4 Robert Uberman, Multinational Corporations (MNCs)

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Robert Uberman, Multinational Corporations (MNCs)

„„Global” vs „Global” vs „nnational” MNCsational” MNCs

• „Big MNCs, despite all modern trends, maintain a strong national identity independently from their ownership form and governance” Maciej Olex-Szczytowski, partner in Ernst & Young, Rzeczpospolita, 15th of May 2008 , pp B11

• Jeffrey Immelt, General Electric: „We’re an American company but in order to be successful we’ve got to win in every corner of the world”, FT, August 16, 2007, page 7

• „Italy needs a big state company or a big multinational” along the lines of Germany’s Siemens to serve as an anchor for commercial and investors dialogue between China and Italy - undisclosed Chinese high rank officials told Giulio Tremonti, the Italian Economy Minister „Italy plans state investment fund to repel invaders”, The Wall Street Journal, April 4, 2011, p. 4.


„„Global” vs „national” MNCs – Allianz caseGlobal” vs „national” MNCs – Allianz case

• „As a global financial services provider, our business is heavily affected by a variety of global, long-term issues”. „Allianz operates as an international insurer on almost every continent” excerpts from the Allianz official webside.

• „An insurer must not differentiate customers according to criteria not linked to technical or financial parameters.” par. 2 „Ethical rules in insuring activities„, which Allianz is proud to follow according to announcement on it’s Polish webside.

• Excerpts of promotion as stated on 15th of November, 2013. (German cars owners will pay 15 % less!!!)

http://www.allianzdirect.pl/redirect-moto.html?partner=lmv011

http://facebook.com/AllianzDirect

„„European” vs „national” MNCsEuropean” vs „national” MNCs

• Inquiry into the most „open” European countries show, that ¾th of managers come from a MNC’s country of origin

• Countries defined to be „open” are: Denmark, Finnland, The Netherlands, Norway, Sweden, Switzerland and United Kingdom

• The research covered 7 000 positions in MBs of non-financial companies between 2000-2005

• Foreigners’ share grew from 21 % up to 24 % over 5 years analysed

• Ruigrok Winfried & Greve Peter, „Does nationallity still matters?”, European Business Forum, Spring 2008, p. 19


Will globalisation level out cultural Will globalisation level out cultural differences?differences?

• „[..] the promotion and maintenance of cultures rooted in their own traditions may be a sine qua non of continuing development of globalisation”.

Alfredo G.A. Valladao, „The twenty-first century will be American”, Verso, London-New York 1996, pp. 64

• Globalisation is based on universalisation of something existing (eg. products, culture), but everything existing must have been individually created somewhere and then expanded, even globally.


Cultural foundations of MNCsCultural foundations of MNCs

• Among the biggest MNC only cultures of two originated from more than one country: Royal Dutch Shell i Unilever

• In many industries a success results from a combination of corporate traditions and national features

Moore Kevin, Amar David, „Does nationallity still matters?”, European Business Forum, Spring 2008, str. 15-16

• Cultural differences are based analysed if two extremes are considered: USA and Japan


Various models of cultural dimensions of Various models of cultural dimensions of MNCsMNCs

• Trompenaars and Hampden-Turner's: “7 Cultures of Capitalism” published in

1993 (the subsequent part of the lecture is based on this work) and restated in 1997 in a book: “Riding the Waves of Culture”

• Hofstede's 5 Cultural Dimensions • Hall’s 3 Cultural Dimensions


Some warning before startingSome warning before starting

• For each dimension that Trompenaars and Hampden-Turner identified they quoted certain national cultures as having a preference at each extreme of that particular dimension. One has to remember tough that people are individuals, and their behavior is shaped not only by their respective nationality.

• Models examining national cultures are par excellance based on generalizations and do not take into account differences between sub-cultures, social statuses or generations within the country. This is especially relevant in today's global environment, where people can be influenced by many different incentives of various origins.


