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............. 1 12 November 2013 ii ProQuest ......................................................................................................................... Cross-cultural Trust-waving in an International Joint Venture: A Case Study of a Chinese and Arab Joint Venture................Table of contents 1........

. James Publication info: International Journal of Management 29. China has substantially increased its outbound direct investment (ODI) in recent years. The study indicated that an Eastern collectivist culture and a Western individualist culture have difficulty maintaining sufficient levels of trust. The purpose of this study was to explore how cultures influence the trust development and maintenance of trust between a Chinese firm and an Arab company. Yang. In general.Document 1 of 1 Cross-cultural Trust-waving in an International Joint Venture: A Case Study of a Chinese and Arab Joint Venture Author: Fan. Nixon. Trust is intentional acceptance of vulnerability based on positive expectations of intentions or behaviors of another (Rousseau et al. The success of IJVs may depend on their adaptability in local cultures. China was the eighth most important foreign direct investment source among developing countries. Successful future initiatives depend upon an understanding of the factors contributing to these issues. motivation. most relationships within IJVs are characterized as adversarial (Mudambi &Helper. and trust. however. ProQuest document link Abstract: Through a case study of an international joint venture (IJV) between a Chinese company and an Arab company. Kasprzak. the authors used first-hand data to examine the dynamic relationship between the partners. 1998). This paper reviews the literature to examine complexities associated with trust building in an IJV due to differences in culture. Introduction Funded by an impressive growth rate. Xiaohua et al. friendship. friendship. however. Lin. Research is limited. 2003). mutual respect. Anantatmula. 2006). In 2004. but can be very fragile and easily damaged by inappropriate or opportunistic behaviors. Past research in sustaining trust has been limited to issues of trust deterioration in single cultural organizations. 1998. and was predicted to move into the top four by 2005-2008 (Buckley et al. But those ODI projects. The study also found the switch from one trust-building process to another will depend on specific circumstances necessary to insure the success of the business. 2007). A case study of a joint venture between two companies from China and a Middle East country analyzes how national culture and corporate culture impact trust-building acrosscultures. mutual respect. Mary Anne. 2007). Although economic calculus and capability assessment are the basic trustbuilding processes at the early stage of an IJV. It is well known that successful implementation of projects must include developing a good working environment and good relations between IJV partners. the authors used first-hand data to examine the dynamic relationship between the partners.. The study indicated that an Eastern collectivist culture and a Western individualist culture have difficulty maintaining sufficient levels of trust. despite the increased size and number of the Chinese ODI investment enterprises in Arab countries (Shenkar &von Glinow. however. especially their abilities to build a high level of trust with local partners (Buckley et al.. current research on China's role in abroad IJV is limited.. in the role of trust in business interactions between Arabs and Chinese. 1994). Vittal. Although economic calculus and capability assessment are the basic trustbuilding processes at the early stage of an IJV. have run into problems in developing and maintaining trust between partners. In the final section. [PUBLICATION ABSTRACT] Full text: Headnote Through a case study of an international joint venture (IJV) between a Chinese company and an Arab company. some of which are international joint ventures (IJV).3 (Sep 2012): 332-346. Trust may be developed gradually over time in an IJV (Madhok. The study also found the switch from one trust-building process to another will depend on specific circumstances necessary to insure the success of the business. 12 November 2013 Page 1 of 11 ProQuest . and intent of the parties will abo impact trust building. we present guidelines for explaining the fluctuations of trust in an IJV. and intent of the parties will abo impact trust building.

