A Comparison of Leadership Styles between Chinese …cmr.ba.ouhk.edu.hk/cmr/webjournal/v16n2/CMR375E12.pdf · Web Journal of Chinese Management Review • Vol 16 • No 2 1 A Comparison

2013 年 5 月第十六卷二期 • Vol. 16, No. 2, May 2013

A Comparison of Leadership Styles between

Chinese and German Managers of Chinese

Companies in Germany

Rainer Busch

Robert McMahon

Alexander Unger

Christian May

Ya-Cheng Wang

http://cmr.ba.ouhk.edu.hk

Web Journal of Chinese Management Review • Vol 16 • No 2 1

A Comparison of Leadership Styles between Chinese and

German Managers of Chinese Companies in Germany

Rainer Busch

Robert McMahon

Alexander Unger

Christian May

Ya-Cheng Wang

Abstract

On the basis of a questionnaire measuring Chinese leadership styles, we tested the

possible differences between German employees working in Chinese companies in

Germany according to their perception of the leadership styles used by either Chinese or

German managers. The results revealed that the leadership styles of the Chinese

managers in Germany is perceived as problematic and could be improved. Genuine

Chinese leadership styles show many advantages in general, but seem to be highly

dysfunctional in Germany. A possible future direction will be discussed to improve the

understanding of Chinese leadership styles in a Non-Chinese environment.

Keywords: Cultural based leadership styles, Chinese and German Managers

_____________________________________________________

Rainer Busch, University of Applied Sciences Ludwigshafen, Germany

Robert McMahon, Dublin Institute of Technology (DIT), Dublin, Ireland

Alexander Unger, University of Applied Sciences Ludwigshafen, Germany

Christian May, University of Applied Sciences Ludwigshafen, Germany

Ya Cheng Wang, KPMG Advisory (China) Limited Xiamen Office, China


Introduction

The fact that it is now difficult to imagine a world without China, be it as a

manufacturing location, as an export and import market, or increasingly as an investor

that has developed an increasing interest in Chinese organizations, both in the business

world and in the academic arena.

To understand an organization, a reasonable place to start is its leadership. “In order to

perceive the opportunities inherent in new developments such as the internationalization

of Chinese companies, we must be prepared to interact with our new partners and learn

to appreciate them for what they are. This, is of course true of both sides, Germany as

the host country, and Chinese companies in their capacity as investors” (Sohm et al.,

2009). As a starting point for conquering the European market, Germany is becoming an

increasingly attractive location for more and more Chinese companies (Sohm et al.,

2009). According to these authors, more and more Chinese companies feel that there is

Chinese competition in Germany and active prize comparisons of German and Chinese

prizes by customers have an increasing relevance.

Figure 1: Chinese FDI in Germany and German FDI in China (German Federal

Bank, 2010).

Figure 1 shows that whereas Chinese foreign direct investment (FDI) in Germany rose

more than tenfold between 1989 and 2006, from 27 million Euros to almost 300 million

Euros, the extent of the German investment was still on a much higher level. Thus the

191

Prof. Dr. Rainer BuschBasics of International Management

Chinese FDI in Germany

(million euros)

1990

33

1995

61

2000

157

2006

295

88

811

5.600

12.669

German FDI in China

(million euros)

Chinese FDI in Germany/German FDI in China

Basics of International Marketing

2008

537

17.000

2009


volume of the German investment in China in the same period increased from 88 million

Euros to almost 13 billion Euros.

From the perspective of the Chinese companies, Germany is attractive on account of its

high technological level, its legal security, the quality of the workforce, its market clout,

and its central location in the EU and Europe. The largely positive and indeed respectful

image of Germany plays a part in the decisions to choose Germany as a location (Sohm

et. al., 2009). On the other hand, the image of the Chinese investors in Germany is often

quite different. There are one-sided reports of debates with profit-oriented investors from

abroad who sometimes paint a fairly negative picture that whips up emotions and raises

anxieties. Perhaps this image is the reason why many Chinese investors act in such an

inconspicuous manner. Examples of this include the 40 percent stake in the profitable

drugstore chain Rossmann, the majority stake in the successful fashion company Esprit,

and the acquisition of traditional German brands such as Goldpfeil and Junghans. This

negative picture is in stark contrast to the interest displayed as German industry

continues to feature in Chinese direct investment: “We also need them (the Asians) as

investors in Europe in a networked global economy, and there cannot be and there

should not be one-way streets” (BASF chief executive Hambrecht, who had just been

elected to the post of chairman of the Asia-Pacific Committee of German Business).

