Transcending Business Boundaries: 12,000 World Managers View Change

For much of the twentieth century, business managers around the world confronted a series of walls. Walls between nations that establish the boundaries of national markets, national practices, or national social, economic, and political systems. Walls between the company and the society in which it exists, drawing sharp distinctions between corporate interests and social interests. Walls between work and home, separating those activities that involve earning a living from those that constitute just plain living. Walls within the workplace itself, dividing managers from workers, function from function, line from staff. And walls between the company and its stakeholders, including suppliers, customers, and venture partners.

Now, we are told, the walls are crumbling.

Globalizing markets, instantaneous communications, travel at the speed of sound, political realignments, changing demographics, technological transformations in both products and production, corporate alliances, flattening organizations—all these and more are changing the structure of the corporation. The once very rigid and unbreachable boundaries of business are fading in the face of change.

Or so many experts say. But what is the experience of real managers around the world?

To find out, in November 1990 Harvard Business Review conducted a World Leadership Survey exploring the boundaries of business. After constructing and testing the survey questionnaire, HBR itself crossed boundaries to share the survey with 25 publications in 25 countries on 6 continents, with each publication reproducing the survey in its own language.

By January 1991, 11,678 responses to the 91 survey questions were received for analysis at Harvard University (see Editor’s note at the end of the article). Details of each nation’s findings were returned to the appropriate magazine editor for further analysis and comment. In addition, a group of experts on each of the survey’s major themes received a detailed set of the global returns; their commentaries appear in the July–August 1991 issue of HBR.

If there is a single message from the survey results, it is this: change is indeed everywhere—regardless of country, culture, or corporation. But the idea of a corporate global village where a common culture of management unifies the practice of business around the world is more dream than reality.

The survey themes fall into five major areas:

• Internationalists vs. economic patriots; how corporate and country interests conflict and coincide in the face of global markets.

• Businesses as citizens; which social responsibilities are embraced—or rejected—by business leaders.

• Productivity and parenting; the ways in which work and family interests can support each other, and the emerging sources of conflict.

• Fissures inside the workplace; issues of loyalty and hierarchy that create a still-divided organization.

• Anxious alliances, cautious coalitions; what companies say about the importance of their ever-closer relationships with customers and suppliers, and how this compares with what they are actually doing.

Since the respondents were not selected at random, it is impossible to know how representative their views are. In addition, language barriers, cultural assumptions, and other national differences can lead to distortions or limitations on comparability. Nevertheless, the survey is a worldwide dialogue with managers whose voices are not always heard beyond their own country’s borders. Because the survey appeared in the language of each country, in a domestically published magazine, participants did not have to belong to a select set of managers who speak English, read international publications, work in global corporations, or travel internationally. In that respect, despite the survey’s limitations, it also overcame many of the hurdles that inhibit open communication about the heart of business practice inside many countries.

This business mainstream is reflected in the profile of the average respondent. Across countries, the typical survey respondent turned out to be:

• A male senior manager in his early 40s, married and bilingual.

• Employed in an established, privately held, mid-size organization with several thousand employees and a two- to four-year planning horizon; the company has a small number of foreign facilities but derives the largest proportion of its revenues domestically, faces mainly domestic competition, and is competitive in its industry but not dominant, having increased profits and market share last year.

• Cautiously optimistic about the future and assuming that the next generation will live a more comfortable, secure life.

• More concerned about customer service, product quality, work force skills, and technology than about macroeconomic and political issues, and sure that trade rules, government policies, currency risks, and even capital availability are neither significant success factors for his business nor significant worries.

• Strongly in favor of work-site child care and very concerned about the quality of education, believing that business should play a major role in improving it.

In addition to profiling the views of this average manager, the survey detected the deep and powerful national differences that overwhelm age, sex, or industry distinctions among respondents. For example, Germans appear the most cosmopolitan. South Koreans most clearly favor country over company. Japanese report the strongest work ethic among top managers and the greatest worries about the work ethic of the rest of their work force.

