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Organizational culture and partner interaction in the management of international joint ventures in India

Abstract

Different from previous research that focused on the formation phase of partnering processes in joint ventures, this study focuses on the post-formation phase and argues that partner interaction processes of communication, cooperation, and conflict resolution play a key role in the implementation and management of joint ventures. We examine how organizational culture differences (OCD) and integration acculturation strategy (IAS) affect international joint venture (IJV) performance through the mediation of partner interaction processes. We develop hypotheses and test them by survey data from 202 executives of IJVs in India. The results suggest that the interaction processes fully mediate the negative effect of OCD but partially mediate the positive effect of IAS on partners’ satisfaction with the joint venture performance. We discuss the implication of these findings for research and practice on post-formation management of IJVs.

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Notes

  1. 1.

    According to Beamish and Lupton (2009: 79), the six joint venture issues are performance, knowledge management, internationalization, cultural differences, governance and control, and valuing a joint venture; all of which, except internationalization, are salient for the implementation and management phase of partnering process.

  2. 2.

    We assume that separation and marginalization are not viable strategies in the post-formation phase because an IJV’s effectiveness depends more on achieving synergy than on domination of one partner. Domination is unappealing because unlike acquisitions (Nahavandi & Malekzadeh, 1988) or parent-subsidiary relationships (Selmer & De Leon, 1996) that are characterized by asymmetrical relationships of power differential, in IJVs, especially those with an evenly distributed ownership, neither of the partners can unilaterally impose its organization’s culture on the venture (Meschi, 1997). Moreover, researchers have observed that the partners of collaborative ventures face the dual pressures of maintaining their own cultural identity and adapting to their partners’ cultural practices (Selmer & De Leon, 2002). Overall, IJV studies suggest that either shared or split control is preferred to dominant control for the effectiveness of joint ventures (Beamish & Lupton, 2009).

  3. 3.

    The data for this paper were part of the original data in Pothukuchi and colleagues’ (2002) survey. However, except for OCD, none of the major variables in this paper were used by Pothukuchi and colleagues (2002). In addition, this study addresses a set of different research questions and tests new hypotheses by employing a different analytical procedure.

  4. 4.

    NCD is computed by the following formula (Kogut & Singh, 1988): \( {\hbox{NC}}{{\hbox{D}}_{\rm{j}}} = \sum\limits_{{\rm{i}} = 1}^4 {\left\{ {{{\left( {{{\hbox{I}}_{\rm{ij}}} - {{\hbox{I}}_{\rm{id}}}} \right)}^2}/{{\hbox{V}}_{\rm{i}}}} \right\}/4}, \) where Iij stands for the index for the ith cultural dimension and jth country, Vi is the variance of the index of the ith dimension, d indicates India, and NCDj is national cultural distance of jth country from India.

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Correspondence to Fariborz Damanpour.

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Table 2 Measurement model properties.

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Damanpour, F., Devece, C., Chen, C.C. et al. Organizational culture and partner interaction in the management of international joint ventures in India. Asia Pac J Manag 29, 453–478 (2012). https://doi.org/10.1007/s10490-010-9204-x

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Keywords

  • Management of joint ventures
  • IJV performance
  • India
  • Organizational culture difference
  • Integration acculturation strategy
  • Partner interaction processes