Understanding "Appropriateness" in Multinational

Corporations

Danielle Cooper
University of Illinois at UrbanaChampaign

Lorna Doucet Michael G. Pratt

University of Illinois at UrbanaChampaign University of Illinois at UrbanaChampaign

Abstract
Assessments of the appropriateness and inappropriateness of behaviors play an important role
in interactions in multinational corporations (MNCs). We develop a model of appropriateness
that that illustrates how various arrangements in MNCs (e.g., geocentric staffing) may work
to influence the frequency of (in) appropriateness assessments as well as the magnitude of
reactions to such assessments via their influence on members ingroupoutgroup
categorizations

Published: 2005
URL: http://www.business.uiuc.edu/Working_Papers/papers/050122.pdf
Understanding Appropriateness in Multinational Corporations

Danielle Cooper

Lorna Doucet

Michael Pratt

College of Business

350 Wohlers Hall

1206 South Sixth Street

Champaign, IL 61820

1
Abstract

Assessments of the appropriateness and inappropriateness of behaviors play an important role in

interactions in multinational corporations (MNCs). We develop a model of appropriateness that
that illustrates how various arrangements in MNCs (e.g., geocentric staffing) may work to
influence the frequency of (in-) appropriateness assessments as well as the magnitude of
reactions to such assessments via their influence on members ingroup-outgroup categorizations.

Keywords: appropriateness; intercultural; multinational corporations

2
Introduction

One of the challenges faced by multinational organizations is enabling diverse employees

to work together effectively. Multinational corporations (MNCs) struggle to facilitate working

relationships between employees from different national and cultural backgrounds. For example,

research has shown that when employees of multinationals are assigned to work in foreign

countries, these assignments are more prone to failure than home country assignments and are

extremely costly (Halcrow, 1999; Poe, 2002). These failures have been attributed, in part, to

employees difficulty adjusting to working with people with different cultural orientations -- the

values and beliefs learned from a cultural group (Caliguri, 2000, Chao, 2000, Earley & Randel,

1997). Differences in cultural orientations may result in different perceptions of appropriate

behavior, negatively impacting relationships within MNCs. More specifically, researchers have

shown that culturally inappropriate behaviors often lead to conflict (Bailey, 2000; Sano & Di

Martino, 2003) and difficulties in achieving organizational goals (Lindsley & Braithwaite, 1996;

Shaw, 1998). On the other hand, cultural appropriateness has been found to be integral to

resolving international conflict (see Fisher, 1997 for review). More generally, empirical research

supports the argument than inappropriate behavior evokes negative reactions while appropriate

behavior elicits positive reactions (Harris, 1970; Henry, Peterson, & Wilson, 1997; Smucker, &

Creekmore, 1974; Stile & Kaplan, 1996; Yoshitake, 1992). These reactions, in turn, can

influence the quality of relationships in an organization.

Despite recognition that appropriateness may be key to understanding the types of

interactions and reactions that are prevalent in multinational organizations, there have been few

explicit attempts to conceptualize appropriateness and to delineate those factors that influence

both the frequency of appropriateness/ inappropriateness assessments as well as the important

3
outcomes associated with such assessments. Drawing on social identity theory (Tajfel & Turner,

1979) and self-categorization theory (Turner, 1987), we argue that the unique context (e.g.,

structural, staffing policies) of MNCs will influence how likely it is that member behaviors are

viewed as inappropriate (versus appropriate), as well as the intensity of the negative (versus

positive) outcomes that are expected to be associated with assessments of inappropriate (versus

appropriate) behaviors.

Towards a Model of Appropriateness

Appropriateness.

While prevalent in studies of cross-cultural interactions and multinational corporations,

the term appropriate is often treated implicitly and its importance in cross-cultural dynamics is

often illustrated rather than defined. An illustration of inappropriate behavior (as may be used in

a cross-cultural sensitivity workshop) is as follows:

Tom Bancroft, the top salesman in his Midwestern U.S. area, was asked to head up a
presentation of his office equipment firm to a Latin American company. He had set up
and appointment for the day he arrived, and even began explaining some of his objectives
to the marketing representative who was sent to meet his plane. However, it seemed that
the representative was always changing the subject; he persisted in asking a lot of
personal questions about Tom, his family, and his interests. [ ] During the next few
days, Tom noticed that though they said they wanted to discuss details of his
presentation, the seemed to spend an inordinate amount of time on inconsequential
activities. This began to annoy Tom (Cushner & Brislin, 1996: p. 155-156).

Tom likely assessed the behavior of the Latin Americans as inappropriate, based on his

culturally-based expectation that they should get down to business and get the job done. This

appropriateness assessment is likely to influence the subsequent working relationship of these

colleagues. The general impression one can take from illustrations such as these is that

appropriateness involves an assessment of a behavior (e.g., spending time on personal issues) as

4
interpreted through the lens of the observer (e.g. the American manager). Two aspects of this

impression are critical.

First, assessments of appropriateness often center on behavior, such as visible conformity

to social norms (Harris, 1970; Miller and Kanazawa, 2000; Peak, 2001). We focus on behaviors

as targets for such assessments for two main reasons. To begin, as we have noted, research on

appropriateness has centered on behaviors, such as taking inappropriate actions or making

inappropriate statements (e.g., Harris, 1970; Miller and Kanazawa, 2000; Peak, 2001; Fisher,

1997; Sano & Di Martino, 2003). Moreover, behaviors are good assessment targets because they

are visible and publicly accessible. They are the primary mechanism for communicating aspects

of an individuals inner world, such as thoughts, intentions, values, attitude and feelings.

