Academic journal article Journal of Management and Organization

The Impact of Cultural Similarities and Differences on Performance in Strategic Partnerships: An Integrative Perspective

Academic journal article Journal of Management and Organization

The Impact of Cultural Similarities and Differences on Performance in Strategic Partnerships: An Integrative Perspective

Article excerpt

ABSTRACT

This theoretical research endeavors to find common ground in the ostensibly inconsistent results of studies on the impact of cultural similarities and differences on strategic partnerships. Some findings suggested that partners have to possess similar cultural characteristics in order to achieve success while others showed that cultural distance had a positive effect on efficiency and the competitiveness of partnerships. This paper systematically analyzes the equivocal evidence of influence of both commonalities and differences on partnerships' outcomes, highlighting conditions under which they can be either beneficial or dysfunctional. Several propositions are formulated in regard to the role of qualitative and quantitative differences in both organizational and national cultures. Further, the theoretical and practical implications are also discussed.

Keywords: strategic partnerships, cultural similarities, cultural differences

INTRODUCTION

The steady rise of international partnerships such as strategic alliances, international joint ventures (IJVs) and selling partnerships is one of the prominent features of the process of globalization. Academics and practitioners have acknowledged that national and organizational culture plays a critical role in the success of partnerships across borders. Moreover, culture is regarded as one of the major causes of the high failure rate of strategic alliances. There is a general consensus in the literature that a cultural fit between partners should exist in order for their collaboration to succeed. However, neither the nature of this fit nor the direction of cultural influence has been fully understood, due to the inconclusive results of empirical research. Some authors argue that partners have to possess similar cultural characteristics in order to achieve success, and the wider the cultural gap is between them the worse the performance (Lane & Beamish 1990; Schneider & De Meyer 1991; Sirmon & Lane 2004). Similar results were reached in the study of another type of inter-organizational relationship - mergers and acquisitions (Chatterjee et al. 1992; Lubatkin et al. 1999; Thomsen 1996). Ostensibly the sound practical prescription that stems from these results is to find a partner as culturally close as possible in order to avoid intergroup conflicts, withholding information, distrust etc. At the same time, other findings have led to the opposite conclusion. Park and Ungson (1997), contrary to their initial hypothesis, found that the duration of international joint ventures had a positive correlation with national-cultural distance and that US-Japanese partnerships were less likely to dissolve than US-US ones. Results reported by Pothukuchi et al. (2002) showed that national cultural distance had a positive effect on efficiency and the competitiveness of joint ventures of Indian firms with foreign partners. Research of mergers and acquisitions also brought some authors to conclude that larger cultural distance is associated with better performance (Krishnan et al. 1997; Morosini et al. 1998). These findings imply that cultural fit may not necessarily mean being alike - it may mean being complementary, i.e. different from each other. The explanations for these contradictory results have involved the multilevel nature of culture (Teerikangas & Very 2006), the conceptual and methodological properties of the cultural distance construct (Shenkar 2001), or the incongruence between economic and psychological performance (Pothukuchi 2002). Though these arguments are certainly not without merits, there are also other reasons for these inconsistent findings. This paper endeavors to find common ground and present additional explanations to the ostensibly contradictory results in studying the impact of similarities and differences in both organizational and national cultures on strategic partnerships. The paper is focused on strategic partnerships; however, its conclusions can be applied mutatis mutandis to other forms of inter-organizational relationships, such as mergers and acquisitions. …

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