The Global Mindset

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The Global Mindset

LIST OF CONTRIBUTORS Bruce J. Avolio University of Nebraska-Lincoln, USA B. Ram Baliga Wake Forest University, USA S

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LIST OF CONTRIBUTORS Bruce J. Avolio

University of Nebraska-Lincoln, USA

B. Ram Baliga

Wake Forest University, USA

Schon Beechler

Duke Corporate Education, USA

Rabi S. Bhagat

University of Memphis, USA

Tejinder K. Billing

University of Memphis, USA

Nakiye A. Boyacigiller

Sabanci University, Turkey

Rachel Clapp-Smith

University of Nebraska-Lincoln, USA

Charlotte A. Davis

University of Memphis, USA

P. Christopher Earley

National University of Singapore, Singapore

Michael A. Hitt

Texas A&M University, USA

Mansour Javidan

Thunderbird School of Global Management, USA

Orly Levy

Culture Crossing Consulting, Israel

Fred Luthans

University of Nebraska-Lincoln, USA

Elaine Mosakowski

University of Colorado, Boulder, USA

Charles Murnieks

University of Colorado, Boulder, USA

Luciara Nardon

Vlerick Leuven Gent Management School, Belgium

Gordon Redding

INSEAD, France

Richard M. Steers

University of Oregon, USA

Sully Taylor

Portland State University, USA

Harry C. Triandis

University of Illinois – Urbana Champaign, USA vii

PREFACE In 2006, a cover story in Business Week suggested that global forces are largely controlling the domestic U.S. economy and that there is little that the U.S. government can do. Currently, the United States imports almost $2.2 trillion in foreign goods; in contrast, the U.S. government receives approximately $2.4 trillion in revenues. And, in 2007, the costs of imports are expected to exceed government revenues. In the past, the United States has had a major influence on the world’s economy, but this influence is waning (Mandel & Dunham, 2006). The substantial development of several country economies such as in China and India and growing competition in global markets have fueled this change. These changes have heightened the importance of firms’ international strategies and increased the need for more and better research to understand how to develop such strategies and implement them successfully (Nachum & Zaheer, 2005). The importance of international strategy is shown by the influence of international activity by major multinational companies (MNCs). According to the World Investment Report (2005), major MNCs had about 54% of their sales outside their domestic market and almost 50% of their assets and employees reside outside their home country. Furthermore, in 2002, 12% of the world’s Foreign direct investment (FDI) was made by firms from emerging market countries (Hoskisson, Kim, White, & Tihanyi, 2004). For these reasons, more research on the underpinnings and outcomes of international strategy is warranted. International strategy is developed, implemented, and managed by top executives and managers in their respective companies. The increasing extent of globalization has heightened the importance of international strategy. These changes require managers to have a ‘‘global mindset’’ to develop and manage effectively the firm’s international strategy. Thus, the global mindset concept explored in this volume is highly important. We examine this concept with a series of essays written by excellent scholars with knowledge of the international environment and the contents and outcomes of a global mindset. We owe a debt of gratitude to each of these authors. ix

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PREFACE

We thank our colleagues and administrators at our respective institutions for the support and inspiration for our work on this volume. We also owe a debt of gratitude to Argie Butler for her work on compiling, integrating, and preparing the final manuscript for this volume. We are pleased to present this volume on The Global Mindset to you.

REFERENCES Hoskisson, R. E., Kim, H., White, R. E., & Tihanyi, L. (2004). A framework for understanding international diversification by business groups from emerging economies. In: M. A. Hitt & J. L. Cheng (Eds), Theories of the multinational enterprise: Diversity, complexity and relevance. Advances in International Management (pp. 137–163). Oxford, UK: Elsevier/ JAI. Mandel, M., & Dunham, R. S. (2006). Can anyone steer this economy? Business Week, November 20, 57–62. Nachum, L., & Zaheer, A. (2005). The persistence of distance? The impact of technology on MNE motivations for foreign investment. Strategic Management Journal, 26, 747–767. World Investment Report. (2005). Transnational corporations and the internationalization of R&D. Geneva, Switzerland: United Nations Conference on Trade and Development (UNTAD).

Mansour Javidan Richard M. Steers Michael A.Hitt Volume Co-Editors

THE GLOBAL MINDSET: AN INTRODUCTION Michael A. Hitt, Mansour Javidan and Richard M. Steers Limited Brands is a powerhouse in the global fashion industry with brands like Victoria’s Secret. Founded in 1963, with one women’s apparel store in Columbus, Ohio, it has grown into more than 3,500 stores and seven retail brands. It was ranked as the ‘‘most admired company’’ in the specialty retail industry by Fortune Magazine in 2003. The company’s success requires the ability to ensure that their items of fashion apparel are constantly appealing to the continuously changing tastes of their female customers. It thus hinges on the company’s agility in identifying fashion trends in a timely fashion and in working with over 300 partners and their over 1,000 factories in 40 countries to ensure timely availability of the product and its high quality. The core of Limited Brands’ agility lies in its systems of interdependencies. The company works hard at building strong interdependence systems among its fashion experts, its marketing groups, and its global network of over 300 suppliers in 40 countries based on mutual understanding of needs, expectations, strategies, and capabilities. The company invests much time and energy in recruiting suppliers from various parts of the world and managing and sustaining trusting relationships with them. But this is no easy task because the suppliers represent many different countries with diverse sociocultural, institutional, political, legal, and economic systems.

The Global Mindset Advances in International Management, Volume 19, 1–10 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19001-X

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So what types of managers and executives does a company like Limited Brands need to nurture such a complex web of global interdependencies? It needs managers who can understand and are able to deal with excessive levels of ambiguity and diversity, managers who have the appropriate knowledge about diverse sociocultural and institutional systems and have the intellectual capacity to absorb but not be paralyzed by high levels of complexity, managers who have the personal attributes that enable them to work closely and effectively with those from other cultural regions of the world, managers who can build sustainable trusting relationships with individuals, groups, and organizations in different countries to ensure that they help Limited Brands achieve its global ambitions. The cadre of managers and executives who can accomplish the above tasks possesses a very important individual feature. We call it ‘‘global mindset.’’ Global mindset is a set of individual attributes that, combined, enable the global executive to succeed in influencing those from different parts of the world to work together to achieve corporate objectives. As suggested in the example, a global mindset has become increasingly important for managers to manage and compete effectively in global markets. In fact, research has recently shown that having a global mindset is necessary for successful internationalization (Nummela, Saarenketo, & Puumalainen, 2004). Because of its importance, this book focuses on the development, content, and implementation of a global mindset in organizations. Increasing globalization has placed increasing importance on managerial global mindsets (Javidan, Dorfman, de Luque, & House, 2006). According to Friedman (2005), the world has become flatter, with many more countries and companies competing in global markets. Friedman suggests that first countries began to globalize, followed by companies and now individuals. He argues that what is going on today is much broader than what we normally refer to as globalization. It is more than communication among governments, businesses, and people and it is more than interactions among organizations. What is happening today is the emergence of new social, political, and business models and impacts deep, ingrained aspects of global societies (Friedman, 2005). This flattening of the world represents a fundamental change and requires that managers of organizations throughout the world develop and use a global mindset. As a relatively new concept, there are varying definitions of a ‘‘global mindset.’’ This variance is reflected in the multiple chapters included in this volume. The definitions vary from quite broad to exceedingly narrow. Yet, none of them conflict with one another. They are either overlapping or complementary. For the purposes of this volume, we define global mindset

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as ‘‘a set of individual attributes that enable an individual to influence individuals, groups, and organizations from diverse social/cultural/institutional systems.’’ The idea for this volume on the global mindset began with a conference on the topic held at Thunderbird School of Global Management in the fall of 2005. There were a large number of participants whose ideas helped to provide a base for this volume. We acknowledge the Thunderbird Conference on the Global Mindset and all of the participants. These participants are listed in the appendix to this volume.

LOGIC FOR THE VOLUME Because of the importance of a global mindset from both a theoretical and a practical point of view, there is need to examine this construct further to understand its contents, how it is developed, when and how it should be applied, and what its consequences are. Thus, we invited a select group of scholars to develop chapters on specific aspects of this topic to help build a volume accomplishing these goals. Our aim here was to invite the foremost thinkers and writers on this topic. Among those invited were Orly Levy, Culture Crossing Consulting; Sully Taylor, Portland State University; Nakiye Boyacigiller, Sabanci University; and Schon Beechler, Duke Corporate Education, who recently published an article, ‘‘What We Talk About When We Talk About Global Mindset,’’ in the Journal of International Business Studies. We asked them to extend their thinking for the paper appearing in this volume. Gordon Redding is a highly respected scholar of international organizational behavior, Director of INSEAD’s Euro-Asia and Comparative Research Centre, and author of numerous publications, including his call to include the influences of history and culture and emergence of institutions in developing international business theories in ‘‘The Thick Description and Comparison of Societal Systems of Capitalism’’ (Journal of International Business Studies, 2005) and his classic work in The Spirit of Chinese Capitalism (Walter de Gruyter, 1993). We asked Gordon to write about the institutional effects on the development and use of a global mindset. Gordon is a prolific author who has recently focused on the effects of informal institutions (e.g., national culture) on a global mindset. Thus, his chapter sets the stage for understanding the nuances of how a global mindset develops and its effects in different cultural settings.

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Christopher Earley (National University of Singapore) is a noted scholar in the study of individual and organizational behavior in international contexts. His work has focused on the intriguing concept of cultural intelligence (CQ: Developing Cultural Intelligence at Work, Stanford University Press, 2006, with Soon Ang and Joo-Seng Tan). We asked Chris to explore the linkages between cultural intelligence and a global mindset. He worked with Elaine Mosakowski (University of Colorado), a respected scholar of international strategy and entrepreneurship, and a younger scholar, Charles Murnieks (University of Colorado), to develop his chapter. Fred Luthans (University of Nebraska) is a highly respected scholar of organizational behavior who has studied behavior in international contexts for a number of years. He developed the concept of psychological capital and we asked him to explicate how psychological capital could be integrated with a global mindset. He worked with noted leadership scholar, Bruce Avolio (University of Nebraska), and a younger scholar, Rachel Clapp-Smith (University of Nebraska), to develop a chapter for this volume. This chapter builds on the earlier work of Luthans and Avolio with Carolyn Youssef published in Psychological Capital: Developing the Human Competitive Edge (Oxford University Press, 2006). Schon Beechler, Duke Corporate Education, and Mansour Javidan, Thunderbird School of Global Management, both noted scholars in the field, focused their attention on the relationship between leadership processes and the global mindset. This work is based on their previous work published in Beechler’s People Strategies in Global Firms (Routledge, 2004) and Javidan’s earlier work in House et al.’s Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies (Sage, 2004). Luciara Nardon, Vlerick Leuven Gent Management School, and Richard M. Steers, University of Oregon, both active researchers in the field of crosscultural management, were invited to write a chapter examining the underlying learning processes involved in developing a global mindset. This paper represents an extension of their previous work published in Managing in the Global Economy (M. E. Sharpe, 2006) by examining how managers can learn to adapt quickly to unanticipated realities on the ground in new global ventures. Finally, Rabi Bhagat (University of Memphis), a noted scholar of organizational behavior and international management, was asked to explain how managers develop a global mindset and thus become global managers. Rabi is coeditor (with Richard M. Steers) of the forthcoming Handbook of Culture, Organization, and Work (Cambridge University Press, April, 2008). Working with Rabi to develop this chapter was the highly respected industrial

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organization psychologist, Harry Triandis, who has made important contributions to the field of organizational behavior in an international context, including his classic book, Culture and Social Behavior (McGraw-Hill, 1994). Rabi and Harry were joined by Ram Baliga, a regarded scholar of international strategy, and two young scholars, Tejinder Billing (University of Memphis) and Charlotte Davis (University of Memphis). Along with our own introductory chapters and the ending chapter in which we integrate the knowledge contained in the volume to present a new model of the global mindset, this volume provides an important advance for the study and understanding of this critical new concept.

CHAPTER CONTENTS The first chapter following this introduction, by Levy, Taylor, Boyacigiller, and Beechler, focuses on explicating the global mindset domain. They argue that the global mindset has become increasingly important to academics and practitioners because of its criticality to long-term competitive advantage in global markets. They suggest that the global mindset reflects the cognitive capabilities of managers in multinational companies. They review the relevant literature for global mindset to include work on the cultural perspective, the strategic perspective, and the multinational perspective. Their chapter also presents the core properties and dimensions of the global mindset. Importantly, Levy et al. provide an integrative framework for understanding a global mindset. In this framework, they define a global mindset as ‘‘a highly complex cognitive structure characterized by an openness to and an articulation of multiple cultural and strategic realities on both global and local levels, and the cognitive ability to mediate and integrate across this multiplicity.’’ A global mindset helps managers to process critical information that allows them to navigate global markets because they are attentive to cultural and strategic dynamics and thus access multiple information sources to better analyze their global competitive landscape. Finally, they extend their earlier work by examining the importance of a fit between managers’ global mindset and the strategic capabilities of the firm. The chapter by Redding examines the challenges involved in developing a global mindset. Redding examines the challenges in developing a global mindset because of the alternative mindsets based on a variety of cultural and institutional contexts one encounters. His work takes a socioeconomic perspective to examine the emergence of different economic and cultural contexts. He then explores how these contexts affect patterns of cognition

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(connecting mindsets to economic actions). His paper uses France as an example to examine the components of a complex system that serve as antecedents to the development of a global mindset. The next chapter by Earley, Murnieks, and Mosakowski examines the interrelationship between cultural intelligence and global mindset. They argue that the concept of cultural intelligence helps to extend our understanding of the global mindset. Earley et al. suggest that a global mindset is an orientation to the world, a very broad connotation of the construct. Further, they describe a global orientation as having several components, including a curiosity about context, acceptance of complexity, sensitivity to diversity, willingness to seek opportunities in uncertainty, faith in organizational processes, emphasis on continuous improvement, an extended time perspective, and systems thinking. They then explore this concept through a review of several works focused on it. Alternatively, cultural intelligence represents ‘‘a person’s capability to adapt effectively to new cultural contexts y .’’ It includes dimensions of cognitive flexibility, acquired world knowledge and motivation to use this knowledge, and having or acquiring the capabilities to respond appropriately to each different cultural context. Earley et al. compare the global mindset and cultural intelligence constructs and conclude that cultural intelligence is broader in some ways and narrower in others. Their review suggests that it may be important to integrate cultural intelligence into the global mindset construct. We explore this further in the last chapter. Clapp-Smith, Luthans, and Avolio integrate cultural intelligence in a model linking psychological capital and global mindset. They interpret the relationship between cultural intelligence and global mindset somewhat differently compared to Earley et al. They suggest that cultural intelligence is a determinant of a global mindset and that the relationship between the two constructs is moderated by psychological capital. Their work is focused at the individual level of analysis as opposed to the organizational level. Luthans et al. use the definition of global mindset resulting from the Thunderbird conference, which is ‘‘the cognitive ability that helps individuals figure out how to best understand and influence individuals, groups, and organizations from diverse sociocultural systems.’’ Luthans et al. take a sociocognitive approach to a global mindset. They use the constructs of positive psychological capital and authentic leadership to explore the model of global mindset. They end their chapter with an interesting set of implications for the field of international management and for future research. In their chapter, Beechler and Javidan agree with Friedman (2005) that the new age of globalization is unique, creating a blurring of national boundaries

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and substantially enhancing international trade. As such, they argue that firms must be able to think and act globally. Similar to Friedman (2005), they explain the complex web of interrelationships that have developed across companies and country boundaries. Because of these new conditions, they argue that significant need exists for truly global leaders but that most firms face leadership shortages. Beechler and Javidan review the research on global leadership competencies and conclude that the number of separate competencies is almost endless, summarizing them in six categories (traits, cognitive, business expertise, vision, relationship skills, and organizing expertise). They define global leadership as ‘‘y the process of influencing individuals, groups, and organizations (inside and outside the boundaries of the global organization) representing diverse cultural/political/institutional systems to contribute toward the achievement of the global organization’s goals y,’’ whereas they define a global mindset ‘‘y as an individual’s stock of knowledge, cognitive, and psychological attributes that enable him/her to influence individuals, groups, and organizations from diverse sociocultural systems.’’ Importantly, Beechler and Javidan do an excellent job of integrating (and contrasting) the concepts of global leadership and global mindset. In so doing, they develop an interesting model of this integration. Nardon and Steers begin their chapter with an interesting example of a manager’s dealings in one day. She is located in Bangalore, India, and interacts with her business partner in California, a client in Hong Kong, Australian clients, and a partner in Mexico before she prepares for her upcoming trip to Germany. The example highlights the complexity of an international manager’s job. Nardon and Steers review the major challenges of working across cultures such as dealing with new cultures without time to learn about them, a lack of clarity as to which culture a manager should adapt to, and the increasing number of virtual intercultural meetings. Using experiential theory, they present a model to explore how individuals can learn quickly about the new cultures they encounter. This learning and adaptation helps managers develop global mindsets. Bhagat, Triandis, Baliga, Billing, and Davis focus their chapter on what is needed to become a global manager. They develop a framework to provide an understanding of the development of global mindset as a function of industry-specific, organization-specific, and person-specific antecedents. They also suggest that the global mindset evolves over time in the context of the cultural variations in which multinational firms operate. In so doing, they present examples of global managers such as Carlos Ghosn of Nissan and Jorma Ollila of Nokia. They examine the antecedents and outcomes of a global mindset. Bhagat et al. recommend a multilevel approach to the

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development and understanding of a global mindset. This chapter provides a good overview building on the earlier chapters with a micro-orientation of a global mindset. As such, it leads effectively into the final chapter. In the last chapter, the three coeditors of the book, Javidan, Steers, and Hitt, attempt to capture and codify, to the extent possible, the new knowledge on the global mindset presented in the volume. They compare and contrast the various definitions of global mindset and present an integrative definition to serve as a base for future work on the construct. They develop a model of a global mindset that highlights the contributions from the other chapters in the book. Finally, Javidan et al. present critical research questions to serve as a catalyst to future research and managerial implications of the important theme of this book. This book explores the concept of a global mindset, seeking to clarify and emphasize its importance for future research and practice. Thus, we believe this volume breaks new ground on a highly important construct in international management.

REFERENCES Bhagat, R., & Steers, R. M. (April, 2008). Handbook of culture, organization, and work. Cambridge, UK: Cambridge University Press (Forthcoming). Earley, C., Ang, S., & Tan, J.-S. (2006). CQ: Developing cultural intelligence at work. Palo Alto, CA: Stanford University Press. Friedman, T. L. (2005). The world is flat: A brief history of the twenty-first century. New York: Farrar, Straus and Giroux. House, R. J., Hanges, P. J., Javidan, M., Dorfman, P. W., & Gupta, V. (2004). Culture, leadership and organizations: The Globe study of 62 societies. Thousand Oaks, CA: Sage. Javidan, M., Dorfman, P. W., de Luque, M. S., & House, R. J. (2006). In the eye of the beholder: Cross cultural lessons in leadership from project GLOBE. Academy of Management Perspectives, 1, 67–90. Luthans, F., Youssef, C. M., & Avolio, B. (2006). Psychological capital: Developing the human competitive edge. New York: Oxford University Press. Nummela, N., Saarenketo, S., & Puumalainen, K. (2004). A global mindset – A prerequisite for successful internationalization?. Canadian Journal of Administrative Sciences, 21(1), 51–64. Pucik, V., Beechler, S., & Evans, P. (2004). People strategies in global firms. Oxford, UK: Routledge. Redding, G. (1993). The spirit of Chinese capitalism. Berlin: Walter de Gruyter. Redding, G. (2005). The thick description and comparison of societal systems of capitalism. Journal of International Business Studies, 36, 123–155. Steers, R. M., & Nardon, L. (2006). Managing in the global economy. New York: M. E. Sharpe. Triandis, H. (1994). Culture and social behavior. New York: McGraw-Hill.

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APPENDIX Bruce Avolio Olufemi Babarinde Paul Beamish Schon Beechler Dharm P. S. Bhawuk David Bowen Angel Cabrera Peter Dorfman Miriam Erez John Frankenstein Hal Gregersen Deborrah Himsel Robert Hisrich Michael A. Hitt Nora Hughes Mansour Javidan Henry W. Lane Orly Levy Stefanie Lenway Fred Luthans Nandani Lynton Thomas Murtha Luciara Nardon Luke Novelli Jone Pearce Christine Pearson Margaret Phillips Lyman Porter Sheila Puffer Lakeesha Ransom Gordon Redding Simcha Ronen Sim Sitkin Anne Stringfellow Mary Sully de Luque Stephen Tallman Mary Teagarden

University of Nebraska Thunderbird School of Global Management University of Western Ontario Duke Corporate Education University of Hawaii at Manoa Thunderbird School of Global Management Thunderbird School of Global Management New Mexico State University Technion – Israel Institute of Technology Center for Global Affairs, School of Continuing & Professional Studies, New York University London Business School Thunderbird School of Global Management Thunderbird School of Global Management Texas A&M University Intel Thunderbird School of Global Management Northeastern University Culture Crossing Consulting University of Illinois at Chicago University of Nebraska-Lincoln Thunderbird School of Gobal Management University of Illinois at Chicago Vlerick Leuven Gent Management School Center for Creative Leadership University of California at Irvine Thunderbird School of Global Management Pepperdine University of California at Irvine Northeastern University University of Minnesota INSEAD Tel-Aviv University Duke University Thunderbird School of Global Management Thunderbird School of Global Management University of Richmond Thunderbird School of Global Management

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APPENDIX (Continued ) Harry C. Triandis Anne Tsui Jutta Ulrich Paul Varella Karen Walch David Waldman John Yang

University of Illinois at Urbana-Champaign Arizona State University Thunderbird School of Global Management University of Calgary Thunderbird School of Global Management Arizona State University BIMBA-Beijing University

GLOBAL MINDSET: A REVIEW AND PROPOSED EXTENSIONS Orly Levy, Sully Taylor, Nakiye A. Boyacigiller and Schon Beechler Over the past decade, global mindset surfaced as a major long-term competitive advantage for firms competing in the global arena. Increasingly, academics and practitioners have pointed to global mindset, or the cognitive capabilities of major decision makers, as critical to organizations because of its impact on a number of key organizational success factors (Gupta & Govindarajan, 2002; Murtha, Lenway, & Bagozzi, 1998; Harveston, Kedia, & Davis, 2000; Jeannet, 2000; Levy, 2005). In a dynamic, complex world driven by fierce global competition there has been a shift from structural and administrative competencies to mindset-based competencies (Bartlett & Ghoshal, 1990). As Govindarajan and Gupta (1998, p. 2) so aptly put it: ‘‘Success is all in the [global] mindset.’’ The idea that the cognitive capabilities, or global mindset, of senior managers in multinational companies (MNCs) is central to organizational performance is not a new one; it dates back to early works by Aharoni (1966) and Kindleberger (1969) on foreign direct investment. Perlmutter (1969), however, was the first to focus attention specifically on managerial cognition by formally integrating the mindset of senior executives into his typology of MNCs. The global integration of world economy and the immense complexity involved in managing current business realities have strengthened the focus on the cognitive aspects of MNCs (Doz & Prahalad, 1991; Prahalad, 1990). As globalization increases, MNCs are exposed to concurrent and often The Global Mindset Advances in International Management, Volume 19, 11–47 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19002-1

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contradictory pressures for global integration and local responsiveness (Doz, Santos, & Williamson, 2001; Prahalad & Doz, 1987; Bartlett & Ghoshal, 1990). Because of this, senior managers must coordinate and integrate geographically distant operations and a culturally diverse workforce (Bartlett & Ghoshal, 1990). Managers are also required to address local needs and to manage the varied interorganizational relationships with a host of stakeholders, including customers, suppliers, strategic partners, and hostcountry governments (Rosenzweig & Singh, 1991). Senior managers of MNCs must therefore find ways to balance conflicting function, business, and country interests (Murtha et al., 1998; Evans & Doz, 1992). To manage these demands, both practitioners and researchers propose that managers with a global mindset are better prepared for the complex multiple organizational environments, indeterminate structures, and heterogeneous cultures that characterize contemporary MNCs (Doz & Prahalad, 1991). The increasing recognition that the cognitive capabilities of MNCs are important to firm competitiveness has generated disparate and at times conflicting definitions and frameworks but very limited empirical research in this field. Conceptually, phrases like ‘‘transnational mentality’’ (Bartlett & Ghoshal, 1989), ‘‘global mindset’’ (Rhinesmith, 1992), and ‘‘multinational mindset’’ (Caproni, Lenway, & Murtha, 1992) have found favor in both academic and popular media. However, the characteristics of these concepts remain relatively ambiguous. Global mindset has come to denote all things global or transnational, including individual attitudes, skills, competencies, and behaviors, as well as organizational orientations, structures, strategies, policies, and practices. This chapter analyzes and integrates the current thinking on global mindset, considering the significance that managerial cognition plays in MNCs’ success. The following section reviews the existing research on global mindset and identifies two major dimensions that underlie the various writings regarding global mindset. Then, we evaluate the global mindset field as a whole and present our own conceptual model of global mindset and propose some illustrative theoretical propositions. To conclude, we summarize the major contributions of our approach.

LITERATURE REVIEW In this section, we offer a careful and systematic review of the theoretical and empirical studies relating to global mindset that have been published in books and peer-reviewed journals. This review includes studies that use differing terms

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to refer to the idea of global mindset but consider the same general concept. At the same time, we exclude studies that do not specifically pertain to global mindset but concentrate on such areas as global leadership, expatriates, and expatriation, even though they may focus on similar underlying themes found in the global mindset literature. We then identify two fundamental themes in the global mindset literature – cosmopolitanism and cognitive complexity – and use these concepts to develop a new integrative approach to global mindset. We have found, in our review of the global mindset literature, that the majority of writers consider global mindset in relation to two salient dimensions of the global environment, specifically, strategic variety and complexity and/or national and cultural diversity. Accordingly, in the next section, we initially discuss Perlmutter (1969), whose work on geocentrism (global mindset) instigated subsequent research that focuses on the cultural aspect of global mindset. We label this first approach the cultural perspective, which concentrates on the cultural distance and diversity related to global markets and operations and emphasizes the challenges integral to managing across national and cultural boundaries. We propose that cosmopolitanism, as well as the attitudes and perspectives that are associated with it, functions as the fundamental premise of the cultural approach to global mindset. Next, we present Bartlett and Ghoshal’s (1989) theoretical approach and the related research on strategic complexity in international management. We label this approach the strategic perspective, which is derived from research on international strategy and concentrates on environmental complexity as well as the strategic variety arising from globalization. This perspective underscores the challenges inherent in managing multifaceted operations in geographically distant and strategically varied businesses while concurrently reacting to local conditions and needs (Prahalad & Doz, 1987). We suggest that this body of work draws on cognitive complexity and its related capabilities in conceptualizing global mindset. In the third and final section of our literature review, we present the multidimensional perspective. The work of Rhinesmith (1992, 1993, 1996) acts as the foundation for this body of work and here global mindset is conceptualized in both cultural and strategic terms while incorporating a host of additional characteristics, as we discuss below.

The Cultural Perspective Research in the cultural school of thought considers global mindset from within the context of the cultural diversity inherent in the process of

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globalization. According to this perspective, senior managers are increasingly faced with the challenge of prevailing over domestic myopia and an ethnocentric mindset, traversing cultural boundaries, interacting with employees from many countries, and managing culturally divergent interorganizational relationships. The cultural perspective suggests that the way to manage these challenges effectively is to overcome an ethnocentric mindset and cultivate a global mindset – one that includes cultural self-awareness, openness to and understanding of other cultures, and selective incorporation of foreign values and practices. The cultural perspective uses Perlmutter’s (1969) groundbreaking tripartite typology of managerial mindsets in MNCs as a conceptual foundation. Diverging from previous work in international business, Perlmutter and his colleagues (Perlmutter, 1969; Heenan & Perlmutter, 1979; Chakravarthy & Perlmutter, 1985) suggest a typology of MNCs specifically based on senior executives’ mindsets. Initially, Perlmutter (1969) made a distinction between three principal states of mind, or attitudes, toward managing a multinational enterprise: ethnocentric (home-country orientation), polycentric (host-country orientation), and geocentric (world orientation). Perlmutter proposed that these orientations affect and mold various characteristics of the multinational enterprise, including structural design, strategy and resource allocation, and, in particular, management mindset and processes. Managers with a geocentric orientation, or a global mindset, exhibit universalistic, supranational approaches, deemphasizing the importance of cultural distinction and nationality when deciding who is capable or reliable (Perlmutter 1969). Superiority and nationality are not considered as equivalent since ‘‘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 acts as a foundation for many of the current conceptualizations of global mindset that concentrate on the challenge of overcoming embedded ethnocentrism and rising above nationally entrenched views (e.g., Maznevski & Lane, 2004; Doz et al., 2001; Adler & Bartholomew, 1992a; Estienne, 1997). For example, Maznevski and Lane (2004) describe global mindset as a metacapability typified by two corresponding facets: 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. They define global mindset as ‘‘the ability to develop and interpret criteria for personal and business performance that are independent from the assumptions of a single country, culture, or context; and to implement those criteria appropriately in different countries, cultures, and contexts’’ (Maznevski & Lane, 2004,

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p. 172). The notion that going beyond national borders and developing complex cultural knowledge is vital for firm success is also central to Adler and Bartholomew’s (1992a) discussion of the ‘‘transnational manager.’’ They assert that while the traditional international manager views the world from a single-country perspective, the transnational manager has a global perspective characterized by knowledge of, and appreciation for, many foreign cultures. In addition to focusing on perspectives, research within the cultural perspective stream often discusses global mindset in terms of cross-cultural skills and abilities (Adler & Bartholomew, 1992a; Estienne, 1997).1 Kobrin (1994) conducted the first empirical study that explicitly examined the construct of geocentrism, or global mindset, as defined by Heenan and Perlmutter (1979). He examined the popular supposition that firms with a global, integrated strategy and/or a global organizational structure will have a geocentric mindset. Kobrin concludes from his research results that while there is an association between a geocentric mindset and the geographic scope of the firm, the direction of causality is not clear. He proposes that global mindset should be considered a multidimensional construct rather than a unidimensional reflection of firm-level characteristics. Several studies (Beechler, Levy, Taylor, & Boyacigiller, 2004; Taylor, Levy, Boyacigiller, & Beechler, forthcoming) also demonstrate that employees’ perceptions of geocentrism are positively related to organizational commitment. An Underlying Dimension of the Cultural Perspective: Cosmopolitanism Reviewing the literature on global mindset within the cultural perspective, we find that while most writers do not specifically cite the construct, cosmopolitanism, and the attitudinal approach coupled with it, serves as an underlying theme of the cultural stance to global mindset and therefore should be considered to be one of the major conceptual dimensions of the global mindset construct. Cosmopolitanism, and the distinction between cosmopolitans and locals, first appeared in the social sciences in the 1950s (Merton, 1957; Gouldner, 1957).2 After having fallen out of favor for a period of time, cosmopolitanism staged a comeback in the 1990s with the increased development and proliferation of global systems and transnational cultures (see Hannerz, 1996; Harvey, 2000; Beck, 2000; Breckenridge, Pollock, Bhabha, & Chakrabarty, 2000; Vertovec & Cohen, 2002a; Archibugi, 2003).3 In their appraisal of work on cosmopolitanism, Vertovec and Cohen (2002b, p. 4) propose that cosmopolitanism simultaneously: (a) transcends the nationstate model; (b) reconciles actions and ideals that are oriented toward both the universal and the particular, the global and the local; (c) is against

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cultural essentialism; and (d) embodies a variety of complex repertoires of identity, interest, and allegiance. On a more individual or personal level, cosmopolitanism signifies a ‘‘y perspective, a state of mind, or – to take a more process-oriented view – a mode of managing meaning’’ (Hannerz, 1996, p. 102). ‘‘Genuine’’ cosmopolitans are identified by their ‘‘willingness to engage with the Other y openness toward divergent cultural experiences, a search for contrasts rather than uniformity y.’’ (Hannerz, 1996, p. 163; italics added). Simultaneously, however, cosmopolitanism has been defined as ‘‘y a matter of competence y a personal ability to make one’s way into other cultures, through listening, looking, intuiting, and reflecting’’ (Hannerz, 1996, p. 193). Even though cosmopolitans are often travelers by nature and are generally engaged with global systems and transnational cultures, many writers suggest that ‘‘y it is not travel that defines cosmopolitans – some widely traveled people remain hopelessly parochial – it is mindset’’ (Kanter, 1995, p. 23).4 In our framework, cosmopolitanism represents a state of mind that is focused on the outside, the other, and seeks to reconcile the local and the global, the familiar and the foreign. A second crucial characteristic of cosmopolitanism is openness, an eagerness to investigate and learn from others’ meaning systems. Together, these two characteristics act as the foundation for the cultural perspective in the literature on global mindset.

The Strategic Perspective While the studies reviewed above all highlight the significance of recognizing cultural diversity and transcending national borders, studies framing global mindset through a strategic lens consider global mindset in terms of the increased complexity produced by globalization. MNCs are faced with the challenge of successfully managing environmental and strategic complexity and incorporating geographically distant operations and markets, while concurrently acting in response to local demands (Prahalad & Doz, 1987; Prahalad, 1990; Kim & Mauborgne, 1996; Sanders & Carpenter, 1998). The strategic perspective on global mindset is founded on international strategy research that was conducted at Harvard in the 1970s and 1980s, particularly the innovative research of Bartlett and Ghoshal (1989, 1990, 1992). Bartlett and Ghoshal classify the transnational organization as the ideal organization, which is not a distinct strategic posture or a specific organizational structure but is rather a new management mentality that ‘‘recognize(s) that

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environmental demands and opportunities vary widely from country to country y (and) also recognize(s) that different parts of the company possess different capabilities’’ (Bartlett & Ghoshal, 1989, p. 64). The literature in the strategic perspective is founded on the assertion that the increased complexity, heterogeneity, and indeterminacy of MNCs (Doz & Prahalad, 1991) can no longer be managed by structural and administrative mechanisms (Prahalad & Bettis, 1986; Doz & Prahalad, 1991; Evans, Pucik, & Barsoux, 2002). Accordingly, this perspective proposes that the key determinant of strategic capabilities of an MNC lies in cultivating a complex managerial mindset (e.g., Bartlett & Ghoshal, 1989; Caproni et al., 1992; Murtha et al., 1998; Paul, 2000). Thus, the properties of global mindset are depicted in terms of high cognitive abilities and information-processing capabilities that allow managers to understand complex global dynamics (e.g., Jeannet, 2000; Tichy, Brimm, Charan, & Takeuchi, 1992), balance between competing demands and concerns (e.g., Murtha et al., 1998; Begley & Boyd, 2003), reconcile the tensions between the local and the global (e.g., Kefalas, 1998; Arora, Jaju, Kefalas, & Perenich, 2004), differentiate between and integrate across cultures and markets (e.g., Govindarajan & Gupta, 2001; Gupta & Govindarajan, 2002), and examine and attend to global issues (e.g., Rhinesmith, 1993; Levy, 2005; Bouquet, 2005). In defining global mindset, for instance, Jeannet (2000, p. 11) underscores the capacity to assimilate across domains: ‘‘[global mindset is] y a state of mind able to understand a business, an industry sector, or a particular market on a global basis. The executive with a global mindset has the ability to see across multiple territories and focuses on commonalities across many markets rather than emphasizing the differences among countries.’’ Jeannet points to a number of essential components of global mindset: evaluating global markets, assessing globalization pathways, and offering a sufficient strategic response. Jeannet suggests that global mindset is not solely a linear extension of the multinational mindset; it diverges significantly in terms of thinking patterns, responses, and cognitive skills. Jeannet (2000) also employs the notion of global mindset at the corporate level, defining it as ‘‘those cultural aspects of a company that define the extent to which the firm has learned to think, behave, and operate in global terms’’ (Jeannet, 2000, p. 199). He asserts that even having a pool of managers that possess a global mindset is not sufficient if a company’s structure, processes, and behavior do not also support the same principles. While some authors (Jeannet, 2000; Tichy et al., 1992) characterize global mindset in relation to managers’ abilities to appreciate, distinguish, and integrate across complex global dynamics, a few studies within the strategic

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perspective group focus on effectively balancing global integration with local responsiveness (e.g., Murtha et al., 1998; Begley & Boyd, 2003) or on reconciling the tension between ‘‘thinking globally’’ and ‘‘acting locally’’ (e.g., Kefalas, 1998; Arora et al., 2004). Murtha et al. (1998), for example, depict global mindset as the ‘‘cognitive processes that balance competing country, business, and functional concerns’’ and assess the correlation between global mindset and cognitive shift. In their study, Murtha et al. (1998) observe that the transformation in global strategy of a major MNC brought about a cognitive shift among managers in the organization toward a more global mindset. Begley and Boyd (2003) similarly focus on mediating the tension between the global and the local, analyzing global mindset at the corporate level. Echoing Jeannet (2000), Begley and Boyd (2003) contend that in order to embed global mindset on an organization-wide level, supporting policies and practices must be in place to manage tensions relating to structural (global formalization vs. local flexibility), processual (global standardization vs. local customization), and power (global dictates vs. local delegation) concerns. Likewise, Kefalas (1998) and Arora et al. (2004) focus on the tension between ‘‘thinking globally’’ and ‘‘acting locally.’’ Kefalas maintains that global mindset 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 (Kefalas, 1998; Arora et al., 2004). Utilizing Kefalas and colleagues’ approach to global mindset (e.g., Kefalas, 1998; Kefalas & Neuland, 1997; Kefalas & Weatherly, 1998), Arora et al. (2004) find 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, 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 statistically significant effect on managers’ global mindset. Govindarajan and Gupta (2001) and Gupta and Govindarajan (2002) similarly view the capacity to concurrently consider local cultures and markets and global dynamics when making decisions as the central attribute of global mindset. They define global mindset as a knowledge structure characterized by both high differentiation and high integration and ‘‘y one that 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, p. 111). These authors characterize global mindset at the corporate level as the aggregated mindsets of individuals

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adjusted for the distribution of power and mutual influence among the group. Govindarajan and Gupta (2001) concede that the highest returns on investment in developing a global mindset will derive from a stronger focus on senior level managers. Nonetheless, their unequivocal 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 mindset in every unit and every employee. Three empirical studies (e.g., Harveston et al., 2000; Nummela, Saarenketo, & Puumalainen, 2004; Bouquet, 2005) investigate the relationship between firm strategic position, market characteristics, and global mindset. Harveston and colleagues observe that managers in firms that are ‘‘born global’’ have a stronger global mindset, more international experience, and higher risk tolerance than managers of gradually globalizing firms. Likewise, Nummela et al. (2004) demonstrate 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 mindset; management experience, measured as international work experience, is also positively related to global mindset, while international education is not. Finally, Bouquet (2005) considers the relationship between a firm’s decision environment and top management team (TMT) global mindset. He defines global mindset as attention to global strategic issues and identifies attention as the core element and, therefore, the primary expression of global mindset. He hypothesizes that attention structures such as structural positions related to globalization and global meetings, which firms establish to regulate the distribution of attention of managers in the firm, will mediate the relationship between firms’ decision environments and TMT attention. Bouquet’s (2005) research empirically supports the hypothesized relationships. Moreover, the results demonstrate a concave relationship between TMT attention to global issues and firm performance. He (2005) concludes that both inadequate and excessive amounts of TMT attention to global strategic issues can have a negative impact on firm performance; in other words, contrary to accepted wisdom, more global mindset is not always better. In contrast to the above studies that examine the relationship between a firm’s characteristics and global mindset, Levy (2005) analyzes the relationship between TMT attention patterns, deemed a primary manifestation of global mindset, and a firm’s global strategic posture. She finds consistent support for the proposition linking TMT attention patterns and global strategic posture, concluding 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.

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Other relevant studies at the TMT level used background characteristics of team members, especially international experience, as a proxy for global mindset, broadly defined: ‘‘y international experience may be a surrogate for cultural knowledge or a global mind set which captures the skills necessary for successfully formulating and implementing an international strategy’’ (Peyrefitte, Fadil, & Thomas, 2002, p. 496). The underlying premise is that international experience exposes executives to different cultures, value systems, languages, and institutional environments (Carpenter, Sanders, & Gregersen, 2001) as well as to diverse information and knowledge sources. This exposure results in superior cross-cultural and cognitive abilities or ‘‘new ways of learning and responding to stimuli because of socio-cultural differences’’ (Ricks, Toyne, & Martinez, 1990, p. 220). These studies examine the relationship between international experience and a variety of organizational outcomes, including internationalization (Sambharya, 1996; Reuber & Fischer, 1997; Tihanyi, Ellstrand, Daily, & Dalton, 2000; Carpenter & Fredrickson, 2001; Athanassiou & Nigh, 2002; Peyrefitte et al., 2002; Tseng, Tansuhaj, & Rose, 2004; Caligiuri, Lazarova, & Zehetbauer, 2004), financial performance (Roth, 1995; Daily, Certo, & Dalton, 2000; Carpenter et al., 2001), choice of entry mode (Herrmann & Datta, 2002), and learning (Yeoh, 2004). For example, Sambharya (1996), Reuber and Fischer (1997), Tihanyi et al. (2000), Carpenter et al. (2001), Athanassiou and Nigh (2002), Peyrefitte et al. (2002), and Tseng et al. (2004) find a positive relationship between international experience of top management and internationalization. However, Athanassiou and Nigh (2002) find that the impact of international experience of each individual TMT member on internationalization is not equal, but rather weighted by his or her centrality within the team. As a result, international experience counts for more or less, depending on the structural position of the individual team member (Athanassiou & Nigh, 2002). Similarly, Caligiuri et al. (2004) also focus on internationalization, but use national diversity of the TMT as an indicator of international experience rather than individual international experience. They observe a positive relationship between national diversity of the TMT and internationalization. Daily et al. (2000) and Carpenter et al. (2001) find a positive association between international experience of senior executives and a firm’s financial performance. Daily et al. (2000) also note that the degree of internationalization of the firm moderates the relationship between international experience and performance. While Roth (1995) observes that international experience measured in terms of managing international activities has no direct or interactive effect on performance, international experience measured by overseas assignments has a direct

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effect when there is a high degree of internationalization and a negative effect when there is a low degree of internationalization. An Underlying Dimension of the Strategic Perspective: Cognitive Complexity Although it is rarely overtly mentioned in the literature, cognitive complexity and the cognitive capabilities associated with it, serves as an underlying theme of the strategic perspective and should therefore be considered a second major conceptual dimension of global mindset. Research on cognitive complexity dates back to the 1950s (e.g., Bieri, 1955; Harvey, Hunt, & Schroder, 1961; Schroder, Driver, & Streufert, 1967; Schroder & Suedfeld, 1971; Streufert & Nogami, 1989; Streufert, Pogash, & Piasecki, 1988; Streufert & Streufert, 1978; Streufert & Swezey, 1986). In the realm of management, the complexity of managerial cognition has been accepted for quite some time as a major factor impacting decision making, strategic choice, and organizational performance (Weick, 1979; Kiesler & Sproull, 1982; Bartunek, Gordon, & Weathersby, 1983; Schwenk, 1984; Duhaime & Schwenk, 1985; Ginsberg, 1990; Miller, 1993). Cognitive complexity represents the degree of differentiation, articulation, and integration within a cognitive structure (Bartunek et al., 1983; Weick & Bougon, 1986). In other words, a cognitive structure composed of a relatively large number of well-integrated and finely articulated components is considered relatively complex. Whereas cognitive complexity generally denotes the structural dimension of a cognitive structure (i.e., the internal organization of information units), the structural and content (i.e., specific information units or knowledge) dimensions become intertwined when considering cognitive complexity in relation to a specific information domain. To be more precise, an individual is unable to form a complex representation of the information domain without sufficient knowledge. Thus, our conceptualization of cognitive complexity incorporates both the structural and the knowledge dimensions that are essential to form complex representation and understanding. Studies on cognitive complexity have routinely found that cognitively complex individuals have more advanced information-processing capabilities. Cognitively complex people seek out more extensive and original information (Dollinger, 1984; Karlins & Lamm, 1967; Streufert & Swezey, 1986), spend more time interpreting it (Dollinger, 1984; Sieber & Lanzetta, 1964), identify a larger number of dimensions, and concurrently are able to possess and employ a number of opposing and complementary explanations (Bartunek et al., 1983). Cognitive complexity has also been associated with a tolerance for ambiguity (Streufert, Streufert, & Castore, 1968), an ability to

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have more well-rounded impressions (Streufert & Swezey, 1986), a capacity to reframe problems (Lepsinger, Mullen, Stumpf, & Wall, 1989; Merron, Fisher, & Torbert, 1987), an ability to balance contradictions, and a consideration of more alternative points of view (Chang & McDaniel, 1995). In the multinational context, for instance, cognitive complexity is necessary to simultaneously balance the often conflicting demands of global integration and local responsiveness. Together, these works confirm the importance of cognitive complexity and, subsequently, the damaging consequences of cognitive simplicity in a complex, rapidly changing world.

