Rationale of the Study - 從台灣母公司到越南子公司之知識移轉: 中階管理之中介效果

Chapter 1 Introduction

1.1 Rationale of the Study

Chapter 1 Introduction

1.1. Rationale of the study

In order to gain certain improvements in direct investment overseas, most of multinational corporations (MNCs) have realized the significance of knowledge transfer. Today in the global competitive environment, knowledge is one of the most important assets of all the resources of a company (Martins & Antonio, 2010a). And knowledge is considered the most significantly important resource and a key

determinant of the company’s performance (Grant, 1996). The cross-border

knowledge transfer is considered an indispensable way to enhance competitiveness, exploit opportunities and promote development of subsidiaries. This is because most of the knowledge base of subsidiaries of MNCs operating in developing countries remains weak. Without knowledge transfer from MNCs headquarters, it is difficult for subsidiaries to improve capacities, survive and succeed (Wang, Tong, & Koh, 2003).

Based on the characteristics of knowledge transfer it can be seen that the knowledge transfer process from the parent firms in developed countries to their subsidiaries operating in developing countries depends on three groups of determinants: the characteristics of knowledge source, the characteristics of knowledge recipients and the relationship between transmitters and recipients (Martins & Antonio, 2010a; Minbaeva, 2007; Szulanski, 2000).

Regarding the knowledge characteristics-related factors abovementioned, the nature of the knowledge, the base of the knowledge, and the means of transfer, i.e., the competence of the expatriate (Szulanski, 1996; Wang et al., 2003) can make many variants in the knowledge transfer process. Moreover, this process is further

complicated by considerations including the absorptive capacity of subsidiaries, the

transfer ability of parent firms and the climate of cooperation between parent firms and their subsidiaries (Martins & Antonio, 2010a). Both the parent firms’ headquarters and their subsidiaries have realized that knowledge transfer is significant to current as well as future performance and to the development of subsidiaries.

In some cases, these factors of knowledge transfer either facilitate or hinder the effective knowledge transfer process (Szulanski, 1996). The knowledge transfer negatively correlates with the lack of communication channel, the inadequacy of knowledge transmitter’s ability and willingness, the deficiency of the recipient’s ability and motivation to acquire and absorb knowledge (Riege, 2007; Sun & Scott, 2005). Differential outcomes in knowledge transfer between transmitters and

recipients are often the result of language problems or communication styles (Narteh, 2008). The complexity of knowledge (i.e. Singh, 1997) and its stickiness (i.e.

Szulanski, 1996) also limit the knowledge transfer effectiveness. Thus it is still difficult to achieve successful total knowledge transfer (Costanzo & Tzoumpa, 2008;

Hansen, 1999b). In some situations, differences in culture may also adversely affect proper knowledge transfer, because this process needs a mutual understanding between transmitters and recipients.

To smooth and harmonize these barriers, the parent firms could use middle managers to mediate, translate and facilitate knowledge transfer between the parent firms’ headquarters and their subsidiaries including expatriates, knowledge source and the rest of the foreign subsidiary employees (Farkas, 2003; Selmer, 1996). The middle managers can identify knowledge gaps and communication problems between

transmitters and recipients, acting as a bridge between parent firms and host country employees (Blumentritt & Hardie, 2000).

The transfer of knowledge is embodied in personal factors and organizational

value systems, norms, and practices. At the personal level, middle managers can support and encourage knowledge transfer initiatives. Because of their strategic and operational function, they can recognize and understand human, organizational and technological issues and then can distribute to effective knowledge transfer (Riege, 2005). Within organization, the middle managers as the role of knowledge agents gather new knowledge, codify, adapt the new knowledge in to existing manufacturing, management procedures and distribute knowledge to the other employees within organization (Blumentritt & Hardie, 2000). The work place employees often do not codify their knowledge, they receive and articulate knowledge only (Riege & Zulpo, 2007). Middle managers attend to the process of codifying tacit knowledge and

articulating tacit into explicit knowledge (Nonaka & Takeuchi, 1995; Szulanski, 1996).

Furthermore, the middle managers can maintain the motivation of sharing knowledge and creating knowledge (Kanter, 1982).

In recent years, Taiwan is one of the countries recognized as large foreign direct investment (FDI) in Vietnam. However, the investments are still facing challenges not only of political, economic, social, cultural and customs difficulties but also

management and technological competency of the local manpower (賀宮鈴, 2007).

Therefore, parent firms now deem knowledge transfer as an important approach to deal with these difficulties. Many companies have continuously carried out a range of transferring measure involving technical and managerial knowledge to their

subsidiaries (Tran, 2004).

