International knowledge transfer in setting-up subsidiaries: the role of context.

Abstract

New foreign manufacturing subsidiary set-up is challenging, particularly when seeking to achieve operational set-up performance efficiencies. This research reveals the nature of the ‘International Knowledge Transfer’ (IKT) process during subsidiary set-up, uncovers local context factors influencing the IKT process, and suggests how to manage the identified influences. Specifically, the research focuses on operational shop floor knowledge, because the field is under researched and it is critical for operational set-up performance efficiencies. As a research strategy, a constructivist research paradigm - applying a retrospective comparable case study of three subsidiaries in Brazil, China, and Mexico - is implemented. Interviews with set-up managers and shop floor employees are used to generate a deep understanding of the cases and to facilitate data triangulation. The findings show that a processual understanding and delimitation of the IKT process during set-up are absent. ‘Relationship’, ‘education’, and ‘language’ emerge as the three primary context factors that influence the IKT process. By not considering local context sufficiently: firstly, communicational misinterpretation - triggered by not considering local behavioural standards - leads to an adverse knowledge transfer relationship; secondly, local educational preparation showed to be insufficient to relate to highly advanced manufacturing knowledge during the IKT, and; thirdly, the use of local translators surprisingly provides limited effectiveness in supporting IKT. In response, it is suggested that employing a knowledge ‘sender’ with local language skills (rather than simply a translator), an initial analysis of local job titles, including associated skill and educational levels, and sender and receiver communication preparation prior to ‘Knowledge Transfer Process’ (KTP) initiation, alongside a careful application of the IKT process itself positively influences IKT, and helps overcome barriers. Through this, the research adds to theory and practice by developing an approach to foster transparent IKT during foreign subsidiary set-up. It offers a list of context factors that influence the IKT process, based on which suggestions for managerial actions are derived to lower the impacts of these local context factors. This assists organizations in minimizing operational set-up performance inefficiencies by supporting shop floor employees to more effectively engage with, and benefit from, IKT.