Comparative International Management

Arndt Sorge, Niels Noorderhaven, Carla Koen

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317756255
• Edition: 2
• Topic: Commerce
• Subtopic: Commerce Général

The use of comparisons to explain, analyze and understand social and economic phenomena is recognized as a valuable social science tool. This textbook deals with the differences in management and organization between nations and their effects on multinational enterprises.

In comparing management practice across the world, the authors cover themes such as national cultures, diversity and globalization. Students are guided through the key business disciplines, providing a broad introduction to the field and including truly global coverage.

With student and instructor friendly resources such as chapter summaries, mini-case scenarios, larger case studies and power-point slides, this book is core reading for students of international business and international management.

1
Introduction to the approaches in comparative international management

Learning objectives

By the end of this chapter you will be able to:

• understand the differences between universalistic and particularistic theories
• evaluate the use and usefulness of contingency theory
• assess the explanatory role of culture
• distinguish between emic and etic approaches to cultural analysis
• reflect critically upon the link between institutions and organization and management issues
• appreciate the differences between the two main institutional clusters
• appreciate the complexity of globalization research
• reflect upon the possible consequences of globalization.

Chapter outline

1.1 Introduction to the theory and research literature

1.2 Universalistic theories

The contingency approach

1.3 Particularistic theories

The cultural approach

The institutional approach

1.4 Globalization

1.5 An integrative approach: societal analysis

Study questions

Further reading

Notes

References

1.1 Introduction to the theory and the research literature

Comparative international management is concerned with the study of management and organization in different societal settings. What are societal settings? Societies are larger collectivities of people that, loosely speaking, provide for, and instill in their members, a number of basic orientations and social patterns of dealing with one another. They make not only cooperation between individuals possible, but also allow for individuals to develop an identity and a view of the world which is shared by fellow members of society. The central characteristic of societies is that they provide for, and interrelate, all the aspects of living and working together that human beings require, in order to experience their life and what they do with it, as basically meaningful.

Societies are different from organizations, by largely not being designed rationally and purposefully. Even when they have seemingly powerful heads like kings, dictators or other strong rulers, and although they often claim a very fundamental loyalty and attachment of their members, societies are hard to control. There are two major reasons for this. One reason, applying above all to earlier, pre-modern societies, is that the local autonomy of more local or regional entities, or of clans and kinship groups, is strong. The other reason, applying above all to societies called ‘modern’, is that these are differentiated into functional spheres that have developed a measure of autonomy: institutions and authorities governing commerce, enterprise behaviour, finance, infrastructure, transport, employment relations, penal law, private life in families or other arrangements, socialization and education of individuals – to name but a few and crude spheres that fall apart into sub-spheres upon closer inspection. Even in such modern societies that are qualified as totalitarian, ruling dictators or central authorities have in practice found it impossible to control everything. How can we classify and order the spheres into which societies are differentiated and which tend to have a life of their own, i.e. a measure of autonomy?

First, all societies have an economy, which is a complex pattern of providing for material subsistence. This includes allocating work roles and specifying the terms and media of exchange of goods and services. Such media of exchange include money, markets, and other trading arrangements and conditions attached to them, but also reciprocal help by neighbours or in larger kinship groups, forced labour or other working arrangements that do not imply the use of money or markets. When we want to emphasize both the economic and the social aspect of such arrangements, we speak of socioeconomic systems.

Second, all societies have a polity, which is a system of deriving binding and sanctioned rules (the legislative part or aspect of the polity), of defining political goals and administrating their implementation (the governmental aspect), and of providing judgment in the case of disputes between individuals or groups (the judicial aspect). Such functions in the polity may be more separate or overlapping. Separation occurs in the modern occidental state, which is one way of giving a basic pattern to the polity. Another is rule by chieftains or, say, rulers in the earlier European Middle Ages, when rulers both governed and made judicial decisions. When we want to emphasize that economic arrangements or decisions are patterned by the polity, or if the economic arrangements influence political structures and processes, we speak of political economy. This is a term for political-economic systems which emphasizes that the polity and the economy are very much inter-related. ‘Political economy’ is also a term used to designate a set of theories and a field of study. For example, a market order regulated by laws made by the government is a part of both the economy and the polity. The respected classics in economics of different persuasions – Adam Smith, David Ricardo, Karl Marx, Joseph Schumpeter and many others, considered themselves or were in practice political economists.

Third, all societies have a system for providing individuals with the skills and knowledge they require, or aspire to, for life in general and for filling central roles in society. This system includes education and occupational training arrangements, which may be more separate such as in schools or universities; but they may also overlap with the allocation of work roles, such as in learning-by-doing in contact with more experienced practitioners.

It is possible to add more and more refined typologies of systems that we find in societies. We take some of them up in the headings of successive chapters. But across these systems, let us elaborate what is both central for building a societal identity and for interrelating what goes on in a society, across systems. For societal identity is built up by interrelating arrangements across distinct systems or domains, such as those mentioned above, and others which are more specific. This will help us articulate major themes and approaches in the comparison of management and organization. Whilst such themes and approaches have tended to lead a life of their own, they also connect because they come out of a very general analysis of human action.

