National differences in leadership. Creation of a concept for the development of international executives

Index of contents

Abstract

The need for an international leadership concept

Literature Review
Definition of leadership in general
Development and relevance of international leadership
The role of culture in the international context

Methodology based on a secondary analysis
National leadership differences in the world's largest economies

Analysis and findings- Development of an international leadership development concept
The need for international leadership development illustrated by a failed internationalization example
Why it is not possible to only transfer successful national leadership to other countries
Measures Concept for the development of international executives

Conclusion

Reference list

Abstract

This scholarly paper aims to create a concept for the development of international executives. The purpose of this concept is to empower international leaders to meet the challenges of different nationalities, cultures and resulting business practices. For this purpose, the current state of literature on national and international leadership practice is reviewed, national differences in leadership culture are analyzed and evaluated, and on this basis concrete measures for international leadership development are derived. Then, the essential measures are brought together to form a feasible concept for successfull international leadership practice, which is compared with the management experience of a board member of a German S-DAX company.

The development of an international leadership concept is necessary because there is a gap in current research and literature in this field. Although the need for preparation for international leadership tasks is emphasized and some individual measures for leadership training have already been developed, there is no practical, holistic development concept. This will be the result of the authors of this paper.

The research was carried out as follows: First, the essential terms for the paper were defined and placed in an international context by means of the current literature. Afterwards, the secondary literature is analyzed in order to find out and to be able to systematize the essential differences of the world's largest economies. This is followed by an expert interview about dealing with the increased need for international leadership, a case study to transform failed to successful international leadership, after which the elaborated measures for international leadership development are presented.

One on of this paper’s main results is that a large part of the countries considered have big differences in their leadership practice due to cultural distinctions. Here, a transferability without adjustments would not be possible.

In this context, our solution concept consists of the following 5 measures for the development of successful international executives. First, we suggest the development of international leadership models. Second, an intercultural 360-degree-feedback should be implemented. Then a global company should introduce international employee surveys. In addition, international leadership assessment centers are needed. Ultimately, the ongoing promotion of international leadership skills is of key importance.

However, the measures proposed in this paper may be subject to significant limitations in practice. Thus, standardized developed measures are not necessarily suitable for every company. Rather, the effectiveness of the measures depends on the respective corporate culture and thus on the individual case.

The need for an international leadership concept

“Give your employees work where they have to make the most of their abilities. Give them all the necessary information. Explain to them clearly what to do. And then - leave them in peace. “ (Hettl, 2013, p. 192). This quote from Robert Waterman shows the growing need for employee empowerment to deliver excellence, both strategic and operational. What Robert Waterman points out with his statement on employee development is becoming increasingly important in the general economic daily routine. Enterprises are more and more confronted with megatrends such as globalization, internationalization and digitization (Kotter, 2010). As a result, companies need to adapt to maintain their own competitiveness (Herger 2016). In particular, the human capital, which forms the core of every company, has accordingly to be prepared and trained for the challenges of these megatrends. Especially the globalization and internationalization cause difficulties which can not be overcome without adaptation measures (Rickard et al., 2009). For companies, this represents a challenge to cope with increasing dynamics in the corporate environment as well as with internal changes. Coordinating and utilizing the increased diversity of employees, managing the clash of different cultures, and managing different cultures and business practices are some of these challenges. The question of a model for international corporate and employee leadership is therefore of central importance nowadays. Without a concept for already international and still expanding companies, the consequences of globalization will inevitably burden competitiveness. Especially as the megatrends cause an increasing diversity of providers, a high complexity in the corporate environment, and thus a reduction in margins. Thus, a concept for the creation of an international leadership culture as well as a strategic plan are indispensable. This paper is therefore dedicated to the creation of such an international leadership concept, to increase the performance of the organization concerned. The research-guiding thesis successful national leadership can be transferred to other countries without any changes and without losing their potential for success is intended to clarify the necessity of such a catalog of measures and is therefore repeatedly included in the derivation of the concept.

Literature Review

In order to give readers an insight into the theoretical foundations of international leadership, the essential definitions and the relevance of international corporate governance are presented below. Here, an understanding is to be gained of what distinguishes international leadership from national leadership and what different demands this places on the respective leadership culture. Ultimately, readers should be made aware of the cultural differences between the individual economies and the implications of this for leadership practice.

