Exploring the relation between international work experience, a global mindset and the awareness and perception of distance

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Exploring the Relation between

International Work Experience, a Global

Mindset and the Awareness and Perception

of Distance.

University of Amsterdam

Thesis MSc Business Administration: International Management 1st Thesis supervisor: E. Dirksen MSC.

2nd Thesis supervisor: Dr. J. Lindeque Diederik van Oppen

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Statement of originality

This document is written by Diederik van Oppen, who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

The concept of distance lies at the core of international business and affects many strategic decisions. In recent research on this distance, the manager’s characteristics and experience have gained attention as the research shifted towards the manager’s awareness and perception of distance. In particular, the global mindset of a manager and his or hers international work experience are promising factors that influence the awareness and perception of distance. This study aims to explore the relation between these three concepts and build a conceptual model in which these concepts are connected. By conducting semi-structured interviews and exercises, along with a small archival study the relationships will be uncovered. The findings suggest that the relationship between international work experience and the awareness and perception of distance is mainly mediated by the contextualisation element of the global mindset. Furthermore, the results show that the awareness is most directly influenced by the international work experience and global mindset of a manager. Also, suggestions on how international work experience should be categorised are given.

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1. Introduction

Distance is one of the most significant factors in international business. It influences, among others, organisational performance, entry mode decisions, and type of ownership. The challenge to overcome distance has grown as the business environment has globalised. Technological advancements significantly lowered the costs of transporting goods and information around the world, which broadened the horizon of many firms as well as it increased the complexity of managing a multinational enterprise. In the course of more than 40 years the concept of distance has undergone constant adjustments. A mayor perspective sprung to life when Johanson and Valhne (1977) introduced the concept of psychic distance, a concept broadening the traditional concept of distance by including all factors that limit the flow of information from and to the market. Later, a distinction was made between objectively measured country level distance stimuli and the manager’s awareness and perception of these distance stimuli, (Dow and Karunaratna, 2006). The inclusion of the awareness and perception of distance in the scope of distance related research meant that the experience and characteristics also became relevant when discussing distance related decisions. In a review article on distance Hutzschenreuter, Kleindienst & Lange (2015) call for further research on the influence of manager’s characteristics on distance. In particular, the literature on a manager’s global mindset offers a promising avenue to be further researched in relation to psychic distance.

A global mindset is a combination of knowledge and skills related to the global business environment and is cultivated by international work experience, (Levy, Beechler, Taylor & Boyacigiller, 2007; Sambharya, 1996). The abilities that make up a global mindset are the ability to conceptualize and contextualize, (Kefalas, 1998). In a globalised

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companies struggle to face the challenges of overcoming distance by organisational and administrative structures alone, (Bartlett and Ghoshal, 1990). In addition, Tung and Miller (1990) argue that the managerial experience of working abroad has an influence on the decisions made on international strategic issues involving distance. This study brings together the literature on distance, the managers’ mindset and experience by exploring the relation between these concepts. In doing so, this study will answer the following research question.

In what way are a manager’s international work experience, global mindset and awareness and perception of distance related to each other?

By conducting semi-structured interviews and exercises inspired by existing measurement scales of global mindset and perception and awareness of distance, along with a small archival study the international work experience, different elements of a global mindset and the manager’s perception and awareness of distance will be assessed. The thematic way of analysing the data will enable inductive and deductive influences to be balanced and come to a conceptual model that describes the relationship between the three concepts in question.

The findings of this study are that the international work experience and the manager’s perception and awareness of distance are mainly mediated by the manager’s ability to contextualize. In addition, the awareness, as opposed to perception, of distance is most directly influenced by the manager’s international work experience. Lastly, the findings suggest that a division of international experience is made not only on the bases of whether a person lived abroad while being involved with international business, but on the level of which he or she was involved. These findings are jointly presented in a conceptual model.

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In practice, the conclusions of this research can have contributions to firms which, in the complex en global business environment, need a better understanding on which characteristics and experiences are important to pay attention to when recruiting, training and hiring managers. In addition, this study can give direction to further research by building a conceptual model in which the relation between international work experience, a global mind set and, the manager’s awareness and perception of distance are described.

The remainder of this paper is structured as follows. First, a review of the available literature on the different concepts and working proposition will be brought forward. Secondly, the research method used will be described and evaluated. Thirdly, the results will be presented. Fourthly, the results will be discussed in relation with the propositions and a new conceptual model will be presented. Also, the limitation and suggestions for future research will be discussed. Finally, some concluding remarks will be given.

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2. Literature review

Understanding what manager’s characteristics and experience mean for the perception of distance is the next important step in the research on psychic distance. This research has moved from measuring psychic distance on a country level (Johansson and Vahlne, 1977) to a more individual level (Nebus and Chai, 2014). Measuring distance on an individual level implicates that the individual itself has influence on the distance as well. Promising characteristics that may affect the perception and awareness of distance are a manager’s global mindset and his or her international work experience, (Hutzschenreuter et al., 2015; Carpenter, Sanders &, Gregersen, 2001). 

In the following section the evolution of the concept of distance and the perception and awareness of that distance will be elaborated. Secondly, relevant research on the managers’ cognitive capabilities with a special focus on the concept of global mindset will be presented. Thirdly, international work experience will be presented. In the final section the connection between these three concepts will be brought forward and the propositions will be presented.

2.1 Distance

Distance is at the core of international business as managing a business internationally is more or less managing the distance and differences between markets. The costs arising from the distance between, for instance, quality of infrastructure, government systems or climate profoundly affect the performance of international ventures because of increased coordination costs (Zaheer, Schomaker & Nachum, 2012) and increased Liability of Foreigness (LoF), (Zaheer, 1995).

