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American Education for International Business

An anomaly exists in the field of American education for international business. First, almost every author acknowledges that the world, and the United States in particular, is entering an era of increased international involvement in which international business will be the cornerstone. However, surveys of those American companies engaged in international businesses indicate a very low desire or expectation that formal education can or should make a significant contribution to the preparation of businessmen for international activities. By way of justifying international business education, Nehrt reported on an exhaustive study of international business conducted by the American Council on Education [1]. The magnitude of the impact of international firms on the U.S. economy is not generally appreciat- ed. One should note first of all that the total U.S. exports have recently passed the $ 100 billion dollar mark. Secondly, a large number of industries have very significant percentages of their operations overseas. In 1974, the U.S. drug industry, for example, had 31 % of its operations abroad; farm machinery -27%; tires -22%; office machinery -20%; soaps and detergents -20%; motor vehicles -18%; soft drinks -18%; etc. (p. 9) Nehrt went on the explain that international business properly includes not only those companies which maintain production facilities in foreign countries, but also all those domestic companies which export or import materials, parts, or finished products, and those which find themselves competing with foreign companies either on the domestic or foreign markets. Thus, when one speaks of educating or training people for international business, one refers to all those individuals whose job can be better performed if they are familiar with the economy, politics or culture of one or more foreign countries, or if they have an understanding of international politics, economics, finance, or transportation (p. 9). Therefore, Nehrt concluded, education for international business should not confine itself to preparing the “35,000 [American] businessmen who live overseas, nor the people who work in the offices of the 6,000 large companies which have overseas operations, nor to the 20,000 firms which engage in exporting” [2]. But, rather, international business affects all managers to a greater or lesser degree. Certainly, a basic education in interna- tional business should be a part of every manager’s background, whether achived for- mally or informally. Moved by such arguments as these and a recognition of the trend toward further internationalism, the American Assembly of Collegiate Schools of Business in 1974 instituted a requirement that all its member schools include education in international business in their “common body of knowledge”. On the other hand, studies of American business firms engaged in international business [3] report that very few of their managers have had any formal training in international * John I. Reynolds, Professor of Management, business, and few companies seem to feel that such training is very important. For example, Tarleton reported that forty percent of those “Fortune 500” companies re- sponding to his questionnaire said that “practically none” of their newly employed Master of Business Administration graduates had significant responsibilities in interna- tional operations, and another twenty-four percent said that “fewer than ten percent of their MBA’s had significant responsibilities” for international business [4]. Tarleton expressed his conclusions as follows: Most of the respondents seemed quite interested in, even enthusiastic about increasing the interna- tionalization of the MBA program. However, there was a significant and somewhat surprising number of responses which, while not negative, were at best neutral to any such trend. Apparently, some executives do not perceive there being very much value in having an international perspective in graduate programs from the standpoint of making the MBA more useful or valuable to their companies (p. 446). In a more recent study of American companies operating in international business, Tung found that in selecting personnel for overseas assignments, education in international business was not even a consideration [5]. In most cases, knowledge of the language of a host country was not an important criterion either. Of much greater importance to these companies was the technical competence of the employee selected. American Assembly of Collegiate Schools of Business accreditation requirements have had an effect on business school curricula. Grosse and Perrit studied 500 business schools, both U.S. and foreign, for the Academy of International Business [6]. Of these, 81 % of the 323 U.S. schools which responded offered at least one course in International Business, an increase during the previous five years of 17%. Despite this, it is fair to say that academics have not been fully satisfied with the “internationalization” of American business school curricula. If education for international business has not grown and developed to the degree that academicians expected, perhaps the reason lies in what is happening to international business rather than in what the colleges have been offering as “international” curricula. In a recent article, Robinson traced the history of international business through three stages and predicted that a fourth stage is imminent [7]. Starting just after World War II, the first stage consisted of rapid direct investment by American companies in foreign countries. The second stage, starting about 1950, saw the development of multinational companies, “in the sense that they moved toward fashioning globally integrated produc- tion and marketing systems, whose