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International joint ventures: the strategic human resource management dimension 1993

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We accept this thesis as conforming INTERNATIONAL JOINT VENTURES: THE STRATEGIC HUMAN RESOURCE MANAGEMENT DIMENSION by Dianne J. Cyr B.A., The University of Victoria, 1973 M.A., The University of New Brunswick, 1977 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES Interdisciplinary Studies [Organizational Behavior, Counselling Psychology, Sociology] THE UNIVERSITY OF BRITISH COLUMBIA November 1992 copyright Dianne J. Cyr, 1992 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. (Signature) Department of  ed-Y-X.-•y)%1A/C-1-" The University of British Columbia Vancouver, Canada Date  /3 ep.^.4A.A7 199-3 DE-6 (2/88) ii ABSTRACT International joint ventures are frequently a response to external pressures placed on globally-oriented companies if they are to survive and compete successfully. Within the international context, a critical element to corporate competitiveness is the effective management of human resources. Despite this reality, very little research to date examines the strategic Human Resource Management (HRM) dimension in international joint ventures. In this investigation, strategic HRM refers to communication systems, staffing, reward and recognition, training, and performance appraisal systems which operate within four successful joint venture (JV) firms. All joint ventures have been formed between two international partners, each from a different national culture. Three of the companies are 50/50 ownership arrangements, while the fourth venture has a 60/40 ownership split between the partners. All four ventures are in the manufacturing sector, although in different market niches. In each case, managers in the joint ventures focus on total quality management and high employee involvement in order to enhance product quality and innovation, and to create a more satisfying environment in which employees can contribute to the organization. Collectively, these joint ventures provide an interesting window through which to view strategic HRM operations. In addition to the description of Human Resource policy and practice, the research pursues an understanding of the more evasive questions as to how and why HRM operates as it does. Issues which evolved from the research and are important to a fuller iii comprehension of HRM in international joint ventures include, among others: the management of the JV-parent relationship; how HRM policy and practice supports or limits parent and JV strategic objectives; the select influence which national culture has on HRM; how corporate culture develops in the JV related to parent influences and JV managerial contributions; and finally, how organizational learning operates at both strategic and tactical levels in each venture. iv TABLE OF CONTENTS ABSTRACT ACKNOWLEDGEMENTS^ xiii PART ONE: JOINT VENTURE BACKGROUND CHAPTER ONE: INTERNATIONAL JOINT VENTURES: THE STRATEGIC HUMAN RESOURCE MANAGEMENT DIMENSION^1 A. Introductory Summary^ 1 1. A Focus on International Joint Ventures^ 1 2. The Role of HRM^ 2 3. The Purpose of this Research Investigation 4 4. The Companies 5 5. Results of the Research Investigation^ 6 CHAPTER TWO: A REVIEW OF THE LITERATURE^ 9 A. Joint Venturing in an International Setting^ 9 1. Introduction^ 9 2. The Form and Functioning of Joint Ventures^12 3. Management of the Venture^ 13 4. The JV Board Structure 14 5. Balancing Stakeholder Interests^ 15 B. Human Resource Management^ 17 1. HRM in Perspective 17 2. The Dimensions of HRM 18 C. HRM in Joint Ventures^ 23 D. Issues for Consideration in Joint Venture Firms^29 1. Corporate Culture^ 29 2. The Creation of Innovative Organizations^31 3. National Culture as Context^ 35 4. National Culture in Organizations^ 37 5. Joint Ventures as a Case of Socio-cultural Merging^39 E. Summary^ 42 CHAPTER THREE: RESEARCH METHODOLOGY^ 44 A. Research Considerations^ 44 1. The Research Orientation^ 44 2. Securing the Companies 45 a) The Type of Joint Ventures^ 45 b) An Elusive Commodity 46 c) The Process for Gaining Entry 48 3. The Process for the Research 50 a) The Format^ 50 b) The Role as Researcher^ 52 4. A Variety of Information 53 a) Documentation 53 b) On-site Observation 54 c) Interviews^ 55 d) The Minnesota Job Satisfaction Questionnaire^57 e) The Culture Inventory^ 58 f) Distribution of the Questionnaires^59 g) Guide to Human Resource Management Practices^60 5. Analysis and Integration of the Data 62 PART TWO: THE JOINT VENTURES - INTRODUCTION^ 65 CHAPTER FOUR: MAYO FOREST PRODUCTS LIMITED 70 A. Joint Venture Background^ 70 1. History of the Operation 70 2. Parent Roles^ 72 3. JV Benefits and Costs^ 76 B. Strategic Orientation 78 1. The Vision^ 78 2. The Requirements^ 79 C. Human Resource Management at Mayo^ 82 1. The HR Departmental Role 82 2. Employee Involvement Systems^ 84 a) Sources of Information Exchange^ 84 b) Shifting Roles for Employees 89 c) Employee Opinion of High Performance Systems^93 3. Reward and Recognition^ 95 a) Rewards^ 95 b) Recognition 95 4. Staffing and Promotion 99 5. Training and Development^ 101 6. Performance Appraisal 102 7. Employee Opinion^ 103 8. Aftermath^ 106 vi D. Results of the Employee Questionnaires^ 106 1. Minnesota Satisfaction Questionnaire 107 2. The Culture Inventory^ 1083. Guide to Human Resource Management Practices^112 E.^Summary of the Results 114 CHAPTER FIVE: OCG MICROELECTRONIC MATERIALS, INC.^117 A. Joint Venture Background^ 117 1. History of the Venture 117 2. Management of the Venture^ 119 B. Strategic Orientation^ 124 1. The Vision^ 124 2. Meeting the Goal 126 C. Human Resource Management at OCG^ 128 1. The HR Departmental Role 128 2. Creating an Integrated Joint Venture^ 132 a) Consolidation of CIBA-GEIGY employees into the Venture^ 132 b) Other Integration Issues^ 138 3. Communication Strategies 140 a) A Format for Information Exchange^140 b) Linking International Operations 143 4. The Performance Management Process 144 5.^Reward and Recognition^ 146 a) Rewards^ 146 b) Recognition 148 6. Staffing and Promotion 149 a) Recruitment 149 b) Employee Transfers^ 150 c) Promotions^ 151 d) Qualities of JV Managers^ 151 7. Training and Development 153 D. Results of the Employee Questionnaires 154 1. Minnesota Satisfaction Questionnaire^ 1552. The Culture Inventory^ 156 3. Guide to Human Resource Management Practices^156 E. Summary of the Results 160 vii CHAPTER SIX: OPTIMA CORPORATION^ 163 A. Joint Venture Background 163 1. History of the Venture^ 163 2. Management of the Venture 164 B. Strategic Orientation^ 168 1. Achievement of the Quality Goal^ 168 C. Human Resource Management at Optima 172 1. The HR Departmental Role^ 172 2. Employee Involvement Systems 176 a) A Team Concept 176 b) The Creation of New Roles^ 180 3. Communication Systems^ 182 a) JV-Parent Communications 182 b) Communication Within the Venture^184 4. Reward and Recognition 188 a) Rewards^ 188 b) Recognition 190 5. Staffing and Promotion^ 193 a) The Selection of Managerial Talent^193 b) Hiring in the Plants 196 c) Career Planning 196 d) Job Postings^ 198 e) Qualities of JV Managers^ 199 6. Employee Transfers Between Optima and the Parent Companies^ 200 a) The Transfer Format 200 b) Relocation Policies^ 202 c) The Employee Perspective 205 7. Training and Development 207 a) The Focus for Training 207 b) Training in the Plants^ 208 8. Performance Appraisal^ 211 a) Performance Appraisal for Salaried Employees^211 b) Performance Appraisal for Associates^214 D. Results of the Employee Questionnaires^ 215 1. Minnesota Satisfaction Questionnaire 215 2. The Culture Inventory^ 216 3. Guide to Human Resource Management Practices^217 E. Summary of the Results^ 222 CHAPTER SEVEN:^TRIAD MOTORS CORPORATION A.^Joint Venture Background 1. History of the Venture 2. Parent Roles 3.^Employee Sentiments About the Venture viii 225 225 225 226 230 B. Strategic Orientation 233 1. The Mission 233 2. The Requirements 234 C. Meshing the Cultures 237 1. The Cultural Challenge 237 2. Bridging Cross-Cultural Differences 240 D. Human Resource Management at Triad 242 1. The HR Departmental Role 242 a)^Plant Start-Up 242 b)^The Development of "Hybrid" HR Policy 243 c)^Challenges for HRM 245 2. Communication Systems 248 a) Communication Across Cultures 248 b) Networks for Information Exchange 253 3. Employee Involvement 256 a) Quality Circles and Kaizen b) Employee Sentiments about Involvement 256 Processes 257 4. Union-Management Relations 260 a) Mutual Commitments 260 b) The Unionization of Triad 262 c)^Understanding Employee Preferences 264 5. Reward and Recognition 264 a) Rewards 264 b) Recognition 266 6. Staffing and Promotion 267 a) An Influence from the Japanese 267 b) Associate Selection 269 c) Salaried Recruitment 271 d) Staff Transfers 273 e)^Promotions 274 7. Training and Development 275 a) The Context for Learning 275 b) Multiskilled Capabilities 277 c)^Other Training 278 8. Performance Appraisal 280 a)^The Format 280 b)^The Accommodation of Cultural Differences 281 9. Employee Opinion 284 ix E. Results of the Employee Questionnaires^ 287 1. Minnesota Satisfaction Questionnaire 287 2. The Culture Inventory^ 289 3. Guide to Human Resource Management Practices^290 F. Summary of the Results 295 PART THREE: CROSS-COMPANY COMPARISONS - INTRODUCTION^299 CHAPTER EIGHT: A CROSS-COMPANY ANALYSIS^ 303 A. The Joint Venture Form^ 303 1. Specialization or Value-Added Ventures^303 2. Dominant versus Shared Management Ventures^305 3. The JV Management Contract^ 307 B. The Strategic Management Orientation 310 1. The Joint Venture Objectives^ 310 2. Operational Inconsistencies with Stated Strategic Objectives 314 3. Organizational Outcomes 315 4. Reinforcing the JV Mission^ 316 5. The Process of Strategic Renewal^ 317 6. The Creation of New Roles in the Venture^319 C. Subgroups in the Joint Ventures 322 1. An Identification of the Subgroups^ 322 2. The Ardsley Employees^ 322 3. Transferred Employees 323 4. Organizational Subunits 325 D. Strategic Human Resource Management^ 326 1. The Human Resource Management Role 326 2. Communication Systems^ 329 3. Reward and Recognition 331 a) Reward Systems 331 b) Recognition 332 4. Staffing and Promotion^ 333 a) Hiring Practices in the Ventures^ 333 b) Staff Transfers 336 c) Career Pathing and Promotions 339 5. Training and Development^ 340 a) Variety in Training Programs^ 340 b) Sources of Training 342 c) Cultural Training 342 d) Job Rotation in Production Facilities^343 6. Performance Appraisal^ 343 x E. The Questionnaires^ 345 1. Guide to Human Resource Management Practices^345 2. Minnesota Satisfaction Questionnaire^ 346 3. The Culture Inventory^ 347 PART FOUR: THE ISSUES: A DISCUSSION - INTRODUCTION^349 CHAPTER NINE: STRATEGIC HUMAN RESOURCE MANAGEMENT^349 A. Management of the JV-Parent Relationship 349 1. Parent Goals and Strategic HRM^ 349 2. Partner Compatibility^ 354 3. Relationship Management 355 4. Implications of the Management Contract^358 5. Parameters for Joint Venture Autonomy 363 B. Integration of HRM and Strategic Planning 365 1. HRM Technique and Process^ 365 2. The HR Departmental Role 366 a) The Process Experts 366 b) Early Involvement 367 c) The Establishment of Credibility^368 d) Charting New Values and Policy 370 e) Resource Requirements^ 373 f) Constant Change^ 374 3. Communication Systems 374 a) Multiple Forms of Communication^ 374 b) Communication Across Cultures 377 c) Sharing Technical Information 381 d) Information Sharing Among Joint Venture Subgroups^ 384 4. Reward and Recognition 386 a) Goals of Reward Systems^ 386 b) Multiple Compensation Systems^ 388 c) The Creation of Meaningful Recognition Systems^ 389 5. Staffing and Promotion^ 394 a) A Focus on High Calibre Staff^ 394 b) Transfers to the Venture 397 c) Career Pathing and Promotions 402 6. Training and Development^ 404 a) A Training Emphasis in the Ventures^404 b) Cultural Training 406 c) Job Rotation in Production Facilities 409 7. Performance Appraisal^ 411 xi CHAPTER Ten: AN INTEGRATED VIEW OF INTERNATIONAL JOINT VENTURE FIRMS - INTRODUCTION^415 A. Corporate Culture^ 417 1. Parent-based Influence^ 417 2. JV-based Influences 420 3. A Role for HR Managers 423 4. A Process Design for HRM 4275. Questionnaire Outcomes^ 432 a) Possible Incompatibility Between Policy and Practice 432 b) A Rational Culture Orientation^ 434 B. Organizational Learning^ 436 1. The Context for Learning^ 436 2. Partner Learning 438 3. Administrative Learning 440 4. Technological Learning 441 C. National Culture^ 443 1. National Culture and HRM Policy and Practice^443 2. Cultural Relativity^ 444 3. The Interaction of National Culture, Corporate Culture and Strategic Orientation^ 447 D. An Integrative Framework for Strategic HRM in International Joint Ventures^ 453 E. Research Issues^ 460 1. Strengths of the Investigation^ 460 2. Limitations of the Investigation 462 F. Toward the Future: Some Personal Summary Comments^465 REFERENCES^ 468 APPENDICES 478 1. Letter Sent to Joint Ventures with the Attached Project Outline^ 478 2. Lists of Employees (By Title) Interviewed in Each Joint Venture 484 3. Schedule for Descriptive Company Information^4894. Annotated Bibliographies of Company Documents 4915. Participation Consent Form^ 5006. Guideline Questions for HRM Policy and Practice (Versions for HRM and Non-HRM Staff)^ 5027. A Question Guide for the General Manager 5108. Instructions for Audiotape Review 512 xii 9. Quinn's Typology of Organizational Culture^514 10. Employee Consent Form and Questionnaires 516 11. Guide to Human Resource Management Practices^521 12. An Elaboration of Quality Circles and Kaizen Processes^ 525 13. A Summary of the Communication Mechanisms which Operate in Each JV^ 532 LIST OF TABLES 1. Human Resource Management Practice Orientations^19 2. Joint Venture Profiles^ 69 3. Results from the Minnesota Job Satisfaction Questionnaire at Mayo Forest Products as Aggregated Scores Across All Respondents^ 110 4. Results from the Culture Inventory at Mayo Forest Products as Aggregated Scores Across All Respondents 111 5. Results from the Minnesota Job Satisfaction Questionnaire at OCG Microelectronics as Aggregated Scores Across All Respondents^ 157 6. Results from the Culture Inventory at OCG Microelectronics as Aggregated Scores Across All Respondents^ 158 7. Results from the Minnesota Job Satisfaction Questionnaire at Optima as Aggregated Scores Across All Respondents 219 8. Results from the Culture Inventory at Optima as Aggregated Scores Across All Respondents^220 9. Results from the Minnesota Job Satisfaction Questionnaire at Triad Motors as Aggregated Scores Across All Respondents^ 291 10. Results from the Culture Inventory at Triad Motors as Aggregated Scores Across All Respondents^292 11. Central Features of the Joint Ventures 301 12. A Process Design for HRM in Joint Ventures 429 13. A Framework for Strategic HRM in International Joint Ventures^ 455 LIST OF FIGURES 1. A Model for IJV Coordination and Process Development 431 2. The Relationship between Parent Involvement, National Culture, and Similarity of Parent Corporate Culture and Strategic Orientation^ 452 3. Quinn's Typology of Organizational Culture^515 4. Quality Circles - The Process 529 5. Quality Circle Activity vs. Kaizen Suggestion^531 ACKNOWLEDGEMENTS Many people deserve recognition for their contributions to this investigation. I would like to thank Peter Frost, my research advisor, for his thoughtfulness, encouragement and guidance during the course of this project. Helpful comments were also provided by Merle Ace, Larry Cochran, and Ken Stoddart who are on the dissertation committee. Evan Evans shared with me his romance and dedication for research; and he provided valuable advice which contributed in significant ways to the development of this investigation. Cheerful and competent technical assistance was provided by Andrew Leung. I am grateful to many individuals in the four joint ventures in which the research was conducted, for their unfailing assistance and insights. In addition, I appreciate the financial support which helped to defray the costs involved in this research. Funding for the project was obtained from a research grant shared with Peter Frost from the University of British Columbia, and from the National Centre for Management Research and Development at the University of Western Ontario. In addition, the final stages of this project were completed at INSEAD in France, through funding provided from a Chateaubriand fellowship from the French government (Centre International des Etudiants et Stagiaires). 