I

Aalborg University

M.Sc. International Business Economics

Spring Semester, 2016

Module 3a Examination Case

Group 4

Ivan Steiner _________________

Dimitrios Zygonalis _________________

Dakota Karlsson _________________

Agnė Petrauskaitė _________________

Vladislav Georgiev Hodzhev _________________

“Words: 7743”

II

Table of Contents

1) Introduction ................................................................................................................................ 1

2) Questions .................................................................................................................................... 2

3) Q1. Cultural Theories ................................................................................................................. 3

a) Functionalistic view ............................................................................................................. 3

b) Interpretivistic view .............................................................................................................. 5

4) Q2. Leadership Theories and Leadership Behavior ................................................................... 8

a) Situational/Contingency theories ......................................................................................... 8

b) Mr. Andersen’s behavior ...................................................................................................... 9

c) Mr. Hjorth ........................................................................................................................... 11

5) Q3. Knowledge Sharing and Learning ..................................................................................... 13

a) Phase 1: “Set-up phase” ..................................................................................................... 13

b) Phase 2: “Managing the people” phase .............................................................................. 15

6) Q4 Recruitment of Expatriates ................................................................................................. 18

a) The Case of Mr. Andersen (“Set-up Phase”) .................................................................... 18

b) The Case of Mr. Hjorth (“Managing the People Phase”) ................................................. 19

c) Why is this relevant? .......................................................................................................... 20

d) What can the company learn from this? ............................................................................. 21

7) Q5. Suggestions for Establishing and Managing a Joint Venture ............................................ 22

8) List of references ..................................................................................................................... IV

III

List of Tables

1. Table 1. “Mr. Andersen,” Authors’ interpretation from the case ....................................... 19

2. Table 2. “Mr. Hjorth,” Authors’ interpretation from the case ............................................ 20

List of Figures

1. Figure 1. “Context of Cultures”, Vonsild, 2016 ................................................................ 17

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Introduction

Aalborg Industries was a Danish boiler manufacturing company recently acquired by Alfa

Laval in 2010. However in 2003, Aalborg Ind. entered into collaboration with Vietnam

Shipbuilding Industry Group, Vinashin. The company was interested in entering the Vietnamese

market for numerous reasons: a potential market for marine’s production, diversity risks from

China in same region, comparable low production costs, and government commitment towards

foreign companies to name a few. As a relatively new company to the market, the Danish

organization sought help from their local partners to navigate the various external challenges they

would face but instead face more internal challenges than previously expected.

Therefore, this paper is going to present the difficulties faced by the company in doing

international business with regards to cultural differences, cross-cultural leadership and human

resource management, along with knowledge sharing and learning within international joint

ventures and the importance of expatriates’ recruitment. All the questions from the case will be

answered within sub-chapters in this project based on relevant theories introduced during the

course as well as examples of the case to enrich our theoretical knowledge with real-life

problems. Where it is required, we will also provide our own suggestions in solving issues

regarding international joint ventures problems arising from different cultures.

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Questions

1. Present and discuss cultural theories introduced in the module focusing on their relevance for

understanding the challenges of leadership and human resource management in international

business.

2. Using relevant leadership theories as a guide, critically discuss the leadership behaviors of the

two Danish managing directors and their influence on the joint venture.

3. Building on selected literature from the module and the guest lectures, discuss how knowledge

sharing and learning in the joint venture could have been optimized, and what initiatives the joint

venture leadership could have taken.

4. What lessons can you draw from the case with respect to the recruitment of expatriates for

international assignments of this type?

5. What major lessons can you draw from the case to guide you if your job was to establish and

manage a joint venture in an emerging country market?

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Q1. Cultural Theories

Based on literature regarding culture, we identify the main concepts of culture from a

functionalist and interpretivist view (Burrel & Morgan, 1979).

Functionalistic view sees culture as a non-dynamic phenomenon, determined by patterns

of values and beliefs that form an overall description of group of individuals. The root

assumption of this approach is from an objectivist viewpoint, which assumes that reality exists

externally and independently, therefore it affects actors in the system, but not the other way. This

reality can be understood only from the outside-perspective, not from the perspective of the

individual embedded in the social system. Actors are acting boundedly rational and are

determined by the environment (Burrel & Morgan, 1979).

These assumptions allow us to understand theories and frameworks used by researchers

arguing from the objective perspective. The most recognized and cited author from this field is

Geert Hofstede. He presented models of cultural dimensions that can statically evaluate national

culture as well as organizational culture of a certain company. He sees culture as a static

phenomenon that can be measured and a researcher does not need to be present to within the

culture being studied. According to Hofstede, culture can be examined at different levels. The

national culture is represented by values and beliefs and is the root layer, while other layers,

namely; rituals, heroes and symbols are more tangible and specific. These characteristic of

culture are called “practices” and represent organizational culture of specific company, arising

from the national culture’s values (Hofstede, 2001).

Hofstede developed two dimensional models for evaluating national and organizational

culture. His 6-dimensional model for evaluation of national culture consists of these factors; (1)

Power distance, (2) Uncertainty avoidance, (3) Individualism or collectivism, (4) Masculinity or

femininity, (5) Long-term orientation, (6) Indulgence vs. restraint. By exploring further layers of

cultural values, we are able to apply his second-level “multi-focus model” evaluating

organizational culture; (1) Means oriented vs. goal oriented, (2) Internally vs. externally driven,

(3) Easygoing vs. strong working discipline, (4) Local vs. professional, (5) Open system vs.

closed system, (6) Employee vs. work oriented.

