Web view2/2/2012 · Since this joint venture is fairly new, ... Lastly the model incorporates the Artifacts of ... where their cultures will meet and agreement will be a

Amalie Bering NielsenCPR:

Spring 2014

Table of Content

1. Introduction

2. The Case

3. Ontology & Epistemology

3.1 Description

3.2 Application

4. Organization Theory Approach

5. The Modern Perspective

5.1 Greiner’s Organizational Lifecycle Theory

5.2 Schein’s Theory of Organizational Culture

6. The Symbolic Perspective

6.1 Social Structure as Community

6.2 Symbols and Artifacts in Culture

7. Discussion: Modern versus Symbolic Perspective

8. International Business Strategy Approach

9. The Access-and-Legitimacy Paradigm

9.1 The Access-and-Legitimacy Paradigm: Critique

10. The Learning-and-Effectiveness Paradigm

10.1 The Learning-and-Effectiveness Paradigm: Solution

11. Comparative Political Economy Approach

12. Constructivist Political Economy

12.1 Clift & Blyth

13. Discussion of Limitations

14. Integration (Regional Integration and the EU)

15. Neofunctionalism & Its Background

15.1 Concept

15.2 Spillover Effect

16. Intergovernmentalism

16.1 Concept

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16.2 Liberal Intergovernmentalism

17. Summary

17.1 Further Contributions & Limitations

18. Conclusion

19. Reference List

20. Appendix

1.0 Introduction

There is one thing in the case about the joint venture between Danish Vestas Wind

Systems A/S (Vestas) and Japanese Mitsubishi Heavy Industry Ltd. (Mitsubishi) that is

striking: Their determination of winning the global wind power market and thereby

taking down the big player in the East, Siemens.

Their determination has made them dedicate their joint venture and teamwork to

“global leadership in offshore wind energy” (Vestas, 2013). This case goes beyond the

local and national level and enters the international, global level. As the case is

relatively new (the joint venture was formed on September 27 th 2013) some of the

issues taken up in this assignment will be marked as potential issues rather than issues

that has already been taking place.

Several theories from the International Business and Politics program would be

relevant and enlightening to apply, but this assignment has been narrowed down to

focus on theories from four courses: Organization Theory, International Business

Strategy, Regional Integration in the EU, and Comparative Political Economy. These

four courses will contribute to see this case from different angles, all wearing different

academic lenses, which will ultimately secure a broad analysis and thorough

discussion and critique. Within each of the courses theories that are significant to the

topic has been chosen to make the structure of the assignment elegant and judicious.

Due to time and space constraints the assignment cannot welcome all courses and

branches – but further contributions will be considered in a separate paragraph.

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When dealing with this topic it is only natural to consider the elements of sharing

knowledge across cultures and asking about the troubles of diversity and other

humane, political and cultural barriers. There will be put an effort into dealing with

these different questions of research from different points of departure, and the

assignment promises to generate and produce valid information for Vestas and

Mitsubishi. Since this joint venture is fairly new, the potential issues discussed will

serve Vestas and Mitsubishi a view into a possible future, where they have the chance

to prevent events from happening and pay attention to any obstacles and

misunderstandings that might evolve in their partnership.

The general research question will be: What are the reasons for Vestas and Mitsubishi

to engage in collaboration such as a joint venture, and what are possible issues facing

the organizations when they collaborate?

However, this research question will be answered through the solutions to the

following sub questions that support the four courses picked out to answer the major

question. The sub questions will be answered in the same order as the courses are

touched upon – ergo Organization Theory will answer the first question, International

Business Strategy the next and so on so forth. The general research question will be

answered in the conclusion.

What tools should the joint venture use in order to merge successfully?

How can Vestas and Mitsubishi avoid challenges caused by diversity?

What differences are present between Vestas and Mitsubishi, and how do the

companies avoid complications from them?

Which benefits face the companies when they engage in a joint venture?

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First this paper will shortly describe the case of Danish Vestas and Japanese

Mitsubishi in order to serve a brief overview of the events so far. As the paper

precedes the philosophies of the chosen courses will be applied to the case. Firstly, the

basic academic concepts of ontology and epistemology will be described under the

course of Philosophy of Social Science. This will give an understanding of the ideas

and motives behind the theories that are later used throughout the assignment. Next,

Organization Theory will contribute with Greiner’s Organizational Lifecycle Theory

and Schein’s theory of Organizational Culture – in these paragraphs it will naturally be

explained how the modern and symbolic perspective differs according to ontology and

epistemology as well. Following this will be a discussion on how the theories answer

the research question and some of the differences between the theories will be pointed

out. Taking up the mission from these paragraphs International Business Strategy will

provide with the diversity management theory by Ely and Thomas. This theory will

aim to explain the paradigm in which the two companies are in, and which paradigm

will be optimal for them to be in, in order to achieve their shared goal. To step into

new territory, the assignment will now turn to a more political viewpoint, and apply

the theory of constructivist political economy from Comparative Political Economy. In

this section Blyth and Clift will present their explanation to how the joint venture

should act in the industry and secure a successful future. To broaden the analysis

further Comparative Political Economy will step out of its territory when being applied

to companies instead of developed countries. This risky step will expand the

knowledge horizon, and show that theories can manage alternative missions when used

in a practical manner. Following up will be an introduction to the concept of

integration within the course of Regional Integration in the EU. Under this caption the

concept of integration will be applied separately and slightly out of its regular context,

and an understanding of the situation will be served from a political point of view.

Lastly there will be a concluding paragraph with a brief summary and a statement of

the final remarks.

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2.0 The Case

The joint venture between Vestas and Mitsubishi that took place the 27th of September

2013 (Bomsdorf & Chopping; 2013) has been chosen as the case that will shred light

on all the practical theories and concepts within the International Business and Politics

program. This joint venture has been established because of a shared dedication to

offshore leadership on the global wind turbine market (Vestas, 2013). Both

organizations will contribute something into the collaboration. Vestas has given up

their sole power over the development of the V164-8.0 MW, and has also agreed to

share the V112 offshore order book, existing offshore service contracts and will

transfer about 300 employees to the new company (Yinan, 2013). Mitsubishi will in

exchange inject 100 million euros in cash into the joint venture and has promised to

put in another 200 million euros based on milestone achievements during the process

of developing the V164 turbine, which has a huge interest for Mitsubishi (Yinan,

2013). In order to gain market share the joint venture will try to integrate the

Mitsubishi hydraulic DDT technology into the 8MW platform. Yinan states in the

article that they would do this to “make the new firm positioned to offer a product line-

up variety that best suits customer demands” (2013) and this way be better suited to

gain their shared goal.