1PART ONE: JOINT VENTURE BACKGROUND CHAPTER ONE INTERNATIONAL JOINT VENTURES: THE STRATEGIC HUMAN RESOURCE MANAGEMENT DIMENSION A. Introductory Summary 1. A Focus on International Joint Ventures To compete in an international business environment, firms are forming strategic alliances as a mechanism for the enhancement of global competitiveness. In recent years, an explosion of international joint venture (IJV) activity signifies this form of alliance as a popular vehicle for augmenting strategic capability, (Geringer and Woodcock, 1989; Harrigan, 1985; Hergert and Morris, 1988; Killing, 1983; Shenkar and Zeira, 1987). Typically, the form and function of joint ventures has not been well defined either in the academic literature or by company executives. In this research, the term joint venture (JV) refers to a legally independent organization which is the product of the partnership of two corporations, (the parent firms), each of which participates in the decision-making activities of the jointly owned company. More specifically, in an international joint venture, at least one parent firm has its headquarters outside the country where the joint venture is located. International JVs are formed for a variety of reasons. International companies create venture partnerships to gain foreign market access, for the acquisition of new technology, to fund capital requirements beyond the capability of a single firm, and in order to share risks. Joint ventures are also a vehicle through 2 which companies can gain broader scale sourcing of materials required for their operations. The possibility exists for both the JV and the parent firms to learn new skills from one another, and to share technology or information as a result of the venture. Many of these elements are essential ingredients for companies which aim to compete in an international arena - where competition is fierce, and where requirements for quality, innovation, and meeting customer requirements are critical. Although there are clearly potential economic and technological benefits which result from firms venturing together, the failure rate of joint ventures is high. For example, in a study of 880 joint ventures and cooperative alliances, only 45 percent of the companies were judged successful by all sponsors (Collins and Doorley, 1991). Some factors which lead to JV failure include: significantly different goals of parent firms; perceptions of unequal costs and benefits; or conflicts over decision-making, managerial processes and corporate values (Dymsza, 1988; Killing, 1983). Misunderstanding is most likely when international JVs span diverse national cultures, and when attitudinal and value differences exist between different groups in the venture (Baird, Lyles and Wharton, 1989). Problems often arise when executives in the parent companies attempt to impose their standards and policies for operation on the joint venture firm. 2. The Role of HRM Despite an increase of joint venture activity, research has generally neglected issues related to the development and implementation of human resource management practice in 3 international JVs. Nor does the research to date examine context factors which determine how and why HRM operates as it does within various joint venture firms. Scholars in the international management field are quick to observe that the HRM role, related to the success or failure of joint ventures, has received little empirical study (Shenkar and Zeira, 1987; Teagarden and Von Glinow, 1989). This omission in the research literature exists even though effective HRM practices are thought to be a significant contributing factor in the successful operation of multinational corporations, (Evans, 1986; Laurent, 1986; Pieper, 1990; Punnett, 1989; Schein, 1986; Schuler, 1989). Tichy (1988) notes that the key to success in multinational companies is leadership, and an innovative set of HRM practices which permit organizational flexibility and adaptability. HRM managers may potentially function as the "process experts", and help to determine the strategic capability of an organization through the methods by which staff are selected, appraised, rewarded, and developed (Evans, 1984; Tichy, 1988). HRM is strategic to the extent that HR activities are consistent with, and enhance the business objectives of the organization. Strategic HRM is concerned with interdependencies which exist between company objectives and human resource management capability (Evans, 1986; Kossek, 1987; Schuler and Jackson, 1987; Tichy, 1983). In this vein, HRM staff are proactive and anticipate both present and future HR needs in the organization (Meshoulam and Baird, 1987). HRM has the opportunity to foster entrepreneurship or mediocrity (Schuler, 1987). In complex, global companies, HRM is required to be flexible and innovative (Schuler, 1989) in order to accommodate 4 diverse business and employee requirements. New forms of HRM which transcend uni-dimensional value systems (Evans, 1986, Quinn, 1984), or the perspectives of a single group (Bartlett and Ghoshal, 1989) will be required in international organizations. In the broadest sense of the term, HRM is a system of "governance" within the organization (Evans, 1986). HR staff work together with managers and other employees in the joint creation of effective solutions for how work is to be accomplished. In effective companies, HRM as enacted by multiple groups within the organization, may be concerned with recruitment, reward and recognition, training and development, performance appraisal, and communication systems, among other things. Considering the important role for HRM, research needs to more fully address HRM in complex, international corporations. In particular, the study of HRM in international joint ventures will help to illuminate how HRM operates in a context when parent firms with multiple national cultures, and multiple corporate orientations, unite. 3. The Purpose of this Research Investigation The research considers how and why HRM policy and practice operate as they do in a sample of successful international joint venture companies. Considering that so little information exists on HRM in this context, the research is exploratory, with an emphasis on the description of HR processes, as well as on the development of some understanding as to the contributing factors which affect HRM. Based on the literature to date, one might expect, for example, that the national culture and corporate culture of the parent firms may have some bearing on HRM operations 5 (Datta and Rasheed, 1989; Killing, 1983; Pucik, 1988; Shenkar and Zeira, 1987). However, how culture or other factors moderate HRM policy and practice in international JVs is far from clear. Further elaboration of both organizational determinants which affect how HRM functions, and the outcomes of various HRM policies and practices deserves further elaboration. In order to gain a comprehensive perspective of HRM in international joint ventures, this research uses a multi-method approach to data collection which includes: documentary materials, interviews at multiple levels in each JV, on-site observation, and questionnaires which measure job satisfaction and employee perceptions of the corporate culture as it operates in each venture. This form of in-depth investigation provides an opportunity for the researcher to better understand the factors which enable or constrain HRM, and where inconsistencies exist between HRM policy and the way in which HR practices operate in reality. 4. The Companies All four joint ventures in this investigation are manufacturing operations which share a remarkably similar strategic management orientation, related to what managers in the JV perceive will lead to successes in a global market. In addition, the HRM focus which the management of these JVs consider desirable in order to accomplish strategic goals, is also very similar. All joint ventures are located in North America, and are 50/50 equity partnerships between the parents, except Mayo Forest Products which has a 60/40 ownership split. Mayo Forest Products is a small lumber manufacturing operation between Canadian and Japanese parent 6 firms. OCG Microelectronics is a relatively new JV, formed in January 1991, and is a partnership between American and Swiss parents. The management of the remaining two JVs in this project prefer that the company names remain anonymous. "Optima" is a venture between American and German multinational corporations, and produces high quality fibre optics. Finally, "Triad" is a JV between American and Japanese parent firms and manufactures automobiles for the American market. Of interest, all four joint ventures have been recognized by external sources for standards of product and service excellence (i.e. customer reports; awards for technological expertise). In addition, on a job satisfaction questionnaire employees in the ventures indicate a relatively high level of satisfaction related to working in each company. 5. Results of the Research Investigation The investigation provides a rich background of how HRM operates in four joint venture companies. Related to the management of the JV-parent relationship, the reason for formation of the venture, level of partner compatibility, and which parent has the management contract contributes to how strategic HRM operates. The joint venture objectives, both as defined by the parents, and implemented by various managers in the JV, likewise have implications for the development of strategic HRM policy and practice. Perhaps not surprising in competitive firms which seek to compete in a global market, all JVs in this research have a remarkably similar strategic orientation which focuses on high quality and low costs. Subsequently, the HRM practices in each JV 7 to meet these goals are likewise very similar. Communication, training, staffing, and reward and recognition for employee achievements are all priorities in these ventures related to the attainment of strategic objectives. In all the JVs, performance appraisal appeared to be a less significant consideration. To remain competitive, all four ventures have a focus on organizational learning and strategic renewal. In this research learning refers to the creation of new ideologies and systems at the organizational level. More specifically, learning occurs: 1. between the parents and between the parents and JV related to changing expectations and objectives; 2. related to administrative changes in policy and practice to keep pace with evolving strategic requirements; and^3. at a technological level.^Various HR practices operate to facilitate learning both in the JV, and related to the transfer of information and technology between the JV and the parents. In addition, the development of corporate culture in the ventures is of interest, and is related to the strategic orientation of the JV, as well as to elements of national culture. In the joint ventures in this investigation, corporate culture developed in relation to parent influences on the JV, as well as related to the contributions of JV staff to create a unique set of norms and values to suit the specific venture requirements. Select HRM policies and practices have contributed to how employees in the joint ventures experience the JV corporate culture. National culture has a definite presence in Triad, but is less strongly felt by employees in the other ventures. As managers at Triad note, almost everything they do is related to the combination 8 of diverse American and Japanese cultures in the plant. As a consequence, in the area of HRM, managers have attempted to create "hybrid" HR policy which takes into account the national cultural values, norms, and operating contingencies of each group. The result has been the establishment of unique forms of HR policy for the multicultural needs of the venture. 1 1 For the reader who wishes an overview of the key points in this investigation refer to: the summary for each joint venture which appears at the end of each company section in "The Companies" portion of the manuscript; Table 11 in the section "A Cross-Company Analysis"; and "A Summary of the Major Themes from this Investigation". 9 CHAPTER TWO A REVIEW OF THE LITERATURE A. Joint Venturing in an International Setting 1. Introduction The complexion of businesses and organizations as we have known them for decades is rapidly being altered. More and more, large multinational companies seek to expand to new markets, are quick to require technology found in other firms, and recognize intense pressure to compete for the rewards of global expansion. Based on the outcome of a seminar on global issues held in 1990, a definition of globalization related to how organizations operate is outlined by Barnett (1990:7-8), Globalization is the integration of business activities across geographical and organizational boundaries. It is the freedom to conceive, design, buy, produce, distribute, and sell products and services in a manner which offers maximum benefit to the firm without regard to the consequences for individual geographic locations or organizational units. There is no presumption that certain activities must be located in certain places or that existing organizational boundaries are inviolable...The global firm is not constrained by national boundaries as it searches for ideas, talent, capital, and other resources required for its success. International joint ventures are one vehicle for the accomplishment of global corporate goals. In conjunction with international demands, new solutions of how to do business are eagerly sought in all forms of multinational companies. Recent books and articles expound on the multinational mission, (Beamish, 1988; Egelhoff, 1988; Hedlund, 1986; Leontides, 1985; Prahalad and Doz, 1987); search for transnational solutions for the management of enterprises which span multiple national borders; (Bartlett and 10 Ghoshal, 1989); and begin to probe complex control and human resource issues which exist in firms when multiple national groups are present (Pucik and Katz, 1986; Doz and Prahalad, 1986). Although the literature has begun to address some of these important issues, relatively little investigation has been devoted to HRM in international joint ventures. This is the case despite the importance of HRM to the success and viability of a company (Evans, 1986; Pieper, 1990; Schuler, 1989; Walker, 1989; Tichy, 1988). Related to a role for HRM, Likert (1967:1) states, Every aspect of a firms's activities is determined by the competence, motivation, and general effectiveness of its human organization. Of all the tasks of management, managing the human component is the central and most important task, because all else depends upon how well it is done. In the context of joint ventures more specifically, HRM can contribute to the achievement of organizational goals related to staffing, promotion, employee loyalty, decision-making and compensation, for example (Cascio and Serapio, 1991; Pucik, 1988; Shenkar and Zeira, 1987). Further, effective HRM policy might serve to bridge discrepancies when diverse social or cultural systems combine (Baird, Lyles, and Wharton, 1989; Teagarden and Von Glinow, 1989). In addition, learning and experimentation in the organization may be enhanced through HRM policy and practice (Bartlett, Doz and Hedlund, 1990; Parkhe, 1991). Technology transfer can be orchestrated related to transfer, training and reward policies (Collins and Doorley, 1991). Despite evidence to suggest that executives and other members in an organization are well advised to focus on HRM in their international operations, HRM issues still receive minimal 11 attention. Frayne and Geringer (1989) note that "of the 100 to 5,000 hours typically involved in creating IJVs, only about 4% of the time has been spent resolving human resource issues". In international operations, there are special requirements for the coordination of activities, including HRM, across company boundaries. In particular, an understanding of intercompany relationships is important. According to Harrigan (1985:40), "the missing link in understanding joint strategies is analysis of dynamic interaction of the three key actors", (i.e. between the parent firms and the JV). Considering company interrelationships, Ohmae (1990:136) observes, To my knowledge, however, not one scholar specializes in the study of intercompany [his emphasis] relationships. This is a serious omission, given the importance of joint ventures and alliances in today's global environment. We need to know much more than we do about what makes effective corporate relationships work...We must recognize and accept the inescapable subtelties and difficulties of intercompany relationships. That is the essential starting point. Then we must focus not on contractual or equity-related issues, but on the quality of the people at the interface between organizations. Finally, we must understand that success requires frequent, rapport-building meetings on at least three organizational levels: top management, staff, and line management at the working level. With these considerations in mind, this research examines HRM as a component of both intercompany relationships between the JV and the parents, as well as how HRM operates within the venture. Related to a requirement to investigate HRM in international ventures, the background for this research is elaborated in the following sections in which literature relevant to this topic is reviewed. Select issues concerning international joint ventures and HRM are considered. In addition, there is some indication that national and corporate culture, degrees of flexibility in the 12 organization, and managerial expertise are likely to relate to how HRM operates in international JVs. These areas are briefly elaborated, as well as the implications of organizational learning in the venture related to how HR policy and practice operates. 