...International Joint Venture System Complexity and Human Resource Management* Randall Schuler Rutgers University and GSBA Zurich Ibraiz Tarique Pace University Chapter to appear in I. Björkman and Günter Stahl (eds.), Handbook of Research in IHRM. (London: Edward Elgar Publishing, 2005) * The authors wish to thank S. Jackson, M. Moelleney, B. Kugler, G. Bachtold, W. Harry, J. Ettlie, D. Osborn, Y. Gong, and I Björkman for their suggestions and commentary in the development of this chapter. © Randall S. Schuler and Ibraiz R. Tarique. 1 International Joint Venture System Complexity and Human Resource Management An increasing number of organizations are entering new global markets as they seek to develop and sustain a competitive advantage in today’s highly competitive global environment (Taylor, 2004; Ernst & Halevy, 2004). To accomplish this international expansion, organizations can and do use many different market entry strategies (Narula & Duysters, 2004; Briscoe & Schuler, 2004; Beamish & Kachra, 2003; Newburry & Zeira, 1998; Child & Faulkner, 1998). Prior research has shown that cross-border alliances, particularly international joint ventures (IJVs) are perhaps the most popular means of international expansion (Ernst & Halevy, 2004; Briscoe & Schuler, 2004; Schuler, Jackson, & Luo, 2004). Despite their popularity, however, IJVs are difficult to develop, organize, and manage. Research has shown that a majority of IJVs fall short of their stated goals leading...
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...during its “third plenum”, the Chinese Communist Part Central Committee gave economic reform top-level priority. Following the Second Session of the Fifth National People’s Congress on 1 July 1979, foreigners were permitted by law “to establish equity joint ventures together with Chinese companies, enterprises or other economic organizations … within the territory of the People’s Republic of China, on the principle of equity and mutual benefit” (PRC, 1987). Since the beginning of these economic reforms in 1979 the Chinese economy has exploded, with an average annual growth rate in GNP of 10 per cent over the last decade, with the attainment of 20 per cent in the coastal areas designated “special economic zones” (EIU, 1994). Foreign direct investment more than doubled between 1987 and 1990 (Kelley and Shenkar, 1993), despite a slow-down after the Tiananmen Square incident, with an estimate of more than 150,000 joint ventures in China. Much of this investment comes from Hong Kong (68.2 per cent in 1992) and other countries of Eastern Asia, with European countries, and even the USA (with 4.6 per cent in 1992) badly represented. Despite this economic growth, there are indications that productivity has been a problem. This may have implications for the attractiveness of China to foreign investors, despite low labour costs. A study undertaken in the mid1980s indicated that productivity levels were 60-70 per cent of those in Hong Kong (Locket, 1987). A recent study (Turcq, 1995) indicates...
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...World's Poor 30 Managing in the Global Marketplace 31 Key Terms 33 Chapter Summary 33 Critical Thinking and Discussion Questions 34 Research Task 34 Closing Case: Legal Outsourcing 35 Introduction and Overview 2 Globalization 3 PART TWO Chapter Two Country Differences 36 National Differences in Political Economy 37 Opening Case: Ghana: An African Dynamo 37 Introduction 38 Political Systems 39 Collectivism and Individualism 39 Democracy and Totalitarianism 42 Economic Systems 44 Market Economy 44 Command Economy 45 Mixed Economy 45 Legal Systems 46 Different Legal Systems 46 Differences in Contract Law 47 Property Rights and Corruption 48 The Protection of Intellectual Property 51 Product Safety and Product Liability 53 Focus on Managerial Implications 54 Key Terms 55 Chapter Summary 55 Critical Thinking and Discussion Questions 55 Research Task 56 Closing Case:The Polish Surprise 56 Chapter Three Political Economy and Economic Development 59 b Opening Case: Who Makes the...
