Influence of national culture on trans

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CCM
16,1
Influence of national culture
on trans-national
alliance relationships
Suku Bhaskaran and Emilija Gligorovska
44
Victoria University, Melbourne, Australia
Abstract
Purpose – The purpose of this paper is to analyse and review whether national culture influences
organisational beliefs about and behaviours to trans-national alliance partners.
Design/methodology/approach – Reviewed extant studies on national culture, organisational
culture and business-to-business relationship. Using information from the literature review and
key informant surveys, a survey instrument comprising of close-ended questions was developed.
The questionnaire was sent to the Chief Executives Officer’s of 1,248 organisations identified
through systematically selecting every third organisation in the sampling frame. Two weeks later,
universal reminders were sent to all 1,248 organisations. The data from 376 fully completed
questionnaires returned were analysed through exploratory factor analysis and canonical correlation
analysis.
Findings – National culture influences beliefs about and behaviours to trans-national alliance
partners. However, beliefs and behaviours are also influenced by the complex inter-relationships
between relational constructs such as trust, commitment, co-operation, dependence, communication
and compatibility. Often, compatibility is not only influenced by national culture but also by the size,
business activity and how the organisation is incorporated.
Practical implications – Beliefs about and behaviours to trans-national partner organisations are
not solely influenced by national culture. It is the outcome of complex and diverse social, political,
economic and organisational factors and how these factors influence orientations to issues such as
trust, commitment, co-operation and communication.
Originality/value – Explores a hitherto under-researched theme on trans-national business
alliances, the influence of the national culture of organisations on various relational issues discussed
in business-to-business relationship studies. The study consolidates knowledge from three streams of
literature (national culture, organisational culture and business-to-business relationship), often
handled as disparate sources of knowledge.
Keywords National cultures, Organizational culture, Business policy, Strategic alliances,
International cooperation, Malaysia
Paper type Research paper
Cross Cultural Management: An
International Journal
Vol. 16 No. 1, 2009
pp. 44-61
# Emerald Group Publishing Limited
1352-7606
DOI 10.1108/13527600910930031
Introduction
Product-market success in a rapidly globalising market, characterised by converging
tastes, rapid adoption of new and innovative technologies, escalating fixed costs,
growing protectionism and excess production capacity, is often determined not by the
quality of product and service offerings alone but also by the quality of business
collaborations (Parkhe, 1991; Ohmae, 1989). Unitary organisations, organisations
which conduct business independently without collaborations, experience difficulties
such as operational inefficiency, resource scarcity, infrastructure constraints and
incapacity to pool business risks (Borys and Jemison, 1989). Increasing realisation that
collaborations are critical to achieving product-market objectives has fostered a large
number of studies on strategic partnership formation and development. Nearly, 70 per
cent of organisational behaviour and human resource management studies make
references to culture and nearly 94per cent of these studies conclude that culture
influences organisational behaviour including how organisations pursue strategic
alliance formation, acquisitions and mergers (Tayeb, 1994). However, a central theme in
inter-organisational research, particularly studies on trans-national collaborations, has
been the influence of national culture on the beliefs and behaviours of executives who
manage such alliances (Trompenaars, 1993; Adler, 1990; Hofstede, 2001, 1997).
Consequently, despite the proliferation of research on the influence of national culture
on trans-national business alliances, past studies pre-eminently explore the effects of
inter-cultural differences at the individual-level (personal culture) and how personal
culture influences cross-cultural negotiations and management.
This article takes the discourse to a new paradigm through exploring the influence
and effects of the following three forces in shaping organisational beliefs and behaviours
(organisations culture) to trans-national alliance relationships: intra-country nationality/
ethnicity (sub-nationality) differences, operating environment of the organisation – the
country’s unique historic, social, political and economic environment and organisational
characteristics – differences in the size, mode of incorporation, industry sector and
business activity of individual enterprises. It is important to understand how these three
forces shape organisational culture and how the resulting organisational culture can
influence relationships with partners. Cultural mismatch (lack of alignment in the beliefs
and behaviours) of alliance partners is more damaging to joint enterprises than financial,
product or market mismatch as cultural mismatch can intensify financial, product or
market risks (Sirmon and Lane, 2004; Schein, 1992). Notwithstanding, the importance of
organisational culture (as captured by the three forces – intra-country national culture,
operating environment and organisational characteristics) in influencing trans-national
business relationships, the conclusions in several recent studies (Griffith et al., 2006;
Sirmon and Lane, 2004; Leonidou et al., 2002) reveal that these issues have not been
explored in past studies. Consequently, the research discussed in this article makes a
significant contribution to our knowledge by investigating whether and, if so, how
national culture influences organisational culture and trans-national business-tobusiness relationships. The empirical research in this study draws on and synthesises
knowledge from three research themes (national culture, organisational culture and interorganisational relationships) which past studies have pre-eminently treated as
independent areas of inquiry.
Literature review
National culture and organisational culture
National culture is work-related values and behaviours of individuals within a country
(Bird et al., 1999; Tayeb, 1997). Many studies (Harris and Moran, 2000; Hofstede, 2001,
1997) use the term culture and nationality interchangeably thus implicitly suggesting
that each country (political entity) has populations with shared history and experiences
and therefore, each country has a homogeneous culture. Past studies do not address in
any great detail intra-country differences arising from heterogeneity in religion and
ethnicity. In countries such as Malaysia, the context of this study, there is substantial
heterogeneity in religion and ethnicity and consequently, it will be inaccurate to
contend that Malaysia has a national culture per se.
