Welcome to International Management Behavior: Global and Sustainable Leadership, ninth edition!

This book is not just a book about global business. It is about people who conduct business – and manage other types of organizations – in a global environment. It discusses and explores typical situations that managers encounter: the problems and opportunities; the frustrations and rewards; the successes and failures; the decisions they must make and the actions they must take.

International management is not an impersonal activity, and it should not be studied solely in an impersonal way. It is important to understand trade theories, to be able to weigh the pros and cons of exporting versus licensing, or to understand the advantages of a joint venture versus a wholly owned subsidiary. But eventually theory must give way to practice; strategizing and debating alternatives must give way to action. Working globally means interacting with colleagues, customers, and suppliers from other countries to achieve a specific outcome. We focus on these interactions, on getting things done with and through other people in an international context.

In the first part of this chapter, we examine how to measure the size and composition of the overall economy. We use these methods to see how saving and investment levels imply how much will be loaned to or borrowed from the rest of the world. Then we define in greater detail the nature of the trade and financial links between the economy and the rest of the world economy. At the end, we discuss how borrowing from the rest of the world affects the status of a country as a net debtor or creditor.

The exchange rate is the key relative price for an economy open to international trade and finance. The price Americans pay for Japanese automobiles imported into the United States depends on how many dollars it takes to buy 100 yen, i.e., the dollar/yen exchange rate. The stronger the dollar, the more yen it will buy, and therefore the cheaper the imported cars will be. At the same time, a strong dollar makes it harder for US firms to profitably sell heavy earth-moving equipment like bulldozers (say those made by Caterpillar) to the rest of the world. The strength of the dollar against other currencies also affects other sectors, besides trade in manufactured goods. A strong dollar is good for a US tourist visiting Madrid, but places in the United States that cater to foreign tourists, such as Las Vegas, do better business when the dollar is weak.

After decades of roaring growth, the “East Asian Miracle” – as touted in a 1993 book published by the World Bank – seemed to be in full swing. Yet a mere four years later, the region was engulfed in chaos. What became known as the Asian Financial Crisis unfolded in July 1997. As foreign exchange reserves were depleted, the Bank of Thailand was forced to let the Thai baht float freely. The currency immediately depreciated by 21%. By January 1998, the baht was 54% weaker against the dollar than it had been six months earlier. The turmoil was not restricted to Thailand; Singapore, Malaysia, Indonesia, and the Philippines also experienced stresses on their balance of payments as capital flows reversed course, with net flowing out rather than in.

In a 2008 interview on ‘Meet the Press’ on US television, then President-elect Barack Obama, while discussing his intention to implement a stimulus plan to get the economy moving, qualified that ‘things are going to get worse before they get better.’ Things did indeed get worse. By the last quarter of 2008, the US economy was shrinking at an annual rate of 8%, as it sank into its deepest and longest recession since the Great Depression. In Figure 13.1, the blue line shows the drastic decline in the growth rate. Household consumption was trending downward at a rate of nearly 5% per year, business investment in factories and equipment was falling at a rate of 21% per year, and new-home construction was plummeting by a disastrous annual rate of 33%. Clearly, if something could be done, it should be, and swiftly.

Competing with Integrity and Ethical Decision-Making challenges students to consider their responsibilities as a business leader more broadly than simply from financial, market, or legal perspective. There can also be human, social, or legal consequences from their decisions. The human and social impact of decisions should be considered at the time these decisions are being made. The distinction between integrity and ethics is explored, and differences between ethical and legal behavior are discussed. Major moral philosophies and ethical frameworks are presented and compared. Examples are provided from multiple industries. The Foreign Corrupt Practices Act (FCPA), the Corruption Perceptions Index from Transparency International, and the Integrative Social Contracts Theory (ISCT) are presented. Ethical use of artificial intelligence is seen as an emerging concern for global leaders. The chapter ends with a set of personal guidelines for dealing with ethical dilemmas for global leaders to consider.

In the first part of this chapter, we examine how to measure the size and composition of the overall economy. We use these methods to see how saving and investment levels imply how much will be loaned to or borrowed from the rest of the world. Then we define in greater detail the nature of the trade and financial links between the economy and the rest of the world economy. At the end, we discuss how borrowing from the rest of the world affects the status of a country as a net debtor or creditor.

Leading Organizational Change highlights how a volatile, uncertain, complex, and ambiguous (VUCA) environment challenges preexisting mindsets and moves companies into the “Age of Agile.” Change scenarios that companies face depending on their current performance are described: anticipatory, reactive, and crisis. The change process (assessing the readiness for change, initiating and adopting the change, and reinforcement and realignment) explains how the process of change unfolds, facilitated by a design thinking approach. The dilemma of excessive persistence versus premature abandonment is discussed, suggesting that the trade-offs of staying on or leaving a course of action must be carefully considered. IBM’s change trajectory, which fundamentally altered the company, is described.

Global Leaders in the 21st Century examines the current context of international management and looks at the noteworthy changes in the business and leadership contexts of globalization. A major shift appears to be taking place in the global political economy. The predominant system characterized by global economic agreements, free trade, global supply chains, and multilateral institutions is being challenged by an increase in the primacy of national interests and security. In this volatile, uncertain, complex, and ambiguous (VUCA) environment, traditional ways of managing are not entirely adequate, and global leaders need to develop new skills. This chapter introduces the concept of Mindful Global Leadership and its components of context sensitivity, perspective taking, and a process orientation. It also presents a global leadership typology-based task complexity and relationship complexity.

Russia’s invasion of Ukraine in February 2022 sent shock waves though the world’s wheat market. The world price of wheat jumped from about $8 per ton to more than $13 per ton within a few days. The markets feared that wheat supplies from the region – which account for a third of the world’s wheat harvest – would be disrupted.

Toward Sustainability and Responsible Organizations addresses the purpose of business and social and environmental sustainability in the complex context of working across boundaries. State capitalism, shareholder capitalism, and stakeholder capitalism are compared. The chronological development of the concepts of sustainability and corporate responsibility is presented. Major corporate sustainability frameworks are identified. The United Nations’ 17 SDG’s, the Global Reporting Initiative, and the sustainable value framework are discussed. The relationship between ESG and financial performance is addressed. Involving and communicating with internal and external stakeholders are important aspects of navigating paradoxes associated with sustainable transformation. The common stakeholder–shareholder paradoxical tension that exists in sustainability management is discussed with an example.

In this chapter, we discuss the causes of the eurozone crisis, by first recounting the lead up to monetary union. In the subsequent section, the economic arguments for and against are explained. Next, we detail the onset of the crisis in banking, government debt, and growth, and the implications of the immediate policy response. The final section explains how the recovery to date has been incomplete.

In this chapter, we discuss the causes of the eurozone crisis, by first recounting the lead up to monetary union. In the subsequent section, the economic arguments for and against are explained. Next, we detail the onset of the crisis in banking, government debt, and growth, and the implications of the immediate policy response. The final section explains how the recovery to date has been incomplete.