International joint ventures: creating value through successful knowledge management

Journal of World Business 38 (2003) 15±30

International joint ventures: creating value through successful knowledge management Iris Berdrowa,*, Henry W. Laneb,1 a

b

Management Department, Bentley College, 175 Forest Street, Waltham, MA 02452-4705, USA College of Business Administration, 360 Huntington Ave., Northeastern University, Boston, MA 02115, USA

Abstract Knowledge management is the conscious and active management of creating, disseminating, evolving and applying knowledge to strategic ends. In this paper, we examine knowledge management in the context of international joint ventures (IJVs), activities that cut across organizational and national boundaries, to show how to manage the behavioral and contextual considerations to create value for the parent companies. A case based methodology was used to conduct 20 in-depth interviews and collect archival data from eight IJVs within the NAFTA partnership of Canada, U.S.A. and Mexico. The ®ndings, achieved with the aid of NUD.IST, a qualitative data analysis package, are summarized into six descriptors that differentiate successful and unsuccessful cases. These descriptors are: mindset, controls, strategic integration, training and development, resource contributions and integration, and relationship development. # 2002 Elsevier Science Inc. All rights reserved. Keywords: International joint ventures; Knowledge management; Qualitative research; Learning

1. Introduction Knowledge is the critical resource of the future. A company's stock of knowledge must include technical knowledge as well as knowledge about how to function in global markets, work with local laws, how to protect intellectual property and how to operate successfully in various forms of partnerships. This package of knowledge resources is critical for success in creating value for the company's shareholders, customers and employees.

*

Corresponding author. Tel: ‡1-781-891-2130; Fax: ‡1-781-891-2896. E-mail addresses: [email protected] (I. Berdrow), [email protected] (H.W. Lane). 1 Tel: ‡1-617-373-8666; Fax: ‡1-617-373-8628.

In strictly ®nancial terms, value creation is the assembly and use of assets to increase market capitalization (Boulton, Libert, & Samek, 2000). However, we can think beyond the ®nancial dimension. These assets may be tangible or intangible, owned or not owned, old economy assets or new economy assets. If a company is failing in the management of these assets and not getting the most from the interaction and relationships among them, such as with alliance partnerships, then it is probably failing to create value. Executives use personal knowledge every day yet rarely stop to think about what it is they know, why they know it or how exactly to apply itÐuntil they have to share it with someone else in a way that is useful to them and the situation. When we consider organizational knowledge, the stock of knowledge that exists within a company, the situation is even less clear. Executives rarely think about managing this

1090-9516/02/$ ± see front matter # 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 9 0 - 9 5 1 6 ( 0 2 ) 0 0 1 0 6 - 2

16

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

knowledge. Learning or transferring knowledge is an implied outcome of other processes such as creating a joint venture. Yet, in an environment where knowledge is a key success factor, in addition to managing tasks, employees or partners, managers must manage knowledge itself, just as any other resource. They must organize knowledge in suitable places, plan its use, direct it to the appropriate people, leverage its application, and evaluate the outcome. Knowledge management is the conscious and active management of creating, disseminating, evolving and applying knowledge to strategic ends. It is a dynamic, interactive process supported by technology with the purpose of enhancing strategic advantage. ``KM is not the implementation of a technology; rather, it is a multidisciplinary approach that integrates business strategy, cultural values and work processes'' (Harris, Fleming, Hunter, Rosser, & Cushman, 1999). But knowledge management is not a simplistic process. Knowledge management is a ``collective endeavor'' that is open to social and political processes that can result in con¯ict from different organizational subcultures and ideologies (DeLong & Seeman, 2000). The con¯ict is due to the differences in language, norms and worldviews. And the tacit knowledge, the unarticulated and noncodi®ed knowledge that is so important in any operation, is context speci®c. In this paper, we ®rst introduce the context for explorationÐinternational joint ventures. Within that context we describe potential knowledge ¯ows as transfer, transformation and harvesting. Then we make the relevance argument, using two of the eight case companies in our study. These two cases tell the story of a successful and an unsuccessful knowledge management situation to illustrate the impact of knowledge management on learning and performance. We then describe the case based methodology used to conduct 20 in-depth interviews and collect archival data from eight international joint venture (IJVs) within the NAFTA partnership of Canada, U.S.A. and Mexico. The ®ndings, achieved with the aid of NUD.IST, a qualitative data analysis package, are summarized into six descriptors that differentiate successful and unsuccessful cases. These descriptors are: mindset, controls, strategic integration, training and development, resource contributions and integration, and relationship development. We conclude the paper with a discussion of knowledge gained and knowledge ¯ows.