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...What are the different forms of organisational learning and how can these concepts be useful? Organisations today are faced with a constant change and very turbulent economic environment. Due to fast growing economies and need to survive in such a “hostile” environment organizations are enforced to continuously seek for different approaches on how to achieve sustainable competitive advantage. As Senge (1990) remarks: "The rate at which organizations learn may become the only sustainable source of competitive advantage." Continuous learning in organisations was presented as a requirement and advocated by Argyris and Schon in 1978. “Organisational learning has been viewed as a source of competitive advantage that helps organisations respond to changes in their institutional environments via adopting and diffusing innovations that will contribute towards improving their performance”. (Sisaye and Birnberg, xiii) Pressures from globalization, technology developments, mergers and acquisitions are testing organisations and forcing them to learn how to anticipate and respond to these rapid changes, complexities and most importantly uncertainties that are hard to predict. Schein (1983) argues that there are three levels of organizational learning culture, cognitive, behavioral and artifactual, where: 1. Behavioral learning deals with the capacity of organizational processes, structures and systems to support learning. 1. Cognitive learning opposite to behavioral...
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...International business or Global marketing is growing at a fast rate and there are more than 180 nations-sates in the world with different market and profitable potential. However for an organization to earn sufficient income in the global market it needs to know the right time and form of market entry mode whilst entering International market (Hill, 2003). Therefore this essay will focus and assess the need for an organisation to use a range of modes of entry while entering the international market. In due course it will give an overview on International marketing literature review, views on variety of entry modes, entry selection criteria, examples based on cased studies and conclusion. General Understanding of International marketing refers to marketing of goods and services from one country to another. Producing and marketing of products in more than one country is also termed as international or multinational marketing. But according to Mc Auley (2001) International marketing can be defined quite simply as “the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit” much similar to domestic marketing. However Kahler (1983) argues and identifies that “International marketing differs from domestic marketing for one basic reason: it involves doing business with individuals, firms, organizations, and/or government entities in other countries”. The author further argues that the difference...
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...this important phenomenon.’ Paul W. Beamish, Canada Research Chair in International Business, Ivey Business School, University of Western Ontario ‘This book provides a comprehensive, well-organized and richly illustrated analysis of inter-firm cooperation. While relevant for managers and business students, it extensively draws on the most up-to-date research, making it also a valuable source for academics studying strategic alliances and the wide array of management issues they raise. Child, Faulkner, and Tallman have done a remarkable job of putting together in a highly consistent way all the knowledge available on what has become an essential facet of business development, namely Cooperative Strategy.’ Pierre Dussauge, Professor of Strategic Management, HEC – School of Management, Paris ‘I highly recommend this book for alliance scholars and practitioners. The breadth of coverage of the practical and theoretical literature on cooperative strategy is one of the book’s primary contributions. The authors demonstrate a comprehensive understanding of the subject matter and the numerous case studies demonstrate a close connection with actual experience.’ Andrew Inkpen, J. Kenneth and Jeanette Seward Chair in Global Strategy, Thunderbird, The Garvin School of International Management ‘Companies need to know not just how to compete with other firms, but how to cooperate with them. The proliferation of joint ventures, partnerships, and strategic alliances reflect the increasingly dispersed...
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...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...
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...DETERMINANTS OF FDI IN CHINA Shaukat Ali and Wei Guo1 ABSTRACT Why and how firms take advantage of foreign opportunities, especially via foreign direct investment (FDI) has been much documented. China, as a major emerging market, has attracted significant flows of FDI, to become the second largest receipt. This paper briefly examines the literature on FDI and focuses on likely determinants of FDI in China. It then analyses responses from 22 firms operating in China on what they see as the important motivations for them to undertake FDI. Results show that market size is a major factor for FDI especially for US firms. For local, export-orientated, Asian firms, low labor costs are the main factor. The paper concludes with managerial implications for businesses wish to exploit opportunities in China. INTRODUCTION The past few years has seen a tremendous growth of foreign direct investment (FDI) that has exceeded both world output and world trade. China is by far the largest recipient, and in 2004 surpassed the USA as host destination. It has consequently attracted an increasing attention from multinational businesses. Since China adopted the reform and opening-up policy in the late 1970s, foreign investment has played an increasingly important role in its economic growth. According to the World Investment Report for 2004 by the United Nations Conference on Trade and Development, China absorbed a total of US$53.5 billion worth of foreign direct investment (FDI) in...
