INTERNATIONAL COMPARATIVE
MANAGEMENT
SUMMARY OF ALL LECTURES
,KC1 INTRODUCTION
ELEMENTS OF THE COURSE
Institutions are laws, rules, generally accepted ways of behaving/doing business. (not companies etc.)
Contingency Approach in organization theory: Characteristics of management & organization depend
on task environment and related contingency factors.
A contingency is a circumstance or condition that may or may not apply. Be aware of the danger of
cultural attribution, this occurs when researchers make cultural interpretations about differences
found between countries without empirical justification.
When looking for the influence of differences in institutional/cultural environment, always control for
differences in:
• organization size; age
• Industry; technology
• Etc
Two strategies for dealing with contingency factors in empirical
research: inclusion of control variables and matching of samples.
In a table you must be able to differentiate between variables of
interest control variables (not the same as independent
variables!).
Strategy of matched samples:
• Select narrow, but comparable subjects in the cultures to be compared
• Draw conclusions from this comparison regarding differences between the cultures in general
• Assumption: differences between the narrow samples are representative for the general
differences
,KC2 GLOBALIZATION
WHAT IS GLOBALIZATION?
Globalization is a qualitative shift towards a global economic system that is no longer based on
autonomous national economies but on a consolidated global marketplace for production,
distribution, and consumption.
Boundaries between countries decrease and the world becomes one big marketplace.
Today, the globalization process is slowing down or even reversing.
FORCES STIMULATING/IMPEDING GLOBALIZATION
Forces promoting (further) globalization:
▪ Decrease of transportation costs
▪ Decrease of communication costs
▪ Integration international financial markets
▪ Mass media, social media
▪ International migration, money flow from migrated people back to the origin country.
Forces impeding (limiting) (further) globalization:
▪ Economic
Lower company profits outside home market; decreasing economic gains of trade liberalization.
Believe that companies can maximize profits by going international.
At the country level globalization has two effects:
– Wealth creation
– Wealth redistribution, some lose their job/income, some get richer.
The redistributive effects get larger relative to the wealth creation effects as the level of trade
liberalization increases. Continuing to make trade more free, will result in less wealth creation to
compensate the ‘losers’. What if the “losers from free trade” need to be compensated?
More wealth is always good, even though some people might receive less of the ‘pie’. These
people can be compensated.
As long as reversing trade agreements is costly, governments always have the incentive to promise
compensation, but rarely to carry it out. The winners need the losers’ assent for the agreement.
But once the agreement is passed, there is little reason for the winners to follow through.
Trade agreements themselves have played a part in the shifting bargaining power between
business and workers. They reflect the decline in the political influence of organized labor. And
they reinforce that decline by changing the rules and norms of competition in turn.
Genuine compensation rarely occurs.
Actual compensation works best when it is embedded in the general social policies of a nation,
and not specifically targeted at trade impacts. Where it has worked, as in Europe, it has been part
of a constitutive bargain between capital and labor that couples the open economy with generous
safety nets. In these countries, there is little need for compensatory policies targeted at trade
directly: individuals who are displaced, lose their jobs, or need retraining can access those broader
mechanisms. European employers have traditionally consented to the high costs of such safety
nets. And they have cemented their consent by institutionalizing it in the form of the welfare
state.
▪ Social
Unbalanced distribution of benefits. Wealth that has been created by globalization has mainly
gone to those who can tap into corporate profits, like shareholders. People dependent on labor
, income are worse off. International, the global middle class saw the largest income jumps and
incomes surge for super rich. Middle class in rich nations have seen incomes flatline. Ordinary
workers in the USA have not profited from globalization.
▪ Cultural
Search for cultural authenticity. Borrowing from other cultures is not always good, it might
damage your own culture.
The issue of cultural appropriation, says it’s bad if you take over elements of other cultures.
To what extent should borrowing from other cultures be admissible?
▪ Political
Limits of democracy.
The trilemma of globalization, sovereignty and democracy. You cannot have all three at the same
time, only two.
Why does trade get picked on so much by populists? It is only one source of churn in labor markets,
and typically not even the most important source. The usual answer is that trade is a convenient
scapegoat, since politicians can point to identifiable foreigners – Chinese, Mexicans, or Germans -- as
the source of the problem. Another deeper issue is that sometimes international trade involves types
of competition that are ruled out at home because they violate widely held domestic norms or social
understandings. When such “blocked exchanges” are enabled through trade they raise difficult
questions of distributive justice.
Three psychologists (Starman et al.) note that people tend to express preference for equality in small
groups, but when asked about the ideal distribution for their country (or large groups), they support
an unequal distribution of resources. People worry about economic unfairness. People understand
that unequal abilities, effort, or moral deservingness imply that a fair distribution in society would also
be unequal. As long as there is belief in social mobility, high levels of inequality will be tolerated.
The essence of the “fair trade” argument according to Rodrik: It’s one thing to lose your job to
someone who competes under the same rules as you do.
FINANCIAL GLOBALIZATION
Economists remain on the whole in favor of free trade, even though they recognize the distributional
impacts may be sometimes adverse. The presumption of the gains from trade – the aggregate
efficiency gains from eliminating barriers on cross-border commerce – remains strong. In principle
financial globalization generates important economic benefits as well: it should channel savings to
countries where returns are higher, enable intertemporal consumption for nations through
international borrowing and lending, and allow global portfolio diversification.
The economics profession’s current views on financial globalization can be best described as
ambivalent. Most of the skepticism is directed at short-term financial flows, which are associated with
financial crises and other excesses. Long-term flows and direct foreign investment in particular are
