IMPACT
OF CULTURE ON MNCS LEADERSHIP
Impact
of culture on MNCs
Over the period, the
development of technology and economic advancement has resulted in the
generation of crucial aspects of the economy which has further necessitated the
formation and enhanced performance of the companies. The attributes of market
has also been enhanced thereby prompting increased interaction of the market
factors and the continued development of the market. In view of these developments,
the geographical boundaries that have continued to exist between nations have
been waived through the consideration of regional integration (Adams, &
Graban, 2011). In this regard, the aspect of international trade has emerged as
a consideration of the aspect so globalization. The leading factor that
characterizes regional development and international trade is the attribute of
multinational corporations that has sorted to increase their participation in
various nations across the globe. According to the analysis of the research
conducted, multinational corporations are companies with global strategies with
production geared towards satisfying the global nations and markets (Bass &
Stogdill, 1982). These companies have developed ideal incentives that will
enable them to satisfy the global market through the aspect of large scale
production top enable global market supply and further they get the advantage
attribute to large scale production which is the derivation of the economies of
scale. In the wake of developments of the multinational corporations, the
aspect of culture has continued to play a significant role in the development
and operation of the corporations in the national economies. Over the period,
various findings have stated that culture is one of the extremely crucial aspects
that are crucial in the determination of performance of the business because it
is responsible for stipulation of the prevailing rules and regulations. The
concept of cultural differences across the global nations is one of the crucial
factors that enhance a critical challenge for the performance and establishment
of the MNCs. In reality, the attribute of culture has continued to pose immense
challenge because different cultures have different regard for the aspects of
gender, labor and significant behaviors that are crucial in the enhancement of performance.
Certainly, the consideration of global depiction of labor is based on the consideration
that global economies should be established to improve the rights, security,
livelihoods and opportunities of the people and families around the globe (Bandura,
1982, Cullen & Parboteeah, 2005). This aspect will be crucial because it
will seek to enhance performance of the communities thereby leading to the
increase in the output of the individuals. In the wake of the realities
regarding the contributions of culture and its importance in enhancing
organizational performance, various multinational corporations have highlighted
that it is extremely crucial for the corporation to consider the attributes of
cultural leaders.
Over the period, the
consideration of culture and its impact on the performance and output of the
organizations has been the subject of discussion for a critical period and
critical theories have been enhanced to help in the establishment of the
factors those results in the consideration of development. One of the leading psychological researchers,
Hofstede’s expressed his opinion on the aspect of culture by stating that cultural
practices in the society or practiced by the community have immense influence
on the formation of behavior and values of the community members. In this
regard, the theory is critical because it helps the members in understanding
the aspects of increasing cross-cultural relationship that is beneficial for
the usage by international management and cross-cultural communication
(Hodgetts & Luthans, 2003, Hoffman, Bynum, Piccolo & Sutton, 2011). The aspect of cross cultural relation has been
of immense consideration on the establishment of organizational performance
because culture has immense contributions in the formation of organization
culture. In order to explain the attributes of culture, Hofstede’s highlighted
the different attributes that formed the subcategories of culture and these include
individualism-collectivism, power distance, uncertainty avoidance and
masculinity-femininity amongst others. The development of these margins has
been of immense benefits to the development of the multinational corporations because
they help the marketers and various managers to understand the attributes of cultural
differences. This understanding is crucial because it enables the managers and
markets to choose ideal market for the distribution of the goods. Critical
analysis of the dimensions of cultural dimensions provided by Hofsteed shows
the following.
Individualism
This dimension considers the extent to which
society members are integrated into groups. The dimensions consider the fact
that individual normally coexist in group and this existence is depicted
through the consideration of the groups or the individuals. Individualistic
societies are largely concerned with the attributes of personal achievements
and individual rights and the people in the society are expected to stand for
them selves when choosing affiliations. On the other hand, collective societies
are generally concerned with the welfare of the whole group and they exist in
various groups (Hofstede, 1980). In the attributes of collectivism, the people
I the society have large extended families which are used for protection in the
exchange for unquestioning loyalty. In this view, the difference in the various
cultural depictions is highlighted by the different existing tributes of
individualism and collectivism.
Power
distance
Power distance is
another incentive used by the theorists to highlight the differences between
various global cultures and this concern the development of the family
structure. Equal distribution of power is essential for some communities while
some communities accept the attribute of power distribution. The illustration
of power distance is the provision in which the less powerful member of the
organizations and institutions accept and expect equal distribution of power. Normally,
the cultures that endorse low power distance usually expect and accept
democratic and rational views. Under this system, subordinates are normally
comfortable with decision made by the superiors and they have the right to
question the integrity of the decisions made and they notice the power of the
other contributors based on their formal position (Hofstede & Bond, 1988).
This depiction shows that various nations have various cultures with regard to
the subordinates and their contributions.
