Editor’s note: As Chinese businesses venture abroad, a daunting issue has presented itself: managing cultural differences. How does a successful global manager bridge different cultures and become a local leader? Shanghai Daily reporter Ni Tao interviewed Mansour Javidan, director of Najafi Global Mindset Institute at the Thunderbird School of Global Management in Glendale, Arizona. The interview was last Friday at Fudan University. The following is the edited version of the interview.

Q: What is the most important attribute of cross-cultural leadership?

A: I will start with explaining what it means to work in an intercultural environment. Think about your elementary school teacher, textbooks. Did they teach you to live and work with people from outside of China?

In almost all cases, I asked managers that question and with very few exceptions, almost everybody says I learn how to live and work with people in my country, like me. That is our comfort zone.

Now in a cross-cultural situation, what do we do? One element of global mindset is what we call cosmopolitan outlook. Cosmopolitan outlook means how much you know about cultures, political systems, governments, and economic systems of other countries.

Q: Why does global mindset matter?

A: In the next 20 years, my prediction is that we will see a lot of Chinese companies go outside of China. So why it matters is because companies are going beyond borders.

Global mindset is the combination of nine different attributes. And these nine attributes we categorize into three dimensions. We call them capitals. Global psychological capital, intellectual capital and social capital.

Intellectual capital is very much your knowledge of your industry, how your industry, your competitors, your customers work in different countries.

Psychological capital is all about emotions. For example, passion for diversity; are you interested to learn about the French, the Chinese, the Americans?

You may be very knowledgeable about other parts of the world, but if you are not interested, you are not going to dedicate any energy to it.

Social capital is about how you build relationships with people from other parts of the world. One part of it is what we call intercultural empathy. Very simply put, if you are a Chinese manager, how easy is it for you to put yourself in the shoes of an American manager?

Q: Which of the three dimensions is most challenging?

A: Every manager and company has asked me the same question. Here’s the way I answer them. Of the three capitals, the easiest part to develop is intellectual capital, because it’s cognitive. The toughest part is psychological capital, because it has a lot to do with our personalities and childhood experiences.

So what happens to a child up to the age of 17 or 18 has a lot to do with that child’s personality at age 4. If someone has very low passion for diversity, or has no interest in quest for adventure, those things are much harder to change. You cannot teach any passion for diversity.

When I work with companies, the suggestion I give them is this: if you have a number of candidates for a global position, of course, technical requirements, expertise, successful track record, all of them are critical. But in addition to that, you need to pay attention. Does this person have psychological capital? Because if this person is very low on psychological capital, it’s risky. There are red flags.

Q: Does the global mindset apply to business only or is it universally applicable, regardless of the sector?

A: Either in 2010 or 2011, I was in Pudong. I gave a talk to 200 senior officials of the Communist Party of China at the Center for Executive Leadership of China, the Communist Party’s training school. The person in charge told me that the former Chinese president, Hu Jintao, had decreed that global perspective is now a requirement for Chinese Communist Party officials. And that’s why they invited me.

The issue of global mindset is important for governments, for non-profits, for corporations. I work with the United Nations, because they want to help people from different cultures work together instead of fighting. So global mindset applies to any situation where you have to deal with people from other parts of the world.

Q: Did your surveys reflect patterns about relative cross-cultural communicative strengths of managers of different nationalities?

A: Right now we almost have 20,000 individuals in our database of global mindset. And they come from many parts of the world. We selected the top 10 countries in our database. These are countries where we have large samples of managers, the US, of course, India, Mexico, China, Japan, Brazil and a few other countries.

The question we asked was how do the managers in these countries compare in terms of global mindset. So we compare their average scores.

What we found was that Brazilian managers have the highest average scores of all the 10 countries.

And that makes sense because Brazil is a mix of everything, a mix of religions, ethnicities, background. When Brazilian children grow up, they are exposed to all kinds of diversity.

Chinese and Japanese managers had lower scores compared to the others.

