International Alliances: Closing the Cultural Gap

Abstract As alliances become increasingly common around the world, differences in cultural expectations and the use of language have taken on a new and critical importance. This study examines the importance of cultural issues in the successful implementation of projects where participating companies are linked in a risk/reward agreement. The review of alliances, including British, American, Canadian, Australian, Arab and Asian companies, revealed that strongly ingrained national cultural characteristics such as acceptance of authority and position in a hierarchy, style of communication, and perceptions of risk stongly influenced the ways in which a team functioned. In addition, however, there were very clear industry and company cultures which were overlaid on the national traits. The interplay of the three detennined the willingness or not of different members to adhere to such basic alliance principles as openness, egalitarianism and empowennent. In no case did we find that the alliance members were given any cultural training nor were they particularly familiar with their partners' national, industry or company cultures. Often it was only after the project was underway, and the joint targets had already been set, that the members clearly understood thatdifferent interpretations existed of the so-called agreement. Although the energy industry has long dealt with multiple nationalities, the introduction of alliance structures has greatly enhanced the need to understand and to incorporate differentcultures into the functioning of the team. Clear communication becomes a key element in the setting of alliance nonns and goals and the recognition that English will be interpreted in different ays is important in maximizing alliance results. Introduction Alliances are becoming increasingly commoll' in the international energy industry as operators search for ways in which to improvethe economics of projects. Even originally skeptical managers have come to believe that the dynamic created in an open environment, with different companies sharing ideas, creates more savings than would have occurred using traditional, segregated ways of working. Alliances have now spread outside of the US and UK to embrace projects in the Middle East and Asia. As the use of this contracting structure grows, it will inevitably encounter successes and failures, attracting admirers and protagonists. But alliancing is here to stay. An understanding of the critical elements affecting the interactions among members will prove invaluable in constructing a set of partners with the greatest chance of success. A previous study was conducted by the authors to identify key elements necessary for alliance success and published as OTC 8091, "Lessons Learned on International Partnering and Alliance Contracts"(l). Although not addressed in that paper, the research revealed the importance of cultural issues as an influence on alliance outcomes. The alliances surveyed here differ from those in OTC 8091 and were specifically chosen for their multi-national content.