Title of Paper: Times New Roman 14pt Bold Centred

KNOWLEDGE CREATION IN INTERNATIONAL JOINT VENTURES IN EMERGING ECONOMIES: PERFORMANCE & OPPORTUNITIES THE EIBA DOCTORAL SYMPOSIUM (EIBA-DS) Ulrik B. Nielsen

University of Southern Denmark, Denmark. [email protected]

1. 1.1

SUBJECT PROBLEM

Entering and developing presence in emerging economies often require foreign firms to set up International Joint Ventures (IJVs) with local partners, especially when the prime motive of the operation is to capture opportunities in the local markets (Mohr & Puck, 2005). IJVs have therefore become an important way for firms to enter these markets and a significant force in shaping a firm’s global strategy in expanding international activities abroad. However, research has shown that IJVs in emerging economies are unstable, and firms have experienced that performance of their IJVs in these emerging economies often does not meet their expectations (Fang & Zou, 2010). Extant research has shown that, in general, management of IJVs appears to be a difficult issue. 60-70% of all partnerships are not successful (Lambe, Spekman, & Hunt, 2002). Inter-partner learning has been proposed in the literature as a major cause of IJV instability (S. H. Park & Ungson, 1997). Yet current research indicates that when IJV partners engage in joint learning to create new IJV-specific knowledge that benefits both partners it stabilizes and sustains the IJV (Fang & Zou, 2010). For instance, Fang and Zou (2010) have demonstrated that creation of new IJV-specific knowledge can be imperative to performance while Pak, Ra, and Lee (2015) demonstrated that IJV parents can become beneficiaries of collaborative sensing and seize the market opportunities (Johanson & Vahlne, 2006). However, inter-organizational knowledge creation processes in IJVs have rarely been examined (Pak et al., 2015) especially not in the context of IJVs in emerging economies. This paucity of studies concerning knowledge creation and inter-organizational learning in IJVs have been noted at a critical research gap in the literature (J.-Y. Park, Ha, & Lew, 2015). The purpose of the project is thus to investigate the antecedents to the superior performance of IJVs in emerging economies by identifying conditions that enable knowledge creation processes. This identification can be seen as a special case of the general problem of how to manage complex business networks as in e.g. (Ritter & Gemünden, 2003). On a more general level, the purpose of the Ph.D. project is to add to the understanding of how interactions with other firms can contribute to the goals of the focal firm. The research question is thus aimed at explaining how relations to other firms in a complex business network can add to the knowledge creation process in the focal firm. 1.2

RESEARCH QUESTION

The proposed research question can be stated like this: “How can knowledge creation in IJVs in emerging economies influence the successful management of these IJVs and what are the antecedences to superior performance?

1

2.

THEORETICAL BACKGROUND

Prior literature on strategic management and IJVs asserts that learning, knowledge acquisition and adaption are important rationales for the creation of IJVs, contributing significantly to IJV performance (Hamel, 1991). Since knowledge must either shared between partners or transferred to an IJV in order to enhance performance, research has primarily focused on issues related to; knowledge transfer, such as absorptive capacity (Lane, Salk, & Lyles, 2001), learning capacity (Simonin, 2004) and knowledge traits (Dhanaraj, Lyles, Steensma, & Tihanyi, 2004). One stream of research has argued that the IJV represent a “learning race” between partners where each part is engaged in absorptive learning from the other part (Lane & Lubatkin, 1998). Another stream has argued that an IJV represent a “vehicle” of joint learning (B. Kogut & Zander, 1992) where partners “share complementary, but distinct, knowledge which could not otherwise be shared” (Bruce Kogut & Singh, 1988, p. 412). In an IJV context, Pak et al. (2015) have argued that new knowledge is created through an organizational learning process that takes place when representatives from both parent companies and the IJV are collaboratively interacting to explore, leverage and pursue potential synergy by blending their resources, knowledge and individual efforts in order to develop IJV-specific knowledge and new competence.

