Informal relationships are critical to get things done in business. This is true everywhere, but particularly so in Asia. While in China there is a specific cultural construct to indicate the importance of social relationships (“guanxi”), all Asian cultures put special emphasis on the value of trust and relationships in doing business. Today the expression “social network” is closely associated with the online platforms that allow people to record their contacts and keep in touch with them, but social networks existed for as long as people existed. A large body of research shows that social networks matter, because they can facilitate access to the resources, knowledge and information other people have.
Social networks are particularly important to get things done in large business organizations, especially when people try to achieve non-routine objectives that require aligning people across functions, business units, or countries. If skills, ability, and aptitudes are the software of leadership, social networks are the hardware the infrastructure required for this software to generate results.
Yet, contrary to what many people believe, not all social networks are equally useful. In fact, research shows that some networks may even be a liability, preventing leaders to navigate the complex world of modern organizations.
An important risk of professional social networks within business organizations is that they may reproduce the hierarchical structure and the functional silos in the firm, rather than complementing them. Â The normal hierarchical channels and procedures in organizations are, almost by definition, designed to deal with routine tasks. To push novel initiatives and business deals through the firm, leaders need the informal networks that cut across the hierarchy. Ties that facilitate communication up and down the hierarchical chain are important, but horizontal ties that cut across the silos in the firm are critical to manage change.
How is Asia doing in this realm? Not too bad, but improvement is necessary. Professional networks are not immune to the traditional hierarchical culture that permeates most Asian societies, and that may be an important factor holding down the emergence of Asian leaders that can play a critical role in large, multinational organizations, being these Asian, European, or American.
I am currently conducting research that compares managerial networks across cultures, based on a large sample of professional networks of managers from all continents. Preliminary analyses comparing the networks of Asian managers with those of European managers reveal some very interesting patterns. After discounting the effect of formal role (i.e CEO), gender, and age, which may affect the composition of a manager’s network, the proportion of horizontal ties in the networks of Asian managers is significantly smaller than that of their European counterparts.
It is interesting to see where the missing horizontal ties are. Asians are similar to Europeans in terms of the proportion of ties to people lower in the formal hierarchy, but they have a significantly higher proportion of ties to people in higher ranks. In other words, the networks of Asian managers are oriented vertically, following hierarchical lines, and are less developed horizontally. This tendency is slightly less pronounced in people below 40 years old, but it is still apparent.
Two other characteristics of Asian networks complement the picture. Neglecting horizontal networks may be less detrimental if a good part of the vertical contacts are in other functions or in other companies: after all, having good access to influential people outside one’s own business unit or firm always helps! Unfortunately, this is not the case. The networks of Asian managers are significantly more focused on their own function within the firm than those of European managers are, and less likely to include contacts working in other firms: Asian managers tend to network upwards, and within their own business units.
This pattern surely results from the way in which things get done in Asia: after all, people are smart enough to develop the networks they need to get their work done. Yet, it also shows where Asian leaders may fail. Asian managers may be less able to get non-routine tasks done, because these tasks typically require mobilizing people outside their own business units and cut across hierarchical lines.
Can something be done? Yes, but it won’t be easy. Unfortunately, some other characteristics of Asian managers networks pose additional challenges. When compared with their European counterparts, the networks of Asian managers are significantly more cohesive: they have more connections between contacts, and the manager’s ties with these contacts are stronger.
My own research shows that these cohesive networks are harder to change, even in the presence of strong external drivers. Being part of a cohesive network is comforting. We can trust these people; we can count on them when we need them. A cohesive network is also easier to maintain than sparse networks where your contacts don’t know each other. Here, it is you who have to do the maintaining. In a cohesive network, anybody can do it and all benefit. But cohesive networks can be also a trap. They limit our ability to reach out, can blind us to events that go beyond the network, and make harder for members to develop relationships outside the network. This is why changing them is harder.
To break away from this trap, organizations have to create opportunities for people to develop ties outside their familiar environments, moving them around and sending a clear message that they go there to build new professional relationships, not just to learn new skills. But organizations can only create opportunities and provide incentives. The task resides ultimately with the individual, who needs to get out of his or her comfort zone. A manager I know makes a point of saving one day a week to have lunch or coffee with one person he just met in the last month or so, especially when he anticipates that they may be mutual benefits to the relationship. Simple actions like this break the inertia, and change people’s mindset. They are hard at the beginning, until they become a routine.
Contrary to what many people believe, multinational corporations operating in the region are avid for local talent. These people are more likely to understand the local cultures and to speak the language of their clients. They are also cheaper, because they do not command expensive expatriate packages. Yet, companies routinely report difficulties identifying and developing local talent for senior leadership positions. Language barriers and idiosyncrasies of Asian managers that set them apart from Europeans and Anglo-Saxons (less likely to voice their opinions and to challenge authority, etc.) are often cited as the main causes behind these difficulties. An analysis of Asian networking patterns may also have a big role in explaining their difficulty to succeed as leaders in multinational corporations. Asia is growing at an unprecedented pace and needs Asian leaders to sustain this pace. The right network is a critical element in these leaders toolkit.