trans-specialization understanding & mobile alliances

Lew et al. 2016 - http://dx.doi.org/10.1057/jibs.2016.10 1

Trans-specialization understanding in international technology alliances: The influence of cultural distance

Lew, Yong Kyu, Rudolf R. Sinkovics, Mo Yamin, and Zaheer Khan (2016), "Trans-specialization understanding in international technology alliances: The influence of cultural distance," Journal of International Business Studies, 47 (5), 577-594. (DOI: 10.1057/jibs.2016.10). http://dx.doi.org/10.1057/jibs.2016.10

http://dx.doi.org/10.1057/jibs.2016.10



Authors


Authors — Lew, Sinkovics, Yamin, Khan

• Dr Yong Kyu Lew » Assistant Professor of International Business

Hankuk University of Foreign Studies, Seoul, Republic of [email protected]

yklew01.wix.com/yklew

• Prof Rudolf R. Sinkovics» Professor of International Business

The University of Manchester, Alliance Manchester Business [email protected] www.manchester.ac.uk/research/rudolf.sinkovics

• Prof Mo Yamin» Professor of International Business

The University of Manchester, Alliance Manchester Business [email protected] www.manchester.ac.uk/research/mo.yamin

• Dr Zaheer Khan» Assistant Professor in Strategy & International Business

The University of Sheffield, Sheffield University Management [email protected] www.sheffield.ac.uk/management/staff/zkhan

mailto:[email protected]

http://www.manchester.ac.uk/research/mo.yamin



http://www.manchester.ac.uk/research/rudolf.sinkovics




http://www.sheffield.ac.uk/management/staff/zkhan

Lew et al. 2016 - http://dx.doi.org/10.1057/jibs.2016.10

Agenda

Framing problems Research questions Modularity, relational governance, and CD and cooperation costs Hypotheses and conceptual model Methods Findings Discussion Implications Future research References Appendix

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Challenges in the mobile devices sector


Specialized Knowledge

SpecializedKnowledge

Firm A Firm B

Framing the problem

• In the mobile devices sector, hardware and software firms represent very different islands of knowledge attributes and specialties.

• An important aspect of the evolution of international business is that capabilities are increasingly relationship- and network-based rather than solely firm-specific (Cantwell et al., 2010).

• Important to overcome cultural and institutional differences between partners in international alliances, and understanding specialization of potential partner.

• Considering the knowledge specialization of a potential partner, it is important how to develop trans-specialized knowledge that partners mutually understand each other, i.e., trans-specialized understanding (TSU).

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Motivation and research problem


Framing in this paper

• TSU can be conceptualized as:» being a limited degree of knowledge sharing islands of shared knowledge

in a sea of mutual ignorance (Hoopes & Postrel, 1999; Postrel 2002).» enabling effective combination of respective specialization to achieve a

mutually desired outcome enabling partners to work together, but does not necessarily entail ‘internalization’ of each other’s capabilities.

• In the MNC literature, there has been far more interest in unidirectional knowledge transfer – » very little research in international business has explicitly focused on a

knowledge combination issue in MNCs (Buckley & Carter, 2004).

• The literature on international alliances has paid much more attention to knowledge acquisition and organizational learning.


Research questions

• Knowledge accessing & combination may be a main rationale for many non-equity based international technology alliances (ITAs). » although the literature on strategic alliance has paid much more attention to

knowledge acquisition and organizational learning rather than on knowledge combination.

• Value co-creation in ITAs hinges on the development of TSU.• Understanding the drivers and antecedent of knowledge sharing (and hence

TSU) in ITAs, and its impact on performance is a useful addition to international business knowledge.

• How can different specializations be combined effectively in a cross-border setting?

• Does cultural distance (CD) undermine the effectiveness of knowledge combination in ITAs?

Research question


Concepts


Modularity

• International business academics have investigated modularity in the context of global sourcing and global production network - they focus on MNCs’ location and lead firms’ relationships with modular suppliers in the vertical context.

• What is modularity? ‘An attribute of […] designing structures based on minimizing interdependence

between modules and maximizing interdependence within them that can be mixed and matched to obtain new configurations without loss of the system’s functionality’ (Campagnolo & Camuffo, 2010: 259).

Physical/logical component separablility and re-combinability (Baldwin & Clark, 1997).

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Modularity

• Benefits of modularity Contribution to the value co-creation in terms of separable and re-combinable characters

increase the visibility of the product development process and thus facilitate collaboration (Jacobides et al., 2006).

Reducing product design complexity enhancing product development speed whilst decreasing new product development cost (Ethiraj et al., 2008) reducing technological adaptation and learning costs, thus facilitating collaboration at a network level.

