Open Internationalization Strategy

Nadine Tournois, Philippe Very

• Publisher: Routledge
• Year: 2021
• eBook ISBN: 9781000347494
• Topic: Business
• Subtopic: Business General
• Index: Business

Open internationalization is a concept that brings a new perspective on the process of firm internationalization. As theories of internationalization show, some companies expand abroad only on their own, known as closed internationalization, while others combine their resources with those of other firms or use their networks for facilitating foreign implantation, known as open internationalization. Parallel to the development of the well-known concept of open innovation, open internationalization can be conceived as a meta-model for understanding companies' expansion abroad.

This book gathers a selection of contemporary research works dedicated to open internationalization, either seen as a way to analyze expansion in foreign countries, or as a way to investigate the management of geographically dispersed activities. All the authors of the chapters are researchers specialized in the internationalization field. Readers will benefit from this new lens for understanding, studying or practising international business, from the decision to go abroad to its implementation and its efficiency.

Open Internationalization Strategy includes both academic empirical investigations and literature reviews on specific topics, making it valuable to researchers, academics, managers, and students in the fields of business and management history, international business, organizational studies, and economics.

Part 1
Culture and Its Requirements

The process and even the very concept of open internationalization cannot ignore the intercultural dimension.

While the environment is increasingly open and economic actors from different backgrounds (geographical, sectorial, institutional, etc.) are coming together to create value more efficiently, they are nevertheless still confronted with the demands of their new cultural environments. The very success of their efforts to bring them closer together, as well as their desire to exploit new countries, depends in part on their ability to understand the values, norms and even beliefs of their partners, and more generally their new environment.

Culture—or rather, the ability to consider the cultural differences between the players involved, whether individuals or organizations—is a prerequisite for any efficient international development. This is particularly true if we place it in the context of open internationalization, which above all is about changing mentality.

Indeed, open internationalization requires initial willingness to discover not only new partners, but also innovative ways of doing business in new environments. Relativizing one’s own culture and learning about the new culture (of an institution and/or nation) therefore seems to be a prerequisite. While market knowledge is still fundamental, taking another culture into account is just as important.

The following chapter therefore highlights this imperative, by successively analyzing a failed venture due to ignorance of a certain number of more or less formal values and social structures when an SME set up a subsidiary abroad. These constantly evolving systems of values and norms are the subject of a second study on the African continent, where the desire to create a continent-wide management model is simultaneously confronted with the problem of integrating African subcultures at the same time as integrating Western modernity. Then, through a case study, we analyze the importance of combining cultural differences and power games when economic actors engage in an innovation project. While ‘relativizing’ one’s own culture seems necessary—in other words, the ability to recognize that one does not know the absolute truth—it is nevertheless no less dangerous to want to enforce other cultural elements. This is demonstrated through a study conducted in an Italian company which forced local employees to use a language and management methods which were foreign to their culture. Finally, the academic field of international management research itself is considered by taking account of the international background of its researchers. We therefore put the cultural dimension back at the heart of the matter.

1
Intercultural Influences Leading to Implementation Failure in the Russian Automotive Industry

Valery Krylov and Vincent Montenero

Introduction

Even though several Western companies have successfully generated high returns in Russia in the past, this market still has difficulty attracting foreign capital. Since 1992, the transition to a capitalist society has been brutal. To survive in a market economy, Russian companies have overly relied on largely adopting a Western management approach. Foreign multinational firms (MNFs) have injected competition. Today, foreign investors still deplore challenges such as high fluctuation in terms of economic activity, excessive bureaucracy and inscrutable management practices. Foreign managers are often apprehensive when required to work in Russia due to widespread stories of failures circulating among expatriates.

In this context, we offer an in-depth analysis of the situation of a Western MNF which failed to establish itself in Russia. Our study aims to understand what combined cultural factors influenced progress on the project. We thus adopt an intercultural approach to untangle and assess the numerous reasons for the project’s failure.

We first introduce our conceptual framework, present our research question and describe our field data. After detailing our methodological choices, we introduce and analyze our results, correlating them to the intercultural literature. Finally, we outline the limitations of our research and formulate our contributions.

Literature Review

Russian National Culture

Under the term ‘culture,’ we understand the core values shared by a group, where a value is a preference for one situation over another (Hofstede, 2003, p. 10).

According to Hofstede’s framework, Russian culture is characterized by high power distance and uncertainty avoidance, a moderate level of collectivism and femininity (Bollinger, 1994; Fernandez et al., 1997; Elenkov, 1997). Added to this is a moderate albeit steadily increasing degree of long-term orientation. Highlighted is the trend “towards investing in new ways of doing things” (Veiga et al., 1995, p. 22) and the hypothesis that personal relationships might in the future become “more important than ever” (Veiga et al., 1995, p. 25). Indeed, Elenkov (1997) reported a high propensity of Russians using social power and informal influence, as well as their openness to new ideas. He also noted an increase in individualism among younger generations.

Aycan et al. (2000) ranked their Russian sample high in paternalism, whereby superiors are expected to provide guidance, protection and care to subordinates in exchange for loyalty and deference. According to their study, Russians are very loyal towards community and highly fatalistic. While they possess a sense of obligation towards others, they do not seek much in terms of responsibility.