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Another similar model was developed by Fons Trompenaars, aimed to evaluate national

cultures based on 7 factors; (1) Universalism vs. Particularism, (2) Individualism vs.

Communitarianism, (3) Neutral vs. Emotional, (4) Specific vs. Diffuse, (5) Achievement vs.

Ascription, (6) Sequential vs. Synchronic, (7) Internal vs. External control (Trompenaars, 1994).

Richard Gesteland’s cultural dimensions is another functionalistic model that compares

these dimensions; (1) Deal-Focus & Relationship-Focus, (2) Informal & Formal, (3) Rigid-Time

& Fluid Time, (4) Expressive & Reserved.

Another objectivistic approach was presented by Hall, focusing on communication

between different cultures. His model of “high vs. low-context cultures” presented another

bipolar perspective to evaluate culture from a deterministic point of view. He described high-

context communication as indirect, both verbal and nonverbal, highlighting the importance of

relationships and context, while exchanging implicit information. Low-context communication is

based on direct, verbal information exchange, where time is important and the content is codified

(Hall, 1976).

As a consequence of the functionalistic approach, the concept of psychic distance was

created. First presented by Beckermann in 1956 and later popularized by Johanson and Vahle in

1977, psychic distance refers to differences in cultures. Johanson and Vahle argue that the

differences in host and home countries’ culture determine the effectiveness of the process of

collaboration between companies embedded in different cultural backgrounds. Kogut & Singh

developed a study about the influence of Hofstede’s cultural factors on selection of entry mode

for internationalization (Kogut & Singh, 1988).

In general, we can characterize the functionalistic view of cultural phenomenon as an

objective approach which assumes that culture is stable, non-dynamic and homogenous and that

individuals are not actors in terms of influencing the system, but members that react to the

environment. Most of the studies see concept of cultures through bipolar determinants. These

determinants are measurable and nomothetic. The Nomothetic approach refers to research based

upon “systematic protocol and technique” (Burrell & Morgan, 2005, p.6). Sub-cultures (e.g.

organizational culture) are based on higher values presented in the national culture. The context

in not taken into consideration.

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The Functionalistic view has been criticized by many scholars, because of its rigid and

static assumption of culture as well as because of its lack of context (Fang, 2010; Dao, 2016;

Shenkar, 2008). Fang criticized Hofstede’s approach in 2007, by saying that cross-cultural

management has dynamic nature, full of paradoxes that need to be understood in context and that

Hofstede’s models do not provide this insight (Fang, 2010). Dao provides 4 types of illusion

arising from functionalistic view; (1) Illusion of symmetry between home and host country -

negligence of context, (2) Illusion of stability - static view of culture, (3) Illusion of discordance

– differences in culture does not need to be complementary, (4) Problem of oversimplification

(Dao, 2016). Furthermore, Shenkar believes that functionalistic perspective on culture needs to be

changed to more dynamic approach that can shed light on contextual interpretivistic view of

culture, examined from the perspective of an actor embedded in the system. He referred to this

approach as the social constructivism (Shenkar et al., 2008). Due to globalization forces,

paradoxes in inter-cultural management call for contextual evaluation (Osland, 2000).

Interpretivistic view represents the exact opposite of what the functionalistic view

provides. The root assumption of this stream is embedded in a subjectivist approach. Reality is

viewed as a subjective phenomenon; therefore it can be understood only from the perspective of

the actor. Actors are creating their perception of reality through their active interaction with the

surrounding environment and in this sense culture is seen as a dynamic concept which is socially

constructed (Burrel & Morgan, 1979). Meaning and interpretations are of big importance to the

construction of culture.

This approach of cultural studies was first recognized as a social constructivist view in

early 1970s by Clifford Geertz. These studies were focused on finding answers to “how

organizations make sense of their social backgrounds?” This process of contextual understanding

of cultures is called sense-making and is characterized as a dynamic ongoing process that

substitute functionalistic view of predefined non-dynamic patterns of evaluating cultures

(Schultz, 1997). Another big difference is that social constructivist view focus on intercultural

interaction, while functionalistic view provides only comparison of cultures (cultural differences)

(Søderberg & Holden, 2002).

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Sense-making is a vital component of the social constructivist approach. It represents a

process of placing initial situation into framework, comprehending and constructing the meaning

and interacting to mutually understand the situation (Weick, 1995). Clark & Soulsby propose a

model of sense-making process in IJV, where they focus on evolution of collaborative process

and change of this process starting from initial cultural conditions to ongoing process of

negotiations between both partners. They differ between two possible sense-making paths; (1)

accumulating and (2) obsolescing, where the first one represents successful negotiation and

sense-making based on adjusting cultural perspective, while the second one holds the view that

underlying cultures may lead to fragmented negotiations and deterioration of collaboration (Clark

& Soulsby, 2009).

Researchers from the stream of mergers and acquisitions sense-making studies generally

argue that national stereotypical cultures are characteristic in initial interpretation, but does not

cover the ongoing process of negotiation between partners, where more refined and dynamic

understandings are taking place.