development begged central control” [8]. The third stage, starting in the 1970’s, saw host governments recognizing and reacting adversely to the economic and political impact of multinational companies. “International business . . . was too important to be left to businessmen, the market, and the ‘inept’ LDC politicians” [9]. After analyzing trends in factors which he saw affecting international business, Robinson argued that the fourth stage will consist primarily of a shift back to international companies, with these companies serving as “enormous” information systems which can identify almost instantly the cheapest sources of capital, the most appropriate skills and production facilities, and the most profitable markets, worldwide. Profits will come from selling access to the information, and “not from dividends arising from investment in fixed assets” [10]. The manager in such a company might require a far different background than the expatriate manager today. Multinational companies are not restricted to employing parent country nationals, but freely employ host country nationals and third country nationals for overseas as- signments. This is even more true when the government of the host country restricts the numbers of foreign executives within its borders. Once again, the character and compe- tence called for in an international manager may be changing from past patterns. MIR Vol. 28, 1988/3 49 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to The Survey We conducted a survey of American companies engaged in international business in order to better understand their preferences for educating their international managers. Unlike several previous surveys which sampled only the opinions of business educators [11] or of mixed samples of business managers and educators [12], the survey reported here sampled the opinions of managers of international businesses only. Unlike the surveys reported by Tarleton and Tung, which covered only managers of very large businesses [13], this survey included a substantial number of small and medium-sized businesses. In some respects, therefore, the results of this survey are more broadly representative than previous surveys of the opinions of American business managers on the subject of the effectiveness of various methods of preparing for a role in international business management. The Sampling Universe and The Sample Uniworld Business Publications publishes what purports to be a comprehensive list of all U.S. firms with international operations [14]. From the total of 4300 American corpora- tions listed in the 1979 edition of that register, every Texas based firm was chosen (233 subjects), and an equal number (generally the immediately following listing) of firms based outside Texas. We mailed a questionnaire to each of these 466 firms. Nine ques- tions gathered material describing the firm’s operations, three asked for predictions of future developments in the international field, eight dealth with practices and procedures involving international management assignments and four focussed upon the respon- dents’ opinions about the relative importance of seven functional fields of specialization within international business and of three ways of gaining knowledge about those fields. One hundred twenty-seven usable replies were received, for a useful repsonse rate of 27%. An additional fifteen companies replied, stating that they had no international operations. In general, therefore, interpretation of responses to most questions should be qualified by the realization that they represent the views of about one-quarter of the sample of companies to which the questionnaire was sent. As will be seen, however, there were so few significant differences among companies with varying objective character- istic on the opinions of interest, that the only concern about response bias may be focussed upon one single issue: whether respondents were those who were more or less favorably inclined to value university education than the general population. On a priori grounds it seems likely that respondents would be biased in favor of university education, since the questionnaire lead clearly identified an educational purpose for the survey. The a priori reasoning, partially confirmed by two internal analyses of responses that will be reported later in this paper, makes it safe to assume pro-educational bias on the part of respondents. Responses Questions 19 through 24 concerned educational preparation for management of interna- tional business, and provided the data for this report. 19. Do you actively seek people with specific qualifications, in terms of education and experience, for entry-level management positions in the international operations of the firm? 50 MIR Vol. 28, 1988/3 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to 73 a. yes 47 b. no If yes, which of the following describe your firm’s requirements of a candidate for an entry-level management position in international operations? (Check all that apply.) 50 a. Candidate must have a bachelor’s degree (minimum). If a particular field is required (business, engineering, science, etc.), please specify: 4 b. Candidate must have a master’s degree (minimum). Particular field: ]_ c. Candidate must have a concentration in international management in his university studies. 7 d. Candidate must have had a foreign language during his university studies. 50 e. People coming directly out of college are not considered for positions in the international operations of the firm. Some domestic experience with the firm is essential before a person can be considered. 