The Multidimensional Perspective In addition to the two perspectives described above, a third approach to global mindset integrates both the cultural and the strategic dimensions, augmenting them with several additional attributes. The research utilizing the multidimensional perspective, increasingly manifest in the literature beginning in 1994, has been profoundly influenced by the work of Rhinesmith (1992, 1993, 1996), whose description of global mindset blends concepts from both the cultural and the strategic perspectives. Rhinesmith defines mindset as ‘‘a way of being, not a set of skills y. It is an orientation to the world that allows you to see certain things that others do not see. A ‘global’ mindset means that we scan the world from a broad perspective, always looking for unexpected trends and opportunities’’ (Rhinesmith, 1992, p. 63). Rhinesmith (1992, p. 64) contends that people with global mindsets 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, are not threatened by surprises or uncertainty, and aspire to be open to themselves and others. According to Rhinesmith, global mindset thus 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. Rhinesmith’s approach to global mindset epitomizes a multidimensional perspective, as he not only integrates cultural and strategic dimensions but also focuses on individual characteristics, drawn from the literature on global leadership. Much of the research in the multidimensional perspective builds directly on Rhinesmith’s work (Ashkenas, Ulrich, Jick, & Kerr, 1995; Srinivas, 1995; Neff, 1995; Kedia & Mukherji, 1999; Paul, 2000). In addition to describing

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global mindset in terms of the capacity to distinguish and comprehend complex and often unanticipated business, cultural, and geopolitical dynamics, authors employing the multidimensional perspective cite a variety of characteristics when describing global mindset. For example, Kedia and Mukherji (1999) assert that global mindset is distinguished by openness and a capacity to identify complex interrelationships. Drawing on Rhinesmith (1993) and Kefalas and Neuland (1997), Kedia and Mukherji (1999) contend that the three key components that distinguish a global mindset are: (1) a unique time perspective, (2) a unique space perspective, and (3) a general predisposition to be open-minded toward other peoples and cultures, to think of cultural diversity as an asset, to thrive on ambiguity, to balance conflicting viewpoints and demands, and to reframe boundaries (Kedia & Mukherji, 1999). In addition, Kedia and Mukherji make use of work in the global leadership literature, noting that global mindset also consists of an emotional connection, a capacity to balance conflicting tensions, an aptitude for managing ambiguity, and savvy (Gregersen, Morrison, & Black, 1998). Furthermore, they maintain that managers need both a global mindset and a specific supportive skill and knowledge set to be globally effective.

DISCUSSION As demonstrated in the literature review, current views on global mindset can be organized into cultural, strategic, and multidimensional perspectives. There are inconsistencies both within and across these perspectives, however, and conceptual opacity in the field as a whole. Definitions and the global mindset construct vary extensively throughout the research, as do the level of analysis and the operationalization of global mindset. Empirical studies additionally have reported inconsistent and conflicting findings. Due to this multiplicity of results and viewpoints, we present a critical reading of the literature as a first step toward creating a thorough and more theoretically grounded research agenda.

The Core Properties of Global Mindset The most significant discrepancy in the current literature involves the core properties of global mindset. The above literature review reveals that studies offer diverse definitions of global mindset. Its central characteristics are described in three, somewhat discrete, sets of terms. The first set of terms is

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cognitive, where studies describe the core properties of global mindset using cognitive and information-processing characteristics. Some examples are ‘‘knowledge structure,’’ ‘‘cognitive structure,’’ ‘‘ability to develop and interpret,’’ ‘‘attention,’’ ‘‘sense making,’’ and ‘‘conceptualization and contextualization abilities.’’ The second set of descriptors is existentialist; these studies describe global mindset using terms such as a ‘‘way of being,’’ ‘‘state of mind,’’ ‘‘orientation,’’ ‘‘openness,’’ and ‘‘awareness,’’ although a thorough reading of these definitions also reveals a strong cognitive slant. The third set of terms is behavioral, where studies describe global mindset in behavioral, dispositional, and competency-related terms such as ‘‘propensity to engage,’’ ‘‘ability to adapt,’’ ‘‘curiosity,’’ and ‘‘seeking opportunities,’’ to name a few. Clearly, this multiplicity of terms and perspectives on global mindset, which employ diverse and discrete theoretical and research perspectives, is a significant challenge for theoretical integration of the field.

Dimensionality of Global Mindset Global mindset has been defined and measured as both a unidimensional and a multidimensional construct. The unidimensional conceptualizations principally concentrate on the cross-cultural features of global mindset. On the other hand, the multidimensional approaches, which often draw on the international strategy literature, consider global mindset in the context of localization and integration challenges.5 In this chapter, we maintain that there are two principal dimensions – cultural and strategic – that should be incorporated in the conceptualization and measurement of global mindset. Furthermore, the multidimensionality and level of complexity of the global environment indicate that global mindset should be conceptualized as a multidimensional construct.

Level of Analysis Studies on global mindset have been carried out at several levels of analysis (i.e., individual, group, and organization). Therefore, global mindset as represented in the current literature can tentatively be deemed a multilevel construct, subsequently involving both conceptual and methodological concerns particular to multilevel research (see Rousseau, 1985, for a discussion of methodological issues that arise from multilevel research). While there are a variety of perspectives, there is a surprising lack of debate on this issue of

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multilevel analysis; one of the fundamental questions emphasized by our literature review is therefore whether global mindset can indeed be considered an attribute of individuals, groups, and organizations. An additional related question is whether the global mindset constructs posited and evaluated at different levels are isomorphic, partially identical, or only weakly related (Rousseau, 1985).6 For instance, researchers often mention individual and organizational global mindsets (Govindarajan & Gupta, 1998; Bartlett & Ghoshal, 1989), but do not answer the question of whether these constructs are identical across levels.

Operationalization of Global Mindset Operationalization of global mindset is yet another area of methodological concern. Global mindset has been operationalized using varied measures and data sources, from both across and within theoretical levels, in some instances as a unidimensional construct and in others as a multidimensional construct. Evaluation at the individual level utilizes self-report questionnaires assessing two key measures: individual preferences and attitudes (Arora et al., 2004; Gupta & Govindarajan, 2002) and individual expectations about the MNC’s global strategy (Murtha et al., 1998). At the team level, studies employ textual and behavioral measures of TMT global mindset (Levy, 2005; Bouquet, 2005); and studies at the organizational level develop perceptual data of globalization-related organizational policies and practices (Kobrin, 1994; Gupta & Govindarajan, 2002). This range of measures, which reveals the conceptual heterogeneity and ambiguity discussed earlier, necessitates a critical evaluation of the content and construct validity of the various measures at each level of analysis (levelspecific validity). Generally, establishing content validity would entail identifying the pertinent content domain of global mindset at each level of analysis. Establishing construct validity would involve constructing a theoretical network of constructs – antecedents and/or outcomes – that relate to global mindset in a consistent, theoretically predicted manner (Carmines & Zeller, 1979).7 These theoretical specifications may prove to be extremely challenging for an abstract construct such as global mindset. Even so, a critical first step toward ascertaining a level-specific operationalization of global mindset would be to delineate the pertinent universe of content that defines global mindset at each theoretical level and to clarify the theoretical relationships between global mindset and its antecedents and/or outcomes.

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Empirical Research While there have been very few empirical studies of global mindset to date, our literature review indicates that researchers have taken multiple perspectives and approaches. Furthermore, because of this diversity of perspectives and inconsistent findings, only a handful of conclusions can be derived regarding the empirical relationships between global mindset and other individual- or organizational-level variables. One of the most fundamental questions, for instance, is whether global mindset precedes strategy and structure or vice versa. Levy (2005) observes a significant relationship between global mindset and global strategy, concluding that TMT global mindset drives globalization. Research that investigates the relationship between international experience and internationalization has produced comparable conclusions (e.g., Sambharya, 1996; Reuber & Fischer 1997; Tihanyi et al., 2000; Carpenter & Fredrickson, 2001; Athanassiou & Nigh, 2002; Peyrefitte et al., 2002; Tseng et al., 2004). In contrast, works by Murtha et al. (1998), Nummela et al. (2004), and Harveston et al. (2000) demonstrate that managerial global mindset follows strategy, rather than the other way around. Another study by Bouquet (2005) proposes that the relationship between TMT global mindset and firm characteristics is mediated by the firm’s attention structure and that the association between these characteristics and global mindset is complex. Last, and divergent from the other findings described above, Kobrin (1994) and Arora et al. (2004) conclude that global mindset is not related to firm characteristics. An additional significant question at the organizational level involves the effect of global mindset on firm performance. The evidence regarding this matter is slight and once again contradictory. Nummela et al. (2004) find a positive relationship between global mindset and financial indicators of the international performance of firms and no relationship between global mindset and managers’ subjective evaluations of performance. Daily et al. (2000) and Carpenter et al. (2001) find a positive relationship between international experience of senior executives and firm’s financial performance. At the same time, Daily et al. (2000) and Roth (1995) observe that the relationship between international experience and performance is moderated by the firm’s degree of internationalization. Bouquet (2005), in contrast, finds a curvilinear relationship between TMT attention to global issues and firm performance. As a final point, surprisingly little is understood regarding the empirical relationship between global mindset and individual characteristics. Although a small number of writers in the field of global leadership investigate

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this matter (e.g., McCall & Hollenbeck, 2002; Maznevski & Lane, 2004), Arora et al. (2004) offer the only evidence that individual characteristics such as foreign country job, foreign country living experience, and international management training are related to managers’ global mindset. Nummela et al. (2004) present tangential evidence for this relationship, with their finding that TMT international work experience is positively related to global mindset, while TMT international education is not related to global mindset.

GLOBAL MINDSET, INFORMATION PROCESSING, AND MANAGERIAL PERFORMANCE: AN INTEGRATIVE FRAMEWORK In this section of the chapter, we suggest an approach to global mindset that incorporates concepts from the literature reviewed above, drawing on the constructs of cosmopolitanism and cognitive complexity. We deliberately focus our discussion on global mindset at the individual level of analysis and define it at this level. We additionally, however, discuss global mindset at the group and organizational levels and propose that it can be considered across multiple levels. Furthermore, although we recognize that others have incorporated a number of skills and traits in their characterizations of global mindset, we focus chiefly on the cognitive properties of global mindset because we consider them to be the construct’s most fundamental elements.

Defining Global Mindset We view global mindset as an individual-level construct that represents a distinctive multidimensional cognition. We therefore view global mindset as an individual-level cognitive structure or, in more general terms, as a knowledge structure. We define global mindset as 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. More specifically, global mindset is typified by three corresponding aspects: (1) an openness and attentiveness to multiple realms of action and meaning, (2) a complex representation and articulation of cultural and strategic dynamics, and (3) a mediation and integration of ideals and actions oriented toward both

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global and local levels. These three aspects generate a multidimensional continuum along which global mindset can be measured and appraised. Accordingly, individuals with the highest levels of global mindset are concurrently aware of and open to multiple realms of meaning and action and are capable of bridging and synthesizing across these realms. While we initially define global mindset at the individual level, as a cognitive construct, it can also be considered an attribute of groups and organizations and examined across multiple levels (Walsh, 1995; Schneider & Angelmar, 1993). In defining global mindset at the group and organizational levels, we take the position of methodological individualism that views system-level phenomenon as the result of orientations, actions, and interactions of individuals (Elster, 1989). Accordingly, global mindset can be conceptualized at the group or organizational level as a shared cognitive structure, which emerges out of actions and interaction among individuals. As Walsh (1995, p. 291) expresses it: y when a group of individuals is brought together, each with their own knowledge structure about a particular information environment, some kind of emergent collective knowledge structure is likely to exist. This group-level representation of an information environment would act just like an individual’s knowledge structure. It too functions as a mental template that when imposed on an information environment gives it form and meaning, and in so doing serves as a cognitive foundation for action.

This emergent shared cognition represents an aggregation of individual cognitive structures, which should take into account uneven power and influence of certain individuals within the group or organization (Walsh, 1995; Govindarajan & Gupta, 2001). However, we do not assume that the emergent cognition consists of nothing more than individuals’ cognitions, orientations and actions taken in the aggregate (Coleman, 1990). Nor do we claim that the emergent cognition is intended or predicted by the individuals. Rather, we suggest that the actions and interactions among individuals are manifested in emergent shared cognition.

Global Mindset and Information Processing The significance of global mindset hinges on the proposition that cognitive structures both represent and order an information domain and also extensively influence information processing. We investigate this connection by analyzing how global mindset shapes the cognitive capabilities of individuals and their decision-making patterns, thus exerting considerable influence on managerial action and the firms’ strategic capabilities.

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Our framework is founded on the information-processing theory.8 Analytically, we begin with a basic information-processing model comprising three stages: attention (or information acquisition), interpretation, and action (Daft & Weick, 1984). Generally, the information-processing model is based on three underlying assumptions. First, individuals have limited information-processing capabilities and consequently focus on only certain aspects of the environment while ignoring others (Sproull, 1984). Second, environmental information undergoes an interpretation process that gives structure and meaning to the data (Daft & Weick, 1984). Third, these interpretations affect action (Daft & Weick, 1984; Dutton & Duncan, 1987; Kiesler & Sproull, 1982). Cognitive structures, including global mindset, influence the attention and interpretation processes, subsequently shaping future action. Furthermore, the impact of individual cognitive structures is especially marked in dynamic and complex environment that is characterized by information overabundance, uncertainty, and ambiguity. Under such conditions, when the environment does not supply clear cognitive cues, attention and interpretation patterns tend to reflect individual dispositions rather than environmental constraints (Abrahamson & Hambrick, 1997). Drawing on the literature on cosmopolitanism and cognitive complexity, we can describe the effect of global mindset on the process of ‘‘noticing and constructing meaning’’ (Kiesler & Sproull, 1982) under the conditions of rapid change, uncertainty, and complexity that characterize the global environment. At the attentional or information-gathering stage, cognitive structures influence attention patterns by guiding attention toward certain facets of the environment, while ‘‘blocking’’ others; hence, cognitive structures function as a lens through which individuals observe their environment. Global mindset consequently shapes information-processing patterns by directing attention to diverse sources of information about both global and local environments. Cosmopolitanism fosters an open-minded and nonjudgmental perception of information, allowing individuals to be open to, and to acquire information from, a number of sources regardless of their national or cultural origin. Simultaneously, cognitive complexity enables individuals to perceive and articulate more information elements and to integrate them into more complex schemas. We therefore propose: P1. Individuals who have a global mindset will pay attention to cultural and strategic dynamics on both global and local levels and will access multiple and diverse information sources upon which to base decisions. However, the impact of cognitive structures goes beyond influencing attention and information acquisition to affect interpretative patterns. During

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the interpretation stage, cognitive structures affect the process of ‘‘sense making’’ or how information is perceived, interpreted, assimilated, and understood (Daft & Weick, 1984). As described above, global mindset is characterized by openness and high levels of differentiation and integrative capacity. Information is therefore not only perceived, but also evaluated irrespective of its national or cultural origin. Likewise, individuals with high integrative abilities can amalgamate information from diverse and improbable sources and incorporate varied interpretative frameworks into the decision-making process. Last, reflexive interpretative processes can lead to the construction of a new and more complex understanding of the environment (Barr, Stimpert, & Huff, 1992). Consequently, global mindset influences interpretative processes by encouraging the nonprejudicial and nonjudgmental perception and evaluation of information, incorporation of information from various sources, and deliberation on both the interpretative process itself and existing mental models. Individuals with a global mindset are more likely to reach complex, innovative, and unconventional explanations that do not simplify global realities, but rather present them in all their complexity, ambiguity, and indeterminacy. Hence, we propose that: P2. Individuals who have a global mindset are likely to develop more complex and multifaceted conceptualizations of cultural and strategic dynamics on both global and local levels. Global Mindset and Effective Managerial Action As suggested earlier, the attention and interpretation processes associated with global mindset influence individuals’ effectiveness in a global context. However, going beyond the confines of a single cultural or strategic view and considering multiple perspectives is insufficient for effective managerial action. Research in international management suggests that a set of core skills and competencies is required for effective managerial behavior in the global arena (Mendenhall & Osland, 2002; Von Glinow, 2001). For example, Bird and Osland (2004) develop a framework of global competencies of which global mindset constitutes one of its building blocks. At the base of this pyramid-shaped framework, we find global knowledge and a set of four personality traits: integrity, humility, inquisitiveness, and hardiness. According to Bird and Osland (2004), the possession of adequate knowledge along with the prerequisite traits allows for the development of global mindset. However, these foundational competencies – knowledge,

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traits, and mindset – do not translate into effective managerial behavior unless the individual has the necessary interpersonal and system skills and abilities. At the interpersonal level, Bird and Osland (2004) specify the following two skills: mindful intercultural communication and the ability to build and create trust. At the system level, they denote the following skills: the ability to span boundaries, to build community through change, and to make ethical decisions. Bird and Osland (2004) also note that identifying a list of essential skills as opposed to making a comprehensive list of global leadership competencies is not an easy task. For the purpose of our discussion, however, we can conclude that while global mindset is a critical competency, effective managerial action in a global context requires additional skills and abilities. Therefore, we suggest the following general proposition: P3a. Individuals who have a global mindset are likely to exhibit effective managerial action in a global context if they also possess the requisite set of skills and abilities. We should also note, 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 mindset. In this context, an interesting and yet unaddressed question is whether a person can develop the requisite set of skills and abilities without at least concurrently developing a global mindset. Drawing on Earley and Mosakowski (2004), we would argue that it is in fact difficult to develop the requisite set of interpersonal and system skills and abilities without a fairly high level of global mindset. These authors call this set of skills and abilities ‘‘cultural intelligence,’’ defined generally as when ‘‘y a person grasps what makes us human and at the same time what makes each of us different from one another’’ (Earley & Mosakowski, 2004, p. 2) and is able to adjust behavior accordingly. Cultural intelligence has three sources: cognitive understanding of what makes a culture unique, driven by innate curiosity and a learning attitude; behavioral flexibility, the ability to ‘‘y receive and reciprocate gestures that are culturally characteristic’’; and finally 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 s/he understands the reasons for the behavior. Moreover, in-depth knowledge of a culture is necessary to know how to adjust behavior correctly in a myriad

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of unforeseen situations. Earley and Erez (1997) argue that this understanding begins with self-knowledge before proceeding to building knowledge about another culture. A person with high cosmopolitanism is more likely to exhibit the curiosity and openness that are necessary to accumulate this depth of knowledge about other cultures. In short, we would argue that a global mindset, 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 we also recognize that the two are most likely self-reinforcing. P3b. The acquisition of the set of interpersonal and system skills and abilities necessary for effective managerial action in a global context is preceded by the acquisition of a significant level of global mindset, particularly cosmopolitanism. Global Mindset and Strategic Capabilities of Firms The ‘‘noticing and constructing meaning’’ processes linked to global mindset may 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 suggest that information-processing capabilities of employees, especially those in senior positions, have a very strong effect on strategic response (e.g., Hambrick & Mason, 1984; Stubbart, 1989; Barkema & Vermeulen, 1998; Egelhoff, 1991; Finkelstein & Hambrick, 1996; Nystrom & Starbuck, 1984; Ford, 1985; Thomas, Clark, & Gioia, 1993). 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 (Daft & Weick, 1984; Smircich & Stubbart, 1985; Carpenter & Fredrickson, 2001). Senior managers, therefore, interpret issues applicable to strategic decision making and will typically have the status required to execute choices resulting from those interpretations (Hambrick & Mason, 1984). Here we suggest that because senior executives who possess a global mindset are externally focused rather than internally focused, they are more likely to be exposed to diverse sources of information and 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 (D’Aveni & MacMillan, 1990; Egelhoff, 1993; Geletkanycz & Hambrick, 1997). If, in addition to global mindset, senior executives also possess enough influence within their firm, they can

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enact these superior strategies (Athanassiou & Nigh, 2002). Thus, we propose that: P4. Senior executives who possess a global mindset and who are sufficiently influential within their firm are more likely to formulate and enact superior global strategies. At the same time, some recent evidence suggests that global mindset may not always translate into superior performance and effectiveness. For example, Bouquet (2005) finds a curvilinear relationship between TMT global mindset and firm performance. Beyond intermediate levels of global mindset, MNCs experience diminishing returns, after which negative returns set in. Roth (1995) also 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 mindset and organizational effectiveness may be contingent on organizational capabilities and strategy and environmental factors. Accordingly, we propose that the impact of global mindset on organizational effectiveness is most likely mediated by strategy implementation capabilities and moderated by environmental and firm characteristics. As we suggested earlier, for firms competing globally, global mindset results in superior strategies. Consequently, the competitive advantage of firms whose senior executives possess a global mindset is often largely based on superior global strategies as opposed to superior strategy implementation capabilities (Egelhoff, 1993). While at times competing through superior strategy may be sufficient, it is often impossible to consistently stay ahead of the competition if competitors possess superior strategy implementation capabilities (Egelhoff, 1993). Moreover, the effects of superior global strategies may be short-lived unless significant entry barriers are erected. Thus, in the absence of significant global implementation capabilities and adequate support structures and processes, global mindset may not translate into long-term competitive advantage. Therefore, we propose that the impact of global mindset on effectiveness is at least partially mediated by global strategic implementation capabilities as follows: P5. Global strategic implementation capabilities will partially mediate the relationship between global mindset and organizational effectiveness. Obviously, strategy implementation capabilities in MNCs is one of the most compelling issues in the field of international management (Kim & Mauborgne, 1996). Developing implementation capabilities may involve a

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host of initiatives (Bartlett & Ghoshal, 1989; Prahalad & Doz, 1987) and repeated cycles of aligning and fine-tuning. In this context, we would like to point to two, often neglected, mechanisms that can enhance the impact of global mindset on organizational effectiveness. First, we suggest that MNCs need to develop a shared understanding of what it means to be a global company (Levy, Boyacigiller, Taylor, & Beechler, 2002). We argue that the ways in which the practice of globalization is debated, interpreted, defined, and shared dramatically affect various aspects of organizational life, including global strategy implementation. Often, senior managers possess a global mindset 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, and thus, global mindset does not translate into a complex company-wide interpretation and implementation of global strategy. Accordingly, developing a shared understanding of the practice of globalization through an ongoing constructive debate can facilitate translating global mindset into a company-wide platform and assist in global strategy implementation (Levy et al., 2002). Second, we suggest that MNCs need to develop flexible structures and processes that span organizational boundaries to disseminate global mindset throughout the corporation (Bartlett & Ghoshal, 1989; Bartlett & Ghoshal, 2000; Ashkenas et al., 1995). As we suggested above, global mindset often does not travel well across geographies, functions, and hierarchies within the corporation. Hence, establishing boundary-spanning processes and practices such as global responsibility designations, global team participation, ad hoc project groups, networks, and shared task groups (Adler & Bartholomew, 1992b; Ashkenas et al., 1995; Bartlett & Ghoshal, 1989; Nohria & Ghoshal, 1997; Pucik, Tichy, & Barnett, 1992) can influence the promulgation of global mindset, 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, we suggest that the effect of global mindset on effectiveness is most likely moderated by environmental and firm characteristics. We argue that an optimal fit between global mindset and environmental and firm characteristics can positively affect organizational effectiveness better than global mindset by itself. Specifically, we focus on two key considerations, namely, the level of environmental dynamism and complexity and the firm’s international strategy.

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Senior executives who operate in an environment characterized by rapid changes, dynamism, and complexity must have a global mindset to understand and respond to their environment. Under such conditions, global mindset is more likely to have a positive influence on a firm’s effectiveness. On the other hand, it is quite possible that when executives operate in a relatively stable environment, global mindset becomes irrelevant or even a liability because it imposes unnecessary complexity where simplicity is called for. Therefore, we propose that for global mindset to have a positive impact on effectiveness, there should be a fit between environmental conditions and the level of global mindset of senior executives: P6. A fit between environmental conditions and managerial global mindset will be positively associated with organizational effectiveness. Similarly, a firm’s international strategy is also likely to affect the relationship between global mindset and effectiveness. High levels of internationalization place high levels of information-processing demands on senior executives and are likely to require significant information-processing capabilities or a global mindset. On the other hand, Roth (1995) finds that strong CEO international experience negatively affects performance when international interdependence is low. Thus, it is quite possible that global mindset 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. This suggests that for global mindset to have a positive impact on effectiveness, there should be a fit between the international strategy of the firm and the level of global mindset of its senior executives: P7. A fit between the international strategy of the firm and the managerial global mindset will be positively associated with organizational effectiveness. It should be noted, however, that global mindset entails high levels of information-processing demands, which could overwhelm decision makers, slowing down decision making to unacceptable levels. It is possible that even when higher levels of global mindset among key decision makers are required, global mindset 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).

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SUMMARY AND IMPLICATIONS The capabilities linked to global mindset are crucial elements in contemporary MNCs, considerably influencing the global competitiveness of firms. Researchers, however, are faced with the challenge of explaining the complex construct of global mindset and further identifying its antecedents and outcomes. To assist in advancing the field we have suggested a framework that details the core properties of global mindset and creates a link between global mindset and global competitiveness of firms. In conclusion, we now discuss the implications of our integrative framework and suggest directions for future research.

Implications of the Integrative Framework As our review and analysis of the literature imply, there are still important unanswered questions concerning global mindset. The integrative framework we propose presents a parsimonious conceptualization of global mindset and focuses on the following major questions: 1. 2. 3. 4.

What are the core properties of global mindset? At what level(s) of analysis should global mindset be studied? Is global mindset a unidimensional or a multidimensional construct? How should global mindset be operationalized and measured at each level of analysis? 5. What are the possible links between global mindset and effective global management? To begin, we define global mindset as a highly complex individual-level cognitive structure characterized by openness, differentiated articulation of cultural and strategic dynamics on both local and global scales, and integration across these multiple domains. We therefore define the core properties of global mindset in cognitive terms in place of offering an exhaustive list of attitudes, dispositions, and skills. Simultaneously, we propose that global mindset, embodying the cognitive basis of effective global management, should be connected with competencies, skills, and behaviors, so as to develop a more complete model of effective management in the global context. Second, we delineate global mindset at the individual level of analysis. We then broaden this classification to describe global mindset at the group and organization levels of analysis. Consequently, we propose that at the group and organizational levels, global mindset should be considered a shared

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cognitive structure that can be analyzed across multiple levels (Walsh, 1995; Schneider & Angelmar, 1993). One benefit of conceptualizing global mindset as a cognitive construct is its robustness across levels. Additionally, a cognitive approach assists in establishing the causal determinants of global mindset at different levels of analysis and in elucidating the relationships between global mindset across levels. Third, our approach clearly demonstrates that global mindset is a multidimensional construct, integrating both cultural and strategic dimensions, as well as local and global levels. These dimensions offer a preliminary mapping of the pertinent content domain of global mindset. From a cognitive perspective, however, content is only one aspect of cognitive structures. Conceptually, cognitive structures can be evaluated in terms of their content and/or structure (Walsh, 1995). Hence, in addition to outlining the relevant content domain of global mindset, our definition of global mindset describes its structural properties by proposing that it is a complex cognitive structure characterized by high differentiation, articulation, and integration. Fourth, by defining global mindset using a cognitive framework and by stipulating both is structural and content dimensions, we offer an approach that is conducive to operationalization. It is beyond the scope of this chapter to provide a systematic review of methods to analyze cognition. However, the managerial cognition literature offers several approaches to measuring both the content and the structure of cognitive structures (see Walsh, 1995, for detailed review; see also Huff, 1990; Barr et al., 1992; Calori, Johnson, & Sarnin, 1994; Lant, Milliken, & Batra, 1992). Calori et al. (1994), for instance, used the cognitive mapping technique to assess the complexity of managerial mindset, while Barr et al. (1992) employed textual analysis of organizational documents to measure the mental models of executives. As a final point, we investigate the information-processing consequences of global mindset, suggesting a clear theory-based link between global mindset and effective global management. We propose that global mindset has a powerful impact on information-processing patterns that may translate into superior managerial capabilities for firms operating in the global arena. Consequently, grounding global mindset in the cognitive and information-processing literature can facilitate a more rigorous examination of the frequently stated but rarely tested assumption that a global mindset is required for the successful management of global firms (Bartlett & Ghoshal, 1992; Ohmae, 1989; Doz & Prahalad, 1991). However, we qualify this proposition and suggest that global mindset in and of itself may be insufficient. Thus, in addition to global mindset a set of core skills and competencies is required for effective managerial behavior in the global arena as

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well as supporting organization structures and processes. Moreover, we also suggest that the effect of global mindset on effectiveness is most likely moderated by environmental conditions and the firm’s international strategy. Therefore, for global mindset to have a positive impact on effectiveness, there should be a fit between environmental and strategic circumstances and the level of global mindset of senior executives. As the literature reviewed in this chapter demonstrates, scholars from various disciplines have endeavored to define global mindset. This has created a multitude of definitions, which is an indication that global mindset is a relatively young field. In addition, the proliferation of dimensions often used to describe global mindset makes it complicated to assess and test propositions regarding it. We offer an approach that is easier to both understand and operationalize in future research efforts, by defining global mindset using a cognitive framework. We also underscore managerial cognitive capabilities in MNCs in the hope of producing a ‘‘cognitive revolution’’ in international management research. In our appeal for a renewed emphasis on cognition, we follow the lead of Doz and Prahalad (1991), who maintained that the newly emerging MNC necessitates a paradigmatic shift to a model in which the mindsets or cognitive orientations of managers comprise the basic units of analysis.

NOTES 1. Although outside the scope of this chapter, a similar theme can be found in the literature on global leadership (e.g., McCall & Hollenbeck, 2002). 2. Merton (1957) initially conceptualized cosmopolitans as individuals who are oriented toward the outside world and locals as those who are narrowly concerned with the affairs of the community to the exclusion of world affairs. Extending this concept to university faculty, Gouldner (1957, p. 290) characterized cosmopolitans as ‘‘those lower on loyalty to the employing organization, higher in commitment to their specialized role skills, and more likely to use outer reference group orientation’’ (Gouldner 1957, p. 290). While the cosmopolitan–local distinction was parsimonious, subsequent research (e.g., Gouldner, 1958; Flango & Brumbaugh 1974; Glaser 1963; Goldberg, Baker, & Rubenstein 1965; Goldberg 1976) found the construct to be more complex and multidimensional. For example, Gouldner (1958) divided cosmopolitans into two groups: outsiders and empire builders. Locals were split into four groups: dedicated, true bureaucrats, homeguards, and elders. Goldberg et al. (1965) expanded the cosmopolitan–local classification system to include four categories. In addition to the cosmopolitan and local categories, a third category, termed ‘‘complex,’’ described those employees who are simultaneously loyal to both their employing organization and their profession. The fourth category, termed ‘‘indifferent,’’ described those employees who were loyal to neither.

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3. At the beginning of the 21st century, a host of initiatives and publications concerning cosmopolitanism appeared (see Hollinger, 2002, for a review of these developments). While we draw on this literature, a comprehensive discussion of the concept of cosmopolitanism is beyond the scope of this brief overview. 4. It should be noted that while cosmopolitans are celebrated by some as the new ‘‘cultural heroes’’ of the global economy, they have frequently come under attack as they are viewed as privileged (Clifford, 1988; Robbins, 1992; Vertovec & Cohen, 2002a, 2002b). While considerable debate has focused on the value-laden aspects of cosmopolitanism, we believe that it is not necessary to overlay the construct with assumptions of superiority (Robbins, 1992). 5. The most explicit example of a multidimensional measure is used by Murtha et al. who draw on the integration-responsiveness framework (Prahalad & Doz, 1987). They measure global mindset in terms of managers’ expectations regarding integration, responsiveness, and coordination. Similarly, Arora (2004) uses a selfreport instrument that reflects two drivers of global value (local competencies and global coordination) suggested by Govindarajan and Gupta (2001). 6. According to Rousseau (1985, p. 8) ‘‘isomorphism exists when the same functional relationship can be used to represent constructs at more than one level y isomorphism implies that constructs mean the same thing across levels y.’’ Partial identity implies that constructs, although similar, ‘‘behave’’ somewhat differently across levels. In addition, the same constructs used at different levels may be only weakly related. 7. Arora et al. (2004), for example, established the construct validity of their global mindset measure by testing the relationships between global mindset and a set of individual background characteristics (training in international management, foreign country living experience and job experience, family member of foreign origin), often considered to be antecedents of global mindset. They found that global mindset was significantly positively related to these characteristics. These theoretically predicted relationships tentatively support Arora et al.’s (2004) global mindset measure. 8. While information processing theory has been applied at the individual (e.g., Hult & Ferrell, 1997; Leonard, Scholl, & Kowalski, 1999; Wang & Chan, 1995), top management team (e.g., Sweet, Roome, & Sweet, 2003), and organizational levels of analysis (e.g., Wang, 2003; Egelhoff, 1991), consistent with our approach to global mindset as an individual-level construct, our primary focus in this discussion is at the individual level. At the same time, there is an obvious and important overlap between the levels of analysis, as the more macro-strategy literature views the top management team of MNCs as the location where a large portion of the strategic information processing capacity of the organization lies (Egelhoff, 1991, p. 197).

ACKNOWLEDGMENTS This chapter draws heavily on our comprehensive review of the literature on global mindset, ‘‘What We Talk About When We Talk About ‘‘Global Mindset’’: Managerial Cognition in Multinational Corporations,’’ in the Journal of International Business Studies (Levy, Beechler, Taylor, & Boyacigiller, 2007). The paper contains material based upon work

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supported by the National Science Foundation under Grant 0080703. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation. The authors thank Columbia University, Portland State University, Sabanci University, San Jose State University, and the International Consortium for Executive Development Research for their support of this research. The authors also gratefully acknowledge the research assistance of Elif Cicekli and Pinar Imer and the editorial assistance of Hester Yorgey.

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THE CHESS MASTER AND THE 10 SIMULTANEOUS OPPONENTS: BUT WHAT IF THE GAME IS POKER? IMPLICATIONS FOR THE GLOBAL MINDSET Gordon Redding INTRODUCTION The metaphor of a poker game suggests the reality of international business as a competitive field in which players test their wits against each other, often using guile, and play at high levels of uncertainty. The game’s rules are essentially simple but there is extensive room to maneuver. If business were actually conducted internationally with one set of clear rules used by all, then it would be like chess. A chess master can play against many others, given the highly structured nature of the game’s processes. A poker master takes on a different kind of complexity, and in that, the reading of others’ minds, characters, behavior patterns, and interactions becomes crucial. The essential challenge of the global mindset is that, whereas you might think you are playing chess against several opponents, you are actually playing poker. The idea of such a mental competence brings attention to the core demand at the heart of the globalization process – that of finding, and/or of The Global Mindset Advances in International Management, Volume 19, 49–73 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19003-3

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developing, executives capable of working effectively across cultures and therefore across alternative mindsets. The corporate ideal of the postmodern organization, represented in such advice as that of Doz, Santos, and Williamson (2001), with their notion of the ‘meta-national’ organization, suggests that the inclusion of variety into the organization’s design requires a form of elasticity within the corporate workings sufficient to achieve the magical mixture of combined loose-tight properties. There is an overarching discipline and a system of control over what is done, but flexibility over how it is done. In this formulation the corporate center is just one star in a galaxy. Local cultural responses are not better or worse but simply different. Diversity stimulates innovation, and unique local contributions are respected. Learning from the differences and the flexibility to take advantage of them are highly esteemed. Organizing and coordinating at this level of complexity would not have been possible before the IT revolution. It is now required. Executives in question need to be capable of (a) coping with such variety and (b) competitively managing its most efficient use. Very few people are naturally equipped to work with multiple mental frameworks and will need help to match the requirements. This requires that the nature of the challenge be fully exposed.

ANALYZING SOCIETAL DIFFERENCES The literature and theory built up in the field of international business over several decades have proved inadequate to the task of creating understanding of the managerial challenges of globalization in practice in the current era. Companies, driven to expand geographically by the new capacity to communicate, have often stumbled against hidden obstacles. In reaching the limits of their understanding, they come up against two related questions, each still largely unanswered: why do the leading firms in most significant industries come from one or two societies (Porter & Wayland, 1995; Haake, 2002), and why do the leading industrial firms find it so difficult to penetrate more than two of the three parts of the Americas/Europe/ Asia triad (Rugman & Verbeke, 2004; Rangan & Drummond, 2002)? The underlying puzzle is often termed ‘the societal effect’, and its indeterminate but nonetheless relentless nature remains a torment to both theorists and practitioners. This is the intellectual challenge against which issues of the global mindset are placed, and one might note the formidable nature of the task of making compelling breakthroughs.

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In a parallel stream of theorizing – that accounting for variations in societal progress – the same societal effect is now coming more toward center stage. Because of the theoretical significance of such thinking, even though it is fairly macro in nature, it will be considered here as part of the received wisdom bearing on the topic of societal differences in mental frameworks and their implications. Two connected weaknesses exist in the way that research is often done when analyzing economic behavior across societies: handling context adequately and choosing appropriate units of analysis such as the society. In a plenary address to the first annual JIBS conference on Emerging Research Frontiers in 2003, Bruce Kogut identified the central issue for the field as the handling of ‘context’. He argued that the study of specific questions, with much of context assumed away, leads to disembedded results or conclusions. He argued for (a) a coming to grips with culture, (b) the bridging of the gap between quantitative and qualitative work, and (c) the inclusion of the political dimension in economic life, if international business theory were to avoid charges of continuing ‘policy irresponsibility’. In the field of development theory three significant studies are worthy of attention in the context of the wider ‘cultural turn’ in the social sciences (Archer, 1996; Nash, 2001). The first of these is the historical study by Landes of the wealth and poverty of nations, with its global perspective, its historical detail, and its conclusion that ‘If we learn anything from the history of economic development, it is that culture makes all the difference’ (Landes, 1998, p. 516). In a similar vein, North, having earlier identified institutions as the core of his account of variations in societal progress, has now concluded that – along with a genetic heritage – ‘the immense variation in the performance characteristics of societies makes clear that the cultural component of the scaffolding that humans erect is also central to the performance of economies and polities over time’ (North, 2005, p. ix). The third work is that of Greif (2006), who has studied the contrasting long-term performances of societies founded in the medieval worlds of the Islamic Mediterranean and Western Europe and concluded that the founding ideals of collectivism, in the Islamic case, and individualism, in the European case, have worked their way into the formulation of the institutional fabric, to affect structures of economic behavior and coordination and, eventually, of performance. In all three cases, the question of culture and its effects is seen as crucial but is handled indirectly. Landes acknowledges its power but does not specify its workings. North points toward the central significance of what he terms the ‘intentionality’ within it – that is the perceptions of the actors

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about the consequences of their actions, such being founded in their beliefs – but he does not clearly demonstrate such workings with empirical support. Greif (2006, p. 14) subsumes the cultural features of beliefs and norms within the category of institutions. This is in contrast to North, who acknowledges the prior nature of the beliefs and says that the dominant beliefs, and especially those of political and economic entrepreneurs, ‘over time result in’ the accretion of an elaborate system of institutions (North, 2005, p. 2). In a critique of the globalization field, Sorge pointed to the confusion over definitions and categories, especially as applied to culture and institutions, and the connections between them. He pointed to ‘a mountain of theoretical muddle’ (Sorge, 2005, p. 48) blocking the ability to move forward. He proposed a solution in the form of a theory of action systems, a proposal carried further by Redding (2007) and to be returned to shortly. Another aspect of the same ‘muddle’ is addressed by North, who chides economists for their simplistic use of the rationality assumption and their ignoring of the role of ideas in making choices: ‘Indeed the uncritical acceptance of the rationality assumption is devastating for most of the issues confronting social scientists and is a major stumbling block in the path of future progress’ (North, 2005, p. 5). Taking a different tack – that of research frameworks themselves – two points of debate are worth attention. The first concerns the unit of analysis and the second the tracing of patterns of determinacy within such a unit. On the first issue, the work of Ragin (1987) is significant, as he has attempted to move the debate beyond the contest between the quantitative and the qualitative and to encourage a synthesis of the two. He argues that the proper comparison should be between ‘wholes’, so that the complex interactions occurring within them should not be analyzed out of context. Similarly, one of the founders of comparative industrial analysis, Maurice (1989), has made the following case for analyzing societies as wholes, seen on their own terms. If you study micro interactions in country A, and then in country B, and try to compare, then the comparisons run into the problem that continuity in meanings and categories across the societies may not hold. If you study the effect of culture in country A, compared with country B, and assume a strong effect, then inadequate attention gets paid to the significance of other features of local context and to the discontinuities between societies in such context. If, on the other hand, you study the micro-macro interactions within one society, so as to understand its internal logics, and then compare the wholes as functioning systems, this avoids the

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need for comparability of components between systems and yields richer understanding of phenomena in their own contexts. The advice of Bourdieu (1977, p. 238) is relevant here: As in all comparisons of one system with another, it is possible ad infinitum to contrast representations of the two systemsy . The only legitimate object of comparison is each system considered as a system, and this precludes any evaluation other than that implied in the immanent logic of its evolution.

A number of themes might now be extracted from these arguments. 1. Culture, seen as the realm of meaning, has a strong effect on the shaping of the institutional fabric and, in turn, on the shaping of behavior in and between organizations. 2. That effect operates within the context of a society and the society provides a complex set of other surrounding influences affecting the interactions. 3. It is valid and useful to compare societies as complex adaptive systems, evolving under the influence of their particular traditions and histories. 4. When thinking of the culture effect, such concepts as beliefs, values, and intentions come prominently into the account. For the purposes of this chapter, the question I now focus on is: how, within the above set of ideas, is it best to think of mindsets and their connection with action? To answer this requires an examination of three approaches. The first is culture research itself, when it addresses different mental universes and when it attempts to explain their impact on, and interaction with, the reality of economic action. The second is the theory of business systems, or at least those examples of it that accept the influence of beliefs and values. The third is the Weberian concern with alternative rationalities and ideational logics. In its modern guise this is the theory of multiple modernities (Eisenstadt, 2000). Brief note will also be taken of the likelihood of alternative patterns of cognition. I shall conclude with an example of what needs to be understood within a global mindset.

CULTURE RESEARCH As Berger and Luckmann (1966) famously said, reality is socially constructed. How a person makes sense of the world comes from the surrounding culture of upbringing, and this ensures that what the world

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effectively ‘is’ for that person is perceived in those terms. As Geertz (1973, p. 5) observed, Believing, with Max Weber, that man is an animal suspended in webs of significance he himself has spun, I take culture to be those webs, and the analysis of it to be therefore not an experimental science in search of law but an interpretive one in search of meaning.

The mindset is the repository of meaning, and the primary concerns it addresses are those of what life is about. For people to be able to fit into a society, they need to have a sense of why they do things, where they belong, whom are they bound to, and what they expect out of life. In a review of the literature on the psychology of worldviews, Koltko-Rivera (2004, p. 41) concluded that acculturation is central to both perception and behavior, arguing that a worldview is a culture’s expression of the ‘why’ of behavior, with acculturation providing the ‘how’. The latter influence works by language preferences and by investment in a set of affect-laden associations with behavior. Within a culture’s meaning system he identifies beliefs about ontology, agency, and epistemology as superordinate, and because of this they have power in determining other aspects of the meaning system. By allocating a central place for culture in the functioning of fundamental psychological processes, he clearly anticipates a daunting variety of worldviews. These are what the global mindset has to straddle and encompass. It is common with other scholars also to analyze such sense making as existing in two layers. Weber (1964) saw these as value rationality, concerned essentially with the societal purposes or ends, and instrumental rationality, concerned with the ways to achieve those purposes, or means. In a similar division, Berger and Luckmann separated primary and secondary socialization, seeing the primary as the set of fundamental understandings of how to fit into society and the secondary as fostering the specialization of meanings needed to allow the society to function in complex ways and adapt to change. An insight into the primary layer has recently been proposed by Bond et al. (2004) and Leung and Bond (2004), in an international study of what they term social axioms. These are not values but are instead the making of sense about how society works, in other words, how the parts fit together, how one thing has implications for another, yielding rules for coping. This important study takes us below the level of other cross-cultural studies, many of which focus on the layer of secondary meaning, or of specific variables. The earlier large-scale studies of cultural differences (Hofstede, 1980, 1991; House, Hanges, Javidan, Dorfman, & Gupta, 2004; Inglehart, 1997; Schwartz, 1994) have provided ample evidence of variation in values. This new broadening of the conceptual tools takes us into general beliefs, or

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generalized expectations, of a kind likely to relate to a wide range of social behaviors. Five orthogonal dimensions of such social axioms are identified, measured with a sample of 9,924 subjects across 41 countries, and labeled as follows: 1. Cynicism: a negative view of human nature and a mistrust of social institutions. 2. Social complexity: belief in multiple ways of achieving something, and acceptance of human variability. 3. Reward for application: belief in effort, knowledge, and careful planning. 4. Spirituality/religiosity: Belief in a supreme being and in the value of religious practice. 5. Fate control: belief in predetermined events but with ways for people to influence outcomes. Data of this kind are invaluable in mapping the world’s variety, but must be used with care to avoid what Archer (1996, p. 4) has termed the Myth of Cultural Integration, ‘one of the most deep-seated fallacies in social science y the y assumption of a high degree of consistency in the interpretations produced by societal units’. She argues for disentangling the myth and proposes that, to do so, two features need to be separated out. The first is the cultural pattern – the logical consistency, or degree of internal compatibility between its components. The second is the field of uniform action – the expressing in behavior of the ideals of the former that may or may not display social uniformity. As an illustration of the relevance of these features, a recent study of mindsets of private sector executives in China has revealed a core feature of confusion over the ideals being pursued, caused reportedly by the social upheavals of the past decades and the shifting of the state’s ideals (Redding & Witt, 2006). Archer recommends that, in the light of this variability between societies in the internal coherence of the cultural framework, care be taken to acknowledge the questions of consistencies and connections at both the culture level and the level of societal action and the mutual interpenetration of the two levels. Having established empirically that people can be compared on their fundamental sense making, at both primary and secondary levels of socialization and acculturation, the subsequent logical challenge is to establish how such programming of minds interacts with the world of business and of social life more generally. For that I turn to consider the theory of business systems, as a prelude to considering the Weberian question of the workings of the ideational logics.