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Sethi and Judge (2009) present an integrative framework where the total costs of doing business abroad consist of either Liability of Foreigness (LoF), or Liability of Multinationality (LoM). In this framework, LoF is described as the supplementary costs incurred by foreign firms as opposed to native firms. This is in accordance with the original definition by Zaheer (1995). However, Sethi and Judge (2009) refine the definition of LoF by dividing LoF in to two types of costs: incidental and discriminatory. Incidental LoF costs are costs arising from adjusting to the differences and acquiring knowledge of and contacts in the local environment. On the other hand, discriminatory costs are costs resulting from economic nationalism and explicit policies aimed against foreign firms. In addition, Sethi and Judge (2009) incorporate LoM as part of the cost of doing business abroad. LoM are the costs a MNE incurs by doing business internationally that stem from outside the host county (Sethi & Judge, 2009). These are costs that, among others, come from the complexities of coordination an enterprise across different time zones (physical distance) and transacting through a global supply chain. Distance leads to extra costs in two ways. Firstly, forces within the host country lead to increased incidental and discriminatory costs. Secondly, the coordination costs of a MNE also increase when distance is higher. In this way, distance influences many business outcomes, including entry mode decisions, (Kogut and Sighn, 1988), sequence of entry (Johanson and Vahlne, 1992) and organizational performance (Evans and Mavondo, 2002; O’ Grady, 1996).

Ghemawat (2001) presents a holistic approach of all distances that influence international business and discusses the four differences in countries that create distance. These four dimensions are Cultural, Administrative, Geographic, and Economic distance (CAGE). Cultural distance becomes greater when there is no common language, religion or social norms. The administrative distance is composed of difference in institution’s strength,

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only physical distance, it also consists of access to water, shared borders and common climate types. Lastly, economic distance is created by differences in consumer income and cost and quality of natural resources. This comprehensive way of conceptualising distance increases the objectivity of measuring distance between countries by offering very measurable indicators of distance while being very complete. However, it does not include the perception and awareness of the manager.

Child (2009) offers another point of view on defining foreign context elements as he categorizes context into either material or ideational systems. The ideational systems include the values and beliefs that people have and “carry and propagate substantive values, such as those expressed in Confucianism, the Protestant ethic, or political ideologies such as Communism.” (Child, 2009, p. 60) These can concern economic, social or political beliefs and values. For example, ideational systems are attitudes towards capitalism or overall confidence in the economy. Child (2009) further states that the physical, or material, context are the observable and tangible elements in a foreign country. These include, among others, communication, information and transportations infrastructure and quality of natural, human or technological resources. The value of this division of foreign context elements is that it separates the values and beliefs (the ideational elements) from the more tangible and measurable ones. Most MNE’s struggle with dealing with ideational differences as these lie in more intangible factors like attitudes of people, (Nebus & Chai, 2014). Because these elements are less observable, more objective measures like Ghemawhat’s CAGE (2001) often fail to see them.

2.1.1 Perception and awareness of Distance

Although very important, in the early development of distance constructs, a managers’ perception and awareness of foreign context elements is not included. The most used type of distance is cultural distance, which operationalizes the difference between two cultures by

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using Hofstede’s cultural dimensions (Hofstede, 1983; Kogut and Singh, 1988). However, as Shenkar (2001) persuasively points out, the way this is measured often is oversimplified and therefore has questionable validity. As aforementioned, Ghemawat (2001) and Child (2009) provide broader definitions of distance incorporating not only cultural distances, but also including administrative and economic elements, on both tangible and intangible levels. However, these measures are still limited in their ability to predict business outcomes by distance because they do not incorporate the managerial decision-making process (O’ Grady, 1996). O’ Grady (1996) argues that, when predicting business outcomes using distance, one should keep into account the managerial decision-making process.

The development of the concept of psychic distance offers a solution to the lack of managerial influence on distance related business outcomes. Johanson and Vahlne (1977) first define psychic distance as “the sum of factors preventing the flow of information from and to the market” (p.24). These factors, they state, include differences in education, language, business practices, culture, and industrial development. Later, this definition was broadened to entail factors preventing or disturbing firm’s learning about and understanding of a foreign environment, (Nordstrom & Vahlne, 1994, as cited in Dow and Karunaratna, 2006).

The concept of psychic distance serves mainly as an umbrella term covering all things contributing to differences between two countries. Thus, this includes both tangible, intangible things but also the managerial decision-making process. However, in its early years, it lacked a clearly defined construct (Hutzschenreuter et al. 2015). Dow and Karunaratna (2006) offer such a construct by presenting a theoretical framework where a distinction is made between Psychic Distance Stimuli (PDS) and Perceived Psychic Distance (PPD). Here, PDS is an antecedent of PPD and consists off the factors language, democracy, religion, industrial development, socialism, time difference, and whether countries have had

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distance, CAGE distance can be described as a concept which gives insight into the PDS between countries. Sousa and Bradley (2008) offer further refinement to this conceptual shift by looking at the relationship between PDS and PPD. They state that a PDS, for example cultural distance, is an antecedent of PPD. In addition, they state that psychic distance should be analyzed on an individual level and is affected by a manager’s own thoughts and experiences.

Nebus and Chai (2014) deepen this line of reasoning by arguing that research regarding psychic distance should have a greater focus on “psychic” than on “distance”. They construct a measure where the characteristics of an individual manager are taken into account by measuring key elements like awareness and perception of distance. Nebus and Chai (2014) explain that awareness stands for the manager’s consciousness of the foreign context element that influences the decision. The perception, they say, is how important managers believe a foreign context element is in the decision. This in contrast with earlier works, which define perception as the extent people see an element as similar or dissimilar to his or her own country.

In summary, the comprehension of the concept of distance evolved over time and now is shifting towards a more individual level, as opposed to country level, way of defining distance. Psychic distance accelerated this shift by incorporating all factors that limit the flow of information. One of these factors is the manager him- or herself. In particular, the cognitive characteristics of a manager are interesting in this aspect as they directly influence the awareness and perception of a manager, (Nebus and Chai, 2014). In the following section we will review relevant literature on these cognitive characteristics.