In order to achieve successful sense-making of different cultural backgrounds, it is

necessary to evaluate a partner’s culture more deeply from the subjective contextual perspective.

Robert Collins, a former expatriate manager outlines several levels of West perception of Asian

culture, where he explains how sense-making is gradually developing with experiences and

openness towards culture.

Osland proposed a model of cultural sense-making consisting of 3 phases; (1) index

context – noticing cues about the situation, (2) making attributions – drawing inferences based on

identity and experience, (3) selecting schema – enacting appropriate behavior script, effected by

(3.1) cultural values and (3.2) cultural history (Osland, 2000).

Another sub-stream of interpretivistic cultural management, closely related to sense-

making, is presented by Brannen and Salk and focuses on negotiation between partners in IJV.

This stream puts emphasis on the emergence of a common culture in IVJ that is created through

negotiations. Rather than speaking about different cultural blend, they emphasize a common

culture that has some of its own idiosyncratic characteristics (Brannen & Salk, 2000).

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In their research paper called “Parenting across borders: Negotiating organizational

culture in a German-Japanese joint venture”, they present a case study of two companies from

different culture and their negotiation process leading to formation of an idiosyncratic

organizational culture. They observed 4 types of mechanisms that shaped organizational culture;

(1) Compromise by one side, (2) Meeting in the middle, (3) Innovation for both partners, (4)

Division of labor to minimize need for further negotiation.

A specific view of concept of culture called “dialectical thinking” can help us understand

the phenomenon of paradoxes in culture. It focuses on understanding and analyzing of those

paradoxes (Simmel, 1997). Paradox is defined as a “contradictory yet interrelated elements

(Lewis, 2000, pp.760). According to this stream of thinking, culture can have characteristics of

both extremes of a certain attributes (e.g. masculine and feminine), because it always depends on

a context.

Tony Fang proposed a specific dialectical approach based on yin-yang philosophy. Yin-

yang represents co-existence. There exists neither absolute yin nor yang, they both co-exist

together in a dynamic form, and they complement each other as well as they are dependent on

each other. Sometimes yin is dominant, while yang is suppressed and vice versa (Chen, 2001).

Fang believes that cultural paradoxes can be seen through yin-yang philosophy, because

of context, where a certain paradoxical situation is appearing. For example, Sweden is according

to Hofstede’s model very feminine culture, while the size of Swedish MNCs as well as the speed

of internationalization of Swedish companies refers to more masculine characteristics of business

practices (Birkinshaw, 2002). Fang argues that dialectical approach is necessary because of 3

main reasons: (1) Need for understanding of the “moment” of the culture – situation, (2) Own life

of culture – evolution of culture and (3) Globalization and its impact on cultures (Fang, 2006).

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Q2. Leadership Theories and Leadership Behavior

What is leadership?

In order to clarify the meaning of leadership we have to determine what a leader is. There

is a big difference between a leader and a manager. Leader is someone who is doing the right

things, while manager is someone who is doing the things right (Bennis). In the broadest sense of

the word, a "leader" is someone who brings people or his/hers followers together and guides them

toward a common goal. Anyone can tell others what to do, but effective leadership requires much

more than the ability to assign tasks to a group. Leaders are defined by their character, the actions

they make, the knowledge they have; even if they are good or bad, they can inspire people,

motivate their followers and they can set directions. So, we would say that leadership is the way a

leader can accomplish the goals he/she has or an organization has assigned to him/her.

Many Leadership theories have been presented through the years, and in our case we have

chosen to work with the Situational/Contingency theories. The reason behind is that there are

several similarities between the two manager profiles that are mentioned in our case study and the

aforementioned theories. Thus, we are given the opportunity to analyze the two Danish Managers

through these theories.

Situational/Contingency theories

Situational leadership theories originate from the studies carried out by academicians such

as Fiedler (1967), Hershey & Blanchard (1969; 1977), House (1971). The main idea behind

these theories is that the way in which leaders behave and influence their subordinates tends to

change with regards to the specific environment and situation to which they are exposed to.

According to the contingency theories the dominant types of leadership behavior are categorized

as being either task-centered or relationship-centered. On the one hand, task-centered leaders are

usually responsible for the close supervision of their subordinates which includes explanation of

their daily duties and setting deadlines for completion, guidance and suggestions on how to

handle with their tasks, etc. (Kuada & Sorensen, 2010) Furthermore, task-oriented leaders could

also be described as people that are extremely focused on the way in which the working process

is being organized and planned. On the contrary, relationship-centered leaders pay considerable

attention on meeting the social and emotional needs of their employees. Such leaders usually

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communicate actively with their employees, coach them, provide them with encouragement and

support so that they feel appreciated and satisfied from the work they do in the organization

(Kuada & Sorensen, 2010).

The contingency theorists, however, believe that the degree to which a certain leader

belongs to any of the two extremes would be dependent on the specificity of the task, the

deadline for completing the task and the level of employees’ maturity when dealing with the task

(Kuada, 2010). Maturity refers to the desire, readiness and ability of a person to be responsible

when setting direction of his or her own behavior.

Mr. Andersen’s behavior

When Mr. Andersen stepped in the shoes of a Managing Director of the newly established

joint venture, he came as a man with a strong vision of how the processes in the organization

should be implemented based on his previous working experience in various countries all over

the world.

