Choose 1 country that the organization (Home Depot) youve been working on in this course could consider expanding into.??? Read the selected article from the University Lib

International Management Review Vol. 8 No. 2 2012

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Essay: Developing Global Leadership:

A review of barriers and adjustments for international expansion

David Burkus

Oral Roberts University, City and Country, USA

Global expansion brings with it many new challenges and opportunities for any organization. This article

outlines four barriers to global expansion (language, regulation, culture, and competition) and provides

leaders with organizational adjustments: organizations must develop executives with a global mindset and

cultural sensitivity; leaders must decide on the level of involvement and decentralize their structure to

empower local managers. These adjustments will better prepare an organization for going global.

It’s inevitable. Just as a growing hermit crab will eventually look for a new shell to grow into, as

organizations grow, many leaders will eventually look to other countries or continents to expand into.

However, often the method that brought success at home is not the same route that will ensure success

abroad. Fortunately, there’s help for leaders looking to help their organizations go global. This article will

outline common barriers to global expansion and suggest organizational adjustments leaders will need to

make. Leaders will need to develop an understanding of these barriers and adjustments in order to know

what to expect when they’re expanding.

Organizations expanding into new countries will likely find that “business as usual” will not operate

well in the new culture (McCall & Hollenbeck, 2002). The cultural differences among locals will create

several barriers that must be overcome for a successful expansion:

Language. McCall & Hollenbeck’s (2002) research on global executives found that learning the

language was often the largest barrier to working across cultures. Though English is the unofficial

language of international business, critical information can be lost in translation. Similarly,

negotiators who do not speak the local language can find themselves at a disadvantage.

Regulation. Differences in labor and consumer regulations can make doing business more difficult

in foreign countries (Black, Morrison, & Gregersen, 1999). For instance, emission regulations for

computer models are stricter in Europe than the United States; as a result, product lines may have to

be customized. Awareness of regulatory standards is vital in order to remain competitive with local

firms.

Culture. The cultural norms of interaction affect the way business transactions are made, even if all

parties interact in the same language. In the United States, many executives focus on doing business

first and letting personal relationships build as the business relationship does (Black, Morrison, &

Gregersen, 1999). In many cultures, this order is reversed. Knowledge of this and other cultural

differences can make interactions with local executives significantly less complicated.

Competitors. As companies enter new markets, they inevitably meet local competitors. These

competitors have knowledge of local markets that foreign companies may not. For example,

McDonald’s spent 13 months trying to sell beef hamburgers in India before an understanding of local

beliefs convinced them to use lamb (Rosen, Digh, Singer & Philips, 2000). Partnering with local

competitors or conducting extensive competitive analysis is vital for gaining this market knowledge.

These four barriers are not exhaustive, just common. When crossing cultures, organizational leaders

can expect to encounter barriers similar to the ones listed above and, in some cases, drastically

different ones.

Whatever barriers these leaders face, their first step is to prepare. Organizations increase their

chances of successful expansion by adjusting the way they operate. Several adjustments may need to be

made to prepare an executive or organization for going global:

Develop a global mindset. Executives preparing for expansion must develop a mindset that is open

and aware of cultural diversity yet can synthesize across this diversity (Gupta & Givindarajan, 2002).

Organizational leaders must be able to synthesize their companies global strategy with the needs of

the local organization and local market.

International Management Review Vol. 8 No. 2 2012

84

Develop sensitivity to cultural differences. Understanding how business is done within the local

culture is vital to getting business done. The ability to perceive and leverage the differences between

familiar and foreign cultures is called cultural literacy and is an important tool for competitive

advantage (Rosen, Digh, Singer, & Philips, 2000).

Decentralize. The executives with the best understanding of local cultures are the ones who are

native to that culture. Organizations may have to change their philosophy of management in order to

empower these executives to make decisions on the local level for the good of the global

organization (Rosen, Digh, Singer, & Philips, 2000).

Decide on the level of involvement. Before making any entry into a foreign market, organizational

leaders must first decide how involved they anticipate being. Galbraith (2000) outlines five levels of

entry companies can make into new markets: exportation, joint venture, foreign operation,

multidimensional network, and transnational operation. Exactly what level of involvement is desired

must be accounted for in a strategic plan.

