What leadership style should be adopted in a multicultural business team context with a difference in cultural background related to power distance : a study between the Netherlands and China

Thesis BSc Economics and Business University of Amsterdam Faculty of Economics and Business

Supervisor: D. Koolmees

What leadership style should be adopted in a multicultural

business team context with a difference in cultural

background related to power distance: a study between

The Netherlands and China.

Emily Lageveen, 5825113 July 20th, 2014

Abstract

This study examines whether one leadership style, consisting of charismatic, team-oriented and participative leadership components would be the best fit in a multicultural business team consisting of high and low power distance cultures, represented by China and the Netherlands. Due to globalization, the growing attractiveness in working abroad has created greater culturally diverse workforce and business teams in multinational companies. This study examines how such culturally diverse business teams should be lead to increase efficiency and effectiveness, specifically related to difference in power distance.

A field experiment is conducted through an online questionnaire, gathering 120 respondents, 33 Chinese and 87 Dutch. This study found that in a culturally diverse business team, consisting of low and high power distance cultures, represented by the Netherlands and China an ideal leader should possess qualities of charismatic, transactional and team-oriented leadership. For Chinese employees one leadership style used to treat every employee is favoured, compared to individualized approaches. Future research suggestions and limitation to this research have also been discussed.

Table of Contents

Abstract ... 2

1. Introduction ... 4

2. Literature review & Hypothesis Development ... 6

2.1 Leadership styles ... 6

2.2 Culture ... 9

2.2.1 Power distance ... 9

2.2.2 Culture clusters ... 11

3. Research Method ... 14

3.1 Samples and Procedures ... 14

3.2 Measure ... 15

4. Results ... 17

4.1 Transformational leadership... 18

4.1.1 Transformational leadership: Team-oriented ... 18

4.1.2 Transformational leadership: Participative leadership ... 18

4.1.3 Transformational leadership: Charismatic leadership ... 19

4.2 Transactional leadership ... 19

4.3 Power distance ... 20

4.4 One leadership style ... 21

5. Discussion ... 23

6. Limitations and future research suggestions ... 26

7.

Conclusion ... 27

8. References ... 28

1. Introduction

Globalization and the growing attractiveness of working abroad has created a diverse workforce within multinational companies (Buckley & Ghauri, 2004) (Brookfield Global Relocation Services, 2012). According to this report, currently up to 40 million expatriates are working abroad. Even though working in an intercultural and international environment sounds defiant and inspiring, managing and leading such a workforce is not as obvious (House et.al., 2004) whereas current statistics state that 40% of all expat contracts fail (Expatriate preparation, 2014) (White, Absher & Huggins, 2011) whereby costs can add up to 2 billion dollar (Koolmees, 2013, p. 3). This raises the question on what styles of leadership exist and what are known cultural differences on the workfloor and how do these two aspects congregate within a company to lead a team effectively?

Extensive research has been conducted on the role of leadership and introduced two styles: transformational versus transactional leadership style (Avolio and Bass, 1999). Building on these leadership styles, Ogbonna and Harris (2000) tried to link these styles to organizational performance and organizational culture. Also if one such leadership style can be universally adapted across national boundaries (Den Hartog, et al., 1999) and how these leadership styles vary across different cultural settings (Hofstede, 1980) (House et.al, 2004). Besides leadership styles, the image and characteristics of an effective and ideal leader are varying within a country or culture (Gerstner, 1994) (Dickson, Den Hartog & Mitchelson, 2003).

Focus has also been placed on the cultural context companies are situated in. Thereby Hofstede’s cultural value framework from 1980 is often used and serves as a building block for most empirical research on culture. Hofstede identified five dimensions of cultural values. One of which is power distance, describing ‘the extent to which a society accepts the fact that power in institutions and organizations is distributed unequally’ (Kirkman & Shapiro, 1997; Hofstede, 1980, p.45). Hereby low power distance cultures have little concern for hierarchy, status and formality whereby the manager is often surpassed to get work done. Where on the opposite, in high power distance cultures, employees expect hierarchy, to have more layers in their organization and felt to be of greater importance.

Both cultural context (Dickens, Den Hartog & Mitchelson, 2003) and leadership style (Zaccaro, Rittman & Marks, 2001) have been researched as a concept of cross-cultural leadership, most research focuses on leadership styles and

characteristics in an international environment, and leaders operating across multiple national boarders. However little research is conducted on what style and which characteristics are needed to lead a culturally diverse business team. Even though research has been conducted om Self-Managing-Work-Teams (SMWTs) in an intercultural context by Kirkman and Shapira (1997), or project teams (Ochieng & Price, 2009) (Zander, Mockaitis & Butler, 2012) (Miller et.al., 2000), little research has been conducted on leading such a diverse business team effectively. Hereby identifying a gap in current literature and leading to the topic of this thesis: What

leadership style should be adopted in a multicultural business team context with a difference in cultural background related to power distance? This study will focus

hereby on the difference between The Netherlands and China. The choice of countries is due to increasing interest in Asia whereby China has been identified as the top country as ‘Emerging new locations for international assignments’ (Brookfield Global Relocation Services, 2012, p. 34), presenting in this research a high power distance culture (House et.al., 2004). However China is also identified as the top country presenting the greatest assignment difficulties for international assignees due to technical difficulties (work permit, language barriers) but also organizational and cultural climate (Brookfield Global Relocation Services, 2012, p.35-36) The Netherlands serves as counter measure presenting a low power distance culture (House et.al., 2004). A necessity for one such leadership style is due to inter-team communication difficulties and possible internal conflicts due to different leadership style approaches and cutting contract failure costs (Zander et.al., 2012).

This research attempts to create a theoretical framework of the ideal leadership style and the accompanying qualities a leader should possess in order to effectively lead a culturally diverse business team. This framework will be valuable to human resource divisions within multinational companies in selecting the right person for the job. Besides the selection process, also the training prior to fulfilling the leadership role can be adjusted to give them a proper training and support for the job expected.

This study will continue with a literature review section, section 2, creating a theoretical background upon which hypotheses are formulated. Building on the theoretical framework, methodology of the research is presented, section 3, discussing the sample size and the procedures for the questionnaire. Next the results are presented in section 4 and discussed in section 5, provided with the research’ implications and limitations in section 6.

