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Globalization and its impact on global managers' decision processes

Article  in  Human Resource Development International · September 2009

DOI: 10.1080/13678860903135730 · Source: OAI

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Human Resource Development International
Vol. 12, No. 4, September 2009, 353–370

INVITED CONTRIBUTION
Globalization and its impact on global managers’ decision processes
Michael Harveya*, Ron Fisherb, Ruth McPhailb and Miriam Moellera
a
University of Mississippi, USA; bGriffith University, Australia
(Received 8 January 2009; final version received 28 July 2009)

Globalization of business can have a profound impact on the decision-making

processes of managers responsible for making these complex interrelated
decisions. This paper explores the global decision-making processes of global
managers. The first element examined is the multiple intelligences that global
managers need to be able to address the issues associated with global decisions.
These eight IQs are considered critical elements in the decision-making
capabilities of global managers. Following this discussion, the composition of
global groups and their impact on the decision-making process is explored to
determine how the composition of the group inhibits/supports the global
manager. The next step in the decision-making process discussed in the paper is
that of the nature of the task(s). The type of task can have a direct impact on the
effectiveness as well as the efficiency of global manager’s decision-making. The
crux of the issue is that a global orientation to decision-making is poised as being
significantly different from decision processes use by managers in a multinational
context.
Keywords: multiple IQs; impact of groups on global decision-makers; type of task
and impact on global decision-making

Introduction
‘The World is Flat!’ This perspective of how to view the competitive, global
landscape has become a strategic mantra for many global managers of the twenty-
first century (Friedman 2005). The basic logic of the Friedman’s (2005) book is that
the world of business has been impacted directly by nine events that have occurred
over the past several decades. These changes in the world necessitate a new
competitive orientation by global managers to remain competitive (see Figure 1).
While global decision-makers must/should retain a certain degree of flexibility in
their decision-making processes, organizations still lack concrete insight into the
quality of global decisions made from an individual’s as well as group’s perspective
and the means to evaluate important decision-making responses related to an
organization’s performance. If this is the case, how should global managers’ decision
processes be evaluated and consequently modified to compete effectively in a flat,
global competitive arena?

*Corresponding author. Email: mharvey@bus.olemiss.edu

ISSN 1367-8868 print/ISSN 1469-8374 online

Ó 2009 Taylor & Francis
DOI: 10.1080/13678860903135730
http://www.informaworld.com
354 M. Harvey et al.

Figure 1. Classification of ‘global flatteners’ and strategic responses (adapted from Harvey
and Novicevic 2006).

The need for new HR learning approaches that are continuous during one’s
career appears to be the key to addressing the complexity of the global marketplace.
Managers are going to be required to modify their strategic decision-making into a
making a series of processes to make global strategic decisions. Strategic decisions
have been described as those that are important in terms of the ‘actions taken,
resources committed or precedents being set’ (Eisenhardt and Zbaracki 1992, 17).
The process of strategic decision-making has become a mix of stepwise rationality
and politics, where power determines what decisions are made. In a model where
choices involve power, rationality is bounded and chance plays an important part in
decision outcomes. However, intuition and emotion are often intertwined with the
process (Patton 2003; Spender 2003). Recognizing the limits of traditional
approaches, we suggest that there is a need to look beyond the model of
organizational goals and rational decision-making and to incorporate those who
encompass the complexity and diversity of organizational life. In addition to the
cognitive and political elements of decision-making, the model should consider issues
such as intuition, emotion and social factors (Eisenhardt and Zbaracki 1992).
Developing these skills in global managers is a unique challenge to HRM in global
organizations and one that needs to be developmental (i.e., continuous) in nature.
 Human Resource Development International 355