Various national business cultures - Two Various national business cultures - Two ways ways ofof describing a company (MNC) describing a company (MNC)


American vision of a corporationAmerican vision of a corporation

• P. Drucker commented on the Alfred P. Sloan’s book, (Sloan had served for many years as GM CEO and was considered to be a founder of it’s strength):– to be probably the most inhuman memoir

ever written.– to be exactly as intended , showing GM

as a perfect mechanism to create profit , – neglecting even existence of such

perspectives like power game, life at work, relations to society”

(Peter F. Drucker, „Concept of the Corporation, John Day,New York, 1972, str. 305)

Robert Uberman, Korporacje międzynarodowe

National business cultures – case of Toyota National business cultures – case of Toyota vs an American Automotivevs an American Automotive

• A request to supplier: price decrease by 20 %

• The supplier’s response: we can not make it• Reply of the American Automotive: we are

changing a supplier• Toyota’s reply: we will help you to review

your processes in order to improve efficiency and eventually gain the 20% costs decrease

• Risks of both approaches(Halbe, Artur, „Professional supply management”, own materials)


Various national business cultures – Various national business cultures – analytical vs holistic approachanalytical vs holistic approach

• Value creation in a MNC is built on a wide range of elements, which shall be analysed in depth (USA)– counter staff observation list in McDonalds

• Value creation is based on relation building both within a MNC and with it’s stakeholders (Japan)– employee initiative box


The analytical approach – a management The analytical approach – a management observation checklist used to evaluate observation checklist used to evaluate performance of counter staff at Mc performance of counter staff at Mc Donald’sDonald’s

Greeting customer

Is there a smile? (how many cms wide?) Yes No

Is a greeting sincere (give an exact value in

Mcpoints)

Yes No

Is there an eye contact (for how many

seconds?)

Yes No

Taking the order

Does personel know menu well? Yes No

Did the customer have to give the order only

once?

Yes No


Source: Hampden-Turner ..., "The seven cultures of capitalism", pp 42-43

Various national business cultures – role of Various national business cultures – role of an individualan individual


Various national business cultures – Various national business cultures – duration of a relationship between an duration of a relationship between an employee and his organisationemployee and his organisation


Various national business cultures – Various national business cultures – contribution of a luck to an overall successcontribution of a luck to an overall success


Contribution of a luck to an overall success Contribution of a luck to an overall success – results of a statistical research– results of a statistical research


Source: PIMS, unpublished research

Various national business cultures – Various national business cultures – contribution of a luck to an overall successcontribution of a luck to an overall success

• Recruiting based on individual capabilities (USA and Europe) vs. Based on shared traditions and values (Japan)

• Limited-term (USA) vs. long-term (Japan) employees engagement

• Competition (USA) vs. cooperation (Japan) as a key power for business development


Various national business cultures – who Various national business cultures – who treats employees the most onerouslytreats employees the most onerously??

Robert Uberman, Multinational Corporations (MNCs)Źródło: Peggy Hollinger, „Evidence undermines Sarkozy’s populists’ mandate”, FT, May,14, 2009,

Various national business cultures – is the Various national business cultures – is the Japanese model really better than Japanese model really better than American one?American one?

• Many Japanese companies, even global ones, have suffered from an insularity and parochialism, and a hierarchical structure that discouraged innovation or input from others

Devin Stewart, „Toyota and the end of Japan”, Newsweek,March,15, 2010

• Carl Ghossn became the first non-Japanese CEO of a MNC originating from Japan (Nissan)

• Japanese economy has suffered a long lasting stagnation since mid-90s

Michiyo Nakamoto, Kate Burgess, „Dividends to reap”, FT,July,3, 2008

• In response to the 2008 crises Japanese MNCs cut their R&D spendings to the bone, while in the US even GM, already bankrupt, maintained their significant level

Harding, Robin, „Warning on fall in Japan’s R&D”, FT, 16 Mar., 2009


Japanese model Japanese model and „and „lost decades”lost decades”

• Competition fuels productivity (…) but in Japan, highly indebted firms and even uncompetitive divisions of large conglomerates have often been kept alive in the interest of stability.

• (…) corporate headquarters continue to allocate funds to underperforming units, resources are diverted that could be put to better use elsewhere and the process of creative destruction is impeded.

• In addition, regulatory barriers make it difficult for new competitors to challenge incumbents in certain sectors.

• Japan’s long-standing lifetime employment model has also contributed to a certain degree of stasis. Downsizing is viewed in a strongly negative light in practice, producing inefficient bureaucracies that lack agility. Georges Desvaux et al, „The future of Japan: Reigniting productivity and growth”, McKinsey Global Institute, Mar., 2015


Various national business cultures – what’s Various national business cultures – what’s really important for American and German really important for American and German managers?managers?

40

90

17

75

0102030405060708090

Dywidends vs.Employement

Sharehoders vsstakeholders

GermanyUSA and UK

Robert Uberman, Multinational Corporations (MNCs)Źródło: „Boards behaving badly. Germany’s flawed corporate governance”, The Economist, August 8th, 2009

Opinions’ distribution on what’s more important out of two challanges

4 Robert Uberman, Multinational Corporations (MNCs)

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