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BUSINESS SYSTEMS The epistemological case for the business systems framework is best stated by a pioneer in the field, Richard Whitley (1992, 1999a, 2002), in a response to the universalist challenge of many economists. It fits with the arguments I have already noted from Geertz, Bourdieu, Maurice, and Ragin, but is also inspired by a tradition of ethnographic work in comparative management theory, examples of which are Abegglen (1958), Dore (1973), Rohlen (1974), Stinchcombe (1974), Guillen (1994), and Guthrie (1999). Whitley’s (1999b) position may be summarized as follows: The economics-based approach uses sparse logics, an assumption of universal relevance, abstract linear causal argument, and highly simplified representation. It assumes that atomistic behavior and functionalist explanation are valid, although they are highly suspect. There are three features of the social world that do not fit into such frameworks: there are multiple, complex, reciprocal connections between phenomena; the phenomena change through time; and new external influences constantly penetrate. In addition – and significantly – the social sciences are second-order fields in that they are highly dependent on the interpretation of meaning. There is no external reality independent of peoples’ construction of it; and there is competition over meaning, making value-neutral definition impossible. Three other features of the scene cannot be ignored: the role of language prevents the valid use of universals, path dependence will be significant, and the state often plays a strong role is the setting of standards and criteria. A social science capable of meeting such challenges is likely to be somewhat to the side of mainstream, such is the power of quantitative positivism in the academy, but it is nonetheless worthy of pursuit. Its principles are visible in attempts at synthesis, such as those of socioeconomics (Etzioni, 1988), the Chicago interpretivist school (e.g., Sewell, 2005), the fuzzy set social science of Ragin (2000), and the multidisciplinary analysis of business systems, or systems of capitalism. There is no inevitability about the choice of the nation-state as the unit of analysis for a business system. It would, for instance, be valid to present a study of Asia’s regional ethnic Chinese across 10 countries (see, e.g., Redding, 1990). But in the majority of cases, the role of the state is so strong in establishing the institutional frameworks, and the role of language is so strong in fixing meanings, that nation-states, more often than not, are the most appropriate envelopes for containing the complex interactions under analysis. This is not the place to review the various frameworks in use (for which see Whitley, 2002; Coates, 2002; Hall & Soskice, 2001). Instead I present a

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synthesis of the key features typically under study in Fig. 1, the more detailed use of which is explained in Redding (2005). Here I will introduce it briefly and then turn to the component labeled Rationale, for further consideration of mindsets. The theory is presented in three layers, but with the prior caveat that determinacy is seen as reciprocal throughout, as well as being multiple and

OWNERSHIP

NETWORKS

MANAGEMENT

Structures and systems for co-ordinating economic behaviour and exchange. Firms and managing

MATERIAL LOGICS

Impact of costs and technology on features and the interaction of features

The shaping of patterns of economic exchange behaviour

CAPITAL

HUMAN CAPITAL

The evolution and growth of forms of order

SOCIAL CAPITAL

IDEATIONAL LOGICS (EXTERNAL)

Impact of external ideas, norms, values, on features and the interaction of features

Institutions: the humanly devised constraints that shape social interaction, and provide a hospitable environment for co-operative solutions to complex exchange. Forms of order

The conditioning of institutions by values and norms

RATIONALE

The adjustment of values and norms by experience

IDENTITY

AUTHORITY

Culture: values, norms and socially constructed realities which act as the bases for the society’s forms of order

Fig. 1.

The Summary Model of Business Systems Analysis.

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with interconnected elements. A society is taken to be a complex adaptive system (Holland, 1995), in interaction with the external world. The object of study is the total, seen in its own terms, and comparable with others, that comparison being of different configurations of internal parts. In practice much analysis follows the search for ‘complementarities’ between the parts, as their interconnections become clear and patterns of determinacy are identified. At the base of the model, and with an implication that it is in some sense ‘prior’, as North suggests, is the realm of meaning. This is divided into three components. The first, labeled Rationale, is where the mindset is analyzed, seen – following Weber and Berger and Luckmann – as having two aspects, in simple terms the ends and means, as idealized within the society, of economic behavior. Beyond that are two further sets of ideas, those affecting the principles of horizontal order (Identity) and vertical order (Authority). The middle layer of the model is the realm of Order, and it is manifest in institutions, or rules of conduct. Three main arenas are identified, in which institutions accrete in societies over history and which have direct relevance for the kind of business system that emerges. The first of these is Capital, the set of ways in which money accumulates, is kept, is allocated, and is sought and used. The second of these is Human capital, or the set of ways in which a society cultivates human talent and allocates and uses it within the economy. The third is Social capital, or the set of ways in which problems of mistrust are solved, with its two key dimensions of personal and institutional trust. The top layer of the model is the business system itself, seen, following Whitley (1992), as a set of patterns for the coordination of economic exchange. The first of these is Ownership, and it represents the establishing of structures, such as firms, and the nature of such structures. The second is Networks, and it represents how such structures connect (or otherwise) across the economy. The third aspect of coordination, entitled Management, explains the way in which resources within an economic unit are brought together and used, an example of which is the state of mutual dependence (or otherwise) between managers and workers. External to the societal system are two sources of influence, distinguished from each other earlier by Weber (1978) and referred to as significant by Child (2000) in his critique of international business theory. The first of these are the Material logics of, for instance, price and technology, each of which is capable of exerting great influence on the internal workings of a societal system. The second are the Ideational logics, for instance, ideas such as democratization, youth culture, market discipline, that also tend to weave their way influentially between systems. The latter, of course, have much relevance in the globalizing of mindsets.

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In such a complex adaptive system, the focus now needed is on the interaction between the Rationale and the three institutional elements of the realm of Order, and for that I turn to the Weberian question. Does each capitalism have its own ‘spirit’ and, if so, how do such spirits work? Such a question goes to the heart of much social science and is as far from being trivial as it is possible to go, so I preface my examination of it with an acknowledgment of its extreme complexity and the limitations of addressing it in a brief space.

THE SPIRIT OF CAPITALISM Weber’s position is perhaps best summarized by Cohen (1981, p. xxv), as follows: The most general characterization of Weber’s comprehensive thematic interest involves the historically unprecedented penetration into the context of all institutional orders and cultural ways of life in modern Western civilization of a peculiar type of rationality.

Weber (1930, p. 26) himself, in discussing the ‘specific and peculiar rationalism’ of Western culture, described the rationalization of mystical contemplation (specifically the ethics of ascetic Protestantism), as well as of the more obvious components of economic life, technique, scientific research, military training, law, and administration. He acknowledged, at the same time, the relevance of counterbalancing forces such as the magical, religious, and ethical. What he sought to understand was the ethos of an economic system. His (uncompleted) agenda was the comparison of cultural systems, and he clearly saw that mindscapes vary across societies and that they influence the emergence of institutions. I propose the term rationale to convey the sense of a set of reasons for something, such a set of reasons making sense of why a pattern of action is pursued. So people might go to church because they believe a deferential relation with a supreme being, and adherence to certain strictures over conduct, are connected with an afterlife. Or a person encourages children to study hard because it will lead to qualifications, higher income, and family security. These thoughts ‘make sense’, and they define the reality for those people. I separate this from rationalism in the sense of argued cogent logic, or mathematical evidence in support of a choice, as used, for instance, in scientific rationality, although this latter might form an important subset in certain cultural rationales, as it does, for instance, in much Western thinking and administration – Weber’s specific and peculiar rationalism.

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Significantly for the global mindset issue, Weber noted that rationale accumulated in ‘fields’ and that each would have its own sense making (see Redding, 2007). The rationales in the fields could be different ‘in terms of very different ultimate values and ends, and what is rational from one point of view may well be irrational from another’ (Weber, 1930, p. 26). The organizational worlds of finance and marketing are notoriously different in their mindsets, and spending money may be rational in marketing and irrational in finance. Soccer and American football are worlds apart mentally; soccer fans deride the protection needed by American football players, whereas in reverse, the football players often see soccer as a game for women. The Japanese do not see the world in the same way as do Americans; for the former firing people may be irrational, for the latter it may be rational. People in each alternative find meaning in that context and may struggle to appreciate meaning in the other. This question of fields lies at the heart of our dilemma and I will return to it shortly. In proceeding with his analysis, Weber put to one side the intellectual tools of formal rationality, which exist in the abstract, such as mathematics, algebra, principles of formal logic, and the use of quantitative evidence. He then concentrated on the substantive (in German materiale) aspect of being rational. This is sense making when it is applied to the social world. At the core of such a collective mindset (when it exists) is a question faced by all societies: Who gets what? Who benefits, how, and why? When Americans place priority on shareholder value, they are choosing to give one set of people priority over others in the allocation of benefits, and there is an entire economic and societal philosophy behind that (historically recent) response. When the Japanese do the opposite, and emphasize the rights of employees to protection, they equally have a philosophy justifying that response. In Weber’s (1922, p. 85) formal definition, substantive rationality is: y the degree to which the provisioning of given groups of persons with goods is shaped by economically oriented social action under some criterion (past, present or potential) of ultimate values, regardless of the nature of those ends.

The criteria in question might be ethical, political, utilitarian, egalitarian, etc., or a combination of such, and the scales on which results are measured against the criteria are endlessly varied. In thinking of them Weber saw that much economic behavior is driven by intentions based in values and that these often include traditions. Because of that they are ‘value-rational’ (wertrational) and are likely to be the unplanned outcome of intuitions. On the other hand much behavior is deliberately planned and is driven by ideas stemming from the working out of means for achieving social action – also

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inevitably in line with values. This form of rationality involving deliberate planning he termed instrumental. Thus Weber proposes a values component, concerned with ends, and an instrumental component, concerned with means. Such disaggregation of components serves to clarify the processes of influence flow between mindsets and action, but at the same time care must be taken to acknowledge that they are in reality mixed up together in the consciousness of people. As Swedberg (1999, p. 281) has judged the matter, Weber saw them as working in parallel, in different ways, but intertwined. A graphic representation of the workings of an ideal type Western mindset, using Weberian categories, in the context of business is given in Fig. 2. Similar graphical analyses of the United States and France, including rationales or mindsets, may be seen in Redding (2005). More detailed discussion of Fig. 2 is given in Redding (2002), but a brief note may be made here that it focuses on the two main components of value and instrumental rationality, and for the instrumental case – although all elements share the feature of being carriers of material progress – they exist in primary and secondary forms. So too does all rationale exist independent of institutions – receiving influence and interacting constantly without doubt, but still having relative autonomy (in Weber’s terminology Eigenrecht). So what is the position of institutions? On this Weber is not specific, but his position has been interpreted by Schluchter (1981, p. 27) as being that the institutional realm mediates between ideas and ‘interests’ (clusters of claimants). Here the spiritual and material wants receive socially relevant solutions. Thus: Interests (material and ideal) not ideas directly determine man’s action. But the world views, which were created by ideas, have very often acted as the switches that channelled the dynamics of the interests. (Weber, 1920, p. 280, cited in Schluchter, 1981, p. 25)

Thus one of the roles of the mindset is to influence the flowing of action in certain channels.

ALTERNATIVE FORMS OF COGNITION There has long been an interest in alternative forms of cognition, and especially the contrasts between East and West (Northrop, 1944; Nakamura, 1964; Maruyama, 1980; Redding, 1980), but it was not until the work of Nisbett (2003) on the ‘geography of thought’ that wide attention was renewed and new evidence presented. Against the background of a caricature that ‘Americans assume everyone is really an American at heart, or if

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The formation of the institutional fabric of society

SUBSTANTIVE RATIONALITY

VALUE RATIONALITY Material progress Impersonal market logics Calculation as an ideal Reason before force Foresight

ENDS

INSTRUMENTAL RATIONALITY The carriers of material progress Primary Secondary Applied rationality Company as instrument of Componentiality ownership Multi-relations Professions plus Makeability professionalism Plurality Grouping and expression of interests

Progress Societal view Bureaucratic order Legitimate private sphere

Rule of law Having government administration The discipline of market

Human rights

MEANS

FORMAL RATIONALITY Theories and techniques of calculation Money-based accountablity Search for principles of efficient coordination CALCULATIONS

Fig. 2.

The Workings of Western-Style Rationale (an Interpretation of Weber).

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not, it’s only a matter of time until they will be’ (p. 220), Nisbett presents evidence to suggest that mindsets may vary at a deep and invisible level, a feature that would inhibit any foreseeable converging of ways of thinking. Here the issue is not about the contents of thought, but the ‘mechanics’ of cognitive processes. The essential aspects of these differences are as follows: 1. Eastern thinking (taking the Chinese case as the prototype, but acknowledging variations) is essentially holistic, rather than selective, the latter being more common in Western modes of thought. In the latter, aspects of reality are analyzed free of their full context and the relations between them studied in a search for ‘laws’ governing their relations. 2. In this ‘Western’ process, there is usually a resort to abstract categories, and these are used in a ‘causal chain’ of assumed connections, each category being a representation of some proposed empirical reality. Much analysis is thus decontextualized. In the Asian case the same layer of abstracts is less obvious, reality is perceived directly, and in some accounts this is related to the structure of language itself and the nature of the representation conveyed by it. Differences in cognitive process are also brought into account here. 3. A third contrast is that between the universalism of the laws found in Western modes of thought, and represented by the canons of natural science, and the contingent nature of much Eastern explanation of events. 4. Western causation, as unidirectional linear Cartesian determinacy, is replaced in Eastern thinking by complex equilibrium and the balancing of opposites. Given the possibility of such differences in cognitive process, the possibility also exists of differences in the world as perceived, in the de facto ‘reality’. These would be manifest in different kinds of explanation about the relationships between things and different categories for the placement of things and events. The fascination of Westerners with alternative perceptions of business strategy, as seen in the popularity of Sun Tzu’s Art of War and all its many derivatives, lies largely in its providing a glimpse into a quite different mindset, a quite different ‘take’ on action. Capra’s (1975) The Tao of Physics presents a case for the meeting of Western science with the Eastern mindscape, on the latter’s terms. Perceptions of the state, the firm, marriage, society, if they vary, do so in a way that changes the basic building blocks used in constructing understanding. This remains a controversial and intriguing area of research, and findings are still tentative. If substantiated, however, the implications are large for those concerned with bridging

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perceptions and finding common mental ground. For those attempting to actually think like others, this really does stretch the elastic.

‘FIELDS’, SEMANTIC SPACES, AND DISEMBEDDING If culture is a set of meanings, it is logical to ask about the boundaries within which such meanings apply. Perhaps the most obvious of all such boundaries is that of the nation-state, for reasons already noted, but there are other fields within which meanings stabilize and are shared and which may be said to have their own culture. This is an inevitable outcome of the secondary socialization underpinning specialization within a society. When a culture comes to contain such subcultures, it needs to be held together still as an integrated whole. The role of social axioms is to provide that interlocking set of universals, and the images used to describe that collective mental architecture relate often to the brain. Hofstede’s ‘collective programming of the mind’ (1980) or ‘software of the mind’ (1991), Sorge’s (2005, p. 52) view of semantic spaces (in his terms, action systems) linked by ‘the neuronal circuitry that makes effects reverberate throughout society’, all suggest a complex system in which meanings are spread across a set of social spaces, as if there were a web of communicating wires to foster shared meaning. In this way, it is possible to envisage a group of overlapping sets. For an individual there would normally be a core meaning space – that of upbringing and language – one’s own national culture. In addition to that, for an adult with a career, other spaces would have accreted, to be entered and left as social life goes on. Within each, there would be a distinct vocabulary shared with other members and so too a distinct set of ideals relating to the action in the space – in most cases being a subset of the wider societal ideals. It is significant that these spaces are the repository of meaning and that the meaning exists – as if it were hanging in the air – independent of the members. Following Sorge (2005) the institutions are then incorporated into these spaces but in a state of dependence on the members who create and maintain them. This allows an important conceptual distinction to be made between culture and institutions. In short, culture belongs to everyone and no one; institutions belong to someone (for further development of these ideas see Redding, 2007). The individual would work in a career space, live in a family space, and spend time in others. If he or she becomes a global executive, then it is conceivable that there is a global executive meaning space, populated by the relatively new ‘tribe’ of itinerant, highly paid, professional executives of the

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kind identified as the ‘cosmocrats’ by Micklethwait and Wooldridge (2000). They fill the business class seats, airport lounges, and fine hotels of the world, and they have their own vocabulary and meanings. It is here that a global mindset might find its most distilled and purest form, but only on condition that certain challenges are met. These are identifiable as follows: (a) Does the depth of embeddedness in the home culture space (and its subset the career space) permit an escape from the meanings absorbed so far, to a point at which alternative meaning structures can be perceived and fully understood? (b) Can the perception of alternative meaning structures lead to their incorporation into a new mindset, containing perhaps contrasting and discrepant understandings? (c) How influential are the surrounding contextual elements in fostering or suppressing such loosening and enriching of the mind? (d) How important is it for an ‘outsider’ to understand the patterns of complex adaptive system evolution in other societies, if a global mindset is to be acquired? (e) In what sense may executives currently operating globally be said to have constructed a viable new culture based in a global mindset? Although in caricature form, the description of the cosmocrats by Micklethwait and Wooldridge (Chapter 12) gives the game away. The above criteria are not met. The 20 million global executives they refer to ‘are a decidedly Western class’. They are described as superficial: ‘it is too easy to confuse a business trip with an in-depth study of another culture’; ‘they seldom meet ordinary people, let alone study their lives in any depth’; ‘had the IMF’s bright young economists ventured out of their hotel rooms in Seoul and Jakarta, they might have understood the relationship between business, politics, and society1 in the economies they were trying to guide’ (p. 241). This tendency to stay aloof from the contexts in which their decisions are applied is compounded by firms themselves becoming ‘placeless’, by standardized systems that eliminate local features – as for instance in hotels or by life in protected communities. They conclude: In fact, one could argue that there is no ‘clash of civilizations’, just the growing pains of one ascendant civilization – that of the cosmocrats – rising against the dozens of civilizations that seek to constrain it. (p. 244)

If they are right – and the supposed global mindset achieved so far is no more than a Western, rational, professional, individualist, aggressive version

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of ‘organization man’ gone abroad, then the real challenges would seem immense. I propose to complete this review by looking at the nature of the challenge identified above: that of trying to understand the relationships between business, politics, and society in a foreign environment.

ONE OF THE POKER-FACED OPPONENTS Perhaps the most ‘foreign’ country in Europe, for Americans, is France. The two countries make manifest a number of key opposing philosophies. French government is heavy and deeply interfering; US government is light. French politics is essentially socialist and is largely contemptuous of liberalism; US politics is essentially liberal and largely contemptuous of socialism. The French have no word for ‘entrepreneur’, as one US president is purported to have said, without laughing. The French labor market is rigid: that of the United States is highly mobile. Public ownership of firms is standard in the United States; private is normal in France. Any attraction between these societies is that of opposites. Let us take it that an American executive needs to come to terms with the business system of France. Expanding on the model given in Fig. 1 is a more detailed description given as Fig. 3. This is what needs to be understood, at minimum, if the French perspective on things is to be at least acknowledged. It need not be approved of in any normative sense (except in a separate context of debate), but, to deal with it in the conduct of business, its workings need to be accepted as a viable alternative combination of mindset (i.e., culture), forms of order (i.e., institutions), and forms of economic coordination and control (i.e., organizations). I am more aware than anyone that it looks forbidding. It breaks the rules for presentation in the world of bullet points, three-box diagrams, and two-by-two matrices. I make no apology for its complexity, but I do recommend certain ground rules for its use, namely: (a) it needs to be pored over for a long time; (b) it needs to be seen as a picture of a changing reality in constant motion; (c) it requires a sense of history, as well as a capacity to project forward; and (d) if you are uncomfortable with accepting the complexity of the real world, then it will not work for you, as it is already a simplification. Too much simplification is the global mindset problem. The diagram in question is only partially completed, to give an idea of how it works rather than a full account. Additional specific issues might be traced in addition to those identified and the connections surrounding them made clearer. There are also strategic implications concerning the likely

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Fig. 3.

The French Business System.

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success or failure of particular industrial responses, but these are outside the reach of this chapter and are considered in Redding (2005). Taking just a few of its connections to unravel, as illustrations of its workings, let us examine some flows of influence in the field of capital. Capital. France is in transition, and the dynamics of this are suggested in the change – beginning in the 1980s – toward reliance on stock market funding, as against bank funding. Even so the transition is only partial, and bank funding is still proportionally double that in the United States. The arrival of foreign investors – now accounting for 35% of equity in the top 40 companies – has caused a change in managerial values with the large French companies, making them more market-oriented and stimulating their global expansion. This has reached a point at which they are now able to obtain international capital via the Paris stock market. And yet, the protection of shareholders’ and creditors’ rights is relatively weak by international standards, and there is a weak market for corporate control. These trends cannot be understood without seeing their connection with a state policy of deliberately shaped adjustment, in which progress depends on maintaining a fine balance between the demands of capitalists and of labor and a slow continuing attempt to deregulate labor markets, by encouraging a nonunionized private sector. A heavy welfare state is part of this stabilizing formula. Distinct historical influences affect these policies and, in particular, the traditions of revolutionary egalitarianism, and left-wing humanism, as well as a willing acceptance of – and dependence on – a strong state role. Deeper in the culture lie the ideals of a distinctly French definition of civilization. This is strongly guarded and openly celebrated and contains the key components of (a) progress having a spiritual (i.e., quality of life) as well as material element, (b) a concern with equality and individual rights, (c) dependence on centralized order, and (d) belief in rationality. Legitimate means of expressing these ideals include strong, involved government, family business, and defense via protest. Organizing in France reflects these conditions. Family business dominates, and there is a large sector of small and medium enterprises. In the large-scale companies, the transition toward market discipline is only partial and the ownership structures remain networked by cross shareholdings, with boards still extensively penetrated by the major elite web of the graduates of the ENA (ecole nationale d’administration), bridging government and market interests. Industrial concentration remains at high levels. The wholesale incursion of foreign enterprises is still prevented by the government. Heavy investment in technology is fostered by the continuing access

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to government-supported funding, usually within an elaborate national plan, and by the availability of patient capital supplied from large laborcontrolled pension funds. Other connections could be made with different parts of the picture, and external influences have been excluded here, but the aim has simply been to demonstrate a process of connecting, of finding context, and of change. Further detail would inevitably accumulate as learning proceeded. Assuming that such a picture represents, with reasonable completeness, how a society’s economy works, where it came from, where it might be going, and under what conditions, the global mindset would be that of a person able to understand a number of such heavily contextualized accounts. The degree of detail of such understanding would clearly vary from case to case with its contribution to the person’s decisions, but a manager working across (or employing people from), say, 10 countries, would have to build for him or herself a set of such mental pictures and keep them up to date. There are two ways of achieving this understanding, and they flow together. The first is by the conscious search for, and acquisition of, knowledge about the other country. This may be done in obvious ways like studying its history, economy, and politics, a quest with no clearly definable end in most cases. The second is by engaging directly with the local society, so as to pick up the nuances of tradition, of attitudes, of the social axioms holding it together, as well as the debates any society will have. This process requires a degree of humility and is greatly helped by language fluency. These are, of course, old lessons, but they seem remarkably hard to learn, especially by members of cultures that have acquired the confidence of apparent ‘success’. If the definition is accepted, that a global mindset is a set of attributes possessed by an individual that enable him or her to influence people unlike him or her effectively, and if, as suggested, a key part of the acquisition of such attributes is an understanding of the full contexts of others, then a number of considerations arise. Knowing where people ‘are coming from’ challenges understanding at three increasingly deep levels. The first of these levels might be termed the institutional. This deals with the surroundings in which the other individual is likely to have grown up and worked, insofar as those surroundings are visible on the surface of society in its manifest order. Among the many things included here would be the systems of education, organized religion, law, government administration, and philosophy; social structures such as kinship patterns; and the specific historical circumstances likely to have shaped these institutions. Americans cannot help but be affected by their society, with its growth, optimism, legalized order, light government, accessible education, accessible capital, and

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Anglo-Saxon heritage. Many British employees now behave with attitudes formed in the Thatcher revolution, under institutional structures such a free labor markets and competitive laissez-faire policies. When one of the most successful companies benefiting from such conditions, Marks and Spencer, expanded into Europe, it ran into such a violent contrast in conditions, especially in labor relations in France and Belgium, that it closed all operations and withdrew. A global mindset might have fostered greater adaptiveness. The levels get harder to come to terms with as you go deeper. The second level, the cultural, may be approached in terms of three questions, as noted earlier: Why does the firm exist? Where do peoples’ primary loyalties and dependencies lie? And what are the bases for legitimate authority? If the US firm exists primarily to give return to shareholders, the German to serve a regional community, the Korean to build the nation, the Japanese to keep people employed, and the Chinese to support and give status to a family, then behavior will reflect these priorities. Such behavior may not always be explained openly, but the effects of such evolved responses are widespread. So too do norms of belonging, and of respect, have a similar impact. The third level, that of alternative cognitive patterns, is largely invisible to everybody. Perhaps the best access to it is to keep asking for explanations, not so much for what they convey about a specific issue, but for what they convey about the mechanisms of reasoning. But this is fruitless without the self-knowledge that one’s own form of thinking gives no monopoly on the truth – whatever that might be. The attitude of cosmopolitanism, the virtue of tolerance, and the acquired skill of understanding alternatives are all essential initial components in an executive capable of operating effectively across cultures and with mixed cultures. In making the process work, the challenge of learning about others increases following the same sequence. The real problems lie in the worlds of alternative meaning, compounded by the competitive pressures of business. When the other poker player’s eye flickers, is he bluffing, or does he have mild conjunctivitis?

NOTE 1. Italics added.

ACKNOWLEDGMENTS Much gratitude is owed to the organizers of the Thunderbird conference on global mindsets held in November 2005, for the stimulating exchanges it

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brought to bear on the issue. I would especially like to note conversations on this topic with Mansour Javidan and the subsequent advice given by him and Michael Hitt in preparing the chapter. I also acknowledge with thanks the support of INSEAD’s Euro-Asia and Comparative Research Centre and the technical help of Nathalie Gonord.

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CULTURAL INTELLIGENCE AND THE GLOBAL MINDSET P. Christopher Earley, Charles Murnieks and Elaine Mosakowski INTRODUCTION AND OVERVIEW With the globalization of business, a relevant question is how might people deal with others from fundamentally different backgrounds (cultural, ethnic, functional, etc.)? Many authors (Rhinesmith, 1992; Paul, 2000; Gupta & Govindarajan, 2002; Kefalas, 1998, just to mention a few) suggest that managers working in international contexts require a specialized way of thinking about the environment in which they operate, a so-called ‘‘global mindset.’’ In the current chapter, we discuss the evolving notion of a ‘‘global mindset’’ and contrast it with extant work on the related concept of ‘‘cultural intelligence’’ (Earley, 2002; Earley & Ang, 2003; Earley & Mosakowski, 2004; Thomas & Inkson, 2004). The thesis of this chapter is that cultural intelligence (CQ) clarifies and extends elements associated with the global mindset (GM) concept in specific directions. In particular, our review of CQ and GM finds common interests in cognition, motivation, and behavior. But CQ emphasizes cognitive flexibility and metacognition across diverse cross-cultural settings, whereas GM primarily focuses on the collection and processing of contextspecific knowledge. CQ stresses cross-cultural self-efficacy and motivation, whereas GM includes somewhat more vague concepts of commitment and The Global Mindset Advances in International Management, Volume 19, 75–103 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19004-5

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willingness to engage. Finally, CQ goes beyond GM’s attention to enacting policies tailored to a cultural setting by also focusing on the behavioral ability to interact interpersonally. In the next section, we turn our attention to the definition and clarification of culture since this construct forms the basis of a global mindset.

BASICS OF CULTURE Any discussion of a global mindset and cultural intelligence must begin with the notion of culture. After all, culture represents the core of society in relation to its institutions and practices (Berry, 1990; Bond & Smith, 1996; Hofstede, 1991; Lehman, Chiu, & Shaller, 2004; Triandis, 1972, 1994). Whether culture emerged as a by-product of evolution to combat the risk of isolation (and to help convey adaptive features of social interaction to safeguard the community) or in reaction to psychological needs of discovering meaning in the world around us (Lehman, Chiu, & Schaller, 2004), it remains a central feature of how researchers and practitioners interact across geographic and sociological boundaries. The human need to form collectivities and to identify oneself based on definable subgroups makes the formation of culture inevitable (Stryker & Burke, 2000). Kluckhohn (1954) defines culture as patterned ways of thinking, feeling, and reacting to various situations and actions. It is acquired and transmitted mainly by symbols, including their embodiments in artifacts. The essential core of culture consists of historically derived and selected ideas and especially their attached values. Culture can be seen as shaping the nature of social structures as they grow and adapt (Hofstede, 1991). Hofstede (1991) provides a commonly cited definition of culture. His view holds that culture is best represented as a set of programming for people within a nation: the ‘‘software’’ of the mind. Societies shape their collectivities and social aggregates according to the rules implied by culture. Rohner (1984) offers useful distinctions of culture, social system, and society. He defined society as a territorially bounded, multigenerational population recruited largely through sexual reproduction and organized around a common culture and a common social system (p. 131). He defined a social system as the behavioral interactions of multiple individuals who exist within a culturally organized population and culture (p. 119) as ‘‘y the totality of equivalent and complementary learned meanings maintained by a human population, or by identifiable segments of a population, and transmitted from one generation to the next’’ (italics in the original). He asserts that the cross-generational

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transmission of cultural meanings within a society is imperfect; over time individuals acquire variations on cultural meanings held by their predecessors imperfectly shared. Any two individuals from a common culture may hold slightly different meanings for the same event or construct, and these two individuals may have shared meanings with other parties in the society but not with one another. Although these definitions seem straightforward, a global mindset requires having knowledge of other cultures (and extant practices, institutions, etc.) as well as an overarching mental framework that might integrate seemingly disparate cultures. An additional complication arises, however, when discussing concepts that are unique and idiosyncratic to particular cultures in contrast to those common across cultures. Before we tackle the specific differences and similarities of these constructs across boundaries, a more general discussion of cultural specificity is warranted.

Emic and Etic Constructs An important characteristic of human functioning is that some constructs and processes may exist uniquely in one culture. Such a construct or process is referred to as an emic construct, while universals are etic constructs. Briefly, a construct is considered emic if it has its basis within a given culture (or group of cultures) and it is fully appreciated only within this context. An emic construct gains meaning from its context and it cannot be appreciated fully absent a contextual interpretation. For example, the Chinese concept of ‘‘guanxi’’ has received much attention in the literature. Much of this work has ignored the emic nature of this construct and misinterprets the meaning of guanxi (Tsui, 1998). Some scholars describe guanxi as bribes and gift-giving as a form of corruption. Although this certainly may happen with guanxi, it is not an inherent part of the construct. Guanxi refers to the establishment of social relationships (Farh, Tsui, Xin, & Cheng, 1998) by offering gifts as token gestures to establish and build a relationship across parties. Without these symbolic gestures, the social bond among people is weakened. Thus, the concept of guanxi must be viewed as an emic construct embedded in the Chinese social context. Other constructs are etic or universal (Berry, 1990; Earley & Mosakowski, 1996). An example of a universal construct is that all people have certain cognitive functions such as memory and recall (with the idiosyncratic exception of people suffering from some physiological or psychological

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impairment). Although people’s memories and ability to recall events differ, these cognitive functions are ubiquitous. Some social institutions are etic, such as marriage or mourning of a lost loved one (Berry, 1990; Resaldo, 1989). The identification of a psychological universal is a difficult one to establish and defend. There are a number of constructs that appear only to be universals. Berry refers to these constructs as imposed-etics (what Triandis refers to as the pseudo-etic), or constructs that are derived in a limited number of cultural systems but do not really apply beyond the fringes of these cultures. An etic is imposed if it is developed in one subset of cultures and applied to others, even if inappropriate to do so. Earley and Mosakowski (1996) described a parallel notion of the pseudo-emic, meaning that some constructs are assumed to be idiosyncratic and unique but, in fact, are not. An imposed-etic captures some generalizability across cultures while being relatively situation specific. Berry suggested that, at the extreme, a pseudoetic is a form of intellectual colonialism wherein the academic wisdom of one culture is imposed upon others with exaggerated hubris. A different form of etic/emic construct may be observed – that of the derived-etic. The identification of etics is something that Berry refers to as identifying derived-etics, meaning that a principle or construct is identified in a subset of cultures and then is examined in other cultures to assess its universality. Our discussion of culture and the specificity of constructs is a backdrop for elaborating on a core idea within this chapter, namely, a comparison of a global mindset with cultural intelligence. As we will discuss, GM has its focus on the etic aspects of culture and creating a single frame of mind that enables a person to work across cultural boundaries, perhaps overlooking nuances of emics. In contrast, CQ emphasizes the discovery of emics as well as etics through an individual’s own interactions in new cultural situations. We now turn to a discussion of global mindset followed by a discussion of cultural intelligence and its contrast (with global mindset). Finally, we suggest ways that a study of cultural intelligence can help guide and focus future work on global mindsets.

GLOBAL MINDSET – OVERVIEW OF THE CONSTRUCT Both macro- and micro-organization scholars, psychologists, sociologists, and organizational strategists seem to agree on several key facets of a global

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mindset. A global mindset refers to a psychological construct capturing a frame of reference based on interacting with people from geographically distant (from the perceiver) regions. Srinivas (1995) defines a global mindset as a way of approaching the world and a tendency to scan from a broader perspective. It includes elements of curiosity, awareness of diversity, and acceptance of complexity and uncertainty (Srinivas, 1995). In an early proposal concerning a global mindset, Rhinesmith (1992) provides his views on what elements constitute a global mindset and what personal characteristics are associated with those elements. He defines a mindset (p. 63) as ‘‘a predisposition to see the world in a particular way that sets boundaries and provides explanations for why things are the way they are, while establishing guidance for ways in which we should behave. A mindset is a filter through which we look at the world.’’ A global mindset involves scanning the world from a broad perspective, looking for unexpected trends and opportunities to achieve personal, professional, or organizational objectives and searching for the broad picture and context surrounding situations. It also entails embracing the complexity and contradictions inherent in global interactions. People with a global mindset value diversity and multicultural teamwork; they are inclusive rather than exclusive. They also are comfortable with the ambiguity, surprises, and unpredictability inherent in complex systems. Individuals with global mindsets continually seek to discover new meanings and to reform boundaries in attempts to improve lives. Having a global mindset requires possessing six personal characteristics: knowledge – broad as well as deep, conceptualization – ability to deal with complexity, flexibility – ability to adjust to global and local demands, sensitivity – for cultural diversity, judgment – ability to intuit decisions with inadequate information, and reflection – seeking continuous improvement. The elements of global mindsets and the associated personal characteristics map onto six ‘‘competencies’’ characteristic of global managers: managing competition, complexity, adaptability, teamwork, uncertainty, and learning. According to Srinivas (1995), global thinkers tend to be open to themselves and others by rethinking boundaries and changing their behavior. A global mindset is the foundation for business competencies such as managing competitiveness and managing uncertainty. Srinivas (1995) sees it as a general orientation to the world. It represents ‘‘y a certain curiosity about the world, to see goals and objectives against larger backdrops and time frames’’ (p. 30). He proposes the idea of a global mindset as a broad, cosmopolitan perspective that is linked to actions. Global mindsets result in organizational consequences through (1) the formulation of a vision, (2) the

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crafting of strategy to realize the vision, and (3) mobilizing and empowering human resources. Srinivas describes eight components that compose a global mindset:  A curiosity and concern with context – involves placing current tasks in both historical and probable future contexts.  Acceptance of complexity and its contradictions – involves feeling comfortable with inevitable conflict and managing minorities’ concerns.  Diversity consciousness and sensitivity – valuing diversity and networks, being able to inspire others.  Seeking opportunity in surprises and uncertainties – taking risks and making intuitive decisions.  Faith in organizational processes – trusting and empowering subordinates instead of tightly controlling them.  Focus on continuous improvement – focus on both self-improvement and helping others improve, making adaptive change.  Extended time perspective – long-term views associated with long-term planning and not worrying about short-term perturbations.  Systems thinking – looking for interdependencies and cause-effect mechanisms, involves anticipating impacts and dealing with reactions. Kefalas (1998) adopts Rhinesmith’s (1992) definition of a mindset as: ‘‘y a predisposition to see the world in a particular way that sets boundaries and provides explanations for why things are the way they are, while at the same time establishing guidance for ways in which we should behave. It is a filter through which we look at the world. A global mindset means that we scan the world from a broad perspective, always looking for unexpected trends and opportunities that may constitute a threat or an opportunity to achieve our personal, professional, or organizational objectives’’ (p. 556).

Kefalas argues that global mindsets allow individuals to see the world as a whole and to use knowledge gained from cosmopolitanism to design value-maximization strategies for everyone involved. He provides a general framework involving the ability to think globally (a continuum of conceptualization) and to act locally (a continuum of contextualization). He suggests that the goal of a global mindset is finding/developing individuals who can understand global points of view and then adapt strategies to fit at local levels (ideally, managers should be ‘‘glocals,’’ or a global thinker with a local perspective and appreciation). Bartlett and Ghoshal (1998) introduce the concept of the ‘‘transnational’’ organization. They argue that transnational organizations are characterized by simultaneous commitment to competitiveness, flexibility, and learning on

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a global scale. They also contend that managers with globally oriented mindsets are central to transnational organizations. Transnational organizations, and by extension their management teams, selectively centralize or decentralize assets (meaning they do not adopt a ‘‘blanket’’ centralization or decentralization policy). They achieve competitiveness by being selective in centralization decisions. This implies that management both accepts and embraces the complexity involved in adapting to local markets in a global economy. Because transnational managers seek to understand and exploit foreign subsidiaries and markets for the focal firm’s benefit, they must possess a broad (possibly global) mindset that understands the contributions inherent from all different functions of the firm and the need to be flexible in making decisions. Optimization according to the situation, not rigid adherence to company policy, seems to be the general theme. Kedia and Mukherji (1999) proposed a broad view of a global mindset in a conceptual paper. They suggest that a global mindset rests largely on the knowledge and skills of a manager. Global mindsets involve the realization that a firm is dependent on the global economy even when the firm’s activities are seemingly confined to the domestic environment. Global mindsets are necessary to handle global competition. To sustain and develop a global mindset, a manager needs particular knowledge and skills. Knowledge involves understanding of the different aspects of an interdependent world, while skills involve behavioral abilities that enable effective work in a global context. Kedia and Mukherji (1999) also argue that global mindsets involve longer term temporal views and increased tolerance of other people and cultures. Individuals with global mindsets thrive on cultural diversity, ambiguity, contradictory forces, and complexity. Global mindsets also involve emotional connections with people throughout worldwide operations. The knowledge necessary for global mindsets is composed of mastery over relevant technology, knowledge about relevant sociopolitical factors, and knowledge of culture and cross-cultural issues. They argue that global mindsets are found in a type of manager called the ‘‘integrator.’’ Kedia and Mukherji (1999) state: The integrator holds multiple cultural perspectives and creates a worldwide web of relationships. The integrator weaves together complex webs of partnerships, alliances, and relationships that shift and reconfigure over time as new threats and opportunities appear. The integrator is one who understands, who is aware, and who is competent. The integrator is able to bridge differences in a meaningful way, and is able to manage the differences between people, values and cultures (p. 245).

More recently, Gupta and Govindarajan (2002) argue that mindsets are cognitive filters through which we observe and make sense of the world.

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They define a global mindset as one that combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity. Global mindsets rest upon knowledge structures with great diversity combined with an ability to integrate diverse viewpoints. A global viewpoint without an integrative capability relegates a firm to serving lots of separate markets without realizing any benefits of combination and integration. Thus, the value of a global mindset lies in combining speed with accurate responses to market opportunities. When a company has a grasp of the needs of local markets, it can build bridges between the needs of different markets and the firm’s own global experience and capabilities (thus, the combination of integration and differentiation). Begley and Boyd (2003) define a global mindset as the ‘‘ability to develop and interpret criteria for business performance that are not dependent on the assumptions of a single country, culture or context and to implement those criteria appropriately in different cultures and contexts’’ (p. 25–26). They go on to assert that achievement of a global mindset requires elements similar to Kefalas’ (1998) model of thinking globally, but acting locally. In their view, this involves balancing the tensions of global consistency and local responsiveness. While possession of a global mindset could confer competitive advantage, Begley and Boyd (2003) caution that the pull of rapid globalization often overwhelms careful management of customizing local actions. Arora, Jaju, Kefalas, and Perenich (2004) employ the Kefalas framework in their empirical analysis of the global mindsets of U.S. textile and apparel industry managers. They add to the descriptions of conceptualization and contextualization. They state that a conceptualization is ‘‘y a means of structuring the way one looks at the world and is evaluated by the degree to which it enables one to cope with the complexity of a phenomenon on a practical basis. It refers to a way of thinking and the ability to comprehend oneself as part of a global environment (pp. 399–400).’’ In addition, a contextualization is defined as ‘‘y a process by which a person adapts the conceptual framework to the local environment. It refers to a person’s ability to act in a context and adapt his or her ideas to the local environment (p. 400).’’ This provides a useful general conceptualization, but it does not explicate what individual-level mechanisms might be involved in enabling a cosmopolitan cognitive approach with an effective, adaptive behavioral repertoire. Nummela, Saarenketo, and Puumalainen (2004) provide an empirical assessment linking global mindset to firm performance. They define a global mindset similar to Gupta & Govindarajan (2002), associating it with

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openness to and awareness of cultural diversity and the ability to handle it. Global mindsets involve a positive attitude toward international affairs and also an ability to adjust to different environments and cultures. Thus, global mindset includes both attitudinal and behavioral elements. Operationally, they measured a global mindset with a seven-item, multidimensional scale measuring items of managerial proactiveness in international markets, managerial commitment to internationalization, and possession of an international vision. They found a positive and significant relationship between a global mindset and the amount of international business conducted. A positive and significant relationship was also found between the degree to which a firm’s environment stressed internationalization and the possession of a global mindset. In another empirical study of global mindsets, Murtha, Lenway, and Bagozzi (1998) created and verified two five-item, seven-point Likert-type mindset scales measuring the global integration and national responsiveness expectancies of international managers. Surveying 370 managers of a U.S.based multinational corporation across a three-year time span, they demonstrated that the mindsets of managers can evolve in a globally oriented direction. In this particular study, the authors were primarily interested in establishing quantitative measures of global integration and national responsiveness that demonstrated both convergent and discriminant validity. In summary, research on a global mindset shares an emphasis on thinking and cognition with a less prominent view of related constructs such as motivation or behavior.

