Beyond the negotiation and setting up stages, another aspect of an organization for which sensitivity to national culture is of utmost importance is the management of human resources. At this stage, national cultures become increasingly relevant to international joint ventures, because of their joint management involvement. International joint ventures bring together two or more sets of employees whose national culture gives them fundamentally different views on what constitutes a desirable management style or appropriate organizational hierarchy (Norburn and Schoenberg, 1994).
As Schuler et al (1993) point out, "[National culture is important because of its] impact upon acceptable, legitimate and feasible practices and behaviors... Acceptable in terms of "can we pay workers different rates, and thereby differentiate them, according to performance"; legitimate in terms of "are there any legal statutes prohibiting us from not paying workers overtime for work on Saturday and Sunday"; feasible in terms of "while the society is hierarchical, authoritarian and paternalistic, can we empower the workforce to make workplace decisions in order to facilitate our quality strategy? "
Various comparative studies have demonstrated that certain cultural attitudes and values have significant implications for organizations and the ways in which they are managed (see for instance, McClelland, 1961, Crozier, 1964; Hofstede, 1980, Hofstede and Bond, 1984, Tayeb, 1988, Hall and Hall, 1990; Meek and Song, 1993). These values and attitudes include individualism, collectivism, attitudes to power and authority, achievement motivation, attitudes to conflict and harmony, tolerance of ambiguity and uncertainty, interpersonal trust, and many more.
The Table below, illustrates some examples of the ways in which organizations could be influenced by work-related cultural traits.
Culture-specific aspects of organization
||Examples of the
||Examples of relevant
||Attitudes to power and
authority; Trust and
confidence in others;
Respect for other
||Ability to cope with
||to privacy and
||Attitude to control
||Respect for other
|Span of control
||Attitude to power
From: Tayeb, 1996
In an IJV if employees coming from partners’ country of origins have differing levels and degrees of the work-related attitudes and values listed in column 3, there is bound to be tension caused by their implications for columns 2 and 1. Schoenberg et al.'s (1995) research findings demonstrate the kind of complexities involved.
Anglo-French joint ventures
Schoenberg and his colleagues studied four major Anglo-French joint ventures from the chemicals and engineering sectors which formed between 1986 and 1989. The researchers sought to establish the major organizational difficulties and opportunities the partners experienced during the formation and management of the partnership, and the management practices that could overcome and make most of these differences.
They compared the two nations on two of Hofstede's (1980) dimensions, power distance and uncertainty avoidance. They argued that the former would determine the views of each nationality on such issues as the preferred degree of centralization and the appropriate levels for decision making whilst the latter would guide the preferences for the number of levels within the organization and the rigidity of the organizational systems.
In Hofstede's study the French scored higher on both power distance and uncertainty avoidance than did the British. These differences of scores, Schoenberg et al. argued, was reflected in the management styles of the managers in the joint ventures studied.
The natural French management style was widely perceived as being more autocratic, with decision-making authority clearly concentrated at top management levels. In contrast, British executives were accustomed to leave more discretion to middle management levels, with strategic information more widely shared. The two national management styles failed to allocate decision-making discretion at the same organizational level.
British managers would assume that the purpose of a meeting was to arrive at a consensus view and then act upon that view. To French managers the purpose of a meeting was simply to clarify the arguments they would later put forward to their bosses for consideration.
Remuneration system and status of employees were another point of difference. For the French, hierarchical position and payment were dependent upon the educational qualifications of the incumbent.
For the British they were both based on the content of the job itself. These two different approaches to remuneration had caused some serious problems.
Following the French approach would mean that for similar jobs in the French parent company significant differences existed between the salary of an ingenieur and a technicien. In comparison, remuneration in the British partner tended to be based more exclusively upon the job actually done.
In the two of the alliances where technical problems had to be solved by bi-national teams, the underlying scientific approaches could be seen to diverge. The French favored the use of precise theoretical calculations to make sure in advance that a system would work, and would enjoy engineering sophisticated and very general solutions. The British were satisfied with a simpler system that proved empirically to work.
