Leadership and Management in Multinational Companies

1. Leadership and Management in Multinational Companies Chapter 14

2. Presentation Outline • What is leadership? • Global leadership • Models of leadership • Leadership traits • Leadership behaviors: U. S. and Japanese views • Contingency theories of leadership • The path-goal model • National context model of leadership

3. Presentation Outline (2) • Leadership in a global context • Styles of international leadership (GLOBE study) • National context and subordinates' expectations • Effects of power distance • Transactional and transformational leadership • Effective leadership behaviors • Attribution and leadership • Should you do what works at home?

4. Leadership • Leadership: process of influencing group members to achieve organizational goals • Excellent leaders • Motivate their employees to achieve more than minimal requirements • What makes a great leader? • Many formal theories of leadership exist • Most people have their own beliefs

5. Global Leadership: The New Breed • One who has the skills and abilities to interact with and manage people from diverse cultural backgrounds • Characteristics of a global leader • Cosmopolitan • Skilled at intercultural communication • Culturally sensitive • Capable of rapid acculturation

6. Global Leadership: Characteristics • Knowledgeable about cultural and institutional influences on management • Facilitator of subordinates’ intercultural performance • A user of cultural synergy • A promoter and user of the growing world culture • A commitment to continuous improvement in self-awareness and renewal

7. Three Classic Models: A Vocabulary of Leadership • Three basic models of leadership • Leadership traits • Leadership behavior • Contingency leadership

8. Leadership Traits • Are leaders born or made? • Great-person theory: 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

9. Traits of Successful U.S. Leaders • Higher intelligence and self-confidence • More initiative • More assertiveness and persistence • Greater desire for responsibility and the opportunity to influence others • A greater awareness of the needs of others

10. Leadership Behaviors • U.S. perspectives on leadership behaviors • Two major types of leadership behaviors • Task-centered leader: focus on completing tasks by initiating structure • Gives subordinates specific standards, schedules, and tasks • Person-centered leader: focus on meeting the social and emotional needs of employees

11. Leader Decision Making Styles • Autocratic leadership: leaders make all major decisions themselves • Democratic leadership: leader includes subordinates in decision making • Consultative or participative leadership: leader’s style falls midway between autocratic and democratic styles

12. Exhibit 14.1: Likert’s Four Styles of Management

13. Japanese Perspectives on Leader Behaviors • Performance-maintenance (PM) theory: balancing task- and person-centered leader behaviors

14. Performance-Maintenance Theory • Two dimensions of PM theory • Performance function (P): similar to task-centered leadership • 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

15. Performance-Maintenance Theory • Maintenance function (M): similar to person-centered • Presents behaviors that promote group stability and social interaction • Difference between the Japanese PM approach and the U.S. perspective • Japanese PM leader focuses on influencing groups • U.S. approach focuses on influencing individuals

16. Path-Goal Theory • A contingency theory of leadership • Four leadership styles that a manager might choose depending on the situation • Directive: give subordinates specific goals, structures, schedules • Supportive: show a concern for satisfying subordinates' needs and establish good relationships • Participative: consult with subordinates, take suggestions, encourage participation in decision making • Achievement-oriented: set goals and reward goal accomplishments

17. Exhibit 14.3: A Simplified Model of Path-Goal Theory

18. Path-Goal Theory: Key Suggestions • When subordinates have high achievement needs, use the achievement-oriented style • When subordinates have high social needs, use the supportive leadership style • When job is unstructured, use a directive style or an achievement-oriented style

19. National Context as a Contingency for Leadership Behaviors • Successful leadership in multinational companies requires that managers adjust their leadership styles to fit different situations.

20. National Context as a Contingency for Leadership Behaviors • Two steps to adjust a leadership to a multination • Step 1: understanding what local managers do to lead successfully in their own country • Step 2: using this knowledge to modify your leadership style • National-context contingency model of leadership: shows how culture and related social institutions affect leadership practices

21. Exhibit 14.5: National-Context Contingency Model of Leadership

22. The National-Context Contingency Model of Leadership • Outlines of how leadership behaviors, traits, and contingencies are affected by the national context: • Leader behaviors and traits • Subordinates’ characteristics • Work setting