Alexashin and Blenkinsopp (2005) applied the Schwartz Value Survey approach (Holt et al., 1994; Ralston et al., 1997) and reported the growing importance of individual success and achievement demonstrating competence, the attainment of status and prestige, and controlling people and resources. Russians are also showing a steadily increasing score for pleasure or sensuous gratification, the search for excitement, novelty and challenge, as well as independent self-direction. They do not seem to conform to social expectations, traditions or security and harmony in relationships, despite their benevolence towards people they know well and moderate degree of universalism (Alexashin and Blenkinsopp, 2005). In contrast, Ralston et al. (2008) highlight low scores in terms of achievement and stimulation.

In general, the average Russian demonstrates a high level of caution or even fear, leading to the quest, desire and need for some type of protection. There is little inclination to take risks or pursue fun and pleasure, and greater acceptance for restricted novelty, freedom and independence. Uncommonly, the pursuit of wealth and authority is decoupled from innovation and creative endeavour. A strong orientation towards individual self-enhancement leaves less room for concern about equality, justice and tolerance, even for people within one’s immediate circle (Magun and Rudnev, 2010).

Based on Kluckhohn and Strodtbeck’s framework (Woldu et al., 2006), Russians greatly appreciate continuous activity in order to accomplish tangible tasks. Above all, they carefully and rationally consider all aspects of a situation before taking any action. Regarding their relationship with nature, Russians prefer to adapt to the broader environment and strive to maintain a balance between its components. Since Russians see human beings as being ‘basically evil,’ relationships within an extended group depart from moderate responsibility, and hierarchical power and responsibility are strongly pronounced.

Based on GLOBE data (Grachev, 2009), Russia is perceived as becoming an increasingly individualistic society. However, performance orientation remains poor. The roles of men and women in organizations appeared balanced after the collapse of the USSR, but the gender gap has recently been widening. Scoring relatively low in terms of assertive and confrontational communication, Russia is moving back to its traditional centralized model. Whereas in the 1990s the time horizon was very limited, the economic and social stability of the 2000s might have encouraged businesses to think more strategically. Though Russians have to accept uncertainty in practice, many would prefer order. A lack of social norms to protect the less fortunate explains Russia’s poor score on humane orientation. GLOBE Russian respondents wish society would reward individuals for being fair, altruistic, generous and kind to others (Grachev, 2009).

Prasnikar et al. (2008) ranked Russian managers as being highly particularistic and rather specific, with a clear separation between professional and private life. In addition, important differences in values can be observed between generations (Richards et al., 2012) and genders (Woldu and Budhwar, 2011).

Russian Culture and Organizations

Cultural values influence organizational practices through attitudes and behaviours. Thus, respect for the status of a Russian manager is directly linked to their autocratic and paternalistic style (Bollinger, 1994), as well as the importance of the balance of power. Employees depend on the manager, thus requiring the establishment of personalized relations (Temnitskii, 2006).

Within elitist Russian organizations, rules apply to the ‘ordinary’ individual but not the boss (Prasnikar et al., 2008). Hence, when confronted with an ethical dilemma, “the Russian group places more emphasis on the specific situation” (Robertson et al., 2003, p. 379). Moreover, Russians “tend to prefer more forceful decision alternatives resorting to business practices” (Thelen and Zhuplev, 2001, p. 29). For instance, “new Russian capitalists often see free pricing as an opportunity to apply unreasonably high prices as the only way to increase profits” (Barnes et al., 1997, p. 544). Predictably, the adoption of foreign organizational and business practices increases perceived performance, while the Russian business culture has the opposite effect (Kobernyuk et al., 2013).

Since Russians “prefer adapting to the environment rather than trying to transform it” (Michailova, 2000, p. 102), anxiety about the future makes executives nervous, emotional and aggressive (Bollinger, 1994). “In an environment in which laws are abrogated or changed almost daily, there are only two choices for a manager: either be totally immobilized by uncertainty or follow one’s own rules” (Veiga et al., 1995, p. 25). Here, ‘one’s own rules’ are typically associated with taking high risks and making radical changes.

The collectivist dimension emphasizes loyalty, as with decisions based on personal relationships with managers (Bollinger, 1994). Personal ties become important where institutions are weak (Kostova, 1999), when the cognitive ‘pillar’ compensates for the absence of normative and regulative ‘pillars’ (Puffer and McCarthy, 2007). Here, informal practices simultaneously support and subvert formal norms (Ledeneva, 2006). Hence, the distinction between putting one’s trust in people and putting one’s confidence in the social environment becomes critical (Sapsford and Abbott, 2006).

This has significant consequences for communication. In general, potential knowledge transmitters may choose to hoard their knowledge for fear of decreasing their own personal value. Within Russian organizations, there is high uncertainty regarding how shared knowledge is used, in particular the negative consequences of knowledge sharing with subordinates (Michailova and Husted, 2003). Formality is also important. Accordingly, quiescence is the Russian’s default reaction to many problematic situations, which could potentially lead to radical oppositional reactions.

These particular dimensions of Russian culture and their co...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• Introduction
• Part 1 Culture and Its Requirements
• Part 2 Partnerships and Open Internationalization
• Part 3 Seeking International Efficiency
• Conclusion
• List of Contributors
• Editors
• Index