Informal Network Leadership—Proactive Versus Reactive Strategic Choices

Global managers know that developing networks in a host country can be a tedious endeavor. Whereas developing friendly work relationships locally is often regarded as less problematic, developing informal networks is challenging but important for business success. The function of informal networks becomes relevant for transactions under ambiguity that require trust and commitment between actors. Global, or expatriate, managers need the support and goodwill of a variety of stakeholder in business, like colleagues, employees, customers, suppliers, government representatives, community leaders, and many more to fulfill their companies’ mission, which is, simply put, to build a successful and profitable market presence and become a respected and hopefully liked local actor. Why is it so difficult to build a network of deep relationships abroad? Here are some of the major reasons.

Informal networking—one size fits all?
We often think of networking, in a nutshell, as an activity that in principle everybody can do and that requires going out there and meeting people, being extroverted, doing small talks, being likeable, and most importantly, thinking instrumentally and mentioning things that we possess or can do that a potential network partner wants. However, the conventional ideals of networking are not as universal as we may think. Informal networking abroad follows different ideals than managers are used to in their home country. Due to different values and norm systems, the way that social ties are chosen, concluded, maintained, and deepened differs across cultures. Societal structures play an important role in setting the framework for networking possibilities as some cultures sharply distinguish informal networks in in-groups from out-groups. Out-group members are often per se not relevant for any networking activity. Global mangers are often regarded as out-group members per se. Given their status and that they are being exposed to a new business culture, it is tough to engage in network building. While culture can change, informal networks appear to be persistent. There is no shortage of evidence that country-specific informal ties and networks maintain their importance in many countries. Some well-known examples of informal networks we refer to here range from yongo and inmaek in South Korea, guanxi in China, wasta in the Middle East, or blat/sviazi in Russia and large parts of the post-Soviet Union. These informal ties and networks are embedded in the respective cultural environments. Hence, the nuances of these informal networks vary across countries. However, they have in common that they play an important, sometimes central, role in doing business in the respective countries while they are difficult to penetrate for outsiders. The dilemma is that expatriate managers are outsiders.

Informal networking abroad follows different ideals than managers are used to in their home country. Due to different values and norm systems, the way that social ties are chosen, concluded, maintained, and deepened differs across cultures

How to network effectively aboard?
For the reasons put forward above, it is an important competency for global managers to thoroughly understand a respective networking context and to proactively lead the network-building process to help the local business prosper. There are two basic strategic choices—reactive and proactive—that can be pursued.    

Reactive strategy. A reactive strategy focuses on learning how to comply with local norms and imitating what local competitors do. Global managers can learn local practices, values, and norms of behavior and change their specific routines, practices, and behaviors over time to resemble local norms. By doing so, global managers may gradually become more of an insider in a particular host country. However, this is a daunting task for outsiders, as many informal networks feature rather particularistic and personalistic characteristics. Trying to get network access can lead to disappointment, especially for those global managers—although not all—from Western countries where interpersonal ties in business are typically believed to be more rational and instrumental. The primary approach of the reactive strategy is therefore related to harnessing the informal networks of local managers. A way for foreign companies to overcome the lack of informal networks is by hiring local managers who possess strong informal networks. However, this approach involves substantial costs and certain risks. Harnessing the local managers’ informal networks may result in considerable costs being incurred to understand the quality and influence of their informal ties and how they can be beneficial, yet this may not guarantee the acquisition of the same level of informal networks as local counterparts. In other words, hiring local managers who possess influential informal networks may lead to a single access point to networks for a foreign firm, which would be a too narrow a focus on one or a few local individuals. There is also a risk that these individuals may become too powerful in decision-making within the organization, which may result in a loss of control. Moreover, local managers may use a foreign company to accumulate social capital for their own gain and eventually leave the company, taking those important networks with them as well as insider knowledge. Further, trust issues may arise as well as difficulty in controlling the information exchange within the informal network of the local manager. Some informal networks feature behavioral ethics that demand loyalty between informal network members to be of higher priority than to a corporate code of conduct. Hence, there is a risk that competition-relevant information and intellectual property would travel via informal networks to competitors. How to control this risk is an issue firms must care about. A proactive strategy is not risk-free either but represents a second option to develop informal networks in host countries.

