This essay draws the attention to these cultural issues since they are the common sources of incompatibility entailing many problems in different fields of business.
Hofstede (2001) argues, when examining culture as a common source of incompatibility it can bee seen in two manners. On the one hand the national culture and on the other hand the corporate culture of a company. By depicting culture as an onion, the difference gets obvious.
The graph (Hofstede, 2001) shows that the outer layers are the organisational culture whereas the national culture relates to the more central layers.
The outer parts of the onion, representing the corporate culture, embody symbols, heroes and rituals. Symbols are words, gestures and objectives that a firm uses (firm logo, way of speaking to customers and to employees, dress habits etc.).
Rituals refer to social rules which have to be followed in a certain company. Heroes are persons that are highly valued in an organisation and are seen as role models.
However the national culture, relating to the more inner layers of the onion model, is seen as values and feelings of wrong or right, good or bad and so on. These values are already acquired in early childhood and are not likely to change in later years.
It gets obvious that the corporate culture of a firm are the elements that can be seen whereas the national culture remains under the surface.
Nevertheless the national culture takes a profound influence on the manner the organisational culture is practised, for instance how the management style is or how decisions are made.
In the case of cross-border alliances different national and organisational cultures are brought in and might represent a source of incompatibility.
As Cartwright and Cooper (1996) underline, in international alliances, incompatibilities may arise due to differences in national cultures and associated managerial styles whereas in domestic alliances incompatibility is often caused by differences in corporate cultures.
In this context Geert Hofstede, a Dutch researcher who did one of the most influential studies on national differences in a cultural context once said, “ Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." (web 6)
Hofstede (2001) sees culture as “[...]the collective programming of the mind which distinguishes the members of one category of people from another.”
The category of people can be a nation, a region or a company which participates in an alliance.
Hofstede studied 116,000 people working in dozens of different countries and found highly significant differences in the behaviour and attitudes of employees and managers from different countries who worked within multinational corporations.
He identified five important dimensions along which people seem to differ across cultures. (web6)
By looking at these dimensions it gets evident where the common sources of incompatibility in cross-border alliances lie.
The first dimension identified by Hofstede (2001) is the power distance, which is the degree to which human inequalities are emphasised.
Having a high power distance means accepting the power and authority of superiors simply on the basis of their hierarchical status. This implies that less powerful employees of a firm accept the decisions and mandates of those above them.
In contrast, cultures with a low power distance do not attach much importance to a person’s position in the hierarchy. The employees in these cultures are more willing to question a mandate from someone at a superior level, they might even refuse it. Emphasis is put on shared decision-making.
Accordingly it could happen that in negotiations or in the day-to-day management and operation of an international alliance, an executive from a high power-distance country -such as Brazil, Mexico, the Philippines, or one of the Arab countries - will continually be wanting to check with his or her superior
If the other partner is represented by an executive from a low power-distance culture, such as Germany, New Zealand, Denmark, U.K. or Sweden, he or she will find this frustrating and an unnecessary waste of time. The low power-distance executive may try to pressure the high power-distance partner into making a decision on his or her own without checking with their supervisor, or may even accuse the executive from the high power-distance culture of lacking the necessary courage to make a decision. The executive from the high power-distance culture, on the other hand, will see the executive from the low power-distance culture as an egotistical businessman. (web7)
Another dimension defined by Hofstede (2001) is the dimension of individualism. The dimension of individualism is the degree to which independent initiative is valued relative to collective effort. A culture with a high belief in individualism would emphasise personal achievement. People who believe in this, tend to put their own interests and those of their immediate family ahead of those of others.
A society low in individualism, so-called collectivist countries, believe that the group comes first. These nations have a well-defined social network, including extended families or tribes. People are expected to put the good of the group ahead of thinking on their own welfare or success.
Most Asian, Latin American, and West African nations tend to be collective whereas people in the U.S., the United Kingdom, Australia, Canada, New Zealand and the Netherlands are said to be individualistic.
As frequently pointed out, the individualistic character of the U.S. society makes it difficult for U.S. corporations and executives to feel comfortable with the collaborative behaviour that is a basic element of most Asian countries. Many of the cultural incompatibilities in international business, and especially in international alliances, are a consequence of one partner being from a more individualist society and the other being from a society that is more collectivist.
Hofstede identified also a dimension called uncertainty avoidance. This dimension reflects the degree to which ambiguity causes anxiety in a society.
People in cultures characterised by a higher uncertainty avoidance seek to reduce ambiguity and feel uncomfortable in unstructured situations. They prefer a structured and routine, even bureaucratic way of doing things. Hofstede found that many people in Germany, Austria, France, Italy or Japan tend to avoid uncertainty.
People in cultures characterised by a low uncertainty avoidance look at ambiguity as a context within which an individual can grow or develop and carve out new opportunities. Hofstede suggests that many people from the United States, Denmark, Sweden or Hong Kong are uncertainty accepting.