In the very beginning of his service, the Danish director was responsible for the whole

training process of the Vietnamese work staff ranging from provision of technical and

management training to teaching some of the personnel basic do-it-yourself skills. Even if he

achieved success in some of aspects of these training practices, in some other cases he met strong

resistance from the Vietnamese, as is evident when work security measures were introduced. As a

representative of a culture, where safety measures at work are considered to be an extremely

important part of the working standards of each company, Mr. Andersen tried to make the

Vietnamese workers adopt the practice of wearing protective shoes and helmets. However, the

response which he initially received was that of a rejection from them to do so, which can be

associated with the lower degree of risk perception for the Vietnamese in comparison with the

Danes. The reason for this problem probably could be traced to the approach of Mr. Andersen

towards his subordinates. Instead of convincing them of the importance of using protective

helmets and shoes at the workplace for their own safety, he had rather forced the workers to wear

them as part of the standards which companies in Denmark tend to follow.

The decision-making process in the joint venture was another aspect where the opinions

of the Danish Managing Director and his Vietnamese partners were different. Mr. Andersen

stayed firm in his position that the whole working process in the joint venture should be done in

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accordance with the western way of thinking, because in his words it was “the only way to build

an organization”. However, this vision was not shared by his Vietnamese partners who had

slightly different opinion. Even if the actions and the decisions of the Danish supervisors seemed

to be sometimes irrational, the Vietnamese could not do anything, because their opinions were

not taken into consideration and sometimes even ignored. This resulted in frustration among the

Vietnamese due to the fact that they were not treated as an equal partner in this joint venture, but

more like an “employee” who was working in the organization. Due to the lack of transparency

in the company in terms of decisions and operational knowledge shared, the Vietnamese

managers lost their authority in the eyes of their employees and thus the impression that they

were just observers of the processes took place. There was an obvious gap in the communication

process between both parties in the joint venture, which had its consequence even on the behavior

of the employees, because their degree of motivation and enthusiasm at the working place

dropped down significantly. Despite that, the Danish manager kept doing things in the way he

was used to do them. Probably the roots for this problem were ingrained in his pre-established

and generalized opinion about the negative impact of local partners in joint ventures, originating

from his previous experience of working in such organizations. We assume that Mr. Andersen

wanted to predict and prevent the risk of such bad practices to happen in the company which he

was managing and for that reason he limited the influence and functions of the other party in the

joint venture. However, by doing so, he did not give the Vietnamese managers space and chance

to show and apply into practice their knowledge, experience and personal capabilities.

Despite his attitude towards the Vietnamese partners and the difficulties he encountered,

at the end Mr. Andersen reached his goal and successfully concluded the set-up phase. The

decisions he took and the behavior he adopted in pursuing his objectives enabled him to build up

the whole plant and start the production process in just three years. However as his successor Mr.

Hjorth said, every success happens at a price and in the case of Mr. Andersen that was the lost

connection between him and the Vietnamese party in the joint venture. In his strive to act as a

professional and to deliver the expected results as soon as possible, he destroyed the bridge that

should exist between him and the local partner, something which is of huge importance in cases

when companies coming from totally distinct countries engage into a joint venture. Based on the

above mentioned analysis, we can conclude that Mr. Andersen behaved as a task-centered leader,

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with an extreme focus on the organization and planning of the working process inside the

organization, on the quality of the final product and on the performance of the work staff.

Mr. Hjorth behavior

As Mr. Hjorth said when he came to Aalborg Industries, it is the first time which he was

working with the Asian culture and he took only one month of training at the company’s

headquarters, related to all kind of tasks that he would face, he was sent to replace Mr. Andersen

at Haiphong.

His first obligation as he began his new position was to determine the current state of the

company. Instead of hiring a new Deputy Managing Director at the vacant position of Mr. Vu, he

suggested to add the responsibilities of this position to his duties and run the joint venture on his

own. This action could be characterized as an immediate response which enabled the company to

return to its normal operations without the need for new additional changes. This is a proof that

he possessed the needed qualities to handle with many tasks and to exert control over the

organization simultaneously.

Another action that Mr. Hjorth undertook was to clarify the responsibilities of both the

blue collar and white collar employees in the organization. Mr. Hjorth thought that through the

years that had already passed, the Vietnamese acquired the needed skills and knowledge to do

their daily obligations on their own and for that reason he dismissed one of the two Danish

supervisors, due to the fact that the functions which they were performing started overlapping.

Furthermore, he composed a new management group whose role was to overtake the functions

occupied at the current moment by the Danish supervisors. By frequent meetings and planning

done almost completely inside the organization, the influence of the Aalborg headquarters was

limited drastically to communication related to sales orders and deliveries. Mr. Hjorth felt that the

company should be run mostly by the Vietnamese party, thereby making them more responsible

with regards the operations and processes which were taking place in the company. We assume

that Mr. Hjorth undertook these actions to motivate the Vietnamese partners and in this way to

increase the level of trust between both sides.

As part of his daily routines Mr. Hjorth also started visiting the company's employees

thereby improving the communication link between them and him. Even the language barrier did

not appear to be an obstacle for the willingness of the Danish manager to talk to the workers, as

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in some cases he was using gestures to express himself. This is obvious sign that he wanted to be

close to the problems and the needs of his employees, thus showing them that they could rely on

him no matter what the nature of the problem was.