trust is mainly developed through intentionality. and cultural norms and values (Doney. Shore &Cross.. 1986). societal institutions (Zucker. 1981). Earley.. 2005). different cultures and added uncertainties. Trust also facilitates long-term relationships between different parties or firms (Ganesan. and (3) the quality and reliability of work undertaken for the joint venture (Atkinson et al. based on a partner's reliability and competence. and uncertain environment (Child.g. such as dual hierarchies. e. including (1) the extent to which one party's objectives are aligned with those of its partner. The extent to which trust is mainly established through above cognitive processes depends upon societal norms and values which vary across cultures.. The Opportunistic process is less likely to be chosen in such a culture because people are not motivated by self-interest. (2) moral hazards (situations in which a party has a tendency to act less carefully than it would otherwise. There are five trust-building cognitive processes described by Doney (1998) who examined the extent to which cultural norms and values facilitate or inhibit the formation of trust. 1995. but there has been little research on how trust is established and evolves across cultures (Doney. Each IJV parent company may contribute to IJV uncertainties through several factors. But given the complex nature of a joint venture. This trust is grounded in reciprocal interpersonal care and concern or emotional bonds with strong affective components. Trust is considered a valuable contributor to lowering transaction costs in a complex. prediction or transference processes." This definition articulates the existence of differences in perception of the same reality between people from different nations. 1994.. 1998). 2006. but rather by the interest of the collective whole (e. Culture is defined by Hill (1 997) as a system of values and norms shared among a group of people. there are distinct differences in trust-developing processes between collectivism and individualism cultures (Figure. Hofstede (1 983. dynamic. 2002). 200 1 . 2006).1). 1998). it is difficult to run an IJV successfully (Madhok. Collectivist Culture Attributes According to Doney (1998). Madhok. leaving its partner to take all or a portion of the consequences). &Shimada. The trust building process is also influenced by the process of exchange. Ring &Van de Ven. Trust in a relationship is not built overnight. Anecdotal evidence has suggested intra-cultural differences in the way trust develops (Schuster &Copeland. "It evolves gradually over time through repeated successful interaction and has to be carefully nurtured through various forms of hard and soft commitment" (Madhok. 1992). 1992) by improving social communication (Doney.g.. 1 992). Trust building processes: Cognitive and Non-cognitive Trust is defined as a willingness of one party to rely on another party and to take action in a way that the action makes one vulnerable to the other party (Mayer et al. When both the trustors and trustees are members of a collectivist society. Peterson. "affective" or blind trust (Lewis &Weigert. Pursuit of individual interests in a collective society is deterred by social sanctions (e.Background As a result of economic globalization.. &Moorman et al. 1983). 1998. One of cultural dimensions proposed by Hofstede is "individualism versus collectivism. the number of IJVs increases dramatically each year. 12 November 2013 Page 2 of 11 ProQuest .g. ? 33). 2006). 1989. 1985)." which can be used to study the relationship between the trust-building processes and their underlying behavioral assumptions (Doney et al.76) states that "Culture is precisely that its essence is collective mental programming. 2006). Sullivan. Trust between partners plays an important role in the success of an IJV. There are different types of trust. Our research provides theoretical guidance about the interaction between trust and cultures by investigating the dynamics of the trust-building processes employed by an Arab party in an IJV. Kameda. or by driving up the costs of opportunistic behavior. 1998) and providing a high level of adaptability to change (Luo. 1996. The question as to how a trusting party to an IJV prioritizes trust-building processes remains unanswered. p. For example. Cognitive trust is more rational and economic. Lindsay. the non-cognitive t rust. Ueno &Sekaran..

