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Managing Across Borders1Scott Thor BUSG 702 International Management
Running head: MANAGING ACROSS BORDERS
Global Leadership: Managing Across Borders
Scott Thor
George Fox University
Doctor of Management
BUSG 702 International Management
March 28, 2010
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Abstract
The world is rapidly becoming one interconnected global system that operates 24/7/365.
This is significantly changing the traditional role of organizational leaders. No longer are
managers interfacing solely with domestic customers, suppliers, and employees. To
remain competitive and continue to grow new revenue streams, organizational leaders
are moving beyond the borders of their own countries, searching for opportunities to
expand. This paper seeks to develop an understanding of what globalization means to
organizational leaders, the evolution of globalization, and the complexities globalization
creates for managing in a world that is becoming borderless. The paper also discusses
the meaning of culture, the challenges of working within different cultural environments,
and the common dimensions that characterize all cultures. A final aspect of the paper
focuses on the role of the global leader, the need to develop global leaders of the future,
and how best to meet the needs of organizations as they compete internationally.
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Managing Across Borders
The words globalization and international have become part of everyday
language to nearly every American. More than ever, we are living in a world that has
become flatter, which has created a leveling effect on the global playing field
(Friedman, 2007). With ninety-five percent of the worlds consumers living outside the
United States, the future of business lies in tapping into the global consumer (U.S.
Chamber of Commerce, 2004). One could argue that organizations that lack the ability
to create a global focus will miss out on a significant opportunity to grow new revenue
streams.
Having products and/or services with a global appeal is only half the equation for
developing an international strategy. The second half lies in the people that will be
needed to seize the opportunity for growth. Simply moving individuals to international
assignments presents a significant challenge that many are likely to struggle with. The
complexities of working in a different culture can present international managers with
the greatest challenge of their career.
Gregerson, Morrison, and Black (1998) surveyed 130 executives from 50 Fortune
500 organizations in Europe, Asia, and the United States, and report that 85 percent of
firms believe they do not have enough global leaders, and 67 percent of the
organizations believe their existing leaders need more training and knowledge to meet
the demands of managing internationally. A more recent survey of 919 senior
executives found that nearly half of executives surveyed stated building a global
organization is their greatest concern, and only 55 percent believe their organization is
able to develop leaders who are capable of dealing with the ability to adapt to the
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change when being assigned to international work (Accenture, 2007). Clearly the
leaders of organizations developing global strategies believe they are not equipped to
meet the demands of a burgeoning global marketplace.
This paper seeks to create an understanding of globalization and the
complexities it presents to organizations and the leaders who execute their international
strategies. The evolution of globalization is also discussed, including a summary of what
had led to the increase in globalization. Also discussed is culture and the difficulties of
not only defining culture, but also those of working in different cultures. A summary of
the common dimensions of culture is also provided, helping explain the similarities of
the characteristics between different cultures.
One could argue that the most influential aspect of becoming successful on a
global scale relates to the effectiveness of the leaders executing the strategies, much of
which is linked to the development of these individuals. This paper also explores the
existing research on the task of becoming an effective global leader by defining what
they do. A final point of discussion includes the development of global leaders. How can
organizations ensure they are working toward meeting the future demand for global
leadership? What knowledge, skill sets, and characteristics do successful international
leaders have? This paper seeks to provide an understanding of what is needed to
ensure the success of managers taking on international assignments.
Globalization
Defining Globalization
No single agreed upon definition of globalization exists. Ohmae (1995) describes
globalization as having an absence of barriers to trade and borders. Robertson (1995)
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suggests that globalization is a melding of the world as a single entity. Renesch (1992)
believes globalization is a combination of common interests between business and
society. Scholte (2008) goes deeper into defining globalization, believing most
descriptions are flawed because of redundancy, having fallen into one of four
categories, which the author describes as internationalisation, liberalisation,
universalisation, and westernisation.
Internationalisation refers to an increase in transactions and independence
between countries. Liberalisation centers on the removal of government imposed
restrictions on trade, such as trade barriers between countries. Universalisation
assumes a combining of cultures and economies into one uniform society.
