225
CHAPTER 15
Leadership and Employee Behavior in
International Business
Chapter Objectives
After studying this chapter, students should be able to:
1. Identify and discuss the basic perspectives on individual differences in
different cultures.
2. Evaluate basic views of employee motivation in international business.
4. Discuss the nature of managerial decision making in international
business.
5. Describe group dynamics and discuss how teams are managed across
cultures.
LECTURE OUTLINE
OPENING CASE: Leadership Issues at Toyota
The opening case discusses the leadership shortcomings of Toyota. Toyota was
undergoing a change in strategy, which lead to changes in culture and rewards.
Key Points
• In 2008 Toyota surpassed General Motors as the world’s largest automobile
company. Additionally, it should be noted that quality and safety problems started
appearing in 2010.
• Toyota had been aware that certain vehicles were prone to uncontrolled acceleration
however; they decided to do nothing about it.
• In 2011, a recall was eventually issued consisting of over 8 million vehicles.
• Their reputation was tarnished because of their apparent lack of concern.
• Quality, dependability, etc., had always been part of Toyota’s culture.
• The company had undergone some changes and the focus shifted from lean
production to technology and innovation.
226
• The focus on new product development came with a high degree of risk.
• Quality problems detract from growth, whereas in the past people were rewarded for
producing high quality products.
CHAPTER SUMMARY
Chapter 15 examines the behavior of managers and employees in different cultures, and
the impact of managerial behavior on international business. The chapter begins with a
discussion of Hofstede’s work concerning individual behavioral differences, and then
relates his ideas to motivation, leadership, and decision making. Finally, issues related
to creating and managing cross-cultural teams are discussed.
INDIVIDUAL BEHAVIOR IN INTERNATIONAL BUSINESS
Individual differences are reflected in personality traits. Attitudes, perception, creativity,
and stress also are factors in influencing individual behavior.
Personality Differences across Cultures
• Personality is the relatively stable set of psychological attributes that distinguish one
person from another. Both biological factors and environmental factors are believed
to be important influences on personality. It is important for international managers
examples of how these traits differ across cultures. Discuss Figure 15.1 here.
• Other personality traits that also influence behavior include the locus of control (the
extent to which people believe that their behavior has a real effect on what happens
to them); self-efficacy (a person’s beliefs about his or her capabilities to perform a
task); authoritarianism (the extent to which an individual believes that power and
Attitudes across Cultures
• Attitudes are complexes of beliefs and feelings that people have about specific ideas,
situations, and other people.
• Job satisfaction or dissatisfaction is an attitude that reflects the extent to which an
individual is gratified by or fulfilled in his or her work. The text notes that research on
227
Perception across Cultures
variety of stereotypes held by some Chinese about Americans.
Stress across Cultures
• Stress is an individual’s response to a strong stimulus. The stimulus is known as a
MOTIVATION IN INTERNATIONAL BUSINESS
Motivation is the overall set of forces that cause people to choose certain behaviors
from a set of available behaviors.
BRINGING THE WORLD INTO FOCUS
Mixing and Matching in a New Joint Venture
This box describes obstacles faced by a joint venture among IBM (U.S.), Siemens
(Germany), and Toshiba (Japan). A team of scientists from the three firms was to
Needs and Values across Cultures
• Understanding needs (the things an individual must have or wants to have) and
values is a starting point in understanding motivation. Primary needs are things
people need for survival, while secondary needs are more psychological and
learned.
• Values are what people believe to be important. Values are learned and developed
as people grow and mature. Values are influenced by one’s family, peers,
experiences, and culture.
228
Motivational Processes across Cultures
• There are three basic categories of motivation: need-based models attempt to
identify the specific needs or set of needs that result in motivated behavior; process-
Need-Based Models across Cultures
• Hofstede’s work can help international businesses understand differences in
motivation across cultures. The text notes, for example, that individualistic societies
are motivated by individually based needs and rewards. The text also provides
Process-Based Models across Cultures
• Expectancy theory suggests that people are motivated to behave in certain ways to
the extent that they perceive that such behaviors will lead to outcomes they find
personally attractive.
The Reinforcement Model across Cultures
• The reinforcement model, which states that behavior that results in a positive
outcome will probably be repeated under the same circumstances in the future, has
LEADERSHIP IN INTERNATIONAL BUSINESS
• Leadership is the use of noncoercive influence to shape the goals of a group or
organization, to motivate behavior toward reaching those goals, and to help
determine the group or organizational culture. Management and leadership are often
mistakenly equated, but there are actually important differences between the two.
