International Joint Ventures (IJV) represent certain challenges: first of all, they are common enterprises of different shareholders with different cultural backgrounds. Misunderstandings about goals, expectations, and the roles top managers will play in the common project occur with much more frequency than in purely national Joint Ventures. Secondly, the different cultural backgrounds demand additional intercultural competences to ensure an effective communication and cooperation. And, last not least, national and organizational cultures play a complex role in an IJV.
|Event NoteHRM Expo 2010, CologneKeynote-Speech
of Prof. Dr. Hora Tjitry
Thursday, 14 October 2010,
2.30pm – 3.30pm, keynote forum,
Subsequent Public Interview
A study from the nineteen-sixties identified more than 160 definitions of culture. The Dutch psychologist Geert Hofstede defined culture as “Software of the mind“. An alternative definition is offered by the German Psychologist Alexander Thomas. He defines culture as an “Orientation System“. To make it short, you could say that from the view of a psychologist, culture can be understood as a system that influences its members and gives them orientation to recognize specific situations and be able to act or react accordingly. The way we see the world is influenced and guided by our culture.
Is there a worldwide management-etiquette that could create a top management culture?
I am not so sure whether we may be to speak of universal management principles that would be valid in any culture or country. I would rather say that there are universal values that influence top management culture, as for example the concept of Stakeholder Values. In the case of Joint Ventures, I observe very often that the same word may have different meanings in different cultures, especially when it comes to business practices. Take for example the word “profit”– the idea how much and how high the profit of a business should be and the priorities the stakeholders establish, can differ very much between cultures.
Western top managers have the reputation to have a lot of “punch“, paired with a strong rational sense of strategy. How hard can it be for such a personality type to develop intercultural sensitivity?
Assertiveness and strategic thinking are indeed important competences for top managers. And they may help international business leaders to develop intercultural competences and sensitivity, although the same value might be understood quite differently by Western and Asian managers. I always quote the example of the oak and the bamboo. In Western countries, assertiveness is interpreted as the ability to stand to ones convictions under any circumstances, like an oak, Asian Managers rather associate it with an extreme flexibility that enables a person to never give up, like a bamboo.
To which extent is it necessary for top managers to understand their own cultural anchorage before entering intercultural dialogue? Many German Managers can’t even say how far they are influenced by their own culture.
The understanding of one’s own cultural imprint is the first and most important step towards more intercultural competence and sensitivity. Facing today’s globalization, it has become more and more important for the global players to have a clear consciousness of their own culture and how it influences their thinking and their behavior. First of all, because due to globalization we have more and more contact with lots of different cultures. The better we know ourselves, the faster and better we will be able to understand others, even if that understanding will not go beyond certain limits. Secondly, thinking about ourselves helps us to establish a distinct cultural identity, which has a positive influence on our professional success and our general satisfaction with life.
Some companies try to integrate cultural differences by creating their own corporate culture. To which extent can that work?
Particularly in global companies, a strong corporate culture that is at the same time flexible enough to integrate national cultural differences, can have a very positive influence on sustainable business success. Corporate culture can be an effective platform for cultural dialogue and promotes the sense of belonging in local employees. Nonetheless, the real challenge is to manage the national and organizational cultures. In other words: what has to be accepted locally and what should be a worldwide standard? Without a strong corporate culture, global companies will loose their competitive advantage. A German company for example will never be successful in China if it simply copies the Chinese way to do business, nor if it strictly sticks to its original strategy. The solution is to build on the German cultural advantage and at the same time integrate the local practice.
Does intercultural sensitivity have to do more with explicit or implicit knowledge?
Intercultural competence and sensitivity has to do with both kinds of knowledge. Some explicit knowledge, as for example history or names of important people is essential, but not enough to manage cultural differences successfully. Our comparative studies on intercultural sensitivity in Germany and Asian countries showed that there are significant cultural differences regarding the explicit or implicit knowledge managers need, and how they use it. While Germans rely mainly on their rational background knowledge, Indonesians for example count on their intuition and sensitivity. Their implicit knowledge consists in the feeling what is right or wrong under certain circumstances.
How do Chinese managers adapt to Western culture? Are there traditional techniques?
The study I just mentioned showed that the Chinese have a unique approach to the management of cultural differences. We call it “Differences Harmonization“ (see picture). In a situation of a cultural encounter, the Chinese might at first imitate the foreigner’s style. Later they are likely to integrate it slowly into their own behavior. In a similar situation, Western managers rather emphasize their identity, with perhaps the possibility of adapting to the other culture on the long term. The Chinese concentrate on maximizing the similarities between different parties to establish social harmony, while Westerners focus on the integration of differences to create cultural synergies.
Picture: Differences Harmonization in China
How do you motivate top managers to identify themselves with a Joint Venture?
First of all, you need clear goals that must be shared by all shareholders. In cross-country IJVs, top manager should be conscious of different interpretations of the same goals due to cultural differences. Secondly, top managers should be trusted with the power of decision-making and clear-cut job descriptions. And, last not least, there has to be a system and an infrastructure that enables and encourages all top managers to act as a team. The system may consist of organizational structures, compensations and benefits as well as performance management.
Is it really that desirable for societies to become more and more intertwined due to the worldwide globalization process? Or to put it differently, how much difference do we need?
The idea of the world being a “Global Village“ exists since the beginning of the internet era. It is true that globalization has reduced distances and to a certain grade also cultural differences. China for example is developing itself towards integration into the global society. You can measure that for example by the number of cars, the presence of McDonald’s or the sales of Paulaner Bier. On the other hand, more and more multinational companies recognize that they should develop more products for the local Chinese market instead of only selling their successful global products there. In my perception, cultural diversity is definitely a positive factor that can be an inspiration for innovations and promote business performance. But it is also a fact that cultural diversity creates problems and losses. I think it is not about how much difference do we need but how we can create more intercultural competences in our society. We cannot ignore the fact that the world is becoming “flatter” every day. Nonetheless that does not mean that cultural differences disappear but rather that more and more people with different cultural backgrounds interact and live together. Cultural heterogeneity is possible to the extent that intercultural competences and sensitivity exist in modern society. If we see that as an advantage, we have a chance to build a better world for all people.
Interview: Stefanie Heine