Derrick Quals

Ryan Huelsmann

Dr. Will

Int. Business

Cultural Conflicts: The Corning-VITRO Joint Venture

According to Webster’s Online Dictionary, a joint venture is “an enterprise in which two

or more companies enter into a temporary partnership”. What this means is that when two

different companies decide to cooperate together in creating one new product or organization,

they enter into a joint venture. Many foreign and domestic corporations have teamed together

for this purpose in efforts to capitalize on an untouched market or increase the net sales and

profit of both companies. This was the case of Corning Incorporated and Vitrocrisa. Corning, a

U.S glass and ceramics manufacturer, teamed up with Mexican owned glass processing

company Vitrocrisa. With Corning’s knowledge in ceramics combined with Vitro’s knowledge in

glass manufacturing, they combined to create Corning- Vitro’s oven ready cooking pots. What

was unique about this 1992 joint venture was not only the new product they produced but how

it “helped double trade between the U.S and Mexico eventhough NAFTA faced strong

opposition from congress over environmental and labor concerns” (Juanita Darling, Los Angeles

Times). Although this joint venture between these two major companies seemed like a match

made in heaven, both companies soon found out how their cultural differences would lead to

their eventual split.

Corning Inc. is a glass and ceramics company which was originated and is stationed in

the United States. Corning Inc. declares themselves as the world leaders in glass and ceramics,

with over 150 years of materials science and process engineering experience. In its earlier

years, Corning was widely known for their oven ready cookware and their previous success in

globalization and joint ventures. Corning’s first joint venture involved a French glassmaking

company named St. Gobain in the 1920’s. Together they created Pyrex cookware. At the time of

their joint venture with Vitro, Corning was the innovative leader in foreign alliances for more

than seventy three years. During that time period they had almost 50 joint ventures with only 9

being unsuccessful.

Vitrocrisa, or Vitro for short, concentrates on glass manufacturing and specializes in

beverage bottling products. Vitro was started in 1909 in Monterrey, Mexico and at the time of

their partnership with Corning, they were one of the world’s largest glass manufacturers.

Although they specialized in drink-ware from bottles to champagne glasses, they also

specialized in the manufacturing of automobile windshields, fragrance bottles, and even

washing machines. Vitro was also the leader in glass manufacturing in Mexico.

When Corning saw an opportunity to expand their expertise in a product market they

saw another chance in which they could team up with another organization of similar product

specialization. Corning also felt that they would also be capitalizing on NAFTA by accessing the

Mexican market. This eventually led to their $130 million joint venture with Vitro. Both

companies saw this as an extremely great opportunity since they felt that both of their

companies shared similarities in history, customer orientated philosophies, goals, and

objectives. Their close relation in product specification led to the development of the Corning

Vitro Corporation’s 5- piece casserole set along with other related cookware products. This

alliance also caused a threat to other U.S companies that competed with Vitro. As Juanita

Darling of the Los Angeles Times wrote, “While Corning employees may not be hurt by this

particular alliance, the trade agreement could cost the jobs of workers at other U.S. companies

that compete directly with Vitro”. Little did they know how short-lived this partnership would

become and how a once great alliance, would deteriorate due to opposing clashes in corporate

culture and beliefs.

Hofstede studied cultural variances among other countries and grouped their values

across four dimensions: power distance, uncertainty avoidance, individualism or collectivism,

and masculine or feminine. By the studying the overall values of a country and where they fall

in those categories, one can almost get a feeling of how these cultural dimensions might affect

Corning’s and Vitro’s overall business practices. The first one involves power distance, which

examines how well the less powerful members of society accept that power is distributed

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unequally. The United States has a low power distance consisting of flatter and more

decentralized structures. In Corning’s case since it is located in the U.S., the people of the top

would let personnel from lower-levels in the organization make decisions or at the very least

listen to their input on decisions. However, Mexico has a high power distance, which means

that the people blindly obey orders and is very centralized. That means Vitro’s heads of the

corporation make all the decisions, and the bottom follows each order to the letter. Next on

Hofstede’s list is uncertainty avoidance, which reflects how likely they will take risks. America

has a low uncertainty avoidance, which means more willing to accept risks of the unknown,

while Mexico has high uncertainty avoidance, which means higher need for security before

taking certain risks. As a result, Corning has less managerial structure and has more managerial

risk taking on their part, while Vitro structures their organizational activities and takes fewer

managerial risks. After that, Hofstede examined how individualistic or collectivistic a country is.

