Staffing global marketing positions: What we don’t know can make a difference

Staffing Global MarketingPositions: What We Don’t

Know Can Make A DifferenceMichael Harvey Milorad M. Novicevic

As the global environment for business becomes more volatile and the need to institute frame-breakingchanges in the conventional wisdom of management increases, global organizational ignorance aboutthe usability of its existing knowledge becomes a critical issue. Ignorance in its most simple form is thelack of factual knowledge but unawareness of ignorance is “not knowing what one does not know” (i.e.,being ignorant of what information would be useful in solving global organizational problems). Thefocus of the paper is on the underlying factors that contribute to escalating organizational ignoranceas more firms attempt to globalize their operations. In the paper we examine two types of organizationalignorance: pluralistic and probabilistic which both can be experienced in a global context. In addition,a means to reduce the risk of global organizational ignorance through an innovative global staffingprocess of combining expatriate and inpatriate managers is explored.

T he Walt Disney Company has areputation of being a purveyor of a

“Magic Kingdom.” This is based on itswidely recognized sophisticated mar-keting knowledge and a keen insightinto the highly competitive entertain-ment business. Disney’s dynasty ofpopular attractions includes themeparks, resort hotels, full–length featuremovies, animated cartoons, consumer

goods, and a host of special projects.The Disney Company has been charac-terized as modern day marketing mavenuntil their financial quagmire, EuroDis-ney. Disney exhibited seemingly inex-plicable global organizational ignorancewhen it made a series of fundamentalmarketing errors opening EuroDisneyin France. Those included: poorly con-ceived park design, location of the parkwas too distant from population centers,pricing too high, inadequate training/motivation of employees and the French“only” atmosphere of the park offendedother European visitors.

Similar stories to that of Disneyabound with marketing legends likeWal-Mart (failures in Brazil, China, and

Michael Harvey, Puterbaugh Chair in AmericanFree Enterprise, Michael F. Price College of Busi-ness, University of Oklahoma, Norman, OK73019, USA. Tel: 11-405-325-3376; Fax: 11-405-325-7688 ,[email protected].. Milorad M.Novicevic, Assistant Professor International Busi-ness, University of Wisconsin—La Crosse, LaCrosse, WI, USA.

80 Journal of World Business / 35(1) / 2000

Indonesia), PepsiCo (failure in Venezu-ela), Apple (failure in the Ukraine),General Motors (failures in SouthAmerica), and the list goes on and on. Isthere a common denominator to theglobalization-related failures of thesehighly successful organizations based inthe U.S.? How can these organizationsreduce the risk of making similar futurefailures due to this ignorance of theglobal marketplace?

Many organizations, as we haveknown them, are losing one of theirmost fundamental qualities; the frame-work of operational certainty in theglobal marketplace (Caves, 1996). Theloss of operational certainty is going tobe particularly accentuated as organiza-tions attempt to capture a share of thegrowing emerging markets in the globalmarketplace. These countries (e.g.,China, India, Indonesia, Malaysia, andthe like) are going to account for 7/8’sof the global population and are thekeys to stimulating growth in the ma-ture developed economies in Europeand the U.S. In addition, most of theseemerging countries represent very dis-tant cultures where managing by the“traditional” expatriation model ofstaffing will be costly and ineffectiveeven if expatriates are willing to takethe assignments. Over the next 5 to 10years this growth of emerging marketsis going to create a “competency defi-ciency” in qualified global managers ca-pable of exploiting market opportunitiesin these unique markets (Gregersen,Morrison, & Black, 1998). In effect, thetop corporate managers will be over-loaded with uncertainty and ambiguitythat may engender the increased risk of

global organizational ignorance plagu-ing their global mindset.

As organizations expand into emerg-ing markets, the complexity of the en-vironments facing managers expandsdramatically. What used to be success-ful multidomestic managerial operatingtemplates become obsolete routines inthe global context forcing managers to“unlearn” the previously acquired do-mestic competencies. Unlearning re-quires the abandonment of informationthat is not appropriate for the presentsituation or time, regardless of howvaluable the information was in the past(McGill & Slocum, 1993). This type ofknowledge restructuring is discontinu-ous and difficult for managers to effec-tively accomplish given the success/investment in the knowledge accruedthrough their past successes.

