Embed Size (px)
Citation preview
Alliance Manchester Business School
Dynamics of reverse knowledge transfer in MNCs: case studies of an American MNC and its Japanese subsidiary A thesis submitted to the University of Manchester for the degree of Doctor of Business Administration
Hiroyuki Ishihara 2017
[1]
Table of Contents 1. Introduction ............................................................................................................................... 7
1.1. Changes MNCs are facing now ........................................................................................... 7
1.2. Marketing strategies for MNCs and knowledge transfer .................................................... 9
1.3. Thesis structure ................................................................................................................. 14
2. Theoretical background .......................................................................................................... 17
2.1. MNCs ................................................................................................................................ 17
2.1.1. MNC as an economic entity ...................................................................................... 17
2.1.2. Strategy-and-structure theory for MNCs ................................................................... 18
2.2. MNC and knowledge transfer ........................................................................................... 21
2.2.1. A short history of research on cross-border knowledge transfer ............................... 22
2.2.2. Knowledge type and characteristics of knowledge ................................................... 23
2.2.3. Organizational characteristics ................................................................................... 26
2.2.4. Network characteristics ............................................................................................. 28
2.2.5. Cultural differences ................................................................................................... 30
2.2.6. Language proficiency ................................................................................................ 32
2.3. Reverse Knowledge Transfer ............................................................................................ 33
2.3.1. Subsidiary’s strategic role ......................................................................................... 36
2.4. Research gap and conceptual framework .......................................................................... 39
2.4.1. Research gap ............................................................................................................. 39
2.4.2. Conceptual framework .............................................................................................. 42
3. Research methodology ............................................................................................................ 46
3.1. Introduction ....................................................................................................................... 46
3.2. Research paradigms........................................................................................................... 48
3.2.1. Ontology and epistemology....................................................................................... 48
3.2.2. Comparison between research paradigms ................................................................. 49
3.3. Research strategy............................................................................................................... 53
3.4. Research method ............................................................................................................... 56
3.4.1. Research questions, research strategy, and research paradigm for this research ...... 56
3.4.2. Research method – case study method ...................................................................... 58
3.4.3. Alternative research methods .................................................................................... 63
3.4.4. Validity for social constructionist’s case study method ............................................ 64
[2]
3.4.5. Generalizability for the social constructionist’ case study method ........................... 67
3.4.6. Weaknesses ............................................................................................................... 69
3.5. Outline of case studies ....................................................................................................... 70
3.5.1. Case study protocol ................................................................................................... 71
3.5.2. Interviews .................................................................................................................. 72
3.5.3. Other evidence ........................................................................................................... 75
3.6. Analysis ............................................................................................................................. 75
4. Background to the case studies .............................................................................................. 80
4.1. Outline of Global Computer .............................................................................................. 80
4.2. The ‘GC Way’ ................................................................................................................... 80
4.3. Era of turbulence ............................................................................................................... 81
4.4. Changes of GC-Japan ........................................................................................................ 86
5. Case study (1): Japan Quality Committee (JQC) Program ................................................ 90
5.1. Overview of the program .................................................................................................. 90
5.2. Meeting style of the JQC program .................................................................................... 91
5.3. Reverse knowledge transfer in the JQC program .............................................................. 93
5.4. Professional translation service ......................................................................................... 97
5.5. Post-JQC meetings ............................................................................................................ 98
6. Case study (2): Japan Value Added Reseller (J-VAR) Program ...................................... 101
6.1. Overview of the program ................................................................................................ 101
6.2. Reverse knowledge transfer in J-VAR program ............................................................. 109
6.2.1. Knowledge transfer outside the VG meetings between GC-US, GC-Japan, and J-VAR partners .......................................................................................................................... 109
6.2.2. Knowledge transfer inside the VG meetings and a cause of misunderstanding ...... 112
6.2.3. Impact of social activities on knowledge transfer ................................................... 115
6.2.4. Impact of translators on knowledge transfer in VG meetings ................................. 119
6.2.5. Impact of cultural differences on knowledge transfer ............................................. 122
6.2.6. Impact of direct participation by GC-US people in VG meetings .......................... 126
7. Case study (3): Global Computer Support Service Partner (GC-SSP) Program ............ 129
7.1. Overview of the program ................................................................................................ 129
7.1.1. At the dawn of channel partner strategy .................................................................. 129
7.1.2. After Delta Computer’s acquisition of another company ........................................ 133
7.1.3. After Delta Computer was acquired by Global Computer ...................................... 135
[3]
7.1.4. A new channel partner program GC-SSP to be released ......................................... 137
7.2. Reverse knowledge transfer in the deployment project of GC-SSP and SPOC in Japan 139
7.2.1. Preparation for deployment ..................................................................................... 139
7.2.2. Persuading channel partners and opposition from them .......................................... 144
7.2.3. Idiosyncrasy of the Japanese market ....................................................................... 145
7.2.4. Local modification of spare parts shipment process ............................................... 149
7.2.5. Local modification of partner program GC-SSP ..................................................... 150
7.2.6. Deployment of the new SPOC and termination of the project ................................ 153
8. Cross-case analysis and findings .......................................................................................... 156
8.1. Overall perception of reverse knowledge transfer........................................................... 156
8.2. Knowledge type and knowledge characteristics ............................................................. 159
8.3. The headquarters’ absorptive capacity ............................................................................ 165
8.4. Subsidiary’s disseminative capacity and language proficiency ...................................... 169
8.5. Tie strength ...................................................................................................................... 173
8.6. Cultural differences ......................................................................................................... 176
8.7. Subsidiary strategic role .................................................................................................. 179
8.8. Summary of cross-case analyses ..................................................................................... 181
9. Discussion ............................................................................................................................... 189
9.1. Discussion about the factors ............................................................................................ 189
9.1.1. Knowledge type ....................................................................................................... 189
9.1.2. The headquarters’ absorptive capacity .................................................................... 190
9.1.3. Subsidiary’s disseminative capacity ........................................................................ 193
9.1.4. Tie strength .............................................................................................................. 195
9.1.5. Cultural differences ................................................................................................. 197
9.1.6. Subsidiary strategic role .......................................................................................... 198
9.2. Discussion of heeding capacity ....................................................................................... 201
9.3. New dynamic model for reverse knowledge transfer ...................................................... 203
10. Conclusions ........................................................................................................................ 207
10.1. Summary of this research ............................................................................................ 207
10.2. Contributions ............................................................................................................... 209
10.3. Managerial implications .............................................................................................. 213
10.4. Limitations .................................................................................................................. 216
[4]
10.5. Potential Areas for Future Research ............................................................................ 217
Appendices ..................................................................................................................................... 219
Appendix-1: List of external conferences ................................................................................... 219
Appendix-2: Case study protocol ................................................................................................ 220
Appendix-3: Initial template and final template for template analysis ....................................... 234
References ....................................................................................................................................... 240
[5]
List of Figures Figure 2-1: Subsidiary roles based on knowledge outflows and inflows (Gupta and Govindarajan,
1991, p.774) ...................................................................................................................................... 37
Figure 2-2: Proposed dynamic model for factors affecting reverse knowledge transfer ................... 44
Figure 3-1: Relationship between research questions, research strategy, and research paradigms
(reproduced from Figure 1.1 in Baikie’s “Approaches to Social Enquiry (2007)” p.27) .................. 47
Figure 3-2: Positioning of critical realism and moderate constructionism (Järvensivu and Törnroos,
2010, p. 100) ..................................................................................................................................... 51
Figure 3-3: Relationship between research paradigm, research strategy, and research method ....... 63
Figure 3-4: An example of record for text data in MS-Access database ........................................... 78
Figure 4-1: Organization diagram before restructuring around 2005 - 2010 .................................... 84
Figure 4-2: Organization diagram after restructuring around 2005 - 2010 ....................................... 85
Figure 6-1: Network for J-VAR business around GC-Zeta server products ................................... 103
Figure 6-2: Formation of the VG Forum ......................................................................................... 107
Figure 6-3: Survey results of satisfaction level by J-VAR partners from 2001 - 2014 ................... 108
Figure 7-1: Relationships between CSBU and PMG ...................................................................... 136
Figure 7-2: Relationships between the J-Team and other functions .............................................. 140
Figure 8-1: Relationships between factors and reverse knowledge transfer in case study (1) ........ 183
Figure 8-2: Relationships between factors and reverse knowledge transfer in case study (2) ........ 185
Figure 8-3: 3 Relationships between factors and reverse knowledge transfer in case study (3) ..... 187
Figure 9-1: Dynamic model of reverse knowledge transfer in a MNC ........................................... 204
[6]
List of Tables Table 2-1: Organizational characteristics of several types of MNC organizations (Source: Bartlett
and Ghoshal, 1989, p.75) .................................................................................................................. 19
Table 2-2: Characteristics of each type of MNC (Source: Hedlund, 1986, p.17) ............................. 20
Table 2-3: Relationship between knowledge type and characteristics of knowledge ....................... 26
Table 2-4: Details of network factors ................................................................................................ 29
Table 2-5: Cultural distance from the UK (Source: Bridgewater and Egan, 2002, p.30) ................. 31
Table 3-1: Relationships of paradigms and ontology/epistemology (Guba and Lincoln, 2005, p.193)
........................................................................................................................................................... 50
Table 3-2: Comparison of research paradigms (Järvensivu and Törnroos, 2010, p. 101) ................. 52
Table 3-3: Comparison between four research strategies (Blaikie, 2007, p.8) ................................. 54
Table 3-4: Relationships between research strategies and ontological/epistemological assumptions
(Blaikie, 2007, p.69) .......................................................................................................................... 56
Table 3-5: Contracting implications of positivism and social constructionism (Easterby-Smith et al.,
2008, p.59) ........................................................................................................................................ 58
Table 3-6: Methodological implications of different paradigms (Easterby-Smith et al., 2008, p.63)
........................................................................................................................................................... 59
Table 3-7: Key features of case study method informed by different paradigms (Easterby-Smith et
al., 2008, p.99) ................................................................................................................................... 60
Table 3-8: Validity for constructionist’s research ............................................................................. 66
Table 3-9: Interviewees list ............................................................................................................... 74
Table 5-1: Time line for Beta Computer (Global Computer) and JQC program .............................. 93
Table 7-1: Summary of events regarding partner programs around Theta server .......................... 131
Table 8-1: Overall perception of reverse knowledge transfer per case study ................................. 157
Table 8-2: Summary of knowledge type and knowledge characteristics ........................................ 159
Table 8-3: Summary of GC-US’s absorptive capacity and prior related knowledge ...................... 165
Table 8-4: Summary of GC-Japan’s disseminative capacity .......................................................... 169
Table 8-5: Summary of tie strength ................................................................................................. 173
Table 8-6: Comprehensive summary for relationships of factors and reverse knowledge transfer 182
[7]
1. Introduction 1.1. Changes MNCs are facing now
The way of doing international business has been changing dramatically year over year.
The most prominent phenomenon in the modern business scene is penetration of
information technology (IT). Development of IT has changed the way of doing
international business completely. A few decades ago, office workers used to send airmails
after typing documents on a typewriter to their counterpart in a foreign country, or use
telexes for more rapid international communications. These days, people do not use
typewriters or telexes any more, but they use PCs, tablets, or smartphones, which are all
connected with the Internet, in order to send emails to their counterpart in a foreign
country. Using this latest technology, it is possible to realize instant and economic
international communications. Also a dramatic decrease of international telephone charges
has made overseas calls much easier. Moreover, the Internet technology has made it easy to
hold high-quality and stress-free telephone conferences or video conferences with people
attending from various countries in the world. So, while opportunities of face-to-face
meetings which require expensive overseas travels have been decreasing, opportunities of
more economic ‘virtual meetings’ using advanced information technology have been
increasing.
In this way, development of IT has made it easier to do international business. At the same
time, however, it is true that development of IT has made competition between companies
in the global market much fiercer. News about a merger-and-acquisition between large
companies spreads instantaneously around the world, and it affects stock prices at the stock
markets in London, New York, and Tokyo within twenty-four hours. News about newly
developed products is communicated across the world in a moment, so not only customers
but also competitors around the world can get to know such information in a quicker way.
Consumers can disseminate their own impressions or preferences about some particular
products or services through SNS, which spreads instantly around the world and affects
purchasing motivations of so many people across the world. Trading through ‘e-commerce’
[8]
has been widespread not only in the business-to-consumer market but also in the business-
to-business market aiming after more efficient and cost-less trading between companies. In
this way, ‘IT revolution’ has been enabling exchange of information across the world
instantaneously and has been accelerating the trend of ‘globalization’, so competition
among rival companies has become fiercer. As a result, a rapid adaptation to the changes in
the global market is required of companies who are competing in the global market,
particularly multinational corporations (MNCs).
Now that the world has become smaller thanks to development of IT, managers in MNCs
have to be familiarized with working with foreign people, who have different linguistic and
cultural background, as a team. While managers in MNCs are able to catch up with
advanced technology rather easily, it might be difficult for them to be quickly familiarized
with working with foreign people, especially in the case that Western people and Oriental
people work together, because in general it takes a longer period of time to understand
foreign people’s cultural background.
As far as a MNC has taken a decentralization policy, such a MNC has not had so much
opportunity for frequent and close communications between people from the headquarters
located in a Western country and people from subsidiaries located in Oriental countries. In
such a MNC, by giving subsidiaries wide autonomy, the headquarters has been leaving
each subsidiary’s management to each subsidiary itself with less interference. Therefore,
although MNCs are performing their activities all over the world, in reality the headquarters
and subsidiaries across the world in each MNC have not been integrated beyond the borders
sufficiently. So, even if the headquarters tries strongly to carry out a reform in response to
the changes in the global market, the actual organizations and the employees are not able to
catch up with such a rapid reform in a timely manner, because internal conditions towards a
global integration process have not been matured yet. Thus, currently many MNCs are
regarded to be struggling with the gap between a rapidity of the external changes in the
global market and a slow pace of adaptation of their organizations and people to those
external changes towards globalization, which takes a longer period of time.
[9]
1.2. Marketing strategies for MNCs and knowledge transfer
As shown in the previous section, many MNCs are facing fierce competition from around
the world, so they constantly have to confront the difficulty of drafting their global
marketing strategies. Ever since Levitt (1983) introduced the notion of a global standard
marketing strategy on the assumption that the people’s preferences in the world would be
homogenized through globalization, there has been controversy regarding the benefits of
adopting either a global standardization strategy or a local adaptation strategy (Apetrei et
al., 2015, Katsikeas et al., 2006, Schmid and Kotulla, 2011, Tan and Sousa, 2013,
Theodosiou and Leonidou, 2003, Verbeke and Asmussen, 2016). One of answers to that
controversy is a ‘contingency approach’ in which neither complete standardization nor
complete adaptation is appropriate, but standardization and adaptation should be mixed to a
certain degree which is contingent on internal and external factors of the focused MNC
(Cavusgil and Zou, 1994, Douglas and Wind, 1987, Drazin and Van De Ven, 1985, Jain,
1989, Rau and Preble, 1987, Theodosiou and Leonidou, 2003, Zou et al., 1997).
However, recently, as some MNCs have been switching their governance policy from
decentralization to centralization (Anonymized Document 5), there is clearly a tendency
that the headquarters in MNCs try to force their complete global standard strategies onto
subsidiaries around the world. One reason behind such a tendency is regarded to be that
those MNCs have to plan and implement their marketing strategies as quickly as possible in
order to win against their competitors in the current global market.
For such MNCs, globally standardized marketing strategies are most convenient, because
the headquarters can make a plan for each marketing strategy efficiently without paying
attention to each subsidiary’s idiosyncratic market situation. Their assumption behind such
global standard strategies is that markets in the world have been homogenized, as Levitt
(1983) or Ohmae (1999) anticipated. Also they can implement such strategies quickly by
allowing only the least modification in the host country of each subsidiary.
[10]
But such a direction in which the headquarters try to force their global standard marketing
strategies upon subsidiaries around the world can be risky, because markets in the world
have not been homogenized in reality yet, as the advocates of local adaptation strategies
insist (Boddewyn et al., 1986, Douglas and Wind, 1987, Wind, 1986). Under such a
situation in the world, there is a possibility that some global standard marketing strategies
significantly misfit the idiosyncratic market situation in some specific countries. If
implementation of such a marketing strategy in the specific country is compelled forcibly,
the risk of going into a difficult situation increases.
Therefore, for a MNC, decision-making to select either a global standardization strategy, a
local adaptation strategy or a contingency approach, in the strategic planning or strategic
implementation phase of each marketing strategy is critical. Such decision-making
influences not only the subsidiary but eventually also the MNC as a whole. From such a
background, the decision-making process for strategic planning in MNCs has been
researched from various angles (Chakravarty and Perlmutter, 1992, Channon and Jalland,
1979, Hedlund, 1980, Lorange and Probst, 1990).
Channon and Jalland (1979) point out that fundamental changes for MNCs appeared after
the oil crisis in 1970s, and that those fundamental changes also resulted in the serious
modification of strategic planning and control systems in MNCs. Particularly, they mention
that there are two new areas for strategic planning, which are ‘competitive analysis’ and
‘socio-political trend analysis’. Competitive analysis is needed because MNCs are always
exposed to threats from new competitors which appear abruptly through geographic market
interpretation by other MNCs. Also socio-political trends analysis is needed because MNCs
have to be careful with changes in the socio-political climate in countries where they
operate (Channon and Jalland, 1979). For both areas, paying closer attention to local
markets is necessary .
Pointing out that strategic planning processes in many MNCs often fall short of offering
realistic support for an effective international strategic focus, Lorange and Probst (1990)
clarify several challenging areas for a MNC’s strategic planning process, and make
[11]
proposals to address those challenging areas. They point out, “a uniform treatment of all
country operations can lead to strategy implementation dysfunctionalities for the
company’s cadre of local managers across several businesses in a given county”
(1990:147). So they insist that proper attention must be given to a global assessment of the
overall business seen in a global context. Also they point out the importance of
participation and communication in the strategic process (Lorange and Probst, 1990).
Particularly, they put an emphasis on face-to-face communication by mentioning, “There is
probably nothing that can substitute for face-to-face communication when it comes to
development of strategic commitment” (1990: 155).
Hedlund (1980) insists on the importance of foreign subsidiaries’ involvement in strategy
formulation for a MNC, by analysing political, economic, social, and technical changes or
uncertainty which modern MNCs are facing. He recommends several practical ways aiming
for subsidiaries’ involvement in strategy formulation, including a recommendation that “the
top managers of the subsidiaries should become involved in formulating corporate strategy
in specified areas” (1980:33), or another recommendation that “more effort should be made
to communicate assumptions about environmental conditions underlying plans and
proposals” (1980:33).
Thus, there has been much research focusing on decision-making processes in strategic
planning or the strategic implementation phase of marketing strategies in MNCs, in
response to the turbulent change of the management environment in which MNCs are
facing. However, research which brings in the research results of ‘cross-border knowledge
transfer’ to the area of decision-making process of strategic planning in MNCs is rare.
Hedlund (1980) and Lorange and Probst (1990) point out that close and effective
communications within a MNC, particularly between the headquarters and subsidiaries, are
necessary for a MNC’s strategic planning. But such communication between the
headquarters and foreign subsidiaries is accompanied by difficulties caused by cultural or
linguistic differences between different countries, which are not mentioned by researchers
in the area of decision-making processes for strategic planning or the strategic
[12]
implementation phase in MNCs (Channon and Jalland, 1979, Hedlund, 1985, Lorange and
Probst, 1990). Those difficulties in communication between different countries in MNCs
have often been studied by researchers in the area of cross-border knowledge transfer (for
example, Szulanski, 1996), so it is meaningful to combine the research results in the area
for cross-border knowledge transfer with research for the decision-making process for
strategic planning.
In terms of cross-border knowledge transfer in MNCs, it has drawn researcher’s attention in
terms of how efficiently and effectively knowledge can be transferred beyond the border
with in a MNC, as MNCs have expanded across the world (Björkman et al., 2004, Gupta
and Govindarajan, 2000, Inkpen and Tsang, 2005, Minbaeva, 2007, Schlegelmilch and
Chini, 2003). Particularly, researchers have been trying to explore the root cause of
difficulties in cross-border communications, which are sometimes called ‘stickiness’
(Szulanski, 1996, Simonin, 1999b). In order to elucidate such stickiness in the knowledge
transfer process, the characteristics of knowledge itself have been argued by introducing the
concept of ‘tacitness’ of knowledge advocated by Nonaka (1991) or Winter (Winter, 1987).
Also cross-border knowledge transfer has been studied by applying the theory of
‘absorptive capacity’ (Cohen and Levinthal, 1990) or the concept for ‘social capital’
(Inkpen and Tsang, 2005, Nahapiet and Ghoshal, 1998), emphasising on the degree of
impact which strength of informal relationships between individuals in a firm has on the
effectiveness of knowledge transfer. Thus, cross-border knowledge transfer in MNCs has
been studied from various angles. But the main focus of such research has been the
knowledge flows from the headquarters to subsidiaries (‘forward knowledge transfer’) from
the viewpoint of how effectively and efficiently knowledge from the headquarters can be
transferred to subsidiaries in the world.
On the other hand, ‘reverse knowledge transfer’, which is knowledge transfer from a
subsidiary to the headquarters, began to be focused upon from the viewpoint of utilizing
innovative technology, which has been developed or accumulated in a specific subsidiary
(Frost and Zhou, 2005, Håkanson and Nobel, 2000). Over time, reverse knowledge transfer
[13]
also began to be studied from the perspective of transferring marketing related knowledge
from subsidiaries to the headquarters (Ambos et al., 2006, McGuinness et al., 2013).
Ambos et al. (2006) explore empirically how reverse knowledge transfer affect the benefits
for the headquarters, and find that the headquarters can enjoy the benefits from not only the
technology related knowledge but also the marketing related knowledge received from
subsidiaries. By extrapolating from their research results, it might be possible to connect
the concept of reverse knowledge transfer to the decision-making process in strategic
planning phase for marketing strategies.
Thus, this research focuses on reverse knowledge transfer in a MNC in the context of
strategic decision-making, but much of extant research about reverse knowledge transfer
has been trying to capture the reverse knowledge transfer mechanisms in MNCs statically.
However, in reality, the true picture of the reverse knowledge transfer is far more
complicated and dynamic. As illustrated in the previous section, because of rapid
development of the Internet and communication technologies, recently communications
within a MNC have become faster and more immediate, but in reality there are possibilities
that miscommunications might happen due to language barriers, cultural differences, lack
of face-to-face communications, and intra-organizational power among others. Thus, the
circumstances around reverse knowledge transfer have become more complicated and
dynamic. Therefore, in this research, the dynamics of reverse knowledge transfer is
explored in a multi-faceted way, considering not only the frequently used factors such as
the type of knowledge to be transferred, the headquarters’ absorptive capacity, or cultural
differences, but also subsidiary’s types (innovator type, implementer type, and some
others), subsidiary’s disseminative capacity, and network characteristics.
Thus, the purpose of this research is to explore the dynamics of reverse knowledge transfer
in a multi-faceted way from the perspective of how reverse knowledge transfer can
influence decision-making in strategic planning or strategic implementation phase for
marketing strategies of a MNC. More specifically, the following questions are pursued:
[14]
- What factors in the reverse knowledge transfer mechanism in MNCs are closely
linked to success or failure of reverse knowledge transfer? How are these factors
interlinked with each other?
- How can MNCs improve the reverse knowledge transfer mechanisms, if they do not
work well?
In this research, initially, a conceptual framework consisting of knowledge type, the
headquarters’ absorptive capacity, subsidiary’s disseminative capacity, language
proficiency, tie strength, cultural differences, and subsidiary strategic role is proposed.
Then, in order to capture vividly the true picture of reverse knowledge transfer in a MNC,
three case studies of a U.S.-based MNC and its Japanese subsidiary are conducted, and
those cases are analysed based on the conceptual framework. Finally, based on cross-case
analyses, a dynamic model for reverse knowledge transfer is proposed.
1.3. Thesis structure
The reminder of the thesis is structured as follows:
Chapter 2 provides a review of literature and a conceptual framework including factors
affecting reverse knowledge transfer in a MNC. In this chapter, literature regarding MNCs,
knowledge transfer in MNCs, and reverse knowledge transfer is reviewed. Based on the
literature review about these fields, a conceptual framework is proposed, and then the
research questions are stated.
Chapter 3 illustrates the research methodology. First, the research paradigm consisting of
ontology and epistemology is discussed. Among several paradigms, social constructionism
is chosen for this research. Secondly, research strategy (inductive, deductive, retroductive,
and abductive) is argued, and the abductive strategy is chosen. Thirdly, research method is
argued, and the case study method is chosen from the social constructionist’s viewpoint.
Also in this chapter, an outline of case studies is illustrated. Interviews are undertaken with
twenty-four respondents, and the language data collected through interviews are
qualitatively analysed.
[15]
Chapter 4 provides the background regarding the target company, Global Computer, for the
case studies. Global Computer (GC) is a U.S.-based IT company, which has subsidiaries
around the world. In the case studies, the reverse knowledge transfer process between GC’s
headquarters in the U.S. and its subsidiary is Japan is focused.
Chapter 5 is about Case Study (1) illustrating how knowledge was transferred from the
Japanese subsidiary of GC (GC-Japan) to the headquarters located in the U.S. (GC-US)
through the Japan Quality Committee (JQC) forum. The purpose of that forum was to
improve the product quality of FT server products, which were raised by the Japanese
customers who were very sensitive to the quality. In this case study, reverse knowledge
transfer did go well due to close relationships between GC-US and GC-Japan and several
other factors.
Chapter 6 is about Case Study (2) illustrating how knowledge was transferred from GC-
Japan to GC-US through the Victory Group (VG) forum to fix various quality issues
around the GC-Zeta server products. In this forum, not only the engineers from GC-Japan
and GC-US but also the engineers from the partner companies certified for the Japan Value
Added Reseller (J-VAR) program used to attend regularly. In this case study, reverse
knowledge transfer worked fairly well due to close relationships between GC-US, GC-
Japan, and the J-VAR partners, and some other factors.
Chapter 7 is about Case Study (3) illustrating a project to deploy one of the globally
standardized channel partner programs in GC-Japan. In this case study, the idiosyncratic
market situation in Japan was not transferred to GC-US accurately, so the deployment
program was unsuccessful, which means that reverse knowledge transfer did not go well.
Chapter 8 presents cross-case analysis and findings through the above three case studies. In
line with the conceptual framework defined in Chapter 2, three cases are analysed, and
findings are presented. One of major findings is a ‘bypass’ which is a direct relationship
between local customers in Japan and the headquarters of GC.
[16]
Chapter 9 provides a discussion based on the cross-case analysis and findings presented in
the previous chapter. Through the discussion, the headquarters’ ‘heeding capacity’ is
proposed. Finally, a dynamic model for reverse knowledge transfer is proposed.
Chapter 10 provides conclusions, in which contributions, managerial implications, and
limitations are discussed.
[17]
2. Theoretical background As discussed in the previous chapter, the purpose of this research is to explore the dynamics
of reverse knowledge transfer mechanisms in MNCs with respect to the headquarters’
strategic decision-making for marketing strategies. In line with this purpose, in this chapter,
the theoretical background for this research is discussed. At first, literature regarding
MNCs, and then literature regarding knowledge transfer and reverse knowledge transfer in
MNCs is reviewed. Next, after the research gap is discussed, in order to explore the
dynamics of the reverse knowledge transfer mechanisms in MNCs, possible factors
affecting reverse knowledge transfer are presented. A conceptual framework for the
dynamics for reverse knowledge transfer in MNCs is then proposed.
2.1. MNCs
One of the most remarkable economic phenomena of the post-war era has been the rise of
multinational corporations (MNCs) in the world. Buckley and Casson note, “No economic
organization in post-industry society has evolved so quickly and to such a high degree of
sophistication of MNC” (1976:1). So MNCs have attracted not only the economists but also
researchers in the management field. In this section, literature regarding the existence of
MNCs, and then literature regarding the relationship between strategy and organization for
MNCs is reviewed.
2.1.1. MNC as an economic entity
In response to a rapid growth of MNCs just after the Second World War, economists began
to pay attention to MNCs as an economic organization from around the late 1950s. Since
Hymer (1976) published a paper regarding the theory of foreign direct investment (FDI) in
1960, other researchers have continued research on MNCs in line with this theory (for
example, Calvet, 1981, Dunning and Rugman, 1985, Temiz and Gökmen, 2014, Tomassen
et al., 2012). The theory of FDI is addressed to the question of why a foreign owned firm is
able to compete with indigenous firms in the host economy, given the innate advantages of
an indigenous firm. Kogut and Zander argue that a principal belief of the theory of FDI is
[18]
that “the primary advantages that a firm brings to foreign market is its possession of
superior knowledge” (1993: 627).
Defining an MNC as an enterprise which owns and controls activities in different countries,
Buckley and Casson (1976) established the ‘internalization theory’ insisting that a MNC
exists to internalize markets for intermediate products such as knowledge. Rugman (1986)
supports this theory and offers a stronger proposition that the MNC arises due to the
internalization of the failure of the market for knowledge. Kogut and Zander (1993) oppose
such a proposition, insisting that MNC arises not out of the failure of market for the buying
and selling knowledge but out of its superior efficiency as an organizational vehicle which
enables knowledge transfer across borders.
2.1.2. Strategy-and-structure theory for MNCs
In parallel with research from the economist’s viewpoint, researchers from the management
field have been studying MNCs from the perspective of business strategy, especially paying
attention to the relationship between strategy and organization. Applying Chandler (1962)’s
strategy-and-structure theory, Fouraker and Stopford (1968) focus on the strategy-
organization co-alignment in the MNC context. In line with this vein, Egelhoff (1982),
Rosenzweig and Singh (1991), Wolf and Egelhoff (2013) and others research MNCs
focusing on the relationships between international strategies and formal organizational
structures.
Through their empirical research on the organization of major MNCs in the U.S., Europe,
and Japan, Bartlett and Ghoshal (1989) classify all the MNCs mainly from the
organizational viewpoint into three types; ‘multinational’, ‘global’, and ‘international’
organizations. On top of them, they emphasize that some successful firms in the world
possess a ‘transnational’ organization (Bartlett and Ghoshal, 1989). They argue that a
transnational company “seeks efficiency not for its own sake but as a means to achieve
global competitiveness”, and that “it acknowledges the importance of local responsiveness
but as a tool for achieving flexibility in international operations” (Bartlett and Ghoshal,
[19]
1989, p.68). Differences between these four types of the MNC organizations are shown in
Table 2-1.
Table 2-1: Organizational characteristics of several types of MNC organizations (Source: Bartlett and Ghoshal, 1989, p.75)
Organizational
characteristics Multinational Global International Transnational
Configuration of
assets and capabilities
Decentralized and
nationally self-
sufficient
Centralized and
globally scaled
Sources of core
competencies centralized,
others decentralized
Dispersed,
interdependent, and
specialized
Role of overseas
operations
Sensing and exploiting
local opportunities
Implementing parent
company strategies
Adapting and leveraging
parent company
competencies
Differentiated
contributions by
national units to
integrated worldwide
operations
Development and
diffusion of knowledge
Knowledge developed
and retained within
each unit
Knowledge developed
and retained at the
centre
Knowledge developed at
the centre and transferred
to overseas unit
Knowledge developed
jointly and shared
worldwide
Similarly, Hedlund (1986) pays attention to the historical transition of the organization
structure and strategy for MNCs, and chronologically classifies the MNCs into three types;
ethnocentrism, polycentrism, and geocentrism. The characteristics of each type of MNC are
shown in Table 2-2.
[20]
Table 2-2: Characteristics of each type of MNC (Source: Hedlund, 1986, p.17)
Ethnocentrism Polycentrism Geocentrism
Importance of foreign
business
Marginal Substantial/dominant Dominant
Basis for international
strategy
Exploit firm-specific
advantages
Market size, scale and scope
economies, finance
Competition, multinationality
Expansion mode Gradual, concentric, green-
field
Market-driven, acquisitions,
cash-constrained
Quick, direct, competition-
driven
Organization structure Mother-daughter, international
division
Mother-daughter, international
division, holding company
Global divisions or matrix
organization
Governance mode Hierarchy Market Hierarchy
Control style HQ-derived, coercive,
normative
Calculative Normative, coercive
Autonomy of subsidiary Low-Medium High Low-Medium
Strategic role of subsidiary Implement local strategy Formulate + implement local
strategy
Implement + adapt to global
strategy
Recruitment and rotation Home-country managers,
much rotation
Local managers, little rotation Mixed, Third country
nationals, much rotation
According to Hedlund (1986), after the ethnocentrism and polycentrism stages, some
MNCs jump rapidly into the geocentrism stage, mainly because of the pressure from rivals.
In geocentric MNCs, a shift back to less calculative and more normative and coercive
control is required in order for global strategies to work (re-centralization), and the
subsidiaries have to implement strategies formulated according to a global logic (Hedlund,
1986). Having pointed out several strains of the current geocentric MNC, Hedlund (1986)
proposes a ‘heterarchical’ MNC as the next ideal stage for MNCs. A heterarchical MNC
should have many centres for decision-making, and subsidiary managers are also given a
strategic role, not only for their subsidiaries but for the MNC as a whole (Hedlund, 1986).
The central idea of the heterarchy concept can be comparable to the transnational concept
advocated by Bartlett and Ghoshal (1989).
From the late 1980s to the beginning of the 1990s, as MNCs became more complicated
organizations which were dispersed geographically and at the same time had multiple
business units with different missions and purposes, the focus of MNC researchers shifted
to the direction in which MNCs are viewed as a ‘network’. Ghoshal and Bartlett argue that
[21]
“such an entity can be conceptualized as an inter-organizational network consisting of all
other organizations such as customers, suppliers, regulators, and so on, with which the
different units of the multinational must interact” (Ghoshal and Bartlett, 1990, p.603).
Kogut (1989) discusses that the focus of such studies is to understand the MNC as a
network competing on its flexibility and easiness of transferring acquired capabilities
across borders.
Applying Wernerfelt (1984)’s Resource-based View (RBV) theory to the MNC
organizations, Gupta and Govindarajan argue that “corporate control over a specific
subsidiary can be thought of as a ‘governance mechanism’ instituted by the corporation to
regulate transactions between it and the focal subsidiary” (1991: 770). Such transactions
occur along three dimensions; capital flows, product flows, and knowledge flows;
therefore, the MNC can be seen as a network of capital, product, and knowledge
transactions (Gupta and Govindarajan, 1991). Thus, much research for MNCs has been
conducted from the viewpoint that a MNC is an inter- or intra-organizational network
(Andersson et al., 2005, Forsgren, 2004, Foss et al., 2012, Holm et al., 2015, Lorange,
2002, Malnight, 1996, Schmid et al., 2002).
2.2. MNC and knowledge transfer
Knowledge or knowledge transfer is closely related with the existence of MNCs itself. As
shown in the above discussion, according to Buckley and Casson (1976)’s internalization
theory, MNCs exist in order to internalize its intermediate products, which are mainly
knowledge. Under Hymer (1976)’s FDI theory, the primary advantages that a MNC can
bring to foreign market is its possession of superior knowledge. Also according to Gupta
and Govindarajan (1991), while a MNC can be viewed as a network of the flows of capital,
product, and knowledge transactions, the flows of knowledge are most important among
them. Thus, knowledge is closely related to the existence of MNCs, but in reality it is not
easy to transfer knowledge across borders beyond cultural or linguistic differences between
[22]
countries (for example, Simonin, 1999b). So knowledge transfer across borders has been
studied from various angles based on the question of how firms can transfer knowledge
efficiently and effectively between different countries, using various theories in an
interdisciplinary way. This is further discussed in the section below.
2.2.1. A short history of research on cross-border knowledge transfer
Originally, knowledge transfer in organizations (not only MNCs but also other general
companies or organizations) began to be researched from the background of technology
transfer (Garud and Nayyar, 1994, Teece, 1977) or learning organizations (Attewell, 1992,
Marquardt, 1996). In the early days, the terminology ‘knowledge transfer’ was not often
used but terms such as ‘technology transfer’, or ‘information transfer’ were used instead.
However, one epoch-making event, which changed the research on knowledge transfer
after it, happened in the early 1990s, that is, introduction of the concept of ‘tacit
knowledge’ (Kogut and Zander, 1992, Nonaka, 1991, Reed and Defillippi, 1990, Winter,
1987). Until then, ‘knowledge’ meant only what we could explain explicitly in documents
or diagrams. However, introducing the concept of tacit knowledge changed the meaning of
‘knowledge’ itself. Drawing on a philosopher Michael Polanyi’s notion “We can know
more than we can tell” (1966, p.4), it was pointed out that there should be potentially an
enormous tacit space of knowledge behind what we can explain explicitly (Nonaka, 1994).
That implied a possibility that cross-border knowledge transfer might be far more difficult
than it had been observed to be until then. Since then, the volume of research on cross-
border knowledge transfer began to increase, and at the same time the term ‘knowledge
transfer’ began to be used instead of ‘technology transfer’ or ‘information transfer’,
implying ‘knowledge’ as something having an tacit aspect (Ahammad et al., 2016, Argote
and Ingram, 2000, Cavusgil et al., 2003, Davenport and Prusak, 1998, Harzing et al., 2016,
Hedlund, 1994, Martin and Salomon, 2003, Simonin, 1999a, Song, 2014, Szulanski, 1996,
von Hippel, 1994). One of the stark contrasts of the research after the introduction of the
concept about the tacitness is that ‘ambiguity’ or ‘stickiness’ of knowledge has been taken
up largely as one of the constructs affecting knowledge transfer, and the purpose of the
[23]
research is to elucidate the factors consisting of such ambiguity or stickiness (Simonin,
1999a, Szulanski, 1996, von Hippel, 1994).
At the same time, research from the area of knowledge transfer in general organizations
was brought in and applied to the research area about MNCs, and much research has been
conducted into cross-border knowledge transfer in MNCs (Asmussen et al., 2013, Berry,
2015, Björkman et al., 2004, Gupta and Govindarajan, 2000, Jonsson, 2008, Kutschker and
Schurig, 2002, Michailova and Mustaffa, 2012, Minbaeva, 2007, Minbaeva et al., 2014,
Schlegelmilch and Chini, 2003, Yamin and Otto, 2004). One of the recent trends of the
research in cross-border knowledge transfer is an attempt to view a MNC as a social
community consisting of human relationships, by introducing the concept ‘social capital’
(Inkpen and Tsang, 2005, Nahapiet and Ghoshal, 1998, Tsai, 2000, Walter et al., 2007).
Another trend is to focus on cross-border knowledge transfer not only for technology or
research-and-development (R&D) related knowledge but also for marketing related
knowledge (Riesenberger, 1998, Schlegelmilch and Chini, 2003, Simonin, 1999a). Thus,
research on knowledge transfer in MNCs has been moved forward from various angles.
In the next section, literature regarding the factors affecting cross-border knowledge
transfer is reviewed according to each of the categories of factors that affect cross-border
knowledge transfer, such as knowledge type and characteristics of knowledge,
organizational characters, network characters, cultural differences, and language
proficiency.
2.2.2. Knowledge type and characteristics of knowledge
First of all, knowledge type is reviewed, since it is regarded that different types of
knowledge should affect the effectiveness of cross-border knowledge transfer (Bhagat et
al., 2002, Birkinshaw et al., 2002, Kogut and Zander, 1992, Nahapiet and Ghoshal, 1998).
Regarding knowledge type, there has been a discussion whether information is a part of
knowledge or not. Nonaka (1994) clearly distinguishes knowledge from information. He
mentions, “In short, information is a flow of messages, while knowledge is created and
organized by the very flow of information, anchored on the commitment and beliefs of its
[24]
holder” (Nonaka, 1994, p.15). Nonaka (1994) puts an emphasis on an essential aspect of
knowledge that relates to human action. Similarly, Davenport and Prusak (1998) define
information as a message in the form of document or audible or visible communication, and
subsequently they define organizational knowledge as follows:
“Knowledge is a fluid mix of framed experience, values, contextual information,
and expert insight that provides a framework for evaluating and incorporating new
experiences and information. It originates and is applied in the minds of knowers.
In organizations, it often becomes embedded not only in documents or repositories
but also in organizational routines, processes, practices, and norms.” (Davenport
and Prusak, 1998, p.5)
This definition also means that knowledge exists within people, so a human aspect is
emphasized.
On the other hand, there is another view that information is a part of knowledge. Kogut and
Zander (1992) classify knowledge into two types; information and know-how. According
to them, ‘information’ is a part of knowledge, which can be transmitted without loss of
integrity once the syntactical rules are known, and it includes facts, axiomatic propositions,
and symbols (Kogut and Zander, 1992). So information type knowledge implies knowing
what something means (‘know-what’). On the other hand, ‘know-how’ is the accumulated
practical skill or expertise that allows other people to do something smoothly and
efficiently, so know-how must be learned and acquired (Kogut and Zander, 1992).
Nahapiet and Ghoshal (1998) classify knowledge into know-how and ‘procedural
knowledge’. While know-how concerns well-practiced skills and routines, procedural
knowledge is defined as declarative knowledge and it suggests development of facts and
propositions (Nahapiet and Ghoshal, 1998). So what Nahapiet and Ghoshal (1998) mean by
procedural knowledge is equivalent to information defined by Kogut and Zander (1992).
Next, characteristics of knowledge are reviewed. Winter (1987) suggests six dimensions for
knowledge characteristics, which are (1) tacit or articulable, (2) teachable or not teachable,
[25]
(3) articulated or not articulated, (4) observable in use or not observable in use, (5) complex
or simple, and (6) independent or an element in system. On the other hand, Kogut and
Zander (1992) propose three dimensions; codifiability, complexity, and whether knowledge
of an individual or that of the organization.
Thus, there are several ways to classify the characteristics of knowledge, but by reviewing
the existing different classification ways, Reed and DeFillippi (1990), and Garud and
Nayyar (1994), summarize into three dimensions such as tacitness, complexity, and
specificity. Brief descriptions of these three are as follows:
(1) Tacitness
Tacit knowledge is the implicit and non-codifiable accumulation of skills obtained through
learning (Reed and Defillippi, 1990). Simonin discusses that “the dichotomy between tacit
and explicit knowledge is based on whether knowledge can or cannot be codified and
transmitted in a formal, systematic language or representation, and has been well
documented” (1999: 469); therefore, Kogut and Zander’s codifiability dimension can be
compared to this tacitness dimension.
(2) Complexity
Complexity refers to the number of interdependent routines, individuals, and resources
linked to particular knowledge (Simonin, 1999b). Reed and DeFillippi (1990) argue that
more complex human or technological systems, consisting of complex knowledge, generate
higher levels of ambiguity. Therefore, in general, the more complex knowledge is, the more
difficult it becomes to transfer it.
(3) Specificity
Specificity is whether knowledge is embedded in a large system (specific or systemic), or
whether it is independent (Garud and Nayyar, 1994). While independent knowledge can be
described by itself, specific knowledge must be described in relation to a body of
[26]
knowledge existing in the organization (Bhagat et al., 2002). While it is more difficult to
transfer specific knowledge, it is easier to transfer independent knowledge.
Each type of knowledge discussed above has the characteristics as shown in Table 2-3.
Table 2-3: Relationship between knowledge type and characteristics of knowledge
Tacitness/
Codifiability Complexity Specificity
Information
(Procedural knowledge) Explicit (Codifiable) Simple/Complex
Independent/
Specific
Know-how Tacit
(Not codifiable) Complex Specific
Know-how is tacit, complex, and specific. Information is explicit, but in terms of
complexity it is simple and complex, and in terms of specificity it is independent and
specific. Thus, what makes distinction between information and know-how is tacitness.
2.2.3. Organizational characteristics
Through their meta-analysis using the extant literature about inter- and intra-organizational
knowledge, van Wijk et al. (2008) take up ‘decentralization’ and ‘absorptive capacity’ as
major organizational characteristics affecting cross-border knowledge transfer. In this
section, in addition to these, disseminative capacity is reviewed, because, as Simonin
(1999b), Szulanski (1996), and Gupta and Govindarajan (2000) point out, the knowledge
sender’s disseminative capacity is regarded to be one of the determinants of knowledge
transfer.
In general, it is regarded that decentralization of a subsidiary in a MNC makes knowledge
transfer easier mainly due to increase of autonomy. In fact, Sheremata (2000)’s empirical
research shows that decentralization improves the quality and quantity of ideas and
knowledge which can be shared between different groups. Also Gupta and Govindarajan
(2000) argue that decentralization increases motivation and willingness to share knowledge
[27]
through the perception of freedom among different groups. The result of the meta-analysis
by van Wijk et al. shows that “prior research had mainly suggested a positive relationship
between decentralization and organizational knowledge transfer” (van Wijk et al., 2008,
p.834).
Since Cohen and Levinthal set forth the concept of absorptive capacity (1990), it has been
quoted and used as a construct in much research regarding knowledge transfer in a firm.
Cohen and Levinthal (1990) insist that exploiting external knowledge is a critical
component from the viewpoint of improving innovation processes in a firm. From such a
background, they define absorptive capacity as “the ability of a firm to recognize the value
of new, external information, assimilate it, and apply it to commercial ends” (1990:128).
And then they point out that “the ability to evaluate and utilize outside knowledge is largely
a function of the level of prior related knowledge” (1990:128). Such prior knowledge might
be basic skills, shared language, or the most recent technological developments in a given
field (Cohen and Levinthal, 1990).
Absorptive capacity has often been used as an antecedent affecting cross-border knowledge
transfer, and its impact on knowledge transfer in MNCs has been confirmed empirically
(Gupta and Govindarajan, 2000, Lane et al., 2001, Szulanski, 1996, Tsai, 2001). Also it is
confirmed empirically that prior related knowledge drives absorptive capacity, and then
contributes to cross-border knowledge transfer (van Wijk et al., 2008).
Although absorptive capacity of the recipient of knowledge has been greatly highlighted,
the other capacity of a communication path, ‘disseminative capacity’ of the knowledge
sender, has rarely been considered. Actually, for effective knowledge transfer, a
collaborative effort by the knowledge sender and the recipient is required (Minbaeva and
Michailova, 2004). Disseminative capacity is defined as “the ability to contextualize,
format, adapt, translate and diffuse knowledge through a social and/or technological
network and to build commitment from stakeholders” (Parent et al., 1997, p.87). So higher
communication skills are required by knowledge senders too, in order to let recipients know
and understand correctly.
[28]
According to Minbaeva and Michailova (2004), disseminative capacity is greatly driven by
‘ability’ and ‘willingness’ (or motivation) of a knowledge sender. In terms of ability, they
point out that “knowledge senders may not be able to transfer their knowledge because they
lack the skills to do so, may lack competencies, or have a language deficiency, etc.”
(2004:668). Meanwhile, regarding willingness, they argue that “the perception that others
are willing to share their knowledge (reciprocity) is an important factor in determining
whether an individual chooses to share his/her knowledge with others” (2004:667). While
Minbaeva and Michailova (2004)’s empirical study supports partially the hypothesis that
ability and willingness relate with knowledge share by the knowledge senders, Cabrera et
al. (2006)’s research shows significant support for such a relationship between the
knowledge senders’ ability and willingness and knowledge share among different groups.
2.2.4. Network characteristics
It is natural that the relationship between human beings is closely related with knowledge
creation or knowledge transfer in a firm. Nahapiet and Ghoshal (1998) introduced the
concept of ‘social capital’ in order to elucidate a process about how innovative knowledge
is created in a firm. Social capital is defined as “the sum of the resources embedded within,
available through, and derived from the network of relationships possessed by an individual
or social unit” (Nahapiet and Ghoshal, 1998, p.243). They assume that social capital
consists of nine factors which are classified into three dimensions; structural, cognitive, and
relational. The structural dimension involves the pattern and configuration of relationships,
while the cognitive dimension represents the resources providing shared meaning and
understanding between the network members (Nahapiet and Ghoshal, 1998). Also the
relational dimension refers to the nature of the relationships and the assets which are rooted
in them (Nahapiet and Ghoshal, 1998).
Applying Nahapiet and Ghoshal (1998)’s concept of social capital to research on the
knowledge transfer process between network members, Inkpen and Tsang (2005) narrow
the factors down to six, which are network ties, network configuration, network stability
(these three categorized to structural dimension), shared goals, shared culture (these two to
[29]
cognitive dimension), and trust (this to relational dimension). Brief descriptions of these
factors are shown in Table 2-4.
Table 2-4: Details of network factors
Category Factor Definitions/meanings
Structural Network ties Network ties deal with the specific ways the actors are related. They are a
fundamental aspect of social capital, because a network of social ties creates
opportunities for social capital transactions (Adler and Kwon, 2002)
Network
configuration
Configurations of a network structure determine the pattern of linkages among
network members. Configurations affect flexibility and ease of knowledge
exchange through their impact on the extent of contact and accessibility among
network members. (Krackhardt, 1992)
Network stability Stability is defined as change of membership in a network. A highly unstable
network may limit opportunities for the creation of social capital. (Inkpen and
Beamish, 1997)
Cognitive Shared goals Shared goals represent the degree to which network members share a common
understanding and approach to the achievement of network tasks and
outcomes. (Nahapiet and Ghoshal, 1998)
Shared culture Shared culture refers to the degree to which norms of behaviour govern
relationships. (Inkpen and Tsang, 2005)
Relational Trust Trust is based on social judgement, together with assessment of costs if the
other party turns out to be untrustworthy (Rousseau et al., 1998).
In the research area of network ties, ‘tie strength’ is the main focus. Tie strength is defined
as a combination of the amount of time, the emotional intensity, the intimacy (mutual
confiding), and the reciprocal services which characterize the tie (Granovetter, 1973).
Hansen (1999) explores empirically differences of the impact which tie strength has on
knowledge transfer between cases to transfer simple knowledge and complex knowledge.
He finds that, while weak ties have a positive impact on knowledge transfer efficiency in
case of transferring simple knowledge, strong ties have a positive impact in case of
transferring highly complex knowledge (Hansen, 1999). Differently, Reagans and McEvily
(2003) find that it is easier to transfer knowledge through strong ties than through weak
[30]
ties, regardless of whether knowledge is simple or complex, tacit or explicit. The result of
the meta-analysis by van Wijk et al. (2008) shows that tie strength is the most important
network level factor.
2.2.5. Cultural differences
It is natural to assume that cultural differences between countries might hinder knowledge
transfer in a MNC across the border. In fact, many researchers adopt ‘cultural distance’ as a
construct in conceptual frameworks for knowledge transfer in MNCs, whether as an
independent variable or as a moderator variable (Bhagat et al., 2002, Björkman et al., 2007,
Schlegelmilch and Chini, 2003, Simonin, 1999b). Cultural distance suggests that “the
difficulties, cost, and risks associated with cross-cultural contact increase with growing
cultural differences between two individuals, groups, or organizations” (Björkman et al.,
2007, p.660). So in terms of knowledge transfer in a MNC, the greater the cultural distance
between a subsidiary’s host country and its mother country is, the more ineffective
knowledge transfer is.
Using Hofstede (1984)’s national cultural dimensions, Kogut and Singh (1988) propose a
formula to calculate cultural distance. Using the Kogut and Singh (1988)’s formula,
Bridgewater and Egan (2002) show an example of the actual calculation result of cultural
distance from the United Kingdom to several countries (Table 2-5).
