Culture and Economic Success: Is Collectivism Incompatible With

A Cultural Model of Economic Development

Globalization, Culture and Economic Development: A Cultural Model of Economic Success and Failure

Dharm P. S. Bhawuk1 Vijayan P. Munusamy David J. Bechtold Keith Sakuda University of Hawaii at Manoa

RUNNING HEAD: A Cultural Model of Economic Development

Correspondence should be sent to: Dharm P. S. Bhawuk Professor of Management & Culture and Community Psychology Shidler College of Business University of Hawaii at Manoa 2404 Maile Way, Honolulu, HI 96822 Tel: (808) 956 8732 Fax: (808) 956 2774 E-mail: [email protected]

1 We are also grateful to Harry Triandis, Kwok Leung, Rabi Bhagat, Eun Bum Cho, and Valery Rosenblat, for their constructive feedback. Paper to be presented at the Asia-Pacific Economic and Business History Conference, February 17-19, 2010, Victoria University of Wellington, New Zealand. A Cultural Model of Economic Development

Globalization, Culture and Economic Development: A Cultural Model of Economic Success and Failure

Abstract

We present a cultural model of economic development by synthesizing the theory of collectivism, stages of economic development, and elements of organizational theories.

The thesis is that collectivist values are not detrimental to economic development, and that organizations in these cultures can still achieve economic development by developing teamthink. We posit that the four characteristics of collectivism, i.e., interdependence, making sacrifices for the ingroups, relational social exchange, and being norm driven, lead to conformity, institutionalization, collective goal congruency, and national goal congruency, which are quite useful when a country is in the early phases of economic development. However, these characteristics may also lead to groupthink, thwarting innovation, which is needed in the later phases of economic development. We propose that organizations can nurture loose coupling, requisite variety, and competitive redundancy to develop teamthink, and thus prosper in the later phases of economic development. We discuss the implications of this model for theory and practice.

A Cultural Model of Economic Development

Globalization, Culture and Economic Development:

A Cultural Model of Economic Success and Failure

Hofstede (1980) found that the industrialized wealthy countries scored higher on individualism than the economically struggling developing countries, which lead to the popular belief that individualism causes economic development. Many years later,

Hofstede (1997) argued that rather than individualism driving the economic development of a country, an increase in national wealth leads to an increase in individualism in that country. The idea is that as people become affluent, they have the financial resource to choose what they want to do, which in turn leads to social independence (Triandis, 1994).

However, a careful historical analysis in our view does not support either of these perspectives (Kennedy, 1988).

Kennedy (1988) traced the historical development of economic power of nations, and discovered that China and India together produced three-fourth of the Gross Domestic

Product (GDP) of the world until 1760, and these two countries were the First World then.

What is today the First World, USA, United Kingdom, Japan, and other European countries were in fact the Third World. In less than two hundred and fifty years, China and

India have become the Third World, and European countries led by the USA have become much more affluent. Japan, which according to the same study only produced 4% of world

GDP until the Second World War, has risen to be the second largest economy of the world, right behind the USA, and scholars have debated whether it would leave the USA behind economically in the near future. Since two and half centuries are not that long a time for cultures, and the economic scenario of the world has gone through such a drastic change, A Cultural Model of Economic Development

we posit that it may be inaccurate to link culture to economic progress or lack thereof.

Culture can shape the development of institutions (Greif, 1994, 1997, 2000, ) that can help or hinder economic development for some time, but culture per say is not a hindrance to economic development.

Greif (1994) carried out a historical comparative analysis of two groups of

Mediterranean merchants, the Maghribi Jewish merchants of the eleventh century and the

Genoese traders (from the city state of Genoa2, which is now a city in Italy) of the twelfth century. Both these groups traded similar goods, used similar technology (ships etc.), covered the same region -- from Spain to Constantinople, and faced almost identical external environment of business, yet each developed different sets of business practices.

Using game theoretic perspective, supplemented by historical analyses, Greif concluded that cultural beliefs shape the development of economic institutions. The results of his study showed that the Maghribi culture resembled the modern collectivist cultures, whereas the Genoese culture resembled current day individualist cultures.

Greif (1993, 1994) demonstrated that the Maghribis believed that they were members of the same umma (derived from umm meaning mother), shared information among their own kind, entrusted their business to other Maghribi traders by developing long-term relationships instead of hiring independent agents, and imposed punishment for cheaters collectively, which are all traits found among people in collectivist cultures today

(Triandis, 1995). Unlike the Maghribis, the Geonese, inspired by Christianity, believed in individual existence rather than in family coexistence, hired agents outside of their

2 Columbus grew up in the city state of Genoa, and was denied funding by the San Giorgio banking syndicate. Unfortunately, the Spanish support led Columbus to explore the Atlantic trade routes, which destroyed Genoa’s business over the years. A Cultural Model of Economic Development

families, controlled the behavior of the agents through legal framework instead of using collective will against the deviants, developed a society where traders were different from agents but agents could become traders over the years, and did not share information with other traders -- creating the earliest idea of trade secrets, which are all characteristics of people in individualistic cultures of the present times (Triandis, 1995). Thus, there is sufficient theoretical basis to analyze economic development using the theory of individualism and collectivism (Greif, 1997).

In this paper we present a model that synthesizes the defining attributes of collectivism with Porter’s (1990) stages of economic development, and by focusing on organizations, which are the engines of economic development, we are able to show that without sacrificing their cultural strengths, collectivist cultures can still pursue the goals of economic development successfully. There is an unfortunate trend toward scapegoating culture, particularly collectivism (Ball, 2001; World Bank, 1993; Tabb, 1996), for economic failure, and we hope to draw the attention of social scientists to the idea that economic success is possible through culturally appropriate practices.

A Cultural Model of Economic Development

We propose in this model that the four defining attributes of collectivism (Bhawuk,

2001; Triandis, 1995) encourage collective and national goal congruencies through conformity and institutionalization. We suggest that the cultural values that contribute to success in the first two stages of economic development (Porter, 1990) may lead to failure due to groupthink in the later two stages. Building on organizational literature, we posit that failure can be avoided by replacing groupthink with teamthink by infusing the concepts of loose coupling, requisite variety and competitive redundancy in the A Cultural Model of Economic Development

organizations when the economy in a country approaches the third and fourth phases of economic development, preferably before groupthink sets in. If organizations are not able to take this by-pass, there is still another path they can follow to turn failure into success, thus helping their national economies.

------

Insert Figure 1 about Here

------

Defining Features of Collectivism

The concepts of individualism and collectivism have found many applications across many disciplines of social science including economics (Ball, 2001; Greif, 1994).

Triandis (1990) proposed that emphasis on agriculture, large families, and unit of survival

(ingroup) appear to be some antecedents of collectivism while socialization for obedience, duty, and sacrifice for the ingroup seem to be some consequents of collectivism.

Synthesizing the literature, he further proposed that collectivism has four universal defining attributes: interdependent concept of the self (Markus & Kitayama, 1991), utility for making sacrifices for in-groups, relational bonding, and norm driven behaviors

(Triandis, 1995). We briefly discuss the four defining attributes of collectivism, and also show how these attributes are associated with conformity, institutionalization, collective and national goal congruency as well as group cohesiveness and groupthink.

Although Triandis discussed these four attributes of individualism and collectivism as separate factors, Bhawuk (2001) integrated them and synthesized them in a theoretical framework. In this framework, the concept of self is at the center, and the other three defining attributes relate to how an individual interacts with other groups, how an individual A Cultural Model of Economic Development

interacts with society at large, and how individuals engage in social exchange with other individuals.