Westernisation has similarities to universalisation, but with an emphasis on becoming
more like western society, which has also been described as Americanisation. Scholte
(2008) offers a fifth concept of globalization as the spread of connections between
people, reducing the barrier to social contact. The author goes on to describe
globalization as a shift in the nature of social space (p. 1478). No matter how
globalization is defined one thing is certain, the process is irreversible (Thomas, 2008).
The Evolution of Globalization
In 2005 U.S. exports totaled $1.2 trillion dollars (U.S. Chamber of Commerce,
2007) representing 10.5 percent of GDP (The World Bank, 2008). World exports as a
percent of GDP have been rising steadily since 1960, increasing from 12.1 percent in
1960 to over 27 percent in 2005 (The World Bank, 2008). Many factors have influenced
the increase in globalization, of which the use of information technology is perhaps the
most significant (Naisbitt, 1994). The use of information systems has allowed
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organizations located throughout the world to be connected through a multitude of
mediums including voice, video, and text. Modern technologies have allowed work
teams to collaborate from thousands of miles apart as if they were in the same
conference room. Friedman (2007) offers several other forces that he argues have
created a flatter world that include governmental changes, workflow software, upload
community collaboration, outsourcing, informing, and personal digital devices.
Friedman (2007) argues that recent changes in government, beginning with the
collapse of the Berlin wall in 1989, have begun the process of democratizing the world.
This has led to creating capitalistic markets across the globe, resulting in a catalyst for
free trade between countries. Workflow software has also created a new frontier in the
concept of collaboration. The ability of machines to talk to one another with no human
intervention has allowed information and data to be shared with no limitations based on
proximity to one another. Online communities have also created a flattening effect,
according to Friedman, which has resulted in greater collaboration by individuals across
the globe. Outsourcing has been perhaps the most influential factor in the rise of
globalization, allowing service and manufacturing organizations the ability to source the
tasks related to their products and services to locations that perform at the most cost
effective and efficient manner. Friedman also argues search engines such as Google
have made finding information incredibly easy, linking people across the world with a
common interest. The availability of the information from personal data devices such as
mobile phones has also brought people around the world closer together, and provided
a more efficient means to accessing information. There is clearly no single reason for
the evolution of globalization. Many factors have played into the world becoming an
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international marketplace. With this evolution come several challenges for the global
manager, one of which is dealing with the change in culture likely to be experienced
when taking an international assignment.
Culture
Defining Culture
Culture is an elusive concept that is hard to define with any precision. Thomas
(2008) describes culture as something shared by members within a specific group.
More specifically, Thomas describes culture as an organized system consisting of
values, attitudes, beliefs, and behavioral meanings that are linked to one another, and
within the context of the environment.
Hofstede (1991) describes culture as mental programming that exists between
human nature and an individuals personality. Hofstede utilizes a pyramid consisting of
three levels to illustrate culture, with the lowest level representing human nature, which
is linked to biological reactions related to needs all humans have (eating, sleeping, etc.).
At the highest level of the pyramid are traits specific to the individuals personality that
are inherited or learned. In the middle lies the concept of culture, which is learned and
specific to groups.
Triandis (1972) describes culture as the perception of the part of the environment
created by people. Included in this description is a categorization of beliefs, attitudes,
roles, and values that are shared amongst a group. The Global Leadership and
Organizational Behavior Effectiveness (GLOBE) project is a research team consisting of
170 management scholars and social scientists focused on the relationship between
organizational and societal culture and organizational leadership. GLOBE defines
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culture as a combination of shared beliefs and values. GLOBE further defines beliefs as
the perception people have in relation to how things are done in their society, and
values as the way people believe things should be done (Javidan & House, 2001).
What is common between these definitions is that culture is something unique to
a group within a society, and moving between societies can present a significant
challenge to international managers. What is also evident are that many aspects of
culture are not visible, making adaptation to a new culture quite challenging. Schein
(2004) offers a perspective on culture dividing it into three specific levels that helps
further refine why integrating into a different culture can be so challenging. The three
levels described by Schein include:
1. Artifacts
2. Espoused values
3. Basic underlying assumptions
Schein (2004) uses the analogy of an iceberg to illustrate the three levels. Visible
artifacts lie above the surface and can be seen in the way people within a culture dress,
speak, use technology, and behave in certain situations. Moving just below the surface
are what Schein describes as espoused values that are consciously held values linked
to the visible artifacts. Deep beneath the surface are basic underlying assumptions,
which Schein believes are unconsciously held values, beliefs, and perceptions that are
assumed by members of the group. One could argue that adapting to the visible cultural
artifacts represents the least significant challenge to integrating into a new culture, and
basic underlying assumptions the most significant. Despite the differences between
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cultures, some common cultural dimensions exist that aid in assisting global managers
faced with the challenge of working outside their native country.
