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Cross-Cultural Alliances
People who spent a year or two in another culture or speak a second language will
understand more about the dynamics of a business situation when they involved with other
cultures. Their know-how may make the differences between success or failure in a competitive
or collaborative situation.
In cross cultural situations the processes of alliance building and the Mindshift principles
remain valid, but the managers who are selected should be trained to become expert not only
in communications, feedback, and problem solving, but also in the extra complications caused
by cultural dissimilarities.
Experience Helps – Sometimes
Cross cultural joint ventures can provide great benefit especially for companies that are
experienced in doing them.
Success and Failure at Corning
Corning has formed more than fifty international joint ventures. There were only nine of
them have failed. One of Corning’s alliances was with the Korean manufacturer Samsung. The
Corning-Samsung venture allowed Corning to enter the Korean market. Corning had invented
the all-glass television tube and was a major supplier for worldwide but needed better access to
Asian markets. Samsung wanted to move into television manufacturing. The mutuality existed,
and the cultural differences were manageable, since both parties appreciated what the other
company had to offer.
Corning recognized and valued Samsung’s knowledge of the market and sale expertise.
Samsung valued the technology and supplier experience that Corning had developed over the
years. It has been considered by both parties to be a success, now has revenues of over $500
million.
However, another joint venture of Corning’s did not success. This was the joint venture
with the Vitro Group in Mexico which is company that manufacture glass and drinkware. The
two companies have misaligned expectations and could not overcome their cultural
differences.
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Successful intercultural collaboration on a grand scale
The Airbus project has four partners that come from different countries. The partners
were Britain, Spain, West Germany, and France. Each group has its responsibility that well
defined and mutually goal for each team to succeed. The management of the project was
decentralized so that decision making was on the local level. This helped to reduce the
possibility for misunderstanding. By dropping the tariff barriers in European Community does
not mean that there is now a “Europerson” due to the fact that National Cultural differences
are strong as ever. There are great differences in style, philosophy, and language among the
Airbus team members. However, the collaboration and desire to achieve the project overcame
the intercultural issues that could have torn the project at many points. Airbus has become
powerful in the aircraft market worldwide due to the success of the venture.
Subculture
When you want to develop the cross cultural alliances, you also have to look at the
subcultures within many country cultures. For example, the degree of formality is an element of
a country’s culture, but in US it differs greatly among subcultures. In southern California, the
relaxed style is acceptable in dress, but it maybe unacceptable in New York.
In fact, not all subcultures are geographical. In insurance and banking, suits are the
general dress code no matter where you are geographically. Regional, ethnic, religious, and
industry subcultures are just a few examples of subcultures within a country.
Executives must be aware not to make generalizations in cultures that value
individualism, since the scope of individual behavior will be varied. They must learn personal
cultural self awareness and understand how to integrate corporate culture and country culture
into management systems that can work in both their country and others.
Cross-Cultural Learning Exchanges
A benefit that is often undervalued in cross-cultural alliances is the transfer of
techniques that work in other countries back to your country. For example, U.S. companies
presume that they will always be in the position of teacher and the international partner in the
position of learner. Major opportunities are lost by taking this attitude. Moreover, senior
management express a desire for two way learning, but workers see the successful practices in
foreign operations as a threat to their job security.
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Motorola Management in Malaysia
Motorola’s plant in Penang, Malaysia is regarded as the best in productivity, quality, and
innovation in the company’s Land Moblie Division. Their quality control program allows
employees to make recommendations which have helped company to save 2 millions. Every
part of the production process was examined with suggestions ranging from minor to
substantial. It made employees feel that they are being a part of the company. They thought in
terms of the good of the group rather than the gain of one individual. However, this program
was not successful in US. This is because people in U.S. value the individual and their own
personal gains above the group. Therefore, the program has been modified for the U.S. culture.
Company changed to provide individual incentives and required employee to develop a team
approach. Workers were moved to go along with the idea of contributing the suggestions.
Shifting labor market
In a global economy, works has been migrated to wherever quality, cost, and efficient
can be managed in order to get a better return on capital and time invested. For example,
South Korea is becoming influential worldwide in the area of memory chips. Cross-cultural
competition for labor and technology is a reality that impacts every company that does
business internationally, and cross-cultural alliances must adapt as well.
The Cross-Cultural Interpreter
