Multinational Organizations

TOPIC PAPER ON

CH: 15 MULTINATIONAL ORGANIZATIONS

CH: 15 MULTINATIONAL ORGANIZATIONS

Outline:

Multi-national organization (also known as multi-national corporations (MNCs) or trans-national corporations) are organizations "that carry out commercial activities for profit in more than one country." They may often have their headquarters based in one country, but their activities extend across international borders. MNCs are becoming more commonplace as the concept of globalization and the global economy becomes more widespread in practice. Multinational organizations developed their business internationally, they encountered many initial problems. Geert Hofstede states: "For those who work in international business, it is sometimes amazing how different people in other cultures behave. We tend to have a human instinct that 'deep inside' all people are the same - but they are not. Therefore, if we go into another country and make decisions based on how we operate in our own home country - the chances are we'll make some very bad decisions." This lack of individual multicultural understanding has led to many multinationals initiating their own proactive methods for embracing diversity and multiculturalism. There is an element of cultural differences, which affects managerial control in several ways;

(i) Culture prescribes the standard of achievement and dictates the concomitant system of rewards to a large degree. In an advanced industrial society, productive achievement is rewarded. In some traditional cultures reward is given for loyalty, devotion and contribution to the group. Thus, a system of motivation and incentive must be meaningful in terms of the particular cultural environment.

(ii) Culture affects an organization’s superior-subordinate relations. Some cultures are prone to producing inter-personal relationships characterized by distance, distrust, and hostility; while others are more conducive to group-oriented, collaborative,...