Cross- cultural leadership success
in Vietnam?!
The Power of Trust and Why it Matters.
A practical field study:
Bridging c...
  2	
  
Time for some acknowledgement first.
When a Master Thesis means more than just a paper to be written, but includes...
  3	
  
Table of content
1. Introduction ……………………………………………………………….. p.4
2. Literature Review …………………………………………………………. p.5
2...
  4	
  
1. Introduction
Within any newspaper or journal one is able to find something about
globalization and its effects ...
  5	
  
understanding of business objectives, assuming all other things being equal. Just as
Kathleen Stephens, the U.S. A...
  6	
  
trustor to be vulnerable to the actions of a trustee based on the expectation that the
trustee will perform a part...
  7	
  
environments. These misunderstandings slow down processes to an extent that
business objectives become less easily...
  8	
  
“partner’s actions creates a sense of indebtedness on the part of the other, which may
lead to beneficial attitude...
  9	
  
currency value’ to measure important antecedents for trust for different cultures. This
includes the notion of eng...
  10	
  
and Mosakowski (2000) further confirmed that an effective multicultural team has a
strong emergent culture as sha...
  11	
  
raising practices, attitudes about time or money, definitions of achievement, concepts
of aesthetics such as beau...
  12	
  
of certain state of affairs to others. For the same assumption, there will be different
tendencies on the good-ev...
  13	
  
awareness builds the inner layer, similarly to the onion model above. Sensibility
differs from awareness in how i...
  14	
  
and how often self- judgments suggest itself by default (Farb, 2007). If leader and
follower were able to steer o...
  15	
  
degree in which the individual has an internalized understanding, that culture is
greatly influenced by societal ...
  16	
  
acceptable. This represents a tendency for the centralization of power and the
subordination of those with less p...
  17	
  
includes such values as thrift, persistence, having a sense of shame, and ordering
relationships. Confucian work ...
  18	
  
influencing the research, rhetorical structure; use of language, and methodology; the
research procedures. Findin...
  19	
  
success do you inspire employees to bring the gifts of initiative, imagination, and
passion to work every day” (H...
  20	
  
Malaysia, Indonesia and the Philippines who did as well as are seemingly to benefit
from bigger Foreign Direct In...
  21	
  
living and working. Nevertheless, they do not share the same value set, background
and understanding of communica...
  22	
  
little contributions made to bridge the gap between the two countries in terms of
cultural understanding and comm...
  23	
  
interviewees or have never been mentioned before. The sample includes n=17
interviews with German managers of sma...
  24	
  
replaces all names of the interviewees. Additionally, recordings have been noted
down as well and are available u...
  25	
  
the importance and relevance of the described problem at hand. The research design
helped understanding what is h...
  26	
  
The strategy first analyzes the status quo, compares it to the desired future state and
derives action points to ...
  27	
  
and honest exchange between leader and employee, a greater commitment and a
lower turnover rate in the long- run....
  28	
  
which reactive task fulfillment is dominant over proactive problem solving. Instead,
proactive problem solving wo...
  29	
  
In order to overcome cultural barriers, the manager also needs to focus on uncertainty
avoidance. By definition u...
  30	
  
that control would harm the open and honest exchange with each other, as it increases
the fear of being wrong wit...
  31	
  
employees identify themselves rapidly with their given environment as “it is in their
ideology to be committed to...
  32	
  
experienced high levels of employee turnover and has observed a steady bonding
among his employees as well as wit...
  33	
  
officially announced by the leader” (Manager #4). This means that translating the
cultural differences into an ap...
  34	
  
can support this. Clarifying prioritized Vietnamese cultural dimensions and values
helps leaders to create enviro...
  35	
  
Confucius, where the family is the priority. It becomes clear how the first
bonding to build up relational trust ...
  36	
  
“As a manager here you should not use a copy- paste strategy. But take
advantage of the positive ‘made- in- Germa...
  37	
  
12 of the 15 managers (80%) referred to the “importance of learning opportunities to
create an interesting enviro...
  38	
  
an opportunity- rich environment combined with the guiding paternalistic leadership
attitude, employees are more ...
  39	
  
here was that there is a need for “cross-cultural code switching” for employees as well
as for employees. As peop...
  40	
  
(Manager #7). As Manager #14 stated at the end of his interview, “it demands a very
strong character to be cultur...
  41	
  
important topic to researchers, but mostly part of the daily business agenda of sent-
abroad managers. In a new c...
  42	
  
them, which can influence their commitment positively. This holds especially for
cultures with a desired power di...
  43	
  
Especially in the coding process within grounded theory, the occurrence of another
piece of data, i.e. the code, ...
  44	
  
would enhance the transparency of that relationship and outline clearer action points.
Another cognitive bias inc...
  45	
  
practices have not been well established yet and might differ in the new cultural
context.
The exploration of Vie...
  46	
  
7. References
A. Adams D. (1995), Health issues for women of color: A cultural
diversity perspective, Thousand Oa...
  47	
  
I. Dorfman, P.W. (1997) Leadership in Western and Asian Countries:
Commonalities and Differences in Effective Lea...
  48	
  
Q. Gerke & Patterson (2008), Dynamics of Reciprocal Collaborative
Trust in Sensitive Information Repositories, Pr...
  49	
  
Z. Kogut, B. (1989), The Stability Of Joint Ventures Reciprocity And
Competitive, The Journal of Industrial Econo...
  50	
  
HH. Ponteretto, (2005), Qualitative Research in Counseling Psychology: A
Primer on Research Paradigms and Philoso...
  51	
  
hospitality and tourism management. Managing Service Quality (2000), 10(6),
pp.397-409.
QQ. Wu et al. (2012), The...
  52	
  
8. Appendix
1. Onion Model of cultural layers (Spencer- Oatey, 1999)
2. Coding Description for Grounded Theory
St...
  53	
  
3. Basic Information Sheet – Interview Partners
Interview
partner
Industry Position Years in
Vietnam
(yrs)
Previo...
  54	
  
10 Education General
Manager
10 No
11 Banking General
Manager
12 Yes
12 Education Associate 2 Yes
13 Automobile C...
  55	
  
6% 18%
Banking =
18%
Diplomat = 6%
Engineering &
Energy =
4. Theorization/ Propositions
Category Elements/ No. of...
  56	
  
(7)
Is high (8)
Collectivism A cohesive group is important (10)
Loyalty is very low (10)
Company is abstract/inta...
  57	
  
