Difficulties in Implementing Level Three Leadership in Cross-Cultural Management

Examining Data from Japanese and American Subsidiaries in Thailand

Timothy Dean Keeley
Professor International Management Kyushu Sangyo University Fukuoka, Japan

Level Three Leadership

Developed by:
James G. S. Clawson Professor of Business Administration The Darden Graduate School of Business University of Virginia

A quick view of

Level Three Leadership: Getting Below the Surface Third Edition (James G. Clawson,
Prentice-Hall, 2005)

Leadership is about affecting human activity, which can be thought of as occurring at three levels:

Level 1: Behavior Level 2: Thoughts Level 3: VABEs

Leadership is also about managing energy, first in yourself and then in others.

Targeting Level 1, 2 or 3 is about managing energy.

If your force at Level 1, you will get passive resistance.

Level 1: Behavior
simply what people do, that which we can observe

Level 1 Leadership
tries to manage behavior in isolation The tradition of scientific management Frederick Taylors time motion studies assigned little importance to employees inner thinking Level One Leadership does not seek input

Level 2: Thoughts
That which we are immediately aware of in ourselves, our conscious processes

Level 2 Leadership
Focuses on employee thinking, "Here's your job; here are the outcomes I expect. What do you think is the best way to achieve them?"

Level 3: VABEs
At this level people hold a set of values, assumptions, beliefs, and expectations (VABEs).

Level 3 Leadership
Is aware of and influences peoples values and basic assumptions, it has the potential of being far more powerful than level-one leadership.

Cultural Influence on Organizational Behavior (VABEs)

Economical Technological Setting Political Legal Setting Ethnic Background Religion Societal Culture: Customs Language

Organizational Culture

Personal Values Assumptions Beliefs Expectations

Organizational Behavior

Level 3 Leadership Understands and Affects

Leaders should be skilled in recognizing and clarifying VABEs in those they work with. The challenge is greatest in an international setting.

Behavior cues may vary greatly across cultures.

Cultural differences usually lead to much greater differences in VABEs.

The assessment of work-related VABEs of members from a different culture based on observed behavior may lead to erroneous conclusions. Assertion: Japanese managers in Japanese subsidiaries in Thailand appear to have particular difficulties in understanding the VABEs of their Thai employees. This appears to be a factor in the low integration of locals in formal leadership positions of Japanese foreign subsidiaries.

Keeley (2001) empirically demonstrated a lowlevel of integration of HCN (host country national) managers in a multi-country study involving 83 Japanese subsidiaries in Thailand, Malaysia, Singapore and Australia.
Communication

35
IHRM

42

HCN Integration

Business Culture

33 Formal Leadership Positions

Understanding VABEs

HCN Integration
Respondents were asked who mainly made decisions, local managers or Japanese managers (16 items). (List)
Likert scale: one = completely Japanese and five = completely local (3 = equally Japanese/Local) The Japanese data yielded a mean of 2.38, while that for the local data was 2.64.

Business Culture
Eight-item scale: issues related to business practices and culture (1 = lowest, 5= highest). Focused on local understanding of Japanese business practices and culture as well as Japanese understanding of local business practices and culture. (List) The Japanese data yielded a mean of 2.83, while that for the local data was 2.82.

Values, Assumptions, Beliefs, Expectations and Behavior at Japanese and American Firms in Thailand

Data gathered in July 2002 for the Japanese firms and May 2003 for the American firms in Thailand. For Japanese firms, 1 questionnaire in Japanese with 88 questions. One in Thai with 84 questions.
For American firms the same questionnaires were used, however, the questionnaire for expatriates was in English rather than Japanese.

Japanese firms: 95 subsidiaries yielding a response rate of 19%. 136 responses from Japanese managers and 175 responses from Thai managers. American firms: 26 subsidiaries yielding a response rate of 17%. 27 responses from American managers and of 22 responses from Thai managers.

Positive Work-Related Habits, Attitudes and Behavior Scale

The following questions were in both the Thai and expatriate (Japanese and American) questionnaires. Questions are based on a 7-point Likert scale (7 is strongly agree and 1 is strongly disagree.) Thai and Japanese (American) managers were asked to give their impression of Thai and Japanese (American) employees for each item.

