Growth can result in miscommunication and possible drawbacks in

Growth
in the international business market has led to a dramatic rise in
cross-national joint ventures (Blodgett, 1992). An
international joint venture (IJV) can be defined as a partnership between two
individuals or companies based in two different countries in which risks and
profits are shared. The advantage of
forming an IJV is that both companies can share their resources without merging
their entire business operations (Buckley
and Casson 2009). This
inevitably means that alongside sharing capital, technology and markets, they
will also be sharing the human resources of the company, and that is when the
question of national cultures will determine the success of the IJV. If a
partnership is able to effectively integrate both existing national cultures,
they would both save a great deal in time, effort, and more importantly, costs.
There is plenty of evidence to suggest
that cross-cultural differences are a major reason why so many cross-border
joint ventures fail (Pooley, 2005). An
example of an IJV that proved successful because both parties took the time to
study one another’s culture is the alliance between Renault and Nissan as seen
in the case study. Rather than forcing their workers to work together based on
knowledge and intuition, both companies were adamant to teach their employees
about the opposing company’s culture, social norms, and communication. Both
parties tried to address all kinds of issues that may arise from cultural
miseducation, ranging from language classes to understanding the counterparty’s
business culture to avoid any issues. Cultural
differences between partners and its impact on IJV performance are the most
common issues found in IJV research (Li et al., 2001). It is also important to note that both parties were open to
change and adaptation, similar to Honda adapting its strategic formulation upon
entering the US market as mentioned earlier. Refusal to adapt or change can
result in miscommunication and possible drawbacks in the future. Mintzberg (2011) stated that in creating any type of
partnership across borders between companies from different countries, it is
vital to the survival and success of the partnership that the two companies
understand the culture of each other so as to reduce and perhaps avoid any
clashes in the processes of decision-making and the daily operations of the
partnership. So rather than ignoring the cultural differences or pretending
that they do not exist, addressing them, adapting to them, and potentially
integrating them will result in less issues and success for both parties, as
seen with the Renault-Nissan alliance.

 

 

Managing people in any
company is an uphill task because senior managers have to deal with employees
from around the world with different cultures and ways of doing business. Managing
people in a transnational corporation to achieve a common goal is even more
complicated as there are several more factors senior managers have to deal with
such as expatriate management, global skills management, and legal regulations
of other countries. National culture has a considerable influence on the
behaviour, attitude, and values of employees in a specific country. Therefore
in the context of a TNC, human resources tasks such as recruitment, appraisal,
and employee development, will all be influenced by national culture. Hofstede’s (1970) cultural dimensions model can be used to appraise certain IHRM
practices and the influence that national culture has on these practices, in
this case, individualism vs collectivism
(IDV) and power distance index (PDI).  For example, with regards to recruitment, (Stone et. Al. 2007) concluded that recruiters that come from a country with collectivistic
values are more likely to give preference to personal references and employee
referrals, whereas recruiters from countries with individualistic values will
give preference to candidates on a merit basis through employment agencies. When
measuring employee performance and appraisal, if the country where the TNC is
operating is considered individualistic, employees will be appraised on their
own individual performance, whereas if the TNC operates a collectivist culture,
employees will be appraised on their teamwork and collective performance (Stone et. Al., 2007). Finally, the influence of national
cultures is also clear regarding employee development. In countries where there
is a high power distance culture, the communication between employees and senior
management is very formal, resulting in decreased interaction and communication
between a TNC’s senior management and their subordinates. On the other hand, in
countries where there is a low power distance culture, employees can more
easily approach their superiors and there is a more open line of communication
between them (House et. Al., 2004). The aforementioned instances clearly
show how important national culture integration is in a TNC, and how without
it, there would be a lot of unanswered questions could arise and lead to conflict.
An example of unanswered cultural issues that went unanswered is mentioned in
the Richard Pooley (2005) case where a breakdown in
communication cost both companies in the alliance tens of millions of dollars. One
company was Japanese and the other was German, and both companies did not
provide their employees with any cultural training as Renault and Nissan did.
This resulted in a culture shock for both parties to the point where the alliance
was unmanageable in the end and resulted in the disbandment of the alliance. It
is therefore important to firstly recognize that organizational hierarchy and
attitudes towards management differs from culture to culture, and to secondly
address this issue by promoting cultural awareness in the workplace. 

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