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International joint ventures between companies in the United States and companies in China often encounter challenges to joint learning in the organizational learning context. These difficulties usually manifest in two important areas: marginality and autonomy.
The degree of autonomy afforded to Chinese firms by their American host companies often multinationals with headquarters in the United States exerts significant influence on the efficacy, perceived legitimacy and buy-in afforded to organizational learning processes undertaken by these types of international joint ventures. Another potential impediment to organizational learning remains its perceived value by Chinese firms.
This paper will focus more or less exclusively on the impact that marginality and different comprehension levels of managerial autonomy have on organizational learning in international joint ventures. Other important elements highlighted include social contexts and mores, barriers to organizational knowledge creation and differences in intercultural communication styles (Dierkes et al, 2003:p 288).
As a result of these barriers, international joint ventures, though often very successful from a financial perspective, sometimes lack a strong commitment to organizational learning and knowledge creation, the assumption perhaps being that knowledge creation by definition can only thrive in a homogenous cultural understanding.
The following paper intends to analyze international joint ventures between American companies and Chinese firms, and aims to document practical and useful means to develop and implement organizational learning strategies that will be effective and viable for managers from the United States who have been appointed to design and set up an organizational learning module in the current Chinese business and cultural climate.
Organizational learning in the context of international joint ventures between Chinese and American firms may struggle simply because each culture has conflicting views on the value of knowledge management and knowledge sharing, and managers from the United States may find that knowledge management in the Chinese business environment does not enjoy the same support from academia and the business world that it does in his or her home country.
Su et al (2010) published a study in the International Journal of Knowledge Management that speaks to this discrepancy and becomes applicable for managers to understand the inherent differences between the two cultures, before they attempt to implement organizational learning processes.
The Su study employs a significant sample group of Chinese firms of multiple sizes, disciplines and fields, and includes businesses that rest in the hands of the state, those under private ownership, domestic firms and firms owned by foreign entities.
Su et als (2010) findings reveal that knowledge sharing in Chinese firms is far short of being completely open, and that a wide range of factors, ranging from Chinese cultural values to attributes of the firm and individual employees, affect the extent of knowledge sharing (p. 25).
The goal of organizational learning, as it pertains to knowledge management, stems from the conviction that assembling the complete extent of employee talent, knowledge, and know-how augments the effectiveness of the business overall.
Organizational learning creates a means by which firms can solve problems, avoid repeating mistakes, and spread the adoption of best practices (Su et al, 2010: p. 25). However, this definition seems applicable only in the Western context, and may only make sense to American managers.
The first important thing to note is that managerial autonomy and decision making in the Western business context is a well entrenched idea, yet in the Chinese business context, it is a fairly recent development.
From the time of the revolution in 1949 right up until the end of the 1970s, the Peoples Republic of China Up ran on a centrally organized economy, wherein firms were essentially extensions of the government used to deploy pre-existing government plans. At that time Chinese firms and their managers held next to no autonomy, because it was not necessary.
They were protected firms, and competition was nonexistent. The widespread economic changes including the establishment of the Shanghai and Shenzhen stock exchanges, and the termination of financial support for most state-owned-enterprises did not in fact occur until well into the 1990s (Su et al, 2010: p. 28).
Since the year 2000, continual change has characterized the Chinese economy, but some of the old mindsets take more time to shift. The move toward private ownership and the opening of the markets continues to gather speed.
In 2001 China joined the World Trade Organization, which created the need for increased market openness, reduced government interference, and increased management autonomy, and with it, more competition (Su et al, 2010: p. 28).
As a result, in less than 20 years, Chinese firms have found it necessary to fast forward their evolution from being completely protected business entities to engaging in competition with both domestic counterparts and foreign players.
Employees of Chinese firms may devalue their own tacit knowledge, as result, due to a perceived dearth of training, lack of expertise, or experience in the competitive business environment.
In the words of Su et al (2010), in conjunction with evaluation apprehension, this uncertainty could reduce their willingness to share private knowledge with co-workers and/or superiors, and result in a lower level of knowledge sharing in Chinese firms as compared to their Western counterparts (p. 28).
Similarly, another obstacle to effective organizational learning is the entitlement mentality left over from Chinas centralized and protected public ownership economy period (Su et al, 2010: p. 29). During this era, workers were guaranteed secure employment for life and had full access to social welfare.
Nepotism abounded, wherein employees often received managerial appointments less through competence, and more through political connections and seniority, which bred a somewhat indolent managerial environment.