Definition of leadership in general

In the following section, two key definitions of leadership are presented, compared, and then interpreted for this paper. First, the definition of the term by Kotter is shown, afterwards the interpretation of leadership by Drucker is presented. Kotter sees leadership in general as setting the strategic and operational direction of a business (Kotter, 1990). Thus, a leader according to Kotter has a certain decision-making competence and ability to act in corporate cultural matters. In addition, a manager has the task of leading the employees according to the corporate goals (Kotter, 1990). Here, too, leadership culture has an important component, since it reflects the core objectives of the corporate objectives through the specifications of the leader. Furthermore, the leadership of employees includes the imparting of motivation and inspiration (Kotter, 1990). This means that leadership design has a major impact on a company's productivity, competitiveness and financial performance. Ultimately, it is important in the leadership to trigger change and movement (Kotter, 1990). This means that change management should be an important core competence of a manager. This is particularly important because of the megatrends mentioned in the introduction. Here, it is important to constantly inspire employees to make changes and empower them to cope with emerging challenges.

For Drucker, a person only becomes a leader by having people to follow him (Cohen, 2010). The followers give him the status of a leader, without which he would not be a leader. However, a high mind or the role of a prophet contributes to the attainment of the status (Cohen, 2010). This means that Drucker divides leaders into thinkers and prophets. Thus, in connection with personnel management, Drucker places a much greater focus on the charismatic character of the leader. Although these characteristics differ, both types of leaders are urgently needed (Cohen, 2010). For Drucker, effective leadership does not mean being loved or admired by its employees. Essentially, the leadership of Drucker is about letting the followers do the right things (Cohen, 2010). Consequently, Drucker is not concerned with the popularity of the leader, but with his leadership qualities. Results of a successful leadership are that leaders are highly visible and they therefore set examples for their employees. For Kotter, leadership therefore also serves as a role model. Employees should be able to meet the requirements of the manager.

When comparing the two terminology definitions, it is striking that Kotter chooses a highly functional approach to leadership. Drucker, on the other hand, chooses a more charismatic approach and deals with the qualities of a leader. For the leadership concept to be developed later, this means that both soft skills and leadership skills need to be developed. This will be reflected in the catalog of measures for international leadership development.

Development and relevance of international leadership

Why is the discussion about national leadership differences necessary?

In essence, we are talking about the greater importance of international leadership due to the megatrends already mentioned, but also because of leadership-specific issues. In particular, the megatrends mentioned above are forcing companies to rethink their HR policy. In addition to the potential risks for the competitiveness of a company mentioned in the introduction due to globalization, internationalization and digitization, the developments also bring with them potential advantages (Vivek and Ghate, 2016). Thus, the low transport costs lead to a possible development of foreign markets. The possibilities for efficient production also make new economic achievements possible. Furthermore, prosperity for emerging economies could broaden the sales territory. Also the constant compulsion to technological progress through the increased competition of foreign companies can lead to at least transitional unique selling points. Affordable global communications open the opportunity for worldwide partnerships and joint ventures, which in turn can boost the sales program. Furthermore, globalization opens up many investment opportunities in other countries and thus promotes expansion opportunities. Ultimately, cultural diversity can increase productivity and efficiency in a company's human capital (Vivek and Ghate 2016). All of these are opportunities will not be adequately exploited without an adjustment of leadership activities. Here, too, there is already an obvious link to the later presented international leadership development. Above all, expanding companies need to prepare and train their executives to face the multiple challenges of an international context.

The leadership-specific issues result from the contingency theory of leadership developed by Fred Edward Fiedler in the 1960s (Ashour, 1973). The leadership style can not be completely separated from the personal characteristics, because personality is strongly related to leadership ability. As a result, an executive in the Fiedler model is difficult to train for new situations. Rather, Fiedler's model suggests changing the situation until it fits the leader and their leadership style. For this, the short formula engineer the job has emerged. Fiedler considers two interacting factors. These are the style of leadership and the favorability of the situation (Ashour, 1973). Thus, following Fiedler, both internal and external factors influence the organizational structure and therefore the leadership effectiveness in a company. External factors are especially the national and cultural differences, which situational must be integrated into the leadership style. This shows that, with regard to the international leadership development concept, particular attention should be given to the cultural differences and the resulting different business practices. On the other hand, international leadership will not be possible. If both internal and external organizational influences are understood by a leader, leadership can be successful.