Cultural Dimensions
Hofstede (1980) originally introduced the concept of cultural dimensions, which
presented the idea that differences between cultures could be measured to help answer
questions about universal problems amongst different societies. The four dimensions
initially developed included power distance, uncertainty avoidance, individualism-
collectivism, and masculinity-femininity. A fifth dimension, long versus short-term
orientation, was later included with the original four (Hofstede, 1991). GLOBE (Javidan
& House, 2001) expanded on Hofstedes research by using the five dimensions as a
basis in their work to develop nine cultural dimensions. The focus of the discussion that
follows is not a comparison of Hofstedes research to that of GLOBEs. An in depth
comparison of the differences and similarities between the studies already exists
(Hofstede, 2006). The focus of the discussion that follows is on creating an
understanding of the nine dimensions as they relate to describing cultural similarities
and differences as they apply to becoming an effective global organizational leader.
A cultural dimension can be described as a characteristic or attribute of a culture
that helps define the culture in relation to a specific behavior pattern or belief. The
GLOBE (Javidan & House, 2001) study identified the following nine dimensions:
1. Assertiveness
2. Future orientation
3. Gender differentiation
4. Uncertainty avoidance
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5. Power distance
6. Institutional emphasis on collectivism versus individualism
7. In-group collectivism
8. Performance orientation
9. Humane orientation
Assertiveness is the level at which a culture encourages people to be aggressive,
competitive, and confrontational as opposed to passive and accommodating. The U.S.
and Austria are two of the most assertive cultures, while Sweden and New Zealand are
less aggressive and more cooperative (Javidan & House, 2001).
Future orientation describes how focused a society is on future activities, and the
rewards they offer for behavior centered on actions such as strategic planning.
Singapore, Switzerland, and the Netherlands emphasize future orientation the most as
opposed to Russia, Argentina, and Italy, where short-term results are rewarded more
highly (Javidan & House, 2001).
The degree to which gender differences exist is a measure of the gender
differentiation dimension. Hungary, Poland, and Denmark have the lowest gender
differentiation demonstrated by more balanced salaries between men and women.
These societies also give women greater decision making authority and participation in
the workforce. South Korea, China, and Egypt are on the opposite end of the spectrum,
giving far fewer freedoms and equalities to women in their respective societies (Javidan
& House, 2001).
Cultures in which uncertainty avoidance is high are represented by a greater
degree of structure and formalization where processes and procedures are
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commonplace in helping to avoid uncertainty. Sweden, Germany, and Switzerland rank
high in uncertainty avoidance, and Venezuela, Russia, and Greece lie on the lower end
where rules and procedures are less a part of the societal structure (Javidan & House,
2001).
Power distance describes how equally power is shared within a society. Cultures
with high power distance can be described as those in which few people make most of
the decisions, while in low power distance societies the decision making power is more
equally shared. Spain, Russia, and Thailand have high power distance, while the
Netherlands and Denmark have lower power distance (Javidan & House, 2001).
The institutional emphasis on collectivism versus individualism dimension defines
a societys tendency to provide opportunities and resources for the members of the
society. These opportunities and resources help societal members become associated
with activities and organizations deemed beneficial to the society. Examples of this
dimension include making non-profit status of an organization easier, and
supplementing organizations that provide benefits to the members of their society.
Japan, South Korea, and Sweden rank high in this dimension, while Argentina, Greece,
and Italy, where individualism is more common, rank low (Javidan & House, 2001).
The in-group collectivism dimension can be defined as the degree to which
members of a society value individual performance versus group performance. This
dimension also measures a societys emphasis on membership in small groups,
whether they are within an individuals organization or family. China, Iran, and India rank
high in this dimension placing a significant importance on membership in family and
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organizational groups. New Zealand, Denmark, and Sweden rank in-group collectivism
low and have more emphasis on individualism (Javidan & House, 2001).
