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The topic of globalization has been around in varying forms since the beginning of the industrial revolution in the 18th century. However, globalization has accelerated over the last 2 decades and what we are witnessing today is not just a continuation of a centuries-old trend. The erosion of barriers for cross-border flow of people, goods, services, and capital supported by instant global communication and rapid flows of information has created a new economic reality that is integrating markets around the world. This emerging global network has fundamentally transformed how the economies of nations around the world operate. Although its reach and benefits are not universal, globalization is now the major driver of world economic growth and prosperity. No country is immune from its consequences, and no company that wants to operate across borders can afford to ignore its impact.
Globalization opens new growth and profit opportunities for established and new players alike. At the same time, globalization presents new and vexing challenges, driven primarily by the ever-increasing complexity of business problems that business leaders need to address. As many authors have noted, the complexity embedded in globalization fundamentally changes the task of managing a global enterprise.
Samuel J. Palmisano, the Chair of the Board, President, and CEO of IBM, in a recent article reviewing the challenges and opportunities facing global corporations like IBM, concludes that the key to their success lies in their ability to integrate every aspect of the global organization. He suggests that today’s global corporations are shifting their focus from products to production and must design their strategy, management, and operations around a new goal: integrating production and value delivery worldwide.
Accomplishing this goal requires managing a high level of complexity both inside and outside of the firm. While multinational corporations (MNCs) have tried to respond to this complexity with new structures and processes, the only component complex enough to succeed in this environment is the human organization, which, in large part, is driven by the nature of the mind-sets, assumptions, and viewpoints that decision makers bring with them to any situation. Mind-set drives discovery of new market opportunities, establishing presence in key markets and transforming presence into global competitive advantage. For this reason, global mind-set has emerged as a major long-term competitive advantage for companies competing in the global arena.
The mind-sets of key decision makers in companies influence important decisions and, therefore, organizational behavior and ultimately firm success. There is no doubt that the right strategies, structures, and processes are critical to global competitive success, but writers are also increasingly emphasizing the important role that mind-set plays both in determining these strategies, structures, and processes and in shaping their outcomes. For these reasons, global mindset has received increasing attention in both the popular press and academic writings. However, as will become clear from the following literature review, the field is still in its infancy, it lacks clear definitions and frameworks, and it has only limited empirical research. This research-paper summarizes the growing body of theoretical and empirical research in this new field and then suggests some future directions to help advance our knowledge and understanding of global mind-set and its impact on global competitiveness.
The growing recognition of the significance of global mindset has led to the proliferation of different and conflicting definitions and perspectives in the literature. Therefore, there is still confusion about what global mind-set is. Four illustrative examples of the many definitions of global mind-set follow:
- Global mind-set is characterized by openness, an ability to recognize complex interconnections, a unique time and space perspective, emotional connection, capacity for managing uncertainty, ability to balance tensions, and savvy (Kedia & Mukherji, 1999).
- Global mind-set combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity (Govindarajan & Gupta, 2001).
- Global mind-set is the ability to develop, interpret, and implement criteria for personal and business performance that are independent from assumptions of a single country, culture, or context (Maznevski & Lane, 2004).
- Global mind-set is a highly complex cognitive structure characterized by an openness to and articulation of multiple cultural and strategic realities on both global and local levels and the cognitive ability to mediate and integrate across this multiplicity (Levy, Beechler, Taylor, & Boyacigiller, 2007).
In the following literature review, we catalogue the various definitions and approaches to global mind-set and take stock of what has been done thus far, both theoretically and empirically. The review draws on a systematic analysis of the studies related to global mind-set that have been published in books and peer-reviewed journals to date. Before reviewing the literature on global mind-set, we start by answering the more general question: What is a mind-set?
A mind-set can be viewed as a lens through which people view, understand, and decode the world around them. Reality, whatever it may be, is never simply “out there” presenting itself in a clear self-explanatory manner. People may experience reality as obvious and apparent, but underneath this sense of simplicity and clarity lies a complex, if at times unconscious, process of sensemaking. People actively make sense of the world around them, and more often than not, this process of sensemaking does not begin with a clean slate. Rather, people approach reality armed with a mind-set that affects what they notice, understand, learn, and remember from any given situation. In a way, mind-set serves to “disarm” reality, rendering it seemingly more intelligible, logical, and clear.
But what is this mysterious thing called mind-set? How does it help people decode reality, be it familiar or foreign, clear or ambiguous? And why does mind-set at times obscure reality rather than decipher it? A quick excursion into the history of social psychology can shed light on the concept of mind-set. After World War II, social psychology moved away from a behavioral approach, which viewed social behavior as determined by external events, to a cognitive approach. According to the cognitive approach, individuals do not simply respond to external stimuli, but rather actively interpret the world around them. The focus shifted to individuals’ mental activities and cognitive capabilities involved in the process of sensemaking. The question then became how individuals make sense of various objects, events, and situations they encounter, especially when the available information is complex, overabundant, ambiguous, or insufficient. Here is where mind-set comes into play. Social psychologists noticed that the process of sensemaking, more often than not, is driven by cognitive schema where past experiences and knowledge guide present information processing. Thus, rather than let reality speak for itself, individuals often impose their existing schema or mind-set on what they encounter.