Proactive strategy. Foreign companies and their foreign managers are viewed as belonging to a different class of actors compared to their local counterparts because of their foreign roots and origin. As a result, they are often shielded from institutional isomorphic pressures. This means that, as long as they act within the boundaries of formal laws and regulations, foreign companies have the discretion to choose their appropriate level of responsiveness to the local environment. Being exposed to a multitude of diverse and often culture-bound local practices and patterns of activity, foreign companies can enjoy some latitude to choose a variety of different patterns that they think fit them best (a fact known, for instance, in Japan as gaijin [Engl. foreigner] bonus). In contrast, local companies often fail to challenge existing norms, expectations, and routines institutionalized in the society because this requires a great deal of time and effort to gain support from local constituents and incurs substantial costs in the form of sanctions from actors who deem such a challenge illegitimate. Foreign companies can confront local norms with fewer costs because they are less expected to adopt locally established practices or social norms. Therefore, foreign companies may overcome the disadvantages arising from the lack of informal ties by deviating from the local way of building and capitalizing on informal networks. Instead, they can proactively develop more extensive diverse and instrumental ties across different groups of actors and not be constrained by cultural norms or in-group/ out-group sentiments and animosities. This can be used as an advantage over local rivals. Hence, foreign companies can capitalize on their competitive strength and reputation to build their informal networks. The competitive strength and reputation of foreign companies can affect their legitimacy in host countries, alleviate opportunistic behaviors of local stakeholders, and increase social acceptance of institutionally deviating behaviors. Large foreign companies with a strong brand name or technology leaders are usually seen as competitive players, and those credentials draw local attention and can be turned into networking power. Thus, foreign companies can effectively enhance their informal networks by driving various initiatives for collaborations. Besides that, many international business clubs (such as the Rotary Club and the Lions Club) and special interest groups for specific industries also represent international networking platforms at the upper and top management level in many countries, providing various networking opportunities for their members through regular meetings, forums, and conferences. While foreign firms compete with local firms for high-quality network ties, access, and influence, it remains an open question whether a proactive strategy can beat local firms in their networking activities. Nevertheless, a proactive strategy can open up opportunities to foreign firms that local firms may not have, and that is the sweet spot upon which foreign firms can build their networking power.
Although a proactive strategy provides some benefits that cannot be achieved by a reactive strategy, it does not come without drawbacks. A proactive strategy calls for a long-term approach. Foreign companies often need to invest for a long time to create informal networks. This fact questions the common practice of using limited expatriate contracts that allow leaders to stay for a limited time, usually 3–5 years, in a country. Given this rather short time frame, effective networks can hardly be established.

Conclusion—Better Go DIY
In sum, the lack of host-country-specific informal networks can be a double-edged sword for foreign companies. Depending on their capability to build and maintain their own differentiated informal networks, the absence of host-country-specific informal networks could offer either a competitive disadvantage or a window of opportunity to create advantages based on a firm’s foreign status. Finally, as complying with local cultural standards can be difficult for foreign firms, especially when local norms deviate sharply form a foreign firm’s convictions in terms of, for example, ethics, gender equality, diversity and inclusion, etc., foreign companies should focus on building their own organically grown informal networks rather than conforming to local norms in order to benefit in the long run.

More here:

Lee, J., Paik, Y., Horak, S., & Yang, I. (2021). Turning a liability into an asset of foreignness: Managing informal networks in Korea. Business Horizons, forthcoming.
Link: https://doi.org/10.1016/j.bushor.2021.04.002

Further related reading (selection):

Horak, S. (2018). Join in or opt out? A normative–ethical analysis of affective ties and networks in South Korea. Journal of Business Ethics, 149(1), 207–220.
Link: https://doi.org/10.1007/s10551-016-3125-7

Horak, S., Afiouni, F., Bian, Y., Ledeneva, A., Muratbekova-Touron, M., & Fey, C. F. (2020). Informal networks: Dark sides, bright sides, and unexplored dimensions. Management and Organization Review, 16(3), 511–542.
Link: https://doi.org/10.1017/mor.2020.28

Horak, S., & Yang, I. (2016). Affective networks, informal ties, and the limits of expatriate effectiveness. International Business Review, 25(5), 1030–1042.
Link: https://doi.org/10.1016/j.ibusrev.2016.01.006


Employee engagement in the digital work era

How to be a part of it when we don’t go to office anymore? //

In recent years, and particularly this one, the workplace has been moving online. Many employees are now working from home without direct supervision from managers or coworkers. This can mean that workflow decreases as there is no encouragement from those in charge, as well as a reduced engagement by the workers themselves. As this looks likely to continue, here are a few ideas to improve employee engagement.