CULTURAL INTELLIGENCE – OVERVIEW OF THE CONSTRUCT Cultural intelligence captures a person’s capability to adapt effectively to new cultural contexts and it has both process and content features (Earley & Ang, 2003). Its general structure consists of three facets including cognitive, motivational, and behavioral elements. In this section, we describe these facets and the underlying processes that link them. Cognitive and Metacognitive Facet The first facet refers to cognitive processing aspects of intelligence, and a useful way of conceptualizing it is through self-concept theory. Just as with

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global mindset, the cognitive facet can be conceptualized as being embodied in the mental representations of the self in relation to others. The self is a person’s mental representation of his or her own personality, social identity, and social roles (Kihlstrom & Cantor, 1984; Stryker & Burke, 2000). The self is a dynamic interpretive structure that mediates most significant intrapersonal and interpersonal processes (Markus & Wurf, 1987; Markus & Kitayama, 1991; Markus, Kitayama, & Heiman, 1996). Intrapersonal processes include cognitive information processing, affect, and motivation, whereas interpersonal processes reflect interactions with the social milieu, including social perceptions, choices of situation, interaction strategies, and reactions to feedback. The self is formed through experience and thought and encoded in memory alongside mental representations of other objects (reflected and imagined) in the physical and social world (Bond & Smith, 1996; Stryker & Burke, 2000). Knowing oneself is insufficient for high CQ. Cognitive flexibility is critical to CQ (as it is to a global mindset), since new cultural situations require a constant reshaping and adaptation of self in operating within a new setting. Flexibility of self-concept and ease of integrating new facets into it are associated with high CQ, since understanding new cultures may require abandoning preexisting conceptualizations of how and why people function as they do. High CQ also requires a capability reformulating one’s self-concept (and concept of others) in new complex configurations. Thus, flexibility and a capability to reorganize one’s self-concept inductively are necessary. An exception to this argument might be someone who is bi- or multicultural, since self-knowledge in this case implies awareness of more than a single culture. Such an individual may have a sufficiently complex self-concept to reflect the flexibility needed for CQ. In addition to cognitive flexibility, high CQ requires strong reasoning skills. Exposure to new cultures often requires detective work to discern significant cues in the environment. Inductive reasoning is important for CQ as a person attempts to sort out, and make sense of, a multitude of social and environmental cues. Take, for example, Hall’s (1976) discussion of his experiences staying in hotels in Japan. After a short time in his hotel (several days of a stay that was to last approximately a month), he returned to his room only to find that he had been moved to another room. After several more days, he found that he had been moved again. This room shuffle reoccurred when he stayed in small hotels in other parts of Japan as well and he initially concluded that he was being moved around because of his low status (gaijin, or foreigner) within the culture. That is, the reason he was moved about was because

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higher status patrons wanted his room. At one time in Kyoto, he was even moved from one hotel to another. His cultural frame and self-concept suggested that he was moved around because of low status. As he later surmised (p. 65): It was our lack of understanding of the full impact of what it means to belong to a highcontext culture that caused me to misread hotel behavior at the Hakone. I should have known that I was in the grip of a pattern difference y . The answer to our puzzle was revealed when a Japanese friend explained what it means to be a guest in a hotel. As soon as you register at the desk, you are no longer an outsider; instead, for the duration of your stay you are a member of a large, mobile family. You belong. The fact that I was moved was tangible evidence that I was being treated as a family member – a relationship in which one can afford to be ‘‘relaxed and informal and not stand on ceremony.’’ This is a very highly prized state in Japan, which offsets the official properness that is so common in public.

Consistent with an American perspective, Hall interpreted room and hotel shuffling as a sign of low status. Strong inductive skills would have suggested that, given Japanese culture’s emphasis on politeness to strangers, only a close friend would be imposed upon by a Japanese host. New cultural contexts provide, at best, ambiguous and, at worst, misleading cues for what is happening. An important aspect of cognitive functioning in CQ refers to the metalevel strategies that global managers have for understanding a new culture. These higher level cognitive processes are part of a person’s metacognition (Earley & Ang, 2003). Metacognition refers to thinking about thinking, or knowledge about cognitive objects (Flavell, 1976, 1987). Metacognition can be further broken down into two complementary elements: metacognitive knowledge and metacognitive experience. Metacognitive knowledge refers to one’s acquired world knowledge that has to do with cognitive matters and it reflects three general categories of knowledge (Flavell, 1987). First, it reflects the person aspects of knowledge or the cognitions that we hold about people as thinking organisms. Second, it refers to task variables, or the nature of the information acquired by an individual. A person learns things about how the type of information encountered influences how it should be dealt with in various contexts. Third, it reflects strategy variables, or the procedures used to achieve some desired goal. Whereas a cognitive strategy might be something such as adding a set of numbers to attain a total, a metacognitive strategy might be to add the numbers up several times to ensure that the total is correct. The original addition procedure gives a ‘‘correct’’ answer to the problem but the successive checks on the total function differently. The

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follow-up operations are intended to reassure that the correct answer has been found. Metacognition is a critical aspect of CQ since much of what is required in a new culture is putting together patterns into a coherent picture even if one does not know what this coherent picture might look like. To do so requires a higher level of cognitive strategy about people, places, and events. It is for this reason that many cultural training programs fail, since they overemphasize the specific example at the expense of a more general learning principle. Many companies train their expatriates by providing countryspecific information. This approach not only is limited by a person’s involvement in the training method but also does not adequately prepare an expatriate for understanding and mastering novel situations. With an effective metastrategy this problem is overcome. CQ reflects cognitive processing capabilities in a number of ways. CQ captures a person’s self-concept and degree of differentiation. Incorporating new information and using the self as a complex filter for understanding new cultural settings is critical. Inductive reasoning is central to CQ since many new cultural situations require that a person step beyond his or her existing knowledge to understand what is going on around him or her. This is not merely empathy; cues determining another person’s affective state, relied upon by an empathetic individual, may be absent or conflicting with what is expected. Emotional expression may be misleading, since it is the underlying emotional states that are truly reflective of a person’s feelings. A high-CQ person must inductively create a proper mapping of the social situation to function effectively. Finally, CQ captures metacognition and higher order learning for an individual.

Motivational Facet Cognitive processing and functioning have long been the limiting domain for traditional work on intelligence. Scholars working in this field traditionally neglect other aspects of psychological functioning even though they are obviously critical for successful adaptation. (There are several prominent models of motivation that incorporate cognitive functioning, such as Bandura’s (1986) self-regulation theory or Locke and Latham’s (1990) goal-setting theory.) Ironically, it appears that motivation theorists have integrated cognition into their models more so than the intelligence researchers have done with motivation. In this section, we explore the

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motivational basis for cultural intelligence, focusing on a person’s self-efficacy and personal motives. It is not sufficient to have knowledge of another group’s ways of dealing with the world. One must be able (and motivated) to use this knowledge and produce a culturally appropriate response. To relate a person’s motivation to cultural intelligence, we return to a person’s self-concept. Cultural intelligence reflects self-concept and directs and motivates adaptation to new cultural surroundings. Self-efficacy is a key facet of the self (Bandura, 1986; Erez & Earley, 1993). Perceived self-efficacy is ‘‘a judgment of one’s capability to accomplish a certain level of performance’’ (Bandura, 1986, p. 391). People tend to avoid tasks and situations they believe exceed their capabilities. Efficacy judgments promote the choice of situations and tasks with high likelihoods of success and eliminate the choice of tasks that exceed one’s capabilities. Self-efficacy plays an important role in CQ because successful intercultural interaction is based on a person’s sense of efficacy for social discourse in a novel setting. A person who does not believe in his or her own capability to understand people from novel cultures is likely to disengage after experiencing early failures (and failure is likely to occur early in such encounters). If the motivational facet of cultural intelligence is weak, adaptation will not occur. A person’s proactive engagement of new cultural circumstances is highly influenced by a sense of self-efficacy. Some individuals are highly efficacious concerning unfamiliar social settings and how to mix and learn more about people from unfamiliar cultures. Further, high efficacy means that, after individuals confront obstacles, setbacks, or failures, they will reengage with greater vigor rather than withdraw (Bandura, 1997). This feature of efficacy is critical for a cultural sojourner because much of discovering and adapting to a new culture means overcoming obstacles and setbacks. Highly efficacious people do not require constant rewards to persist in their actions; rewards may not only be delayed, they may appear in a form that is unfamiliar (and thereby not appearing as a reward). People having low efficacy expectations are unable to maintain commitment to a course of action under such duress. An additional benefit is derived from a heightened sense of efficacy, namely, a strategic way of thinking and problem-solving (Bandura, 1997; Locke & Latham, 1990). Individuals who have a strong sense of efficacy engage in a problem-solving and strategic approach to overcoming obstacles and this is very important in intercultural encounters since immediate and

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obvious answers to dilemmas may be absent. High-CQ people have a strong efficacy with regard to intercultural encounters and so they ‘‘work smart as well as hard.’’ Norms and values are related to CQ and they are an important aspect of the self as they guide what features of the social environment a person attends to and what he or she values (Glenn & Glenn, 1981; Hofstede, 1991; Kluckhohn, 1954; Kluckhohn & Strodtbeck, 1961; Rokeach, 1973; Schwartz, 1992, 1993). From a motivational perspective, values and norms guide our choice of activities and help define our evaluation of them. A person having strong group-based values is likely to avoid situations requiring personal actions. Further, such a person is likely to evaluate individual, idiosyncratic behavior negatively. Thus, cultural adjustment may be impaired or influenced by one’s motivation energized by cultural values and norms.

Behavioral Facet The third facet of cultural intelligence refers to the behaviors in which a person engages. The behavioral aspect of CQ suggests that adaptation not only is knowing what and how to do (cognitive) and having the wherewithal to persevere and exert effort (motivational); it also requires having responses needed for a given situation in one’s behavioral repertoire. Lacking appropriate responses, a person must have a capability to acquire such behaviors. CQ reflects a person’s capability to acquire or adapt behaviors appropriate for a new culture. Difficulties in acquiring a new language, such as accurate pronunciation of tones and phonemes in languages such as Mandarin or Thai, can be important to cultural adjustment. Given that language conveys many subtleties of a person’s culture, it is our argument that people who lack an aptitude for acquiring languages, at least at some reasonable level of proficiency, will have a low CQ. In a sense, language acquisition is one example of a behavior that one might need to be successful in an expatriate work context. We are not saying that there is a causal connection between language acquisition and CQ; we are merely arguing that the two are related. A person’s behavior is tied to CQ in more indirect ways. A person may know and wish to enact a culturally appropriate behavior, but he or she cannot do so because of some deep-set reservation. For example, imagine an expatriate who is provided with a plate filled with a local delicacy of fried

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grubs and earthworms in the Australian outback but who is unable to overcome his revulsion and eat. This type of response (or lack of it) can be thought of in behavioral terms (Luthans & Kreitner, 1985). That is, the specific reinforcement history of an individual bears strong relevance to his or her execution of particular actions in new cultural settings. In an intercultural encounter, even if a person is able to produce a desired response eventually, it remains a problem that the host may detect hesitation and react negatively. Behavior properly executed requires a willingness of a person to persist over time. Persistence is necessary for the acquisition of new skills and so is a person’s aptitude to determine these new skills. It is not merely enough to be willing to try and learn new behaviors; a high-CQ person has an aptitude to determine where new behaviors are needed and how to execute them effectively. Role modeling provides an important contribution to behavioral CQ. A person with high CQ can adapt his or her behavior to any given cultural context. This is loosely illustrated by the old adage of ‘‘When in Rome, do as the Romans do.’’ Displaying behaviors that are consistent with a target culture is an important aspect of intercultural adjustment and interaction. Mimicry offers a potentially important vehicle to adaptation. A myriad of cues are provided through observing others and observing their reactions as you interact with them; a person high in behavioral CQ integrates and mimics these cues and behaviors (Chartrand & Bargh, 1999). Work on mimicry suggests that the effective mimicking of another person’s behavior, even if done unconsciously, results in an increased satisfaction with the interaction. Mimicry is subtle and even unconscious (Chartrand & Bargh, 1999) but it results in generally positive effects in a social encounter. A highCQ person is a talented mimic, although such mimicry may be largely unconscious. If mimicry is used purposely then it constitutes a type of cognitive strategy as well as a behavioral intervention. It is not just acting the same as others and pretending to be a member of another culture, however; it is engaging in actions that put people from another culture at ease. To control personal displays and actions, a person must be able to use the various behavioral cues provided by others to interpret their actions and underlying motives. What is particularly difficult about such inferences is that these behaviors often occur in highly unfamiliar settings and as part of unfamiliar rituals. In addition to these facets of CQ, there are a number of processes that underlie how people deal with new and unfamiliar cultures. In the next section, we turn to a discussion of the process aspects of CQ.

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Process Aspects of Cultural Intelligence Cross-cultural knowledge can be differentiated across three levels (universal, mediate, and setting-specific levels) and between two types – declarative, or what it is that we know about something, and procedural, or what we know about how something operates (Ackerman & Heggestad, 1997; Tulving & Schacter, 1990). The simplest way to think about declarative versus procedural knowledge is that the former is information about the characteristics of an entity (e.g., a refrigerator keeps objects cold), whereas the latter describes the way something functions (e.g., a refrigerator has a coolant circulating through various heating coils that act to extract the heat from the ambient environment and this heat is then given off by the coolant, which is recirculated). That is, declarative knowledge concerns facts, propositions, and events, whereas procedural knowledge concerns underlying function and actions. Both types of knowledge exist at the three levels of analysis although they differ in general specificity and link to a social setting. Declarative and procedural knowledge at a universal level does not need to be learned, and reflects basic psychological processes such as storing and recalling memories, sensory encoding, and language (the capacity for language rather than a specific language). Declarative categories include features such as distinguishing animate from inanimate, universal conceptions of good versus evil (not the definition of each, but the existence of these universal categories), and self-concept. Procedural categories include storing and recalling memories, sensory processing, etc. At a universal level, declarative and procedural knowledge is highly abstract and general. Universal knowledge is inherent to the individual and not merely a product of personal experience. Universal knowledge is not unchangeable, and extreme circumstances (such as physiological damage to the brain) can influence these knowledge categories at a universal level. Psychological universals represent declarative knowledge at a highly abstract level. For example, people have abstract categories of person perception and self-concept (Epstein, 1973). The dimensions of depth, breadth, and complexity of these categories vary across individuals, but each person has memory-based schema with these dimensions. Moral values may also be universal according to some scholars (Wilson, 1993). If so, these universal values would constitute declarative knowledge at a universal level. Proper treatment of self and others, views of justice, fair allocation of resources, and duty to others are possible universal values. Procedural knowledge at a universal level refers to the routines that individuals have for processing the information they receive. Procedural

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memory stores sequences of actions; in the case of universal procedural knowledge, people have routines for processing information such as storing new memories or categorizing experiences (Wyer & Srull, 1980). This is much like what Wyer and Srull (1980) called an executor, or a construct whose function is to store, move, and retrieve information. Universal declarative and procedural knowledge exist for all people but to varying degrees. A person with high CQ has a greater capacity to store and categorize new experiences than a person with low CQ (although both possess this universal capacity). At a mediate (cultural) level, procedural and declarative knowledge reflect more culture-specific information and characteristics. For example, on the first author’s first trip to Japan’s Narita Airport, he noticed that several of the airline personnel were wearing white cotton gloves as they handled baggage, directed buses, etc. What was the purpose of wearing white gloves? This information is processed so that he might understand the meaning of white gloves. Is there a concern about contamination? Is there a concern about communicable diseases? Is there a norm of cleanliness? Procedural knowledge reflects our existing knowledge about how the Japanese work at airports, how other Asian cultures operate at airports, etc., and our specific declarative knowledge of the Japanese might emphasize cleanliness, xenophobia, etc. At a mediate level, he is trying to generate an inference about Japanese workers and why they wear white gloves. Our inference will not necessarily apply outside of this instance, but it applies to more than a single idiosyncratic individual or experience. This gives rise to further processing at a specific setting to understand the significance of gloves at this airport for a given airline employee in a given situation. At a mediate level, he draws from his shared experiences within his own culture (and across cultures as a sojourner) as a general lens for viewing and understanding this situation. He asks, why do some airline employees wear white gloves? To formulate an answer he draws upon setting-specific procedural and declarative knowledge to deal with the uniqueness of this situation. The specific setting in which the first author is operating largely influences his use of particular procedural routines and declarative knowledge. He seeks collaborating cues to form a hypothesis that might explain the use of white gloves by airport personnel. For example, he hypothesizes that the Japanese are fearful of disease and so gloves are worn to fend off biological contamination. To assess this, he turns to past experiences at airports, encounters with Japanese students and colleagues, prior visits to other Asian countries, etc., and ultimately forms an impression based on this information combined as a judgment.

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One’s specific reaction to and processing of this intercultural encounter are the products of information processing and integration at many different levels of processing. At a universal level, people deal with an encounter by processing the events, categorizing the information, and storing it into general person construct categories. These categories include features such as human versus inanimate object and a general sense making concerning the nature of people and their functions and roles. At a mediate level, people process the encounter within the context of what they know (e.g., knowledge of Japanese culture and norms). They draw from their existing memory concerning Japan and the Japanese people. At a proximate level, they process the encounter as to why this particular person is wearing gloves, his reaction toward others, whether all personnel are wearing gloves, how they feel about a person wearing gloves on this given day, the ambient temperature, and a multitude of additional setting-specific cues. In summary, the process aspects of cultural intelligence can best be conceived as operating at different levels of analysis and consisting of declarative and procedural knowledge. They operate at three levels: universal level – processes and knowledge for general processing of a universal conception of humanity, mediate level – processes and knowledge that are culture-specific, and setting-specific level – processes and knowledge that are specifically tied to the context, people, and timing of events. In the following section we focus on an integration and comparison of cultural intelligence with global mindset. This analysis focuses on an individual-level of analysis to align with the CQ construct. Although some definitions of global mindset refer to macrophenomena (e.g., Bartlett and Ghoshal’s (1998) transnational organization), the definitions of global mindset inevitably are tied to an individual-level construct.

COMPARISONS OF GLOBAL MINDSET AND CULTURAL INTELLIGENCE To describe and integrate the extant literature on a global mindset, this section analyzes the most prominent works using the three constituent elements of cultural intelligence: cognition/metacognition, motivation, and behavior. We focus on whether the construct of a global mindset, as formulated in the current literature, considers the aspects of individual psychology and behavior that cultural intelligence addresses. Table 1 presents our comparative review.

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Table 1. Cite

Rhinesmith (1992)

Srinivas (1995)

Murtha, Lenway, and Bagozzi (1998) Bartlett and Ghoshal (1998)

Kefalas (1998)

Kedia and Mukherji (1999)

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Analysis of Various Definitions of GM by CQ Components. Definition of Global Mindset

Scanning the world from a broad perspective, looking for unexpected trends and opportunities to achieve personal, professional, or organizational objectives. Embraces complexity, diversity, ambiguity, and unpredictability. Tendency to scan the world from a broad perspective. Includes elements of curiosity, flexibility, continuous improvement, faith, acceptance of complexity, diversity, and uncertainty. Balancing national responsiveness and global integration simultaneously, rather than trading one off against the other. Do not define global mindsets, but discuss ‘‘transnational’’ organizations. These organizations are committed to competitiveness, flexibility and learning on a global scale. Tendency to scan the world from a broad perspective, always looking for threats or opportunities. Involves conceptualization (thinking and perceiving globally) and contextualization (adapting actions to local contexts). Scanning the world from a broad perspective, and realizing interdependence of global economy. Includes appropriate knowledge, skills, and savvy.

Considerations of the Following CQ Dimensions? Cognition

Metacognition

Motivation

Behavior

Yes

No

Implied

Yesa

Yes

No

Implied

Yesa

Yes

No

No

Yesa

Yes

No

Implied

Yesa

Yes

No

No

Yesa

Yes

No

No

Yesa

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Table 1. (Continued ) Cite

Gupta and Govindarajan (2002)

Arora, Jaju, Kefalas, and Perenich (2004)

Begley and Boyd (2003)

Nummela, Saarenketo, and Puumalainen (2004)

Definition of Global Mindset

Combines an openness to/ awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity. GMs involve knowledge structures with great diversity combined with an ability to integrate diverse viewpoints. Scanning the world from a broad perspective, being open-minded, rethinking boundaries and modifying behavior. Involves conceptualization and contextualization. Ability to develop and interpret criteria for business performance that are not dependent on the assumptions of a single context and to implement those criteria appropriately in different contexts. Balancing global consistency with local responsiveness. Openness and awareness of cultural diversity and the ability to adjust to different environments and cultures.

Considerations of the Following CQ Dimensions? Cognition

Metacognition

Motivation

Behavior

Yes

No

Implied

Yesa

Yes

No

No

Yesa

Yes

No

No

Yesa

Yes

No

Implied

Yesa

a

The reader should note that ‘‘behavior’’ in terms of the GM definitions depicted in the table is different than behavior in CQ terms. Behavior in GM definitions involves an ability to translate cognitive perspectives of cosmopolitanism into effective action strategies that acknowledge the interests of diverse peoples and exploit differences for gains. It does not involve the individual ability to adapt to and blend in with diverse cultures, as is stated in CQ.

Cognition Every definition of global mindset emphasizes cognition, as does cultural intelligence. Scholars seem to agree that a global mindset requires an

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awareness of context and cultural differences (Gupta & Govindarajan, 2002; Kedia & Mukherji, 1999; Kefalas, 1998; Rhinesmith, 1992; Srinivas, 1995). Obviously, possession of either CQ or a GM implies that a minimum of mental effort is needed to at least recognize and understand that differences exist across cultures and these differences influence interpersonal interaction. Moreover, both CQ and GM involve cognitive flexibility. GM scholars often refer to the ability to change one’s self-concept depending on what is needed to interact effectively in a different culture (Rhinesmith, 1992; Srinivas, 1995). Similarly, CQ requires individuals’ modifying their self-representation by incorporating new facets of the focal culture. Last, strong cross-cultural reasoning skills are prerequisites for both the CQ and the GM concepts. Where CQ involves inductive reasoning to connect significant cues to underlying patterns, GM requires sensitivity to common patterns in different contexts and effective synthesis across these differences (Gupta & Govindarajan, 2002; Kefalas, 1998). All in all, it appears that both global mindset and cultural intelligence are mindful of basic cognitive elements that allow for the processing and comprehension of the impact of cultural diversity on interpersonal interaction.

Metacognition While the overlap of the cognitive aspects of CQ and GM is evident, GM conceptualizations generally do not involve considerations of metacognition. Even though many global mindset scholars espouse the need for individuals to reshape their self-concept and think reflectively (Rhinesmith, 1992; Srinivas, 1995), they do not describe in detail what higher order metacognitive strategies might be useful for analyzing more proximate thought processes. For example, synthesizing disparate cultural information is mentioned (Gupta & Govindarajan, 2002), but not the possibility of synthesizing across different cognitive processes to analyze disparate cultural information such as integrating new experiences into existing schema or making these schema more readily accessible for interpreting new situations. CQ explicitly posits the need to think about how information is processed and combined, while GM focuses more on making sure different types of information are represented and processed. Expansion of the GM concept to incorporate metacognitive elements discussed in CQ may facilitate individual performance in international contexts. Rhinesmith’s (1992) oft-adopted definition of a global mindset states that it is ‘‘a filter through which we look at the world’’ and that this filter is

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what allows for the viewing of ‘‘unexpected trends and opportunities to achieve our personal, profession or organizational objectives’’ (p. 63). This is a useful conceptualization but arguably a limited one. Using only one filter to view the global business environment will allow an individual to see certain opportunities but also to miss others because that particular filter is not attuned to all possible ‘‘trends and opportunities.’’ By definition, a filter removes certain factors from consideration. Metacognition, as incorporated in CQ, involves the ability to change cognitive filters and perceive the international context in a variety of ways, rather than just one. By cycling through different cognitive strategies, an individual can appraise the different trends and opportunities made available by viewing the international environment in a variety of contexts. Thus, metacognition could act as a force multiplier for a GM, enabling the individual to sort through various different mindsets and pick the one that maximizes exploitation of possible ‘‘trends and opportunities.’’ CQ metacognitive strategies allow for the possibility of raising one’s awareness to a higher level. Instead of looking for opportunities based on a context, as is stated in GM, a high-CQ individual may scan across a variety of contexts and notice patterns of commonality that have gone unnoticed by others. Gupta and Govindarajan (2002) talk about the need to synthesize across diversity, but do not talk about the cognitive strategies detailing how this synthesis should occur. The metacognitive element of CQ mentions functions like ‘‘pattern recognition,’’ and thus offers one possible avenue through which a GM could integrate knowledge across a broad range of contexts. In essence, the conceptualization of GM could become more actionable by considering the metacognitive element of CQ.

Motivation In CQ, motivation is an important, explicit consideration. Specifically, CQ refers to the motivation to engage in cross-cultural interaction and the selfefficacy required to persist through the inevitable setbacks. Global mindset scholars occasionally imply that motivation is an important constituent facet by referring to terms like ‘‘commitment’’ or ‘‘willingness’’ (Rhinesmith, 1992), but never address motivation directly. For instance, GM researchers talk about the necessity of a commitment to continuous learning (Bartlett & Ghoshal, 1998; Srinivas, 1995), a commitment to understanding and becoming smarter about global perspectives (Gupta & Govindarajan, 2002), or a ‘‘willingness to deal with broad global and foreign issues’’

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(Rhinesmith, 1992, p. 63). The mention of commitment or willingness implies that individuals with a global mindset will persevere in their attempts to learn about and adapt to different cultural contexts, but does not explore this contingency or address the factors that may impact it. Similar to the discussion about metacognition in the previous section, we argue that the concept of GM would benefit by consideration of motivation factors discussed in CQ. Even though GM scholars raise the need for individuals to commit to embracing diversity, the lack of motivational considerations prevents an understanding of the mechanisms through which a global mindset is developed intrapersonally. In turn, this leaves individuals ignorant about how to increase their ability to persist through adversity. The extensive work of Bandura (1997) leads us to conjecture that motivation to persist in international engagements can be increased by an elevation of the actors’ self-efficacy. Thus, one important subcomponent that all GM scholars should address is the intercultural self-efficacy central to CQ. Interestingly, the consideration of important constituent antecedents to intercultural motivation like self-efficacy mentioned in CQ may offer practical recommendations not considered under the current conceptualization of GM. For example, GM authors currently prescribe foreign travel (Kedia & Mukherji, 1999) or foreign job rotation (Gupta & Govindarajan, 2002) as ways to build a global mindset. Incorporating self-efficacy concerns, we might modify these recommendations to stage foreign travel or job rotation in a manner in which the developing manager progressively proceeds from cultures more similar to one’s own to those more different. Such a graduated approach to building a global mindset would incrementally increase the individual’s knowledge of diverse cultures while simultaneously keeping self-efficacy high. In this program, the developing manager has a lower probability of incurring a damaging shock to his or her intercultural selfefficacy because of the reduced dissimilarity between cultures. This is just one example of how CQ might increase our understanding of the important mechanisms that underlie development of a GM.

Behavior Every treatment of global mindset refers to some type of behavior, but this behavior differs from what is discussed in CQ. In the extant GM literature, behavior often alludes to the ability to turn the cognitive understanding of cultural differences into some type of effective policy (Arora et al., 2004; Gupta & Govindarajan, 2002; Kefalas, 1998), where effectiveness is usually

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defined as an increase in the welfare of all parties involved. GM scholars discuss behavior and adaptation as profitably applying the knowledge of cultural diversity. This includes the ability to craft policy, but not necessarily the ability to interact effectively on an interpersonal basis. While crafting and implementing strategy is one type of behavior, CQ takes adaptation further than does GM. In CQ, behavior refers to the ability of individuals interacting with others on a personal basis, sometimes simulating or mimicking other cultural practices. Behavior in CQ involves more than developing new plans that incorporate diversity; it also involves acquiring the behaviors necessary for interpersonal interaction. At the extreme, a person may possess a high level of GM (being able to understand and create effective cross-cultural strategy) but have a low level of CQ (being unable to adapt his or her behavior to interact individually with other cultures). Given the numerous technologies available in today’s global environment, interpersonal interaction is not necessarily a requirement for effective international policy. That said, GM’s failure to consider the behaviors involved in interpersonal interaction invites possible hazards. CQ explicitly acknowledges that certain behavioral repertoires may be required for intercultural interaction. Even if an individual cognitively understands and accepts diversity, and can cognitively synthesize across differences, he or she may be unable to interact effectively because of physical limitations. These limitations are not considered by the GM construct;1 GM makes the assumption that all people are behaviorally homogeneous. On one level, it is somewhat ironic that a construct like GM, which is dedicated to embracing cultural heterogeneity, assumes behavioral homogeneity. By ignoring possible behavioral limitations to cross-cultural interaction, GM overlooks the possibility that certain individuals may cognitively embrace diversity, but be unable to communicate that stance sincerely. Such individuals will be unable to craft effective global policies because certain international parties will not trust or be willing to engage the focal individual. In this instance, the physical component of behavior considered by CQ directly affects the policycrafting behavior of GM. Said otherwise, the behaviors considered by GM are only cognitively driven behavior and the GM construct may be underspecified without considering the physical elements of CQ.

CONCLUSIONS AND FUTURE DIRECTIONS This chapter attempted to compare global mindset and cultural intelligence. In particular, we reviewed extant literature on global mindset and argued

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that the three dimensions of cultural intelligence – namely, cognitive (and metacognitive), motivational, and behavioral – extend the ongoing discussions around what constitutes a global mindset, how managers can develop one, and how they can perform better in international contexts. We believe that cultural intelligence is, in some ways, a broader and, in other ways, a narrower construct than global mindset. Cultural intelligence is a broader construct than a global mindset in its attention to higher order metacognitive processes that facilitate problemsolving and pattern recognition across cultures. Without consideration of the processes underlying cognitive flexibility, global mindset may be steering managers toward thinking that is overly contextually based and that does not incorporate learning across contexts. The cognitive processes associated with a global mindset may be purely reactive to situational cues, whereas, drawing upon metacognitive resources and strategies, individuals with high CQ will dynamically adapt and adjust their existing ‘‘mindset’’ (schema, memory, etc.) as they encounter new cultural contexts. This adaptation leads to development of novel behavior and action provided a high-CQ manager is sufficiently motivated. Because of its singular focus on cultural differences across intercultural and international contexts, CQ is in some ways narrower than a GM. Global mindset refers more broadly to a psychological construct capturing a frame of reference used when interacting with people from geographically distant regions. The diversity and complexity associated with these interactions may or may not be limited to cultural differences. While social and religious differences may be closely intertwined with cultural differences, other differences may be relatively independent of culture, possibly deriving from the unique economic or political histories of the regions. Certainly the relatively general component elements of CQ may apply to interactions across distinct economic or political systems. Like cross-cultural interactions, the success of other types of cross-border interactions may depend upon an individual’s cognitive and metacognitive processing, motivational drivers, and behavioral abilities. Nonetheless, CQ is grounded in research on the psychological processes and physical manifestations associated with different meaning systems for different cultures. What is promising when imagining further integration of global mindset and cultural intelligence is their joint focus on a multiplexity of psychological processes that direct cognition, motivation, and behavior. One particular promising avenue is presented by an individual’s self-concept and identity (Burke & Reitzes, 1991) as core elements driving these psychological processes. Managers with global mindsets and high cultural intelligence are

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likely to emphasize their identity as a global manager and global citizen above other identities. As multinational corporations become increasingly powerful relative to nation-states, one may observe global roles being defined by interactions among an elite group of managers operating across borders and the adoption of global identities by these managers. Unlike typical roles that are defined within relatively homogeneous social units (Stryker & Serpe, 1982), these emerging global roles and global identities may span social and cultural boundaries. In addition, holding global identities may influence the social psychological construction of individuals’ other identities. People who place great importance on their identity as a global citizen may develop pancultural views of what activities and meanings are associated with being a leader or manager. While little is known about global identities, research on who becomes a successful global manager can investigate the nature of and development of global identities created through interacting both within heterogeneous social units and across multiple homogeneous social units. By studying the underlying drivers of global mindset and cultural intelligence, scholars may better understand what elicits these psychological orientations and processes, how they function, and when they contribute to an individual’s effectiveness or detract from it in a particular context. This knowledge will be useful for helping managers align their self-concepts and identities with their chosen goals and positions within global corporations and globalizing societies.

NOTE 1. The lack of consideration of behaviors by the global mindset construct is not meant to be perceived as an indictment. As a ‘‘mindset,’’ GM is obviously focused more intently on cognitive rather than behavioral elements. Nevertheless, in this paper, it is our intent to point out benefits to all involved by considering the integration of factors acknowledged by CQ, but ignored or overlooked by GM.

REFERENCES Ackerman, P. L., & Heggestad, E. D. (1997). Intelligence, personality, and interests: Evidence for overlapping traits. Psychological Bulletin, 121, 219–245. Arora, A., Jaju, A., Kefalas, A. G., & Perenich, T. (2004). An exploratory analysis of global managerial mindsets: A case of U.S. textile and apparel industry. Journal of International Management, 10, 393–411.

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THE ROLE OF PSYCHOLOGICAL CAPITAL IN GLOBAL MINDSET DEVELOPMENT Rachel Clapp-Smith, Fred Luthans and Bruce J. Avolio In a hypothetical exchange of letters regarding the state of global leadership research, Scandura and Dorfman (2004) state that the advent of the multinational corporation has challenged our mindsets. Indeed, the dizzying rate of globalization has led many international management scholars to question how existing theories and research findings may be applied to improve multinational success (Peng, 2004). Popular columnists such as Thomas Friedman (2005) have also made note of the drastic changes resulting from accelerated globalization in the early part of the 21st century. He describes global forces that have served as ‘‘flatteners’’ or events that have hastened the rate of globalization and changed the environment from one in which countries compete for resources to one in which any individual in any part of the world may compete on a level playing field. For example, Friedman indicates that your tax returns, while submitted to an accounting agency in the United States, may actually be processed somewhere in India (Friedman, 2005). This awakening to the new global environment has led to new thinking about global leadership and how today’s and tomorrow’s corporations can gain competitive advantage.

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One result of this new thinking in international management has been the emergence of the somewhat atheoretical, yet ubiquitous, concept of global mindset. Levy, Beechler, Taylor, and Boyacigiller (in press, p. 4) provide a comprehensive review of the concept of global mindset and note that it ‘‘has come to stand for everything supposedly global or transnational, from individual attitudes, skills, competencies and behaviors, to organizational orientations, structures and strategies, to policies and practices.’’ To help narrow and operationalize this catch-all concept for meaningful theory building, research, and application, an invited group of international management scholars gathered in Glendale, Arizona, at Thunderbird, the Garvin School of International Management, to discuss the concept of a global mindset. After a couple of days of intense dialogue and review of position papers, this group came to an initial consensus about the general meaning of a global mindset as being the cognitive ability that helps individuals figure out how to best understand and influence individuals, groups, and organizations from diverse social/cultural systems. Using this definition of global mindset as the point of departure, in this chapter we propose that the core constructs that inform this influence process are cognitive complexity, cultural intelligence, and positive psychological capital.

AT WHAT LEVEL DOES GLOBAL MINDSET EXIST? Inherent in the meaning of global mindset is the dilemma of an appropriate level of analysis at which we define, measure, and research this construct. This chapter addresses the individual level of analysis using social cognition, which explains how the development process of global mindset helps individuals make sense of unfamiliar stimuli, broaden their cognitive capacities, adjust their behavior accordingly, and have a positive influence on others. Our recently developed core construct of positive psychological capital, or PsyCap (Luthans, Youssef, & Avolio, 2007), and the overarching process of authentic leadership development (Avolio & Luthans, 2006) are used to explicate the theoretical social cognitive framework. The ‘‘influence on others’’ implies a leadership process, and that is why we address the role that global mindset may have in the authentic leadership development process (Avolio & Luthans, 2006). Using an individual level of analysis to frame our definition and subsequent discussion, we propose that global mindset can be characterized as a worldview or capacity for sense making that takes multiple, diverse perspectives into account in formulating attitudes, opinions, judgments,

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decisions, and other actions and behaviors. More simply, we propose that a global mindset allows an individual to view an event or occurrence through a variety of different lenses or, one might say, cognitive templates/ categories. Such perspective-taking capacities enable an individual to see quickly a broad array of potential cognitive categories against which to evaluate observations, while recognizing essential nuances that differentiate global cultural groups. An example of our proposed sense-making perspective of global mindset would be the meaning behind the variety of smiles of a business person from Thailand. To an outsider, such Thai smiles are not readily transparent. However, an outsider with a global mindset would have the wherewithal to develop strategies to adjust to such nuances, demonstrating a keen awareness and understanding of cultural differences, and know how to act accordingly. Once encoded into the individual’s global mindset, this information could be readily accessed when dealing with different cultural groups in which nonverbal expressions carry greater weight when interpreting how people are thinking, feeling, and ultimately behaving. Thus, the initial encoding of such information becomes a template for more efficiently storing new information or cues accumulated by individuals as they enter into new cultural experiences and challenges. The opposite of the above example is an international manager who has a relatively underdeveloped global mindset. In situations in which the weight of information concerning nonverbal cues varies, this manager from another culture would interpret a ‘‘smile as just being a smile.’’ Thus, the ability of this manager with an underdeveloped global mindset to assimilate new and diverse information into more integrated categories is quite limited and the result could be poor interpersonal relationships with Thai contacts and resulting ineffective performance. Fig. 1 shows our proposed individual-level model or process to explain what constitutes global mindset development. As shown, we suggest that the concept of positive psychological capital is central in developing one’s global mindset, as it mediates the relationship between cognitive complexity and cultural intelligence. Specifically, we propose a process model of development that begins with a trigger moment that induces an individual to enact varying levels of cognitive complexity. In other words, the trigger moment provides a cue and the individual enacts a process of either fitting the cue into an existing cognitive category or building a new category to accommodate an unknown cue. Therefore, unknown cues provide information that expands cognitive complexity. The positive state-like capacities of hope, optimism, resiliency, and self-efficacy provide the psychological resources

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Global/Cultural Trigger Moments

Cognitive Complexity • Differentiation • Integration

• • • •

PsyCap Hope Optimism Resiliency Efficacy

Cultural Intelligence • Meta-Cognitive CQ • Cognitive CQ • Behavioral CQ • Motivational CQ

Individual Characteristics • Promotion focus • Developmental Readiness

Fig. 1.

An Individual-Level Model of Global Mindset Development.

for an individual to bridge the relationship of greater cognitive complexity to higher levels of cultural intelligence. Certain individual characteristics, as the model depicts, strengthen the role of positive psychological resource capacities, or PsyCap, on influencing cultural intelligence. The relationship of these three core elements of our proposed global mindset (cognitive complexity, psychological capital, and cultural intelligence) provides a process model by which the development of global mindset may be understood. Importantly, Fig. 1 shows our proposed process depicting global mindset development and is not intended to be a sequential, causal model. As fully discussed next, this process model is grounded in Bandura’s (1986, 2001) social cognitive theory, which would suggest that the relationships could be reciprocal in some cases. For example, culturally intelligent individuals may seek out trigger moments by, for example, attending a multicultural social event. In addition to possible reciprocal relationships, Gupta and Govindarajan (2004) discuss global mindset in terms of an iterative process and we would say that our microprocesses or relationships shown in the model could also occur in an iterative manner. In any event, a central tenant of the model is that positive PsyCap may accelerate the process of global mindset development. Therefore, while the relationships may be causal, reciprocal, or iterative, the process model indicates that PsyCap may help individuals reconcile the external cues (trigger moments) with their cognitive frame of reference (cognitive complexity either shifting their frame of reference or integrating cues into current frames of reference) and to bridge the relationship (mediate) to translating such cognitive processing into appropriate behavior (cultural intelligence). After first providing the social cognitive theoretical foundation, we examine in turn the role of cognitive complexity, PsyCap, and cultural

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intelligence in understanding the development of a global mindset. Then we discuss how our model can contribute to researchable propositions and initial guidelines for developing the capability of authentically leading across global/cultural contexts.

SOCIAL COGNITIVE THEORETICAL FOUNDATION FOR GLOBAL MINDSET Social cognitive theory can provide a foundation and supporting framework for examining global mindset because it takes into consideration the interaction between the individual, the contextual factors, and the behavior itself. This triangular reciprocal interaction produces, and is a product of, the person, the context, and the behavior (Bandura, 1986). In essence, this social cognitive theory may provide insight and understanding into the interaction of the individual with a multicultural context and the resulting behavior. Social cognitive theory involves the notion of human agency. Unlike agency theory derived from economic models of behavior, human agency seeks to understand how people develop, adapt, and change (Bandura, 2002). In social cognitive theory, human agency has four major properties: intentionality, forethought, self-reactiveness, and self-reflectiveness (Bandura, 2001). We use each of these components of agency to establish the theoretical grounding for integrating our proposed model of the relationships between cognitive complexity, positive psychological capital, and cultural intelligence. The Role of Intentionality Intentionality describes agency simply as planned behavior. As such, intentions are the power to originate actions for given purposes (Bandura, 2001). These actions may produce unintended consequences. In other words, intentions are not outcomes, but produce consequences that may have been unforeseen. In the context of cross-cultural interactions, countless examples exist in which a home office manager’s or expatriate’s intentions led to unintended consequences. For example, for a manager in North America, not receiving any challenges from his Asian employees about a new initiative may be viewed as acceptance by his followers. However, while implementing the new idea or concept the North American manager might discover that his Asian counterpart is dragging his feet because he never really committed

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to the new idea, but was unwilling to challenge his superior in deference to his authority. Thus, our global mindset model suggests that a level of cognitive complexity in which intentionality may be exercised in a culturally appropriate manner is necessary.

The Role of Forethought The social cognitive framework provides guidance in analyzing the selfregulatory aspects of agency (Bandura, 2001). Individuals anticipate consequences through forethought, and this in turn motivates actions to reach intended outcomes. Therefore, forethought provides direction, coherence, and meaning (Bandura, 2001). Forethought enables people to transcend the dictates of their immediate environment and to shape and regulate the present to fit a desired outcome. In a global mindset, such forethought capacities allow individuals to try out possible selves (Markus & Wurf, 1987) that may be culturally relevant and produce positive outcomes. We know from research in cognitive/social psychology that individuals maintain an ‘‘actual self’’ that represents an understanding of the current state of who one is, one’s values, beliefs, ways of thinking, and so forth. The concept of ‘‘possible self’’ is the self you can become over time, via development, which in the context of leadership Avolio and Luthans (2006) have termed as authentic or genuine leadership development. With respect to our model of global mindset development, we would expect individuals with high cognitive complexity, PsyCap, and cultural intelligence to be positioned to move to a new possible self as they entertain, encode, and interpret crosscultural experiences. In essence, we never come back the same self we left to the extent our global cultural experiences move us from our actual to our possible self. In the context of leadership development, one Air Force officer recently indicated that after spending a year in a football-field-sized community with 30 other nations’ forces in Afghanistan, he realized how limited his view was of the U.S. position in the world and his own position in terms of working with people of diverse cultural backgrounds. This global cultural trigger event moved his thinking regarding his actual self to a possible self that represented a more culturally diverse view of the world that encompassed many of the commonalities and differences that he discovered existed across cultures.

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The Role of Self-Reactiveness The third component of agency identified by Bandura (2001) is selfreactiveness, in which individuals react to the plans (intentions) and forethought of such planned behavior. Thus, self-reactiveness is the motivation that links thought to action and sets plans and forethought into behavior. Self-regulation occurs through self-reactiveness with the subfunctions of self-monitoring, awareness of personal standards, and corrective selfreactions (Bandura, 2001). Thus, self-reactiveness provides an iterative process that may help individuals to build upward spirals (when utilizing positive psychological capacities) to achieve efficacy in multicultural settings. We will later discuss in detail how positive PsyCap enables upward spirals of positivity and the role this has on broadening mindsets in general and a global mindset in particular.

The Role of Self-Reflectiveness Finally, the fourth component of agency derived from social cognitive theory is one’s self-reflectiveness. This is the ‘‘meta-cognitive capacity to reflect upon oneself and the adequacy of one’s thoughts and actions’’ (Bandura, 2001, p. 10). Thus, people reflect on their behavior, motives, and values and the meaning of events in their personal self-concepts. Following intentions, forethought, and self-reactiveness, individuals reflect on the accuracy of their thinking for planning and executing behavior to achieve intended outcomes. This process becomes critical in global mindset development because self-reflection enables individuals to understand what behaviors correspond appropriately to certain cultural contexts and help contribute to building metacognitive abilities and in turn strategies of cultural intelligence. These four dimensions of social cognition provide theoretical grounding for our proposed process model of global mindset development (see Fig. 1). We now give attention to the core variables of this model: cognitive complexity, positive psychological capital, and cultural intelligence.

