MGT 672 Saudi Electronic University Student Advocacy and Labor Paper

International
Management
TENTH EDITION
Culture, Strategy, and Behavior
Fred Luthans | Jonathan P. Doh
International Management
Culture, Strategy, and Behavior
Tenth Edition
Jonathan P. Doh
Villanova University
Fred Luthans
University of Nebraska?Lincoln
INTERNATIONAL MANAGEMENT: CULTURE, STRATEGY, AND BEHAVIOR, TENTH EDITION
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Library of Congress Cataloging-in-Publication Data
Names: Luthans, Fred, author. | Doh, Jonathan P., author.
Title: International management : culture, strategy, and behavior / Fred
Luthans, University of Nebraska-Lincoln, Jonathan P. Doh, Villanova
University.
Description: Tenth Edition. | Dubuque: McGraw-Hill Education, [2018] |
Revised edition of the authors? International management, [2015]
Identifiers: LCCN 2016055609| ISBN 9781259705076 (alk. paper) | ISBN
1259705072 (alk. paper)
Subjects: LCSH: International business enterprises?Management. |
International business enterprises?Management?Case studies.
Classification: LCC HD62.4 .H63 2018 | DDC 658/.049?dc23 LC record
available at https://lccn.loc.gov/2016055609
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website
does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education
does not guarantee the accuracy of the information presented at these sites.
mheducation.com/highered
Dedicated in Memory of
Rafael Lucea,
A Passionate Advocate for Global Business Education and Experience.
iii
Preface
C
hanges in the global business environment continue unabated and at an accelerated
pace. Many surprising and difficult-to-predict developments have rocked global
peace and economic security. Terrorism, mass migration, the United Kingdom?s exit from
the European Union, and the rise of anti-immigration political movements in Europe, the
United States, and elsewhere have called into question assumptions about the direction
of the global political economy. In addition, rapid advances in social media have not only
accelerated globalization but also provided a means for those who seek political and
economic changes to organize and influence their leaders for more responsible governance, or, in some cases, advance a more narrow ideological agenda (see opening articles
in Chapters 1 and 2). In addition, concerns about climate change and other environmental issues have prompted companies, in conjunction with governments and nongovernmental organizations, to consider alternate approaches to business and governance (see
Chapter 3 opening article).
Some of these developments have challenged longstanding beliefs about the power
and benefits of globalization and economic integration, but they also underscore the
interconnected nature of global economies. Although many countries and regions around
the world are closely linked, important differences in institutional and cultural environments persist, and some of these differences have become even more pronounced in
recent years. The challenges for international management reflect this dynamism and the
increasing unpredictability of global economic and political events. Continued growth of
the emerging markets is reshaping the global balance of economic power, even though
differences exist between and among regions and countries. Although many emerging
markets continued to experience growth during a period when developed countries?
economies stagnated or declined, others, like Russia and Brazil, have faced major setbacks. Further, some developed economies, such as Greece, Italy, Spain, and Portugal,
continue to face formidable challenges that stem from the European debt crisis that began
in 2009. Low or negative interest rates reflect a ?new normal? of slower-than-average
growth among many global economies.
The global political and security environment remains unpredictable and volatile,
with ongoing conflicts in the Middle East and Africa and continuing tensions in Iran,
North Korea, Iraq, and Afghanistan and elsewhere. Another crisis stemming from conflict in Syria and elsewhere has resulted in mass migration?and broad dislocations?
across North Africa and Southern, even Northern, Europe (see Chapters 1 and 2 for
further discussion). On the economic front, the global trade and integration agenda seems
stalled, largely due to domestic political pressures in Europe and North America. Although
the Trans-Pacific Partnership (TPP), a proposed free-trade agreement including 12 countries in the Americas and Asia, was concluded, its ratification in the United States is
uncertain. Similarly, the fate of the Transatlantic Trade and Investment Partnership, which
was still under negotiation at the time of this writing, is also unclear.
As noted above, the advent of social networking has transformed the way citizens
interact; how businesses market, promote, and distribute their products globally; and how
civil society expresses its concerns that governments provide greater freedoms and
accountability. Concurrently, companies, individuals, and even students can now engage
in broad ?mass? collaboration through digital, online technology for the development of
new and innovative systems, products, and ideas. Both social networking and mass collaboration bring new power and influence to individuals across borders and transform
v
vi
Preface
the nature of their relationships with global organizations. Although globalization and
technology continue to link nations, businesses, and individuals, these linkages also highlight the importance of understanding different cultures, national systems, and corporate
management practices around the world. The world is now interconnected geographically,
but also electronically and psychologically; as such, nearly all businesses have been
touched in some way by globalization. Yet, as cultural, political, and economic differences persist, astute international managers must be in a position to adapt and adjust to
the vagaries of different contexts and environments.
