International business and development Academic year Prof. Alessandro Arrighetti Carlo Tagliaferri Milica Peric Patrizia Ciurlia Cooperation and competition among firms

Inter-Partner Interactions and Knowledge Transfer Mechanisms in the Chinese Automotive Industry A Qualitative Research Based on Dual Managerial Perceptions

Introduction The purpose of this report is to put on light the relevant role that the inter-firm knowledge transfer plays in order to encourage interactive co-operation between different businesses and to constantly achieve a sustainable competitive advantage (SCA). In particular, it was found that the Chinese Automotive Industry could represent one of the most relevant examples of alliances among MNEs (Multi National Enterprises) operating in several nations and local businesses (with various dimensional characteristics): by sharing knowledge among the components of these international alliances (that have been called IJVs, International Joint Ventures), both the workforce/management of the enterprises and the stakeholders that naturally interact with them could enjoy some benefits that would be impossible to be reached if each component would decide to protect its knowledge from each form of leakage.

Conceptual Background  The SCA (Sustainable Competitive Advantage) is the goal: most effective ways to achieve and maintain it and related competences;  RBT and KBT: finding the best compromise between the two theories.

Conceptual Framework  Why is knowledge part of the fundamental resources?  How could knowledge be defined? Which kind of knowledge do exist?  IJVs: which type of arrangement is and what is based on?  Tacit knowledge as a precious resource to be shared among IJVs and an incentive to avoid excessive protection of knowledge inside a business;  Mutual complementarity: does it influence willingness or reluctance to share information?  Surviving the “honeymoon” period (inter-partner trust);  Potential and realized absorptive capacity of transferor and recipient: the strongest barrier to knowledge transfer.

The Automotive Sector  Characteristics and quick introduction;  The role of FDI (foreign direct investments);  Ties between SOEs (State owned enterprises) and MNEs.

© Int. J. Manag. Bus. Res., 3 (2), , Spring 2013

Research Methods Knowledge transfer research types in IJVs:  Quantitative: analytical and statistical approach;  Qualitative: direct experiences to heighten perceptions and understand actions and meanings in their social context.

Data collection Based on an interview in which participants can express their views over a wide range of responses. Case Sample:  Two firms have been interviewed: A (American) and B (Chinese), both represented by executive members of involved IJV;  Research and interview carried out in an important Chinese city, first during the period between September 2005 and February 2006, then in February 2006;  Bi-linguistic interview approach: two questionnaires, in English and Mandarin;  Results were obtained with the support of CATPAC software.

Data analysis consisted on:  Multiple readings of the interview transcripts and related documents;  Identifying activities and subjective evaluations pertaining to the success of knowledge transfer and learning configurations ;  Description, interpretation, evaluation and application, analytical method that let interviewees tell the “story” and discuss it;  Classification and examination of evidence used to make linkages between concepts.

Strategic Motives and Knowledge Transfer Objectives Competitiveness A A B B USAChina Advanced technology and management Fast growing – Economic development Too expensive products Cheap labour and material costs

Willingness to transfer and Intent to learn B B Improve quality of vehicle products by sharing knowledge A A Willingness and interest to invest in B Modernity of B

IJV [A-B] Knowledge creates important learning potential for both enterprises. Knowledge identification and Knowlegde base

1997 Western styles Modern skills Qualified employees Management Education Influence of government officials Sharing Development Knowledge connections and contributions

Intensive co-operation and Knowledge development Relevance of managers: Knowledge development Innovation Adoption process Co-operation Researchers

Inter-firm Relationships affect the process of knowledge exchange, sharing, combination and joint problems-solving through creating or enchasing a number of necessary conditions, such as friendship an well- organized IJV AB network.

The formation of inter-organizational cooperative entities to improve knowledge transfer performance is significant in terms of competitive advantages that are:  Competitive success;  Organizational performance for knowledge resources;  Increase of employees' expectations and their capabilities on dealing with constant changes;  Knowledge connections between alliance partners. Findings

Inter-partner relationship has a positive role:  As a facilitator of knowledge transfer;  As a reduction of cultural misunderstanding;  As an encourangement of inter-firms transfers;  As a key resource that contributes to enhance overall alliance performance. Findings

Conclusion “Current circumstances tell us that learning is no longer a choice but a necessity” Schein, 1993 The US and China examples of joint ventures analyzed in its research, formed by two automotive companies leading by interactive cooperation and interfirm knowledge transfer pratices, underline that both countries can have many complementary goals and opportunities in term of fast- growing economic and industrial development, skills, know- how, but also in connections, contribution and intensive cooperation. As long as enterprises cooperate well and exert their respective strengths, and recognize their individual weaknesses, they are both sure to create the greater global markets.

Conclusion  USA still has a technological advantage, on the other hand China has labor and natural resources advantage: The combination of the two advantages definitely represents a resource of innovation and smoother trade relations that will lead to an even greater level of social, political and economic benefits for both countries firms.  China needs to better focus on conservation of world resources, but at the same time, America needs to become a more active and willing partner with Chinese economic reform options;  American service industries are among the most developed in the world: China could take advantage of this opportunity to promote joint development;  China and USA both managed to create some successful examples of service industries cooperation, such as Motorola, Intel, IBM, Cisco, and other American IT Firms companies that have all crowded and collaborated with China industrial firms

Conclusion Knowledge transfer activities are the keys of success. Their relevance is evident:  In alliances and collaborations among enterprises;  In order to enter in a mew market’s sector and to gain a great portion of it;  To favour economy scales and reduction of different kind of costs.