In the case of China, the best reason we can come up with as a result of our conversations is the history of Chinese business. China’s business up to the late 1980s was very much government-run, bureaucracy, internally focused. Not much exposure at all to anybody outside China. So very isolated. Starting in the late 80s and up to today, Chinese business has been exposed to foreign companies, but mostly in China.

The reason for Japanese managers is different. Based on what we heard from Japanese managers, most Japanese managers do not like to work outside of Japan or with non-Japanese. They prefer to work in Japan, and with fellow Japanese.

Q: Do cultural stereotypes hinder managers with cross-cultural leadership?

A: Here’s the difference between cultural stereotype and cultural understanding. Cultural stereotype means 100 percent certainty.

So if you are American, I’m 100 percent certain you are individualistic. If you are Chinese, I am 100 percent certain you are collectivist. In other words, it is a very simplistic view of human beings.

Cultural understanding is this: In general, Chinese managers are more interested in their families, much stronger family ties, family values than American managers. Now suppose I’m sitting in front of a Chinese manager, I’m not saying this Chinese manager is 100 percent family-oriented. I’m paying attention. I’m going to ask you questions about family, about relationship, to confirm you as a Chinese manager are closer to that stereotype.

When I’m sitting with an American manager, I’m going to figure out how family-oriented is that person.

In other words, the difference between cultural understanding and cultural stereotype is that I start with questions in cultural understanding. I have a hypothesis that I’m going to test.

In cultural stereotyping, I don’t have a question. I only have an answer.

Q: Management gurus caution foreign managers against lecturing locals. But sometimes outsiders do know better. An example is Carlos Ghosn, who turned Nissan around. How to strike the balance between the two practices?

A: Let’s take it to a simple situation. I’m a Chinese manager from Lenovo.

I’m now hired by Huawei as a senior executive. I’ve been with Lenovo for 20 years, very successful.

And now I come and work for Huawei and you are my employee at Huawei.

Every meeting we have I start by telling you at Lenovo this is how we did it, and we were very good. How will you react as a 10-year employee of Huawei? You can get upset.

So this issue of lecturing people is not just about cross-cultures, it’s also from one Chinese company to another Chinese company. No one likes to be told you are bad.

Q: What is lacking in Shanghai’s tool chest to become a top innovative hub like Silicon Valley and Tel Aviv?

A: I wrote a piece for the Harvard Business Review in 2006 about the challenge for Chinese executives. We know that a lot of Chinese executives are very ambitious. They want to have innovative products, and brand names as good as GE or Cisco or others.

But the question is, how do you encourage your organizations to be innovative. Not every idea they have will succeed, a lot of them fail. That’s part of the package. So one thing of the culture of innovative companies we have seen is that they are willing to take risks. For a Chinese company to encourage innovation, they need to expect some risks.

And in that article I made the point that Chinese companies tend to be top-down. People in top positions have a lot of power. And they dictate a lot of things to people at lower levels. In cultures like that people are reluctant to take risks, because if I take a risk, and I fail, my boss may fire me.

So in that article I wrote my view that the Chinese executives have the talent, the resources, the market opportunities, to be very innovative. But for them to get there, they need to pay attention to the culture of their organizations.

The more top-down the system is, the bigger the chance people will become reluctant to take risks.

Q: Chinese entrepreneurs are buying up foreign firms and assets abroad. But many are cross-culturally insensitive. How do they compensate for that?

A: There was actually a survey done of executives of a thousand Chinese companies either expanding abroad or thinking of expanding. Many of them were asked what was their major concern.

The No. 1 concern was managing cultural differences. Yes, the opportunities are there, and Chinese companies are going to go after them. But Japanese companies did the same thing in the 80s, and they failed.

The track record of Japanese companies outside of Japan is not very good, because Japanese companies expected everybody to be Japanese. They were imposing their ways of doing things too much on other people in other countries. And as we discussed earlier, people don’t like that.

So the challenge to Chinese entrepreneurs is going to be first of all, understanding of this issue. And secondly, willingness for them to learn and to encourage their teams, the Chinese employees, to learn that, because if they don’t, they will pay a price. The price can be expenses going higher, besides, you lose local talent, market share, your brand and reputation, or you simply fail.