13 f. A person’s desire to serve overseas is a more critical factor than his experience as a domestic manager. In addition to the basic statistics shown for Question 19, a detailed analysis of answers to the second part, “entry qualifications” provided further insight. About two-thirds of the companies require a university degree. For over half of those who enter with a degree, however, this by itself is not enough. Candidates also require domestic experience with the firm. For a substantial minority (32%) domestic experience is sufficient. Other responses show that 1 5 respondents value engineering specialists, while 1 1 are looking for business graduates, three science, and one architecture. A similar conclusion, that engi- neering education is more frequently required of international management entrants by respondents to this survey than any other single discipline (in cases where a discipline is specified), is borne out by an analysis of free-form replies to all questions by the 32 respondents who made reference at any point to functional area disciplines important to overseas assignments; 24 mentioned engineering while 13 mentioned business subjects. It is also important to note that very few companies require a master’s degree for entry-level positions in the international field. This fact is far from an endorsement of graduate-level study for entry into international management. Although it is not completely clear why as many as 40% of the respondents to question 19 do not “actively seek” persons for entry-level positions, inferences can be drawn from free-form answers to question 20. 20. Describe briefly the way a person typically enters the field of international manage- ment with your firm. Any additional comments about the requirements for a candi- date in terms of work experience and education will be appreciated. Some respondents have so few international management positions that they did not have current openings at the time of the survey. Others make a practice of hiring experienced international people from larger firms, and these may not have been viewed as “entry level” jobs. Still others, constituting a majority of the 86 respondents who gave some answer to question 20, emphasized in one way or another that entry into internatio- nal management was contingent upon a functional skill (typically engineering or business-related ) and substantial experience in the domestic operations of the company. Few of the free-form respondents made explicit reference to how the functional skills might have been attained, but those that did made it clear that the firm brought people into their domestic operations through university recruiting. 21 . Of the following areas of knowledge, which do you consider more important for your international managers? (Please rank order them: 1, 2, 3, etc.) MIR Vol.28, 1988/3 51 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to 62 international business finance 77 international marketing 23 international accounting 1_8 international labor relations \1_ international business law 1_5 international transportation 33 importing and exporting techniques 34 other The values shown in the above table are the number of questionnaires on which the given subject was listed as of first, second or third importance. It seems clear that international marketing and international business finance are far ahead of any other subject, among those listed. The most frequently cited “other” subject areas were “technical,” specifi- cally related to the business of the responding firm. It is useful to recognize that the responses to question 21 are reasonably consistent with Nehrt’s findings, in which a mixed panel of educators, managers and government agency persons rated international marketing and international business finance in first and second place in importance, and international transportation least important of the seven subjects listed. Respondents in the present study ranked international labor relations higher in importance and international accounting and international business law lower than did Nehrt’s Delphi panel. 22. To what extent do you believe university studies to be important in the acquisition of knowledge in the following areas? Very Moderately Relatively Mean of important important unimportant rating* Int’l business finance 48% 43% 9% 1.61 Int’l marketing 42% 47% 11% 1.68 Int’l accounting 33% 47% 20% 1.91 Int’l labor relations 17% 41% 43% 2.24 Int’l business law 37% 40% 23% 1.86 Int’l transportation 7% 44% 49% 2.41 Importing and exporting 16% 5\% 33% 2A1_ Mean of ratings 29% 45% 27% 1.98 * Assigning an arbitrary weight of 1 to each answer in column 1, 2 to column 2, and 3 to column 3. 23. To what extent do you believe specialized executive development programs to be important in the acqusition of knowledge in the following areas? Very Moderately Relatively Mean of important important unimportant rating* Int’l business finance 56% 33% 11% 1.56 Int’l marketing 59% 29% 11% 1.52 Int’l accounting 29% 50% 21% 1.92 Int’l labor relations 24% 42% 34% 2.10 Int’l business law 43% 34% 23% 1.81 Int’l transportation 22% 30% 48% 2.25 Importing and exporting 30% 32% 38% 2jO8 Mean of ratings 38% 36% 27% 1.89 52 MIR Vol. 28, 1988/3 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to 24. To what extent do you believe overseas experience to be important in the acquisition of knowledge in the following areas? Very Moderately Relatively Mean of important important unimportant rating* Int’l business finance 52% 38% 10% 1.58 Int’l marketing 82% 17% 2% 1.20 Int’l accounting 36% 49% 15% 1.79 Int’l labor relations 61% 27% 12% 1.51 Int’l business law 45% 44% 12% 1.67 Int’l transportation 41% 36% 23% 1.82 Importing and exporting 48% 34% \8% L70 Mean of ratings 52% 35% 13% 1.61 Questions 22 through 24 are at the heart of the survey in providing guidance for curriculum design. Although we do not propose, as will become apparent later on, that universities should merely prepare students in the exact molds specified by the market- place, nonetheless we believe that these opinions are an important