1. The case of Thai Joint Enterprise With Japanese Partner in Building
Business
Literature Review
Company within the 21st century is increasingly carried out with
shifting borders. International partnerships will become standard
apply because the item life cycles shorten and immediate distribution
turn out to be imperative. As company is increasing its globalization,
alliances among multinational firms are becoming much more popular.
Cooperation between international companies can take many forms
such as, cross-licensing of proprietary technologies, sharing of
manufacturing amenities, co-funding of research tasks, and advertising
of each other's products using current distribution networks (Griffin
and Pustay, 2005). This kind of forms of cooperation are referred to
as strategic alliances, company arrangements whereby two or even more
companies choose to cooperate for his or her mutual advantage. A joint
enterprise is a particular and much more formal kind of strategic
alliance.
two.1 Defining International Joint Venture (IJV)
An worldwide joint venture (IJV) is a unique type of strategic
alliance in which two or even more businesses from various nations be
a part of together to create a new business entity that is legally
separate and distinct from its mother and father. Joint ventures are
normally established as companies and therefore are owned from the
founding parents in whatever proportions they negotiate. Even though
unequal ownership is common, many are owned equally from the founding
companies (Berger, 1999).
Here's also a definition adapted from Shenkar and Zeira (1987):
one it's a separate legal organisational entity, and belongs entirely
to neither/none of its mother or father;
2 it's jointly controlled by its mother or father;
three these parents are legally impartial of every other;
four the headquarters of at least 1 mother or father is situated
outdoors the nation in which the IJV operates.
As mentioned some IJVs are shaped on an equity basis, much more
versatile preparations might rely on contract cooperation with out
involving the legal commitments of equity. Some IJVs might have more
than two mother and father. Generally, the more mother and father
the higher the administrative complexities and also the higher the
issue of controlling the undertaking. Occasionally, both (or all)
mother and father are located outside the IJV country. For instance,
Coca Cola (Vietnam) was began as an IJV between Coca Cola (USA) and
a Singaporean bottler; originally it did not employ any Vietnamese
managers, like a result the business required to deal with cultural
distinction (Beamish, 1985).
In terms of the building industry, joint enterprise continues to
be noticed like a tool for enhancing the performance with the
construction procedure and emphasizes the way in which it helps to
create synergy and increase the usefulness of each participant's
resources (Barlow et al., 1997).
The Building Business Institute defines joint ventures as a long-
term dedication in between two or even more organisations for that

2. purpose of attaining specific company objectives by maximizing the
effectiveness of every participant's resources. This demands altering
traditional relationships to a shared tradition without regard to
organisational boundaries. The relationship is based upon trust,
dedication to typical goals, and an comprehending of every other's
person expectations and values (Barlow et al. 1997). To date, joint
venture is understood like a set of collaborative processes, which
emphasizes the significance of typical objectives. The base of
joint enterprise is a high degree of interorganisational trust and
the presence of mutually beneficial objectives. Joint enterprise
indicates a management process that helps the strategic preparing
to improve the effectiveness with the enterprises, and forms a team
with typical objectives (Barlow et al. 1997). Participants of the
undertaking can improve performance in terms of price, time, quality,
construct ability, fitness-to-purpose, and a entire of array of
other requirements, if they adopt much more collaborative ways of
operating (Bresnen and Marshall 2000). Barlow et al. (1997) mentions
six effective elements of joint enterprise: building believe in,
teambuilding, the need for leading level commitment, the significance
of individuals, the strategic motion of key personnel, and the require
for open up and flexible communications. The same authors quote as
typical advantages in a joint enterprise relation: reduced costs,
shortened delivery time, enhancement in building high quality, much
better working atmosphere, and organisational studying. Joint venture
classifications focus on the duration of cooperation in between
partners. This dissertation will be used as a case study to discover
the extent and native of those benefits in practice.
Two main kinds of joint venture are discovered in literature:
project joint venture and strategic joint venture or long-term
joint enterprise. Undertaking joint enterprise is a cooperative
partnership between organisations for that duration of a specific
project (Barlow et al. 1997). In the finish of the undertaking, the
partnership is terminated and an additional joint enterprise might
commence around the next project (Kumaraswamy and Matthews 2000).
