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ORGANISATIONAL LEARNING AND KNOWLEDGE ACQUISITION A case study of internationalising manufacturers of wood-based prefabricated buildings Master´s Thesis in International Business Author: Clemens Kraus Supervisors: D.Sc. Birgitta Sandberg M.Sc. Elina Pelto 4.11.2012 Turku Turun kauppakorkeakoulu • Turku School of Economics Table of contents 1 INTRODUCTION ................................................................................................... 9 1.1 Internationalisation opportunities and challenges for manufacturers of wood-based prefabricated buildings............................................................... 9 1.2 The role of knowledge in the internationalisation process of firms ............. 10 1.3 Definitions .................................................................................................... 12 1.4 Research gap, research question and contribution ....................................... 14 1.5 Positioning of the study ................................................................................ 16 1.6 Structure of the study ................................................................................... 18 2 THEORIES OF INTERNATIONALISATION .................................................... 19 2.1 Overview over different theories of internationalisation ............................. 19 2.2 The Uppsala Model ...................................................................................... 21 2.2.1 Explanation of the Uppsala Model and underlying assumptions..... 21 2.2.2 Criticism of the Uppsala Model ....................................................... 23 2.3 Born Globals, International New Ventures and International Entrepreneurship .......................................................................................... 25 2.3.1 Emergence of the phenomenon and definitions ............................... 25 2.3.2 The role of strategy in the Born Global concept .............................. 28 2.3.3 Internationalisation patterns and categorisations of born globals .... 29 2.4 Network view in international expansion..................................................... 31 2.5 Market entry modes ...................................................................................... 35 3 A FRAMEWORK OF ORGANISATIONAL LEARNING AND KNOWLEDGE ACQUISITION...................................................................................................... 39 3.1 Knowledge-based view of the firm .............................................................. 39 3.2 Positioning the knowledge-based view within related theories ................... 40 3.2.1 Resource-based view ....................................................................... 40 3.2.2 Dynamic capabilities ........................................................................ 41 3.3 Organisational learning and knowledge creation ......................................... 44 3.3.1 Theoretical foundations of organisational learning ......................... 44 3.3.2 Classification of organisational learning ......................................... 46 3.3.3 Different types of organisational learning ....................................... 47 3.3.4 The conversion of tacit and explicit knowledge and organisational knowledge creation .......................................................................... 49 3.3.5 Absorptive capacity ......................................................................... 52 3.3.6 Dominant logic and competency traps ............................................. 54 3.4 Organisational learning and capability development in the internationalisation processes of firms ......................................................... 56 3.4.1 Linking organisational learning, capability development and internationalisation theories ............................................................. 56 3.4.2 Absorptive capacity and variation in the internationalisation process ........................................................................................................ 61 4 METHODOLOGY ................................................................................................ 63 4.1 Research approach ....................................................................................... 63 4.2 Research process .......................................................................................... 64 4.2.1 Case selection .................................................................................. 65 4.2.2 Data collection ................................................................................. 67 4.2.3 Case analysis .................................................................................... 69 4.3 Evaluation of the study ................................................................................. 70 5 ANALYSIS OF ORGANISATIONAL LEARNING AND KNOWLEDGE ACQUISITION IN CASE COMPANIES ............................................................. 73 5.1 Emergence of the wood-based prefabricated houses ................................... 73 5.2 Introduction of the case companies .............................................................. 76 5.2.1 Elk .................................................................................................... 76 5.2.2 Honkarakenne .................................................................................. 79 5.2.3 Lapponia House ............................................................................... 82 5.2.4 Vario-Bau ......................................................................................... 82 5.2.5 Wolf System .................................................................................... 83 5.3 Case analysis ................................................................................................ 84 5.3.1 Company size, type of business and development stage of the internationalisation ........................................................................... 85 5.3.2 Motives, facilitators and challenges for foreign expansion ............. 86 5.3.3 Internationalisation approaches ....................................................... 89 5.3.4 Organisational learning, knowledge acquisition and the management of foreign expansion ........................................................................ 91 6 CONCLUSION ..................................................................................................... 98 6.1 Theoretical findings and contribution .......................................................... 98 6.2 Managerial implications ............................................................................. 104 6.3 Limitations and outlook ............................................................................. 107 7 SUMMARY......................................................................................................... 109 REFERENCES.............................................................................................................. 113 APPENDIX ................................................................................................................... 125 APPENIX 1 Operationalisation table ................................................. 125 APPENIX 2 Interview Questions ....................................................... 126 List of figures Figure 1 Theories and concepts in the study ..................................................... 17 Figure 2 The role of knowledge in internationalisation .................................... 20 Figure 3 A stylized model of capability formation and performance ............... 43 Figure 4 Modes of the knowledge creation....................................................... 51 Figure 5 A model of gaining market access through symbiotic relations ....... 100 Figure 6 A model of a gradual internal knowledge development ................... 101 List of tables Table 1 Internationalisation and the network model ....................................... 34 Table 2 Characteristics of firms entering foreign markets ............................. 35 Table 3 Overview of approaches to learning ................................................... 46 Table 4 Distinctions between tacit and explicit knowledge ........................... 50 Table 5 Case companies .................................................................................. 66 Table 6 Data interviews ................................................................................... 68 Acknowledgements First, I would like to thank my supervisors Birgitta Sandberg, D.Sc. and Elina Pelto, M.Sc. who guided me through the writing process and gave me valuable hints to keep the topic manageable and focus on the main issues in my study area. Further, I thank Maria Elo, Ph.D. for the review and her valuable comments. Here, I also want to thank Peter Zettinig, Ph.D. who showed us how to find appropriate theories and carve out ac- curate research questions during the first research seminar. Next, I want to thank all my interview partners, Mag. Christian Murhammer, Ing. Josef Gruber, Alois Konrad, Ing. Josef Neuwirth, Thomas Rieder, Risto Kilkki, M.Sc and Kim Paasonen. I highly appreciate the opportunity to get access to companies which pursued a successful internationalisation path and that you took your time for the interviews. All the interviews helped me to get a thorough understanding about several issues and challenges which a building company faces if it aims to expand abroad, but also about various kinds of possible solutions. I enjoyed