The concept of mind-set and similar concepts such as schema, gestalt, and script are all part of a broad conceptual family of cognitive structures. Cognitive structures are mental templates that represent and organize information, assumptions, and ideas about a specific environment, situation, object, or event. Cognitive structures can be elaborate and complex, containing a comparatively large number of finely articulated and well-integrated information units. On the other hand, cognitive structures can be relatively simple, containing relatively small, basic, and a diffuse number of information units.
In order to identify the properties of a specific type of mind-set such as a global mind-set, researchers often first outline the main dimensions of the environment that this specific mind-set confronts. In the case of global mind-set, the majority of writers consider global mind-set in relation to the global environment, particularly, in relation to two salient dimensions of this environment: strategic complexity and/or national and cultural diversity (Levy, Beechler, Taylor, & Boyacigiller, 2007). This review is therefore organized around these two broad approaches, beginning with research taking a cultural perspective. Building on the important work of Perlmutter and his colleagues, writers taking a cultural perspective on global mind-set focus on cultural distance and diversity related to global markets and operations and emphasize the challenges inherent in managing across national and cultural boundaries.
A number of other writers approach global mind-set from a strategic perspective, which builds heavily on the groundbreaking work of Bartlett and Ghoshal. Most writers taking this approach to global mind-set are experts in international strategy and examine the environmental complexity and strategic variety that arise from globalization. This approach focuses on the challenges of managing multifaceted operations in geographically distant and strategically varied businesses while simultaneously responding to local conditions and needs.
Finally, drawing heavily on the foundational work of Rhinesmith, there is a third group of writers who take a multidimensional perspective, which conceptualizes global mind-set from both the cultural perspective and the strategic perspective simultaneously.
The Cultural Perspective
Research in the cultural school of thought looks at global mind-set through the lens of cultural diversity inherent in the globalization process. According to this perspective, senior managers are increasingly faced with the challenge of prevailing over domestic myopia and an ethnocentric mind-set, traversing cultural boundaries, interacting with employees from many countries, and managing culturally diverse interorganizational relationships. The cultural perspective proposes that the way to manage these challenges effectively is to move away from an ethnocentric mind-set and cultivate a global mind-set—one that includes cultural self-awareness, openness to and an understanding of other cultures, and the selective incorporation of foreign values and practices.
This cultural perspective is based in large part on Perl-mutter’s (1969) typology of MNCs, which proposes that companies can be categorized not by their geographical scale or scope but by the mind-sets of senior executives within the firm. Perlmutter distinguishes between three principal states of mind toward managing a multinational enterprise: ethnocentric (home-country orientation), poly-centric (host-country orientation), and geocentric (world orientation). Perlmutter proposes that these orientations or mind-sets affect and mold various characteristics of the MNC including structural design, strategy, and resource allocation, and, in particular, management mind-set and processes. An ethnocentric orientation is expressed in terms of headquarters and national superiority attitudes: “We, the home nationals of X company, are superior to, more trustworthy and more reliable than any foreigner in headquarters or subsidiaries” (p. 11). A polycentric orientation takes the form of a respectful disengagement from foreign cultures: “Let the Romans do it their way. We really don’t understand what is going on there, but we have to have confidence in them” (p. 13). Managers with a global mind-set, or those with a geocentric orientation in Perlmutter’s terms, exhibit a universalistic, supranational approach, deemphasizing the importance of cultural differences and nationality when deciding who is capable or reliable: “Good ideas come from any country and go to any country within the firm” (Heenan & Perlmutter, 1979, pp. 20-21).
Perlmutter’s description of geocentrism is the foundation for many of the current conceptualizations of global mindset, which concentrate on the challenge of overcoming embedded ethnocentrism and rising above nationally entrenched views. For example, Maznevski and Lane (2004) describe global mind-set as a metacapability typified by two corresponding dimensions: an inclusive cognitive structure that directs attention and interpretation of information and a well-developed competence for altering and revising this cognitive structure with new experiences. According to these authors, global mind-set is the ability to develop, interpret, and implement criteria for performance that are independent from the assumptions of a single culture, country, or context (Maznevski & Lane, 2004). In addition to focusing on mind-set or perspective, many writers in the cultural stream such as Adler and Bartholomew (1992) often discuss global mind-set in terms of cross-cultural skills and abilities.
Kobrin (1994) conducted the first empirical study that explicitly examined Perlmutter’s typology and the popular assumption that firms with a global, integrated strategy and/or a global organizational structure will have a geocentric mind-set. However, Kobrin finds that while there is an association between a geocentric mind-set and the geographic scope of the firm, the causal direction is not clear. He proposes that global mind-set should be considered a multidimensional construct rather than a unidimensional reflection of firm-level characteristics. Some recent empirical research in multinational corporations by the authors of this research-paper (Beechler, Levy, Taylor, & Boyacigiller, 2004; Taylor, Levy, Boyacigiller, & Beechler, in press) indicates that employees’ perceptions of geocentrism have important individual and organizational outcomes and are positively related to organizational commitment.
The Strategic Perspective
The previously reviewed studies highlight the significance of cultural diversity and transcending national borders. In contrast, studies examining global mind-set through a strategic lens focus on the increased complexity generated by globalization. MNCs are faced with the challenge of successfully managing environmental and strategic complexity and incorporating geographically distant operations and markets while simultaneously responding to local demands.