In the book Organizations – A very Short Introduction, Mary Jo Hatch begins the first

chapter by acknowledging that organizations evolve when people work together in

order to accomplish a shared goal (Hatch, 2012). This happens on the individual level,

but it can also be translated to the organization level, as in the case with Vestas and

Mitsubishi. Both of these organizations want to gain global leadership on the wind

power market as Vestas puts it (Vestas, 2013), but none of them sees how they can

take on this task alone and be successful about it. The topic of collaboration and

learning is central in this case, because both organizations need to learn from each

others technologies, sciences and general organizing skills in order to achieve their

shared goals. And as a natural development from the acknowledgement of the need to

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share knowledge the two organizations decided to collaborate and merge their

companies.

In this case we have Vestas that has a great deal of knowledge and knowhow in the

area, but never enough capital. On the other side we have Mitsubishi with a fair share

of capital, but not that particular technology that makes Vestas so special in this

industry. Both companies can benefit from organizing and merging, because this way

they have much bigger chance of winning global leadership on the market – Which is

right now dominated by Siemens. Bomsdorf and Chopping argue that this

collaboration has mainly become a reality because Siemens is two big to beat alone

(2013). Hatch present an example where a rock needs to be moved to the top of a hill

(shared goal) – but either person (Vestas or Mitsubishi) can do this alone, neither can

they do it if they do not collaborate, because, as Hatch puts it, they will end up pushing

on every side of the rock and still not get it anywhere. But if the two persons (Vestas

and Mitsubishi) decide to collaborate they will finally be able to organize their powers

and energy and get the rock pushed to the top of the hill (Hatch, 2012). Of course this

example simplifies the case very much, but it does not have to be more complex than

that in order to get the idea on why Vestas and Mitsubishi choose to form a joint

venture.

3.0 Ontology and Epistemology

Before approaching the given case with clashing methods and theories, it is essential to

outline why some theories and methods seem to clash in the first case. Philosophy of

Social Science teaches the background behind the areas of science and the theories that

scientists and academics apply. The course puts forward valid argumentation for the

basic and, possibly, unknown assumptions that people make in order to understand

circumstances, information and life in general. However, this assignment will look at

ontology and epistemology from an academic point of view, and aim throughout the

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paragraphs to point out which framework or lens the theories and concepts presented

are belonging to.

3.1 Description

Moses and Knutsen have introduced the two fundamental concepts within ontology

and epistemology in their book from 2012 called Ways of Knowing. This title already

hits the spot, because ontology and epistemology is indeed trying to clarify the

different ways of knowing, and they both categorize thoughts and assumptions into

boxes. Ontology is the understanding of being (Moses and Knutsen, 2012), which asks

about existence and what the borders of the physical world really are, if there is such

thing as a real physical world. Epistemology on the other hand is the understanding of

knowledge. What is real and what is unreal is arguably impossible to distinguish. What

is real knowledge to one academic can be an assumption to another, and the other way

around – knowledge is supposedly individual. Moses and Knutsen describes these

concepts and their function as “These underlying priors provide researchers with the

philosophical ballast necessary to address important questions concerning nature of

truth, certainty and objectivity in a given project.” (2012, p. 1). From this statement it

becomes clear that Moses and Knutsen assume that every individual has their own lens

to look at the world through, and this lens is important to understand not only to be

critical to the theory and conclusion drawn, but also because it might enlarge our own

conception of the world. Being able to manage ontology and epistemology as concepts

is essential when distinguishing between applications of theories that academics use

constantly. It is argued by Moses and Knutsen that the ontology and epistemology one

belongs to is like a sweater you can freely take on and off, as it seems comfortable

(and applicable under the circumstances) (2012). This viewpoint is not shared by

March and Furlong, who believes that ontology and epistemology should be

understood as skins that you are born and raised into. You can never freely assume

something else, everything you understand and how you understand it is already an

integrated part of your mind (2002). What is paradoxical is that even within the

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philosophy of social science there are clashes between differing conceptions of the

world and its appearance. Marsh and Furlong starts their arguments by stating: “Each

social scientist’s orientation to their subject is shaped by their ontological and

epistemological position. Most often those positions are implicit rather than explicit,

but, regardless of whether they are acknowledged, they shape the approach to theory

and the methods which the social scientist utilizes.” (Marsh & Furlong, 2002, p. 1).

This argument is highly provocative to academics such as Moses and Knutsen, because

this means that they actually have no control over their own beliefs and that the

sweaters they think they put on and off really is superficial.

3.2 Application

Within ontology there is three major methodologies. Moses and Knutsen highlight that

Naturalism and Constructivism is the two endpoints on the scale, while Scientific

Realism is in the middle between the two (Appendix 20.4). It should be noted that very

few academics find themselves in the positions of being one hundred percent

constructivist or naturalist, but often are a mixture of both, possibly skewed towards

one of them. Naturalists mainly believe that the world is Real and that answers are

accessibly through science and proper research. There exists a real, objective truth,

which is independent of the observer (Moses & Knutsen, 2012). On the other hand

constructivist believe that there is no such thing as a Real World, but rather the world

is a product of human beings own making. “Each of us sees different things, and what

we see is determined by a complicated mix of social and contextual influences and/or

presuppositions.” (Moses & Knutsen, 2012, p. 9) – this line points out that the

observer of the world influences the world. Lastly the scientific realist mixes the two

former methodologies and mainly borrows features from Naturalism when the

ontological question is asked, because they recognize that there is a Real World. On

the other hand scientific realist embrace that there is many levels to the truth, which

makes the Constructivist approach make an impact. It is acknowledged by scientific

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realist that the world is exceedingly complex (Constructivist), but yet through science

this world can be uncovered (Naturalist)(Moses & Knutsen, 2012).

