Business GOES NATIVE.

Thriving in a global economy calls for multinational muscle, yet homogenization breeds contempt. Here's how international CEOs cope with culture conflict.

Jacques Nasser, the Lebanese-Australian president and CEO of Ford Motor Co., is this year's archetype for the high-profile, non-native

What Nasser faced in the massive tire recall is a fundamental lesson of international experience. Most business is local, and bound by local culture and economics, yet at the same time, local challenges can affect the global success, image, and posture of multinational corporations.

With his distinctive accent, Nasser appeared on nationally televised ads to assist in the recall of the Firestone tires that had been linked to accidents and deaths. Nasser also took the unprecedented action of idling three U.S. assembly plants for two weeks to release their 70,000 tires as replacements for the defective treads. At the time, U.S. customers were beginning to shun Ford Explorer Sports Utility Vehicles as a result of the tire problem, and nearly 50 percent of consumers surveyed thought Ford's response to the tire recall had been fair or poor.

The growth economy in the U.S. obscures a residual and, in some cases, deep unhappiness with the way U.S. business is conducted internationally. General Electric's unions in the Northeast U.S. are livid about the transfer of supplier jobs to other countries, especially Mexico. Meanwhile, Vincente Fox, the president of Mexico, is pushing for expanding the North American Free Trade Agreement into a North American Common Market, a step that U.S. workers will surely resist. The workers point to an eight-to-one wage differential as the only reason jobs are leaving.

Disparities in local economies worldwide make any kind of global business planning difficult. China is growing at better than 8 percent a year, while Japan is stuck in the 10th year of a recession rivaled only by the Great Depression of the 1930s, and its banks have still not fully reformed. Argentina has a stalled economy with unemployment running greater than 10 percent, while Brazil's unemployment is below 8 percent and falling as manufacturing and mining take off. Germany is taking off after its 10-year struggle to reunify, and unemployment is dropping. France is growing slowly, and Africa, with the exception of South Africa, is a disaster.

Having lived and worked in other countries, international CEOs (see table, pages 36-37) should be sensitive to the impact of culture on performance, but sometimes, surprisingly, they are not. Netherlands-born Durk Jager's short-lived run as CEO of Procter & Gamble was an object lesson in moving too fast for a culture. In this case, it was the very culture in which Jager had been raised-that of Procter & Gamble.

The Internet has confused the differences between global and local business, and 2000 only deepened the confusion. Major firms, such as consumer electronics makers, have discovered that they can no longer isolate technologies or technology introductions by region because enthusiasts communicate with each other globally through Internet newsgroups. If a company decides not to introduce a product in the U.S., for example, it risks alienating well-informed fans.

Even more importantly, local distributors and dealers have been resisting global Internet reach and the enhanced marketing power of large multinational companies in, for example, consumer electronics and autos. These cultural conflicts will not go away soon. In fact, they will intensify as each side portrays its way of working and relating to consumers as better. Japan has been struggling with the same issue for better than a decade, and a face-off between large chain stores and mom-and-pop businesses that have traditionally dominated commerce in the country continues. Large chains are making inroads, but not as quickly as they'd like, thanks to cultural resistance. Small store owners have the law and tradition on their side. The same holds true for U.S. auto dealers, who are powerful presences in statehouses.

As these cultural conflicts intensify rather than abate, work experience in multiple countries will be an essential criterion for CEOs of multinational companies going forward. Further, with an increase of trade and business combinations between Mexico and the U.S. and among European Community countries, international CEOs will be spending more time negotiating local/regional conflict than they have in the past. This will demand good political skills as well as excellent communications abilities to convince politicians that a plant shutdown in one country and move of jobs to another is better overall for a country's economy.

It will require even greater ability to convince consumers and politicians that the cultural artifacts of one country are not inimical to another. This is a continuing challenge for MacDonald's Corp. in France, for example, where the Big Mac is seen as the destruction of French cuisine. The irony, of course, is that millions of French enjoy their Big Macs. The fear of cultural homogenization is a growing presence in several cultures and already is a barrier to some multinational businesses.

The contradictory proposition that international CEOs work with is that "all business is local, except when it isn't." Successful international CEOs seem to have a fine-grained feel for the differences and know how to act at one moment with a global view and at another within local culture. On average, non-native and international CEOs seem to be better at this than CEOs who are raised within one culture.

Denis Lyons is senior director in Spencer Stuart's New York office.

