Introduction and Purpose
In order to prepare a journal article that covers the subject adequately, the question will be divided into three parts. Firstly, the journal article will address advances in economic globalization. In order to do so, I will ascertain that there actually is economic globalization. I will do this by reviewing literature from different scholars on the subject of economic globalization. I will also explore the various aspects of economic globalization and advancements in economic globalization over time.
Through globalization, the human race has become more interconnected hence reducing the ‘distance’ between the different nations. 1Nonetheless, significant variations in business and management systems still persist. This paper will establish the legitimacy of this opinion by reviewing relevant literature. The paper will analyze the literature so as to put the assertions made by the authors into perspective. On the same note, the paper will establish the causes of these variations and the reasons why they persist, even with the increased interconnectedness between different economic regions globally owing to economic globalization.2
Owing to economic globalization, managers can work anywhere in the globe. This is because globalization has brought about harmonization of ideologies pertaining business and management of enterprises. This notwithstanding, the significant variations that exist between business and management systems affects the workmanship of international managers to a good extent. This paper will explore the effect of these variations on the work delivery of international managers. The paper will review literature adduced by other scholars to discuss the ramifications of these variations on international managers.
Advancements in economic globalization
Economic globalization refers to the growing economic interdependence of the economies of various nations world over due to the rapid increase in the movement of goods, technology, services and capital across national borders. Unlike globalization in general, economic globalization is fuelled by the rapid growth in significance of information in many types of productive activities, the advancements in science and technology and marketization.3
In the recent years, there has been an exponential growth in integrated and cross-border trade. This has not been limited to goods and services but also encompassing exchange of ideas and technology, currency, movement of people through migration and international travel and movement of capital. Ascertaining that there has been advancement in economic globalization would require evidence presented in a measurable parameter.
The extent of economic globalization is manifested by the volume of the financial transactions made in the international markets. The New York financial markets record volumes of over 1.2 billion dollars every day in financial transactions. Daily stock transactions in the international markets exceed this amount by far. This is evidence of the extent of the advancement in economic globalization. 1Daily financial transactions involving foreign exchange have increased from 18.3 billion dollars in the year 1977 to 4 trillion dollars as at April of 2010.4
Over the previous decade, technological advancements have played a role in fueling economic globalization. They have lowered transportation and communication costs hence increasing the movement of people across international borders. These advancements in technology have also reduced the costs of information storage and retrieval and data processing. The manifestations of these advancements include the World Wide Web, electronic mail and the internet.
Trade liberalizations over the last decades have transformed the once protected trading regions into a liberated world trading system. Through the inception of the World Trade Organization, there has been a significant reduction in trade barriers and tariffs’ thereby increasing the movement of people, goods, services and capital. Organizations today have a wider reach owing in part to technological advancements. The horizons for their managers have widened owing to the advancements in communication.
Variations in business and management systems around the world
Even with the advancements in economic globalization outlined above, there are still very significance variations in business and management systems around the world. Cultural differences persist world over between the different societies. This difference in cultural value is especially relevant to multinational companies. 5 These companies operate in cross and multicultural environment and this has an effect on their operations. The managing process across cultural borders is substantially complex as it forces multinational companies to adapt their approaches and processes to individual cultural contests that they operate in.6
The evolution of customer demands has also cause variations in management systems in the world. For instance, the ISO has been globally accepted as quality standard. However, over time this standard has evolved in different areas. Due to the environmental consciousness of consumers, there has been increased demand for ‘green’ products. This has necessitated the adoption of sustainable practices for business owners and managers. Variations in adherence and regulations to the stipulated sustainability laws by different countries play a significant role in preventing the businesses for employing best practices towards environmental sustainability.7
Management and decision making process are also varied across the globe. For instance, Japanese find the Western and in particular, the American way of decision making as cerebral, analytic, objective and impersonal rather than synthetic, subjective, emotional and personal thinking. Concepts like collectivism, hierarchism, and attention to context are more common with people from East Asia. This is because of their prescribed relationships and roles within relatively stable and complex social networks. Conversely, American people abode in small, simpler and less constraining social environments. Thus they can be more individualistic, egalitarian, and less attentive to context. This brings out the variation in business and management systems from these two economic regions.
Reasons for Variations in business and management systems
Even with the advancement in economic globalization, businesses in different regions are governed by different models as regulated by the laws in these regions or countries. For instance, some governments regulate the business models in some important sectors of the economy in these countries. Even with the increased liberalization as a result of globalization, such businesses find themselves under the regulation of the government to some extent.
As highlighted earlier, our socialization also affects the business structures and management systems. For instance, concepts like collectivism, hierarchism, and attention to context are more common with people from East Asia. This is because of their prescribed relationships and roles within relatively stable and complex social networks. They are socialized to live in communities as opposed to individualistic ways of life. Conversely, American people abode in small, simpler and less constraining social environments. Thus they can be more individualistic, egalitarian, and less attentive to context.8
Ramifications of these variations to international managers
International managers face an uphill task in maintaining productivity at work at the same time preserving the cultural harmony when working in cross-cultural or multicultural environments. 12Variations in business and management systems around the globe do not make it any easier for them. International managers are not necessarily brought up or socialized in the cultures that they work. Nonetheless, they are expected to adapt to them and find winning formulas.9
Managers are expected to make decisions that spur their organizations ahead. A manager who is posted into a new station where the business models are different from what he is used to ought to familiarize himself with the new models. The alternative is a complete of the whole model and institute one that he is familiar with. However, some of these models are regulated by the government. Besides, the socialization and the business environments that the managers work in affects their decision making process. They ought to strike a balance between their expatriate perceptions and those of the locals.
Cultural complexity also poses a challenge for international managers. 10 Some of these challenges are manifested by a language barrier.11The interdependence of organizational cultures, micro perspectives and regional cultures determines the way international managers interact with their subordinates. Managers have to develop and implement processes and modalities for cross-cultural communication when they are faced with a cultural interface. These managers are ultimately responsible for reducing frictions between the cultures of the parent and subsidiary companies. 12
Multiplicity of factors
The following a conceptual framework showing the interdependence of different cultural perspectives in international business management. It shows the different aspects that affect the work delivery of international managers.
Figure 1: Conceptual framework showing the interdependence of factors
The conceptual framework above shows the interdependence of factors. These are that factors that international managers have to balance in order to enhance cohesion in a multicultural setting. 13
Business environment in any market is a as varied as the cultures that define it.14 In the competitive environment that international businesses operate, the managers ought to harmonies the warring cultural perspectives and to adapt to the different business and management systems in order to thrive.15
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