Second, appropriateness centers on the perceptions of behavior.1 Individuals often

evaluate others using inferences based on assessments of observable behaviors (Carlston &

Skowronski, 1994). Thus, appropriateness is a quality that is assigned (or not) to a given

behavior of a target individual by an observer. In this paper, we define an appropriateness

assessment as an observers belief regarding the extent to which an observed behavior fits the

behavioral norms espoused by the observer. Conversely, we define an inappropriateness

assessment as an observers belief regarding the degree of deviation between an observed

behavior and the behavior norms held by the observer. As the fit between the observed behavior

and the behavioral norm becomes closer the appropriateness assessment increases. As the gap

between the observed behavior and the behavioral norm widens, the appropriateness assessment

1
It is important to note, however, that each member in the interaction may make different assessments of appropriateness. That is, members need
not achieve consensus about the appropriateness of each others behaviors. One party may view a behavior as inappropriate, while the other party
may see the same behavior as quite appropriate.

5
decreases (and inappropriateness assessment increases). In other words, as observed behaviors

increasingly deviate from norms, these behaviors are assessed to be increasingly inappropriate.

In the past, research has used cultural orientation of the observer as the source of these

behavioral norms (e.g., Fisher, 1997; Lindsley & Braithwaite, 1996). Following this trend, we

focus on behavioral norms associated with individuals cultural orientations, which are strongly

associated with the particular socialization experiences prevalent in a given nation of origin. A

defining characteristic of many multinational organizations is the presence of individuals from

different nations with different cultural orientations. We differentiate culture from cultural

orientation. In our paper, the term culture is used to characterize the worldview of a group of

people such as a nation (Triandis, 1994, 1998). This worldview may be comprised of the

groups norms, values and assumptions for how people interact with each other (Distefano &

Mavnevski, 2000; Kroeber & Kluckhohn, 1952; Triandis, 1982). By contrast, we use the term,

cultural orientation to characterize the worldview of an individual that is learned from their

cultural group.2 This reflects the distinction made by other researchers between the collective and

individual levels of analysis in cross-cultural research (Hofstede, 2001; Schwartz, 1992).

Although other scholars have examined a number of dimensions of cultural orientation,

including individualism-collectivism, power distance (Hofstede, 1983; Triandis, 1994), and

uncertainty avoidance, (Hofstede, 1983), for the sake of parsimony, we use the term more

generally to denote a culturally-influenced mindset rather than making specific arguments based

on particular dimensions.

2
We do not assume that all individuals living in a particular country have been socialized to adopt a nationally
shared set of cultural assumptions, mindsets and worldviews. In some countries, certain generations may have
indeed participated in, and been socialized by, a unified national culture. In other countries or in other generations
within that country, a national culture comprised of shared assumptions, mindsets and worldviews may have
never existed. What is central to our model is the focus on the behavior of individuals who have been socialized by
some cultural group and who have internalized a shared set of assumptions, mindsets and worldviews, as
represented by their cultural orientation. This cultural group may be their nation, a sub-culture within that nation, or
the organization itself.

6
 As cultural theorists have argued, cultural orientations influence not only how individuals

behave, but also how they interpret the actions of others (Geertz, 1973: Bhagat & McQuaid,

1982; Triandis, 1998; Hofstede, 2001). Much research is suggestive that individuals cultural

orientations are associated with their preferences for, and responses to, the behaviors of others.

For example, research suggests that individuals cultural orientations are associated with their

reactions to others influence attempts (Ng & Van Dyne, 2001) as well as their emphasis on

interpersonal relations in teams (Sanchez-Burks, Nisbett, & Ybarra, 2000). Because cultural

orientations include behavioral norms, they - by definition - play an important role in

assessments of appropriateness. The more observed behaviors differ from those behavioral

norms that are included in individuals cultural orientations, the more individuals assess such

behaviors as inappropriate. Conversely, the more observed behaviors are congruent with

behavioral norms that are included in individuals cultural orientations, the more individuals

assess such behaviors as appropriate.

MNC Characteristics and Appropriateness Assessments

MNCs vary in terms of how they are organized and how they manage human resources.

We argue that these organizational arrangements have predictable effects on both the likelihood

that behaviors are assessed to be inappropriate (versus appropriate), and the impact of both

appropriate and inappropriateness assessments. These organizational arrangements are shown at

the across the top of in Figure 1 and are discussed below. We begin by discussing those

arrangements (e.g., foreign investment, staffing practices, and integration) that should influence

the likelihood that behaviors are assessed to be inappropriate.

7
 _________________________________________________________

INSERT FIGURE 1 ABOUT HERE

_________________________________________________________

MNCs and Frequency of Inappropriateness Assessments

1. Foreign Investment. MNCs vary by the degree of cultural orientation heterogeneity of

their staff, as well as the probability that staff members with different cultural orientations will

interact. With regard to the former, MNCs vary in the extent to which they are operate in many

different nations and in the extent of their involvement in those countries (Cheng, 1991). Some

MNCs invest heavily in foreign operations while other MNCs focus their investments in

domestic operations. All other things being equal, as the amount of investment in foreign

(versus domestic) operations increases, the probability that individuals with different national

origins will interact should also increase. Cross-national interactions create the opportunities for

cultural orientations to collide resulting in assessments of inappropriateness (Adair, Okumura

& Brett, 2001). Given that behaviors and behavioral norms are significantly influenced by

cultural orientations (Triandis, 1994), employees are more likely to perceive a divergence

between colleagues behaviors and employees behavioral norms when those involved have

different cultural orientations acquired from their countries of origin.3

Proposition 1: Employee behaviors are more likely to be assessed as inappropriate in

MNCs as the amount of foreign investment increases, mediated by the likelihood of

cross-national interactions.

3
We note that the cultures of different countries are not equally different. For example, the culture of Australia
differs more from the culture of China than it does from the culture of the U.S. For simplicity, we do not take such
variations in differences in culture into consideration in this paper. We believe that role of such variations is worth
pursuing in future research.