But what distinguishes international from national leadership? This will be shown by the authors in the following section. The specificity of international leadership over national leadership is the leadership of different cultures and the resulting different demands on the respective corporate culture. In the leadership culture, this manifests itself in particular in the following factors, which are even more important than in a national context: Firstly, there should be an identification of the essential cultural characteristics of a country as well as the derivation of the most important cultural goals. Furthermore, the specific human orientation in the own company culture should be derived from the country’s culture. Subsequently, the resulting leadership skills are derived, which an executive in a certain country needs to be successful there. Ultimately, the culture of the country determines how conflicts are dealt with in a given country.

Thus, it can be stated that international leadership essentially deals with the management of characteristic cultural differences. This raises the question of what a culture actually is. GLOBE defines culture as “shared motives, values, beliefs, identities and interpretations of significant events that result from the collective experience of the members of a collective and are transmitted across generations” (Brodbeck, 2016, p. 38-39). However, the role of culture in international leadership will be discussed in the next section in more detail.

The role of culture in the international context

As the previous section shows, the concept of intercultural leadership thus describes the leadership of employees in a cultural context. On the one hand, this can relate to the relationship between executives and employees in external relations and, on the other hand, to internal interactions. The employees of a company, whether at home or abroad, are always influenced by the respective organizational culture - a set of basic assumptions that are within an organization and thus also within a culture (Abell, 2015). The thinking, evaluating, feeling and everyday actions of the employees are therefore culturally influenced (Abell, 2015). Thus, the culture that impacts a company is both relevant to the strategic direction of an organization and its operational measures. Examples of typical intercultural leadership situations include the selection and assessment of international assignments, the integration of employees into multi-cultural working groups, and the management of intercultural communication within the company (Guo et al., 2016). Added to this are moderation in intercultural conflict situations. In this context, the promotion of intercultural skills of employees and the preparation of employees for tasks in an international context are also important. The consistency of the culture of a country and the corporate culture has significant advantages (Guo et al., 2016). Consequently, if a leader succeeds in integrating the culture of the country into the corporate culture, the following synergies can result. Having a corporate culture tailored to employee needs and country needs can have a positive effect on the organization's performance. In addition, the resulting efficiency and productivity of employees and their collaboration reduces organizational costs (Guo et al., 2016). This also leads to a competitive advantage. If a company succeeds in aligning corporate culture with the needs of each country's consumer, this creates a competitive advantage over other multinational companies that fail to do so (Guo et al., 2016).

In addition, the constant adaptation of the corporate culture to the needs of a host country produces an effective change management. By compelling a company to constantly adapt to the needs of the host country for its competitiveness, performance-enhancing organizational change is enforced (Abell, 2015).

A flexible and dynamic corporate culture can help with various mergers and acquisitions. The main advantage here is that the cultures of the merging companies (even if one of them is foreign) are more easily reconciled than with rigid and conservative corporate structures (Aristos et al., 2018).

This shows the paramount role that both corporate culture and the culture of the target country should play in a company's expansionist plans. At this point, the main thesis, that successful national leadership can be transferred to other countries without any changes and without losing their potential for success, can thus be contradicted at this point of the paper. Thus, with regard to the development of an international leadership concept, the culture and the resulting deductions for the leadership practice of a country must be derived. For that, in the following part of the paper the cultural peculiarities as well as the resulting leadership practices in the largest economies of the world are shown.

Methodology based on a secondary analysis

In order to demonstrate the essential role of culture and the resulting essential insights for the international culture of leadership, the text below shows the main cultural differences of the world's largest economies. For this purpose, the existing secondary literature on the cultural characteristics of the largest economies will be evaluated and from this a conclusion for our thesis as well as our international leadership concept will be derived. The following economies are considered: The United States of America with a gross domestic product of 20400 billion US dollars, the People's Republic of China with a gross domestic product of 14000 billion US dollars, Japan with a gross domestic product of 5200 billion US dollars, Germany with a gross domestic product of 4200 billion US dollars, Brazil with a gross domestic product of 2100 billion US dollars, Russia with a gross domestic product of 1700 billion US dollars and Saudi Arabia with a gross domestic product of 748 billion US dollars. As can be seen from the choice of the countries considered and their cultures, an attempt was made to ensure a holistic view of the cultural differences from Western cultures through the East to Islamic culture. Thus, a profound insight into all cultures and leadership practices should be ensured.

