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International joint ventures: the strategic human resource management dimension Cyr, Dianne J. 1993

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We accept this thesis as conformingINTERNATIONAL JOINT VENTURES:THE STRATEGIC HUMAN RESOURCE MANAGEMENT DIMENSIONbyDianne J. CyrB.A., The University of Victoria, 1973M.A., The University of New Brunswick, 1977A THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFDOCTOR OF PHILOSOPHYinTHE FACULTY OF GRADUATE STUDIESInterdisciplinary Studies[Organizational Behavior, Counselling Psychology, Sociology]THE UNIVERSITY OF BRITISH COLUMBIANovember 1992copyright Dianne J. Cyr, 1992In presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.(Signature)Department of  ed-Y-X.-•y)%1A/C-1-"The University of British ColumbiaVancouver, CanadaDate  /3 ep.^.4A.A7 199-3 DE-6 (2/88)iiABSTRACTInternational joint ventures are frequently a response to externalpressures placed on globally-oriented companies if they are tosurvive and compete successfully. Within the internationalcontext, a critical element to corporate competitiveness is theeffective management of human resources. Despite this reality,very little research to date examines the strategic Human ResourceManagement (HRM) dimension in international joint ventures. Inthis investigation, strategic HRM refers to communication systems,staffing, reward and recognition, training, and performanceappraisal systems which operate within four successful jointventure (JV) firms. All joint ventures have been formed betweentwo international partners, each from a different national culture.Three of the companies are 50/50 ownership arrangements, while thefourth venture has a 60/40 ownership split between the partners.All four ventures are in the manufacturing sector, although indifferent market niches. In each case, managers in the jointventures focus on total quality management and high employeeinvolvement in order to enhance product quality and innovation, andto create a more satisfying environment in which employees cancontribute to the organization. Collectively, these joint venturesprovide an interesting window through which to view strategic HRMoperations. In addition to the description of Human Resourcepolicy and practice, the research pursues an understanding of themore evasive questions as to how and why HRM operates as it does.Issues which evolved from the research and are important to a fulleriiicomprehension of HRM in international joint ventures include, amongothers: the management of the JV-parent relationship; how HRMpolicy and practice supports or limits parent and JV strategicobjectives; the select influence which national culture has on HRM;how corporate culture develops in the JV related to parentinfluences and JV managerial contributions; and finally, howorganizational learning operates at both strategic and tacticallevels in each venture.ivTABLE OF CONTENTSABSTRACTACKNOWLEDGEMENTS^ xiiiPART ONE: JOINT VENTURE BACKGROUNDCHAPTER ONE: INTERNATIONAL JOINT VENTURES: THE STRATEGICHUMAN RESOURCE MANAGEMENT DIMENSION^1A. Introductory Summary^ 11. A Focus on International Joint Ventures^ 12. The Role of HRM^ 23. The Purpose of this Research Investigation 44. The Companies 55. Results of the Research Investigation^ 6CHAPTER TWO: A REVIEW OF THE LITERATURE^ 9A. Joint Venturing in an International Setting^ 91. Introduction^ 92. The Form and Functioning of Joint Ventures^123. Management of the Venture^ 134. The JV Board Structure 145. Balancing Stakeholder Interests^ 15B. Human Resource Management^ 171. HRM in Perspective 172. The Dimensions of HRM 18C. HRM in Joint Ventures^ 23D. Issues for Consideration in Joint Venture Firms ^291. Corporate Culture^ 292. The Creation of Innovative Organizations^313. National Culture as Context^ 354. National Culture in Organizations^ 375. Joint Ventures as a Case of Socio-cultural Merging^39E. Summary^ 42CHAPTER THREE: RESEARCH METHODOLOGY^ 44A. Research Considerations^ 441. The Research Orientation^ 442. Securing the Companies 45a) The Type of Joint Ventures^ 45b) An Elusive Commodity 46c) The Process for Gaining Entry 483. The Process for the Research 50a) The Format^ 50b) The Role as Researcher^ 524. A Variety of Information 53a) Documentation 53b) On-site Observation 54c) Interviews^ 55d) The Minnesota Job Satisfaction Questionnaire^57e) The Culture Inventory^ 58f) Distribution of the Questionnaires^59g) Guide to Human Resource Management Practices^605. Analysis and Integration of the Data 62PART TWO: THE JOINT VENTURES - INTRODUCTION^ 65CHAPTER FOUR: MAYO FOREST PRODUCTS LIMITED 70A. Joint Venture Background^ 701. History of the Operation 702. Parent Roles^ 723. JV Benefits and Costs^ 76B. Strategic Orientation 781. The Vision^ 782. The Requirements^ 79C. Human Resource Management at Mayo^ 821. The HR Departmental Role 822. Employee Involvement Systems^ 84a) Sources of Information Exchange^ 84b) Shifting Roles for Employees 89c) Employee Opinion of High Performance Systems^933. Reward and Recognition^ 95a) Rewards^ 95b) Recognition 954. Staffing and Promotion 995. Training and Development^ 1016. Performance Appraisal 1027. Employee Opinion^ 1038. Aftermath^ 106viD. Results of the Employee Questionnaires^ 1061. Minnesota Satisfaction Questionnaire 1072. The Culture Inventory^ 1083. Guide to Human Resource Management Practices^112E.^Summary of the Results 114CHAPTER FIVE: OCG MICROELECTRONIC MATERIALS, INC.^117A. Joint Venture Background^ 1171. History of the Venture 1172. Management of the Venture^ 119B. Strategic Orientation^ 1241. The Vision^ 1242. Meeting the Goal 126C. Human Resource Management at OCG^ 1281. The HR Departmental Role 1282. Creating an Integrated Joint Venture^ 132a) Consolidation of CIBA-GEIGY employees intothe Venture^ 132b) Other Integration Issues^ 1383. Communication Strategies 140a) A Format for Information Exchange^140b) Linking International Operations 1434. The Performance Management Process 1445.^Reward and Recognition^ 146a) Rewards^ 146b) Recognition 1486. Staffing and Promotion 149a) Recruitment 149b) Employee Transfers^ 150c) Promotions^ 151d) Qualities of JV Managers^ 1517. Training and Development 153D. Results of the Employee Questionnaires 1541. Minnesota Satisfaction Questionnaire^ 1552. The Culture Inventory^ 1563. Guide to Human Resource Management Practices^156E. Summary of the Results 160viiCHAPTER SIX: OPTIMA CORPORATION^ 163A. Joint Venture Background 1631. History of the Venture^ 1632. Management of the Venture 164B. Strategic Orientation^ 1681. Achievement of the Quality Goal^ 168C. Human Resource Management at Optima 1721. The HR Departmental Role^ 1722. Employee Involvement Systems 176a) A Team Concept 176b) The Creation of New Roles^ 1803. Communication Systems^ 182a) JV-Parent Communications 182b) Communication Within the Venture^1844. Reward and Recognition 188a) Rewards^ 188b) Recognition 1905. Staffing and Promotion^ 193a) The Selection of Managerial Talent^193b) Hiring in the Plants 196c) Career Planning 196d) Job Postings^ 198e) Qualities of JV Managers^ 1996. Employee Transfers Between Optima and the ParentCompanies^ 200a) The Transfer Format 200b) Relocation Policies^ 202c) The Employee Perspective 2057. Training and Development 207a) The Focus for Training 207b) Training in the Plants^ 2088. Performance Appraisal^ 211a) Performance Appraisal for Salaried Employees^211b) Performance Appraisal for Associates^214D. Results of the Employee Questionnaires^ 2151. Minnesota Satisfaction Questionnaire 2152. The Culture Inventory^ 2163. Guide to Human Resource Management Practices^217E. Summary of the Results^ 222CHAPTER SEVEN:^TRIAD MOTORS CORPORATIONA.^Joint Venture Background1. History of the Venture2. Parent Roles3.^Employee Sentiments About the Ventureviii225225225226230B. Strategic Orientation 2331. The Mission 2332. The Requirements 234C. Meshing the Cultures 2371. The Cultural Challenge 2372. Bridging Cross-Cultural Differences 240D. Human Resource Management at Triad 2421. The HR Departmental Role 242a)^Plant Start-Up 242b)^The Development of "Hybrid" HR Policy 243c)^Challenges for HRM 2452. Communication Systems 248a) Communication Across Cultures 248b) Networks for Information Exchange 2533. Employee Involvement 256a) Quality Circles and Kaizenb) Employee Sentiments about Involvement256Processes 2574. Union-Management Relations 260a) Mutual Commitments 260b) The Unionization of Triad 262c)^Understanding Employee Preferences 2645. Reward and Recognition 264a) Rewards 264b) Recognition 2666. Staffing and Promotion 267a) An Influence from the Japanese 267b) Associate Selection 269c) Salaried Recruitment 271d) Staff Transfers 273e)^Promotions 2747. Training and Development 275a) The Context for Learning 275b) Multiskilled Capabilities 277c)^Other Training 2788. Performance Appraisal 280a)^The Format 280b)^The Accommodation of Cultural Differences 2819. Employee Opinion 284ixE. Results of the Employee Questionnaires ^ 2871. Minnesota Satisfaction Questionnaire 2872. The Culture Inventory^ 2893. Guide to Human Resource Management Practices^290F. Summary of the Results 295PART THREE: CROSS-COMPANY COMPARISONS - INTRODUCTION^299CHAPTER EIGHT: A CROSS-COMPANY ANALYSIS^ 303A. The Joint Venture Form^ 3031. Specialization or Value-Added Ventures^3032. Dominant versus Shared Management Ventures^3053. The JV Management Contract^ 307B. The Strategic Management Orientation 3101. The Joint Venture Objectives^ 3102. Operational Inconsistencies withStated Strategic Objectives 3143. Organizational Outcomes 3154. Reinforcing the JV Mission^ 3165. The Process of Strategic Renewal^ 3176. The Creation of New Roles in the Venture^319C. Subgroups in the Joint Ventures 3221. An Identification of the Subgroups^ 3222. The Ardsley Employees^ 3223. Transferred Employees 3234. Organizational Subunits 325D. Strategic Human Resource Management^ 3261. The Human Resource Management Role 3262. Communication Systems^ 3293. Reward and Recognition 331a) Reward Systems 331b) Recognition 3324. Staffing and Promotion^ 333a) Hiring Practices in the Ventures^333b) Staff Transfers 336c) Career Pathing and Promotions 3395. Training and Development^ 340a) Variety in Training Programs^ 340b) Sources of Training 342c) Cultural Training 342d) Job Rotation in Production Facilities ^3436. Performance Appraisal^ 343xE. The Questionnaires^ 3451. Guide to Human Resource Management Practices^3452. Minnesota Satisfaction Questionnaire^ 3463. The Culture Inventory^ 347PART FOUR: THE ISSUES: A DISCUSSION - INTRODUCTION^349CHAPTER NINE: STRATEGIC HUMAN RESOURCE MANAGEMENT ^349A. Management of the JV-Parent Relationship 3491. Parent Goals and Strategic HRM^ 3492. Partner Compatibility^ 3543. Relationship Management 3554. Implications of the Management Contract^3585. Parameters for Joint Venture Autonomy 363B. Integration of HRM and Strategic Planning 3651. HRM Technique and Process^ 3652. The HR Departmental Role 366a) The Process Experts 366b) Early Involvement 367c) The Establishment of Credibility^368d) Charting New Values and Policy 370e) Resource Requirements^ 373f) Constant Change^ 3743. Communication Systems 374a) Multiple Forms of Communication^ 374b) Communication Across Cultures 377c) Sharing Technical Information 381d) Information Sharing Among JointVenture Subgroups^ 3844. Reward and Recognition 386a) Goals of Reward Systems^ 386b) Multiple Compensation Systems^ 388c) The Creation of Meaningful RecognitionSystems^ 3895. Staffing and Promotion^ 394a) A Focus on High Calibre Staff^ 394b) Transfers to the Venture 397c) Career Pathing and Promotions 4026. Training and Development^ 404a) A Training Emphasis in the Ventures^404b) Cultural Training 406c) Job Rotation in Production Facilities 4097. Performance Appraisal^ 411xiCHAPTER Ten: AN INTEGRATED VIEW OF INTERNATIONALJOINT VENTURE FIRMS - INTRODUCTION^415A. Corporate Culture^ 4171. Parent-based Influence^ 4172. JV-based Influences 4203. A Role for HR Managers 4234. A Process Design for HRM 4275. Questionnaire Outcomes^ 432a) Possible Incompatibility Between Policyand Practice 432b) A Rational Culture Orientation^ 434B. Organizational Learning^ 4361. The Context for Learning^ 4362. Partner Learning 4383. Administrative Learning 4404. Technological Learning 441C. National Culture^ 4431. National Culture and HRM Policy and Practice^4432. Cultural Relativity^ 4443. The Interaction of National Culture, CorporateCulture and Strategic Orientation^ 447D. An Integrative Framework for Strategic HRM inInternational Joint Ventures^ 453E. Research Issues^ 4601. Strengths of the Investigation^ 4602. Limitations of the Investigation 462F. Toward the Future: Some Personal Summary Comments^465REFERENCES^ 468APPENDICES 4781. Letter Sent to Joint Ventures with the AttachedProject Outline^ 4782. Lists of Employees (By Title) Interviewed inEach Joint Venture 4843. 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 512xii9. Quinn's Typology of Organizational Culture^51410. Employee Consent Form and Questionnaires 51611. Guide to Human Resource Management Practices^52112. An Elaboration of Quality Circles and KaizenProcesses^ 52513. A Summary of the Communication Mechanisms whichOperate in Each JV^ 532LIST OF TABLES1. Human Resource Management Practice Orientations ^192. Joint Venture Profiles^ 693. Results from the Minnesota Job SatisfactionQuestionnaire at Mayo Forest Products as AggregatedScores Across All Respondents^ 1104. Results from the Culture Inventory at Mayo ForestProducts as Aggregated Scores Across All Respondents 1115. Results from the Minnesota Job SatisfactionQuestionnaire at OCG Microelectronics as AggregatedScores Across All Respondents^ 1576. Results from the Culture Inventory at OCGMicroelectronics as Aggregated Scores Across AllRespondents^ 1587. Results from the Minnesota Job SatisfactionQuestionnaire at Optima as Aggregated Scores AcrossAll Respondents 2198. Results from the Culture Inventory at Optima asAggregated Scores Across All Respondents^2209. Results from the Minnesota Job SatisfactionQuestionnaire at Triad Motors as Aggregated ScoresAcross All Respondents^ 29110. Results from the Culture Inventory at Triad Motorsas Aggregated Scores Across All Respondents^29211. Central Features of the Joint Ventures 30112. A Process Design for HRM in Joint Ventures 42913. A Framework for Strategic HRM in InternationalJoint Ventures^ 455LIST OF FIGURES1. A Model for IJV Coordination and Process Development 4312. The Relationship between Parent Involvement, NationalCulture, and Similarity of Parent Corporate Cultureand Strategic Orientation^ 4523. Quinn's Typology of Organizational Culture^5154. Quality Circles - The Process 5295. Quality Circle Activity vs. Kaizen Suggestion ^531ACKNOWLEDGEMENTSMany people deserve recognition for their contributionsto this investigation. I would like to thank PeterFrost, my research advisor, for his thoughtfulness,encouragement and guidance during the course of thisproject. Helpful comments were also provided by MerleAce, Larry Cochran, and Ken Stoddart who are on thedissertation committee. Evan Evans shared with me hisromance and dedication for research; and he providedvaluable advice which contributed in significant ways tothe development of this investigation. Cheerful andcompetent technical assistance was provided by AndrewLeung. I am grateful to many individuals in the fourjoint ventures in which the research was conducted, fortheir unfailing assistance and insights. In addition, Iappreciate the financial support which helped to defraythe costs involved in this research. Funding for theproject was obtained from a research grant shared withPeter Frost from the University of British Columbia, andfrom the National Centre for Management Research andDevelopment at the University of Western Ontario. Inaddition, the final stages of this project were completedat INSEAD in France, through funding provided from aChateaubriand fellowship from the French government(Centre International des Etudiants et Stagiaires).1PART ONE: JOINT VENTURE BACKGROUNDCHAPTER ONEINTERNATIONAL JOINT VENTURES:THE STRATEGIC HUMAN RESOURCE MANAGEMENT DIMENSIONA. Introductory Summary1. A Focus on International Joint VenturesTo compete in an international business environment, firms areforming strategic alliances as a mechanism for the enhancement ofglobal competitiveness. In recent years, an explosion ofinternational joint venture (IJV) activity signifies this form ofalliance 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 formand function of joint ventures has not been well defined either inthe academic literature or by company executives. In thisresearch, the term joint venture (JV) refers to a legallyindependent organization which is the product of the partnership