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The strategic function of a top business leader, with its vision-forming, persuading, and control abilities, spans much of what has been traditionally viewed as the field of leadership research. While far from exhausted, the drift toward studying the rest of the organization and its environment has been both substantial and refreshing. Nonetheless, there is a strategy-forming process that remains mostly in the realm of top corporate leadership, which has been the focus of some attention within the last decade.1 Interestingly enough, the role of succession remains largely within top management, which brings up the question of an organization's capacity to learn from its environment.
There seems to be no barriers to entry into the business leadership literature arena. While some leaders speak or write about leadership without having led many businesses, others who have led lack the capacity for reflection which is necessary to explain what it is that they do. Yet, most leaders seem to have something to say, and they find eager listeners. Because publishers know there is a seller's market in leadership books, they go so far as to resurrect authors long dead for hundreds, if not thousands, of years. In fact, business leadership is one of the most prolific areas within management literature. What follows are my thoughts focused on the rim of the contention: business leadership in Brazil.
I chose to explore this topic because many of my graduate MBA students barely have any notion of what a true business leader is. When asked to name a few leaders I expected to hear the names of Juan Domingo Perón, for Argentina, and Getúlio Vargas, for Brazil, founders of some of the region's largest and most prominent businesses. Alternatively, I would have expected my students to mention Casimiro Montenegro, who founded the Brazilian Aeronautical Technology Institute to lay the foundations of a healthy Brazilian aeronautical industry and helped to midwife Embraer, a world leader in mid-sized jet planes.
Instead, my students offered the names of heirs of prominent local businesses, not even the names of the founders of those businesses. My students, like so many other young MBAs, seem to have fallen under the spell of press agents, who, for a fee, confuse more than enlighten, in Latin America as well as elsewhere. For example, think of Enron's Ken Lay, or WorldCom's Bernie Ebbers, who ruined not only the businesses they were meant to run for their shareholders, but crippled whole industries. However, until their criminal activities were exposed, they were media darlings in much of the business press.
Are MBA students being misled by the business press and thus are unable to tell a real leader from a fraud? Or is it that those we call business leaders today are only figureheads propelled by those toiling beneath them, as Tolstoy's enigmatic wave metaphor would have it?2 Despite the aura surrounding business leadership, it is true that much of what business leaders do is relatively routine work, well within the capabilities of many of their subordinates.
Most of the time 90% of business performance is the same no matter which average business leader is in charge. The real test of leadership occurs within an unusual decision making environment such as during the Tolstoyan storm. Then the person at the helm may make the difference between sinking the ship or taking it to calmer waters. During a storm the correct person at the helm may be so crucial that stakeholders will want to be reassured that at all times they have the best person they can afford at the helm. But how can stakeholders tell if they have the best affordable person at the helm?
In business leadership it may not the best person to sort out all matters that a business needs at the helm, but specifically the leader capable of coping with what is likely to come up in unusual or unexpected situations. But how can you tell that the leader you can afford is up to the job? The truth is you cannot, until the storm arrives. Believing that you can select the best person for the job before the test comes implies believing that a given leader's necessary qualities are already there, to be revealed upon demand. It implies believing that leaders are independent of context, which, we have learned the hard way, they are not.
Winston Churchill offers a good example of a leader whose fortunes waxed and waned depending on his characteristics and the context. A crisis thrust him to the fore in May 1940 to plan the defense of England against the Nazis. But a similar crisis in 1939, when the war first erupted, had not. In 1945, then proven as a leader, he was ousted from his post when the war was almost over, only to be brought back to office yet again in 1951. Perhaps Churchill's most pronounced character trait, his dogged determination, overshadowed the versatility that was required when dealing with a variety of situations, but served him well when determination was called for. The context defined the type of leader that was required, and Churchill filled the bill. Until he didn't any longer.
It may not even be possible to assess traits or situations as precisely as we would wish. Is this a recession? Will this person be tough enough when necessary? This is not an attempt to transfer to the leadership arena Heisenberg's Uncertainty Principle, but it may not be far from it, in that both situations and traits are reconstructions of a perceived reality only partially apprehended.3 To wit, we may not even know the nature of the storm, or the traits and competencies of the leader at the helm.
