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2005 CIB W92/T23/W107 International Symposium on Procurement Systems
The Impact of Cultural Differences and Systems on Construction Performance
February 7th – 10th; 2005 – Las Vegas, NV USA
THE ROLE OF INVESTMENT, EXCHANGE & ACCUMULATION OF NON-
ECONOMIC CAPITAL ON INTERNATIONAL PROJECT PERFORMANCE
Kerry London1, Jessica Chen2 and Nathaniel Bavinton3
School of Architecture and Built Environment, University of Newcastle, Callaghan Drive, New South
Wales, Australia
ABSTRACT
Recently there has been an increase in construction firms internationalising. The
internationalisation process particularly, market entry strategies has been well
researched. There has been less research concerned with investigating long term
sustainability for exporting firms. The cornerstone of a sustainable business model is
construction performance. Construction performance is a combination of project and
client organisation objectives and the design and construction process. An
understanding of client and project objectives as well as process is impacted upon by
cultural factors. Client organisational and project objectives is a critical part of the
early stages of a project which involves brief development. Firms involved in design
stages achieve sustainability through an explicit understanding of non economic
factors. Non-economic factors have been identified as cultural, social and intellectual
capital which ultimately underpin financial capital. This paper explores how
exporting firms invest, accumulate and exchange ‘softer’ capital to achieve
sustainability. The preliminary results of an architectural design firm case study are
presented. The findings indicate that project and process performance can be
improved through various strategies. Project performance can be enhanced through
accumulation of social and cultural capital to develop intellectual capital and process
performance can be increased through accumulation of cultural in exchange for social
capital.
Keywords: social, cultural and intellectual capital.
INTRODUCTION
The internationalisation of services, particularly the internationalisation of design
services has become more and more widespread in the last decade. Governments
across the world are increasingly recognising the significance of internationalisation
as an important source of the economy. Internationalisation has relevance for both the
industry and individual firms. Firstly, internationalisation is an important step towards
ensuring improved industry performances. Secondly, internationalisation is critical for
individual firms for two reasons: survival and growth (Akhter, 1995). Exporting firms
are provided the opportunity to diversify their products and/or services to increase
their market share and to relocate their competitive position to be less susceptible to
downturns and fluctuations in the domestic markets (El-Higzi, 2003).
Construction design firms around the world have been involved in the export of
products and/or services related to design and construction for numerous years but
1 Kerry.London@newcastle.edu.au
2 Jessie79@bigpond.com
3 nathaniel.bavinton@studentmail.newcastle.edu.au.
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with varying degrees of success. Notwithstanding assistance provided for small
exporting businesses through international trade missions, organised export support
networks and information packages by a burgeoning number of government agencies,
evidence suggests that there are still perceived barriers to market entry (Draganich,
1998) and great difficulties in maintaining a long-term successful international
construction business.
The primary issues that confront organisations exporting include cross cultural
business communication and the development of social and business networks with
strategic partners and suppliers (Draganich, 1998). It is interesting to note that most
firms are under the impression that linguistic and cultural differences will make
internationalisation too demanding.
Studies on the international construction business environment have been typically
limited to exploratory case studies (Pietroforte, 1997; London, 2001) which only
sought to describe market entry strategies used by firms. Various innovative strategies
exist for construction SMEs to enter markets (Doherty, 1999; Buckley and Ghauri,
1994, El-Higzi, 2002) but less is known about the appropriate entry and organisational
approaches, relevant self assessment strategies and the extent of long term economic
sustainability for the individual firms and industry alike (London and Chen, 2004).
Although there are many industry practitioner experiences of success and failure to
draw upon; an analysis of this knowledge has not been undertaken explicitly. The
cornerstone of a sustainable business model is an understanding of what contributes to
firm success and the indicators of business performance; which are bound to
construction performance.
This paper is within the Adaptive Performance Framework that has been developed
by the research team working on the CRC-CI study ‘Internationalisation of Australian
Construction Design Firms’ (London et al, 2004). This paper aims to develop a
conceptual model for the investment, accumulation and exchange of the non-
economic capital for the sustainability of exporting design firms. The paper firstly
introduces the products and processes that impact upon construction performance and
then examines how and under what conditions firms employ strategies of capital
accumulation, investment and exchange to achieve business sustainability in
international markets. This is then followed by a brief description of the methodology
undertaken for the study in terms of the data collection and analysis methods and a
discussion of some preliminary findings to date.
