Culture Resource Centre

Negotiated Practices to Overcome Cultural Differences in IJV’s

Searching for Synergy

FROM THE LITERATURE – I like to share some insights from an article by Barmeyer and Davoine (2019) who researched International Joint Ventures (IJV’s). One of the article’s invaluable messages that stand out to me is that you will not only need to overcome the impact of national cultural differences, but you also (and often forgotten or neglected) need to deal with each international partners’ organisational culture and preferred practices. Managerial and work practices therefore need to be negotiated and re-aligned to provide synergy in the new IJV.

What’s the deal with International Joint Ventures?
Let’s dig a bit deeper into IJV’s: Between 30 – 60% of IJV fail due to (1) Cultural differences, (2) Breakdown in trust, (3) Issues with sharing control, (4) Time differences (and getting things done), (5) Change in economic/competitive landscape, (6) Differences in expectations between parties, and (7) Disruptive to (home-base) business (Bayly 2008).

The importance of the first factor, cultural differences, seems to be confirmed by Beamish and Lupton (2009) who identify ‘the impact of culture’ on IJV performance as one of the six major topics of IJV research. Furthermore, most authors suggest that differences in national cultures and environments of partners produce a higher level of management complexity.

How do we make them successful?
When setting up the IJV, selecting partners successfully includes doing a Cultural due diligence: the process of investigating, assessing and defining the cultures of two or more distinct business units. It consists of a cultural assessment to discover areas of similarity and difference that will impact integration efforts and the achievement of strategic objectives.

That brings an additional layer of complexity to the new IJV: when these international partners start working together they need to overcome areas of differences due to the national, organisational cultures and managerial and work practices. Overcoming cross-cultural practices is not only about conflicts, threats and bargaining power: it is also about finding solutions, understanding the other’s perspectives, sharing common representations and common goals, and developing new solutions, new identities and new representations.

Negotiated Practices to reach Synergy in IJVs
Long-term IJV’s studies seem to draw similar conclusions and refer to the development of new organisational cultures, managerial and work practices through the interactions of the IJV’s partners and staff. Cultural differences therefore should not simply be seen as obstacles to cooperation: they may have complementary, enriching or synergistic effects on work practices.
To me that confirms that message: managerial and work practices need to be negotiated to provide synergy in the new partnership.

How to facilitate the development of synergistic practices?
– set up organisational and communication structures,
– practice individual skills and socialisation of IJV leaders and staff,
– develop relationships and learning processes,
(boundary spanning between parties).

To wrap up
The people involved with the development of synergistic practices require a certain level of cultural know-how, cultural sensitivity, and intercultural competence to incorporate a successful IJV.

Article by Barmeyer and Davoine Facilitating intercultural negotiated practices in joint ventures: The case of a French–German railway organization. International Business Review, Vol. 28, Issue 1 [Feb 2019]

Joost Thissen, Partner & Interculturalist
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