These types of managers may still exist, and as Su et al (2010) accurately state, these managers from the old guard may resist practices&such as those aimed at increased knowledge sharing&[because] that may threaten their position or authority (p. 29). Managerial autonomy was not as necessary when there was no separation of responsibilities between the government and the firm, or between the government as the owner and the government as the manager (Su et al, 2010: p. 29).
Losses and profits were subsumed by the state, therefore some of the most fundamental profit and loss responsibilities and concerns that seem de rigueur for American managers did not apply in Chinese firms until relatively recently.
Under the old system, ingenuity and resourcefulness did not net any personal benefit. Now, despite the fact that the Chinese economic system engenders more responsibility and business acumen for its managers, there still may exist a large cadre of employees with little concern for how well their firms perform, in turn reducing their emphasis on or efforts toward knowledge sharing (Su et al, 2010: p. 29)
On the other side of this equation lies the expatriate, and this goes both ways: the American manager stationed in China, or the Chinese manager stationed in the United States.
Both types of managers may face the issue of marginality while attempting to implement an organizational learning process, or by attempting to explain to headquarters in their home country why the organizational learning process in the foreign country is not working (Holsapple, 2004: p. 439).
Neither manager is at home he or she may be well acquainted with local customs and culture, yet their superiors in each member country of the international joint venture may view them as marginal, or not a true member of any culture, by virtue of their peripheral status in the community because they were not born there.
Easterby-Smith et al (2005) point to this phenomenon, and its impact on organizational learning, herein: perceived marginality affects perception and, thus, the influence of the sender&because the [multinational corporation] views senders as marginal, the information or knowledge they transmit is considered of less value or relevance than similar information from a member within the home country&
Information or knowledge flowing from them is likely to have little influence on the knowledge base or decision making of&the home office (p. 218).
As an example, technological firms tend to live and die by their tacit knowledge, in the Western arena. American managers understand that tacit, non-imitable knowledge is crucial for a firms competitive advantage (Li, Huiping 2010, p. 98; Awad, 2004: p. 27).
A highly competitive business environment such as technology tends to encourage employees to forego their personal needs and share tacit knowledge freely in order to serve the competitive engine of the firm, otherwise the value and uniqueness of knowledge-intensive resources can be swiftly lost to competitors (Li, Huiping 2010, p. 98).
But given that competition still remains a relatively new concept in Chinese firms, this business imperative may be lost on some Chinese managers. Organizational learning processes often seek to gain open access to the kind of deeply-embedded knowledge that flows through the lifeblood of the firm (Li, Huiping 2010, p. 98).
This type of tacit knowledge often resembles practices and methods that may either be proprietary, or that can only be perceived and attained by the senior firm. Huiping (2010), speaks of technological capability itself as a form of tacit knowledge which varies from firm to firm, and may or may not avail itself to managers due to its inherently specialized nature (p. 98).
Tacit knowledge and capabilities after all derive from internal learning processes developed in close quarters with other employees of varying competence levels and talents (Huiping, 2010: p. 98). Technological aptitude is not a commodity. It cannot be bought and sold only imitated&with or without assistance&from the originating firm (Huiping, 2010: p. 98).
For this reason, managers are best served when they avail themselves of the autonomy index prevalent in the Chinese firm, as outlined earlier. In Western business, the tacit knowledge, or skills, routines and processes&developed over time in a gradual process involving trial and error&are a primary source of competitive&or ownership&advantage (Huiping, 2010: p. 98).
However many managers in Chinese firms may either not see the relevance of tacit knowledge to the business model, may feel threatened by it, or may feel too marginalized to act upon it. Chinese firms desire to join the international joint ventures to gain access to the tacit knowledge embedded therein, however their ability to acquire and act upon that knowledge in their own firms may be limited by their lack of autonomy.
Reference List
Awad, E. M. (2004) Knowledge Management. Delhi, Pearson Education.
Dierkes, M. et al (2003) Handbook of Organizational Learning and Knowledge. Oxford, Oxford University Press.
Easterby-Smith, Mark et al (2005) The Blackwell handbook of organizational learning and knowledge management. New Jersey, Wiley-Blackwell.
Holsapple, C.W. (2004) Handbook on knowledge management. Berlin, Birkhauser.
Huiping, L. (2010) Integration and accumulation of technological capability within joint ventures in China. Journal of International Management Studies [online] 10 (1). Web.
Su, W. et al (2010) Exploring the extent and impediments of knowledge sharing in Chinese business enterprise. International Journal of Knowledge Management [online] 6 (4) Web.
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