Traces of foreign retailers – local knowledge-spillovers and strategy adaption within retail internationalization

ABSTRACT

Since the 1990s certain retail companies have evolved into some of the largest and most dispersed transnational corporations worldwide. However, within the ‘new era of retail distribution’ retailers are increasingly divesting from foreign markets. This study addresses these recent and under-explored dynamics by revealing the traces transnational retail corporations leave after divesting from a country. It explores the aspect of learning of host market retailers from entering transnational corporations (TNCs) and examines how foreign knowledge is adjusted in the business strategies of these local actors. It takes a fresh empirical slant using qualitative interviews with host market retail managers including former TNCs’ subsidiaries operating under domestic ownership. The emerging economy of Turkey serves as an empirical example. The paper finds that foreign retailers transfer firm-specific resources to the local retail through (1) demonstration and imitation, (2) vertical linkages with suppliers, (3) joint ventures and acquisitions, and (4) labor turnover of TNC trained staff. Certain successful local companies adjust the foreign knowledge based on their local knowledge and strengths, their high level of flexibility and deep territorial embeddedness, and create ‘hybrid’ business strategies. These findings suggest that dynamic capabilities are crucial to successful retailing in an international competitive environment. TNC managers should work with local staff in partnerships of equals and managers of locally operating companies should incorporate new knowledge by hiring TNC trained staff.     

Knowledge embeddedness and the transfer mechanisms in multinational corporations

This paper reports a qualitative study conducted at four Japanese subsidiaries in China and Vietnam about their process of international knowledge transfer. Building on the literatures concerning the diverse types and characteristics of knowledge in multinational corporations (MNCs), we explore the broad mechanisms adopted and locally generated by the host country subsidiaries for transferring the foreign knowledge and putting the locally embedded knowledge into practical use at the local settings. The findings indicated (1) the limitations of applying a standardized and universal set of knowledge transfer mechanisms without considering local idiosyncrasies and (2) the contributions of local agents and institutions throughout the process of local knowledge adaptation and development.     

跨国公司嵌入与我国开发区产业集聚的实证研究

文章从新社会经济学的"嵌入性"视角,对我国开发区跨国公司嵌入与产业集聚现象问题进行实证分析,论证了跨国公司嵌入与产业集聚的互动关系。一方面,跨国公司嵌入对开发区产业集聚有重大影响;另一方面,开发区产业集聚对跨国公司嵌入也有重大影响。但跨国公司嵌入对当地内资企业集聚的带动作用有限,内外资企业互动融合不足,这将是未来我国开发区亟待解决的问题。     

论东道国产业集群与跨国公司的直接投资:相互影响及政策建议

东道国产业集群的快速发展对跨国公司的直接投资产生了重大的影响,使得跨国公司获得了直接投资的协同竞争效应、建立了跨国公司直接投资新的区位优势、提升了跨国公司对区外出口的竞争力并且改善了跨国公司子公司在东道国的经营绩效。与此同时,跨国公司对东道国产业集群的直接投资也推动了当地集群的升级、集群治理结构的优化并整固了东道国集群的植根性。最后,本文提出了吸引跨国公司直接投资推动我国产业集群发展的具体政策建议。     

Competing globally: How Japanese MNCs have matched goals and strategies in India and China

Japanese MNCs have established strong investment positions in the US, Europe and Asia. China has been a major recipient of Japanese foreign direct investment (FDI), while investment in India has grown much more slowly. We argue that the differences extend much beyond the levels of investment—Japanese involvement in India and China is qualitatively different. Japanese FDI in China was motivated by access to location-specific productive resources, and it involved a high degree of technology, management skills and organizational knowledge transfer. The Japanese subsidiaries in China were integrated with the network of international subsidiaries as a part of the MNC's global strategy. Japanese FDI in India, however, was motivated by the desire to access local markets. It involved less transfer of technology and management skills, and Japanese subsidiaries in India operated independently as part of a multi-domestic strategy. We conclude that foreign entrants to the region should be aware and able to respond to the unique advantages of each host country and to the different strategies and capabilities of the subsidiaries of Japanese MNCs.     

