Management Styles and Leadership Styles in Multinational Corporation - Literature review Example

UK based multinational enterprise deploying parent country nationals to manage a subsidiary in Japan as opposed to locally based managers Table of Contents Table of Contents 2 Introduction 3 Cultural diversity 3 Bicultural management 5 Country of origin effect on employees 6 Management style in MNC 6 Cross cultural management in MNC 8 Conclusion 9 Reference list 11 Introduction According to AshongLamptey (2014), numbers of multinational corporations are increasing rapidly in the developing economies. Organisations are increasing multinational investment strategies to explore emerging economy. Multinational set up will be facing certain complexity in terms of managing the human resources. Parent companies are concerned about the different HRM contexts like employment of new people, training new recruits and developing skills of the employees. These strategies will face complexity regarding the multicultural and linguistic backgrounds of international employees. Contrepois (2011) opined that multinational enterprises have to develop different types of performance appraisal policies, communication strategies and labour or employee relation policies. These strategies of multinational enterprise will face the challenge of economic crisis, exchange rate deviations and political situations. International corporations have to maintain unique HRM strategies to manage their multinational employees in order to achieve organisational goals. In the current study, critical investigation is made on the management issues faced by the UK based multinational enterprise in order to control the employees of Japan subsidiary. This study will emphasise on the facts like cultural diversity, bicultural management, and country of origin effect on employees, management styles and leadership styles in Multinational Corporation. Moreover, the study will contrast the HRM policies of developed economy like the UK and developing economy like Japan. Cultural diversity Barr and Dowding (2012) stated that international organisations are recruiting people from different international cultures, having various beliefs and backgrounds. Globalisation is promoting local employees to be a part of global economy that they are contributing in the global operations of multinational enterprises. MNC are facing huge competitions in different international market, so they are developing their HR base with skilful and efficient employees. Bertoli and Riccardo (2013) recommended that international managers have to develop strategies as per international diversity. Diversity of employees is managed with the help of empowerment of creativity and more change flexibility traits. Bose and Ponnam (2011) opined that there are mainly three dimensions of cultural diversity like Primary dimensions, Secondary dimensions, and Tertiary dimensions. Basically international human resource managers have to develop strategies by considering those facts. Primary dimensions of cultural diversity include factors like race, traditions, gender, age and disability of the local employees. On the other hand, secondary dimensions of cultural diversity includes aspects like religious background, culture of the employees, sexual direction, thinking capacity, geographic basis, family background, lifestyle of the employees in the international aspects, and economic parity of the employees (Bondarouk et al., 2011). Political stability, professional experience, educational qualification, linguistic aspects, and nationality of employees are the other secondary factors that are impacting cultural diversity of the employees. Finally, Contrepois (2011) stated that tertiary dimensions of the cultural diversity includes the factors like beliefs of the employees, assumptions of the employees, perceptions, attitudes, feelings, values and group norms. UK based multinational firms are required to develop the proper diversity management strategies for meeting the issues faced by the Japanese subsidiary. UK based parent company is facing the complexity of managing workplace diversity in Japan without involving their local based managers. They were trying to control the diversity issues with parent country nationals. Thus, it raised organisational challenge in evolving multicultural occupational environment (Easter, 2013). Bicultural management According to Hong (2010), international human resource management of different MNC firms will be facing the challenge of bicultural traits of employees. Bicultural individuals are those who are having two different cultural traits. People can have such cultural schemas for their family or parent backgrounds. It is one of the cross cultural behaviour management. International human resource managers have to develop strategies to minimise the gaps created due to bicultural traits. In the developed countries, bicultural employees are having different types of values, feelings, beliefs, and behavioural traits. Mainly these traits are getting differentiated due to the inherent social, ethnic and maturity factors. Therefore, MNC HR managers are rapidly developing strategies for managing bicultural employees in the organisations (Jackson, 2014). Bicultural management is aimed to develop proper link among the self-motivated employees. Multinational companies are facing the complex culture related issues, so