Questions are preceded with the words Thai employees for one set of these questions and Japanese (American) employees for another set of the same questions: (1) Tend to arrive to work on time. (2) Think that company responsibilities are more important than personal matters. (3) Tend to meet deadlines. (4) Think that they should work overtime to finish their work when necessary. (5) Are quite willing to help with tasks that they are not directly responsible for. (6) Share information freely with other people in the company. (7) Feel responsible only for their own assigned work (reverse-coded in the analysis).

Table 1a: Positive Work-Related Habits, Attitudes and Behavior Scale Japanese Subsidiaries
Data Sets Thai (TH data) Mean 4.6902 N 175 Std. Dev. .9220 Std. Error 6.970E-02 % 3.9 or below 24% % 4.14 or above 68%

Thai (JP data)

Japanese (TH data) Japanese (JP data)

3.3697
5.2831 5.1944

133
174 133

.7530
.6603 .5674

6.530E-02
5.006E-02 4.920E-02

77.9%
3.4% 2.3%

14%
93.7% 96.2%

About T Difference: - 1.3205

About J Difference: + 0.0887 Total diff. = - 1.4092

Table 1b: Positive Work-Related Habits, Attitudes and Behavior Scale American Subsidiaries
Data Sets Mean N Std. Dev. Std. Error % 3.9 or below % 4.14 or above

Thai (TH data)

Thai (AM data) American (TH data) American (AM data)

5.0563
4.3668 4.5682 5.1429

22
27 22 27

.6005
.8737 .6895 .5850

.1280
.1681 .1470 .1126

4.5%
25.9% 27.3% 0%

95.0%
59.3% 63.6% 100%

About T Difference: - 0.6895

About A Difference: - 0.5747 Total Diff. = - 0.1148

The data begs the questions about:

The big difference between J view of T and T view of J :

T and J ratings of J are so close together for some items in which T and J ratings of T are so far apart!
The difference between T and A view of each other is not so far apart for these same items Examine the items of large differences and propose explanations:

Table 2a: Think that company responsibilities are more important than personal matters. (JP)
Data Sets Mean N Std. Dev. Std. Error % 3 or below % 5 or above

Thai (TH data)

Thai (JP data) Japanese (TH data) Japanese (JP data)

4.71
2.98 5.41 5.86

173
136 173 136

1.41
1.26 0.98 1.06

0.11
0.11 8.53E-02 9.32E-02

22.5%
69.1% 1.7% 4.5%

59.0%
9.6% 93.1% 82.6%

About T Difference: - 1. 73

About J Difference: - 0.45

Table 2b: Think that company responsibilities are more important than personal matters. (AM)
Data Sets Thai (TH data) Thai (AM data) American (TH data) American (AM data) Mean 4.76 4.15 4.67 4.81 N 21 27 21 27 Std. Dev. 1.04 1.56 1.24 .96 Std. Error .23 .30 .27 .19 % 3 or below 14.3% 34.6% 14.3% 11.1% % 5 or above 66.7% 42.3% 42.4% 66.7%

About T Difference: - 0.61

About A Difference: - 0.14

Think that company responsibilities are more important than personal matters.
Japanese stay late when boss stays late sacrificing personal life (even if no work to do). Japanese expect employees to stay with the group even when an individual cannot contribute. And other irrational overt behavioral signals
Viewed from US and Thai cultural norms

To demonstrate commitment Leads to high scores on the scale for J by T

Japanese tend to live to work while Thais mainly work to live. Thais expect work to be sanuk (fun).

Japanese and Thai measuring (behavioral cues) are very different. American and Thai expectations behavioral cues seem closer together.

sticks

and

Table 3a: Tend to meet deadlines. (JP)

Data Sets Thai (TH data) Thai (JP data) Japanese (TH data) Japanese (JP data) Mean 5.17 3.17 5.83 5.52 N 175 133 173 133 Std. Dev. 1.23 1.33 1.00 .87 Std. Error 9.31E-02 .12 7.61E-02 7.52E-02 % 3 or below 9.7% 66.9% 4.0% .8% % 5 or above 72.6% 20.6% 91.3% 87.2%

About T Difference: - 2.00

About J Difference: - 0.31

Table 3b: Tend to meet deadlines. (AM)

Data Sets Thai (TH data) Thai (AM data) Mean 5.36 4.22 N 22 27 Std. Dev. .95 1.45 Std. Error .20 .28 % 3 or below 9.1% 34.6% % 5 or above 59.1% 42.3%

American (TH data)

American (AM data)

5.82
5.78

22
27

.80
.80

.17
.15

0%
7.4%

90.9%
77.8%

About T Difference: - 1.14

About A Difference: - 0.04

Tend to meet deadlines.

