• Leadership styles then relate to how managers treat their subordinates and incorporate authoritarian, paternalistic, or participative approaches

. • These styles can be summarized in terms of Likert’s management systems or styles (systems 1 through 4) and the managerial grid (1.1 through 9.9).

• The attitudes of European managers toward dimensions of leadership practice, such as the capacity for leadership and initiative , sharing information and objectives, participation , and internal control, were examined in a classic study by Haire, Ghiselli, and Porter. They found that Europeans, as a composite, had a relatively low opinion of the capabilities of the average person coupled with a relatively positive belief in the necessity for participative leadership styles.

• The study also found that these European managers’ attitudes were affected by hierarchical level, company size, and age. Overall, however, this study found that European managers prefer a participative leadership style. • The Japanese managers in the Haire and associates study had a much greater belief in the capacity of subordinates for leadership and initiative than managers in most other countries.

• The Japanese managers also expressed a more favourable attitude toward the participative leadership style. In terms of sharing information and objectives and using internal control, the Japanese responded above average but were not distinctive. • In a number of ways, Japanese leadership styles differed from those of U.S. managers. Company size and age of the managers were two factors that seemed to affect these differences.

• Other reasons included the basic philosophy of managing people, how information was processed , and the high degree of ethnocentrism by the Japanese. (Ehnocentrism is judging another culture solely by the values and standards of one’s own culture (i.e., our culture is ‘best’!) • However, some often overlooked similarities are important, such as how effective Japanese leaders manage high-achieving and low-achieving subordinates.

• Leadership research in the Middle East traditionally has stressed the basic differences between Middle Eastern and Western management styles. More recent research, however, shows that many managers in multinational organizations in the Persian Gulf region operated in a Western –oriented Likert system 3 (participative) style. Such findings indicate that there may be more similarities of leadership styles between Western and Middle Eastern parts of the world than had previously been assumed.

• Leadership research has also been conducted in some South American countries and even in India. These studies have shown that Likert’s system 3 (participative) leadership styles are more in evidence than traditionally has been assumed. • Although there always will be important differences in styles of leadership between various parts of the world, participative leadership styles may become more prevalent as countries develop and become economically advanced. (Get feedback on India from students!)

• MNCs can use three basic sources for filling overseas positions: home-country nationals (expatriates), host-country nationals, and third –country nationals. In many countries, the most common reason for using home-country nationals , or expatriates, is to get an overseas operation under way . Once this is done, many MNCs turn the top management job over to a host-country national who is familiar with the culture and language and who often commands a lower salary than the home-country national.

• Not only do host-country senior managers often command a lower salary than home-country nationals but frequently home-country nationals receive many other benefits which do not apply to hostcountry nationals. • The primary reason for using third-country nationals is that these people may have the necessary expertise for the job. Many large MNCs may also develop an ‘international management team or group’ whose members may be chosen to fill top management positions in any country where the MNC operates. • (Kodak and Ford and my own examples).

• Many criteria are used in selecting managers for overseas assignments . Some of these include adaptability , independence, self-reliance, physical and emotional health, age, experience, education, knowledge of the local language, motivation, the support of spouse and children, and leadership skills . (Example of dual career families as a problem). • Those who meet selection criteria then are given some form of screening, and many MNC’s require a potentially successful candidate to undertake sometimes extensive pre-departure training and briefing.

• As I said earlier, if a home-country appointment is made , this can be an expensive business, Some studies have indicated that the cost of maintaining a home-country appointee is normally about 2.6 times his/her (but they are mainly men!) annual salary (so if his annual salary is U.S.$100,000, the annual cost of maintaining him in this position is U.S.$ 260,000!) • This high cost is one major reason that most companies prefer appointing a host-country national as soon as possible.

• Another reason, however, is that a home-country national appointee , particularly if he stays for a lengthy period in a foreign country may find that he (& also his family) may find it very hard to adjust when he returns to his home country environment . Often, while in the foreign environment, the homecountry appointee (& his family) has a much higher standard of living than he has once he returns to his home country! • Some MNCs are developing ‘transition strategies’ to try to overcome these types of problems.

• Obviously, one way to try to overcome these sorts of problems is to appoint a host-country manager as soon as possible so that a home-country manager only stays in the foreign environment for as short a period as possible. However, this may not always be possible. • Where I now live, in Thailand, home-country top management used to be very common but now, most large MNCs have Thai nationals as top managers. Interestingly, the main exceptions to this appear to be top managers in many Japanese and French companies operating in Thailand.

• Training is the process of trying to alter employee behavior and attitudes to increase the probability of goal attainment. As indicated, many expatriates require training before, as well as during, their overseas stay. A number of factors will influence a company’s approach to training. One is the basic type of MNC , ethnocentric, polycentric, regiocentric, or geocentric. Another factor is the learning style of the trainees.