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...Objectives * Examine how international growth places demands on management and HRM * Identify factors that impact on how managers of internationalizing firms respond to these challenges * We cover the following areas: * Structural responses to international growth: The organizational context in which IHRM activities take place. Different structural arrangement have been identified as the firm moves along the path to international status – from export department through to more complex department such as the matrix, transnational, heterarchy, networked. * Control and coordination mechanisms: Control and Coordination aspects. Formal and informal mechanisms were outlined, with emphasis on control through personal networks and relationships, and control through corporate culture, drawing out HRM implications. * Mode of operation used in various international markets: The various modes-such as wholly owned, franchising, management contracts and international joint ventures- used by multinational for foreign market entry and expansion. Again, we attempted to demonstrate the IHRM implications of the various modes, although noting that most of the literature focuses on wholly owned subsidiaries and international joint ventures. * Effect of responses on HRM approaches and activities: How international growth affects the firms approach to HRM. Firms vary from one another as they go through the stages of international development, and react in different...
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...THE INFLUENCE OF CHINESE REGULATIONS IN THE CASE OF MERGERS & ACQUISITIONS INTERNATIONAL GOVERNANCE CASE STUDY: MERGERS & ACQUISITION OF THE CHINESE CHIP PRODUCER TRAN SIST KLAUDIA BRUDLO CHRISTOPHER GÖLLNITZ GABRIEL BÖHM REIMS, 10/03/2013 Introduction and general regulation Since China became a member of the World Trade Organization in 2001 several steps have been taken by the Chinese government to move towards a market- oriented economy. For that reason the amount of foreign investment in China continues to grow. There is a vast number of laws and regulations, therefore the possibility to conduct Mergers and Acquisitions in China should be carefully considered and analyzed. Generally we can say that the actions required depend on the industry sector in which foreign investments are made. For that reason we have to consider the so called “Catalogue for the Guidance of Foreign Investment” which is issued by the NDRC and MOFCOM. Ranging from “encouraged”, “permitted”, “restricted” or “prohibited” investments we can identify our industry sector as an encouraged one1. So, in our case there are several available forms of foreign acquisition, but we will focus on just three legal ones which appear most frequently and will be introduced later. Regardless of the chosen legal form, a common set of prerequisites must be met. The following figure displays these requirements in the order of realization. Local Administration of Industry...
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...International Law Managerial Implications Question 1 She feels that she must have the support of the directors for any major overseas venture. What arguments can she offer to explain why SewTex should become active in the international markets? She understands that making a commitment is important but what does that really mean? SEWTEX exports about 5 percent of its production of industrial machine, of which, the most sophisticated industrial machines go to German & Swiss textile firms, whiles its earlier models are sent to India, Pakistan & Brazil. There is currently some concern about the US Textile industry which has been slowly declining. In this case, the objective is to increase the company’s turnover, which means SEWTEX has to exports more & be the main actor on foreign market. Major commercial advantages for SEWTEX to be active in the international market: * First, it is an opportunity to dramatically increase their sales. * Increase profitability, the extent of the export price which can generate sufficient margin and the profits will grow. * Gain of notoriety worldwide * Better understanding of the competition * Better using of their production capacity. For example if SEWTEX is not working at full capacity and if its facilities are under-utilized, it will increase its production through exports * Boost business * Exporting can bring a breath of fresh air in the business and allow to leave behind any bad habits and improve on...
