Management MCO101 – Unit 3 – Organisation, Globalisation and the Resulting Environments

Globalisation


One can be sure that virtually every one of the 2822 academic papers on globalisation written in 1998 included its own definition, as would each of the 589 new books on the subject published in that year.

Many see it as a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows.

However, one can also point to a rapid increase in cross-border social, cultural and technological exchange as part of the phenomenon of globalisation.

The sociologist, Anthony Giddens, defines globalisation as a decoupling of space and time, emphasizing that with instantaneous communications, knowledge and culture can be shared around the world simultaneously. We become as the Media Theorist Marshall McLuhan suggested – a global village.

When did globalisation begin?

There is no agreed starting point, but understanding of globalisation is helped by considering the following.

The first great expansion of European capitalism took place in the 16th century, following the first circumnavigation of the earth in 1519 to 1521.

There was a big expansion in world trade and investment in the late nineteenth century. This was brought to a halt by the First World War and the bout of anti-free trade protectionism that led to the Great Depression in 1930. Some see this period as an interruption to the process of globalisation commenced in the late 19th century.

A sense that the world was united was generated by the establishment of the International Date Line and world time zones, together with the near global adoption of the Gregorian calendar between 1875 and 1925. During that period, international standards were also agreed for telegraphy and signaling.

The end of the Second World War brought another great expansion of capitalism with the development of multinational companies interested in producing and selling in the domestic markets of nations around the world. The emancipation of colonies created a new world order. Air travel and the development of international communications enhanced the progress of international business.

Globalization according to economy, teachnology, political, and personal

Measuring Globalization: Globalization according to economy, teachnology, political, and personal

Randolph Kluver and Wayne Fu have published a ranking of most culturally globalised countries. According to this study, Singapore and Switzerland are the most culturally globalised countries, while the Philippines and Pakistan are the least. The authors cite official multilinguistic policy and per capita income as key drivers of globalisation.

One clear pattern that emerges from this ranking is that the globalization of culture may have a significant linguistic component. Three of the top five nations (Singapore, Switzerland, and Canada) have official bilingual policies. English-language permeation also tie into a country’s capacity to absorb international cultural products. Seven of the top 20 nations in this index (United States , United Kingdom, Canada, Australia, Ireland, Singapore, and Israel) are among the top 10 English-speaking countries in the world.

However, when we consider the bottom 10 countries (Peru, Romania, Morocco, Thailand, Turkey, Philippines, Egypt, Indonesia, China, and Pakistan), we see that multilingual nations are not guaranteed a high degree of cultural globalization: The Philippines and Pakistan—two countries where English is widespread—still rank near the bottom. The biggest barrier to cultural globalization seems to be poverty, as all of these countries have a per capita gross domestic product of under $8,000, and 4 of the 10 have a literacy rate of less than 60 percent. Also, some countries, notably China and Indonesia , have government policies that restrict the import of foreign books and journals. Poverty, illiteracy, and lack of social openness all are associated with a lack of cultural globalization.

Effects of Globalization on the Poor a paper by Ryan Pitylak at the University of Texas, Austin here

The fall of the Berlin Wall and the collapse of the Soviet Union ended the cold war between the forces of capitalism and socialism with capitalism triumphant. The development of the internet made possible the organisation of business on a global scale with greater facility than ever before.

An excellent paper exploring this, and other issues relating to globalisation, is written by Mauro Guillen, at The Wharton School and Department of Sociology at the University of Pennsylvania The paper, Is Globalization Civilizing, Destructive Or Feeble? A Critique Of Five Key Debates In The Social-Science Literature can be downloaded here

A Dutch academic who maintains a good website on globalisation.

An Environment

The planet earth, and all it contains is the human environment. We hear so much about the environment, and the damage we have done and are doing to it. Large-scale and global environmental hazards to human health include climate change, stratospheric ozone depletion, loss of biodiversity, changes in hydrological systems and the supplies of freshwater, land degradation and stresses on food-producing systems. Industry and business have played a large part in this problem, as the by-product of production has often been greenhouse gasses and pollutants.