Due to all of the changes he did since his appointment as the new Managing Director in

the joint venture, Mr. Hjorth managed to accomplish the goals that were set in front of him. He

succeeded in reviving the lost communication between Aalborg Industries and Vinashin by

building and strengthening the level of trust through appreciating the equal role the Vietnamese

party had in the joint venture and through giving them more power and control over the decisions

and processes inside the organization. Mr. Hjorth could be perceived as a bridge between the

Danish and the Vietnamese cultures, because he not only managed to identify and fill the gaps

inside the joint venture, but he also succeeds in finding a “common language” for the two parties

to understand each other. According to the above mentioned discussions we could say that Mr.

Hjorth can be characterized as a relationship-centered leader. He managed to establish closer

relationship with the Vietnamese partners by active communication with both the senior

management and the employees, by showing support and trust with regards to the tasks they were

responsible for and by appreciation of their opinions.

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Q3. Knowledge Sharing and Learning

In order to answer these questions, first of all we need to understand why knowledge is so

important in IJVs, why the process of sharing knowledge is crucial and how it can be efficiently

reached between two business partners. Second, we will look at the provided case and will

emphasize main issues which occurred during the startup phases and will try to understand the

reasons behind them. Third and finally, according to the conclusions we draw from the case, we

will apply relevant theory and give suggestions on possible solutions in order to improve

knowledge sharing and learning.

Applying knowledge-based resources is at the heart of competitive advantage for

multinational enterprises (Kogut & Zander, 1992). Conventional wisdom has shifted from

viewing international joint ventures (IJVs) simply as organizational mechanisms that MNEs use

to overcome opportunistic behavior to viewing IJVs as effective conduits that enable MNEs to

exploit their knowledge in multiple markets (Inkpen & Dinur, 1998). Two common types of

knowledge are explained in the literature: Tacit and Explicit. Tacit knowledge is abstract and can

be communicated only through active involvement of the teacher. Explicit knowledge is highly

codified and is transmittable in formal, systematic language (Polanyi, 1966; Nonaka & Takeuchi,

1995). In other words, tacit knowledge requires a high degree of socialization and communication

while explicit knowledge is more detailed and task oriented.

Before suggesting improvements to the knowledge sharing and learning practices with

regards to the case, we first need to identify the reasons behind the misunderstandings which

have occurred between the two sides. Two Danish and three Vietnamese leaders will be taken in

consideration while analyzing the case: Mr. Andersen and Mr. Hjorth (Danish Managing

Directors) appointed by Aalborg Industries, Ms. Pham (The head of Vinashin’s International

Department) appointed by Vinashin, Mr. Doan (Sales manager from Aalborg Industries sales

office in Hanoi) and Mr. Dao (Quality manager) respectively.

Phase 1: “Set-up phase” One of the main duties Mr. Andersen had was to facilitate the

knowledge transfer process, the main focus in the following section. We will look at Mr.

Andersen’s choice of strategy and highlight the disagreements which occurred between him and

the Vietnamese managers.

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The first challenge presented is that related to the technical advisers from Denmark as

trainers in Haiphong. While Mr. Andersen saw the value of having Danish employees in Vietnam

as a great advantage in terms of their teaching and opportunity to share knowledge, Mr Dao saw

this in quite the opposite direction. He saw that even though they were educated, they lacked the

skills to help when bigger technical issues occurred. Additionally, Mr Andersen had stopped

sending Asian employees to Denmark while Mr. Dao emphasized the added benefit to send local

employees to Denmark to gain deeper knowledge about the technical instruments such as the

boilers they soon were to be producing. These problems arose mainly due to the high levels of

miscommunication between both parties. This could have been easily been resolved by

continuing the practice of sending the local Vietnamese employees for education in Denmark.

Mr. Andersen’s decision to cease that practice resulted in diminished degrees of knowledge

sharing between both sides.

A second issue between the two cultures occurred regarding basic protective tools: the

implementation of helmets and shoes. Mr. Andersen insisted on the employees wearing

protective gear just as their colleagues usually do in Denmark. However Mr. Andersen could not

understand why he met resistance on this matter. Mr. Dao later revealed that the staff members

were frustrated as their opinions were not valued. Furthermore, the Vietnamese employees felt

forced to follow Danish rules and were not able to demonstrate their own knowledge or have

input regarding decision making. This is a very crucial point as it reveals that there was no

cultural understanding between the managers and comprehension of issues. The lack of

communication and understanding is again a key issue.

The third issue presented in the case concerns information transparency. While Mr.

Andersen did not comment on this particular situation, Ms. Pham expressed her disappointment

about involvement in company procedures as she felt that she was informed about decisions only

at the very end when the decisions were already made. She expressed additional disappointment

regarding learning within the company, specifically that of technology. She felt that even though

a goal of the IJV was for the employees to learn, the Vietnamese employees have learnt almost

nothing about the new technology. This again shows lack of communication during the process

and very insufficient knowledge sharing.