oftwo corporations, (the parent firms), each of which participates inthe decision-making activities of the jointly owned company. Morespecifically, in an international joint venture, at least oneparent firm has its headquarters outside the country where thejoint venture is located.International JVs are formed for a variety of reasons.International companies create venture partnerships to gain foreignmarket access, for the acquisition of new technology, to fundcapital requirements beyond the capability of a single firm, and inorder to share risks. Joint ventures are also a vehicle through2which companies can gain broader scale sourcing of materialsrequired for their operations. The possibility exists for both theJV and the parent firms to learn new skills from one another, andto share technology or information as a result of the venture.Many of these elements are essential ingredients for companieswhich aim to compete in an international arena - where competitionis fierce, and where requirements for quality, innovation, andmeeting customer requirements are critical.Although there are clearly potential economic andtechnological benefits which result from firms venturing together,the failure rate of joint ventures is high. For example, in astudy of 880 joint ventures and cooperative alliances, only 45percent of the companies were judged successful by all sponsors(Collins and Doorley, 1991). Some factors which lead to JV failureinclude: significantly different goals of parent firms; perceptionsof 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 spandiverse national cultures, and when attitudinal and valuedifferences exist between different groups in the venture (Baird,Lyles and Wharton, 1989). Problems often arise when executives inthe parent companies attempt to impose their standards and policiesfor operation on the joint venture firm.2. The Role of HRMDespite an increase of joint venture activity, research hasgenerally neglected issues related to the development andimplementation of human resource management practice in3international JVs. Nor does the research to date examine contextfactors which determine how and why HRM operates as it does withinvarious joint venture firms. Scholars in the internationalmanagement field are quick to observe that the HRM role, related tothe success or failure of joint ventures, has received littleempirical study (Shenkar and Zeira, 1987; Teagarden and Von Glinow,1989). This omission in the research literature exists even thougheffective HRM practices are thought to be a significantcontributing factor in the successful operation of multinationalcorporations, (Evans, 1986; Laurent, 1986; Pieper, 1990; Punnett,1989; Schein, 1986; Schuler, 1989). Tichy (1988) notes that thekey to success in multinational companies is leadership, and aninnovative set of HRM practices which permit organizationalflexibility and adaptability.HRM managers may potentially function as the "processexperts", and help to determine the strategic capability of anorganization through the methods by which staff are selected,appraised, rewarded, and developed (Evans, 1984; Tichy, 1988). HRMis strategic to the extent that HR activities are consistent with,and enhance the business objectives of the organization. StrategicHRM is concerned with interdependencies which exist between companyobjectives and human resource management capability (Evans, 1986;Kossek, 1987; Schuler and Jackson, 1987; Tichy, 1983). In thisvein, HRM staff are proactive and anticipate both present andfuture 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 tobe flexible and innovative (Schuler, 1989) in order to accommodate4diverse business and employee requirements. New forms of HRM whichtranscend 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 worktogether with managers and other employees in the joint creation ofeffective solutions for how work is to be accomplished. Ineffective companies, HRM as enacted by multiple groups within theorganization, may be concerned with recruitment, reward andrecognition, training and development, performance appraisal, andcommunication systems, among other things. Considering theimportant role for HRM, research needs to more fully address HRM incomplex, international corporations. In particular, the study ofHRM in international joint ventures will help to illuminate how HRMoperates in a context when parent firms with multiple nationalcultures, and multiple corporate orientations, unite.3. The Purpose of this Research InvestigationThe research considers how and why HRM policy and practiceoperate as they do in a sample of successful international jointventure companies. Considering that so little information existson HRM in this context, the research is exploratory, with anemphasis on the description of HR processes, as well as on thedevelopment of some understanding as to the contributing factorswhich affect HRM. Based on the literature to date, one mightexpect, for example, that the national culture and corporateculture of the parent firms may have some bearing on HRM operations5(Datta and Rasheed, 1989; Killing, 1983; Pucik, 1988; Shenkar andZeira, 1987). However, how culture or other factors moderate HRMpolicy and practice in international JVs is far from clear.Further elaboration of both organizational determinants whichaffect how HRM functions, and the outcomes of various HRM policiesand practices deserves further elaboration. In order to gain acomprehensive perspective of HRM in international joint ventures,this research uses a multi-method approach to data collection whichincludes: documentary materials, interviews at multiple levels ineach JV, on-site observation, and questionnaires which measure jobsatisfaction and employee perceptions of the corporate culture asit operates in each venture. This form of in-depth investigationprovides an opportunity for the researcher to better understand thefactors which enable or constrain HRM, and where inconsistenciesexist between HRM policy and the way in which HR practices operatein reality.4. The CompaniesAll four joint ventures in this investigation aremanufacturing operations which share a remarkably similar strategicmanagement orientation, related to what managers in the JV perceivewill lead to successes in a global market. In addition, the HRMfocus which the management of these JVs consider desirable in orderto accomplish strategic goals, is also very similar. All jointventures are located in North America, and are 50/50 equitypartnerships between the parents, except Mayo Forest Products whichhas a 60/40 ownership split. Mayo Forest Products is a smalllumber manufacturing operation between Canadian and Japanese parent6firms. OCG Microelectronics is a relatively new JV, formed inJanuary 1991, and is a partnership between American and Swissparents. The management of the remaining two JVs in this projectprefer that the company names remain anonymous. "Optima" is aventure between American and German multinational corporations, andproduces high quality fibre optics. Finally, "Triad" is a JVbetween American and Japanese parent firms and manufacturesautomobiles for the American market.Of interest, all four joint ventures have been recognized byexternal sources for standards of product and service excellence(i.e. customer reports; awards for technological expertise). Inaddition, on a job satisfaction questionnaire employees in theventures indicate a relatively high level of satisfaction relatedto working in each company.5. Results of the Research InvestigationThe investigation provides a rich background of how HRMoperates in four joint venture companies. Related to themanagement of the JV-parent relationship, the reason for formationof the venture, level of partner compatibility, and which parenthas the management contract contributes to how strategic HRMoperates. The joint venture objectives, both as defined by theparents, and implemented by various managers in the JV, likewisehave implications for the development of strategic HRM policy andpractice. Perhaps not surprising in competitive firms which seekto compete in a global market, all JVs in this research have aremarkably similar strategic orientation which focuses on highquality and low costs. Subsequently, the HRM practices in each JV7to meet these goals are likewise very similar. Communication,training, staffing, and reward and recognition for employeeachievements are all priorities in these ventures related to theattainment of strategic objectives. In all the JVs, performanceappraisal appeared to be a less significant consideration.To remain competitive, all four ventures have a focus onorganizational learning and strategic renewal. In this researchlearning refers to the creation of new ideologies and systems atthe organizational level. More specifically, learning occurs:1. between the parents and between the parents and JV related tochanging expectations and objectives; 2. related to administrativechanges in policy and practice to keep pace with evolving strategicrequirements; and^3. at a technological level.^Various HRpractices operate to facilitate learning both in the JV, andrelated to the transfer of information and technology between theJV and the parents.In addition, the development of corporate culture in theventures is of interest, and is related to the strategicorientation of the JV, as well as to elements of national culture.In the joint ventures in this investigation, corporate culturedeveloped in relation to parent influences on the JV, as well asrelated to the contributions of JV staff to create a unique set ofnorms and values to suit the specific venture requirements. SelectHRM policies and practices have contributed to how employees in thejoint ventures experience the JV corporate culture.National culture has a definite presence in Triad, but is lessstrongly felt by employees in the other ventures. As managers atTriad note, almost everything they do is related to the combination8of diverse American and Japanese cultures in the plant. As aconsequence, in the area of HRM, managers have attempted to create"hybrid" HR policy which takes into account the national culturalvalues, norms, and operating contingencies of each group. Theresult has been the establishment of unique forms of HR policy forthe multicultural needs of the venture. 11 For the reader who wishes an overview of the key points inthis investigation refer to: the summary for each joint venturewhich appears at the end of each company section in "The Companies"portion of the manuscript; Table 11 in the section "A Cross-CompanyAnalysis"; and "A Summary of the Major Themes from thisInvestigation".9CHAPTER TWOA REVIEW OF THE LITERATUREA. Joint Venturing in an International Setting1. IntroductionThe complexion of businesses and organizations as we haveknown them for decades is rapidly being altered. More and more,large multinational companies seek to expand to new markets, arequick to require technology found in other firms, and recognizeintense pressure to compete for the rewards of global expansion.Based on the outcome of a seminar on global issues held in 1990, adefinition of globalization related to how organizations operate isoutlined by Barnett (1990:7-8),Globalization is the integration of business activitiesacross geographical and organizational boundaries. It isthe freedom to conceive, design, buy, produce,distribute, and sell products and services in a mannerwhich offers maximum benefit to the firm without regardto the consequences for individual geographic locationsor organizational units. There is no presumption thatcertain activities must be located in certain places orthat existing organizational boundaries areinviolable...The global firm is not constrained bynational boundaries as it searches for ideas, talent,capital, and other resources required for its success.International joint ventures are one vehicle for theaccomplishment of global corporate goals. In conjunction withinternational demands, new solutions of how to do business areeagerly sought in all forms of multinational companies. Recentbooks and articles expound on the multinational mission, (Beamish,1988; Egelhoff, 1988; Hedlund, 1986; Leontides, 1985; Prahalad andDoz, 1987); search for transnational solutions for the managementof enterprises which span multiple national borders; (Bartlett and10Ghoshal, 1989); and begin to probe complex control and humanresource issues which exist in firms when multiple national groupsare present (Pucik and Katz, 1986; Doz and Prahalad, 1986).Although the literature has begun to address some of theseimportant issues, relatively little investigation has been devotedto HRM in international joint ventures. This is the case despitethe 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 thecompetence, motivation, and general effectiveness of itshuman organization. Of all the tasks of management,managing the human component is the central and mostimportant task, because all else depends upon how well itis done.In the context of joint ventures more specifically, HRM cancontribute to the achievement of organizational goals related tostaffing, promotion, employee loyalty, decision-making andcompensation, for example (Cascio and Serapio, 1991; Pucik, 1988;Shenkar and Zeira, 1987). Further, effective HRM policy mightserve to bridge discrepancies when diverse social or culturalsystems combine (Baird, Lyles, and Wharton, 1989; Teagarden and VonGlinow, 1989). In addition, learning and experimentation in theorganization may be enhanced through HRM policy and practice(Bartlett, Doz and Hedlund, 1990; Parkhe, 1991). Technologytransfer can be orchestrated related to transfer, training andreward policies (Collins and Doorley, 1991).Despite evidence to suggest that executives and other membersin an organization are well advised to focus on HRM in theirinternational operations, HRM issues still receive minimal11attention. Frayne and Geringer (1989) note that "of the 100 to5,000 hours typically involved in creating IJVs, only about 4% ofthe time has been spent resolving human resource issues".In international operations, there are special requirementsfor the coordination of activities, including HRM, across companyboundaries. In particular, an understanding of intercompanyrelationships is important. According to Harrigan (1985:40), "themissing link in understanding joint strategies is analysis ofdynamic interaction of the three key actors", (i.e. between theparent firms and the JV). Considering company interrelationships,Ohmae (1990:136) observes,To my knowledge, however, not one scholar specializes inthe study of intercompany [his emphasis] relationships.This is a serious omission, given the importance of jointventures and alliances in today's global environment. Weneed to know much more than we do about what makeseffective corporate relationships work...We mustrecognize and accept the inescapable subtelties anddifficulties of intercompany relationships. That is theessential starting point. Then we must focus not oncontractual or equity-related issues, but on the qualityof the people at the interface between organizations.Finally, we must understand that success requiresfrequent, rapport-building meetings on at least threeorganizational levels: top management, staff, and linemanagement at the working level.With these considerations in mind, this research examines HRMas a component of both intercompany relationships between the JVand the parents, as well as how HRM operates within the venture.Related to a requirement to investigate HRM in internationalventures, the background for this research is elaborated in thefollowing sections in which literature relevant to this topic isreviewed. Select issues concerning international joint venturesand HRM are considered. In addition, there is some indication thatnational and corporate culture, degrees of flexibility in the12organization, and managerial expertise are likely to relate to howHRM operates in international JVs. These areas are brieflyelaborated, as well as the implications of organizational learningin the venture related to how HR policy and practice operates.2. The Form and Functioning of Joint VenturesInternational joint ventures represent a unique form of theglobally oriented corporation. The number of international JVswhich are formed is rapidly increasing, with the greatest incidenceof collaborative agreements between two partners (Hergert andMorris, 1988). Depending on the requirements of the JV, thepartners may have differing roles or functions. Lei and Slocum(1991) describe ventures which are either "specialized" or "value-added". In specialization ventures, each partner contributesspecific expertise to the operation. For example, one partner inthe JV may manufacture