Introduction
Leadership is the process of an individual gaining the help of others to attain or achieve certain common objective. We come across several leaders in our daily activities: in schools, stores, at work, among other places to mention but a few. In the current globalised markets, businesses like multinational companies operate in varied market conditions throughout the world. Leaders of these firms need to understand different aspects of the markets they operate in such as cultural differences that may exist. Unlike the west, business cultures significantly differ in the east. This calls for variation in approach to leadership styles in the different regions.
The style of leadership theory promoted in western countries such as the UK and the US, it is impractical in eastern block nations like China and both the Koreas unless modifications are made to accommodate the cultural differences.
To better understand the inapplicability of these leadership styles such as transformational leadership in Korea and the greater east in general, this paper illustrate among other issues the cultural differences in relation to business activities between the United States and Korea. Challenges to leadership theory and its aspects in Korea are also discussed in addition to the effect of intercultural differences on current multinational businesses that operate in multicultural environments globally.
Intercultural differences in the United States and Korea
Culture covers vast societal issues that are shared such as values, customs, behaviors and artifacts. This is handed down generation after another through learning. Generally it is the way of life of a particular people. Cultural differences vary from country to country depending on several factors. A country’s culture entails certain values and symbols which the locals interpret in particular ways. The beliefs, language and norms that outline the behavioral pattern, is also different.
A particular learned behavior develops in an individual as a person grows up in a specific place from childhood to adulthood and should be taken into account when dealing with the individual (Dalton 1998, p. 109). As aforementioned, in the current economic environment of globalised businesses, cultural difference is a major issue that is dealt with in many fronts. Organizations operate in multicultural environments and employees have diverse cultural backgrounds (Baldwin & Martin, 1995, p. 18). The markets too are diverse and need varied marketing approaches.
Name
Americans generally value their names more than the family names while the Koreans prefer the family name to their own according to Tan (1998) and E Diplomat (2009). Culturally, women in the US change their names after marriage to adopt the husband’s names. Their Korean counterparts retain their maiden names in marriage (Tan, 1998; Darlington, 2008). Use of first names is common with Americans.
The Koreans stress on use of family names in conversations in addition to titles such President, Doctor, Miss or Mrs.; hence hiding their names (Ingraham, 1997; Kim, 2005). Americans too have their names on most things such as social halls, dictionaries, and museums but the Koreans reduce such practices (Alford, 1988; Triandis, 1995). An example is President Kim, or Miss Hu. In America it would be; John, Mark, or just Mary.
Language
In American culture, people stress more on the first person ‘I’ and virtually try to be singly possessive in their sentences (Hall, 1976; Kwon et al., 2006). Americans refer to their places of work with phrases such as ‘my firm’ or ‘my company’ and the church they attend as ‘my church’. The Koreans and indeed most eastern block countries would settle for ‘our’ in the above instances instead of ‘my’ (Choi & Choi, 1993; Triandis, 1995). In the US, the culture of standing out from the crowd and not just being part of the statistics is heavily promoted. In Korea, the advice is to be like the others as being on the frontline is viewed to have a higher likelihood of a downfall (Chang 2008).
Mannerism and customs
Behaviors such as public expression of affection through kissing and hugging among other kinematics are common acceptable practices in the American culture, and forms part of daily life. In the Korean culture, such actions are perceived as impolite or rude and may lead to negative consequences (Kublin, 1995; Hofstede, 1980). Uttering of common daily phrases such as ‘Thank you’ in the American culture is replaced by use of bodily gestures or simply eye contact without any verbal communication.
The same applies to requesting for help in certain instances (Hall, 1984). The intercultural difference spreads as far as to the kind of housing in the two regions. While rooms in a typical American house are of specific functions, in the east these are multipurpose (Kim & Choi, 2004). According to Hwang (1997), the Koreans are better participants in alumni activities than Americans.
In a nutshell, Americans are more individualistic while the Koreans are more communal.
Differences in business culture
The individualism culture in the American business system characterizes matters on personal grounds such as self government and discretion. Crucial decision making in large corporate is sometimes left to the individual CEOs. For instance, approval of tenders for supply of particular machineries could be the work of one procurement officer. The result of this is a free market economy which is self governing. Individual investors and consumers are the core of the economy leading to shareholders based corporate paradigm (Aldridge, 2002). On the contrary, Koreans perform their duties in a communal and collective manner.
There is interdependence in all aspects of operations. Loyalty and solidarity are key in the collective decision making process, and all crucial matters are extensively consulted on and agreed upon. Individual responsibility is replaced by collective responsibility. Corporations’ interests are more significant than individual shareholder’s. The product of these practices is large conglomerates like Hyundai, LG, and Samsung (Morden & Bowles, 1998; Kee, 2008).