[31]
Table 2-5: Cultural distance from the UK (Source: Bridgewater and Egan, 2002, p.30)
Country
Cultural distance
from the UK
Denmark 1.80
France 2.21
Germany 0.65
Japan 4.83
Netherland 2.01
Sweden 2.41
Switzerland 0.45
USA 0.09
According to this calculation result, cultural distance from the U.K. to the U.S. is almost
zero, so the figures shown in this table can be used as cultural distance from the U.S. to
other countries as well. In that case, it is obvious that cultural distance of Japan (4.83) from
the U.S. is much more distant than cultural distance of any European countries (e.g., 2.21
for France or 2.01 for Netherland). This means that, when thinking about a U.S.-based
MNC, the influence of cultural differences should be considered more seriously for its
Japanese subsidiary than its European subsidiaries.
In research on knowledge transfer in MNCs, cultural distance is often measured using this
Kogut and Singh (1988)’s formula (Håkanson and Nobel, 2001, Millar and Choi, 2009), or
a modified procedure based on Hofstede (1984)’s cultural dimensions (Bhagat et al., 2002,
Kedia and Bhagat, 1988), or other procedures based on Trompenaars (1997)’ dimensions
(Fey and Furu, 2008, Hutchings and Michailova, 2004). However, not all of such research
shows the significant impact of cultural distance on the effectiveness of knowledge transfer
in MNCs. For example, van Wijk et al. (2008) demonstrate that their meta-analysis of
extant literature does not show a clear impact of cultural distance on inter-organizational
knowledge transfer, so they conclude that further investigations will be necessary.
[32]
Reviewing such inconsistent results of research, which used cultural distance as a construct
in international business, Björkman et al. (2007) point out imperfection of the cultural
distance index, so they propose a new idea of conceptualizing culture. They recommend to
use the term ‘cultural differences’ instead of cultural distance, insisting to view “MNCs as
‘cultural systems’ where beliefs, values, and practices form specific configurations in
particular parts of the corporation” (Björkman et al., 2007, p.661). In their theoretical
research regarding capability transfer in cross-border acquisition, it is assumed that cultural
differences affect negatively social integration and potential absorptive capacity, both of
which are supposed to influence capability transfer positively (Björkman et al., 2007).
2.2.6. Language proficiency
Recently, there has been a trend to discuss the impact of linguistic elements on knowledge
transfer in MNCs separately from the impact of cultural differences (Marschan-Piekkari et
al., 1999, Peltokorpi, 2015, Welch and Welch, 2008, Yamao and Peltokorpi, 2015). Welch
and Welch mention, “we concentrate on the specific role of language, in a sense taking it
out of the ‘culture box’” (2008:341). They propose a conceptual framework for cross-
border knowledge transfer, in which seven commonly identified factors (cost, transfer
medium, teams, networks, trust, staff movements, and motivation) influence cross-border
knowledge transfer through the ‘prism of language’ (Welch and Welch, 2008). They argue
that, by affecting all these factors, language may facilitate, filter, distort, and/or act as a
barrier to effective cross-border knowledge transfer (Welch and Welch, 2008).
Through their empirical qualitative research, Buckley et al. (2005) demonstrate that
inefficiency caused by language differences has increased the cost of knowledge transfer
from the headquarters of Western companies to their Chinese subsidiaries. Similarly,
Ambos and Ambos (2009)’s quantitative research shows that ‘linguistic distance’
(differences between sender and recipient units in national languages) has a negative impact
on the effectiveness of knowledge transfer in Europe-based MNCs. Also Peltokorpi (2015)
and Yamao and Peltokorpi (2015) propose conceptual frameworks for cross-border
knowledge transfer, which include corporate ‘language proficiency’ as a construct, and
[33]
emphasize the significant impact of corporate language proficiency on knowledge transfer
through their quantitative studies to the Japanese subsidiaries of foreign MNCs. Thus,
research about knowledge transfer in MNCs paying attention to language proficiency
should try to focus on subsidiaries whose linguistic distance is far from English which is
often used as an official language in many MNCs.
2.3. Reverse Knowledge Transfer
Another research trend focuses on knowledge flows from a subsidiary (or subsidiaries) to
the headquarters in a MNC (reverse knowledge transfer). In the early days when MNCs
appeared, the mainstream of the knowledge flows was from the headquarters to subsidiaries
(Patel and Pavitt, 1991). It was mainly because state-of-the-art technology was transferred
from the headquarters located in an advanced country to subsidiaries located in developing
countries. Therefore, research about knowledge transfer used to focus on the knowledge
flows from the headquarters to subsidiaries (Hymer, 1976, Patel and Pavitt, 1991, Vernon,
1966). These knowledge flows are called ‘conventional knowledge transfer’ (Yang et al.,
2008) or ‘forward knowledge transfer’ (Ambos et al., 2006).
Over time, subsidiaries which were exposed to fierce competition in their host countries
began to store their own marketing know-how. Also some subsidiaries started to acquire
more advanced technological knowledge than subsidiaries located in other countries
(Bartlett and Ghoshal, 1986). At this point, such subsidiaries holding more useful
knowledge than others started to transfer their knowledge to other peer subsidiaries. Such a
transfer is called a ‘lateral transfer’ (Ambos et al., 2006), and has been researched by many
scholars (Frost et al., 2002, Gupta and Govindarajan, 1994, Holm and Sharma, 2006,
Mudambi and Navarra, 2004).
Nowadays, as some subsidiaries have become more knowledgeable and skilful in some
specific areas such as manufacturing technology for some specific products or developed
purchasing skills for some specific materials, not only peer subsidiaries but also the
[34]
headquarters have started to pay attention to such useful knowledge which those specific
subsidiaries have. Hence, knowledge began to flow out from subsidiaries to the
headquarters. Researchers have started to study this third kind of the knowledge flows from
subsidiaries to the headquarters, that is, ‘reverse knowledge transfer’ (Ambos et al., 2006).
At first, the focus was on the research-and-development (R&D) type of knowledge or
knowledge for innovation that was transferred from some subsidiaries to the headquarters
(Asakawa, 2001, Frost and Zhou, 2005, Ghoshal and Bartlett, 1988, Håkanson and Nobel,
2000, Millar and Choi, 2009, Nohria and Ghoshal, 1997). Nohria and Ghoshal mention,
“. . . innovation in MNCs is no longer simply the responsibility of the corporate centre.
Indeed, relative to domestic companies, it is the capacity for distributed innovation that
represents the unique organizational advantage of the modern MNC” (1997: 32). Thus,
researchers began to focus on the role of subsidiaries as a distributor of innovative
knowledge.
Håkanson and Nobel (2001) attempt to elucidate how the degree of integration between the
headquarters and a subsidiary and the degree of ‘embeddedness’ of a subsidiary can
influence ‘reverse technology transfer’. A subsidiary’s embeddedness means how deeply
the subsidiary is “embedded in the local environment in that they maintain frequent and
significant interactions with local organizations (customers, suppliers, competitors, etc.)”
(Håkanson and Nobel, 2001, p.398). Through their quantitative research of foreign R&D
units of a number of Swedish MNCs, Håkanson and Nobel (2001) show that subsidiaries’
embeddedness and integration between the headquarters and the subsidiaries significantly
influence reverse technology transfer.
Also Frost et al. (2002) insist that the 'centres of excellence', defined as an organizational
unit that embodies a set of capabilities that has been explicitly recognized by the firm as an
important source of value creation, can emerge in subsidiaries of MNCs. In line with this
context, Frost and Zhou (2005) empirically show that R&D co-practice, which is
collaborative technical activities carried out jointly by R&D personnel, can accelerate
reverse knowledge integration from subsidiaries to the headquarters.
[35]
Subsequently, researchers have begun to pay attention to the transfer mechanisms for not
only R&D type knowledge but also knowledge regarding marketing from the viewpoint of
the headquarters’ benefits (Ambos et al., 2006, Holm and Sharma, 2006, Noorderhaven and
Harzing, 2009). Ambos et al. note that “the headquarters in a MNC can benefit from its
subsidiary’s knowledge in a various ways: local knowledge can help headquarters to fine-
tune and coordinate a global strategy, improve processes in their own or other units in the
network, or simply provide the missing link in the quest to develop a new product” (2006:
296). In this way, local knowledge in subsidiaries, whether R&D type knowledge or
marketing related knowledge, can be beneficial for the headquarters in terms of the global
strategy, operations, and new product development.
Now reverse knowledge transfer in MNCs is being researched from various perspectives
(Ambos et al., 2006, Jimenéz-Jimenéz et al., 2014, Kumar, 2013, McGuinness et al., 2013,
Mudambi et al., 2014, Nair et al., 2016, Najafi-Tavani et al., 2015, Rabbiosi, 2011,
Sanchez-Vidal et al., 2016, Yang et al., 2008). Although research on reverse knowledge
transfer has been conducted by applying the results of theoretical and empirical research in
the area of cross-border knowledge transfer in MNCs, there are some factors which are
specific to reverse knowledge transfer. For example, subsidiary’s motivation to share its
knowledge (McGuinness et al., 2013, Yang et al., 2008), embeddedness of subsidiaries
(Håkanson and Nobel, 2001, Najafi-Tavani et al., 2015), or subsidiary innovativeness
(Mudambi et al., 2014) are taken up as specific factors which affect reverse knowledge
transfer. Among such factors specific to reverse knowledge transfer, subsidiary’s strategic
role can be regarded to be a decisive factor (Ambos et al., 2006, Asakawa, 2001, Rabbiosi,
2011), because it forms the reverse knowledge transfer mechanisms in a MNC, influences
autonomy and then motivation of knowledge transfer, and eventually affects the
effectiveness of reverse knowledge transfer. In the following section, a subsidiary’s
strategic role is reviewed from the viewpoint of how it affects reverse knowledge transfer.
[36]
2.3.1. Subsidiary’s strategic role
Each subsidiary has a different role in terms of strategy planning and implementation. For
example, while some subsidiaries are expected to provide with advanced technology
acquired in their host countries to the rest of the MNC, others simply implement global
strategies forced from the headquarters. So reverse knowledge transfer is influenced by
subsidiary’s strategic roles.
So far several typologies to classify the subsidiary strategic roles have been proposed
(Ambos and Schlegelmilch, 2007, Bartlett and Ghoshal, 1986, Birkinshaw and Morrison,
1995, Gupta and Govindarajan, 1991, Nobel and Birkinshaw, 1998). Among them, Gupta
and Govindarajan (1991)’s typology is to classify subsidiary’s strategic roles into four
types using two dimensions; the extent to which the focal subsidiary engages in knowledge
inflows from the rest of the MNC, and the extent to which the focal subsidiary engages in
knowledge outflows to the rest of the MNC. The four types of subsidiary strategic role are
‘Global Innovator’, ‘Integrated Player’, ‘Implementer’, and ‘Local Innovator’ (Figure 2-1).
[37]
Likewise, based on how each subsidiary contributes to strategic planning and
implementation, Bartlett and Ghoshal (1986) classify subsidiary roles into four types such
as ‘Strategic Leader’, ‘Contributor’, ‘Implementer’, and ‘The Black Hole’. Although the
dimensions used for classification are different, the meaning of each of the roles defined in
these two typologies (Gupta and Govindarajan (1991)’s typology and Bartlett and Ghoshal
(1986)’s typology) is quite similar, as illustrated in the following descriptions.
Firstly, ‘Global Innovator’ (GI) type subsidiaries, with high outflows and low inflows of
knowledge, serve as the fountainhead of knowledge for the rest of the MNC (Gupta and
Govindarajan, 1991). As some subsidiaries have become more advanced in technology,
they began turning into major knowledge creator in the MNC. This role is equivalent to
‘Strategic Leader’ defined by Bartlett and Ghoshal (1986). Strategic Leader type
subsidiaries serve as a partner of the headquarters in developing and implementing strategy
(Bartlett and Ghoshal, 1986).
Figure 2-1: Subsidiary roles based on knowledge outflows and inflows (Gupta and Govindarajan, 1991, p.774)
Global Innovator (GI)
Integrated Player (IP)
Local Innovator(LI)
Implementer(IM)
Low High
Low
High
Knowledge inflow from the rest of the corporation to the focal subsidiary
Know
ledg
e ou
tflo
wfr
om th
e fo
cal
subs
idia
ry to
the
rest
of t
he co
rpor
atio
n
[38]
Secondly, ‘Integrated Player’ (IP) type subsidiaries, with high outflows and high inflows,
are expected to provide their own knowledge to the rest of the MNC. So their role is similar
to the GI’s role, but different in that they need to receive a certain level of knowledge
inflows from other parts of the MNC (Gupta and Govindarajan, 1991). This role is
equivalent to ‘Contributor’ in Bartlett and Ghoshal’s typology, defined as the subsidiaries
operating in a strategically unimportant market but having a distinctive capability (Bartlett
and Ghoshal, 1986).
Thirdly, Implementer (IM) type subsidiaries, with low outflows and high inflows, engage in
little knowledge creation and rely heavily on knowledge inflows from the rest of the MNC
(Gupta and Govindarajan, 1991). Bartlett and Ghoshal (1986) also call this type of
subsidiary ‘Implementer’. According to their argument, these subsidiaries have just enough
competence to maintain its local operations, and lack the potential to be contributors type
subsidiaries (Bartlett and Ghoshal, 1986).
Finally, Local Innovator (LI) type subsidiaries, with low outflows and low inflows, have
almost complete local responsibility for the creation of relevant know-how, which is too
idiosyncratic for other parts of the MNC to utilize (Gupta and Govindarajan, 1991). This
role is equivalent to ‘The Black Hole’ defined by Bartlett and Ghoshal (1986). According
to their definition, the black hole type subsidiaries exist in local markets where strong local
presence is essential (Bartlett and Ghoshal, 1986).
There is a trend to research reverse knowledge transfer using these typologies for a
subsidiary’s strategic roles (Ambos et al., 2006, Asakawa, 2001, Rabbiosi, 2011). Ambos et
al. (2006)’s empirical research shows that knowledge received from IP and GI type
subsidiaries is more valuable for the headquarters than knowledge received from IM and LI
subsidiaries. While they recommend that the headquarters should focus on obtaining
knowledge from the more valuable subsidiaries, such as IP or GI type subsidiaries, they
point out a risk that valuable knowledge generated in IM or LI type subsidiaries might be
ignored because headquarters’ filters block it (Ambos et al., 2006). On the other hand,
through the survey to over 200 dyads consisting of a foreign subsidiary and the
[39]
headquarters of Italian MNCs, Rabbiosi (2011) finds that over 90% of IM type subsidiaries
either have transferred a low volume of knowledge to their headquarters or did not engage
in reverse knowledge transfer at all. Thus, it is clear that reverse knowledge transfer from
IM type subsidiaries are very limited.
From its definition in the typology, knowledge outflows from IM type subsidiaries are low,
which means that they might not have much knowledge which can be valuable for other
subsidiaries or the headquarters. But it does not mean that reverse knowledge transfer from
IM type subsidiaries should be left unattended. Bartlett and Ghoshal mention, “The
implementers’ efficiency is as important as the creativity of the Strategic Leaders or
Contributors, - and perhaps more so, for it is this group that provides the strategic leverage
that affords MNCs their competitive advantage” (1986: 91). In this way, the roles and
responsibilities expected of IM type subsidiaries are important from the perspective of
global strategy implementation.
2.4. Research gap and conceptual framework
So far literature regarding cross-border knowledge transfer, particularly reverse knowledge
transfer, has been reviewed by focusing on what kind of factors affect cross-border
knowledge transfer. As shown in the above sections, various factors affecting reverse
knowledge transfer in a MNC have been already researched broadly and precisely for a
number of years. However, there are several areas where further enhancement will be
needed.
2.4.1. Research gap
Firstly, among the current literature regarding reverse knowledge transfer, there has rarely
been literature which attempts to apply the concept of reverse knowledge transfer into the
area of how subsidiaries’ knowledge influences the headquarters’ decision-making in the
strategic planning or strategic implementation phase for marketing strategies. As mentioned
earlier, reverse knowledge transfer began to be studied by focusing on transfer of R&D
[40]
type knowledge aiming to make use of innovative technology cultivated in a host country
for the rest of the MNC (Frost and Zhou, 2005, Håkanson and Nobel, 2001). More recently,
the research focus has been shifted to the transfer of more marketing-related knowledge
(Ambos et al., 2006). Although Ambos et al. (2006) mention the importance of
subsidiaries’ marketing-related knowledge such as marketing know-how or market data
about local competitors in relation with the headquarters’ benefits, they do not explore the
impact which subsidiaries’ marketing-related knowledge has on the headquarters’ decision-
making for strategic planning and strategic implementation. On the other hand, as shown in
the previous chapter, now that the global level competition has become fierce, some MNCs
have to make strategic decisions quickly about whether they will select either a global
standardised strategy, a local adaptation strategy, or a mixed strategy contingent upon the
situation (Douglas and Wind, 1987, Theodosiou and Leonidou, 2003). In order to make the
headquarters’ decision-making process quick and effective, it is necessary that the effective
reverse knowledge transfer mechanisms to collect the detailed market situation of
subsidiaries around the world are in place (Egelhoff, 1991, Jain, 1989). As of today,
however, literature which focuses on a relationship between reverse knowledge transfer and
the headquarters’ decision-making process for strategic planning and strategic
implementation is rare. At this point, there is a research gap.
Secondly, in order to investigate how the reverse knowledge transfer mechanisms in a
MNC influence the headquarters’ decision-making process, it is necessary to grasp
dynamically the whole picture of the reverse knowledge transfer mechanisms in a MNC.
However, there has rarely been literature which explores reverse knowledge transfer in a
dynamic and multi-faceted way. For example, Ambos et al. (2006) take up subsidiary
strategic role, source country competitive strength, context similarities, and the
headquarters’ absorptive capacity, as constructs which affect reverse knowledge transfer,
but they do not consider impacts of some other factors and analyse each factor’s mutual
relationships. Thus, research to grasp reverse knowledge transfer more dynamically is rare,
although the reverse knowledge transfer mechanisms in real settings are so complex that it
is difficult to understand statically. So here is another research gap.
[41]
Thirdly, although there has been much quantitative research in the area of reverse
knowledge transfer, there has been less qualitative research. McGuiness et al. (2013)
conducted a case study of a MNC in the UK, but they collected quantitative data from that
company and analyse them quantitatively (‘natural experiment’ method). Thus, qualitative
research in the area of reverse knowledge transfer is very rare. However, when it is
attempted to capture the real status of the reverse knowledge transfer mechanisms in a
dynamic way, a qualitative method is regarded to be more suitable. It is because, under the
qualitative research scheme, there is a possibility that unknown or hidden points might be
brought to light through the real voices of interviewees (Hancock and Algozzine, 2011). At
this point there is a research gap as well.
In this way, in the extant literature, there has rarely been literature which focuses on reverse
knowledge transfer in the context of the headquarters’ strategic decision-making, and which
elucidates the reverse knowledge transfer mechanisms in a MNC holistically using many
factors ranging from knowledge types, organizational characteristics to network
characteristics or cultural differences.
In this research, these research gaps are tackled. As discussed in the first and second
research gaps, in this research, in order to make use of the research results in the area of
reverse knowledge transfer for the headquarters’ strategic decision-making, the reverse
knowledge transfer mechanisms in a MNC are explored dynamically. Also, as discussed in
the third research gap, in order to explore the reverse knowledge transfer mechanisms in a
MNC dynamically, a qualitative research method is used. In summary, the purpose of this
research is to explore the dynamics of reverse knowledge transfer in a MNC qualitatively,
with a focus on the role of the concept of reverse knowledge transfer for the headquarters’
decision-making process in the strategic planning and strategic implementation for
marketing strategies.
In the next section, a conceptual framework to explore the dynamics of reverse knowledge
transfer in a MNC is proposed in line with the above purpose of this research.
[42]
2.4.2. Conceptual framework
In this section, a conceptual framework for reverse knowledge transfer to explore the
dynamics of reverse knowledge transfer in a MNC is proposed, bringing in factors affecting
cross-border knowledge transfer in a MNC, which are reviewed in the previous sections.
(1) Knowledge type
Regarding knowledge type, Kogut and Zander (1992)’s typology of knowledge, in which
knowledge is classified into information and know-how, is used. Although there is an idea
that information should be distinguished from knowledge (Davenport and Prusak, 1998,
Nonaka, 1994), it is practical to treat information as a part of knowledge when analysing
the knowledge transfer process in real settings, because both information and know-how
are flowing dynamically in real MNCs. As many researchers (for example, Birkinshaw et
al., 2002) show theoretically and empirically, it is regarded that knowledge type, whether it
is information or know-how, has an impact on reverse knowledge transfer crossing the
border.
(2) Absorptive capacity, disseminative capacity, and language proficiency
In this conceptual framework, absorptive capacity (Cohen and Levinthal, 1990) of the
headquarters and disseminative capacity (Minbaeva and Michailova, 2004) of the target
subsidiary are used as organizational characteristics. As many researchers make sure
empirically (for example, Szulanski, 1996), the impact which absorptive capacity has on
cross-border knowledge transfer is significant, so it is chosen as a factor in this framework.
The reason why disseminative capacity is taken up in spite of low attention or ignorance to
that capacity by the majority of researchers is because it is regarded that there surely exist
cases in which reverse knowledge transfer does not work due to low disseminative
capacity.
According to Minbaeva and Michailova (2004), one of the major drivers affecting
disseminative capacity is the knowledge sender’s skill, to which language proficiency of
the knowledge sender is closely linked. As Peltokorpi (2015) points out, language
proficiency of the target subsidiary is regarded to affect reverse knowledge transfer.
[43]
(3) Tie strength
As shown in Table 2-4, there are several network characteristics which affect cross-border
knowledge transfer (Inkpen and Tsang, 2005). Among them, network ties, or tie strength,
can be regarded as the most influential factor according to van Wijk et al. (2008)’s meta-
analysis. In this conceptual framework, tie strength between the headquarters and the target
subsidiary is adopted as one of network factors. As Reagans and McEvily (2003) and
Rowley et al. (Rowley et al., 2000) determine empirically, strong ties are regarded to affect
positively reverse knowledge transfer.
(4) Cultural differences
In this framework, Björkman et al. (2007)’s view is adopted, in which a whole MNC can be
viewed as a cultural system, where beliefs, values, and practices form specific
configurations of a firm. Although Björkman et al. (2007) suppose that cultural differences
affect social capital (in the case of this research, tie strength) and absorptive capacity, in
this framework, it is assumed that cultural differences between the host country of a
subsidiary and the mother country do not affect some specific factors, but that they affect
all the factors sometimes strongly, sometimes weakly. Such a characteristic of cultural
differences might be coined as ‘ubiquity’ of cultural differences.
(5) Subsidiary strategic role
In this framework, Gupta and Govindarajan (1991)’s typology for subsidiary strategic role
is used. As shown in Figure 2-1, they classify a subsidiary’s strategic roles into four types;
Global Innovator, Integrated Player, Implementer, and Local Innovator (Gupta and
Govindarajan, 1991). When the impact of the target subsidiary’s strategic role on reverse
knowledge transfer is explored, Gupta and Govindarajan (1991)’s typology is most suitable
because it is based on the level of the knowledge inflows to and outflows from the target
subsidiary. While reverse knowledge transfer from GI or IP type subsidiaries are
highlighted in other research (Ambos et al., 2006, Rabbiosi, 2011), IM and LI type
subsidiaries are the focus in this research.
[44]
By bringing in the above factors as key factors, a conceptual framework for the dynamics
of reverse knowledge transfer in a MNC is illustrated in Figure 2-2.
As shown in Figure 2-2, in this conceptual framework, all factors are loosely connected,
and it is assumed that these factors as a whole affect reverse knowledge transfer.
In this research, using this initial conceptual framework, the following research questions
will be pursued:
- What factors in the reverse knowledge transfer mechanisms in MNCs are closely
linked to success or failure of reverse knowledge transfer? How are these factors
interlinked with each other?
- How can MNCs improve the reverse knowledge transfer mechanisms, if they do not
work well?
Figure 2-2: Conceptual framework for factors affecting reverse knowledge transfer
- Knowledge type
- SUB’s disseminative capacity
- HQ’s absorptive capacity
- Tie strength
Reverse knowledge
transfer
Key dynamic factors
- Subsidiary strategic role
- Cultural differences
- Language proficiency
[45]
These research questions will be explored qualitatively in a real setting consisting of the
headquarters in the U.S. and the Japanese subsidiary of a U.S.-based MNC. In the next
chapter, the methodology for this research will be presented.
[46]
3. Research methodology 3.1. Introduction
In the previous chapter, a conceptual framework was formed and research questions were
drawn based on literature review. In this chapter, the research methodology is presented.
In general, the research method is defined based on the researcher’s philosophical stance,
which is called ‘research paradigm’ (Blaikie, 2007), ‘inquiry paradigm’ (Guba and Lincoln,
2005) or just ‘paradigm’(Symon and Cassell, 1998). For example, Easterby-Smith et al.
(2008) take up three research paradigms such as positivism, realism, and social
constructionism, as the contemporary research paradigms in the social research world. Such
a research paradigm is determined based on each researcher’s ontological and
epistemological assumptions.
As the next step, Blaikie (2007) argues that ‘research strategy’ (inductive, deductive,
retroductive, or abductive approach) should be considered in order to determine the
research method. Figure 3-1 shows a relationship among research questions, research
paradigm, ontological/epistemological assumptions, and research strategy. As shown in this
diagram, research questions, research strategy, and research paradigm are inter-linked with
each other, which means that there could be feedback processes from one element to
another.
[47]
Research problem
Research questions
RESERCHSTRATEGY
Ontology
Epistemology
RESERCHPARADIGM
- Inductive- Deductive- Retroductive- Abductive
- Positivism- Critical
rationalism- Interpretivism- Critical realism…
Figure 3-1: Relationship between research questions, research strategy, and research paradigms (reproduced from Figure 1.1 in Blaikie’s “Approaches to Social Enquiry (2007)” p.27)
In this research, ‘social constructionism’ is adopted as a research paradigm, and an
‘abductive approach’ is chosen as a research strategy. Based on these assumptions, case
study research, one of the qualitative methods, is adopted as a research method. In the rest
of this chapter, the research paradigm, research strategy, and then research method are
discussed one by one.
[48]
3.2. Research paradigms
3.2.1. Ontology and epistemology
Ontology is philosophical assumptions about the nature of reality. Positions where each
researcher stands at vary between the two extremes: realism and idealism. A realist thinks
that “both natural and social phenomena are assumed to have an existence that is
independent of the activities of the human observer (Blaikie, 2007, p.13)”. An idealist’s
view is that “what we regard as the external world is just appearances and has no
independent existence apart from our thoughts (Blaikie, 2007, p.13)”. Relativism has a
similar view to idealism, for which Easterby-Smith et al. discuss that “relativist assumes
that different observers may have different viewpoints, and that what counts for truth can
vary from place to place and from time to time (2008, p.62)”.
In the continuum between two extremes (realism and idealism), there exist various
ontological stances. For example, Blaikie (2007) introduces six ontologies. But what all
those ontologies have in common is that they assert the existence of reality to a certain
degree (Blaikie, 2007, p.14).
On the other hand, epistemology is a theory of the method or grounds of knowledge. It
provides us “a philosophical grounding for establishing what kinds of knowledge are
possible (what can be known) and criteria for deciding how knowledge can be judged as
being both adequate and legitimate (Crotty, 1998, p.8).” In terms of epistemology, there
have been two mainstreams; objectivism and subjectivism. An objectivist regards ‘things’
as having intrinsic meaning; therefore, the “researcher’s role is to discover the meaning that
already resides in them (Blaikie, 2007, p.18).” On the contrary, a subjectivist’s view is that
‘things’ make no contribution to their meaning but that the observer gives meaning to the
things.
An alternative for the above two views is constructionism. It denies both objectivist’s and
subjectivist’s views. Instead, a constructionist views that meaning is not discovered but it is
constructed. The researcher aims “to understand how people invent structures to help them
[49]
make sense of what is going on around them (Easterby-Smith, et.al, 2008, p.63).
Epistemologies also vary between the two extremes (objectivism and subjectivism), and
constructionism is positioned somewhere on such a continuum.
In principle, based on these ontological and epistemological stances as the two dimensions,
the research paradigm which each researcher chooses can be determined. However, these
two philosophical stances are interlinked each other. For example, in a constructionism
epistemology, the stance is not to discover the meaning but to construct knowledge about
the outer world, so it must have been associated with idealism ontology, which views that
reality of the outer world differs for each observer.
3.2.2. Comparison between research paradigms
Blaikie defines a research paradigm as “the broader framework of theoretical or
philosophical perspectives”, and it contains “assumptions about reality and how it can be
studied (Blaikie, 2007, p.5, p.12)”. It means that each researcher’s ontological assumption
(assumptions about reality) and epistemological assumption (how it can be studied) affect
directly what kind of research paradigm the researcher selects.
In principle, by combining ontological assumptions and epistemological assumption
various kinds of research paradigms can be seen. For example, Guba and Lincoln (2005)
take up four paradigms such as positivism, post-positivism, critical theory et al., and
constructivism for their argument about the paradigmatic controversies. Relationships
between these four paradigms and ontological and epistemological stances are shown in
Table 3-1.
[50]
Table 3-1: Relationships of paradigms and ontology/epistemology (Guba and Lincoln, 2005, p.193)
Positivism Post-positivism
Critical Theory et
al. Constructivism
Ontology Naïve realism –
“real” reality but
apprehensible
Critical realism –
“real” reality but
only imperfectly
Historical realism
– virtual reality
shaped by social,
political, cultural,
economic, ethnic,
and gender values
Relativism – local
and specific
constructed and co-
constructed
realities
Epistemology Dualism/objectivism;
findings true
Modified
dualism/objectivism;
findings probably
true
Subjectivism;
value-mediated
findings
Subjectivism;
created findings
Similarly, Järvensivu and Törnroos (2010) take up four research paradigms such as naïve
realism (positivism), critical realism (post-positivism), moderate constructionism (social
constructionism), and naïve relativism. They try to capture positioning of each of these four
research paradigms using ontological assumption and epistemological assumption as two
dimensions (Figure 3-2). A brief summary of the ontological and epistemological
assumptions for each research paradigm is shown in Table 3-2.
[51]
Figure 3-2: Positioning of critical realism and moderate constructionism (Järvensivu and Törnroos, 2010, p. 100)
[52]
Table 3-2: Comparison of research paradigms (Järvensivu and Törnroos, 2010, p. 101)
Naïve realism
(Positivism)
Critical realism
(Post-positivism)
Moderate
constructionism
(Social constructionism) Naïve relativism
Ontology Only one, true reality
exists; universal truth
claims apply
There is a reality;
specific local,
contingent truth
claims apply
There may be a reality;
specific local, contingent
truth claims apply
There is no reality
beyond subjects
Episte-
mology
It is possible to know
exactly what this
reality is through
objective, empirical
observations
It is possible to
move closer to local
truths through
empirical
observation,
bounded by
community-based
critique/consensus
It is possible to under-
stand local truths through
community-based
knowledge creation and
empirical observations
bounded by subjectivity
It is possible to form
an understanding of
the subjective reality
through analysis of
the subject's account
of knowledge
Among these four paradigms, Järvensivu and Törnroos (2010) particularly focus on critical
realism and social constructionism, and argue about a comparison between these two
paradigms. Critical realism (or post-positivism) assumes that there is a reality independent
of our knowledge of it, but that it is only imperfectly apprehensible through observations in
terms of epistemology (Järvensivu and Törnroos, 2010). According to Easton (2010),
critical realism assumes a transcendental realist ontology, and an eclectic realist or
interpretivist epistemology. Based on Sayer (1992)’s concept, Easton argues that a critical
realist’s view is that “the world is socially constructed but not entirely so, and that the ‘real’
world breaks through and sometimes destroys the complex stories that we create in order to
understand and explain the situations we research (Easton, 2010, p. 120)”. In Figure 3-2,
critical realism is positioned in the middle on the ontological axis and also in the middle of
epistemological axis, but it is close to the naïve realism end.
Drawing on Nightingale and Cromby (2002)’s study, Järvensivu and Törnroos argue that
“moderate constructionism (social constructionism) defines truth as community-based and
[53]
derived from empirical data (Järvensivu and Törnroos, 2010, p.101)”. Referring to Longino
(2001)’s view that scientific knowledge is, in part but not entirely, the product of social
negotiation, they discuss that moderate constructionist thinks that “a truth claim is
epistemically acceptable in a community if it is based on evidence that is acceptable to the
community (Järvensivu and Törnroos, 2010, p.101)”. According to Blaikie (2007), a social
constructivist thinks that knowledge is shared intersubjectively and that meaning is given
socially rather than individually. In Figure 3-2, social constructionism is positioned in the
middle on the ontological axis and also in the middle of epistemological axis, but it is close
to the naïve relativism end.
Although critical realism and social constructionism are similar to each other ontologically
and epistemologically, they differ in that social constructionism seeks for the possibility of
multiple community-formed knowledge bases, whereas critical realism seeks for one single
truth (Järvensivu and Törnroos, 2010). Such a difference generates a difference in the
process of gathering data via interviews. For critical realism, a researcher’s interviewing is
“a search-and-discovery mission concerned with maximizing the flow of valid and reliable
information that resides in informant’s mind (Järvensivu and Törnroos, 2010, p.102)”. For
social constructionism, a researcher’s interviewing is “a social encounter in which
knowledge is jointly constructed by the interviewer and the informant (Järvensivu and
Törnroos, 2010, p.102)”. Therefore, for them, the interview is not merely a conduit but is a
site of producing reportable knowledge itself (Holstein and Gubrium, 2004).
3.3. Research strategy
Research strategy is defined as “logics of enquiry, which are processes required to answer
research questions, to solve intellectual puzzles, to generate new knowledge (Blaikie, 2007,
p.2)”. Blaikie (2007) picks up four research strategies such as inductive, deductive,
retroductive, and abductive. Table 3-3 shows a brief summary of the logics for these four
research strategies.
[54]
Table 3-3: Comparison between four research strategies (Blaikie, 2007, p.8)
Inductive Deductive Retroductive Abductive
Aim To establish
universal
generalizations to be
used as pattern
explanations
To test theories, to
eliminate false ones
and corroborate the
survivor
To discover
underlying
mechanisms to
explain observed
regulations
To describe and
understand social life
in terms of social
actors’ motives and
understanding
Start Accumulate
observations or data
Identify a regularity to
be explained
Document and model
a regularity
Discover everyday lay
concepts, meanings,
and motives
Task Produce
generalization
Construct a theory
and deduce hypothesis
Construct a
hypothetical model of
a mechanism
Produce a technical
account from lay
accounts
Finish Use these ‘laws’ as
patterns to explain
further observations
Test the hypotheses
by matching them
with data
Find the real
mechanism by
observation and/or
experiment
Develop a theory and
test it iteratively
The aim of the inductive research strategy is to describe the characteristics of social
situations, and then to determine the nature of patterns of the relationships between these
characteristics, by starting with collection of data. For the deductive research strategy, the
aim is to test theories by deducting one or more hypotheses from it and then collect
appropriate data (Blaikie, 2007).
The retroductive research strategy also starts with an observed regularity, but its aim is to
discover a previously unknown structure and mechanism, by constructing a hypothetical
model of it and trying to establish its existence by observation and experiment (Blaikie,
2007).
Differently from the above three research strategies, the abductive research strategy starts
from discovering everyday lay concepts, meanings, and motives in the social world of the
social actors being investigated. The aim for the abductive research strategy is “to discover
[55]
their constructions of reality, their ways of conceptualizing and giving meaning to their
social world, their tacit knowledge (Blaikie, 2007, p.10)”. According to Blaikie (2007), the
reality of the social world is embedded in its everyday language, so the researcher has to
enter its world in order to discover the motives and reasons. And the next step is to
paraphrase the lay concepts or meanings discovered from the real world into a technical
account using the technical language of social science.
Blaikie further mentions about the abductive research strategy as follows:
“The social world is the world perceived and experienced by its members, from the
‘inside’. The social scientist’s task is to discover and describe this ‘insider’ view,
not to impose an ‘outsider’ view on it. Therefore, the aim is to discover why people
do what they do by uncovering the largely tacit knowledge, the symbolic meanings,
intentions and rules, which provide the orientations for their actions.” (Blaikie,
2007, p.90)
Based on the above discussion, Blakie (2007) thinks that the abductive research strategy is
based on the idealism ontology and the constructionism epistemology. This means that the
research paradigm can be naïve relativism or social constructionism. Similarly, Järvensivu
and Törnroos (2010) argue that the researchers who take the naïve relativism stance or
social constructionism stance as a research paradigm tend to adopt the abductive research
strategy. Thus, it is likely that there exists a closeness between the constructionism
paradigms and the abductive research strategy.
Likewise, other research strategies can be linked with each research paradigm or
ontological/epistemological assumptions. Blaikie (2007) connects each research strategy
with ontological and epistemological assumptions as shown in Table 3-4.
[56]
Table 3-4: Relationships between research strategies and ontological/epistemological assumptions (Blaikie, 2007, p.69)
Inductive Deductive Retroductive Abductive
Ontology Cautious realism
Depth realism
Subtle realism
Cautious realism
Subtle realism
Depth realism
Subtle realism
Idealism
Subtle realism
Epistemology Conventionalism Conventionalism
Falsification
Modified neo-
realism
Constructionism
3.4. Research method
3.4.1. Research questions, research strategy, and research paradigm for this research
In this section, research questions are revisited, and the research strategy and research
paradigm for this research are argued based on the above discussions.
As discussed in the previous chapter, the research questions for this research are as follows:
- What factors in the reverse knowledge transfer mechanisms in MNCs are closely
linked to success or failure of reverse knowledge transfer? How are these factors
interlinked with each other?
- How can MNCs improve the reverse knowledge transfer mechanisms, if they do not
work well?
The background for these research questions is to develop a deep understanding of the
reverse knowledge transfer mechanisms between a subsidiary and a MNC headquarters
during the decision-making process in strategic planning or the strategic implementation
phase for marketing strategies of a MNC.
As discussed in the previous chapter, although much research has been conducted to
analyse factors affecting reverse knowledge transfer, such extant research has been trying
[57]
to capture reverse knowledge transfer statically and at a high level. In this research, the
whole picture of reverse knowledge transfer is captured in a more dynamic way.
The unit of analysis for this research is reverse knowledge transfer from a subsidiary to the
headquarters, which might include complex and ambiguous factors. In order to elucidate
mechanisms of such a vague objective, the abductive strategy is regarded to be suitable,
since the aim of the abductive strategy is “to discover why people do what they do by
uncovering the largely tacit knowledge, the symbolic meanings, intentions and rules, which
provide the orientations for their actions” (Blaikie, 2007, p.90).
Järvensivu and Törnroos (2010) mention that, while unlike the inductive strategy the
abductive strategy accepts existing theory, it also allows for a less theory-driven research
process than the deductive strategy, which enables data-driven theory generation. In this
research, at first a conceptual framework was built up based on the literature review, and
then fieldwork was carried out in order to verify the validity of the conceptual framework.
And then, through in-depth analysis of the data derived from the fieldwork, the conceptual
framework was modified and then new concepts were proposed. Therefore, the whole
research process was neither inductive nor deductive, but abductive.
In the previous section, closeness between research strategies and research paradigms was
discussed. According to Blaikie (2007), the abductive research strategy is related with the
idealism ontology and the constructionism epistemology (Table 3-4). Also Järvensivu and
Törnroos (2010) point out the closeness between the constructionism paradigms and the
abductive strategy. From these arguments, the social constructionism paradigm is suitable
for this research.
Moreover, Easterby-Smith et al. (2008) discuss differences between the positivism
paradigm and the social constructionism paradigm. A brief summary for such differences
are shown in Table 3-5. When checking each item of this table, this research shows a
complete conformability with the characteristics for social constructionism. For example, 1)
the observer is part of what is being observed, 3) explanations are aiming to increase
general understanding of the situation rather than demonstrating causality, 4) research goes
[58]
ahead through gathering rich data from which ideas are induced, and 6) unit of analysis
includes the complexity of ‘whole’ situations which, in this case, is reverse knowledge
transfer in a MNC. From such conformability, it is clear that the stance of this research is
social constructionism.
Table 3-5: Contracting implications of positivism and social constructionism (Easterby-Smith et al., 2008, p.59)
Positivism Social constructionism
1) The observer Must be independent Is part of what is being observed
2) Human interests Should be irrelevant Are the main drivers of science
3) Explanations Must demonstrate causality Aim to increase general understanding
of the situation
4) Research
progress through
Hypothesis and deductions Gathering rich data from which ideas
are induced
5) Concepts Need to be defined so that they can
be measured
Should include stakeholder perspective
6) Units of analysis Should be reduced to simplest term May include the complexity of ‘whole’
situations
7) Generalization
through
Statistical probability Theoretical abstraction
8) Sampling
requires
Large numbers selected randomly Small numbers cases chosen for
specific reasons
3.4.2. Research method – case study method
As discussed in the previous section, in this research, the abductive strategy is chosen as a
research strategy, and the social constructionism is chosen as a research paradigm, because
such a research strategy and research paradigm fit the aim of this research, which is to
explore the dynamics of reverse knowledge transfer in a MNC. Easterby-Smith et al.
(2008) suggest a way to select a research method once a research paradigm is chosen
(Table 3-6). As shown in the table, in the case of social constructionism, the research
[59]
design is not an experiment or triangulation but ‘reflexivity’. According to Easterby-Smith
et al. (2008), a reflexive approach for social constructionism means that findings which are
found by a researcher from the target society are reflected to the researcher herself/himself
who will use them for their theory making. They also add that “such reflexive approaches
are recognized as being particularly relevant when studies are considering power and
cultural differences” (Easterby-Smith et al., 2008, p.63).
Table 3-6: Methodological implications of different paradigms (Easterby-Smith et al., 2008, p.63)
Positivism Naïve relativism Social constructionism
Aims Discovery Exposure Invention
Starting points Hypotheses Propositions Meanings
Designs Experiment Triangulation Reflexivity
Techniques Measurement Survey Conversation
Analysis/interpretation Verification/falsification Probability Sense-making
Outcomes Causality Correlation Understanding
Also another characteristic of a social constructionist’s research methods is its research
technique, which is not measurement or survey but ‘conversation’. They mention that
“much attention is given to the use of language and conversations between people as they
create their own meanings (Easterby-Smith et al., 2008, p.63)”. Based on such implications
as ‘reflexivity’ (design) and ‘conversation’ (technique), a ‘case study method’ which
includes such dimensions in it is chosen for this research.
Essentially, a case study is a method looking in depth at one, or a small number of,
organizations, events, or individuals over time (Easterby-Smith et al., 2008). More
specifically, Yin (2009) defines that the case study method is used to investigate a
contemporary phenomenon in depth and within its real-life context, especially when the
boundaries between phenomenon and context are not clearly evident. Also he mentions,
one characteristic point is that the case study method relies on multiple sources of evidence.
In the research in which the dynamics of reverse knowledge transfer in a MNC is explored,
[60]
a case study method fits Yin (2009)’s viewpoints about in-depth investigation of a
contemporary phenomenon within the real-life context. Also in this research, the researcher
himself is an observer who can access various kinds of evidence not only languages
through interviews but also internal or external documentations. From such accessibility to
the evidence as well, a case study method should be suitable for this research.
Recently, exponents of the case study method have been increasing in the social research
world, so researchers with wide-ranging paradigms have been conducting this kind of
method. Easterby-Smith et al. (2008) classify the major exponents of case study method by
their paradigms (Table 3-7).
Table 3-7: Key features of case study method informed by different paradigms (Easterby-Smith et al., 2008, p.99)
Realism (Yin)
Relativism
(Eisenhardt)
Constructionism
(Stake)
Research design Prior Flexible Emergent
Sample Up to 30 4 - 10 1 or more
Analysis Across Both Within case
Theory Testing Generation Action
As discussed in the previous section, social constructionism is chosen as a research
paradigm for this research, so Stake (1995)’s viewpoints for each element in the above
table reflect the direction of this research better than Yin (2009)’s or Eisenhardt (1989)’s
ones. Stake (1995)’s stance is more concerned with providing a rich picture of life and
behaviour in social groups rather than with issues of validity; therefore, the number of cases
is not important, so even one single case is meaningful. Easterby-Smith et al. (2008)
summarize the characteristics of a constructionist’s case study method into three points as
follows:
[61]
(1) This type of research is based on direct observation and personal contacts, generally
through interviews.
(2) This type of research takes place within single organizations, but involves sampling
from a number of individuals.
(3) Collection of data takes place over a period of time and may include both live
observations and retrospective accounts.
With respect to the points above, in this research, the researcher himself is a middle-level
manager of the target company for the case studies, so he himself not only can have direct
observation and personal contacts but also has been familiar with those cases. Actually he
himself has been directly engaged in two cases out of three. The case studies in this
research were conducted in a single company, which is a U.S.-based MNC, attended by a
number of respondents. Thirdly, data were collected over time, which includes
retrospective accounts for the target company such as books or articles in magazines. Thus,
this research shows conformability to the characteristics of constructionist’s case study
method.
According to Stake (1995), one of the characteristics of a constructionist case study method
is that the researchers put an emphasis on ‘understanding’ rather than explanation. He
mentions that “quantitative researchers have pressed for explanation and control; qualitative
researchers have pressed for understanding the complex interrelationships among all that
exists.” (Stake, 1995, p.37) He argues that “qualitative research tries to establish an
empathetic understanding for the reader, through description, sometimes thick description,
conveying to the reader what experience itself would convey”. (Stake, 1995, p.39) In this
research, attention is paid to understanding of the dynamics of reverse knowledge transfer
in a MNC, which includes complex interrelationships among the people who are involved,
and to describing each case in a detailed way.
In terms of closeness between the abductive strategy and case study method, Dubois and
Gadde (2002) discuss that case study research should be more or less abductive because it
[62]
requires an integrated approach in which researchers handle the interrelatedness of the
various elements in the research work. According to Dubois and Gadde (2002), the
preliminary analytical framework consists of articulated ‘precautions’, which is developed
according to what is discovered through the empirical fieldwork. In this way, case study
research goes ahead as the researcher constantly goes back and forth between theory and
observations, and such a process itself is abductive.
Based on Dubois and Gadde (2002)’s argument, Järvensivu and Törnroos (2010) point out
that superiority of a case study method by social constructionism researchers with the
abductive research strategy is coming from a) benefits of the social constructionism
paradigm, which enables researchers to create knowledge from a community-oriented
perspective, and b) benefits of abduction, which allows researchers to access prior theories
and generate new knowledge though constant dialogue between theoretical
conceptualization and empirical investigation (Järvensivu and Törnroos, 2010). In this
research, new knowledge is created through the conversations within a ‘community’ which
consists of a MNC and its partner companies, and it has been conceptualized in the process
of going-back-and-forth between theory and observation. Thus, the social constructionist’s
case study method has a close relationship with the abductive research strategy. As a result,
in this research a case study is chosen as a research method from the combination of the
social constructionism paradigm and the abductive research strategy.
Such a relationship between the paradigm, research strategy, and research method for this
research is shown in Figure 3-3.
[63]
(Ontology)Relativism
(Epistemology)Subjectivism
(Research paradigm)Social constructionism
(Research strategy)Abductive
(Research method)Case study method
Figure 3-3: Relationship between research paradigm, research strategy, and research method
3.4.3. Alternative research methods
As the aim is to explore the dynamics of reverse knowledge transfer in a MNC, an
experimental or quasi-experimental research design is regarded to be unrealistic. This is
because the mechanism of knowledge transfer from a subsidiary to the headquarters in the
real context is so dynamic and complicated that a single researcher cannot control the
whole or even a part of such a process under an experimental research design. Although it
might be possible to capture a subtle phenomenon through experimental research design,
such a result might be far from in-depth elucidation of the dynamism itself.
One possible alternative research method might be a survey as one of the quantitative
methods, in which a conceptual framework should be firmly defined in advance before the
actual fieldwork starts. The survey research design can be applicable for both the deductive
and inductive research strategy, that is, for testing the ready-made framework (deductive)
or for creating new constructs through statistical methods (inductive). However, this type of
method is inferior in in-depth exploration for particular social phenomenon, as Hancock
and Algozzine mention “Whereas a typical quantitative research project identifies and
[64]
investigates the impact of only a few variables, qualitative research attempts to explore a
host of factors that may be influencing a situation” (2011, p.9).
3.4.4. Validity for social constructionist’s case study method
From the positivist’s stand point, Yin (2009) protects against criticisms of the case study
method by proposing several tactics to increase construct validity, internal validity, external
validity, and reliability. In general, however, researchers whose stance is social
constructionism do not mention validity or reliability of the research results because such
assessment factors for research method are regarded to derive from positivist philosophies
of science (Kvale, 1995). But, in this section, from the social constructionist’ viewpoint,
investigations regarding alternatives which are equivalent to validity constructs are
conducted.
From a constructionist’s perspective, validity of research can be related with the
community aspect in terms of ‘authenticity’ and ‘fairness’ (Guba and Lincoln, 2005). Guba
and Lincoln (2005) argue that research should be authentic and fair, meaning that all
stakeholders’ views, perspectives, claims, concerns and voices should be apparent in the
final product of research. Valid research should raise the level of awareness of the
participants about knowledge produced by the research and should encourage action (Guba
and Lincoln, 2005). In this way, the concepts of authenticity and fairness emphasize the
community and pragmatic aspects of research validity in constructionist studies.
Golden-Biddle and Locke (1993) point out that qualitative researchers should pay attention
to ‘convincingness’ of the text as their final outcome of the research, and that such a
convincingness depends on whether researchers can persuade their audiences that their
findings are worth paying attention to. They define three dimensions for convincingness
such as ‘authenticity’, ‘plausibility’, and ‘criticality’ (Golden-Biddle and Locke, 1993).
Similarly to Guba and Lincoln (2005)’s idea, Golden-Biddle and Locke define authenticity
as to be genuine to the field experience as a result of having ‘been there’ (1993).
Plausibility is the ability of the text to connect two worlds; one is the world which is
depicted descriptively and conceptually in the text, and the other is the world comprising
[65]
the reader’s personal and professional experience. Criticality is the ability of the text to
actively probe readers to reconsider their taken-for-granted ideas and beliefs (Golden-
Biddle and Locke, 1993). Criticality can be achieved by disrupting reader’s common sense
and enabling them to step back and to reflect on their assumptions underlying their work.
Kvale (1995) insists that knowledge should be validated through practice, and then he picks
up three approaches to validate knowledge for constructionism research. Firstly, validity
can be considered as an expression of ‘craftsmanship’, working towards higher credibility
through continual checking, questioning, and theoretical interpretation of findings.
Secondly, validity can be seen as a ‘communicative’ concept, meaning that validity is
developed in a ‘communicative process’ involving the study participants, the scientific
community, and the general public. Finally, from a pragmatic viewpoint, valid knowledge
should help us to take action and produces the desired results (Kvale, 1995).
The alternative criteria regarding validity for constructionist’ research discussed above are
summarized in Table 3-8, along with an illustration of how these have been applied to this
research.
[66]
Table 3-8: Validity for constructionist’s research
Advocator
Alternative
criteria for validity What has been done in this research
Guba and
Lincoln
(2005)
Authenticity - All the texts are not based on hearsay, but based on direct
interviews with the real people.
Fairness - Interviews were done not only with personnel from the target
company but also with personnel from partner companies to avoid
bias.
- Interviews were done not only with personnel from the Japanese
subsidiary but also with personnel from the headquarters to avoid
bias.
- When describing each of the case studies, attention was paid to
including comments from as many interviewees as possible.
Golden-
Biddle
and Locke
(1993)
Authenticity - All the texts are not based on hearsay, but based on direct
interviews with the real people.
Plausibility - This research deals with common topics among IB researchers.