2. Literature review & Hypothesis Development

The literature section starts with current leadership styles and theories leading to cultures, power distance and cultural clusters based on power distance.

2.1 Leadership styles

Extensive research has been conducted on the role of leadership, what characteristics a leader should posses (Gerstner, 1994; Dickson, Den Hartog & Mitchelson, 2003), if such leadership qualities are universally applicable (Den Hartog et.al., 1999) and how they relate to organizational culture and performance (Ogbonna & Harris, 2000). However the leadership field can be described as ‘fuzzy’, where ‘fuzzy’ is defined as no signs can differentiate all members from all non-members (Den Hartog et.al., 1999; Rosch, 1978).

However, examining culture and leadership, Bass (Avolio & Bass, 1999) has identified two leadership styles: transactional leadership and transformational leadership. Whereby the former describes a one-way top down communication style, short term oriented and where an aggressive approach is adopted. The former is more pro-active, stimulating, motivating and a participative leadership style and is often related to charisma. Bass (et.al., 2003) argued that transformational leadership occurs and is needed in times of change and uncertainty, whereas transactional leadership best applies in a well-ordered environment set by organizational rules and norms. Often the term directive leadership is used to describe transactional leadership.

However according to Dickson (et.al., 2003) neither transactional nor transformational leadership style is best and can be universally applied in every culture. Recently project GLOBE (Global Leadership and Organizational Behavior Effectiveness) was launched, conducting research across 62 cultures on transformational leadership. According to the GLOBE project leadership attributes exist that are universally endorsed and contribute to outstanding leadership, and attributes that are universally seen as undesirable (House et.al., 2004)(Dickson, Den Hartog & Mitchelson, 2003)(Den Hartog et.al., 1999). According to the GLOBE project an outstanding leader should be encouraging, motivational, dynamic and to have foresight. However on the contrary should be non-cooperative, be dictational nor ruthless (House et.al., 2004)(Den Hartog et.al., 1999). Besides, an outstanding leader should be integer and trustworthy and reflect charisma and inspiration which are all important attributes to transformational leadership (House et.al., 2004)(Den Hartog et.al., 1999). Outstanding leadership is also associated with team-oriented leadership, whereby the leader should be effective in team building, communication

and coordination of its team (Avolio, Walmbwa & Weber, 2009). The results to the study of Den Hartog (et.al., 1999) suggested that most transformational leadership qualities are universally endorsed and contributing to outstanding leadership.

Den Hartog (et.al., 1999) created six global leadership dimensions related to transformational leadership from the GLOBE project, along which cultures can be aligned and find the most effective leadership qualities a leader should posses in order to be an effective leader in that specific culture. These six dimensions are: autonomous, charismatic, team-oriented, self protective, humane and participative. Where self protective describes whether leaders are status conscious and centered (Gupta et.al., 2002). Autonomous relates to being independent and self-governing as a leader, and humane profiles a modest and caring leader (Gupta et.al., 2002). Figure 1 portrays the ideal form of leadership according to the GLOBE project for the Netherlands and for China, however this is not necessarily a leader typically found at middle level managers (House et.al., 2004). It is measured on a scale between one (non-outstanding leader) and seven (outstanding leader). Besides the GLOBE project, recent study has supported these six global leadership dimensions as part of transformational leadership whereby transformational leadership is part of the new-genre leadership. Hereby a shift takes place from more traditional (transactional) leadership versus transformational leadership (Avolio, Walumbwa & Weber, 2009, p. 428) where especially focus is on charisma, participative and team-oriented aspects of transformational leadership as most suited to current business. This leading to our first hypothesis.

Hypothesis 1: The characteristics, charisma, team-oriented focus and a participative

leadership style, all components of transformational leadership, are positively experienced by both Chinese and Dutch people.

Figure 1: Dutch and Chinese leadership profile scores (House et.al.,2004).

Participative leadership has been greatly valued in the Germanic, Anglo and Nordic European Cultures, whereas the Middle East, Eastern Europe, Confucian Asia and Southern Asia did not endorse this type of leadership style (Dickson, Den Hartog & Mitchelson, 2003, p. 738)(House et.al., 2004).

Study conducted by Dorfman (et.al., 1997) in the United States, Mexico, Japan, Taiwan and South Korea showed that charismatic leadership was consistently endorsed in all cultures. Transactional leadership had a positive outcome in Mexico and Taiwan, relating to high power distance. However United States and South Korea had a positive correlation with participative leadership, both low on power distance (Dickson, Den Hartog & Mitchelson, 2003 p. 738)(Hwang et.al., 2013).

Recent research has focused on leadership styles in multicultural project teams. According to Zander, Mockaitis and Butler (2012, p.595) team leaders serve as bridge makers for cultural boundaries within multicultural teams and should be motivational, inspiring and serve as a mentor. Essential to team members in global virtual teams was the personal interest the leader takes towards the individual (Zander et.al., 2012). However a conflict can arise if some team members appreciate the individual personal interest, respect and trust of a leader delegating empowerment, and on the contrary some members view this as unacceptable (Zander et.al., 2012)(Kim, 1996). Since they appreciate transactional leadership

0 1 2 3 4 5 6 Charismatic Team-Oriented Self-protective Praticipative Humane Autonomous Netherlands China

more and therefor might lose their trust and respect if the leader does not behave in such a manner (Zander et.al., 2012)(Kirkman & Shapiro, 1997). According to Zander (et.al., 2012) a team leader that is stuck in such a paradox will not lead a team effectively unless the conflict can be solved. Besides, recent study in single culture teams found that one leadership style instead of individualized leadership is positively related to team effectiveness, thereby creating a common team norm (Zander et.al., 2012).

Hypothesis 2: Adopting one leadership style compared to individualized leadership

is positively related to team effectiveness.

2.2 Culture

Hofstede’s cultural value framework in organizations is the building block for most empirical research on culture. However Hofstede’s work is also most criticized. Recent study by Kirkman, Lowe & Gibson (2006) tested if this dated framework from 1980 can still be applied in current research. According to Kirkman, Lowe & Gibson (2006, p. 313) Hofstede’s cultural values framework can still be utilized if used accurately and effectively (Taras, Kirkman & Steel, 2010). Hofstede defined culture as ‘the collective programming of the mind which distinguishes the members of one human group from another’ (Taras, Kirkman & Steel, 2010: Hofstede, 1980a, p. 25). He identified four dimensions of cultural values: Individualism-collectivism, power distance, uncertainty avoidance and masculinity-femininity and later on a fifth dimension was included, the long- versus short-term orientation. Since this research focuses on the difference in high versus low power distance and its effect on leadership style in multicultural business teams, only power distance will be discussed.

