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International Business

"Crosscultural leadership styles, values and behaviours in China and the USA"

Group assignment

1. Introduction

After President Nixon’s historical visit in 1972, China has become a significant American trade partner (http://www.dkraft.se/docs/people/aj/kina). However, difficulties in operating cross-cultural business are often declared by both countries’ managers when doing business with each other. Most of these difficulties are caused by cultural factors.

In this report, through firstly investigating the country profile of China and the USA, their different cultural norms and values are examined. Secondly, by referring to Hofstede’s and Hall’s cultural framework, their similarities and differences in relation to culture are drawn. Thirdly, comparison of two countries’ leadership style and impact on subordinates are illustrated. Lastly, certain recommendation for better leadership and management is suggested.

2. Country Profile of China and the USA

              We focus the aspects of population size, historical factor, politics and religion or belief when comparing the country profile of China and the USA.

2.1 Population size

              China has large population and thus stresses maintaining harmony and group interest to prevent chaos. On the contrary, the USA has smaller but more diverse population. People come from different background and are governed by laws to protect individual interest.

2.2 Historical factor

China has longer history than the USA, so Chinese concern more about past. Moreover, Chinese agricultural society emphasises on group efforts and achievement (Pitta, Fung & Isberg 1999). However, American industrial society focuses more on individual success and achievement (Pitta, Fung & Isberg 1999).

2.3 Politics

              Being a communist country, China has accepted high hierarchy and central-planned government. Chinese accept imbalance distribution of power and respect of authority. Unlikely, American federal government offers citizens human rights, like right of election and speech.  Americans view equality and democracy are significant to their lives.

  2.4 Religion or belief

              China’s cultural belief is originated the teaching of an ancient philosopher, Confucius. Confucianism is behaviours or moral doctrine regarding human relationships, social structures, virtuous behaviour and work ethics (Fan, 2000). There are five basic human relations in Confucianism (Figure 1) and thus Chinese believe that human relationship is the primary structure of the society.

Oppositely, Americans’ core cultural values lies on Judeo-Christian and Western socio-theological laws and principles (Pitta, Fung & Isberg, 1999). Americans believe that “moral and ethical bases are provided through the decades of a sovereign moral authority, God” (Pitta, Fung & Isberg, 1999, p.5). The concepts of right and wrong are divided clearly and moral and legal frameworks are stated for organizing a society. Therefore, the rule of law has been perceived more authority and applied universally in the USA.

3. Cultural values in China and the USA

  Pitta, Fung and Isberg (1999) regard culture as a pervasive factor in the difficulty of managing cross-cultural management. We adopt Hofstede’s and Hall’s cultural framework to illustrate similarities and differences between China and the USA’s cultural values.

3.1 Hofstede’s Dimensions

 We explain the different aspects of Chinese and American culture by using Hofstede’s (1994) five dimensions: (Figure 2)

1. Power distance;

2. Collectivism versus individualism;

3. Masculinity versus femininity;

4. Uncertainty avoidance and

5. Long term orientation,

Firstly, Chinese have higher power distance than Americans by showing more willingness to recognise and accept hierarchy of authority and more dependence on the decision of their supervisors.

Secondly, in the area of collectivism versus individualism, Chinese tend to be collectivism and more familiar with forming group relationships and networks. Pitta, Fung and Isberg (1999) also explain that the Chinese mentality is to work in groups to accomplish a common goal and that privacy is not as highly valued as in American culture.

Thirdly, the area of masculinity versus femininity, Chinese tend to be in the middle range whereas Americans tend towards the masculinity end. Americans tend to pursue personal achievement rather than good working relationships and group harmony that Chinese stress.

Fourthly, although Chinese and Americans have quite similar view on uncertainty avoidance, Pitta, Fung and Isberg (1999) argue that because of strong adherence to harmony, change can be viewed as disruptive by Chinese.

Lastly, in long-term orientation, Chinese are at the top of the list when compared to the opposite side of the USA. Chinese are more likely to plan for the future and take more time to ensure their plans materialise and networks to support their plans (Buttery & Wong 1999).

3.2 Hall’s high- and low-context cultural framework

Another important cultural framework is Hall’s (Francesco & Gold 1998) high- and low-context cultural framework. In low-context culture, when confrontation occurs, Americans try to persuade opponents by words. However, in high-context culture, Chinese do not rely on language and make judgments varied across situation. Chinese believe “rule of man” is more important than “rule of law” (Pitta, Fung & Isberg 1999, p.8).

