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Intelligence and Transformational Leadership

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1.1 Introduction

In order to ensure effective cross-cultural management, a wide range  of approaches has been used in many multinational organizations in managing challenging issues facing management, as well as leadership of organizations (Behaviour Effectiveness Research Program, 2007).

Currently, there are a lot of people from various backgrounds who come together to work in the same organizations. These people have different perceptions concerning certain ideas, and they require to be managed differently. Also, there is a need to ensure leaders, such as managers and executives, to use the right leadership approaches to bring the unity among employees and leaders (Coleman, 2012). This is because a current paradox of globalisation has resulted into the need to ensure cultural intelligence and transformational leadership are implemented in conducting the affairs of any multinational institution to remain competitive in the global market (Das, 2004). There are currently high levels of complexity of working pace despite the inability of leaders to execute their powers across borders, as well as areas of different time zones and to conduct the outsourced contracts (Donahue, 2011). They have been forced to rely on networks of quality control, ensuring cost effectiveness of their surroundings, as well as make quick decisions to ensure the responses to the expectations of stakeholders of different markets are positive.          

Cultural intelligence and transformational leadership have been identified as methods that can be used to ensure organizations are managed effectively, and cultural differences are used to the advantage of the organizations (Society for Pentecostal Studies, 1994). Cultural intelligence has been defined as the ability to interact and communicate effectively with people of different cultures through the use of target practices aiming at achieving the intended purpose. It is regarded as the quality that makes a person able to interact with people of different cultures (Storey, 2009). It also involves the ability to tolerate ambiguity, being flexible towards the attitudes and cultures of different people, as well as suspending judgements until a range of cues are developed. This intelligence can be acquired by working in a foreign country, going for vacation abroad, or involving in experiences, such as missionary work (Reddy, 2007). Cultural intelligence is considered a significant quality in ensuring a person interacts with colleagues who are of different nationalities and cultures. The major ways in which this intelligence can be achieved is through training, expatriation, and global leadership (Prasad, 2004).

The idea of transformational leadership is also regarded significant in managing people of different cultures and backgrounds in any organization. This is a relationship between a leader and a follower in a manner that results into the improvement of the followers’ attitude towards the organization and leaders in particular (Singh-Sengupta, 2007). It also ensures a follower is motivated to work effectively and contribute considerably towards the achievement of the goals of the organizations. It is a quality that ensures a leader makes the right leadership decision that contributes to the improvement of their organizations and employees develop trust in him / her. This relationship may take place in two forms: transactional and transformational. In cases where a leader goes according to the requirements of the followers, the leadership approach is simply an exchange of process and is referred to as transactional leadership (Pattanayak, 2002). However, when a leader tries to bring changes in the motives and goals of his / her followers, the leadership practice is referred to as transformational leadership (Koop,  Pearson& Schwarz, 2001). This type of leadership is regarded significant in meeting regional preferences based on location of target areas of the company’s operations (Prasad, 2004). The ability of most Indians and Eastern leaders to unify people during transactions is what brings the difference between East and West. In the Indian community, people are less concerned about what a person thinks provided their behaviours embrace the recommended norms (Sahi, 2008). This quality enables them operate in a number of cultures to their advantage. The ability to exercise this kind of leadership depends on the structure of an organization. This is because the organizational structure plays an essential role in distinguishing the levels of specialisation, standardization, and formalisation (Sarin, 2010). These functions of an organization contribute towards the level of implementation and observation of rules in an organization.

Transformational leadership is also dependent on the values that are considered paramount in an organization. An organization that has transformational values makes its employees loyal to the organization and contribute positively towards its goals (Prasad, 2004). These management principles have ensured that countries in Eastern Europe and the Middle East continue to gain more revenues despite employing people of different cultures in the same company. The existence of virtual technology has ensured the building of cultural intelligence through immersion into experiences of various people around the world (Nilakant, 2006). This has ensured that they are able to communicate, negotiate, and provide leadership services in a range of business environments to achieve business desired outcomes. This study provides an investigation of some of the transformational leadership approaches used in India and other successful multinational companies to ensure high productivity across cultures.

1.2. Background of the Study

The idea of cultural intelligence in India has a long cultural history that can be traced as far as during the Indus Valley Civilisation in 3000 B.C. India is also regarded as one of the multilingual countries. It consists of 28 states, 6 union areas, and the New Delhi (Hussey, 2008). It has resulted into the society of India being a fractured one in comparison with other countries such as China. It is worth noting that the power systems in India are very complicated to the caste system. Generally, there is a high level of equality between buyers, and sellers and inequalities are only based on personal relationships that exist between interacting parties. Indians are also known to be tolerant to uncertainty and are good at taking risks and experimenting actions (Grossetete, 2008).    

