International organisational behaviour
Introduction Contemporary business world witnesses the changing of the workforce’s composition. This trend first has been completely appreciated in the practice of multination corporations (MNCs). According to Dowling, Schuler and Welch HRM policies and practices of MNCs are likely to be different from those found in domestic firms (Dowling, et al, 1994).
For MNCs the difference in geographical spread meant that MNCs should normally engage in a number of HR and organisational behaviour activities that were not needed in domestic firms – such as providing relocation and orientation assistance to expatriates, administering international job rotation programmes, dealing with international union activity, managing multicultural and virtual groups, etc. Managing the diversity generated a number of coordination and communication problems that had not arisen in domestic firms, and simultaneously fostered specific methods designed for the resolutions of diversity related problems.
The experience of MNCs indicates that companies that want to be competitive in the turbulent and evolving marketplace need to appreciate the compositional changes of workplace and apply HR and international organisational behaviour practices/strategies towards attracting, recruiting, developing, and retaining a diverse workforce. In addition, the experience of MNCs provides justification for Adler’s statement (2002) that multicultural teams can potentially become the most effective and productive teams in an organisation.
At the same, the effectiveness of multicultural teams heavily depends on environment a MNC is operating as well as company’s managerial ability to guide, motivate and control diverse workforce. From the critical perspective, developing a multicultural workforce, working groups, etc offers numerous opportunities for both not-for-profit organisations and profit companies, because a diverse workforce is a source of creativity and ideas as people with various cultural and racial backgrounds have different attitudes, values, and norms.
However, managing culturally diverse teams requires specific approaches and sophisticated strategies. OB Strategies in International Context What emerges from contemporary research is that the multinationals often outperform their domestic counterparts in nearly all aspects of human resource management and organisational behaviour, including the degree of attention given to employee relations, the ability to motivate working groups, retain high potentials, and the use of innovative and progressive OB practices.
For example, a survey of 143 organisations in Britain in 1985 indicated that foreign-owned organisations used more advanced HRM and OB techniques, devoted more resources to personnel management and were more likely to use a variety of new communication and work design methods in order to gain employee loyalty (Margerison, Edwards, Martin, Purcell and Sissons, 1988). The 1999 study supported the view that multinational companies are more likely than their domestic counterparts to use advanced OB and HRM techniques and practices (Sharpe, 2004).
However, researchers suspected that in many cases the differences in OB might have been associated with the specific sector, or the competitive strategy being pursued by the organisation. Therefore, to test for this possibility, the questionnaire data were entered into a multivariate analysis, which examined how much of the total variation in HR practices could be explained by the firm’s nationality, industry sector, management philosophy and/or competitive strategy (Sharpe, 2004). The results showed that:
(1) Companies that were pursuing a strategy of high product innovation were particularly likely to have quality circles, career guidance programmes, specialised career paths, and some type of creativity assessment for new hires. In contrast, companies that were primarily competing on the basis of cost leadership put relatively more emphasis on formal manpower planning (to determine future manpower requirements), and preferred to handle employee relations on an ad-hoc basis rather than through formal procedures.
(2) Service companies were more likely than manufacturing firms to share information among employees, link pay to performance and delegate authority to the lowest possible level. In contrast, manufacturing firms were more likely to offer job security, flexible working arrangements, financial support to those who wish to take external training courses. (3) A wider variety of HRM practices were used when top managers saw employees primarily as “a source of talent that must be developed”, rather than primarily as “a cost factor that must be reduced”(Sharpe, 2004).
Not surprisingly, top managers who saw employees as a source of talent were more likely to do the following things: – Delegate responsibility to the lowest possible level, – Offer flexible working arrangements to employees – Openly share information about the goals and results of the company – Use quality circles to seek out the ideas of their workers
Researchers and practitioners have found solid operational traction by focusing on the interaction of individual and multicultural group practices with organisational processes, systems, and technologies for acquiring, sharing, retaining, and applying knowledge-all within the broadly identified “knowledge management” field (McCann ; Buckner, 2004). It is smart knowledge management strategy, for example, for an organisation to cultivate functionally diverse and geographically dispersed “communities of practice” around important technical challenges.
Such “communities” are grounded in basic human needs to problem-solve and share, and by enabling sharing behaviors through sophisticated global information systems and communications technologies individual and group learning is leveraged to an organisation and industry level. From a knowledge management perspective, effective organisations are those that promote individual and group learning through management practices that amplify and move information through organisation-level systems, processes, and technologies (McCann ; Buckner, 2004).
In addition to internal effectiveness of teams, International Organisational Behavior (IOB) deals with cross-national diversity effectiveness since oftentimes culture determines the success of OB activities. Therefore, contemporary IOB imperatives include achieving intercultural effectiveness among the diverse workforce of an organisation within and across national boundaries, and achieving intercultural effectiveness in intercultural business interactions.
It is well documented in literature that national culture affects the way that people of different cultures interact (Hofstede, 1995; Trompenaars, 1993). Further, at the functional level, culture has been identified as influencing OB and HRM practices, leadership and organisational strategy (Schneider and De Myer, 1991). There is, however, significant debate as to whether this translates into actual performance differences in the international setting.
The four-dimensional model of national culture (power distance, uncertainty avoidance, individualism-collectivism, and masculinity-femininity) suggested by Hofstede (1980) has been broadly accepted as a descriptor of national culture. In attempting to apply culture to the management of organisations, Hofstede and associates (1995) suggest that five, rather than four, dimensions influence the way that managers manage. The fifth dimension is long and short-term time focus, also called Confucian values (Hofstede, 1995).
It is noted, however, that there has been little comprehensive empirical research as to the relationship between Hofstede’s time dimension and performance outcomes. The research available tends to focus on a limited number of dimensions and/or a small number of countries. Often performance is not measured, but when it is, it tends to be represented with a single measure of financial performance, which reflects organisational, not managerial, effectiveness.