Why not – Making social media a part of the job. Working from home means that employees engage less with their colleagues simply because of the enforced distance between them. However, utilizing social media platforms can help to bridge that barrier quite effectively. After all, most of us are already playing around on social media sites on a daily basis. Homeworkers are no exception, so why not harness this when communicating with employees? Businesses would do well to create Facebook pages where updates within the workplace can be made. Alternatively, group chats can be created on spaces such as WhatsApp and Slack, enabling quick and easy messaging between specific groups. Zoom and Teams are popular and ideal for meetings, while GatherTown is great for creating a space for coffee breaks so employees can have a chat and network informally, much as they used to do in person. Further, many firms prefer Yammer an open networking tool that allows to tab into the knowledge of others.
Conversations with and questions to others can be viewed by all members and increase the knowledge of participants, who share ideas, discuss updates and network across the global organization.

Leadership culture is key. Leaders need to lead by example and avoid making the impression that remote work is a burden. Leaders that are largely absent or get in touch occasionally via email only will destroy a productive work environment and dilute team cohesion. Leading (often global) virtual teams requires extra efforts and a true interest in the challenges managers and employees face in their environment. Since the private and work sphere more and more merge these days, disregarding the private life of team members would be ignorant. Expecting managers and employees to perform while working remotely starts with the right leadership attitude and culture. They are framing the new normal at work. In a global management environment having cross-cultural compassion skills is key leading a remote team and creating a high-performance work environment.

Communicate. It’s clear from this that communication is vital to successful working when everyone is apart. With remote working the new norm for many, leaders will need to up their game in terms of how they communicate to their teams. Part of this involves creating and setting out detailed plans and goals for remote workers so that they can work more effectively on their projects. This might even see an increase in output from workers, as it has been shown that nearly 40% of homeworkers finish their tasks faster than when at work. By providing goals, everyone gets set up for a successful workday. By including workers in these decisions and taking care of their needs, management will also be promoting a sense of belonging which, in turn, promotes a better work ethic.

Efficient collaboration and information access. An important aspect to promoting a good working environment is to ensure that the team works well together. In order to get good collaboration between team members, employers will need to provide easier ways for this to happen. There are a number of online team collaboration options available. These can include clear calendars and schedules as well as organized meetings to encourage idea-sharing. In conjunction with this, it’s important that employers make it easy for employees to get hold of information. An inability to get access to important information is definitely going to cause a reduced workflow and that’s through no fault of the employee. Relevant information should be readily available to the employee in order to encourage working. Having to trawl for information is discouraging.

However, what all of this comes down to is making the work experience fun – or at least pleasant – for the stay-at-home employee. When encouraging engagement, workers should feel like they want to participate. Tapping into that common phenomenon of FOMO (fear of missing out), is a way to get workers engaged, participating in the work, and adding input. Employers will need to be proactive, though, in order to get here, and leaders need to nurture this team spirit within their virtual teams.

Redes informales en los negocios: los lados oscuros y brillantes

La creación de una red de conexiones informal puede ser vista como una actividad positiva con resultados benéficos para los individuos, las empresas y la sociedad en su conjunto, pero la interconexión informal puede también llevar a la colusión, mafias, nepotismo, y otras formas de conducta poco éticas o corruptas – principalmente relacionada con la investigación sobre mercados emergentes. Hasta la fecha, la construcción de redes informales y su entrelazamiento y desarrollo cultural no ha sido centro de la gestión internacional o los estudios organizacionales, una brecha que este número especial busca darle atención. Este número especial contribuye a comprender mejor las dinámicas de las redes informales y su ambivalencia, en la cual las mismas redes tienen diferentes modos de operación y tienen lados positivos y negativos intermitentemente o simultáneamente. Demostramos que el contexto en el cual las redes informales operan, resalta su complejidad, y fomenta el dialogo entre los académicos que estudian las redes informales en una variedad de países. Usando una perspectiva contextual y comparativa nos permite conceptualizar redes informales en una manera más integrada y balanceada. Entender el funcionamiento de la creación de una red de conexiones informal -conocidas como guanxi, yongo, jentinho, wasta, y blat, en entornos culturalmente específicos, pone a los valores Occidentales, las estructuras sociales, y los ideales de comportamiento en perspectiva y pone a prueba las soposiciones, narrativas y teorías. Debido a que la creación de redes informales es una manera convencional de hacer negocios en muchos países, cómo se describe en este número especial, definiendo los lados iluminado (positivo) y oscuro (negativo) de las redes informales es fundamental para la gestión responsable y el éxito empresarial en las corporaciones multinacionales.

More here:
Horak, S., Afiouni, F., Bian, Y., Ledeneva, A., Muratbekova-Touron, M., & Fey, C. F. (2020). Informal Networks: Dark Sides, Bright Sides, and Unexplored Dimensions. Management and Organization Review, 16(3), 511-542.
DOI: https://doi.org/10.1017/mor.2020.28

Remote work: How to network informally?