4.0 Organization Theory Approach

Organization theory aims to describe the dynamics and activities in an organization.

The organization that are dealt with in this case is a joint venture, which means that

there are two ways to identify the organization: Vestas and Mitsubishi together or as

two separate companies. The main focus will be to identify the issues of the merger

and possible solutions hereof, and the sub-question that will be answered in the

following passages is: What tools should the joint venture use in order to merge

successfully? Achieving this ambition the assignment presents the modern perspective

and the symbolic perspective and their respective theories and concept within to

contrast the analysis. Notice that parts of the following analysis has been inspired by

my former paper Collaboration & Knowledge Sharing Between Vestas & Mitsubishi,

Amalie Bering Nielsen, March 2014.

5.0 The Modern Perspective

Greiner’s theory of the organizational lifecycle and Schein’s theory of organizational

culture both fall under the category of the modern organizational perspective. The

modern perspective has an objective ontology and a positivist epistemology. Ontology

is the philosophy that describes assumptions behind existence and reality. When we

have an objective ontology it means that the world is seen to exist independently of

humans being perceptions and knowledge of it – there is a reality and truth waiting to

be discovered (Hatch, 2013). We also have epistemology, which deals with the

philosophy of knowing and the assumptions behind knowledge. When it comes to the

epistemology attached to the modern perspective it is believed that this truth and

reality can be “discovered through valid conceptualization and reliable measurement,

which allows the testing of knowledge against the objective world: knowledge

accumulates, allowing humans to progress and evolve.”(Hatch, 2013, p. 15).

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5.1 Greiner’s Organizational Lifecycle Theory

The theory or model of the organizational lifecycle presented by the American

organization theorist Greiner goes under the modernist theories of organizational social

structure.1 This theory argues that an organization develops through ten phases, where

every second phase is known as a crisis or an obstacle that needs to be solved in order

for the organization to survive and grow further. One could argue that Vestas and

Mitsubishi, two well-established organizations, have reached a point on the lifecycle

termed the Renewal crisis since all of the other steps on the lifecycle model is already

behind them. The Renewal crisis is just after the Collaboration stage, which is where

the organization usually acknowledges that teamwork and trust is necessary if the

organization shall survive (Hatch, 2013). From Hatch’s description of the Renewal

crisis we learn that “…top management must shift its concern to constantly

regenerating motivation and staying focused on organizational goals and purposes.”

(Hatch, 2013, p. 108). This indicates clearly that this is the point where both Vestas

and Mitsubishi find themselves. On this stage Greiner argues that the organization will

either renew and reform itself or suffer from organizational decline and eventually die.

What we see in our case is that the organizations involved strive to renew themselves,

acknowledge that teamwork and trust is on their path towards their shared goal of

leadership on the global wind power market. If this merger turns out to be successful,

Vestas and Mitsubishi will both have managed to successfully grow out of their

renewal crisis.

5.2 Schein’s theory of Organizational Culture

Schein’s theory helps to shred light on the cultural implications this new collaboration

might run into when they start interfering in each other general cultures and

organization. Schein’s theory has three levels of culture, described by the concepts of

assumptions, values and artifacts2. The deepest level is the level containing the basic

1 See figure of Greiner’s Lifecycle Model in 8.1 Appendix One2 See figure of Schein’s three levels of culture in 8.2 Appendix Two

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assumptions that represents the beliefs and the perceptions of reality and truth obtained

by the members of the culture (Hatch, 2013). This level is taken for granted by the

members, and if someone where to ask them about their basic assumptions they would

hardly be able to answer; probably they would state their values instead. It is also

important to mention that Schein describes this deep level to be the core of the culture.

The next level is values, which are typically known as goals and basic principles and

standards that affect and guide the members in the culture. Lastly the model

incorporates the Artifacts of the culture, which is visible objects, activities or symbols.

Artifacts, though, can be difficult to interpret because of their distance from the core

assumptions. The problems that could rise from this are the differences in cultures

there is between the two organizations; one Danish and one Japanese. To bring in

another layer to this analysis it is relevant to point out the positions that Denmark and

Japan take on Geert Hofstede’s uncertainty avoidance and power distance dimensions

graph and on his individualism and masculinity dimensions graph3. Denmark’s

position on the uncertainty avoidance and power distance chart is in the area

characterized by small power distance and weak uncertainty avoidance, while Japan is

to be found in the opposite corner of the graph under large power distance and strong

uncertainty avoidance. What we learn from this is basically that this lays ground for

the two organizations to experience some of their cultural differences and maybe they

will find it extremely difficult to collaborate due to these differences in values and

assumptions, as Schein would argue. We have the same tendency on the other chart

where Denmark is positioned in the corner of individualistic feminine, while Japan is

placed in the collectivistic masculine area. These can all be characterized as values that

are challenged within each of the organizations, and as Hatch notices “…challenge

most often comes from marginal members of the organization such as newcomers,

artists, or revolutionaries – or from outsiders like a new CEO…” (2013, p. 112).

Vestas and Mitsubishi should be aware of their differences and their cultures in order

to get past this little crisis of control as recognized from the former model presented by

3 See both graphs of Hofstede’s dimensions in 8.3 Appendix Three

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Greiner. Here the organizations has entered a stage where there is a need for further

integration (learning and tolerating each other cultures) and therefore they are thrown

into a control problem, which forces the organization to create and implement formal

rules and procedures in order for the organization to work in the same direction.

6.0 The Symbolic Perspective

The symbolic perspective adopts a subjective ontology stating that the world is

constructed by subjective awareness and does not exist objectively. This belief further

develops in the epistemology connected to the symbolic perspective that is

characterized by interpretivism. The symbolic epistemology says that knowledge and

truth is relative and socially constructed and therefore changes over time as it is re-

constructed and co-constructed to eternity. Under this basic perspective the theories of

social structures as community and symbols and artifact in cultures has been chosen to

clarify the social and cultural challenges that Vestas and Mitsubishi might run into in

their collaboration.