The nature of the self has been argued to be the most central attribute (Bhawuk,

2001; Markus & Kitayama, 1991; Triandis, 1989), which shapes the other characteristics of collectivism. Concepts like simpatico among Hispanics (Triandis, Marin, Lisansky, &

Betancourt, 1984), Pakikisama among Filipinos (Church, 1987), amae among Japanese

(Doi, 1981), Guanxi (Luo, 2000) among the Chinese, and Philotimo among the Greek

(Triandis, 1994) illustrate the collectivists’ sense of interdependence and their need to maintain harmony among people with whom they interact closely, and reflect the general feeling of relatedness with others. One way of describing it is to say that collectivists inherit their relationships, which are spun around their kinship and their primary network, consisting of the nuclear family, the extended family, and the locality (e.g., village, town, and so forth) where they live or from where they originate (Hsu, 1971). They tend to integrate individuals outside their kinship into their primary network to expand their relationships. This interdependence coexists with emotional closeness and builds cohesiveness in people working together. However, the desire to maintain harmony and to save face also put pressure on dissidents to conform to group norms and decisions, which may lead to groupthink.

The second characteristic of collectivism pertains to the relationship between self and groups of people. With interdependent concept of self, collectivists develop ties with other people to satisfy the needs of the self as well as the members of the collective included in the self (e.g., their family, kin, friends, and coworkers) with whom they perceive to have a common fate (Triandis, McCusker & Hui, 1990; Hui & Triandis, 1986). A Cultural Model of Economic Development

This leads to the subordination of individual goals to the goals of a collective (Triandis et al., 1985; Triandis, 1989), and sharp differentiation between ingroups and outgroups. The ingroup is accepted as trustworthy, and collectivists are willing to sacrifice their self- interest to be a part of this group. However, they are likely to indulge in exploitative exchange with people who are in their out-groups (Triandis et al., 1988). In a study of

Korean children, Han and Park (1995) found that the children favored ingroups over outgroups in reward allocation at an early age, and it is not a surprise that people in power allow special privileges to their ingroup members. Individualists, by contrast, do not make such strong distinctions between in-groups and out-groups.

The collectivists’ subjugation of self interest for the benefit of the group worked well during the early phases of the economic development of the Southeast Asian region.

Shinataro Ishihara (Mohamad & Ishihara, 1995, p.110) captured this spirit in these words:

“Just as a son or daughter realizes when they have to forgo a personal pleasure for

the good of the family, a company's staff, from the boardroom to the assembly line,

know that compromise accomplishes more than confrontation”.

Collectivists are also found not to indulge in social loafing (Earley, 1989) when dealing with their ingroups. Therefore, when working as a team, collectivists are likely to have a tightly integrated and cohesive team that acts like a monolithic unit. Two antecedents of groupthink, namely illusion of morality and shared stereotypes are likely to be accentuated by the group cohesiveness and the tendency to justify actions done to protect the interests of the ingroup. In the same vein, Kim (2000, p. 151) argued that an over emphasis on ingroup loyalty and harmony coupled with over-emphasis on self- A Cultural Model of Economic Development

regulation led to “factionalism, regionalism, nepotism, and blocked the creation of a well- functioning civil and democratic society” in Korea in the past.

The third characteristic of collectivism captures the nature of social exchange between self and others. With an interdependent concept of self, people inherit relationships, and are likely to view their relationships as long-term in nature. Therefore, collectivists are unlikely to break a relationship even if it is not cost effective. Thus, collectivists value relationships for their own sake, and nurture them with unequal social exchanges over a long period of time. These relationships are more like communal in nature (Clark & Mills, 1979), where the relationship is valued in itself, and the exchanges that go on between people are less important. People feel an equality of affect, e.g., when one party is happy, the other feels good; and when either party experiences a set-back, the other feels bad (Mills and Clark, 1982). Individualists, on the other hand, are rational in their social exchange, and are guided by the principles of equal exchange and cost benefit analysis.

Finally, the fourth characteristic of collectivism focuses on how individuals interact with the society at large. Collectivists inherit many relationships and learn to live with the interdependencies that come with them. Part of managing the interdependencies is to develop goals that meet the need of more than one’s own self. In the process of taking care of the needs of one’s ingroup members, a social mechanism evolves in collectivist cultures, which is driven by norms. Thus, for collectivists it is cognitively easier to resort to methods that have been tried in the past for interacting with other people. A sense of duty guides them toward social norms both in the workplace and in interpersonal relationships.

Individualists, on the other hand, are less concerned about others’ needs, and care much less A Cultural Model of Economic Development

about what their family members or co-workers have to say, let alone the extended family, friends, or neighbors. Some of the characteristics of groupthink like self-censorship, mind- guarding, and collective rationalizing, are likely to be accentuated by the tendency of following a norm in the collectivist cultures.

Consequences of Collectivism

At the psychological level, in relation to group decision making, these four characteristics of collectivism foster conformity, whereas they contribute to institutionalization at the organizational level. In a comparative study of Chinese and

American people, Hsu (1981) concluded that collectivists believe in interdependence and are inclined to conform. In general, in Confucian cultures, conformity tends to govern all interpersonal relations and carries strong social and cultural approval. The same conformity can be observed in many social behaviors in other Asian countries. For example, a subordinate often informs his or her superior before proceeding with an important decision. Such approval seeking reflects constant self-monitoring with “What would others think or say if I do this” in mind.

It has been found that collectivist cultures tend to create lasting institutions and policy shaping structures. For example, the Japanese Union of Scientists and Engineers

(JUSE) was created after World War II to help streamline the scientific developments in

Japan, and they continue to be active, and support the institutionalization of the quality circle movement that started in Japan (Crocker, Charney, & Chiu, 1984; Konz, 1979).

Quality circles continue to flourish in Japan even today, whereas in the USA it has come and gone like a fad (Abrahamson, 1996; Castorina & Wood, 1988; Lawler & Morhman,

1985). Similarly, the use of suggestion system has been institutionalized in Japan leading A Cultural Model of Economic Development

to much organizational creativity (Inagami, 1983; Min Basadur, 1992), while this method never took roots in western management.

The role of government has also been systematically institutionalized in Japan,

Singapore, Korea, and other Asian countries. The Japanese Ministry of Economy, Trade, and Industry (METI), formerly known as the Ministry of International Trade and Industry

(MITI) is known for its legendary role in the development of Japan after WWII, and it is this institution building that has earned the country the label Japan Inc3. (Tsurutani, 1972), which has spread to Korea, Singapore, and other countries. This institution building is inspired and supported by the common fate that people experience in collectivist cultures, and because of this perception of common fate people are willing to make personal sacrifices for the common good. For example, Japanese consumers save about 14% as compared to American consumers who save about 0.5 percent (Synodinos, 2001). This is despite the fact that the Japanese postal service pays extremely low interest rate, less than one percent per year, to the depositors, and this personal sacrifice made by the people of

Japan makes cost of capital the lowest in the world for the Japanese businesses, which in itself is a financial legend.

Collectivist values can lead to group as well as organizational goal congruency. A reflection of such goal congruency is the low divorce rate found in collectivist cultures, which is attributed to the fact that people often sacrifice personal interest to preserve family unity and goals (Bhawuk, 1999). Even though there has been an increase in the rate

3 “Japan Inc.” has a much longer history than most people are aware of, as can be seen in the following quote: "The industrial hierarchy of Japan is so compact that you can almost think of its works as the products of a single beautifully integrated and highly diversified corporation ... For a generation ... it has been Japan Incorporated against the world." (Fortune, 1936, p.77).

A Cultural Model of Economic Development

of divorce in some collectivist cultures recently, other countries like India, for example, continue to have a very low divorce rate, about 1.1 per hundred, as compared to the 38 per hundred in the USA. At the organizational level, many scholars have studied Japanese,

Chinese, Korean, Indian and other Asian organizations, and concluded that Asian organizations are different from the Western ones in that there is high goal congruency between the organization and its employees (Miyajima, 1986; Redding, Norman &

Schlander, 1994; Sinha, 1994; Wang, 1981; Yoo, & Lee, 1987).

It can be argued that the two world wars have shaped the post war economies of

America and Europe. In the same vein, we posit that colonization and World War II have shaped the economic dynamism of East Asian countries. For example, unlike Europe and

North America, where capitalism evolved from within, capitalism was imposed by the colonizers on Asian nations (Kim, 1995). Though this imposition altered some of the cultural values in these countries, and the values of these countries continue to change, researchers have found that the emphasis on human-relatedness, a characteristic of collectivism, remains strong (Kim, 1995). In Japan, researchers (Azuma, 1986; Befu,

1986; Kurachi, 1984) note that human relatedness is still strong despite its heavy focus to industrialization, urbanization, modernization, and capitalism. In fact, Misumi (1985) argued that the economic success of Japan is due to its “maintenance of human-relatedness, and not in spite of it” (Kim, 1995, p. 11). Similarly, Steensma, Marino and Weaver (2000) found that collectivist value relationships and dislike bargaining relationships.