These adjustments must be made during the process of preparing the organization and the selected

executives for expansion into the new culture. Global expansion brings with it many new challenges and

opportunities for any organization. Organizational leaders will likely encounter many barriers to entering

the new culture, including language, regulation, cultural differences, and new competitors. In order to

prepare for these new hurdles, leaders can prepare by making several adjustments to themselves and their

organization. Organizations should develop executives with a global mindset and cultural sensitivity.

Leaders need to decide on the level of involvement and decentralize their structure to empower local

managers. Regardless of how these adjustments are made, organizations will find they must be in order to

break from business as usual and successfully go global.

References Black, J. S., Morrison, A., & Gregersen, H. (1999). Global explorers: The next generation of

leaders. New York: Routledge.

Galbraith, J. R. (2000). Designing the global corporation. San Francisco: Jossey –Bass.

Gupta, A.K., & Govindarajan, V. (2002). Cultivating a global mindset. Academy of Management

Executive, 16(1), 116-126.

McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of

international experience. Boston: Harvard Business School Press.

Rosen, R., Digh, P., Singer, M., & Philips, C. (2000). Global literacies: Lessons on business leadership

and national cultures. New York: Simon and Schuster.

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Contents lists available at ScienceDirect

Renewable and Sustainable Energy Reviews

journal homepage: www.elsevier.com/locate/rser

Assessing national renewable energy competitiveness of the G20: A revised Porter's Diamond Model

Kai Fanga,b,1, Yunheng Zhoua,1, Shuang Wangc,1, Ruike Yed,1, Sujian Guoa,⁎

a School of Public Affairs, Zhejiang University, Hangzhou 310058, Zhejiang Province, PR China b Institute of Environmental Sciences (CML), Leiden University, 2333CC Leiden, The Netherlands cHang Zhou Dianzi University, 310023 Hangzhou, Zhejiang Province, PR China d School of Public Administration, Zhejiang University of Technology, 310023 Hangzhou, Zhejiang Province, PR China

A R T I C L E I N F O

Keywords: Renewable energy Industry competitiveness Diamond Model Composite index of renewable energy competitiveness (CIREC) Country-based analysis Policy recommendation

A B S T R A C T

To ensure energy security and tackle global challenges, such as climate change and environmental degradation, governments have formulated and implemented various public policies to encourage the development and utilization of renewable energy worldwide. This article focuses on potential approaches to evaluating and promoting the international competitiveness of Group 20's (the G20's) renewable energy industry. By developing a revised Diamond Model in relation to Porter's theory of industry competitive advantage, it provides an ana- lytical framework for assessing the national renewable energy competitiveness of the G20 members, makes an in-depth investigation into the main driving factors for renewable energy industry, and presents a sound com- petitiveness assessment of the present and future of the G20's renewable energy industries, such as solar, wind, hydropower, and biomass energy. Based on the international analysis of the G20, the study also proposes a set of policy recommendations to support decision makers in the evaluation and choice of strategies for enhancing national renewable energy competitiveness. Our findings could better serve both policy makers and industrial end-users as a useful reference for international efforts to approach the sustainability of global energy use.

1. Introduction

Resource shortages (especially energy) and environmental problems have always been the major challenges for modern human society. With the rapid expansion of industrialization and urbanization around the world, many of these problems are getting worse. For instance, over- exploitation of fossil fuels has led to climate change and environmental degradation, causing energy to be one of the most urgent and chal- lenging public policy issues in the 21st century. To address this issue, the international community has made great efforts towards sustainable development by accelerating the transition to cleaner energy.

It is broadly believed that successful development of renewable energy could ensure energy security and mitigate climate change. Therefore, governments have been actively stimulating renewable en- ergy growth on different scales. In the early 2000s, the European Union (EU) set a goal of transforming to a low carbon society. Moreover, the United States of America (USA) considers renewable energy as an im- portant stimulator of domestic economic recovery. Meanwhile, emer- ging economies are catching up with developed countries in the global renewable energy race. China, for example, has promised that its

carbon dioxide (CO2) emissions will peak by 2030, when the percentage of non-fossil fuels in primary energy consumption will increase to around 20%.

The primary purpose of this article is to assess the renewable energy competitiveness of the world's major nations. By revising the Diamond Model proposed by Michael E. Porter [1], this study performs a quan- titative analysis of the renewable energy industry competitiveness. It will uncover the driving forces of the renewable energy industry and provide a policy assessment framework for policy makers according to national resource endowments and competitive advantages.

