Adopters of individualism adhere to the philosophy that people should be free to pursue economic and political endeavors without constraint. This means that govern- ment interest should not solely influence individual behavior. In a business context, this is synonymous with capitalism and is connected to a free-market society, as discussed in Chapter 1, which encourages diversity and competition, compounded with private owner- ship, to stimulate productivity. It has been argued that private property is more successful, progressive, and productive than communal property due to increased incentives for main- tenance and focus on care for individually owned property. The idea is that working in a group requires less energy per person to achieve the same goal, but an individual will work as hard as he or she has to in order to survive in a competitive environment. Simply follow- ing the status quo will stunt progress, while competing will increase creativity and progress. Modern managers may witness this when dealing with those who adopt an individualist philosophy and then must work in a team situation. Research has shown that team perfor- mance is negatively influenced by those who consider themselves individualistic; however competition stimulates motivation and encourages increased efforts to achieve goals.2
The groundwork for this ideology was founded long ago. Philosophers such as David Hume (1711–1776), Adam Smith (1723–1790), and even Aristotle (384–322 BC) contributed to these principles. While philosophers created the foundation for this belief system long ago, it can be witnessed playing out through modern practice. Eastern Europe, the former Soviet Union, areas of Latin America, Great Britain, and Sweden all have moved toward the idea that the betterment of society is related to the level of free- dom individuals have in pursuing economic goals, along with general individual free- doms and self-expression without governmental constraint. The well-known movement in Britain toward privatization was led by Prime Minister Margaret Thatcher during her 11 years in office (1979–1990), when she successfully transferred ownership of many companies from the state to individuals and reduced the government-owned portion of gross national product from 10 to 3.9 percent.3 She was truly a pioneer in the movement toward a capitalistic society, which has since spread across Europe.
International managers must remain alert as to how political changes may impact their business, as a continuous struggle for a foothold in government power often affects leaders in office. For example, Britain’s economy improved under the leadership of Tony Blair; however, his support of the Iraq War severely weakened his position. Conservative David Cameron, elected Prime Minister in 2010, has sought to integrate traditional
conservative principles without ignoring social development policies, something the Labour party has traditionally focused on. Government policy, in its attempt to control the economic environment, waxes and wanes, something the international manager must be keenly sensitive to.
Europe has added complexity to the political environment with the unification of the EU, which celebrated its 50th “birthday” in 2007. Notwithstanding the increasing integration of the EU, MNCs still need to be responsive to the political environment of individual countries, some due to the persistence of cultural differences, which will be discussed in Chapter 5. Yet, there are also significant interdependencies. For example, the recent economic crisis in Greece has prompted Germany and France to mobilize public and private financial support, even though the two largest economies in the euro zone have residual distrust from earlier eras of conflict and disagreement.4 Europe is no longer a group of fragmented countries; it is a giant and expanding interwoven region in which international managers must be aware of what is happening politically, not only in the immediate area of operations but also throughout the continent. The EU consists of countries that adhere to individualistic orientations as well as those that follow collectivist ideals.