Reference no: EM133425428

Cross-cultural impact on international business collaborations

The truly multinational executive, able to work effectively anywhere in the world with any nationality, remains a rare beast, and ordinary staff therefore need to understand and learn from different cultures to achieve the right level of collaboration.

A foreign joint venture or alliance, for example, may be agreed in Mumbai with great enthusiasm at board level, but the hoped-for results will only materialise if operating staff at all levels in Birmingham are ready and able to work with their opposite numbers. Nationality, religion or corporate culture may be the big hurdle, but it is important to also realise that even within the same organisation wider cultural gaps can exist between, say, R&D and finance as between the R&D teams of two partners. Wherever it occurs, the failure to understand can be disastrous. Rover is a tragic example. Back in the 1980s, when shop-floor collaboration in the UK car industry was near zero, Rover nonetheless managed to form a partnership with the Japanese group Honda to fill its vital new model programme. But the arrogance of the Rover managers and the lack of a learning culture prevented them from obtaining the real benefits of the relationship, according to Professor Lord Bhattacharyya, head of the Warwick Manufacturing Group. Later, in 1992, when BMW bought the Rover business, communication with the German managers was even worse (exacerbated by political infighting on the German side). Failure was the inevitable and bitter result. No doubt, ex-Rover patriots today will see the somewhat similar collapse of the DaimlerChrysler link as salve for wounded pride. Rather like Rover, DaimlerChrysler was dogged by poor collaboration and in-fighting, which stemmed in part from national cultural differences and traditions between German and US managers.

The outcome in both cases will have come as no surprise to Professor Geert Hofstede, who 30 years ago pioneered the study of cultural diversity in 56 countries using IBM's worldwide database. He has since been joined by others, notably a fellow Dutchman, Fons Trompenaars, and the American Craig Storti. Interest in their work is currently reviving after some big companies, including IBM, found that trying to impose a single corporate culture around the globe did not lead to better collaboration. Two of the five "cultural dimensions" that Prof Hofstede derived from his database go some way to explaining the difficulties faced by Honda, BMW and Daimler-Benz managers in collaborating with their opposite numbers at Rover and Chrysler respectively. One is individualism, defined as the degree to which ties between individuals - family as well as business colleagues - are loose or tight. The UK score as assessed by Prof Hofstede is 89 out of a possible 100, indicating a high degree of individualism, exceeded only by the US with 91. Germany is a little above the European average at 67, but Japan scores 46. On another dimension, uncertainty avoidance - the degree to which individuals feel uncomfortable in unstructured environments - the Japanese score 92, the Germans 65, the Americans 46 and the Brits 35.

1. You are requested to identify the key issues of the cultural impact on the collaborations from the above case.

2. How do you apply Hofstede's theory of national cultural dimensions in detail to analyse the failure of the collaborations between different business partners?