The newly industrialized countries like Hong Kong, Japan, Singapore, South Korea and Taiwan that were traditionally agrarian succeeded in developing collective norms that were compatible with their cultural values (Kim, 1995), and still succeeded economically. A Cultural Model of Economic Development

The motivation to be economically independent from the West led people in these collectivist cultures to develop stronger national congruencies. This is also captured in the popularity of terms like Japan Inc. (Tsurutani, 1972). The idea of having a country

“incorporated” much like an organization, appealed to other Asian countries, and we can find reference to “Korea Inc.” and “Singapore Inc.” in the business literature. At the individual level, for example, it has been argued that “Korean entrepreneurs and employers have historically emphasized their unselfish contributions to national progress (Eckert,

1993, p.117). Korean employees also share the same characteristic, and are known to take fewer vacation days and put in hundreds of hours more than the American workers (Koo,

1994).

In sum, the collectivist values captured by the four characteristics can have a positive effect on organizations in building teams through conformity and collective goal congruency, and can also lead to national goal congruency and institutionalization of organizational practices like quality circles, partnership among government and private organizations, etc. The Asian success came from the collective effort driven by nationalism in the face of much national adversity. The collectivist sense of common fate has been an energizing force for innovation and change in these countries. To quote Porter

(1990, p. 282), “Pressure and challenge, not “a quiet life,” has led firms and nations to advance.” We can see in what follows that in the two early phases of economic development, ability of collectivist cultures to achieve national goal congruency through collective values can play a major role in economic success and in competing with other nations. A Cultural Model of Economic Development

Factor Driven Economy

When the economy is factor driven, competitive advantages are derived solely from basic factors of production -- cheap and abundant labor, natural resources (petroleum, coal, iron and other metals, industrial diamond, etc.) that can be used in manufacturing by other countries, and favorable growing conditions of certain agricultural products. The nations in this stage develop policies to achieve an efficient use of these factors for economic growth, and offer, among others, tax holidays, exclusive rights to markets, special import facilities and foreign currency privileges. Organizations are more reactive, and try to take advantage of these policies to be profitable. According to Porter (1990), the tendency to focus on the factors of production in a way limits the types of industries a nation can develop. He argued that although all nations capitalize on their factors advantage, only a few ever pass through this stage and move to a more advanced stage, and clearly, Japan,

Korea, Taiwan, Singapore, Hong Kong have done this. Porter cautioned that “a factor- driven economy is one with a poor foundation for sustained productivity growth” (1990, p.

548),” and the big bulk of developing countries struggling with poverty in Asia, Africa, and South America exemplify this.

Investment Driven Economy

In the next stage, competitive advantage at the national level is accomplished by aggressively investing in education, technology and management methods to enhance production capabilities. It is this combination of factor advantages as well as newly acquired and improved upon manufacturing capability that allows the nation to achieve credibility as an industrial entity. As a part of the natural outcome of developing from a factor driven to an investment driven economy is a change in the labor force from being A Cultural Model of Economic Development

semi-skilled to better educated and, correspondingly, better paid. Over time, increasing labor costs have a negative impact on the competitiveness of the country. However, in the early stages of development the increased efficiency and productivity within the economy offsets the increase in labor costs. It is this increased productivity that allows for exponential growth of the nation's economy (Porter, 1990), and the increase in domestic discretionary income can either be saved and reinvested into the economy, or spent on consumer products.

Economic Success

We posit that cultural values that lead to collective and national goal congruencies play a key role in the factor and investment driven economies, which is corroborated in the development of many of the East Asian economies in the last thirty years. Inspired by the national goal of economic development, these countries quickly achieved efficiencies in industries where they had factor advantages, and reinvested the surplus into the acquisition of technology as well as the education and training of the domestic workforce. Thus, there is a plausible case to support that cultural values of collectivism can lead to economic success, which is one of our major thesis. However, the cultural values that play a positive role in this stage of economic development are not able to contribute once the economic development is forced to move into the innovation-driven stage, which gets further compounded by the development of globalization and hypercompetition. This is because success can easily breed an attitude that leads policy makers and managers not to see or pay attention to the need to change the policies and organizational structures4 and values to

4 Ted Levitt referred to such blind spots in marketing as “Marketing Myopia” in his now classic article. In R & D centers this same attitude takes the form of “Not invented here,” therefore not good or worth paying attention to. A Cultural Model of Economic Development

be competitive in the changing global business world. Such attitudes supported by extreme conformity can easily lead to groupthink, which is detrimental to organizations when they need to be innovation driven. In the next sections we discuss these issues and how organizations can bypass the consequences of groupthink.

Groupthink

Moderate to high group cohesiveness is one of the antecedents of groupthink (Janis,

1982). However, acting alone, cohesiveness does not create groupthink. Janis identified the following secondary conditions that foster groupthink: 1) insulation of the group, 2) a stated leader preference for a certain decision, 3) a lack of norms requiring methodical procedures, and 4) homogeneity of member’s social background and ideology. Janis recognized two other factors coming from the external environment, high stress from external forces and low self-esteem within the group due to past failures. All these factors set the stage for flawed, and destructive, group decision making. The symptoms of groupthink have been described by Janis (1982) to include direct social pressure on members who do not agree with the shared beliefs of the group, members self-censoring so as to conform with the consensus of the group, members viewing themselves as invulnerable and sharing an illusion of unanimity, an emergence of self-appointed mind- guards who screen out adverse information from the group, collective effort by group members to rationalize their actions as well as to describe themselves as inherently moral, and the use of stereotypes about others to portray them as weak or incompetent.

Ultimately groups that experience groupthink make poor information searches and incomplete surveys of both objectives and alternatives before they make decisions. They also experience selective bias in processing the information that they use in the decisions A Cultural Model of Economic Development

that they make. These groups fail to examine fully the risks associated with their preferred choice as well as become unwilling to reappraise initially rejected alternatives. Janis

(1982) asserted that under groupthink the probability that an effective decision will be made sharply diminishes, because the group uses flawed decision processes. He proposed that the quality of decisions was contingent upon the soundness of the procedures through which they were taken. Previous research has also shown that the tendency for groupthink in cohesive groups is quite high (Asch, 1952; Kiesler, 1969; Hare, 1976; McGrath, 1984).

Reviewing three decades of literature on groupthink, Baron (2005, p. 219) concluded that “the evidence has largely failed to support the formulation’s more ambitious and controversial predictions, specifically those linking certain antecedent conditions with groupthink phenomena,” and offered a ubiquity model of groupthink. He reduced the antecedents of groupthink to three variables. These three antecedents are found to relate to the four defining attributes of collectivism. First, he argued that the individuals in the group share social identification with group members, which is similar to collectivists having an interdependent concept of self, a self that they share with others.

Second, there is a dominant group norm, which is much like the collectivists being norm driven. Clearly, it would require much effort for a group of individualists, who are driven by their individual attitudes, values, and beliefs, to develop a strong group norm compared to collectivists. Third, there is a lack of situational self-efficacy. Again, past research has shown that collectivists emphasize on collective-efficacy (Triandis, 1989), which would lead to a lack of situational-efficacy when facing decisions that affects their ingroup members. Thus, the same goal congruencies that lead to economic success can also lead to A Cultural Model of Economic Development

economic failure if divergent views are not examined in the context of rapidly changing economy as is experienced in the current times with globalization.