How, then, can we be sure we have done a good job appointing the person at the helm? Most headhunters will tell the board client that they have delivered what they were asked to. The truth is that we cannot be sure. But we can do many things to hedge against the odds in the first place through the selection of the leader. But can we select if neither the traits nor the context to be faced can be known for sure?
We can make more than educated guesses. There are at least two stories at play here: the organizational dynamics and the individual's experience. We can have reasonably adequate information on both the organizational evolution over time and on the internal web of relationships of the organization at the time of selecting the leader. Furthermore, we also know the background story of the organization and its people. The educated guess now requires us to make a match between the organization to be led and the person to lead it, knowing that the background story not only encompasses both, but also constrains the choice, in that there are followers' expectations about the leader's style which must be attended to.
In countries where large corporations are publicly held, their leadership is mostly professional and access to the privileged top slots is mostly meritocratic. It is in those same countries where much of the best leadership literature is produced; and a lot of it has been produced, both good and bad. Much of the best of that literature has attempted to identify leadership traits, the circumstances of their leadership, their relationship with their followers, and a lot more.4 Some of the worst leadership literature, lurking under the guise of self-help, amounts to cheap shots at making a fast buck out of near nothing. This is how current leadership recommendations are sold: on impressions left over by advisors to princes, long dead warriors, or even watered-down versions of original insights such as those of Robert Greenleaf's servant leadership.
Overanxious executives fretting about their position on the corporate ladder may fall for nonsense leadership literature and find solace in some of it. But how is one to judge what its value is to those who buy into such nonsense despite so much sensible reading guidance available in more developed countries? Some junk will always be sold, despite the best advice.
Yet what is most bewildering, if not completely unconscionable, is that some of that junk leadership literature percolates into Latin America's larger editorial markets where good readership advice is lackluster at best. In these countries even the best American leadership literature may be discounted because a reverse alchemy of sorts is at play, turning even golden advice into clay.
Brazil is a good example with which to frame this discussion; there, large domestic companies are still largely family owned. In Brazil, a young executive stands little chance of becoming a corporate leader of a family-owned business unless he or she is a member of the family by birth or by marriage. Young and single executives who are not also heirs and want to become a corporate leader of a domestic business would do better to seek out a well-connected marriage counselor rather than rely on the advice of a management professor or rely on pursuing an MBA, at least for starters.5
Even in the few companies that have begun to professionalize their corporate leadership, the professional managers feel the owners breathing down their necks whenever a nonroutine decision must be made. There is not much room for individual originality. A recently empowered professional high-level executive at a prominent Brazilian agribusiness remarked that he liked my international strategy ideas but that they would have to be presented by the “McDonald's of strategy” for him to feel comfortable enough to take them to his board. He may know his board well and feel that they have outsourced their strategic thinking to consulting companies that package their products in a way that looks like strategy because it tastes, smells, and looks like everybody else's strategy. Presumably, this executive was reluctant to endorse any strategy beyond the obvious; yet the conduct of international business is far from obvious for domestic corporations, which have prospered locally by focusing only on anticipating local moves.6 This is why experienced headhunters say that the owners of Brazilian companies, when they resort to their search services at all, prize the humility of the candidates above any other attributes or characteristics.7 They are not interested in charisma or strategic thinking abilities. That is for the owners to exercise.
The truth is that foreign business leadership literature is worth about as much as snow plows in Brazil. That it is published at all in Portuguese ought to be a matter of concern, because it means that it is being sold, and perhaps even read; otherwise, why else would anyone publish it? In all probability, if this type of literature gets published it is due to hype and collusion. Publishing houses are mostly located in developed countries and by publishing in emerging markets they are able to extend the life of texts that have made a mark in other markets. Consequently, publishing risks are lower and there is still money to be made from thin but avid markets, particularly when they are ill advised.
