The influence of culture on the strategies employed by joint ventures between Chinese organizations and European organizations : a case study of FAW-VW Automobile Corp. in China

Abstract

Better understanding national and organizational cultures are the most important issue impacting the success of international business activity and corporate strategy. The purpose of this thesis is to develop an understanding of if/how national cultural differences influence corporate strategy employed by joint ventures between Chinese organizations and European organizations. To develop such an understanding, a single case study has been conducted with FAW-VW Automobile Corp., the joint venture between China FAW Group Corporation and German Volkswagen Group. The case study is based on Geert Hofstede’s framework of five cultural dimensions. Results from Geert Hofstede’s cultural dimensions indicate that there are clear cultural differences between Germany and China do such cultural differences impact Volkswagen Group’s multinational corporation in China? In this case study the author will discuss what happens when different cultures and different strategies combine with the most important issues of people in different roles inside Volkswagen Group and China FAW Group. The author’s findings confirm that national cultural differences do influence strategy formulation and implementation when cooperating within the multinational organization. More specifically, the author’s dissertation shows that the cultural differences influencing FAW-VW’s corporate strategy are: Power Distance, Uncertainty Avoidance, Individualism or Collectivism, Masculinity-Femininity, Long Term Orientation. Language differences are regarded as an important factor by FAW-VW; however the results of this thesis are specific for the company studied. Therefore the author’s study only contributes insights, regarding the influence of cultural differences on corporate strategy, for other multicultural companies facing global challenges.