Discontinuous learning in organiza-tions makes a vast majority of presentmanagement’s competencies obsolete.The traditional evolutionary model,based on the knowledge of certainty,served as the reliable platform for orga-nizations in stable environments. Rec-ognizing global organizational igno-rance may reveal the areas of rigidity intraditional approaches to global organi-zational learning (Smithson, 1993). Theuse of organizational knowledge thatneeds to be revealed in the global mar-ket include: 1) knowledge of how toacquire insight from the organization’sglobal relationships; 2) understandingof how to activate this knowledge ac-quired from global relationships; and 3)knowledge of how to assess the reliabil-ity of this acquired knowledge. Bylearning from global ignorance, man-agement unlocks and licenses the op-

Reducing Global Organizational Ignorance81

portunity for its managers to reflectivelyprocess the missing data into innovativeinformation and such information intonew knowledge. Therefore, the processof recognizing organizational ignoranceis one step toward creation of newknowledge out of the ambiguity inher-ent in the global context.

Wal-Mart, through its failure in Bra-zil, documents global ignorance in partdue to its lack of understanding whatproducts were appropriate for the localBrazilian market (no demand for cord-less tools, leaf blowers, and Americanfootballs), differences in operating sys-tems (forklifts purchased failed to workwith standardized pallets used in Brazil)and most importantly, sales for Sam’sClubs fell well below sales forecastsbecause most Brazilian consumers donot have enough storage space to takeadvantage of buying in bulk. Therefore,in an effort to reduce global ignorance,a process must be designed to producethe shared understanding among the or-ganization’s stakeholders in a way thatassists them in unraveling the globalcomplexities and to identify feasible al-ternative opportunities for specific ac-tions based on the new, emergentknowledge and not on historic conven-tional wisdom.

In essence, recognizing global orga-nizational ignorance allows manage-ment to “see” the relevant knowledgeneeded for globalizing the organiza-tion’s business activities. This paper ex-amines the concept of organizational ig-norance as it may arise in the process ofincreasing an organization’s strategicglobal orientation. The paper is dividedinto three sections: 1) Recognizingglobal organizational ignorance as not

only the complement of organizationalknowledge but also as the referent oforganizational learning and unlearning;2) Focusing the managerial issues sur-rounding global organizational igno-rance; and 3) Recommending steps tocure global organizational ignorance.Each of these sections will be discussedin detail.

GLOBAL IGNORANCE

Frequently, executives unwillingly sup-port global organizational ignorance be-cause of the trade-offs between the or-ganization’s need to adapt to theemerging global market and their per-sonal investiture in the “certainties” ofthe domestic success they have enjoyedin the past. Key managers may becomeunaware of the necessary transforma-tion of domestic practices and policieswhen globalizing the organization.Their ignorance results from the socialinfluence exerted by top decision-makers in the process of developing arationale for undertaking a global strat-egy. This reluctance to recognize theneed for change may occur in strongcorporate cultures (i.e., IBM, Disney,Nike, Microsoft, Apple, Wal-Mart)where there is an inordinately high levelof conformity to the cultural norms es-tablished on the past domestic successof the organization. The result is thatmanagers frequently ignore emergingknowledge that challenges the existingpolitical base of the entrenched culturein their highly successful organizations.

When management begins to betterunderstand its level of learned igno-rance, it can then begin to acquire the


insight and understanding of the conse-quences of this ignorance on the vagariesof competing in the hyper-competitiveglobal business environment. This insightinforms management of the larger rami-fications of the organizational ignorance,which may be instilled among stakehold-ers in two distinct forms: 1) pluralisticignorance; and 2) probabilistic ignorance.

PLURALISTIC IGNORANCE

Pluralistic ignorance (Allport, 1924) isa social phenomenon that reflects a “sit-uation where people operate within afalse social world” (Fields & Schuman,1976:427) creating “patterns of falsebeliefs” (O’Gorman, 1986:335) that areeither individually inferred or collec-tively shared. Pluralistic ignorance be-longs to the social comparison-basedfamily of psychological states (i.e., suchas false consensus or false uniqueness)(Prentice & Miller, 1993; 1996). Inother words, pluralistic ignorance hasbeen found to emerge in diverse con-texts in which the conflict between gen-eral and specific social norms is mostsalient (Lafane & Darley, 1970; Korte,1972).