Criticality - This research enables readers to question their common sense
through proposals about the new concepts.
Kvale
(1995)
Craftsmanship - When describing each of the case studies, attention was paid to
keeping higher creditability through continual checking or
questioning.
Communicative
process
- Feedback was given by expert researchers through international
conferences (BMM 2013, IMP Asia 2014, and Vaasa IB 2015),
annual review meetings at AMBS, or communications with the
supervisors. (details of each conference are shown in Appendix-1)
Practical knowledge
(knowledge which
helps us to take
action)
- A practical proposal is to be made in the final stage of the
research.
[67]
3.4.5. Generalizability for the social constructionist’ case study method
A prevailing argument against the case study method is that the method provides little basis
for scientific generalization (Tsang, 2014, Yin, 2009). Eisenhardt (1989)’s challenge to
such a criticism against the case study method is that it can contribute to theory-building
through multiple-case analysis. Eisenhardt (1989) proposes several ways of selecting cases
for theory-building, mentioning that four to ten cases as a sample size should be enough for
theory-building (Table 3-7). But such an idea for theory-building through multiple-case
analysis is refuted mainly by constructionist case study researchers. Dyer and Wilkins
(1991) oppose Eisenhardt’s stance noting that it is paradoxical because in spite of its aim
for theory-building (inductive) her idea about research process includes elements for
hypotheses testing (deductive). Instead, they argue that even single-case studies can reach a
deeper level of contextual insight (Dyer and Wilkins, 1991). Similarly, Halinen and
Törnroos (2005) insist that the essence of single-case studies is not their power to build
generally-held theories but their capacity to understand phenomena.
Järvensivu and Törnroos (2010) argue that a debate over whether multiple-case studies or
single-case studies are more advantageous for generalizability might be misguided. They
point out that such a difference of the stance in terms of generalizability of the case study
method derives from a difference of each researcher’s philosophical stance (research
paradigm) based on their ontological and epistemological assumptions (Järvensivu and
Törnroos, 2010). For example, Eisenhardt (1989)’s paradigm is regarded to be naïve
relativism and her research strategy is inductive, hence her idea is to increase the number of
cases for theory-building. Meanwhile, Dyer and Wilkins (1991) or some other researchers
who are refuting Eisenhardt’s idea for theory-building through cases studies are based on
the social constructionist’s viewpoint in which a universal truth does not exist but
knowledge is constructed through human beings’ observations or experiences in societies.
So they emphasize that “from a social constructionist viewpoint, the purpose of case
studies, whether single or multiple, is not to reveal universal truths but to generate local and
historically context-specific understanding” (Järvensivu and Törnroos, 2010, p.104).
[68]
From such a background, Järvensivu and Törnroos (2010) propose alternative criteria for
social constructionism researchers, which can replace generalizability. That is ‘analytical
generalization’ (or ‘transferability’), which was originally advocated by Yin, meaning that
a theory from one context-specific case study can be used in analysing other related
contexts (Yin, 2009). According to Yin (2009), while ‘statistical generalization’ is used to
make an inference about a population on the basis of empirical data collected about a
sample, analytical generalization is to use a previously developed theory as a template with
which to compare the empirical results of the case study. A key point of difference between
these two generalizations lies in a difference of selecting cases, that is, a ‘case’ for case
study method is not a ‘sample’ chosen randomly from population at all, but it is a particular
and unique case which the researcher knows very well.
In terms of generalizability for the case study method, Stake (1995), whose paradigm is
social constructionism argues that the real business for the case study method is not
generalization but ‘particularization’. He mentions that “a constructive view encourages
providing readers with good raw materials for their own generalizing”, and that “the
emphasis is on description of things that readers ordinarily pay attention to, particularly
places, events, and people, not only commonplace description but ‘thick description’, the
interpretations of the people most knowledgeable about the case” (Stake, 1995, p.02). Thus,
Stake puts emphasis on interpretation by researchers, which is the most distinctive
characteristic of case study research, rather than generalizability.
In this research, in line with these views by Stake (1995) and Yin (2009), multiple-case
studies are conducted primarily for the purpose of deeply understanding the dynamics of
reverse knowledge transfer in the target MNC, and then through the ‘interpretation’ process
(analysis process), a new framework which could be transferable for other related cases will
be proposed.
[69]
3.4.6. Weaknesses
Järvensivu and Törnroos (2010) discuss three weaknesses of the social constructionist’s
case study method based on the abductive research strategy. The first weakness is regarding
the abductive strategy. They argue that, under the abductive strategy, the researcher’s initial
theoretical insights may ‘direct’ the course of gathering and analysis of empirical data,
which suppresses generation of new theories. Moreover, they suggest a risk that “the
researcher may unintentionally seek theoretical frameworks that fit his/her empirical
observations and omit frameworks that are not in line” (Järvensivu and Törnroos, 2010,
p.107). In terms of this vulnerability, they emphasize that abductive researchers pay
attention to demonstrating openness and transparency in the research process.
The second weakness is about validity of the outcome of the social constructionist’s
research. As discussed in the previous section, in the case of social constructionist’s case
studies, the validity of research is assured through empirical evidence or consensus within a
community. If so, there should be a question about who or what authority will ultimately
judge whether a certain piece of knowledge is based on such evidence that reaches a
sufficient level of consensus in a community. Another question might be how long this
validity will last under the situation where consensus is ever-changing (Järvensivu and
Törnroos, 2010). Although it is difficult to show a counterargument to such criticisms, they
contend that, by verifying the new idea critically and openly from various angles, social
constructionism researchers can demonstrate something useful about the subject which the
case study research focuses on.
The third is a weakness related to transferability (analytical generalization). There is a
question of how much similarity is needed to assert that a theoretical framework created in
one context can be applied in another. To this question, they show a point of view that,
even though some communities rate the degree of transferability higher than others, it is
important that all communities learn new ideas independently of whether the models can be
applied to the contexts or not (Järvensivu and Törnroos, 2010).
[70]
3.5. Outline of case studies
In this research, three case studies were conducted for the purpose of exploring the
dynamics behind reverse knowledge transfer in a MNC. All three case studies are about
marketing programs to promote sales of products in the Japanese subsidiary of a U.S.-based
global IT company, Global Computer (GC). The first case takes up a marketing program
focusing on quality improvement activities in order to promote sales of high-end server
products mainly to end-users in the Japanese market. It was launched in 1992 when the
Japanese subsidiary (GC-Japan) had enough autonomy, based on a request from the
Japanese subsidiary to the headquarters (GC-US). The second case takes up a marketing
program also focusing on quality improvement activities in order to promote sales of
another kind of high-end server products to several resale partners in Japan. It was launched
in 1998 when GC-Japan still had enough autonomy, also based on a request from GC-Japan
to the headquarters. The third case is about a global standard channel partner program
which was deployed in GC-Japan in 2008 when GC-Japan’s autonomy was greatly
restricted. In each of these case studies, how reverse knowledge transfer was conducted
from the Japanese subsidiary to the headquarters in the U.S. is the focus, and the case study
evidence was collected through the fieldwork and analysed.
These three case studies were selected purposefully by the author himself, because as an
employee of GC-Japan he has been familiar with them all. Particularly, he has been
engaged directly in the latter two cases. Therefore, he is in a position to observe directly the
phenomena and events related with reverse knowledge transfer. Regarding the case
selection strategy, Flyvbjerg (2006) argues that, when the objective is to achieve the
greatest possible amount of information, a random sample may not be the most appropriate
form of case selection. So he recommends selecting atypical or extreme cases which often
reveal more information (Flyvbjerg, 2006). From such a perspective, the three cases for this
research were selected as extreme cases by the author based on his own experiences.
Furthermore, from the viewpoint as a social constructionist case study advocator, Stake
(1995) points out that an important criterion for selection of cases should be “to maximize
[71]
what we can learn” (1995:4). For that purpose, he insists that it is important “to pick cases
which are easy to get to and hospitable to our inquiry, perhaps for which a prospective
informant can be identified” (1995:4). In this way, it was expected that what would be
learned from the three case studies selected by the author himself could be maximised
through familiarity to each case and easier accessibility to the informants.
3.5.1. Case study protocol
Prior to the actual fieldwork, a ‘case study protocol’ was prepared in line with Yin’s
instruction (2009, p.79) consisting of two sections; (1) the field procedures and (2) the case
study questions (Appendix-2). In the section of the field procedures, the candidates for
interview were selected carefully from various departments in GC-US, GC-Japan, and from
some partner companies. Also a plan for all interviews such as schedule and places to be
visited is plotted.
In the section of the case study protocol, guidelines for questions to be asked in the actual
interviews are prepared based on the initial theoretical framework. As Easterby-Smith et al.
(2008) point out, researchers should pay attention to the degree of structure of interviews.
They classify interviews into three categories by the degree of structure; highly-structured,
semi-structured, and unstructured (Easterby-Smith et al., 2008, p.143). Highly-structured
interviews are based on carefully prepared sets of questions, which are piloted and refined.
In case of semi-structured interviews, such carefully prepared sets of questions are not
needed, but some guidelines are needed. However, although researchers are to some extent
tied to their frameworks, they should not be tied up by them. What interviewers should be
careful about is to confirm to cover all the topics they have prepared, although there may be
some deviation from the sequence in order to follow interesting line of inquiry. In case of
unstructured interviews, interviewees can talk freely without any interruption for the
purpose of obtaining a clear picture of the interviewee’s perspective (Easterby-Smith et al.,
2008).
In this research, semi-structured interviews were chosen in order to collect wide-ranging
views regarding each factor in the initial framework from interviewees under guidelines to
[72]
a certain degree. In line with such direction, in the section of the case study protocol,
guidelines for questions to be asked in the actual interviews are investigated and
documented.
In general, interviews are main evidence for the case study method and are powerful
because “(the interview) is … the opportunity for the researcher to probe deeply to uncover
new clues, open up new dimensions of a problem and to secure vivid, accurate inclusive
accounts that are based on personal experience” (Easterby-Smith et al., 2008, p.144).
However, in order to obtain such answers from a respondent, a certain level of skill is
needed for the researcher. Easterby-Smith et al. mention that the skills of an interviewer
“centre on the ability to recognize what is relevant and remember it, or tape it, so that
afterwards detailed notes can be made” (2008:146). Also interviewers need to be able to
listen carefully, refraining from casting their own points of view or feelings during the
interview.
Compared with surveys or highly-structured interviews, semi-structured and unstructured
interviews have a risk that they might generate bias. Therefore, in the case of semi-
structured and unstructured interviews, the researcher has to be careful to avoid bias. One
way to avoid bias is to leave questions as open as possible, and not always but just at an
appropriate timing the researchers focus on their own original questions (Easterby-Smith et
al., 2008). Other than that, Easterby-Smith et al. (2008) pick up six issues with which the
researcher should be careful about when undertaking interviews such as obtaining trust,
being aware of social interaction, using the appropriate language, getting access, choosing
the location for the interviews, and recording interviews.
3.5.2. Interviews
The main case study evidence was interviews with the people who were involved in each of
marketing programs in Global Computer. Interviewees were selected carefully by the
author himself so that the outcome from the interviews would be maximised, based on the
concept of ‘purposeful selection’ (Reybold et al., 2013, Patton, 2001). According to
Reybold et al., purposeful selection is “a strategy for accessing appropriate data that fit the
[73]
purpose of study, the resources available, the questions being asked, and the constraints
being faced” (2013:700). Also, pointing out that the interviewee’s story is embedded in a
matrix of researcher choices such as research questions, interview styles, analysis
techniques, and countless other choices, they point out that purposeful selection is also a
mechanism for making meaning (Reybold et al., 2013). Thus, the purposeful selection of
interviewees is vital for qualitative research.
From November to December in 2011, interviews for a pilot fieldwork were conducted, and
then from November 2013 to August 2014, main interviews were conducted. Table 3-9
shows a list of interviewees who were interviewed through the pilot fieldwork and main
fieldwork. All the names in this list are disguised.
[74]
Table 3-9: Interviewees list
Case
Name of
respondent
(All names are
disguised)
Belongs
to Role in the project
Date of
interview
Case-1
(JQC)
Jones (Mr) GC-US Program manager for JQC, Quality Management 05-Mar-2014
Garcia (Mr) GC-US Project Member, Hardware Design 07-Mar-2014
Yamaguchi (Mr) GC-Japan Leader of Japan side of JQC, Software Support 23-Jan-2014
Matsumoto (Mr) GC-Japan Project member, Spare Parts Management 14-Aug-2014
Case-2
(J-VAR)
Smith (Mr) GC-US Sponsor, Quality Management 13-Dec-2013
Johnson (Mr) GC-US Program Mgmt Office/Liaison, Quality Management 06-Dec-2013
Williams (Mr) GC-US Ex Program Mgmt Office/Liaison, Global Sales 06-Feb-2014
Anderson (Ms) GC-US Project member, Global Manufacturing 13-Dec-2013
Brown (Mr) GC-US Project member, Spare Parts Management 09-Apr-2014
Mori (Mr) GC-US Program Mgmt Office/Liaison (Expatriate),
Hardware Support
05-Dec-2013
Takahashi (Mr) GC-Japan Program Mgmt Office, Japan Sales 17-Jan-2014
Kobayashi (Ms) GC-Japan Ex Project member, Global Manufacturing Japan 23-Jan-2014
Yamamoto (Mr) GC-Japan Project member, Japan Technical Support 18-Feb-2014
Nakamura (Mr) GC-Japan Project member, Japan Technical Support 17-Feb-2014
Sasaki (Mr) Lambda Representative from J-VAR Partner (Lambda) 05-Feb-2014
Kato (Mr) Omega Representative from J-VAR Partner (Omega) 12-Feb-2014
Yamada (Mr) Omega Representative from J-VAR Partner (Omega) 26-Mar-2014
Case-3
(GC-SSP)
Sato (Mr) GC-Japan Sponsor, Partner Management Group Japan 15-Nov-2011
Tanaka (Mr) GC-Japan Project manager, Partner Management Group Japan 24-Jul-2014
Suzuki (Mr) GC-Japan Project manager, Partner Management Group Japan 16-Nov-2011
Yoshida (Ms) GC-Japan Project manager, Partner Management Group Japan 4-Aug-2014
Yoshikawa (Mr) GC-Japan Project manager, Spare Parts Management 27-Aug-2014
Watanabe (Mr) Tau Corp. Manager of after-sales support 21-Aug-2014
[75]
In the Case-1, two employees from GC-US and two from GC-Japan were interviewed. In
the Case-2, six employees from GC-US, four from GC-Japan, and three from alliance
partners were interviewed. In the Case-3, five employees from GC-Japan and one from a
channel partner were interviewed.
Each of the interviews was between 30 and 90 minutes in duration. While most of the
interviews were face-to-face, a couple of them were conducted over the phone. The
interviews with Japanese people were conducted in Japanese, and the interviews with
American people were in English. All the interviews were recorded with a digital voice
recorder, and then were transcribed. While the interviews with English speakers were
transcribed into the English text straightforwardly, the interviews with Japanese speakers
were transcribed into the English text through ‘back translation’ technique (Brislin, 1970)
by the researcher and his bilingual co-operator.
3.5.3. Other evidence
In this research, internal and external documents as the case study evidence were collected.
Internal documents include annual reports, company profile, organization charts,
documents for each marketing program, presentation materials for meetings with partners,
and meeting minutes. External documents include books, magazine articles, newspaper
articles, and academic articles. 1
3.6. Analysis
Based on the above discussion, the purpose of analysis for social constructionism case
study method is ‘interpretation’ (Stake, 1995). Stake (1995) discusses that case study
researchers can reach new meanings about cases through either ‘direct interpretation’ of the
individual instance or ‘categorical aggregation’ of instances until something can be said
1 These internal and external documents as the case study evidence include real company names; therefore, when a document is quoted in the following chapters, cross-reference for it is described as “Anonymized document ‘n’”, and these documents are listed on a separated sheet.
[76]
about the cases. In this study, in order to find new meanings about the cases mainly through
categorical aggregation, ‘template analysis’ technique (King, 1998) is used.
Regarding the template analysis technique, King argues that “the essence of the approach is
that the researcher produces a list of codes (a ‘template’) representing themes identified in
their textual data” (King, 1998, p.118). According to King (2012), template analysis is used
within a range of philosophical positions (paradigms). On one hand, this technique is used
by researchers taking realism positions in order to uncover the ‘real’ beliefs, attitudes, and
values among others. On the other hand, template analysis is also used researchers taking a
social constructionism position such as Burr (1995) or others, in order to interpret the text
or the data through a qualitative research method.
The procedure for this technique is as follows:
- To create an initial template … “Often the best starting point for constructing an initial
template is the interview topic guide – the set of question areas, probes and prompts
used by the interviewer (King, 1998, p.122)”.
- To revise the template … “Once an initial template is constructed, the researchers
must work systematically through the full set of transcripts, identifying sections of text
which are relevant to the project’s aims, and making them with one or more appropriate
code(s) from the initial template (King, 1998, p.124).” To revise the template, there are
three ways as follows:
o Insertion … To add a new code when an issue in the text is identified but not
covered by the existing codes
o Deletion … To delete an initially defined code which is no need to be used
o Changing scope … To redefine a code at a lower or higher level, if it was found
that the code is defined either too narrowly or too broadly
- To complete the final template (to make a decision about when a template is ‘good
enough’) … “It is possible to go on modifying and refining definitions of codes almost
ad infinitum, but research projects inevitably face external constraints which mean that
you do not have unlimited time to produce an ‘ideal’ template (King, 1998, p.127).”
[77]
King (1998) points out that, at the step of revising the template, researcher has to make a
decision whether to use computer software package or to code by hand. He recommends
that “the more data one has, and/or the more complex the template, the more worthwhile it
is to use a computer package (King, 1998, p.125).” In this research, since the structure of
factors related with knowledge transfer from the Japanese subsidiary to the headquarters in
the U.S. is so complicated, the decision was made to use computer software. However, the
computer software which was used for revising the template was not a software package
such as NVivo but MS-Access relational database. The reasons why MS-Access was
chosen for revising the template in this research are as follows:
- Using MS-Access enables a researcher to program or re-program relational databases
more flexibly until the databases will be what the researcher wants it to be. Meanwhile,
in the case of a software package, it is impossible to modify specifications or algorithm
themselves embedded (hard-coded) in the software.
- A software package automatically builds up relationships between codes and text data,
and eventually forms a ‘tree’ structure with nodes or sub-nodes, but the logic of how
those nodes or sub-notes are formed is unclear to the researcher. Meanwhile, using MS-
Access enables a researcher to relate a code with corresponding text data manually
through his/her own careful consideration.
- In the case of a software package, when relating a code with text data, it is difficult to
use ambiguous wordings flexibly. For example, assuming the code is ‘social activity’, a
software package might ignore the wordings such as ‘get-together’ or ‘going for drink
with colleagues’ or some others in text data, which can be related with ‘social activity’.
Meanwhile, in case of MS-Access a researcher can relate codes and text data more
flexibly by the researcher himself/herself.
From these reasons, in this research, MS-Access is chosen for computer software to revise
the template.
[78]
In the actual analysis, first of all, the initial template was built up based on the initial
conceptual framework which was formed through literature review. In MS-Access, one
database for the code structure for this initial template was created (DB-1).
Next, each paragraph of transcript data derived from the interviews was input into another
database (DB-2) one by one. Then each of these records was related with one or more than
two template codes of DB-1 by inputting the corresponding code number into a field of
DB-2. At the same time, the word(s) which correspond to the template code were
highlighted with yellow colour. Figure 3-4 shows an example of one record (text data) in
DB-2 which is related with a certain template code. This figure also shows that the
wordings related with the code which are highlighted with yellow colour.
Figure 3-4: An example of record for text data in MS-Access database
[79]
In the process of repeating such a work to manually relate each text record with each
template code, whenever a new element of the template was found from the text data, the
new code was added to DB-1 (‘insertion’), and whenever a code was found to be no use
any more, such a code was deleted from DB-1 (‘deletion’). Also whenever it was found that
modification of the structure of codes was necessary, the structure of DB-1 was modified
(‘changing scope’). Through such an interactive process between DB-1 and DB-2, the final
template has been shaped. As shown in Appendix-3, the initial template which had 191
codes was transformed to the final template consisting of 58 codes.
According to King (1998), building up a final template (list of codes) is not the goal for
qualitative research, but interpretation based on the template is more important. King
mentions, “The template and the coding derived from it are only means to the end of
interpreting the texts, helping the researcher to produce an account which does as much
justice as possible to the richness of the data (King, 1998, p.130).” In this research, based
on the final template (Appendix-3), interpretation was conducted, which are demonstrated
in Chapter 8 for cross-case analysis and findings.
[80]
4. Background to the case studies 4.1. Outline of Global Computer
Global Computer (GC) was founded in 1939 in the United States by two American
youngsters, beginning with a line of electronic test equipment. It has developed gradually
year on year, and has now become one of the largest IT companies in the world. As of
2015, GC’s major product lines include personal computing devices, enterprise and
industry standard servers (ISS), storage devices, networking products, software and a
diverse range of printers. It also has services and consulting business around its products.
GC’s net revenue for 2014 was $111.5 billion, and the number of employees across the
world is 302,000 as of 2015 (Anonymised document 1). GC has its headquarters in the
‘Silicon Valley’, California, United States.
GC provides its products and services all over the world, having local offices in more than
170 countries. Its ratio of dependence on the foreign markets is so high that approximately
65% of its overall net revenue in 2014 came from outside the United States (Anonymised
document 1). In the case of its business deployment in Japan, GC established a joint
company in collaboration with a large manufacturing company in Japan in 1963. Since
then, GC’s subsidiary in Japan (GC-Japan) has grown along with the headquarters, and the
alliance with the Japanese manufacturing company was eventually dissolved in 1999. At
that moment, GC-Japan became a wholly owned subsidiary of GC. Now GC-Japan has its
head office and a manufacturing plant in Tokyo, five sales offices and twenty-four service
centres all over the country (Anonymized document 2). The number of regular employees
for GC-Japan is over 5,000, and except for the headquarters in the United States, GC-Japan
is the second largest single country subsidiary in the world after the subsidiary in the
United Kingdom.
4.2. The ‘GC Way’
GC has had its own unique company culture which is called the ‘GC Way’. Since the
company was established, the founders’ philosophy about management of the company has
[81]
cultivated the concept of the GC Way, in which core values include a respect of employees,
an environment that fosters creativity, and a flat management hierarchy. These core values
have generated other elements of the company culture, such as management by objectives
(MBO), commitment to teamwork, an open door policy, management by wandering around
(MBWA), employment security and stability (avoidance of layoffs), and decentralized
organization, among others (Anonymised document 6). A case study report issued by a
business school in the U.S. focusing on the GC Way (Anonymised document 6) quotes a
voice of an employee explaining the GC Way as follows:
“Working at GC is about feeling the responsibility to express your opinion. It is
about contributing as an individual while at the same working in a team. As a
result, there is an important value of trust and freedom at GC that employees need
to work successfully as an individual and a team member. This inherent feeling
within GC makes it a very special place to work.” (An ex-employee of GC)
In the same case study report (Anonymised document 6), there is another quote regarding
GC’s organization as follows:
‘The division….is an integrated, self-sustaining organization with a great deal of
independence. The aim is to create a working atmosphere that encourages solving
problems as close as possible to the level where they occur.” (An ex-employee of
GC)
This illustrates how GC’s organization was originally highly decentralized.
4.3. Era of turbulence
From the 1980s to the 1990s, Global Computer was severely challenged by the IT market’s
rapid change including innovation in information technology, entry of new start-ups, and
global competition. Having being exposed to such an intense external challenge, GC was
obliged to change its business strategy and organization. In the midst of such a turbulent
period, GC accepted a new CEO from the outside in 1999. In the history of GC, it was the
first time that an outsider was brought in as its CEO, but the board of directors including
[82]
the former CEO concluded that an outsider with a fresh perspective was required to
accomplish the changes needed (Anonymised document 7).
This new CEO, Ms. White (pseudonym), forced through her reform strategies one after
another, including large M&A’s being accompanied with layoffs. In the history of GC, it
was the first time that such a large size layoff took place, and it meant that one of unwritten
rules in the GC Way, avoidance of layoffs, was broken. Many employees lamented such a
loss of the value in the GC Way; for example, in an article in a newspaper dated on April
22, 2002 (Anonymised document 9), one former employee noted:
“The GC Way is about yesterday’s culture. Now we live in a world where principles
are tossed out the window and anything goes as long as it means making a buck. . . .
It was a better world when we lived in the GC Way. But unfortunately, those days
are gone forever.” (An ex-employee of GC)
In 2005, another new CEO, Mr. Harris (pseudonym), took office; he was also brought in
from outside the company. He was characterized by his thorough cost-cutting strategy
including large layoffs. One of his reform strategies is to reduce the information system
applications in the world and the data centres. According to this strategy, 3,500 applications
in the world was reduced to 1,500, and 85 data centres to 6 from 2005 to 2008
(Anonymised document 3). Through this reform, global standardization of information
system has been accelerated by replacing a lot of local applications with global standard
ones.
Also he tried to centralize strategic decisions, seeking for a quick cascade of decisions from
the top to the bottom; therefore, the organization had to be changed from the previous
rather flat structure to a more hierarchical structure. In the past, GC’s organization was as
shown in Figure 4-1. As shown in this figure, each country’ subsidiary consisted of each
business unit (BU)’s county branch, which reported directly to the subsidiary’s
management team, indicated by solid lines in the figure, while reporting to each BU’s
regional office, indicated by dotted lines. In this structure, wide-ranging autonomy was
[83]
granted to BU’s country branches (subsidiaries), so they were able to make a decision by
themselves based on their own judgement under the subsidiary management’s approval.
On the other hand, since Mr. Harris took office as CEO in 2005, GC’s organization has
quickly been changed into the structure shown in Figure 4-2. In this structure, each BU’s
country branch is linked with solid lines to each BU’s regional head office which is then
linked straightforward to each BU’s world-wide headquarters, while each BU’s county
branch is linked indirectly with the subsidiary’s management. Within each subsidiary, in-
country organization is formed, but lateral links between BU’s in each country are not so
strong. Thus each BU has changed to having a rigid three-layer structure consisting of
country level, region level, and world-wide level. As a whole, strong centralized
organization has been built up in the world, while each subsidiary’s autonomy has been
considerably limited.
In other words, decentralization and autonomy, which were important elements of the GC
Way, have been lost too. At the same time, other elements such as MBWA or commitment
to teamwork have disappeared as well, so the company has changed to an organization
emphasizing more top-down unilateral type of communications rather than bilateral or
peer-to-peer communications.
[84]
Figu
re 4
-1: O
rgan
izatio
n di
agra
m b
efor
e re
stru
ctur
ing
arou
nd 2
005
- 201
0
[85]
Figu
re 4
-2: O
rgan
izatio
n di
agra
m a
fter
rest
ruct
urin
g ar
ound
200
5 - 2
010
[86]
When Mr. Harris suddenly resigned in 2010, a new CEO was assigned, and then after one
year, yet another new CEO, Ms. Lewis (pseudonym), was put in place. Even after these
new CEOs took office, the basic policy, determined by the former outsider CEOs, Ms.
White and Mr. Harris, regarding execution of layoffs and centralization of decisions, was
not changed significantly. In this way, the values of the GC Way, which had been inherited
from generation to generation since its foundation, were almost completely lost through the
fierce competition in the IT industry that came into play after the 1990s.
4.4. Changes of GC-Japan
When it comes to GC-Japan, during the early days, it had been treated like an independent
affiliate company, and wide ranging autonomy had been allowed. An ex-board-member of
GC-Japan notes in the book he wrote as follows:
“From the 1960s to the 1970s, GC was conducting its business based on its unique
technology and products all over the world, but there was a ground rule that the
subsidiary in each country should manage the subsidiary by itself.”
“In those days, we were manufacturing GC’s products here in Japan, but we used
to use many Japan’s original production management method in our plants. Also in
terms of financial reports, initially we used to make the financial reports based on
the Japanese accounting standard, and then convert only some necessary items into
the American standard. Therefore, we did not have to change the whole financial
reports based on the American standard, but it was allowed to stick to the Japanese
standard.” (An ex-board-member of GC-Japan, Anonymized document 5,
translated by the author)
Based on Gupta and Govindarajan’s typology for subsidiary’s strategic roles (Gupta and
Govindarajan, 1991), GC-Japan in those days was regarded to be a ‘local innovator’ (LI)
subsidiary, since the level of knowledge inflows from the headquarters was low due to non-
intervention policy by the headquarters to a subsidiary and the level of knowledge outflows
[87]
to the headquarters was also low due to the non-existence of any attractive knowledge for
the headquarters particularly in terms of the marketing strategy.
However, as time went on, under the trend of the whole company shifting towards
centralization, GC-Japan’s autonomy has been eroded, and eventually it has become just
like a loose grouping of each business unit’s Japanese branch with limited lateral
relationships (Figure 4-2). Business strategy or annual goals from the regional level to the
country level are decided by the headquarters of each business unit, and are simply
cascaded to the county branch through the regional office in a top-down style.
An ex-board-member of GC-Japan (Anonymized document 5) thinks that the reason why
the headquarters of GC began to take its strong attitude to the subsidiaries around the world
was coming from the fact that GC was successful in the consumer printer business in the
U.S. through its brave challenge to the market which was totally different from the
business-to-business market which it had been familiar with.
“A strongly held belief that ‘This American way is surely a single way of doing the
IT business from now on’ became GC’s charter, under which they thought all the
styles of business in subsidiaries across the world should be standardized. Also such
a movement was supported by the concept of cost reduction through
standardization, which was an inevitable element under the competitive global
market.” (An ex-board-member of GC-Japan, Anonymized document 5, translated
by the author)
In this way, as the headquarters of GC became self-confident with its business style and
continued to push the headquarters’ way, GC-Japan has gradually become a subsidiary
which just implements standardized strategies cascaded from the headquarters.
Based on Gupta and Govindarajan (1991)’s typology, the current GC-Japan is regarded to
be an ‘implementer’ (IM) subsidiary, since the level of knowledge inflows from the
headquarters is high due to a successive cascade of strategy or directions or goals from the
[88]
headquarters in a top-down style and the level of knowledge outflows to the headquarters is
low as before.
The organizational change in the worldwide GC around 2005 brought various changes to
managers and employees in GC-Japan. One of the biggest challenges for many of the
Japanese country managers in each BU has become communicating with his or her regional
manager in English. Previously, their immediate managers were Japanese (inside GC-
Japan), with whom they could easily communicate in Japanese. But after this organization
change, they began to have to communicate with their manager at the regional level (Asia
Pacific and Japan region) in English, because most of those regional managers are in
English-speaking countries such as Singapore, Hong Kong, or Australia. For some whose
English language skill is not so high, this change became a big challenge.
The ex-board-member of GC-Japan notes in his book as follows;
“When it comes to explanation of the idiosyncratic situation of the Japanese market
to the headquarters, the language barrier was fatal. In those days, GC-Japan was
already a large organization, so it was very difficult to assign the people who have
higher language skill of English to all the management positions. So even though
some managers showed high performance in the local business in Japan, they often
miscommunicated with their counterparts in the U.S.” (An ex-board-member of
GC-Japan, Anonymized document 5, translated by the author)
In this way, as the organization structure has changed, the communication style and
frequency between GC-Japan and the regional office or the headquarters had to be changed.
In this research project, case studies of three marketing programs deployed in GC-Japan
have been conducted. The first two were launched originally by GC-Japan in collaboration
with the headquarters for the purpose of obtaining customer satisfaction through quality
improvement forums, when GC-Japan had significant autonomy. Another marketing
program was planned and deployed in a top-down style after GC moved to a centralized
[89]
organization, which resulted in large complaints from the existing channel partners in
Japan. In the next three chapters, those case studies are presented.
[90]
5. Case study (1): Japan Quality Committee (JQC) Program 5.1. Overview of the program
Beta Computer (BC) was established in 1974 in the U.S. as a company to develop and sell
its single computer series, Fault Tolerant (FT) servers, which continuously run for 24 hours
a day 365 days a year by applying unique fault tolerant technology. From the 1970s to
1980s, it developed rapidly due to the uniqueness of its technology, and in 1984 it was
ranked as 500th in the Fortune 500. In 1990s, however, its growth rate started to slow down
abruptly, and in 1998, Beta Computer was acquired by another U.S.-based IT company, and
then it was acquired by Global Computer in 2001.
BC made inroads into the Japanese market in 1979 by establishing a wholly owned
subsidiary in Japan (BC-Japan). From the middle of the 1980s to the beginning of 1990s, as
the sales of FT servers expanded in the Japanese market, quality of its products began to be
spotlighted. At that time, the quality of BC products was so bad that customers all over the
world complained about it. Garcia, who was in charge of quality assurance back then,
recollects as follows:
“… and in the early days, we had general quality problems, everything was bad;
hardware, software, middleware, everything.”
“… when it started out, quality was miserable. We had terrible quality, a lot of
customer unhappiness, a lot of work for BC-Japan.” (Interview with Garcia in GC-
US)
In the Japanese market where quality is the most important priority, such low quality FT
servers generated dissatisfaction among the customers, and the management team of BC-
Japan believed that such low quality would have a big negative impact on the sales
expansion of the BC products. From this background, BC-Japan attempted to launch its
unique quality improvement program with the collaboration of the headquarters of BC.
At first, the proposal raised by BC-Japan to launch a quality improvement program was not
understood by the headquarters. In a book featuring Beta Computer written by a Japanese
[91]
journalist (Anonymized document 4), the following words of a member of the board of BC-
Japan back then who visited the headquarters in November 1989, are included:
“At that time, I appealed to the headquarters people, ‘In Japan the customer is not
king but God. So in order to satisfy such God’s requirements, we have to decrease
the number of defective products by improving quality of the hardware products.’ I
told them in this way strongly, but they didn’t understand me initially.” (Mr.
Kimura’s words, Anonymized document 4, translated by the author)
However, in January 1991, when several senior engineers from the development group in
the headquarters visited Japan and had meetings with several local customers there, the
headquarters’ view of the Japanese market changed completely. On the first day they had
an internal meeting with BC-Japan, but at that time the visitors from the U.S. were very
sceptical about what BC-Japan said, thinking that BC-Japan was trying to exaggerate.
However, once they met with local customers and heard their voices directly, from the next
day on they completely understood that what the BC-Japan people had said was right
(Anonymized document 4). In this way, the headquarters of BC began to understand BC-
Japan’s proposal and finally committed to cooperating with BC-Japan in their quality
improvement program. In 1992, the Japan Quality Committee (JQC) program was launched
officially.
5.2. Meeting style of the JQC program
Under the framework of the JQC program, two different types of the general JQC meetings
were held alternately on a quarterly basis. One type of JQC meeting was held in Japan,
attended by engineers and other related people from the headquarters including vice-
president class executives. In a one-week schedule, visits to several local customers by
those visitors from the headquarters were programed for the purpose of directly listening to
customers’ voices. Jones, the chairman of the JQC meeting, notes as follows;
[92]
“… we would bring 10 or 15 people from U.S. to come to Japan for a week and we
would visit customers and apologize and explain problems and things like that.”
(Interview with Jones in GC-US)
In those days, there were over 200 customers who were using FT servers in Japan. When a
JQC meeting was held in Japan, the BC team visited 10 to 12 critical customers chosen
from among them.
And the other type of JQC meeting was held in the U.S., attended by engineers from BC-
Japan. The meetings held in the U.S. were mainly internal so that engineers in the
headquarters and BC-Japan could discuss critical quality issues raised by the Japanese
customers. So customers in Japan rarely attended this type of meetings held in the U.S.
“One time BC-Japan would bring 10 or 15 people to the U.S., and we would bring
all the engineers together. We would have big meetings, so that they could hear
about the Japanese experience. They could hear from the Japanese how bad the
quality was, what the problems were, and then three months later, we would come
to Japan to visit the customers.” (Interview with Jones in GC-US)
The JQC program, which started in 1992, continued even after Beta Computer was
acquired by Global Computer in 2001, until the program ended in 2008. During this period
of time, quality of FT servers was greatly improved, and thereby the level of customer
satisfaction was elevated, and eventually sales of FT servers in the Japanese market grew.
In terms of the final phase of the JQR, Jones recollects as follows;
“… we had been through the worst and things were starting to trend down, right.
We weren’t bringing as many people to Japan, the issues weren’t as hot. Customers
weren’t demanding to see people from the lab, so I sort of managed the tail end of it
until we basically stopped doing meetings anymore.” (Interview with Jones in GC-
US)
However, even after the JQC program ended, two subcommittees, one is focusing on
quality of FT server software and the other focusing on quality of spare parts for FT
[93]
servers, were launched voluntarily in 2010, and the activities in these subcommittees have
continued to run. Though the scale of the activities has been reduced and the attendees are
limited only to internal people, what is characteristic of these post-JQC programs is that the
DNA of JQC, which consists of the concept of continuous quality improvement and direct
conversation between the headquarters and GC-Japan in order to overcome
miscommunication, has been inherited by these subcommittees.
In Table 5-1 the events regarding BC (GC) and the JQC program are summarized
historically.
Table 5-1: Time line for Beta Computer (Global Computer) and JQC program
Year Events about BC Events about BC-Japan and JQC 1974 - Beta Computer (BC) established in the U.S. 1979 - Japanese subsidiary (BC-Japan) established 1984 - BC ranked as 500th in Fortune 500 1987 - Annual revenue reached $1B 1992 - The JQC program launched 1998 - BC acquired by Delta Computer (DC) - BC-Japan integrated into DC-Japan 2001 - DC acquired by Global Computer (GC) - DC-Japan integrated into GC-Japan 2008 - The JQC program ended 2010
- Post-JQR Software Support Review Meeting (con-call) launched - Post-JQR Spare Parts Quality Review meeting (con-call) launched
5.3. Reverse knowledge transfer in the JQC program
Through the quarterly JQC meetings, firstly technical knowledge regarding quality issues
for hardware and software had been disseminated from BC-Japan (later GC-Japan) or from
the local customers in Japan to the headquarters. As a second step, corrective actions were
taken in the headquarters. Finally, the results or status of progress for each activity were
reported from the headquarters to the team in Japan. In this three-step process, whether this
process worked well as a whole depended on how BC-Japan or the local customers in Japan
[94]
were able to disseminate their knowledge to the headquarters during the first step, namely
reverse knowledge transfer.
Before the JQC program was launched, requests for quality improvement had been
disseminated from BC-Japan via emails. Garcia recollects as follows:
“I was an engineering manager at that time, and I had to deal with problem reports
from Japan. They were reporting problems – defects; it was a software project, and
I would get very frustrated, because the support manager in Japan would always
send me e-mail messages wanting more details, ‘What’s the root cause of this? How
are you going to fix this? When are you going to fix this?’ I kept complaining; I
said, ‘Why does he ask me so many questions? He doesn’t need to know this. He
reported the problem, I’ll fix it and he’ll get it then.’” (Interview with Garcia in
GC-US)
In this way, BC-Japan constantly requested that the headquarters would reveal many further
details regarding each serious failure. Such requests were not originated from BC-Japan,
but from the local customers in Japan, who were very sensitive about quality control.
Further details of their requests are described by a manager of the engineering team of BC-
Japan who are in contacting with local customers as follows:
“Also, even though we explain a root cause technically, they aren’t convinced yet
about it. They ask us, ‘Why did you release such a problematic product which had
such a fault in it? You have your own test procedure, right? Please explain at which
point in that procedure you overlooked that fault? Did you overlook it at the design
phase, or coding phase? Or did you overlook it at a single unit test, or a connection
test, or a total system test? Please explain at which phase you couldn’t find that
fault.’” (Interview with Yamaguchi in GC-Japan, translated by the author)
Many of the users of FT servers in Japan are IT managers including a Chief Information
Officer (CIO), who are responsible for maintenance of those servers, which are often used
for critical jobs in their company, and their missions include reduction of the risk of
[95]
downtime of their servers and ‘continuous improvement’ of the total system (Bensaou and
Earl, 1998). In order to reduce the downtime, they use several methods such as statistical
process control or Total Quality Control (TQC) methods (Ishikawa, 1985), which are
widespread in every kind of industry sector in Japan (Mak, 1999). Also they think that the
manufacturer of their server machine should provide an extension of their own activities for
continuous improvement, so they think it natural for the manufacturer to undertake its
continuous improvement activities together with them. From such a background, the
Japanese customers continued to raise their requests for quality improvement to BC-Japan
by demanding more detailed information about serious failures.
But, as shown in the earlier comment by Garcia, initially the headquarters in the U.S.,
which did not have such a background regarding TQC or the concept of continuous
improvement, did not understand what BC-Japan requested. Hence, it can be assumed that
the BC headquarters’ absorptive capacity was low in the early stage, since it did not have
‘prior related knowledge’ which can be thought as a single driver of absorptive capacity
(Cohen and Levinthal, 1990). Also knowledge transferred from BC-Japan to the
headquarters was not only highly complex but also tacit, since it included implicit
knowledge which could not be transferred only by descriptions in emails.
However, after the JQC program was launched, and engineers in the headquarters started to
attend face-to-face JQC meetings with BC-Japan either in Japan or in the U.S., or with the
local customers in Japan, they began to understand the Japan team’s requests.
“So, that was a very enlightening process to me. I was here, I was able to see how
committed their customers were, how important that the products that they bought
from us worked well and were supported well. So, it was an educational experience
to me and I quickly learned how to culturally translate.” (Interview with Jones in
GC-US)
“I think they [engineers from the headquarters] understood and a lot of times it was
very surprising. Why did somebody complain about that, such a small thing, very
minor, very insignificant? There would be a lot of that, but also it just helped to
[96]
sensitize them to the issues that the Japanese customers were experiencing, so I
think everybody said, yes, it helps raise the quality, awareness, and I mean it was
good for visibility and that was one of the primary reasons we had that Japan
people come to the US was so that they could meet the engineers and explain the
issues, and the engineers could hear it straight from the face of the guy who got
yelled at by the customer.” (Interview with Jones in GC-US)
Through the face-to-face JQC meetings which were held on a quarterly basis, the
headquarters’ absorptive capacity was getting higher over time, because its prior related
knowledge, which is mainly regarding the Japanese firms’ concept of continuous
improvement, was getting richer.
Meanwhile, whenever JQC meetings were held in the U.S. attended by people from BC-
Japan and the headquarters, they used to hold group dinners by the whole team, informal
get-togethers by smaller groups, or sometimes they went to some sporting event such as a
football game.
“… there was always social activities. Even in the U.S., there was always an event
called the ‘friendship dinner’. One night we would have a dinner, and it was usually
at a restaurant and there would be awards given out and Japanese would always
give gifts to the foreign attendees.” (Interview with Garcia in GC-US)
“In the U.S., we would try to do something that you might not do in Japan, maybe
go to a football game or some sporting event or an American barbeque restaurant
or something, some kind of food that you don’t always see in Japan. Yeah, there
was definitely a social aspect of it and a lot of the people had very long
relationships.” (Interview with Garcia in GC-US)
Through such repeated socialization opportunities, a strong link has been formed between
BC-Japan and the headquarters of BC, so it is regarded that even complicated knowledge
was able to be easily transferred.
[97]
When JQC meetings were held in Japan, BC-Japan and the BC headquarters sometimes
invited some of the Japanese customers to their social activities. Through such social
occasions, another link has been formed between the Japanese customers and the BC
headquarters. Although this second link was not as strong as the one between BC-Japan and
the BC headquarters, it can be suggested that the links should not have more or less an
impact on reverse knowledge transfer, because direct conversations can help the
headquarters people better understand Japanese people’s way of thinking. All in all, as
these two links became stronger over time through social activities and other occasions, and
because of this it seems that the headquarters’ absorptive capacity was intensified, which
led to actual quality improvement of FT servers.
5.4. Professional translation service
Whenever the BC team (BC-Japan and the BC headquarters) visited the Japanese customers
at the time of the JQC meetings held in Japan, they used to take a professional translator
with them, because basically proficiency of English for many Japanese customers is not
high enough to discuss complex technical issues with native speakers from the U.S. In
order to make sure that they could translate as perfectly as possible, BC-Japan used to have
a briefing in advance with the translator who would be assigned to a customer visit.
“We used to have a briefing with the translator, who was assigned to that meeting
with a particular customer, before the actual visit. That briefing was about an hour
and we explained the background and others using the presentation materials which
would be used at the meeting actually. In that briefing, we used to explain the
content to a very detailed level such as the names of products, in order to mitigate
the mistranslation.” (Interview with Yamaguchi in GC-Japan, translated by the
author)
“All in all, there wasn’t any case in which we faced big trouble in terms of the
language barrier. Also I myself can speak English, so when the translator got into
trouble, I sometimes supported him or her in the meeting. I think that our products
[98]
are unique, so there are sometimes the technical terms which cannot be translated
into Japanese properly. Regarding those technical terms, we tried to input as many
words as possible to the translator at the briefing in advance. But we couldn’t cover
them all, so in such a case I myself would support.” (Interview with Yamaguchi in
GC-Japan, translated by the author)
Thus, efforts to mitigate the risk of mistranslation were made behind the scene, so that what
the customers in Japan wanted to say was able to be transferred to the headquarters of BC
as accurately as possible.
5.5. Post-JQC meetings
When a couple of years passed after the JQC program had ended, software support team of
GC-Japan began to feel that the degree of miscommunication in their daily communication
between the headquarters and GC-Japan was getting larger, and they were afraid that the
number of unsolved quality issues was increasing. Almost at the same time, the spare parts
management team in GC-Japan also began to see some miscommunication occasions in
their daily communication. When these two different groups in GC-Japan again faced
miscommunication with the headquarters, the method they chose for the post-JQC
communication was not face-to-face meetings but conference call by small groups for
economic reason. These two groups separately launched their regular conference calls
voluntarily to review quality issues with engineers in the headquarters, at almost the same
time. Yamaguchi, team leader of FT software support group in GC-Japan, mentioned the
background that made him initiate these conference calls as follows:
“… when I request the US team some repairs for a software product, there are a lot
of cases in which both sides’ views don’t match. Not only in the past but even now
there are such cases. In order to avoid such miscommunications, I think that
frequent communications between us matters.” (Interview with Yamaguchi in GC-
Japan, translated by the author)
[99]
From such a background, he voluntarily launched a process of weekly conference calls with
the development team in the headquarters to review the status of some unresolved quality
issues for FT software. Yamaguchi describes the characteristics of these review meetings as
follows:
“So the main thing for this weekly meeting is a detailed ‘status check’ of each issue,
which is done just like a chat. When my boss in the US came to Japan the other day
and he joined this weekly meeting with me, he was so impressed with this way of
status check that he said to me that he would like to deploy this process globally.”
(Interview with Yamaguchi in GC-Japan, translated by the author)
Separately, Matsumoto, the team leader of FT spare parts management group in GC-Japan,
also launched another process of regular conference calls to discuss quality issues about
spare parts for FT servers. He explains why he launched such a process below:
“After the JQC discontinued, what we did was … all right, in general, there are
issues which cannot be found only from the metrics, such as a very obscure point of
doubt, and so on, so we started to hold the ‘Quality Free Forum’, in which all
attendees can speak freely every kind of points in question related to quality.”
(Interview with Matsumoto in GC-Japan, translated by the author)
“So one of the purposes of this new trial was to relieve frustration of the people
who were concerned. Until then, we hadn’t had such an opportunity for us to
discuss every kind of topics in a free style, so it was a new action we started after
the full-fledged JQC.” (Interview with Matsumoto in GC-Japan, translated by the
author)
What these two processes have in common are that both group meetings are held by small
groups and that, in both processes, free or flexible types of discussions are allowed. In
typical conference calls, efficiency is so prioritized that the purpose of the meeting or all
the agenda items are defined beforehand and proceedings are advanced in a timely manner
in line with the pre-defined agenda. So, any topics unrelated with the agenda items might
[100]
not be taken up, even if some attendees want to confirm something ambiguous during the
meeting. But, in case that there are significant misunderstandings between attendees, free
style discussions by a small group are very effective in filling the gap, and through such a
style of meeting outcomes have been actually obtained as follows:
“I have been continuing this process for these four or five years. As you can see
from this list, I have resolved as many items of issues as possible like this, without
raising any official escalations.” (Interview with Yamaguchi in GC-Japan,
translated by the author)
Thus, after the JQC subcommittees were launched in order to reduce misunderstanding
between the headquarters and the Japanese subsidiary, and conference calls by small groups
have been continued.
Although the JQC program lasted for sixteen years and during those years many people
moved back and forth between the U.S. and Japan, it appears that the level of knowledge
absorption by the headquarters did not reach a satisfactory level, judging from the fact that
the post-JQC subcommittees had to be launched just a few years later. One reason behind it
is regarded to be that, although the headquarters tried to absorb knowledge about the
Japanese subsidiary’s uniqueness through their direct ‘enlightenment’ experiences, such
knowledge was not fixed deeply inside the organization. Under such a situation, as
Yamaguchi suggests, a continuous effort to disseminate knowledge from the subsidiary to
the headquarters is necessary.
“So only the way to bridge the gap about the way of thinking between foreign
countries and Japan should be frequent communications.” (Interview with
Yamaguchi in GC-Japan, translated by the author)
[101]
6. Case study (2): Japan Value Added Reseller (J-VAR) Program
6.1. Overview of the program
In 1986, Global Computer (GC) released a series of high-end computers, GC-Zeta series,
equipped with its newly-developed CPU. At the same time, GC also started to provide
some Original Equipment Manufacturers (OEMs) across the world with this CPU chip.
Some Japanese computer manufacturers also started to adopt GC’s high-technology chip
into their own products. A few years later, several Japanese computer manufacturers
changed their strategy and launched a brand-new business model, in which they adopted
not only GC’s CPU chip but also GC’s product as a whole. Behind such a movement, there
was a trend of an accelerated increase of costs in internally developing their own hardware
and software in a short period of time under the fierce competition among the worldwide IT
industry. Rather than bearing such huge costs for development by themselves, they thought
it more beneficial to resell hardware and software products, which would be provided by
another highly-competent manufacturer, and which only required slight modifications to
them. This business model was built up from scratch based on a proposal from one of
Japanese computer manufacturers, and prepared in collaboration with various functions in
the headquarters of GC (GC-US) and the Japanese subsidiary (GC-Japan). In 1990, the first
manufacturer was certified as a Japan Value Added Reseller (J-VAR) partner, and then
another four computer manufacturers in Japan, including Lambda or Omega, were certified
as the J-VAR partners by the end of 1995. Figure 6-1 shows the network structure for the J-
VAR business model around the GC-Zeta server. Until then, there was no business model
which had a direct relationship between GC-US and a local customer or partner in foreign
country, which is shown in this diagram.
As the sales of GC-Zeta servers in Japan expanded in the second half of the 1990s, some of
J-VAR partners requested that GC-Japan should hold a forum to discuss quality issues,
because in those days they had a lot of quality issues about this series of server raised by
their end-users. The J-VAR partners sold GC-Zeta series servers to their own customers in
[102]
various industry sectors such as public sectors including government offices, financial
sectors including mega-banks in Japan, the tele-communication sector, the manufacturing
sector and the distribution and retail sector. Many of these end-users used GC-Zeta servers
for their mission-critical purposes, so they were very sensitive to the quality of their servers
from the viewpoint of reduction of downtime and ‘continuous improvement’ (Bensaou and
Earl, 1998).
