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International Management
Culture, Strategy, and Behavior
Twelfth Edition
Jonathan P. Doh
Villanova University
Fred Luthans
University of Nebraska–Lincoln
Ajai S. Gaur
Rutgers University
Lut61312_fm_i-xxxii.indd 1 17/01/23 10:06 AM

INTERNATIONAL MANAGEMENT
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Dedicated in Memory of
Jean Boddewyn, Stephen Kobrin, and Jose R. de la Torre
iii

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Preface
T he global business environment has recently been characterized by instability and rapid
change. The COVID-19 pandemic and the geo-political events of the past few years have
created a very high level of uncertainty and volatility in global, political, and economic affairs.
Several longer-term trends, such as an increasing level of integration across nations and people,
seem to have come to a halt or, in some cases, reversed. Political conflicts, economic disrup-
tions, and realignment of security arrangements have all created challenges for global business.
Around the world, support for global economic integration and engagement appears to be on
the decline. The United Kingdom’s withdrawal from the European Union (EU), and extensive
economic sanctions imposed on Russia by the U.S. and it’s allies, along with the COVID-19
pandemic-driven disruptions of global value chains and are examples of this broad trend.
Some see the U.S. as retreating from its long-held position as the leading advocate of
trade and economic interdependence. Further, trade tensions have risen not just between the
U.S. and China, two world powers jockeying for global leadership, but also between the U.S.
and its key allies, such as the European Union and Canada. Concurrently, nationalist senti-
ments in the U. S., Europe, Asia, and elsewhere have resulted in raised barriers to both legal
and illegal immigration. Exacerbating these pressures, longstanding concerns about the uneven
impacts of globalization on jobs, wages, and incomes have resurfaced, as have broader questions
about the costs of economic globalization to both developed and developing countries and
their citizens. Recent spikes in inflation and dramatic weather events add to this uncertainty.
At the same time, however, trade and investment agreements continue to operate, and
new economic arrangements are implemented. Businesses, professionals, and citizens con-
tinue to engage in global commerce, investment, and people-to-people exchanges. Rapid
advances in social media have not only accelerated globalization but also called into question
issues of privacy, security, and access to private information (see opening articles in Chapters
1 and 2). In addition, concerns about climate change and other environmental issues have
prompted companies, in conjunction with governments and nongovernmental organizations,
to consider alternate approaches to business and governance (see Chapter 3 opening article).
Some of these developments have challenged longstanding beliefs about the power
and benefits of globalization and economic integration, but they also underscore the
interconnected nature of global economies. Although many countries and regions around
the world are closely linked, important differences in institutional and cultural environ-
ments persist. Many of these differences have become even more pronounced in recent
years, as seen in variations in how citizens, companies and governments around the world
responded to the COVID-19 pandemic. The challenges for international management
reflect this dynamism and the increasing unpredictability of global economic and political
events. Continued growth of emerging markets is reshaping the global balance of eco-
nomic power, even though differences exist between and among regions and countries.
Although some emerging markets continued to experience growth during a period when
developed countries’ economies stagnated or declined, many others, such as Russia, Sri
Lanka, Ghana, Egypt and Pakistan, have faced major setbacks. Further, some developed
economies, such as Greece, Italy, Spain, and Portugal, continue to face formidable chal-
lenges in recovering from the European debt crisis that began over a decade ago.
The global political and security environment remains unpredictable and volatile,
with ongoing conflicts in the Middle East, Africa, and Eastern Europe. The rising energy
prices because of the Russia–Ukraine conflict have threatened the unity of the European
Union and put the global economy at the risk of another major recession. The Syrian
civil war has resulted in mass migration—and broad dislocations—across North Africa and
v

vi Preface
Europe (see Chapters 1 and 2 for further discussion). On the economic front, the global
trade and integration agenda seems stalled, largely due to domestic political pressures and
increased protectionism in Europe and North America. Examples include the U.S.’ threat
to withdraw from—and subsequent renegotiation—of the NAFTA (now called the United
States–Mexico–Canada Agreement), the rising tensions between the U.S. and China
because of China’s aggressive stance towards Hong Kong and Taiwan, and the inability
of the U.S. to forge new trade partnerships.
As mentioned, the advent of social networking has transformed the way citizens inter-
act; how businesses market, promote, and distribute their products globally; and how civil
society expresses its concerns that governments provide greater freedoms and accountability.
Concurrently, companies, individuals, and even students can now engage in broad “mass”
collaboration through digital, online technology for the development of new and innovative
systems, products, and ideas. Both social networking and mass collaboration bring new power
and influence to individuals across borders and transform the nature of their relationships
with global organizations. Although globalization and technology continue to link nations,
businesses, and individuals, these linkages also highlight the importance of understanding
different cultures, national systems, and corporate management practices around the world.
The world is now interconnected geographically, but also electronically and psychologically;
as such, nearly all businesses have been touched in some way by globalization. Yet, as cultural,
political, and economic differences persist, astute international managers must be in a posi-
tion to adapt and adjust to the vagaries of different contexts and environments.
In this new, twelfth edition of International Management, we have retained the strong
and effective foundations gained from research and practice over the past decades while
incorporating the important latest research and contemporary insights that have changed
the context and environment for international management. Several trends have emerged
that pose both challenges and opportunities for international managers.
First, the COVID-19 pandemic has challenged the fundamental assumptions about
how international business is conducted. As nations closed borders and controlled the
movement of goods as simple as masks and fever-reducing medicines, there has been a
shift in the thinking of citizens, business leaders, and policy-makers on the benefits and
risks of a more integrated global economy. Nationalistic governments in many countries
around the world are challenging previous assumptions about the benefits and inevitabil-
ity of globalization and integration. Second, while emerging markets remain vitally impor-
tant to global growth, many of these economies are facing a high level of stress and run
the risk of default on their sovereign debt. China’s economic growth has significantly
decelerated as it has matured. The Russian economy has come to a grinding halt due to
it’s aggressive stance on Ukraine and the economic sanctions that followed. In Asia, Sri
Lanka has defaulted and Pakistan and Bangladesh have sought bailouts from the IMF. In
South America, Brazil continues to recover from a deep recession, and Argentina has
battled accelerating inflation. Third, the development of new technology, such as artificial
intelligence and robotics, will result in fundamental changes to the global job market.
Fourth, increasing electronic connectivity in developing countries will continue to help
accelerate those economies and facilitate international business of all sorts. However,
barriers and limitations imposed by governments could threaten this progress.
Although we have extensive new, evidence-based material in this edition, we continue
to strive to make the book even more user-friendly and applicable to practice. We continue
to take a balanced approach in the twelfth edition of International Management: Culture,
Strategy, and Behavior. While other texts stress culture, strategy, or behavior, our emphasis on
all three critical dimensions—and the interactions among them—has been a primary reason
the previous editions have been the market-leading international management text. Specifi-
cally, this edition has the following chapter distribution: environment (three chapters), culture
(four chapters), strategy (four chapters), and organizational behavior/human resource man-
agement (three chapters). Because the context of international management changes rapidly,
all the chapters have been updated and improved. New real-world examples and research
results are integrated throughout the book, accentuating the experiential relevance of the
straightforward content. As always, we emphasize a balance of research and application.

Preface vii
For the new, twelfth edition, we have incorporated important new content in the areas
of the impact of COVID-19 on the global workforce and multinational companies, emergence
of protectionism and its impact on international trade, the use of social media and other
communication connectivity in global affairs, the role that advanced technologies are begin-
ning to fill in international business, and other important global themes. We have incorpo-
rated the latest research and practical insights on pressure for both MNCs and governments
to adopt more sustainable practices, and the strategies many companies are using to dif-
ferentiate their products through such “green” management practices. We have updated the
discussion of a range of contemporary topics, including ongoing global conflicts.
A continuing and relevant end-of-chapter feature in this edition is the “Internet
Exercise.” The purpose of each exercise is to encourage students to use the Internet to
find information from the websites of prominent MNCs to answer relevant questions
about the chapter topic. An end-of-book feature is a series of Skill-Building and Experi-
ential Exercises for aspiring international managers. These in-class exercises represent the
various parts of the text (culture, strategy, and behavior) and provide hands-on experience.
We have incorporated new content and thoroughly revised the chapter opening
discussions called “The World of International Management” (WIM), based on very
recent, relevant news stories to grab readers’ interest and attention. These timely opening
discussions transition the reader into the chapter topic. At the end of each chapter, there
is a pedagogical feature that revisits the chapter’s subject matter: “The World of Interna-
tional Management—Revisited.” Here we pose several discussion questions based on the
topic of the opening feature in light of the student’s entire reading of the chapter. Answer-
ing these questions requires readers to reconsider and to draw from the chapter material.
Suggested answers to these “WIM—Revisited” discussion questions appear in the com-
pletely updated Instructor’s Manual, where we also provide some multiple-choice and
true-false questions that draw directly from the chapters’ World of International Manage-
ment topic matter for instructors who want to include this material in their tests.
The use and application of cases are further enhanced in this edition. All cases have
been updated, and several new ones have been added. The short, within-chapter country
case illustrations—“In the International Spotlight”—can be read and discussed in class.
These have all been revised, and five have been added—Australia, Malaysia, Qatar, Saudi
Arabia, and Singapore. In addition, we have updated or replaced all of the additional “You
Be the International Management Consultant” exercises, which present a current challenge
or dilemma facing a company in the subject country of the “International Spotlight.”
Students are invited to respond to a question related to this challenge. The revised or newly
added “Integrative Cases” positioned at the end of each main part of the text were created
exclusively for this edition and provide opportunities for reading and analysis outside class.
Review questions provided for each case are intended to facilitate lively and productive
written analysis or in-class discussion. Our “Brief Integrative Cases” typically explore a
specific situation or challenge facing an individual or team. Our longer and more detailed
“In-Depth Integrative Cases” provide a broader discussion of the challenges facing a com-
pany. These two formats allow maximum flexibility, so that instructors can use the cases
in a tailored and customized fashion. Accompanying many of the in-depth cases are short
exercises that can be used in class to reinforce both the substantive topic and students’
skills in negotiation, presentation, and analysis. The cases have been extensively updated,
and several are new to this edition. Cases concerning the controversies over drug pricing,
TOMS shoes, Russell Athletics/Fruit of the Loom, Euro Disneyland and Disney Asia,
Google in China, IKEA, Starbucks, Walmart, Danone, Chiquita, Coca-Cola, and others
are unique to this book and thoroughly revised in this edition. In addition, two brand-new
cases written specifically for this edition explore Tesla’s open innovation model in emerg-
ing economies and the challenges in managing global virtual teams in the X-Culture Proj-
ect. Of course, instructors also have access to Create (http://create.mheducation.com),
McGraw Hill’s extensive content database, which includes thousands of cases from major
sources such as Harvard Business School, Ivey, Darden, and NACRA case databases.
Along with the new or updated “International Management in Action” boxed appli-
cation examples within each chapter and other pedagogical features at the end of each

viii Preface
chapter (i.e., “Key Terms,” “Review and Discussion Questions,” “The World of Interna-
tional Management—Revisited,” and “Internet Exercise”), the end-of-part brief and in-
depth cases and the end-of-book skill-building exercises and simulations in the Connect
resources complete the package.
Finally, this edition marks the addition of a new author, Ajai Gaur, a Professor of
Strategy and International Business at Rutgers University. Ajai brings subject expertise in
global business strategy, emerging markets, institutions, and a range of other topics. He also
has deep ties and links to East and South Asia, and helps to further “globalize” the book.
International Management is generally recognized to be the first “mainstream” text
of its kind. Strategy casebooks and specialized books in organizational behavior, human
resources, and, of course, international business, finance, marketing, and economics pre-
ceded it, but there were no international management texts before this one, and it remains
the market leader. We have had sustainability because of the effort and care put into the
revisions. We hope you agree that this twelfth edition continues the tradition and remains
the “world-class” text for the study of international management.
Instructor Library
The Connect Instructor Library is your repository for additional resources to improve student
engagement in and out of class. You can select and use any asset that enhances your lecture.
To help instructors teach international management, this text is accompanied by a
revised and expanded Instructor’s Resource Manual, Test Bank, and PowerPoint slides,
all of which are in the Connect Library.
Acknowledgments
We would like to acknowledge those who have helped to make this book a reality. We will
never forget the legacy of international management education in general and for this text
in particular provided by our departed colleague Richard M. Hodgetts. Special thanks also
go to our growing number of colleagues throughout the world who have given us many
ideas and inspired us to think internationally. Closer to home, Jonathan Doh would like
to thank Villanova University and its leadership, especially Provost Pat Maggitti, Villanova
School of Business Dean Joyce Russell, Associate Dean Wen Mao, and Herb Rammrath,
who generously endowed the Chair in International Business Jonathan now holds, and
Bob Moran, who endowed Villanova’s Moran Center for Global Leadership. Ajai Gaur
would like to thank Rutgers Business School Dean Lei Lei and Vice Dean Petra Christ-
mann for generous research support. Additionally, for this new, twelfth edition, we would
like to thank Aishwarya Vashishtha, Niharika Pandey, Raj Dhamal, Sannah Asif, Shubham
Singh, Shyamala Sethuram, and Tianhao Liu, who provided assistance in preparing new
figures and tables, and other background work for the revisions. Fred Luthans would like
to give special recognition to two international management scholars: Henry H. Albers,
former Chair of the Management Department at the University of Nebraska and former
Dean at the University of Petroleum and Minerals, Saudi Arabia, to whom previous edi-
tions of this book were dedicated; and Sang M. Lee, former Chair of the Management
Department at Nebraska, founding and current President of the Pan Pacific Business
Association, and close colleague on many ventures around the world over the past 30 years.
In addition, we would like to acknowledge the help that we received from the many
reviewers from around the globe, whose feedback guided us in preparing the eleventh
edition of the text. These include
Douglas H. Carter, Texas A&M University- Daria Panina, Texas A&M University
San Antonio Marjolijn van der Velde, Davenport
Lauryn A. De George, University of Cen- University
tral Florida Christina Wassenaar, University of Alabama
Tracy K. Miller, University of Dayton Sharon Segrest, University of South Florida
Kelly Mollica, University of Memphis St. Petersburg

Preface ix
Our thanks, too, to the reviewers of previous editions of the text:

Thomas M. Abbott, Post University Jae C. Jung, University of Missouri–Kansas City
Yohannan T. Abraham, Southwest Missouri State Ann Langlois, Palm Beach Atlantic University
University Robert Kuhne, Hofstra University
Janet S. Adams, Kennesaw State University Christine Lentz, Rider University
Irfan Ahmed, Sam Houston State University Ben Lever III, College of Charleston
Joseph S. Anderson, Northern Arizona University Robert C. Maddox, University of Tennessee
Chi Anyansi-Archibong, North Carolina A&T State U niversity Curtis Matherne III, East Tennessee State University
Kibok Baik, James Madison University Douglas M. McCabe, Georgetown University
R. B. Barton, Murray State University Jeanne M. McNett, Assumption College
Lawrence A. Beer, Arizona State University Lauryn Migenes, University of Central Florida
Koren Borges, University of North Florida Alan N. Miller, University of Nevada, Las Vegas
Tope A. Bello, East Carolina University Ray Montagno, Ball State University
Mauritz Blonder, Hofstra University Rebecca J. Morris, University of Nebraska–Omaha
Gunther S. Boroschek, University of Massachusetts–Boston Ernst W. Neuland, University of Pretoria
Charles M. Byles, Virginia Commonwealth University William Newburry, Florida International University
Constance Campbell, Georgia Southern University Yongsun Paik, Loyola Marymount University
Scott Kenneth Campbell, Georgia College & State University Valerie S. Perotti, Rochester Institute of Technology
Luke H. Cashen, Nicholls State University Richard B. Peterson, University of Washington
Imran Chowdhury, Pace University Suzanne J. Peterson, University of Nebraska–Lincoln
M. Suzanne Clinton, University of Central Oklahoma Joseph A. Petrick, Wright State University
Lauryn De George, University of Central Florida Juan F. Ramirez, Nova Southeastern University
Helen Deresky, SUNY Plattsburgh Richard David Ramsey, Southeastern Louisiana University
Dr. Dharma deSilva, Center for International Business Manjula S. Salimath, University of North Texas
Advancement (CIBA) Owen Sevier, University of Central Oklahoma
John Donnellan, New Jersey City University Mansour Sharif-Zadeh, California State Polytechnic
David Elloy, Gonzaga University University–Pomona
Val Finnigan, Leeds Metropolitan University Emeric Solymossy, Western Illinois University.
David M. Flynn, Hofstra University Jane H. Standford, Texas A&M University–Kingsville
Jan Flynn, Georgia College and State University Dale V. Steinmann, San Francisco State University
Joseph Richard Goldman, University of Minnesota Randall Stross, San Jose State University
James Gran, Buena Vista University George Sutija, Florida International University
Robert T. Green, University of Texas at Austin Deanna Teel, Houston Community College
Annette Gunter, University of Central Oklahoma David Turnipseed, University of South Alabama–Mobile
Jerry Haar, Florida International University–Miami Katheryn H. Ward, Chicago State University
Jean M. Hanebury, Salisbury State University Li Weixing, University of Nebraska–Lincoln
Richard C. Hoffman, Salisbury State University Aimee Wheaton, Regis College
Johan Hough, University of South Africa Marion M. White, James Madison University
Julie Huang, Rio Hondo College Timothy Wilkinson, University of Akron
Mohd Nazari Ismail, University of Malaya George Yacus, Old Dominion University
Steve Jenner, California State University–Dominguez Hills Corinne Young, University of Tampa
James P. Johnson, Rollins College Zhe Zhang, University of Central Florida–Orlando
Marjorie Jones, Nova Southeastern University Anatoly Zhuplev, Loyola Marymount University
Finally, thanks to the team at McGraw Hill who worked on this book: Terri Schiesl, Managing
Director; Michael Ablassmeir, Director; Laura Hurst Spell, Associate Portfolio Manager; Jean
Findley, Development Editor; Karryn Vogt, Marketing Manager; and Melissa M. Leick,
Senior Content Project Manager. Last but by no means least, we greatly appreciate the love and
support provided by our families.
Jonathan P. Doh, Fred Luthans, and Ajai S. Gaur

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Doh Luthans Gaur
New and Enhanced Themes
The twelfth edition of
• Thoroughly revised and updated chapters to reflect the most
International critical issues for international managers.
• New or revised opening World of International Management
Management: Culture, (WIM) features written by the authors on current international
management challenges; mini-cases were prepared expressly for
Strategy, and Behavior
this edition and are not available elsewhere.
is still setting the • Discussions of international conflicts and the rise of protection-
ism, and their impact on international business.
standard. Authors • New focus on the COVID-19 pandemic as a “black swan” event
with important implications for MNCs and their managers.
Jonathan Doh, Fred • New and updated discussions of major issues in global ethics,
technology, sustainability, and other cutting-edge research.
Luthans, and Ajai Gaur • Greater attention to shifting demographic trends and global
talent management, emphasizing the impact new advanced
have taken care to technology will have on the global economy.
• Renewed emphasis on major emerging regions, economic chal-
retain the effective
lenges in major countries such as Brazil and Argentina, and
foundation gained specific case illustrations on how companies are managing
these challenges.
from research and
Thoroughly Revised and Updated Chapter Content
practice over the past
• New or revised opening WIM discussions on topics including
decades. At the same the global influences of social media using the case of Face-
book; the impact of internal and external risks when doing
time, they have fully
business in Turkey; the role of social networking in interna-
incorporated important tional conflicts; sustainability as a global competitive advantage
using examples of Patagonia, L’Oreal, and AB InBev; cultural
new and emerging challenges in global mergers and acquisitions; the competitive
dynamics between Apple and Xiaomi, and Amazon and
developments that Alibaba; Airbnb’s entry into China, Cuba, India and Thailand;
Netflix’s and Starbucks’ strategies for global expansion; and
have changed what many others. These features were written expressly for this
edition and are not available elsewhere.
international managers • Updated and strengthened emphasis on ethics, technology, and
sustainability.
are currently facing
• Extensive coverage of current geopolitical issues impacting
and likely to face in international business, including including the COVID-19 pan-
demic, the Russia–Ukraine conflict, Brexit, increased national-
the coming years. ism and protectionism across Europe and the U.S., trade
disputes between China and the United States, and the eco-
nomic slowdown in China, to name a few.
• Revised or new “In the International Spotlight” inserts that pro-
file the key economic and political issues relevant to managers
in specific countries.
xii

Continues to Set the Standard. . .
Thoroughly Updated and/or New Cases,

Inserts, and Exercises
• Completely new and revised “In the International Spotlight” country

profiles at the end of every chapter, including the addition of profiles
on Australia, Malaysia, Qatar, Saudi Arabia, and Singapore.
• “You Be the International Management Consultant” exercises, many
new to this edition, present an actual company’s challenge in that
country and invite students to recommend a course of action.
• Thoroughly updated “International Management in Action” fea-
tures, including discussions on timely topics such as trade disputes,
base of the pyramid markets, the growing influence and importance
of emerging economies, Uber’s global expansion, Huawei’s strategies
for managing political risk, and the shifting cultural dynamics associ-
ated with increasing percentages of Millennials and Gen Z in the
workforce, to name a few.
• Thoroughly updated cases (not available elsewhere): TOMS shoes,
Russell Athletics, Disney Asia, Google in China, IKEA, Starbucks,
Walmart, Danone, Chiquita, Coca-Cola, and others are unique to this
book and specific to this edition.
• Brand new end-of-part cases developed exclusively for this edition
(not available elsewhere): Tesla’s Open Innovation Strategy in Emerg-
ing Markets and The X-Culture Project: Challenges of Managing Global-
Virtual Teams.
• Thoroughly revised “World of International Management” chapter
opening discussions, including topics such as Netflix’s international
expansion, the impact of Syria war and Russia–Ukraine conflict on
doing business in Turkey, and the expansion challenges for Airbnb in
emerging markets, to name a few.
• New and revised graphics throughout.
• Timely updates throughout, based on the latest research, including
a discussion of the influence of the COVID-19 pandemic, the future
of work in MNCs, the role of technology such as bitcoins and block-
chain for international business, the impact of protectionism on the
international business community, and the continued push toward a
sustainable future, to name a few.
Totally Revised Instructor and Student Support

The following instructor and student support materials can be found in Connect® ®
at connect.mheducation.com for the twelfth edition.

• The Instructor’s Manual offers a summary of Learning Objectives
and a teaching outline with lecture notes and teaching tips, as well as
suggested answers to questions found throughout and at the
xiii

xiv Continues to Set the Standard. . .
c onclusion of each chapter. Suggested answers are also provided for all the
cases found in the book.
• The test bank offers over 1,000 test items consisting of true/false, multiple
choice, and essay. Answers are provided for all test bank questions.
• PowerPoint Presentations consisting of approximately 30 slides per chapter
give instructors talking points, feature exhibits from the text, and are summa-
rized with a review and discussion slide.
• Create: Instructors can now tailor their teaching resources to match the way
they teach! With McGraw Hill Create, create.mheducation.com, instructors
can easily rearrange chapters, combine material from other content sources,
and quickly upload and integrate their own content, like course syllabi or
teaching notes. Find the right content in Create by searching through thou-
sands of leading McGraw Hill textbooks. Arrange the material to fit your
teaching style. Order a Create book and receive a complimentary print review
copy in 3–5 business days or a complimentary electronic review copy (echo)
via e-mail within one hour. Go to create.mheducation.com today and register.
AACSB Tagging
McGraw Hill Education is a proud corporate member of AACSB International. Under-
standing the importance and value of AACSB accreditation, International Management
recognizes the curriculum guidelines detailed in the AACSB standards for business accred-
itation by connecting selected questions in the text and the test bank to the six general
knowledge and skill guidelines in the AACSB standards. The statements contained in
International Management are provided only as a guide for the users of this textbook. The
AACSB leaves content coverage and assessment within the purview of individual schools,
the mission of the school, and the faculty. While the International Management teaching
package makes no claim of any specific AACSB qualification or evaluation, we have within
International Management labeled selected questions according to the six general knowl-
edge and skills areas.

About the Authors
JONATHAN P. DOH is Associate Dean of Research and Global Engagement, the Herbert
G. Rammrath Chair in International Business, co-faculty Director of the Moran Center
for Global Leadership, and Professor of Management at the Villanova School of Business.
Jonathan teaches, does research, and serves as an executive instructor and consultant in
the areas of international strategy and corporate responsibility. Previously, he was on the
faculty of American and Georgetown Universities and a trade official with the U.S. gov-
ernment. Jonathan is author or co-author of more than 85 refereed articles published in
leading international business and management journals, more than 30 chapters in schol-
arly edited volumes, and more than 100 conference papers. His articles have appeared in
journals such as Academy of Management Review, California Management Review, Journal Jonathan Doh
of International Business Studies, Journal of Management, Journal of Management Studies,

Journal of World Business, Organization Science, Sloan Management Review, and Strategic
Management Journal. He is co-editor and contributing author of Globalization and NGOs
(Praeger, 2003) and Handbook on Responsible Leadership and Governance in Global Busi-
ness (Elgar, 2005) and co-author of the previous edition of International Management:
Culture, Strategy, and Behavior (11th ed., McGraw Hill/Irwin, 2021), the best-selling inter-
national management text. His current research focus is on strategy for and in emerging
markets and global corporate responsibility and sustainability. His scholarly books include
Multinationals and Development (with Alan Rugman, Yale University Press, 2008), NGOs
and Corporations: Conflict and Collaboration (with Michael Yaziji, Cambridge University
Press, 2009), and Aligning for Advantage: Competitive Strategy for the Social and Political
Arenas (with Tom Lawton and Tazeeb Rajwani, Oxford University Press, 2014). He has
been an associate, consulting, or senior editor for numerous journals and was editor-in-
chief of Journal of World Business from 2014 to 2018. Jonathan has also developed more
than a dozen original cases and simulations published in books, journals, and case data-
bases and used at many leading global universities. He has been a consultant or executive
instructor for ABB, Anglo American, Bodycote, Bosch, China Minsheng Bank, Hana
Financial, HSBC, Ingersoll Rand, Medtronic, Shanghai Municipal Government, Siam
Cement, and the World Economic Forum, among others. Previously, he was an external
adviser to the Global Energy Resource Group of Deloitte Touche. Jonathan served for
five years as a member of the Executive Committee of the Academy of Management
Organizations and Natural Environment Division, a role that culminated in service as
chair of the division in 2016. He was ranked among the top 15 most prolific international
business scholars in the world for the period 2001–2009 (Lahiri and Kumar, 2012) and
in 2015 was elected a fellow of the Academy of International Business and in 2021, a
Fellow of the Academy of Management. He has been an associate editor, special issue
editor, senior editor, or consulting editor of several academic journals. From 2014 to 2018,
he was Editor-in-Chief of Journal of World Business and is currently General Editor of
Journal of Management Studies and Area Editor (Sustainability) and member of the Soci-
etal Impact Advisory Committee of the Journal of International Business Studies. He is a
frequent keynote speaker to academic and professional groups in Europe, Asia, and Latin
America. In the most recent global ranking by scholars at Stanford University of scientists
and their intellectual contributions, he was ranked 298 out of 44,945 in business manage-
ment, placing him among the top 0.65%. He holds a Ph.D. in strategic and international
management from George Washington University.
xv

xvi About the Authors
FRED LUTHANS is the University and the George Holmes Distinguished Professor of
Management, Emeritus at the University of Nebraska–Lincoln. He is also a senior research
scientist for HUMANeX Ventures Inc. He received his B.A., M.B.A., and Ph.D. from the
University of Iowa, where he received the Distinguished Alumni Award in 2002. While
serving as an officer in the U.S. Army from 1965 to 1967, he taught leadership at the
U.S. Military Academy at West Point. He has been a visiting scholar at a number of col-
leges and universities and has lectured in numerous European and Pacific Rim countries.
He has taught international management as a visiting faculty member at the universities
of Bangkok, Hawaii, Henley in England, Norwegian Management School, Monash in
Australia, Macau, Chemnitz in Germany, and Tirana in Albania. A past President of the
Academy of Management, in 1997 he received the Academy’s Distinguished Educator
Award. In 2000 he became an inaugural member of the Academy’s Hall of Fame for being
one of the “Top Five” all-time published authors in the prestigious academy journals. For
many years he was co-editor-in-chief of the Journal of World Business and editor of Orga-
University of Nebraska–Lincoln nizational Dynamics and is currently co-editor of Journal of Leadership and Organizational
Studies. The author of numerous books, his seminal Organizational Behavior is now in its
thirteenth edition and the 2007 groundbreaking book Psychological Capital (Oxford Uni-
versity Press) with Carolyn Youssef and Bruce Avolio came out in a new version in 2015.
He is one of very few management scholars who is a Fellow of the Academy of Manage-
ment, the Decision Sciences Institute, and the Pan Pacific Business Association. He
received the Global Leadership Award from the Pan Pacific Association and has been a
member of its Executive Committee since it was founded over 30 years ago. This com-
mittee helps organize the annual meeting held in Pacific Rim countries. He has been
involved with some of the first empirical studies on motivation and behavioral manage-
ment techniques and the analysis of managerial activities in Russia; these articles were
published in the Academy of Management Journal, Journal of International Business Studies,
Journal of World Business, and European Management Journal. Since the very beginning
of the transition to market economies after the fall of communism in Eastern Europe, he
has been actively involved in management education programs sponsored by the U.S.
Agency for International Development in Albania and Macedonia, and in U.S. Informa-
tion Agency programs involving the Central Asian countries of Kazakhstan, Kyrgyzstan,
and Tajikistan. Professor Luthans’s recent international research involves his construct of
positive psychological capital (PsyCap). For example, he and colleagues have published
their research demonstrating the impact of Chinese workers’ PsyCap on their performance
in the International Journal of Human Resource Management and Management and Orga-
nization Review. He is applying his positive approach to positive organizational behavior
(POB), PsyCap, and authentic leadership to effective global management and has been
the keynote at programs in China (numerous times), Malaysia, South Korea, Indonesia,
Philippines, Singapore, Taiwan, Japan, Vietnam, Costa Rica, Mexico, Chile, Fiji, Germany,
France, England, Spain, Norway, Finland, Denmark, Netherlands, Italy, Russia, Macedo-
nia, Albania, Morocco, South Africa, New Zealand, and Australia.