and the United Arab Emirates are "collectivist" societies (Triandis. J. to minimize opportunism. Cultural theory assessments for collectivists predict greater "uncertainty avoidance" and a stronger distinction between "in-group" and "out-group" members than individualist societies such as Western cultures (Bohnet. Partners are assumed to be economically rational beings. the trustor infers that another party can be trusted (Akerlof. Hofstede. Doney.M. Individualist Culture Attributes In the individualist culture. * Calculative process. * Intentionality process. and allow for trust across groups by focusing on mitigating the costs of opportunism ~ for example. a party will impose strict controls. willingness to trust is based more on calculation and capability than on principle or emotion. It is common to use a deterrence mechanism. When altruistic intentions are perceived. 1978). In the Arab Middle East.* Predictability process. parties with no prior social connections will probably build trust in a calculative process. * Transference process. et al. 1990. Trust is built by forecasting a trustee's behavior based on past actions. Trust may develop through a transference process. formal reporting structures. form new rules. structured specifications. and staffing policies. 12 November 2013 Page 3 of 11 ProQuest . et al. A trustor's willingness to trust is based on an assessment of the trustee's ability to meet his or her obligations and the trustor's expectations. Based on the extent of tolerance for uncertainties and opportunistic behaviors. They foster trust between strangers. (1998) and Child (2001). Based on cost and benefit analysis. 1985). by offering damages to the insured party. norms promote an economic calculus providing evidence that opportunistic behavior is frequent and has relatively low costs. 1998. trust may result. 1995. 1970). A negative consequence is considered inevitable if opportunistic behaviors are discovered by the participating partner. will act opportunistically and in their own self-interest (Williamson. during which the trustor transfers trust from a known entity similar to an unknown one. 2010).. 2005. ?. loyalty. budgeting limitations. Trust is developed through a calculative process whereby one party determines benefits and risks in the relationship by calculating the costs or rewards of the party cheating or cooperating in a relationship (Lindskold. parties may choose an opportunistic behavior if the cost of being caught is lower than the benefit to be gained. Trust in the Early Stage of an IJV According to Doney et al. compensation structures. for example. 1998). Das and Dahman (2002) stated that three different deterrence mechanisms are used for controlling opportunistic behaviors: * Initial stage preventive mechanisms including contractual provisions. Trust in Arab Societies Arab Middle Eastern countries such as Saudi Arabia. Luo. and/or reject deviant behaviors to mitigate uncertainty and prevent opportunism (Singh. * Operational stage mechanisms include monitoring. intentionality and transference to assess a partners' trustworthiness and to decrease the likelihood of opportunism. Partners are assumed to be economically rational beings.. 2001). Trust formation is influenced by one party's perception of the intentions of the other party. * Capability process. et al. Jordan. reputation and the fear of adverse treatment are the main factors producing trust. This would indicate the use of preventive mechanisms and relation-based processes like prediction. in the early stage of an IJV. The consistency of the target's past actions and the extent to which the target's actions are congruent with his or her words affect the degree to which a trustor judges the target's behavior to be predictable. Serva &Mark. and given the chance. 2002). McEvily. 2003). To the extent that the benefits of cheating do not exceed the costs and likelihood of being caught. and they have an inalienable right to maximize expected gains or minimize expected losses at the expense of others (Kramer 1999. imposing costly sanctions on the other party. trust is unlikely to develop if one party perceives another to have only selfish intentions. This in turn drives up the costs of opportunistic behaviors in the form of penalty for violations (Hagen.

including C-OIL. In addition to investing in upstream oil industry. determine the real-life context (Dyer &Wilkins. and develop oil and gas in a defined area in the Middle East. For the purposes of this paper. Data analysis method This study began with a research question. most of the Chinese oil companies. Case Study Result Background and objectives of C-OIL Spurred by its economic growth and a sharp increase in demand for petroleum products. 2005). is a state-controlled Oil company. these Chinese investors were eager to expand their overseas markets. several questions remain: * How do partners allocate trust and control in the approach to operating the joint venture in order to control opportunism cross-culture? * How national cultures interact with corporate culture in controlling opportunism and building trust? * How does a party to an IJV prioritize its trust-building processes? Research Method and Data Collection Research Method The traditional single case study method was selected due to the high complexity of the LTV itself. Its partnership with an Arab oil company demonstrated the influences of national cultures in the trust building process in the early stages of the LTV formed. Although all managers are Arabic nationals with a collectivist cultural background. A-OIL for the Arabic Oil company.participatory decision making. Case selection A Chinese state-owned oil company created an IJV to pursue overseas direct investment in oil/gas exploration and production. Due to the shortage of available energy resources at home and the volatility of the world energy market. China has become the world's second largest importer of oil and gas. its business culture and management processes remain predominantly Western-oriented. 