2. The Form and Functioning of Joint Ventures International joint ventures represent a unique form of the globally oriented corporation. The number of international JVs which are formed is rapidly increasing, with the greatest incidence of collaborative agreements between two partners (Hergert and Morris, 1988). Depending on the requirements of the JV, the partners may have differing roles or functions. Lei and Slocum (1991) describe ventures which are either "specialized" or "value- added". In specialization ventures, each partner contributes specific expertise to the operation. For example, one partner in the JV may manufacture the product, while the other partner does the marketing. In a value-added venture, the partners share in the creation of product value in the venture. In this instance, the JV partners might jointly design and manufacture a product, drawing on synergistic capabilities of the staff in both parent organizations. Within the two partner venture, Killing (1983) describes three levels of management involvement or control by the partners: dominant parent JVs, shared management ventures, or independent ventures. The dominant parent JV is closest to the idea of a wholly-owned subsidiary, and one parent has primary management responsibility for the venture. In a shared management JV, both parents have a meaningful role, and provide input as to how the venture operates. In independent JVs, the venture is relatively 13 free of interference from either parent, and the JV General Manager is often given responsibility for decisions which affect the venture. 3. Management of the Venture The management of joint ventures is a complex process. If parent firms decide that a joint venture is required to accomplish desired strategic goals, then the partners must be prepared to deal with difficult issues related to joint ownership and joint decision-making in the venture. Collins and Doorley (1991) observe that in successful JVs, much advance planning is required, and the venture is likely to be championed by senior executives in the parent firms. The venture plan will ideally consider market options, business strategy, resource requirements, funding - all related to partner compatibility. Collins and Doorley elaborate that company style and corporate culture should be a "major consideration" as to whether two parent firms are able to effectively join together in a joint venture operation. Different goals, perceptions and values of parent firms may result in corporate disharmony, and frequently to the failure of the venture (Dymza, 1988; Killing, 1983). For example, do prospective JV partners have similar operating styles related to decision-making and HR management? Is there partner compatibility related to the level of employee participation desired in the JV? To avoid misunderstanding between the partners, these issues might be addressed in early JV negotiations, before the actual start-up of the venture. In addition to planning for the venture, Collins and Doorley 14 (1991) suggest other criteria which will enhance the success of various forms of strategic alliances. These "golden rules" of partnership success include: • a balance of trust and self-interest • anticipation of conflicts • clear definition of strategic leadership • flexibility • acceptance of cultural differences at both the level of national culture and corporate culture • orchestration of technology transfer • learning from the partner's strengths Taken together, the preceding points offer some guidelines for further research on how the the relationship between joint venture partners might be managed. 4. The JV Board Structure Most joint ventures have a dual-board structure which includes a formal Board of Directors, which is usually comprised of senior representatives of both parent firms; and an advisory committee, which is often the operating group for the venture. Generally, the Board of Directors is concerned with the ongoing success of the venture, as well as the protection of parent interests. The Board typically approves the annual operating plan, reviews budgets, and approves major capital expenditures. According to Collins and Doorley (1991), in a 50/50 JV the Board would have equal representation from each of the parents. Members of the board are chosen to "reflect the main contributions of each parent". The General Manager of the venture will often sit on the Board, but may 15 not always have full voting rights. In contrast, the advisory committee is comprised of senior managers in the venture, and is active in the day-to-day operation of the company. The advisory committee informs the Board of Directors of key issues for consideration when Board approval is required. 5. Balancing Stakeholder Interests In early venture negotiations, the parents need to decide who has management responsibility for the venture, in which specific areas, and how key positions in the venture are to be staffed. In addition, the level of autonomy and decision-making responsibility allocated to JV managers (as opposed to parent managers), must be decided. For the venture to achieve maximal results, members of both the JV and parent organizations will work toward the success of the venture. Lorange and Roos (1992; 1991) point out that there are two political considerations in strategic alliances. These include: • Stakeholder Blessing - Are both internal (i.e. JV) and external (i.e. parent) interest groups convinced that the venture is desirable? • Internal Support - Are a broad range of employees in the venture convinced that the venture is viable? Are they committed and able to further the JV goals? Related to internal support, if managers and other groups in the venture view the JV as threatening to their careers or personal goals, then enthusiastic, positive contributions to the venture are likely to be curtailed. The extent to which HRM or other strategic management 16 practices are adopted from one parent influences the corporate culture and dominant values present in the venture. For example, Frayne and Geringer (1989) propose that training content, the form of performance appraisal, or type of compensation and reward are expected to affect the JV corporate identity. If one parent is responsible for the management contract, including HRM, in the venture, then theoretically that parent is more likely to infuse the venture with its practices, strategic objectives and operating style. Further, dominance by the parents in the venture will affect the level to which JV autonomy is possible. The development of a corporate identity in the venture is likely to occur under some of the same conditions which operate in wholly owned companies. Various authors (Joiner, 1987; Kanter, 1989; Morgan, 1988; Schein, 1986; Walton and Lawrence, 1985) suggest that an integrated corporate identity is most likely when: • there is strong, unified leadership • there is a vision and mission statement for the company which is meaningful to employees and continually reinforced • communication is open at all levels in the organization • employees are actively involved • HRM practices reinforce company values In joint ventures, evidence of these characteristics may contribute to the development of a unified JV corporate culture which is independent from that of the parent firms. 17 B. Human Resource Management 1. HRM in Perspective There are multiple roles and demands for HRM in progressive organizations. London (1988) describes that HR staff operate as the roles of educators and developers, innovators, evaluators, leaders, consultants, and futurists. In order to have sufficient power to fulfill at least some of these roles, HRM staff require information, resources, and support from other groups (Kanter, 1988). HR staff are accountable to multiple stakeholders in the organization (Tsui, 1987), and often may be in the often precarious position of choosing which group's interests are to be met first. For example, production interests may need to be balanced with employee concerns related to overtime or time-off policies. In joint ventures, multiple stakeholders may include not only JV employees such as supervisors, managers, union representatives, or production staff, but also various employees belonging to the parent firms. In recent years, the expectation for HRM is that it is strategic and linked to the business requirements of the company. This is especially desirable in highly competitive organizations. Walker (1989) elaborates on organizational needs or issues which will determine HR roles in the global competitive environment of the 1990s. HRM must be responsive to: • the creation of a unified corporate vision • the development of flexible, decentralized organizational structures 18 • the establishment of HR policy which enhances quality consciousness • a requirement for increased international learning, including technology transfers • flatter, less bureaucratic organizations • lean staffing • the motivation of a diverse workforce with high personal expectations • respect for unique differences while seeking common values and approaches. Many of these issues will be dealt with by managers and employees at all levels in the organization. In some instances staff in the HR department will work with other employees to develop creative, appropriate, enriching HR policies and practices which benefit both employees and the organization. 2. The Dimensions of HRM Consistent with the literature, five dimensions of HRM will be considered in the present research: planning, staffing, performance appraisal, training and reward systems (Schuler, 1986; Schneider, 1988). 2 A list of HRM practices appears in Table 1. 2 The description of HR functions has been adapted from Dolan, S.L. and Schuler, R.S. (1987). Personnel and Human Resource Management in Canada. St. Paul: West Publishing Company, and from Schuler, R.S. and Jackson, S.E. (1986). Managing Stress Through PHRM Practice, Research in Personnel and HRM, 4, 183-224. 19 TABLE 1 Human Resource Management Practice Orientations Planning ^Informal^ Formal ^ Loose Tight Short-term^ Long-term Explicit Analysis Implicit Analysis Narrow Jobs^ Broad Jobs Segmented Design Integrative Design Low Employee Involvement^ High Employee Involvement Staffing External Sources ^ Broad Paths Multiple Ladder Implicit Criteria Open Procedures Performance Appraisal ^Behavioral criteria^ Results Criteria Short-term Criteria Long-term Criteria Purposes: Development, Remedial, Maintenance Low Employee Participation^ High Employee Participation Individual Criteria Group Criteria Reward ^Low Base Salaries^ High Base Salaries Internal Equity External Equity Few Perks^ Many Perks Standard, Fixed Package Flexible Package Low Participation^ High Participation No Incentives Many Incentives Short-term Incentives^ Long-term Incentives Little Employment Security High Employment Security Hierarchical^ Egalitarian Training ^Short-term^ Long-term Narrow Application Broad Application Unplanned, Unsystematic^ Planned, Systematic Individual Orientation Group Orientation Low Participation^ High Participation Adapted from R.S. Schuler (1987). Human Resource Management Practice and Choices. In R.S. Schuler and S.A. Youngblood (Eds.), Readings in Personnel and Human Resource Management,  3e, St. Paul: West Publishing. Internal Sources Narrow Paths Single Ladder Explicit Criteria Closed Procedures 20 Further, in this investigation, the communication system is considered as a sixth dimension of HRM-related activities. In an extensive survey of American managers, communication activities were found to make the biggest contribution to managerial effectiveness (Luthans, 1988; Luthans, Hodgetts and Rosenkrantz, 1988). In the work by Luthans et al. communication was considered a separate, yet complementary activity to HRM practices such as motivating/rewarding, staffing, and training and development, for example. Additionally, communication is considered important to how employees perceive the organizational environment to operate (Joiner, 1987; Kanter, 1989; Morgan, 1988; Schein, 1986). The six dimensions for HRM are outlined in the following paragraphs. a) Communication - Systems for communication operate at multiple levels in the organization and may include, for example, meetings, written correspondence, television or telephone. Schein (1986) notes that communication may be either formal and insitutionalized, or informal. In addition, communication may be open and generally involve employees, or closed and specific to selected group members. As the complexity of the organization increases, forms of communication such as transition teams, task forces, or joint-management teams may be used to create information linkages across diverse and often geographically decentralized groups (Barlett and Ghoshal, 1989; Joiner, 1987; Kanter, 1983; Prahalad and Doz, 1987). b) Planning - Planning involves forecasting human resource needs for the organization, and the appropriate steps necessary to meet those needs. Human resource planning aims to anticipate 21 shortages or surpluses of human resources and to correct imbalances; anticipate needs related to employee development; identify employee skills and to provide opportunities for employees; and link HR plans with the business plans of the organization. HRM planning may vary according to whether it is long-term or short-term, formal or informal, tightly or loosely linked to corporate planning, explicit or implicit, integrated or segmented, with high or low levels of employee involvement. c) Reward - Reward systems are the mechanism by which organizations seek to evaluate the contributions of employees in order that direct and indirect monetary and nonmonetary rewards can be distributed. Rewards are provided based on legal regulations and the organization's ability to pay. Reward will vary according to whether there exists high or low base salaries; internal or external equity; few or may "perks"; and flexible or fixed and standardized packages.