American Management Style in Bangladeshi Firms

Introduction

Background

A significant number of research studies have recently been carried out to examine the dynamics of globalization of businesses across the continents (Thanopoulos & Leonard, 1996; Trompenaars, 1994; Van Maanen, 1992). Amusingly, the normal standard for analyzing globalization of business is to examine how Corporate America has influenced the international markets for commodities, services, and factors of production. These studies show that U.S.-based multinational corporations (MNCs) focusing on businesses such as consumer durables and non-durables, tourism, information technology among others have reduced the geographical barriers thus reducing the world to a global village (O’Keefe & O’Keefe, 2004). With companies such as McDonald’s and Wal-Mart in the forefront of Corporate America by opening up restaurants and stores in different countries across the world, U.S.-based multinational corporations have broken down all barriers. As other Western and developed countries follow suit and establish subsidiaries in developing countries, various issues have been raised regarding cross-cultural management.

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One of the issues is effective strategies of managing local employees by expatriates (Ogbor, 2000; Jassawalla, Truglia & Garvey, 2004; Macduff, 2006). Various cultural theories such as the Hofstede’s five cultural dimensions, (Hofstede, 2004), show that different countries have different cultures. In order for people from different cultural backgrounds to co-exist peacefully, there is a need for each party to understand and respect the other party’s culture (Leung, 2005; Ilangovan, Scroggins & Rozell, 2007; House, Hanges, Javidan, Dorfman & Gupta, 2004). Another important issue facing cross-cultural organizations is the management style that should be adopted (Graen, 2003; Gudykunst, 1997; Gupta, Hanges & Dorfman, 2002). For U.S.-based corporations operating in other countries, the norm has been to apply the American management style. This is because the American management style is viewed as the benchmark and the epitome of business success. While this may work in some countries, it may fail in other countries. The purpose of this study is to examine the applicability of the American management style to U.S.-based MNCs with subsidiaries in Bangladesh.

Objectives of the Study

The general objective of this study is to examine the applicability of American management style to U.S.-based multinational corporations operating in Bangladeshi. The study seeks to achieve the following specific objectives:

  1. To identify similarities and/or disparities between American and Bangladeshi management styles
  2. To examine the most effective elements of American management style in Bangladeshi firms

Research Questions

The following research questions will be answered by the study.

  1. How applicable is the American management style to Bangladeshi firms?
  2. Is there any similarity/disparity between the American and Bangladeshi management styles?
  3. What elements of American management style are most effective in Bangladeshi firms?

Justification of the Study

Many studies have been conducted on the applicability of American management style to different developing countries (Yifeng & Tjosvold, 2008; Chien, 2006; Peterson, Napier & Shul-Shim, 2000; Kotabe, 1998; McLaurin, 2006). However, to the best of the researcher’s knowledge, none of these studies have examined Bangladesh. This is despite the fact that there are many multinational corporations operating in the country. For any cross-cultural organization to succeed, the management needs to understand the similarities between the cultures of the local people and the managers. This case applies to all countries that host a multinational corporation. This study will make important contribution to the existing literature in various ways. First of all, it will bridge the literature gap concerning the applicability of American management style to Bangladeshi firms. Consequently, the study will inform managers of U.S.-based multinational corporations operating in the country on whether or not the American management style is effective in Bangladesh. This will in turn influence the managers to modify their management style accordingly.

Scope of the Study

There are different types of firms operating in Bangladesh. For this study however, the focus will be on U.S.-based multinational corporations operating in Bangladesh. Specifically, the study will analyze British American Tobacco, Bangladesh, a subsidiary of British American Tobacco as well as City NA, a subsidiary of City Group.

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Literature review

This section presents a review of studies conducted on the application of American management style to various developing countries.

Study 1

Gopalan and Stahl (1998) carried out a study to determine how applicable the American management style is to the Indian firms. They argue that although some management ideologies can easily be transferred across countries due to their lack of basis on culture, majority of the American management ideologies are culture-specific. They argue that some management practices should not be exported to developing countries which have different cultures. Based on the Kluckhol and Strodbeck (1961) cultural profile, the researchers discussed how the American culture differs from the Indian culture. The researchers conclude that the exportation of American management ideologies would have both positive and negative consequences. On the negative side, some of the Indian values may be lost as a result of interaction with the Western ideologies. On the positive side, because American ideologies emphasize on skills rather than family relationships, Indian businesses would be forced to hire qualified workers rather than family members and this would increase business profits.

Study 2

Conflict is inevitable in any organization, and more so in a cross-cultural organization (Tang & Kirkbride, 1986). Effective conflict management strategies are therefore crucial. Yuan (2010) carried out a study in a multinational corporation in China involving both American and Chinese employees to determine how conflicts in the organization are managed. Various conflict management strategies were identified including: integration, insisting on one’s own idea, compromising, complying with authority, avoidance, passive resistance, dissolving the relationship, and third-party approach. The researchers found that the American and the Chinese employees interpreted the conflicts in different ways based on their cultural differences. Most of the Chinese employees used avoidance, complying with authority, and compromising strategies based on their cultural orientation of face-saving and Confucius’ ideology of obedience to authority (Hofstede & Bond, 1988). On the other hand, most American employees insisted on their own ideas and dissolving the relationship as conflict resolution strategies based on their cultural orientation. The findings of this study have important implications for U.S.-based firms operating in China. For such a business to succeed, the management should understand the Chinese culture and find ways of integrating it with the American culture (Rahim, 2000).