2.2.1 Power distance

The dimension power distance identified by Hofstede (1980), defined as ‘the extent to which a society accepts the fact that power in institutions and organizations is distributed unequally’ (Kirkman & Shapiro, 1997; Hofstede 1980, p.45). Hereby low power distance cultures have little concern for hierarchy, status and formality whereby the manager is often surpassed to get work done (Kirkman and Shapiro, 1997, p. 737). Where on the opposite, in high power distance cultures employees expect hierarchy to have more layers in their organization and felt to be of greater importance. Hereby employees are more reluctant in challenging or questioning their supervisors (Den Hartog, et.al., 1999). Besides, in high power distance cultures,

employees expect and want more guidance through rules and regulations from their leaders, corresponding to an autocratic leadership style (Kirkman et.al., 2009) (Dickson, Den Hartog & Mitchelson, 2003). According to Den Hartog et.al., (1999) leadership attributes such as status-conscious, class-conscious, elitist and domineering are appreciated in high power distance cultures, but are considered to be counterproductive in low power distance cultures such as the Netherlands.

In cultures where power distance is low rather than high, employees will more likely perceive decisions (compensation system design) as fair when they have input (Den Hartog et.al., 1999). Subsequently, in countries where power distance is high, resistance to work in teams occurred (Den Hartog et.al., 1999). In low power distance cultures, or more egalitarian cultures (such as the Netherlands), transformational leadership style needs to adopt a more participative approach than in high power distance cultures (Den Hartog, et.al., 1999, p.245). Where as in a high power distance culture, a more directive approach to transformational leadership is desired (Dickson, Den Hartog & Mitchelson, 2003, p.740). As such, in a high power distance culture employees expect and work better in a one-directional and top down communication from their leaders. In such a culture, like China, transactional leadership style would be the best fit, since transformational leadership often adapts a two way communication style and attempts to be inspiring and thereby challenging their employees (Kirkman, Chen, Farh, Chen, Lowe, 2009).

Employees with different cultural backgrounds associate different attributes and behaviors with a leadership role and power distance is one of such factors related to the image of an outstanding leadership. According to GLOBE project (Den Hartog, et.al., 1999) certain leadership qualities are universally endorsed and others are identified as counterproductive. Characteristics identified as universally endorsed are encouraging, motivational, dynamic and to have foresight. On the contrary ruthless and dictatorial are seen as universally counterproductive qualities of a leader (Den Hartog et.al., 1999, p. 738). However most other characteristics varied across cultures and are often related to power distance. A study conducted by Dorfman and Shapiro (et.al., 1997) compared leader behavior in five countries, whereby transactional leadership had positive outcomes in high power distance countries (Mexico and Taiwan) and participative leadership had positive outcomes in low power distance countries (United States and Korea). Dorfman (et.al., 1997) showed that supportive and charismatic leader behaviors are universally endorsed, where as transactional and participative are cultural specific. A further study by Dickson, Den Hartog and Mitchelson (2003) showed that developing countries share a combination of participative leadership and transactional leadership, named as a paternalistic

style of leadership. Hereby countries are high on power distance, but also having a strong family bond expecting organizations to take care of them and their families (p.739). Leading to the following hypotheses.

Hypothesis 3a: Dutch people, from a low power distance culture will experience

transformational leadership more positively than transactional leadership.

Hypothesis 3b: Chinese people, from a high power distance culture will experience

transactional leadership more positively than transformational leadership.

2.2.2 Culture clusters

The GLOBE project has clustered cultures into groups based on power distance. According to Dickson, Den Hartog and Mitchelson (2003) the following cultures can be grouped:

- Eastern Europe: Albania, Georgia, Greece, Hungary, Kazakhstan, Poland, Russia and Slovenia.

- Nordic Europe: Denmark, Finland and Sweden.

- Germanic Europe: Austria, Germany, the Netherlands, German-speaking Switzerland.

- Anglo: Australia, English speaking Canada, England, Ireland, New Zealand, South Africa (white sample) and the USA.

- Sub-Saharan Africa: Namibia, Nigeria, South Africa (black sample), Zambia and Zimbabwe.

- Confucian Asia: China (including Hong-Kong), Japan, Singapore, South Korea and Taiwan.

- Southern Asia: India, Indonesia, Malaysia, the Philippines and Thailand. - Middle East: Egypt, Iran, Kuwait, Morocco, Qatar and Turkey.

- Latin America: Argentina, Bolivia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico and Venezuela.

The Anglo cluster common factor is their dominant language English and they used to be members of the British Empire (Hwang et.al., 2013). This cluster shows high level of power distance and medium level of other cultural dimensions such as in-group collectivism and future orientation (House et.al., 2004). However the ideal seen by the employees is low in power distance, and high on performance orientation and in-group collectivism. According to Dickson, Den Hartog and Mitchelson (2003) a charismatic and participative leadership style is best fit.

Southern Asia, with its common historical and cultural background is characterized to be high on collectivism, masculinity and power distance (Gupta et.al, 2002). The other cultural dimensions are average. An effective leader would posses charismatic and team oriented qualities (Gupta et.al., 2002; Dickson, Den Hartog & Mitchelson, 2003).

The Arabic cluster has commonality due to their natural resources such as oil, their history, religion and norms (Kabasakal & Bodur, 2002). They share a high in-group collectivism and power distance and are rated low on future orientation (Kabasakal & Bodur, 2002, p. 46). Most effective leadership style accompanied is hard to define according do Kabasakal and Bodur (2002) since all leadership styles are average, where team-oriented and charismatic are seen as most effective.

The Eastern Europe cluster differentiates itself by high power distance and relying on hierarchy in their business context. Even though this portrays the current situation; they desire a more future oriented, collectivistic environment. Charismatic, participative and team-oriented leadership are effective, however participative leadership is not as effective in every country within the cluster, especially when power distance is high.