Note that the so-called Group 20 (G20) in our paper is interpreted in a way that differs slightly from general perceptions. Data for the EU inevitably overlap with those for individual EU members, such as Germany and France, which are likely to adopt different key investment incentives to promote renewable energy, as will be explained below. Therefore, it may be reasonable to exclude the EU from the investigated list. Moreover, Denmark and Spain, which are member states of the EU but not of the generally perceived G20, have succeeded in structuring their renewable energy sectors. It is our conviction that lessons can be learned from those two countries. Therefore, countries in our analysis

https://doi.org/10.1016/j.rser.2018.05.011 Received 3 November 2016; Received in revised form 13 May 2018; Accepted 13 May 2018

⁎ Corresponding author.

1 All these authors have made equal contributions to the article. E-mail address: [email protected] (S. Guo).

Renewable and Sustainable Energy Reviews 93 (2018) 719–731

Available online 21 June 2018 1364-0321/ © 2018 Elsevier Ltd. All rights reserved.

T

are the classic G20 members, excluding the EU, while including Denmark and Spain. Nevertheless, these will still be referred to as the G20 for reasons of simplicity.

2. Definition and literature review

2.1. Renewable energy

While there is no consensus on the definition of renewable energy, in general, renewable energy is defined as a suite of energy sources that: (1) are produced through ongoing natural processes, (2) can be natu- rally regenerated at a rate that equals or exceeds the consumption rate [2,3], and (3) can be continuously replenished [4,5].

People hold varying views on the sources of renewable energy, as- serting that it comes 1) directly from the Sun (e.g., thermal, photo- chemical), 2) indirectly from the Sun (e.g., wind, hydropower), or 3) from other natural movement and environmental mechanisms (e.g., geothermal, tidal energy) [6]. Anyhow, one may conclude, from a broader point of view, that renewable energy is ultimately derived from the radiant energy of the Sun reaching the Earth [7]. Because of lim- itations in data availability, this study chooses to focus on four types of renewable energy: hydropower, wind, solar, and biomass.

Renewable energy has been widely recognized as a strategic direc- tion for energy transition because of its sustainability and near-zero emissions. The International Energy Agency (IEA) predicts that re- newable energy consumption will increase by an average of 2.6%/year between 2012 and 2040, while world net electricity generation will grow by merely 1.9%/year in the same period, and, because of this, the renewable share of world net electricity generation is estimated to ex- pand from 22% in 2012 to 29% in 2040. More specifically, in 2012, the proportions of hydroelectricity, wind, and solar in total renewables generation were 77%, 11%, and 2.1%, respectively, and the other re- newables (biomass, waste, tide/wave/ocean, etc.) accounted for ap- proximately 8.5%; in 2040, these numbers would change to 52%, 23%, 9%, and 11.7%, respectively, [8]. During this period, hydroelectricity would still dominate the world's renewables, while solar would be the fastest-growing energy source, wind would hold a more important po- sition, and biomass would mainly occupy the category of the rest of the renewables.

2.2. Competitiveness

The definition of "competitiveness" varies, depending on the scale, context and purpose of its use. It can be expressed in relative terms, referring to the comprehensive capacity reflected in the competition or comparison of two or more participants. Since the 1970s, competi- tiveness studies have been extensively conducted at multiple scales, ranging from nation, region, industry, and company to products. Reviewing the existing theories of competitiveness, one may divide them into three schools: 1) the Classical School; 2) the Neoclassical, Austrian, and Institutional School; and 3) the Contemporary School. There is a great variety of literature concerning the concept of com- petitiveness, most of the contributions rely primarily on the compara- tive advantage theory, which is ever-evolving, from the original abso- lute advantage and comparative advantage theory by Adam Smith and David Ricardo, to the theory of entrepreneurship and innovation by Joseph Schumpeter, to the management theory (the Diamond Model) by Michael Porter, and to the representative Paul Krugman's critical competitiveness theory—new economic geography theory [9]. For ex- ample, the World Economic Forum (WEF) defines international com- petitiveness as the ability of a country or a company to produce more wealth than its competitors under a world market equilibrium condi- tion; thus, international competitiveness is deemed to be the unification of competitive assets and competitive procedure [10]. The Organization for Economic Cooperation and Development (OECD) shares the view that competitiveness represents, under favorable market conditions, the

extent to which the country can produce goods and services for inter- national competition, while synchronously capacitating the growth of real domestic income and living standards [11]. The International In- stitute for Management Development (IMD) argues that competitive- ness is an effective means to achieve goals of improving living standards and enhancing social welfare [12].

