The Effect of Culture in the International Collaboration - Essay Example

CULTURAL ISSUES IN INTERNATIONAL COLLABORATION 1.0 Introduction 1.1 Definition of international collaboration International collaboration refers to cooperative arrangements between two or more parties from different countries to work jointly for mutual benefit (Buckley & Casson 1994). The parties engage in effective transfer of knowledge among themselves to create and sustain a competitive advantage. There are well-established strategies for resolving conflicts that use both assertiveness and cooperation to obtain solutions that are advantageous to all the participants. According to Shaughnessy (1995), collaboration occurs in a situation where the goals of the participants are compatible and that the relationship will play a vital role in achieving their goals. This writing will address the effect of culture in international collaboration to find out whether cultural issues are one of the major reasons that account for the failure of international collaborations. 2.0 Types of collaborations There are different types of collaborations used by organisations around the world. The choice of the type of collaboration that organisations choose, as put by Shaughnessy (1995), depend on the various factors such as the nature of the project they want to undertake, the objectives of the parties, the risks involved and the scale of operations. There are five main types of collaborations used by organisations in the modern world, informal agreements, strategic alliances, strategic partnerships, joint ventures as well as revenue and risk sharing partnerships. 2.1 Informal agreements These are informal agreements characterized by the employment of little legal structures. They mostly involve verbal agreements between the boards of managements of the two parties and usually, involve short-term agreements in projects that will last for a short period. Here, the number of risks faced by the members is reasonably low and thus, the establishment of the agreements base on mutual trust between the parties involved (Beamish 2012). However, in some conditions, very long lasting collaborations and joint business operations can operate in this manner. 2.2 Strategic alliances This type of collaboration involves organisations that lack any substantial degree of ownership and work jointly to gain mutual benefit in a strategical important relationship. Being mere relationships rather than specific inter-organisational structures, strategic alliances lack a well-defined legal form. The alliances align suitably, to the goals and objectives of the organisations involved. In strategic alliances, the partners preserve their autonomy but there is existence of mutual dependency that aim at pooling their resources together and assist each other in dealing with the challenges posed by the market. Here, there is no creation of a new legal enterprise and there exist a strategic intention on each party. Strategic alliances are relevant to organisations that intend to expand its operations beyond the current size but have failed to accomplish because of a number of reasons. This kind of collaboration is mostly, the first stage in the process of building strategic partnerships (Beamish 2012). 2.3 Strategic partnerships This is an extension of strategic alliance where the partnering organisations connect through a non-controlling degree of shareholding. This type of collaboration occurs when an organisation agrees with another organisation for a specific joint project that is naturally, strategic and followed by an exchange of equity amongst the members (Beamish 2012). 2.4 Joint venture In Joint venture, the individual organisations agree and form a new separate business entity with the aim of achieving specific goals. During the agreement, there is the assignment of duties and responsibilities, ownership, financial reward and risks. However, each individual firm preserves its autonomy. The assignment of duties and responsibilities depend on the capability and knowledge of each organisation. Usually, each member takes what he can perform in the best manner and this result to better results and high quality operations that help them to gain a competitive advantage (Killing 2012). 2.5 Risk and revenue sharing partnerships This is an arrangement that allows an organisation supplying commodities to purchase a portion of new commodity programs, and hence reducing the financial peril of the organisation. This will enable the organisation to share a portion of the revenue earned in the future from the sale of the commodities. Usually, these agreements are very confidential and information regarding the agreement is very scarce (Killing 2012). 3.0 Cultural issues In international collaboration, culture plays a very important role in shaping the nature and extent of the collaboration. In case where the organisations engaging in the agreement come from countries that share similar cultural values, culture can act in favour of the deal. However, cultural diversities can greatly hinder the process of collaboration. Some of the important cultural issues include language, education, social systems, level of development, behaviour and religious values (Lane & Beamish 1990). Language greatly affects the exchange of ideas between individuals. For proper understanding of the terms of the agreement, both the two individuals must be well conversant with the language in use. In the case where the two require a translator then distortion of the information can occur. The level of education of the two parties also determines the degree of understanding since learned individuals are able to understand faster and seal the deal within a shorter time as opposed to when both or one of the individuals is not learned. The level of development of the two countries also dictates the extent, which organisations can collaborate since high diversity affects the level of trust and capability to fulfill the promises. Culture entails the behaviour of the people and this may hinder the process of collaboration. For example, Americans are more time conscious than many other people and this may pose a difficulty in collaborating with others who are not equally strict in adherence to time schedules. Religious differences yield different doctrines regarding the operation of business and this can greatly affect the process collaboration (Lane & Beamish 1990). Other issues that greatly affect international collaboration include technology. Organisations can decide to merge to share their technological knowhow regarding the operation of business activities. It also determines the efficiency of operations and the ability to fulfill promises and perform to the expectation of the other party. Technology also affects communication process and exchange of ideas. Finally, legal issues may also play a vital role in shaping the nature of the collaboration process since some government policies such as taxation may promote or hinder international cooperation (Lane & Beamish 1990). 