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...Pervez Ghauri Source: Journal of World Business. 36.3 (Fall 2001): p303. Document Type: Article Full Text: COPYRIGHT 2001 JAI Press, Inc. Full Text: China has been one of the most favorite markets for Western firms for the last decade. However, doing business with China is considered difficult, mainly because negotiating with Chinese counterparts is quite complex. This paper analyses the negotiation process with China from a socio-cultural perspective. A Swedish multinational, Ericsson, is followed for several years and its negotiation process for different Chinese projects in the telecommunication industry is studied in depth. Based on these cases and literature a model is developed and some conclusions are drawn. Finally, managerial implications presented as four Ps: Priority, Patience, Price and People sum up the essence of Chinese business negotiation process. The People's Republic of China (PRC) started to open up its economy to the rest of the world in December 1978. Since then, Western business communities have been enthusiastic about China--the world's largest emerging market with more than one billion consumers. The Western enthusiasm for China decreased somewhat during a period following the Tiananmen Square incident in June 1989. But it rebounded and increased even more vigorously in the 1990s. China's rank in world trade rose from 32nd in 1978 to 9th today. By the end of 1995, China already approved a total of 258,000 foreign-invested enterprises with contractual...
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...determinants of competitiveness in the original model, this study specifically examines the impact of government on industry competitiveness. This study retrieves archival data on multi-measurements used in prior studies. The author incorporates one case study of a Chinese auto firm to illustrate the specific impact of government policy and the responses of auto assemblers and component suppliers. Interviews with experts in auto-related industries are conducted to triangulate the findings. Results show that the Chinese auto industry is still in its early stages of development, whereas product quality and economies of scale of domestic automakers are approaching global standards; thus Chinese auto firms aim at becoming major players in the international market. The government plays an active role in assisting the industry development as the nation transitions from a planned economy to a free market. iii Acknowledgements There are many people that have offered me extraordinary support. I would like to thank the members of my supervision committee for the support, enthusiasm, and freedom to pursue an avenue close to my heart. I would like to thank my supervisor Dr. Bradley Olson for his wisdom and guidance in this project. He has always been supportive and helpful when I...
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...University of Glasgow Adam Smith Business School International Business & Entrepreneurship Research Method MGT 5174 A Comparative Study of Entry Modes Adopted by Sainsbury’s and M&S in China Based on Resource-based View Theory Yuyu Xiong 2203873 07/24/2016 Word Account: 3013 Table of Contents 1. Introduction……………………………………………………………………..…3 1.1 Background ………………………………………………………………..…3 1.2 Research Questions …………………………………………………………..3 1.3 Research aim and objectives………………………………………………… 4 2. Literature Review ……………………………………………………………..….4 2.1 Timing ………………………………………………..…..4 2.2 Scale of Entry ………………………………..…..……5 2.3 Steps taken before choosing entry modes………………………………..…. 2.4 Entry Modes……………………………….……………………………..…. 2.5 Factors that influence the choice of entry mode…………………………..…. 3. Methodology…………………………………………………………………..….6 3.1 Research philosophy………………………………………………….………6 3.2 Research approach……………………………………………………………7 ...
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...Proceedings - LEAD 2009 Conference CULTURAL BOUNDARY SPANNING IN GLOBAL PROJECT NETWORKS Melissa Di Marco, 1 John E. Taylor 2 and Pauli Alin 3 ABSTRACT Projects are increasingly global in scope and outsourcing on projects increasingly common. Along with globalizing trends in projects, the workforce is also globalizing. It is common for engineers to move to other countries as expatriate workers or as emigrants to pursue job opportunities in other firms. Where much is known about global networks of engineers collaborating on projects, little is known about the mediating role played by individuals that share the same nationality as an international partner on a project. In this paper, we examine two project teams executing complex, reciprocally interdependent design projects in India. One team was comprised of Indians and Americans. The other team was identical, but also contained an Indian national who had studied and worked in the U.S.A. Both teams worked on similar design schedule optimization problems. Over the duration of three days we examined the interactions of the teams assembled to finalize their designs. Through quantitative network analyses and qualitative observations of the cross-cultural interactions, we found the Indian expatriate to play a cultural boundary spanning role resolving cross-cultural knowledge system conflicts and increasing collaboration effectiveness. We induce a propositional theoretical model of cultural boundary spanning in global...
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