Welling and Kamann (2001) state that if these firms do not meet again
in an additional undertaking, the learning impact reached around the
particular undertaking will probably be eradicated. Strategic joint
enterprise is a relationship with a high degree of cooperation between
companions (Barlow et al. 1997), which takes location when two or
even more firms use joint venture on the long-term basis to undertake
more than 1 construction undertaking, or some continuing activity
(Kumaraswamy and Matthews 2000). In this type of joint venture, the
learning accomplished in a specific undertaking is more prone to be
used in long term projects. Within the context of the strategic joint
enterprise, it becomes a management philosophy that is expected to
function continuously for every and every undertaking and there are
more expectations from group members than to get a undertaking joint
venture (Cheng and Li 2001). The type of TNC JV will be the strategic
joint venture where Thai and Japanese Companion are focusing around
the long term goal.
2.two Seeing Joint Ventures as a Foreign Marketplace Entry and
Development Strategy

3. Joint ventures are sometimes viewed like a second (or perhaps 3rd)
very best option for supplying a foreign market-bemng utilized only
when fedezal gover�ment regulations (�.g. owne�ship and exr�rt
controls, l�mitations on royalty repayments, etc.) prevent the
establishment on wholly owned �ubsidiaries, exports, or lmcensing.
Cestiinly, there are main issues uhat come ux within the �lanning,
negotiation, ant adminis�ration o� worldwide joint ve�turms. In
sxite of this kind of difficulties, it's broedly rgcognysed �n
the�literature that you will find imporvant stretegic and aggressive
advantages tha� mcy be derived from successful joint v�nture
agseements, qnd such!collaboratyon m�y bm cons�dered a initya�
option in particular conditions 8Kenichi Ohmce, 1985). Connolly
(1984), for example, a�gued that txe property of developed-country
mu�tinctyonal en|��prise� (ooney, forei�n$gychange, technology<
management� and �arketi�g abinities, etc.) and developing-gountry!
companie� (|ower costs, greqter familiarity with!nearby!markets,"and
so on.)�are comple�entar{, cod(that vhe2�ixture �f thgs� assevs0in
a joint ventur� resumts in0mutual!idvantages. This�can��e(noticed
withi~ the0case of TNC.$Equall{, C�n�ractor (�984) argued the loss
of control and the s|aring!og xrofits inhmr�nt�in1equity joint!
ve~tures0is�more than compen�ated for from ti� knowledgm and
capital�contrijution!wyth tle n�asby"companion; sonticts with
g�vernment off�cia�s: fastev entry in�o(the�markev;`a~d fanger
redu�tion. Harrkgin (1984, 198�) arguel that0koint ventures should
not be(sden |ike a hidino"place ov i signal �f weaknuss. I�stead, if
organyzee rroperl�joint*vm�tu�es would$ce a
source(of0a�grewsive"edvao|awe��a indicate� of defendi�g existing
strategmc$xowitions in �rposition)to forcus t�o strong for 9 firm$to
withstand by itself or like a indicates of(implem�nting
m�eifigations"in stzategic postures (e.g� diversification iccess uo
techoolooy)/ Ko�nt venturmw permit every kompanyon to focus0their!
resources in loketions of expertmse, w�i|st enabling diver�ificatyon
into �t|ractyve but unfamiliar�business creas.!Genesal, Jarrigan
(1�84, 1985) concludes that joint vm~tures*are importint stretegic
weapon in re{ponding towirds the cha|lenges of global competytion.
two.thr�e Facto��for forming the IJV
The partners (Thai and Japanese) may have sha�ed interests�in!forming an IJV which give
both opportunities to
five proluse greater market power by combining sources;(Bell,�1996)0
6 reduce r�sk by sharing costs (expens�s of expense and production
are shared);
seven reap econommes of scale;
8 cooperave"and steer slear of competition , which might`inc}r greater costs0than �hose
incurred by agreeing towmr�w the IJV (the IJV os defin�te|y an ill�a~cg that restry�ts!