COGNITIVE COMPLEXITY Cognitive complexity has had a rich history of research in many different disciplines, including developmental psychology, communications, political

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science, organizational behavior, strategy, and leadership. Resulting from such conceptually diverse attention to the construct, multiple definitions of cognitive complexity have existed for many years. For example, Vannoy (1965) summarized the varying perspectives of the time and noted that some scholars viewed cognitive complexity as a disposition, while others viewed the construct as a ‘‘less enduring state’’ that applies to specific content domains (Vannoy, 1965, p. 385). In search of a general construct, he found no evidence that cognitive complexity is a general personality trait. More recent reviews of the literature confirm Vannoy’s findings as well as providing evidence that cognitive complexity may depend on a situation or content domain (Burleson & Caplan, 1998; Levy et al., in press). This view indicates that the construct is more state-like and malleable than trait-like and dispositional. For example, empirical studies have shown that Middle Eastern leaders experienced changes in levels of cognitive complexity before the 9/11 attacks, immediately after, and again after the U.S. entry into Afghanistan (Conway, Suedfeld, & Clements, 2003). This conceptual and empirical work supports cognitive complexity as being a state-like capacity. Thus, we align our definition of cognitive complexity with that of Burleson and Caplan (1998) and Levy et al. (in press), in that it represents the degree of differentiation and integration within a cognitive system. Such a cognitive system comprises both structural and knowledge dimensions (Walsh, 1995; Levy et al., in press). Gupta and Govindarajan (2004) describe cognitive complexity as an individual’s selection of what information and environmental cues to absorb, as well as the biases used to interpret such information. This cognitive processing helps individuals build an implicit theory of what the world is like and contributes to their process of sense making. Lewis and Jacobs (1992) suggest that, as opposed to reacting to an ‘‘objective’’ real world, people react to the meaning they have attached to that world as they perceive it, categorize it, and ultimately interpret it. As such, cognitive complexity explains this meaning-making process, which, from a global mindset perspective, may be influenced by cultural context as well as individual cognitive capacities. Walsh (1995) points out that an omnipresent global economy leads to very challenging levels of complexity and ambiguity for leaders of multinational organizations. One aspect of this complex global economy is how nuanced it becomes as it spans multiple social, cultural, and national groups. Oftentimes who one meets first, how much time is allocated for interactions, and how seemingly inconsequential decisions are actually made can all become extremely important cues in terms of the cultural context in

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which one is embedded and trying to operate. For example, an American professor teaching in Vienna, Austria, found that he had to invite students to join him on the elevator. They would not presume to ride down with him unless given permission. The first time he was in front of the elevator, he was talking to a student and did not see the doors open. By the time he turned around, the elevator had left and no one had stepped on. He realized after some reflection that the status of a professor was much higher there than back home and that status alone dictated some of the reactions he observed in students. We are discovering that cognitive complexity not only aids leaders in coming to terms with ambiguity and complexity, but also enables them to recognize, understand, and utilize the nuanced nature of a globalizing environment.

Differentiation and Integration Work on examining cognitive complexity has two components that can help explain this process: differentiation and integration. Differentiation describes the number of elements within categories and the categories themselves that individuals use or apply to interpret events in a particular environment. A very narrow view of the world is characteristic of low differentiation. With low differentiation, individuals tend to see events in terms of black and white or by applying one category across a multitude of contexts. An example of such thinking would be anyone who is in a leadership role must not be questioned. High levels of differentiation, on the other hand, promote individuals to use potentially multiple categories to interpret and understand events. Thus, a broader perspective is taken under high differentiation, suggesting that the power distance and status accorded to leaders may vary from culture to culture. Indeed, the actual meaning of what constitutes being a ‘‘devoted follower’’ may change across cultures and would be identified, interpreted, and processed in a very different way by someone exhibiting high levels of differentiation. On the surface, high differentiation would seem vital for developing global mindset. However, without the second component of integration, high differentiation could become overwhelming for an individual. This means that one may have many categories, but an inability to integrate them across cultural contexts may lead to considerable confusion. Those high in integration not only have multiple categories they can utilize, but also are able to draw connections across categories and make sense of information within each category. Therefore, individuals high in cognitive complexity

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(i.e., high in both differentiation and integration) may be described as reaching Kegan’s (1983) highest level of cognitive development, i.e., a more systems view of the world or, at the risk of being redundant, what we could call a ‘‘universal’’ global mindset.

Strategic Implications of Cognitive Complexity Strategy scholars such as Bartlett and Ghoshal (1998) and Doz and Prahalad (1987) highlight the competing demands of a firm that characterize the paradox of operating in a global capacity. Multinational business leaders are faced with the widely recognized dilemma of adopting a strategy of global integration or local responsiveness. In many instances, satisfying elements of one demand (global integration) results in a trade-off of the other demand (local responsiveness) and vice versa. Globalization, however, places leaders in a paradoxical situation of satisfying both demands, which might represent a global trigger event as noted in our global mindset development model (see Fig. 1). Specifically, there are certain aspects of the global context that may trigger in individuals a way of processing information and events that would be unlikely to ever occur in a single, highly homogeneous culture. This is perhaps why Bartlett and Ghoshal (1998) have recommended a transnational mindset, or global mindset, to balance this paradoxical demand of the global competitive environment. These strategic implications from cognitive complexity also impact operational issues (Where should my company produce what products for which market?), financial issues (What sources of capital are most beneficial to my company’s operations?), marketing issues (Should my company brand on a global level or local level?), human resource issues (What type of reward system will optimize employee performance?), and global political issues (Could political instability in this or another country impact my business?). Cognitive complexity would seem to help international managers take the first step toward needed global mindset development. The two components of cognitive complexity, differentiation and integration, can enable international managers to go to a broader set of potential cognitive categories that can challenge their own cultural lenses. The goal would be ultimately integrating seemingly disparate or paradoxical information to come to terms with unfamiliar or new settings. Thus, in terms of basic processes of global mindset development, international managers should have a sufficient level of cognitive complexity to engage in trying to understand ambiguous, paradoxical, and conflicting information.

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The international manager who is low in cognitive complexity will simply fit the events into a simple set of categories. Additionally, those with low cognitive complexity neither adapt nor change over time as they accumulate different cultural experiences. Although important in developing global mindset, we propose that cognitive complexity is certainly necessary, but not sufficient. From our recent work on taking positive psychology to the workplace (Luthans et al., 2007), we propose that psychological capital may play an important mediating role between cognitive complexity and cultural intelligence in global mindset development.

POSITIVE PSYCHOLOGICAL CAPITAL We define psychological capital, or simply PsyCap, as: An individual’s positive psychological state of development that is characterized by: (1) having confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resiliency) to attain success (Luthans et al., 2007, p. 3).

Although the factors of PsyCap are commonly used terms in everyday language and have even been used in reference to the development of global leaders (Mendenhall, 2001), we use very precise meanings based on theory, measurement, and research support from positive psychology (Seligman & Csikszentmihalyi, 2000; Snyder & Lopez, 2002) and positive organizational behavior (Luthans, 2002a, 2002b, 2003; Luthans & Youssef, in press; Wright, 2003). For a positive psychological capacity to be included as part of PsyCap, it must meet the criteria of being based on theory, research, and valid measurement; be state-like (somewhat malleable and open to development); and have performance impact (Luthans, 2002a, 2002b; Luthans et al., 2007). The positive psychological capacities that have been determined thus far to meet these inclusion criteria for PsyCap best include self-efficacy, resilience, optimism, and hope (Luthans, 2002a; Luthans, Luthans, & Luthans, 2004; Luthans & Youssef, 2004; Luthans et al., 2007). Because of common usage, on the surface these four constructs appear very similar and interchangeable, but there is considerab‘le evidence that is both theoretical (Bandura, 1997; Luthans, Avolio, Avey, & Norman, in press; Luthans et al.,

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2007; Snyder, 2000, 2002) and empirically based demonstrating discriminate validity between them (Bryant & Cvengros, 2004; Carifio & Rhodes, 2002; Luthans, Avolio et al., in press; Magaletta & Oliver, 1999). To gain insight and understanding into these four capacities that constitute PsyCap and their potential implications for global mindset, the following brief overview is provided.

Self-Efficacy in PsyCap Self-efficacy is the belief in one’s ability to succeed at a specific task in a specific context (Bandura, 1997). It can be simply thought of as confidence and appears in cross-cultural discussions ranging from global leadership effectiveness to cultural adjustment (Mendenhall, 2001) to cultural intelligence (Earley & Ang, 2003). Self-efficacy effects on work attitudes have been found across cultures (Luthans, Zhu, & Avolio, 2006) and have been shown to be developable through vicarious learning, social persuasion, and mastery experiences (Bandura, 2002; Earley, 1994). Black and Mendenhall (1991) specifically note that high levels of efficacy will impact the willingness of individuals to learn new ways of thinking and behaving in a host country. In addition, Earley and Ang (2003) suggest that efficacy contributes to individuals’ motivation to understand and adapt to a new environment.

Resiliency in PsyCap Resiliency is defined as the ability to bounce back from adversity, stress, or even positive events (Luthans, 2002a). Positive psychologists Masten and Reed (2002) note that resiliency is ‘‘a class of phenomena characterized by patterns of positive adaptation in the context of significant adversity or risk.’’ Luthans et al. (2007) describe how resiliency enables individuals not only to overcome adversity, but also to flourish or build broader coping and adaptation capacities. Fredrickson’s broaden-and-build model gives evidence for positive psychological states undoing the negative effects of events and building long-lasting capabilities for thinking more globally (Fredrickson, 2000, 2001; Fredrickson & Joiner, 2002). As such, resiliency seems to contribute to global mindset development in that individuals who experience stress from a lack of familiarity in new cultural settings could potentially overcome such stress not only to find a level of behavior they are comfortable with, but also

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to expand their perspective-taking capacities and to build broader cognitive strategies for sense making. Resiliency may also induce individuals to find comfort outside of their typical comfort zone and challenge their own assumptions about the way they view the world (Luthans et al., 2007).

Optimism in PsyCap Optimism, or the realistic belief in positive outcomes (Luthans, 2002a; Seligman & Csikszentmihalyi, 2000), will help individuals have a more positive expectancy of stressful or unfamiliar events and allow for greater learning opportunities from such events. Optimism is based on the explanatory style individuals adopt. Optimists attribute negative events to external factors and internalize positive events. In the case of global mindset, optimists will tend to attribute failed cross-cultural interactions to underlying cultural dynamics and will use such an attribution to seek strategies for successfully navigating this cultural encounter in the future. Dweck (2006) provides evidence of such an explanation by noting that a growth mindset, as opposed to a fixed mindset, adopts an optimistic explanatory style. In Dweck’s definition, individuals with fixed mindsets view unfavorable events as indicators of their self-worth, while individuals with growth mindsets see such events as opportunities to learn. Such modes of thinking enable the metacognitive component of cultural intelligence, therefore, to expand and to build strategies for future cross-cultural interactions. A positive explanatory style may increase resiliency. This is because an external attribution of negative events enables bouncing back and beyond. A positive explanatory style also increases beliefs about how efficacious one will be in future tasks. Thus, while optimism alone is a powerful construct for understanding how psychological capacities contribute to global mindset, a far clearer picture may emerge by considering how efficacy, resiliency, and optimism interact with each other as higher order PsyCap (Luthans, Avolio et al., in press). The fourth capacity of hope provides even more to the PsyCap core construct.

Hope in PsyCap Hope is defined in positive psychology as the will to achieve certain goals as well as the ability to find pathways to achieve the goals successfully (Snyder, 2000). Often international exposure creates moments in which people

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discover that their mental models are narrow, culturally biased, and insufficient for making sense of paradoxical cues. Hope can help determine what individuals do with this awareness. With high willpower, or motivation, to adjust and high way-power, or the capacity to find alternative responses, individuals would be expected to incorporate more pathways into their metacognitive strategy and broaden their capacity for perspective taking. The two components of hope create an iterative process in which an upward spiral of hope is supported (Luthans et al., 2007). In other words, the agency of hope builds the way-power of hope and vice versa. While hope builds capacities for agency and pathways to achieving goals, the psychological growth that hope induces also builds capacities for resilience, optimism, and efficacy (i.e., PsyCap) to accomplish tasks in certain situations/cultures.

PSYCAP AS A HIGHER ORDER CORE CONSTRUCT In combination and when interacting, the four positive capacities of efficacy, resilience, optimism, and hope have been demonstrated to represent the higher order core factor of PsyCap (Luthans, Avolio et al., in press). In other words, there seems to be an underlying common thread running through the psychological resource capacities (i.e., efficacy, resilience, optimism, and hope) not only of positivity, but also of striving to flourish and succeed. Law, Wong, and Mobley (1998) have described how multidimensional constructs may relate to such an underlying core construct, and our research indicates this is the case with efficacy, resilience, optimism, and hope making up the core construct of PsyCap (Luthans, Avolio et al., in press). Specifically, overall PsyCap has been found to be a stronger predictor of performance and job satisfaction across diverse samples than each of the individual capacities that make it up (Luthans, Avolio et al., in press). Thus, we propose that PsyCap may be a mediator between cognitive complexity and cultural intelligence in the development of global mindset. To date, PsyCap or its individual capacities have been found to have a relationship with performance outcomes not only in U.S. samples, but also in those from various cultures such as China (Luthans, Avolio, Walumbwa, & Li, 2005), Central Asia (Luthans & Ibrayeva, 2006), Southeast Asia (Luthans, Zhu et al., 2006), and India (Luthans, Combs, Clapp-Smith, & Nadkarni, 2006). In addition, Luthans and Avolio (2003) have presented PsyCap as an antecedent to such authentic leadership developmental states as self-awareness and self-regulation. Also, Avolio and Luthans (2006) have

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noted the importance of PsyCap in accelerating the development of authentic leadership processes, and laboratory and field experimental research has demonstrated that PsyCap can be developed (Luthans, Avey, Avolio, Norman, & Combs, 2006). Again, relying in part on Fredrickson’s broaden and build theory, individuals who are more positive and flourishing will have greater psychological resources to explore things that are new to them. For example, Fredrickson and her colleagues have found that positive emotions and states can ‘‘spark dynamic processes with downstream repercussions for growth and resilience’’ (Fredrickson & Losada, 2005). In this regard, upward spirals of positivity contribute to individuals’ abilities to broaden their sense-making capacities and remain open to new stimuli (i.e., new and different cultures) by adopting a state of inquiry (as opposed to advocacy) (Fredrickson & Losada, 2005). Upward spirals also help draw the interrelatedness of the four positive PsyCap components. Thus, the development of the four components and, in turn, overall PsyCap may broaden people’s mindsets (Fredrickson & Losada, 2005). We would propose that such broadening would provide individuals with the psychological resources and energy (i.e., contribute to their global mindset) to flourish in ‘‘different’’ cultural contexts to a much greater extent than those individuals who are low in PsyCap. As shown in Fig. 1, the broadening of mindsets explicates the mediating effect of the positive psychological resources of hope, optimism, resiliency, self-efficacy and overall PsyCap on the four attributes of cultural intelligence. Namely, not only do such positive resources widen ‘‘the array of thoughts’’ (Fredrickson & Losada, 2005), which is the expansion of metacognitive and cognitive abilities, but they also broaden behavioral repertoires (Fredrickson & Branigan, 2005). The evidence thus far suggests that positivity and higher energy sources would lead individuals to greater levels of inquiry, which would be essential in resolving paradoxical information that one would confront in vastly different cultural contexts. Drawing from the social cognitive framework, the construct of hope explains how appropriate intentionality is derived from greater cognitive complexity. In other words, as individuals gain greater awareness of themselves and their environment, hope initiates the future-directed plans and enables individuals to see more pathways to reaching desired outcomes of these plans and desired possible selves. Behavior is then realigned to make intended consequences more probable than unintended outcomes. In addition to intentionality, both hope and resiliency give greater meaning to how forethought from social cognitive theory is enacted in global

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mindset development. Not only do the intentions of individuals become goal oriented, or the willpower enacted through hope, but also the direction that Bandura (2001) describes in his conceptualization of forethought manifests itself in the recognition of multiple pathways to intended outcomes. In addition, resiliency is the psychological state that enables individuals to overcome contextual and personal constraints and regulate behavior to be culturally relevant. In the occurrence of a successful cross-cultural experience, self-reflection recognizes the formation of mastery experiences and thus builds self-efficacy. Such self-reflectiveness capacity will also enhance explanatory styles and build greater optimism for future cross-cultural interactions. Given the role of the four psychological capital constructs within social cognitive theory, we can help bridge the gap to understanding how higher levels of cognitive complexity may lead to greater cultural intelligence capacities with the intervening latent, core construct of PsyCap. Individuals interact with unfamiliar environments and begin the process of sense making by differentiating stimuli according to different categories and then working to integrate the information in some way within and between those categories (cognitive complexity). This often-overwhelming experience becomes developmental when individuals reflect on their self-concepts embedded in unfamiliar settings and regulate their behavior accordingly, as described in social cognitive theory. Each of the positive psychological resource capacities of resiliency, hope, optimism, and efficacy enhances the reflective and regulatory aspect of human agency and thus, combined as PsyCap, they explain how greater cognitive complexity leads individuals to develop metacognitive strategies, absorbing nuanced cognitions, motivating to adapt to new stimuli, and finally behaving in a culturally appropriate manner. These outcomes are the components of cultural intelligence, to which we now turn our attention.

CULTURAL INTELLIGENCE Earley and Ang (2003, p. 97) have observed that ‘‘cultural meanings are typically not shared uniformly by an entire society, and they are not shared precisely.’’ The construct of cultural intelligence has emerged to account for one’s ability to recognize, reconcile, and enact appropriate behaviors according to these imprecise indicators of cultural norms. Derived from the work on general components of intelligence by Sternberg (1996), cultural intelligence contributes to the notion of multiple intelligences by combining

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culture and intelligence to understand the ability to adapt to diverse environments (Ng & Earley, 2006). As shown in Fig. 1, cultural intelligence, or simply CQ, has four critical components – metacognition, cognition, motivation, and behavior (Ang, Van Dyne, Koh, & Ng, 2004). The metacognitive strategies are particularly relevant in developing a global mindset. Our proposed model of global mindset development predicts that higher levels of cognitive complexity, mediated by PsyCap, will enhance individuals’ CQ, their capacity to ‘‘think about thinking’’ or to gain awareness of their own mental models, and integrate the information from potentially paradoxical paradigms. Different cultural situations individuals face while working abroad frequently present opportunities for them to enact each component of CQ in terms of their development. As a result, such experiences may accelerate the development of cultural intelligence, global mindset, and a change in the actual self.

Metacognitive CQ Earley and Ang (2003) draw from a number of cognitive theories to develop their metacognitive component of CQ. They use ‘‘social cognitive, self, and schema theory to describe how self-knowledge and schema of an individual shapes how he or she faces the social world’’ (Earley & Ang, 2003, p. 100). Metacognitive CQ is defined as ‘‘an individual’s cultural consciousness and awareness during interactions with those who have different cultural backgrounds’’ (Ang et al., 2004, p. 5). Metacognition can be thought of as strategies for processing information. It is been described as ‘‘thinking about thinking’’ or ‘‘learning to learn’’ (Earley & Ang, 2003). Individuals with global mindsets often describe moments in which they became aware of their own mental models or paradigms of Western thought, like that described earlier for the Air Force officer, which instances we have labeled in our model as global trigger moments. Often, these impactful experiences lead these individuals to develop strategies for collecting information in new environments, integrating new and unfamiliar stimuli, and adapting their behavior to be congruent with the new environment. In a study that included three experiments, Kelemen, Frost, and Weaver (2000) found that metacognitive abilities differ across time and task and they are not stable across settings. Their findings give evidence that metacognitive ability is not a general capacity; it varies across tasks and settings. In other words, metacognitive ability may be considered state-like. Similar to the previous discussion of the state-like nature of PsyCap, metacognitive

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ability is relatively situation-specific and developable. In this regard, a global mindset may consist of metacognitive ability that applies to situations presented by the global economy and, importantly, can be developed.

Cognitive CQ As opposed to metacognitive CQ, which deals with knowledge of cognitive processes, cognitive CQ is defined as ‘‘an individual’s knowledge of specific norms, practices, and conventions in different cultural settings’’ (Ang et al., 2004). Several studies have shown that specific cultural knowledge leads to desirable outcomes such as higher performance and greater understanding of other cultural perspectives (Ang et al., 2004). Although this cognitive component of cultural intelligence may seem to apply to only those cultures for which individuals have knowledge of norms, values, and practices, it actually also helps explain how individuals gain such knowledge in unfamiliar cultural contexts. In other words, Earley and Ang (2003) describe cognitive CQ as the ability to understand a context without being fully constrained by past experiences, in which individuals may come to terms with ambiguous and misleading cues. This ability also contributes to developing metacognitive strategies that may be useful in other cultures about which less prior knowledge exists. As depicted in our proposed model (see Fig. 1), the components of positive PsyCap contribute to this process of developing metacognitive cultural capacities based on trigger moments that build the cognitive component, or cultural knowledge base.

Motivational CQ The motivational component of CQ is conceptualized by Ang et al. (2004) as embracing self-efficacy and intrinsic interests. In other words, individuals high in motivational CQ will feel confident about their ability to interact in culturally diverse groups and experience personal satisfaction from such settings. As shown in the model, there is a link between PsyCap and the motivational component of CQ. Much of what Earley and Ang (2003) describe in the motivation layer of cultural intelligence can largely be attributed to efficacy and perhaps resiliency. For example, they discuss a need to ‘‘persevere in the face of adversity’’ (Earley & Ang, 2003) as an important aspect of motivational CQ, which is PsyCap resiliency.

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The motivation component may also help explain why individuals who are more curious about other cultures may be able to recognize differences and similarities more quickly, may ask more questions, and may place themselves in more novel or boundary-testing situations to expand their own understanding about a culture. Self-efficacy and intrinsic interest, then, describe not only why individuals may seek out novel situations (intrinsic interest) but also how they come to terms with confusing and paradoxical stimuli (PsyCap efficacy and resiliency). Their confidence in their ability to learn from such environments helps them cognitively process incongruent information, rather than simply ignore it or discount it at the outset as irrelevant to one’s way of thinking. Behavioral CQ The metacognitive awareness, knowledge of a culture, and motivation to understand culturally diverse settings (i.e., the three components of CQ) all help individuals to enact the final identified component of CQ: behavioral CQ. In essence, individuals with high behavioral CQ have the ability to self-regulate or adjust their behavior to exhibit contextually appropriate gestures, languages, and/or facial expressions. As a component of the process of global mindset development, behavioral CQ helps explain how cognitive complexity and the other three components of CQ allow individuals with global mindsets to observe and understand behavior within unfamiliar environments and adjust their own behavior to develop culturally appropriate interactions and responses. This process incorporates the social cognitive framework (Bandura, 2002) and describes how individuals learn from others (modeling and vicarious learning) and how they interact with the environment. Positive psychological capital again plays a mediating role in this process by helping bridge the gap between cognitive complexity and self-reactiveness and behavioral CQ.

THE ROLE OF GLOBAL MINDSET DEVELOPMENT IN AUTHENTIC LEADERSHIP DEVELOPMENT Our starting definition of a global mindset derived from the Thunderbird conference which described it an influence process characterizing individuals, groups, and organizations that must operate in diverse social/cultural systems. Our proposed model and discussion of global mindset development

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describe a process in which individuals become more aware of their self-concepts and cognitive categories/processes and adapt their behavior according to an integration of personal and cultural values. We now use this process of global mindset development as a point of departure for developing authentic global leaders, those that can genuinely and successfully operate in a global cultural context. Authentic leadership development takes not only leaders into account but also followers and the context in which they are embedded to understand how the leadership process develops. Gardner, Avolio, Luthans, May, and Walumbwa (2005) have advanced a theory of authentic leadership development in which leaders and followers are true to their own values by achieving greater self-awareness, balanced processing, relational transparency, and a moral/ethical perspective. Fostering this process are life trigger moments, planned and unplanned, that may accelerate the development of both authentic leaders and followers. Avolio and Luthans (2006) describe how these trigger moments become more meaningful to one’s development of self-awareness and balanced processing by drawing from one’s positive psychological capital. In our global mindset model, we propose that such life trigger moments serve as antecedents to cognitive complexity in the developmental process of one’s global mindset. In addition to trigger moments, we also propose that individual characteristics such as developmental readiness and a promotion focus (as opposed to a prevention focus) may moderate the relationship between individuals’ positive PsyCap and their cultural intelligence. When individuals have the internal readiness to develop their own capacities, the relationship between PsyCap and cultural intelligence will be strengthened. A promotion focus is a self-regulation system that is concerned with attaining the ‘‘ideal self,’’ which encompasses wishes, aspirations, and accomplishments. In contrast, a prevention focus concerns the avoidance of punishments and strives for the ‘‘ought self,’’ which is described by obligations and duties. A promotion focus leads individuals to be more creative in problem solving and have a greater willingness to take risks (Kark & Van-Dijk, 2007). In the event that individuals have a promotion focus, they will be more likely to utilize positive psychological capacities to foster metacognitive strategies, be open to unfamiliar stimuli, exhibit motivation to react to and reflect on such stimuli, and adjust their behavior for the purpose of learning and responding in a more culturally appropriate and advantageous manner. The opposite is the individual who is not able to change and therefore applies existing ways of thinking to all new experiences. A lack of adaptation and learning from these new experiences might

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characterize the legions of expatriates who found overseas assignments so difficult to understand that they returned early (Kraimer, Wayne, & Jaworski, 2001). In addition to the antecedent of global/cultural trigger events and the moderator of individual characteristics, the proposed global mindset development process more generally overlaps with authentic leadership development in the conceptualizations of self-awareness and balanced processing. Cognitive complexity enables individuals to have balanced processing, as they may look at events from multiple perspectives before choosing to decide. The sense-making process of global mindset also aids individuals in gaining greater self-awareness and articulation of their current mindsets (Gupta & Govindarajan, 2004). Global mindset as proposed here would seem to contribute to the authentic development of truly (or authentic) global leaders, as it would help them reconcile norms that may be incongruent with their personal values. In addition, development of a global mindset for authentic global leaders would assist them and followers to more effectively recognize opportunities embedded in the cultural context in which they find themselves. As such, leaders come to understand who they are and that understanding will reflect a more culturally rich global mindset.

IMPLICATIONS FOR INTERNATIONAL MANAGEMENT AND FUTURE RESEARCH While this chapter discusses the individual level of analysis for understanding global mindset and its development, implications for international management span many levels of the multinational firm, especially if our target of focus is the most senior leaders. By considering how individuals develop capacities for recognizing nuances, gaining positive psychological capacities for leveraging such awareness, and building metacognitive strategies for future success in dealing with new and nuanced cultural environments, we may begin to understand how some global organizations see future opportunities in new markets today that others are unable to recognize. In other words, the individual level of analysis in global mindset helps us to understand how international managers and employees of multinational firms build culturally relevant and future-oriented strategies that provide them with sustainable growth. Without understanding the individual level of analysis, we are hard pressed to gain insight into the ways that top management teams and their

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multinational companies successfully plan and execute sustainable and veritable strategies. We can therefore see over time an escalation of the global mindset construct as defined here to larger collectives such as teams, divisions, organizations, and entire nations who exemplify a culturally rich and diverse global mindset. From a global leadership perspective, it is important for international managers to understand the value of developing their own capacities of hope, optimism, efficacy, resiliency, i.e., their PsyCap, as well as developing those of their followers. How would such global-mindset leaders be able to move their followers forward and flourish, if their followers’ mindsets are rooted in simplistic cultural stereotypes? Obviously, for larger entities to be led successfully in a global cultural context, all members will ultimately have to develop higher levels of cognitive complexity, PsyCap, and CQ to enhance a global mindset. Global authentic leaders will need to build a workforce with global mindsets for international competitiveness. Such PsyCap capacities enhance leaders’ and followers’ abilities to take broader perspectives (i.e., global mindsets) and to flourish in a global context. Therefore, as we noted above, the individual level of analysis discussed in this chapter provides a starting point to understanding how multinational companies may initiate change internally to become a more globally minded collective. The proposed model of global mindset development also provides opportunities for future research. Most often, international management research considers a company level of analysis. By theorizing and testing the individual or small group/team level of analysis, we may gain new insights into the interfirm microprocesses that represent successful internationalization and cross-border trade. We have also presented a model that is testable, and future research directions entail not only testing the model, but also extending it to consider the impact of global mindset development on performance, trust, and understanding with the general context of human relations, as well as the more specific context of authentic leadership development. Some specific future research questions that we propose would advance the theoretical understanding of global mindset are: what are the conditions (context) that enable a global mindset to develop? For example, can a global mindset develop without international work experience or exposure to new national cultures? In the same vein, are there varying degrees of cultural distance that either accelerate or hinder global mindset development? For example, may an individual gain an appropriate level of cognitive complexity and cultural intelligence by traversing multiple subcultures of

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the United States or of China? What characterizes the trigger moments that accelerate development of a global mindset? Can these trigger moments be planned and what would go into such planning? Each of these research questions directly or indirectly deals with the issue of context. Context is critical to any theory development process and is particularly important in understanding the conditions that accelerate global mindset development and to a large extent authentic leadership development as well. We have proposed a process of global mindset development that considers how individuals make sense of unfamiliar stimuli and regulate and reflect on their behavior. Within the context of globalization, such perpetual self-regulation and reflection, we would argue, allows for greater levels of perspective taking and development of cultural intelligence. Using a social cognitive framework, we may understand how positive psychological capital is central to mediating sense-making processes and allowing for successful cross-border interactions. To date, global mindset theories have presented a number of constructs that are believed to comprise a global mindset, but have not shown and conceptually supported how these various constructs relate to each other and interact (causally, reciprocally, or iteratively) to develop a global mindset. We conclude that our proposed model can provide a foundation for further theory-building and researchable propositions for the development of global mindset starting at the individual level of analysis. We also suggest that in a world that has entered into numerous conflicts throughout human history, oftentimes due to a poor understanding of one culture by another, rapidly developing global mindsets in leaders and followers not only may generate organizational growth and competitiveness, it could indeed save lives.

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LEADING WITH A GLOBAL MINDSET Schon Beechler and Mansour Javidan THE STRATEGIC IMPERATIVE While there is strong agreement that globalization is spreading rapidly, there is no agreement on what globalization actually means and how it is measured. Giddens (1999) defines globalization as ‘‘the worldwide interconnection at the cultural, political, and economic level resulting from the elimination of communication and trade barriers.’’ He further defines it as ‘‘y a process of convergence of cultural, political, and economic aspects of life’’ (reported in Inkpen & Ramaswamy, 2006, p. 13). Govindarajan and Gupta (2001) define globalization as ‘‘growing economic interdependence among countries as reflected in increasing cross-border flows of three types of entities: goods and services, capital, and know-how’’ (p. 4). Globalization has been occurring for centuries but the new age of globalization is not merely a continuation of a centuries-old trend. There are several unprecedented features of globalization that emerged around the dawn of the 21st century (Friedman, 2005). First, globalization has been enabled and characterized by erosion of boundaries. Trade liberalization has opened borders across which capital moves easily and foreign direct investment (FDI) restrictions have been relaxed considerably. In addition, while the telegraph shrank the world a century ago for institutions, in the 1990s the Internet empowered individuals, as well as The Global Mindset Advances in International Management, Volume 19, 131–169 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19006-9

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governments and corporations, to gain unprecedented access to information, increasing their consumption possibilities as well as their ability to affect social and political spheres outside the borders of their own countries (Friedman, 2005). Simultaneously, advances in technology increased the opportunities for international travel while the costs of international travel and transport declined dramatically and, along with the opening of political borders, spurred an increase in the international movement of people. Electronic communication, declining transportation costs, more flexible forms of economic organization, and the growing importance of mobile assets such as finance and knowledge establish an increasingly uniform horizon of production possibilities across national borders, integrating markets around the world and internationalizing decisions about investment and jobs (Palmisano, 2006). As traditional boundaries disappear and competition springs from every corner of the earth, companies have rapidly tried to globalize to take advantage of the growth opportunities in international markets. The international business environment provides firms with unprecedented opportunities but also formidable challenges because globalization is a manifestation of complexity (Lane, Maznevski, & Mendenhall, 2004). As will be explained below, this complexity results from conditions of multiplicity, interdependence, and ambiguity – all of which are interrelated and in a state of constant flux (Lane et al., 2004). In complex environments, predicting the future is impossible and rigid control unadvisable. Managing complexity requires a new way of thinking and a new way of organizing. Lasserre (2003) suggests that to exploit global opportunities, corporations need to develop effective global strategies using the following framework:  Global ambition: defining the relative importance of various regions and countries.  Global positioning: choice of countries, customer segments, and value propositions.  Global business systems: investments in resources, assets, and competence to create a global value chain and global capabilities through alliances and acquisitions.  Global organizations: global structure, processes, coordination, and human resources management. To think and act globally, corporations must become adept at collaborating, discovering, ‘‘architecting,’’ and systems thinking (Lane et al., 2004). For example, Samuel J. Palmisano, the Chair of the Board, President, and

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CEO of IBM, in a recent article (2006), reviewed the challenges and opportunities facing global corporations and concluded that the key to their success lies in their ability to integrate every aspect of their global organization. He suggested that today’s global corporations are ‘‘shifting their focus from products to production – from what things companies choose to make to how they choose to make them, from what services they offer to how they choose to deliver them. Simply put, the emerging globally integrated enterprise is a company that fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide. State borders define less and less the boundaries of corporate thinking or practice’’ (Palmisano, 2006, p. 129). That is why in making overseas investments, corporations are increasingly looking beyond the local market and are focusing on how to supply the entire global market. But corporations are not just interested in integrating their internal organizational units and functions. They are also focused on outsourcing many of their internal activities, such as back-office support work, to outside specialists who can perform them better and cheaper. As a result, the global corporation is evolving as a global network of interconnected and tightly integrated internal and external activities designed to satisfy their varied customer markets in different parts of the world (Palmisano, 2006; Friedman, 2005). Another important benefit of such a complex web of interconnections is the increased ability of the corporation to encourage and support corporatewide innovativeness that can result in new global products, services, markets, or business processes. Eaton Corporation is an example of Palmisano’s view of a global corporation. Eaton is headquartered in Cleveland, Ohio, in the industrial heartland of the United States. It has an extensive product portfolio ranging from automotive parts to aircraft components to golf clubs. It has over $12 billion in sales, more than half of which is generated outside the United States, in scores of countries on all continents. It has 210 manufacturing plants in 32 countries and its global supply chain consists of partners in 86 countries. The company’s growth plans call for severalfold increases in their sales in Asia, especially China, and their manufacturing and supply chain strategy is focused on producing high-quality products at efficient cost using a highly integrated network of internal and external suppliers. To summarize, globalization creates unique and unprecedented opportunities for corporations. But leveraging such opportunities is not easy. Palmisano (2006) suggests that to succeed in the new global arena,

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corporations need significant changes in their organizational cultures to enable them to form trusting relationships with their partners, relationships that would lead to higher quality products and services, more efficient production systems, and effective transfer of knowledge and learning, along with other outcomes. To achieve all this, corporations need a new and different breed of global leaders who can take decisions and actions that facilitate the development of the complex network of internal and external connections with individuals, teams, and organizations from many different political, social, and cultural systems. They require leaders who do not rely on traditional hierarchical approaches because they would impede fluid and collaborative work relations and would reduce trust and speed of decision making and action taking throughout the global network. As Morrison (2000) suggests: As companies rely more and more on global strategies, they require a greater number of global leaders. This tie between strategy and leadership is essentially a two-way street: the more companies pursue global strategies, the more global leaders they need; and the more global leaders companies have, the more they pursue global strategies. That the world has an ever-greater need for global leaders is consistent with the increased globalization of competition over the past two decades. (p. 119)

Despite the need for an increasing supply of global leaders, companies are having a difficult time filling these positions. For example, in the early 1990s Adler and Bartholomew (1992), in their study of international companies, suggested that most companies are unable to implement their global strategies due to a lack of global leadership. In 2006, despite the increasing need for global leaders, the situation had not improved. A global survey by Mercer Delta of 223 senior executives from large corporations across 17 industrial sectors in 44 countries found that a majority of business executives believe their companies face leadership shortages to meet the future global business risks that are threatening their corporate performance (Mercer Delta, 2006).

WHAT IS GLOBAL LEADERSHIP? The above discussion on global strategy points to the conclusion that the concept of global leadership is a rather recent phenomenon. While the term global leader first appeared in the 1960s and 1970s to describe a company’s market position, it was not until the end of the 1980s that the term global was being applied to executives and to individual jobs (McCall & Hollenbeck,

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2002, pp. 20–21), although the work in this area focused almost exclusively on expatriates rather than global leaders, per se. The interest in this topic has been driven by global corporations’ rush to develop and execute global strategies that would get them privileged access to global markets and supply chains (Mendenhall & Osland, 2002; Von Glinow, 2001; Bartlett & Ghoshal, 1989; Brake, 1997; Pucik, 1992; Morrison, 2000; Spreitzer, McCall, & Mahoney, 1997) and the need to find qualified leaders to help companies pursue complex global strategies. Because of its practical heritage and its focus on providing pragmatic assistance to global corporations, the field is inherently managerially oriented and does not have a strong and rigorous research orientation (Hollenbeck, 2001). The main publication outlet for the topic is the Advances in Global Leadership series (Mobley, Gessner, & Arnold, 1999; Mobley & McCall, 2001; Mobley & Dorfman, 2003), and a number of edited volumes have also been published by Mendenhall, Kulhmann, and Stahl (2001); Mendenhall and Osland (2002); Hollenbeck (2001); and Suutari (2002). Most authors on the topic seem more interested in providing normative advice to global executives and human resource (HR) professionals than tackling theoretical or empirical challenges involved in rigorously exploring, conceptualizing, and verifying the various constructs of interest (Osland, Bird, Mendenhall, & Osland, 2006). To begin with, the construct of global leadership is seldom clearly defined. Most authors do not even try to define what they mean by global leadership, apparently assuming that it requires no definition. The conventional view seems to be that global leadership is a construct in juxtaposition to domestic leadership. Whereas domestic leaders work with domestic individuals, global leaders work with those from different countries (Hollenbeck, 2001). Morrison (2000) describes it in the following way: For a company to become more global, its leaders must develop competencies that go beyond what is familiar in the home country (Yamaguchi, 1988). Globalization – whether at the level of the industry, business, or individual leader – is all about overcoming national differences and embracing the best practices from around the world. Something more than an American, European, or Asian approach to leadership is required. Needed is a global model that can be applied throughout the world, a model that transcends and integrates national schemes and becomes an essential tool for hiring, training, and retaining the leaders of tomorrow. (p. 120)

This approach is consistent with Bartlett and Ghoshal’s (1989) and Adler and Bartholomew’s (1992) view that global leaders work in global organizations and execute global strategies across, rather than within, borders. Bird and Osland (2004) suggest that the transition from purely domestic to

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global is a ‘‘quantum leap’’ (p. 4) because of significantly greater complexity facing the global leader. They suggest that the increased complexity is due to:  greater need for cultural understanding,  heightened need for broad knowledge spanning functions and nations,  more frequent boundary spanning across national and organizational boundaries,  more stakeholders to consider when making decisions,  higher levels and types of tensions on and off the job,  heightened ambiguity, and  more challenging ethical dilemmas. The complex transition from domestic to global arenas led Kets de Vries and Florent-Treacy (1999, p. xvii) to conclude that ‘‘within virtually a single generation, our comfortable existence in a familiar home culture has been shaken by an awareness that we cannot escape being part of this global, interconnected environment y . Leaders at the helm of the corporations of the future will need the capacity to step out of their own comfort zone and adapt to other realities.’’ While the approach to defining global leadership in terms of the global nature of the leader’s job is helpful, it does not provide sufficient insight into what is unique about global leadership (Hollenbeck, 2001). There is confusion and fuzziness in using such terms as global executive, global manager, and global leader interchangeably without delineating the boundaries between them (Osland et al., 2006). What many writers describe as leadership is actually the organizational tasks performed by global executives. But just because an executive is in charge of a global organization does not necessarily mean that he or she is an effective global leader. The extant US-based literature on leadership has dealt with this issue in its treatment of leadership versus management (Yukl, 2006; Kouzes & Posner, 2002; Daft, 2002) but the global leadership literature does not currently present a clear view. An exception is the work by Osland et al. (2006), who provide a more detailed definition of global leadership as ‘‘a process of influencing the thinking, attitudes and behaviors of a global community to work together synergistically toward a common vision and common goals’’ (p. 204). In contrast, most writing in the global leadership literature seems less interested in a clear definition and more interested in the issue of competencies. Perhaps due to its practical heritage, most of the literature is concerned with the question of what competencies or capabilities are needed for effective global leadership and how they are developed (Osland et al., 2006).

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Since various summaries of the existing research on global leadership are provided elsewhere (see, for example, Hollenbeck, 2001; Morrison, 2000; Bird & Osland, 2004; Suutari, 2002; Mendenhall & Osland, 2002; Osland et al., 2006), we will provide only a brief overview of the findings here.

GLOBAL LEADERSHIP COMPETENCIES When defining and identifying the qualities of global leadership, most writers and managers focus on competencies, a term that came into use in the early 1980s to describe the group of skills, attitudes, values, and personal traits that were considered essential to performing a specific task (Boyatzis, 1982; Brisco & Hall, 1999). In fact, a number of researchers define global leadership only by the list of competencies that purportedly characterize individuals who have been identified as ‘‘global leaders’’ (e.g., Brake, 1997; Rhinesmith, 1996; Mendenhall et al., 2001). Rhinesmith (1996) identified a set of 24 competencies related to three main responsibilities of global leaders: strategy and structure, corporate culture, and people. Brake (1997) identified three characteristics of global leadership, relationship management, business acumen, and personal effectiveness, and John Pepper, the former CEO of Procter & Gamble, suggested the following global competencies (Bingham, Felin, & Black, 2000):    

dealing with uncertainty, knowing customers, balancing tensions between global efficiency and local responsiveness, and appreciating diversity.

Some of the skills needed by global leaders are generic, while others are firm-specific, depending on the industry, the strategy of the firm, and its culture. For example, Black, Morrison, and Gregersen (1999), in their interviews of 130 senior line and human resource executives in 50 companies in Europe, North American, and Asia, found that effective global leaders:  demonstrate both global business and global organization savvy;  exhibit character, including the competencies of emotional connection with people, and high integrity; and  embrace duality, having the ability to manage uncertainty and to balance both globalization and localization pressures.

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At the same time, these authors found that two-thirds of the characteristics of effective leaders were generalizable across situations and companies, while one-third were idiosyncratic or specific to a particular situation. The lists of effective global leadership competencies are practically endless, to the point at which they become useless. We have seen companies working hard to define the necessary qualities ending up with a list of 80 to over 200 vital competencies. While there is no definitive list of global competencies, in the same way that there is no single definition of a ‘‘global job,’’ McCall and Hollenbeck (2002) provide one of the most comprehensive categorizations, derived from interviews with 101 executives (92 men and 9 women) who were considered extremely successful global executives by their organizations. These executives, from 36 countries, worked for 16 global companies in diverse positions. McCall and Hollenbeck do not focus on the business skills required to do well in an international posting, as these are considered a basic requirement. Rather, they focus on the experiences that prepare a person for leadership challenges, analyzing the individual and experiential characteristics that help a global executive excel in his/her job (see Table 1). Mendenhall and Osland’s (2002) review of the literature produced 56 global leadership competencies, which they categorized into a set of six core dimensions: cross-cultural relationship skills, traits and values, global Table 1.

Global Executive Competencies.

 Open-minded and flexible in thought and tactics: The person is able to live and work in a variety of settings with different types of people and is willing and able to listen to other people, approaches, and ideas.  Cultural interest and sensitivity: The person respects other cultures, people, and points of view; is not arrogant or judgmental; is curious about other people and how they live and work; is interested in differences; enjoys social competency; gets along well with others; is empathic.  Able to deal with complexity: The person considers many variables in solving a problem, is comfortable with ambiguity and patient with evolving issues, can make decisions in the face of uncertainty, can see patterns and connections, is willing to take risks.  Resilient, resourceful, optimistic, and energetic: The person responds to a challenge, is not discouraged by adversity, is self-reliant and creative, sees the positive side of things, has a high level of physical and emotional energy, is able to deal with stress.  Honesty and integrity: Authentic and consistent, the person engenders trust.  Stable personal life: The person has developed and maintains stress-resistant personal arrangements, usually family, that support a commitment to work.  Value-added technical or business skills: The person has technical, managerial, or other expertise sufficient to provide his or her credibility. Source: Competencies of Global Executives, McCall and Hollenbeck (2002, p. 35).

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Global Leadership Dimensions (with attendant competencies).

