The conflict issue in international business and the

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Procedia - Social and Behavioral Sciences 41 (2012) 100 – 107

International Conference on Leadership, Technology and Innovation Management

The conflict issue in international business and the global leadership Kürşad Zorlu, PhDa, Ümit Hacıoğlu, PhDb, b a

Assitant Professor, AhiEvranUniversity, Kirsehir, 40100, Turkey Assistant Professor, BeykentUniversity, Istanbul, 34500, Turkey

b

Abstract Global economic crisis erupted the world economy in the mid-2008 has challenged managers, strategists and scholars to question how to sustain long term competitive business strategy. The conflict in international organizations also challenges competitive strategies, disseminating the failure in group interaction, synergy and productivity. In this context, solving conflict at international business organizations via global leadership styles will contribute into the development of organizational commitment, job satisfaction and participation. Hence, the role of global leadership in international organizations underpins the success of long term stability and success. In this study, it is aimed to draw a theoretical framework of the global leadership and its role in conflict resolution in international business. This study also demonstrates that (1) there is a linkage between the level of conflict and group interaction, satisfaction, and performance, (2) there is the linkage between long term organizational success and group interaction, learning skills and leadership styles, and (3)Global leadership is a key success factor for solving conflict in multicultural businesses and sustains long term business success. Keywords:Conflict, International Business, Global Leadership, Group Performance

2011 Published by Elsevier Ltd.Selection and/or under of responsibility of International ©©2012 Published by Elsevier Ltd. Selection and/or peer reviewpeer-review under responsibility The First International Conference on Leadership, Technology and Innovation Management Conference on Leadership, Technology and Innovation Management

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1877-0428 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of The First International Conference on Leadership, Technology and Innovation Management doi:10.1016/j.sbspro.2012.04.014

Kürşad Zorlu and Ümit Hacıoğlu / Procedia - Social and Behavioral Sciences 41 (2012) 100 – 107

1. Introduction In today’s business world, sustaining effective teamwork, job satisfaction, efficiency, productivity, motivation, coordination and synergy throughout business units, functions and team members, is one of the major challenges for long term success in international business organizations.Moreover, exogenous factors in multiethnic society in which international organizations operate, affect our way of behavior and attitude causing conflict within organization. Conflict is the major barrier for effective group work and integration, and leaders have preliminary role in conflict resolution. In literature, studies illustrated the linkages between long term organizational success and group interaction, learning skills and leadership styles. Moreover, studies examining the role of effective management and leadership styles in high performing organizations, demonstrated the linkages which depend on strong organizational culture, leadership, group learning and interaction [1], [2], [3], [4], [5], [6], [7], [8] In today’s business world, the shift in traditional working methods towards globally accepted methods facilitated the change in leadership required by organizations. The globalization process and the nature of competition challenge organizations to own specialized and professional leaders having individual and professional talents. Rapid change in the circuit of communication technologies makes it difficult to diversify both concepts of leadership and global leadership. Within the framework of leadership, our study focuses on (1) the linkage between conflict and group interaction, (2) the role of leadership in international business (3) leadership styles, and (4) the role of global leadership in conflict resolution. In this context, study begins by a literature review of conflict and global leadership, continues by drawing a theoretical framework for the role of global leadership in conflict.

2. Conflict Issue in Organizations 2.1. Conflict in literature In literature, there is a debate on the classification of Conflict studies. In fact, the conflict is an interdisciplinary issue while the conflict occurs in actual life among individuals, societies, businesses, governmental organizations and states. There are two major camps studying the nature of conflict in literature. Scholars in the first camp are influenced by international relations and political economyadvocating that the nature of conflict is related to ethnicity, cross cultural disputes, religious differences and socio economic inequality [9], [10], [11], [12], [13],[14], [15], [16], [17], [18]. Scholars in the second camp have pledged their loyalty to management and organizational behavior studies insisting that conflict is individual and organizational issue affecting group interactions and firm performance in long run [19], [20], [21], [22], [23], [24], [2], [25], [26]. Conflict issue at organizational level has been also considered seriously as subject to conflict management studies, multicultural studies and relationship-oriented leadership studies [4], [27], [28], [29], [30], [31], [8]. Scholars address that the conflict as an organizational issue has effects on productivity, intra-group communication and individual satisfaction [32], [33], [34]. Scholars also argue

