Dynamic cross-cultural competencies and global leadership effectiveness

American research, April 2012

Ensuring that leaders in global companies can operate effectively in a global setting, with cross- or multi-cultural elements, is critical to organisational success. Consequently, enormous resources are spent on developing global leaders and yet the return on that investment is often less than expected. For example, according to a 2010 survey by the American Management Association, 62% of companies around the world report having a global leadership development program of some form but only half of the surveyed 939 companies agreed that their global leadership development programs were highly effective and improved leadership skills in the participants.

These programs and ultimately global leaders would be more effective if organisations had a better understanding of the conditions for success, in terms of individual characteristics and the growth process. Could it be that some leaders, no matter how good the leadership program, are not suited to global roles? Alternatively, can programs be better designed to tap into or shape cross cultural experiences? These questions are answered in a recent research by Professors Caligiuri (Rutgers University, USA) and Tarique (Pace University, USA). More specifically they considered whether:

Their research findings indicate that effective global leaders combine certain personality characteristics (for example extroversion and openness) and experiences, and that non-work related cross-cultural experiences are often neglected as a significant shaper of cross-cultural competencies. These findings will help organisations identify, select and grow global leaders more effectively.

Aim:
This study builds on previous work regarding dynamic cross-cultural competencies, which are defined as competencies that can be acquired or enhanced through training and development. These previous studies posit that a global leader’s ‘tolerance of ambiguity’ and ‘cultural flexibility’ have a strong correlation with global leadership effectiveness, while the influence of ethnocentrism on global leadership effectiveness is unclear and requires further research.

The study considers this topic in a more sophisticated way by examining whether the combined effect of personality characteristics and cross-cultural experiences predict a leader’s effectiveness as a global leader. In this context, a global leader is defined as a leader who interacts with external clients from other countries, develops strategic business plans on a worldwide basis, and manages a global budget and foreign suppliers or vendors.

Method:
The study examined the influence of personality traits and cross cultural experiences on each of the three dynamic cross cultural competencies (namely tolerance of ambiguity, cultural flexibility and reduced ethnocentrism).

The study comprised two surveys, being a Global Leader Survey (survey one) and a Supervisor Assessment Survey (survey two).  Survey one was  a self-reported measure by individuals and was used to collect data on personality, cross cultural experiences, dynamic cross cultural competencies and demographics. Survey two was a supervisor assessment of global leadership competency.

Across both surveys, 582 prospective participants were identified by human resource executives in three large MNC conglomerates. 420 global leaders completed survey one, and almost half of these participants were assessed by supervisors through survey two on their global leadership competency.

A brief snapshot of the demographics of the surveyed participants revealed that they were 24% female and 76% male. 70% of participants were between the ages of 41 - 60, 89% held a bachelor degree or higher and 64% were citizens of the United States (Australian participants numbered 2.3% in the survey).

Measures:
The participants were asked various questions to assess their personality based upon the Five Factor NEO Personality Inventory with a focus on the following three.

• Neuroticism: Sample question “I often feel inferior to others”
• Extraversion: Sample question “I like to have a lot of people around me” (reverse score)
• Openness: Sample question “I often try new and foreign foods.”

Participant responses were gauged on a Likert-type scale ranging from strongly disagree to strongly agree.

The participants were also asked to rate the quality of their participation in:

• Organisation-initiated cross-cultural experiences: expatriate assignments or cross-cultural mentoring
• Self-initiated cross-cultural experience: study abroad or international travel.

Questions gauged their degree of cross-cultural experience within their family or ethnic group. These variables were then assessed for a statistically-meaningful relationship with, and competency in, each of the three dynamic cross-cultural competencies. The competencies assessed and sample questions included:

• Cultural flexibility: Sample question “Foreign countries have fun and interesting activities which are not common in my native country”
• Tolerance for ambiguity: Sample question “The most interesting life is to live under rapidly changing conditions”
• Inversely scored to ethnocentrism: “Sample question “I like to meet foreigners and become friends.”

The Supervisor Assessment Survey later measured the global leadership effectiveness of each participant by ranking their effectiveness at, for example, ‘negotiating with people from other countries’ or ‘supervising people who are from different countries’.

Findings:
The study examined whether the ratings of survey one predicted the ratings of survey two to understand the influence of personality traits and cross cultural experiences on dynamic cross cultural competencies and global leadership effectiveness. This relationship was then considered across six hypotheses. Findings were made regarding the types of individual suitable for a global role and the process by which cross-cultural competencies can be developed. These findings were based on statistically-significant relationship across three groupings of the eleven variables, namely the participant’s seven measures of personality traits/cross-cultural experiences, the three measures of cross-cultural competency, and the assessment of each participant’s effectiveness as a global leader. These individual findings support the overall premise that cross cultural competencies are related to global leadership effectiveness. The findings were as follows.

• Personality: Openness and extroversion were more positively connected to being an effective global leader, whilst neuroticism and ethnocentrism was not. The researchers explained: “Extroverts have the need to engage in social activities and have a strong learning orientation, which affects interpersonal interactions in ways that are important to retain and reproduce learned skills and behaviours. Similarly, individuals high on openness to experience are more likely to retain and reproduce learned skills and behaviours. Openness to experience allows individuals to seek new experiences and learn about new cultures from other people”
• Experience: Self- and organisation-initiated cultural experiences contributed to global leadership effectiveness, but self-initiated experiences had a more meaningful benefit to leaders. In particular, non-work cultural experiences were associated with cultural flexibility and tolerance to ambiguity, and reduced ethnocentrism. Work related cultural experiences were only associated with cultural flexibility and tolerance to ambiguity.

Implications:
The study is one of the first to demonstrate how personality and cross-cultural experiences can influence dynamic global leadership competencies and global leadership effectiveness. The researchers concluded that “to be effective, global leaders need high levels of both cultural flexibility and tolerance of ambiguity, and low levels of ethnocentrism required in jobs with complex international and multicultural responsibilities”.

Therefore, the salient points made in this study are that global leadership development programs need to first identify those candidates with the requisite individual characteristics (extraversion and openness to experience) invest in their cross-cultural experiences and acknowledge the importance of self-initiated experiences. The case for taking overseas holidays would appear to be strengthened by this research. As ever-increasing resources are invested in developing global managers to compete in an increasingly-global economy, this study provides some guidance on how to target those resources for a better return on this important investment in a business’ managerial talent.

To read the full article, see Caligiuri P & Tarique I (2012) “Dynamic cross-cultural competencies and global leadership effectiveness”. Journal of World Business, doi: 10.1016/j.jwb.2012.01.014