Traits Curiosity/Inquisitiveness Continual Learner Learning Orientation Accountability Integrity/Courage Commitment Hardiness Maturity Results-Orientation

Cognitive Environmental Sensemaking Global Mindset Thinking Agility Improvisation Pattern Recognition Cognitive Complexity Cosmopolitanism Managing Uncertainty Local vs. Global Paradoxes

Relationship Skills

Organizing Expertise

Close Personal Relationships CC Communication Skills “Emotionally Connect” Ability Inspire, Motivate Others Conflict Management Negotiation Expertise Empowering Others Managing CC Ethical Issues

Team Building Community Building Organizational Networking Creating Learning Systems Strong Operational Codes Global Networking Strong Customer Orientation

Business Expertise Global Business Savvy Global Organizational Savvy Business Acumen Total Organizational Astuteness Stakeholder Orientation Results-Orientation

Vision Articulating a tangible vision and strategy Envisioning Entrepreneurial Spirit Catalyst for Cultural Change Change Agentry Catalyst for Strategic Change Empowering, Inspiring

Source : Figure 11.1 Categorization of global leadership competencies in the empirical research Osland et al., 2006, p. 209.

business expertise, cognitive orientation, global organizing expertise, and visioning (see Table 2). More recently, Goldsmith, Greenberg, Robertson, and Hu-Chan (2003) surveyed 74 Forum group members and conducted interviews with 28 CEOs, current and future global leaders, and 202 high-potential nextgeneration leaders. They identified 12 dimensions of global leadership: integrity, constructive dialogue, shared vision, developing people, building partnerships, sharing leadership, empowerment, thinking globally, appreciating diversity, technological savvy, customer satisfaction, and maintaining competitive advantage. Similarly, Kets de Vries and Florent-Treacy (1999) found from their semistructured interviews with senior executives that global leadership encompasses 12 dimensions: envisioning, empowering, energizing, designing, rewarding, team building, outside orientation, team global mindset, tenacity, emotional intelligence, life balance, and resilience to stress.

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In sum, the extant literature provides a wealth of information about the dimensions of global leadership, but much of the writing is of a normative nature and does not follow the traditional requirements of rigorous empirical research. Instead, it can best be viewed as exploratory research building the foundation for more rigorous work to come. While the research has generated a number of overlapping dimensions, most of the research on global leadership has been published in books, rather than peer-reviewed journals, and the findings thus far can be viewed as only preliminary. In addition, there is still confusion in the field regarding the definition of global leaders versus domestic leaders and the difference between global leaders and global managers (Osland et al., 2006). Existing research does not explain how individual characteristics contribute to effective global leadership nor does it identify which competencies are critical in all contexts versus those that are important in only particular contexts (Osland & Bird, 2006). None of the published studies includes direct measures of behaviors nor do they correlate leaders’ attributes with objective measures of leadership effectiveness (Osland & Bird, 2006). To help set the stage to develop a framework linking global leadership and global mindset we provide the following definition for global leadership: Global leadership is the process of influencing individuals, groups, and organizations (inside and outside the boundaries of the global organization) representing diverse cultural/political/institutional systems to contribute toward the achievement of the global organization’s goals.

There are a number of components to this definition that we would like to highlight. First, our view of global leadership as a process of influence is in line with the conventional literature on leadership, in which most definitions reflect the notion of intentional influence exerted by one person over other people (Yukl, 2006). Unlike the prevailing literature in the global leadership field, our definition of leadership means that leadership can be exercised by an individual or a group. We also explicitly acknowledge that in addition to a leader, leadership requires other people or groups who are led toward an organization’s goals. However, in the extant literature on leadership, the assumption is that ‘‘other people’’ are typically the direct reports working for the leader in a traditional hierarchical relationship. Most of the writing on leadership is focused on how leaders can motivate their direct reports toward some common goals. While the same is true in the case of global leaders, it is only a small part of the picture. Global leaders do have employees, but they are scattered around the world. Furthermore, since a typical global

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organization is more of a network of supply chain partners, joint venture partners, or strategic alliance partners trying to execute integrated global strategies (Brake, 1997), the boundaries of the typical global organization are more permeable and fuzzy than those of the traditional organization (Ashkenas, Ulrich, Jick, & Kerr, 1995). Global leaders need to influence individuals, teams, or organizations from different parts of the world to help achieve their organizations’ objectives. And they need to do this without relying on traditional lines of authority. Furthermore, those being influenced are different from the global leader. Their cultural background is different, so the way they see and interpret the world is different. In addition, what motivates them may be different from what the global leader is used to because they do not have common experiences and their cultural values and practices are different: Crossing business borders – borders of business unit, of market, of product, of function, and of customer – although important, is fundamentally different from crossing borders of country and culture. Dealing with multiple business elements, however arranged, adds layer upon layer of complexity and contributes to ambiguity, anxiety, and uncertainty, but the impact on executives is primarily cognitive or intellectual. Although the problems may be more complex, they are, at bottom, business problems, not personal problems. It is the crossing of cultural lines that is an assault on the identity of the person. When the task becomes managing differences of country, culture, language, and values, the assumptions we make about ourselves and other people are brought into question. Effective executive performance when crossing country and cultural borders often demands a kind of transformation of who we are and how we see ourselves. (McCall & Hollenbeck, 2002, p. 22)

The ‘‘other people’’ are also from different social and political systems. Their institutional systems, their legal frameworks, and their social structures are different from those in the global leader’s home context (North, 1990). They may even have different views on the whole notion of the corporation and its role in the society (Hunt, 2000). In sum, global leadership is about influencing those who are different from the leader in many important ways.

WHAT IS CROSS-CULTURAL LEADERSHIP? Our view is that to understand fully the construct of global leadership, we need to connect it better to the concept of cross-cultural leadership (CCL). Whereas the field of global leadership is in its infancy, the related field of CCL has a longer history. For example, the widely recognized Bass and Stogdill’s Handbook of Leadership dedicated one page to CCL in its 1974

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edition, 14 pages in its 1981 edition, and 40 pages in its 1990 edition, reflecting the increasing prominence of the topic. We will not provide a comprehensive review of the literature because various authors have done so (Bass, 1990; Smith & Peterson,1988; House, Wright, & Aditya, 1997; Peterson & Hunt, 1997; Dorfman, 2004), but we provide a high-level overview below. While the literature in CCL, like that in global leadership, is driven by the globalization of the world of business, it is, in contrast to global leadership, only partly focused on practical and managerial needs. Instead, rooted in the discipline of cross-cultural psychology, it is also interested in theoretical and methodological issues, as evidenced by Dorfman: From a scientific and theoretical perspective, compelling reasons exist for considering the influence of culture on leadership processes. Because the general goal of science is to develop universally valid theories, laws, and principles, leadership researchers should strive to develop leadership theories that transcend cultures. Most likely, these theories will take the form of mid-range theories such as those prevalent in the leadership literature (e.g., LMX theory from Graen & Uhl-Bien, 1995). (2004, p. 269) As Triandis (1993) suggests, leadership researchers will be able to ‘‘fine-tune’’ theories by investigating cultural variations as parameters of the theory. Cross-cultural research may also help uncover new theoretical relationships by forcing the researcher to consider a much broader range of non-cultural variables (Chemers, 1983). For instance, models promoting participatory leadership may be valid for relatively sophisticated employees in developed countries, but less valid for employees in less developed countries where egalitarian values may not be highly valued. (2004, p. 269)

The major driver of the field is the fact that most of the research in leadership during the past few decades has been conducted in Western countries (Yukl, 2006). Given the increasing cross-cultural contact in global corporations, research has focused on the following questions:  To what extent are the theories and models of leadership applicable to non-Western cultures?  Are there universally desirable or undesirable attributes of leadership across cultures?  Are there culturally specific aspects of leadership?  What are the dynamics of CCL and how does one succeed in a crosscultural context? The starting point in the CCL literature is the notion of culture. Despite many years of work by many researchers and writers, there is no unified definition of culture. Definitions of culture vary from the very inclusive (e.g., ‘‘culture is the human-made part of the environment’’; Herskovitz, 1955) to

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highly focused (‘‘culture is a shared meaning system’’; Shweder & LeVine, 1984, p. 110). The conventional wisdom in cross-cultural psychology reflects Hofstede’s notion of the cultural onion (1980, 2001). Hofstede defines culture as ‘‘the collective programming of the mind that distinguishes the members of one group or category of people from another’’ (2001, p. 9). He defines values as the invisible part of culture manifested through cultural practices, consisting of symbols, heroes, and rituals (2001, p. 10). He visualizes the relationship between culture, values, and practices as the ‘‘Onion Diagram’’ (2001, p. 11) arguing that cultural values drive practices. There is general acceptance that the values-based framework for measuring cultures has been helpful in deciphering cultures (Leung et al., 2002; Smith, Peterson, & Schwartz, 2002; Leung, Bhagat, Buchan, Erez, & Gibson, 2005), but other researchers have started to take a different approach. The GLOBE research program defined societal culture in terms of cultural values and practices (House, Hanges, Javidan, Dorfman, & Gupta, 2004). It identified nine cultural dimensions and compared 62 societies in terms of their cultural values and practices related to the nine dimensions. Leung et al. (2002) introduced the notion of social axioms, which they define as general beliefs. The conventional approach to measuring cultures is through asking individual respondents about what is important to them as individuals and then aggregating the results at the culture level. Leung and Bond (2006) summarize the underlying premise for this approach: For most people, life is not an aimless, mindless drift; their actions and activities are conscious or unconscious manifestations of their responses to two fundamental questions: What do they want to pursue in life and how do they pursue those goals? The ‘‘what’’ question has been extensively researched under the rubric of values, the study of which seeks to identify general goals that people regard as important (e.g., Rokeach, 1973). (p. 2)

Schein (1992) presents a different view of culture, as a product of a collective’s attempts to address two sets of group issues: external adaptation and internal integration. Culture evolves as a collective adapts to ongoing challenges surviving in the face of external threats and opportunities and managing relations among its members. Despite the divergence of views on the definition of culture, there is general agreement among researchers that culture refers to the cognitive systems and behavioral repertoires that are shaped as a result of individuals’ experiences. To the extent that individuals share common experiences, they will form similarities in their cognitive and behavioral profiles. Of course,

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the extent of commonality is also influenced by such other factors as individual personality. Human beings are not cultural robots and, even within each culture, there is a range of individual cognitive and behavioral profiles fueled by, among other things, individual idiosyncrasies. Given the above link between culture and cognitive and behavioral repertoires, many authors believe that culture can impact leadership in several different ways (Adler, 1997; House et al., 1997; House et al., 2004; Javidan & Carl, 2004; Dorfman, 2004; Javidan & Carl, 2005; Javidan, Dorfman, Sully de Luque, & House, 2006). Growing up in a particular culture, leaders develop and internalize the cultural values and practices of the culture and learn, over time, desirable and undesirable modes of behavior. Smith et al. (2002) showed that the extent to which managers rely on formal rules and supervisors for guidance is related to their cultural background. Geletanycz (1997) showed that executives’ adherence to existing strategy is related to their cultural background in terms of individualism, uncertainty avoidance, and power distance. Rahim and Magner (1996) found that leaders in individualistic cultures tend to put more emphasis on coercive power. Mehra and Krishnan (2005) found that Indian Svadharma orientation (following one’s own duty) is related to transformational leadership in that country. Culture also impacts the context of the relationship between the leader and the followers (Yukl, 2006). Cultural norms influence the way people in a society relate to each other and, as such, influence the type and content of relationships in general. Leadership, as a unique form of relationship, is bound to be also influenced. For example, a leader in a high power distance culture is likely to act autocratically not just because he/she has learned it in his/her own experience, but also because any other type of behavior may be deemed ineffective by his/her boss or those outside the organization (Javidan et al., 2006; Javidan & Lynton, 2005). Another important impact of culture on leadership is through its impact on the implicit leadership theories of the members of the culture (Lord & Maher, 1991; House et al., 2004; Javidan & Carl, 2004; Javidan & Carl, 2005). A society’s culture reflects some sort of collective agreement on meanings and interpretations. Such agreements turn into social influences by producing ‘‘a set of compelling behavioural, affective, and attitudinal orientations and values for the members’’ (House et al., 1997, p. 538). Triandis (1994), in a comprehensive review of almost 400 studies, concluded that the cultural value orientations in a country will determine the optimum leadership profile for that country. He concluded that, while there are some universal attributes of management systems, each distinct culture may have a distinct management style that is both moderated and directly influenced by culture.

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The implicit theories of leadership in a society are influenced by its culture because of the prominent role of leaders and because of their contribution to the collective’s success or failure. The theories are also culturally dependent because leaders mostly work with people. Leadership is about relations with other individuals and groups, most of whom are at least partially influenced by cultural values and beliefs. For leaders to succeed, they need to act in ways that are culturally acceptable (Javidan & Carl, 2004). The GLOBE research program (House et al., 2004) proposed and tested an integrated theory on the linkage between a society’s culture and its implicit leadership theory. It shows that members of a culture tend to develop a common implicit theory of leadership that is a set of attributes, expectations, and criteria to assess their leaders. The closer the fit between a leader’s actions and attributes and the group’s implicit criteria, the more the leader is accepted by the members. GLOBE shows that cultural values, and not practices, are associated with specific culturally endorsed leadership theories. For example, it shows that societies that report relatively higher values of performance orientation prefer leaders who demonstrate higher levels of value-based leadership. Or societies that report higher scores on power distance values tend to demonstrate a more positive view of self-protective leadership compared to those societies that score lower on power distance values. GLOBE also identifies leadership attributes that are universally desirable, such as ‘‘decisiveness’’ and ‘‘foresight.’’ It further shows that such leadership attributes as ‘‘ruthless’’ and ‘‘irritable’’ are universally undesirable. In other words, while societies have different expectations from their organizational leaders as a result of their differing cultural values, they also have several common expectations or criteria to evaluate such leaders (Dorfman, Hanges, & Brodbeck, 2004). To conclude this section and to set the stage for the comparison of global leadership and CCL, we define: Cross-cultural leadership as the process of influencing individuals or teams representing diverse cultural/meaning systems to contribute toward the achievement of the organization’s goals.

The key element of this definition is that those being influenced represent cultures that are different from that of the leader and have differing ways of making sense and interpreting their world. Owing to the roots of the field in cross-cultural psychology, CCL is generally focused on the relationship between a leader and one or more direct reports who are from different cultural backgrounds.

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WHAT IS THE DIFFERENCE BETWEEN GLOBAL AND CROSS-CULTURAL LEADERSHIP? Given the fact that global leadership and CCL are rooted in different disciplines, and that their focus is significantly different – helping executives in global positions in the former and enhancing the science and theory of leadership in the latter – the two streams of work are largely independent of each other. The CCL literature simply ignores the notion of global leadership and makes no attempt to connect to it, even though it acknowledges the reality of global responsibilities for many executives. The field of global leadership seems relatively more aware of the CCL literature but makes only passing reference to it and certainly makes no attempt to bridge the divide or even define and contrast the two constructs. In this section, we will contrast the two constructs and will explain how the two are connected. We suggest that CCL is a subset and a component of global leadership (GL). As can be seen from the definitions provided earlier, CCL is about leading individuals and teams who are from a different cultural background. GL is about leading those who are from different cultural, political, and institutional backgrounds. The focus of global leadership goes beyond that of managing cultural differences and extends into dealing with the political and institutional systems that underpin individual and organizational behavior in different countries. Both CCL and GL are focused on how to influence others who are different from the leader. Both constructs are based on the assumption that to succeed, leaders need to understand and address these differences. CCL is concerned with understanding and managing cultural differences. GL is concerned about the same plus the impact of differences in political and institutional frameworks. For example, a manager trying to influence and motivate his/her employees from a different culture needs to learn about their cultural heritage and its implications for individual motivation (CCL). But he/she also needs to understand the rules and regulations governing employer–employee relations in that society (GL) because they can play a big part in driving or constraining employees’ and employers’ behavior. The new general manager of a Korean electronics firm in Cuba made a big effort to understand the Cuban and Latin American culture during his first few months in the job. While he found it helpful, he realized that it was even more important to learn the Cuban political and institutional framework because of the severe restrictions they imposed on his and his employees’ actions. For example, he learned that he did not have the freedom to choose what employees to hire; the state provided the workers. He also

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realized that any form of bonus or performance-based reward was illegal. His solution: He would take his best performing Cuban salesperson to the only foreign supermarket in Havana where locals are not allowed on their own and where only US dollars are accepted. He would give the sales person a cart for 30 minutes and would pay for everything that the sales person could put in the cart in that time. Another important distinction between CCL and GL is that CCL, due to its roots in psychology, is almost exclusively focused on an influence relationship between a leader and his/her direct reports inside the organization. While some researchers examine the dyadic relationship between a leader and individual subordinates (Hiller & Day, 2003; Graen, Hui, & Gu, 2004), others take a more aggregate view of the relationship between a leader and his/her subordinates in general (O’Connell, Lord, & O’Connell, 1990; Ling, Chia, & Fang, 2000; Javidan & Carl, 2004; Javidan & Carl, 2005). In contrast, global leadership goes beyond the influence relationship between a leader and direct reports in two important ways: first, it also encompasses individuals outside the organization. Global leaders need to influence many individuals who are not their direct reports and are not even employees of the firm. They may be individuals working for other firms who are the clients, the supply chain partners, or joint venture partners of the firm. As explained earlier, the global corporation is evolving as a global network of interconnected and tightly integrated internal and external activities designed to satisfy their varied customer markets in different parts of the world (Palmisano, 2006). To create such a global network, global leaders need to successfully influence many individuals in other organizations in the network. But they need to go beyond individuals and influence various teams and organizations to ensure tightly integrated systems. They need to manage global virtual teams like R&D and product design that span several organizations around the world. They also need to influence such organizations as supply chain partners or joint venture partners to ensure proper levels of cooperation and integration. A company like Eaton with hundreds of supply chain partners in 86 countries needs global leaders who are capable of managing massive numbers of global partners across the globe. Last, but not least, global leaders need to influence external organizations who are not their partners but who are critical stakeholders, such as political and regulatory agencies who embody and enforce the institutional framework in each society (North, 1990). Building and sustaining support from these organizations can be critical to the ongoing success of the global corporation. For example, GE’s planned acquisition of Honeywell was thwarted not by US regulatory agencies but by the European Union’s regulatory agency.

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To sum up, CCL and GL are distinct phenomena that differ mostly in terms of their scope. CCL is focused only on relationships among individuals within the boundaries of an organization. GL is focused on broader relationships between the leader and a wide range of stakeholders inside and outside the global organization. It is because of this difference in scope that we regard CCL as a subset and component of global leadership.

GLOBAL MINDSET: THE KEY TO SUCCESSFUL GLOBAL LEADERSHIP Responding to heightened global competition and increased levels of complexity and volatility in the global environment, global mindset has emerged as a key source of long-term competitive advantage in the global marketplace. The cognitive abilities (mindsets) of key decision makers play a key role in the strategic capabilities of global firms because the ways in which managers make sense of their organizational and global environments can enhance or inhibit competitive advantage (Caproni, Lenway, & Murtha, 1992). Mindset drives discovery of new market opportunities, establishing presence in key markets and converting presence into global competitive advantage (Govindarajan & Gupta, 2001). Having a global mindset has become a critical success factor in global firms (Bartlett & Ghoshal, 1990; Gupta & Govindarajan, 2002; Murtha, Lenway, & Bagozzi, 1998; Harveston, Kedia, & Davis, 2000; Jeannet, 2000; Levy, Beechler, Taylor, & Boyacigiller, 2007): Diverse roles and dispersed operations must be held together by a management mindset that understands the need for multiple strategic capabilities, views problems and opportunities from both local and global perspectives, and is willing to interact with others openly and flexibly. The task is not to build a sophisticated structure, but to create a matrix in the mind of managers. (Bartlett & Ghoshal, 1989, p. 212)

Because global firms face contradictions or paradoxes, key decision makers must have ‘‘dualistic perspectives.’’ For example, an individual with a global mindset has an openness to and awareness of diversity across businesses, countries, cultures, and markets; the ability to develop and interpret criteria and business performance that are independent of the assumptions of a single country, culture, or context; and the ability to synthesize across this diversity and to implement those criteria appropriately in different countries, cultures, and contexts (Govindarajan & Gupta, 2001; Maznevski & Lane, 2004). For the global firm the key advantages of a global mindset are

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(Govindarajan & Gupta, 2001):  early mover advantage in identifying emerging opportunities,  greater sophistication and more fine-grained analysis as the trade-off between local adaptation and global standardization,  smoother coordination across complementary functional activities distributed across borders,  faster rollout of new product concepts and technologies,  more rapid and efficient sharing of best practices across subsidiaries, and  lower failure rate in expatriate assignments. Cross-cultural leadership and global leadership represent a constellation of cognitions, behavioral repertoires, and behaviors. A leader’s cognitions, or mindset, determine what a person believes is worth doing, which helps to determine the competencies that that individual develops over time. In turn, those competencies help determine actual behaviors. There is a recursive element to this process as mindsets are both drivers of behaviors and outcomes. In the sections below we provide a brief overview of the extant work on global mindset, our definition of global mindset, and then a model linking global mindset and global leadership effectiveness. There have been two approaches used by researchers looking at global mindset at the individual level. Many writers have conceptualized global mindset in relation to salient dimensions of the global environment, most notably in relation to cultural and national diversity and environmental complexity associated with globalization (Levy et al., 2007), underscoring the challenge of crossing cultural boundaries, interacting with employees from many countries, and managing culturally diverse interorganizational relationships. Levy et al. (2007) use the term cosmopolitanism for this dimension of global mindset that emphasizes an individual’s level of engagement and an ability to navigate through unfamiliar cultures with an external and open focus. Other researchers writing about global mindset have focused on aspects of environmental complexity and strategic variety stemming from the globalization of operations and markets. The environmental complexity approach highlights an additional demand placed on MNCs: the need to integrate geographically distant and strategically diverse operations and markets (Prahalad & Doz, 1987). Appropriately, this approach often defines global mindset as a cognitively complex knowledge structure characterized by high levels of both differentiation and integration (Levy et al., 2007). There are two aspects of cosmopolitanism that are important to global mindset. First is an orientation toward the outside and the external

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environment, rather than a focus on the inside, the local or the parochial. A second key aspect is the characteristic of openness, which represents not only being interested in others but also being willing to engage and be open to exploring the alternative systems of meanings held by outsiders and to learn from them (Levy et al., 2007). As Kanter (1995) discusses, it is possible for someone to be externally oriented without being open to the people or knowledge they learn about: ‘‘It is not travel that defines cosmopolitans – some widely traveled people remain hopelessly parochial – it is mindset’’ (Kanter, 1995, p. 23). The cosmopolitan perspective was first introduced into the international business literature by Perlmutter and his colleagues in the late 1960s when they highlighted the importance of mindset among international senior executives in defining the multinational firms (Perlmutter, 1969). Perlmutter distinguished among three primary attitudes (mindsets) toward managing a multinational enterprise, which he labeled ethnocentric (home-country orientation), polycentric (host-country orientation), and geocentric (world orientation). These orientations, Perlmutter suggested, influence and shape diverse aspects of the multinational, including structural design, strategy and resource allocation, and management processes. Perlmutter’s descriptive typology defines the ethnocentric, polycentric, and geocentric orientations in terms of specific attitudes. An ethnocentric orientation is expressed in terms of headquarters and attitudes of national superiority: ‘‘We, the home nationals of X company, are superior to, more trustworthy and more reliable than any foreigner in headquarters of subsidiaries’’ (Perlmutter, 1969, p. 11). A polycentric orientation represents a respectful disengagement from foreign cultures: ‘‘Let the Romans do it their way. We really do not understand what is going on there, but we have to have confidence in them. As long as they earn a profit, we want to remain in the background’’ (Perlmutter, 1969, p. 13). Leaders with a global mindset, or a geocentric attitude, to use Perlmutter’s term, have universalistic, supranational attitudes and downplay the significance of national and cultural differences: ‘‘Within legal and political limits, they seek the best men (sic), regardless of nationality, to solve the company’s problems anywhere in the world’’ (Perlmutter, 1969, p. 13). Many of the current conceptualizations of global mindset build on Perlmutter’s approach. For example, Maznevski and Lane (2004) define global mindset as ‘‘y the ability to develop and interpret criteria for personal and business performance that are independent from the assumptions of a single country, culture, or context: and to implement those criteria appropriately in different countries, cultures, and contexts’’ (p. 172).

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While cosmopolitanism is important to a global mindset, it does not mean that individuals do or should forego the historic roots of their existence or cultural heritage. Jeannet (2000) notes that even with a ‘‘global mindset y a manager y is operating from a long rope or cord, with a large radius, not constrained by ethnocentric view, but grounded in a home country culture for personal balance’’ (p. 197). In contrast to the cosmopolitan approach to global mindset described above, other writers, primarily working in the field of international strategy, have focused on aspects of environmental complexity and strategic variety associated with globalization when writing about global mindset. This approach focuses on global mindset as a cognitively complex knowledge structure characterized by high levels of both differentiation and integration. Govindarajan and Gupta (2001), for example, state that every mindset represents a knowledge structure with two primary attributes: differentiation and integration (p. 110). 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 (Bartunek, Gordon, & Preszler, 1983; Weick & Bougon, 1986). People who are more cognitively complex can perceive a larger number of dimensions in a domain and can simultaneously hold and apply several valid but competing and complementary interpretations to that domain (Bartunek et al., 1983). Cognitive complexity is also associated with the capacity to balance contradictions, ambiguities, and trade-offs (Tetlock, 1983) and the ability to manage dualities or paradoxes (Evans, Pucik, & Barsoux, 2002; Levy et al., 2007). Our conceptualization of global mindset encompasses both the simultaneous and the integrative use of the cognitive capabilities associated with cosmopolitanism and high cognitive complexity (Levy et al., 2007). It is a multifaceted construct that represents the fusion between an orientation toward the external environment, an ability to notice and integrate diverse elements in this environment, and a person’s underlying openness to ideas and experiences (Levy et al., 2007; see also the work of Rhinesmith, 1996; Kedia & Mukherji, 1999; Govindarajan & Gupta, 2001). An individual with a global mindset has an awareness of diversity across businesses, countries, cultures, and markets; the ability to develop and interpret criteria for business performance independent of assumptions regarding a single country, culture, or context; and the ability to synthesize across this diversity and to implement those criteria appropriate in different countries, cultures, and contexts (Govindarajan & Gupta, 2001; Maznevski & Lane, 2004). Global mindset is the capacity to navigate successfully across

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cognitive and geographical space, including different knowledge and meaning systems. We provide the following definition: Global mindset is an individual’s stock of knowledge, cognitive, and psychological attributes that enable him/her to influence individuals, groups, and organizations from diverse sociocultural systems.

COMPONENTS OF GLOBAL MINDSET The essence of global leadership, as in generic leadership, is to influence others to contribute toward some shared and common goals. Yukl (2006) showed that there are a number of specific influence tactics that help achieve the expected results. They are:  Rational persuasion: use of logical arguments and factual evidence.  Apprising: explaining the relevance and benefit of the expected end point to the target of influence.  Inspirational appeal: arousing the target’s emotions by connecting to his/ her values and ideals.  Consultation: soliciting suggestions from the target.  Collaboration: offering resources and assistance to the target.  Ingratiation: using praise and flattery before and during the influence attempt.  Personal appeals: appealing to friendship or asking for personal favors.  Exchange: offering incentives and willingness to reciprocate.  Coalition tactics: seeking the aid of others to influence the target.  Legitimating tactics: using rules, policies, and contracts to legitimate the request.  Pressure: using demands, threats, frequent checking to get the target to carry out the task. Kotter (2003) suggested that effective leaders use a combination of the above influence tactics to achieve three outcomes: setting direction, aligning people, and motivating them. Leaders gather and analyze substantial amounts of data to help create visions and strategies (direction setting). Aligning means intensely and effectively communicating a legitimate and credible message and empowering people to take initiatives toward the common goals. Motivating means inspiring, exciting, and energizing others by connecting to what is important to them: their values and ideals. What distinguishes global leadership from generic leadership, and what makes it

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Perceive, analyze, decode

Accurately identify effective managerial action Possess behavioral flexibility and discipline to act appropriately

Fig. 1.

What Effective Global Managers Do. Source: Bird and Osland (2004, p. 66).

more complicated, is that global leaders need to influence others who represent diverse sociocultural/political/institutional systems. Integrating the ideas above with the work of Osland and Bird (2006), we can apply the lens of expert cognition to examine differences between novices and expert global leaders (see Fig. 1). As Osland and Bird note, experts perform at higher levels of proficiency because they perceive the world differently and use more sophisticated processes of insightful thinking. When looking at a problem, they differentiate more readily between relevant and irrelevant information, while novices sometimes overlook important cues or assign too much importance to irrelevant information (Osland & Bird, 2006, p. 131). Experts then combine relevant information into relevant patterns to allow for more accurate diagnosis of a problem and, compared to novices, perceive more patterns. Experts also possess a vast store of knowledge that is more extensive than that of novices and they are better at gauging the importance of different types of knowledge and the difficulty of problems (Klein & Hoffman, 1992, p. 209, quoted in Osland & Bird, 2006, p. 131). Experts are also better at perceiving the interaction among cues and understanding the meaning of invisible or absent cues. They are better than novices at reacting to nonroutine situations and making decisions under pressure and are more likely to generate a high-quality solution in their first attempt without having to compare alternatives. In addition, although there is no difference in analytic reasoning between novices and experts, experts complement their analytical skills with intuitive reasoning, which is ‘‘a cognitive conclusion based on a decision maker’s previous experiences

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and emotional inputs’’ (Burke & Miller, 1999, p. 93, quoted in Osland & Bird, 2006, p. 132). Finally, because of their knowledge and their experience base, experts’ perceptions of their work become more complex than that of novices (Osland & Bird, 2006, p. 133). Based on the research on expert thinking, Osland and Bird (2006, p. 133) conclude that compared to novices, expert global leaders should be better able to:      

differentiate between relevant and irrelevant cues, perceive more patterns in cues, recognize what is missing, interpret patterns and the interaction among cues more accurately, have more extensive knowledge bases, and cross-index patterns from other industries, country operations, and cultures.

While Osland and Bird (2006) focus on the cognitive implications of global leadership, it is also important to examine the complexity of influence processes in a global context. As indicated earlier, the ultimate success of global leaders lies in their ability to influence others to contribute to the goals of the global enterprise. Cognitive complexity is a necessary but not sufficient requirement for successful influence. To succeed, global leaders need a package of attributes called global mindset: Global mindset is the stock of (1) knowledge, (2) cognitive, and (3) psychological attributes that enable a global leader to influence individuals, groups, and organizations (inside and outside the boundaries of the global organization) representing diverse cultural/political/institutional systems to contribute toward the achievement of the global organization’s goals.

The critical components of global mindset are intellectual capital, psychological capital, and social capital. Below we will provide a brief explanation of each component.

Global Intellectual Capital Intellectual capital refers to the global leader’s intellectual and cognitive capabilities. It consists of several key attributes:  knowledge of the global industry,  knowledge of the global value network,

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 knowledge of the global organization,  cognitive complexity, and  cultural acumen. Table 3 shows a summary of the various elements of intellectual capital. Global leaders with high stocks of intellectual capital are capable of understanding the complex global industry in which they are operating. They are aware of differing competitors and competitive strategies, and divergent Table 3. Knowledge of the Global Industry

Components of Global Intellectual Capital.

Knowledge of Global Value Networks

Knowledge of the Global Organization

Cognitive Complexity

Global business, competitors, and industry

Knowledge of global supply chains

Understanding the importance and the processes of building global value networks Understanding the importance of global strategic alliances and networks to the global firm’s strategy Knowledge of how to manage global networks and teams

Ability to define challenges and opportunities from multiple and diverse perspectives Ability to find solutions to challenges and opportunities from multiple and diverse perspectives Ability to bridge and integrate among multiple perspectives

Cultural selfawareness

Economic, political, and institutional systems

Understanding the tension between global efficiency and local effectiveness Understanding global implications when making local decisions

Ability to empathize with those who hold conflicting views

Knowledge of other languages

How to transact business in different parts of the world

How to scan the world for trends and opportunities

Understanding the importance of global inclusive visions and finding common views Understanding the global value proposition and business model

Cultural Acumen

Understanding cultural similarities and differences

Knowledge of other histories and cultures

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economic and political systems, and are able to identify business opportunities in different parts of the world. They understand the importance of global value networks and supply chains and integrated global operations and are aware of the importance of global virtual teams. They understand the complexities of a global organization and the natural tensions existing between global and local requirements. They are cognitively complex individuals who are able to understand multiple perspectives on how to define and address global opportunities and challenges. While they understand that their global context is complex, they are not paralyzed by it. Finally, they have strong cultural acumen, which includes cultural self-awareness, understanding cross-cultural differences as well as other’s histories, and knowledge of other languages. Our notion of cultural acumen is similar to Earley and Mosakowski’s (2004) concept of cultural intelligence, but is not exactly the same in the sense that theirs includes behavioral components while our notion of cultural acumen does not. It contains only cognitive elements that help trigger particular behaviors.

Global Psychological Capital Having a sufficient stock of global intellectual capital is only one component of global mindset. Having knowledge and understanding global issues are important attributes of effective global leaders but they do not automatically lead to success. Global leaders have the appropriate knowledge but they also have the appropriate psychological makeup that enables them to put the knowledge to good use. Individuals who are knowledgeable about global phenomena but lack the required psychological makeup are probably successful global analysts, but they are not global leaders. Global leaders possess a package of psychological attributes that we call global psychological capital. Rooted in positive organizational behavior, psychological capital is defined by Luthans and Youssef (2004) as a set of state-like (as opposed to fixed and trait-like) variables that can be developed through proactive management and workplace intervention. Luthans and his colleagues (e.g., Luthans, Youssef, & Avolio, 2007) define psychological capital as an individual’s positive psychological state of development that is characterized by: (1) having confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining

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and bouncing back, and even beyond (resiliency), to attain success (Luthans, Youssef, & Avolio, 2007). We believe that the above state-like attributes are critical components of global psychological capital. Global leaders need self-efficacy because they face high levels of ambiguity and challenging tasks in diverse parts of the world. They need the self-confidence to drive them to meet and face such challenges. Optimism and hope are also important parts of global mindset because they energize the global leader to look for and believe in a successful ending regardless of the enormity of the challenge. Resiliency is a critical component of global mindset because global leaders are more likely to experience failures and to need to continuously readjust and regroup. Resiliency provides the reservoir of energy to sustain global leaders through the ups and downs of complex challenges. But the above four psychological states are not the only attributes needed for successful global leadership. Our concept of global psychological capital is further informed by the extant literature on expatriate success and global leadership. Table 4 provides a summary of the various components of global psychological capital, which consists of positive psychological profile, cosmopolitanism, and passion for cross-cultural encounters. Cosmopolitanism refers to a set of psychological attributes that enable an individual to take a nonethnocentric view of the world (Levy et al., 2007). Cosmopolitan global leaders downplay their own national identity (Levy et al., 2007). They are open and sensitive to other cultures, showing a Table 4. Positive Psychological Profile Self-efficacy Optimism Hope Resiliency

Components of Global Psychological Capital. Cosmopolitanism

Passion for Cross-cultural and Cross-national Encounters

Downplay significance of nationality Openness and sensitivity to other cultures and systems Positive attitude toward international affairs Willingness to accept good ideas regardless of where they come from Willingness to work across time and distance Respect for other cultures Flexibility

Passion for cultural differences Curiosity about and interest in other cultures Quest for global adventure Passion to learn about other cultures Emotional connection to people from other cultures

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willingness to learn about others and a positive attitude toward international issues and affairs (Spreitzer, McCall, Jr., Mahoney, 1997; Barham & Oates, 1991; Woodruffe, 1993; Javidan et al., 2006). They are able to work across boundaries of time, location, and distance and to accept ideas regardless of where in the global organization they are generated (Derr, Jones, & Toomey, 1988). Finally, cosmopolitan individuals show strong flexibility and adaptability while working with people from different other parts of the world (Aycan, 1997). The third component of global psychological capital is passion for crosscultural encounters. This characteristic refers to a deep sense of excitement and passion for working with people from diverse cultures (Spreitzer et al., 1997). The challenge of working with diverse individuals and teams is not viewed as just an intellectually stimulating occasion, but also as an emotionally enriching experience. Curiosity about other cultures and quest for global adventure are also integral parts of global psychological capital because they turn the unknown into an exciting target to pursue rather than a fearful state to run away from (Bird & Osland, 2004). They generate a strong passion to learn about other cultures and diverse points of view. Last, global leaders with passion for cross-cultural encounters are able to connect emotionally to people from many different parts of the world and are able to generate positive emotional energy in them. To sum up, our notion of global psychological capital consists of a positive psychological profile, cosmopolitanism, and passion for cross-cultural encounters. It is important to point out that while the elements of positive psychological capital (e.g., self-efficacy, optimism, hope, and resiliency) are psychological states that can be enhanced, some of the other elements of global psychological capital (e.g., openness and curiosity) may be deeper psychological traits and attributes and thus not as easily changeable.

Global Social Capital Social capital is ‘‘the potential value arising from certain psychological states, perceptions and behavioral expectations that social actors form as a result of both their being part of social structures and the nature of their relationships in these structures’’ (Kostova & Roth, 2003, p. 307). In simple terms, social capital refers to relationships inside and outside the firm. It reflects ‘‘the ability of actors to secure benefits by virtue of membership in social networks or other social structures’’ (Portes, 1998, p. 6). According to Kidd and Teramoto (1995), social capital is ‘‘know who’’ and is derived

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Table 5. Components of Global Social Capital. Structural Social Capital Assets based on the position an individual occupies in a network and the contacts that he/she enjoys that provide him/her with access to information or other benefits.

Relational Social Capital

Cognitive Social Capital

Assets derived from interactions with others in the network, rather than just the structure itself. For example, relational social capital includes beliefs and attitudes such as trust and trustworthiness.

Resources providing shared representations, interpretations, and systems of meaning among parties.

from the network of relationships an individual possesses. It involves being able to draw on acquaintances as well as the various relationships these acquaintances possess or have access to. There are three types of social capital: cognitive, relational, and structural (Nahapiet & Ghoshal, 1998; Kostova & Roth, 2003) (see Table 5). Structural capital is based on the position an individual occupies in a network and the contacts that he/she enjoys that provide him/her with access to information or other benefits. People with high levels of structural social capital occupy important positions with connections to a large number of individuals. They have the potential to call on these contacts to get access to information and to accomplish action. Relational social capital includes assets that are derived from interactions with others in the network, rather than just the structure itself. For example, relational social capital includes beliefs and attitudes such as trust and trustworthiness (Kostova & Roth, 2003). Relational social capital is the ‘‘y capability that arises from the prevalence of trust in a society or in certain parts of it’’ (Fukuyama, 1995, p. 27). Cognitive social capital is defined as the ‘‘y resources providing shared representations, interpretations, and systems of meaning among parties’’ (Nahapiet & Ghoshal, 1998, p. 224). For example, cognitive social capital refers to shared norms, values, attitudes, and beliefs and is therefore more subjective and intangible than structural social capital. Global leaders possess high levels of structural social capital because of their position within networks both inside and outside of the global organization. They must also possess high levels of relational social capital with an ability to connect to and work with people from other cultures and countries. Global leaders have the underlying ability to build mutually

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Social Capital

Psychological Capital

Individuals who have a global mindset

Intellectual Capital

Individuals who possess the behavioral flexibility and discipline to act appropriately Individuals who are capable of perceiving, analyzing and decoding the global operating environment

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Global Leaders who are effective in influencing people from different sociocultural systems

Global Corporations that are successful in their different global markets

What is the game? What are the rules? How do we win?

Individuals who can accurately identify effective managerial action in the global operating environment

Fig. 2.

Global Mindset and Effective Global Leadership.

trusting relationships with people from other countries and cultures. Finally, through cognitive social capital and shared representations and systems of meaning, global leaders have the capability to generate positive energy through their relationships with others to motivate and influence them. Integrating the components of our discussion above, an important key to successful global leadership is global mindset, which is, in turn, made up of three important components: global intellectual capital, psychological capital, and social capital. However, global mindset is a necessary but not sufficient condition for global leadership (Kedia & Mukherji, 1999). In addition to a global mindset, effective global leaders must also possess a behavioral repertoire that is appropriate to given cross-cultural and/or cross-national contexts and have the ability to execute the appropriate behaviors effectively (see Fig. 2). Only if mindset can be translated into effective behavior can global leaders influence individuals, groups, and organizations (inside and outside the boundaries of the global organization) representing diverse cultural/political/institutional systems to contribute toward the achievement of the global organization’s goals and ultimately its success.

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DEVELOPING GLOBAL LEADERSHIP MINDSETS AND BEHAVIORAL CAPABILITIES While some aspects of global mindset are genetic (cognitive complexity is largely determined at birth, for example), individuals and organizations can develop global psychological, intellectual, and social capital in a variety of ways. The speed with which individuals and organizations can cultivate a global mindset is driven by four factors (Govindarajan & Gupta, 2001, p. 126):  curiosity about the world and a commitment to becoming smarter about how the world works,  exposure to diversity and novelty,  an explicit and self-conscious articulation of current mindset, and  a disciplined attempt to develop an integrated perspective that weaves together diverse strands of knowledge about culture and markets. Employee selection and recruiting from diverse sources worldwide support the development of a global mindset. Global firms need to draw from a wide pool of candidates worldwide. 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. In addition, to increase curiosity about the world and understanding of how the world works, as well as exposure to diversity and novelty, formal education, cross-border teams and projects, diverse locations for meetings, foreign experience, and expatriation are the most commonly used and effective tools in MNCs (e.g., McCall & Hollenbeck, 2002). To understand one’s current mindset and to develop and integrate different perspectives about culture and markets, the tools of meritocracy, global ownership, defining core organization values, job rotation, and creating social ties across locations are critically important (Govindarajan & Gupta, 2001). Networking and collaborative opportunities can also help to create a global mindset and effective global leadership repertoires and behaviors. Global teams can be used as effective collaborative coordination tools to help develop a global mindset 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 fields. In addition, cross-national communities of practice, knowledge networks, and global meetings can all play an important role in exposing employees to

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different ways of thinking and diverse sources of information and can help to foster a global mindset and global leadership competencies. Challenging experiences and working in a context in which one has no previous expertise are the best ways of inspiring people to learn (McCall & Hollenbeck, 2002). In an international context, they also serve to stretch people’s minds beyond narrow domestic barriers and create a more complex mental map of the world (Black & Gregersen, 2000). Accepting challenging assignments involves setting priorities or making sacrifices, depending on one’s perspective. From their survey of 101 global executives, McCall and Hollenbeck (2002) found that the single event that produced the most lessons for leadership was turning around a business. Thirty-five percent of leaders found turnarounds to be the most difficult, challenging, and powerful learning opportunities in their lives. The second most powerful experience cited was culture shock (29%), while career shifts accounted for 21%. These are both perspective-changing leadership experiences outside the person’s area of expertise. Special projects, consulting roles, and staff advisory jobs were also of high importance (24%) to leaders’ learning. Despite the expense and the time required, there is every indication from research that direct cross-cultural and cross-national experience is the best teacher (e.g., Javidan et al., 2006; McCall & Hollenbeck, 2002; Black & Gregersen, 2000). Career-path planning and international assignments help develop global mindset 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, i.e., 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). At the same time, 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 crossnational 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. 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 (McCall & Hollenbeck, 2002). One way to enhance learning and build psychological capital as well as effective global leadership behaviors is

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through facilitated reflection and reframing. Building on preliminary work at the Gallup Leadership Institute at the University of Nebraska, which indicates that microinterventions can be used to develop and change participants’ psychological capital through cognitive, emotional, and behavioral processes by enhancing individuals’ staunch view of reality (Luthans, Avey, Avolio, Norman, & Combs, 2007, forthcoming), MNCs can use setbacks and failures as critical learning and development opportunities. Following a similar process outlined by Luthans et al. (forthcoming), MNCs can set up a structured process for expatriates or those working on global teams and in other global jobs in which individuals first identify recent personal setbacks at work and then write their immediate reactions to the setback. A facilitator then elaborates on examples of a staunch view of reality and an ideal resilient process for mentally framing the setback. Participants then assess the realistic impact of their setback – what is in their control, what is out of their control, and options for taking action. Participants are asked to repeat/ practice these new processes on additional personally relevant setbacks at work to reinforce learned cognitive processes that perpetuate the development of not only resiliency, but also ‘‘realistic’’ optimism. They are encouraged to practice anticipating and addressing setbacks associated with the personal goals set in the hope-building process or with other events inside or outside of work. When participants more accurately frame a personal setback in terms of true impact, control, and options, they not only are more apt to bounce back quickly from the setback, but may be able to attain levels even above where they started (Luthans et al., forthcoming). While there are various ways to enhance leaders’ global mindset, there is one critical universal tool that will improve the success of the many techniques and strategies: assessment. Regardless of how a corporation decides to develop leaders’ global mindset, it needs to use some form of assessment. Without a valid and reliable method to assess the current state of one’s global mindset, it is difficult, if not impossible, to properly measure and enhance global mindset. Our description and explanation of the three components of global mindset can be a useful first step in creating such an instrument.