The strategic perspective on global mind-set is founded in international strategy research that was conducted at Harvard University in the 1970s and 1980s, particularly the innovative research of Bartlett and Ghoshal. The literature taking a strategic perspective is based on the assumption that increased complexity, heterogeneity, and indeterminacy of MNCs (Doz & Prahalad, 1991) can no longer be managed by structural and administrative mechanisms. Thus, this approach proposes that the key determinant of strategic capabilities of an MNC lies in cultivating a complex managerial mind-set. The properties of global mind-set are described in terms of high cognitive abilities and information processing capabilities that allow managers to understand complex global dynamics, balance between competing demands and concerns, reconcile tensions between global and local, differentiate between and integrate across cultures and markets, and examine and attend to global issues.
In describing global mind-set, for example, Jeannet (2000) underscores the capacity to assimilate across domains and defines global mind-set as a state of mind able to understand a business, a particular market, or an industry sector on a global basis. An executive with a global mindset has the ability to see across many territories and focuses on commonalities across markets rather than emphasizing differences among countries. According to Jeannet, global mind-set is not a linear extension of the multinational mindset but diverges significantly in terms of thinking patterns, responses, and cognitive skills. In addition to applying global mind-set to the individual level, Jeannet also applies it at the corporate level and characterizes corporate global mind-set as the cultural aspects of a company that define the extent to which the firm has learned to think, behave, and operate in global terms (p. 199).
While some authors in the strategic perspective stream characterize global mind-set in relation to managers’ abilities to appreciate, distinguish, and integrate across complex global dynamics, a few studies within this stream focus on effectively balancing global integration with local responsiveness or on reconciling the tension between “thinking globally” and “acting locally.” Murtha, Lenway, and Bagozzi (1998) define global mind-set as the cognitive processes that balance competing functional, business, and country concerns. In their empirical study of the correlation between global mind-set and cognitive shift in a major MNC, these researchers observed that the transformation in the global strategy of the firm brought about a cognitive shift among managers in the organization toward a more global mind-set. Begley and Boyd (2003) similarly focus on managing the tension between the global and the local, analyzing global mind-set at the corporate level. Echoing Jeannet (2000), they contend that in order to embed global mind-set on an organization-wide level, supporting policies and practices must be in place to manage tensions relating to structural (global formalization vs. local flexibility), procedural (global standardization vs. local customization), and power (global dictates vs. local delegation) concerns. Similarly, Kefalas (1998) focuses on the tension between thinking globally and acting locally and maintains that global mind-set is typified by high levels of both conceptualization (the expression of fundamental ideas that depict a phenomenon and the identification of the major relationships between these ideas and the whole) and contextualization (the adaptation of a conceptual framework to the local environment) abilities.
Testing the relationships that Kefalas (1998) proposed, Arora, Jaju, Kefalas, and Perenich (2004) observed that managers are more adept at thinking globally (conceptualization) than they are at acting locally (contextualization). Their study also shows that, of all demographic characteristics measured to predict managers’ global mind-sets, training in international management, manager’s age, foreign country living experience, family member from a foreign country, and job experience in a foreign country have the most statistically significant impacts.
Govindarajan and Gupta (2001) also consider the capacity to concurrently take local cultures and markets and global dynamics into account when making decisions as the central attribute of global mind-set. They define global mind-set as a knowledge structure that combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across that diversity (p. 111). These authors characterize global mindset at the corporate level as the combined global mind-set of individuals, adjusted for the distribution of power and influence among the group. They believe that global mind-set is critical to success and their advice is that if a company’s goal is to secure and maintain global market leadership in its industry, it must strive to develop a global mind-set in every unit and every employee.
Three recent empirical studies examine the relationship between firm strategic position, market characteristics, and global mind-set. Harveston’s, Kedia’s, and Davis’s (2000) research finds that managers in firms which are “born global” (are global from their founding) have a stronger global mind-set, more international experience, and higher risk tolerance than managers of gradually globalizing firms. Another study conducted by Nummela, Saarenketo, and Puumalainen (2004) finds that market characteristics—the level of globalization of the market in which the firm operates and the turbulence of the market—are positively related to global mind-set. Management experience, measured as international work experience, is also positively related to global mind-set while international education is not. The most recent empirical study considers the relationship between the top management team’s decision environment and their global mind-set (Bouquet, 2005). In this study, Bouquet defines global mind-set as an awareness of global strategic issues, and management attention is considered to be the primary expression of global mind-set. Bouquet’s empirical research supports his hypothesis that global attention structures (e.g., structural positions related to globalization and/or global meetings), which firms establish in order to regulate the distribution of attention in managers in the firm, will mediate the relationship between firms’ decision environments and top management teams’ attention. The results demonstrate a concave relationship between top management team attention to global issues and firm performance, and Bouquet concludes that both inadequate and excessive amounts of management attention to global strategic issues can have a negative impact on firm performance.
In contrast to the previously mentioned studies that examine the relationship between a firm’s characteristics and global mind-set, Levy (2005) analyzes the relationship between top management team attention patterns and a firm’s strategic position. In her empirical research, she finds consistent support for the proposition linking top management team attention patterns and strategy and concludes that firms are more likely to be highly global when their top management focuses on the global environment and takes a diverse set of this environment’s elements into account during decision making.
