Conditions for Multinationals to Be Successful Globally - Case Study Example

ESSAY By Name Course Instructor Institution City/State Date Implications of the Globe Study of Leadership for Multinational Companies Operating across Four Continents, Where Leadership Effectiveness is Believed to be Key to Achieving High Performance Introduction Leadership has frequently been defined as the capability of influencing a group with the objective of achieving shared goals. GLOBE study offers a more recent opinion about leadership by considering it as an individual ability to motivate, influence as well as allow others to contribute toward the organisation’s success and effectiveness (House et al., 2004, p.15). This notion exhibits the roles held by leadership in bringing about the success as well as the effectiveness of the business organisations. Thus far, there are different concepts concerning leadership, due to the fact that ideal leadership conceptions change from one culture and time to another. Even though culture has been defined differently by different authors, House et al. (2004) in their GLOBE study established that the main theme of culture is cultural characteristics the ‘sharedness’ amongst the members: shared identities and meanings; shared ways of reacting, feeling, and thinking; and universally experienced happenings such as the members’ language, history, as well as religion. The focus of the GLOBE study was to assess the values and beliefs of a particular society. The essay examines the implications of the globe study of leadership for multinational companies operating across four continents, where leadership effectiveness is believed to be the key to achieving high performance Discussion Contemporary multinational companies are interested in developing as well as enacting instruments and policies like universal leadership competency models (LCMs) across the continents so as to improve the shared corporate culture as well as bring about the enterprise’ global success. In consideration of a large number of involved national cultural standards as well as the multifaceted demands within the global virtual setting on contemporary‘s leaders, business organisations are struggling to espouse and manage modernised leadership competencies. As observed by House et al. (2004) with insufficient capabilities of global leadership, business organisations have to develop leadership competency models that primarily acknowledge the cultural contingency. Given that the majority of the past leadership research focussed on Western Europe and North America, the embedded cultural assumptions of such nations has transformed into the competency frameworks utilised by scores of MNCs in the present day. House et al. (2004) noted that charismatic leadership theories have turned out to be a default for the success of global business, even in countries that lack value leadership that is oriented to performance. Human resources instruments like 360-degree feedback, balanced scorecards and Management by Objectives all stemmed from the United States and are inextricably associated with modern-day leadership competency models. According to Shi and Wang (2011, p.93), cultural models express the basic problems’ patterns that impact the functioning of individuals and groups. To comprehend the cultural differences, a number of models have been created, like the Hofstede (1991) Model, studies by Trompenaars (1993), and GLOBE Model by House et al (2004). Hofstede’s five dimensions of culture have been cited by scores of researchers within the field of intercultural management. Hofstede (1991) created an influential framework that explains the differences within the national culture that consist of five main dimensions: the first dimension is the power distance or the level to which the societies accept that power in the organisations as well as institutions is unequally distributed. The second dimension is uncertainty avoidance or the level to which the societies feel vulnerable to unclear circumstances and attempt to circumvent them. The third dimension is individualism/collectivism, or the level of which people are included in the groups. The fourth dimension is masculinity/femininity, or the level of which values that are dominant are ‘male’ values like assertiveness, acquiring goods and money, as well as failure to care for others. The last dimension is the long-term versus short-term orientation, associated with gratification postponement. The date that was gathered by Hofstede (1991) enabled more than 50 countries to be rated in terms of the first four dimensions. Hofstede (1991) managed to show the considerable variations between countries anchored on such five dimensions; however, other some countries were comparable. This made it possible to group countries based on their cultural similarities as well an offer direction on how a leadership approach can be adjusted when a multinational company moves from one group of cultures to a different culture; for instance, from the United Sates to the Middle East (Javidan et al., 2006, p.904). GLOBE project conducted by Javidan et al. (2006) is the most cited study with regard to cultural differences in leadership as well as management. The study was conducted in 62 societal cultures and more than 17,000 managers were involved. After reviewing the existing literature, particularly the works of Trompenaas (1993), Hofstede, and others, nine cultural dimensions’ measures were conceptualised and created during the GLOBE study: Uncertainty Avoidance, Assertiveness, Performance Orientation, Institutional Collectivism, Humane Orientation, Future Orientation, Gender Egalitarianism, In-Group Collectivism as well as Power Distance (Harzing, 2004, p.694; Shi & Wang, 2011, p.95; House et al., 2004). According to Javidan et al. (2006, p.899), such are some of the aspects that define the culture of a country, and that differentiates one society from another. Competencies of leadership in contemporary multinational companies must facilitate more distributed and devolved leadership authority. Basically, this realism has moderately been enabled by remote and virtual workplace structures. In the virtual global setting, the parameters for conceptualising leadership have been shifted. The new frontiers in the IT have transformed the sense of effective leadership and this has made the theory that culture is comparable to the national identity less significant within the modern-day global virtual setting. Still, MNCs depend on leaders who are interculturally competent so as to meet the globalisation demands (Javidan et al., 2006, p.911). Leaders have to balance local as well as global requirements, but this has become a key dilemma that has to be reconciled by the MNCs. The emergence of glocalization exhibits the ubiquitous need for leaders in the MNCs to reconcile local reality as well as global influence. Trompenaars (1993) viewed culture pragmatically by drawing upon the works of earlier authors such as Kluckhohn and Strodtbeck (1961) as well as Parsons (1951). He defines culture as a means through which people solve problems, especially associated with time, relationships as well as the external environment. The cultural dimensions presented by both Hofstede (1991) and Trompenaars (1993) are a valuable tool