2.2 A manager’s mindset

A person is constantly challenged by the ambiguity, complexity, and dynamism of his or her environment. The way all individuals deal with this information challenge is with his or

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her mindset in the form of numerous knowledge structures. These structures resemble their information worlds and thus facilitate an efficient and effective information processing and decision-making, (Torngate, 1980 as cited in Walsh, 1995). Walsh (1995) further explains that humans use knowledge structures to give meaning and form to their information environment. In other words, managers make sense of the complex world around them by filtering out the information and structuring it in a way they think is useful. Knowledge structures are employed to retrieve and guide information, store it into memory and to interpret sensory data, (Wilcox and Williams, 1990). Therefore, knowledge structures influence all kinds of activities of a person, including perception and awareness.

The limitations originating from the use of knowledge structures are presented by Gioia (1986 as cited in Walsh, 1995) who states that “the use of knowledge structures may encourage stereotypic thinking; subvert controlled information processing; fill data gaps with typical but perhaps inaccurate information; prompt one to ignore discrepant and possibly important information; discourage disconfirmation of the existing knowledge structure; and inhibit creative problem solving.”(p. 282) These liabilities could stem from the way the information is organized: it is structured in order to maximize the efficiency of information retrieval, not the accuracy, (Wilcox and Williams, 1990)

The way manager’s filter out and structure information is determined by the manager’s previous experiences and background because knowledge structures are a product of a person’s history, which is shaped trough an iterative process, (Gupta and Govindarajan, 2002). The action undertaken as result of the information which is processed through and stored in the knowledge structure, adds to the experience off a manager. This experience, in its turn, is linked to the development of the knowledge structure trough a recursive loop, (Walsh, 1995). Therefore, these knowledge structures are dynamic, formed by experiences of

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A manager’s idiosyncratic characteristics and his or her strategic choices are related to each other, (March and Simon, 1958). In continuation of this line of reasoning Harveston, Kedia and Davis (2000) reveal a difference in the mindset of managers of born globals and gradually internationalizing firms. Abrahamson and Hambrick (1997) explain this by stating that when a manager has a wide scope to pay attention to, the attention pattern is more reliant on the manager’s characteristics than on external cues. These findings indicate that especially in the complex global business environment full of uncertainty and ambiguity, a manager’s mindset has a profound effect on the strategic decisions.

Gupta and Govindarajan (2002) propose a theoretical framework where different kinds of knowledge structures can be identified by observing the differentiation and integration of a manager’s mindset. The differentiation of a mindset stands for the scope of information a manager’s possesses, and the integration is how well the manager integrates information from different knowledge elements. For example, a manager with a low differentiation of knowledge structure is a functional expert, someone who knows a lot about one subject. A manager with a high integrative knowledge structure is able to apply the knowledge from different markets to one specific market. They define a knowledge structure that is highly differentiated and highly integrative in a context of different cultures and markets as a global mindset.

In summary, the cognitive characteristics guide the perception and awareness of a manager. In a global business environment, the importance of the manager’s mindset is emphasized by the complex and ambiguous nature of it. In the following section we will further elaborate on cognitive characteristics that compromise a global mindset.

2.2.1 Global mindset

Bartlett and Ghoshal (1990) state that due to the increasingly global and complex business environment, senior managers’ mindset as opposed to structural and administrative

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properties of the firm have become an important source of sustained competitive advantage. Levy et al. (2007) identify two basic perspectives on global mindset: the strategic- and cultural perspective. The cultural perspective is focused on complexity arising from cultural and national diversity. On the other hand, the strategic perspective focuses on environmental complexities and strategic diversity that come along with globalization.

The cultural perspective originated in Perlmutter’s (1969) study where he used a groundbreaking typology op MNC’s based on the top management’s orientation. He used three different categories in which MNC’s could be placed: ethnocentric (home country focused), polycentric (host country focused) and geocentric (world focused). According to Perlmutter (1969) geocentric managers have supra-national, universalistic attitudes and downplay the significance of cultural and national differences in determining who is trust worthy or competent. On the other hand, Bartlett and Ghoshal (1990) introduce a strategic perspective on global mindset by altering the geo-centrism into a transnational mindset, which includes the ability of balancing the forces of global integration and responsiveness to local markets. This perspective is more focused on the skills and competences necessary to work in a global environment.

Aside from these two perspectives, Levy et al. (2007) also identify a multidimensional perspective on global mindset, which incorporates the ability to deal with both cultural and strategic complexities. They define global mindset as “a highly complex cognitive structure characterized by an openness to and articulation of multiple cultural and strategic realities on both global and local levels, and the cognitive ability to mediate and integrate across this multiplicity” (levy et al., 2007, p.16.) The complementary elements that make up global mindset are awareness of and openness to several spheres of action and meaning, mediation and integration of ideals and actions oriented both locally and globally, and a complex

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such a global mindset are a better chance of identifying emerging opportunities, a greater sophistication in analysis the trade of between integration and responsiveness of a firm, lower transaction costs associated with doing business across borders and better knowledge sharing, faster implementation of innovations, (Gupta and Govindarajan, 2002).

As is mentioned above, a knowledge structure facilitates the information processing and decision making of an individual. The information processing and decision making consists of three steps: attention, interpretation, and action, (Daft and Weick, 1984). Managers with a global mindset are open to and are able to acquire information of multiple sources, locally and globally, regardless of the nationality or cultural origin of that information. In addition, the global mindset allows managers to see and articulate more information components and tie them together in complex schemas. The interpretative process is shaped by the global mindset by the preferment of nonjudgmental perception, combination of information from multiple sources, and the reflection on the interpretative process itself and existing knowledge structures. This leads managers with global mindsets to arrive at innovative and complex interpretations of reality, (Levy et al., 2007).