The organization’s willingness to commit resources to this long-range management

skill development is indispensable for managers to develop a global mindset.
Global managers’ decision-making processes should be aligned with the strategy
that a global organization pursues. In a global context, managerial decision-making
is particularly important and complex owing to the spatial and cultural distance
between home and host countries (Roth 1992). For global business, managerial
decision-making is complicated further by the need to ensure that decisions are not
just implemented partially or watered down when implemented globally. Con-
sistency of implementation is essential. A major challenge is providing consistent
management globally, while still allowing sufficient flexibility at local levels to enable
businesses to function effectively. A change in strategic focus from multinational to
global poses significant challenges for global human resource management (Harvey,
Speier and Novicevic 1999). Human resource development efforts should be directed
at instilling and accordingly evaluating the skills needed to effectively adapt decision-
making processes to global markets and competitors.
In a global context, managerial decision-making contains three defining
characteristics that underpin the process: willingness to take risks; openness of
decision-making; and consensus of decisions (Roth 1992). The importance of
understanding managerial decision-making characteristics is that they are linked to
the strategic choices that businesses make, which in turn is reflected in performance.
Managerial decision-making characteristics, through their links with performance,
may provide firm-specific competitive advantage by creating a capability to
implement a particular strategy (Roth 1992, 770). Risk-taking is a part of the
decision processes for all organizations engaged in international business. However,
higher levels of risk are associated with global business because of greater task
uncertainty occurring across global markets. Higher levels of risk add to the
complexity of managerial decision-making in a global context. Managers must
develop a means for addressing the high levels of stress associated with making
decisions in a global context as well as developing the agility needed to make
decisions that are locally appropriate but in addition or consistent with decisions
being made in the global marketplace.
The paper proceeds as follows: first, this paper utilizes reference point theory
(RPT) as a foundation for examining global decision-making by introducing it as a
theoretical foundation for better understanding how global managers make complex
global decisions. Second, a model of global decision-making is introduced that
applies the concept of multiple IQs as the basis for recognizing the key knowledge
points that global managers will need to be successful in the global marketplace.
Third, we will discuss group-level decision-making and its impact on global
managers. Fourth, the importance of considering the task environment and other
characteristics in the decision-making process is addressed. Finally, the paper
concludes by summarizing/restating the importance of the collective consideration of
dimensions of global decision-making that would allow for a solid process/model by
which decisions could be instilled and evaluated in the light of the profound impact
globalization has and will have on global decision-making processes.

Reference point theory

Reference point theory (RPT) is an attempt to determine ex ante the strategic
reference points of global managers as well as certain ‘others’ that influence the
356 M. Harvey et al.

reference point of global managers (Fiegenbaum, Hart, and Schendel 1996). The
dynamic reference points used by global managers provide assistance in establishing
the risk/return ratio for each decision in a global context. The assessment of the
conduciveness to adjust one’s conceptual decision-making framework when entering
other environments may be based on past, present and future experiences of the
global manager (e.g. each decision has a temporal dimension to it and may remain a
constant for all decisions made by managers).
Two primary reference indices for constructing risk assessments made on an
ongoing basis in an organization are internal (i.e. group, individual managers) as
well as external (i.e. differences in the macro environments). These may be perceived
as the various potential referent points that may change over a time continuum of
past, present and future. Therefore, global decision-makers may use this reference
point perspective to assess the various points-of-view related to strategic decisions at
different points in time relative to each macro environment (Hopfensitz and Winden
2008; Cohen, Etner, and Jeleva 2008). Policies may be directed at modifying the
global decision-making process as global managers move from one environment (i.e.
both macro and organizational) to another over time.
There are potentially three models of risk-taking decision behaviour of global
managers relative to addressing the adaptive decision-making skills of each glo-
bal manager. First, the global decision-maker may assume the risk adverse when
making any decisions that pertain to strategic decisions. The global managers’
propensity to address issues associate with making the adjustment in the
organization’s strategic choices is reduced if the return/reward is insufficient to
stimulate a willingness to undertake such risks. Global managers, on the other
hand, may make decisions that maximize utility and, therefore, have a positive
slope to the risk-taking curve (Schoemaker 1982). Therefore, a segment of global
managers, at the same time, may be risk-takers (i.e. the rewards outweigh the
cost/consequences).
It has been hypothesized that global decision-makers are able to increase
returns and reduce risk simultaneously by selecting an appropriate reference-point
for their strategic decision. In addition, making long-run organizational decisions
in an information vacuum or that are not tied to some decision context (as
explicit or implicit reference points) would be unrealistic and lead to suboptimal
global decision-making. When global managers make decisions that are new in an
unfamiliar decision context (e.g. global) then they need to develop a new set of
reference points on which to base their strategic decisions (Miller and Ireland
2005).
There is a third stream of RPT research which speculates that global decision-
makers make decisions that are clearly above a reference point and at the same
time make other decisions that are below the same reference point. The
conclusion that can be drawn from this is that global managers are both
risk-averse and risk-takers, depending on whether the decision-makers perceive
themselves to be in a domain of gains or losses relative to changing their concept
of social time (Fiegenbaum, Hart, and Schendel 1996). It has been argued that
the top management team (TMT) level, global decision-makers become internal
reference points in a specific organizational context for issues such as visualizing
the concept of time (Kahneman and Tversky 1979). The question becomes how
and which reference point global managers will use when they make decisions
relative to global strategic choices.
 Human Resource Development International 357

Developing a global decision-making model for global managers

In an effort to develop a cadre of global managers, human resource management
must integrate into the global managers’ training how to learn the nuisances of
cultural novelty and the need to continually adjust to overseas markets. This requires
the assessment of the decision-making skills of global managers and the development
of a programme to strengthen the global decision-making skills of the managers in
question. HRM can initially start this assessment of decision-making skills by using
a set of multiple IQs as indicators of the potentially diverse abilities of global
decision-makers (see Figure 2). The multiple IQ sets can be grouped into three
categories: analytical, practices and creative intelligence, as suggested by the triarchic
theory of human intelligence (Sternberg 1985, 1996).

