This essay aims to discuss how context influences the leadership style of a subsidiary. Specifically, it focuses on the national culture in which the organization operates and organizational culture. When an organization has a subsidiary in a foreign country, it may be forced to let the subsidiary choose the right leadership style depending on its culture. In many cases, the subsidiary is forced to operate according to the foreign country’s culture because an organizational culture cannot influence a national culture, but national culture can affect corporate culture. Therefore, the national culture determines the direction in which the subsidiary will take. In this case, the paper will examine an American organization with a subsidiary in China. Starbucks is a multinational Company with subsidiaries across several countries, including China. Its headquarters are in Seattle, Washington. It specializes in hot and cold drinks and nearly all types of coffee. I will focus on China because its culture is different from that of America in many ways; hence, it is likely to affect significantly how organizations operate. This paper will focus on the following topics; Critical evaluation of leadership styles, how national culture may affect the choice of leadership, how organizational culture may affect the choice of leadership, and corporate example.
Critical Evaluation of Leadership Styles
There are several leadership styles. One of them is the authoritarian or autocratic leadership style. In this style, leaders make decisions on their own without incorporating other team members (Mahajan 2011, p.281-282). It is a kind of dictatorship whereby a leader is rigorous. This type of style is applicable when making decisions is limited, or team members need clear guidelines. If the members are let to make decisions, everyone may come with their own, causing ambiguity. Advantages of the style are; it reduces time spent on decision-making and creates consistent results. The disadvantages include; it kills employees’ innovation and creativity, reduces group collaboration, increases employee turnover, and decreases the group’s input (IMD n.d, n.p).
Secondly, the participative leadership style stems from the democratic theory. It is whereby a leader engages team members in the decision-making process. Team members are let to discuss, but the leader has the final decision depending on what the majority of the team has agreed (Fiaz, Su, Amir and Saqib 2017, p.143-156). Team members feel included and motivated because their input counts in decision making. The advantages are; it encourages employees to be innovative and creative, it creates a strong team; hence, the likelihood of high productivity. Furthermore, it increases employee motivation, and they feel satisfied. The disadvantages are; it is time-consuming because team members have to discuss disagreements and communication failures, and poor decisions can be made mostly if employees are unskilled and do not have much knowledge.
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Lastly, Laissez-faire or hands-off leadership style is when a leader delegates duty to employees and leaves them to perform without much supervision. The leaders often have time to dedicate to other projects because they do not waste much time on the field. For this style to work, employees must be well trained and be highly experienced. The advantages are; employees have freedom while doing their work (Sharma, Kumar, Singh and Keshorjit 2013, p.29-31). Also, innovation and creativity are highly nurtured because employees perform independently; hence they are forced to think creatively. It also creates a positive working environment through freedom. The disadvantages include; the responsibility of a leader is not well exercised. The leader does not define their command to the employees. Secondly, low-quality performance of employees may be recorded. This is because they are not supervised. Hence, they may relax and perform poorly.
Critical Evaluation of how National Culture may affect the Choice of Leadership
China has several distinguishing practices in its national culture that may significantly affect an organization’s leadership style. First, China’s national culture emphasizes working as a group rather than an individual (Bryant 2019, n.p). For instance, people do not work independently but engage others in whatever they do, like in decision making. Likewise, organizations foster togetherness and engage in healthy competition. In such a culture that does not promote individualism, subsidiary organizations, for example, from America, may be forced to change how they work. For instance, a leader must work with leaders from other organizations regardless of whether they are competing with them or not. The autocratic leadership style can work in China because authoritarian leaders do not work as a team with employees.
Secondly, in China, hierarchy is treated as a vital factor in leadership as Zhang and Spicer (2013, p.739-762) note. More respect is given to those in higher positions. Subsidiaries that have a more flat structure might be forced to adjust to a hierarchy. Employees should show respect to the leaders, but it is not a must for leaders to respect the employees. This culture may affect leadership style in that participative styles may not work well. Therefore, the autocratic style may be the only style suitable because of the hierarchy. Thirdly, China’s conversation is usually direct to the point. Unlike Americans, they do not engage in small talks like establishing friendships by asking about age, marital status, or income. They consider such information as personal and maybe rude and uncomfortable. This practice may affect the leadership style used in an organization in that leaders and employees may not establish mutual friendships that sometimes ease the role of leaders. With such a culture, participative or democratic styles may not work, but Laissez-faire may work because the leader will not have to spend time talking to employees
Lastly, in China, the right to freedom of speech and access to information is not advocated for. The country has imposed heavy censorship on media and the internet such that people do not just share information (King, Pan and Roberts 2013, p.326-343). This may have a critical impact on leadership styles because leaders may be forced to choose a style that is not information-oriented or does not allow employees and the public to access information quickly. For instance, an organization needs to share information with the public on social media to engage with the public. Hence, if there is heavy censorship on the media, then this cannot be applicable. Therefore, a style such as an autocracy may work well, but a democratic leadership style may not work effectively because it requires leaders seeking information from employees and the public. Still, regarding information, it is shared on a need-to-know basis as Huo, Zhao and Zhou (2013, p.522-569) note. Therefore, not everyone is given access to information. Nevertheless, even if the national culture will affect an organization, the learning theory of national culture developed by Trompenaars and Hampden-Turner encourages organizations to learn and recognize the cultural differences, respect the culture, and reconcile with the differences (Jacobson 1996, p.15-28). Through this, it will be able to concur within the foreign culture.
