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105 Seiten, Note: 1,7
List of Abbreviations
List of Tables and Figures
1.1 Executive Summary
1.2 Scope of Work
2.1 Definition of Problem
2.1.1 The need for Teams in a Merger or Acquisition
2.1.2 Cross-Cultural Challenges in Teams
2.1.3 Team Effectiveness
2.2 Reasoning and Motivation
2.3 Research Methods
3 Relevant Theories
3.1 Mergers and Acquisitions
3.1.1 Definition, Types, and Phases
3.1.2 Theories for Mergers and Acquisitions
184.108.40.206 Transaction Cost Theory
220.127.116.11 Agency Theory
18.104.22.168.1 Resource-based View
22.214.171.124.2 Knowledge-based View
3.2.2 Theories for Culture
126.96.36.199 Kluckhohn / Strodtbeck
3.3.1 Definition and Approaches
3.3.2 Theories for Leadership
188.8.131.52 Blake and Mouton’s Managerial Grid Model
184.108.40.206 Lewin’s Leadership Styles
220.127.116.11 Likert’s Leadership Styles
18.104.22.168 French and Raven Power Taxonomy
22.214.171.124 Social Exchange Theory
126.96.36.199 Strategic Contingencies Theory
188.8.131.52 Fiedler’s Contingency Model
184.108.40.206 House’s Path-Goal Theory
220.127.116.11 Vroom-Yetton / Vroom-Jago Model
3.4.2 Theories for Teams
18.104.22.168 Tuckman’s Model of Group Development
22.214.171.124 Gersick’s Punctuated Equilibrium Model
126.96.36.199 Belbin’s Team Roles
188.8.131.52 Hackman’s Team Effectiveness Model
184.108.40.206 Guzzo & Shea’s Team Effectiveness Model
4 Selected Theory Elements
4.1 Geert Hofstede’s Culture Value Dimensions
4.1.1 Power Distance
4.1.2 Individualism versus Collectivism
4.1.3 Masculinity versus Femininity
4.1.4 Uncertainty Avoidance
4.1.5 Long-Term versus Short-Term Orientation
4.2 Likert’s Leadership Styles
4.2.1 Exploitative Authoritative
4.2.2 Benevolent Authoritative
4.3 Hackman’s Team Effectiveness Model
4.3.1 Real Team
4.3.2 Compelling Direction
4.3.3 Enabling Structure
4.3.4 Supportive Organizational Context
4.3.5 Expert Coaching
5 Case - European Aeronautic Defence and Space Company N.V
5.1 The Multinational Merger of EADS
5.1.1 About EADS
5.1.2 The Merger in 2000
5.2 Application of Selected Theory Elements
5.2.1 Hofstede’s Culture Value Dimensions
220.127.116.11 French Culture
18.104.22.168 German Culture
22.214.171.124 Spanish Culture
5.2.2 Likert – Leadership Styles
5.2.3 Hackman’s Team Effectiveness Model
5.3 Findings and Interpretation of Expert Interviews
5.4 Solution of Case Problem
6 Conclusion / Critical Comments / Outlook
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Figure 1: Cross Border M&As 1987-
Figure 2: Kluckhohn & Strodtbeck’s Culture Value Orientations
Figure 3: Managerial Grid Model
Figure 4: The Punctuated Equilibrium Model
Figure 5: Hackman's Team Effectiveness Model
Figure 6: Sample Hofstede Graph
Figure 7: IPO Framework for Analyzing Group Behavior and Performance
Figure 8: Four Levels of Self-Management
Figure 9: Setting Direction about Means versus Ends
Figure 10: Hofstede Graph for France
Figure 11: Hofstede Graph for Germany
Figure 12: Hofstede Graph for Spain
Figure 13: Findings on Cultural Value Dimensions for France
Figure 14: Findings on Cultural Value Dimensions for Germany
Figure 15: Findings on Cultural Value Dimensions for Spain
Table 1: French and Raven Power Taxonomy
Table 2: Belbin's Team Roles
Table 3: Findings on Cultural Value Dimensions from Expert Interviews
The International Management program at the Fachhochschule für Oekonomie und Management (FOM) gave me the opportunity to learn a lot about today’s global economy. Along with the semester I studied at the Paris Graduate School of Management (PGSM) as well as my practical experience in the insurance sector, this program provides a good basis for my future career. With the present bachelor thesis I would like to apply the knowledge I gained within the last three and a half years by doing research on the chosen topic.
This bachelor thesis is addressed to the exam-committee of the FOM and explains the impact of cultural diversity on teams in mergers and acquisitions. With this paper, I plan to finish my studies at the FOM. I was always interested in other countries and their respective cultures, which was one of the major reasons for spending one year of high school in Sodus, NY, USA and a semester in Paris, France. Especially in Paris I got to work in teams that were made up of people with various cultural backgrounds. This was very interesting and inspiring, and lead to my choice for a culture- and team-related topic for the bachelor thesis.