Malaysia’s population comprises of 61.4 per cent Bumiputra (primarily Malay but
also other indigenous groups, predominantly Muslim), 23.7 per cent Chinese
(predominantly Buddhist) and 7.1 per cent Indian (predominantly Hindu). Although
there are large numbers of Chinese in other countries within the Association of South
East Asia Nations (ASEAN), the non-indigenous population in other ASEAN countries
is <8 per cent of the total population. Consequently, in terms of nationality and religion,
Influence of
national culture
45
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46
unlike Malaysia, these countries have an over-arching cultural homogeneity and as a
result Malaysia provides a unique study setting.
When the term culture is associated with the term organisation, additional conceptual
and semantic complexities are evident (Wilms et al., 1994). Organisations are open
systems in constant interaction with its environment. The term organisational culture not
only capture the unconscious, but deliberate elementary assumptions and convictions
shared by group members (sub groups, occupational units, hierarchical layers and
geographically dispersed segments) but also the beliefs of group members about the
organisation and its broader environment (Schein, 1992). These assumptions, convictions
and beliefs of group members are their learned responses to coping with the external
environment and managing the internal integration of the organisation (Schein, 1992).
National culture of Malaysian organisations
In the Malaysian context, the term organisational culture present even greater
complexities because of Malaysia’s unique historical, social, economic and political
background and the influence of these on the shared unconscious but deliberate
elementary beliefs, convictions and behaviours of organisational members. The social,
political and economic policies of the British Colonial government and independent
Malaya’s Malay dominated government witnessed the growth of organisations with
distinct identities of national culture.
The Colonial government assisted many British enterprises to start-up and develop
their operations in Malaya through offering land concessions, tax incentives and other
support. By the late 1940s, British enterprises such as Harrisons and Crosfield, Sime
Darby and Guthrie dominated cash crop production and international trade. Small-tomedium scale Chinese and Indian enterprises dominated retail and wholesale trades.
Chinese enterprises became even more dominant in post-colonial Malaya. Influenced by
the experiences of their friends, relatives and business colleagues in recently independent
Burma (Myanmar), in the period leading up to Malaya’s independence, many wealthy
Indians left Malaya. When Myanmar became independent, the businesses and properties
of non-indigenous communities were nationalised. This action affected the Indians most
severely because Indians were the dominant non-indigenous business community in
Burma. Because China was under a Communist regime, the Chinese in Malaya could not
return to their homeland to start-up private enterprises. Consequently, Chinese
entrepreneurs in Malaya did not endeavour to relocate to China.
Unlike independent Burma’s government, Malaya adopted a laissez-faire economic
policy that encouraged foreign investment and international trade. Taking advantage
of Malaya’s investment friendly environment, small-to-medium scale Chinese
enterprises strategically accessed the benefits of joint-enterprise with foreign
companies through becoming local distributors and agents for these companies. Rapid
economic development in Malaya witnessed the emergence of a sizeable urban middle
class predominantly made-up of the Chinese. Growing disposable incomes amongst an
upwardly mobile Chinese middle class created ‘‘new’’ business opportunities especially
in areas such as housing, retailing and finance. Enterprising Chinese wholesalers and
retailers diversified into housing development, plantations, finance and other activities
to service the needs of the growing middle class population (Tan, 1982). These
developments witnessed the emergence of a few large and diversified Chinese owned
business conglomerates.
The growing economic position of the Chinese in Malaya marginalised the
Bumiputras while concurrently the political domination of Bumiputras marginalised
the Chinese (Tan, 1982). Perceptions of economic and political marginalisation amongst
the different nationalities perpetuated inter-nationality distrust and tensions which
culminated in nation-wide race riots in 1969. In 1971, in what it claimed to be an action
to address distrust and tensions between different nationalities, the government
promulgated a social engineering program described as the new economic policy
(NEP). The NEP proposed to address Bumiputra grievances of economic
marginalisation through policies, programs and actions targeted to increase Bumiputra
participation in business and the professions. The NEP substantially improved the
economic position of the Bumiputras. For example, Bumiputra equity in private
business increased from <1 per cent in 1970 to >20 per cent in 1990 (Crouch, 1993).
However, evidence of increased Bumiputra participation in business was primarily the
result of Federal and State governments establishing large numbers of ‘‘trust’’ agencies
(registered as Bumiputra organisations) and conducting business as State monopolies
or as preferred suppliers to the government. State and Federal governments rapidly
established wholly-owned business enterprises and also entered into joint-ventures
with foreign companies so much so that by 1990 government equity represented >50
per cent of private share capital designated as Bumiputra (Crouch, 1993). State and
Federal governments declared that government equity in these ‘‘trust’’ agencies will be
divested through a phased privatisation program reserved for the Bumiputras. In the
mid 1980s, the privatisation program was introduced through a spate of management
‘‘buy-outs’’ by Bumiputras that was aided through low-interest loans from the
government, official sponsorship, preferential government contracts and other support
(Jesudason, 1989; Jayasankaran, 1998a, b, c).