CONCLUSION It is a truism that the world of business is increasingly global. The world is increasingly flatter (Friedman, 2005), mostly due to technological developments. While the flatter world provides many new opportunities, it also provides a variety of challenges that are driven by the fact that humans

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developed and are accustomed to a round world. The challenge to global leaders is to mobilize global resources to achieve their companies’ ambitions. To succeed, they need a new and increasingly critical tool called global mindset. In this chapter we have defined global mindset, identified its components and shown how it can help global leaders. Our hope is that our chapter and the others in this volume will help encourage a more rigorous and scientific approach to decoding such an integral element of global leadership success and global corporate competitive advantage. At the same time, much work lies ahead.

ACKNOWLEDGMENT The research support by the Worldwide ERCR Foundation for Workforce Mobility is thankfully acknowledged.

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LEARNING CULTURES ON THE FLY Luciara Nardon and Richard M. Steers We do not see things as they are, we see them as we are. – Talmud Bangalore, India, 5:30 AM. Adhira Iyengar wakes up early, prepares a cup of tea, and logs onto her computer. As expected, Debra Brown, her business partner in California, is already logged on. ‘‘Good morning! I have a few questions about your last report and would like to discuss them with you before I leave for the day.’’ As they finish their online meeting, Adhira stares at her calendar – it will be a long day. At 10 AM she has a conference call with Mr. Wu, a client in Hong Kong, about some changes in their service contract. At 1:30 PM she has a face-to-face meeting with a group of prospective Australian clients in her office in Bangalore. Before the end of the day, she must finish a report and e-mail it to Mrs. Sanchez, a partner in Mexico City, and she still needs to prepare her trip to Berlin coming up next week.

This example from a day in the work life of a busy international manager illustrates how recent technological advancements have pushed both the pace and the complexity of globalization to new heights (Friedman, 2005). Communication technology makes it possible to collaborate – or compete – globally from anywhere in the world, regardless of one’s country of origin or cultural background. As a growing number of organizations establish increased operations around the world, managers’ exposure to both partners and competitors from significantly different cultural backgrounds has increased at a rate that has surprised both economists and social scientists. The implication of this for managers of all types is clear: Managers with The Global Mindset Advances in International Management, Volume 19, 171–190 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19007-0

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a significant capability to think and understand business relationships from a global perspective will more often than not succeed over those with more limited nation-based mindsets (Nummela, Saarenketo, & Puumalainen, 2004). In this pursuit, the concept of the global mindset is of no small consequence.

CHALLENGES OF WORKING ACROSS CULTURES Developing successful relationships with people from different cultures is challenging by definition. Several reasons account for this, including people’s tendencies to have preconceived notions about how the world works (or should work), how individuals behave (or should behave), and which behaviors are acceptable (or unacceptable). These ideas are largely influenced by our personal experiences and the cultures in which we grew up. We tend to approach intercultural interactions based on our own perceptions, beliefs, values, biases, and misconceptions about what is likely to happen (Kluckhohn, 1954; Geertz, 1973; Hofstede, 1980, 1991; Trompenaars & Hampden-Turner, 1998; Schneider & Barsoux, 2003; Steers & Nardon, 2006). As a result, when we engage in exchanges with people from different cultures we often find that the consequences of our actions are different from what we expected or intended (Adler, 2002). The results can range from embarrassment to insult to lost business opportunities. Traditionally, practitioners and scholars have suggested that managers should deal with cross-cultural conflicts by adapting to the other culture (Earley & Mosakowski, 2004; Earley & Ang, 2003; Trompenaars & Hampden-Turner, 1998; Bennet, 1998). In this regard, academic and management training programs have long recognized a fairly typical pattern of behavior and accommodation referred to as culture shock (Chaney & Martin, 1995). That is, new expatriates initially experience stress and anxiety as a result of being immersed in an unfamiliar environment. Over time, they learn new ways of coping and eventually feel more comfortable living in the culture of the host country. Expatriate managers are able to be effective in dealing with people from another country by learning the foreign culture in depth and behaving in ways that are appropriate to that culture (Bennet, 1998). For example, a manager assigned to work in France for several years is advised to study French language and culture and then begin to make French friends upon his or her arrival in the new location. While this approach to training remains popular, we suggest that the increasing intensity and diversity that characterize today’s global business environment

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require a new approach. This new approach is forced upon managers because, unlike in the past, the new global manager must succeed simultaneously in multiple cultures, not just one or two (Berthoin Antal, 1995; Adler, 2002; Friedman & Berthoin Antal, 2005). Gone are the days when a manager prepared for a long-term assignment in France or Germany – or even Europe. Today, this same manager must deal simultaneously with partners from perhaps a dozen or even two dozen different cultures around the globe. Thus, learning one language and culture may no longer be enough, as it was in the past. In addition, the timeline for developing these business relationships has declined from years to months – and sometimes to weeks. To us, this requires a new approach to developing global managers. This evolution from a collection of principally bicultural business environments to one more integrated and global environment presents managers with at least three challenges in attempting to adapt quickly to the new realities on the ground: 1. Many intercultural encounters happen on short notice, leaving little time to learn about the other culture. Imagine that you just returned from a week’s stay in India where you were negotiating an outsourcing agreement. As you arrive in your home office you learn that an incredible acquisition opportunity just turned up in South Africa and that you are supposed to leave in a week to explore the matter further. You have never been to South Africa, nor do you know anybody from there. What do you do? While there are many books covering the ‘‘do’s and don’ts’’ of cultures, they are typically helpful guides on how to eat or behave politely and say little about how local managers behave (Osland & Bird, 2000; Friedman & Berthoin Antal, 2005). 2. It is often unclear to which culture we should adapt. Suppose that your company has asked you to join a global project team to work in a sixmonth R&D project. The team includes one Mexican, one German, one Chinese, and one Russian. Every member of the team has a permanent appointment in their home country but is temporarily assigned to work at company headquarters in Switzerland for this project. Which culture should team members adapt to? In this case, there is no dominant cultural group to dictate the rules. Considering the multiple cultures involved, and the little exposure each manager has likely had with the other cultures, the traditional approach of adaptation is unlikely to be successful. Nevertheless, the group must be able to work together quickly and effectively to produce results (and protect their careers) despite their differences. What would you do?

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3. Intercultural meetings increasingly occur virtually (using computers or video conferencing) instead of through more traditional face-to-face contacts. Suppose you were asked to build a partnership with a Korean partner that you have never met and that you know little about Korean culture. Suppose further that this task is to be completed online, without any face-to-face communication or interactions. Your boss is in a hurry for results. What would you do? Taken together, these three factors demonstrate how difficult it can be to work across cultures in today’s rapidly changing business environment. The old ways of communicating and doing business are simply less effective than in the past. The question before us, then, is how to facilitate management success in such situations. In the remainder of this chapter, we argue that managers need to ‘‘learn how to learn’’ to deal with other cultures and make sense of varied environments (Schwandt, 2005). To this end, we will discuss how individuals learn from experience (Kolb, 1976; Argyris, 1995) and how these theories and models can be applied to intercultural contexts.

TOWARD A GLOBAL MINDSET: LEARNING CULTURES ‘‘ON THE FLY’’ In recent years, numerous academicians and global managers have pointed out that, faced with increasing challenges of adapting to a fast-paced, multicultural, and technology-intensive environment, managers need to develop what has been called a global mindset (Rhinesmith, 1992; Kedia & Mukherjim, 1999; Jeannet, 2000; Maznevski & Lane, 2003; Nummela et al., 2004). As noted by Javidan, Dorfman, de Luque, and House (2006, p. 68), ‘‘it is insufficient for a manager who is likely to assume, mistakenly, that being open minded in Atlanta, Helsinki, and Beijing will be perceived identically, or that walking in someone else’s shoes will feel the same in Houston, Jakarta, or Madrid. Because of the lack of scientifically compiled information, businesspeople have not had sufficient detailed and contextspecific suggestions about how to handle these cross-cultural challenges.’’ Developing a global mindset is one clear way to resolve this deficiency. In this chapter, we follow Maznevski and Lane’s (2003) conceptualization of global mindset as the ability to develop and interpret criteria for personal and business performance that are independent of the assumptions of a single country, culture, or context and to implement those criteria

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appropriately in different countries, cultures, and contexts. In other words, global mindset is a cognitive structure or knowledge structure that contains information about several cultures and realities (Chatterjee, 2005). This knowledge allows managers to interpret situations using multiple cultural frameworks and then select the most appropriate action for each particular situation (Rhinesmith, 1992; Maznevski & Lane, 2003). However, while knowing everything about every culture and using such knowledge in appropriate ways is ideal, in reality achieving this level of understanding is difficult, if not impossible, for at least two reasons: first, learning about another culture from a distance is difficult at best and, second, most managers do not have the time to learn about other cultures and develop a global mindset well before they are asked to be effective. As a result, to develop a global mindset and be effective in the process, managers need to develop the ability to learn how to deal with other cultures ‘‘on the fly,’’ that is, to learn enough about the other and his or her cultural background in the course of the interaction. We argue in this chapter that intercultural episodes represent opportunities for interdependent learning in which managers can often compensate for knowledge gaps by developing personal mastery (Friedman & Berthoin Antal, 2005). We argue further that developing an ability to learn how to learn about interacting with other cultures and making sense of their divergent environments is probably the best strategy available for managers who want to succeed in the multicultural reality of today’s global business environment (Schwandt, 2005). Finally, we discuss below how individuals can learn from experience and how individual learning cycles, if managed correctly, can influence the success of intercultural interactions.

INDIVIDUAL LEARNING: EXPERIENTIAL LEARNING THEORY According to experiential learning theory, knowledge is created through a combination of grasping and transforming experience (Kolb, 1976; Kolb & Kolb, 2005). The learning process is composed of four stages, which include the two modes of constructing knowledge: knowledge is grasped through concrete experience and abstract conceptualization and transformed through reflective observation and active experimentation (Kolb & Kolb, 2005). While it may begin in any of the four stages, learning is a process

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Testing implication of concepts

Observation & Reflections

Abstract concepts & generalizations

Fig. 1.

The Experiential Learning Model.

of experience, observation and reflection, abstract conceptualization, and active experimentation. The experiential learning process is depicted in Fig. 1. To illustrate how experiential learning theory works, consider the following scenario: Imagine that you come from a culture that values direct and straightforward communication. As you engage in a conversation with another individual, you are likely to think that direct questioning is appropriate and will result in a straightforward answer. Further, imagine that the other individual with whom you are communicating comes from a culture that values indirect communication and ‘‘saving face.’’ For this person direct questions are inappropriate and information is exchanged indirectly through subtle suggestions and hints. Now, consider that neither of you are sufficiently knowledgeable to adapt your communication styles to fit the other’s culture. The most likely result of this scenario is that you will ask a direct question and will get what you perceive as an unsatisfactory response. At this point, you are likely to experience an emotional reaction – discomfort, perplexity, offense, or surprise. The feelings you experience as a result of your actions are referred to as concrete experience. In other words, it is your emotional reaction to the results of your actions. Your experience or feelings may then prompt you to try to understand what is happening. You may engage in observation and reflection. Once you recognize that there is a mismatch between what is happening and what you thought would happen, you observe the other person and try to guess why he or she is responding in that way. You may mentally run through a list of possible problems: maybe he or she did not hear you, did not understand the

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question, does not speak English very well, is shy, is not comfortable with the question, and so forth. You then search for other clues in his or her behavior and in the context of the situation that can help explain the behavior. In other words, you look for additional information that will help you make sense of the situation. This observation and reflection forms the basis of abstract concepts and generalizations. As you think about it, you develop a theory of what is happening. In other words, you identify a plausible explanation for the behavior and are ready to start searching for alternative solutions to your problem. Let us suppose that you concluded that your partner is uncomfortable with your question. The individual’s body language suggests that he or she feels embarrassed to answer. Therefore, you theorize that you should pose the question in a different way. Your newly developed theory will guide future actions you may take to deal with this individual and others from the same culture. As you practice these new actions, you are testing implications of concepts. You decide, for example, to formulate your question in a different way, you observe the results, and start a new learning cycle. The cycle continues until you are able to identify successful behaviors. Learning through experience is a process of trial and error in which we perceive a mismatch, reflect on it, identify solutions, and initiate new behaviors. When we identify successful behaviors, we incorporate them into our theories of how to behave. The next time we engage in a similar situation, we draw on our latest theory for guidance (Kolb & Kolb, 2005; Hogan & Warrenfeltz, 2003). As the circular pattern of experiential learning theory suggests, we may start our learning process at different points of the cycle, depending on the situation and our learning preferences (Kolb & Kolb, 2005). For instance, some people have a preference for abstract concepts and generalizations, preferring to go to the library and read about the other culture prior to engaging with its members. These individuals will strive to develop a theory beforehand and will improve their theory in the course of the interaction. Others have a preference for observation and may choose to watch foreigners interacting prior to engaging with them. In other words, they will fine-tune their theories based on their observations. Still others may prefer to jump into the situation without prior exposure and draw on their feelings to decide how to behave. Given our individual preferences for some learning abilities, we tend to emphasize some learning opportunities over others (Kolb & Kolb, 2005). When we rely exclusively on the set of preferred abilities, our capability to

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learn from situations that do not draw on them decreases. As the circular model suggests, individuals that are able to utilize the four types of abilities are better equipped to learn in the complex environment of intercultural interactions.

INTERDEPENDENT LEARNING: THE INTERCULTURAL INTERACTION LEARNING MODEL While experiential learning theory has remained one of the most influential theories of management learning (Kayes, 2002, p. 137), it has been criticized for its failure to account for the social aspects of learning (Holman, Pavlica, & Thorpe, 1997). Kayes (2002) addresses this concern, arguing that concrete experience is manifested in an emotional state of need, which becomes an internalized representation through observation and reflection. He relates abstract conceptualization to identity, which serves to organize experience and equates active experimentation to social interaction through which experiences arise. Building upon these ideas, the intercultural interaction learning model focuses on two or more individuals who are simultaneously experiencing problems, reflecting on them, theorizing about them, and engaging in new corrective actions. In other words, the learning process is interdependent and interactive, not independent or linear (Thomas, 2006; Kayes, 2002; Schwandt, 2005). The learning of one party leads to an action that will influence the learning of the other party and so forth. This interdependence is illustrated in Fig. 2.

Concrete Experience

Reflect

Concrete Experience

action action Develop new theory

Reflect Develop new theory

Fig. 2. The Intercultural Interaction Learning Model.

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Ideally, as these individuals’ learning processes interact, better ways of communicating are created. However, if learning is short-circuited, the relationship suffers, and the interaction fails. For instance, if after asking a question and receiving an unsatisfactory answer the person does not stop to observe the other party and reflect on his or her behavior, he or she may engage in actions that are detrimental to the relationship. In sum, an effective intercultural interaction is the result of a successful interdependent learning process, in which two or more parties learn to work together. In our view, an intercultural interaction is an opportunity for interdependent learning in which individuals both learn about the other’s culture and negotiate effective ways of relating to one another. Building on previous communication research we suggest four main areas that need to be negotiated: identities, meaning, rules, and behaviors. Each of these negotiating activities is based on a specific learning ability: (1) the ability to negotiate identity draws on the ability to engage in concrete experiences; (2) the ability to negotiate meaning builds on the ability to reflect and observe; (3) the ability to negotiate new rules is based on the ability to develop new theories; and (4) the ability to negotiate new behaviors is based on the ability to take actions. Fig. 3 integrates individual-level processes with interaction-level processes.

Negotiate identity

Take action

individual

Reflect

Negotiate meaning

Negotiate behaviors

Experience Results

Develop new theory interaction Negotiate new rules

Fig. 3.

The Interaction Negotiation Process.

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Negotiating Identity An individual’s identity is the set of attributes that are central, enduring, and distinctive about an individual (Ashforth & Mael, 1989). In other words, identity is the answer to the question, ‘‘Who am I?’’ Identity is constructed through social interactions, whereby individuals create categories and define themselves in relation to others. This process of categorization influences not only how individuals position themselves in relation to others, but also how people act and feel about the interactions. Our own identity or selfimage is closely linked to our interpretations of reality (Schwandt, 2005). In other words, we make sense of the world based on how we see ourselves. Social identification theory suggests that one’s actions will be congruent with one’s identity. Individuals tend to engage in activities that are harmonious with their self-concept and to support institutions that embody their identities (Ashforth & Mael, 1989). It is for this reason that intercultural interactions are potentially challenging. When we engage with others from a different cultural background, our assumptions, values, and beliefs may be questioned. Our perceptions about who we are, our competence, our status, and our self-worth may be challenged. An intercultural interaction is likely to produce strong feelings associated with our own identity and how we expect to be treated. For these feelings to be positive, individuals must engage in a process of identity management or negotiation (Ting-Toomey, 1988). The importance of negotiating identity in cross-cultural conflicts has been recognized in the intercultural relations literature (Rothman & Olson, 2001). According to this body of knowledge, conflicts of interests among different groups or individuals are projected on the basis of identity, and differences in international conflicts must involve a resolution of the parties’ identities. Rothman (1992) suggests that dealing with international conflicts requires first dealing with oneself through reflexive dialogue. In other words, it requires addressing how the issue is reflected ‘‘inside’’ one’s mind and how one’s identity is challenged or threatened by it. Negotiating identity is particularly important in situations in which one culture is perceived to be in a more powerful position than the other. For instance, in global business acquisitions, the managers from the acquiring company are generally more powerful, have greater status, and may try to impose the ‘‘right’’ way of doing things on the people from the acquired company. Individuals from the less powerful group may find that their culturally based assumptions and values are criticized and considered inappropriate and may feel that their own sense of self is being challenged.

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In other words, their position in the social environment is decreased. For instance, a Spanish manager may consider that arriving 30 min late to a meeting is normal and acceptable. However, the manager of the recently acquired Polish company may see this as a sign of disrespect and a sign that she is no longer important to the organization. Having one’s identity threatened may close off communication, impede learning, and eventually compromise the success of the interaction. Unless both parties can negotiate an acceptable identity for themselves, the interaction is likely to fail. The process of identity negotiation involves two identities – our own and the other’s identity (Imahori & Cupach, 2005). For an intercultural interaction to be successful, we need to be able to preserve a satisfactory identity for ourselves while at the same time respecting and preserving the other’s identity. To preserve our own identity, we need to develop self-awareness (Cant, 2004; Adler, 2002). Self-awareness refers to understanding who we are, what our values are, and what our place in the social interaction is. In other words, we need to understand that we are complex cultural beings and that our values, beliefs, and assumptions are a product of our cultural heritage. When we understand that who we are is heavily influenced by our own cultural experiences, we are better equipped to separate our sense of worth from the situation. For example, the Polish manager above may think ‘‘As a Polish manager, I do not like to wait,’’ rather than ‘‘Only people that are not important are kept waiting.’’ The first statement preserves her identity, the second challenges it. To preserve the other’s identity, it is important to develop empathy toward the other. Empathy refers to the ability to identify and understand the other’s feelings and motives. In other words, empathy suggests an understanding that the other is also a complex cultural being and that their actions – like ours – are a product of deep-seated cultural values and beliefs (Friedman & Berthoin Antal, 2005). In other words, when there is a misunderstanding, managers with a global mindset tend to search for a cultural explanation for the other’s behavior, before judging the other party’s behavior. For example, suppose you had asked your Egyptian counterpart if an important report would be ready today, and he had answered yes but did not deliver it. Instead of judging him based on your own culture (perhaps suggesting that he is not dependable, trustworthy, or competent), you empathize with him on the grounds that his behavior is also a product of culture. Maybe he indirectly told you that he could not finish the report, but you did not understand. Maybe your request was not appropriate or time expectations were not clear. Therefore, you assume that he is acting

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consistently with his own cultural rules even though you do not understand them. You then proceed to try to understand what happened, trying to identify a possible miscommunication. Managers that are open-minded and willing to suspend judgment are more likely to be successful. Skilled managers empathize with others, not based on shared values and assumptions, but based on the common fact that we are complex cultural beings and behave in accordance to a complex web of cultural values and beliefs. In summary, to negotiate identities effectively we need to understand that we are cultural beings. We need to know our own values and assumptions and their relationship with our own culture. We also need to empathize with the other, knowing that he or she is also influenced by culture even if we do not know what it means. With this in mind, we can negotiate acceptable identities in which our own and the other’s sense of self is preserved. When our sense of self is preserved, our feelings in the interaction are more likely to be positive and it becomes easier to continue with the learning experience.

Negotiating Meaning Meaning refers to the interpretation we give to things. For example, what does signing a contract really mean? For some cultures a contract means the end of a negotiation, for others it means the beginning of a relationship. New assignments of meaning are based on current and past experience. Jointly understood meaning is constructed through interaction, as individuals exchange information (Berger & Lukeman, 1966). Therefore, when two individuals from different cultures interact, they are likely to start with different understandings about the meaning of the concrete thing they are talking about (for example a contract). However, to be effective, they will need to arrive at a common understanding of the issue. Friedman and Berthoin Antal (2005) refer to this idea as ‘‘negotiating reality.’’ Whereas we build on their ideas, we prefer to call this process negotiating meaning, as we believe ‘‘reality’’ is a broader term that involves identities, rules, and behaviors, discussed in other parts of this chapter. Meaning cannot be transmitted from one person to another, only messages are transmitted (Gudykunst, 1998). When we send a message to another we attach certain meaning to it, based on our interpretation of the issue, ourselves, and the other. When others receive our message, they attach meaning to it based on their interpretation of the issue, the message, themselves, and ourselves. For example, when you say, ‘‘I am glad we were able to sign a contract,’’ you may mean ‘‘I am glad the negotiations are over and

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I can go back to business.’’ However, your Asian counterpart may hear ‘‘I am glad we agreed to start a relationship and will continue the negotiations for a long time to come.’’ A common meaning must be constructed for this interaction to be effective. Meaning is constructed through interaction, as individuals exchange information. Negotiating meaning involves uncovering hidden cultural assumptions, becoming aware of how culture shapes perceptions, expectations, and behaviors for all parties involved. Friedman and Berthoin Antal (2005) suggest that to negotiate meaning effectively individuals must engage in two behaviors: inquiry and advocacy. Inquiry refers to exploring and questioning one’s own reasoning and the reasoning of others. In other words, individuals strive to create and accept a new, common meaning, by asking the following questions: How do I/you perceive the situation? What do I/you wish to achieve in this situation? Which actions am I/are you taking to achieve this goal? Inquiry requires suspending judgment, letting go of a previous understanding, and tolerating uncertainty until a new understanding may be created. Advocacy refers to expressing and standing for what one thinks and desires. Advocacy suggests stating clearly what you think and want and explaining the reasoning behind your view. When individuals combine inquiry with advocacy they share information about their cultural assumptions, the meanings they associate with the issue, and the reasoning behind their thinking. This sharing of assumptions and interpretations creates the basis for a new, mutually acceptable meaning to emerge. Engaging in inquiry and advocacy is challenging because it requires uncovering our own perceptions, exposing ourselves, being open to listen to the other’s perception, and being willing to give up the safety of our own previous interpretations for a new culture-free interpretation to emerge. To make matters worse, cultural-based preferences also influence how individuals may go about doing this (Saphiere, Mikk, & DeVries, 2005). For example, in some cultures, individuals prefer to express themselves using open and direct communication, whereas in other cultures individuals are likely to share their assumptions indirectly, making it difficult for direct communicators to fully understand (Hall, 1959, 1981). Some indirect communicators may even feel uncomfortable with direct questioning of their assumptions, which could potentially close communication even further. Additionally, culturally based preferences may suggest circumstances in which inquiry and advocacy are more likely to be successful. In some cultures it may be during formal meetings, in other cultures it may be late at night over drinks, still in others it may be through informal one-on-one conversations.

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Therefore, to negotiate meaning, individuals must gather information in several different ways, relying on the context, body language, subtle cues, and messages. These abilities rely heavily on learning skills associated with observation and reflection: information gathering and analysis (Yamazaki & Kayes, 2004). Information gathering refers to the ability to collect information through various means to understand the point of view of others. Competent managers gather information by observing context, body language, face expression, and other behavioral cues; listening to what is being communicated; and asking questions when appropriate and in a way that is appropriate. Information analysis refers to the ability to interpret this information in light of what is being discussed, the people involved, and the context in which the interaction is happening. In summary, negotiating meaning requires the ability to explore what lies under the surface of the cultural iceberg by asking questions when appropriate, observing others, testing assumptions, and stretching frames of reference. It requires the ability to gather and analyze information from various sources.

Negotiating New Rules Once individuals agree on acceptable identities and meanings, they need to focus their attention on developing or negotiating new rules that will inform their relationship in the future. These rules are akin to theories of action (Argyris, 1995) and over time create a common context. For instance, they need to establish rules about acceptable behaviors regarding time. How late is too late? Managers may agree that, for instance, 15 min is not considered late, but that further delays should be avoided – or at a minimum deserve an apology. Alternatively, they may agree on a more clear specification of time when making appointments: 8:00 AM Mexican time means that delays are expected, while 8:00 AM American time means that punctuality is expected. These rules should cover the most important cultural obstacles to the success of the relationship, whether they are about time, use of titles, style of communication, or any other thing. Over time, these rules will equate to a new shared culture (Casmir, 1992; Klimoski & Mohammed, 1994; Adler, 2002; Earley & Mosakowski, 2000) for the individuals involved. Sometimes, this culture is a combination of the several cultures involved, sometimes it is based on an overlapping culture such as the organizational, functional, or professional culture. At other times, it is possible to create a culture that is unlike any other, but that is

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acceptable to all. Finally, there are times in which one of the parties will embrace the other’s cultural rules and adopt the other’s culture as their own. This last scenario is more common when one of the parties has been exposed to the other’s culture for a long time and can adapt. To develop new rules, managers must develop the learning skills associated with integration and transformation of information (Kayes, 2002; Yamazaki & Kayes, 2004). Integration of information refers to the ability to assimilate all the information gathered in the negotiating meaning stage into a coherent theory of action. For example, you noticed that your counterpart looked annoyed when you answered the phone during a meeting, you noticed that he turned his cell phone off, and you noticed that he signaled to the secretary that he should not be interrupted. You integrate all these disparate pieces of information into one theory – your counterpart does not appreciate interruptions. Transformation of information refers to creating a theory of action based on the information you have. Continuing with the interruption example, you transform your theory about the other into a theory about what you should do – you should avoid interruptions that are not important and always apologize for any interruption that might occur. As these behaviors take place, rules are adjusted and fine-tuned. In summary, to develop new rules, or common theories of action, managers need to develop the analytical skills to integrate and transform information.

Negotiating New Behaviors Finally, once individuals develop new theories of action and agree on a common set of cultural rules to guide the interaction, they need to complete the learning loop by negotiating new behaviors. For example, if the negotiated rule is that delays of more than 15 min should be avoided, you must learn to engage in a new set of behaviors that will allow you to control time, prioritize things differently, and arrive on time. Or, perhaps the new rule suggests that direct communication should be avoided, in which case you will need to learn to engage in a communication style that is more indirect, subtle, and diplomatic. Engaging in new behaviors requires high levels of behavioral flexibility, that is, the ability to engage in different behaviors, being able to switch styles and accomplish things in more than one way (Thomas, 2006). For some individuals it is easy to engage in some behaviors but not others (Kolb,

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1976; Kolb & Kolb, 2005). Successful managers are able to recognize which behaviors are challenging for them and compensate with other behaviors. For instance, for some individuals it is very difficult to communicate indirectly. They recognize this limitation and, to compensate for it, search for opportunities to discuss issues one-on-one – where embarrassment is avoided – and preface their direct statements with an apology. Additionally, competent managers need to be mindful of themselves, the other, and the interaction (Thomas, 2006; Thomas & Inkson, 2004). In other words, they are constantly paying attention to what they are feeling and doing, what the other is doing, and how the other reacts to what they say and do. In the process of learning about the other and testing ways to interact, individuals are aware of their own behavior and the effect of their behavior on others. In summary, negotiating behavior implies the ability to engage in new behaviors that are consistent with negotiated rules, meanings, and identities. It also implies constant mindfulness, or attention, to what is happening in the interaction.

PUTTING IT ALL TOGETHER Dealing with foreign partners and competitors is increasingly unavoidable. As the examples throughout this chapter suggest, the realities of today’s global environment imply that managers often need to do business in several countries and deal with several cultures simultaneously. While the examples in this chapter may suggest easy solutions – e.g., when dealing with Spaniards, know they will be late – the reality of intercultural encounters is considerably more complex for several reasons: First, individuals are often influenced by multiple cultures – national, regional, organizational, functional, and professional (Schneider & Barsoux, 2003; Friedman & Berthoin Antal, 2005). Second, in no country are the people monolithic in their beliefs, values, and behaviors. People are different, despite having the same country of origin. Third, our business counterparts are also learning how to deal with foreigners and may deal with us in ways that are not typical of their own culture. And finally, culture itself is very complex and may seem paradoxical for an outsider (Bird & Osland, 2003). For this reason, simplistic categorization of cultures may provide helpful explanations of behavior, or good first guesses (Adler, 2002), but they are not good predictors. If there is a persuasive argument for developing a global mindset, this is it.

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Negotiate meaning

Negotiate behaviors

Negotiate identity

Negotiate new rules

Inf orm tion ation ma Integration & Transfor

Fig. 4.

Learning Skills for Intercultural Competence.

To succeed in such a reality, managers are encouraged to develop learning skills that will allow them to learn how to succeed in each interaction by uncovering cultural assumptions and learning how to deal with them. These learning skills are summarized in Fig. 4. The manager in our opening example has to deal in one day with four or five different cultures. It would be difficult for her to acquire fluency in these cultures, while sitting in her office in Bangalore. Instead, she needs to develop learning skills that will compensate for cultural knowledge gaps, helping her to negotiate her interactions. We have argued that intercultural interactions involve four types of negotiation relating to identities, meaning, rules, and behaviors. The negotiation of identities relies on strong self-awareness and empathy, so the emotional experience is managed and the learning experience can proceed. The negotiation of meaning relies on information gathering and analysis, which uncovers a new basis of information from which new meanings can be created. The negotiation of rules relies on an individual’s ability to integrate and transform information into new theories of action. Finally, the negotiation of behaviors relies on behavioral flexibility and mindfulness with which managers are able to engage in alternative behaviors according to each situation.

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The prospect of dealing with others from different cultural backgrounds can be very challenging, but at the same time very rewarding. Interacting with others brings the possibility of learning more about ourselves, discovering new ways of doing things, and finding creative solutions to both new problems and old. It also contributes in no small way to business success. In developing this global mindset, intercultural learning processes play a significant – and often underappreciated – role.

ACKNOWLEDGMENTS The authors thank Kathryn Aten, Santiago Garcia, Michael Hitt, and Mansour Javidan for their helpful comments on an earlier draft of this chapter.

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ON BECOMING A GLOBAL MANAGER: A CLOSER LOOK AT THE OPPORTUNITIES AND CONSTRAINTS IN THE 21ST CENTURY Rabi S. Bhagat, Harry C. Triandis, B. Ram Baliga, Tejinder K. Billing and Charlotte A. Davis During the first decade of the 21st century, various multinational and global companies began the process of cultivating stronger global orientations in senior managers and the upper echelons of the organization. This is a relatively new phenomenon. Empirical research on the validity of the global mindset is just beginning to develop (Boyacigiller, Beechler, Taylor, & Levy, 2004). A number of leading textbooks are also beginning to offer a comprehensive description of the aptitudes and skills that a global manager should possess. To this trend, the notion of a global mindset has been advanced (Boyacigiller et al., 2004; Govindarajan & Gupta, 2001; Osland, Bird, Mendenhall, & Osland, 2006; Paul, 2000; Bartlett, Ghoshal, & Beamish, 2007; Rhinesmith, 1993). What precisely does this concept of ‘‘global mindset’’ connote? In its essence, does it involve senior managers thinking primarily in global terms and painstakingly learning to abandon the multinational mentality The Global Mindset Advances in International Management, Volume 19, 191–213 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1571-5027/doi:10.1016/S1571-5027(07)19008-2

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(Perlmutter, 1969)? Govindarajan and Gupta (2001) noted that some multinational companies feel constrained by the economic situations and governmental regulations in the countries of their origin in their efforts to develop global managers. The gap between economic, strategic, and technological requirements for going global and functioning in the domestic or multinational mode can be considerable and poses obstacles for developing a global mindset. Partly because of this, there has been limited attention given to the various antecedents that might facilitate the growth of a global mindset and, indeed, develop global managers. However, the situation is considerably different today, and as we begin to understand the dynamics of the growth of global companies in the BRIC (Brazil, Russia, India, and China) economies and other emerging economies in Asia, Latin America, and even Africa, there is a need to address the issue of developing a global mindset and global managers. The degree of environmental complexity (in the domains of international marketing, strategic considerations, technological and knowledge management issues, etc.) that an organization is required to deal with is typically the best predictor of a global mindset. In this chapter our objectives are as follows: 1. advance an integrative framework that depicts the evolution of a global mindset in the interactive context of industry-specific, organizationspecific, and person-specific antecedents, which are largely responsible for developing a global mindset; 2. underscore the importance of cultural variations that a multinational or global organization needs to be concerned with as providing the overarching context for understanding the emergence of a global mindset; 3. provide a list of the opportunities and constraints on the path to becoming a global manager; 4. discuss the implications by emphasizing the importance of a meso (multilevel) framework for future theory building and empirical research in this area. A global mindset has been defined in two different ways as: y the ability to develop and interpret criteria for personal and business performance that are independent from the assumptions of a single country, culture, or context: and to implement those criteria appropriately in different countries, cultures, and contexts (Maznevski & Lane, 2004, p. 4); y one that 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, p. 111)

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While these two definitions reflect the concept of a global mindset well, they do not capture the essence of interactions among various environmental, organizational, and personal domains that global managers are required to deal with on an ongoing basis. The definition that we propose is as follows: Global managers are those individuals who successfully manage the ongoing interactions between industry-specific, organization-specific, and person-specific factors that are present in their work lives. They do so both efficaciously and effectively in the cultural contexts of their origin as well as in other diverse cultures with whom they must interact.

ANTECEDENTS OF A GLOBAL MINDSET The schematic diagram shown in Fig. 1 suggests that a global mindset evolves in the cultural context of industry-specific, organization-specific, and person-specific antecedents that are salient in the context of the global manager and the environment in which he or she functions. Taken clockwise, we discuss the relevance of various factors that comprise these three important domains and how these domains interact with the overarching cultural contexts salient in the domestic as well as in the international business environment. In Table 1, we present the various factors in industryspecific, organization-specific, and person-specific domains that either Cultural Context Industry Specific Antecedents Global Mindset Person Specific Antecedents

Organization Specific Antecedents

Cultural Context

Fig. 1. A Schematic Diagram Depicting the Evolution of a Global Mindset in the Interactive Context of Industry-Specific, Organization-Specific, and Person-Specific Antecedents.

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Table 1.

Factors that Facilitate and Constrain the Development of a Global Mindset.

Industry-specific

Organization-specific

Person-specific

Opportunities

Constraints

Rapid pace of globalization Fast product life cycle Creation of economic trade blocks that facilitate crossborder commerce Uniform practices in global marketing and product standardization Effective government interventions Administrative heritage that facilitates rapid globalization Strategic leadership Effective monitoring of organizational clients Horizontal coordinating mechanisms Effective knowledge management systems Cosmopolitan orientation Cognitive complexity Cultural intelligence Emphasis on nonjudgmental and universalistic modes of thinking Supportive network of family and friends

Slower pace of globalization or no globalization Slower product life cycle Limited opportunity for crossborder commerce Rigid patterns of global marketing Centralized economies and autocratic government intervention Weak administrative heritage Lack of strategic vision at the top Ineffective linkages with organizational clients and low responsiveness Vertical coordinating mechanisms Lack of knowledge management systems Local orientation Cognitively simple ways of interpreting the world Lack of cultural intelligence and competencies Emphasis on judgmental and particularistic thinking Lack of supportive network

facilitate (provide opportunities) or hinder (act as constraints) the development of global mindset and global managers.

Industry-Specific Antecedents In 2005, the combined output of emerging economies reached an important milestone. It accounted for more than half of the gross domestic product of the world, when adjusted for purchasing-power parity. These developing countries, China in particular, have a far greater influence on the economic performance of the major multinational and global corporations of the G7 countries than is generally assumed. The Economist (September 16–22,

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2006), in a survey of the world economy, noted that the time to be surprised by such developments is gone. The emerging economies are driving global growth on an unprecedented scale and are having a major impact on economic indices such as the rate of inflation, interest rates, wages, and the profits of corporations. The Economist also noted that as these emerging economies (Brazil, Russia, India, China, i.e., the so-called BRIC economies; Mexico; Poland; etc.) get more integrated into the global economy and the World Trade Organization (WTO) and per capita incomes of citizens of these countries rise up to the level of developed countries (e.g., United States, United Kingdom, Germany, Japan, France, Sweden, Denmark, and Finland), they will provide the largest push to the world economy since the onset of the Industrial Revolution in the early part of the 20th century. The need for a global mindset is clearly heightened if the industry in which the firm is competing is evolving into a global one. Yip (2003) delineated the importance of the following drivers that determine the likelihood that an industry will become global. Market drivers: Converging consumer needs and preferences in diverse parts of the world coupled with implementation of effective channels of distribution facilitate the globalization of markets (Leavitt, 1983). Rapid growth of China and India in the 1980s, 1990s, and 2000s has created unprecedented opportunities on a global scale. Business Week (August 22–29, 2005b), in a comprehensive coverage of what global organizations need to know about these two countries, focused a great deal on the role of creative marketing of products and services. In a related vein, Shenkar (2004), in describing the rise of China as a global economic power, discussed the various challenges to management and marketing that lie ahead for US-based multinational organizations. Cost drivers: The steady pace of globalization in some industries has greatly affected the capacity of many organizations to set prices for their products and services. International diversification, through which a firm increases the sales of products and services in the international context (Hitt, Tihanyi, Miller, & Connelly, 2006) also increases cost-related concerns. Coupled with these developments, shorter product and technology life cycles intensify R&D costs. What makes situations more complex is that increases in research and development costs occur when the firm is experiencing significant declines in market share. General Motors (GM) is a good case in point. In an article entitled, ‘‘Why GM’s Plan Won’t Work; and the Ugly Road Ahead,’’ Business Week (May 9, 2005a) discussed the relevance of how large global corporations get entrapped into these kinds of cost-driven situations. Managers of multinational and global corporations such as GM

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need to be more responsive to differences in country costs, economies of scope, economies of scale, and learning and experience curve-related effects. Insights into these processes are critical for international competitiveness. The process of developing better insights facilitates the development of a global mindset and global managers. Institutional drivers: The national governments of over 100 countries who participate in the WTO are devising policy changes that have profound implications for competitiveness as well as survival of global organizations. Also, other institutions, including nongovernmental organizations (NGOs), create various situations that facilitate or hinder development of global commerce. Recent concerns about the adverse affects of globalization (see Stiglitz, 2002; Kiggundu, 2002) have been addressed in various trade talks, such as the Doha Round of the WTO in Qatar and the summit of G8 countries in Edinburgh, Scotland. Along with these summits, there is a worldwide movement leading to removal of visible and not so visible barriers for transnational commerce. This facilitates the growth of global corporations and the development of a global mindset – especially the kind that enables senior managers to effectively scan, interpret, and utilize information inherent in the institutional environments. Competitive drivers: Many global organizations are increasingly centralizing the activities of subsidiaries located in dissimilar cultures of the world. This enables them to obtain new sources of competitive advantage (i.e., lower costs of production, lower factors costs, and seamless cross-border transfer of organizational knowledge) and leads to further globalization (Yip, 2003). MNCs that concentrate their activities either in the domestic market or in a region close to their headquarters become vulnerable to global competition (Kiggundu, 2002). To become less vulnerable, these organizations discover creative ways of encouraging their senior managers to be more aware of the various economic, market, and technological trends that develop in the world, thus facilitating the process of becoming global managers. In his keynote address to the Academy of International Business (AIB, June 23, 2006) annual conference in Beijing, China, Jagdish Sheth, the noted scholar of global marketing, discussed the tremendous growth of what he termed the ‘‘Chindia’’ region of the world economy. Comprising China and India, this Chindia region is well on its way to becoming the largest economic region in the world by the year 2020 (Business Week, August 22–29, 2005b; Sheth & Sisodia, 2006). Sheth noted that by the time Western multinationals develop a 20/20 vision of the various opportunities and constraints that lie in the global marketplace, these countries will be powerful economic blocks in what is being termed as the Asian century.

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In fact, recent analyses suggest that China is not necessarily the major cause of the American incurred deficit with the rest of the world. Consider the following: China’s current account surplus with America is around $100 billion of a likely deficit of $900 billion. In other words, as The Economist (July 30–August 5, 2005) put it, the deficit that Americans experience is ‘‘Made in America’’ and not in China. Relatively low to moderate global orientation of US managers is often regarded as one of the major causes for losing market share and competitiveness. It takes a different type of manager with an intricate sense of the complex underpinnings of the world economy (especially in the emergent economies and developing regions of the world, such as Chindia) to be successful in today’s global marketplace. To operate successfully in an interconnected and partially globalized world (Leung, Bhagat, Buchan, Erez, & Gibson, 2005), it becomes necessary to interpret accurately the developing trends in the global economy. Furthermore, this should be accomplished by separating signals from noise. In the auto industry, for example, major drivers of globalization are: (1) the accelerated product and technology life cycles, (2) the harmonization of regulations in the European Union, (3) the global outsourcing of parts and related services, and (4) the existence of global logistics organizations such as FedEx, UPS, and DHL. Consider the case of Carlos Ghosn of the Nissan Corporation (the fourth largest automobile company in the world). He was able to foresee the importance of these drivers and initiated a series of effective cross-border alliances. In the process, he sensitized Nissan managers to be more responsive to the worldwide developments in the auto industry. In contrast, Richard Waggoner, the president and CEO of General Motors in the United States, was not as responsive. As a result, not only is General Motors in the process of losing its lead in the industry, but it does not have a cadre of managers who are able to function with the required fine-tuned sense of a global mindset. In fact, there is a strong possibility that Toyota, operating as a wellcoordinated and effectively integrated global manufacturing organization, will emerge as the largest automobile company in the near future. And Nissan, led by Carlos Ghosn (one of the best examples of a global manager), will be its close competitor. In a related vein, Jorma Ollila of Nokia Corporation of Finland appreciated the substantial changes in the telecommunications industry due to worldwide deregulation and transformed this little known company into the household name that it is today. In fact, in 1992, Nokia had a market capitalization of only about 150 million euros and today Nokia is valued at 62 billion euros. Global

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managers such as Carlos Ghosn and Jorma Ollila not only were able to greatly improve the economic and market performance of their respective companies, but also transformed some of the important features of the industries in which their companies operate.

Organization-Specific Antecedents Our research reveals the importance of the following factors that are located in the organizational context of those companies that facilitate the evolution of a global mindset. In fact, we suggest that an ongoing emphasis on these factors leads to development of a global mindset in the organization. Administrative heritage: Multinational corporations with strong administrative heritages (Bartlett, Ghoshal, & Beamish, 2007) are better able to facilitate the growth of a global mindset. This is accomplished with considerable ease if their organizational structures go beyond functioning as matrix structures and instead encourage the development of a frame of mind (Bartlett, Ghoshal, & Beamish, 2007) that takes into account the dynamics of misalignment that routinely arise in the course of adapting the structures and strategies to the demands of the global marketplace. For example, the administrative heritage of the Komatsu Corporation of Japan, with its ongoing emphasis on overseas orientation and user orientation, greatly influenced the development of the global mindset of its managers (Bartlett, Ghoshal, & Beamish, 2007). In contrast, the largest global corporation in this industry, i.e., Caterpillar, Inc., of the United States, was unable to do so because its administrative heritage was largely oriented toward dealing with labor unions and other traditional issues. Mirroring clients: The need to serve clients in the global marketplace better by adopting some of their strategies facilitates the development of a global mindset. In fact, an isomorphic orientation of organizational strategies with the strategies of the primary clients is a major factor that drives globalization (Yip, 2003). This approach to aligning the strategies of the organization with the strategies of the primary clients is found in Indiabased high-technology and software multinationals that have emerged as major global competitors. Infosys and Wipro, who serve global clients such as GE of the United States and Ericsson of Sweden, function in this mode. Senior managers of these highly competitive IT companies have been strongly encouraged to scan the latest developments in the information technology industry (Friedman, 2005). Mirroring concerns of global clients on an ongoing basis fosters the creation of a global mindset (see Fig. 1).