Our premise is that learning adds value to the IJV and the parent activities. At a minimum, learning enhances adaptability and responsiveness. A greater bene®t comes when learning leads to new opportunities. Not all IJVs provide similar learning opportunities or demand similar degrees of learning. Our argument is that ineffective learning can disable the achievement of performance outcomes. 2. Context for exploration The prime motivations for creating an IJV are to either share the risk of engaging in a particular activity in a particular market, or to share the resource requirements of a particular activity. Partners contribute knowledge and capabilities learned throughout their histories in the form of technology, people or business processes. Each looks for partners with complementary competencies. Alliances, such as IJVs, offer a means to access knowledge, which is not yet widely distributed or exploited (Zack, 1999), providing learning opportunities and the potential for value creation. However, many IJV partners do not recognize the potential of active learning from IJVs for the parent organization (Beamish & Berdrow, 2001). Learning from partners requires connecting people so they can think together, creating communities of practice in which complex knowledge can be interpreted and leveraged (McDermott, 1999). This can be particularly challenging in the presence of organizational and national boundaries across which knowledge ¯ows. In this situation, learning has to happen through personal interactions, interactions that are often inhibited by differences in language, norms and mental models. 3. Knowledge ¯ows within an IJV network The network perspective of IJVs provides an understanding of how knowledge can move between partners and the IJV. We recognize three different yet interrelated knowledge ¯ows within the IJV network. Each of these ¯ows calls for related yet unique knowledge management processes. We de®ne these processes as: (1) transfer: managing the ¯ow of existing knowledge between parents and from the parents

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

17

Fig. 1. Knowledge management processes in IJVs.

to the IJV; (2) transformation: managing the transformation and creation of knowledge within the IJV through its independent activities; and (3) harvesting: managing the ¯ow of transformed and newly created knowledge from the IJV back to the parents. These ¯ows and related knowledge management processes are depicted in Fig. 1. 3.1. Transfer Transfer is the migration of existing knowledge between IJV network parties. For example between parent ®rms and from parents to the IJV. This migration can happen through activities such as buying technology, observing and imitating technology used by the partner, or changing existing technologies according to directions given by a partner. Basically, transfer means accepting what the partner does, integrating it into one's own systems or changing one's own resources to imitate it without really understanding why or how it works. There is some practicality to this process because imitation can lead to an understanding of underlying tacit knowledge. Nonaka

(1994) calls this internalization. The danger however, is that the underlying tacit knowledge is never developed or is incorrectly interpreted. In such a case only imitation is achieved and when problems arise, it is dif®cult to know how to correct them.2 Although IJVs provide opportunities for effective knowledge transfer because they involve not just tangible resources, but also knowledge-bearing individuals, the tacit knowledge that individuals carry is the more dif®cult resource to acquire. ``It is easy enough to transfer hardwareÐblueprints, speci®cation sheets, price lists and product samplesÐbut real commitment on the part of the sender may be necessary to ensure the transmission of the tangible `knowhow' which is in the minds of those who use the hardware'' (Killing, 1983). Sharing tangible knowl2 It should be noted that an alternative danger exists when a partner understands the contributed technology too well and copies it for use in other activities, hence violating a partner's patents or copyrights. This potential for competitive behavior is raised by Buckley and Casson (1988) in their discussion of mutual forbearance. We discuss this issue in Section 5.2.6.

18

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

edge-embedded products involves only explicit knowledge, but through interactions, personnel movement and strategic linkages, tacit knowledge can also be shared (Inkpen, 1996). Yet transfer does happen, and if done correctly with proper consideration and support, it can be useful. It is important to consider this type of learning within the context of an IJV because often this is the organizational channel by which transfer happens (Benvignati, 1983; Von Glinow & Teagarden, 1988). 3.2. Transformation Transformation is de®ned as the integration, application and leveraging of contributed knowledge and the creation of new knowledge as a result of the joint activities. The potential for knowledge transformation exists any time individuals are placed in new situations or are presented with new challenges and new ideas. Quinn calls this ``cross-functional serendipity'' and claims, ``the interaction between skilled people in different functional activities often develops unexpected new insights or solutions'' (Quinn, 1992: 77). Transformation also occurs whenever existing knowledge is challenged by new contextual realities. For example, our understanding of how to set up an effective reward system may be challenged in an economic environment where housing and education are of greater concern than self-development and recognition. Or understanding of an ef®cient and effective plant layout may be challenged by the realities of space and utility costs, and availability of building materials. These challenges force reassessment of existing knowledge to solve problems and, in the process, learn something new. The greater the difference between the reality in which the knowledge was developed and that in which it is being applied, the greater the potential for learning. Although transforming contributed knowledge in order to succeed in collaborations (Doz, 1996) is recognized as important, it is a relatively understudied concept (Hedlund, 1994). 3.3. Harvesting Of the three types of learning identi®edÐtransfer, transformation and harvestingÐthe third has the least known about it. Harvesting knowledge involves dif-