                    Selected Top NON-NATIVE EXECUTIVES
U S A
                                     COMPANY -- TITLE NAME
                      AEA INVESTORS -- CHAIRMAN & CEO VINCENT MAI
                             Alcoa -- President & CEO ALAIN BELDA
                            A.Med -- Founder VP & CTO WALID ABDOUL-HOSN
               American International Underwriters --
                                      President & CEO Martin J. Sullivan
                             Armark -- Chairman & CEO Joseph Neubauer
                           ASC Inc. -- Chairman & CEO Heinz Prechter
                         Baker & McKenzie -- Chairman Christine Lagarde
                                   Bcom3 Group -- CEO Roger Haupt
                         Becton Dickinson -- Chairman Clateo Castellini
           Bell Laboratories (Lucent Technologies) --
                                            President Arim Metravali
                    CNH Global N.V. -- Chairman & CEO Jean-Pierre Rosso
      Chiron Corporation -- Chairman, President & CEO Sean P. Lance
               Computer Associates -- President & CEO Charles Wang
               Computer Associates -- President & CEO Sanjay Kumar
                   Continenetal Generall Tire Inc. --
                                      President & CEO Bernd Frangenberg
                           eBay -- Founder & Chairman Pierre Omidyar
             Eli Lilly and Company -- President & CEO Sidney Taurel
                        Ford Motor -- President & CEO Jacques A. Nasser
                   Fort James Corp. -- Chairman & CEO Miles Marsh
                 Frito-Lay America -- President & CEO Al Bru
                Goodyear -- Chairman, President & CEO Samir G Gibara
                         Honeywell -- President & CEO Giannantonio Ferrari
             Hughes Network Systems -- Chairman & CEO Pradman Kaul
                        Intel Corporation -- Chairman Andrew S. Grove
                 Intershop Communications -- Chairman Eckhard Pfeiffer
            Intershop Communications -- Founder & CEO Stephan Schambach
                Kellogg -- President & CEO & Chairman Carlos Gutierrez
                  McKinsey & Co. -- Managing Director Rajat Gupta
                                           NCR -- CEO Lars Nyberg
                            OpenGrid Inc. -- Chairman Philippe Kahn
                      Parmalat USA Corporation -- CEO Aldo Uva
                Pharmacia & Upjohn -- President & CEO Fred Hassan
                      Philip Morris -- Chairman & CEO Geoffrey Bible
                        Rohm & Haas -- Chairman & CEO Rajiv Gupta
             Sega of America -- Vice Chairman and COO Toshiro Kezuka
           Sensormatic Electronics -- President & CEO Per-Olof Loof
                              TIMCO -- President & MD Sandip Bhagat
                 UAL and United Airlines -- President Ronjojoy "Rono" Dutta
                      U.S. Airways -- President & CEO Rakesh Gangwal
               Yahoo Inc. -- Co-Founder & Cheif Yahoo Jerry Yang
U K
                           Amvescap -- Chairman & CEO Charles Brady
                        Arcadia PLC -- Chairman & CEO John Hoerner
            Associated British Ports PLC -- Group CEO Bo Lerenius
                                 Barclavs Bank -- CEO Matt Barrett
                                 BBA PLC -- Group CEO Roberto Quarta
                       Billiton PLC -- Chairman & CEO Brain Gilberston
               The Body Shop International PLC -- CEO Patrick Gournay
                                CGNU PLC -- Group CEO Bob Scott
                             Caradon PLC -- Group CEO Jurgen Hintz
                             Cookson Group PLC -- CEO Stephen Howard
                            Enterprise Oil PLC -- CEO Pierre Jungels
                                       GKN PLC -- CEO C.K. Chow
                                  Granada -- Chairman Gerry Robinson
                                  Invensys PLC -- CEO Allen Yurko
            Marks & Spencer PLC -- Executive Chairman Luc Vandevelde
       NPower (domestic arm of National Power PLC) --
                                   Executive Chairman Ross Sayers
                                    Orange PLC -- CEO Hans Snook
                                   Pearson PLC -- CEO Marjorie Scardino
                          Pilkington PLC -- Group CEO Paolo Scaroni
                                     Rexam PLC -- CEO Rolf Borjesson
                                 Rio Tinto PLC -- CEO Lee Clifford
                      Royal & Sun Alliance PLC -- CEO Bob Mendelsohn
                                Sema Group PLC -- CEO Pierre Bonelli
                        SmithKline Beecham PLC -- CEO J.P. Garnier
             South African Breweries PLC -- Group CEO Graham Mackay
                  Standard Chartered PLC -- Group CEO Rana Talwar
                               Tata & Lyle PLC -- CEO Larry Piilard
                                  TI Group PLC -- CEO Bill Laule
                                 Unilever -- Chairman Niall Fitzgerald
U S A
      COUNTRY OF ORIGIN
      South Africa
      Morocco
      Lebanon
      United Kingdom
      Israel
      Germany
      France
      UK
      Italy
      India
      France
      South Africa
      Taiwan
      Sri Lanka
      Germany
      France
      Morocco
      Lebanon
      South Africa
      Cuba
      Egypt
      Italy
      India
