Leadership & Organization Development Journal

Leadership and organizational effectiveness in multinational enterprises in southeast Asia

Michita Champathes Rodsutti Fredric William Swierczek
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Michita Champathes Rodsutti Fredric William Swierczek, (2002),"Leadership and organizational effectiveness in
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 Leadership and organizational effestireness
in multinational enterprises in southeast Asia
Keywords
Leadership,
Organizational effectiveness,
Organizational culture,
Management styles, Motivation,
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
Job satisfaction
Abstrast
This paper identifies the key
relationships of organizational
effectiveness and leadership in
southeast Asia. Managers from
Ł,065 multinational companies
based in Thailand and
representing 3Ł different
nationalities participated in this
study. International leader
characteristics and organizational
culture are found to determine an
appropriate multicultural
management style. Executive
motivation is strongly influenced
by this multicultural management
style. Different dimensions of
organizational effectiveness,
including return on assets, most
admired, job satisfaction and
personal satisfaction are related
to specific aspects of leader
characteristics, organizational
culture and multicultural
management style.
ªeceived: January 2002
ªevised: March 2002
Accepted: April 2002
The research register for this journal is available at
Leadership & Organization
Development Journal
23/5 [2002] 250–259
MCB UP Limited
[ISSN 0143-7739]
[DOI 10.1108/01437730210435965]
[ 250
]
Mickita Ckampatkes Rodsutti
Asian Institute of Technology, Klongluang, Pathumthani, Thailand
Fredric William Swierczek
Asian Institute of Technology, Klongluang, Pathumthani, Thailand
Introdustion
In the globalization era, different cultural
frameworks of both leaders and local staff
require specific skills of leadership. Leaders
of multinational enterprises have to
respond effectively to the dynamics of their
own organizational culture and the multi-
cultures of staff and the country in which
they are based. Some multinational
enterprises can succeed in this blending of
cultures, but most cannot succeed in
different cultural milieus. Does
organizational effectiveness influence
different leadership styles in multinational
enterprises based in Thailand? In this paper
important leadership dimensions related to
organizational effectiveness are reviewed.
Organizational effestireness
There is still no universalistic definition
or accepted model for organizational
effectiveness, since the best criteria remain
elusive because the goals and objectives of
organizations are multiple and difficult to
identify (Cameron, 1981; Sekaran, 1994;
Lachman and Wolfe, 1997). However, there
are two major perspectives. The first is an
external approach which is focused on the
goals of the organizations and its
relationship to its environment. This is the
system resource perspective. The second is
an internal approach based on
organizational process which is focused on
productivity and employee satisfaction.
In the external approach, the most widely
used effectiveness criterion for
organizations is goal attainment or goal
accomplishment. Goal-attainment
approaches define organizational
effectiveness as the accomplishment of a
set of organizational goals and objectives
(Steers, 1975). There have been many
efforts to define goal
The current issue and full text archive of this journal is available at
attainment in organizational effectiveness.
Price (1968) has developed propositions about
the determinants of organizational
effectiveness by reviewing 50 studies that
have attempted to explain variations in
organizational effectiveness. However,
dissatisfaction with goals-attainment models
has increased over time because of the
difficulties in defining organizational goals
(Miles, 1980; Mohr, 1983; Ott and Shafritz,
1994). An alternative, based on the system
resource perspective, has been proposed.
System resource models emphasize the
specific ends of organizations, but also the
means necessary to achieve those ends
(Miles, 1980). Yutchman and Seashore (1967)
defined an organization’s effectiveness in
terms of its bargaining position – that is, how
well it can exploit its environment in the
acquisition of scarce and valued resources
(Yutchman and Seashore, 1967). The term
‘‘bargaining position’’ refers to the ability of
the organization to acquire resources. The
highest level of organizational effectiveness
is reached when the organization maximizes
its bargaining position and optimizes its
resource procurement (Pennings and
Goodman, 1977, p. 176).
