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ABSTRACT
Industrial globalization presents the need for companies to expand into new territories world-wide. Research has attributed difficulties in doing so largely to problems and difficulties in the process of knowledge transfer, and has recently pinpointed the essential role of implementing knowledge from other parts of the world, and the learning required to do so. An ethos of knowledge transfer, implementation and learning are needed for international business success. Chinese multinational companies are new and significant phenomena, are newly internationalizing, and are culturally ill-disposed to such an ethos. This study will employ longitudinal ethnographic research to identify if and how they reconcile this conundrum, to advance understanding concerning the link between knowledge and learning and international business development.
BACKGROUND
The knowledge source, the knowledge transfer process, and the knowledge recipient have
been categorized as the three principle elements of a knowledge-management system (Wiig，
1995). As knowledge retention and distribution have always been the concern of organizations and their managers, sophisticated techniques and systems have been designed for managing the knowledge source and knowledge transfer (Davenport and Prusak, 1998; Wiig, 1995). One of the main recent streams of research in international business is concerned with knowledge-management within multinational corporations, especially knowledge transfer between parent firm and subsidiaries. For these firms, and for research on them, cross-border knowledge transfer and implementation have become hot topics.
For most multinational companies, transferring knowledge is important for self-improvement and development, both in home and in host markets. Knowledge transfer is a circular process; MNCs gather knowledge from business partners, and then apply it back to doing business with these or other business partners. In this process, knowledge application (which can be called as ‘implementation’) plays an essential role; it determines the effectiveness of knowledge transfer, without which, MNCs cannot develop and possibly cannot survive in foreign markets. Thus, the implementation of transferred knowledge should be a focus of attention; especially for companies dealing with multinational markets.
Many firms in the People’s Republic of China have, in recent years, grown so rapidly that
they are now beginning to become MNCs. However, their complex culture background, their different political environment and their firms’ comparatively undeveloped management skills and technologies bring huge challenges for their internationalization. These aspects also represent obstacles for foreign companies who are trying to do business with Chinese MNCs. These concerns lead to a comprehensive investigation of the factors, and the management techniques that influence the implementation of international business knowledge transfer within the Chinese-Western context.
LITERATURE REVIEW
Knowledge Transfer in MNCs
Buckley and Casson (1976) advocated the very existence of a MNC lies in its ability to internalize externalities by putting together resources and activities at a more efficient rate than markets do. According to Kogut and Zander (1993), MNCs were defined as a social community in which knowledge exists among cooperating members; the productive knowledge of this community was defined as competitive advantage.
Nowadays MNCs are widely viewed as the most efficient mechanisms for the international transfer of tacit knowledge; based on this advantage, MNCs are able to create and dynamically transform networks of information involving multi-location data-inputs, centralize and disperse information processing and constantly evolve modes of data analysis and knowledge-processing capabilities (Gupta and Govindarajan, 1996).
The importance of knowledge transfer derives from the increasing globalization and convergence of industry, the challenging environment that forces companies to expand into new markets. New markets normally imply new customers, competitors, stakeholders, and business practices, whose effective management depends on appropriate organizational knowledge and skills (Prusak, 1998; Riesenberger, 1998). Since a market entrant may not necessarily have these skills in-house, it must either develop them internally or acquire them externally by cooperating with or taking over other firms that possess them (Barney, 1999).
On one hand, knowledge transfer is one kind of ‘knowledge sharing’, a natural product of
learning experiences from partners, but also making them an element of a new way of managing and operating. Learning to create new knowledge depends on user firms’ dynamic capabilities, that subset of capabilities which allows the user firm to reconfigure, reintegrate and transform its resources (in this case, knowledge resource) into new competencies and competitive advantages (Teece et al., 1997).
Though much attention as been given to transferring knowledge, researchers are now finding that without implementation, the simple transferring process can be meaningless. In another words, implementation is the ultimate objective of knowledge transfer, this involving action.
Context of the application
3. Planning of knowledge
Managing unintended consequences
- Acting
Institutionalizing
Context of the source
of knowledge
- Generating
- Gathering
Identifying local knowledge
Valuing another culture Coping with ambiguity
Listening and observing
Translating knowledge
Figure 1: Cross-cultural knowledge transfer in International Mergers and Alliances
Research Question
The capabilities and conditions of successful knowledge transfer have been viewed from various contexts and perspectives by international researches, but there are few studies of the implementation of knowledge transfer, especially the international business knowledge transfer between MNCs. Here I will ask how companies connect the external knowledge transfer with internal knowledge transfer and knowledge learning. Specifically, how do they translate knowledge from one subsidiary to another, how do they reorganize it, adapt it and institutionalize it, and how do they develop an organizational learning cycle. It therefore uses the two different perspectives of knowledge transfer implementation, that of the knowledge transfer and that of knowledge learning. It ultimately aims to provide references for improving management practice concerning knowledge transfer and learning in international business.
This research will investigate and analyze the international business knowledge transfer and implementation within Chinese MNCs. Chinese MNCs are a new phenomenon, and being novices in the international business area, are still in the initial stages of multinationalization process from a knowledge transfer point of view. Their lack of global experience in dealing with multinational business means they often do not realize the need for a different management approach and mentality (Li, 2006). They are highly influenced by the traditional Chinese culture dimension, which shapes operations into a conservative pattern with top-down communication styles, which may limit knowledge flows at different levels.
Common and different knowledge transfer features will be identified in Chinese MNCs, and how these features influence the development of Chinese MNCs will be investigated. These issues will be critically analyzed to compare the observed practice in Chinese MNCs with theoretical developments and with the results of earlier studies.
Methodology
Based on earlier studies, knowledge transfer heavy relies on the capability of managers; their flexibility and learning capability influences the transfer process, so talking with managers directly is necessary to understand the process of knowledge transfer, implementation and
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