ferent processes than the creation of knowledge. Harvesting involves the ¯ow of knowledge from the IJV to the parent where it can be applied to other internal activities or external alliances. It seems that the burden for harvesting knowledge should be on the parent ®rm since management has a better overall view of the organization and its needs. Unfortunately, the ``not invented here'' syndrome will prevent managers from considering the validity or usefulness of the knowledge developed within the IJV. The lack of attention to, and formal debrie®ng of, expatriate managers returning home can also prevent the knowledge from ever getting discovered by parent managers. IJVs do provide the opportunity for learning both within the IJV and by the parent ®rms (Inkpen, 1995). Interestingly, IJV performance satisfaction determines the degree to which parents engage in learning efforts, implying that performance evaluation determines knowledge acquisition and harvesting efforts. In the next section we provide a brief comparison of two joint ventures whose parent companies had different outlooks about learning and managing knowledge. 4. A tale of two joint ventures Having laid out the model of knowledge management in IJVs, we provide the managerial argument for considering these issues using two cases from the eight cases of the study. These two tell the story of a successful and an unsuccessful knowledge management situation to illustrate the impact of knowledge management on learning and performance. ``Elsa'' provides a benchmark of ineffective learning processes, learning outcomes and performance. It struggled for years to even match the Canadian partner's operations expertise and outcomes. The lack of performance was the result of poorly managed relations, tight operational and ®scal controls, and a teaching mindset vs. learning mindset. ``Kenam,'' in contrast, is a turnaround case. It was able to rebound from initial operations problems through learning processes. The American parent assumed it could transfer its technological competence in one material to casting a different material, an assumption that quickly proved wrong. An openminded attitude, a strong parent±IJV relationship and a long-term view allowed for a third party with

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

the requisite skill to be brought in. The IJV was able to leverage what it had learned with new customers. The parents gained valuable knowledge that they could use in other operations. Although these two cases are asymmetrical in size, scope and learning opportunities, both required transferred resources to be adapted to local conditions and both provided expansion opportunities. One succeeded and the other did not. 4.1. Elsa Elsa was formed in 1992 as a 50/50 joint venture between a Canadian company and a Mexican company, to operate a metal stamping facility that supplied components to the automotive industry. The Canadian partner was a supplier of metal, modular assemblies to the Original Equipment Manufacturers (OEMs). Its operational strategy was to operate master stamping facilities in each country, with portable assemblywelding facilities located near each customer's automobile assembly plants. The Mexican partner, in operation for over 40 years, had always belonged to the same Mexican family and the owner had inherited the business from his father. In 1990, the company was operating three plants in Mexico producing three different product lines. One of those plants was a stamping facility. Customers were pressuring the Canadian company to establish facilities in Mexico to be closer to their assembly plants. The Mexican company had been identi®ed from a pool of possible partners by an external consultant but was the second choice for the Canadians. In an almost textbook joint venture, the Canadian partner provided technology, manufacturing knowledge and a strong customer base. The Mexican partner brought existing facilities, domestic market knowledge, government knowledge and cultural understanding. The Canadian partner realized that the company had to maintain expected levels of quality and cost. In order to meet these expectations successfully, it developed a strategy to standardize the operational and ®nancial reporting systems used by all its units as a way of controlling the manufacturing activities and outcomes. Executives did not anticipate an ongoing value in the relationship, despite a desire to expand into South America in the future. It expected no

19

acquisition of new knowledge about the operations, or of details about the market and the culture beyond those affecting the current operations in Mexico. The managers sent by the Canadian partner carried with them the mindset that Mexicans would take advantage of a foreigner at every opportunity and, therefore, control was essential. Of the Canadian executives involved with Elsa, only the president had any experience in Mexico. Whenever managerial resources were provided to the joint venture, the decision was based on immediate need and limited by cost concerns. The Elsa plant in Mexico was structured similarly to the Canadian plant, although the joint venture focused on small runs of low volume output, whereas the Canadian plant focused on large volume runs. Similar manufacturing processes were used in Mexico as in Canada. The existing manual operations of the Mexican partner plant were replaced with automatic systems, automatic feeders and progressive dies. Although the equipment was similar, it was older, obsolete equipment in poor repair that had been shipped to Mexico. The accounting systems and joint venture performance were closely controlled through reporting requirements that copied the Canadian systems and Mexican managers had virtually no autonomy in decision-making. Nor was any formal, ongoing training provided to employees. The partners held negative views of each other. The Canadians felt that the Mexicans were patriarchal and controlling while the Mexican management felt the Canadian partner's attitude towards them was patronizing rather than one of partnership. Not only did the JV suffer poor ®nancial performance, but also future relations between the partners were uncertain. Elsa could be characterized as a clone of the Canadian partner for whom the transfer of existing technologies and systems was important solely to meet customer expectations of quality and quantity. Despite the Canadian partner's desire to further expansion activities in Latin America, a preconceived mindset about the ability of Mexicans prevented any cultural learning from occurring at an institutional level. Some individuals involved in the joint venture experienced personal learning. However, the harvesting and institutionalization of this new knowledge never occurred. The barrier created by the president's mindset of mistrust and superiority blocked it.