This approach has resulted in the
development of multiple constituency models
of organizational effectiveness. As open
systems, organizations involve many parties
or stakeholders, including shareholders,
employees and society. Models of multiple
constituencies suggest that organizations are
effective to the extent to which their
constituencies are at least minimally
satisfied (Keeley, 1978; Connolly et. al., 1980;
Miles, 1980). Gaertner and Ramnarayan
(1983, p. 97) defined this effectiveness as
‘‘the ability of an organization to account
successfully for its outputs and operations
to its various internal and external
constituencies’’.
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
The internal organizational effectiveness
approach is based on a well managed
system and competent internal processes.
An organization has a well managed system
if its members are highly integrated,
information flows smoothly, and employees
achieve good performance, enjoy job
satisfaction and are committed to the
organization (Katz and Kahn, 1966; Likert,
1967; Cameron, 1986). In other words, the
organization must also be a ‘‘good place to
work’’ for its employees (Lawler, 1996). Like
goals, relevant systems and processes are
difficult to specify, define, and assess
(Lachman and Wolfe, 1997).
Job satisfaction is a crucial element in
business success. This is reinforced by a
growing body of academic research
demonstrating the links between employee
satisfaction and performance (Whitehead,
1998). Nevertheless, concerning people
management, job satisfaction alone may
not be sufficient to explain how people feel
at work. From a meta-analysis of job
satisfaction and personal satisfaction
conducted by Rain et al. (1991), both types
of satisfaction are equally important in
performance. This research focuses on job
satisfaction and personal satisfaction to
determine the internal organizational
effectiveness of multinational enterprises.
Multiple measures of organizational
effectiveness are considered. The first
measure of performance is ROA (return on
assets). This reflects goal-attainment,
resource acquisition and one constituency –
investors or shareholders. ROA is the most
common measure of firm performance in
management research (Gomez-Mejia and
Palich, 1997). Although some studies used
ROE (return on equity) or ROI (return on
investment) in measuring financial
performance, ROA is better to measure
management capability related to
profitability.
As Kim et al. (1989, p. 50) recognize, ROA
measures ‘‘the relative efficiency with
which the firm produces its output and is
particularly well suited to reflect the
attainment of strategies in business
operations.’’ Because of its widespread
acceptance and its relative resistance to
financial manipulation, this study employs
ROA as a financial performance indicator
suitable for the external dimension of
effectiveness (Gerhart and Milkovich, 1990).
Secondly, external effectiveness is also
represented by the perspective of peer
companies in the business environment, i.e.
customers, suppliers and competitors. The
Most Admired ranking developed by Fortune
is a well-accepted method for measuring
external performance based on peer
review.
To determine the effectiveness based
on internal processes, job and personal
satisfaction were used (Rain et. al., 1991;
Atkinson et. al., 1997). Job satisfaction is
a significant reflection of the behavioral
aspects of employees (Checkland, 1981).
Evidence suggests that ‘‘satisfied executives
are more likely to experience high internal
executive motivation, to give high-quality
work performance, and to have low
turnover’’ (Bruce and Blackburn, 1992).
Kirkman and Shapiro (2001) stated
executives who are more personally satisfied
are less likely to leave, more likely to display
supportive behavior and are satisfied with
their lives overall (Kirkman and Shapiro,
2001; Judge and Watanabe, 1993). Work-
related effectiveness is represented by job
satisfaction and individual effectiveness is
represented by personal satisfaction.
This study will examine the four major
components of leadership which are most
related to organizational effectiveness. These
are international leader characteristics,
organizational culture, multicultural
management style and executive motivation.
International leader sharasteristiss
and organizational effestireness
The relationship between international
leader characteristics and organizational
effectiveness was initially investigated by
Lieberson and O’Connor (1972). This study is
regarded as the major source of empirical
support for the view that leaders have a
limited influence on organizational
effectiveness because they are constrained by
situational factors. Thomas (1988, p. 388)
provides evidence that individual leaders do
make a difference. His study was carried out
in large international retail firms in the UK
and was designed to overcome the
methodological problems of earlier studies.
Another study by Roth (1995) found an
overall pattern of CEO characteristics
(internal locus of control, emotional
orientation and international experience)
had an important influence on firm
performance. The contradictory findings
about leadership should be clarified.
