- Email: [email protected]
The role of communication competencies in international business relationship development
Journal of World Business 37 (2002) 256±265
The role of communication competencies in international business relationship development David A. Grif®th* Department of Marketing, College of Business BUSAD C402g, University of Hawaii, Honolulu, HI 96822, USA
Abstract Effective communication between international business partners is critical for global success. Underlying national and organizational cultural differences in international business relationships creates hurdles to effective communication, hindering performance. To assist managers in understanding this issue, a model of communication effectiveness for international relationship development, derived from industry examples, theory, and a dataset consisting of 123 qualitative interviews conducted with American, Canadian, Chinese, and Japanese managers is presented. Further, in order to assist managers in the task of developing more effective communications, a six-step process aimed in directing managerial action is presented. By proactively managing its communications, a ®rm can develop stronger international business relationships facilitating the rapid response to market opportunities and challenges. # 2002 Elsevier Science Inc. All rights reserved.
Communication underlies the effectiveness of coordinating exchange activities, developing strong relationships, which results in improved performance (Dwyer, Schurr, & Oh, 1987; Nevin, 1995). Without effective inter-organizational communications, learning among partners is diminished and the long-run effectiveness of the relationship may be damaged. Communication presupposes that there is a particular cultural framework that allows ``translation'' of the meaning embedded within communication by the recipient to maintain the true intent of the communication (Kim, 1991). When business partners emanate from different cultures (national and organizational), the underlying cultural inconsistencies in communication patterns create hurdles to the development of effective global business relationships (Kim, 1991; Mohr & Nevin, 1990). Today, managers continue to struggle with communication barriers in their international relationships. The lack of a process to address communication issues presents a gap in the literature. The purpose of this study is to develop a model for understanding key factors leading to effective communication in international business relationship development. First, an examination of the role of culture in international business communications is addressed. Next, a model of * Tel: 1-808-956-8167; Fax: 1-808-956-9886. E-mail address: [email protected] (D.A. Griffith).
communication effectiveness in international relationships, developed from industry examples, theory, and a dataset consisting of 123 qualitative interviews conducted with American, Canadian, Chinese, and Japanese managers is presented. Finally, a six-step process aiding in directing managerial action to overcome cultural communication inconsistencies is presented. 1. The construction of international relationships Instrumental in producing successful international performance is the interaction and coordination of organizational elements. The basis of this idea can be explained by using a congruence approach that theorizes that similarity (i.e., ®t) of relevant contextual, structural, and/or strategic factors maximizes ef®cient operations (Doty, Glick, & Huber, 1993; Newman & Nollen, 1996; Tosi & Slocum, 1984). Alternatively, when inconsistencies exist, underlying differences in operating components create barriers to operations, hindering effectiveness (Doty et al., 1993; Fey & Beamish, 2000). Communication effectiveness in an international relationship can be in¯uenced by the ®t between national and organizational cultures (Fox, 1997; Gudykunst & Kim, 1984; Kim, 1991; Li, 1999), as well as by the breadth (i.e., the cultural diversity of members) and ownership structure of the relationship (see Fig. 1).
1090-9516/02/$ ± see front matter # 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 9 0 - 9 5 1 6 ( 0 2 ) 0 0 0 9 2 - 5
D.A. Griffith / Journal of World Business 37 (2002) 256±265
257
Fig. 1. Construction of international business relationships.
National culture provides an implicit theory relating to behavioral expectations in a variety of situations, including communication (Hofstede & Bond, 1988; Moon, 1996). When business partners emanate from very different national cultural orientations interact, such as Japan and the U.S., cultural inconsistencies in communication strategies (e.g., Japanese employ indirect communication whereas Americans use direct communication) may result in communication obstacles, hampering performance. For example, some claim that the coordination problems experienced by Matsushita in its acquisition of MCA and Sony in their acquisition of Columbia Pictures were caused by miscommunications between Japanese and American managers (Farhi, 1995; Nakamoto, 2000). It is believed that the Japanese national culture communication strategies of Matsushita's and Sony's managers were in contrast to American managers at MCA and Columbia Pictures, respectively, leading to misunderstandings hampering performance (Farhi, 1995; Nakamoto, 2000). Alternatively, when ®rms from relatively similar national cultural orientations interact, as is the case with Canadian±U.S. relationships, general similarity in culturally founded communication patterns (e.g., direct communication, etc.) minimizes cultural communication hurdles, enhancing overall relationship ef®ciencies. The ®t, or lack thereof, of organizational culture also has a direct effect on international business communication effectiveness. Organizational culture is the pattern of shared behaviors, values, and beliefs that provide a foundation of understanding of the organizational functioning processes and norms directing employee behavior (Schein, 1985). Organizational culture is an amalgamation of the national culture and the backgrounds of individuals assembled in the organizational setting (Schein, 1996). Differences in
organizational cultures can lead to miscommunications and the deterioration of joint efforts (Veiga, Lubatkin, Calori, & Very, 2000). For example, organizational culture clashes may be the sticking point in the recent merger of America Online and Timer Warner. Whereas AOL's culture is characterized as streamlined and ¯uid, quickly making and implementing decisions, Time Warner is composed of individual ®efdoms, each with their own subculture, united by their traditions, and is slow in making decisions or reacting to environmental changes (Houston, 2001; Lowry, 2000). Further, Howe (2000) notes that even after a decade after Time, Inc. and Warner Communications merged, Time Warner is more of an ®rm composed of individual units than a uni®ed whole, thus highlighting the communication dif®culties embedded in organizational culture. Further, the interaction of national and organizational cultures can either facilitate or hinder communication effectiveness making these elements critical to consider when assessing communication in international business relationships. For example, the recent merger of U.S.-based InFocus and Norwegian Proxima ASK highlights communication differences between the two organizations that can be attributable to both national and organizational cultures. John Harker, CEO of InFocus, points to the fact that Proxima ASK didn't tend to over-communicate to with their employees, while InFocus did, suggestive of differences in approaches to communication embedded within each ®rm's organizational culture (Woods, 2001). Further, Harker noted that although InFocus was delicate in its attempts to impose its ways its efforts were often met with national culture resentment (Woods, 2001). Differences in national and organizational cultures creates substantial obstacles to performance effectiveness.
258
D.A. Griffith / Journal of World Business 37 (2002) 256±265
Further, ®rms establish multiple international relationships with partners spanning a diverse set of cultures and consisting of different ownership structures. As the breadth of a ®rm's relationships increases, the cultural diversity of its partners can also increase, thus increasing the cultural inconsistencies the ®rm must overcome. Similarly, ownership structure (i.e., joint partnerships, strategic alliances, etc.) plays an important role in communication effectiveness. The dif®culty in communicating in jointly owned operations (as opposed to wholly owned) is that the organizational culture becomes a hybrid of those of the partner organizations. To effectively operate, ®rms must understand the elements in¯uencing the communication patterns between partners, adapting to those differences when necessary. 2. A model for international communication effectiveness To assist managers in developing effective strategies to overcome international communication challenges, a proactive model of communication effectiveness was developed (see Fig. 2). The model is derived from industry examples, theory, and 123 qualitative interviews with managers (e.g., import and export managers, global marketing vice presidents, global marketing managers, global business directors, marketing managers, regional sales managers, international sales managers, etc.), from Canada (n 28), China (n 31), Japan (n 33), and the United States (n 31), who actively engage in international communication with international partners. The managers were employed in ®rms ranging in size from under 5 employees to over 1,000, with annual sales revenue ranging from just over U.S.$ 5 million to over U.S.$ 1 billion, representing a wide range of industries including, automotive, dental
equipment, electronics, pharmaceuticals, consumer packaged goods, etc. 2.1. Communication competencies Communication competence is a set of abilities and knowledge related to communication that enables an individual to engage in appropriate/meaningful communications with international partners (Cui, Van den Berg, & Jiang, 1998; Kim, 1991; Triandis, 1973). Communication competence may vary by cultural distance, frequency, and effectiveness of past interactions, the level of global experience of a manager, as well as the learning environment of the organization (Kim, 1991; Triandis, 1973). One looks to a manager's competencies to assess his/her ¯exibility and adaptation in communication encounters, such as his/her ability to adjust, integrate, and establish new manners of communicating with culturally diverse partners. Communication competencies encompass three broad, inter-related dimensions: cognitive, affective, and operational (Kim, 1991). 2.1.1. Cognitive competence When LM Ericsson Telephone Co. announced that it would be using ``external contracting'' for its headset business, many of Ericsson's partners, including its Chinese joint venture partner, thought that the company was withdrawing from its joint venture factory in China (Financial Times, 2001). Nothing could have been further from the truth. The lack of cognitive competence in this case, indicated by rigidity of interpretation of the term ``external contracting,'' created a miscommunication threatening the underlying joint venture partnership. Cognitive competence refers to an individual's ability to ascertain meaning from verbal and nonverbal language (Applegate & Sypher, 1988; Kim, 1988, 1991). Cognitive
Fig. 2. A model of communication effectiveness.
