The cultural dimension
Success in international business is largely a matter of understanding and managing cultural differences. Neoclassical economics makes another wrong assumption here, with respect to what scientists call validity. It frequently assumes that an experiment done in one culture can be replicated with the same result in another culture. That is very often not so; in many cases the result will not even be valid outside one particular social group. Culture matters, not just for the competitive advantage of nations, but for the performance of all organizations.6 Cultural differences are the number one reason why companies fail overseas (see e.g. Ricks 2006).The reasons we continue to make mistakes seem to be because our existing theories about cultures and "otherness" are misleading, and because we are forced to think within the bounds of what is politically correct. One example is our need to analyze situations according to the "us and them" dichotomy. Since we are separate individuals, there must by definition be an "us" and a "them". A number of academics object to this as a cause of aggression, even of nationalism and racism, as if we could choose to eliminate this perspective, to stand outside our human condition and at the same time act within it. Instead, theory is presented as an alternative reality.
Culture should rather be seen in the light of critical theory, as a continuous and inescapable struggle between values, if not necessarily taking the form of open conflict. It is true that we are moving towards a multicultural society, but the keys to understanding social behaviour are still very much rooted in the understanding of cultural differences, and that will not change for generations to come. Struggle, however, does not necessarily imply physical violence, and need not lead to wars. Conflict of interests is a part of human nature, and can be addressed through tolerance, dialogue, and negotiations. If we were to think in those terms then perhaps we could become somewhat happier too, less disillusioned by divergences from theoretical ideals. Unfortunately it seems that political ideology is a troublesome trait of the Western mind.
The link to real political thought
The larger objective of this book is to show what the tradition of geopolitics has to offer decision-makers, but also to suggest to the reader how to try to understand the complexity of social facts without being seduced into adopting sensationalist answers to world events - a danger which is always inherent in the study of geopolitics, and of which that discipline will never entirely be able to rid itself.
The kind of thinking associated with the German term Realpolitik may serve as a useful tool for understanding the actions of other organizations and nations, though applied to one's own society it is a recipe for catastrophe. To be human means to show empathy and to act in the interest of others. But to survive means to compete. Both ideals are necessary for a society to prosper. Furthermore, good, altruistic actions often create sympathy, which in turn can lead to economic prosperity. This is a lesson ignored by most of my fellow MBAs, doubtless because it was never explained properly.
For as long as they have existed, multinational enterprises and nation states have constructed models of their own positions in order to know what to do next. Whether we see these models as subjective pictures or as facts is very much a question of our own interests and perspective. Our own real reasons for acting are often hidden from others but also to some degree from ourselves, which we in the social sciences understand as a kind of failure of rationality. Social actions quickly become unduly complex, and there is always an element of randomness in our behaviour. In an organization there will often be only a few people who understand the true and complete motives underlying a decision (not that such understanding in itself is any guarantee that what individuals want to happen actually happens. There is always a great difference between knowing and acting). Contrary to what we frequently want to believe, major decisions are often the initiative of a few people. This is true even for very large democratic institutions like the European Union (cf. Möller 2008). Very often there are unforeseen actions by uninvited or unanticipated actors. In other words, chance tends to play a part in what actually happens. Moreover, the way we work in organizations is very much based on national and cultural values. Mix all this with the role of opinion, and you start to see some of the complexity of organizational behaviour and real-world decision making. What we gain for the purposes of model-building by simplifying this reality, we lose for the purposes of understanding. So, because social life is so complex, the discipline of economics leads us to miss too many potential insights.
As analysts we cannot disregard opinions just because they are politically incorrect, normative, or subjective. What matters is whether or not these opinions are actually being used for making decisions, by ourselves and by others. As decision-makers it is not our first concern to question the other party's motives. Rather, it is natural that they will often be different from and contrary to our own. We do right to assume that they are mostly selfish. Mankind talks a great deal about morality, but men are first moved to alter their actions by colliding with the boundaries defined by our laws (in the case of multinational enterprises) and by the limitations and potentials which are defined by the sum of our resources (in the case of nation states). Morality is often an argument deployed in order to defend one's own rights and interests. These assumptions yield what we in the West think of as the real political perspective, evaluations of interest by organizations based on self-interest. This real political perspective is the same for both geopolitics and geoeconomics. This does not have to be seen as pessimism, but can be understood as realism. It has also been called pragmatism.9It is largely a question of what to expect. As Sir Humphrey Appleby reminds us in the television series Yes, Minister, "A cynic is what an idealist calls a realist".
The realist way of thinking is not typically European, even though we frequently like to imagine that it is so, citing Machiavelli or Hobbes. In China it goes back at least to the statesman Guan Zhong (d. 645 BC) who served Duke Huan of Qi (ruled 686-643 BC). In India it goes back to Kautilya and his book Arthashastra, about 300 BC. Among the better-known realist thinkers we find Sun Zi, whose dates are disputed (some say he lived in the third century, others as early as the fifth century BC). Later philosophers such as Han Fei Zi (ca 280-233 BC) represent a whole group of similar Chinese thinkers called the Realist or Legalist School (fa jia). This is the same tradition that we see develop independently and at a much later date with Machiavelli and the study of geopolitics.
The study of geopolitics probably includes the most interesting collection of real political contributions we have today. Unfortunately some of this "us and them material" is secret or restricted, as when it is contained in the archives of the many intelligence organizations around the world. Much is expressed orally as private opinions of individuals and decision makers, or occurs as notes in the confidential files (competitive and competitor analysis) of private-sector corporations. In multinational enterprises real political information exists mostly as oral tradition. This is because its content is often considered politically incorrect. Written information that could damage any particular individual, company, or country is as a rule kept secret or hidden, at least for as long as it affects employees still alive. At the same time the different issues, national positions, and opinions that are kept hidden from us are often understood by the parties involved, if only because we learn to read between the lines. We already know what the other party thinks of us and our position, we can feel it and we see in their actions and behaviour what is otherwise hidden from us. When studying intelligence we are reminded that it is the examples that are covert or secret, not the methods. This is the very rationale and precondition for the existence of a discipline of intelligence. There are no secret or covert intelligence methods or analyses, only differences in information sets, competence, and training, and of course in intelligence budgets, which again determine the quantity of analysis carried out and the technical intelligence capabilities of each country or multinational enterprise.