Consequently, international leader
characteristics will be examined in this study
as they relate to organizational effectiveness.
Organizational sulture and
organizational effestireness
Past research suggests that if managers paid
more attention to organizational culture,
including an organization’s ideals, norms,
[ 25Ł ]
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
[ 252
]
and values, and recognized the symbolic
aspects of management, they would have
powerful tools for enhancing organizational
effectiveness (Gummer, 1990). A firm that
ignores the importance of organizational
culture may develop several competing sets
of values with conflicting interests, or a
weak culture that does not contribute to its
effectiveness (Smith and Kleiner, 1987).
Does organizational culture really
influence organizational effectiveness?
Kotter and Heskett (1992) found that firms
with cultures that valued the key
stakeholders (customers, stockholders, and
employees) and leadership from managers
at all levels significantly outperformed
firms that did not have those cultural
values. Over an 11-year period, the more
culturally developed firms increased
revenues by an average of 682 per cent
compared to their peers’ 166 per cent and
also improved their net incomes by 756 per
cent.
Sheridan (1992) found that an interpersonal
relationship-oriented culture highly
influences the retention of executives.
Professionals in companies that
emphasized interpersonal relationships
remained
14 months longer than those in firms
emphasizing only task-related values.
Petty, et al. (1995) indicated that measures
of organizational culture were also
significantly related to objective measures
of performance. A more appropriate
organizational culture can improve
organizational performance in financial
terms (Petty et al., 1995). For the
organizational effectiveness of
multinational enterprises, organizational
culture is a key success factor.
Multisultural management
style and organizational
effestireness
At the organizational level, organizational
culture is determined mainly by the top
management team, but each manager can,
through their own management style,
influence the values of their subordinates.
The effect of the managerial level has a
stronger relationship on employee behaviors.
The multicultural management style is one
of the key factors for success in working
with professionals from varied backgrounds
and culture.
Although international executives usually
have high technical skills, the inability to
manage people can cause problems leading
to organizational ineffectiveness.
Consequently, people management has
become an increasingly important element
in the multicultural management style
encouraged in global corporations. The other
important aspect of the multicultural
management style, is cross-cultural
management. With the development of a
diverse workforce, traditional management
approaches need to be adapted and become
more concerned with cultural issues.
Multicultural management becomes a key
determinant of organizational effectiveness.
Multicultural employees with different
national and cultural backgrounds are best
managed by international executives with
special cross-cultural skills and approaches.
People management and organizational
effectiveness
People management approaches were found
to be related to organizational effectiveness
in multinational companies (Huselid, 1995;
Delaney and Huselid, 1996; Klein and Kim,
1998). Employee skills and organizational
supports were positively and significantly
related to return on assets (Huselid, 1995). In
the international banking industry, positive
associations were found between perceived
market performance, i.e. growth in sales,
profitability and market shares and human
resource management practices (Delaney
and Huselid, 1996).
In a survey by the Gallup organization,
27 per cent of international businesses
have a high emphasis on people
management.
These companies also enjoy higher profits
and 22 per cent higher productivity than
average (Prickett, 1998). Schofield (1998)
found that the way people are managed has
a powerful impact on both productivity and
profitability. Moreover, the study shows that
other management practices commonly
associated with performance, such as
competitive strategy, technology, market
share, total quality management do not
influence performance as much as people
management. Research on 60 of the world’s
top multinational corporations, e.g. Xerox,
Warner-Lambert, Unilever and Arthur
Andersen, also confirmed that the effective
management of people in a global business
does create greater profits (Stroh and
Caligiuri, 1998).
High involvement of employees also
increases the profitability, both directly
and indirectly, through the positive
influence on job satisfaction (Vandenberg et
al.,
1999). Participation in management was
strongly and positively related to financial
performance (Wright et al., 1999). Ngo et al.
(1998) found that higher ratings of
performance, measured by peer review,
were also related to better people
management.