With far less face to face, real-life interaction, maintaining informal relationships at work is challenging //

Today, many of us are working from home. While this can still mean good productivity, it does mean that our connections with other people such as our colleagues can be somewhat limited. In fact, without the usual coffee break meetups, chats in hallways, or gossips over the copier, it can be very difficult to maintain these informal ties away from the office. So, how can we stay connected to our colleagues and business partner while remote working and why is it so important?

Importance of keeping in touch. Remote working can ensure that a good flow of work is maintained, but without human connection, employees often struggle getting things done. With everything being online, remote workers can lose that sense of connection with their colleagues, something that can actually be very beneficial when it comes to workflow and mental state. Though companies will have open communication channels such as email or meetings scheduled, this is usually serving work purposes only. Gone are those meetups that help receiving important information and reconfirm trust and collaboration with colleagues. Further, without these informal encounters, it can be difficult to maintain focus and enthusiasm for a job. Instead, employees can end up feeling isolated and stressed. The FOMO (fear-of-missing-out) feeling can become a dominant feeling. However, companies can help promote this aspect of work-life even with everyone spread apart.

Chats over coffee – online. Similar to when in the physical workspace, home employees should be encouraged to take regular breaks throughout the day as this can improve productivity. When meeting in person won’t work, employers can set up virtual coffee room meetings at the same time of day. In this way, a routine is built, and everyone can get their chats in without having to think about work. Team members can join a larger group chat, or set up smaller ones among themselves. This works well with, for instance, GatherTown where employees can chat and network informally much as done in person.

Keeping up engagement. The key to keeping up positivity is encouraging regular engagement among all employees. It can be a great idea to start up a regular game. This could be a ‘question of the week’ game where workers take it in turns to post a general question that everyone answers. In this way, employees can get to know each other better as well as thinking about things outside of work. It can also spark further conversations that can then translate over to the coffee breaks. Alternatively, more complex games could be set up, such as a game of group hangman or other trivia games.

Another option is to set up team contests or challenges. Not being in the office doesn’t mean some of these popular events should go ignored. If your company has an annual contest, keep that going. And if it doesn’t, well, why not start one as something new and exciting. Sparking a little friendly competition and encouraging teaming up is the perfect way to get everyone involved and engaged. This may also create a perfect team dynamic with links to actual work tasks.

A further option to think about is virtual workouts. With employees siting at home they usually exercise less than usual. There’s no better way to push engagement, team spirit, and camaraderie than by engaging in a round of yoga, chair stretches or some other fitness exercise to keep everyone stimulated. This will also go a long way in building a strong core team, one that will translate well back in the face-to-face world too.

While not every employee is into fun, entertainment or sports events, companies may set up informal interest groups and use technology that enables online break out rooms so that private talks can take place. Many firms already utilize technologies that enables closer-to-reality experiences such as augmented reality. Informal interest groups that form within firms may include book clubs and reading circles, travel clubs including business travel clubs, amongst other.

Firms have also made very positive experiences with creating and experimenting with informal groups interested in developing new products and services. Overall, interest groups can be leisure-oriented and/or designed based on the respective industry culture, i.e. taking into account the lifestyle and professional culture of the industry the company is active in.

While these ideas help to create an informal sphere where informal ties and networks can be developed and maintained, privacy concerns when chatting online and video-meeting online remain and require a solution to fully take advantage of the output informal ties and networks can produce for the firm.

Remote work: Social anxiety and the Fear-of-missing-out (FOMO)

How leaders can help to combat feelings of FOMO and get the most out of work //

What is FOMO? FOMO (Fear of Missing Out) encompasses the idea that employees are feeling detached from their normal routine. Some employees may feel that something is missing from their working lives and that they are cut adrift from their colleagues. Feelings of FOMO have risen in recent years.

How has FOMO affected the lives of employees? FOMO has become increasingly worrying for employers. As constant social media checking has become an everyday habit, more employees are struggling to log out mentally after a long day of work. The need to check emails has compounded this. Employees feel they have to send off one more email and want to be seen as being productive. They want to make sure they finish all their work as there’re no set start and finishing times for remote working but employees need to switch off and turn off emails. As an employer, the welfare and health of your employees should be of paramount importance. While there is an element of disconnection when working remotely, video meetings can help replicate an office environment and interaction. Employees like to keep in touch with their colleagues and a weekly catch up is a good way of doing this. Tools like Zoom can facilitate this and you could carry out activities such as informal information sharing to boost morale.

