Cross-Cultural Differences and Joint Venture Longevity

Abstract

In this paper we test whether national cross cultural differences between joint venture (IV) parents affect JV longevity by comparing that of two categories of JVs placed in the same environment, those between two or more Japanese parents on one hand, and those between Japanese and American parents, on the other. Carefully controlling for n the last ten years the rates of formation and dissolution of international joint ventures (JVs) have both been extremely high. Seventy percent of the partnerships studied by Coopers and Lybrand (1986), two-thirds of those in Auster's (1986) and Kogut's (1989) sample, half of those in Harrigan's (1988), forty percent of those in Millington and Bayother factors that may affect JV longevity, we find that the longevity of Japanese-American JVs is lower than that of Japanese-Japanese JVs. Such effects, however, appear only for dissolutions that result from the sale of the venture to one of the partners, not for those due to liquidation or sale to a third party. liss' (1997) and a third of those in Franko's (1971) eventually broke up. Crosscultural conflicts between parents of different nationalities are often cited as reasons for these high dissolution rates (Brown, Rugman and Verbeke, 1989; Lane and Beamish, 1990; Shenkar and Zeira, 1992). Yet while there is much anecdotal support for this thesis, the sta- *Jean-Franoois Hennart is Professor of International Management at Tilburg University. His main research focus is on the transaction cost theory of international business institutions. He is the author of A Theory of Multinational Enterprise (University of Michigan Press, 1982)and of many theoretical and empirical articles on transaction cost theory and modes of market entry and exit.

The impact of partner diversity within multiparty international joint ventures

“…Cognitive-cultural and normative differences among partner firms' home countries may only be blunt proxies for the idiosyncratic and complementary resources that the partner firms are able to bring into a MPIJV. Similar, although the prior research into the survival of dyadic IJVs suggests negative effects of cultural distance (see, for example, Hennart & Zeng, 2002), cultural differences among partners may not have the same effect on the survival on IJVs and on MPIJVs. Firms' decisions to enter an MPIJV may indicate a greater willingness to adjust to other partners' cognitive-cultural characteristics and practices and, thus, are likely to attenuate any potential negative effects of cultural differences.…”

“…While some studies have argued for a negative impact (Garcia-Canal, et al, 2003;Gong, et al, 2007;Hennart & Zeng, 2002) and others have argued for a positive impact (Beamish & Kachra, 2004), empirical evidence on this question remains inconclusive (Beamish & Kachra, 2004;Hennart & Zeng, 2002;Park & Russo, 1996). By combining of RBV and TCE arguments to investigate the effects of qualitative differences between MPIJVs, we reconcile these conflicting findings on the nature of the association between the number of partners and IJV outcomes.…”

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

“…Following prior research (Barkema & Vermeulen, 1997;Hennart & Zeng, 2002), we argue that cultural distance is a key determinant of uncertainty in IJVs since these hybrid modes are-in contrast to WoSjointly managed by firms from dissimilar cultures (Luo et al, 2001). Specifically, the integration of these dissimilar cultures may involve combining different value systems, management styles, and organizational structures (Hennart & Zeng, 2002;Kogut & Singh, 1988), all of which may lead to divergent goals and potential conflicts in the course of IJV operations. Thus, other agency problems are arising.…”

Privatização e mudanças organizacionais: um estudo de caso sobre transformação cultural e comportamental

“…Marks e Mirvis (1998 apud SAYÃO; TANURE; DUARTE, 2006) enfatizam que o tipo de integração cultural escolhido pelos gestores da mudança influencia no grau de incorporação dessa mudança. Pesquisadores apontam que, no mundo gerencial, a influência da cultura nacional sobre a cultura organizacional adquire maior relevância quando são considerados os modelos de gestão pelas multinacionais e que são implementados nas organizações (FREITAS, 1997;HENNART;ZENG, 2002;LYLES;SALK, 1996). Esses modelos e práticas gerenciais elaborados em outros países são permeados de pressupostos e valores culturais que tendem a ser diferentes e/ou conflitantes com os da sociedade receptora.…”

“…A defesa dos valores, crenças e costumes de uma determinada organização por meio de seus funcionários representa um comportamento de adesão à cultura dessa organização. Assim, uma nova gestão organizacional, ao se interpor a uma cultura já internalizada pelo coletivo, traz em seu bojo modificações estruturais, tecnológicas e culturais, sugerindo um enfrentamento de culturas que pode resultar em um choque cultural (HENNART;ZENG, 2002;SIMON;LANE, 2004).…”