• There are two primary reasons for training : organizational and personal. Organizational reasons include overcoming ethnocentrism, improving communication, and validating the effectiveness of training programs. • Personal reasons include improving the ability of expatriates to interact locally and increasing the effectiveness of leadership styles. There are two types of training programs: standard and tailormade. Research indicates that small firms usually rely on standard programs and larger MNCs tailor their training.

• The six major types of training include environmental briefings, cultural orientation, cultural assimilators, language training, sensitivity training, and field experience. • A cultural assimilator is a programmed learning approach that is designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs, and values of another. Assimilators have been developed for many different cultures. Their validity has resulted in the improved effectiveness and satisfaction of those trained as compared with other training methods.

• Organization development (OD) is the deliberate and reasoned introduction ,establishment, reinforcement , and spread of change for the purpose of improving an organization’s effectiveness. • The basic purpose of OD is to reconcile individualgroup-organization differences, often accomplished through the use of OD interventions such as team building , Management by objectives (MBO), confrontation meetings, third-party peacemaking , and survey feedback.

• Research indicates that OD interventions are often less effective in international settings . One primary reason is that many cultures do not have low power distance or low uncertainty avoidance (Hofstede’s dimensions), which are seen as two key dimensions for successful OD efforts. • This is why team building has not worked very well and why MBO might have to be highly modified. • On the other hand, third-party peacemaking and survey feedback have had some success , because they could be adapted to these two dimensions.

• Labor relations is the process through which managers and workers (usually represented by Trade Unions0 identify and determine job relationships that will be in effect at the workplace. • In most countries, the government is also heavily involved in labor relations usually by establishing a framework of laws, rules and regulations about how the labor relations system with the country concerned is supposed to operate.

• Obviously, every country is different as far as its labor relations environment is concerned and so different laws, rules and regulations apply but most countries do have trade unions although these may operate differently from one country to another. • Again, when an MNC begins its operations in a ‘new’ country, management must become aware of that country’s labor relations system so any expatriate manager must operate within the local labor relations framework.

• An example, before I became an academic, I worked as the HR Manager for an American MNC located in my country , Australia, and this company at that time had no trade union or unions for its employees. However, the company was, for the first time, beginning to manufacture products in Australia (up until that time, all products had been imported from the parent company in the USA.) • However, with the manufacturing activity, also came (or would come) trade union membership.

• I then received instructions from my superiors in the U.S. that trade unions were not to be permitted to operate in any company activities in Australia. • I had to advise them that under Australian law , a company could not refuse to grant access to appropriate trade unions and if an appropriate trade union offered membership to any appropriate employee, then that employee could join the Trade Union if he or she wished to.

• A company could not dismiss an employee for joining an appropriate trade union nor could they discriminate against him/her in any way. • At least in theory a company with 1,000 employees with only one member of a trade union. • In practice , however, this would not happen because a Trade Union would require many members in a company.

• Usually MNCs , especially experienced ones , are very careful to follow all the host county’s labor laws, regulations , and rules, and, indeed, any laws , regulations, or rules which apply to any areas of their operations. • Before entering a ‘new’ country then, it is important for them to seek both appropriate legal and commercial advice prior to actually establishing the company in that country.

• Ethics is a study of morality and standards of conduct. It is important in the study of international management because ethical behavior often varies from one country tom another. For example, earlier in this class, I indicated that India had a comparatively low score on the Transparency International Index of corruption, with a score of only 3.1, making it 95th out of 182 countries , and that any score under 5.0 is regarded as unsatisfactory.

• Other research as well as the Transparency International Index has clearly indicated that different countries have different ethical standards required of companies or organizations operating in their country. • As one would expect, ethics is usually seen as a greater problem in under developed countries or developing countries more than in highly developed countries. • Sometimes countries pass laws to attempt to regulate their own companies operating abroad, e.g., the Foreign Corrupt Practices Act (USA, 1977).

• One major development in the future on international management is likely to be even more of a global perspective. Many corporations are likely to become transnationals , no longer concerned with traditional national borders , and view the world as one giant market. Ties will loosen between transnational companies and their home countries, and changing market conditions, such as demographic changes in terms of population, age, culture, and product demands, will receive more attention.

• A second, and complementary , development is likely to be a focus on transnational strategies-how they are formulated and implemented. The right moves are likely to include adopting strategies that reduce overcapacity, differentiating product offerings, and allowing for the rapid exploitation of the learning curve, continuing to watch the competition, and emulating only what works. Another important area oc change should involve training managers in the customs and cultures of those geographic areas where they will be working and being able to choose the best worldwide locations for setting up operations

• Finally, current trends appear to point to much greater joint partnering and the need for ongoing research. The joint venture may, indeed, become a way for transnational companies to compete effectively in the global economy and continued international research is needed to learn and innovate for future success.

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