One effective tool for managing the challenge of cross-culture alliance is the interpreter.
This does not means the language interpreter, but someone who either comes from or has lived
in both your and the partner’s cultures. They would understand the verbal and nonverbal
communication and perception in both cultures. This is because in some culture it is important
whether people involved come from and in-group or and out-group. A cultural interpreter that
comes from in-group would be able to make connection in a culture where relationships and
status are more important than the contract terms.
Understanding Values Across Cultures
It is difficult for an organization to compete in the global arena without international
partners and alliances on various level of the pyramid. Company need to understand cultural
perceptions of value. Developing alliance has enabled the company to minimize their capital
investment rather than taking risk by themselves.
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Riding the Political Waves: Honeywell in Russia
Honeywell Company has been established for 20 years in the market. This company
used it understanding of political uncertainty and understanding to select the partner in the
business alliance. At first they took a position of 49 percent in the JV with the Ministry of
Mineral Fertilizer, after that they increase to 50 and 70 afterward.
There were many nationalities people who worked in this project including Belgians,
Austrians and German. Theses all nationalities were first assisted to align up. After that 100
percent of the team was Russian. They put the value of joint venture through ability to learn
from the partner in order to avoid failure of this alliance.
For example: 3M
They emphasized and focus on the strategy of selecting the right partner from both
political and business point of view, therefore, the problem of miscommunication and failure
will rarely occurred.
Japanese Executives only, please!
The chairman of $700 million Japanese telecommunications noticed that “you can’t live
in your own world anymore, and alliance with the partner is not a bad choice” Therefore,
finding the right partner regardless of nationality is most important to create the future
success. As a result, the company was thinking of doing an alliance with French conglomerate.
The strategy of this Japanese company is that, they will make all decision at home office in
Japan. For example, Japanese executive run all foreign subsidiaries oversea, and most decision
making will be done at headquarter in Japan.
Problem!!
The structure could result in becoming less competitive due to all decisions making have
been made by Japanese’ committees from headquarter.
Solution:
The understanding of the partnering in global economy should also be transferred in the
decision making as well.
For example: Sony
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Sony is the company that has moved further than any other competitors in term of
globalization. It is a multinational conglomerate corporation headquartered in Minato, Tokyo,
Japan, and one of the world's largest media conglomerates. They alliance with many countries
namely USA and Europe.
Creativity involvement and decision making is a key, therefore, in headquarter; the
majority of the decision making is come from non-Japanese executives more than Japanese
themselves. English-speaking skills are highly valued at Sony. The quote from Mr. Tamotsu
(Sony’s executive deputy president) is “We hire and promote people mainly for their ability to
do business” “But if you can’t speak English here, you can’t fully do your job.
The Nomads of Texas Instruments
Texas Instrument is a special team that creates, investigates and implements
international activities. They set up many plants in many countries such as Japan, Taiwan and
Singapore. However, when the tasks have been accomplished, the team members who
specialized in each skill will leave the project. Therefore, the company could lose good people.
Unlike the team that employed by Visionary manager, they can renovate the declining
company into sustaining company. This team has many experienced and skilled managers with
whom she used to work with in the past. This company will use the failure that had to happen
in the past as a driver to the key success.
Four elements of the country culture.
 Power Distance: The extent to which how the culture accept the power in organizations
(equal VS unequal)
 Uncertainty Avoidance: The extent to which the society feels threatened by uncertain
situations. (Avoid for the changes in their life)
 Individual/Collectivism:
 Individualism: a loosely society in which people are supposed to take care of
themselves
 Collectivism: a tight society in which people are supposed to take care one
another. (Ex. People look after each others and in turn for loyalty aspect).
 Masculinity/ Femininity: Masculinity is the extent to which the dominant values in
society are money, not caring others, quality of life of others.
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Hofstede ranking
Power Distance: USA ranked number 25—Americans are not willing to accept power difference
among group or individuals. They are more open to share idea and feel free to vote.
Uncertainty Avoidance: They ranked 31st – they are not really scared of changes in every day
life.
Individual: ranked the 1st – very independent country
Muscularity: ranked 12th
This tool can help the countries to decide about alliance decision making. And help the
company see clearer about the foreign environment.
Cultural Differences- The European Management Forum Survey
It is an annual report on international competitiveness published a summary of the
survey of nearly 2000 managers. They examined the perspective of the manager toward
culture.
1) Motivating the workforce: shows the result when 2 questions have been asked. Those two
questions are