There are still many gaps between the literature and the empirical researches of cross-border knowledge transfer. The mechanism of knowledge transfer from MNEs to local companies has not been gained attention (Pak & Park, 2004). Empirical researches of knowledge transfer from the headquarters of MNCs to their subsidiaries

are still limited (Minbaeva, 2007) and still at early stage (Kotabe, Dunlap-Hinkler, Parente, & Mishra, 2007).

Several previous researches (i.e., Chen & McQueen, 2010; Gupta &

Govindarajan, 2000; Khanseh & Jolly, 2008; Martins & Antonio, 2010a, 2010b;

Minbaeva, Pedersen, Bjorkman, Fey, & Park, 2003; Minbaeva, 2007) have

concentrated on antecedent factors on knowledge transfer but few indicated clearly how headquarters and subsidiaries deal with these barriers influencing the knowledge transfer process. The research on middle management has proposed a new role for middle management as knowledge transfer facilitators but the impact of middle management on knowledge transfer has not been verified nor taken into account with other factors.

There is very little empirical evidence that suggests likely managerial actions or gives evidence about how to overcome diverse knowledge transfer barriers and the effectiveness of those actions, thereby assisting executives and middle managers in creating a more systematically knowledge-driven collaborative environment (Riege &

Zulpo, 2007, p.29).

These issues lead to the suggestion that it is necessary to carry out an appropriate study of cross-border knowledge transfer applied to the subsidiaries of FDI companies in developing countries particularly focusing on Taiwan foreign direct investment companies in Vietnam. The findings of this research intend to be useful suggestions for those who are concerned in the cross-border knowledge transfer process in both parent firms and their subsidiaries. As the result, it is hoped that a favourable environment of knowledge transfer and organizational capacities in such companies will be built.

1.2. Research objective and questions

As abovementioned, the study aims to concentrate on cross-border knowledge transfer process from parent firms to overseas subsidiaries specifically Taiwan foreign direct investment companies in Vietnam. Fist, an assessment of cross-border

knowledge transfer process related factors involving knowledge source, knowledge recipients and relationships between the knowledge transmitters and the knowledge recipients was investigated. Then, linkage between middle management, factors of knowledge transfer and the degree of knowledge transfer in the context of subsidiaries of Taiwan’s MNCs in Vietnam was studied. And finally, an interactive pattern

focussing on Taiwan FDI companies in Vietnam was set up.

In order to build the pattern, a survey in several specific Taiwan companies in Vietnam was conducted. The research questions were as follows.

1. How do knowledge transfer’s factors affect the degree of knowledge transfer?

2. How do middle managers affect the knowledge transfer’s factor and the degree of knowledge transfer?

3. How do knowledge transfer’s factors affect the degree of knowledge transfer with the intervention of middle managers?

1.3. Research method and procedure

To achieve the objectives, quantitative studies were applied. A quantitative survey was employed to test hypotheses in the research model derived from relevant literature. The procedure included literature view and overview of Taiwanese FDI in Vietnam, quantitative research findings and conclusions (see Figure 1).

The literature of previous researches on determinants of knowledge transfer process, middle managers and knowledge transfer effectiveness were reviewed. Then

the research model and hypotheses were elaborated. An overview of the Taiwanese FDI was presented, followed by a brief analysis of current situation of Vietnam’s investment environment. The role of FDI to Vietnam’s economy development was also reviewed. Part of the quantitative research involved testing of the conceptual model in the context of Taiwanese companies operating in the precision and electronic sectors.

Figure 1. Research procedure

Chapter 2 Literature Review

2.1. Knowledge concepts 2.1.1. Knowledge definition

Nowadays, the concept of knowledge is widely recognized both in academic fields and in the society. It is difficult to determine an exact definition of knowledge since it is a multifaceted concept with multi-layered meanings (Nonaka, 1994).

Moreover, there are many perspectives on how knowledge should be defined but an exact definition does not exist (Bratianu & Vasilache, 2009). Nonaka in 1991 and 1994 has highlighted knowledge as a justified belief that increases an individual’s capacity to take effective action. Knowledge’s result is a created capacity for

decision-making to achieve purposes which are relevant to each individual (De Long

& Fahey, 2000). Knowledge has been introduced as information, data, document, concepts, rules, tools, routines and processes (Davenport, 1998). An individual or organization can obtain and enrich their knowledge through practical experience, education and training. Because of different perspectives of the knowledge concept, thus a general view of the knowledge concepts and knowledge types can provide the direction of the knowledge transfer research and the approach used in this study.

2.1.2. Knowledge classification

The dimensions of knowledge are not consistently identified within the literature.

Within the human dimension (Nonaka, 1991; Nonaka & Takeuchi, 1995; Polanski, 1967) knowledge has been identified as of two types: tacit and explicit. The second way of defining knowledge refers to three different types: individual, organizational and social (De Long & Fahey, 2000; Malhotra, 2003). In the context of business

organization, knowledge can be classified according to business administration (Lane, Salk, & Lyles, 2001; Lyles & Salk, 1996).