8
 2. Staffing practices. Multinational organizations also vary in their approaches to staffing

parent country headquarters and host country subsidiaries. Some MNCs choose to have more

geocentric staffing approaches in which parent country headquarters and host country

subsidiaries are meant to be staffed without consideration of nationality (Dowling, Schuler &

Welch, 1994). Such staffing policies increase the likelihood of cross-national interactions

occurring throughout the organization. Other MNCs choose to have more polycentric staffing

approaches in which parent country headquarters are primarily staffed with parent country

nationals and host country subsidiaries are primarily staffed with host country nationals. In

MNCs with such staffing policies, cross-national interactions are relatively rare.4 Using a similar

logic to that used in explaining the effects of foreign investment, MNC staffing policies that

bring together individuals with different cultural orientations, and thus different behavioral

norms, should result in an increase in inappropriateness assessments:

Proposition 2: Employee behaviors are more likely to be assessed as inappropriate in

MNCs with staffing policies that are more geocentric (i.e. less polycentric) than MNCs

with policies that are less geocentric (i.e. more polycentric), mediated by the likelihood of

cross-national interactions.

3. Integration. In a similar vein, MNCs also vary in the extent to which they integrate

their operations across nations and subsidiaries (Doz & Prahalad, 1984). MNCs choose different

levels of integration based on their strategic needs for global efficiencies and knowledge-sharing

(Bartlett & Ghoshal, 2000).5 In highly integrated MNCs, firm activities are linked across

4
MNCs may use other staffing policies, such as ethnocentric policies. However, we choose to contrast geocentric
and polycentric policies. Polycentric policies have historically been most prevalent in MNCs, and research suggests
that MNCs are increasingly utilizing geocentric policies (De Cieri & Dowling, 1995; Thompson & Keating, 2004).
5
MNCs may also differ in the extent to which they are responsive to the local environment. However, for the sake
or parsimony, we do not address this in the model.

9
national subsidiaries and the firms competitive position in one country is significantly

influenced by its competitive position in another country (Porter, 1986). The extent to which

MNCs are integrated is likely to influence the extent to which their organizational members are

involved in cross-cultural interactions. In highly integrated MNCs, organizational members are

likely to have a greater need to rely on and coordinate their activities with other members located

in different countries. Hence, cross-national interactions are likely to be more prevalent in

highly integrated MNCs than in MNCs that are less integrated.

Proposition 3: Employee behaviors are more likely to be assessed as inappropriate in

MNCs that are more integrated than in MNCs that are less integrated, mediated by the

likelihood of cross-national interactions.

Increases in assessments of inappropriateness are important for MNCs because individual

reactions and associated organizational outcomes to inappropriateness tend to be negative (see

Figure 1). Juvonen (1991) argues that inappropriate behavior by targets invokes feelings of

anger in observers. Individuals experiencing anger, in turn, are less likely to help others

(Reisenzein, 1986). Juvoven (1991) provides empirical support for the proposition that

inappropriate behavior increases anger, which in turn increases withdrawal of help.

In addition to the emotions they evoke, reactions to inappropriate behavior may be

triggered by more social motives (Millham & Weinberger, 1977), thus prompting more group-

level reactions. For example, in order influence member behavior, deviants are often punished

(Etzoni, 1997; Goodwin and Cramer, 2002; Horowitz, 1997) or rejected (Briggs, 1970; Maples,

Dupey, and Torres-Rivera, 2001). These responses can be adopted by the larger collective-

culminating in the ostracism of the offender (Briggs, 1970; Economist, 1998; Williams and

Sommer, 1997). Punishment and rejection have been shown to correct deviant behavior

10
increasing conformity in subsequent interactions (Saltzstein, 1976). Whether such responses are

largely a product of emotional experience or of social motives, they are expected to influence the

quality of interpersonal interactions, and hence, the effectiveness of organizations where they

occur.

MNC Characteristics and the Consequences of Appropriateness

Beyond influencing the likelihood of cross-national interactions, the context of MNCs

should also influence the intensity of the outcomes associated with appropriateness assessments.

That is, while appropriateness is generally associated with positive outcomes and

inappropriateness with negative outcomes (Harris, 1970; Henry, Peterson, & Wilson, 1997;

Smucker, & Creekmore, 1974; Stiles & Kaplan, 1997; Yoshitake, 1992), we argue that certain

organizational arrangements are likely to result in either exacerbating or dampening the

consequences associated with assessments of appropriateness versus inappropriateness.

Specifically, appropriateness (versus inappropriateness) assessments may trigger a range of

responses, ranging from strong positive (versus negative) responses to weak positive (versus

negative) responses. Such responses are important because they have a significant effect on the

subsequent interactions between the members involved. We use social identity theory and self-

categorization theory to argue that different organizational arrangements are likely to cause

members to categorize some individuals as ingroup members and others as outgroup

members. These categorizations, in turn, will influence the strength of the outcomes of

appropriateness assessments.

We argue that reactions to appropriateness/inappropriateness assessments may vary in

strength depending on how one categorizes another individual. Social categorization is a process

whereby individuals classify others as belonging to a certain category of people, such as

11
categories based on age, social status, and occupation (Klimoski & Donahue, 2001). Categories

serve to reduce cognitive effort in person perception and to simplify the social world (Macrae,

Milne, & Bodenhausen, 1994). When individuals categorize themselves and others in a

particular situation, these cognitive structures provide individuals with a basis for making social

judgments (Klimoski & Donahue, 2001). Ingroup and outgroup differentiation, a primary form

of social categorization, identifies and groups together people who are like us, and distinguishes

them from individuals who we perceive to be different from us. Thus, individuals who share a

salient social category are often categorized as ingroup members, while those who do not tend to

be categorized as outgroup members (Chattopahyay, George, & Lawrence, 2004). National

origin in multinational organizations is likely to serve as a salient social category.

