think globally, act locally

COMMENTARY

Think Globally, Act LocallyA.G. Kefalas

This article presents a conceptual framework for understandingthe phenomenon of globalization and global mindset.Globalization is a phenomenon that permeated the entire humanlife on a worldwide basis: from the level of the individual to theworld level. Technology, and especially Information Technology(IT), i.e., the combination of computers and telecommunications,made globalization feasible, while liberalization of the world’scommercial and political regimes made it reality. Theimplications for business enterprises, and, for that matter, for anyorganized effort aimed at satisfying human needs, are indeedimmense. The proposed framework calls for the development ofpeople who (1) think globally and (2) act locally. These people seethe entire world as their oyster and are able to adapt their globalthinking to the local contexts. Neither of these attributes areinnate to most people. Both are acquired attributes. Most of uscan learn to think globally and act locally. © 1998 John Wiley &Sons, Inc.

INTRODUCTION

For a company like Daimler-Benz, Globalization is not an optionalstrategy. It is the only one.

—Juergen Schrempp, Financial Times, The Global Company,Part 10 of 12-Part Series

Thunderbird International Business Reviev, Vol. 40(6) 547–562 (November/December 1998)© 1998 John Wiley & Sons, Inc. CCC 1096-4762/98/060547-15

547

A.G. Kefalas is with the Department of Management, Terry College of Business, TheUniversity of Georgia, Athens, GA 30602

All “Commentaries” are articles intended to stimulate discussion and do not represent edito-rial opinion.

Despite the significance of globalization, American businesses donot seem to be very successful in getting their managers ready forit. Most US multinational company CEOs would admit that hav-ing a much stronger cadre of globally minded leaders is on virtual-ly everybody’s list of the factors that will strengthen their compa-nies’ competitiveness. Yet a 1995 study by the InternationalConsortium for Executive Development Research (ICEDR) of 1,500executives from 12 large companies around the world—each ofwhich describe themselves as global—found that “the ability to cul-tivate a global mindset in their organizations was rated dead last—34th of 34 dimensions” (Dumaine, 1995, p. 225). Notable exemptionwere responses from Japanese and Korean managers who listedhaving a global mindset as an important dimension for leader-ship effectiveness. In addition, mid-level managers rated as more important consideration than did senior managers (Ready, 1997, p. 30).

This contradiction, i.e., the difference between proclaiming one’scompany global and actually creating a global company, raises somevery interesting questions. One could, for instance, ask: Is this con-tradiction the result of deliberate neglect on the part of large UScompanies?, or: Is it the result of the real difficulty in finding youngmanagement candidates with a global mindset; or, even worse: Is itimpossible to actually create, via training and development, man-agers with global mindset? or, finally: Is the Director of ICEDR rightwhen he proclaimed that “Two generations of economic dominance,combined with strong domestic market, have contributed to creatinga colonial mentality in many US companies” (Dumaine, 1995)? Couldthis explain the fact that the rate of failure in overseas assignments,i.e., expatriates being sent home prematurely, by American execu-tives is three-to-four times as high as their European and Asiancounterparts (Adler, 1991)?

The basic philosophy underlying this work is that all of the abovealternative explanations are equally likely. In addition, and mostimportantly, we believe that the concept of the global mindset hasnot been well defined in the literature. As a consequence, since everymanager has his or her conception of what constitutes a global mind-set, they cannot be accused of not doing their best to cultivate one.They are simply acting as the proverbial five visually impaired In-dians trying to identify the elephant. Finally, research has foundthat, at least in the US, “neither the managers nor the universitieswhich hope to supply appropriately trained graduates to interna-tional corporations fully appreciate the realities of internationalbusiness” (Kobrin, 1984).