Pride to work for western company high (6)
Increased turnover when better opportunity
(14)
Bonding through traini...
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  1. 1. Cross- cultural leadership success in Vietnam?! The Power of Trust and Why it Matters. A practical field study: Bridging cultural differences and relational trust through strategic leadership intent. A re- emphasis on the importance of context- based leadership strategies in the multinational business environment. An outreach for the importance of practical HR Research to conceptualize the international workplace of tomorrow ~ “Let us be honest, Franziska. We have to go back to how we treat each other (…). Sustainability is not how you optimize your money, but how you optimize your talent” Interviewee, Ho Chi Minh City, 2012 ~ Maastricht University School of Business and Economics April 20th , 2013 Franziska Ottilie Becker ID #: i597317 Study: MSc. IB – Change, Management & Consultancy Assignment: Master Thesis (EBS 4013) Thesis supervisor – and supporter: Yannick Bammens
  2. 2.   2   Time for some acknowledgement first. When a Master Thesis means more than just a paper to be written, but includes a life- long memory and guidance for the future there is a reason to thank those who were part of it: I hereby like to thank some people, who made it possible to realize this research, to move to Vietnam and settle in fast, to finish it in times of severe ambiguity as well as all the support ranging from making loads of coffee, good conversations, workouts, proof- reads or simply shared and sincere silence: Thank you to Yannick Bammens, my thesis supervisor and – supporter who was the one who finally accepted my proposal of doing research in Vietnam. Having been able to follow my curiosity and interest in the field of cross- cultural change management was a truly enriching experience. Allowing me to bridge academia with my first field study is what my Master of Science at Maastricht University created a truly valuable experience and ensured that I am on the right path of my career. A sincere ‘thank you’ also for being a very understanding supporter, when I had to personally shift priorities for some time. Also ‘thank you’ to Hannes Gunther who supported this thesis by helping me to find Yannick Bammens, as my final supervisor. Thank you to all the managers I was able to interview. My time in Vietnam was a short and deep dive into the culture and I believe that the practical insights I gained will support me in my endeavors and career within Talent Management and Talent Education tremendously. Thank you to my beloved family & friends. Their support in the last months of personal and academic up and downs was a great lift- up. Special thanks to Oliver Kanders, with whom I created this great field research idea. Oliver has supported me since we first discussed this idea in a little Irish Pub in a small Italian town over a beer.
  3. 3.   3   Table of content 1. Introduction ……………………………………………………………….. p.4 2. Literature Review …………………………………………………………. p.5 2.1 Relational trust …………………………………………………… p.5 2.2. Cultural awareness ……………………………………………….p.10 3. Research Background ……………………………………………………...p.18 3.1. Personal Motivation… …………………………………………...p.18 3.2. The Vietnamese Market ………………………………………….p.20 4. Method …………………………………………...........................................p.23 4.1. Data Collection …………………………………………………...p.23 4.2. Analysis …………………………………………………………..p.24 5. Discussion …………………………………………………………………..p.41 5.1. Limitations & Future Research ………………..………………...………..p.43 6. Conclusion ………………………………………………………………….p.45 7. References …………………………………………………………………..p.47 8. Appendix ...………………………………………………………………….p.52
  4. 4.   4   1. Introduction Within any newspaper or journal one is able to find something about globalization and its effects on our society, economy and everyday business. A practical challenge organizations face in times of increasing interdependence is the capability to work effectively across cultural boundaries. Over the last decade, cross- cultural studies have been of major interest. Following, on a company level the importance of strategic HR and internal communication grows with the number of companies expanding into different countries across the globe. Globalization creates new constellations of management and internal communication. Management of a multicultural nature demands shifts in thinking and acting and goes beyond the single notion of directing work. In order to achieve a healthy working environment differences in culture need to be addressed, such as effective decision- making and control mechanisms are conducive to good communication and cultural understanding (Cui, Ball & Coyne, 2002). Developing effective human resource practices and trainings play an important role in this process, and are critical for international joint ventures’ (IJV) success (Pucik, 1988; Zeira & Parker, 1995). Moreover, it demands the engagement and bonding with and for employees to understand individuals with different sets of values and backgrounds. Thus, the creation of relational trust between a leader and his followers needs to be addressed. Human Resource Management research (HRM) and leadership research must address relational trust, establishing mechanisms to enhance trust and thus performance on a viable basis (Inkpen & Currall, 2004). Here, the role of expatriates, the managers sent abroad to establish a company’s subsidiary, has been of special interest to other organizational behavior researcher (Davis, 1995; Molinsky, 2007). Trust builds loyalty to the business, an open business environment and shared
  5. 5.   5   understanding of business objectives, assuming all other things being equal. Just as Kathleen Stephens, the U.S. Ambassador to the Republic of Korea summarized it: “We must use our shared interests and values to compliment and transform each other’s growth” (Matthews & Thakkar, 2012). Long- term success therefore depends on context- based leadership strategies, which in turn depends on the ability of its organizational actors and the ability to bridge cultural differences to create relational trust. This study explores how leaders in cross-cultural settings may overcome cultural barriers to build relational trust from a change management perspective. 2. Literature Review 2.1 Relational Trust The interdependences of countries and businesses are growing. Ever since trade barriers began to fall, the internationalization of markets has created new business opportunities. Despite opportunities the interplay of cultures in the workplace demands a shift in the focus and meanings of leadership, responsibility and management theory. Cross-cultural leadership and workplace diversity management have been on worldwide research and business agendas within the last decades. The challenge of the expatriate, the sent- abroad manager, is to bond with his or employees in a way to eliminate perceived inequalities, to motivate and create a common ground for business. In the context of cross-cultural leadership, relational trust gained attention and has been discussed more frequently over the last few years (Davis, 1995; Fryxell et al., 2002) This is because trust serves as a bonding tool. It is the basis for a mutually healthy relationship between a leader and his followers. According to Mayer et al. (1995) trust is defined as an individual’s readiness to perform a certain behavior and attitude. He defines trust as the “willingness of a
  6. 6.   6   trustor to be vulnerable to the actions of a trustee based on the expectation that the trustee will perform a particular action”. Similarly, Rousseau et al. (1998) defined trust as “a psychological state comprising the intentions to accept vulnerability based on positive expectations of the actions of the trustee”. In a cross- cultural context trust is particularly hard to reach as individuals’ criteria and pre-conditions for trust may differ for several reasons. For example, culturally implied leadership styles or the attitudes towards formal authority may differ across countries. In fact, it is proven that cultural distance is negatively correlated with measures of trust in IJVs and that people are more inclined to trust other people who are like them (Fryxell et al., 2002). Thus, to establish relational trust in a new company environment, companies need to demonstrate a general readiness and openness towards the new culture and its ways of doing business. Trust can therefore be seen as a behavioral intention. This behavioral intention is the basis for successful business. Dirks and Ferrin (2002) found that trust has a positive correlation to many relevant performance indicators of a company. Amongst these are job performance, organizational citizenship behavior, turnover intentions, job satisfaction, organizational commitment and commitment to decisions. From a leadership perspective, trust enables the successful coordination of work, higher levels of motivation and especially better social exchange. The three mentioned factors will be discussed separately, while social exchange will be discussed more thoroughly. Coordination of work is enabled in situations of mutual trust between the leader and employee. To coordinate a business a certain degree of programmability of behaviors and measurability of outcomes is required. The lack of a basis of trust leads to misunderstandings and inefficiencies in the long- run. Effectively a lack of trust creates high transaction costs commonly found in many multicultural work
  7. 7.   7   environments. These misunderstandings slow down processes to an extent that business objectives become less easily achievable (Colquitt, 2007). From a motivational perspective, relational trust is an important enabler for follower’s willingness to perform. According to Kouzes & Posner (1995) effective leaders create motivation by generating trust through role modeling. Their main ingredient is being a personal example and showing observable dedication. Effective role models are able to act fast to stop behaviors that breakdown trust and collaboration, e.g., “unethical behavior, backbiting and unproductive complaining” (Kouzes & Posner, 1995). In a multicultural setting, leading human motivation demands an understanding of values and needs. If led and managed correctly, trust can therefore serve as a leveraged form of motivation. (Bijlsma-Frankem, 2005). However, successful leadership on multicultural level is one of positive social exchange. Ergo, the leader in his role as a model of inspiration can influence the relationship to his local colleagues positively through his social behavior. Rockstuhl et al. (2012) uses social exchange, which explains the positive effects of the leader-member exchange (LMX) on a multicultural level. Social exchange is defined as “involving unspecified obligations created by received favors” (Blau, 1964). To be precise, as leaders engage in favorable, positive social behaviors with their employees, work attitudes and behaviors will be positively impacted as employees feel the positive urge to give back as a matter of reciprocation. Reciprocity can be regarded as a central factor regarding social exchange between foreign manager and local subordinate (Hamel & Prahalad, 1989). In Gouldner’s (1960) norm of reciprocity, he explains that the parties involved in social exchanges appreciate that a favor received now “creates an expectation of some repayment in the future” (Colquitt et al., 2007). For instance, to care about the
  8. 8.   8   “partner’s actions creates a sense of indebtedness on the part of the other, which may lead to beneficial attitudes and behaviors directed toward the caring partner” (Colquitt et al., 2007). Reciprocity in building trust is further important out of the following two reasons. One, for an effective communication and collaboration access to and with employees, managers needs to be able to rely on reciprocal responsibility, i.e. trust for each other (Gerke and Patterson, 2008). Because leaders and employees are supposed to manage unfamiliar relationships with unfamiliar parties an open and collaborative environment for the IJV is an important ingredient to learn from each other. Two, in the field of cross-cultural work settings uncertainty, ambiguity and volatility belong to daily business processes as well as to the daily togetherness as both environment and people are unknown. Reciprocity as a management intention is therefore crucial as to how lasting intra-organizational relationships can be build. An open communication style with each other and trustworthy relationships foster a community based on collaboration, openness and innovativeness; a crucial determinant for the success of IJVs (Kogut, 1989). Concerning appropriate strategic leadership intents, past research shows that certain leadership styles are more likely to unleash relational trust than others. Generally, leadership styles based on empowering the follower instead of commanding tasks work best in building a culture of trust. Such research focused on identifying leadership styles that specifically foster non-material, trust- based relationships rather than purely economic relationships. This focus can be most often found in family business research, which aims to give deeper insight into psychological aspects and ask whether family businesses can provide a blueprint for built-in solutions on how to create successful companies (Davis, 1995). For instance Colquitt et al. (2007) places high emphasis on establishing a so-called ‘common