[103]
Glo
bal C
ompu
ter (
GC)
HQ
MFG
US
Spar
e Pa
rts
Supp
ort U
S
Glo
bal S
ales
GC-
Zeta
Bus
ines
s U
nit
-MKT
G/D
esig
nLa
mbd
a
Om
ega
Sigm
a
Iota
Epsil
on
J-VAR
Par
tner
s
High
er L
evel
Tec
h Su
ppor
t
Products/Parts Supply
GC-
Japa
nM
KTG
Japa
n
MFG
Japa
n
Spar
e Pa
rts
Supp
ort J
apan
Japa
n Te
chni
cal S
uppo
rt
Sale
s Jap
an
-Pro
duct
s/Pa
rts
Supp
ly-L
ower
Lev
el T
ech
Supp
ort
J-VA
R Bu
sines
s Ag
reem
ent b
etw
een
thre
e en
titie
s (G
C HQ
, GC-
Japa
n, a
nd
each
of J
-VAR
par
tner
s)
5 pa
rtne
rs a
re
orga
nizin
g th
e VG
For
um
Figu
re 6
-1: N
etw
ork
for J
-VAR
bus
ines
s aro
und
GC-Z
eta
serv
er p
rodu
cts
[104]
In response to such requests from J-VAR partners, GC-Japan and the headquarters of GC
(GC-US) launched a forum in 1998 to discuss various quality issues raised by the J-VAR
partners. This was attended by not only engineers from GC-Japan but also engineers from
GC-US. In the early days, however, even though they actually held such meetings in Japan,
the meetings were rather pointless. Saito, project leader for this business in Omega,
recollects as follows:
“… the purpose of the forum was not very clear, and we continued useless meetings
in order to discuss what we should do in that forum. For me, such discussions were
not interesting at all, but we had to continue such dull discussions for a while.”
(Interview with Saito in Omega, translated by the author)
However, such a situation was broken by a proposal from two J-VAR partners, in which
they requested that Global Computer used the meetings to achieve concrete goals which
would be set up by mutual consent. Until then, they did not have any measurable goals.
“What broke such a situation was that Lambda and Omega together submitted GC
a proposal in which we, partners and GC, would continue our activities for quality
improvement by setting the goals about the failure rate; in other words, we
determined the concrete theme of discussion, that is, measurable indexes for the
quality improvement. … After we submitted this proposal and it was accepted by
GC, situation had been improved at an accelerated pace and we could move
forward towards the full-scale activities.” (Interview with Saito in Omega,
translated by the author)
In this way, a forum to discuss quality of GC-Zeta servers between J-VAR partners, GC-
US, and GC-Japan officially started in 2000, and this forum was named the ‘Victory Group
forum’ or the ‘VG forum’ in short. Kobayashi, team leader of Global Manufacturing in GC-
Japan, mentioned the purpose of the VG forum as follows:
“Originally, the J-VAR partners wanted to talk directly to the ‘Honmaru’[donjon,
or the core of an organization] people. Since the VG forum was established for that
[105]
purpose, what the customers wanted was that this forum should be a place where
they talk directly to the people in the headquarters of GC.” (Interview with
Kobayashi in GC-Japan, translated by the author)
Initially, the VG meetings were held on a quarterly basis alternately in the U.S. and in
Japan, and four or five days were spent on discussions in each meeting. When a VG
meeting was held in the U.S., not only engineers from GC-Japan but also representatives
from five J-VAR partners attended it, so totally about thirty to forty people travelled from
Japan to the U.S. When a VG meeting was held in the U.S., the venue for it varied every
time. Usually the VG meetings were held around Silicon Valley, state of California, where
the headquarters of GC is located, but sometimes the meetings were held in Colorado,
Georgia, or Texas, where GC’s large manufacturing plants or R&D centre are located.
Meanwhile, when a VG meeting was held in Japan, about ten to fifteen people from GC-US
travelled to Japan. They were representatives from various functions such as the hardware
design group, the software design group, the manufacturing group, the spare parts group,
the after-sales service group, and the global sales group. While the members who attended
VG meetings regularly were middle-level managers in GC-US, sometimes senior-level
managers like a vice president also came to Japan for some special occasions, for example,
in a case when the product line-up for GC-Zeta servers was renewed, or in a case when a
series of serious failures happened to a certain model.
As time went by and the impact of the whole company’s cost-cut strategy was spreading,
the style of VG meetings had to be changed; the frequency was reduced from four times a
year to three times a year, the number of attendees who had to travel abroad was reduced,
and costly face-to-face meetings changed to a hybrid style in which conference calls and
face-to-face meetings were mixed. As of 2014, the VG meetings are held four times a year
and the venue was fixed only in Japan. Of the VG meetings, three are held in a hybrid style
in which only a few key persons in GC-US come to Japan and the rest of members attend
over telephone, and once a year a complete face-to-face meeting is held, in which all the
related members from GC-US attend in person.
[106]
Under the scheme of the VG forum, J-VAR partners requested Global Computer (GC) to
improve the total quality of GC-Zeta servers, so their requests ranged from improvement of
manufacturing quality, design quality for hardware and software, spare parts quality, to
improvement of after-sales support service quality. Therefore, various groups of worldwide
GC have been involved in this forum. Figure 6-2 is a diagram of the formation for the VG
forum, which shows how these teams are related with each other.
In this formation, the Program Management Office (PMO) plays a key role in running this
forum. It consists of (1) sponsors, Smith from the Quality Management team in GC-US and
Ishikawa from the Japan Technical Support, and (2) liaison team, Johnson from the Quality
Management team in GC-US and three members from GC-Japan (one from Sales, one from
Marketing, and one from Japan Technical Support). The main roles for PMO are planning,
logistics arrangement, communication among functions, and facilitation of each VG
meeting.
Whenever a VG meeting is held, a questionnaire survey is conducted in order to check the
level of customer satisfaction of all the participants from the five J-VAR partners. In each
questionnaire sheet, all attendees from J-VAR partners are encouraged to evaluate each
item using the ratings from 1 (the lowest) to 5 (the highest). The survey results of the
overall evaluation from 2001 to 2014 are shown in Figure 6-3. As shown in this figure,
from 2001 to 2002 when this forum just started, the satisfaction level was as low as 3.2 to
3.5, but from 2003 it stared to rise and reached a level as high as 4.0, and this satisfaction
level has been kept until 2014 although there have been ups-and-downs occasionally.
Therefore, except for a difficult period at the initial stage, this VG forum has been attaining
medium to high satisfaction from the J-VAR partners constantly until today.
[107]
© C
opyr
ight
201
2 H
ewle
tt-P
acka
rd D
evel
opm
ent
Com
pany
, L.P
. Th
e in
form
atio
n co
ntai
ned
here
in is
sub
ject
to
chan
ge w
itho
ut n
otic
e.1
Febr
uary
7,
2012
1
PMO
JP
Liai
son
(Tak
ahas
hi -
Sale
s/Al
lianc
e)
WW
Des
ign
liais
on (
John
son/
Mor
i )W
W M
anuf
actu
ring
(And
erso
n)W
W S
pare
Par
ts(B
row
n)
WW
MCO
•H
W e
ngin
eeri
ng (L
3/M
ori)
•SW
eng
inee
ring
(L3/
Oga
wa)
WW
Sup
port
team
(Tay
lor)
WW
MKT
G (T
hom
as)
R&
D B
ack
supp
ort
•H
W L
ab•
SW L
ab
Glo
bal M
FG J
apan
(Nak
amur
a)Sp
are
Part
s Ja
pan
(Yos
hika
wa)
Ja
pan
Tech
nica
l Sup
port
(Nak
ajim
a)
Japa
n Te
chni
cal S
uppo
rt (I
shik
awa)
MKT
G (Y
amas
hita
)
WW
Tea
m (G
C-U
S)JP
Tea
m (G
C-Ja
pan)
VG
For
um :
For
mat
ion
Lam
bda
Om
ega
Sigm
a
Iota
Epsi
llon
J-V
AR
Pa
rtne
rs
Rol
es o
f WW
team
•O
wn
acti
ons
& M
aint
ain
stat
us•
Bri
ng th
e cu
stom
er v
oice
into
BU
s•
Dri
ve im
prov
emen
ts•
Mai
ntai
n m
etri
cs/d
ata
–sh
are
•P
repa
re s
peci
al t
opic
s•
Inve
stig
atio
n (t
echn
ical
)•
Pro
cess
impr
ovem
ent
•In
terf
ace
to p
artn
ers
PMO
WW
Lia
ison
(Jo
hnso
n)
Rol
es o
f JP
team
•O
wn
acti
ons
item
s•
Pri
mar
y co
ntac
t to
par
tner
s•
Issu
e m
anag
emen
t•
Conn
ect
GC-
Japa
n pr
oces
s an
d W
W p
roce
ss
Advo
cate
s
Rol
es•
Logi
stic
s-
phys
ical
logi
stic
s•
Com
mun
icat
ion
amon
g al
l fun
ctio
ns•
Pla
nnin
g –
Goa
ls, A
lignm
ent,
Exp
ecta
tion
•Fa
cilit
atio
n –
Mee
ting
min
utes
, AI m
anag
emen
t, fo
llow
-up
•P
rogr
am o
pera
tion
•O
wn
com
m. p
artn
ers
at p
rogr
am le
vel
Mem
bers
Sp
onso
rs•
Smit
h(Q
ualit
y)•
Ishi
kaw
a(J
TS)
Li
aiso
ns•
John
son
(WW
liai
son)
•Ta
kaha
shi(
JP L
iais
on)
•N
akaj
ima
( Par
tner
Sup
port
Lia
ison
)•
Yam
ashi
ta(J
apan
Mar
keti
ng L
iais
on)
Prog
ram
Man
agem
ent
Off
ice
(PM
O)
Figu
re 6
-2: F
orm
atio
n of
the
VG F
orum
[108]
Figu
re 6
-3: S
urve
y re
sults
of s
atisf
actio
n le
vel b
y J-V
AR p
artn
ers f
rom
200
1 - 2
014
[109]
6.2. Reverse knowledge transfer in J-VAR program
6.2.1. Knowledge transfer outside the VG meetings between GC-US, GC-Japan, and
J-VAR partners
During the period from one VG meeting to the next one, communications between GC-
Japan and GC-US have been continuing for the purpose of (1) resolving some unresolved
issues or (2) reporting some new issues which have been found and reported from the J-
VAR partners to GC-Japan. Such information has been transferred via emails. However,
sometimes what an engineer in GC-Japan intended to transfer is not understood very well
by his or her counterpart in GC-US, particularly when Japan Technical Support reports a
quality issue related with the design of hardware and software. Mori recollects about his
own experiences when he was an engineer in Japan Technical Support, as follows:
“Before I was dispatched to the U.S., I used to feel like that what I tried to express
in my emails wasn’t understood very well by my counterpart in the U.S. At that time
I thought that my language skill level was not so high yet, or that a cultural gap
should prevent our mutual understanding.” (Interview with Mori in GC-US,
translated by the author)
Then he offered himself as an expatriate in the headquarters, and his request was accepted.
So he was dispatched to the headquarters in the U.S. in 2003. Since then he has been in the
U.S. with his family and has been acting as a liaison for the J-VAR business between Japan
Technical Support and some engineering departments in the headquarters such as R&D
centre. From his current viewpoint as a liaison, Mori mentions about the communication
between GC-Japan and GC-US as follows:
“After I moved to the U.S., I came to realise the difference between the American
people and Japanese people much more clearly. Now I receive emails from
engineers of Japan Technical Support, which are described in Japanese. When I
read them, of course, I certainly understand what they mean. However, when I start
to write an email to an R&D engineer by translating that Japanese email to
[110]
English, I feel it is difficult to do so, because what is described in Japanese is really
ambiguous from the American’s viewpoint.” (Interview with Mori in GC-US,
translated by the author)
In this way, after he moved to the U.S. and lived there for a while, he realized that it did not
work at all to translate literally from what he thought in his head in Japanese into English.
Instead, he realized a necessity of nonliteral translation, or ‘cultural translation’. Kobayashi
in Global Manufacturing Japan calls such a process of nonliteral translation ‘interpretation’
(‘kaishaku’ in Japanese).
“When it comes to the transmission of information, basically the information is
transmitted through superficial or verbatim language. In this case, the
‘interpretation’ (‘kaishaku’) matters. I mean, the information itself is expressed by
the ‘language information’ or the numbers, but such information expressed in such
a way is not always equal to what the sender would like to tell.”
“Therefore, the key thing is whether a mediator can interpret, considering even the
background concept, with a clear awareness of such a difficulty of the
interpretation, and finally can lead to achievement of the goals such as resolving
each issue or something like that.” (Interview with Kobayashi in GC-Japan,
translated by the author)
Anyway, having realized that literal translation from Japanese into English did not work,
Mori began to transfer information disseminated from GC-Japan to R&D engineers in GC-
US through his own translation adding his comments.
According to Nakamura, a team leader in Japan Technical Support, approximately 70% of
emails from Japan Technical Support sent directly to engineers in GC-US. But the
remaining 30% of them are sent to Mori at first for his translation, and then forwarded to
engineers in GC-US. Nakamura mentions that, only when they have to report some highly
complicated or sensitive issues to the headquarters, do they ask Mori to intermediate. This
is because even now the level of English proficiency of his staff members is not high
[111]
enough to disseminate such highly complex issues to their counterpart in the U.S. in a very
accurate way.
Also Sasaki in Lambda, one of the J-VAR partners, points out a vulnerability of this
transfer mechanism intermediated by someone in GC-Japan in order to convert Japanese
information into English information, expressing it as ‘filtering process’:
“If someone intervenes between a sender of information and its receiver, then this
intervener often filters the original information to some degree; therefore, it
becomes more difficult to send the original information accurately to the receiver.”
“… I think there is a gap based on a difference of each individual’s characters,
which causes a bias and finally leads to miscommunication. There could be an
impact by the skill level difference between the engineers in the Japan Technical
Support.” (Interview with Sasaki in Lambda, translated by the author)
From these internal and external observations, it appears that knowledge which is
transferred from Japan Technical Support to the headquarters is highly complex and tacit
because they are dealing with design related issues which are difficult to codify. Also
disseminative capacity of engineers in Japan Technical Support does not seem to be so
high, partly because their English proficiency level is not so high, and partly because the
translation process itself from Japanese to English contains a filtering effect in it.
On the other hand, Global Manufacturing Japan has a different point of view in terms of
such a translation process. According to Kobayashi who was previously a representative for
the VG forum from Global Manufacturing Japan, in the early days when the VG Forum
was launched, her team had often felt misunderstandings between Global Manufacturing
Japan and other areas in the world, maybe because of language barrier or cultural
differences. Therefore, in order to mitigate such misunderstandings, around 2003 to 2004,
her team established a procedure to communicate quality issues with the people of Global
Manufacturing in other countries using their own particular format.
[112]
“So, in Global Manufacturing Japan, we ourselves designed an ‘RCA (Root Cause
Analysis) format’. It is a format for reporting various kinds of quality issues, and by
following the pre-defined procedures anybody can communicate any kind of quality
issues without loss of necessary information or data. To use this kind of format
means that we speak under the same ‘grammar’. In this way, we can communicate
faster and more accurately.” (Interview with Kobayashi in GC-Japan, translated by
the author)
Thus, right now Global Manufacturing Japan can communicate with the headquarters and
other subsidiaries without much conflict. Also the fact that communications can be done
using a reporting format means that the quality issues dealt in the manufacturing group can
be codified even though they are highly complicated. So knowledge which is transferred in
the manufacturing group is highly complicated but explicit (not tacit) due to its
codifiability. Based on its characteristic of knowledge, they were able to develop their own
format to communicate with the headquarters, and through such a procedure Global
Manufacturing Japan can compensate their low disseminative capacity.
6.2.2. Knowledge transfer inside the VG meetings and a cause of misunderstanding
As soon as the VG meetings were launched and meaningful discussions started by setting
up goals, much better communications were expected through face-to-face meetings, but in
reality communications did not go well in the early days. In those days, many of the
participants of the VG meetings from GC-US did not accurately understand the background
of the issues raised by the J-VAR partners. For example, Williams, then a liaison in the
PMO for the VG forum, mentioned as follows:
“As you know, the Japanese perspective of acceptability in quality is far more
detailed and far more stringent than the U.S. acceptability levels. That obvious gap
was one by which that did pose a lot of problems, because, as you know, there
would be one instance of a defect on a product that we have shipped 10,000 of and
the Japanese wanted a full RCA analysis done on it. Full root cause analysis,
actually not an R.O.I. [Return On Investment], but a root cause analysis. So this
[113]
sort of behaviour is something that’s expected in Japan but would completely be
unexpected or unacceptable in the U.S. because it is far within our tolerances for
quality.” (Interview with Williams in GC-US)
On the other hand, from the viewpoint of the J-VAR partners, they had a complaint like
this:
“… it seems to me that they think, if a problem they are now tackling with has been
resolved, then ‘that’s it’ for them. It’s just like, if somewhere of something has
ripped open, then they sew it, and that’s all. They don’t try to do something so as
not to rip open again.”
“It is kind of a ‘stop-gap’ action, and I often see the reports from GC-US, saying in
the way that they were successful in controlling the symptom to a certain degree,
and saying, ‘We don’t have to do anything further. Any problem?’” (Interview with
Saito in Omega, translated by the author)
Where is this difference of views coming from? All the five J-VAR partners are
manufacturers who have been designing and manufacturing their own brand computer
products, so they have their own criteria in terms of quality in each of the phases such as
design phase, manufacturing phase, and after-sales support phase. Therefore, it is natural
that they tried to apply the same criteria for quality even to the third-party products
manufactured by Global Computer. What is characteristic of the Japanese manufacturing
companies is that most of them introduced the Japan-unique Total Quality Control (TQC)
concept (Ishikawa, 1985) to their quality control process.
From the 1950s to 1970s, Japanese companies, mainly in manufacturing industry,
aggressively tried to take in the cutting-edge knowledge regarding quality control. In the
early days, two big gurus, Dr. W. Edwards Deming and Dr. Joseph Juran, greatly affected
the quality control in Japan. Both of them were American management consultants as well
as statisticians, who were invited to Japan to give lectures or consultancy service directly to
several companies in Japan (Schonberger, 2007). Their quality control philosophy as well
[114]
as their scientific approach had been spreading into the entire manufacturing industry in
Japan. After those gurus left Japan, the quality control concept and methods were modified
and improved independently in Japan. By the middle of the 1980s, Japanese original quality
control method, such as TQC (Ishikawa, 1985) or JIT (Sugimori et al., 1977), were brought
to completion thanks to efforts by many Japanese scholars or practitioners (Schonberger,
2007).
Today in many of the Japanese manufacturing companies the TQC concept has penetrated
so widely that almost all employees have become to have more or less a ‘quality mind-set’
(Mak, 1999); for example, even a rank-and-file employee in a Japanese manufacturing
company knows the basic three steps of failure analysis; ‘Gen-in Kyumei’ (investigation of
root cause), ‘Saihatsu Boshi’ (corrective action to prevent recurrences), and ‘Suihei Tenkai’
(or ‘Yoko Tenkai’; application of the corrective action to similar products and processes).
From such a background, all the five J-VAR partners, who are traditional large electrical
machinery manufacturers in Japan, have established their own quality control system based
on the TQC concept. On the other hand, Global Computer has its own quality control
system, but it is very different from the Japanese one. Therefore, in general, the employees
in GC-US have little knowledge regarding Japanese TQC. Many attendees from GC-Japan
or the J-VAR partners to the VG forum are aware of the lack of understanding of the TQC
concept by engineers from GC-US; for example, Mori mentions as follows:
“… it is clear that, in the U.S., there are no words or even concepts which express
the ‘Yoko Tenkai’ [application of a corrective action to similar products and
processes]. Therefore, it is understandable that GC-US do not try to do ‘Yoko
Tenakai’ at all. So the J-VAR partners have a frustration at that point, and they
point out repeatedly in every VG meeting why GC do not try to do ‘Yoko Tenkai’.”
(Interview with Mori in GC-US, translated by the author)
Such a lack of understanding of the TQC concept by the headquarters implies a lack of
‘prior related knowledge’ (Cohen and Levinthal, 1990); therefore, the headquarters’
[115]
absorptive capacity was initially very low. And this low absorptive capacity by the
headquarters eventually led to a difference of view in the early days of the VG forum.
However, if an attendee to the VG forum from GC-US has enough knowledge regarding
TQC, then things change dramatically. For example, Anderson, a manager of Global
Manufacturing in GC-US, has a plenty of knowledge regarding TQC, because, when she
did her master’s degree, she researched ISO 9000 which has a lot of elements similar to the
Japanese TQC concept. With such a background, her presentations at VG meetings
regarding the manufacturing quality used to exactly match the partners’ requirements, so all
the J-VAR partners hailed her presentations, as Sasaki of Lambda mentioned about the VG
meetings held around 2012 to 2013;
“In these recent VG meetings, I like Anderson’s presentations very much
personally. Her presentations are very nice. All the related people in my company
praised her presentation at the previous VG meeting very much, because it was
well-organized and got to the point well, which the audiences would like to know.
Even Mr Shimizu, the top management of our BU, praised her presentation very
much.” (Interview with Sasaki, translated by the author)
From this episode, it is obvious that Anderson understands almost completely what the J-
VAR partners want to know, and it is because she has plentiful knowledge about the TQC
concept which is prevalent among all the manufacturing companies in Japan. Therefore,
this episode also shows a validity of Cohen and Levinthal’s absorptive capacity (1990)
concept that an individual’s prior related knowledge, in this case Anderson’s knowledge
about TQC, has an impact on absorptive capacity for the individual or the group to which
he or she belongs.
6.2.3. Impact of social activities on knowledge transfer
Whenever a face-to-face style VG meeting is held either in the U.S. or in Japan, social
activities such as reception parties, informal get-togethers, or excursions have been held
and attended by representatives from the J-VAR partners. The purpose of such social
[116]
activities is not only for entertaining the attendees from the J-VAR partners as guests, but
also for ‘team-building’. Through such opportunities for team-building, links between the
J-VAR partners, GC-US, and GC-Japan have been strengthened over time. Almost all the
people who are concerned with the J-VAR business are affirmative to having social
activities from the viewpoint of building up personal relationships.
“I think it’s very important, because it helps you develop relationships with the
people you’re working with, and they get to know you as a person, maybe a little bit
about your personal life, your interests, and things like that. I think by having
separate professional discussion and social discussion it helps build the
relationship.” (Interview with Johnson in GC-US)
“The social activities, I think, are one item that improved the relationship, and
therefore improved the communication and the trust, and I think they were very
effective. I got a great deal of feedback not only from internal GC but also from the
partners that the ability to engage in a non-work environment was very valuable to
them. I mean, of course, everybody likes to drink and eat and socialize, but it helped
with the bonding process.” (Interview with Williams in GC-US)
“We may tell each other things we like to do. We may find out, ‘Oh, you like wine.
Oh, I like wine too.’ ‘Oh, what’s your favourite?’ So you kind of start having
conversations about all these topics, not just related to work, so you have a linkage
to that person at a different level. That relationship is different than just business.”
(Interview with Anderson in GC-US)
“Particularly, in the network such as the VG forum, which is not a one-shot ad hoc
team but a long-lasting team, once you could establish one-on-one relationship, it is
easier to communicate each other. Under an established relationship, you don’t
have to get tense when you talk to him or her, and you can provide much more
information with a sense of security.” (Interview with Kobayashi in GC-Japan,
translated by the author)
[117]
“Drinking together does not directly lead to our total understanding, but through
such opportunities we can diminish the distance between us, and such an effort does
indirectly lead to how deeply we can communicate or how deeply we understand
each other.” (Interview with Saito in Omega, translated by the author)
Such direct relationships enhanced through social activities should be very effective
especially for the GC-US people to better understand the way of thinking of Japanese
people. It can be assumed that, even though their level of understanding about the Japanese
way of business was not enough only through internal communications with the GC-Japan
people, the GC-US people might get a hint for their further understanding through such
direct external conversations with the J-VAR partners. Through this process, some of the
GC-US people can reach to such a higher level that they can understand complex and tacit
knowledge disseminated from the Japan team; for example, Saito in Omega tells about
Miller, ex-sponsor of the VG forum from GC-US, with whom Saito built up a close
relationship over a long period of time, as follows:
“… it is obvious that he [Miller] can understand me even if I don’t say much. And I
can see what he thinks somehow only through eye-contact even if he doesn’t talk
much. In this way, I believe that we can communicate from the heart not only with
Japanese people but also with foreigners.” (Interview with Saito in Omega,
translated by the author)
Also there is a case in which a personal link between a person in a J-VAR partner and a
person in GC-US became so intimate that they can talk directly over the phone in the case
of a very serious issue:
“For example, when he has a very critical issue, Saito in Omega might talk to Smith
[current sponsor of the VG forum] directly over the phone, and vice versa. Of
course, in a usual case, Smith tries to let the GC-Japan people discuss with Saito at
first, but in a very urgent case, he calls to Saito directly.” (Interview with
Kobayashi in GC-Japan, translated by the author)
[118]
Also there are cases in which internal links between GC-US and GC-Japan are enhanced
through social activities. For example, Global Manufacturing US and Global
Manufacturing Japan try to be closer to each other, as Kobayashi recollects:
“Not just with the partners, but we, Global Manufacturing Japan team, have also
established a very close relationship with the people in Global Manufacturing US.
For example, when we went to the U.S., they used to invite us to their house
personally or to a nearest park for lunch or used to take us for an excursion to Lake
Tahoe or somewhere else. Reversely, when they came to Japan, we used to take
them to Nikko or Kamakura or some other places.” (Interview with Kobayashi in
GC-Japan, translated by the author)
Thus, the internal links between GC-US and GC-Japan have been also strengthened
through social activities. All in all, it is regarded that absorptive capacity by the
headquarters (GC-US) has been developed by two links (one is an internal link between
GC-US and GC-Japan, the other is an external link between GC-US and the J-VAR
partners) which have been strengthened through formal meetings and social activities. Also
low disseminative capacity by GC-Japan and the J-VAR partners can be compensated by
such strengthened internal and external links.
One of characteristics of the J-VAR program is that there is a co-design or co-evaluation
process by a J-VAR partner together with GC-US. Smith remembers such a few
collaboration cases as follows:
“For example, I think one of the things that helps, relative to the knowledge
transfer, is the few times we had in our exchange. Particularly, if you recall back in
the 80's, Lambda actually designed one of the boards for the X500 and X600, the
predecessor to the Y-class server. So they were working very closely with the lab.
When, I think, there was an original Super Zeta, Yamada from Omega and a few
other engineers were in one of the GC plants in California, for several months also.
And so I think that interaction goes a very long way in building up both the skill set
[119]
as well as the interpersonal relationship that allows for better exchange of the
technical information.” (Interview with Smith in GC-US)
In 2000, Yamada and five other engineers from Omega were dispatched to a facility for
GC-US in California for a co-evaluation project for ‘Super Zeta’, a newest model of the
GC-Zeta series. They stayed there for four months in order to conduct evaluation tests for
that newest model before its official product release together with the engineers in Global
Manufacturing US. The original purpose for this project was for a J-VAR partner to gain
higher technological knowledge for the specific server product through such a co-work in
GC-US. But actually, not only did they gain such technological knowledge, but also they
could understand the cultural difference between the U.S. and Japan through their every-
day life in the U.S., and their English proficiency level was raised too.
“During those four months, we had to live by ourselves in the town like an ordinary
citizen, for example, we sometimes went out for shopping to local stores and so on.
Therefore, through such various experiences contacting with the local people, I
think my English level was improved.” (Interview with Yamada in Omega,
translated by the author)
After this project, Omega also dispatched another team of six engineers to GC-US in 2009
for another co-evaluation project regarding the next generation of the GC-Zeta server
product. From among the members dispatched to GC-US at that time, the next leader in
charge of the J-VAR business in Omega was born. In this way, Omega has been continuing
its effort to gain technical knowledge directly from the headquarters of GC, and through
such an effort Omega can raise its disseminative capacity by improving the engineers’
English proficiency and also by overcoming cultural difference between the U.S. and
Japan.
6.2.4. Impact of translators on knowledge transfer in VG meetings
At the beginning, when the VG forum was launched, there was no translator in each
meeting, although many attendees from the J-VAR partners felt that they did not keep up
[120]
with the proceedings of each meeting, mainly due to their low level of English proficiency.
So discussions were not lively at all. Saito in Omega recollects as follows:
“Honestly speaking, in the early days, we couldn’t communicate with each other
well. The reason of such a miscommunication was the language barrier, because we
did not have any translators in each meeting. Those days we pretended that we
understood what the people from GC-US said. One reason why we didn’t have any
translators might be that we thought it wasn’t cool that the OEM business experts
couldn’t communicate in English. But actually until we would have the translators,
the meetings had been very quiet.” (Interview with Saito in Omega, translated by
the author)
A few years later, GC-Japan made a decision to provide a simultaneous translation service
by professional translators in each face-to-face VG meeting. Each time three or four
professional translators are called and a set of transmitter and audio equipment is carried in
to the venue. With a compact radio receiver and an earphone, each attendant can listen to
either English or Japanese by selecting the channel on the receiver. By having translators in
every VG meeting, the effectiveness and efficiency of the meetings tremendously were
improved, as Saito mentions:
“After the translators began to be involved, the meetings became livelier and more
effective. Until then, we couldn’t say what we wanted to say … we couldn’t
understand well what they said, so there was a kind of hesitation, I mean, we
couldn’t have a courage to speak something. … I’m sure that GC or GC-Japan
should bear significant cost for bringing the translators in to every VG meeting, but
this decision to bring the translators into the VG meetings should be really a right
decision.” (Interview with Saito in Omega, translated by the author)
Also foreign attendees to the VG meetings point out the effectiveness of translators as
follows:
[121]
“I could not imagine doing these VG meetings without them [translators]. And if it
was not simultaneous, it would take twice as much time to get through any of the
meetings at all. So it is valuable.” (Interview with Brown in GC-US)
“We are very dependent upon the translators. Because, even with brighter partners,
they can understand English to a degree, but not enough.” (Interview with Smith in
GC-US)
Some attendees, mainly Japanese people, however, feel difficulty of communication even
under a situation with the simultaneous translation service. What cannot be transferred even
through professional translators is regarded to be nuance or feeling behind each sentence or
each word.
“I believe that the translators faithfully translate into English sentences what I have
spoken in Japanese. However, there is something they cannot transfer only through
such faithful translations. That is, as I mentioned earlier, something like a tacit
consent among Japanese people, which foreigners cannot sense, behind each word
itself.” (Interview with Yamada in Omega, translated by the author)
“Even if we have professional translators in a meeting, I think it is difficult to
communicate the nuance behind the word itself, so we sometimes cannot tell
accurately what we want to say.” (Interview with Yamamoto in GC-Japan,
translated by the author)
“Many times the translator would not understand the context behind the message.
What I mean by is like, if something was being requested, all of the issues and all of
the circumstances that led up to that request was not understood by the translator.
Therefore, the translator would only translate words and not the feelings.”
(Interview with Williams in GC-US)
Thus, even though the simultaneous translation service was introduced, in fact there has
been more or less misunderstanding between the J-VAR partners and GC-US. If a
misunderstanding due to mistranslation is sensed during a meeting, then the proceedings
[122]
are interrupted, and all the attendees take off their radio receiver and try to speak each other
directly without simultaneous translation. For example, Mori mentions as follows:
“Therefore, whenever discussion gets nowhere, I try to encourage the partners to
talk to the GC-US people directly. I don’t think that, under such a critical situation,
there is any better way than a direct conversation. I mean, I encourage them to have
a direct conversation without any interpreters, even though they are not good at
speaking English.” (Interview with Mori in GC-US, translated by the author)
In this way, efforts have been made in order to minimize misunderstanding at each meeting,
but it is the fact that there exist cases where both side cannot reach to an agreement due to
misunderstanding.
6.2.5. Impact of cultural differences on knowledge transfer
What is a root cause of the critical misunderstanding between Americans and Japanese?
Some people try to attribute the main reason of such misunderstanding to cultural
differences. However, regarding the impact of cultural differences on communications,
views vary from person to person. Firstly, there are people who think that, rather than
national cultural differences, organizational cultural differences matter in the cross-border
communications. For example, Saito in Omega mentions as follows:
“I mean, when we look at each subdivided group in GC-US, I think they accomplish
their own responsibility perfectly, but when we look at the company as a whole, we
often see a kind of discontinuity between those groups, or inconsistency as a whole
company, and so we often wonder why they [people in GC-US] cannot do such easy
things we requested. Those things are not based on national cultural differences but
rather based on differences in organizational process.” (Interview with Saito in
Omega, translate by the author)
Also he compares difference of process in GC and Omega. In Omega, all the processes
from design to after-sales services for this server product business are managed by a single
division, so it is just like a ‘cellular manufacturing’ style in which they can control
[123]
everything. On the other hand, in GC each process such as design, manufacturing, and
after-sales support services is managed by a different group, so it is like ‘mass production’
style, in which horizontal relationships between groups tend to be less close and inter-group
collaboration and control might be difficult. While Saito is aware of such an organizational
difference, he continues to request GC to improve such a situation through ‘orchestrating’
all the related functions by a single conductor.
Similarly, Sasaki in Lambda thinks organizational cultural differences matter in cross-
border communication. Particularly, he thinks that, while organizational culture for many of
the Japanese companies including Lambda is based on collectivism, GC’s organizational
culture is based on individualism. Therefore, while in Lambda many people from various
groups try to solve a single serious quality issue collaboratively, engineers in GC-US
prioritize their personal mission or goal so greatly that they do not try to take up any actions
which are not related to their annual goals even though they might be aware that such
actions are beneficial for a company as a whole. From such a background, Sasaki observes
that engineers in GC-US do not want to pay attention to quality issues raised from J-VAR
partners if such actions are not included in their annual goals, and that eventually
understanding regarding the Japanese way of business by those engineers would not be
deepened.
Mori is the expatriate in GC-US acting as a liaison between GC-US and GC-Japan, and
mainly dealing with quality issues related with design. From his experience where he has
worked with the American engineers in GC-US, he is aware of organizational culture
differences between an American company (Global Computer) and some Japanese
companies (J-VAR partners). One of his viewpoints is a difference between GC and the J-
VAR partners in how they view cost related with quality issues. There are cases in which
Japanese companies tend to give a heavy pressure to GC to resolve a tiny little quality issue
in any way even though return on investment (ROI) for resolving such an issue is supposed
to be very low, and engineers in GC-US tend to refuse such a request rationally if the
estimated ROI is significantly low.
[124]
Mori thinks that this conflict is based on each side’s way of viewing costs related with
solution of quality issues. Focusing on ROI for each case of quality issue, the American
company simply calculates ROI with benefit to be brought by resolving that quality issue
and the cost to be spent on resolving it. On the other hand, Japanese companies believe that
resolving even a tiny little issue leads to improvement of quality of the whole product with
which that quality issue occurred and also leads to improvement of the design process or
production process for the similar products (‘ripple effect’), and eventually leads to benefits
for the whole business unit or the whole company. So Japanese companies do not pay
attention to ROI for each individual case but try to view things macroscopically. Mori
thinks that this organizational culture difference might lead to difficulty of cross-border
knowledge transfer.
Secondly, some attendees of the VG forum think that national cultural differences are
important in the cross-border communications rather than organizational cultural
differences. For example, Williams, who was previously serving as a PMO liaison in GS-
US and a sales rep in charge of the J-VAR partners, agrees that there were many instances
of national cultural differences, so what he tried to do at first was to instruct new comers
from GC-US how to behave in a meeting or dinner with the Japanese customers.
“So, [there is] tremendously big culture gap between the US in many, many ways.
In meeting protocol and how the meeting logistics was to behave. I was constantly
coaching the US executives on how the seating arrangement is, on who speaks, who
are the people who actually hold up the dynamics behave between the Japanese
representatives and the US representatives.” (Interview with Williams in GC-US)
From his long-term experiences in the business with Japanese companies, he himself
managed to make up a list of “dos and don’ts at the business scene in Japan” to be handed
to all attendees from GC-US.
“Yeah, so it [dos and don’ts list] was basically more of how to use chopsticks and
how to put your chopsticks down, and things like, …you know, where to sit, and just
how to eat different foods, these sorts of things were pretty basic; but I think it
[125]
helped them to understand the culture gap, because the intent was not to
inadvertently embarrass their partners or embarrass ourselves. We did not want to
show disrespect. We always wanted to respect the relationship or respect the way
things were done. … These sorts of things there I tried to put in a document, and
that would help the new people try to minimize any sort of those behaviours that
might embarrass both GC or embarrass the partner.” (Interview with Williams in
GC-US)
Thus, Williams thought that national cultural differences matter, and tried to mitigate the
impact of such cultural differences on communications between GC-US and the J-VAR
partners. Like Mori, as a liaison, Williams often faced some difficult situations in which
discussions did not reach to an agreement between the J-VAR partners and GC-US
especially in case of a very sensitive issue, so it is assumed that he began to think deeply
about what the root cause of such an ultimate disagreement was and reached to his
conclusion that the ultimate misunderstanding should be coming from the cultural
differences.
Thirdly, there are people who do not think that cultural differences influence cross-border
communication so significantly. For example, while she admits the existence of cultural
differences, Anderson in Global Manufacturing US does not think such differences are the
gap which hinder communications between American people and Japanese people.
“Not a cultural gap, but I think we have cultural differences, and that, in order to
do business with people from different cultures, you have to first understand the
culture, because otherwise you may not understand why they ask what they ask. So
knowing that the Japanese customers, for example, are very keen on quality, so
knowing that - if you know that that is part of culture, you have to do – go the extra
mile for your customers in Japan. But if you think of all the customers as Japanese,
then I think that you wouldn’t be able to run your business that way, because not
everybody is a Japanese customer, not everybody is also as demanding in quality,
but you can use those learnings to improve your products overall for all customers.
[126]
But I don’t think there are gaps. I think it’s more cultural differences.” (Interview
with Anderson in GC-US)
Kobayashi in Global Manufacturing Japan has also a similar view to Anderson’s.
Kobayashi thinks that the cultural differences can be overcome or can be mitigated by
devising some tools such as a common format, through which all the related people in the
world can ‘talk’ under the common grammar, as mentioned earlier. The fact that both
Anderson and Kobayashi belong to Global Manufacturing where codifiable knowledge is
exchanged might be related with that they do not think the impact by cultural differences is
not so significant.
6.2.6. Impact of direct participation by GC-US people in VG meetings
While the level of understanding about the J-VAR partners’ requirements by the regular
members of the VG forum from GC-US has grown over time, understanding by the back-
end engineers in GC-US has not been deepened yet to a satisfactory level. So some
members of the VG forum point out that deepening understanding about the J-VAR
partners’ requirements by engineers in GC-US should be the next step for development of
the VG forum in the future. In the past, there was an attempt to invite executives from each
department to one of the VG meetings held in Japan and let them meet directly the people
from the J-VAR partners. Actually, from 2008 to 2011, a half-day meeting called
‘Executive Review Meeting’ (ERM) used to be hosted during a face-to-face VG meeting in
Japan once a year, and several executives in GC-US came to Japan to attend this meeting
where they not only gave their own presentations about high-level overall quality
improvement initiatives but also attended a reception party in which they could socialize
directly with the people from the J-VAR partners. The aim behind this attempt of inviting
executives of GC to Japan was to let them directly experience the Japanese way of business
and let them spread such knowledge to rank-and-file employees in GC-US in a top-down
style after they went back to the U.S. But in reality it did not work well, maybe because
their presence in a VG meeting was too short and too intermittent to cause a mind change to
entire engineering groups in GC-US.
[127]
Therefore, the PMO changed their strategy so as to invite not executives but middle-level
managers, who are working more closely with customers, to a face-to-face VG meeting in
Japan, or to let them attend a conference-call type VG meeting even if they cannot go to
Japan. Johnson, a member of the PMO, mentions as follows:
“The other thing it’s good for us and this is something I’ve tried to do is I’ve tried
to bring new people to Japan, because every time somebody who comes to Japan
who has never been here before and sits in 3 or 4 days of 8-hour long meetings with
30 people from Lambda or Omega on the other side of the room all asking
questions, and very detailed, and everything. Sitting there, they start to understand
what the environment is, and you can tell people, it’s like, ‘Yeah, you go to Japan
and you have a meeting for 8 hours.’ They don’t really get it, but if they are there,
and they’re sitting in the chair, and they’re listening to this, and they see how
invested the partners are, and they see how invested GC-Japan is. You really
understand how important this all is, because of the huge investment by the partners
and by GC-Japan in this business to have all these people taking 2, 3, 4 days 4
times a year to put these programs together. That’s why I like to bring more people
to Japan, so they can experience. Just like my first time, I didn’t understand it until I
got here; once I got here it is like, ‘Wow, this is different.’ So, I think every person
that we bring to Japan can end up being an advocate for us back in their home
organizations.” (Interview with Johnson in GC-US)
Another thing that has been done in order to spread knowledge regarding requirements
from the J-VAR partners is that Mori, an expatriate, has been continuing an effort to let
engineers in GC-US know the characteristics for the J-VAR business in every kind of
opportunities.
“Recently, I am often invited to various kinds of meetings which are not related
directly with the J-VAR business. If the person who knows that I am in charge of the
J-VAR business and thinks that the topic of a meeting might be related with the J-
VAR business, he or she invites me to that meeting. In some of those meetings, I try
[128]
to explain what the J-VAR business is and what kind of requirements those partners
raise to GC. They listen to me carefully. They do not take actions immediately, but it
is important at least that they did ‘listen’ to what I have presented. Recently,
opportunities for me to attend such meetings held by those engineers in the Texas
facility are increasing, so I try to raise awareness of the Japanese quality mind-set
among them using such an opportunity.” (Interview with Mori in GC-US, translated
by the author)
Thus, efforts to spread knowledge regarding the Japanese way of business with a
background of quality mind-set throughout the people in GC-US have been continued by
people from various levels in the company. Such efforts are regarded to be a key factor for
developing GC-US’s absorptive capacity, which leads to improvement of the effectiveness
of the whole reverse knowledge transfer regarding the J-VAR business.
[129]
7. Case study (3): Global Computer Support Service Partner (GC-SSP) Program
7.1. Overview of the program
In this case study, a development project of a global standard channel partner program in
the Japanese subsidiary of Global Computer is described. In the Japanese subsidiary, the
business with channel partners has developed from the 1980s in a unique way which is
different to the rest of the world; therefore, when a global standard channel partner program
had to be deployed in Japan in the 2000s, the Japanese subsidiary had a struggle. How the
Japanese subsidiary acted under a contradiction between the headquarters’ strategy and
conservativeness of channel partners in Japan is described. Table-1 shows a timeline of
major events related with the channel partner program in Global Computer and its
precursor Delta Computer.
7.1.1. At the dawn of channel partner strategy
Delta Computer (DC) was established in 1982 in the U.S., and became the largest supplier
of personal computer (PC) systems in the world during the 1990s. In 1991, DC entered into
the Japanese market by establishing its wholly-owned subsidiary, DC-Japan. In the next
year DC-Japan released its Japanese models, and they started to sell those products with
very low prices. Due to such a low-price strategy of DC-Japan, other PC manufacturers in
Japan were obliged to reduce prices for their products; therefore, prices of PCs in the
Japanese market on the whole were pushed down significantly. This phenomenon which
affected the Japanese society was so remarkable that the Japanese mass media called it
‘Delta Shock’.
In its product line-up, Delta Computer had not only PCs but also PC servers, ‘Theta server
series’. Selling servers required a different business model to that required for selling PC
products. In order to expand sales of server products, a supplier needed to provide its
customers with high level maintenance services for both hardware and software. In order to
do so, the supplier needed to be equipped with an infrastructure consisting of call centres
with highly skilled agents, service centres with highly skilled customer engineers (CEs) and
[130]
spare parts depots, covering possible local areas in each country and covering service
hours, typically for 24 hours a day on 7days a week. So in general, it takes quite a time and
huge investment to build up such an infrastructure. But DC grew so rapidly that they did
not have enough time to prepare for its own rigid infrastructure to provide its customers
with maintenance services for its server products. Instead, the strategy which DC took was
to increase certified partners who were able to not only sell DC’s server products but also
provide maintenance services to their end-users using their ready-made infrastructure
consisting of call centres, service centres, and spare parts depots in each country.
[131]
Table 7-1: Summary of events regarding partner programs around Theta server
Year Events at the headquarters of DC & GC Events at the Japanese subsidiary (DC-Japan &
GC-Japan) 1982 - Delta Computer (DC) established in the U.S.
1989 - Theta server released
1991 - Japanese subsidiary (DC-Japan) established 1998 - DC acquired another IT company
- Support Pack released
1999 - MSDP (Maintenance Service Delivery Partner) partner program released based on 'More for More' strategy
1999 ~ 2002
- Initially, channel partners in Japan opposed MSDP - PMG-Japan modified MSDP locally - Most of channel partners in Japan signed the local version of agreement for MSDP
2001 - DC was acquired by Global Computer (GC)
2002 - 'Sales and Delivery' strategy announced - MSDP renewed
- DC-Japan was integrated into GC-Japan
2003 ~ 2006
- A campaign driving channel partners into the renewed MSDP promoted
- Channel partners opposed renewed MSDP again - PMG-Japan modified the renewed MSDP locally again without reporting to the HQ - Most of channel partners in Japan signed the local version of agreement for MSDP
2005 - Harris became the new CEO of GC - Strategy to reduce the IT systems launched
2006 - New partner program GC-SSP released - New version of SPOC (Spare Parts Order for Channel) released
2007 - Project team in charge of deployment of GC-SSP and SPOC in Japan <J-Team> formed - In November, training session for SPOC held in Malaysia. Some members of the J-Team attended it.
2008 - In January, workshop for SPOC held in Japan - Local process 'MPES (Manual Parts Emergency Shipment)' was approved within GC-Japan - Extremely deep discount strategy for Support Pack under GC-SSP was approved within GC-Japan
2009 - In February, SPOC was deployed in Japan - Project team 'J-Team' dissolved
2008 ~ 2009
- Agreement for GC-SSP partner program signed by channel partners under the condition of deeply discounted prices for Support Packs
This strategy, however, was meant to allow each of DC’s certified channel partners to
provide their end-users with their own brand maintenance services. Therefore, the strategy
was a double-edged sword, because, while DC was able to expand its product sales through
[132]
the partners’ own channels, it had to sacrifice the potentially profitable area (maintenance
services) by giving this to the partners.
In general, the maintenance services for server products are profitable. When an end-user
buys a server product, they have two options regarding maintenance services after its
warranty period has ended; one is to call to a service provider or the manufacturer to ask for
an on-site repair service whenever the product breaks down (‘per-call service’), and the
other is to sign a contract with a service provider or the manufacturer for a premium
maintenance service for a specified period of time. From an end-user’s viewpoint, assuming
that failure rate of the product is considerably low, using per-call services should be more
economical than signing a maintenance service contract which is quite expensive.
However, in the case of server products which are generally used for a very important
processes in each company, the ratio of users who choose to sign a maintenance service
contract tends to be higher. It is because, in spite of its higher price, a contract-type service
is much more secure than a simple per-call service, in terms of CE’s response time (e.g. 4-
hours response vs. next-business-day response), and spare parts readiness (e.g. 100%-
guaranteed readiness vs. best-efforts shipment). When looking from the service provider’s
side, the more contract-type services its end-users buy, the more profit it can gain, because
prices for contract-type services can be set so as to be much more profitable than the
summation of the amount of per-call type services.
In the early 1990s, DC-Japan began to expand not only its PC product business but its
server product business in the Japanese market using the channel partners’ distribution
channels. DC’s strategy allowing its channel partners to provide their end-users with the
partners’ own brand maintenance services was accepted favourably by many of the
Japanese channel partners, because the partners found an advantage not only in re-selling
DC’s Theta servers but also in obtaining revenue through selling their own brand
maintenance services to those server users.
Because of the higher specifications and cost-performance of Theta servers in comparison
with the competitors’ products and DC-Japan’s strategy to allow channel partners to
[133]
provide their own brand maintenance services, the number of certified channel partners
increased rapidly. Thanks to such an increase of the partners, the share of DC’s Theta
server in the Japanese market expanded in the late 1990s. By the end of 1998, DC-Japan
had about 30 certified channel partners, and the market share of its Theta server became the
second in the PC server market in Japan (Anonymised document 10).
7.1.2. After Delta Computer’s acquisition of another company
In 1998, Delta Computer acquired a large U.S.-based computer company, which had been
dominant in the area of the high-end server business and had a rigid infrastructure to
provide its customers with appropriate maintenance services across the world. Similarly to
other subsidiaries in the world, DC-Japan merged with the Japanese subsidiary of that
computer company in the same year. As a result, DC-Japan acquired a fully-fledged
infrastructure for maintenance services consisting of over twenty service centres with
highly-skilled customer engineers and over ten spare parts depots all over the country.
Just after this acquisition, the head office of the Customer Support business unit (CSBU) in
DC, which was located in the U.S. and in charge of after-sales support services, released a
series of packaged maintenance service, ‘Support Pack’. This new service enabled
customers (mainly direct sales customers) to sign a maintenance service contract more
easily by getting rid of complicated paperwork which was necessary for the former
maintenance service contracts. Also DC set a strategic price for each Support Pack so as to
be much lower than the former maintenance service contracts. DC made such low prices
possible by rationalizing internal administration flows from the quotation phase to the
phase of registration of the data for each service contract. Thus, the CSBU in DC aimed to
expand the sales of maintenance services aggressively by releasing this packaged service.
The background behind this strategy was that DC had to utilize more effectively its own
huge infrastructure (the company’s fixed capital) for providing maintenance services,
which DC began to own after the acquisition.
While the Support Pack had been developed mainly for the direct sales customers, the head
office of the Partner Management Group (PMG) in the CSBU, in charge of the after-sales
[134]
services business for channel partners, began to think about taking advantage of the Support
Pack for the channel partner business. In 1999, the PMG in the CSBU announced the
‘Maintenance Service Delivery Partner (MSDP)’ program, a new channel partner program,
which put an emphasis on encouraging its channel partners to buy and resell DC’s Support
Pack, instead of encouraging them to provide their own brand maintenance services. Under
this new channel partner program, the more Support Packs a channel partner would buy, the
more payback it could get from DC. So this scheme was called ‘More for More’. The
underlying purpose of such a strategy change was to take back the business opportunities
for the maintenance services, which DC once had given to its channel partners in the early
days, now that DC became able to provide maintenance services using their own
infrastructure.
In DC-Japan, the Partner Management Group Japan (PMG-Japan) in the CSBU-Japan was
responsible for rolling out the new channel partner program, MSDP, in Japan. PMG-Japan
started negotiations with channel partners, but many of the major channel partners in Japan
opposed DC’s new program in which channel partners were encouraged to purchase and
resell DC’s Support Pack instead of selling their own brand maintenance services to their
end-users. This was because if channel partners resold DC’s Support Pack and relied on
DC’s maintenance services completely, utilization of their infrastructure for maintenance
services would significantly decrease. Additionally, the pricing control for maintenance
services would be lost, and eventually the profitability of the total business around DC’s
Theta servers would deteriorate. Having received such strong opposition from major
channel partners, PMG-Japan had to modify the terms and conditions of the new program
agreement locally so that the channel partners could continue to provide their end-users
with their own brand maintenance services. In those days, PMG-Japan in DC-Japan was
able to modify such a program agreement locally without getting any approvals from the
headquarters. Also DC-Japan did not even have to report such a modification to the
headquarters at all.