Knowledge transfer, regulatory support, legitimacy, and financial performance: The case of foreign firms investing in China

This study aims to link the knowledge-based view and the legitimacy perspective in order to explore the determinants of knowledge transfer and regulatory support. We then examine their consequences within a systematic framework drawing upon the institutional view. Examining a sample of 102 Taiwanese manufacturing firms operating in China, the study finds that both knowledge transfer from local suppliers and regulatory support from local governments help foreign firms to enhance their financial performance. The combination of trusting relationships with local suppliers, a foreign firm's knowledge stock, and agglomeration encourage local suppliers to transfer knowledge. Additionally, foreign firms’ knowledge stock is significantly related to regulatory support.     

Knowledge flow and boundary crossing at the periphery of a MNC

In this paper, we develop a model of four modes of knowledge flow, two involving knowledge acquisition and sharing, and two involving the localizing, embedding and investment of knowing in practice. We illustrate the model with data from an embedded case study involving a focal China-based subsidiary of a Japanese MNC, its headquarters, and two of its local suppliers. While power asymmetries appeared to have substantial impact on the terms upon which syntactic, semantic and pragmatic boundaries were crossed, successful knowledge transfer and boundary crossing appeared to depend on the willingness and ability of the various parties to engage in joint development of knowledge for mutual benefit.     

“以竞争换技术”战略与外资溢出效应——基于我国工业部门相关数据的分析

本文采用中国工业部门的相关统计数据,对外商在华直接投资的溢出效应进行了初步探讨。结果表明,外资在我国工业部门各行业产生了显著的溢出效应。此外,内外资企业之间的相互竞争对二者的生产效率有着明显的促进作用。这一方面证明了溢出效应中竞争效应的存在,同时也表明溢出效应的“正反馈”机制已在我国内外资企业之间成功建立。基于上述实证结果,本文最后从“以竞争换技术”的角度提出了促使外资产生更大溢出效应的政策建议。     

Small and medium-sized transnational corporations: Salient features

This second half of a series on small and medium-sized transnational corporations (TNCs) describes their main features in terms of such variables as the markets and industries in which they operate, ownership, forms of investment, performance and competitive advantages. It also deals with strategies that small and medium-sized enterprises (SMEs) tend to take in their foreign operations.An appreciable share of small and medium-sized TNCs produces highly-specialized or niche products that give them relatively high market power in those market segments. Their principle source of advantages emanate from proprietary technology, flexible management, organization and market ability, reputation and supplier/customer relations. Small and medium-sized TNCs, unlike their larger counterparts, are more likely to enter developing countries through joint ventures and other collaborative arrangements with local firms. SMEs from some developed countries, mainly Europe, are particularly willing to enter joint ventures.Transnational Corporations Affairs Officer United Nations Conference on Trade and DevelopmentThe aurthor is grateful for advice and comments by Hafiz Mirza. This paper is based on the chapter IV of the UNCTAD Programme on Transnational Corporations,Small and Medium-sized Transnational Corporations: Role, Impact and Policy Implications, New York: United Nations publication, Sales no. E.93.II.A.15, 1993.     

Managing FDI technology spillovers: A challenge to TNCs in emerging markets

Prior studies on foreign direct investment (FDI) technology spillovers have offered little guidance to transnational corporations (TNCs) on how to protect and exploit technology across borders. The present paper argues that TNCs can manage technology spillovers through selection of entry modes, selection of technologies, and selection of investment priorities in the affiliates they establish in foreign markets. A number of hypotheses are derived from theoretical analyses and are tested against firm-level data from China. The findings of the paper have significant implications for TNCs that face fierce competition from local firms in emerging markets.     