  9. 9.   9   currency value’ to measure important antecedents for trust for different cultures. This includes the notion of engagement, the strength of relationships through personal rapport and reputation and the motivation to care for others. Those were commonly found characteristics found in family-led organizations ranging from entrepreneurial companies to small- and medium-sized companies as well as multinational corporations (Davis, 1995). Within this field of research, the development of stakeholder engagement, incentive alignment, and value currency creation is argued to be an evolutionary process with implications for understanding organizational behavior dynamics. For instance, bonding between leader and follower develops a shared communication platform enabling a common understanding of business objectives. Employees will better be able to gather and share formal and informal knowledge if they do not fear harmful consequences from that action. In companies, where trust is absent, relationships are characterized by an attitude of confrontation: “me vs. you; us vs. them; by deep and hidden animosities rather than goodwill” (Lobo and Dolke, 2007). In climates like this performance is shifting to lower level due to energies going into “manipulation and protection rather than efficiency and effectiveness” (Lobo and Dolke, 2007). Clearly, positive social exchange to build relational trust is essential to organizational learning willingness and ability, knowledge acquisition and dissemination as well as the generation of ideas. Understanding the motivational cues across cultures demands time and patience, which is hard to achieve in times of fast-changing and highly competitive markets. Unlike homogeneous or mono- cultural teams, multicultural teams cannot refer to a pre-existing identity because of their short- lived individual project-based life cycle (Earley and Mosakowski, 2000). They develop and depend on a team culture of straightforward rules, performance expectations and individual perceptions. Earley
  10. 10.   10   and Mosakowski (2000) further confirmed that an effective multicultural team has a strong emergent culture as shared individual prospects facilitate communication and team performance. This suggests that the positive effect and trust generated by the perceived shared understanding can fuel performance improvement and boost team effectiveness abroad. 2.2 Cultural awareness Organizations that seek performance improvement on a global scale and use opportunities in the global marketplace will face limitations “in attempting to transfer organizational theories across cultures” (Casimir, 2006). Dynamics and environments that have proven to be successful in creating trust in a mono-cultural setting may not work in a multicultural workplace. Despite prior research, the importance of trust in trust- enabling leadership and in-role performance remains an under-researched issue. Partially, this is due to “the challenge in fully conceptualizing the potential mediating effect of trust” as leader-follower relationships can occur in a variety of contexts, including those pertaining to culture” (Casimir, 2006). The values and beliefs held by members of a culture influence not only the behaviors of individuals within the culture but also the extent to which specific behaviors are viewed as acceptable and effective (House et al., 1999). In this section, the author elaborates on the general challenges and opportunities of cross-cultural differences based on previous research. Sub-questions at the end of the section will introduce conducted research in Vietnam on how to enhance cross- cultural team convergence to build relational trust. In an attempt to commonly define culture researcher Geert Hofstede, defines culture as the following: “the collective programming of the mind that distinguishes the members of one group or category of people from the others” (Hofstede, 1980). Culture can include how people live and decide to live, role expectations, and child
  11. 11.   11   raising practices, attitudes about time or money, definitions of achievement, concepts of aesthetics such as beauty, art, music and food among other things. Cultural differences are most certainly belonging to the oldest differences perceived by human kind. A culture exists of different layers that have varying degrees of visibility and tangibility. This is often referred to the onion model of cultures and consists of layers of symbols, heroes, rituals and values as seen in figure 1 in the appendix. For example a culture’s religious customs can be explicitly communicated, while tendencies of whether something is right or wrong are implicit and hard to communicate. Symbols generally describe words, gestures, pictures, or objects that carry a particular meaning, which is only appreciated and understood by those who share a particular culture. New symbols easily develop over time, just as old ones disappear. Symbols are also being copied from one particular group to others. Symbols are most often taught in cross-cultural trainings as they are rather easy to memorize and do not demand too big of a personality change in order to adapt. Examples involve the learning of a new language, knowing the way to greet in another country or how to hand over a business card. This is the reason why symbols represent the outermost layer of a culture. Further, Heroes are people, past or present, real or fictitious, who possess characteristics that serve as role or guiding models in a culture. Those do differ in any country. Knowing the meaning of role models within a country can increase the cultural awareness and understanding of certain employee reactions or behaviors. Rituals are collective, shared activities. In everyday life and business they sometimes seem superfluous in reaching desired objectives, but are considered as socially essential. They are therefore carried out most of the times for their own interest and desire. This involves especially religious and social ceremonies. The core of a culture is formed by values. For outsiders, they are broad preference tendencies
  12. 12.   12   of certain state of affairs to others. For the same assumption, there will be different tendencies on the good-evil-, right-wrong-, natural-unnatural continuum in different countries. Most of the times, values remain unconscious to those who hold them as they have been passed through multiple generations and thus are the deepest roots to all outer layers (Spencer- Oaley, 1999). The greatest challenge of cultural understanding is therefore to understand the very roots of a culture. This is where great parts of every individual’s motivation lie. Due to people’s own lack of their own cultural awareness, the understanding of other cultures is of an even greater challenge. Neither can many cultural differences be easily discussed, nor be directly observed. The level of difficulty increases if both parties are not aware of their own culture. The cultural layers emphasize the complexity that lies in understanding and being fully aware of a foreigner’s actions and explain the challenges managers face abroad. It also points out the importance of personal and cultural awareness to bridge culture- related differences (Adams, 1995). Given a manager’s behavioral intention to understand a culture, cultural awareness has a major impact on the success of cross-cultural undertakings. It shall thus be further investigated. We will here define cultural awareness with reference to Adams (1995). Cultural Awareness means to develop sensitivity and understanding of another ethnic group. This involves internal changes in terms of attitudes and values. Awareness and sensitivity also refer to the qualities of openness and flexibility that people develop in relation to others. Cultural awareness needs to be seen within the context of cultural knowledge (Adams, 1995). In today’s business cross - cultural knowledge is often mentioned as a prerequisite for success (Weiermair, 2000). Cultural knowledge can be seen as a system of layers where cultural sensibility builds the outer layer, whereas cultural
  13. 13.   13   awareness builds the inner layer, similarly to the onion model above. Sensibility differs from awareness in how it is implemented in the conscious and unconscious state of mind of the individual. Sensibility draws on the ability to feel or perceive, to have an intellectual perception alias the ability to see, hear or become aware of something through the senses (Adams, 1995). Businesses invest great amounts of personal and financial resources in the education of cultural sensibility. Here, so- called cross-cultural trainings focus on behavioral determinants. This means, that they provide a range of behavioral ‘to dos’ and ‘don'ts’ for the respective foreign country. Those tools are of major importance to show a respectful, sensible attitude and willingness to engage with the other party. The manager is able to sense alias hears, sees, observes differences and through prior education is therefore able to react according to the respective cultural norms and standards. Cultural sensibility opens the door to cross- cultural communication and interaction though does not determines the quality or depth of the relationship, i.e. cross-cultural understanding. If international businesses aim to develop a lasting businesses abroad they have to dive deep into the respective culture, gaining an intuitive understanding for their cultural and societal cues and use their know- how and cultural savyness for their own good, leveraging different inputs, creating a collaborative environment. Awareness instead is more commonly defined as having knowledge as well as a deeper consciousness. This awareness often requires a certain level of cognition of one’s own cultural background to gain a deeper understanding of the present moment’s experience and step back from judgments based on one’s personal cultural background. Basically this implies that “every time one’s attention projects into judgment, memory or anticipation, it constitutes a rejection of the adequacy of the present” (Farb, 2007). The art to establish conscious cultural awareness is therefore to understand of how
  14. 14.   14   and how often self- judgments suggest itself by default (Farb, 2007). If leader and follower were able to steer own biases towards a new culture, learning from each other and creating cultural synergies would be facilitated. This cultural sensibility and cultural awareness are ongoing processes and take time to become part of people’s habitus. A congruent cultural diversity management for each employee going abroad, especially when managing workplace diversity eases this challenging and long-lasting task and is able to promote cultural convergence, which in turn facilitates relational convergence. The connotation of ‘diversity’ implies it already: Social actors in all possible settings are different in character and quality and by nature are not of the same kind (Oxford Dictionary, 2009). Christensen & Overdorf (2007) thus propose to approach a new market with a start-up strategy. This means that a company’s established homeland strategy; structure and company culture may not be best within the context of the new country subsidiary. In such case it is often better to approach the new market by creating new best practices. Otherwise if established homeland practices are applied without question, the company risks having to change its approach not long after market entry. According to Hannan et al. (2006), a change in the blueprint of employment relation in the early stages increases the hazard of failure. Over time insufficient knowledge and inadequate understanding of each other, will lead to “long lasting conflicts between international managers and local counterparts and employees” (Quang et al., 1998). In the worst cases, this leads to the failure of the business partnership (Quang, et al. 1998). Following, in a culturally complex business environment, expatriate managers are not only judged according to their technical and international business knowledge and experience. They will also be judged on their cross- cultural soft - and leadership skills. The general notion of cultural awareness includes cultural sensitivity to a
