Strategic alliances and their
cultural aspects
IBC 2003
Hogeschool Arnhem en Nijmegen
Joop Vinke M.A.
Definition of an alliance
Arm’s length
control
1.
2.
3.
Alliance
Merger or
Acquisition
Open-ended (“incomplete”) agreement
Between separate firms
With shared control
important motives for entering into
strategic alliances
1.
2.
3.
4.
5.
6.
7.
8.
Obtaining know-how
Entry to (new) markets
Increasing efficiency
Spreading business risks
Offering integrated solutions to clients
Increased competition due to liberalisation of markets
Growing costs and necessity to bring new products and
services to the market
Trend to follow the leader
Mergers, Acquisitions and
Takeovers
 Merger: any transaction that forms one
economic unit from two or more previous units
 Acquisition: the purchase of a controlling
interest in a firm, generally via a tender offer for
the target shares
 Takeover: a general term which includes both
mergers and acquisitions
Kinds of alliances
-
Tactical and strategic alliances;
(Van Gils, 2000)
-
Horizontal, vertical (upstream/downstream),
diversification, and diagonal alliances;
(Macbeth & Ferguson, 1994; Nooteboom, 1999)
-
Strategic alliances: learning, business, and hybrid
alliances;
(Koza and Lewin, 2000)
-
Scale alliances (horizontal, business) and
complementary alliances (learning).
(Garrette and Dussage, 2000)
Advantages of co-operation
-
-
-
forming novel combinations of perspectives
stimulates specialization (and through that
economies of scale)
sharing of risks
motivation for survival and continuity (of smaller
firms)
more flexibility and greater diversity of sources
of competence
Polygamy is O.K.!!!
A single ideal partner seldom exists
 Complexity demands multiple capabilities

But:
Promiscuity is not……….
From traditional competition
To group vs. group
Results:
From ………………
To…………….
Traditionally rivalry
 Firm vs. Firm
 Firms advantage
 Core competence
 Corporate structure


Collective competition
 Group vs. Group
 Group advantage
 Group competence
 Group structure
How to build strategic alliances?


Strategic alliances are formed to unite culturally
different partners in pursuit of a common objective.
Successful alliance leaders manage the relationship
in the context of the partner’s cultural differences,
finding ways to create value from complimentary
differences and reduce the impact of those
differences that impede alliance success
But remember:
The number of successful alliances is still less then
50%
The influence of alliances on the
culture of organisations
Results of a survey of 455 CEO’s in 2000:
1.
2.
3.
4.
5.
6.
7.
8.
Overly optimistic
Poor communication
Lack of shared benefit
Slow results for payback
Lack of financial commitment
Misunderstood operating principles
Cultural mismatch
Lack of alliance experience
Spekman, Robert E., Alliance competence, New York 2000
What is CULTURE?
Symbols:
gestures, words, objects etc. of which only the group
members know the meaning
 Heroes:
public figures, dead or alive, real or fictive, who serve as
role models
 Rituals:
acts that, for outsiders, may seem useless but are socially
essential

Norms and Values

Norm:
What is right? / What is wrong?

