Building Trust Relationship in Cross-Culture Collaboration: Cases Studies on Two Chinese

Building Trust Relationship in Cross-culture Collaboration: Cases Studies on Two Chinese Animation Companies

ABSTRACT

Internationalization and inter-firm collaboration is a trend of business nowadays, as firms begin to grow, gaining specific technology capability and developing products for different markets. In the meanwhile, cultural values and managerial practices vary from country to country, which makes cross-border management morechallenging than the traditional in-house business model. A trusting relationship is essential to business success and continuity, yet details of how to build-up and maintain trust are unclear. This paper investigates trust developmentin cross-border collaboration. Literature review has covered key trust theories and its linkage with culture. To further understand the critical issues in of trust, two in-depth case studies are conducted from the Chinese animation game industry. It is found that in order to achieve long-term business collaboration, companies need to be continuously responsive and adapt their trust models. Based on the case analysis, a general model with trust “separation, integration and compromising” and a practical model is developed for further testing. Other research topics to further link trust with sustainability are also proposed in the end.

Keywords: Trust, Relationship Management, Cross-culture Management

INTRODUCTION

With the popularity of new technology and the trend of globalization, the business world new is witnessing increasingly more international collaboration. Taking the manufacturing sector for example, firms no longer conduct all parts of the production in-house, but rather, collaborating with suppliers and partners, all-together forming supply chains. The trend of expanding from single factory operations management towards inter-firm collaboration happen also in emerging new industries, among which is the creative sectors such as the animation game industry. Traditionally, companies such as Disney vertically integrate almost all parts of operations, including conceptualization, production, distribution, character business. However, currently there more animation products are created either through joint design or outsourcing. The collaboration between Disney and Pixar shows good example, where Disney in charge of promotion and distribution and Pixar mainly responsible for production and technology improvement. With mergers and acquisition, the two companies now can share resources, while keeping each specialty. In China, due to the fact that most animation companies are small, lacking experiences, joint development and participating in collaborative project provide opportunities to grow. With the Chinese government issuing supporting policies for the animation game industry, there are more than 70 industry clusters throughout China now, providing a platform to share resources.

One issue emerging as companies grow from in-house operations towards inter-firm network is trusting relationship. In fact, the sustainability of business is more and more relay on long-term trust. Here it is argued that “the sustainability of firms is not predicted in contracts but rather in underlying trust issues” (Aras and Growther, 2007). Trust is not just a marketing or public relationship issue, but can be regarded as a type of value embedded in organization. It should also be treated as intangible asset which help firms towin customer order, reduce risk, achieve technology advancement and develop competitive advantage in a sustainable way. Although trust may have different meanings, it is generally believed that trust is an integral part in supply chain and alliance networks. In fact, it is believed that “virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence” (Arrow, 1974).On an inter-personal level, trust can be seen as friendliness, kindness, and openness to different ideas. On the inter-firm level, trust can be extended as responsiveness, caring, willingness to share and competence co-development. Effective communication is important to form trust, especially in a cross-culture context. As the world is witnessing large scale of internationalization and globalization, understanding of different culture –as values and norms shared among a group or organization – is essential to business success and sustainability. Sometimes misunderstanding of different values can result in distrust, reputation risk, inefficiency, and thus results in business failure.

Another issue associated with inter-firm trust is culture difference, especially between the East and the West nowadays. With the trend of globalization, many firms are now involved in cross-border collaboration. For one thing, firms can assess to a variety of knowledge and resources, reaching new market. For another, different values and attitudes can result in misunderstanding, and thus make the relationship vulnerable than collaboration domestically. China as the world largest emerging economy is playing more active role in terms of internationalization. However, how to understanding Chinese culture, and thus do business in China remain difficult for many western companies. Similarly, as Chinese firm are seeking opportunists to meet the world, they should also realize and respect other cultures. In order to sustain business partnership, firms need to invest time on understanding each other, and eventually forming long-term trust. Managing global virtual team even requires more cross-border coordination and communication. With trust, firms can not only share resources, but also risk together.

Based on the important role of trust in business sustainability and internationalization, this chapter aims to explore the process and values related to trust issues in the across-border collaboration context. It will focus on China, with investigating into how Chinese animation firms develop trust with partners from other cultures. In particular, the chapter will answer the following three questions: 1) What are the key activities and process of trust leading to business sustainability? 2) What are the value differences in cross-culture collaboration? 3) What are the adaptation mechanisms to facilitate trust in a long-term? The chapter can contribute to the theory of trust and inter-firm relationship management. Moreover, it provides practical models on understanding trusting relationship across cultures, an important decision making area in the international business nowadays.