  15. 15.   15   degree in which the individual has an internalized understanding, that culture is greatly influenced by societal customs, values, viewpoints and beliefs. Summarizing in economic terms, the value proposition of the employer abroad is therefore partially a function of the adaptability of the manager in a different country, just as the willingness and proactive attitude in understanding the way of working and communicating to get to his or her desired business objective. The importance of this topic lies in the simple idea, that we as social actors are all part of a system. In fact, we are not actors in a vacuum but rather a response to what we experience from the outside and the action of other social actors. This is a crucial to know for strategic decision- making and communication as these dynamic relationships come with interdependencies. Thus, we need to understand personal biases in order to understand and work with others (Hofstede, 1980). Hofstede (1980) introduced five cultural dimensions to increase cultural awareness and increase overall effectiveness in a multicultural context. His motivation is based upon the drive to improve cross-cultural communication and with it business strategies on the basis of mutual understanding. The cultural dimensions Hofstede (1980) found within his international study are power distance, individualism, and masculinity vs. feminity, uncertainty avoidance and long-term orientation. Power Distance concerns “the extent to which less powerful members of organizations within a country expect and accept that power is distributed unequally” (Hofstede, 1980). National cultures that demonstrated what Hofstede considers to be ‘low power distance’ are the countries in which there is a concern to minimize inequalities. The less powerful in these societies tend to look to those with the ultimate power to make decisions, and inequalities within society are overall more
  16. 16.   16   acceptable. This represents a tendency for the centralization of power and the subordination of those with less power within businesses. Individualism is represented by societies in which people look after themselves and their families. In every day business this is often reflected in, employment contracts marked by hiring and firing. More collective societies, people are more concerned for others and the culture. It is based around the cohesiveness, bonding of groups, such as the family. Here, group protection in exchange for loyalty is ranked highly. This tendency is reflected in businesses as well as elsewhere in the society. In his 1980s research Hofstede cited Ecuador and Indonesia as examples of collective societies. Masculinity or the masculinity- feminity continuum refers to the degree to which gender roles are distinct and adhered to within society. In high femininity societies, social gender roles overlap. Both men and women valuing ‘feminine’ qualities such as modesty, intuition, relationship building and quality of life above the more traditionally ‘masculine’ qualities of aggression, acquisition of wealth and competition. Japan, the UK and West Germany scored high on masculine values. Uncertainty Avoidance (UA) “concerns the extent to which the members of a society feel threatened by uncertain and unknown situations” (Hofstede, 1989). In essence, this cultural dimension measures a country or culture's preference for strict laws and regulations over ambiguity and risk. High uncertainty avoidance scores imply further that there is a fear of ambiguous situations. Germany scored relatively high on uncertainty avoidance with a value of 65 compared to Japan with a value of 95. Also China with 85 lies in the upper range of uncertainty avoidance. Education often serves as a first explanation for this. Remarkable, those are all cultures with a relatively stronger emphasis on traditions in every day settings show higher values in the UA dimension. The Long- term orientation dimension was included after the initial study in 1982 and
  17. 17.   17   includes such values as thrift, persistence, having a sense of shame, and ordering relationships. Confucian work dynamism refers to dedicated, motivated, responsible, and educated individuals with a sense of commitment and organizational identity and loyalty (Bond & Hofstede, 1989). Its opposite, Short Term Orientation, stands for embracing virtues related to the past and present, in particular, respect for tradition, preservation of ‘face’ and fulfilling social obligations (Hofstede, 1980). This paper is interested in contributing to further theory development about how cultural differences influence relational trust in order to identify critical junctures for multicultural HR strategies. The focus will be shifted to the following sub- questions: First, what are cultural differences constraining the bonding between follower and leader? Second, how do specific cultural differences have a greater impact on trust- building leadership challenges? Third, what are leadership styles supporting and fostering the building of relational trust to increase general understanding for each other and make culturally diverse work groups striving for the common goal? Fourth, What are most suitable communication strategies to bridge perceived differences to advance the creation of relational trust? Last and fifth, how do previous experiences of the leader in different cultures have an impact on trust- building in the new cultural context? 3. Research Background 3.1. Personal Motivation In qualitative research, the researcher is a vital factor. It is therefore relevant to articulate the philosophical base upon which the study is based. The philosophical beliefs regarding science involve ontology; the nature of reality, epistemology; the relationship between the researcher and the participant, axiology; personal values
  18. 18.   18   influencing the research, rhetorical structure; use of language, and methodology; the research procedures. Findings are thus driven by these beliefs and interpretation of the author on it. Precisely, they have guided the formulation of the research question, the data collection method, the analysis method, and will also guide the propositions (Ponterotto, 2005). The author will therefore briefly outline a personal motivation on top the literature review on relational trust and cultural differences and awareness. This aims to support the inclusivity of the research into current multicultural management discussions perspective and is likewise supposed to increase understanding for the motivation to conduct research on this topic. As elaborated in the literature review above, trust serves a bonding tool and creates a meaningful environment for the parties involved. Though, this environment is context- binding, i.e. environment- and people specific. In fact, management will always depend on the socially and economically value it creates (Bloxham, 2002). Human advancement through a wide set of new technologies and the general convergence of global markets determines and demands a different idea of how to plan, organize, command, coordinate and control today, i.e. the manager’s work. Earlier, in times of mostly mono-cultural setting and industrialization the importance managers’ practices were much more seen in creating a productive environment including compliant and productive workers. After times of severe instability due to wars and oil crises, industries and individuals were motivated to ensure stability and efficiency in order to cover basic needs and enable financial security (Maslow, 1943). Even though bonding was important, it was not prioritized due to its outside factors, i.e. the context. In today’s international business world workplaces are meant to be able to engage in a serious change management task asking: “How in such a competitive and multicultural economy where entrepreneurial genius is the secret to
  19. 19.   19   success do you inspire employees to bring the gifts of initiative, imagination, and passion to work every day” (Hamel, 2010)? Management of a multicultural nature demands shifts in thinking and acting and goes beyond the single notion of managing, overseeing projects. It demands the engagement with and for employees to understand individuals with different set of values and backgrounds. With increasing dedication and background in the field, the author more and more believes that the manager of tomorrow brings by an understanding of necessary cultural convergence through mutual understanding. Precisely, the manager of tomorrow is the one of a mindful and listening character being able to go beyond own cultural boundaries and using the notion of bonding, i.e. trust, to transform differences in opportunities for the business. This led to the field study being elaborated onto in the next sections. The next section will elaborate on the Vietnamese market to give insights into the context of the study. Further, the methodology will include the data collection and treatment, i.e. coding and an analysis section and resulting propositions. 3.2 Vietnamese Market Especially countries of less economic exposure and yet unawareness of people and culture seem to diminish the success of international assignments (Ralston et al., 2006). In the next section, Vietnam’s economy will therefore first be briefly introduced. Second, the impact of yet smaller economic exposure compared to China will be discussed. Third, the author briefly introduces Vietnam’s culture relative to the German culture. Vietnam has only been part of the global business community since 1986, after opening up their country for international trade and severe foreign direct investment (FDI). Germany, with a strong power in international trade as leading export country was one of the first big investors in the past communistic country. Despite of that, Vietnam is one of the ASEA countries next to Thailand,
  20. 20.   20   Malaysia, Indonesia and the Philippines who did as well as are seemingly to benefit from bigger Foreign Direct Investments (FDI) throughout the next years. Prediction surveys just stated that Vietnam is a strong competitor to China looking at labor supply, skilled labor and a robust domestic demand. After its first opening in the 1980s Vietnam and the remarkable number of FDIs, they mean to stabilize and grow his position as a likewise considered economics player next to China and Japan . Additionally, a nation that has endured a century of being ruled by China and France afterwards lasted three consecutive wars beginning in 1940 and a trade embargo in 1994, Vietnam still emerged as the country with the most optimistic people. 94% of the Vietnamese population expects a good future (Statistics Publishing House, 2004). A positive economic outlook supports this optimistic attitude, i.e. growth rates of 8.5% in 2007 before the financial crisis and on average 7.3% throughout the 1990s (GIC, 2008; Statistics Publishing House, 2004). Further, around 50% of the Vietnamese population is under the age of 27. Implications are a continuing population growth as well as a large, dynamic and growing workforce experiencing a more and more internationalized market structure. A main fallacy in the discussion and research on cross-cultural leadership of Western- Asian relationships is that many countries are being put within the same cultural categorization as China. In 2006 Ralston et al. predicted that Vietnam converged with and shows similarity to China, which is based on Vietnam’s past of having been influenced in areas such as technology, knowledge, education and Confucianism. This is especially relevant as China ruled Vietnam by around 1000 years between 111 B.C. and A.D 939. Also, their gained economic power over the last decade fostered this impression (Statistics Publishing House, 2004). It is true, that both China and Vietnam share the mere of traditional and value-oriented ways of
