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CHAPTER RESOURCES Reading Content Introduction 11.1 Technology as Physical Infrastructure 11.2 Technology of Information Infrastructure 11.3 Technology of Human Infrastructure 11.4 Technology Trends in International Business Summary and Case ORION: Build your

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PRACTICE Chapter 11 Reading Quiz

APPENDIX

11.3 Technology of Human Infrastructure

LEARNING OBJECTIVE

Describe the effect of human capital on opportunities in a global business.

Global companies not only face physical and information infrastructure challenges but also are often constrained by the level of human capital that is available in a market. Several factors are indicators of the availability of human capital. As Figure 11.13 suggests, these include education, corporate training, and alignment of educational, company, and government initiative to build human capital. We now discuss each of these in turn.

FIGURE 11.13 A Framework for assessing the level of technological infrastructure in countries Human capital infrastructure includes education, corporate training, and cooperation between companies, educational institutions, and governments.

Education Human capital is the abilities, skills, experience, and knowledge possessed by individuals. The quality of human capital can have important implications for the growth and development of opportunities for international business. Economic output, for instance, is a function of labor and technology. If labor (human capital) is skilled, it will produce higher output per person per hour, leading to growth. Education is thus positively associated with positive economic outcomes. According to the National Center for Education Statistics, the United States spends about $12,000 per child per year for elementary and secondary education and more than $26,000 per student per year for postsecondary education—the highest amount in the OECD (see Figure 11.14). Note the positive slope of the line in Figure 11.14; this suggests that higher spending on education is correlated with higher GDP per person in a country. In other words, the more a country invests in education, the more wealthy it is likely to be.

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DOWNLOADABLE eTEXTBOOK PRINTER VERSION BACK NEXT

CHAPTER RESOURCES Reading Content Introduction 11.1 Technology as Physical Infrastructure 11.2 Technology of Information Infrastructure 11.3 Technology of Human Infrastructure 11.4 Technology Trends in International Business Summary and Case ORION: Build your

Proficiency Videos Animations Multimedia Study Tools Business Hot Topics

COURSE RESOURCES

Career Center Business Hot Topics Videos Animations

PRACTICE Chapter 11 Reading Quiz

APPENDIX

11.3 Technology of Human Infrastructure

LEARNING OBJECTIVE

Describe the effect of human capital on opportunities in a global business.

Global companies not only face physical and information infrastructure challenges but also are often constrained by the level of human capital that is available in a market. Several factors are indicators of the availability of human capital. As Figure 11.13 suggests, these include education, corporate training, and alignment of educational, company, and government initiative to build human capital. We now discuss each of these in turn.

FIGURE 11.13 A Framework for assessing the level of technological infrastructure in countries Human capital infrastructure includes education, corporate training, and cooperation between companies, educational institutions, and governments.

Education Human capital is the abilities, skills, experience, and knowledge possessed by individuals. The quality of human capital can have important implications for the growth and development of opportunities for international business. Economic output, for instance, is a function of labor and technology. If labor (human capital) is skilled, it will produce higher output per person per hour, leading to growth. Education is thus positively associated with positive economic outcomes. According to the National Center for Education Statistics, the United States spends about $12,000 per child per year for elementary and secondary education and more than $26,000 per student per year for postsecondary education—the highest amount in the OECD (see Figure 11.14). Note the positive slope of the line in Figure 11.14; this suggests that higher spending on education is correlated with higher GDP per person in a country. In other words, the more a country invests in education, the more wealthy it is likely to be.

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FIGURE 11.14 Postsecondary Spending In 2012, among OECD countries, the United States spent the most per student on postsecondary education. Source: “Education Expenditures by Country,” National Center for Education Statistics, Institute of Education Sciences, May 2017, http://nces.ed.gov/programs/coe/indicator_cmd.asp.

ManpowerGroup conducts surveys of global business leaders each year to ask them questions about hiring global talent. According to the 2016 survey, 40 percent of the 42,000 participating employers indicated they were facing a skills shortage, or having difficulty finding people with the right skills to fill vacant positions. The survey reaches companies in forty-three countries, so this is not a localized effect. Basic skills like reading, writing, and math are not the problem; rather, specific skills like mobile app design, nursing, and sales are in short supply. This skill shortage is particularly acute in Japan, where 83 percent of employers report having trouble. Some economists argue that a skills shortage should not exist because the unemployed would just move to fill the jobs, but others are quick to point out that those currently unemployed simply do not have the skill sets needed for the available jobs, and in many countries laws prohibit those who do have the skills from immigrating to the country. For instance, given the United Kingdom's 2016 decision to leave the EU (“Brexit”), many are fearful that the skills shortage in the United Kingdom will increase.

