Globalization, Diversity, and Ethics PDF

**Module 2** **GLOBALIZATION, DIVERSITY AND ETHICS** **Module Introduction** It is an inescapable fact that the emergence of concerns and issues relating to the increasing globalization, existence of diversity in the workplace and ethics in a global context are already part of every business or...

**Module 2** **GLOBALIZATION, DIVERSITY AND ETHICS** **Module Introduction** It is an inescapable fact that the emergence of concerns and issues relating to the increasing globalization, existence of diversity in the workplace and ethics in a global context are already part of every business organization today. Organizational behavior plays a significant role in addressing how the individuals and groups can cope up to this trend. OB also aims to look at these concerns as an advantage rather than a challenge. Globalization demands the human resources to be more competitive beyond their national borders. As globalization opens the boundaries between countries, this leads to the rise of a more diversified workforce, embracing cultures and individual differences within the international firms. Consequently, diversity and globalization had led to the concept of ethics and ethical behavior in organizations. This concern has been less discussed and with only a little attention in organizational behavior. But now, the emerging perspectives on ethics have brought up moral issues and choices as well as the deals with right and wrong behaviors. As you go along the chapter, you will get to understand how these three concepts go together in the context of human behavior in organizations. Moreover, these can now be viewed as issues to make the management rethink about their approaches to their organization's operations and workforces. **Topic Outcomes** *After reading and understanding this module, students will be able to:* 1\. Explain the strategic importance of organizational behavior in a global context 2\. Explain diversity and diversity management 3\. Discuss emerging perspectives on ethics **ORGANIZATIONAL BEHAVIOR IN A GLOBAL CONTEXT** Today, globalization is one of the major environmental aspects that creates a huge impact on organizations. This paradigm shift has also challenged the organizations to respond both in internal and external environments. In the context of OB, we understand that individuals think, behave and act differently around the world. We may have similarities but have differences as well. This is actually related to the next topic in this chapter, i.e. diversity. Let us first discuss **globalization**. This refers to the internationalization of business organizations leading to a global economy. It is a trend whereby the national boundaries become less relevant. **Globalization and Foreign Job Assignments** The increasing globalization has paved way to the foreign job assignments of its human resources. Multinational firms assign employees to operate the businesses across countries. Individuals who are tasked to work outside their home countries are known as **expatriates** or "expats". For expatriates, this is an exciting experience as an opportunity for learning and growth but at the same time, is a challenge to take. Common problems encountered by the expats include **culture shock** or the stress brought about by the individual's difficulties and challenges in coping with the requirements of life outside their home country. This is particularly related to how one should behave and act in a new country. **Culture,** as defined, is a way of life, varies from one country to another. Some acceptable behaviors in a given country may not be appropriate or morally right to the culture of other nations. Aside from the challenging experience through a foreign job assignment, this can also be considered as a rewarding one. Working with individuals coming from different countries around the world is an opportunity for learning. Differences may be apparent, but so as new ideas and creativity. Cultural effects on international working relationships can be viewed through high-context and low-context cultures. Countries with **high-context cultures** tend to communicate and understand individuals through contextual elements. They consider looking at the underlying meaning, gesture and tone in a message. They focus on valuing personal relationships and trust. Most Asian countries like Korea, China, Japan and Philippines. On the other hand, countries like Germany, the United States of America and Canada exhibit **low-context cultures.** This means that they communicate through an established system. They prefer no room for confusion. The purpose of low-context cultures is to make a message clear to everyone so that it will not slow down the process. They value messages in black and white rather than contextual clues. In addition, there are some more related aspects of culture such as monochronic and polychronic time orientation. **Monochronic time orientation** is manifested by individuals who prefer working on tasks one at a time. They do not engage in multitasking and do not divert attention from a planned task to minimize interruptions. Contrary to that, individuals with **polychronic time orientation** work well even with multiple tasks at a given time. They have more flexible plans and are not distressed by interruptions. In most cases, individuals who differ as to high-context and low-context cultures have difficulties dealing with one another; the same is true to those who work with monochronic and polychronic time orientation. However, these issues may be resolved through proper training as regards cultural differences. The outcome of the said training is known as cultural intelligence. It is an individual's ability to understand and adjust