Influence of National Culture on Leadership in Business Management in Business Organisations in India

Table of Contents

1. Introduction
1.1 Introduction to this section
1.2 Background
1.3 Aim and Objectives
1.4 Selection of a specific country
1.5 Structure of the dissertation

2. Culture and Its Impact on Business
2.1 Introduction
2.2 National Culture
2.3 Culture and Globalisation
2.4 Cultural Differences
2.5 Culture Variables
2.5.1 Power distance
2.5.2 Individualism and Collectivism
2.5.3 Masculinity and Feminity
2.5.4 Uncertainty Avoidance
2.6 Leadership and Culture
2.6.1 Cultural intelligence
2.7 Background on India

3. Methodology
3.1 Introduction to this section
3.2 Research Paradigms
3.2.1 Positivistic paradigm
3.2.2 Phenomenological paradigm
3.3 Selection of Research Paradigm
3.4 The Case Study method
3.5 Data Collection Method
3.6 Research Limitations
3.7 Research Ethics

4. Findings and Discussion
4.1 Introduction to this section
4.2 Background of business organisations
4.2.1 United Phosphorus Limited
4.2.2 Olam International Limited
4.2.3 WNS
4.2.4 Hughes Systique Corporation
4.2.5 Mudra Group
4.2.6 BCC Research
4.3 The Empirical Evidence
4.3.1 Question 1
4.3.2 Question 2
4.3.3 Question 3
4.3.4 Question 4
4.3.5 Question 5
4.3.6 Question 6
4.3.7 Question 7
4.3.8 Question 8
4.3.9 Question 9
4.3.10 Question 10
4.3.11 Question 11
4.3.12 Question 12
4.3.13 Question 13
4.4 Analysis of the findings
4.4.1 Questionnaire of the subordinates
4.4.2 Questionnaire of the superiors

5. Conclusion
5.1 Introduction to this section
5.2 Analysis of the findings
5.2.1 First Objective
5.2.2 Second Objective
5.2.3 Third Objective
5.2.4 Fourth Objective
5.2.5 Fifth Objective
5.3 Recommendations for further research

6. Reflection

References

Appendix

Abstract

This paper investigates the influence of national culture on the aspect of leadership in business management in business organisations in India.

The current level of globalisation is very high in the existing business scenario, due to which interactions between people from different nations and from different cultural backgrounds for business purposes is happening at a high rate.

People from different nations carry the cultural perceptions and beliefs of that nation and construe different meanings to the same situation. Thus the understanding of the cultural norms & practices of different nations can be helpful in understanding why a person behaves in a given situation. Also, the development of the skill of cultural intelligence can be a valuable asset and those managers which posses this skill can be more successful and obtain better results in business dealings.

The cultural variables as propounded by the seminal author Hofstede, namely power distance, individualism & collectivism, masculinity & feminity, and uncertainty avoidance, were used in this research. As per the previously done research by the seminal author Hofstede, India was ranked high in the power distance index, moderate in the individualism index, moderate in the masculinity index, and low in the uncertainty avoidance index.

The empirical evidence was gathered from 6 business organisations in India and the total number of respondents was 12.

The findings have indicated the power distance in India is lower than what has been previously found out. Also, the cultural variable of masculinity & feminity has been found to be leaning more towards feminity rather than masculinity which is again opposed to the results as previously propounded. The findings have corroborated with the results as obtained by previous research regarding the cultural variables of individualism & collectivism and uncertainty avoidance, that individualism & collectivism is moderate and uncertainty avoidance is low in India.

The findings have led to the conclusions that, currently in India, the leaders in business organisations cannot impose themselves on the subordinates and expect unquestioning obedience. The leaders have to be understanding and have to view the subordinates as a valuable part of the management team in a business organisation. Also the findings have indicated that the personnel in leadership positions in business organisations in India, are coming in contact with people of different nations, and not all, but some of the business organisations are providing training on cultural awareness & intelligence to its personnel.

The limitation of this research has been that the total number of respondents were only 12 and thus more participants would have led to the collection of more empirical evidence which would have led to the generation of results that would have been exhaustive and widely applicable.