Contrary to the general belief, neoclassical economists like Paul Krugman criticize the view that the concept of competitiveness is well- defined at the firm level, and it turns out to be “a meaningless word” if extended to the nation level [13]. Porter believes that the classical comparative advantage theory cannot adequately account for industrial competitiveness and that it is necessary to understand the concept with the aid of the competitive advantage theory. In his book, “The Com- petitive Advantage of Nations,” Porter defines industrial competitive- ness as “Under the condition of international free trade, the capacity that a particular industry of a country provides more products that meet customers’ needs and reaps sustainable profits with its higher pro- ductivity” [1]. According to this definition, the ultimate source of na- tional competitiveness is domestic industrial productivity. Porter's studies on industrial competitiveness provide a new paradigm that shifts the focus from comparative advantage to competitive advantage theory. Inspired by his book, a growing number of studies have un- derlined the importance of the competitiveness concept.

Computational structure of the so-called competitiveness-ranking index is the key to international comparison of competitiveness. To our knowledge, the Growth Competitiveness Index (GCI), by McArthur and Sachs [14], and the Business Competitiveness Index (BCI), by Porter, are probably two of the most classic competitiveness indexes. The former makes an evaluation based on factors that influence sustained economic growth over the medium-to-long term. The latter explores company-specific factors that generate improved efficiency and pro- ductivity indicators at the micro level as complementary to the GCI. In 2004, a new Global Competitiveness Index (GloCI) that takes advantage of both the GCI and BCI was created by WEF [15].

Given the complexity of the competitiveness concept, there would be great need for either multidimensional or composite indicators in assessing industrial competitiveness. This is the reason why many competitiveness index rankings make use of multiple indicators, such as the one proposed in the Global Competitiveness Report.

A literature review demonstrates that competitiveness may be de- fined in a variety of ways for different purposes. With respect to in- dustrial competitiveness, it is necessary to understand the concept with the aid of the competitive advantage theory. Porter's book, The Competitive Advantage of Nations, has led to a shift of focus from in- dividual firms and industries to a nation-wide scope, containing nu- merous firms and industries [16], thereby providing a new paradigm for international competitiveness analysis.

In addition, in recent years, “soft indexes” with no statistical stan- dards have been increasingly employed in various international ranking systems, such as the Quality of the Judiciary, the Nation's Innovation Preference, the Extent of Corruption, and the Quality of Company Management [9].

2.3. Frameworks for assessing competitiveness of renewable energy

Porter's Diamond Model has now been widely applied to assess the competitiveness of one industry by investigating the mutual influences between elements (both internal and external components) and their influences on the whole industry. However, some researchers criticize the Diamond Model as lacking applicability in the nations that rely heavily not only on their multinationals but also in the activities taking place beyond national boundaries [16]. Following Porter, many re- searchers continue to revise the classical model in keeping with dif- ferent end uses. Currently, there are three types of models in relation to the Diamond Model for assessing industrial competitiveness. These are the Porter-Dunning Model, the Porter Value Chain Model, and the Jin

K. Fang et al. Renewable and Sustainable Energy Reviews 93 (2018) 719–731

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Bei-Causal Model. Overall, most competitiveness studies are based on updated or refined versions of the Diamond Model, either by adding new contributing factors or adjusting parameters, rather than going beyond the analytical framework of the Diamond Model.

For example, Dunning introduced the concept of transnational corporations’ commercial activities in his improved Potter–Dunning Model [17]. Rugman and Cruz explored the synergies of the Canadian Diamond Model and the American Diamond Model in their study of Canada's competitive advantage [18]. Cho developed a Nine Factors Model based on nine factors that can be classified into three categories: physical, human, and governmental [19]. Jin applied the Diamond Model to interpret China's market share and the profitability of do- mestic industrial products and proposed an economic analysis paradigm that fits well with specific conditions of Chinese industrial develop- ment. Based on this model, he set up an analytical framework for the international competitiveness of industrial products [20]. Rui added one key element—knowledge absorption and innovative ability—to the Diamond Model, with the argument that it is only with this core in- dustry that sustainable competitiveness can be truly developed [21].