with the behaviors of people outside his/her culture. For example, individuals may opt to learn foreign languages or may prefer working in teams. **International Participation : Multidomestic, Global and Transnational Firms** Organizations that engage in foreign markets have more opportunities for growth yet require understanding of which international approaches and related organizational characteristics to consider. **Multidomestic Firms** These are organizations that utilize multidomestic strategy. Firms operate in such a way that they respond to the needs in particular of each country. Products are tweaked to suit the preference of a specific market. Nestle is a classic example of a multidomestic firm. It uses specific and unique sets of strategies like marketing and sales approach. It caters to the local taste of a given country and offers different products for different markets. In general, multidomestic firms have low integration but of high responsiveness. Company employees then have less chances of being deployed outside their countries. **Global Firms** These firms are characterized by high integration and low responsiveness. The strategy of the organization is to offer standards and common products across different countries and regions in the world. They seek to maintain centralization in the mother country while maximizing efficiency through reduced costs. Global firms oppose multidomestic firms. Commonly, pharmaceutical and luxury goods companies belong to this type of firm. These firms often send expatriates across the organization. **Bartlett and Ghoshal's Typology of Multinational Companies:** **Global, Transnational, International and Multidomestic Strategy** **Transnational Firms** Transnational firms use transnational strategy in becoming highly responsive to specific needs of a country and at the same time, high in global integration. These firms somehow exhibit the characteristics of both multidomestic and global firms. They try to tailor fit the products to some degree to cater the needs of various countries but also seek to standardize to some extent for cost efficiency. International travels and meetings and foreign job assignments are also evident in this type of firm. **International Firms** These firms are not actually considered strategic as they have low levels of local responsiveness and global integration. This is much known as an exporting strategy. **Dimensions of National Culture** One of the significant contributions to organizational behavior made by Geert Hofstede, a social scientist, is the four dimensions of culture, i.e. Power Distance, Uncertainty Avoidance, Individualism and Masculinity. This resulted from his research among 40 countries. Several scientists and researchers followed after him and identified some more dimensions of national culture. Researchers under The Global Leadership and Organizational Behavior Effectiveness (GLOBE) Project generated nine units of measurement or Cultural Dimensions. This research was made across 162 countries. 1\. **Power Distance**. It refers to the degree to which the power and status privileges are accepted by people to be unequally distributed in the society. Countries that score high on this dimension are those who expect a more centralized or autocratic leadership. Russia is one example for high power distance. Members of this country respect their titles and status. 2\. **Uncertainty Avoidance**. It refers to the degree to which people do not feel like taking risks in unpredictable outcomes. In high uncertainty avoidance countries, people focus on following specific rules and put everything in order. Germany and Japan are countries that score high on this. 3\. **Assertiveness.** Hofstede identified this as "masculinity" in his four dimensions of culture. This refers to the degree to which people are aggressive and confrontational. It reflects the strong personality of individuals in high assertiveness countries. Often, those who have low-context cultures score high on assertiveness. Germany and the United States are high assertiveness countries as opposed to the Philippines where people are asked and consulted before making decisions. 4\. **In-group collectivism**. It refers to the degree to which people take pride belonging to their organizations and families. China scores high on this as they exhibit a strong distinction between the members and non-members of their group or family. 5\. **Institutional Collectivism**. It refers to the degree to which integration of groups and organization is being encouraged. This means that countries who have high institutional collectivism oppose individualism. Individualism is one dimension identified by Hofstede as the degree to which individuals feel good when they are self-reliant and focused in their personal goals. Germany and Italy have low institutional collectivism but score high on individualism. People in these countries are rewarded for their personal efforts and outcomes. Japan and Singapore on the other hand have high institutional collectivism. 6\. **Performance Orientation.** It refers to the degree to which excellence is recognized and being rewarded. Innovation and competitiveness are encouraged in countries with high performance orientation. They appreciate excellent performance thus, they value the training and reward system. Singapore and the United States score high on this, while Russia has low performance orientation. 7\. **Humane Orientation**. It refers to the degree to which people value fairness, kindness and altruism in the country. The Philippines is one nation with high humane orientation. Singapore and Germany on the other hand have low humane orientation. 