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The fourth issue evident from the case relates to the cultural differences within and

outside the organization. It involves various factors such as power distance, differences in the

mentalities and cultures within the organization, and communication misunderstandings. To give

an example, even though Mr. Andersen listed the general idea that joint ventures are considered

as being something romantic, his real perception of them was that they usually lead to conflicts or

fights. He gives an example of this when he talks about the Vietnamese tendency to run from

problems, while Mr. Dao gives another example of the Vietnamese's’ disagreement with the

Danish attitude to power and informal language. These issues indicate how little the

understanding between the cultures and expectations the managers had as well as showcase the

minimal efforts put forth by Mr. Andersen to make the situation acceptable for both sides.

To sum up, Mr. Andersen worked very efficiently in terms of building the factory and was

extremely task-oriented. On the other hand, he totally ignored the fact that Vietnamese

companies and employees are relationship-oriented, so efficient communication was essential

during this set-up phase. Furthermore, successful communication would also have improved

collaboration, knowledge sharing and learning, which are essential factors when establishing

IJVs.

Phase 2: “Managing the people” phase- The second Danish expatriate Mr. Hjorth found

himself in a situation attempting to better collaborate and connect with the local personnel. His

primary task was to improve the connections with Vinashin which were destroyed due to the

inefficient communication and coordination between both partners during the first phase.

The main issue came up when he realized that the Danish technical supervisors who came

to train employees, did not do that – instead completed tasks without actually educating their

coworkers. He reacted immediately by reducing the amount of Danish supervisors to only one.

Additionally, the Vietnamese employees were now expected to take a more active role in running

the company in order to feel responsible and not only rely on others. This initiative involved the

employees and turned out to be very efficient. Moreover, Mr. Hjorth managed to establish

personal relationships with the Vietnamese employees, and through constant communication, he

was able to better transfer the knowledge he had to others which additionally increased the

effectiveness of the board meetings allowing both parties to reach more satisfactory decisions.

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Mr. Hjorth’s behavior in the JV altered not only the entire process of communication and

understanding between the two different cultures, but also the knowledge sharing and learning

processes and furthered the acceptance of different opinions. His initiatives to improve

collaboration gave positive results and strengthened the joint venture’s relationships. In

comparison to Mr. Andersen, Mr. Hjorth is a good example to follow when managing knowledge

sharing and collaboration in two very culturally different countries through a joint venture.

As we can see from the conclusion drawn from all the issues, the main reason why Mr.

Andersen did not reach the efficient knowledge sharing and learning by Vietnamese employees

as Mr. Hjorth did, was his ignorance to a different culture as a matter to manage in his daily

duties which strongly affected his communication’s style and relationships with employees. Due

to the main problem – wrong understanding of different cultures in terms of communication- now

we will apply Hall‘s Low-High context framework, analyze the differences between Danish and

Vietnamese cultures and communication styles and provide suggestions on how Mr. Andersen

should have behaved in order to succeed in knowledge sharing.

The Low – High context framework consist of two main elements – Low context cultures and

High context cultures.

Low context cultures such as USA, Germany, Denmark, Sweden or Switzerland are

known as highly individualistic countries using explicit manner of communication, task-oriented

and much focused on requirements, very precise and punctual countries. Low context cultures

exclude many of those stimuli and focus more intensely on the object communication event. The

message itself means everything (McDowell, 2003).

In a contrast, High context cultures such as China, Vietnam, Japan, India or Latin

America are known as highly collectivistic countries with implicit manner of communication,

tend for long-term relationships and relaxed about timing. High context cultures verbal messages

have little meaning without the surrounding context, which includes the overall relationships

between all the people engaged in communication (McDowell, 2003).

A general idea is that while communicating across cultures within different context, the

biggest importance is that person is aware of different culture communication manners which are

reflected by cultural differences and must be able to adjust to them. It is necessary to emphasize

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that meaning is constructed by combining both the content and information which surround a

particular event.

(Figure 1. “Context of Cultures”, Vonsild, 2016)

This framework helps to explain the cultural differences which can arise in terms of

communication. According to this framework, Denmark belongs to the low-context countries

while Vietnam - to the high-context countries. The main problem in the case is that the countries

are extremely different in terms of national and organizational culture and the processes

businesses use to handle issues are different. Vietnamese ‘‘running away from problems‘‘ here

can be seen as not being as concerned with time as Danes are; the Danish strict manner of

completing a task and not sharing information are due to high focus on requirements; Vietnamese

social interaction need can be seen as relationship-building view while the precise Danish manner

is an efficiency seeking method.

To generalize, the communication used and experienced by Mr. Andersen should have

been adjusted to the Vietnamese culture. He should have tried to understand the culture and why

he faces those issues, build relationships with employees, use different and wider communication

manner to explain issues from Danish perspective and put increased efforts on sharing the

knowledge with the employees and encourage them to learn instead of forcing them to listen. Had

he done this, his understanding of the culture would have been greater and could have prevented

the issues that transpired within the organization that affected the working environment.