  21. 21.   21   living and working. Nevertheless, they do not share the same value set, background and understanding of communication, team and group work as well as authority. In fact, Ralston et al.’s findings in 2006 prove this. They found that “Vietnamese are Vietnamese, and they are different from Chinese. This is a finding worthy of note given the increasing activity between the West and Vietnam. One implication of which Western MNCs should be aware is that this difference does exist, and in turn, that they should realize that a cut- and- paste of Chinese Management strategies into Vietnam may not insure success here” (Ralston et al., 2006). This fallacy brings up two implications for cross-cultural leadership research in Vietnam. First, there has been very little research conducted in Vietnam yet. Second, the generalizations of clustering China and Vietnam into one cultural category causes a dysfunctional communication and operation strategy in Vietnam, leaving leaders as well as employees dissatisfied, clueless and wondering about the reasons what has gone wrong, i.e. turnover behavior, loss of trust and authenticity, employee’s complacency towards work. In this research the German and Vietnamese serve as an example to elaborate on cross- cultural leadership challenges. German and Vietnamese culture differs greatly in values, customs and their perceptions on professionalism and business success. Nevertheless, cross-cultural research and training have yet not found out what the major reasons for unsuccessful expatriate assignments are. Notably, German businesses and programs are perceived as less based on national interests (GIC, 2009). Furthermore, they are known to be innovative as well as for high quality standards, i.e. Germany’s brand “made in Germany” is known all over the Asian room and serves as a role model to foster economic stability and prosperity in Vietnam. Previous argumentation shows that prerequisites already build a constructive foundation for businesses in Vietnam. However, there have been very
  22. 22.   22   little contributions made to bridge the gap between the two countries in terms of cultural understanding and communication. Despite of the categorization fallacy with China from above, “there has been very little empirical investigation of management practices in general” (Ralston et al., 1996). In this regard, the paper aims to enrich academic as well as management insights for German MNEs conducting business in Vietnam and showcase the importance of contextualization in multicultural management. Specifically, the author highlights that the leader serves as the main contributor to the social relationship development between German managers and Vietnamese employees to overcome perceived cultural barriers. 4. Method 4.1 Data collection Data was collected within a 1,5 month period in Ho Chi Minh City (HCMC), South Vietnam. The choice of location was Ho Chi Minh City. HCMC is the most important business region in Vietnam when looking at the number of total regions with significant economic contribution to the overall GDP. Five out of the nine most powerful economic regions for business lie in the South of Vietnam. Out of the 200 biggest companies in Vietnam, 101 companies account for the five regions. 54 of those are situated in HCMC (Cheshier & Penrose, 2007). Interviews were considered to be the most suitable instrument as it allowed the author to identify the greatest challenges from the broad spectrum of overcoming cross-cultural challenges to build relational trust. Furthermore, the interviews supported the following three points: First, to discuss certain challenges in depth; second, to adapt the interview to the area of expertise of the interviewed manager and third to adapt the interview over time in order to address specific aspects which have been commonly highlighted by previous
  23. 23.   23   interviewees or have never been mentioned before. The sample includes n=17 interviews with German managers of small, medium and large-sized companies and corporations living and working in Ho Chi Minh City. Four interviews had to be excluded due to either bad recording quality or because the author decided that the contributions made were not adding value to the research topic. The resulting sample size is therefore n=13. All managers have at least two years of management experience in their position. 50% of the managers have several years of other management experience abroad, merely in other Asian countries, particularly Japan and China. The choice of interview partners has been judgmental and often also based on the snowball effect, which means that one interview partner recommended another manager out of his network. The judgmental choice of interviewees was based on the two dimensions, i.e. the personal and company background and their current leadership position. Personal backgrounds include General Managers, Chief Executive Officers, Lawyers and Consultants. Company background accounts for the respective industry. The range of industries in this sample includes education, consulting, banking, automobile, trade, renewable energy and engineering. The interviews had an average length of one hour and eight minutes (67.58 min) and were segmented into two parts. The first part the managers were asked to talk about the different challenges based on the cultural dimensions. Over time, the author was able to observe a clear pattern of highlighted cultural dimensions and further challenges for the managers. Those highlighted cultural dimensions based on Hofstede’s five cultural dimensions and other challenges have been established through the codifying and conceptualizing the data based on the research method called grounded theory. A non- disclosure agreement was made at the beginning of each interview, which gave the author the opportunity to record every interview. To ensure anonymity, numbers
  24. 24.   24   replaces all names of the interviewees. Additionally, recordings have been noted down as well and are available upon request with the author. 4.2 Analysis In order to investigate the challenges within multicultural leader- follower settings multicultural behavior research the author decided to use the constant comparative method of grounded theory. The grounded theory was first termed by Glasser & Strauss, 1967 and defined as “the discovery of theory from data”. Grounded theory is the experiential reflection of acquired data to a certain topic. It is often described by attributes such as holistic, naturalistic and inductive. The responsiveness of research based on grounded theory is aimed at contextual values determined by the investigator’s theoretical sensitivity, i.e. knowledge, understanding and skill for the given context (Glaser, 1992). Here, it has been emphasized that the variety of sources is important for the data collection to provide “a way to expose variation and a way to establish conceptual frameworks” (Egan, 2002). In the case of this study, it particularly supplied promising possibilities for “the development of theoretical frameworks that emerge from research situated in practice and enhance the Human Resource Development (HRD) theorist- HRD practitioner partnership in the process of theory building” (Egan, 2002). Furthermore, grounded theory here was used as the following: The author aimed to explore a cultural phenomenon and this paper shall therefore be understood as a thorough exploration of contemporary cross- cultural challenges between German and Vietnamese managers and employees, respectively. By using the interviewing technique the researcher takes a real-world way of looking at the problem of cultural differences in building relational trust within a company and applies social and cultural understanding to it. The manager, moved into the center as considered to be the expert on the topic of interest, defining
  25. 25.   25   the importance and relevance of the described problem at hand. The research design helped understanding what is happening in Vietnam’s multicultural workplaces from the manager’s point of view. Theory starts to emerge by comparing different data sets, i.e. the different interviews with managers from various industries with each other and continuously code insights, observe patterns across interviews and finally categorize them (Glaser, 1992). Once saturation for one category was approached the author formulated a proposition. All categorizations and therefore propositions aim to answer and elaborate on the sub- questions from above. The data was handled by Strauss and Corbin’s stage approach (1982), the so- called theoretical sensitive coding, as seen in the coding sheets in the appendix. Visible in the appendix upon request the author took each single interview itself and coded down first impressions related to the directional keywords of the topic, i.e. trust, bonding, motivation, cultural differences, power distance, uncertainty avoidance, masculinity, long-term orientation, cultural convergence. At the beginning of each interview the interviewees introduced themselves. In most cases, the interviewer introduced all cultural dimensions and elaborated on the importance of trust to create a collaborative nature in the company. They were then asked how they perceive the cultural differences and what the biggest barriers are to overcome when aiming to motivate and bond with employees. Table 3 shows a general overview of all interview partners and their key inputs. Further, the following propositions are proposing estimated action points to fill the gap between cultural differences and relational trust. Likewise, thee are supposed to serve as guiding thoughts and actions to overcome cultural barriers. Continuing previous elaborations, trust is created through the matters of bonding. Bonding in turn is based on the premise of convergence. In order to visualize the cultural barriers to overcome a basic strategy in Change Management is supportive.
  26. 26.   26   The strategy first analyzes the status quo, compares it to the desired future state and derives action points to bridge both. The author therefore first looked at the differences, which most often were defined by the misunderstandings, frustrations and daily challenges the managers would have. In the course of the interviews questions on how to tackled those exact problems were supposed to finding out strategies to change the current situation for good. Also the manager’s learning experience need to be included here. One HR manager shared an insight from one of his studies on employee retention: “based on our surveys, turnover is about 40% in Vietnam (…) the market is really fairly volatile when it comes to human capital.” Manager #8 added which also reveals one of the major impressions the author gained throughout the interviews: “I think, international companies here in Vietnam have greater challenges in realizing business goals such as in other subsidiaries, even with higher human resource input.” He later concluded: “We may need to rethink the right leadership approach. Something needs to be done” Resolving, there is a demand for a leadership approach adaptive to the Vietnamese context. This involves Change Management. The objective is to improve the relationship between leader and employer to solve other challenges contingent to the importance of relational trust. Here, the status quo are the three main cultural differences mentioned above, the desired state is the relational trust assuming an open
  27. 27.   27   and honest exchange between leader and employee, a greater commitment and a lower turnover rate in the long- run. Open and honest exchange, commitment or loyalty, but especially accompanying turnover intentions are the greatest concerns for the 15 managers in HCMC. Nevertheless, turnover intentions etcetera lie outside of the scope of this study. Based on the literature review, i.e. the positive social exchange discussion one can though assume that turnover behavior for instance should be diminished. The author therefore proposes that a Change Management perspective will be effective to outline action and performance indicators to overcome cultural barriers for the sake of building relational trust. P1: In order to overcome cultural barriers a change management perspective supports the creation of relational trust, as specific action points help to showcase the specific cultural differences of the two cultures. During the coding and conceptualization phase, the interviews revealed a clear pattern of what the greatest cultural barriers to a successful bonding and thus creation of relational trust are. The analysis reveals that power distance, uncertainty avoidance and individualism are the dimensions impacting the creation of trust the most. In 10 of the 15 (~ 70 %) interviews managers referred back to the three dimensions when elaborating on bonding, motivation, commitment and turnover behavior. Long-term orientation and masculinity were also mentioned, though mostly in combination with the latter dimensions, i.e. enforcing them. Power Distance was mentioned by 70%, i.e. 10 of the 15 managers as a severe difference to their previous management experiences in the Western world. The implications of power distance were not only that the unequal power distribution was accepted, but also desired. Vietnamese employees expect a hierarchical structure in
