Good companies sometimes fail. It’s a simple reality in today’s global economy. Might not be any rhyme or reason to these failures—anyone can point to the wallowing U.S. economy, the falling value of the U.S. dollar overseas, the pock-marked real estate market and the ripple effect of plunging world markets for an easy, off-the-shelf answer. The bigger question is this: what golden bullet will slow this world free-fall?
Alas, this golden bullet doesn’t currently exist. This may be especially true when it comes to American business professionals and the need to improve their cross cultural competencies, which could ultimately help their organizations compete more effectively in the global economy.
Consider the following: leading researchers in the area of cross-cultural management find that:
- the estimated range of failure for overseas assignments for global companies ranges between 16 and 70 percent;
- the cost of failure at any firm varies from $65,000 to $1 million; and
- the total cost for U.S. firms exceeded $2 billion annually based on research published in 1997.
Kettering University professors David Strubler and Sung-Hee Park believe that companies that develop cross-culturally competent professionals capable of adjusting to a host country’s culture during overseas assignments can significantly reduce operational costs.
Strubler, an associate professor of International Management, and Park, an assistant professor of Business, presented a paper titled “Toward a Prescriptive Research Model of International Adjustment: An Extended Model of Black, Mendenhall and Oddou’s 1991 Framework for International Adjustment (FIA)” at the Midwest Business Administration Conference in Chicago in March 2009.
The paper provides a prescriptive model and the measures necessary to construct this model for companies that place employees in assignments around the world.
“Failures are expensive,” Strubler said, adding that proper selection and preparation of professionals “is both a huge cost savings and a way to improve the success rate of any kind of global business arrangement. With the costs of failed overseas assignments comes a real possibility of long-term effects, including damage to the firm’s reputation, poor relations with local residents and businesses, and the negative impact on the expatriate’s psychological health as well.”
Strubler’s and Park’s research focuses on the importance of previous studies, which are more descriptive in nature. But to properly respond to today’s challenges, they emphasize a prescriptive, comprehensive theoretical model to provide “an updated, practical guideline for international adjustment issues,” Park said.
Their model centers on adjustment in terms of an increased sense of satisfaction in coping with a new culture because the expatriate learns how to work effectively within the host country. The goal is not assimilation but acculturation—the process through which an individual adapts to the culture of a particular society.
Previous researchers attempted to examine the psychological, social and behavioral concerns of managing overseas operations without achieving much success. However, Strubler’s and Park’s efforts build off J.S. Black’s, M. Mendenhall’s and G. Oddou’s 1991 model titled “Toward a Comprehensive Model of International Adjustment: An Integration of Multiple Theoretical Perspectives.”
This model describes primary competency and cross-cultural adjustment factors that organizations should consider before assigning employees overseas. For example, companies could use specific tests to establish the competencies of staff. Such testing would also help identify training needs and eliminate deficiencies among employees before they left for overseas assignments. In addition, this testing would help companies locate employees who are ready for overseas assignments.
Furthermore, testing for an employee’s cross-cultural social intelligence and intercultural competency provides companies and individuals insight into the professional’s level of self-efficacy, relation and perceptions skills, which are crucial for adjustment in the host country.
This testing, combined with periodic measures of effectiveness, could provide insights into how well an individual performs and offer ways to enhance approaches designed to select and prepare professionals for overseas assignments. This includes helping them manage daily cross cultural interaction with people from other cultures at home.
“The degree of adjustment a professional must make could be specific to a particular country, organization and individual,” Park said. Some of the adjustment factors organizations as well as individuals must take into consideration include the following:
Anticipatory Adjustment
- Individual preparation for overseas assignment;
- Organizational selection mechanisms (choosing parent country nationals, host country nationals, etc.);
- Interaction effect between individual and organizational factors; and
- Readiness of an expatriate’s family members to adjust to another culture.
In-Country Adjustment
- Individual in-country adjustment (self-efficacy, relation skills, perception skills);
- Job related in-country adjustment;
- Organizational culture and socialization in-country adjustment; and
- Non-work in-country adjustment.
Strubler’s and Park’s work began with an in-depth literature review organized around Black’s FIA. The result of this effort yielded a number of propositions that the two Kettering faculty members expect to test in the very near future.
“Currently, we’re preparing to distribute surveys to follow up our research and support our propositions,” Strubler said. “In the short-term we will conduct a pilot study and in the summer, author a second paper with colleagues Dr. Atul Agarwal of the Business Dept. and Todd Steel of the Graduate Office. We expect that this study will prove which competency and adjustment factors are the most reliable and valid. These factors will be what industry needs to know to cut costs and improve their success rate,” he added.
This research is just one of many aspects of Kettering’s newly improved Dept. of Business. Under the leadership of Dr.Andy Borchers’80, interim department head and a 2007-2008 Oswald International Faculty Fellowship winner, the department continues making strides in developing opportunities for students.
The bachelor’s of Business Administration (BBA) degree, for example, is ideal for those interested in international business. Additional applied global studies and research that involve students are also on the increase.
New opportunities to study in China are now available, with the first trip departing June 2009. These activities, combined with the international experience of Kettering Provost Dr. Michael Harris, continue to spur and help the Department prepare for future endeavors.
For individuals or companies interested in participating in the research project and for more information about this effort, contact Dr. Strubler at dstruble@kettering.edu or Dr. Sunny Park at spark@kettering.edu. Learn more about Kettering’s Department of Business.
Written by Gary J. Erwin
810.762.9538
gerwin@kettering.edu