1、Cross-cultural Management of Sino-foreign Equity Joint VentureAbstractAlong with economic globalization, joint ventures continue to grow globe-wide. Nevertheless, there is a higher failure rate for joint ventures, China is no exception. According to statistics, among the Sino-foreign joint ventures

2、established in China (including multinationals), about 15% of them are closed in advance of the scheduled termination time and about 70% of joint venture cooperation face discord situation. This contradictory phenomenon causes academic researches on the joint venture performance. Scholars carry out

3、researches on the factors that affect joint venture performance from several factors, such as environmental factors, the choice of partners, and joint venture itself. Although the study of angles and ways are different, the conclusions are not the same. All the reasons that affect joint venture, cro

4、ss-cultural management as a major factor produce a great impact on organization management, strategy development and implementation of the joint venture. In this paper, research on cross-cultural management of Sino-foreign joint ventures is the main theme and it will also discuss the relationship be

5、tween the cross-cultural management and joint ventures operating. This article starts its discussion about cross-cultural management of Sino-foreign joint ventures from the relationship between cross-cultural conflict and business performance. For now, the main content of cross-cultural management o

6、f joint ventures is cross-cultural conflict management, while measure of the operating conditions of the joint venture takes operating performance as the standard. Therefore, this article simplifies “cross-cultural management of Sino-foreign joint ventures” to “relationship between cross-cultural co

7、nflict and corporate performance in Sino-foreign joint ventures”. The study is based on cross-cultural conflict, cross-cultural management theory and corporate performance theory and through analyzing by relevant theories, this paper takes joint ventures as research subject and focuses on cross-cult

8、ural conflict, which is a common phenomenon in joint ventures, and centers around national cultural conflict, the relationship between corporate culture conflicts with the joint venture performance to carry out theoretical and empirical research.First of all, review of relevant research results at h

9、ome and abroad to systematically explain the connotations of the cross-cultural conflict in Sino-foreign joint ventures, the formation mechanism and its relationship with performance; then, the beginning of this article will carry out empirical study design of the interaction between cross-cultural

10、conflict formation process and business performance, select conflict of national culture and corporate culture conflicts as independent variables, introduce the joint venture performance as the dependent variable to put forward relevant research assumptions. The main assumptions of this paper includ

11、e the following aspects: H1: national cultural conflicts of Sino-foreign joint venture are negatively related to performance. H1a: the conflict on the power distance dimension is negatively correlated with the performance of the joint venture. H1b: the conflict of uncertainty avoidance dimension is

12、negatively correlated to the performance of the joint venture. H1c: the conflict of Individualism / Collectivism dimension is negatively correlated to the performance of the joint venture. H1d: the conflict of male / female degree dimensions is negatively correlated to the performance of the joint v

13、enture. H1e: the conflict of long / short-term oriented dimension is negatively correlated to the performance of the joint venture. H2: The enterprise culture conflict of Sino-foreign joint venture is negatively correlated with performance. H2a: material and cultural conflicts of the Sino-foreign jo

14、int ventures are negatively related to performance. H2b: The negative behavior and cultural conflicts of the Sino-foreign joint venture are negatively related to performance. H2c: system and cultural conflict of Sino-foreign joint venture is negatively related to performance. H2d: Spiritual and cult

15、ural conflicts of joint ventures are negatively related to performance. This study has two methods: for organizational culture and national cultural conflict, as well as corporate performance, apply the form of questionnaire; depth interviews are used for the study of the role of the relationship be

16、tween the cross-cultural conflict and corporate performance. Carry out research through the network and their own relationship to obtain 91 valid questionnaires, and use Amos, SPSS software and structural equation model to test the hypothesis. The results showed that: Overall, the conflict on the va

17、rious dimensions of national culture and corporate culture are negatively correlated with the performance of joint ventures; relationship capital and Sino-foreign joint venture enterprise performance are positively correlated, and has a buffer effect on cross-cultural conflict and performance. Then,

18、 expand in-depth discussion of empirical results and put forward policy recommendations. Finally, sum up the inadequacies of this study and point out the direction for future research. Overall, the findings of this paper are as follows:First, the relationship between national culture conflicts and c

19、orporate performance. Two kinds of dimensions of national cultural conflict take uncertainty avoidance, power distance and individual / collectivism as the main factors of the countries cultural conflict in the cross-cultural management. Second, the relationship between organization cultural conflic

20、t and corporate performance. Among conflicts in the organizational culture, institutional conflict and the material and cultural conflicts are not necessarily play a catalytic role for the organizational culture conflicts, which shows that for the Sino-foreign joint ventures, if we can make good use