place to start. The tables above report responses to each question as percentages of total response to each question, to allow easier comparison across questions. (Numbers of responses to each question varied from 103 to 113.) There can be no inherently right way to convert these opinions into relative rankings. The simple transformation used here was to create the “mean of ratings” column at the right of the table by treating “very important” as having a rank of 1, “moderately important” as having a rank of 2, and “relatively unimportant” as having a rank of 3. Several conclusions can be drawn from these rankings and the significant differences among them. There is little doubt that the respondents generally valued overseas expe- rience more than university education or executive development programs. The prefer- ence for overseas experience as a means of gaining knowledge in these subject areas is marked, as can be seen more easily in Table 1, below. When combined with insights gained from previous answers to question 19, which emphasized the importance of domestic experience, this is a resounding vote of confi- dence in experience across the board. Furthermore, the relative rankings are not significantly different among respondents with varying organizational characteristics. Among several hypotheses concerning possi- Table 1: Rank Order of Means of Ratings From Question 22, 23, 24 University Exec. Dev. Overseas Studies Programs Experience Int’l business finance 3 1 2 Int’l marketing 3 2 1 Int’l accounting 2 3 1 Int’l labor relations 3 2 1 Int’l business law 3 2 1 Int’l transportation 3 2 1 Importing and exporting 3_ 2_ 1_ Mean of ratings 3 2 1 MIR Vol. 28, 1988/3 53 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to Table 2: A Portion of the Answers to Question #/, Nehrt, 1977 Specialized skills: What method of training do you consider best for the acquisition of each skill? 1* 2* 3* 4* 5* 6* 7* Int’l business finance 61% 11% – – 28% 11% 28% Int’l marketing 32% 5% – 10% 53% 5% 63% Int’l accounting 65% – 10% 10% 15% 10% 25% Int’l labor relations 6% 33% – 11% 50% 33% 61% Int’l business law 68% 10% – 5% 17% 10% 22% Int’l transportation 5% 16% 16% 27% 36% 32% 53% Importing and exporting 6% 22% 17% 28% 28% 39% 56% * Column definitions: 1 -during university studies; 2-specialized executive development programs; 3 -in house company training programs; 4-domestic on-the-job experience; 5 -overseas experi- ence; 6-columns 2 and 3 combined; 7-columns 4 and 5 combined. Table 3: Preference Rankings of Nehrt’ s Delphi Panelists University Post-University Experience Studies Training Int’l business finance 1 3 2 Int’l marketing 2 3 1 Int’l accounting 1 3 2 Int’l labor relations 3 2 1 Int’l business law 1 3 2 Int’l transportation 3 2 1 Importing and exporting 3 2 1 ble such differences, only one proved to be statistically significant: larger companies (those with more than 100 management-level employees) ranked overseas experience higher than did smaller companies. At the level of individual subject areas, however, no significant differences emerged among companies of different sizes. Viewing the respon- ses for each subject area in turn, it is possible to interpret the rankings as the pooled opinions of the entire respondent group. Our choice of the seven subject areas covered in the survey was strongly influenced by the fact that these areas had been the focus of interest in Nehrt’s 1977 study. One way to start to draw conclusions from this survey is to see how it compares with the conclu- sions reached by Nehrt’s Delphi panel, as summarized in Table 2 below. When the two methods of post-university training are combined (as in column 6 of Table 2) and the two forms of experience (as in column 7 of Table 2), the resulting rankings of preference from Nehrt’s Delphi panel are as shown in the following Table 3. It is hardly necessary to labor over the subject areas (labor relations, transportation and import-export) where the rankings of the present survey are in complete agreement with those of Nehrt’s Delphi panel. The substantial gaps between the percentage figures in Nehrt’s analysis, contrasted with the narrow gaps between rankings in the present survey, are artifacts of the research design. Nehrt in effect required a choice among alternatives, whereas the present survey questions encouraged a recognition that several methods of 54 MIR Vol. 28, 1988/3 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to acquiring knowledge might be combined or used in sequence. What is interesting is that populations with substantially different characteristics agreed on the relative merits of methods, and that these three subjects (labor relations, transportation and import- export) seem best learned by experience. There is less agreement between the two studies about international marketing. Both respondent groups believe that experience is better than either university studies or executive development programs. But Nehrt’s panel rated university studies ahead of executive development, whereas there was a (non-significant) preference for executive development over university studies among the present respondents. Furthermore, an interpretation which can be read from these responses that is hidden in Nehrt’s report is that both university studies and executive development programs are considered to be rather more than less important in imparting such knowledge. Among the seven subject areas (i.e. reading down the “mean of ratings” columns in questions 22 and 23), interna- tional marketing scores as the second most favored university and the most favored specialized executive development program. In our survey the orders of preference for different ways of acquiring knowledge in international business finance, international accounting and international business law were not statistically