A number of other empirical studies of global mind-set at the top management team level use background characteristics of team members, particularly international experience, as a proxy for global mind-set. The underlying premise of this research stream is that international experience exposes executives to different cultures, value systems, languages, and institutional environments, as well as to diverse information and knowledge sources. This exposure, in turn, results in superior cross-cultural and cognitive abilities. These studies examine the relationship between international experience and a variety of organizational outcomes, including internationalization, financial performance, choice of entry mode, and learning. Many of the studies find a positive relationship between international experience of top management and internationalization although Athanassiou and Nigh’s (2002) research points toward the conclusion that the impact of international experience of each top management team member is not equal but weighted by his or her centrality within the team.
Daily, Certo, and Dalton’s (2000) research and Carpenter, Sanders, and Gregersen’s (2001) research also find a positive relationship between international experience of senior executives and the firm’s financial performance. At the same time, Roth (1995) in his empirical study finds that international experience as measured by managing international activities has no direct or interactive effect on performance but international experience measured by overseas assignments has a direct effect when there is a high degree of internationalization and a negative effect when there is a low degree of internationalization. Finally, other research on top management teams by Caligiuri and her colleagues uses national diversity as an indicator of international experience and finds a positive relationship between national diversity of the top management team and internationalization.
The Multidimensional Perspective
In addition to the two major schools of thought in the global mind-set literature just described, a third category of research integrates both the cultural and strategic dimensions. Research taking a multidimensional perspective began with the work of Rhinesmith (1992) who defines mind-set as a way of being—an orientation to the world that allows you to see certain things that others do not see. A global mind-set, as Rhinesmith defines it, scans the world from a broad perspective, always looking for unexpected trends and opportunities. People with global mind-sets are more inclined to search for the broader context, accept life as a balance of conflicting forces, and have more confidence in organizational processes than in organizational structure. They hold diversity in high regard, and surprises or uncertainties do not threaten them. They aspire to be open to themselves and others. Global mind-set therefore involves high levels of cognitive capabilities, particularly those involving scanning and information processing, in addition to the capacity to integrate competing realities and demands and the ability to value cultural diversity.
A number of recent writings in the field of global mindset build directly on Rhinesmith’s multidimensional perspective. For example, Kedia and Mukherji (1999) view global mind-set as distinguished by openness and a capacity to identify complex interrelationships. These authors describe three components that distinguish a global mind-set: (a) a unique time perspective, (b) a unique space perspective, and (c) a general disposition to be open-minded toward other people and cultures. For Kedia and Mukherji, those with a global mind-set think of cultural diversity as an asset, thrive on ambiguity, and have the ability to balance conflicting viewpoints and demands and to reframe boundaries. According to these authors, global mind-set also includes an emotional connection, a capacity to balance conflicting tensions, and aptitude for managing ambiguity and savvy. To be effective, managers need both a global mind-set and a specific supportive skill and knowledge set.
The most recent contribution to the multidimensional stream is an article by Levy, Beechler, Taylor, and Boyacigiller (2007), which reviews the literature and highlights two important constructs underlying writing in the global mind-set field: cosmopolitanism and cognitive complexity. Cosmopolitanism emphasizes the individual’s level of engagement and ability to navigate through unfamiliar cultures with an external and open focus. Two aspects of cosmopolitanism are important to global mind-set. First is an orientation toward the outside and the external environment rather than a focus on the inside, the local, or the parochial. A second key aspect is the characteristic of openness, which represents being not only interested in others but also willing to engage in, to be open to, and to learn from exploring the alternative systems of meanings held by outsiders. While cosmopolitanism is important to a global mind-set, it does not mean that individuals do or should forego their historic roots or their cultural heritage.
The second dimension identified by Levy, Beechler, Taylor, and Boyacigiller (2007) is cognitive complexity, which consists of two dimensions: differentiation and integration. Differentiation is the number of constructs or dimensions used to describe a domain while integration refers to the number of links among the differentiated constructs. People who are more cognitively complex can simultaneously hold and apply several valid but competing and complementary interpretations of a domain or situation. Cognitive complexity is also associated with the capacity to balance contradiction, ambiguities, and trade-offs and with the ability to manage dualities or paradoxes.
These authors define global mind-set at the individual level as a highly complex cognitive structure distinguished by an openness to and expression of multiple cultural and strategic realities at both the global and local levels, and the cognitive capacity to moderate and assimilate across this diversity (Levy, Beechler, Taylor, & Boyacigiller, 2007). They link global mind-set and managerial action through an information-processing model, which is based on three underlying assumptions. First, individuals have limited information-processing capabilities and consequently pay attention only to certain aspects of the environment while ignoring others. Second, individuals interpret this environmental information, thus giving structure and meaning to the data. Third, these interpretations affect action and, ultimately individual and organizational outcomes.
Furthermore, the impacts of individual cognitive structures on decision making and outcomes are especially prominent in dynamic and complex environments that are characterized by information overabundance, uncertainty, and ambiguity. Under these conditions, according to Abrahamson and Hambrick, when the environment does not provide clear cognitive cues, attention and interpretation patterns have a tendency to mirror individual predilections instead of environmental constraints.
Global decision-making environments are characterized by rapid change, uncertainty, and complexity, and they therefore enhance the impact of mind-sets on organizational decisions and outcomes. At the information gathering stage, for example, cognitive structures influence attention patterns by focusing attention on certain facets of the environment while blocking others. Cognitive structures thus function as a lens through which individuals observe their environment. A global mind-set shapes information-processing patterns by directing attention to various contrasting sources of information about both global and local environments. Cosmopolitanism produces an open and nonjudgmental approach to the perception of information, thus allowing individuals to be open to and to acquire information from a number of sources regardless of their national or cultural origin. At the same time, cognitive complexity enables individuals to distinguish and effectively communicate more information elements and to incorporate them into more complex conceptualizations or schemas.