Acknowledgements

I am deeply grateful to my supervisor Dr. Elizabeth Williamson for the guidance and support she has given to me during this project. Her constant guidance as well as encouragement provided the rigour that was much needed in this project. My wholehearted gratitude and respects to her. Thank you.

I also thank my mother and father for their constant encouragement which was a great support to me. Lastly, but in no way in the least, I thank all my friends who helped me in this project.

List of Figures

Figure 1: The “Onion”: Manifestations of Culture at Different Levels of Depth

Figure 2: Society wide factors contributing to a multifaceted model of culture

Figure 3: Culture as a three level layered cake

Figure 4: Sources of Differences Between Countries and Groups

Figure 5: Theoretical Model

Figure 6: Domain of cultural intelligence

Figure 7: Episodic view of the interactive dimensions of cultural intelligence

Figure 8: Response of subordinates & superiors to question 1

Figure 9: Response of subordinates & superiors to question 2

Figure 10: Response of subordinates & superiors to question 3

Figure 11: Response of subordinates & superiors to question 4

Figure 12: Response of subordinates to question 5

Figure 13: Response of superiors to question 5

Figure 14: Response of subordinates to question 6

Figure 15: Response of superiors to question 6

Figure 16: Response of subordinates to question 7

Figure 17: Response of superiors to question 7

Figure 18: Response of subordinates to question 8

Figure 19: Response of subordinates to question 9

Figure 20: Response of superiors to question 9

Figure 21: Response of subordinates to question 10

Figure 22: Response of subordinates to question 11

Figure 23: Response of subordinates to question 12

Figure 24: Response of subordinates to question 13

1. Introduction

1.1 Introduction to this section

This section sets out the context of this dissertation and also furnishes the reader(s) with the aim & objectives, and the structure of this dissertation. Further, in this section, the reasoning and the need for undertaking this study, as well as the benefits that will be obtained from this study have been explained.

1.2 Background

The word culture implies the traditions & practices, the arts, the social institutions, and accomplishments of a specific nation, or even a particular social group. It also includes the attitudes, beliefs and behavioural characteristics of a particular social group (Pearsall, 1998). This dissertation is not concerned with the culture in the biological sense meaning a culture of bacteria, but in the rhetoric sense. Culture is also a way of keeping order and preventing chaos (Warner & Joynt, 2002). Culture can also be a set of rules, habits and values which are considered appropriate and acceptable by society. These are not necessarily written and sometimes can even be implicit (Thompson, 2009). Overall it can be said that culture denotes a set of expectations, set of rules and values which are established in order to have stability and order in a society or social group. Culture also gives identity to an individual, for instance, when it is said that a person is Scottish or Canadian or Indian, a set of characteristics which are associated with that culture are invoked.

In the business world, the behaviour of managers, leaders and owners of business enterprises is affected by the culture of the country and/or the social group from where they have emanated. There are cultural differences and these can be seen in the behaviour and actions of people of different cultures. For instance, people from Canada, Australia, Thailand and from Japan can have very different views on the issue of how should the relationship be, between a superior manager and his/her subordinates. Employees of some countries are used to having managers who listen to the subordinate’s opinions and in some other countries, employees might be afraid to do the same (Hofstede & Hofstede, 2005). Employees from different cultural backgrounds construe different meanings of the same situation (Trompenaars & Turner, 1997). Thus an understanding of the cultural background of businessmen and businesswomen can lead to a better understanding of their behaviour and actions (Hofstede & Hofstede, 2005). The need to understand these cultural differences has increased in today’s modern business environment where globalisation is rampant (Koen, 2005) and people from different countries and cultural backgrounds are not only in contact with people of a multitude of nationalities through electronic communication mediums like the internet and cellular phones, but are also regularly traversing the globe in order to conduct business.