In this new tenth edition of International Management, we have retained the
strong and effective foundations gained from research and practice over the past
decades while incorporating the important latest research and contemporary insights
that have changed the context and environment for international management. Several
trends have emerged that pose both challenges and opportunities for international
managers.
First, more nationalistically oriented governments and/or political movements
have emerged in many regions of the world, challenging previous assumptions about
the benefits and inevitability of globalization and integration. Second, while emerging
markets continue to rise in importance, some?such as China and India?have fared
much better economically than others?such as Brazil and Russia. Third, aging populations and concerns about migration have challenged many developed country governments as they wrestle with these dual pressures. Fourth, social media and other forms
of electronic connectivity continue to facilitate international business of all sorts; however, these connection go only so far, with many barriers and limitations imposed by
governments.
Although we have extensive new, evidence-based material in this edition, we
continue to strive to make the book even more user-friendly and applicable to practice. We continue to take a balanced approach in the tenth edition of International
Management: Culture, Strategy, and Behavior. Whereas other texts stress culture,
strategy, or behavior, our emphasis on all three critical dimensions?and the interactions among them?has been a primary reason why the previous editions have been
the market-leading international management text. Specifically, this edition has the
following chapter distribution: environment (three chapters), culture (four chapters),
strategy (four chapters), and organizational behavior/human resource management
(three chapters). Because the context of international management changes rapidly,
all the chapters have been updated and improved. New real-world examples and
research results are integrated throughout the book, accentuating the experiential
relevance of the straightforward content. As always, we emphasize a balance of
research and application.
For the new tenth edition we have incorporated important new content in the areas
of the emergence and role of social media as a means of transacting business and mobilizing social movements, the global pressures around migration, the role of the ?sharing?
economy as represented by companies such as Uber, and other important global themes.
We have incorporated the latest research and practical insights on pressure for MNCs to
adopt more sustainable practices, and the strategies many companies are using to differentiate their products through such ?green? management practices. We have updated
discussion of a range of contemporary topics, including continued exploration of the role
of the comprehensive GLOBE study on cross-cultural leadership.
A continuing and relevant end-of-chapter feature in this edition is the ?Internet
Exercise.? The purpose of each exercise is to encourage students to use the Internet
to find information from the websites of prominent MNCs to answer relevant questions about the chapter topic. An end-of-book feature is a series of Skill-Building and
Experiential Exercises for aspiring international managers. These in-class exercises
represent the various parts of the text (culture, strategy, and behavior) and provide
hands-on experience.
Preface
We have extended from the ninth edition of International Management the chapter-opening discussions called ?The World of International Management? (WIM),
based on very recent, relevant news stories to grab readers? interest and attention. Many
of these opening articles are new to this edition and all have been updated. These
timely opening discussions transition the reader into the chapter topic. At the end of
each chapter, there is a pedagogical feature that revisits the chapter?s subject matter:
?The World of International Management?Revisited.? Here we pose several discussion
questions based on the topic of the opening feature in light of the student?s entire
reading of the chapter. Answering these questions requires readers to reconsider and
to draw from the chapter material. Suggested answers to these ?WIM?Revisited?
discussion questions appear in the completely updated Instructor?s Manual, where we
also provide some multiple-choice and true-false questions that draw directly from the
chapters? World of International Management topic matter for instructors who want to
include this material in their tests.
The use and application of cases are further enhanced in this edition. All cases
have been updated and several new ones have been added. The short within-chapter
country case illustrations??In the International Spotlight??can be read and discussed in class. These have all been revised and three have been added?Cuba, Greece,
and Nigeria. In addition, we have added an additional exercise, ?You Be the International Management Consultant,? that presents a challenge or dilemma facing a company in the subject country of the ?Spotlight.? Students are invited to respond to a
question related to this challenge. The revised or newly added ?Integrative Cases?
positioned at the end of each main part of the text were created exclusively for this
edition and provide opportunities for reading and analysis outside of class. Review
questions provided for each case are intended to facilitate lively and productive written analysis or in-class discussion. Our ?Brief Integrative Cases? typically explore a
specific situation or challenge facing an individual or team. Our longer and more
detailed ?In-Depth Integrative Cases? provide a broader discussion of the challenges
facing a company. These two formats allow maximum flexibility so that instructors
can use the cases in a tailored and customized fashion. Accompanying many of the
in-depth cases are short exercises that can be used in class to reinforce both the substantive topic and students? skills in negotiation, presentation, and analysis. The cases
have been extensively updated and several are new to this edition. Cases concerning
the controversies over drug pricing, TOMS shoes, Russell Athletics/Fruit of the Loom,
Euro Disneyland and Disney Asia, Google in China, IKEA, HSBC, Nike, Walmart,
Tata, Danone, Chiquita, Coca-Cola, and others are unique to this book and specific
to this edition. Of course, instructors also have access to Create (www.mcgraw-hillcreate.com), McGraw-Hill?s extensive content database, which includes thousands of
cases from major sources such as Harvard Business School, Ivey, Darden, and NACRA
case databases.