Latin Europe is clustered based on the comparative role of their governments playing a paternalistic role creating high collectivism and high on power distance (Dickson, Den Hartog & Mitchelson, 2003). Even though power distance is low, the desired level would be low. According to House (et.al., 2004) a charismatic, participative leadership style would be the best form for an effective leadership.

The Nordic Europe cluster share a common background in history, language and culture (House, et.al., 2004). This cluster is low on power distance and high on collectivism, future orientation and uncertainty avoidance. This is congruent with a charismatic and participative leader (Hwang et.al., 2013).

The Germanic Europe cluster all have a Germanic language origin (Hwang et.al., 2013). Most organizational relationships are based on cooperation and coordination, whereby participative leadership is congruent and regarded as highly positive (Szavo et.a., 2002, p. 66) (Hwang et.al. 2013)(Dickson, Den Hartog & Mitchelson, 2003). Besides participative leadership, charismatic and team-oriented leaders are contributing to effective leadership within this cluster (House et.al., 2004). According to House (et.al., 2004) the Netherlands is medium on power distance (4,11) and aspires to be low (2,45) , whereby high is considered >4,5 on a scale from one to seven.

The Confucian Asian cluster includes Singapore, Hong Kong, Taiwan, China, South Korea and Japan. This cluster portrayed high scores in performance

orientation and in both forms of collectivism (Dickson, Den Hartog & Mitchelson, 2003). These countries are results driven and are loyal to the group. The leadership style most suited to Confucian Asia is protective to him or herself, inspirational and team oriented. However clear in top-down communication on goal setting and decision making whereby status is of importance (Dickson, Den Hartog & Mitchelson, 2003). According to House (et.al., 2004) China is high on power distance (5,02) and aspires to be low on power distance (5,5) (see figure 2 for the comparison with the Netherlands).

Figure 2: Power distance as it is in the Netherlands and in China, and how they aspire it to be (House et.al., (2004, pp. 539-540)).

Since the Netherlands is low on power distance (compared to the 62 countries measured) and China is currently high on power distance but aspires to be lower on power distance, and according to their cultural clustered groups are positively related to charismatic, team-oriented and participative leadership styles, hypothesis 4 arises. Besides, according to the GLOBE project and recent studies by Avolio, Walumbwa and Weber (2009) an universally outstanding leader should possess qualities from team-oriented leadership, charismatic, integer, trustworthy and inspiring, all components related to transformational leadership (House et.al., 2004)(Den Hartog et.al., 1999).

be China As is ChinaShould be

Power Distance; Netherlands and

China as is and should be

Hypothesis 4: Transformational leadership with components of charisma,

team-oriented and participative leadership is most suited to multinational business team containing members with high and low power distance cultural backgrounds.

3. Research Method

This section presents the empirical research design and methodology that has been used for this deductive study. A questionnaire method is used in this research for the data collection. The questionnaires are formulated in English and distributed mainly to native Dutch and native Chinese people. Figure 3 below portrays the conceptual model of this research study whereby the leadership style chosen influences the multicultural business team and thus effecting team performance and happiness.

Figure 3: Conceptual model of research study.

3.1 Samples and Procedures

A quantitative method of data analyses has been chosen to test the association between the studied variables. Through this chosen method, a greater number of respondents can be involved thereby improving the generalization of the results avoiding possible partial outcome (low et.al., 1996, p.407). Using questionnaires provides an opportunity to collect great amount of data from a large pool (Saunders et.al., 2009, p.596).

The questionnaires were created through Qualtrics, an online resource for conducting research, distributing the link to the survey through Email and Facebook. The questionnaire opened with a welcome word including the aim of the research and stating all information collected will be treated anonymously. In total 128 responses were collected of which 6 were incomplete and therefor deleted from calculation. Thus, 122 people were used for the study, of which 2 items were deleted since they were neither from the Netherlands nor China but from South-Africa and Russia. The average age of the respondents is 25 years, 68% is female and 32% male. Of the 120 responses 87 are native Dutch and 33 are native Chinese whereby

Leadership

style

Multicultural

Business

team

Team

effectiveness

& happiness

90 currently vacate in the Netherlands, 29 in China and 1 in Germany. 47 respondents are current students, 70 are working, 2 graduated but unemployed and 1 is a writer.

Graphic representation of respondents relating to their gender, country of origin, country currently living and their current occupation.

3.2 Measure

The questionnaires used for this study were partly taken from the study conducted by Bass and Avolio (1997) on multifactor leadership questionnaire. Besides questions were added from the study of House (et.al., 2004) on power distance and transformational leadership used in the GLOBE project. The questionnaire uses a 7 point Liker scale from 1 (completely disagree) to 7 (completely agree) as response to the questions. This scale allows to quickly answer the questions, understanding the magnitude of the respondents feelings regarding the questions but also allowing for a neither agree nor disagree answer. Transformational leadership is tested through three constructs: team-oriented, participative and charismatic.

Team-oriented leadership is measured by asking the respondents three

questions derived from House et.al. (2004). The three items which had to be scaled from 1 (completely disagree) to 7 (completely agree) are ‘my ideal leader is team-oriented’, ‘my ideal leader emphasizes team building’ and ‘my ideal leader creates a

Gender

Country of origin

Living

Current occupation

common goal for the team’. Crobachs Alpha is 0,495 and therefor the three items are not internally consistent and thus reliable. However if the item ‘Creating a common goal’ is deleted the Cronbachs Alpha will increase to 0,696 and thus considered to be internal consistent and reliable.

Participative leadership is measured by two questions derived from House

et.al. (2004). The three items have to be scaled from 1 (Completely disagree) to 7 (completely agree). The questions are ‘the ideal leader involves the team in decision making’ and ‘the ideal leader involves the team in implementing decisions’. Cronbachs Alpha is 0,915.

Charismatic leadership is measured by four questions derived from House

et.al. (2004). The four items have to be scaled from 1 (completely disagree) to 7 (completely agree). The questions are ‘the ideal leader is inspiring’, ‘the ideal leader is motivating me to do the best I can’, ‘the ideal leader is self-sacrificing’ and ‘the ideal leader creates learning opportunities. Cronbachs Alpha is considered quite low, 0,527. However if ‘self-sacrificing’ is deleted its internal consistency of the construct will increase to 0,753. It would further increase if the item ‘creating learning opportunities’ is deleted however the change would not be 0,038<0,05 and therefor eliminating the item would mean losing substantial information.