In any institution whether business, political, social or academic, it is the leader who inspires and initiates actions and turns ideas into reality. The person who is a leader is the one who embarks on ventures, who inspires others to follow into unknown territory and the one who takes the risks of failing thus taking a very big responsibility on his/her shoulders (Greenleaf, 1991; Cottrell, 2010). The business world has many people who persisted in the face of daunting challenges & adversity, who tried novel and unusual ways of doing things, who ventured into fields that were considered dangerous and unfeasible by others, and who have created mega business corporations some of which generate the turnover equivalent to entire countries. Such people are also termed as visionaries. Steve Jobs of the Apple Inc., Bill Gates of the Microsoft Corporation, Dhirubhai Ambani of Reliance Industries (India), Jehangir Ratanji Dadabhoy Tata of Tata Son’s Ltd. (India), Rupert Murdoch of the News Corporation, Jack Welch of the General Electric Company, are examples of such leaders. The influence of a leader is not just restricted to the financial bottom-line of a business organisation but it can be on the very existence & functioning of an organisation (Yukl, 2008; Egan, 2010). Further, there exists no definite pattern of leadership and leaders themselves do not exhibit any standard behaviour to similar situations (Egan, 2010).

In the current business environment, globalisation is becoming an embedded feature. Globalisation includes integration of the economies of the world, reduction of rules & restrictions pertaining to trade & commerce and increase in the flow of goods & services across countries (Naim, 2004). In the present economic environment, such a situation can arise that an employee could be working for an Italian business organisation in the United Kingdom with co-workers that are Australian with their superior executive being from an Asian nation (Wood, 2008).

Technology has eroded the barriers of time and space. These factors (time & space) limited the effects of an event to a particular region or country, but currently they have been made as though insignificant. The option to protect a country’s economy from the happenings in the rest of world no longer exists and even the government of a country trying to insulate their country’s economy (by imposing bans on foreign trade or imposing taxes & duties on imports) has become helpless in this regard (Naim, 2009). The effect of an occurrence in an Asian country can result in reduction in share prices in a western nation with unprecedented speed (Tappin & Cave, 2009). Time has become a luxury which the leaders in business organisations in the current age do not have and yet they have to make decisions in complicated situations (Tappin & Cave, 2009). As stated previously, globalisation is a raging phenomenon in the current business world and differences caused by different cultures of different nations and societies also exist. The understanding of the impact of the culture on leadership has become a necessity in the current global business environment where business leaders and to-be leaders can be faced with situations which are complex and require quick response (House et. al. 2001).

1.3 Aim and Objectives

The aim of this dissertation is to investigate the influence of national culture on the aspect of leadership in business management in business organisations in India.

The objectives of the above aim are;

1. Critically investigate the impact of national culture in business organisations.
2. Critically analyse the impact of national culture on leadership in business management through books and journals articles.
3. Carry out a case study analysis to investigate impact of national culture on leadership using companies in India.
4. Assess the issues and challenges on leadership caused by cultural variables.
5. Suggestions for enhancement of leadership in business organisations.

1.4 Selection of a specific country

In this study, India has been selected as the country from where the empirical evidence will be gathered and whose culture will be studied. Why India has been selected is due to many reasons.

Firstly, this nation is currently the second most populous nation in the world, second only to China and has a population of more than 1.2 billion people (Wilson,2008;Lakshmi, 2011) and is projected to become the most populous country overtaking China in the 2020s (Wilson,2008; Feng, 2010). Further, its population is projected to grow to the huge number of 1.6 billion by 2050 (Bloom, 2011; Population Reference Bureau, 2011). Already out of the nearly 7 billion people in the world today, 17% belong to India and by 2050 this percentage is projected to increase much more (Population Reference Bureau, 2011).

Secondly, India is being advertised as a nation that is poised to become a superpower of the future and as a haven for economic growth (Wilson,2008; Kumar,2009), especially during the recent global economic crisis (Chaze, 2009; Sharma, 2011). It is also termed as an Asian tiger, second only to China (Ajami, 2005). But, at the same time, India has appalling poverty also, with more than a quarter of its population or more than 300 million people being termed as poor. Further, the economic prosperity has enriched the lives of only around 50 million of its population, thus there exists a colossal divide between the haves and have-nots in the country (Kundu, 2010). In 2009 – 2010, as per the World Bank estimates, 32% of India’s population is in abject poverty (World Bank, 2011). India became a free nation in 1947 (Desai, 2011), but even after it has been free for more than 60 years, in the year 2010, it was ranked at the 119th place among the nations of the world, in the United Nations human development index (United Nations Development Programme, 2010). It has been said that the culture of India has influenced the way trade & commerce is conducted in the country (Kumar, 2009) and within its culture is its highly complex caste system which propounds the peculiar practice of untouchability (Dumont, 1970) which exists till today (Sooryamoorthy,2008) even though it was legally abolished as back as in the 1950’s in the Constitution of India (Desai,2011). It can be said that India is country of extreme extremes. All these stated facts make India a very fascinating, and at the same time, a curious subject for research.