For the purposes of this study an international project was defined as a project that the
construction design firm was working on which had a client in another country and
the client was physically located in that country. The client country is known as the
host country. The construction design firm may also have had an office in the host
country which either facilitated client liaison or performed some part of the service,
however the core of the design service was conducted in a geographical location
distant to the client and the project’s country of origin. Many of the concepts that are
discussed in this paper are not exclusive to construction performance on international
projects. Indeed, in many instances the research participants in the study made clear
assertions that there is little difference conceptually between an international and
domestic project – however, they then proceeded to highlight all the differences.
Perhaps the point of difference between domestic and international projects is that the
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role of non-economic capital becomes more intense and critical on international
projects and it is critical on every instance of international project.
CONSTRUCTION PERFORMANCE
Construction performance is the performance of the product and the process. The
product is the facility and the process includes all processes related to design and
construction to occupancy phase. The performance of a facility has often been
measured through the post occupancy evaluation research (Preiser, 1989). There is a
relationship between the performance measurement of a facility and the process and
this has been well established (Lesley, 1985; Preiser, 1989; London, 1997). For many
years it has been accepted that in particular the original project objectives, which is
the expected performance, should be mapped against the actual project performance.
Perhaps more critical is that the original project objectives of a project are a reflection
of the client organizational objectives. The client’s organizational objectives are
aligned to their values. The organizational values are fundamentally associated with
organizational culture. The client organizational culture on international projects is
made up of three key dimensions of culture: organizational and country and to a lesser
extent industry/professional/sector culture. For example, government clients (public
sector) often collectively are considered to have particular cultures however, even
within that client sector some particular organisations may have different
characteristics. Some government agencies can be considered more aggressive, more
risk averse and/or more conservative than others.
The design and construction processes on international projects are a result of various
systems in place. In many cases countries have unique systems particular to that
country. Therefore on an international project there could be numerous organisations
originating from various countries.
Finally a fourth dimension to culture may be the project culture. Project culture would
impact upon the process performance and ultimately perhaps building performance.
Project culture is created by the mix of all other forms of culture and the
interrelationships between the cultural forms. For example, the interaction of a
number of different organisations who are geographically dispersed creates a unique
project culture. The interaction of organisations from different professional
dispositions also can create a unique project culture. Figure 1.0 summarises key
concepts related to construction performance in terms of international projects and the
various types of influencing cultures.
Culture is an important element to construction performance. Culture includes the
shared beliefs, traditions, values and customs of a group of connected individuals. In
the context of international projects the introduction of various forms and types of
culture could lead to difficulties in achieving integration of shared understanding and
common goals, hence affecting project performance. There are numerous ways in
which cultural differences in the internationalisation process may impact upon project
performance. However, various innovative strategies exist for organisations managing
culture on a project basis and managing for culture on an organizational level to
improve construction performance and this includes:
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• Developing social, business and professional networks across
organisations/professions and countries (social)
• Achieving market credibility through artefacts (physical & non-physical),
which includes highly regarded buildings, educational credentials and
embedded ‘culture’ (cultural)
• Accumulating knowledge base in terms of ideas, market knowledge and
practices/experiences (intellectual)
These three themes can be considered within Bourdieu’s concepts of a firm’s
‘capital’. The following section discusses the types of capital.
PROCESS
BUILDING
Construction
performance
Quality
Expected performance
vs actual performance
Client and User
satisfaction
Organisational and
project objectives
Values & culture
Project
Country A
Client host
Country B
Firm System B
System A
Culture B
Culture A
Country
Culture B
Organisation &
professional
cultures B
Country
Culture A
Organisation &
professional
cultures B
Figure 1.0: Construction Performance related to culture
NON-ECONOMIC CAPITAL
As indicated by London and Chen (2004) the types of capital that have been adopted
for this study in relation to Bourdieu’s suggestion of the four capital (economic,
symbolic, social and cultural) are financial, social, cultural and intellectual capital.
Bourdieu relates symbolic capital to power accumulation of groups or individuals to
define ‘who or what is most ‘legitimate’ in various societies and societal groups’
(Skaates et al, 2002). Skaates et al however suggested that such a definition of
symbolic capital is highly complex in the field of architecture and ‘difficult to capture
over the span of a mere decade’ (Stevens, 1998 as cited by Skaates et al, 2002). As the
present study is related to design firms within the construction industry, the high level
of diversity further compounds the complexity. Therefore symbolic capital has been
excluded and replaced with intellectual capital, which is of more relevance to the
study of internationalisation of design firms.