(1) Analytical intelligence involves the planning, implementation and evaluation

of problem-solving processes and knowledge acquisition, which include
cognitive intelligence – the traditional measure of intellectual ability, i.e. the
ability to reason, learn and think analytically (Binet and Simon 1916;
Wechsler 1950) – and emotional intelligence – the ability to use one’s own
effective state to tap the effective state of others to accomplish objectives, i.e.
the ability to display an appropriate emotional state and to respond to
others’ emotions in an effective manner (Cooper and Sawaf 1997; Goleman
1995).
(2) Creative intelligence is the individual ability to develop innovative solutions
to new problems encountered in novel environments. This involves intuitive
IQ – the ability to have quick insights and without processing information
actively or formally (i.e. being ‘street smart’) – and creative IQ – the ability to
diverge/innovate in thinking to create fresh and novel ideas and solutions to
problems. Creative intelligence is the ability to address problems with insight

Figure 2. Global decision-making model.

358 M. Harvey et al.

and resourcefulness and to find unique solutions (Anderson 2000; Weick

1998).
(3) Practical intelligence is individual tacit knowledge that draws on common
sense, intuition and ‘street-smart’ knowledge to adapt to an environment or
to shape the environment to the problem at hand. Four separate IQs are
included in this category:
. Political IQ – the ability of the global manager to use the formal and
informal power in the organization to accomplish his/her objectives. The
ability to know how to use power prudently, judiciously and artfully in the
organization.
. Social/cultural IQ – the extent to which one is socialized adequately in a
society, an organization or a group. Recognition and understanding of
roles, norms, routines and taboos in various configurations (e.g. groups,
organizations).
. Network IQ – the ability to accomplish tasks/goals when working with
unique organizational subunits. Accomplishing the goals of the global
manager and/or organization by effectively understanding and managing
inter/intra-organizational relations.
. Organizational IQ – the global manager that has a detailed and accurate
understanding/insight as to how the organization operates both function-
ally and the time that is needed to accomplish goals. In-depth knowledge of
how to get ‘things’ done in an organization (Davenport and Prusak 1998;
Sternberg and Smith 1985; Wagner and Sternberg 1985).

Each of these IQs can become an asset of the global manager and can become an
integral part of an ongoing development programme established by HRM. This
long-range development programme established by HRM can provide the global
manager with a foundation for making complex global decisions that one may have
little or no experience in making. The enormity of global decision-making can be a
daunting task for any global manager but becomes of more concern to the newly
appointed global manager. Therefore, it is imperative to examine the individual IQs
in more detail and to test global managers for each of the IQs to gain insights into
the probability of quality global decision-making by these managers. The seven IQs
that are needed to be an effective global decision-maker are discussed below.

Cognitive intelligence
Given the sheer difficulty associated with managing global organizations, it would
appear that a meaningful reference point for selecting global decision-making is the
cognitively superior global managers. Cognitive IQ (i.e. the ‘g’ factor of general
intelligence) equates to the intellectual capabilities of global managers and is a
critical element in global decision-making (Sternberg, O’Hara and Lubart 1997;
Sternberg and Kaufman 1998). The components of intelligence abilities are:

(1) Higher levels of abstract reasoning and focusing on developing problem

solving processes
(2) The ability to learn beyond the capabilities of others in sheer volume and
time necessary to learn
(3) The global managers ability to learn what is valued by individual societies
 Human Resource Development International 359

(4) The ability to adapt to and meet the demands of the unique host country
environments effectively (Sternberg 1997a).

A common denominator in the study of general intelligence over the last 150 years
has been the ability of the individual to adapt to changing and progressively complex
problem environments, which is a hallmark of managing in a global context
(Barkow, Cosmides and Toobey 1992; Buss 1995). The complexity of global
decision-making would underscore the need to select global managers with high
cognitive IQs.