4. your(personal catabmlmty for indepgndent action,"jut qdditionally�restricts th�t0of yowr
com��nion); (�ont�actor & Lovangel 1988).<�{pan>
In general, though, most IJVs offer mother and father various opportunities which arise from
their different environments. A project might offer the foreign mother or father access to a
local market, and the local mother or father use of the international marketplace. According to
(thailandoutlook.com), in 1997 two securities companies, the Premier Group of Thailand and
SBC Warburg, shaped a joint enterprise designed to provide Warburg with local knowledge and
Premier with worldwide entry.
Furthermore, the foreign mother or father needs to meet the host
government's requirements for doing business within the nation (in
this case the Thai Government). For instance, a foreign company
is only permitted to operate within the country if ownership is
shared having a nearby company. The IJV offers the foreign parent
opportunities to learn about local marketing conditions and to gain
access to nearby resources, including manufacturing amenities, labour,
and materials. For the local mother or father these are possibilities
to generate upstream and downstream industries. For instance, the
improvement of an IJV pulp mill encourages nearby entrepreneurs to
increase logging facilities and to invest in paper manufacture. The
nearby government advantages by possibilities to encourage foreign
expense. Also, the foreign parent may be allowed to consider only
minority ownership, and must fulfil conditions regarding local
employment, technology transfer, purchase of nearby materials, etc
(Chowdhury, 1992).
two.four Factors influencing IJV success and failure
The greater that the business depends upon the strategic alliance
in order to achieve its strategic goal, the more it invests in the
success with the alliance. In the situation of TNCJV this indicates
investing to find the ideal partner. Finding the ideal companion takes
time and effort, and the higher the significance the company gives to
this selection procedure, the greater the chances of success (Geringer
1991).
Hung's (1992) research of Canadian businesses operating in South-East
Asia discovered that "the most often mentioned difficulty is to get
the right companion company, 1 which has compatible objectives and is
trustworthy". Therefore, trust is one with the most important parts of
forming the IJV. Believe in factors then will be reviewed:
2.4.1 Trust between the parents
The project is much more likely to succeed when each parent trusts
that the other is genuinely committed to the project and will do its
very best to abide by all agreements between them (Demirbag & Mirza,
2000).
When more companions believe in each other, the easier they find it to
reach agreement on internal preparations:
1 applying the same strategic priorities to planning;
2 management style, and systems;
3 systems for communicating in between the parents, the IJV, and
mother and father; within the IJV; and with the environment
four factors associated with company passions, objectives, impact of
size, timescale
5 assessments of IJV success and failure: project evaluation, both

5. ongoing and on termination.
(Demirbag & Mirza, 2000)
2.four.2 Mistrust in between mother and father, and also the
environment
Mistrust arises from
13 inadequate preparing;
14 communication issues in between parents (Thai and Japanese within
this situation)
15 wide differences in the national and organisational cultures of the
parents;
16 1 parent altering its attitude towards the project in response to
�ts personal internal changes � e.g., a brand new technique,$a new
CEO;
17 1 mother�or father amtering its attitude to the undertaking in
response to changes in its company environment.
To take the final point: b�th mother and father operate �n their personal
volatile �ompany e�~ivo�ment. Their n�qrb� masket� and(�ompetitors
differ>0T�ey are subject to divf�r�nt loc�� political, social, and eco�omic
pressur�s. These environmental dif�evences make any alliance inherently
un�tablm (Geringer, 198x).
�span>These elements�of environmental uncertainty may be the reason for focusing onn} on
short-term alliances with highly particulir goals. The partners may use an initial limited alliance in
order to test the possibilities to gmt a greater commitment and to construct believe in (Harrigan,
1985).(This also has implications for communicatmon. Each partner �eeds to communicate
informition about its own en~ironment and to dgvelop knowledge with th� other's.
2.four.three Believe in within the project
A project succeeds when undertaking staff trusts each other and
when persons posted from the two mother and father develop a
synergetic relationship. Before undertaking operations start, a shared
undertaking culture is fostered by mixing staff from the mother and
father in groups, where they work collectively on project planning.