Interestingly, managers’ views tend to correspond more to their country’s cultural heritage and less to its geographic location or its regional economic affiliations. Cultural alliances appear to unite the views of Italians and Spaniards with those of Mexicans, Brazilians, and Venezuelans, superseding the bonds of the new Europe. English-speaking countries tend to have deep similarities, regardless of continent. Japan and South Korea each stand alone.

While the survey results indicate that the emergence of a global culture of management is more dream than reality, they also uncover the leaders of the dream. For the most part, traditional industrial enterprises—larger, older, publicly held manufacturing companies with long planning horizons—are leading the drive toward globalization. These organizations are more “cosmopolitan” in their outlook and are reshaping their boundaries faster. They are the most international in scope, least protectionist, and most closely involved in cross-boundary relationships with suppliers, customers, and venture partners. They also have undergone the most pervasive changes in the last two years: more downsizings, reorganizations, CEO changes, mergers or divestitures. Respondents from this sector report less satisfaction with their own jobs and a decline in loyalty and commitment to their companies.

Such companies and such managers are in the vanguard of changes that could confront business with new political and social struggles.

Internationalists vs. Economic Patriots. Economics has not yet triumphed over politics. While most survey respondents present themselves as “internationalists”—free trade advocates who reject government favoritism or assistance for domestic companies—country differences and contradictions in response patterns suggest continuing local political battles over the rights and responsibilities of businesses. Those in more domestically focused companies and those in countries whose national competitiveness is eroding join newly industrialized countries in sounding notes of ambivalence about internationalism.

Most of the survey respondents naturally want businesses to have the freedom to make decisions in their own interests, without having to take “patriotic” considerations into account. As expected, the most internationalist views on the survey are expressed by German, Swedish, Finnish, Dutch, and Belgian respondents. It is no surprise to find the capital of the European community (Belgium) and the European community’s unofficial leader (Germany) among a group of nations whose size or situation makes trade a necessary component of a healthy economy.

This internationalist tendency on the part of northern European countries is mildly associated with the greater cosmopolitanism of their managerial populations, especially in Germany. “Cosmopolitan” respondents (those who speak more than one language and were born or hold citizenship in countries other than the ones in which they currently work) are somewhat more likely to hold internationalist views—the only area in which their attitudes toward business practices differ significantly from those of their “local” counterparts. These cosmopolitan respondents often work for cosmopolitan companies—those doing business in many countries—and therefore reflect the interests of their companies in eliminating barriers to operating anywhere in the world.

Japanese antiprotectionist responses are most surprising in light of Western “conventional wisdom” that says Japanese companies benefit from government protection and assistance. Assuming the honesty and accuracy of the responses, three interpretations seem most plausible. First, this group of Japanese managers, drawn primarily from older companies competing domestically, having heard recent exhortations in the Japanese media about the inevitability of internationalism, is now playing that message back. Or, second, the responses could simply reflect a growing confidence within Japan over the quality and performance of Japanese products. Or, third, it is possible that Western conventional wisdom is simply wrong.

Underneath the world majority’s endorsement of globalism are some potentially difficult contradictions. Look at the third of the survey respondents who say that businesses should be willing to pay a premium to support domestic suppliers, or the quarter who want business owners to care more about their country’s success than their company’s. These managers are indicating their willingness to put patriotism before profits. They represent a sizable business group available for political mobilization in the name of protectionism.

Even in the unlikely event that trade barriers disappear, other contentious issues remain around the rights and responsibilities of global companies. Respondents appear to draw a clear line between economic freedom and political rights. While foreign ownership of local assets is acceptable around the world, foreign voice in local affairs is not.

Will local politicians simultaneously court foreign investors and exploit xenophobia in trying to keep their country free of foreign influence? If a freer flow of capital across country borders is not accompanied by the ability to protect that capital through the political system, will global companies exit, or will they enter into the political fray?

If the internationalists do challenge the economic patriots over political rights and economic freedom, they will be up against groups likely to have a great deal of local clout. Economic patriots could have a larger voice in domestic politics than even their numbers suggest. The survey shows a correlation between patriotic responses, a more local business orientation, and a slightly greater willingness for business to help solve social problems.