Then there are the business schools acting as silent accomplices. Barely any independent thinking is carried out at local business schools in emerging markets. This is partly because business schools rely mostly on part-time faculty who teach at several schools. Because the instructors are, thus, essentially interchangeable at most business schools, the schools cannot differentiate their product except through the school's facilities and credentials. The most nimble business schools have sought international recognition through accreditation, not through the originality or relevance of their research.
Accreditation by foreign accrediting bodies does not come without a cost. A requirement to publish in international journals goes with it. This is how professors at domestic business schools are being tamed, by being encouraged to publish abroad, which largely means addressing problems directed at readership elsewhere, rather than addressing local problems or implementing locally adequate research methodologies. This problem is not only Brazilian; it is a Chinese problem as well.8 For different reasons it may also be a problem at top American and European business schools as well, at least according to the The Economist.9 If the relevance of business research is being questioned there, we should be more than alarmed in Brazil and in other emerging markets. This is because in Brazil, and presumably in other emerging markets as well, teachers with research training are relatively scarcer than in America or Europe. One presumes that business schools would want to ensure the best deployment of scarce research resources by allocating them with greater parsimony than they would be allocated in America or Europe. That in Brazil those scarcer research resources are not being carefully allocated, because American and European schools are being emulated in pursuit of accreditation, makes the waste of domestic research efforts even more discouraging.
Also, in Brazil, part-time professors, who comprise at least three quarters of the faculty at Brazilian business schools, are hired to teach, not to think, least of all to teach how to think. The latter requires substantial individualized tutoring of students. Because individualized attention is more time-intensive, to business schools it is far more expensive than classroom teaching. Only the best business schools will devote adequate resources to individualized tutoring. This may be why even at an elite Brazilian business school student individualized supervisory roles are paid at only about one fifth the comparative hourly rate paid for classroom teaching.
If business faculty were honest, they would be telling students that though they may aspire to be business leaders of the true type, with actual autonomy, they will never make it. It is not something MBA students would pay to hear; they would desert in droves, and the business schools would go out of business. Even some of the best business schools make sure the truth does not get out, perhaps even weeding out early their most enthusiastic teachers. Business schools have abandoned their mandate and have become labor market incubators. They mold and certify an anesthetized, unthinking, robotic corps of executives who will not know anything except how to reproduce foreign dogma.
But why will Brazilian MBA students never achieve positions of genuine corporate leadership in Brazil? Because true leaders, judging by American and European standards, we now know, are not hired by family-owned corporations, nor are they sought by the subsidiaries of multinationals.
The headhunters that multinationals hire to staff their corporations, however, will paint a rosier, if self-serving, story. They will tell you that multinationals wish to hire independent thinkers who are open to new ideas, willing to take risks, to manage innovation, and who have a keen eye for strategy. That is a partial list of what is asked from headhunters, like those of Korn/Ferry in Brazil.10 But the truth is that those abilities will be wasted at subsidiaries of multinationals, because multinationals carry out no research locally because strategy is decided elsewhere; therefore taking risks will not be prized nor will independent thinking. Tactful obedience is mostly what multinational corporations want from the heads of their subsidiaries; but it would not be prudent to write it down in a contract with a headhunter.
Niceties aside, the experience of headhunters also points out that domestic corporations and multinationals are seeking different species, not just different specimens of the same species. In Brazil, an executive with a multinational is not exactly fungible with the executive of a domestic corporation. This is why careers show so little cross-over after the first few years.
To this collusion of interests among publishing houses, headhunters, and business schools and their teachers and students, we must add the top business managers and the business media they support with their advertising. The top business managers are the ones who determine the pay of press agents to plug interviews in the business media. The media, of course, are mostly eager to sell advertising space but in order to do so they must allow some space for news that makes business managers and their businesses look good. This is why so much reporting on business leaders resembles homilies, rather than news or analysis.
The nature of the collusion at play does not stem from active malfeasance, but results only from each agent following his own self-interest. However, this does not make the collusion less damaging to the interest of good teaching and research at Brazilian business schools.
