MGTO 630B Managing People Globally for Competitive Advantage

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MGTO 630BManaging People Globally for
Competitive Advantage
Transferring Management Systems Learning in
IJVs Saturday, March 1, 2003
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By the end of todays 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?
LOCAL PARTNER
WHOLLY OWNED SUBSIDIARY vs JV
FOREIGN INVESTOR
Organizational Level
Overseas Training
ACQUISITION
GREENFIELD
VS.
Commitment Of human resources
Learning Intent Effort
Industrial Experience
Organizational Unlearning
Individual Level
EXPATRIATE MANAGER
LOCAL MANAGER
Knowledge
Tsang, E. W. K. (2001). Managerial learning in
foreign-invested enterprises 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?

• Lets 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 gt alliance gt 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)?
• Lets 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 /
  dont worry)

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Acknowledged Accepted Hierarchy

• ROYAL
• FAMILY
• Titled citizens
• Large 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
• Ones 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 dont 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 Firms U.S. Firms
Work hard 4.02 4.48
Learn more 4.26 4.76
Become indispensable 4.32 3.00
Get a second job 2.41 1.83
Create a new job 3.85 2.52
Get more control over my job 3.81 3.31
Do my job well 3.25 4.58
Let others recognize me 3.23 2.52
Assertively ask 2.57 3.07
Exchange favors (guanxi) 3.79 3.00