Thus, if managers act on their espoused values, domestically oriented companies with a protectionist agenda could play a disproportionate role in shaping political policy because of the credibility they gain from local philanthropy. This pattern is already apparent in many regions of the United States.

Even if the scope of economic activity is increasingly global, many social problems remain firmly local. More internationally oriented companies could find their local political voice reduced by their managers’ greater reluctance to get involved in the social arena. It is understandable that cosmopolitan managers might not identify with a community’s problem if they can easily pull up stakes and move elsewhere. But if cosmopolitan managers in global companies show reduced commitment to the places in which they operate, then political voice could be ceded to more protectionist and patriotic localists.

Businesses as Citizens: Which Social Responsibilities? Respondents everywhere single out the quality of education as the most significant social issue affecting their organizations, and they feel business should take the lead in improving it. A scant 5% feel business should not be involved at all. While 18% say that businesses should limit their contribution to financial support, another 77% approve of a very active role. And a great many respondents feel business can make a very useful contribution to basic literacy skills.

Environmental issues such as waste disposal and pollution are the second highest social priority, though falling well behind education in degree of importance to the respondent’s own business. But solving environmental problems is the responsibility of those that create them. Most respondents are willing to shoulder all the burdens; only 3%—one of the lowest responses on any item on the survey—think business should not be involved at all.

Consensus breaks down, however, around somewhat messier human problems that are country-specific: alcoholism and drug addiction, crime-ridden cities, and poverty. Argentinians, for example, worry more about the impact of poverty and unemployment on business, while Americans see unsafe cities and substance abuse as more pressing problems.

Regardless of the strength of concerns, there tends to be little interest in business involvement in solving the problems of urban life. In some countries, of course, business leaders can count on a strong welfare-oriented government to prevent problems or address them if they arise. There are low crime rates, stiff antidrug laws, and social safety nets. Singaporeans, for example, are much less likely than the average respondent to feel that unsafe cities are a critical problem for their businesses or that business has to improve literacy. Government simply ensures that such problems do not occur.

But consider the situation in countries like the United States whose respondents identify urban problems as urgent. Responses hint that business leaders are turning their backs on decaying cities, either because they can move facilities internationally or because they do not know what to do. This may cause downward spirals: as businesses abandon deteriorating cities, poverty and crime grow, literacy drops, and such places become even less attractive to business. If businesses do not accept citizenship responsibilities in areas they say affect them, will there be a backlash against business? Or will social activists push businesses to take more responsibility in exchange for economic concessions?

Managers often appear more politically conservative than the general population, and their responses to the HBR survey are no exception. They are willing to shoulder those welfare burdens involving wealth creation that have already been established as part of the standard benefit package in industrialized nations. But they draw the line at taking on new responsibilities, such as helping employees care for elderly dependents.

Productivity and Parenting. Respondents voice strong support for practices that help working parents. While world averages are skewed slightly because Americans take the lead in this area, Japanese, Brazilian, Mexican, and Canadian respondents are also strong supporters. Only South Korean managers are dissenters.

Finding world consensus in a direction some consider “women’s” issues—and from a survey response that is 90% male—is noteworthy. Attitudes toward work and family are fraught with cultural overlays, colored by deeply held personal values. Yet respondents agree on three win-win practices that are good for both families and organizations.

First, child care at the work site is overwhelmingly supported by respondents. Indeed, there is more agreement in this area than in any other on the survey.

A second practice considered good for both families and organizations is for both husbands and wives to hold important paid jobs. There is strong support for dual-career families even among those who believe that it is good for the family to have one parent at home to take care of children. Still, the line between work and family should not be erased too much, respondents believe; a sizable group feel a husband and wife should not work for the same organization. Clearly, respondents’ views reflect a deep ambiguity and continuing conflicts for women, who are expected to work at demanding paid jobs while “someone” stays home with the children.

Flexible work hours is the third practice considered good for both families and organizations. Support for flextime appears connected to a desire for family members to be able to provide care for one another, instead of relying on child care centers—though fewer support stay-at-home family members than support work-site child care. But flexible work hours are seen as good for the family just as often as a family member at home.

