Leader Cultural Intelligence and Organizational Performance

TL;DR

This study demonstrates that leader cultural intelligence positively impacts organizational performance in multicultural settings, with organizational structure mediating this relationship, based on empirical data from knowledge-based companies.

Contribution

It provides empirical evidence linking leader CQ and organizational performance, highlighting the mediating role of organizational structure in cross-cultural environments.

Findings

Leader CQ directly improves organizational performance.

Organizational structure mediates the CQ-performance relationship.

Higher leader CQ correlates with better organizational outcomes.

Abstract

One of the challenges for international companies is to manage multicultural environments effectively. Cultural intelligence (CQ) is a soft skill required of the leaders of organizations working in cross-cultural contexts to be able to communicate effectively in such environments. On the other hand, organizational structure plays an active role in developing and promoting such skills in an organization. Therefore, this study aimed to investigate the effect of leader CQ on organizational performance mediated by organizational structure. To achieve the objective of this research, first, conceptual models and hypotheses of this research were formed based on the literature. Then, a quantitative empirical research design using a questionnaire, as a tool for data collection, and structural equation modeling, as a tool for data analysis, was employed among executives of knowledge-based companies in the Science and Technology Park, Bushehr, Iran. The results disclosed that leader CQ directly and indirectly (i.e., through the organizational structure) has a positive and significant effect on organizational performance. In other words, in organizations that operate in a multicultural environment, the higher the level of leader CQ, the higher the performance of that organization. Accordingly, such companies are encouraged to invest in improving the cultural intelligence of their leaders to improve their performance in cross-cultural environments, and to design appropriate organizational structures for the development of their intellectual capital.