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Cross-Cultural Issues of International Joint Ventures: A Viewpoint from Israel

Ferenc Farkas and Giora Avny ()
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Giora Avny: University of Pécs

from Óbuda University, Keleti Faculty of Business and Management

Abstract: The present study focuses on studying the perception of joint ventures, which have prevailed in recent years due to globalization, and in an effort to shed some light on the contribution of organizational and national culture to the performance of international joint ventures in which Israeli firms take part. Organizational culture is a collectively internalized deeply embedded set of beliefs, expectations and assumptions that influence and guide thinking and behavior among joint venture members. Contradicting findings continue to be confusing regarding the nature of the relationship between partners' cultural differences and joint venture performance. The goal of the present research is to resolve this indeterminacy by theoretically advancing and empirically testing a model to explain the phenomenon. Three major hypotheses were tested in this study in an effort to support the differing opinions between researchers: (1) Difference in organizational culture is the reason for performance gaps in joint ventures rather than national culture differences; (2) The influence of cultural difference on the performance of international joint ventures is indirect, but highly influenced by the level of trust between its partners; (3) The extent of acculturation between partners has a positive influence on trust formation between the partners and as a result, on the joint venture performance. Data were collected from 66 managers in 63 joint ventures that included Israeli partners and 23 countries in 16 industries. Relationships proposed in the study were validated using the methodology of structural equations modeling. The study has found that the performances of joint ventures, whose basis of operation is in Israel, are influenced by the organizational culture differences, driven by trust between partners as a mediating variable. The extent of acculturation between partners was found to have a positive influence on trust, which is a major derivate for forming more positive and better joint ventures. The study has also found that national culture differences have no influence on joint venture performance. Nevertheless, it is important for future studies to continue and to compare countries, industrial branches and various combinations of characteristics of parent companies and joint ventures.

Keywords: organizational culture; organizational performance; international joint venture (search for similar items in EconPapers)
Date: 2005
ISBN: 963715440X
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