The different countries are examined for essential, comparable specifics, which basically consist of the following components and result from the section "Development and relevance of international leadership": First, an overview of the cultural characteristics of the country is given. As a result, the main cultural goals of an economy are considered. Subsequently, the resulting human orientation is presented, followed by the description of the required leadership skills. Finally, the country-specific handling of conflicts should be included in the consideration.

National leadership differences in the world's largest economies

As mentioned in the introduction to this section, the consideration of the leadership practices of the different countries starts with the United States of America. The main cultural characteristic of the USA is the high individualism, which goes hand in hand with a strong drive for self-realization. Also results from this a high performance orientation, to actually realize your own goals. In addition, this is accompanied by a high focus on the own person (Gluck, 1981). Thus, the main cultural goals are the creation and implementation of personal visions, as well as the recognition and the use of one’s own potential (Gluck, 1981). The human orientation is as follows. In the organizations of American companies exists an extensive self-government and self-competence of employees, which is associated with a high degree of freedom of choice and freedom of action for employees. Furthermore, there is a high focus on employee development and thus a pronounced personnel development philosophy. But contrary to the American opinion, there are strict hierarchies. Despite the employees' high level of personal responsibility, everyone has their own place in the company and has to obey and be accountable to the respective higher authority (Gluck, 1981). Consequently, the criteria defining successful leaders in the USA are pronounced soft skills, a high level of intuition, a strive for consensus and a value equal treatment of the employees, solidarity and the ability to create a good working atmosphere. An American leader should have some kind of overstatement, create and use strategic change, he should be a risk lover and ultimately a profit maker (Srivastava, 2016). The way of dealing with conflicts shows the actual hierarchical organizational structure in American companies. In a conflict, the decision-making power and the assertiveness are by the leader (Gluck, 1981).

In China, the leadership culture is much more determined by the tradition and spiritual practices of the country. The main cultural characteristic of China is the concept of face. In China, a person does everything to make sure he can keep his face. This means that no one should break out of the usual pattern, be particularly conspicuous, or go in a special way against the flow (Hackbart and Ranger, 2014). The main cultural goals are shaped by the Confucian concept. This concept requires loyalty, obedience and decency to the authorities (Hackbart and Ranger, 2014). This is also reflected in the human orientation, which is essentially determined by the notion of guanxi. After that, leadership practice in China is characterized by a degree of reciprocity. This means that the employees respect and support their superiors, but in return the leaders return something to their employees. This requires mutual trust, which is also demanded by the concept of the guanxi. In addition, this involves mutual obligations, both on the employee side and on the leadership side (Nelson, 2012). Therefore, the criteria that define successful leaders in Chinese companies are the decision making in balance of all parties, using indirect communication to make sure nobody loses face for example in conflicts, observing cultural customs to fulfill the claim of traditional compliance, having patience and ultimately he should make ethical considerations above profit (Hackbart and Ranger, 2014). The way of dealing with conflicts is thereby a nonaggressive way of solving. In Chinese leadership practice conflicts are avoided rather than seeking the possibility of conflict resolution. Nevertheless, a good leader has to solve conflicts successfully (Hackbart and Ranger, 2014)!

Leadership in Japan is characterized by the essential cultural specificity, that there are clear framework conditions and plans by the authorities (Fukushige and Spicer, 2011). This is also reflected in the important cultural goal of supporting leadership (whether it be political leadership or corporate governance). This should be done in a stoic posture. Therefore, it is essential to acquire as much knowledge as possible (Fukushige and Spicer, 2011). The human orientation is based on the cultural characteristics described. On the one hand, there is some degree of autonomy, on the other hand strong self-initiative in the support of the leadership is expected. To prevent the rise of some too ambitious employees, there is a certain amount of de-emphasism of the workman (Jung and Takeuchi, 2010). So, the criteria defining successfull leaders in Japan are a strong amount of obedience towards the leadership. Along with this, a too high autonomy of the executive should be avoided. A leader should also be inconspicuous, without resistance, not autonomous and he should not have an extraordinary charisma (Fukushige and Spicer, 2011). Conflicts are not expected to arise, the leader can be sure of obedience of his employees right from the start (Fukushige and Spicer, 2011).

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