Impact of Power Distance: Comparison Among Multi National Companies

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Running Head: IMPACT OF POWER DISTANCE

Impact of Power Distance:
Comparison among Multi-National Companies
Febian
Western Kentucky University

GRST597
Nevil C. Speer, PhD, MBA
May 8, 2009
Table of content
I. Introduction………………………………………………………………………….. 3 II. Impact of power distance toward facework strategies………………………………..7 a) The correlation between power distance and Organizational changes…………..10 b) The correlation between power distance and injustice…………………………. 11 c) The correlation between power distance and individualism/collectivism……….13 d) The correlation between power distance and self-management…………………16 III. Impact of power distance toward decision making………………………………….16 a) Face-to-face participative decision-making……………………………………..19 b) Collective participative decision-making………………………………….…….20 c) Paternalistic participative decision-making……………………………………..22 d) Pseudo participative decision-making…………………………………………...23 IV. Impact of power distance toward effective leadership……………………………....24 V. Conclusion…………………………………………………………………………...27 VI. References…………………………………………………………………………...30

Introduction
Imagine a convenient 21st century office place with a high salary, a cozy chair and working desk, the latest office computer with all high technology systems. Everything you could ask for except nice subordinates who are willing to co-operate with you and a boss who is willing to treat you equally because you do not know and understand how to deal with the culture beyond this situation. I believe that this situation would probably happen to many employees in the world. This is the situation for Brianna Loftus who works for a multinational company Tetra Pack, who just got promoted but has to move to another country whose culture is totally different from hers. A little story about this company, Tetra Pak founded in 1951 is a multinational food processing and packaging company of Swedish origin with over 150 branch offices across the globe. Tetra Pack should know how to manage and develop its management and also how to treat its employee depending on where the office is located. It is because management cannot be separated from national culture. What happened to Briana could happen to employees in other multi-national companies in the world. According to Hofstede (1983) there are three reasons caused why nationality is important to management. The first reason is political because Nations are political units, rooted in history, with their own institution: forms of governments, legal system, labor and employer’s association system. The second reason why nationality is important for management is sociology because nationality has a symbolic value to citizens. And, the last reason why nationality is important for management is psychological because thinking is partly conditioned be national culture factors. Therefore, there is a relationship between management and national culture and it has become clear that national and even regional cultures do matter for management. The convergence of those factors defines, as outlines by Hofstede (1983; 2001), the concept of power distance: The relationship between superior and a subordinate in a hierarchy, including its values component, a measure of the interpersonal power or influence between the superiors and their subordinates as perceived by the less powerful of the two, subordinates. In an organization, the level of power distance is related to the degree of centralization of authority and the degree of authority leadership. This relationship shows that centralization and autocratic leadership are rooted in the mental programming of the member of a society, not only of those in power but also of those at the bottom of the power hierarchy. Hofstede (1983) explains that some countries...
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