Cross-Cultural Leadership In The Financial Industry

The Impact of Globalization on Corporate Culture and Leadership Effectiveness in Multinational Banks

von Sarah L. Goehre

Bachelorarbeit
Vis. Prof. Dr. Harry W. Trummer

Abstract

Due to the increasing importance of globalization and the concomitant rising pressure for multinational corporations, perhaps especially for multinational banks, to hold their ground against strong international competition, this thesis intends to examine the impact of cultural diversity on corporate culture and leadership effectiveness in globally operating organizations.

Its underlying core proposition states that – in order to reach global leadership effectiveness – it takes certain attributes which are positively correlated with emotional and cultural intelligence and that comprise character traits as well as acquired behavior or styles. Only such a culturally intelligent leader will be truly capable of performing the balancing act between the various cultural codes, making the most effective use of advantages generated by cultural diversity, while, at the same time minimizing efficiency gaps resulting from the same.

This challenge faced by contemporary leadership is discussed throughout the course of this paper. A comprehensive literature review shows that differences between cultures lead, at least in the first instance, to difficulties in communication and collaboration. However, it is likewise pointed out that cultural diversity may eventually generate competitive advantages, provided that a profound understanding of the divergent cultural influences exerted on behavior and practice is gained. Research studies on differences in national cultures and their associated influences on work-related practices are presented as they proffer a useful framework to study and to understand cultural peculiarities. Furthermore, the phenomenon of corporate culture is elucidated whereby it is reasoned that even though an organization‘s culture needs to exhibit one predominant culture of origin to afford a stable reference frame, it has to include multicultural facets as well, if the business venture strives towards long-term success in global relations. A discussion of cross-cultural training programs depicts that those can offer valuable support during the process of promoting cultural awareness and expertise through the experience of intercultural real-world encounters – upon condition that they incorporate adequate assessment and practice methods to obtain a global mindset and related competencies.

The practice-based analysis within the financial industry yields interview results that confirm the aforementioned thesis by underscoring the importance of attaining knowledge about various cultural backgrounds as well as competencies that contribute towards cultural intelligence to ensure global leadership effective-ness. At the same time, however, they illustrate the existing and future need for the provision and adoption of instruments to successfully bridge efficiency gaps emerging from distances in culturally contingent value and belief systems that affect business processes.

Both findings of theory and practice convey the overarching purpose of this thesis to shine a light upon the concept of leadership against the background of globalization, accompanied by workplace multiculturalism. As a consequence, thereof, in the specific context of growing internationalization, effective leadership may be regarded as cultural brokerage.

Keywords: corporate culture • country of origin (COO) • cultural dimensions • culturally endorsed implicit leadership theory (CLT) • cultural intelligence (CQ) • diversity • efficiency gaps • global leadership • multinational bank /- corporation (MNB/MNC)