As far as the performance of Chinese managers when dealing with mergers and

acquisitions (M&A) in Europe, Lucks (2008) comes to the conclusion that two-thirds of

the announced deals stopped during the M&A process. In addition to this most of the

deals underperform even after a long time. The major reasons for this are:

Priority to buy cheap

Weak or narrow due diligence

Chinese management who are internationally inexperienced

Substituting and overruling the national managements

Transfer of factories to China – divesting instead of investing

The above mentioned internationalization aspects of the Chinese companies shows that

there are good reasons for having a systematic look at the major features of the Chinese

leadership styles.


Leadership, Management and Entrepreneurship

According to Northouse (2010) “leadership is a process whereby an individual

influences a group of individuals to achieve a common goal.” Leadership as a trait or a

characteristic differs from leadership as a process. Statements like, “he is born to be a

leader” or “she is a natural leader” are commonly expressed when referring to people

who take a trait perspective toward leadership. The trait perspective suggests that certain

individuals have special innate or inborn characteristics or qualities that make them

leaders, and that it is these qualities that differentiate them from non-leaders. Some of

the personal qualities used to identify leaders include unique physical factors (e.g.

height), personality features (e.g. extraversion) and other characteristics (e.g. intelligence

and fluency). To describe leadership as a trait is quite different from describing it as a

process (see Figure 2). The trait viewpoint conceptualizes leadership as a property or set

of properties possessed in varying degrees by different people. This suggests that it

resides in select people and restricts leadership to those who are believed to have special,

usually inborn, talents. The process viewpoint suggests that leadership is a phenomenon

that resides in the context of the interactions between leaders and followers, this makes

leadership available to everyone. As process, leadership can be learned (Northouse,

2010).

Figure 2: Different Views of Leadership (Northouse, 2010).

Leadership is a process that is similar to management in many ways. Leadership

involves influence, as does management. Leadership entails working with people, and so

Prof. Dr. Rainer Busch

International Objectives50

Trait

Definition of Leadership Process

Definition of Leadership

Leader

● Height

● Intelligence

● Extraversion

● Fluency

● Other Traits

Followers

Leadership

Leader

Followers

Interaction

Leadership

Different Views of Leadership

International Marketing Objectives


does management. Leadership is concerned with effective goal accomplishment, and so

is management. In general, many of the functions of management are activities that are

consistent with the definition of leadership (Northouse, 2010). Leadership is also

different from management. Whereas the study of leadership can be traced back to

Aristotle, management emerged at around the turn of the 20th

century with the advent of

our industrialized society. Management was created as a way to reduce the chaos within

organizations, to make them run more effectively and efficiently. The primary functions

of management, as first identified by Fayol (1999), were planning, organizing, and

controlling. These functions are still representative in the field of management today.

Figure 3: Functions of Management and Leadership (Kotter, 1990).

Kotter (1990) argued that the functions of “management” and “leadership” are quite

dissimilar (cf. Figure 3). The overriding function of management is to provide order and

consistency to organizations, whereas the function of leadership is to produce change

and movement. Management is about seeking order and stability; leadership is about

seeking adaptive and constructive change. Kotter (1990) contended that both

management and leadership are essential if an organization is to prosper. For example, if

an organization has a strong management without leadership, the outcome can be stifling

and bureaucratic. Conversely if an organization has a strong leadership without

management, the outcome can be meaningless or misdirected. To be effective,

organizations need to nourish both a competent management and a skilled leadership

(Northouse, 2010). "Managers are people who do things right and leaders are people

who do the right thing […] Management controls, arranges, does things right; leadership

Prof. Dr. Rainer Busch

International Objectives54

Management

Produces Order and Consistency Leadership

Produces Change and Movement

Planning and Budgeting

● Establishing agendas

● Set timetables

● Allocate resources

Organizing and Staffing

● Provide structure

● Make job placements

● Establish rules and procedures

Controlling and Problem Solving

● Develop incentive

● Generate creative solutions

● Take corrective action

Establishing Direction

● Create a vision

● Clarify big picture

● Set strategies

Aligning People

● Communicate goals

● Seek commitment

● Build teams and coalitions

Motivating and Inspiring

● Inspire and energize

● Empower subordinates

● Satisfy unmet needs

Leadership vs. Management

International Marketing Objectives


unleashes energy, sets the vision so we do the right thing" (Bennis & Nanus 1985).