For Japanese Difference

Differences between J and T national culture in relation to time and uncertainty avoidance. T think J managers set deadlines earlier than they need be. T meet real implicit (honne) deadline even when they miss the explicit (tatemae) deadline.

For American Difference (and Japanese)

Work is treated in the West as a continuous series of interrelated activities; one segment leads to the next step, and so forth. The preferred work pattern is steady, even relentless. Thais do not always perceive the same connection between certain individual tasks. Projects are often completed in a flurry of last minute effort.
Holmes, H. and Tangtongtavy, S. (1997). Working with the Thais: A Guide to Managing in Thailand. Bangkok: White Lotus.

Table 4a: Think they should work overtime to finish their work when necessary. (JP)
Data Sets Thai (TH data) Thai (JP data) Japanese (TH data) Japanese (JP data) Mean 5.29 4.15 6.21 6.01 N 175 133 174 133 Std. Dev. 1.21 1.56 .79 .74 Std. Error 9.13E-02 .14 6.02E-02 6.45E-02 % 3 or below 9.1% 32.4% .6% 0% % 5 or above 77.1% 22.1% 96.0% 94.7%

About T Difference: - 1.14

About J Difference: + 0.20

Table 4b: Think they should work overtime to finish their work when necessary. (AM)
Data Sets Thai (TH data) Thai (AM data) American (TH data) American (AM data) Mean 5.86 5.63 5.00 4.81 N 22 27 22 28 Std. Dev. .77 1.01 1.41 .96 Std. Error .17 .19 .30 .19 % 3 or below 0% 33.3% 18.2% 0% % 5 or above 95.5% 51.9% 63.6% 92.6%

About T Difference: - 0.23

About A Difference: + 0.19

Working overtime is very common in Japan

Expectations are that subordinates stay late when their boss stays late.

The Japanese Supreme Court has upheld a ruling that a company can sack any member of staff if they refuse to work overtime!
Over 50% of unionized workers in Japan work overtime without pay on an average of 29.6 hours per month, a survey conducted by the Japanese Trade Union Confederation (Rengo) 2003

Table 5a: Think that it is important to have a friendly and pleasant work environment . (JP)
Both Data Sets Thai (TH data) Thai (JP data) Japanese (TH data) Japanese (JP data) Mean 5.56 5.24 4.40 5.14 N 174 136 174 133 Std. Dev. 1.16 1.17 1.35 1.04 Std. Error E8.76-02 .10 .10 9.00E-02 % 3 or below 5.1% 8.8% 19.0% 4.5% % 5 or above 81.7% 53.7% 50.0% 69.9%

About T Difference: - 0.32

About J Difference: - 0.74

Table 5b: Think that it is important to have a friendly and pleasant work environment . (AM)
Both Data Sets Thai (TH data) Thai (AM data) Mean 5.95 6.19 N 22 27 Std. Dev. .65 .88 Std. Error .14 .17 % 3 or below 0% 0% % 5 or above 100% 92.6%

American (TH data)

American (AM data)

4.23
4.63

22
27

1.27
1.01

.27
.19

31.8%
7.4%

26.4%
51.9%

About T Difference: + 0.24

About A Difference: - 0.40

Japanese do not think it is as important to Thais as Thais think it is - 0.40. The Americans are saying yes! We see Thais think work should be fun + 0.24. Thais do not think it is as important to Japanese as Japanese think it is - 0.74.
Thais do not think it is as important to Americans as Americans think it is - 0.40. Different concepts of what constitutes friendly and pleasant work environment. a

Different concepts of what constitutes a proper and productive work environment.