Factors in the effective transfer of knowledge from multinational enterprises to their foreign subsidiaries: a Mozambican case study

The purpose of this article is to better understand the role of internal stakeholders in subsidiaries of multinational companies (MNCs) in order to offer potential insights into the cross‐border transfer of knowledge from those companies’ headquarters to their subsidiaries. The focus is upon subsidiaries in developing countries, here Mozambique. More specifically, the article is concerned with identifying factors that influence the learning of internal stakeholders and noting practices which seem associated with a high level of absorptive capacity and performance of subsidiaries. The starting point is evidence of ineffective transfer of knowledge by MNCs to their subsidiaries in developing countries, with consequent sub‐standard performance. The research reported involves four case studies of Portuguese companies operating in Mozambique and draws on data from interviews with senior and middle managers in the firms’ Mozambican subsidiaries. The results obtained suggest that successful knowledge transfer to overseas subsidiaries is found under the following conditions. First, the parent company knows the local context and provides a flow of relevant information. Second, application of knowledge locally is done flexibly to suit local circumstances. Next, a participatory approach is used so that local staff can see why the knowledge conveyed is necessary. Fourth, explanation and demonstration are key techniques, with major roles for on‐the‐job training, continuous improvement and training at headquarters. Finally, issues arising from local culture may need to be addressed.     

Tapping the power of local knowledge: A local-global interactive perspective

Existing theories of international business and strategy do not fully explain how local knowledge disadvantage faced by foreign investors can be mitigated. We conducted an in-depth qualitative study into four MNCs to investigate the micro-processes of how they generated value from their dispersed sources of local knowledge in China. The results suggest an interactive model: that MNCs employed management processes encompassing three strategically interconnected efforts—global knowledge penetration, local-global knowledge blending, and local-global knowledge integration. The model highlights the interplay between global and local knowledge and challenges extant research that solely focuses on the transfer of either home-based or local knowledge.     

Knowledge Recipients,Acquisition Mechanisms,and Knowledge Transfer at Japanese Subsidiaries: An Empirical Study in China

Although knowledge transfer contributes to a firm's competitive advantage, the effect of mechanisms used by a knowledge recipient on knowledge acquisition has been understudied. This article provides some insights on the interplay of knowledge recipients and transfer mechanisms between Japanese multinational corporations and their subsidiaries operating in China. Using structural equation methodology, this research proposes a knowledge transfer model that captures knowledge recipients’ characteristics and acquisition mechanisms, and empirically investigates the impact of knowledge recipients on mechanisms to test the applicability of specific mechanisms in knowledge acquisition. This article argues that knowledge recipients’ motivation and absorptive capacity have a positive impact on knowledge acquisition, and simultaneously provides evidence that mechanisms have mediating effects, which are vital to our understanding of knowledge transfer effectiveness. This study extends our understanding by adding knowledge transfer mechanisms as mediating factors in the relationship between knowledge recipients’ characteristics and knowledge acquisition, and quantifying the relationship. © 2015 Wiley Periodicals, Inc.     

Transnational corporations and the global water industry

This article takes stock of foreign direct investment (FDI) undertaken by transnational corporations (TNCs) in the global water industry and examines the evidence on the impact of their operations in host countries. Between 1996 and 2006, approximately $12 billion were invested in water‐related sectors, of which 75% came from the private sector (including TNCs) from just four countries, while tentative calculations put the global share of investment by TNCs at 56%. Presently, 243 enterprises have interests in 409 water projects in 53 host countries. However, just six countries have received over half of the total investment. A survey of the evidence reports mixed results of the impact of TNCs' investment in host countries. It is argued that the biggest issue here is pricing, a dilemma that, alongside the privatization issue of host countries' water industry, is discussed in the concluding section. © 2011 Wiley Periodicals, Inc.     

Crossing the Boundaries of Obligation: Are Corporate Salaries a Form of Bribery?

Trans-National Corporations (TNCs) pay relatively high salaries to local people in host countries. TNCs assume that such employees will accept an employeeÇôemployer relationship similar to that which exists in North America, but the obligations and personal interests that such a relationship create often directly conflict with systems of obligation already established in the host country. When TNCs do business across the boundaries of systems of obligation, corporate salaries can be seen as a form of unethical bribery. In this paper, the core case of business bribery is described consistent with the usual philosophical analysis of bribery, and the grounds for thinking bribery is unethical are made clear. The amount of a bribe is irrelevant to the ethical analysis. Bribery is distinguished from tips and grease on structural grounds. The concept of a system of obligation is defined, and examples given that show the variability of systems of obligation in host countries. Arguments are given to show that salaries paid by TNCs create obligations and personal interests which sometimes conflict with existing systems of obligation, and that such payments have the same structure as more traditional forms of bribery. The ethical issues of corporations crossing the boundaries of systems of obligations are discussed.     