At this point I would like to thank the lecturers at the FOM and the PGSM that I had the chance to listen to and that guided me throughout my studies. I especially thank Jörg H. Fischer for tutoring me and giving me his support in order to finish my studies with the present thesis.
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The paper at hand gives information on how to succeed with teamwork in a cross-border and multicultural context, which is of major importance in the case of international mergers and acquisitions (M&As). A company’s management and people in charge of international teams not only face cultural diversity and the implications that come with it, but also the question of how to get teams to be most effective. What kind of leadership is most appropriate for teams and what factors influence teams in their efficiency are two of the most important questions to be answered. For that reason the present thesis concentrates on some of the major theories on M&As, culture, leadership, and team effectiveness and applies them to a practical example: European Aeronautic Defence and Space Company N.V. (EADS), a company that emerged from three culturally different companies in 2000 and that faced and still faces the challenges mentioned above. People from France, Germany, and Spain now need to work together to accomplish common goals, often by means of teamwork. The reader gets to know how EADS perceives and handles cultural diversity, exercises leadership, and achieves team effectiveness. The theory elements selected before serve as a guideline to see how EADS’ actions affected the challenges they faced. These findings from secondary sources together with in-depth interviews with a senior executive at EADS and other experts on multicultural teamwork provide the basis for recommendations on how to cope with cultural diversity after a merger or acquisition. These especially focus on what should be considered in this respect to make the transaction succeed after all. Critical comments and an outlook are added by the author at the end of this research paper.
The thesis starts with an introduction in chapter 1, covering an executive summary of the present thesis followed by the current chapter, which gives an overview of how this thesis is structured. Chapter 2 includes a definition of the problem that the research is based on as well as the authors reasoning and motivation for choosing “Successfully Structuring Multicultural Teams in M&As – based on the example of EADS N.V.” as a topic for the bachelor thesis. At the end of chapter 2 the reader gets an overview of available primary and secondary research methods and which ones had been used. All relevant theories for the subjects covered in this thesis are listed and briefly described in chapter 3, which starts with the field of M&As, followed by theories for culture, leadership, and teams. In chapter 4 the author gives more detailed information on selected theory elements that were in his opinion most suitable for doing research on the given topic. After these theoretical parts of the thesis, chapter 5 advances to the practical example of EADS. Some general information about EADS and the merger in 2000 is given, being followed by an application of the theory elements selected in chapter 4. The next part of this chapter shows the findings and interpretation of the conducted expert interviews for each of the areas in focus. Chapter 5 finishes by describing the author’s finding on how EADS solved the problem mentioned in chapter 2. The bachelor thesis ends with a conclusion, critical comments, and an outlook by the author in chapter 6.
Due to ongoing globalization and increasing competition, the market for M&As has been remarkably growing throughout the two last decades, especially booming in the 1990s. Multinational mega-mergers such as Daimler-Chrysler and Exxon-Mobil “virtually changed the landscapes of their respective global markets.” M&As continue to radically change business environments. Even though M&A activity has been decreasing between 2000 and 2003, it has been growing again in 2004 (see Figure 1). The trend for the future is upwards, especially for hostile takeovers. The continuous gathering of EU (European Union)-states under one economic roof and the economic opening of countries following the Warsaw Pact provide new opportunities for industry, trade and services.
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Figure 1: Cross Border M&As 1987-2004.
Knowing about the importance of M&As for worldwide economy, it is very unsatisfactory that more than 50% of them do not deliver the expected outcome in the sense of added value and interest. The consultancy company AT Kearney found out that, in average, companies lose 10% of profitability after the transaction. Companies are frequently losing great amounts of capital. For an example, Bayrische Motorenwerke AG (BMW) bought Rover in 1994 for around 7 billion (bn) US$ and sold it again in 2000 for ten British Pounds. There are various reasons for these failures, such as unsystematic and inconsistent acquisition-strategies or integration problems, as well as a lack of stringency in conducting demerger-activities.
By 1999, 85% of American top-managers believed that human resource problems have a bigger influence on the success of an M&A than problems in the financial area. In other words, the merger will only be successful, if the employees accept the management’s decision and are thus ready to work together with their new colleagues. One of the major integration problems is the cultural difference between people in the merged companies. “Managers have often seriously underestimated the significance of cultural factors.” Differences appear in three major areas: one is the structural difference between the two firms in size, age, and their history, as well as the industry they are in, geographic locations, and whether products and/or services are involved. Secondly there are political differences in a sense that managerial decision making may reside in different levels of hierarchy. Thirdly there may be a difference in emotions, which is the main focus of this research: different day-to-day thoughts, habits, attitudes, commitment, and daily behaviors have a major influence onto the clash or compatibility of two or more cultures. As all the points mentioned above illustrate, most problems are seen in the merger integration process. It is found to be “difficult, time consuming, uncertain, and fraught with risks and setbacks.”