About the Authors xvii
AJAI S. GAUR is Dean’s Eminent Research Professor and Chair of the Department of
Management and Global Business at Rutgers Business School – Newark and New Bruns-
wick, Rutgers University. He is also an affiliate faculty member with the Division of Global
Affairs at Rutgers University and a Dunning fellow at the University of Reading, UK. Ajai
holds a Ph.D. from the National University of Singapore. He teaches and does research
in the areas of international strategy, corporate governance and emerging markets. Previ-
ously, he was on the faculty of Old Dominion University. Ajai is an author or co-author
of more than 70 articles published in leading strategy and international business journals.
He has also written several case studies and contributed chapters in scholarly edited
volumes. His articles have appeared in journals such as Asia Pacific Journal of Manage-
ment, Cross-Cultural & Strategic Management, Global Strategy Journal, Human Resource Ajai Gaur
Management, Journal of Business Ethics, Journal of Business Research, Journal of Interna-

tional Business Studies, Journal of International Management, Journal of Management, Jour-
nal of Management Studies, Journal of World Business, Long Range Planning, Management
International Review, Organization Research Methods, and Strategic Management Journal
amongst others. In his research, Ajai studies the distinct institutional influences on firms’
geographic and product growth strategies in diverse institutional contexts. A related focus
of his research is to study institutional influences on various firm-level governance mech-
anisms and their strategic and performance consequences. Empirically, he has examined
firms based in Australia, China, Germany, India, Japan, New Zealand, South Korea, the
UK, and the USA. Ajai has won multiple awards from professional associations and
conferences, including the Best Dissertation Award, the Best Dissertation Proposal Award,
and the Best Paper award in different years at the Academy of International Business
conferences. He was ranked as the second most prolific and influential author based on
research done on Indian firms between 1974 and 2021 (Mukherjee et al., 2022), and
amongst the top 25 scholars worldwide for research on emerging market multinationals
(Luo and Zhang, 2016). Ajai has been serving as Editor-in-Chief of the Journal of World
Business since 2019 and a consulting editor at the Journal of International Business Studies
since 2017. Previously, he served as a senior editor of the Asia Pacific Journal of Manage-
ment (2014–2018) and a senior editor of the Journal of World Business (2014–2018). He
also co-guest edited special issues of Global Strategy Journal, International Business Review,
Journal of Management Studies, and Journal of World Business. He was elected as the
President of the Asia Academy of Management for two terms from 2015 to 2019. In 2021,
Ajai was elected as a fellow of the Academy of International Business.

Brief Contents
Part One Environmental Foundation
1 Globalization and International Linkages 2
2 The Political, Legal, and Technological Environment 44
3 Ethics, Social Responsibility, and Sustainability 74
Brief Integrative Case 1.1: Coca-Cola in India 99
Brief Integrative Case 1.2: TOMS Puts Its Right Foot Forward 106
In-Depth Integrative Case 1.1: Student Advocacy
and “Sweatshop” Labor: The Case of Russell Athletic 112
In-Depth Integrative Case 1.2:
The Ethics of Global Drug Pricing 119
Part Two The Role of Culture

4 The Meanings and Dimensions of Culture 132
5 Managing across Cultures 162
6 Organizational Cultures and Diversity 186
7 Cross-Cultural Communication and Negotiation 212
Brief Integrative Case 2.1: The X-Culture Project:
Challenges of Managing Global-Virtual Teams 249
Brief Integrative Case 2.2: Danone’s Wrangle with Wahaha 253
In-Depth Integrative Case 2.1a: Euro Disneyland 259
In-Depth Integrative Case 2.1b: Disney in Asia 270
In-Depth Integrative Case 2.2: Walmart’s Global Strategies 276
Part Three International Strategic Management

8 Strategy Formulation and Implementation 288
9 Entry Strategies and Organizational Structures 322
10 Managing Political Risk, Government Relations,
and Alliances 352
11 Management Decision and Control 378
Brief Integrative Case 3.1: Google in China:
Protecting Property and Rights 405
Brief Integrative Case 3.2: Winning a War Without an Armor:
Tesla’s Open Innovation Strategy in Emerging Markets412
xviii

Brief Contents xix

How Starbucks Convinced Indians to Embrace Coffee 418
Organizational Behavior and Human Resource Management Part Four

12 Motivation across Cultures 432
13 Leadership across Cultures 470
14 Human Resource Selection and Development
across Cultures 506
Brief Integrative Case 4.1: IKEA’s Global Renovations 552
In-Depth Integrative Case 4.1: Chiquita’s Global Turnaround 560
Skill-Building and Experiential Exercises 569
Glossary 583
Indexes 589

Table of Contents
Part One Environmental Foundation
1 Globalization and International Linkages 2

The World of International Management: An Interconnected World 2
Introduction 5
Globalization and Internationalization 8
Globalization, Antiglobalization, and Global Pressures for Change 8
Global and Regional Integration 10
Changing Global Demographics 15
The Shifting Balance of Economic Power in the Global Economy 15
Global Economic Systems 23
Market Economy 23
Command Economy 23
Mixed Economy 24
Economic Performance and Issues of Major Regions 24
Established Economies 24
Emerging and Developing Economies 26
Developing Economies on the Verge 29
The World of International Management—Revisited 35

Summary of Key Points 35
Key Terms 36
Review and Discussion Questions 36
Answers to the In-Chapter Quiz 36
Internet Exercise: Global Competition in Fast Food 37
Endnotes 37
In the International Spotlight: India 42
2 The Political, Legal, and Technological Environment 44

The World of International Management:
Social Media and Political Change 44
Political Environment 46
Ideologies 47
Political Systems 50
Legal and Regulatory Environment 53
Basic Principles of International Law 53
Examples of Legal and Regulatory Issues 54
Privatization 57
Regulation of Trade and Investment 60
xx

Table of Contents xxi
Technological Environment and Global Shifts in Production 60

Trends in Technology, Communication, and Innovation 61
Biotechnology 62
E-Business 63
Telecommunications 64
Technological Advancements, Outsourcing, and Offshoring 65

Key Terms 68
Internet Exercise: Hitachi Goes Worldwide 68
Endnotes 68
In the International Spotlight: Malaysia 73
3 Ethics, Social Responsibility, and Sustainability 74

Sustaining Sustainable Companies 74
Ethics and Social Responsibility 77
Ethics and Social Responsibility in International Management 77
Ethics Theories and Philosophy 77
Human Rights 79
Labor, Employment, and Business Practices 80
Environmental Protection and Development 81
Globalization and Ethical Obligations of MNCs 83
Reconciling Ethical Differences across Cultures 85
Corporate Social Responsibility and Sustainability 85
Corporate Governance 89
Corruption 90
International Assistance 91

Key Terms 94
Endnotes 94
In the International Spotlight: Qatar 98
Brief Integrative Case 1.1: Coca-Cola in India 99
Endnotes 103
Brief Integrative Case 1.2: TOMS Puts Its Right Foot Forward 106
Endnotes 110
In-Depth Integrative Case 1.1: Student Advocacy and
“Sweatshop” Labor: The Case of Russell Athletic 112
Endnotes 117

xxii Table of Contents
In-Depth Integrative Case 1.2: The Ethics of Global Drug Pricing 119
Endnotes 127
Part Two The Role of Culture
4 The Meanings and Dimensions of Culture 132

Culture Clashes in Cross-Border Mergers and Acquisitions 132
The Nature of Culture 134
Cultural Diversity 135
Values in Culture 138
Values in Transition 138
Cultural Dimensions 140
Hofstede 140
Trompenaars 149
Integrating Culture and Management: The GLOBE Project 152
Culture and Management 153
GLOBE’s Cultural Dimensions 153
GLOBE Country Analysis 154
National Culture and the COVID-19 Pandemic 155

Key Terms 157
Internet Exercise: Renault-Nissan in South Africa 157
Endnotes 158
In the International Spotlight: Turkey 161
5 Managing across Cultures 162

Taking a Bite Out of Apple: Corporate Culture
and an Unlikely Chinese Start-up 162
The Strategy for Managing across Cultures 164
Strategic Predispositions 165
Meeting the Challenge 166
Cross-Cultural Differences and Similarities 168
Parochialism and Simplification 168
Similarities across Cultures 170
Many Differences across Cultures 171
Cultural Differences in Selected Countries and Regions 174
Using the GLOBE Project to Compare Managerial Differences 174
Managing Culture in Selected Countries and Regions 175

Table of Contents xxiii

Key Terms 180
Internet Exercise: Haier’s Approach 180
Endnotes 181
In the International Spotlight: Poland 185
6 Organizational Cultures and Diversity 186

The Fundamentals of Strong Multinational Teams 186
The Nature of Organizational Culture 188
Definition and Characteristics 189
Interaction between National and Organizational Cultures 190
Organizational Cultures in MNCs 194
Family Culture 196
Eiffel Tower Culture 196
Guided Missile Culture 197
Incubator Culture 198
Managing Multiculturalism and Diversity 200
Phases of Multicultural Development 200
Types of Multiculturalism 202
Potential Challenges Associated with Diversity 203
Advantages of Diversity 204
Building Multicultural Team Effectiveness 205

Key Terms 208
Internet Exercise: Lenovo’s International Focus 208
Endnotes 209
In the International Spotlight: Singapore 211
7 Cross-Cultural Communication and Negotiation 212

Netflix’s Negotiations: Global Expansion Strategies 212
The Overall Communication Process 214
Verbal Communication Styles 215
Interpretation of Communications 217
Communication Flows 218
Downward Communication 218
Upward Communication 219

xxiv Table of Contents
Communication Barriers 220

Language Barriers 220
Perceptual Barriers 222
The Impact of Culture 224
Nonverbal Communication 225
Achieving Communication Effectiveness 227
Improve Feedback Systems 228
Provide Language Training 228
Provide Cultural Training 229
Increase Flexibility and Cooperation 229
Managing Cross-Cultural Negotiations 229
Types of Negotiation 231
The Negotiation Process 231
Cultural Differences Affecting Negotiations 233
Negotiation Tactics 235
Negotiating for Mutual Benefit 236
Bargaining Behaviors 238

Key Terms 242
Internet Exercise: Working Effectively at Toyota 243
Endnotes 243
In the International Spotlight: China 247
Brief Integrative Case 2.1: The X-Culture Project: Challenges
of Managing Global-Virtual Teams 249
Endnotes 252
Brief Integrative Case 2.2: Danone’s Wrangle with Wahaha 253
Endnotes 258
In-Depth Integrative Case 2.1a: Euro Disneyland 259
Endnotes 269
In-Depth Integrative Case 2.1b: Disney in Asia 270
Endnotes 274
In-Depth Integrative Case 2.2: Walmart’s Global Strategies 276
Endnotes 283
Part Three International Strategic Management
8 Strategy Formulation and Implementation 288

Starbucks’ Caffeinated Push for Global Growth 288

Table of Contents xxv
Strategic Management 290

The Growing Need for Strategic Management 291
Benefits of Strategic Planning 291
Approaches to Formulating and Implementing Strategy 292
Global and Regional Strategies 295
The Basic Steps in Formulating Strategy 298
Environmental Scanning 298
Internal Resource Analysis 300
Goal Setting for Strategy Formulation 300
Strategy Implementation 302
Location Considerations for Implementation 302
Combining Country and Firm-Specific Factors
in International Strategy 304
The Role of the Functional Areas in Implementation 305
Specialized Strategies 307
Strategies for Emerging Markets 307
Base of the Pyramid Strategy308
Entrepreneurial Strategy and New Ventures 311

Key Terms 315
Internet Exercise: Infosys’ Global Strategy 315
Endnotes 315
In the International Spotlight: United Arab Emirates 320
9 Entry Strategies and Organizational Structures 322

The World of International Management: Airbnb 322
Entry Strategies and Ownership Structures 324
Export/Import 324
Wholly Owned Subsidiaries 325
Mergers/Acquisitions 325
Alliances and Joint Ventures 326
Licensing 328
Franchising 329
The Organization Challenge 329
Basic Organizational Structures 330
Initial Division Structure 331
International Division Structure 332
Global Structural Arrangements 333
Transnational Network Structures 337

xxvi Table of Contents
Nontraditional Organizational Arrangements 338

Organizational Arrangements from Mergers,
Acquisitions, Joint Ventures, and Alliances 338
Organizing for Product Integration340
Organizational Characteristics of MNCs 341
Formalization 341
Specialization 342
Centralization 343
Putting Organizational Characteristics in Perspective 344