229
DECISION MAKING IN INTERNATIONAL BUSINESS
Decision making is the process of choosing one alternative from among a set of
alternatives in order to promote the decision makers’ objectives.
Models of Decision Making
• Managers may make decisions in two very different ways. The normative model of
decision making suggests that managers apply logic and rationality in making the
best decisions. In contrast, the descriptive model argues that behavioral processes
limit a manager’s ability to always be logical and rational. See Figure 15.3 here. The
• Step 1: Problem Recognition. Culture may influence the way in which an individual
recognizes and defines a problem. The text provides examples of differences in the
way that problems might be recognized depending on individuals’ social orientation
and uncertainty orientation.
• Step 2: Identifying Alternatives. Alternatives may also be identified in different
230
GROUPS AND TEAMS IN INTERNATIONAL BUSINESS
It is important that international managers understand the behavioral processes
associated with groups and teams since much of an MNC’s work is accomplished by
people working together.
The Nature of Group Dynamics
• The use of teams is attractive to companies because theory suggests that people
working together should accomplish more than they can by working alone.
• A mature team generally has certain characteristics: it develops a well-defined role
Managing Cross-Cultural Teams
• A homogeneous team is generally considered to have less conflict, better
communication, less creativity, more uniform norms, higher cohesiveness, and clear
informal leadership when compared to its heterogeneous counterpart. The text
provides an example of Japan‘s teams.
• Managers who are creating teams should try to match the composition of the team to
the nature of the task at hand.
BRINGING THE WORLD INTO FOCUS
Risky Decisions Lead the Way for Porsche
This box discusses the leadership style of Wendelin Wiedeking, Porsche’s CEO. He
has increased profits each of the last nine years, and has made a number of difficult
• Teams may also be affected by other cultural factors including members’ social
orientation, power orientation, uncertainty orientation, and goal orientation.
231
CHAPTER REVIEW
1. Define personality and explain how personality differences affect individual behavior.
Personality is the relatively stable set of psychological attributes that distinguish one person
2. Explain how attitudes vary across cultures.
Attitudes, the complexes of beliefs and feelings that people have about specific ideas,
situations, or other people, are important because they are the mechanism through which
3. Discuss the basic perceptual process and note how it differs in different cultures.
Perception is the set of processes by which an individual becomes aware of and interprets
information about the environment. Stereotyping is one common perceptual process that
4. Explain how attitudes and perception can affect each other.
Perception, the set of processes by which an individual becomes aware of and interprets
5. Discuss stress and how it varies across cultures.
Stress is an individual’s response to a strong stimulus. The stimulus is known as a stressor.
It is important for international managers to consider the stress involved in managing
6. Identify some of the basic issues managers must confront when attempting to motivate
employees in different cultures.
Motivation refers to the overall set of forces that encourage people to select certain
7. How do needs and values differ in different cultures?
8. Summarize the steps in the normative model of decision making and relate each to
international business.
The normative model of decision making implies that managers make logical and rational
9. Why are teams so important? What are the basic implications of teams for an international
business?
Companies consider teams to be important because, at least in theory, people working
together can accomplish more than people working independently. Teams have several
233
QUESTIONS FOR DISCUSSION
1. Which do you think is a more powerful determinant of human behavior, cultural factors or
individual differences?
Students will naturally respond to this question in one of two ways. Some students will
probably argue that individual differences are at the root of human behavior, and are
Teaching Note:
Instructors may want to ask students to identify traits within themselves that
are clearly a reflection of their local culture, as well as traits that they feel are
a result of their own individual differences. Students can then discuss their analyses with
others, and look for similarities and differences in interpretations of culture and behavior.
2. Think of two or three personality traits that you believe are especially strong in your
culture, and two or three that are especially weak. Relate these to Hofstede’s cultural
3. Assume you have just been transferred by your company to a new facility in a foreign
location. Which of your own personal dimensions do you think will be most effective in
helping you deal with this new situation? Does your answer depend on which country you
are sent to?
Most students will probably suggest that the best way to assess the foreign country’s culture
is through either direct or indirect research. Depending on which country students analyze,
Teaching Note:
Instructors may want to rephrase this question to identify a specific country
or countries so that students can actually assess another country’s culture
along Hofstede’s dimensions.
4. How might perception affect motivation in different cultures?
Perception is the set of processes by which an individual becomes aware of and interprets
information about the environment. An individual’s cultural background will play a role in
5. How might organizations in different cultures go about trying to enhance leadership
capabilities?
