The Paradox of Diversity

The very differences that help make orga­nizations more innovative and responsive to global demands make it more likely to have conflict and constrain organizations’ abilities to address the issues that face them.

We need to look no further than the many failed and troubled global joint ventures over the past 20 years to see the tensions and con­flicts that may emerge as organizations join together for strategic purposes. In reporting a well-known and very costly unsuccessful venture, The New York Times described the 1993 Corning (U.S.) Vitro (Mexican) merger as a “marriage made in hell” (DePalma, 1994). Interviews with managers from both corporations suggested that Mexican manag­ers were insulted by Americans’ directness, and American managers were frustrated by the politeness of the Mexicans. Americans perceived the politeness and lack of confron­tation as an evidence of Mexican manag­ers’ unwillingness to address problems and faults. The problems, however, were rooted not only in interpersonal differences but also in the structural and economic dynamics (e.g., different marketing strategies, increas­ing competition, and a stronger peso). Indeed, an essential point to consider when studying any conflict in the global workplace is that individual cognitions, values, experiences, and attitudes (the basis of most studies of conflict and cultural variability) are always grounded in the political/economic/historical context of nation-states.

The 25-month union was hurt by constant cultural clashes. Corning managers were sometimes left waiting for important deci­sions about marketing and sales because in Mexican culture only the top management could make them.... Vitro’s sales approach was less aggressive, the remnant of years in a closed economy, and this sometimes clashed with the pragmatic approach Corning had developed over decades of cooperation. (DePalma, 1994, p.

Similarly, in 2008, Daimler-Benz’s (German) chief executive officer, Dieter Zetsch, described the disastrous 10-year merger with Chrysler Corporation (U.S.) as a “practical lesson about the limits of global­ization” (Strieber, 2008, n.p.). Several analy­ses suggest that although strategically the merger made sense, the contrasting cultures, conflicting management styles, histories of the two companies, and government regula­tions thwarted many opportunities for suc­cess (Mateja, 2007).

There are, of course, studies of interna­tional mergers that are successful. When Ciba and Sandoz (both multinational corporations [MNCs] headquartered in Switzerland but with very different corporate cultures and inter­national locations) joined together to form the pharmaceutical giant Novartis, initially there were serious problems and conflicts. Through close attention to sociocultural elements at the interpersonal/group levels (improving cultural awareness, developing culturally competent leaders, and increasing sensitivity of team mem­bers) and the structural level (selection, reward, and career systems that were modified to take into account diverse societal expectations and norms), the merger became a long-standing success (Valentine, 1998). Nonetheless, despite greater scholarly and practitioner attention being paid to conflict and global competence at both the micro- and macrolevels of global collaborations, it is still the case that post­merger profits tend to be smaller than the joint profits of the firms prior to the merger, what economists describe as the “merger paradox” (Heywood & McGinty, 2007).