The issues mentioned above appear greatly in multicultural teams formed before, during, and after an international M&A. One of the biggest purposes for forming teams in international companies is the implementation of projects. Projects are most commonly used when there are:
- relatively new,
- particularly complex,
- highly interdisciplinary
tasks and problems. These conditions are especially fulfilled when an M&A is planned and undertaken.
Apart from these specific reasons to form teams, there is an overall trend towards employee participation in decision-making. John Naisbitt portrayed this phenomenon as a megatrend towards participative ethic. This theory has been affirmed by other economics, including Thomas R. Harvey and Bonita Drolet: “People want and expect some measure of control over their own destinies.” They also expect horizontal team structures to replace vertical, authoritarian command structures as the twenty-first century advances. Not only have teams become very popular, but also firms discovered that “people working together as a group can accomplish more than they can working individually.” As a consequence, managers must build strong teams and strong people in order to survive in the future and to ultimately build strong organizations.
In times where the world of organizations is no longer defined by national boundaries, managers need to take cultural differences into account. In cross-cultural M&As there is always communication between at least two cultures. It may be said that culture is a critical factor for the success of the venture. Exploding data traffic, an increasing movement of people, and the international exchange of goods lead to the fact that cultural standards and beliefs admix – but they also collide. “There are many instances where the failure of an international alliance [such as an M&A] has been attributed to lack of cultural fit, or conflict between two cultures”. Multinational enterprises (MNEs) may see it as an additional burden to adapt to local cultural values that are transmitted through a nation’s political economy, education, religion, and language. It is unquestionable that teams have become an omnipresent part of all organizations, but managers need to be aware “of the differences that can result from diversity within a group or team.” Thus it is important to know how to handle this issue and get the most out of cultural diversity. A successful team leader or builder additionally faces the challenge to build teams across functional and corporate differences, which brings up the question on how to best lead a team.
Unfortunately, teams often lead to negative outcomes in terms of low productivity, poor decisions, or conflict. Research done in the field of team effectiveness has begun around 20 years ago, so it is still quite young. It suggests that teams hold the potential for a lot of positive outcomes. What conditions are necessary for teams to be effective and how this effectiveness can actually be measured are major issues of the research done in this thesis.
The problems mentioned above show that many M&As do not bring the success anticipated before the transaction. In a more and more globalizing world this problem will be of growing concern, as companies will need to internationalize in order to stay competitive. As mentioned in chapter 2.1.3, an M&A is not only about institutions, but also people from the respective countries coming together. Different cultural backgrounds may cause misunderstandings, prejudices, and misinterpretations. The other issue to point out is the general trend towards participation and teamwork. All of these aspects together are a great challenge for companies, managers, and employees in today’s global business environment and ask for further research and studies. There have been numerous studies and theories on M&As, culture, leadership, and teams. But research on how these issues play together has only recently started, and there are a lot of problems still to be solved. The paper at hand tries to find out, how M&As can get to be more successful through the effective use of multicultural teamwork.
The author’s motivation for choosing this topic lies mainly in his experiences made in Paris, France. As he got to work in small teams with people from various countries (mainly France, Mexico, China, USA, Spain, and Sweden), he experienced some of the pros and cons of multicultural teamwork himself. It was interesting to see how people from different cultures could all reach the same goal, but with different approaches based on how they were used to solve a problem and tackle a task. The author considers multicultural teamwork a powerful tool for companies to remain competitive in tomorrow’s business environment. Getting deeper insights and finding out how to be more effective in this respect was the author’s main motivation for conducting research on the chosen topic.
In general, research may be described as “a careful investigation leading to the discovery and interpretation of information.” There are various methods at hand for researchers, which allow them to discover and reinterpret this information, or to suggest practical applications or theoretical implications of that information. These methods may be divided into two types of research: primary and secondary research.
“Primary research is the study of a subject through firsthand observation and investigation”. Examples for primary research methods are of a qualitative kind such as in-depth interviews, focus groups, and panels, or quantitative methods like telephone, self-administered, and interview surveys. The author uses in-depth interviews with experts from different areas. Questions in the interviews vary depending on the occupation, knowledge, and experience of the expert. Due to the author’s occupation and personal contacts many experts have an insurance-related background. Secondary Research refers to the examination of studies that others have written about a topic, such as books and articles (in journals, newspapers, the internet etc.). In contrast to primary research it is about data that has already been collected and, if used in a research paper, needs to be fully cited. The author uses the most common types of secondary research, including all of the sources mentioned above.