Economic Failure

Once nations are successful in investment-driven economy, they are forced to move into the innovation stage as the earlier economic success raises the cost of factor production (e.g. labor) and they start to lose their competitive advantage, which is further intensified by globalization. In addition, the domestics markets become more sophisticated due to higher standards of living, which demands innovative products of higher-quality. In order to maintain some competitive advantage firms must seek out new advantages by being increasingly more innovative in their product offerings as well as more flexible in their firm’s strategy. Groupthink becomes a great liability in this phase. Due to excessive groupthink in organizations and among policy makers, nations lose their ability to compete in the innovation stage. For example, the 1997 financial crisis in Southeast Asia was not due to a collapse of production capabilities but an inability to respond to changing domestic and world conditions quickly, including making changes in financial policies that were no longer appropriate (Khatri, Wen, Fuie & Geok, 1999). As cultural influence cannot be eliminated, and it might be detrimental to do so, we propose the concepts of loose coupling, requisite variety and competitive redundancy, which can counterbalance the negative effects of some of the cultural influences that lead to groupthink. They can also help create teamthink, which can facilitate organizations to be more successful in the innovation and wealth driven stages of economic development. A Cultural Model of Economic Development

Towards Innovation and Wealth Driven Economy

We posit that there are two paths for nations with collectivist cultures to develop teamthink, and hence move towards innovation and wealth driven economies. The first path is more like a bypass and is available before groupthink starts to set in, whereas the second path is a reaction to failures resulting from groupthink, and is available after groupthink sets in.

Path 1 is most applicable to nations when they are fast becoming industrialized and some of their organizations begin to emerge as a leader in the world market, or when the cost of manufacturing makes transferring them off-shore more profitable. In the late 1980s many of the Japanese companies like Toyota, Honda, Canon, Matsushita Electrical, etc. were clearly emerging ahead of other companies in their industries in the USA and Europe.

Also, about this time Sony and other companies were moving many manufacturing plants to other South East Asian countries like Malaysia and Thailand. This would be ideal time for government policy makers to start changing their policy toward nurturing the service industry instead of protecting their manufacturing industry through excise and other benefits. And manufacturing companies would need to become more competitive through innovation. This is found in the case of Toyota and many other Japanese companies, which have developed effective multifunctional teams to take ideas from design to market in less than two years (Ward et al., 1995). We suggest that the application of “loose coupling,” “requisite variety,” and “competitive redundancy” will help organizations to preemptively avoid groupthink.

Path 2 is most relevant to countries that have gained economic success through the first two phases of economic development, but are struggling in the third stage due to A Cultural Model of Economic Development

groupthink in policy making as well as in organizations where managers continue to push the same strategy despite failures in the global market place. Though this is not the preferred path, it is still available to both managers in organizations and policy makers in government. When countries are in crisis, it is harder to change their course, because people continue to think that what has worked in the past should work, not realizing that the environment and the economy have changed, which call for new approaches. As can be seen in the model, both these paths lead toward teamthink through loose coupling, requisite variety, and competitive redundancy. Teamthink allows organizations and nations to gain divergent perspectives, which is critical to recognize opportunities and obstacles and to create synergy. One may wonder how these organizational variables influence policy makers in the government. Policies that force organizations in the first two stages of economic development to stick to a narrow specialization in some area of production should be relaxed, and new policies should allow organizations to develop the requisite variety to meet the environmental challenges. Again, in the early stages of economic development, governments develop policies that focus on optimization or resource conservation, and they need to set a broader course for organizations for them to explore requisite variety and competitive redundancy. Next, we discuss how these organizational constructs can lead to the development of teamthink.

Loose Coupling

The concept of “loose coupling” was first used by March and Simon (1958) in describing the relationships that exist between the various units of an organization

(Spender & Grinyer, 1995). On the surface the term may appear to be an oxymoron because of the inherent contradiction between the two words, loose and coupling, because A Cultural Model of Economic Development

“loose” suggests separateness and “coupling” suggests connectivity among various organizational units. However, the insight of the construct lies in balancing these inherent contradictions.

This construct gained popularity after Weick’s (1976) seminal study of educational organizations as loosely coupled systems (Spender & Grevesen, 1999). He described seven advantages of such systems. First, such organizational systems know their environments better because their elements are free to interact with the environment, and could be observing the environment from many different perspectives. For example, the business school of a university could be a global player whereas the medical school could be a local player, allowing the university to please different constituencies by meeting their disparate needs. On the other hand, tightly coupled systems have in effect fewer probes to scan the environment independently, and are not able to understand and predict the environment as well.

Second, loosely coupled systems enable one element of the system to adjust and adapt to a new contingency without affecting the whole system (Weick, 1976). This was also supported by Levinthal (1997), who argued that in changing environments, loosely coupled organizations are more able to engage in effective local adaptation and as such have a higher rate of success. In the above example, the medical or business schools of the university could change their policies, to become local or global, independent of each other without adversely impacting each other or the general policy of the university. Third,

Weick argued that loose coupling allows the survival of a portion of an organization. For example, the traditional photo business of Kodak could fold without hurting the digital imaging business, since these units work rather independently. This idea is particularly A Cultural Model of Economic Development

relevant to the discussion of hypercompetition and other environmental uncertainties caused by globalization.

Fourth, loosely coupled system could retain a greater number of mutations and novel solutions due to the preservation of separateness and uniqueness of elements in the system. Fifth, loosely coupled systems allow the system to function even if some part of the system is down. Sixth, self-determination results from autonomy that loosely coupled systems allow their elements. And finally, loosely coupled systems are relatively inexpensive to manage because they require less coordination (Weick, 1976).

The benefits of loosely coupled systems are clear. For example, in Japan, loosely connected business organizations that were reformed from tightly controlled Zaibatsu,5 proved to be a significant contributor to its economic development (Kashima & Callan,

1994). Samsung, the most profitable technology company, ahead of Microsoft, IBM and

Intel in the first quarter of 2004, is the largest loose conglomerate (Chaebol) in Korea. It differs from other Korean Chaebols and even Japanese and US companies in that it treats internal vendors and external vendors in a similar manner with no favoritism in pricing

(Brown & Doebelle, 2004). These examples show that “loose coupling” is something that

Asian organizations can practice with effort, and it not only facilitates organizational learning, but also enhances the effectiveness and efficiency of organizations. Loosely coupled system may in fact be a good system to deal with the challenges of globalization, which requires a balance between global and local needs.

5 It is interesting to note that the term zaibatsu and chaebol have the same two Chinese characters, which means “wealth clique” (Guillen, 2001, p. 44). A Cultural Model of Economic Development

Theoretically, the concept of loose coupling already exists at the societal level in collectivist cultures. For example, the distinction between an ingroup and outgroup lies in that the relationship between individuals in an ingroup is tight and the relationship between members from outgroups is loose. Considering that most collectivist cultures in the pre- colonial times appeared to be societies in harmony, it is plausible that these cultures can deal with contradictions, and can cultivate the notion of loose coupling.

Requisite Variety

The law of requisite variety states that the internal environment of an organization should have enough distinctive characteristics in order to deal with the variability of external environment (Ashby, 1958). If the environment is fast changing in many areas, then the organization can adapt better if it is internally diverse enough to tap all the signals coming from the environment. For example, the political system in a country could be changing, the consumer needs and taste may be changing, the workforce demographic may be changing, the standard of living of the nation may be rising, and many multinational companies may be entering into the local market. To deal with all these changes an organization needs more than one of its units to simultaneously scan changes in these areas. If it only has a planning department responsible for monitoring the changes, it is likely to fail to respond to changes in the environment. In other words, organizations are effective when they are diverse internally to capitalize on the diversity in the external environment (Hon & Brunner, 2000).

The concept of requisite variety has found many applications in organizational literature since it first appeared in the fifties (Ashby, 1958). For example, it has been applied to diversity (Weick, 1979), knowledge management (Nonaka, 1994; Chen & Lin, A Cultural Model of Economic Development

2004), value creation and sustained growth (Rastogi, 2003), strategic management

(Maranville, 1999; Burton & Forsyth, 1986), and ethics (Husted, 1993). Krefting, Kirby, and Krzystofiak (1997) argued that varying the internal environment through heterogeneity of workforce and greater participation would facilitate requisite variety and reduce groupthink. In a way, requisite variety is also the characteristic that helps organizations to recognize diverse groups and foster productive relationships among them. Lacking requisite variety, organizations may not even recognize some groups as strategic constituencies. Shifting the paradigm from conformity and control to the paradigm of diverse ideas and participation has been argued as a major strategy for organizational success (McDaniel & Walls, 1997). Examples of this can be found in the Asian cultures.

