EDO 818 Module 5 Managing Across National Contexts Example

Adopted on Paper, Believed on the Floor? Transferring Three Management Practices to Plants in the Czech Republic and Malaysia

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Doctor of Education Program, Aspen University

EDO 818: Leading Across Contexts and Cultures

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Month Day, Year

Adopted on Paper, Believed on the Floor? Transferring Three Management Practices to Plants in the Czech Republic and Malaysia

When Clearbrook Water Systems, an invented Minnesota filtration manufacturer, acquired its Brno plant in 2021 and opened its Penang plant in 2023, headquarters transferred three management practices it considered central to its identity. The first was a lockout and tagout safety program, in which every worker who services a machine places a personal lock on its energy source. The second was a pay-for-performance bonus tied to individual targets, worth up to 12% of salary. The third was an open-door policy inviting any employee to raise concerns with any manager, including the plant manager. Headquarters' compliance reports show all three in place at both sites. The plants tell a more varied story. This paper uses research on managing across national contexts to explain the results and to plan the next transfer. The company and its practices are invented, and national institutions are described in general terms.

Implementation and Internalization

Kostova (1999) developed a model of the transnational transfer of strategic organizational practices within multinational companies. She defined successful transfer as having two parts: implementation, the extent to which employees at the recipient unit follow the formal rules of the practice, and internalization, the extent to which they come to see the practice as valuable and commit to it. A practice can be implemented without being internalized, followed in form while believed in by no one. Kostova proposed that transfer success depends on three contexts. The country context is captured by institutional distance, the difference between the home and host countries' regulatory institutions, such as laws and rules; cognitive institutions, the shared knowledge and frameworks people use; and normative institutions, values and norms. The organizational context concerns whether the recipient unit's culture supports learning and change. The relational context concerns the recipient unit's trust in, commitment to and identification with the parent.

Results Site by Site

Assessing Institutional Distance

The safety program faced little distance at either site. Regulatory institutions in both countries already required energy isolation, engineers at both plants shared the cognitive framework behind it and normative expectations of worker safety were strong. The program was implemented and internalized.

The individual bonus faced greater distance in Brno. Czech labor relations give works councils information and consultation rights, and the plant's council viewed individual targets set by managers as unfair to employees whose work depends on shared equipment. Normatively, the plant's engineers valued fairness and stability, as Module 1 found. The bonus was implemented because headquarters required it, but not internalized.

The open-door policy faced greater distance in Penang. Its cognitive premise, that an employee can approach a senior manager directly with a concern, conflicts with expectations about hierarchy and face described in Modules 1 and 3. Normatively, raising a concern above one's supervisor could be seen as disloyal. The policy was implemented on paper, posted in every break room, and almost never used.

Legitimacy in Many Places

Kostova and Zaheer (1999) examined how multinational enterprises gain and keep legitimacy, the acceptance of the organization by its environments. They argued that the multinational faces unusual complexity: it must be legitimate in many institutional environments at once, its own subunits face both the host country's expectations and the parent's internal demands, and legitimacy is harder to establish because of a liability of foreignness and because local stakeholders judge the firm with limited information, sometimes by stereotypes. A subunit must therefore attend to external legitimacy in its host country and internal legitimacy within the company.

In Brno, the works council's acceptance is part of external legitimacy; a practice the council opposes undermines the plant's standing with its workforce. In Penang, a policy employees see as foreign and impractical weakens the parent's credibility on everything else it asks.

Capabilities, Not Imitation

Zaheer (1995) studied the trading rooms of banks in New York and Seoul and found that foreign-owned trading rooms were less profitable than local ones, evidence of a liability of foreignness. Foreign firms that transferred their own organizational capabilities from home performed better, while imitating local firms' practices did not overcome the liability. The lesson is not that headquarters' practices should always be exported unchanged, but that a multinational's advantage lies in capabilities that work better than local alternatives.

Clearbrook's safety program is such a capability, and it succeeded. The bonus and the open-door policy are less capabilities than habits of Minnesota's culture, and exporting them unchanged added friction without adding advantage.

Planning the Next Transfer

Clearbrook plans to introduce a continuous improvement program, in which teams meet weekly to propose small process changes, at all three sites next year. The transfer plan follows from the analysis. First, assess institutional distance for the program at each site before launch, with each plant's leaders. Second, co-design the local version: in Brno, with the works council, including how ideas are rewarded; in Penang, with team leaders, including private or written channels for suggestions instead of open meetings. Third, phase adoption, starting with one line per plant. Fourth, measure internalization, not only implementation, through a short survey asking whether employees see the program as worthwhile, alongside counts of meetings held. And fifth, revisit the bonus and open-door policy using the same process.

Conclusion

Clearbrook's practices transferred well where institutional distance was small and poorly where it was large, and two were adopted in form without being believed. Kostova explains the difference between implementation and internalization and the role of distance, Kostova and Zaheer explain the need for legitimacy in each host setting and Zaheer shows that a multinational's advantage lies in real capabilities. Assessing distance, co-designing with local stakeholders and measuring internalization should shape the next transfer.

References

Kostova, T. (1999). Transnational transfer of strategic organizational practices: A contextual perspective. Academy of Management Review, 24(2), 308-324. https://doi.org/10.5465/amr.1999.1893938

Kostova, T., & Zaheer, S. (1999). Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review, 24(1), 64-81. https://doi.org/10.5465/amr.1999.1580441

Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341-363. https://doi.org/10.5465/256683