These interpretations of reality are reflected by the ability of the manager to conceptualize and contextualize, (Kefalas, 1998). Conceptualization is the way of building a mental model of the world, a manager with a global mindset takes into account the goals and ways of being of people in foreign contexts. Contextualization on the other hand, describes the ability of a manager to adapt his global way of thinking to a local environment, (Kefalas, 1998). Contextualization is more about managing the complexities of a globalized world and can be compared with the strategic perspective of a global mindset. These two aspects are interrelated to each other.

In short, a manager with a global mindset thinks globally and acts locally. This type of mindset can be of high value in a global business environment as it is likely that it has an

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impact on distance related decisions. As was mentioned above, a manager’s mindset is influenced by his or her experience. It is therefore also very likely that one of the antecedents of a global mindset is international work experience. In the following section we will further explore the connection between a manager’s experience working internationally and his or her cognitive characteristics.

2.3 International work experience

The lack of acquiring, integrating and using knowledge of foreign markets is a major obstacle in the development of international operations, (Johanson and Vahlne, 1992). The knowledge of foreign markets is essential as it reduces uncertainty and therefore lowers the costs related to doing business across borders. Knowledge of foreign markets can be gained through international work experience, (Roth, 1992).

International work experience is the experience a manager has working on assignments abroad, (Takeuchi, Tesluk, Yun & Lepak, 2005). They state that this can be measured by the number and length of previous work experience abroad. In particular, actually spending considerable time in other countries as opposed to just being exposed to international business issues helps to gain deeper understanding of foreign market conditions and opportunities, (Roth, 1992). For a MNE, the international work experience of its employees is a vital asset and even a source of competitive advantage, (Carpenter et al., 2001). Daily, Certo & Dalton (2000) argue that international work experience will increases the chances off managers to reach the top management team of a MNE.

The managerial experience of working abroad has an influence on the decisions made on international strategic issues, (Tung and Miller, 1990). This supports earlier findings of Bilkey (1978) on the relation between the international work experience of a manager and the propensity of a firm to export. Dichtl, Koeglmayr and Mueller (1990) even showed that the

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Harveston et al. (2000) make a connection between the international experience of a manager and his or her mindset as by showing the born global firms have managers with more global mindsets and more international experience. Sambharya (1996) argues that international work experience is linked to the global mindset of a manager in two ways. Firstly, it reduces uncertainty when doing international business because managers can use their prior experience to address problems. Secondly, managers with international experience bring along cultural knowledge that will benefit them in the decision-making process. Carpenter et al. (2001) refine this reasoning by stating that international work experience develops the ability of the manager to profit continuously from global uncertainty in policy regulations, competitors’ actions and exchange rates. In addition, little or no international work experience can lead to a limited ability to understand foreign employees or customers.

In summary, international work experience of managers has an influence on the strategic decision-making process. This influence comes from the impact international work experience has on the mindset of the manager. In particular, international work experience is one of the factors that stimulate the development of a global mindset. This global mindset has a direct impact on the awareness and perception of distance in the decision-making process. In the following section the link between international work experience, a global mindset and the awareness and perception of distance of the manager will be further explained and a research gap together with a research question will brought forward.

2.4 Research gap and question

By scrutinizing the definition of psychic distance, Sousa and Bradley (2006) show that, because psychic distance inherently includes the perception and awareness of an individual, the individual’s values influence psychic distance. The distinction between PDS and PPD made by Sousa and Bradley (2008) offer a useful theoretical framework to further

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investigate distance because it separates objective country level stimuli of distance and the manager’s perception and awareness on these stimuli of distance.

The knowledge structures, as part of the cognitive characteristics of a manager described by Walsh (1995), influence the PPD because they control the amount and type of information a manager’s uses to make a decision. Therefore, the cognitive characteristics of a manager are a promising predictor of the PPD. In addition, the type of knowledge structure that a manager has originates from the experience of that manager, (Gupta and Govindarajan, 2002). Therefore, a manager’s cognitive characteristics originate, among others, from international work experience, (Sambharya, 1996). In other words, the literature points towards a connection between international work experience and managerial cognitive characteristics and a connection between these managerial cognitive characteristics and PPD. These connections are schematically displayed in figure 1.

General Relation Main Concepts Figure 1

Source: author

The review of literature pointed out some interesting concepts that help explain the underlying connection. Firstly, Nebus and Chai (2014) offer refinement to the role of the perception and awareness of a manager in psychic distance by using another way of defining perception. Earlier work use definitions of perception that only include the extent people see an element as similar or dissimilar to his or her own country. However, perception is, Nebus and Chai (2014) state, the amount of importance managers attribute to a foreign context

International work

experience

managerial

cognitive

characteristics

Perception of

Psychic

Distance

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perception we are able to filter out perception and awareness as being possibly influenced by the cognitive characteristics of a manager. Secondly, the concept of a global mindset seems very useful in better understanding international business related decisions. This is due to the international context of both the business environment of a MNC’s manager and the concept of global mindset. Thirdly, there are already studies done on the link between international work experience and the mindset of a manager (e.g. Harveston et al., 2000; Sambharya, 1996) and a direct link between a manager’s international work experience and the strategic business outcomes(e.g. Tung and Miller, 1990; Bilkey 1978). By relating the international work experience, global mindset and, the perception and awareness of distance to each other, this study will find the answer to the following research question. In what way are a manager’s international work experience, global mindset and awareness and perception of distance related to each other?

Following the seminal work of March and Simon (1958), the manager’s idiosyncratic characteristics cannot be overlooked when trying to explain international business related business decisions. The research on distance therefore needs to avoid focussing too much on how objective country level indicators of distance influence international business. Nebus and Chai (2014) call for a better understanding of the role of manager’s characteristics in the research on distance. In addition, Hutzschenreuter et al. (2015) indicate that a global mindset is a promising characteristic to be researched in relation to distance. Also, international work experience seems to be related to a global mindset (Carpenter et al., 2001). Therefore, in answering the research question this study can set the first steps in shedding light on the role former experience and cognitive characteristics play in the research on distance.