Individual competition drives the US economy, and Darwinian survival for the fittest theory applies to the market. Continuous imperative mergers and acquisitions are the order of the day. Memorable one includes the Yahoo! and Google deal, and the recent takeover of Cadbury by Kraft. Financially deprived companies continually seek bankruptcy protection, and several others fail altogether. This is a major reason for the transient nature of the US stock markets (Bhide, 1994).
The kind of practice is unacceptable in Korean business cycles. While the Americans embrace equal opportunity and treatment for all, Koreans encourage paternalistic protection of businesses. Mutual forbearance is a common practice that consequently leads to a discriminatory society of high nepotism. Networking and connections is promoted. Firms prefer to cooperate instead of competing against each other. Mergers are therefore friendly as opposed to hostile takeovers in the US.
Companies in Korea generally help each other avoid bankruptcy unlike in the states where competitors look for what to gain from others downfall. The help could be in the form of cross subsidization or reciprocal trading among other forms of relationships (Rodrik, 1994; International Monetary Fund, 2004).
Agency cost is very high in the United States due to diffused corporate ownership (Miller, 1994). Shareholder activism is also strong. In Korea, agency and bankruptcy costs are low because of cross ownership of the firms which are mutually reliant. The companies as a result have high leverage tolerance. Korean economy and markets are inert and rigid due to these behaviors as the American markets remain flexible and mobile (Wheeler & Sillanpaa, 1997).
The Korean culture creates a closely knit conservative society in which most things are indirect or implicit. Individuals are expected to make decisions that are not only good for the company but also for themselves. Judgment is based on form and appearance in disregard of contents (Cho & Schulz, 2001). Accounting styles are very conservative unlike the US system of real transparency. Strict disclosure and reporting is not a requisite. Furthermore inspection and auditing of the large family or societal businesses is a rare practice (Bhide, 1994; Jang & Lee, 1997).
These differences in summary can be represented as shown in the tables below
Culture and philosophy.
Economic system.
Characteristics of corporate system.
Leadership theory
Avolio and Bass (2008) define transformational leaders as those who motivate others to do more than they originally intended and often more than they thought was possible. As Mc Crimmon (2008, Introduction section, para. 2) stated, it was developed by James McGregor Burns in the late 1970s for political leaders and later adopted into business. Transformational leadership can be viewed to entail charisma-being appealing to your followers while having energetic, dynamic and commanding presence making them wanting to emulate you. This comes from admiration; respect and developed trust that make them view you as a role model.
Powerful individuals use their capacity to influence other in this style of leadership. Inspirational motivation is another component of transformational leadership. These are leaders who appeal to basic values with enthusiasm optimism and eloquent speaking styles that leave their followers envisioning an attractive better future.
They are of desirable communication skills. Intellectual stimulation involves inspiring people to explore their abilities to get most of it through ways such as creative thinking and suggestion of new solutions to problems. Public criticism is avoided and followers are free to differ in opinion with the leader. Engagement of fellowship accepted but then ultimate decisions are made by the leaders. The leader pays attention to subordinates and helps them meet their needs.
An example of this kind of leader in the United States currently is their president, Barrack Obama. He is charismatic and large numbers of the minority groups in the U.S. such as colored’s admire him as their role model. To say his oratory skills are excellent is an understatement and has displayed this in several instances; during his famous Cairo speech giving hope to strained relations between the U.S. and Islamic nations, the Berlin speech and in presidential debates managing to convince voters he was ready for the job among others. He has welcomed criticism in his major healthcare budget plans and included republicans’ suggestions in the bill that is now being discussed in congress.
Founders of SMEs normally have immense understanding of their business operations especially in early times. As it grows and employees increase, however the need to nurture talent within the organization for healthy growth arises. Transformational leadership helps in attaining this. It also escapes the control bureaucracy and bonds of traditional inertia. This kind of leaders may though not be skilled in employee engagement in environments where substance, integrity or character and content are of extreme importance and demand for “evidence based” decision making is key.
Inapplicability of transformational style of leadership in Korea
Fellowship
The thinking pattern of a people has subtle influence on their social lives. Transformational leadership style works in the west because American culture stresses on induction and the style of reasoning is from specific to common in different aspects of business. The charismatic leader is viewed as a role model and is to be emulated by the followers. The leaders therefore easily induct the subordinates to whatever course they want them to take. The Korean culture stresses on reasoning from common to specific which emphasizes comprehensive thinking. There is no ‘idolization’ of a specific individual and hence everyone makes a point of doing what they perceive to best in consultation with the others (Gardner, Gabriel, & Lee, 1999).