      Hungary
      Germany
      Germany
      Cuba
      India
      Sweden
      France
      Italy
      Pakistan
      Australia
      India
      Japan
      Sweden
      India
      India
      India
      Taiwan
U K
      USA
      USA
      Sweden
      Ireland
      USA
      South Africa
      France
      Australia
      USA
      USA
      Belgium
      Hong Kong
      Ireland
      Canadian
      Belgium
      New Zealand
      Canada
      USA
      Italy
      Sweden
      Australia
      USA
      France
      France
      South Africa
      India
      USA
      USA
      Ireland
AUSTRALIA
                                       COMPANY -- TITLE
                                Wembley PLC -- Chairman
                                   ANZ Bank Ltd. -- CEO
                                        BHP Ltd. -- CEO
                               Burns Philip Ltd. -- CEO
                                 Coles Myer Ltd. -- CEO
                                        CSR Ltd. -- CEO
                      Goodman Fielders Ltd. -- Chairman
                          John Fairfax Ltd. -- Chairman
                               Lion Nahthan Ltd. -- CEO
                                 McPhersons Ltd. -- CEO
                        Solution 6 Holdings Ltd. -- CEO
                           Star City Casino Ltd. -- CEO
                           Vodafone Pacific Ltd. -- CEO
CANADA
                 Canadian Tire Corp Ltd. -- President &
                                                    CEO
                         Chartwood Pacific Group -- CEO
                                    Cominco Ltd. -- CEO
                        Jim Pattison Group -- President
FRANCE
                             Eridania Beghin Say -- CEO
                                         L'Oreal -- CEO
                St. Microelectronics -- CEO & President
GERMANY
                             Deutsche Telekom AG -- CEO
HONG KONG
                              HSBC Holdings -- Chairman
                     Morgan Stanley Dean Witter Asia --
                            Chalman & Managing Director
                     Securities & Futures Commission --
                                               Chairman
                                  Sino Land -- Chairman
MEXICO
                              Banorte -- Chairman & CEO
                                           Chase -- CEO
                                  Citibank -- President
THE NETHERLANDS
                                Baan -- President & CEO
                            Grolsch Brewery -- Chairman
SINGAPORE
                       Development Bank of Singapore --
                            SMD & Head-Personal Banking
SOUTH AFRICA
                           South African Airways -- CEO
SPAIN
                                Citroen Hispania -- CEO
                                      NH Hoteles -- CEO
                                           Pryca -- CEO
SWITZERLAND
                     ABB Area Brown Boveri -- President
                                                  & CEO
                           Alusuisse Lonza Group -- CEO
                         Kuhne & Nagel International --
                                        President & CEO
                                     Nestle S.A. -- CEO
                                             SGS -- CEO
                                       Tag-Heuer -- CEO
AUSTRALIA
                NAME                   COUNTRY OF ORIGIN
                Clases Hultman         Sweden
                John McFarlance        UK
                Paul Anderson          USA
                Tom Degnam             USA
                Denis Eck              USA
                Peter Kirby            South Africa
                David Heam             UK
                Brain Powers           USA
                Gordon Caims           UK
                David Allman           UK
                Nell Gamble            UK
                David Banks            Scotland
                Dr. Brain Clark        South Africa
CANADA
                Wayne Sales            USA
                U. Gary Charlwood      Germany
                David Thompson         UK
                Kevin Benson           South Africa
FRANCE
                Stefano Meloni         Italy
                Lindsay Owen-jones     UK
                Pasquale Pistorio      Italy
GERMANY
                Ron Sommer             Israel
HONG KONG
                David Eldson           UK
                Alasdalr Morrison      UK
                Andrew Sheng           Malaysia
                Robert Ng              Singapore
MEXICO
                Robert W. Chandler     USA
                John Donnelly          Panama
                Julio de Quezada       Cuba
THE NETHERLANDS
                Plerre J. Everaert     Belgium
                J. Troch               Belgium
SINGAPORE
                Phillppe Pallant       France
SOUTH AFRICA
                Coleman Andrews        USA
SPAIN
                Francols Albert Cusey  France
                Gabreielle Burgio      Italy
                Georges Plassat        France
SWITZERLAND
                Goran Lindahi          Sweden
                Sergio Marchionne      Canada
                Klaus Herms            Germany
                Peter Brabeck-Letmathe Austria
                Antony Czura           UK
                Christian R. Viros     France