To come to a reliable answer of the research question, a conceptual model needs to be constructed. In the following section the theoretical foundations for the propositions made by this study will be explained. In addition the conceptual model will be presented.

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2.5 Propositions and conceptual model

Making the connection between international work experience, managerial cognitive characteristics and psychic distance is an important step towards a better understanding of the role of the manager’s perception and awareness in distance. The reviewed literature gives reason to expect two broad connections. Firstly, international work experience leads to higher levels of global mindset. Secondly, higher global mindset leads to a higher awareness and better perception of distance. In the following section these links will be substantiated with literature and defined more precisely.

To begin, the link between international work experience and a global mindset will be addressed. Carpenter et al. (2001) state that the international work experience leads to both a better performance of a manager in a complex and uncertain global business environment and a better understanding of people in a foreign country. This draws similarities with the theory on global mindset as Kefalas (1998) divide the concept of global mindset into two elements. First the conceptualisation, which incorporates the level a manager takes into account the goals and ways of being of people in foreign contexts. And secondly, the contextualization, which entails the ability of a manager to act in a complex world of different markets and cultures. Based on preceding arguments, the following proposition is put forward.

Proposition 1: A higher amount of international work experience leads to an increase in global mindset by both increasing the contextualization and conceptualization abilities of a manager.

Secondly, the link between a manager’s global mindset and perception and awareness of distance will be explained. As Levy et al. (2007) state that one of the elements of a global

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with a global mindset are open to and are able to acquire information of multiple sources (Levy et al. 2007). Nebus and Chai (2014) define awareness of distance as the amount of foreign context elements a person takes in to account when assessing distance. Based on this literature, the following proposition is given.

Proposition 2: Both higher levels of conceptualization and contextualization will lead to a higher awareness of distance.

Furthermore, the ability of contextualisation is about dealing with the complexities of the global business environment, (Kefalas, 1998). A manager with a high ability to contextualize can adapt his or her worldview to support his business related decisions. Therefore, the ability to contextualise is very practical, it is expected that a manager will have greater sight on tangible elements and therefore perceive them as relatively more important. This translates in to the following proposition.

Proposition 3: A manager with a high ability to contextualise will perceive physical, as opposed to ideational, foreign context elements as relatively more important.

In addition, it is expected that the manager’s ability to conceptualize also has a distinct impact on the perception of psychic distance. Conceptualization is the way a manager sees the world. In particular, it concerns the level a manager takes the differences of people’s own values and believes in account in his or her word view, (Kefalas, 1998). Child (2009) defines the ideational foreign context elements as being based on the values and believes of people. A manager with a high ability to conceptualize is therefore expected to put a greater emphasis

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on ideational foreign context elements in his decision-making process. This leads to the following proposition.

Proposition 4: A manager with a high ability to conceptualize will perceive ideational, as opposed to physical, foreign context elements as relatively more important.

On the bases of these propositions, a conceptual model can be made up which shows the way international work experience, managerial cognitive characteristics and the perception of psychic distance are connected to each other. The proposed conceptual model is displayed in figure 2.

Proposed Conceptual Model Figure 2 Source: author

International

work experience

GM:

Conceptualization

Perception of

ideational

elements

Awareness of

distance

GM:

Contextualization

Perception of

physical elements

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In this proposed conceptual model, the answer to the research question based on the available literature is presented. However, this research will be of inductive nature and therefore will leave room for adjustment to this model on the basis of the observations made. In the following section the research method which will lead to these observations will be presented.

3. Methods

The methods to provide an answer to the research question are presented in this section. Firstly, the research design including the motives for qualitative research, measurement instruments and sample will be presented. This will be followed by the evaluation according to important constructs like reliability and validity. Finally, the data collected is presented in overview.

3.1 Research design

This study will employ qualitative methods to find an answer to the research question because it can be of superior value when building new theory from observations, takes the context into account and is most suitable for this type of research question. This study is of an inductive nature because the goal of this study is to support the construction of new theory. In the literature review an effort has been made to explore the main concepts. However, the literature on the relation between international work experience, a global mindset and the perception and awareness of distance is still limited. Rynes and Gephart (2004) argue that qualitative research in particular is suitable for the explanation of observations by presenting conceptual insights that reveal how comprehensive concepts work in particular cases.

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The perception and awareness of a manager is, among others, reliant on the context of the managers, (Nebus & Chai, 2014). In addition, according to the principles of constructionism, the mindset of a manager and the managers him- or herself are not separate phenomena. This means that, when assessing the mindset of a manager, the manager’s environment and background needs to be taken into consideration. Therefore, qualitative methods are very suitable to find an answer to the research question as they offer broad insights on how, in certain environments, concepts interact, (Rynes & Gephart, 2004). The nature of this research question is how international work experience, the manager’s global mindset and the perceptions and awareness of distance are related to each other. Accordingly, qualitative research offers the best chances to find a complete answer.

In order to find this answer, the three concepts in this research question are researched separately using semi-structured interviews, a small archival research and an exercise completed by the participants. The international work experience of manager will be assessed in two ways. Firstly, the LinkedIn page of the manager will be analyzed to get a complete overview of the professional experience of a manager. Secondly, the manager will be asked about his or her current and past professional experience to support this primary analysis and potentially offering deeper insights. This will be asked in the first part of the semi-structured interview as these are relatively easy question to answer and will make the participant feel comfortable talking before asking deeper question on his worldview.

The global mindset of a manager will be analyzed by the remaining part of the semi-structured interview. The questions used in this interview are adapted from a survey designed by Kefalas and Neuland (1997, as cited in Arora, Jaju, Kefalas & Perenich, 2004). Because of the qualitative nature of this study however, the questions are made more open-ended to leave room open for deeper insights in the concept of a global mindset. Examples of questions are:

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dramatically due to the globalization. What is your view on this?” or “Could you describe the Dutch culture in relation to other cultures?” The interviews were held in Dutch.

