UDK: 330.

34:005 Journal of Entrepreneurship

Paper received: 1.07.2020. and Business Resilience
Paper accepted: 19.09.2020. Year III • Vol 3, No 2
pp. 33-38
SCIENTIFIC REPORT

IMPACT OF GLOBALIZATION ON
ORGANIZATIONAL BEHAVIOR
IN BUSINESS ENVIRONMENT
Scott Nealon
CalCampus, NH, USA
E-mails: [email protected]

ABSTRACT

Globalization is the process of international integration resulting from

continuous interchange of ideas, cultural aspects, products, and world
views. It has allowed for companies to continue expanding throughout the
world but connecting on multiple continents. The ability for these
companies to conduct business with other local countries, whether it is
trade or simply working together, has allowed for growth of smaller
companies within the framework. Not only are they able to work together
with the distribution of goods or services, but they are able to share
cultures, norms, technology, and many other things that can help improve
business worldwide. The ease of the internet has allowed for businesses
to connect more rapidly and more frequently sharing these ideas and
norms. Expansion of business is a large responsibility of the global
managers and they must have a set of skills that allow them to operate
and administer this work globally, while having the ability to sift through
information and make proper decisions on potential next steps for the
company. They must also be aware of the necessary changes in the
culture and be aware of market trends in order to be adapted. This paper
aims to take a look at how impactful globalization is to a company, the
pros and potential challenges that come with globalization, and how
global managers are responsible for overseeing the transition of these
companies as the expand internationally.

Key Words: Globalization, Global Managers, Organizational Culture

JEL classification: F6, F01, M14

33
 © Filodiritto Editore – Proceeding

INTRODUCTION

Globalization is the process of international integration resulting from continuous

interchange of ideas, cultural aspects, products, and world views [4]. This has led to much
advancement within organizations in order to keep up with competition. While expansion
for a company can be very beneficial, it comes with many challenges adjusting to potential
new markets. It is important organizations spend time to understand cultures and
understanding how to make the most of expansion through globalization.
Globalization has been heavily impacted by international trade and resulting in increased
productivity worldwide. Globalization provides opportunities for companies to work with
suppliers, manufacturers, and the consumers of their products [5]. Trade agreements must
occur to ensure proper guidelines are in place in order to promote productivity and
efficiency among countries. For example, it can be seen that non-tariff barriers has led to
the rapid increase in economic growth in developing countries because of the newly
available markets for their products [6]. This has led to most companies to relocate to
these countries because of the ability to operate at lower costs when it comes to
production. Because of this, opportunities have expanded for those who may not originally
have the ability to work and thus increasing job opportunities in those countries. With such
a large increase in overall organizations oversees, this also leads to better structures of
those companies to continue to keep up and maximize efficiency and productivity [6].
There are different types of globalization. These include financial, economic,
technological, political, cultural, ecological, and sociological which can all have
effects on organizations production. Political globalization refers to the cooperation
among different countries and can help businesses work together to improve
production. Global organizations exist to ensure fair trade and countries can remain at
peace to work together to ensure flow of goods can continue as they support the entire
world, not just the countries involved [7].
Social and cultural globalization refers sharing ideas, knowledge, and cultural norms
between nations. The ability to share among various cultures is essential and can relate
to many business ideas or trends to help the growth for underdeveloped countries.
Because of this, it is said that this globalization tends to favor the bigger economies
and those tend to support or work to improve those of lesser economic status. One
potential threat to globalization when it comes to distribution of a good or service is
the potential theft or duplication of a product. In order to prevent this intellectual
property right have been established so that company’s products as well as ideas are
protected and can help prevent potential knockoffs [1].
Technological globalization relates countries and their ability to connect through
technology. Over the years, technology advancements have allowed many countries to
speed up there innovation and markets, especially with the use of the internet. This has
allowed those to connect too many people from all sorts of backgrounds to work
together to make necessary improvements. Companies have embraced these
technological advancements as a way to lower costs of production whether it is from
technological improvements or relocating to countries where labor is cheaper.
34
 © Filodiritto Editore – Proceeding