  28. 28.   28   which reactive task fulfillment is dominant over proactive problem solving. Instead, proactive problem solving would be a common characteristic in western companies as part of flatter hierarchies. In the course of the interviews the author understood, that a common ground would only be possible by being more of a supervisor on an operational level than a General Manager. From a leadership perspective this implies, “that the manager always need to be one step ahead” and “work as hard as the employees” (Manager #1) to earn respect. This is a further mean to foster bonding between both, leader and follower, which was also closely related to achieving operational excellence. Reaching operational excellence would depend to high extents on providing clear task outlines, clear communication and high levels of management involvement in daily business procurements. Instead of being focused on the business’ strategy, known as a common job description in the western business environment, leaders here would need to appreciate the direct contact with their employees, their role model status and learning about effective strategic communication to create a common ground and understanding, fostering the importance of positive social exchange and bonding in the Vietnam. As manager #1 further elaborated: “I had to realize that I had to be much more of a boss than I was used to (…) In fact, to really grow this business, I am the only one who can build this up here. (…) I am role model and I have to use this hierarchy thinking for the business’ greater good (…).” Proposition 2a therefore argues that: P2a: Relational trust in Vietnam depends on how well the leader is able to lead on the premise of desired power distance.
  29. 29.   29   In order to overcome cultural barriers, the manager also needs to focus on uncertainty avoidance. By definition uncertainty avoidance is society’s tolerance for uncertainty and ambiguity. It is an indication as to what extent the members of a culture feel either uncomfortable or comfortable in unstructured situations. Hofstede (1989) found out that Germany scores reasonably high, whereas Asian countries score reasonably low on uncertainty avoidance. However, based on the interviews this does not hold. Managers have stated higher levels of uncertainty avoidance on a company level for their Vietnamese colleagues than in a German environment. Their Vietnamese colleagues would have a stronger fear of making wrong decisions and being less respected or fired as a result. The high desired power distance could thus be regarded as a means of security from making mistakes. They explained that a leader should “avoid surprises” (Manager #2), that “they like to know what is going on and when” (Manager #3) and “basically to consider the company as a family construct to lower fear” (Manager #1), which means to lower uncertainty in the workplace. In four interviews managers were further referring to their experiences on supervision versus control related to uncertainty avoidance. Manager #3 pointed out, that “they [Vietnamese executives] do not want to be controlled, but they want to be supervised”. The author was able to find out more about this distinction by looking at the dynamics between power distance and uncertainty avoidance as well as uncertainty avoidance by itself. Supervision is defined as a critical watching and directing or overseeing of task or project to ensure it is done properly (Dictionary, 2013) Within supervision power of the beholder is smartly used, whereas by definition control is defined as “exercising authoritative or dominating influence over someone” (Dictionary, 2013). The notion of control would very much interfere with the “family construct” mentioned above. Throughout the interviews it became clear
  30. 30.   30   that control would harm the open and honest exchange with each other, as it increases the fear of being wrong with their work. Proposition 2a therefore claims that the degree of uncertainty avoidance would translate into how much the leader is able to supervise on the premise of the three previous elements, but not control his or her employees. It seems Vietnamese are more encouraged to bond with their leader by being involved and work together, than being dominantly pushed into a certain direction. This fine difference reveals an aspect, which the author discussed and abstracted from the interview with manager #9: Given the desired power distance and the revealed fine distinction between supervision and control the author argues that Vietnamese are more drawn to ‘with-powerment’ instead of em-powerment. Whereas the prefix em- implies that power is entirely ‘covered’ by the empowered, the prefix ‘with’ shows that in the case of Vietnam uncertainty avoidance is not bridged by giving the employee power to decide on his own, but rather power to co-decide. This means to lessen the fear of making wrong decisions. Proposition 2b therefore argues: P2b: Relational trust depends on how well the leader is able to supervise, but not control the employees, i.e. lessen uncertainty avoidance. In between the previous elaborations communication has been commonly mentioned. In fact, cultural differences are most likely to be bridged by using an open communication with each other. As argued above, power distance as well as uncertainty avoidance may harm collaboration in the first place. Strategically, communication therefore becomes an integer part of and additional tool in bridging cultural differences. Moreover, the Vietnamese orientation towards collectivism builds a promising ground to bridge differences through communication. The collectivistic nature was found as a remarkably important cultural dimension of Vietnam in 12 of the 15 interviews. Experiences of the managers indicate that
  31. 31.   31   employees identify themselves rapidly with their given environment as “it is in their ideology to be committed to a group” (Manager #13). Also, communication was experienced to be the best tool to combine most aspects in multicultural leadership and management, but especially to build relationships and enhance learning for both parties. Communication creates situations “in which you are very close to your employees. They like to see that you are hands-on and close to them. Those are situations when you build commitment” (Manager #14). Success in business requires much more than basic communication skills. There is a need to develop communication skills that allow sharing information accurately as well as building constructive relationships. Collectivism can help to support this. Collectivist societies are highly interdependent. When decisions are to be made, there have to be consultations on each other’s ideas and opinions. This became especially clear when managers would report about the increased turnover after holiday, which would be spent with the family. When the family would consult with each other and decide that this employment is not appropriate anymore, employees would quit the job right after the holiday. Within this context, one manager elaborated on the necessity of policies and regulations especially with new employees to make them aware of the collateral damage for everyone involved. Following, if both parties understand the implications of possible collateral synergies, their collectivistic nature can be used as a trust enabler through open communication. This enhances sharing knowledge and information and gives rise to adapt multinational strategies to the Vietnamese context. The author perceives the leader as the main social actor in developing the relational trust. This argument has already been backed up by the argumentation on desired power distance above. Manager #15 also emphasized this and the importance of involvement through clear communication. He told the author, that he has not
  32. 32.   32   experienced high levels of employee turnover and has observed a steady bonding among his employees as well as with his employees: [based on a discussion on employee turnover and talent management in Vietnam] “They [Vietnamese employees] are perceived short-term thinkers. But that is only fostered through the mere of current [international] management actions (…) If you want them to be interested in the sustainability of the company use their family focus. But if you only stay for 3 or 4 years they will never understand.” What is meant here is that an expatriate culture where managers are generally sent to Vietnam for 2-3 years only opposes the Vietnamese idea of a family culture and hinders a long-term focus to build relational trust. Proposition 2c proposes, that by engaging employees in decision processes and continuously engaging them in the process as well as encouraging them to participate here, the leader is able to replicate the family decision- making processes and build trust through collectivistic communication internally. P2c: Relational trust depends on how well the leader is able to use strategic and clear communication strategies, i.e. use collectivism for bonding. After a thorough investigation of the dominant cultural dimensions in Vietnam, power distance, uncertainty avoidance and collectivism the author observed that the major barrier for managers was not that they did not accept the implied cultural differences between them and the Vietnamese. Instead, they were much more challenged by the shift in personal thinking and leading. The German business culture is marked by a trend towards lower hierarchies, proactive self- thinking and acting when solving tasks and problems. Instead, in Vietnam “liberal decision- making freedom has to be
  33. 33.   33   officially announced by the leader” (Manager #4). This means that translating the cultural differences into an appropriate leadership framework is necessary. After categorizing the three mentioned cultural dimensions, the author observed patterns of a specific desired leadership style emerging – paternalistic leadership. Paternalistic leadership is a leadership style in which the leader guides subordinates in a fatherly manner. Previous research has already proven that paternalistic leadership styles are most common in cultures of developing countries and likewise tend to be higher on power distance (Wu et al., 2102). Effective leadership in Vietnam is highly status- oriented and directive. Yet it requires a high level of interest and sometimes-active involvement in subordinates' private lives (Dorfman , 1998). The basis for this is the Confucian way of living. Here, humanity sits at the core of everyday interaction with each other. Respect, traditions and integrity for and with each other are crucial, which translates into the fact that family and relatives are being prioritized over all other relationships, including work (Xuewu, 2008). Interviewee #5 pointed out that “in business conversations in Vietnam, family is covered first, in Germany we are going straight to business”. Managers pointed out that mutual understanding, loyalty and commitment are often based on whether “a manager is interested in family matters of their employee”, “supply good working conditions”, “create an environment of stability”, “be part of their wedding”, “create lunch traditions to sit together” (Manager #1, #3, #5, #10). In order to build relational trust it is important to know about the values a specific culture is attached to. Thus, connecting the three cultural dimensions with the most suitable leadership style support a culture- specific view of leadership. Past research has already argued that unique cultural characteristics such as language, religion, and values call for distinct leadership approaches in different societies, instead of using universal leadership strategies (Dorfman, 1997). Research