In these instances, the individualgroup members recognize the discrep-ancy between their private behavior andthoughts for themselves but do not as-sume it for other group members(Shamir & Shamir, 1997). Therefore,they believe that the actions of othersaccurately reflect the others’ individualthoughts and feelings. For example,stakeholders of an organization recog-nize the growing importance of globalmarkets for the organization’s opportu-

nity to expand but do not observe anyindications from top management otherthan to maintain the domestic base forthe growth. Therefore, managers as-sume that the top management has someprepared plans, which they are notaware of, for effective action. There-fore, their pluralistic ignorance preventsthem from raising the “red flag.”

An example of the dynamics of plu-ralistic ignorance could be observed atMerck & Co., a world leader in thepharmaceutical industry. In 1998, thecompany saw both its sales and profitgrow 19% over those of 1997, bringingsales to $23.6 billion and net income to$4.6 billion. Merck’s global success,shared by its customers and investors,will end soon, says analyst StephenScala. In the years 2000 and 2001,Merck’s U.S. patents expire on five bigdrugs that are currently generating $5billion in sales on a global basis. Scalaanticipates that Merck’s global salesgrowth will drop to 8% in 2001 and 6%by 2002 slowing its net income growthto 9% and 6% in those years. RaymondGilmartin, Merck & Co. Chairman,tried to sustain the power of the stake-holders’ pluralistic ignorance spell byasserting, “Merck has defied conven-tional wisdom before.” He contendedthat Merck’s product line of new drugs,which will be first launched in the do-mestic market, will more than offset thedrop. This assertion seemed to havebeen supported when Merck’s drug, Zu-cor, generated $3.6 billion by early1997. However, a drug development cy-cle has dramatically shortened today in-creasing the uncertainty of a newlylaunched drug’s success. In 1997,Warner–Lampert obtained an acceler-


ated approval for Lipitor, a drug parallelto Zucor. Warner also formed a co-marketing alliance with Pfizer, Inc., tocreate a combined sales force of 2,700sales reps (vs Merck’s 1,400). As theresult, at the end of 1998 June quarter,Lipitor had a 31% share versus Zucor’s24.5%. Merck has maintained its deter-mination to pursue drug developmentbased on its internal development.Merck’s stock, traded at p-e ratio of26.5 (vs industry average of 31.5) basedon 1999 expectations, reflected thestakeholders’ loss of confidence in thecontinuation of Merck’s past globalsuccess.

PROBABILISTIC IGNORANCE

In a probabilistic view of global busi-ness, contextual ambiguity about thepotential of emerging markets elicitsmanagers’ behaviors that have a ten-dency to bound their judgment of futureto their past business experience. Ingeneral, this means that, when the man-agers’ ignorance becomes probabilisticbecause of the contextual changes,managers rely on a limited number ofexperiences that generate suboptimalorganizational outcomes. Specifically,in global probabilistic contexts, threecommon heuristics: representativeness,availability, and anchoring, become sa-lient and lead managers to generate or-ganizational ignorance instead of gain-ing knowledge.

The representativeness heuristic im-plies that managers, when evaluatingthe probability of an event, may rely onthe perceived similarity of that event toa class of events known to them from

their past experiences. The availabilityheuristic, however, implies that manag-ers rely on the ease or rate at which anevent comes to their mind (i.e., morerecent and frequent events bias manag-er’s judgment). Availability heuristic isgenerated when the managers’ limittheir efforts to acquire new knowledgeby relying on their familiarity withevent-related cues. Their resulting igno-rance stems from such poorly groundedjudgment, inflated by their use of avail-ability heuristic. Therefore, when as-sessing the potential in the global mar-ket, managers may attempt to use theavailability of the growth logic of thedomestic marketplace, which is not ap-plicable to the global market place.

A case illustrating probabilistic igno-rance was observed in the marketingstrategy of Gerber, Inc. which at-tempted selling the baby food productsin Hungary by featuring a motherwarmly embracing her baby. Unfortu-nately, the model in the ad was wearingthe wedding ring on her left hand; How-ever, Hungarians, wear their weddingrings on their right hands. In otherwords, Gerber was advertising to un-wed mother in Hungary to buy theirproducts. Those same executives haddifficulty in determining why sales didnot reach the forecasted levels.

