112312 Essay

13862 Words Apr 15th, 2016 56 Pages
Chapter 7

Cultural Diversity in
Cross-Border Alliances
Susan E . Jackson
Randall S . Schuler

Introduction
Increasingly, firms are using cross-border alliances to strengthen and maintain their position in the market place . Although often seen as a relatively fast and efficient way to expand into new markets and incorporate new technologies, the success of cross-border alliances is by no means assured . To the contrary, such alliances often fall short of their stated goals and objectives . While some failures can be explained by financial and market factors, the failure of others can be traced to neglected human resource issues and activities associated with managing the cultural diversity present in these organizations .
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Cross-Cultural Management : Foundations and Future

These drivers of cross-border alliances are expected to intensify in the future, as globalization continues - even in the face of difficult economic conditions
(Charman, 2000 ; Cyr, 1995 ; Doz and Hamel, 1998 ; Hitt, Harrison, and Ireland,
2001 ; Inkpen and Beamish, 1997 ; Lane, Salk and Lyles, 2001 ; The Economist,
2000) . For example, the U .S . biotechnology industry is characterized by networks of relationships between new biotechnology firms dedicated to research and new product development and established firms in industries that can use these new products, such as pharmaceuticals . In return for sharing technical information with the larger firms, the smaller firms gain access to their partners' resources for product testing, marketing, and distribution (Liebeskind, Oliver, Zucker, and
Brewer, 1996) . Big pharmaceutical firms such as Merck or Eli Lily gain from such partnerships because the smaller firms typically develop new drugs in as little as five years, versus an eight-year average development cycle in the larger firms
(Robertson and Jett, 1999 ; Schonfield, 1997 ; Sager, 1996) .

Types of Cross-Border Alliances
When using cross-border alliances to implement their business strategies, firms have many options . Representing the least intense and complex form of crossborder alliances are licensing agreements and various

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