2008). and training * Contingency mechanisms used when other mechanisms have failed including direct and indirect retaliation and co-opting the majority control of the organization. Along with their expansion into new areas of oil exploration and development.. formerly an American oil company nationalized in the 1970's. Through multiple events observation. The goal of this IJV was to explore. One of the authors of this paper was given access to firsthand data and other documents. data were collected by accessing primary information directly from email records and other sources within the IJV. they are renamed as C-OIL for the Chinese Oil company. If the impact of national cultures in trust building processes is also included in this process. 2009). analysis and comparison. 1991). We then determined how the national culture and corporate behavior of both companies jointly influenced their trust building processes. 2007). This single case study method enables us to gain a deeper understanding of the project setting. 2004. p455). China has sought to invest abroad to secure its energy supply (Rosen &Houser. Background and objectives of A-OIL A-OIL. Unfortunately the use of these mechanisms may result in trust deterioration between parties in an IJV. record the actual meanings of actions and settings (Gephart. The actual names of the IJV and its partnering companies are withheld to maintain confidentiality. followed by an analysis of A-OIL's actions as the project was executed by C-Oil. "How did ?A-OIL build trust with C-OIL?" We described the initial governance and trust level in the ACJV. and as a result. appraise. following the United States (Zweig et al. have attempted to increase export of products and services to the host countries of their joint ventures (Wu. and ACJV denotes the Arab Chinese Joint Venture. we iteratively refine our findings and develop a conceptual framework on cross-culture trust building (Santo &Eisenhardt. Data collection For this study. ?-OIL embraced international joint ventures with great 12 November 2013 Page 4 of 11 ProQuest .

All foreign oil companies evacuated the area. This non-cognitive. There is also a positive association between trust and partner's capability. through a rigid competitive bidding process and based on C-OIL's financial and technical capability and reputation in the industry. the international joint venture was instrumental in the expanding the international market for local Arab products and services. related party transactions shall be on terms no less favorable to the ACJV than those that could have been obtained a comparable arm's-length transaction by the ACJV with an unrelated third party. In exchange for providing support. to remain on site as the only foreign oil company. It provided an express channel for the ACJV to access timely technical services from either parent company or their affiliates 12 November 2013 Page 5 of 11 ProQuest . Proposition 1: Upon forming of an IJV. The BOD was composed of five directors: three C-OIL Company directors and two host country directors. ACJV experienced difficulty in acquiring products and services from public markets through competitive bidding. there is a positive association between trust and rigid economic calculus. C-OIL received a sincere request from A-OIL. All the related-party transactions with value exceeding a defined threshold must be approved by not less than 51% of the Directors nominated by shareholders other than the related party defined as non-related party directors (Confidential legal document). but to A-OIL in particular. and ensure that the aggregate expenditures with local businesses for at least forty percent (40%) of ACJV's total expenditures for goods and services. this international joint venture allowed A-OIL to access foreign investment capital and advanced oil exploration technologies. All the fundamental agreements of the joint venture were unilaterally prepared by A-OIL. an obvious joint effort to build affective trust between both A-OIL and C-OIL. Third. Affective trust development. dramatically changing the ACJV trust profile. First. the host Arab country needed more Oil and gas to fuel its economy. a fatal terrorist attack occurred 150 meters away from the ACJV project site. JV profile The percentages of ownership and control in the ACJV were 20% in ?-OIL and 80% in C-OIL. one from ?-OIL. According to the Upstream Agreement between C-OIL and the government of A-OIL' s host country. Second.enthusiasm for a number of reasons. Initial governance and trust level In 2004. the ACJV would give procurement priority to local contractors. the other from the host country government. but it also assisted in promoting ACJV's business partnership. with a fast-growing population. A-OIL would provide protection for all C-OIL expatriates. The CEO was assigned by C-OIL. ?-OIL chose C-OIL to form a joint venture. C-OIL proposed entering a "Technical Service Agreement" (TSA) through which ACJV would acquire products and services directly from both shareholders. causing multiple problems with the local security as well as the local economy. As a newly-established small company. In addition. C-OIL was given little opportunity to negotiate the terms and conditions. The members of the MT were from both Chinese and Arabic venture partners. affective trust not only bound the interpersonal relationship. A-OIL's competitive bidding process and rigid economic calculus in preparing fundamental agreements indicated A-OIL's trust of potential partners was based on Western-dominant calculative and capability processes characterizing an international busineess culture rather than its collectivist culture's traditional reliance on prediction. intentionality and transference. The event presented a serious challenge to both partners. C-OIL and other bidders concluded that all ACJV agreements were diligently prepared on a rigid economic calculus designed to deter opportunism by any parties to the As per the Shareholder Agreement between C-OIL and A-OIL: All technical and other services that are provided by any shareholder or an affiliate of a shareholder (defined as related party) defined as related-party transactions. with two levels of management: the Board of Directors (BOD) and the onsite Management Team (MT). and should acquired through competitive bidding process. After the formation of ACJV in 2004.

