What We Talk About When We Talk About “Global Mindset”

What We Talk About When We Talk About “Global Mindset”:
Managerial Cognition in MNCs
As global competition continues to intensify, global mindset has emerged as a key source of
long-term competitive advantage in the global marketplace. A growing number of academics and
practitioners view global mindset, or the cognitive capabilities of key decision makers, as a critical
success factor that affects a variety of organizational outcomes (Gupta and Govindarajan, 2002; Murtha,
Lenway, and Bagozzi, 1998; Harveston, Kedia, and Davis, 2000; Jeannet, 2000; Levy, 2005). This
emerging consensus reflects a recognition that the present-day competitive landscape requires a shift in
focus from structural and administrative mechanisms to mindset-based capabilities (Bartlett and
Ghoshal, 1990). As Gupta and Govindarajan (1998:2) suggest: “Success is all in the [global] mindset.”
The notion that global mindset or the cognitive capabilities of senior managers in multinational
companies (MNCs) is important to firm performance dates back to the early works on foreign direct
investment by Aharoni (1966) and Kindleberger (1969). However, it was Perlmutter (1969) who
focused attention on managerial cognition by offering a formal typology of MNCs which explicitly
incorporates the prevailing mindsets of senior executives. Over the last decade, developments in the
global economy have re-focused attention on the cognitive dimension of MNCs as business realities
have given rise to tremendous managerial complexity (Doz and Prahalad, 1991; Prahalad, 1990). As
globalization intensifies, MNCs are subjected to simultaneous and often conflicting pressures for global
integration and local responsiveness (Doz, Santos, and Williamson, 2001; Prahalad and Doz, 1987;
Bartlett and Ghoshal, 1990). As a result, senior managers need to integrate and coordinate
geographically dispersed operations and a culturally diverse workforce (Bartlett and Ghoshal, 1990). In
addition, managers must respond to local demands and to manage inter-organizational relationships with
diverse stakeholders, including host governments, strategic partners, customers, and suppliers
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