Cult Diff Corning & Vitro CaseIB410 3/10/13

Cross-Cultural Conflicts in the Corning-Vitro Joint Venture

This case presents the 1992 joint venture of Corning Inc. and Vitro; two companies with

shared corporate cultures, customer-oriented philosophies, and a long history of successful joint

ventures and globalization. The abundance of parallels between the two companies led to the

rational assumption that the joint venture would be of great success. Unfortunately, after only 25

months, the alliance was dismantled and was noted as being, “a marriage made in hell” by

analyst, Francisco Chevez. (Okleshen) The demise of the joint venture was due to cultural

differences; differences that had not been considered before the venture began and ultimately,

differences that could have been avoided if proper analysis and consideration of the culture had

taken place. This case study identifies and explains Corning’s strategic predisposition of the

joint venture, the importance of understanding culture prior to an alliance, how to overcome

differences to foster success, and the impact of public statements on a joint venture failure.

Corning Inc. has formed nearly 50 ventures with only nine failures, proving the

company’s success in joint venture alliances; so what went wrong, what was Corning’s strategic

predisposition toward a joint venture with Vitro? A failure to understand the Mexican culture by

the American Corning firm was the main downfall to the joint venture; therefore the

predisposition Corning displayed is ethnocentric. To better understand this predisposition, it is

important to understand the definition of culture. Culture, as defined in the textbook, is the

acquired knowledge that people use to interpret experience and generate social behavior. This

knowledge forms values, creates attitudes, and influences behavior. (Luthans & Doh, 2012)

Within the Corning and Vitro joint venture it was soon discovered the two companies did not

share the same decision-making styles and their marketing work arenas were from different

planets. Corning’s decision making style could be described as low power distance from

Hofstede’s Cultural Dimensions; the American firms’ structure is flatter and decentralized while

Mexico’s Vitro company exercised a high power distance structure, in which high emphasis was

placed on bureaucratic and hierarchical structure. Corning soon noted that these differences in

management and decision making styles deprived both companies of the flexibility to make fast

management decisions, decisions that were necessary in the business climate of both countries.

(Okleshen) In the face of marketing the two company’s products, it was discovered that Vitro

used a slower, less aggressive approach that was perceived by Corning to be too polite and

wasted time. Corning practiced a quick-action and aggressive approach, one that had been

adapted to from decades of competition. (Okleshen)

Understanding cultural differences before deciding on an alliance could mean the

difference between absolute success and utter failure. Through the Corning and Vitro failed

alliance, Corning now understands the importance of cultural knowledge. Analyzing and

understanding the cultural differences from Hofstede’s Cultural Dimensions, Corning could have

prevented the failed alliance with Vitro. With little investigation it is clear that Vitro values a

high power distance structure with high uncertainty avoidance, Vitro’s structure follows high

collectivist, feminine, centralized, cooperation, safety, and high organizational loyalty. Corning,

an American based firm is essentially the opposite, however it has been realized that fully

understanding the culture of a potential partner before deciding on an alliance can lead to great

alliances that can be significantly beneficial to the operations of a company if they are done

carefully and selectively. (Okleshen) Corning and other MNC’s must acknowledge and know

the connections in philosophy, goals, history, and objectives of both firms in order to formulate

successful alliances.

Prior to the dismantling of the Corning and Vitro alliance, Corning could have made

negotiations and adjustments with Vitro to overcome the differences. Corning should have

noticed the management issues and marketing differences, the companies then could have agreed

on changes to marketing, management styles, and accounting systems that better align with both

firms’ practices. By doing these negotiations and making adjustments, the Corning and Vitro

joint venture would have been more successful. It would have also been a good idea to use an

interpreter or mediator to help the two companies overcome their cultural differences and any

misunderstandings that could have occurred during negotiations.

The two companies decided to maintain a relationship and agreed to mutually distribute

each other’s products. This decision was made because Corning and Vitro both realized an

opportunity to continue working closely with one another, possibly in hopes of one day renewing

the joint venture. The companies recognized their cultural differences and Corning ultimately

gave Vitro back its $130 million initial investment after the downfall of the alliance. Corning’s

public statements over the failure of the joint venture revolved around the timeliness in the

decision making process of Vitro; it simply was too long and slow for the American Corning

company. Vitro’s president Eduardo Martens acknowledged, “Business in Mexico is done on a

consensus basis, very genteel and sometimes slow by U.S. standards.” (Okleshen) His statement

made it quite clear why the joint venture was a flop after only 25 months. Harsh public

statements by either company about the failure of the alliance could result in removing

opportunities for the future or result in hard feelings from the companies and a loss of

distribution for each other’s products.

This case presents a learning opportunity for companies wanting to expand into a global

market through joint venture. It exemplifies the importance of understanding the culture and

management practices of both companies within the joint venture prior to entering. Corning also

learned its lesson from this failed alliance and has noted that both foreign and domestic alliances

require additional skills and more management time. (Okleshen) With additional research into

the failure, Corning hopes to identify why the cultural differences with Vitro were too strong to

overcome. (Okleshen) Which only makes one wonder, is there hope for a renewed joint venture

for the two companies?

Works Cited

Okleshen, C. (n.d.). Cross-cultural conflicts in the corning-vitro joint venture. Retrieved from

http://mssu.blackboard.com/bbcswebdav/pid-1380589-dt-content-rid-1994759_1/courses/

1779_201310/Corning_Vitro Case.pdf

Luthans, F., & Doh, J. P. (2012). International management culture, strategy, and behavior. (8th

ed., p. 108). New York: McGraw-Hill.