8\. **Gender Egalitarianism**. It refers to the degree to which equality for men and women is actualized. When gender egalitarianism is evident in a country, women are given opportunity to achieve power and positions. Japan scores low on this. Women in this country are less recognized and have lower status as regards work. 9\. **Future Orientation**. It is the degree to which individuals value investing in plans for the future. People value long-term gains in countries with high future orientation. Russia scores low on this while Canada, Switzerland and the Netherlands are high on this. In general, global business must understand that the functions and practices in managing human resources are common, but the approach on how these will be performed shall vary from one country to another. Effective management ensures that they are attuned with their cultural surroundings. **MANAGING DIVERSITY IN THE WORKPLACE** **Diversity: What is it?** The differences between and among individuals and groups are often viewed as sources of conflict in the workplace. However, given the fact that everyone is unique and people are heterogeneous, effective managers now consider diversity as an advantage. Esty, et.al defined **diversity** as acknowledging, understanding, accepting, and valuing differences among people with respect to age, class, race, ethnicity, gender, disabilities, etc. A huge factor that brought about diversity is the changing demographics. These changes are best exemplified with the changing role of women in the society and new family roles, equal employment opportunity and organizational restructuring. Moreover, technological advancement and globalization also led to new workplace practices. Organizations who are able to manage diversity make it beneficial to both employer and employees. Embracing diversity minimizes discrimination and consequent legal liabilities. Diversity promotes a continuous learning environment, creativity and innovation in the workplace. **Barriers to Achieving Diversity** Although managing diversity has been advantageous to groups and individuals, organizations still encounter problems related to roadblocks and obstacles in creating an inclusive workplace. The barriers and challenges to achieving diversity include: 1\. **Prejudice and Discrimination**. Prejudice is an unjustified and negative attitude of individuals towards others who belong to social or cultural groups outside their own. Example of this is racism and sexism. Prejudice influences the way a person thinks about a certain group. Prejudiced views, if not at all times, often lead to discrimination. Discrimination is the negative behavior resulting to unfair treatment towards people based on individual's social or cultural membership. Some prejudiced persons do not act their attitudes. But for those who do, discrimination is manifested on three common examples - racial discrimination, age discrimination and gender discrimination. For instance, a married woman was not promoted in her job because the management thinks that the roles of women at home are more prioritized than job. Another example is an old-aged man who was not hired for the job without looking at his credentials and simply decided on the grounds of age. Prejudice and discrimination are roadblocks to diversity. Aside from it results in injustice and lawsuits, these barriers prevent an organization from fostering creativity and innovation from diversity. 2\. **Stereotyping.** It refers to the generalized beliefs towards individuals belonging to a certain group. This means that a person is judged based on what is perceived about a given group. For example, black people are viewed and generalized as poor and underqualified. People with Disabilities are considered weak. Whenever people think that members of a group have the same characteristics, this is already a pre-judgement, without seeing whether a certain member is really of the same characteristics with their group. Thus, stereotyping becomes a barrier to diversity and stereotypes end up with false judgements. **3. Differences in Social Identity.** Social identity theory was proposed by psychologist, Henri Tajfel. He defined social identity as a person's sense of who they are based on their group membership. In social identity theory, individuals take pride as they belong to a certain group. The world was divided "them" and "us" based through a process of social categorization (i.e. we put people into social groups). Religion, nationality, sexual orientation and ethnic groups are examples of social groups. Affiliation to any of this boosts self-esteem of an individual which sustains the social identity. However, the differences in social identity became a barrier to diversity. When an individual's social identity is too prominent, the person becomes more aware of being different from the rest of the group where he or she does not belong. Thus, the situation may result in stress and dissatisfaction. Similarly, those from minority groups feel stressed and fear about losing their social identity when the majority seem to indirectly "check their identity at the gate". Hence, people who belong to a common group think that they are better than those who do not. This now can also result to stereotypes and discrimination. 4\. **Power Differentials.** Power often comes from status and expertise of an individual. When one seems to be of higher level than the other, say in terms of knowledge and skills, he or she may gain individual power. This actually makes no problem when ethical behavior is considered by those people in power. Although, power differentials often exist and eventually creates a barrier to diversity. There is a tendency to have factions and those who belong in low-status groups get frustrated as they often feel harrassed and are not free to speak up. While, those in higher status tend to ignore and belittle the others. Power inequality does not embrace diversity. 