Accordingly, Griffin and Pustay (1999) mention that countries like Germany have the emotional need for rules and formalisation at their workplace, whereas American firms mostly dislike rules and standardisation. In this example, two different attitudes on uncertainty avoidance are clashing and it gets evident, that problems might arise within an alliance of which the members are coping with uncertainty in a different manner.
The fourth cultural dimension, masculinity with its opposite part femininity, expresses “[...]the extend to which the dominant values in society are assertiveness, money, and material things, not caring for others, quality of life and people.” (Hofstede 2001)
A society scoring high on masculinity tends to value decisiveness, assertiveness and competitiveness. These are abilities of mens` values that stress control over events and concern with material possessions.
In the opposite, womens` value orientations tend to be linked with nurturing relationships and human interaction.
By looking at the issue of incompatibilities in cross-border alliances it might be, that companies from male-oriented cultures have to deal with companies where the managers might be women. This situation could lead to massive problems since in masculine-oriented societies like Japan, Mexico or Argentina men are expected to hold the primary positions and jobs whereas women are expected to stay at home and raise the children.
The last dimension, Hofstede added is the so called long-term orientation, which focuses on the degree, members of a society adopt a long-term versus a short-term outlook on life, work and other aspects of society. Long-term orientated cultures like Japan, Taiwan or South Korea have a strong focus on future and they value thrift, hard work or perseverance. Other societies like the USA tend to focus on the present and past.
Countries which differ extremely in time orientation are Japan and the USA, for instance.
Transferring this to international business alliances, problems of incompatibility might arise since Japanese companies are more focusing on long-term projects which entails making decisions carefully, saving money and concentrating on the future. American firms ,on the other hand, tend to make fast decisions, do not save money and put their focus more on the present situation instead of having a strong future orientation.
Besides Hofstede, another cross-cultural research was done by Hall and his wife who
examined another issue that could lead to incompatibilities.
Edward Hall and his wife (1989, cited by Naylor 1999) identified what they have called low-context and high-context language societies.
High-context language societies rely heavily on information that is not in the communication per se, but is already in the person receiving the communication.
In low-context language societies, however, nothing is assumed and everything must be spelled out in the communication.
In societies with a high-context communication, the exchange of information usually happens verbally, whereas in countries with a low context communication people do rely on other, paper or electronic, carriers for their information and an agreed code or language aimed at making their messages more easily understood.
In the context of cross-border alliances this could lead to incompatibilities when the allied firms belong to different “communication cultures” . A contract, for example written by an allied partner with a high-context language background, may seem incomplete or unprofessional for an allied firm belonging to a low-context culture.
By looking at Hofstede`s five dimensions, as well as at Hall´s research, it gets obvious that entering into a cross-border alliance also means entering into an intercultural interaction, involving national and organisational cultures of companies from different countries.
However the degree of possible incompatibilities depends to which extend the cultures differ from each other.
Hofstede (2001) mapped so-called “clusters”. Cross-border alliances consisting of countries comprised in a cluster, share many cultural similarities and are more likely to succeed than alliances involving non-cluster countries. In this case the incompatibilities due to cultural differences, as developed in Hofstede`s dimensions play an significant role and might cause the poor performance or even the failure of an alliance.
However the dilemma of poor performance or failure of international alliances due to the common source of incompatibility, culture, can be minimised.
Holt and Wigginton (2002) emphasise that Hofstede´s research on dimensions of cultural values provides a useful model to get a better understanding of cultural diversity among different nations.
Jackson (1995) argues that Hofstede´s study offers a framework for analysing similarities and differences in cultures of two or more countries, since alliances between different nations only turn out successfully if the different parties understand the different views each other may have on the world.
Understanding Hofstede´s dimensions helps to explain why other cultures are different.
Therefore Holt and Wigginton (2002) underline that intercultural training of partners in an alliance is an important way to facilitating and extending that understanding.
Such training is useful for preparing negotiators or managers, who have to work closely on a day-to-day basis with the venture partners, once an alliance has been formed.
Successful managers or employees in cross-border alliances are those who are capable of adapting their behaviour to be effective members of the multinational organisation.
An interview of 400 employees, who worked abroad or with foreign businessmen, of the company Honeywell revealed that typical cross-cultural problems are communication, misunderstanding of the rules of social engagement and different attitudes towards time. (Dotlich, 1982 cited by Cartwright, 1996)
In this context Hofstede (2001) developed a training program in intercultural competence which enables people, dealing with other cultures, to gain a conscious understanding of cultural diversity and consequently to be able to minimise incompatibilities.
The training passes through three phases:
The first phase is awareness, which teaches participants that one carries a particular mental software because of the way he was brought up, and that others who grew up in different environments carry a different mental software. This awareness phase tries to convey the message to perceive people in their cultural context by revealing the learner’s own software and where it may differ from that of others.
For instance, understanding that Americans will demonstrate a greater sense of individualism, relatively less concern with power distance, and greater tolerance for ambiguity often helps American managers and employees how their values correspond to those from different countries. (Holt and Wigginton, 2002)
In the second phase, the knowledge phase, participants gain new knowledge about different cultures by learning their symbols, heroes, and rituals. Although employees from one company of the alliance would never share the values of another company’s culture, they must at least get an intellectual grasp on where the values differ from one ones.