the product, while the other partner doesthe marketing. In a value-added venture, the partners share in thecreation of product value in the venture. In this instance, the JVpartners might jointly design and manufacture a product, drawing onsynergistic capabilities of the staff in both parent organizations.Within the two partner venture, Killing (1983) describes threelevels of management involvement or control by the partners:dominant parent JVs, shared management ventures, or independentventures. The dominant parent JV is closest to the idea of awholly-owned subsidiary, and one parent has primary managementresponsibility for the venture. In a shared management JV, bothparents have a meaningful role, and provide input as to how theventure operates. In independent JVs, the venture is relatively13free of interference from either parent, and the JV General Manageris often given responsibility for decisions which affect theventure.3. Management of the VentureThe management of joint ventures is a complex process. Ifparent firms decide that a joint venture is required to accomplishdesired strategic goals, then the partners must be prepared to dealwith difficult issues related to joint ownership and jointdecision-making in the venture. Collins and Doorley (1991) observethat in successful JVs, much advance planning is required, and theventure is likely to be championed by senior executives in theparent firms. The venture plan will ideally consider marketoptions, business strategy, resource requirements, funding - allrelated to partner compatibility. Collins and Doorley elaboratethat company style and corporate culture should be a "majorconsideration" as to whether two parent firms are able toeffectively join together in a joint venture operation. Differentgoals, perceptions and values of parent firms may result incorporate disharmony, and frequently to the failure of the venture(Dymza, 1988; Killing, 1983). For example, do prospective JVpartners have similar operating styles related to decision-makingand HR management? Is there partner compatibility related to thelevel of employee participation desired in the JV? To avoidmisunderstanding between the partners, these issues might beaddressed in early JV negotiations, before the actual start-up ofthe venture.In addition to planning for the venture, Collins and Doorley14(1991) suggest other criteria which will enhance the success ofvarious forms of strategic alliances. These "golden rules" ofpartnership 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 ofnational culture and corporate culture• orchestration of technology transfer• learning from the partner's strengthsTaken together, the preceding points offer some guidelines forfurther research on how the the relationship between joint venturepartners might be managed.4. The JV Board StructureMost joint ventures have a dual-board structure which includesa formal Board of Directors, which is usually comprised of seniorrepresentatives of both parent firms; and an advisory committee,which is often the operating group for the venture. Generally, theBoard of Directors is concerned with the ongoing success of theventure, as well as the protection of parent interests. The Boardtypically approves the annual operating plan, reviews budgets, andapproves major capital expenditures. According to Collins andDoorley (1991), in a 50/50 JV the Board would have equalrepresentation from each of the parents. Members of the board arechosen to "reflect the main contributions of each parent". TheGeneral Manager of the venture will often sit on the Board, but may15not always have full voting rights. In contrast, the advisorycommittee is comprised of senior managers in the venture, and isactive in the day-to-day operation of the company. The advisorycommittee informs the Board of Directors of key issues forconsideration when Board approval is required.5. Balancing Stakeholder InterestsIn early venture negotiations, the parents need to decide whohas management responsibility for the venture, in which specificareas, and how key positions in the venture are to be staffed. Inaddition, the level of autonomy and decision-making responsibilityallocated to JV managers (as opposed to parent managers), must bedecided. For the venture to achieve maximal results, members ofboth the JV and parent organizations will work toward the successof the venture. Lorange and Roos (1992; 1991) point out that thereare two political considerations in strategic alliances. Theseinclude:• Stakeholder Blessing - Are both internal (i.e. JV) andexternal (i.e. parent) interest groups convinced that theventure is desirable?• Internal Support - Are a broad range of employees in theventure convinced that the venture is viable? Are theycommitted and able to further the JV goals?Related to internal support, if managers and other groups in theventure view the JV as threatening to their careers or personalgoals, then enthusiastic, positive contributions to the venture arelikely to be curtailed.The extent to which HRM or other strategic management16practices are adopted from one parent influences the corporateculture and dominant values present in the venture. For example,Frayne and Geringer (1989) propose that training content, the formof performance appraisal, or type of compensation and reward areexpected to affect the JV corporate identity. If one parent isresponsible for the management contract, including HRM, in theventure, then theoretically that parent is more likely to infusethe venture with its practices, strategic objectives and operatingstyle. Further, dominance by the parents in the venture willaffect the level to which JV autonomy is possible.The development of a corporate identity in the venture islikely to occur under some of the same conditions which operate inwholly 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 companywhich is meaningful to employees and continuallyreinforced• communication is open at all levels in the organization• employees are actively involved• HRM practices reinforce company valuesIn joint ventures, evidence of these characteristics may contributeto the development of a unified JV corporate culture which isindependent from that of the parent firms.17B. Human Resource Management1. HRM in PerspectiveThere are multiple roles and demands for HRM in progressiveorganizations. London (1988) describes that HR staff operate asthe roles of educators and developers, innovators, evaluators,leaders, consultants, and futurists. In order to have sufficientpower to fulfill at least some of these roles, HRM staff requireinformation, resources, and support from other groups (Kanter,1988).HR staff are accountable to multiple stakeholders in theorganization (Tsui, 1987), and often may be in the often precariousposition of choosing which group's interests are to be met first.For example, production interests may need to be balanced withemployee concerns related to overtime or time-off policies. Injoint ventures, multiple stakeholders may include not only JVemployees such as supervisors, managers, union representatives, orproduction staff, but also various employees belonging to theparent firms.In recent years, the expectation for HRM is that it isstrategic 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 whichwill determine HR roles in the global competitive environment ofthe 1990s. HRM must be responsive to:• the creation of a unified corporate vision• the development of flexible, decentralized organizationalstructures18• the establishment of HR policy which enhances qualityconsciousness• a requirement for increased international learning,including technology transfers• flatter, less bureaucratic organizations• lean staffing• the motivation of a diverse workforce with high personalexpectations• respect for unique differences while seeking commonvalues and approaches.Many of these issues will be dealt with by managers and employeesat all levels in the organization. In some instances staff in theHR department will work with other employees to develop creative,appropriate, enriching HR policies and practices which benefit bothemployees and the organization.2. The Dimensions of HRMConsistent with the literature, five dimensions of HRM will beconsidered 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 fromDolan, S.L. and Schuler, R.S. (1987). Personnel and Human Resource Management in Canada. St. Paul: West Publishing Company, and fromSchuler, R.S. and Jackson, S.E. (1986). Managing Stress ThroughPHRM Practice, Research in Personnel and HRM, 4, 183-224.19TABLE 1Human Resource Management Practice OrientationsPlanning^Informal ^ Formal^Loose TightShort-term^ Long-termExplicit Analysis Implicit AnalysisNarrow Jobs ^Broad JobsSegmented Design Integrative DesignLow Employee Involvement ^ High Employee InvolvementStaffingExternal Sources^Broad PathsMultiple LadderImplicit CriteriaOpen ProceduresPerformance Appraisal ^Behavioral criteria ^ Results CriteriaShort-term Criteria Long-term CriteriaPurposes: Development, Remedial, MaintenanceLow Employee Participation ^ High Employee ParticipationIndividual Criteria Group CriteriaReward^Low Base Salaries ^ High Base SalariesInternal Equity External EquityFew Perks ^Many PerksStandard, Fixed Package Flexible PackageLow Participation^ High ParticipationNo Incentives Many IncentivesShort-term Incentives ^ Long-term IncentivesLittle Employment Security High Employment SecurityHierarchical ^EgalitarianTraining^Short-term ^ Long-termNarrow Application Broad ApplicationUnplanned, Unsystematic ^Planned, SystematicIndividual Orientation Group OrientationLow Participation ^ High ParticipationAdapted 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 SourcesNarrow PathsSingle LadderExplicit CriteriaClosed Procedures 20Further, in this investigation, the communication system isconsidered as a sixth dimension of HRM-related activities. In anextensive survey of American managers, communication activitieswere found to make the biggest contribution to managerialeffectiveness (Luthans, 1988; Luthans, Hodgetts and Rosenkrantz,1988). In the work by Luthans et al. communication was considereda separate, yet complementary activity to HRM practices such asmotivating/rewarding, staffing, and training and development, forexample. Additionally, communication is considered important tohow employees perceive the organizational environment to operate(Joiner, 1987; Kanter, 1989; Morgan, 1988; Schein, 1986).The six dimensions for HRM are outlined in the followingparagraphs.a) Communication - Systems for communication operate atmultiple levels in the organization and may include, for example,meetings, written correspondence, television or telephone. Schein(1986) notes that communication may be either formal andinsitutionalized, or informal. In addition, communication may beopen and generally involve employees, or closed and specific toselected group members. As the complexity of the organizationincreases, forms of communication such as transition teams, taskforces, or joint-management teams may be used to create informationlinkages across diverse and often geographically decentralizedgroups (Barlett and Ghoshal, 1989; Joiner, 1987; Kanter, 1983;Prahalad and Doz, 1987).b) Planning - Planning involves forecasting human resourceneeds for the organization, and the appropriate steps necessary tomeet those needs. Human resource planning aims to anticipate21shortages or surpluses of human resources and to correctimbalances; anticipate needs related to employee development;identify employee skills and to provide opportunities foremployees; and link HR plans with the business plans of theorganization. HRM planning may vary according to whether it islong-term or short-term, formal or informal, tightly or looselylinked to corporate planning, explicit or implicit, integrated orsegmented, with high or low levels of employee involvement.c) Reward - Reward systems are the mechanism by whichorganizations seek to evaluate the contributions of employees inorder that direct and indirect monetary and nonmonetary rewards canbe distributed. Rewards are provided based on legal regulationsand the organization's ability to pay. Reward will vary accordingto whether there exists high or low base salaries; internal orexternal equity; few or may "perks"; and flexible or fixed andstandardized packages.^Rewards may encourage employeeparticipation; have incentives built in; be based on short-term orlong-term incentives; have employment security; and be eitherhierarchical or egalitarian based.d) Staffing - Staffing is usually defined as a search forand obtaining potential job candidates in sufficient amount andquality in order that the organization can renew itself and filljob needs. Staffing objectives are also concerned with satisfyingthe needs of job candidates. Not only should job applicants beattracted to an organization, but it is desirable that they beretained.^Staffing may be done internal or external to theorganization, follow broad or narrow career paths, offer single ormultiple promotional ladders, use explicit or implicit criteria for22promotion, or use closed or open (i.e. job postings) procedures.e) Training - Training and development activities refer toan attempt to improve current or future employee performancethrough new skill or knowledge acquisition, or the adjustment ofemployee attitudes. Training may focus on short-term or long-termneeds; narrow or broad applications, (i.e productivity versusquality of work life). Training may be planned and systematic orspontaneous, unplanned or unsystematic; have a group or individualorientation; and allow low or high employee participation.f) Performance Appraisal -^As a formal structure,performance appraisal (PA) is a system which measures, evaluatesand influences an employee's attributes, behaviors, andperformance. Data obtained from the appraisal may be used tocorrect employee deficiencies or to suggest alternative jobplacements for employees. Appraisal may vary according to whetherthe process emphasizes how, versus how many things an employeeaccomplishes; whether criteria are behaviorally or resultsoriented; the extent to which evaluation criteria are short-term orlong-term; whether the purpose is developmental, maintenance orremedial; the degree of employee participation expected; andwhether individual or group appraisal criteria are stressed.Although communication, planning, staffing, performanceappraisal, training and reward systems in progressive organizationsare linked, and generally responsive to the business and humanrequirements of the organization, each HR dimension may varyautonomously. For example, in response to HRM needs in aninternational JV, performance appraisal maybe widely modified fromthe practices of the parent firms, while other practices related to23training 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 alsooccur. For example, in the area of performance appraisal, the JVmay be the same as one or both parents related to a behavioralorientation in the appraisal, but differ from the parents on thelevel of employee participation in the process. Selectedmodifications to HRM are based on an open system approach, in whichHRM programs and activities fit the requirements and constraints ofthe organization based on its unique environment (Tsui, 1987). Ininternational JVs, the venture is expected to have different HRMand other strategic operating requirements from each of the parentfirms. As a result, adjustments to HRM policy and practice will bemade to best match the specific needs of the venture.C. HRM in Joint VenturesIn a review article which examines human resource managementin 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 toHRM issues considered by previous researchers, Shenkar and Zeiraidentify a number of HRM issues in JVs which were problematic.These issues include: staffing, promotion, loyalty of employees tothe JV, decision-making, communication, and compensation. Inaddition, the authors note that research to date has ignored manyfundamental HRM issues in joint ventures such as careerdevelopment, termination of service, demotion, absenteeism,24employee attitudes, control patterns, job design, training, and jobrotation.Further, based on their literature review, Shenkar and Zeira(1987) suggest two structural characteristics of joint ventureswhich significantly affect HRM, as well as other management issues.These characteristics are:• Multiple ownership - Parent firms might differ relatedto:^private or state-owned; size; reputation orcompetitive advantage; industry focus; unionized or not;human resource orientation; objectives for joining theventure; or the extent to which one parent tries todominate the JV.