For example, China introduced the ‘three-in-one’ principle as the national industrial policy to ensure that technicians, workers, and managers worked together for technological innovation (Wang, 1994).

At the national level policies can be developed that support the development of requisite variety. For example, the multi-language policies in India and Singapore have helped these countries not only to develop their human resource, but also to reach out to a broader market place with products and services. Recently, the Malaysian politicians argued that the acquisition of Tamil and Mandarin languages in addition to Bahasa

Malaysia and English would be an added advantage in view of the opening of the markets in India and China,6 and also added Mandarin and Tamil language classes in Malaysian national schools.

6 http://www.mic.org.my/newsdetail.php?id=156; see also http://www.pmo.gov.my/website/webdb.nsf/0/3802e7accec7cc3148256fef0001fadb?OpenDocument&Click= A Cultural Model of Economic Development

Adler (2002) argued that diverse groups inherently reduce the probability of groupthink through their composition. Bhawuk, Podsiadlowski, Graf, & Triandis (2002) noted that diversity is not only reflected in objective or demographic variables but also in subjective, cultural behavior, attitudes, norms, and values. Krefting, Kirby, and

Krzystofiak (1997, p. 385) cautioned that just having demographic diversity is a “flawed proxy for requisite variety because it focuses on artificial requirements and fails to overcome organizations' tendencies to suppress alternative voices.” They further asserted that organizations need to be aware, recognize and protect the diversity voice in order to truly tap the requisite capabilities of their workforce. Though, diverse groups might take more time to reach decisions (Fisher, 1980), the likelihood that they would explore the full range of alternatives is higher (Triandis, Kurowski & Gelfand, 1994). Not doing so, organizations may miss the opportunity to respond to signals from the environment.

Competitive Redundancy

The term redundancy is often associated with wasting resources, and this notion is founded on the mechanistic worldview and resource-based view of organizations.

Mechanistic approaches to manage organizations encourage high degrees of specialization

(Morgan, 1998) and discourage redundancies. In the resource-based view, it is implied that firms have limited resources and as such, redundancies should be avoided in order to be focused. Emery and Trist’s (1965) classic research on organizational environment argued that industries experience different rate of change in the environment. They categorized environments broadly -- from those that change slowly to those that change rapidly, and called them placid-randomized environment, placid-clustered environment, disturbed-reactive environment and turbulent-field environment. It can be argued that A Cultural Model of Economic Development

turbulent-field environment is more relevant today due to globalization and rapid technological change compared to forty years ago, and so organizations need to develop competitive redundancies.

Another example of competitive redundancy is found in the way Toyota pursues the design of automobiles. Toyota develops many prototypes before selecting a final design. Unlike other car manufacturers who pursue one design iteratively, Toyota’s engineers think about sets of design alternatives. In contrary to the conventional wisdom that suggests this process to be inefficient, Ward, Liker, Cristiano, and Sobeck (1995) found that the process of having redundancies in the design phase actually contributed to a quicker and cheaper production of Toyota cars in the end.

Learning many tasks through job rotation rather than focusing on specializing on a single task also reflects redundancy. However, this method is found to make manufacturing companies leaner in the end. Nonaka (1988) argued that the degree of new perspectives depends on the degree of task rotation. His argument is supported by the fact that the generation of new perspectives depends on new meaning, which is task-specific.

In other words, task rotation enables organizations to tap new perspectives from their employees. Similarly, redundancy in Japanese “Ringi” system of decision making, quality circles, and autonomous work teams have also been found to contribute to organizational success.

We posit that collectivist societies already have cultural competencies in dealing with competitive redundancy in that they develop multiple web-like relationships, and regularly transact in this social network, blurring the difference between work and social networks. Interestingly, even though ‘redundant contacts’ have been identified as an A Cultural Model of Economic Development

ineffective way to build networks in the western world (Burt, 1992), it might be effective in Eastern societies where redundant contacts do play an important role in building relationship due to their distinction of ingroups and outgroups. Knowing more than one person in an outgroup would certainly help in reducing the network distance caused by the ingroup and outgroup differentiation. As redundancies here are based on the differentiation between ingroups and outgroups, it inherently has the characteristic of loose coupling, which is one of the preconditions for teamthink.

Toward Teamthink

Building on their work with self-managing teams, Neck & Manz (1994) proposed the concept of teamthink as an alternative to groupthink. Teamthink describes group decision making processes that draw upon the same basic antecedent conditions as groupthink, but leads groups to productive and effective decision making. Unlike groupthink, teamthink has been described as constructive, and is considered a more effective way of making decisions as well as enhancing team performance. Some symptoms of teamthink include the encouragement of divergent voices and ideas, the open expression of concern, an awareness of limitations, recognition of unique attributes of members, and discussion of collective doubts.

In comparing the two phenomena we must analyze the antecedent conditions closely. Interestingly group cohesion is a central element to both these constructs. Group cohesion serves to bring together the group, and gives a collective identity to the team members. Deviating from groupthink, teamthink nourishes divergent views from all group members, the freedom to openly express concerns and alternative ideas, and the uniqueness A Cultural Model of Economic Development

of every member. It also encourages the discussion of collective doubts and the limitations as well as the threats associated with a decision (Neck & Manz, 1994).

Neck and Manz (1994) identified several contingency factors that ultimately determine whether a group will develop constructive or destructive group processes. Of these factors the most critical factor is the team leader, which the authors described as being the primary mechanism by which the mind of the group revolves. Leaders that deliberately seek-out divergent opinions as well as encourage full assessments of the risks and benefits of all alternatives begin to set the stage for productive, constructive decision making in groups.

The cultural beliefs of the members of the group, especially as it applies to the use of norms as heuristics in decision making, are also critical to the emergence of teamthink.

Unlike Janis (1982), who viewed group norms as a way of censoring members and controlling the flow of divergent beliefs in destructive decision making, Neck and Manz believe that norms that encourage group members to express divergent opinions can be established, which in turn can enhance the development of a constructive decision making process. This in turn would allow the group to maximize the acquisition and interpretation of all relevant information, and fully consider the risks and benefits of both the preferred course of action as well as other viable alternatives. This in turn can maximize the potential outcomes of every decision that a team makes. We posit that loose coupling, requisite variety and competitive redundancy can create the ground for teamthink to emerge, since these three organizational strategies would support diversity, critical thinking, and evaluation of all possible alternatives. Thus, teamthink can help the organizations deal with the challenges of the next two phases of economic development. A Cultural Model of Economic Development

Innovation Driven Economy

In the innovation-driven stage, the industrial developments of the country would have outpaced the advantages due to country factor benefits. The acquisition of technology in existing industries can no longer support continuing production efficiencies because costs of labor, due to a better-educated population, are increasing at a rate faster than improvements in production (Porter, 1990). An additional complication is the growing sophistication of domestic markets, and the expectation that these markets demand more innovative and higher quality products. In order to maintain competitive advantages firms must seek out new advantages by being increasingly more innovative in their product and service offerings as well as more flexible in their firm’s strategy.

Wealth Driven Economy

The final stage in Porter's model is called the wealth-driven economy. In this stage, the driving force is the wealth that has already been achieved from existing industries.

This stage can ultimately lead to decline, according to Porter, unless the nation and the firm seek out new competitive advantages. This is done by widening out and adding new industries that have high value added capabilities while at the same time weeding out those industries whose advantages came from country factors or investment factors, which are no longer profitable. For example, Japanese television manufacturers moved from Japan to

Korea to Taiwan, and now they are in China. Again, it makes intuitive sense that by nurturing loose coupling, requisite variety, and competitive redundancy, organizations can explore the demands of the environment better, and be economically successful in this stage of economic development. A Cultural Model of Economic Development

Figure 2 synthesizes how Porter’s four stage model operates in the cultural space shaped by globalization and interacts with governmental policies and organizational strategies. It shows how the production frontier expands as the economy grows from stage one to two to three to four. Every country has multiple cultures, and often there is a dominant culture. Cultural space refers to the various cultures present within a national boundary and their interactions. Cultural theories Parsons and Shils, 1951; Kluckhohn &

Strodtbeck, 1961; Hofstede, 1980; Triandis, 1995; Trompenaars & Hampden-Turner,

1997; Leung & Bond, 2004) are tools that facilitate mapping the cultural space.

