Chapter 7

Cultural Diversity in
Cross-Border Alliances
Susan E . Jackson
Randall S . Schuler

Introduction
Increasingly, firms are using cross-border alliances to strengthen and maintain their position in the market place . Although often seen as a relatively fast and efficient way to expand into new markets and incorporate new technologies, the success of cross-border alliances is by no means assured . To the contrary, such alliances often fall short of their stated goals and objectives . While some failures can be explained by financial and market factors, the failure of others can be traced to neglected human resource issues and activities associated with managing the cultural diversity present in these organizations . This chapter describes the special challenges that cultural diversity creates for effectively managing human resources within cross-border alliances . Drawing upon the extensive literature regarding the management of domestic alliances and domestic diversity, we offer suggestions for how human resource management practices might be used to improve the success of cross-border alliances .
Regardless of industry, it appears that it has become all but impossible in our global environment for firms to successfully compete without growing and expanding through deals that result in cross-border alliances (CBAs) (Lucenko,
2000) . In some industries, e .g., insurance, cross-border alliances provide a means for moving into new markets . In other industries, e .g., pharmaceuticals and software technology, small enterprises that are developing new products may enter into alliances with larger firms that can more efficiently manufacture and distribute those products . Other reasons for cross-border alliances include gaining access to the talents of another country's labor market, acquiring access to new technologies,
controlling