Table 6a: Think that it is important to maintain harmony in the office. (JP)
Both Data Sets Thai (TH data) Thai (JP data) Mean 5.36 5.14 N 173 133 Std. Dev. 1.22 1.25 Std. Error 9.31E-02 .11 % 3 or below 8.0% 4.4% % 5 or above 77.0% 72.8%

Japanese (TH data)

Japanese (JP data)

4.54
5.23

173
133

1.31
.89

9.92E-02
7.74E-02

19.0%
2.3%

50.0%
77.4%

About T Difference: - 0.22

About J Difference: - 0.69

Table 6b: Think that it is important to maintain harmony in the office. (AM)
Both Data Sets Thai (TH data) Thai (AM data) American (TH data) American (AM data) Mean 6.00 6.37 3.68 4.19 N 22 27 22 27 Std. Dev. .82 .56 1.09 1.11 Std. Error .17 .11 .23 .21 % 3 or below 0% 0% 45.5% 22.2% % 5 or above 90.9% 100% 22.7% 33.3%

About T Difference: + 0.37

About A Difference: - 0.41

Maintaining harmony is very important in both Japanese and Thai society. Interview opinions of Japanese managers indicate it is even more important in Thai society. Both Thai and Americans realize the big difference here between Thai (6.00/6.37) and American (3.68/4.19) culture. Both Japanese and American managers give higher overall ratings to Thai managers for ability to maintain harmony in the workplace.

Graph/Table 1: Ability to Maintain Harmony in the Workplace

50 40 30 20 10 0 1 2 3 4 5 6 7 Japnese Data American Data

1 = Expatriate much better, 2 = Expatriate better, 3 = Expatriate somewhat better, 4 = same, 5 = Thai somewhat better,6 = Thai better, 7 = Thai much better. (% of Responses)

Mean American Japanese 5.37 4.16

Std. Error .25 8.49E-02

Std. Deviation 1.28 .98

N 27 134

% 3.9 or below 7.4% 19.4%

% 5 or above 77.8% 33.6%

A Thai strength

* Opinions of Japanese and American Managers

Table 7a: Tend to be loyal to the company. (JP)

Both Data Sets Thai (TH data) Thai (JP data) Japanese (TH data) Japanese (JP data) Mean 4.87 3.31 6.09 5.40 N 175 133 174 133 Std. Dev. 1.25 1.21 .89 .87 Std. Error 9.47E-02 .11 6.73E-02 7.54E-02 % 3 or below 10.9% 54.4% 0.6% 1.5% % 5 or above 58.3% 13.2% 93.1% 86.5%

About T Difference: - 1.56

About J Difference: + 0.69 Total diff. = - 2.25

Table 7a: Tend to be loyal to the company. (AM)

Both Data Sets Thai (TH data) Mean 5.55 N 22 Std. Dev. 1.01 Std. Error .22 % 3 or below 4.5% % 5 or above 81.8%

Thai (AM data)

American (TH data) American (AM data)

4.96
4.36 4.67

26
22 27

1.61
.67 .88

.32
.29 .17

23.1%
31.8% 7.4%

69.2%
40.9% 55.6%

About T Difference: - 0.59

About A Difference: - 0.31 Total diff. = - 0.28

Japanese express loyalty and commitment though exaggerated behavior: Staying with the group even when they cannot contribute to work being done. Sacrificing their private time (life) even when it is not really that necessary. Staying late at work Not taking their full vacation

Table 8a: Show a lot of commitment to the company. (JP)

Both Data Sets Thai (TH data) Mean 4.80 N 175 Std. Dev. 1.20 Std. Error 9.10E-02 % 3 or below 12.0% % 5 or above 58.3%

Thai (JP data)

Japanese (TH data)

3.41
5.86

133
174

1.21
1.02

.10
7.76E-02

50.0%
1.7%

16.2%
86.8%

Japanese (JP data)

5.65

133

.82

7.10E-02

1.5%

91.0%

About T Difference: - 1.39

About J Difference: + 0.21

Table 8b: Show a lot of commitment to the company. (AM)

Both Data Sets Thai (TH data) Thai (AM data) American (TH data) American (AM data) Mean 5.50 5.19 3.77 4.67 N 22 27 22 .27 Std. Dev. .67 .96 1.02 .88 Std. Error .14 .19 .22 .17 % 3 or below 0% 23.1% 40.9% 7.4% % 5 or above 99.9% 69.2% 22.7% 70.4%

About T Difference: - 0.31

About A Difference: - 0.9

The following questions were only included in the Thai questionnaires for Japanese and American subsidiaries. The data gives and indication of Thai employees view of the expatriates understanding of Thai culture and the Thais understanding of Japanese (American) culture.