How great of emphasis a society places on performance defines the performance
orientation dimension. Societies that reward performance rank high in this dimension,
which include Hong Kong, the U.S., and Singapore. Performance plays a less important
role in countries such as Russia, Argentina, and Italy (Javidan & House, 2001).
The final cultural dimension defined by the GLOBE research team is humane
orientation. This dimension describes the level to which a society rewards individuals for
being compassionate and caring about each other. Ireland, Malaysia, and the
Philippines rank the highest in this dimension, and France, Singapore, and West
Germany the lowest (Javidan & House, 2001).
The cultural dimensions provided by GLOBE help establish a greater
understanding of the complexity between cultures and how global leaders need to
understand what works in one culture may not work in another. It is also important to
understand the ranking of the dimensions are only an averaging of the cultures, and
individuals within a culture may or may not accurately represent the dimensional data
presented by the GLOBE research team. With a greater understanding of globalization
and culture, and the complexities of each, one can begin to understand why the role of
the international manager can be such a challenging and demanding proposition.
Global Management
Defining Management Activities
The process of management was originally thought of as the tasks of planning,
organizing, commanding, coordinating, and controlling (Fayol, 1930). Observing these
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activities can be challenging, and they do not necessarily function sequentially, making
it difficult to determine which category the activities of a manager fall into (Thomas,
2008). Because of these difficulties, management scholars began looking for a better
way to describe what managers do. From this research the best known study was
completed by Mintzberg in the 1960s (Mintzberg, 1973).
Mintzberg (1973) argues that a managers authority over their organizational
units provide them with three categories of activities that include interpersonal,
informational, and decisional roles. Mintzbergs work helped to argue that managerial
work is not predominately systematic and rational, but more fragmented with a large
degree of variety, and most of all, having a high degree of interpersonal interaction.
Hales (1986) reviewed 30 management studies and came to similar conclusions
as Mintzberg. Hales found that the work of managers is highly variable, a significant
portion of time is spent in problem solving activities and persuading others to do things,
and that contradictions are widespread in managerial work. Hales research also
concluded that managers have a significant amount of freedom in deciding what to do
and how to do it, and that little time is spent in a single activity.
Summarizing this research, the primary roles of the manager include the tasks of
controlling and disseminating information, solving problems and making decisions, and
leading and motivating individuals in an effort to achieve the goals of the organization.
Each of these activities has a high degree of interpersonal interaction, which is the core
of managerial work (Thomas, 2008). The role of a global manager is similar to that of a
domestic manager. Both types of managers conduct the same activities, but the culture
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that the manager works within will affect the emphasis of each role, both directly and
indirectly (Thomas, 2008).
Characteristics of Global Managers
In their research of global managers noted previously, Gregerson et al. (1998)
concluded that all global managers need to have a certain set of context specific
abilities, and a core set of characteristics to be successful. Their research concluded
that one-third of a global managers success is linked to specific knowledge and skills.
These include understanding the organizations culture, knowledge specific to the
industry in which the organization competes, and an understanding of the accepted
management practices for the country in which they work. Two thirds of the
characteristics apply no matter what level position the individual has, organizational
culture, the norms of the industry in which they compete, or the management practices
in the country they work. These characteristics include demonstrating character and
business savvy, as well as embracing duality. What really stood out in their research as
a catalyst to these characteristics is that successful global managers have an
uninhibited curiosity to constantly be learning about what they do not know, and are
motivated by a sense of adventure.
The subjects of the research conducted by Gregerson et al. (1998) consistently
repeated that having a curious nature fueled their desire for increasing their knowledge
of global business. The research also concluded that personal character is based on
two components, connecting with people on an emotional level and demonstrating
uncompromising integrity.
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According to Gregerson et al. (1998), connecting with individuals on an emotional
level is a three step process beginning with having a sincere interest in others, followed
by making an effort to listen, and being able to understand the differing perspectives of
other people. Creating this connection is critical in establishing trust. The authors also
found that integrity is a characteristic that is tested more often when on an international
assignment where corporate governance is not to the level as when working
domestically.