With introduction, the chapter will then review existing literature related to business sustainability, trust, cross-culture management and Chinese culture value of trust. To identify details of activities and processes, two case studies are conducted from the Chinese animation game industry. Both firms have achieved business sustainability through successfully building trust with foreign parterres, yet they follow different approaches. General issues related to inter-firm trust will be addressed, based on the cases, followed by practical implementation, conclusion and future research areas identification.

LITERATURE REVIEW

The nature of trust can be examined from several aspects. Many literature and studies have explored dimensions and components of trust, for example in early years, Rempel et al.’s (1985)has discussed the predictability, dependability and faith in relationship. Later on,Sako (1992) has categoriezedthree types of trust, namely competence, contractual and goodwill trust.Ganesan (1994) makes further definition of credibility and benevolence trust. To extend the concept, McAlister’s (1995)summarizedcognitive and affective elements of trust. Mayer et al.’s (1995) also identified ability, integrity and benevolence trust. Based on the original philosophy of utilitarianism (Bentham, 1789), Aras and Crowther (2007) suggest that the sustainability of a firm relies more on trust, rather than negotiated contract. In the economic context, Schuitema’s (2000) maturity progression modelhas specified two different levels of trust – utilitarian and humanitarian. From the perspective of utilitarian, trust can be predicted on relation-specific skills; whereas humanitarian emphasizes belief and values of goodwill.Based on the this philosophy,Platts and Tomaevic (2004)’sprovide the model of “can-will-does”,combining technical, contractual and goodwill trust, indicating the importance of learning and leadership.

The development of trust has different levels, both microand macro levels (Lewis and Weigert 1985). Social psychology indicates that trust can be viewed in terms of a subjective state and a behavior (Suh et al., 2006). To explore the building-up stages trust, Lewicki and Bunker (1996) identified calculus-based trust, knowledge-based trust and identification-based trust.Similar models is seen in Doney and Cannon’s (1997) five steps of trust, namely calculation, prediction, capability, intentionality and transference in business relationship development. Another model on trust, confidence and cooperation (TCC) is proposed to clarify the formation stages and driving forces of trust, and link it with risk management (Siegrist, Earle and Gutsche, 2007). In research studies, Liu and de Jonge (2016) havesummarized 16 dimensions to evaluate three types of trust. Specifically “technological capability”, “management styles”, “idea innovation”, and “business judgement” are used to describe competence trust. “Standard terms”, “negotiable contract”, “role specification” and “agreement fairness” are used to explain reliability trust. To further understand goodwill trust, “friendly attitude”, “passion factors”, “open-mindedness”, “willingness to share”, “long-term vision”, “coevolution”, “social community” and “relational background” can be explored. On a more macro-level concern, with the increasingly awareness of corporate social responsibility nowadays, trust is closely related with stakeholder management, and trust should be regarded as social contractwith shareholders, suppliers, customers and employees (Aras and Crowther, 2007). Environment issues should also be considered, in order to become a trustworthy and ethical company (Aras and Crowther, 2007). Based on concept analysis, Aras and Crowther (2007) further develop a model for evaluation sustainability and trust, with four major elements: maintaining economic activity; conservation of the environment; ensuring social justice; and developing spiritual and cultural values.To exam essential components of trust in international business, Heffernan (2004) adopts a relationship lifecycle model, including five stages: pre-relationship stage, early interaction stage, relationship growth stage, partnership stage, and relationship end stage. Through interview and case studies, findings suggests: 1) Search trust, meaning trust based on information and evidence from indirect sources, is the only form of trust in the first stage; 2) Contract trust influences most in the second stage, namely early interaction stage. 3) Competence is important in the relationship growth stage.

Culture factors are found important to the establishment of inter-firm trust, especially in international collaboration. In fact, “trust is context sensitive: actors that may trust each other in one situation may not display the same level of trust in other situations” (Beckett et al., 2010). The way of selecting partners, communicating, negotiation and problemsolvingprocesses can be different under various cultural contexts.Culture has been explored since long ago in the level of national and organizational culture. Influential theories have provided dimensions to evaluate national culture differences. This can be generally categorized as time, changes, material and relationship factors. Factors indicating attitudes towards time include viewing time as linear, doing things one by one with a schedule (monochronic), or in a flexible way (polychronic) (Hall, 1969, Hampden-Turner and Trompenaar, 2000). Researchers also find that some countries are more long-term oriented, whereas others focus on now and short-term (Hofstede, 2001). Values on changes also vary in different cultural contexts, and the tendency of accepting unpredictability is describe as uncertainty avoidance (Hofstede, 1994). Cultures of high uncertainty prefer stability, while cultures of low uncertainty avoidance likes radical changes (Hofstede, 1994). Material factors such as degree of competition and achievement in the society can be explained through the dimension of masculinity vs. feminity (Hofstede, 1994). To quantify thehierarchical structurewithin an organization or society, Hofstede (1994) creates the dimension of power distance. The role of individual within group relationship is indicated as the dimension of individualism vs. collectivism (Hofstede, 1994). Other factors related to communication and interaction with external environment include high vs. low content (Hall, 1969) and specification vs. diffusion (Hampden-Turner and Trompenaar, 2000). These cultural dimension have been implemented in international business studies. On a practical level, the way of solving problems and improving inter-firm relationship also vary greatly between countries and culture backgrounds. Based on in-depth interviews, Suh et al. (2006) analyze trust dimensions in USA and South Korean cultures in service industry, identifying that direct experiences and recommendations are important factors affecting cross-culture trust. In addition, culture theories identify the concept of family to trust development as some Asia cultures prefer trusting relationship building as an extension of family (Hoyer and MacInnis, 1997).