The relationship of people
management to internal organizational
effectiveness is
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
also important. Performance related
compensation, training and development
leads to higher employee satisfaction and
retention (Ngo et al., 1998). Team
empowerment is positively related to job
satisfaction, organizational commitment,
and team commitment (Kirkman and Rosen,
1999). Continuous improvement and
empowerment were positively associated
with job satisfaction for employees in
different cultures (Robert et al., 2000).
Different cultures have different
perceptions of job satisfaction (Yavas et al.,
1990). In multinational enterprises, people
management may not be sufficient to
manage a multicultural workforce. Cross-
cultural management is considered a
complementary management approach
related to organizational effectiveness.
Cross-cultural management and
organizational effectiveness
Managing a diverse workforce has proven to
be a key success factor for the effectiveness
of multicultural organizations. Ng and Tung
(1998) found that managers of culturally
heterogeneous branches of international
banks, compared to culturally
homogeneous branches, indicated lower
absenteeism and achieved higher
productivity and financial results. Newman
and Nollen (1996) found that the financial
performance of the European and Asian
work units of a multinational company was
higher when management practices were
adapted to the local culture. This is an
important aspect to assess related to
organizational effectiveness.
Conseptual model of
organizational effestireness and
leadership
International leader characteristics,
organizational culture, multicultural
management style and executive
motivation are key components related to
organizational effectiveness. Specific
characteristics and qualifications of
international executives influence their
multicultural management style. Yousef
(1998) found that there are significant
relationships between the leader’s personal
characteristics such as age, education,
gender, national culture, experience and
performance. These characteristics of the
leader should influence the multicultural
management style. The conceptual model
suggests key hypotheses, which can be
tested.
Hl. Higher external organizational
effectiveness is strongly related to
the international leader
characteristics including good
communication,
dealing well with difficulties,
professionalism and cultural
awareness.
H2. Higher external organizational
effectiveness is strongly related to
organizational culture including
values related to performance-
oriented, long-term employment,
collectivism and quality enhancement.
H3. International leader characteristics
will be strongly related to the
multicultural management style. This
style involves giving opportunities to
subordinates, people management,
local participation and local culture
concerns.
Organizational culture values and practices
are shared by members of a firm (Kotter and
Heskett, 1992). Different organizational
values related to specific management
practices. Organizational culture, also
influences the multicultural management
style of leaders in multinational enterprises.
H4. Organizational culture is strongly
related to the multicultural
management style.
The multicultural management style
considers the appropriate behaviors of
executives in multinational enterprises.
These are the actions executives take to
achieve their performance goals. It is the
multicultural management style which will
be most directly related to the motivation of
international executives. The more leaders
use the multicultural management style, the
more motivated they will be. These actions
will also be consistent with the process
aspects of organizational culture.
H5. The multicultural management style is
strongly related to executive
motivation.
The overall satisfaction of international
executives will increase when the key
motivations are considered. Multinational
enterprises which respond to the motivation
of these executives, can improve their
internal effectiveness as measured by job
satisfaction and personal satisfaction
(Figure 1).
H6. The more motivated the international
executives, the higher the internal
organizational effectiveness.
Methodology
Sample
Data were collected from 1,065 leaders of
multinational enterprises in Thailand; 37
per cent of respondents were in top
management and 45 per cent were division
managers, such as heads of specific
functions. Pertaining to
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
Figure Ł
Model of organizational effectiveness in multinational enterprises
job responsibility, 37 per cent of
respondents were in general management
and the rest were in other functions. Half of
the respondents had been with the
companies more than five years, and 24 per
cent of the respondents had more than ten
years of service. These executives included
31 different nationalities, and the
companies were based in 29 foreign
countries.
Measures
International leader ckaracteristics
The measurement of these characteristics
was developed and validated by Swierczek
and Hirsch (1994). These scales consist of 30
items on a seven-point scale ranging from
‘‘very much’’ to ‘‘not at all’’. Reliability
measured by Cronbach’s alpha was 0.80.
0rganizational culture
A modified version of Swierczek’s (1998)
partnership success scale was used to
measure organizational culture. The
questionnaire was developed from the
original concepts of Hofstede et al. (1990) and
Trompennars (1993); it comprised 32 items
with a seven-point scale based on two
different aspects for each organizational
culture dimension. The reliability was 0.80
for this scale.