Individuals who are perceived of as outgroup members tend to be disparaged, while those

who are ingroup members tend to be seen in a positive light so as to enhance an individuals self-

esteem (Hogg, Terry & White, 1995). These differential evaluations are referred to as an

ingroup bias (Turner, 1999). Much empirical evidence supports the existence of ingroup bias

(see Mullen, Brown & Smith, 1992 for a review). Researchers have further argued that one way

in which ingroup bias may be manifested is through differential reactions to normative and

counter-normative behaviors by ingroup and outgroup members (see Marques, Abrams, Paez &

Hogg, 2001 for review). We posit that these arguments can be extrapolated to include

differential reactions to behaviors deemed either appropriate or inappropriate. When the behavior

of an ingroup member is appropriate, this may reflect well on the entire group, and reinforce the

groups collective sense of who they are that is, their identity (Pratt, 2003). By contrast,

when an individual is viewed as being part of the outgroup, his or her behavior is not seen as

reflective of the collective or their identity. In this regard, the influence of the behavior of an

12
outgroup member on the intra-group functioning of the collective is less than it is for ingroup

members. Thus, appropriate behavior by an ingroup member is more likely to lead to positive

evaluations and to be reinforced by the collective as compared with analogous behavior of an

outroup member. Empirical evidence supports these predictions (Marques, Abrams, Paez &

Hogg, 2001; Marques, Abrams & Serodio, 2001; Marques, Yzerbyt & Leyens, 1988).

Individuals are also likely to react differently to perceived inappropriateness by ingroup

members and by outgroup members. As described by the black sheep effect, inappropriate

behaviors by ingroup members pose an important threat to the positive identity of the ingroup

and subsequently, interfere with individual self-enhancement motives (Marques, 1990; Marques

& Paez, 1994; Marques, Yzerbyt & Leyens, 1988). Thus, the generally positive bias toward the

ingroup as a whole may result in negative reactions toward specific ingroup members who

threaten the ingroup (Marques, Abrams, Paez & Hogg, 2001). As noted above, inappropriate

behaviors by outgroup members do not pose such a threat as they are not seen as reflective of the

group or collectives identity. In fact, inappropriate behaviors by outgroup members may even

serve to bolster the positive identity of the ingroup as they may serve to further prove the

superiority of the ingroup and subsequently, serve the individual self-enhancement motive.

Hence, individuals are more likely to derogate ingroup members who behave in

inappropriate ways than outgroup members who behave in such ways (Marques, Abrams, Paez

& Hogg, 2001; Eidelman & Biernat, 2003). Individuals are also more likely to pressure deviant

ingroup members than deviant outgroup members to conform to behavioral norms. Eliminating

the deviant behavior of ingroup members will bolster the positive identity of the ingroup,

whereas eliminating the deviant behavior of outgroup members serves no such purpose. In fact,

eliminating the deviant behavior of outgroup members may threaten the positive distinctiveness

13
of the ingroup vis--vis the outgroup. If deviant ingroup members do not respond to conformity

pressures, other group members will eventually punish, condemn and ultimately reject such

deviants as a way to reinforce the groups normative system, and reclaim its positive identity

(Durkheim, 1912, 1982; Hewstone, 1995; Schachter, 1961). Research supports such predictions.

For example, Marques, Abrams & Serodio (2001) found that individuals were more likely to

hold negative evaluations of deviant ingroup members than of deviant outgroup members. They

also found that individuals were more willing to attempt to reform the behavior of deviant

ingroup members than of deviant outgroup members.

In sum, we have summarized arguments that individuals are likely to evaluate the

behaviors of ingroup members in a more extreme fashion than the behaviors of outgroup

members. They will more positively evaluate appropriate behaviors of ingroup members than of

outgroup members. They will also more harshly evaluate inappropriate behaviors of ingroup

members than of outgroup members. Such extreme evaluations will also be associated with

more extreme interpersonal behaviors that are meant to reinforce (extinguish) appropriate

(inappropriate) behaviors by ingroup members. If inappropriate behaviors cannot be

extinguished, deviant ingroup members are expected to be rejected by other ingroup members.

Such extreme behaviors - particularly rejection behaviors - are likely to affect the quality of

interpersonal interactions, and subsequently, organizational effectiveness. Hence, we argue that

the relations between appropriateness assessments and outcomes will be more extreme for

ingroup members than for outgroup members (see Figure 2 for the graphical representation).

Stated more formally:

Proposition 4: The relations between appropriateness assessments and outcomes will be

moderated by ingroup-outgroup categorization, such that these relations will be more

14
 extreme when targets are more likely to be categorized as ingroup members (i.e. less

likely to be categorized as outgroup members) than when targets are less likely to be

categorized as ingroup members (i.e. more likely to be categorized as outgroup

members). Outcomes will be most favorable for appropriateness assessments for those

categorized as ingroup members and least favorable for inappropriateness assessments for

those categorized as ingroup members.

_________________________________________________________

INSERT FIGURE 2 ABOUT HERE

_________________________________________________________

The likelihood that targets are categorized as ingroup (versus outgroup) members

depends on two key factors: the likelihood of using a particular criterion for categorization and

the degree of interaction between potential members of each category. Visible characteristics,

such as nation of origin, tend to be highly accessible as a basis categorizing members (Earley &

Mosakowski, 2000; Hogg, 2003; Messick & Massie, 1989; Stangor, Lynch, Duan & Glass,

1992). Research suggests that such demographic dissimilarities between individuals in

organizations can lead to organizational members from foreign countries being seen as outgroup

members, despite their shared organizational membership (Chattopahyay, George, & Lawrence,

2004; Lau & Murnighan, 1998).