Intuitive intelligence
It might be argued that nowhere in business arena is intuitive IQ more important
than in the global context. Global managers, who have to address multiple sets of
global environmental contexts while attempting to balance the organizational
anomalies found between countries, almost need to have this ‘sixth sense’ (Cunha,
Cunha and Kamoche 1999; Khatri and Ng 2000). The benefits of using the
intuition of global managers to manage subsidiaries in emerging markets are:

(1) An expedited decision-making process

(2) Qualitative improvement of decisions aided by tacit, informal knowledge that
is not generic to the organization
(3) Facilitated personal development by building personal self-efficacy of global
managers as decision-makers (i.e. having insights and confidence that others
do not have when making decisions in complex environments).

The intuitive IQ of the global manager provides experiential insights into specific
local decision processes or routines. The insights that are provided by the global
manager’s intuition make it difficult for competitors to replicate as the thought
processes being used to develop strategies in emerging markets. In addition to the
individual global manager’s ability to make effective decisions in a global context,
the impact of groups on the quality of global decisions cannot be underestimated.
The group becomes a microcosm of the organization as a whole but can have a
direct impact on the decision-making of global managers. Therefore, it would
appear imperative to examine groups in a global decision-making context.

Emotional intelligence
One IQ that appears essential for global managers is that of emotional maturity. The
importance of emotional intelligence increases with the complexity of the task/
assignment, the novelty of the task environment and the level of authority in an
organization that the global manager is to occupy. TMT members’ authority and
technical skills become less important than emotional control when fulfilling the
expectations of the global manager (Goleman 1998). In particular, the ability to
control effects in the face of competing values of the host/home country as well as
within becomes critical in order for the manager to assert authority. The emotional
stability of global managers in the global environment which may contain significant
differences in a socio-cultural context is immense. Having and gaining emotional
stability is even more important if managers have little or no past experiences with
360 M. Harvey et al.

the new cultural context. In sum, emotional stability and maturity become an
important enabler of global managers when making complex global decisions.
Therefore, emotional stability and maturity becomes an important enabler of global
managers when making complex global decisions.
Measures of emotional maturity include such things as the global manager
having well-developed, self-regulating self-awareness that is derived from emotional
stability; an understanding of and empathy for others; and the possession of a highly
developed set of social skills (Goleman 1998). These qualities are necessary to aid
global managers in addressing the complexities of managing cross-culturally in a
global context and, therefore, are an integral enabler for employing one’s cognitive
IQ to solve global managerial problems (Cooper and Sawaf 1997; Dienstbier 1989).
Therefore, mental toughness can be viewed as the emotional ‘glue’ of analytical
intelligence. By combining both cognitive and emotional IQs into the analytical
intelligence of managers, the ability to emotionally handle risk, discord and lack of
cohesiveness is enhanced.

Network intelligence
A global manager’s understanding of how the entire global organizations works as a
whole becomes the focus of network intelligence. However, with network IQ one
attempts to ascertain the abilities of global manager to work effectively in an intra- as
well as an inter-organizational context. Global networks are visualized as a set of
organizational informal as well as formal amalgamated business relationships among
collective actors in the global network (Anderson, Hakansson, and Johanson 1994).
From a social exchange perspective of global business networks, the importance of the
informal nature of network relationships among individuals in different organizations
becomes central as the network activities evolve over time (Granovetter 1985). The
quality of these personal relationships (i.e. the level of mutuality) and the scope of
relationships (i.e. number of professional/business ties) in the emerging country can be
used as a quasi-indicator of a global manager’s network IQ.

Political intelligence
Internal politics found in complex global organizations is derived by attempts of
organization members to manage, create or modify shared meaning in a social
context of the global organization (Sederberg 1984). Organizations are often thought
be to complex social political arenas, where competing interest groups vie for scarce
resources through the exercising of power and influence (Fandt and Ferris 1990;
Ferris et al. 2000). To ‘engineer’ social/economic situations conducive to outcomes
that favour the initiator of the act requires political intelligence to accomplish
socially complex tasks.
The level of ambiguity primarily influences the amount of organizational politics
and the level of type of accountability that is found in global organizations. As
ambiguity increases in a global organization, global managers will resort to
exercising their individual power to gain political influence (Ferris and Judge 1991).
Managers in these ambiguous global environments will attempt to put a ‘spin’ on the
events taking place in the organization to gain disproportionate scarce resources and
create a ‘shared’ meaning of an activity or decision. Therefore, a global manager’s
political IQ is his/her ability to gain resources though exercising political power in
 Human Resource Development International 361

situations was ambiguity and accountability levels allow for a shaping (i.e. ‘spin’) of
attitudes and images among those being influenced in the global organization. This is
one of the more difficult IQs to be developed by HRM due to the personal nature of
these skills; an argument could be made that you either have this IQ or you do not.

