Academic journal article SAM Advanced Management Journal

Keys for Success in the Leadership of Multinational Corporations, 1990 through 1997

Academic journal article SAM Advanced Management Journal

Keys for Success in the Leadership of Multinational Corporations, 1990 through 1997

Article excerpt

At the beginning of 1998, the world economy faced one of its most difficult challenges in several decades. Serious economic problems that had been brewing in the Far East for six months or more threatened the possibility of a worldwide economic recession (Anonymous, 1998; Dornbusch, 1998). This economic crisis had a substantial impact on multinational strategies. For example, General Motors (GM) placed a hold on its planned construction of a major ($400 million) assembly plant in Thailand (Blumenstein, 1998). Despite the magnitude and impact of this crisis, some multinationals will survive the threat and some will prosper. This paper will explore common factors among the leaders of those multinational firms that have the unusual ability to "weather the storm" and to consistently engender performance at levels well above similar firms in their industries.

It is a basic proposition of this paper that there are commonalties in leadership style or strategy that distinguish very successful multinational firms from the noticeably less successful. We also believe that leadership is only one of several variables that affect the performance of a firm. As Porter (1985) notes, firms - particularly leaders of firms - have the ability to influence elements of the competitive environment, including their own firm's strategy and structure. However, few if any firms can have an appreciable impact on elements of the remote environment. So, in terms of crafting strategies that lead to above-industry average performance, successful multinational leaders probably do things differently from many of their less successful competitors.

Literature Review

In an article written to celebrate the 40-year history of Administrative Science Quarterly, Fiedler noted that a leader's performance is contingent on the leader's style, abilities, and background and on the control and influence the situation provides (Fiedler, 1996). This summary view of leadership emphasizes that a principal component of leadership success is clearly the behavioral and background characteristics of the leader.

Kirkpatrick and Locke (1991) attribute successful leadership to drive (a trait encompassing achievement, motivation, ambition, tenacity, and initiative), integrity, self-confidence, cognitive ability, and knowledge of the business. This research tends to refute, in part, the negativity associated with what has been described as the "trait school of leadership." Certain leadership traits (behaviors, characteristics, or strategies) do impact performance of firms. Thus Kirkpatrick and Locke empirically support the opinion of Fiedler that leadership characteristics are correlated with firm success.

Feigenbaum (1997) notes that pacesetter companies in the 1990s have two important attributes - respect for and responsiveness to the customer and an unrelenting drive to enhance business efficiencies. He admonishes companies (and their leaders) to have an action orientation, a focus on important goals, the ability to understand and properly utilize the human resources available, and the willingness to seriously engage in business process reengineering.

In a consideration of leadership as a process, Kets de Vries (1994) posits that successful leaders fill two roles - charismatic (envisioning, empowering, and energizing) and instrumental (designing the organization and controling, rewarding behavior). Sleeth and Johnston (1996) believe that psychological and physical dimensions underlie both people and task and that effective leaders are able to diagnose, evaluate, and plan for actions that bridge the gaps and link people and tasks in the work environment.

We summarize the above studies by proposing that successful leadership in multinational operations is a multidimensional construct, probably involving a marketing orientation coupled with the ability to instigate product and process innovation and a strong "flair" for tapping the inherent capabilities of all organizational members. …

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