The perception and awareness of psychic distance were measured by asking the manager to make a mind-map concerning a fictive decision to offshore a business element. This method is constructed by Nebus and Chai (2014) and is very useful in measuring the perception and awareness of distance in a particular decision. They state that the perception and awareness of distance is also dependent on the decision. Therefore, a case will be used to measure the perception and awareness of a manager. The case was described to the manager as follows.

You are employee of a Dutch MNE which is moving its financial administration department abroad for reasons of increasing cost efficiency. The department will remain under full ownership of the MNE and the movement will take place in a year. The decision to offshore is already made, but there still needs to be decided where to. You are asked which criteria the company should take into account when deciding to which country to offshore by constructing a mind-map.

The managers where first asked to name the foreign context elements that they would consider in this decision. After that, the interviewer gave three additional elements for the managers to consider. These elements where written down on individual post-it notes. After this, the manager was asked to place the post-it notes with the elements on a white piece of paper with a dot in the middle. He or she was given the instruction that the closer a post-it note was placed to the dot, the more important that foreign context element was for the manager.

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In this case, the decision is purely about country choice as other decisions, like entry mode or ownership type, are already given. The reason that the department used in the case is the financial administration is that it is an overhead department that is present and more or less the same in many MNE’s. This means that the experience of the participating managers with this department will not interfere with the results. The reason that the case describes a situation where the department remains under full ownership is that the managers have to consider the actual country specific elements as opposed to considering elements that are more specific to outsourcing partners.

The order of the measurement of these different variables is as follows. Firstly, the analysis of the LinkedIn page was conducted to get familiar with the manager. Secondly, the exercise was done with the manager before the semi-structured interview was held. The exercise was done before the interview because the interview contained some questions about culture; this could potentially influence the manager’s awareness of culture related foreign context elements.

Using a purposive sampling method the participants were selected in order to get a heterogeneous sample on the bases of the international work experience. Some participants only had very limited experience, like doing an operational internship abroad, and others worked in multiple countries on strategic issues. The sample consists out of 10 managers who all have experience with strategic international decisions. The reasons the sample only includes managers with experience with strategic international decision is the distinction between international work experience and exposure to international business made by Roth (1992). In this way, the chance that any of the observed variance in mindset and perception and awareness of distance are explained by the participant’s familiarity with international strategic decisions is reduced.

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In summary, a qualitative approach was employed by using an archival study, semi-structured interview and mind-map exercise with ten managers in order to answer the research question. In the next section these methods will be scrutinized in order to ensure an objective view on the reliability and validity of this design.

3.2 Evaluation of methodology

The strength of qualitative research is the ability to take the environment of the participants into account. In this study this also meant the global environment. However, this does lead to troubles replicating the study as the environment of global politics and economy constantly changes and cannot be “frozen”, (Lecompte and Goetz, 1982). For instance, the interviews were held in a period where Donald Trump was elected as president of the United States and the British people voted to leave the European Union. These factors where part of the environment of the participants and perhaps influenced their views on globalization. Also, these factors are hard to replicate. Therefore, the criteria of external reliability are hard to meet with this study, as it is with most qualitative studies. The internal reliability is strong as there is only one observer. This makes the question of inter-observer consistency obsolete.

The internal validity concerns the strength of the study in identifying the right causal relationships, (Yin, 2009). This is one of the strong suits of qualitative research it is able to take the environment of the participants into account. A risk connected with qualitative research in this aspect is that the proposed causal relationships would be derived from the interpretation of the observer, as opposed to the observations. To avoid this risk, the results of this study will be substantiated with direct quotes from the interviews. Also, the interview contained many open-ended questions to provide the participants with enough freedom to answer the question without being steered to them by the interviewer. The risk of participants not understanding a question or the exercise correctly and therefore giving wrong answers is countered by asking if the participants understood the questions and the exercise. The internal

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validity is supported by the use of measurement scales that are used in published academic articles as the bases for this research. This ensures that the questions and mind-map exercise measure what they are intended to measure. In addition, the international work experience of a manager is assessed by two sources, some interview questions and the LinkedIn page. This also leads to a higher internal validity.

The research uses multiple cases as this is most suitable for building new theory, (Eisenhardt and Graebner, 2007). However, the amount of cases if still relatively low as this study makes use of ten interviews. This limits the external validity as it is hard to generalize the findings across other social settings. Also, because of the limitation of my own network in finding participants, the participants are all Dutch. This leads to trouble when generalising the findings across nationalities. Therefore, this study will only be able to propose theory and provide extensive suggestions for future research.

3.3 Data and analysis

As aforementioned, to reach an answer to the research question, ten interviews and exercises were held with managers who had experience with strategic international decisions. These interviews and exercises were held between November 2016 and January 2017. The participating managers had a variety of roles in different industries. The participants are presented in table 1.

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Participants Table 1

Participant Age Company Sector Role

A 30 Colliers International Consultancy Manager Hotel Investments

B 24 V2C Spirits Food producer Sales Manager

C 35 CRH Building materials M & A Manager

D 48 Arla Food producer Head of Foodservice

E 58 ABN AMRO Banking Managing Director & Head Corporate Banking International

F 31 KLM Royal Dutch Airlines

Aviation Key Account manager

G 32 KPN Telecom Program Manager Music & Channel Manager “KPN Presenteert”

H 33 AholdDelhaize Retailing Category Manager

I 48 KPN Telecom Sourcing Manager

J 43 Ordina Consultancy Head of HR

Source: author

The interviews were recorded with the Ipad of the interviewer, the mind-maps were photographed and the LinkedIn pages of the manager exported and copied in the appendices of this paper. The audio files of the interviews where transcribed which reduces possible bias from the interviewer and increases the accuracy of the findings. Together with the images of the mind-maps, the transcribed interviews were imported in Atlas.Ti and analysed. Atlas.Ti is scientific software used to analyse the qualitative data.