Social capital (SC) is the creation of personal relationships and networks based on
trust built over time. Members of a social network interact and gain through a
symbiotic relationship between each other. Working in a network helps spread risks
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and marketing costs. Social capital has relevance for the project team networks and
the organisation and client networks. According to Cohen and Prusak (2001, p4):
‘Social capital consists of the stock of active connections among people: the trust, mutual
understanding, and shared values and behaviours that bind the members of human networks and
communities and make cooperative action possible’
In a study on the internationalisation of Danish architectural firms Skaates et al (2002)
saw national construction industries as milieus or groups characterised by
geographical areas which had a network of actors with a set of ‘rules and norms
regulating the interactions between these actors’ (Cova and Ghauri, 1996). Consistent
with Cohen and Prusak’s definition, Skaates et al (2002) defined social capital as
recognition by other actors within the construction industry that the firm is a member
of ‘their inner circle due to one’s dispositions…or one’s way of working and ‘tacit
knowledge’.
Cultural capital (CC) entails physical ‘dispositions’ such as ‘building visible
buildings, winning design competitions, or obtaining important tenders’ (Skaates et al,
2002). These concepts are premised on the reputation of the firm in that the success of
marketing architectural services ‘depends upon the firm’s ability to sell and deliver a
credible promise’ (Lowendahl, 2000).
It differs from social capital in that it is the high profile of a firm’s projects that marks
the firm as having acquired a high level of cultural capital. Therefore, cultural capital
is the firm’s highly regarded past achievements that create trust and credibility; which
is different from trust that is formed through relationships or networks, which is social
capital. A firm acquires cultural capital through building successful buildings, thus
creating a presence in the foreign market. It can be likened to achieving a foothold in
a market, where success often breeds further success. More and more clients are
relying on instantaneous recognition in their decision-making process when
employing design firms and such recognition is gained through the creation of
reputation. A firm’s reputation is earned through a high level of cultural capital.
Bourdieu however states that cultural capital is not only limited to such ‘physical
dispositions’, whereby it also takes form in another dimension as the embedded
‘culture’ of a firm. ‘…it refers to the ensemble of cultivated dispositions that are
internalized by the individual through socialization and that constitute schemes of
appreciation and understanding’ (Swartz, 1997). Therefore a firm is also able to
accumulate its cultural capital by employing staff of the desired ‘culture’
Intellectual capital (IC) is an organisation’s collective skills, experience,
competences and knowledge and is critical to the sustainability of firms, particularly
in international markets. According to Stewart (1998), the strength of a firm lies
within its intangible assets, where he posits that intellectual capital of a firm is ‘the
talents of its people, the efficacy of its management systems and the character of its
relationships to its customers’.
The understanding of cultural issues and market knowledge is one of the key success
factors for firms when exporting their services (Draganich, 1998). A firm’s market
knowledge and understanding of cultural issues typically arises from individual
experiences with particular markets, clients and projects. General knowledge of a
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foreign market and the client is improved through successive completion of projects
and these experiences create tacit knowledge. Such tacit knowledge will contribute
towards achieving increased project performance.
A firm can also acquire its intellectual capital by establishing skills and niche
expertise through the employment of specific skilled staff members, which would
enable the firm to respond to client’s requirements more efficiently. A firm’s skill
specialisation which is accumulated through its involvement in previous projects and
employment and can contribute to winning further projects as clients value a firm’s
expertise to deliver satisfying results.
MODEL FOR ACCUMULATION, EXCHANGE AND
INVESTMENT OF NON-ECONOMIC CAPITAL
There are three types of non-economic capital that are important for the performance
on international projects including; social, intellectual and cultural. Financial capital is
significant to all three types of non-economic capital as ultimately all three types are
aimed at creating financial capital for the firm (refer to Figure 1.1). The notion that
“economic capital is at the root of all other types of capital” and that these other types
are in fact “transformed, disguised and forms of economic capital” is not a new
concept at all (Bourdieu, 1991). For example, economic capital makes possible the
investment in cultural capital by making possible the investment of time needed to
accumulate cultural capital.