Multicultural management style
Two concepts of people management
and cross-cultural management are
included. People management was
developed from in-depth interviews of
the multinational
enterprise managers and expert opinions –
24 items were developed. Cross-cultural
management including 14 items was
developed by Swierczek and Hirsch (1994).
All multicultural management style items
are measured by a seven-point scale which
ranged from ‘‘strongly agree’’ to ‘‘strongly
disagree’’. The reliability was 0.87 for the
overall multicultural management style part
of the survey.
Executive motivation
Hellriegel and Slocum’s (1996) questionnaire
is used for the measurement of motivation; it
comprised 20 items with a seven-point scale
ranging from seven (very satisfied) to one
(not satisfied at all). The reliability of the
executive motivation questionnaire was 0.87.
0rganizational effectiveness
Financial performance was measured by an
average return on assets (ROA) from
1995-1999 financial data, published by the
Nation Multimedia Publishing Group.
To reflect an external viewpoint of
organizational effectiveness, the Most
Admired Companies’ rankings by Fortune,
Far Hastern Hconomic Reviem 2DD and
Asian Business were used as criteria.
Job satisfaction and personal satisfaction of
the leaders were used to measure the
internal aspects of organizational
effectiveness. These internal performance
data are derived from specific questions in
the questionnaire with a seven-point scale
ranging from ‘‘very satisfied’’ to ‘‘not
satisfied at all’’.
Data analysis
Membership lists of different national
chambers of commerce and the Business
Reviem Top lDDD developed by the
Nation Multimedia group, were sources
of the multinational enterprise
databases used for sampling. The
surveys were sent to a
random sample of multinational
companies in Bangkok. The respondents
represent a 26 per cent return from the
4,100 surveys distributed. For the total
sample, the reliability of the survey is
acceptable, as shown in Table I.
Table I
Reliability
Section Alpka
International leader ckaracteristics 0.80
0rganizational culture 0.80
Multicultural management style 0.87
0verall ¡ob satisfaction 0.87
Total survey 0.86
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
In¢erna¢ional leader GHARAG¢eris¢igs
Good communicator
Dealing well witk difficult situation
Professional
Culturally aware
Tecknical competent
Experienced expatriate manager Sub¡ective preference
Most important features of international
leaders
The most important leader characteristic,
as shown in Table II, is good communication
skill (6.38). The least important characteristic
is subjective preference (4.36). These
results indicate the attributes of
international executives in Thailand. In
multicultural organizations with various
national cultures and employee
backgrounds, communication skills are
highly important.
Performance oriented (5.10) is the most
recognized value of organizational culture.
The performance emphasis relates to the
process culture. These leaders emphasize
action rather than the background of
managers and staff. Other key aspects are
long-term employment and collectivism.
These values fit very well with Asian values.
Providing opportunities to subordinates
(6.02), people management (5.69) and local
participation (5.45) are the highest rated
actions related to the multicultural
management style. The Japanese concept of
Table II
Dimensions of leadership
Mean
0rganiza¢ional GUL¢Ure
Performance oriented
Long-term employment
Collectivism
Generalized roles
Network structure
§uality enkancement
Long-term time perception
Feelings
Environmental
oriented
concern
Mul¢IGUL¢Ural managemen¢ s¢yle
0pportunities to develop
People management
Local participation
Local culture concern
Team identity
Delegation
Corporate centric problem
solving Japanese concept of
management
EXEGU¢IVE mo¢iva¢ion
Self actualization
Social relationskips
Pkysical need
management (3.47) is the lowest rated aspect.
These approaches involve the subordinates
in decision making in culturally appropriate
ways. The result for the Japanese concept is
interesting. These Asian executives accept
the values of long-term involvement and
group-based management but reject the
Japanese label.
The highest dimension of executive
motivation is self actualization (5.83) and
the least is physical need (5.32). The
motivation of leaders in multinational
enterprises corresponds very much with
Maslow’s hierarchy of needs. Executives
would achieve a higher level of self-
actualization because the other needs
would already be satisfied.