Thinking about this also brings an appreciation of the complexity of the systems upon which we depend. There is a multitude of interlocking factors – each with relative strengths and influence – that make it so. This is the environment of the natural world, the complex whole that which surrounds us all everyday.

But there are various ‘environments’ – social, business, developmental – in each case it refers to external factors that can sustain or abate development and growth.

Over the course of human history, migrating and settling people, families, communities have had to preoccupy themselves with surviving the impact of continuous environmental change. Facing these challenges, they have themselves changed, adapted, and developed. They came to realise and understand how to grow crops, they came to realise and understand how to build settlements, towns and cities, they developed economies. Similarly, each individual human being – as they develop from babies to adults – learn to respond to external stimuli, they realise and begin to use language, they learn to coordinate their bodily movements, they do all this to cope with and respond to changes in their physical and social and mental environments. The theory of the psychologist B.F. Skinner is based upon the idea that learning is a function of change in overt – that is observable – behavior. Other definitions include:

“a persisting change in human performance or performance potential . . . (brought) about as a result of the learner’s interaction with the environment” (Driscoll, 1994, pp. 8-9).

“the relatively permanent change in a person’s knowledge or behavior due to experience” (Mayer, 1982, p. 1040).

“an enduring change in behavior, or in the capacity to behave in a given fashion, which results from practice or other forms of experience” (Shuell, 1986, p. 412).

Peter Senge in The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations “the task of making change happen requires businesspeople to change the way they think about organizations: “We need to think less like managers and more like biologists.” He is stresses the importance of thinking of the organization as a living organism, sensitive and reactive to external forces and pressures.

Some change is within limits predictable, night into day, season into season., that people need clean drinking water, shelter and so forth. So much so that humans learned to prepare and be ready for these changes. They learned to control the natural environment, they developed lights to combat the dark, heating systems to tackle cold and air-conditioners to beat the heat. Pots and methods of preservation and cooking were developed. Media developed to mitigate the divides of time and space as did transportation methods and infrastructures. But things still happened which were unexpected, and so today we have floods, tsunamis, earthquakes and technical breakdowns for which we can only partially plan.

Obviously having staff, assets, offices, resources and so forth are crucial elements to a firm’s effort to produce and make service offerings. But if we need to sell to a world beyond, that is beyond our office or factory walls or even beyond our borders, we need to know about that world beyond, we need to relate our products and services to that world beyond, link to that world beyond, especially that distributed idea which we call ‘the market’ and to that particular social group called customers.

They are, or should be the raison d’être for firms making things or offering services in the first place. However, customers, which are not typically an integral part of the firm, represent merely one part of a firm’s experience of the outside, external world of influences. even when one speaks of customer relationship management (CRM) this hardly refers to firms ‘managing’ customers. Similarly, firms may influence customers via advertising and marketing, but they cannot control them, plan for how they may react (especially to new product and service offerings), they cannot organize them although they may sort existing and prospective customers in to ‘segments‘, and they cannot lead them although sales will try to persuade as if their life depended upon it…

In some industry sectors the external conditions which help and mitigate growth and can start to be quite complex. They can include fundamental changes in technology and innovation, specialisation, internationalisation of service processes, and also increasing integration of emerging economies are changing the global economic conditions, resulting legislation at trans-national, national, regional and local levels.

Change

‘All is change; all yields its place and goes.’ Euripedes
‘All is change; only change is changeless’ Heraclitus

Change is usual. In Buddhism they say: ‘all is change’. Change is so pervasive in our lives that it almost defeats description and analysis. Everything changes. This implies that things as they are are always changing and that the most basic constituent of existence is change Things evolve, or dissipate, even if there are periods when things seem to remain in equilibrium. Companies absorb money and ideas; they are fulled by money and ideas. They are sustained by money and ideas. If a person doesn’t proactively change their environment in concordance with their will then change will happen to them. They change regardless if they consciously think they do or not. Similarly, if a company doesn’t react to change, and especially if they are successful, then someone will copy them or improve upon their product or service, or someone will undercut the price. They will steal their market. The Japanese have a term called “kaizen,” which means continual improvement. It is a never-ending quest to do better. And you do better by changing. Standing still allows your competitors to get ahead of you.