Cultural/social intelligence
Cultural IQ is derived from a global manager’s knowledge of a particular culture and
can be assessed by examining the global manager’s knowledge of:

(1) The material aspects of a culture (i.e. technology, economic development,

available level of standard-of-living) of a society
(2) The social institutions found in a culture – educational, political and religious
(3) The aesthetic values in a culture
(4) The official and unofficial languages used in the culture
(5) The cultural beliefs or philosophy within the culture as to the role/value of
‘man’ in the society.

Having a high social/cultural IQ allows global managers to have insights into the
foreign country’s culture context and how to ‘translate’ or integrate the specific cues
of that culture with the general frame in the home country of the headquarters of the
organization. The cultural and social discrepancy between two countries can
increases the stress experienced by global managers responsible for the foreign
culture market, resulting in difficulties to manage effectively in the foreign culture
(Searle and Ward 1990; Ward and Chang 1997; Ward and Kennedy 1993).

Organizational intelligence
A global managers’ organizational IQ has as its foundation the global manager’s
knowledge of how ‘things’ officially are accomplished in the organization. This
knowledge refers to having a basic understanding of the policies, procedures,
planning processes, auditing formats and any other types of formalized prescribed
activities/events that take place in the organization. Rather than reflecting an
understanding of the informal process discussed under social/cultural IQ, the
organizational intelligence is the corollary to that notion by reflecting an
understanding of the official formal ‘rules’ of management in foreign subsidiaries.
The rationale for inclusion of organizational IQ into the composite of IQs for
selecting global managers is that the ‘fit’ and ‘flexibility’ issues between
headquarters and subsidiaries and among subsidiaries in global organizations
involve a complex web of policies and processes designed to coordinate resources
and activities in the various organizational locations (Milliman, Von Glinow, and
Nathan 1991).

Innovative intelligence
The ability of global managers to think in abstract terms, to develop business ideas
and concepts that have not been conceptualized by others in the global business
context, constitutes business innovation. The embodiment of ideas/concepts into
new processes, products, services and technologies is a valuable outcome of
362 M. Harvey et al.

innovation. A global manager’s innovative IQ is composed of six interrelated

components:

(1) Basic knowledge – innovative creativity is generally directed by one’s

knowledge of a topic or specific area of expertise.
(2) The intellectual ability to synthesize connections, reframe complex problems
and assess the value or potential of creative innovative actions (Sternberg
1997a, 1997b, 1997c).
(3) Inventing thinking/learning style – innovative managers have a preference for
thinking in novel ways that they have constructed in idiosyncratic ways
(Andersen 2000).
(4) Motivation to focus on the task/problem and its solution – ideas in and of
themselves have value and are rewarding.
(5) Risk-taking attitude – creative innovativeness frequently conflicts with
present convention and therefore, the individual has to have the willingness
to ‘stand alone’.
(6) Dependence on supportive environment – for creative innovation to occur, the
environment has to be supportive of challenging to the status quo to promote
change and accept cognitive diversity (Beir 1995; Stein 1991).

Determining the innovative IQ of global managers is difficult to measure initially,

but over time, global managers who exhibit higher than average innovativeness can
be recognized for their continuing efforts in an organization. The problem may be
that these global managers are prone to challenge the conventional management
wisdom given the ‘newness’ of managing in a global context. These challenges of
conventional wisdom can create problems for the global manager with TMT or
managers in the home country. HRM should be willing to intervene in certain
situations to come to the ‘aid’ of global managers. In addition, the global managers
should be made aware of the potential pitfalls of having a high innovative IQ.

Group-level decision-making and its impact on global managers

Group decision-making has been studied for a number of years relative to the
resulting decision styles based upon group composition and longevity (e.g. Rowe and
Mason 1987). Although the thought processes involved in decision-making are
difficult to observe, Rowe and Mason’s (1987) decision-style model can be applied to
groups. They argue that most groups are predisposed to or maintain specific
preferences in how they organize information presented serially, spatially or
behaviourally. Furthermore, groups’ decisions or subsequent actions are based on
how they think about and visualize their environment. Groups’ decision style reflects
their predisposition toward personal objectives, situation avoidance, likes and
dislikes, communication preferences and how they approach problems as a group
(Arrow and McGrath 1993, 1995).
Rowe and Mason’s (1987) model classifies groups’ decision style into four
categories which is related to the formality that is derived from the longevity/tenure
of a group, with styles being differentiated along two dimensions: cognitive
complexity and value orientation. Cognitive complexity looks at a group’s ability
to handle an influx of diverse information. Groups’ acceptance of cognitive
complexity within decision-making process is related directly to the amount of
 Human Resource Development International 363

information needed to make a decision. In other words, some groups require higher
levels of specificity or detailed information to make decisions. Others have a higher
tolerance for ambiguity and are more comfortable making decisions with limited
information (Rowe and Mason 1987), thus they have a higher tolerance for cognitive
complexity.
A group decision-maker’s value orientation represents the second dimension of
the decision style model. Rowe and Mason (1987) suggest that a more objective
group gravitates towards the task or technical component of the decision. In
contrast, a more subjective group focuses on the social or stakeholder impact of the
decision. When combined, the cognitive complexity dimension and the value
orientation dimension can be used to create a decision style typology for global
groups that includes four decision-styles that are based to a degree on the longevity
of the group: directive; analytical; conceptual; and behavioural (Rowe and
Boulgarides 1992).