They exchange non-critical technological and company data (Harrigan,
1985).
A lack of believe in arises when
18 staff join the project ignorant with the needs and passions of
their colleagues from the other mother or father;
19 local staff feel threatened by a stronger foreign mother or father;
20 conflict come up from human resource and technology transfer
policies (1 mother or father cannot supply the skills to which it is
committed);
21 cultural differences are exploited.
2.4.four Trust between the project staff and their parent
A undertaking succeeds when staff posted to it feels confident with
the support of their headquarters. Mistrust arises when promised
support fails to materialize, or staff feel that their long-term
career prospects with the company are in jeopardy. A project is also
undermined when top administration fails to communicate its goal
effectively within the organisation. Subordinate levels perceive it

6. like a drain on their sources, and give it a minimum of attention
(Kachara & Hebert, 1999).
two.four.5 Similar business passions
The potential partners are much more prone to function together
effectively when they have related passions. The mother and father
of effective IJVs have similar passions and belong to similar or
complementary sectors. When both contribute and learn from the
other, fruitful cooperation is possible. Businesses within the same
business form alliances when they hope to benefit from discrepancies
in technology, systems, and markets (Kogut, 1988). By 1993, joint
ventures parented by the Swiss food firm, Nestle, included alliances
with Coca Cola (canned coffee and tea drinks), General mills
(cereals), and two companies in the people's Republic of China (a
coffee and creamer plant, an infant formula and milk powder plant).
2.4.six Compatibility in size
Incompatibility in the size with the parents is important when one
uses its greater sources to dominate the project in its own passions
alone. However, the improvement of company by Internet and other
electronic media indicates the company can expand (and agreement)
in a very short time, and also the size of staffing complements and
physical resources is no longer an accurate guide to some firm's
financial and knowledge power (Kachra & Hebert, 1999).
The research of the foreign direct expense in Japan discovered the
attitude taken by the Japanese bureaucracy was influenced by this kind
of elements because the investor's care for its partnership with the
federal government, the profitability of the IJV, the foreign parent's
commitment, timing and location, and technology transfer issues.
However, "the size with the investor does not seem to matter much"
(Thawley, 1996).
2.four.seven Compatibility in timescale
The mother and father require to share a timescale. Suppose that
Mother and father A and B are both prepared to invest in five years'
development expenses. The project is set fair. But contradictions come
up when Mother or father A aims at reinvesting profits made during
the initial period whereas Parent B wants a quick return from its
investments (Li, 1995).
2.five Culture influencing IJV success and failure
2.5.1 Cultural dimensions by Hofstede
Cultural distance between companions and its impact on IJV performance
has so far been the most commonly reviewed variable. The distance
has usually been expressed multi-dimensionally (based on Hofstedé
(1980) four cultural dimensions and an index created by Kogut and
Singh (1988)). Cultural similarity decreases issues caused by
cultural issues (e.g. different norms of behaviour and productivity,
measurement and goals related to efficiency) and should facilitate
believe in and cooperation between partners. Barkema and Vermeulen
(1997) tried to analyse in much more detail the impact of tradition
on IJV performance. Utilizing the five different cultural dimensions
by Hofstede - power distance, uncertainty avoidance, individualism,
masculinity, and long-term orientation - the authors anticipated
that there would be differences in the impact of various dimensions.
Differences in uncertainty avoidance are difficult to cope with

7. because they imply differences in how people perceive opportunities
and threats in their environment and how they act on them (Schneider
& Meyer, 1991). In substantial uncertainty avoidance countries
organisations tend to respond to uncertainty by creating up a system
of high formalization and hierarchy. In low uncertainty avoidance
nations people are much more attracted to versatile, ad hoc structures
that leave much more room for improvisation and negotiation.
Differences in uncertainty avoidance lead to differences in how
partners perceive and respond to events within the environment with
the IJV, which will likely breed disagreement and disputes between
the companions, and have a detrimental impact on the IJVs efficiency.