Changing the focus of FOMO. While FOMO can impact some more employees more than others, there are strategies that can help deal with this. Changing the focus to make people feel like they are included will go some way to rectifying FOMO. Encourage people who feel disconnected or disenfranchised to feel that they are part of a team. Incorporate fun things during those weekly video calls, such as quizzes so that people can participate, which will help them to forget about their FOMO at least for a few hours during this time. With FOMO, there will be some workers that will be desperately missing colleagues. A natter at someone’s desk helped break up the working routine. Now, new ways have to be found to keep conversations going as working remotely can stir up feelings of isolation and loneliness. People respond in different ways to changes and adaptation can be harder for some than others. Being empathetic can help foster a culture of trust and respect. Getting an entire team to pull in the same direction can be challenging. During times of remote working, there should be an element of leniency, so leaders shouldn’t be hard on your colleagues when they are struggling.

How to lead against FOMO? Now more than ever, communication is vital! With more tools at our disposal, it should be easier. Screen sharing and video conferencing can help with this and should be embraced to make teams more tightly knit, reducing FOMO. Maintaining informal ties works against FOMO, although this is challenging in an online environment. However, there are tool available that are of help. GatherTown is great for creating a space for coffee breaks so leaders can have a chat and network informally with their staff, much as they – hopefully – used to do in person. Leaders should take the time to invest in their employees emotionally so that, in turn, employees can confide in their boss when they encounter difficulties working at home. Embrace new management techniques so that employees can confide in you.

It can be easy to disengage from your employees while working remotely. This is why reaching out is essential. Check in on your employees and encourage them to reach out to friends and coworkers to alleviate these feelings.

How to turn leader favoritism into something better

How empathy‐based favoritism can help to develop organizational social capital //

The question of how to treat subordinates fairly and justly is a central ethical challenge for responsible leaders. Typically, leaders encounter challenges between differentiating their interactions with employees to build a more personal relationship and leveling their interactions with employees in an indiscriminate manner. This balancing act between two different priorities may pose an ethical dilemma for leaders. Though leader favoritism commonly occurs, it is conventionally regarded negatively as fairness norms require leaders to treat followers equally.

“leader favoritism is conventionally regarded negatively as fairness norms require leaders to treat followers equally”

In our study, we explore different views on leader favoritism based on different ethical principles. We develop an alternative to the conventional view and suggest that leader favoritism may not necessarily lead to negative outcomes when empathy‐based favoritism is applied. While controlling leader favoritism is unrealistic and ignorant to the relationship-building process between a leader and subordinates, the organizational social capital, goodwill, and resources leaders gain from their relationships with subordinates enables a leader to assemble the resources (e.g. knowledge) necessary for successful change. In this vein, we recommend drawing on the ethical principles of a utilitarian approach by balancing particularism and universalism, which is helpful to build organizational social capital.

We propose that under certain conditions leader favoritism may not lead to negative outcomes”

In line with the greatest happiness principle of Mill’s utilitarianism to achieve a high level of organizational social capital, a leader should consider the radius of trust and/or externalities from his or her favoritism in an organization. The notion of social liability highlights the fact that personal ties are not necessarily helpful for all employees, as they benefit exchange parties at the expense of others. Ideally, the goal would be to maximize cohesiveness or trust (social capital) and minimize the radius of distrust (social liability) for the higher level of organizational social capital from leader favoritism. We argue that this may be achieved when an in-group’s social capital from leader favoritism produces positive externalities, during which the radius of trust can be larger than the group itself, with the potential for cooperation to spread beyond the in-group members. In other words, the factor affecting the supply of social capital is not the internal cohesiveness of in-groups per se, but rather the way in which these groups relate to outsiders. We therefore suggest that a leader should focus on the empathic bond among in-group members (social concerns) rather than on loyalty (equity), since equity-based interactions cannot be free from bias. Since in-group clannism within organizations can increase the negative externalities associated with closure, restricting the free flow of information and knowledge (e.g. groupthink), a leader should encourage good particularism and discourage bad particularism.

Our proposal of building organizational social capital moves away from the conventional approach of looking at the divergent ethical views toward favoritism as competing or contradictory. Complementary to our suggestions, potential negative effects of perceived leader favoritism by out-group members can be reduced by implementing fair reward systems and transparency in decision-making behavior and operational procedures. 

More here:
Yang, I.; Horak, S. & Kakabadse, N.K. 2020. An Integrative Ethical Approach to Leader Favoritism. Business Ethics: A European Review, forthcoming. DOI: http://dx.doi.org/10.1111/beer.12309  

* Photo credit: “emperor penguins” by sandwichgirl is licensed with CC BY-NC-ND 2.0.