Humans characteristically create, and relate to, an artificial world of both technical and social, economic and political artefacts. Artefacts are created by humans and they are neither found in nature nor in instinctive dispositions naturally inherent to the species. Without such artefacts, humans would be helpless. Now, artefacts are on the one hand external to humans, as they are supra-individual and have to be taken as given to a large extent by individuals; on the other hand they are internal, because they are represented in the minds of individuals, which is called knowledge (Berger and Luckmann, 1967). Some would say that the only thing we are able to conceptualize as ‘real’ is our knowledge. It is not only individual knowledge but shared knowledge. More or less at the same time, scholars in sociology and in organization studies analysed the ‘interaction’ between human actors and what was conceptualized as shared knowledge but is, by the sharing between humans, not only internal but also external: the construction of systems or structures that we necessarily deal with or relate to.

The idea is that human action and artificial systems impinge on one another, reciprocally. We cannot even fully grasp the meaning of individual action without relating it to its shared external references, and we cannot grasp the nature of systems or structures imagined to be shared and external, without referring to what actors have ‘in mind’. Such ideas were explained by sociologists such as Anthony Giddens (1986) and Pierre Bourdieu (1986), and organizational scholars such as Karl Weick (1979) or Michel Crozier and Erhard Friedberg (1980). For the particular purpose of international comparison, such basic ideas were developed by Maurice, Sellier and Sylvestre (1986) in an approach called ‘societal analysis’.

When we use the term ‘society’, we therefore do not imply that this is a clearly bounded entity or collectivity at a level of aggregation opposed to individuals. First, most of the historical societies we are aware of have multiple layers and ambiguous boundaries. Even most modern nation states are divided into half-separate identities, demarcated for instance by language or dialect or state boundaries in federal states such as the United States of America, Canada, Australia, Germany, Austria and Switzerland. Spain and the United Kingdom have also become more federal in recent times. Societies may thus have sub-societies. People more or less expect that the various aspects of living and working together are or should be tied together at some place, and if there are different places where this happens, they have often found ways of dealing with this pragmatically, acknowledging different and possibly conflicting authorities and societal entities. In many parts of the world, ethnic and governmental identities diverge and conflict, notably in Africa and also Asia, whilst in Europe, governments have largely made their peace with ethnic diversity within and across nation states. But ambiguity and contestation are still virulent, as can be seen in the cases of Catalonia (in Spain) and Scotland (in the United Kingdom). Further east, parts of Ukraine have recently again become contentious cases. So are other regions in Asia where statehood is divergent from ethnic and cultural identities, which has given rise to conflicts over the years.

The upshot of all this is that we can unravel and explain differences between management and organization in different countries in three major ways, which are connected but also different. The first conceptual and research entry into this world of differences is through the minds of human actors, i.e., we look at what Hofstede called the ‘mental programming’ of actors and compare this across countries. What actors have in mind and share, is called culture.

As we have seen, humans not only imagine what they share in their mind as something individual but also as external. This means that they conceive of it as something beyond their individual intention or will. And this is behind the other fundamental element: institutions. Institutions are typified patterns of behaviour, with a weaker or stronger normative foundation, which are like ‘tools’, a bit like in technical work, that we use in order to achieve meaningful results in social communication and every kind of work which implies relating to other people, in an understandable and accepted way.

This allows us to conceptualize culture and institutions as two main major entries into international comparisons, around which theories about international differences have formed and methodologies have been developed. They focus on the two ‘poles’ of human interaction, shared culture in the minds of actors on the one hand, and institutions as typified regularities conceived to be supra-individual and external on the other hand. The third major entry now is the interrelation of these two: the ongoing reciprocal referencing and formation between actors and institutions. This means that in order to know an actor, we have to look at the institutions the actor has in mind; and when we want to know an institution, we have to look at how actors understand it and practise it. This yields cultural-ist, institutionalist and interactionist approaches (such as the societal analysis mentioned above) to the study of international differences.

Scholars have gone to great lengths to argue about the relative merits and strengths of these approaches. The point in the present textbook is not to involve the reader in this sort of dispute, and confuse him or her with the intricate quarreling between approaches that it implies. Here, we work by the principle of tolerance between approaches, each of which may perform better for some purposes and worse for others. The separate approaches taken for themselves already require some effort and skill of understanding and practice on their own. Culturalist and institutionalist explanations are themselves differentiated into sub-types. Interactionist theory-building such as societal analysis is even more intricate, often felt to be demanding, and should preferably be engaged after having learned to handle the other two approaches.

Ideally the reader will learn that a picture of international differences and their explanation can never be complete; one should progress from culturalist explanations to institutionalist explanations or vice versa, as the ‘root’ of differences is never in the minds of actors or in institutions only. A complete or even sufficient explanatory picture can never be based on only one of the approaches. Differences in management and organization never ‘ultimately go back to’ specific factors. They always go back to bundles of factors that have worked together over a lengthy process in time. Further comparisons make you go on and on. This takes us through interactionist explanations, but it also takes us back to the others.

All this explains the breakdown of the book into chapters. After this introduction, we offer three chapters that go into the specifics of culturalist and institutionalist approaches. After this conceptual and empirical groundwork, we move on to the specific differences in management and organization fields, in the chapters that follow. The penultimate chapter (11) then ties things together again, dealing with the internationalization or globalization of enterprise, economic and governmental activities that are so widely discussed.

International comparisons deal with the interplay between societal settings on the one hand, and various management and organizational forms and processes on the other. Comparisons always yield both, similarities and differences. It is important to be aware that there are different types of theory and different research designs, which may favour or emphasize either, the search for similarities or the search for differences. Assessing the measure of similarity or diversity is therefore a tricky task, because the outcome depends at least in part on what research design is adopted, and what theoretical foundation this is related to. It is therefore crucial to be open, at all times, to possibilities or biases inherent to concepts and methods, and to consider the possibility of similarities even when differences are obtained, and vice versa. As we shall see in t...