27 Sep 2006  Report from the Field

Report From Egypt: Studying Global Influences

On a recent trip to Cairo, Rosabeth Moss Kanter studied three international companies to better understand the effects of globalization on them and the surrounding region. In this report, she looks at current business trends in Egypt, including the increasing privatization of state-run businesses. Key concepts include:

  • Egypt is interested in attracting more foreign direct investment, and is studying what multinationals need and want.
  • Leading global companies operating in Egypt actively teach and transmit business standards and techniques to their local customers, especially small businesses.
  • Community service programs are another way multinationals influence the local business environment. One effort helps laid-off employees start small businesses that offer new services to villages.

 

Travel Date: May 2006

Location Visited: Cairo

Purpose: Research on three global companies with Egyptian operations.

Report:

Sean Silverthorne: What was the nature of your visit?

Rosabeth Moss Kanter: I traveled to Cairo in May 2006 with my research associate to conduct interviews at the Egyptian operations of three exemplary global companies (two headquartered in the U.S., one in Latin America). The project looks at how the "giants" are transforming themselves in light of their continuing and increasing global scope, and what kind of impact they have on the ground, including whether and how they influence the standards of the countries in which they operate as they seek global consistency.

We are following a small number of companies with excellent reputations to locations both similar and different from their home markets. Egypt had come up repeatedly as culturally more different than other places, and I also felt that it is very important for Americans to understand Muslim countries. (We have also been, or will be, in India, China, Latin America, Japan, sub-Saharan Africa, and Eastern Europe, as well as the U.S. and Western Europe.)

In Egypt, we interviewed the top group of managers heading every function but also spoke with a cross-section of employees (with translators) and even several customers and partners. Since one of the companies—an IT giant—has been partnering with a major government ministry, I talked with a variety of senior government officials. I was invited to give a talk on leadership at the American University of Cairo, the top English-language university in Egypt, for faculty, guests from the business community, and students in their emerging leaders program, so that was another opportunity to meet people and see trends in the region through their eyes. And we dined with one of my former students, who set up one of the pioneering private equity funds in Egypt and whose wife is bringing high-fashion retailing to a corner of the new Four Seasons Hotel.

Q: What did you see there in general in terms of current business management trends?

A: In two of the companies, there were no expats among top management and a great deal of sophistication about the best and latest in everything. In one of those, its development lab competes effectively on a world basis with similar facilities in India and even the U.S. Of course, these are multinationals that move people across locations, expect frequent travel outside the country, and emphasize abundant training and Web-based process tools.

Part of the mission of all three companies in Egypt is to transmit these standards to their local customers, especially small businesses. All three were active in providing courses and sometimes certification for suppliers, and they would often work with customers to help them run their businesses effectively, including giving them planning and project management tools.

All three companies were active in community service, sometimes through philanthropic efforts but more often helping communities through core business practices, such as gaining flexibility to hire and fire from the union by raising wages and increasing training or helping laid-off employees start small businesses that offered new services to villages, or working with the government to create a new educational program that happened also to make new relationships and gain new business. One of the companies gave employees two hours a week to tutor at a school and was influential in raising standards for health care. In another of the companies, I also met the first woman in that company to have her baby brought to work for breast-feeding during the workday.

And here's something else that's interesting: the large number of women engineers. Egypt has no problem with women studying math and science!

Q: What are the locals there talking about in terms of business management and opportunities? What's the buzz?

A: Some small businesses are concerned about how to find capital and partners. Some protected domestic companies are concerned about the government's growing interest in foreign direct investment. Mainly, though, I found people eager to know about the best ways to manage a business.

One of the companies gave employees two hours a week to tutor at a school and was influential in raising standards for healthcare.

The university students wanted career advice and wanted to know when and how to work for a cause they cared about—much like our MBA students. Some of the government officials I spoke to wanted to stimulate more technological innovation, especially in IT, and ensure that there was a flow of high-quality university graduates.

But please recognize that I was spending time in a little multinational bubble insulated from the daily life of most Egyptians. There are still many problems that need to be solved, including whether enough high-quality schools can be built fast enough, and tax structures that reward leaving construction sites a mess of rubble and buildings unfinished, since property taxes are collected only on finished buildings.

Q: If you've visited there before, I wonder how Egypt has changed from a business perspective?

I haven't been there before, but I spoke to many people in advance and on the ground who confirmed one of the biggest business trends: rapid privatization of state enterprises (one of the companies in my project entered Egypt via one of Egypt's most successful privatizations) and a greater interest in foreign direct investment, with more people in government trying to understand what multinationals need and want. This, in turn, provides a good opportunity for global companies with high standards to influence policy changes and bring a major country up to world standards in many domains.

However, the situation remains highly volatile in the Near East, and feelings run strong—that won't change for a very long time. I did not talk politics, ever. We listened to how Americans are viewed, and we tried to understand a set of cultural and religious traditions different from ours. I found that technology and business management are neutral territories on which to meet and make friends.

About the author

Sean Silverthorne is editor of HBS Working Knowledge.