Entrepreneurship is a relatively young field compared with its counterparts in

management. Some argue that entrepreneurship is merely leadership in a special context,

a context defined as the discovery, evaluation, and exploitation of an opportunity to

create future goods and services. Schumpeter’s view was that entrepreneurship was a

special case of leadership (social leadership) that was distinguishable from other forms

of leadership in terms of one who created a company rather than managing an existing

one (Schumpeter, 1949). Cogliser & Brigham (2004) use the company’s vision to

emphasize the difference between “Leadership” and “Entrepreneurship”: In the

leadership context vision is seen as the means by which the leader’s goals are

communicated in an inspirational fashion to their followers, and the leader takes various

actions intended to implement the vision (which provides a sense making component for

the followers). In the entrepreneurial environment, vision not only clarifies goals, but it

also inspires the constituents’ confidence in an uncertain future as well as marshalling

resources at a discount. This discounting factor of required resources is especially

relevant in the entrepreneurial setting, since it is unlikely that the start-up could create

the advantages necessary to launch and grow the venture were they to pay full price for

their resources.


Procedure

The aim of our study includes an initial preliminary analysis of the possible differences

in the perception of German employees concerning the leadership styles of their Chinese

and German managers in companies that are located in Germany. All of the employees

who participated in the survey were German, they all worked in Chinese companies that

were located Germany (in Chinese possession or Chinese spin-offs in Germany). The

data was gathered through a developed questionnaire (Unger et al., 2011, Busch et al.,

2013) which incorporated four Chinese leadership styles. These four assumed leadership

styles were Daoistic leadership (DL), Confucianistic leadership (CL), Legalsistic

leadership (LL), and Paternalistic leadership (PL). All four styles were based on four

central dimensions of Chinese culture (House & Javidan, 2004; Hofstede, 1980;

Schwartz, 1994; Smith & Peterson, 1995; Inglehart, 1997; Fan, 2000).

During the first stage a group of German employees answered 12 questions about how

they perceived the leadership styles of their Chinese managers (n = 50). In the second

stage the same group answered questions about the perceived leadership style of their

German managers (n = 40)1. Then during the third stage a new group (n = 40) also

indicated their perception of the leadership styles of their German managers. This group

was only questioned about the perception of their German managers. We introduced this

third sample group to ascertain that their answers will not be biased (e.g. contrast or

assimilations effects) by the fact that they have filled out the questionnaire about their

Chinese managers before, as the group in the second stage did.

The participants of the survey were recruited through close contacts of the University of

Applied University Ludwigshafen who work for the companies in Germany. All of the

data from the used sample refers only to the subsample employees who evaluated their

Chinese managers and the employees who evaluated their German managers (“others”).

The third subsample, those who evaluated their German managers (“same”), was not

considered in the following description of the sample, because these participants already

took part in a first round of the survey, when they evaluated their Chinese managers.

Size of the companies ranged from 3 up to 100000 employees (MEMPLOYEES = 174.58).

55,6% have less than 10 employees and the remaining 44,4% ranged between 300 and

1000000 employees. Consequently small as well as huge companies were included in

the sample. Depending on the different definitions (OECD, 2005) of small and medium-

sized enterprises (SME’s) the sample features 55,6% SME’s (vs. 44,4% larger

companies, if SME’s is defined as less than 250 employees) or 58,69% SME’s (vs.

41,31% larger companies, if SME’s is defined as less than 500 employees). The

1 10 participants could not take part in the second wave of the survey because they only had Chinese

managers.


branches of the companies were itemized as following: Manufacturing (37,7%),

telecommunication (41,6%) and various others (20,8%). 70% of the participants were

male (30% female). Their age distribution was: 5,6% between 20 and 30 years old,

48,9% between 31 and 40 years old, 42,2% between 41 and 50 years old and 3,3%

between 51 and 60 years old. According to their level of education, all of the participants

feature at least a bachelor degree or higher. Their function subdivided into the following

types: Administration (16,7%), human resources (2,2%), finance (17,8%), marketing and

sales (41,1%), procurement (10%), production R&D (11,1%) and logistics (1,1%).

Each leadership style was measured by three items, indicating as appropriate in former

studies (Unger et al., 2011; Busch et al., 2012). Thus the entire questionnaire consists of

12 items covering all of the hypothesized four leadership styles. The questionnaire is

documented in Appendix A (English version) and Appendix B (Chinese version). To test

for possible differences we used SPSS as an analysis tool and conducted three separate

MANOVA’s2: 1.) Chinese managers vs. German managers (same group), 2.) Chinese

managers vs. German managers (other group) and 3.) German managers (same group) vs.

