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strategy and business
 / Winter 2006 / Issue 45(originally published by Booz & Company)


Recent Research

On creative globetrotters, relocated headquarters, a business ethics pioneer, and more.

Passport to Creativity
William W. Maddux ([email protected]) and Adam D. Galinsky ([email protected]), “Cultural Barriers and Mental Borders: Multicultural Experience Facilitates Creative Thinking and Problem Solving,” International Association for Conflict Management (IACM) 19th Annual Conference. Click here.

Photograph by Matthew Septimus
It has long been recognized that creativity, among the most admired of human qualities, is a valuable asset in the business world, whether for designing a new product, developing a compelling advertising campaign, or solving operational problems. What is less understood is whether certain life experiences make people — especially employees — more creative.

Previous research suggests that some forms of diversity foster creativity. Teams made up of individuals from multiple ethnic and cultural backgrounds, for example, have been found to produce more imaginative solutions to problems. And in some studies, bilingual people have demonstrated a creative advantage over people who speak only one language.

Two academics from the Kellogg School of Management at Northwestern University, however, argue that the effect on creativity of another aspect of diversity has not been fully explored: time spent living or traveling in a foreign country. William W. Maddux, visiting assistant professor of management and organizations, and Adam D. Galinsky, associate professor of management and organizations, have conducted a series of experiments to fill this gap.

In one case, 205 MBA students were given a candle, a pack of matches, and a box of tacks, all placed next to a cardboard wall. Each was then asked to attach the candle to the wall so that it burned properly and did not drip wax on the floor. The most creative choice would have been to use the tacks to attach the box as a candleholder to the wall. Sixty percent of those who had lived abroad solved this problem, but only 40 percent of those who hadn’t lived abroad arrived at the solution.

In another experiment, a different group of students was asked to negotiate the hypothetical sale of a gas station. From the information provided, a financial impasse was clear: The minimum price that the gas station owner would accept was higher than the amount authorized by the purchasing company. To close the deal, a creative solution was needed — specifically, to offer the owner a job as the manager of the gas station after the sale to increase his financial security and convince him to lower his asking price. Again, the findings confirmed that living abroad increased the likelihood of completing the negotiation successfully.

The authors argue that traveling or living in another country enhances creativity because exposure to other cultures trains individuals to recognize that there is more than one way to look at behaviors and tasks. For example, leaving some food on your plate is regarded as a sign of great respect for your host in some cultures, implying that you’ve had enough to eat, but in other cultures the same behavior may be interpreted as an insult. Interestingly, the authors found that a minimum of six months in a foreign country is required to augment creativity, but the effect does not noticeably increase if an individual stays longer.

The findings have important implications for organizations. As the authors note, “It may behoove organizations to hire individuals with experience living abroad, or send employees on transfers or sabbaticals to foreign branches if creativity is particularly valued.”


Headquarters Relocation
Julian Birkinshaw ([email protected]), Pontus Braunerhjelm ([email protected]), Ulf Holm ([email protected]), and Siri Terjesen ([email protected]), “Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?” Strategic Management Journal 27: 681–700 (2006). Click here. 

Anecdotally, it appears that corporations are no longer shy about moving their corporate headquarters, sometimes even from one country to another. Examples include Massey Ferguson’s relocation from Canada to the United States; Tetra Pak’s move from Lund, Sweden, to Lausanne, Switzerland; the relocation of four South African companies (Anglo American, Investec Bank, Old Mutual, and SABMiller) to London; Viatron’s move to the Netherlands; News Corporation’s shift from Australia to New York; and a number of others. Julian Birkinshaw of the U.K.’s Advanced Institute of Management Research, Pontus Braunerhjelm of the Royal Institute of Technology in Stockholm, Ulf Holm of Uppsala University in Sweden, and Siri Terjesen of the Brisbane Graduate School of Business in Australia calculate that 23 of the Fortune 500 companies have set up HQs in a new country in recent years. Intrigued by this apparent trend, the authors examined 125 business unit headquarters and 35 corporate headquarters of Swedish companies to determine why some companies choose to relocate.

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