Social
Cultural
Inte llec tual
Financial
Figure 1.1: Cultural, intellectual and social capital interactions to support financial capital
The relationships between cultural, social and intellectual capital are complex
(Bourdieu, 1987). Capital exists in a variety of forms or states. Bourdieu (1987)
suggested that these primary relationships are guided by an understanding of three
concepts; investment, exchange and accumulation of capital. The investment of a
particular type of capital can be aimed at the exchange of capital in order to
accumulate capital. Alternatively the accumulation of a particular type of capital may
be so that an exchange of another type of capital can take place.
The interrelationships between the all types of capital is critical towards achieving
project performance in terms of both building performance and process performance.
The performance is measured by achievement of project objectives which should
relate to client organisational objectives. The process performance is primarily
measured by efficiency and effectiveness considerations. To achieve efficiencies and
effectiveness the working relationships between project team members is often
critical. The development and enhancement of social and business relationships is
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affected by social capital. Social capital can also be enhanced by an effective
exchange of intellectual capital.
Performance is partially related to the development of clear client organisational
objectives and further to that project organisational objectives. This is impacted by an
understanding of the values of the organisation and to understand values an
understanding of the client’s culture is critical. Culture is of course both country and
organisational and ultimately there is a project culture. It is not difficult to see that
social and cultural capital can perhaps play a significant role in project performance.
Clearly intellectual capital is critical to the execution of a project. The concept of
intellectual capital is not new either and the study of knowledge management is quite
a large field and much has been written on this concept.
Figure 1.3 summarises the conceptual model of construction performance related to
types and states of capital. Perhaps what is important at this stage in this particular
study is the drawing together of the forms of capital and the study of their
interrelationships in terms of their various states.
Social
Cultural
Intellectual
Financial
Exchanged
Invested
Accumulated
Client Organisational
objectives
Project objectives
Process
PROJECT PERFORMANCE
STATES OF CAPITAL
TYPES OF CAPITAL
Figure 1.3: Types and state of capital related to construction performance
At this stage we can speculate on anticipated interrelationships between the various
forms of non-economic capital. However, it is an empirical study that will identify
and validate the merit of this theory related to how firms work successfully on
international projects. The empirical orientation is certainly found in Bourdieu’s work
where only empirical research can determine the key forms of capital and their
interrelationships in a specific social space (Swartz, 1997). The social space described
in this study is that occupied by construction design firms and their international
clients. Understanding these complex relationships, according to Swartz (1997, p75),
has been an important area of study in Bourdieu’s sociology, that is, “:.. the study of
how and under what conditions individuals and groups employ strategies of capital
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accumulating, investing and converting various kinds of capital in order to maintain
or enhance their positions in the social order …”
The aim of this paper is to describe preliminary results of a study that was to answer
the research question: “How do successful Australian construction design firms
develop long term sustainable economic business models?” The premise for the study
was that long term sustainability was achieved through the complex interaction
between various forms of capital. The identifying and mapping various instances of
capital and its accumulation, investment and exchange or conversion was key to
developing the sustainable economic business model for internationalisation.
STUDY
A case study methodology is used through the study of three design firms who have
been successful in entering and achieving some measure of sustainability in
international markets. Two architectural design consultant firms and one design and
construct firm are investigated in-depth to describe and explain how successful design
firms internationalise and create successful business models. A construction design
firm has been defined as a firm that engages in design of some form in relation to the
construction project; for example, consultants who design; contractors who may
design and construct and/or manufacturers who design a product.
Each organisation makes up one case study. There are three main stages to developing
an understanding of the nature of the firms’ internationalisation process and its
success. The single most important source of data for this research is in-depth,
personal interviews.
• Stage 1: 3 Interviews with Senior Managers for approximately 60-90 minutes
to clarify why the organisation is working in international markets and the
context with which the organisation undertakes the work, to explain policies,
procedures and performance measurement related to international work and to
identify from their perspective the difficulties and successful strategies for
various markets
• Stage 2: 4 Interviews with Design Team Staff who have worked on any
international project to map the project processes and identify difficulties
experienced by participants on projects and to gain insight into the staff’s
experiences on international projects with a range of success levels
Descriptions of the following concepts have been completed for each case:
• organisation’s experiential and market knowledge & design management,
policy and procedures
• internationalisation processes and project processes
• successful strategies and inhibitors to success
The analytical methodology has been drawn primarily from the research perspective
of grounded theory (Strauss and Corbin 1990, 1994, and Glaser 1992).This project
was developed as exploratory and inductive, and in response to this concern grounded
theory was used as a means of data organisation and theory generation, particularly
useful in its capacity for providing structured guidelines for conceptual relationships
and explanatory frameworks (Charmaz 2000). In keeping with the methodological
framework of case studies, grounded theory assumes the individual case to be an
autonomous unit of action and therefore an independent unit of investigation.