548 KEFALAS

THE GLOBALIZATION PHENOMENON

When 21st century historians trace the developments of the 20thcentury they will most likely give the decade of the 1990s the namethe Age of Globalization. Some people will use the term globalizationin its colloquial meaning to refer to “selling the same product world-wide.” As Al Zeien, chief executive of Gillette, the US razor maker,put in an interview with Financial Times “[he] sees a lot of people inneed of a shave. Refusing to pay tribute to cultural differences is oneof Mr. Zeien’s management mantras” (Griffith, 1998). These peoplewere influenced by Theodore Levitt’s seminal article on the “Glo-balization of the World’s Markets” (Levitt, 1983), and/or KenichiOhmae’s “The Triad” (Ohmae, 1985), or “The Borderless World”(Ohmae, 1990), whose writings directed attention to the growingsimilarity of the buying habits of citizens in different countries. Thisis globalization in the narrow sense of the concept. However, whileglobalization is primarily used in a business context, it is a phe-nomenon that has affected all humans worldwide, albeit in variedforms and degrees. It is this more pervasive and ubiquitous natureof this phenomenon that makes it such an important issue.

Globalization in Perspective

Globalization can be defined in many different ways. Table 1 pro-vides a summary of the main ways globalization has been defined aswell as some of the main manifestations or key indicators for eachfocal level. The five focal levels chosen here are arbitrary and aremeant to serve as a convenient continuum. The levels are arrangedin order of complexity from the most complex focal level, the world,to the least complex people as consumers, executives, and managers.Conceptually it really makes no difference at what point of the con-tinuum one begins the analysis. Conceivably one could begin at thebottom of the continuum, i.e., at the individual level and then tracethe implications of the changes that occur at that level, as measuredby the key indicators, for the level immediately above that. Equallylegitimate will be to start at the top of the continuum and speculateon the implications of the changes at that level for every other level.

A cursory look at Table 1 will convince one of the interrelation andinterdependence of the manifestations or key indicators of global-ization among the five levels of focus. Views on the direction of thisinterdependence vary widely. Some observers argue that it is thequest for profits by the multinational firms, the so-called Multina-tional Companies, or MNCs, that induce changes in people’s behav-

COMMENTARY: THINK GLOBALLY, ACT LOCALLY 549

Tab

le 1

.G

lob

aliz

atio

n i

n P

ersp

ecti

ve

Foc

al L

evel

Man

ifes

tati

ons

or K

ey I

ndi

cato

rs o

f G

loba

liza

tion

WO

RL

D

Th

e ec

onom

ic i

nte

rdep

ende

nce

of

Cro

ss-b

ord

er T

rad

e:be

twee

n 1

986

and

1996

tra

de g

rew

at

an a

nn

ual

rat

e tw

ice

as l

arge

as

wor

ld’s

cou

ntr

ies

thro

ugh

in

crea

sin

g G

DP

(6.

2% v

s. 3

.2%

)vo

lum

e an

d va

riet

y of

cro

ss-

Cro

ss-b

ord

er I

nve

stm

ent:

betw

een

198

0 an

d 19

94 F

orei

gn D

irec

t In

vest

men

t gr

ew f

rom

4.8

% t

o bo

rder

tra

nsa

ctio

ns

in g

oods

an

d 9.

6% o

f w

orld

GD

P.

serv

ices

an

d in

tern

atio

nal

cap

ital

Cro

ss-b

ord

er t

ran

sact

ion

s of

bon

ds

and

sto

cks:

grew

fro

m 5

% o

f G

DP

in

US

, Ja

pan

an

d G

erm

any

and

tech

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in 1

970

to 1

52%

, 19

7%,

and

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res

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199

6.

CO

UN

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9319

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phar

mac

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hat

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an

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in

yea

rs 1

980–

1994

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. F

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rofi

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as a

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mpl

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s h

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a G

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irem

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that

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nce

and

prac

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glo

bali

smL

ack

of d

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s be

twee

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eadq

uar

ters

an

d “i

nte

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Mu

ltic

ult

ura

l te

am b

uil

din

g w

orks

hop

s an

d tr

ain

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and

deve

lopm

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prog

ram

sN

ew i

deas

an

d n

ew p

rodu

ctio

ns

con

trib

ute

d by

for

eign

aff

ilia

tes.

Sou

rces

: IM

F,

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non

, W

ells

, an

d R

anga

n,

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alas

, C

ovin

tara

jan

an

d G

upr

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inan

cial

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bal

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ess

( a

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peci

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erie

s).

ior. People’s wishes create, in turn, changes at the country level. Forexample, customer demands for foreign products entice governmentsto open their markets to MNCs. Profitability of the newcomers at-tracts other MNCs, thus creating an industry. Other observers seethe country as the initiator of globalization. The once economic mir-acles of the East Asia, the so-called little tigers are usually used asan example of a government-driven globalization.