In most discussions on activity in the area of M&As the terms merger, acquisition, and consolidation are used interchangeably. The management of a target firm usually prefers to talk about a merger of the two firms, while the term used in discussions amongst themselves and the boards of directors is ‘acquisition’. They seem to find more comfort in talking about a merger, as it implies mutual interests. Still, there are some considerable differences between a merger and an acquisition in the degree of cooperation and interaction between the two firms. While mergers tend to involve equalized firms, an acquisition of a firm is usually exercised by a large and more powerful firm taking over a smaller one. The key factor for distinguishing the two “is the extent to which one firm is expected unilaterally to give up its independence to the other.” In general, M&As vary along three dimensions: the dominant strategic purpose, the degree of friendliness versus hostility, and the desired level of integration between the firms.
M&As may be divided into four types depending on the “extent to which the business activities of the acquired organization are related to those of the acquirer”: (1) vertical, (2) horizontal, (3) conglomerate, and (4) concentric. In a vertical M&A the two firms work in successive processes in the same industry, e.g. a manufacturer buys one of its suppliers. Horizontal M&As refer to mergers of two firms in the same industry, so former competitors. If a firm acquires another firm from a completely unrelated industry one may speak of a conglomerate M&A. Concentric mergers differ from horizontal mergers in the fact that the acquired firm is in an unfamiliar but related industry into which the acquirer wishes to expand. Instead of speaking of concentric mergers, other research suggests to distinguish between product and market extension. Product extension is defined just like concentric mergers, while market extension refers to M&As in which the acquirer wishes to sell the same products in another market that has not been tapped yet.
Marks and Mirvis (1998) introduced a three-stage model for dividing the M&A process into phases, namely precombination, combination, and postcombination. The precombination phase, also called the pre-merger phase, is usually a time spent with financial implications. Buyers concentrate on aspects like the price for the target, tax implications, the estimated return on investment, and how to structure the transaction. Communication between the two parties is often very low, which may create an atmosphere of uncertainty and ambiguity. In the combination or merger phase, emphasis is generally put on political issues, mostly dealing with power. The postcombination or post-merger phase “requires implementing the decisions made for integrating organizations, structures, structures, cultures, policies, practices, and people.” This phase is in the main focus of this thesis, also because it is considered the key to making acquisitions work.
The Transaction Cost Theory goes back to the research done by John R. Commons (1934) and Ronald H. Coase (1937). It was later extended by Oliver E. Williamson (1979). The basic question they asked was: Why are not all economic transactions handled on the market? Or putting it another way: Why do organizations evolve that internalize market transactions? Coase started off with a vague definition of transaction costs as “the cost of using the price mechanism”. This definition left a lot of interpretation to what costs can be included, which lead many transaction cost economics to do further research and give more specific definitions. Definitions for transaction costs vary depending on what they are applied for, so Thrainn Eggertsson suggests that there is “no clear-cut definition of transaction costs”. Others tried to redefine the term, like Williamson who first defines the term ‘transaction’ by saying it “occurs when a good or service is transferred across a technologically separate interface”. He then describes the respective costs as "the economic equivalent of friction in physical systems”. They could “include all costs associated with any allocative decision regardless of whether the decision is made in a market or by a government (i.e. policies).”
A company needs to decide whether it is more efficient to internalize transactions or use the market. The decision between the two main institutions, meaning the organization and the market, and therefore the decision between the coordinates price-system and hierarchy-system, is made after the consideration of costs. As long as costs in the market are lower, the market decision will be made. But as soon as they are higher, the hierarchy-decision is the right choice and the market will be internalized, or taken into the organization.
Also called the principal-agent problem, the agency theory describes the problem “that because people are, in the end, self-interested they will have conflicts of interests over at least some issues any time they attempt to engage in cooperative endeavors.” This problem has first been introduced by Michael C. Jensen and William H. Meckling in 1976. Their findings started a discussion on the work of companies’ top management in a sense that they may often be led by personal interests rather than those of the company. An agent is, by commercial law, defined as “a person, who is authorized to act on the behalf of another (called the principal) to create a legal relationship with a Third Party.” As both the agent (i.e. the top management team) and the principal (share-/stakeholders) are commonly considered utility maximizers, it is easy to assume a conflict of interests in this agency relationship. The fact that the agent usually obtains information earlier than the principal may be tempting for the agent to make decisions, which may not be to the welfare of the principal. For cooperations like M&As this may happen in two ways: within the cooperation or between the common management team and executives in the cooperation. Due to this problem the principal has different types of costs defined as agency costs. These arise from three sources: monitoring expenditures by the principal (measuring, observing, and controlling the agent), bonding expenditures by the agent (monitoring others, who in turn may act for their own interest), and residual losses (losses due to the agent not acting for the full welfare of the principal).