Global leaders also need to have the ability to deal with uncertainty. Gregerson
et al. (1998) argue that while domestic managers deal with uncertainty as well, global
managers must deal with it on a more frequent basis. The most obvious source of
uncertainty relates to global managers moving from their native country where they are
likely most comfortable, to a foreign culture where a significant degree of uncertainty is
bound to be encountered. The authors argue that global managers must have a high
tolerance for ambiguity to better cope with the unknowns encountered when working in
a different culture.
Gregerson et al. (1998) suggest that in addition to uncertainty global managers
must also deal with certain tensions of balancing local needs with those of global
integration. The research suggest that those managers who are able to balance the two
by not focusing entirely on localizing or globalizing all activities are more likely to
succeed. The challenge lies in the ability of determining which activities should stay
local and which should become global.
A final characteristic identified by Gregerson et al. (1998) is savvy. The authors
divide savvy into two categories that include business and organizational. Business
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savvy includes understanding the global market for the products and/or services the
organization provides, whereas organizational savvy revolves around knowing the
capabilities of the organization and how they can be best utilized to be successful in the
execution of the business strategy.
In similar research conducted as part of the GLOBE project, researchers
studying the attributes of successful global managers found several similar
characteristics considered to be desirable by managers including integrity, honesty,
trustworthiness, being able to communicate effectively, coordinate activities, and build
teams. The research also uncovered some undesirable characteristics that include
leaders who are ruthless, have big egos, or are highly irritable or antisocial (Javidan,
Dorfman, de Luque, & House, 2006).
Javidan et al. (2006) also discovered attributes of successful global managers
similar to previously cited research that include having what they call a global mind-set
(p. 85), a high tolerance for uncertainty, and the ability to adapt to different cultures. The
global mind-set is important in understanding new cultures and all the nuances that
come with working in a foreign land such as the differences in political, legal, and
economic systems in addition to the management paradigms of the culture. Also
important is the ability to deal effectively with uncertainty. Each culture represents a
potential to create the need to learn how to manage differently, which can pose a
significant challenge to managers working in an unfamiliar culture. A final attribute found
in the research linked to successful global mangers, is the ability to quickly adapt to a
new environment, and change behavior patterns to those that are acceptable to the
local culture.
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Javidan, Teagarden, and Bowen (2010) conducted interviews with 200
executives in the U.S., Asia, and Europe, and surveyed more than 5,000 managers
around the world, expanding on the global mind-set concept previously discussed. In
their research they focused on creating an understanding of what contributes to both
success and failure of international managers. From this research three main
components of the global mind-set were established. The three components include the
following:
1. Intellectual capital
2. Psychological capital
3. Social capital
Intellectual capital can be described as an individuals knowledge of international
business and their capacity to learn, psychological capital is the ability of an individual to
change and learn new cultures, and social capital describes the ability to make new
connections with people who are not like you, bring together individuals around a
common purpose, and influence others who are unlike yourself (Javidan et al., 2010).
Javidan et al. (2010) describe each of the components as having specific
attributes. Intellectual capital is characterized by the attributes of global business savvy,
which is based in a strong understanding of global markets; cognitive complexity,
demonstrated by the ability to link together multiple scenarios consisting of several
parts; and a cosmopolitan outlook, which is described as having an interest in cultural
specifics (i.e. government, history, geography, etc.) of foreign countries.
Psychological capital can be characterized as a passion for diversity, a love of
adventure, and having self-confidence. Social capital has the attributes of intercultural
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empathy, which is demonstrated in the ability to connect at an emotional level with
people from a different culture; interpersonal impact, characterized as being able to
bring differing views together to build consensus and maintain trustworthiness; and
diplomacy, described as the ability to listen to others and be able to discuss differences
in a diplomatic manner (Javidan et al., 2010).
Reviewing the literature on what makes an international manager successful, a
number of common themes begin to surface. The following is a summation of the most
prevalent similarities:
1. Business knowledge related to global markets
2. Ability to adapt to changing environments
3. Adventurous attitude and little fear of the unknown
4. Willingness to learn about other cultures
5. Ability to see things from different perspectives, and respect others for what
they believe even though you may not agree
Knowing what leads to becoming a successful global manager is only a starting
point for organizations in their quest to develop individuals not only willing to take on
international assignments, but also in the process of understanding how to help them
become effective in these challenging roles. What may separate failure from success
may not be understanding what leads to success, but more so on the process used to
develop international managers.