6.1 Social Structures as Community

What the concept of social structures as community can bring into our analysis is a

new understanding of the organization as a community, which is socially constructed.

In order for Vestas and Mitsubishi to merge fully they have to begin sharing symbols

(using mixed technologies or maybe renaming some of their products to fit into both

organizations) and show some interaction so that members of the organizations can

interpret the organizations to be one or be a part of each other. Hatch introduces a

concept called communities of practice (2013), which is further discussed in Etienne

Wenger’s paper on the same topic. Communities of practice are about how learning

happens through social interaction, in our case the joint venture between Vestas and

Mitsubishi. A community like the one between the two organizations is “…informally

bound together by common interests in learning and the development of knowledge…”

(Hatch, 2013, p. 110). What is so special and beneficial about these communities is

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that when the knowledge sharing begins the organizations can cross their individual

boundaries and reach for something higher – in our case the shared goal of global

leadership in wind power. Learning is acknowledged to become a part of the

participation in a practice, and this participation is what pushes the need to collaborate

on an inter-organizational level.

In the article by Silvia Gherardi on the topic of learning and knowing in organizations

the makes the statement that organizations both participate in social learning systems,

but they are at the same time constituted by them (2000). This makes one think of a

circular relationship between the organization and its social learning system, because

both affect each other. In our case Vestas would be participating in the same social

learning system as Mitsubishi and they would both be shaped by their participation.

Over time Mitsubishi would contain some of the same elements as Vestas, and the

other way around – by collaboration their cultures would slowly merge and rise to a

level superior to the cultures they were before. The social community theory has

demonstrated to us that by collaboration makes both organizations better off, because

they can share knowledge and not only go beyond their former level of information but

also merge their cultures and become closer to being one. Wenger testifies, “Their

success depends on their ability to design themselves as social learning systems and

also to participate in broader learning systems such as an industry, a region, or a

consortium.” (Wenger, 2000, p. 226)

6.2 Symbols and Artifacts in Cultures

Garfinkel engaged in ethnomethodological experiments and came across the

conclusion that the sense making developed through everyday social life constructs our

everyday social life that we so easily take for granted (Hatch, 2013). Under the

symbolic perspective culture is understood as a construction made of interacting

individuals – these individuals interpret the events going on around them and through

this interpreting process they themselves contribute to the events and engage in

collective sense making. Also it is well acknowledge within the symbolic tradition that

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meaning creates culture and culture creates meaning, which again will put us in a

circular situation. Applying this to the case of Vestas and Mitsubishi we find that the

organization should be able to avoid cultural issues if they adopt the interpreting

process and both begin to shape the events or the actions they participate in together.

By interaction they will reach a point where they contribute to collective sense making,

where their cultures will meet and agreement will be a reality (or at least an interpreted

reality). The theory articulates the same conclusion found under the modern

perspective, that if both organizations go beyond their individual boundaries they will

reach a higher cultural phase where both organizations can fit it. Meaning is said to be

dependent on culture (Hatch, 2013), so for the joint venture to be successful a lot of

meaning and knowledge sharing will have to take place in order to take Vestas and

Mitsubishi closer to each other culturally. When Vestas and Mitsubishi successfully

find and implement common ground culturally they will find themselves at a point

where their professional relationship will blossom and the two organizations will work

as elegantly as one.

7.0 Discussion: Modern versus Symbolic Perspective

Which key theories and perspectives best describes the case and it’s possible issues

and challenges are hard to decide upon. Both can be argued for and against – in the end

it comes down to which perspective one belongs to: the modern or the symbolic as has

been presented and used in this assignment.

It can be argued that the theories of Shein and Greiner used within the modern

perspective is easier to directly apply on the issues that might rise from the joint

venture. This is because the answers that follow from these theories are concrete and

therefore more suited for a quick, informal analysis and application by potential

managers within Vestas and Mitsubishi. But the symbolic perspective gives another

understanding of the challenges the organizations might bump into when the

organizations force their members to work together towards a shared goal and work

across cultures. The symbolic perspective is good at explaining how the organizations

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need to adapt to each other symbols, artifacts and meanings in order to reach a

common ground on the cultural level – only then can the new merger be successful in

achieving their goal.

Where the modern perspective would say that such tools as formal rules and

regulations should be applied in order for the organization to be successful, the

symbolic perspective gives us a more soft way to look at the procedure of forming the

joint venture known as shared symbols and artifacts within the new organization. It is

much more acknowledged in the symbolic perspective that the members of the

organizations should have a feeling of belonging to something bigger than before, so

that their interpretations together will contribute to creating a mutual reality that exist

only in their interpretation. Modernists, on the other hand, believe that the joint venture

is something that truthfully exists on some papers and through some social and formal

contracts, for example by being approved by the European Union (Bomsdorf &

Chopping; 2013).

Both perspectives give some very informing and relevant theories to apply, and on

some points they seem to overlap or at least to some extent reach the same

conclusions. As, for example, when the symbolic perspective presents the inference

that both organizations should begin to shape and participate in actions together to

reach a point of collective sense making. This could be somehow translated into the

conclusion grasped within the modern perspective when Greiner argues that both of

the organizations are captured in the renewal crisis and must begin to shift their

attention from constantly regenerating motivation and instead focus on the new shared

goal of the joint venture – this shift of focus could be understood as a collective sense

making in order for the joint venture to reach its goal. Basically this kind of

comparison is dangerous to make, since the ontology and epistemology of the two

perspectives are so diverse. But it is possible to draw some of the same conclusions, if

you are looking for them, when seeking to prove that lines tend to blur in some points.

8.0 International Business Strategy Approach

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Where the Organization Theory Approach failed to enlighten us, the International

Business Strategy Approach steps in to fill in the blank spots. In the former analysis of

the case and the possible challenges of Vestas and Mitsubishi the concluding part

stated that the companies should begin to participate in actions together to reach a

point of collective sense making: ergo sharing a culture. This conclusion welcomes an

application of the diversity theory by Ely and Thomas (1996), picked up from the

course of International Business Strategy. When using this theory the following

paragraphs will identify the issues in the company regarding diversity, and the basic

understanding of the term. What are the reasons behind these issues, and how can this

new merger become a successful business? When answering this it becomes essential

to understand the three paradigms a company could find itself in according to the basic

understanding of the term diversity. Ely and Thomas believes that before one can

manage diversity successfully, one has to understand the term fully - that is without

bias. Ely and Thomas present three paradigms in their paper from 1996, where only

two of them have proved to be relevant to this paper: The Access-and-Legitimacy

paradigm, and the Learning-and-Effectiveness paradigm.

