Impact of Multiple Normative Systems on Organization Performance of International Joint Ventures

Research on international joint ventures (IJV) reveals difficulties in managing cross-cultural teams. Our research aims to understand how cultural differences between Japanese and American firms in IJV projects effect team performance through computational experimentation. We focus on and characterize culturally- driven normative systems as a central role of cultural differences, composed of two dimensions: cultural values and cultural practices. Cultural values refer to workers' preferences in making task execution and coordination decisions. These preferences drive specific micro-level behavior patterns for individual workers. Cultural practices refer to workers' perceptions and expectations to include norms adopting each culture's typical organization style, such as centralization of authority, formalization of communication, and depth of organizational hierarchy. Our ethnographic observations have documented distinctive micro-level behavior patterns and organization styles for Japanese and American teams. We use a computational experimental design that sets task complexity at four levels and team experience independently at three levels, yielding twelve organizational contexts. We then simulate the four possible combinations of US vs. Japanese team individual behavior and organization style in each context to predict work volume, cost, schedule, and project quality outcomes. Simulation results predict that: 1) both Japanese and American teams show better performance across all contexts when each works with its typical organization style, suggesting positive correlation between two normative components (cultural values and cultural practices) on team performance; 2) the Japanese organization style performs better in the case of high task complexity, while the American organization style performs better in the cases of low and medium task complexities, implying that the impact of normative systems is contingent upon task complexity; and 3) the Japanese organization style tends to have significantly lower project quality (system integration) risks than the American organization style. In addition, cultural practices (typical organization styles) have a larger impact on project performance than cultural values (culturally driven behavior patterns). Our simulation results are qualitatively consistent with both organizational and cultural contingency theory, and with limited observations of US-Japanese IJV project teams.