• Multiple national affiliation - The JV is a setting forindividuals who often differ in national origin, culturalvalues and social norms.Shenkar and Zeira identify JV characteristics, and omissions in theliterature related to this topic, which form an important guide forfuture research on international joint ventures. However, sincethe publication of the 1987 article, the international literaturehas barely begun to address many of these issues related to HRM ininternational JVs. There are some exceptions.Notably, Pucik (1988) examined the causes of HRM-relatedproblems in 23 joint ventures established between American orEuropean manufacturing firms and Japanese partners, located inJapan. Pucik found that in the particular case of JVs in Japan,low performance in the ventures was related to an inability on thepart of the Western partner to manage the cooperative relationship.Several of the problems encountered were related to poorly designed25and executed HRM strategies. Further, these problems were embeddedin national cultural differences between Western and Japaneseparent firms, and their strategic orientations as to how to dobusiness. More specifically, difficulties in the management of theJV were related to:• Staffing - frequent changes among Japanese managers whichresulted in inconsistent communication links with theWestern partner; over reliance on the Japanese partner toobtain suitable recruits which reduced control overstaffing by the Western partner• Training - utilization of external training programswhich failed to provide socialization of employees to thevalues and norms of the JV; the venture became aconvenient training ground for the Japanese parentcompany• Performance Appraisal - use of Western-style PA which wasinappropriate for Japanese staff related to culturaldifferences (i.e. preferences for group vs. individualevaluation; level of explicit vs. implicit feedbackconsidered desirable)• Reward - high wage costs in order to attract employeesfrom the Japanese parent firm; perceptions by theJapanese that Western expatriates were bettercompensated.Other research further substantiates how the presence ofmanagers from different national cultures adds to managementcomplexity in international joint ventures. For example,Mendenhall and Black (1990) consider the subtleties of conflict26resolution in Japanese-American ventures. The authors describe 1.the Japanese do not view conflict and "harmony" on the samecontinuum (as the authors claim is the case with most Americans),and 2. the desire by Japanese to obtain harmony is specific tocontextual conditions (i.e. whether "insiders" or "outsiders" tothe group are present). These differences suggest implicitdifferences 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 partnershipsbetween Japanese and Americans, differences existed related tostrategic objectives and how information is controlled and managed.Peer task teams across the parent companies were viewed as one wayto bridge strategic and cultural diversity. In addition, inearlier work by Peterson and Shimada (1978), communicationdifficulties between Japanese and American executives due tolanguage differences were singled out as the most pressing problemin the ventures investigated.The importance of understanding the cultural implications ofinternational venturing is also underscored by Phillips (1989). Inthe investigation of a 50-50 American-Japanese joint venture,Phillips found that divergent management styles, inflatedexpectations and disputes over quality and labor practices resultedin ongoing problems in the venture. Many of the differences instyle and value orientations stemmed from national culturalheritage. Phillips comments (1989:39),(American) workers grumble about the daily calisthenicsand the boring dedication ceremonies Japanese seem tolove. And managers can't understand Japanese frugality:At one plant, the size of memo paper caused a 40-minutedebate.27In an exploratory investigation conducted in the People'sRepublic of China, Teagarden and Von Glinow (1989) consider HRM ininternational joint ventures between Chinese and foreign firms.Teagarden and Von Glinow found that the cultural and social systemsas they operate in China were a significant factor which affectedJV effectiveness. More specifically, a Confucian influence,decision-making structures, the form and function of relationships,face-saving, and ideological assumptions influenced HRM. In otherresearch, major attitudinal differences were found between Americanand Chinese managers in joint ventures regarding preferences fororganizational structure, work orientation and reward systems(Baird, Lyles and Wharton, 1989).In addition, Cascio and Serapio (1991) examine HRM in fourinternational alliances. The authors consider issues related tothe blending of national culture and management style, job design,staffing, training, performance appraisal, compensation andbenefits, career issues, and labor-management relations. Cascioand Serapio summarize the lessons which are learned from theirinvestigation:• when national and corporate cultures are blended, thepartners need to spend time building trust; understandingand accommodating each other's interests is important• job design can be enhanced when the partners are willingto learn from one another• recruitment and staffing policies should be well-definedin the early stages of the venture• orientation and training of employees should focus on thepreparation of employees to deal with the social context28of their jobs, as well as the development of technicalskills• performance appraisals need clear objectives, liberaltime frames in which to achieve results, and built-inflexibility related to changing market and environmentaldemands• compensation and benefits policies should be uniform toavoid employee feelings of inequity• careers opportunities must be ensured for local managers• in the early stages of the venture, the partners mustagree on suitable terms for the labor-managementagreementConsidering the results of this research, time is required to builda stable relationship between diverse partners in an alliance. HRMpolicy ideally is determined in the early stages of the venture,and is applied consistently. The partners may potentially learnnew capabilities in an environment when there is an openness to newideas and operating styles. The research by Cascio and Serapio isan important building block to an understanding of how strategicHRM operates in joint venture firms. The present research aims toboth corroborate and extend the lessons already extracted from theearlier investigation.Datta and Rasheed (1989) conceptualize the importance ofplanning in international JVs which considers the variousconditions affecting HRM. For example, variables to consider inthe planning process include the local labour market, differencesin cultural and management styles between the parents, and parentobjectives. Related to this last point, a degree of compatibility29between parent objectives is important if venture partners are towork effectively together. Further, Frayne and Geringer (1989)suggest that HRM practices are one way in which parent firms canassert influence, and accomplish their strategic objectives in theventure. Depending which parent manages staffing, training,reward, and performance appraisal, then implicit control in the JVis more likely to be exerted by that parent.In the preceding paragraphs, work was reviewed whichspecifically focuses on HRM in international joint ventures. Inaddition, theory and research in a broader range of organizationsrelated to corporate culture, organizational learning andinnovation, and national culture are thought to offer someunderstanding as to how HRM might operate in JV firms. Relevantissues are considered with reference to joint ventures, and areelaborated in the following sections.D. Issues for Consideration in Joint Venture Firms1. Corporate CultureInterpretive approaches to the study of organizations andculture suggest that culture is both process and product,externally and internally situated as meaning, and evolves overtime (Berger and Luckmann, 1967). Members of a group createcumulative interpretations of their reality based on ongoingactions and interactions. Shared cognitive frameworks exist aboutnorms, values and preferences and affect how members of a groupdemonstrate their familiarity with rules of appropriate behavior(Leary, 1983; Goffman, 1959). The informal components of culture30provide implicit patterns for action and a "governing sense" forthe 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, andmay be demonstrated by office layouts or the manner of dress. Ata deeper level, values govern behavioral patterns and are lessaccessible. In some instances, values are not readily identifiableeven to individuals or to groups who influence, and who are in turninfluenced by the governing values. At the most elusive level ofcorporate culture are basic assumptions. Schein refers toassumptions as invisible, deeply embedded characteristics which arerooted in relationships to the environment, the nature of time,activity, and space. These assumptions are related to the nationalcultures to which individuals belong, and represent enduring,social characteristics.In addition to culture existing at multiple levels, culturehas both external and internal elements (Schein, 1986). Externalelements of culture include consensus on 1. a core mission; 2. themeans 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 corporateculture include 1. a common language and communication system, 2.consensus on group boundaries (who is in or out); and 3. how powerand influence are stratified. Related to this, leaders in theorganization and HRM staff might help to provide, for example, afocus for employees of what is valued or normative behavior; how31critical incidents are to be handled; or the criteria forrecruitment, rewards, or appraisal.The company culture is related to the corporate philosophy ormission, 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 HondaMotor Corporation has an energetic, innovative culture which wasdeveloped by the top management team. In accordance with thecorporate philosophy, an atmosphere is created at Honda in whichaggressive, new product development is inspired. To encourageinnovation, recruitment systems are designed which match strategicfirm objectives.In multinational organizations, different goals, perceptionsand values of parent firms may result in corporate disharmony, andfrequently to the failure of the venture (Dymza, 1988; Doz andHamel, 1991; Killing, 1983; Parkhe, 1991). Further, partnerheterogeneity may hamper organizational learning (Doz and Shuen,1991). Norms which foster flexibility and learning may serve tobridge differences in strategic orientations or national cultureswhich exist between the partner firms (Parkhe, 1991).2. The Creation of Innovative OrganizationsResearchers have struggled with a concept and definition ofhow organizations learn, adapt, and change to accommodate newcontingencies and environmental conditions (Argyris and Schon,1978; Chandler, 1962, Lyles, 1988). Organizational theory hasconsidered learning at two levels in companies: 1. at a strategiclevel major ideological changes are instituted; and 2. at a32tactical level modifications to practices occur, but on a scalethat is unlikely to transform the course set for the company(Jelinek, 1979; Lyles, 1988; Pettigrew, 1985). Organizationallearning has been variously described as adaptation and response tonew 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, learningrefers to the creation of new ideologies, systems and processes atthe organizational level.Although learning and innovation are generally important inorganizations, this capacity is critical in competitivecorporations which operate on a global basis. In complexorganizations such as joint ventures, where multiple cultures andrequirements for innovation exist, then "organizational learningbecomes a threshold condition for alliance success" (Parkhe, 1991).One way in which a capacity to learn is enhanced in joint venturesis through the development of flexible structures and relationshipsbetween the parents and the venture. Of increasing importance isthe ability of JV managers to revise HRM and other systems inresponse to changing internal and external environments.Organizations must learn new competencies. Accordingly,"organizations that learn quickly and well have a distinctadvantage in implementing change" (Nord and Tucker, 1987:32). Oldsystems are discarded and replaced by more strategic andappropriate concepts and practices. The capacity for organizationsto alter HRM or other management systems in international jointventures prevents management orientations from becoming obsoleteover time. In global firms, an experimentation-based policy33process is more likely to take advantage of organizational varietyand diversity, resulting in more creative organizational outcomes(Bartlett, Doz and Hedlund, 1990).HRM systems can either support or curtail an environment forlearning. Pucik (1988:77) advocates "that the transformation ofthe HR system to support the process of organizational learning isthe key strategic task facing the HR function in firms engaged ininternational cooperative ventures". According to Pucik, learningin 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 strategiesIn addition, HR staff and other managers in the organization needto accept the responsibility for the creation of conditions whichresult in learning.^Learning is a process which requiresintegration. To enact this process the HR department will requiresupport from other managers and employees."Politics in organisations breed in times of change"(Pettigrew, 1985:43). Change may threaten the existingdistribution of resources, affect salaries or promotionalopportunities, and shift the control of tasks. New roles for34members of the organization may be required. For example, insystems where there is high employee involvement, then the role ofsupervisors will feasibly be reconfigured. In the case ofadministrative innovations, permission for change may be necessaryprior its implementation (Frost and Egri, 1991; Kanter, 1983).As already mentioned, strategic alliances have numerousstakeholders who are both internal and external to the alliance(Lorange and Roos, 1992; 1991). With respect to strategic andtactical changes in alliances, and more specifically in jointventures, support and approval of the multiple interest groups(i.e. JV and parent employees), is advisable prior totransformations in organizational values or systems. Toeffectively implement learning and change, HR staff will requireboth knowledge of the concerns of various stakeholders (Kanter,1983; Tsui, 1987), as well as the political skills necessary tomanage change.Finally, innovation may be more likely in organizations wherethere is support for multiple values and perspectives. Evans(1986) describes that complex organizations, with the potential forinnovation, are likely to exhibit paradoxical qualities. Examplesof "value dualities" are systems which have simultaneous elementsof control and flexibility, formalization and informality, orindividuality and teamwork. Cameron and Quinn (1988) also endorsethe benefits to organizations of a competing values approach, andsuggest that highly effective organizations pursue competing,paradoxical criteria simultaneously, rather than a single set oforganizational value criteria. More recently, Evans and Doz (1990)elaborate on qualities of the "dualistic organization", in which35competing value characteristics are effectively balanced. Evansand Doz suggest that "dynamic  balances" may be created inturbulent, complex organizations when, for example, teamwork iscreated among strong individuals, opportunism is planned, orpartnerships are formed between competitors. Evans and Doz addthat a starting point for the introduction of dualistic thinkinginto organizations is through various HRM processes.3. National Culture as ContextThe national culture to which an individual belongs has anindelible influence on both attitudes and behavior. As Hofstede(1980) describes, the shared ideas of national cultures build uponsymbolic frameworks, mental programs and conceptual distinctionsthat shape social action. Underlying assumptions prescribe sharedways of thinking, perceiving and evaluating the world, self, andothers (Ronen, 1986). Attitudes toward uncertainty and change, ortask versus social orientations are examples of national culturalassumptions which affect perceptions of how the world shouldoperate.Culture is passed from one generation to another. Cultureembraces the concept of morality, determining for each group whatis 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 communallife. In the