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Leadership and Management Behavior in Multinational Companies

Learning Objectives (1 of 3)

Know the characteristics of global business leadership.
Describe traditional North American models of leadership, including trait theory, behavioral approaches, and contingency theory.
Explain the Japanese performance-maintenance model.
Apply the cultural-contingency model of leadership

Learning Objectives (2 of 3)

Develop sensitivity to national cultural differences in preferred leadership traits and effective leadership behaviors.
Discuss how national culture affects the choice of leader influence tactics.
Discuss how national culture influences subordinates’ expectations regarding appropriate behaviors and the traits of leaders.

Learning Objectives (3 of 3)

Explain the role of transformational leadership in multinational settings.
Understand how national culture affects a leader’s attributions regarding subordinates’ behaviors.
Diagnose cultural situations and suggest appropriate leadership styles to fit them.

Leadership

The GLOBE’s universal definition of Leadership:
“the ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members.”
Effective multinational leadership is more challenging than being a good domestic leader.
Widely different leadership styles may be equally effective in reaching goals in various cultures.

Global Leadership:
The New Breed (1 of 2)

The Global Leader must have the skills and abilities to interact with and manage people from diverse cultural backgrounds in their multinational organization.
Characteristics of a global leader:
Cosmopolitan
Skilled at intercultural communication
Culturally sensitive
Capable of rapid acculturation

Global Leadership: The New Breed (1 of 2)

Characteristics of a global leader: (cont’d)
A facilitator of subordinates’ intercultural performance
A user of cultural synergy
A promoter and user of the growing world culture
Emotionally intelligent

Three Classic Models:
A Vocabulary of Leadership

The three basic models of leadership entail:
Leadership traits
Leadership behavior
Contingency leadership

Leadership Traits (1 of 2)

Are leaders born or made?
The Great-Person Theory is the idea that leaders are born with unique characteristics that make them quite different from ordinary people.
Contemporary views of leadership traits do not assume that leaders are born.
Although leaders are different, aspiring leaders can achieve this difference by training and experience.

Leadership Traits (2 of 2)

In the U.S., successful leaders exhibit:
High intelligence & self-confidence
Great initiative
Assertiveness & persistence
A great desire for responsibility and the opportunity to influence others
A high awareness of the needs of others

U.S. Perspectives on Leadership Behaviors (1 of 2)

Although leaders have different traits than subordinates, traits alone do not make a leader.
The behaviors leaders use to manage employees may be more important.
Classic U.S. studies of leadership reveal two types:
A task-centered leader gives specific directions to subordinates so that they can complete tasks.
A person-centered leader focuses on meeting the social and emotional needs of employees.

U.S. Perspectives on Leadership Behaviors (2 of 2)

The distinction between task-centered and person-centered also applies to how leaders make decisions:
Leaders who adopt an autocratic leadership style make all major decisions themselves.
Those who employ a democratic leadership style delegate the decision-making to subordinates.
The consultative and participative leadership styles falls midway between the autocratic and democratic styles.

Japanese Perspectives on Leadership Behaviors (1 of 2)

The Performance-Maintenance (PM) Theory of leadership represents a Japanese perspective, balancing task- and person-centered leader behaviors
Has two dimensions
Performance (similar to task-centered)
Maintenance (similar to person-centered)

Japanese Perspectives:
Performance Maintenance Theory (1 of 2)

There are two components of performance function:
Planning component: the leader works for or with subordinates to develop work procedures
Pressure component: the leader then pressures employees to put forth more effort and to do good work

Contingency Theories

The Contingency Theories assume that the appropriate style and leader depends on the situation.
Successful leaders choose leadership style based on situations.
There are two North American contingency theories of leadership:
Fiedler’s theory of leadership
Path-goal theory

Fiedler’s Theory of Leadership (1 of 2)

Fiedler’s Theory of Leadership holds that managers tend to be either task- or person-centered leaders.
Success depends on three contingencies or characteristics of work situation:
The relationship between leader and subordinates
The degree to which subordinates’ tasks are clearly defined
The officially granted power of the leader

Fiedler’s Theory of Leadership (2 of 2)

Effective leadership occurs when the leadership style matches the situation.
Fiedler’s Theory suggests that task-centered leadership works best in situations that are either favorable or unfavorable for a leader.
Person-centered leadership works best in situations that are not clearly favorable or unfavorable.

Exhibit 15.2:
Predictions of Leader Effectiveness under Different Conditions

Path-Goal Theory (1 of 2)

Using Path-Goal Theory, a leader might adopt one of four leadership styles, depending on the situation. These four styles are:
Directive (give subordinates specific goals)
Supportive (show concern for their needs)
Participative (consult with them and encourage)
Achievement-oriented (set goals and reward goal accomplishments)

Exhibit 15.3:
A Simplified Model of Path-Goal Theory

Path-Goal Theory (2 of 2)

Key leadership suggestions based on path-goal theory:
When subordinates have high achievement needs, adopt the achievement-oriented style.
For subordinates with high social needs, adopt the supportive leadership style.
When the job is unstructured, adopt a directive style or an achievement-oriented style.