23. Leadership Traits and Behaviors in the National Context • GLOBE (Global Leadership and Organizational Behavior Effectiveness) • The very latest research on cross-national differences in leadership • Study contains insights regarding crucial leadership styles to navigate successfully through a maze of cultural settings

24. Exhibit 14.6 Culture Free Positively and Negatively Regarded Leadership Traits and Behaviors from 60 countries

25. Exhibit 14.7: GLOBE’s Study Clusters and Countries Included in Each Cluster

26. Styles of International Leadership (GLOBE study) • Charismatic/Value-Based leadership captures the ability of leaders to inspire, motivate, and encourage high performance outcomes from others based on a foundation of core values. • Team-Oriented leadership places emphasis on effective team building and implementation of a common goal among team members

27. Styles of International Leadership (2) • Participative leadership reflects the extent to which leaders involve others in decisions and their implementation. • Humane-oriented leadership comprises supportive and considerate leadership. • Autonomous leadership refers to independent and individualistic leadership behaviors. • Self-protective leadership “focuses on ensuring the safety and security of the individual and group through status-enhancement and face-saving.”

28. GLOBE findings • Team-oriented leaders are preferred in Latin European and Southern Asian countries. • Anglo and Germanic cultures prefer participative leaders. • South Asian cultures prefer humane leaders. • East Asia: Charismatic/values-based and team-oriented leadership are valued most highly (Japan, Korea) • Self-protective and autonomous leaders are generally seen as ineffective

29. National Context and Subordinates’ Expectations • Subordinates’ expectations: expectations regarding what leaders “should” do and what they may or may not do • High power-distance – autocratic leadership • E.g., many of the Latin and Asian countries • Low power-distance – the leader be more like them • E.g., Sweden and Norway

30. Comments on Exhibit 14.10 • Great Britain ranks low in power distance. • In 1980, the U.S. was near the middle of the power distance scale. Exhibit 14.10 is based on 1980 data for specific countries. • Later studies suggest that the U. S. is now moderately low in power distance. • Mexico is a high power distance country. • Exhibit 14.10 still provides useful information about how power distance affects employee expectations.

31. Exhibit 14.10: Subordinates’ Expectations under Three Levels of Power Distance

32. Transactional and Transformational Leaders • Transactional leadership: managers use rewards or punishments to influence their subordinates • Most ordinary leaders use transactional leadership • Requires adjustments in different countries

33. Transformational Leadership • Managers go beyond transactional leadership by • Articulating a vision • Breaking from the status quo • Providing goals and a plan • Giving meaning or a purpose to goals • Taking risks • Being motivated to lead • Building a power base • Demonstrating high ethical and moral standards

34. Transformational Leaders • Succeed because subordinates respond to them with high levels of performance, devotion and willingness to sacrifice • Same leadership traits may not lead to transformational leadership in all countries • The best leaders use both transactional and transformational leadership

35. Exhibit 14.11: GLOBE Study and Charismatic Leadership

36. Another Description ofTransformational Leaders • Idealized influence – charisma. Ability to get their followers to accept a common purpose or vision • Inspirational motivation – an easy-to-understand sense of purpose regarding what should be done. • Intellectual stimulation – giving people a new paradigm or world view (similar to breaking from the status quo) • Individualized consideration – identify development needs and see that they are met.

37. Leadership Behaviors in DecreasingOrder of Effectiveness • Transformational leaders • Transactional leaders • Management by exception – active – looks for problems and sees that they are resolved • Management by exception – passive – deals with problems when they are called to his/her attention • Laissez-faire (managers who do very little)

38. Attribution and Leadership • Emphasis on what leaders believe causes subordinates’ behaviors • A key distinction in attribution • External attribution: factors outside the person and beyond the person’s control (e.g., natural disasters, illness, faulty equipment, etc.) • The leader corrects the work situation if possible. • Internal attribution: characteristics of the person (e.g., personality, motivation, low ability, etc.) • The leader rewards or punishes the person.

39. Attribution and Leadership • Fundamental attribution error: assumption by managers that people behave in certain ways because of internal motivations, rather than outside factors • Common error for Western managers to make in other countries • Successful leaders make the correct attributions.

40. Getting Results: Should You Do What Works at Home? • Cannot assume that successful home leadership styles or traits will result in equally successful leadership in a foreign country • It is difficult to adapt. • Cross-cultural training is important.