Birmingham Insights on Asia – (4) International Strategic Alliance Performance (High Technology Industry in Taiwan)

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This comment is based on Jo-Chun Chieh’s Dissertation written under the supervision of Prof. Michael Czinkota at the University of Birmingham, UK.

3, Organizational culture differences have more influence than national culture differences on International Strategic Alliance (ISA) performance, from the Taiwanese managers’ perspective. Two of the organizational cultural dimensions, professional and pragmatic orientation, ranked as the first two elements of importance when cooperating with a foreign partner, while two of the national cultural dimensions, uncertainty avoidance, long-term orientation, was ranked subsequently. Pothukuchi et al. (2002) addressed a similar concept with differences in organizational culture, compared to differences in national culture, considerably facilitating conflict and impeding cooperation between alliance partners.

4, The study justifies  that ISA practice indeed significantly interferes with the relationship between culture differences and iSA performance. John (1984) indicates that long and sticky partnership between cooperative enterprises reduces that potential for opportunistic behavior while the dissolution of a partnership often leads to poor decision-marketing, interaction and management of inter-organizational relationships. Complementary resources, absorptive capacity, commitment, and trust are important willingness to work together (Day & Klein, 1987). This partnership can evolve positive or negative consequences, depending on how Taiwanese managers implement their managerial practices with foreign partners.

 

Related Article: Birmingham Insights on Asia – (3) International Strategic Alliance Performance (High Technology Industry in Taiwan)

Birmingham Insights on Asia – (3) International Strategic Alliance Performance (High Technology Industry in Taiwan)

birmingham-clipart-256

This comment is based on Jo-Chun Chieh’s Dissertation written under the supervision of Prof. Michael Czinkota at the University of Birmingham, UK.

The study investigated the perspective of Taiwanese managers, thereby examining the impact of national and organizational culture differences and International Strategic Alliance (ISA) practices on ISA performance. Four findings can be concluded as follows.

1, National culture differences partly influence ISA performance, especially in the uncertainty avoidance and long-term orientation dimensions. This finding corresponds to one of the cultural functions proposed by Schneider (1989). He states that culture serves two functions, to solve external adaptation and internal integration problems. Uncertainty avoidance and long-term orientation especially impact on external adaptation. In other words, Taiwanese managers in the high-technology industry emphasize and are good t coping with opportunities and threats from the external environment, as well as being good at developing ISA strategies with foreign alliance partners. on the other hand, power distance, individualism and masculinity influence employee relationships within an organization.

2, Organizational culture differences also partly influence ISA performance, especially in professional and pragmatic (market -oriented) dimensions. Kasper (2001) associates corporate culture and market orientation, claiming that “market oriented organizations are open, employee-oriented, results-oriented, pragmatic, professional…”. This finding reflects that Taiwanese managers in the high-technology industry emphasize the importance of building objectives and obtaining new knowledge when cooperating with ISA foreign partners. Kasper (2001) also associates innovation, stating that customer contacts and customer participation in the R&D procedure are the basis of innovation. This notion implies that Taiwanese managers have high consciousness about global competition and pay attention on balancing innovation and market orientation.

Stay tuned for two more conclusions on our next Birmingham Insights on Asia.

Visit to Taiwan

Professor Czinkota returned from a successful trip to Taiwan where he held discussions with the government on trade relations and export promotion. He also was honored by the invitation of the National Science Council (NSC) of Taiwan in recognition of his research contribution to export development. His keynote speech at the US Taiwan Commercial Council was titled “Turmoil in Academia:There is Sunshine above the Clouds”

Professor Czinkota with Vice Minister Cho

Professor Czinkota with Vice Minister Cho, Minstry of Economic Affairs

Professor Czinkota with Director General Tong

Professor Czinkota with Director General Tong, Department of International Cooperation

Japan and Asia: Oceans Apart

It is a common perception that since Japan is in Asia, it should be culturally closer to Asian economies like China and the four tigers (Hong Kong, Singapore, South Korea, and Taiwan) than Western countries in Europe and the USA. However, research in the area of cultural values suggests that this is not the case. In fact, Japan is found to be more culturally dissimilar to Asian countries than are the USA and European countries. Based on the well-known cultural dimensions articulated in Geert Hofstede’s Culture’s Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations, the masculinity index of Japan is 95. Singapore and Hong Kong’s masculinity scores are 48 and 57 respectively while those of the UK and the USA are 66 and 62. The masculinity index focuses on the degree to which a society reinforces the traditional masculinity work role model of male achievement, control and power. A high masculinity index for Japan indicates a high degree of gender differentiation. In such a culture, males dominate a significant portion of society and its power structure, with females being controlled by male domination. In Singapore and Hong Kong, this is not the case.

In addition, the uncertainty avoidance scores of the UK and the USA are 35 and 46, once again in between Japan (92) and Singapore (8) and Hong Kong (29). Uncertainty avoidance index focuses on the level of tolerance for uncertainty and ambiguity in a society. A high uncertainty avoidance index indicates that Japan has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations and controls in order to reduce the incidence of uncertainty. Thus, Japanese culture encourages less risk-taking while in Singapore and Hong Kong, risk-taking is almost mundane.

While culturally distinctive, Japanese culture and business practices are perceived to be closer to those of South Korea than to China and other Chinese-dominated countries such as Hong Kong, Singapore, and Taiwan. Relationship building is a key element of business transactions in Japan. To be able to join an existing network is especially important for companies trying to conduct businesses in apan or trading with Japanese companies. Reciprocity in relations and saving and maintaining the “face” of Japanese counterparts are priorities fo sustaining relationships. The high uncertainty avoidance index suggests that when dealing with Japanese companies, it is important to show one’s commitment to a plan of joint action.

For more information, refer to Fundamentals of International Business: 1st Asia-Pacific edition by Michael Czinkota et al. 

Conference Discussion: Transpacific Trade Agreement (TPP)

Ambassador Cuisia of the Philippines anticipates the ongoing rise of Asia. The Philippines are experiencing growth rates of over 6%, and even so ranks only third in Asia. He sees the TPP as bringing a new trade architecture to the world, drawing a line down the middle of the Pacific, and accelerating the dynamics of the Asian marketplace. Due to new strength in Asia, Mr. Cuisia forecast the beginning of a new “Roman Peace” with new allies and alliances forming a counterweight to the current “heavy hitters” in trade. His key message was that the Philippines want to become part of the emerging TPP.

Ambassador Jose L. Cuisia (Philippine Embassy Photo by Lilibeth Almonte-Arbez)

Jack Jan, chairman of the Taiwan-U.S. Commercial Forum reiterated the desire of Taiwan to join in with the TPP. That way, Taiwan could offer even more opportunities as a bridge to China. However, in spite of such a desire to join, he warned against the effects of too onerous a cost.

Skip Jones, the Deputy Assistant Secretary of Commerce explained that a TPP would greatly enhance and strengthen the role of Asia as a member of supply chains, global channels and technology. He believes that countries will be able to join the TPP, as long as they don’t break the effort or slow down progress. However, as he colorfully put it: “those who join late get bit by the dog.”