Review of Malaysia’s colonial, social, economic and political background suggests
that the organisations in the country can be delineated into different national cultural
typologies. Ten organisational typologies, based on differences in the nationality/
ethnicity of the owners and senior management team (Bumiputra, Chinese, Indian,
Others), business registration (in Malaysia, businesses are registered as Bumiputra or
non-Bumiputra), how the business was incorporated (sole enterprise, private company
limited by shares, public company, joint-venture company, multinational company etc)
and business characteristics (industry sector, number of employees, sales, business
activity etc) were delineated. The ten organisational typologies are Government-Owned
Corporation, Chinese Family Enterprise, Chinese Company (Private Limited), Bumiputra
Company (Private Limited), Privatised Government Company, Bumiputra/Government
(Public Listed), Chinese Family Controlled (Public Listed), Chinese-Bumiputra Joint
Venture, Multinational Corporations and Indian-Bumiputra Joint Venture.
Inter-organisational relationships
Co-operative aspects of economic behaviour are relatively neglected in academic
discourses. Whilst economists rationalise the theory of pure and perfect competition,
there is no corresponding discourse on pure and perfect co-operation (Alderson, 1965).
Concepts such as trust, commitment, co-operation and communication have featured
significantly in social exchange theory (Scanzoni, 1979; Cook and Emerson, 1978; Blau,
1968), buyer behaviour (Reichers, 1985; Becker, 1960), marital relationships (Thompson
and Spanier, 1983) and organisational behaviour (Meyer and Allen, 1991). However,
these concepts were only adopted in inter-organisational relationship discourses much
later. Even when relational concepts were captured in inter-organisational relationship
discourses, until the 1990s, the focus was pre-eminently on issues pertaining to power,
conflict and the management of conflict (Frazier and Summers, 1986; Lusch and
Influence of
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Brown, 1982; El-Ansary and Stern, 1972). A noticeable shift in research orientation
only became evident from about the early 1990s. From the 1990s, a number of studies
(Vlosky and Wilson, 1997; Anderson and Narus, 1991; Oliver, 1990) investigated interorganisational relationships much more broadly and explored issues pertaining to
inter-partner trust, commitment, co-operation, communication and bonding. These
studies concluded that trust, commitment, co-operation, communication and bonding
rather than domination, power and control underpinned successful joint-enterprises.
One of the most salient features of enduring social relationships is the underlying
trust shared by members of the social unit (Rotter, 1980). Similar to a social context,
inter-organisational trust is fostered and sustained when partners inspire confidence
regarding their reliability and integrity (Morgan and Hunt, 1994; Schurr and Ozanne,
1985). Trust supports beliefs that the actions of partners will lead to beneficial
outcomes and that partners will not take unexpected actions that will result in
detrimental outcomes (Anderson and Narus, 1991). Frequently, organisations make
commitments and pursue risk taking behaviours based on confidence about their
partners. Relationships founded on trust are more enduring. Trusting relationships
will endure difficulties such as not being able to achieve agreed outcomes, provided
partners believe that unforseen circumstances inhibited the outcomes (Anderson and
Narus, 1991). Relationship trust increases when partner behaviours are perceived as
consistent, competent, honest, fair, responsible, helpful and benevolent. Relationship
trust diminishes when, because of implicit or explicit misrepresentations, partner
behaviours are perceived as opportunistic (Morgan and Hunt, 1994; John, 1984).
Trust engenders honest communication of ideas and beliefs regarding group goals
and problems including information about satisfaction or dissatisfaction with partners
and jointly searching for answers to these issues (Zand, 1972). Relationships built on
trust can withstand greater stress and adapt more strongly to challenges. Honest
communication of ideas and collaborative goal setting increase goal compatibility and
encourage social bonding (person-to-person relationships) between key individuals in
partnering organisations. However, measuring relationship trust at any one point in
time may be misleading. Beliefs regarding relationship trust are the outcome of
immediate past experiences and relationship trust can change if future experiences are
either more positive or more negative than past experiences (Wilson, 1995; Anderson
and Narus, 1991; Dwyer et al., 1987).
Trust increases relationship commitment (Morgan and Hunt, 1994; Berry and
Parasuraman, 1991). Past studies have defined relationship trust as (a) the desire for
relationship continuity (Anderson and Weitz, 1992; Dwyer et al., 1987), (b) relationship
solidarity (Boyle et al., 1992), (c) willingness to make short-term sacrifices to achieve
longer term objectives (Comer and Zirger, 1997; Dwyer et al., 1987), (d) motivation and
involvement (Mowday et al., 1982), (e) positive affect and loyalty (Kanter, 1972), (f)
willingness to make investments in the relationship (Anderson and Weitz, 1992), (g)
loyalty (Angle and Perry, 1981) and (h) willingness to provide special help in times of
need (Kim and Frazier, 1997). These definitions reveal overarching common themes
such as positive action underpins commitment (Dwyer et al., 1987), relationship
commitment is measurable (Salancik and Meindl, 1984) and that relationship
commitment is based on long lasting and sustainable relationships (Gundlach et al.,
1995). Successful partnerships are dependent upon commitment between partners
(Barney, 1990; Schurr and Ozanne, 1985).
Commitment can be the result of underlying trust between partners and
concurrently commitment can also foster and promote trust i.e. commitment can be
both the cause and effect of trust. Similarly, where co-operation does not ensue from
partner dependence, for example, because of contractual obligations or the market
power of a partner, it can be an antecedent and also a precedent to trust and
commitment. Trust and commitment can engender co-operation and at the same time,
perceived co-operative behaviours can engender trust and commitment. Organisations
which share trusting relationships often willingly co-operate and postpone outcomes
from joint enterprises if their partners face temporary difficulties in meeting their
obligations (Anderson and Narus, 1991). Co-operation is reinforced and trust and
commitment between partners increase when conflicts are resolved to their satisfaction
and are not resolved as a compromise as a result of the power, control and dependence
relationships (Gibb, 1961).