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Horizontal coordination mechanisms: Competing in a global industry requires continuous coordination and integration of organizational activities across borders and cultures. As a result of the emergence of hybrid industries (microelectromechanical systems, for example), hybrid strategies (outsourcing simple manufacturing activities while retaining more complex manufacturing activities at home), and hybrid technologies (informatics incorporating biology and computer sciences, for example), global organizations develop cross-functional strategies. Such coordination and integration are difficult to accomplish in traditional hierarchical multinationals. As network organizations become more prevalent and work teams composed of individuals from dissimilar cultures work in virtual teams, the process of developing a global mindset becomes easier. Knowledge creation and diffusion: Global organizations of the 21st century function in what is known as a knowledge economy (Friedman, 2005). Increasingly, the capacity to create and transfer valued organizational practices and knowledge across cultures and borders is becoming crucial (Bhagat, Kedia, Harveston, & Triandis, 2002; Davenport & Prusak, 1997; Nonaka & Takeuchi, 1995; Shenkar & Li, 1999). While information technology-based systems (such as groupware) have been useful, the art and science of creating and diffusing knowledge in the global network is critical (Davenport & Prusak, 1997). In the process of emphasizing the effective functioning of global knowledge systems, MNCs also encourage the development of a global mindset. Personnel transfers: Personnel transfers, which are employed as mechanisms to facilitate transfer of tacit knowledge and other related organizational practices in subsidiaries located in dissimilar national and cultural contexts, also facilitate the development of global managers. Japanese multinationals, in particular, are noted for creating effective management systems for intraunit transfers of global personnel. Such transfers facilitate effective implementation of innovative R&D techniques and related knowledge management mechanisms to develop products that have a better global reach. A natural outcome of such personnel transfers is the development of a global mindset in the organization: individuals get the opportunity to learn different ways of doing things in dissimilar global environments, which, in its turn, facilitates the development of global managers.

Person-Specific Antecedents Factors that are idiosyncratic to the individual and facilitate the evolution of a global mindset are cosmopolitanism (Boyacigiller et al., 2004), cognitive

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complexity (Boyacigiller et al., 2004; Govindarajan & Gupta, 2001), cultural intelligence (Earley, 2002; Earley & Ang, 2003), nonjudgmental thinking (Triandis, 2007), emphasis on a universalistic versus a particularistic mode of decision making (Hooker, 2003), and social support from one’s family and friends (Beehr, 1995; Beehr & Bhagat, 1985). Table 1 provides a list of these factors and how absence of these factors constrains the development of global managers. Cosmopolitan orientation encourages individuals to be more concerned with important issues and events in the outside world. Persons characterized by this attribute are more focused on developing their professional values and think beyond the immediate concerns of their functional units and organizations. These individuals are ‘‘a social class defined by its ability to command resources and operate beyond and across wide territories’’ (Kanter, 1991). Cognitive complexity as the next attribute of global managers is concerned with the ability to differentiate among diverse yet related elements in the environment. Cognitively complex individuals are able to cultivate the geographic and cultural diversity that is necessary for navigating the complex world of the interconnected global economy. Two facets of cognitive complexity are differentiation and integration. Cognitively complex individuals will often employ a fairly large number of dimensions or constructs to describe an important business or situational event that has relevance for the global organization. Having done that, they would also be able to integrate these dimensions effectively in a meaningful fashion so that data from the environment get converted into information and then into knowledge (Bhagat et al., 2002). Cognitive complexity in the context of developing a global mindset is concerned with one’s ability to fine-tune and balance competing and often conflicting country, functional, and business concerns that arise in the context of global organizations in unpredictable fashions. Murtha, Lenway, and Bagozzi (1998) and Govindarajan and Gupta (2001) emphasize the importance of cognitive complexity in their assessments of global managers. We advance the notion that cognitively complex global managers are also able to learn from their long-term rivals in the industry without expressing hostilities or frustrations. Cultural intelligence is a vital aptitude that enables global managers to interpret culturally complex and unfamiliar accents and events in a meaningful fashion (Earley & Ang, 2003). The idea of cultural intelligence is new, and it picks up where the idea of emotional intelligence left off with the work of Goleman (1995). While some aspects of cultural intelligence are innate, motivated individuals, through their own personal efforts and cross-cultural training (Landis & Bhagat, 1996), can enhance their cultural intelligence.

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As global corporations expand their reach to culturally diverse parts of the world, managers of subsidiaries need to grapple with confusing and uncertain cultural environments. Often, such environments are also filled with instances of culture clashes (Bhagat, Kedia, & Shin, 2006), and it becomes necessary that managers be not only culturally competent and culturally sensitive (Dinges & Baldwin, 1996), but also culturally intelligent (Earley & Ang, 2003). Nonjudgmental thinking is crucial for developing tendencies toward impulse control and acting in a calm fashion in conflicting and competitive situations that routinely arise in global transactions. This ability is concerned with one’s cognitive capacity to look at a situation without engaging in immediate appraisals, whether they are primary or secondary in nature (Lazarus & Folkman, 1984). It is indeed difficult to develop this ability because a large majority of us hold deeply ingrained cultural beliefs, attitudes, and values and are more likely to make quick judgments regarding stimuli, events, and activities that are culturally unfamiliar or even unpleasant. Overseas experience in dissimilar cultural contexts is likely to enhance this ability. In fact, the longer and more successful the experience that an expatriate or global manager may have had in a dissimilar cultural context, the more likely is the propensity for him or her to develop nonjudgmental thinking. Emphasis on universalistic versus particularistic modes of decision making is concerned with the extent to which an individual employs identical criteria in judging various important events (i.e., selection, development, promotion, and rewarding employees) and situations (i.e., responsible parties for the incident of 9/11 in the United States). Individuals adopting the universalistic approach employ identical criteria in selecting, promoting, and rewarding subordinates and co-workers. These individuals also adopt a broader perspective in attributing the cause of various events taking place in their environments. Highly emotionally disturbing events, such as the World Trade Center disaster on September 11, 2001, in the United States, are likely to be interpreted in a broader fashion by these individuals, compared to those adopting a particularistic mode. Particularism as a cultural value is found in vertical collectivistic cultures (Triandis, 1998) as well as in cultures that are driven by relationships as opposed to rules (Hooker, 2003). In cultures that are more driven by relationships and affective concerns, it becomes necessary to be more sensitive to the welfare of one’s in-group and selectively recruit and reward members of one’s in-group even if they are not as competent as members of an out-group. Universalism is more commonly found in individualistic cultures (Hooker, 2003; Triandis, 1994, 1995). Such cultures provide a large number

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Collectivism Horizontal

Vertical

Fig. 2.

Individualism

Development of global mindset is problematic.

Development of global mindset is relatively easily accomplished.

These cultures are rare. The culture of Israeli Kibbutz and Mongolia are examples.

Examples of countries characterized by these cultural variations are Sweden, Denmark, and Australia etc.

Development of global mindset is problematic.

Development of global mindset is moderately easy.

Examples of countries characterized by these cultural variations are China, India, Mexico, Brazil etc.

Examples of countries characterized by these cultural variations are US, UK, France, Germany, Austria, Ireland etc.

Cultural Contexts that Facilitate the Development of a Global Mindset.

of situations that can facilitate and even energize the evolution of a global mindset. In particular, countries with a horizontal individualistic orientation are likely to foster a global mindset in a stronger vein compared to those with a vertical individualistic orientation. In Fig. 2, we depict the emergence of a global mindset in the four types of cultural contexts described by Triandis (1995, 1998) and Bhagat et al. (2002). However, this is not to suggest that collectivistic cultures do not foster the development of global mindsets. Our analyses suggest that while person-specific antecedents play a large role, one must take into account the role of relevant industryspecific and organization-specific antecedents in the development of global managers. Consider the case of Sony of Japan. Japan is a vertical collectivistic country (Triandis, 1998). Sony was an unknown Japanese electronics company after World War II. It has emerged as the largest electronics conglomerate in the world in the 21st century. Akio Morita, chairman of Sony, is largely responsible for this growth. He was a manager with an acute sense of the global marketplace and understood the changing demands of consumers in the electronics industry. He not only was cognitively complex and culturally intelligent, but also engaged in a universalistic mode of decision making (Nathan, 1992). Under his leadership, Sony, Inc., began to recruit and promote US and other Western managers to senior leadership positions in various overseas locations – something relatively new in vertical collectivistic cultures such as traditional Japan.

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A supportive network from family and friends is no less significant in terms of its role in developing a global mindset. Research on expatriates has shown repeatedly that those who fail in overseas operations do not receive appropriate support from their family and friends. In fact, the support of one’s spouse is of crucial significance in being able to function in an expatriate role and later on the path to becoming a manager with a great deal of international experience. The importance of family support systems has been examined in Burke (1988), Carlson and Perrewe (1999), and Caligiuri and Lazarova (2002). Taken cumulatively, social support and effective management of work– family conflict is of crucial importance in overseas assignments – a necessary step in becoming a global manager. Individuals who are not able to undertake international assignments because their children’s education may be compromised (Fukuda & Chu, 1994), or who are excessively concerned with their feelings of personal and family well-being and security (Harvey, 1985), exclude themselves from the opportunities of becoming global managers. Social support in the form of informational, affective, instrumental, and structural support is, in our view, a critical but often ignored factor in developing a global mindset. Consider the case of Indra Nooyi, president and CEO of PepsiCo, in the United States. She maintains a core Hindu identity even as she leads a global organization that is a close competitor to Coca-Cola, the industry leader. She remains at ease with Indians as well as Westerners, wearing saris as comfortably as business suits, thus maintaining a global perspective without losing her individuality and originality. She receives considerable social support from a strong network of family and friends, both in the United States and, from her native family, in India. Carlos Ghosn, CEO of Nissan, also has maintained a supportive network of family and friends. He maintains three residences, one in Tokyo, one in Paris, and another in New York City. He is a Brazilian, and in his initial years with Nissan, it was not easy for him to function in a leadership capacity because of the historical preference of the Japanese companies for native Japanese in senior roles. He has encouraged his family to live closer to him and takes every possible opportunity to underscore their importance in the overall scheme of his life. Gurcharan Das, the country manager of Proctor & Gamble in India, has a similar profile. Having graduated from Harvard Business School in the late 1960s, he returned to India to fulfill the need to do his duty as a devoted Hindu. He not only has been successful as a country manager for P&G Corporation, but also has maintained a vital and socially active life in the global city of Mumbai in India. In Table 1 we depict various opportunities and constraints that one needs to take into account in development of a global mindset.

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WHO DEVELOPS A GLOBAL MINDSET? It must not be assumed that every person can develop a global mindset. Certain individuals have predispositions that strongly attach them to their own culture and religion. Some of these individuals also feel that their point of view is the only correct one and any other view is likely to be either incorrect or immoral. Such individuals are typically not sent to international posts, regardless of their technical competence. In a similar vein, cognitively simple individuals do not become global managers. When a person ‘‘solves’’ a complex problem with a simple solution the chances are that the solution is wrong. Most valid and effective solutions take into account multiple perspectives inherent in a given situation and often they include the culture of the problem solver and the intricacies of the other cultures. Another trait that is important for the development of a global mindset is avoidance of self-deception. Self-deception is the tendency to see the world the way the person hopes, wishes, or would like it to be rather than the way it is (Triandis, 2007). Individuals who indulge in self-deception tend to select information that is consistent with their culture, wishes, hopes, and needs and avoid information that is inconsistent with their ideology, religion, or frame of reference. Mild self-deceptions have been found to be beneficial. For example, a person who thinks that he or she is more intelligent than he or she truly is may feel protected from even valid criticisms by not experiencing lower self-esteem. But large self-deceptions (e.g., ‘‘We will be greeted with flowers in Iraq,’’ as Paul Wolfowitz, then Assistant Secretary of Defense, stated in 2003) can result in enormous mistakes (Triandis, 2007). Individuals who engage in large self-deceptions are not likely to develop a global mindset (Triandis, 2007). A person who is high in self-deception is unlikely to make good decisions in dissimilar cultures and is likely to offend the sensibilities of members of other cultures that he or she must deal with in the context of the global organization. Ethnocentrism is a special case of self-deception (my culture is ‘‘good’’ and other cultures are good to the extent that they are like my culture). Stereotyping (I know accurately the attributes of the people in the other culture) is yet another form of self-deception. The tendencies toward ethnocentrism, intolerance for diversity, and stereotyping are related (Altemeyer, 1981). Openness to new experiences (McCrae & Costa, 1997) and modernity (Inkeles & Smith, 1974) are predispositions that facilitate the process of developing a global mindset. Individuals who are open to new experiences function better in work groups in organizations that are characterized by horizontal relationships. Modernity as a cognitive state facilitates acceptance of change

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and willingness to deal with the structural changes often brought about by globalization. In individualist cultures it is virtuous to be assertive, dominant, open to new experiences, and self-reliant and to help people one likes. In collectivist cultures, it is virtuous to be modest, to emphasize harmony within the ingroup, to keep relationships intact, and to be responsive to the needs of others, and one helps those with whom one has an established relationship, such as in-group membership, friendship, or previous obligations (Triandis, 1994, 1995). These differences can result in misunderstandings across cultures and make interpersonal relationships difficult. Managers wishing to be globally competent should understand these issues and their underpinnings. In addition to knowing about cultural differences the manager needs to know about cultural distances, because there are certain cultures that are so different from his or her own culture that bridging the gap is likely to be very difficult. It may be better for the organization to send to that post a person from another culture whose cultural distance is smaller. Cultural distance reflects (Triandis, 1994, p. 33): (a) Language distance. Languages are related to each other so that there are language families. For example, the Indo-European languages belong to the same family, but the languages of Finland, Estonia, and Hungary belong to a different family. The more different the language family of another culture, the more difficult it will be for the manager to adjust to that culture. Learning the language of the host culture is relatively easy when the languages belong to the same subfamily (e.g., English and German) and gets more and more difficult the more the language families differ. It is desirable to know some of the language of the country to which one is going, though it is realized that a manager who has responsibilities for several countries will not be able to do that. (b) Religions. Shamanic, Christian, Jewish, Islamic, Hindu, Buddhist, Shinto, and animistic religions have many differences within each religion. It is also important to understand the appropriate fault lines among the civilizations that are primarily based on religious differences. Time Magazine (November 27, 2006) provides an interesting discussion as to how Pope Benedict unintentionally offended many Muslims with a comment made in September 2006. The issue of differences among cultures in terms of how they differ in their religious underpinnings has hardly received any attention in the global management literature. However, it is important for global managers to be aware of regional and worldwide clashes among civilizations and major religions.

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(c) Social structure. Social structure, such as wealth, gross national product per capita, and the United Nations Human Development index, which takes into account adult literacy and life expectancy, can be similar or different. Norway, Sweden, Australia, and Canada are highest on this index; whereas Sierra Leone, Niger, Burkina Faso, and Mali are the lowest (The Economist’s World in Figs, 2006). Global managers should be aware of differences in social structures. At this time we do not know how to weigh these three facets of cultural distance as barriers for making adjustment to other cultures. As a first approximation we might give each of these facets an equal weight. The individual with a global mindset will come from a culture that is very close to the middle of the distribution of distance among cultures. It is necessary for the global manager to be aware of some of the ways in which his or her own culture is similar or different from the culture of the host country, as well as the cultures of the countries in which his or her organization functions. In individualist cultures people generally emphasize what is inside the person (beliefs, attitudes, personality), while in collectivist cultures they emphasize what is outside the person (group pressure, norms, role definitions) as the causes of behavior. ‘‘Culture assimilators’’ have been developed to train individuals to make isomorphic attributions (Bhagat & Prien, 1996; Gudykunst, Guzley, & Hammer, 1996), i.e., to be more or less accurate when making attributions concerning behaviors that occur in the other culture. There are numerous ways to train people going to another culture to be effective in that culture. They are discussed in some detail in Fowler and Mumford (1995) and Landis and Bhagat (1996). The individual with a global mindset should be familiar with the majority of the ways in which his or her own culture differs from other cultures. Global organizations need to train individuals to develop self-efficacy in dealing with people from dissimilar cultures. If managers find themselves incapable of dealing effectively with members of the other culture then it is unlikely that they will be successful as global managers. We advance the notion that individuals with a global mindset will feel capable of dealing with the majority of cultures of the world. Learning to avoid behaviors that are perceived as being offensive to members of other cultures, and using those behaviors that make them feel comfortable and at ease, is also critical. An excellent example of this difficulty of cross-cultural interaction is found in Kowner (2002), who reported that the Japanese avoid contact with non-Japanese because Western behavior makes many Japanese feel that they lose status. Japan is a vertical

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collectivistic culture (Bhagat et al., 2002; Triandis, 1998) and losing status, especially in the public arena, can be difficult to accept. The Japanese feel that they behave in meek and humble ways, while non-Japanese behave in ways that are obtrusive and inconsiderate. The Kowner study (2002) compared the perception of verbal and nonverbal behavior of lower and higher status people in asymmetric dyadic interactions between Japanese and Westerners. The results of the study found that the Japanese perceived that they lost status in the interaction with non-Japanese due to some of the verbal and nonverbal gestures like the crossing of legs by Westerners. The reality of this point was very clear when President George W. Bush was seen interacting with Prime Minister Koizumi of Japan on television. In one of the public meetings, President Bush patted Prime Minister Koizumi on the back. This was viewed by the Japanese audience as culturally insensitive. One would have expected that the advisors of President Bush should have warned him about this conduct, which, despite its good intentions, was considered inappropriate and rude. The point is that individuals with a global mindset are aware of most of the behaviors that cause difficulties across cultures and will have enough behavioral flexibility to avoid these behaviors (Triandis, 2007). In addition, they will know what behaviors are helpful in interaction across cultures (e.g., smile and show respect) and will include these behaviors in their behavior repertoire. Having discussed the role of various antecedents in the domains of industry, organization, and person, we are now in a position to delineate the relationship between a global mindset and organizationally valued outcomes.

RELATIONSHIP OF A GLOBAL MINDSET WITH ORGANIZATIONALLY VALUED OUTCOMES Fig. 3 depicts the relationship of the evolution of and emphasis on a global mindset with valued outcomes. Global mindsets are not cultivated without rational consideration as to how they affect the performance of the global organization. The first criterion that organizations are concerned with is increasing market share in the global marketplace. Research reviewed in Govindarajan and Gupta (2001) shows that emphasis on a global mindset is related with increased market share and the ability to function with greater strategic intent and posture. Superior financial performance is the next clear outcome of sustaining and enhancing a global mindset across their organizational network. It has also been found that organizations that

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Evolution of and Emphasis on Global mindset

Increased Market Share in the Global Marketplace

Fig. 3.

Global Strategic Intent and Posture

Superior Financial Performance

Greater International Diversification

Relationship of Emphasis on Global Mindset with Valued Outcomes.

emphasize the art and science of thinking and interpreting the various trends in the industry and in one’s organization are also able to expand their range of products and services. In addition, the scope of international diversification (Hitt et al., 2006, Annual Review, Journal of Management) is likely to be strongly influenced by the global orientation of the senior managers.

TOWARD A DYNAMIC CONSTRUCTIVIST MESO MODEL Our approach (Fig. 1) in understanding the antecedents of a global mindset shows that we are simultaneously concerned with the study of a global mindset by involving at least two levels of analyses, of which one is focused on micro issues and the other is concerned with factors at the macro perspective. Antecedents from the industry and organizational domains are clearly macro in orientation and are not under the direct control of the individual whose global mindset needs to be assessed or developed. Antecedents in the personal domain are somewhat under the control of the individual. A meso (multilevel) perspective highlights the significance of considering multiple levels of analysis that are relevant for understanding variations in a given dependent variable, such as a global mindset in the present case (House, Rousseau, & Thomas-Hunt, 1995; Klein, 2002; Klein & Kozlowski, 2000). In proposing the meso perspective, the authors note that the primary objective is to enhance the quality of our understanding of the variations of the dependent or outcome variable by incorporating both micro and macro variables in a coherent framework.

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The meso perspective is employed in considering the simultaneous relevance of the salient attributes from the three domains that are shown to interact in Fig. 1. Furthermore, Fig. 1 also shows that development of a global mindset is also influenced by the broader variations present in the cultural contexts of the global organization. These cultural contexts are not necessarily the same as the cultural contexts of the home country of the global organization, but indeed reflect the trend in global culture (Leung et al., 2005) that constitutes the overarching environment of the organization.

Methodological Concerns The first methodological issue that should concern researchers in this area is to deal with the complexity of multilevel design in discerning the influence of all three intersecting domains. The meso perspective, as we have noted, is employed when researchers are interested in considering the simultaneous relevance of salient attributes from different levels of analyses. The moderating influences also need to be considered, but we have not discussed the role of moderating influences in this chapter. The work of Lytle, Brett, Barsness, Tinsley, and Maddy (1995) should be of value in this connection. The second methodological concern is with multimethod design. Antecedents from the industry-specific domain are macrolevel variables reflecting broader economic trends in and shifts in the business environment, whereas some of the antecedents in the organization-specific and person-specific domains are microlevel variables. The various drivers in the industry-specific domain need to be appropriately operationalized, and their interactions with individual measures of cognitive complexity, cultural intelligence, etc., operationalized at the microlevel are to be analyzed creatively. There is no doubt a dearth of empirical research in this area of inquiry. It is important that we develop a body of empirically based findings to develop more rigorous models of a global mindset.

IMPLICATIONS FOR FUTURE RESEARCH The strategic and long-term importance of a global mindset for the 21st century is being routinely covered in popular press such as Business Week, The Economist, and the New York Times. The July 9, 2006, issue of the New York Times discussed the significance of the new CEO of Sony Corporation, a British citizen, who was chosen for his special insights into

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the nature of markets in the Western world. The coverage revealed that while he was greatly impressed with the various trends in the global electronics industry and how Sony might do in the future, he was concerned with his possible acceptance as the CEO, given the fact that the Japanese, as a cultural group, have typically not had a Western manager at the helm of the company. The same is true for Carlos Ghosn of Nissan. In fact, in a recent survey of MBA students in one of the classes taught by the first author, the students expressed surprise at how the Japanese managers might accept these Western managers as CEOs of such global companies like Sony and Nissan. The same goes for Indian multinationals located in the Asian Silicon Valley in the southern region of India. There are talks about recruiting Western managers as senior managers to oversee the growth of Indian software and outsourcing industries, but so far, there have only been talks in this area. When we analyze these stories in some depth, we see the ongoing interaction of how industry-specific trends are interacting with organizational values and cultures to determine the kind of a global mindset that eventually can and will develop in different parts of the world. In future research, it will be important to examine differences in cultural variations in the development of a global mindset across similar industries and organizational structures. As noted earlier, research in this area needs a sustained multidisciplinary meso perspective that is undertaken in a constructivist vein. We hope the ideas offered in this chapter will act as a stimulus to future theory building and research in this area. There are challenging issues to be resolved, but a journey of a thousand miles always begins with a single step.

ACKNOWLEDGMENTS The authors thank the editors for their suggestions in the early stages of developing this chapter. Partial support for work on this chapter was made possible by a summer grant from the Fogelman College of Business to the first author in the summer of 2006.

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PUTTING IT ALL TOGETHER: SO WHAT IS A GLOBAL MINDSET AND WHY IS IT IMPORTANT? Mansour Javidan, Richard M. Steers and Michael A. Hitt My Wal-Mart hosts took me over to the 1.2 million-square-foot distribution center, where we climbed up to a viewing perch and watched the show. On one side of the building, scores of white Wal-Mart trailer trucks were dropping off boxes of merchandise from thousands of different suppliers. Boxes large and small were fed up a conveyor belt at each loading dock. These little conveyor belts fed into a bigger belt, like streams feeding into a powerful river. Twenty four hours a day seven days a week, the suppliers’ trucks feed the twelve miles of conveyor streams, and the conveyor streams feed into a huge Wal-Mart river of boxed products. (Friedman, 2005, p. 128)

In his best selling book, The World is Flat (2005), Thomas Friedman identified the forces that he argued are making the world flatter: the demise of communism as an alternative to capitalism; the development of the Windows program, which enabled mass access to personal computers; the invention of Netscape, which enabled mass access to the Internet; the development of interoperability across diverse software and hardware systems; open source software development; outsourcing; off-shoring; supply chaining; in-sourcing; and ‘‘in-forming,’’ or any individual’s ability to build his or her own personal supply chain of information, knowledge, and

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entertainment. He argued that these forces have created unprecedented connectivity among individuals, groups, and organizations from many parts of the world. The ‘‘Wal-Mart symphony’’ (Friedman, 2005, p. 128) of moving 2.3 billion general merchandise cartons a year relies heavily on the forces identified above because it requires friction-free connections among multiple players in many parts of the world. While Wal-Mart has been a master at developing integrated global systems, it is by no means the only one. A number of successful global corporations have been able to leverage global supply chains to cater to global customers. Millions of miles in fiber optic lines around the globe and major advances in software development have flattened the world of business by eliminating frictions among various parties and removing obstacles that impede connectivity among diverse players in different parts of the world. As a result, a new source of competitive advantage is emerging: the ability to integrate players from many parts of the world faster and more effectively than others (Palmisano, 2006). The challenge to global corporations is increasingly to create seamless globally integrated systems to satisfy diverse customer needs in different global markets. But while the technology to do this is now in place, it is not an easy task due to the fact that even though the world is getting flatter, individuals’ minds are still firmly round. Corporations’ ability to create globally integrated systems depends to a large extent on their success in getting their employees, managers, and executives to understand and adapt to a flat world. Most individuals in their normal course of development grow up as unicultural individuals, understanding how to work with individuals who are like them. Until the recent phenomenally rapid pace of globalization, most individuals were facing a mostly unicultural work environment. However, work environments are rapidly changing as a result of the flattening of the world. Massive numbers of uniculturally developed individuals must now work with people who are different from them in a globally integrated organization. But while the appropriate software has been developed to flatten the world of business, the appropriate software to flatten the human mind does not yet exist. Most ordinary individuals continue to have a round mind in an increasingly flat world. Thus, the new competitive advantage of global corporations lies in their ability to shape the minds and actions of their employees to ensure successful performance. As a result, the challenge to global leaders is to successfully influence, mobilize, and enable their global workforce, global teams, and global networks to work effectively toward the achievement of the corporation’s global goals (Lasserre, 2003).

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GLOBAL MINDSET DEFINED The authors of the various chapters in this book have approached the concept of global mindset from diverse perspectives and have defined it differently. Levy et al. in this volume define global mindset as a highly complex cognitive structure distinguished by an openness to and expression of multiple cultural and strategic realities on both global and local levels and the cognitive capacity to moderate and assimilate across this diversity. More specifically, global mindset is typified by three corresponding dimensions: (1) an openness and attentiveness to multiple realms of action and meaning, (2) a complex representation and expression of cultural and strategic dynamics, and (3) a moderation and incorporation of ideals and actions oriented toward both global and local levels (Chapter 1 of this volume). At the core of their definition is the awareness of and openness to multiple realities, meanings, and perspectives. Redding in this volume agrees with Levy et al. and engages in a deeper examination of the complexities facing global corporations and global leaders. He suggests that a major source of such complexity is the diversity of institutional systems around the globe. All global corporations need to understand the institutional framework underpinning the world of business in different countries: ‘‘Among the many things included here would be the systems of education, organized religion, law, government administration, and philosophy; social structures such as kinship patterns; and the specific historical circumstances likely to have shaped these institutions’’ (Redding, this volume). He then identifies the diversity in cultural systems and in cognitive systems as the other two major sources of complexity and concludes that cosmopolitanism, openness, and flexibility are critical ingredients of global mindset: ‘‘The real problems lie in the worlds of alternative meaning, compounded by the competitive pressures of business. When the other poker player’s eye flickers, is he bluffing, or does he have mild conjunctivitis?’’ (Redding, this volume). Earley et al. in this volume use the concept of cultural intelligence to shed further light onto the issue of openness to diverse institutional, cognitive, and cultural systems. They compare cultural intelligence (CQ) and the global mindset (GM) construct, identifying the areas of overlap as well the areas of disconnect between the two. They find two areas of overlap: cognitive structure and motivation or openness. In their analysis, both global mindset and cultural intelligence consist of cognitive complexity and openness to diversity.

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They suggest, however, that the two constructs are different in that cultural intelligence emphasizes metacognition or the ability to move beyond a single specific example of diversity to the general ability to understand and make sense of any example of diversity. In their view, global mindset does not entail such a mental framework. Another point of divergence is that cultural intelligence focuses on and incorporates behavioral manifestations, while global mindset is more limited to what is in the mind and is not manifested in actual behavior: ‘‘GM scholars discuss behavior and adaptation as profitably applying the knowledge of cultural diversity. This includes the ability to craft policy, but not necessarily the ability to interact effectively on an interpersonal basis. While crafting and implementing strategy is one type of behavior, CQ takes adaptation further than does GM. In CQ, behavior refers to the ability of individuals interacting with others on a personal basis, sometimes simulating or mimicking other cultural practices. Behavior in CQ involves more than developing new plans that incorporate diversity; it also involves acquiring the behaviors necessary for interpersonal interaction. At the extreme, a person may possess a high level of GM (being able to understand and create effective cross-cultural strategy) but have a low level of CQ (unable to adapt his or her behavior to interact effectively with other cultures)’’ (Earley et al., this volume). Earley and his colleagues further suggest that scholars interested in global mindset need to incorporate Bandura’s notion of self-efficacy (1997) to understand better the psychological and motivational aspects of global mindset: ‘‘The extensive work of Bandura (1997) leads us to conjecture that motivation to persist in international engagements can be increased by an elevation of the actors’ self-efficacy. Thus, one important subcomponent that all GM scholars should address is the intercultural self-efficacy central to CQ’’ (Earley et al., this volume). Clapp-Smith, Luthans, and Avolio’s chapter in this volume is focused on self-efficacy (as suggested by Earley et al.). Using the concept of positive psychological capital, they shed light on the motivational and psychological components of global mindset. They define psychological capital, or PsyCap, as: An individual’s positive psychological state of development that is characterized by: (1) having confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resiliency) to attain success. (Luthans et al., 2007, p. 3)

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They suggest that leaders with a global mindset show strong self-efficacy and confidence when operating in a global cross-cultural context. These leaders are also resilient individuals because they must face complex crossborder challenges and are not always successful. Resilient individuals view failures in such situations as learning opportunities. They are optimistic because otherwise they would be unwilling to take risks and accept complex global challenges. They are also hopeful in the sense that they have clear objectives and are able to find the appropriate paths to achieve them. In short, global mindset requires not only the cognitive software to understand a flat world, but also the psychological software necessary to deal with it effectively. Beechler and Javidan’s chapter in this volume presents an integrative model incorporating the concepts presented in the other chapters to explain the link between global mindset, global leadership, and corporate performance. They define global leadership as ‘‘the process of influencing individuals, groups, and organizations (inside and outside the boundaries of the global organization) representing diverse cultural/political/institutional systems to contribute toward the achievement of the global organization’s goals’’ (Beechler & Javidan, this volume). They explain that increasingly the role of global leaders is to achieve this influence without the existence of hierarchical relationships because many critical individuals, groups, and organizations are outside the boundaries of the leader’s own organization. They then define global mindset as ‘‘an individual’s stock of knowledge, cognitive, and psychological attributes that enable him/her to influence individuals, groups, and organizations from diverse sociocultural systems’’ (Beechler & Javidan, this volume). They present a model showing that global mindset is a critical driver of successful global leadership, which in turn is a critical success factor for global corporations. They further suggest that global mindset consists of intellectual capital (intellectual and cognitive capabilities), psychological capital (state-like and psychological attributes), and social capital (the ability to build, secure, and leverage trusting relationships). It is important to note that Beechler and Javidan’s notion of psychological capital builds on the work of Clapp-Smith et al. but goes beyond it to include other psychological attributes such as cosmopolitanism and passion for cultural diversity. They also agree with Earley et al. that global mindset does not represent behavioral manifestations, but argue that such is not a disadvantage. Instead, they view global mindset as the content of the global leader’s psyche. It is a major driver of his or her behavior but is distinct from the leader’s actual behavior. Beechler and Javidan propose that leaders with a

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global mindset are capable of perceiving, analyzing, and decoding the global operating environment. They possess behavioral flexibility and are able to identify effective managerial action in different environments. Nardon and Steers pick up on this issue. They point out that while it is important for global leaders to learn from diverse cross-border issues, they must do it on short notice and ‘‘on the fly’’: However, while knowing everything about every culture and using such knowledge in appropriate ways is ideal, in reality achieving this level of understanding is difficult, if not impossible, for at least two reasons: first, learning about another culture from a distance is difficult at best and, second, most managers do not have the time to learn about other cultures and develop a global mindset well before they are asked to be effective. As a result, to develop a global mindset and be effective in the process, managers need to develop the ability to learn how to deal with other cultures ‘‘on the fly,’’ that is, to learn enough about the other and his or her cultural background in the course of the interaction. (Nardon & Steers, this volume)

Using an intercultural interaction learning model they suggest that intercultural interactions involve four types of negotiations relating to identities, meanings, rules, and behaviors. To succeed in such negotiations, global leaders need strong self-awareness, empathy, information gathering and analysis, new theories, and behavioral flexibility. In short, Nardon and Steers present a set of suggestions on how global leaders can learn about and adapt to their cross-border challenges in their day-to-day frequent and brief interactions. In another integrative approach, Bhagat et al. in Chapter 8 use a meso approach and suggest that global mindset evolves as a result of three types of antecedents: industry specific, organization specific, and person specific: Global managers are those individuals who successfully manage the ongoing interactions between industry-specific, organization-specific, and person-specific factors that are present in their work lives. They do so both efficaciously and effectively in the cultural contexts of their origin as well as in other diverse cultures with whom they must interact. (Bhagat et al., this volume)

The authors conceptualize global mindset as constrained by industry- and organization-specific markers. One who has a global mindset as an executive in the global investment banking industry may not have the same mindset as an executive in a corporation in the global telecommunications industry. They agree with the suggestion of Earley et al. that self-efficacy is a critical element of global mindset because it enables learning across cultures and organizations: The point is that individuals with a global mindset are aware of most of the behaviors that cause difficulties across cultures and will have enough behavioral flexibility to avoid

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these behaviors (Triandis, 2006). In addition, they will know what behaviors are helpful in interaction across cultures (e.g., smile and show respect) and will include these behaviors in their behavior repertoire. (Bhagat et al., this volume)

The authors suggest that understanding global mindset requires an integrative and meso approach in which we integrate microlevel individual phenomena (e.g., Clapp-Smith et al., this volume) with macrolevel industry and societal phenomena (e.g., Redding, this volume).

GLOBAL MINDSET AS A COMPETITIVE ADVANTAGE: MANAGERIAL IMPLICATIONS As part of the Thunderbird Global Mindset Project, a group of researchers interviewed 215 senior international executives in cities in the United States, Europe, and Asia.1 The interviews were conducted in several waves. In the last wave, a group of 15 senior global executives was asked to discuss companies that in their mind were successful in the global arena and those that were not. They were also asked to rate a number of individual attributes that were critical to the success of global executives. Table 1 shows the attributes that received an average score of 5 and above on a 7-point scale. While these results are not scientific, they are indicative of the importance of global mindset and its various components. The executives interviewed seem to believe that psychological capital (e.g., Clapp-Smith et al., Beechler & Javidan, this volume), as manifested by such attributes as openness and respect for other cultures, adaptability, selfconfidence, optimism, and resiliency, is a highly important requirement for global executives. They also indicate that intellectual capital (Redding, Beechler, & Javidan, Bhagat et al., this volume), as manifested through understanding of other cultures, global business models, and political and economic systems in diverse parts of the world, is another important requirement. The interviewees also highlighted another key issue that has not been addressed in sufficient depth by the authors in this volume. They pointed out that successful global leaders are able to build and maintain trusting relationships with those from other parts of the world. They felt that global executives who have a global mindset are better able to build mutual trust because they can develop compatible objectives and align the various parties’ interests. They are also better able to build trust by treating people from other parts of the world with respect and understanding. The interviewees

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Table 1. Critical Global Executive Attributes. Respecting cultural differences Ability to generate positive energy in people from a different part of the world Willingness to adapt, learn, and cope with other cultures Adaptability Willingness to accept good ideas no matter where they come from Ability to excite people from a different part of the world Acknowledgment of the validity of different views Openness to cultural diversity Ability to suspend judgment about those from other cultures Positive attitude toward those from other cultures and regions Self-confidence Understanding of how to build and manage global alliances, partnerships, and value networks Ability to connect with people from other parts of the world Ability to adjust behavior in a different cultural setting Collaborativeness Ability to manage the tension between corporate requirements and local challenges Willingness to work across time and distance Ability to handle complex cross-cultural issues Resiliency Understanding of the global business and industry Optimism Desire to learn about other cultures and other parts of the world Understanding cultural similarities Understanding other cultures and histories Curiosity Passion for learning about and being in other cultures Understanding the political and economic systems in other parts of the world Risk taking

6.73 6.50 6.43 6.36 6.33 6.30 6.29 6.27 6.20 6.20 6.14 6.14 6.13 6.13 6.00 5.93 5.87 5.87 5.86 5.73 5.71 5.67 5.67 5.60 5.57 5.50 5.47 5.00

1 ¼ Extremely unimportant; 7 ¼ Extremely important

suggested that mutual trust, or what Beechler and Javidan in this volume call social capital, evolves as a result of the executive’s willingness to trust those who are different from him or her, plus his or her ability to behave in ways that are rooted in strong intellectual and psychological capital and to create alignment among the various parties. The issue of trust in a crossborder, cross-cultural setting is an important and as yet underexplored area of research. Integrating the various contributions in this volume, we conclude that the concept of global mindset represents an important competitive tool for today’s managers. Corporate leaders are advised to develop, exhibit, and act with a global mindset for their firms to achieve and maintain a competitive

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advantage in international markets. Without such a mindset, in our view, such firms are likely to face better prepared and more knowledgeable global competitors, thereby threatening the very survival of the firm.

IMPLICATIONS FOR RESEARCH ON THE GLOBAL MINDSET Taken together, the chapters contained in this volume offer a wealth of information, ideas, and suggestions for future research on the concept and application of a global mindset. Each chapter adds value in its own right to this important dialogue. We view the chapter by Orly Levy, Sully Taylor, Nakiye Boyacigiller, and Schon Beechler as a signal contribution to theory development on the topic of the global mindset. This chapter offers a rich review of previous research on the topic, as well as variations in conceptualizing it. As such, the chapter offers a number of promising avenues for future research, as they themselves point out. Perhaps most promising here is a clearly articulated conceptual model of the global mindset concept, as well as several specific and testable propositions. The results of such testing should go a long way toward clarifying both the concept and the role of a global mindset in managerial dynamics and success across borders. Gordon Redding’s chapter discusses the challenge of developing a global mindset in terms of the variety of alternative mindsets due to societal culture and the variety of contexts across which decision making needs to take place and in which the differences of mindset are grounded. The inadequacy of international business theory in dealing with this contextual variety is highlighted, as is the trend in social science to acknowledge the significance of the societal effect. Three research approaches are proposed and discussed: research on cultural comparison, including recent work on social axioms; research on business systems and attempts to map the key variables that account for the emergence of alternative systems of capitalism; and research on the spirit or ethos of various economic systems. France is used as an example in these discussions. Taking these conceptualizations to the field presents significant challenges. However, the presentation in this chapter invites simultaneous comparisons of multiple models of cultural understanding. Chris Earley, Charles Murnieks, and Elaine Mosakowski focus their chapter on comparing two parallel concepts relating to interpersonal success in a global context: global mindset and cultural intelligence. The particular emphasis of this examination is on the psychology underlying each concept.

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Earley et al. conclude that cultural intelligence is the more useful of the two concepts from the standpoint of their psychological explanatory power. A useful next step in this comparison would be to initiate comparative empirical studies of the construct validity of each concept, that is, which concept hangs together better empirically, not just conceptually. Moreover, it would also be helpful to see serious comparative studies focusing on the utility of each concept in the managerial world – that is, how each approach facilitates managerial success or failure in the workplace. In their chapter, Rachael Clapp-Smith, Fred Luthans, and Bruce Avolio introduce the concept of positive psychological capital in the development of a global mindset, particularly in the area of leadership success. The authors have been helpful here in articulating a model that is testable, albeit it with some difficulty. The authors also point to a number of specific research questions that go beyond their own proposals to the general concept of a global mindset that are worthy of empirical exploration. Included here are such questions as whether a global mindset can be developed without salient international work experience and whether varying degrees of psychological distance between two cultures can accelerate or impede the development of a global mindset. Taken together, this chapter offers a rich and varied set of implications for future researchers to consider. The chapter by Schon Beechler and Mansour Javidan ties the concept of global mindset most directly to leadership behavior and success. Based on their review of existing theory and research on global leadership, global competencies, and the global mindset in general, they offer a precise definition of global mindset that highlights both its cognitive and its behavioral components. This clarity facilitates future research into both the concept of global mindset and its construct validity. In addition, a number of implications for future research focusing on the development of a global mindset follow from this chapter. In particular, the articulation of three types of capital – social, psychological, and intellectual – that can enhance the development of a global mindset, along with a model indicating how these variables can jointly influence a manager’s behavioral repertoire in global situations, is worthy of further empirical examination. Luciara Nardon and Richard M. Steers focus their chapter on learning cultures ‘‘on the fly’’ – that is, adapting to cultures when time is of the essence or, more accurately, when managers do not have the luxury of developing a substantive cultural understanding of their partners or competitors prior to doing business. At such times, initiating impromptu negotiations with others within the context of a cross-cultural episode becomes critical for success. To accomplish this, managers must understand learning

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processes in general and how such processes occur in cross-cultural settings in particular. As noted in the paper, developing these cultural adaptation mechanisms finds their theoretical base in learning theory. As such, many of the research implications focus on questions relating to how learning theory relates to efforts to develop a global mindset, in both the short and the long run. An important question here is how learning theory itself applies across cultures. That is, is learning theory universal in its application or do cultural differences modify this application. Since much of what we know about learning processes is derived from U.S.-based research, this becomes an intriguing question that goes beyond the concept of the global mindset itself. In addition, research focusing on the validity, utility, and generalizability of the model presented in this chapter is in order. In other words, is this model accurate in describing adaptation processes of global managers, as well as meaningful and helpful for understanding managerial behavior in foreign settings? The chapter by Rabi Bhagat, Harry Triandis, Ram Baliga, Tejinder Billing, and Charlotte Davis focuses squarely on the content and processes involved in developing a global mindset. As such, the research implications that follow stress the importance of examining differences in cultural variations in the development of global mindset across both industries and organizational structures. The authors suggest that research in this area requires a sustained multidisciplinary meso perspective that is undertaken in a constructivist vein. As with several implications suggested in other chapters, this is not an easy task, but it may be a required one if we are to explicate further this central concept for the benefit of future global managers. Finally, if there is a ‘‘golden thread’’ that winds throughout these divergent chapters, it is the utility and applicability of the concept of a global mindset. That is, how useful is this concept both for better understanding the success or failure of current managers and for developing more successful managers in the future. To succeed here, we require three things: First, we need substantive research on the validity and generalizability of the concept of a global mindset, both as a construct and as a model. Second, we need more research on how to measure this construct so future research can be accomplished in a more systematic and integrative manner. Finally, we need additional research on how to train managers so they can develop a global mindset in their future endeavors in the global economy. Taken together, the answers to these questions could represent a genuine sea change in how we train and develop managers for the future. As such, we encourage management researchers to incorporate the concept of a global mindset in their future research endeavors.

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NOTE 1. The authors thankfully acknowledge the support of Thunderbird colleagues Mary Teagarden, Femi Babarinde, Christine Pearson, David Bowen, Karen Walch, Nandani Lynton, and Angel Cabrera, who are all members of the Global Mindset Project and conducted interviews with global executives.

REFERENCES Friedman, T. L. (2005). The world is flat: A brief history of the twentieth century. New York: Farrar, Straus and Giroux. Lasserre, P. (2003). Global strategic management. London: Palgrave Macmillan. Luthans, Y., & Avolio (2007). Psychological capital. Oxford, UK: Oxford University Press. Palmisano, S. J. (2006). The globally integrated enterprise. Foreign Affairs, 85(3), 127–137.