Building Trust in Cross-Cultural Collaboration

This assignment examines the critical role of trust in successful cross-cultural collaboration, particularly within merger and acquisition scenarios. It highlights the communication barriers that can arise due to cultural differences, such as those between Taiwanese and German cultures. The assignment then proposes strategies for building and restoring trust through open communication, language proficiency, and understanding of cultural nuances like high-context vs. low-context communication styles.

Running head: MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
Managing Across Organizational & Cultural Boundaries
Name of the Student:
Name of the University:
Author’s Note:

1MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
Question 1
Six main bases for collaborative advantage
The six main bases of collaborative advantage are access to resources, shared risk,
efficiency, coordination and seamlessness, learning and the moral imperative. The organization
collaborates to share resources when they can’t accomplish their objectives with individual
resources, for instance, pharmaceutical companies which require resource for production and
marketing collaborate to share resources(Kozlenkova, Samaha and Palmatier 2014).Organization
collaborates to share the risk of failure of a project, for instance R&D projects. Organizations
collaborate to gain efficiency in terms of outsourcing, operational efficiency, coordination and
economies of scale, for example, public-private partnership (Bingham and O'leary 2014).
Coordination and seamlessness is a part of efficiency of an organization, collaboration also
promotes mutual learning of organizations. Most importantly, organizations collaborate on moral
imperative to eradicate problems on national, society, industrial and organizational levels (Foss.
and Knudsen 2013).
Why BenQ initially wanted to join efforts with Siemens
Taiwanese companies witnessed a shrink in profit margins for contract manufacturing. In
order to achieve a profitable future, the Taiwanese companies wanted to move beyond low-cost
manufacturing. Taiwanese companies wanted to build their individual brand names rather than
being a contract manufacturer who is almost anonymous in the marketplace. BenQ, the
Taiwanese company wanted to acquire Siemens, the German company for its existing brand
name which was attractive. BenQ also wanted to enhance its global presence by acquiring

2MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
Siemens. The launch of the brand Ben-Q Siemens by acquisition of the mobile phone division of
Siemens which was losing money proved to be advantageous for BenQ. The merger helped
BenQ to become the fourth largest brand of mobile phones across the globe after Nokia,
Samsung and Motorola. K.Y. Lee, the chairman of BenQ felt that he will be able to generate
profits from the debt-ridden unit of mobile phone of Siemens. Lee was of the opinion that
because of the global distribution and sales channel of BenQ it was easier for BenQ to achieve
profit easily. The manufacturing facilities and economies of scale of Ben Q would also increase
by choosing a complimentary partner like Siemens. BenQ initially wanted to join efforts with
Siemens because the organization felt that this merger and acquisition will lead to a win-win
situation for both companies as more synergy and value in the marketplace will be created by the
formation of the brand name BenQ-Siemens (Cheng. and Seeger 2011).
Bases for collaborative advantage of the collaboration between BenQ and Siemens
The German company, Siemens was not directly paid by BenQ. The 100% stake of
mobile phone division of Siemens was acquired by BenQ. Initially an amount of 250 million
Euros was provided to BenQ by Siemens for funding the business, later 50 million Euros was
spent by Siemens to purchase shares of BenQ which were issued newly. Siemens also incurred
the loss of the unit, 1.5 million Euros loss per day. Siemens collaborated with BenQ to develop
technologies for handsets. The rights of co-branding was vested to BenQ- Siemens within a
tenure of 5 years and the right for the usage of the trademark of Siemens was gained by BenQ
for a period of 18 months. BenQ wanted to fulfil the contract agreement of labour with the cell
phone employees of Siemens. The share of Siemens was up by 3% and rose to 61.9 Euros
because of the transaction (Cheng. and Seeger 2011).

3MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
Ultimate outcome of the collaboration between BenQ and Siemens
The collaboration of BenQ and Siemens failed ultimately. After purchasing the handset
division of Siemens, the shares of BenQ dropped by 2.7 % on the Taiwan Stock Exchange. The
new business division of BenQ Mobile commenced its operation in October, 2005 in Munich,
Germany with 7000 employees across the globe. The handset operations of Siemens allowed
BenQ to compete with leading brands, but the current prime customers of BenQ had a conflict of
interests because of the collaboration between Siemens and BenQ. By September 2006, BenQ
decided not to invest money in its German subsidiary to cut loss. The interests of the creditors
were protected and the subsidiary filed for insolvency in Munich court. There was loss of 3000
jobs in German because of this failure. The high context culture of BenQ and the low context
culture of Siemens, failed communication and difference in organizational culture resulted in this
failed acquisition. The media commentators, labor leaders and politicians in Germany felt that
BenQ did not have experience in marketing and lacked competence and the acquisition of
Siemens by BenQ was an economic and social disaster (Cheng. and Seeger 2011).
Question 2
The Critical Challenges those Multicultural companies might face
Multicultural companies face challenges with communication, difference in culture and
diversity. The difference in culture among employees of a multicultural company results in
language barriers and communication practices which are divergent in nature. Intercultural
communication has two comparison points which are influential which are 1) The idea of context
and 2) The value/ belief theory of culture. A multicultural company has a workforce with
different cultural values, for instance, the high-context culture where people demonstrate deep

4MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
involvement with one another and in a low context individualized culture where people are
demonstrate little involvement with each other. Values are the foundation of culture and
collective programming is influenced by values (Huxham and Vangen 2013). The people
belonging to similar culture share similar patterns of feeling, thinking reacting and acting and
thus a particular event is perceived in different ways by people from different cultures. Power
distance, masculinity or femininity, avoidance of uncertainty, individualism or collectivism and
long-term and short term orientation are different cultural dimensions founded by Hofstede.
Multi-cultural companies have a diverse workforce from different countries and thus their
cultural values are affected by the 5 cultural dimensions of Hofstede. Also multicultural
companies have multicultural teams and have to deal with challenges of diversity-both surface
level diversity like ethnicity, age, gender and deep-level diversity like differences in values,
attitudes and beliefs. Also, people with different cultural background have different mode of
learning and it is a challenge for multi-cultural companies (Hunt 2014).
Cultural difference challenge in case of BenQ and Siemens
BenQ is a company from Taiwan and Siemens is a company from German. The culture
of BenQ was influenced by oriental Confucian culture whereas that of Siemens was Germanic
European culture. The culture in Taiwan is more collectivist and rule-oriented and less assertive
and future oriented. The culture in German is focused on contracts, agreements, individual rights
and personal independence. On the index of individualism, Germans scored 67 and Taiwanese
scored 17. Taiwanese society has a collectivistic culture and employees have a strong sense of
organizational belonging while Germans prefer challenges, time, and freedom and are highly
individualistic. The difference in culture created a gap between the German subordinates of
Siemens who were highly individualistic and Taiwanese employers of BenQ who were highly

5MANAGING ACROSS ORGANIZATIONAL & CULTURAL BOUNDARIES
collectivistic. There was turnover in executive management of Siemens. Taiwanese scored 58
and score of Germans was 35 in the scale of power distance. Germany has a strong union and
collective tariff agreements between representatives of trade unions and employers association
fix salaries of German employers. Germans separate work and private lives, they do not work on
Sundays and public holidays and have six weeks of paid vacation while Taiwanese are ready to
work on weekends and holidays if there is a requirement by their organization. Thus, BenQ faced
the challenge of maintaining good relationship with union labor of Siemens. In the index of
avoidance of uncertainty , Taiwanese ranked 69 and Germans ranked 65. Taiwanese have fear of
failure and avoid risks. The electronics company of Taiwan adopts procedures of cost-cutting
and after acquiring Siemens, BenQ had NT$36.7 billion loss. Business schedules in German are
flexible while it is rigid in Taiwan. The production schedule, new product development and
marketing plan of BenQ were delayed after acquisition of Siemens because of the difference in
organizational culture. The R & D of new products across BenQ and Siemens and the
incompatible culture of the two companies were not integrated by BenQ and thus the company
faced financial problems due to the cultural difference. BenQ was a Taiwanese company and
focused on product diversification, adaptability, resilience, flexibility and innovation with an
informal organizational structure whereas Siemens had a formal organizational structure with a
decision-making process which was methodical. Also, there were challenges of cross- cultural
communication, the Taiwanese have a subtle style of communication while communication style
in German companies are assertive, the employees of BenQ could not speak German resulting in
barriers of communication. The intercultural failure resulted in failed acquisition of Siemens by
BenQ (Cheng. and Seeger 2011).

