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Stretching Your Global Mindset

by Pankaj Ghemawat 28. April 2011 12:55

How well do you really understand the world beyond your own country's borders? Do you value all human beings equally or are you more sympathetic toward people who are closer and more similar to you? What does it matter for business and for society?

Several readers of my previous post have commented that mindsets or perceptions about globalization can be at least as important as actual levels of globalization. I agree. Mindsets matter. They have big real world consequences, particularly as is the case now with Europe's debt crises and bailouts, when collective prosperity depends on the extension — as opposed to contraction — of cooperation, trust, and sympathy across borders and distances.

Consider the following data on trust levels based on surveys conducted in various Western European countries. As the graph below shows, more than twice as many Western Europeans trust their own fellow citizens "a lot" as compared to citizens of other Western European countries (48% vs. 20%). And only 13% place the same level of trust in citizens of countries outside of Western Europe.

Ghemawat Fig 11-3.png

More systematic research shows that bilateral trust decreases with geographic, linguistic, religious, genetic, and somatic distance (measured by an index of body type differences) as well as with income differences and a history of wars — findings that hit on all four dimensions of my CAGE framework (Cultural, Administrative, Geographic, and Economic), with particular focus on the cultural dimension. And levels of trust influence more than just whom you're inclined to lend to, to bail out in a crisis. Moving from lower to higher levels of bilateral trust has been shown to increase trade, direct investment, portfolio investment, and venture capital investment by 100% or more, even after controlling for other characteristics of a pair of countries.

It's easy to say you trust foreign people on a survey, but what about actually doing something that reflects how much you care about distant and different people? Data on foreign news coverage and foreign aid provide some indication of how much human sympathy declines with distance. As it turns out, trust is relatively insensitive to distance in comparison to sympathy.

Ghemawat Fig 15-2.png

First, some disturbing data about news coverage, which given the importance of ratings probably provide a reasonable reflection of what the general public cares about. A study of more than 5,000 natural disasters suggests that from the standpoint of U.S. media coverage, each dead European is "worth" three South Americans, 43 Asians, 45 Africans, or 91 Pacific Islanders. To summarize in rough terms, as shown on the graph above, news coverage indicates we care about people in neighboring countries about 10% as much as we care about our own fellow citizens, and this figure declines to 1% as you move to countries farther from home.

Then, consider actual willingness to help distant people in need. Compare aid to the domestic poor versus official development assistance (ODA) to the rest of the world's poor, using the approach outlined by Branko Milanovic. Based on weighted per-person averages for fourteen developed OECD economies, national governments spend 30,000 times as much helping each domestic poor person as each poor foreigner. Or put differently, when it comes to aid, the foreign poor are valued at 0.003 percent (1/30,000th) as much as the domestic poor. And if you're wondering where this would stand if the rich countries all gave 0.7% of their GDP in foreign aid, as they promised to do in 1992 at Rio de Janeiro, that would only mean the foreign poor would receive 1/15,000th as much as the domestic poor. Hardly a promise to value every human being equally.

A host of business and social problems could be solved more easily if people broaden their mindsets and shift their own personal sympathy decay curves a little closer to horizontal. In business, imagine how much better multinational corporations could function if there was more trust between headquarters and far flung country operations. In the social sphere, an interesting study by David Anthof and Richard Tol relates carbon prices to levels of sympathy, showing that it would be far easier to address climate change if we placed more weight on the harms inflicted on others.

What do your own trust and sympathy decay curves look like? What curves are embodied in the values of your organization and its workforce?

Please click the button below and answer the survey questions. In a future post, I'll report back the results.

Or try out the full Global Attitude Protocol (GAP) from which these questions were drawn. For more suggestions on how to change individual mindsets, see the last chapter of my new book World 3.0: Global Prosperity and How to Achieve It, and for ideas for corporations on how to foster this mindset shift within their organizations, refer to my most recent HBR article, The Cosmopolitan Corporation.

Tags:

Globalization | trust

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