^Rewards may encourage employee participation; have incentives built in; be based on short-term or long-term incentives; have employment security; and be either hierarchical or egalitarian based. d) Staffing - Staffing is usually defined as a search for and obtaining potential job candidates in sufficient amount and quality in order that the organization can renew itself and fill job needs. Staffing objectives are also concerned with satisfying the needs of job candidates. Not only should job applicants be attracted to an organization, but it is desirable that they be retained.^Staffing may be done internal or external to the organization, follow broad or narrow career paths, offer single or multiple promotional ladders, use explicit or implicit criteria for 22 promotion, or use closed or open (i.e. job postings) procedures. e) Training - Training and development activities refer to an attempt to improve current or future employee performance through new skill or knowledge acquisition, or the adjustment of employee attitudes. Training may focus on short-term or long-term needs; narrow or broad applications, (i.e productivity versus quality of work life). Training may be planned and systematic or spontaneous, unplanned or unsystematic; have a group or individual orientation; and allow low or high employee participation. f) Performance Appraisal -^As a formal structure, performance appraisal (PA) is a system which measures, evaluates and influences an employee's attributes, behaviors, and performance. Data obtained from the appraisal may be used to correct employee deficiencies or to suggest alternative job placements for employees. Appraisal may vary according to whether the process emphasizes how, versus how many things an employee accomplishes; whether criteria are behaviorally or results oriented; the extent to which evaluation criteria are short-term or long-term; whether the purpose is developmental, maintenance or remedial; the degree of employee participation expected; and whether individual or group appraisal criteria are stressed. Although communication, planning, staffing, performance appraisal, training and reward systems in progressive organizations are linked, and generally responsive to the business and human requirements of the organization, each HR dimension may vary autonomously. For example, in response to HRM needs in an international JV, performance appraisal maybe widely modified from the practices of the parent firms, while other practices related to 23 training may be adopted from the parent unchanged. Alternately, within each broad HR area (i.e. performance appraisal, reward), variations as to what is adopted from the parent firms might also occur. For example, in the area of performance appraisal, the JV may be the same as one or both parents related to a behavioral orientation in the appraisal, but differ from the parents on the level of employee participation in the process. Selected modifications to HRM are based on an open system approach, in which HRM programs and activities fit the requirements and constraints of the organization based on its unique environment (Tsui, 1987). In international JVs, the venture is expected to have different HRM and other strategic operating requirements from each of the parent firms. As a result, adjustments to HRM policy and practice will be made to best match the specific needs of the venture. C. HRM in Joint Ventures In a review article which examines human resource management in international joint ventures, Shenkar and Zeira (1987:549) observe that in "the vast majority of the literature on IJVs, issues about human resources are sporadic and limited". Related to HRM issues considered by previous researchers, Shenkar and Zeira identify a number of HRM issues in JVs which were problematic. These issues include: staffing, promotion, loyalty of employees to the JV, decision-making, communication, and compensation. In addition, the authors note that research to date has ignored many fundamental HRM issues in joint ventures such as career development, termination of service, demotion, absenteeism, 24 employee attitudes, control patterns, job design, training, and job rotation. Further, based on their literature review, Shenkar and Zeira (1987) suggest two structural characteristics of joint ventures which significantly affect HRM, as well as other management issues. These characteristics are: • Multiple ownership - Parent firms might differ related to:^private or state-owned; size; reputation or competitive advantage; industry focus; unionized or not; human resource orientation; objectives for joining the venture; or the extent to which one parent tries to dominate the JV. • Multiple national affiliation - The JV is a setting for individuals who often differ in national origin, cultural values and social norms. Shenkar and Zeira identify JV characteristics, and omissions in the literature related to this topic, which form an important guide for future research on international joint ventures. However, since the publication of the 1987 article, the international literature has barely begun to address many of these issues related to HRM in international JVs. There are some exceptions. Notably, Pucik (1988) examined the causes of HRM-related problems in 23 joint ventures established between American or European manufacturing firms and Japanese partners, located in Japan. Pucik found that in the particular case of JVs in Japan, low performance in the ventures was related to an inability on the part of the Western partner to manage the cooperative relationship. Several of the problems encountered were related to poorly designed 25 and executed HRM strategies. Further, these problems were embedded in national cultural differences between Western and Japanese parent firms, and their strategic orientations as to how to do business. More specifically, difficulties in the management of the JV were related to: • Staffing - frequent changes among Japanese managers which resulted in inconsistent communication links with the Western partner; over reliance on the Japanese partner to obtain suitable recruits which reduced control over staffing by the Western partner • Training - utilization of external training programs which failed to provide socialization of employees to the values and norms of the JV; the venture became a convenient training ground for the Japanese parent company • Performance Appraisal - use of Western-style PA which was inappropriate for Japanese staff related to cultural differences (i.e. preferences for group vs. individual evaluation; level of explicit vs. implicit feedback considered desirable) • Reward - high wage costs in order to attract employees from the Japanese parent firm; perceptions by the Japanese that Western expatriates were better compensated. Other research further substantiates how the presence of managers from different national cultures adds to management complexity in international joint ventures. For example, Mendenhall and Black (1990) consider the subtleties of conflict 26 resolution in Japanese-American ventures. The authors describe 1. the Japanese do not view conflict and "harmony" on the same continuum (as the authors claim is the case with most Americans), and 2. the desire by Japanese to obtain harmony is specific to contextual conditions (i.e. whether "insiders" or "outsiders" to the group are present). These differences suggest implicit differences in conflict management between Japanese and Americans, which may or may not be apparent to the parties involved. Further, Tyebjee (1991) found that in venture partnerships between Japanese and Americans, differences existed related to strategic objectives and how information is controlled and managed. Peer task teams across the parent companies were viewed as one way to bridge strategic and cultural diversity. In addition, in earlier work by Peterson and Shimada (1978), communication difficulties between Japanese and American executives due to language differences were singled out as the most pressing problem in the ventures investigated. The importance of understanding the cultural implications of international venturing is also underscored by Phillips (1989). In the investigation of a 50-50 American-Japanese joint venture, Phillips found that divergent management styles, inflated expectations and disputes over quality and labor practices resulted in ongoing problems in the venture. Many of the differences in style and value orientations stemmed from national cultural heritage. Phillips comments (1989:39), (American) workers grumble about the daily calisthenics and the boring dedication ceremonies Japanese seem to love. And managers can't understand Japanese frugality: At one plant, the size of memo paper caused a 40-minutedebate. 27 In an exploratory investigation conducted in the People's Republic of China, Teagarden and Von Glinow (1989) consider HRM in international joint ventures between Chinese and foreign firms. Teagarden and Von Glinow found that the cultural and social systems as they operate in China were a significant factor which affected JV effectiveness. More specifically, a Confucian influence, decision-making structures, the form and function of relationships, face-saving, and ideological assumptions influenced HRM. In other research, major attitudinal differences were found between American and Chinese managers in joint ventures regarding preferences for organizational structure, work orientation and reward systems (Baird, Lyles and Wharton, 1989). In addition, Cascio and Serapio (1991) examine HRM in four international alliances. The authors consider issues related to the blending of national culture and management style, job design, staffing, training, performance appraisal, compensation and benefits, career issues, and labor-management relations. Cascio and Serapio summarize the lessons which are learned from their investigation: • when national and corporate cultures are blended, the partners need to spend time building trust; understanding and accommodating each other's interests is important • job design can be enhanced when the partners are willing to learn from one another • recruitment and staffing policies should be well-defined in the early stages of the venture • orientation and training of employees should focus on the preparation of employees to deal with the social context 28 of their jobs, as well as the development of technical skills • performance appraisals need clear objectives, liberal time frames in which to achieve results, and built-in flexibility related to changing market and environmental demands • compensation and benefits policies should be uniform to avoid employee feelings of inequity • careers opportunities must be ensured for local managers • in the early stages of the venture, the partners must agree on suitable terms for the labor-management agreement Considering the results of this research, time is required to build a stable relationship between diverse partners in an alliance. HRM policy ideally is determined in the early stages of the venture, and is applied consistently. The partners may potentially learn new capabilities in an environment when there is an openness to new ideas and operating styles. The research by Cascio and Serapio is an important building block to an understanding of how strategic HRM operates in joint venture firms. The present research aims to both corroborate and extend the lessons already extracted from the earlier investigation. Datta and Rasheed (1989) conceptualize the importance of planning in international JVs which considers the various conditions affecting HRM. For example, variables to consider in the planning process include the local labour market, differences in cultural and management styles between the parents, and parent objectives. Related to this last point, a degree of compatibility 29 between parent objectives is important if venture partners are to work effectively together. Further, Frayne and Geringer (1989) suggest that HRM practices are one way in which parent firms can assert influence, and accomplish their strategic objectives in the venture. Depending which parent manages staffing, training, reward, and performance appraisal, then implicit control in the JV is more likely to be exerted by that parent. In the preceding paragraphs, work was reviewed which specifically focuses on HRM in international joint ventures. In addition, theory and research in a broader range of organizations related to corporate culture, organizational learning and innovation, and national culture are thought to offer some understanding as to how HRM might operate in JV firms. Relevant issues are considered with reference to joint ventures, and are elaborated in the following sections. D. Issues for Consideration in Joint Venture Firms 1. Corporate Culture Interpretive approaches to the study of organizations and culture suggest that culture is both process and product, externally and internally situated as meaning, and evolves over time (Berger and Luckmann, 1967). Members of a group create cumulative interpretations of their reality based on ongoing actions and interactions. Shared cognitive frameworks exist about norms, values and preferences and affect how members of a group demonstrate their familiarity with rules of appropriate behavior (Leary, 1983; Goffman, 1959). The informal components of culture 30 provide implicit patterns for action and a "governing sense" for the construction of action (Zimmerman, 1966). Related to culture as "sensemaking" in organizations, Schein (1984) elaborates that corporate culture exists at three levels: 1. behaviors and visible data; 2. values; and 3. basic assumptions. Behaviors are represented at the most surface level of culture, and may be demonstrated by office layouts or the manner of dress. At a deeper level, values govern behavioral patterns and are less accessible. In some instances, values are not readily identifiable even to individuals or to groups who influence, and who are in turn influenced by the governing values. At the most elusive level of corporate culture are basic assumptions. Schein refers to assumptions as invisible, deeply embedded characteristics which are rooted in relationships to the environment, the nature of time, activity, and space. These assumptions are related to the national cultures to which individuals belong, and represent enduring, social characteristics. In addition to culture existing at multiple levels, culture has both external and internal elements (Schein, 1986). External elements of culture include consensus on 1. a core mission; 2. the means for goal attainment, (i.e. organizational structure, reward, control and information systems); 3. the measurement of results, and 4. the management of conflict. Internal elements of corporate culture include 1. a common language and communication system, 2. consensus on group boundaries (who is in or out); and 3. how power and influence are stratified. Related to this, leaders in the organization and HRM staff might help to provide, for example, a focus for employees of what is valued or normative behavior; how 31 critical incidents are to be handled; or the criteria for recruitment, rewards, or appraisal. The company culture is related to the corporate philosophy or mission, product and market strategies, organizational structures, HRM systems and the attitudes of top management, (Enz and Schwenk, 1988; Kono, 1990). For example, Kono (1990) elaborates that Honda Motor Corporation has an energetic, innovative culture which was developed by the top management team. In accordance with the corporate philosophy, an atmosphere is created at Honda in which aggressive, new product development is inspired. To encourage innovation, recruitment systems are designed which match strategic firm objectives. In multinational organizations, different goals, perceptions and values of parent firms may result in corporate disharmony, and frequently to the failure of the venture (Dymza, 1988; Doz and Hamel, 1991; Killing, 1983; Parkhe, 1991). Further, partner heterogeneity may hamper organizational learning (Doz and Shuen, 1991). Norms which foster flexibility and learning may serve to bridge differences in strategic orientations or national cultures which exist between the partner firms (Parkhe, 1991). 