What Is Global Mindset?

This argument is not new. It was proposed more than 30 years ago when researchers began to examine how corporations make decisions about foreign investments, and it parallels other research on managerial cognition.^[4] Perlmutter developed the first formal outline of the orientations or mindsets of managers in multinational firms.^[5] His now-classic typology of ethnocentric, polycentric, and geocentric orientations formed a framework for subsequent theoretical and empirical work. The future need was clearly for more “geocentric” managers, “the best men, regardless of nationality, to solve the company's problem anywhere in the world.”^[6] Since then many authors have argued that the cognitive orientation of managers has become a critical issue facing multinationals.

There are two different and complementary perspectives on global mindset, one rooted in a psychological focus on the development of managers in multinational firms, and the other coming from scholars and practitioners with a strategic viewpoint on the transnational enterprise. One concept of global mindset views it as the ability to accept and work with cultural diversity, leading to research that tries to map out the skill or competency sets associated with this. Scholars have observed that people with global mindsets tend to approach the world in ways that differentiate them from domestic managers.^[7] Unlike firms with an ethnocentric mindset, a firm with a global mindset “accepts diversity and heterogeneity as a source of opportunity.”^[8]

Extensive lists of competencies that distinguish successful global managers have been developed.^[9] Some examples include the championing of international strategy (visioning the future), acting as a cross-border coach (giving and receiving feedback from international teams), cognitive complexity (the ability to step back and see new patterns), and emotional maturity (being able to handle emotional crises). However, most of these lists are generic; they do not take into account the specific strategic focus of the firm. Although no one can disagree with the general desirability of such qualities and their relevance for managers in multinational firms, such all-encompassing use of the global mindset concept has stripped it of any distinct cognitive meaning.^[10]

The strategic perspective on global mindset is more concerned with mirroring the dilemmas of the organization. Rather than focusing on general skill sets, it focuses on a way of thinking that reflects conflicting strategic orientations. Since most multinational firms face contradictions (the determining feature of the transnational enterprise), scholars have emphasized the need for “balanced perspectives,” arguing that a critical determinant of success in such firms lies in the cognitive orientations of senior managers.^[11]

Diverse roles and dispersed operations must be held together by a management mindset that understands the need for multiple strategic capabilities, views problems and opportunities from both local and global perspectives, and is willing to interact with others openly and flexibly. The task is not to build a sophisticated structure, but to create a matrix in the mind of managers.^[12]

The concept of “the matrix in the mind” vividly captures the notion of global mindset and the idea that contradictions cannot be resolved by structure but need to be built into the way of thinking of leaders and managers in the transnational firm. Thus, the strategic perspective on global mindset refers to a set of attitudes that predisposes individuals to balance the competing business, country, and functional priorities that emerge in international management processes, rather than to advocate any of these dimensions at the expense of the others. It involves recognizing that organizational resources are deployed across all subunits and places high value on sharing information, knowledge, and experience across boundaries.^[13]

The concept of global mindset helps to differentiate between expatriate and global managers.^[14] Expatriates are defined by location, as managers who are working in a different country from their own. Global managers, by contrast, are defined by their state of mind. They are people who can work effectively across organizational, functional, and cross-cultural boundaries. They are able to balance the simultaneous demands of global integration and local responsiveness. They are expected to have a hands-on understanding of global business and perceive global competition as an opportunity. Some global managers may be expatriates—most have been expatriates at some point in their careers—but not all expatriates are global managers. International management literature is full of examples of expatriates with an ethnocentric orientation.^[15] At the same time, local managers in lead countries may not be expatriates, but they invariably need to have a global mindset.

Global or otherwise, the kind of mindset managers do need depends on the competitive position of the firm. Not all companies have to become transnational to do business across borders. A multidomestic or a meganational mindset may be just as appropriate, and a polarized mindset may serve a positive purpose at a particular stage of globalization. What matters is alignment and consistency.