9.0 The Access-and-Legitimacy Paradigm

The case has a lot of similarities with the access-and-legitimacy paradigm. Ely and

Thomas acknowledge that this paradigm takes hold in organizations or companies

when they want easier access to for example a new market, with a new clientele.

Mainly the assumption about the case being in this paradigm is build upon the fact that

Vestas gains better access to the growing Asian market by teaming up with Japanese

Mitsubishi, which is also an old, and experienced player on the field. Luckily for

Vestas, they had something in return for Mitsubishi (technology and knowledge),

which makes this paradigm a win-win situation. The idea behind it is that the

demographics of the company should match the critical consumer or constituent

groups (Ely & Thomas, 1996). When using this definition on the case, a lot of

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resemblances occur. Mitsubishi is a Japanese company with a fair amount of capital,

based in Asia (the most promising future costumers in the wind power industry) and

Vestas wants to achieve success on the Asian market. These facts alone advocate the

access-and-legitimacy paradigm. We assume that the joint venture was not only

formed because of the skills in the two companies, but also because Mitsubishi

naturally has some knowledge and know-how about the Asian market, culture and

societies and not the least the challenging rival: Siemens. Being in this paradigm has

both strengths and limitations, which are recognizes by Ely and Thomas. A noticeable

strength they mention is the market-based orientation that naturally will turn into being

a competitive advantage for the company. But the challenges of this paradigm weigh

more, since the company risks to “emphasize the role of cultural differences in a

company without really analyzing those differences to see how they actually affect the

work that is done.” (Ely & Thomas, 1996, p. 83). This is of course a noticeable effect

of the joint venture, because both Vestas and Mitsubishi risk loosing some of their

identity before they know any of it. If Vestas and Mitsubishi fail to embrace and

analyze their differences, especially their cultural differences, they might end up in a

situation where both companies find themselves in a situation where none of them can

recognize the job that is done. This risk is rarely worth to take, which is why the joint

venture should aim to place them selves in the Learning-and-Effectiveness Paradigm.

9.1 Access-and-Legitimacy Paradigm: Critique

The Paradigm presented by Ely and Thomas is challenged by the arguments of Jakob

Lauring (2013) in his paper: International Diversity Management: Global Ideas and

Local Responses. And it is precisely the concept of local responsiveness that is

relevant in this case between Vestas and Mitsubishi. Lauring sees the different cultures

more as strength than as a weakness, and finds that differences in markets and

environments should be met by differences in management. Indirectly it can be drawn

from his statement that local managers should run their own show, and think less about

the former mission and vision of the company. Being in a new environment with a new

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clientele asks for flexibility and ability to push borders within the company, even if

this changes the company’s identity a notch. Lauring describes local responsiveness as:

“local responsiveness, on the other hand, concerns the attempt to respond to specific

circumstances within a variety of different locations.” (2013, p. 212). This definition

underlines the former reasoning. By challenging the Paradigm of Ely and Thomas,

Lauring highlights the strengths within the Access-and-Legitimacy Paradigm, and

shows with no further need for a new way of approaching a new market.

10.0 Learning-and-Effectiveness Paradigm

The optimal paradigm to find oneself in according to Ely and Thomas is the Learning-

and-Effectiveness Paradigm, which is recognized by the rethinking of the primary

tasks within the companies involved and redefinition of labels such as markets,

products, strategies, missions, business practices, and even cultures (Ely & Thomas,

1996). When a company finds it self in this paradigm it is open to change. Applying

this to the case it would mean that both within Vestas and Mitsubishi as the individual

companies that they are would develop into something better and the joint venture they

form together will also improve into a stronger collaboration because the companies

will create a common ground where their respective ideas and culture can meet. One

thing that is worth mentioning when it comes to the strengths of this paradigm is the

fresh perspective that it welcomes. Vestas and Mitsubishi will immediately experience

that both companies have something particular and new to contribute with, but this can

only be exposed if all fordomme are put aside and openness conquer. When the joint

venture leans to acknowledge the differences between them they will benefit from

them instead of being hæmmet – differences between the employees will become a

valuable asset in the company. The joint venture will incorporate the differences so

that they end up learning from them and grow out of they regular comfort zone

because of them (Ely & Thomas, 1996)

10.1 Learning-and-Effectiveness Paradigm: Solution

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Now all the pros have been lined up to paint the picture and show the advantages of

this new paradigm, but how can the new joint venture place itself in this paradigm? If

Vestas and Mitsubishi aim to create the most successful joint venture, they need to

consider how they will emerge into the Leaning-and-Effectiveness Paradigm from the

Access-and-Legitimacy Paradigm they currently find themselves in. Ely and Thomas

have created eight preconditions (full list in Appendix 20.5) that need to be present

before the company can fully place itself in the Learning-and-Effectiveness Paradigm.

This assignment will touch upon four of them, because these four are the most relevant

to the case. The first one to focus is nr. 5 on the list: The organizational culture must

encourage openness. This precondition is basic for the companies, and both Vestas and

Mitsubishi should be open to change and expect change within their individual

companies as well. Being stubborn will get them nowhere, and then the joint venture

will only serve as an eternal struggle towards agreement, which they will never reach

without openness. Ely and Thomas writs that “Such a culture instills a high tolerance

for debate and supports constructive conflict on work-related matters.” (Ely &

Thomas, 1996, p. 86). This statement points out that conflict is a part of being open,

but if the companies learn to embrace the conflict and milk it from constructive

information and critique they will find themselves in a situation where they benefit

from the conflict. Thus, in order to be open, one (: management) must tolerate conflicts

and heating debates among their employees. Another precondition is nr. 7: The

organization must have a well-articulated and widely understood mission. This

precondition should balance the former one, by stating the importance of not loosing

the company’s identity, brand or values completely. Being able to balance the two

preconditions can be hard, because it is individual when a company steps over the line

towards loosing themselves, or holding on too tight to old procedures and regulations.