However, it seems to benefit the company but reducing costs by cutting out the middle
man and improving technologies around the workplace in order to effectively reduce
costs without sacrificing productivity. Many of these improvements have also led to
reduced marketing and advertisement costs while improving the ability to reach more
people with their products [12].
All of these can have a very big impact on organizations and their overall growth so it
is important that managers work to becomes more aware of these areas and overcome
any challenges they may face. While all these have an impact on ways organizations
can operate, it is important to understand the different types of global organizations.
These consist of inter-governmental organizations, international non-governmental
organizations, and multinational enterprises. Inter-governmental organizations consist
of only governments and are based on agreed upon terms amongst the countries
involved. An example of an IGO is the United Nations. International non-
governmental organizations are made up of individuals, not governments or groups of
people. While they may seem not as important as the IGO’s, they can have a big
impact when it comes to driving global politics. For example, international non-
governmental organizations can drive individual rights and freedoms. Multinational
enterprises are businesses that operate in more than one country [3]. Their primary
goal is production and profit and utilize expanding to countries of different economic
states to take advantage in order to make a profit.
In order to effectively transition companies to be multicultural, the importance of
having a manager that that accomplish this is vital. It is also important to have a
manger that can have a positive impact on the culture of a company. Culture within a
company is not clearly defined because of the inability to effectively measure culture.
Ultimately, culture consists of core values that lie within the beliefs of the company
and can be large or small scale. These values develop over time and may happen on
purpose or on complete accident. Because of this complexity and the effect on internal
and external factors, it is said that entrepreneurial culture can be very dynamic.
Internal factors include displeasure with the work that has been done so far, group
constraints, speaking clear and common language, and a desire to improve efficiency.
External factors are those that happen outside of the company and tend to be
uncontrollable. These include economic and technological factors such as needing
proper roads for transport or more intensive agriculture [5].
Cultures differ among countries and even people. People within a company can
interpret the environment in a completely different way, thus having different values
or views on culture within the organization. This can be very challenging for
companies to expand because of the impact it may have on culture or within a
different group of people [5]. These are the challenges a global manager must face and
will take a closer look at some of the qualities they possess in order to help improve
culture when faced with adverse situations.
A global manager is someone who can systematically oversee all aspects of the
companies and coordinate both internally and externally. These managers possess
traits that allow them to thrive in the business environment [8]. Self- confidence for a
35
 © Filodiritto Editore – Proceeding

manager is important as they are more likely able to adapt to change [9]. They tend to
have personal values that are seen by those working around them. They tend to be
very driven and have personal goals that they look to meet consistently. They also
have business competence which allows them to have perspective when it comes to
new ideas and potential change. Lastly, they have the skill to analyze the environment
around them and make educated decisions on product quality, structure of cost, human
resources, financial reserves, and innovative abilities, just to name a few [5]. The
Harvard Business Review states that there are three types of managers who fit this
profile which are a business manager, country managers, and functional managers. It
is also important to have quality executives to provide the necessary resources and
support for these managers [10].
The goal of a business manager is to continue to expand and improve performance
within the company, thus creating more profit [11]. The ability of a manager to take
advantage of opportunities while also coordinating actions across barriers is important to
the success of the manager as well as to the company. They are essentially responsible
for adapting the company to the changes they face while maintaining the companies
culture and integrity internally [5]. While they are the point people for projects, a
successful manager has the ability to lean on those around him for insight. This is where
coordination is necessary in order to continue with the movement of products as well as
staying connected and integrated. For this, managers need to possess both administrative
and interpersonal skills. Companies have transitioned into more of this collaborative
style rather than an idea of a single “global leader” to keep the integrity of the company
and allow multiple people to work together to execute the business plan.
While interpersonal and administrative skills are necessary for the coordination within
the company there is also a need for a manager to be aware of the market.
Understanding the local market is important factor to essentially assess the needs of
customers. They can also keep in mind the trend of their competitors. Flexibility in
these situations can allow for the company to make the necessary adjustments and
flow with the market trends, thus preventing a company getting left behind. It is
important that these managers take in information and have the ability to determine
where they can benefit from the information. It is important for these managers to
have a vision and keeping that vision strong. As the information comes in they will
need to refer back to their interpersonal skills to sell their plan to those in higher
positions within the company and prevent them from staying “stale” [10].

CONCLUSION

As we can see, globalization for companies has become very beneficial and important.
Globalization has led to expanded markets, free flow labor, and improved
infrastructure. By expanding markets, companies are able to reach these new markets
in a variety of different ways, especially through the help of technology. They are also
able to potentially relocate to different countries to provide job opportunities to these
underdeveloped countries while reducing labor costs. It certainly is not a simple
36
 © Filodiritto Editore – Proceeding

transition as relocation requires re-structuring and understanding new markets and