they are planning to link community and cognitive psychology of the employees. Jackson (2015) argued that international HRM policies are contrasting cultural recognition and knowledge among the employees of different nations. Employees are having two or more cultural degree in their life. Secondly, such employee’s attitudes, behaviours, and values are controlled by both the cultural traits. Finally bicultural employees merge and unify their cultural traits among organisational cultural set. Thus, bicultural traits of employees are managed by the multinational managers with the help of IHRM strategies (MagierŁakomy and Rozkwitalska, 2013). In the current context, UK based parent company nationals will be facing the challenge of managing bicultural employees in Japanese subsidiary. The UK based leaders are facing huge complexity in identifying the native issues faced by the Chinese, Japanese and Korean peoples. Language is the key issue that develops individual differences among the employees which results in bicultural experience. According to Mok and Morris (2010), IHRM policies survey and interview technique helps in identifying the bicultural traits of the Japanese peoples. Therefore, it can be said that the bicultural traits can be affecting the management of the subsidiary of Japan through the parent country nationals. Country of origin effect on employees According to OSullivan (2008), the term ‘Country of origin’ can be defined in two ways like organisational perspective and employees aspects. In terms of organisations, Country of origin refers to the nation where the production process or headquarter is situated. Country of origin of the current case study is the UK where the parent company is situated. From the employee perspective country of origin refers to the country from where employee’s cultural background originated or where they born (Schuler et al., 2004) In the current context, UK nationals will face complexity of managing people in Japan due to the country of origin related issues. Managers from the Japanese origin will be able to develop proper management on the subsidiary employees. However, country of origin concept will oppose the international or UK based control over the Japanese subsidiary. Thus, HR managers of the Japan subsidiary can adopt various management styles in terms of reducing the country of origin related gaps. Management style in MNC International human resource management identifies different type of management styles to control issues like country of origin, cultural diversity and bicultural traits. Following leadership styles are adopted by the global companies in order to achieve their target. Ethnocentric: Foreign parent companies are promoting their subsidiaries with autonomy in management policies. Smaiziene and Vaitkiene (2013) stated that headquarters are developing and implementing those strategies in the subsidiary set up. Parent company national are the key management personnel for controlling the employees of the subsidiaries. In addition, home country employees are empowered with lower decision making power. Polycentric: Many international firms are considering their subsidiaries as separate national entity. Such subsidiaries are given the power of decision-making. Local nationals are recruited by the headquarters to make the decisions as per the external and internal challenges faced in the subsidiary countries. Local managers integrate organisational goals set by the parent company with the decisions they made (Smale, 2007). Region-centric: MNE’s are developing management polices as per the geographic presence. Regional managers are given the power of decision-making. The manager will contrast various challenges faced by the organisation and develop strategies as per that regions (Zhang, 2014). Geocentric: Multinational corporations are adopting various management strategies as per different locations. Parent companies are considering that each branch have exclusive competence. Thus, separate strategies are maintained in different organisational heads to create proper utilisation of different types of resources. Barr and Dowding (2012) stated that PCNs, HCNs and TCNs are provided with the strategic development concerns. Senior management level is working in the headquarters and developing unique goals for the different locations. Thus, this management style is more effective than the other leadership styles. Local managers are given the power to develop strategies to control employee behaviours in Japan. In the Japanese subsidiary of the UK based parent company, the management styles must be modified so as to implement more effective leadership. Management policies can adopt the region-centric or geocentric approaches to ensure more local control on the subsidiary. In Japan, there are various contextual rules. Japanese economy demands for authorization for any multinational organisations. Highly skilled employees are responsible to fulfil the conditions like annual salary and other employment related rules (Bertoli and Riccardo, 2013). UK based multinational organisation needs to fulfil the policies of recruiting the domestic servants from the Japanese economy. UK based multinational firms are required to maintain proper schedule for annual salary. In Japan, skilled employees must be paid minimum 15 million yen in a year. Japanese FDI firms are required to meet the minimal requirements of