Power distance and individualism directly bear on issues of internal
integration and influence relationships with personnel, such as the
choice of control types, reward systems. Administration of personnel
is usually 1 of the initial activities to become left to the local
partner. There can also be evidence that MNCs do not transfer cultural
values related to power distance and individualism to their foreign
subsidiaries (Soeters & Schreuder, 1988). Thus tensions between
the companions with differences along these dimensions might be
avoided. Shenkar and Zeira (1992) suggest that having partners from
both "feminine" and "masculine" cultures might even advantage the IJV.
The aggressive attitude of one companion and also the partnership
orientation of the other may complement every other instead than
collide. The above discussion suggests that differences in uncertainty
avoidance would be more important than the other three dimensions.
The empirical results by Barkema and Vermeulen (1997) supported the
expectations: uncertainty avoidance and long-term orientation had
higher differential negative impact on IJV survival than masculinity,
whilst the two other dimensions (individualism and energy distance)
had no impact. What concerns the Asian context it may be said that
all potential Asian cultures have rather similar cultural profile.
This profile includes rather few layers of decision-making, much
more danger taking, greater group emphasis, and higher concern for
relationships (Swierczek & Hirsch, 1994). This can be applied to TNC
where Thai and Japanese tradition share some similarities.
One tradition can influence how willing 1 is to trust a possible joint
enterprise companion. When it comes to tradition, the Japanese tend
to become somewhat introverted in their ways. They generally are not
receptive to outsiders. When conducting business with Japanese, it's
essential to note that relationships and loyalty towards the group is
critical for success.
(http://www.geert-hofstede.com/hofstede_japan.shtml)
According to Hofsted Cultural Dimension Scores, the score of Japan
is dramatically different from other Asian Countries. Masculinity in
Japan will be the highest characteristic. The lowest ranking factor is
Individualism, which coincides with their high ranking in Uncertainty
Avoidance. Japan is a much more collectivist tradition that avoids
risks and shows little value for personal freedom.
(http://www.geert-hofstede.com/hofstede_thailand.shtml)
In contrast, Thailand's lowest Dimension is Individualism (IDV). A
low score, as Thailand has, indicates the society is Collectivist
as compared to Individualist which this score is even lower than

8. Japanese. It may be said that this is manifest in a close long-term
dedication to the member 'group', is that a family, extended family,
or extended relationships. Furthermore, the primary different category
compared to Japanese Dimension is Masculinity which ranks the lowest
among the Asian Nations. This lower degree is indicative of a society
with less assertiveness and competitiveness, as compared to 1 where
these values are considered more essential and significant. This
situation also reinforces more traditional male and female roles
within the population.
two.five.2 Compatibility between national cultures
Ones culture also influences ones perception of the environmental
elements discussed above; whether your company interests are similar
(or in conflict), whether your objectives are complementary, whether
differences in size are essential, what timescale should apply. In
theory, partners are more prone to agree on these points when cultures
are compatible. That is, joint ventures shaped by parents of similar
cultures stands a greater chance of succeeding than these primarily
based on between dissimilar cultures (Wille, 1988).
two.five.three Different organisational cultures
If the organisational cultures of the two mother and father vary
broadly, a effective alliance may not be possible. However, this is
not always the case. Within the situation of TNC, the organisational
tradition of mother or father can be advantagous because the
understanding of National Culture also affects the performance.
When talks designed to lead to strategic alliance between Mitsubishi
of Japan and Daimler-Benz of Germany broke down, the following report
was made:
"Analysts say the match has been strained from the beginning because
the companies have fundamentally different structures. Daimler-Benz,
a much smaller company than Mitsubishi, has traditionally had a close
knit management structure that has tended to set out clear strategic
objectives and forge ahead. Mitsubishi, an amorphous conglomerate of
several large businesses, has moved much much more cautiously with
internal factions often disagreeing over broader policy." (Yamawaki,
1995).
The companies were unable to overcome differences in their strategies,
structures, and organisational cultures.