If Vestas and Mitsubishi want to avoid finding themselves in a position where they

loose identity they should agree on some terms before starting the collaboration, and

make a contract to assure that all agreements are overholdt. When they understand the

importance of this reconciliation of expectation from the joint venture, they will find

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future discussion more relevant because everyone within the joint venture has their

eyes on the common goal. When the mission is clear it provides a focal point, which

helps keep the discussion centered around the shared goal (Ely & Thomas, 1996). Next

precondition is nr. 1: The leadership must understand that a diverse workforce will

embody different perspectives and approaches to work, and must truly value variety of

opinion and insight. It can be argued that this point is mostly relevant for Vestas to

take notice of. Vestas is still a small company when compared to all the global

enterprises, such as Mitsubishi, and might have yet to learn the importance of a

tolerant, accepting and understanding leadership. Vestas should be aware of their way

of dealing with the joint venture, because they are rather green when it comes to

merging, while Mitsubishi has numerous daughter companies and are an experienced

participant in merger and acquisitions. The last precondition that is worth mentioning

here is nr. 8: The organization must have a relatively egalitarian, nonbureaucratic

structure. This point might seem difficult to implement for some, but in order to get

most out of the joint venture it shall be easy to forward new knowledge and ideas to

management. The usual way of doing things within the companies will be challenged

because the new transparent structure will welcome the constructive debates and

discussions that the joint venture will feed its success from. Again openness is the only

way to achieve their shared goal, and both companies shall be willing to give up some

of their sovereignty to accomplish this.

11.0 Comparative Political Economy Approach

A course that is normally focused on developed countries and their similarities and

differences can easily be translated into a course that compares two companies and

highlight their dissimilarities. Vestas and Mitsubishi have roots in different countries,

which is both developed economies. This makes the theories within Comparative

Political Economy highly relevant to apply to the case in order to point out possible

obstacles in the joint venture, since developed economies are the major target group

within this course. Knowing the possible complications before they might happen will

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serve as indescribable information for the companies in the joint venture, so they can

prepare themselves and avoid misunderstandings and major challenges. Taking the

theories out of their natural habitat is a risky action, but nonetheless, an analytical,

beneficial one. The following paragraphs will contribute with the answer to the

question of how collaboration can be successful between the companies, and what

differences they should pay attention to and respect.

12.0 Constructivist Political Economy

The constructivist approach can serve an understanding of the ideas behind the nations

two different institutional systems and rules and regulations in general, which can be

applied to the viewpoint of companies and organizations as well. Differing ideational

ideas will logically create different institutions. Looking at the mind-set in Danish

Vestas versus the mind-set and conceptions in Japanese Mitsubishi of what an ideal

institution would look like will shred some light on the comparison and take us further

into the analysis and closer to the answer on how their joint venture can achieve

success. Constructivist theory assists to analyse how the national understanding of

unemployment as problem is and then what solutions this particular understanding

provoke in the heads of the policy makers and the people in general. Clift develops an

argument upon the concept of Post-dirigisme, which builds further into the VoC

approach by Soskice and Hall (2001), which states that the state is not only an actor in

the market, but also an enactor of markets. This suggestion implies that a country’s

ideational ideas will leave footprints on the institutions in that country (Clift, 2012) –

“…how actors understand their environment, arguing that these understandings shape

how change is enacted” (Clift 2012, 2). This theory is very much alike the concept of

institutional blueprints by Blyth, as will be discussed later in the assignment. Using

this theory on the case between Vestas and Mitsubishi it is suspected to dig up some

issues of diversity when it comes to the understandings of system and the actors that

create it.

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12.1 Clift & Blyth

Using the concepts of institutional blueprints, ideas as weapons and ideas as cognitive

locks represented by Blyth (2001) we find that institutional blueprints is a way of

taking away political uncertainty by incorporating ideas and conceptions to the

institutional structure. Blyth’s concept of institutional blueprints is therefore very

related to the concept of ideational ideas by Clift. Applying this to the case it becomes

clear that in times of crisis or uncertainty, Vestas and Mitsubishi might act differently

because of differing ideas, which will ultimately leave diverse institutional blueprints

creating a diverse industry at last. When the industry evolves and emerges into

something different, Vestas or Mitsubishi might find them selves in a better or worse

situation, according to how the environment is shaped towards their wishes and

benefits. But companies are also enactors of the industry as informed earlier in the

assignment, which will make the ideas of the companies relevant when the

environment is shaped. These ideas from the actors (companies) will leave institutional

blueprints, which means that general regulations and rules in the industry might

change over time. Blyth also presents ideas as weapons, which can be understood as

using ideas to shape the contemporary structural system. If either Vestas or Mitsubishi

began to manipulate the structure or the norms within the wind power industry they

could end up in a position where they could “challenge the existing institutional

arrangements” (Blyth 2001, 4). Usng ideas for manipulation can also happen on the

lower levels, where the joint venture might want to use these weapons towards other

competitors such as Siemens, or Vestas and Mitsubishi could use ideas as weapons

individually towards each other. This last scenario would weaken and eventually kill

the joint venture, since trust and transparency is key elements to adopt when merging.

A precondition for success recognized by Ely and Thomas (1996) as well, when they

put forward their eight preconditions for creating the learning-and-effectiveness

paradigm (Appendix 20.5). Ideas can also take the form of cognitive locks, a concept

that are best described by Blyth himself: “Once ideas has been institutionally

embedded, policy-making becomes possible only in terms of these ideas” (Blyth 2011,

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4). Cognitive locks are therefore the compasses of the policy in a country according to

Blyth, and it works as a lens through which the possible policies are perceived. If

Vestas and Mitsubishi’s cognitive locks are too far apart it could birth a problem of

diversity and misconceptions between the two companies. Now, as the former analysis

suggested this does not necessarily have to be a problem. The learning-and-

effectiveness paradigm will propose that Vestas and Mitsubishi acknowledge their

differences, including their cognitive locks, and find a way to incorporate their diverse

mind-sets into a valuable asset for the joint venture.