(1) Directive groups exhibit a low tolerance for ambiguity and a heightened need
for structure that typically comes with longevity of the group (i.e.
development of standard operating procedures to address routine and/or
ongoing operating decisions). These groups tend to be very logical and
efficient in their decision-making and require a greater level of detail and
codified data before making global decisions.
(2) Analytical groups tend to be more comfortable with ambiguous information
and are more willing to accept a larger volume of information and varying
alternatives before making a decision. They are innovative in their problem
solving and base decisions on forecasts derived from large volumes of data.
(3) Conceptual groups are adept at addressing highly ambiguous tasks in
unstructured situations. These groups tend to be more risk-oriented, willing
to explore new options, involve others in the decision-making process, and
tend to use information gathered from multiple sources and examine many
alternatives before settling on a solution. Ultimately, these groups make
decisions using their feelings and instincts.
(4) Behavioural groups’ decision-making styles are best characterized as basing
decisions on the development of people. They tend to exhibit low levels of
ambiguity and require structure, while focusing on the short-term effect of
their decision. This type of group pays less attention to the longevity of the
group and bases decisions on short-run impact/outcomes.

Through participation in efforts to meet group objectives, the individual is able to

achieve his/her individual goals. This is not to imply a self-serving purpose, but
rather through identification with the global group the individual works toward the
group objective, and residually toward his/her own goals (Leana and Van Buren
1999). Given the nature of associability, it has both affective (i.e. collectivist feelings)
and skill-based components (e.g. ability to coordinate activities), but it is a basic
component of global group cohesiveness.
The value of trust is derived from a reduction in risk of opportunistic behaviour
on the part of one’s group partner thus reducing the costs of the relationship
(Williamson 1993). Furthermore, when someone is trusted, others are more willing
to commit to the relationship and ultimately to the group (Das and Teng 1998;
Leana and Van Buren 1999; Morgan and Hunt 1994). Through the development of
364 M. Harvey et al.

trust in the group, repetitive transaction sequences occur, thereby reducing

transaction costs. Trust extends beyond dyadic relations via generalization through
affiliation and reputation (Leana and Van Buren 1999). Putnam (1993) argues that
trust can reside at the generalized level via the development and adherence to
generally accepted global group norms and behaviours. Thus, a global group that
adheres to the generally accepted norms and behaviours embedded within set social
relations can be trusted even though a member joining the group or assigned to a
virtual group does not automatically have personal knowledge of, or interaction
with, the group (Jarvenpaa, Knoll, and Leidner 1998; Jarvenpaa and Shaw 1998;
Jarvenpaa and Leidner 1999).
At the same time, there are a number of inhibitors to group creativity:

(1) Not recognizing that creativity follows a well-articulated process (i.e.

absorption, inspiration, testing, refinement and selling), where each step
must be executed to insure that creativity takes place in the group
(2) Pressure in the group to conform
(3) Pressure for immediate/tangible results
(4) Lack of knowledge/expertise in a particular area that is needed to complete
the creativity cycle
(5) Too much success in the creativity process building over-confidence and to a
degree, complacency (e.g. the winners curse)
(6) Lack and/or loss of creative leader in the group
(7) Heightened organizational risk of being a member of a creative group (e.g.
risk increase when creativity is not view as being of value and, in turn, high
risk to the organization)
(8) Lack of time to be creative in the organization owing to other duties or
requirements of the group
(9) Creativity is equated with change, and people, groups and organizations can
only absorb so much change in a given time (Lau and Murnigham 1998;
Kozlowski and Bell 2002). One of the most difficult issues associated with
group creativity is developing the appropriate metrics to calibrate the level
and value of creativity in the group. Given that the nature of the creativity
processes is highly subjective/intangible, developing measures of what is
being created and the value of these creative output is a difficult task. This is
particularly true at the organizational level of decision-making in global
organizations. From a HRM development standpoint, this is one of the more
difficult skills to develop in global managers, and if one is to learn this skill it
will take an extended timeframe to gain mastery of it.