Self-interest is what has led to this equilibrium which reflects a blatant unconscious collusion to suppress the truth, which, putting it mildly, means that even true leadership literature born in America is mostly irrelevant to Brazilian managers. But is it so?
Arguably, the answer is yes. For instance, anyone would be hard-pressed to find in American business leadership thinking, whether good or bad, any reliable reference to the fact that in Brazil—and perhaps also in China—two business leadership career tracks may exist with no cross-over between them. You will find nothing meaningful, because for a century American business leadership thinking has focused on advice for one market for business leaders, who, for all their differences, are mostly fungible. That is, American leadership thinking, and its European counterpart, have focused on the problems of their own markets and produced mostly sound reflections on their own business leadership needs, which do not include a two-track leadership career path with no crossovers.
In Brazil, as noted earlier, there are two markets for executives: one for domestic corporations, mostly family-run, and another for executives of multinationals. That there has been almost no crossover between them is supported by inductive research conducted by a group of MBA candidates.11 They surveyed 48 corporations selected from among the largest 500 operating in Brazil as indicated by Exame, a prominent Brazilian business magazine. European, American, and Brazilian firms accounted for almost all corporations, in relatively similar numbers, as shown in Figure 1. Interestingly enough, no business leader was black, though half the Brazilian population is non-white. But this leads to another story.
Figure 1. Shares of National Origin among This Convenience Sample (48) of the 500 Largest Corporations Active in Brazil
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All Brazilian corporations were led by Brazilian executives or their owners. Only half the foreign corporations were led by Brazilians (see Figure 2). This means that only about one third of the top management positions in large businesses located in Brazil are run by Brazilians able to experience the independence of being more than an arm's length away from the owners.
But even more interestingly, 84% of the top managers of multinational subsidiaries had been employed in the same company or in another multinational immediately before their current position. Clearly, the implication is that if a young executive's wish is to attain a leadership position in a multinational subsidiary he or she should not “do” time at a domestic corporation. In fact, in our database there was not one case of a multinational hiring from within a Brazilian corporation an executive for a leadership position. These means there is a two-track career for business leadership in Brazil and none will give the leader the autonomy necessary to leave a legacy. The leader at a multinational will have come from the ranks of a multinational, where he or she will have little autonomy. The leader of a domestic company will either be a family member or an executive also with little autonomy.
Young Brazilians, born or trained to become business leaders, do not have the opportunity to meet the challenge of running an international company, either at domestic corporations that have internationalized, or at subsidiaries of multinationals. Only half of the top slot positions at Brazilian subsidiaries of multinationals are held by Brazilian executives, and the financial autonomy granted to them there will be minimal at best. Frequently, leaders at American subsidiaries in Brazil must ask headquarters for permission for issues as menial as upgrading the air conditioning of the places where they work. Managing subsidiaries of foreign multinationals in Brazil is hardly an adequate learning platform for grooming international business leaders.
As Brazilian companies internationalize, they will feel the lack of international expertise and will feel tempted to hire Brazilian executives with experience at multinationals. This is already happening, and, in fact, analysis of our data showed that immediate prior employment in a Brazilian domestic corporation was less a predictor for achieving a leadership position at a Brazilian corporation as than it was for subsidiaries of multinationals.
However, crossovers from multinationals to domestic corporations are still so rare that they attract media attention.12 Yet, given the limited autonomy enjoyed by an executive at a subsidiary it is unlikely that Brazilian corporations will gain much by hiring Brazilians with a seemingly international management veneer as acquired by those that led subsidiaries in Brazil.
Brazilian corporations willing to internationalize should not limit themselves to Brazilians who have led subsidiaries of MNCs; they should, instead, hire competent managers with international experience, even if they lack Portuguese language skills. Then younger Brazilian managers may be placed under the wing of those experienced foreign managers to learn the ropes with them.
Does this mean that there is no future in learning the Brazilian leadership style? No; the Brazilian leadership style, which is paternalistic, is probably the most fitting leadership style to lead business organizations staffed with the populations of southern Europe, Latin America, Africa, and the Middle, Near, and Far East.13 That is, paternalistic leadership works best in probably four fifths of the world. But it is not as effective in the United States or northern Europe, where much of the world's gross domestic product (GDP) and managerial books are generated.