Transactional leadership is measured through five items all derived from Bass

and Avolio (1997) and scaled on a 7 point Likert scale. The items used to measure transactional leadership are ‘the ideal leader sets goals’, ‘the ideal leader has clear expectation of the team and the teammembers’, ‘the ideal leader promises rewards for desired performance’,’the ideal leader controls team members by relying on standards, rewards, punishment and sanction control’ and ‘the ideal leader is one that deals with present issues’. Cronbachs Alpha measures 0,615, therefor this construct is internally consistent and reliable. Deleting any of the five items would not increase Cronbachs Alpha.

Power distance is measured by five items derived from House et.al. (2004).

The questions posed are answered on a scale from 1 to 7, varying from one extreme to another. Two questions are from the point of view of their native society of culture and two others from the point of view of the respondent. The fifth question is on how a typical organization in their society of culture sees it. The questions are: ‘In your society, or your culture/I believe followers are expected to (1) obey their leaders without question (7) question their leaders when in disagreement’ and ‘In your society, or your culture/I believe that power is (1) concentrated at the top (7) shared throughout the society’. The fifth question is ‘In a typical organization in your society or your culture a persons influence is based primarily on (1) one’s ability and

contribution to the organization (7) the authority of one’s position. Cronbach’s Alpha is 0,803 and therefor internally consistent. However if the fifth item ‘In a typical organization in your society or your culture a persons influence is based primarily on (1) one’s ability and contribution to the organization (7) the authority of one’s position’ is deleted Cronbachs Alpha will increase to 0,874 (difference >0,05) and therefor considered to be more internally consistent and reliable.

Adopting one leadership style compared to individualized leadership is tested

through five items measured on a 7 point Likert scale from 1 (completely disagree) to 7 (completely agree). The items are ‘a leader should behave the same towards every member of a team’, ‘a leader that enacts the same with every team member creates a common norm within the team’, ‘I might feel left out of the team if my leader treats other members differently’, ‘I might lose trust and respect if my leader treats other members differently’ and ‘I understand that a team consisting of different cultural backgrounds, all members want an expect different things from a leader.’. Cronbachs Alpha is 0,832, however it would increase if the item ‘I understand that a team consisting of different cultural backgrounds want different things from a leader’ is deleted to 0,907 (difference >0,05).

4. Results

In order to test the proposed hypotheses statistical analyses are conducted. Table 1 below illustrates the correlation and descriptive statistics for the studied variables, through which we can see how the variables relate. The correlation between team-oriented and participative leadership is positive and significant (r = ,398) as well as with charismatic leadership (r = ,478). Besides charismatic leadership is also positively correlated to participative leadership (r = ,356). Transactional leadership is somewhat positively related to team-oriented leadership, but not significantly (r = ,22). However transitional leadership is significantly negatively correlated to participative leadership style (r = -,379). Power distance is significantly positively correlated to all transformational leadership constructs (r = ,380; r = ,748 and r = ,470) and significantly negatively related to transactional leadership with r = -,357. The construct one leadership style is highly positively related to transactional leadership style with r = ,233 and p = 0,01, and significantly negatively related to participative leadership (r = -,312) and power distance (r = -,294).

Variable Mean SD 1. 2. 3. 4. 5. 1. Team-Oriented 2. Participative 3. Charisma 4. Transactional 5. Power Distance 6. One leadership style 5,93 4,80 6,01 5,39 4,36 4,57 0,67 1,70 0,64 0,72 1,22 1,26 1 ,398** ,478** ,22 ,380** -0,25 1 ,356** -,379** ,748** -,312** 1 ,081 ,470** -,158 1 -,357** ,233* 1 -,294** 1

Table 1. Descriptive statistics and correlations among variables in study samples.

** Correlation is significant at the 0,01 level (2-tailed) * Correlation is significant at the level 0.05 level (2-tailed)

4.1 Transformational leadership

4.1.1 Transformational leadership: Team-oriented

Next all constructs are tested between the difference in cultural backgrounds, thus the Netherlands and China. ANOVA testing team-oriented to the Netherlands and China resulted resulted in a significant difference between the two countries (p=,001) in their means (NL = 6,06; China = 5,59). R-squared = 0,096, therefor 9,6% of variance in team-oriented leadership is explained by the countries. Testing these means to 4,5, thus the minimum in accepting team-oriented, both countries are significantly above the rejection region. These means reflect that both countries favour a more team-oriented leader whereby the Netherlands agrees it is a definite component of an ideal leader, whereas China somewhat agrees it is a definite component of an ideal leader. Even though creating a common goal was not an item related to team-oriented based on Cronbachs Alpha, according to the ANOVA test the Netherlands mean is 6,05 and China 5,94 however not tested significant (p = 0,511). Only 0,3% of the variance related to creating a common goal is explained by the difference in countries, thereby stating that the two countries show no significant difference. Both countries somewhat agree for a leader to be creating a common goal for the team as an essential component of an ideal leader.

4.1.2 Transformational leadership: Participative leadership

ANOVA testing on participative leadership between the Netherlands and China a significant difference between the two countries resulted (p = 0,01) in their means (NL = 5,66, China = 2,55). R-squared = 0,674, showing that 67,4% of the variance explains there is a significant difference between the Netherlands and their perception on participative leadership and China on participative leadership. Whereby the Netherlands strongly agrees and relates to such leadership style and

where China believes leaders should not be involving followers in decision making and implementing decisions. Testing these means to the test value 4,5, thus the minimum in accepting participative leadership style, the Netherlands is significantly above the rejection reagion (p = ,000). China however is within the rejection region, even after lowering the test value to 3. Thus China shows no positive correlation to participative leadership.

4.1.3 Transformational leadership: Charismatic leadership

ANOVA testing on charismatic leadership style between the Netherlands and China also differ significantly in their means (NL = 6,15, China = 5,65). With an R=squared of 0,121, 12,1% of the variance explains the difference in charismatic leadership, whereby the Netherlands favours a charismatic components as part of an ideal leader more than China, however both see it as something positive. Testing both countries against the test value 4,5 as a minimum value for this construct resulted both countries are significantly above the rejection region (p = ,000). Even though self-sacrificing was not a item related to the charismatic construct based on Cronbachs Alpha, according to ANOVA test the Netherlands mean is 4,77 and for China 4,64 and is not significant (p = 0,626). Only 0,2% (R-squared = 0,002) of the variance can be explained by the difference in countries. Both countries somewhat agree for a leader to be self-sacrificing as an essential component of an ideal leader.