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that the nature of conflict is the major problem for the success of decision making process while standard business operations are prone to failure in the absence of leadership. 2.2. Conflict in Group Interaction, Satisfaction and Performance In literature, researches and empiric studies covering organizational behavior and management issues, have established a general framework for the conflict management and sustaining long term group interaction among members. The level of employee satisfaction and conflict are associated with negative correlations. As the level of conflict among task oriented groups escalates, then satisfaction of task oriented group members significantly degrades. Satisfaction was significantly lower in conflicting groups related to equity issues, task-related goals and objectives, and personality differences. Moreover, the consensus based groups are performing much better than the conflict based groups. Conflicts in relations among group members also decrease perceived productivity [24], [26]. [35], [36], According to Jehn and Bendersky, the level of conflict among individuals within a group varies in accordance with multiple conditions. Therefore, examining the negative effects of conflicts requires a contingency perspective [26]. Amongst the negative effect of conflict on group and business performance, some studies suppose that there can be a positive effect of conflict in group performance in some cases (Table 1). According to Jehn and Bendersky, organizational conflict at team level has also positive linkage with performance. Task oriented conflicts in groups can increase the team performance and the groups that moderate to high levels of task oriented conflicts had higher performing individuals and higher overall group performance than groups with low levels of task oriented conflict [26] 2.3.Relationship Based and Task Oriented Conflicts The classification of organizational conflicts varies in consistent with different studies and scholars. From macro to micro perspectives, the classification efforts enumerate different factors from social level to the individual level. However, just only the efforts of change in globalization process result in conflicts at organizational level. Moreover, conflict basis stem from frustration with specific demands, needs and expectations. Groups in bargaining process also experience the conflict with other groups in business organizations. According to Pondy, there are three main organizational conflict dimensions: conflicts related to bargains, bureaucracy and system [37]. Bargaining conflicts within organization are linked to the allocation of resources, hierarchy in organizations. System conflicts are based on administrative issues and coordination problems (stem from ineffective management and lack of leadership). According to Jehn, K &Bendersky C., there are two major types of conflicts: cognitive and goal oriented conflicts. Cognitive conflicts involve disagreement over interpretation and goal oriented conflicts are interpersonal disagreements focusing on competition for reward systems [26]. Goal oriented conflicts are people centered conflicts operationalized by unequal workloads, struggles over leadership, and personal differences. Task oriented conflict conflicts are based on procedural matters and ideational matters relating to ideas, goals and values associate with substantive content of the tasks [26]


Table 1: Intergroup Conflict in Organizations and its echoes at individual and group levels [26] Conflict Type Individual Level Group Level Distraction Misspent time/effort Relationship Based Conflict

Limits cognitive process Decreases ability to assess new information Decreases commitment

Decreases cooperation and goodwill Decreases communication and understanding Decreases group focus on resolving Limits the access to new information

Increases effort Increases divergent cognitive process Task Oriented Conflict

Enhances task focus Increases anxiety and tension

Increases divergent opinions, interpretations and viewpoints Increases critical evaluation and assessment of alternatives Increases communication, shared information and problem identification

3. Global Leadership and Conflict In today’s business world, the shift in traditional working methods towards globally accepted methods facilitated the change in leadership required by organizations. In this competitive edge organizations must develop a global strategic vision. The globalization process and the nature of competition challenge organizations to own specialized and professional leaders having individual and professional talents. The impacts of globalization on leadership are (1) learning behavioral dimensions required by different cultures, (2) farsightedness,(3) being proactive, (4) managing disputes with cooperation, and (5) leading multicultural teams [38], [39]. In literature, studies illustrated the linkages between long term organizational success and group interaction, learning skills and leadership styles. Moreover, studies examining the role of effective management and leadership styles in high performing organizations, demonstrated the linkages which depend on strong organizational culture, leadership, group learning and interaction [1], [2], [3], [4], [5], [6], [7], [8]. Studies in literature about the basic principles of global leadership have been intensified over management, managerial competencies, globalization and the nature of leadership issues. Although this consensus in literature, it is possible to see that the concepts of management and leadership are interchangeably and confusingly used in some cases. However, these concepts are quite different. Leaders define objectives and motivate and coordinate organization units, team and individuals with emotional and conceptual talents without coercion. On the other hand, managers choose the best ways and methods to reach organizational goals allocating resources among business functions with authority and discipline. In literature, the situation of leaders within organizations is still a confusing issue. Generally, top managers and CEOs are identified as leaders. However, workers at low ranks might have leadership talents. In some cases, leaders do managerial tasks as well as managers can act as leaders. However, in the context of functionality, the prior role should not be underestimated. Moreover, rapid change in the circuit of communication technologies makes it difficult to diversify both concepts of leadership and global leadership. In the process of 2008 Global Economic Crisis, any measures taken globally became more challenging issue for the local organizations. Hence, the effect of decisions taken by global leadership, on local sized enterprises must not be underestimated [40], [41].