Developing Global Managers
Gregerson et al. (1998) suggest that based on their research in interviews with
leaders of Fortune 500 organizations, global leaders are born and then made (p. 28).
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The researchers compare the process of creating effective global leaders to one similar
to developing great musicians and athletes. To become the best, argue Gregerson et
al., takes talent, opportunity, training, and education. The authors suggest that
organizations that take a formalized approach to training perform better financially than
those who do not. Despite this finding, their survey results show that more than 40
percent of organizations take an ad hoc approach to developing global leaders.
Gregerson et al. (1998) suggest the development process should take a global
approach in understanding not just one country, but the entire world. Four strategies
suggested by the authors include travel, teams, training, and transfers. Two unique
travel suggestion by the authors are to take detours off the main roadways when
traveling to get a better sense of the country, and spending time exploring markets,
schools, shops, and homes to gain a better understanding of what living in the country
is really like. Teams also provide a development opportunity to work with people from
different cultures. Training is also an obvious strategy for learning about a different
culture. A final strategy is transferring to a new assignment and immersing oneself in a
foreign land. Eighty percent of the studys respondents believe that working and living in
a foreign country is the single most effective method of becoming a better manager.
Javidan et al. (2006) suggest that organizations start by making a large volume
of information on global and cross-cultural issues and reports specific to different
countries available to employees. The authors also suggest the use of multimedia
programs and journals specific to international management. Consistent with the
findings of Gregerson et al. (1998), Javidan et al. conclude that international
assignments are the most effective method to developing global leadership capabilities.
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Javidan et al. (2010) offer a more structured approach to preparing for an
international assignment, suggesting the use of an assessment tool to gain a better
understanding of an individuals weaknesses related to the global mind-set components.
Based on the assessment the authors suggest a plan consisting of, read, surf, watch,
do, and listen (p. 111). To improve intellectual capital the authors also suggest reading
publications such as the Economist and Foreign Affairs to develop an understanding of
international issues. Also suggested is watching television programs with an
international perspective, and attending lectures, conferences, and workshops. Overall,
the authors argue that improving intellectual capital is the easiest to improve of the
three.
Psychological capital is the most difficult to improve, argue Javidan et al. (2010).
The authors believe it is the most difficult to improve simply because there are limits to
how much one can, or should, change their personality. Two questions are suggested
by the authors to help individuals increase self awareness. First, how do you feel about
things such as people and places that are foreign to you? Why do you feel this way?
Second, do you feel it is necessary to change the way you feel, and if so, why? Javidan
et al. suggest once you answer these questions you will be better prepared to take on
activities related to improving your psychological capital.
Building social capital is related to improving ones ability to widen your
relationships with people outside of your normal circle of social interaction (Javidan et
al., 2010). The authors suggest the challenge is to widen your perspective by interacting
with people who have interests and viewpoints that differ from yours. Taking on
assignments with international teams, traveling to foreign countries, and joining social
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networking groups such as those that include both face to face and online interaction
are ways in which to increase social capital.
Developing global leaders is a challenge facing organizational leaders tasked
with executing global strategies. The research suggests the most effective method of
developing leaders is to immerse them in the foreign culture, but this is not always a
viable option, nor the most economical. Perhaps taking a hybrid approach is the most
logical starting point for those responsible for creating development programs. What is
blatantly evident is that if organizations continue to take an ad hoc approach the results
will likely continue to disappoint, and the potential to grow beyond domestic borders
may take longer than expected.
Conclusion
We no longer live in a world where the focus of organizations and individuals
within them can be only on what we see around us. We have to close our eyes and
begin to visualize a global perspective that will quickly become the norm for the future of
business. The data suggests we have significant work to do in developing the global
leaders needed to make this vision become a reality, but the tools and techniques are
available to begin the process. Those organizations that seize the opportunity to begin
the process of developing future leaders are most likely to be the ones who succeed at
taking on the challenge that comes with living in a world that is becoming flatter.
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York: Picador/Farrar, Straus and Giroux.
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