D.A. Griffith / Journal of World Business 37 (2002) 256±265
competencies relate the psychological concepts embedded in an individual's values that in¯uence their ability to accurately decode a partner's message (Kim, 1988, 1991). This entails an individual's adaptability in his/her meaning construction, cognitive rigidity/¯exibility, categorization schema, etc. (Kim, 1988, 1991). An individual's cognitive competencies allow him/her to adjust effectively to communication differences in highly diverse environments. The importance of cognitive competency for successful global network communication was widely noted by American, Canadian, Chinese, and Japanese managers. Managers indicated that cognitive competence moves beyond implicit technical language competency, but encompasses ¯exibility and adaptation to one's linguistic patterns, tone of voice, speech rate, etc., when conversing with culturally inconsistent business partners. Cognitive competency's importance can be observed in the following successful and unsuccessful communication episodes. A mid-sized American distributor who purchases equipment from a supplier in Osaka, Japan has developed cognitive competence resulting in a successful international business relationship. He indicated ``as I have become more ¯uent in Japanese, I have become more aware of the subtleties of the language. I think that I have a better understanding of my partner and what they mean.'' This distributor's success can be contrasted with the failure of an American manager, employed by a large manufacturing ®rm, who lacks cognitive competence. He indicated that although he speaks Japanese ¯uently, successful relationships with Japanese ®rms elude him. In discussing a former Japanese supplier he indicated that ``the guy resented me . . .. He thought only Japanese should speak Japanese. No gaijan allowed. When I would speak in Japanese . . . he would start speaking English. Like he could do it too. I've had similar trouble with other Japanese (partners).'' Not understanding that the Japanese partners' efforts to speak English was a sign of respect, the American manager's inaccurate decoding of the communication effort damaged the relationship. Common to the interviews was that each manager's cognitive competency, or lack thereof, directly in¯uenced their ability to develop effective relationships. Managers who were able to adapt to the communication patterns of their partners fostered the development of a more effective communication environment, whereas those managers not possessing cognitive competencies tended to experience more dif®culty in developing international relationships. 2.1.2. Affective competence Immediately after Hyundai Motors announced a threeway alliance with Mitsubishi Motors of Japan and DaimlerChrysler, DaimlerChrysler denied it. While Hyundai viewed the relationship as an alliance, since DaimlerChrysler was part owner of Mitsubishi, DiamlerChrysler did not (Benoit & Burton, 2000). Lack of affective communication competency on the part of DaimerlerChrysler, affectively reacting to the use of the term `alliance,' in this case resulted
259
in the loss of face for Hyundai Motors and deterioration of DaimlerChrysler's relationship with Mitsubishi Motors. Affective competence relates to an individual's emotional tendencies in relation to communications (Applegate & Sypher, 1988; Kim, 1991). An individual's affective competencies are derived from his/her motivational and attitudinal predisposition to experiences, such as ambiguity tolerance, adaptive motivation, empathic motivation, etc. (Kim, 1991). An individual's adherence to embedded meanings in¯uence his/her attitudinal response to culturally diverse communications. As such, an individual's affective competence determines his/her willingness to accept and respond to unique and divergent communications, in¯uencing his/her ability to facilitate the development of communication contexts distinct to each international partner. Those interviewed noted the importance of affective competencies, such as tolerance and managing ambiguity, in their communications with their international partners. For example, a manager for a small American dental equipment manufacturer, who had numerous failed global relationships, indicated that he does not like dealing with Chinese distributors. He indicated that while he desperately wished to enter the market, he did not think that he could continue to try to do business with the Chinese because he believed that he could never get a straight answer. Over a 3year period, he tried to initiate relationships with seven different distributors. He noted, ``. . . none of the contacts I made have panned out. The only way to be successful in China is to get someone else to do it for you. I gave up last year. I hired an export management company that had business in China to represent me. At least that headache is gone.'' His low tolerance for ambiguity is indicative of his low affective competency. Contrast his failed communication experience with the successful communication experience of a large Canadian distributor who possessed affective competence, thus enabling him to establish successful global relationships. In reference to his relationship with a Chinese distributor he indicated, ``I went to China on a Canadian Trade Promotion run. I tell you, they do stuff differently over there. I met a couple of distributors. One in Shanghai and I really got along. I called him up about a week after I got back. Our business has been good. I try to give him whatever he needs. You have to listen. I mean really listen. Not only to what is said, but what is not said.'' Throughout the interviews, success or failure of the relationship was determined, to a degree, on the affective competence of the managers. Managers conveying instances of affective competence tended to be engaged in more longterm, successful partnerships. 2.1.3. Behavioral competence When Yoichiro Kaizaki of Bridgestone remained silent for more than a month after claims that Firestone tires may have been linked to a signi®cant number of deaths in the U.S., his communication behavior frustrated many of Bridgestone/ Firestone's global partners, such as Ford Motor Company.
260
D.A. Griffith / Journal of World Business 37 (2002) 256±265
While Kaizaki viewed the issue as a U.S. situation (i.e., Firestone), and, therefore, believed it appropriate not to get involved, his global partners viewed his communication behavior differently (Terazono, 2000). Lack of behavioral competency in this case contributed in part to the demise of a century old relationship. Behavioral competence refers to an individual's ¯exibility and resourcefulness in reacting to communication encounters (Kim, 1991). The domain of behavioral competencies encompasses behavioral ¯exibility, communication authenticity, message, and behavioral complexity, interaction management, etc. (Applegate & Sypher, 1988; Fox, 1997; Kim, 1991). A manager's behavioral competencies enable him/her to engage in meaningful interactions with those of many cultures. Lack of behavioral competencies restricts a manager's ¯exibility and adaptability to communication encounters that result in hindering effective relationship development and management. Managers interviewed consistently indicated that those managers possessing higher levels of behavioral competency were able to generate new communication and cultural contexts that facilitated effective communication. Take for example a small Chinese distributor, possessing behavioral competencies, who found success working with an American supplier of of®ce equipment. ``When we began to do business I was afraid of making mistake. I asked my friend for his understanding. I very much wanted to learn how to do business like Americans. Over years we shared with each other how business was done in each country. I think we both have learned much.'' Alternatively, a midsized Canadian distributor in Nova Scotia indicated that although sharing a common language with his American supplier communication problems pervaded the relationship because of the communication behavior of the supplier. The Canadian distributor indicated that he felt like a dumping ground for surplus parts. He noted that the supplier rarely contacted him unless he needed to reduce his end of year inventory. ``Every year we get the same call asking us if we could use this or that. I guess he thinks we only need one shipment a year. . . . I've tried calling him when we could use product, but he never returns my call.'' In this case, the behavior of the American supplier communicated a lack of understanding of the Canadian distributor. Common to the interviews was that behavioral competencies either facilitated or hindered the development of an effective communication environment. Through ¯exibility and adaptability in a manager's communication behavior the communication environment evolved to support effective communication resulting in the development of a stronger relationship. 2.2. Communication environment As no two national or organizational cultures are identical, inherent differences necessitates a negotiation of communication and cultural protocols for the development of a common
communication environment (Kim, 1991). Through implicit adaptations a new communication environment that is unique to the ®rms in the relationship is established. Casmir (1999) indicates that communication protocols, appropriateness of strategies, monitoring, and communication feedback mechanisms are all dynamically adjusted for successful communication to occur, thus suggesting not only communication interaction, but also cultural interaction. 2.2.1. Communication interaction When OSRAM, the German lighting giant, bought the U.S. ®rm Sylvania, the German and U.S. engineers had trouble communicating. To solve the problem, an e-mail language translation system was developed and implemented (Freivalds, 1998). Through communication interaction, a new communication protocol, unique to the relationship was developed, enhancing communication effectiveness. Communication interaction refers to the hybridization of communication protocols within a relationship and thus, the development of a new set of communication patterns for transacting (Casmir, 1999). The interaction of each ®rm's unique communication protocol is integrated to establish a set of hybrid norms for communication within the relationship (Casmir, 1999). The importance of communication interaction was evident in a relationship between a small Canadian consumer package goods company and its Chinese partner. A manager for the Canadian ®rm indicated that they had to develop new means of communicating (e.g., increasing the amount of communication as well as minimizing the use of technical jargon) with their Chinese partner to ensure clear communication. He suggested that when both partners were willing to slightly change how they communicated with each other the relationship become much better. The in¯uence of communication interaction on relationship development was a common theme in the interviews. 2.2.2. Cultural interaction NTT Communications president Masanobu Suzuki notes that one of NTT's biggest challenges is how to close the gap between Japanese and U.S. management styles. He notes that to be globally successful, a ®rm must change and adopt its behavior to be in line with a global standard, inclusive of characteristics of many cultures (Nakamoto, 2000). Thus, to be globally successful all partners must demonstrate ¯exibility and change in cultural strategies to facilitate a communication environment that aids in strengthening its international relationships. Cultural interaction, i.e., adjustments over time to a ®rm's cultural protocols, results from the communication encounter that sets forth new cultural norms that can be signi®cantly differentiated from each ®rm's original organizational and national culture, such as orientation toward time, uncertainty and relational norms (e.g., solidarity, information exchange, ¯exibility) (Casmir, 1999). For example, a large Japanese equipment manufacturer indicated ``we had to ®nd new ways
D.A. Griffith / Journal of World Business 37 (2002) 256±265
