Explain the theories of convergence, divergence and crossvergence

Author: Iloka Benneth Chiemelie

Published: 15-October-2014

Explain the theories of convergence, divergence and crossvergence

In any given system, knowledge is essential when the role it plays towards increased performance and competitive advantage are measured. Researchers have made known that the min motivating factor for MNEs’ decision to expand their business abroad is because of the opportunity it allows them to access new knowledge as well as transfer such knowledge across its firms with the potential of boosting their human resources (Bjorkman, Stahl and Vaara, 2007; Ranft and Lord, 2002). In any case, it should be noted that differences in culture does influence the process through which such knowledge are being shared between headquarters and its subsidiaries.  

In the disadvantage theory, Ralston et al. (1997) made known that any given system will have to drop its own value in order to fully adopt the values of other systems (which is normally the system of the headquarter). Thus, this will result to new issues in reference to both systems as a result of the difficulties associated with dropping in inbuilt values as well as adopting a totally different one (Weber et al., 1996).

Still on the ideas of Ralston et al. (1997), the theory of convergence described by the authors stated that convergence in the organizational sense is used to imply that differing values existing in the system is combined to become one. This means that the absence of convergence will result to complexity of relationship between headquarters and subsidiaries as a result of differences in values and it will bring about different ways for sharing information within the system (Etzioni, 1961; Ouchi, 1980; Selznick, 1965).

As defined by Ralston et al. (1997), the theory of convergence deals with the development of new unique cultures, values and beliefs in any given system, and it can sometimes contradicts with the old values. This means that the headquarter and its subsidiary will need to drop their previous organizational or national values and cultures in order to develop new one that will guide their present business operations. Similar with the theory of social community (Etzioni, 1961; Ouchi, 1980; Selznick, 1965), there is the lack of high potentials for convergence and this will result to complexities in relationship between the headquarter and subsidiaries as a result of differences in the value of the system.

How is this theoretical framework similar to or different from other cross-cultural management frameworks which you have studied in this module?

The above theoretical frameworks does fall in line with that of localization, globalization and glocaliation. In the approach of localization, it is the company that brings it values to converge with that of local values of its subsidiary when they are in a foreign market.

In the globalization sense, the subsidiary and headquarter drop their individual values in order to create a crossvergent values that it will adopt across its subsidiaries independent of the market or county (more like a new global way of business standardization).

On the other note, globalization can be viewed as the divergence of subsidiaries from their normal values (which is the values they had before acquisition) to values of the headquarter (which occurs after successful acquisition).

Which theoretical framework(s) would you apply when considering how to bring about more effective integration with subsidiaries and minimize risk for headquarters?

As a result of the differences in cultures, there is a need to pay attention to dynamism involved in integrating a business process and this does include physical, procedural and cultural integrations (Shrivastava, 1986).

As such, I will apply the framework of convergence because this does have the potential of increasing the level of knowledge transfer and also aid in the establishment of common value system (Etzioni, 1961; Ouchi, 1980; Selznick, 1965). The main reason for this is because different cultures are being combined to form a common cultures which is built around the values established by these cultures. The convergence framework also has an advantage over divergence (since there is no need for any system to totally drop their values and adopt the values of another system) and crossvergence (as the systems involved will still retain their own values while also learning from the values of their partner system).

References

Bjorkman, 1., Stahl, G., and Vaara, E. (2007), Cultural differences and capability transfer in cross-border acquisitions: The mediating roles of capability complementarity, absorptive capacity, and social integration.  Journal of International Business Studies, 38 (4): 658-672.

Etzioni, A. (1961). A comparative analysis of the complex organization. New York: Free Press.

Ouchi, W. G. (1980), Market, bureaucracies, and clans. Administrative Society Quarterly, 25 (1): 129-141.

Ralaston, D.A., Holt, D.H., Terpstra, R.H., and Kai-Cheng, Y. (1997). The impact of national cultures and economic ideology on managerial work values: A study of the United States, Russia, Japan, and China. Journal of International Business Studies, 28 (1): 177-207.

Ranft, A., and Lord, M. (2002), Acquiring new technologies and capabilities: A grounded model of acquisition implementation. Organization Science, 13 (4): 420-441.

Selznick, P. (1965). RVA and the grass roots. New York: Harper Torchbooks.

Shrivastava, P. (1986). Post-merger integration. Journal of Business Strategy, 7 (1): 65-76.

Weber, Y., Shenkar, O., and Raveh, A. (1996). National and corporate cultural fit in mergers/acquisitions: An exploratory study. Management Science, 42 (8): 1215-1227.