13.0 Discussion of Limitations

The constructivist approach will not predict whether or not it is the mind-set in Vestas

or in Mitsubishi that are the dominant and better one. All it tells is that there must be

some ideas that differ between the two companies, which will ultimately end up

creating different institutions that makes different rules and regulations, and form

different environments in which the companies find them selves as actors. The

ultimate challenge for the companies is to find a way into a situation where they act as

a single, united company, a joint venture, where they face the evolving environment

together. The theory cannot help explain how this is done, it only point out

opportunities of failure. These proposals of possible issues does, however, serve

brilliant tool for Vestas and Mitsubishi when they want to avoid issues such as these,

because they can prepare them selves and learn what not to do from the theory. One

major critique of the constructivist approach is that is it not consequent and does not

provide true answer and some clear predictions; it is only an idea about something, but

not something in itself. The constructivist approach can be double-sided and give

different answers, which makes is difficult to apply, since it “tends to under-estimate

the importance of the material dimension” (Buch-Hansen, 2014).

14.0 Integration (Regional Integration and the EU)

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Incorporating the theories from the course of Regional Integration and the EU might

seems as a difficult task, and give the impression that theories are forced to fit the case.

In the following section, this assignment will prove that these theories are indeed

applicable to the case, and that both Vestas and Mitsubishi have important lessons to

learn from them. These following sections will provide the answer for the benefits

behind collaborating and forming a joint venture, and by that adding some of the

important responses to the overall research question. Integration will be focused on as

a subject of its own within the course, and therefore none of the material that covered

the procedures in the European Union will be touched upon. Integration is a topic that

lies under the term International Relations, which makes this section a natural

extension of the former paragraphs.

15.0 Neofunctionalism & Its Background

Neofunctionalism is a development from functionalism, which was first presented and

described by David Mitrany (Bache & George, 2011). The functionalism that Mitrany

describes wants the world to be a peaceful place avoiding war between nations – a goal

that can only be accomplished by taking away national sovereignty and creating a

global web of international activities. Mitrany’s solutions is found in a system where

all areas of human life is divided out to so called functional agencies, that is “his

scheme was to take individual technical tasks out of the control of governments and to

hand them over to these functional agencies.” (Bache & George, 2011, p. 5). Now this

idea of a global system is supposed to lame the national governments, because they

will naturally be interdependent on each other and the tasks that the functioning

agencies are responsible for. Mitrany argues that taking away this power from the

nation states will make them immobilized and ultimately unable to engage in war – but

Mitrany argues that tasks will be solved a lot more effectively, because every

functional agency will specialize. Now this is all about countries and nation states, but

it can just as easily teach companies the benefits of merging and collaborating instead

of using energy on competing for market shares.

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Neofunctionalism springs from basic functionalism and was provoked to develop as a

modsvar to realism, which was very popular in the 1950’ies – the same time where

neofunctionalism was build up (Bache & George, 2011). Neofunctionalism assumes

that the international platform has more actors than the nation states, and that non-state

actors such as lobbyists and companies shape politics and the international relations as

well, which eventually makes the concept of the state more complex and the borders

between nations rather blurred to some extent.

15.1 Concept

Neofunctionalism will teach Vestas and Mitsubishi that as soon as they appear in the

same industry they will automatically experience that they cross each other’s ways and

indirectly (or directly) affect each other’s decisions and actions, just like the nation

states do in the international arena. Using the arguments of neofunctionalism out of its

nature explains the actions of companies and their actions as well, and helps

companies understand the benefits of merging and collaborating. A neofunctionalist

would argue that decisions made within the individual companies are products of

pressures from the industry it is a part of. This statement is directly picked up and

analyzed from the neofunctionalist belief that “…government decisions are influenced

by pressures from various interest groups and bureaucratic actors” (Bache & George,

2011. p. 8). Translating this communication into an informative product for companies

we get that Vestas and Mitsubishi already were a part of each other’s decision-making

and competitive activities even before they decided to merge. The merger will now

serve as a competitive advantage for both companies, where decisions in the individual

companies are now intentionally transparent between the two. Both companies can

benefit from this knowledge sharing and teamwork, because neither has to use energy

and resources on defending company secrets and acquaintances and none have to

worry about being pressured by the other company. Last, but not least, both Vestas and

Mitsubishi have a bigger voice in the industry when they play on the same team, which

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will make them able to put bigger pressure on decisions makers and political actors

that can affect their business.

Another important concept developed within the frames of neofunctionalism is

transnationalism or transgovernmentalism. Neofunctionalism expects to see actors that

have common interest or goals will interact and work together across national borders;

this activity is also expected to happen for state departments, which will seek to make

contact with similar state departments in other nations. Converting this concept of

transnationalism into something usable in a company perspective, we expect to see

collaboration between companies in the same industry across national borders as well

as within them. Using this concept neofunctionalists can predict possible future joint

ventures, mergers, and acquisitions. Neofunctionalists believe that nations and

departments within nations (in this case: companies) will learn and experience that

cooperation across all sorts of borders (national, cultural, ethnical etc.) will have

enormous benefits for all participating actors. This social set of ideas is significant

within the neofunctionalist perspective, and it seems that nations, companies and

human beings has acknowledged this notion.

15.2 Spillover Effect

Neofunctionalism present another central concept to understand why and how

integration exists and progresses by growing its roots deeper and deeper into the

grounds where it has been allowed to take roots. The spillover effect can be imagined

as a snowball that rolls down a hill and grows bigger on its way – it amplifies itself and

grows for every second that passes. Within the academic world it can be defined and

understood in two ways: One where an actions towards a goal can only be assured by

taking another action, which will create a new circumstance where another action has

to be made in order to get closer towards the goal; a circle that continues until the goal

has been reached or for an eternity. Another understanding of the concept is the

political, cultural, technical etc. spillovers that occur between sectors, companies,

nations or human beings. This spillover can be understood as smaller pressures as well

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that determines and shapes the actions of different actors – decisions are always

determined by differing conceptions of reality and diverse pressures from all

shareholders. The spillover effect is a web of pressures and makes every actor apart of

its world (Bache & George, 2011). If Vestas and Mitsubishi learn the art and skill of

spillover they will be able to use this against the system to further make their

contributions to the industrial environment. They can spillover new norms and set new

standards within the industry, a very relevant cause in this case, where the new wind

power turbine is about to be developed with Mitsubishi. Setting standards and

pressuring the industry, both the companies within it (ex. Siemens) and the policy

makers that decide the rules and regulations, will help the companies to create the

perfect environment for their joint venture. But it is important to remember that every

competitor has the same agenda, and are just as determined to invent the better product

or creating perfect conditions for themselves.