RESEARCH METHODOLOGY

Current research has explored the impact of culture on trust relationship. However, the study on how trust can be established and continued in cross-culture context is limited. From literature review, the Hofstede’s culture dimensions are demonstrated in inter-firm long vs. short term commitment. However, it is not enough as there are many other areas of inter-firm relationship which are impacted by culture but are not yet studied clearly. Practice review on the manufacturing sectors and animation industry suggests that trust is a culture sensitive area which needs further study. Literature of national culture covers “long-term commitment”, “formality”, “power” and “shared vision” under certain national culture context. However, there are limited systematic studies on how national culture dimensions interact with different types of trust, in particular under cross-culture collaboration between Chinese and non-Chinese companies. Literature on trust also lacks of process based model, and the details interaction mechanism between trustand culture.

Based on the research gap, this chapter aims to uncover the activities related to trust development in cross-culture collaboration. Trust issues will beexplored from two aspects: key process and key values. According to the definition and meaning of culture, it is a system of values and norms shared by a group of people (national or organizational level) that can influence behaviors. Therefore the impact of national culture on trust issues can be seen from:1) how the activities and behavior differ during the development process of trust, and 2) how the concept and meaning of trust differs from country to country with prioritized values. Based on these, the main objective of the research is to improve the understanding of the development of inter-firm trust in cross-culture collaboration context. More specifically, it aims to:

-Map the process of how inter-firm trust is formed, developed and continued in cross-culture collaboration projects.

-Identify the key constructing elements and attitudes of inter-firm trust, including competence, reliability and goodwill trust.

-Develop practical suggestion for companies on cross-culture collaboration.

The research adopts the approach of theory building with qualitative methods. Although the existing literature of culture and trust can help to generate a research framework, findings are limited, and thus cannot provide a meaningful hypothesis to be tested. Instead, theory-building with qualitative method can provide a good way to understand issues which have not been explored (Yin, 1994; Eisenhardt, 1989).Among the qualitative methods, case studies into Chinese animation companies are chosen. The primary concern of conducting case studies is to understand better the research questions, to build theory according to the research framework and to make a linkage between the established theory and practice. Therefore case companies selected should support the aim of developing and testing. Criteria of suitable case companies from the animation industry are established as follows:

-The case company is involved in international or domestic Chinese animation industry supply network. The collaboration can be outsourcing, co-development, or other forms.

-Cases are selected with different culture backgrounds, e.g. cases from western culture and oriental culture such as Japan are included.

-There are typical collaborated project between the focal company and its partners, to make it easy to follow the process of inter-firm trust build-up. The project can be the making of certain product, or on a more general level, a series of products development over long time.

-The case companies agree to give adequate access to the researchers, and people are willing to give comments and opinions on trust issues in inter-firm relationship management.

Based on the above criteria, two Chinese companies involving cross-culture collaboration animation product design and development are selected. For the reason of culture diversity and the accessibility of data, Case One company has successfully co-developed product with a Japanese partner, while Case Two companyhas maintained long-term collaborative relationship with a USA company. Chinese culture represents an oriental style with priorities on polycronic time, high power distance, collectivism, slightly high in feminity and long-term orientation (Hofstede, 2010). USA culture represents a western culture which monocronic time orientation, specification, low power distance, individualism, and masculinity. The Japanese culture has some similarity with Chinese culture, yet it is identified as unique and different from other cultures (Hofstede, 1980). It is generally believed to be polychronic time oriented, high in power distance, collectivism, masculinity, uncertainty avoidance, and has long-term orientation.In addition, these two case companies are along the earliest ones in China to conducting international collaboration. During the collaboration, they met problems related to trust development, and thereafter made effort to sustain the relationship. Their internationalization strategy and inter-firm relationship management can be potentially helpful to other Chinese firms. Table 1 shows basic information of the case companies.