territories. The free flow of labor has allowed companies to expand their talent pool
without many restrictions. These candidates bring value to the company as they
improve efficiency and productivity within the workplace. Potential negatives of
workflow labor have been workplace discrimination and improper use of child labor
and slavery. Lastly, in order to keep up with globalization due to improved trading
systems, local infrastructures have been created or improved to help improve the
efficiency and safety of transportation among goods or products [6].
With improvements comes potential consequences and these include environmental
degradation, marginalization of local firms, and unemployment. Companies that
expand globally leave the potential for the current location to be acquired or even
reduced, resulting in jobs lost. Natural resources have been overused thus resulting in
the environment potentially degrading [6]. Though some have theorized the potential
negative effects of globalization on mortality rates, one particular study looked more
closely and actually found that those in more globalized countries tend to show lower
mortality rates [2].
It is important to have someone in place that can continue to drive innovation and have a
good feel for the market trends to drive the company forward. There are many traits of
successful global leaders but they all revolve around the ability to interact with those
around them while having the ability to take in information from the local market and
make assessments or decisions on their needs. They have the ability to be very clear with
roles and responsibilities and understanding the company’s goals and mission and can
hold the integrity of the company intact. They have a high level of confidence and other
traits that allow them to analyze situations, adapt, and be innovative to stay current with
market trends and competitors. Change within a company is inevitable. When there is a
change in status quo, there is a need to adapt and this may cause a disruption in a
company’s routine, provide dissatisfaction with the current situation, provide a lack of
trust, and have a need for efficiency, more external pressure, and often a fear of the
unknown. While adaptation or change is often hard for companies, it is the manager’s job
to provide a sense of security for the employees and be a leader in order to prevent
resistance. There are many ways an employee can be resistant towards change. These
include logical resistance, psychological resistance, and sociological resistance. Logical
resistance is based around ignoring factual information, rational reasoning, logic and
science. This is usually at the onset of the change and can usually be expected by
employees. Psychological change is based on emotions, sentiments, and attitudes. This is
when there is a fear of the unknown, mistrust management’s leadership, or feels their
security or self-esteem threatened. Lastly, sociological resistance is also logical when it is
as a disruption among the group’s values, norms, and interest. It is important for managers
to understand that this is normal behavior and will usually arise when change is occurring
so it is important that they have a plan on handling these different types of resistance. It is
the combination of these attributes that allow for manager’s to build personal relationships
with their employees, administer and delegate work appropriately, and take in information
and utilize it to the best of their ability to push the company in the right direction.
37
 © Filodiritto Editore – Proceeding

LITERATURE

[1]. Carr, M. & Chen, M. A. 2001. Globalization and the informal economy: How
global trade and investment impact on the working poor. International Labour
Organization.
[2]. Figge, L., Oebels, K. & Offermans, A. The effects of globalization on Ecological
Footprints: an empirical analysis. Environ Dev Sustain 19, 863–876 (2017).
[3] Harvard Law School. Types of IGO’s. Retrieved from
https://hls.harvard.edu/dept/opia/what-is-public-interest-law/public service-
practice-settings/public-international-law/types-of-igos/ on Feb 20, 2020.
[4]. Newstrom, J.M. Organizational Behavior: Human Behavior at Work. 13th
Edition. 1997.
[5]. Radovic-Markovic, Mirjana. Impact of Globalization on Organizational Culture,
Behavior and Gender Role, IAP Publishing, United States of America, May 1,
2012.
[6]. Rodrik, Dani. 2001. The global governance of trade as if development really
mattered. Background paper for the Trade and Sustainable Human Development
Project, UNDP.
[7]. Elbeshbishi, A.N.and Ahmed Al A'ali, E. (2020). Fair Trade and Ethical
Consumerism: A Complementary Perspective, IGI Global, United States.
[8]. Bartley, J., Marcus, P. B., Massimiliano, C., Mombert, H., and Piermartini, R.
(2015). The Role of Trade in Ending Poverty. Geneva: World Trade
Organization.
[9]. Radović-Marković, M., et.al (2017), Organizational behavior and types of
leadership styles and strategies in terms of globalization. Newton Abbot:
Compass Publishing, 2017. 257 str., ilustr. ISBN 978-1-912009-87-9.
[COBISS.SR-ID 512476514].
[10]. Bartlett, D. (2003). Management and Business Ethics: A Critique and Integration
of Ethical Decision‐making Models, British Journal of Management, September
2003. https://onlinelibrary.wiley.com/doi/abs/ 10.1111/1467-8551.00376.
[11]. Radovic-Markovic, M. (2008), Managing the organizational change and culture
in the age of globalization. Journal of business economics and management, (SCI
list Thomson Reuters/M21). ISSN 1611-1699, 2008, vol. 9, issue 1, str. 3-11.
[COBISS.SR-ID 1025173173].
[12]. Larsson, T. (2001). The Race to the Top: The Real Story of Globalization,
CATO Institute, Washington, D.C.

38