The impact of cognitive structures goes beyond influencing attention and information acquisition to affect how individuals interpret patterns of information. During the interpretation stage, cognitive structures have an effect on “sensemaking,” the process of how information is perceived, interpreted, assimilated, and understood (Daft & Weick, 1984). Cosmopolitanism enables individuals not only to perceive but also to evaluate information irrespective of its national or cultural origin. At the same time, individuals with high integrative abilities can synthesize information from diverse and unlikely sources and incorporate a variety of interpretive frameworks into the decision-making process.
Finally, the combination of cosmopolitanism and cognitive complexity can help individuals create new and more complex understandings of their environment. Global mindset therefore influences interpretive processes by encouraging the nonprejudicial and nonjudgmental perception and evaluation of information, incorporation of information from various sources, and deliberation on both the interpretive process itself and existing mental models. Individuals with a global mind-set are more likely to produce complex, innovative, and unconventional explanations that do not simplify global realities but rather present them in all of their complexity and ambiguity (Levy, Beechler, Taylor, & Boyacigiller, 2007).
Global Mind-Set And Effective Managerial Action
As previously discussed, the attention and interpretation processes associated with a global mind-set influence individuals’ abilities to understand and act effectively in a global context. However, in addition to mind-set, research in international management suggests that a set of core skills and competencies are required to translate this mind-set into effective managerial behavior. Drawing on an extensive review of the literature, Bird and Osland (2004) developed a framework of global competencies, which includes global mind-set as one of the building blocks. At the base of their pyramid-shaped framework is global knowledge and a set of four personality traits: integrity, humility, inquisitiveness, and hardiness. According to these authors, the possession of adequate knowledge along with the prerequisite traits allows for the development of global mind-set. However, these foundational competencies—knowledge, traits, and mind-set—do not translate into effective managerial behavior unless the individual has the necessary interpersonal and system skills and abilities.
Bird and Osland (2004) specify two skills at the interpersonal level: mindful intercultural communication and the ability to build and create trust. At the system level, they identify the following skills: the ability to span boundaries, build community through change, and make ethical decisions. Their work therefore suggests that while global mindset is a critical competency, effective managerial action in a global context requires additional skills and abilities.
We should note, however, that individuals who possess the requisite set of interpersonal and system skills and abilities are not likely to exhibit effective managerial action unless they also possess a global mind-set. In this context, an interesting and yet unresearched question raised by Earley and Mosakowski’s (2004) work is whether a person can develop the requisite set of skills and abilities without at least concurrently developing a global mind-set. These authors identify a set of skills and abilities that they label “cultural intelligence”—the capability for a person to grasp what makes us human and at the same time what makes each of us different from one another and to be able to adjust behavior accordingly.
Cultural intelligence has three sources: (a) cognitive understanding of what makes a culture unique, driven by innate curiosity and a learning attitude; (b) behavioral flexibility, the ability to receive and reciprocate gestures that are culturally determined; and (c) high self-efficacy, the confidence to believe that one can understand people from different cultures (Earley & Mosakowski, 2004, p. 3). Cognitive understanding is necessary because it is difficult, given the complexity of the competing cultural factors that affect behavior (Osland & Bird, 2000), for a person to simply mimic the behavior of people in an unfamiliar culture and be appropriate unless he or she has understood the reasons for the behavior. Moreover, in-depth knowledge of a culture is necessary to know how to adjust behavior correctly for a myriad of unforeseen situations. A person with high cosmopolitanism is more likely to exhibit the curiosity and openness that is necessary to accumulate this depth of knowledge about other cultures, and Levy, Beechler, Taylor, and Boyacigiller (2007) argue that a global mind-set, especially cosmopolitanism, likely precedes the acquisition of the set of interpersonal and system skills and abilities that make effective managerial action possible in global settings, although they also recognize that the two are most likely self-reinforcing.
Global Mind-Set And Strategic Capabilities Of Firms
The “noticing and constructing meaning” processes linked to global mind-set have important implications for the strategic capabilities of the firm. Whereas strategic behavior is influenced by a large number of factors, both the managerial cognition and the upper echelon perspectives in the strategy literature imply that information-processing capabilities of employees, especially those in senior positions, have a very strong effect on strategic response. What is more, these capabilities are particularly significant under conditions of complexity, uncertainty, and rapid change, when strategic response entails interpreting and “enacting” the business environment.
Senior managers interpret issues applicable to strategic decision making, and they will typically have the status required to execute choices resulting from those interpretations. Levy, Taylor, Boyacigiller, and Beechler (2007) suggest that because senior executives who possess a global mind-set are externally focused rather than internally focused, they are more likely to be exposed to diverse sources of information and thereby develop insights regarding environmental dynamics, threats, and opportunities, as well as changes and trends. This managerial focus is likely to result in superior and innovative strategies.
At the same time, some recent evidence suggests that global mind-set may not always translate into superior performance and effectiveness. For example, as we noted previously, Bouquet (2005) finds a curvilinear relationship between top management teams’ global mind-set and firm performance. Beyond intermediate levels of global mind-set, MNCs experience diminishing returns, after which negative returns set in. Also as previously noted, Roth (1995) reports a negative relationship between CEOs’ expatriate experience and performance in the case of companies with low levels of international interdependence. This evidence suggests that the relationship between global mind-set and organizational effectiveness may be contingent on organizational strategy and environmental factors. Levy, Taylor, Boyacigiller, and Beechler (2007) therefore suggest, but have not empirically validated, the proposition that the impact of global mindset on organizational effectiveness is most likely mediated by strategy implementation capabilities and moderated by environmental and firm characteristics.