Traits, Behaviors & Contingencies

Leaders have a variety of behaviors they can use to get the job done.
Most experts now believe that no one leadership trait or behavior works best in all situations.
A successful leader must diagnose the situation, pick the behaviors and develop the leadership traits that fit best.

National Context as a Contingency Model of Leadership (1 of 2)

Successful leadership in multinational companies requires that managers adjust their leadership styles to fit different situations.
Learn what local managers do to lead successfully in their own countries.
Use that knowledge to modify your leadership style appropriately.

National Context as a Contingency Model of Leadership (2 of 2)

In a multinational setting, these components are all affected by the national context:
Leader behaviors & traits
Subordinates characteristics
Work setting

Exhibit 15.4:
National-Context Contingency Model
of Leadership

Leadership Traits and Behaviors in the National Context (1 of 2)

People prefer certain traits and behaviors in their leaders depending on their cultural backgrounds, though some behaviors & traits are cultural universals.
GLOBE (Global Leadership and Organizational Behavior Effectiveness) conducted cross-national research of 60 nations on differences in leadership.
Their study contains insights that can help a manager develop leadership styles to navigate successfully through a maze of cultural settings.

Leadership Traits and Behaviors in the National Context (2 of 2)

GLOBE findings:
Leadership styles vary by country.
Team-oriented leaders preferred in Latin European, East European and Southern Asian societies.
Participative leaders are preferred by Anglo, Nordic European, and Germanic European cultures.
Humane leaders preferred in Southern Asian cultures.
All agreed that autonomous leaders and self-protective leaders universally impeded leadership.

National Context and Preferred Leader Influence Tactics

Influence Tactics are tactical behaviors leaders use to influence subordinates.
U.S managers favor seven influence tactics
Assertiveness
Friendliness
Reasoning
Bargaining
Sanctioning
Appeals to a higher authority
Coalitions

Exhibit 15.8:
Preferred Leader Influence Tactics
in Four Countries

National Context and Subordinates’ Expectations
(1 of 2)

The national context affects Subordinates’ Expectations: what leaders “should” do and what they may or may not do.
Power distance has profound effects on expectations:
In high power-distance countries, autocratic leadership is expected.
In low power-distance countries, the leader should forego status symbols, & involve subordinates in decision-making.

National Context and Subordinates’ Expectations (2 of 2)

Other cultural values affect subordinates’ expectations:
Strong masculinity norms lead to the acceptance of more authoritarian leadership
Strong uncertainty-avoidance norms lead subordinates to expect the leader to provide more detail in directions

Contemporary Leadership Perspectives:
Multinational Implications

There are two contemporary approaches to leadership:
Transformational Leadership
Attribution Approach
The GLOBE study found that Transformational Leadership was considered superior in almost all societies.

Transformational Leadership
(1 of 2)

The Transformational Leader:
Articulates a vision
Breaks from the status quo
Provides goals and a plan
Gives meaning or a purpose to goals
Takes risks
Is motivated to lead
Builds a power base
Demonstrates high ethical and moral standards

Transformational Leadership
(2 of 2)

Transformational leaders succeed because subordinates respond to them with high levels of performance, personal devotion, reverence, excitement about leader’s ideas, and willingness to sacrifice for the good of the company.
Transformational Leaders go beyond Transactional Leadership which uses punishment and rewards.
The same leadership traits may not lead to transformational leadership in all countries.

Attributions and Leadership (1 of 2)

The attributional approach to leadership emphasizes the leader’s attributions regarding the causes of subordinates’ behaviors.
In determining how to respond to a subordinate’s behavior, the leader makes two key distinctions:
External attribution: factors outside the person and beyond the person’s control (illness); or
Internal attribution: characteristics of the person (e.g., personality, motivation, low ability, etc.)

Attributions and Leadership (2 of 2)

Once leader makes an attribution, the leader responds to the subordinate based on that assumption.
Internal attribution : behavior corrected or rewarded
External attribution: modify the work environment
Fundamental attribution error: an assumption by a manager that people behave in certain ways because of internal motivations, rather than outside factors
Successful leaders make the correct attributions.

Getting the Results: Should You Do What Works at Home?

The contingency view of leadership suggests that managers cannot assume that successful home leadership styles or traits will result in equally successful leadership in a foreign country.
Managers need to modify and adapt leadership styles to be congruent with the cultural setting.
Without adequate cross-cultural training, expatriates may continue to apply their previously successful home style leadership in international settings.

Exhibit 15.11: Leadership Behavior and Job Performance of U.S. Managers in U.S. & Hong Kong

The Cultural Context and Suggested Leadership Styles

Because of the extreme variability among cultures and nations, there are few prescriptive theories of multicultural leadership.
But there may be some general recommendations based on research re power distance & uncertainty:
In high power distance cultures, behave more autocratically.
In high uncertainty cultures, remove ambiguity from the work setting.

Exhibit 15.12:
National Culture and Recommended Leadership Styles

Summary and Conclusions

All multinational managers should strive to become global leaders.
Chapter 15 provides important information on the nature of leadership and understanding of leadership in the international setting.
The chapter also reviews classic leadership theories and applies them to the international settings.
Effective leadership is essential for the success of the multinational company.