Organizations are engines of economic development and act within the cultural space of the country. Organizations act to expand the production frontier. Governments seek to support such expansion, but may inadvertently create policies that hinder growth of the economic frontier.

------

Insert Figure 2 about Here

------

Economic Success

Janis (1982) asserted that the probability that a successful decision would result under the flawed decision processes of groupthink is quite unlikely. He proposed that the quality of decisions was contingent upon the soundness of the procedures through which they were made. We posit that loose coupling, requisite variety, and competitive redundancy can enrich the decision process, which would improve the quality of decision, and thus lead to economic success. A Cultural Model of Economic Development

Discussion

There are three major contributions of our model. First, through a synthesis of organizational variables, process of economic development, and culture theory, our model takes a small step in the direction of presenting a new paradigm in the study of culture and economic success. We posit that all cultures have the potential to be economically successful, and they need to find their own mechanisms to go from one stage of economic development to another. We presented the case of how collectivist cultures, which represents a vast majority of developing nations in the world, could pursue economic development without sacrificing their cultural values. This is made possible by the theoretical advancement in cultural studies in the past 25 years and the availability of rich literature on culture and decision making process, which was perhaps not possible at the time of the writings of influential development economists such as Myrdal (1971) and

Galbraith (1962), since cultural studies and research on decision making were still in their infancy then. In the past, researchers have focused on identifying elements of culture that are positive or negative for economic development. We do not think this is a productive research path. We agree with those who argue that culture as a whole can play a positive role as a facilitator of economic development (Azfar, 1992), and showed that the negative effect of cultural values can be reduced by using tools that are compatible with cultural values. Counter-cultural practices often do not take root, and either get distorted over a period of time, or simply become ineffective.

Second, our model enriches Porter’s idea of stages of economic development.

Specifically, it links organizational theories and culture to Porter’s model. Loose coupling, requisite variety and competitive redundancy are presented as concepts and tools that can A Cultural Model of Economic Development

be used to transform organizations in the lower two phases to the higher two levels of economic development. Porter exhorts organizations to innovate and to look for new industries where they can get high rate of return on their investments, but does not provide organizational mechanism to achieve these goals. Our model fills that lacuna in his work.

Third, our model provides tools that can be used by collectivist nations to move forward in their economic development. Many collectivist countries are not fairing well in transforming their economic development to the stage of innovation and wealth because of the lack of teamthink. We posit through our model that the imbalance created by groupthink can be balanced by adding the norms of loose coupling, requisite variety and competitive redundancies. It is important to note that the key lies in balancing, not eliminating, the existing norms. Metaphorically, it is similar to balancing a car wheel where new wheel weights are added to ensure smooth running of the car. Though the wheel works well initially, it becomes imbalanced after some time but we do not change the wheel just because it is imbalanced. Similarly, the cultural values of collectivism do not need to be discarded, but rather complemented with the norms of teamthink. As we posited earlier, the problem of groupthink tends to appear at the higher stages of economic development when the pressure to innovate is paramount. As noise and vibration are the signs of an imbalanced wheel; illusion of invulnerability, closed-mindedness, pressures toward uniformity, and illusion of unanimity are some signs of groupthink.

Our model is also useful in explaining the importance of collective and national goal congruency for economic development. For example, Sri Lanka had one of the highest GDP in the South Asian region in the early 1980s, but its inability to sustain national goal congruency has led the GDP of the country to fall to one of the lowest in the A Cultural Model of Economic Development

region. Many Asian countries are never able to develop national economic goal congruency. For example, Nepal was led by two monarchs who were always consolidating their own position in the country, which led to the creation of a political system that served their interests well, but did not help create a national economic goal. It is no wonder that, much like Sri Lanka, the country that aspired to be a zone of peace has slipped on the list of unstable countries, which is not even safe for tourists – the primary income source for

Nepal. Thus, the development of national economic goal congruency, much like Japan,

Korea, Singapore, and Taiwan have done, is a precondition for economic development.

We also clarified the spurious relationship between individualism and national wealth. Consistent with our analysis, when one examines economic indicators like Gross

National Growth (GNG), it appears that collectivism is more predictive of wealth (r = .70, p < .001), as was shown in the twenty-country data from the Chinese culture connection

(1987). Schwartz (1994) also reported that larger household sizes, a measure of collectivism, predicted national wealth, and argued that the association between individualism and wealth might have changed in the last twenty-five years since Hofstede's

(1980) analysis. He noted that the correlation between GNP and Autonomy dimension only accounted for half the variance in his 1990 data as compared to Hofstede's 1970s data.

As we suggested earlier, trying to blame culture for economic failure is a sterile intellectual journey, akin to the colonial mindset, which should be abandoned sooner than later in light of the historical (Kennedy, 1988) and theoretical (Greif, 1993, 1994, 2000) evidence against it.

History has shown that cultural values that are implicated for failures now have indeed contributed to success in the past. The notion that East Asian countries have A Cultural Model of Economic Development

become economically successful only recently is flawed, since they have been successful in the past. For example, Malacca (part of Malaysia) was a key economic player and the most important port in the world hosting as many as 2000 ships a day during the 15th century (Elegant, 1999). A Portuguese writer named Tom Pires declared that “whoever was the lord of Malacca had his hand on the throat of Venice” (Longmire, 1984).7

Similarly, in the 11th century during the Song dynasty, the Chinese developed the world’s most productive agricultural system and had the finest commercial ships. They also introduced the world’s first paper money, long before any of the Western countries

(Zhiling, 1997).

For the global economy to flourish, it is important that the developing countries of the world, whose culture is mostly collectivist, make economic progress. Though recent research in management and social science has implied that these countries need to overhaul their culture to model after that of the western countries, we posit that such countercultural approaches are likely to lead to failure and suffer much backlash. Indeed, as the model presented in this paper showed, it is possible to retain the important cultural values of collectivist cultures and still move to the later stages of economic development proposed by Porter (1990) using the organizational concepts of loose coupling, requisite variety, and competitive redundancy. As aptly put by Guillen (2001, p.4), “economic development is about finding politically feasible, ideologically tolerable, and economically workable combinations of domestic and foreign resources to promote growth.” Culture is one of the most critical resources, and it is hoped that the theoretical framework presented

7 Myrdal( 1971) also suggested that the average economic level in Malaysia might have been higher than in the Western European countries when industrial revolution began. A Cultural Model of Economic Development

here would facilitate in understanding the role of cultural variables of collectivism in describing the roots of economic success or failure. A Cultural Model of Economic Development

References

Abrahamson, E. (1996). "Managerial fashion." Academy of Management Review.

21(1):254-285

Adler, N. J. (2002). International dimensions of organizational behavior (4th Ed.).

Cincinnati, OH: South-Western.

Asch, S. E. (1952). Social psychology. Englewood Cliffs: Prentice Hall.

Ashby, W. R. (1958). Requisite variety and its implications for the control of complex

systems. In George J. Klir (1991), Facets of systems science. New York: Plenum

Press

Azfar, K. (1992). Asian Drama Revisited. Karachi: Royal Book Co.

Azuma, H. (1986). Why study child development in Japan? In H. Stevenson, H. Azuma

& K. K. Hakuta (Eds.), Child development and education in Japan (pp. 3-12). New

York: Freeman.

Ball, R. (2001). Individualism, collectivism, and economic development. The Annals of

the American Academy of Political and Social Science, 573(57)

Baron, R. (2005). So right it’s wrong: Groupthink and the ubiquitous nature of polarized

group decision making, Advances in experimental social psychology, 37.

Befu, H. (1986). The social and cultural background of child development in Japan and

the United States. In H. Stevenson, H. Azuma & K. K. Hakuta (Eds.), Child

development and education in Japan (pp. 13-27). New York: Freeman.