Obviously, the strategy implementation capability of MNCs is one of the most compelling issues outstanding in the field of international management. Developing implementation capabilities involves a variety of organizational initiatives and repeated cycles of aligning and fine-tuning. In this context, Levy, Taylor, Boyacigiller, and Beechler (2007) point to two often neglected mechanisms that can enhance the impact of global mind-set on organizational effectiveness. First, these authors suggest that MNCs need to develop a shared understanding of what it means to be a global company and that the ways in which the practice of globalization is debated, interpreted, defined, and shared dramatically affects various aspects of organizational life including global strategy implementation. Often, senior managers possess a global mind-set and have broad and deep conceptions of globalization realities and dynamics. However, companies as a whole frequently cannot effectively translate these complex individual understandings into organizational policies and actions. A global mind-set does not immediately translate into a complex company-wide interpretation and implementation of global strategy. Rather, developing a shared understanding of the practice of globalization through an ongoing constructive debate can facilitate translating global mind-set into a company-wide platform and assist in global strategy implementation (Levy, Boyacigiller, Taylor, & Beechler, 2002).
Second, Levy, Taylor, Boyacigiller, and Beechler (2007) suggest that MNCs need to develop flexible structures and processes that span organizational boundaries in order to disseminate global mind-set throughout the corporation. Establishing boundary spanning processes and practices such as global responsibility designations, global teams, ad hoc project groups, networks, and shared task groups can influence the development of global mind-set, thus unifying employees around a common understanding and set of objectives. This shared understanding, in turn, can facilitate global strategy implementation by promoting communication and cooperation across organizational boundaries.
In addition, these authors suggest that the impact of global mind-set on effectiveness is most likely moderated by environmental and firm characteristics. They argue that an optimal fit between global mind-set and environmental and firm characteristics can positively affect organizational effectiveness, and they focus on two key considerations— namely, the level of environmental dynamism and complexity and the firm’s international strategy.
Senior executives who operate in an environment characterized by rapid changes, dynamism, and complexity must have a global mind-set in order to understand and respond to their environment. Under such conditions, global mindset is more likely to have a positive influence on firm’s effectiveness. On the other hand, it is quite possible that when executives operate in a relatively stable environment, global mind-set becomes irrelevant or even a liability because it imposes unnecessary complexity where simplicity is more effective and efficient (Levy, Taylor, Boyacigiller, and Beechler, 2007).
Similarly, a firm’s international strategy is also likely to affect the relationship between global mind-set and effectiveness. High levels of internationalization put increased levels of information-processing demands on senior executives, which require significant information processing capabilities or a global mind-set. Thus, it is possible that global mind-set has a positive impact on organizational effectiveness in the case of high levels of internationalization and is irrelevant or even damaging in the case of low levels of internationalization. For example, there is some empirical evidence that strong CEO international experi-ence negatively affects performance when international interdependence is low (Roth, 1995). This suggests that for global mind-set to have a positive impact on effectiveness there should be a fit between international strategy of the firm and the level of global mind-set of its senior executives (Levy, Taylor, Boyacigiller, & Beechler, 2007).
At the same time, global mind-set entails high levels of information-processing demands, which could overwhelm decision makers, slowing down decision making to unacceptable levels. Thus, it is possible that even when higher levels of global mind-set among key decision makers is required, global mind-set will have a positive impact on a firm’s effectiveness only when it is accompanied by support structures and processes within the firm such as modular networks, communities of practice, distributed management, and centers of excellence (Begley & Boyd, 2003).
Developing A Global Mind-Set: Organizational Action Steps
Companies concerned about having a sufficient number of managers with a global mind-set must look first and foremost at the human resource management practices they use. Research makes clear that human resource management (HRM) policies can either impede or undermine global mind-set development. In the following section, we will briefly discuss the major HRM components that impact global mind-set development.
Selection Practices And Global Mind-Set Development
Cosmopolitanism and cognitive complexity can be used as important criteria when initially choosing potential candidates for managers in global companies. Individuals can be selected on their cognitive complexity, as this characteristic is probably one of the most difficult elements to change after hiring and is determined primarily by nature rather than nurture. To determine a job candidate’s cognitive complexity capability, a company can add exercises to assessment center selection procedures that have been found to be effective in choosing candidates for international careers. These exercises can be structured to identify people who see multiple dimensions of a problem as well as the interconnections among them. However, the company has to leverage the selection assessment center experience to make sure that the candidate receives feedback concerning areas he or she needs to develop further. In addition, identifying activities and accomplishments in the candidate’s background that demonstrate an ability to differentiate and integrate across a great deal of information such as running complex projects can be used as indicators of potentially high cognitive complexity (Boyacigiller, Beechler, Levy, & Taylor, 2004).
The second component of global mind-set, cosmopolitanism, or at least a propensity toward it, can be seen in a candidate’s background as well. Past research suggests that education in other countries, relatives (e.g., parents) from other countries, and foreign language ability are all associated with a more cosmopolitan orientation. People can demonstrate openness toward others and interest in the world in a variety of other ways such as the travel they have voluntarily undertaken, the media they read, and the hobbies they pursue.