2. The Creation of Innovative Organizations Researchers have struggled with a concept and definition of how organizations learn, adapt, and change to accommodate new contingencies and environmental conditions (Argyris and Schon, 1978; Chandler, 1962, Lyles, 1988). Organizational theory has considered learning at two levels in companies: 1. at a strategic level major ideological changes are instituted; and 2. at a 32 tactical level modifications to practices occur, but on a scale that is unlikely to transform the course set for the company (Jelinek, 1979; Lyles, 1988; Pettigrew, 1985). Organizational learning has been variously described as adaptation and response to new information (Shrivastiva, 1983); new insights or knowledge (Argyris and Schon, 1978; Hedberg, 1981); new structures (Chandler, 1962); and new systems (Jelinek, 1979). In this research, learning refers to the creation of new ideologies, systems and processes at the organizational level. Although learning and innovation are generally important in organizations, this capacity is critical in competitive corporations which operate on a global basis. In complex organizations such as joint ventures, where multiple cultures and requirements for innovation exist, then "organizational learning becomes a threshold condition for alliance success" (Parkhe, 1991). One way in which a capacity to learn is enhanced in joint ventures is through the development of flexible structures and relationships between the parents and the venture. Of increasing importance is the ability of JV managers to revise HRM and other systems in response to changing internal and external environments. Organizations must learn new competencies. Accordingly, "organizations that learn quickly and well have a distinct advantage in implementing change" (Nord and Tucker, 1987:32). Old systems are discarded and replaced by more strategic and appropriate concepts and practices. The capacity for organizations to alter HRM or other management systems in international joint ventures prevents management orientations from becoming obsolete over time. In global firms, an experimentation-based policy 33 process is more likely to take advantage of organizational variety and diversity, resulting in more creative organizational outcomes (Bartlett, Doz and Hedlund, 1990). HRM systems can either support or curtail an environment for learning. Pucik (1988:77) advocates "that the transformation of the HR system to support the process of organizational learning is the key strategic task facing the HR function in firms engaged in international cooperative ventures". According to Pucik, learning in alliances is more likely when there is: • a high priority given to learning activities • involvement by the HR function • long-term planning • a focus on obtaining and retaining high quality staff • training provided in cross-cultural competence • a career structure which is conducive to learning • reward and performance appraisal which focuses on long- term goals, learning activities, and global strategies • incentive for the transfer of "know-how" • an HR group who have knowledge of the partner strategies In addition, HR staff and other managers in the organization need to accept the responsibility for the creation of conditions which result in learning.^Learning is a process which requires integration. To enact this process the HR department will require support from other managers and employees. "Politics in organisations breed in times of change" (Pettigrew, 1985:43). Change may threaten the existing distribution of resources, affect salaries or promotional opportunities, and shift the control of tasks. New roles for 34 members of the organization may be required. For example, in systems where there is high employee involvement, then the role of supervisors will feasibly be reconfigured. In the case of administrative innovations, permission for change may be necessary prior its implementation (Frost and Egri, 1991; Kanter, 1983). As already mentioned, strategic alliances have numerous stakeholders who are both internal and external to the alliance (Lorange and Roos, 1992; 1991). With respect to strategic and tactical changes in alliances, and more specifically in joint ventures, support and approval of the multiple interest groups (i.e. JV and parent employees), is advisable prior to transformations in organizational values or systems. To effectively implement learning and change, HR staff will require both knowledge of the concerns of various stakeholders (Kanter, 1983; Tsui, 1987), as well as the political skills necessary to manage change. Finally, innovation may be more likely in organizations where there is support for multiple values and perspectives. Evans (1986) describes that complex organizations, with the potential for innovation, are likely to exhibit paradoxical qualities. Examples of "value dualities" are systems which have simultaneous elements of control and flexibility, formalization and informality, or individuality and teamwork. Cameron and Quinn (1988) also endorse the benefits to organizations of a competing values approach, and suggest that highly effective organizations pursue competing, paradoxical criteria simultaneously, rather than a single set of organizational value criteria. More recently, Evans and Doz (1990) elaborate on qualities of the "dualistic organization", in which 35 competing value characteristics are effectively balanced. Evans and Doz suggest that "dynamic  balances" may be created in turbulent, complex organizations when, for example, teamwork is created among strong individuals, opportunism is planned, or partnerships are formed between competitors. Evans and Doz add that a starting point for the introduction of dualistic thinking into organizations is through various HRM processes. 3. National Culture as Context The national culture to which an individual belongs has an indelible influence on both attitudes and behavior. As Hofstede (1980) describes, the shared ideas of national cultures build upon symbolic frameworks, mental programs and conceptual distinctions that shape social action. Underlying assumptions prescribe shared ways of thinking, perceiving and evaluating the world, self, and others (Ronen, 1986). Attitudes toward uncertainty and change, or task versus social orientations are examples of national cultural assumptions which affect perceptions of how the world should operate. Culture is passed from one generation to another. Culture embraces the concept of morality, determining for each group what is right and what is wrong. According to Nath (1988:24), Culture is shared by all members of a particular group, and it is essential for the basis of social and communal life. In the words of Hofstede (1980:27) the essence of culture is collective mental programming. It is the part of our conditioning that we share with other members of our nation, region, or group but not with members of other nations, regions or groups. An early anthropologist defined culture as "that complex whole 36 which included knowledge, belief, art, morals, law, custom, and any capabilities and habits acquired by man as a member of society" (Tylor, 1924:1). Consistent differences in value systems and social orientations have been observed among national cultural groups (Child, 1981). To illustrate, a study conducted by Meindl, Hunt and Lee (1987) examined the differences between Western "individualism" and Eastern "collectivism". In an individualistic culture such as the United States, ideas tend to arise from individual action, competition is positive and people are self- governing. Alternately, in the collectively-oriented cultures of South Korea, China and Singapore, action is generally agreed upon by consensus, there is greater dependence on the larger group, and relationships evolve around joint responsibility. Self-interest, so prominent in Western philosophy, is less relevant in a collective society. In another example, related to an orientation to activities, North Americans generally see themselves as "doers" and seek accomplishments that can be externally measured. For instance, employees are rewarded for their successes with promotions, raises, and other forms of public recognition. In contrast, in cultures which focus more on "being" than "doing", there tends to be more of a natural acceptance of the pace of life, with little attempt to force or influence outcomes. Further, related to a time dimension, Americans have a slightly future orientation and progress is often tied to future goals. Eastern societies tend to focus more on the past and value the importance of societal customs and traditions (Adler and Jelinek, 1986). 37 4. National Culture in Organizations Laurent (1986) studied groups of managers from different national backgrounds and found that nationality had three times the influence as a predictor of managerial assumptions than any other characteristic such as age, education, function or type of company. Accordingly, national cultures influence the corporate culture of organizations, (Adler, Doktor and Redding, 1986; Adler and Jelinek, 1986; Laurent, 1986). Corporate culture is represented in the more surface values and norms present in organizations, and is unlikely to significantly alter underlying assumptions which stem from national culture assumptions. Laurent (1986:99) writes, Deep-rooted assumptions could then be better understood as the historical result of broader cultural contexts like civilizations and nations. Organizations would only select from the available repertory of their larger cultural context of a limited set of ideas that best fit their own history and modes of implementation. Consistent with this argument, one might expect a manager from Japan who works in a U.S. based joint venture to modify certain elements of corporate culture such as dress or open door policies, without actually changing basic, governing assumptions as to authority or appropriate levels of formality. These latter assumptions are rooted in the history and traditions of Japanese society, and as such are less malleable or subject to alteration. Related to the implications of national culture for international joint ventures, research has generally suggested the influence of the socio-cultural environment on the management process, (Chiu and Bu, 1989; Kelley, Whatley and Worthley, 1987; Lindsay and Dempsey, 1985; Mendoca and Kanungo, 1989; Schneider, 1989; Warner, 1986). In addition, assumptions and values which 38 operate within different national cultures are selectively transferred into specific HRM practices (Ishida, 1986; Negandhi et al. 1985; Peterson and Schwind, 1977; Schneider, 1988). Various researchers have found different preferences for compensation systems (Atchison, 1989), training and development (Tang and Kirkbride, 1989), and performance appraisal (McEvoy and Cascio, 1989; Whitely, Tang and Kirkbride, 1989) related to the national culture of employees. Further, management practices are not necessarily transferable across cultures. For example, Western- style performance appraisal systems are considered inappropriate in Hong Kong, where the concept of "face" precludes the use of confrontative feedback. Americans prefer individually-oriented appraisals, as opposed to Taiwanese workers who are more likely to prefer a group focused appraisal (McEvoy and Cascio, 1989). Much has been said about the differences which exist between Japanese and American management practices. Related to variations which stem from national culture origins, Japanese management philosophy is described as based on lifetime employment, slow evaluation and promotion, non-specialized career paths, group decision-making, implicit control mechanisms, and collective responsibility (Ishida, 1986; Peterson and Shimada, 1978). However, some modification in long standing management practice is possible. Related to this, there is a recent trend in Japan toward restructuring wage controls, and a greater focus on performance- based evaluation and rewards (Mroczkowski and Hanaoka, 1989). In contrast, American management systems focus on individual accomplishment, hiring externally, and explicit control mechanisms. Performance tends to be objectively measured and rewards are 39 distributed based on equity and merit. In research in 37 joint ventures, Killing (1983) notes that managers of different nationalities have varying attitudes to fundamental assumptions regarding the importance of material wealth, the value of on-the-job performance and the desirability of change. According to Killing (1983:57), The greater the cultural gap between the parent's base countries, the greater the problem (in the IJV). A fundamental hindrance to the creation of a core skill can simply be the difference in language. Many joint ventures formed in Japan in the 1960s between Japanese and North American firms failed in the early 1970s. Cultural differences were cited as a major problem in many of these. 5. Joint Ventures as a Case of Socio-cultural Merging The merging of diverse cultures within the same organization is a complex and difficult process. In international joint ventures, the parent firms often represent diverse national or corporate cultures. For example, in an American-Japanese joint venture, each cultural group brings to the JV different values, expectations and operating procedures. In this instance, Japanese and American managers may need to work together to create new organizational forms appropriate to all groups in the venture. Alternately, cultural merging may occur between groups with their origins in the same national culture. Again in the context of a joint venture, employees may be consolidated who are all American in cultural origin, but who come from parent organizations with different corporate styles and ideologies. Differences in corporate philosophy might relate to appropriate levels of risk- taking, or the amount of training offered to employees. 40 In organizations where cultures combine, ambiguity, or the denial of another's culture may result (Martin and Myerson, 1988). In an American-Japanese JV for example, members from diverse cultures may find the values or habits of the other group confusing or inappropriate. Ishida (1986) examined the transferability of Japanese values and practices to non-Japanese subsidiary operations and discovered numerous problems which were related to philosophical differences between the two groups. Ishida comments, The difference in the concept of job leads to conflict between Japanese and non-Japanese working in the same organization. The non-Japanese cannot bear the vagueness of job boundaries and complain that the Japanese boss often trespasses on his own area of authority. The Japanese, on the other hand, criticize the non-Japanese workers for 'doing only what they are told to do' and complain that they 'lack initiative and flexibility'. Subsequently, a learning process is required in which group members develop a new understanding of expected requirements in the organization. In addition, group members will need to work toward an appreciation of an unfamiliar culture. When different national cultures combine, the possibility exists for either positive, creative outcomes - or stress (Adler, 1986). According to Moran and Harris (1982), cultural synergy is possible when new forms of learning transcend the boundaries of separate cultures. National cultural differences are neither ignored nor minimized, but are appreciated as a source for innovation and change. Managers and other employees are more likely to combine elements of contrasting value systems or cultures in organizations where there is flexibility, trust and support for change. A philosophy which establishes a norm for pluralism in perspectives and capabilities is important (Bartlett and Ghoshal, 41 1989; Prahalad and Doz, 1987). The merging of subcultures in joint ventures is likely to necessitate some degree of value negotiation, and openness to another's point of view. When opposing belief structures are brought together, compromises are required related to discrepant beliefs or political differences (Walsh and Fahey, 1986). In this context, strategy-making will ideally be participative (Miller and Friesen, 1984) and involve members of each group. In general, mergers of organizations tend to ignore the importance of human resource dynamics (Marks, 1989; Marks and Mirvis, 1986). In corporate mergers, Schweiger and Weber (1989) note the importance for determining how HRM policy and systems are to be combined and they recommend either: (a) partial integration of HRM policies of both firms, or (b) leaving the policies and systems of the firms separate. In research which examines Japanese subsidiaries in Taiwan, Japanese managers selectively added a Japanese influence to local management practices; and in some instances Japanese systems were implemented in entirety (Negandhi et al. 1985). Related to these issues, how do joint venture companies manage HRM policy and practice when national cultures or corporate cultures combine? Is there an integration of HRM policy adopted from both parents and applied to all JV employees? Alternately, are certain aspects of HRM policy applied to different subgroups in the venture? Further, is there a role which the HR department can play in diffusing the difficulties experienced in companies when diverse cultures are combined? 