Assessing tke conceptual model
The LISREL structural equation software
program (Joreskog and Sorborn, 1993) is
used to test the hypotheses derived from the
model of leadership and organizational
effectiveness. Structural equation modeling
is chosen because a series of dependent
variable relationships can be examined
simultaneously, which is a limitation of
other statistical methods. LISREL is used
because it provides a straight forward
method of analysing multiple relationships.
6.38 The ability to assess the relationships
comprehensively provides an approach to
6.30 move from explantory research to
6.Ł6 confirmatory analysis (Table III).
5.65 Several models specifying different
patterns of relationships between the
5.Ł7 external organizational effectiveness
4.99 measures (ROA, Most Admired) and internal
organizational effectiveness ( job satisfaction
4.36 and personal satisfaction) and the leadership
dimensions were tested, to determine the
best fitting model. This is defined as the
degree to which the observed results are
5.Ł0 predicted by the model. The initial model
4.80 includes all relationships from international
4.77 leader characteristics, organizational
culture, multicultural management style and
4.43 executive motivation related to the different
4.32 dimensions of organizational effectiveness.
Alternative models are examined until the
4.44 model with the best fit is derived.
3.7Ł
3.49
3.20 Results and dissussions
The goodness of fit estimates indicate a
good fit of the model to the data (GFI =
6.02 0.87,
5.69 AGFI = 0.83, RMSEA = 0.045). Figure 2 shows
5.45 the causal relationships in the model. All
hypotheses were accepted.
5.20 From the hypotheses, the most effective
4.96 companies are positively related to
4.84
4.Ł6
3.47
5.83
5.69
5.32
 Michita Champathes Rodsutti Table III
and Fredric William Swierczek Testing the model
Leabership anb organizational
effectiveness in multinational Estimate
enterprises in southeast Asia
Leadership & Organization S¢RUG¢ural model
Development Journal
23/5 [2002] 250–259 0rganizational culture ‹ Multicultural management style 0.50‡
International leader ‹ Multicultural management style 0.46‡
ckaracteristics Multicultural ‹ Executive motivation 0.65‡
management style Return on ‹ 0rganizational culture 0.Ł4
assets ‹ International leader 0.Ł9‡
Most Admired ckaracteristics
Measuremen¢ model
International leader ckaracteristics ‹ Professionalism 0.48‡
Experienced overseas 0.56‡
Culturally aware 0.49‡
Sub¡ective preferences 0.24‡
Tecknical competence 0.68‡
Good communicator 0.32‡
Dealing well witk difficulties 0.46‡
Downloaded by University of Montana At 01:40 05 April 2015 (PT)

0rganizational culture ‹ Network 0.77‡

structure 0.73‡
Generalist 0.28‡
§uality enkancement 0.55‡
Collectivism 0.29‡
Performance oriented 0.2Ł‡
Emotional 0.53‡
0rganizational environment 0.47‡
Long-term employment 0.44‡
Long-term time perception
0.45‡
Multicultural management style ‹ People management 0.72‡
Local culture concern 0.62‡
Team identity 0.63‡
Local participation 0.Ł3
Japanese concept of management 0.62‡
Delegation 0.37‡
Career opportunities 0.05
Corporate centric problem
solving 0.78‡
0.73‡
Executive motivation ‹ Social 0.74‡
relationskips Self
actualization
Pkysical need
Goodness of fi¢
GFI (goodness-of-fit index)
0.87
AGFI (ad¡ust goodness-of-fit index)
0.83
Note: ‡ significant in 95 per cent confidential
level

international leader characteristics (Hl)

and organizational culture (H2). More
specifically, leader characteristics are
influenced by the Most Admired criteria but
organizational culture is influenced by the
return on assets. The estimates can be
considered as correlations. The more a
company is rated effectively, the higher the
level of leader characteristics. The best
performing companies are associated with
a process-oriented organizational culture.