16.0 Intergovernmentalism

Intergovernmentalism stands in opposition to neofunctionalism, and it finds its

inspiration in the realist perspective (Bache & George, 2011). Intergovernmentalism

does not acknowledge the assumption that other actors such as organizations and

lobbyists have a big say in the global and local political arena. They believe that

nations states alone can make the decisions they favor, without the indirect and direct

manipulation from non-official actors (Bache & George, 2011). Politics are pure from

an intergovernmentalist perspective, which can be interpreted as a naïve and childish

statement. If Vestas and Mitsubishi should have a fair chance to have a say in

international and local politics, they will stand stronger and have a bigger voice if they

stand together. It is well-known phenomenon from all over the world; those big

companies that contribute nicely to the national GDP will be heard and respected more

often than smaller enterprises that do not have as much value for the nation. This fact

is unofficial, yet all have touched upon it at some time. What could be recommended

for Vestas and Mitsubishi to do from this analysis is to stick together and grow

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together, in order to participate in the system and shape the structures that are relevant

to them and the industry where they act.

17.0 Summary

This assignment has gone through four courses of the International Business and

Politics program, excluding the introduction to the second year project: Philosophy of

social science, that explained ontology and epistemology. The theories and concepts

that constructs this assignment has showed great balance in their application, and

served broad and diverse conclusions that somehow still manage to point Vestas and

Mitsubishi in one general direction. Organization Theory gave an answer to the

question on how the two companies could secure a successful merger, with minimum

complications, and recognized the importance of mutual understanding and sharing

symbols and culture. International Business Strategy gave insight on the issues that

could arise from diversity in the workforce, and presented a hands-on guide to avoid

troubles caused by diversity. Being in the learning-and-effectiveness paradigm will

make sure that the joint venture get maximum benefits from their differences both

culturally, but also on a more professional level. Comparative Political Economy

presented the constructivist approach, which had a hard time being entirely concrete

and usable in a practical sense. However, this approach pointed out some very

important areas to focus on to avoid issues that would arise from differing cognitive

locks and internally manipulation. At last integration as an individual concept, dragged

out from the Regional Integration and the EU course, has shown benefits of merging

and presented two opposite approaches to why a joint venture is a good and modern

idea. Having two good reasons to merge does not make the decision worse, it only

strengthens the choice made by the companies.

17.1 Further Contributions & Limitations

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The International Business and Politics program presents an endless amount of

theories, concepts, perspectives and paradigms. But due to space constraints and the

fear of being too superficial and posturing this assignment has been narrowed down to

focus all its energy on digging into the four chosen courses and the theories that are

relevant to apply on the case within them. If time and space were not limited theories

from Microeconomics and International Economics could have presented an

understanding of the financial aspects and mechanisms processes in this joint venture.

The economic perspective is particularly underrepresented in this assignment, but it

was never the intention to make such sections take up space, since there is so much to

discover from the theories that has been applied. The complementation of the applied

theories and concepts are fulfilling, because what one theory leaves out or fails to

explain, the other theory picks up and continues to create an understanding that will

serve as practical information for the companies. Ideally, this assignment would be a

two-volume assignment, where one volume would take the political and cultural point

of view, as this assignment does, and the other one would be number cracking and

financial analyses. Further contributions could have developed from statistics, which

would fit in the hypothetical second volume as well, since statistical skills would be

highly valued in such an analysis and critique. Political Science is a course that could

have been forced to serve some explanations and conclusion as well, like theories from

Comparative Political Economy and to some extent from Regional Integration and the

EU have been forced. But Political Science is indeed a bit more political in it’s

procedures and approaches than the two other courses that have been used, which

makes it both unnatural and irrelevant to milk this course from inferences about the

case.

18.0 Conclusion

The analysis of the case and the practically applied theories has brought this

assignment to the next level when it comes to relevant information for the companies.

All four courses has presented practical solution that can help Vestas and Mitsubishi

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avoid issues and challenges in the future, so they can use all of their energy on creating

a strong and united joint venture. To answer the research question, the conclusions

from the sub-questions has been considered, and the assignment can conclude that

Vestas and Mitsubishi should implement full transparency on all layers of the joint

venture, make a complex yet understandable contract to set out outlines for actions,

and acknowledge their differences and take advantage of them. Vestas and Mitsubishi

have made the right choice when they formed their joint venture, because they will

learn valuable lessons from each other methods, procedures, mind-sets and cultures.

They will benefit on several levels, not only because Vestas will receive more capital

to fund their studies and technical inventions, and not only because Mitsubishi will get

access to the highly valued technology behind the most complex and effective wind

turbine ever made. They will find that managing their differences and understanding

each other professional cultures, missions, vision and methods will teach every

employer an invaluable lesson that will give the joint venture huge advantages in the

industry. If the companies manage to follow the tips and outlines presented in this

assignment, they can avoid stupid mistakes and create the perfect soil for the joint

venture to mature in. Issues might arise from differences in ways of doing business,

ethnical diversities or conceptions of the market and industry. If Vestas and Mitsubishi

fail to pay attention to these possible issues, they might find out about them when it is

too late, and worst-case scenario is that the joint venture might break apart. But

knowing about and being aware of the multiple issues that have been presented in this

assignment, will get the companies far, since they can prevent them from ever

happening. It will be exiting to follow this fresh joint venture, and see if they can reach

their shared goal of winning the global wind power market.

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Documents

Web view2/2/2012 · Since this joint venture is fairly new, ... Lastly the model incorporates the Artifacts of ... where their cultures will meet and agreement will be a