When an organization decides to form an international alliance, there are certain strategic management capabilities that must be introduced into the corporate culture for a venture to be successful. The most important of these factors include having a flexible organizational culture, political risk awareness, decentralized strategic planning, multifaceted management structures and the ability to share authority/responsibility. The key skills of the managers involved in a partnership alliance must involve the ability to work in ambiguous, unfamiliar, cross functional and trans-cultural relationships. Understanding the issues of cultural differences in the way information is conveyed and applying these understandings is critical to the success of such strategic alliances (Mitchell, 2004).
Effective partnerships will include the sharing of risk, resources, rewards, objectives and values. If both partners are sharing all the risk then the potential for exploitation is reduced and collective collaboration will have the potential effect of achieving strategic objectives for all parties. Strategic partners will be able to share their strengths and limit their weaknesses while generating more than just the sum of their individual parts as a direct result of the collaboration. In addition, the partnering relationship itself is the vital element by which partners’ behaviors and attitudes must represent one of collaboration and less about egotistical self-interest (Mitchell, 2004).
An HR professional can advise the C-suite in cross-cultural partnerships by first preparing an initial analysis of one’s own organization prior to taking on a cross-cultural strategic partner and performing a SWOT analysis of the organization. Second, a similar risk analysis should be performed on the potential strategic partner. It would be important to clearly identify the metrics that both organizations would use and how the data/information would be gathered, analyzed and interpreted. Although increasing revenue is the main focus in any partnership alliance, other shared goals include increasing market share and improving competitive advantage for both entities. In addition, all key stakeholders need to become active in the partnership alliance. Middle management needs to be trained on the rationale for establishing an alliance so that they can participate fully in the measure of KPIs and continued collaboration between all parties. Because all alliances go through growing pains, it would be important for key management of each organization to form leadership teams to identify those practices that may disrupt the success of the partnership. Cultural diversity training in negotiations and communication would be essential for all key members of the alliance team. The greater the ability of the parties to communicate, the increased likelihood of positive relationships with inherent trust will begin to form. As in any relationship, strategic partners are likely to experience some degree of tension as the partnership progresses to new levels.
Gupta (2011) proposes four guidelines to prevent strategic alliances from failing. First by defining the parameters of a partnership narrowly, this will reduce organizational complexity and permit companies to collaborate with differing partners for differing strategic goals. Second, it is important to choose alliance partners with a low risk of potential competing philosophies. Third, it is important to let the logic of the partnership dictate key decisions. Fourth, it is important to remember that a partnership is not just an alliance but also a relationship between people, which takes time to build, nurture and for trust to form.
If, for example, a company intends to partner with a firm in China, an HR executive would want to be well versed in and provide the C-suite with an overview of Chinese culture as it relates to Geert Hofstedt’s model of global cultural diversity. China has a high power distance, which means its society believes that inequalities among its people are acceptable. China is in stark contrast with the U.S. in that it is highly collectivist in which the people act on behalf of the interests of a group rather than individualistically. In terms of masculinity/femininity, China is a masculine society, which means it is success-oriented and driven. In terms of uncertainty avoidance, China ranks relatively low. Finally, in terms of long-term orientation, China ranks high, which means that persistence and perseverance are the norm. Relationships are ordered by status and the order is observed (Hofstede).
An HR professional can implement training and development activities, not only for the key alliance manager, but also for the general employee population to address cultural diversity issues in the partnership alliance, as well as shared goals and mutual respect (Das, 2010).
Performance management is an important facet of the strategic partnership arrangement. In order for performance management to be effective in a partnership you must have a clear vision and strategic plan implemented for the partnership; all leaders and managers involved int the alliance must be in agreement as to performance measurement principles to be used; and the partners must possess knowledge of each other’s laws and regulations governing the partnership (Aguinis, 2013).
The HR professional needs to focus on organizational development aimed at developing the social organization. It is important to facilitate friendships among the partners. Conversely, the lack of personal relationships among the partnering entities will make it extremely difficult to for the transfer of knowledge to materialize.
As organizations begin to expand globally, they will continue to utilize strategic alliances to expand operations and increase their knowledge base. In order to succeed, companies must effectively manage many forms of cultural diversity. The challenge of managing cultural diversity involves more than just assessing the degree of cultural fit between potential strategic alliance partners.