Students at a university in Seoul, South Korea, come from across the world—Brazil, Kenya, Pakistan, India, Nigeria, Turkey, Romania, Vietnam, and other countries—because their own countries faced severe skills shortages. Samsung recognized the skills shortages in these countries when it tried to find people who could run its global electronics operations. To combat the shortage, the company recruited the brightest undergraduate students from their home countries and gave them scholarships to study for an MBA in Korea. Upon graduation, the students would work for Samsung in Korea for a couple of years to further refine their skills. After that time, they would return to their home countries with all the skills to lead Samsung's businesses in these markets. This solution was effective for a time, but it was expensive for Samsung. Worse still, the newly trained employees were often hired away by other global companies in the local markets—after all, they were often some of the most skilled employees in their country.

While most countries provide primary education for the majority of their populations, the quality of this education varies greatly. India operates the largest education system in the world, and that alone brings many challenges. Often, schools lack basic resources such as desks, books, and even teachers. In response, despite the availability of public education, roughly 40 percent of families choose to send their children to private schools—even though private education represents a significant cost to the family. This trend is common throughout Asia. In Japan, Singapore, and Korea, families commonly invest heavily in private education, sending their children to after-school classes for math, English, and the sciences. After- school classes are so aggressive and competitive in Korea that the government instituted laws requiring schools to close at 10 p.m. and not start again before 6 a.m.

Corporate Training and Development In addition to the level of education within a country, corporate training has important effects on human capital. Global companies spend over $130 billion a year on corporate training—nearly double the estimated $70

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FIGURE 11.14 Postsecondary Spending In 2012, among OECD countries, the United States spent the most per student on postsecondary education. Source: “Education Expenditures by Country,” National Center for Education Statistics, Institute of Education Sciences, May 2017, http://nces.ed.gov/programs/coe/indicator_cmd.asp.

ManpowerGroup conducts surveys of global business leaders each year to ask them questions about hiring global talent. According to the 2016 survey, 40 percent of the 42,000 participating employers indicated they were facing a skills shortage, or having difficulty finding people with the right skills to fill vacant positions. The survey reaches companies in forty-three countries, so this is not a localized effect. Basic skills like reading, writing, and math are not the problem; rather, specific skills like mobile app design, nursing, and sales are in short supply. This skill shortage is particularly acute in Japan, where 83 percent of employers report having trouble. Some economists argue that a skills shortage should not exist because the unemployed would just move to fill the jobs, but others are quick to point out that those currently unemployed simply do not have the skill sets needed for the available jobs, and in many countries laws prohibit those who do have the skills from immigrating to the country. For instance, given the United Kingdom's 2016 decision to leave the EU (“Brexit”), many are fearful that the skills shortage in the United Kingdom will increase.

Students at a university in Seoul, South Korea, come from across the world—Brazil, Kenya, Pakistan, India, Nigeria, Turkey, Romania, Vietnam, and other countries—because their own countries faced severe skills shortages. Samsung recognized the skills shortages in these countries when it tried to find people who could run its global electronics operations. To combat the shortage, the company recruited the brightest undergraduate students from their home countries and gave them scholarships to study for an MBA in Korea. Upon graduation, the students would work for Samsung in Korea for a couple of years to further refine their skills. After that time, they would return to their home countries with all the skills to lead Samsung's businesses in these markets. This solution was effective for a time, but it was expensive for Samsung. Worse still, the newly trained employees were often hired away by other global companies in the local markets—after all, they were often some of the most skilled employees in their country.

While most countries provide primary education for the majority of their populations, the quality of this education varies greatly. India operates the largest education system in the world, and that alone brings many challenges. Often, schools lack basic resources such as desks, books, and even teachers. In response, despite the availability of public education, roughly 40 percent of families choose to send their children to private schools—even though private education represents a significant cost to the family. This trend is common throughout Asia. In Japan, Singapore, and Korea, families commonly invest heavily in private education, sending their children to after-school classes for math, English, and the sciences. After- school classes are so aggressive and competitive in Korea that the government instituted laws requiring schools to close at 10 p.m. and not start again before 6 a.m.

Corporate Training and Development In addition to the level of education within a country, corporate training has important effects on human capital. Global companies spend over $130 billion a year on corporate training—nearly double the estimated $70

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Global companies spend over $130 billion a year on corporate training—nearly double the estimated $70 billion spent on public education in the U.S. alone. This training is designed to develop a range of skills such as leadership, negotiation, and sales. Many global companies have formal leadership development programs that recruit employees into two- to four-year rotational programs with opportunities to learn different facets of the company. MetLife, GE, IBM, and many others offer such programs across a host of functional areas, including global human resources, global supply chain, global leadership, and global marketing.

In addition to these longer formal programs, most global companies offer skill-based training, much of which takes advantage of new technologies by moving online. New companies such as edX, Coursera, and Udemy offer classes for people around the globe. The use of virtual technologies has shifted corporate training closer to employees and has made it more hands-on.

In addition to providing internal corporate training, some companies partner with employers and employees to identify the skills lacking in the labor market and then develop those skills, working directly with individuals to build them. For instance, LabourNet is a service in India with a mission to provide training and skill development to workers who are not in formal jobs, with a goal of providing vocational training to 1 million workers.