Staff posted towards the undertaking from the two parents is much
more prone to work well together when their organisational cultures
are similar. This does not mean that they ought to be identical -
an impossible condition. Instead, there must be considered a sense
of comfort about how the other does the business, a willingness to
work collectively and learn, and needs for shared solutions (Fedor &
Werther, 1997).
two.five.four How the IJV affects the parent organisational cultures
Parenting an IJV undertaking can influence the tradition with
the mother or father headquarters by creating new spirit
of "internationalism." This is ADVANTAGOUS when headquarters staff
advantage from an influx of new ideas and technologies, and develop
new knowledge with the possibilities offered I the environment.
It's DISADVANTAGOUS when the outflow of staff towards the IJV (and
inflow of replacements) impairs internal cohesion. A positive culture

9. is weakened when staff feels pressured by responsibilities for which
they have no training and experience. Supporters with the project are
isolated. Planning and operating the IJV influences the organisational
culture of the mother or father headquarters. In order to respond
to issues and opportunities arising from parenting the undertaking,
headquarters streamlines and reorganizes its structures (Siddall et
al., 1992).
two.six Motivational Perspectives in between Thai and Japanese
One's motives are major determinants of one's behaviour. If the
company can understand the employee's motives, they can influence
their employee's behaviour. To motivate others is one with the
most essential administration tasks. It comprises the abilities
to understand what drives people, to communicate, to involve, to
challenge, to encourage, to set an instance, to develop and coach,
to obtain feedback, and to provide a just reward. According to
(Find Ref), "Motivation is about cultivating your human capital.
The challenge lies not it the function by itself, but in you, the
person who creates and manages the function environment." However, to
motivate people in different culture might be difficult if the level
of motivation is not exactly the same. Ref describes how different
tradition may be perceived differently. Scandinavian cultures (Sweden,
Norway, Finland, and Denmark) location a substantial value on quality
of lifestyle and social needs. European and Anglo-American cultures
location a substantial value on productivity, efficiency, and
individual self-actualisation. Chinese tradition values collectivism
and community activity higher than individualism (Exact same Ref).
According to Maslow's hierarchy of needs, he theorised that people
have successive layers of needs, and that as every lower layer is
satisfied, then the person moves on towards the subsequent layer up.
The following diagram will explain how the model works:
(Maslow's hierarchy of needs model from Maslow, 1943)
The lowest layer is that of physiological needs. It is the require
to eat, sleep, stay warm, use the bathroom, etc. The second layer is
safety (the need to have physical and psychological security, such as
wanting the presence of law and keeping a job). The 3rd layer is that
of love and belonging (being the require to be part of the family,
group, or gang). Some would say that this 3rd layer is very much a
Japanese domain, where belonging to some group seems to take priority
over the achievement of higher layers. According to (Japanese Ref),
he raises the question that "How many times have you noticed very
capable people like Japanese deny themselves a fuller career due to
their desire to stay with some smaller business on the foundation that
it's their 'family?'" The Japanese always put the top priority to
their business. The fourth layer is that of self esteem and status.
This is exactly where high-achievers dwell, and therefore are able
to distinguish themselves commercially and professionally. The fifth
layer is "Actualization." According to Wikipedia.com, it gives the
following description (extract): "Self actualized people embrace the
facts and realities of the world rather than denying or avoiding them.
They are spontaneous in their ideas and actions. They are creative.
They are interested in solving problems, which often includes the
problems of others."

10. The interesting point to make here's whether Thai and Japanese have
exactly the same level in Maslow's hierarchy of needs. At TNC,
different level of needs might bring the conflict in interactive
situations, for instance, between Japanese employer and Thai employee,
the model might require to be adopted in its applications amongst
differing cultures. Even though the tradition of Thailand and Japan
might be similar, it does not mean that they would have the same
desire or expectation.
Primarily based around the literature review, the definition of
IJV, and reasons for forming the JV have been illustrated. Factors
including cultural differences between Thai and Japanese, and various
motivational perspectives were explained. However, it's essential and
vital to discover how these factors affect TNC employees primarily
based on their perception. In Chapter four, findings and analysis from
the interview will probably be examined.
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