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In the rapidly shrinking world of international business, the role of cross-cultural management has emerged as a major issue (Cascio, 1992). Paradoxically, however, recent developments in communications, travel and trade between countries have not brought national cultures closer together (Craig et al., 1992). Neither has the improved physical accessibility been accompanied by a corresponding drastic improvement in cross-cultural understanding, since expatriate business managers are regularly assigned to all parts of the world without any cross-cultural preparation at all (Black et al., 1991; Black et al., 1992a, pp. 92-3; Selmer, 1995a).
Typically, inadequate cross-cultural understanding leaves the expatriate managers to apply the same leadership approaches as they used in their home country and not adjust or adapt to the local norms and practices (Black and Porter, 1991; Lawson and Swain, 1985; Selmer, 1995b). Examining consequences of insufficient cross-cultural understanding in international business, research has revealed that:
* premature return rates are significant, especially among US expatriates;
* each failure gives rise to substantial direct and indirect costs;
* a notable share of, especially US, expatriate managers who stay on are regarded as ineffective by their parent organizations; and
* ineffective expatriate managers incur large direct and indirect costs (Black et al., 1992b).
Although the often quoted high expatriate failure rates measured as premature return to the home country has been challenged recently as having little empirical foundation, it can easily be argued that expatriates who remain on their assignments, but failing to perform adequately, could be more damaging to the company than those who return prematurely (Harzing, 1995).
Despite such serious consequences of inadequate cross-cultural understanding, not many studies have examined the leadership behaviour of expatriates. Ruben and Kealey (1979) found that interpersonal and communication skills were important to expatriates. Hawes and Kealey (1981) studied the behaviour of technical advisers in six countries and concluded that being flexible, listening, building relationships, and being respectful and sensitive were crucial behaviours. Furthermore, it was found that US managers in Hong Kong applied a very similar leadership behaviour as managers in the USA (Black and Porter, 1991). The growing literature on expatriate adjustment, especially work adjustment, would also be relevant here (McEvoy and Parker, 1995). However, previous empirical studies on expatriate behaviour and adjustment tend to be either anecdotal in nature (Black et al., 1991) or rely on sell reports (Black and Porter, 1991; Black and Stephens, 1989; Feldman and Tompson, 1993).
To avoid problems in previous studies, and tapping a new data source, host country national (HCN) employees could be used as a relevant source of information concerning the leadership behaviour of expatriate managers. It has recently been suggested that the expatriate's ability to work effectively with a culturally different workforce would be a salient indicator of work adjustment (Feldman, 1991; Feldman and Tompson, 1993). Using HCN staff would also avoid the weaknesses of data based on self-assessment (Black et al., 1992a, p. 178). Managers would be a category of HCN employees with sufficiently close and frequent contact with the expatriate executives to get a comprehensive and reliable impression of their leadership behaviour. The HCN managers would typically be in a subordinate position to the expatriate and, from the literature on performance appraisals, it has long been known that subordinate appraisals constitute a valuable source of information (Bernardin, 1986, 1987; Bernardin and Beatty, 1987; Kerr and Schreisheim, 1974). The opinion of HCN subordinates would necessarily be based on what they have experienced, i.e. their perceptions of the leadership behaviour of the expatriate executive. Local bosses would constitute a point of reference of prevailing leadership behaviour and leadership style in the host country and an HCN employee with experience of both expatriate and local bosses would be able to compare these two categories. Consequently, the purpose of this article is to explore empirically the differences in leadership behaviour between expatriate bosses and local bosses as perceived by their HCN subordinates in the foreign operation.
The Hong Kong management culture
The empirical investigation was carried out in Hong Kong. Covering an area of 1,075 square kilometres south of the People's Republic of China, Hong Kong is a modern, mostly urban society. Hong Kong has 5.8 million inhabitants of whom 60 per cent were born in the territory and 34 per cent were born in mainland China. Hong Kong is predominantly Chinese, with an overwhelming majority belonging to the Cantonese dialect group (Roberts, 1992).
Although Confucianism was abolished in China at the turn of this century, having been the predominant ideology in China for 2,000 years, it has had a fundamental and prevailing influence on the Chinese character. Confucianism is a belief system which has provided the Chinese with great stability and resilience and it remains a major force in Hong Kong culture and values (Redding, 1990, p. 48; Tan, 1986). Confucianism is an authoritarian system which places great emphasis on values such as conformity, submission and respect for one's parents and elders. Confucius' Five Cardinal Relations (Wu Lun), between sovereign and subject, father and son, elder brother and younger brother, husband and wife, and friend and friend, prescribe precise vertical relations between superiors and subordinates. Everyone knows their own place and whom they must defer to. These status differences are regarded as the correct and best way of conducting relationships and are accepted and maintained at all levels of the hierarchy (Bond, 1991; Bond and Hwang, 1986; Hofstede and Bond, 1988).
The Chinese have carried these values into their managerial practices to such an extent that a distinct Chinese leadership pattern has emerged. Although Chinese businesses have …