Due to this fact, German companies, for example should know that gift giving is an essential symbol in Chinese business culture. Knowing about this ritual, avoids Germans to come “unprepared” to a business meeting. (Gesteland, 2002)
Finally Hofstede (2001) mentions the skills phase which is based on awareness and knowledge but adds practice and actual experience. Participants have to learn to understand the symbols of the other cultures, recognise their heroes, practise their rituals and experience the satisfaction of getting along in the new environment.
This last method of training is based on field experiences which might entail a short trip to the partners location in order to experience and use the learned theory. (web 8)
Concerning the universality of the training, Hofstede (2001) says that intercultural competence can be taught, but for example students with extreme left- or rightwing political sympathies or unduly inflated egos are not likely to gain some distance from their own beliefs and might not succeed in doing this training.
There are a multitude of organisations providing cross-cultural training utilising many different methods in their programs.( web 9)
As a study shows, the two most commonly cited elements of these programs are factual information about the other country and understanding the culture of the other country, as suggested by Hofstede. (web8)
It gets obvious that minimising incompatibilities in cross-border alliances, which occur mostly due to cultural differences, means understanding the differences in national cultures of the allied companies. All parties involved need first to appreciate the different views and interpretations each other may have on the world. Without this awareness, which they can gain through training, they can not even begin to understand more specific behaviour within the context of the corporate culture
Just comparing one’s own management style, decision-making progress or reward system with allied organisations, reveals that there are differences and how these differences are, but without a broader contextual understanding of national values the explanation why there are differences can never be answered.
(Cartwright and Cooper, 1996)
In conclusion it can be said, that the essay shows the existence of different approaches in order to analyse the sources of incompatibility in cross-border alliances.
In the traditional way of analysing them, people focused their attention on rational-economic factors.
But as Kitsching (1967, cited by Cartwright and Cooper 1996) says, “[...] the mere existence of potential synergism is no guarantee that the combined operation will realise the
Potential. ”
That is to say, that entering into an alliance by just looking at economic-rational factors is no guarantee for success.
Cartwright and Cooper (1996) emphasise this issue by using an illustrative comparison. They say that conceptualising an alliance exclusively as a rational financial and strategic activity is
“[...] like buying a house when one is satisfied as to price, title, location and structure, without inspecting the interior; then, having moved in, finding oneself uncomfortable with the layout and irritated by the eccentricities of the workings of the central heating system.”
This comparison reveals that the common sources of incompatibility in a cross-border alliance is represented by different cultures of the partners within an alliance.
Since culture affects the way of decision making, the management style and other parts of the organisational culture, numerous problems or “incompatibilities” might arise and harm the performance of the alliance.
These arising incompatibilities can be explained and analysed by using Hofstede`s and Hall´s framework of national culture.
As a possibility to minimise this harming sources of incompatibility, the partners within an alliance have to be aware of the impact of their own culture in order to understand the cultural differences of the others. This cultural understanding can be taught by training and consequently helps to minimise the incompatibilities, on the one hand, and maximises the synergy effect of the alliance, which is the key of a winning cross-border alliance, on the other hand.
REFERENCES
Cartwright, S., Cooper C.L. (1996), Managing Mergers, Acquisitions and Strategic Alliances: Integrating People and Cultures, Second Edition. Oxford: Butterworth-Heinemann Limited.
Culpan R. (1993), Multinational Strategic Alliances. New York: International Business Press.
Gesteland, R.R. (2002), Cross-Cultural Business Behaviour: Marketing, Negotiating, Sourcing and Managing Across Cultures. Copenhagen: Copenhagen Business School Press.
Griffin, R.W., Pustay, M.W. (1999), International Business: A Managerial Perspective, Second Edition. Massachusetts: Addison Wesley Longman, Inc..
Hofstede, G. (2001), Cultural Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations, Second Edition. California: Sage Publications, Inc..
Holt, D.H., Wigginton, K.W. (2002), International Management, Second Edition. Orlando: Harcourt College Publishers.
Jackson, T. (1995), Cross-Cultural Management. Oxford: Butterworth-Heinemann Limited.
Naylor, J. (1999), Management. London: Financial Times Professional Limited
Web1. University of Minnesota [online]. Available from:
[Accessed 10 November 2004]
Web2. zeromillion [online]. Available from:
[Accessed 12 November 2004]
Web3. oneworld alliance [online]. Available from:
[Accessed 20 November 2004]
Web4. Europa-Universität Viadrina Frankfurt (Oder) [online]. Available from:
.
[Accessed 21 November 2004]
Web5. praxisintercultural [online]. Available from:
[Accessed 20 November 2004]
Web6. Geert Hofstede [online]. Available from:
[Accessed 20 November 2004]
Web7. purdue university press [online]. Available from:
[Accessed 22 November 2004]
Web8. highcontext [online]. Available from:
[Accessed 22 November 2004]
Web9. strategic alliances [online]. Available from:
[Accessed 18 November 2004]