What is clear is that multinational organizations need to draw from a wide pool of candidates. A company that restricts itself to hiring candidates that are only of a certain nationality, gender, or background will be at a disadvantage because such practices decrease the pool in which to find candidates who are cognitively complex and cosmopolitan. As one of our colleagues, Charles Vance, notes, companies need to cast a wider net, to view the entire globe as a source of talent. In addition, it is highly unlikely that a global mind-set will develop within a management team that is not diverse (Boyacigiller et al. 2004).
Training and Global Mind-Set Development
Both before candidates have been selected into the firm and after, the development process used with them to nurture a global mind-set must be carefully considered. Initially, some kind of assessment should occur. In this vein, Govindarajan and Gupta (2001) provided a set of diagnostic questions to help organizations ascertain whether their employees have a global mind-set:
- In interacting with others, does national origin have an impact on whether or not you assign equal status to them?
- Do you consider yourself as equally open to ideas from other countries and cultures as you are from your own country and culture of origin?
- Does finding yourself in a new cultural setting cause excitement or fear and anxiety?
- When visiting or living in another culture, are you sensitive to the cultural differences without becoming a prisoner of these differences?
- When you interact with people from other cultures, what do you regard as more important: understanding them as individuals or viewing them as representatives of their national cultures?
- Do you regard your values to be a hybrid of values acquired from multiple cultures as opposed to just one culture? (p. 115)
In addition, there is a long history and a broad repertoire of cross-cultural training methods, many of which are helpful for the development of a global mind-set. Recent research suggests that living and working in a foreign country is probably the most powerful tool to develop global mind-set. Furthermore, researchers suggest that there are four key aspects of a successful program to develop global leaders or managers with a global mind-set. It should be multimethod, aligned with the organization, transparent, and inclusive.
Perhaps the most important aspect of global mind-set development is the recognition that it must draw on a myriad of methods in order to foster both cosmopolitanism and cognitive complexity. Research has shown that experiential learning is extraordinarily important—as much as 50% of learning occurs through work experience. Companies from different countries will emphasize different methods for developing global leaders and their attendant global mind-sets. Despite these differing approaches, we make a recommendation that focuses on the process: the company should look at a series of tasks or assignments that build in difficulty and impact on global mind-set, starting with international business projects and building to global responsibility for a product or service. The expatriate assignment must be carefully managed, however, in order for it to contribute to development of a global mind-set. Simply posting managers overseas will not necessarily result in the development of a global mind-set either in the individuals or in the organization. The expatriate assignment is just one, albeit an important one, of these progressively more global assignments that help to transform managers into leaders with global mind-sets (Boyacigiller et al. 2004).
Networking and collaborative opportunities can also help to create a global mind-set and effective global leadership repertoires and behaviors. For example, global teams can be used as effective collaborative coordination tools to help develop a global mind-set and hone global leadership skills. Staffing teams with members from diverse countries, backgrounds, and functional specialties can help members appreciate and understand multiple perspectives on challenges and opportunities faced by the firm and provide valuable practice opportunities. In addition, cross-national communities of practice, knowledge networks, and global meetings can all play an important role in exposing employees to different ways of thinking, diverse sources of information, and can help to foster a global mind-set and global leadership competencies (Beechler & Javidan, 2007).
Alignment and transparency of HR policies are also important in the process of developing global mind-sets. For example, given the need to develop a solid knowledge basis in the company’s business and operations, as well as the need to preserve the social capital required to interact across global organizational boundaries, it is preferable to institute a long-term employment relationship. Global employees who feel they can trust and rely on the goodwill of others within the firm will be able to access information and coordinate more easily than when social capital is low. Employees who feel they are long-term employees of the firm are more likely to build the requisite relationships and trust (Boyacigiller et al. 2004).
Finally, the global mind-set development system must be inclusive. Including candidates from many nationalities signals the company’s commitment to cosmopolitanism as an important value, that is, its own openness to others. As mentioned previously, firms that exclude candidates from development activities on criteria such as gender and nationality will create top management teams constrained by their homogeneity. In addition, as noted earlier, inclusiveness in the development process will foster a greater sense of equity and enlarge the pool from which to choose candidates with the requisite initial capabilities (Boyacigiller et al. 2004).
Career path planning and international assignments help develop global mind-set and global leadership competencies. A career path should provide for recurring local and global assignments and the ideal career path should alternate between local, global, local, and again global assignments. For example, SmithKline Beecham follows a policy that requires candidates for senior management positions to have a “2+2+2” experience, that is, hands-on experience in two businesses, in two functions, and in two countries. With each new assignment, these managers broaden their perspectives and establish informal networks of contacts and relationships (Paul, 2000, p. 197).
While these assignments and other activities can be used to build cosmopolitanism and cognitive complexity, they can also lead to less desirable outcomes. Research shows that an international assignment does not necessarily lead to a global mind-set. Sometimes, it can lead to an increase in prejudice and cultural stereotypes. Learning from experience in an unfamiliar context may be particularly difficult since the cues people give about areas of conflict or to indicate the existence of a problem vary from one culture to another, as does the way in which they provide feedback. As individuals have cross-national and cross-cultural experiences, it is critical that they are able to step back, reflect, and learn quickly, deeply, and well from their experiences so that they can apply this new knowledge and insight to future experiences. As McCall and Hollenbeck have shown in their research, those who have the capability to expose themselves to challenge and then learn quickly from it have been shown to have the greatest global leadership potential. One way to enhance learning and develop a global mind-set as well as effective global leadership behaviors is through facilitated reflection and reframing of setbacks and failures as critical learning and development opportunities (Beechler & Javidan, 2007). A proactive HR function is therefore needed to effectively manage the international assignment and the expatriate’s experiences so that they lead to positive outcomes (Boyacigiller et al. 2004).