Even though both countries are significantly positively related to team-oriented and charismatic, the construct participative leadership showed a significant difference between the two countries in opposing directions. Where the Netherlands relates positively to participative leadership and China shows a negative relation to this construct. Therefor hypothesis 1, team-oriented, participative and charisma, all

components of transformational leadership are positively related to Chinese and Dutch people, is rejected. However, if altered, team-oriented and charisma, both

components of transformational leadership are positively related to Chinese and Dutch people, is supported.

4.2 Transactional leadership

Transactional leadership tested with ANOVA between the Netherlands and China shows significant differences between the two countries. With respective means of 5,20 for the Netherlands and 5,88 for China, China seems to be significantly higher and thus more related to transactional leadership style. With an R-square of 0,177, 17,7% of variance in transactional leadership style is explained by the countries. Testing both countries against the test value 4,5 as a minimum value for this construct resulted both countries are significantly above the rejection region (p =

,000), therefor both positively relating to transactional leadership. However the Netherlands seems to somewhat agree to the components of transactional leadership as part of an ideal leader compared to China that agrees to these components.

Comparing team-oriented, charisma, and participative leadership style with transactional leadership dividing the constructs based of country origin, the Netherlands shows no correlation between transactional and team-oriented leadership (r = 0,072, p = 0,507) meaning that the Netherlands prefers team-oriented leadership style over transactional leadership style. However China shows a significant positive correlation of 0,579 between transactional and team-oriented leadership styles. Relating participative leadership to transactional leadership style, none of the two countries shows a significant correlation. However between charisma and transactional leadership style China shows a positive correlation of r = 0,726, whereas the Netherlands shows no significant relationship between the two construct (r = ,162, p = ,134). Thus China relates the transformational components, team-oriented and charisma as important as transactional leadership components for an ideal leader, whereas the Netherlands prefers participative, charismatic and team-oriented components, thus transformational leadership qualities over transactional leadership qualities.

4.3 Power distance

ANOVA testing on power distance between the Netherlands and China shows a significant difference in mean of 4,95 for the Netherlands and 2,84 for China. With an R-squared of 0,619, 61,9% of the variance is explained by the preference for power distance between the two countries. Whereby China seems to relate more to a hierarchical structure, whereas the Netherlands question their leader when in disagreement and power should be shared throughout society. Even though the item ‘In a typical organization in your society or your culture a persons influence is based primarily on (1) the authority of one’s position (7) one’s ability and contribution to the organization’ according to ANOVA testing, no significant difference between the two countries is found (p = ,098). The Netherlands with a mean of 4,61 and China 4,09 both countries seem to be relating to a persons influence is based both on one’s authority and ability to contribute, where the Netherlands has a slighter tendency to the right, one’s ability to contribute to the organization. Testing both countries to the standard <3,5 for China and >4,5 for the Netherlands, whether the countries are respectively low and high on power distance indicates with a significance level of

0,05 (and p = ,000) in a one sided test that China is below 3,5, thus high in power distance. The Netherlands is above >4,5 (p = ,000) and thus low on power distance.

Measuring power distance construct in a paired sample t-test against team-oriented, charismatic and participative leadership, shows for the Netherlands that charisma and team-oriented are significantly positively correlated (r = ,355, p = 0,001; r = ,267, p = 0,014). Thus the Netherlands as a low power distance culture favours charismatic and team-oriented leadership style. China shows a strong significant positive correlation (r = ,524, p = ,002) with participative leadership. Thus stating that China as a high power distance culture favours components of participative leadership. Therefor hypothesis 3a, ‘Dutch people, from a low power

distance culture will be positively related to transformational leadership’ cannot be fully met. However 3a is met if Dutch people, from a lower power distance culture will

be positively related to charismatic and team-oriented leadership style components of transformational leadership.

Measuring power distance (reverse scaled) in a paired sample t-test against transactional leadership for China, transactional leadership (5,88) and power distance (5,16, reversed) shows no significant correlation. Neither did the Netherlands show a significant correlation. Therefor this test shows no support for

hypothesis 3b ‘Chinese people, with a high power distance culture will be positively related to transactional leadership’, thus in this sample of Chinese respondents no

positive correlation between a high power distance culture and transactional leadership is supported.

4.4 One leadership style

Testing if one style is better than different leadership style within one team ANOVA tested the Netherlands with a mean of 4,32 and China 5,21 with a significant difference. With an R-squared of 0,103, 10,3% of the variance is explained one leadership style preference by the difference in countries. Hereby stating that the Netherlands somewhat agrees to having one leadership style for one team, however can relate to a more personal and individual approach to each team member compared to China, which more agrees to having one leadership style is best for the team. When both countries are tested to a minimum of 4,5 on this item, thus answering to minimally somewhat agree to completely agreeing on having one leadership style results in a positive correlation with the Chinese respondents and no significant correlation with the Dutch respondents (p = ,221) and thus the

Netherlands does not meet the requirements for hypothesis 2, adopting one leadership style compared to individualized leadership is significantly positively

experienced by Dutch and Chinese respondents. However the Chinese do meet this requirement.

Even though the item ‘I understand that a team consisting of different cultural backgrounds want different things from a leader’ was deleted from the construct one leadership style, tested in ANOVA showed there was no significant difference (p = 0,633) between the two countries. With a mean for the Netherlands of 5,70 and China 5,79 both countries seem to agree to understand that cultural backgrounds would want different things from a leader.