  34. 34.   34   can support this. Clarifying prioritized Vietnamese cultural dimensions and values helps leaders to create environments conducive to building trust from the beginning onwards and leaves him with the right behavioral intentions. Proposition 3 therefore argues that: P3: The cultural dimensions of Power Distance, Uncertainty Avoidance and Individualism reason that a paternalistic leadership is most effective when aiming to build relational trust. In order to emphasize on the appropriateness of the paternalistic the author likes to include a rather political and economics argumentation managers made. However, this argumentation concerns the understanding of the Vietnamese culture to bridge cultural differences and lays the foundation for relational trust. Conducting business in the Vietnamese market means that managers “have to understand that the business world here in Vietnam is marked by family business (…) This is due to all the years of closed markets” (Manager #17). The years of closed market impose that the past was mostly marked by small and medium- sized enterprises, which were and are run by families. Also, managers would state that due to political turmoil, lacking political structures and unstable markets families would become very entrepreneurial. In times where the country would not be able to supply stability, especially after the Vietnam War, the creation of businesses was necessary for own survival and to cover basic needs. The family orientation in Vietnam should therefore not only be seen as a cultural value, but also as an economic necessity from the past. Manager #4 talked about this as well: “It is challenging to be part of a bigger whole. It is politically not encouraged. It is not encouraged by society. And it is not encouraged by the values of
  35. 35.   35   Confucius, where the family is the priority. It becomes clear how the first bonding to build up relational trust is really based on creating family structures (…) but that does not make it any easier.” The width of reasons for paternalistic leadership in Vietnam shows the necessity to adjust own leadership styles to the respective country. Proposition 4 therefore argues that: P4: Paternalistic leadership has a positive effect on the leader- follower relationship between German company managers and Vietnamese employees out of cultural and economic reasons. In the course of the interviews the author recognized a new pattern to build relational trust. A new dimension within the change management strategy for cross- cultural leadership is time. The author found, that conscious time management is important for effective bonding. Time management refers to recognizing altering needs of employees over time and the management of employee’s talents. Especially, in MNCs based in emerging markets the local employees’ learning curve is steep. Being exposed to a different culture within their own culture, they soon will adapt to a new mindset and will differ from other co-nationals (Caprar, 2011). Cultural differences will decrease. The interview with a German- Vietnamese manager has shown, that Vietnamese employees in German firms are receptive for new learning opportunities. They are aware of the better prospects and appreciate the “efficient, organized and qualitative work Germans are pursuing in every day business” (Manager #6). Manager #3 contributed to this with: “Vietnamese employees are fascinated by the ability of Germans to abstract things and get it organized until it is done” Also Manager #6 contributed:
  36. 36.   36   “As a manager here you should not use a copy- paste strategy. But take advantage of the positive ‘made- in- Germany’ reputation. They will want to listen to that.” Though as in daily conversations, the Vietnamese value personal conversations over business conversations when they get to know each other. This has implications for the validity of paternalism in the leader- follower exchange when bridging cultural differences to build relational trust. The Vietnamese culture appreciates reliability, a care- taking attitude of the leader. The leader serves as a role model. This is different from effective leadership approaches in Western management. However, building bonding momentum through paternalistic leadership characteristics will be more effective in the early day of the manager’s assignment to build a common ground with each other and show interest in and an participative attitude towards the Vietnamese employees. Based on the previous literature review, it can be assumed that focusing on building the LMX from the beginning onwards increases the probabilities that relational trust will be built. Further it can be assumed that lower turnover behavior; commitment and loyalty will likewise be positively impacted. Proposition 5 therefore argues that: P5: Paternalistic leadership will be most effective for the relationship between cultural differences and relational trust when pursued consistently when a new expatriate leader arrives. The next proposition will also elaborate on the time dimension in cross- cultural leadership in Vietnam. During the interviews a shift in the appropriateness and elements in the paternalistic leadership approach could be observed. Next to the provision of good working conditions and a guiding and caring attitude of the leader,
  37. 37.   37   12 of the 15 managers (80%) referred to the “importance of learning opportunities to create an interesting environment for the employees” (Manager #10). In the course of the interviews it became clear, that the provision of a learning environment is going beyond the guidance within the paternalistic leadership framework. The leaders would most often state it as an addition to the discussion on managing cultural differences. This especially holds for the younger professionals with a degree in higher education. Those still belong to “a minority group of scarce talent in Vietnam” (Manager #10). The international exposure creates a differentiation among locals. Foreign-locals, the local employees working in a MNC, will want to participate in the business development as well as stimulate own growing social needs in an international business environment. Whereas in the beginning “you are in the [Maslow’s] basic need pyramid level and you do not care about strategic goals and achievement as you just want to survive tomorrow” (Manager, #15), the international exposure enriches the employee’s personal horizon over time, which the leader can use to bond with his or her subordinate. Manager #15 also experienced that clear career outlook programs, which would had a positive impact on the commitment of their employees to stay: “Career plans yet helped a lot to create loyalty from the beginning onwards. We basically talked to them and said ‘this can be your career path, this is what you can do in 5, 10, 15 years’.”(…) “They enjoy, if they see they can learn and grow. Though over time, they look what the track records of the company are. Do they send people abroad, are there self-development opportunities?” Thus, there is an importance of recognizing and nurturing different fellowship demands. This is crucial to nurture employees in their personal development and satisfy them. It creates a win- win situation for both parties. If the manager provides
  38. 38.   38   an opportunity- rich environment combined with the guiding paternalistic leadership attitude, employees are more likely to embrace these opportunities: “You have to provide meaning, but also boundaries and rules. We explained them at the very beginning: This is where we want to be in 2-years time and they saw it is happening” (Manager, #17) It can therefore be proposed that paternalistic leadership will remain effective for bonding over time, if the leader understands to provide learn and growth opportunities particularly in an international environment. P6: Paternalistic leadership will be less effective when employees do not find self- development opportunities, such as trainings, abroad experiences as well as monetary incentives over time. The author found an additional relevant element to overcome cultural barriers and build relational trust within a multicultural workgroup. During the interviews the managers were often referring to the education system and its fallacy in providing the necessary cognitive abilities and skills for diverse workplaces and for the sake of cultural convergence. One manager stated openly “they [Vietnamese students] are basically taught not to think”, which implies that operations are based upon the notion that “If he [the leader] says do A,B,C you do A,B,C and not more” (Manager #11). The author aimed then to investigate the core of this issue. In fact, eight managers referred back to the current education system in Vietnam and referred to it as the root of a low level of pro-activism, problem-solving attitude and other desired traits in employees. Such lacks in competence would have to be overcome by MNCs. It leaves them with great amounts of training efforts and costs to build more proactive, self- managing and problem-solving colleagues. The emerging category
  39. 39.   39   here was that there is a need for “cross-cultural code switching” for employees as well as for employees. As people get used to work with different cultures on a longer- run basis, they tend to have a shorter adaption phase and are able to deal with cultural differences, i.e. cultural heterogeneity more constructively. This so- called cross- cultural code- switching (CCCS) was initially termed by Molinski (2009). CCCS deals with the “psychological challenges of adapting behavior in foreign cultural interactions”. Molinsky (2009) proposed that through “socialization in a particular cultural setting, individuals internalizes norms for appropriate behavior in specific interactions” and are therefore able to read cultural cues more easily than those without CCCS ability. Combined with the awareness of the previous propositions, the accumulation of previous experiences helps to be able to deviate from “accustomed behavior in one’s native culture in order to engage in behavior appropriate to a foreign culture” (Molinsky, 2009) more easily. HRM practitioners as well as HRM researchers here often refer to a needed global mindset. Reviewing the interviews with the managers, the author was able to observe a similar need. Managers would clearly benefit from younger employees with experience abroad, whether through studies, internships or employees with previous work experience abroad (Manager #6, #7, #10, #11). However, the same holds true for the managers themselves. Expatriates with previous work experience abroad mostly in the Asian room felt more comfortable, patient and tolerant in bridging cultural differences. Having been exposed to another culture before, those managers would be able to read cultural cues faster. With an increasing level of cultural- and self- awareness, managers seem to be able to listen and react upon the employees’ needs more effectively. Cultural awareness and self-awareness of managers with previous experience abroad resembles a greater sensibility and empathy for culturally difficult situations
  40. 40.   40   (Manager #7). As Manager #14 stated at the end of his interview, “it demands a very strong character to be culturally flexible and still demonstrate an authentic self”. Further, patience is an indicator of how fast managers would be able to “adapt to the market and work around their business objectives within the cultural constraints”, which demands a “mindset based on flexibility and curiosity over judgment” (Manager #11). The final proposition therefore argues that: P7: Previous experiences abroad moderate the relationship between cultural differences and relational trust as it supports cultural convergence through cross- cultural code switching. Based on a change management perspective, the extracted propositions of the research study in Vietnam aim to showcase the importance of appropriate leadership as well as current human resource tasks for international businesses aiming build relational trust when conducting business in Vietnam. The outlined propositions draw a clear focus on the leadership side of bridging cultural differences. The author likes to point out that these propositions are based upon the idea of cultural convergence in the most positive sense. Neglecting the notion that cultural convergence implies giving away parts of the own cultural identity, the author aimed to make a contribution towards strategic cultural convergence. 5. Discussion Research on multicultural organizational behavior has been under thorough investigation ever since falling trade barriers made it possible to let national businesses become global. Cross- cultural differences became an increasingly