for a number of themes within the organisation as well as the company structure or when conducting business in other countries. It is imperative for MNCs to understand the differences between cultures as well as countries. Still, cultural dimensions are beneficial tools for purposes of marketing because of the fact that they allow for the design of an ideal strategy. All societies have through the history developed a different culture, wherein it is very crucial to consider the various ways of communicating and using the language meaning. For MNCs to be successful in the global markets, they should segment the markets into cultural dimensions and then create a marketing plan so as to capitalise on these segments’ common elements. Therefore, the success or failure of MNCS in global markets relies on the environment’s prior analysis. Furthermore, the cultural analysis may as well offer different guides for developing the marketing strategy. Actually, when an MNC moves to a new continent it is important to study the society and the population, the culture and the history. With regard to the society’s habits and culture in a particular country, the MNCs can utilise the theory of cultural dimensions developed by Hofstede (1991) and Trompenaars (1993) as a guideline. Global leaders should see the world by means of the cross-cultural lens: The rate at which the global businesses are growing is unprecedented and due to rapid globalisation that has enabled MNCs leaders to operate in diverse environments across the globe, it is important to differentiate leadership competencies in the global environment contrasted with the mono-cultural setting. According to Javidan et al. (2006, p.899) there is empirical evidence that points out that leader’s behaviour, attributes, influence and status, vary significantly because of forces that are culturally unique to the regions or countries wherein the leaders operate. These attributes that are culturally contingent can be comprehended based on the difference between emics (culture specific) as well as etics (culture universal or general as commended by a number of scholars such as Pike (1997) and House et al. (2004). Therefore, MNCs’ leaders must be able to identify similarities and differences in culture and familiarise themselves with the emic behaviours with the goal of creating a common ground through which the common goals can be achieved. In essence, the various abilities, skills, attitudes and traits that make up the expertise of the global managers have been described in different studies as the global competencies. Even though it is customarily acknowledged that global leadership is important to the MNC success, the information accessible to leaders is either too general or too specific to be universally useful (Javidan et al., 2006, p.901). Expectedly, MNCs complain about the shortage of managers that have the needed skills for global leadership. Some of the characteristics of global managers include being open-minded, respecting how different countries operate, and be able to appreciate why things are done that way. Most of the earlier studies that focussed on the work values failed to include countries in the Eastern Europe into their sample. According to Harzing (2004, p.694), the countries in the Eastern Europe have been included only in a few studies such as Smith et al.’s (1996) study on values of national culture, where they noted that they differ significantly from one country to another. Another study that focused on Eastern European countries include as cited by Harzing (2004, p.694) included the Gupta et al. (2002), which identified numerous societal clusters within such countries that create one cluster. Still, these studies failed to concentrate on work goals or ideal job characteristics. Therefore, Harzing (2004) study sought to compare the ideal job characteristics’ differences between Eastern and Western European countries. Harzing (2004, p.701) observed that students within the Eastern European countries exhibit varying preferences in terms of their ideal job as compared to students from other countries in Europe. Money, prestige and advancement are important motivators for students from these countries. Harzing (2004, p.701) further established that the economic development level in the Eastern European countries forces skilled labourers to migrate to other EU countries. The Hofstede model and GLOBE Model developed by Hofstede (1991) and House et al. (2004), respectively offers MNCs managers with the much-required insights concerning the structure of national cultures. Although the work of Hofstede was not the first to study to focus on the Cross-Cultural Research (CCR), his five cultural dimensions have succeeded in placing the CCR at the forefront of international business research; therefore, his works have enormous influences on the fields of international business as well as management. On the other hand, the House et al. (2004) GLOBE Model is viewed to be the most recent cultural model on organisational cultures and values that can be used by MNCs managers to enter new markets with different cultures. Conclusion In conclusion, the essay has examined the implications of the globe study of leadership for multinational companies operating across four continents, where leadership effectiveness is believed to be the key to achieving high performance. As evidenced in the essay, leaders in the MNCs can be successful in the global markets if they acknowledge the local cultural norms as well as the existing dissimilarities between individual markets. The essay has cited a number of earlier studies such as Trompenaars (1993) and models such as GLOBE model and Hofstede model that exhibit that national culture significantly impacts leadership competency models deployment in the MNCs. To succeed in all continents, the MNCs’ leaders must make sure that they have factored cultural flexibility while searching for group-wide corporate synergies. Therefore, the desire for flexibility in MNCs as well as ambiguity tolerance impedes the unchallenged adaptation of universal standards and rules. Due to the globalisation of business organisations as well as the increasing interdependencies amongst countries, the significance of clearly understanding the cultural influences on organisational and leadership practices has become greater. References Harzing, A.-W., 2004. Ideal Jobs and International Student Mobility in the Enlarged European Union. European Management Journal, vol. 22, no. 6, pp.693–703. Hofstede, G., 1991. Cultures and Organizations: Software of the Mind. London, UK: McGraw-Hill. House, R.J., Hanges, ‎.J. & Javidan, ‎., 2004. Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies. Thousand Oaks, California: SAGE Publications. Javidan, M. et al., 2006. Conceptualizing and measuring cultures and their consequences: a comparative review of GLOBE’s and Hofstede’s approaches. Journal of International Business Studies, vol. 37, pp.897–914. Shi, X. & Wang, J., 2011. Interpreting Hofstede Model and GLOBE Model: Which Way to Go for Cross-Cultural Research? International Journal of Business and Management, vol. 6, no. 5, pp.93-99. Trompenaars, F., 1993. Riding the Waves of Culture: Understanding Cultural Diversity in Business. London: Nicholas Brealey Publ. Read More