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A Study on Socialization in International Joint Ventures in China; a Case of Nissan and Dongfeng

Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics

1.0 Introduction

1.1 Background of the study

Marketing research has noted that the best way to penetrate the Chinese market is via an equity joint venture EJV with a local partner who is well connected. This explains why multinational companies prefer using joint venture as a penetration structure in China. Well know companies including Starbucks, McDonald’s, and Nissan among others opted for a joint venture approach in China (Wong, 2019). This preference of EJV as a form of company structure by MNC is attributed to the Chinese Foreign Investment Law which requires foreign companies to comply with due diligence and corporate establishment regulations in the country (Wong, 2019). However, over the last decade, the popularity of IJV in China has continued to decline in favor of wholly owned foreign enterprises. This is because they presume wholly owned foreign enterprises as being a better option when it comes to protecting their intellectual property rights alongside other proprietary technologies from being disseminated by local firms (nber.org, 2020). Still, international joint ventures are an approach to recon in China since the foreign investment policy by China needs foreign companies to partner with a local firm. From 2015 to current, foreign companies have established over 10000 new joint ventures in China, which accounts to $27.8 billion of FDI (nber.org, 2020). Interestingly, studies have however, recorded high rate of failure for these joint ventures. These failures are majorly attributed to selection of poor entry strategy including integration mechanisms (Hofstede, 2010).

Upon venturing into a foreign market, a company’s expatriates, who entail professionals who are moving in from their country into the new one ostensibly to work for the company will find the new work environment different than the one they were used to (Leonardelli et al, 2012). Accordingly, these employees will be required to adapt to the new culture, new roles or tasks and new social contacts (Leonardelli et al, 2012). Although expatriates are not new hires into the company, they are new country they will be working in. According to Horwitz (2014), organisational newcomers, need to learn job aspects alongside aspects of the social and cultural contexts so as to effectively “fit in”. In this respect, socialization is considered as a fitting in or learning process that needs some form of transition or change within the newcomer over a specific timeframe. Both the expatriate and domestic employees definitely require some form of learning for them to adapt to the new work environment and understand their new roles so as to become effective team members. Owing to this transition, it would be interesting to understand how international joint ventures undertake socialization of their expatriates in light of the domestic socialization concept.

1.2 Significance of the Study

There is no doubt that the partnership, international joint venture and alliance will be the defining deal for the current decade, next one and beyond. The alliance and specifically, the joint venture boom is considered to be relevant especially for industries that are undergoing fast change (Horwitz, 2014). These include high tech, biotech, financial services, the media, entertainment, and pharmaceuticals. Interestingly, studies have however, recorded high rate of failure for international alliances. These failures are majorly attributed to selection of poor entry strategy including human resource management (Hofstede, 2010). Despite this, the number of international alliances continues to grow on a consistent level (Ohmae, 2020). In this regard, the research will employ the case of Nissan and Dongfeng in China which are successful in the China market to enlighten marketers and multinationals on the aspect of socialization. There are currently few studies focusing on socialization strategy by international companies and none on joint ventures and especially in the China context. Thus this research aims to fill this gap by enlightening co-operates and stakeholders on the need for socialization and the effective socialization strategies especially in the Chinese context.

1.3 Aim and Objectives

The aim of this study is to analyze the socialization in international joint ventures in China using the case of Nissan and Dongfeng. Specific objectives include the following.

1. To evaluate the performance of international joint venture between Nissan and Dongfeng

2. To identify ways through which socialization is achieved in Nissan and Dongfeng (such as through joint training activities, structured personnel interactions, rotation of personnel in key managerial positions in the international joint venture and so on)

3. To examine the impact of socialisation on international joint venture performance of Nissan and Dongfeng

4. To offer suggestions on how Nissan and Dongfeng can further enhance their international joint venture performance through socialization