to operate with our American distributor. By combining their way and our way we found the `best' way to operate.'' This new, mutually agreed upon organizational culture facilitates the ¯ow of communication between ®rms signaling a desire to work toward mutual bene®t, building trust, commitment, and satisfaction within the relationship. Firm's developing managers who possess the necessary communication competencies to develop new communication and cultural environments within their relationships are able to establish effective and ef®cient communication exchange conditions. It is important to note that the managers interviewed overwhelming indicated that effective global communications were not solely based on the competencies of a single manager, but rather the matching of managers in the relationship who possess communication competencies. The importance of matched, competent managers is clearly demonstrated by a mid-sized Japanese distributor who has been successful in establishing long-term, pro®table relationships. This manufacturing equipment distributor has been working for years with the same American manufacturer. When the relationship was initiated, he felt it was important to meet face-to-face with the supplier. Given that he realized that his business was a relatively small percentage of the manufacturer's, he decided that it was best to go to the United States so that he could meet with his supplier and see the factory. Since that time, he and his supplier have used a variety of communication vehicles to keep in contact. He indicated ``I realize that American's do not always see the necessity in meeting face-to-face. Our ways of building relationships are done differently. When we work together as a team, we win. We have agreed, each year one of us travels. They come here to meet with me and our customers. I go there to meet with them and our suppliers.'' In this case, both communication and cultural interactions facilitated the development relational quality. 2.3. Relational quality Relational quality refers to the strength of the relationship and the potential for the relationship to continue the process of relationship development. Relational quality is a critical goal for ®rms as it facilitates performance effectiveness. The development of strong inter-organizational relationships allows ®rms to capitalize on reductions in direct transaction costs associated with the exchange process while at the same time increasing the volume of exchange (Gundlach, Achrol, & Mentzer, 1995; Williamson, 1991). Further, relational quality stimulates stronger, more intimate partnerships, building trust, commitment, and satisfaction that increases the effectiveness of the relationship, thereby differentiating it from less well coordinated competitors (Barney, 1991; Henderson & Cockburn, 1994). 2.3.1. Trust and commitment Motorola Vice president Ruey Bin Kao, speaking on the recent U.S.$ 407 million contract with China United
261
Telecommunications, the largest telecommunication monetary contract at the time, noted ``our cooperation with China Unicom has been very successful over the past 7 years. We have established a win±win partnership based on trust and mutual bene®t'' (Motorola, 2001). Through communication and cultural interaction over time, Motorola has developed strong relationships in China, positioning itself for success in the Chinese marketplace. Trust, i.e., when one has con®dence in its partner's reliability and integrity, and commitment i.e., the long-term orientation taken toward the exchange relationship by a channel member, form the foundation of long-term business relationships (Morgan & Hunt, 1994; Gundlach et al., 1995; Parkhe, 1998). Trust and commitment are highly interrelated, forming from an underlying ``bonding'' of relationship partners. The creation of a unique communication environment to the relationship minimizes inconsistencies between partners in their communications reducing hurdles to bonding. As bonding occurs, relational partners increase their trust in one another and, therefore, increase their commitment to the relationship, thus providing for a more coordinated and effective relationship. Managers interviewed consistently indicated that trust and commitment were necessary prerequisites for the development of a strong, long-term partnership. Those interviewed indicated that the development of trust and commitment is important because it can increase coordination, reduce costs, and increase ¯exibility. For example, a large American consumer products manager indicated that his ®rm's relationship with its largest Japanese partner was only successful because they trusted their partner to make local product selection decisions and were committed to the long-term success of the relationship. He indicated that the long-term nature of the relationship was built as much on pro®tability as it was on the trust that had developed between the companies. Respondents indicated that through the development of strong international relationships, they were able to develop and implement strategy decisions more proactively to outperform their competitors. For example, an American equipment manufacturer indicated ``when you trust your partner to make decisions in their market, rather than demanding that they pass every decision by you, you are able to be more responsive to the local market conditions, and as such become more competitive.'' 2.3.2. Satisfaction The dissolution of Faith Oriental, a Hong Kong±Sino± Japanese joint venture was a result of dissatisfaction in the relationship by its investors. While investors, Prosperity Ltd., Tomiyama Construction Machinery Ltd., Tagawa Crush Stone Ltd., and Tien Shan Ltd., expected the U.S.$ 10 million international joint venture to develop a quarry in China over a 20-year period, the joint venture lasted less than 1 year. Lack of communication of partner strategies hampered efforts to more fully develop the partnership. Diminished trust and commitment in the relationship resulting from uneven
262
D.A. Griffith / Journal of World Business 37 (2002) 256±265
exposure among partners in the relationship created dissatisfaction among partners resulting in the ventures eventual dissolution (O'Connor & Halos, 1999). In the case of Faith Oriental, lack of communication created an atmosphere of low trust and commitment making partners dissatis®ed with the ongoing operations of the venture. Satisfaction refers to an affective state resulting from the appraisal of a ®rm's exchange relationship (Morgan & Hunt, 1994). Those relationships that have developed the necessary communication environment, via adaptations in communication and cultural environments, to foster trust and commitment are often the most satisfying for businesses, as each partner believes they are working together toward common goals. The importance of the development of an effective communication environment was strongly evident in the interviews. For example, a small Japanese auto part supplier working with a U.S. auto manufacturer indicated that, ``by both of us making adjustments in how we operate, we both have become happier and more productive. The relationship is much stronger and much more pro®table.'' Further, those ®rms in trusting, long-term relationships, such as Motorola whose history in China sates back to 1967, indicated their satisfaction with the policies and actions of their partners as well as the belief that the strength of their relationship derived signi®cant performance outcomes. 3. Action plan for communication effectiveness To address the issues involved with ®t of national and organizational cultures in a ®rm's international relationships,
a ®rm must be proactive and develop speci®c strategies to enhance communication effectiveness. Although extremely important to a ®rm's future success, most organizations have not formalized its management of communications. As such, a series of assessment steps to impel managerial action is presented to assist managers (see Fig. 3). 3.1. Step one: assess communication competence of internal managers A ®rm's managers vary in their level of cognitive, affective, and behavioral competencies. While a manager may possess high degrees of cognitive and behavioral competence, he/she may lack affective competence. Given the importance of a manager's communication competencies for relationship success, it is critical that ®rms assess each manager's competencies in the context of his/her current and future communication roles. The ®rst step in assessing communication competence is to determine technical language competency (regarding current and potential exposure languages), including standard language pro®ciencies, dialectic differences, ¯exibility in the use of words and grammatical structure. Once a technical level of cognitive competence is assessed a ®rm should employ experiential assessment to gauge affective and behavioral competencies. Experiential assessment methods, such as scenario exposure, on-line intercultural communication simulations, and post hoc review of the manager's past communication exchanges, can be used to assess competency levels. Once a manager's communication competency levels are identi®ed, training and development programs can be used to enhance the manager's communication competencies.
Fig. 3. Action plan for communication effectiveness.
D.A. Griffith / Journal of World Business 37 (2002) 256±265
3.2. Step two: matching internal and external manager competencies In order for a ®rm's managers to be able to communicate effectively, a ®rm must partner with ®rms who employ culturally communication competent managers. Only when the internal (i.e., the ®rm's) and external managers (i.e., the ®rm's partner) are matched in competencies can a ®rm realistically expect success in its international relationships. Matching internal and external managers who possess the requisite communication competencies posses an inherent challenge for a ®rm as they can only control internal managers. As such, ®rms valuing communication competence, and the performance effectiveness derived, may wish to undertake a two-prong approach to enhancing the communication competencies of external managers. First, the issue of communication competency should be given priority in discussions with partners. Through open and frequent communication regarding the relational and performance outcomes of employing managers who posses cognitive, affective, and behavioral competencies a ®rm can demonstrate to its partners its commitment to the relationship as well as its desire for enhanced performance effectiveness. A ®rm can offer to assist its partners in the assessment of the communication competence of its managers by sharing its own protocols of communication competence assessment. Second, the issue of communication competence can be integrated into the ®rm's partner selection and retention criteria. As a ®rm begins to integrate the issue of communication competence into its partner selection and retention criteria it is important that it demonstrate communication competence in terms of ¯exibility in relation to its partners. While a communication protocol may be desired, the communication of the protocol to each partner must demonstrate the communication competencies the ®rm wishes to develop within its relationships. 3.3. Step three: assessing the effectiveness of the communication environment As the communication between competent managers increases, the rate of adaptation of communication and cultural protocols increases, thereby increasing both the ef®ciency and effectiveness of the communication exchanges. As ®rms interact, a new communication environment develops unique to the partnership. To assess the communication environment, ®rms may wish to employ both objective and subjective assessment methods. For example, a ®rm may wish to query each manager at periodic intervals regarding his/her perception of the communication environment's effectiveness and how he/she believes it could be improved. By independently assessing the perceived communication environment, differences may be observed suggesting opportunities for communication environment adaptations. Further, objective criteria, such as the number of miscommunications/misunderstandings