Contrary to the availability heuristic,the anchoring heuristic implies thatstakeholders base their judgment on thereliability of their initial “guesses” and,therefore, bias their subsequent “guess-es” to be consistent with their initial“guesses.” Anchoring explains the man-agers’ overconfidence in guessing therelevance of events for their organiza-tion particularly in dynamic environ-


ments. The domestically oriented man-ager may assume that the length of timeto effectively introduce a new globalproduct or the time period for imple-mentation of a brand positioning strat-egy will be similar to the time frameexperienced domestically.

Motorola, Inc. had relied for a num-ber of years on its dominant knowledgeand global market share in analog cel-lular phone business. Many analysts feltthat Motorola was noticeably late inlaunching digital mobile phone prod-ucts. Motorola suffered from probabi-listic ignorance and misjudged the rateof growth in digital mobile phone seg-ment. The Scandinavian manufacturers,Ericsson and Nokia, timely recognizedMotorola’s ignorance and aggressivelyfocused their strategic product thrustsinto the digital mobile phone segment.As a result, Ericsson and Nokia re-corded respective sales growth of 35%and 34% whereas Motorola recordedthat of mere 6.5%. Furthermore, Mo-torola’s 1998 stock was off 40% fromthat of 1997. While Motorola is restruc-turing its analog business, Ericsson andNokia are preparing for 2001 when Ja-pan, Europe, and the U.S. will finishlaying the infrastructure for the thirdgeneration wireless technology wave.Thus, Motorola’s response has becomea vicious circle of compromising anduntimely market responses.

FOCUSING THE MANAGERIAL ISSUES

SURROUNDING GLOBAL

ORGANIZATIONAL IGNORANCE

The basis of global organizational igno-rance centers on managements or other

stakeholders’ unawareness about whichinformation is relevant for correct inter-pretation of data that are available. In aneffort to focus the issues surroundingglobal organizational ignorance, thecommon errors associated withcollecting/interpreting data need to beclarified. There are four errors com-monly recognized as being committed,which become salient when past knowl-edge is incompletely defined by re-searchers to create new knowledge inunknown contexts:

1. Type I Error: this type of errorentails falsely rejecting informa-tion that are actually correct (i.e.,correct knowledge is disregarded/discarded).

2. Type II Error: this type of errorallows erroneous information to beintegrated into the body of knowl-edge accepted in the organization(i.e., information is retained when,in fact, it is inadequate, misleadingor time-locked relative to futuredecision making).

3. Type III Error: this type of erroroccurs by selecting the right answerfor the wrong reason or conversely,correctly rejecting knowledge forthe wrong reason (i.e., the final de-cision outcome is correct but thelogical/rationale/information used inthe decision were flawed).

4. Type IV Error: the data or infor-mation may be accurate but due tothe use of “wrong” analysis(technique/interpretation) the trueconclusion is not found (i.e., thedata are correct but the means usedto devise the “answer” or knowl-edge is inappropriate drawing the


decision maker to falsely concludethe answer).

In an effort to gain insight into therole that decisional or interpretative er-rors play in the creation of global orga-nizational ignorance, Table 1 is pre-sented (see Table 1). Table 1 illustratesthe four most common types of errorsmade from inappropriate reasoningfrom past experiences/knowledge,which thereby increase/extend globalorganizational ignorance. These errorsinfluence both the stakeholders’ deci-sion frame-of-reference (engenderingprobabilistic ignorance) and interpreta-tive frame-of-reference (engenderingpluralistic ignorance). Each cell of theTable has an example in a global con-text of how decision-makers can extendthis normative ignorance into makingglobal strategic decisions. For example,a Type One Error under pluralistic ig-norance addresses the fundamental is-

sues of adaptation of successful domes-tic strategies to the potentially dramaticenvironmental differences facing orga-nizations in the global context. Thequestion that needs to be addressed is,“which functions/strategies need to beadapted and to what degree in whichmarkets?” The pluralistic ignorance ofdomestic decision-makers would be thatif these functions/strategies have beensuccessful in the domestic market, wecan use these functions/strategies in aglobal context. Therefore, a standard-ized marketing strategy would be im-plemented by the marketing team basedupon the universality of needs for theirproduct.