In the 20-th century, there have been a number of liberal trade policies that ensured trade was less complicated (Singh & International Conference on Integrating Spirituality & Organizational Leadership, 2009). Also, there were a number of improved communication strategies that ensured convergence of ideas to guarantee operations in organizations were improved (Bhadury, 2000). The emergence of digital technology in the 1980’s enabled organizational leaders to ensure that commerce was able to be conducted over long distances. There were also a lot of liberal trade policies, which ensured affordable transportation facilities were created for long-distance trade, thus allowing the movement of goods over long distances. Consequently, it has become easy to monitor every stage of the production process, as well as to minimise the costs of operations (Bhadury, 2000).

The effective monitoring of operations has brought the need to understand multicultural aspects of organizations in the process of leading multinational organizations (Adina, 1998). It has become necessary to develop multicultural understanding of organizations by managers and other company executives. Nevertheless, there is little evidence concerning the relationship between effective intercultural interaction and organizational leadership. There is also little knowledge concerning capabilities of the intercultural understanding in foreign multinationals and the subsequent high output of these multinational organizations (Hatcher, 2007).

Indians are also known for their ability to engage in non-verbal communication since they do not usually refuse requests outright as they have a long history of bartering (Fernandes, 2010). This makes the parties to determine the pros and cons of a situation as long as the disagreements are gentle and focused on the exact issues. Unlike other Asian representatives, Indians can only get loud when they are passionate about what they are saying. It should be stressed that certain actions are considered taboos in India, which makes the people have the need to understand various cultures (Khairoowala, 2006).

Some of the taboos in this country include prohibited handshake between people of the same sex, not standing with hands placed on the hips, not whistling, winking or pointing to another person. When talking to another person, people are required to be at least two to two and a half feet apart while maintaining eye contact is prohibited unless a person has taken cues from the people around. When a person disagrees with another person, he / she should not indicate it directly. Though, he / she may state that he / she may consider the situation (Khairoowala, 2006). As a result, Indian people are those who have experienced a lot of norms in their daily lives, and they will be more willing to change to adapt to cultural preferences of a person in an attempt to maintain harmony and demonstrate agreeable attitudes. Their approach towards identification is professional, and they are always interested in knowing people personally before they engage in business. In times of meals, a person is not required to thank the host for a meal, but to be polite and be prepared for concessions on either side. As a result of these cultural practices, Indians are regarded as the most flexible people in dealing with people from different cultures (Dunnette, 1994).

The observation of their taboos ensures they are able to learn different rules applying to business, which are considered necessary in promoting loyalty of employees and motivating them. Their lack of bias also ensures their employees are neutral to the company and work towards the goals of the company. Consequently, there have been a number of successful multinational companies and leaders in India compared with other successful countries around the globe (Leigh, 1996).

1.3. Problem Statement

There has been the need by multinationals to wrestle the paradoxes that prevent the improvement of globalisation, and these corporations have become the dominant social institutions in the 21st century (Khairoowala, 2006). Corporations that have successfully implemented cultural intelligence have improved in turnover to exceed the total turnover of some countries in the world. The capability of Indian organizational leadership has been observed to be complimented by the effective implementation of transformational leadership. On the contrary, empirical research in the area of the relationship between the understanding cultural intelligence and the resulting consequences on the performance of organizations is still scarce (Mukhopadhyay, 2005).

As a result, cultural intelligence is considered a crucial skill that business leaders in this environment need to have. It has been considered particularly important for business executives in Western multinational companies and Australian industries (Khairoowala, 2006). This study is focused on identifying the capability of indigenous leaders to enable them to understand various cultures and use their knowledge to implement the right leadership approaches that provide the attainment of profitability of their operations. It is also considered significant for companies that operate internationally in areas where the target market consists of people of various cultures, and there is a necessity to ensure their needs and desires are understood so that the objectives of the business are accomplished (Donahue, 2011).

Leaders in a number of organizations, such as managers and executives, also need to understand the cultural requirements of their employees. This is because a large company that operates internationally will always have to employ people from different geographical settings who have different attitudes and perceptions. They may also have different interpretations of communication. Consequently, it is necessary to develop a proper mechanism that is to incorporate the understanding of the needs and requirements of these people and also ensuring that they are united in the organization (Cavusgil, 2012). Cultural intelligence is also significant in ensuring employees’ demands, such as working hours and the amount of work, are understood so that the relationship between managers and employees if positive and also ensuring that employees have the right attitude towards the company, as well as the managers. In order to solve these problems in organizations, a number of proposals have been made that can enable managers to run their companies at the international level at the same pace, for example, as that if International Business Machines (IBM). This multinational company is not unique, but the cultural intelligence and transformational leadership approaches of its executives ensure its operations at the international levels are successful, resulting into huge profits (Bartlett, 2011).