263
could be compiled internally. Each miscommunication could be given a priority rating suggestive of its impact on the relationship's performance. Managerially, it is important to note that the creation of new communication environments for individual relationships is dif®cult for many ®rms to administer. Dif®culty arises not from the development of the communication environment between partners, but rather from organizational cultures that emphasize administrative controls. As such, it is important that a ®rm's organizational culture allow for the development of new communication contexts, each with its unique communication protocols. This is not to suggest that managers should be given free reign to develop any communication protocol, but rather that they should be given the latitude to generate effective communication protocols unique to each relationship. 3.4. Step four: assessing relational quality The evolving communication environment resulting from the interaction between managers and the ®rms they represent in¯uence the development of relational quality between their respective ®rms. To assess relational quality in a ®rm's relationships, subjective and objective approaches can be undertaken. Subjectively, trust, commitment, and satisfaction can be assessed by inquiring into the beliefs of ®rm managers pertaining to a speci®c partner. Objectively, relational quality can be assessed through measuring the intention of contract renewals, pattern of purchase orders (e.g., increasing or decreasing), amount of information shared over time (e.g., increasing or decreasing), etc. Employing both subjective and objectives measures can provide a ®rm with greater con®dence in their overall level of relational quality. 3.5. Step ®ve: developing appropriate communication strategy Communication strategies consist of both the speci®c messages (aimed at achieving a speci®c goal) and the method of delivery. Effective communication in a ®rm's international relationships necessitates consideration of not only competencies, communication environments and relational quality, but also the speci®c goals the ®rm wishes to achieve in the relationship and its present position. In essence, a ®rm must assess whether a ``communication gap'' (i.e., the difference between the relational quality the ®rm desires in the speci®c relationship and the relational quality that currently exist in the relationship). In some instances a ®rm may wish to develop a short-term relationship in which relational quality is not developed, as it is not necessary to achieve the ®rm's goals. In other relationships, a ®rm may wish to establish a more enduring relationship, thus necessitating not only competencies, but also the development of new communication environments and relational quality, as such necessitating a different communication
264
D.A. Griffith / Journal of World Business 37 (2002) 256±265
strategy. For example, if a ®rm believes that its relationship with its distributor in China is critical for its long-term success due to the Chinese market's high growth potential, and determines that its current manager's working with the distributor lacks speci®c competencies necessary for developing an appropriate communication environment necessary to develop relational quality the ®rm may wish to train, or reassign, the manager and assign a manager to that relationship to foster the building of relational quality. Or, if the development of new communication environments are hampered by the ®rm's existing organizational culture, sti¯ing the development of a new communication environment with its speci®c cultural and communication protocols, the ®rm may wish to allow for greater ¯exibility in the ®rm's international communication policies for enhancing the development of a unique cultural and communication interactions to foster the development of trust, satisfaction, and commitment, etc. 3.6. Step six: auditing of performance effectiveness of communication Given the complexity of establishing effective inter-organizational communication strategies in a ®rm's international relationships, it becomes critical to audit the effectiveness of communication and its facilitation, or hindrance, of performance effectiveness. Firms should consider the creation of multi-®rm committees for the monitoring of communication. The committee should be responsible for: (1) the auditing of communication competency of managers; (2) the coordination of protocols for general consistency; (3) the development of ¯exible communication environment protocols; (4) evaluation of the relational quality over time with partners, thus necessitating the creation of a strategic communication plan; and (5) assessing the impact of the communication environment on performance effectiveness. 4. Summary Theory and practice indicate that congruence, or ®t, of relevant contextual, structural, and or strategic factors maximize ef®ciencies of operation. As communication is founded in particular cultural frameworks allowing for the ``translation'' of the meaning by the recipient to maintain the true intent of the message, the ®t, or lack thereof, of such frameworks poses a potential obstacle to developing effective international relationships. For example, when business partners emanate from different cultures (both national and organizational), the underlying cultural inconsistencies in communication strategies may pose hurdles to the development of effective global business relationships. However, national and organizational barriers to communication may be minimized through the employment of managers with speci®c communication competencies who can work toward the development of unique communication environments
within each relationship building relational quality and enhancing performance. In this study, a model of communication effectiveness for international relationship development, derived from industry examples, theory, and a dataset consisting of 123 interviews conducted with American, Canadian, Chinese, and Japanese global business managers was presented. The model focuses on three key communication competencies (cognitive, affective, and behavioral), necessary to develop communication environments (consisting of communication and cultural interaction) to foster relational quality. Further, in order to assist global managers in the task of developing more effective international communication, a six-step process aiding in directing managerial action was presented. By proactively managing a ®rm's communication processes in its international relationships, a ®rm can develop strong partnerships in the face of incongruence of national and organizational cultures, facilitating the rapid response to market opportunities and challenges, thus enhancing performance. References Applegate, J., & Sypher, H. (1988). A constructivist theory of communication and culture. In Y. Kim & W. Gudykunst (Eds.), Theories in intercultural communication (pp. 41±65). Newbury Park, CA: Sage. Barney, J. (1991). Firms resources and sustained competitive advantage: A comment. Management Science, 32: 1512±1514. Benoit, B., & Burton, J. (2000, May 8). Confusion over Hyundai Motor deal. Financial Times, p. 28. Casmir, F. (1999). Foundations for the study of intercultural communication based on a third-culture building model. International Journal of Intercultural Relations, 23(1): 91±116. Cui, G., Van den Berg, S., & Jiang, Y. (1998). Cross-cultural adaptation and ethnic communication: Two structural equation models. The Howard Journal of Communications, 9(1): 69±85. Doty, D. H., Glick, W. H., & Huber, G. P. (1993). Fit, equi®nality, and organizational effectiveness: A test. Academy of Management Journal, 36(6): 1196±1251. Dwyer, R., Schurr, P., & Oh, S. (1987). Developing buyer±seller relationships. Journal of Marketing, 51(2): 11±27. Farhi, P. (1995, April 8). MCA, Sony: Why mergers didn't work. Washington Post, p. D1. Fey, C. F., & Beamish, P. W. (2000). Joint venture con¯ict: The case of Russian international joint ventures. International Business Review, 9: 139±162. Financial Times. (2001). Ericsson to continue mobile phone production. Financial Times Information. Asiainfo Services, Inc. Fox, C. (1997). The authenticity of intercultural communication. International Journal of Intercultural Relations, 21(1): 85±103. Freivalds, J. (1998). When cultures clash. Communication World, 15(9): 19±21. Gudykunst, W. B., & Kim, Y. Y. (1984). Communicating with strangers: An approach to intercultural communication. New York, NY: Random House. Gundlach, G., Achrol, R., & Mentzer, J. (1995). The structural commitment in exchange. Journal of Marketing, 59(1): 78±92.
D.A. Griffith / Journal of World Business 37 (2002) 256±265 Henderson, R., & Cockburn, I. (1994). Measuring competence: Exploring ®rm effects in pharmaceutical research. Strategic Management Journal, 15(Winter): 63±84. Hofstede, G., & Bond, M. (1988). Culture's consequences: International differences in work-related values. Beverly Hills, CA: Sage. Houston, F. (2001). AOL/TW spells big. Columbia Journalism Review, 40(2): 22±27. Howe, P. J. (2000, November 19). Do the pieces still ®t? Boston Globe, p. F1. Kim, Y. Y. (1988). Communication and cross-cultural adaptation: An integrative theory. Clevedon, UK: Multilingual Matters. Kim, Y. Y. (1991). Intercultural communication competence: A systems-theoretic view. In S. Ting-Toomey & F. Korzenny (Eds.), Intercultural communication competence (pp. 259±275). International and intercultural communications annual. Newbury Park, CA: Sage. Li, H. Z. (1999). Communicating information in conversations: A cross-cultural comparison. International Journal of Intercultural Relations, 23(3): 387±409. Lowry, T. (2000). AOL Time Warner: The thrill is gone. Business Week, 3703: 158±160. Moon, D. G. (1996). Concepts of culture: Implications for intercultural communication research. Communication Quarterly, 44(1): 70±81. Mohr, J., & Nevin, J. R. (1990). Communication strategies in marketing channels: A theoretical perspective. Journal of Marketing, 54(4): 36±51. Morgan, R. M., & Hunt, S. D. (1994). The commitment±trust theory of relationship marketing. Journal of Marketing, 58(3): 20±38. Motorola. (2001). Motorola received largest Monetary contracts for China Unicom's nationwide CDMA infrastructure. PR Newswire Association, Inc.: Source: Motorola Inc.
265
Nakamoto, M. (2000, October 23). When culture masks communication. Financial Times, p. 15. Newman, K., & Nollen, S. (1996). Culture and congruence: The ®t between management practices and national culture. Journal of International Business Studies, 27(4): 753±779. Nevin, J. (1995). Relationship marketing and distribution channels: Exploring fundamental issues. Journal of the Academy of Marketing Science, 23(Fall): 334±337. O'Connor, N., & Chalos, P. (1999). The challenge for successful joint venture management in China: Lessons from a failed joint venture. Multinational Business Review, 7(1): 50±61. Parkhe, A. (1998). Understanding trust in interrelational alliances. Journal of World Business, 33(3): 219±240. Schein, E. (1985). Organizational culture and leadership. San Francisco: Jossey-Bass. Schein, E. (1996). Culture: The missing concept in organizational studies. Administrative Science Quarterly, 41(2): 229±240. Terazono, E. (2000, September 25). Survivor with a tenacious grip. Financial Times, p. 16. Tosi, H.L., Jr., & Slocum, J.W., Jr. (1984). Contingency theory: Some suggested directions. Journal of Management, 10(1): 9±26. Triandis, H. R. (1973). Culture training, cognitive complexity and interpersonal attitudes. In D. Hoopes (Ed.), Readings in intercultural communication (Vol. 2, pp. 55±67). Pittsburgh: Regional Council for Interculutral Education. Veiga, J., Lubatkin, M., Calori, R., & Very, P. (2000). Measuring organizational culture clashes: A two-nation post-hoc analysis of a cultural compatibility index. Human Relations, 53(4): 539±557. Williamson, O. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2): 269±296. Woods, B. (2001, July 28). Caution: Merging cultures. Chief Executive.