German managers (other group).

2 MANOVA (Multivariate Analysis of Variances) is an extended analysis tool of an ANOVA (Analysis of

Variances) which enables us to test the influence of one or more independent variables, on more than just one dependent variable. In both cases it tested if significant main effects as well as interactions could be observed or not on the basis of clarified square sums.


Results

The first MANOVA confirmed highly significant main effects for DL (F(1 ,87) = 153,52,

p = .00; CL (F(1 ,86) = 248,57, p = .00 and PL (F(1 ,87) = 125,16, p = .00. No

significant effect was observed for LL (F(1 ,87) = 0,26, p = .61. Cf. for the first

MANOVA also see Table 1 and Table 2.


Figure 4: The Index of leadership styles for all four of the investigated types over

all three sample groups.

All of the following mean values (M’s) refer to the respectively calculated additive

indexes based on the items belonging to the four hypothesized leadership styles.

(MLL_CHINESE = 11, 28 vs. MLL_GERMAN = 11,48). So we could conclude that DL and CL

were perceived significantly less as leadership styles of the Chinese managers (MDL =

7,68; MCL = 8,12) compared to the German managers (MDL = 13,08; MCL = 13,45). The

opposite pattern was revealed according to PL: The leadership styles of Chinese

managers (MPL = 16,08) were perceived significantly more pronounced to be a

Paternalistic Leadership (PL) when compared to the German mangers (MPL = 12,1). Cf.

for an overview of all of the mean values also see Figure 4: On the x-axis we have all

three subsamples and the y-axis shows the corresponding mean values of the additive

indexes of all of the four issued Leadership styles. High values indicate, that the

leadership style has a high prevalence and is strongly perceived, whereas low values

indicate the opposite. Each leadership style ranged from 3 (minimum) to 21 (maximum).

The second MANOVA “Chinese Mangers vs. German Managers (other group)”

confirmed the same pattern of differences as in the first MANOVA (cf. Table 3 and 4):


Significant main effects for DL (F(1, 88) = 13,24, p = .00) and CL (F(1, 88) = 339,91, p

= .00), which indicated higher values for the German managers (MDL = 15,53; MCL =

13,68) compared to the Chinese Managers (MDL = 7,68; MCL =8,12), again no difference

according to LL (F(1,88) = 0,72, p = .63; MCHINESE = 11,28 vs. MGERMAN = 11,1), and

one significant main effect for PL (F(1,88) = 228,55, p = .00), which indicated higher

values for the Chinese managers (M = 16,08) compared to the German managers (M =

11,55).

Finally the third MANOVA (cf. Table 5 and 6) revealed that – as expected – no

significant differences were observed for DL (F(1,77) = 1,01, p = .32), CL (F(1,77) =

0,28, p = .6) and LL (F(1,77) = 1,14, p = .29. Only for PL we observed a nearby


significance (F(1,77) = 2,12, p = .15; MGERMAN_SAME = 12,10 vs. MGERMAN_OTHER = 11,55)

but only at the 10% level, which hence could also be neglected. We can summarize that

DL and CL is perceived as low for Chinese managers and high for German managers,

whereas the reverse pattern was observed for PL (high for Chinese managers and low for

German mangers) and no difference between Chinese and German mangers was

observed for LL.


Limitations and conclusions

The most critical point of our analysis is that those leadership styles which were

presumably more positive when evaluated by the German employees is less pronounced

by the Chinese managers working in Germany. We speculate that Daoistic as well as

Confucianistic leadership styles have some partly complementary equivalents in types of

Western participative leadership styles. We further assume that Paternalistic as well as

Legalistic leadership styles were complementary with Western Authoritarian leadership

styles, which were more disliked by German employees.