4. Leadership styles and behaviours in China and the USA

As being stated above, discrepancies between Chinese and American culture have a large impact on leadership styles and behaviours and make them quite different in leadership styles, group or individual orientation, face preservation, guanxi, willingness to take risk and concept of time. However, there are some similarities found in both countries which are emphasis on teamwork and supportive leadership style.

4.1 Leadership styles

The most salient characteristic of leadership style in China is “paternalistic and authoritarian” (Wang & Clegg 2002, p.34). Chinese managers make all important decisions, and not allow any employee involvement. The behaviour of these managers is considered a directive leadership. They “let subordinates know what they are expected to do, give specific guidance, ask subordinates to follow rules and procedures, schedule and coordinate work” (Francesco & Gold, p.151). High power distance with hierarchical social values in China leads to low degree of trust between management and employees. Moreover, according to Wang and Clegg (2002), Chinese managers are influenced by Confucianism that emphasizes harmony and respect of hierarchy. Subordinates are treated like “children” who must be obedient and are not entirely trusted, while boss is seen as “a parent”, thus looks after and controls his subordinates.

In contrast, American culture with small power distance leads to “participative and consultative” leadership style (Rodrigues 1998, p.30). Managers consult with subordinates and take their opinions and suggestions into consideration. They are achievement-oriented and seek improvement in performance and efficiency. They believe employees’ participation in decision-making is a dynamic process and can enhance management effectiveness (Wang & Clegg 2002).

4.2 Group or individual orientation

The second difference is sprung from group or individual orientation. American managers place more importance on individual right, “individual uniqueness and diversity” (Pitta, Fung & Isberg 1999, p.16). By contrast, Chinese managers concern about group goals and group benefits. A research (Harrison et al., 1999) revealed that Chinese managers, compared to their American counterparts, emphasize more on firm’s interests than their own one. American managers aim at efficiency and promote their employees based on merit. Meanwhile, Chinese managers demand for loyalty and rate it above employees’ efficiency. Hence, promotion in China is based on seniority.

4.3 Face preservation

A cultural identity popular in collectivist society is face preservation. Chinese are highly sensitive to give, take, gain or protect face. Managers are afraid of losing face and try hard to save others’ face. In dealing with employees, managers avoid to criticize them directly in front of others. Furthermore, because of high-context culture, outspokenness is viewed as rude. Chinese managers do not explicitly indicate how they feel (Pitta, Fung & Isberg 1999). American managers who believe in being direct and open can put Chinese employees in an uncomfortable position by saying exactly what they mean or feel (Li 1999).

4.4 Guanxi in workplace

Guanxi or relationship is more stressed in the workplace in China (Li & Labig 2001). Chinese managers like building good personal relationship with their subordinates and think it helps facilitate their work. Often, they spend time with their subordinates after working hours. Dissimilarly, American managers rarely have this happen since they think business and personal relationships should be separated from each other (Pitta, Fung & Isberg 1999).

In process of relationship-building, gift-giving is quite common. Chinese managers think that receiving gifts from their employees is a norm and conveying messages of respect and “renqing” (exchange reciprocal favours) (Pitta, Fung & Isberg 1999). American managers, however, assume that gift-giving can influence decision-makers’ judgment and act as a bribery. (Kohls & Buller 1994 quoted in Pitta, Fung & Isberg 1999).

4.5 Willingness to take risks

Chinese leaders are less risk-taking than American ones. Chinese try to reduce degree of uncertainty by offering more security, establishing more formal rules, providing their employees with greater career stability (Adler 2002). Americans, on the other hand, possess higher degree of trust towards their employees. Thus, managers spend less time on monitoring the employees and assume challenges can motivate the employees (Rodrigues 1998).

4.6 Concept of time

Chinese and Americans have different concept about time. American managers are more short-term oriented and focus on present and near future. Therefore, they usually establish plans for only 5 or 10 years. Moreover, they do not expect to employ a worker for life-long time and fire anyone immediately if he does not perform well. Chinese managers, in contrast, expect workers to work for company for a long time and heavily rate their loyalty. They focus on the past and thus refuse to any plans or changes that are contradictory to their customs, traditions and past experience (Adler 2002; Pitta, Fung & Isberg 1999).

4.7 Teamwork

Different from the above six aspects, teamwork is found in both countries. Although American culture emphasizes individualism, decision decentralization and high interpersonal trust help facilitate teamwork. In China, because of strong focus on interests of firms and common goals and collectivism in nature, teamwork is often adopted in the workplace (Chen & Barshes 2000).

