Global Mindset and Leadership Effectiveness

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1 Global Mindset and Leadership Effectiveness

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3 Global Mindset and Leadership Effectiveness Wim den Dekker

4 Wim den Dekker 2013 Foreword Paul Jansen 2013 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2013 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress.

5 This book is dedicated to my daughters Rosanne and Anne-Fleur

6 This Page Intentionally Left Blank

7 Contents List of Tables List of Figures Foreword by Paul Jansen Preface and Acknowledgments xi xii xiii xv 1 Introduction Leadership in a globalizing world Why this book? Approach Who will benefit from this book? Research and theory Individuals Organizations Roadmap for the reader 10 2 Globalization and Leadership Effectiveness Globalization Conceptions of globalization Dimensions of globalization Global awareness Globalization of leadership Leadership The influence of contextual factors on leadership Global leadership Differences between domestic, expatriate, and global leadership Global leadership effectiveness Essential global leadership qualities The competency approach Multidimensional frameworks Effective global leadership Conclusion 36 vii

8 viii Contents 3 Global Mindset: Theoretical Backgrounds History and definitions Approaches to global mindset studies The international approach The universal approach The multidimensional approach Perspectives on the global mindset The cultural perspective The strategic perspective The multidimensional perspective Global mindset as a set of managerial attitudes toward globalization The concept of global mindset Attitude formation Belief formation Factors influencing global mindset The role of global mindset in leadership effectiveness Conclusion 62 4 Identifying Global Mindset at the Individual Level Research strategy Research issue Method Sample Differences between domestic leaders, expatriate leaders, and global leaders Global work experience Global business knowledge and organizational knowledge Cross-cultural competencies Global mindset Leadership effectiveness Conclusion 87 5 Instrument Development Research strategy Research issue Method Questionnaire design Sample 92

9 Contents ix 5.3 Measures Indicators of business environment Indicators of organization Indicators of culture Indicators of time Indicators of personal factors Pilot study Analysis and results Sample description Data analysis A typology of mindsets Global mindset Attitudes toward business environment Attitudes toward organization Attitudes toward culture Attitudes toward time Universal mindset Attitudes toward business environment Attitudes toward organization Attitudes toward culture Local mindset Attitudes toward business environment Attitudes toward organization Attitudes toward culture Validity of the GMQ Conclusion Global Mindset and Leadership Effectiveness Research strategy Research issue Method The research model and hypotheses The research model Hypotheses Sample Measures The global mindset questionnaire Influencing factors Criteria for leadership effectiveness 136

10 x Contents 6.5 Descriptive results Instrument reliability The relationship between personal and person-in-job factors and global mindset The relationship between global mindset and leadership effectiveness Global mindset and career success Global mindset and salary growth Global mindset and performance rating Global mindset and career satisfaction The relationship between global mindset, its antecedents, and leadership effectiveness Full regression Interactions Differences in global mindset and leadership effectiveness between domestic managers and global managers Differences between managers Differences in global mindset Differences in leadership effectiveness Conclusion Discussion Introduction Summary of the main findings Contributions to theory The concept of global mindset The relationship between global mindset and leadership effectiveness Limitations Contributions to practice Individuals Organizations Suggestions for further research 190 References 193 Index 207

11 List of Tables 4.1 Differences between domestic leaders, expatriate leaders, and global leaders Lessons from global work experience Global business knowledge and organization knowledge Lessons from cross-cultural experiences Global mindset dimensions Lessons from leadership effectiveness Descriptive results of the research sample Analysis of variance: age and mindset Analysis of variance: education and mindset Analysis of variance: working or studying abroad and mindsets Analysis of variance: global travel and mindsets Relationship between personal and person-in-job factors and mindsets Relationship between global mindset and criteria for leadership effectiveness Full regression analysis between mindsets, criteria for leadership effectiveness, and predictors Differences in mindset between DOM, DOMEXP, and GLOBAL samples Differences in leadership effectiveness between DOM, DOMEXP, and GLOBAL samples Overview of the relationships between mindsets, their antecedents, and leadership effectiveness Overview of corporate mentalities and mindset typology in terms of mindset organization fit 183 xi

12 List of Figures 1.1 The research model Research stages Research model Global mindset and expatriate experience related to objective leadership effectiveness Global mindset and global travel experience related to objective leadership effectiveness Global mindset and global travel in current job related to objective leadership effectiveness Global mindset and time spent on global business assignments related to objective leadership effectiveness Differences in mindset between DOM, DOMEXP, and GLOBAL samples Typology of mindsets Stages of mindset developments 180 xii

13 Foreword A Global Mindset is defined as a set of individual beliefs toward globalization processes in which global and local elements are balanced. In a Local Mindset an ethnocentric approach dominates, and in a Universal Mindset a global approach dominates. Mindsets are about beliefs. For instance, the belief that the world consists of a multitude of domestic markets (local mindset), or that the world in the end is just one big market (universal mindset). In a local mindset, there exist clear borders between different regional markets of consumer types, whereas in an universal mindset there are no borders, and therefore one, centralized strategy suffices worldwide. This is all clear and also intuitively appealing, but which mindset contributes the most to leadership effectiveness? Reasoning also in the present study suggests that in a perfect Hegelian framework people move from thinking (too) local to (too) universal and finally (may) end up in the synthesis of a global mindset. In the latter orientation both Act local, think global and Act global, think local apply. Now this is all theory, or even philosophy, but the author has developed a questionnaire to actually measure the mindsets. Measurement means making behavior of theoretical constructs, and accordingly Wim den Dekker has painstakingly translated the three mindsets in behavioral examples of a lot of questionnaire items. Subsequent research then shows that the three mindsets indeed exist, that they, as expected, overlap, and that the effectiveness of a leader in utilizing the mindsets depends on the situation. So contrary to Hegel, applying the synthesis of a universal mindset is not always feasible or advisable. It is not an ideal general endpoint. In fact, the three mindsets overlap mutually and therefore they do not construe a clear hierarchy of clearly separated stages. I find the interplay between theoretical refinement of the mindset concepts and empirical measurement through behavioral items, the most important contribution of this work. In the end, the study again shows that measurement cannot do without a sound theory (since theory answers the question What are we talking about? ) and that theory is enriched by well-designed measurement. In this sense, xiii