CAUSES OF GLOBALIZATION

The last decade of the 20th century witnessed two seemingly inde-pendent but related phenomena. Both of these phenomena relate tothe human desire to do something at a greater speed. The one phe-nomenon relates to the desire of humans to communicate with eachother at any time using any means deemed appropriate. The secondphenomenon relates to the human desire to facilitate this desire byeliminating the barriers to this communication. This desire forboundaryless communication gave rise to a spate of technologies.These technologies can easily be divided into two generic categories.The first category includes attempts to eliminate the natural barri-ers to communication. The science of the “new physics” was the hu-man response to this need. The second category includes attempts toeliminate the manmade bariers. The “New World Order” politicalideology was the human response to this need.

These two post WWII human efforts gave birth to the phenome-non of globalization. It is immaterial whether the physical tech-nologies or the ideological technologies came first. What matters isthat today people can communicate with each other, in the world ofStanley Davis, “Any time, any place, no matter” (Davis, 1990). Inthis world the proverbial barriers of time and space are transformedinto resources and the clumsy, dirty, and heavy matter does not re-ally matter. What matters are data: little blimps in a CRT that canbe tailored and woven into all sorts of fabrics to suit individualtastes. Today, thanks to the truly miraculous developments of in-formation technology and the equally amazing harmonization of thepolitical, legal, economical, and to some extent, cultural manmadesystems, most humans can indeed communicate any time, anyplace, without the use of or the handling of matter at all. The worldtoday does indeed resemble Marshall McLuhan’s Global Village(McLuhan, 1991).

To most people some of these changes appear contradictory, con-fusing, paradoxical, and puzzling. Others see them as revolutionary.Still, others look at these events as normal phases in the human evo-lutionary process. Globalization is the most commonly used word to

552 KEFALAS

describe the part of this process that pertains to changes in the eco-nomic and political spheres that seem to bring the world together(Greider, 1997). Critics of this view use expressions such as Glob-aloney, used by the economist Paul Krugman to downplay the sig-nificance of globalization for the US economy (Krugman, 1996), andClash of Civilizations, a term introduced by the political scientistSamuel Huntington to describe the changes which aim at taking theworld apart rather than creating a Universal Civilization (Hunting-ton, 1997).

The average person is torn between these two contradictorytrends. On one hand the developed nations are experiencing an im-plosion of the world by eliminating the boundaries that divide thevarious countries, a sort of Sovereignty at Bay (Vernon, 1971) phe-nomenon. On the other hand, the second world and the developingcountries are undergoing a horrendous explosion into a myriad oftiny countries proclaiming their sovereignty. Most people are simplyexperiencing an ABFS, i.e., an “Acquired Boiling Frog Syndrome”:these gradual changes have created a very comfortable environmentthat makes everybody “feel good” to the point of oblivion.

In summary, technology (e.g., people and/or data traffic) makesglobalization feasible, while liberalization (e.g., elimination of cross-border controls) makes it happen. Regarding technology, the follow-ing brief statements give a rather telling picture. In the area of “mat-ter travel” between 1930 and 1990, the average revenue per air milecollapsed from $.68 to $.11. In the area of “voice travel” the cost of athree-minute telephone call dropped from $244.65 in 1930 to $.32 in1997. Finally, in “data travel” the cost of each unit of computing pow-er plummeted by 99%. Regarding liberalization between 1970 and1997, the number of countries that eliminates exchange controls af-fecting imports of goods, services and to some extent, money leapedfrom 35 to 137. The ultimate result of these two mutually reinforc-ing post WWII human inventions has been an explosion in worldtrade and investment. For example, global ratios of exports to totaloutput jumped from 12% in 1970 to 17% in 1997. In addition, fol-lowing the “no matter” analogy the ratio of manufacturing outputand employment to total output and employment declined from 30%in 1970 to 20% in 1994 in the European Union and in the US from28% in 1970 to a mere 16% in 1994 (Wolf, 1997).

