Leadership Styles for Multi-National Companies

Table of contents

Abstract:

The Importance of Leadership

Identifying, Explaining, and Evaluating three Leadership Styles

Conclusions, Synthesis, and Interpretation

References

Abstract:

When multinational companies (MNCs) select leaders and managers, which bear responsibility across the organisation they are well advised to look for individuals with strong intercultural skills. Amongst those skills might be abilities to adopt their leadership style in order to achieve their results with individuals from different cultural backgrounds. In consequence, the MNC in total might find different leaderships styles being applied at the same time throughout their organisation. Autocratic, democratic, and visionary leadership styles might be amongst those most frequently executed alongside each other.

The Importance of Leadership

It is difficult to overjudge the importance of leadership. Not only that its style is said to account for a staggering 30% of a company’s profitability (Goleman, Boyatzis, & McKee, 2003), it is also the main component of change (Popovici, 2012) and vital to its success and therefore one of the most important subjects in company strategy (Johnson, Scholes, & Whittington, 2008).

Looking back in time, there appears to be an evolvement of leadership styles - or eras (Van Seters, 1990) - from the initial personality via influence, behaviour, situation, contingency, transactional, anti-leadership and culture to what van Seters in the early 1990s considers the most recent, the transformational leadership, based on intrinsic motivation and characterised by proactiveness, sometimes radicalness, innovation and creativity (Bass & Bass, 2008). This is somewhat overtaken by (Vroom & Jago, 2007) who hold contingency leadership the most relevant model for the new century.

Another view goes to the evolvement of leadership within a company, which has been described in five phases, each representing a growth against the previous (Greiner, 1998). Greiner underlines the importance of leadership with regards to what it does for the future resulting from previous stages and reminds to look out for past procedures that prevent present and future developments if they are not eliminated by leadership. Greiner’s theory will be covered in more detail further down in the section on growth.

But not only leaders take influence on organisations but also organisations on leaders (Horner, 1997), creating an important interdependency. And even if several sources point out that leadership traits and behaviours are seen as universal (Jago, 1982; Horner, 1997) and not dependent on a particular situation there are substantial doubts on a clear definition of traits (Zaccaro, Kemp, & Bader, 2004) because of the broad effects they have in leadership.

In the following sections some key elements will be briefly evaluated to show the effects of leadership. This can, however, only be a brief snapshot of some of the important leadership elements and many sources were excluded to enhance the focus of this document.

Leadership and Management: Are leaders being made (Adair, 1979) or rather born (Popovici, 2012)? And are leadership and management the same? Many sources agree that companies require both leadership and management, some say that a company could work without leadership (Maccoby, 2000) but would lack the energising factor that encourages motivation and change. One view is that the natural leader is empowering people using direction and inspiration but may need a manager to implement his goals (Burke, 1986), making leadership and management interdependent. In this model, the manager has different characteristics and behaviours but can, too, give employees a feeling of empowerment via his actions and his invitations to participate. A connection between management and leadership is also implied in the statement that all styles of leadership must mean working on public, private and personal levels (Scouller, 2016). On the other hand, the manager is seen as a hired professional to match with the company’s required leadership style (Răducan & Răducan, 2014), being a mere employed professional in difference to the charismatic leader whose responsibility lies in motivation and change management. The emerging of professional managers (Horner, 1997), acting more deliberately, consciously and planned to stimulate ideas on a day-to-day business (De Jong & Den Harton, 2007), is sometimes seen necessary for administering a company (Maccoby, 2000). It has also been pointed out that in some cases managers are appointed due to their expertise, knowledge, or time with the company (Stanley, 2006) rather than their managerial or leading skills. Popovici (2012) stresses the difference between leaders and managers from the view of their employees in pointing out the differences between the position as a result of a career (manager) or of a calling (leader) with the first being obeyed whereas the latter being followed, a motive that will reoccur later in this document.