1.4. Purpose Statement

This study provides a research of the cultural intelligence practices, as well as transformational leadership approaches that have been used by most multinational organizations in India It emphasises the need to ensure that people of different cultures are integrated based on their attitudes and preferences to guarantee multinational corporations are successful. It also focuses on the need for any organizational leader who intends to do his / her duties internationally to have certain managerial qualities that are significant in ensuring the desired objectives of the work are achieved. It means that there should be high cultural intelligence that enables the manager or executive to understand cultural preferences of people in another country while ensuring the goals of the business are met.

This study also explains methods that can be used to transform leadership in any organization and  makes an emphasis on the areas, such as the transformational leadership approach. This approach t ensures organizations focus on transforming the attitudes, behaviours and loyalty of their employees to guarantee they have positive attitudes to their seniors, as well as work towards the achievement of the goals of the organization. It also focuses on the impact of the organizational structure on the activities of a multinational organization by proposing some of the structural changes that need to be implemented if any changes are expected to be achieved. It also focuses on the significance of ethics in ensuring transformational leadership is successful by proposing the implementation of transformational attitudes and motivations. This paper also focuses on the values that need to be incorporated in the organization to ensure the aspirations and values of employees are targeted towards those goals. This study also researches the effects of cultural intelligence and transformational leadership in a number of case studies.

There are many multinational organizations that have been relocated to India as a result of globalisation of the business activities. However, their cultures are different from that of Indians (Certo, 2007). For example, the Americans use the transactional approach to conduct their activities, while Indians use the relational one. It has resulted into misunderstanding of various cultures within the same organizations (Forest, 2007). Due to the difference in American and Indian cultures, it has been considered significant to understand various cultures to enable effective operations of these multinational organizations in India. This ensures the consequences associated with cultural differences are mitigated and profitability of organizations is not affected (De et al, 2009).

As a result, a lot of case studies are conducted in multinational organizations operating in India in order to find out the ways in which cultural differences affect their business activities. This paper provides a study on Indian organizational leaders by establishing transformational leadership styles that are implemented to improve the capability of their employees. The focus of this paper is based on American multinationals based in India in terms of their methods of managing employees from different cultures and exercise transformational leadership practices.

The cases studies are conducted in multinational companies in India owing to the nature of Indians as the most culturally intelligent people in the business world. These case studies are used to determine variables that are considered significant in understanding cultural intelligence and transformational leadership in organizations that are considered successful while employee workers from different backgrounds who have different perceptions of conditions at work place.IATA is an example of organization that has been successful in implementation of cultural intelligence in conducting its services.

1.5. Objectives of the Study

In order to understand the nature and effects of transformational leadership and cultural intelligence in the Indian corporations, anumber of objectives were developed. These objectives acted as a guide towards achieving the purpose and a guide for the methodology of the study. The study also tries to provide a guide to people who want to travel to foreign countries on methods of applying cultural intelligence while convincing them not to focus so much on technology. It is mainly concerned with such areas as the use of body language and the right tones when communicating with people from various cultures in order to ensure that the matter under concern is understood by all the parties.  It is also focused on bringing understanding of relationship between work experience in foreign country as an expatriate and the level of cultural intelligence. Some of the objectives that were developed include the following:

  • To determine cultural intelligence practices used by managers and executives in the Indian multinational corporations;

  • To investigate the transformational leadership practices used by managers and executives of the most successful corporations in India;

  • To determine the relationship between the level of implementation of transformational leadership and organizational performance in the Indian multinational corporations.

1.6. Research Hypotheses

Nowadays, the study of cultural intelligence and transformational leadership is not understood by many managers and executives. This paper tries to simplify the understanding of this topic by coming up with certain tentative solutions to the problem. Consequently, certain hypotheses were formulated to understand the topic. Some of the hypotheses are as follows:

Hypothesis 1: There is a relationship observed between transformational leadership and the commitment of organization’s followers.

Hypothesis 2: The commitment of the organization’s followers and transformational leadership are high in places where cultures are more collected;

Hypothesis 3: There is s relationship between the ability to understand different cultures and the level of the success of operations of a multinational business.

