The impact of national and organizational cultural differences on international joint venture performance

Abstract

The purpose of this study is to theoretically explore how national cultural differences, organizational cultural differences and trust between partners can influence IJV performance. Findings from previous studies have been mixed, and this study attempts to address the relationship and performance issues by theoretically advancing a model to explain the inconclusive results found to date. Based on previous research, the findings of this study are as follows. Firstly, in terms of the relationship between national cultural differences and IJV performance, differences in the national cultures of IJV partners adversely influence IJV performance. Secondly, in the case of the relationship between organizational culture and IJV performance, differences in organizational culture between IJV partners create organizational problems that adversely influence IJV performance. Thirdly, with regard to national versus organizational cultural differences and IJV performance, organizational cultural differences represent the visible differences between, as opposed to the latent effects of, cultural differences, and these may cause greater interaction problems between the IJV partners. Fourthly, in terms of partnership trust and IJV performance, partnership trust positively influences partner interaction and venture performance. Finally, in the case of national culture, partnership trust and IJV performance, it is argued that national and organizational cultural differences adversely influence process- based trust producing mechanisms, or partnership trust. It is also empirically established that partnership trust significantly influences IJV performance. Therefore, partnership trust mediates the relationship between cultural differences and IJV performance through a chain of interactive processes.