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3.1 The Features of Global Leadership There are two major styles of leadership: relationship oriented and task oriented leadership. The leadership with people oriented behavior requires leaders to be considerate on subordinate relations, team relations, respecting team member values, ideas and feelings, and establishing mutual trusts. Moreover, considerate leaders are friendly, provide open communication, develop teamwork and are oriented toward their subordinates [8], [42]. With the role of relationship oriented leadership style, it is aimed to succeed long term planning and implementing process with contribution of individuals. Schoenberger, in his study, defined the major step to manage cultural crisis of the firms. It relies on the creation of corporate culture and synergy. Having strong corporate culture requires visionary leadership with relations oriented skills, creating group synergy, resolving conflict, and building a learning organization [27],[29]. Table 2: Global leadership decision model [43], [44], [45]. Leadership Variables

Basic Objectives

Job variables (e.g., responsibilities, performance expectations)

Directive

Fairness in wage policy

Interpersonal dynamics (e.g., moment-tomoment interactions),

Supportive

Leadership Competencies

Situational Variables

Desired Mental Characteristics Optimizm Self Regulation Social Judgment Skills

Equality of opportunity. Collectivity

Empathy Motivation to work internationally Cognitive skills The Behavioral Competencies Social Skills

Team context variables (e.g., boss, peers, direct reports),

Organizational culture variables (e.g., norms, history, strategies),

Perception of Justice

Contingent Reward

Consistency in Reward and Punishment System Perception of Common Identity

Contingent Punishment

Innovation

Charisma

Promoting creativity

Participation

Contribution

Networking Skills Knowledge Experience

The Core Competencies

Country culture variables (e.g., use of power, individualism, respect for others).

Resolving Disputes Managing Diversities

Self Awareness Engagement in Personal Transformation

Balanced Authority Unity Of Purpose

Inquisitiveness

Global leadership must have different features than these two dimensions of leadership, and must illustrate result oriented behaviours. In literature, there are many studies including characteristic features of global leadership. Generally, studies place emphasise on the global leaders’ attitude of perceiving and harmonizing diversities easily and enumerates some cognitive, behavioural and conceptual characteristics: openness, honesty, feasibility, having continuous learning and predisposition to


communication [46],[47],[48],[49],[50],[51],[52]Jokinen defines the global leadership competencies and variables in his systemic model in table 2. 3.2 The role of Global Leadership in Conflict Resolution The role of international business in context of placement and functionality must be dynamic and adoptive to change. It is inevitable to stand out from conflict in organizations under the effect of tremendous and fastest changes. Therefore, those organizations must implement managerial strategies to prevent conflict inside. As mentioned before, the positive role of the conflict in teamwork also should not be underestimated.For international business organizations, political and socio-economic environment of organizations affect the resources for conflict in international businesses. This effect is transmitted via organizational culture.The main basis of organizational conflict rely on the differences in purposes, perceptions, personality, purposes, and ambiguity, communication problems and the lack of resources. Moreover, perception on wage and status inequality, and oppositions against ethnicity, sexuality and physical appearance, and exclusion of others in the context of social and political environment become the zones of the conflict for organizations or multicultural groups [53], [54],[55]. Multicultural businesses have strong hinterland in comparison with stereotype cultural organizations. In order to stimulate this effect in competition, organizations need leadership skills at top of organizations. It is also possible to see heterogenic organizational structure in terms of different variables. Among them, individual differences (ethnicity, language, appearance, sexuality, personality and ideology) are important variables influencing the way in which leaders behave. Shared leadership in heterogenic organizational structure is effective against conflicting situations [56]. Dorfman, et al. in his study covering 5 different countries from East to West, demonstrates that there is a tendency in behavioural inconsistency for the leaders from different cultures and different societies[57]. The study also illustrated that there is a linkage between shared leadership style, commitment and satisfaction in Asian countries while there is no linkage among them in Western countries.It is difficult to generalize that the leadership style with participatory approach is absolutely convenient with every organizations. It is possible to see participation at general for Japanese organizations under the effect of national culture. Organizations under time constraints sometimes prefer adopting current situations to leadership instead of changing leadership styles. For instance, it is not expected to see the change in behaviours of an authoritarian and coercive manager towards much compromising and participatory styles [58]. From this point, it is more rational to define Global leadership behaviour against conflict within the framework of contingency view. Figure 1illustrates the interaction between global leader, culture and conflict has been illustrated. It is also demonstrated that the organizational conflict in international businesses stems from ambiguity, clash of interest, diversities and imperfection-exaggeration. The Culture is the most important platform that defines the roots of the conflict and the global leadership behaviours. Hence, global leaders must have enough knowledge on and internalize the national and organization culture. In this context, creation of a strong corporate culture and social synergy within corporation underpins the success of long term stability and success for international businesses. Figure 1: Global leadership, culture and organizational conflict model [59]