Along with the new or updated ?International Management in Action? boxed application examples within each chapter and other pedagogical features at the end of each
chapter (i.e., ?Key Terms,? ?Review and Discussion Questions,? ?The World of International Management?Revisited,? and ?Internet Exercise?), the end-of-part brief and indepth cases and the end-of-book skill-building exercises and simulations in the Connect
resources complete the package.
International Management is generally recognized to be the first ?mainstream?
text of its kind. Strategy casebooks and specialized books in organizational behavior,
human resources, and, of course, international business, finance, marketing, and economics preceded it, but there were no international management texts before this
one, and it remains the market leader. We have had sustainability because of the
effort and care put into the revisions. We hope you agree that this tenth edition
continues the tradition and remains the ?world-class? text for the study of international management.
vii
viii
Preface
McGraw-Hill Connect?: connect.mheducation.com
Continually evolving, McGraw-Hill Connect? has been redesigned to provide the only
true adaptive learning experience delivered within a simple and easy-to-navigate environment, placing students at the very center.
?
?
Performance Analytics?Now available for both instructors and students,
easy-to-decipher data illuminate course performance. Students always know
how they?re doing in class, while instructors can view student and section
performance at a glance.
Personalized Learning?Squeezing the most out of study time, the adaptive
engine within Connect creates a highly personalized learning path for each
student by identifying areas of weakness and providing learning resources to
assist in the moment of need.
This seamless integration of reading, practice, and assessment ensures that the focus is
on the most important content for that individual.
Instructor Library The Connect Management Instructor Library is your repository
for additional resources to improve student engagement in and out of class. You can
select and use any asset that enhances your lecture.
To help instructors teach international management, this text is accompanied by a
revised and expanded Instructor?s Resource Manual, Test Bank, and PowerPoint slides,
all of which are in the Connect Library.
Acknowledgments
We would like to acknowledge those who have helped to make this book a reality. We
will never forget the legacy of international management education in general and for this
text in particular provided by our departed colleague Richard M. Hodgetts. Special thanks
also go to our growing number of colleagues throughout the world who have given us
many ideas and inspired us to think internationally. Closer to home, Jonathan Doh would
like to thank the Villanova School of Business and its leadership, especially Provost Pat
Maggitti, Interim Dean Daniel Wright, Dean Joyce Russell, Interim Vice Dean Wen Mao,
and Herb Rammrath, who generously endowed the Chair in International Business
?Jonathan now holds. Also, for this new tenth edition we would like to thank Ben Littell,
who did comprehensive research, graphical design, and writing to update chapter material
and cases. Specifically, Ben researched and drafted chapter opening World of International
Management features, developed a number of original graphics, and provided extensive
research assistance for other revisions to the book. Allison Meade researched and drafted
the Chapter 4 World of International Management feature on ?Culture Clashes in CrossBorder Mergers and Acquisitions.? Fred Luthans would like to give special recognition
to two international management scholars: Henry H. Albers, former Chair of the Management Department at the University of Nebraska and former Dean at the University of
Petroleum and Minerals, Saudi Arabia, to whom previous editions of this book were
dedicated; and Sang M. Lee, former Chair of the Management Department at Nebraska,
founding and current president of the Pan Pacific Business Association, and close colleague on many ventures around the world over the past 30 years.
