Academic journal article Management International Review

Managerial Learning in Foreign-Invested Enterprises of China

Academic journal article Management International Review

Managerial Learning in Foreign-Invested Enterprises of China

Article excerpt


* This paper develops a model of host-country managerial learning in the foreign-invested enterprises of China. The discussion is based on an empirical study of 18 such enterprises.

* The factors affecting managerial learning originate from either organizational or individual sources. The former include the foreign partner, the Chinese partner, and the structure of an FIE, while the latter include the expatriate manager and the local manager.

Key Results

* The factors affect the managerial learning process in different ways and the model gives some ideas of what a foreign investor can do in order to facilitate learning.

With the opening up of former socialist countries in Eastern Europe (including Russia) and of existing socialist countries such as China and Vietnam, thousands of foreign companies have flocked to set up operations in these transitional economies. Through these operations, active transfer of management knowledge from foreign companies to local business communities has taken place. The absorption of management know-how is usually one of the official objectives of attracting foreign direct investments. For instance, during the early stage of China's economic reforms, the government learned from the experience of restructuring thousands of loss-making state enterprises that modern management techniques were sorely needed for the country's continued economic development:

   We must consciously sum up China's historical experience and study the
   concrete conditions and requirements for the economic growth. In addition,
   we must draw upon the world's advanced methods of management, including
   those of capitalist countries, that conform to the laws of socialized
   production (Central Committee of the Communist Party of China, 1984).

This phenomenon of management knowledge transfer has attracted the attention of some researchers since the early 1990s (e.g., Child/Markoczy 1993, Markoczy 1993). A 1996 special issue of Organization Studies was devoted to the discussion of managerial learning in the transformation of Eastern Europe. A caveat is that the nature of this managerial learning should be distinguished from that occurring in strategic alliances formed by partners from developed countries (cf. Dodgson 1993, Hamel 1991, Inkpen/Crossan 1995). In the former case, managers of a transitional economy learn to run a company according to the rules of a market economy; in the latter case, managers of an alliance partner try to acquire certain skills possessed by the other partner(s).

Previous studies of host-country managerial learning have enriched the existing literature and have made inroads on building a solid empirical foundation in this area of research. Drawing upon the insights provided by these studies and using China as an example, the objective of this paper is to propose a model which systematically incorporates the key factors affecting host-country managerial learning. Since there are many factors that can affect a learning process, such as firm size and corporate culture, the factors included in the model are by no means exhaustive. This paper provides a more comprehensive understanding of host-country managerial learning than previous studies.

Overview of Previous Studies

Table 1 lists the major empirical studies of host-country managerial learning from foreign investors in transitional economies. Owing to limitation of space, this section does not intend to analyze these studies. Rather, it gives a rough idea of what aspects of managerial learning have been investigated, and some of their limitations. Some of these studies will be referred to in the following sections when their results are relevant to this study.

Table 1. Major Empirical Studies of Host-country Managerial Learning

Study                      Country of Investigation

Child and Markoczy (1993)  China & Hungary
Markoczy (1993)            Hungary
Cyr and Schneider (1996)   Czech Republic,
                           Hungary & Poland
Geppert (1996)             East Germany
Lyles and Salk (1996)      Hungary
Nilsson (1996)             East Germany
Villinger (1996)           Czech Republic, Hungary,
                           Poland & Slovakia
Lyles and Steensma (1997)  Hungary

Study                      Research method

Child and Markoczy (1993)  Case study
Markoczy (1993)            Case study
Cyr and Schneider (1996)   Interview &
                           questionnaire survey
Geppert (1996)             Case study
Lyles and Salk (1996)      Questionnaire survey
Nilsson (1996)             Longitudinal case study
Villinger (1996)           Questionnaire survey
Lyles and Steensma (1997)  Longitudinal
                           questionnaire survey

Study                      Key aspects of managerial learning

Child and Markoczy (1993)  A typology of managerial learning depending
                           on whether cognitive and/or behavioural
                           change takes place

Markoczy (1993)            The impact of changes in contingent factors,
                           such as decrease in dependence on
                           authorities and the simultaneous increase in
                           dependence on the foreign partners, on
                           organizational routines and procedures

Cyr and Schneider (1996)   How human resource management activities
                           contribute to the learning of new values and
                           behaviours, especially for local managers
                           and employees

Geppert (1996)             How the processes of learning in
                           organizations are tied to specific
                           institutional conditions

Lyles and Salk (1996)      The influence of organizational
                           characteristics, structural mechanisms and
                           contextual factors on knowledge acquisition
                           from the foreign parent in joint ventures

Nilsson (1996)             How the myths and theories for change held
                           by Western acquiring companies are relevant
                           for managerial learning in Eastern Europe

Villinger (1996)           Key skill requirements for and major
                           barriers to successful managerial learning

Lyles and Steensma (1997)  The influence of managerial and technical
                           support provided by the foreign parent on
                           IJV learning and the impact of learning on
                           IJV survival

Somewhat surprisingly, Hungary has been the most researched country although her political and economic influence is much smaller than that of China. …

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