11.4 Discussion

This study substantiates four conjectures and empirical findings of the earlier studies mentioned above:

• Austrian managers exhibit a very high degree of participatory leadership behaviour.

• Polish and Czech managers diverge from their Austrian counterpart in respect of their preference for autocratic leadership styles and divergence from the prescriptions of the Vroom “Yetton models, and in terms of most of the ˜main effects .

• Czech and Polish managers are relatively similar in respect of most of the measured dimensions in the Vroom “Yetton framework.

• National culture is a dominant factor in the formation and execution of leadership styles.

How can we explain the results for Poland and the Czech Republic, which at the national level successfully reorganized their centrally planned economies into a privatized market system open to international competition? Did the more drastic changes remain at the national level and fail to penetrate the organizational and individual levels? The latter seems to be the reality, in spite of the fact that individual managers show a high degree of flexibility, with high scores in their standard deviation. Does it look as though a ˜configurational view is the best way to explain lack of change within a change process? A closer look at the three main levels may bring us closer to understanding this paradoxical situation of stasis amid the flux of change. The majority of the Czech citizens (individual level) expected that their individual freedom had to be honoured by the state; this is not (yet) expected in the framework of private companies (organizational level). Perhaps in such a historic situation a change at the organization level can materialise only from ˜above by democratic legislation as was done in Austria and Germany through different forms of codetermination of capital and labour after the Second World War. In this way citizens would not only have a ˜voice (Hirschman, 1970) according to the national constitution in state affairs but also within the national economy and private enterprises . In such a development a democratic pattern would reign on all three levels: the national, the organizational and the individual level would be united within one participative configuration ( ˜Gestalt ). The existing values need appropriate situational conditions in order to be transformed into actions.

The situation in Austria after World War II may provide an example. It can be argued that during the war, culturally and individually preferred leadership styles did not score highly on the AI to GII scale. The state was in the hands of one party and the economy was state-controlled to divide the most available goods among the majority, leaving little for private consumption. When the war was over and democracy was restored, the social/economic partnership model was created and political and economic power was shared by the social democrats and conservatives. This occurred under the leadership of the prewar political elite, who saw no future in the extremes of either capitalism or communism. To deal with decision making and conflict resolution a system was constructed in which all stakeholders had a voice, and consensus (GII) was the preferred strategy for decision making and actions (Szabo et al., 2002). The idea of partnership governed not only the highest political and economic levels but also the daily experiences of managers at the organizational level. Laws requiring codetermination “ as in West Germany “ forced them, their subordinates and union representatives to negotiate and establish norms of cooperation and participation, which required new forms of leadership behaviour. This system eventually took a toll on development, with ˜over-consensualism delaying Austri s adaptation to the rapid changes in Europe and elsewhere in the world. The erosion of the coalition power structure became manifest in the elections for the present parliament, with evidence of value changes in the population and the expression of individualism by younger generations with no experience of war, poverty and the need for solidarity.

In the Czech Republic the organizational level could be the bottleneck in any change in managers leadership behaviour. It seems crucial that the results of the ˜de-governmental process with its key elements of privatization and the governance structure in the new private companies were insufficient. Of all the economic plans launched since 1989, voucher privatization (Kost, 1994; Fogel, 1994) must rank among the most ambitious. In contrast to other ex-communist countries , the majority of state property has been formally transferred to private hands. However the process has not been transparent and enterprise ˜owners are often not real owners but managerial cliques whose power is owed to connections cultivated during the old regime . Voucher privatization has caused a paradox: share ownership has been transferred to investment funds, which are private in legal terms but are actually controlled or owned by banks in which the state has a large or even a majority stake. The state banks are owned by the National Property Fund (NPF). Hence the banks own the investment funds, which in turn own the majority of companies. Companies indebted to the banks are artificially kept alive because otherwise the banks will be forced to admit that many of their loans are unrecoverable.

In a situation like this the market system does not bare its teeth at inefficient companies and managers in protected industries can maintain their old ways of acting and thinking. These managers are characterized by a lack of entrepreneurial spirit and a strong aversion to responsibility, leading to a delay in the necessary restructuring measures. Managers remain order-takers, conservative, risk averse, operations focused, ˜inside people with a strong reliance on personal contacts. Proficiency in foreign languages other than Russian is relatively low. Older managers in particular are technically oriented with a propensity to stick rigidly to plans. To a degree they are flexible, but their flexibility is aimed in the wrong direction. A typical feature of central planning was the shortage of raw materials, manufactured inputs, energy, workers, investment capital and so on. This called for an ability to improvise and be flexible on the input side of business activities. However the market system s emphasis is on the output side, with a consumer and market orientation.

Market reform alone cannot change the governance structure of companies. The Czech government s reforms were not based on Germany and Austri s experience with codetermination; rather its economic ideals were closer to the Anglo-Saxon models, particularly that of the United States. Perhaps consensus-seeking was seen as too close to collectivism. It seems that concepts such as freedom, individualism and competition are now more appealing to victims of the command system than to politicians , who were hurt by the failure of their first democratic system. The maintenance of the old hierarchical governance structure by the numerous directly and indirectly state-owned companies has not encouraged managers to change their habits. In leadership seminars managers repeatedly state that they would like to include their subordinates in the decision-making process but the latter expect them to make their decisions alone. That way, if their decisions are wrong the subordinates will not have to share the blame. Perhaps a communication problem exists (who tells whom first, what is expected in reality) or the leader forgets his or her responsibility to act as model and be the front runner when it comes to admitting that he or she does not have all of the necessary information and therefore needs the help, advice and commitment of subordinates to get the job done effectively.