PRACTICAL IMPLICATIONS OF THE GLOBALIZATIONPHENOMENON

Globalization is reshaping, not only the grand, macro level aspectsof economic life, but the personal aspects as well, including where,


when, and with whom we perform our daily work. At every level—from the personal to the team, corporate, and foreign joint venture—and in every corner of the globe, the new economic order is openingnew vistas of opportunity by tearing down the boundaries that keptpeople separate from one another and limited the possibilities for in-teraction, cooperation, collaboration, and personal, national, region-al, and global economic growth and prosperity (O’Hara-Devereauxand Johansen, 1994).

Each working day millions of managers and line employees strug-gle with the awkward, frustrating, confounding, and even confusing,down-to-earth issues of the global workplace:

• How to build trust among team members scattered around theglobe from Atlanta to Zaire who have never met and are not like-ly to ever meet,

• How to implement strategies for sharing information over half adozen different national electronic infostructures using differentlanguages,

• How to motivate workers with different work ethics rangingfrom individualistic, Western-style attitude toward work, to pa-ternalistic, non-Western attitudes, to “the State-will-take-care-of-me” socialist-communist individual mindset,

• How to schedule team conference calls among members who liveseveral time zones apart. How do we convince, for example,Americans to forego the Super Bown Sunday annual ritual to at-tend a teleconference with their Japanese colleagues?

• How to get things done on time by adhering to deadlines whensome people don’t dare using the word dead and whose time per-spective is different from ours.

Obviously one can think of hundreds other issues in line with theones mentioned above. Equally easily one can also think of a num-ber of answers to these questions. The point we try to make here isthat the phenomenon we call globalization has made these issuesconsiderably more acute. For one thing the significance of cross bor-der dealings for the average global corporation has increased con-siderably. Sales revenues and profits derived from overseas activi-ties, the so-called internationalization ratio, once a small proportionof total sales and profits, have now been elevated to substantial vol-umes. In other words, while in the past international dealings use tobe thought of as the caboose to a large domestic locomotive, theyhave now become the locomotive for which domestic sales and prof-its are the caboose.

554 KEFALAS

In addition to the economic and financial interdependence, the na-ture of doing business has changed considerably. In the past, prob-lems that MNC managers may have encountered were primarily as-sociated with transplanting to the foreign subsidiary a technologythat was developed at home. Indeed, there were a number of quicktechnological fixes available to technology transfer problems. Today,problems global managers encounter are mostly people problems forwhich there are no quick technological fixes readily available. Cur-rently, we are banking on the new information technology (IT) tosolve all problems. And indeed, to some extent, and for some prob-lems, IT does offer a number of adequate solutions. For example, thistechnology does help us get in contact with one another, even thoughmost of the time we may not understand one another. However, it isbecoming fairly evident that this new technology must be supple-mented with considerations of such culturally influenced human at-titudinal and behavioral attributes as openness, tolerance for ambi-guity, acceptance of other peoples’ values, attitudes, and behavior,experimentation, determination, and the desire to continuouslylearn from one another. In short, it requires a new mindset.

IN SEARCH OF THE GLOBAL MINDSET

As one travels around the world and works with global corporationsone has the opportunity to observe managers struggling with the nu-merous difficulties of working across cultures. For example, one ob-serves managers questioning the assumptions embedded in the de-signs of their plans and approaches to management, the working andthinking styles of the people they are assigned to work with, andeven their own and other people’s views of the world. One starts sus-pecting that perhaps something was amiss. Perhaps there is some-thing that people from different cultures who are forced to work to-gether to make a living must have that will allow them to functioneffectively.

A quick search of the literature revealed that this something is aunique attribute of human behavior. Philosophers have given this at-tribute various names. Some call it one’s Weltanschuung (view of theworld), a comprehensive conception or apprehension of the world es-pecially from a specific standpoint. Others speak of one’s standpoint,a position from which objects or principles are viewed and accordingto which they are compared and judged. Still others talk of one’spoint of view, a position from which something is considered or eval-uated; or one’s own philosophy, the most general beliefs, concepts,and attitudes, of an individual or group. Finally, recently manage-


ment literature has introduced the term mindset, a mental inclina-tion, tendency or habit; a fixed state of mind (Webster’s New CollegeDictionary).