Further, the experiences of the author of this dissertation, professionally, academically and personally have led to the generation of interest into the study of cultural differences across different nations and societies and their impact in the business world. The author has few years of experience of working in a business organisation and also of owning a business venture in India and has been an international student with exposure to people of different nationalities and a plethora of varied ideas, concepts and notions. It has led to the realisation that many differences exist in opinions and judgements, about the same issue, with people from different cultural backgrounds, and an in-depth study would lead to a better understanding and enrichment of the author’s knowledge, and would also help in enhanced performance in the professional career.

1.5 Structure of the dissertation

This dissertation is divided into five main sections. The second section is the literature review, which draws on the works many authors and provides an exhaustive collection of writings on the chosen topic, which is the investigation of the impact of the national culture on leadership in business organisations in India. The literature has been taken from books, journal articles and online sources. The books used are academic books such as, “Managing Across cultures”, by the authors Warner and Joynt (2002), and “Cultures and Organisations: Software of the mind”, by Hofstede and Hofstede (2005; 2010), to name just a few. Books on the subject of business management (including human resource management, marketing management, organisational behaviour, personnel development, economics) and sociology, have been used. The journals used are academic journals such as the, “Harvard Business Review” and the “Journal of Asia-Pacific Business”, to name just a few. Online sources have also been utilised for instance the website of the Chartered Institute of Personnel Development (CIPD). The third section is called the methodology which will be a case study analysis of business organisations in India. In The fourth section the findings of the empirical evidence are collated, analysed and discussed. In the fifth and final section the conclusions are drawn and recommendations are given along with the limitations of this study.

2. Culture and Its Impact on Business

2.1 Introduction

This section gives an exhaustive analysis of the literature on the chosen topic, which is the investigation of the influence of national culture on the aspect of leadership in business management in business organisations in India. Also, critical review of the collected literature has been done in this section. The literature has been collected from books and journals. The explanation of culture, impact of culture on business, the impact on leadership in business and explanation of cultural variables has been given in this section.

2.2 National Culture

As given previously, cultural differences between countries exist and culture does influence the behaviour of employees, managers, and leaders. It is humans who are the producers of cultures, and human cultures are subjective in nature (Triandis, 1990; cited in Price, 2007). The distinctions of race and ethnicity are also the outcomes of culture (Olson, 2002). Culture comprises of norms, values, rules and beliefs. Different cultures have different views of the world. Also there can be broad regional differences in one national culture (Price, 2007). Culture also gives identity to a person and influences the performance, behaviour, values, viewpoints and the mind-set of a person (Harris, 2004).

Culture shock is the term given to the strain & tension (physical and mental) which a person experiences when he/she goes from his/her home country or environment to a new country or a new environment in which a person finds himself/herself helpless and inept (Miller & Aidi, 2008; Xia, 2009). Culture shock can lead to development of antagonism towards the new culture/and or country in the person(s) experiencing frustration and anxiety due to the new environment and can be detrimental in interpersonal relationships (Ferraro, 2006; cited in Xia, 2009). The phenomenon of alcohol abuse has been noted in employees who are sent overseas for business purposes due to the stress caused by culture shock (Barrett, 2009).

It is not possible in the real world to accomplish any objectives in isolation. Collaboration & interaction with others is required in order to accomplish any task. Even the writer of a book has to work with editors and publishers in order to get his work out to an audience. Interaction & collaboration with subordinates, superiors, customers, suppliers and many other associates is daily part of working in any organisation. But as it turns out that we humans are not simple but are complex bundle of many emotions, and we decide for ourselves what is right and what is wrong and reach certain conclusions and make opinions about people and situations (Fisher & Sharp, 1999).