2.1.2.1. Tacit knowledge and explicit Knowledge

Tacit knowledge, or so called personal knowledge, can be viewed as a form of awareness (Fisher & Mandell, 2009; Polanski, 1967). Tacit knowledge is often gained from actual experience (Nonaka, 1994), often hidden and embedded in an individual and difficult to be encoded into the text and transferred (Kogut & Zander, 1993). Tacit knowledge usually includes beliefs, personal values, experiences, know-how, skills and understanding. This type of knowledge exists within the knower’s mind (Nonaka

& Takeuchi, 1995). Tacit knowledge consists of two components: cognitive and technical (Murray, 2007). Cognitive knowledge, also known as unstructured

knowledge, is used by the knower. This mental model cannot be expressed directly by data or by representation (Nonaka & Takeuchi, 1995). And the concrete concepts which can be expressed directly by knowledge representation are technical

components (Murray, 2007). Explicit knowledge can be defined as knowledge that has been or can be articulated and shown in books, manuals, printed documentation and guides that express information clearly through language, images, sounds, or other means of communication (Nonaka & Takeuchi, 1995).

2.1.2.2. Individual, organizational knowledge

At the organizational level, knowledge can be categorized into two distinct types:

individual and organizational (Malhotra, 2003; Tsoukas & Vladimirou, 2001).

Individual knowledge refers to knowledge which takes place inside individual human heads (Simon, 1991) and is processed and can be released by the individual, it can be

tacit or explicit or a combination of both (Bratianu & Vasilache, 2009) and creates an individual activity (Grant, 1996). Individual knowledge refers to the knowledge held by an individual who is the primary (if not exclusive) handle and repository of what is known (Cook & Brown, 1999). Organizational knowledge, however, is a result of knowledge integration generated by the co-ordinated effort of individuals in the organization and from the knowledge flow coming from the external environment.

Organizational knowledge is held in common by a group of people or by an organization (Cook & Brown, 1999).

However, individual knowledge can be detached from its owner, and at the level of group or organization this knowledge then can be processed to become

organizational knowledge (Bratianu & Vasilache, 2009; Riege, 2007). Each individual in an organization may not possess everything that is in the organization’s knowledge but this knowledge is possessed by the organization as a whole (Weick & Roberts, 1993). In accordance with the Japanese research view, organizational knowledge has been defined as the capacity of a companies or organization to create new knowledge and to disseminate it throughout the organization and to embody in its products, services and systems (Nonaka & Takeuchi, 1995). Organizational knowledge also includes operating routine, management rules, manufacturing technologies, customer data (Kogut & Zander, 1992).

2.1.2.3. Business knowledge

In the context of business organizations, according to different areas of business several categories of knowledge have been identified such as manufacturing

knowledge, knowledge of marketing, knowledge of management, and knowledge of technology (Lane et al., 2001; Lyles & Salk, 1996). The knowledge of management

refers the managerial strategies and practices that are used to manage the processes of production, and the operation within a company. The knowledge of external

environment relates to government laws and regulations, industrial policies, business procedures, and the political, social and economic environment. The knowledge of a company’s culture pertains to the social norms, values, and beliefs of employees' such as attitudes, and different communication styles. The knowledge of market concerns related products and service markets, such as market share, and typical behaviours of local customers. And the knowledge of technology includes tools, machines,

procedures, and processes involved in producing products or providing services.

2.2. Cross-border knowledge transfer 2.2.1. Knowledge transfer concept

Knowledge transfer is an important aspect of knowledge management. It is considered as the transmission of knowledge from the original location to where it is needed and is applied. The transfer of knowledge not only reflects the flow of

knowledge from the knowledge holders to knowledge recipients but also includes the application of the knowledge according to the need of the recipients (Gupta &

Govindarajan, 2000). Within a continuously changing environment, knowledge

transfer can provide a company with the grounding to develop sustainable competitive capacity (Argote & Ingram, 2000).

Previous research has presented two main models of knowledge transfer. The first one is spiral model, so called knowledge conversion model proposed by Nonaka and Takeuchi (1995), Nonaka and Toyama (2003). The other is communication model, which has been proposed by Sharon & Weaver and developed by Szulanski (1996, 2000) and expanded by Minbaeva (2007). This model specified the basic element of

knowledge transfer as: source, message, recipient and context. Both Szulanski (1996) and Minbaeva (2007) continue to identify aspects of knowledge transfer that take place is the physical transmission.