For America’s Corning, they are high on the individual making them wealthier, having greater

individual initiative, and taking part in a Protestant work ethic focusing on individual needs,

while Mexico’s Vitro is higher on collectivist side resulting in poorer conditions, less individual

initiative, and a Catholic work ethic focusing on the group or family needs. Finally, Hofstede

discussed masculinity or felinity of countries. America, especially Corning, is masculine, which

means they are earning more stress and more focused on obtaining wealth, recognition, or

advancement. Basically, the people are always on the lookout for the next promotion or raise,

which is more easily achieved in low power distance nations because movement is easier.

However, Mexico and their company Vitro are more feminine, which means they are more

focused on cooperation, friendly atmosphere, and employment security. It is these aspects that

make the loyalty for the company to exist. Hofstede emphasized and categorized the

differences in culture between these two countries, but it is how these differences affected

their ability to manage and cooperate with each other that led to their imminent downfall.

As stated earlier, Hofstede pointed out the differences in their respective homelands,

and now let’s examine those differences and how they affected their management style.

Corning was decentralized, which meant that middle-level and lower-level managers were

involved in the decision making process. In addition, certain decisions, depending on the type

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such as distribution or consumer, the higher-ups would never know about it. The reasoning

behind this is that decisions could be made quickly, that it builds trust and increases

productivity amongst employees, and that people on the front-line know what is best in doing

their jobs better. Vitro, on the other hand, is very centralized and has all the top managers

make all important decisions. In Vitro’s case, middle-level managers were seldom asked to

contribute. Mr. Loose, a Corning chief executive, commented on this method of doing business

by stating “My experience on the Mexican side is that someone in the organization would have

a decision in mind, but then the decisions had to be kicked up a few levels.”

The next set of problems came from their informal and formal methods of doing

business. Corning was very informal, thus making it forward in most of its business practices,

forcing it to move quickly, and was very open to acknowledge problems in order to try to solve

them. However, Vitro has more of a formal method of doing business. It was family oriented,

very polite, believed to move slowly, bureaucratic and hierarchal, and unwilling to acknowledge

problems because they thought it was rude. These differences in management styles were

linked to a variety of conflicts in the joint venture.

Another source of trouble in this joint venture was that Corning encouraged

competition amongst its employees, while Vitro encouraged cooperation. Stemming from this

aspect of competition was the quick-action and aggressive sales. Also, Corning is always

attempting to be better either at selling, at producing, or at anything else that would help the

business thrive, and, as a result, Corning rewarded those individuals who came up with new

ideas, who brought in more sales, or who found a way to improve production by issuing raises,

bonuses, recognition, or promotion. Vitro encouraged cooperation amongst its people. This

means that Vitro has a slower, more deliberate approach to sales. To encourage this concept, it

rewarded the people more as a group. Now, since Vitro is in a closed economy in Mexico with

little competition, the company did not have the mindset for competition. Its main focus and

competitive advantage was product reliability. Corning has to be pushing for more sales,

pushing for better production, pushing for more ways to beat out their competitors. Vitro does

not have to be as cutthroat to achieve its goals in Mexico’s closed economy.

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Their attitudes toward risk also took effect and caused some arguments for this joint

venture. Corning was more open to risk because they know that in order to survive one has to

change and every change requires a little bit of risk, while Vitro was very averse to risk. One

issue that presented itself is that Corning wanted to distribute its products to Wal-mart and K-

Mart, but Vitro disagreed. Mentioned earlier was the fact about Vitro being in a closed

economy, and as a result, it was out of its element with Corning’s method of doing business.

Corning knew that by selling to these department stores the joint venture’s product would be

presented to a variety of consumers who would see the value of their work at an affordable

price, yet Vitro still found this move too risky.

Another difference these two organizations had was the degree of loyalty to the

company. Corning had low organizational loyalty, which meant that people identified more

with their occupation than their company, while Vitro had the opposite. Now, it is not being

said that Corning employees were not loyal at all, but if any of them was offered a job with

better pay and better benefits with another organization, he or she would take it. Vitro, on the

other hand, has very high organizational loyalty, which stems from their hierarchal and

bureaucratic structure and the loyalty to the family and its patrons. It was this high

organizational loyalty that Vitro was able to accomplish its method of decision-making,

cooperation, and formal methods of doing business that Corning practically conflicted with.

Without this fundamental key, none of those methods would be possible.

Finally, in 1994 the joint venture concluded, and the $130 million dollars to start the

venture was returned. To this day, Corning still investigates what it could have done differently.

Both Vitro and Corning continue to do business together, not as a joint venture, but as a

distribution of each other’s products. This case encourages other companies to obtain a full

background of culture and management practices before entering into joint ventures and to

either adapt to them or find common ground in those areas.

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