  41. 41.   41   important topic to researchers, but mostly part of the daily business agenda of sent- abroad managers. In a new culture, the manager is not only exposed to new rules, legislations, but mostly to a workforce who has a different value set and background. Such as motivational cues differ among different people, the more we can expect the motivational cues to differ among different cultures. In order to bridge cultural differences to work with each other in multicultural workplaces the emphasis on building stronger relationship based on trust become a strategic leadership task. Relations based on trust serve as an effective bonding tool and as a leveraged form of motivation, implying a greater acceptance of differences to overcome cultural barriers. However, the discussion has yet not made greater contributions on how to overcome cultural barriers on the basis of the actual differences. In this study, the leaders’ challenges were used as starting points to find appropriate context- based solutions. Generally, this approach is supposed to open the leader’s mindset to view differences from a change management perspective. The difference between the status quo and the desired state depends on their strategic intent and behavioral intention as elaborated above. In fact, the leader may become the change he wants to see in this yet asymmetric relationship. In this research, paternalistic leadership was proposed to be the best leadership strategy to bridge cultural difference and build relational trust. Besides the best leadership proposition, the author further argued that that a mix of soft skills, i.e. paternalism and hard facts would create the best trust- based environment. Hard facts define the self- development opportunities, i.e. trainings, abroad experiences etcetera. Effective retention strategies are to support employees’ efforts to improve themselves. This can become more valuable to employees than higher compensation offered by other companies because it keeps their skills competitive. It also demonstrates employees, that their company is willing to invest in
  42. 42.   42   them, which can influence their commitment positively. This holds especially for cultures with a desired power distance and great affection towards collectivistic actions, which this paper also proposes. In fact, if one is not aware of the company’s weaknesses, it is questionable whether they will ever be addressed. HR Change management (HRCM) processes allow effectively identifying and measuring performance gaps by evaluating employees’ performance of goals and demonstration of key competencies in the international business environment. This data drives action to address performance gaps at the individual, departmental and organizational level, and then monitor the effectiveness of actions in terms of improved performance. One may term those derived or contextualized performance drivers as Talent Key Performance Indicators (TKPIs). They help to create a culture involvement as well as of continuous improvement and development. It also helps to prevent performance challenges in any part of the business from going unnoticed or unaddressed. 5.1 Limitations and Future research The cross- cultural research in Vietnam also shows limitations. On a systematic research level, the research shows limitations in its size of the sample, a possible perception and subjective bias and empirical significance. The discussion on the three limitations will then also lead to a brief elaboration on future research respectively. First, the sample size in qualitative research may be chosen differently. A known rule of thumb for research usually considers a sample of 30 participants or more. Quantitative studies strive to do random sampling, whereas qualitative studies often decided to do purposeful or criterion-based sampling. Generally, samples for qualitative studies are smaller than those used in quantitative studies. The reason is, that “there is a point of diminishing return to a qualitative sample—as the study goes on more data does not necessarily lead to more information” (Mason, 2010).
  43. 43.   43   Especially in the coding process within grounded theory, the occurrence of another piece of data, i.e. the code, is what is relevant “to ensure that it becomes part of the analysis framework” (Mason, 2010). The author observed a cultural phenomenon, in which frequencies are considered to be less important, than gaining a broad understanding of the complexity around the topic. Also, qualitative research is labor- intensive. An analysis of a large sample, i.e. between 30 and 500, can be time consuming and simply unfeasible. In his research of 2010, he found out that a sample size of 31 should be used as a reference point to leave the researcher with enough data to learn from it. In this case, 17 interviews were held. 13 interviews were finally used constitute the sample size. Based on the reference sample size of 31, 13 interviews need to be considered as a limitation. Future research should look into interviewing a larger sample to see whether the impressions of the author still hold. Involving more interested researchers would help to conduct larger- scale qualitative research projects. Second, because only managers, but no Vietnamese employees were interviewed, the research includes a perception bias. Perception biases are grouped into human cognition biases and are defined by “people's stereotypic beliefs about other groups, and their affiliations with their own in-groups, color their perceptions and judgments” (Pronin, 2006). However, the results of this research should be regarded in the light of the manager’s experiences. Also, the author tried to translate challenges of the managers abroad into opportunities to bridge the cultural gap. The author’s perception is similarly based on own judgments concerning the propositions she would formulate. Additionally, due to a limited amount of time in Vietnam of 1,5 month and the restricted accessibility to Vietnamese employees the author decided to only focus on experiences of the managers. For research, it will be interesting to look into the dynamics and perceptions of both parties and eliminate stereotypes. This
  44. 44.   44   would enhance the transparency of that relationship and outline clearer action points. Another cognitive bias includes that the researcher had the same nationality and cultural heritage as the managers interviewed. Both parties are German. On the one hand this is an advantage as bonding was facilitated. On the other hand, the researcher might have made some assumptions and did not discover more possible strategies on the basis of cultural differences, as her view was not objective enough. Finally, this research does not supply any empirical evidence. Qualitative research data is based on human experience, which gives rise to greater details and depth in complex research questions such as a cultural phenomenon. This makes it sometimes more compelling than quantitative research data. Nevertheless, qualitative data is also characterized by the rigor of the researcher and interviewees. This makes it hard to assess and demonstrate. The lack of a structured quantitative analysis implies that statistical significance cannot be provided. Future research may therefore consider translating the outlined propositions into questionnaires and conducting quantitative research on it. On of the advantages, but likewise disadvantages of quantitative research is that it becomes generalizable (Mayring, 2007). Therefore, the author likes to emphasize on the power of the context- based findings and deeper insights into the dynamics of leadership in Vietnam, which would require a skillful and experienced researcher. 6. Conclusion Multicultural Leader- follower relationships belong to the most challenging. Especially for the leader it involves to be able and willed to continuously build a coherent local employer value proposition (EVP). By establishing a business abroad managers have to reconsider that human capital is their strongest asset as management
  45. 45.   45   practices have not been well established yet and might differ in the new cultural context. The exploration of Vietnam’s culture shows that it is difficult to understand in many aspects and that a better understanding and awareness of their own culture can help key executives and their respective companies to be more successful in creating lasting relationships with their employees. Across interviews, it was remarkable how again and again contradictions were found that also key executives could not explain. Equally varied was the success and satisfaction with which interview partners handled their respective companies or departments. Some seemed to have discovered the most outstanding learners in the world amongst their employees, many others were faced by lazy men who did not seem to want to work at all. Generally, managers would often switch between the internal and external influences, such as employee motivation and would then switch to the fallacies of the education system and the unpredictable market due to its fragile political system. Most key executives however, were enthusiastic about the challenge they had chosen or had been given when coming to Vietnam. They found it interesting to look at Vietnam through the frame of cultural differences and think about possible strategic solutions to overcome those and build relational trust, breaking down what would otherwise have caused an overflow of information to consider. As already discussed in the analysis, much lies within the hands of a leader in Vietnam. This is a conclusion that many interview partners as well as the author herself could not as easily draw for Germany. Whether for businesses or individuals I can only highly recommend Vietnam as a location of dynamism, change and realization through a culture that challenges many life assumptions.
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  52. 52.   52   8. Appendix 1. Onion Model of cultural layers (Spencer- Oatey, 1999) 2. Coding Description for Grounded Theory Stage Purpose Coding Identifying anchors that allow the key points of data to be gathered Conceptualizing Collection of codes of similar content that allows the data to be grouped Categorizing Establishing broad groups of similar concepts that are used to generate a theory Theorizing Collecting explanations that explain the subject of the research
  53. 53.   53   3. Basic Information Sheet – Interview Partners Interview partner Industry Position Years in Vietnam (yrs) Previous experience in Asia (e.g. China, Japan) (YES, NO) 1 HR General Manager 5 Yes 2 Service (Advocacy) Associate 8 No 3 Chemicals/ Trade CEO 15 No 4 German Consulate Diplomat 3 Yes 5 Automobile General Manager 2 Yes 6 Renewable energy Associate 2 No 7 Trade, Gastronomy CEO & Founder 10 Yes 8 Banking General Manager 8 Yes 9 Banking General Manager 45 Yes
  54. 54.   54   10 Education General Manager 10 No 11 Banking General Manager 12 Yes 12 Education Associate 2 Yes 13 Automobile CEO 6 Yes 14 HR CEO 9 No 15 Engineering CEO & Founder 6 No 16 Postal Service CEO 9 Yes 17 Automobile General Manager 6 Yes Percentages Service (HR, Advocacy, Postal) = 24% GM = 41 % Average = 9,294 yrs. Excluding Interviewee #9 (german- Vietnamese): = 7,0625 yrs. YES = 65 % Automobile = 18% CEO = 35 % NO = 35 % Education = Associate =
  55. 55.   55   6% 18% Banking = 18% Diplomat = 6% Engineering & Energy = 4. Theorization/ Propositions Category Elements/ No. of Interviews mentioned in Power Distance High (12) Interview partner recommends decreasing power distance (5) Feedback to superior is low (4) Determines decision-making authority (10) Societal values (Confucius) are the reason (5) Uncertainty Avoidance Economic growth and will to participate in it are higher- risk behavior outside of work (5) Is low (4) They try to avoid uncertainties (6) Embrace change when added-value is seen (4) Fear to make wrong decisions and loose face
  56. 56.   56   (7) Is high (8) Collectivism A cohesive group is important (10) Loyalty is very low (10) Company is abstract/intangible (8) Pride to work for western company high (6) Individualists (5) Loyalty is low due to lack of well-educated labor (4) Loyal to superior (4) Family has highest priority (10) Loyalty is high (5) Career perspective matter of bonding (8) Paternalistic leadership Feedback to superior is low 4 Fear to make wrong decisions and loose face 7 They try to avoid uncertainties (6) Family has highest priority (10) Pride to work for western company high 6 Time dimension (Need management) Not enough to supply only good working conditions (3) Opportunity cost to switch for more money (5) Adoption to multicultural setting (2) Higher education degree (3) Self- development opportunities Career perspective matter of bonding (8)
  57. 57.   57   Pride to work for western company high (6) Increased turnover when better opportunity (14) Bonding through training (5) Cross- cultural code switching Education lacks international business focus (7) Previous experiences (9)

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