What is convergence? What are some of the factors causing convergence? Do you think that companies will adopt more convergent practices in the future? Why or Why not?

Response submitted by Keith:

CONVERGENCE is the increased similarity of management practices, especially those related to STRATEGY.
Management practices are COPIED and used by all nationalities and most apparent with transnational organizations.

1. Similarity of customer demands and worldwide shopping.
2. Growing industrialization and economic development result in increased technical and financial capabilities that limit design options. (?)
3. Global competition and trade raises managerial awareness of other countries. More interaction encourages copying what works.
4. Cross-border mergers, acquisitions, and alliances combine strategies.
5. Cross-national mobility of managers with high talent. Increases mimic isomorphism.
6. Internationalization of business education. Many international students taking U.S. and European M.B.A. programs, then return to home countries. Cooperative programs in developing nations.

- Managers must understand and anticipate strategies of rivals from other countries.
- Managers must understand strategies of potential business partners.
- Strategies developed in one national context might be copied and modified to fit another national context.
(pages 241-244)

Response submitted by Jorge & Habib:

Ethical convergence refers to the growing pressures for multinational companies to follow the same rules in managing ethical behavior and social responsibility. There are four (4) reasons for ethical convergence:
  1. The growth of international trade and trading blocs, such as NAFTA and the EU, creates pressures to have common ethical practices that transcend national cultures and institutional differences. Many trading partners and other international associations are developing measures to reduce corruption.
  2. Interaction between trading partners creates pressures for imitating the business practices of other countries. The increased interaction between people of different cultural backgrounds, exposure to ethical traditions encourages people to adjust to, imitate, and adopt new behaviors and attitudes.
  3. Companies that do business throughout the world have employees from varied cultural backgrounds who need common standards and rules regarding how to behave. Multinational companies rely on their corporate culture to provide consistent norms and values that govern ethical issues.
  4. An increasing number of business watchdogs, such as ethical investment companies and nongovernmental organizations, also are encouraging multinational companies to become more ethical.
Companies will continue adopting more ethical convergent practices because of the moral and financial pressure to eliminate corruption. Extensive corruption costs money, makes business less competitive internationally, and risks embarrassing scandals.

Heidi's Response

What is convergence?
The increasing similarity of management practices among different organizations.
What are some of the factors causing convergence?
  • Multinational firms competing in the same industry tend to have similar structures and strategies regardless of the location of the company’s headquarters.
  • They use what they see as most effective.
  • Because they compete in worldwide markets, MNC seek not only uniform products and strategies but ways of organizing that need not differ by national boundaries.
  • MN managers often lack deep-seated national cultural or societal identification. Their companies, not their nations, are more important to them.
  • Coercive, mimic, and normative isomorphic forces cause convergence.
    • Coercive: Social institutions coerce organizations to adopt certain practices (government regulations).
    • Mimetic: Organizations purposefully copy the strategies of the most successful organizations “benchmarking”.
      • Global customers and products
      • Global competition and global trade
      • Cross-border mergers, acquisitions, and alliances
      • Cross-national mobility of managers
    • Normative: Organizations indirectly copy the designs, cultures, and strategies of other organizations by conforming to professional and technical norms.
      • Growing levels of industrialization and economic development
      • Internationalization of business education (spreads common business techniques)
Do you think that companies will adopt more convergent practices in the future? Why of why not?
I believe that companies will adopt more convergent practices as the world continues to become more interdependent. Normative forces such as internationalization of business education (MBA programs), regional trade agreements and membership in the WTO will standardize management practices. Cross-border competition, trade, mergers, acquisitions provide more opportunities to learn about and copy successful managerial practices from anywhere in the world.