Global managers must resolve the following four distinct types of contracting issues
in hybrid type of ownership scheme, which arise with the increase in risk and
uncertainty of expected cooperative behaviour: coordination issues; division issues;
defection issues; and adaptation issues (Mohrman, Cohen, and Mohrman 1995;
Marquart and Horvarth 2001). The coordination issues arise if the global manager
misperceive the feasibility of cooperating with others in the organizational structure
and risk potentially negatively can affect significant others (e.g. partners). The
expected outcome of cooperation must meet the condition that a global manager
expects shared relational behaviour with other units (i.e. other global managers
representing share-ownership would allow the global manager to make the decision).
 Human Resource Development International 365

The division issues arise if the global managers representing different owners have
possible opposing preferences relative to their decision. The expected outcome of
mutual cooperation among global managers must satisfy the condition that each
manager expects concessional behaviour in the future with the global manager and
must be reflected in the performance appraisal of the team members as well as the
team as a whole (Scott and Einstein 2001).
The division issues arise if one global manager can gain rewards by acting
unilaterally at the expense of another global manager, leaving the second manager
(i.e. owner) worse off than status quo. The expected outcome of cooperation must
satisfy the condition that a global manager expects reliable relational behaviour from
other manager counterpoints representing other owners (Pelled, Eisenhardt, and Xin
1999). The defection concerns revolve around the potential of one or more of the
parties to the relationship will leave the relationship and where time and effort is
expended to keep the relationship viable and intact. The adaptation issue illustrates
the modification of one global manager’s decision to optimize outcomes for the
shared ownership rather than to maximize returns to the manager’s organization
(Williamson 1993). Another component to the global manager’s decision-making
process is the impact of time on the decision-making model of global managers
(Harvey, Griffith and Novicevic 2000).

Task environment and characteristics of the global tasks

An important factor is the task itself. Campbell (1988) examined qualities that
increase task complexity – the presence of multiple ways to potentially arrive at the
desired outcome, multiple desired outcomes, confliction interdependence among
paths to outcomes (multiple), uncertain links between the paths and potential
outcomes. The complexity of tasks is multiplied when viewed in the hypercompe-
titive market in which a global manager operates. In addition, determining how
complex a task is linked to the individual’s own capabilities (March and Simon 1958,
55). The individual’s intrinsic interest and population familiarity in relation to the
task will affect how complex it appears to them (Shaw 1976). The perceived difficulty
of the task itself can also be considered in relation to the individual’s experience and
interest (Huber 1985). In short, what may be considered a difficult task to one person
may be simpler for another manager based upon their multiple IQ inventory.
Tasks can be grouped into those that are simple, decision, judgment, problem
and fuzzy tasks (Campbell 1988). Simple tasks are explained by the absence of
multiple paths and outcomes, and conflicting interdependent or uncertainty or
probabilistic linkages. Decision tasks focus upon choosing the optimal outcome or
desired end-state. Judgment tasks require the task-doer to analyse and integrate
diverse sources of information and make a judgment or prediction about a future
event. Problem tasks require the task-doer to choose from a multiplicity of paths to
achieve one desired end-state. Fuzzy tasks required the task-doer to choose from
both multiple end-states achievable and from multiple ways to achieve these. In a
global environment, tasks will more likely be problem tasks and fuzzy tasks, thus
adding to the complexity of decision-making. It is worth noting that employees are
increasingly ambivalent about increasing task demands and the gains they receive as
a result (Scott-Ladd and Marshall 2004).
Decision-making requires divergent processes and creativity, and the individual
has to review and rely upon already stored heuristics (Campbell 1988). The heuristics
366 M. Harvey et al.

of task assessment and ultimately decision-making should be viewed in the context of