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Q4 Recruitment of Expatriates

Taking the paper “Of Bears, Bumblebees, and Spiders: The Role of Expatriates in

Controlling Foreign Subsidiaries” written in 2001 by Harzing as a base, the two Danish Expats

Mr. Hjorth and Mr. Anderson can fall into one of three metaphors based on the way they in

which they should manage the foreign subsidiary. According to Harzing, control mechanisms can

be categorized by the way in which such mechanisms influence control either

“directly/explicitly”, “indirectly/implicitly”; as well as the level it is achieved at

“personal/cultural”, “impersonal/bureaucratic/technocratic”(Harzing, 2001, p.369). Depending

on the level to which control methods are used and to what level, expats can thus be classified as

“bears, bumblebees, or spiders” (Harzing, 2001, p.369). From this, the two Danish Managing

Directors in Vietnam - first Mr. Andersen, followed by Mr. Hjorth can be categorized by the way

they managed the foreign entity. These are the two expats that are largely mentioned in the text

and will be the primary focus of this section. As there is only information from the text to go on,

we can only look at the company’s motivations for employing expats. Typically, companies have

several different motives for this: “expansion of the business, trouble shooting, control,

coordination, staff development, loyalty, and organizational learning” (Vonsild, 2016).

The Case of Mr. Andersen (“Set-up Phase”)

Mr. Andersen was the first expat Managing Director, MD, for Aalborg Industries in

Vietnam. When he was originally assigned the position, the JV had just been created and

therefore the company was under a process of “construction and technology transfer from the

Danish partner” (AIV Case, p.8). According to the case, his main duties were to ensure the JV’s

operations were put into place as agreed upon, to ensure the implementation of quality and work

procedures as according to Danish standards, and to further improve the knowledge sharing

process between the two entities (AIV Case). Additionally, after being put in charge of the

Vietnamese branch, Mr. Andersen came to realize that in order to be successful, other duties must

be completed. An overview of the duties he had is listed below:

19

Mr. Andersen’s Expected Duties Additional Duties

Implement Quality/Work

Procedures

Trainer/Training Coordinator – (Technical and Management

training)

Further the Transfer of

Knowledge

Basic skills – excel use, cleaning

Ensure operations went as agreed

upon

Decision Making

(Table 1. “Mr. Andersen,” Authors’ interpretation from the case)

The Case of Mr. Hjorth (“Managing the People Phase”)

Mr. Hjorth was the 2nd MD of Aalborg Industries Co. Ltd, and began in Vietnam in 2007.

According to the text he was quite new to Aalborg Industries before moving to Vietnam. He

spent only a single month at their HQ to gain training ranging from “production and quality

issues to reporting systems between Aalborg and Haiphong” (AIV Case, p.16). While he had

previous experience “working in a foreign culture,” having been in places such as Kenya, Poland,

and Burma, he had never been faced with the challenge of working “with the culture” as well as

this was his first experience with Asian Culture (AIV Case, p.16). Upon his arrival, Mr. Hjorth

was given a list of tasks HQ wanted him to complete made serious changes in regards as to how

the company should be run. Such tasks included improving the connection between Vinashin and

HQ, or were primarily related to engineering healthier relationships amongst the local employees

with their foreign employers.

20

Mr. Hjorth’s Duties How?

Improve

relationships

Relinquish more control to locals, uphold procedural checking(s), more

communication

(Table 2. “Mr. Hjorth,” Authors’ interpretation from the case)

Why is this relevant?

Taking the various motives companies have for expatriation we can identify the duties of

Mr. Andersen and Mr. Hjorth as taking place in similar albeit different phases of the company’s

expansion. During Mr. Andersen’s tenure or the first phase, the company’s goals were primarily

related to those of business expansion, control, and coordination. However, these duties also

overlapped with issues regarding staff development and organizational learning as well. As these

motivations were related to more functionalist or operational goals, the company was seeking to

establish themselves with minimal experience in that market, therefore the need for someone like

Mr. Andersen was needed to help establish their presence. According to Mr. Dao, former quality

manager at Vinashin, Andersen was a “real manager” (AIV Case, p.16). Dao recognized that the

set-up phase was tumultuous, but Andersen was successful. Andersen’s predecessor Mr. Hjorth

had this to say as well, “he succeeded in building the factory in three years…something I could

not have done so quickly” (ibid) However, the speed at which the company was built caused

relations to be strained between the two countries which furthered already mounting frustrations.

Mr. Andersen was focused solely on achieving the goals that HQ gave him and less worried

about developing relationships. Referring back to Harzing’s article, Mr. Andersen would thus fall

into the “bear” category. He sought to directly influence control from a bureaucratic perspective

and enforce the decisions HQ had made. Several examples of this are given in the text. Example

1: His duties were to provide technical and management training. Therefore, he preferred to bring

in Danish technical advisors to Haiphong in order to influence more people within the company

and provide greater technological knowledge to the Vietnamese employees. This is consistent

with the idea of influencing control. Example 2: Related to the control motive, Vietnamese

managers felt as if they were undermined by Andersen and HQ. A quality manager was quoted as

saying, that sometimes they [the Vietnamese] felt that “decisions made by the Danish

Supervisors…were not correct” however they would then “be reported to the director

21

[Andersen] and thus be forced to follow” (AIV Case, p.11) This caused tensions as the

Vietnamese later stated they had reasons for doing things their way: lack of tools/ resources on

site, unnecessary costs, but they [the Vietnamese] gave up trying to explain their reasoning as

they felt they were not taken seriously.