21、 of the material and cultural factors, or have a certain degree of system tolerance is conducive for corporate to control organization cultural conflict, and contribute to overall performance improvement. Third, factors affecting business performance. Insufficient financial and technical resources a

22、nd satisfaction between cooperation is negative for overall corporate performance. That is to say the respondents believe that companies access to resources, satisfaction between cooperation has not yet produce the effect of promoting the performance of the enterprise, most people think that for joi

23、nt ventures, access capacity to resources needs to be improved, bilateral cooperation and exchange satisfaction needs to be further improved. After the formation of the joint venture, the operating efficiency produces a positive effect on firm performance. Overall, respondents felt the formation of

24、the joint venture significantly enhance enterprise efficiency, but in the enhancement of the market competition advantage and joint venture partners satisfaction of cross-cultural management need to be further enhanced. Fourth, if Sino-foreign joint ventures want to successfully manage cross-cultura

25、l conflicts, enhance the overall corporate performance, they need to start from the three aspects of communication, commitment and trust, with the means of cultural integration, the common development of multi-culture to jointly solve the corporate culture conflicts, and promote the enhancement of b

26、usiness performance. Key words: cross-cultural management of Sino-foreign joint ventures; Hofstede Cultural Dimension Theory1. Introduction1.1 Research BackgroundNowadays, with the continuous development of economic globalization, joint venture has become an important cooperation form for enterprise

27、s to compete under the background of economic globalization. Undoubtedly, in the furious competition, relying on cooperation between companies to obtain advantages of competition is becoming the choice for more and more companies. Since the 1980s, enterprises established based on international joint

28、 capital has underwent great development. Since reform and opening-up, China has attracted more and more FDI. Until 2010, the total amount of foreign investment has reached 105.73235 Billion Dollars. Among it, 4,970 foreign directly invested projects are carried out in the form of joint venture and

29、the real amount is 22.498 Billion Dollars, which occupies 21% of the total amount of foreign direct investment. Compared to 17.318 Billion Dollars in 2008, it has increased by 30%. The specific statistics are shown in Table 1-1. Table 1-1 Statistical table of FDI from 2005 to 2010YearActual used amo

30、unt of FDIQuantity of projects Total Joint funded Cooperation Solely funded Total Joint fundedCooperationSolely funded2005638.05146.1418.31438.7944001104801166323552006670.76143.7819.4467.034147310223103630214200737871764964129581783.39155.9614.16577.56200827514461246822434952.53173.1819.03731.74200

31、9274064970300221361088.21224.9816.16816.21201023435428339018762918.04172.7320.34707.26Source of statistics: China Statistical Yearbook 2007.2009.2011. From the statistics in Table 1-1, we can see that the form of Sino-foreign joint venture is gradually becoming an important investment mode for forei

32、gn investors to enter Chinas market and it has already become the most important investment mode in addition of solely funded enterprises. Moreover, according to statistics, currently all the Top 500 multinational companies across the world have invested in China. The statistics in UNCTAD 2011 World

33、 Investment Report shows that China ranks the first in the list of “The Worlds most Attractive Countries for Investment”, while America, India, Brazil, Russia ranks from the second to the fifth place. Chinas rank moves one place up compared to 2009 and 3 places up compared to 2007. With regard to th

34、e total amount of FDI, China becomes the developing country that attracts the largest amount of FDI in 2010, second only to America. Judging from the development trend of Chinas attraction of worldwide investment, Chinas FDI attraction extent will be intensified in the future and the quantity and sc

35、ale of Sino-foreign joint venture still have room for further development. From the above, during its developing process of cooperation with China in the areas of capital, technique and managerial experience, Sino-foreign joint venture is gradually becoming an important part of Chinas external econo

36、mic relationship and has made tremendous contribution to Chinas economic development and internationalization of Chinas enterprises. However, judging from the perspective of legal person, Sino-foreign joint venture belongs to independent economic entity. It has close links with its parent company an

37、d to a large extent, during its management process in China, it has to comply with management concepts and culture of its parent company. Conflicts of company culture and ethnic culture are inevitable during development process of Sino-foreign joint venture in China and they have become one of the b

38、iggest obstacles for development of Sino-foreign joint venture. According to investigation statistics of Cui Jingbo (2001), among the Sino-foreign joint venture in China, about 15% of the enterprises is expected to be dissolved in advance and 70% of the investigated companies admitted that within th

39、e company, there are various reasons causing disharmony between Chinese and foreign personnel. However, among the respondents, 1/3 of the large multinational companies think that the diversified company culture within the enterprise itself bring management obstacles to the company by virtue of cultu