The role of communication competencies in international business relationship development David A. Grif®th* Department of Marketing, College of Business BUSAD C402g, University of Hawaii, Honolulu, HI 96822, USA
Abstract Effective communication between international business partners is critical for global success. Underlying national and organizational cultural differences in international business relationships creates hurdles to effective communication, hindering performance. To assist managers in understanding this issue, a model of communication effectiveness for international relationship development, derived from industry examples, theory, and a dataset consisting of 123 qualitative interviews conducted with American, Canadian, Chinese, and Japanese managers is presented. Further, in order to assist managers in the task of developing more effective communications, a six-step process aimed in directing managerial action is presented. By proactively managing its communications, a ®rm can develop stronger international business relationships facilitating the rapid response to market opportunities and challenges. # 2002 Elsevier Science Inc. All rights reserved.
Communication underlies the effectiveness of coordinating exchange activities, developing strong relationships, which results in improved performance (Dwyer, Schurr, & Oh, 1987; Nevin, 1995). Without effective inter-organizational communications, learning among partners is diminished and the long-run effectiveness of the relationship may be damaged. Communication presupposes that there is a particular cultural framework that allows ``translation'' of the meaning embedded within communication by the recipient to maintain the true intent of the communication (Kim, 1991). When business partners emanate from different cultures (national and organizational), the underlying cultural inconsistencies in communication patterns create hurdles to the development of effective global business relationships (Kim, 1991; Mohr & Nevin, 1990). Today, managers continue to struggle with communication barriers in their international relationships. The lack of a process to address communication issues presents a gap in the literature. The purpose of this study is to develop a model for understanding key factors leading to effective communication in international business relationship development. First, an examination of the role of culture in international business communications is addressed. Next, a model of * Tel: 1-808-956-8167; Fax: 1-808-956-9886. E-mail address: [email protected] (D.A. Griffith).
communication effectiveness in international relationships, developed from industry examples, theory, and a dataset consisting of 123 qualitative interviews conducted with American, Canadian, Chinese, and Japanese managers is presented. Finally, a six-step process aiding in directing managerial action to overcome cultural communication inconsistencies is presented. 1. The construction of international relationships Instrumental in producing successful international performance is the interaction and coordination of organizational elements. The basis of this idea can be explained by using a congruence approach that theorizes that similarity (i.e., ®t) of relevant contextual, structural, and/or strategic factors maximizes ef®cient operations (Doty, Glick, & Huber, 1993; Newman & Nollen, 1996; Tosi & Slocum, 1984). Alternatively, when inconsistencies exist, underlying differences in operating components create barriers to operations, hindering effectiveness (Doty et al., 1993; Fey & Beamish, 2000). Communication effectiveness in an international relationship can be in¯uenced by the ®t between national and organizational cultures (Fox, 1997; Gudykunst & Kim, 1984; Kim, 1991; Li, 1999), as well as by the breadth (i.e., the cultural diversity of members) and ownership structure of the relationship (see Fig. 1).
1090-9516/02/$ ± see front matter # 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 9 0 - 9 5 1 6 ( 0 2 ) 0 0 0 9 2 - 5
D.A. Griffith / Journal of World Business 37 (2002) 256±265
257
Fig. 1. Construction of international business relationships.
National culture provides an implicit theory relating to behavioral expectations in a variety of situations, including communication (Hofstede & Bond, 1988; Moon, 1996). When business partners emanate from very different national cultural orientations interact, such as Japan and the U.S., cultural inconsistencies in communication strategies (e.g., Japanese employ indirect communication whereas Americans use direct communication) may result in communication obstacles, hampering performance. For example, some claim that the coordination problems experienced by Matsushita in its acquisition of MCA and Sony in their acquisition of Columbia Pictures were caused by miscommunications between Japanese and American managers (Farhi, 1995; Nakamoto, 2000). It is believed that the Japanese national culture communication strategies of Matsushita's and Sony's managers were in contrast to American managers at MCA and Columbia Pictures, respectively, leading to misunderstandings hampering performance (Farhi, 1995; Nakamoto, 2000). Alternatively, when ®rms from relatively similar national cultural orientations interact, as is the case with Canadian±U.S. relationships, general similarity in culturally founded communication patterns (e.g., direct communication, etc.) minimizes cultural communication hurdles, enhancing overall relationship ef®ciencies. The ®t, or lack thereof, of organizational culture also has a direct effect on international business communication effectiveness. Organizational culture is the pattern of shared behaviors, values, and beliefs that provide a foundation of understanding of the organizational functioning processes and norms directing employee behavior (Schein, 1985). Organizational culture is an amalgamation of the national culture and the backgrounds of individuals assembled in the organizational setting (Schein, 1996). Differences in
organizational cultures can lead to miscommunications and the deterioration of joint efforts (Veiga, Lubatkin, Calori, & Very, 2000). For example, organizational culture clashes may be the sticking point in the recent merger of America Online and Timer Warner. Whereas AOL's culture is characterized as streamlined and ¯uid, quickly making and implementing decisions, Time Warner is composed of individual ®efdoms, each with their own subculture, united by their traditions, and is slow in making decisions or reacting to environmental changes (Houston, 2001; Lowry, 2000). Further, Howe (2000) notes that even after a decade after Time, Inc. and Warner Communications merged, Time Warner is more of an ®rm composed of individual units than a uni®ed whole, thus highlighting the communication dif®culties embedded in organizational culture. Further, the interaction of national and organizational cultures can either facilitate or hinder communication effectiveness making these elements critical to consider when assessing communication in international business relationships. For example, the recent merger of U.S.-based InFocus and Norwegian Proxima ASK highlights communication differences between the two organizations that can be attributable to both national and organizational cultures. John Harker, CEO of InFocus, points to the fact that Proxima ASK didn't tend to over-communicate to with their employees, while InFocus did, suggestive of differences in approaches to communication embedded within each ®rm's organizational culture (Woods, 2001). Further, Harker noted that although InFocus was delicate in its attempts to impose its ways its efforts were often met with national culture resentment (Woods, 2001). Differences in national and organizational cultures creates substantial obstacles to performance effectiveness.
258
D.A. Griffith / Journal of World Business 37 (2002) 256±265
Further, ®rms establish multiple international relationships with partners spanning a diverse set of cultures and consisting of different ownership structures. As the breadth of a ®rm's relationships increases, the cultural diversity of its partners can also increase, thus increasing the cultural inconsistencies the ®rm must overcome. Similarly, ownership structure (i.e., joint partnerships, strategic alliances, etc.) plays an important role in communication effectiveness. The dif®culty in communicating in jointly owned operations (as opposed to wholly owned) is that the organizational culture becomes a hybrid of those of the partner organizations. To effectively operate, ®rms must understand the elements in¯uencing the communication patterns between partners, adapting to those differences when necessary. 2. A model for international communication effectiveness To assist managers in developing effective strategies to overcome international communication challenges, a proactive model of communication effectiveness was developed (see Fig. 2). The model is derived from industry examples, theory, and 123 qualitative interviews with managers (e.g., import and export managers, global marketing vice presidents, global marketing managers, global business directors, marketing managers, regional sales managers, international sales managers, etc.), from Canada (n 28), China (n 31), Japan (n 33), and the United States (n 31), who actively engage in international communication with international partners. The managers were employed in ®rms ranging in size from under 5 employees to over 1,000, with annual sales revenue ranging from just over U.S.$ 5 million to over U.S.$ 1 billion, representing a wide range of industries including, automotive, dental
equipment, electronics, pharmaceuticals, consumer packaged goods, etc. 2.1. Communication competencies Communication competence is a set of abilities and knowledge related to communication that enables an individual to engage in appropriate/meaningful communications with international partners (Cui, Van den Berg, & Jiang, 1998; Kim, 1991; Triandis, 1973). Communication competence may vary by cultural distance, frequency, and effectiveness of past interactions, the level of global experience of a manager, as well as the learning environment of the organization (Kim, 1991; Triandis, 1973). One looks to a manager's competencies to assess his/her ¯exibility and adaptation in communication encounters, such as his/her ability to adjust, integrate, and establish new manners of communicating with culturally diverse partners. Communication competencies encompass three broad, inter-related dimensions: cognitive, affective, and operational (Kim, 1991). 2.1.1. Cognitive competence When LM Ericsson Telephone Co. announced that it would be using ``external contracting'' for its headset business, many of Ericsson's partners, including its Chinese joint venture partner, thought that the company was withdrawing from its joint venture factory in China (Financial Times, 2001). Nothing could have been further from the truth. The lack of cognitive competence in this case, indicated by rigidity of interpretation of the term ``external contracting,'' created a miscommunication threatening the underlying joint venture partnership. Cognitive competence refers to an individual's ability to ascertain meaning from verbal and nonverbal language (Applegate & Sypher, 1988; Kim, 1988, 1991). Cognitive
Fig. 2. A model of communication effectiveness.