42 E. Summary International joint ventures are used increasingly as a mechanism for the enhancement of firm competitiveness on a global basis. Although the role of HRM in international corporations has been recognized by researchers as important, there has been very little research on the role and function of strategic HRM in international joint ventures. The current research examines HRM as it operates within the venture, and related to intercompany relationships. Management in joint ventures is complex. In those studies in which HRM in international joint ventures was investigated, issues of concern relate to multiple ownership and multiple national affiliation (Shenkar and Zeira, 1987). Further, partner ability to manage the cooperative relationship when multiple national and corporate cultures combine was considered to be important (Cascio and Serapio, 1991; Pucik, 1988; Teagarden and Von Glinow, 1989). More specifically, Cascio and Serapio (1991) found trust building, job design which enhances learning, well-defined recruitment and staffing policies, training programs and fair compensation policies to be salient issues in joint ventures. Although many of these issues are also relevant in wholly owned companies, complexity is added to how HRM operates when multiple parent firms are involved. For this reason, planning in joint ventures is especially important in order that differences in cultural and management styles between the parents and the venture are considered (Datta and Rasheed, 1989). Beyond the realm of investigations specifically conducted in 43 joint ventures, a broader band of organizational literature offers information as to how joint ventures might operate. Corporate culture is considered with respect to how people in organizations construct meaning, and the levels of values and assumptions which operate. The company culture is interrelated to the corporate mission, product and market strategies, organizational structures, HRM systems and the attitudes of executives (Enz and Schwenk, 1922; Kono, 1990). Further, how organizations learn, adapt and change at both tactical and strategic levels is of interest. In companies in which global competitiveness is a goal there are special requirements for innovation and transformation. As Parkhe (1991) describes, in strategic alliances an ability to learn is crucial to the attainment of organizational successes. HRM systems can either support or curtail an environment in which learning occurs (Pucik, 1988). Related to national culture, previous research has generally supported the influence of the social and cultural environment on management practices (Kelley, Whatley and Worthley, 1987; Schneider, 1989; Warner, 1986). In particular, assumptions and values which operate within different national cultures are often transferred into HRM practices (Ishida, 1986; Peterson and Schwind, 1977). In international joint ventures when multiple national or corporate cultures combine, "cultural merging" occurs which often requires adjustments of HRM policy and practice to meet newly evolving realities. 44 CHAPTER THREE RESEARCH METHODOLOGY A. Research Considerations 1. The Research Orientation This project explores the development and implementation of HRM policy and practice in a small number of successful international joint ventures. The intent of the research is to gain an indepth understanding of strategic HRM through the description of various HRM practices as they operate in the JVs. Both formal, institutionalized HR practices are considered, as well as informal operating systems. In addition, the research intends to provide an understanding of why and how HRM operates as it does in each company. This format pertains to the questions asked in exploratory case study methodology (Yin, 1989) and is appropriate when relatively little previous investigation exists on a topic. In this instance, the aim of the project is to develop a comprehensive description of HRM in joint ventures. Unlike some other case study research (i.e. Allison's Essence of Decision Making Explaining the Cuban Missile Crisis, 1971) the intent is not to pose competing explanations for the same set of events. Instead, this investigation is more oriented toward the potential development of an integrative framework for how various areas of the theoretical literature (i.e. corporate culture, national culture, organizational learning) may complement each other in order to provide a better understanding of strategic HRM in joint venture firms. Further, the methodology in this project is consistent with 45 research done by Kydd and Oppenheim (1990), who considered HRM in four exemplary companies. This research also conforms to a call by Ulrich (1987) for a detailed analysis of strategic HRM, in order to gain a more penetrating appreciation of how firms are able to increase their effectiveness through HRM applications. In this spirit, the present project aims to provide a comprehensive description and understanding of various HRM practices in four successful international JVs, related to the generation of theory in this area. The results of this investigation also provide information to managers and practitioners concerning the implications of various strategic HRM policies and practices. The research uses multiple sources of data collection including documentation, on-site observation, interviews, and questionnaires. Multiple methods for data collection allow a cross-analysis of information in order to ensure consistency in the data, and are a signal for when further information or analysis is required. Multiple methods of data collection are recommended by several authors, (Adler, 1984; Eisenhardt, 1989; Yin, 1989), to obtain greater breadth and reliability of the results of the research. In addition, information is collected at multiple levels in each organization, (i.e. executives, mid-level managers or supervisors, and production staff), to gain an appreciation of the various perspectives in each group. 2. Securing the Companies a) The Type of Joint Ventures Four successful international joint ventures firms were required for participation in the research. A sample size of four 46 was chosen in order to allow greater comprehensiveness across joint ventures (which vary related to national culture of the parents etc.) than would be possible in a single case analysis. For a company to qualify as suitable for the project, the following criteria would need to be met: • The company would be a "formal" joint venture (i.e. an independent company which is the product of the union of two other firms). • The partners in the venture would be of different national origins in order that the JV be "international" in nature. • The partnership between the parent firms would be approximately equal in terms of the equity of ownership, (i.e. a 50/50 to 60/40 ownership split in the JV). • The JV would be "successful" both in terms of a) external awards and recognition given to the venture for exemplary performance, and b) because managers and other employees in the JV felt that the venture was a satisfying place in which to work. • The JV would have its headquarters and/or major production site in North America, for practical reasons related to the collection of data. • The management of the venture would be willing to have me on site for two weeks, and to allow me access to documents, and to staff for the purpose of interviews. b) An Elusive Commodity Gaining entry to the types of companies designated for the research was incredibly difficult. I spent six months full-time 47 attempting to contact possible joint venture firms, and to secure the participation of managers for the project. During the course of this task I contacted approximately 350 managers or academics, to a) locate possible joint ventures, b) determine if a company either met the criteria designated for entry to the project, or c) to more specifically request participation. Most people whom I contacted did not seem to be aware of joint ventures which existed, or where they were located. As part of my search, I also used numerous library sources, however because of the often rapid change of ownership of JVs, many of these sources were outdated. In part, the difficulty of finding suitable JVs for the project might be considered related to the following characteristics: • There is no clear designation of joint ventures as opposed to other forms of strategic alliances, and therefore in the literature as well as in other descriptions, a partnership company may be called a joint venture, when in fact it is not. • There is no accessible, comprehensive listing of joint venture firms. Various government agencies do not have this information, including the Conference Boards in both Ottawa and New York, provincial or state agencies, municipal groups, or private agencies. • The often quickly changing ownership of JVs meant that the most recent directories of company listings are outdated before their publication. • In many instances, managers did not want a researcher on site. My perception is that this hesitancy was related 48 to a desire by managers to keep strategic initiatives "in-house". Several companies did not want competitors to gain information as to what they were doing. Some of the companies which I had contacted wrote back and said that their operations were "highly confidential". Other companies did not want to participate due to feared "leaks" about the company identity in future publications, (although the option of confidentiality was presented to company managers in each case). Further, I felt some managers whom I contacted were not particularly secure about the quality of their HR operations in the company, and preferred not to have an outsider present to view operations or practices. In other cases, managers cited that they simply did not have the time to allow company involvement in a research project of this nature. c) The Process for Gaining Entry Once possible joint ventures had been identified, I telephoned an upper level manager in the venture, (usually the Vice-President of Corporate Development or the Vice-President for Human Resources, and in some cases a representative in the Public Relations department), to determine whether the venture had the qualifying characteristics of the companies I was hoping to locate for this investigation. Based on this conversation, and if there was some possible interest, I sent a letter to this contact person which describes the intent of the project, and the required amount of involvement by the company. In addition, the company representatives were informed that if they were to participate in 49 the project, the company would have the benefit of a report which outlines the findings in the company, as well as an executive summary report related to the general research project. Refer to Appendix 1 for a copy of the letter and project outline which were sent to each company with potential to participate in this project. Typically, approval for my entry was obtained in a managerial meeting which would include the JV President, and the Vice- President or other senior manager for HRM. I offered follow-up information, as requested. Approvals for research entry often took six to eight weeks. Finally, I was able to secure the participation of four joint ventures - Mayo Forest Products, OCG Microelectronics, Optima and Triad. Briefly, at Mayo Forest Products contact was made with the Vice-President of Canadian Pacific Forest Products (the parent firm), who quickly informed me that research access to the mill would be possible. I went with him to the mill to meet with the General Manager for the JV and the Personnel Administrator. At this time, the Executive Secretary to the General Manager in the JV outlined for me meetings which would be beneficial to attend, and people I should interview. Research began in the mill approximately one week later. At OCG Microelectronics, contact was initially made through the Public Relations Department, and after about eight weeks during which research access to OCG was a possibility, I made a follow-up call to the President of the venture. I was given immediate approval for the project, pending additional approval from the Manager for HRM, who also was interested in participation in the research. At Optima, contact with the JV was made through the Manager of Employee Relations, who 50 over a seven week period, was able to get approval from senior managers, including the Vice-President of Personnel for my entry. Securing the participation of Triad was both quick, and very fortunate. I contacted someone in the Japanese parent company who I already knew, who in turn contacted a key person in the venture. Access to Triad was determined within days. This was particularly lucky, as I was told the plant had not previously been involved in any extensive research investigation, despite numerous attempts by other researchers to gain access to the company. 