Key Terms 346
Internet Exercise: Organizing for Effectiveness 346
Endnotes 346
In the International Spotlight: Saudi Arabia 350
10 Managing Political Risk, Government Relations,

and Alliances 352
Turkey: Risks and Political Uncertainty 352
The Nature and Analysis of Political Risk 354
Macro and Micro Analysis of Political Risk 355
Terrorism and Its Overseas Expansion 359
Analyzing the Expropriation Risk 359
Managing Political Risk and Government Relations 359
Developing a Comprehensive Framework or Quantitative Analysis 360
Techniques for Responding to Political Risk 363
Managing Alliances 367
The Alliance Challenge 368
The Role of Host Governments in Alliances 369
Examples of Challenges and Opportunities in Alliance Management 370

Key Terms 372
Internet Exercise: Nokia in China 372
Endnotes 372
In the International Spotlight: Vietnam 376
11 Management Decision and Control 378

Global Online Retail: Amazon versus Alibaba 378

Table of Contents xxvii
Decision-Making Process and Challenges 380

Factors Affecting Decision-Making Authority 381
Cultural Differences and Comparative Examples of Decision Making 383
Total Quality Management Decisions 385
Decisions for Attacking the Competition 386
Decision and Control Linkages 386
The Controlling Process 387
Types of Control 389
Approaches to Control 391
Performance Evaluation as a Mechanism of Control 393
Financial Performance 393
Quality Performance 394
Personnel Performance 396

Key Terms 400
Internet Exercise: Looking at the Best 400
Endnotes 400
In the International Spotlight: Japan 404
Brief Integrative Case 3.1: Google in China: Protecting Property
and Rights 405
Endnotes 409
Brief Integrative Case 3.2: Winning a War Without an Armor: Tesla’s Open
Innovation Strategy in Emerging Markets412
Endnotes 416
How Starbucks Convinced Indians to Embrace Coffee 418
Endnotes 427
Organizational Behavior and Human Resource Management Part Four
12 Motivation across Cultures 432

The World of International Management: Motivating Employees
in a Multicultural Context: Insights from Emerging Markets 432
The Nature of Motivation 434
The Universalist Assumption 435
The Assumption of Content and Process 436
The Hierarchy-of-Needs Theory 437
The Maslow Theory 437
International Findings on Maslow’s Theory 438

xxviii Table of Contents
The Two-Factor Theory of Motivation 442

The Herzberg Theory 442
International Findings on Herzberg’s Theory 443
Achievement Motivation Theory 446
The Background of Achievement Motivation Theory 446
International Findings on Achievement Motivation Theory 447
Select Process Theories 449
Equity Theory 449
Goal-Setting Theory 450
Expectancy Theory 451
Motivation Applied: Job Design, Work Centrality,
and Rewards 451
Job Design 451
Work Centrality 454
Reward Systems 458
Incentives and Culture 458
COVID-19 and the Future of Work 460

Key Terms 463
Internet Exercise: Motivating Potential Employees 463
Endnotes 464
In the International Spotlight: Nigeria 468
13 Leadership across Cultures 470

Global Leadership Development: An Emerging Need 470
Foundation for Leadership 471
The Manager-Leader Paradigm 472
Philosophical Background: Theories X, Y, and Z 473
Leadership Behaviors and Styles 475
The Managerial Grid Performance: A Japanese Perspective 477
Leadership in the International Context 479
Attitudes of European Managers toward Leadership Practices 479
Japanese Leadership Approaches 481
Differences between Japanese and U.S. Leadership Styles 482
Leadership in China 483
Leadership in the Middle East 485
Leadership Approaches in India 485
Leadership Approaches in Africa 486
Leadership Approaches in Latin America 486

Table of Contents xxix
Research Findings and Insights about Leadership 487

Transformational, Charistmatic, and Transactional Leadership 487
Qualities for Successful Leaders 489
Culture Clusters and Leader Effectiveness 489
Leader Behavior, Leader Effectiveness, and Leading Teams 491
Cross-Cultural Leadership: Insights from the GLOBE Study 492
Authentic Leadership 495
Ethical, Responsible, and Servant Leadership 497
Entrepreneurial Leadership and Mindset 498

Key Terms 500
Internet Exercise: Taking a Closer Look 501
Endnotes 501
In the International Spotlight: Australia 505
14 Human Resource Selection and Development

across Cultures 506
The Challenge of Talent Retention in India 506
The Importance of International Human Resources 509
Getting the Employee Perspective 509
Employees as Critical Resources 510
Investing in International Assignments 510
Economic Pressures 510
Sources of Human Resources 511
Home-Country Nationals 512
Host-Country Nationals 512
Third-Country Nationals 513
Subcontracting and Outsourcing 514
Selection Criteria for International Assignments 516
General Criteria 516
Adaptability to Cultural Change 517
Physical and Emotional Health 518
Age, Experience, and Education 518
Language Training 518
Motivation for a Foreign Assignment 519
Spouses and Dependents or Work-Family Issues 519
Leadership Ability 521
Other Considerations 521

xxx Table of Contents
International Human Resource Selection Procedures 521

Testing and Interviewing Procedures 521
The Adjustment Process 522
Compensation 523
Common Elements of Compensation Packages 524
Tailoring the Package 526
Individual and Host-Country Viewpoints 527
Candidate Motivations 527
Host-Country Desires 528
Repatriation of Expatriates 529
Reasons for Returning 529
Readjustment Problems 530
Transition Strategies 531
Training in International Management 532
The Impact of Overall Management Philosophy on Training 534
The Impact of Different Learning Styles
on Training and Development 534
Reasons for Training 535
Types of Training Programs 537
Standardized versus Tailor-Made 537
Cultural Assimilators 539
Choice of Content of the Assimilators 540
Validation of the Assimilator 540
Positive Organizational Behavior 540
Future Trends 541

Key Terms 544
Internet Exercise: Coke Goes Worldwide 545
Endnotes 545
In the International Spotlight: Brazil 551
Brief Integrative Case 4.1: IKEA’s Global Renovations 552
Endnotes 558
In-Depth Integrative Case 4.1: Chiquita’s Global Turnaround 560
Endnotes 567
Skill-Building and Experiential Exercises 569
Personal Skill-Building Exercises 569

1. The Culture Quiz 570
2. “When in Bogotá . . .” 574

Table of Contents xxxi
3. The International Cola Alliances 577

4. Whom to Hire? 580
In-Class Simulations (available in Connect, connect.mheducation.com)

1. “Frankenfoods” or Rice Bowl for the World: The U.S.-EU
Dispute over Trade in Genetically Modified Organisms
2. Cross-Cultural Conflicts in the Corning-Vitro Joint Venture
Glossary 583
Name and Organization Index 589
Subject Index 606

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PART ONE
ENVIRONMENTAL
FOUNDATION
Lut61312_ch01_001-043.indd 1 13/01/23 3:01 PM

Chapter 1
GLOBALIZATION AND
INTERNATIONAL LINKAGES
Globalization is one of the most profound forces in our con-
temporary economic environment, although support for free
The World of International
trade and open borders is not universal. The practical impact Management
of globalization can be felt on all aspects of society, and effec-
tive management of organizations in an increasingly complex
An Interconnected World
OBJECTIVES OF THE CHAPTER
global environment is crucial for success. In nearly every

country, increasing numbers of large, medium, and even small
corporations are engaging in international activities, and a
growing percentage of company revenue is derived from overseas
A rmed with lawyers and tens of thousands of documents she
copied from Facebook’s internal system, Frances Haugen
decided to reveal what she termed the “true nature” of Facebook to
markets. Yet, continued economic and political uncertainties the users of the product and the general public. Facebook’s whistle-
in many world regions, the rise of more nationalistic political blower, a former manager on the social media giant’s “civic integrity
movements, and continued concerns about the impact of team,” leaked the documents to the Wall Street Journal and came
immigration have caused some to question the current system forward in October 2021 to do just that: to tell the truth about
for regulating and overseeing international trade, invest- Facebook and all of the negative effects of its products.
ments, migration, and financial flows. Nonetheless, interna- Using her work with algorithms and internal research, Haugen
tional management—the process of applying management revealed many concerning facts about the company. She provided
concepts and techniques in a multinational environment— evidence that a core algorithm, designed to boost engagement and
continues to retain importance. clicks, intentionally shows users content that makes them angry,
Although globalization and international linkages have including content that is divisive and polarizing. The leaked docu-
been part of history for centuries (see the International Manage- ments also exposed Facebook’s research on the spread of hate
ment in Action box “Tracing the Roots of Modern Globalization” and misinformation. According to Haugen, Facebook’s own re-
later in the chapter), the principal focus of this opening chapter search shows that only around 3–5 percent of hate, and less than
is to examine the process of globalization in the contemporary 1 percent of violence and incitement, is identified on its platform,
world. The rapid integration of countries, advances in informa- despite the company considering itself best in class on this front.
tion technology, and the explosion in electronic communication The very hate speech supported domestically and internationally by
have created a new, more integrated world and true global com- Facebook’s algorithms to increase engagement is not being caught
petition. Yet, the complexities of doing business in distinct mar- by Facebook’s systems. This unrestrained hate has built up ethnic
kets persist. Since the environment of international management and genocidal violence against global minority groups, including
is all-encompassing, this chapter is mostly concerned with the allegedly stirring up ethnic violence, most recently displayed by the
economic dimensions, while the following two chapters are fo- unrest and genocide in Ethiopia and Myanmar. For example, in
cused on the political, legal, and technological dimensions and 2017, the purge of over 750,000 Rohingya Muslims in Myanmar
ethical and social dimensions, respectively. The specific objec- was allegedly fueled by hate speech on Facebook.
tives of this chapter are Facebook’s internal research shows yet another disturbing sta-
tistic: 13.5 percent of teenage girls say that Instagram makes their
1. ASSESS the implications of globalization for countries,
suicidal thoughts worse, and 17 percent of them say it makes their
industries, firms, and communities.
eating disorders worse. Perhaps one of the most damning claims
2. REVIEW the major trends in global and regional integration. against Facebook in the documents is its role in the Capitol insur-
rection on January 6th, 2021. After the U.S. presidential election of
3. EXAMINE the changing balance of global economic power
2020, Facebook decided to disband the civic integrity team that
and trade and investment flows among countries.
Haugen was a part of and remove additional safeguards in place.
4. ANALYZE the major economic systems and recent devel- That allowed for even more inaccurate and divisive content to be
opments among countries that reflect those systems. shared, which may have led to the attack. In sum, Haugen asserted
that the company lied to the public on very serious matters in order
to increase engagement, and ultimately, profit.
A whistleblower faces many risks, including counterclaims
from the company, which is extremely well-funded, and threats
2
Lut61312_ch01_001-043.indd 2 13/01/23 3:01 PM