D.A. Griffith / Journal of World Business 37 (2002) 256±265
competencies relate the psychological concepts embedded in an individual's values that in¯uence their ability to accurately decode a partner's message (Kim, 1988, 1991). This entails an individual's adaptability in his/her meaning construction, cognitive rigidity/¯exibility, categorization schema, etc. (Kim, 1988, 1991). An individual's cognitive competencies allow him/her to adjust effectively to communication differences in highly diverse environments. The importance of cognitive competency for successful global network communication was widely noted by American, Canadian, Chinese, and Japanese managers. Managers indicated that cognitive competence moves beyond implicit technical language competency, but encompasses ¯exibility and adaptation to one's linguistic patterns, tone of voice, speech rate, etc., when conversing with culturally inconsistent business partners. Cognitive competency's importance can be observed in the following successful and unsuccessful communication episodes. A mid-sized American distributor who purchases equipment from a supplier in Osaka, Japan has developed cognitive competence resulting in a successful international business relationship. He indicated ``as I have become more ¯uent in Japanese, I have become more aware of the subtleties of the language. I think that I have a better understanding of my partner and what they mean.'' This distributor's success can be contrasted with the failure of an American manager, employed by a large manufacturing ®rm, who lacks cognitive competence. He indicated that although he speaks Japanese ¯uently, successful relationships with Japanese ®rms elude him. In discussing a former Japanese supplier he indicated that ``the guy resented me . . .. He thought only Japanese should speak Japanese. No gaijan allowed. When I would speak in Japanese . . . he would start speaking English. Like he could do it too. I've had similar trouble with other Japanese (partners).'' Not understanding that the Japanese partners' efforts to speak English was a sign of respect, the American manager's inaccurate decoding of the communication effort damaged the relationship. Common to the interviews was that each manager's cognitive competency, or lack thereof, directly in¯uenced their ability to develop effective relationships. Managers who were able to adapt to the communication patterns of their partners fostered the development of a more effective communication environment, whereas those managers not possessing cognitive competencies tended to experience more dif®culty in developing international relationships. 2.1.2. Affective competence Immediately after Hyundai Motors announced a threeway alliance with Mitsubishi Motors of Japan and DaimlerChrysler, DaimlerChrysler denied it. While Hyundai viewed the relationship as an alliance, since DaimlerChrysler was part owner of Mitsubishi, DiamlerChrysler did not (Benoit & Burton, 2000). Lack of affective communication competency on the part of DaimerlerChrysler, affectively reacting to the use of the term `alliance,' in this case resulted
259
in the loss of face for Hyundai Motors and deterioration of DaimlerChrysler's relationship with Mitsubishi Motors. Affective competence relates to an individual's emotional tendencies in relation to communications (Applegate & Sypher, 1988; Kim, 1991). An individual's affective competencies are derived from his/her motivational and attitudinal predisposition to experiences, such as ambiguity tolerance, adaptive motivation, empathic motivation, etc. (Kim, 1991). An individual's adherence to embedded meanings in¯uence his/her attitudinal response to culturally diverse communications. As such, an individual's affective competence determines his/her willingness to accept and respond to unique and divergent communications, in¯uencing his/her ability to facilitate the development of communication contexts distinct to each international partner. Those interviewed noted the importance of affective competencies, such as tolerance and managing ambiguity, in their communications with their international partners. For example, a manager for a small American dental equipment manufacturer, who had numerous failed global relationships, indicated that he does not like dealing with Chinese distributors. He indicated that while he desperately wished to enter the market, he did not think that he could continue to try to do business with the Chinese because he believed that he could never get a straight answer. Over a 3year period, he tried to initiate relationships with seven different distributors. He noted, ``. . . none of the contacts I made have panned out. The only way to be successful in China is to get someone else to do it for you. I gave up last year. I hired an export management company that had business in China to represent me. At least that headache is gone.'' His low tolerance for ambiguity is indicative of his low affective competency. Contrast his failed communication experience with the successful communication experience of a large Canadian distributor who possessed affective competence, thus enabling him to establish successful global relationships. In reference to his relationship with a Chinese distributor he indicated, ``I went to China on a Canadian Trade Promotion run. I tell you, they do stuff differently over there. I met a couple of distributors. One in Shanghai and I really got along. I called him up about a week after I got back. Our business has been good. I try to give him whatever he needs. You have to listen. I mean really listen. Not only to what is said, but what is not said.'' Throughout the interviews, success or failure of the relationship was determined, to a degree, on the affective competence of the managers. Managers conveying instances of affective competence tended to be engaged in more longterm, successful partnerships. 2.1.3. Behavioral competence When Yoichiro Kaizaki of Bridgestone remained silent for more than a month after claims that Firestone tires may have been linked to a signi®cant number of deaths in the U.S., his communication behavior frustrated many of Bridgestone/ Firestone's global partners, such as Ford Motor Company.
260
D.A. Griffith / Journal of World Business 37 (2002) 256±265
While Kaizaki viewed the issue as a U.S. situation (i.e., Firestone), and, therefore, believed it appropriate not to get involved, his global partners viewed his communication behavior differently (Terazono, 2000). Lack of behavioral competency in this case contributed in part to the demise of a century old relationship. Behavioral competence refers to an individual's ¯exibility and resourcefulness in reacting to communication encounters (Kim, 1991). The domain of behavioral competencies encompasses behavioral ¯exibility, communication authenticity, message, and behavioral complexity, interaction management, etc. (Applegate & Sypher, 1988; Fox, 1997; Kim, 1991). A manager's behavioral competencies enable him/her to engage in meaningful interactions with those of many cultures. Lack of behavioral competencies restricts a manager's ¯exibility and adaptability to communication encounters that result in hindering effective relationship development and management. Managers interviewed consistently indicated that those managers possessing higher levels of behavioral competency were able to generate new communication and cultural contexts that facilitated effective communication. Take for example a small Chinese distributor, possessing behavioral competencies, who found success working with an American supplier of of®ce equipment. ``When we began to do business I was afraid of making mistake. I asked my friend for his understanding. I very much wanted to learn how to do business like Americans. Over years we shared with each other how business was done in each country. I think we both have learned much.'' Alternatively, a midsized Canadian distributor in Nova Scotia indicated that although sharing a common language with his American supplier communication problems pervaded the relationship because of the communication behavior of the supplier. The Canadian distributor indicated that he felt like a dumping ground for surplus parts. He noted that the supplier rarely contacted him unless he needed to reduce his end of year inventory. ``Every year we get the same call asking us if we could use this or that. I guess he thinks we only need one shipment a year. . . . I've tried calling him when we could use product, but he never returns my call.'' In this case, the behavior of the American supplier communicated a lack of understanding of the Canadian distributor. Common to the interviews was that behavioral competencies either facilitated or hindered the development of an effective communication environment. Through ¯exibility and adaptability in a manager's communication behavior the communication environment evolved to support effective communication resulting in the development of a stronger relationship. 2.2. Communication environment As no two national or organizational cultures are identical, inherent differences necessitates a negotiation of communication and cultural protocols for the development of a common
communication environment (Kim, 1991). Through implicit adaptations a new communication environment that is unique to the ®rms in the relationship is established. Casmir (1999) indicates that communication protocols, appropriateness of strategies, monitoring, and communication feedback mechanisms are all dynamically adjusted for successful communication to occur, thus suggesting not only communication interaction, but also cultural interaction. 2.2.1. Communication interaction When OSRAM, the German lighting giant, bought the U.S. ®rm Sylvania, the German and U.S. engineers had trouble communicating. To solve the problem, an e-mail language translation system was developed and implemented (Freivalds, 1998). Through communication interaction, a new communication protocol, unique to the relationship was developed, enhancing communication effectiveness. Communication interaction refers to the hybridization of communication protocols within a relationship and thus, the development of a new set of communication patterns for transacting (Casmir, 1999). The interaction of each ®rm's unique communication protocol is integrated to establish a set of hybrid norms for communication within the relationship (Casmir, 1999). The importance of communication interaction was evident in a relationship between a small Canadian consumer package goods company and its Chinese partner. A manager for the Canadian ®rm indicated that they had to develop new means of communicating (e.g., increasing the amount of communication as well as minimizing the use of technical jargon) with their Chinese partner to ensure clear communication. He suggested that when both partners were willing to slightly change how they communicated with each other the relationship become much better. The in¯uence of communication interaction on relationship development was a common theme in the interviews. 2.2.2. Cultural interaction NTT Communications president Masanobu Suzuki notes that one of NTT's biggest challenges is how to close the gap between Japanese and U.S. management styles. He notes that to be globally successful, a ®rm must change and adopt its behavior to be in line with a global standard, inclusive of characteristics of many cultures (Nakamoto, 2000). Thus, to be globally successful all partners must demonstrate ¯exibility and change in cultural strategies to facilitate a communication environment that aids in strengthening its international relationships. Cultural interaction, i.e., adjustments over time to a ®rm's cultural protocols, results from the communication encounter that sets forth new cultural norms that can be signi®cantly differentiated from each ®rm's original organizational and national culture, such as orientation toward time, uncertainty and relational norms (e.g., solidarity, information exchange, ¯exibility) (Casmir, 1999). For example, a large Japanese equipment manufacturer indicated ``we had to ®nd new ways
D.A. Griffith / Journal of World Business 37 (2002) 256±265