Relationship commitment can be discerned and even measured from allocations of
economic, communication and emotional resources, durability of the relationship and
consistency in actions (Anderson and Narus, 1991). Commitments increase when
partners believe that the relationship is important and take actions that advance the
relationship (Morgan and Hunt, 1994; Moorman et al., 1993). Commitment to a jointenterprise becomes stronger when partners believe that other actors in the jointenterprise reveal even greater commitment to the initiative (Ross et al., 1997).
Commitment can be distinguished into affective and continuance commitment.
Affective commitment derives from the desire to continue the relationship because of
the benefits from the partnership, whereas continuance commitment represents
situations where partners have to persist with the relationship because of difficulties in
terminating the partnership because of contractual obligations or the unequal power of
partners (Allen and Meyer, 1990; Cook and Emerson, 1978).
The quality and effectiveness of communication often fosters trust, commitment and
co-operation as it facilitates better understanding of the needs and motivations of
partners. In effect, the quality and effectiveness of communication foster a more
conducive climate for resolving disputes (Moorman et al., 1993). Quality and
effectiveness of communication enable partners to align their expectations to the
missions and objectives of the joint enterprise rather than to the expectations of their
individual organisations (Etgar, 1979). Non-evaluative, spontaneous, emphatic and
suggestive communication (rather than planned, neutral and directive exchanges) foster
greater trust, co-operation and commitment between partners (Gibb, 1961). Often the
effectiveness and quality of communication is a precursor to fostering greater trust, cooperation and commitment (Morgan and Hunt, 1994; Moorman et al., 1993). However,
accumulation of experience and knowledge regarding partners and underlying issues
that govern the relationship can foster trust, co-operation and commitment and improve
the quality and effectiveness of communication. Consequently, trust, co-operation and
commitment can be a precursor and an antecedent to good quality and effective
communication between partners (Anderson and Narus, 1990).
Trust, commitment, co-operation and communication are mediating influences in
relationship exchanges and can determine relationship termination costs, benefits from
the joint enterprise, shared values of the joint enterprise and partner behaviours
(Morgan and Hunt, 1994). Through directing investments into longer term outcomes
and partaking in greater risk taking behaviours based on beliefs that partners will not
act opportunistically, organisations can build trust, commitment, co-operation and
communication. Greater trust, commitment, co-operation and communication influence
relationship outcomes including acquiescence, propensity to exit, functional conflict,
decision-making uncertainty and sustainability of the joint enterprise (Morgan and
Influence of
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49
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Hunt, 1994). Relationship trust and commitment increase when relationships are based
on sharing resources, opportunities and benefits that are superior; maintaining high
standards of shared values and pursuing alliances with partners with shared values;
sharing valuable information including expectations, market intelligence and
evaluations of performance; and not taking unfair advantage of partners (Morgan and
Hunt, 1994). Through building trust, commitment, co-operation and communication
and fostering shared goals and visions, partners can increase compatibility and
develop person-to-person interactions between key individuals in the partnering
organisations (social bonding).
Summary statements and hypotheses
Discourses on national culture and organisational culture in extant studies suggest
that, in effect, the difference between the two concepts is primarily the unit of analysis
or the study context. In the case of national culture, the unit of analysis is the nation
(political entity) and in the case of organisational culture, the unit of analysis is the
work group or organisation.
National and organisational culture represent the values and behavioural norms,
the beliefs, language, rituals governing behaviour, patterns of action, shared
expectations and responses to the environment of the group that constitute the nation
or the organisation. Analysis of the concepts, theoretical foundations, epistemologies
and methodologies in extant studies on national and organisational culture suggest
that relational issues are explicitly or implicitly discussed identically. For example,
Hofsted (2001) invokes risk-taking orientation as capturing national culture, whereas
Chatman (1991) invokes risk-taking orientation as capturing organisational culture.
Based on our analyses above, we postulate that the beliefs and behaviours of
organisations (as measured by relational constructs such as trust, commitment,
co-operation, communication, dependence, social bonding and compatibility) to their
trans-national partners are determined by the culture of the organisation. Further, we
postulate that organisational culture is influenced by the nationality of the owners and
senior managers of individual organisations, a variety of nation specific historical,
social, political and economic factors; and the characteristics of individual
organisations such as its size, business activity, industry sector and basis of
incorporation. (Table I). Based on the above analyses, we offer following hypotheses:
H1.
Organisations from identical national cultures are significantly similar in
their beliefs about and behaviours to their trans-national partners.
H2.
Organisations of different national cultures significantly vary in their beliefs
about and behaviours to trans-national partners.
Methodology
Survey research
The sampling frame for the survey was constructed from information in trade
directories and food industry databases. Information based on review of extant studies
on national culture, organisational culture and business-to-business relationship was
used to develop a structured close-ended questionnaire. The questionnaire comprised
statements (measurement items) describing beliefs and behaviours regarding overall
business operations, business strategy and the conduct of transactions and
relationships with the organisation’s most important trans-national partner.