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Each case study will be analysed as an independent unit and subjected to two stages
of coding and analysis. Stage 1: ‘open coding’ involves the loose association of
themes and concepts as revealed by the individual transcripts. Stage 2: ‘axial coding’
involves the arrangement of data according to dominant themes that have emerged.
Eventually this mode of analysis will be extended to comparative analysis between
case studies in order to ascertain common themes and irregularities and to enhance the
potential for generalisation of the resultant theory.
PRELIMINARY RESULTS & DISCUSSION
The dynamics of capital accumulation, exchange and investment appears to play a
significant role in contributing to the firm’s international success. This can be seen in
many occasions throughout the firm’s internationalisation process. Some observations
of the strategies undertaken in practice of the interrelationships between the capital to
improve project performance are discussed to validate this point.
Project & process performance: exchange of SC & CC
The firm’s conscious decision to employ staff with good language skills and cultural
understanding implies the firm’s recognition of the importance of the investment of
cultural and intellectual capital and the dynamics associated with it:
‘We have partners there who are bilingual, or multilingual or have been educated here. So they’re
local operators who speak English very well and have the same culture as the people who grew up
there because their networks will allow. So they’re kind of I guess super proxies in a sense that they’re
not just our representatives but they’re also using us in a parasitic relationship. They use us to get
jobs and we use them to get jobs. So they not only trust us to work, I guess it’s not just trust it’s mutual
obligation’ (Senior partner)
In doing so the firm not only accumulated its cultural and intellectual capital, it was
also simultaneously accepted and linked into the social and business networks of these
personnel whereby the exchange of social capital took place. The relationship that
exists is interesting in that both the firm and individual personnel or ‘super proxies’
play a mutual role whereby both are ‘obliged’ to exchange their social capital to
obtain and win projects from the network. This efficient form of working relationship
and effective exchange of social capital contributes immensely to project
performance.
The firm also appears to understand and is able to contextualize the various forms of
capital into its internationalisation strategy to a certain degree. This is shown in the
firm’s decision to invite a Senior Partner with a strong background in urban design
into the firm, which is clearly well aligned with the firm’s internationalisation strategy
to diversify its services to include the area of urban design.
‘…I’ve got a strong background in teaching actually urban design, a number of the staff here were my
students, so at some point they approached me and said would I be dumb enough to join them and I
said yes at the time, three years ago. So I think that we saw a match between my interests in urban
design and strategy and their interest in delivering services in the area’ (Senior Partner)
The invitation, which was enabled by the firm’s existing social network provided the
opportunity for the firm to further accumulate its social, cultural and intellectual
capital and diversify its services. The firm is now able to use or exchange its cultural
capital by marketing the firm as one that has the niche specialisation in urban design.
Project performance is increased with the firm’s clear understanding of client
requirements and ability to execute projects within the area of urban design.
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Project performance: accumulation of SC & CC to exchange IC
At present the firm appears to be operating under limited resources and is perhaps
unable to place staff at ideal positions. Consequently, there are some areas in the
internationalisation process, which may not necessarily be functioning at the optimum
level hence affecting project performances. For example, a recurring issue within the
firm is the briefing process that involves the understanding and translating of the
international client’s requirements. Communication is a critical component of the
briefing process and therefore there is a need to ensure that the staff member
responsible for the information flow of international projects has the necessary skills
or intellectual capital required.
The main mentions of intellectual capital revolved around the management of people
within the firm and positions between firms such as translators regarding both niche
specialisation and the need of matching people with the right skills to the right tasks.
This was especially important for people occupying essential positions in the internal
and external flows of information.