to operate with our American distributor. By combining their way and our way we found the `best' way to operate.'' This new, mutually agreed upon organizational culture facilitates the ¯ow of communication between ®rms signaling a desire to work toward mutual bene®t, building trust, commitment, and satisfaction within the relationship. Firm's developing managers who possess the necessary communication competencies to develop new communication and cultural environments within their relationships are able to establish effective and ef®cient communication exchange conditions. It is important to note that the managers interviewed overwhelming indicated that effective global communications were not solely based on the competencies of a single manager, but rather the matching of managers in the relationship who possess communication competencies. The importance of matched, competent managers is clearly demonstrated by a mid-sized Japanese distributor who has been successful in establishing long-term, pro®table relationships. This manufacturing equipment distributor has been working for years with the same American manufacturer. When the relationship was initiated, he felt it was important to meet face-to-face with the supplier. Given that he realized that his business was a relatively small percentage of the manufacturer's, he decided that it was best to go to the United States so that he could meet with his supplier and see the factory. Since that time, he and his supplier have used a variety of communication vehicles to keep in contact. He indicated ``I realize that American's do not always see the necessity in meeting face-to-face. Our ways of building relationships are done differently. When we work together as a team, we win. We have agreed, each year one of us travels. They come here to meet with me and our customers. I go there to meet with them and our suppliers.'' In this case, both communication and cultural interactions facilitated the development relational quality. 2.3. Relational quality Relational quality refers to the strength of the relationship and the potential for the relationship to continue the process of relationship development. Relational quality is a critical goal for ®rms as it facilitates performance effectiveness. The development of strong inter-organizational relationships allows ®rms to capitalize on reductions in direct transaction costs associated with the exchange process while at the same time increasing the volume of exchange (Gundlach, Achrol, & Mentzer, 1995; Williamson, 1991). Further, relational quality stimulates stronger, more intimate partnerships, building trust, commitment, and satisfaction that increases the effectiveness of the relationship, thereby differentiating it from less well coordinated competitors (Barney, 1991; Henderson & Cockburn, 1994). 2.3.1. Trust and commitment Motorola Vice president Ruey Bin Kao, speaking on the recent U.S.$ 407 million contract with China United
261
Telecommunications, the largest telecommunication monetary contract at the time, noted ``our cooperation with China Unicom has been very successful over the past 7 years. We have established a win±win partnership based on trust and mutual bene®t'' (Motorola, 2001). Through communication and cultural interaction over time, Motorola has developed strong relationships in China, positioning itself for success in the Chinese marketplace. Trust, i.e., when one has con®dence in its partner's reliability and integrity, and commitment i.e., the long-term orientation taken toward the exchange relationship by a channel member, form the foundation of long-term business relationships (Morgan & Hunt, 1994; Gundlach et al., 1995; Parkhe, 1998). Trust and commitment are highly interrelated, forming from an underlying ``bonding'' of relationship partners. The creation of a unique communication environment to the relationship minimizes inconsistencies between partners in their communications reducing hurdles to bonding. As bonding occurs, relational partners increase their trust in one another and, therefore, increase their commitment to the relationship, thus providing for a more coordinated and effective relationship. Managers interviewed consistently indicated that trust and commitment were necessary prerequisites for the development of a strong, long-term partnership. Those interviewed indicated that the development of trust and commitment is important because it can increase coordination, reduce costs, and increase ¯exibility. For example, a large American consumer products manager indicated that his ®rm's relationship with its largest Japanese partner was only successful because they trusted their partner to make local product selection decisions and were committed to the long-term success of the relationship. He indicated that the long-term nature of the relationship was built as much on pro®tability as it was on the trust that had developed between the companies. Respondents indicated that through the development of strong international relationships, they were able to develop and implement strategy decisions more proactively to outperform their competitors. For example, an American equipment manufacturer indicated ``when you trust your partner to make decisions in their market, rather than demanding that they pass every decision by you, you are able to be more responsive to the local market conditions, and as such become more competitive.'' 2.3.2. Satisfaction The dissolution of Faith Oriental, a Hong Kong±Sino± Japanese joint venture was a result of dissatisfaction in the relationship by its investors. While investors, Prosperity Ltd., Tomiyama Construction Machinery Ltd., Tagawa Crush Stone Ltd., and Tien Shan Ltd., expected the U.S.$ 10 million international joint venture to develop a quarry in China over a 20-year period, the joint venture lasted less than 1 year. Lack of communication of partner strategies hampered efforts to more fully develop the partnership. Diminished trust and commitment in the relationship resulting from uneven
262
D.A. Griffith / Journal of World Business 37 (2002) 256±265
exposure among partners in the relationship created dissatisfaction among partners resulting in the ventures eventual dissolution (O'Connor & Halos, 1999). In the case of Faith Oriental, lack of communication created an atmosphere of low trust and commitment making partners dissatis®ed with the ongoing operations of the venture. Satisfaction refers to an affective state resulting from the appraisal of a ®rm's exchange relationship (Morgan & Hunt, 1994). Those relationships that have developed the necessary communication environment, via adaptations in communication and cultural environments, to foster trust and commitment are often the most satisfying for businesses, as each partner believes they are working together toward common goals. The importance of the development of an effective communication environment was strongly evident in the interviews. For example, a small Japanese auto part supplier working with a U.S. auto manufacturer indicated that, ``by both of us making adjustments in how we operate, we both have become happier and more productive. The relationship is much stronger and much more pro®table.'' Further, those ®rms in trusting, long-term relationships, such as Motorola whose history in China sates back to 1967, indicated their satisfaction with the policies and actions of their partners as well as the belief that the strength of their relationship derived signi®cant performance outcomes. 3. Action plan for communication effectiveness To address the issues involved with ®t of national and organizational cultures in a ®rm's international relationships,
a ®rm must be proactive and develop speci®c strategies to enhance communication effectiveness. Although extremely important to a ®rm's future success, most organizations have not formalized its management of communications. As such, a series of assessment steps to impel managerial action is presented to assist managers (see Fig. 3). 3.1. Step one: assess communication competence of internal managers A ®rm's managers vary in their level of cognitive, affective, and behavioral competencies. While a manager may possess high degrees of cognitive and behavioral competence, he/she may lack affective competence. Given the importance of a manager's communication competencies for relationship success, it is critical that ®rms assess each manager's competencies in the context of his/her current and future communication roles. The ®rst step in assessing communication competence is to determine technical language competency (regarding current and potential exposure languages), including standard language pro®ciencies, dialectic differences, ¯exibility in the use of words and grammatical structure. Once a technical level of cognitive competence is assessed a ®rm should employ experiential assessment to gauge affective and behavioral competencies. Experiential assessment methods, such as scenario exposure, on-line intercultural communication simulations, and post hoc review of the manager's past communication exchanges, can be used to assess competency levels. Once a manager's communication competency levels are identi®ed, training and development programs can be used to enhance the manager's communication competencies.
Fig. 3. Action plan for communication effectiveness.
D.A. Griffith / Journal of World Business 37 (2002) 256±265
3.2. Step two: matching internal and external manager competencies In order for a ®rm's managers to be able to communicate effectively, a ®rm must partner with ®rms who employ culturally communication competent managers. Only when the internal (i.e., the ®rm's) and external managers (i.e., the ®rm's partner) are matched in competencies can a ®rm realistically expect success in its international relationships. Matching internal and external managers who possess the requisite communication competencies posses an inherent challenge for a ®rm as they can only control internal managers. As such, ®rms valuing communication competence, and the performance effectiveness derived, may wish to undertake a two-prong approach to enhancing the communication competencies of external managers. First, the issue of communication competency should be given priority in discussions with partners. Through open and frequent communication regarding the relational and performance outcomes of employing managers who posses cognitive, affective, and behavioral competencies a ®rm can demonstrate to its partners its commitment to the relationship as well as its desire for enhanced performance effectiveness. A ®rm can offer to assist its partners in the assessment of the communication competence of its managers by sharing its own protocols of communication competence assessment. Second, the issue of communication competence can be integrated into the ®rm's partner selection and retention criteria. As a ®rm begins to integrate the issue of communication competence into its partner selection and retention criteria it is important that it demonstrate communication competence in terms of ¯exibility in relation to its partners. While a communication protocol may be desired, the communication of the protocol to each partner must demonstrate the communication competencies the ®rm wishes to develop within its relationships. 3.3. Step three: assessing the effectiveness of the communication environment As the communication between competent managers increases, the rate of adaptation of communication and cultural protocols increases, thereby increasing both the ef®ciency and effectiveness of the communication exchanges. As ®rms interact, a new communication environment develops unique to the partnership. To assess the communication environment, ®rms may wish to employ both objective and subjective assessment methods. For example, a ®rm may wish to query each manager at periodic intervals regarding his/her perception of the communication environment's effectiveness and how he/she believes it could be improved. By independently assessing the perceived communication environment, differences may be observed suggesting opportunities for communication environment adaptations. Further, objective criteria, such as the number of miscommunications/misunderstandings