words of Hofstede (1980:27) the essence ofculture is collective mental programming. It is the partof our conditioning that we share with other members ofour nation, region, or group but not with members ofother nations, regions or groups.An early anthropologist defined culture as "that complex whole36which included knowledge, belief, art, morals, law, custom, and anycapabilities and habits acquired by man as a member of society"(Tylor, 1924:1).Consistent differences in value systems and socialorientations have been observed among national cultural groups(Child, 1981). To illustrate, a study conducted by Meindl, Huntand Lee (1987) examined the differences between Western"individualism" and Eastern "collectivism". In an individualisticculture such as the United States, ideas tend to arise fromindividual action, competition is positive and people are self-governing. Alternately, in the collectively-oriented cultures ofSouth Korea, China and Singapore, action is generally agreed uponby consensus, there is greater dependence on the larger group, andrelationships evolve around joint responsibility. Self-interest,so prominent in Western philosophy, is less relevant in acollective society.In another example, related to an orientation to activities,North Americans generally see themselves as "doers" and seekaccomplishments 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 cultureswhich focus more on "being" than "doing", there tends to be moreof a natural acceptance of the pace of life, with little attempt toforce or influence outcomes. Further, related to a time dimension,Americans have a slightly future orientation and progress is oftentied to future goals. Eastern societies tend to focus more on thepast and value the importance of societal customs and traditions(Adler and Jelinek, 1986).374. National Culture in OrganizationsLaurent (1986) studied groups of managers from differentnational backgrounds and found that nationality had three times theinfluence as a predictor of managerial assumptions than any othercharacteristic such as age, education, function or type of company.Accordingly, national cultures influence the corporate culture oforganizations, (Adler, Doktor and Redding, 1986; Adler and Jelinek,1986; Laurent, 1986). Corporate culture is represented in the moresurface values and norms present in organizations, and is unlikelyto significantly alter underlying assumptions which stem fromnational culture assumptions. Laurent (1986:99) writes,Deep-rooted assumptions could then be better understoodas the historical result of broader cultural contextslike civilizations and nations. Organizations would onlyselect from the available repertory of their largercultural context of a limited set of ideas that best fittheir own history and modes of implementation.Consistent with this argument, one might expect a manager fromJapan who works in a U.S. based joint venture to modify certainelements of corporate culture such as dress or open door policies,without actually changing basic, governing assumptions as toauthority or appropriate levels of formality. These latterassumptions are rooted in the history and traditions of Japanesesociety, and as such are less malleable or subject to alteration.Related to the implications of national culture forinternational joint ventures, research has generally suggested theinfluence of the socio-cultural environment on the managementprocess, (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 which38operate within different national cultures are selectivelytransferred into specific HRM practices (Ishida, 1986; Negandhi etal. 1985; Peterson and Schwind, 1977; Schneider, 1988). Variousresearchers have found different preferences for compensationsystems (Atchison, 1989), training and development (Tang andKirkbride, 1989), and performance appraisal (McEvoy and Cascio,1989; Whitely, Tang and Kirkbride, 1989) related to the nationalculture of employees. Further, management practices are notnecessarily transferable across cultures. For example, Western-style performance appraisal systems are considered inappropriate inHong Kong, where the concept of "face" precludes the use ofconfrontative feedback. Americans prefer individually-orientedappraisals, as opposed to Taiwanese workers who are more likely toprefer a group focused appraisal (McEvoy and Cascio, 1989).Much has been said about the differences which exist betweenJapanese and American management practices. Related to variationswhich stem from national culture origins, Japanese managementphilosophy is described as based on lifetime employment, slowevaluation and promotion, non-specialized career paths, groupdecision-making, implicit control mechanisms, and collectiveresponsibility (Ishida, 1986; Peterson and Shimada, 1978).However, some modification in long standing management practice ispossible. Related to this, there is a recent trend in Japan towardrestructuring wage controls, and a greater focus on performance-based evaluation and rewards (Mroczkowski and Hanaoka, 1989). Incontrast, American management systems focus on individualaccomplishment, hiring externally, and explicit control mechanisms.Performance tends to be objectively measured and rewards are39distributed based on equity and merit.In research in 37 joint ventures, Killing (1983) notes thatmanagers of different nationalities have varying attitudes tofundamental assumptions regarding the importance of materialwealth, the value of on-the-job performance and the desirability ofchange. According to Killing (1983:57),The greater the cultural gap between the parent's basecountries, the greater the problem (in the IJV). Afundamental hindrance to the creation of a core skill cansimply be the difference in language. Many jointventures formed in Japan in the 1960s between Japaneseand North American firms failed in the early 1970s.Cultural differences were cited as a major problem inmany of these.5. Joint Ventures as a Case of Socio-cultural MergingThe merging of diverse cultures within the same organizationis a complex and difficult process. In international jointventures, the parent firms often represent diverse national orcorporate cultures. For example, in an American-Japanese jointventure, each cultural group brings to the JV different values,expectations and operating procedures. In this instance, Japaneseand American managers may need to work together to create neworganizational forms appropriate to all groups in the venture.Alternately, cultural merging may occur between groups with theirorigins in the same national culture. Again in the context of ajoint venture, employees may be consolidated who are all Americanin cultural origin, but who come from parent organizations withdifferent corporate styles and ideologies. Differences incorporate philosophy might relate to appropriate levels of risk-taking, or the amount of training offered to employees.40In organizations where cultures combine, ambiguity, or thedenial of another's culture may result (Martin and Myerson, 1988).In an American-Japanese JV for example, members from diversecultures may find the values or habits of the other group confusingor inappropriate. Ishida (1986) examined the transferability ofJapanese values and practices to non-Japanese subsidiary operationsand discovered numerous problems which were related tophilosophical differences between the two groups. Ishida comments,The difference in the concept of job leads to conflictbetween Japanese and non-Japanese working in the sameorganization. The non-Japanese cannot bear the vaguenessof job boundaries and complain that the Japanese bossoften trespasses on his own area of authority. TheJapanese, on the other hand, criticize the non-Japaneseworkers for 'doing only what they are told to do' andcomplain that they 'lack initiative and flexibility'.Subsequently, a learning process is required in which group membersdevelop a new understanding of expected requirements in theorganization. In addition, group members will need to work towardan appreciation of an unfamiliar culture. When different nationalcultures combine, the possibility exists for either positive,creative outcomes - or stress (Adler, 1986).According to Moran and Harris (1982), cultural synergy ispossible when new forms of learning transcend the boundaries ofseparate cultures. National cultural differences are neitherignored nor minimized, but are appreciated as a source forinnovation and change. Managers and other employees are morelikely to combine elements of contrasting value systems or culturesin organizations where there is flexibility, trust and support forchange. A philosophy which establishes a norm for pluralism inperspectives and capabilities is important (Bartlett and Ghoshal,411989; Prahalad and Doz, 1987).The merging of subcultures in joint ventures is likely tonecessitate some degree of value negotiation, and openness toanother's point of view. When opposing belief structures arebrought together, compromises are required related to discrepantbeliefs or political differences (Walsh and Fahey, 1986). In thiscontext, strategy-making will ideally be participative (Miller andFriesen, 1984) and involve members of each group.In general, mergers of organizations tend to ignore theimportance of human resource dynamics (Marks, 1989; Marks andMirvis, 1986). In corporate mergers, Schweiger and Weber (1989)note the importance for determining how HRM policy and systems areto be combined and they recommend either: (a) partial integrationof HRM policies of both firms, or (b) leaving the policies andsystems of the firms separate. In research which examines Japanesesubsidiaries in Taiwan, Japanese managers selectively added aJapanese influence to local management practices; and in someinstances Japanese systems were implemented in entirety (Negandhiet al. 1985).Related to these issues, how do joint venture companies manageHRM policy and practice when national cultures or corporatecultures combine? Is there an integration of HRM policy adoptedfrom both parents and applied to all JV employees? Alternately,are certain aspects of HRM policy applied to different subgroups inthe venture? Further, is there a role which the HR department canplay in diffusing the difficulties experienced in companies whendiverse cultures are combined?42E. SummaryInternational joint ventures are used increasingly as amechanism for the enhancement of firm competitiveness on a globalbasis. Although the role of HRM in international corporations hasbeen recognized by researchers as important, there has been verylittle research on the role and function of strategic HRM ininternational joint ventures. The current research examines HRM asit operates within the venture, and related to intercompanyrelationships.Management in joint ventures is complex. In those studies inwhich HRM in international joint ventures was investigated, issuesof concern relate to multiple ownership and multiple nationalaffiliation (Shenkar and Zeira, 1987). Further, partner ability tomanage the cooperative relationship when multiple national andcorporate cultures combine was considered to be important (Cascioand 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 andstaffing policies, training programs and fair compensation policiesto be salient issues in joint ventures. Although many of theseissues are also relevant in wholly owned companies, complexity isadded to how HRM operates when multiple parent firms are involved.For this reason, planning in joint ventures is especially importantin order that differences in cultural and management styles betweenthe parents and the venture are considered (Datta and Rasheed,1989).Beyond the realm of investigations specifically conducted in43joint ventures, a broader band of organizational literature offersinformation as to how joint ventures might operate. Corporateculture is considered with respect to how people in organizationsconstruct meaning, and the levels of values and assumptions whichoperate. The company culture is interrelated to the corporatemission, 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 bothtactical and strategic levels is of interest. In companies inwhich global competitiveness is a goal there are specialrequirements for innovation and transformation. As Parkhe (1991)describes, in strategic alliances an ability to learn is crucial tothe attainment of organizational successes. HRM systems can eithersupport or curtail an environment in which learning occurs (Pucik,1988).Related to national culture, previous research has generallysupported the influence of the social and cultural environment onmanagement practices (Kelley, Whatley and Worthley, 1987;Schneider, 1989; Warner, 1986). In particular, assumptions andvalues which operate within different national cultures are oftentransferred into HRM practices (Ishida, 1986; Peterson and Schwind,1977). In international joint ventures when multiple national orcorporate cultures combine, "cultural merging" occurs which oftenrequires adjustments of HRM policy and practice to meet newlyevolving realities.44CHAPTER THREERESEARCH METHODOLOGYA. Research Considerations1. The Research OrientationThis project explores the development and implementation ofHRM policy and practice in a small number of successfulinternational joint ventures. The intent of the research is togain an indepth understanding of strategic HRM through thedescription of various HRM practices as they operate in the JVs.Both formal, institutionalized HR practices are considered, aswell as informal operating systems. In addition, the researchintends to provide an understanding of why and how HRM operates asit does in each company. This format pertains to the questionsasked in exploratory case study methodology (Yin, 1989) and isappropriate when relatively little previous investigation exists ona topic. In this instance, the aim of the project is to develop acomprehensive description of HRM in joint ventures. Unlike someother case study research (i.e. Allison's Essence of DecisionMaking Explaining the Cuban Missile Crisis, 1971) the intent is notto pose competing explanations for the same set of events.Instead, this investigation is more oriented toward the potentialdevelopment of an integrative framework for how various areas ofthe theoretical literature (i.e. corporate culture, nationalculture, organizational learning) may complement each other inorder to provide a better understanding of strategic HRM in jointventure firms.Further, the methodology in this project is consistent with45research done by Kydd and Oppenheim (1990), who considered HRM infour exemplary companies. This research also conforms to a call byUlrich (1987) for a detailed analysis of strategic HRM, in order togain a more penetrating appreciation of how firms are able toincrease their effectiveness through HRM applications. In thisspirit, the present project aims to provide a comprehensivedescription and understanding of various HRM practices in foursuccessful international JVs, related to the generation of theoryin this area. The results of this investigation also provideinformation to managers and practitioners concerning theimplications of various strategic HRM policies and practices.The research uses multiple sources of data collectionincluding documentation, on-site observation, interviews, andquestionnaires. Multiple methods for data collection allow across-analysis of information in order to ensure consistency in thedata, and are a signal for when further information or analysis isrequired. Multiple methods of data collection are recommended byseveral authors, (Adler, 1984; Eisenhardt, 1989; Yin, 1989), toobtain greater breadth and reliability of the results of theresearch. In addition, information is collected at multiple levelsin each organization, (i.e. executives, mid-level managers orsupervisors, and production staff), to gain an appreciation of thevarious perspectives in each group.2. Securing the Companiesa) The Type of Joint VenturesFour successful international joint ventures firms wererequired for participation in the research. A sample size of four46was chosen in order to allow greater comprehensiveness across jointventures (which vary related to national culture of the parentsetc.) than would be possible in a single case analysis. For acompany to qualify as suitable for the project, the followingcriteria would need to be met:• The company would be a "formal" joint venture (i.e. anindependent company which is the product of the union oftwo other firms).• The partners in the venture would be of differentnational origins in order that the JV be "international"in nature.