4.0 Culture versus international collaboration Generally, the Anglo cultures have opposite values compared with the Far Eastern cultures. Individualism, special relationships, emotional relationships, universalism and achievement are the common characteristics of Anglo cultures. This means that participants from Anglo societies have better relationships among the cultural as well as communication variables. This is to say that cultural dimensions greatly, affect the process of communication, which in turn may hinder the level of collaboration. According to this argument, it is more difficult for organisation from Anglo culture countries to engage in collaboration with organisations from Far Eastern cultures (Tran & Skitmore 2002). To continue, the dimensions of individualism, avoidance of uncertainty, masculinity and power distance greatly affect the various characteristics of the contents as well as the style of every member in the process of communication. Generally, Far Eastern societies are collectivistic and high power distance while Anglo societies are individualistic and low power distance. In the process of formulating an effective communication strategy, each type of society requires a different approach. Therefore, during the collaboration process, there is the difficulty in determining the best approach that is going to yield the most desirable effect. However, common feature exist in the nature of these cultures and this cannot be a reason of failure to the process. Both the Far Eastern and Anglo cultures are low uncertainty evasion cultures (Jackson & Artola 1997). This common feature can be the source of power that will enable to overcome all the other cultural barriers. People coming from Anglo culture societies tend to be more ready in accepting any new event that may emerge in the course of the day. They are more ready to take risks, show higher degree of tolerance for different opinions. They also demonstrate high level of tolerance to different behaviours that are in opposition to their own behaviours. Consequently, different languages and cultures pose less threat to the process of communication when they intend to exchange ideas. This therefore means that collaboration is easier because the language and cultural barriers are less enabling proper understanding between parties. However, since cultural differences emerge because of the differences in what people see and interact with in their daily activities, differences are inevitable and one must always prepare to deal with the challenge posed by the difference. In all dealings that aim at producing desirable outcomes, communication challenges are inevitable. Therefore, it is wrong to assign a unique definition to Cultural differences as those factors that inhibit international collaboration (Shaughnessy 1995). Most managers from Anglo societies consider those managers from Far Eastern societies as individuals with poor communication skills and hence cannot pass information in an effective manner (Zarzu 2013). This is because of the view that collectivists tend to stress on the importance of holding discussions in a group. This means that when collectivists’ managers communicate with the individualists’ managers, they tend to show high reluctance in making quick decisions. In addition, collectivists tend to demonstrate low commitment to their organisations regarding the decisions made during the discussion. This therefore means that the national culture makes the communication process to be complex. Therefore, Anglo cultural individuals encounter a barrier in communicating with individuals form Far Eastern societies. This explains why there are fewer relationships between Anglo cultural organisations and Far Eastern societies. Culture is that which is making the collaboration process to fail. However, it is the intention of every particular organisation to diversify and expand its operations. The best method to achieve this objective is to find new markets in other countries and establish branches. Therefore, if the management of any particular organisation realizes the importance of collaboration, which is necessary for smooth running of business activities in the foreign country, it will obviously be willing to do so. This in turn will lead to commitment in the decisions arrived and will facilitate the process of decision making to speed up the process of growth of its organisation. This idea intercepts the belief held by the individualists that collectivists tend to be slow in decision making and less committed to the decisions made during the discussion. Therefore, according to this argument, culture does not inhibit collaboration between the organisations coming from the two different clusters (Petersen & Welch 2002). The willingness to trust other individuals is another factor that gives a clear manifestation of power distance. No collaboration can occur between two or more individuals without trust between them. The level of trust between individuals dictates the strength and commitment of each member to the terms that constitutes the process of collaboration. Individuals coming from high power distance cultures characteristically, view other individuals as a threat and hence demonstrate low tendency of trusting others. The positive association of the collectivists on lack of trust is a clear exhibition of this idea. Therefore, when the Anglo culture societies, which are the lower power distance societies, communicate with members from the Far Eastern culture societies, which are the high power distance societies, they find that there is lack of trust from them (Lane et.al. 2012). This interferes with the process of communication and hence difficult to arrive at the conclusion. However, lack of trust cannot act as a barrier following the improved modern forms of communication where it is easier to pass information from one individual to another. In addition, any individual who aims at achieving growth for his organisation and ready to observe all the ethics in business operations is likely going to be trust worthy. With the process of globalization, managers continue to realize the importance of fair deals for mutual benefit and therefore