Graph/Table 2: Japanese (American) culture is difficult to understand.

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 3.91 3.36

N 173 22

Std. Dev. 1.60 1.36

Std. Error .12 .29

% 3 or below 38.7% 54.5%

% 5 or above 32.9% 22.7%

Graph/Table 3: You understand Japanese (American) culture.

AM culture seems better understood by Thais

Both Data Sets Thai (JP Co.) Thai (AM Co) Mean 3.97 5.32 N 174 22 Std. Dev. 1.53 .99 Std. Error .12 .21 % 3 or below 33.9% 4.5% % 5 or above 43.7% 81.8%

Graph/Table 4: You understand Japanese (English) well.

Smaller language barriers at AM

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 3.21 6.23

N 174 22

Std. Dev. 1.94 .53

Std. Error .15 .11

% 3 or below 55.2% 0%

% 5 or above 30.5% 100%

Graph 5: Differences between Thai and Japanese (American) culture make communication with your Japanese (American) bosses difficult.

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 3.96 3.05

N 175 22

Std. Dev. 1.69 1.81

Std. Error .13 .39

% 3 or below 39.4% 59.1%

% 5 or above 37.7% 27.3%

Graph/Table 6: You understand the Japanese (American) way of management.

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 4.41 5.64

N 174 22

Std. Dev. 1.41 .73

Std. Error .11 .15

% 3 or below 23.6% 0%

% 5 or above 53.4% 95.5%

The scores are much higher for Thais working at American companies.

Graph/Table 7: Your Japanese (American) boss understands Thai language well.

About 1 out of 5
Both Data Sets
Thai (JP Co.) Thai (AM Co)

Mean
3.24 2.57

N
175 21

Std. Dev.
1.51 1.86

Std. Error
.11 .41

% 3 or below
59.4% 71.4%

% 5 or above
21.7% 19.0%

Graph/Table 8: Your Japanese (American) boss understands Thai culture well.

Less than half

Both Data Sets Thai (JP Co.) Thai (AM Co) Mean 3.87 4.67 N 175 21 Std. Dev. 1.46 1.35 Std. Error .11 .30 % 3 or below 40% 14.3% % 5 or above 34.9% 47.6%

Graph/Table 9: Your Japanese (American) boss understands Bunkhun

1 out of 3
Both Data Sets Thai (JP Co.) Thai (AM Co) Mean 3.78 3.29 N 174 21 Std. Dev. 1.44 1.38 Std. Error .11 .30 % 3 or below 32.8% 47.6% % 5 or above 28.2% 14.3%

1 out of 6 Bunkhun, or indebted goodness, is a psychological bond between someone who, out of sheer kindness and sincerity, renders another person the needed help of favor, and the latters remembering the goodness done and his ever-readiness to reciprocate the kindness.
Suntaree Komkin, Psychology of Thai People

Graph/Table 10: You feel Katanyoo Rookhun towards Japanese (American) boss.

Both Data Sets

Thai (JP Co.) Thai (AM Co)

Mean
5.07 4.50

N
175 22

Std. Dev.
1.19 1.92

Std. Error
9.01E-02 .41

% 3 or below
5.7% 27.3%

% 5 or above
57.4% 59.1%

Engendered in slightly over half the Thais The first aspect of bunkhun.
The feeling of gratitude and indebtedness.

Graph/Table 11: Your Japanese (American) boss practices Mettaa Karunaa towards his subordinates.

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 4.75 4.81

N 175 21

Std. Dev. 1.32 1.54

Std. Error 9.97E-02 .34

% 3 or below 12.6% 23.8%

% 5 or above 57.7% 52.4%

Rendered by slightly over half of the expatriate bosses. The second aspect of bunkhun. The quality of being merciful and kind.