Both the Netherlands and China, representing low and high power distance culture, positively relate to team-oriented, charismatic and transactional leadership as part of an ideal leader, whereas the Netherlands also positively relates to participative leadership style. Besides China positively correlates to having only one leadership to be effective within a team, therefor only charisma and team-oriented components of transformational leadership styles are accepted and will have a positive influence on a multicultural workforce. However components of transactional leadership are also welcome and essential according to these two cultures. On the other hand components of participative leadership, thus a leader involving the team in decision making and implementing decisions is regarded as a contribution to team effectiveness. Thus hypothesis 4, Transformational leadership with components of charisma, team-oriented and participative leadership is most suited to a multinational business team containing members with high and low power distance cultural backgrounds, is partially accepted.

partially

Hypothesis 1: The characteristics, charisma, team-oriented focus and a

participative leadership, all components of transformational leadership, are positively experienced by both Chinese and Dutch people.

for China

Hypothesis 2: Adopting one leadership style compared to individualized

leadership is positively related to Chinese and Dutch people.

partially

Hypothesis 3a: Dutch people, from a low power distance culture will

experience transformational leadership more positively than transactional leadership.

Hypothesis 3b: Chinese people, from a high power distance culture will

experience transactional leadership more positively than transformational leadership.

partially

Hypothesis 4: Transformational leadership with components of charisma,

team-oriented and participative leadership is most suited to multinational business team containing members with high and low power distance cultural backgrounds.

5. Discussion

This study aims at making a contribution to the evolving field of multicultural business teams, in more detail leadership styles in such diverse teams. Even though it is a relatively new and emerging field of study, extensive research has been conducted on leadership styles (Den Hartog et.al., 1999)(Avolio & Bass, 1999)(Gerstner, 1994)(Ashkanasy, 2002). The goal of this study is to test whether transformational leadership style with components of team-oriented, participative and charismatic leadership is most suited in a multicultural business team containing members with high and low power distance cultural backgrounds. The choice of two countries, the Netherlands and China representing a low and high power distance culture is based on the information provided by the GLOBE study presented by House (et.al, 2004) and recent statistics on expatriates (Brookfield Global Relocation Services, 2012).

The first hypothesis aimed at studying the three components of transformational leadership to be positively related to Chinese and Dutch people. These three components are team-oriented, participative and charismatic leadership styles. Evidence was found to support this hypothesis partially. Both team-oriented and charismatic leadership were found effective and favoured in the Netherlands and in China. However support for participative leaderhip was only found in the Netherlands, whereas China found a negative relation to this construct. Participative leadership consists of two items: ‘An ideal leader involves the team in decision making’ and ‘An ideal leader involves the team in implementing decisions. According to this study, Chinese people prefer a leader to be charismatic, motivating and inspiring however should not involve the team, or a leader’s subordinates be involved in decision making. This relates to their cultural background in a high power distance country where in their society, followers are expected to obey their leader without question, instead of questioning when in disagreement. Thus when involved in decision making, together with their team leader one would not go into a disagreement in terms of planning. The Netherlands on the other hand showed strong positive relations to all three constructs. Amongst all three components a strong positive correlation was indicated showing all three component work well together. This is all according to the findings of the GLOBE study and Dickson (et.a., 2003)(Den Hartog et.al., 1999) where all these construct relate to a universally endorsed outstanding leadership contributes. However the construct participative tested to China differs relating to the GLOBE project findings, where participative is

mentioned as a leadership style most suited to the Confucian Asian cluster (House et.al., 2004)(Dickson, Den Hartog & Mitchelson, 2003). This difference can be explained due to this research testing what their ‘ideal leader’ would act like, whereas the GLOBE project tested what would be the ‘ideal situation’, more leaning to a business approach and not a leadership style.

The second hypothesis aimed at testing whether adopting one leadership style within a team would be more favoured and effective than multiple, individualized leadership styles. According to recent studies in multicultural project teams and leadership styles, conflicts can arise if some team members appreciate the individual personal interest, respect and trust of leader delegating empowerment, and on the contrary some members view this as unacceptable (Zander et.al., 2012)(Kim, 1996). This unacceptance can lead to disrespect and losing trust in their leader (Zander et.al., 2012)(Kirkman & Shapiro, 1997). To test whether this is plausible among these two cultures, four items measured this construct resulting in China significantly supporting only one leadership style within a business team as effective. The Netherlands neither agreed nor disagreed does stating to be either fine with one leadership style or having an individualized approach. Thus partially supporting the second hypothesis. Reasoning for the Dutch might be that Dutch people are good at following managers direction, however all need personal feedback to become as effective and efficient as possible. If one members receives more attention from a manager, other team members do not see this as a threat but as an incentive to increase team outcome. Whereas in high power distance cultures, such as China, employees expect and work better in a one-directional and top down communication from their leaders (Dickson, Den Hartog & Mitchelson, 2003, p.740) and thus cooperation between the two is not accepted (Zander et.al., 2012).

Hypothesis 3a, Dutch people from a low power distance culture will be positively related to transformational leadership is partially met. According to the paired sample t-test performed only the constructs charismatic and team-oriented leadership are correlated to low power distance, whereas participative shows no significant correlation. However China shows a strong negative correlation with participative leadership stating that high power distance cultures do not favour participative leadership qualities. Even though charisma, team-oriented and participative leadership styles are correlated amongst one another, participative leadership shows no relation with low power distance. According to the GLOBE project the Germanic European cluster shows a high positive relation to participative leadership, since most organizational relationships are based on cooperation and coordination (House et.al., 2004)(Szabo et.al., 2002, p.66)(Hwang, et.al.,

2013)(Dickson, Den Hartog & Mitchelson, 2003). However Dorfman (et.al, 1997)(House etl.al., 2004) mentioned that team-oriented and charismatic leadership behaviors are universally endorsed, whereas directive (transactional) and participative are cultural specific. Thus this might be culturally specific for the Netherlands that transactional and participative are moderately favoured as leadership behaviours. However for the Netherlands it still shows a positive relation, therefor testing with a greater number of respondents might lead to a different result.

Correlating high power distance with transactional leadership showed no significant correlation, neither did the Netherlands after further exploring the data. Therefor no support was found for hypothesis 3b. This result might seem somewhat odd since previous studies by Dorfman (et.al., 1997) and Dickson, Den Hartog and Mitchelson (2003) presented transactional leadership components as having positive outcomes in high power distance countries, such as China. However both their means are fairly high and positive, and might show different results if explored more extensively then 33 respondents.