Following the definition of Thompson, Gamble, and Strickland, “a company’s strategy consists of the combination of competitive moves and business approaches that managers employ to please customers, compete successfully, conduct operations, and achieve organizational objectives.” It shows what choices the company’s managers made among alternative markets, competitive approaches, and ways of operating. Over time, various theories and approaches have been developed to explain the fact that some companies are more successful than others. Considering that this chapter focuses on M&As, there are two theories to mention: resource-based view (RBV) and knowledge-based view (KBV).
The RBV on the firm analyzes the company itself rather than the competitive environment. This approach has its root in an early work by Edith Penrose (1959), who provided a quite detailed exposition of a research based view. She stated that a firm is not only an administrative unit, but also “a collection of productive resources the disposal of which between different users and over time is determined by administrative decision.” R.P. Rumelt (1984) later summarizes the RBV on firms as follows: “[A] firm’s competitive position is defined by a bundle of unique resources and relationships". One of the most often cited definitions for the term resources is given by B. Wernerfelt (1984). He defined resources as “those (tangible and intangible) assets which are tied semi-permanently to the firm." The main aspect of the theory is that differences between competitors are a result of efficiency differences in resources. Only if there are differences between firms, there may be differences in efficiency and consequently in success. Resources need to provide some conditions to enable the company to not only obtain, but also sustain a competitive advantage: they need to be valuable, rare, imperfectly imitable, and imperfectly substitutable.
The KBV is based on the findings for the RBV, but instead of regarding knowledge as one of the intangible assets it is considered the decisive criterion for companies. The firm becomes a “body of knowledge”. Tangible assets and “intangible relations are the results of human action, and depend ultimately on people for their continued existence.” There have been various definitions for knowledge in past research. Liebeskind (1996) defines it as “information whose validity has been established through test of proof”, while Bierly et al. (2000) regard knowledge “as clear understanding of information and their associated patterns and learning about knowledge [...] as the process of analysis and synthesis of information.” The theory states that firms vary in their knowledge identification, allocation, utility, transfer, and protection. There has been research on different types of knowledge, like explicit and implicit (or tacit) knowledge, as well as construed, internalized, and conceptual knowledge. Other economists concentrated on different levels, on which knowledge is examined, namely the individual and the collective level.
One of the major researchers in the area of knowledge is Ikojiro Nonaka, who introduced the theory of organizational knowledge creation. It explains how organizational knowledge is created and states that it is essential for continuous innovation, which in turn leads to competitive advantage. As the present research paper focuses on M&As, the most interesting issue addressed by Nonaka is the question of how knowledge is socialized and externalized, or transferred. Cross-cultural socialization is regarded as “a time-consuming and costly process that is indispensable to carrying out organizational knowledge creation across national boundaries.” This process is hard because it takes time to share tacit knowledge and build trust between people from different cultures, but it is necessary. Mobilizing employees, including so called training or knowledge specialists, is considered important for the socialization and externalization process. Tacit knowledge needs to be externalized into explicit language through e.g. manuals for employees. Nonaka considers the discovery and remedy of weaknesses at an individual and organizational level as a key for effective organizational knowledge-creation on a global scale, adding three conditions: strong commitment by the top-management, assigning capable middle managers as global knowledge engineers, and the development of a sufficient level of trust among participants in the project.
Talking about culture in M&As there are two types of issues to mention: national culture and organizational culture. As this thesis focuses on national culture differences within teams, organizational culture is left out and only the major theories and models for national culture are mentioned. A lot of research has been done on trying to identify dimensions, with which one can describe similarities and differences between national cultures. This chapter provides a definition for culture and presents some of the most popular approaches to this issue as well as a conceptual approach to culture by Eberhard Dülfer.
The term culture may be generally defined as “an abstract entity which involves a number of usually man-made, collective and shared artefacts, behavioural patterns, values or other concepts which taken together form the culture as a whole.” Every individual carries different layers of culture within itself: the national, regional, religious, linguistic, gender, generation, social class, and for employed people the organizational, departmental, and/or corporate level of culture.
Florenece R. Kluckhohn and Fred L. Strodtbeck believe that variations in culture deal with a variability in basic elements of culture, which they call value orientations. These are defined as “complex, but definitely patterned (rank-ordered) principles, resulting from the transactional interplay of three analytically distinguishable elements of the evaluative process – the cognitive, the affective, and the directive elements – which give order and direction to the ever-flowing stream of human acts and thought as these relate to the solution of ‘common human’ problems.” See Figure 2 for the five value orientations that were identified.
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Figure 2: Kluckhohn & Strodtbeck’s Culture Value Orientations.
National cultures vary not in the existence of these orientations but rather the ranking pattern for each one. With their five value orientations, Kluckhohn and Strodtbeck were some of the first researchers to provide a grid, which makes it possible to describe single cultures, compare them with one another, or eventually compare a culture’s consequences on management.
