factors (e.g. organization size, technology; contingency
factors)
- When looking for the influence of differences in institutional/cultural environment,
always control for differences in:
o Organization size; age
o Industry; technology
- Two strategies for dealing with contingency factors in empirical research: inclusion of
control variables and matching of samples
- Contingency factors can be direct (e.g. bigger firms are more formalized), but they
can also moderate
- Exam: ‘what are the variables of interest and what are the control variables?’
Contingency factors
- Strategy of “matched samples”
o Select narrow, but comparable subjects in the cultures to be compared
Specify on companies of certain size and industry within countries, so
not: all companies in the Netherlands compared to all companies in
Belgium
o Draw conclusions from this comparison regarding differences between the
cultures in general
, o Assumption: differences between the narrow samples are representative for
the general differences
What is ‘globalization’?
- A qualitative shift towards a global economic system that is no longer based on
autonomous national economies but on a consolidated global marketplace for
production, distribution, and consumption
- Countries and national economies become less important
o The boundaries become lower, and the world becomes one market place for
products, capital and labour
- As societies developed, the links between societies have become stronger
o These links have become global
- Globalization process is slowing down. Or is globalization even reversing? ‘
o Drop in 2007 – 2008: crisis
Forces promoting / impeding globalization
- Forces promoting (further) globalization:
o Decrease of transportation costs
o Decrease of communication costs
o Integration international financial markets
Capital can flow very easily from one country to another
o Mass media, social media
o International migration
Money stream/flow from migrated people back to the country of origin
- Forces impeding (further) globalization:
o Economic: Lower company profits outside home market; decreasing economic
gains of trade liberalization
o Social: Unbalanced distribution of benefits
o Cultural: Search for cultural authenticity
, o Political Limits of democracy
- Limits to globalization: economic
o Lower company profits outside home market
Companies become more hesitant to invest abroad
o Macro-economic
o At the country level globalization has two effects
Wealth creation pie gets bigger, everybody is better of
Wealth redistribution the pie gets bigger, but some can get smaller
pieces
Some people get richer, but some also get poorer, within the
same country
Compensate those people who lose
o The redistributive effects get larger relative to the wealth creation effects as
the level of trade liberalization increases
o What if the “losers from free trade” need to be compensated?
- Limits to globalization: social
o Unbalanced distribution of benefits
Distribution between capital and labour
The wealth created by globalization has gone to the
shareholders, and those who are dependent on labour income
are worse off
Benefits of globalization typically go not to the middle income groups in
Western society, their income is flat
o Ordinary workers in the USA have not profited from globalization
- Limits to globalization: cultural
o Search for cultural authenticity
Borrowing from other cultures is not always good might damage
your own culture
Globalization leads to a mix of cultures
o The issue of “cultural appropriation’’
It is bad if you take over elements of other cultures
You should not take elements of another culture and incorporate them
into you own culture
E.g. a Chinese dress as a prom dress
- Limits to globalization: political
o The trilemma of globalization, sovereignty and democracy
You can only have two of those, not all three
Scenarios of globalization
- Four possible scenarios:
1. Convergence
2. Specialization
3. Incremental adaptation
4. Hybridization
, Scenario 1: Convergence
- The world will look more alike
- The Anglo-American version of capitalism will be adopted worldwide (as in Europe
after WW-II) Anglo-American version of capitalism = countries will start to look
more alike
- But: contradicted by successes of, e.g., Japan, Korea, China
Scenario 2: Specialization
- Economies will specialize in where they have a comparative advantage, e.g., based
on Porter’s “diamond” factors
- But: a large proportion of trade is intra-industry trade
o That is not a sign of specialization
Scenario 3: Incremental adaptation
- Countries tend to evolve in the direction of the most efficient system and practices
o They don’t all move at the same pace
- However, cultures and institutions constrain countries & firms in this process
Scenario 4: Hybridization
- Parts of the economy/society become part of the global system
- Other parts may remain largely unaffected, e.g.:
These parts are not mobile
o Healthcare
o Education
Most education is nationalized / organized on the national scale
o Personal services
You need face-to-face interaction
o Construction
Process of construction is often localized; subcontract local
constructors
Summary
- Globalization is a qualitative shift towards a more integrated social and economic
world system
- Globalization seems to have come to a halt
- There are economic, social, cultural and political factors that play a role in this
- Further globalization in the future can follow different scenarios
Lecture 2
What is culture?
- Culture is difficult to define, because it encompasses so many elements:
o Ideas and values
o Patterns of behaviour