Not all companies are part of a supposedly privatized but actually state-owned conglomerate. Real private companies do exist but they struggle with financial problems in a system that makes it nearly impossible for small new businesses to obtain loans, which normally have to be repaid within four years . However opportunities are offered by international alliances. For example Volkswagen and Skoda have formed a very successful partnership (Kunz, 1995; Groenwald and Leblanc, 1996; Dorow and von Kibed, 1997) using the so-called tandem system, in which for a transition period of several years a manager from Germany and a manager from the Czech Republic shared the same job and decisions had to be authorized by both managers. This procedure can be seen as a bilateral consensus seeking program within one company; namely a structure with some elements of the partnership system (as we can see on the national level in Austria and on a company level in Germany). The Skoda/VW company is successful not only in the Czech Republic but also internationally, despite competition from manufacturers in countries such as Germany, Spain and Mexico.

In contrast to the development in large market-driven companies, two other sources of change seem to be effective. First of all, the charismatic leaders as owners act as entrepreneurs, take responsibility for their enterprise under difficult conditions and find acceptance in the form of identification by the sub- leaders in their organizations. The second source may come from a new breed of young managers who are professionally oriented, educated (some hold an MBA) and able to speak languages such as English, German and French. These young managers are not only entrepreneurial but also flexible and open-minded. As a typical Czech trait they also possess a special talent for improvisation and survival. They rely on market signals and are risk takers with strategic vision. These characteristics are optimistic conjectures; we hope that they may become reality and be reported in scientific investigations in the future.

A similar situation has been found in Poland by a number of action-oriented researchers employing the Vroom “Yetton model. According to Maczynski et al. (1994, p. 313):

The combination of a centralized directive, an enormous bureaucracy, and passive subordinates produced managers who behaved in the same way they themselves were being treated “ that is, in a highly autocratic fashion. . . . The current situation in Poland is vastly different from the situation that prevailed at the time our data was collected. Control is no longer exerted so exclusively from the top. There is no longer such a strong emphasis on coercion as a means for achieving managerial control. Employees now have much more power and a concomitant expectation that their views will be solicited and considered . Simply stated, managers can no longer function effectively by applying the traditional mechanisms of unilateral control and command. Today s Poland demands more participative management practices consistent with a ˜human resources conception of what participation means. Of course, evidence of how Poland s enterprises and their managers respond to the enormous changes associated with decentralized control must await future research.

These statements perhaps reflected some optimism and hope for short- term change. The evidence emerged in a follow-up study in which the style of Polish managers in 1988 was compared with the style of managers in 1993 and 1994. The results of this study were summarized as follows :

The results suggest that, although political change may be swift, cultural change is very slow. And this includes changes in the ˜leadership culture that may exist in organizations. A radical political transformation between 1988 and 1994 produced few differences in managerial styles. If the political changes can be labeled a discontinuous leap, the management change must be labeled incremental. . . . The few differences that did emerge in the current study are of interest. Privatization has significantly reduced the use of the most autocratic behavioral alternative and has increased the use of subordinate consultation. This may represent the first step in a gradual change toward more participative practices. Government managers, however, remain highly autocratic; this sector may be the slowest to manifest a behavioral change despite its dramatic political transformation (Jago et al ., 1996, p. 314).

Szabo et al . (1997) also found some momentum and resilience towards established behaviours combined with the tendency towards incremental new orientations. The GLOBE project s results confirm this:

Concerning autocratic behavior, the GLOBE results support the assumptions that the prototypical Polish manager is expected to be more autocratic than the Austrian counterpart. . . . Individual items results show that Polish subordinates tend not to question their superior (means > 4.5 at the ˜as is and the ˜should be level) and are expected to go along with their decisions (mean > 4.0 at the ˜should be level). . . . It looks as if there is a trend in Polish management s power basis to shift from formal authority toward expert and information power. . . . Based upon the GLOBE research results, it follows that whatever the (new) power base might be, once a person is accepted as a leader, subordinates still seem to expect an autocratic leadership style. . . . The large standard deviation shows that Polish managers can be characterized by cognitive concepts which would basically allow them to behave in a flexible way. It seems, however, that the conditions that actually make use of this flexibility are not yet in place. In particular, subordinates seem to expect leaders to continue to behave autocratically. (Szabo et al., 1997, pp. 286, 288, 289)

Smith s (1997, p. 382) event management study also found that ˜Poles emphasized reliance on their superior . With regard to the organizational practices of effective Polish firms, Obloj and Thomas (1996, p. 475) report the existence of a ˜cultural gap between the top management and the rest of the employees. Top management is clearly in charge, controls the information flows and makes the decisions. They do not engage with employees in mission building exercises; teams are a rarity, consultants are used sparsely and for particular purposes. Adding to Reber and Jago s (1997) conclusion and to our discussion above, Maczynski (2002) suggests that cultural changes may succeed if changes in institutional structures have been initiated and are accompanied by adequate training programmes: ˜In order to effectively introduce changes into Polish culture, not only do autocratic structures need to be transformed into more participative structures, but Polish leaders and managers need to be effectively trained in participative modes of behavior as well (ibid., p. 213).

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