A-OIL accepted the over-quoted price for services the first year due to its high level of trust in its partner C-OIL. therefore. 2010). there is a positive association between affective trust and external threats to both parties of an IJV who consider each other as a close-knit.without going through a tough. the approval procedure for all related-party transactions became complex and time consuming. less than $200 per day. but also created disputes between the ACJV and its contractors. "I am sorry to say that the ACJV and the contractor [C-OIL] roles are mixed up and it seems that ACJV is favoring [the] contractor. even though they still required approval from Non-related Party Directors. ?-OIL became very sensitive to any violation. are contracted from outsider manpower companies at a fee calculated using standard industry practices: actual labor costs plus 5% overhead. It was well known that labor costs in the Chinese market were very low. This new TSA would help ACJV meet urgent and confidential operational requirements. the cost of opportunistic behavior by C-OIL was low. A-OIL also set up a monitoring group to track all the operational activities associated with all the affiliates of COIL. It added two additional required signatures in the approval process for all related-party transactions: the project management office (PMO). but to the PMO and then to Legal Department for review and endorsement. the high level of affective trust granted by A-OIL was abused by C-OIL pursued its own opportunistic interests by conducting multiple related-party transactions (with its subsidiaries) for the ACJV project: It is a general practice in the oil industry that drilling supervisors. a procurement plan required endorsement of the management team. but the pricing and payment terms it contained were ambiguous and trust-based rather than calculative. Proposition 2: In an Arab-based IJV. It is not about money but the violation of principal" [sic (personal communication. its use was loosely controlled by both the parties. the ?-OIL company rate for a Western supervisor. and there was no procedure in place to challenge or evaluate service prices quoted by related parties. It not only resulted in enormous difficulties in daily operations by stripping off all the flexibilities needed for contract execution. usually within 20 days. and time-consuming competitive bidding process as stipulated by the Shareholder Agreement. A quote from the shareholders was considered to be the price for the services and products provided. At the beginning of 2005. the TSA was loosely controlled and included no penalty to opportunism. ?-OIL reverted to the collectivist strategy of trust-building by unilaterally changing the governance structure of the joint venture. Trust destroyed by opportunism. The over-quoted TSA services eventually caught the attention of A-OIL. Rather than amend the agreement with C-OIL to articulate the pricing terms and conditions to curb opportunism. All requests from the ACJV for TSA services received easy approval from the Nonrelated Party Directors and the time frame needed for receiving this approval was short. With the addition of the two new check points. Some of TSA services were even retroactively approved by Non-related party Directors to meet urgent operational requirements. the members from ?-OIL demanded that all requests containing related-party transactions justify each quoted price. First. At this early stage of the ACJV. Such an extensive and restrictive control created an atmosphere of "skepticism" atmosphere across the ACJV. and the ?-OIL Legal Department. restrictive. Third. Consequently. The trust between both parties was obviously high: The TSA was not well articulated. and furthered by national culture Unfortunately. who coordinate and supervise on-site drilling operations. which included all the members from both parent companies. One A-OIL project manager stated. per the new technical service agreement. the written resolution for such transactions was not to be directly submitted to the Non-related Party Directors for approval as was done before. C-OIL provided drilling supervision services for USD $ 900 per day. which assumed that C-OIL was behaving opportunistically in its own interest. Once this threshold had been passed. Second. it 12 November 2013 Page 6 of 11 ProQuest . and only then to the Nonrelated party Director for final approval. resulting in affective conflict in almost every ACJV procurement meeting between two parties.