The strategy for analyses is a thematic approach as described by Saunders, Lewis & Thornhill (2016). This methodical and logical way to analysing data is common for qualitative research. It has the advantage that it remains flexible, (Braun & Clarke, 2006). Saunders et al.(2016) state that it exceeds other analysis strategies because the ability to balance between deductive and inductive elements of the study by incorporating existing literature into the analysis while still leaving room open for new findings. Before the coding of data, a codebook was constructed using existing literature in global mindset and the perception and awareness of distance. In addition, by using the answer of the managers in

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combination with the existing literature on global mindset, it was possible to filter out extra codes that could be used to show different level of contextualization and conceptualization of the manager’s mindset.

The quantification of small sample data can lead to problems because small changes lead to different outcomes, (Pratt, 2009). Therefore, small memo’s describing the work experience of the managers where added instead of coding the text of the manager’s LinkedIn. The mind-maps where coded using Child’s (2009) model and Ghemawat’s (2001) CAGE model of foreign context elements. It was also recorded how many elements a manager identified in his or her mind-map.

In summary, qualitative research methods were used to find answer to the research question. Three sources of data where tapped into with ten participating managers. Thematic analysis was used to analyse the data and come to reliable and valid result. In the following section the results if this study will be presented.

4. Results

The ten interviews, mind-maps and LinkedIn pages brought some interesting insights in to the relation between the manager’s international work experience, cognitive characteristics and perception and awareness of distance. In the following section the results will be analyzed by firstly looking at the relation between international work experience and the global mindset of a manager. Secondly the link between the manager’s global mindset and perception and awareness of distance will be explained by the observations made. Additionally, the direct link between the international work experience of a manager and his or her perception and awareness of distance will described by the results of this study.

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4.1 International work experience and a global mindset

To begin, the results concerning the relation between international work experience and a global mindset will be brought forward. The participating managers all had different levels of international experience. In addition, variance in the level of contextualization was observed. The first proposition concerns this relation and is formulated as follows.

Proposition 1: A higher amount of international work experience leads to an increase in global mindset by both increasing the contextualization and conceptualization abilities of a manager.

The 10 interviews were held with managers with different levels of international experience. When asked if he had experience working abroad, participant F stated: “Well, not really... I did an internship in China once, but that’s already thirteen years ago... is that right..? Yeah, I guess about ten years ago and furthermore, I do not have any experience working abroad.” When asked about his view on globalization he was relatively positive stating that “I don’t think the trend will stop, but I do expect that the speed in which the world has globalized… You see much more political groups and viewpoints that for a small bit oppose the globalization. Just look at Great Britain and Donald Trump in the US. Unfortunately, these factors slow down further globalization”. In addition, he saw that, as a company it was crucial to do business internationally. When asked is doing business internationally is crucial for a company to survive he stated: “Absolutely. In the world nowadays you cannot really do it differently isn’t it?” These answers indicate that this participant did have an ability to conceptualize as he was positive about globalization and saw doing business internationally as crucial for firms. His ability to contextualize was assessed when looking at the answers to the questions whether he saw the forces of globalization back

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into his work. When asked if he saw the effect of globalization back into his work in the way he could plan ahead he stated ”No I don’t see any of that back in my work. We are quite capable of planning”. Also, when asked about the Dutch culture, he had trouble describing it, stating “Well, I find it hard to describe. I think the Dutch culture is, how you call it, the spirit of the Dutchman is a spirit of grabbing the bull by the horns and pushing forward and grabbing opportunities, abroad or in the Netherlands.” These answers indicate that participant F has a low ability to contextualize, as he does not show that he is able to integrate changes of globalization into his work and has a lower cultural awareness.

On the other hand, participant E explained that he had a lot of international working experience when asked if he liked working with internationals he explained. ”I worked a couple of years in Singapore, Hong Kong and in London.” His LinkedIn page indeed shows more than 10 years of working abroad in both Asia and Europe. When he was asked about his view on the value of different cultures he replied: “No, What culture you have doesn’t matter to me”. Also, he showed no form of patriotism when asked about the acquisition of Dutch firm by foreign firms. “Well that it is part of living in a global world. I have no problems with that whatsoever.” His view on the necessity to do international business as a company was also similar of that of participant F although he did state that it depends on the size of the company. “Uuhm well necessary... it depends on what you do... Simply, there some businesses, for instance, small shop owners in the Netherlands, that do not have to do business internationally because they can reach a certain target group which they are very content with. If you consider the larger enterprises, than doing business internationally is a huge advantage because we have seen a high amount off globalization.” These answers indicate a similar level of conceptualization than that of participant F. There is however, difference in the level of contextualization as participant E shows a much higher level of this

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date of the news. Participant E did not do this. Also, the amount in which they incorporated the context into their work differed quite. Participant F stated that “I don’t do that much often actually” When asked if he looked at the context when making business related decisions. Participant E however, did do this as he stated: “Well I have been operating internationally my whole life. In the sense that I have been raised internationally, so in a sense the international part has always been there. It is part of how I look at the world and operate in it.”

When using these two opposing cases as example, it can be stated that international work experience has a more direct influence on the ability to contextualize than on the ability. And indeed when taking the rest of the cases into consideration, this statement holds up. Participants with high levels of international work experience showed higher amounts of contextualization. The ability to conceptualize however, showed lesser variation. Every participant did have this in some form. This could be due to the fact that all the participants did have some experience with international business and to some extent also had experience working abroad. Therefore, the observations point towards a more direct influence of international work experience on the ability to contextualize and are inconclusive on the effect of international work experience to conceptualize.

In this study we saw that a higher amount of international work experience only led to a higher contextualization ability and did not really affect the ability to conceptualize. However, as aforementioned our all the participating managers all had some sort of international experience. Therefore, this proposition is not fully supported by the observations but still plausible.