Here we will adopt Rhinesmith’s definition of a mindset “as a pre-disposition to see the world in particular way that sets boundariesand provides explanations for why things are the way they are, whileat the same time establishing guidance for ways in which we shouldbehave. In other words, a mindset is a filter through which we lookat the world. A mindset is a way of being rather than a set of skills.It is an orientation to the world that allows you to see certain thingsthat others do not see. A global mindset means that we scan theworld from a broad perspective, always looking for unexpectedtrends and opportunities that may constitute a threat or an oppor-tunity to achieve our personal, professional, or organizational objec-tives” (Rhinesmith, 1994).

Using these definitions of globalization, global business, and glob-al mindset, we propose that a person who subscribes to globalizationis expected to

1. see the world as a whole,2. search for similarities or commonalties among the various ele-

ments of the world, such as people and their habits,3. exploit the similarities or commonalties to discover differences,

and4. use the knowledge gained from this worldwide search to design

and execute strategies that will maximize the benefits to all (lo-cal and global) stakeholders.

In the early Eighties, the World Future Society coined the phraseThink Globally Act Locally to describe the general philosophy of itsfirst international meeting in Toronto. Current business literatureadopted the term glocalization to describe the management strategythat aims at global coordination coupled with local responsiveness.As Jackson put it, “The trick is to achieve a balance: combine the lo-cal knowledge with global reach” (Jackson, 1997).

The Main Question

The main question asked here is, “What values, beliefs, attitudesand behaviors must a person have in order to subscribe to global-ization philosophy as we defined here?” We postulate that these at-tributes manifest themselves in people’s (1) way of conceptualizingthe world, i.e., build mental models of the world and their role or po-

556 KEFALAS

sition in it, and (2) the way of contextualizing, i.e., the way of adapt-ing this mental models when they act on this world.

Responses to this Question: A Brief History. Over the last one halfof this century management scholars and practitioners have strug-gled with the issue of the international aspects of managing. Duringthe first two decades of the second half of the 20th century, most aca-demics became the proponents of the universality of management.On the practitioner camp international duties were assigned toheadquarters executives who would rotate jobs between the homeand host country. Gradually, a groundswell of suspicion developedthat perhaps international aspects of management were indeed dif-ferent and required sui generis approaches. Academics developed anew discipline, the comparative management field, aimed at shed-ding some light on the degree and nature of the modifications ofexisting management theories and practices. Practicing Human Re-source managers began to experience problems with foreign assign-ments.

After considerable work in both camps, academics decided that theinternational dimension of business needed special attention. Anumber of new approaches to internationalize business curriculawere invented. These approaches ranged from attempts to enrichstudent exposure to international aspect by adding one or two lec-tures to the traditional, discipline-based courses, to stand-alone, full-coverage international business curricula. These curricula empha-size the importance of the multicultural nature of internationalbusiness and impress on the importance, indeed the necessity, of tak-ing into account the cultural aspects of their approaches to foreignbusiness management. Practicing HR managers adopted the viewthat since the cultural aspects of international ventures are very im-portant for their success, expatriates were replaced with Host Coun-try National (HCN) or native managers who were knowledgeable ofthe cultural and other aspects of the local business environment.

The recently popularized globalization phenomenon has accentu-ated the inadequacy of both of these efforts. Exposing students to theuniqueness of the international aspects by reading a short paperbackon the international dimensions of accounting, finance, and so on,did not quite accomplish the task. Replacing expatriates with localmanagers resolved the national culture problem at the expense ofcorporate culture issues. Nationals could not or would not adopt thecorporate culture because, in their opinion, it conflicted with theirnational or regional culture. Cultural clashes became evident espe-cially after a major acquisition, joint venture, or even a non-equitystrategic alliance.


A New Conceptual Framework

The new framework places at its center the manager’s mind. Onecould perhaps coin a phase—complimentary to Form Follows Func-tion—Function Follows Mind, i.e., strategy follows mindset. In oth-er words, one could postulate that the choice of an internationaliza-tion strategy would depend on one’s way of looking at the world.Globally minded managers can be easier persuaded to assume thenecessary risks in going global. By the same token, locally-mindedmanagers would tend to exaggerate the risks associated with foreignventures. In addition, globally minded people would have an easiertime implementing the strategies by adapting their strategies, struc-tures, systems and products to the needs of the local environment,i.e., acting locally.