In the factory workers’ case, productivity rose because they were being observed. This is known as the Hawthorne Effect (named after the factory where the research took place). It means that the mere observation of a group tends to change it.

The initial premise is that there are four kinds of change in organisations:

More on the nature of change here.

Like many other concepts in management theory, the idea of change can be applied to your own person as it is to an entire firm. Observe the chart below:

At one time, it was assumed in the physical sciences that if the behavior observed in a system cannot be predicted, the problem is due to lack of fine-grained information, so that a sufficiently detailed investigation would eventually result in a deterministic theory (“If you knew exactly all the forces acting on the dice, you would be able to predict which number comes up”).

Scarcity

Anything that is scarce is valuable. Firms can also be affected by scarcity. Scarce customers means more competition between you and those others who produce the same thing. Likewise, if a raw material such as wood is scarce and you have a supply you can set your own price this is a seller’s market.

In economics, scarcity is the problem of infinite human needs and wants, in a world of finite resources. In other words, society does not have sufficient productive resources to fulfill those wants and needs. Lack of available talent in the skills market can impact the firm, as can the lack of raw materials.

Managers can manage internal processes, but things, people and events that exist and happen outside the building, out with the staff, are less controllable and so are less manageable. This affects all management functions, planning, organising, controlling and leading.

With emerging economies accounting for over half of the total world GDP and consumed over half of the world’s energy and four-fifth of the growth in oil demand pushing fuel prices. Sound environmental management can lead to reduced risk to the firm, and that this risk reduction is valued by financial markets.

To speak seriously of change we need to look beyond individual examples, and look instead at change as a process – one with its own dynamics. Change does not simply describe the differences between one state of affairs and another, but is the means by which settled relationships are undermined and replaced by new configurations. Instead of seeing how change is an ever-present feature of our past, and therefore our future, we can look at the pace of change itself and see that change – technological, political and social – is perpetually accelerating. And this acceleration has effects all of its own, independent of the actual changes described. Simply put, it makes change the normal state of affairs, against which we search for stability, or at least for stable narratives. But as the process of change accelerates, the future becomes less certain, and we turn our attention towards common moments and common threats. Since all organisations are open systems—even Trappist monasteries—sooner or later the right trigger stimulus will come along and the change will occur.

Uncertainty

Over the course of human history, people, families, communities have had to preoccupy themselves with surviving the impact of continuous environmental change. Some change is within limits predictable, night into day, season into season. So much so that humans learned to prepare and be ready for these changes. But things still happened which were unexpected, and so today we have floods, tsunamis, earthquakes for which we can only partially plan.

The lack of certainty, A state of having limited knowledge where it is impossible to exactly describe existing state or future outcome, more than one possible outcome. At one time, it was assumed in the physical sciences that if the behavior observed in a system cannot be predicted, the problem is due to lack of fine-grained information, so that a sufficiently detailed investigation would eventually result in a deterministic theory (“If you knew exactly all the forces acting on the dice, you would be able to predict which number comes up”). If the aim of management is to make the most of a given set of resources, then it is a process skill practices in the dynamic setting of change and environmental elements which are partially deterministic and interdeterministic.

Punctuated equilibrium

Punctuated equilibrium is a theory of evolutionary biology which states that most sexually reproducing populations experience little change for most of their geological history, and that when phenotypic evolution does occur, it is localized in rare, rapid events of branching speciation (called cladogenesis). In general, the original formulation of theory has been used to explain patterns of change in groups and organizations where periods of “stasis” are punctuated by brief and intense periods of “radical” change.