These assumptions, which seem to be quite reasonable, should however be tested in

follow-up studies respectively as part of further research in this domain. A second

limitation which has not yet been clarified sufficiently is the question of how the

difference in perception has come into being. Two possibilities have to be considered:

First it is possible that the Chinese Managers indeed show other leadership styles, when

they operate in an international environment respectively in Germany in the definite case

of our study. The second explanation would be that German employees do not accurately

perceive these leadership styles, and due to that the immense possible advantages of the

Daoistic and Confucianistic leadership styles could not be deployed. Combinations of

both possibilities could not yet be ruled out. However, what we could clearly conclude is

that our data suggests that the fit of the leadership styles of the Chinese managers with

the perception of their leadership styles by the German employees is not optimal and

needs further improvements. Cultural differences as well as organizational factors need

further consideration for a better understanding of the problem. We assume that the

Chinese managers needs more sensitivity towards the differences of their Chinese and

German employees (we also assume that the same would be the case for German

managers, respectively European managers, working in China or other Asian countries,

although this was not in the scope of our study). Our findings indicate that more

knowledge about the leadership styles of the Chinese mangers is required. This concerns

practitioners as well as scientists to the same extent.


References

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Values. London: Sage.

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political change in 43 societies. Princeton, NJ: Princeton University Press.

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York, NY: The Free Press.

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when expanding into 1st tier markets. Retrieved from www.merger-mi.de.

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Sage.

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University Press.

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values. In Kim, U., Triandis, H. C., Kağıtçıbaşı, Ç., Choi, S-C., & Yoon G. (Eds.),

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Appendix A: The English Version of the Questionnaire

Items measuring perceived leadership styles

(7-point Likert scale: 1 = I did not experience it at all; 7 = I experienced it very often)

Questionnaire of perceived leadership styles (modified from Unger et al. 2011)

What kind of leadership characteristics have you experienced yourself in your professional

lifespan?

1 (DL) Leaders possessed the quality to keep a low profile and influenced by this style. 1--2--3--4--5--6--7

2 (DL) Leaders could adjust themselves to any environment and situation. 1--2--3--4--5--6--7

3 (DL) The style of the leaders was gentle and soft, but also persistent and powerful. 1--2--3--4--5--6--7

4 (CL) Leaders were perseverant, ambitious and optimistic. 1--2--3--4--5--6--7

5 (CL) Leaders appreciated self-examination and corrected mistakes. 1--2--3--4--5--6--7

6 (CL) Leaders shaped the character of followers by role modelling, mentoring and reinforcing. 1--2--3--4--5--6--7

7 (LL) If a subordinate was incompetent with respect to his duties, it was a matter of course that 1--2--3--4--5--6--7

the leader dismissed him.

8 (LL) Once a regulation was announced, it was be applicable to everybody in the company 1--2--3--4--5--6--7

without any exceptions.

9 (LL) Leaders insisted on high performance standards and did not tolerate low performance. 1--2--3--4--5--6--7

10 (PL) Leaders expected obedience. 1--2--3--4--5--6--7

11 (PL) Leaders insisted on making final decisions on key issues. 1--2--3--4--5--6--7

12 (PL) Leaders guarded key information tightly. 1--2--3--4--5--6--7


Appendix B: The Chinese Version of the Questionnaire

您经历过的领导风格具有哪些特点？

我从未经历过 = 1

我经常经历到= 7

1 (DL) 领导者具备保持低调的基本素质，并因为这种作风对他人产生了一

定的影响力。 1--2--3--4--5--6--7

2 (DL) 领导者能够很灵活地调整他们自己去适应任何不同的环境或者情境，

就好像水能够适应任何容器一样。 1--2--3--4--5--6--7

3 (DL) 领导者具有温文尔雅，同时又坚持己见和雷厉风行的领导风格。 1--2--3--4--5--6--7

4 (CL) 领导者能够坚持不懈、积极进取和保持乐观。 1--2--3--4--5--6--7

5 (CL) 领导者能够自我批评和纠正错误。 1--2--3--4--5--6--7

6 (CL) 领导者通过塑造榜样、悉心指导和严格训练来培养和塑造追随者的素质。 1--2--3--4--5--6--7

7 (LL) 如果下属不能够很好地胜任他/她的职位，领导者认为解雇调离这名下

属是理所当然的事。 1--2--3--4--5--6--7

8 (LL) 一旦一项规则被制定和宣布了，领导者都会将它适用于公司中的任何人，

无一例外。 1--2--3--4--5--6--7

9 (LL) 领导者坚持企业内部的高标准要求，不能够容忍不佳的表现。 1--2--3--4--5--6--7

10 (PL) 领导者要求员工绝对的服从。 1--2--3--4--5--6--7

11 (PL) 领导者坚持对一些关键的问题做最后的决策。 1--2--3--4--5--6--7

12 (PL) 领导者对于企业的一些关键信息进行严密的控制。 1--2--3--4--5--6--7

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