Another economist, who has done significant research on culture and cultural differences, is Edward T. Hall. Together with his wife Mildred Reed Hall he mentioned plenty of cultural characteristics. The most important ones are briefly presented in this chapter: (1) context, (2) space, (3) time, and (4) information flow.
Hall defines context as “the information that surrounds an event and is inextricably bound up with the meaning of that event.” Societies may be characterized as high-context or low-context cultures. "High context transactions feature pre-programmed information that is in the receiver and in the setting, with only minimal information in the transmitted message. Low context transactions are the reverse. Most of the information must be in the transmitted message in order to make up for what is missing in the context (both internal and external)." With the cultural value of space, Hall shows differences in people’s invisible boundaries they put around themselves. These boundaries form an invisible bubble and define a person’s personal and territorial space, which may be penetrated by only few people for limited time. Space is not only perceived by vision, but by all senses instead: “Auditory space is perceived by the ears, thermal space by the skin, kinesthetic space by the muscles, and olfactory space by the nose.” Hall mentions that spatial differences are often not seen as culturally patterned and thus misinterpreted, which many times leads to bad feelings. Hall’s next cultural variable time is quite different from Kluckhohn and Strodtbeck’s definition. The distinction is made between monochronic and polychronic cultures. Monochronic time is defined as “doing one thing at a time”, while polychronic time means “being involved with many things at once.” Information flow, Hall’s fourth and final cultural orientation, examines how fast or slow information is coded and decoded in different situations of communication. In high-flow information cultures, information flows freely and quickly. It is usually associated with high-context and polychronic cultures. Low-flow information cultures tend to go in line with low-context and monochronic cultures, as a “result not only of taking up one thing at a time, but of the compartmentalization associated with [low-context] institutions.”
The probably most cited and frequently used study in the field of culture is the research done by Geert Hofstede. His view on culture is in many aspects based on the works of Kluckhohn/Strodtbeck, as he restated their definition of culture by describing it as “the collective programming of the mind that distinguishes the members of one group or category of people from another.” Hofstede conducted two surveys at IBM between 1967 and 1973, in which 116,000 questionnaires were collected from 72 countries in 20 languages. These surveys consisted of 180 questions at the beginning, but the number was gradually reduced later to 160. With his first study, Hofstede tried to identify value dimensions for national culture differences, concentrating on values important in a work environment. It resulted in the formulation of the following four dimensions: Power distance, individualism, masculinity, and uncertainty avoidance. A fifth dimension called long- versus short-term orientation was introduced later by Hofstede, after research done by Michael Harris Bond suggested this dimension to be added.
Another commonly cited economist for cultural value dimensions is Fons Trompenaars. Also inspired by the theory of Kluckhohn and Strodtbeck he conducted research over a period of 10 years with 15,000 managers from 28 countries, representing 47 national cultures. He developed seven value dimensions that, in comparison to Hofstede, emphasize not only on cultural dimensions, but even more on their connection to issues relevant to management. Just like in Hofstede’s dimensions, countries have a score from 0 to 100, depending on how their culture relates to the dimensions given by Trompenaars. These are named:
1. Universalism versus particularism
2. Individualism versus communitarianism
3. Neutral versus affective cultures
4. Specific versus diffuse cultures
5. Achievement versus ascription
6. Sequential versus synchronic cultures
7. Internal versus external control.
In comparison to all the theories on culture mentioned above, Eberhard Duelfer has a different approach to explain culture. Instead of trying to identify cultural value dimensions, his model describes different layers functioning as a filter to make decisions. Due to its conceptual nature, Duelfer’s model can, in comparison to the other culture theories mentioned, not be used as an instrument for finding out the cultural values of a country’s society.
Duelfer makes a distinction between natural and man-made influences from the environment, where nature forms the basis for the layer model. All man-made influences are put in layers on top of this layer, together forming the complex of cultural influences. The layer model is formed like a pyramid in order to consider the fact that each layer has a direct influence on the decisions of the manager, who is placed as an additional layer on top of the environmental influence layers. Following the layer for natural influences are those called (from bottom to top): state of reality knowledge and technology, cultural beliefs, social relationships and bindings, legal and political norms, and task-environment.