4.2 A global mindset and the awareness of distance

The shape of the link between the global mindset and the awareness and perception of distance has come forward during the ten interviews. In general, the variation in the global

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mindsets of the managers seemed to lead to changes in both the awareness of distance and the perception of distance. To begin, the link between high levels of conceptualization and contextualization and the awareness of distance as presented in proposition 2 will be brought forward.

Proposition 2: Both higher levels of conceptualization and contextualization will lead to a higher awareness of distance.

I found that the level of contextualization was more directly linked to the manager’s awareness of distance than the ability of the manager to conceptualize. For example, participant D and G both showed a high level of Conceptualization, but different levels of contextualization. Participant D, when asked about his view on globalization, mentioned: “I think we are only at the start of it. I think that is only beautiful and makes the world very transparent. You will however need to take this into account as a company.” Also, he was very strict about the equality of cultures when asked if he thought a culture was supreme or not: “O no, I think supreme is a dangerous word. No, we are not supreme. Furthermore he stated: “I find it dangerous because if you rank cultures, you automatically make somebody subservient to you and I think that is a huge mistake because it can also be bad judgment. I don’t rank, you have to take other into account.” Likewise, Participant G also was positive towards globalization when he replied to the question how his view was on globalization: “Positive, uuhmm personally I think it is an opportunity for more chances. I am not that confined inside national boundaries of the Netherlands or Europe.” Subsequently, when asked if he thought that globalization would never stop or that boundaries would disappear he stated: “I hope so, I would be positive about that”.

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However, when looking at the ability to contextualize of participant D and G, there is some difference visible. Participant G was a bit more hesitating when asked if he could adapt himself easily when circumstances change. He replied: I pretend to... uuhmm yes. In instance that it uuhmm yes I do think so yes.” Also, when asked if he liked working with foreign people he replied: “uuh yes, but the hesitation in my voice is deliberate. It depends from which country.” Also, it was noticeable that he mentioned that he didn’t think news was objective but primarily used Dutch sources to keep up to date from the news. Participant D however showed a higher level of contextualization when he replied to the question whether he liked working with internationals: “Yes, I like doing that, you can learn a lot from it. It helps you to keep an open mind.” What was particularly interesting was his ability to compare different cultures with each other on the bases of different elements. “I see large differences in cultures between countries, The Danish are very much comparable to the Dutch, they are maybe a bit more correct. A bit more political and therefore sometimes also a bit softer in our eyes. The Fins, Finland is very similar to the Netherlands, if you look at how the market is organized and how the people behave and organize. Uhmm... the Germans are totally different, you do see them change. Traditionally, they have been very hierarchical but you see the younger generation saying goodbye to that. You see the same thing in Belgium, they are also very hierarchical. The French are very nationalistic, there, everything has to be local and with French flag on it. That’s very important there, also because the government stimulates that with protectionist policies. The Italians are prepared to try something new but are very committed to their own culture, their own pride and own customs must match it.” Later on, he described, in more general terms cultures from the Middle-east, Russia and Africa. This is one of the points that indicate a high ability to contextualize.

When comparing the two mind-maps, the first difference is noticed rather easily. Participant G only incorporated 9 elements into his mind-map while participant D

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incorporated 24 elements. Participant G mentioned basic elements like “costs of labor” and “IT - infrastructure”. On the other hand, participant D mentioned more sophisticated elements like “management culture”, “living conditions expats” and, “fiscal regulations. These results are in line with other observations, when you look at the participants with high levels of contextualization, they mentioned more elements that they would consider when comparing countries for an offshoring decision. Therefore, we can say that the observations do not support proposition 2 as only contextualization seems to increase the awareness of distance.

In the following section, the results that offer insights in to the relation between a global mindset and the perception of distance will be analyzed by taking the 3rd proposition into account.

4.3 A global mindset and the perception of distance

Proposition three and four offer additional information about the relation between a global mindset and the perception of distance. Nebus and Chai (2014) describe this perception as the importance a manager ascribes to a certain foreign context elements. The elements that the manager named can either be labeled as ideational or physical. First, the results concerning the third proposition will be analyzed.

Proposition 3: A manager with a high ability to contextualize will perceive physical, as opposed to ideational, foreign context elements as relatively more important.

When looking at the answers of participant B, he showed an above average ability to contextualize. When he was asked if he liked working with internationals he stated: “Yes, I have been schooled in an international setting... the first language I learnt to speak was

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with foreign people with different cultures, from Americans to Africans and people from Iran.” When asked if it costs him less effort to work together with internationals he answered: “No, it doesn’t cost me any effort at all. I even like working with them because it is different than working with people that are more similar than myself.” Also, he was fond of traveling, used international news channels like CNN and BBC as to keep up to date on foreign news and always tried foreign dishes. When making his mind-map, he did include some ideational elements like “governmental beliefs in capitalism”, but included much more physical elements like “low costs of labour”, “supply of labour” and “government regulations. In addition, the physical elements where weighed as more important than the physical ones. Thus, on the bases of this single case you could find support for the third proposition.

However, when we look at the results of other participants with similar levels of contextualisation, other conclusions must be drawn. For instance, participant J showed a high level of contextualisation when she was quite able to reflect on how, in general, Dutch behave in foreign settings: “Well uhmm, The Dutch are very direct you know, and also a bit arrogant with that. Arrogant in the sense of self-confidence, to put it that way. In general you see that they are more comfortable in settings with multiple cultures.” Furthermore, she stated that she likes working with foreigners: “Yes, I find that very inspiring because of a diversity perceptive. With that I mean diversity in the broadest sense of the word. Broad including background, profile, gender, religion, worldview and that kind of classifications. That is very inspiring, working with people with different backgrounds, because everything that comes out of that, and that is a deep conviction of mine, always becomes better when diversity is involved.” She also stated that she eats different kinds of foods regularly and really likes working in dynamic environments as “ Working at a government or city council would not fit me well”. While having a high level of contextualisation, she did however see “culture” and “working culture” as two very important elements when choosing a country to offshore to.

Exploring the relation between international work experience, a global mindset and the awareness and perception of distance