‘I can’t understand a thing that the client’s saying of course because they don’t speak English and if
they did, English doesn’t really make much sense, you certainly don’t get enough out of it, you can
understand what they’re saying but you don’t get the true meaning. So I tend to rely on particularly
the third party and I’ve mentioned this person before and that person then will give me a delivery of a
brief but what I do is I tend to then talk about things with them to understand a lot more about what it
is we’re actually designing.’(Senior partner)
The dependence on the third party in relation to the development of the design brief
makes this relationship highly significant to the firm. The third party occupies an
essential position in the flow of information between the client and firm as both
translator in the linguistic sense and interpreter in the cultural sense. It is this cultural
interpretation – the translation of the totality of meaning rather than simply the
surface level meaning carried by the strict definition of language. The importance of
communicating at this deeper level and receiving this totality of meaning is
recognised by the firm:
‘It’s so important to take somebody, not just an interpreter, it can be an absolute disaster and I’ve
done that, to go with an interpreter that actually just gives the words back in the other languages, it’s a
disaster. The intent’s never there, the message doesn’t get across, it’s very confused and we never
really know where we stand’ (Senior partner).
Accordingly an understanding of cultural nuance and subtlety, in addition to a
linguistic capacity for understanding, is an essential form of intellectual capital. This
form of intellectual capital is most functional when it is based on an awareness of
both countries and business cultures:
‘It’s skill based but it’s also understanding the other entities and business. I mean it’s not just about
doing the everyday work it’s about understanding how we do business.‘ (Senior Partner)
The firm recognises the potential ambiguity surrounding the interpretation of meaning
from Chinese to Australian. These different interpretations have the potential to be
‘slightly different’ with ‘slightly different nuances’, and are possibly affected by both
personal interpretation and linguistic limits. The first of which is directly related to
conceptual continuity, the second is related to wider cultural factors, like whether
direct and precise translations of some terms, words and concepts even exist in the
other language. In order to mitigate as far as possible the potential for
misinterpretation by a third party upon whom the firm depends considerably, the
accumulation of this form of intellectual capital (within this case study) tends to be
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related to the building of alliances, and thus to the development of strong business
networks. The element of trust that must be placed in the third party as to their
capacity to accurately deliver the required level of understanding to the firm has been
developed over a long period of time as partners. The strength of this relationship can
be considered instrumental to the achievements of the firm’s desired outcomes and in
maintaining sustainable business in international markets.
‘It needs to be a longer association with somebody, it needs to be that sort of working together almost
in the same team and this particular person that we work with in the joint venture, it’s a very, very
strong relationship and that’s why I think it’s been very successful.’ (Senior Partner).
Thus the management of intellectual capital, and in particular the matching of niche
specialisations to the right tasks when it relates to putting people capable of
demonstrating a two-way and rich understanding of culture is of paramount
importance. Furthermore, when there is reliance on third parties to fill this cross-
cultural communication niche, the development of social networks and the
development of alliances and close long-term partnerships is central in the
development of trust.
In this example it has been an instance of social capital in the form of business
relationships characterised by a high level of mutual trust, that has been exchanged for
intellectual capital consisting of the required bi-lingual capacity and a high level of bi-
cultural understanding in order to translate the deeper aspects of meaning between
client and firm. The effect of this exchange is the eventual accumulation of further
cultural capital that results from the development of the firm’s reputation as a
business capable of understanding delivering accurately on the client’s desires and
needs. This interrelationship between the capital is highly significant for the
improvement of project performance in that the accurate delivery of clients needs in
relation to its organisational objectives is critical to project performance.
Process performance: accumulating CC to exchange SC
Another important theme emerging from the analysis is the importance of socialising
with clients in order to build social capital as formal and informal social networks.
The social environment provides a number of challenges related to developing and
exhibiting a degree of cultural understanding. There is a close relationship between
the development of social capital in the form of recognised membership in particular
social milieus or business cliques and the capacity to demonstrate a cultural
awareness, understanding and sensibility. In a social setting, these forms of cultural
capital frequently involve partaking in cultural practices and activities that are
simultaneously familiar in content – they revolve around eating, drinking and
associated activities and are yet foreign in context.
As a particular form of cross-cultural relationship, the informal social occasion has
certain dynamics that if understood, appear to greatly enhance the opportunities for
converting cultural capital into useable social capital. Firstly, in dealing with
internationalisation into China the client’s local culture is on show. There is an
interest for the host party to package and present their culture in the best light, and
associated with this is a desire to impress using unique and valued aspects of their
culture. This environment can create situations of conflict for the guest individual,
who must find ways to demonstrate an appreciation for the host culture, and yet avoid
uncomfortable situations and offending the clients. For example:
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‘I’ve dealt with Korean clients for example who’ve wanted me to sing and I don’t sing. The Koreans
do pride themselves on the fact that they can sing and they do like to show that off and I don’t sing and
I don’t like to show it off’ (Senior partner)
Of secondary importance is thus finding alternative ways to relate. In the absence of
direct communication this must often take the form of involvement in activities to
demonstrate a willingness to experience the host culture and openness to its cultural
value. Cultural capital in the form of an appreciation of the host country humour can
be invaluable for both understanding the nuances of informal social interaction and
for avoiding potentially difficult situations. Similarly, the extent to which the clients
have an appreciation for Australian culture can largely determine the capacity to
exchange cultural capital into useable social capital. Cross cultural communication is
a two-way interactive process.