Both the Netherlands and China, representing low and high power distance culture, positively relate to team-oriented, charismatic and transactional leadership as part of an ideal leader, whereas the Netherlands also positively relates to participative leadership style. Besides China positively correlates to having only one leadership to be effective within a team, therefor only charisma and team-oriented components of transformational leadership styles are accepted and will have a positive influence in a multicultural work team. However components of transactional leadership are also welcome and essential according to these two cultures. As stated earlier according to Dorfman (et.al., 1997) previous research indicated participative and transactional leadership styles as culturally specific, thus varying across cultures. Whereby the Netherlands favours both, and China only the transactional style. However since the Netherlands only significantly positively correlated to charismatic and team-oriented (as did China) and not significantly to participative, such leadership qualities and behaviour can be excluded in a multicultural business team. Even though Dutch employees might be open with an individual approach and thus leave space to involve participative behaviour, according to this research Chinese team members would not encourage nor accept such behaviour. Thus for an multicultural business team, consisting of Dutch and Chinese, respectively low and high power distance cultures, one leadership style profile consisting of transformational leadership components, such as charismatic and team-oriented, combined with transactional approach is favoured to create an efficient and effective team effort.

6. Limitations and future research suggestions

Although this study has presented some addition to the evolving field of study, attention should be given to the limitations this study has encountered. It should be noted that the sample size of this study can be considered quite low, 120 (NL = 87, China = 33). Therefor future research including a larger sample size could increase internal validity and generalizability, through which more support might be found for participative leadership for instance. Due to the time available for this study a cross-sectional study is conducted through which only data is gathered representing this specific moment in time. It could be interesting to repeat these questions and expand to a longitudinal study and track changes in peoples opinions through their careers.

This leading to the next limitation, average age of the population studied mostly consisted of student of 22-25 years old. Therefor this population has not gained (enough) work experience, nor team experience to really understand the relationship between a leader and its business team. Even though these students might have worked in different team on multiple projects, such team experience cannot be easily compared to an actual business team. Ideally would be to study such (a) multicultural business team(s) and study the underlying struggles and feeling accompanied in such environments.

This leading to the non-existing social aspect of this study. A leader and a business team are involved in a social and interacting communication which is left out of this study but highly interesting and relevant for future research. Communication styles are of high importance and of everyday relevance in multicultural teams and need to be investigated in extension of this research. For instance the difference between high and low context communication, etiquette, does such behavior need to be regulated (how and by whom?), how does this difference in communication style reflect on negotiation and decision making. How do relationship-based cultures behave compared to rule-relationship-based cultures, do these relate to the difference in low and high power distance cultures. All aspects involved in business team and all affecting team effectiveness.

Besides the internal team situation, the current study only investigates two countries, the Netherlands and China. However the result of this study might be the solution to a specific case if a business team consists of only Dutch and Chinese employees, however might not be applicable for Spanish and Indonesians joined in a business team. Therefor additional research can be done on how the clusters identified by the GLOBE study vary across one another on this subject.

Even though the questionnaire was partly formulated by House (et.al., 2004) and Bass & Avolio (1997) only a few items checked a construct. More items can be included through which the construct is more internally reliable and consistent. Besides, due to the online form of the questionnaire a great number of respondents could be reached however difficulties or ambiguities cannot be reported, thus not adjusted. A more extensive pre-test might be a solution.

Although extensive research has been conducted on transformational and transactional leadership, none has much been tested in a multicultural setting. Even though the GLOBE project offers us great insight and new information it also focuses on only transformational leadership style. However according to this study transactional components are still highly valued and appreciated among the respondents and should therefor not be excluded.

7. Conclusion

This study aimed to reveal whether one leadership style, consisting of charismatic, team-oriented and participative leadership components would be the best fit in a multicultural business team consisting of high and low power distance culture, represented by China and the Netherlands. Since multicultural business team is an emerging field of study, this study made an attempt to contribute new findings. Previous literature provided insights in current leadership styles and culturally differences related to different countries. These insights provided several hypothesis in regards to the relationship in power distance and leadership style. This study discovered that a business team consisting of Dutch and Chinese members, representing low and high power distance cultures, shows a positive relationship with charismatic, team-oriented and transactional leadership style behaviors. Even though China showed no significant relations to participative leadership, the Netherlands did and is also positively correlated to charismatic and team-oriented leadership. Besides, the study showed that one leadership style approach was generally favoured among Chinese respondents whereas the Netherlands neither favoured nor unfavoured having just one leadership style in a business team. Despite the difference between the two countries, and difference in approach to participative leadership, the general findings of this study are in line with the literature. Therefor if a multicultural business team, consisting of Dutch and Chinese employees, an ideal leader would employ a combination of charismatic, team-oriented and transactional leadership styles to best lead its business team.

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Appendix 1

Thanks for participating in this survey!

The topic of this survey is about the sort of leadership style you find most effective and feel most comfortable with. It will only take a few minutes to complete it. All information will be handled anonymously.

What is your age? What is your gender?

What is your country of origin?

In which country are you currently living? What is your current occupation?

Please rate the following statements on a scale from 1. Strongly disagree to 7. Strongly agree.

1. An ideal leader is… A. Team oriented

B. Emphasizes team building C. Creates a common goal

D. Involves the tam in decision making

E. Involves the team in implementing decisions F. Is inspiring

G. Is motivating me to do the best I can H. Is self sacrificing

I. Creating learning opportunities J. Sets clear goals

K. Has clear expectations of the team and the team members L. Promises rewards for desired performance

M. Controls team members by relying on standards, rewards, punishments and sanction control

N. That deals with present issues.

2. The following questions concern what you believe is the ideal leader. Please rate the following questions on a scale from 1, strongly disagree to 7. strongly agree.

A. A leader should behave the same towards every member of a team

B. A leader that enacts the same with every team member creates a common norm within the team.

C. I might feel left out of the team if my leader treats other members differently. D. I might lose trust and respect if my leader treats other members differently. E. I understand that a team consisting of different cultural backgrounds, all

members want and expect different things from a leader.

3. On a scale from 1 to 7:

A. In your society, or your culture followers are expected to (1) obey their leaders without question, 7. Question their leaders when in disagreement. B. In your society, or your culture power is: (1) Concentrated at the top, 7.

Shared throughout the society.

C. I believe that followers should (1) Obey their leader without question, 7. Question their leader when in disagreement.

D. I believe that power should be (1) concentrated at the top, 7. Shared throughout the society.