Identification of MNC knowledge resources for the local market: an examination of 7-Eleven's international licensing operations

A major concern for local managers is the identification of appropriate knowledge resources for their markets. This paper looks at how local managers make decisions on whom to learn from within the multinational corporation (MNC). Learning within the MNC has traditionally been studied from a knowledge transfer perspective, that is, focusing more on the MNC's facilitation of internal knowledge flows rather than observing local initiatives in knowledge identification. Drawing on network and psychic distance literature, the paper argues that the learning behavior of local units evolves through time. Knowledge exchanges tend to occur between markets that appear to have smaller psychic distances, especially in the initial stages of local market development. The argument is developed using a multiple case study of 7-Eleven licensees.     

Oil Extraction and Poverty Reduction in the Niger Delta: A Critical Examination of Partnership Initiatives

The combination of corporate-community conflicts and oil transnational corporations’ (TNCs) rhetoric about being socially responsible has meant that the issue of community development and poverty reduction have recently moved from the periphery to the heart of strategic business thinking within the Nigerian oil industry. As a result, oil TNCs have increasingly responded to this challenge by adopting partnership strategies as a means to contribute to poverty reductions in their host communities as well as secure their social licence to operate. This paper critically examines the strengths and weaknesses of the different community development partnership (CDPs) initiatives employed by Shell, Exxon Mobil and Total to contribute to poverty reduction within their host communities in the Niger Delta, Nigeria. Drawing on empirical data and critical analysis, the paper argues that while the CDP initiatives by SPDC, MPN and EPNL have the potential to contribute to community development, the failure to integrate negative injunction duties into existing partnerships means that the partnerships make no difference to how oil TNCs conduct their core business operation. Consequently, CDPs have had limited positive impact on poverty reduction in the Niger Delta. The paper concludes by examining the implications of the emerging issues for partnership and poverty reduction.     

Knowledge transfer in collaborations between foreign and indigenous firms in the Nigerian oil industry: The role of partners' motivational characteristics

Previous empirical studies on determinants of interfirm knowledge transfer have been largely focused on knowledge transfer between symmetrical partners, where there are relatively similar levels of knowledge sophistication and complementary knowledge‐transfer motives. Determinants of knowledge transfer between partners in asymmetric “market‐exploitation” alliances, where there are large differences in capabilities, and in motives, of the collaborating partners, have been understudied. This article presents a qualitative case study‐research of knowledge transfer in such collaborations in the Nigerian oil industry. Four cases of interfirm collaborative arrangements between foreign and local indigenous firms in the industry were studied and analyzed. Based on the results of the case study research, this article highlights the dominant role of partners' motivational characteristics, as against, their cognitive characteristics in the knowledge‐transfer process of asymmetric market‐exploitation alliances. It develops a set of theoretical propositions to expand the understanding of the key determinants of learning and knowledge transfer.     

Managing localization of human resources in the PRC: a practical model

The localization of top management positions is an important objective for many Transnational Corporations (TNCs). Despite its importance, there is little systematic discussion of how the localization process should be managed. Based on a review of related literature and in-depth interviews with six TNCs in the PRC, we developed a three-stage model of the localization process. In this article, we use that model to describe the challenges that TNCs face when localizing top management positions in the People’s Republic of China.     

跨国公司传承母国文化的路径分析

跨国公司是文化全球化的最重要主体,模因理论可以用来分析文化传播和演化的微观路径和宏观路径。模因论对文化传承的微观路径描述是关于模因、模因复合体、载体、生存机器之间的关系问题的解释,其宏观路径是国家文化经过跨国公司实施子公司活动、商务活动以及销售文化产品活动,进而影响子公司东道国个人和组织之间的传承通道。跨国公司传承母国文化呈现出发达国家占据主动地位、欠发达被动输入文化的整体态势,但欠发达国家的传统核心文化的强势模因也对跨国公司有着明显的反作用力。