Good leadership skills will vary by culture. In collectivistic cultures, the group is important,
6. Do you think it will ever be possible to develop a motivation framework that is applicable to
all cultures? Why or why not?
Most students will probably agree that it would be difficult to develop a motivation framework
that is applicable to all cultures simply because cultures place different values on different
7. How do motivation and leadership affect corporate culture?
Corporate culture refers to the idea of “the way we do things around here.” Two critical
dimensions of corporate culture are motivation and leadership. To fully understand the role
Teaching Note:
The following two questions can generate a fair amount of interesting
discussion (and usually laughter) if they are acted out in class rather than
simply discussed. For example, instructors can ask students to play the roles of the
Japanese, Australian, and Italian managers who are being transferred to the U.S.
8. What advice would you give to a Japanese, an Australian, and an Italian manager just
transferred to the United States?
9. Assume you are leading a team composed of representatives from British, Mexican,
Brazilian, and Egyptian subsidiaries of your firm. The team must make a number of major
decisions.
a. What guidelines might you develop for yourself for leading the team through its decision-
making process?
Most students will probably focus on the idea that if they can learn as much as possible
about the other cultures, they will be better prepared to handle each individual in the
b. What steps might you take to enhance the team’s cohesiveness? How successful do you
think such an effort would be?
Most students will probably recognize that a team made up of British, Mexican, Brazilian,
BUILDING GLOBAL SKILLS
Essence of the exercise
This exercise is designed to show students the process of learning about another culture, and
incorporating aspects of that culture into one’s own behavior. Students working in teams of two
are asked to research a culture of their choice and, assuming the role of an individual from the
other culture, negotiate a contract for the sale of a product.
Answers to the follow-up questions:
1. How easy or difficult was it to model the behavior of someone from another country?
2. What other forms of advance preparation might a manager need to undertake before
negotiating with someone from another country?
Students will probably have various suggestions for how a manager could prepare for a
meeting with someone from another country. Typically, suggestions include complementing
Other Applications
This exercise deals with differences in cultural behavior that can affect international
business. It asks students to identify another culture and model that culture’s behavior. An
CLOSING CASE
Ikea’s Transformational Leader
The closing case reviews the character changes of Pernille Spiers-Lopez after she moved from
Denmark to the United States, and took her career from journalist to furniture salesperson to
human resource manager and finally to the presidency of IKEA North America.
Key Points:
• Spiers-Lopez grew up in Denmark, graduated college and started a career as a
journalist. Finding that path unsatisfying, she moved to the United States and began
a career in the retail furniture industry.
• She was an aggressive employee in what previously had been a male-dominated
career path.
1. Can you speculate about the personality traits that personify Pernille Spiers-Lopez?
Personality represents personal characteristics that lead to consistent patterns of
behavior, and a personality trait is a feature of a person’s character that can be used
to describe a person’s personality. Some of traits that personify Spiers-Lopez would
include:
SELF ESTEEM – This is a trait that deals with an evaluation a person makes of
LOCUS OF CONTROL – This is a trait that refers to the extent an individual has to
control events affecting them. An individual who has an “interior” locus of control
EXTROVERSON – This is a trait of an individual who tends to be sociable and
emotional, and is a critical requirement for managerial success.
All of the above are clearly traits the personify Spiers-Lopez. (LO 15.1; AACSB
Skills: Analytical Skills; Learning Outcomes: Discuss the factors that influence
leadership and employee behavior.)
2. Describe the role that motivation played in the choices made by Pernille Spiers-
Lopez in her career.
Motivation is a force that drives a person to take a particular course of action, and a
review of the case clearly shows that there were many forces that were interacting
3. Discuss how her experiences with stress may have been impacted by international
issues?
The case itself does not provide the students with a lot of information on how her
4. Describe Pernille Spiers-Lopez’s approach to leadership at IKEA.
In her opinion, effective leadership starts with self-examination. She feels that
PART THREE CLOSING CASES
CASE 1:
Reinventing Nissan
This case describes plans introduced by Carlos Ghosn to improve Nissan’s
performance. Ghosn was appointed by Renault (a French automobile
manufacturer), which purchased a 37 percent stake in Nissan in 1999. Many
of Ghosn’s recommendations are drastic and go against the typical way of
doing business in Japan.
239
Key Points:
• Nissan’s performance in the 1990s fell significantly below its performance in the
1980s. The high value of the yen in the early 1990s (among other factors) made it
difficult for the company to export its way out of its difficulties.
Case Questions
1. What benefits will Nissan gain if its procurement of parts is combined with Renault’s
parts procurement on a global basis? Are there any costs to this change? What
problems does Nissan create if it abandons the keiretsu system for purchasing
parts? In what ways might the Internet facilitate this change?