PepsiCo International made a plural-istic mistake in Venezuela when themanagement assumed that their prod-ucts would be purchased in the samemanner and retail outlets as they aredomestically. Frequently, soft drinksare purchased one at a time in Venezu-

Table 1Type of Information Error

Type ofIgnorance Type I Error Type II Error Type III Error Type IV Error

PluralisticIgnorance

management doesnot recognize theneed to adaptexisting strategiesto local context ofindividual markets

managementimplementing astrategic decision overthe objections of analliance partner moreknowledgeable of theenvironment

management notentering a marketbecause there are toomany governmentregulations . . . whendemand was not largeenough to support anew competitor

management not correctlyassessing market potentialbecause of low per capitaincome . . . when there area large number of peopleper household

ProbablisticIgnorance

managers argue thatthe global market isnot attractive due tothe need tocontexualizemarketing efforts toforeign markets

managers not rejectinginput from subsidiarymanagement that localeconomic conditionsprevent them fromreaching their goals

managers expecting tosuccessfully competein a country becausethere are only localcompetitors

managers conducting asurvey to collect data onconsumers in developingcountries withoutappropriate modification toresearch methodology


ela and from street vendors rather thanfrom more traditional/formal retail out-lets. Although the demand for PepsiCoInternational products was universal,the marketing strategy and purchasingof the product needed to be modified toeffectively compete in the Venezuelanmarket. By not making these modifica-tions to the marketing and product strat-egies, over 75% of the potential sales inthe country were overlooked.

Another illustration of emerging or-ganizational ignorance can be illus-trated by examining a Type III Error. Inthis situation, the ignorance of the man-agement or other stakeholders relativeto the global decision is that competi-tion will be less strenuous because only“local” competitors are selling productsin the selected market place. This lackof contextual insight into the regulatoryadvantages given to some local produc-ers provides the management with a dis-torted sense of reality.

The text in Table 1 is meant to dem-onstrate how operational ignorance oc-curs when decision-makers do not rec-ognize their past experiences andknowledge is no longer applicable tothe dynamic global environment. With-out a clear understanding of the type oferrors that can be committed when col-lecting information, ignorance willmore than likely be perpetuated in theorganization. Simple misconceptionscan damage the chances of an organiza-tion attempting to compete in the globalcompetitive arena. For example, manypeople think that Tokyo and Singaporeare close neighbors. In fact, they areover 3,300 miles apart, about the samedistance that separates New York Cityfrom London. Just as many would not

know that Miami is further south thanMonterey, Mexico; because people“know” that Mexico is south of the U.S.A basic ignorance of the global geogra-phy may doom manager’s effectivenessin the global marketplace.

The commission of one of the fourtypes of significant errors may resultfrom the inappropriate use of domesticknowledge for successfully competingin the global marketplace. The transi-tion from the relative certainty of thedomestic market to uncertainty of theglobal market is defined as the degree towhich probabilities of success in theglobal context are ill defined. Therefore,uncertainty gives birth to incompleteknowledge. In an effort to reduce therisks of global organizational igno-rance, there may be a need to change thecomposition of the management team toreflect the heterogeneity of the globalenvironment. Therefore, staffing globalpositions becomes an integral aspect ofsolving the global business dilemma.

REDUCING GLOBAL ORGANIZATIONAL

IGNORANCE: A STAFFING SOLUTION

Developing a global management staff-ing program to address the risk ofglobal organizational ignorance allowsthe integration of missing context-specific knowledge in the managementof the global organization. Determiningthe most effective and efficient candi-date pool to confront global organiza-tional ignorance necessitates identifyingfactors that affect staffing assignments(see Table 2). First, competencies needto be developed within the organizationto effectively learn and manage rela-


tionships embedded in various socialcontexts. These competencies relate tothe use of social knowledge localized tospecific national markets.