trust is more important. The ongoing process of harmonisation of the procedures in conducting business operations means that in the near future, trust is never a barrier to the process of international collaboration (Lane & Beamish 1990). Both the Anglo group and the far Eastern groups are masculinity societies. The Anglo group societies believe that personal communication skills are a barrier to effective communication. The personal communication skills reflect to the level of respect to the most successful individual. On the other hand, the Far Eastern societies hold that motivation does not place any barrier to the process of communication. It is true that personal skills matters but it is good to remember that it is possible to learn and improve personal communication skills if the need arise. On the other idea, motivation is a very important factor but will not pose any threat since it is a function of what one wants to achieve from the negotiation process (Jansson, Johanson, & Ramström 2007). In an attempt to enhance communication between organisations, most organisations have started using culture to control the operations of the business rather than controlling on basis of rules. Any organisation that emphasises on external orientation puts stress on meeting the demands of their clients. The Anglo organisations that operate internationally hire managers that have good personal communication skills. On this issue, both the Anglo and the Far Eastern clusters indicate that both structural and cultural variables are key determinants to the process of effective communication. More interesting is that the Far Eastern group does not consider religious beliefs as a barrier to the process of communication. This is because, the individuals from this group is mostly interested in task accomplishment rather than personal issues and social needs of the participants. On the other hand, organisations that support individuality demonstrate very high degree of appreciation of cultural diversity of the members. All the arguments presented above show that culture could not, in any way inhibit collaboration between the organisations coming from these two clusters (Yang & Lee 2002). However, a decision made by an individual is a function of what he wish to achieve, what he know and what he believes. Since religion causes beliefs, then it is obvious that religion will affect the decisions made by the individuals and consequently the process of collaboration. An individual will only enter into an agreement that conforms to his religious beliefs. For example, a firm that supplies and distributes wine and alcoholic products is less likely going to establish collaboration with a firm domestically operating in an Islamic country like Saudi Arabia. In this case, religion has inhibited the process of collaboration and hence expansion of the operations of the organisation in the country. Whether religion matters or not depends on the level at which both or one of the parties becomes committed to it (Adler & Gundersen 2007). A good example that illustrates how cultural diversities can fail international collaboration is the failure of the joint venture between the BenQ of Taiwan and Siemens of Germany. It is very clear that the two organisations that combined to establish BenQ-Siemens had differences in nationality, identity as well cultures. Siemens enjoyed the reputation of being the prowess of German engineering. Siemens had the well-established culture of labour synchronization and powerful councils of workers that greatly resisted the change. BenQ specialised in the manufacture of consumer electronics and flexibility, innovation and the spirit of enterprising described the culture of the organisation. The corporate culture of BenQ was less structured and informal while that of Siemens was formal and well structured (Cheng & Seeger 2012). The cultural differences in the management of the two organizations posed very great challenge especially on the side of BenQ, which was more interested in the merger. This is because the company, for the first time, was trying to gain international outlook in its operations. The decision making process of Siemens caused delays and slowed the rapid advancements desired by the two parties. By October 2005, BenQ had acquired the mobile phone unit of Siemens but Siemens postponed the closure of the account to December 2005. This inhibited many of the projects that BenQ wanted to undertake including the development of new products and marketing plans. The approach used by the Taiwanese and the Germans regarding working time is thus very different and accounting for the problems that emerged in the process. This finally, led to a failure of the deal because BenQ did not manage to benefit from the deal. The acquisition of Siemens by BenQ failed because of lack of understanding of the cultural diversity as well as poor skills employed in the process of integration. BenQ management could not bring together the two cultures of the organisations and combine the methods of research and new product development across the organisations. The extent of the intercultural failure became clearer after BenQ suffered severe financial problems leading to the collapse of the project. This case, provides a clear illustration of how cultural incompatibility results to failure of international collaborations (Cheng & Seeger 2012). 5.0 Conclusion It is very true that cultural issues are one of the major reasons that account for the failure of international collaborations. Culture is about what individuals see, what they hear and how they interpret in their brains. This consequently, determines what they believe and consequently what they are willing to do. Usually, an individual will accept what is compatible with what he believes. In addition, an individual will always appreciate what is familiar to him and nobody is always ready to trust a stranger. All these factors will negatively, hinder the process of collaboration. Achieving uniformity in the manner people feel and behave is impossible since this depends on the nature of the challenges that people face. Different regions face different challenges and hence different set of beliefs and behaviours that in turn inhibit the process of collaboration. However, the growth of digital technology that has eased communication and interaction has enabled the world to start moving towards a common way of life that will in turn enable collaboration. The success of this process will therefore depend on the growth and spread of technology worldwide. 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