According to research, cultural awareness can greatly improve the international success of an

organization. Cultural awareness enables companies to, “develop appropriate policies and determine
how to plan, organize, and control in a specific international organization” (Francesco and Gold, 2005;
Hofstede, 1980; Joinson, 1998; Khatri, 2009).

In our case, a synthesis of both cultures can lead to greater cultural sensitivity and awareness, as
well as efficiency and productivity. They each emphasize various aspects of their respective cultures.

Chinese partner value cultivation and attendance to relationships (humanity) in the workplace,
giving importance to local employment, contribution to local economy and meeting expectations of
government and party officials. For them, culture of maintaining relationships and harmony among
employees and managers is vital and ultimately crucial to the overall success and productivity of the
company

In contrast, U.S partner value the successful completion of business ventures as opposed to
cultivating relationships. U.S. partner put emphasis on more on getting the operation or venture
completed as soon as possible.

Global Leadership and Organizational Behavior Effectiveness (GLOBE) project provides managers
with an additional lens through which they can better understand how to perform well in an
international environment. GLOBE researchers categorized countries into clusters of countries with
similar cultural characteristics. This categorization provides a convenient way to summarize cultural
information for a larger number of countries and simplifies the task of the international manager
attempting to manage effectively in countries within clusters. Because the clusters include societies with
similar cultural profiles, similar cultural adaptations can be made.

Under country cluster U.S. is under ANGLO CLUSTER while China is under CONFUCIAN ASIA. To compare
how the different clusters rate different forms of leadership, the GLOBE researchers considered six
leadership profiles:

 charismatic type (degree to which the leader can inspire and motivate others)
 team oriented (degree to which the leader can foster a high functioning team),
 participative type (degree to which leaders involve others in decision-making)
 humane-oriented type (degree to which the leader shows compassion and generosity)
 autonomous (degree to which the leader reflects independent and individualistic leadership)
 self-protective (degree to which the leader is self-centered and uses a face-saving approach)
Table 6.7 shows how the various clusters rank these leadership types.
Moreno’s core problem is that the ROI is affected by sociocultural differences.

Chui Wai’s point of view:

1. Moreno was making REAL contribution to solve unemployment rate of the country;
2. Moreno was generating just the right level of profit (not too little and, just as important,
not too much) in comparable with so many U.S.-Chinese joint ventures with negative
results (in red/loss);
3. The 5% ROI, would not place the Moreno under hot water in the eyes of local
government authorities, whom still viewed high profits of Western companies on
Chinese soil as a form of exploitation (domination). There is a pressure on from the
government.

Paul Danver’s point of view:

1. The 5% ROI is not sufficient despite low labor cost. His acceptable ROI is 20%;
2. Pointed out the greater efficiency and incorporation of sophisticated technology to
reduce workforce substantially (massive lay-off to his Chinese counterpart);
3. The ROI is the justification for the going-concern issue of Moreno.

Therefore, the sociocultural differences on management style is the major cause of the
problem. Convergence between the two partners is a viable option and can take place and both
sides remain open and receptive to one another. This type of mutually beneficial relationship
effectively nullifies any fears or doubts and further strengthens the ideal that both can coexist in
harmony. They must consider also the social return on investment (SROI) (a method for
measuring values that are not traditionally reflected in financial statements, including social,
economic, and environmental factors). They can identify how effectively a company uses its
capital and other resources to create value for the community. It can also increase the
corporation’s understanding of its effect on the community and allow better communication
regarding the value of the corporation’s work.
 The most successful business partnerships are formed when the interests of both
parties are aligned. Put simply, if a partner finds it beneficial to meet the terms of the Joint
Venture agreement then it’s likely they will comply with it. Moreno is operating for three years
and is already accepted by the Chinese government and recognized for its contribution to the
social problem of unemployment.  The Chinese partner has strong ties to government then
there may be other considerations besides profitability. They may consider local job creation or
tax income generation to be more important than pursuing profits from US investment.

Successful joint ventures are not rushed and find the most benefits from long-term
partnerships. Since, Moreno’s relationship with the Chinese has passed many obstacles
including red tape with monetary losing years, Ray Betzell and Chiu Wai may negotiate to seek
for return of investment in a more time-flexible and tax-efficient way. Aside from that, Ray
Betzell may have discussion with Chiu Wai, in the interest of maintaining their competitive edge,
to adopt whatever means necessary to achieve supremacy, like incorporating new technologies.

The fundamental elements of a culture cannot be altered, but the likelihood to adapt
and converge is greater if and only if the relationship is founded on mutual respect and
agreement.