Interest - Individual - Group - Interdepartmental

Ambiguity - Task - Command - Responsibility -Management style

Imperfection and Exaggeration - Authority - Democracy - Communication

Sharing - Wage - Promotion - Reward

Diversities - Purposes - Perceptions - Personal

Organizational Conflict

Culture

Global leadership behaviour -Directive, -Supportive -Contingent

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5. Conclusion Global economic crisis erupted the world economy in the mid-2008 has challenged managers, investors and individuals to question about sustainable long term business success. The conflict in international business organizations affects group interaction, synergy and productivity. In some cases, task oriented conflicts in organizations increases motivation while relationship oriented conflict affects individual interactions and group performance. The main basis of organizational conflict rely on the differences in purposes, perceptions, personality, purposes, and ambiguity, communication problems and the lack of resources. Moreover, perception on inequality in wage and status, and oppositions against ethnicity, sexuality and physical appearance, and exclusion of others in the context of social and political environment became the zones of the conflict for organizations or multicultural groups. Effective management and leadership styles on high performing organizations are linked with strong organizational culture, group learning and interaction.In today’s business world, the shift in traditional working methods towards globally accepted methods facilitated the change in leadership required by organizations.The globalization process and the nature of competition have been challenging organizations to own specialized and professional leaders having individual and professional talents. Rapid change in the circuit of communication technologies makes it difficult to diversify both concepts of leadership and global leadership.The impacts of globalization on leadership are (1) learning behavioral dimensions required by different cultures, (2) farsightedness,(3) being proactive, (4) managing disputes with cooperation, and (5) leading multicultural teams. As a conclusion, organizational conflict in international businesses stems from ambiguity, clash of interest, diversities and imperfection-exaggeration. The Culture is the most important platform that defines the roots of the conflict and the global leadership behaviors. Hence, global leaders must have enough knowledge on and internalize the national and organization culture. In this context, solving conflict at international business organizations via global leadership styles will contribute into the development of organizational commitment, job satisfaction and participation. Hence, the role of global leadership in international organizations underpins the success of long term stability and success. References [1] Peter, M (1996) What is Strategy? Harward Business Revies, 74 (6), pp.61-78 [2] Bass, B.M. (1990), Handbook of Leadership: A Survey of Theory and Research, New York [3] Schein, E.H.(1993), On Dialogue, culture and Organizational Learning, Organizational Dynamics, Vol: 22, No:2, pp. 40-51 [4] Yukl, G. (2002) Leadership in Organizations, fifth Ed. Prentice Hall Inc., New Jersey. [5] Eren, E., Zehir, C. and Özşahin, M (2004) Change Management Effectiveness during the crisis: Benchmarking Industries and Firms in terms of Change Management Applications and Firm Performance, GBTA, , Cape-Town, South Africa [6] Mahrokian, S. Chan, P., Mangkomkanok, P. and Lee, H. (2010), Corporate Culture: Review of Business Reseach, Vol. 10, N.1 [7] Reed, L., Cohen, D.V. and Colwell,S.R. (2011), A new Scale to measure Executice Servant Leadership [8] Özşahin, M, Zehir, C. and Acar, A.Z. (2011) linking Leadership style to firm performance: The mediating effect of Learning Orientation, 7th Internatinal Strategic Management Conference, France [9] Waltz, K. (1954), Man, the State, and War: A Theoretical Analysis, Columbia University Press, Newyork. [10] Boulding, K.E. (1963) Conflict and Defence: A general Theory, Michigan. [11] Schelling, T.C. (1980), The Strategy of Conflict, USA [12] Rubin, J.Z., Pruit, D.G., and Kim, S.H. (1994) Social Conflict: Excalation, Stalemate and Settlement, 2nd Ed., McGraw-Hill [13] Mayer, B., (2000) Dynamics of Conflict Resolution: A practioners Guide: San Francisco: Jossey- Bass Publishers. [14]Collier, P. (1999), On the Economic Consequences of Civil War, Oxford Economic Papers [15]Collier, P.,Hoeffler, A. and Rohner, D.(2006) Beyond Greed and Grievance: Feasibility and Civil War, Afr.Econ. WP.10. [16]Collier, P and Hoeffler, A. (2004), Greed and Grievance in Civil War, Oxford Economic Papers, 56 [17]Collier, P., Hoeffler, A. and Soderbom, H. (2007) Post Conflict Risks, , Oxford Economic Papers. [18]Orhan, O.Z., Zehir, C. and Hacıoğlu, Ü. (2009) Çatışma Riskinin Ekonomik Analizi, Stratejik Araştırmalar Dergisi, İstanbul, [19]Litterer, J.A. (1996) Conflict in Organization: A Re-examination, Academy of Management Journal, Vol, 9. N. 3, pp.178-186


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