MGTO 630B Managing People Globally for Competitive Advantage Transferring Management Systems: Learning in IJVs Saturday, March 1, 2003 Please note: This is only a preliminary version of the file that will be shown in class. A complete version, which incorporates the thread of the discussion in class, will be available from the course website after the completion of the class.

2 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

3 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

4 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

5 Figure 5-2. Motivation for International Alliances

6 How does learning occur in IJVs? Organizational Level Individual Level FOREIGN INVESTOR LOCAL PARTNER WHOLLY OWNED SUBSIDIARY vs JV ACQUISITIONGREENFIELDVS. EXPATRIATE MANAGER LOCAL MANAGER Knowledge Commitment Of human resources Industrial Experience Organizational Unlearning Learning Intent & Effort Overseas Training Tsang, E. W. K. (2001). Managerial learning in foreign-invested enterprises in China. Management International Review, 41,

7 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):

8 Types of knowledge acquired through alliances Country specific  Local government  Labour force  Competence with accessing local markets / distribution channels Firm specific technologies

9 What influences firms’ capabilities to learn / transfer knowledge?

10 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...

11 Which factors influence the differentiation / integration of HRM Practices?

12 HR practices that tend to be localized Time off Benefits Gender composition Training Executive bonus Participation