Communication
Western transformational leaders have good oratory skills and verbal communication styles which they employ in a persuasive manner to impress their followers giving them hope of a better tomorrow. In Korean and the east in general, verbal communication is minimal and the excellent speeches are taken in with suspicion. A successful western leader in Korea will therefore have to drop the western transformational characteristics and view his subordinates more as equals that need to be consulted and not a group that is copying all he/she does (Baiyuan, 2002). Culturally, verbal communication in Korean culture is quite limited
Influence on power
Value view is others especially associates is another significant aspect of culture that deters the success of transformational leadership in Korea. The transformational leaders in the American culture pursue equality and insist on principles of justice that are reasonable with a double winning objective. This is one way in which they motivate their followers in the name of fairness to all as a leader should not be biased as per the just principles.
The Korean aims at single winning and does not emphasize on equality treatment to all a clash to transformational leadership style. Americans transformational leaders would insist on treating purchasers as equals while Koreans are culturally discriminative and therefore subordinates do not expect to offer such treatment (Feather, 1996). Time value is a difference that transformational leaders in the US who live on a quick life rhythm experience difficulty with if they are to operate in Korea. Cultural the Koreans especially the more powerful ones pay little attention to time in business deals and cherish negotiations.
Koreans will culturally wait for a long time in order to close a business deal as long as they achieve their objective without compliant. Transformational leaders in the US would probably give up on the basis of principle that it is not just to be kept waiting for that long if the interested party is respectfully willing to negotiate (Earley & Erez, 1997).
The decision making process of the Koreans is enormous and takes a very long time since it is extensively consultative. The implementation time once negotiations are concluded though is very short and fast. This does not conform to the transformational style of leadership where the leaders are supposed to fast think and make decision that are in the best interest of the company within very limited time frame (Hackman, 1987).
Networking
Transformational leaders in the US bear all the responsibility of the group actions and are therefore responsible for all the successes and failures of the group. Korean leaders on the contrary acts as mere facilitators of group actions and therefore results are viewed as the group responsibility and not that of the leader’s (Podsakoff, et al. 1990). Businessmen in Korea are of strong group conscious and therefore an individual’s conscious is not sufficient to close a deal. In the United States, the transformational leaders are likely to make decisions once their conscious is clear and it is binding to the whole group (Hofstede, 1980).
Transformational leaders tend to focus on their survival as a way to prove their capability and their actions tends more towards egocentrism in business. The Koreans emphasize on group survival and therefore employees all take responsibility for their actions and do not view a failure as the leader’s problem but everyone’s problem (Markus, & Kitayama, 1991). Because of this behavioral pattern, Koreans tend to make more business networks in a bid to promote everyone’s survival. The networks are further promoted by their negotiation style and have influence I decision making.
Negotiation
Intercultural differences deeply influence negotiation styles and codes of conduct in business deals. Transformational leaders are normally confident in negotiations and aim at wrapping up the business as quick as possible aiming at gaining as much as possible for their businesses in the deal. They view the negotiations as a competition with the other partner in the deal and should maximize any benefits that may arise. Koreans prefer to develop long term relationship with business associates (Levine, & Moreland, 1991).
Culturally the Koreans prefer a common ground for which all the parties’ best gain in the deal and maintain a relationship that leads to continuous transactions. The transformational leaders think though of what they can gain for their companies even if it is at the cost of the other party loosing considerably (Gibson, 1999). Methods of expression also vary considerably. The calm eloquent confidence of transformational leaders coupled with lack of apology is culturally perceived as rude and impolite in Korean culture.
The Koreans furthermore hardly expresses their disagreement explicitly. In such instances, they imply the meaning (Jung, Chow, & Wu, 2003). Sometimes they develop weak appearance in negotiations in a bid to gain sympathy a move that is not practiced by transformational leaders who are supposed to be on top and in control of situations (Hui, & Villareal, 1989). Negotiations of deals by US transformational leaders are mostly formal and business focused with the relationship developed strictly formal, shallow, and short lived. Koreans style entail deeply built relationships that last for a longer time and is sometimes personal (Hackman, 2002).
Effects of the intercultural differences on global business
Multinational businesses that operate in diverse cultural regions normally both in the east and in the west are the most affected by these cultural differences. Trouble with human resource development occurs if these differences are not taken note of and worked upon for the companies’ good. They can be harnessed for the companies’ gains and positively increase growth.
The basic components of human resources development which is significant to the success of a company concern staffing, management training and development, compensation policies, and performance appraisals. Intercultural differences affects all the above, and if left unchecked could easily cripple the operations of a multicultural organization that employs people from different cultures and operates in various parts of the globe.