The central proposition of punctuated equilibrium embodies three concepts: stasis, punctuation and dominant relative frequency (Eldridge and Gould, 1972). Stasis refers to a long period of relatively unchanged form; punctuation is radical change over a short duration; and dominant relative frequency is the rate these events occur in a particular situation. Punctuated equilibrium was developed as an alternative to phyletic gradualism, which stresses consistent, cumulative changes to species.
Within the context of organizational behavior, the punctuated equilibrium model consists of deep structures, equilibrium periods and revolutionary periods. Deep structure is “the set of fundamental ‘choices’ a system has made of (1) the basic parts into which its units will be organized and (2) the basic activity patterns that will maintain its existence.” (Gersick, 1991, p 14) Equilibrium periods are characterized by the maintenance of organizational structures and activity patterns, where small incremental adjustments are made to adjust for environmental changes without affecting the deep structure. Revolutionary periods occur due to significant changes in the environment that lead to wholesale upheaval where a system’s deep structure comes apart, leaving it in disarray until the period ends and choices are made around which a new structure forms. (Gersick, 1991)

Punctuated Equilibrium

Punctuated Equilibrium

One of the key punctuations noted in the research is major environmental change caused by technological innovation (Romanelli and Tushman, 1994) where a technological discontinuity triggers a period of instability, which is closed by the emergence of a dominant design or business paradigm (Anderson and Tushman, 1990). The introduction of a disruptive, or competence destroying, IT innovation (Tushman and Anderson, 1986; Lyytinnen and Rose, 2003) can be considered a punctuation that interrupts the existing stasis, destroying the existing deep structure. It should be noted that revolutionary outcomes, based on interactions of system’s historical resources with current events, are not predictable and they may or may not leave a system better off (Gersick 1991).

While its use in Information Systems (IS) research has increased recently, punctuated equilibrium is not a unanimously accepted theoretic framework. Within the field of biology, its chief opponent is Richard Dawkins, who is often viewed as the chief antagonist of the late Stephen Jay Gould, one of punctuated equilibrium’s originators. Within the field of organizational behavior, Lichtenstein (1995) argued that that self-organization theory could be a more acceptable framework with greater explanatory power.

Punctuated Equilibrium

Punctuated Equilibrium

references:

Driscoll, M. P. (1994). Psychology of Learning for Instruction. Boston: Allyn and Bacon.

Eldredge, N. and Gould, S. (1972) ‘Punctuated Equilibria: An Alternative to Phyletic Gradualism’, in T.J. Schopf (Ed.), Models in Paleobiology San Francisco: Freeman, Cooper & Co. pp. 82-115

Gersick, C.J.G. (1991) ‘Revolutionary Change Theories: A Multi-Level Exploration of the Punctuated Equilibrium Paradigm’, Academy of Management Review, 16(1), 10-36.

Hannan, M.T. and Freeman, J. (1977) ‘The Population Ecology of Organizations’ American Journal of Sociology, 82(5), 929-964.

Lichtenstein, B. M. (1995) ‘Evolution or Transformation: A Critique and Alternative to Punctuated Equilibrium’ Dorothy P. Moore, ed. Academy of Management Best Papers Proceedings, Madison, WI: Omnipress, pp.291–295.

Mayer, R.E. (1982). ‘Learning’ In H.E. Mitzel (Ed.), Encyclopedia of Educational Research New York: Free Press. pp.1040-1058.

Romanelli, E. and Tushman, M. (1994) Organizational Transformation as Punctuated Equilibrium: An Empirical Test, Academy of Management Journal, 37(5), pp.1141-1166.

Shuell, T.J. (1986). Cognitive conceptions of learning. Review of Educational Research, 56, pp.411-436.

Tushman, M. and Anderson, P. (1986) Technological Discontinuities and Organizational Environments, Administrative Science Quarterly, 31(3), pp.439-465.

Tushman, M. and Romanelli, E. (1985) Organizational Evolution: A Metamorphosis Model of Convergence and Reorientation, in L.L. Cummings and B.M. Staw (Eds.), Research in Organizational Behavior, Vol 7, Greenwich, CT: JAI Press. Pp. 171-222

To view slides full page or to download them click HERE.

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