• The partnership between the parent firms would beapproximately 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) externalawards and recognition given to the venture for exemplaryperformance, and b) because managers and other employeesin the JV felt that the venture was a satisfying place inwhich to work.• The JV would have its headquarters and/or majorproduction site in North America, for practical reasonsrelated to the collection of data.• The management of the venture would be willing to have meon site for two weeks, and to allow me access todocuments, and to staff for the purpose of interviews.b) An Elusive CommodityGaining entry to the types of companies designated for theresearch was incredibly difficult. I spent six months full-time47attempting to contact possible joint venture firms, and to securethe participation of managers for the project. During the courseof this task I contacted approximately 350 managers or academics,to a) locate possible joint ventures, b) determine if a companyeither met the criteria designated for entry to the project, or c)to more specifically request participation. Most people whom Icontacted did not seem to be aware of joint ventures which existed,or where they were located. As part of my search, I also usednumerous library sources, however because of the often rapid changeof ownership of JVs, many of these sources were outdated.In part, the difficulty of finding suitable JVs for theproject might be considered related to the followingcharacteristics:• There is no clear designation of joint ventures asopposed to other forms of strategic alliances, andtherefore in the literature as well as in otherdescriptions, a partnership company may be called a jointventure, when in fact it is not.• There is no accessible, comprehensive listing of jointventure firms. Various government agencies do not havethis information, including the Conference Boards in bothOttawa and New York, provincial or state agencies,municipal groups, or private agencies.• The often quickly changing ownership of JVs meant thatthe most recent directories of company listings areoutdated before their publication.• In many instances, managers did not want a researcher onsite. My perception is that this hesitancy was related48to a desire by managers to keep strategic initiatives"in-house". Several companies did not want competitorsto gain information as to what they were doing. Some ofthe companies which I had contacted wrote back and saidthat their operations were "highly confidential". Othercompanies did not want to participate due to feared"leaks" about the company identity in futurepublications, (although the option of confidentiality waspresented to company managers in each case). Further, Ifelt some managers whom I contacted were not particularlysecure about the quality of their HR operations in thecompany, and preferred not to have an outsider present toview operations or practices. In other cases, managerscited that they simply did not have the time to allowcompany involvement in a research project of this nature.c) The Process for Gaining EntryOnce possible joint ventures had been identified, I telephonedan upper level manager in the venture, (usually the Vice-Presidentof Corporate Development or the Vice-President for Human Resources,and in some cases a representative in the Public Relationsdepartment), to determine whether the venture had the qualifyingcharacteristics of the companies I was hoping to locate for thisinvestigation. Based on this conversation, and if there was somepossible interest, I sent a letter to this contact person whichdescribes the intent of the project, and the required amount ofinvolvement by the company. In addition, the companyrepresentatives were informed that if they were to participate in49the project, the company would have the benefit of a report whichoutlines the findings in the company, as well as an executivesummary report related to the general research project. Refer toAppendix 1 for a copy of the letter and project outline which weresent to each company with potential to participate in this project.Typically, approval for my entry was obtained in a managerialmeeting which would include the JV President, and the Vice-President or other senior manager for HRM. I offered follow-upinformation, as requested. Approvals for research entry often tooksix to eight weeks.Finally, I was able to secure the participation of four jointventures - Mayo Forest Products, OCG Microelectronics, Optima andTriad. Briefly, at Mayo Forest Products contact was made with theVice-President of Canadian Pacific Forest Products (the parentfirm), who quickly informed me that research access to the millwould be possible. I went with him to the mill to meet with theGeneral Manager for the JV and the Personnel Administrator. Atthis time, the Executive Secretary to the General Manager in the JVoutlined for me meetings which would be beneficial to attend, andpeople I should interview. Research began in the millapproximately one week later. At OCG Microelectronics, contact wasinitially made through the Public Relations Department, and afterabout eight weeks during which research access to OCG was apossibility, I made a follow-up call to the President of theventure. I was given immediate approval for the project, pendingadditional approval from the Manager for HRM, who also wasinterested in participation in the research. At Optima, contactwith the JV was made through the Manager of Employee Relations, who50over a seven week period, was able to get approval from seniormanagers, including the Vice-President of Personnel for my entry.Securing the participation of Triad was both quick, and veryfortunate. I contacted someone in the Japanese parent company whoI already knew, who in turn contacted a key person in the venture.Access to Triad was determined within days. This was particularlylucky, as I was told the plant had not previously been involved inany extensive research investigation, despite numerous attempts byother researchers to gain access to the company.3. The Process for the Researcha) The FormatI spent two weeks in each joint venture. In addition, at MayoForest Products I returned to the JV for two days, two weeks afterthe research data had already been collected, to interview peopleabout any changes they anticipated for Mayo due to the resignationof the General Manager the previous week. Data was collected atMayo Forest Products in April 1991, and in the other three venturesin July and August 1991. Approximately 20 interviews wereconducted at multiple levels in each company, and the titles ofthose people who were interviewed appear in Appendix 2. I had a"contact person" in each JV, who assisted me with whom would berelevant and responsive individuals to interview, arranged for awork space, suggested meetings to attend, outlined relevantdocuments to collect (and often provided them), and informed meabout miscellaneous items of company protocol. The title of mycontact varied: at Mayo it was the Executive Secretary to the JVGeneral Manager; at OCG it was the HR manager; at Optima it was51the Manager of Employee Relations; and finally, at Triad, it wasthe Training Specialist who fulfilled this role. All my contactswere well informed about company operations, and very generous oftheir time and insights.The operations of the joint ventures were not usuallycontained in a single location. Subsequently, to gain a broaderperspective of the operations, I visited more that one site tocollect information or materials for this research. At Mayo ForestProducts, most data was collected at the mill, but interviews witha Vice-President in the Canadian parent firm, a Vice-President forthe Japanese parent firm, and the Personnel Officer for salariedstaff in the JV were conducted at the Regional office for theCanadian parent, where these individuals were located. At OCG,which is a very decentralized operation, I interviewed people andcollected other information at the JV Headquarters in New Jersey;the JV plant in East Providence, Rhode Island; the Ardsley facilityin New York state; and the CIBA-GEIGY U.S. parent companyheadquarters, also in New York state. At Optima, data wascollected at the JV headquarters office and at the twomanufacturing plants, which were all located in the same city.Triad, is a self-contained unit, and all data for the venture wascollected at the plant.While at the main research location for each venture, I wasusually given a desk or work space to use temporarily. At MayoForest Products, I had a desk in the Administration area, in awell-travelled location. At the other joint ventures, I had spacein the HRM areas. Although security was a priority in all the JVs,I was given very good access to information. For example, I was52able to obtain copies of requested documents, and in some casesmanagers volunteered to provide me with confidential reports. Inaddition, I was given the freedom to explore the various JVlocations on my own. At both Optima and Triad, which requiredsecurity entry badges, I was given a visitor's badge for the lengthof the stay at the company; and this permitted me access to certainareas. At Triad, freedom of movement was restricted in the plantfor safety reasons, although I was able to move freely in theadministration areas.b) The Role as ResearcherIn ethnographic and other case study research, characteristicsof the researcher such as gender or status may influence the datacollection process with respect to how the participant views orresponds to the researcher (Spradley, 1987). As one of the"instruments" in the study, the fact that I am female and agraduate student may theoretically affect the participant-researcher relationship, and further, the information which isobtained for the purpose of this investigation. With considerationfor my perceived role as researcher in mind, I attempted to fit thecharacterisics of the environment as much as possible. Forexample, in the mill operations I wore jeans and hardtoed boots,when alternately in an office setting I chose to wear conservativebusiness clothing.My perception is that employees in the ventures identified mein a researcher capacity while I was visiting in each company. Iwas not asked for advice in a consulting role. On occasion, Ifelt that I was a confidant to some individuals who wereinterviewed. Related to this, some respondents shared personal53concerns related to the work environment, which generally theyspecified were intended to be confidential. Once I was on the JVsite, and sometimes in advance, employees who were to beinterviewed were informed of my intentions in the company, and thescope and focus of the research. In some cases, the project outlineand a brief summary of my background and experience, (which bothwere sent to the JV as part of the process to gain entry to theventure), were copied and distributed to staff.Although the majority of participants in the research areNorth American in cultural origin, some of the senior managers whowere interviewed were also Swiss (2), German (3) or Japanese (4).Related to this fact, I tried to ensure that each cultural group ofparticipants was comfortable with the interview format, and wasable to understand the content and intent of the questions. Onlyin the case of some of the Japanese respondents was languageproblematic. To ensure understanding I spoke slowly and rephrasedquestions if there appeared to be any confusion or hesitancy in theresponse. In only one instance was a written inventory completedwith an HR manager who did not have English as a first language.On this occasion, I went through the inventory with this individualto ensure an understanding of the content.4. A Variety of Informationa) DocumentationInformation on the joint venture, (i.e. age, reason forformation, industry focus etc.), and the strategic orientation ofthe company, (i.e. the corporate vision, historical changes), werecollected. Appendix 3 provides a more comprehensive listing of54some of this content. To gather information about the JV moregenerally, and HRM policy and practice more specifically, a widevariety of documents were consulted. This included, for example,company newsletters, employee handbooks, company brochures ormanuals, JV annual reports, policy statements, HR forms, newspaperarticles on the JV, or union agreements. Annotated bibliographiesfor each JV, which itemize the documents used in the research, anda brief description of their contents, appear in Appendix 4.b) On-site ObservationDuring the time when I was on-site full-time at each jointventure, I was able to observe operations, attend meetings, andhave numerous informal conversations with employees at multiplelevels in the organization. Information which was collected fromthese experiences, as well as my personal impressions of activitiesor events in the JV, were recorded in a journal. In each company Iwas 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 10days. This included production meetings, mill maintenancemeetings, manager's meetings, and a closed union meeting. At OCG,due to the amount of travelling between sites, I attended fewermeetings, although I did sit in on some of the production meetingsat the plant facility. At Optima, I attended a communicationmeeting, production meetings at both of the plants, and a "teammeeting". In conformance with plant policy that visitors are notpermitted into the plant without a guide, I was not able to attendfloor meetings at Triad. However, I did have the opportunity toattend several Quality Circle presentations, which occurred in July55when I was there. I also attended an HR meeting while at Triad.In addition, I was able to get some personal insights fromemployees about the operation of the venture over lunch, or inother private conversations. Responses were either volunteered orresulted from my informal prompting.c) InterviewsThe interview format was consistent for all participants. Iwould introduce myself and the research topic, ask participants ifthere were any questions, request permission to tape-record thesession, 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 thatconfidentiality would be guaranteed. This portion of the consentform was completed at the end of the interview, in order thatparticipants could better judge their preference based upon whatthey had already said. Refer to Appendix 5 for a copy of theconsent form. No one refused to have the session tape recorded.To lead participants into the interviews gradually, we began withthe participant describing his or her background and experience,and the work role in the venture. I did not take notes, but choseto have a "conversation" with the individual who was interviewed,which allowed for eye contact, as well as a more informalatmosphere. On a few occasions, participants asked that the taperecorder be turned off if they had something personal,confidential, or perhaps incriminating to tell me. ^In thisinstance, I would usually ask permission to take notes. ^Myimpression is that employees were comfortable in the interviews,and generally unguarded in their responses, although there were a56few exceptions.The interviews were relatively unstructured and I used open-ended questions as probes. Participants were encouraged to includeany information they felt was relevant to help me understand howand why HRM policy and practice operated as it did in the venture.On average, the interviews were one and one-half to two hours inlength. An outline of general interview questions, and sub-questions which could be used as interview prompts appear inAppendix 6. Many of the questions which appear in this appendixare based on previous theoretical or empirical work by Datta andRasheed (1989), Frayne and Geringer (1989), and Pucik (1988), butwere developed specifically for the current project. There are twointerview guides in Appendix 6 which vary slightly from oneanother. One guide was used with HRM staff, the other foremployees 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 inwhich they appear, but in an order which evolved naturally in thecourse of the interview.Information from tape recorded interviews was formatted ontoa computer, and an interview tape was replayed until relevantmaterial was accurately captured. Rather than a completetranscription, I selected what I felt was important to the goals ofthe investigation and either copied verbatim quotations, orsummarized the material into descriptive notes. Material which wasrepetitive or irrelevant was therefore not put onto computer,although all tapes have been retained. As a reliability check onthis procedure, a graduate commerce student was hired to check a57random sample of three tapes from each JV, for a total of 12 tapes.The graduate student was instructed to ensure that verbatim quoteswere accurate, and to check that I had accurately captured theessence of the rest of the conversation in notes. I