of legal action. In response to the release of the documents, throw at it to prevent more unethical behavior? Only time will
Facebook issued a lengthy statement, asserting that the Wall tell.1,2,3 Unfortunately, while the U.S. has the ability to challenge
Street Journal deliberately mischaracterized the company and Facebook’s seemingly unethical practices, many other countries
cherry-picked negative information from the leak. It is clear that do not have a strong enough government or the rule of law to do
Facebook will not take the bombshell accusations lightly. so. Therefore, all eyes are on this whistleblower and the
Even before this recent development, Facebook was facing changes that she can bring about.4
integrity issues and doubt in the eye of the public. The trouble for
Facebook began back in March 2018, when it was revealed that a Social Media Ha s Changed How We Connect
university research associate and Cambridge Analytica had re- Although Facebook and other social media applications have
leased a third-party Facebook application called “This Is Your Digi- faced considerable scrutiny in regard to data privacy, one thing
tal Life.” Although the application itself was simply a personality is certain: We currently live in a world interconnected and trans-
quiz, users of the application unknowingly enabled Cambridge An- formed by social media. Through online networking, the way we
alytica to collect detailed information from their Facebook profiles. connect with others has drastically changed. The volume of con-
Personal information, such as home location, current city, inter- tent being created and shared is staggering, with virtually any-
ests, and birthdates was gathered from users of the application, as one on the globe only a few clicks away. In fact, the average
well as from their Facebook friends. Only a few hundred thousand number of links separating any two random people on Facebook
people actually downloaded the application, yet 87 million people is now only 3.57.5 Statistics from some of the most used social
had their personal data compromised. Using the information gath- networking applications underscore how social media has con-
ered through the application, Cambridge Analytica was able to nected people across the globe:
profile Facebook users based on personality, age, location, and
interests. These users could then be targeted with political adver- Facebook
tisements that would be more likely to influence their
political opinion. Additionally, the Russian govern- 3000
2800
ment’s utilization of social media to interfere in the 2600
9%
Population in Millions
2400
2016 U.S. presidential election, including the spread 2200 USA
2000
of misinformation, went unchecked and unrestricted 1800
1600
by Facebook. More than 3,000 advertisements and 1400 91%
1200
80,000 posts, originating from Russian-based opera- 1000
800
of users are outside
of the USA
tives and designed to incite political divisions, were 600
400
posted on the site in the two years prior to the elec- 200
0
Facebook China India USA
tion. Facebook first estimated in October 2017 that
up to 10 million users had been targeted by Russian-
purchased election advertisements but later con- 98.5% of the daily users, access Facebook through their mobile devices.
firmed that as many as 125 million U.S. users could
have seen posts or advertisements from Russian-
based operatives.
The Cambridge Analytica revelations resulted in
a fine for Facebook, but its growing share prices Source: 39 Facebook Stats That Matter to Marketers in 2022.” Hootsuite, May 13, 2022. https://blog.hootsuite
barely faltered in the long term. The company also .com/facebook-statistics/
overcame allegations of Russian interference. The
company has persevered through a tumultuous ini-
tial public offering and a questionable company-culture. CEO Instagram
Mark Zuckerberg and the company have clearly bounced back • Over 1 billion people create content on Instagram every
before, but in light of the leaked documents, many wondered: month.6
can Facebook’s reputation survive? Or, worse for the company, • Over 85 percent of Instagram users are from outside the
can Facebook survive any future regulations that lawmakers U.S.7
3
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4 Part 1 Environmental Foundation
• Ninety-five million new photos are uploaded and shared ev- one of their properties—even if the customer does not tag Mar-
ery day.8 riott in his or her post—and to interact with that guest in a posi-
• Over 80 percent of users utilize Instagram in deciding tive way. For example, if a pair of customers post a photo of
whether or not to make a purchase.9 themselves celebrating a first wedding anniversary at a Marriott
hotel in Orlando, the M Live command center can find that post
Snapchat through the geo-tag in real time, call the local hotel’s concierge,
• Snapchat reached 100 million active members in less than and have a bottle of champagne sent to the couple’s room.18
four years—outpacing the growth of Facebook or By 2018, Marriott had opened its fourth M Live location and
Instagram.10 now has command centers in London, Hong Kong, and the U.S.,
• By the second quarter of 2021, Snapchat had over 293 mil- covering the European, North and South American, and Asian
lion daily users.11 markets. London, the newest location, can engage in conversa-
• Sixty-two percent of active daily users are located outside of tion in French, Spanish, German, Italian, English, and other lan-
North America. guages.19 Social media will continue to be a valuable tool for
• More than 5 billion “snaps” are sent every day, Marriott as the company expands to new locations in the devel-
• equating to more than 18 billion video views.12 oping regions of the world, creating positive customer experi-
• Over seventy five percent of 13- to 34-year-olds in the U.S. ences that help build the brand’s reputation.20,21,22
are on Snapchat.13
Certainly, social networks are a part of many people’s lives. Yet, Social Media has Impacted International Diplomacy
has the virtual world of social media networks made a perma- and Global Policy
nent impact in the world of international business? World leaders have turned to social media as a way to express
options and gauge public support. According to a 2018 study, 98
Social Media has Changed Global Business Strategy percent of all governments have an official Twitter presence, 93
Marriott International, an American-based hotel company, has percent maintain a Facebook account, and 81 percent utilize Ins-
strategically leveraged social media to improve the customer ex- tagram. Laos, North Korea, Sao Tome and Principe, and Turk-
perience across its many global locations. A key component of menistan are the only countries that do not have a Twitter
this strategy is Marriott’s “M Live” studios, which serve as cen- presence.23 Additionally, over 900 government ministers and
tralized social media “command centers” for the company. M 1,400 ambassadors maintain individual Twitter accounts. As of
Live employees, equipped with conference rooms and large 2020, world leaders have posted more than 8.7 million tweets
shared screens, monitor customers’ posts, comments, and and have a following of more than 620 million users.24 Citizens
pictures across a variety of social networking platforms in real in most countries can now directly access their governments
time.14,15 through these social networks. For example, the Dutch govern-
The M Live strategy has improved the way that Marriott en- ment responds to policy comments and questions for 12 hours a
gages its global customer base. With more than 7,000 proper- day, every weekday, through Twitter. The Nepalese govern-
ties in over 130 countries around the globe, creating ment’s “Hello Government” Twitter account focuses on replying
personalized interactions with guests was nearly impossible be- to questions from citizens, and more than 85 percent of Rwan-
fore social media.16 Marriott was dependent on call centers and dan President Paul Kagame’s tweets are replies to other users.25
e-mails to answer questions and complaints. Communication This direct access to governments through social media
was slow and generic, often eroding customer patience and re- played an important role during the COVID-19 pandemic. The
sulting in negative feedback. By using social media, however, President of Panama showed his support of health care workers
Marriott representatives at M Live centers are able to engage in by tweeting 140 clapping emojis. Many other government lead-
instant and meaningful interactions, whether the customer is lo- ers and organizations followed suit. Pope Francis used Twitter to
cated in the U.S., the United Arab Emirates, or Uganda. The M pray for health care workers and those suffering from COVID-19,
Live employees, who are equipped to respond in a variety of lan- and Twitter was the first platform through which Boris Johnson,
guages, can engage with social media posts, interact one-on- the Prime Minister of the U.K., announced that he tested positive
one with customers, and monitor conversations from around the for COVID. Twitter played many roles during the health crisis, in-
globe.17 cluding acting as a source of information, reassurance, and
By utilizing social media, Marriott can offer a more personal- guidance.26
ized service to its customers. An example of this is M Live’s use Open dialogue between world leaders is also becoming
of “geo-tags.” Geo-tags, which are often included on public so- commonplace on social media platforms. The international re-
cial networking posts, are digital markers that give the physical action to the U.S.’ withdrawal from the Paris Climate Agree-
location of the person uploading a photo or post to a website. ment in 2017 provides a good example. Various global
These tags give M Live employees the ability to search for posts leaders used Twitter to openly urge U.S. President Trump to
that were uploaded by customers who are physically located at reconsider his decision. Fiji Prime Minister Frank Bainimarama
Lut61312_ch01_001-043.indd 4 13/01/23 3:01 PM

Chapter 1 Globalization and International Linkages 5
tagged President Trump’s personal Twitter account to ask him incite violence, according to Twitter. This suspension sets a
“not to abandon the Paris Agreement,” and the prime minis- precedent for the use of social media by all world leaders and
ters of the Nordic counties used Twitter to appeal to President the possible restrictions they can face.30
Trump “to show global leadership.” French President Emman- Social media networks have accelerated technological inte-
uel Macron called on President Trump to “Make Our Planet gration among the nations of the world. People across the globe
Great Again,” and the French Foreign Ministry tagged Ivanka are now linked more closely than ever before. This social phe-
Trump (President Trump’s daughter and adviser) in a tweet nomenon has implications for businesses, as corporations can
asking her to change her father’s mind.27 now leverage networks such as Facebook to achieve greater
The United Nations (U.N.) has increasingly embraced social success. Understanding the global impact of social media is key
media as a tool to enhance diplomacy and understanding world- to understanding our global society.
wide. The U.N. maintains official accounts on Twitter, YouTube, Despite the challenges and privacy concerns that social
Flickr, Pinterest, Tumblr, Instagram, Snapchat, and LinkedIn, and, networking platforms face, such as Facebook’s Cambridge
as of 2021, boasts over 7 million followers on its primary Face- Analytica scandal, discussed in the beginning of this section,
book page.28 As part of its 2018 United Nations Climate Change social media has transformed the world in which we live. The
Conference, the U.N. utilized various social media platforms to pace of interconnectivity across the globe continues to in-
spread information regarding gender inequity and the U.N.’s crease with the new communication tools that social net-
sustainable development goals worldwide. The hashtag working provides. Social media has altered the way that we
“#COP24” was used to link activities across various networks, interact with each other, and businesses, like Marriott, have
while YouTube and Facebook served as primary platforms for gained advantages by leveraging online networks. In this
disseminating information and videos to its global audience chapter, we examine the globalization phenomenon, the
(refer to Chapter 3, Table 3–4, for a further discussion of the growing integration among countries and regions, the
U.N.’s sustainable development goals).29 changing balance of global economic power, and examples
The relationship between world leaders and social media has of different economic systems. As you read this chapter,
taken a recent twist following the permanent suspension of for- keep in mind that although there are periodic setbacks,
mer President Donald Trump from Twitter. This suspension is a globalization continues to move at a rapid pace and that all
result of a violation of Twitter’s Glorification of Violence policy. nations, including the U.S., as well as individual companies
Trump, who tweeted about the insurrection at the Capitol on and their managers will have to keep a close watch on the
January 6, 2021 and questioned the legitimacy of the 2020 current environment if they hope to be competitive in the
Presidential election, has the ability to mobilize his audience and years ahead.
■ Introduction
Management is the process of completing activities with and through other people. management
International management is the process of applying management concepts and techniques The process of completing
in a multinational environment and adapting management practices to different economic, activities efficiently and ef-
political, and cultural contexts. Many managers practice some level of international man- fectively with and through
agement in today’s increasingly diverse organizations. International management is dis- other people.
tinct from other forms of management in that knowledge and insights about global issues international management
and specific cultures are a requisite for success. Today more firms than ever are earning The process of applying
some of their revenue from international operations, even nascent organizations, as illus- management concepts and
trated in the chapter opening World of International Management. techniques in a multina-
Many of these companies are multinational corporations (MNCs). An MNC is a tional environment and
firm that has operations in more than one country, international sales, and a mix of adapting management prac-
nationalities among managers and owners. In recent years such well-known American tices to different economic,
MNCs as Apple, Oracle, Coca-Cola, Ford Motor Company, ExxonMobil, Caterpillar, political, and cultural envi-
Walmart, Microsoft, and Google have all earned more annual revenue in the international ronments.
arena than they have in the U.S. In addition, MNCs from developing economies, such as MNC
India, Brazil, and China, are providing formidable competition to their North American, A firm having operations in
European, and Japanese counterparts. Names like Cemex, Embraer, Haier, Lenovo, LG more than one country, in-
Electronics, Huawei, Telefonica, Santander, Reliance, Samsung, Li & Fung, Airtel, Tata, ternational sales, and a na-
and Infosys are becoming well-known global brands. Table 1–1 lists the world’s top non- tionality mix of managers
financial companies ranked by foreign assets through 2020. and owners.
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Table 1–1
The World’s Top Nonfinancial MNCs, Ranked by Foreign Assets, 2020
(in millions of dollars)
Rank Company Name Home Economy Foreign Assets Total Assets Foreign Sales Total Sales
1 Toyota Motor Corp Japan $336,609 $561,991 $175,673 $256,658

2 Royal Dutch Shell Plc United Kingdom 323,240 378,630 122,337 169,374
3 Deutsche Telekom AG Germany 259,626 325,091 98,634 115,190
4 Volkswagen Group Germany 258,098 610,031 205,334 254,202
5 Total SA France 239,970 267,406 85,765 111,786
6 BP Plc United Kingdom 234,760 267,205 129,122 169,208
7 Anheuser-Busch InBev NV Belgium 187,003 227,494 37,398 43,780
8 British American Tobacco PLC United Kingdom 175,170 187,947 32,822 33,063
9 Daimler AG Germany 174,541 350,641 147,180 175,991
10 Exxon Mobil Corp United States 171,361 332,750 93,471 181,502
Source: “World Investment Report 2021.” United Nations Conference on Trade and Development, 2021.
Globalization, coupled with the rise of emerging market MNCs, has brought prosperity
to many previously underdeveloped parts of the world. This is especially true in China,
where luxury items, like automobiles, have become increasingly attainable. In 2005, auto-
mobile sales in China totaled only 5.8 million units, representing less than 9 percent of
global sales, while automobile sales in the U.S. exceeded 17.4 million units. Just 16 years
later, in 2021, over 26 million automobile units were sold in China, accounting for over
a quarter of global sales and far surpassing the 15 million units sold in the U.S.31 The
global auto industry suffered a blow due to the COVID-19 pandemic and the associated
disruptions to the supply chains. While the U.S. has still not reached the pre-pandemic
sales levels of about 17 million units a year, China has surpassed the pre-pandemic levels.
The supply chain disruptions and the global chip shortage have particularly impacted
American carmakers. General Motors (GM), who was the top seller for the U.S. market,
experienced a 13 percent drop between 2020 and 2021 in the U.S. market, selling just
over 2.2 million vehicles. It was overtaken by the Japanese carmaker, Toyota, which sold
2.3 million vehicles in 2021, an increase of 10.4 percent over 2020.32 Moreover, a number
of emerging market auto companies have also emerged as global players through their
exporting, foreign investment, and international acquisitions, including the purchase of
Volvo by Chinese automaker Geely and Tata’s acquisition of Jaguar Land Rover.
Procter & Gamble (P&G), an American consumer products MNC headquartered
in Cincinnati, Ohio, has invested heavily in its Singapore operations over the last 10 years.
P&G’s Singapore Innovation Center (SgIC) functions as the primary research and devel-
opment center for the company’s hair, skin, and home care products. Initially costing
US$185 million, the SgIC employs more than 500 engineers and scientists, focuses on
more than 18 different fields of study, and has successfully introduced several major
products into the global marketplace. Inspired by the success of the SgIC, P&G invested
a further US$100 million in 2017 to establish the P&G Singapore E-Center, a digital
innovation hub that focuses on improving the supply chain and end-to-end logistics of the
company. The Asian market, with nearly 2 billion customers and 25 different brands, is
particularly important for P&G’s future growth plans.33,34,35
In the last few years, Africa’s emerging markets have benefited from significant invest-
ments made by technology-focused MNCs. Google A.I., a division of Google that special-
izes in developing artificial intelligence technology, announced the opening of a major
research center in Accra, Ghana, in 2018. The new center, which focuses on developing
Artificial Intelligence (A.I.) tools for the health care, education, and agriculture sectors,
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Chapter 1 Globalization and International Linkages 7
aims to employ highly educated engineers and researchers from local universities.36 In late
2017, Facebook, which has close to 200 million users in Africa, announced plans to open
a technology-based incubator space for start-ups in Lagos, Nigeria, called Ng Hub. The
project’s primary goal is to provide education and tools to underfunded entrepreneurs,
which will enable the start-ups to grow and attract investment from around the globe. In
addition to the incubator space, Facebook committed to providing technology-based train-
ing to over 50,000 Nigerians.37
MNCs continue to turn to India when expanding their consulting, IT, and other
service-based offerings. Accenture, an American professional services firm, employs
150,000 people in India, constituting more than a third of its global workforce. In fact,
85 percent of the 469,000 Accenture employees worldwide are now located outside the
U.S.38 Accenture’s Indian operations, with highly specialized knowledge in artificial intel-
ligence, blockchain technology, and machine learning, are increasingly driving innovation
for the company.39 Since entering India in 2013, Amazon has committed $6.5 billion to
get a foothold in India’s $900 billion retail market.40,41 In 2019, Amazon opened its larg-
est campus in the world with a capacity to accommodate 15,000 workers in 1.8 million
square feet space.42 These investments continued even during the COVID-19 pandemic
with an announcement of $1 billion in digitizing small and medium businesses in India.43
These trends reflect the reality that firms are finding that they must develop inter-
national management expertise, especially expertise relevant to the increasingly important
developing and emerging markets of the world. Managers from today’s MNCs must learn
to work effectively with those from many different countries. Moreover, more and more
small and medium-sized businesses will find that they are being affected by international-
ization. Many of these companies will be doing business abroad, and those that do not
will find themselves doing business with MNCs operating locally. And increasingly, the
MNCs are coming from the developing world as previously domestic-oriented companies
from countries like China and India expand abroad through acquisitions or other means.
Table 1–2 lists the world’s top nonfinancial companies from developing countries ranked
by foreign assets in 2019.
Table 1–2
The World’s Top Nonfinancial TNCs from Developing and Transitioning Economies, Ranked by
Foreign Assets, 2019
(in millions of dollars)
Rank Company Name Home Economy Foreign Assets Total Assets Foreign Sales Total Sales
1 CK Hutchison Holdings Ltd Hong Kong/China $143,367 $ 155,523 $ 32,556 $ 38,163
2 China National Petroleum China 133,548 610,320 180,875 383,281
Corp
3 Hon Hai Precision Industries Taiwan 96,897 110,865 169,254 172,842
4 Tencent Holdings Ltd China 95,453 137,037 2,420 54,589
5 Samsung Electronics Co, Ltd South Korea 87,435 305,544 168,245 197,552
6 Sinopec - China China 82,889 318,682 137,800 429,174
Petrochemical Corp
7 China COSCO Shipping Corp China 81,361 126,369 8,167 45,144
Ltd
8 China National Offshore China 74,952 185,602 66,273 109,877
Oil Corp
9 Huawei Investment & China 67,839 123,344 50,945 124,263
Holding Co Ltd
10 Sinochem Group China 57,396 79,089 11,126 81,256
Source: “World Investment Report 2021.” United Nations Conference on Trade and Development, 2021.
Lut61312_ch01_001-043.indd 7 13/01/23 3:01 PM

