Is globalization shaping your mission?

"The globalization of markets poses new challenges to organizations…These developments give rise to new organizations that bring together individuals and groups from different national and organizational cultures. In the process, unprecedented cross-cultural puzzles get created that may result in the most confusing disasters or develop highly creative synergies."

---Andre Laurant in "The Cross-Cultural Puzzle of Global Human Resource Management" from Globalizing Management

The cross-border reach of corporations and organizations has been growing rapidly for the past two decades and there seems to be no end in sight. A 1996 survey of 250 manufacturing and service companies by Cushman & Wakefield Worldwide found that 70% of them were more likely to consider international expansion than they were five years previously. This unprecedented international movement of commercial organizations is a result of their quest for business opportunities on a global scale. However, there are also significant risks involved. These are reflected by the high failure rate of international alliances and joint ventures that has been documented by several studies in recent years.

According to a 1995 Columbia University study, 57% of cross-cultural joint ventures end in failure. Their average life span was only three and a half years. A survey of 200 companies in 60 industries conducted by Larraine Segil, reported in the November 1998 issue of Global Workforce magazine, stressed that cross-border alliances are much more challenging than domestic ones. She found that they take two to three times longer to create and at least half of them fail. Seventy five percent of the companies surveyed believed the failures were caused by incompatibility of national or corporate cultures. Contrast this poor "track record" with the emerging global managers described in the article, "Managers without Borders" in the November 20, 2000 edition of Businessweek Online. "Europe is creating a new business elite: men and women who move easily across borders, switching languages and cultures as smoothly as they flick on their ever-present cell phones."

Many intercultural services are designed to help companies deal with the cross-cultural consequences of transferring managers, organizational cultures, and practices to other countries. Providers often stress the importance of these kinds of services in their sales presentations and marketing materials. Therefore, a potential buyer should be acquainted with the cultural risks and challenges, as well as the opportunities that emerge in cross-border organizational ventures and relationships.

Globalization Focus Questions

• Is your company "going global?" Why? Has a global mission been defined?
• Is it a common vision shared by all those involved? Does it have the support of all the required players and stakeholders?
• At which stage of globalization is your company or business unit currently functioning? Is it in transition to another stage? Is this transition part of an intentional corporate strategy?
• Does your senior management understand the process of globalization? How well developed are their global thinking and intercultural business skills?
• Are they aware of the transcultural organizational issues and challenges encountered at the different stages of globalization? Do they realize the potential business impact of these issues and challenges? If not, why not?
• Do your international employees have the cross-cultural capabilities required to support your company’s current and next stage of globalization? If not, are they being providing with them?

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This article copyright © Gary M. Wederspahn. All rights reserved.

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