2.0 Literature Review

2.1 International joint venture

An international joint venture (IJV) is a business or company structure where two or more businesses that are based different in countries partner to achieve their business interests. A firm that wants to venture into a specific foreign market may wish to forge a joint venture agreement with a local business player so as to avoid the liabilities associated with cross-border business transactions. Furthermore, JV help in minimizing the risk related with business acquisitions (Cui, 2014). According to Li et al (2013), it is the behavior of the partnering members that determines the satisfaction and performance of the collaborative performance. Christoffersen (2013) found out that to avoid alliance failures and opportunistic behaviors, firms needed to create shared values as well as work in reducing goal deviation. The shared values represent the joint aspirations and goals of the partners. However, according to this author, most MNC fail due to lack of establishing shared values among the IJV partners. The authors note that if the IJV partners endeavor to create shared values, there would be a less likelihood of the partners sacrificing the other’s interest as they pursue their own ambitions and goals. When members of an organization share similar perceptions regarding the way they need to relate with one another, they will not only be able to avoid the potential misunderstandings but also be able to create more opportunities for the exchange of resources and ideas. On the other hand, if the partners harbor significant differences on such aspects as management styles, strategic goals, their transaction and negotiation costs could increase (Huang et al, 2014). In this regard, Huang et al (2014) noted that creation of shared values in form of relational norms, which leads to minimizing of value gaps motivates the IJV partners to be committed to their relationship as well as bar the other from acting in an opportunistic way.

2.2 Concept of socialisation and how it is achieved in International Joint ventures

Socialization refers to the practice of training employees whereby; newcomers are separated from fellow workers, trained in a specific work procedure, skill or social or cultural orientations as opposed to training them while performing their duties with the existing workers (Fang et al, 2011). According to Batistic (2015), organizational socialization is the process through which a person obtains the social skills, and knowledge which is essential in assuming his or her responsibilities. Effective socialization leads translates to better skilled, trained and loyal employees. Dovidio & Gaertner (2010) found the process of socialization in many multinationals to be similar to the adjustment process which expatriates undergo. The author noted that in such organizations, the use of organizational “insiders” played a key role in domestic socialization. These “insiders” act as agents of socialization for new employees in the firm. Again, these “insiders” are employed by organizations to provide newcomers with the social support and information they need so as to adapt. On their part, Hartman, & Moeller (2010) found the involvement of MNC in supporting the socialization processes of their employees through adjustment of compensations to fit the economic and social aspect of the new environment, training programs on the local cultural, social and job aspects, as well as providing financial and relocation incentives. The training is meant to make the expatriates become proficient in interacting and managing the host country nationals, hence is able to meet the goals of their respective assignments.

2.3 The impact of socialisation on international joint venture performance

Leonardelli, DeNisi and Toh (2012) established that social categorization lead to a greater dual identity and information sharing among the host country nationals. According to the author, the dual identity which socialization help in creating lead to a “them and us” mindset rather than a “them vs us” further minimizing the merger resistance. In addition, the continuity of this identity is essential in post merger identification. For the majority of IJV studies, cultural distance or differences which are mostly inspired by Hofstede dimensions are found to be strongly associated with the performance of an IJV. In his book, Hofstede confirmed that cultural aspects and differences were a significant factor in determining the success or failure of international alliances (Hofstede, 2010). Similarly, a research by Child et al (2011) noted that social and cultural influences harbor a significant level of influence not only on the longevity but also the stability of a joint venture.

3.0 Methodology

3.1 Data type

This study will rely on primary data so as to acquire the required data. This means that the researcher will collect the information directly from the context of the research. This approach was adopted due to its ability to allow the researcher have control on how to collect the data, be able to identify the location or case scenarios to use, tailor the size of the project as well as identify the right respondents to address the research objectives accordingly (Trend Monitor, 2016). As it regards, the research design, the author opted to choose a qualitative research design for this case study. This type of research design was preferred since it facilitates the retrieval of data that requires respondents to state their perspectives, meaning and experience in the study context (Astalin, 2013). Similarly, the researcher intends to understand the real life perspectives and experiences of managers in Nissan and Dongfeng, thus the research design was deemed appropriate for this course.