In short, Brazilian leadership style, being paternalistic and having prospered in the shadow of a highly regulated economy, where effective lobbying capacity has proven so valuable, is a poor school for international business. The Brazilian leadership style can be deployed effectively in culturally similar countries provided that it is not Brazilians that lead locally and that the locals chosen to lead embrace the local version of a paternalistic tradition.
Take the following organizational and managerial traits as typical of Brazilian domestic management. Trust is never granted, it must be painstakingly earned through repeated displays of affection and loyalty, even to the point of selflessness. Building such a level of trust takes time; therefore seniority—or time at the business—is paramount and loyalty is frequently preferred over professional competence. Besides, evaluation of trust, allegiance, and selflessness are not easily quantifiable, so emotional displays may be at least partly taken for evidence of them, turning the workplace into one fraught with a high level of emotionality. Emotions must be perceived to be assessed; therefore, face-to-face communication will be preferred to phone communications, and e-mail will be acceptable only if the other two are not possible.
Because selflessness can be construed as evidence of organizational allegiance, compensation will generally be lower at domestic corporations and promotions will not necessarily be linked to performance. It is up to the top of the organizational pyramid to bestow exceptional rewards and those will be distributed in a paternalistic style, frequently with an eye to the beneficiary's needs rather than his or her performance.14
Clearly, the traits discussed above are not managerial traits praised in international management textbooks, though the same managerial traits, as already mentioned, may be widespread across Latin America, southern Europe, Africa, and the East, from Lebanon to China.15 The trouble with that management style is that we do not have an off-the-shelf theory to build onto, to teach; nor is there the experience to manage corporations with international activities with this type of managerial paradigm.
The paternalistic side of Brazilian leadership is not a handicap when managing Brazilians or, perhaps, most of the business world often referred to as emerging markets.16 But, because it is highly personalized, the Brazilian style's effectiveness may be blunted when paternalistic leadership has to be exercised across time zones and with little face-to-face contact. Brazilian business leaders would have to learn to grant greater autonomy to their overseas managers than multinationals grant to their subsidiary leaders in Brazil. Yet, in Brazil, there seems to be no more effective leadership style than the paternalistic one, at least judging by the results of managing Brazilians with little exposure to globalization.
In Brazil, leader means only one thing: father. This may be why a matrix type of organization is so alien to Brazilians, because they can only have one father. The paternalistic management style that Brazilians follow demonstrates an obvious flaw in foreign business leadership literature when applied to Brazil. It is, perhaps, a fatal flaw. Not only does it show that even the best American or European business leadership writing may be glaringly unable to offer useful insights to Brazilian executives, the flaw is at the root of what is necessary to know in order to make sense of foreign leadership literature in Brazil and similar emerging markets: subsidiaries of multinationals do not hire local leaders, they hire flunkies who are later promoted into near-meaningless presidencies of subsidiaries, while family-owned corporations do not really need business leaders except at times of succession.
However, successions are infrequent. The long wait may kill the heir in waiting, literally or figuratively; for the wait may last too long, or it may sap him, or her, of all the energy, willingness, and conviction that good foreign literature claims is necessary in a business leader. Critical as this bit of wisdom may be for sizing up business leadership theory and practice in emerging markets, it is not to be found in American or European literature. We have to work on it ourselves, or perhaps in closer contact with our Latin American and Asian colleagues.
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1. Behrens, A. (2012, March 28–29). Leadership. Theory review suggests best fit of a leader at subsidiaries, Business Association of Latin American Studies. Annual Meeting, Rio de Janeiro. See also House, R. J., & Aditya, R. N. (1997). The Social Scientific Study of Leadership: Quo Vadis? Journal of Management, 23, 409–473. doi: 10.1177/014920639702300306
2. Tolstoy, L. (1956). War and peace. Edited by BompaCrazy.com (several pages of Chapter VII of First Epilogue: 1813–1820).