How great is the sense of drive, responsibility and entrepreneurship among
managers of your nationality?
How willing to identify with corporate objectives and priorities are the workers
of your nationality?
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Answer of 1st question: it showed vertically as the estimate of talent of the nation’s
management. Ex. The highest rank were US, followed by HK, Sweden, JP, TH and West Germany
Answer of 2nd question: it showed horizontally. Ex. JP placed far right hand side, followed by
Taiwan, South Korea
How should we interpret his data?

USA most people seem to be individual therefore, the management culture
will be balanced between corporate culture and interest of the group.
 Corporate culture always has a conflict with the group belief system VS the
individual requires flexibility.
Business in USA:
Most of the companies in USA use the system of equally individual oriented cultures
which lead to generate more of the new ideas and creativities. For example, Apple computer
which show the successful business company in US. They claim that using the individual
contribution is greatly valued as a part of corporate culture.
Continuing the content from the page 164-165 (Motivating the Workforce)





Brazil can be the most emerging economy country in Latin America, but the
management talent available there to motivate workers was low
The visionary manager is needed
Therefore, cross-border alliances take the role in order to develop the national
management characteristics in the dominant culture
However, forming an alliance may get some managers who do not fit the norm of the
dominant culture
Also, managers can only motivate workers who want to learn and strive to improve
because some of the workers do not like changes.
2. Delegating Authority

The EMF Foundation Survey looked at the willingness of managers to delegate authority
of “are managers willing to let their workers take responsibility of a given task or not?”
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

Japan is the country that scores highest which means the Japanese managers trust their
subordinates to work on a given task.
However, there is the Adventurer manager who does not want to give any responsibility
to his/her subordinates since he/she thinks that he/she can do it faster and better.
Developing an alliance will be a challenge for the Adventurers because this will give
more work to them.
3. Marketing Push and Product Quality

The EMF survey found the countries with the highest reputation in both market push
and high quality products were Japan, Switzerland, Sweden, and Denmark by asking the
question related to the abilities of managers to sell product and how it link to the quality
of product sold.
4. Willingness to create and exploit technological innovation