Figure 1: Conceptual M odel

Building upon research by Pak et al. (2015) a conceptual model of basic knowledge management processes in an IJV is presented in figure 1. Knowledge management is viewed as a series of processes since knowledge creation is argued to be a synthesizing process through which an organization interacts with individuals and the environment (Nonaka & Toyama, 2003). To explore the process of knowledge conversion, the Ph.D. project will build upon organizational knowledge creation theory through the SECI model (Nonaka & Takeuchi, 1995) and Ba (the context) (Nonaka, Toyama, & Konno, 2000) which explains how interactions generate new knowledge by converting tacit knowledge into explicit knowledge and back again. 3.

R ESEARCH DESIGN

Knowledge is defined as “justified true belief” and is considered a dynamic human process of justifying personal belief towards the truth (Nonaka & Takeuchi, 1995). The emphasis on “justified belief” in the definition corresponds to an epistemology of pragmatism which will frame the Ph.D. project.

2

Since the research question pertains to exploring how knowledge creation in IJVs in emerging economies can influence the successful management of these IJVs and what the antecedences to superior performance are, a case study methodology is proposed. (Yin, 2013). Case studies are well suited to new research areas or research areas for which existing theory seems inadequate (Eisenhardt, 1989). Particularly, in international business research, where data is collected from cross-border and cross-cultural settings (Ghauri, 2004). A benefit of applying case studies is that it allows the Ph.D. project to take a longitudinal approach (Van Maanen, 1979). Following Hyder and Ghauri (1989), IJVs are best understood and studied as a “historical process” combined with direct observation and interaction. Another core strength of case studies is contextuality (Yin, 2013) which frequently is argued to be important in studying IJVs (Beamish & Lupton, 2016). The level of depth with which each case is investigated allows for theory building, not just theory testing (Eisenhardt, 1989). Building upon the conceptual model a case study can permit an investigation of the specific knowledge processes in IJVs in emerging economies from a variety of viewpoints, covering a period of time, and cross the boundaries between performance and opportunities. The ability of case studies to deal with a wide variety of evidence including documents, interviews and observations will facilitate the generation of novel theory and to derive constructs and measures (Bonoma, 1985). Following Ghauri (2004) case selection should be based on criteria’s consistent with the research problem and correspond to the theoretical framework and the variables being studied. The initial criteria for selecting cases are one or more IJVs formed by a developed economy firm and an emerging economy firm. A variety of Danish firms is planned to represent the developed economy firm. Contact to a Danish multinational within the dairy sector has already been established due to its involvement in IJVs in Sub-Sahara Africa and other emerging economies. Initial and informal contacts have been established with a number of Danish firms with IJVs in emerging economies. 4.

EXPECTED RESULTS AND CONTRIBUTIONS

Overall the Ph.D. project expects to contribute with cutting-edge knowledge on the nature and successful management of IJVs in emerging economies. Through the investigation of the antecedents to superior performance by identifying conditions that enables knowledge creation processes. Particularly, in the sub-Saharan region which is sorely called upon (Beamish & Lupton, 2016; Iacobucci & Onyemah, 2015). The Ph.D. project is expected to commence in January 2017 and shortly hereafter the aim is to systematically collect information regarding how an IJV between a foreign firm and local partners can establish a knowledge creation process from both a theoretical and empirical perspective. 5.

CONCLUSIONS

One of the remaining concerns regarding the Ph.D. project relates to: 

How would you recommend me to develop, build and manage a solid research design? 3

6.

