Page 442 - Cultures and Organizations

Intercultural Encounters 407

cated is one not only of place but also of time: optimal solutions will very

likely change over time, so that periodic reshufflings make sense.
Expanding Multinationals: International Mergers

and Other Ventures
Mergers, acquisitions, joint ventures, and alliances across national bor-
22
ders have become frequent, but they remain a regular source of cross-
cultural clashes. Cross-national ventures have often turned out to be
dramatic failures. Leyland-Innocenti, Vereinigte Flugzeugwerke–Fokker
and later DASA-Fokker, Hoogovens-Hoesch and later Hoogovens–British
Steel, Citroen-Fiat, Renault-Volvo, Daimler-Chrysler, and Alitalia-KLM
are just a few of the more notorious ones. There is little doubt that the list
will continue growing as long as management decisions about interna-
tional ventures are based solely on financial considerations. They are part

of a big money and power game and are seen as a defense against (real
or imaginary) threats by competitors. Those making the decision rarely
imagine the operating problems that can and do arise inside the newly
formed hybrid organizations. Even within countries, such ventures have
a dubious success record, but across borders they are all the less likely to
succeed. If cultural conditions do look favorable, the cultural integration
of the new cooperative structure should still be managed; it does not hap-
pen by itself. Cultural integration takes lots of time, energy, and money

unforeseen by the financial experts who designed the venture.
Five ways of international expansion can be distinguished, in increas-

ing order of cultural risk: (1) the greenfield start, (2) the international stra-
tegic alliance, (3) the joint venture with a foreign partner, (4) the foreign
acquisition, and (5) the cross-national merger.
The greenfi eld start means that the corporation sets up a foreign subsid-

iary from scratch, usually sending over one expatriate or a small team, who
will hire locals and gradually build a local branch. Greenfield starts are by

their very nature slow, but their cultural risk is limited. The founders of the
subsidiary can carefully select employees from the host country who fi t the
corporation’s culture. The culture of the subsidiary becomes a combination
of national elements (mainly values; see Chapter 9) and corporate elements

(mainly practices; see Chapter 10). Greenfield starts have a high success
rate. IBM, many other older multinationals, and international accounting
firms until the 1980s almost exclusively grew through greenfi eld starts.