Bhawuk, D. P. S. (2001). Evolution of culture assimilators: Toward theory-based

assimilators. International Journal of Intercultural Relations, 25 (2), 141-163. A Cultural Model of Economic Development

Bhawuk, D.P.S. (1999). Cultural Variation in Group Dynamics: Applications of the

Theory of Individualism and Collectivism. Paper presented at the Symposium on

Unresolved Issues in the Study of Cultural Impacts on Work-Group Productivity, at

the Inaugural Conference of International Academy for Intercultural Research, Kent

State University, Kent, Ohio, April 29-May 1.

Bhawuk, D. P. S., Podsiadlowski, A., Graf, J., & Triandis, H.C. (2002). Corporate

Strategies for Managing Diversity in the Global Workplace. In G. R. Ferris & M. R.

Buckley, & D. B. Fedor, (Eds.), Human resource management: Perspectives,

context, functions, and outcomes (pp. 112-145). Englewood Cliffs, NJ: Prentice-

Hall

Brown, H. & Doebelle, J. (2004). Samsung's Next Act, Forbes, July 26 Vol. 174, Issue 2

Burt, R.S. (1992). Structural Holes: The Social Structure of Competition. Harvard

University Press.

Burton, M, R., & Forsyth, D, J. (1986). Variety and the firm's performance: an empirical

investigation. Technovation, 5, p. 23-24.

Castorina, P. & Wood, B. (1988). "Circles in the fortune 500: why circles fail." Journal

for Quality and Participation. 11, 40-41.

Chen, C., & Lin, B. (2004). The effects of environment, knowledge attribute,

organizational climate, and firm characteristics on knowledge sourcing decisions. R

& D Management, 34(2), 137.

Chinese Culture Connection (1987). Chinese Values and the Search for Culture-Free

Dimensions of Culture, Journal of Cross- Cultural Psychology, 18(2): 143-164. A Cultural Model of Economic Development

Church, T. A. (1987). Personality research in a non-western culture: The Philippines.

Psychological Bulletin, 102, 272-292.

Clark, M. S., & Mills, J. (1979). Interpersonal attraction in exchange and communal

relationships. Journal of Personality and Social Psychology, 37, 12-24.

Crocker, O. L., Charney, C., & Chiu, J. S. L. (1984). Quality circles: A guide to

participation and productivity. New York, NY: Methuen Publications.

Doi T. (1981). The anatomy of dependence. Tokyo, Japan: Kodansha International

Earley, P.C. (1989). Social Loafing and Collectivism: A Comparison of the United States

and the People's Republic of China. Administrative Science Quarterly, 34(4), 565-

581.

Eckert, C.J. (1993). The South Korean Bourgeoisie. In Hagen Koo (ed). State and Society

in Contemporary Korea. Ithaca, N.Y.: Cornell University Press p.95-130.

Elegant, S. (1999). A pyrrhic victory. Far Eastern Economic Review, 162(23), 45.

Emery, F.E. & Trist, E.L. (1965). The Casual Texture of Organizational Environments,

Human Relations, 18, p. 21 –32.

Fisher, B.A. (1980). Small group decision making: Communication and the group

process (2nd ed.). New York: McGraw-Hill.

Fortune (1936). Volume XIV (3) September

Galbraith, J. K. (1962). Economic Development. Cambridge, MA: Harvard University

Press.

Greif, A. (2000). The Fundamental Problem of Exchange: A Research Agenda in

Historical Institutional Analysis. European Review of Economic History, 4 (3), 251-

284. A Cultural Model of Economic Development

Greif, A. (1997). Cultural beliefs as a common resource in an integrating world: An

example from the theory and history of collectivist and individualist societies. In P.

Dasgupta, K-G Mäler, and A. Vercelli (eds.), The economics of transnational

commons. Oxford:Clarendon Press.

Greif, A. (1994). Cultural beliefs and the organization of society: A historic and

theoretical reflection on collectivist and individualist societies. Journal of Political

Economy, 102, 912-950.

Greif, A. (1993). Contract Enforceability and Economic Institutions in Early Trade: The

Maghribi Traders' Coalition. American Economic Review, 83 (3), 525-548.

Guillen, M. (2001). The Limits of Convergence. New Jersey: Princeton University Press

Han, G, & Park, B. (1995). Children's choice in conflict: Application of the theory of

individualism-collectivism. Journal of Cross-Cultural Psychology, 26 (3), 298-313.

Hare, A. P. (1976). Handbook of small group research (3rd Ed.). New York: Free Press.

Hofstede, G. (1997). Cultural constraints in management theories. In R.P. Vecchio (Ed.),

Leadership: Understanding the dynamics of power and influence in organizations

(pp.465-483). Notre Dame: University of Notre Dame Press.

Hofstede, G. (1980). Culture's consequence. Beverly Hills, CA: Sage Publications.

Hon, L. C., & Brunner, B. (2000). Diversity issues and public relations. Lawrence

Erlbaum Associates.

Hsu, F. L. K. (1981). Americans and Chinese: Passage to difference (3rd Ed.). Honolulu,

HI: University of Hawaii.

Hsu, F. L. K. (1971). The challenge of the American dream: The Chinese in the United

States. Belmont, CA: Wadsworth Publishing Co. A Cultural Model of Economic Development

Hui, C. H., & Triandis, H. C. (1986). Individualism-collectivism: A study of cross-

cultural researchers. Journal of Cross-cultural Psychology, 17, 222-248.

Husted, W.B. (1993). Reliability and the design of ethical organizations: A rational

systems approach. Journal of Business Ethics, 12(10), 761.

Inagami, Takeshi (1983). QC circles and the suggestion system. Japanese Industrial

Relations Series, 11, 31-34. Tokyo: The Japan Institute of Labor.

Janis, I. L. (1982). Groupthink: Psychological studies of policy decisions and fiascoes

(2nd Ed.). Boston: Houghton Mifflin.

Kashima, Y. & Callan, V. J. (1994). The Japanese work group. In H. C. Triandis, M. D.

Dunnette & L. M. Hough (Eds.), Handbook of industrial and organizational

psychology (pp. 609-646). Palo Alto, CA: Consulting Psychologists Press, Inc.

Kennedy, P. (1988). The Rise and Fall of the Great Powers: Economic Change and

Military Conflict from 1500 to 2000. New York: Random House

Khatri, N., Wen, C.Y., Fuei, L.W. & Geok, T.A. (1999). Cronyism: Antecedents and

consequences. SABRE Working paper, 10-99, pp. 1-46

Kiesler, C. A. (1969). Group pressure and conformity. In J. Mills (Ed.), Experimental

social psychology (pp. 235-306).

Kim, U. (1995). Individualism and collectivism: A psychological, cultural and ecological

analysis. Copenhagen, Denmark: Nordic Institute of Asian Studies.

Kim, U. (2000). National development and East Asian values: cultural perspective. In I.

Norland, & Đ T. Phạm (Eds.), International conference Asian values and Vietnam's

development in comparative perspectives: selected papers (pp. 135-154). Hanoi:

National Center for Social Sciences and Humanities. A Cultural Model of Economic Development

Konz, S. (1979). Quality circles: Japanese success story. Industrial Engineering, 11

(October), 24-26

Koo, S.M. (1994). Korea’s Big Business Groups and International Competitiveness. In

Sung Yeung Kwack (ed). The Korean Economy at a Crossroad. Westport,Conn:

Praeger. p.151-66.

Krefting, L. A., Kirby, S. L. & Krzystofiak, F. J. (1997). Managing diversity as a proxy

for requisite variety: Risks in identity-conscious inclusion and pressures to conform.

Journal of Management Inquiry, 6, 376-389.

Kurachi, A. (1984). Reactions to an incident involving a child in school: A comparison of

Japanese and American mothers and teachers' reaction. Journal of Cross-Cultural

Psychology, 15, 321-337.

Lawler, E. and Morhman, S. (1985). Quality circles after the fad. Harvard Business

Review. 63: 65-71.

Levinthal, D. (1997). Adaptation on rugged landscapes, Management Science 43(7):934-

950.