3. As the reader may already know, Heisenberg's Uncertainty Principle denies the possibility of simultaneously determining exact values “the prime example being the position and momentum of a particle.” The Uncertainty Principle in Stanford Encyclopedia of Philosophy. Retrieved February 2, 2012, from http://plato.stanford.edu/entries/qt-uncertainty/#HeiArg
4. Take only a handful; for instance, the insightful contribution of Nohria, N. & Khurana, R. (2010). Handbook of leadership theory and practice. Cambridge, MA: Harvard Business Press Books. Or an update into the behaviour of business leaders, as provided by Goffee, R., & Jones, G. (2005). Why should anyone be led by you? Cambridge, England: HBP.
5. Brazil is not known to be particularly meritocratic; see Barbosa, L. (1996). Meritocracia à brasileira, o que é desempenho no Brasil? Revista do Serviço Público Ano 47 Volume 120(3), 58–102.
6. Top Brazilian executives formerly with multinationals argued that there is an informational schism between domestic and international corporations in Brazil, the domestic ones being on the losing side of this, as per a debate between Fábio Barbosa, president of Banco Real bought by ABN-AMRO, now by Banco Santander; José Carlos Grubisich, president of Braskem, Brazilian chemical industry; Eduardo Bom Ângelo, president Brasilprev, Banco do Brasil pension fund; Roberto Carvalho Silva, presidente Anglogold, mining company, and Alessandro Carlucci, co-president Natura, cosmetics industry, on November, 27, 2006, at AMCHAM, São Paulo, Brazil.
7. Echeveste, S., et al. (1999 Mai/Ago). Perfil do Executivo no Mercado Globalizado RAC, 3(2), 181.
8. Leung, K. (2007). The glory and tyranny of citation impact: An East Asian perspective. Academy of Management Journal, 50(3), 510–513.
10. Echeveste, S., et al., 1999.
11. MBA students to whom I remain very grateful for their work in making this paper possible, though they cannot share the responsibility for my interpretation of the data: Gedival Magalhães, Kattia Mirabello Muraro, Luciana Gerbovic Amiky, and Renato Guazzelli.
13. Behrens, A. (2010). Charisma, paternalism, and business leadership in Latin America. Thunderbird International Business Review, 52(1), 21–29. Since this publication, I have tested close to 100 Indian MBAs and over two thirds of them would choose to work for the paternalistic leader, whether he was Brazilian or American. For a perspective on why paternalism is so prominent in Brazil, see Behrens, A. (2012, January 18). Guest post: Paternalism vs meritocracy, Financial Times, at http://goo.gl/mHwoJ
14. Views similar to the espoused above may be found in most Brazilian analysts of domestic managerial traits, like in Bernohoeft, R., & Gallo, M. Governança na empresa familiar. Rio de Janeiro: Campus, 2003; Bernhoeft, R. (1989). Empresa familiar: Sucessão profissionalizada ou sobrevivência comprometida. São Paulo: Nobel; Lodi, J. B. (1993). A empresa familiar (4th ed.). São Paulo: Pioneira (Biblioteca Pioneira de Administração e negócios); Secco, R. (1980). O administrador organizacional e o processo decisório. Revista Executiva, Porto Alegre, 6(24), 36–67; Vidigal, A. C. (1996). Viva a empresa familiar. Rio de Janeiro: Rocco; Macedo, K., et al. The successors process into family firms and exclusion of women. Psicologia e Sociedade (online), Set./Dez. 2004, 16(3), 69–81. Available in Portuguese at: www.scielo.br/scielo.php?pid=S010271822004000300009&script=sci_arttext
15. Aycan, Z. (2006). Paternalism: Towards conceptual refinement and operationalization. In K. S. Yang, K. K. Hwang, & U. Kim (Eds.), Scientific advances in indigenous psychologies: Empirical, philosophical, and cultural contributions (pp. 445–466). London, England: Cambridge University Press (in particular, p. 446).
16. Behrens, A. (2010). Charisma, paternalism, and business leadership in Latin America. Thunderbird International Business Review, 52(1), 1–73.