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Reverse Knowledge Transfer in Indian Mnes === Reverse Knowledge Transfer in Indian MNEs ===================================== Smitha Ravindranathan Nair Thesis submitted to The University of Sheffield in partial fulfilment of the requirement of the degree of Doctor of Philosophy Management School The University of Sheffield November 2013 ACKNOWLEDGMENTS I would like to thank my supervisors, Professor Mehmet Demirbag and Professor Kamel Mellahi for their support and guidance during my doctoral research. I am grateful for the time and effort they spent towards my research and for my publications. It would have been almost impossible for me to complete this journey without their continuous support and encouragement. I would also like to thank my family; my husband, parents and brother who have always been there for me when I needed them. Their belief in me was a constant source of inspiration that kept me going on this journey. I am also thankful to all the managers who spent their valuable time to respond to my questionnaire. I really appreciate their thoughtfulness and the consideration they have shown towards my research. Last but not the least; I am thankful to God Almighty who gave me the required strength and perseverance. 1 ABSTRACT Emerging Market Multinational Enterprises (EM MNEs) and their growing importance in the current global economic and business scenario has attracted much scholarly attention. An important aspect in the growth of these EM MNEs is their rapid catching up strategies which has been discussed extensively in the international business (IB), management and strategy literature. Indian MNEs, one of the prominent amongst EM MNEs, have had their share of overseas acquisitions, more so in the last decade.Their international expansions along with the subsequent knowledge transactions and associated learning have played a vital role when it comes to their catching up strategies as latecomers in the international scene. These strategies were attempts to overcome their limitations and weakness pertaining to organisational competencies, home country conditions and availability of resources. Hence to be globally competitive, it has become imperative for these MNEs to learn from their overseas counterparts, be it alliance or joint venture partners or acquired subsidiaries. This thesis attempts to extend the current understanding of knowledge transfers in MNEs with specific focus on MNEs from emerging markets and how they learn from their advanced overseas units. Going by the conventional approach where the subsidiaries learn from their parents, the knowledge transfer literature has also largely dealt with this form of primary knowledge transfer. But one needs to consider the fact that in the current global scene, subsidiaries are also sufficiently capable and some even function as centres of excellence and support other units within the network. In this context, reverse knowledge transfers seek more attention and more so in the case of MNEs from emerging markets like India. Towards achieving this, we draw our observations from a cross sectional survey of a sample of Indian MNEs, who have overseas subsidiaries, to explore the effects of some of the main determinants of such cross border reverse knowledge transfers. The literature dealing with the antecedents of knowledge transfer is largely fragmented and hence this thesis is an attempt to integrate the different prevailing perspectives. This 2 study looks at the determinants of reverse knowledge transfer in Indian MNEs in terms of the characteristics of both the Indian parent and the associated overseas subsidiary unit. Further, it also looks at the role of the characteristics of the knowledge involved in the transfer and other dyadic aspects of the relationship between the subsidiary and the parent and also between the host and home countries. The analysis indicates that knowledge attributes are the most influential determinants when it comes to reverse knowledge transfer in Indian MNEs. This is followed by parent characteristics and then subsidiary characteristics while dyadic aspects have the least influence on reverse knowledge transfer in Indian MNEs. In addition to knowledge tacitness, complexity and relevance, it could be seen that subsidiary mandate and relative competitive positioning also positively influence reverse knowledge transfer in Indian MNEs. Partial support was found for the positive effects of the other determinants like organisational learning capability, perceived subsidiary capability, organisational collaboration and technical knowledge infrastructure on reverse knowledge transfer. 3 DISSEMINATION FROM THIS THESIS Conference Papers • “Knowledge Acquisitions by Indian Multinationals”, AIB UK Chapter, March 2013 (Presented at Aston Business School) • “Reverse Knowledge Transfer: A Survey of Acquisitions by Indian MNEs” – Paper accepted for the AIB 2013 Conference at Istanbul, Turkey (To be presented in July 2013) • “Reverse Knowledge Transfer in Indian Multinationals” – Paper accepted for workshop on the Impact of Emerging Multinationals on Global Development, European Cooperation in Science and Technology, Milan, May 2013 • “Reverse Knowledge Transfer from Overseas Acquisitions” – Paper accepted at the Annual SMS Conference in Atlanta, September 2013 Papers Submitted (under Revision) • “Reverse Knowledge Transfer from Overseas Acquisitions: A Survey of Indian MNEs” – Management International Review, Special Issue on Emerging Market Multinationals 4 Table of Contents 1. INTRODUCTION ............................................................................................................... 16 1.1 Research Background .................................................................................................. 16 1.2 Research Aim and Objectives ..................................................................................... 18 1.3 Research Contributions ............................................................................................... 20 1.4 Thesis Outline ............................................................................................................. 21 2. LITERATURE REVIEW .................................................................................................... 23 2.1 Extant Theories on MNEs ........................................................................................... 23 2.2 Applicability of Extant theories for EM MNEs .......................................................... 29 2.3 Internationalisation patterns of EM MNEs.................................................................. 33 2.4 BRIC MNEs – A comparison ...................................................................................... 41 2.5 Indian MNEs ............................................................................................................... 48 2.5.1 Institutional environment in India ....................................................................... 48 2.5.2 Internationalisation of Indian MNEs ................................................................... 51 2.6 Theories for EM MNEs – The ongoing debate ........................................................... 62 2.7 Summary ..................................................................................................................... 65 2.8 Knowledge and Learning ............................................................................................ 67 2.8.1 Knowledge Management ..................................................................................... 67 2.8.2 Knowledge .......................................................................................................... 70 2.8.3 Learning .............................................................................................................. 72 2.9 Knowledge Transfers and MNEs ................................................................................ 75 2.9.1 Organisational Characteristics and Mechanisms ................................................. 80 2.9.2 Knowledge attributes ........................................................................................... 86 2.9.3 Social Capital ...................................................................................................... 88 5 2.9.4 Home and Host Country Aspects ........................................................................ 89 2.9.5 Summary ............................................................................................................. 91 3. CONCEPTUAL MODEL and HYPOTHESIS DEVELOPMENT ..................................... 96 3.1 Reverse Knowledge Flow ........................................................................................... 96 3.2 Unit Level Characteristics ......................................................................................... 101 3.2.1 Parent Company Characteristics........................................................................ 101 3.2.2 Subsidiary Characteristics ................................................................................. 104 3.3 Dyadic Characteristics ............................................................................................... 108 3.4 Knowledge Attributes................................................................................................ 112 4. RESEARCH METHODOLOGY ...................................................................................... 116 4.1 Research Designs – An overview .............................................................................. 116 4.2
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