In general, if the economy of the hostcountry is less financially and educa-tionally developed, the cultural distancebetween parent and host countries in-creases if the parent organization isbased in a developed country. The needto develop mutual social knowledge(i.e., the ability to understand and pre-dict “others” general patterns of behav-ior in a particular context) to reduceglobal ignorance and to strategicallyutilize knowledge as a competencywithin the organization escalates withthe degree of economic and cultural dis-tance. Based on the degree to whichsocial knowledge of the host countryneeds to be interpreted, the global orga-nization should focus on strategicallydeveloping both an expatriate (i.e.,home country) and inpatriate (i.e., hostcountry nationals relocated to headquar-ters) pools of overseas managers. This

program of combining expatriation andinpatriation creates avenues for socialknowledge exchange between head-quarters and subsidiaries in host coun-tries. This learning may provide thefoundation for sustained competitiveadvantage in the global marketplace(Fulmer, Gibbs, & Keys, 1998).

Inpatriate managers perform aboundary-spanning role between head-quarters, the foreign subsidiary andtheir cultures (Thomas, 1994). The or-ganizational position of the inpatriatemanagers should be to provide compe-tent leadership to the expansion effortsin developing/emerging markets. Theinpatriate managers would be located inthe domestic organizational structurebut would make frequent overseas tripsto provide direction to facilitate organi-zational global learning. By locating theinpatriate managers in the home coun-try, top management would not experi-ence the loss of control generally feltand partially experienced when usinghost country nationals located in their

Table 2Interactive Decision Matrix: Country/Pool of Candidates

High

Equivocalityof SubsidiaryPeformance

Goals

Low Cultural Distance High

SocialKnowledge

Low

SocialKnowledge

High

SocialKnowledge

Low

SocialKnowledge

High

Level ofEconomicDevelopment Low Exptriate Inpatriate

Inpatrite (P)Expatriate (S)

Inpatriate (P)Expatriate (S)

High Expatriate InpatriateInpatriate (P)Expatriate (S)

Inpatriate

Low Expatriate Inpatriate Inpatriate Inpatriate

Low High Inpatriate Inpatriate Inpatriate Inpatriate

Notes: P 5 Primary, S5 Secondary.


own country. In addition, by having theinpatriate managers domiciled in thedomestic organization, the process ofboth multiculturalism and transcultural-ism can be activated. By utilizing theirsubtle cultural input, the organizationhas undertaken the first strategic step indeveloping a multicultural managementgroup and global learning organizationthat is needed to compete effectively inthe global market (Nemetz & Chris-tensen, 1996). Inpatriate managers canalso provide invaluable input in adapt-ing organizational strategies in emerg-ing markets. They can provide contex-tual input on the adaptation of marketstrategies that are locally oriented buttie to the overall global objectives of theorganization.

The greater the global organization’sneed for social knowledge associatedwith a given host country, the greaterthe emphasis should be on expandingthe inpatriate candidate program andpool of candidates. Finally, the specificnature of understanding the myriad ofissues surrounding the organizationneeds to be explored. The factors thatcould directly influence the “nature” ofthe global organizational ignorance are:1) level of host country economic de-velopment; 2) cultural distance/noveltybetween the home and host countries; 3)the equivocality of subsidiary perfor-mance goals; and 4) the social knowl-edge of the potential candidate group toreduce the ignorance level in host coun-tries.

LEVEL OF ECONOMIC DEVELOPMENT

The need to examine the level of eco-nomic development stems from the fun-

damental differences in how business isconducted within developed and devel-oping countries (Rostow, 1971). Theabsence of business infrastructure andstandardized processes and proceduresfor conducting business in many devel-oping countries necessitate a high levelof integration of business strategies(Dadfer & Gustavsson, 1992). Therehave been a number of classificationschemes developed to categorize eco-nomic development of a nation. But,most recently, the World Bank has de-veloped a widely accepted classificationschemata.

The main criterion used by the WorldBank is gross national product (GNP)per capita. Every world economy isclassified as low income—less than$675 per capita; middle income—income of more than $675 and less than$8,356 (and within the middle-incomecategory of $675–$2,695 as lower-mid-dle-income); high income—per capitaof greater than $8,356 (World, 1995).Low and middle-income economies arefrequently described as developingcountries. The World Bank classifica-tion is then extended to geographic ar-eas and by export product categories.Each country may be viewed from in-ternal economic perspective and in anexternal geographic/economic perspec-tive relative to other countries in a re-gion and their exports to the rest of theworld. By doing so, a level of sophisti-cation of business infrastructure can bederived. The greater the economic dis-tance between the home and host coun-try, the more difficult it will be for non-national managers to do business. Thecontextual nature of business in devel-


oping countries requires an in depth un-derstanding of “how business works.”