Value:
What is good / bad?
What is beautiful / ugly?
What is natural / artificial?
What is normal, not normal?
Etc.
Explicit culture
Symbols
Heroes
Rituals
Values and Norms
Is culture inborn or learned?
Definitions:
 “The right way of doing things””
 “The collective mental programming of people in
an environment
 “The collective preference of one decision above
another one””
 “Integrated system of patterns of behaviour which
are acquired by all members of a society
Models: 1. Hofstede
PDI -
power distance
the extent to which a culture accepts that power in organizations is distributed unequally
MAS -
Masculinity
the value attributed to achievement, assertiveness, and material success as opposed to
the stereotypical feminine values of relationships, modesty, caring and the quality of life.
IDV -
Individualism
the extent to which people are supposed to take care of themselves and be emotionally
independent
UAI -
Uncertainty avoidance
the degree to which members of a society are uncomfortable with risk and uncertainty
CDI -
Confucian dynamism
the extend to which a society exhibits a pragmatic future-oriented perspective rather then
a conventional historic or short time point of view
Models: 2. Trompenaar
The seven dimensions of culture
universalism vs. particularism
individualism vs. collectivism
neutral vs. affective relationships
specific vs. diffuse relationships
achievement vs. ascription
Sequential vs. synchronic culture
Internal vs. external control
Universalism vs. particularism
What is more important - rules or relationships?
Universalism:
“What is good and right
can be defined and
always applies!“
Particularism:
Great attention to the
obligations of
relationships and unique
circumstances
Individualism vs. collectivism
Do we function in a group or as an individual?
A.
B.
“It is more important to focus on individuals
so that they can contribute to the collective as
and if they wish”
“It is more important to consider the collective
first since that is shared by many individuals”
Neutral vs. affective (emotional)
relationships
“The nature of our interactions
should be
objective and detached”
North European business
relationships
“The expressing the emotions
is part of
the relationship and therefore
acceptable”
South European business
relationships
Specific vs. diffuse relationships
When the whole person is involved in a
business relationship there is
a real and personal contact,
instead of
the specific relationship
prescribed by contract.
Achievement vs. ascription
Do we have to prove ourselves to receive status or is it given to us?
Achievement:
“One will be judged
on what you have
recently
accomplishes and on
your record.”
Ascription:
“The status is
attributed to you, by
birth, childhood,
gender or age, but
also by your
connections and your
educational record.”
Sequential vs. synchronic culture
Is time a line ?
…..or is it a circle?
Past, present and future
Past
Present
Future
…. Or?
How would You draw it??
Internal vs. External control
Do we control our environment or work with it ?
1.
2.
Major focus affecting their lives and the
origins of vice and virtue as residing within
the person (part of the nature)
World is more powerful than individuals.
Nature is to be feared or emulated.
Global Literacy
Be effective in doing business and managing with
different culture
This applies equally to:
1. those working where there is diversity in the
work force
2. those travelling and working in different
cultures
3. those receiving business visitors from other
cultures
Don’t………..!
Change your behaviours to try to
emulate the culture(s) you are
working with.
or
Simply 'Do in Rome as Romans do...
etc.
Try …………Reconciliation
In dealing with different cultures, you have several options:
• Ignoring other culture
• Abandon your standpoint
• Compromise or…………
Reconciliation:
Universalism
…Apply rules and procedures
universally to ensure equity
and consistency
although……
…We do not want to drown
in chaos or lose our sense
of central directions so we
must…
Central
guidelines with
local adaptations
and discretion
…We do not want to
degenerate into rigidity and
bureaucracy so we
must………
..Encourage flexibility by
adapting to particular
situations. However......
Particularism
Cultural differences






How does a company learn and work, Where is it? Whom does it
serve and how?…………..
…….are all manifestations of its culture.
How does it deliver knowledge throughout the organization?
What is the corporate structure?
What practices distinguish its operations?
Who are its stakeholders?
What are their objectives?
Company-culture is defined by the answers to these
questions, but determined by the context in which
the company exists.
Three types of cultures
affecting
organizations and alliance partner behaviour
National / Ethnic Culture
Industry / Organizational Culture
Professional Culture
1. National / Ethnic Culture
The values and norms that create the
society in which the partner
organization is based.
Drives for thinking, communications styles,
attitude towards hierarchy, gender roles and
other aspects of individual and group
A model for defining national culture
based on the diversity of European regimes
Rheinic model
Germany, Austria, Netherlands,Scandinavia, France
Anglo-Saxon model
UK, Ireland
Latin Rim model
Greece, Spain Southern Italy, Portugal
The “Rheinic” model
Social partnership in various forms
Germany, Austria, Netherlands, Scandinavia, France
Juridified industrial relations
 Work councils
 Emphasis on social cohesion and social market
 Welfare as “first resort”
 Corporatist tradition

The “Anglo-Saxon” model
Free market
UK, Ireland
 Voluntarist, adversarial industrial relations
Free market
Welfare as “last resort”
The “Latin Rim” model
Greece, Spain Southern Italy, Portugal
 Conflictual, antagonistic industrial relations
 Mixed labour market
 Rudimentary welfare (church, family support)
2. Industry / Organizational Culture
“Reflects the values and norms that
permeate the organization”
It is distinguished by:
 orientation towards risk,
 collaborative management style,
 maturity,
 corporate arrogance,
 level of centralization
 market focus, among others.
3. Professional Culture
“the values and norms embodied by
professionals of a specific
discipline”
People in different occupations usually
incorporate the professional biases
associated with their roles within the
organization
Managing
cultural differences




Define differences!
Research!
Simplify!
Management!
Building alliance competence
The most frequently items that companies miss
are:
 An “alliance-culture” throughout the
organisation
 A clear understanding of how and where
within the company the alliance issues should
be resolved
 The know-how to develop internal alliance
competences
Five steps to build
alliance competence
 1.
 2.
 3.
 4.
 5.
Embracing the concept
Identify alliance responsibility
Allocate dedicated resources
Adopt a methodology
Develop an alliance process
Alliance Strategies
“More important than creating strategic
alliances is to develop alliance
strategies”
B. Gomez-Casseres (2002)
1.
2.
3.
4.
Let Business strategy drive alliance decisions
Grow relationships; don’t “do deals”
Create portfolios of alliances, not stand alones
Organize internally to co-operate externally