Japanese joint-ventures in China
This kind of cultural clash is a manifestation of the extent to which we all take our home-grown assumptions for granted and expect others to know them and to behave accordingly. Japanese joint-ventures in China are an interesting case in point.
Yager et al. (1994), in their study of foreign joint ventures in China, found that Japanese managers were almost baffled by Chinese workers' display of a lack of pride in and identity with their employer organizations. An examination of some of Chinese cultural characteristics shows that the underlying values of Chinese workers' attitudes to their workplace are quite different from those of their Japanese counterparts.
Culturally, China represents a "high-context" (Hall, 1959) culture, in which meanings often derive from relationships, authority and context. In China conceptions of self, morality, time, causality and probability may differ significantly from conceptions in many other countries (Redding, 1990). Indeed, the persistence of personalized loyalty (i.e. loyalty to a particular individual) in Chinese culture may impede development of organizational loyalty (Castaldi and Soerjanto, 1988). As a consequence, a sense of personal contribution to organisational objectives, so evident for example in the Japanese model of business operation, is not present in Chinese organizations (Yager et al. (1994).
In contrast, Japanese managers come from a culture where, among other things, employees are known for their high degree of commitment to their workplace, and for including it in their in-group. Consequently, the Japanese managers who had taken such sentiments and attitudes for granted found their absence in Chinese work environment puzzling.
There are also other aspects of Chinese culture which might cause some difficulties for joint ventures operating in China.
Traditionally, Chinese personal networking has been important, if not essential, to success, using extended family and other developed relationships and connections to gain cooperation and to get things done. The success of Chinese networking skill in building the effectiveness of small businesses, their interpersonal relationships, loyalties, and a system of mutual support do not seem to carry over to larger organizations, including joint ventures with foreigners. This had implications for discipline. Industrial discipline, a concept implying not only that workers follow a regimen in their jobs, but also the will of supervisors to exercise sanctions in controlling worker behavior, was non existent among Chinese workers. A sense of responsibility to the employer organization, consistency in work performance and follow-through also seemed to be unusual. There was a pervasive need to build identity to the enterprise. Although some joint venture managers reported initial resentment among workers for strict discipline and enforcement of work rules, companies that had adopted clear, enforceable expectations coupled with production bonuses and visible rewards seemed to be more successful (Yager et a., 1994).
An awareness of cultural differences between partners and respect for these could of course help ease complexities and tensions which might arise in an IJV, and thereby increase the chances of the joint venture’s success. But this may be easier said than done. Faulkner’s (1995) study provides a revealing example.
Faulkner found that mutual trust, sensitivity to company culture, and sensitivity to national culture were among the top five attitudes which have a strong association with alliance success. Nine out of ten joint ventures surveyed claimed to have positive attitudes on both or all sides towards national and corporate cultural differences. However, the situation was not always totally trouble-free.
British and Japanese JV
For example, in ICI Pharma, a joint venture of British and Japanese parentage, relationship seems to have met with culture problems. There seems to be, at least on the ICI side, a fundamental difficulty in moving mentally out of the strong ICI culture, into a sensitive understanding of partners from other cultures. The ICI Pharma joint venture has been in existence since 1972, yet ICI can still say: "One of the things that still holds us back in Japan is our lack of understanding of Japanese culture. Relationships are very important in Japan, and we are much less certain about what might spoil a relationship than we would be with a European or US company"
In another joint venture, the Courtaulds/Nippon Paint joint venture, attitude problems also seem to have placed a brake on the development of the relationship. The venture started off well because the people setting it up were sensitive to their cultural differences: "... then there were people changes, and the older people who knew Nippon very well retired, and the younger people came in and didn't understand the Japanese culture, and way of doing things"
The inherent difficulties are involved in adopting and maintaining positive cooperative attitudes in international strategic alliances.
This internal conflict only emphasizes the apparent importance of the attitude question in sustaining a positive alliance relationship (Faulkner, 1995).