The Role of Growth: A solid leadership is vital to growth, one of the key purposes of a company (Johnson, Scholes, & Whittington, 2008). It can translate values into actions which are supposed to lead to the desired growth (Ciulla, 1999) along with enduring values. Also, leadership is substantially about encouraging and motivating people which is considered one of the core requirements to growth (Koryak, et al., 2015) as it the ability of leaders to anticipate change, make decisions and learn from each situation (Schoemaker, Krupp, & Howland, 2013). As mentioned earlier, Greiner states (initially in 1972 already) that companies grow in five phases (Greiner, 1998), a model which is widely reflected and agreed upon in literature. Each phase starts with an evolution and ends with a revolution on a core management problem which has to be solved before the next phase is reached. Solving these managerial or leadership problems can enable the growth of business, making leadership a core requirement. Leadership and growth are also strongly connected in political and country’s contexts (Brady & Spence, 2010), a complex area with direct influence on companies’ growth.

National vs. International Leadership: In light of multi-national companies, the difference between the leaderships of a country organisation (i.e. national) and a global or international organisation is of key importance (Horner, 1997) since diversity and the cross-cultural context have many pitfalls that can seriously harm a company’s success. Only a responsible leadership will be able to address globalisation (Voegtlin, Patzer, & Scherer, 2012). Indeed, Manfred Kets de Vries warns to apply local or national culture and leadership in a global context (Kippenberger, 2002). In researching on and comparing typical leadership styles in different countries and their companies he underlines this important statement. A consensual leadership as often seen in Scandinavia may directly contradict to France’s elitist leadership in which groups discuss but decisions are made in complex power networks. Equally, the Germanic technocratic leadership of sticking to processes may not go along with the Anglo-Saxon charismatic leadership approach of decisive acting but might correspond more to the consensual model, all of which might have difficulties with the Russian democratic centralism of open discussions on leaders but no opposition after they have been elected or the Chinese approach of keeping to adopt at any time, coming from the Daoist tradition (Capurro, 2013). - Leadership is a core cultural issue (Sanchez-Runde, Nardon, & Steers, 2011) and needs cultural intelligence to be adopted for a global context. This includes but is not limited to cultural differences, stereotypes, and gender issues (Ayman & Korabik, 2010) raising from different cultural backgrounds.

Leadership and Ethics: Leadership is closely bound with ethical questions raising from the intrinsic motivation of many leaders, requiring companies to search for leaders with strong ethics and/or train their managers on ethical questions (Eubanks, Brown, & Ybema, 2012). The often desired ethics of general responsibility and care as well as positive impacts (Adair, 1979) are accepted universally but in practice need leaders to be reflective as well as engaged and rational (Grandy & Sliwa, 2015) which – as shown above – are not necessarily attributes of leaders. Looking into historical psychology (Aronson, 2001) distinguishes between transformational leaders acting adhesive to rules (deontological) – they could perhaps be called trained leaders – and transactional leaders, working for the greater good, as well as directive leaders, driven by egoism (both teleological). With regard to leaders’ unwanted ethical behaviour, Davis sees macro- and micro contingencies to affect them (Davis & Luthans, 1979) and Tumasjan underlines that the higher the social difference between the leaders and those led is, the more severe any immoral behaviour is criticised (Tumasjan, Strobel, & Welpe, 2011). Lastly, leadership and ethics are strongly related to the formal Corporate Social Responsibility, covering the areas of responsibility of a company against the outside world (Roddy, 2016); this complex topic is recognised by the writer but will not be discussed.

Having determined the importance of leadership in different contexts we will now turn to evaluating different leadership styles.

Identifying, Explaining, and Evaluating three Leadership Styles

Traits, behaviour, and contingency are three approaches reflected as the foundation in many sources on leadership styles (Roddy, 2016). They are preoccupied in literature with strong personality versus the gender issue (traits), learned behaviour versus the problem of measuring the results (behaviour), and flexibility versus the challenge to really adopt to situations (contingency) (Adair, 1979). The different styles introduced below are only a selection of many more styles and versions of the same styles, some underpinned with academic evidence, others merely developed by HR-consultants and promoted along with their services. What can be seen as a prerequisite is that a) people are generally prepared and willing to follow different leadership styles albeit obviously not with the same results and b) charismatic leaders can be dangerous (Maccoby, 2000).

Theories and Models of Leadership: Companies gradually move towards leaner structures, opening the desire for more cooperative leading such as leadership by influence and support (Horner, 1997). The same requirement was identified slightly later again with the creating of followership (Howell & Costley, 2006) and the stressing of transformational leadership (Gumusluoglu & Ilsev, 2009) which at their time where seen as emerging models. Nevertheless, the leadership models remain fairly stable, so four of them are presented in this document of which three styles will be selected and evaluated in more detail.