Respondents were asked to indicate on a five-point Likert scale, anchored from
Constructs and measures
Trust
Partner inconsistent and unreliable
Partner inconsiderate
Partner undependable
Partner alters facts
Uncertain of partner’s plans
Easy to do business with partner
Commitment
Committed to partner
Maintain relationship indefinitely
Loyal to partner
Maximum effort to maintain relationship
Partners problems of no concern
Co-operation
Conscientious in co-operative relationships
Flexible contract terms
Rework agreements
Put aside contractual terms
Dependence
Substantial investments in infrastructure
and facility
Partner’s authority
Communication
Partner believes written rules, policies and
procedures important
Task, activities, and schedules documented
Relationship based on shared informal
understanding
Compatability
Compatibility in organisational values and
corporate ethos important
Differences in organisational values and
corporate ethos inevitable
Compatibility in organisational values and
corporate ethos not important
Compatibility in management styles important
Compatibility in management styles not important
Social bonding
Personal and social relations influence co-operation
Regularly review performance of joint-business
Influence of
national culture
Factor
loading
Item-to-total
correlation
Alpha if
item deleted
0.789
0.838
0.800
0.579
0.743
0.598
0.7060
0.7537
0.7656
0.5415
0.6856
0.5455
0.8354
0.8275
0.8240
0.8677
0.8390
0.8621
0.760
0.661
0.692
0.660
0.429
0.6369
0.5664
0.6171
0.5216
0.3770
0.6951
0.7109
0.6942
0.7264
0.7811
0.371
0.888
0.548
0.819
0.3154
0.7229
0.4967
0.6460
0.7607
0.5124
0.7045
0.5727
9.053E-02
0.4002
0.4743
0.143
0.3377
0.5291
0.971
0.8182
0.7041
0.801
0.703
0.7140
0.6601
0.8182
0.8754
0.614
0.6328
0.6974
0.345
0.4833
0.7755
0.867
0.709
0.498
0.7263
0.7628
0.6413
Table I.
0.7164
0.5069
Factor loadings and
reliability of measure of
partner relationships
51
2.249E-03
0.336
0.837
0.2833
0.4273
‘‘Strongly Agree’’ to ‘‘Strongly Disagree’’, the extent to which each statement
appropriately captured the beliefs and behaviours of their organisation.
Respondents were also asked to identify a cultural typology which best described
their organisation. For this, the ten cultural typologies identified in the generative
study and an additional item captioned ‘‘Other’’ was included and respondents were
asked to indicate the label that best described their organisation.
The questionnaire also delineated several organisational characteristics. Scaled
tabulations for sales, number of employee, years in business, value chain position
(retailer, wholesaler, distributor, manufacturer etc), industry sector (dairy, meat, rice,
wheat etc), mode of registration (sole enterprise, private company, public company,
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joint-venture etc) and business arrangement with principal overseas partner (agent,
franchisee, licensee, joint-venture manufacturing, contract manufacturer etc) were
provided. Respondents were asked to select one item in each variable that best
described their organisation.
The questionnaire was pre-tested through in-depth discussions with the Chief
Executives Officer (CEO) of five organisations in Malaysia at which time the
questionnaire was administered. As a result of the pre-test and discussions, some
minor changes to wordings and descriptions of measurement items and organisational
characteristics were made. The questionnaire was then finalised.
The finalised questionnaire and a personalised covering letter were sent to the
CEO’s of 1,248 organisations identified through systematic sampling. Every third
listing in the survey sampling frame was selected for questionnaire administration.
The five organisations at which the pre-tests were conducted were eliminated from the
survey. Four weeks after the questionnaires were initially sent, personalised universal
reminders were sent to the CEO’s of all 1,248 organisations thanking those who had
responded and requesting others to return completed questionnaires within the next
four weeks. 421 responses were received within eight weeks of first sending out the
questionnaires. Elimination of 45 partially completed questionnaires yielded 376
useable responses, a response rate of 30.13 per cent.
Data analysis
Exploratory factor analysis with maximum likelihood extraction was invoked to
reduce and summarise all measurement items in the questionnaire. Factor loading
below 0.32 and items that significantly loaded on more than one factor were excluded
from further analysis. Items with factor loadings of >0.32 were subjected to reliability
analysis using the internal consistency method. Analysis for internal consistency was
completed independently for items within each factor. Items with reliability coefficients
(Cronbach ) of <0.50 were omitted. The measurement items used in the study are
summarised in Table I.
To examine the effects when all variables are used in combination, discriminant
function analysis was invoked to identify the relative magnitude of different variables
across each organisational typology. Discriminant function analysis simultaneously
tests different variables and identifies interrelationships and overlaps between
variables (Hair et al., 1987). Theoretically, the signs and magnitudes of discriminant
coefficients are analogous to weights in regression analysis. However, this
interpretation is questionable because the data is often unstable (Hair et al., 1987).
Because of this limitation, pooled within group correlation matrixes were examined for
multi-collinearity in data. If multi-collinearity was not evident, standardised canonical
discriminant function coefficients were analysed to identify the most significant intergroup predictors of variation. Thereafter, significance of the functions (Wilks’) and
the importance of each function in explaining group differences (Eigen values) were
reviewed. Each function identifies complex and significantly different positive and
inverse correlations across relational measures such as trust, commitment, cooperation, communication, social bonding, dependence and compatibility. Finally, the
functions at group centroids were analysed.
