When discussing business trends in the twenty-first century, one will often hear the phrase “the world is becoming flatter.” This statement is a reflection of the globalization trend, in which businesses are competing across and beyond national and regional borders. Even companies that only operate in a domestic market will find that a great deal of their competition comes from firms headquartered in foreign countries. Although globalization may be “flattening” the business environment by reducing the impact of borders, this does not automatically mean that business can be or is done in the same way throughout the world. Businesses that operate in foreign environments must quickly realize that understanding cultural and institutional differences and the local context are critically important to being successful. Therefore, organizations that operate beyond their domestic borders must have leadership that understands the nuance between how to operate globally, yet locally. Effective global leaders must have what is termed a global mindset and must also possess a high level of cultural intelligence to compete in an international environment successfully.
The concept of a global mindset is complex. Having this mindset upends the adage “think globally, act locally” into “think and act both globally and locally at the same time.” This means that a leader must be able to recognize not only when to set global standards across the business, but also understand how diverse contexts and local cultures require a more tailored approach. In other words, a global leader must be able to balance dichotomies such as global standardization with local customization. For example, while McDonald’s is best known in the U.S. for its line of beef burgers, in India, where more than half the population is Hindu and do not eat beef for religious reasons, the burger offerings are either chicken or vegetarian. The standards of speed and consistency are what McDonald’s has globalized. Menu offerings, however, are localized to correspond to cultural and contextual preferences and requirements.
There are three components to a global mindset, referred to as types of capitals: intellectual capital, social capital, and psychological capital.
Intellectual capital refers to a leader’s global business savvy, cognitive complexity, and have a cosmopolitan outlook. Global business savvy incorporates knowledge about global industry, globally competitive business and marketing strategies, international business transactions and risks, and non-domestic supplier options. Cognitive complexity is demonstrated through an ability to grasp complex concepts quickly, strong analytical and problem-solving skills, an ability to understand abstract ideas, and an ability to take complex issues and explain the main points simply. A cosmopolitan outlook describes being up-to-date on prominent world events, as well as having knowledge of different cultures, geography, and history around the world.
Social capital includes having intercultural empathy, interpersonal impact, and diplomacy. Intercultural empathy describes the ability to connect to and work well with people from other parts of the world. Interpersonal impact describes the ability to build strong relationships and networks with people from other cultures. Diplomacy is observed in the ability to integrate diverse perspectives, to listen to what others have to say, and having a willingness to collaborate.
Psychological capital is reflected through a passion for diversity, a quest for adventure, and in self-assurance. Individuals who have a passion for diversity enjoy traveling and exploring other parts of the world, getting to know people in those locations, and even living in another country. Those who enjoy dealing with challenging and unpredictable situations, and who are willing to take risks and test their abilities have a quest for adventure. Those with a great deal of self-assurance are energetic, self-confident, and are comfortable in uncomfortable situations.