■ Globalization and Internationalization

International business is not a new phenomenon; however, the volume of international
trade has increased dramatically over the last two decades. Today, every nation and an
increasing number of companies buy and sell goods in the international marketplace. A
number of developments around the world have helped fuel this activity.
Globalization, Antiglobalization, and Global Pressures for Change

globalization Globalization can be defined as the process of social, political, economic, cultural, and
The process of social, politi- technological integration among countries around the world. Globalization is distinct from
cal, economic, cultural, and internationalization in that internationalization is the process of a business crossing
technological integration national and cultural borders, while globalization is the vision of creating one world unit,
among countries around the
a single market entity. Evidence of globalization can be seen in increased levels of trade,
world.
capital flows, and migration. Globalization has been facilitated by technological advances
offshoring in transnational communications, transport, and travel. Thomas Friedman, in his book
The process by which com- The World Is Flat, identified 10 “flatteners” that have hastened the globalization trend,
panies undertake some ac- including the fall of the Berlin Wall, offshoring, and outsourcing, which have combined
tivities at offshore locations to dramatically intensify the effects of increasing global linkages.44 Hence, in recent years,
instead of in their countries globalization has accelerated, creating both opportunities and challenges to global busi-
of origin.
ness and international management.
outsourcing On the positive side, global trade and investment continue to grow, bringing wealth,
The subcontracting, or con- jobs, and technology to many regions around the world. While some emerging countries
tracting out, of activities to have not benefited from globalization and integration, the emergence of MNCs from
endogenous organizations developing countries reflects the increasing inclusion of all regions of the world in the
that had previously been benefits of globalization. Yet, as the pace of global integration quickens, so have the
performed by the firm. antiglobalization sentiments and the emergence of new concerns over mounting global
pressures.45 These pressures can be seen in protests at the meetings of the World Trade
Organization (WTO), International Monetary Fund (IMF), and other global bodies and
in the growing calls by different interest groups in both developed and developing coun-
tries to make the global trading system more responsive to their economic and social
needs. These groups are especially concerned about rising inequities between incomes,
and nongovernmental organizations (NGOs) have become more active in expressing con-
cerns about the potential shortcomings of economic globalization.46 In addition, an
increasing number of candidates in various election campaigns around the world have
criticized globalization, including the migration of people, as a contributing factor leading
to lost jobs at home and general economic insecurity. The perceived negative effects from
globalization on the U.S. manufacturing industry were a major issue in the 2016 U.S.
presidential election. According to some analysts, the antiglobalization sentiment may
have ultimately swayed the vote in several key states to then-candidate Donald Trump. It
is important to remember that even though globalization does contribute to changes in
industry and manufacturing, as well as the loss of some jobs, these problems are typically
the result of a range of factors, of which globalization is just one. In many instances,
globalization is just a scapegoat for other sources of harm, such as technological advances
that change the employment structure of an economy.47
Who benefits from globalization? Proponents believe that everyone benefits from
globalization, as evidenced in lower prices, greater availability of goods, better jobs, and
access to technology. Theoretically, individuals in established markets will strive for better
education and training to be prepared for future positions, while citizens in emerging
markets and underdeveloped countries will reap the benefits of large amounts of capital
flowing into those countries, which will stimulate growth and development. Critics dis-
agree, noting that the high number of jobs moving abroad as a result of the offshoring of
business services jobs to lower-wage countries does not inherently create greater opportu-
nities at home and that the main winners of globalization are the company executives.
Proponents claim that job losses are a natural consequence of economic and technological
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International Management in Action
Tracing the Roots of Modern Globalization
Globalization is often presented as a new phenomenon their global trading, the Chinese introduced uniform con-
associated with the post–World War II period. In fact,
tainer measurements to enable merchants to transact busi-
globalization is not new. Rather, its roots extend back to ness using common weight and dimension measurement
ancient times. Globalization emerged from long-standing systems. Like the early Egyptians and later the Romans, they
patterns of transcontinental trade that developed over many used coinage as an intermediary form of value exchange or
centuries. The act of barter is the forerunner of modern specie, thus eliminating complicated barter transactions.
international trade. During different periods of time, nearly
every civilization contributed to the expansion of trade. European Trade Imperative
The concept of the alphabet came to the Greeks via trade
Middle Eastern Intercontinental Trade with the Phoenicians. During the time of Alexander the
In ancient Egypt, the King’s Highway, or Royal Road, Great, transcontinental trade was extended into Afghani-
stretched across the Sinai into Jordan and Syria and into stan and India. With the rise of the Roman Empire, global
the Euphrates Valley. These early merchants practiced trade routes stretched from the Middle East through central
their trade following one of the earliest codes of commer- Europe, through Gaul, and across the English Channel. In
cial integrity: Do not move the scales, do not change the 1215, King John of England signed the Magna Carta, which
weights, and do not diminish parts of the bushel. Land stressed the importance of cross-border trade. By the time
bridges later extended to the Phoenicians, the first mid- of Marco Polo’s writing of The Description of the World at
dlemen of global trade. Over 2,000 years ago, traders in the end of the 13th century, the Silk Road from China to the
silk and other rare valued goods moved east out of the city-states of Italy was a well-traveled commercial highway.
Nile basin to Baghdad and Kashmir and linked the ancient His tales, chronicled journeys with his merchant uncles,
empires of China, India, Persia, and Rome. At its height, gave Europeans a taste for the exotic, further stimulating
the Silk Road extended over 4,000 miles, providing a the consumer appetite that propelled trade and globaliza-
transcontinental conduit for the dissemination of art, reli- tion. Around 1340, Francisco Balducci Pegolotti, a Floren-
gion, technology, ideas, and culture. Commercial cara- tine mercantile agent, authored Practica Della Mercatura
vans crossing land routes in Arabian areas were forced to (Practice of Marketing), the first widely distributed refer-
pay tribute—a forerunner of custom duties—to those who ence on international business and a precursor to today’s
controlled such territories. In his youth, the Prophet Mu- textbooks. The search for trading routes contributed to the
hammad traveled with traders, and prior to his religious Age of Discovery and encouraged Christopher Columbus
enlightenment the founder of Islam himself was a trader. to sail west in 1492.
Accordingly, the Qur’an instructs followers to respect pri-
vate property, business agreements, and trade.
Globalization in U.S. History
Trans-Saharan Cross-Continental Trade The Declaration of Independence, which set out griev-
ances against the English crown, upon which a new nation
Early tribes inhabiting the triad cities of Mauritania, in an- was founded, cites the desire to “establish Commerce” as
cient West Africa below the Sahara, embraced caravan a chief rationale for establishing an independent state. The
trade with the Berbers of North Africa. Gold from the sub- king of England was admonished “for cutting off our trade
Saharan area was exchanged for something even more with all parts of the world” in one of the earliest antiprotec-
prized—salt, a precious substance needed for retaining tionist free trade statements from the New World.
body moisture, preserving meat, and flavoring food. Sin- Globalization, begun as trade between and across ter-
gle caravans, stretching 5 miles and including nearly ritorial borders in ancient times, was historically and is
2,500 camels, earned their reputation as ships of the even today the key driver of world economic develop-
desert as they ferried gold powder, slaves, ivory, animal ment. The first paths in the creation of civilization were
hides, and ostrich feathers to the northeast and returned made in the footsteps of trade. In fact, the word meaning
with salt, wool, gunpowder, porcelain pottery, silk, dates, “footsteps” in the old Anglo-Saxon language is trada,
millet, wheat, and barley from the east. from which the modern English word trade is derived.
Contemporary globalization is a new branch of a very old
China as an Ancient Global Trading Initiator tree whose roots were planted in antiquity.
In 1421, a fleet of over 3,750 vessels set sail from China to
cultivate trade around the world for the emperor. The voy- Sources: Thomas Cahill, Sailing the Wine Dark Sea: Why Greeks Matter
age reflected the emperor’s desire to collect tribute in ex- (New York: Doubleday, 2003), 10, 56–57; Charles W. L. Hill, International
Business, 4th ed. (New York: McGraw-Hill Irwin, 2003), 100; Gavin Men-
change for trading privileges with China and China’s
zies, 1421: The Year China Discovered America (New York: William
protection. The Chinese, like modern-day multinationals, Morrow/HarperCollins, 2003), 26–27; Milton Viorst, The Great Docu-
sought to extend their economic reach while recognizing ments of Western Civilization (New York: Barnes & Noble Books, 1994),
principles of economic equity and fair trade. In the course of 115 (Magna Carta), 168 (Declaration of Independence).
Lut61312_ch01_001-043.indd 9 13/01/23 3:01 PM

change and that offshoring actually improves the competitiveness of American companies
and increases the size of the overall economic pie.48 Critics point out that growing trade
deficits and slow wage growth are damaging economies and that globalization may be
moving too fast for some emerging markets, which could result in economic collapse.
Moreover, critics argue that when production moves to countries to take advantage of
lower labor costs or less regulated environments, it creates a “race to the bottom” in which
companies and countries place downward pressure on wages and working conditions.49
The increase in antiglobalization sentiments has led to demands for more regulations
that can limit and even reverse globalization. While this skepticism against globalization is
not a new phenomenon, there has been a rise in antiglobalization sentiments with both
the political left and the right engaging in opposing supranational institutions that facilitate
globalization. The benefits and costs of globalization are not evenly distributed within and
across societies. While the benefits of globalization tend to be diffuse, the costs are more
concentrated within specific sectors of the economy, impacting some population segments
more than others. Those suffering due to globalization become its vocal critics and are
prone to lobbying by interest groups and political actors again globalization.
India is one country at the center of the globalization debate. As noted previously,
India has been the beneficiary of significant foreign investment, especially in services such
as software and information technology (IT). India’s public debt has been hovering in the
range of 65–70 percent of GDP over the past 15 years, increasing macroeconomic stability
and lowering its vulnerability to external risks. Additionally, India experienced a healthy
growth rate of about 7 percent in the decade before the pandemic hit the economy and is
estimated to grow at 8.9 percent in the fiscal year 2021–22, outpacing China as the fastest
growing large economy.50,51 Despite this growth, infrastructure challenges still remain. Limited
clean water, power, paved roadways, and modern bridges have made it increasingly difficult
for companies to expand. It is possible that India will follow in China’s footsteps and continue
rapid growth in incomes and wealth; however, it is also possible that the challenges India
faces are greater than the country’s capacity to respond to them. See In the International
Spotlight at the end of this chapter for additional insights into India.
According to antiglobalization activists, if corporations are free to locate anywhere
in the world, the world’s poorest countries will relax or eliminate environmental standards
and social services in order to attract first-world investment and the jobs and wealth that
come with it. Proponents of globalization contend that even within the developing world,
it is protectionist policies, not trade and investment liberalization, that result in environ-
mental and social damage. They believe globalization will force higher-polluting countries
such as China and India into an integrated global community that takes responsible
measures to protect the environment. However, given the significant changes required in
many developing nations to support globalization, such as better infrastructure, greater
educational opportunities, and other improvements, most supporters concede that there
may be some short-term disruptions. Over the long term, globalization supporters believe
industrialization will create wealth that will enable new industries to employ more modern,
environmentally-friendly technology. We discuss the social and environmental aspects of
globalization in more detail in Chapter 3.
These contending perspectives are unlikely to be resolved anytime soon. Instead, a
vigorous debate among countries, MNCs, and civil society will likely continue and affect
the context in which firms do business internationally. Business firms operating around
the world must be sensitive to different perspectives on the costs and benefits of globali-
zation and adapt and adjust their strategies and approaches to these differences.
Global and Regional Integration

One important dimension of globalization is the increasing economic integration among
countries brought about by the negotiation and implementation of trade and investment
agreements. Here we provide a brief overview of some of the major developments in global
and regional integration.
Lut61312_ch01_001-043.indd 10 13/01/23 3:01 PM

