A Case Study on Partnering Across Borders: Negotiating Organizational Culture in a German-Japanese Joint Venture

The above case is about a cross border joint venture and in this case a critical analysis is done to see how the national culture of Germany and Japan plays a role in a joint venture setting. This is an interesting and a very good example to understand the impact of national culture on organizational culture. The article is available online at the following URL: http://www.thunderbird.edu/wwwfiles/sites/globe/pdf/process.pdf.

About The Joint Venture

Nutech, the German and Japanese joint venture, has started its production in 1991. Before the joint venture has started, it was a German based paper plant, which was established in 1710 and the relationship between the partners started in the early 1970s where the Japanese company licensed the German company for producing carbonless copying paper. Both the German and Japanese partners have equal shares of 47.5 percent each, while another Japanese company who is the distributor of Nutech products owned 5 percent of the joint venture’s share. In the middle of 1994, Nutech employed 216 employees including 145 wage earners and 71 managers. Six Japanese managers were employed in this process for the following positions: the Managing Co-Director, Director of Technology, Director of Sales and Marketing, Director of Business Planning, Quality Manager and Manager of Sales. Most of the top positions, for instance, sale and marketing, and Technology are occupied by the Japanese while Germans occupied the production and Administrative functions.

In the mid 1980s, the companies considered a closer relationship between them as the companies observed a rapid expansion of the market of thermal paper in Europe, which was a great opportunity for them and to survive form the international competition. Despite initial failure of the negotiation and takeover of the German company by a US company, they reached an agreement and the contract was duly signed in 1990. The structure of top management was decided in late 1990 and the final agreement was implemented in 1991.

The Problem

On the establishment of the joint venture several problems were identified and most of them were culture specific. The national cultures of Germany and Japan are significantly different from one another and the behavior, values, beliefs and assumptions are also different from each other, which pose great problem in terms of decision making, concept of work, job role perception, language, customer orientation and the like.

Analysing the Situation

Robbins (2003) specifies that top level management influences the managerial values. Based on this view, it can be asserted that the management of Nutech influences the company’s culture in two different ways: the German way of doing things and the Japanese way of doing things. The following table will give a better view (p.466):

Table 1: German/Japanese Organizational Two-Billiard-Ball

German

Japanese

Importance of the individual Importance of the group
Well defined job roles Job roles flexibility
Fast and efficient (vs. consensus) decision making Consensus decision making
Leader as orchestrator with absolute authority Leader as orchestrator/mediator
Rules more important than situation Situation more important than rules
Importance of job security Importance of lifetime employment
Distinct boundary between business and personal life Small boundary between business and personal life
Limited consultative decision Participative decision
Importance of expertise (vs. Age seniority) Importance of age seniority
Importance of hierarchy Importance of hierarchy
Uncertainty avoidance Uncertainty avoidance

Nutech entails a three phase development process:

Phase 1: startup – a period when a large number of Japanese nationals were present to aid in the installation and testing of the new technology

Phase 2: adjustment – characterized by problems and setbacks concerning consistency of product, output, quality and wastage

Phase 3: stable growth – a period of relative

Each phase faced challenges in terms of dealing with team members and as such brought issues of cultural similarities and differences.

In the first phase, for installing the new technology Japanese vendors has sent additional engineers to Germany. They are from five different Japanese firms working on site and they were only loosely coordinated with one another. Second, this period was a highly stressful time, as one manager mentioned that they are behind schedule. These cause problems for both organizations as cultural issues affects the speed and effectiveness of management actions.

The national cultural differences among the managers influence the decision making to a large extent. These are understood from various perspectives of Japanese and German mangers. For example, one of the Japanese managers said (p. 471):

If you are responsible, you actually should have the power to make some decisions . . . particularly if you are responsible for waste and those sorts of things. [Here] you feel like you have little power.

There are differences in the reporting procedures as well in terms of how they will report to their home offices. Though Germans have the freedom of making decision on day to day operations, some strategic decisions want them to consult with the parent organization. For example, Japanese managers are ordered to report every hour detailing what is happening there, what happened and how to solve problems.

Norms differences in decision making cause serious conflicts between German and Japanese managers.

Work conceptualization is also a source of cultural problems. Japanese managers in necessity used to work till late , for example, until around nine o’clock at night while their German colleagues would typically leave work punctually at five o’clock. A Japanese manager illustrates this as (p. 471):

big difference between German and Japanese people is the workers. Workers in Germany care very much about private hours . . . there is some big order from the boss, if they have some appointment they will stick to their private life.

Japanese managers define this as the reason of time differences between Japan and Germany.

Job role perception, use of languages and customer orientation are also among the sources of cultural problems. For example, it is pointed out that whatever the base of the customers, Japanese always try to meet the demand of the customers while Germans perceptions are different. They desire larger orders for justification of developing new products and manufacturing as such.

Other sources of cultural problems are individualism vs. collectivism, production quality expectations and the like.However, with the passage of time, these problems are minimized to some extent; nevertheless the national cultural influences on organizational cultures are still dominant.

Organizational cultures are the values and assumptions of the founders which are instilled in the behavior of the organizational members and national cultural values are the basis of the values and assumption of the organizational culture. It is observed from the case that how national culture influences the organizational behavior in international joint venture. So it can be asserted that national culture influences organizational culture to a large extent.

 

References:

• House, R. J., Hanges, P. J., Ruiz-Quintanilla, S. A., Dorfman, P. W., Javidan, M., & GLOBE associates. (1999). Cultural influences on leadership and organizations: Project GLOBE. In W. H. Mobley, M. J. Gessner, & V. Arnold (Eds.), Advances in global leadership (Vol. 1, pp. 71-114), JAI Press, Stamford, CT.
• Robbins, S. P. (2003), Organizational Behavior, Prentice-Hall, Upper Saddle River, NJ.


 

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