Hence, when nation is used as a basis for categorization, organizational members will

categorize fellow countrymen as ingroup members and colleagues from foreign countries as

outgroup members. If aspects of the context make it likely that nation will be a salient basis for

categorizing coworkers, yet an employee never encounters any foreign coworkers while

performing his job, he will have little opportunity to use the outgroup category in interpreting

15
social situations (i.e. nation never becomes salient). Hence, the extent to which an observer is

likely to categorize a target as an ingroup (versus outgroup) member depends on whether the

target satisfies the ingroup (versus outgroup) criteria, and whether the category is likely to be

salient to the observer. When considering nation as a basis for categorization, the extent to

which observers are likely to categorize targets as ingroup (versus outgroup) members depends

on whether these targets are from the same (versus different) nation, and whether nation is likely

to be salient to the observers. The extent to which nation is salient to observers depends on the

amount of contact between individuals from different nations. Hence, we propose the following

(see Figure 3 for graphical representation):

Proposition 5: The relation between the likelihood of cross-national interactions and the

likelihood that individuals are categorized as ingroup members is moderated by the

likelihood that nation is the basis for categorization. Hence, individuals are least likely to

be categorized as ingroup members (most likely to be categorized as outgroup members)

when both the likelihood of cross-national interactions and the likelihood that nation is

the basis for categorization are highest. Individuals are most likely to be categorized as

ingroup members (least likely to be categorized as outgroup members) when either the

likelihood of cross-national interactions or the likelihood that nation is the basis for

categorization is lowest.

_________________________________________________________

INSERT FIGURE 3 ABOUT HERE

_________________________________________________________

16
 MNC Characteristics and Ingroup-Outgroup Categorization.

Various MNC characteristics should affect the extent to which employees are likely to

use nation as a basis for categorization. These characteristics include the types of staffing

policies used and the degree of integration of the organizations operations.

1. Staffing policies.

Staffing policies can influence employees tendencies to use nation as a basis for

categorization by affecting the physical proximity of employees from different nations and by

affecting the sense of shared fate held by employees from different nations. Physical proximity

is a factor which has long been associated with perceiving others as members of a shared

category hence, as members of ones ingroup (Ashforth & Mael, 1996; Pratt, Fuller &

Northcraft, 1998; Turner, 1984). Proximity with other individuals can increase feelings of

ingroupness because individuals tend to direct attention towards those who are in their

immediate environment, which can facilitate interpersonal bonding (Kiesler & Cummings, 2002;

Rockmann, Pratt & Northcraft, 2005). Furthermore, individuals tend to perceptually group

people who are physically close to one another as compared to people who are physically

separate because they appear more unified (Hamilton & Sherman, 1996).

Proximity may help to create a sense of belonging to a shared ingroup for individuals

who are dissimilar in visible characteristics. For example, Rockmann, Pratt, and Northcraft

(2005) found empirical evidence that team members who were from dissimilar subgroups were

more likely to see one another in terms of their shared group membership when these dissimilar

others were co-located than when they were physically separate (i.e., when members of different

subgroups were also in different locations). These results have direct implications for MNCs that

are comprised of individuals from different nations across different locations. For example,

17
MNCs that use more geocentric staffing policies tend to co-locate employees from different

nations. By increasing the physical proximity of these employees, these MNCs increase their

perceptions of being part of a shared ingroup, as what likely binds these people together is their

connection to the MNC; as a result, the likelihood that differences in nation of origin will be used

as a basis for categorization decreases. By contrast, in MNCs with more polycentric policies,

individuals from different nations are more likely to be physically separate from other national

subgroups. Therefore, national similarities are likely to be salient for these individuals;

consequently, nation is likely to be the dimension along which ingroup-outgroup categorizations

are made.

Proposition 6: MNCs that use staffing practices that are more geocentric (i.e. less

polycentric) are less likely to have employees use nation as a basis for categorization than

MNC that use staffing practices that are less geocentric (i.e. more polycentric)

2. Integration. Integration, as described earlier, is the extent to which firm activities are

linked across national subsidiaries (Porter, 1986). We argue that the degree of integration of an

MNC will influence ingroup-outgroup categorization by creating a sense of common or shared

fate held among members from different nations. Perceiving a sense of shared fate with others

increases the perception that individuals are a bounded group because they face similar outcomes

(Lickel, et al., 2000). When individuals perceive that they have some degree of common fate,

they are more likely to categorize themselves as a group and hence, see one another as ingroup

members despite differences in nation of origin (Campbell, 1958; Sherif, 1977). For example,

Gaertner, Mann, Murrell & Dovidio (1989) findings suggest that shared outcomes- as compared

to independent outcomes - enhance a sense of shared fate, thereby contributing to individuals

perceiving themselves as one group.

18
 When an MNC is highly integrated, individuals are likely to perceive themselves to be

bound together as a group because they face similar outcomes (Lickel, et al., 2000). We argue

that having a sense of shared fate decreases the likelihood that individuals will focus on their

differences such as differences in nation of origin- and increases the likelihood that individuals

will feel a sense of ingroupness based on their interdependence. Therefore, we propose:

Proposition 7: MNCs that are more integrated are less likely to have employees that use

nation as a basis of categorization than MNCs that are less integrated.

To summarize, certain organizational arrangements by MNCs may make nationality more

or less likely to be the focus of ingroup-outgroup categorization. This, in turn, should influence

whether or not an increase in cross-national interactions will lead to an individual co-worker

being categorized as being part of a members ingroup or outroup. (See Figure 1). These

ingroup-outrgoup assessments are important because they influence the intensity of outcomes of

appropriateness assessments. (See Figure 2). As we discuss below, ingroup-outgroup

assessments also influence the outcome of appropriateness assessments in another major way.

Another Important Ingroup-Outgroup Effect: Miscategorizations.

In the preceding sections, we discussed how ingroup-outgroup distinctions may

exacerbate or diminish outcomes of appropriate assessments (Proposition 5) and discussed how

organizational arrangements may impact ingroup-outgroup assessments (Propositions 6-7).