significant. It may be concluded, therefore, that our survey gives no basis for contradicting the opinions of Nehrt’s Delphi panel about methods of acquiring these skills. However, the present respondents showed significant preferences for both university studies and specialized executive development programs in such disciplines as international business finance and international marketing over other disciplines, such as importing and exporting. Two final items of statistical significance will serve to complete the reporting of results. Those fifty respondents who indicated that their companies required bachelor’s degrees showed a significantly higher preference for university studies (seven disciplines combi- ned) and for university studies in international business finance than did other respon- dents. If we assume that companies like those fifty respondents constitute the primary market for university graduates, we should pay attention to their opinions. Interpretation of the Results One way to interpret the orders of preference for university studies and executive devel- opment programs among different disciplines is to call that statistic a measure of relative Table 4: Subject Areas by Relative Importance and Relative Teachability Subject Area Relative Relative Teachability Importance University Exec. Dev. Int’l business finance High 1 2 Int’l marketing High 2 1 Int’l accounting Low 4 4 Int’l labor relations Low 6 6 Int’l business law Low 3 3 Int’l transportation Low 7 7 Importing and exporting Low 5 5 MIR Vol. 28, 1988/3 55 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to “teachability” of each subject area. This is a fundamental concern in the design of a curriculum, in any event. In Table 4, we gathered together insights from questions 21, 22, and 23, to match up respondents’ opinions about relative importance and relative teach- ability. To the extent one were designing university courses and/or executive development pro- grams specially focussed on an international dimension, international business finance and international marketing are prime candidates. As regards international business finance this conclusion is completely consistent with Tarleton’s study of opinions of multinational companies and their opinions regarding master’s degree offerings. The present findings, however, tend to rate international marketing slightly higher than did Tarleton’s respondents. It is tempting to step back from the detail of single questions and infer broader lessons for academe from the total message of these responses, including a sizeable percentage of free-form answers. These respondents seem to be saying, “If we can find such people, we want our interna- tional operations staffed with managers who have had previous overseas experience. For international business finance, accounting and law, academic or special executive devel- opment training is a close substitute for overseas experience. For international market- ing, university studies are an effective way to learn the area, although overseas expe- rience is to be greatly preferred. What we are primarily looking for, in hiring university graduates, however, is not their international education but their grounding in academic or technical specialities (e.g., engineering, business or science). We expect to ground them in our business through domestic experience before sending them overseas to represent us.” There is one anomaly in this set of explanations, however. From responses to other questions in the survey it becomes apparent that the relative availability of American managers with overseas experience is falling and will continue to fall, even as the international operations of American firms rise. Although there is no reason to question companies’ practices of immersing new managers in domestic experience before sending them overseas, it may well be that their recruiting of managers with previous overseas experience will prove more and more difficult in the future. Universities may need to find imaginative ways to fill that gap, including study-abroad programs, international in- ternships and traditional courses with international perspectives. What does not seem justified, at this point, is a proliferation of courses with “international” in their titles, and curricula which are “international” at the expense of a thorough grounding in the fundamental disciplines of business administration. Although the present survey did not address the question directly, it might be inferred also from these data that American managers are not overly concerned with cultural problems in international business. In all “open” questions, the type of education men- tioned by the managers was almost without exception “technical,” mostly engineering and business related. There was very little requirement seen for foreign language, history, art, religion, sociology, or anthropology. Why is this? One possible reason might be that America is an open, pluralistic society with an extremely high degree of specialized manufacturing and professional services. American managers might be expected to view the world as a logical extension of this pluralistic society, but on a larger scale. From such a viewpoint, it is not necessary to customize products or services to the peculiar needs or desires of specific overseas customers. Rather, what is needed is a highly developed standardized product or service which can be used anywhere in the world. “Build a better mousetrap …” 56 MIR Vol. 28, 1988/3 This content downloaded from on Thu, 25 Apr 2019 06:52:46 UTC All use subject to Although such an approach offers the benefits of absolute and comparative advantage for both producers and users, it is yet to be seen whether or not the rest of the world will adopt the pragmatic rationalism on which it is based.

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