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Imagine the experiences of explorers such as Magellan or Cook as they scanned the horizon of the great Pacific Ocean for days; they had no reliable charts, an unfamiliar hemisphere of stars, shark-infested waters, a crew losing confidence with each passing day, storm clouds gathering in the distance, waves crashing over the ship’s bow, and wind howling. In many ways, the new business world is just as dangerous, filled with brutal storms of competitors, endless seas of change, seemingly strange cultures, confusing marketing channels, and unknown frontiers of technology.
The great difference, however, is that only a few great and courageous explorers were needed in the days of Magellan. Once the seas and their islands were charted, the coordinates didn’t change. In contrast, the islands, mountains, rivers, and valleys of today’s global business world are not static; they change. Markets, suppliers, competitors, technology, and customers are constantly shifting.Consequently, global business now requires all leaders to be explorers, guided by only the faintest glimmer of unfamiliar stars and excited by the opportunity and uncertainty of untapped markets.
At current growth rates, trade between nations will exceed total commerce with- in nations by 2015.1 In industries such as semiconductors, automobiles, commercial aircraft, telecommunications, computers, and consumer electronics, it is impossible to survive and not scan the world for competitors, customers, human resources, suppliers, and technology.
These forces of change help explain why leadership models of the past will not work in a global future. Provincial Japanese models of leadership have worked in Japan because Japanese leaders largely interacted with other Japanese. The same has been true for American, German, or French leadership models. In the future, a new breed of leader will be needed. Recently, Jack Welch, CEO of General Electric, commented:
“The Jack Welch of the future cannot be like me. I spent my entire career in the United States. The next head of General Electric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires. We have to send our best and brightest overseas and make sure they have the training that will allow them to be the global leaders who will make GE flourish in the future.”2
Most companies lack an adequate number of globally competent executives.
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1. R. Daft, Management (New York: Dryden, 1997).
2. J. Welch, speech at General Electric, Spring 1997.
3. For a complete review of characteristics related to international assignment success, see:
J.S. Black, H.B. Gregersen, M.E. Mendenhall, and L. Stroh, Globalizing People through International Assignments (Reading, Massachusetts, Addison-Wesley, 1998); and
J.S. Black and H.B. Gregersen, So You’re Going Overseas: A Handbook for Personal and Professional Success (San Diego, California: Global Business Publishers, 1998).
4. For a discussion of the relationship between global effectiveness and understanding culture, see:
S. Weiss, “Negotiating with ‘Romans’ — Part 1,” Sloan Management Review, volume 35, Winter 1994, pp. 51–61; and
L. Hoecklin, Managing Cultural Differences: Strategies for Competitive Advantage (Wokingham, England: The Economist Intelligence Unit and Addison-Wesley, 1995).
5. For the first major review of this concept, see:
M.E. Mendenhall and G. Oddou, “The Dimensions of Expatriate Acculturation: A Review,” Academy of Management Review, volume 10, number 1, 1985, pp. 39–47.
6. For example, see:
J.S. Black, “Personal Dimensions and Work Role Transitions: A Study of Japanese Expatriate
Managers in America,” Management International Review, volume 30, number 2, 1990, pp. 119–134.
7. M. Nyaw and I. Ng, “A Comparative Analysis of Ethical Beliefs: A Four Country Study,” Journal of Business Ethics, volume 13, number 7, 1994, pp. 543–555; and
M. Philips, “Bribery,” Ethics, July 1984, pp. 621–636.
8. For a review, see:
Black et al. (1998), chapter three.
9. The trade-offs between gathering too much data and too little are discussed in: G. Stalk, “Time — The Next Source of Competitive Advantage,” Harvard Business Review, volume 66, July–August 1988, pp. 41–51.
10. For an academic perspective, see:
A. Morrison and K. Roth, “A Taxonomy of Business-Level Strategies in Global Industries,” Strategic Management Journal, volume 13, number 6, 1992, pp. 399–417;
M. Porter, “Changing Patterns of International Competition,” California Management Review, volume 28, Winter 1986, pp. 9–40; and
S. Ghoshal, “Global Strategy: An Organizing Framework,” Strategic Management Journal, volume 8, number 6, 1987, pp. 425–440.
11. For a more complete discussion of arbitrage advantages that come through globalization, see:
G. Ragazzi, “Theories of the Determinants of Direct Foreign Investment,” IMF Staff Papers, July 1973, pp. 471–498.
For a discussion of the advantages of global integration, see:
C.K. Prahalad and Y. Doz, The Multinational Mission (New York: Free Press, 1987).
12. For a discussion of the impact of exchange rates on global competition, see:
R. Aliber, “The MNE in a Multiple-Currency World,” in J. Dunning, ed., The Multinational Enterprise (London: Allen & Unwin, 1971); and
D. Lessard, “Transfer Prices, Taxes, and Financial Markets: Implications of International Financial Transfers within the Multinational Corporation,” D. Lessard, ed., International Financial Management: Theory and Application, second edition (New York: Wiley, 1985).
13. H. Crookell and A. Morrison, “Subsidiary Strategy in a Free Trade Environment,” Business Quarterly, volume 55, Autumn 1990, pp. 33–39; and
K. Roth and A. Morrison, “Implementing Global Strategy: Global Subsidiary Mandates,” Journal of International Business Studies, volume 23, number 4, 1992, pp. 715–735.
14. For an excellent discussion of the challenges of learning in a global context, see:
D. Leonard-Barton, Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation (Boston: Harvard Business School Press, 1995); and
Y. Doz, K. Asakawa, J. Santos, and P. Williamson, “The Metanational Corporation” (Banff, Canada: Academy of International Business Annual Meeting, paper, 26–29 September 1997).
15. R. Belbin, Management Teams: Why They Succeed or Fail (London: Heinemann, 1991);
P. Evans, E. Lank, and A. Farquar, “Managing Human Resources in the International Firm: Lessons from Practice,” in P. Evans, Y. Doz, and A. Laurent, eds., Human Resource Management in International Firms: Change, Globalization, Innovation (London: Macmillan, 1989).
16. Black et al. (1992); “The Fast Track Leads Overseas,” Business Week, 1 November 1993, pp. 64–68; and
L. Ioannou, “Cultivating the New Expatriate Executive,” International Business, July 1994, pp. 40–50.