H3 examined the relationship between
international leader characteristics and
multicultural management style. The higher
the levels of international leader
characteristics, the more emphasis on
multicultural management style. These
results strongly support that a leader with
more appropriate characteristics (good
communication, dealing well with
difficulties, professionalism and culturally
aware) strongly influences the multicultural
management style. H4 considers the
relationship between organizational culture
and the multicultural management style.
This hypothesis is also confirmed. An
organizational culture with values such as
performance-oriented, long-term
employment, collectivism and quality
enhancement has a direct and positive
relationship to the multicultural
management style. The multicultural
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
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Figure 2
Organizational effectiveness and leadership
management style emphasizes giving
opportunities to subordinates, people
management, local participation and local
culture concern. This style is strongly
related to executive motivation,
specifically
self-actualization. Leaders who encourage
the involvement of their local
subordinates are more motivated. H5 is
accepted.
H6 explores the relationship of executive
motivation to internal effectiveness. The
more motivated these leaders are, the
higher their job satisfaction and their
personal satisfaction. H6 is supported. This
model tested through LISREL finds
empirical support for all the relationships
examined in the six hypotheses.
Conslusions
This study was primarily concerned with
investigating the relationships among
aspects of leadership, which are related to
organizational effectiveness.
According to the analysis, it is interesting
that the two dimensions which represent
the external perspective of organizational
effectiveness, are related to two different
aspects of the model. Return on assets is
moderately and significantly related only to
organizational culture. The better
performing multinational enterprises
emphasized an organizational culture,
which is based on values, such as
performance- oriented, long-term
employment, collectivism and quality
enhancement.
The other dimension of organizational
effectiveness from the external viewpoint is
the peer rating based on the Most Admired
criteria. Multinational enterprises which are
rated higher are characterized by leaders
who are good communicators, deal well with
difficult situations, are professional and
culturally aware.
The key relationship in this model is the
values represented in the organizational
culture which are strongly and significantly
related to the multicultural management
style. This emphasizes opportunities for
subordinates, people management, local
participation and a concern for local culture.
This analysis clearly indicates that the
multicultural management style is a product
both of the leader’s characteristics and
experience, but also of the supportive
organizational culture in which they are
working.
Executive motivation was defined in terms
of physical, social and growth needs.
Executives who emphasize the multicultural
management style achieve a higher level of
motivation. This motivation is very strongly
related to the dimensions of organizational
effectiveness at the internal perspective.
These leaders are more satisfied with their
jobs and their personal conditions.
Organizational effectiveness is associated
with different dimensions of leadership.
More effective multinational enterprises are
related to the process-oriented organizational
culture and a particular set of international
leader characteristics which emphasize
interpersonal skills and problem solving. The
most effective companies strongly emphasize
the multicultural management style which
focuses on people management and
cross-cultural understanding. Leaders who
use this approach have higher executive
motivation. They are also more satisfied
with their overall situation. This style is the
bridge between organizational effectiveness
based on performance from the external
perspective and the internal perspective
based on the psychological dimensions.
This analysis demonstrates very clear and
specific links between organizational
effectiveness and leadership. The most
effective multinational enterprises
emphasize a specific profile of leader
characteristics and create a supportive
organizational culture. More importantly,
these enterprises emphasize a multicultural
management style which motives the leaders
and increases the satisfaction of these key
executives and their subordinates.
The question remains whether these
relationships are causal. There are four
established criteria for making causal
assertions:
 Michita Champathes Rodsutti
and Fredric William Swierczek
Leabership anb
organizational effectiveness
in multinational enterprises
in southeast Asia
Leadership & Organization
Development Journal
23/5 [2002] 250–259
Downloaded by University of Montana At 01:40 05 April 2015 (PT)
1 Sufficient association between two
variables.
2 Temporal antecedence between the cause
versus the effect.
3 Lack of alternative causal variables.
4 A theoretical basis for the relationship
(Hair et al. 1998, p. 592).
Causal assertions are possible if they are
based on a theoretical rationale. The model
of leadership and organizational
effectiveness and the hypotheses developed
from this model are linked very much to
theoretical and empirical support.
However, even if these relationships are
confirmatory and represent strong
associations, other research would be needed
to establish causality.
ªeference
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