• It may not be necessary to understand an entire set of the partner’s knowledge. TSU may suffice, and it helps avoid ‘technological glitches’ in the alliance (Hoopes & Postrel,

1999). Product modularity makes it easier to develop shared knowledge that partners can mutually

understand.

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Relational governance

• Inter-firm governance mechanisms are premised on an appropriate socialization process, social interaction, and ties which help generate trust and commitment to partners (Heiman & Nickerson, 2004).

• Some alliances have an organizational learning rationale, whereby partners seek to learn and acquire capabilities from each other (Grant & Baden-fuller, 2004). Alliances that are more intent on the combination of existing knowledge base of partners

will be less vulnerable to opportunism. In knowledge-combining alliances, long-term cooperation is perceived as less risky;

partners are not in a “race” to learn faster than each other and hence will be less anxious that their specialist capabilities may be captured or internalized by their partners.

• As long as knowledge sharing is perceived to generate net benefits for the partners, they will provide resources and support the nurturing of the relational norms and socialization necessary for knowledge sharing.

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CD and cooperation costs

• CD complicates the process of organizational learning, inter-partner knowledge transfer, and value creation.

• The impact of CD through its impact on the cost of inter-firm cooperation costs ‘arising from the need to collaborate with a partner’ (White, 2005). Cooperation costs have two components arising from: Task-related coordination needs (e.g., hardware and software engineers) to undertake

joint problem solving to enable the effective combination of partners’ specialization. Those costs arising from inter-firm diversity such as CD.

• CD reduces the propensity of individual specialists to seek knowledge from each other.

• Reluctance to seek knowledge from someone with a different culture can render knowledge sharing more cumbersome and hence complicate the development of TSU.

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CD and cooperation costs

• CD can affect TSU development indirectly, through an impact on the cost of cooperation arising from partners’ diversities. High CD may make it harder for supportive relational norms to develop (Buckley &

Carter, 2004). At high levels of CD, the maintenance of a cooperative inter-partner relationship may

be more resource-intensive, in turn rendering the generation of TSU more costly.

• Modular product design can reduce technology transaction-related hazards and costs through the integration of knowledge within modules. Modular product design in ITAs between specialists facilitates the achievement of

mutually agreed goals for the alliance. Product modularity facilitates knowledge combination in ITA, and reduces the need

for intensive interaction between the partnering firms. CD between partners (inter-partner diversity) won’t significantly impair the

development of the necessary level of TSU.

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Hypotheses and conceptual model


Hypotheses

• Hypothesis 1: There is a positive relationship between relational governance and TSU development in ITAs.

• Hypothesis 2: The higher the degree of product modularity, the easier it is for ITA partners to develop TSU.

• Hypothesis 3a: CD negatively affects the development of TSU in ITAs. • Hypothesis 3b: CD negatively moderates the relationship between relational

governance and TSU.• Hypothesis 3c: The relationship between product modularity and TSU is not

affected by CD.

• Hypothesis 4: There is a positive relationship between the level of TSU and each partner’s firm performance.

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Conceptual model

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Trust

Commit-

Social governance

RelationalGovernance

FirmPerformance

ment

H4Trans-Specialization Understanding

H2ProductModularity H3b

H1

H3c

CulturalDistance

H3a


Methods


Methods

• Sampling frame: 879 HW (n=350) and SW (n=529) firms in the mobile computing industry.

• 110 valid responses – 110 non-equity based ITAs (52 SW and 58 HW firms). • Non-response bias tests. • Common method bias test.• Construct reliability, discriminant and convergent validity tests. • Latent construct’ s predictive relevance test.• Partial least structural (PLS) structural equation modeling.

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Findings


Findings

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• The results of structural equation modelling support for H1, H2, and H4.• Relational governance as a viable vehicle for the development of TSU.• Product modularity facilitates TSU.• TSU positively affects each partner’s performance.


Findings

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• CD negatively moderates the relationship between relational governance and TSU.• No moderating effect of CD on the relationship between product modularity and TSU while the

association between product modularity and TSU is still significant.


Discussion


Discussion

• As different specializations create boundaries across which dialogue and communication is difficult, TSU needs the nurturing of collaborative interface to motivate knowledge exchange despite differing specialization.

• An importance of relational governance mechanism for generation of TSU in ITAs. Stringent mechanisms for controlling of knowledge protection may not be a major

concern in partnerships aiming to combine disparate specializations. CD increases the costs of cooperation between partners, thus CD discourages the

development of TSU.

• Product modularity reduces the complexity of technological interfaces. Regardless of CD, challenges in knowledge combinations are eased when product

design and development benefit from modular connectivity between the specializations.

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Implications

• The social and technological antecedents and performance consequences of TSU in the context of international alliances between specialists, and the role of CD in such context.