Industry, Education, and Government The quality of the human capital infrastructure is influenced not only by the level of education and training available in countries but also by the level of collaboration and coordination among companies, educational institutions, and government agencies. Global industries struggle when companies don't work with universities to determine current and future needs, when universities and governments don't work together on research and development, and when industry and government fail to set priorities and agendas. When companies, universities, and governments work together, however, they can build world-class opportunities. For instance, Germany successfully cultivated a booming synthetic dye industry by bringing together companies' resources, universities' research, and the government's money.

Similarly, Silicon Valley in California became a world-class center for technology by bringing together academics from Stanford and Berkley, including tech firms from the Valley, and gaining government support from nearby municipalities. The city of Tel Aviv, Israel, sought to replicate the Silicon Valley model by combining government support, educational resources, and business forces to create a tech hub. The government requires all men and women to join the Israeli army and puts the brightest in high-tech intelligence units such as its famous Unit 8200, where it trains them on cutting-edge technologies and encourages them to pursue tech opportunities after their two-year military service. The businesses of the country also spend the most per capita on research and development. Finally, universities in Israel provide world-class programs, particularly in engineering and information technology. The combination of these forces has resulted in an abundance of tech start-ups that have created significant economic growth.

On the other hand, where governments, industries, or educational institutions are not supportive and do not work together, businesses are forced to develop or find resources on their own, narrowing the margins for success.

One of the key organizations that can bring firms, universities, and governments together is a “business incubator.” A business incubator is a company that helps found and grow new businesses. It provides new companies with space, tools, and leadership skills to help accelerate their early growth. For instance, MIT has created an organization called the Global Startup Lab (GSL), which provides resources to undergraduate students from emerging markets. In addition to providing resources directly to students, the GSL partners with institutions such as governments, businesses, and universities in emerging markets, with the goal of helping students develop commercial opportunities.

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Concept Check 11.3 ! "

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Question 1

Digital technology infrastructure includes:

Global companies spend over $130 billion a year on corporate training—nearly double the estimated $70 billion spent on public education in the U.S. alone. This training is designed to develop a range of skills such as leadership, negotiation, and sales. Many global companies have formal leadership development programs that recruit employees into two- to four-year rotational programs with opportunities to learn different facets of the company. MetLife, GE, IBM, and many others offer such programs across a host of functional areas, including global human resources, global supply chain, global leadership, and global marketing.

In addition to these longer formal programs, most global companies offer skill-based training, much of which takes advantage of new technologies by moving online. New companies such as edX, Coursera, and Udemy offer classes for people around the globe. The use of virtual technologies has shifted corporate training closer to employees and has made it more hands-on.

In addition to providing internal corporate training, some companies partner with employers and employees to identify the skills lacking in the labor market and then develop those skills, working directly with individuals to build them. For instance, LabourNet is a service in India with a mission to provide training and skill development to workers who are not in formal jobs, with a goal of providing vocational training to 1 million workers.

Industry, Education, and Government The quality of the human capital infrastructure is influenced not only by the level of education and training available in countries but also by the level of collaboration and coordination among companies, educational institutions, and government agencies. Global industries struggle when companies don't work with universities to determine current and future needs, when universities and governments don't work together on research and development, and when industry and government fail to set priorities and agendas. When companies, universities, and governments work together, however, they can build world-class opportunities. For instance, Germany successfully cultivated a booming synthetic dye industry by bringing together companies' resources, universities' research, and the government's money.

Similarly, Silicon Valley in California became a world-class center for technology by bringing together academics from Stanford and Berkley, including tech firms from the Valley, and gaining government support from nearby municipalities. The city of Tel Aviv, Israel, sought to replicate the Silicon Valley model by combining government support, educational resources, and business forces to create a tech hub. The government requires all men and women to join the Israeli army and puts the brightest in high-tech intelligence units such as its famous Unit 8200, where it trains them on cutting-edge technologies and encourages them to pursue tech opportunities after their two-year military service. The businesses of the country also spend the most per capita on research and development. Finally, universities in Israel provide world-class programs, particularly in engineering and information technology. The combination of these forces has resulted in an abundance of tech start-ups that have created significant economic growth.

On the other hand, where governments, industries, or educational institutions are not supportive and do not work together, businesses are forced to develop or find resources on their own, narrowing the margins for success.

One of the key organizations that can bring firms, universities, and governments together is a “business incubator.” A business incubator is a company that helps found and grow new businesses. It provides new companies with space, tools, and leadership skills to help accelerate their early growth. For instance, MIT has created an organization called the Global Startup Lab (GSL), which provides resources to undergraduate students from emerging markets. In addition to providing resources directly to students, the GSL partners with institutions such as governments, businesses, and universities in emerging markets, with the goal of helping students develop commercial opportunities.

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Concept Check 11.3 ! "

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Question 1

Digital technology infrastructure includes:

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Copyright © 2018 by John Wiley & Sons, Inc. All rights reserved.

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Communication technologies

Internet technologies

All of these

Data technologies

Copyright © 2018 by John Wiley & Sons, Inc. All rights reserved.

Question Attempts: 0 of 1 used CHECK ANSWER

Communication technologies

Internet technologies

All of these

Data technologies

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