Graph/Table 12: Your Japanese (American) boss shows Henjai to his subordinates

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 4.66 5.29

N 172 22

Std. Dev. 1.32 1.38

Std. Error .10 .30

% 3 or below 13.7% 9.5%

% 5 or above 57.1% 66.7%

Done by slightly over half of the expatriate bosses.

To see into the heart.

Showing and understanding and empathy for the subordinate, his/her duties and burdens.

Graph/Table 13: Your Japanese (American) boss understands (is sensitive to) the needs of his subordinates.

Both Data Sets

Thai (JP Co.) Thai (AM Co)

Mean
4.49 5.05

N
175 21

Std. Dev.
1.41 1.36

Std. Error
.11 .30

% 3 or below
19.4% 14.3%

% 5 or above
53.1% 66.7%

Likewise, describes slightly over half of the expatriate bosses.

Graph/Table 14: Your Japanese (American) acts like Phu Phadetkan

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 3.53 2.62

N 175 21

Std. Dev. 1.60 1.66

Std. Error .12 .36

% 3 or below 48% 71.4%

% 5 or above 26.9% 13..3%

Results more favorable towards for Americans. Japanese consensus management?

A dictatorial manager, who makes decisions without consulting anyone.

Graph/Table 15: Your Japanese (American) boss sufficiently consults with you before making decisions.

Both Data Sets Thai (JP Co.) Thai (AM Co)

Mean 4.15 4.95

N 175 21

Std. Dev. 1.46 1.43

Std. Error .11 .31

% 3 or below 28.6% 19%

% 5 or above 47.4% 66.7%

Japanese tend to practice consensus management mainly with other Japanese expatriates and those at the head office.

Conclusions and Implications The difficulty of understanding VABEs and managing them leads to Level 1 leadership. Setting deadlines earlier than the actual deadline may be in line with Japanese VABEs but for the Thais it appears to be focusing on behavior only (Level 1). A somewhat negative view of Thai managers work-related behavior by Japanese managers is most likely a factor in the low degree of integration of the former group.

Assessment of VABEs based on observed behavior may lead to erroneous conclusions.

Even though Japanese and Thai culture share many similarities, there does not seem to be any greater understand between these two groups than there is between Thai and Americans. Differences in VABEs are more apparent in a cross-cultural setting. It allows an opportunity for expatriates to examine their own VABEs.

In order to fairly judge the local managers it is necessary to sometimes let go of ones own VABEs. Many people struggle across-cultural boundaries since they cannot let go of their own VABEs. They try to manage solely from their own cultural perspective (with their VABEs unchanged).

Optimal leadership will come from:

Expatriate leaders examining their own VABEs and modifying those that lead to a dysfunctional work environment. Expatriate leaders greater understand of the local VABEs and seeking to influence them.

Local employees better understanding their own VABEs and those of the expatriates.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Integration Scale Decisions concerning: the hiring of new employees promotion of employees and wage/salary increases. employee benefits such as vacation time, etc. borrowing funds from local banks or financial institutions. production schedules. purchase of production inputs. local advertising. future products or services offered by the local subsidiary. investment in new facilities. Decisions concerning pricing of products and services. production goals. sales goals. personnel training for local managers at the subsidiary. layoffs (dismissal) of employees at the subsidiary. most minor decisions such as those concerning day-to-day operational issues. most major decisions such as those concerning strategic of longterm issues.

1. 2. 3. 4. 5.

6.
7. 8.

Business Culture Scale There is an Us versus Them mentality between the local managers and the Japanese managers. (reverse-coded) The Japanese managers have a sufficient understanding of local business practices. The Japanese managers have a sufficient understanding of the local culture. Differences between local values and culture and those of Japan often lead to conflicts. (reverse-coded) Japanese culture is so unique that it is impossible for non-Japanese to fully understand it. (reverse-coded) It seems individualism is stronger in this country than in Japan. (reverse-coded) Our company has made a sufficient effort to teach local managers about Japanese culture and business practices. Our company has made a sufficient effort to teach Japanese managers about local culture and business practices.