A Closer Look
Outsourcing and Offshoring
The concepts of outsourcing and offshoring are not new, line lawyers. It also raises the question as to whether or
but these practices are growing at an extreme rate. Off- not there are limitations to offshore outsourcing. Many
shoring refers to the process by which companies under- companies, including Deutsche Bank, spread offshore
take some activities at offshore locations instead of in outsourcing opportunities across multiple countries such
their countries of origin. Outsourcing is the subcontract- as India and Russia for economic or political reasons. The
ing or contracting out of activities to external organiza- advantages, concerns, and issues with offshoring span a
tions that had previously been performed within the firm variety of subjects. Throughout the text we will revisit the
and is a wholly different phenomenon. Often the two idea of offshore outsourcing as it is relevant. Here in
combine to create “offshore outsourcing.” Offshoring be- Chapter 1 we see how skeptics of globalization wonder if
gan with manufacturing operations. Globalization jump- there are benefits to offshore outsourcing, while in Chap-
started the extension of offshore outsourcing of services, ter 2 we see how these are related to technology, and
including call centers, R&D, information services, and finally in Chapter 14 we see how offshore practices affect
even legal work. American Express, GE, Sony, and Netflix human resource management and the global distribution
have all used attorneys from Pangea3, a Mumbai-based of work.
legal firm, to review documents and draft contracts.
These companies benefit from the lower costs and higher
Sources: Pete Engardio and Assif Shameen, “Let’s Offshore the Law-
efficiency that companies like Pangea3 can provide com-
yers,” BusinessWeek, September 18, 2006, 42; Tony Hallett and Andy
pared to domestic legal firms. This is a risky venture, as McCue, “Why Deutsche Bank Spreads Its Outsourcing,” BusinessWeek,
legal practices are not the same across countries, and March 15, 2007; “Offshoring Your Lawyer,” The Economist, December 16,
the documents may be too sensitive to rely on assembly- 2010, http://www.economist.com/node/17733545.
Over the past six decades, succeeding rounds of global trade negotiations have
resulted in dramatically reduced tariff and nontariff barriers among countries. Table 1–3
shows the history of these negotiation rounds, their primary focus, and the number of
countries involved. These efforts reached their crest in 1994 with the conclusion of the
Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs
and Trade (GATT) and the creation of the World Trade Organization (WTO) to oversee World Trade Organization
the conduct of trade around the world. The WTO is the global organization of countries (WTO)
that oversees rules and regulations for international trade and investment, including agri- The global organization of
culture, intellectual property, services, competition, and subsidies. However, in the countries that oversees rules
and regulations for interna-
29 years since the Uruguay Round, the momentum of global trade agreements has slowed.
tional trade and investment.
Trade talks at WTO Ministerial Conference in Seattle in 1999 were postponed after
Table 1–3
Completed Rounds of the Negotiations under the GATT and WTO
Year Place (name) Subjects Covered Countries
1947 Geneva Tariffs 23
1949 Annecy Tariffs 13
1951 Torquay Tariffs 38
1956 Geneva Tariffs 26
1960–1961 Geneva Tariffs 26
(Dillon Round)
1964–1967 Geneva Tariffs and antidumping 62
(Kennedy Round) measures
1973–1979 Geneva Tariffs, nontariff measures, 102
(Tokyo Round) “framework” agreements
1986–1994 Geneva Tariffs, nontariff measures, 123
(Uruguay Round) services, intellectual property,
dispute settlement, textiles,
agriculture, creation of WTO
Source: Understanding the WTO.
11
Lut61312_ch01_001-043.indd 11 13/01/23 3:01 PM

rotesters disrupted meetings and trade representatives from developed and developing
p
countries were unable to agree on an agenda. In November 2001, the members of the
WTO successfully launched a new round of negotiations at Doha, Qatar, known as the
“Development Round,” reflecting the recognition by members that trade agreements
needed to explicitly consider the needs of and impact on developing countries.52 However,
after a lack of consensus among WTO members regarding agricultural subsidies and the
issues of competition and government procurement, progress again slowed. At the most
recent meeting, held in Geneva in July 2008, disagreements among the U.S., China, and
India over access to agricultural imports from developing countries resulted in an impasse
after nine days of discussions.53 Although there have been attempts to restart the nego-
tiations, they have remained stalled, especially in light of rising protectionism.54
Partly as a result of the slow progress in multilateral trade negotiations, the U.S.
and many other countries have pursued bilateral and regional trade agreements. In 1994,
North American Free Trade the United States, Canada, and Mexico enacted the North American Free Trade Agreement
Agreement (NAFTA) (NAFTA), which, removed most barriers to trade among these countries and created the
A free trade agreement world’s largest free trade zone. A number of economic developments occurred because of
among the U.S., Canada, this agreement, which was designed to promote commerce in the region. Some of the
and Mexico that removed more important developments include (1) the elimination of tariffs as well as import and
most barriers to trade and export quotas; (2) the opening of government procurement markets to companies in the
investment. It was renegoti-
other two nations; (3) an increase in the opportunity to make investments in each other’s
ated and replaced by the
country; (4) an increase in the ease of travel between countries; and (5) the removal of
United States–
Mexico–Canada Agreement restrictions on agricultural products, auto parts, and energy goods. In the more than
(USMCA), signed in 2018. 25 years since NAFTA was first implemented, trade between its member countries has
quadrupled. Despite the successes, NAFTA, like other free trade agreements, was not
immune from some criticism. In recent years, disruptions caused to specific industries,
including the shifting of manufacturing jobs from the United States to Mexico, the con-
tinued tariffs on dairy exports to Canada, and the inability of Mexican farmers to compete
with subsidized U.S. farmers, resulted in discussions to revise the deal. In 2018, the
original NAFTA countries agreed to a renegotiated trade agreement, called the United
States–Mexico–Canada Agreement (USMCA). In 2020, the USMCA was ratified by all
three member countries, thus replacing NAFTA. USMCA maintains the key provisions
of the original trade agreement while enacting minor changes aimed at protecting intel-
lectual property rights, altering car manufacturing regulations to encourage more North
American manufacturing, and opening the Canadian market to tariff-free dairy imports
from the United States.
Other regional and bilateral trade agreements, including the 2003 U.S.–Singapore
Free Trade Agreement and the 2004 U.S.–Dominican Republic–Central American Free
Trade Agreement (CAFTA-DR), were negotiated in the same spirit as NAFTA/USMCA.
The CAFTA-DR export zone, which was implemented on a rolling basis between 2006
and 2009, is the United States’ second largest free trade zone in Latin America after
Mexico. In 2021, two-way trade totaled more than US$68.4 billion.55,56
Agreements like NAFTA/USMCA and CAFTA-DR not only reduce barriers to
trade but also require additional domestic legal and business reforms in developing nations
to protect property rights. Most of these agreements now include supplemental commit-
ments on labor and the environment to encourage countries to upgrade their working
conditions and environmental protections, although some critics believe the agreements
do not go far enough in ensuring worker rights and environmental standards. Partly due
to the stalled progress with the WTO and FTAA, the United States has pursued bilateral
trade agreements with a range of countries, including Australia, Bahrain, Chile, Colombia,
Israel, Jordan, Malaysia, Morocco, Oman, Panama, Peru, and South Korea.57
Economic activity in Latin America continues to be volatile. Despite the continuing
political and economic setbacks these countries periodically experience, economic and
export growth continues in Brazil, Chile, and Mexico. In addition, while outside MNCs
continually target this geographic area, there also is a great deal of cross-border investment
among Latin American countries. Regional trade agreements are helping in this
Lut61312_ch01_001-043.indd 12 13/01/23 3:01 PM