Combination of procurement procedures would lead to greater power over suppliers
as well as economies of scale in purchasing and increased efficiency in the
procurement process. The tradeoff would be a decrease in procurement flexibility
2. Suppose natural attrition fails to allow Nissan to reach its goal of reducing its
workforce by 21,000 people. If this occurs, what would you advise Carlos Ghosn to
do? Should he abandon the planned job cuts? Or should he begin to fire workers
and risk violating one of Japan’s strongest cultural norms?
This question allows students to explore and defend alternatives of their own.
Different students will provide different suggestions and there is no clear “one best
240
resources management process)
3. Given Japan’s culture, will the introduction of performance-based compensation
schemes create any problems for Nissan in Japan? If so, what is the nature of these
problems? Do you have any suggestions for overcoming these problems?
Performance-based compensation is making inroads in Japan, but the seniority-
based system is still very strongly entrenched. Given Japanese respect for elders
and team-based work systems, compensation based strictly on individual
4. Prime Minister Obuchi’s comments send a clear signal that Japanese politicians will
resist any restructuring of Nissan’s operations that lead to significant losses of
domestic jobs. How important is this political threat to Ghosn’s plans? What advice
would you give Carlos Ghosn to overcome or address Obuchi’s concerns?
As mentioned above, the relationship between business and government in Japan
differs significantly from the relationship in the U.S. The Japanese government,
5. As it turned out, Ghosn’s strategies paid off. In 2002, Nissan made a record $6.1
billion in profits; its 11 percent operating margin was one of the highest in the auto
industry. Some observers are now arguing that only a foreigner (a non-Japanese)
could have turned Nissan around so quickly. Do you agree?
It is difficult to come to any solid conclusion based on one year’s performance. The
safest answer is to take a wait-and–see attitude. To the extent that Nissan’s
CASE 2:
Slimline: Marching to a Different Drummer
The opening case describes the operation of Slimline Ltd., a clothing manufacturer
located in Sri Lanka. Slimline supplies Victoria’s Secret and Marks & Spencer.
Slimline is a Sri Lanka-U.S. British joint venture which employs 5,000 workers and
produced over $50 million worth of apparel in 2005. It operates four factories that
produced 50 million units of women’s sleepwear and intimate apparel.
Key Points
• The management at Slimline is considerably higher educated than average for a Sri
Lankan garment factory.
Case Questions:
1. Slimline is a joint venture among three companies, a local Sri Lankan firm, a British firm
and a U.S. firm. What are the benefits of the joint venture to each of these companies?
The key benefit is that it involves cooperation between the firms, and it is one of the
means of that a firm can use to expand internationally. The agreement enabled each of
2. Why did each choose to participate in the joint venture rather than operate it own wholly
owned subsidiary?
3. From the perspectives of each of the partners, are there any potential pitfalls to joining a
joint venture?
Partnering with other businesses can be complex. It takes time and effort to build the
Case 3
Daimler and Chrysler: Dream or Nightmare?
The closing case describes the “merger” between Daimler-Benz and
Chrysler. Though the merger was termed a “marriage of equals,” it was
Key Points:
In 1998, Daimler-Benz CEO Jurgen Schrempp orchestrated a merger between Daimler-Benz
and Chrysler. DaimlerChrysler became the third largest automaker in the world. Daimler would
contribute lessons in quality and technology while Chrysler contributed efficiency and speed to
market.
Chrysler’s efforts to improve quality had significantly increased the cost of its cars – often with
little perceived benefit to the consumer.
243
Case Questions:
1. Identify the basic organization design issues at DaimlerChrysler.
Combining two firms with different organization designs is a difficult task. What seemed to be a
2. What form of organization design might be most appropriate for DaimlerChrysler?
In retrospect, a hybrid design that allowed the firms to continue operating somewhat
autonomously might have been best. However, such a design would have made it hard for the
3. Identify the basic control issues at DaimlerChrysler from all three levels.
The three levels of control are strategic control, organizational control, and operational control.
From a strategic control perspective, the basic issue is what strategic direction should
DaimlerChrysler take? That is, how should resources be invested and who should control the
4. How do you think the control function should be organized and managed at Daimler
Chrysler?
Students may differ in their perspectives on this question, though U.S. students typically tend to
5. Describe how behavioral issues may have played a role in DaimlerChrysler’s problems.
Behavioral issues clearly sparked the resistance to change by American workers. Those
managers accustomed to making decisions quickly and without having to get approval would