CULTURAL DISTANCE/NOVELTY

BETWEEN HOST AND HOME COUNTRIES

The concept of cultural distance hasbeen analyzed from a number of viewpoints (Hofstede, 1980; MOW, 1986;Bond & Hofstede, 1989; Trompenaars,1993, Gannon, 1994). Each of these ap-proaches has attempted to identify var-ious dimensions of culture that can beused to classify cultures into similarcategories/groups. The most frequentlyused classification system was devel-oped by Hofstede, 1980. It uses fourprimary constructs by which to classifycultures: those being 1) individual-col-lectivism; 2) power distance; 3) uncer-tainty avoidance; and 4) masculinity-femininity. The basic assumption of thisclassification scheme suggests that thegreater the similarity between home andhost countries, the less difficulty expa-triates have in adjusting to the host cul-ture.

As the cultural distance between twocultures increases, social knowledge be-comes more important for managing inthe host country. The need to have cul-turally astute managers is accentuatedin culturally distant countries. There-fore, the inpatriate manager is projectedto provide the best fit for reducing ig-norance and, therefore, will be the mosteffective manager. The manager’s self-efficacy (e.g., the degree the managerbelieves that they can be successful in aparticular global assignment) favors theinpatriate manager over the expatriatemanager in culturally “tough” environ-ments (Bandura, 1986, 1988).

EQUIVOCALITY OF SUBSIDIARY

PERFORMANCE GOALS

As organizations become more global, theconcern for coordination of resourceswithin the global organization’s networkincreases. During international and multi-national organizational phases, control-ling resources centrally was preferred toimprove the coordination of these assetsto maximizing usefulness (Caves, 1996).As the global network organizational de-sign concept evolves, individual manag-ers should be provided the opportunity tomaximize resource utilization locallywhereas coordinating asset flows betweenunits increases the degree of subsidiaryperformance equivocality. The concept ofperformance equivocality relates to thedifferences in expectations betweenglobal entities based upon local conditionbut framed by network expectations of“acceptable” performance for each net-work unit. The greater the equivocality insubsidiary performance, the more likelythe level of ignorance of management inthe headquarters. Therefore, the greaterthe need for managers with local contex-tual knowledge to operating in the homecountry organization. The degree ofequivocality in subunit performance de-pends upon the following factors in theinternal context of a global organization:1) the degree of understanding of the op-portunities facing the unit in its local en-vironment; 2) management’s experiencein competing in the local market; 3) thelength of time the organization has beenactively competing in the local market;and 4) the motivation for entering themarket and the resulting competitive pos-ture developed over time.


The greater the latitude in the corpo-rate strategic orientation, the more ex-perience and breadth of managerialcompetency are needed from headquar-ters to form contextual strategies andcompetitive positioning. These reduceignorance of how to effectively com-pete in the local market. At the sametime, the foreign subsidiary managermust assess the global network goal ex-pectations and remain consistent withthese expectations to maintain/improvethe network efficiency. The less that isknown about the local market or thegreater the uniqueness of the localconsumer/competition, the greater theneed for inpatriation.

SOCIAL KNOWLEDGE OF CANDIDATE

GROUP

To compensate for the cultural and eco-nomic distance that influences the man-agement’s performance, social knowl-edge about the host country subsidiarycan be developed (Tolbert, 1988; Sohn,1994). Social knowledge focuses on themanager’s ability to understand andpredict host country nationals’ behaviorin the context of the host culture. Suchknowledge lowers the decisional andinterpretative ignorance about the ac-tions in the host country. The impor-tance of having local social knowledgeincreases in many cases the greater theeconomic and cultural differences be-tween home and host country. The so-cial knowledge of knowing what andhow to manage in a host country framemanagement’s strategic orientation to:1) predict how locals internal (employ-ees) and external (customers, suppliers,

etc.) stakeholders are more than likelyto act; 2) relate observed behaviors tohow locals are understanding thepresent state of affairs; 3) better under-stand the locals’ frame-of-reference rel-ative to perceived/actual behaviors; 4)better communicate with and under-stand (decipher) verbal and nonverbalcommunications from locals (Sohn,1994). In effect, social knowledge alsohelps to insure the most effective utili-zation of resources in a local context.Less bureaucratic and/or formal con-trols will be needed from headquarters,thereby, reducing the level of surveil-lance necessary to insure compliancewith corporate goals and strategies. So-cial knowledge accentuates the ratio-nale for building a multicultural man-agement perspective to reduce globalorganizational ignorance.