While Mr. Andersen was more focused on building something that lives up to the high

standards Aalborg Industries has put in place for themselves, Mr. Hjorth was employed during

the phase that more focused on aspects related to relationship building or goals related to staff

development and loyalty. While he was impressed with the speed at which Mr. Andersen built up

the company, he also stated that “when a company is built that fast, you’re not thinking about the

people” which is consistent with the above statements by the Vietnamese employees feeling

disregarded. Therefore, Hjorth became the person who sought to improve attitudes within the

foreign branch and he can be thought of as a “bumblebee.” According to Harzing, bumblebees

are those who seek to socialize and create informal communication networks. He communicated

with everyone and would otherwise let “people come to him when necessary”(AIV Case, p.18).

Furthermore, he sought to decrease the surveillance that the employees under Andersen’s tenure

previously felt by reducing the number of technical supervisors from two to one so they

Vietnamese employees would actually be trained, and not solely rely on the Danish employees

for guidance. He operated under the belief that they [the locals] should run the company, not him.

He additionally set-up frequent meetings with the production manager, the quality manager, and

the newly appointed chief accountant, to “take back the ground so far occupied by the Danish

supervisors” (AIV Case, p.17) He sought to treat them as partners, and not a separate entity.

What can the company learn from this?

To sum up, a couple lessons can be learned from this. During the recruitment process the

company should consider the goals they wish to achieve; whether they are related to a

functionalistic/operational or an interpersonal/social approach and thus recruit someone who fits

those needs. As the first phase of operations in Vietnam was heavily based on knowledge sharing

of technical aspects and organizational enforcement, the first managing director was someone

who sought only to complete the goals put forth by the company using a straightforward

approach. This caused tensions within the company; however in hindsight he was successful in

his tasks.

22

As the second phase was more intent on the people within the organization, a managing

director who emphasized relationships and people was thus recruited. He was also successful

during his tenure, improving the relationships and giving more of a balance to the joint venture

once the necessary changes were made.

Furthermore, this gives evidence that as a company changes, the type of expatriate needed

can change as well. Therefore, companies should always reflect on their goals and motivations to

determine if the expat currently fits into what they are trying to achieve.

Q5. Suggestions for Establishing and Managing a Joint Venture

The first and possibly most important lesson that can be drawn from the case study is a

necessity of cultural awareness or so called cultural sensitivity. Prior to establishing cooperation

with a foreign company, the initiator should be aware of their partner’s cultural background.

Cultural sensitivity demonstrates the awareness and openness toward a different culture (Johnson

& Sohi, 2001). The problem with cultural sensitivity is that it is very difficult to measure and

hard to obtain as well as it requires additional resources to invest, including time.

Since a company cannot analyze partner’s culture from the interpretivistic perspective, we

suggest applying Hofstede’s cultural model or Hall’s communication theory to statically evaluate

the differences that the future collaboration would face. Denmark is very individualistic and

masculine, using very low context communication, while Vietnamese culture is scoring vastly

different in those three categories.

We believe that the Danish company should have invested more resources into further

examining the Vietnamese culture, because as we demonstrated in previous chapters, the lack of

awareness caused a lot of obstacles, including communication problems, knowledge sharing and

power distribution.

Another issue that can be a good example of possible improvement is the choice of

expatriate Mr. Andersen. As we mentioned, Mr. Andersen’s approach toward collaboration was

highly task-oriented. He can be described as a transactional type of manager, with a lack of social

approach. Vietnamese employees were only executing commands, without having the chance to

absorb shared knowledge and to cooperate better with Mr. Andersen within the JV.

23

Drawing from the “dialectical thinking” theories, we suggest to balance task-orientation

and relationship-orientation approach leadership characteristics of company’s expatriates. Mr.

Andersen’s mission was successful, but we believe that a more open-minded and

transformational leadership approach with a combination of cultural awareness would help to

achieve even better outcomes in terms of knowledge sharing and Vinashin’s future self-

sufficiency.

As we mentioned above, the Vietnamese employees had very little opportunities to

contribute to the JV establishment, because the Danish attitude towards the JV was very superior.

It is difficult to say if this was because of Mr. Andersen’s leadership style or because of the

Danish company’s attitude in general, but it seems that Aalborg Industries felt superior in the

collaboration due to technological advantage, bigger financial contribution to the JV or because

of the fact that Vietnam is a developing country.

Therefore, we think that it is important to establish a direct communication channel

between host country management and home country HQ. In our case, this would help

Vietnamese company to address all the discomforting issues to Danish HQ, since Mr. Andersen

did not consider Vietnamese as equal partners for decision making.

Another lesson that can be drawn from the case is related to knowledge-sharing. Lack of

cultural sensitivity and experiences alongside with lack of trust from the Danish side and lack of

commitment from the Vietnamese side caused insufficient knowledge sharing between both

partners.

Danish company’s motivation was mostly about market growth and lowering costs, while

Vietnamese company saw an opportunity to get a technological and business know-how as an

exchange for market knowledge.

We believe that Aalborg industries should have considered establishing more mutual and

balanced relationship, which could have provided Danish company with a useful information

about doing business in Vietnam and Asia in general, not only focusing on financial outcomes.

We believe that a lesson that can be drawn from knowledge-sharing problem in this

particular JV is that even if a company is considering establishing a JV for market and cost

reasons, they should always take into account the opportunity to learn as well.

IV

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