GLOBE stands for Global Leadership and Organizational Behaviour Effectiveness Research Program and it is the name for a project that was conducted in 62 societies by 170 investigators. Its aim is to differentiate attributes of societal and organizational cultures, as well as link cultural characteristics to specific leader characteristics and actions. The project’s research on culture is based on nine cultural value dimensions:
1. Uncertainty Avoidance
2. Power Distance
3. Institutional Collectivism
4. In-Group Collectivism
5. Gender Egalitarianism
7. Future Orientation
8. Performance Orientation
9. Humane Orientation.
The first six of these dimensions are directly linked to the dimensions found by Hofstede, whose dimension Individualism vs. Collectivism is split into Institutional and In-Group Collectivism. Hofstede’s dimension Masculinity vs. Feminism has been split into Gender Egalitarianism and Assertiveness, as the founders of GLOBE felt that there are many factors in Hofstede’s original dimension “irrelevant to the concept of masculinity.” Future Orientation basically goes back to Kluckhohn and Strodtbeck’s dimension of Past, Present, Future Orientation, but is also conceptually similar to Hofstede’s Long-Term Orientation. Performance Orientation has its origin in D.C. McClelland’s work on need for achievement in 1961, and Humane Orientation is again derived from Kluckhohn and Strodtbeck and their dimension called Humane Nature as Good versus Human Nature as Bad.
Six global behaviors were identified for the leadership attributes:
1. Charismatic/Value-Based Leadership
2. Team-Oriented Leadership
3. Participative Leadership
4. Humane-Oriented Leadership
5. Autonomous Leadership
6. Self-Protective Leadership.
Leadership has been a huge subject of research throughout the last century. Key variables for understanding leadership effectiveness have been characteristics of the leader, the followers, and the situation. A leader is defined as “a person or thing that leads”.
The trait approach was “one of the earliest approaches to studying leadership”. Research was based on the assumption that the probability of a person to attain leadership positions and be affective in it. The different studies in this field vary in the kind of traits being examined, like “traits that predict emergence as an informal leader in groups, […] traits that predict advancement to higher levels of management, [or] traits related to effective performance by a manager in the current job.”
“Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at what leaders actually do.” This approach began in the early 1950s as researchers had become discouraged with the trait approach. There are two main subcategories to mention for the behavior approach to leadership. “One … examines how managers spend their time and the typical pattern of activities, responsibilities, and functions for managerial jobs.” The second subcategory “focuses on identifying effective leadership behaviour.” A lot of research has been done in this area, preferably involving a survey field study. It intends to examine the correlation between leadership behavior and leadership effectiveness. Examples for this area of research are the leadership styles by K. Lewin, those by Rensis Likert, and the normative decision model by Vroom and Yetton.
The power-influence approach to understanding leadership concentrates on the meaning of power and authority and the influence of one person to another. Power is generally defined as “the absolute capacity of an individual agent to influence the behavior or attitudes of one or more designated target persons at a given point of time. … Authority involves the rights, prerogatives, obligations, and duties associated with particular positions in an organization or social system.” There are basically three outcomes of influence attempts, which are commitment, compliance, and resistance. H.C. Kelman further introduced three different types of influence processes varying in the commitment of the individual: instrumental compliance, internalization, and personal identification. There has also been significant research on the question of how power is acquired or lost. The social exchange theory came up in the late 1950s in various versions, with the most relevant being those by Hollander and Jacobs, as they referred explicitly to leadership. Another theory was introduced by D.J. Hickson et al. in 1971, called the strategic contingencies theory.
The situational approach examines leadership on factors like the characteristics of followers, the leader’s work nature, the type of organization, and the nature of the external environment. The situational approach has two major subcategories: one line of research focuses on the similarity or difference of leadership processes across organizations, levels of management, and cultures. The other subcategory concentrates on the situational aspects “that ‘moderate’ the relationship of leader attributes (e.g., traits, skills, behaviour) to leadership effectiveness.” Theories developed in this area of research are also called contingency theories of leadership.
 Eiteman et al. (2001) p. 449.
 Cp. Picot/Bergmann (2002) p. V and Wirtz (2003) p.V.
 Cp. UNCTAD (2002) p. 341 and UNCTAD (2005) p. 325.
 Cp. Landgraf/Potthoff (2006).
 Cp. Behrens/Merkel (1990) p. V.
 Cp. UNCTAD (2002) p. 341 and UNCTAD (2005) p. 325.
 Cp. Jansen (2001) p. 223 and Cartwright/Cooper (1996) pp. 24-25.
 Cp. Anon (1998).
 Cp. Wirtz (2003) p. 7.
 Cp. Hubbard, N. (1999) p. 16 and Cartwright/Cooper (1996) p. 5.
 Deresky, H. (2005) p. 82.
 Cp. Clemente/Greenspan (1999) p. 9.
 Haspeslagh/Jemison (1991) p. 105.
 Cp. Kutschker/Schmidt (2004) p. 628.
 Cp. Meckl (1995) pp. 25-39.
 Cp. Naisbitt (1982)
 Harvey/Drolet (2004) p. 3.
 Cp. Ibid p. 7.
 Griffin/Pustay (2005) p. 441.
 Cp. Jamieson/O’Mara (1991) pp. 130-133.
 Cp. Adler (1997) p. V.
 Cp. Weiss (2006)
 Ghauri/Usunier (1996) p. 165.
 Cp. Schwartz (1999) p. 24.