3. The Process for the Research a) The Format I spent two weeks in each joint venture. In addition, at Mayo Forest Products I returned to the JV for two days, two weeks after the research data had already been collected, to interview people about any changes they anticipated for Mayo due to the resignation of the General Manager the previous week. Data was collected at Mayo Forest Products in April 1991, and in the other three ventures in July and August 1991. Approximately 20 interviews were conducted at multiple levels in each company, and the titles of those people who were interviewed appear in Appendix 2. I had a "contact person" in each JV, who assisted me with whom would be relevant and responsive individuals to interview, arranged for a work space, suggested meetings to attend, outlined relevant documents to collect (and often provided them), and informed me about miscellaneous items of company protocol. The title of my contact varied: at Mayo it was the Executive Secretary to the JV General Manager; at OCG it was the HR manager; at Optima it was 51 the Manager of Employee Relations; and finally, at Triad, it was the Training Specialist who fulfilled this role. All my contacts were well informed about company operations, and very generous of their time and insights. The operations of the joint ventures were not usually contained in a single location. Subsequently, to gain a broader perspective of the operations, I visited more that one site to collect information or materials for this research. At Mayo Forest Products, most data was collected at the mill, but interviews with a Vice-President in the Canadian parent firm, a Vice-President for the Japanese parent firm, and the Personnel Officer for salaried staff in the JV were conducted at the Regional office for the Canadian parent, where these individuals were located. At OCG, which is a very decentralized operation, I interviewed people and collected other information at the JV Headquarters in New Jersey; the JV plant in East Providence, Rhode Island; the Ardsley facility in New York state; and the CIBA-GEIGY U.S. parent company headquarters, also in New York state. At Optima, data was collected at the JV headquarters office and at the two manufacturing plants, which were all located in the same city. Triad, is a self-contained unit, and all data for the venture was collected at the plant. While at the main research location for each venture, I was usually given a desk or work space to use temporarily. At Mayo Forest Products, I had a desk in the Administration area, in a well-travelled location. At the other joint ventures, I had space in the HRM areas. Although security was a priority in all the JVs, I was given very good access to information. For example, I was 52 able to obtain copies of requested documents, and in some cases managers volunteered to provide me with confidential reports. In addition, I was given the freedom to explore the various JV locations on my own. At both Optima and Triad, which required security entry badges, I was given a visitor's badge for the length of the stay at the company; and this permitted me access to certain areas. At Triad, freedom of movement was restricted in the plant for safety reasons, although I was able to move freely in the administration areas. b) The Role as Researcher In ethnographic and other case study research, characteristics of the researcher such as gender or status may influence the data collection process with respect to how the participant views or responds to the researcher (Spradley, 1987). As one of the "instruments" in the study, the fact that I am female and a graduate student may theoretically affect the participant- researcher relationship, and further, the information which is obtained for the purpose of this investigation. With consideration for my perceived role as researcher in mind, I attempted to fit the characterisics of the environment as much as possible. For example, in the mill operations I wore jeans and hardtoed boots, when alternately in an office setting I chose to wear conservative business clothing. My perception is that employees in the ventures identified me in a researcher capacity while I was visiting in each company. I was not asked for advice in a consulting role. On occasion, I felt that I was a confidant to some individuals who were interviewed. Related to this, some respondents shared personal 53 concerns related to the work environment, which generally they specified were intended to be confidential. Once I was on the JV site, and sometimes in advance, employees who were to be interviewed were informed of my intentions in the company, and the scope and focus of the research. In some cases, the project outline and a brief summary of my background and experience, (which both were sent to the JV as part of the process to gain entry to the venture), were copied and distributed to staff. Although the majority of participants in the research are North American in cultural origin, some of the senior managers who were interviewed were also Swiss (2), German (3) or Japanese (4). Related to this fact, I tried to ensure that each cultural group of participants was comfortable with the interview format, and was able to understand the content and intent of the questions. Only in the case of some of the Japanese respondents was language problematic. To ensure understanding I spoke slowly and rephrased questions if there appeared to be any confusion or hesitancy in the response. In only one instance was a written inventory completed with an HR manager who did not have English as a first language. On this occasion, I went through the inventory with this individual to ensure an understanding of the content. 4. A Variety of Information a) Documentation Information on the joint venture, (i.e. age, reason for formation, industry focus etc.), and the strategic orientation of the company, (i.e. the corporate vision, historical changes), were collected. Appendix 3 provides a more comprehensive listing of 54 some of this content. To gather information about the JV more generally, and HRM policy and practice more specifically, a wide variety of documents were consulted. This included, for example, company newsletters, employee handbooks, company brochures or manuals, JV annual reports, policy statements, HR forms, newspaper articles on the JV, or union agreements. Annotated bibliographies for each JV, which itemize the documents used in the research, and a brief description of their contents, appear in Appendix 4. b) On-site Observation During the time when I was on-site full-time at each joint venture, I was able to observe operations, attend meetings, and have numerous informal conversations with employees at multiple levels in the organization. Information which was collected from these experiences, as well as my personal impressions of activities or events in the JV, were recorded in a journal. In each company I was given an introductory tour of the manufacturing operation. The number of meetings which I attended varied on each site. For example, at Mayo Forest Products I attended 17 meetings in 10 days. This included production meetings, mill maintenance meetings, manager's meetings, and a closed union meeting. At OCG, due to the amount of travelling between sites, I attended fewer meetings, although I did sit in on some of the production meetings at the plant facility. At Optima, I attended a communication meeting, production meetings at both of the plants, and a "team meeting". In conformance with plant policy that visitors are not permitted into the plant without a guide, I was not able to attend floor meetings at Triad. However, I did have the opportunity to attend several Quality Circle presentations, which occurred in July 55 when I was there. I also attended an HR meeting while at Triad. In addition, I was able to get some personal insights from employees about the operation of the venture over lunch, or in other private conversations. Responses were either volunteered or resulted from my informal prompting. c) Interviews The interview format was consistent for all participants. I would introduce myself and the research topic, ask participants if there were any questions, request permission to tape-record the session, and get the participation consent form signed. Confidentiality was discussed, and participants had two options: that I could use names with statements which were made, or that confidentiality would be guaranteed. This portion of the consent form was completed at the end of the interview, in order that participants could better judge their preference based upon what they had already said. Refer to Appendix 5 for a copy of the consent form. No one refused to have the session tape recorded. To lead participants into the interviews gradually, we began with the participant describing his or her background and experience, and the work role in the venture. I did not take notes, but chose to have a "conversation" with the individual who was interviewed, which allowed for eye contact, as well as a more informal atmosphere. On a few occasions, participants asked that the tape recorder be turned off if they had something personal, confidential, or perhaps incriminating to tell me.^In this instance, I would usually ask permission to take notes.^My impression is that employees were comfortable in the interviews, and generally unguarded in their responses, although there were a 56 few exceptions. The interviews were relatively unstructured and I used open- ended questions as probes. Participants were encouraged to include any information they felt was relevant to help me understand how and why HRM policy and practice operated as it did in the venture. On average, the interviews were one and one-half to two hours in length. An outline of general interview questions, and sub- questions which could be used as interview prompts appear in Appendix 6. Many of the questions which appear in this appendix are based on previous theoretical or empirical work by Datta and Rasheed (1989), Frayne and Geringer (1989), and Pucik (1988), but were developed specifically for the current project. There are two interview guides in Appendix 6 which vary slightly from one another. One guide was used with HRM staff, the other for employees who were less familiar with HRM policy and practice. Appendix 7 is a question guide used with the JV General Manager. In all cases, questions were not necessarily asked in the order in which they appear, but in an order which evolved naturally in the course of the interview. Information from tape recorded interviews was formatted onto a computer, and an interview tape was replayed until relevant material was accurately captured. Rather than a complete transcription, I selected what I felt was important to the goals of the investigation and either copied verbatim quotations, or summarized the material into descriptive notes. Material which was repetitive or irrelevant was therefore not put onto computer, although all tapes have been retained. As a reliability check on this procedure, a graduate commerce student was hired to check a 57 random sample of three tapes from each JV, for a total of 12 tapes. The graduate student was instructed to ensure that verbatim quotes were accurate, and to check that I had accurately captured the essence of the rest of the conversation in notes. I asked that she note errors, omissions of relevant material, or additions. A copy of the instructions to the reviewer are in Appendix 8. The reviewer considered the interview transcripts to be 100% accurate related to quotations. In instances where content discrepancies did infrequently occur, I rechecked the tapes to ensure that participant comments were accurately noted. d) The Minnesota Job Satisfaction Questionnaire The short form of the Minnesota Job Satisfaction Questionnaire (MSQ) developed by Weiss, Dawis, England, and Lofquist (1967) was completed by a random sample of employees in each venture. The questionnaire has been used over the years as a reliable measure of job satisfaction (Muchinsky, 1983). The short version of the inventory consists of twenty items related to various aspects of one's job. The employee responds on a 5-point scale. In addition to an overall score for job satisfaction (which is a summation of scores on all MSQ items), there are two subscales which determine employee levels of "intrinsic" and "extrinsic" job satisfaction. The intrinsic satisfaction scale consists of twelve items which reflect achievement, ability utilization, and autonomy, for example. The extrinsic scale consists of six items which relates to policy administration or working conditions. The MSQ manual indicates that internal consistency, (based on a wide variety of occupational groups), has a mean reliability coefficient of .86 for the intrinsic satisfaction scale, .80 for the extrinsic scale, and 58 .90 for the general satisfaction scale. This research focuses on the organizational level of employee responses to job satisfaction, rather than on individual level responses. For this reason, mean scores and standard deviations for each item of the MSQ are aggregated across all respondents in a JV. Aggregated mean scores for overall job satisfaction, and category scores for intrinsic and extrinsic levels of job satisfaction were obtained. As suggested in the test manual, it is most meaningful to consider scores for overall satisfaction, intrinsic satisfaction and extrinsic satisfaction compared to percentile ratings. A high degree of job satisfaction is represented in the 75th percentile or higher; mid-range satisfaction is the 26-74 percentile, and a low degree of job satisfaction is reflected in the 25th percentile or lower. e) The Culture Inventory The Culture Inventory considers various aspects of corporate culture as it operates within a company. The inventory has twelve items adopted from Quinn's (1984) competing values model. (Refer to Appendix 9 for an elaboration of the theory which underlies Quinn's model). Four types of corporate culture are represented (three items for each culture type). The various culture orientations include group, developmental, hierarchical and rational cultures. Participants respond on a 5-point scale to indicate their level of agreement with each of the twelve statements in the inventory. I made one modification to the original inventory and changed "participant's business" to "this company" which I felt would be more relevant to the respondents in my sample. According to Yeung et al. (1989) who have also used 59 this inventory in research with a large sample or companies, the reliability coefficients for the four culture types are: group culture (.79), developmental culture (.80), hierarchical culture (.76), and rational culture (.77). The level of cultural predominance in each of the four culture categories is determined by adding numerical responses for each group of three items. As with the MSQ, organizational level responses were obtained in each JV. Scores for the Culture Inventory are represented as aggregated means for each item of the inventory. Mean scores were also obtained for each of the four corporate culture categories. The consent form for participants, which describes the project and confidentiality issues, as well as copies of both the Minnesota Job Satisfaction Questionnaire (identified as "Questionnaire 1"), and the Culture Inventory (identified as "Questionnaire 2") appear in Appendix 10. Attached at the back of the questionnaires is a page requesting some background information for each participant. This also appears as part of Appendix 10. f) Distribution of the Questionnaires Sixty sets of questionnaires were distributed in each joint venture; return rates varied from 32 to 45 questionnaires in each company. A stratified random sample of employees was identified to complete the questionnaires. Participant selections were done in the following way: • An employee list or computer printout would be obtained which lists all employees in the company for the geographical location in which the research was conducted. Names were in alphabetical order with no job designation listed. This list would include employees at 60 all levels in the organization from production workers to executives. • I went down the list beginning with the first name and selected names at equal intervals. For example if there were 240 employees in the company and the distribution of questionnaires was 60, I would select every fourth name. If there were 2400 employees in the company, I would select every fortieth name. • The questionnaires were placed in an envelope with the employee's name on the front. An envelope with my name on the front c/o the HR department, was included with the questionnaires in order that the individual could place the completed questionnaires in it, and return the questionnaire with confidentiality of the contents ensured. • Questionnaires for employees were bundled together by unit, division, or area, and were usually distributed directly to the employee by the supervisors for the area. • Envelopes were to be returned to either the supervisor (who would pass them to me), or through the internal mail system to the HR department. g) Guide to Human Resource Management Practices The Guide to HRM Management Practices is found in Appendix 11. I developed the guide for use to identify HRM practices which operate in the areas of planning, staffing, performance appraisal, reward and training. Information from the HRM Guide is intended to either confirm or expand information from other sources related to HRM practices as they operate in each venture. 61 The HRM Guide was adapted from Schuler (1987) related to various human resource practice orientations. I was interested in the development of this format because it has applicability for the determination of multiple values (i.e. the presence of both long- term and short-term goals, or that both a group and an individual orientation), which HR managers feel operate in the venture related to HRM practices. Although Schuler tends to use the HR orientations as unidimensional, I have presented the scales on the HRM Guide in a manner which allows participants to select the operation of multiple values, if they felt this was the case. For example, a participant may indicate that planning is both formal and ordered, as well as informal and flexible. The dual aspect of the inventory is outlined in the introductory instructions to participants. The HRM guide is meant as an informal guide to HR practices and has neither reliabilty or validity ratings. For the purpose of the research, the HRM Guide was completed by key managers in the HR departments. I felt that these individuals would be most familiar will all aspects of HR practice. If there were only one such designated person (as at OCG), then the HRM Guide would be completed only once in a JV. If there were more than one HR manager, then the HRM Guide would be completed by more than one individual. For example, at Triad, both the General Manager for HR (an American), and the Human Resources Executive Vice-President (who is Japanese), completed the HRM Guide. This allows for the presentation of multiple perspectives of how HRM operates in the venture. In all cases, I was present and went through the HRM Guide with the participant, to provide clarification when necessary. 