local employees. However, if the UK based leaders or managers are selected in the Japanese subsidiary they will face cross cultural factors among the organisational employees (AshongLamptey, 2014). Cross cultural management in MNC According to Contrepois (2011), multinational corporations are facing the challenge of managing isolated cultures among the employees of different national areas. Cross-cultural traits are observed among the employees as they having different backgrounds and nationality. This trait is creating barrier in developing relationships with the co-workers having different cultural backgrounds. Easter (2013) critically evaluated that multinational workforce loses their efficiency and capability of accomplishing any tasks for the cross cultural factors. International human resource managers are required to develop proper relationships among the employees. Cross cultural management policies are increasing rate of cooperation among international employees. Moreover, cultural gap can be reduced with the help of intense communication. External stakeholders are facing the threats of cross cultural factors among the employees. Managers of Japanese subsidiary need to evaluate the barriers faced for the cross-cultural traits among the employees. There are several polices that the UK or Japan based subsidiary can adopt in terms of reducing the cross cultural gaps (Hong, 2010). Jackson (2014) suggested that Japanese leaders are required to explain their individual assumption regarding the cultural differences among the international locations. Rather, they have to identify the cultural difference among the UK and Japan. Managers must be flexible to change as per the cultural context. Such traits of the leaders must be appraised to mitigate more cultural gaps. Employees are empowered with more collaboration factors, this policy will help in communicating or exchanging values and beliefs among the group members or subordinates. Managers must be able to disseminate the developmental opportunities among the team members. Cross cultural traits can be avoided with the proper human resource task. UK based parent company need to maintain proper recruitment or staffing, international transferring, and ability management among the employees. In addition, managers have to support the employees in leading them with cultural humbleness (Jackson, 2015). Conclusion This study is critically describing the strategic benefits and negative aspect associated with a UK based multinational enterprise deploying parent country nationals to manage a subsidiary in Japan as opposed to locally based managers. Different aspects like cultural diversity, bicultural management, country of origin effect, management and leadership styles and cross cultural management helps to state the issue. From the study it is obtained that the Japanese subsidiary must be managed with the local based managers. Parent nationals or the UK people will face issues in managing leadership. Reference list AshongLamptey, J., 2014. Bicultural Experience and Developmental Relationships: A Professional Approach. Academy of Management Proceedings, 2014(1), pp.10859-10859. Barr, J. and Dowding, L., 2012. Leadership in health care. Los Angeles: SAGE. Bertoli, G. and Riccardo, R., 2013. Made in Italy e country of origin effect. MERCATI E COMPETITIVITÀ, (2), pp.13-36. Bondarouk, T., Ruel, H. and Looise, J., 2011. Electronic HRM in theory and practice. Bingley, U.K.: Emerald. Bose, S. and Ponnam, A., 2011. Country of origin effect on services: an evaluation of entertainment. Managing Leisure, 16(2), pp.98-107. Contrepois, S., 2011. Globalizing employment relations. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. Easter, S., 2013. Understanding competing logics at the organizational level through a bicultural lens. Academy of Management Proceedings, 2013(1), pp.12411-12411. Hong, H., 2010. Bicultural Competence and its Impact on Team Effectiveness. International Journal of Cross Cultural Management, 10(1), pp.93-120. Jackson, T., 2014. Is cross-cultural management studies morally mute? Cross-cultural management and ethics. International Journal of Cross Cultural Management, 14(3), pp.267-269. Jackson, T., 2015. Putting the passion back into cross-cultural management scholarship. International Journal of Cross Cultural Management, 15(1), pp.3-4. MagierŁakomy, E. and Rozkwitalska, M., 2013. Country-of-origin effect on manager’s competence evaluations. Journal of Intercultural Management, 5(4) pp. 59-67. Mok, A. and Morris, M., 2010. Asian-Americans Creative Styles in Asian and American Situations: Assimilative and Contrastive Responses as a Function of Bicultural Identity Integration. Management and Organization Review, 6(3), pp.371-390. OSullivan, K., 2008. Strategic knowledge management in multinational organizations. Hershey, PA: Information Science Reference. Schuler, R., Jackson, S. and Luo, Y., 2004. Managing human resources in cross-border alliances. London: Routledge. Smaiziene, I. and Vaitkiene, R., 2013. Country of Origin Effect in a Lithuanian Market of Vitamins and Dietary Supplements. International Business Research, 6(12). Smale, A., 2007. Mechanisms of global HRM integration in multinational corporations. Vaasa: Universitas Wasaensis. Zhang, L., 2014. On Becoming Bicultural: A Taxonomy of Expatriate Cultural Identity. Academy of Management Proceedings, 2014(1), pp.16762. Read More