Abstract

Despite high investments and low success rates for Joint Ventures of Western
companies in China, there has been no systematic investigation into the problems
which cause these alliances to not achieve their goals. For this reason, this work
aims to provide academically researched insights while also addressing a business
need.
The objective of this research was to develop a classification of Sino-Western JV
problem attributes according to their similarities in a hierarchical cluster structure.
The classification enabled the generation of a better understanding of typical
problem areas based on problem attributes. Further analysis and interpretation of
the identified problem areas and problem patterns allowed for the identification of
resolution measures and the examination of their potential effectiveness.
This work classified a large number of multi-layered JV problems, varying widely in
nature. For this purpose, problems derived from empirical case studies
documented in the literature were arranged according to their subject-related
similarities and a hierarchical structure consisting of problem attribute clusters was
developed. The result is the establishment of a polythetic classification of
approximately 700 Sino-Western Joint Venture problem attributes.
Through the process of problem statement selection, problem attribute extraction
and their clustering, the attributes were grouped and condensed. This reduced the initial complexity of the wide range of problems and enabled specific problem
domains with related problem attribute clusters to be identified. The structuring of
the problem elements showed how problem clusters are interrelated and helped to
differentiate between complex and more easily resolved problems.
The overall classification of attributes illustrates the domains in which problems
occur. Eight problem domains are revealed and refer to: differences in the Western
and Chinese cultures, business practices, business operations, JV expectations,
Chinese history, Chinese government involvement, disparities between Western
expatriated managers and local Chinese managers, and opposing fundamental
concepts. Further, communication and culture challenges were identified as
recurring themes among the problem attribute clusters.
Based on an improved understanding of key problem areas, it is suggested to
focus on strengthening communication capabilities and cultural awareness with the
aim of increasing the success rate of Sino-Western Joint Ventures. It is
recommended that Western companies concentrate on problem attribute clusters
which are considered to be potentially solvable or reducible rather than those
related to intrinsic differences in order to have the greatest effectiveness.
This work exemplifies the important role which classifications play in social
sciences research and demonstrates the problem solving capability of
classifications. Consequently, a classification approach which is suitable to make
new kinds of investigations in social phenomena has been suggested. An improved
understanding has been achieved which enabled these phenomena to be reviewed
and addressed from new angles. Further, the work both confirmed existing
research results related to Sino-Western JV problems and gathered new insights
by analysing these problems in a consolidated, structured form through the
development of a classification.