In addition, we would like to acknowledge the help that we received from the many
reviewers from around the globe, whose feedback guided us in preparing the tenth edition
of the text. These include
Joseph S. Anderson, Northern Arizona
University
Chi Anyansi-Archibong, North Carolina
A&T State University
Koren Borges, University of North
Florida
Lauryn De George, University of Central
Florida
Jae Jung, University of Missouri at Kansas
City
Manjula S. Salimath, University of North
Texas
ix
Preface
Our thanks, too, to the reviewers of previous editions of the text:
Thomas M. Abbott, Post University
Yohannan T. Abraham, Southwest Missouri State
University
Janet S. Adams, Kennesaw State University
Irfan Ahmed, Sam Houston State University
Chi Anyansi-Archibong, North Carolina A&T State
University
Kibok Baik, James Madison University
R. B. Barton, Murray State University
Lawrence A. Beer, Arizona State University
Koren Borges, University of North Florida
Tope A. Bello, East Carolina University
Mauritz Blonder, Hofstra University
Gunther S. Boroschek, University of Massachusetts?Boston
Charles M. Byles, Virginia Commonwealth University
Constance Campbell, Georgia Southern University
Scott Kenneth Campbell, Georgia College & State
University
M. Suzanne Clinton, University of Central Oklahoma
Helen Deresky, SUNY Plattsburgh
Dr. Dharma deSilva, Center for International Business
Advancement (CIBA)
David Elloy, Gonzaga University
Val Finnigan, Leeds Metropolitan University
David M. Flynn, Hofstra University
Jan Flynn, Georgia College and State University
Joseph Richard Goldman, University of Minnesota
James Gran, Buena Vista University
Robert T. Green, University of Texas at Austin
Annette Gunter, University of Central Oklahoma
Jerry Haar, Florida International University?Miami
Jean M. Hanebury, Salisbury State University
Richard C. Hoffman, Salisbury State University
Johan Hough, University of South Africa
Julie Huang, Rio Hondo College
Mohd Nazari Ismail, University of Malaya
Steve Jenner, California State University?Dominguez Hills
James P. Johnson, Rollins College
Marjorie Jones, Nova Southeastern University
Jae C. Jung, University of Missouri?Kansas City
Ann Langlois, Palm Beach Atlantic University
Robert Kuhne, Hofstra University
Christine Lentz, Rider University
Ben Lever III, College of Charleston
Robert C. Maddox, University of Tennessee
Curtis Matherne III, East Tennessee State University
Douglas M. McCabe, Georgetown University
Jeanne M. McNett, Assumption College
Lauryn Migenes, University of Central Florida
Alan N. Miller, University of Nevada, Las Vegas
Ray Montagno, Ball State University
Rebecca J. Morris, University of Nebraska?Omaha
Ernst W. Neuland, University of Pretoria
William Newburry, Rutgers Business School
Yongsun Paik, Loyola Marymount University
Valerie S. Perotti, Rochester Institute of Technology
Richard B. Peterson, University of Washington
Suzanne J. Peterson, University of Nebraska?Lincoln
Joseph A. Petrick, Wright State University
Juan F. Ramirez, Nova Southeastern University
Richard David Ramsey, Southeastern Louisiana University
Owen Sevier, University of Central Oklahoma
Mansour Sharif-Zadeh, California State Polytechnic
University?Pomona
Emeric Solymossy, Western Illinois University.
Jane H. Standford, Texas A&M University?Kingsville
Dale V. Steinmann, San Francisco State University
Randall Stross, San Jose State University
George Sutija, Florida International University
Deanna Teel, Houston Community College
David Turnipseed, University of South Alabama?Mobile
Katheryn H. Ward, Chicago State University
Li Weixing, University of Nebraska?Lincoln
Aimee Wheaton, Regis College
Marion M. White, James Madison University
Timothy Wilkinson, University of Akron
George Yacus, Old Dominion University
Corinne Young, University of Tampa
Zhe Zhang, University of Central Florida?Orlando
Anatoly Zhuplev, Loyola Marymount University
Finally, thanks to the team at McGraw-Hill who worked on this book: Susan Gouijnstook,
Managing Director; Anke Weekes, Executive Brand Manager; Laura Hurst Spell, Senior
Product Developer; Erin Guendelsberger, Development Editor; Michael Gedatus, Marketing Manager; and Danielle Clement, Content Project Manager. Last but by no means
least, we greatly appreciate the love and support provided by our families.
Fred Luthans and Jonathan P. Doh
Luthans
The tenth
edition of International
Management: Culture,
Strategy, and Behavior
is still setting the
standard. Authors
Jonathan Doh and
Fred Luthans have
Doh
New and Enhanced Themes
?
?
?
?
?
taken care to retain
the effective
foundation gained
from research and
?
?
practice over the past
decades. At the same
time, they have fully
Thoroughly Revised and Updated Chapter Content
?
incorporated important
new and emerging
developments that
have changed what
international managers
are currently facing
and likely to face in
the coming years.
?
?
?
?
x
Thoroughly revised and updated chapters to reflect the most
critical issues for international managers.
Greater attention to demographic trends and human mobility,
underscoring the importance of aging work forces, migration,
culture, and global talent management.
Focus on global sustainability and sustainable management
practices and their impact on international management.