Analyses and discussions
Assessment of pooled within group correlation matrix revealed low correlations
between the predictors (Table II). Only one significant correlation was evident, the
positive correlation between social bonding and compatibility (0.607). Lower level of
negative correlation was also evident between formal communication and co-operation
(0.471). The findings conformed to what we predicted. We expected beliefs and
behaviours regarding person-to-person relationships amongst individuals in the
alliance to be positively correlated to compatibility with values, ethos and missions of
partner organisations. We also expected trust and formality to be inversely correlated,
lower levels of trust resulting in greater use of contractual and other process driven
modes of exchanges. Additionally, the results revealed correlations, albeit at low levels,
between several other predictors. For example, there was positive correlation between
trust and co-operation (0.400), co-operation and compatibility (370), formal process of
communication and dependence (0.364) and inverse correlation between formal process
of communication and trust (0.383).
The significance attached to the univariate F ratios reveal that when the predictors
are assessed individually, the first five functions are significant in differentiating
between the organisational types (Wilks’ ¼ 0.165, 2 (63) ¼ 661, p < 0.001; Wilks’
¼ 0.315, 2 (48) ¼ 423, p < 0.001; Wilks’ ¼ 0.450, 2 (35) ¼ 293, p < 0.001;
Wilks’ ¼ 0.609, 2 (24) ¼ 182, p < 0.001; Wilks’ ¼ 0.781, 2 (15) ¼ 91, p < 0.001;
Wilks’ ¼ 0.973, 2 (8) ¼ 10, p ¼ 0.260; Wilks’ ¼ 0.997, 2 (3) ¼ 0.958, p ¼ 0.811).
The structure matrix reveal that function 1 is positively correlated to trust,
compatibility and co-operation and inversely correlated to social bonding; function 2
is positively correlated to dependence and co-operation and inversely correlated
to compatibility and formal communication; function 3 is inversely correlated to
compatibility and social bonding and positively correlated to co-operation and formal
communication; function 4 is positively correlated to formal communication,
dependence and social bonding and inversely correlated to co-operation; and function 5
is positively correlated to social bonding, co-operation and trust and inversely
correlated to dependence (Table III). The eigenvalues for the functions reveal that the
first five functions account for nearly 99 per cent of data variability thus signalling that
the data is stable in explaining group differences.
Correlating the organisational typologies with functions at group centroids disclose
differences in the beliefs about and behaviours to trans-national partners across five
‘‘functions’’ (Table IV).
Significantly, different levels of complex positive and inverse beliefs about and
behaviours to partners are evident across the organisational typologies delineated in
this study. Different levels and combinations of trust, commitment, co-operation,
communication, social bonding, dependence and compatibility can be discerned across
the organisational typologies (Table V). It is evident that organisations within each
Measure
Influence of
national culture
53
Correlation
CoSocial
Trust Commitment operation Communication Dependence bonding Compatibility
Commitment
0.328
Dependence
0.314
Co-operation
0.400
Trust
1.000
Social bonding 0.327
Communication 0.383
Compatibility
0.145
1.000
0.030
0.370
0.328
0.338
0.246
0.202
0.370
0.243
1.000
0.4000
0.227
0.471
0.108
0.246
0.364
0.471
0.383
0.281
1.000
0.189
0.030
1.000
0.243
0.314
0.274
0.364
0.268
0.338
0.274
0.227
0.327
1.000
0.281
0.607
0.202
0.268
0.108
0.145
0.607
0.189
1.000
Table II.
Correlations of partner
relationship constructs
CCM
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54
organisational typology reveal homogeneity across these relational constructs.
However, it is also evident that, based on these relational paradigms, each
organisational typology is significantly different to other organisational typologies in
the study.
Chinese-Family Business, Chinese-Bumiputra Joint Venture, Bumiputra/
Government (Public Listed) and Chinese Company (Ltd) demonstrate significantly
greater orientation to social bonding with their partners. Other than Bumiputra/
Government (Public Listed), organisations within this group evolved from Chinese
Family Enterprises. In a family enterprise, the owners tend to take-on leadership roles
and business is frequently pursued and sustained through personal and trusting
relationships between the owners and senior members of partner organisations.
Consequently, it is not surprising that smaller scale Chinese organisations such as
Chinese (Family Business) and Chinese Company (Ltd) reveal greater relationship
orientation and priority to compatibility and social bonding.
Even when small-scale Chinese organisations become large organisations, the
owners retain their dominant role in partner relationships and continue to administer
partner relationships through close personal ties (personal bonding). The owners do
not encourage personal bonding between the organisation’s managers and members of
the overseas partner. The two different modes of engagement with partners, personal
bonding by owners and process driven approach by the managers, may explain why
Chinese Family Controlled (Public) organisations reveal less orientation to exchanges
based on relationships. The survey questionnaire was completed by the managers and
therefore, the position reported is the beliefs and behaviours of the managers. Based on
the responses in the survey questionnaire, the relationship characteristics of Chinese
Constructs
Table III.
Correlation between
relationship constructs
and discriminant
functions
Dependence
Compatibility
Communication
Social Bonding
Co-operation
Commitment
Trust
1
2
Function
3
4
5
0.191
0.254
0.144
0.271
0.242
0.101
0.322
0.617
0.348
0.323
0.006
0.233
0.116
0.184
0.165
0.789
0.362
0.444
0.360
0.220
0.112
0.499
0.209
0.609
0.384
0.369
0.278
0.026
0.453
0.256
0.255
0.723
0.723
0.191
0.449
Organisational type
Government-Owned Corporation
Bumiputra Company (Ltd)
Chinese (Family Business)
Government Company (Privatised)
Chinese Family Control (Public)
Chinese Company (Ltd)
Table IV.