the environment in which it is made and the cultural assumptions held by the
decision-maker. Two decision-making behaviour frameworks are the country-
related cultural factors framework and the universal factors model. The first, the
country-related cultural factors framework, used Hofstede’s (1984) typology of
national cultural dimensions: power distance, uncertainty avoidance, individualism,
masculinity and, later, the Confucian dynamism dimension (Hofstede and Bond
1988). The dimensions are used to determine whether an authoritative/consultative
or participative decision-making style should be adopted dependent upon the
national culture in which the decision is being made. For example if feelings are
considered more important than facts then feelings will determine the pathway
chosen and potentially to decision made. Social institutions, norms, levels of
uncertainty tolerance (risk), subjective versus objective perspectives, the locus of
control and past versus future orientations (time) of a national culture all influence
decision-making. For example, for Arabic people a speedy decision may be
interpreted as a disregard to the importance of the relationship (Derskey and
Christopher 2008, 181).
Second, the universal factors model identifies various situational factors and how
they impact upon decision-making behaviour and therefore view decision-making as
‘culture-free’ (Child and Kieser 1979, 251–71). Rather than culturally bound,
decision-making behaviour is influenced by factors such as subordinates’ work
environment, motivation, maturity level, managerial level and functions. Both
frameworks imply that decision-makers in a global environment need to consider the
extent those individuals in differing situations and cultures will accept various
decision-making behaviours. Global managers need to be flexible and perhaps
consider the use of both frameworks at differing points of time and location.
According to McGrath (1984), an assessment of any group performance situation
begins with the nature of the task. If the work is to be done by a group, then its
members should be organized in ways that promote effective performance given the
demands of the task (Saavedra, Earley, and Van Dyne 1993). A global manager’s
assignment consists of tasks that, again, consist of levels of progressively smaller
subtasks. Tasks are either given to, or identified by, the global manager. Each task
has a recognizable beginning and end, the former containing recognizable stimuli
and guidelines concerning goals and/or measures to be taken (Bystrom and Jarvelin
2000). Seen in this way, both a large task or any of its (obviously simpler) subtasks
may be considered as a task.
Tasks that global managers need to address during global assignments fall into
three primary categories:

(1) Coordinative tasks are integrative in nature and can be illustrated by

developing a marketing plan, initiating an organizational change in a foreign
subsidiary or selecting foreign suppliers. These tasks require a finely orches-
trated interaction between the domestic organization and the subsidiary
where the global manager is located overseas, and where speed, accuracy and
reliance on others are essential for the global manager to accomplish such
tasks successfully (Hart and Staveland 1988).
(2) Computational tasks are more structured tasks that require utilization of an
established body of knowledge and techniques to complete the tasks
successfully. There is less ambiguity in these tasks and there is a known
 Human Resource Development International 367

beginning and end in the set of activities comprising these tasks (Bystrom and
Jarvelin 2000). While most computational tasks are fairly procedural and
may require a great deal of effort on the part of the global manager, their
demand for the global manager to coordinate their efforts with others is
lessened.
(3) Creative tasks are tasks that have not been addressed in the past by the global
manager; there are no ‘proven’ answers or processes to find their solution and
are dependent on the creative insights of the global manager to accomplish
these tasks but creating an appropriate decision process (Saavedra, Earley,
and Van Dyne 1993). These tasks can be approached and/or framed in a
number of different ways because a wide variety of information sources can
be scanned to implement a creative task solution (Hambrick et al. 1998).
Therefore, it is particularly difficult to measure the result/outcomes of
performing such tasks.

Summary/conclusion
One of the goals of human resource management is to develop new skill and
competencies in global managers. The rate of change and the magnitude of change
taking place in the global marketplace have been difficult for many human resource
managers to integrate the necessary skills to be effective in the global market context.
The rate of change has kept most/many of the human resource decision-makers
reacting to global change rather than proactively addressing changes that will occur
in the future. Developmentally, it is difficult to determine needed skills in global
managers when the HRM group has not had an opportunity to develop and test new
ways of learning how to be effective in a global context. It can be argued that global
managers must develop new decision-making reference points that can be used in
developing new global skills.
Global decision-making is envisioned to take into consideration the individual,
group, environment and task that is to be managed by the global manager. The
individual level of decision-making needs to develop an inventory of an individual
manager’s multiple IQs. This set of competencies is used to calibrate the global
manager mix of IQs to effectively as well as efficiently address the managerial tasks
facing them in the overseas environment. The group context must be addressed
owing to the complexity of global tasks; groups will be used more predominantly to
insure that there is sufficient talent to address global decisions. The interaction
between the individual and the group becomes more important given the increased
use of groups and the need for more competencies than most global managers
possess.
The nature of local and global environments must be addressed to help insure
that the context of decision-making is considered, given the number of different
environmental configuration global managers can/will face. Additionally, the level of
economic development (e.g. stages of development less developed, developing,
industrialized and post industrialized) can have a direct impact on strategies that can
be employed by the global manager. The rate of economic growth can also influence
the types of decisions and the overall strategy employed by the global manager. In
addition, the internal organization environment in each of the global locations of the
MNC can also created a decision-making maze that the global manager must
address. Each ‘local’ organizational environment will be unique, yet decisions need
368 M. Harvey et al.

to be made in the context of what is needed throughout the global organization. The
tasks that the global manager is to address during their assignment also have a
direct/indirect impact on the decision-making process. To effectively staff and
manage the global organization each of these dimensions of decision-making must
be considered to address the ‘on-the-run’ compression of social/economic time to
make decisions.

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