Cross- cultural Communication This page intentionally left blank

Security problems
Security covers not only the personal security of staff working on the project 
but also the confidentiality of technical know- how, the protection of pat-
ents and intellectual copyright, including designs, trademarks and logos, 
and correctly drawn-up licensing agreements. These aspects are of particular 
importance as the legal requirements may differ from country to country.
It is also advisable to establish and specify realistic objectives in the tech-
nology transfer process against a feasible timeframe, with agreement as to 
how performance is to be measured, what standards, including safety, are 
required and how quality is to be maintained and controlled in the future.
Selection of staff
As in multinational teams, the selection of key personnel is crucial for suc-
cess in ensuring the effective transfer of knowledge, skills and technology 
across cultures. Apart from the requirements of professional expertise, those 
selected should have a good tolerance for ambiguity and the ability to cope 
with situations involving frustration and, at times, even hostile resentment. 
They also need cultural empathy in the ability to see how things are seen 
from the receiver’s point of view. Whenever possible, local managers should 
be involved in the transfer at an early stage and local workers should be 
employed in such areas as the construction of facilities and the development 
of supporting infrastructure. It is important to build up the confidence of 
local managers by giving them opportunities to show their capability.
International Joint Ventures
Another form of approach which involves the transfer of skills, knowledge 
and technology is to set up an IJV. This is an agreement that can often be 
classified as a strategic alliance between two or more independent partners, 
or, in certain cases, with national government involvement, to own and 

---

Transfer of Skills, Technology and Knowledge 253
control an overseas business. It can be to set up a completely new business, 
in many cases with a management that is separate from the partner’s 
own management structures. When two or more partners are involved, 
such a venture is often called a consortium. IJVs may be encouraged by 
govern ments to make it financially and economically attractive for foreign 
investors to join in a partnership with a local company. They are an expand-
ing area in international business, particularly in Russia and China.
A good example of an IJV is the production of the European Airbus, 
involving Aérospatiale, British Aerospace,
Daimler- Benz Aerospace and 
Spain’s Constructiones and Aeronautica. Earlier examples, of course, include 
Anglo- French cooperation in the consortia to build Concorde and the 
Channel Tunnel.
In some countries, such as China, the government may insist that IJVs are 
the only way in which a foreign company can enter the market in certain 
sectors of the economy. Reasons for forming IJVs can involve the desire to 
create a greater market by combining resources, reducing the risks by sharing 
the cost of investment, production and marketing, and achieving economies 
of scale. Added incentives are to acquire advanced technology, share the cost 
of research and development, share management expertise and reduce labour 
and transportation costs, as well as avoiding tariffs and customs duties. 
Foreign companies may decide to set up Research and Development (R&D) 
centres in other countries to satisfy their governments’ requirements for 
transferring technology to local partners in return for tax incentives.
There are considerable cultural benefits to be gained from working with a 
local partner who has detailed knowledge of the local tastes, preferences, mar-
ket potential and contacts, particularly with the local government. This local 
knowledge should be maximized to produce as much synergy as possible.
There are, however, potential risks in setting up an IJV. These include 
the sharing of competitive knowledge and technology, and the risk of 
nationalization or other forms of local government pressure. Paragraph 8 of 
the UN Resolution ‘Permanent Sovereignty over Natural Resources’ (1962) 
provides that: ‘Foreign investment agreements freely entered into, or by 
sovereign states, shall be observed in good faith.’ However, the validity of 
taking over foreign assets in the national interest also implies an obligation 
to pay compensation under customary international law. In addition, dis-
putes may arise over differing objectives, the locus of control, pricing and 
production policy, and the amount of capital to be allocated for expansion 
or for dividends to shareholders. Some of these potential problems can be 
avoided by one partner having a majority ownership, which allows it to 
exercise control, especially over its technology. Nevertheless, shared owner-
ship arrangements can still lead to disagreements and battles for control due 
to conflicts of interest over strategy and objectives. This was particularly evi-
dent in the case of the large TNK- BP Anglo- Russian JV, which was intended 
to act as a major example of Russia/UK cooperation but which has been 

---

254 Cross-Cultural Communication
fraught with difficulty since its inception in 2003. The situation has been 
further complicated by the intention of the Russian government- controlled 
oil giant Rosneft to acquire 50 per cent of BP’s stake in TNK- BP, thus creating 
the world’s largest oil producer.