The strongest endorsement of a working parent’s agenda comes from Japanese and U.S. respondents. The reasoning, however, appears to be quite different in these two groups. Japanese respondents seem to support any practice that makes it easier for people to dedicate themselves single-mindedly to work. Japanese scores on a “precedence for work over family” scale are off the charts—higher and statistically more distant from the scores of other countries than any other measure. Japanese respondents are nearly alone in finding it good for the family to have vacations, weekends, or evenings interrupted for work. What parents do “for the family” seems viewed in financial terms—to keep working and earning. Support for working parents may be seen by the Japanese as tilting the work-family balance in favor of work; by U.S. respondents, as tilting it toward family.

Organizations want productivity; families want time. The greatest work-family tensions center around conflicting time demands—the trade-offs involved in working weekends, interrupting vacations, or staying late at the office. Child care facilities make it easier for people to work and not spend time with their families. The tensions are clear when both parents work and both parents value their families—the combination is true for many survey respondents.

By supporting child care and flextime, managers are endorsing the work side of the work-family equation; the family side remains unaddressed. This area is ripe for new solutions that go beyond parenting leaves and sabbaticals. Will we see flex-year—the opportunity to work intensively for periods of time, then ease up, perhaps around school vacations? Or will solutions lie in technology—making work flexible and portable, or adding labor-saving innovations to increase productivity while freeing up time? A new work force, composed of more working parents, requires a new look at the workplace itself.

Fissures Inside the Workplace. Today’s work force is generally viewed everywhere as more skilled and motivated than it was ten years ago. This positive aura is even stronger for successful, growing companies. Managers from growing companies think more highly of their own jobs, their employers, and their people than do those from stagnant companies—one of the few differences between the groups on the survey.

Many respondents count work force skills among the most important business success factors, but successful companies have a higher percentage of managers who believe their people actually have better skills. Are the people in such companies really better, or does a “halo effect” surround anyone who works in a successful organization? Research suggests that positive views of people’s abilities can cause high performance as well as result from it. A “culture of pride,” based on success, increases confidence and motivation. It’s a virtuous cycle: performance stimulating pride stimulating performance.

But the widely noted decline in employee loyalty and commitment is also confirmed by survey respondents from many countries. And the respondents express a higher level of satisfaction with their jobs than with their employers—a pattern indicative of the shift in managerial loyalty from company to profession.

That gaps remain between managers and nonmanagers is not surprising, but the nature of the gaps is suggestive. Workers are seen as having a widening edge over managers in their ability to work well in teams; managers are seen as increasing their cross-functional knowledge more than nonmanagers. Managers also tend to reserve strategic information and project initiation for themselves.

Such gaps could limit the ability of either group to contribute fully to the organization’s success. If employees’ teamwork is not associated with better knowledge about the whole business and where its work fits in, how can the team help solve problems or improve performance, especially with limited power to initiate projects? And if managers’ strategic knowledge is not associated with cooperation, then how well can the organization develop cross-functional integration or other forms of synergy? This suggests a dual corporate education agenda for the future, one in which companies both upgrade the team skills of managers and increase the strategic knowledge of employees.

Respondents from Japanese companies report some of the greatest differences between the organizational “top” and “bottom” and are least optimistic about work force improvement. They see a widening gap between the better discipline and motivation of managers today and the declining work ethic of other employees. But these respondents are also unusual in counting on product development and the quality of management more than work force skills to make their companies successful. Perhaps Japanese society is beginning to move away from its traditional work ethic, as some Japan-watchers suggest; but a continued emphasis on innovation still provides productivity advantages. This is a reminder that great products, well-designed processes, and effective strategic planning can sometimes play a bigger role in business outcomes than worker attitudes.

Is hierarchy still inevitable in all but the smallest companies? Maybe so, but respondents in Finland, Austria, and New Zealand report much more egalitarianism in their companies. Clearly some countries are beginning to blur the distinction between managers and others. Social distance—differences of appearance and lifestyle—fades fastest; organizational power distinctions linger longer.

Anxious Alliances, Cautious Coalitions. While boundaries within the organization are shifting slowly, the blurring of external boundaries is apparently happening faster. Larger, older manufacturing companies are in the vanguard, but they are proceeding cautiously.