A-OIL relinquished pursuit of "social value" in the ACJV after years of interactions with C-OIL for an approach more likely to develop trust between the parties. calculative. It is clear 12 November 2013 Page 7 of 11 ProQuest .to restore the collectivist trust-building process. ?-OIL rejected that request and sent a delegate to Beijing to convince C-OIL to remain within the partnership. But surprisingly. By proposing a contingency framework as presented by Figure-2.dramatically slowed down the project and increased its overall operational cost. In an attempt to resolve the conflict over its own opportunism." a deeply rooted practice of a traditional collectivist culture . In a cross-cultural partnership. The calculative process is fundamental to the Western-dominant business culture." but when faced common external threats. The imposed monitoring and safeguarding to protect ?-OIL from opportunism penalized both C-OIL and A-OIL. 2008. our research extends Doney's theory (1998) of exploring the complexity of cross-culture trust building. there is a much stronger distinction between "in-group" and "out-group" relationships in developing trust than in individualist Western cultures. or between out-groups trust building becomes complex (Bohnet. Proposition 3: Trust dramatically decreases with the perception of a partner's opportunistic behaviors in an Arab-based IJV. we find that an Arab national culture and Western-dominated corporate culture interacted to jointly determine how trust could be built between the parties. Discussion All types of trust-building processes . rather than an individualist/calculative process in which that determination is made objectively. the Chinese participants were an "out-group. which should have cost approximately $20.capability. and behave in a calculative manner to develop and maintain trust with its international partner. prediction or transference processes. acknowledging C-OIL's financial and operational ability to meet its obligation in the partnership. a collectivist party in an IJV may deviate from its national culture. C-OIL voluntarily attempted to compensate ?-OIL for their losses by offering them an over-priced A-OILrelated-party transaction . In Arab societies. The relations of the partners were strained for years and costly exploration efforts had little commercial success. turning to a calculative process to weigh the benefits and risks from their relationship. Such behavior is consistent with known Arab cultural norms: trust was developed through a collectivist/intentionality process. while in the traditional Arab world. From the Arab group's perspective. ?-OIL began to behave in a more economically rational manner. but it was consistent with known Arab cultural norms to "purify value and principal. C-OIL offered to pay A-OIL $40. requesting termination of the contract with a Chinese affiliate for drilling service at a Board meeting in September.000. Such behavior may seem economically irrational. the trust between partners dropped to a very low level because ?-OIL assessed C-OIL based on its perceived intentionality. Proposition 5: In certain circumstances. Using this case study of an international joint venture between Chinese and Arab Oil companies as an example.occur in relationships. the attitude of ?-OIL toward this related-party transaction reversed. but the emphasis in each process differs according to national cultures.an individualist calculativeoriented effort to re-establish trust for a collectivist partner.000 for conducting a one-day Health Safety Environmental workshop. affective trust was created across groups to defend the business relationship (P2). Reverting to a calculative/capability process Although the partnership between A-OIL and C-OIL remained alive because the fundamental interests of both shareholders remained unchanged. A-OIL refused this offer. Proposition 4: Economically irrational control mechanism of opportunism in an IJV is positively associated with a collectivist culture. 2010). C-OIL decided to withdraw from the ACJV at the end of the first contract term. intentionality and prediction . The Arab partner's reassessment of its partner's trustworthiness reduced their trust levels and resulted in mutual losses. building trust is mainly based on intentionality. Moreover A-OIL began to utilize an individualist/capability process.