4.8 Supportive leadership style

The other similarity of two countries is supportive leadership style. Chinese managers develop directive and supportive leadership simultaneously, in order to show concern for subordinates’ needs, welfare, and create a friendly and family-like working environment (Francesco & Gold 1998). Likewise, American managers treat employees as assets that can bring future economic benefits. They put efforts in employee motivation and occupational health and safety.

5. Impact on subordinates in China and the USA

After we have examined different styles and behaviour of leaders in China and the USA, we investigate their impact on subordinates correspondingly. The behavioural differences between Chinese and American workers are respect for authority, decision making, initiative taking and communication practices. Nevertheless, intrinsic motivation is adopted by management in both countries.

5.1 Respect for authority

First, under autocratic management, Chinese workers strictly follow the orders and show the practice of “unquestioning obedience” (Littrell 2002, p.23) towards their managers. However, in American’s participative management environment, workers show respect, but at the same time, recognize the limitation of authorities (O’Keefe & O’Keefe, 2002).  

5.2 Decision making

Secondly, Chinese workers are more likely to consult their managers even for ordinary tasks while American workers view that as a signal of incompetence at one’s level of responsibility (Li, 1999). American workers are perceived more dependent in their own decision making, but Chinese workers are perceived less willing to take up tasks by their own (O’Keefe & O’Keefe, 2002).

5.3 Intiative taking

Thirdly, Chinese avoid taking initative vecause they think doing something without invitation is insubordination and acting according to the authorities is more appropriate whereas Americans emphasize that individuals should take their own responsibility in their jobs (O' Keefe & O' Keefe, 2002).

5.4 Communication practices

Fourthly, Chinese workers tend to be passive and polite in their communication with managers while Americans stress effective communication as direct and articulate (O’Keefe & O’Keefe, 2002). Chinese’ communication is one-way that the workers responding to initiatives of the managers and indirect that the workers preserving the managers’ face (O’Keefe & O’Keefe, 2002). Nevertheless, American workers are encouraged to discuss and provide feedback to the managers, so their communication process tends to be two-way and more efficient (O’Keefe & O’Keefe, 2002).

5.5 Intrinsic motivation

Lastly, there is a similar view on motivating employees by intrinsic factors from both China and the USA. Chinese and Americans all agree that intrinsic factor can motivate their employees, rather than extrinsic factor. In China, employees regard relationship with co-workers and employers are their major motivators (Herbig & Genestre, 1997). While in the USA, more research found that satisfying the self-esteem and self-actualization needs of employees through participative management and job enrichment can motivate employees (Herbig & Genestre, 1997).

6. Conclusion

As the world of international business is very dynamic, the role of cross-cultural management remains critical and significant (Cascio quoted in Littrell, 2002). Differences in history, politics, social and economic systems, religion, culture and value of China and the United States have created a great challenge for cross-cultural managers.  This report uses Hofstede’s and Hall’s cultural framework to distinguish the core cultural values of both countries and illustrates some important aspects of their different leadership styles. The directive leadership style in China and the participative leadership style in USA are divergent to each other, but supportive leadership style is found in both places. International managers have to aware of those differences and develop a flexible management policy.

It can be concluded that the leadership styles in China and USA are so different due to their cultural differences. However, as economic reform is occurred in the contemporary China, globalization and world trade facilitates “the integration process and harmonization of common management practices” across countries (Liu & Mackinnon, 2002, p.119). Western management practices become more influential among the Chinese companies and reshape their values system (Fan, 2000). It is believed that the cultural and organizational distinction between China and USA stressed in this report has become blurred gradually.

7. Recommendations

As Hofstede (1991 quoted in Li, 1999) states management practices which work in one country do not necessarily work in another, because they are culturally dependant. In view of the differences of culture and leadership styles between China and the USA, cross-cultural leaders have to possess culture awareness towards other cultures and their business practices. In order to overcome this challenge, we suggest management of both countries should develop a mix-approach management system, build relationship, create open communication and show mutual respect, and lastly acquire cross-cultural knowledge through proper training.

7.1 Mix-approach management system,

Li (1999) mentions that transition to a market economy, rapid economic growth and structural reform occurred in China put pressure to compel the Chinese managers to adopt modernisation of management methods and professionalisation of company management.  The transfer of culture and management styles involves two-way efforts. Hence, Chinese and American managers have to create a synergy by balancing the best of both the East and the West and develop an optimum “mix-approach management system” (Li, 1999, p.334).

7.2 Relationship building

Secondly, American managers have to recognize the importance of relationship building in Chinese culture through guanxi. Within the organisational family in China, Americans can commence to use the relationships already established by local management and create an internal set of mutual obligations with their subordinates (Liu & Mackinnon, 20002). Kanter and Corn (1994) state a positive orientation can ease stress and poor expectation of people at the earliest stage. Foreign managers can play a role in initiating relationship discussions. Hence, the staffs are more likely to view the relationship as desirable and work hard to accommodate to any differences in cultural style.