5\. **Poor Organizational Design and Structural Integration**. Good organizational design creates a fair distribution of authority, workload and functions of individuals and groups within the organization. This also ensures an effective organizational structure. Structural integration likewise shows how men and women are represented in the positions in the organization. A poorly integrated integration reflects what is being coined in organizational behavior as glass ceiling. This term refers to the barriers that hinder minorities and women from reaching their career aspirations. In addition, glass border refers to the barrier that discriminates against women by not providing opportunities to be given foreign job assignments. Lastly, glass floor or also known as sticky floor refers to a barrier that hinders an even lateral movement into other positions at the basic level. 6\. **Communication Barriers and Resistance to Change**. Miscommunication and resistance to change have also hindered the achievement of diversity. The management must ensure implementation of effective diversity management programs not only to minimize legal consequences, but to recognize each of the individuals as they are. Effective managers should take into account two important programs, i.e. affirmative action programs and diversity management programs. However, the latter provides a more inclusive working environment. Shown in below is the comparison of the two programs.  **Affirmative Action versus Diversity Management** **(Hitt, Miller and Collela, 2012)** Basically, affirmative action programs were created by the government to eliminate discrimation, thus promoting equal employment opportunities. However, this often does not address the real problem but simply focuses more into the legal aspects. Diversity management on the other hand responds to the needs of individuals and groups in terms of fostering a greater inclusion in the workplace regardless of different backgrounds. It is likewise more strategic as it also considers diversity as a source of competitive advantage. Some organizations comply with AAPs just to minimize lawsuits; while organizations promoting diversity management are voluntary in nature. Diversity management is proactive. It allows individuals to learn from the views and perspective of other groups. This is more than AAPs and EEOs. Diversity looks at the differences of individuals, not the group's. Hence, each one is definitely unique and judging them based on their group preference and membership will be helpful as they do not actually represent a group in particular. Hasty generalization leads to discriminations and conflicts. There is no best practice to manage diversity. Each organization must assess and understand what works best for them based on the dynamics of the workplace. Personal awareness and empathy are keys to managing diversity effectively through individual approach. For organizational approach, training programs are effective techniques. **ETHICAL PERSPECTIVE ON ORGANIZATIONAL BEHAVIOR** **Ethics** is a moral principle about what is right or wrong. Ethical values of individuals guide them in creating decisions and making necessary actions. This has become an issue in organizational behavior as these ethical values and behavior differ from the influences that individuals consider. 1\. Cultural Influences. Examples of this includes family, religion, and friends. How people are raised leads to personal ethics. Since personal ethics is apparently diverse, professional ethics and organizational ethics shall help the organization in establishing the guidelines to follow in the workplace. 2\. Organizational Influences. These are the company policies and practices, codes of ethics, reward and punishment systems. These are implemented in the entire organization and attempts to create a company image behaving ethically. 3\. External Environment. These forces include political, legal, economic and international developments as well. **Ethics in the context of Globalization** Ethics can make a reputation of an organization. Ethical behaviors reflect an organization\'s honest and just professional endeavors and activities. Employees even become more productive when they think they belong and work for organizations that practice fair business activities. Ethical issues concern every individual in various countries all over the world. In organizational behavior, ethics play an important role in several HR practices including employee recruitment and selection, performance management, retention decisions and labor relations. Since cultural influences differ from one country to another, corporate cultures are significantly taking a big part in guiding the ethical principles of the organizations. The human behavior in organizations and the ethical corporate cultures should go hand in hand to win in the global market. The way the individuals behave in the organizations make up the representation of the companies as a whole. Thus, the management must ensure that the organization maximizes the economic outcomes without violating legal obligations and moral standards, more importantly if one company operates outside its national border. Global responsibility is an emerging concern today. Stakeholder-centered organizations look at the impacts of company decisions on the multiple groups of stakeholders, inside and outside the organizations. This is likewise very vital since there is no single universal recipe nor view of what is generally accepted as right or wrong in the world. To address the different ethical perspectives, ethical awareness must be embraced in each and every organization.