Home > Past Issues > 35/2 April 2002

35/2 April 2002

Charles Baden-Fuller Editorial

Managing International Joint Ventures
As growth in Western markets slows down and organic expansion becomes more difficult, more firms are examining joint ventures as a way forward. Clearly the potential returns are high especially when they involve partnerships in emerging markets, yet the topics of how to handle the enterprise and judging when to enter and when to exit remain under-researched.

Our first piece by Peter Buckley, Keith Glaister and Rumy Husan touches on Partnering Skills. These authors provide a valuable checklist of what is needed based on a careful sample of over 20 Anglo-European joint ventures. Their matrix can also be used as a basis for identifying training needs.

Our second piece by Paul Beamish and Ruihua Jiang looks at the mainland Chinese market, one of the most exciting from the perspective of growth. These authors find that there has been a decline in profitability of JVs over the period 1985 to 1999. They identify the causes of the decline (too much entry) and point to factors that joint ventures can apply to stem these adverse influences.

Managing Change
How do organisations create and sustain momentum? Many firms are only great for a short time and sustained success remains elusive goal. We see once mighty giants fall to earth; some will rise up, others will get buried. Most managers will settle for sustaining success over the medium term.

Veronica Hope Hailey and Julia Balogun utilise insights from Glaxo- Wellcome to present a change tool designed for the medium horizon. Using their rich data collected over 8 years, they stress the multidimensionality of the challenge and list the many levers that managers must use. Their story is valuable because we have so few good accounts of successful organisations that are based on careful longitudinal data.

Our last piece by Irena Grugulis and Adrian Wilkinson warns us against the fallacy of looking at organisations too simplistically. Even though there has been decades of research suggesting that organisations are complex, too often Culture and Culture change has been seen as the universal panacea and the British Airways story is used as the exemplar. These authors show that not only is the story over simplified, but that it is too often applied dangerously and out of context. The paper is neat and contains some new and highly pertinent twists.

Executive Summaries

Managing International Joint Ventures

Peter Buckley, Keith Glaister and Rumy Husan International Joint Ventures: Partnering Skills and Cross-Cultural Issues pjb@lubs.leeds.ac.uk

Developing levels of cooperative activity and escalating globalisation are yielding increasing instances of cross-border alliances, working across inevitable linguistic and other cultural barriers. The skills required to make such enterprises flourish may be beyond those of the mainstream Western competitive paradigm: touching on the Chinese-style guanxi cooperation via business networks, this article looks at an array of skills identified by managers themselves from a sample of 20 Anglo-European JVs to offer new perspectives on the partnering skills needed for success in international joint ventures (IJVs).
Analysing managers comments, four categories of skills are identified: those needed by the parent-partners; those required for the partners to ‘downward' manage the IJV managers; the "upward management" skills of IJV managers in dealing with their originating partners; and those of managing the IJV itself, with the third of these isolated as a skill too often unrecognised The article presents a matrix to examine the four categories of skill in the context in which each are used. Of value both as an analytical device and a diagnostic tool, this matrix offers indications that show the selection and training of managers and the inculcation of the skills required for each level of operation are important areas for the attention of potential IJV partner managers.

Paul Beamish and Ruihua Jiang Investing Profitability in China: Is It Getting Harder? pbeamish@ivey.uwo.ca

Since China opened up to the outside world in 1979, it has attracted increasing amounts of foreign direct investment (FDI), becoming the second largest recipient of FDI flows in the world after 1993, Meanwhile Japan had become the second largest FDI source country in the world by the mid-1990s, and a major destination for such investment was China, which absorbed one-ninth of all Japanese foreign investments by the end of 1996. But the proportion of Japanese subsidiaries in China which have been profitable has declined - the only part of the world where this has been the case. Why?
Using information from the Toyo Keizai, this article studies the performance of nearly 3,000 foreign subsidiaries across the period 1985 -1999 to examine the declining profitability of NME's foreign direct investment in China. Looking first at the influence of macro-level factors responsible for the historically fluctuating performance of the Chinese economy, the authors observe that subsidiary-specific factors had the greater influence. Early entrants into the market appear to enjoy significant benefits and larger subsidiaries tended to perform better, but high majority ownership control registers as a negative factor, and the use of local managers may also be advantageous. Implications for MNE managers and the future prospects of foreign direct investment in China are noted.

Managing Change

Veronica Hope Hailey and Julia Balogun Devising Context Sensitive Approaches to Change: The Example of Glaxo Wellcome
j.balogun@cranfield.ac.uk

While change is becoming a way of life for both organisations and managers, too often change initiatives have been unsuccessful. As a result, organisations need managers capable of managing change, and a key skill to successful change management is the ability to develop a context sensitive approach, yielding approaches to change that will be effective in the relevant context.
This paper uses the models and styles identified in the existing literature to build a framework that presents a comprehensive view of both implementation and the context aspects that have to be taken into account. This change kaleidoscope forms a diagnostic tool for managers. Comprehensive data collected over an 8 year period on Glaxo Wellcome - a successful organisation that managed change in a pro-active manner rather than in a crisis driven re-active manner – is used to examined the applicability of the kaleidoscope, and illustrate how it can be used to gain an appreciation of an organisation's change context and the suitability of the implementation options selected.

Adrian Wilkinson and Irena Grugulis Managing Culture at British Airways: Hype, Hope and Reality a.j.wilkinson@lboro.ac.uk

Appearing to offer managers a universal panacea for all ills, and academics a gloriously simple explanatory framework, the notion of ‘cultural change' within organisations continues to excite attention nearly twenty years after the publication of In Search of Excellence. At a stroke "Magic wand" management change turns round unproductive workplaces and transforms reluctant employees into enthusiasts. But such simple stories with their happy endings are the stuff of a child's book of fairy tales: perhaps the reality is more complex.
Have the inspirational accounts British Airways cultural change fallen into the same trap of over-simplifying management change by focussing on one, albeit dramatic, element? In drawing attention to the danger of allowing the study of the workplace to become ‘fictionalised', this article offers a corrective that lays out the bones of BA's impressive turn-round ‘story' and sets them against the background of the industry environment and the changes in the company's structural reality at the time. Lessons for managers include the condemnation of rhetorical flourishes unaccompanied by substantive change and of seeking to use people as a means to an end.

Book Reviews

This issue is available in full on-line at www.ScienceDirect.com

 
Long Range Planning - International Journal of Strategic Management