263
could be compiled internally. Each miscommunication could be given a priority rating suggestive of its impact on the relationship's performance. Managerially, it is important to note that the creation of new communication environments for individual relationships is dif®cult for many ®rms to administer. Dif®culty arises not from the development of the communication environment between partners, but rather from organizational cultures that emphasize administrative controls. As such, it is important that a ®rm's organizational culture allow for the development of new communication contexts, each with its unique communication protocols. This is not to suggest that managers should be given free reign to develop any communication protocol, but rather that they should be given the latitude to generate effective communication protocols unique to each relationship. 3.4. Step four: assessing relational quality The evolving communication environment resulting from the interaction between managers and the ®rms they represent in¯uence the development of relational quality between their respective ®rms. To assess relational quality in a ®rm's relationships, subjective and objective approaches can be undertaken. Subjectively, trust, commitment, and satisfaction can be assessed by inquiring into the beliefs of ®rm managers pertaining to a speci®c partner. Objectively, relational quality can be assessed through measuring the intention of contract renewals, pattern of purchase orders (e.g., increasing or decreasing), amount of information shared over time (e.g., increasing or decreasing), etc. Employing both subjective and objectives measures can provide a ®rm with greater con®dence in their overall level of relational quality. 3.5. Step ®ve: developing appropriate communication strategy Communication strategies consist of both the speci®c messages (aimed at achieving a speci®c goal) and the method of delivery. Effective communication in a ®rm's international relationships necessitates consideration of not only competencies, communication environments and relational quality, but also the speci®c goals the ®rm wishes to achieve in the relationship and its present position. In essence, a ®rm must assess whether a ``communication gap'' (i.e., the difference between the relational quality the ®rm desires in the speci®c relationship and the relational quality that currently exist in the relationship). In some instances a ®rm may wish to develop a short-term relationship in which relational quality is not developed, as it is not necessary to achieve the ®rm's goals. In other relationships, a ®rm may wish to establish a more enduring relationship, thus necessitating not only competencies, but also the development of new communication environments and relational quality, as such necessitating a different communication
264
D.A. Griffith / Journal of World Business 37 (2002) 256±265
strategy. For example, if a ®rm believes that its relationship with its distributor in China is critical for its long-term success due to the Chinese market's high growth potential, and determines that its current manager's working with the distributor lacks speci®c competencies necessary for developing an appropriate communication environment necessary to develop relational quality the ®rm may wish to train, or reassign, the manager and assign a manager to that relationship to foster the building of relational quality. Or, if the development of new communication environments are hampered by the ®rm's existing organizational culture, sti¯ing the development of a new communication environment with its speci®c cultural and communication protocols, the ®rm may wish to allow for greater ¯exibility in the ®rm's international communication policies for enhancing the development of a unique cultural and communication interactions to foster the development of trust, satisfaction, and commitment, etc. 3.6. Step six: auditing of performance effectiveness of communication Given the complexity of establishing effective inter-organizational communication strategies in a ®rm's international relationships, it becomes critical to audit the effectiveness of communication and its facilitation, or hindrance, of performance effectiveness. Firms should consider the creation of multi-®rm committees for the monitoring of communication. The committee should be responsible for: (1) the auditing of communication competency of managers; (2) the coordination of protocols for general consistency; (3) the development of ¯exible communication environment protocols; (4) evaluation of the relational quality over time with partners, thus necessitating the creation of a strategic communication plan; and (5) assessing the impact of the communication environment on performance effectiveness. 4. Summary Theory and practice indicate that congruence, or ®t, of relevant contextual, structural, and or strategic factors maximize ef®ciencies of operation. As communication is founded in particular cultural frameworks allowing for the ``translation'' of the meaning by the recipient to maintain the true intent of the message, the ®t, or lack thereof, of such frameworks poses a potential obstacle to developing effective international relationships. For example, when business partners emanate from different cultures (both national and organizational), the underlying cultural inconsistencies in communication strategies may pose hurdles to the development of effective global business relationships. However, national and organizational barriers to communication may be minimized through the employment of managers with speci®c communication competencies who can work toward the development of unique communication environments
within each relationship building relational quality and enhancing performance. In this study, a model of communication effectiveness for international relationship development, derived from industry examples, theory, and a dataset consisting of 123 interviews conducted with American, Canadian, Chinese, and Japanese global business managers was presented. The model focuses on three key communication competencies (cognitive, affective, and behavioral), necessary to develop communication environments (consisting of communication and cultural interaction) to foster relational quality. Further, in order to assist global managers in the task of developing more effective international communication, a six-step process aiding in directing managerial action was presented. By proactively managing a ®rm's communication processes in its international relationships, a ®rm can develop strong partnerships in the face of incongruence of national and organizational cultures, facilitating the rapid response to market opportunities and challenges, thus enhancing performance. References Applegate, J., & Sypher, H. (1988). A constructivist theory of communication and culture. In Y. Kim & W. Gudykunst (Eds.), Theories in intercultural communication (pp. 41±65). Newbury Park, CA: Sage. Barney, J. (1991). Firms resources and sustained competitive advantage: A comment. Management Science, 32: 1512±1514. Benoit, B., & Burton, J. (2000, May 8). Confusion over Hyundai Motor deal. Financial Times, p. 28. Casmir, F. (1999). Foundations for the study of intercultural communication based on a third-culture building model. International Journal of Intercultural Relations, 23(1): 91±116. Cui, G., Van den Berg, S., & Jiang, Y. (1998). Cross-cultural adaptation and ethnic communication: Two structural equation models. The Howard Journal of Communications, 9(1): 69±85. Doty, D. H., Glick, W. H., & Huber, G. P. (1993). Fit, equi®nality, and organizational effectiveness: A test. Academy of Management Journal, 36(6): 1196±1251. Dwyer, R., Schurr, P., & Oh, S. (1987). Developing buyer±seller relationships. Journal of Marketing, 51(2): 11±27. Farhi, P. (1995, April 8). MCA, Sony: Why mergers didn't work. Washington Post, p. D1. Fey, C. F., & Beamish, P. W. (2000). Joint venture con¯ict: The case of Russian international joint ventures. International Business Review, 9: 139±162. Financial Times. (2001). Ericsson to continue mobile phone production. Financial Times Information. Asiainfo Services, Inc. Fox, C. (1997). The authenticity of intercultural communication. International Journal of Intercultural Relations, 21(1): 85±103. Freivalds, J. (1998). When cultures clash. Communication World, 15(9): 19±21. Gudykunst, W. B., & Kim, Y. Y. (1984). Communicating with strangers: An approach to intercultural communication. New York, NY: Random House. Gundlach, G., Achrol, R., & Mentzer, J. (1995). The structural commitment in exchange. Journal of Marketing, 59(1): 78±92.
D.A. Griffith / Journal of World Business 37 (2002) 256±265 Henderson, R., & Cockburn, I. (1994). Measuring competence: Exploring ®rm effects in pharmaceutical research. Strategic Management Journal, 15(Winter): 63±84. Hofstede, G., & Bond, M. (1988). Culture's consequences: International differences in work-related values. Beverly Hills, CA: Sage. Houston, F. (2001). AOL/TW spells big. Columbia Journalism Review, 40(2): 22±27. Howe, P. J. (2000, November 19). Do the pieces still ®t? Boston Globe, p. F1. Kim, Y. Y. (1988). Communication and cross-cultural adaptation: An integrative theory. Clevedon, UK: Multilingual Matters. Kim, Y. Y. (1991). Intercultural communication competence: A systems-theoretic view. In S. Ting-Toomey & F. Korzenny (Eds.), Intercultural communication competence (pp. 259±275). International and intercultural communications annual. Newbury Park, CA: Sage. Li, H. Z. (1999). Communicating information in conversations: A cross-cultural comparison. International Journal of Intercultural Relations, 23(3): 387±409. Lowry, T. (2000). AOL Time Warner: The thrill is gone. Business Week, 3703: 158±160. Moon, D. G. (1996). Concepts of culture: Implications for intercultural communication research. Communication Quarterly, 44(1): 70±81. Mohr, J., & Nevin, J. R. (1990). Communication strategies in marketing channels: A theoretical perspective. Journal of Marketing, 54(4): 36±51. Morgan, R. M., & Hunt, S. D. (1994). The commitment±trust theory of relationship marketing. Journal of Marketing, 58(3): 20±38. Motorola. (2001). Motorola received largest Monetary contracts for China Unicom's nationwide CDMA infrastructure. PR Newswire Association, Inc.: Source: Motorola Inc.
265
Nakamoto, M. (2000, October 23). When culture masks communication. Financial Times, p. 15. Newman, K., & Nollen, S. (1996). Culture and congruence: The ®t between management practices and national culture. Journal of International Business Studies, 27(4): 753±779. Nevin, J. (1995). Relationship marketing and distribution channels: Exploring fundamental issues. Journal of the Academy of Marketing Science, 23(Fall): 334±337. O'Connor, N., & Chalos, P. (1999). The challenge for successful joint venture management in China: Lessons from a failed joint venture. Multinational Business Review, 7(1): 50±61. Parkhe, A. (1998). Understanding trust in interrelational alliances. Journal of World Business, 33(3): 219±240. Schein, E. (1985). Organizational culture and leadership. San Francisco: Jossey-Bass. Schein, E. (1996). Culture: The missing concept in organizational studies. Administrative Science Quarterly, 41(2): 229±240. Terazono, E. (2000, September 25). Survivor with a tenacious grip. Financial Times, p. 16. Tosi, H.L., Jr., & Slocum, J.W., Jr. (1984). Contingency theory: Some suggested directions. Journal of Management, 10(1): 9±26. Triandis, H. R. (1973). Culture training, cognitive complexity and interpersonal attitudes. In D. Hoopes (Ed.), Readings in intercultural communication (Vol. 2, pp. 55±67). Pittsburgh: Regional Council for Interculutral Education. Veiga, J., Lubatkin, M., Calori, R., & Very, P. (2000). Measuring organizational culture clashes: A two-nation post-hoc analysis of a cultural compatibility index. Human Relations, 53(4): 539±557. Williamson, O. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2): 269±296. Woods, B. (2001, July 28). Caution: Merging cultures. Chief Executive.