Another random document with
no related content on Scribd:
the same rate of taxes, the streets on which they live are seldom
paved, poorly lighted, and any public improvements that might be
made are always last in coming to them. Thousands of Negroes make
an effort not to buy within the white district but so near that district
that they may be able to get some of the city improvements. There is
also a measure of protection as well as a measure of convenience
when Negroes live on the better streets.
“The Negro has a just protest against the sort of treatment he is
forced to endure notwithstanding he is a taxpayer. It may be alleged
that he is not a heavy taxpayer, and this we grant, but there are
sections of cities sparsely settled which are improved at the behest of
speculators while Negro residents are compelled to live in
discomfiture and inconvenience because of the lack of
improvement.”
Dr. Hughes of Baltimore, speaking for colored citizens, said:
“It means the stopping of self-respecting, law-abiding colored
citizens in their efforts to secure homes and plant themselves in
communities as taxpayers.
“Rental values will advance since there will be no outlet for an
already congested population: they must stay where they are, and in
order to do so pay any price which an unscrupulous money grabber
may demand. With the high cost of foodstuffs and the low scale of
wages for unskilled labor the passage of the West ordinance points to
the creation of a pauper element in our city rather than a thrifty, law-
abiding colored citizenship, and the pauper element of any city or
community makes the more prosperous pay in one way or another
for their support.
“In your ordinance you involve the bread of my people. Recently I
stood in Pierce Street and overheard this conversation: A colored
woman was asked, ‘Did you get the place?’ ‘Yes, I got it and started to
work, when the lady asked me where I lived, and when I told her she
said she could not have any one in her house who came from that
street. She said there was too much disease there.’ It remained for
that woman to move. With the West ordinance in force, where could
she go? We have already a crowded colored population. For her to
move out meant for some one else to move in. It affects not only the
employed, but the employer, and the only way out is for the man who
hires a servant to go to the additional expense of renting or buying a
house for his servants in more healthy quarters, which will aggravate
the already troublesome help problem.”
The Philadelphia Ledger adds helplessly:
“How the Negro is going to be helped to rise under these
circumstances is one of the inscrutable problems of our time and
generation. His own unaided efforts are blocked everywhere by caste
restrictions and discriminations.”
The New York Globe says:
“The Negro has been told to smile and look pleasant as his political
rights have been taken from him. The argument has been that if he
did not make a fuss over voting the race prejudice of his white fellow
citizen would abate—that he would be given a freer chance to work,
to acquire property, to become of material weight in the community.
But, North as well as South, doors of industry are being shut against
the Negro. The economic tragedy of the educated Negro who aspires
to good things is pitiful. He finds either that personal effort and
merit do not count, or that they do not count much. In many places it
is against the Negro who is not willing to stay down in the mire that
antipathy blazes the most brightly. He is the ‘biggotty nigger’.”
Finally the Boston Herald pauses to remark:
“We purchased more than we knew with that first cargo of slaves
sold by the Dutch captain to the Virginia planters now almost three
hundred years ago.”
GOMPERS.
It seems pretty certain that Samuel Gompers, president of the
American Federation of Labor, was to some extent misquoted on the
Negro problem. The official version given by Mr. Charles Stetzle is as
follows:
“The race problem came up in the convention, but not altogether
by the choice of the delegates. President Gompers had given an
address on the depressed races, remarking that it could not be
expected that the Negro, for instance, could have as high an ideal for
himself as the Caucasian. A morning newspaper came out next
morning and in big headlines said that Gompers had ‘read the Negro
out of the trades union,’ when, as a matter of fact, Gompers meant
exactly the opposite. He took occasion to correct the erroneous
impression which had been made upon the public. At any rate, he
spoke of it at least three different times in public addresses.”
The incident has caused much comment, most of it based on the
supposition that union labor is officially drawing the color line. The
Chicago Post says:
“The American Federation of Labor has always declared that ‘the
working people must unite and organize, irrespective of creed, color,
sex, nationality or politics.’ For many years the Federation denied
membership to all unions which drew the color line—a stand which
kept out, for example, the International Association of Machinists
until it eliminated the word ‘white’ from its constitution. Even when
the A. F. of L. relented sufficiently to admit several of the railroad
brotherhoods which were closed to Negroes, Mr. Gompers was
always very robust in his assertion that organized labor welcomed
the Negro worker. When the Industrial Commission of 1900 quizzed
Mr. Gompers on the race issue, it drew from him some very touching
stories of Negro loyalty to the trade union movement. He talked
pretty much like an abolitionist up to a few years ago.”
The Chicago Daily News says:
“Mr. Gompers was represented in the original report of his address
to have dealt with Negroes and Asiatics as if the problems presented
by the two were similar. Everybody should know that they are not.
“The Negroes are native-born American citizens. They know no
other land. It is their sincere desire, according to the measure of their
abilities, to share in the life of the American people. They are making
progress in education and industry. Under these conditions, to deny
to Negroes the right to join labor unions when they meet the
standards required of white applicants for membership would be
clearly un-American.”
The comments of two other papers are characteristic. The
Charleston (S. C.) News and Courier is complacent:
“There is no use to palaver about and invent reasons. Everybody
who knows anything at all knows that racial antipathy is a real thing,
even though intangible. Why beat about the bush and deny it? Aside
from the ignorance of the Negro, his many weaknesses, his fatal
physiological structure, his extraction prevents his recognition as a
social equal, be he in South Africa, America or anywhere else. On
that ground his elimination from white unions is a necessity.
Concomitant reasons need not be given. They follow in natural
sequence.”
The New York Evening Post says, however:
“But even should a reactionary policy of rigid exclusion prevail, it
cannot keep the Negro down industrially; it will doubtless handicap
him in many sections, but the only people who can keep the Negroes
in an inferior economic and social position are the Negroes
themselves. A race that has risen so rapidly against such wonderful
odds is to be held back by no organization of workingmen, however
powerful.”
“COLORED.”
The case of the child with one-sixteenth Negro blood whom the
District of Columbia courts call a “Negro” has brought some
comment. The Detroit News says:
“Eventually the courts must draw the line. The dark races when
intimately associated with the white in overpowering numbers
gradually bleach out. At the fourth remove the descendants are often
blond in type. As the court seems to take no account of the actual
color of the individual in applying the classification ‘colored,’ it must
be assumed that definition must depend upon simple mathematics.”
The Taunton Gazette adds:
“By the same reasoning a man with one-sixteenth Chinese blood is
a Chinaman and one-sixteenth of the blood of any race relegates him
to that race. As a matter of fact, that question of one-sixteenth is not
likely to arise in any case save where it is desired to make out a
person a Negro, and that is where the nub of the whole matter rests.
“It is probable that there are thousands of persons in this country
with one-sixteenth Negro blood in them who do not know it
themselves nor does any one else, for family records are not always
carefully kept along these lines.”
VOTING.
The Boston Transcript has this letter from Dr. Horace Bumstead:
“Dr. Doremus Scudder of Hawaii told the American Missionary
Association in Tremont Temple that the American Negro of the
future will thank his Southern white brother for depriving him of the
ballot until he should have proved his fitness for it—and that he
would thank him notwithstanding the manner in which his ballot
had been taken away. Let us see just what this means.
“It means that the Negro will hereafter be grateful for a
disfranchisement practically based on color rather than unfitness—
which its promoters have boldly avowed was intended to disfranchise
every Negro if possible and not one white man if it could be avoided,
and which they accomplished through ‘grandfather’ and
‘understanding’ clauses artfully devised to deprive the Negro of his
constitutional guarantees for a square deal as regards suffrage
qualifications.
“It means that the Negro will hereafter be grateful for a
disfranchisement which is seriously restricting his economic freedom
and opportunity, the protection of his life and property, his right to
travel in equal comfort for an equal fare, the education of his
children, and the guarding of the virtue of his wife and daughters.
“This conclusion Dr. Scudder naively states he has arrived at after
seven years’ residence, not in the South, but in Hawaii, and because
the liquor dealers there have bought up the votes of the natives. In
other words, when white men have so little control over their baser
element that they cannot keep them from offering bribes, the proper
course, in Dr. Scudder’s opinion, seems to be to take the ballot from
all colored men because some of them have accepted bribes, rather
than to disfranchise the few white men who have offered them.
“When American Negroes become grateful for a disfranchisement
accomplished in such ways, and on such grounds, and with such
detriment to their own welfare, they will have proved themselves
unworthy of American citizenship. And that time will never come.
They are willing to play the political game with their white brothers
on equal terms, but not with loaded dice and marked cards.”
NEGRO SOLDIERS.
The Boston Herald reports General Burt’s views on Negro soldiers
as follows:
“That in the five qualifications that go to make up a good soldier,
drilling, marksmanship, marching, discipline and fighting, the Negro
soldiers of the United States army are paramount, was the
contention of Brigadier-General Andrew S. Burt, retired, ex-
commander of the Brownsville Black Battalion, in his address last
night on ‘The Negro Soldier in Ancient and Modern Warfare,’ at a
meeting of colored people in St. Paul’s Baptist Church, under the
auspices of the Boston Literary Association.
“He cited two instances in the Spanish-American War when the
colored troops showed their true value as soldiers. The first instance
being the rescue of the Rough Riders by the Tenth Colored Cavalry,
the second the heroism of the Twenty-fourth Colored Infantry in
volunteering as nurses during the yellow fever epidemic.
“In speaking of army discipline he referred the audience to his
sworn testimony before the Senate committee on the Brownsville
‘shoot-up,’ and challenged the comparison of any records of any class
of good citizens to equal that of the Twenty-fifth colored regiment.
“Speaking of the Negro soldier generally, he said: ‘I can find
nowhere in the histories of the Revolutionary, the Indian, the
Spanish-American or the war in the Philippines, a single instance
where a Negro regiment showed the white feather or refused to
charge the enemy when called to do so.’”
IN SOUTH AFRICA.
The A. P. O., of Cape Town, South Africa, a colored periodical,
brings word of the appointment of Mr. Hull, a colored man, to the
South African cabinet. It will be remembered that the South African
Constitution requires cabinet members to be “persons of European
descent.” Apparently men of mixed descent are not excluded. A. P. O.
says:
“The decision of General Botha not to relinquish the premiership,
and of Mr. Hull to accept a seat, and so retain the post of Treasurer-
General, keep the Botha Ministry practically intact. We predicted
that the Prime Minister would get over his defeat and cling to his
office with its £4,000 a year.
“It is now safe to say that we are already on the road toward a
Native Parliament, which, according to Dr. Broon, is only one
hundred years off; for not only have many of the present M.L.A.’s an
infusion of native blood in their veins, as is evidenced by their
features, but the very Cabinet contains colored men. After all, we are
moving pretty fast toward the realization of a native Government.”
The prophecy of Professor Broon, to which A. P. O. refers, is thus
described in the Tsalo Ea Becoana:
“Prof. R. Broon, lecturing recently in Johannesburg on ‘South
Africa 100 Years Hence,’ made some curious and interesting
statements. He said he had gone into the question and was
thoroughly convinced that the black man, if the present policy was
continued, was going to rule South Africa in 100 years. He did not
include the colored people in his meaning, but he referred to the
Kafir or Bantu race. There were some 1,200,000 white people in
South Africa, while there were 7,200,000 Kafirs. One of the principal
factors that was welding the natives together was religion. More and
more black labor was being employed in the Cape Colony, and in a
short time the native would have a large number of trades in his
hands. Intermarriage between natives and whites was taking place in
Cape Colony. The segregation policy seemed to be the most practical
way of saving South Africa for the whites.”
A WINTER PILGRIMAGE
The race problem is not one problem. It differs not only in time,
but in place. Therefore I always go to different groups of colored
people in this land with much of interest and curiosity, knowing that
each will present its peculiar phase of relationship between the white
and colored group.
I have just come back from such a journey, and its scenes and
lessons are filling my thought.
There was Toledo, with its colored group a little pushed aside and
half forgotten in the onward rush of the growing city till the group
gripped itself and awoke and said: “We are a part of Toledo—you
may not forget us.” So now slowly comes the push forward and
upward.
In Cleveland it is far different—it is not so much a matter of
gaining civic recognition as men and women—that battle was fought
by worthy men long years ago. It is the deeper problem of holding
the ground gained; of not letting theatres and restaurants and hotels
inaugurate a new discrimination which had once disappeared. This is
a difficult battle of the new economic rise of the Negro; when few
Negroes applied or had money to apply it was easy to say
theoretically, “Live where you will, go where you please.” But when a
group of black folk growing in power put a $75,000 church on your
corner—that is a phase of the race problem that hadn’t struck you
before.
Between these cities of past and present lies the mystic city of the
future, with its great cloud walls.
In Oberlin there are nearly two thousand young folk at study and
at play. Working and playing beside them are a hundred colored boys
and girls, and they all walk on sacred ground, on ground long since
consecrated to racial equality and hatred of caste and slavery. Yet
among these venerable ideals obtrudes the Present and it, with all its
odd corners, must be builded into the future city.
The present holds not only the problem of the treatment of ten
million black folk elsewhere, but of the hundred colored boys and
girls right there in Oberlin. It presents a tremendous moral dilemma
to frank young souls. When these children came from anti-slavery
homes they found it easy and natural to treat black men as men. But
coming now from a world that thinks God made a big mistake in ever
creating black folk—coming from such social teaching, they hesitate.
Once in a while a black student (or rather a yellow one) may be
elected a society, but usually no desert in character or scholarship
avails.
Yet this fact brings no mental peace or moral satisfaction. The
spirit of democracy is strong, the influence of the faculty is righteous,
and I came from five hours’ earnest conference with these young folk
with a sense of seeing a mighty battle for righteousness, and a belief
that somehow, sometime, justice would prevail.
But after all it was the men I met that meant most. Could I
introduce them? Let me see. There was the young lawyer who burned
to awaken a sleeping city to its duties and rights; there was the
brown physician who is one of the leading surgeons in the city, and
his knife finds no color line. Then the girl who ran a political
campaign last month had a father who was director in a white bank
and one of the solid business men of the town. In their parlor
gathered a brown father, a yellow mother, the white pastor and the
white girl chum—but why should we catalog the colors of their skins
and not those of their clothes? In Oberlin the chief book store is
“colored,” and the chief paperhanger and the chief building
contractor. Elsewhere I sat with the man who had just been elected a
member of a leading white city club and heard how the second
highest mechanic in the Peerless motor factory wore “the shadowed
livery of the sun.”
Therefore, all is well? Therefore, all is not well. Here are a climbing
people. The hardiest and most talented and the pushing are literally
forcing a way. But against them and against the ordinary black man
the bonds of medievalism are drawn and ghettos and sumptuary laws
are encompassed in the color line.
W. E. B. D.
EDITORIAL
ENVY.
It is unfortunate that in the recent newspaper discussion of an
Appeal to Europe sent out not by this Association but by a number of
colored men of influence and standing, reference was constantly
made to the lowest personal motives and seldom to the arguments
presented.
It is true that with all peoples, and especially with a race in the
throes of birth-pain, personal likes and jealousies play a wretchedly
large part. But it does not follow that they explain all the struggle and
difference of opinion. It is true that the rise of a man like Mr. Booker
T. Washington to a place of commanding influence has made him an
object of envy to many narrow souls. But it does not follow that the
thousands of intelligent people who differ with Mr. Washington are
all actuated by such motives, or are unable to distinguish great and
vital principles apart from personal feeling.
When, therefore, such differences of opinion arise, as it is natural
and healthy that they should arise, it is both wrong and unjust to
assume the motive to be necessarily low. Particularly is this true
when adequate causes of deep and compelling importance are openly
and honestly given as the cause of this difference.
Are such causes sufficient to sustain the complainers? That is a
matter of argument, not of innuendo or abuse. No man and no cause
are above the careful scrutiny and criticism of honest men, and
certainly to-day there is in the United States a very large field for
argument as to the proper attitude of colored leaders toward the race
problem.
THE TRUTH.
To the honest seeker for light the puzzling thing about the Southern
situation is the absolutely contradictory statements that are often
made concerning conditions. For instance, the New York Evening
Post is taken to task by the Norfolk (Va.) Landmark for assuming
that Southern colored men are largely disfranchised. The Virginia
paper says “No Negro in Virginia can be kept from voting, provided
he measures up to the same requirements for the exercising of that
right that the white man must. The laws of the State will protect him
in the right should election officials deny it him. That Negroes in this
State may freely qualify to vote is fully attested by the fact that
thousands of them do vote.” Again, the New Orleans Picayune
declares with regard to the complaint of disfranchisement, “The
arrant and absolute falsity of the specification in regard to the ballot
is seen in the fact that every legal bar to the exercise of the ballot
applies to whites and Negroes alike. Every elector (voter) must either
be able to read and write or, in case of illiteracy, he must pay taxes on
ordinary assessable property of the minimum value of $300. These
laws are strictly in accordance with the requirements of the
Constitution of the United States, and have been so pronounced by
the courts.”
Just so in earlier days before legal disfranchisement, paper after
paper and orator after orator declared that the Negro could and did
vote without let or hindrance.
Despite this, every intelligent person in the United States knows
that these statements are false. The Southern testimony to this is
itself open and convincing. Not only have we Mr. Tillman’s frank and
picturesque testimony on the past, but to-day the Richmond (Va.)
Leader says that all is well in Virginia “since we disfranchised the
Negro”; Congressman Underwood of Alabama says the Alabama
Negro “does not count for anything politically” in that State; a
prominent judge on the Mississippi bench says “The Negroes in
Mississippi do not vote and should not,” and it is a matter of plain
official record in Louisiana that of over 150,000 Negro males 21
years of age and over (of whom nearly 70,000 could read and write)
there were in 1908 only 1,743 registered as voters, and these were
disfranchised by the “White Primary” system. In the face of these
facts, does it pay deliberately to misrepresent the truth?
OPPORTUNITY.
A friend of our Association writes: “While I heartily approve of the
colored people being given an opportunity to improve their
condition, I feel that after doing what I can to help them to earn a
living honorably, they must depend on their own resources to
advance themselves.” This is the attitude of many excellent friends of
humanity, but it assumes that if a man is fairly equipped for earning
a living to-day he will have the opportunity to do so, and that the
paths before him will be open so as to make the rise of the deserving
possible.
It is precisely because the opportunity to earn a living, even for
those equipped to do so, is not given to-day to thousands of colored
people in the United States, that the National Association for the
Advancement of Colored People exists. It is wrong and wasteful to do
for people what they can and ought to do for themselves, but when
the doors of opportunity are so shut in their faces so as to discourage
and keep back the hard-working and deserving, then action is called
for.
To-day Negroes may work freely as menials at low wages; they may
work freely as farm laborers under conditions of semi-slavery; higher
than that they meet unusual difficulties—the difficulty of saving
capital from low wages to farm or go into business; the difficulty of
securing admission to the trades even when competent; the difficulty
of securing protection under the law and of rearing a family in
decency; the difficulty of educating their children; the difficulty of
protecting their rights by the ballot. To be sure, if they are unusually
gifted and pushing they may push higher at the risk of insult and
bitter opposition. Thus the fact remains that the mass of the willing,
eager workers of the race are held back and forced down by a deep
and growing race prejudice, and these, pressing down on the lower
strata, encourage in them laziness and vagrancy and crime. The
National Association for the Advancement of Colored People is an
organization for giving the colored race a reasonable opportunity to
help itself.
SCHOOLS.
The philanthropist of a city like New York is bewildered and often
exasperated by the demands and begging of colored schools in the
South.
To some extent this is inevitable, and is due to the fact that the
United States is undertaking to give elementary education to a race
of ten million people very largely by private philanthropy instead of
making this a State and even a national charge, and leaving to
voluntary effort the college work and work of social uplift.
But beyond this the philanthropic world is to some extent itself to
blame because of the encouragement it gives to unknown and
unvouched-for enterprises and to unwise and unjustifiable attempts
to duplicate existing foundations.
The representative of a great fund once called on the writer and
expressed great sorrow that an alleged school in the South to which
one of the most prominent New York philanthropists had given
$5,000 was found on investigation to be no school at all. This was
unfortunate, but there are hundreds of good and deserving schools
starving for help which this philanthropist did not give to because
their representatives did not appear so glib or plausible. It is not the
smoothest talker who necessarily is doing the best work.
THE NATIONAL PASTIME.
Seventy-five per cent. of the Negroes lynched have not even been
accused of rape.
Again, indiscriminate and ill-advised giving encourages such

things as are happening in Atlanta. Atlanta needs public elementary
schools, but it does not need more private schools. The existing
schools are equipped for excellent work in industries, agriculture,
college training and some professional work. With adequate help and
endowment they could do splendid work.
Because, however, one man deservedly lost his job at one of these
great schools, he is attempting to found a new school in Atlanta and
unnecessarily duplicate this work. Soon he will appear in New York
asking funds, and without investigation or thought many will give.
When they find their efforts wasted the deserving schools will suffer.
There is crying need of an impartial, thoroughly reliable directory
of educational and philanthropic effort among Negroes, a central
information bureau on broad lines, with maps and figures at
command which could furnish unbiased facts. The National
Association for the Advancement of Colored People is ready to
undertake such a work immediately on a small scale, and to expand
it whenever it can get the necessary support.

International Management Culture Strategy and Behavior 12E Ise 12Th Ise Edition Fred Luthans Full Chapter

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International Management: Culture

Strategy and Behavior, 12e ISE 12th/ISE

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Thoroughly Updated and/or New Cases,

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of International Business Studies, Journal of Management, Journal of Management Studies,

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Management, Journal of Business Ethics, Journal of Business Research, Journal of Interna-

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Part Two The Role of Culture

Part Three International Strategic Management

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In-Depth Integrative Case 3.1:

Organizational Behavior and Human Resource Management Part Four

Skill-Building and Experiential Exercises 569

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1 Globalization and International Linkages 2

The World of International Management—Revisited 35

2 The Political, Legal, and Technological Environment 44

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Technological Environment and Global Shifts in Production 60

The World of International Management—Revisited 67

3 Ethics, Social Responsibility, and Sustainability 74

The World of International Management—Revisited 93

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Part Two The Role of Culture

4 The Meanings and Dimensions of Culture 132

The World of International Management—Revisited 156

5 Managing across Cultures 162

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The World of International Management—Revisited 179

6 Organizational Cultures and Diversity 186

The World of International Management—Revisited 207

7 Cross-Cultural Communication and Negotiation 212

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Communication Barriers 220

The World of International Management—Revisited 241

Part Three International Strategic Management

8 Strategy Formulation and Implementation 288

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Skill-Building and Experiential Exercises 569

Skill-Building and Experiential Exercises 569