As is illustrated in Table 2, globalstaffing decisions could be signifi-cantly improved by understanding theinternal and external environmentsthat the overseas manager is to beassigned to, as well as, the socialknowledge of each candidate pool.The lower the complexity/differencesin economic and cultural values theless social knowledge or experience isneeded. Therefore, it is more appro-priate to use expatriate staffing. As theenvironments become more distant/complex, the manager needs localcontextual knowledge. The inpatriatepool of candidates seems to have acompetitive advantage in these situa-tions. As the goals of the local orga-nization are less well known and aredesigned to be opportunistic to thelocal market, the contextual knowl-


edge of the inpatriate becomes an im-portant selection criterion.

If the goals of the global organizationare to effectively utilize global re-sources and efficiently develop local as-sets, the most appropriate means to de-velop these dynamic capabilities indistant environments is in the use of theinpatriate. Expatriates will continue toprovide expertise in developed econo-mies that have less novel cultures andthe goals of the organization are morearticulated and consistent betweenheadquarters and the subsidiaries. But,as the majority of future growth andvolume of business will come fromemerging markets where global organi-zational ignorance will be at its highest,inpatriates provide the best means ofcoping with such ignorance and maxi-mizing the resources of the global orga-nization (Arnold & Quelch, 1998). Atthe same time, these individuals will beable to configure these resources intodynamic capabilities given their socialknowledge of the local markets. Oneadditional advantage will accrue to theglobal organization that uses the inpa-triation model. These individuals willhave extended tours of duty or multipleassignments, thereby, improving theirexpertise and skills to more effectivelymanage the assets of the global organi-zation, a renewable global human re-source. Global ignorance should be re-duced substantially. On the other hand,expatriate look at their 3 to 5 year as-signments as a one time requirement toearn the international credentials and donot expect to be reassigned internation-ally thereby, becoming a nonrenewableresource and less important in eliminat-ing global organizational ignorance.

THE VALUE OF RECOGNIZING GLOBAL

IGNORANCE

The recognition of global organiza-tional ignorance is emerging as a potenttool to foster global organizational un-learning and learning. Today’s hyper-competitive global environment blursthe boundary between the unknown andthe known, opening up the possibilityfor emergence of pluralistic or probabi-listic ignorance in those organizationsthat are globalizing. The transition froman asset-based to knowledge-basedeconomy has caused a shift in relevanceof organizational capital from economicto social capital. However, managersand other stakeholders are often un-aware of the causal structure underlyingthis shift. As the result, the boundarybetween global organizational knowl-edge and ignorance has become fluid,permeable and invisible to the stake-holders. Global organizational igno-rance has thus become the shadow ofglobal organizational knowledge. Bydelineating this shadow, organizationalstakeholders can recognize their sharedfalse beliefs about the assumed organi-zational knowledge and act on them toreveal what is not known.

Contrary to the analysis that is ori-ented toward studying the anticipatorypower of knowledge integration, globalorganizational ignorance analysisshould take the opposite orientation. Itshould be toward the analysis of socialcognition that will identify comple-ments of corporate strategies choiceprocesses. Such processes explain theunderlying mechanisms that shape theframing of managements’ decisions inglobal knowledge acquisition.


It is anticipated that organization sci-ence and practice will ultimately inte-grate the concepts of organizationalknowledge and organizational igno-rance into a pragmatic quasi-knowledgesynthesis. Such synthesis will identifywhen and where the framing of organi-zational and managers’ choices influ-ences the emergence of organizationalignorance and study how organizationalignorance is generated in global envi-ronments. Better diagnosis and predic-tions of organizational quasi-knowledgewill be the result because the standardframework of knowledge capital will becomplemented by understanding globalignorance liabilities. The practical goalis to identify contexts in which globalignorance liabilities are salient and in-fluential. The Drucker’s notion of theexponential global information wasteforeshadows where the contexts breed-ing ignorance can be found in organi-zations that are globalizing (Drucker,1998).

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