• Highly codified scientific and engineering knowledge is not significantly affected by CD.

• High level of CD is not necessarily lead to significant friction in the (technological) working relationships between partners in ITAs (Shenkar et al., 2008).

• Product modularity as having a potential for functioning as a governance mechanism for specialized knowledge combination in ITAs.

• Product modularity can substitute relational governance when strong relational norms are not well developed in ITAs.

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Future Research

• Worthwhile to investigate the model in a different industry context (e.g., automotive manufacturing or aerospace engineering)

• Further studies can expand on CD to include a broader conceptualization, for instance the CAGE framework or institutional distance.

• The inclusion of control mechanisms (the costs of control) in the model to test a complete set of interfirm governance mechanisms from economic, social and technological perspectives.

• Conceptualization of product modularity, e.g. interfacing protocols between modules.

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Resources

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Baldwin, C. Y. & Clark, K. B. Clark (1997). "Managing in an Age of Modularity." Harvard Business Review 75(5): 84-93.

Buckley, P. J. & Carter, M. J. (2004). “A formal analysis of knowledge combination in multinational enterprises.” Journal of

International Business Studies, 35(5): 371-384.

Campagnolo, D. & Camuffo, A. (2010). "The Concept of Modularity in Management Studies: A Literature Review." International

Journal of Management Reviews 12(3): 259-283.

Cantwell, J., Dunning, J. H., & Lundan, S. M. (2010). “An evolutionary approach to understanding international business activity:

The co-evolution of MNEs and the institutional environment.” Journal of International Business Studies, 41(4): 567-586.

Ethiraj, S. K., Levinthal, D., & Roy, R. R. (2008). “The dual role of modularity: Innovation and imitation.” Management Science,

54(5): 939-955.Grant, R. M. & Baden-Fuller, C. (2004). “A knowledge accessing theory of strategic alliances”. Journal of Management Studies,

41(1): 61-84.Grunwald, R. & Kieser, A. (2007). “Learning to reduce interorganizational learning: An analysis of architectural product innovation

in strategic alliances.” Journal of Product Innovation Management, 24(4): 369-391.

Gulati, R. & Singh, H. (1998). “The architecture of cooperation: managing coordination costs and appropriation concern in

strategic alliances.” Administrative Science Quarterly, 52(1): 32-69.

Heiman, B. A., & Nickerson, J. A. 2004. Empirical evidence regarding the tension between knowledge sharing and knowledge

expropriation in collaborations. Managerial and Decision Economics, 25(6 7): 401–420.‐

Hoopes, D. G. & Postrel, S. (1999). "Shared knowledge, “glitches,” and product development performance." Strategic

Management Journal 20(9): 837-865.

Jacobides, M. G., Knudsen, T., & Augier, M. (2006). “Benefiting from innovation: Value creation, value appropriation and the role

of industry architectures.” Research Policy, 35(8): 1200-1221.

Lane, P. J. & Lubatkin, M. (1998). “Relative absorptive capacity and interorganizational learning.” Strategic Management Journal,

19(5): 461-477.Postrel, S. (2002). “Islands of Shared Knowledge: Specialization and Mutual Understanding in Problem-Solving Teams."

Organization Science 13(3): 303-320.

Shenkar, O., Luo, Y., & Yeheskel, O. 2008. From “distance” to “friction”: Substituting metaphors and redirecting intercultural

research. Academy of Management Review, 33(4): 905–923.

White, S. (2005). “Cooperation costs, governance choice and alliance evolution.” Journal of Management Studies, 42(7): 1383-

1412.


Appendix: Country distributions of ITA partners

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Focal firm country Partner country frequency Focal firm country Partner country frequencyTaiwan USA 23 Japan Taiwan 1China Taiwan 12 Japan USA 1Korea USA 8 Korea Canada 1UK USA 5 Norway USA 1USA UK 5 Sweden USA 1Taiwan India 4 Taiwan Germany 1France USA 2 USA Netherlands 1Japan Taiwan 2 USA Japan 1Korea Taiwan 2 USA Canada 1Taiwan UK 2 USA Taiwan 1Taiwan USA 2 China USA 1USA Korea 2 Korea China 1Ireland USA 2 Morroco USA 1USA China 2 Taiwan Malaysia 1Canada USA 1 Taiwan Russia 1Canada Taiwan 1 UK China 1China Hong Kong 1 USA Bulgaria 1Finland USA 1 USA Vietnam 1Finland Korea 1 USA Russia 1France Taiwan 1 USA no answer 5India Japan 1 Finland no answer 1India Netherlands 1 India no answer 1India USA 1 Korea no answer 1Israel Korea 1 110Total

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