62 5. Analysis and Integration of the Data The focus of data collection in this research is on descriptive information, rather than on quantitative analysis. As already described, data were collected from documentation, interviews, questionnaires, and on-site observation. The multiple forms of information form a rich data base of HRM operations in four international joint ventures. Quantitative analysis of the Minnesota Job Satisfaction Questionnaire and the Culture Inventory are meant to primarily extend or corroborate other data collected in this investigation. The HRM themes which frame this investigation (i.e. communication systems, planning, staffing, training, reward and recognition, and performance appraisal) were used to categorize information from the interviews and other data sources. In addition, and related to the strategic emphasis in this project, I also used categories such as JV background (i.e. history of the operation, parent roles), and the strategic orientation of the company (i.e. company vision and the steps taken to accomplish the vision), to organize the analysis of data. These additional categories evolved naturally from the interviews, and were determined based on the degree to which they were repeated in multiple data sources (i.e. in documents, interviews etc.), and existed in all four JVs in the investigation. Inevitably, I made some judgements as to what should be included as relevant data for the purpose of this study. For instance, and based on the review of the literature, I felt that national culture and corporate culture might be relevant to an understanding of strategic HRM policy and practice. Related to 63 this, implicitly a loose framework of issues which might be theoretically important existed, although as much as possible I attempted to be open to new areas which were neither identified by me or others as directly relevant to the topic. Further, as already explained, a reliability check was done on the interview transcripts to ensure that I had not subjectively omitted material which was relevant to this investigation. More specifically, the analysis of the data occurred as follows: • The questionnaires were analyzed using the method as described in the preceding sections. • On each interview transcript, I noted the content categories related to HRM operations, JV background, or strategic orientation of the company as described in the preceding paragraph. • Documents were reviewed in the same way, using already identified HRM and company categories. • In a similar way, the journal was reviewed and categorized. Following this preliminary step, data was organized within each JV, across the various sources of data. For example, within a single venture, all information on training would be organized together in order to form a comprehensive outline of training operations in the JV. At this point, all sources of data were used to create a unified analysis of HRM in the company. Convergence as well as inconsistency in the data were noted. In addition, the questionnaires were considered related to both trends in the data for each questionnaire, and in comparison 64 to other information obtained in the JV. The HRM Guide was used to determine levels of consistency of HRM policy and practice between respondents in the venture. In addition, information from the HRM Guide was compared to other data. All sources of data were then collectively woven into a profile for strategic HRM operations for each joint venture. These integrated units form the basis of the "Results" section which follows. 65 PART TWO: THE JOINT VENTURES Introduction The four international joint venture companies investigated in this research are all competitive, strategic players in the global marketplace. These joint ventures have been formed between two international partners, each from a different national culture. The ventures share very similar corporate goals and objectives. Without exception, in all the joint ventures in this research, employees strive to produce high quality products in their respective market sectors. "Total quality" programs operate to accomplish this goal through 1. the reduction or elimination of defects, 2. continuous product improvement, and 3. the development of enhanced understanding of customer requirements. Employees are expected to actively contribute to this process through their involvement in quality management and product innovation. Depending on the reasons for the formation of the venture, the parents have either specialized roles, or strive to combine their technological expertise in order to add value to the JV operation. Technology from the parent firms is transferred to the venture, depending on specific JV requirements. Although all four joint ventures are manufacturing operations and share an orientation toward quality and service, they represent "maximal variety" in that they are in different industries, and differ in size and age. This variety therefore provides a comprehensive view of some of the strengths and challenges faced by joint venture firms. Mayo Forest Products is a small lumber manufacturing firm with 160 employees established in 1980. It 66 operates primarily as a subsidiary operation of Canadian Pacific Forest Products (60% owner), and is unionized. The other parent is Mitsubishi (40%) which provides Mayo Forest Products with access to the Japanese market. The second company in this study is OCG Microelectronics, which was formed in January 1991 and is a 50/50 partnership between American (Olin) and Swiss (CIBA-GEIGY) multinational parent firms in the microelectronic industry. OCG is very decentralized, relatively small (196 employees), and is nonunionized. The remaining two companies which participated in this study prefer to remain anonymous. Consequently, I have renamed the joint ventures as well as the parent companies. These names are fictitious and are not meant to represent any existing firm. The third company "Optima" was established in 1977 as a 50/50 equity venture between American and German parent firms. Optima specializes in fiberoptics and maintains technological linkages with its German parent. This company is medium-sized (1250 employees) and operates without a union. The final company to participate in this research is an automobile manufacturing joint venture which was formed in 1985 and began production in 1988. "Triad" is a greenfield operation, unionized and relatively large (approximately 3000 employees). It is the product of American and Japanese parent firms. An overview profile of the joint ventures in this research appears in Table 2. Throughout the following sections, various issues are reflected which consider the human resource management component as it operates in joint venture firms. Related to the emphasis which the management of these four participating companies place on their 67 employees, HRM is more often than not, linked to the strategic functions in the company. In addition, because each JV represents a union of diverse national and corporate cultures, issues related to the incorporation of parent and joint venture goals, values, and preferences are apparent throughout these sections. They confirm the contrasts, and the difficulty connected to the creation of whole and effective systems when more than one set of actors are on the corporate stage. More specifically, and based on key themes which emerged from the investigation, HR policy and practice might be considered in the context of the following issues: 1. The management of the JV-parent relationship - Does the type of joint venture (specialized/value-added or dominant/shared); degree of partner compatibility; which parent has the management contract; and the ability of both JV and parent managers to interact effectively have an impact on strategic HRM? 2. The integration of HRM with strategic planning - How do various HRM practices such as communication, staffing, training, reward and recognition, and performance appraisal contribute to, or limit, strategic JV objectives? What is the role for the HR department in this process? 3. The development of a corporate culture in the JV - What are the influences (either from the parents or JV-based) which shape the norms and values as they operate in the venture?^How, if at all, are various subgroups accommodated into the organization? 4. The establishment of organizational learning in the JV - 68 In progressive ventures, is there an emphasis on flexibility and learning, and if so what are the strategic and tactical components of this process? 5. The presence of diverse national cultures - Which HR policy is changed, if any, and what stays the same in the context of a joint venture when parents are from different national cultures? Finally, I have presented each company as a synthesis and integration of data collected from each JV site. The data in this section is based on interviews, documents, and questionnaire results. This is a reflection of what the participants of each company shared with me of their history and insights. I have reserved my own opinions and analysis of these events for the discussion section. Plant Start-up/ OCG^OPTIMA 1991 TRIAD 1988 MAYO 1980; 1977 TABLE 2 JOINT VENTURE PROFILES Reorganization reorg. 1988 (January) reorg. 1988 Ownership 60% CPFP 50% CIBA-GEIGY 50% Bauer 50% Spartica 40% Mitsubishi 50% Olin 50% Fiberop 50% Japan Motors Strategy Orientation total quality high employee management ^ involvement Management Contract CPFP Olin Fiberop Japan Motors Number of Employees 160 196 1250 3000 Union Status unionized non-union non-union unionized Market Sector lumber photoresists/ polyimides fiberoptics automobile JV Type (Specialization or Value-Added) specialization value-added value-added specialization Technology Transfer none both parents both parents Japanese 70 CHAPTER FOUR MAYO FOREST PRODUCTS LIMITED A. Joint Venture Background I. History of the Operation Mayo Forest Products is a sawmill nestled on the shoreline at Nanaimo, British Columbia. Operational since 1980, the mill is a joint venture between Canadian Pacific Forest Products Limited (60% owner) and Mitsubishi Corporation (40%). Mayo competes internationally in the high quality lumber market. To ensure survival, the aim at the mill is to extract the greatest value from every log. This requires logs entering the mill must be accurately cut to specified lengths, and be free of defects in order to maximize lumber extraction and to minimize waste. The largest percentage of cut lumber is exported into the quality conscious Japanese market. Eighty five percent of the lumber manufactured at Mayo is sent to Japan, which represents approximately 4.5% of Japan's total North American lumber imports. The remainder of the lumber is marketed to the United Kingdom, Europe and the Middle East. Mayo Forest Products has 22 salaried employees, (i.e. in administrative or management areas), and approximately 160 hourly employees who are unionized members of the International Woodworker's Association of Canada. The Mayo mill was designed in 1978 and constructed in 1979. According to the production supervisor, the mill was a combination of a traditional Japanese mill and a North American mill design. During the mill construction there was high participation from the Japanese partner in both the engineering and design phases of the 71 project. When the mill began production in 1980 it was recognized in the industry as one of the most progressive mills in British Columbia, and set a standard for quality requirements into the Japanese market. The plant came up to production quickly and maintained the same level for about seven years. During this time other competitors had outpaced the Mayo operation, productivity levels had not improved, and the plant technology was becoming outdated. The general manager noted the plant employees had little or no training in the markets for which they were cutting, and no knowledge of the direction of the business. There was no long term plan, no formal quality control programs, and little information was shared with employees. Accidents in the mill had been steadily increasing. To counter this downward trend, Sandy Fulton who is the Vice- President of Canadian Pacific Forest Products (CPFP) in charge of the Mayo operation, hired a new General Manager for the mill in 1988. The intent of this action was to create a major transformation of how the mill operated. To assist in the development and implemention of this change, an outside consultant was hired to work with the General Manager, as well as with other staff mambers at Mayo. Together they instituted a "High Performance Management System", which emphasizes setting and meeting high quality standards; employee education and involvement; and statistical monitoring and communication of performance results to all levels of the organization. Part of the reorganization plan involved refocusing the goals and roles of each of the joint venture parents. Mitsubishi was to concentrate solely on the marketing and on providing good product information; it would have 72 no direct involvement in the management of the site operation. On the CPFP side, Sandy Fulton assisted to refocus the management priorities at the Mayo operation. The mill manager was provided the opportunity to operate more autonomously, while maintaining an enhanced focus on quality control and performance management in the mill. To get first hand information about markets in Japan, employees at Mayo began to visit Japan, and talk directly with customers regarding product requirements. 2. Parent Roles Currently, the roles of the joint venture parents are specialized and well defined. Mitsubishi has the marketing agreement to supply lumber products to the Japanese market. Canadian Pacific Forest Products handles the marketing of lumber to other destinations and has the management contract for the Mayo operation. This relationship has mutual benefit to both partners. CPFP is able to sell some of the logs that come off their holdings to the Mayo lumber manufacturing operation, at fair market prices. Mitsubishi gains by having a continuous flow of high quality products into their building material distribution systems. Both Mitsubishi and CPFP formally manage the joint venture through an advisory committee and the joint venture board. The advisory meetings occur quarterly or more frequently, and alternate between the Mayo mill site and Japan. According to Sandy Fulton, the meetings include representatives from Mitsubishi Tokyo, Mitsubishi Vancouver, CPFP representatives in manufacturing and marketing and some of the management staff at Mayo. They meet to jointly decide a future focus for the mill related to product 73 development and people management, as well as to discuss other planning issues relevant to both JV partners. The advisory committee informs the JV board of issues for consideration. As Sandy Fulton describes, If there are other issues that need to be addressed at the senior, and when I say the senior level, the board of directors level, we would look to the advisory committee as the vehicle to develop the direction or the consensus of what steps we're going to take. That might be as complex as negotiating the next agreements that will prevail for the next ten years in how the ownership structure is going to take, or what sales agreements are going to be, or log supply agreements or you know generally