[135]
7.1.3. After Delta Computer was acquired by Global Computer
After Delta Computer was acquired by Global Computer (GC) in 2001, the newly-
organized Customer Support business unit (CSBU) modified its strategy for the channel
partner business regarding its server products. CSBU directed that channel partners across
the world should purchase and resell the Support Pack more aggressively and wanted to
prohibit channel partners from providing their own brand maintenance services. This
strategy was called ‘Sales and Delivery’, which meant that GC needed to sell more and
more Support Pack (‘Sales’) in order to increase the opportunities for GC to deliver
maintenance services (‘Delivery’) instead of allowing channel partners to deliver
maintenance services under their own brand. Although the program name ‘Maintenance
Service Delivery Partner (MSDP)’ did not change, the content of the program became more
rigorous and compulsory regarding the annual goal of purchasing volume of Support Pack.
From 2003 to 2006, a large-scale campaign to drive all channel partners in the world into
the renewed MSDP program was promoted by CSBU. In GC-Japan, PMG-Japan in CSBU-
Japan had to negotiate again with channel partners in Japan As shown in Figure 7-1, there
were direct relationships between CSBU-Japan and PMG-Japan, so the headquarters tried
to control the Japanese subsidiary. Differently from the days in DC-Japan, the head office
of PMG in the U.S. would not allow local modification of the program, so GC-Japan had to
negotiate with channel partners more strongly than before. In those days, there were around
40 channel partners in Japan, consisting of partners certified by the pre-merger GC and
ones certified by the pre-merger DC. It took a long period of time for PMG-Japan to visit
all the channel partners for explanation and negotiation about the new partner program.
[136]
Product Business Unit Japan- Product Sales Team
. . .
Customer Support Business Unit Japan (CSBU-Japan)- Partner Management Group Japan
(PMG-Japan)- Service Delivery Group Japan
- Call Centre Team- Customer Engineer (CE) Team- Spare Parts Team
. . .
<GC-Japan>
Product Business Unit Head Office
Customer Support Business Unit (CSBU) Head Office- Partner Management Group Head
Office- Service Delivery Group Head Office
<GC Headquarters>
Groups related with deployment of GC-SSP and SPOC in GC and GC-Japan
Figure 7-1: Relationships between CSBU and PMG
But, as a matter of course, the channel partners again opposed this revised MSDP, because
the program contents had not changed much from the previous version except for the
conditions when buying Support Packs (discount and payback percentages), so the partners
could not find any merits from this revised partner program. Having received such
opposition from channel partners, PMG-Japan modified the Japanese-written agreement for
the program locally so that it would leave the door open for provision of each channel
partner’s own brand services. Under the condition that each partner could continue its own
brand maintenance services, many channel partners agreed with the revised program
agreement. And then PMG-Japan reported the headquarters simply the fact that it
completed the deployment of the revised MSDP program in Japan, without mentioning the
local modification of agreement.
[137]
7.1.4. A new channel partner program GC-SSP to be released
After GC acquired DC, it became clear that there were so many IT systems in both pre-
merger GC and pre-merger DC that each of business units began to integrate those
dispersed and fractionalized systems into more streamlined ones. Such an integration
process was further accelerated just after a new CEO, Mr. Harris, took office in 2005. He
was well known as a ‘cost-cutter’, and he reduced about 3,500 IT systems to 1,500 during
his term in office from 2005 to 2008 (Anonymised document 3).
In terms of IT systems related with the channel partner business in CSBU, both pre-merger
companies had their own systems. Since both GC and DC granted each subsidiary
autonomy in the past, local versions of a single system existed in each region or country in
the world. For example, DC originally developed SPOC (Spare Parts Order for Channel), a
system for channel partners to place orders for necessary spare parts for emergency call-
outs. But after it was dispersed across the world, this system was more or less converted in
each region or country so as to be suitable to the local way of business practice. As a result,
DC had several local versions of SPOC in the world by the time of its acquisition by GC.
Around 2006, the head office of CSBU made a decision to integrate these dispersed
systems for parts ordering by channel partners, in response to the CEO’s strategy to reduce
the number of the IT systems. The design team in CSBU decided to adopt the pre-merger
DC’s SPOC as a core system, and started investigation about the specifications for the new
system in order to reflect the terms and conditions of the channel partner program into the
system, in collaboration with the head office of the PMG.
Previously, both GC and DC had a tradition in which, before an important new IT system
was to be developed, they held face-to-face meetings at the headquarters inviting the related
people from all over the world, and used to reflect the conditions which were picked up
from these representatives from the world into the new system. For example, Tanaka who is
[138]
now in PMG-Japan but was previously in the Japan IT group in pre-merger GC-Japan
recollects those days as follows:
“In the past, representatives from countries used to go to the headquarters in the
U.S. to discuss about the specs for internal IT systems. For example, from the spec
design phase, we the staff members of Japan IT quite often used to go to the
headquarters in order to raise some unique requests from Japan directly to the
headquarters so that the new system could take in some complicated requirements
from Japanese customers.”
“… when a certain system for CSBU was introduced, which is still working even
now, I was dispatched to the headquarters as well. At that time, people came to
Silicon Valley from all over the world, say, from France, Sweden, Germany, and
Asian countries, and we had discussed there for about two years… In those days,
when we went to the headquarters, we used to spend time with senior managers in
the headquarters, for example, we sometimes played golf with them, had a
barbecue, and so on.” (Interview with Tanaka, translated by the author)
However, in the 2000s, such a ‘good old tradition’ was gradually lost, and after Harris
became the CEO of GC, such a costly listening process was completely forbidden. Tanaka
mentions as follows:
“In the past, whenever we had to finalize the design for a certain system, there were
opportunities for regions or countries to review the specs at least. However,
recently we never seen such an opportunity for a review of the specs. Instead, we
often see the cases in which the specs which we have never seen so far appear out of
nowhere, and have to say, ‘Oh, I don’t know at all. Who have finalized such
specs?’” (Interview with Tanaka, translated by the author)
So the new SPOC was designed without hearing from any local person in the world under
the policy that the system should be deployed to all the regions or countries in a top-down
[139]
style and any local modifications would not be allowed in principle except for language
conversion.
In parallel with the movement of system integration, the PMG in CSBU who were
promoting the ‘Sales and Delivery’ strategy more aggressively and making channel
partners purchase and resell more of GC’s Support Pack, were trying to revise the channel
partner program again. At the same time, the PMG investigated a mechanism to completely
prohibit channel partners from providing their end-users with their own brand maintenance
services, because the PMG knew that there were still some channel partners who were
providing their own brand maintenance services not only in Japan but also in other
countries in the world. Therefore, the PMG instructed the SPOC design team to incorporate
such a concept of the channel partner strategy into the new system.
All in all, by the end of 2006, the new channel partner program, Global Computer Support
Service Partner (GC-SSP), and the new version of SPOC were completed almost at the
same time, and these two were rolled out in the world between 2007 and 2009. The biggest
characteristic in the new version of SPOC was a process to automatically block spare part
shipment for every case of a partner’s own brand maintenance services; therefore, channel
partners would be obliged to purchase a Support Pack for every server product that they
would buy from GC and resell this to their end-users.
7.2. Reverse knowledge transfer in the deployment project of GC-SSP
and SPOC in Japan
7.2.1. Preparation for deployment
On a global scale, the new channel partner program, GC-SSP, and the renewed system for
channel partner, SPOC, started to be deployed from the beginning of 2007. These two were
essentially different projects, but they were closely related with each other, so in GC-Japan,
these two were deemed as a single project, which was promoted by a project team
consisting of the PMG-Japan and other groups within CSBU-Japan. In the second half of
[140]
2007, a project team (the J-Team) was formed in Japan for the purpose of deploying the
new SPOC system and making a contract agreement for the GC-SSP partner program with
all channel partners in Japan. Figure 7-2 shows the relationships between the J-Team and
other related groups. At first, the deployment completion timing, that is, ‘X-day’, was set as
November 2008, but later it was postponed to February 2009 mainly due to a delay of
development of the Japanese version of the new SPOC.
Channel partners in Japan (Total: about 40 partners)- Tau Corporation
(Internal Stakeholders)- President of GC-Japan
- Product Sales Team
J-TeamPurpose: To deploy new SPOC and GC-SSP partner program in JapanMembers- PMG-Japan- Representatives from Service
Delivery Group
(Sponsor)Top management of CSBU-Japan
CSBU-Japan
GC-Japan
Pressure
. . .
Negotiation regarding new SPOC & GC-SSP
High business volume for products
Figure 7-2: Relationships between the J-Team and other functions
Initially, members of the PMG-Japan were not able to capture clearly the whole picture of
the renewed SPOC, until some of them attended a face-to-face training session in Malaysia
in November, 2007, hosted by the headquarters. Yoshida, a member of PMG-Japan who
attended this five-day-long training session, recollects as follows:
“… when I attended a workshop held in Malaysia in November 2007, which was a
training session for trainers, I noticed that there would be a big change in the new
version of SPOC. Until then we didn’t know exactly what would be changed in the
[141]
new version from the old one only through the documents cascaded from the
headquarters.” (Interview with Yoshida, translated by the author)
Thus, at this training session, the PMG-Japan got to know the details of specifications of
the new SPOC, especially the points which would have a big impact on channel partners in
Japan. So they would bring back knowledge acquired through that training session to Japan,
and would deploy it to the project members of the J-Team. Reversely, in this training
session, PMG-Japan had opportunities for letting the headquarters know the current
situation of the operations in Japan around the channel partner business.
“In a certain training course, an instructor asked Maeda [a member of the PMG-
Japan] how we were doing our operations in Japan, and he explained about a part
of the actual process in Japan roughly… Then the instructor answered, ‘OK, I see,
then for the partners in Japan we have to set up different steps in this system.’ At
this moment, maybe for the first time, we were able to share with the people from
the headquarters partly about how the delivery operations were in Japan.”
(Interview with Yoshida, translated by the author)
In this way, in the training session held in Malaysia, the PMG-Japan was able to share with
the headquarters a little portion of how GC-Japan was carrying on the operations around
maintenance services for channel partners in Japan, but not a whole picture of the
operations, let alone how channel partners in Japan wanted to continue to provide their own
brand maintenance services.
As soon as the members of PMG-Japan who attended the training session went back to
Japan, they started to assess the impact which the specifications of the new SPOC would
have on channel partners in Japan. They did this in conjunction with other members of the
J-Team. The change which would have a biggest impact on channel partners was
anticipated to be the renewed condition for getting a spare part, in which SPOC would
block spare part shipments unless they were related to a Support Pack; therefore, it meant
that, if a channel partner would like to obtain a spare part from GC in a timely manner for
[142]
its own brand maintenance services, an adequate Support Pack should have been bought in
advance.
It was very clear that such a big change in the system would arouse fierce opposition
among major channel partners in Japan who wanted to continue their own brand
maintenance services and who never wanted to buy GC’s Support Pack. Therefore, such a
situation in CSBU-Japan was shared with the Product Sales in GC-Japan in advance.
However, the J-Team was still optimistic, having the hope that the specifications in the new
SPOC might be changed if they could persuade the headquarters through detailed
explanation of the situation.
Two months later, in January 2008, a five-day-long workshop was held in Tokyo attended
by the regional office members as the representatives for the headquarters. The purpose of
this workshop was for the headquarters to introduce the whole specifications and process
for the new SPOC to the J-Team and other related people, and to confirm whether the new
SPOC would work correctly under the conditions of the Japanese channel partner business
without any big modifications to the system.
Before this workshop, most of the J-Team members had hoped that there would be a chance
to persuade the headquarters to modify the specifications in the new SPOC system so that a
channel partner could receive spare parts immediately even without any identification of a
Support Pack. But, in reality, at the beginning of this workshop, the J-Team members were
told that the purpose of this workshop was not to hear the Japanese unique conditions
which should be brought in to the system but to check final workability of the system in
which almost all the specifications had been already fixed. In addition, they also were told
that, if the J-Team would like to change some specifications which were already fixed, then
the J-Team should raise a ‘Request for Change’ (RFC) for each of the specification changes
to the Worldwide IT team, describing the financial impact on business in detail. They
added, that, however, even though the J-Team would raise an RFC, it would not be always
approved unless the financial impact would be significantly enough.
[143]
Having heard such an explanation by the regional office members at the beginning of the
workshop, the people from the PMG-Japan and other groups in GC-Japan lost their will to
ask the headquarters to change the specification of the new SPOC. Yoshikawa, who was a
member of the J-Team, recollects as follows:
“I was shocked to hear what they told us on Day-1 of that workshop. As soon as I
heard it, I thought it would be no use to let them know our complaints or the
partners’ complaints, because it was too late. I wanted to say ‘It’s not fair! We
weren’t asked anything about the spec of the new system beforehand at all!’, but
actually I dared not to say it, because it seemed useless to say so. I believe many of
the attendees thought in the same way.” (Interview with Yoshikawa, translated by
the author)
Also, Tanaka, project leader of GC-SSP part in the J-Team, mentions about this workshop
as follows:
“At that time, I thought we had nothing to do except for persuading all the channel
partners to agree with the current spec of SPOC in any way, or doing something
locally without reporting to the headquarters.” (Interview with Tanaka, translated
by the author)
Thus, at this workshop held in January 2008, the J-Team was not able to disseminate the
detailed situation of the channel partner business in Japan, particularly the fact that many of
the major channel partners would like to continue their own brand maintenance services
and they never wanted to buy Support Packs. If the J-Team had been able to explain the
detailed situation of the channel partner business in Japan at this workshop very clearly
regardless of what the representatives from the headquarters said, the situation might have
changed. Yoshikawa mentions as follows:
“Looking back on that workshop, I sometimes wonder, what if we could let them
know about our situation more aggressively at that workshop. Even if we had done
so, nothing might have changed, but something might have happened, because at
[144]
that timing there was still quite a while left until our final implementation of
SPOC.” (Interview with Yoshikawa, translated by the author)
7.2.2. Persuading channel partners and opposition from them
Giving up the hope of changing the specifications in the new SPOC, the J-Team had to seek
solutions through two different approaches; (1) to persuade channel partners in Japan to
buy Support Packs based on the new partner program GC-SSP and to use the new SPOC in
order to get spare parts in a timely manner, and (2) to devise locally another process
without using the new SPOC and allow channel partners to continue to provide their own
brand maintenance services. Actions for these two approaches were taken in parallel.
In terms of the option (1), negotiations with channel partners were begun soon after the
workshop. Differently from the past cases, such as the deployment project of MSDP which
met with failure, the J-Team tried to take one or two middle-tier managers of CSBU-Japan
to each visit in order to persuade the partners more strongly than previously. Negotiations
with each partner were undertaken repeatedly. However, similarly to the past cases, the
result was that some of dominant channel partners fiercely opposed the proposal from GC-
Japan and such a hard-line attitude of GC-Japan. The reason why channel partners opposed
this was the same as previously because they had already investigated a lot of resources to
construct their infrastructure to provide their end-users with their maintenance services for
GC’s Theta servers and giving up their own brand maintenance services meant a significant
decline of their after-sales services business around Theta servers.
But it is also the fact that GC-Japan’s hard-line attitude to the new channel partner program
and a new system caused a great concern inside each of major channel partners. In the case
of Tau Corporation, one of the biggest channel partners for GC-Japan, the middle-level
management made a decision that they could not accept the GC’s proposal to purchase the
Support Pack for several operational reasons, and sought a final decision from the board of
directors. Watanabe, one of the middle-level managers in charge of maintenance services
business in Tau Corporation, recollects those hard days as follows:
[145]
“I remember that, one day in 2008, I myself and one of my colleagues were called
by one of the board members to his room. There he asked me, ‘How is GC?’, and I
had to answer, ‘Sir, it would be impossible [to continue the business with GC-Japan
any longer, if we had to buy Support Pack].’Then he said after a while, ‘All right.
Then there is no way other than switching from GC to Chi Computer [one of
Japanese computer manufacturers], right?’ Maybe in this way, most of the board
members began to incline to switch our PC server business from GC to Chi
Computer.” (Interview with Watanabe in Tau Corporation, translated by the author)
Eventually, CEO of Tau Corporation had to telephone to the president of GC-Japan directly
and told him that, if GC-Japan forcefully went ahead with this change, Tau Corporation
would have to change its primary vendor for PC servers from GC to another provider.
As soon as the president of GC-Japan received such an ultimatum from the CEO of Tau
Corporation, he instructed the top management of CSBU-Japan to work out a
countermeasure in order to avoid the worst case. Also some other channel partners, who
thought that such a big change in the after-sales services portion would cause cancellation
of the whole business around Theta server, raised an escalation for improvement to the top
management of Product Sales of GC-Japan, who passed such strong claims to the top
management of CSBU-Japan. In those days, while relationships between a subsidiary and
the headquarters in the same business unit have been strengthened, lateral relationships
between different business units within the same subsidiary were becoming weaker, so
Product Sales in GC-Japan and CSBU-Japan did not always have a good relationship. But
in this extreme case, these two units had to co-work in order to resolve such a significant
issue, because a decrease of product shipment to channel partners meant a decrease of the
after-sales business by CSBU-Japan.
7.2.3. Idiosyncrasy of the Japanese market
Thus, an attempt to persuade channel partners by taking a hard line ended in failure, so the
J-Team had to re-think or completely stop option (1). The people engaged in the channel
partner business in GC-Japan also started to think about the situation in other countries or
[146]
other regions. According to the PMG-Japan, in other countries, deployment of both the new
channel partner program GC-SSP and the new system for channel partners SPOC had been
carried out without any ‘show-stoppers’. The fact that the conditions for channel partners
had been getting worse each time the channel partner program was renewed should be
common among all the countries in the world. If so, one might wonder why channel
partners in Japan were so different from the ones in other countries. Yoshida, a member of
the PMG-Japan, mentions as follows:
“In other countries, all the partners are much smaller in their size than GC, so
those partners tend to be more obedient to GC’s directions, such as GC’s sudden
policy changes of a partner program. However, in Japan, some of the channel
partners are even larger than GC-Japan, so such partners aren’t obedient to GC at
all. They are stronger than GC-Japan in terms of the power balance, so they simply
reject GC’s proposals regarding some policy change if that change is unfavourable
for them. Therefore, tough negotiations are often necessary.” (Interview with
Yoshida, a member of PMG-Japan, translated by the author)
Also Suzuki, a member of the J-Team, mentions about a factor relating to why channel
partners in other countries tend to agree even with a disadvantageous partner program as
follows:
“For not only the GC-SSP program but also other channel partner programs, in
other countries, the motivation why partners would like to get authorised by GC in
spite of more hindrance is that being authorized by GC means a ‘prestige’ for
partners. However, here in Japan, partners do not want such ‘prestige’ of GC at
all. So it cannot be a bait to agree with more disadvantageous program for partners
here in Japan. Therefore, conflicts always happen.” (Interview with Suzuki,
translated by the author)
This pointing-out that prestige as a certified partner with GC did not work at all in Japan
might be related with difference in the company size. There could be a tendency that, the
[147]
smaller the size of a channel partner is, the more eagerly the partner tries to obtain a
prestige as a certified partner with GC.
Also in Japan, as Watanabe in Tau Corporation mentioned in the interview with him, there
was a risk that channel partners were able to switch to another server product vendor more
easily than in other countries, because in Japan there were several domestic server vendors
such as Chi Computer whose products did not have as high cost-performance as GC’s
products but had some other advantages in prices or lead-time.
However, such idiosyncratic characteristics about the Japanese market or localized
operations in Japan were not communicated to the headquarters. Tanaka, project leader of
GC-SSP part in the J-Team, mentions about how knowledge regarding the Japanese way of
business has been shared with the headquarters as follows:
“We didn’t have to let them know at all in the past... In the early days, GC-Japan
was deploying each channel partner program by ourselves as an independent
country without any control by the regional office or the headquarters, so we didn’t
have an intention to let the headquarters know such a local situation.” (Interview
with Tanaka, translated by the author)
“Later, the headquarters went in the direction to strengthen their governance
further, such as leading to the direction in which we have to ship spare parts strictly
in accordance with the entitlement… In this way, the headquarters tried to
strengthen their governance, but the PMG-Japan were trying to avoid such a
governance as much as possible in order to keep the current local operations,
because we had to respond to the requests from the existing partners in Japan.
Therefore, the headquarters didn’t know the situation in Japan at all.” (Interview
with Tanaka, translated by the author)
Thus, when wide-ranging autonomy was allowed to the Japanese subsidiary, PMG-Japan
did not use to let the headquarters know how the business with channel partners in Japan
was conducted, because PMG-Japan did not have to do so. And even after autonomy for
[148]
subsidiaries was limited, PMG-Japan continued not reporting the detailed situation of the
channel partner business in Japan. So it is natural that, at the design phase of the new
SPOC, unique conditions for the Japanese subsidiary were not considered at all by the
design team in the headquarters.
As a matter of fact, even under the situation in 2008 when the top management of CSBU-
Japan and Product Sales got strong pressure for change from the dominant channel partners,
neither the PMG-Japan nor CSBU-Japan communicated such a difficult situation to the
headquarters. This was because the top management of CSBU-Japan were aware that, even
though they had raised a request for improvement to the headquarters, the headquarters
would have done nothing for the Japanese subsidiary except for emphasizing again the
importance of standardizing local operations into global ones.
In terms of the daily communications, the PMG-Japan did not use to have frequent
communications with the headquarters or the regional office. In the case of Tanaka, he had
never met his counterpart in the regional office while he was involved in this project, but
communicated with him via emails and over the phone:
“I myself didn’t have a close relationship with him … No, I haven’t met him, though
I have talked over the phone.” (Interview with Tanaka, translated by the author)
Also, Yoshida points out that other people in the PMG-Japan in charge of the system
deployment had less communication with the regional office and the headquarters,
particularly mentioning those members’ lower language skill as follows:
“… when I was assigned to the current role, I noticed that the people in this group
couldn’t speak English very well, so it is not surprizing that it should be difficult for
them to tell what was happening in Japan. I mean, a certain level of communication
skill is necessary to communicate with the foreign people.” (Interview with
Yoshida, translated by the author)
Under such a circumstance, it was impossible to form social links between people in the
worldwide PMG team. Consequently, the detailed situation regarding the channel partner
[149]
business in Japan was not communicated to the headquarters effectively through the daily
communication paths either.
7.2.4. Local modification of spare parts shipment process
In parallel with the option (1) (described in 7-2-2 above), the J-Team moved forward
preparation for option (2), which is to devise locally another process without using the new
SPOC which would allow channel partners to continue to provide their own brand
maintenance services. From among a few alternatives, an idea to apply an internal call-
centre system (Call Centre Tool: CCT) to be used for handling the calls from direct sales
customers to the spare part requests by channel partners was considered. CCT was a global
tool for managing all the phases of each fault report from direct sales customers, from the
reception phase, through the spares shipment and CE dispatch phase, to the closure phase.
This system had flexibility to enable spare parts shipment around the clock even for un-
entitled cases. But there was a strict global rule that this tool should not be used for calls
from channel partners. This was because allowing it to be used for the purpose of channel
partner business meant encouraging the channel partners’ own brand maintenance services.
Instead, channel partners were forcibly guided towards using SPOC under the global rule.
In spite of such a situation, the top management of CSBU-Japan was forced into approving
the idea to apply CCT to the spare part requests by channel partners, because of the huge
pressure both directly from the dominant channel partners on CSBU-Japan and indirectly
from them through Product Sales. In fact, after several internal meetings with the J-Team
members, having judged that there would be no better idea, the top management of CSBU-
Japan made a decision to use CCT for the channel partners business, at the end of April
2008. But they presented a condition that this localised process would be temporary and
that it should be ended in less than a year after its launch. Although the decision to allow
the use of CCT for the channel partner business was serious and risky, neither the top
management of CSBU-Japan nor the J-Team members reported this decision or the future
possible impact to the headquarters.
[150]
After that, the J-Team started to build up locally an infrastructure specialized for the
channel partner business from taking orders, and spare part shipment, to entitlement check
and billing. This process, which was called ‘MPES (Manual Parts Emergency Shipment)’,
would be operated for 24 hours a day on 365 days a year, and it had to depend on manual
labour. Therefore, the new infrastructure became a very costly one, which was completely
different from the original concept of the new SPOC aiming to reduce the labour cost by
automating all the end-to-end processes on the assumption that all channel partners would
buy GC’s Support Packs. Anyway, this new process, MPES, was ready by the ‘X-day’ in
February 2009.
7.2.5. Local modification of partner program GC-SSP
While some members of the J-Team was preparing for the MPES process, other members
in charge of the GC-SSP portion had to restart negotiations with channel partners regarding
the new partner program GC-SSP. Even though the local process (MPES) would enable a
channel partner to obtain spare parts immediately without buying Support Packs, it was a
temporary process with a time limit. So the J-Team had to let channel partner sign the
agreement for the GC-SSP and let them use the new SPOC before the MPES process would
be discontinued. Under such a high pressure and through repeated discussions with channel
partners, the J-Team managed to devise a new idea which would enable channel partners to
continue their own brand maintenance services under a restriction that they would have to
buy Support Packs.
This new scheme was like this: GC-Japan would sell each Support Pack to those major
channel partners with a very deeply discounted price for the purpose of only delivering
spare parts in a timely manner. In principle, the price of each support pack consisted of
several elements, such as material costs for spare parts, labour costs for call centre agents or
CEs, and margin, among others. If GC-Japan would allow a channel partner’s own brand
maintenance services, what a channel partner really needed were not services by GC-
Japan’s call centre agents or CEs, but just spare parts. Therefore, if GC-Japan would not
consider the pricing elements related to the services of call centre agents and CEs, then GC-
[151]
Japan could reduce the price for each Support Pack to the limit. On the other hand, from the
channel partners’ viewpoint, it would be good if they would be able to continue their own
brand maintenance services by getting spare parts through SPOC in a timely manner. Of
course, in order to do so, they had to buy Support Packs in advance, but according to the
new scheme the price of each Support Pack was so reasonable that the summation of the
discounted Support Pack prices would be equivalent to or lower than the summation of the
spare parts to be purchased. Therefore, it was expected that this new scheme would be
accepted by the major channel partners.
However, this new scheme had a grave fault on the GC-Japan side, that is, it would still
allow channel partners to continue to provide their end-users with their own brand
maintenance services. This was inconsistence with the original concept of the GC-SSP
partner program which aimed to eradicate channel partners’ own brand maintenance
services across the world. But, having judged that there was no other better idea than this
new scheme, the top management of CSBU-Japan had to approve the scheme in which
channel partners could buy Support Packs with hugely discounted prices in October 2008.
Having received the final approval by the top management of CSBU-Japan, the J-Team
visited again each of the major channel partners and explained the new proposal in which
channel partners could continue their own brand maintenance services while they had to
buy Support Packs with hugely discounted prices. Almost all channel partners accepted this
proposal instantly, as Tanaka mentions;
“… we continued our negotiation with X and Y to get their agreement on switching
their business model to the direction of buying GC’s Support Packs, in exchange for
accepting their request to make their annual total payments the same amount as the
amount they had paid until then. And finally, GC-Japan agreed with about x%
discount of all Support Packs. This is an unprecedentedly huge discount, which is
like an ‘unequal treaty’ between a strong country and its colony. In this way, we
reached to a conclusion for our negotiation.” (Interview with Tanaka, translated by
the author)
[152]
But it was almost impossible for channel partners to prepare Support Packs for all the Theta
servers which were already installed at the end-user’s sites, by the X-day. Therefore, the J-
Team made its final decision by adopting a phased approach as follows:
- Phase-1 (in a year from the X-day): Channel partners can use both SPOC and
Manual Parts Emergency Shipment (MPES)
- Phase-2 (after one year will pass): Channel partners can use only SPOC
Having accepted this phased approach proposed by GC-Japan, each of the major channel
partners signed the agreement for the GC-SSP program one after another from 2008 to
2009. The J-Team reported the headquarters simply the fact that they managed to make
channel partner sign the agreement for the GC-SSP program, without mentioning about the
condition change of the discount rate.
“It was impossible for us to report such a fact of applying a very deep discount rate
to the regional office or the headquarters. Instead, we have tried to hide this fact so
far. In other words, this means that it was difficult to say that Japan team have had
a good relationship with the headquarters. Actually, we have made every effort to
hide the inconvenient facts for Japan and not to let such things be leaked to the
headquarters.” (Interview with Tanaka, translated by the author)
On the other hand, only Tau Corporation, one of the biggest channel partners for GC-Japan,
did not agree even with this new proposal in which a channel partner could buy Support
Packs with hugely discounted prices. It was because, even if Tau Corporation would buy
Support Packs and use SPOC from its own internal system, there were several technical
‘show-stoppers’ in its internal system. According to Tau Corporation, it would take a huge
cost for modification for its internal system because the system it was using for its after-
sales support services was a very large and complicated system. Consequently, Tau
Corporation refused the new proposal about GC-SSP.
Again the J-Team had to devise out another process only for Tau Corporation, which was a
very important partner for both CSBU-Japan and Product Sales team in GC-Japan. Having
investigated every possible alternative, the J-Team finally made a decision to allow Tau
[153]
Corporation to continue to use the MPES process even beyond the time limit which was set
one year after the X-day. It implied that this very costly labour-intense MPES process
would not be just a temporary process but that it might be a permanent one.
In this way, preparations for deployment of the new SPOC for all the channel partners in
Japan had been completed by the X-day in February 2009. In summary, there were three
types of channel partners as follows:
- Type (1) … Channel partners who would sign GC-SSP partner program without any
modification and would use SPOC from the ‘X-day’
- Type (2) … Channel partners who would sign GC-SSP partner program under the
condition of huge discount for Support Packs and would use MPES from the ‘X-
day’ but would switch to use SPOC after one year
- Type (3) … A channel partner (Tau Corporation) who would not sign GC-SSP at all
and would use MPES from the ‘X-Day’ onward
While the scheme for the type (1) partners was in line with the original strategy of the
headquarters which was not to allow the partners’ own brand maintenance services and to
encourage channel partners to buy more Support Packs, the scheme for the type (2) and
type (3) partners were contradictory to the headquarters’ direction. Also the business
volume and transaction volume for the type (2) and type (3) partners were much more than
that for the type (1) partners; therefore, the cost for irregular operations for the type (2) and
type (3) partners would be significantly high. This situation was exactly what Tanaka
described as an ‘unequal treaty’ between a strong country and its colony, showing how
weak GC-Japan was against the major channel partners in the power balance.
7.2.6. Deployment of the new SPOC and termination of the project
Through careful preparations by the J-Team described above, the new SPOC was
eventually launched in Japan exactly on the X-day in February 2009, simultaneously with
termination of the legacy systems. At the same time, the MPES process started to work as
[154]
well, which was operated by a special operations team who had to work twenty-four hours
a day on seven days a week. So the type (1) channel partners and a part of the type (2)
channel partners started to use the new SPOC from that day, while the majority of the type
(2) partners and Tau Corporation started to use the MPES.
Just after the new SPOC was launched and began to work normally, the J-Team reported
the headquarters only the fact that the system started to work without any major problems.
Then the project team was dissolved, and all the unfinished affairs were taken over by the
PMG-Japan.
When the project for deployment of the new system SPOC, and a new partner program GC-
SSP was completed in Japan, the main concern of the headquarters had already shifted to
another new strategy for the next generation. So even though the J-Team reported the
headquarters that it completed the deployment project, the headquarters was not so much
interested in it, as Yoshida and Tanaka in the PMG-Japan mention:
“No visitors have come to Japan after we implemented the new version of SPOC,
except for the visitors for the partner audit. I think that, for the headquarters
people, their top priority was to implement the system itself in any way, and once
they have completed to implement it, they don’t mind at all whether things are going
well or not.” (Interview with Yoshida, translated by the author)
“It took so long time to deploy the GC-SSP program in Japan, so when we have
finished to deploy it, preparation for the next partner program has already started
in the rest of the world. So they [the headquarters] didn’t care much about whether
Japan have completed to deploy such an out-of-date program or not.” (Interview
with Tanaka, translated by the author)
Thus, all through the period of the deployment project in Japan, the details how the J-Team
struggled with the global standard strategy which was forced onto the Japanese subsidiary
or the idiosyncrasy in the Japanese market were not communicated to the headquarters at
all. After the deployment project, providing maintenance services by channel partners
[155]
under their own brand has been continued in Japan, without being revealed to the
headquarters. As time went by, it has become known by the headquarters little by little that
Support Packs were sold with hugely discounted prices in Japan, and that there were still
several channel partners who provided their own brand maintenance services. Although the
headquarters was vaguely aware of such situation in GC-Japan, it did not dare to take any
actions about these issues in GC-Japan, because the financial statements did not look
significantly unhealthy.
[156]
8. Cross-case analysis and findings In the previous chapters, three case studies regarding reverse knowledge transfer from the
Japanese subsidiary to the headquarters of a U.S.-based IT company were presented. In this
chapter, the cross-case analysis and findings regarding these three case studies are
presented.
As discussed in the chapter on methodology, keywords were extracted through template
analysis from the interview transcripts for these three case studies. Those keywords were
categorized along with each of functions defined in the conceptual framework (Figure 2-2).
Based on those categorized keywords, interpretation was conducted across all the case
studies. Below such a cross-case interpretation is described.
At first, the overall perception of reverse knowledge transfer for each case study is
reviewed, and then the cross-case analysis for each of factors affecting reverse knowledge
transfer is discussed with respect to the relationship between each of the factors and the
overall perception of reverse knowledge transfer.
8.1. Overall perception of reverse knowledge transfer
First of all, the overall perception of reverse knowledge transfer in each case is reviewed.
The overall perception of reverse knowledge transfer is related to whether knowledge was
transferred successfully from the Japanese subsidiary (GC-Japan) to the headquarters (GC-
US) in each case study. It can be evaluated using case study evidence which is internal
documents and the interviewees. Table 8-1 shows a summary of the overall perception of
reverse knowledge in each case study.
[157]
Table 8-1: Overall perception of reverse knowledge transfer per case study
Overall perception of reverse
knowledge transfer
(Successful or unsuccessful?)
Case-1 (JQC) Successful
Case-2 (J-VAR) Moderate
Case-3 (GC-SSP) Unsuccessful
In case study (1), the Japan Quality Committee (JQC) program to discuss quality issues
about FT severs was taken up. The JQC meetings were held either in the U.S. or in Japan
alternately, attended by employees from various sections in GC-US and GC-Japan.
Whenever the JQC meetings were held in Japan, the attendees from GC-US used to visit
some important Japanese customers and listen to customers’ voices directly there. In this
program, GC-Japan attempted to transfer knowledge mainly for specific quality issues
around the FT server products to the headquarters in the U.S. (GC-US).
As Garcia mentioned (Section 5.3), before this program was launched, engineers in GC-US
did not understand at all the Japanese customers’ requirements regarding quality
improvement, so there were so many open quality issues when the JQC program was
launched in 1992. However, through repeated JQC meetings over many years, such open
quality issues had been fixed one by one, and finally the number of significant open quality
issues reached to zero in 2008, so this program ended successfully (Section 5.2). From such
evidence, the overall perception of reverse knowledge transfer can be evaluated to be
‘successful’.
In case study (2), the Japan Value Added Reseller (J-VAR) program was taken up.
Particularly, the Victory Group forum (VG forum) where quality issues around the GC-
Zeta server products was the focus. Similarly to the JQC program, the VG meetings were
held either in the U.S. or in Japan, but a big difference from the JQC program was that, in
the case of the VG meetings, not only employees from GC-US and GC-Japan but also
people from the J-VAR partners have always attended. In this forum, there was an attempt
[158]
to transfer knowledge about quality issues from GC-Japan and the J-VAR partners to GC-
US.
As Saito in Omega, one of the J-VAR partners, mentioned, just when the VG forum was
launched, communications between the Japan side (J-VAR partners and GC-Japan) and
GC-US did not work well, so significant quality issues raised by the J-VAR partners were
not fixed in a timely manner. Therefore, from 2001 to 2002 the customer satisfaction level
about the VG forum was less than 3.5 on the basis of 5.0 (Figure 6-3). However, through
repeated meetings, GC-US became more knowledgeable about the Japanese partners’
requirements and began to fix many quality issues more quickly, so the customer
satisfaction level about the VG forum raised to around 4.0 after 2004 (Figure 6-3). Thus,
many quality issues have been fixed through such VG forum, but quality issues around the
GC-Zeta server have been happening continuously thereafter, and sometime it took a longer
period of time to fix some major issues. So the customer satisfaction level has been
repeating ups-and-downs (Figure 6-3), and the VG forum is still continuing (as of 2016).
From such observations, the overall perception of reverse knowledge transfer for case study
(2) can be evaluated to be ‘moderate’ just between unsuccessful and successful.
In case study (3), a project to deploy a new channel partner program (GC-SSP) in GC-
Japan was taken up. This globally standardized partner program was originally developed
in GC-US and deployed in all subsidiaries around the world with very limited local
modification. In GC-Japan, a project team (the J-Team) was formed in order to deploy GC-
SSP, and the deployment project was continued from 2007 to 2009. During this term,
although the J-Team was aware of significant misfit between the strategy of the new partner
program and the real market situation in Japan, the J-Team did not have an opportunity to
communicate such a situation to GC-US. Although many local partners in Japan expressed
their fierce opposition, the J-Team did not report such a situation to GC-US. As a result,
huge cost had to be spent locally in order to fill the gap between the global standard
program and the local market situation. This means that knowledge was not transferred
[159]
properly from GC-Japan to GC-US; therefore, the overall perception of reverse knowledge
transfer for case study (3) can be evaluated to be ‘unsuccessful’.
8.2. Knowledge type and knowledge characteristics
As discussed in Chapter 2 (Theoretical background), the type of knowledge to be
transferred from a subsidiary to the headquarters is regarded to have an impact on reverse
knowledge transfer. In the three case studies, various kinds of knowledge was transferred.
Summary of knowledge type and characteristics of knowledge dealt in each case study is
shown in Table 8-2.
Table 8-2: Summary of knowledge type and knowledge characteristics
Content of
knowledge to be
transferred
Knowledge
characteristics Knowledge type
Overall perception
of reverse
knowledge transfer
Case-1
(JQC)
Quality issues and
background concept
Complex, Tacit,
Specific
Know-how Successful
Case-2
(J-VAR)
Quality issues and
background concept
a) Complex, Tacit,
Specific
b) Complex, Explicit,
Specific (under RCA
format operations)
a) Know-how
b) Information (under
RCA format
operations)
Moderate
Case-3
(GC-SSP)
Market situation in
Japan
Complex, Tacit,
Specific
Know-how Unsuccessful
In the JQC program described in case study (1), initially engineers in GC-US did not
understand accurately GC-Japan’s requirements regarding the quality issues only through
emails, as Garcia mentioned (Section 5.3). Although he suspected that there should be
something unknown behind requests from GC-Japan regarding quality improvement, he did
not understand clearly what it was. However, through repeated face-to-face meetings with
[160]
GC-Japan and visits to the local customers in Japan, engineers in GC-US became more
familiar with requests for improvement of quality from Japanese customers.
Also, as Yamaguchi, manager of the software support team in GC-Japan admitted, requests
from the Japanese customers regarding quality improvement were unique, and difficult to
understand even for GC-Japan people (Section 5.3). It is regarded that such a uniqueness is
coming from the TQC concept which has been supported by many Japanese manufacturing
companies. Therefore, in case study (1), knowledge which GC-Japan tried to transfer to
GC-US in the JQC program was not only quality issues themselves but also the concept of
TQC as a background concept behind them, which was complex and specific.
Also there was a problem related with a difference of language, as Jones, the chairman of
the JQC program, pointed out as follows;
“My experience working in Japan is that very often there is a communication gap. I
don’t think that that’s specific to any program, because I’ve seen it in every area
that I’ve been involved. I think a lot of it has to do with the language issues. It’s
very difficult to provide information in the native language that the recipient can
understand it. … If everything was in one language, you could just forward messages
and things like that, but now every message has to be translated, and then
forwarded, and then there are questions about it. So, I think there is a very high
overhead associated with communication, so I think it’s always going to be
challenge for us.” (Interview with Jones, chairman of the JQC program)
Thus, all knowledge which was conceived originally in Japanese but translated into English
afterwards has a possibility that it includes a part which cannot be expressed clearly, that is,
a tacit part.
From these observations, knowledge to be transferred in the JQC program from GC-Japan
to GC-US included not only complexity and specificity to the Japan’s idiosyncratic
background based on the TQC concept, but also tacitness due to the language difference
between Japanese and English. Therefore, knowledge type was not ‘information’ but
[161]
‘know-how’. Also from the comments by Jones and Garcia, it was fact that initially GC-US
engineers did not understand clearly the GC-Japan’s requests, so it can be considered that
know-how type knowledge was difficult to transfer across the border. Meanwhile, the
overall perception for case study (1) was successful (Table 8-1), which means that know-
how type knowledge was transferred across the border successfully under a certain
condition with a mixture of some other factors.
In the J-VAR program in case study (2), quality issues raised from the Japanese partners
and the background concept were attempted to be transferred to GC-US. As Mori, an
expatriate who was dispatched from GC-Japan to GC-US, mentioned, when he was in
Japan, he used to feel that his explanations regarding quality issues raised by the J-VAR
partners only through emails were not understood accurately by engineers in GC-US
(Section 6.2.1). It is regarded that the quality issues which he wanted to let them know
included the TQC background. So such knowledge was complex, and specific, which was
difficult to transfer from Japan to the U.S.
Such a difficulty of transferring quality issues from GC-Japan to GC-US can also be known
from the fact that, when engineers in Japan Technical Support in GC-Japan tried to send an
email regarding a highly complex quality issue, they did not translate by themselves but
asked Mori to help translate and forward to the laboratory engineers, as Nakamura
mentioned (Section 6.2.1).
Also, as Kobayashi in Global Manufacturing Japan and Sasaki in Lambda, one of the J-
VAR partners, pointed out, there was a possibility that a mediator in a knowledge flow
might distort the true meaning which the knowledge sender really wanted to let the
knowledge recipient know. So Sasaki expressed such a phenomenon as a ‘filtering effect’
by a mediator, while Kobayashi emphasised an importance of each mediator’s ability of
interpretation (“kaishaku” in Japanese), which is not a simple translation ability but an
ability to let the knowledge recipient know the background concept as well.
Furthermore, as Yamada in Omega, Yamamoto in GC-Japan, or Williams in GC-US
pointed out, in the VG meetings there sometimes are cases in which even highly skilled
[162]
professional translators cannot translate accurately what the original speaker wanted to
express (Section 6.2.4). Yamada explained about it using the Japanese word “Anmoku-no-
ryokai”, meaning tacit consent among the people who are concerned, while Yamamoto
explained using the word ‘nuance’ and Williams did ‘feeling behind the words’. Whatever
the keywords they use, the central idea is that there exists a portion which is not transferred
accurately only through literal translation, which implies a tacit part of knowledge to be
transferred. From these, it can be known that knowledge to be transferred from GC-Japan to
GC-US in the J-VAR program included a tacit part based on the language difference.
From the above observations, knowledge to be transferred in case study (2) was know-how
type, which was complex, tacit, and specific to the Japanese background. And such know-
how type knowledge is difficult to transfer.
However, the overall perception of reverse knowledge transfer for case study (2) was
moderate (Table 8-1), which shows that, although it is clear that know-how type knowledge
is difficult to transfer across the border, even such know-how type knowledge can be
transferred to a certain degree through some efforts for communication improvements.
Another finding in case study (2) is that Global Manufacturing Japan devised a format
(RCA format), with which all members of Global Manufacturing in the world can
understand the essence of each of quality issues (Section 6.2.1). In this process, original
know-how type knowledge was codified, and transformed into information type
knowledge, so that such codified knowledge (information type knowledge) flows more
smoothly across the world. The background reason of this codification is that Global
Manufacturing Japan thought that a worldwide common format was necessary in order to
communicate highly complex quality issues without any misunderstanding by people in
foreign countries beyond the cultural or language differences (Section 6.2.1). This shows a
case in which information type knowledge can be transferred more efficiently and more
effectively than know-how type knowledge.
In case study (3), it was illustrated that the idiosyncratic Japanese market situation which
caused a misfit with the global standard program was not transferred to GC-US. As
[163]
Yoshida, a member of the J-Team, noted, while in other countries channel partners were
much smaller than Global Computer, in Japan many channel partners were as large as GC-
Japan, so they did not easily accept GC-Japan’s requests for partner program changes or IT
system changes (Section 7.2.3). In relation to this, Suzuki, a member of the J-Team,
mentioned that, while channel partners in other countries tended to regard being a GC’s
authorized partner as a prestige, the Japanese partners did not feel so, instead they requested
more realistic benefits (Section 7.2.3). However, such an idiosyncratic situation in the
Japanese market was not transferred to GC-US at all.
On top of that, the Japanese local market situation regarding the channel partner business is
highly complicated due to its multi-layered structure or relationships between partners
themselves which have been built up over time. Suzuki mentioned as follows;
“In other regions or countries, the deepest case of the partner structure consists of
three layers; (GC) – Distribution Partner – Reseller – End-user. That’s simple. On
the other hand, in Japan, some resellers are also allowed to re-sell GC’s products
or services to another reseller, so logically the structure could be an infinite loop.
But in reality, the deepest case is five layers; (GC) – DP- 1st Tier Reseller – 2nd
Tier Reseller – 3rd Tier Reseller – End-user. Under such a structure, one 3rd tier
reseller ‘A’ might have relationships with one 2nd tier reseller ‘B’ for a certain
product category and one 1st tier reseller ‘C’ for another category at the same time.
In such a case, we might have to watch through which route each product will be
sold in order not overlook any fraud by partners. But in reality it is totally
impossible, because there are too many relationships between partners, just like a
spider web. So that’s uncontrollable.” (Interview with Suzuki, translated by the
author)
Thus, the Japanese local market has an idiosyncratic situation. Such a unique local market
situation is regarded to be not information but know-how with characteristics such as
complexity, difficulty of codification (tacitness), and specificity to the Japanese
idiosyncratic market situation. Meanwhile, the overall perception of reverse knowledge
[164]
transfer for case study (3) was unsuccessful (Table 8-1), so it means that know-how type
knowledge can be one of factors which affect unsuccessful reverse knowledge transfer.
In summary, in terms of knowledge type, in case study (1), knowledge type was know-how
which is difficult to be transferred across the border, but the overall perception of reverse
knowledge transfer was successful. It is regarded that other factors, which will be discussed
below (Section 8.3, 8.4, and 8.5), have pushed up the overall perception of reverse
knowledge transfer to the successful level. In case study (2), knowledge type was know-
how, and the overall perception of reverse knowledge transfer was moderate. As well as
case study (1), other factors are regarded to have pushed up the overall perception of
reverse knowledge transfer to the moderate level. Also in case study (2), an exceptional
process, in which information type knowledge was used, was found. That is a RCA format
process run by Global Manufacturing group in the world, and it was found that information
type knowledge can be transferred with less misunderstanding than know-how type
knowledge. In case study (3), knowledge type was know-how, and the overall perception of
reverse knowledge transfer was unsuccessful, so it is clear that knowledge-type affected
reverse knowledge transfer. Thus, although other factors affect positively reverse
knowledge transfer, it was confirmed that know-how type knowledge was difficult to
transfer from GC-Japan to GC-US.
Additionally, one particular finding around the knowledge type is a potential risk that a real
meaning of what the knowledge sender intended to express is not communicated accurately
to the knowledge recipient due to existence of a translation process from one language to
another. Such a risk was pointed out by Jones in GC-US in case study (1), and Sasaki in
Lambda and Kobayashi in GC-Japan in case study (2). Sasaki called such a risk a ‘filtering
effect’ by a mediator and Kobayashi explained such a concept using a Japanese word
“kaishaku” (‘interpretation’ in English) by a mediator. Also in case study (2), insufficient
translation by professional translators was pointed out, and the portion which cannot be
translated accurately was explained using the keywords such as “Anmoku-no-ryokai” (tacit
consent among the people who are concerned), ‘nuance’, or ‘feelings’. What these
[165]
keywords have in common is a characteristic that knowledge includes a tacit part which is
difficult to translate from one language to another, and eventually leads to difficulty of
knowledge transfer. So it is regarded that tacitness is a very important characteristic when
transferring know-how type knowledge across the border.
8.3. The headquarters’ absorptive capacity
As shown in Chapter 2, it is expected that, if the headquarters has higher absorptive
capacity, knowledge is transferred more effectively from a subsidiary to the headquarters.
Also the single driver for absorptive capacity is regarded to be ‘prior related knowledge’. In
this section, GC-US’s absorptive capacity and what kind of prior related knowledge was
shared between GC-US and GC-Japan is reviewed across the cases. Table 8-3 shows a
summary of the level of GC-US’s absorptive capacity and the status of prior related
knowledge for each case study.
Table 8-3: Summary of GC-US’s absorptive capacity and prior related knowledge
Status of prior related
knowledge
Level of GC-US’s
absorptive capacity
Overall perception of
reverse knowledge
transfer
Case-1 (JQC) GC-US learned TQC-related
knowledge through meetings over
time
High Successful
Case-2 (J-
VAR)
a) In general, GC-US had no
TQC-related knowledge, but
learned through meetings over
time a certain level
b) In a specific case, some people
had TQC-related knowledge
a) In general, medium
b) In a specific case,
high
Moderate
Case-3 (GC-
SSP)
GC-US had no knowledge about
the Japanese specific market
situation
Low Unsuccessful
[166]
In case study (1), under the JQC program, initially GC-US did not understand accurately
GC-Japan’s requests or repeated questions regarding quality issues, as Garcia, a software
engineer in charge of the JQC program, mentioned (Section 5.3). Underlying such requests
or questions from GC-Japan is the concept of TQC which is widespread among Japanese
companies. Engineers in GC-US in charge of the FT server products did not have such a
background regarding TQC, so initially they did not understand what GC-Japan and the
Japanese customers requested. This means that GC-US did not have enough prior related
knowledge, and that its absorptive capacity was so low that knowledge was not transferred
effectively from GC-Japan to GC-US.
Over time, through the face-to-face meetings with GC-Japan and Japanese customers under
the JQC program, GC-US became much more familiar with the background of the Japanese
customers’ requests, as Jones mentioned (Section 5.3). So its absorptive capacity has been
improved to such high level that all the major quality issues were completely fixed by 2008
when GC-Japan made a decision to end the JQC program. From such observations, in case
study (1), GC-US’s absorptive capacity can be considered to be high throughout the period
when the JQC meetings had been held. Meanwhile, the overall perception of reverse
knowledge transfer for case study (1) was successful (Table 8-1), so it shows that the
headquarters’ absorptive capacity largely affects reverse knowledge transfer.
Under the J-VAR program in case study (2), in the early days of the VG forum, engineers
in GC-Japan like Mori felt frustration that their thoughts were not fully understood by GC-
US, when they communicated with GC-US via emails (Section 6.2.1). Likewise, as Saito in
Omega, a J-VAR partner, mentioned, the J-VAR partners also felt similarly whenever he
attended face-to-face meetings with GC-US before the full-fledged VG forum was
launched. One of the reasons why GC-US did not understand such requests raised from
GC-Japan or the J-VAR partners can be regarded that engineers in GC-US did not have
enough knowledge regarding the TQC concept. As Saito in Omega mentioned, in the early
days, the J-VAR partners used to feel a frustration that GC-US’s responses to their requests
were like a stopgap action (“Taisho Ryoho” in Japanese), while they expected a holistic
[167]
solution which covered an eradication process of every possible cause of each significant
failure (Section 6.2.2). Thus, it is clear that GC-US did not have the background of the
TQC concept, and that GC-US lacked prior related knowledge in those days.
