Implications of Transcultural Leadership Competence on Creating Shared Value
by Marco Möhrer.
In today’s modern societies, social interactions are embedded in and significantly shaped by the consequences of a lasting globalization process that is not showing any indication of slowing down. These consequences are most notable in the increasing complexity of overseeing, understanding and managing the global web of different, as well as common cultural interests. This requires a sophisticated form of management that is able to bring together various cultural backgrounds and cultivate a new cultural self-understanding that can also be understood as global culture.
Companies in particular are driving but also driven by their rapidly changing business environment in the global arena which has a significant impact on their business models and the way they create value. Indeed, the value creation process of companies today is the result of the interplay of various interdependent interests of a variety of stakeholders that requires a new set of specific competencies and approaches that go well beyond what for decades has been considered »the standard economic logic« of doing business.
Adressing stakeholder interests
Facing political as well as societal demands that require companies to foster the creation of Shared Value, firms are no longer held responsible only for generating economic prosperity, but also for taking societal problems and challenges into account. Nowadays this ambivalence is considered a crucial part of the decision making process of companies. The ambitious goal of Creating Shared Value can thus only be fulfilled by close cooperation between organizations and society which can only succeed when using the ability of companies to identify, understand and react accordingly to multiple stakeholder interests as an essential part of their everyday business reality.
The concept of Shared Value, in this understanding, also implies that desired mutual gain through cooperation cannot be achieved by simply satisfying stakeholder needs, treated as external elements of the value creation process of companies. Instead, the creation of value that benefits the company by simultaneously addressing societal needs requires stakeholders and the resources they obtain to be an inherent part of the firms’ business models. It then also seems plausible that this value creation process is determined by various stakeholder interests and resources, as well as the capability of firms to make efficient use of them.
In times of globalization, in which diverse cultural backgrounds of people have a significant impact on the working conditions of organizations and their executive managers, the complex network of a firm’s diverse moral resources provided by its internal and external stakeholders becomes particularly important. Companies function as hubs of these moral values (e.g. integrity, respect and fairness) whose basic ideas can be discovered across all cultures. However, the differing meaning of these values is often the result of an individual or local interpretation which makes it difficult for companies, respectively their executive management, to complete the required actions in given situations. For the value creation process of companies, that is to say the creation of Shared Value, it seems to be crucial to develop a common understanding of diverse moral resources by defining shared values, representing collective moral interests among stakeholders that eventually lead to desired actions in certain situations.
Transcultural Leadership Competence
Identifying, shaping and fostering shared values in companies is central to good leadership. Creating Shared Value through shared values thus requires today’s leaders to shift their focus from managing intercultural differences to searching for transcultural commonalities. Transcultural Leadership, as the contemporary manifestation of Leadership Excellence in today’s intersectoral business environment, can then be understood as the active engagement of firms and their leaders to foster the development of »a shared emotional and cognitive foundation« of moral resources – to use Josef Wieland’s words – with the goal of finding and developing shared values among various stakeholders in different sectors of society. Since shared values are also the product of shared experiences and transcultural interaction, they cannot be considered static in nature, but rather understood as a continuous, dynamic learning process that requires transcultural leaders to sustainably reflect on the current cultural reality that is surrounding them. Only by doing this, the management of shared values can have a positive contribution to the firm’s goal of Creating Shared Value.
At this point, the LEIZ Transcultural Profiler (LTCP) as a tool for global value management can serve as an important catalyst to foster this learning process by identifying and evolving transcultural shared values in companies. The LTCP allows firms to identify diverse cultural values in organizations and addresses the question how leaders deal with these different values. The tool thus helps to create awareness of the cultural diversity among the company’s different internal and external stakeholders. In addition, it addresses the question as to which values a company really wants to share in the first place, since not all values are of the same importance for every company. In this form the LTCP can also function as a bridge between the descriptive analysis of a firm’s current cultural values from an individual ethical perspective and the opportunity for the development of transcultural competences among business leaders as a consequence of this analysis that could eventually have a significant impact on the (shared) value creation process at the organizational level.
Transcultural business leaders play a crucial role in this framework since they are mediators of diverse moral stakeholder resources. They are, in fact, cultural cross-border commuters and intersectoral decision-makers – a certain type of Leadership Excellence that is desperately needed for successful cooperation and social interaction in today’s globalized business environment.