Study 3

Jaussaud and Schaaper (2007) also conducted a study in China in which they examined European-based and Japanese-based multinational corporations operating in China. Specifically, he researchers wanted to examine the differences between European and Japanese practices in human resource management, including the management of Chinese employees. They found that the European and Japanese subsidiaries in China have similar practices with regard to control, human resource management and management of Chinese employees. Differences between the two nationals exist in expatriation policy and training programs put in place for the Chinese employees. For instance, the Japanese subsidiaries seemed to send more expatriates to China than the European subsidiaries. The reasons given include the closer geographical proximity of Japan to China than of Europe to China. The European subsidiaries compensate for less expatriation through vigorous training of the Chinese employees.

Study 4

In a cross-cultural organization, there is need for adaptation of the managers’ cultural orientation to suit that of the host country (Graeme, 1994; Kluckhohn & Strodtbeck, 1961). Anwar and Chaker, 2003) carried out a study to examine how American management styles can be adjusted to suit the culture of the United Arab Emirates. The researchers found that the American and Arabian cultures differ significantly to the extent that the American and Arabian management styles are incongruent. As a result, there is need for American-based firms operating in the Arab countries to familiarize themselves with the unique Arabian cultures and management styles (Ralston, Holt, Terpstra & Kai-Chang, 1997). Although some of the elements of Arabian culture may appear insignificant to other cultures, they play a significant role in the success of the businesses in the long-run.

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Key theoretical base of the study

Based on the literature review, the main theoretical bases for this study will include:

  • The Hofstede’s cultural orientation by Geert Hofstede
  • The Kluckhol and Strodbeck (1961) cultural profile by Rockwood Kluckhol and Fred Strodtbeck

Methodology

Data Type and Data Collection

Primary data will be collected through interviews using a semi-structured interview guide (Hesse-Biber & Leavy, 2005; Schindler & Cooper, 2001; Kombo & Tromp, 2006). The researcher will interview the senior managers of two U.S.-based multinational corporations with subsidiaries in Bangladesh. The interview guide will contain questions that touch on: cultural differences between the expatriates and the local employees; how the cultural differences affect the operation of business (both positive and negative effects); elements of the management style used in the organization; and effectiveness of the management style, for instance, in maintaining employees and ensuring the bottom line of the organization.

Research Procedure

The research process will follow the following order:

  1. A letter will be sent to the management of the two firms informing them of the study and requesting for the participation of senior managers.
  2. The questionnaire will then be drafted and pilot-tested on a handful of managers who will not take part in the main study.
  3. The researcher will train two assistants to help in conducting the interviews
  4. The interviews will then be conducted according to the agreed-upon time and place.
  5. The data collected will then be fed into a spreadsheet such as Microsoft Excel and later exported to statistical data analysis software, mainly SPSS and STATA for data cleaning, coding and analysis (Trochim & Land, 1982; Leedy & Ormrod, 2005; Chandran, 2004).

Data analysis

Both qualitative and quantitative data will be analyzed. Qualitative data will include the data on the cultural differences between American expatriates and the Bangladeshi workers. Various themes will be identified and highlighted. In addition, qualitative data will include the elements of the American management style used in the organizations. Dominant themes will also be identified in this case. Quantitative data on the other hand will include the effect of American management style on the performance of the organizations. Performance will be measured by variables such as the rate of employee turnover in the organizations and the trend of the amount of profits made since the companies’ inception.

Reflection

This study will provide useful insight into how U.S.-based multinational corporations in Bangladesh are run and managed. The study will involve interviewing both the managers and the local employees of the two firms to understand the management style used. The main problem anticipated in conducting the study would be reluctance of the managers to provide honest responses about their management style and how it has affected the bottom line as well as the welfare of the local employees. In addition, a number of ethical considerations will be observed especially when interviewing the local employees. These include: anonymity, privacy and confidentiality. This is because their responses (especially if they reflect the management in a negative way) may affect the employees’ relations with their managers and may lead to job losses. Thus, these ethical considerations will be upheld so as to protect the respondents from any harm that might result from their participation.

Conclusion

In sum, this study seeks to examine how applicable the American management style is to Bangladesh. The study is important because no such study has been done before to the best knowledge of the researcher. As a result, it will help to narrow the literature gap and may form the basis upon which further studies may be conducted on Bangladesh given the increasing importance of Bangladesh in the global market.

References

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  2. Chandran, E., 2004. Research Methods: A Quantitative Approach. Nairobi: Daystar University.
  3. Chien, M., 2006. A study of cross culture human resource management in China. The Business Review, 6(2), pp. 231-238.
  4. Gopalan, S. & Stahl, A., 1998. Application of American management theories and practices to the Indian business environment: Understanding the impact of national culture. American Business Review, 16(2), pp.30-41.
  5. Graeme, H., 1994. Culture and Management. Australian Accountant, 64(10), pp.14-22.
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