MGTO 630BManaging People Globally for Competitive Advantage

Transferring Management Systems: Learning in IJVsTransferring Management Systems: Learning in IJVsSaturday, March 1, 2003Saturday, March 1, 2003

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By the end of today’s class, you should be able to: Evaluate the factors

contributing to knowledge creation / learning in IJVs

Evaluate the impact of culture on IJV learning / performance

Explain the factors that contribute to differentiation (localization) / integration (globalization) of HRM practices

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A Re-definition of Global HRM The strategic, policy, and practical

issues related to how MNEs of any type or size manage their human resources, including their approaches to balancing issues of differentiating and integration (duality theory) while enhancing the flow of knowledge transfer within the organization – Brewester, 2002

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Why are alliances important? Resource-Based View of the Firm

Knowledge basis of sustainable advantage / firm growth Firms able to develop, transfer and exploit knowledge

most likely to succeed No organization can develop within its boundaries

all critical knowledge needed to prosper and grow Original knowledge sources for most critical

inventions at Du Pont (1920 to 1950) came from outside company: suppliers, buyers, universities, consultants, government agencies, competitors

Access to broader knowledge bases through learning increases firm flexibility – external capabilities embedded in inter-firm relationships ALLIANCES

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Figure 5-2. Motivation for International Alliances

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How does learning occur in IJVs?

Organizational Level

Individual Level

FOREIGN INVESTOR

LOCAL PARTNER

WHOLLY OWNEDSUBSIDIARY vs JV

ACQUISITION GREENFIELDVS.

EXPATRIATE MANAGER

LOCALMANAGER

Knowledge

CommitmentOf humanresources Industrial

ExperienceOrganizationalUnlearning

LearningIntent &Effort

OverseasTraining

Tsang, E. W. K. (2001). Managerial learning in foreign-investedenterprises in China. Management International Review, 41, 29-51.

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Figure 5-3. Obstacles to Learning in International Strategic Alliances

Source: Adapted from V. Pucik, “Strategic Alliances, Organizational Learning, andcompetitive Advantage: The HRM Agenda,” Human Resource Management 27 (1988): 77-93.

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Types of knowledge acquired through alliances Country specific

Local government Labour force Competence with accessing

local markets / distribution channels

Firm specific technologies

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What influences firms’ capabilities to learn / transfer knowledge? Let’s see what insights we

can gain from “American Diagnostics Systems”

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What influences firms’ capabilities to learn / transfer knowledge? Cultural distance

US firms learned less from alliances with non-US firms

Governance structure (hierarchy, market, alliance) of firm Hierarchy > alliance > market

Openness or protectiveness of partners Characteristics of knowledge transferred Country of organization

Japanese firms learn the most from alliances with firms in other countries; but, less willing to share expertise compared with firms from other countries (e.g., U.S. MNEs localize management asap; Japanese keep Japanese in top position)

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Impact of Culture on IJV Knowledge Transfer / Performance What matters more: National

culture (e.g., Thailand), regional culture (Bangkok) or organizational culture (Ferodo)?

Let’s see what insights we can gain from the Ferodo case . . .

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Thailand: Cultural values that influence Thai workers Ego (face saving and criticism

avoidance) Grateful (paternalistic) relationships

- hierarchy Smooth interpersonal relationships

(harmony) Interdependence (group orientation) Fun (sanuk) / pleasure (mai pen rai:

never mind / don’t worry)

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Acknowledged & Accepted Hierarchy

ROYAL FAMILY

Titled citizensLarge business families, prominent civil

servants, military leaders

Professional bureaucrats, managerial staff, other commercial workers

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Buddhism Thai Respect for Hierarchy Karma

Everything is pre-determined or destined One’s position in society is static Social mobility not available / not

pursued Karuna

Quality of being merciful and kind Harmonious relationships

Higher status person should behave benevolently toward lower status individual Boss should forgive subordinate who makes mistakes

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Hierarchy Behavior

Deep wai (deep bow of respect) to foreign managers

Proper dress, behavior and customs Senior managers wear suits with jackets to

meetings; Subordinates wear only shirts and ties minus jacket

On nom thom ton (lower oneself) Employee allows boss to look authoritative and

knowledgeable even when s/he knows what is being discussed

Power-distance Junior people don’t speak up; tendency to “beat

about the bush” when problems arise because boss should not be disturbed

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Initiative / Motivation

Initiative Not encouraged to make mistakes / take

initiative Boss must take initiative, is paid to do so

Motivation Company image and prestige Salary rises, bonuses Convenience at work Snacks and food Security Job title

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Another view of initiative/ motivation: Harmony Kreng jai

Restrain self-interest or desire to maintain harmony Comply with requests of others BUT

Do not communicate disagreement or dissatisfaction

Do not assert true feelings or opinions Do not participate in evaluation of

situation / problem Do not admit lack of understanding or

mistake

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Saving Face Harmony

Sia nah Avoid situations of potential

embarrassment or disadvantage Create situations where no one

is embarrassed, disadvantaged or at fault

BUT Needs of individual constrained

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Career Tactics use by Thai Managers (Comparison with those employed by Thai versus US firms in Thailand)CAREER TACTIC Thai

FirmsU.S. Firms

Work hard 4.02 4.48Learn more 4.26 4.76Become indispensable 4.32 3.00Get a second job 2.41 1.83Create a new job 3.85 2.52Get more control over my job

3.81 3.31

Do my job well 3.25 4.58Let others recognize me 3.23 2.52Assertively ask 2.57 3.07Exchange favors (guanxi) 3.79 3.00