asked that shenote errors, omissions of relevant material, or additions. A copyof the instructions to the reviewer are in Appendix 8. Thereviewer considered the interview transcripts to be 100% accuraterelated to quotations. In instances where content discrepanciesdid infrequently occur, I rechecked the tapes to ensure thatparticipant comments were accurately noted.d) The Minnesota Job Satisfaction QuestionnaireThe short form of the Minnesota Job Satisfaction Questionnaire(MSQ) developed by Weiss, Dawis, England, and Lofquist (1967) wascompleted by a random sample of employees in each venture. Thequestionnaire has been used over the years as a reliable measure ofjob satisfaction (Muchinsky, 1983). The short version of theinventory consists of twenty items related to various aspects ofone's job. The employee responds on a 5-point scale. In additionto an overall score for job satisfaction (which is a summation ofscores on all MSQ items), there are two subscales which determineemployee levels of "intrinsic" and "extrinsic" job satisfaction.The intrinsic satisfaction scale consists of twelve items whichreflect achievement, ability utilization, and autonomy, forexample. The extrinsic scale consists of six items which relatesto policy administration or working conditions. The MSQ manualindicates that internal consistency, (based on a wide variety ofoccupational groups), has a mean reliability coefficient of .86 forthe intrinsic satisfaction scale, .80 for the extrinsic scale, and58.90 for the general satisfaction scale.This research focuses on the organizational level of employeeresponses to job satisfaction, rather than on individual levelresponses. For this reason, mean scores and standard deviationsfor each item of the MSQ are aggregated across all respondents ina JV. Aggregated mean scores for overall job satisfaction, andcategory scores for intrinsic and extrinsic levels of jobsatisfaction were obtained. As suggested in the test manual, it ismost meaningful to consider scores for overall satisfaction,intrinsic satisfaction and extrinsic satisfaction compared topercentile ratings. A high degree of job satisfaction isrepresented in the 75th percentile or higher; mid-rangesatisfaction is the 26-74 percentile, and a low degree of jobsatisfaction is reflected in the 25th percentile or lower.e) The Culture InventoryThe Culture Inventory considers various aspects of corporateculture as it operates within a company. The inventory has twelveitems adopted from Quinn's (1984) competing values model. (Referto Appendix 9 for an elaboration of the theory which underliesQuinn's model). Four types of corporate culture are represented(three items for each culture type). The various cultureorientations include group, developmental, hierarchical andrational cultures. Participants respond on a 5-point scale toindicate their level of agreement with each of the twelvestatements in the inventory. I made one modification to theoriginal inventory and changed "participant's business" to "thiscompany" which I felt would be more relevant to the respondents inmy sample. According to Yeung et al. (1989) who have also used59this inventory in research with a large sample or companies, thereliability coefficients for the four culture types are: groupculture (.79), developmental culture (.80), hierarchical culture(.76), and rational culture (.77). The level of culturalpredominance in each of the four culture categories is determinedby adding numerical responses for each group of three items. Aswith the MSQ, organizational level responses were obtained in eachJV. Scores for the Culture Inventory are represented as aggregatedmeans for each item of the inventory. Mean scores were alsoobtained for each of the four corporate culture categories. Theconsent form for participants, which describes the project andconfidentiality issues, as well as copies of both the Minnesota JobSatisfaction Questionnaire (identified as "Questionnaire 1"), andthe Culture Inventory (identified as "Questionnaire 2") appear inAppendix 10. Attached at the back of the questionnaires is a pagerequesting some background information for each participant. Thisalso appears as part of Appendix 10.f) Distribution of the QuestionnairesSixty sets of questionnaires were distributed in each jointventure; return rates varied from 32 to 45 questionnaires in eachcompany. A stratified random sample of employees was identified tocomplete the questionnaires. Participant selections were done inthe following way:• An employee list or computer printout would be obtainedwhich lists all employees in the company for thegeographical location in which the research wasconducted. Names were in alphabetical order with no jobdesignation listed. This list would include employees at60all levels in the organization from production workers toexecutives.• I went down the list beginning with the first name andselected names at equal intervals. For example if therewere 240 employees in the company and the distribution ofquestionnaires was 60, I would select every fourth name.If there were 2400 employees in the company, I wouldselect every fortieth name.• The questionnaires were placed in an envelope with theemployee's name on the front. An envelope with my nameon the front c/o the HR department, was included with thequestionnaires in order that the individual could placethe completed questionnaires in it, and return thequestionnaire with confidentiality of the contentsensured.• Questionnaires for employees were bundled together byunit, division, or area, and were usually distributeddirectly 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 mailsystem to the HR department.g) Guide to Human Resource Management PracticesThe Guide to HRM Management Practices is found in Appendix 11.I developed the guide for use to identify HRM practices whichoperate in the areas of planning, staffing, performance appraisal,reward and training. Information from the HRM Guide is intended toeither confirm or expand information from other sources related toHRM practices as they operate in each venture.61The HRM Guide was adapted from Schuler (1987) related tovarious human resource practice orientations. I was interested inthe development of this format because it has applicability for thedetermination of multiple values (i.e. the presence of both long-term and short-term goals, or that both a group and an individualorientation), which HR managers feel operate in the venture relatedto HRM practices. Although Schuler tends to use the HRorientations as unidimensional, I have presented the scales on theHRM Guide in a manner which allows participants to select theoperation of multiple values, if they felt this was the case. Forexample, a participant may indicate that planning is both formaland ordered, as well as informal and flexible. The dual aspect ofthe inventory is outlined in the introductory instructions toparticipants. The HRM guide is meant as an informal guide to HRpractices and has neither reliabilty or validity ratings.For the purpose of the research, the HRM Guide was completedby key managers in the HR departments. I felt that theseindividuals would be most familiar will all aspects of HR practice.If there were only one such designated person (as at OCG), then theHRM Guide would be completed only once in a JV. If there were morethan one HR manager, then the HRM Guide would be completed by morethan one individual. For example, at Triad, both the GeneralManager for HR (an American), and the Human Resources ExecutiveVice-President (who is Japanese), completed the HRM Guide. Thisallows for the presentation of multiple perspectives of how HRMoperates in the venture. In all cases, I was present and wentthrough the HRM Guide with the participant, to provideclarification when necessary.625. Analysis and Integration of the DataThe focus of data collection in this research is ondescriptive information, rather than on quantitative analysis. Asalready described, data were collected from documentation,interviews, questionnaires, and on-site observation. The multipleforms of information form a rich data base of HRM operations infour international joint ventures. Quantitative analysis of theMinnesota Job Satisfaction Questionnaire and the Culture Inventoryare meant to primarily extend or corroborate other data collectedin this investigation.The HRM themes which frame this investigation (i.e.communication systems, planning, staffing, training, reward andrecognition, and performance appraisal) were used to categorizeinformation from the interviews and other data sources. Inaddition, and related to the strategic emphasis in this project, Ialso used categories such as JV background (i.e. history of theoperation, parent roles), and the strategic orientation of thecompany (i.e. company vision and the steps taken to accomplish thevision), to organize the analysis of data. These additionalcategories evolved naturally from the interviews, and weredetermined based on the degree to which they were repeated inmultiple data sources (i.e. in documents, interviews etc.), andexisted in all four JVs in the investigation.Inevitably, I made some judgements as to what should beincluded as relevant data for the purpose of this study. Forinstance, and based on the review of the literature, I felt thatnational culture and corporate culture might be relevant to anunderstanding of strategic HRM policy and practice. Related to63this, implicitly a loose framework of issues which might betheoretically important existed, although as much as possible Iattempted to be open to new areas which were neither identified byme or others as directly relevant to the topic. Further, asalready explained, a reliability check was done on the interviewtranscripts to ensure that I had not subjectively omitted materialwhich was relevant to this investigation.More specifically, the analysis of the data occurred asfollows:• The questionnaires were analyzed using the method asdescribed in the preceding sections.• On each interview transcript, I noted the contentcategories related to HRM operations, JV background, orstrategic orientation of the company as described in thepreceding paragraph.• Documents were reviewed in the same way, using alreadyidentified HRM and company categories.• In a similar way, the journal was reviewed andcategorized.Following this preliminary step, data was organized within each JV,across the various sources of data. For example, within a singleventure, all information on training would be organized together inorder to form a comprehensive outline of training operations in theJV. At this point, all sources of data were used to create aunified analysis of HRM in the company. Convergence as well asinconsistency in the data were noted.In addition, the questionnaires were considered related toboth trends in the data for each questionnaire, and in comparison64to other information obtained in the JV. The HRM Guide was used todetermine levels of consistency of HRM policy and practice betweenrespondents in the venture. In addition, information from the HRMGuide was compared to other data. All sources of data were thencollectively woven into a profile for strategic HRM operations foreach joint venture. These integrated units form the basis of the"Results" section which follows.65PART TWO: THE JOINT VENTURESIntroductionThe four international joint venture companies investigated inthis research are all competitive, strategic players in the globalmarketplace. These joint ventures have been formed between twointernational 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 theirrespective market sectors. "Total quality" programs operate toaccomplish this goal through 1. the reduction or elimination ofdefects, 2. continuous product improvement, and 3. the developmentof enhanced understanding of customer requirements. Employees areexpected to actively contribute to this process through theirinvolvement in quality management and product innovation.Depending on the reasons for the formation of the venture, theparents have either specialized roles, or strive to combine theirtechnological 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 operationsand share an orientation toward quality and service, they represent"maximal variety" in that they are in different industries, anddiffer in size and age. This variety therefore provides acomprehensive view of some of the strengths and challenges faced byjoint venture firms. Mayo Forest Products is a small lumbermanufacturing firm with 160 employees established in 1980. It66operates primarily as a subsidiary operation of Canadian PacificForest Products (60% owner), and is unionized. The other parent isMitsubishi (40%) which provides Mayo Forest Products with access tothe Japanese market.The second company in this study is OCG Microelectronics,which was formed in January 1991 and is a 50/50 partnership betweenAmerican (Olin) and Swiss (CIBA-GEIGY) multinational parent firmsin the microelectronic industry. OCG is very decentralized,relatively small (196 employees), and is nonunionized.The remaining two companies which participated in this studyprefer to remain anonymous. Consequently, I have renamed the jointventures as well as the parent companies. These names arefictitious and are not meant to represent any existing firm. Thethird company "Optima" was established in 1977 as a 50/50 equityventure between American and German parent firms. Optimaspecializes in fiberoptics and maintains technological linkageswith its German parent. This company is medium-sized (1250employees) and operates without a union.The final company to participate in this research is anautomobile manufacturing joint venture which was formed in 1985 andbegan production in 1988. "Triad" is a greenfield operation,unionized and relatively large (approximately 3000 employees). Itis the product of American and Japanese parent firms. An overviewprofile of the joint ventures in this research appears in Table 2.Throughout the following sections, various issues arereflected which consider the human resource management component asit operates in joint venture firms. Related to the emphasis whichthe management of these four participating companies place on their67employees, HRM is more often than not, linked to the strategicfunctions in the company. In addition, because each JV representsa union of diverse national and corporate cultures, issues relatedto the incorporation of parent and joint venture goals, values, andpreferences are apparent throughout these sections. They confirmthe contrasts, and the difficulty connected to the creation ofwhole and effective systems when more than one set of actors are onthe corporate stage. More specifically, and based on key themeswhich emerged from the investigation, HR policy and practice mightbe considered in the context of the following issues:1. The management of the JV-parent relationship - Does thetype of joint venture (specialized/value-added ordominant/shared); degree of partner compatibility; whichparent has the management contract; and the ability ofboth JV and parent managers to interact effectively havean impact on strategic HRM?2. The integration of HRM with strategic planning - How dovarious HRM practices such as communication, staffing,training, reward and recognition, and performanceappraisal contribute to, or limit, strategic JVobjectives? What is the role for the HR department inthis process?3. The development of a corporate culture in the JV - Whatare the influences (either from the parents or JV-based)which shape the norms and values as they operate in theventure?^How, if at all, are various subgroupsaccommodated into the organization?4. The establishment of organizational learning in the JV -68In progressive ventures, is there an emphasis onflexibility and learning, and if so what are thestrategic and tactical components of this process?5. The presence of diverse national cultures - Which HRpolicy is changed, if any, and what stays the same in thecontext of a joint venture when parents are fromdifferent national cultures?Finally, I have presented each company as a synthesis andintegration of data collected from each JV site. The data in thissection is based on interviews, documents, and questionnaireresults. This is a reflection of what the participants of eachcompany shared with me of their history and insights. I havereserved my own opinions and analysis of these events for thediscussion section.Plant Start-up/OCG^OPTIMA1991TRIAD1988MAYO1980; 1977TABLE 2JOINT VENTURE PROFILESReorganization reorg. 1988 (January) reorg. 