Levitt, T. (1960). Marketing Myopia, Harvard Business Review, 38(4), 45-56.

Longmire, R. A. (1984). Malacca and the throat of Venice. Taylor & Francis Ltd.

Luo, Y. (2000). Guanxi and Business. Singapore: World Scientific.

Maranville, S. J. (1999). Requisite variety of strategic management modes: A cultural

study of strategic actions in a deterministic environment. Nonprofit Management

and Leadership, 9(3), 277.

March, J. G., & Simon, H. (1958). Organizations. New York: Wiley. A Cultural Model of Economic Development

Markus, H. R., & Kitayama, S. (1991). Culture and the self: Implications for cognition,

emotion, and motivation. Psychological Review, 98, 224-253.

McDaniel, R. & Walls, M.E. (1997). Diversity as a Management Strategy for

Organizations: A view through the lenses of chaos and quantum theories. Journal of

Management Inquiry, 1997, 6(4), 363-375.

McGrath, J. E. (1984). Groups: interaction and performance. Englewood Cliffs: Prentice

Hall.

Mills, J., & Clark, M. S (1982). Exchange and communal relationships. In L. Wheeler

(Ed.), Review of personality and social psychology (Vol. 3, pp. 121-144). Beverly

Hills, CA: Sage Publications.

Min Basadur, (1992). Managing creativity: A Japanese model. The Academy of

Management Executive, 6, 29-40

Misumi, J. (1985). The behavioral science of leadership: an interdisciplinary Japanese

research program. Ann Arbor: University of Michigan Press.

Miyajima, R. (1986). Organizational ideology of Japanese managers. Management

International Review, 26 (1), 73-76.

Mohamad, M. & Ishihara, S. (1995). The voice of Asia: two leaders discuss the coming

century. New York: Kodansha International.

Morgan, G. (1998). Images of organizations: The Executive Edition, San Francisco:

Berrett-Koehler.

Myrdal, Gunnar (1971). Asian Drama: An inquiry into poverty of nations. New York:

Pantheon Books A Cultural Model of Economic Development

Neck, P. C., & Manz, C. C. (1994). From groupthink to teamthink: toward the creation of

constructive thought patterns in self-managing work teams. Human Relations, 47(8),

929.

Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation.

Organization Science, 5(1), 14p.

Nonaka, I. (1988). Creating organizational order out of chaos: Self-renewal in Japanese

firms. California Management Review, 30(3): 57.

Porter, M. (1990). The Competitive Advantage of Nations. New York: Macmillan.

Rastogi, P. N. (2003). The nature and role of IC: rethinking the process of value creation

and sustained enterprise growth. Journal of Intellectual Capital, 4(2), 227.

Redding, S.G., Norman, A., & Schlander, A. (1994). The nature of individual attachment

to the organization: A review of East Asian variations. In H.C. Triandis (Ed.),

Handbook of industrial/ organizational psychology, 2nd ed., vol. 4 (pp. 647-688).

Palo Alto, CA: Consulting Psychologists Press.

Schwartz, S. H. (1994). Beyond Individualism/Collectivism: New Dimensions of Values.

Individualism and Collectivism: Theory Application and Methods. U. Kim, H. C.

Triandis, C. Kagitçibasi, S. C. Choi and G. Yoon. Newbury Park, CA, Sage.

Sinha, J. B. P. (1994). Cultural embeddedness and the developmental role of industrial

organizations in India. In Triandis, H. C., Dunnette, M. D., and Hough, L. M. (eds.),

Handbook of industrial and organizational psychology, 2nd edition, Volume 4 (pp.

727-764). Palo Alto, CA: Consulting Psychologists Press, Inc. A Cultural Model of Economic Development

Spender, J. C., & Grevesen, W. (1999). The multinational enterprise as a loosely coupled

system: the global integration - local responsiveness dilemma. Managerial Finance,

25(2), 63.

Spender, J. C., & Grinyer, P. H. (1995). Organizational renewal: top management's role

in a loosely coupled system. Human Relations, 48: 909-926.

Steensma, H. K., Marino, L., & Weaver, K. M. (2000). The influence of national culture

on the formation of technology alliances by entrepreneurial firms. Academy of

Management Journal, 43(5): 951-973.

Synodinos, N. E. (2001). Understanding Japanese consumers: Some important underlying

factors. Japanese Psychological Research, 43(4), 235-248.

Tabb, W.K. (1996). The East and the World today. Social Justice, 23(1-2), p. 250-262

Triandis, H. C. (1989). The self and social behavior in differing cultural contexts.

Psychological Review, 96, 506-520.

Triandis, H. C. (1990). Cross-cultural studies of individualism and collectivism. In J.

Berman (Ed.), Nebraska symposium on motivation, 1989 (pp. 41-133). Lincoln:

University of Nebraska Press.

Triandis, H. C. (1995). Individualism and collectivism. Boulder, CO: Westview Press.

Triandis, H.C. (1994). Culture and social behavior. New York: McGraw-Hill, Inc.

Triandis, H. C., Marin, G., Lisansky, J., & Betancourt, H., (1984). Simpatia as a cultural

script of Hispanics. Journal of Personality and Social Psychology, 59, 1006-1020.

Triandis, H.C., Leung, K., Villareal, M., & Clark, F.L. (1985). Allocentric vs. idiocentric

tendencies: Convergent and discriminant validation. Journal of Research in

Personality, 19, p.395-415. A Cultural Model of Economic Development

Triandis, H. C., Bontempo, R., Villareal, M. J., Asai, M., & Lucca, N. (1988).

Individualism and collectivism: Cross-cultural perspectives on self-ingroup

relationships. Journal of Personality and Social Psychology, 54, 323-338.

Triandis, H. C., Kurowski, L. L., & Gelfand, M. J. (1994). Workplace diversity. In H. C.

Triandis, M. D. Dunnette & L. M. Hough (Eds.), Handbook of industrial and

organizational psychology (pp. 769-827). Palo Alto, CA: Consulting Psychologists

Press, Inc.

Triandis, H. C., McCusker, C., & Hui, C. H. (1990). Multimethod probes of

individualism and collectivism. Journal of Personality and Social Psychology, 59,

1006-1020.

Tsurutani, T. (1972). The politics of national development; political leadership in

transitional societies. New York, NY: Chandler Publishing Company.

Wang, G. (1981). Community and nation: Essays on Southeast Asia and the Chinese.

Singapore: Heinemann.

Wang, Z. (1994). Culture, economic reform, and the role pf industrial and organizational

psychology in china. In H. C. Triandis, M. D. Dunnette & L. M. Hough (Eds.),

Handbook of industrial and organizational psychology (pp. 689-725). Palo Alto,

CA: Consulting Psychologists Press, Inc.

Ward, A., Liker, K. J., Cristiano, J. J., & Sobeck, K. D. (1995). The Second Toyota

Paradox: How Delaying Decisions Can Make Better Cars Faster. Sloan

Management Review, 36(3). 43-62.

Weick, K. E. (1976). Educational organizations as loosely coupled systems.

Administrative Science Quarterly. A Cultural Model of Economic Development

Weick, K.E. (1979). The Social psychology of organizing. (2nd ed.). Reading, MA:

Addison-Wesley

World Bank (1993). The East Asian miracle: Economic growth and public policy New

York: Oxford University Press

Yoo, S., & Lee, S. M. (1987). Management style and practice of Korean Chaebols.

California Management Review, 29, 95-110.

Zhiling, H. (1997, Jul 25).Chengdu taps resources to promote economic development.

China Daily, pp. 3. A Cultural Model of Economic Development

Defining Features of Collectivism • Interdependent Concept of Self • Utility for making sacrifice for ingroups • Relational Bonding

• Norm Driven Behaviors

Consequences of Collectivism • Conformity • Institutionalization • Collective Goal Congruency • National Goal Congruency

Loose Coupling Factor Driven Economy Investment Driven Economy Requisite Variety Competitive Redundancy

Path 1 Economic Success Teamthink

Groupthink Innovation Driven Economy Path 2 Wealth Driven Economy

Economic Failure Economic Success

Figure 1: A Cultural Model of Economic Development A Cultural Model of Economic Development