Developing A Global Mind-Set: Individual Action Steps
With the changing nature of the psychological contract between individuals and organizations more responsibility than ever rests on individuals to ensure their own long-term development and employability. Organizations increasingly view international experience and the development of a global mind-set as prerequisites to upward mobility. Moreover, managers are increasingly seeking international assignments for the personal development and skills they may acquire as part of a “boundaryless” career, not necessarily to advance within a specific firm.
Govindarajan and Gupta (2001), building on work in cognitive psychology, human development, and technological innovation, argue that the development of a global mind-set at either the individual or the organizational level, follows a series of ^-curves and is a nonlinear process. The development of global mind-set, like the development of any cognitive schema, involves both assimilation and accommodation of new information. It must be an ongoing process built on an articulation of self-awareness and other-awareness. Novices begin by following rules, then, as they gain practical experience, they begin to understand general patterns. As they become more competent, they recognize complexity and a larger set of cues. They are able to discern which cues are the most important and move beyond strict adherence to rules to think in terms of trade-offs. Once they reach the expert stage, they can read situations without rational thought—they diagnose the situation unconsciously and respond intuitively because over the years they have developed the holistic recognition, the mental maps that allow for effortless framing and reframing of strategies and quick adaptation (Osland & Bird, 2004). Their knowledge is, at this point, tacit (Boyacigiller et al., 2004).
Thus, the development of a global mind-set is a dynamic sensemaking cycle that follows the three steps of our effectiveness cycle: (1) perceive and analyze the situation, (2) select an appropriate response, and (3) act effectively. The first step involves the ability to decode and diagnose the context accurately. The second step involves knowing what managerial action will work in a particular situation and the third step of behaving appropriately is made possible by an adequate behavioral repertoire as well as the behavioral flexibility to enact the script correctly (Osland and Bird, 2004; Boyacigiller et al., 2004).
Directions for Future Research and Summary
The capabilities linked to global mind-set are crucial elements in contemporary MNCs, considerably influencing the global competitiveness of firms. Researchers, however, are still faced with the challenge of explaining the complex construct of global mind-set and further identifying its antecedents and outcomes.
As our review and analysis of the literature imply, there are still many ambiguities and important unanswered questions concerning global mind-set. Scholars from various disciplines have endeavored to define global mind-set and it has been used to describe individual, team, and organizations, furthermore complicating research and clarity in the area. In addition, there are inconsistencies in whether global mind-set is defined as a cognitive phenomenon, a state of being, or a set of behaviors or competencies. For example, what are the similarities and differences between global mind-set, cultural intelligence, global leadership, and expatriate success?
Another current challenge in the field of global mind-set involves empirical testing. Surprisingly few studies have been carried out so far and there is no consistency across measures or outcomes, making conclusions tentative at best. At the same time, recent work has begun to synthesize what we know about global mind-set, its antecedents and consequences and to suggest directions for future research (e.g., Levy, Beechler, Taylor, & Boyacigiller, 2007; Levy, Taylor, Boyacigiller, & Beechler, 2007; Osland, Bird, Osland, &Mendenhall, 2006). For example, Levy, Beechler, Taylor, and Boyacigiller (2007) suggest the following research agenda. First, a number of authors view global mind-set as a capability that can be developed over time but we still know very little about the dynamics of how this occurs. In addition, researchers conclude that while international experience is a key driver of global mind-set, not all individuals who go abroad develop a global mind-set. Are there certain innate qualities that are important to developing a global mind-set and what are the relative roles of nature versus nurture in this process? Longitudinal research on employees sent on international assignments is needed to determine if global mind-set does grow with international exposure and to identify mediating factors to that process. In addition, research is needed to determine how international assignments should be designed and managed to result in an increase in global mind-set. Similarly, future research should consider what types of human resource management policies and specific training programs and opportunities are more likely to foster the development of a global mind-set.
Another area for further exploration identified by Levy, Beechler, Taylor, and Boyacigiller (2007) is how global mind-set at an individual level is related to global mind-set at the team and organizational levels. For example, who in the organization needs a global mind-set? And is there a tipping point or a critical mass of individuals within the firm that needs to possess a global mind-set in order for it to have an impact on organizational performance? What is the influence of diversity within the top management team on global mind-set and what roles do organizational culture, structure, and processes play in developing and sustaining a global mind-set?
It is also unclear from the research results to date what is the relationship between global mind-set and effective managerial action. For example, what is the relationship between global mind-set and organizational performance (Levy, Beechler, Taylor, & Boyacigiller, 2007)? Fortunately, while the field of global mind-set is still in its infancy research, both theoretical and empirical, has been gaining momentum in the last few years. In addition to the recent reviews and syntheses of the literature, a number of scholars are currently development empirical measures of global mind-set, which are critical in answering many of the questions raised previously and in helping managers in multinational corporations develop the global mind-set they need in order to succeed in the ever-globalizing dynamic business environment.
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