2.2.2. Knowledge conversion model

The knowledge conversion model, so called spiral of knowledge, is the processes by which knowledge can be transformed (Nonaka & Takeuchi,1995). This model is built on the distinction between tacit and explicit knowledge. This model supposes that although tacit knowledge is not easy to code. Nevertheless, it can be mobilized and converted. The model not only explains the knowledge creation process but also describes the process of transferring created knowledge within companies.

The knowledge conversion model has four phases including Socialization, Externalization, Combination and Internalization. All facilitate the knowledge’s conversion from the individual to the organizational levels (see Figure 2).

Socialization phase: tacit knowledge is converted to tacit knowledge. This phase emphasises the process of creation of tacit knowledge through sharing experiences.

The main actors of this phase are individual. Socialization transfer of tacit knowledge most frequently takes place through joint activities, observation, imitation and

practice rather than written or verbal instructions (Murray, 2007; Nonaka & Takeuchi, 1995).

Figure 2. The knowledge conversion model

Note. From “A Dynamic Theory of Organizational Knowledge Creation” by Nonaka (1994), Organization Science, 5(1), 14-37, p. 19.

Externalization: tacit knowledge is converted to explicit knowledge. This is the process of articulating and transforming tacit knowledge. In this phase, the ability of using metaphoric language, analogies and models is very significant. Externalization may be seen as a key phase in the knowledge-creation activity and is considered as the concept creation phase. The knowledge in this phase is often presented in visible ways.

Information technology is used to support individual to describe, and explain the concept (Murray, 2007; Nonaka & Takeuchi, 1995).

Combination (explicit to explicit) is a process of creating new explicit knowledge from a number of existing explicit knowledge. Explicit knowledge can be exchanged and combined through telephone conversations, meetings, memos, and so on. Thus

not only includes information technology but also networking which supports the information combination process. Organizations often use training as the most common way to achieve such combination (Murray, 2007; Nonaka & Takeuchi, 1995).

Internalization (explicit to tacit) is the process of converting explicit knowledge such as principles, procedures, methodology etc to new tacit knowledge in the form of sensations, memories and images. The explicit knowledge is embodied in action and practice by an individual and can be experienced by others. Internalization may take place in various ways, through real life experience, or simulation through the use of software (Murray, 2007; Nonaka & Takeuchi, 1995).

2.2.3. Communication model

The knowledge transfer process based on a communication model can be viewed as a message transmission from a source to a recipient in a given context. This is a process of dyadic exchanges of knowledge including just the transmitter and the recipient and referring to four basic elements as: source, message, recipient and context (Bratianu & Vasilache, 2009). The effectiveness of the transfer often depends on the disposition and ability of the source and recipient, on the strength of the relationship between them, and on the characteristics of the object that is being created. In the communication model the time factor needs to be considered. As the time-lag between transmitter and recipient is one of the critical features of modern knowledge management (Chini, 2004). Thus, interruption, postponement, restoration of knowledge transfer process may occur (Bratianu & Vasilache, 2009).

To describe the knowledge transmission process from a source to a recipient in a given context Szulanski (2000) has proposed four stages including: initiation,

implementation, ramp-up, and integration.

Initiation: This phase reflect the formation of the transfer idea and all events that lead to the decision of transfer. In this stage, organizational participants need to be aware of existing knowledge within the context of the organization and they can use this knowledge to address their needs. They also need to know what kind of

knowledge is needed, what knowledge can be used, who the knowledge belongs to, how knowledge can be collected, when and where the knowledge can be transferred (Szulanski, 2000; Murray, 2007).

Implementation: In this phase, the decision to transfer knowledge has been made knowledge can be released by the way of communication or documentation by one party and received by the other. In this stage, the adaptation of the knowledge occurs in both sources and recipient. Knowledge can be changed at the source location to meet the perceived need of the recipient. The easiness of this transferring approach depends on the previous experiences of both parties in transferring knowledge at the earlier transferring stages, the similarity of the source and recipient, and the quality of the knowledge itself (Szulanski, 2000; Murray, 2007).

Ramp-up: This stage begins when the recipient starts using the transferred knowledge, to solve the reality of daily problems in the working place. The recipient evaluates the knowledge value according to its easiness of implementation and application, and the success brings to solve the problems (Szulanski, 2000; Murray, 2007).

Integration: This stage begins after the recipient achieves satisfactory results of applying transferred knowledge. The recipients gradually apply the knowledge to solve problems that arise during their work. Use of the transferred knowledge gradually becomes a routine. As time passes, a shared history is developed and the

knowledge transfer between the source and the recipient is increased. The knowledge can flow more freely and new applications are added to existing knowledge

(Szulanski, 2000; Murray, 2007).

In a development of the knowledge transfer model of Szulanski, Minbaeva (2005) has recently redefined it as the knowledge transfer process within MNCs and Jose Martins and Nelson Antonio (2010) has supposed a model of knowledge transfer from

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