Customer service is saluted as the top success factor in nearly every country. Product quality, often involving close relationships with suppliers, is also highly ranked. Many companies represented in the survey claim to have long-term relationships both with their customers and suppliers. But according to survey results, “long-term” does not necessarily translate into “close.” In practice, customers are kept at arm’s length and suppliers only a little closer. Only a small minority of companies claiming long-term supplier relationships train suppliers or work closely on product development with those suppliers.

Is ambivalence about breaching company boundaries a function of the difficulties involved in making this change? Most respondents’ companies are engaged in at least a few joint ventures or alliances, though more often in countries like Sweden or Belgium than in Argentina or Brazil. The more joint venture experience respondents have, the more they identify managerial issues as worrisome. For instance, Belgians are more concerned about loss of control and information in collaborative ventures. In contrast, Austrians, who report less joint venture activity, consider the biggest risks to involve political and macroeconomic factors such as exchange rates.

It is one thing for less experienced managers to be unaware of the corporate culture clashes and ongoing managerial dilemmas of cross-company coalitions. But if so many experienced managers recognize that ongoing management issues are the biggest risks in alliances and partnerships, why do companies devote considerably more resources and top management time to negotiating the deal than they do to managing the subsequent relationship?

According to respondents’ reports, companies in some countries do more than give lip service to the importance of their external allies. Germans, for example, are higher than the average on scales measuring closeness to both customers and suppliers.

Other country differences are provocative. Americans score somewhat higher than average on customer closeness and lower than average on supplier closeness. The Japanese pattern on the survey is the opposite. Though appearing cautious and protective in all relationships, the Japanese are more likely to open their boundaries to suppliers than to customers. This is consistent with other findings. Japanese respondents place a much higher emphasis on product innovation than do U.S. respondents, who prefer to count on customer service for their success.

Does this tell us anything about systematic managerial biases that can subtly influence strategies, resource allocation, and patterns of attention? Imagine that the survey findings are an early indicator of where companies are placing their bets for the future, and consider the plausibility of this possible division of global labor between the triad powers: will the U.S. role be to distribute and service products developed in Japan—while Germany competes effectively with both?

Agenda for the Next Conversation. Comparing and contrasting opinions from managers in many countries provides an opportunity for leaders to hold a mirror to themselves, their companies, and the countries in which they do business. Like an image in a mirror, the images they see could be distorted by any number of cultural factors, or the self-selection of respondents. Still, taken as a whole, the survey results suggest some topics for the next conversation.

• Look to Germany for role models of companies “fit” for global competition. German cosmopolitanism is associated with less reliance on government and more cooperation with suppliers and customers. Working effectively across boundaries could come more easily to German companies, giving them an edge in the global economy. In contrast, companies in English-speaking countries, including the United States, are still comparatively inward-focused.

• Worry about the Japanese emphasis on product innovation and the Japanese work ethic. In fact, worry about Japanese worries. A tendency to be dissatisfied, for example, with the work force, coupled with a productivity emphasis could spur Japanese companies on to more achievements, especially in labor-saving technology.

• Expect less from one’s country and give more. Conflicts and contradictions around political rules for the economic game still have to be sorted out. International companies are not expecting much direct government economic assistance. At the same time, companies that are excellent local citizens contributing to the improvement of society can have a stronger voice in political affairs.

• Get on the child care and education bandwagons. The overwhelming worldwide consensus about the importance of these issues suggests that companies that do not contribute could lag behind their competitors. While cleaning up the environment is also an important arena for action, business leaders already see this as their responsibility. A greater challenge for business is to develop a social agenda that identifies ways to contribute to today’s families and tomorrow’s work force.

• Close the gap between values and practices. Do too many managers lack faith in the capabilities of nonmanagers? General agreement about the importance of people to a company’s success should be translated into opportunities for those at the bottom to get more information, initiate projects, and mingle with management. Similarly, endorsement of the importance of customer service and product quality should be reflected in new ways of including customer and supplier perspectives in decision making.

A smaller world creates a bigger agenda for business. There are more cultures to understand, more social responsibilities to master, more time pressures to juggle, and more relationships to rethink.