Then, through direct communications between GC-US, GC-Japan, and the J-VAR partners
in the VG meetings, GC-US has become knowledgeable regarding the TQC concept over
time, and its absorptive capacity has been improved to a certain level. But as Mori
mentioned (Section 6.2.4), it is sometimes seen that GC-US and the J-VAR partners did not
reach to the common understanding of a certain issue even after a long discussion in the
VG meetings, which means that GC-US’s absorptive capacity was not so high even after all
these years. One particular keyword is ‘Yoko-Tenkai’, which means application of a
corrective action to similar products and processes. This is regarded as one of important
constructs in the TQC concept, but at the same time it is most difficult to understand from
the viewpoint of GC-US. Although this construct had been mentioned quite often in the VG
meetings, it was very clear that GC-US did not understand about Yoko-Tenkai from their
presentations in the recent VG meetings.
From these observations, it is judged that the GC-US’s absorptive capacity was at a
medium level. Meanwhile, the overall perception of reverse knowledge transfer was
moderate (Table 8-1), so it means that the headquarters’ absorptive capacity greatly affects
reverse knowledge transfer in case study (2).
On the other hand, in the same case study, a different level of the GC-US’s absorptive
capacity can be observed as another finding. As demonstrated in section 6.2.2, in the VG
meetings, many attendances from the J-VAR partners acclaimed the presentations by
Anderson in Global Manufacturing in GC-US, because her presentations answered well the
partners’ expectations based on the TQC concept including Yoko-Tenkai. Anderson herself
had extensive knowledge about the TQC concept through her self-development, so she was
able to easily understand what the J-VAR partners requested, not only superficially but
from the deeper level. This is a remarkable example showing that, if a person in the
[168]
headquarters has enough prior related knowledge, knowledge can be transferred from a
subsidiary to the headquarters very effectively.
In case study (3), in the strategy planning phase, the design team for the GC-SSP program
and SPOC system in GC-US did not have enough knowledge regarding the idiosyncratic
Japanese market situation. As Tanaka mentioned, although in the past the headquarters used
to listen to special requirements from major subsidiaries when a new program or a new IT
system was being prepared to be released, nowadays there are no such opportunities and a
new program or new IT system with global standard specifications was forced on each
subsidiary in a top-down style (Section 7.1.4). So it is clear that the new partner program
GC-SSP and the new IT system SPOC were designed without paying special attention to
GC-Japan’s particular conditions (Section 7.1.4), which means that GC-US did not have
prior related knowledge in terms of the Japanese market situation. If there had been people
who were familiar with local market situation in Japan in the strategy planning team of GC-
US, then the situation might have been different. But in reality, GC-US went ahead with an
implementation process of the new partner program and the new IT system without paying
attention to each subsidiary’s unique situation at all, which caused a significant misfit in the
Japanese market eventually.
Therefore, it is judged that GC-US did not have prior related knowledge regarding the
Japanese market situation, and that its absorptive capacity was at low level. Meanwhile, the
overall perception of reverse knowledge transfer was unsuccessful (Table 8-1), so it shows
that the headquarters’ absorptive capacity or its prior related knowledge greatly affects
reverse knowledge transfer.
In summary, in case study (1), the headquarters’ absorptive capacity was high, and reverse
knowledge transfer was successful. In case study (2), the headquarters’ absorptive capacity
was at medium level, and the overall perception of reverse knowledge transfer was
moderate. In case study (3), the headquarters’ absorptive capacity was low, and reverse
knowledge transfer was unsuccessful. In this way, it can be judged that the headquarters’
[169]
absorptive capacity is a major driver which affects greatly reverse knowledge transfer
across the border.
8.4. Subsidiary’s disseminative capacity and language proficiency
As discussed in Chapter 2, a subsidiary’s disseminative capacity is assumed to have an
impact on reverse knowledge transfer, and the drivers of disseminative capacity can be skill
(ability) and motivation (willingness). Table 8-4 shows a summary of GC-Japan’s
disseminative capacity for each case study.
Table 8-4: Summary of GC-Japan’s disseminative capacity
Skill
(language
proficiency) Motivation
GC-Japan’s disseminative capacity
Overall perception of
reverse knowledge
transfer
Case-1 (JQC) High High High Successful
Case-2 (J-VAR) Medium High Medium Moderate
Case-3 (GC-SSP) Low Low Low Unsuccessful
In case study (1), Yamaguchi, leader of software support team in GC-Japan, mentioned,
that his team never met any big trouble with communicating in English in the JQC program
(Section 5.4). In 2010 when two years passed after the JQC program officially ended, he
launched a post-JQC quality check forum focusing on the software product quality
voluntarily by himself. This forum was not as big as the JQC program, but some engineers
from GC-US were invited to weekly conference calls for a status check, so the meetings
were progressed in English. Yamaguchi was a facilitator of the conference calls. Thus, his
and his team members’ language proficiency was high enough to proceed such conference
calls.
Not only Yamaguchi’s software support team but also Matsumoto’s spare parts
management team in GC-Japan launched voluntarily a post-JQC forum based on regular
[170]
conference calls with GC-US in the same year (Section 5.5). Therefore, Matsumoto’s spare
parts management team members also have high language proficiency enough to proceed
such conference calls. From these discussions, it is clear that the language proficiency of
these teams in GC-Japan in charge of the FT server business was high.
Meanwhile, GC-Japan’s motivation to transfer its knowledge to GC-US was high, not only
because pressure from the local customers to fix each quality issue was high, but because
originally the JQC program was launched based on the GC-Japan’s strong request raised
from necessity of quality improvement in order to survive fierce competition in the
Japanese market. Thus, the language proficiency of GC-Japan was high, and motivation
was also high; therefore, it can be judged that disseminative capacity for GC-Japan was
high in case study (1). The overall perception of reverse knowledge transfer was successful
(Table 8-1), which suggests that the subsidiary’s disseminative capacity affects reverse
knowledge transfer.
In case study (2), as Mori, an expatriate dispatched from GC-Japan to GC-US, mentioned,
some of emails written by engineers in the Japan Technical Support in English were
difficult for native English speakers to understand, particularly so in case of dealing with
highly complex issues (Section 6.2.1). So sometimes he had to correct or re-write those
emails to send them to laboratory engineers in GC-US.
In general, the language proficiency level of the people in GC-Japan who were engaged in
J-VAR business was rather high, but their language proficiency level was not enough to
explain highly complex issues. Also in the VG meetings, the Japan Technical Support
tended not to speak by themselves in English but to use the simultaneous translation service
instead, even when the Japan Technical Support team’s direct intervention might be better
for the case of highly technical discussions (Section 6.2.4). This is also coming from a
background that GC-Japan’s language proficiency is not high enough to talk about highly
complex technical issues. Thus, in case study (2), the language proficiency of the team in
charge of the J-VAR business in GC-Japan can be judged to be medium.
[171]
Meanwhile, GC-Japan’s motivation to transfer their knowledge to GC-US is regarded to be
high, since it was the GC-Japan team’s mission to play an intermediate role between GC-
US and the J-VAR partners in the J-VAR business agreement (Section 6.1). Thus, in case
study (2), the motivation of GC-Japan was high, but the language proficiency of GC-Japan
was at a medium level, so it is judged that GC-Japan’s disseminative capacity was at
medium level in case study (2). The overall perception of reverse knowledge transfer was
moderate (Table 8-1), which suggests that GC-Japan’s disseminative capacity relates to
reverse knowledge transfer.
In case study (3), as Yoshida in the PMG-Japan mentioned, the language proficiency level
of the PMG-Japan was not high enough to let GC-US know the complex structure of the
Japanese channel partners (Section 7.2.3). Differently from case studies (1) and (2),
departments related with channel partner business in GC-Japan had been continuing
business rather domestically with very limited communications with the headquarters or
regional offices in foreign countries. So in those departments in GC-Japan, many
employees’ language proficiency of English was not so high.
Also as an ex-board-member of GC-Japan notes in Chapter 4 (Background to the case
study), when the company grew, it was getting more difficult to assign managers who have
high language proficiency to all the positions in the front line of GC-Japan. Additionally,
he mentions in the book he wrote as follows;
“In those day, many problems which GC-Japan was facing were the Japanese
business environment which one single company cannot change by any possibility,
such as administrative guidance instructed by the Japanese government or various
public agencies, or extremely complicated regulations, among others. All of them
did not match the American way of business… When we tried to communicate these
delicate issues in Japan to the headquarters, the impact of language barrier was
very great.” (An ex-board-member, Anonymized document 5, p. 104, translated by
the author)
[172]
Thus, it is clear that several sections in GC-Japan have been struggling to let GC-US know
the Japanese idiosyncratic market situation due to their low language proficiency.
On top of that, in terms of motivation, as Tanaka, project manager of the J-Team,
mentioned, in the past the PMG-Japan did not have to let the headquarters know the unique
market situation in Japan because GC-Japan was running its own channel partner program
under the decentralized situation (Section 7.2.3). So a reporting process from GC-Japan to
GC-US has not been routinized. From such a background, even when the situation of the
new partner program deployment project got worse due to strong opposition from many
local partners, the PMG-Japan did not dare to report such a situation to GC-US (Section
7.2.3). It was not only because the PMG-Japan did not have any routinized process to report
to the headquarters, but also because the PMG-Japan should have thought that, under such a
strict centralized system of GC, it was no use reporting the situation to the headquarters.
Therefore, their motivation to transfer their knowledge to GC-US was very low all the time.
Thus, in case study (3), language proficiency of GC-Japan was low and motivation was also
low. So it is regarded that GC-Japan’s disseminative capacity was low in case study (3).
Meanwhile, the overall perception of reverse knowledge transfer was unsuccessful (Table
8-1), so disseminative capacity of GC-Japan has affected reverse knowledge transfer.
In summary, in case study (1), GC-Japan’s disseminative capacity was high due to its high
language proficiency and high motivation, and the overall perception of reverse knowledge
was successful. In case study (2), GC-Japan’s disseminative capacity was medium due to
its medium language proficiency and high motivation, and the overall perception of reverse
knowledge was moderate. In case study (3), GC-Japan’s disseminative capacity was low
due to its low language proficiency and low motivation, and the overall perception of
reverse knowledge was unsuccessful. In this way, it is clear that the Japanese subsidiary’s
disseminative capacity affects reverse knowledge transfer across the border.
[173]
8.5. Tie strength
In Chapter 2, tie strength between the headquarters and a subsidiary which affects reverse
knowledge transfer was discussed. It is assumed that strong ties accelerate effective reverse
knowledge transfer. A summary of tie strength across the cases is shown in Table 8-5.
Table 8-5: Summary of tie strength
Ties between
GC-Japan and
GC-US
Ties between local
customers in Japan
and GC-US
Overall perception of
reverse knowledge
transfer
Case-1 (JQC) Strong Medium (but with
limited customers)
Successful
Case-2 (J-VAR) Strong Strong Moderate
Case-3 (GC-SSP) Weak No existence Unsuccessful
As Jones and Garcia in GC-US mentioned in case study (1), whenever the JQC meetings
were held either in the U.S. or Japan, informal social activities such as ‘friendship dinners’
and others were held attended by all the members from GC-US and GC-Japan (Section
5.3). It is clear that, through such informal socialization processes, ties between GC-Japan
and GC-US have been strengthened over time, as Jones mentioned as follows:
“The first people I knew in Japan was through JQC and I am still friends with them,
people that have retired from GC, I still consider them my friend and I see them
when I come to Japan. It was a very good experience and a very close team of
people.” (Interview with Jones in GC-US)
Also GC-US and GC-Japan occasionally held informal meetings with some large customers
in Japan (Section 5.3). Such occasions were not very often, but through such opportunities,
it is sure that ties between GC-US and the local Japanese customers have also been
strengthened to a certain level.
So in case study (1), it can be seen that, while ties between GC-US and GC-Japan were
strong, ties between GC-US and the Japanese customers were at a medium level. The
[174]
overall perception of reverse knowledge transfer was successful, so it is regarded that
strong ties between GC-US and GC-Japan and medium ties between GC-US and the local
customers affect positively reverse knowledge transfer.
Similarly, in case study (2), as Kobayashi in Global Manufacturing Japan pointed out,
various types of social activities such as group dinners or excursions were held between
GC-US and GC-Japan, when the VG meetings were held either in the U.S. or Japan
(Section 6.2.3). Brown (in charge of spare parts engineering in GC-US) also mentioned
about some excursions held by GC-US and GC-Japan as follows:
“It was really beneficial for me to really open and expand my awareness of
humanity. So I really appreciate the excursions outside of that scene, the different
restaurant styles. I went to Mount Fuji with, back then Smith, and, someone from
GC-Japan. He set the whole thing up years and years ago and that was very, very
impressive.” (Interview with Brown in GC-US)
In this way, ties between GC-US and GC-Japan have been strengthened through
opportunities of informal socialization.
In case study (2), what is different from case study (1) is that almost all the social activities
were attended by not only people of GC-US and GC-Japan but also people of the J-VAR
partners (Section 6.2.3). As shown in the section 6.2.3, many respondents in GC-US and
the J-VAR partners mention that having such opportunities for socializations between GC-
US and the Japanese local partners was effective for improvement of communications with
each other thereafter. It is partly because, by establishing personal relationships between a
particular person in GC-US and a particular person in a J-VAR partner company, the height
of a barrier between two of them can be lowered. Thus, through repeated social activities,
ties between GC-US and the J-VAR partners have been strengthened. As Kobayashi in
Global Manufacturing Japan mentioned, relationships between GC-US and J-VAR partners
were raised to such a high level that a key person in the J-VAR partners was able to talk
directly to a manager in GC-US over the phone without passing through GC-Japan in some
emergency cases (Section 6.2.3). Also as Saito in Omega mentioned, some relationships
[175]
between an individual from GC-US and an individual from GC-Japan can be raised to such
a level that each of them can understand the other’s mind only through eye-contact or
expression. From such observations, in case study (2), ties between GC-US and GC-Japan
were strong as well as ties between GC-US and the J-VAR partners.
Meanwhile, the overall perception of reverse knowledge transfer was moderate (Table 8-1).
So it is supposed that, while strong ties between GC-US and GC-Japan and strong ties
between GC-US and J-VAR partners can contribute to improvement of reverse knowledge
transfer across the border to a certain degree, those two kinds of strong ties are not enough
to push up the overall perception of reverse knowledge transfer to the successful level.
In case study (3), as Tanaka mentioned, although he talked to a few people in GC-US over
the phone as the project manager for the GC-SSP deployment project, he had never met any
people in GC-US related with this project in person (Section 7.2.3). Also Yoshida in the
PMG-Japan mentioned that none of the members of the PMG-Japan had met the people in
GC-US, and that, even in daily communications via emails, they used to communicate with
GC-US less frequently (Section 7.2.3). Under such a circumstance, it is difficult to establish
personal level relationships between GC-US and the PMG-Japan.
Besides, there was no evidence in which local channel partners had direct communications
with GC-US, so it is regarded that there was no direct relationship between GC-US and the
Japanese channel partners. Therefore, in case study (3), ties between GC-US and GC-Japan
were weak, and ties between GC-US and the Japanese channel partners did not exist. The
overall perception of reverse knowledge transfer was unsuccessful (Table 8-1), so it is
regarded that weak ties between GC-US and GC-Japan negatively affect reverse knowledge
transfer across the border.
Regarding tie strength, there was a new finding, which was an existence of a direct path
between GC-US and local customers in Japan in case studies (1) and (2). In normal
business situations, it is very rare for local customers in the host country where a subsidiary
is located to have a continuous direct relationship with the headquarters in the mother
country of the MNC. However, in case studies (1) and (2), such a direct relationship was
[176]
established and has been kept for a long period time, because in the charter of each program
(the JQC program or the J-VAR program) it was stipulated that attendance of people from
the headquarters was compulsory. Such a direct path is regarded to have an indirect effect
on reverse knowledge transfer from the subsidiary to the headquarters by mitigating
miscommunications between two of them. The direct path between a local customer in the
host country and the headquarters in the mother country can be named as “bypass”, and the
indirect effect mitigating the miscommunication between the headquarters and the
subsidiary can be called “bypass effect”. In case studies (1) and (2), such a bypass effect
can be observed.
In summary, in case study (1), ties between GC-US and GC-Japan were strong and ties
between GC-US and the customers in Japan (bypass) were medium, and the overall
perception of reverse knowledge transfer was successful. In case study (2), ties between
GC-US and GC-Japan and ties between GC-US and the J-VAR partners in Japan (bypass)
were both strong, but the overall perception of reverse knowledge transfer was moderate. In
case study (3), ties between GC-US and GC-Japan were weak, and the overall perception of
reverse knowledge transfer was unsuccessful. Thus, it can be judged that, while strong ties
between the headquarters and a subsidiary and existence of ties between the headquarters
and local customers have a positive impact on reverse knowledge transfer across the border,
weak ties between the headquarters and a subsidiary have a negative impact on reverse
knowledge transfer across the border.
8.6. Cultural differences
In Chapter 2, it was noted that cultural differences between the mother county where the
headquarters is located and the host country where the subsidiary located indirectly affects
reverse knowledge transfer.
In case study (1), although Garcia in GC-US and Yamaguchi in GC-Japan mentioned about
strong quality focus of the Japanese companies as one of the cultural differences, they did
[177]
not mention about any other kinds of cultural differences, which means that they did not
think that cultural differences interfered in the discussions regarding quality issues in the
JQC meetings. Meanwhile, the overall perception of reverse knowledge transfer was
successful for case study (1); which means that the reverse knowledge transfer process
across the border worked so well that it did not allow any big impact of cultural differences
between two countries.
In case study (2), respondents made various responses regarding the impact of cultural
differences between the U.S. and Japan on reverse knowledge transfer. As shown in section
6.2.5, Saito in Omega and Sasaki in Lambda pointed out a difference in the way of mission
assignment between an American company and a Japanese company. While Saito used a
metaphor of mass production style (GC-US) vs. cellular manufacturing (J-VAR partners),
Sasaki used a concept of individualism (GC-US) vs. collectivism (GC-US). Thus, both of
them spotlighted the difference in the way of mission assignment. They insisted that, while
GC assigned each employee’s mission in alignment with his/her group’s objectives,
Japanese companies tried to assign each employee’s mission in alignment with the whole
company’s objectives. Therefore, the J-VAR partners often saw cases in which, one group
has completed a corrective action but another related group has not done it because such a
corrective action was out of the mission for that another group, so eventually the corrective
action does not work properly as a whole. So they always recommended GC-US to
orchestrate all the related groups to overcome the current ‘silo’ operations in GC-US. GC-
US understands logically such a request from the J-VAR partners but cannot accept the
request and improve its current situation quickly, because GC-US has a group-focused
mission assignment system which cannot be modified flexibly. From such a background, a
situation arises, in which requests for improvement raised from the J-VAR partners are
difficult for GC-US to accept, which leads to ineffective reverse knowledge transfer.
Similarly, Mori in GC-US as an expatriate pointed out a difference in viewing the costs
which are related with quality issues between GC-US and the J-VAR partners. According
to Mori, GC-US generally refuses a request to fix a quality issue raised by the J-VAR
[178]
partners if ROI (Return on Investment) was expected to be less than cost to be spent to fix
that issue. However, the J-VAR partners thought that, even though ROI would be less than
cost for a specific issue, the total benefits by fixing that issue, such as quality improvement
of the whole product, improvement of design process, and application of the corrective
action to similar products, should be greater than the cost. From this background as well, a
situation in which requests for improvement raised from the J-VAR partners were difficult
to get accepted by GC-US, also led to ineffective reverse knowledge transfer.
The above two observations are about organizational cultural differences between an
American company and a Japanese company, so if organizational cultural differences are
great, then such differences are regarded to be a hindrance of mutual understanding and
eventually lead to negative impact on reverse knowledge transfer. The overall perception of
reverse knowledge transfer in case study (2) was moderate, so it is regarded that cultural
differences affect reverse knowledge transfer negatively.
In case study (3), Tanaka, project manager of the J-Team, mentioned that he did not
communicate with GC-US enough for him to feel cultural differences. As shown in the
previous sections, members of the PMG-Japan communicated less often with people in GC-
US, so it is likely that not only Tanaka but also other members in the PMG-Japan did not
have enough communications with C-US to feel cultural differences. Therefore, in case
study (3), it was difficult to see whether cultural differences affect reverse knowledge
transfer or not.
In summary, regarding impacts which cultural differences have on reverse knowledge
transfer, in case study (1), the reverse knowledge transfer process worked so well that it did
not allow any impact by cultural differences. In case study (2), it was suggested that
cultural differences affect reverse knowledge transfer negatively. In case study (3), it was
difficult to see whether cultural differences affect reverse knowledge transfer or not. Thus,
from case study (1), although it was difficult to abstract the impact of cultural differences
on reverse knowledge transfer, it was found that it would be possible to establish the
reverse knowledge transfer process which is not affected by any cultural differences.
[179]
8.7. Subsidiary strategic role
As discussed in Chapter 2, strategic role of the subsidiary, such as GI, IP, IM, or LI,
possibly affects reverse knowledge transfer. In case study (1), it was illustrated that the JQC
program was launched in 1992 when Beta Computer (BC) was not owned by Global
Computer. It was launched based on a strong appeal to BC’s headquarters by BC-Japan
who felt the necessity of quality improvement for the FT server products in order to win
against the local competitors in Japan (Anonymized document 4). In those days, BC was
under a decentralized system (Anonymized document 4), so BC-Japan then can be seen as a
Local Innovator (LI) subsidiary, which has a complete local responsibility for the creation
of relevant know-how that is too idiosyncratic for other parts of the MNC to utilize. So it is
regarded that, under the decentralization policy of the whole company, BC-Japan was able
to build up and propose to BC-US its own local marketing programs like the JQC, and that
BC-Japan was able to get approvals from BC-US relatively easily. Even after BC was
acquired by GC in 2001 and switched its policy to centralization around 2005, the JQC
program was continued. After 2005, GC-Japan became an Implementer (IM) type
subsidiary which has just enough competence to maintain its local operations but lacks the
potential to be a contributor type subsidiary. So it can be said that the JQC program had
been launched when GC-Japan was a LI type subsidiary, but that it was continued even
after the subsidiary became an IM type subsidiary.
Thus, in case study (1), the JQC program has been continued in a LI and then IM
subsidiary. In general, from its definition, the level of knowledge outflows from a LI or an
IM subsidiary to the headquarters is low, but in reality overall perspective of reverse
knowledge transfer was successful (Table 8-1), which meant that sufficient knowledge has
flowed from GC-Japan (BC-Japan) to GC-US (BC-US). Therefore, in case study (1), it is
regarded that this specific program has been run independently of the whole company’s
policy.
[180]
In case study (2), the J-VAR business was launched in 1990 followed by the VG forum in
2000, when GC was keeping its decentralization policy and GC-Japan was a LI subsidiary.
Similarly to the JQC program, this J-VAR program with the VG forum was launched based
on an earnest appeal to GC-US from GC-Japan who built up its own marketing program by
itself without any help from the headquarters. Such a request for launching a new program
raised spontaneously by a subsidiary was approved by the headquarters relatively easily
because GC was following a decentralization policy. Even after the GC’s policy was
switched to centralization and GC-Japan became an IM subsidiary in 2005, the J-VAR
business and the VG forum have been continued.
Thus, the VG forum has been continued through the days when GC-Japan was a LI and
then IM subsidiary, from which knowledge is not regarded to outflow to the headquarters
very often. However, the overall perception of reverse knowledge transfer was moderate, so
in reality a certain volume of knowledge has outflowed from GC-Japan to GC-US.
Therefore, similarly to case study (1), in this case study, it is regarded that the specific
programs (the J-VAR program and the VG forum) have been run independently of the
whole company’s policy.
In case study (3), the new partner program GC-SSP and the new IT system SPOC were
designed in GC-US and released in 2006 when GC was following a centralization policy.
Therefore, the new partner program was globally standardized in alignment with the
centralization policy, which was aimed to be deployed in a common format all over the
world. The new program and the new IT system started to be deployed in GC-Japan from
2007 when it was an IM subsidiary, from which knowledge is regarded to outflow to the
headquarters less often. In fact, before and during the deployment project from 2007 to
2009, only limited knowledge outflowed from GC-Japan to GC-US. Particularly,
knowledge regarding the idiosyncratic market situation in Japan was not transferred, which
led to the unsuccessful overall perception of reverse knowledge transfer (Table 8-1). Thus,
case study (3) showed a clear fit with the conceptual framework in which the subsidiary’s
strategic role (in this case, IM) has impact on reverse knowledge transfer.
[181]
In summary, in case studies (1) and (2), these marketing programs (the JQC program and
the J-VAR program) have been continued independently of the whole subsidiary’s strategic
role, so a certain volume of knowledge has been transferred reversely to GC-US from a LI
or IM type subsidiary. In case study (3), the new marketing program and the new IT system
was planned and implemented in line with the whole company’s centralization strategy, so
only limited knowledge was transferred back to GC-US from an IM subsidiary, which fits
with the conceptual framework.
8.8. Summary of cross-case analyses
In the above sections, the overall perception of reverse knowledge transfer for each case
study was reviewed (Table 8-1), and then cross-case analyses were conducted in terms of
how six factors, which are knowledge type, headquarters’ absorptive capacity, subsidiary’s
disseminative capacity, tie strength, cultural differences, and subsidiary strategic role, affect
the overall perception of reverse knowledge transfer (Table 8-2, Table 8-3, Table 8-4, and
Table 8-5).
A comprehensive summary for relationships of the factors and reverse knowledge transfer
is shown in Table 8-6.
[182]
Table 8-6: Comprehensive summary for relationships of factors and reverse knowledge transfer
K
now
ledg
e ty
pe
HQ
’s a
bsor
ptiv
e
capa
city
Subs
idia
ry’s
diss
emin
ativ
e
capa
city
Tie
stre
ngth
bet
wee
n
GC
-Jap
an a
nd G
C-
US
Cul
tura
l diff
eren
ces
Subs
idia
ry st
rate
gic
role
Ove
rall
perc
eptio
n
of r
ever
se k
now
ledg
e
tran
sfer
Case-1
(JQC)
Know-how
High
High Strong
(+ bypass) Un-
recognized
LI IM Successful
Case-2 (J-
VAR)
a) Know-how
b) Information
(under RCA
format
operations)
a) In general,
medium
b) In specific
case, high
Medium Strong
(+ bypass)
Recognized LI IM Moderate
Case-3
(GC-SSP)
Know-how Low Low Weak
(No
bypass)
Un-
recognized
IM Unsuccessful
As shown in Table 8-6, in case study (1), the overall perception of reverse knowledge
transfer was successful. Factors which had a negative impact on the overall perception of
reverse knowledge transfer are knowledge type of the knowledge to be transferred which
was know-how. Factors which contributed to the overall perception of reverse knowledge
transfer to the successful level are the high absorptive capacity of GC-US, high
disseminative capacity of GC-Japan, strong ties between GC-US and GC-Japan, and
medium ties (bypass) between GC-Japan and the local customers. No direct impacts of
cultural differences and subsidiary strategic role were found. Such relationships between
factors and reverse knowledge transfer for case study (1) are shown in Figure 8-1.
[183]
Know
-how
type
Kn
owle
dge
tran
sfer
red
= Q
ualit
y iss
ues
HQin
the
USJa
pan
Sub
Diss
m. C
ap: H
igh
(Hig
h la
ngua
ge s
kill
+ hi
gh m
otiv
atio
n)
Loca
lcu
stom
ers
Abs.
Cap
: Hig
h
Qua
lity
issue
s Di
rect
rela
tions
hip
betw
een
HQ a
nd lo
cal
cust
omer
s ca
n ra
ise u
p HQ
’s ab
s. c
ap.
= ‘B
ypas
s ef
fect
’
Tie
stre
ngth
: Str
ong
=
Ove
rall
perc
eptio
n of
RKT
: Suc
cess
ful
Figu
re 8
-1: R
elat
ions
hips
bet
wee
n fa
ctor
s and
reve
rse
know
ledg
e tr
ansf
er in
cas
e st
udy
(1)
[184]
In case study (2), the overall perception of reverse knowledge transfer was moderate.
Factors which had a negative impact on the overall perception of reverse knowledge
transfer were knowledge type of the knowledge to be transferred which was know-how and
cultural differences. Factors which had a positive impact on the overall perception of
reverse knowledge transfer were medium absorptive capacity by GC-US, medium
disseminative capacity by GC-Japan, strong ties between GC-US and GC-Japan, and strong
ties (bypass) between GC-US and the J-VAR partners. No direct impact of subsidiary
strategic role was found. The relationships between factors and reverse knowledge transfer
for case study (2) are shown in Figure 8-2.
[185]
Know
-how
type
kn
owle
dge
Know
ledg
e tr
ansf
erre
d =
Qua
lity
issue
sHQ
in th
e U
SJa
pan
Sub
Diss
m. C
ap: M
ediu
m(d
ue to
med
ium
lang
uage
sk
ill +
hig
h m
otiv
atio
n)
Loca
lcu
stom
ers
Abs.
Cap
: Med
ium
(due
to la
ck o
f com
plet
e un
ders
tand
ing
of T
QC
conc
ept)
Qua
lity
issue
s Di
rect
rela
tions
hip
betw
een
HQ a
nd lo
cal
part
ners
can
raise
up
HQ’s
abs.
cap
. =
‘Byp
ass
effe
ct’
Tie
stre
ngth
: Str
ong
=
Ove
rall
perc
eptio
n of
RKT
: Mod
erat
e
Figu
re 8
-2: R
elat
ions
hips
bet
wee
n fa
ctor
s and
reve
rse
know
ledg
e tr
ansf
er in
cas
e st
udy
(2)
[186]
In case study (3), the overall perception of reverse knowledge transfer was unsuccessful.
Factors which had a negative impact are knowledge type of the knowledge to be transferred
which were know-how, low absorptive capacity of GC-US, low disseminative capacity of
GC-Japan, weak ties between GC-US and GC-Japan, and subsidiary strategic role as an IM.
No direct impact of cultural differences was found. Such relationships between factors and
reverse knowledge transfer for case study (3) are shown in Figure 8-3.
[187]
Know
-how
type
kn
owle
dge
Know
ledg
e to
be
tran
sfer
red
= M
arke
t situ
atio
n in
Ja
pan
HQin
the
US
Japa
n Su
b
Diss
m. C
ap: L
ow(d
ue to
low
lang
uage
sk
ill +
low
mot
ivat
ion)
Loca
lcu
stom
ers
Abs.
Cap
: Low
(due
to la
ck o
f kn
owle
dge
rega
rdin
g th
e Ja
pane
se m
arke
t)
Tie
stre
ngth
: Wea
k
=
Ove
rall
perc
eptio
n of
RKT
: U
nsuc
cess
ful
B2B
rela
tions
hip
Figu
re 8
-3: 3
Rel
atio
nshi
ps b
etw
een
fact
ors a
nd re
vers
e kn
owle
dge
tran
sfer
in c
ase
stud
y (3
)
[188]
Thus, based on interpretation of evidence found in the case studies, cross-case analysis was
conducted for each function defined in the conceptual framework, and it was found that the
each factor shows consistency and inconsistency with the conceptual framework. In the
next chapter, such consistent and inconsistent points are investigated further, and a dynamic
model for reverse knowledge transfer will be proposed.
[189]
9. Discussion In the previous chapter, the cross-case analysis and findings from the case studies were
presented, and consistent and inconsistent points relating to the conceptual framework were
shown. In this chapter, those factors are further reviewed and finally a dynamic model to
elucidate the dynamics of reverse knowledge transfer is proposed.
9.1. Discussion about the factors
In this section, based on the findings presented in the previous chapter, each of the factors
defined in the conceptual framework is further discussed.
9.1.1. Knowledge type
As shown in the previous chapter, knowledge type affects reverse knowledge transfer
across the border. It was found that know-how type knowledge which was complex, tacit,
and specific was difficult to transfer across the border in all the three case studies.
Meanwhile, information type knowledge was easier to transfer across the border, as
described in case study (2) in which Global Manufacturing Japan devised a world-wide
common format in order to let all the members of Global Manufacturing in the world know
about highly complex quality issues raised by Japanese customers, particularly the J-VAR
partners. Such findings conform to the results of extant theoretical or empirical research
focusing on how knowledge type such as know-how or information affects cross-border
knowledge transfer (Bhagat et al., 2002, Birkinshaw et al., 2002, Kogut and Zander, 1992).
One particular finding about knowledge type was a potential risk that a real meaning of
what the knowledge sender intended to express is not communicated accurately to the
knowledge recipient due to existence of the translation process from one language to
another. A respondent in one of the Japanese partners called such a process ‘filtering’, and
another respondent in GC-Japan described it as ‘interpretation’ by a mediator. Such a
characteristic of ‘obscuration through translation process’ largely depends on the tacitness
character of knowledge. As Nonaka (1994) points out, “knowledge that can be expressed in
words and numbers only represents the tip of the iceberg of the entire body of possible
[190]
knowledge” (1994: 16), so the other portion underwater of the iceberg is a tacit portion of
knowledge. Therefore, how a knowledge sender transfers the underwater portion (tacit
portion) of the iceberg (entire knowledge) through translation is important. In many cases,
only the tip of the iceberg (explicit portion) is transferred through literal translation. If that
is the case, the tacit portion is not transferred to the knowledge recipient, so the real
meaning might be obscured.
Regarding this problem, one respondent from case study (2) emphasized a necessity of
‘cultural translation’ which is a process to translate nonliterally including explanation of the
background. However, such cultural translation requires very high skill, and such a skill is
difficult to attain even for highly skilled bilingual people in a short period of time.
Therefore, cultural translation might not be a realistic solution. Another solution which can
be proposed through the case studies might be to convert as much know-how type
knowledge as possible, to information type knowledge through codification process. This
method also has limitation in that not all of know-how type knowledge is codifiable.
Anyway, the question, “How effectively can the tacit portion of the entire body of
knowledge be transferred across the border through translation process?” is regarded to be
essential for cross-border knowledge transfer. Particularly, the more distant ‘linguistic
distance’ between the languages spoken in the headquarters and the subsidiary, the bigger
the tacit portion (‘underwater’ portion of the iceberg) which might be mistranslated or
untranslated at all through translation process. However, seemingly little research focusing
on this area has been conducted so far, so research which probes into this question will be
needed, aiming at mitigating miscommunication caused by insufficient translation of the
tacit portion of entire knowledge.
9.1.2. The headquarters’ absorptive capacity
Findings from the cross-case analysis showed that absorptive capacity of the headquarters
affects reverse knowledge transfer. In both case studies (1) and (2), it was described that,
although initially GC-US did not have prior related knowledge, particularly TQC-related
knowledge, GC-US has accumulated such prior related knowledge over time through
[191]
repeated face-to-face meetings or email-based communications with GC-Japan or the
Japanese customers. Through such an accumulation process (learning process) of prior
related knowledge, GC-US’s absorptive capacity reached a high level in case study (1) and
a medium level in case study (2). Eventually, such improvement of GC-US’s absorptive
capacity is regarded to lead to successful or moderate reverse knowledge transfer. On the
other hand, in case study (3), GC-US did not have prior related knowledge regarding the
local market situation in Japan at all. Also during the period of the deployment project of
the new partner program and the new IT system, GC-US failed to accumulate such
knowledge. Therefore, its absorptive capacity level was low, which is regarded to lead to
unsuccessful reverse knowledge transfer. These findings that prior related knowledge is a
driver of absorptive capacity, and that absorptive capacity affects cross-border knowledge
transfer, are consistent to the extant theoretical or empirical research (for example,
Szulanski, 1996).
Next, a difference of the GC-US’s absorptive capacity level between case study (1) (the
JQC program) and case study (2) (the VG forum) is explored. Both the JQC program and
the VG forum for the J-VAR program are similar to each other in terms of the way of
administrating the forum. However, the level of GC-US’s absorptive capacity for the JQC
was high, but that for the VG forum was medium (Table 8-3). One possible reason of that
difference is regarded to be a difference of the structure of the forum between two of them.
In case of the JQC program, several groups in the FT server division, such as the Product
Development group, hardware support group, software support group, and spare parts
management group in GC-US were involved in that program. Among them, the Product
Development group was the main body, acting as a control tower to administer all related
groups. Several representative engineers who were directly in charge of design of the FT
server products in the Product Development used to attend all the JQC meetings. The
Product Development is not a very large group, so it was easier for the representative
engineers to share newly acquired knowledge with other members in the group rather
quickly.
[192]
On the other hand, in case of the VG forum for the J-VAR business, several groups related
with the GC-Zeta server products were also involved in the forum. However, there was no
group which acted as a control tower. Therefore, one or two representatives from each of
those groups used to attend the VG meetings, and the Program Management Office (PMO)
was coordinating all the related groups from a neutral position (Figure 6-2). So the structure
of the forum was not as simple as the JQC’s case. In this structure, those representatives
from GC-US had only an intermediate role. Actually, many of the representatives were not
directly in charge of the tasks for quality improvement, so they had to ask someone else to
fix each of quality issues as soon as they went back to the office. In general, each of groups
related with the GC-Zeta server was larger than groups related with the FT server, so it was
difficult to spread newly acquired knowledge widely in each group efficiently in a timely
manner. So even though the individual level absorptive capacity of each of the
representatives was enhanced rather quickly through attendance at repeated meetings with
GC-Japan or the J-VAR partners, it took a much longer time for each group in GC-US to
increase all the other members’ levels of prior related knowledge. Therefore, most of the
action plans for each quality issue had to be made without deep understanding of the
background of the Japanese customers’ requests. As a result, from the perspective of the J-
VAR partners or GC-Japan, such action plans presented by GC-US seemed to be off the
point of what they expected.
Thus, the difference of absorptive capacity between case study (1) and case study (2) is
coming from the difference of the structure of each forum. According to Cohen and
Levinthal (1990), a process of developing the individual level absorptive capacity to the
organizational level absorptive capacity consists of two steps. The first step is to enhance
absorptive capacity of individuals who are positioned in the frontline interfacing directly
with external environment, who can be called ‘gatekeepers’(Tushman, 1977), and the
second step for those gatekeepers to communicate with other people within the organization
(Cohen and Levinthal, 1990). Cohen and Levinthal mention, “… the level of organizational
absorptive capacity are not only a function of the gatekeeper's capabilities but also of the
expertise of those individuals to whom the gatekeeper is transmitting the information”
[193]
(1990:132). Thus, it is important not only to enhance the individual level absorptive
capacity for the gatekeepers but also to establish a communication process within an
organization in order to share knowledge acquired by gatekeepers with other people in the
organization. Therefore, in case of reverse knowledge transfer, in order to improve the
headquarters’ absorptive capacity, it is important to pay attention to both levels of an
efficient and effective communication process to spread newly acquired knowledge within
the related groups in the headquarters.
9.1.3. Subsidiary’s disseminative capacity
As shown in the previous chapter, it was found that the Japanese subsidiary’s disseminative
capacity affects reverse knowledge transfer. In case study (1), the level of disseminative
capacity of the groups related with the FT server business in GC-Japan was high, because
both their language proficiency and motivation were high. In case study (2), the level of
disseminative capacity of the groups related with the J-VAR business in GC-Japan was
medium, because their motivation was high but their language proficiency was medium. In
case study (3), the level of disseminative capacity of the groups related with the channel
partner business in GC-Japan was low, because both their language proficiency and
motivation was low. Such a different level of disseminative capacity in each case study is
related to the overall perception of reverse knowledge transfer for each case study, which
was successful, moderate, and unsuccessful respectively (Table 8-4). These findings that
disseminative capacity of a subsidiary in a MNC affects cross-border knowledge transfer
are consistent with extant theoretical and empirical literature (Minbaeva and Michailova,
2004, Park et al., 2013).
As Minbaeva and Michailova (2004) mention, although the importance of disseminative
capacity in relation to knowledge transfer has been argued in numerous conceptual studies,
substantial empirical support is largely absent. One of the reasons why empirical research
focusing on disseminative capacity is not undertaken so often is regarded to be that
effective samples or cases were not found in which disseminative capacity affected very
clearly cross-border knowledge transfer, because it is most likely that the majority of
[194]
research so far has been conducted into MNCs whose headquarters and subsidiaries are
located in the countries between which linguistic distance is not very great, for example, the
headquarters is in the U.K. and subsidiaries in European countries.
According to Minbaeva and Michailova (2004), disseminative capacity is a function of
ability (skill) and willingness (motivation) of the knowledge sender, and the skill is largely
affected by language proficiency. Therefore, in a case in which linguistic distance is close,
such as a case between English and another European language, it is difficult to find a
significant impact of disseminative capacity on cross-border knowledge transfer within a
MNC.
As discussed in Chapter 2, corporate language proficiency in relation to cross-border
knowledge transfer has begun to be focused upon (for example, Welch and Welch, 2008).
In this research area, cases have been focused in which linguistic distance is greater, such
as between English and Chinese (Buckley et al., 2005), or between English and Japanese
(Peltokorpi, 2015, Yamao and Peltokorpi, 2015), and it was found that linguistic distance
had significant negative impact on the effectiveness of cross-border knowledge transfer.
Using data regarding test scores to check average ability of English-speaking Americans for
43 languages after set periods of foreign language training, Chiswick and Miller (2005)
provide a table for linguistic distance for those 43 languages. Regarding the scores in that
table, they mention,
“The range is from a low score (harder to learn) of 1.00 for Japanese to a high
score (easier to learn) of 3.00 for Afrikaans, Norwegian and Swedish. The score for
French is 2.50 and for Mandarin 1.50. These scores suggest a ranking of linguistic
distance from English among these languages: Japanese being the most distant,
followed by Mandarin, then French and then Afrikaans, and Norwegian and
Swedish as the least distant.” (Chiswick and Miller, 2005, p.4)
In this way, linguistic distance from English matters more in the case of Japanese or
Chinese than in the case of Norwegian, Swedish, French or other European languages.
[195]
Therefore, when thinking about subsidiaries in European countries, if the MNC’s common
language is English, then disseminative capacity does not matter so much. On the other
hand, when thinking about subsidiaries in Asian countries such as China or Japan, if the
MNC’s common language is English, it is highly expected that disseminative capacity of
the subsidiaries is low, and that eventually such low disseminative capacity affects
negatively reverse knowledge transfer.
Thus, linguistic distance is closely linked with one of the drivers of disseminative capacity,
that is, skill. The greater the linguistic distance between the languages spoken in the host
country where the subsidiary is located and the mother country of the MNC, the lower the
subsidiary’s disseminative capacity is. From such a viewpoint, further empirical research
focusing on disseminative capacity of subsidiaries in MNCs in relation to cross-border
knowledge transfer between the countries whose linguistic distance is great is needed.
9.1.4. Tie strength
Findings through cross-case analysis showed that tie strength positively affected reverse
knowledge transfer. In case studies (1) and (2), it was found that strong ties between GC-
US and GC-Japan were nurtured through dense informal social activities, and such strong
ties helped transfer of know-how type knowledge from GC-Japan to GC-US. Contrarily, in
case study (3), it was found that, if ties between GC-US and GC-Japan are weak, know-
how type knowledge such as the idiosyncratic market situation in Japan was difficult to
transfer. These findings are consistent with theoretical and empirical literature focusing on
the relationship between tie strength and cross-border knowledge transfer (Hansen, 1999,
Reagans and McEvily, 2003).
But when thinking more precisely about the step-by-step process of how tie strength affects
reverse knowledge transfer, it is more reasonable to think that ties between the headquarters
and the subsidiary help enhance mutual understanding between them, and that such an
enhanced mutual understanding affects both the headquarters’ absorptive capacity and the
subsidiary’s disseminative capacity, both of which affect reverse knowledge transfer
[196]
eventually. Therefore, tie strength is not a direct factor affecting reverse knowledge
transfer, but an indirect factor.
One remarkable finding around this factor was an existence of direct relationships between
the headquarters of a MNC and local customers in a subsidiary’s country. As discussed in
the previous chapter, such a relationship can be called a ‘bypass’. This bypass is regarded
to mitigate ineffectiveness of reverse knowledge transfer caused by low absorptive capacity
of the headquarters or low disseminative capacity of the subsidiary. Such an effect which
the bypass can help improve reverse knowledge transfer can be called a ‘bypass effect’.
In the case that the headquarters’ absorptive capacity is low due to lack of prior related
knowledge shared between the headquarters and the subsidiary, if there is a bypass, then the
headquarters people can gain the background knowledge, which might not be the prior
related knowledge itself but should be related with prior related knowledge, through direct
communications with local customers such as informal social activities. Also in the case
that the subsidiary’s disseminative capacity is low due to its low language proficiency, if
there is a bypass, the same effect can be expected as the above case.
Thus, through the bypass effect, the headquarters can improve its absorptive capacity, and
the subsidiary can improve its disseminative capacity. However, it is not always possible to
establish such a direct path between the headquarters and local customers, but it is clear
that, once the headquarters can establish the bypass which are not always strong ties but
even weak ties, it can acquire a beneficial return.
From this perspective, it is suggested that, if the headquarters of a MNC can have a number
of weak ties with local customers, the effectiveness of reverse knowledge transfer might be
improved, even though the ties between the headquarters and the subsidiary are not so
strong. In other words, if the headquarters can have weak ties with a wider network in a
host country, reverse knowledge transfer can be enhanced in spite of weak ties between the
headquarters and the subsidiary. Such an effect of enhancing reverse knowledge transfer
through ties with the wider network can be called as a ‘network effect’. Thus, it is
[197]
important for the headquarters of a MNC to seek for establishment of direct ties with the
wider network of a hosting country.
9.1.5. Cultural differences
According to the findings through cross-case analysis, only case study (2) showed a
possibility that cultural differences affect reverse knowledge transfer negatively. The
findings from case study (2) were about organizational cultural differences between
American companies and Japanese companies, such as a difference in mission assignment
or a difference of the way of thinking about the cost for quality improvement.
In Chapter 2, it was argued that, Björkman et al. (2007)’s concept for cultural differences is
adopted for the conceptual framework, in which a MNC is viewed as a cultural system
where beliefs, values and practices form specific configurations in the firm. Under such a
perspective, Björkman et al. (2007) propose a conceptual framework for the cross-border
acquisition, in which cultural differences affect negatively ‘social integration’ and
‘potential absorptive capacity’ for the acquiring organization, and then these two factors
affect ‘capability transfer’ (knowledge transfer) eventually. So in case of this research, the
Björkman et al. (2007)’s model can be interpreted that cultural differences could negatively
affect ‘the headquarters’ absorptive capacity’ and ‘tie strength’, and that these two factors
eventually affect reverse knowledge transfer. So cultural differences are not a direct factor
affecting reverse knowledge transfer but an indirect factor.
In case study (2), it is clear that employees in GC-US did not understand exactly the
background of the Japanese customers’ requests because of organizational cultural
differences between American companies and Japanese companies; therefore, theoretically
the findings regarding the impact of organizational cultural differences can be explained by
applying the Björkman et al. (2007)’s model, in which cultural differences affect the
headquarters’ absorptive capacity negatively.
Björkman et al. (2007) argue that cultural differences have also a negative impact on
‘social integration’, which is equivalent to tie strength in this research. Any clear evidence
[198]
about that was not found through the case study evidence, because, while many respondents
in case studies (1) and (2) talked about affirmative side of social activities by GC-US and
GC-Japan, they did not mention anything about a negative side caused by cultural
differences. However, it is clear that cultural differences affect tie strength between GC-US
and GC-Japan, because one of the purposes of holding such social activities was to enhance
mutual understanding between GC-US, GC-Japan, and the Japanese customers, and to
mitigate misunderstandings caused by cultural or linguistic differences between them. If
such social activities had not been held, ties between GC-US, GC-Japan, and the Japanese
partners might have been much weaker than the ties as of today, and one big reason for
such a deterioration of tie strength can be attributed to an impact of cultural differences. So
it is considered that an impact of cultural differences on tie strength between GC-US and
GC-Japan exists as Björkman et al. (2007) insist.
Therefore, as far as case study (2) is concerned, it can be said that cultural differences
affected negatively the headquarters’ absorptive capacity and tie strength, in line with
Björkman et al. (2007)’s concept, but no clear evidence was found in case studies (1) and
(3). So further precise research is needed to probe into this area.
9.1.6. Subsidiary strategic role
In case studies (1) and (2), it was found that the marketing programs (the JQC program and
the J-VAR program) developed by GC-Japan were launched when GC-Japan was a LI
subsidiary, and that, even after GC-Japan became an IM subsidiary, those programs have
been continued independently of the whole subsidiary’s strategic role. So it can be said that
a certain volume of knowledge has outflowed from a LI or IM type subsidiary to the
headquarters, which can be contradictory to the theory the level of knowledge outflows
from LI or IM type subsidiaries to the headquarters is low (Gupta and Govindarajan, 1991).
In case study (3), the new marketing program and the new IT system were planned and
implemented in line with the whole company’s centralization strategy, when GC-Japan was
an IM subsidiary. So, while much knowledge in-flowed from GC-US to GC-Japan (IM
[199]
subsidiary), little knowledge outflowed to GC-US from GC-Japan, which shows a complete
correspondence to the definition of subsidiary role (Gupta and Govindarajan, 1991). .
In terms of case studies (1) and (2), originally both the JQC program and the J-VAR
program were proposed from GC-Japan to GC-US and were approved by GC-US, when
BC-Japan and GC-Japan were a LI subsidiary. Also after the programs were launched, high
level of knowledge continued to outflow from the LI or IM subsidiary to the headquarters.
Theoretically, it is rare that high level of knowledge outflows from a LI or IM subsidiary to
the headquarters, but as far as the special marketing programs such as the JQC program or
the J-VAR program are concerned, the headquarters had to listen to what the Japanese
subsidiary and local customers wanted to say. It was because, for both cases, the market
size was large. On the other hand, case study (3) showed a typical case in which globally
standardized marketing program was planned by the headquarters under a centralization
policy without bringing in any local requirements from subsidiaries in the world, and it was
deployed in the Japanese subsidiary, which was then an IM subsidiary. During the
implementation phase, the J-Team in charge of the deployment project in Japan noticed a
significant conflict between the global standard program and the local idiosyncratic market
situation in Japan, but it did not have enough disseminative capacity, so such a critical
situation was not reported to the headquarters at all. Also there was no established
mechanisms to give feedback regarding the program to the headquarters from the Japanese
subsidiary, because the subsidiary’s strategic role was IM. Thus, from the theoretical
viewpoint, the state in which knowledge outflows from the subsidiary to the headquarters
was limited appears to fit the theory that the level of the knowledge outflows from an IM
subsidiary is low (Ambos et al., 2006, Gupta and Govindarajan, 1991, Rabbiosi, 2011).
At this point, when thinking about a mechanism for how the subsidiary strategic role affects
reverse knowledge transfer (knowledge outflows from a subsidiary), not a direct
relationship between the subsidiary strategic role and reverse knowledge transfer, but a
mechanism in which the subsidiary strategic role affects the subsidiary’s disseminative
capacity and then it affects subsequently reverse knowledge transfer should be considered.
[200]
When thinking about the relationship between the subsidiary strategic role and the
subsidiary’s disseminative capacity, one important construct which connects these two
factors can be ‘power’ (Astley and Zajac, 1991). Drawing on Astley and Zajac (1991)’s
research focusing on how intra-organizational power influences organizational design,
Ciabuschi et al. argue, “From a knowledge transfer perspective, power considerations can
either enhance or dampen the willingness to share and receive knowledge” (2010: 475).