Organisational types and Chinese–Bumiputra Joint Venture
Multinational
partner relationship –
Indian-Bumiputra Joint Venture
functions at group
Bumiputra/Government (Public Listed)
centroids
1
2
0.403
1.148
1.431
0.167
1.553
0.974
0.152
0.778
1.063
0.669
0.587
0.379
1.233
0.570
0.460
0.152
1.102
0.562
1.607
0.541
Function
3
0.493
0.131
0.678
1.346
6.533E-03
0.570
0.677
1.117E-03
0.365
0.467
4
5
7.868E-02
0.551
0.263
4.598E-02
0.707
0.325
0.946
0.301
1.434
0.337
0.238
0.219
0.836
0.245
0.479
1.259
0.555
0.193
0.379
0.100
Construct
Important
Not important
þ Trust
þ Compatibility
þ Co-operation
Bumiputra Company (Ltd)
Chinese (Family Business)
Bumiputra/Government
(Public Listed)
Indian-Bumiputra Joint Venture
Chinese (Family Business)
Chinese-Bumiputra Joint Venture
Government Company
(Privatised)
Bumiputra/Government
(Public Listed)
Government Owned Corporation
Government Company
(Privatised)
Chinese Family Control (Public)
Chinese Company (Ltd)
Multinational
Social bonding
þ Dependence
Compatibility
Communication
þ Co-operation
Compatibility
Social bonding
þ Co-operation
þ Communication
þ Communication
þ Dependence
þ Social bonding
Co-operation
þ Social bonding
þ Co-operation
þ Trust
Dependence
Chinese Family Control (Public)
Bumiputra Company (Ltd)
Chinese Company (Ltd)
Chinese-Bumiputra Joint Venture
Chinese Family Control (Public)
Indian-Bumiputra Joint Venture
Multinational
Influence of
national culture
55
Chinese-Bumiputra Joint Venture
Chinese Family Business
Chinese Company (Ltd)
Government Owned Corporation
Bumiputra/Government
(Public Listed)
Indian-Bumiputra Joint Venture
Chinese-Bumiputra Joint Venture
Multinational
Bumiputra Company (Ltd)
Chinese (Family Business)
Chinese Company (Ltd)
Family Controlled (Public) organisations are significantly different to Chinese Family
Enterprises and mirror the characteristics of multinational organisations. Not
withstanding, the caveat regarding the two pronged partner engagement in Chinese
Family Controlled (Public) organisations, overall, it is evident that the size and mode of
business incorporation influence organisational culture more significantly than the
national culture of the organisation. When family businesses become larger and
become public listed companies, these organisations begin to adopt more systematic
and formal process of partner engagement and reduce their reliance on personal
bonding.
Bumiputra Company (Ltd), Bumiputra-Indian Joint Venture, Bumiputra/
Government (Public Listed) and Government-Owned Corporation reveal belief and
behaviour characteristics that give importance to trust, compatibility and co-operation
and significantly less importance to social bonding. The partners of many of these
organisations are also shareholders, organisations that the government has acquired or
in the case of Indian-Bumiputra Joint Venture, new business start-ups between large
companies in India and government/Bumiputra organisations in Malaysia. These
organisations (Bumiputra Company (Ltd), Bumiputra-Indian Joint Venture, Bumiputra/
Government (Public Listed) and Government-Owned Corporation) tend to research and
complete due diligence before pursuing substantive investments in joint enterprises
with partners. Often, compatibility in visions and values influence decisions to pursue
such alliances. Therefore, it is plausible that in the case of these organisations, joint
Table V.
Summary information –
organisational types and
relationship orientations
CCM
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56
enterprises with partners are founded on trust, commitment and co-operation resulting
from systematic information gathering about partners and not, as with alliances by
smaller but long established family enterprises, based on relationships at the person-toperson level. Consequently, factors such as the type of partnering arrangement,
business activity and the size of business can influence partner relationships much
more significantly than organisation’s national culture.
Chinese Family Controlled (Public), Chinese Company (Ltd) and Multinational
organisations also reveal lower orientation to relational bonding. These organisational
typologies indicated low orientation to trust, co-operation and compatibility. The
relationship between these organisational typologies and their partners are driven to
achieving targeted commercial goals. Therefore, larger organisations, particularly
public listed companies, seem to adopt formal relationship processes at the
organisational level but encourage personal bonding at the individual level. It seems
that the size and mode of incorporation of these organisations influence partner
relationships more significantly than the national culture of the organisation.
Chinese (Family Business) and Chinese-Bumiputra Joint-Venture reveal significant
orientation to partner dependence and the use of formal modes of communication but
low orientation to compatibility. This may arise from the unequal power balance
between these organisations and their trans-national partners. The small-scale
organisations in the study are mostly agents or local representatives of large
international organisations. More than 57 per cent (n ¼ 14) of Chinese Family Business
in this study are importers with 43 per cent reporting sales of less than M$50 million
per year. Also, Chinese-Bumiputra Joint Venture organisations are significantly
oriented to partner dependence and co-operation but not oriented to compatibility and
formal communication process. Chinese-Bumiputra Joint Venture organisations in the
study are primarily importers, franchisees or licensees. Consequently, the nature of
business and size of business rather than the organisation’s national culture is the
major influencer of partner relationships. In the case of franchise and licensing
arrangements, we anticipated dependence on and co-operation with partner to feature
highly. Therefore, in Chinese-Bumiputra Joint Venture organisations, we did not expect
to observe low orientation to formal process. Franchising and licensing arrangements
are almost always based on contractual arrangements that govern relationships. The
low orientation to compatibility in these organisations seems logical because most
licensors and franchisors are large organisations which use franchising and licensing
arrangements to form alliances with small-scale organisations to enter new overseas
markets. Consequently, relationship dependence and low orientation to compatibility
and formal process is influenced by the mode of business relationship (e.g. franchising,
licensing etc) and the position and power of partners. Consequently, in these instances,
factors such as the mode of collaboration, size of business, dependence and power
equations, rather than the organisation’s national culture, influence relationships with
partners.