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Actions taken to minimize each of the challenges
Actions were taken to minimize the challenges. BenQ managed to maintain a cordial
relationship with the labor union of Siemens. Lee, the chairman of BenQ made a public apology
to the stakeholders of German and Taiwan at Institutional Investor Conference and promises for
the future was delivered in this conference. Lee also hoped to recover the financial loss and
achieve healthy growth. In order to take corrective action to meet the financial crisis, Chairman
Lee wanted to resign at the board meeting.
Question 3
Trust between BenQ and Siemens
Initially trust was displayed between BenQ and Siemens in order to achieve collaborative
advantage financially and operationally. Chairman Lee of BenQ retained the CEO of Siemens
Joos along with 2800 R & D employees in order to make a smooth transition. However, the
employees of Siemens did not have trust in BenQ. The mechanism of internal communication
adopted by BenQ at the beginning of the deal was not appropriate resulting in anxiety and
rumors among German employees. There was miscommunication and disagreement over the
new products development process and the speed of reorganization between the German
management and headquarters at Taipei of BenQ. The decision of BenQ to terminate financial
support for the German subsidiary was rational for Taiwanese but was severely condemned in
German. The implementation plan of new business strategies for BenQ- Siemens unit was not
communicated among employees in a concise and consistent manner by BenQ resulting in
miscommunication and lack of trust. The employees of BenQ was not fluent in German and there
was communication barrier between the companies resulting in lack of trust because the high

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context Taiwanese culture preferred subtle communication while the low-context Germans
preferred to communicate directly. Lee did not communicate directly about the layoff of the
employees of Siemens to avoid direct disagreement and thus the German employees felt
deceived later on (Cheng. and Seeger 2011).
The ways trust can be built and restored for a better collaboration outcome
Trust can be restored for a better collaboration outcome with the help of an innovative
communication model (Alguezaui and Filieri 2014). The two clashing cultures of companies
during a merger and acquisition process can be integrated with the help of an open
communication model. The organizational uncertainty and stress can be successfully reduced
with clear communication. The anxiety and tension of employees increases due to
communication gap resulting in grapevine. In culturally distant countries misinterpretation
occurs of the actions and messages of the acquiring firm which are misconstrued, ambiguity can
be reduced and expectations can be clarified by adopting an open communication model. Foreign
language proficiency among employees can reduce the barrier in communication and build trust
resulting in better collaborative outcome. The communication process should be clear and
concise for a better collaborative outcome and to build trust. The communication program
should be employee-centered and the organizations should focus on a high level of relationship
building among employees to restore a better collaborative outcome. Also, the managers of an
organization should make sure that employees are not deceived by revealing accurate
information. The concept of face-concern is of paramount importance to build trust, for instance,
individualists try to save their own face and collectivists save the face of members of a group.
In order to restore a better outcome of collaboration and build trust, the difference of the high
context and low context organizational culture should be minimized. A balanced approach

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between individualism and collectivism, power distance and avoidance of uncertainty can result
in a better outcome of collaboration. The board of directors should protect stakeholders when an
organization is hit by crisis to build trust and restore collaboration.

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Reference Lists
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