Applying this concept to case study (3), it can be observed that, because GC-Japan suffered
from pressure from the headquarters demanding forcibly to implement the global standard
program, such ‘intra-organizational power’ made GC-Japan cower, and dampened the
willingness to share its knowledge to the headquarters. Thus, not only the subsidiary’s low
language ability but also intra-organizational power clearly affects a subsidiary’s
disseminative capacity.
Also it can be regarded that such intra-organizational power is closely linked with the
subsidiary strategic role. For example, if a subsidiary is GI or IP type, intra-organizational
power of the subsidiary is stronger than power of the headquarters, but if a subsidiary is IM
type, intra-organizational power of the headquarters is stronger than the power of the
subsidiary. Therefore, it is possible to regard that intra-organizational power, which is
related with the subsidiary strategic role, has an impact on the subsidiary’s disseminative
capacity. Thus, intra-organizational power (Ciabuschi et al., 2010) is an important construct
which bridges between the subsidiary strategic role and the subsidiary’s disseminative
capacity.
From the practical viewpoint, the situation illustrated in case study (3), which caused an
intolerable result of the deployment project in GC-Japan, should not be acceptable. As
Bartlett and Ghoshal (1986) point out, the role of IM subsidiaries is important particularly
in the strategy implementation phase, because they provide the strategic leverage that
affords MNCs their competitive advantage. But in reality, it is difficult for the headquarters
to know what is happening in the IM subsidiary under a centralization policy, because the
concept of centralization policy itself implies the headquarters’ intention to avoid a bilateral
[201]
communication with subsidiaries in order to prioritize efficiency of decision-making
process. Under such a configuration of a MNC, a significant misfit between a global
standard strategy and the local market situation in the subsidiary may happen easily just
like case study (3).
On the other hand, if the subsidiary has to let the headquarters know what is happening in
the subsidiary, then what the subsidiary can do is to appeal to the headquarters directly
through either (a) a formal path with a background of the subsidiary’s high disseminative
capacity or (b) an informal path with a background of strong ties based on a social
relationship between the headquarters and the subsidiary. However, in case study (3), even
these two possibilities were eliminated due to the subsidiary’s low disseminative capacity
and weak ties between the headquarters and the subsidiary, so eventually the subsidiary had
to face an intolerable result.
But if a MNC would like to avoid such a worst case, then the MNC has to find another
solution in relation to the reverse knowledge transfer mechanisms. In the next section, a
new idea for the headquarters to grasp what is happing in an IM subsidiary whose
disseminative capacity is low will be discussed.
9.2. Discussion of heeding capacity
As discussed above, under the centralization policy of a MNC, subsidiaries tend to be
implementers (IM) whose role is just to implement globally standardized strategy cascaded
from the headquarters in a top-down style. Under the current fiercely competitive situation
of the global market, many MNCs, especially U.S.-based MNCs, might shift to
centralization, because it has been observed that by nature U.S.-based MNCs have a
tendency to centralize, formalize, and standardize when they roll out their subsidiaries in
the world (Child et al., 2000, Collings et al., 2008).
Also, as case study (3) has shown, a case, in which both the headquarters’ absorptive
capacity and the subsidiary’s disseminative capacity are low and ties between the
[202]
headquarters and the subsidiary are weak, exists in reality. In such a case, if there are no
emergency measures for the subsidiary to let the headquarters know what is happening in
the subsidiary, then that subsidiary might go into a critical situation.
Under such a situation, if the subsidiary does not have enough ability to ‘push’ its
knowledge, then one of countermeasures can be that the headquarters will ‘pull’ it
proactively. So an ability for the headquarters to heed what a subsidiary has to say is
necessary. Such an ability can be named “heeding capacity” defined as the ability for the
headquarters to heed what a subsidiary would like to transmit but cannot do well, which is
achieved by listening carefully and not letting language barriers or cultural differences
obfuscate the meaning. Marcus and Nichols argue that “when people pay inadequate
attention to unusual events and neglect warnings, the possibility of breaching a
performance barrier increases” (1999: 496). From such a viewpoint, they emphasise that
such unusual events must be ‘heeded’ (Marcus and Nichols, 1999). Similarly, MNCs
should avoid the worst case by acquiring the headquarters’ heeding capacity.
An important aspect of heeding capacity is the headquarters’ positive attitude towards
viewing the subsidiary’s current situation with their own eyes, as Johnson in charge of the
VG forum in case study (2) notes about his experience;
“So that was a very enlightening process to me. I was here, I was able to see how
committed their customers were, how important that the products that they bought
from us worked well and were supported well. So, it was an educational experience
to me.” (Interview with Johnson in GC-US)
Thus, a direct experience like “to see is to believe” is important, and it is a part of heeding
capacity. However, such a direct face-to-face meeting is not the only solution for heeding
capacity, but some other ways might be effective. For example, as shown in the part of the
post-JQC meetings in case study (1), weekly short-time conference calls including free
discussions in a relaxed atmosphere might be effective, in that attendees can ease their
frustration caused by cross-culture miscommunications through such free discussions. What
[203]
is important in heeding capacity is for the headquarters to listen patiently and carefully to
what the subsidiary people have to say.
Basically, in order to capture each subsidiary’s situation very accurately, the headquarters
should attain its high absorptive capacity and establish strong ties with the subsidiary, but
in general it takes a long period of time for a MNC to do so. Now that many MNCs are
facing rapid changes in the global market, they have to address many issues quickly, so the
headquarters might not be able to spend much time for enhancing its absorptive capacity
regarding a specific subsidiary and establishing strong ties with it. In such a case,
enhancing heeding capacity can be the second best solution to avoid the worst scenario.
9.3. New dynamic model for reverse knowledge transfer
In chapter 2, a conceptual framework was proposed (Figure 2-2) in order to explore the
dynamics of reverse knowledge transfer, and then case studies which were conducted to a
U.S.-based IT company were analysed along with the conceptual framework. Based on the
findings from the case studies and further discussions about those findings, a new dynamic
model for reverse knowledge transfer is proposed in this section.
[204]
A dynamic model for reverse knowledge transfer is shown in Figure 9-1. As shown in this
figure, four factors such as knowledge type, the headquarters’ absorptive capacity,
subsidiary’s disseminative capacity, and subsidiary strategic role are direct factors which
affect reverse knowledge transfer.
Knowledge type, whether knowledge to be transferred is know-how or information, has a
direct impact on cross-border knowledge transfer as the extant literature demonstrates
(Bhagat et al., 2002, Birkinshaw et al., 2002, Kogut and Zander, 1992, Szulanski, 1996).
For every kind of knowledge transfer in a firm, the knowledge recipient’s absorptive
capacity, defined as the ability to recognize the value of new, external information,
assimilate it, and apply it to commercial ends (Cohen and Levinthal, 1990), is important,
and particularly in the case of reverse knowledge transfer, the headquarters’ absorptive
capacity has a large direct impact on reverse knowledge transfer, as demonstrated in the
extant literature (for example, Ambos et al., 2006). Prior related knowledge shared between
Knowledge type
HQ’s absorptive capacity
SUB’s disseminative capacity
Reverse knowledge
transfer
Tie strengthbetween HQ and SUB
Cultural differences
Bypass(between HQ and local
customers)
Language proficiency
HQ’s heeding capacity
SUB strategic role
Intra-organizational power
Figure 9-1: Dynamic model of reverse knowledge transfer in a MNC
[205]
the knowledge recipient (the headquarters) and the knowledge sender (a subsidiary) is a
driver of the headquarters’ absorptive capacity (Cohen and Levinthal, 1990).
The knowledge sender’s disseminative capacity, defined as the ability to contextualize,
format, adapt, translate and diffuse knowledge through a social and/or technological
network and to build commitment from stakeholders (Parent et al., 2007), matters as well
as the knowledge sender’s absorptive capacity. Particularly, in the case of reverse
knowledge transfer, disseminative capacity of a subsidiary has a direct impact on reverse
knowledge transfer, although attention to this construct has been low in literature so far
(Minbaeva and Michailova, 2004).
The subsidiary strategic role, whether the subsidiary is a Global Innovator (GI), Integrated
Player (IP), Implementer (IM), or Local Innovator (LI) (Gupta and Govindarajan, 1991),
also affects directly reverse knowledge transfer, as shown in the extant literature (Ambos et
al., 2006, Rabbiosi, 2011).
As discussed in the section 9.1.4, tie strength between the headquarters and the subsidiary
is not a direct factor for reverse knowledge transfer, but is an indirect factor which affects
the headquarters’ absorptive capacity and the subsidiary’s disseminative capacity, because
ties between the headquarters and the subsidiary form an informal social capacity by
establishing personal-level relationships, and then such social capital affects reverse
knowledge transfer (Nahapiet and Ghoshal, 1998). Also if a ‘bypass’ exists, which is a
direct path between the headquarters of the MNC and local customers in the host country,
such ties between them have an auxiliary effect to improve the headquarters’ absorptive
capacity and the subsidiary’s disseminative capacity.
Cultural differences are also an indirect factor which affects the headquarters’ absorptive
capacity negatively, because the greater cultural differences between the headquarters and
the subsidiary are, the lower the level of the headquarters’ understanding about the
subsidiary is, which leads to the lower level of the headquarters’ absorptive capacity. Also
cultural differences affect tie strength between the headquarters and the subsidiary, because
[206]
the greater cultural differences between the headquarters and the subsidiary are, the weaker
ties between them become (Björkman et al., 2007).
Language proficiency is another indirect factor which affects a subsidiary’s disseminative
capacity. As Minbaeva and Michailova (2004) point out, ability (skill) and willingness
(motivation) are two drivers for disseminative capacity, and it was found that skill is
affected by the language proficiency of the subsidiary. Peltokorpi (2015) and Yamao and
Peltokorpi (2015) assume that corporate language proficiency has a direct impact on
reverse knowledge transfer, but in this dynamic model, the subsidiary’s language
proficiency is considered to affect the subsidiary’s disseminative capacity at first, then it
affects reverse knowledge transfer.
Intra-organizational power also affects a subsidiary’s disseminative capacity. As Ciabuschi
et al. (2010) suggest, intra-organizational power can either enhance or dampen the
willingness to share and receive knowledge. Also Intra-organizational power is closely
linked with subsidiary strategic role. While intra-organizational power of GI or IP type
subsidiaries is stronger than power of the headquarters, intra-organizational power of the
headquarters is stronger than power of IM type subsidiaries.
Finally, as discussed in the previous section, heeding capacity is inserted in this dynamic
model. Heeding capacity can be also positioned as an indirect factor which affects both the
headquarters’ absorptive capacity and the subsidiary’s disseminative capacity. If both the
headquarters’ absorptive capacity and the subsidiary’s disseminative capacity are high
enough, then heeding capacity might not be needed. However, if either the headquarters’
absorptive capacity or the subsidiary’s disseminative capacity is low, then the knowledge
transfer mechanisms in the MNC go into malfunction status. In such a case, the
headquarters’ heeding capacity is effective as the second best solution, because it helps low
absorptive capacity of the headquarters and low disseminative capacity of the subsidiary.
[207]
10. Conclusions In this chapter, after summary of this research is briefly presented, contributions,
managerial implications, and limitations are presented. Finally potential areas for future
research are discussed.
10.1. Summary of this research
Recently, because of increasingly fierce competition, many MNCs are faced with a difficult
situation in which they have to make quick decisions about marketing strategy. They
revolve around whether they will choose a global standardization strategy, a local
adaptation strategy, or a contingent strategy in which the degree of mixture of global
standardization and local adaptation is variable contingent upon each subsidiary’s market
situation. Under such a circumstance, in order for the headquarters to capture the status of
subsidiaries as precisely as possible, the effective and efficient reverse knowledge transfer
mechanisms are needed by a MNC. From such a background, the dynamics of reverse
knowledge transfer in MNCs were elucidated in this research.
The research questions explored in this research were as follows:
- What factors in the reverse knowledge transfer mechanisms in MNCs are closely
linked to success or failure of reverse knowledge transfer? How are these factors
interlinked with each other?
- How can MNCs improve the reverse knowledge transfer mechanisms, if they do not
work well?
Regarding the first research question, at first through the literature review, the following
were identified as the factors which affect reverse knowledge transfer (Section 2.4.2):
- Knowledge type: whether knowledge to be transferred is simple or complex,
explicit or tacit, independent or specific
- The headquarters’ absorptive capacity, whose driver is prior related knowledge
[208]
- Subsidiary’s disseminative capacity
- Language proficiency
- Tie strength
- Cultural differences
- Subsidiary strategic role: whether GI (Global Integrator), IP (Integrated Player), IM
(Implementer), or LI (Local Innovator)
A conceptual framework was formed using these factors (Figure 2-2), and three case
studies in a U.S.-based IT company were conducted. Through cross-case analysis for these
case studies, all of these factors were found to be more or less influential in reverse
knowledge transfer (Table 8-6). Although the results were almost consistent with the extant
literature, there were a couple of notable points. One point was that subsidiary’s
disseminative capacity matters if linguistic distance is great such as the case of reverse
knowledge transfer from a subsidiary in Japan to the headquarters in the U.S., in spite of
less attention being given to the impact of the subsidiary’s disseminative capacity on cross-
border knowledge transfer. The other point is that reverse knowledge transfer does not
work if the subsidiary is an IM type subsidiary. So far, in the extant literature, IM type
subsidiaries have not been discussed extensively, but as shown in the case studies, it will be
important to pay attention to IM type subsidiaries, if the MNC is shifting towards the
centralization and the power of the headquarters over subsidiaries becomes stronger.
Next, in the discussion chapter, interlinkage among the above factors was reviewed, and
finally a dynamic model for reverse knowledge transfer was proposed (Figure 9-1). In this
model, four factors such as knowledge type, the headquarters’ absorptive capacity,
subsidiary’s disseminative capacity, and subsidiary strategic role are defined as factors
affecting reverse knowledge transfer directly. On the other hand, tie strength, language
proficiency, and cultural differences are defined as indirect factors which do not affect
reverse knowledge transfer directly but affect the above four direct factors. Also ‘intra-
organizational power’ was brought to light through the discussion as another indirect factor,
which affects subsidiary strategic role and subsidiary’s disseminative capacity.
[209]
In addition to confirming that the factors identified in the literature review influential in
reverse knowledge transfer, new factors which affect reverse knowledge transfer were
found through observation and analysis of the case studies. From the case studies, it was
found that a ‘bypass’, a direct path between the headquarters and a local customer in a host
county, can enhance the headquarters’ absorptive capacity and disseminative capacity of
the subsidiary (Section 8.5). If there a bypass exists, it can mitigate ineffectiveness of
reverse knowledge transfer due to the headquarters’ low absorptive capacity or the
subsidiary’s low disseminative capacity (bypass effect). Moreover, through case studies,
‘heeding capacity’ was proposed (Section 9.2). Heeding capacity is defined as the ability of
the headquarters to heed what a subsidiary would like to transmit but cannot do well, which
is achieved by listening carefully and not letting language barriers or cultural differences
obfuscate the meaning. This ability is effective in the case that the subsidiary is an IM, its
disseminative capacity is low, and ties between the headquarters and this subsidiary are
weak.
Regarding the second research question, one of the answers related to the headquarters’
heeding capacity which was mentioned in Section 9.2, and this capacity is regarded to be
effective when the reverse knowledge transfer does not work properly in a MNC. In
addition to that, a couple of other ways to improve the effectiveness of reverse knowledge
transfer were suggested. One such countermeasures is to hold regular conference calls
attended by people from both the headquarters and subsidiaries to discuss not only specific
topics but also more general topics in a relaxed atmosphere (Section 9.2). The other
countermeasure is to bring more and more people from the headquarters to the subsidiary in
order to let them experience the business practice in the subsidiary directly (Section 6.2.6).
10.2. Contributions
First of all, this research tackled a research gap, in which research applying the concept of
reverse knowledge transfer to the MNC’s strategic decision-making for marketing strategy
[210]
is rare. As shown in the case studies, it is clear that there are cases in which reverse
knowledge transfer in a MNC does not work properly, and that such a MNC cannot make
an appropriate decision in strategic planning or the strategic implementation phase for
marketing strategy. Particularly, as illustrated in case study (3), if the reverse knowledge
transfer mechanisms do not work properly and the headquarters cannot get to know the
detail of the market situation where the subsidiary is located, then there is a possibility that
the marketing strategy fails. Thus, this research shows that reverse knowledge transfer is
important from the perspective of how the headquarters make decisions in strategic
planning or the strategic implementation phase for marketing strategies. On the other hand,
as pointed out in Section 1.2, in the extant literature, although researchers put an emphasis
on the importance of communication between the headquarters and subsidiaries for better
strategic decision-making, research showing more concreter way for communication is rare.
Regarding this point, this research suggests an idea that the concept of reverse knowledge
transfer can be applied as the theory of communication between the headquarters and
subsidiaries for strategic decision-making.
Also, in some MNCs, the trend of centralization has been accelerated recently, and more
and more subsidiaries have become IM type subsidiaries which simply carry out marketing
strategies given by the headquarters (Ferner et al., 2004, Gates and Egelhoff, 1986). In such
subsidiaries, autonomy has been limited and morale has been undermined, so motivation to
share the subsidiary’s idiosyncratic knowledge with the headquarters has been lowered
(Collings et al., 2008, Edwards et al., 2005). Eventually, such low motivation to share
knowledge with the headquarters leads to low disseminative capacity of the subsidiary,
which can be worsen further if the subsidiary’s language proficiency is low. Thus, the
recent trend of centralization is closely linked with the ineffectiveness of reverse
knowledge transfer, which can subsequently cause an inadequate strategic decision-making.
Therefore, if IM type subsidiaries will increase from now on, then research focusing on the
impact of reverse knowledge transfer on the MNC’s strategic decision-making should be
developed furthermore.
[211]
Secondly, this research tried to explore the dynamics of reverse knowledge transfer by
bringing in possible factors which can be assumed to influence significantly reverse
knowledge transfer. For that purpose, a conceptual framework was formed bringing in
several factors which have been adopted in the extant literature regarding cross-border
knowledge transfer (Figure 2-2). Through case studies and cross-case analysis, the
conceptual framework was modified, and finally a dynamic model for reverse knowledge
transfer was proposed, which includes such factors as knowledge type, the headquarters’
absorptive capacity, subsidiary’s disseminative capacity, subsidiary strategic role, tie
strength, language proficiency, cultural differences, and intra-organizational power (Figure
9-1). So far, there has been literature taking up a few factors among these (Ambos et al.,
2006, Frost and Zhou, 2005, Håkanson and Nobel, 2001, McGuinness et al., 2013,
Rabbiosi, 2011), but it is difficult to capture the realistic picture of the reverse knowledge
transfer mechanisms using such limited factors. For example, so long as paying attention to
the flows of knowledge disseminated from a subsidiary, only focusing on the headquarters’
absorptive capacity is not sufficient, but disseminative capacity of the subsidiary should be
considered (Minbaeva and Michailova, 2004). Also, in this research, from the assumption
that a structure consisting of the headquarters and a subsidiary forms a ‘network’ having
many linkages between human beings on both sides, tie strength as a network character was
brought in (Hansen, 1999, Nahapiet and Ghoshal, 1998, Reagans and McEvily, 2003).
Thus, this research can show the dynamic model explaining how the reverse knowledge
transfer mechanisms work, using as many factors as possible.
Thirdly, this research tried to explore the dynamics of reverse knowledge transfer using a
qualitative method. While there has been much quantitative research on reverse knowledge
transfer, quantitative research has been limited (McGuinness et al., 2013). One of the
reasons is regarded to be difficulty to capture the realistic picture of reverse knowledge
transfer in a MNC qualitatively from the outsider’s viewpoint. In this research, making the
best of the author’s position as an ‘insider’ of the target company for the case studies, wide-
ranging fieldwork including interviews with internal and external respondents was
undertaken, and detailed and precise case studies were written (Chapter 4 to 7). Thus, this
[212]
research can contribute to the research gap regarding scarcity of qualitative research, by
providing enriched presentations for case studies.
Fourthly, this research has proposed two new concepts. One is the concept of ‘bypass’
which is a direct relationship between the headquarters of a MNC and local customers or
partners in a host country where a subsidiary is located (Section 8.5). If a bypass exists, low
absorptive capacity of the headquarters and low disseminative capacity of the subsidiary
can be mitigated. Also if there are a number of such bypasses, even though tie strength for
each of them is weak, the headquarters is able to establish a network with those local
customers or partners, which enables the headquarters to enhance its absorptive capacity
and eventually leads to improvement of reverse knowledge transfer. Thus, while this
concept is useful as one factor of the dynamic model for reverse knowledge transfer (Figure
9-1), it can also compensate for the network theory for business-to-business marketing.
The other concept is the headquarters’ heeding capacity (Section 9.2). If the headquarters
can enhance its heeding capacity, it is possible to improve its absorptive capacity, even
though the subsidiary is an IM, its disseminative capacity is low, and tie strength between
the headquarters and this subsidiary is weak. Ideally, the best strategy for improvement of
the ineffectiveness of reverse knowledge transfer is to strengthen the network tie between
the headquarters and subsidiaries, but that might require a long period of time and much
cost. Now that MNCs should change rapidly, the second best strategy is regarded to be to
develop and enhance the heeding capacity. The headquarters should listen carefully what
the subsidiary wants to share knowledge and should apply such absorbed knowledge to the
current or future marketing strategies. Thus, while this concept is a factor of the dynamic
model for reverse knowledge transfer (Figure 9-1), it can be useful for the research area
regarding the headquarters-subsidiaries relationships.
[213]
10.3. Managerial implications
Firstly, as shown in the case studies, there are cases, in which a significant misfit occurs
between a globally standardized strategy and idiosyncratic local market situation, even
though globalization of the world economy has developed recently. Scholars who advocate
global standardization think that globalization of world markets could be accelerated,
because rapid advances in transportation and communication technologies would facilitate
the trend towards homogenization of world markets (Levitt, 1983, Ohmae, 1999). However,
in reality, as of today, such homogenization of world markets has not advanced yet to the
level they expected. Instead, there still remain significant barriers in the legal, cultural, or
linguistic aspects between countries. Therefore, managers in MNCs should pay attention to
such idiosyncratic local market situations in some specific countries. If the idiosyncrasy of
a local market is too great to neglect, then a contingency approach (Theodosiou and
Leonidou, 2003) should be selected, in which local adaptation strategy is blended with
global standard strategy to a certain degree contingently upon the level of the idiosyncrasy.
If a MNC sticks to its globally standardized marketing strategy anyway for the sake of
saving cost and time, then just a small modification to the globally standardized marketing
strategy should be considered in order to avoid a crucial misfit between the strategy and the
local market situation. In such a case, the cost necessary for such a modification and the
negative impact anticipated by applying such a global standard marketing strategy to the
subsidiary without any modification should be compared as precisely as possible. If the
cost for modification is less than the negative impact, then such a global standard marketing
strategy should be modified. If not, the global standard marketing strategy could be
implemented to the subsidiary without any modification, but such implementation should
be promoted carefully, by monitoring the progress through close communications with the
subsidiary.
Secondly, if managers of MNCs would like to know the local market situation in each
country precisely, then the effective reverse knowledge transfer mechanisms should be
established. For such effective reverse knowledge transfer mechanisms, improvement of the
[214]
headquarters’ absorptive capacity is the first priority. Improvement of the headquarters’
absorptive capacity means to obtain as much related knowledge as possible from the
subsidiary, because prior related knowledge is a single driver for absorptive capacity
(Cohen and Levinthal, 1990).
One way for the headquarters to gain related knowledge from a subsidiary is to establish a
regular meeting scheme to monitor the current status of each marketing program in the
subsidiary, such as on a weekly basis or monthly basis. Good examples are the ‘post-JQC
meetings’ (conference calls) launched voluntarily by the employees in GC-Japan, which
were illustrated in case study (1). Like those post-JQC meetings, it is important to keep
meetings between the headquarters and a subsidiary on a regular basis. A key point for such
regular meetings is to create an atmosphere in which all the attendees can speak freely
without hesitation even though there are people whose language proficiency is not so high.
Also another key point is for the headquarters to listen to carefully and patiently what the
subsidiary people say. At this point, ‘heeding capacity’ is required of the attendees from the
headquarters.
Another way to obtain related knowledge from a subsidiary is to develop strong ties with
the subsidiary by developing a ‘social capital’ (Nahapiet and Ghoshal, 1998) between the
headquarters and the subsidiary through repeated informal social activities over time. In
order to do so, it is important to exchange people between the headquarters and the
subsidiary. Such an exchange of people might be a high-cost process due to overseas
travels, but it should be effective enough to offset the cost related with the travel, from the
viewpoint of improvement of communication. For example, in case study (2), Kobayashi of
Global Manufacturing Japan mentioned as follows:
“… For example, if someone of a Japanese company asks something a little selfish
to an American person in email, and if that American person has never met this
Japanese person before, then the American’s response should be very cool. He or
she might answer in email, ‘It’s your business’, or ‘That is the issue due to your
mis-operations, so it has nothing to do with me’, or something like that. …
[215]
However, once that American has met this guy of the Japanese partner company in
person and gone for a drink together or make an excursion or whatever, then he or
she becomes so friendly that they might say, ‘All right, if you have any problems,
please contact with me, and I can answer whatever you would like to know’ or
something like that.” (Interview with Kobayashi in GC-Japan, translated by the
author)
In this way, a face-to-face meeting, whether formal or informal, by the people from
different countries is effective for improvement of the communications between them in the
future.
Also such a face-to-face meeting is effective because the headquarters people can
experience directly the local business scene. For example, in case study (1), Jones of GC-
US mentioned about the importance of attending the JQC meeting in person by expressing
it as an ‘enlightenment’ process, which means that it was a very impressive experience for
him to see the Japanese way of business directly with his own eyes. From such a viewpoint,
it is important to exchange people between the headquarters and the subsidiary, particularly
to dispatch people from the headquarters to the subsidiary for their direct contact.
Thirdly, managers of MNCs should think about how to improve the subsidiary’s
disseminative capacity, if it is recognized that the level of disseminative capacity or
language proficiency of that subsidiary is not high enough for the normal communications.
Such countermeasures might be language training programs, which might be led by either
the headquarters or the subsidiary, or self-development encouragement programs.
As shown in Chapter 4, now that the Japanese subsidiary of GC has become a large
company which has over 5,000 employees all over the country, it is almost impossible to
hire people who have higher business related skill as well as higher language proficiency.
In general, when hiring new employees, business related skill is prioritized rather than
language proficiency, so it is inevitable for such a large subsidiary to hire people whose
language proficiency is not very high. Assuming that the headquarters forces its global
standard strategies in a top-down style to the subsidiary, and if the MNC leaves such an
[216]
issue of low language proficiency of the subsidiary as it is, then the risk that operational
failure in the strategic implementation phase might happen increases. If a MNC will switch
to the centralization policy, and try to integrate the subsidiaries with the headquarters as a
‘single unit’, then it is necessary to raise the level of language proficiency of the subsidiary
through internal training programs or self-development encouragement programs.
10.4. Limitations
Although the research method for this research was multi-case study, those case studies
have focused on only a structure consisting of the headquarters in the U.S. of a U.S.-based
MNC and its subsidiary in Japan. It means that the output from these case studies might be
limited to a case between a subsidiary in Japan and the headquarters in the U.S. Also in
terms of industrial sector, the output of this research might be applied only to the cases of
MNCs in the IT or high technology sector. As discussed in Chapter 3, cases were selected
not randomly but deliberately (Reybold et al., 2013, Yin, 2009), and not ‘statistical
generalization’ but ‘analytical generalization’ (or ‘transferability’ to other cases) is
appropriate for the case study method (Yin, 2009). Therefore, the three case studies in this
research are enough for such transferability, even though they are describing those
particular events which the author knew very well. Nevertheless, if more qualitative
research into different structures consisting of the headquarters and a subsidiary in other
countries will be conducted and the results will show similar phenomena, ‘criticality’
(Golden-Biddle and Locke, 1993) and transferability of the dynamic model for reverse
knowledge transfer proposed in this research (Figure 9-1) can be enhanced. Also if there
will be qualitative research in other industrial sectors than IT or high technology sectors, it
will also strengthen criticality and transferability of the proposed dynamic model.
Secondly, in this research, each factor is evaluated without paying attention to a difference
of the degree to which each factor affects reverse knowledge transfer. For example, in case
study (2), it was observed that knowledge type was know-how, the headquarters’ absorptive
[217]
capacity was medium, the Japanese subsidiary’s disseminative capacity was medium, tie
strength was strong, and consequently the overall perception of reverse knowledge transfer
was moderate. In this case, when thinking about which of these four main factors
contributes to the overall perception most significantly, probably it is the headquarters’
absorptive capacity, but it is difficult to evaluate precisely. Thus, it is clear that there was a
difference of ‘weight’ between those factors, but it was difficult to evaluate how
significantly each function affected reverse knowledge transfer under the current research
method. On the other hand, it is important to evaluate the degree of how significantly each
factor(s) could affect reverse knowledge transfer, from the viewpoint of what kind of
countermeasure each MNC should take in order to improve the reverse knowledge transfer
mechanisms. At this point, there is a limitation of this research, and something like a
quantitative approach might be necessary for the future research to make the weight of each
factor clear.
10.5. Potential Areas for Future Research
Firstly, as pointed out in Section 9.1.1, under a situation where linguistic distance between
two countries is great such as between the U.S. and Japan, how the tacit portion of
knowledge, which is metaphorically expressed as ‘underwater portion of the iceberg’, will
be transferred is vital for cross-border knowledge transfer. Through literal-translation, only
the explicit portion of knowledge (the tip of iceberg) can be transferred, but the tacit portion
is left behind. Recently, machine translation software has developed remarkably by
applying artificial intelligence (AI) technology. However, considering the untransferability
of the tacit portion of knowledge, it might be risky to rely perfectly on machine translation,
particularly in the cases where linguistic distance is great. From such a perspective,
research focusing on the limitation of knowledge transfer across the border due to the
untransferability of the tacit portion of knowledge, and focusing on how such a limitation
can be overcome, will be necessary.
[218]
Secondly, as pointed out in Section 9.1.3, language proficiency is an important factor for
cross-border knowledge transfer, particularly in the cases where linguistic distance is great.
After the 2000’s, more and more research about cross-border knowledge transfer focusing
on language proficiency has been conducted (Marschan-Piekkari et al., 1999, Peltokorpi
and Vaara, 2014, Welch and Welch, 2008, Yamao and Peltokorpi, 2015), but basically
empirical research for this area is not sufficient yet. For example, research arguing the
impact of language proficiency on cross-border knowledge transfer in connection with
disseminative capacity of a subsidiary is rare. From such a perspective, it is expected that
research focusing on language proficiency which influences cross-border knowledge
transfer will further develop.
Thirdly, as Ciabuschi et al. (2010) argue, the impact of ‘intra-organizational power’ on
cross-border knowledge transfer is important. As pointed out in Section 9.1.6, the
headquarters’ power surely affects the subsidiary’s disseminative capacity. If the
headquarters’ power is strong enough, the motivation of a subsidiary to share its own
knowledge with the headquarters might be lowered, which eventually leads to low
disseminative capacity of the subsidiary. From such a viewpoint, it is expected that research
focusing on linkage between the intra-organizational power and disseminative capacity of
subsidiaries will further develop.
[219]
Appendices
Appendix-1: List of external conferences
This table shows the details of the external conferences which the author attended.
Date Name of conference Place Submissions
June 20th - 22nd,
2013
The 6th International
Conference on
Business Market
Management (BMM
2013)
University of
Bamberg, Germany
Paper for conference
December 8th –
10th, 2014
The 6th Meeting of the
IMP Group in Asia
Bali, Indonesia
(Sanur Paradise Plaza
Hotel)
Paper for conference
- Received comments by two
reviewers for the initial version,
and then re-written
*) After the conference, the paper
was chosen as a candidate for a paper
to be submitted to a special edition of
JBIM
August 26th –
28th, 2015
The 13th Vaasa
Conference on
International Business
University of Vaasa,
Finland
Paper for doctoral tutorial
- Received comments from two
reviewers for the initial version,
and then re-written
[220]
Appendix-2: Case study protocol
Case study protocol Based on Yin (2009)’s guideline
1. Overview of the case study project 1-1. Introduction This is a protocol for a case study which will be conducted by Hiroyuki Ishihara for his doctoral thesis research. The purpose of this research is to elucidate how the effectiveness of the inter- and intra-organizational knowledge transfer will affect the performance of a multinational corporation (MNC), especially focusing on a case in which a bypass exists between the headquarters of the MNC and partners (strategic alliances) in a local market. In order to research such an association between the effectiveness of the organizational knowledge transfer and the performance, the case study is chosen as a research method. In this research, two case studies will be conducted. The first is a case in which the effectiveness of knowledge transfer will be researched between the headquarters in the U.S. of a global IT company, its subsidiary in Japan, and its local partners in Japan. This case has a direct relationship (‘bypass’) between the headquarters of an MNC and the local partners embedded in a foreign local market. So the unit of analysis is not a dyad, not a network, but a ‘triad’. The second case deals with another type of partner program which was deployed in a top-down way from the headquarters to subsidiaries in the world, and from each of subsidiaries to local partners in each country. In this case, although a direct relationship between the headquarters and the local partners does not exist, there are reverse knowledge flows from partners to subsidiaries, and subsidiaries to the headquarters. But it is supposed that such reserve knowledge transfers in the second case might not be as effective as the first case in which the ‘bypass’ knowledge flow exists. Both case studies will be conducted at Global Computer company (a pseudonym) which has its headquarters in California, in the U.S., providing its customers all over the world with a full line-up of the IT hardware products from tablet PCs, printers, storage products to high-end servers, software products, and every kind of services from after-sales maintenance services to consulting services. 1-2. Research question The research question of this research is as follows: How does the effectiveness of knowledge transfer between the headquarters of a
multinational corporation (MNC), its subsidiary, and its local partners affect the
[221]
performance of the MNC under a condition that a direct relationship between the HQ and the foreign local partners (‘bypass’) exists?
1-3. Conceptual framework A conceptual framework for this research is formed based on the following several theories or concepts proposed in the extant literature:
a) van Wijk, et al.’s meta-analytic review results regarding the constructs for inter- and intra-organizational knowledge transfer (2008)
b) Social capital dimensions of networks (Inkpen and Tsang, 2005) c) Concept of network structure; cohesion and range (Reagans and McEvily, 2003) d) Concept of disseminative capacity (Minbaeva and Michailova, 2004) e) Concept of shared value (Nohria and Ghoshal, 1994)
Figure A-1 shows the conceptual framework for this research.
The above conceptual framework consists of several antecedents and one consequence. The antecedents for the effectiveness of knowledge transfer under the inter- and intra-organization environment are classified into three categories of (1) nature of knowledge, (2) organizational characteristics, and (3) network characteristics. The consequence of the effectiveness of knowledge transfer is regarded as the performance of the targeted MNC.
Figure A-1: Conceptual framework
[222]
The single factor of the ‘nature of knowledge’ is the ambiguity of knowledge which is transferred inter-organizationally or intra-organizationally. It is predicted that the higher the ambiguity of knowledge to be transferred, the lower the effectiveness of knowledge transfer. Van Wijk, et al. (2008) define two factors under the ‘organizational characteristics’; decentralization and absorptive capacity. It is predicted that the higher the degree of decentralization of the targeted MNC, the higher the effectiveness of knowledge transfer, and that the higher the degree of absorptive capacity of each actor, the higher the effectiveness of knowledge transfer. Also as the third element of the organizational characteristics, disseminative capacity, which is advocated by Minbaeva and Michailova (2004), should be considered. It is predicted that the higher the degree of disseminative capacity of each of actors, the higher the effectiveness of knowledge transfer. According to Inkpen and Tsang (2005), the ‘network characteristics’ include three types of dimensions; structural dimensions, cognitive dimensions, and relational dimension. It is predicted that the higher the degree of each of the structural dimensions such as network ties, network configuration, and network stability, the higher the effectiveness of knowledge transfer. Secondly, it is predicted that the greater the degree of each of cognitive dimensions such as shared goals and shared culture, the higher the effectiveness of knowledge transfer. Thirdly, as the relational dimension, only one factor is presumed, which is trust. It is predicted that the higher the degree of trust by an actor to the other actors, the higher the effectiveness of knowledge transfer. 2. Data collection procedures 2-1. Target of analysis This research will focus on the relationship between the headquarters of Global Computer (GC) in the United States, its subsidiary in Japan (Global Computer Japan; GC-Japan) and its local Japanese strategic alliance partners (JPA, JPB, JPX, and JPY). Case-1 will deal with a partner program which is called ‘Japan OEM’ or JOEM. In the program, partners such as JPA or JPB re-sell GC’s products, mainly UNIX servers and storage products, to their end-users, and both the headquarters in the U.S. and the subsidiary in Japan (GC-Japan) give a high-level technical support under a tripartite contract. In this case, there exists a bypass between GC’s headquarters and the local partners in Japan, so it is expected that the knowledge should flow among three actors very effectively. On the other hand, Case-2 will deal with another partner program which was deployed through a typical vertical relationship. This partner program (GC Support Partner; GCSP) aimed to boost sales of GC’s Industrial Standard Servers to partners by attaching GC’s
[223]
packaged maintenance services. This program was deployed in a top-down way from the headquarters to subsidiaries in the world, and from each subsidiary to local partners in each country. Therefore, the ‘bypass’ does not exist in this case, so it is expected that the knowledge transfer process might not be as effective as the Case-1. 2-2. Data collection plan In these two case studies, several kinds of sources of evidence will be accessed such as documents, interviews, and participant-observation.
a) Documents Within Global Computer, either in the headquarters or Japanese subsidiary, there are several kinds of documents regarding the targeted cases as follows:
Internal documents - Organizational chart - Annual reports of Global Computer - Contract agreements between Global Computer and its alliance partners (JPA
or JPB) - Program documents for the JOEM partner program and GCSP program - Sales plan by sales teams in charge of GC-Zeta servers or OC servers for
each fiscal year - Internal financial reports - Presentation materials at meetings with partners - Minutes of meetings - Email communications
Documents by partners or customers
- Annual reports - Presentation materials at meetings with partners/customers
The researcher is an employee of GC-Japan, so he can access to the internal documents through the intranet, if they are the current ones. Even if they are the outdated ones, it is possible to access to the internal archived database after getting adequate internal permission of each site.
b) Interviews When considering strategy for the interview, there are three types of interview such as ‘structured’, ‘semi-structured’, and ‘unstructured’ (Easterby-Smith, et al., 2008). Among these, the semi-structured type of interview is regarded as appropriate for this research, because, while the semi-structured type interviews requires a certain level of direction of discussion, it gives us the freedom of what each respondent answers and the freedom of what the researcher asks, and eventually enables us to obtain a wide range of language data and also to discover unexpected findings.
[224]
While a list of candidate interviewees is shown in the next section B-3, expected preparation prior to site visits is described in B-4.
c) Direct observation Because the researcher is an employee of Global Computer, it is possible to attend various kinds of internal meetings or meetings with partners or customers, and to obtain useful data through such direct observation. 2-3. Contact person list In each of case studies for this research, interviews will be done with the people of GC headquarters, the people of GC-Japan, and the people of Japanese local partners JPA, JPB, JPX, and JPY. The following tables are the lists of the potential interviewees in those organizations: Table A-1: Interviewees List (Case-1)
Organization Position of interviewee Location Reason for interview GC Headquarters
Ex-leader of WW TCE & Quality, VP
Texas, U.S. Had been responsible for J-VAR program for many years
Current leader of WW TCE & Quality
Hawaii, U.S. Currently responsible for J-VAR program as the project manager
Current sub-leader of WW TCE & Quality
Hawaii, U.S. Responsible for J-VAR program
Ex-leader of WW Sales team for GC-Zeta servers in charge of J-VAR
Illinois, U.S. Had been responsible for J-VAR program for many years from sales’ viewpoints
Ex-sub-leader of WW TCE & Quality
Texas, U.S. Had been responsible for J-VAR program for many years
Laboratory engineer of WW TCE & Quality
Texas, U.S. Responsible for every kind of design issues about BCS hardware
Quality manager of WW Manufacturing
California, U.S. Responsible for manufacturing of GC-Zeta servers
Quality manager of WW Spare Parts Management
California, U.S. Responsible for spare parts of GC-Zeta servers
GC Japan Leader of J-VAR Partners team, Product Sales
Tokyo, Japan Responsible for product sales to J-VAR partners and a chairman of VG forum
Ex-leader of Japan GC-Zeta server Manufacturing
Tokyo, Japan Has been responsible for manufacturing in GC-Japan for many years
Leader of Technical Support, Customer Services
Tokyo, Japan Responsible for technical support at the customer services side
Ex-leader of Technical Support, Customer Services, GC-Japan
Tokyo, Japan Had been responsible for technical support at the customer services side for many years
[225]
Technical Support, Customer Services, GC-Japan
Tokyo, Japan Responsible for technical support at the customer services side
JPA Senior manager of GC-Zeta server business
Kanagawa, Japan Senior manager of the department in charge of J-VAR business
Leader of quality control team of GC-Zeta server
Kanagawa, Japan Manager of technical team in charge of J-VAR business
Sub-leader of quality control team of GC Server
Kanagawa, Japan Sub-leader of technical team in charge of J-VAR business
JPB Senior manager of GC-Zeta server business
Tokyo, Japan Senior manager of the department in charge of J-VAR business
Manager of GC-Zeta server business
Tokyo, Japan Manager of technical team in charge of J-VAR business
Leader of quality control team of GC-Zeta server
Tokyo, Japan Sub-leader of technical team in charge of J-VAR business
Table A-2: Interviewees List (Case-2)
Organization Position of interviewee Location Reason for interview GC Headquarters
Ex-leader of WW Channel Partner Business Development
Illinois, U.S. Had been responsible for WW channel partner business development (but now in another company)
Ex-leader of WW GC-SSP program
Colorado, U.S. Had been responsible for implementation of GC-SSP program at the WW level
GC Japan Ex-leader of Partner Management Group, GC-Japan
Tokyo, Japan Had been responsible for channel partner business development in Japan
Ex-member of Partner Management Group, GC-Japan
Tokyo, Japan Had been responsible for implementation of GC-SSP program in Japan
Ex-member of Partner Management group, GC-Japan
Tokyo, Japan Responsible for implementation of GC-SSP program in Japan
Member of Partner Management Group, GC-Japan
Tokyo, Japan Responsible for partner communication regarding service delivery
JPX Manager of Service Logistics Tokyo, Japan Senior manager of service logistics group in charge of all vendors’ products including GC’s products
JPY Manager of Customer Services Division
Tokyo, Japan Senior manager of customer service division in charge of all vendors’ products including GC’s products
2-4. Expected preparation prior to site visits When the interviews will be undertaken with the internal people in the headquarters of GC and GC-Japan, the researcher will have to visit the facilities of GC in the U.S. and Japan. Although there will be little difficulties for the researcher to access to those GC’s sites as an
[226]
employee of GC-Japan, a formal letter explaining the purpose of the research and promising non-disclosure of the personal information should be prepared in advance. On the other hand, the interviews with the people in the local partners in Japan will be done at each partner’s facility. The researcher will need to get a permission to access to each partner’s site as well as get a permission to conduct interviews by sending a formal letter explaining the purpose of the research and promising non-disclosure of the personal information. 3. Case study questions The questions in the case study protocol are posed not to interviewees but to the researcher. It means that the protocol’s questions are the researcher’s reminders regarding the information that need to be collected. The main purpose of the protocol’s questions described here is to keep the researcher on track as data collection proceeds. Firstly, in each of interviews, followings are confirmed at the introduction: Respondent’s position/background in each organization Background to the organizations Secondly, the researcher should ask each of interviewees the questions which are related with the factors that might affect the effectiveness of inter- or intra-organizational knowledge transfer. As mentioned in the section of conceptual framework (A-3), such factors are as follows:
a) Nature of knowledge (Knowledge characteristics) Ambiguity of knowledge
b) Organizational characteristics Decentralization Absorptive capacity Disseminative capacity
c) Network characteristics Structural dimensions
- Network ties - Network configuration - Network stability
Cognitive dimensions - Shared goals - Shared culture
Relational dimension - Trust
[227]
Thirdly, the researcher should also ask the questions related with the consequence of the effectiveness of knowledge transfer, which is the performance of the targeted MNC. The protocol’s questions each of these factors are discussed below. 3-1. Background to the respondents and the organization These questions are all essential to building up pre-understanding, so they are related to understanding the roles and responsibilities of each respondent and the organization to which each respondent belong. Summary of questions is as follows:
- What is the respondent’s role in his/her organization? - How is the respondent related with each of programs (Japan-OEM or GCSP)? - How long has the respondent been engaged in his/her organization or specific
program? 3-2. Ambiguity of knowledge According to van Wijk, et al. (2008), knowledge ambiguity refers to the inherent and irreducible uncertainty as to precisely what the underlying knowledge components and sources are and how they interact. It emerges from the simultaneous effects of tacitness, specificity and complexity of the underlying knowledge to be transferred. Therefore, it is effective to ask each respondent what kind of knowledge they deal with and how difficult it is to transfer such knowledge beyond the boundary of companies or crossing a national boundary. Summary of questions is as follows:
- What kind of knowledge/information is the respondent dealing with? Is it related with technology, business, or whatever?
- Can such knowledge/information transferred be easily codified or documented? - How difficult is it to transfer such knowledge/information inter-organizationally or
internationally? Why do they think so? - What kind of difficulties or trouble have the respondents experienced so far in
transferring knowledge/information inter- or intra-organizationally or internationally?
3-3. Organizational characteristics As the organizational characteristics, van Wijk, et al. (2008) take up two factors such as decentralization and absorptive capacity. Decentralization involves moving down the hierarchy regarding the locus of authority and decision-making, and reflects the extent to which decision-making is dispersed in an organization. Decentralization broadens communication channels as it increases units’ dependence on mutual adjustment to
[228]
coordinate activities, and consequently improves the quality and quantity of knowledge that may be shared. On the other hand, absorptive capacity refers to the ability to recognize, assimilate and apply new external knowledge. In general, absorptive capacity is a dyad-level construct and has limited applicability at the firm level, and that absorptive capacity facilitates inter-organizational knowledge transfer. Also the researcher adds one more organizational characteristic, which is disseminative capacity. According to Parent, et al. (2007), disseminative capacity is defined as the ability to contextualize, format, adapt, translate and diffuse knowledge through a social and/or technological network. When we think about intra- and inter-organizational knowledge transfer, not only absorptive capacity but also disseminative capacity should be considered. Summary of questions is as follows:
- (Decentralization) If decentralization exits in a respondent’s organization, what is that decentralization like? What are the major differences before and after the decentralization?
- (Absorptive capacity) Do the respondents think it is easy for them to understand the information which other actors disseminate? Why do they think so? Do they think that their capacity to understand such information has grown over time?
- (Absorptive capacity) On the other hand, do the respondents think that other actors understand fully what the respondent’s organization disseminates? Why do they think so? Do they think that other actors’ capacity to understand such information has grown over time?
- (Disseminative capacity) Do the respondents think that they can translate and disseminate their information to other actors efficiently? Why do they think so? Do they think that their capacity to disseminate their information has grown over time?
- (Disseminative capacity) Do the respondents think that other actors can translate and disseminate their information to the respondent’s organization efficiently? Why do they think so? Do they think that other actors’ capacity to disseminate such information has grown over time?
3-4. Network structural dimensions Inkpen and Tsang (2005) classify the network characteristics into three categories; network structural dimensions, cognitive dimensions, and relational dimensions. The first network characteristic is the network dimensions, which are network ties, network configuration, and network stability. Firstly, ‘network ties’ deal with the specific ways in which the actors are related, and such ties are a fundamental aspect of social capital, because an actor’s network of social ties creates opportunities for social capital transactions including knowledge exchange.
[229]
Secondly, ‘network configuration’ determines the pattern of linkages among network members. Such elements of configuration as hierarchy, density, and connectivity affect the flexibility and ease of knowledge exchange through their impact on the extent of contact and accessibility among network members. Thirdly, ‘network stability’ is defined as frequency of membership change in a network. A highly unstable network may limit opportunities for the creation of social capital, because when an actor leaves the network, ties disappear. While such network structural dimensions can be clarified basically through factual data or observation, some findings through interviews might support the findings through such factual data. Summary of questions is as follows:
- Do respondents think that they have established social ties with members of other organizations? If so, in what way have they established such social ties? It is through daily communications on business, official face-to-face meetings, or more casual team-building events, SNS, or whatever?
- Do they think that such a social ties has become stronger over time? - Do they think that such social ties are beneficial to every aspect of the business?
Why do they think so? 3-5. Network cognitive dimensions The second network characteristic is network cognitive dimensions. According to Inkpen and Tsang (2005), shared goals and shared culture are the main factors of the network cognitive dimensions. ‘Shared goals’ refer to the degree to which network members share a common understanding and approach to the achievement of network tasks and outcomes. On the other hand, ‘shared culture’ refers to the degree to which norms of behaviour govern relationships. This construct is “the set of institutionalized rules and norms that govern appropriate behaviour in the network. While these are sometimes spelled out in formal contracts, most often they are simply understandings that evolve within the dyad and the network” (Gulati et al., 2000: 205). Summary of questions is as follows:
- Does respondents’ organization have goals shared with other organisation(s)? If so, what kind of goals do those organizations share? How these shared goals are/have developed?
- To what degree the corporate culture (organizational culture) is shared between the respondent’s organization and other organizations? Why do they think so?
- What kind of difficulties regarding the organizational culture differences have respondents experienced so far? How have they overcome such difficulties?
[230]
3-6. Trust (Relational Dimension) The third network characteristic is relational dimension, which consists a single factor; trust. According to Inkpen and Tsang (2005), trust plays a key role in the willingness of network actors to share knowledge. A lack of trust may lead to competitive confusion about whether or not a network firm is an ally. Conversely, an atmosphere of trust should contribute to the free exchange of knowledge between committed exchange partners, because decision makers should not feel that they have to protect themselves from others’ opportunistic behaviour. Summary of questions is as follows:
- What is the degree of trust between the organization to which respondents belong and other organizations? Is the degree of such a trust high or low? Why do they think so?
- Do they think such a trust has grown over time? 3-7. Performance According to van Wijk, et al. (2008), transferring knowledge contributes to the development of organizational capabilities that are difficult to imitate, and subsequently leads to enhanced performance. Firms that are able to learn about customers, competitors, and regulators stand a better chance of sensing and adapting their products and services to emerging needs. Hence, organizational knowledge transfer has been associated with higher levels of performance. In their study regarding knowledge acquisition in international joint ventures, Lyles and Salk (1996) define three types of performance: performance viewed from economic and business criteria, performance as the accumulation of know-how and capabilities, and the overall performance in relation to effort and expected outcomes. Subsequently, they discuss that the economic and business performance includes measures such as business volume growth, achieving planned goals, making profits, achieving acceptable levels of employee productivity, lowering unit costs, and lowering overall costs. In this research, as indicators of the performance, the following constructs will be adopted: (a) whether target partner program has achieved each fiscal year’s goals (order and revenue), and (b) trend of partner’s satisfaction level of each of target partner program. In terms of the constructs for the performance shown above, it is possible to capture the objective outlook of the performance of each organization through external/internal documents such as the annual report, financial reports, and project summary reports, among others. On the other hand, it might be useful to bring out subjective viewpoints of each respondent regarding the overall performance of each partner program through interviews. Summary of questions is as follows:
[231]
- How do respondents think about the overall performance of the project in which they are engaged? Do they think that it is getting better year by year?