Conclusions
Organisations delineated into the ten national cultural typologies reveal significant
shared characteristics (homogeneity) in their beliefs about and behaviours to their
trans-national alliance partners. This supports the hypothesis that these organisations
can be classed into ten distinct groups. Each group reveal significant differences
to other groups (heterogeneity) in regard to their beliefs about and behaviours to
their trans-national alliance partners. This supports the hypothesis that the ten
organisational typologies are significantly different orientations in regard to beliefs
about and behaviours to partners. Consequently, we conclude that organisational
typologies can be delineated based on the national culture of the owners and senior
managers (Bumiputra, Chinese, Indian etc), the operating environment of the
organisation (historical, political, social and economic background of the country) and
the organisational characteristics (size of organisation, business activity, industry
sector, basis of incorporation etc).
The findings reveal that the national culture of the organisation (as captured by the
nationality of the owners and senior managers) is not the only influencer of
organisational beliefs about and behaviours to partners. This is evident from the fact
that organisations from similar national culture but of different size, basis of
incorporation, business activity and mode of relationship with partners demonstrate
significantly different beliefs about and behaviours to partners. For example, Chinese
Family Business and Chinese Company (Ltd) are significantly oriented to compatibility
and social bonding, whereas Chinese Family Controlled (Public) organisations mirror
practices in multi-national corporations in that they use arms length and formal modes
of engagement with partners. Consequently, the size of the organisation and mode of
incorporation (for example, public listed companies have greater accountability and
reporting requirements than family enterprises) influence engagements with partners
much more significantly than the organisation’s national culture.
We conclude that discourses on organisational culture underpinned by assumptions
that each country has a homogeneous national culture and therefore, nationality
influenced organisational culture have to be re-examined. Several other factors
influence organisational culture much more significantly than national culture.
National culture significantly influences organisational culture when the organisation
is small and the owners and senior managers (who are usually family members) are
actively engaged in the day-to-day administration of operations. This is evident from
the beliefs about and behaviours to partners of Chinese Family Business. In a family
enterprise, owners tend to lead the organisation and business is often developed and
maintained through close personal contact networks, personal bonding, trust,
commitment and co-operation between the organisation’s owner and senior members
of the partner organisation. However, as the organisation becomes large and its
business structure (sic mode of incorporation) changes, in most instances more formal
systems and procedures are introduced.
This study examined direct correlations between organisational culture and relational
constructs. The findings reveal complex interrelationships between different relational
constructs. For example, varying degrees of positive and inverse correlations are evident
between social bonding and compatibility, formal process of communication and cooperation, trust and co-operation, co-operation and compatibility, formal process of
communication and dependence and formal process of communication and trust. It is
logical to conclude that these interrelations between relational constructs will influence
beliefs about and behaviours to alliance partners. Additionally, some relational
constructs can be the cause, the result or be both the cause and the result of other
relational paradigms. For example, in some instances, trust can be an antecedent to
commitment, whereas in other instances, commitment can foster trust. Similarly, good
quality and effective communication can foster trust, commitment and co-operation but
trust, commitment and co-operation can also facilitate better quality and more effective
communication. Further, factors such as the quality and effectiveness of communication
and the resulting compatibility in visions and values can influence relationships with
Influence of
national culture
57
CCM
16,1
58
partners. Finally, even if there are no differences in the extent to which two organisations
trust their partners, their commitment to their partner can be different because of
differences in their dependence on the partner because of contractual obligations or
power and dependence equations between the partners. If one partner has greater power
because of size or reputation, dependence relationships can result and this can impact on
commitment to the relationship.
Relationship between organisations and partners is a highly complex phenomenon.
Inter-organisational relationships are the outcome of complex interactions between
relational paradigms (which we captured in the study through the label functions),
national culture of the organisation (which we captured through the nationality of the
owners and senior managers), organisational characteristics (size, industry sector,
activity etc) and the operating environment (the country’s political, social and economic
environment).
Even though this study makes a substantive contribution to knowledge on national
culture, organisational culture and business relationships, it has some limitations and
these issues need to be explored in future research. The causes and effects of
interrelationships of relational constructs across different organisational typologies
need to be investigated. The interrelationships of relational constructs influence beliefs
about and behaviours to trans-national partners and therefore, such research will be of
great value in theory building and management practice. Notwithstanding the
limitations identified, the findings and conclusions in this study make significant
contribution to our stock of knowledge about national culture, organisational culture
and business relationships by revealing that organisational culture and alliance
relationship is a complex phenomenon and cannot be determined by the national
culture of organisations. Researchers and practitioners should be cognisant of the
national culture, operating environment, organisational characteristics and the effects
of the interrelationship between various relational constructs when strategising and
planning trans-national alliances.
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Corresponding author
Emilija Gligorovska can be contacted at: emilija.gligorovska@vu.edu.au
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