However, another way in which ingroup-outgroup categorizations may influence reactions to

appropriateness assessments is through correct and incorrect categorizations. Categorizations

may not be perfect and may be revised over time (Tajfel & Turner, 1979). Thus, an individual

could incorrectly categorize an ingroup member as an outgroup member according to his own

criteria for ingroupness and outgroupness. Furthermore, it is possible that an outgroup

19
member could be incorrectly categorized as an ingroup member. Moreover, it is also possible

that these errors may be noticed and corrected. For example, nurses who wear street clothes

rather than a medical uniform may be initially miscategorized by other medical personnel as

being part of a medical outgroup (e.g. patients or patient families) (see Pratt & Rafaeli, 1997).

When such mistakes are recognized and corrected, both parties may be embarrassed. In addition,

these corrected mistakes may influence how miscategorized coworkers are subsequently treated

and affect their ability to fulfill their job requirements. These and other possibilities prompt us to

examine how miscategorization influences reactions to appropriateness assessments.

We believe that the multinational environment of MNCs can lead to miscategorization.

For example, an individual may believe that a colleague was born in China, based on his physical

features. However, that individual may later come to realize that the target was born in the U.S.

If the individual chooses to categorize ingroup and outgroup members according to whether or

not they were born in the U.S., this individual will change his categorization of his colleague

from outgroup to ingroup member once his mistake is revealed. However, these changes in

categorization are not without their implications.

In the short run, miscategorizing an ingroup member as an outgroup member is likely to

reduce negative reactions to inappropriateness. This occurs because inappropriateness is more

weakly associated with negative reactions for outgroup members than ingroup members.

However, if an individual obtains knowledge of the targets true status as an ingroup member,

and the targets again behaves in a way that is perceived to be inappropriate, the intensity of their

negative reactions towards the miscategorized individual may increase. As described earlier,

behavioral norm violations by an ingroup member are likely to be dealt with more dramatically

than the same violation by an outgroup member. These negative reactions may be intensified,

20
however, given individuals tendency to attribute their unsuccessful behaviors to external causes

(self-serving bias). An individual who mistakenly categorizes an ingroup member is likely to

attribute his mistake to external causes such as the miscategorized member (e.g. if they were

really American, they should have dressed more like an American). Moreover, given the

tendency to attribute others behavior to internal causes (fundamental attribution error),

individuals may believe that they were purposefully deceived by the target. The net result is that

miscategorization of ingroup members may result in feelings of betrayal. Thus, we propose:

Proposition 8: The relations between appropriateness assessments and outcomes will be

moderated by beliefs regarding ingroup-outgroup miscategorizations, such that observers

will have more intense negative reactions to inappropriate behaviors by ingroup members

who they believe were miscategorized (as an outgroup member) than those who they

believe were correctly categorized.

Conversely, if an inappropriately behaving outgroup member is miscategorized as an

ingroup member, then such miscategorization may actually have a beneficial effect. That is, if

these perceptions are eventually corrected, the long term implications might be less negative than

if the person was initially categorized as an outgroup member. This may occur because if the

perceiver comes to realize his mistake, he may feel guilty for the misunderstanding and for his

overly harsh treatment of what he thought was an ingroup member behaving inappropriately.

Consequently, he may attempt to overcompensate for any poor treatment that may have resulted

from incorrect expectations (Caprara, Barbaranelli, Pastorelli, Cermak, & Rosza, 2001). Such

overcompensation may result in the perceiver softening his negative behaviors toward the target

to a less intense level of negative behaviors than is typically directed towards inappropriate

outgroup members. This additional softening of his negative behaviors may serve as a sign of

21
dtente or reconciliation towards the unfairly punished target. Such positive behaviors would not

be expected if the offender was initially identified as an outgroup member:

Proposition 9: The relations between appropriateness assessments and outcomes will be

moderated by beliefs regarding ingroup-outgroup miscategorizations, such that observers

will have less intense negative reactions to inappropriate behaviors by outgroup members

who they believe were miscategorized (as an ingroup member) than those who they

believe were correctly categorized.

Discussion

In this paper, we have offered a model of assessments of appropriateness in multinational

organizations. We have offered a precise conceptualization of the concept of appropriateness

(and inappropriateness) assessments. We have also explored how organizational arrangements in

multinational organizations influence the likelihood that behaviors will be assessed as

appropriate (versus inappropriate) as well as how characteristics of multinationals influence the

outcomes associated with those assessments. More specifically, drawing on social identity

theory and self-categorization theory, we have explored how variations in intensity of foreign

investment, staffing policies and degree of integration of MNCs affect how behaviors in these

organizations are likely to be assessed. We have also explored how these variations in

organizational arrangements influence the intensity of observers negative (versus positive)

reactions to behaviors assessed as inappropriate (versus appropriate)

Theoretical Implications

We enrich existing research on appropriateness by (1) adding more conceptual rigor to the

term by providing a clear definition of what appropriateness is and by (2) enriching our

22
understanding of appropriateness by considering the role of context in this case the

multinational context on the frequency of appropriateness assessments and the magnitude of

assessment outcomes.

First, previous research has often used the term appropriateness without providing a clear

definition. By reviewing the literature that invokes this concept, we were able to construct a

formal definition of the term that can be used to clarify future research. While there has been

some informal consensus about its meaning, we believe that research in this area will be

hampered if the meaning of appropriateness is not made explicit. Even if there is disagreement

about the definition, explicitness invites debate about the boundaries surrounding the concept

and illuminates certain avenues for research (e.g., an integration of behavioral attribution and

appropriateness research).