1.7. Limitations of the Study

Despite the significance of this study in understanding the effects of transformational leadership and cultural intelligence in transforming multinational organizations, there are certain limitations that may prevent reliance on the results of the study. One of the limitations is that this study only focussed on the samples obtained from India. The methodology involves the study of respondents from India assuming they are all Indians. Some of these respondents might be from foreign countries where different values are embraced. It is possible that their responses may make the results of the analysis unreliable. In addition, this study involved the study of multinationals in India, neglecting a similar study in other countries with the different cultural dimensions and organizational structures. Furthermore, this study did not consider other factors of the organizational outcomes, such as organizational citizenship, motivation of employees, improvement of productivity, and level of organizational belonging as methods that can be used to understand employees’ work conditions to ensure their retention.

This study could also be made effective by collecting data from a number of respondents from various sectors of the economy to assist in knowing the causality and in understanding the relationship better. The sample used in this study is limited to organizations within India. The study could also be more convincing of studies were conducted on leadership styles that are used by leaders from other parts of the world who are operating in India. On the contrary, the logistics involved in conducting such a task would be overwhelming since the resources and personnel involved in the research will be difficult to obtain. A strong research team will be required to gain access to the global organizations in the right geographical environments, to identify the relevant Indian organizational leaders, and to ensure the cooperation of the same in a timely and organized manner.

Also, there may be a time constraint in ensuring the accomplishment of the research objectives. This is because the collection of data would require a comprehensive travel to Indian cities, such as Delhi, which will result into the need to extend time schedule for research and additional financial allocations for conducting studies in these cities. Furthermore, the study may be jeopardized by the factors, such as terrorist activities, poor sanitation, weather conditions, and infrastructural problems, such as power failures.


2.1. Brief Introduction

It has been necessary to ensure the cultural diversity is considered in many organizations, as well as leaders in many multinational organizations exercise transformational leadership (Hersey, 2001). This is because the current world environments require effective understanding of various attitudes of employees as well as employers acting as motivators to their employees. It has also been necessary to ensure that employers understand the preferences of their employees based on their cultures so that the best ways of leading them in organizations are implemented (Oddou, 1998).

Furthermore, it has been found that, for any individual to conduct international activities such as internationals trade and transactions, it is necessary that the person interacts with foreigners in manner which ensures the intention of a conversation is not misunderstood. In addition, it is necessary to ensure the culture of people in another country is taken into account so that the parties involved in the transactions understand one another. Many multinational organizations have been observed to be created in India. This is because India is regarded as a hub for successful operations of multinational organizations owing to a number of conditions that exist within the country, which assist in accomplishing the business purposes of these organizations. For instance, India has over 200 million people who speak total of 300 different languages. Thus, the possibility of conducting a business in the country requires the understanding of various cultures, as well as the practice of leadership, which does ensures all employees are considered and motivated (Zubko, 2010).

 Due to the high population, it is possible for India to have high control of the world market by improving its bilateral trade with major world economies, such as the United States. The other factor that has attracted investment of multinational businesses in India is its bilateral trade relationship with the United States (Zubko, 2010).

It has been estimated that the bilateral trade between India and the United States in the year 2010 reached $ 50 million. Since India is also regarded as the America’s largest trading partner, multinational business owners have developed preference for investment in the country. However, there are a number of cultural differences that prevent effective commerce between the two countries (Zubko, 2010). One of these factors has been identified as cultural differences in terms of ideological views with regards to business operations. For instance, Americans believe that time is the most important factor to consider in any activity, while Indians consider time to be flexible. Americans believe that deals are paid attention to, while Indians consider that the main point of focus should be made on relationships. Thus, there is a possibility of occurrence of cultural misunderstanding between the Americans and Indians due to cultural differences. To explore the issues of cultural intelligence, it is necessary to study the consequences of a foreign company operating in India. The capabilities of cultural intelligence and transformational leadership are also significant in ensuring a person does not become ambiguous in a foreign country. By understanding the culture and attitudes of people in another environment, it is possible for any person to interact with the people effectively and conduct his / her business in a peaceful manner and ensuring he / she does not become boring in another location where he / she is a stranger.

In addition, it ensures the time wastage is avoided by getting to the point regarding one’s intentions while ensuring people in another environment relate with a person correctly. It is based on the fact that the current world situation requires the high level of understanding of peoples’ culture, as well as ensuring a person is focussed on meeting his / her business objective. Without cultural intelligence, it has almost become impossible for certain people or companies to conduct their businesses internationally. This is because of the high level of ambiguity in terms of interaction and communication with other people.

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