Commerce & Culture

Students at the University of South Carolina learn how formal and informal institutions shape societies and how to translate business models from one country to another.
Commerce & Culture
Today’s business students must learn to operate within every single country in the world, from developed nations to emerging economies. In fact, as emerging nations receive more foreign direct investment and increase their ability to compete on the international level, they are becoming increasingly important global players. Yet the institutions that we take for granted in other countries often do not exist within the governments, cultures, and business environments of emerging nations. Students must learn to be as comfortable in these settings as they are in the developed world.

To prepare students to work in these vastly different environments, business schools must design curricula that do more than focus on the skills and perspectives of a Western neoliberal socioeconomic model. They must go beyond presenting global cases in the classroom, offering short-term trips to other countries, or placing their students in virtual teams with international participants. They must create future managers who can deeply appreciate other cultures and who know how to transfer a product, service, practice, or business model to a significantly different institutional and socioeconomic setting.

To achieve these goals at the Darla Moore School of Business at the University of South Carolina in Columbia, we recently made major revisions to our international MBA. For instance, in the past our program had an optional language training component, delivered through a three-month in-country immersion followed by a three- or four month international internship. Now, language training is a requirement for all students; if they are bilingual when they enter the program, they will learn a third language. Our goal is for them to reach advanced intermediate levels of fluency, which will allow them to engage in business in this second or third language.

But we recognize that, even if students understand another language and even if they spend a great deal of time in another country, they might learn very little about its business and culture. Indeed, they might find that their preconceived stereotypes are reinforced. Thus, we revamped our curriculum in other ways designed to help students understand how cultures evolve, what institutions support these cultures, and how they vary across the world. To do this, we added more flexibility in required core courses, strengthened our functional disciplines—and added two distinct multidisciplinary dimensions.

LEARNING TO COMPARE


The first new dimension is supplied by a course on comparative politics and sociology. The literature in this field, which discusses the conceptual frameworks of various socioeconomic systems and forms of governance, is more commonly taught in political science programs than in business classes. Our comparative institutions course is led by Gerald Mc-Dermott, who has a PhD in political science and teaches in the Moore School’s international business department.

In the class, students systematically analyze the institutional configurations that shape a country’s governance, technology, and competitive international profile. “They learn to conduct complex risk analyses, identify sustainable innovation clusters, and evaluate trends in transnational regulations, while also learning how institutional foundations affect a company’s competitive advantage,” McDermott says.

For instance, students might consider the case of Denmark, where the unionization rate is 80 percent and social expenditure as a percentage of GDP is more than 30 percent, one of the highest in the world. How do Danish companies manage to be among the most competitive in the world while also innovating at the frontiers of technological change? Students also might look at Israel, which the IMD Global Competitiveness Yearbook ranks at No. 1 for innovation capacity and entrepreneurship. What explains the global competitive position of a country that is relatively small in population and lacks many critical factors of production?

In both cases, students learn that distinct and radical national innovation systems link government institutions with public policy, industry capabilities, and institutions of higher education; all these sectors are aligned for the broader purpose of enhancing public and private goods. Informal institutions—such as culture, values, and role models—provide further motivation and rewards for companies and individuals that pursue innovation.

Students also learn that innovation and competitiveness are always influenced by macro-sociopolitical systems. We believe that this knowledge will enable them to understand the global competitiveness of any organization within any country.

LEARNING ABOUT CULTURE


Our second multidisciplinary dimension is a course we developed with our anthropology department. It incorporates the principles of ethnography, or the study of people and cultures. Both in class and on location, students learn the tools of ethnography as they deconstruct and reconstruct the cultures of unfamiliar settings and determine how these influence particular sectors. For instance, in the 2014-2015 academic year, they focused on the supermarket and grocery store industry.

While on campus, students use videoconferencing technology to conduct two field reports about cultures in other nations. They conduct two more field reports during the eight months they spend abroad completing their language training and internships. The countries they can choose to visit include Japan, Morocco, China, Taiwan, France, Spain, Germany, Italy, Mexico, and Brazil.

The course builds on the notion of a business model—that is, it examines target markets, value propositions, value chains, and forms of revenue generation for a particular industry. As students observe customs and conduct interviews in real market settings, they develop an understanding of specific segments within the industry, including employees, managers, owners, customers, and regulatory agents. They don’t simply define the components of the model; they provide detailed descriptions of the physical and sociopolitical contexts, both formal and informal, that underlie the model. Students then share their reports so they can do comparative analyses of different models across industry segments.

Once students gain a fundamental understanding of a business model within a given industry, they relocate throughout the world to begin their internships. In their new settings, students must first replicate their earlier ethnographic analyses, each identifying the business model for a local company in the same industry. Again, teams share information to conduct comparative analyses so they can understand why these models have emerged. They also learn how the business model in another country is influenced by institutional differences in culture, values, capabilities, social structure, political structure, and economy.

Students revisit the initial business model to consider how it might transfer to the new context. For instance, perhaps a student is working within an industry where revenue generation depends on property rights and patent protection. If, in this new locale, the legal system is undeveloped or nonexistent, are there other institutions that might provide the same protection but in a different form? If not, should the student reconfigure the original model to work in this context? Or should he or she recommend that the corporation work toward creating the institutions it needs to operate, such as those protecting legal or labor rights?

Students work through each component of the business model so they can understand how it applies in the new setting. We don’t want them simply to understand business practices in the host country. We want them to understand that these practices and institutions exist in their specific forms because they reflect historical, social, and cultural contexts. Because we also want them to examine their personal responses to local cultures, we include a self-reflective component.

The course is delivered by two specialists with expertise in the business applications of ethnography. “We are seeing students challenge their assumptions about how things should work,” says Ken Erickson, lead faculty instructor. “They’re moving well beyond focusing on local business etiquette and making normative statements about cultures to understanding local institutions and informal rules.”

LEARNING AGILITY


After completing these two classes, students come away with a deep understanding of how markets vary—and the knowledge that local rules and customs change all the time. That’s why it’s important for students to develop mindsets of agility. “We want students not to get stuck on one model, but to learn to see patterns in settings of rapid and precarious change,” Erickson says. “Our interns are helping their corporate hosts evaluate problems ranging from promoting sustainability in local supplier networks to teaming with multinational engineering groups on the bleeding edge of transportation technology. It takes time to build contextual intelligence, but our students will have a head start.”

At the Moore School, our goal is to produce business multiculturals. While we want our graduates to be bilingual, we also know that it’s not enough for them to simply know another language. They also must develop the business acumen to learn about and act within rapidly changing business cultures that do not conform to the models typically taught in business school. These are the skills any future executive will need to navigate a rapidly changing and uncertain world.
Kendall Roth is senior associate dean for international programs and partnerships at the University of South Carolina’s Darla Moore School of Business in Columbia. He also holds the J. Willis Cantey Chair of International Business and Economics.