 Griffin/Pustay (2005) p. 441.
 Cp. Trickey (2004).
 Cp. Campion/Medsker/Higgs (1993) p. 1.
 Seattle Central Community College Library (2003) p. 7.
 Cp. Ibid.
 Gibaldi (2003) p. 3.
 Cp. Joppe (2006).
 Cp. Gibaldi (2003) p.3 and Asia Market Research (2006).
 Cp. Buono/Bowditch (1989) p. 60.
 Cp. Mace/Montgomery (1962) pp. 3-4.
 Buono/Bowditch (1989) p. 61.
 Cp. Ibid.
 Cartwright/Cooper (1996) p. 3.
 Cp. Cartwright/Cooper (1996) p. 3.
 Cp. Buono/Bowditch (1989) p. 63.
 Cp Marks/Mirvis (1998) pp. 28-44.
 Ibid p. 41.
 Haspeslagh/Jemison (1991) p. 105.
 Cp. Kutschker/Schmid (2004) p. 446.
 Coase (1988) p. 88.
 Eggertsson (1990) p. 15.
 Williamson (1985) p. 1.
 Ibid p. 3.
 OECD (2001) p. 2.
 Kutschker/Schmid (2004) p. 446.
 Jensen (1994) p. 12.
 Cp. Kutschker/Schmid (2004) p. 574.
 Wikipedia (2006a).
 Cp. Jensen/Meckling (1976) p. 5. and Kutschker/Schmid (2004) p. 574.
 Cp. Pausenberger/Nöcker (2000) p. 395.
 Cp. Jensen/Meckling (1976) p. 5-6.
 Thompson et al. (2004) p. 3.
 Cp. Thompson et al. (2004) p. 3.
 Wirtz (2003) p. 35.
 Cp. Müller-Stewens/Lechner (2003) p. 356-357.
 Penrose (1959) p. 24.
 Rumelt (1984) p. 557.
 Wernerfelt (1984) p. 172.
 Cp. Müller-Stewens/Lechner (2003) p. 357.
 Cp. Value Based Management (2005b).
 Cp. Müller-Stewens/Lechner (2003) p. 362.
 Sveiby (2001).
 Liebeskind (1996) p. 94.
 Bierly et al. (2000) p. 600.
 Cp. Müller-Stewens/Lechner (2003) pp. 362-364 and Nonaka/Takeuchi (1995) p. 224.
 Cp. Nonaka/Takeuchi (1995) pp. 3-6.
 Cp. Ibid pp. 197-198.
 Nonaka/Takeuchi (1995) p. 209.
 Cp. Ibid pp. 209-222.
 Cp. Kutschker/Schmid (2004) p. 694.
 Dahl (2004) p. 1.
 Cp. Hofstede/Hofstede (2005) pp. 10-11.
 Kluckhohn/Strodtbeck (1961) p. 4.
 Kluckhohn/Strodtbeck (1961) p. 12.
 Cp. Ibid p. 4.
 Cp. Kutschker/Schmidt (2004) p. 702.
 Cp. Ibid.
 Hall/Hall (1987) p. 7.
 Cp. Ibid.
 Hall (1976) p. 101.
 Cp. Hall/Hall (1990) pp. 11-13.
 Hall/Hall (1987) p. 13.
 Cp. Ibid.
 Hall (1981) p. 153.
 Hall/Hall (1987) p. 16.
 Cp. Kutschker/Schmid (2004) p. 708.
 Cp. Hall/Hall (1987) p. 29.
 Hofstede (2001) p. 9.
 Cp. Hofstede (2001) pp. 41-43.
 Cp. Krentzel (2001) p. 17.
 Cp. Hofstede/Hofstede (2005) pp. 29-31.
 Cp. Hofstede/McCrae (2004) p. 60.
 Cp. Deresky (2005) p. 96.
 Cp. Kutschker (2004) p. 726.
 Cp. Trompenaars/Woolliams (2003) pp. 31-32.
 Cp. Kutschker/Schmid (2004) p. 737 and Duelfer (2001) pp. 259-270.
 Cp. Duelfer (2001) pp. 259-261.
 Cp. House et al. (2004) p. 11.
 Cp. Ibid pp. 11-14.
 Ibid p. 13.
 Cp. House et al. (2004) pp. 11-14.
 Cp. Ibid p. 14.
 Cp. Yukl (2005) p. 12.
 AskOxford.com (2006).
 Yukl (2005) p. 180.
 Ibid p.182.
 Straker (2006a).
 Yukl (2005) p. 13.
 Cp. Ibid pp. 13-14.
 Cp. Ibid p. 146.
 Cp. Ibid p. 147.
 Cp. Kelman (1958) p. 54.
 Cp. Yukl (2005) p. 158.
 Ibid p. 14.
 Cp. Ibid.