3.2 Research instrument

The research will be conducted through interviews with the identified respondents. In this respect, an interview guide will be designed by the researcher to provide guidance during the interview process. This guide will consist of the questions which are designed and aligned with the research objectives. This instrument was deemed viable as it aligns with the qualitative research design approach. Specifically, the interview guide will help the research author to acquire detailed information regarding the respondent’s feelings, opinions, and or perceptions. Furthermore, they will make it easy for the researcher to ask detailed questions or clarifications from the respondent’s answers and hence achieve high validity rate. What is more, the researcher is able to control the order of the questions being asked while also able to judge the respondents spontaneity (Astalin, 2013). However, the problem with using this instrument is that it requires a lot of time to interview respondents. This means that only a limited number of respondents can be considered for a given study. In addition, there is a probability of bias especially if the respondent reacts to the interviewer’s race, economic status, physical appearance, or class. Moreover, it may not be possible to maintain full anonymity with the interviewees which could be a concern to the respondents (Sociology Group, 2019).

3.3 Data collection

The topic for this research is “A study on socialization in international joint ventures in China; a case of Nissan and Dongfeng” therefore, the type of data to be gathered will be descriptive in nature. The data will be collected from five managers of the two companies forming the joint venture in China, Nissan and Dongfeng which are operating jointly in China. Due to Covid-19 issues, it may not be possible to undertake a face to face interview and so the researcher will opt for a phone interview. To gain permission of conducting the interview in the company, the researcher will obtain phone numbers of the respective personnel from a friend who is already working in the joint venture as an assistance HR manager. The researcher will then make a phone call to each of these managers at a respective time, introduce himself and explain how he obtain the phone number. After these introductions, the researcher will then explain the purpose of the communication, the aim of the research, its purpose after which he will request for his appropriate time to be engaged in the interview. The researcher will

3.4 Data analysis

Thematic analysis approach should be used to analyse the data. This entails identification of patterns of themselves in the interview data collected. Accordingly, the researcher will be moving forward and backwards, between the data set, the coded data extracts and then deduce meaning from the data. The basic stems that will be followed including firstly assigning preliminary codes to the collected data for purposes of describing the content and then proceed to search for the themes and patterns across the entire data set. The next steps entail reviewing the themes identified and then naming and defining them and eventually produce the dissertation.

3.5 Research ethics

While conducting this research, the researcher will always strive to uphold the principle of honesty in report the data, integrity, objectivity and respect for intellectual property. Furthermore, confidentiality of the information provided by the respondents will be guaranteed throughout the process. The identity of the respondents will as well be kept anonymous in line with the ethical guidelines. What is more, the researchers will be informed of their right to take part in the study on a voluntary ground and the possibility of disengaging themselves from the interview at any time they feel so. Additionally, the researcher will take account the organizational and national policies that should be adhered and incorporate them before embarking on the interview process.

4.0 Theoretical Foundation 4.1 The theory of Organisational Socialization This research can be better be explained using the Theory of Organization Socialization introduced by Maanen, and Schein (1979). This theory stipulates that individuals learn concerning their work responsibilities is mostly directly related on how they learn it. According to the authors, the process of socialization is essentially a cultural matter since it entails transmission of values and information. In socialization, the organization has to identify the best approach to teach its new employees desirable perspective and behaviors which are customary within the work settings and those that are not. 4.2 Contingency Theory of Socialization According to this theory, introduced by Feldman (1976), the contingency theory of socialization is a model of personal socialization into an organization. The authors postulate that organizational socialization is a procedural process that entails cultural orientation, job involvement, mutual influence, and general satisfaction. Moreover, as per this theory, professional, non-professional and paraprofessional workers experience difference level of socialization. As such, organizations need to take these into account when designing socialization programs for such individuals. This research fits into international business category, taking into concern that the focus is on expatriates working in foreign countries. Multinational companies have for one reason or another to send expatriates to their foreign subsidiaries to work from there. Accordingly, they have to relearn their roles, the new culture, environment, work procedures, social aspects and even values so as to fit in the new work environment.


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