The leadership style applicable in one cultural niche may not be effective in another area and therefore may need modifications. Staffing for multinationals in which employees have been transferred from the host country or parent company in a different location to the subsidiary is an example of such a situation. If the transferred employees are in managerial positions, then they need to make adjustments in their leadership methods to fit the new environment.
Appraisals for instance, are done by the human resources department for people of diverse backgrounds and assessors may not necessarily be from the same cultural cocoon as the appraised. There are also differences in what people value which affect reward schemes like bonus compensations.
Management training and development
Professional approach to human resources development involves several aspects that are addressed differently in various places. Services such as recruitments can be outsourced from consulting firms which also multitask (Mayer & Davis 1999, p 167). The consulting firms like PriceWaterhouseCoopers, and Deloitte & Touche perform a range of duties such as assurance, recruitments, auditing, financial advisory among others business related services.
Concerning human resources development, they perform a variety of tasks like restructuring of entire organizations, and appraisals apart from recruitment. In cases where this is internally done then global HR managers are obligated to undertake the aforementioned duties. Cultural considerations should be made at these levels whether the particular business is handled by outsourced professionals or inside firm employees. This should be in the positive sense and not used for victimization or discrimination. The focus on organizational effectiveness and employee development is achieved through efficient running of the system which checks on how the diverse culture can promote business.
Staffing
Employees may be expatriates, host-country nationals, or third-county national. Normally differences across cultures and countries are barriers to overcome. Employees such as expatriates may find difficulty in adjusting to the new environment, or are finally completely unable to do so. Reasons such as the physical conditions like temperatures, religion or foods contribute to the barriers. For the company, a particular country’s laws especially those related to tax, customs and procedures for background screening are some of the issue that have to put up with. The environment in a country should be evaluated before setting a business in a foreign country (Pucik 1996, p. 76).
Compensation policy
Compensation of host country nationals for multinationals that are venturing into a new market is a matter that the human resource managers keenly look at prior to the company’s operations in a particular new environment (Dutton 1999, p. 68).
Variations in tax, living standards, and other factors that affect particular employees are all considered in the package that they do take home. Cultural background plays significant roles in determining the remuneration guidelines for employees in different parts of the world and should be considered in fixing compensation rates. In North America, emphasis is made on individualism and transformational style of leadership that demand high performance, and compensation practices are tuned to encourage along this lines. The Europeans stress on social responsibility and the Koreans tradition is to priorities age and company service as the basic determinants of compensation (Barton & Bishko 1998, p. 67-69).
Appraisals
Appraisals enable determination of which areas they are best suitable to improve in (Wood 2003, p. 356). While it is not a legal requirement to introduce appraisal schemes, legislation is in place to accommodate its usage (Welch, D. 2007, p.275). Normally this takes the form of bonuses, salary increment among others. Generally there is usually a link between the appraisal system and the reward review though it is preferable that these take place at different times (Murphy & Jensenand 2001, p. 87). Cultural values should be well understood in structuring the reward scheme. This is because it is important to understand what is valuable to a people in order to award a reward that is likely to motivate them.
Conclusion
Cultural differences are part and parcel of our diverse nature and affect business. In human resource development, this feature can be harnessed to be productive instead of retarding growth. The key to successful intercultural employee performance development strategy in a multicultural setting is to have a clear understanding of the different cultures in the parenthesis. One can then best decide on how to make use of the opportunities it provides to improve on business.
While transformational leadership highly empowers people to achieve beyond prior accomplishments and achievements, it greatly promotes individualism. The core business principle in Korean culture is collective/societal gain. Considering the differences in aspects of leadership such as in negotiations and communication just to mention but a few, the principles leadership contrasts significantly and thereby render it inapplicable in the two countries.
Recommendations
In order to improve transformational leadership skills, Kotelnikov, V. (n.d, Analysis section, para. 1) stated that the transformational leader should constantly create awareness of the vision to be achieved a task that requires commitment and energy.
The leaders should also uphold personal integrity in order to build trust which is essential in creating followers as they sell the vision. Keeping subordinates fully informed on all that affect their jobs empowers them by making them feel they are insiders boosting their morale. Respecting other individuals plays a role in organizational change and the process to drive change should be humane ever when under high pressure.
To reduce incidences associated with intercultural differences outlined above, preventive measures need to be taken in advance. For example, prior to departure, the foreign employees are oriented and trained in the challenges they may meet ahead in their new job placements (Conger, FineGold & Lawler 1998, p. 653). Areas considered in clued among others: language, culture, history, local customs, and the living conditions in the host nation.
During their assignments, they are helped to continue expanding skills, career planning, together with home-country development. The lifestyle, workplace conditions and employees of destination are pre-mentioned in their briefing. The below figure, provides a general view of such a preparation.
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