40、ral conflicts. With regard to those Sino-foreign joint ventures that are dissolved ahead of time, 82% states that irrational treatment of cross-cultural conflict and integration has lead to failure of cooperation between companies. Take Guangzhou Peugeot as the example, there is difference of invest

41、ment target between the Chinese party and France party and no coordination has made arranged towards this period during their specific cooperation, which affect cooperation efficiency and lead to failure of Guangzhou Peugeot. Even though Dongfeng and Citroen have lasted their strategic partnership r

42、elationship for nine years, they undergo lots of conflicts after the joint venture is established. In addition to management strategy conflict toward the Chinese market, the cultural difference of those two companies plays an important role in causing conflicts of management concepts in the manageme

43、nt layer of both parties. Therefore, in the future economic development of China, in order to fully utilize the economic leading effect of Sino-foreign joint venture, research on cross-cultural management of Sino-foreign joint venture seems to be very important. 1.2 Research Significance Since the 1

44、970s, the research focuses of joint venture by various countries is mainly about research of organization structural management, marketing strategy and product development, while due to abstraction of cross-cultural management within the Sino-foreign joint venture, not very much attention is paid to

45、 it. Since the 1990s, acceleration of development of economic globalization has boosted expansion of multinational companies in the whole world. Importance of cross-cultural conflict and contradiction is gradually attached and whether cross-cultural management is successful or not can directly influ

46、ence management performance of the company. Meanwhile, in the furious competition among companies, whether the performance is good or bad is the crucial factor that determines success or failure of the company competition. However, in the recent research on cross-cultural management, research of jud

47、gment standards for efficiency of cross-cultural management is not very clear, many of the researches are done from the manifestation aspects of cross-cultural conflicts during cross-cultural management and quantitative researches are insufficient. This paper aims at carrying out a research on cross

48、-cultural management from the perspective of cross-cultural conflicts within the joint venture and it is based on previous research results of cross-cultural management. Theoretical significance of this paper: First, the research focus of this paper is about the influence of cross-cultural managemen

49、t on company performance, namely to provide an overall and dynamic research perspective for the relationship between cross-cultural conflict and company performance when the manifestation forms of cross-cultural conflict are clarified through deciding the influence of different cross-cultural confli

50、cts manifestation forms exerted on company performance. Second, this paper measures the countrys cultural conflict standard based on the model of Hofstedes cultural conflict dimension theory. In here, Hofstedes cultural dimension theory is linked with the standard of company performance. Moreover, r

51、elevance hypotheses are made based on relationship between different dimensions and company performance and they are used for hypothesis conditions of demonstration investigation for research. In addition, the basis for demonstration research of this paper is the first hand data obtained through que

52、stionnaires. The respondents are joint ventures established in China, so this paper can fully reflect the real situations of cross-cultural management within joint ventures in China. Practical significance of this paper: According to researches of some scholars, many foreign investors are unsatisfie

53、d about the company performance obtained by Sino-foreign joint venture and only 50% of the foreign investors are satisfied about the management performance of their joint ventures established in China (Hu and Chen, 1996). Its main reason is that China hasnt be well prepared for encountering cultural

54、 differences when its market is newly opened and many enterprises havent realized the negative influence brought by cultural differences to company performance. However, the increasingly huge attraction potential of FDI in Chinas future suggests that more and more companies across the whole world ar

55、e going to invest in China to cooperate with Chinese companies in the form of joint venture. At that time, the cultural differences will be much bigger and it is under this background, research on current situation of cross-cultural management of joint venture and how to deal with cross-cultural con

56、flict to improve companys management performance has important practical significance. 1.3 Research idea and method The main issue for study in this paper is as follows: its main content is about the influence of cross-cultural management of our national joint venture exerted on company performance.

57、 The research subject is Chinese and foreign joint ventures established in China. Its theoretical foundation is as follows: cross-cultural management theory (mainly Hofstedes cultural dimension theory) and company performance measuring theory. Through analyzing manifestation forms of cross-cultural

58、conflict within joint ventures established in China and causes of different manifestation forms of cross-cultural conflicts, this paper tries to discuss the positive and negative influences brought by cross-cultural conflict to company performance. Based on this, this paper further finds out the inf

59、luence of cross-cultural conflict on company performance during cultural management and furthers research through designing demonstration research proposal. First, this paper designs the hypothesis condition for research based on Hofstedes cultural dimension theory. Questionnaire is designed based on the variables related in research hypothesis and index and questions of the ques