Critical Evaluation of how Organisational Culture may affect the Choice of Leadership
An organizational culture consists of many factors such as core values, mission, goals, communication styles, rules and guidelines, behaviours, and attitudes, how it researches, among others (Picincu 2020, n.p). All these affect the leadership style that the organization employs. Firstly, an organization’s core values significantly affect the leadership style in that a leader must have the traits the core values demand. For instance, if teamwork is one of the core values, then a democratic leader cannot thrive. Therefore, the core values require a leader to have such values because that is what the organization believes in.
Secondly, an organization’s mission, vision, and goals are an excellent determinant of leadership as Bass and Avolio (1994, p.541-554) states. While they clearly state the direction in which the organization is heading, likewise, the leadership style should lead the organization towards the same direction. For instance, if the mission statements and the goals are about producing the best products, then the leadership style should reflect that. It should be a style that will enable the organization to achieve its goals. For instance, a democratic style can correctly help an organization accomplish that because it considers the employees’ input who can achieve the goals. However, depending on the system theory, organizations should adjust their cultures based on their environment (Allaire and Firsirotu 1984, p.193-226). Hence, it is vital to study the environment so that the culture can fit.
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Lastly, an organization’s communication style contributes to the culture. It greatly influences the leadership of how information is disseminated, who disseminates it, and how it flows, who has access to an information ad that does not affect how the leader performs (Men and Jiang 2016, p.462-479). If communication, for instance, excludes employees, the leader might be autocratic. If the system allows everybody to access information, the leadership style might suit the democratic style. Also, suppose that communication culture does not allow leaders to communicate with employees or establish productive relationships. In that case, the perfect leadership styles that may work in such an organization are autocratic or Laissez-faire, limiting interactions with employees.
Zakkour (2017, n.p) talks about how Starbucks succeeded in China by adjusting to the Chinese culture. Zakkour is a writer about China’s e-commerce, technology, consumers, and supply chain. He explains China’s three cultural factors that made Starbucks company change its operations, including leadership, when it set a subsidiary in China. One of the cultural factors is family. Since civilization, Chinese people have considered a family as a vital source of security and education. For this, Starbucks had to adjust its leadership style such that it considers giving much respect to parents no matter their positions in the organization. Also, in 2012, the leaders of Starbucks China held an annual form that included employees and their parents in which they learnt about the company and its future in China as Zakkour states. Parents are considered intelligent, and hence corporations engage them. Therefore, Starbucks leaders have to hold such annual meetings. Because of this, the leadership style must be democratic.
Secondly, community or togetherness is another cultural factor that influenced the leadership style at Starbucks. Chinese highly value communities or groups, and because of this, Starbucks had to choose a style that encourages teamwork. For instance, a style like participative or democratic, in which employees can form small communities and interact. Lastly, the hierarchy system culture also influenced the leadership of Starbucks. The company had to distribute power according to the position of the leader. Unlike in America, where the distribution of power, according to hierarchy, is not highly considered. The top leader was given the most power, and it decreases as the hierarchy drops. This is because China highly observes hierarchy. After all, it believes those in higher position deserves much power and respect.
According to Ferguson (2019, n.p), Starbuck Corporation’s organizational culture is as follows. Servant leadership where employees are treated first, relationship-driven approach, collaboration and communication, inclusion and diversity, and openness. Due to these practices, Starbucks had to focus on a democratic leadership style just as China’s national culture demands. The company treats employees with respect regardless of position. Hence, the leader must be democratic because democratic leaders treat their employees with respect. Also, because of collaboration and communication and inclusion of employees in decision-making processes, the leadership had to be democratic so that every employee could have a chance of taking part. To achieve the cultural practices, it demands a leader who understands employees as a vital asset and does not make decisions independently, instead of engaging them.
Summary and conclusion
To sum up, the paper has shown that a subsidiary may be forced to adjust its leadership style depending on the national culture of the foreign country and its organizational culture. However, organizational culture cannot influence national culture, but national culture can influence the organizational culture. There are many leadership styles such as autocratic, democratic, and Laissez-faire that companies can adjust to depending on the national culture. The paper has focused on China and Starbucks subsidiary in China. It has outlined the national culture of China that may affect leadership or organizations, including Starbucks.
They include; community and collaboration, how communication flows, hierarchy and respect, family as a source of security and education, and freedom of speech and access to information. The majority of the factors favours a democratic leadership style. However, factors like hierarchy and respect favours an autocratic leadership style. Also, organizational culture, such as values, beliefs, behaviours, and communication styles, significantly affect leadership styles. For Starbucks Corporation, its culture, including collaboration, servant leadership, inclusion and diversity, and openness, allows it to employ a democratic leadership style. It is essential for organizations looking forward to setting up subsidiaries to be vigilant and learn about the cultures of the countries they target. This is because they must adjust to the country’s culture. Like Starbucks, it invested in research on learning about China’s culture and devised ways of adjusting its leadership to fit China’s culture, and that why it has succeeded.
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