Culture
vs. MNCs leadership
Over the period, the
consideration of culture has become significantly recognized and various
international businesses have taken to the attribute of adopting the provisions
of Hofstede’s cultural theories of cultural diversities. With the continued
development and expansion of the MNCs, the aspects of culture has been of
immense influence thereby leading to the consideration of adopting cultural
diversity program in the management of the multinational corporations. The
investigation into the aspect of cultural issues in the understanding of the
organization leads to the development of the fact that leaders can utilize the
effects of organizational culture to direct subordinates to the highest level
of motivation to enable them increase their outcome for the organization (House,
Hanges, Javidan, Dorfman & Gupta, 2004). The consideration of leadership
behavior is in consideration with the elements of organizational culture and
this shows that performance of the organization is based on the reigning
culture within the organization. In
reality, organizational leadership is one of the critical aspects that lead to
the establishment of performance and therefore the leaders must consider the
attribute of adapting to the changeable satiations in the organization. The
realization of self efficacy of the leaders of the MNCs is an extremely crucial
incentive that leads to the enhancement of performance the establishment of
these factors are based on the consideration three elements that have been
identified as the crucial attributes leading to the establishment of ideal
leadership programs. Overall, culture has grown and developed into an important
aspect that is considered in the business world because of the leading contributions
that it has impacted on the leaders of the various companies.
Cultural
dimensions have the impact of transforming leadership behaviors
The contributions of
leadership of the organization have the impact of transforming the organization
and increasing profitability. Over the period the relationship between cultural
diversity and leadership efficacy has attributed to immense fall of various
organizations. The attributes of high power distance has been ascertained to
have lower regards for the others and this leads to the emergence of low self
esteem. In reality, this kind of leadership is detrimental for the performance
of the organization/corporation and ideal incentive must be initiated to ensure
the attributes of transformation of the leadership styles are enhanced.
Cultural
dimension has relations with leadership self-efficacy
The development of self
motivation theory of leadership has marked a critical aspect towards the
establsihment and performance of the multinational corporations. This theory
also proposed the establishment of the theory that proposes the attributes of
positive behavior and how the positive behavior influences the consideration of
the leadership self-efficacy (Kirkpatrick, & Locke, 1996, Rost, 1993). The
consideration of self efficacy is one of the attributes that enable the
leadership of the organization to employ the usage of ideal factors that are
aimed at ensuring increased performance of the organization. Adoption of self
efficacy will ensure that the leaders adopt the visions of the Corporation and
provide feedback to the other members and this gives room for the aspect of
evaluation which is critical for the establishment of performance. On of the
benefits of cultural contribution is the aspect of transforming the self
interest of the leader and influencing the leaders to think of the attributes
of the corporations. In this regard, the consideration of culture is considered
as an ideal event that enhances performance of the multinational corporations.
Cultural
differences between Australia and China
The recent past has
witnessed the emergence of significant development is the aspect of the economy
and in the establishment of international business. With the emergence of
globalization, the consideration of regional integration has taken toll and
various businesses have established their subsidiaries across the regional
borders. On the verge of this development, the consideration of cultural
differences has continued to be a significant problem that hinders the
performance and operation businesses (Ruvolo, Petersen, & LeBoeuf, 2004, Stevens
& Campion, 1994). Over the period, the consideration of culture has stated
that culture is extremely vital for the establishment and performance of the
business incentives and this consideration has resulted in the development of
cross cultural diversity programs. Analysis conducted to identify the
differences between Australia and China has cited significant differences I
their cultural depictions. The usages of Hofstede’s dimensions are crucial in illustrating
cultural difference between the tow nations.
Individualism
Individualism dimension
shows the degrees to which the cultural relations are represented through the
integration of various groups and the consideration of this is crucial because
it helps highlights how members exist in the community. Analysis of the
Australian economy has shown that the country scores 60% and is therefore
considered to be highly individualistic. In this country, self interest is
regarded and groups are not recognized in the society. The people are self
reliant because they look up to themselves and the society (Schein, 2004). On the other hand, China scores 20% and this
shows that groups and welfare of the society are significantly enhanced.
Chinese have special attribute for face recognition that enhances unity amongst
the society and the people. In this regard, these nations have different
cultures in their system and the conduction of business in these cultures
requires the aspect of understanding the cultures.
Power
distance
Power distance forms an
exceptional aspect of deterring the difference in the culture, Australia
culture have special regards for the junior officers and the subordinates
because the nation scores 36% on the grid scale showing that Australian
organizations have aspects of convenience. Communication is also participative,
informal and direct. On the other hand, China scores 80% on the scale showing
high disparities that characterizes the nation and this is characterized by the
following. Greeting done according to age, status is recognized by age and the
senior staff must make significant announcements (Shamir, House & Arthur,
1993). The establishment of the cultural differences above shows the increasing
concerns for the need to analyze and study the national cultures before the consideration
of expanding the multinational corporation to the regional and global markets.
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