Another area that the EMF survey focused on is the relationship between the stated
readiness of corporations to exploit innovation and the average number of patents
granted per 100,000 inhabitants of the country which the Japanese scored by far the
highest in number of patents.
Planning the Cross Cultural Alliances
It is essential for one to follow the proper methods when planning a cross-cultural
alliance. The ability to work in ambiguous, unfamiliar, cross-functional, and transcultural
relationships must be a key skill of a managers in building international alliances.
Having a cultural interpreter in a management team can be very beneficial to building
such an alliance. This person will have experience in working in cross-cultural alliances, and can
bring many helpful tips to help the alliance work. Some of the aspects he/she can help with are:
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Interpreting communication and information.
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The issues that can terminate the alliance in different cultures.
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How to gain buy-in, or acceptance within the culture of important ideas and
decisions.
The ability to work with both cultures will enable him/her to translate both sides’ strategies and
goals into a realistic plan, which will please both parties.
Ignoring the critical cultural norms, such as perception of time, leadership, and reward,
of a culture can increase the failure potential of international alliances.
Culture Clash: Making Shoes in China
An example of a cross-cultural alliance failure involved an American company with
operations in the People’s Republic of China. The alliance was to manufacture shoes in China
and to be distributed in the U.S.
Attitude of Americans: The Americans looked at the project as experimental, and did not
consider it their highest priority. The young American owner had an entrepreneur attitude that
was aggressive and did not tolerate process, praises sales, and believes his way is the best way
of doing business.
Attitude of Chinese: The Chinese partner is a closely-knit group of villagers that used to be
farmers, but is now involved with commerce. They have other alliances with firms from Taiwan,
Japan, and Korea. They prefer to work together as a collective, meaning that the opinions of the
older members of the collective will be greatly respected. It is very important to maintain group
harmony and overt conflict in interpersonal relationships.
Culture Clash: Problems in manufacturing with quality and deadline dates started to arise, and
an American manager is sent to deal with it. The American manager stays for 2 hours, and
within those hours’ only expresses his displeasure in the quality and tries to express how
important quality and timeliness is. He returns home thinking he has done a good job, but the
same problems are still evident in the next run.
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The young American owner feels they only need a pep talk from him, and decides to go
to China. When he arrives at the village, he too expresses how important quality and timeliness
is. The manager only stays for half a day and even declines and invitation to a banquet in his
honor from the Chinese. After a few more flawed runs in manufacturing, the American firm
decides to pull out and create a joint venture with Mexico instead.
These cultural problems could have been avoided if the American managers only knew
the importance of interpersonal relationships in the Chinese culture. The Chinese culture is
predominant in collectivism and feminism, which emphasizes the importance of group
dynamics. The Chinese found it more comfortable to work with their other joint ventures,
because they shared the same cultural values, and therefore focused their resources and
efforts into those relationships.
Culture Clash: Bringing Swedish Pharmaceuticals to the U.S.A.
In this case, language and understanding plays a significant role between the Swedes
and the U.S. It expresses that just because there is a commonality in language, doesn’t mean
that their culture will be easier to work with.
Attitude of Swedes: They have a strong commitment and sense of identification with the
corporate entity. The manager will always work in accordance to the company culture and the
commitment level of the company. They have an appreciation of intricacies of international
trade, and therefore understand the importance of the American language. They also looked at
the American company they were partnering with as a big asset, and an experienced firm who
knew how to deal with FDA processes.
Attitude of American: The American firm looked into this partnership with great enthusiasm.
They Americans were looking to expand their market and were also interested in the
technology that the Swedish firm had. They style of negotiation the Americans like to use are
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very confrontational and “John Wayne” like. It implies a poorly though out, spur of the moment
plan, that allows for only one winner.
Culture Clash: The alliance had two main reasons to failure:
-
Lack of cross-cultural teams containing the talent necessary to achieve the goals of
the parties: This was because the American firm was eager to start the project, and
had created a team with its own planners and scientist for the new division. The
Swedes also made a mistake of thinking the Americans knew what they were doing,
because of their size in the market. The team had decided to reengineer the
product, to offer the highest quality, as their reputation was on the line as well. This
caused a lot of delays in time, which concerned the Swedes.
-
Misalignment of the partners’ objectives: The objectives of the two parties were
not communicated at all. The Swedes were looking for a distribution partner that
could obtain FDA approval, and then enter the market with widespread distribution.
They were not looking for a research and development alliance, which is what the
American firm was looking for. The Americans were assuming the risks of new
product development, with distribution not the main objective. The Swedes were
focusing on the lower part of the Pyramid of Alliances, where not much capital or
risk is required, as the Americans saw the alliance being higher up on the pyramid.
The capital the American invested went into product development and technology
research rather than developing a distribution network, which is what the Swedes
wanted.
These problems could have been avoided if only the Swedish firm had been less
Adventurous and had taken part in the American teams. Because they had trusted the
American company to know what they were doing, the American company misled them.
The result was a complete breakdown of the Alliance relationship, with no trust, no
confidence, and loss of opportunities for both sides.
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Migratory and Embedded Knowledge and Country Culture
It is critical to understand the issue of cultural differences and language communication
in developing an international alliance. The view of migratory and embedded knowledge must
be qualified in a cross-cultural setting. Most companies highly value the migratory knowledge
much more than the embedded, and this often leads to a failed relationship.
U.S. companies in China have discovered that the Chinese mostly value the embedded
knowledge much higher than the migratory. This causes misunderstandings between the U.S.
and Chinese firm when the U.S. firm expresses its goals clearly, whereas the Chinese keep the
goals hidden. The U.S. may find the Chinese approach difficult, which is that a great deal of
information must be transferred to them by the U.S. partner, especially embedded knowledge,
before they start any long- term relationships.
The Chinese view the contracts as a ongoing negotiation process, that can be changed
as more parties are involved.
Unintended Knowledge Transfer to China
A U.S. firm in an alliance with a Chinese firm had felt that they had been taken
disadvantage by the Chinese. This was because the transfer of embedded knowledge to the
Chinese firm. A continuing stream of Chinese representatives had been sent to the States,
financed by the U.S. firm, had received detailed demonstrations and explanations of
manufacturing and management process, while they continued to delay the deadline for the
project.
The U.S. partner had decided to redirect their efforts to key families in India, where they
could limit the knowledge transfer and work predominately with migratory knowledge. The U.S.
firms had found it comfortable to work with the Indian firm, mainly because their
representatives were western-educated, spoke excellent English, and also had transcended the
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cultural barriers to relate to them in a way they could recognize. Negotiating and implementing
contracts in a Western, over and direct way had pleased the Americans greatly.
Realization of the fact that the Americans were not ready for the Chinese, had saved
them from further wasting more time and capital. Understanding the cultural differences could
have avoided all the waste, and they may have decided to work in India from the start.