Traits, behaviour and contingency are three theories which not necessarily deliver styles or models but should be remembered in this context. The following table condenses subjects raised in different sources, among them Ayman & Korabik (2010) and Roddy (2016).

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The model of Goleman (Goleman, Boyatzis, & McKee, 2003) bases on the recognition that leaders have to amend their styles depending on the situation (Goleman, 2000). He recognises that successful leaders need to be aware of and be able to regulate themselves, they need to be empathic and motivating towards those they manage, and they have to have extensive social skills. The model is both fairly recent and complex and describes six leadership styles not only with their pros and cons but also with phrases to point out their core characteristic.

Based on Roddy (2016) the following table was composed, adding information from various sourced amongst which are Johnson, Scholes, and Whittington (2008) and other sources mentioned in this document.

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The cultural aspect of leadership is reflected in the fourth model which characterises three different approaches with this regard (Sanchez-Runde, Nardon, & Steers, 2011):

Abbildung in dieser Leseprobe nicht enthalten

It is notable, that several terms appear repetitively in the different models and – mostly – are provided with similar characteristics.

For the critical evaluation of their differences the autocratic, the democratic, and the visionary leadership style were chosen, referring to the aforementioned findings.

Autocratic Leadership: The autocratic or commanding leadership style is characterised by a (one) strong leader. He demands obedience from his employees, gives orders and wants them to be followed without questioning. Autocratic leaders can often be found in successful family companies in the national as well as the international context. Amongst famous companies with such leadership is C&A – a multinational business still owned and managed by the founder’s family (Nelsen-Minkenberg, 2016). In this case is was not only the founder of the company, the inventor of their business concept, who lead his company commanding. This leadership style is said to have also expanded into next generations and is still being practiced today despite a quite normal style of day-to-day business operation. Autocratic leadership can also work successfully in different countries – all of the mentioned companies have successful international operations. By the writer’s experience this can be due to a group of managers, transferring the autocratic demand of the proprietor into other leadership styles for the actual business which match the local culture - almost all of these companies have managers with apparently international backgrounds. Autocratic leadership may be received differently in different cultures, being in some, as outlined earlier in this abstract, more acceptable than in others. One of the benefits of an autocratic leadership can lie in the management of change. Autocratic leaders can be very successful in times of crises or other situations where fast action and change is needed. It lies, however, in the nature of the style that it does not empower or involve people very much. Success can be instant but may also be limited to the time the pressure is brought to the employees. In comparison to other styles, autocratic leadership can be seen as one of the most natural (i.e. born) styles whereas e.g. democratic leadership can be judged as learned. Autocratic leaders strive for quick results and pressure when e.g. visionary leaders target a common goal with their employees.

Democratic Leadership: Democratic leaders target the guidance of those led by them and make them participate to collaborate as a team. They are seen to be eager to get their employees’ qualified input and use means of two-way communication extensively. One of the examples described for democratic leadership is Apple after the return of Steve Jobs (Gill, 2016). Other than in his first approach – as founder and inventor – he was now seen to involve people and use team leadership as a means to steer his company, providing the overall positive, agreeable working environment that is written about widely. Particular in the later years of his leadership, Jobs appears to set more on democracy which could be linked to the growing, massive success of his business. On internationalisation, democratic leadership can be extremely helpful when it comes to planning and developing a business as it can mean to involve people with international experience. Looking into cross-cultural operations it can be imagined, that a democratic leadership may not be received equally effective in all cultures, taking the former USSR countries or China as examples which – as mentioned earlier – rise from a culture of (political) democratic centralism if not autocracy and may have difficulties with empowerment at work. Democratic leadership can make people feel good and create an overall positive atmosphere in a company. It gives employees the chance to participate and take ownership and can make operations be successful in the long term. If such time is not available, democracy could lead to a lack of clear guidance and speed to get things done. One of the key differences between autocratic and democratic leadership could be in communication, being one-way in the first and two-way in the latter case. Upon these two styles it becomes exceptionally clear that there may be times for which one style and other times for which another style is needed. A visionary leadership is much closer to democracy as it does not directly contradict in style but in many cases complements it.

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