Ethnocentrism, which means having the belief that one’s own culture is right and the others is wrong and that the values, opinions, norms and judgements held by one’s own culture have to be valid and applicable universally. This notion is unfortunately a reality and exists in the business world (Price, 2007). It has been propounded that multinational corporations which are ethnocentric in their approach should be termed as internationally inclined organisations and those which have flexible structures and allow the managers to adapt to cultures of different nations are the genuinely global business organisations (Walton, 1999; Rhinesmith, 1996; cited in Price 2007), which in reality are few in number (Price, 2007). “There is a Russian saying than everyone looks at the world from the bell tower of his own village. Perceptions differ because our experiences differ, and because we select from among our experiences. Each of us observes different data in part because we are all interested in different things. Depending on our specific perspective, our perceptions vary. Terrorists are seen as freedom-fighters by those who would to be free. Freedom-fighters are seen as terrorists by those are terrorised.” (Buchanan and Badham, 2000, Page 159).

As discussed in the above paragraphs, ethnocentrism is an extant feature in humans and also in the business organisations, and at the same time, without interaction and collaboration between different people, tasks cannot be completed and objectives cannot be achieved.

In the current business environment, where diversity of the employees can be immense (Wood, 2008), the need to develop an outlook that acknowledges and understands cultural differences among employees, (Connerley & Pedersen, 2005; cited in Ayman & Korabik, 2010), and removes ethnocentrism, especially in leaders, is required (Triandis, 1995; cited in Ayman & Korabik, 2010).

illustration not visible in this excerpt

Figure 1: The “Onion”: Manifestations of Culture at Different Levels of Depth

(Source: Hofstede, G. and Hofstede, G. (2005). Cultures and Organisations: Software of the mind. 2nd edition. McGraw Hill, pg.7)

As illustrated in figure 1 above, culture can be exhibited in many ways and has many layers. The first layer, the symbols, comprises of gestures, objects and words. These symbols can age out and new ones can appear with passage of time, and can be only skin-deep in character. Heroes, as shown in the second layer of figure 1, are people who have characteristics which are held in high esteem by a culture. These heroes can be living or dead and even imaginary for instance the Barbie doll in United States and the Asterix in France. In today’s age, the selection of heroes by a culture is heavily influenced by the media and external appearances are of significance. Rituals are events done jointly, such as religious ceremonies. Rituals include homilies and debates and are significant socially. Business meetings can be for ritualistic reasons such as for reinforcing a team’s solidarity and even for emphasising a leader’s influence. The final level of culture, as depicted in figure 1, which can also be called as the crux of the culture, are the values. These are assimilated at an early age and can only be deduced by other people from the behaviour of a person. Also, values can be difficult to express and explain and involve the way a person feels about a circumstance or situation (Hofstede & Hofstede, 2005).

illustration not visible in this excerpt

Figure 2: Society wide factors contributing to a multifaceted model of culture

(Source: French, R. (2010).Cross Cultural Management in Work Organisations. 2nd edition. Chartered Institute of Personnel Development, pg.27)

As illustrated in figure 2 above, there are many aspects which influence the culture of a nation. For instance, changes in the political system in Russia led to a change in the values of the people of the country (Thompson & McHugh, 2009; cited in French, 2010). Changes in culture can occur vice-a-versa also, as the change in values of a culture can affect the many aspects or factors, as depicted in figure 2. An example of this is the shift from communist government type to democratic government style in many east European nations due to the change in the values of the people of those countries (French, 2010).

illustration not visible in this excerpt

Figure 3: Culture as a three level layered cake

(Source: French, R. (2010).Cross Cultural Management in Work Organisations. 2nd edition. Chartered Institute of Personnel Development, pg.40)

Figure 3 explains culture as having three layers. The outer layer consists of objects, heroes, signs and expressions which can easily represent a culture, for example the national flag of a country (French, 2010). The second layer consists of the customs and practices of a culture. The third and final layer is the foundation and consists of the values of a culture.

As it can be observed in figure 1 and 3, when explaining the notion of culture, the values are always forming the fundamental base of the concept. Figure 1 and 3 are from different authors (figure 1 is from Hosftede & Hofstede, who is regarded as a pioneer in this field), but both have emphasised the same aspect of ‘values’ when elucidating the concept of culture. ‘Values’ is seen as having the central position in culture and at the same time, values are difficult to explain.

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