Renewable energy competitiveness research represents an im- portant application in the domain of energy competitiveness research, in which the competitiveness denotes a country's international com- petitiveness in terms of renewable energy, such as wind, hydropower, photovoltaic (PV), and biomass energy, and associated industries. Relevant measurement indicators include renewable energy resource, investment, technological innovation index, the number of employees, total installed capacity, the Constant Market Share Model (CMS), Trade Competitiveness Index (TCI), and Revealed Comparative Advantage Index (RCA). Note that variations in indicators may exist among case studies for different purposes.

Certain index research systems have been put into practice. For example, the Global Cleantech Innovation Index (GCII) covers 40 countries, for which the score is calculated based on the average be- tween inputs and outputs of innovation. Each of these inputs and out- puts is determined by four equally weighted pillars: General Innovation Drivers (inputs), Cleantech-Specific Innovation Drivers (inputs), Evidence of Emerging Cleantech Innovation (outputs), and Evidence of Commercialized Cleantech Innovation (outputs). The four pillars com- prise 15 indicators [22]. A similar example can be found in Ernst & Young's Renewable Energy Country Attractiveness Index (RECAI) [23]. However, many of the existing index systems remain problematic, due either to the lack of well-grounded theoretical foundations or to failure to focus exclusively on the renewable energy industry.

Unlike the case in many other industries, the use of the Diamond Model in renewable energy industrial competitiveness remains largely uninvestigated, apart from a few studies. These include Dögl and Holtbrügge, who analyzed Germany's competitive advantage of re- newable energy firms over India and China by taking governmental and cultural influences into account [24]. In another study, Panagiotis and Nikos investigated the competitive advantage of renewable energy en- terprises of Greece [25].

Some researchers have paid more attention to the industrial com- petitiveness of specific types of renewables. For instance, Zhao revised Porter's Diamond Model for assessing China's wind power industry by defining Government as the fifth determinant, rather than as a sec- ondary element, and incorporating technology into the model as an intermediate variable [26]. Based on the Diamond Model analysis, Zhao developed a gear model as a way of understanding the dynamic process of the development of the PV industry [27].

In addition to the Diamond Model, research frameworks and tools, such as Fixed Effects Vector Decomposition (FEVD) [28,29], Panel Corrected Standard Errors (PCSE) [30], Event History Analysis (EHA) [31], and Data Envelopment Analysis (DEA) [32], have been widely applied to assessing the growth factors and driving factors of renewable energy and policy choices. Zhang assessed the international competi- tiveness of China's wind turbine manufacturing industry using the

Analytic Hierarchy Process (AHP) in comparison to enterprises in Denmark (Vestas), Spain (Nordex), USA (GE Wind), Germany (Ga- mesa), and India (Suzlon) [33]. Sovacool adopted interviews and data analysis to compare the renewable energy industry competitiveness of ten countries in the Asia-Pacific region through a combination of in- terviews and data analysis, recommending a set of valuable design principles, common elements, and best features [34].

It is argued that the above-mentioned references reveal several shortcomings in the quantitative assessment of global renewable energy competitiveness. First, most of the studies assessed the renewable en- ergy for particular countries, especially developed countries. International comparison of major economies, such as the G20, remains largely unexplored. Second, various new quantitative methods and tools that have emerged lack either rigorous scientific underpinning or critical insights into the classic Diamond Model. Based on a review of the state of the art in industrial competitiveness theories and practices, the remainder of this paper aims to address these issues by means of a revised Diamond Model for assessing the G20's renewable energy competitiveness.

3. Framework for assessing renewable energy based on a revised Diamond Model

3.1. Revision to the Diamond Model

The Diamond Model is chosen to yield our analytical framework from a new perspective. According to Potter's “Competitive Advantage: Creating and Sustaining Superior Performance,” the idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system made up of sub- systems, each with inputs, transformation processes, and outputs. And, in the Potter's Diamond Model, the industry competitive advantage of a nation lies in four broad attributes: Factor conditions; Demand condi- tions; Related and supporting industries; and Fi

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