Developing Global Leaders

As firms reach across borders, global-leadership capacity is surfacing more and more often as a binding constraint. According to one survey of senior executives, 76 percent believe their organizations need to develop global-leadership capabilities, but only 7 percent think they are currently doing so very effectively. And some 30 percent of US companies admit that they have failed to exploit fully their international business opportunities because of insufficient internationally competent personnel.

Most of the prevailing ideas in business and academia about global leadership reflect efforts by leadership experts to adapt the insights of their field to the global arena. I come at this topic from the opposite perspective, having focused for nearly two decades on studying globalization and thinking through its implications for business and public policy.

At the core of my work lies the reality that, while globalization is indeed a powerful force, the extent of international integration varies widely across countries and companies and generally remains more limited than is commonly supposed. To be sure, rapid growth in emerging markets, combined with a long-term outlook of lower growth in most developed economies, is pushing companies to globalize faster. But metrics on the globalization of markets indicate that only 10 to 25 percent of trade, capital, information, and people flows actually cross national borders. And international flows are generally dampened significantly by geographic distance as well as cross-country differences. US trade with Chile, for example, is only 6 percent of its likely extent if Chile were as close to the United States as Canada is. Furthermore, if two countries don’t share a common language, that alone slashes the trade volume between them by 30 percent.

An appreciation of how distances and differences influence international ties helps explain some of the organizational and other stresses that established multinationals are encountering as they accelerate their expansion to emerging markets. Emerging Asia is farther away—and more different, along multiple dimensions—than more familiar markets in Europe and North America. Japanese multinationals face a distinctive set of cultural, political, and economic issues that complicate their efforts to expand abroad.

Exaggerated notions of what globalization means—what I call “globaloney”—are also apparent in prevailing ideas about global leadership. Some training centers aim to develop “transcultural” leaders who can manage effectively anywhere in the world as soon as they step off the plane. Yet scholars of cross-cultural management suggest that objectives like this are unrealistic. While global leadership is still a nascent field, common conceptions of it already incorporate myths or half-truths that rest on misconceptions about globalization. Correcting these myths should help the efforts of companies to increase their global-leadership capacity.

 

Executive Editor

 Ms Anna Sullivan

Ms Anna Sullivan