the relationship was mainly based on a calculative or capability process during which actors are assumed to be rational beings. because collectivist society highly values social principles and strongly opposes opportunistic behaviors.that affective trust. Conclusion This research extends previous research on the impact of national culture in trust building processes. We emphasize that in Arab societies. Our findings differ from Pressey and Selassie's (2002) conclusion. Given this orientation. facilitated by the fundamental agreements between partners upon the formation of the IJV. We agree with Doney (1998) and Child (200 1) in that at the early stage of an IJV. Using a case study of an international joint venture between Chinese and Arabic Oil companies. P5). to the oil industry in the Middle East seeking international joint ventures. its Western-dominant corporate culture and calculative/capability process rather than its Arab national culture prevailed. it is evident that an Arab partner is not likely to follow a single trust-developing process. Limitations and Suggested Future Research The study results are directly applicable to the Chinese oil industry and to some extent.as shown in Figure-2. and analyzed how the Arab company chose trust-building processes. one would expect to learn about measures of trust reduction or trust enhancement when influenced by cultures. such factors as affection. grounded in reciprocal interpersonal care and concern or emotional bonds. capability and intentionality will play a role in trust building in an IJV. which is positively associated with a collectivist culture (P4). it is not only impacted by national culture. therefore creating a fluctuating trust building process which may continue to constitute a challenge to any foreign partner. integrity trust may disintegrate if a collective party discovers opportunistic behaviors of its foreign partner (P3). Many of the study findings are generic in nature. building trust between partners is most likely a calculative process. its control mechanism of opportunism is characterized as economic irrationality. In addition. When making a strategic decision. We found that at the beginning of the IJV. we found national culture also impacts cross-culture trust building processes. Our research finds that this Western-oriented international business calculative and capability culture. Additionally. but also by its corporate culture. in that we find national culture does play a role in developing trust between partners. can be extended across cultures. it tended to embrace intentionality processes in assessing a foreign partner's trustworthiness. we conclude that trust building is a contingency process. Future research efforts may consider examining the influence of other cultural dimensions such as distance of power and risk propensity on the trust building process in an international joint venture. but rather implement other appropriate processes in interacting with business partners. We propose a contingency framework to explain how Arab company chose different processes in various circumstances at the early stage of an Arab-based IJV. References 12 November 2013 Page 8 of 11 ProQuest . As an important outcome of a study of this nature. National culture impacts that baseline in cross-culture trust building. Therefore. particularly when a strategic decision is to be made. An Arab company may behave economically and rationally in developing and maintaining trust with its foreign partner in the IJV by switching to calculative and capability processes (PI . is just the baseline of trust-building at this early IJV stage. It is important to note that when the Arab company made strategic decisions such as the formation or extension of partnership with a foreign party. On the other hand. we examined a dynamic relationship between the two companies. the Arab company tended to adopt calculative or capability processes. Its willingness to trust a partner fluctuates with its choice of trust-building processes according to the business environment . especially in a cross-culture partnership. and partners are assumed to be economically rational beings who aim to maximize expected gains or minimize expected losses at the expense of others. even though such a choice resulted in an economically irrational decision. and caution should be exercised in interpreting these results in other contexts. otherwise.

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com/docview/1040715965?accountid=8107 Copyright: Copyright International Journal of Management Sep 2012 Last updated: 2012-09-17 Database: ProQuest Central _______________________________________________________________ Contact ProQuest Copyright © 2013 ProQuest LLC. International trade. Middle East Classification: 2310: Planning. Business And Economics--Management ISSN: 08130183 Source type: Scholarly Journals Language of publication: English Document type: Case Study. Trusts. 1220: Social trends & culture. All rights reserved.Contact email address: yfan@email. 9130: Experiment/theoretical treatment Publication title: International Journal of Management Volume: 29 Issue: 3 Pages: 332-346 Number of pages: 15 Publication year: 2012 Publication date: Sep 2012 Year: 2012 Publisher: International Journal of Management Place of publication: Poole Country of publication: United Kingdom Publication subject: Business And Economics--Accounting. Location: China. Culture. Feature Document feature: Tables References Diagrams ProQuest document ID: 1040715965 Document URL: http://search. 9178: Middle East. .Terms and Conditions 12 November 2013 Page 11 of 11 ProQuest . 9179: Asia & the Pacific.wcu. Joint ventures.proquest.edu Subject: Studies.