New or revised opening World of International Management
(WIM) features written by the authors on current international
management challenges; these mini-cases were prepared
expressly for this edition and are not available elsewhere.
Discussions of the rise of global terrorism, the migrant crisis,
the growing role of social media in international transactions,
and many other contemporary topics presented in the opening
chapter and throughout the book.
New and updated discussions of major issues in global ethics,
sustainability, and insights from project GLOBE and other
cutting-edge research.
Greater emphasis on major emerging regions, economic challenges
in major countries such as Brazil and Russia, and specific case
illustrations on how companies are managing these challenges.
New or revised opening WIM discussions on topics including
the global influences of social media using the case of Snapchat; the role of social networking in political change in the
Middle East; sustainability as a global competitive advantage
using examples of Patagonia, Tesla, and Nestl?; and cultural
challenges in global mergers and acquisitions. Others address
the competitive dynamics between Apple and Xiaomi and
Amazon and Alibaba, the emergence of Haier as the largest
global appliance company, Netflix?s challenges in China and
Russia, and many others. These features were written expressly
for this edition and are not available elsewhere.
Updated and strengthened emphasis on ethics, social
responsibility, and sustainability.
Extensive coverage of Project GLOBE, its relationship to other
cultural frameworks, and its application to international management practice (Chapters 4, 13).
Revised or new ?In the International Spotlight? inserts that
profile the key economic and political issues relevant to
managers in specific countries.
Greater coverage of the challenges and opportunities for international strategy targeted to the developing ?base of the
pyramid? economies (Chapter 8 and Tata cases).
Continues to Set the Standard. . .
Thoroughly Updated and/or New Cases,
Inserts, and Exercises
?
?
?
?
?
?
?
?
Completely new ?In the International Spotlight? country profiles at
the end of every chapter including the addition of profiles on Cuba,
Greece, and Nigeria.
?You Be the International Management Consultant? exercises presenting an actual company?s challenge in that country and inviting
students to recommend a course of action.
New ?International Management in Action? features, including
discussions on timely topics such as the rise of Bitcoin, the
Volkswagen emissions scandal, and the political risks facing Uber,
to name a few.
Thoroughly updated cases (not available elsewhere): TOMS shoes,
Russell Athletics/Fruit of the Loom, Euro Disneyland and Disney
Asia, Google in China, IKEA, HSBC, Nike, Walmart, Tata, Danone,
Chiquita, Coca-Cola, and others are unique to this book and specific
to this edition.
Brand new end-of-part cases developed exclusively for this edition
(not available elsewhere): TOMS Puts Its Right Foot Forward; The
Ethics of Global Drug Pricing.
Brand new ?World of International Management? chapter opening
discussions, including topics such as Netflix?s expansion to emerging markets, the merger of ABInBev and SABMiller, the battle
brewing between Apple?s iPhone and Chinese cell phone startups,
the impact of Russian sanctions on international businesses, and the
growth of Chinese brand Haier, to name a few.
New and revised graphics throughout.
Timely updates throughout, based on the latest research, including
an extended discussion of the GLOBE project, the continued impact
of global terrorism on international business, and the push towards a
sustainable future, to name a few.
Totally Revised Instructor and Student Support
The following instructor and student support materials can be found in
Connect? at connect.mheducation.com for the Tenth Edition.
?
?
The Instructor?s Manual offers a summary of Learning Objectives
and a teaching outline with lecture notes and teaching tips, as
well as suggested answers to questions found throughout and at
the conclusion of each chapter. Suggested answers are also provided for all the cases found in the book.
The test bank is offered in both Word and EZ Test formats and
offers over 1,000 test items consisting of true/false, multiple choice,
and essay. Answers are provided for all test bank questions.
xi
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Continues to Set the Standard. . .
?
?
?
?
PowerPoint Presentations consisting of 30 slides per chapter give instructors
talking points, feature exhibits from the text, and are summarized with a
review and discussion slide.
LearnSmart?: The Tenth Edition of International Management is available with LearnSmart, the most widely used adaptive learning resource,
which is proven to improve grades. To improve your understanding of
this subject and improve your grades, go to McGraw-Hill Connect? at
connect.mheducation.com and find out more about LearnSmart. By
helping students focus on the most important information they need to
learn, LearnSmart personalizes the learning experience so they can study
as efficiently as possible.
SmartBook?: An extension of LearnSmart, SmartBook is an adaptive eBook
that helps students focus their study time more effectively. As students read,
SmartBook assesses comprehension and dynamically highlights where they
need to study more.
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teaching style. Order a Create book and receive a complimentary print
review copy in 3?5 business days or a complimentary electronic review
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