Interestingly, a willingness to be open to what the ‘other’ culture has to offer, while
no doubt a benefit, is probably not as crucial a capacity to display an awareness of
different dimensions of that culture, and as such cultural capital is a precious
commodity in the negotiation of informal-social interactions. There can be a certain
amount of pressure or expectation to partake in activities that have the potential to
bridge the cultural divide. As stated above these can often be familiar in general
content but presented in a totally foreign way. For example:
‘You’ve got to be very clear because the clients would order the most bizarre things to eat because
that’s the way they want to impress you and the most expensive things on the menu are things you
probably never want to touch, you know things that well personally I draw the line at.’ (Senior
Partner)
Interestingly, these situations provide a potential opportunity for demonstrating
cultural awareness and exchanging it for social capital. While demonstrating openness
to the host culture in the form of trying out various exotic culinary delights and
cultural activities is valuable, one interviewee demonstrated how a knowledge of (and
taste for) the less exotic fare known as ‘peasant food’ demonstrated to the clients an
appreciation of culture that could never have been gained by trying dish after dish of
exotic food.
‘So there’s a degree of them wanting to impress you and you don’t want to let them down, but the way
I’ve dealt with that it’s quite interesting the response I’ve had, is that I actually prefer the peasant
food. I’ve learned so much about the food through this other person that I go around with, they’re
actually so impressed because that’s what they want as well and the whole thing gets much more
relaxed and we get a much better atmosphere out of that than them thinking they have to impress me.’
(Senior Partner).
On the other hand there are certain cultural practices that are familiar in context and
content no matter what country one finds oneself. These can be utilised as bonding
agents in forming social networks, and are often understood as essential steps in the
development of close business partnerships and networks:
‘Then there’s also in China, there’s a degree of expectation as well to do certain things and I’ve had
to have drinking competitions with clients and they love it and I’ve got one client for example who
because I won the competition initially, he chases me all over China to re-have the re-match’ (Senior
Partner)
The importance of all these examples of different challenges within the informal-
social interaction is that they provide the opportunities for both sides of the potential
partnerships to get to know the other outside of the often rigid restraints of the formal
business relationship. For the effective utilisation of the potential of the various forms
of capital is the need for a greater understanding of the different roles of capital
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accumulation, investment and exchange as such interrelationships are critical towards
achieving improved project performance both in terms of building and process
performance.
CONCLUSION
This paper presented preliminary results for one case study. As such the capacity for
generalisation from the data is limited. However, it served to highlight and make
explicit the significance of the interrelationships between the non-economic capital.
The non-economic capital include social, cultural and intellectual capital and the
accumulation, exchange and investment of each type of capital represents an ongoing
ability by the firm to improve project performance. The preliminary findings indicate
that central to a firm’s capacity for improved performance is the extent to which it can
manage difficulties arising from cross cultural communication, in order to be
international, and to still be effective in understanding the client’s organisational goals
and desires and delivering the highest quality of product in response.
Cross cultural communication was identified as the primary barrier confronting design
firm’s internationalisation, and as occurring in three interrelating contexts:
• between national cultures (language, cultural understandings, social customs)
• between corporate business cultures (management styles, processes and
procedures)
• between project cultures (fields of expertise, niche specialisation and
conceptual compatibility and continuity).
The findings demonstrated the extent to which social, cultural and intellectual capital
interact to influence the firm’s sustainable business practices in international
contexts. It looked at
• the importance of social capital in developing alliances, partnerships and
utilising formal and informal social networks.
• the role of cultural capital in the informal social interaction was highly
important in allowing trust to develop in social networks. Socialising with
clients and partners also provided significant opportunities for demonstrating
cultural awareness and understanding and thus converting cultural capital into
social capital.
• the role of intellectual capital and niche specialisation in people management.
It identified centrally important positions in internal and external information
flows and particularly in relation to different perceptions held by senior
partners and design staff regarding the effectiveness of the briefing process.
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