Second, although one of the core competencies of organizational research is to understand

how specific organizational contexts influence member behavior (House, Rousseau & Thomas-

Hunt, 1995), previous research on appropriateness has been relatively a-contextual. Thus, while

it is important to understand how such factors as cultural orientation play a role in

appropriateness assessments, we also argue that top managers should have a greater

understanding of how their policies and practices can serve to exacerbate or mitigate the impact

of appropriateness and inappropriateness assessments. Specifically, we argue for the role of

multinational organizational arrangements (e.g., staffing) in determining the likelihood that

behaviors are assessed as appropriate (versus inappropriate) as well the responses to such

assessments. We further argue that interaction frequency and ingroup-outgroup dynamics, in

particular, play a critical role in understanding how organizational arrangements affect these

appropriateness dynamics. Future research should continue to explore the relationship between

23
organizational arrangements and appropriateness.

In a similar vein, we enrich existing research on multinational organizations by examining

how organizational features affect the complex day-to-day experiences and behaviors of MNC

employees. Much research regarding the effects of the characteristics of MNCs on performance

overlooks the complex dynamics occurring at the interpersonal level of the organization (Adler

& Barthlomew, 1992; Cheng & Cooper, 2003). Research that examines how macro features of

MNCs influence the quality of interpersonal interactions can provide a broader understanding of

factors that influence MNC effectiveness. Additionally, some research tends to assume that

MNCs are similar in the issues they face at the interpersonal level, such as the extent of

intercultural interactions. We suggest that MNCs may vary in both the prevalence of such

interactions and outcomes of these interactions.

We also enrich our understanding of cross-cultural interactions in organizational behavior by

looking within rather than across contexts. While the majority of such research has focused on

comparing organizational phenomena across nations or culture, much less attention has been

paid to the role of cultural orientation within situations or contexts such as an MNC -- where

different cultural orientations collide (Adler & Bartholomew, 1992; Kirkman, Lowe & Gibson,

in press; for notable exceptions, see: Adair, Okumura & Brett, 2001; Brett & Okumura, 1998).

Researchers have argued that comparing organizational behavior across nations or cultures does

not provide a complete understanding of what happens in cross-cultural interactions (Doucet &

Jehn, 1997). Due to the growing frequency of cross-cultural interactions, particularly in MNCs,

it is increasingly to understand such interactions. Our paper contributes to this stream.

We also contribute to research on cross-cultural interactions by focusing attention on the

role of social categorization in interpreting behaviors in such interactions. Past research has

24
examined the interpretation of behaviors in cross-cultural interactions by exploring the

behavioral norms and perceptual lenses associated with different cultural-orientations (Gao &

Ting-Toomey, 1998; Shuster & Copeland, 1996). Although this research provides an important

foundation for future research, little research examines other factors that are likely to influence

interpretations of, or reactions to, behaviors in cross-cultural interactions (Leung, Bhagat,

Buchan, Erez & Gibson, 2005). We contribute to the understanding of cross-cultural

interactions by overlaying a new interpretive mechanism on such interactions based on social

identity theory and variations in MNC context. We do so by building on previous theoretical

frameworks regarding the interpretation of behaviors as influenced by behavioral norms and

perceptual lenses embedded in cultural orientations. Hence, our research extends previous

foundational research.

Finally, we extend research on social identity theory in organizational contexts. While

social identity has been linked to many organizational outcomes, including member attachment

and turnover, much less work has focused on how these dynamics influence how members make

sense of co-workers behavior. Specifically, we argue that social identity dynamics, such as

ingroup-outgroup categorizations, can play a major role in appropriateness dynamics. In this

way, we expand our understanding of social identity outcomes in organizations. We also open

the door for using social identity to explore other cognitive-perceptual concepts (e.g., perceptions

of fairness).

We also contribute in a more directed way on the use of social identity theory in

demography research. Much research on ingroup-outgroup dynamics in organizations has

focused on demographic characteristics, such as nation, as a basis for categorizing other

organizational members (e.g. Chattopadhyay, George & Lawrence, 2004; Tsui, Egan, &

25
O'Reilly, 1992). We extend this research in three ways. First, we contribute by examining how

the likelihood of using a demographic category as a basis for categorization depends on

organizational features. Second, our inclusion of appropriateness in our model may add new

insight into why such categorizations are important. While demography has tended to focus on

the relationship between categorization into demographic groups and intergroup conflict, they

have viewed the relationship as being rather direct. Our paper suggests that conflict may also

stem from assessments of appropriateness. Third, most research on ingroup-outgroup

categorization in organizations explores situations in which categorizing colleagues as outgroup

members as compared to categorizing them as ingroup members - is associated with negative

outcomes (e.g. Chattophadyay, 1999; Thatcher & Jehn, 1998; Tsui, Egan, & O'Reilly, 1992).

However, in this paper, we add to this research by suggesting conditions where negative

outcomes may be greater for ingroup members as compared to outgroup members when

behaviors are assessed as inappropriate.

Practical Implications

More and more organizations, including multinational organizations and international joint

ventures, are made up of members with different cultural orientations. Consequently, it is

becoming increasingly important for managers to understand, predict and control potential

effects of this diversity. Our model offers managers a variety of approaches for managing

cultural diversity in multinational organizations.

In general, the implications of our model can be split into two main categories: 1) changes

to the organizational context, and 2) education of employees regarding the causes and

consequences of assessments of appropriateness. Since cultural orientation of employees is quite

stable, attempting to manage diversity by changing cultural orientations is unlikely to be

26
effective. However, cultural diversity can be managed via organizational practices. As noted in

Figure 1, practices such as staffing, integration, and investment can all influence appropriateness

dynamics.