14 xiv Foreword the study is not only about the development of a questionnaire but also about the psychological processes underlying thinking or acting globally or locally. What for instance is the relationship between the mindsets and basic psychological orientations such as openness or extraversion? The author even suggests that moving from local to global is equivalent to growing up, since we are all born local. This development and interchange between local, transnational, and universal returns in the career of the author. Having continued his career from business positions to human resources as Senior HR Consultant for an international division of a large bank, Wim den Dekker presently is Head of Human Resources Western European Area of a large multinational organization. Since he is also a Dutchman a small country that has a vast amount of trading relations worldwide mixing local and universal into some kind of global cocktail, may be expected to be more or less inborn. Importantly, Wim has not only transgressed country boundaries. By writing a book based on both intensive theoretical investigation and extensive empirical research, he has also moved from applied HRM to doing science. This has made the author truly universal. Paul Jansen PhD, Professor of Industrial Psychology, VU University Amsterdam Amsterdam, May 2013

15 Preface and Acknowledgments My motivation for studying global mindset and leadership effectiveness is twofold. First, when working for a bank s international division, I was really interested in the way managers with global responsibilities organized their work and communicated with their globally dispersed and multicultural staff. Especially the 24/7 business environment of the bank s dealing rooms amazed me. While corporate executives are sleeping, their managers are executing business transactions and are making important decisions half a world away. I often wondered how they managed to remain in control of their overseas operations and how they inspire and motivate their geographically dispersed workforce consisting of people with many different cultural backgrounds. As a result of differences in cultural origin, they differ in ways of working and hold other attitudes toward appropriate behavior in organizations. I admired the managers who were capable of aligning culturally different people across the globe. On the other hand, it was sometimes remarkable to experience managers who expected prompt response from people nine time zones away and who believed the effective solution to the problem in their home country would have similar results anywhere in the world in any cultural context. Second, in my role as senior HR consultant for the bank s global business divisions at that time, I was often questioned about the international readiness of managers. I noticed top management did not necessarily need my advice when sending someone abroad with years of international work experience. Based on their expatriate managers track records, executives were often confident of the successful accomplishment of the international or global assignment. Their real challenge was to select the right candidate in case no one had foreign work experience. Therefore, I attempted to identify the personal factors related to successful global leadership. I found out there were individual characteristics that could be very important for international leadership success. One of these capabilities, next to personality and behaviors, was a right set of attitudes for doing cross-border and cross-cultural business. xv

16 xvi Preface and Acknowledgments Because of my interest in managerial behavior and attitudes related to global leadership effectiveness, I started to search the literature on global leadership. Recent studies consider global mindset an essential aspect of successful global leadership. However, what a global mindset means in this respect and the characteristics of the relationship between global mindset and leadership effectiveness remained unclear. Therefore, based on an extensive literature research, I conducted interviews with a number of leaders with global responsibilities because these managers were the most likely target group to identify a global mindset. These interviews were very exciting because the interviewees gave me a perfect insight into their worlds. The results of this study reveal that a global mindset could play an important role in global leadership development. When analyzing data, I found possible dimensions which indicated a global mindset is a multidimensional construct. Based on the results, I conducted a second field study in order to develop an instrument to operationalize the construct using measurable items. In an online survey, the instrument which I called the Global Mindset Questionnaire was tested in a large sample of people working in an international division of a large bank. The results confirmed the global mindset construct and the interrelated dimensions. Finally, in a third online survey in a multinational financial service company, the instrument was retested and related to the criteria of effective leadership behavior. The results reconfirmed the global mindset construct, although the relationship with leadership effectiveness appeared to be different than expected. The financial service company had a local mentality meaning a strong focus on domestic business and senior managers were appraised on the sales they realized in the country in which they were positioned. The results indicated that managers with global mindsets are ineffective in ethnocentric firms. In contrast, managers with local mindsets were perceived by their superiors as effective! Global mindsets are not likely to be effective in companies characterized by a domestic or home country orientation. The findings as described in this book could have consequences for organizations and individuals in terms of mindset organization fit and global career development. I describe these consequences in the final chapter of this book. I hope the findings of my study will contribute to the body of knowledge regarding global leadership and the role of mindsets in effective leadership development. It could be

17 Preface and Acknowledgments xvii valuable for companies and institutions for which cross-border business and cross-cultural relationships are important. Individuals may profit from this book when they are working in a global business environment or wish to pursue a career in this worldwide arena. I am very grateful to my colleagues and the people in the global companies who enabled me to complete this work. Also many other people outside these companies contributed to the research and this book. Of course, I could not be successful without the support of people from the scientific staff of the VU University, Amsterdam. I owe special thanks to Svetlana Khapova and Claartje Vinkenburg for supporting me in developing the research model and methodology. I feel greatly indebted to Professor Paul Jansen who repeatedly demonstrated his trust in my research project. His thoughts have been very inspiring to me and motivated me to complete the project. I would like to thank my family and friends for the moral and emotional support they provided at all times. I could not complete this study without the love and support of my wife and daughters. I cannot help but think of my parents: regretfully they passed away much too early. They would have been very proud of this result! I dedicate this book to my daughters, Rosanne and Anne-Fleur. I sincerely hope that their mindsets may be focused on exploring and developing their talents.

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