In the previous blog we have argued that ‘Culture’ is described as the modus operandi of a group of people, such as implied by organizational culture. This concept of culture implies not only the shared modus operandi but also the shared values that underpin the modus operandi. Thus, the concept describes both the underlying value as well as the behavior that can be observed. A company can have a ‘highly competitive culture’, implying that competitiveness is valued highly within that company, or is a "core value" within the company. It also implies that in conducting its business the company will behave very competitively. As such, culture in organizations is the way the employee thinks, talks and works. It reflects the norms and values that are anchored in the organization and refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature (Ulijn, Nagel & Tan 2001).
Consequently, organizational culture is rooted in an organization's goals, strategies, structure, and approaches to labor and has impact on many areas of a companies operation. Culture provides a context for interpreting events and assigning meaning (Rafaeli & Worline, 2000; Trice & Beyer, 1993; Denison, 1996). Cultures develop in both large and small groups of people, so cultural differences occur at many levels. Some cultural differences become most evident when comparing large geographic regions, while others can be found at the level of countries, regions within countries, industries, organizations, occupational groups, demographic groups within a country, and so on. For any particular international joint venture, merger or acquisition, cultural differences at many or all of these different levels are likely to be relevant. The specific nature and location of a strategic cross-border alliance determines which elements of culture become most relevant and require the most attention. For the sake of clarity, we will focus on the issues associated with cultural diversity and management behavior in strategic alliances.
Cultural diversity shapes who speak with whom, how often and what they speak about (Luo, 2001; Salk & Shekar, 2001). As a result, the structure of an organization’s communication network reflects the structure of its cultural diversity (Brass, 1984; Lincoln & Miller, 1979). Even when a strategic alliance occurs between companies within a single country, cultural differences may be significant due to regional differences. A study of more than 700 managers in large cities in China suggests that there are at least three distinct regional subcultures in that country. As a result, cultural diversity may create a challenge for alliances between companies from different regions in China as it would for International alliances (Ralston, Kai-Cheng, Wang, Terpstra, & Wei, 1996). Depending on the cultural distance between the national cultures involved in a strategic alliance, managing differences in country cultures or regional cultures may be of relatively great or only minor significance. In some domestic strategic alliances, differences in country cultures are relatively small. In others, however, cultural differences in such key areas as leadership styles and decision-making procedures can be substantial (Brodbeck et al., 2000).
Variations (or similarities) in the institutional environments of the strategic alliance partners may further complicate (or help to alleviate) the challenge of managing differences due to national cultures. Nevertheless, even within economic trade zones, differences in institutional arrangements among countries result in differences in the functioning of management, approaches to managing an organization’s human resources (Brewster, 1995; Glunk, Heijltjes, & Olie, 2001; Mayer & Whittington, 1999). Similarly, differences in industry cultures may be important in some strategic alliances and nearly irrelevant in others.
Cultural diversity and management behavior
Alliance formation is most of the time an exercise of trial and error, with in most cases no clear alliance strategy (Dai, Gurău & Ranchhod, 2006). It is also about establishing relationships at different levels of an organization with partner companies with the objective to achieve, a result that is beneficial for the parties involved. Partner-match is critical in organizational collaboration and selecting partners that are similar in management style and company culture can increase the chance to a successful "alliance marriage".
Partner compatibility relates to the relationship with the partner, but also relates to how employees in both organizations think, talk and work. Partner match as such relates to how norms and values are anchored in each of the collaborating organizations. Matching refers to similarity in shared values, attitudes, standards, and beliefs that characterize members of the organization and define the nature of the organization. In addition, differences in culture result in differences in how management functions as well as approaches to managing an organization’s human resources (Brewster, 1995; Glunk, Heijltjes, & Olie, 2001; Mayer & Whittington, 1999). Difference in management approaches, decision making and differences in "think, talk and work" can limit the success of the alliance due to "the personal note": In our blog on alliance success and failure we have argued that in the alliance relationship, trust, communication and collaboration play an important role to prevent conflicts or opportunistic behavior of each of the partners to occur.
We can now conclude that many aspects of cultural diversity can influence the behavior of employees in strategic alliances. In addition, cross cultural communication, resource sharing and influence attempts are the most important behaviors to understand how cultural diversity affects the modus operandi in teams, departments and whole organizations. Cultural diversity also shapes who speaks with whom, how often and what they speak about. As a result, the structure of an organization’s communication network reflects the structure of its cultural diversity (Brass, 1984; Lincoln & Miller, 1979). Cultural diversity implies the use of different languages and communication styles, which may lead to misunderstandings when people with different national & organizational cultural backgrounds attempt to communicate. Cultural diversity in strategic alliances is therefore always an issue and should be managed accordingly.