1988Ownership 60% CPFP 50% CIBA-GEIGY 50% Bauer 50% Spartica40% Mitsubishi 50% Olin 50% Fiberop 50% Japan MotorsStrategy Orientation total qualityhigh employeemanagement ^involvementManagement Contract CPFP Olin Fiberop Japan MotorsNumber of Employees 160 196 1250 3000Union Status unionized non-union non-union unionizedMarket Sector lumber photoresists/polyimidesfiberoptics automobileJV Type (Specializationor Value-Added)specialization value-added value-added specializationTechnology Transfer none bothparentsbothparentsJapanese70CHAPTER FOURMAYO FOREST PRODUCTS LIMITEDA. Joint Venture BackgroundI. History of the OperationMayo Forest Products is a sawmill nestled on the shoreline atNanaimo, British Columbia. Operational since 1980, the mill is ajoint venture between Canadian Pacific Forest Products Limited (60%owner) and Mitsubishi Corporation (40%). Mayo competesinternationally in the high quality lumber market. To ensuresurvival, the aim at the mill is to extract the greatest value fromevery log. This requires logs entering the mill must be accuratelycut to specified lengths, and be free of defects in order tomaximize lumber extraction and to minimize waste. The largestpercentage of cut lumber is exported into the quality consciousJapanese market. Eighty five percent of the lumber manufactured atMayo is sent to Japan, which represents approximately 4.5% ofJapan's total North American lumber imports. The remainder of thelumber is marketed to the United Kingdom, Europe and the MiddleEast. Mayo Forest Products has 22 salaried employees, (i.e. inadministrative or management areas), and approximately 160 hourlyemployees who are unionized members of the InternationalWoodworker's Association of Canada.The Mayo mill was designed in 1978 and constructed in 1979.According to the production supervisor, the mill was a combinationof a traditional Japanese mill and a North American mill design.During the mill construction there was high participation from theJapanese partner in both the engineering and design phases of the71project. When the mill began production in 1980 it was recognizedin the industry as one of the most progressive mills in BritishColumbia, and set a standard for quality requirements into theJapanese market. The plant came up to production quickly andmaintained the same level for about seven years. During this timeother competitors had outpaced the Mayo operation, productivitylevels had not improved, and the plant technology was becomingoutdated. The general manager noted the plant employees had littleor no training in the markets for which they were cutting, and noknowledge of the direction of the business. There was no long termplan, no formal quality control programs, and little informationwas shared with employees. Accidents in the mill had been steadilyincreasing.To counter this downward trend, Sandy Fulton who is the Vice-President of Canadian Pacific Forest Products (CPFP) in charge ofthe Mayo operation, hired a new General Manager for the mill in1988. The intent of this action was to create a majortransformation of how the mill operated. To assist in thedevelopment and implemention of this change, an outside consultantwas hired to work with the General Manager, as well as with otherstaff mambers at Mayo. Together they instituted a "HighPerformance Management System", which emphasizes setting andmeeting high quality standards; employee education and involvement;and statistical monitoring and communication of performance resultsto all levels of the organization. Part of the reorganization planinvolved refocusing the goals and roles of each of the jointventure parents. Mitsubishi was to concentrate solely on themarketing and on providing good product information; it would have72no direct involvement in the management of the site operation. Onthe CPFP side, Sandy Fulton assisted to refocus the managementpriorities at the Mayo operation. The mill manager was providedthe opportunity to operate more autonomously, while maintaining anenhanced focus on quality control and performance management in themill. To get first hand information about markets in Japan,employees at Mayo began to visit Japan, and talk directly withcustomers regarding product requirements.2. Parent RolesCurrently, the roles of the joint venture parents arespecialized and well defined. Mitsubishi has the marketingagreement to supply lumber products to the Japanese market.Canadian Pacific Forest Products handles the marketing of lumber toother destinations and has the management contract for the Mayooperation. This relationship has mutual benefit to both partners.CPFP is able to sell some of the logs that come off their holdingsto the Mayo lumber manufacturing operation, at fair market prices.Mitsubishi gains by having a continuous flow of high qualityproducts into their building material distribution systems.Both Mitsubishi and CPFP formally manage the joint venturethrough an advisory committee and the joint venture board. Theadvisory meetings occur quarterly or more frequently, and alternatebetween the Mayo mill site and Japan. According to Sandy Fulton,the meetings include representatives from Mitsubishi Tokyo,Mitsubishi Vancouver, CPFP representatives in manufacturing andmarketing and some of the management staff at Mayo. They meet tojointly decide a future focus for the mill related to product73development and people management, as well as to discuss otherplanning issues relevant to both JV partners. The advisorycommittee informs the JV board of issues for consideration. AsSandy Fulton describes,If there are other issues that need to be addressed atthe senior, and when I say the senior level, the board ofdirectors level, we would look to the advisory committeeas the vehicle to develop the direction or the consensusof what steps we're going to take. That might be ascomplex as negotiating the next agreements that willprevail for the next ten years in how the ownershipstructure is going to take, or what sales agreements aregoing to be, or log supply agreements or you knowgenerally the parameters in which the two companies ownthe operation. So any one of those issues that mightcome up would be dealt with either at the advisorycommittee level or in a subcommittee if you will of thoseindividuals. So those individuals at the advisorycommittee level play a very integral role in themanagement of the operation and dealing with any of theissues between the two owners. And that might not be soevident when you're sitting at the mill. You might notsee a lot of that.Sandy Fulton believes the advisory committee is responsive andreflects the requirements of each partner. The mill manager, MikeLow generally agrees with this analysis. Planning directives fromthe advisory committee and requests for major capital expendituresare approved formally at the JV board level. The JV board for MayoForest Products is comprised of 3 Mitsubishi members and 4 CPFPmembers. Sandy Fulton of CPFP is the chairman for the boardmeetings, which he describes as being largely "ceremonial". Theexecutive Vice-President of Mitsubishi Canada adds the boardmembers meet in these institutionalized meetings, but in additionthey meet frequently in other settings. The Mitsubishirepresentative suggests "agreement, conviction or common interest"in the joint venture are facilitated informally.74Although Mitsubishi is a 40% owner in the joint venture, CPFPhas the management contract through which it has the authority anddiscretion for how the mill is managed and operates. Related tothis, Mayo Forest Products functions like a wholly owned subsidiaryof CPFP with very little evidence at the mill level it is a jointventure. This analysis is supported by some of the comments madeby Mayo employees. One employee volunteered he worked for CanadianPacific Forest Products and added, "everybody here works forCanadian Pacific Forest Products. If someone at Canadian PacificForest Products is not happy with your performance, then you don'thave a job. If somebody at Mitsubishi's not happy about yourperformance, they have to live with it." Another employee notes hefelt Mayo is treated like a division of CPFP. In fact, frequentperformance comparisons are made by managers in the mill betweenthe Mayo operation and other CPFP mills in the area. Although theemployee handbook cites Mayo is a JV between Mitsubishi and CPFP,few employees seem to understand the implications of thisrelationship. "The Mitsubishi presence in this mill is so limited,it's almost nonexistent to the crews" one mill manager remarked.Although there are no Mitsubishi employees transferred to the Mayooperation, some of the mill managers have previously worked withCPFP.Within the network of relationships which tie the Mayo milloperation to CPFP, Sandy Fulton views Mayo "almost like a totallyindependent company, but overlaid with the rest of the company"[CPFP]. He continues,In the management of it [Mayo] we manage it notappreciably different than our other sawmills. And whenI say that we have a manager there and while he's a Mayo75Forest Products general manager, I personally view him inthe same way as I do the general manager of Ladysmith andthe Tahsis sawmill. He conceivably might have a littlebit more latitude in that he serves two masters not justone...Given this parameter, Sandy Fulton provided the GeneralManager at Mayo with a mandate to operate as autonomously aspossible, and told him "to manage his business unit and feel freeto make whatever changes are required." To a great degree MikeLow, the General Manager at Mayo, has been able to make changeswhich he felt were necessary for upgrading the mill and creating anew management style. At the mill site there are no visible signsMayo Forest Products is related to CPFP. As Mike Low points out,"we have our own corporate identity, our own colors, our own policymanuals. Let's take advantage of that. We can do anything wewant. I write the policies for the policy manual and am signingofficer for the company." Alternately, it is the Mitsubishipresence which is more visually represented. The company sign atthe front of the building, and a sign over the resource centre bothare in Japanese and English. In the front lobby there are twoJapanese dolls in a glass case, gifts from Mitsubishi Corporation.However, because the reporting link for Mayo is to the CPFPparent, Mike Low requires CPFP approvals through the Vancouverregional office, as well as the Montreal headquarters office ofCPFP before making certain decisions. This is the case in thehuman resource areas for staffing and compensation practices, whichrequire approvals from the Montreal office. In all instances,approval is required before hiring anyone and for allocating salaryincreases. Mike Low finds this frustrating and says, "it'sprevented me from doing a proper job of recognizing my staff. It's76prevented us from doing a proper job of organizing the staff asthings change and evolve. We've done a poor job of properlycompensating people." Mike notes he does have some unapprovedpositions on the payroll for which he can't seem to get approval.These people are being paid on an hourly basis under a "hiddenpayroll".3. JV Benefits and CostsThere are both benefits and costs to operating in a jointventure in which there are two large parent companies involved.Mike Low reflects there is a "tremendous amount of clout" pluscapital and power provided from the JV union. This ensures a levelof security for the venture. Alternately, dealing with two hugecorporations is difficult in order to get things done. Mike Lowsaid if either Mitsubishi or CPFP disagree on an issue it's "almosta hopeless cause." Despite some of the difficulties of balancinga joint venture relationship, the key players seem to feeloptimistic about the progress at Mayo, and have activelycontributed to the wellbeing of the venture. Sandy Fulton notesthe importance of a good relationship between the two partners, andadds he had personally invested a significant amount of time andeffort in making the venture successful. He said "it was importantto me to get to know all of the people in the whole process, fromthe most senior individual to everybody that was involved in themarketing of the products for Mayo". Mike Low was instrumental inaltering the path the mill has taken. In an address to the staffin the company newsletter (March 1991) he writes,To me, Mayo is as unique as our people. Each individual77with an astonishing variety of backgrounds and interests,and yet, each day we come together, as one team,powerful, dedicated and satisfying to work with. Withoutpeople we would not have growth, and without growth,there would not be continued success.A Mitsubishi board member, Mr. Tsuchiya concurs. He stresses theimportance of communication among the partners, and adds at alllevels of the joint venture they are able to discuss issues. Mr.Tsuchiya comments both partners see Mayo as their "baby" and bothMitsubishi and CPFP include each other at their board meetingdinners.The success of Mayo Forest Products has varied over the years.It currently represents an exemplary company and multipleindicators attest to the management and marketing success of theorganization. In the first quarter of 1991, Mayo had its best eversafety performance per person day; quality was up and productioncosts down; and the mill production level was above budget andabove the 1990 performance level. Mayo is recognized in Japan asone of the top five sawmills in North American for quality lumberproducts and in recent months, Mayo was awarded the Japanese lumbergrading certification. This signifies lumber products from Mayomeet the requirements set by the Japan Federation of Lumbermanufacturers, and are preferred over non-certified products byJapanese lumber buyers. The lumber bypasses inspection on arrivalto Japan. This certification is the only one awarded in Canada,and the second in North America. Based on these distinctions andsuccesses in the quality area to date, Mayo Forest Products hasapplied for the 1991 Canada Awards for Business Excellence in thequality category.78B. Strategic Orientation1. The VisionIn 1988, as a preliminary step in the reorganization of theMayo operation, Sandy Fulton at CPFP introduced Mike Low to theRydberg Levy consulting group. Sandy Fulton had been involved withthe consulting company for the previous eight or nine years as aresult of working on other projects with them. One of theconsultants worked with Mike Low for a period of approximately oneyear before he came in to work with the other managers andemployees at Mayo. Initially, the consultant worked with themanagement staff to establish a focus and vision for the future ofMayo Forest Products. Later, hourly employees were involved insimilar sessions to determine goals and focus in their own groups.In one instance, twelve of fourteen filers attended a whole daysession at a local hotel, to construct a vision and goals as to howthe file room should best operate. To enact a new strategy andvision for Mayo Forest Products, major changes in staff wererequired at the management level. Of twenty-two managers currentlyin the operation, all but three or four were hired by Mike Low aspart of the reorganization plan. Mike has served as a champion forthe reorganization plan at Mayo. He is dedicated, energetic, andperceived as fair by staff at all levels of the company. Hisinfluence and initiatives are strongly felt, and greatlyappreciated by the majority of employees. Many of the staff atMayo specifically note the important role which Mike Low has had inthe reorganization of the mill operation.The vision for Mayo Forest Products is reflected in the79company mission statement which is located in the front lobby ofthe building. It reads,We at Mayo Forest Products will be the highest quality,lowest cost producer of Japanese wood products in thePacific Northwest through bringing together innovativepeople, raw materials and technology to produce a productthat meets our customers requirements every time.Mike Low points out the mission statement ties together people, rawmaterials and technology. Substatements were developed to expandon the above mission statement. These include the Mayo Statementof Quality which is, "we will meet our internal and externalcustomer's requirements every time" [his emphasis]. The Mayophilosophy for how people are viewed focuses on a need to "build astrong, committed and dynamic team that will carry this plant intoand through the 1990's". The team concept is an importantcomponent at Mayo, and is reflected on every page of the company'spost-it notes in the phrase "quality, a team effort". Numerousreferences to the "Mayo team" are sprinkled throughout the companynewsletter. A team approach is cultivated partly through aconscious effort to build a cooperative relationship with the unionand its members. A recent step toward this goal involved theinclusion of a union employee on the selection panel for hiringthirty n