R EFERENCES

Beamish, P. W., & Lupton, N. C. (2016). Cooperative strategies in international busin ess and management: Reflections on the past 50 years and future directions. Journal of World Business, 51(1), 163-175. doi:10.1016/j.jwb.2015.08.013 Bonoma, T. V. (1985). Case research in marketing: opportunities, problems, and a process. Journal of marketing research, 199-208. Dhanaraj, C., Lyles, M. A., Steensma, H. K., & Tihanyi, L. (2004). Managing tacit and explicit knowledge transfer in IJVs: the role of relational embeddedness and the impact on performance. Journal of International Business Studies, 428-442. Eisenhardt, K. M. (1989). Building Theories from Case-Study Research. Academy of Management Review, 14(4), 532-550. doi:Doi 10.2307/258557 Fang, E., & Zou, S. M. (2010). The effects of absorptive and joint learning on the instability of international joint ventures in emerging economies. Journal of International Business Studies, 41(5), 906-924. doi:10.1057/jibs.2009.100 Ghauri, P. (2004). Designing and conducting case studies in international business research. Handbook of qualitative research methods for international business, 109-124. Hamel, G. (1991). Competition for competence and interpartner learning within international strategic alliances. Strategic Management Journal, 12(S1), 83-103. Hyder, S. A., & Ghauri, P. N. (1989). Joint venture relationship between Swedish firms and developing countries: a longitudinal study. Journal of Global Marketing, 2(4), 25-48. Iacobucci, D., & Onyemah, V. (2015). JBBMat 21: Variety of Theories, Methods, and Countries While Giving Further Voice to Emerging Markets Within Africa. Journal of Business-to-Business Marketing, 22(1-2), 73-85. doi:10.1080/1051712x.2015.1020244 Johanson, J., & Vahlne, J.-E. (2006). Commit ment and opportunity development in the internationalization process: A note on the Uppsala internationalization process model. Management International Review, 46(2), 165-178. Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 411-432. Kogut, B., & Zander, U. (1992). Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology. Organization Science, 3(3), 383-397. doi:DOI 10.1287/orsc.3.3.383 Lambe, C. J., Spekman, R. E., & Hunt, S. D. (2002). Alliance competence, resources, and alliance success: Conceptualization, measurement, and initial test. Journal of the Academy of Marketing Science, 30(2), 141-158. doi:Doi 10.1177/03079459994399 Lane, P. J., & Lubatkin, M. (1998). Relative absorptive capacity and interorganizational learning. Strategic Management Journal, 19(5), 461-477. doi:Doi 10.1002/(Sici)10970266(199805)19:53.3.Co;2-C Lane, P. J., Salk, J. E., & Lyles, M. A. (2001). Absorptive capacity, learning, and performance in international joint ventures. Strategic Management Journal, 22(12), 1139-1161. doi:10.1006/smj.206 Mohr, A. T., & Puck, J. F. (2005). Managing functional diversity to improve the performance of international joint ventures. Long Range Planning, 38(2), 163-182.

4

Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company: How Japanese companies create the dynamics of innovation: Oxford university press. Nonaka, I., & Toyama, R. (2003). The knowledge-creating theory revisited: knowledge creation as a synthesizing process. Knowledge management research & practice, 1(1), 2-10. Nonaka, I., Toyama, R., & Konno, N. (2000). SECI, Ba and leadership: a unified model of dynamic knowledge creation. Long Range Planning, 33(1), 5-34. Pak, Y. S., Ra, W., & Lee, J. M. (2015). An integrated multi-stage model of knowledge management in international joint ventures: Identifying a trigger for knowledge exploration and knowledge harvest. Journal of World Business, 50(1), 180-191. doi:10.1016/j.jwb.2014.02.006 Park, J.-Y., Ha, Y. J., & Lew, Y. K. (2015). International Joint Ventures and Dynamic Co -learning between MNEs and Local Firms. The Rise of Multinationals from Emerging Economies: Achieving a New Balance, 213. Park, S. H., & Ungson, G. R. (1997). The effect of national culture, organizational complementarity, and economic motivation on joint venture dissolution. Academy of Management Journal, 40(2), 279307. doi:Doi 10.2307/256884 Ritter, T., & Gemünden, H. G. (2003). Network competence: Its impact on innovation succe ss and its antecedents. Journal of Business Research, 56(9), 745-755. Simonin, B. L. (2004). An empirical investigation of the process of knowledge transfer in international strategic alliances. Journal of International Business Studies, 407-427. Van Maanen, J. (1979). The fact of fiction in organizational ethnography. Administrative science quarterly, 539-550. Yin, R. K. (2013). Case study research: Design and methods: Sage publications.

5