Using these two main dimensions, thinking or conceptualizingand acting or contextualizing, one could develop the taxonomy de-picted in Figure 1. It can be seen from this matrix that the first di-agonal alternative (quadrants 1 and 3), local thinkers and local ac-tors (TLAL) and global thinkers and global actors (TGAG), would notmake good candidates for globalization agents. Local thinkers andactors (TLAL) make good local and national managers but would bedisastrous for a global venture. On the other hand, global thinkersand actors (TGAG) make good candidates for humanitarian tasks,such as promoting corporate image and good will and democratic val-ues around the world. Of the second diagonal alternative (quadrants2 and 4), the first one, i.e., local thinkers and global actors (TLAG),takes us back to the proverbial ethnocentric style which has beenproven to be inappropriate for globalizing an organization. Finally,the combination of global thinkers and local actors (TGAL) possessthe mindset that is deemed the most appropriate for expanding anorganization’s activities globally. This person will need the leastamount of change in his or her way of looking at the world in con-templating a globalization strategy and also will require the leastchange in adapting the strategy to the local context.

Figure 2 provides a graphical presentation of the conceptual

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Think: ConceptualizationAct: Contextualization Locally Globally

Locally Think Locally Think GloballyAct Locally [TLAL] Act Locally [TGAL]

Globally Think Locally Think GloballyAct Globally [TLAG] Act Globally [TGAG]

Figure 1. The Two Dimensions of Global Mindset.

framework for a global mindset. The vertical axis of this two di-mensional framework represents the person’s way of thinking, i.e.,building a mental model about the world. This is a person’a mentalcapacity that is called conceptualization. The major concepts that aperson uses to build a mental mode of the world are drawn from hisor her own private tool kit. Usually, these concepts relate to one’s un-derstanding of purposes, processes, and people (Bartlett, 1995). Aperson scores high on the conceptualization dimension of the global


Figure 2. Determinants of Global Mindset.

Figure 3. Conceptualization and Contextualization.

mindset, i.e., Think Globally, when the person takes into account thepurposes, process, and people distant from his or her own conceptu-al space. The horizontal axis of the graph depicts the person’s effortsto adapt his or her way of conceptualizing the world to the local en-vironment or context when the person attempts to implement themental model (Redding, Porter, and Crow, 1995). The context relatesto the attributes of one’s job and the factors that affect it, such asthe local social, technological, ecological, political, and economic as-pects of the business environment.

Figure 3 superimposes Figure 1 on Figure 2 and creates a frame-work that can serve as a guide to the HR manager’s difficult task ofchoosing candidates for global involvement. The general rule is thata company would like to move along the 45 degree diagonal in theglobalization space bounded by the two globalization dimensions,i.e., conceptualization and contextualization. Starting with the up-per left quadrant [D], managers that are high on global conceptual-ization, but low on global contextualization, require considerabletraining on the local contextual aspects such as local values, atti-tudes, and behaviors regarding the job as well as the greater exter-nal business environment. These are individuals who have all goodintentions of being a global manager but lack the experience of deal-ing with implementing their ideas and skills in contexts markedlydifferent from their own.

The lower left quadrant [C] contains individuals who for some rea-son or other have not had any real experience with global thinking.Perhaps their social upbringing and/or educational and professionalbackgrounds did not require them to deal with any of the situationsassociated with global thinking. Lower right quadrant [B] representspeople who are well versed on the local context of strategies, struc-tures, and systems, but find it difficult to relate this local context tothe larger context of the organization as a whole and the globe. Forthese people the local context becomes the proverbial Procrusteanbed: every newcomer must fit the local context. Most organizationsthat have carried the so-called local context adoption to its limit andturned over the management of their subsidiaries to local nationalshave experienced cultural clashes. Finally, the upper right quadrant[A] are the real stars. These persons need the least amount of ad-justment both in their thinking and acting.

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think globally, act locally

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