Our model further offers a framework for monitoring and understanding the frequency and

outcomes of appropriate assessments by pointing to the importance of attending to both the

likelihood that behaviors are assesses as appropriate (versus inappropriate) as well as attending

to ingroup-outgroup categorizations occurring amongst organizational members. In particular,

managers should be aware of the potential trade-offs that their practices may have on these two

outcomes. For example, lowering the degree of integration should decrease the likelihood of

cross-national interactions, and hence decrease the likelihood that behaviors are assessed as

inappropriate, thereby increasing positive outcomes. However, over the long term, such a policy

can lead to individuals viewing themselves primarily in terms of their subgroup differences

(e.g.. nation of origin) as the lack of integration fails to create a sense of common fate among

members. Similarly, managers need to be aware how changes in their practices (e.g., from

polycentric to geocentric) may change the appropriateness dynamics in their organization.

Managers may also choose to educate employees regarding the causes and consequences of

appropriateness assessments. Education remains a critical component of any cultural diversity

management program because as we have discussed above practices that decrease the

likelihood that behaviors will be considered inappropriate may also increase the chance that

ingroups are defined by nation rather than by the MNC. This information may be used to avoid

the potential organizational dysfunction associated with frequent cross-national interactions and

different bases for categorizing co-workers. We also suggest that cultural diversity training

should perhaps focus more explicitly on the causes and consequences of appropriateness.

27
Towards Future Research

Our framework suggests how differences in multinational context may translate into

perceptions of, and responses to, appropriateness. In addition to the suggestions we have

already made, future efforts could be directed in two main directions: 1) expanding the model of

appropriateness by specifying additional factors or additional relations between factors and 2)

exploring more contexts and types of categorizations.

First, it is likely that our model is underspecified. In particular, behavioral norms are likely

to be affected by other factors than cultural orientation and categorization. For example,

familiarity influences how we make sense of others behavior (Park, 1986). If the relationship is

fairly familiar, the behavioral norms of the observer are likely to be somewhat idiosyncratic and

specific to the target. If the relationship is one of strangers, the behavioral norms are more likely

to be based on cultural orientation and categorization. Factors such as relationship type and

others should be explored in future research.

Behavioral norms may also come from organizational or occupational cultures (see Trice &

Beyer, 1993 for review). Future research, therefore, should concentrate on those factors that

influence which culture (nation, organization, or occupation) is likely to be the primary source

for behavioral norms. We have argued that certain factors in MNCs (e.g., low levels of

integration) may decrease the likelihood that ones nation is the basis for ingroup-outgroup

categorizations. However, drawing upon the research of Rockmann and colleagues (2005),

staffing policies may contribute to making the organization itself the basis for ingroup-outgroup

comparisons. In these cases, perhaps organizational cultural norms become more potent than

norms based on cultural orientation as influenced by ones nation of origin. But even this

relationship may not be straightforward. Organizations may have multiple cultures that vary by

28
unit or subunit (Martin, 1992); thus an organizational subculture, rather than a superordinate

organizational culture, may dictate behavioral norms. Further, if the MNC is organized around a

profession (e.g., a medical profession), then these organizations may be infused with

occupational cultures, which in turn, may also be fractured or fragmented (Pratt & Rafaeli,

1997). Thus, examining additional sources of behavioral norms, especially in MNCs, remains a

challenging, but potentially fruitful endeavor.

Future research may also explore more characteristics of multinational organizations and

more types of categorization. For example, we restricted our study of multinational

characteristics to investment patterns, degree of integration and staffing policies. It would be

interesting to examine other aspects of MNCs such as emphasis on national responsiveness

(Bartlett & Ghoshal, 2001), cross-cultural training policies (Bhawuk & Brislin, 2000), and

cultural distance among host countries (Kogut & Singh, 1988). It is likely that each of these

factors, as well as others, is likely to play a role in determining the causes and consequences of

appropriateness assessments.

Finally, future research could also move beyond ingroup-outgroup as a basis for

categorization. These assessments tend to be based on broad social categories that operate at the

group (e.g., unit, organization, society) level. However, categorization may also take place at the

dyadic level (Brickson, 2000). For example, individuals may categorize others based on the type

of relationship they have with them such as boss, peer or client. It would be promising to

explore the effect of these and other types of categorization on outcomes of appropriateness.

Such categorizations tend to be more personal and less abstract. As a result, they may influence

appropriateness assessments in a different manner.

29
 In sum, we offered an explicit definition of appropriateness and have presented a model of

the factors that lead to appropriateness assessments, and those that influence the outcomes of

these assessments. More specifically, we offered propositions regarding the roles of the

characteristics of multinational organizations in determining the likelihood that behaviors will be

assessed as appropriate (versus inappropriate). We have also offered propositions regarding how

the characteristics of MNCs are likely to affect the intensity of reactions to such assessments. We

concluded by arguing that our model extends literatures in several key areas and offer a variety

of implications for managers facing the challenge of managing nationally diverse employees in a

multinational context. We believe that our research can be used as a springboard for future

research in the under-examined area of appropriateness in organizations.

30
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FIGURE 1: Theoretical Model of Appropriateness in Multinational Corporations

Foreign Geocentric Staffing Practices Integration

Investment (vs. Polycentric)

P2 P6
P1 P7
P3

Likelihood of Cross- Likelihood that Nation is

National Interactions Basis for Categorization
(versus other Bases)
P5

Likelihood that Individuals are

Categorized as Ingroup
(versus Outgroup)

P4

Likelihood that Behaviors are

Assessed as Appropriate Outcomes
(vs Inappropriate)
P8, 9

Beliefs Regarding Ingroup-Outgroup Miscategorization

39
FIGURE 2: Joint Effects of Appropriateness Assessments and Ingroup-Outgroup Categorization on Outcomes

Ingroup
Positive

Outgroup

Outcomes

Negative

Inappropriate Appropriate

Assessments of Appropriateness

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FIGURE 3: Joint Effects of Cross-National Interaction and Nation as Basis for Categorization on Ingroup-
Outgroup Categorization

Ingroup

Use of Nation
Categorize: L
Categorization
Use of Nation
Categorize: H

Outgroup

Low High

Likelihood of Cross-National Interactions

41