3-8. Closing comments Each interview should be finished by asking if the respondents have anything else they want to add, anything they thought the researcher need to also consider, or any comments or recommendations. 4. Data collection procedure and data analysis plan 4-1. Data collection procedure In this section, the data collection procedures for each of evidences are described.
a) Interviews As far as the respondent’s agreement will be obtained, each of interviews will be recorded using a digital voice recorder, which can record the voice data as MP3 format computer files. Subsequently, some of those voice data will be transcribed entirely using transcription software or manually, and others will not be transcribed but summarized into a document manually. In case of the interviews with Japanese people, the documented data, either transcriptions or summaries, will be translated into English. A confirmation process (back-translation process) might be needed, in which a third person will re-translate a document, which has already been translated into English, back into Japanese and compare such a re-translated document with the original Japanese document.
b) Direct observation Regarding the meetings, whether internal meetings or meetings with partners or customers, meeting minutes are usually issued as a general rule of the company, but in case such minutes will not be issued, the researcher will take meeting notes as a WORD format document. Even in the cases that the meeting minutes will be issued, if there is something noteworthy, the researcher should add some notes to such meeting minutes. When the researcher has a chance to talk informally with visitors from the headquarters or people from customer or partner companies, the researcher will take notes right after such an informal conversation has been done. Moreover, whenever the researcher finds something particular regarding the targeted partner programs in his daily activities, those findings should be noted as quickly as possible.
[232]
4-2. Data analysis plan According to Yin (2009), regarding the data analysis there are four strategies as follows (p.130):
i. Relying on theoretical propositions ii. Developing a case description
iii. Using both qualitative and quantitative data iv. Examining rival explanations
In this research, a conceptual framework is formed based on the extant literature, so basically collected data should be analysed in line with the conceptual framework discussed above (1-3), which means that data analysis will be done based on Yin’s strategy #1 ‘relying on theoretical proposition’. As an analytic technique, ‘template analysis’ will be used. Through the template analysis a researcher produces a list of codes (a template) representing ‘themes’ identified in their textual data (King, 1998: 118). The themes are defined as the recurrent and distinctive features of respondents' accounts in interviews that characterize perceptions and/or experiences, seen by the researcher as relevant to the research question. Coding is the process of attaching a label (code) to a section of text to index it as relating to a theme. A key feature of template analysis is the hierarchical organization of codes, with groups of similar codes clustered together to produce more general higher order codes. Hierarchical coding allows the researcher to analyse texts at varying levels of specificity and there can be as many levels of themes as the researcher finds useful. Such a hierarchical organization of codes will be formed based on the conceptual framework prior to the actual analysis phase, and then the data collected through interviews will be analysed by the template analysis. 5. Outline of case study report First of all, this case study research will be done for the purpose of the researcher’s doctoral thesis research, so the audience for this case study is a thesis committee. So in terms of the final report, presenting mastery of the methodology and the theoretical issues is a key point (Yin, 2009: 167). In terms of the formats for the written case study report, the ‘multiple-case version of the classic single case’ will be chosen. This format will contain multiple narratives, covering each of the cases singly, presented as separate sections. Also the report also will contain a section covering the cross-case analysis and results (Yin, 2009: 170).
[233]
Also as the illustrative structure of the final report, the ‘linear-analytic structure’ will be chosen among others. This structure starts with the description of the issue being studied and a literature review, and then proceeds to cover the methods used, the findings from the data collected and analysed, and the conclusions and implications from the findings (Yin, 2009: 176). According to Yin (2009), this structure is the most advantageous when the thesis committee is the main audience. The final report also will contain an annotated bibliography, which lists the documentation sources as the case study evidences. The annotations would help a reader to know which documents might be relevant for further inquiry (Yin, 2009: 90).
[234]
Appendix-3: Initial template and final template for template analysis
A) Initial template (191 codes) 1. Nature of knowledge – Ambiguity
1.1. Tacit or explicit 1.1.1. Tacit knowledge
1.1.1.1. Common understanding you do not need to explain to others (‘Anmoku-no-ryoukai’) 1.1.1.2. Slang among Americans 1.1.1.3. Tacitness in Japanese culture
1.1.2. Explicit knowledge/Codifiable/Protocol 1.2. Complex or simple
1.2.1. Complex knowledge 1.2.1.1. Complexity of Japanese partner structure
1.3. System-dependent or independent 1.3.1. System-dependent knowledge
1.3.1.1. Highly confidential knowledge/Proprietary 1.3.2. Independent knowledge
2. Organizational Characteristics 2.1. Organizational structure
2.1.1. Centralization/Decentralization 2.1.1.1. Centralization/Global standardization/Bureaucracy 2.1.1.2. HQ's attitude not to disclosure inconvenient cases 2.1.1.3. Partial localization under global standardization strategy
2.1.2. Decentralization 2.1.3. Silo operations
2.2. Absorptive capacity 2.2.1. Prior related knowledge
2.2.1.1. Knowledge level comparison on the level of companies 2.2.1.1.1. Equivalent knowledge level between HP and Japanese customers 2.2.1.1.2. Knowledge level difference among Japanese customers 2.2.1.1.3. Japanese customers' higher skill of articulating each issue 2.2.1.1.4. Effort to bridge knowledge gap between companies
2.2.1.2. Knowledge regarding TQC 2.2.1.2.1. Japanese customers' attitude to find root causes 2.2.1.2.2. Lack of TQC concept in HP HQ/Lack of concept of ‘Suihei Tenkai’ in HP HQ
2.2.1.2.2.1. HP HQ's tendency to stop at short-term containment /Symptomatic treatment (‘Taishou-Ryouhou’)
2.2.1.2.3. Wide coverage of partners' own customers/Necessity of ‘Suihei Tenkai’ 2.2.1.2.4. Japanese customers' requests to reveal every information in advance 2.2.1.2.5. Effort to educate foreign employees about TQC concept
2.2.1.3. Knowledge utilization from partners’ own brand products to HP's products 2.2.1.4. Japanese customers' early involvement in design phase
2.2.1.4.1. Co-work in testing in a US plant by HP HQ and Japanese customers 2.2.1.5. Knowledge level comparison on the level of individual
2.2.1.5.1. Superior technical knowledge of HP lab engineers to engineers of Japanese customers
2.2.1.5.2. Coverage of wider topics by individuals of Japanese customers 2.2.1.5.3. Skill-set fit by senders and receivers of knowledge 2.2.1.5.4. Accumulated knowledge through long-term experience
2.2.1.6. Knowledge accumulation and fixation in an organization
[235]
2.2.1.7. Difference of level of seriousness to Japanese customers 2.2.1.8. Acting as an intermediary/Feedback of partners’ requirements to the US people
2.2.1.8.1. Raising awareness among the HP HQ people/Education to the HP HQ people/Effort to increase the number of supporters
2.2.1.8.2. Bringing new members to WinG or JQR to let them feel the way the meetings are held in Japan/Enlightenment process/Awareness (‘Kizuki’) process
2.2.1.8.2.1. Difficulty to persuade managers in bringing people to Japan 2.2.1.8.3. Expatriate role as a native Japanese
2.2.1.8.3.1. Education to HP-J people not to accept partners requests so easily 2.2.1.8.4. Ability to apply the specs for Japanese customers to other products for other
countries 2.2.1.8.5. Mutual application of knowledge between JQR and WinG 2.2.1.8.6. High/low motivation to listen to Japanese customers' requirements
2.3. Disseminative capacity 2.3.1. Lower disseminative capacity
2.3.1.1. Lower language skill 2.3.1.2. Japanese people's hesitation to speak to others straightforwardly 2.3.1.3. Non-necessity to report to HP HQ 2.3.1.4. Efforts to improve Japanese employees' English skill
2.3.2. Higher disseminative capacity 2.3.2.1. Higher language skill 2.3.2.2. Effort to let foreigners know at the timing of F2F meeting
2.4. Communication process 2.4.1. Communication process (outside F2F meetings)
2.4.1.1. Lack of information through the ‘Chinese whisper’ (‘Dengon’ game) process 2.4.1.2. Difficulty of communication via emails 2.4.1.3. Establishing a communication protocol
2.4.1.3.1. Homogeneity of results 2.4.1.3.2. Speed of transfer 2.4.1.3.3. Utilization of SharePoint 2.4.1.3.4. Lack of adequate internal communication process
2.4.1.4. Interim meetings between HP-J and Japanese customers 2.4.1.5. Regular meetings where attendees can speak frankly
2.4.2. Communication process (inside F2F meetings) 2.4.2.1. Importance of F2F meeting/Face expression/Visual (non-verbal) cues/ Body language)
2.4.2.1.1. Frustration of miscommunication through conference call 2.4.2.2. Utilization of Halo video-conferencing system/Less physical face-to-face and more
virtual meetings 2.4.2.3. Lync 2.4.2.4. Interjection by HP-J people 2.4.2.5. Tripartite meeting in one place
2.4.2.5.1. Direct communication between Japanese customers and HP HQ people 2.4.2.6. Enablement of getting to know the right person in charge through F2F meetings 2.4.2.7. Visit to a plant or lab in the US to understand the actual operations
2.4.3. Translation 2.4.3.1. Existence of language barrier
2.4.3.1.1. Prior consent of technical terms 2.4.3.1.2. Ambiguity of Japanese language
2.4.3.2. Simultaneous/consecutive translation 2.4.3.2.1. Essentiality (necessity) of simultaneous translation 2.4.3.2.2. High overhead (*overhead = a load for a processor to transact some jobs
necessary for the purpose different from the original one)
[236]
2.4.3.2.3. Limit of translators’ ability/Impossibility to translate the context behind the words 2.4.3.2.3.1. Cultural translation
2.4.3.2.4. Skill level difference by each translator 2.4.3.2.4.1. Experienced translators who know even the customer's specific background
2.4.3.2.5. Translation check by bi-lingual HP-J people 2.4.3.2.6. Document check in advance by native English speaker
2.4.4. Interpretation (‘Kaishkau’) 2.4.4.1. Interpretation affected by culture
2.4.5. Continuous improvement of communication 2.4.5.1. Action items (Issues) management 2.4.5.2. Focus on special topics for deep discussion 2.4.5.3. More focus on preventive actions rather than reactive way of solving issues
3. Network dimensions 3.1. Network ties
3.1.1. Ties between Japanese customers and HP HQ 3.1.1.1. Japanese customers’ co-work with design engineers of HP HQ 3.1.1.2. Respect to the HP HQ team from recognition of influence 3.1.1.3. Importance of HP senior management's attendance to meetings held in Japan 3.1.1.4. Direct communication between Japanese customers and HP HQ people at meetings held
in the US 3.1.2. Ties between Japanese customers and HP-J
3.1.2.1. HP-J’s easier acceptance of Japanese customers’ requests/Empathy through the “mirror neurons”
3.1.2.2. Frequent interim meetings between HP-J and partners before/after WinG 3.1.2.3. Creation of sense of togetherness as a “Japanese team”
3.1.3. Ties between HP HQ and HP-J 3.1.3.1. Unclear positioning of HP-J 3.1.3.2. Exploitation of “gaijin” at a difficult situation 3.1.3.3. Unsubstantial relationship between HP HQ and HP-J 3.1.3.4. Strong tie between HP HQ and HP-J
3.1.3.4.1. Formation of a close team of people 3.1.3.4.2. Respect to the HP HQ team/Respect to “Gaijin”
3.1.4. Social activities/Informal meetings 3.1.4.1. Building up relationships/Understanding personal characters through sharing personal
life or personal interest 3.1.4.1.1. Enabling to foresee each person’s reaction
3.1.4.2. Establishing a linkage at a different level 3.1.4.2.1. Exchange of unofficial views
3.1.4.3. Buffer effect in troubled times/Lessening the tension 3.1.4.4. Development of trust through social activities 3.1.4.5. Personal ability to connect on an informal level 3.1.4.6. Enabling to understand all the people in the world have no difference
4. Cultural distance 4.1. Uniqueness of Japanese culture
4.1.1. Respect to customers/ “Customer is God” 4.1.2. Culture of apologies 4.1.3. Face-saving culture/Reputation 4.1.4. Showing dedication (hardworking attitude) even in case of a hopeless situation 4.1.5. Preference of homogeneity in society 4.1.6. Avoidance to upset customers 4.1.7. Emotional appeal to HP HQ rather than logical background 4.1.8. Valuing visibility as much as functionality
[237]
4.1.9. Quality mind-set in Japan/Commitment to quality/Continuous improvement 4.1.10. Hierarchical structure in Japanese companies – rigidity
4.1.10.1. Seating order in a meeting 4.1.11. Difficulty to argue with each person’s boss in a straight way 4.1.12. Less participation of women in the workplace 4.1.13. Japan's culture of doing more than you need to
4.1.13.1. Ability to find something abnormal by front-line workers in Japanese companies 4.2. Cultural difference between US and Japan
4.2.1. Collective responsibility vs. individual responsibility 4.2.1.1. Collectivism (Japan)
4.2.1.1.1. “Must-do” philosophy in Japanese companies in case of serious quality issue 4.2.1.1.2. Japanese customers' bulldozing way of raising their request
4.2.1.2. Individualism (US) 4.2.1.2.1. Division of labour (‘Bungyou’) 4.2.1.2.2. Rule of non-aggression to another employee’s territory 4.2.1.2.3. Rigid belief not swayed by external big voices
4.2.1.3. Cellular Manufacturing style vs. Mass Production style 4.2.2. Generalists vs. specialists 4.2.3. Lifetime employment (‘Shushin Koyo’) vs. result-based HR management (‘Seika Shugi’)
4.2.3.1. Difficulty to find designers of a certain model 4.2.4. Difference in cost consciousness/Cost consciousness consistent from the upper management
level to individual level 4.2.5. Difference of expectations level 4.2.6. Difference of loyalty level between Japan and US
4.3. Cultural difference on individual level/Micro-culture 4.3.1. Ability to bridge the gap/Intrinsicalness to accept foreign culture/Tolerance and respectfulness
4.3.1.1. Understanding foreign culture through direct contacts/Immersion process 4.4. Culture in general
4.4.1. Culture as sharing the common experience 4.4.2. Non-existence of culture gap, existence of only culture difference 4.4.3. Homogeneity of essence as a human being
5. Knowledge transfer effectiveness 5.1. Existence of communication gap
5.1.1. Compromised solution 5.1.2. Breakdown in negotiation/Very conceptual level of argument 5.1.3. Frustration from miscommunication
5.2. Effective communication 5.2.1. Communication improvement over time 5.2.2. Relief of frustration
5.3. Speed of transfer 6. Performance
6.1. Business growth 6.1.1. WinG as an opportunity to bring more business/Additional value 6.1.2. Necessary condition to participate in the game/Quality improvement as one component of
many things that can be done to drive revenue growth 6.1.3. Fixation of an image of a firm assuring high quality 6.1.4. Business growth with repeat-purchasers 6.1.5. Balance between quality and business 6.1.6. Co-work with HP as a strength appealing to end-users
6.2. TCE improvement 6.3. Quality improvement leading to total cost reduction 6.4. Cost increase
[238]
B) Final template (58 codes)
1. Knowledge type 1.1. Information type
1.1.1. Protocol 1.1.2. Codifiability
1.2. Know-how type 1.2.1. ‘Anmoku-no-ryoukai’ (Common understanding you do not need to explain to others) 1.2.2. Slang among Americans 1.2.3. Tacitness in Japanese language/culture 1.2.4. Complexity of Japanese partner structure 1.2.5. Proprietary
2. HQ’s absorptive capacity 2.1. Prior related knowledge
2.1.1. Knowledge regarding TQC 2.1.2. “Suihei Tenkai" (Application of improvement technique/method to other similar products) 2.1.3. “Taishou Ryouhou” (Symptomatic treatment) 2.1.4. Knowledge accumulation over time
2.2. Employees’ roles 2.2.1. Education to the HP HQ people/Effort to increase the number of supporters 2.2.2. Enlightenment process 2.2.3. Effort to bring more employees to Japan 2.2.4. Expatriate role
2.3. Direct path 2.3.1. Direct communication between Japanese customers and HP HQ people
3. Subsidiary’s disseminative capacity 3.1. Skill
3.1.1. Lower language skill 3.1.2. Difficulty of communication via emails 3.1.3. Protocol establishment 3.1.4. Regular meetings where attendees can speak frankly 3.1.5. Communication process (inside F2F meetings) 3.1.6. Effect of F2F meetings
3.2. Motivation 3.2.1. Hesitation 3.2.2. Non-necessity of reporting to HQ
4. Tie strength 4.1. Formal
4.1.1. Direct communication between Japanese customers and HP HQ people 4.1.2. Partner’s co-work with HQ in design phase
4.2. Informal 4.2.1. Social activities 4.2.2. Building up relationships
5. Cultural differences 5.1. Unique Japanese culture 5.2. Cultural difference between US and Japan 5.3. Micro culture 5.4. Non-existence of culture gap
6. Language proficiency 6.1. Lower language skill 6.2. Language barrier
[239]
6.3. Ambiguity of Japanese language 6.4. Simultaneous/consecutive translation 6.5. Impossibility to translate the context behind the words 6.6. Cultural translation 6.7. Interpretation
7. Subsidiary roles 7.1. Autonomy
7.1.1. Centralization 7.1.2. Decentralization
[240]
References ADLER, P. S. & KWON, S.-W. 2002. Social Capital: Prospects for a New Concept. The Academy
of Management Review, 27, 17-40. AHAMMAD, M. F., TARBA, S. Y., LIU, Y. & GLAISTER, K. W. 2016. Knowledge transfer and
cross-border acquisition performance: The impact of cultural distance and employee retention. International Business Review, 25, 66-75.
AMBOS, B. & SCHLEGELMILCH, B. B. 2007. Innovation and control in the multinational firm: A comparison of political and contingency approaches. Strategic Management Journal, 28, 473-486.
AMBOS, T. C. & AMBOS, B. 2009. The impact of distance on knowledge transfer effectiveness in multinational corporations. Journal of International Management, 15, 1-14.
AMBOS, T. C., AMBOS, B. & SCHLEGELMILCH, B. B. 2006. Learning from foreign subsidiaries: An empirical investigation of headquarters' benefits from reverse knowledge transfers. International Business Review, 15, 294-312.
ANDERSSON, U., HOLM, D. B. & JOHANSON, M. 2005. OPPORTUNITIES, RELATIONAL EMBEDDEDNESS AND NETWORK STRUCTURE. The 21st IMP-conference. Rotterdam, Netherlands.
APETREI, A., KURESHI, N. I. & HORODNIC, I. A. 2015. When culture shapes international business. Journal of Business Research, 68, 1519-1521.
ARGOTE, L. & INGRAM, P. 2000. Knowledge Transfer: A Basis for Competitive Advantage in Firms. Organizational Behavior and Human Decision Processes, 82, 150-169.
ASAKAWA, K. 2001. Evolving headquarters-subsidiary dynamics in international R&D: the case of Japanese multinationals. R&D Management, 31, 1-14.
ASMUSSEN, C. G., FOSS, N. J. & PEDERSEN, T. 2013. Knowledge Transfer and Accommodation Effects in Multinational Corporations: Evidence from European Subsidiaries. Journal of Management, 39, 1397-1429.
ASTLEY, W. G. & ZAJAC, E. J. 1991. INTRAORGANIZATIONAL POWER AND ORGANIZATIONAL DESIGN: RECONCILING RATIONAL AND COALITIONAL MODELS OF ORGANIZATION. Organization Science, 2, 399-411.
ATTEWELL, P. 1992. TECHNOLOGY DIFFUSION AND ORGANIZATIONAL LEARNING: THE CASE OF BUSINESS COMPUTING. Organization Science, 3, 1-19.
BARTLETT, C. A. & GHOSHAL, S. 1986. Tap your subsidiaries for global reach. Harvard Business Review, 64, 87-94.
BARTLETT, C. A. & GHOSHAL, S. 1989. Managing Across Borders: The Transnational Solution, Boston, MA. , Harvard Business School Press.
BENSAOU, M. & EARL, M. 1998. The right mind-set for managing information technology. Harvard Business Review, 76, 118-129.
BERRY, H. 2015. KNOWLEDGE INHERITANCE IN GLOBAL INDUSTRIES: THE IMPACT OF PARENT FIRM KNOWLEDGE ON THE PERFORMANCE OF FOREIGN SUBSIDIARIES. Academy of Management Journal, 58, 1438-1458.
BHAGAT, R. S., KEDIA, B. L., HARVESTON, P. D. & TRIANDIS, H. C. 2002. Cultural Variations in the Cross-Border Transfer of Organizational Knowledge: An Integrative Framework. The Academy of Management Review, 27, 204-221.
BIRKINSHAW, J., NOBEL, R. & RIDDERSTRALE, J. 2002. Knowledge as a Contingency Variable: Do the Characteristics of Knowledge Predict Organization Structure? Organization Science, 13, 274-289.
[241]
BIRKINSHAW, J. M. & MORRISON, A. J. 1995. Configurations of Strategy and Structure in Subsidiaries of Multinational Corporations. Journal of International Business Studies, 26, 729-753.
BJÖRKMAN, I., BARNER-RASMUSSEN, W. & LI, L. 2004. Managing knowledge transfer in MNCs: the impact of headquarters control mechanisms. Journal of International Business Studies, 35, 443-455.
BJÖRKMAN, I., STAHL, G. K. & VAARA, E. 2007. Cultural Differences and Capability Transfer in Cross-Border Acquisitions: The Mediating Roles of Capability Complementarity, Absorptive Capacity, and Social Integration. Journal of International Business Studies, 38, 658-672.
BLAIKIE, N. 2007. Approaches to Socail Enquiry, Cambridge, Polity Press. BODDEWYN, J. J., SOEHL, R. & PICARD, J. 1986. Standardization in international marketing: Is
Ted Levitt in fact right? Business Horizons, 29, 69-75. BRIDGEWATER, S. & EGAN, C. 2002. International Marketing Relationships (Profitable
Marketing Relationships) Basingstoke, Hampshire, PALGRAVE. BRISLIN, R. W. 1970. Back-Translation for Cross-Cultural Research. Journal of Cross-Cultural
Psychology, 1, 185-216. BUCKLEY, P. J., CARTER, M. J., CLEGG, J. & HUT, T. 2005. Language and Social Knowledge
in Foreign-Knowledge Transfer to China. International Studies of Management & Organization, 35, 47-65.
BUCKLEY, P. J. & CASSON, M. 1976. The Future of Multinational Enterprise, London, Macmillan.
BURR, V. 1995. An Introduction to Social Constructionism, New York, Routledge. CABRERA, Á., COLLINS, W. C. & SALGADO, J. F. 2006. Determinants of individual
engagement in knowledge sharing. International Journal of Human Resource Management, 17, 245-264.
CALVET, A. L. 1981. A Synthesis of Foreign Direct Investment Theories and Theories of the Multinational Firm. Journal of International Business Studies, 12, 43-59.
CAVUSGIL, S. T., CALANTONE, R. J. & ZHAO, Y. 2003. Tacit knowledge transfer and firm innovation capability. The Journal of Business & Industrial Marketing, 18, 6-21.
CAVUSGIL, S. T. & ZOU, S. 1994. Marketing Strategy-Performance Relationship: An Investigation of the Empirical Link in Export Market Ventures. Journal of Marketing, 58, 1-21.
CHAKRAVARTY, B. S. & PERLMUTTER, H. V. 1992. Strategic Planning for a Global Business. In: ROOT, F. R. & VISUDTIBHAN, K. (eds.) International Strategic Management: Challenges and Opportunities. New York: Taylor & Francis.
CHANDLER, A. D., JR. 1962. Strategy and Structure: Chapters in the History of the American Industrial Cambridge, MA, MIT Press.
CHANNON, D. & JALLAND, M. 1979. Multinational Strategic Planning, London, Palgrave Macmillan.
CHILD, J., FAULKNER, D. & PITKETHLY, R. 2000. FOREIGN DIRECT INVESTMENT IN THE UK 1985-1994: THE IMPACT ON DOMESTIC MANAGEMENT PRACTICE. Journal of Management Studies, 37, 141-166.
CHISWICK, B. R. & MILLER, P. W. 2005. Linguistic Distance: A Quantitative Measure of the Distance Between English and Other Languages. Journal of Multilingual and Multicultural Development, 26, 1-11.
CIABUSCHI, F., MARTÍN, O. M. & STÅHL, B. 2010. Headquarters' Influence on Knowledge Transfer Performance. MIR: Management International Review, 50, 471-491.
[242]
COHEN, W. M. & LEVINTHAL, D. A. 1990. Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35, 128-152.
COLLINGS, D. G., MORLEY, M. J. & GUNNIGLE, P. 2008. Composing the top management team in the international subsidiary: Qualitative evidence on international staffing in U.S. MNCs in the Republic of Ireland. Journal of World Business, 43, 197-212.
CROTTY, M. 1998. The Foundations of Social Research, London, SAGE Publications. DAVENPORT, T. H. & PRUSAK, L. 1998. Working Knowledge: How Organizations Manage
What They Know, Boston, Massachusetts, Harvard Business School Press. DOUGLAS, S. P. & WIND, Y. 1987. The Myth of Globalization. Columbia Journal of World
Business, 22, 19. DRAZIN, R. & VAN DE VEN, A. H. 1985. Alternative Forms of Fit in Contingency Theory.
Administrative Science Quarterly, 30, 514-539. DUBOIS, A. & GADDE, L.-E. 2002. Systematic combining: an abductive approach to case
research. Journal of Business Research, 55, 553-560. DUNNING, J. H. & RUGMAN, A. M. 1985. The Influence of Hymer's Dissertation on the Theory
of Foreign Direct Investment. The American Economic Review, 75, 228-232. DYER, W. G., JR. & WILKINS, A. L. 1991. Better Stories, Not Better Constructs, to Generate
Better Theory: A Rejoinder to Eisenhardt. The Academy of Management Review, 16, 613-619.
EASTERBY-SMITH, M., THORPE, R. & JACKSON, P. R. 2008. Management Research, London, SAGE Publications.
EASTON, G. 2010. Critical realism in case study research. Industrial Marketing Management, 39, 118-128.
EDWARDS, T., ALMOND, P., CLARK, I., COLLING, T. & FERNER, A. 2005. Reverse Diffusion in US Multinationals: Barriers from the American Business System. Journal of Management Studies, 42, 1261-1286.
EGELHOFF, W. G. 1982. Strategy and Structure in Multinational Corporations: An Information- Processing Approach. Administrative Science Quarterly, 27, 435-458.
EGELHOFF, W. G. 1991. Information-Processing Theory and the Multinational Enterprise. Journal of International Business Studies, 22, 341-368.
EISENHARDT, K. M. 1989. Building Theories from Case Study Research. Academy of Management Review, 14, 532-550.
FERNER, A., ALMOND, P., CLARK, I., COILING, T., EDWARDS, T., HOLDEN, L. & MULLER-CAMEN, M. 2004. The Dynamics of Central Control and Subsidiary Autonomy in the Management of Human Resources: Case-Study Evidence from US MNCs in the UK. Organization Studies (01708406), 25, 363-391.
FEY, C. F. & FURU, P. 2008. Top management incentive compensation and knowledge sharing in multinational corporations. Strategic Management Journal, 29, 1301-1323.
FLYVBJERG, B. 2006. Five Misunderstandings About Case-Study Research. Qualitative Inquiry, 12, 219-245.
FORSGREN, M. 2004. The use of network theory in MNC research. In: MAHNKE, V. & PEDERSEN, T. (eds.) Knowledge Flows, Governance and the Multinational Enterprise: Frontiers in International Management Research. New York: Palgrave Macmillan.
FOSS, K., FOSS, N. J. & NELL, P. C. 2012. MNC organizational form and subsidiary motivation problems: Controlling intervention hazards in the network MNC. Journal of International Management, 18, 247-259.
FOURAKER, L. E. & STOPFORD, J. M. 1968. Organizational Structure and the Multinational Strategy. Administrative Science Quarterly, 13, 47-64.
[243]
FROST, T. S., BIRKINSHAW, J. M. & ENSIGN, P. C. 2002. Centers of Excellence in Multinational Corporations. Strategic Management Journal, 23, 997-1018.
FROST, T. S. & ZHOU, C. 2005. R&D co-practice and 'reverse' knowledge integration in multinational firms. Journal of International Business Studies, 36, 676-687.
GARUD, R. & NAYYAR, P. R. 1994. Transformative Capacity: Continual Structuring by Intertemporal Technology Transfer. Strategic Management Journal, 15, 365-385.
GATES, S. R. & EGELHOFF, W. G. 1986. Centralization in Headquarters-Subsidiary Relationships. Journal of International Business Studies, 17, 71-92.
GHOSHAL, S. & BARTLETT, C. A. 1988. Creation, Adoption, And Diffusion Of Innovations By Subsidiaries of Multinational Corporations. Journal of International Business Studies, 19, 365-365.
GHOSHAL, S. & BARTLETT, C. A. 1990. The Multinational Corporation as an Interorganizational Network. Academy of Management Review, 15, 603-625.
GOLDEN-BIDDLE, K. & LOCKE, K. 1993. APPEALING WORK: AN INVESTIGATION OF HOW ETHNOGRAPHIC TEXTS CONVINCE. Organization Science, 4, 595-616.
GRANOVETTER, M. S. 1973. The Strength of Weak Ties. American Journal of Sociology, 78, 1360-1380.
GUBA, E. G. & LINCOLN, Y. S. 2005. Paradigmatic Controversies, Contradictions, and Emerging Confluences. In: DENZIN, N. K. & LINCOLN, Y., S. (eds.) The Sage Handbook of Qualitative Research. 3rd ed. Thousand Oaks: Sage Publications.
GUPTA, A. K. & GOVINDARAJAN, V. 1991. KNOWLEDGE FLOWS AND THE STRUCTURE OF CONTROL WITHIN MULTINATIONAL CORPORATIONS. Academy of Management Review, 16, 768-792.
GUPTA, A. K. & GOVINDARAJAN, V. 1994. Organizing for knowledge flows within MNCs. International Business Review, 3, 443-457.
GUPTA, A. K. & GOVINDARAJAN, V. 2000. Knowledge flows within multinational corporations. Strategic Management Journal, 21, 473-496.
HÅKANSON, L. & NOBEL, R. 2000. Technology Characteristics and Reverse Technology Transfer. MIR: Management International Review, 40, 29-48.
HÅKANSON, L. & NOBEL, R. 2001. Organizational Characteristics and Reverse Technology Transfer. MIR: Management International Review, 41, 395-420.
HALINEN, A. & TÖRNROOS, J.-Å. 2005. Using case methods in the study of contemporary business networks. Journal of Business Research, 58, 1285-1297.
HANCOCK, D., R. & ALGOZZINE, B. 2011. Doing Case Study Research: A Practical Guide for Beginning Researchers, New York, Teachers College Press.
HANSEN, M. T. 1999. The Search-Transfer Problem: The Role of Weak Ties in Sharing Knowledge across Organization Subunits. Administrative Science Quarterly, 44, 82-111.
HARZING, A.-W., PUDELKO, M. & SEBASTIAN REICHE, B. 2016. The Bridging Role of Expatriates and Inpatriates in Knowledge Transfer in Multinational Corporations. Human Resource Management, 55, 679-695.
HEDLUND, G. 1980. The role of foreign subsidiaries in strategic decision-making in swedish multinational corporations. Strategic Management Journal, 1, 23-36.
HEDLUND, G. 1986. The Hypermodern MNC -- A Heterarchy? Human Resource Management, 25, 9.
HEDLUND, G. 1994. A Model of Knowledge Management and the N-Form Corporation. Strategic Management Journal, 15, 73-90.
HOFSTEDE, G. 1984. Culture's Consequences: International Differences in Work-Related Values (Cross Cultural Research and Methodology), Newbury Park, CA, SAGE Publications.
[244]
HOLM, U., JOHANSON, J. & THILENIUS, P. 2015. Headquarters' Knowledge of Subsidiary Network Contexts in the Multinational Corporation. In: FORSGREN, M., HOLM, U. & JOHANSON, J. (eds.) Knowledge, Networks and Power: The Uppsala School of International Business. New York: Palgrave Macmillan.
HOLM, U. & SHARMA, D. D. 2006. Subsidiary marketing knowledge and strategic development of the multinational corporation. Journal of International Management, 12, 47-66.
HOLSTEIN, J. A. & GUBRIUM, J. F. 2004. The Active Interview. In: SILVERMAN, D. (ed.) Qualitative Research: Theory, Method and Practice. 2nd ed. London: SAGE Publications.
HUTCHINGS, K. & MICHAILOVA, S. 2004. Facilitating knowledge sharing in Russian and Chinese subsidiaries: the role of personal networks and group membership. Journal of Knowledge Management, 8, 84-94.
HYMER, S. H. 1976. The International Operations of National Firms: A Study of Direct Foreign Investment, Cambridge, MA, MIT Press.
INKPEN, A. C. & BEAMISH, P. W. 1997. KNOWLEDGE, BARGAINING POWER, AND THE INSTABILITY OF INTERNATIONAL JOINT VENTURES. Academy of Management Review, 22, 177-202.
INKPEN, A. C. & TSANG, E. W. K. 2005. SOCIAL CAPITAL, NETWORKS, AND KNOWLEDGE TRANSFER. Academy of Management Review, 30, 146-165.
ISHIKAWA, K. 1985. What Is Total Quality Control?: The Japanese Way, Englewood Cliffs, N.J. , Prentice-Hall.
JAIN, S. C. 1989. Standardization of International Marketing Strategy: Some Research Hypotheses. Journal of Marketing, 53, 70-79.
JÄRVENSIVU, T. & TÖRNROOS, J.-Å. 2010. Case study research with moderate constructionism: Conceptualization and practical illustration. Industrial Marketing Management, 39, 100-108.
JIMENÉZ-JIMENÉZ, D., MARTÍNEZ-COSTA, M. & SANZ-VALLE, R. 2014. MNCs Innovation, Reverse Knowledge Transfer and Firm Absorptive Capacity. Electronic Journal of Knowledge Management, 12, 47-55.
JONSSON, A. 2008. A transnational perspective on knowledge sharing: lessons learned from IKEA's entry into Russia, China and Japan. The International Review of Retail, Distribution and Consumer Research, 18, 17-44.
KATSIKEAS, C. S., SAMIEE, S. & THEODOSIOU, M. 2006. Strategy Fit and Performance Consequences of International Marketing Standardization. Strategic Management Journal, 27, 867-890.
KEDIA, B. L. & BHAGAT, R. S. 1988. Cultural Constraints on Transfer of Technology across Nations: Implications for Research in International and Comparative Management. The Academy of Management Review, 13, 559-571.
KING, N. 1998. Template analysis. In: SYMON, G. & CASSELL, C. (eds.) Qualitative methods and analysis in organizational research: A practical guide. Thousand Oaks, CA: Sage Publications Ltd.
KING, N. 2012. Doing Template Analysis. In: SYMON, G. & CASSELL, C. (eds.) Qualitative Organizational Research: Core Methods and Current Challenges. Thousand Oaks, CA: Sage Publications Ltd.
KOGUT, B. 1989. A Note on Global Strategies. Strategic Management Journal, 10, 383-389. KOGUT, B. & SINGH, H. 1988. The Effect of National Culture on the Choice of Entry Mode.
Journal of International Business Studies, 19, 411-432.
[245]
KOGUT, B. & ZANDER, U. 1992. KNOWLEDGE OF THE FIRM, COMBINATIVE CAPABILITIES, AND THE REPLICATION OF TECHNOLOGY. Organization Science, 3, 383-397.
KOGUT, B. & ZANDER, U. 1993. Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation. Journal of International Business Studies, 24, 625-645.
KRACKHARDT, D. 1992. The strength of strong ties. In: NOHRIA, N. & ECCLES, R. G. (eds.) Networks and organizations: Structure, form and action. Boston: Harvard Business School Press.
KUMAR, N. 2013. Managing reverse knowledge flow in multinational corporations. Journal of Knowledge Management, 17, 695-708.
KUTSCHKER, M. & SCHURIG, A. 2002. Embeddedness of Subsidiaries in Internal and External Netoworks: Prerequisite for Technological Change. In: HAVILA, V., FORSGREN, M. & HÅKANSSON, H. (eds.) Critical Perspectives on Internationalisation. Kidlington, Oxford: Elsevier Science.
KVALE, S. 1995. The Social Construction of Validity. Qualitative Inquiry, 1, 19-40. LANE, P. J., SALK, J. E. & LYLES, M. A. 2001. Absorptive Capacity, Learning, and Performance
in International Joint Ventures. Strategic Management Journal, 22, 1139-1161. LEVITT, T. 1983. The globalization of markets. Harvard Business Review, 61, 92. LONGINO, H. E. 2001. The Fate of Knowledge, Oxford, Princeton University Press. LORANGE, P. 2002. Developing an Internally Driven Growth Strategy in Network Organizations:
An Organizational Learning Approach. In: HAVILA, V., FORSGREN, M. & HÅKANSSON, H. (eds.) Critical Perspectives on Internationalisation. Kidlington, Oxford: Elsevier Science.
LORANGE, P. & PROBST, G. 1990. Effective strategic planning processes in the multination corporation. In: BARTLETT, C. A., DOZ, Y. & HEDLUND, G. (eds.) Managing the Global Firm. London: Routledge.
MAK, W. M. 1999. Cultivating a quality mind-set. Total Quality Management 10, 622-626. MALNIGHT, T. W. 1996. The Transition from Decentralized to Network-Based MNC Structures:
An Evolutionary Perspective. Journal of International Business Studies, 27, 43-65. MARCUS, A. A. & NICHOLS, M. L. 1999. On the Edge: Heeding the Warnings of Unusual
Events. Organization Science, 10, 482-499. MARQUARDT, M. J. 1996. Building the Learning Organization: A Systems Approach to Quantum
Improvement, New York, McGraw-Hill. MARSCHAN-PIEKKARI, R., WELCH, D. & WELCH, L. 1999. In the shadow: the impact of
language on structure, power and communication in the multinational. International Business Review, 8, 421-440.
MARTIN, X. & SALOMON, R. 2003. Knowledge Transfer Capacity and Its Implications for the Theory of the Multinational Corporation. Journal of International Business Studies, 34, 356-373.
MCGUINNESS, M., DEMIRBAG, M. & BANDARA, S. 2013. Towards a multi-perspective model of reverse knowledge transfer in multinational enterprises: A case study of Coats plc. European Management Journal, 31, 179-195.
MICHAILOVA, S. & MUSTAFFA, Z. 2012. Subsidiary knowledge flows in multinational corporations: Research accomplishments, gaps, and opportunities. Journal of World Business, 47, 383-396.
MILLAR, C. C. J. M. & CHOI, C. J. 2009. Reverse knowledge and technology transfer: imbalances caused by cognitive barriers in asymmetric relationships. International Journal of Technology Management, 48, 389-402.
[246]
MINBAEVA, D. 2007. Knowledge transfer in multinational corporations. Management International Review, 47, 567-593.
MINBAEVA, D., PEDERSEN, T., BJÖRKMAN, I., FEY, C. F. & PARK, H. J. 2014. MNC knowledge transfer, subsidiary absorptive capacity and HRM. Journal of International Business Studies, 45, 38-51.
MINBAEVA, D. B. & MICHAILOVA, S. 2004. Knowledge transfer and expatriation in multinational corporations: The role of disseminative capacity. Employee Relations, 26, 663 - 679.
MUDAMBI, R. & NAVARRA, P. 2004. Is Knowledge Power? Knowledge Flows, Subsidiary Power and Rent-Seeking within MNCs. Journal of International Business Studies, 35, 385-406.
MUDAMBI, R., PISCITELLO, L. & RABBIOSI, L. 2014. Reverse Knowledge Transfer in MNEs: Subsidiary Innovativeness and Entry Modes. Long Range Planning, 47, 49-63.
NAHAPIET, J. & GHOSHAL, S. 1998. Social Capital, Intellectual Capital, and the Organizational Advantage. The Academy of Management Review, 23, 242-266.
NAIR, S. R., DEMIRBAG, M. & MELLAHI, K. 2016. Reverse knowledge transfer in emerging market multinationals: The Indian context. International Business Review, 25, 152-164.
NAJAFI-TAVANI, Z., ZAEFARIAN, G., NAUDÉ, P. & GIROUD, A. 2015. Reverse knowledge transfer and subsidiary power. Industrial Marketing Management, 48, 103-110.
NIGHTINGALE, D. J. & CROMBY, J. 2002. Social Constructionism as Ontology: Exposition and Example. Theory & Psychology, 12, 701-713.
NOBEL, R. & BIRKINSHAW, J. 1998. Innovation in Multinational Corporations: Control and Communication Patterns in International R&D Operations. Strategic Management Journal, 19, 479-496.
NOHRIA, N. & GHOSHAL, S. 1997. The Differentiated Network: Organizing Multinational Corporations for Value Creation, San Francisco, CA, Jossey-Bass.
NONAKA, I. 1991. The Knowledge-Creating Company. Harvard Business Review, 69, 96-104. NONAKA, I. 1994. A Dynamic Theory of Organizational Knowledge Creation. Organization
Science, 5, 14-37. NOORDERHAVEN, N. & HARZING, A.-W. 2009. Knowledge-Sharing and Social Interaction
within MNEs. Journal of International Business Studies, 40, 719-741. OHMAE, K. 1999. The Borderless World: Power and Strategy in the Interlinked Economy, New
York, HarperCollins. PARENT, R., ROY, M. & ST-JACQUES, D. 2007. A systems-based dynamic knowledge transfer
capacity model. Journal of Knowledge Management, 11, 81 - 93. PARK, C., VERTINSKY, I. & MINBAEVA, D. 2013. THE INFLUENCE OF FOREIGN
PARTNERS' DISSEMINATIVE CAPACITIES ON KNOWLEDGE TRANSFERS TO INTERNATIONAL JOINT VENTURES. Frederiksberg: Copenhagen Business School.
PATEL, P. & PAVITT, K. 1991. LARGE FIRMS IN THE PRODUCTION OF THE WORLD'S TECHNOLOGY: AN IMPORTANT CASE OF "NON-GLOBALISATION". Journal of International Business Studies, 22, 1-21.
PATTON, M. Q. 2001. Qualitative Research & Evaluation Methods, Thousand Oaks, CA, Sage Publication.
PELTOKORPI, V. 2015. Corporate Language Proficiency and Reverse Knowledge Transfer in Multinational Corporations: Interactive Effects of Communication Media Richness and Commitment to Headquarters. Journal of International Management, 21, 49-62.
[247]
PELTOKORPI, V. & VAARA, E. 2014. Knowledge transfer in multinational corporations: Productive and counterproductive effects of language-sensitive recruitment. J Int Bus Stud, 45, 600-622.
POLANYI, M. 1966. The Tacit Dimension, London, Routledge & Kegan Paul. RABBIOSI, L. 2011. Subsidiary roles and reverse knowledge transfer: An investigation of the
effects of coordination mechanisms. Journal of International Management, 17, 97-113. RAU, P. A. & PREBLE, J. F. 1987. STANDARDISATION OF MARKETING STRATEGY BY
MULTINATIONALS. International Marketing Review, 4, 18-28. REAGANS, R. & MCEVILY, B. 2003. Network Structure and Knowledge Transfer: The Effects of
Cohesion and Range. Administrative Science Quarterly, 48, 240-267. REED, R. & DEFILLIPPI, R. J. 1990. Causal Ambiguity, Barriers to Imitation, and Sustainable
Competitive Advantage. The Academy of Management Review, 15, 88-102. REYBOLD, L. E., LAMMERT, J. D. & STRIBLING, S. M. 2013. Participant selection as a
conscious research method: thinking forward and the deliberation of ‘Emergent’ findings. Qualitative Research, 13, 699-716.
RIESENBERGER, J. R. 1998. Knowledge: The Source of Sustainable Competitive Advantage. Journal of International Marketing, 6, 94-107.
ROSENZWEIG, P. M. & SINGH, J. V. 1991. ORGANIZATIONAL ENVIRONMENTS AND THE MULTINATIONAL ENTERPRISE. Academy of Management Review, 16, 340-361.
ROUSSEAU, D. M., SITKIN, S. B., BURT, R. S. & CAMERER, C. 1998. NOT SO DIFFERENT AFTER ALL: A CROSS-DISCIPLINE VIEW OF TRUST. Academy of Management Review, 23, 393-404.
ROWLEY, T., BEHRENS, D. & KRACKHARDT, D. 2000. Redundant Governance Structures: An Analysis of Structural and Relational Embeddedness in the Steel and Semiconductor Industries. Strategic Management Journal, 21, 369-386.
RUGMAN, A. M. 1986. NEW THEORIES OF THE MULTXNATIONAL ENTERPRISE: AN ASSESSMENT OF INTERNALIZATION THEORY. Bulletin of Economic Research, 38, 101-118.
SANCHEZ-VIDAL, M. E., SANZ-VALLE, R. & BARBA-ARAGON, M. I. 2016. Repatriates and reverse knowledge transfer in MNCs. The International Journal of Human Resource Management, 27, 1-19.
SAYER, A. 1992. Method in Social Science, London, Routledge. SCHLEGELMILCH, B. B. & CHINI, T. C. 2003. Knowledge transfer between marketing functions
in multinational companies: a conceptual model. International Business Review, 12, 215-232.
SCHMID, S. & KOTULLA, T. 2011. 50 years of research on international standardization and adaptation—From a systematic literature analysis to a theoretical framework. International Business Review, 20, 491-507.
SCHMID, S., SCHURIG, A. & KUTSCHKER, M. 2002. The MNC as a network: a closer look at intraorganizational flows. In: LUNDAN, S. M. (ed.) Network Knowledge in International Business (New Horizons in International Business Series). London: Edward Elgar Pub.
SCHONBERGER, R. J. 2007. Japanese production management: An evolution—With mixed success. Journal of Operations Management, 25, 403-419.
SHEREMATA, W. A. 2000. CENTRIFUGAL AND CENTRIPETAL FORCES IN RADICAL NEW PRODUCT DEVELOPMENT UNDER TIME PRESSURE. Academy of Management Review, 25, 389-408.
SIMONIN, B. L. 1999a. Ambiguity and the Process of Knowledge Transfer in Strategic Alliances. Strategic Management Journal, 20, 595-623.
[248]
SIMONIN, B. L. 1999b. Transfer of Marketing Know-How in International Strategic Alliances: An Empirical Investigation of the Role and Antecedents of Knowledge Ambiguity. Journal of International Business Studies, 30, 463-490.
SONG, J. 2014. Subsidiary absorptive capacity and knowledge transfer within multinational corporations. Journal of International Business Studies, 45, 73-84.
STAKE, R. E. 1995. The Art of Case Study Research, Thousand Oaks, CA, SAGE Publications. SUGIMORI, Y., KUSUNOKI, K., CHO, F. & UCHIKAWA, S. 1977. Toyota production system
and Kanban system Materialization of just-in-time and respect-for-human system. International Journal of Production Research, 15, 553-564.
SYMON, G. & CASSELL, C. 1998. Reflections on the Use of Qualitative Methods. In: SYMON, G. & CASSELL, C. (eds.) Qualitative Methods and Analysis in Organizational Research. London: SAGE Publications.
SZULANSKI, G. 1996. Exploring Internal Stickiness: Impediments to the Transfer of Best Practice Within the Firm. Strategic Management Journal, 17, 27-43.
TAN, Q. & SOUSA, C. M. P. 2013. International Marketing Standardization. Management International Review, 53, 711-739.
TEECE, D. J. 1977. TECHNOLOGY TRANSFER BY MULTINATIONAL FIRMS: THE RESOURCE COST OF TRANSFERRING TECHNOLOGICAL KNOW-HOW. Economic Journal, 87, 242-261.
TEMIZ, D. & GÖKMEN, A. 2014. FDI inflow as an international business operation by MNCs and economic growth: An empirical study on Turkey. International Business Review, 23, 145-154.
THEODOSIOU, M. & LEONIDOU, L. C. 2003. Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research. International Business Review, 12, 141-171.
TOMASSEN, S., BENITO, G. R. G. & LUNNAN, R. 2012. Governance costs in foreign direct investments: A MNC headquarters challenge. Journal of International Management, 18, 233-246.
TROMPENAARS, F. & HAMPDEN-TURNER, C. 1997. Riding the Waves of Culture: Understanding Diversity in Global Business. Riding the Waves of Culture: Understanding Diversity in Global Business London: Nicholas Brealey Publishing.
TSAI, W. 2000. Social Capital, Strategic Relatedness and the Formation of Intraorganizational Linkages. Strategic Management Journal, 21, 925-939.
TSAI, W. 2001. KNOWLEDGE TRANSFER IN INTRAORGANIZATIONAL NETWORKS: EFFECTS OF NETWORK POSITION AND ABSORPTIVE CAPACITY ON BUSINESS UNIT INNOVATION AND PERFORMANCE. Academy of Management Journal, 44, 996-1004.
TSANG, E. W. K. 2014. Generalizing from Research Findings: The Merits of Case Studies. International Journal of Management Reviews, 16, 369-383.
TUSHMAN, M. L. 1977. Special Boundary Roles in the Innovation Process. Administrative Science Quarterly, 22, 587-605.
VAN WIJK, R., JANSEN, J. J. P. & LYLES, M. A. 2008. Inter- and Intra-Organizational Knowledge Transfer: A Meta-Analytic Review and Assessment of its Antecedents and Consequences. Journal of Management Studies, 45, 830-853.
VERBEKE, A. & ASMUSSEN, C. G. 2016. Global, Local, or Regional? The Locus of MNE Strategies. Journal of Management Studies, 53, 1051-1075.
VERNON, R. 1966. INTERNATIONAL INVESTMENT AND INTERNATIONAL TRADE IN THE PRODUCT CYCLE. Quarterly Journal of Economics, 80, 190-207.
[249]
VON HIPPEL, E. 1994. "Sticky Information" and the Locus of Problem Solving: Implications for Innovation. Management Science, 40, 429-439.
WALTER, J., LECHNER, C. & KELLERMANNS, F. W. 2007. Knowledge transfer between and within alliance partners: Private versus collective benefits of social capital. Journal of Business Research, 60, 698-710.
WELCH, D. E. & WELCH, L. S. 2008. The Importance of Language in International Knowledge Transfer. MIR: Management International Review, 48, 339-360.
WERNERFELT, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5, 171-180.
WIND, Y. 1986. The Myth of Globalization. The Journal of Consumer Marketing, 3, 23. WINTER, S. G. 1987. Knowledge and competence as strategic assets. In: TEECE, D. J. (ed.) The
Competitive Challenge: Strategies for Industrial Innovation and Renewal (Business Strategies Series). Cambridge, MA: Ballinger Publishing Company.
WOLF, J. & EGELHOFF, W. G. 2013. An empirical evaluation of conflict in MNC matrix structure firms. International Business Review, 22, 591-601.
YAMAO, S. & PELTOKORPI, V. Year. Host Country National’s Corporate Language Proficiency and Reverse Knowledge Transfer in Multinational Corporations. In: The 9th International Workshop of Groupe d’Etudes Management et Langage (GEM&L) on Management and Language, 2015 Helsinki. 1-41.
YAMIN, M. & OTTO, J. 2004. Patterns of knowledge flows and MNE innovative performance. Journal of International Management, 10, 239-258.
YANG, Q., MUDAMBI, R. & MEYER, K. E. 2008. Conventional and Reverse Knowledge Flows in Multinational Corporations. Journal of Management, 34, 882-902.
YIN, R. K. 2009. Case Study Research, Design and Methods, Fourth Edition, London, SAGE Publications.
ZOU, S., ANDRUS, D. M. & NORVELL, D. W. 1997. Standardization of international marketing strategy by firms from a developing country. International Marketing Review, 14, 107-123.