7.3 Open communication

Moreover, open communication and showing mutual respect are critical to develop trust and ensure a successful cooperation (Kanter & Corn, 1994). Jackson and Bak (1998) suggest that American mangers can spend more time with their local staff in China on social events outside normal working hours to get better understanding. However, in situation when Chinese managers deal with American staff, they should use more explicit expression to communicate with their employees and adopt more strategies like empowerment and participative management.

7.4 Training on cross-cultural knowledge

Lastly, in order for management in both countries to better understand business in two places, an international executive education and training programme should be operated (Tixier, 2000). Management need to develop sufficient understanding of cultural differences and complexities of the global market. Knowledge of differences in historical, political, religious and economic factors, business customs and practices, values and beliefs of the society and social interactions are all important (Littrell, 2002). Furthermore, they need to develop essential adaptive traits which include how to be tolerant of ambiguity, and to reserve judgment about the actions of members of other cultures (Littrell, 2002).

8. Appendix

Figure 1: The five basic human relations in China

(Fan 2000, p.4)

Figure 2: Relative importance of five dimensions of culture in Chinese and Western economies

 (Hofstede 1991 quoted in Buttery & Wong 1999, p. 148)

9. References

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Buttery, E. & Wong, Y. 1999, ‘The development of a guanxi framework’. Marketing Intelligence & Planning, vol. 17, no. 3, pp. 147-153.

Chen, X. & Barshes, W. 2000, ‘To team or not to team’, China Business Review, vol. 27, no. 2, pp. 30-34.

China Economic Review [online] 1997, Available: http://www.dkraft.se/docs/people/aj/kina [2001, October, 2].

Fan, Y. 2000, ‘A classification of Chinese culture’, Cross Cultural Management, vol. 7, no. 2, pp. 3-10.

Francesco, A. & Gold, B. 1998, International Organizational Behaviour: Text, Readings, Cases, and Skills, Prentice Hall, New Jersey.

Harrison et al. 1999, ‘A cross-cultural investigation of managers’ project evaluation decisions’, Behavioural Research in Accounting, vol. 11, pp.143-160.

Herbig, P. & Genestre, A. 1997, ‘International motivational differences’, Management Decision, vol. 35, no. 7, pp. 562-567.

Hofstede, G. 1994, ‘The business of international business is culture’, International Business Review, vol. 3, no.1, pp.1-14.

Jackson, T. & Bak, M. 1998, ‘Foreign companies and Chinese workers: employee motivation in the People’s Republic of China’, Journal of Organizational Change Management, vol. 11, no. 4, pp. 282-300.

Kanter, R. & Corn, R. 1994, ‘Do culturally differences make a business difference?’, Journal of Management Development, vol.13, no.2, pp.5-23.

Li, J & Labig J. 2001, ‘Negotiating with China: Exploratory study of relationship-building’, Journal of Managerial Issues, vol. 13, no. 3, pp. 345-359.

Li, S. 1999, ‘Management development in international companies in China’, Education and Training, vol. 41, no. 6, pp. 331-335.

Littrell, R. 2002, ‘Desirable e leadership behaviours of multi-cultural managers in China’, Journal of Management Development, vol. 21, no. 1, pp. 5-74.

Liu, J. & Mackinnon, A. 2002, ‘Comparative management practices and training: China and Europe’, Journal of Management Development, vol. 21, no. 2, pp. 118-132.

O’Keefe, H. & O’Keefe, W. 1997, ‘Chinese and Western behavioural differences: Understanding the gaps’, International Journal of Social Economics, vol. 24, no.1, pp.190-196.

Pitta, D., Fung, H. & Isberg, S. 1999, ‘Ethical issues across cultures: Managing the differing perspectives of China and the USA’, The Journal of Consumer Marketing, vol. 16, no. 3, pp.240-246. (ABI Global pp1-17)

Rodrigues, A. 1998, ‘Cultural classifications of societies and how they affect cross-cultural management’, Cross Cultural Management, vol. 5, no. 3, pp. 29-39.

Tixier, M. 2000, ‘Communication and management styles in Australia: Understanding the changing nature of its corporate affairs’, Cross Cultural Management, vol. 7, no. 1, pp. 12-22.

Wang, Y. & Clegg, S. 2002, ‘Trust and decision making: Are managers different in  the people’s Republic of China and on Australia?’, Cross Cultural Management, vol 9, no. 1, pp.30-45.

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