20

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

It took Elsa years to achieve the quality and productivity levels of the Canadian partner despite the transfer of resources. Elsa's management was unable to overcome performance problems and lost out on expansion opportunities. Elsa illustrates that even in cases where only transfer is desired, poor learning processes will limit that necessary adaptation of existing knowledge. 4.2. Kenam Kenam was a large foundry for a speci®c line of automotive components. It was a joint venture between an American automobile manufacturer and a Mexican conglomerate. The American company, with global manufacturing, assembly and sales held a leading position in the truck and car markets. This company had extensive resources and had accumulated knowledge worldwide. Through its market strength and access to suppliers around the world, it held signi®cant in¯uence over the quality levels and delivery schedules of its suppliers. The Mexican company was a large diversi®ed organization with extensive resources and international experience as well. Its strategy was to raise the competitiveness of all its businesses to global standards. It had invested U.S.$1 billion over a 5-year period to upgrade the businesses to state-of-the-art technology; revised the manufacturing and administrative processes to improve productivity; and through acquisitions, alliances and divestitures, focused on those businesses with the greatest potential. It was involved, successfully, in 20 alliances because it chose good partners, established clear criteria for the joint venture from the beginning, and maintained a high degree of contact through monthly meetings. Both companies sought partners who were leaders in their ®eld with a demonstrated ability and desire to work with alliance partners. The American partner was to contribute customer demand and casting technology. The Mexican partner contributed market knowledge, labor and government relations, administrative and accounting systems and knowledge. They also contributed the management, engineers, and sales people. The foundry was designed to produce parts from a new material with which neither the American nor the Mexican partner had experience. Kenam experienced

initial dif®culties producing quality parts from its new casting operations. Even though the American partner had set up a similar casting foundry in Canada, the knowledge it gained at that plant was not suf®cient to assess what was going wrong in the joint venture's processes. The Mexican parent, lacking experience with this new material, could not provide the needed expertise either. These dif®culties were overcome, however, through a technological assistance agreement established with an Italian company pro®cient in casting the new metal and by placing Italian engineers and experts into the joint venture for an extended period of time. Therefore, the JV added a third partner that would contribute the necessary technological expertise by means of a technical assistance agreement with both the joint venture and the American parent's Canadian plant. To ensure ongoing research and development support, this company formally was brought into the Kenam partnership. The partners worked closely with the joint venture, providing guidance on current operations as well as making decisions on future growth and investment. The technical assistance agreement was maintained even after the plant had become self-suf®cient in its limited volume and product line. The intent was to learn more than just the basics and to work through the dif®cult integration between the three culturesÐ American, Mexican and Italian. The joint venture's current ability to produce quality products from new designs and its growth record re¯ect the hard work and determination that went into learning and solving the initial problems. The partners maintained a mutual respect and were supportive of each other and the JV. They truly held a desire to have the JV succeed on its own merit. Initial negative performance was turned around and the JV went on to win world-class awards and develop new unique designs successfully. The Kenam case shows that knowledge is not always directly or objectively transferable and that the adaptation of technical knowledge to new applications requires a learning process. The companies and individuals involved in Kenam were able to integrate and apply their diverse knowledge contributions. This transformation was leveraged within the JV to surpass the performance levels of its American parent. These two cases are differentiated in several ways, the most prominent of which are the values and

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

attitudes of the players and the knowledge management processes and outcomes. The closed and controlling values and attitudes displayed by Elsa led to a minimum transfer of knowledge. The openness and willingness to learn exempli®ed by Kenam led to effective transformation and harvesting of knowledge more valuable than what was originally transferred. The full study unfolds this differentiation in greater detail. 5. The study The research focused on a simple questionÐwhat processes facilitated or inhibited the effective management of knowledge resources? Eight joint ventures in Mexico were explored with in-depth case studies written on four of them. Three of the joint ventures were in the automotive parts industry and others included wastewater treatment consulting, convenience stores and diversi®ed manufacturing. Twenty interviews were conducted in Mexico, Canada and the U.S. over a 12-month period. Interviews were conducted with multiple respondents from each IJV set, collecting data from both the parent's and the IJV's perspective. The sample was chosen to ensure data was captured on the processes of interest as well as a range of performance outcomes against which to compare those processes. Of the four main cases, one was clearly unsuccessful in terms of learning processes, learning outcomes and performance. This case provided a benchmark of ineffective learning processes against which other cases could be compared and differentiated. The second was a turnaround case. This IJV was able to rebound from initial operational problems through effective learning processes. The third case was a successful case in terms of learning and performance. It was chosen because it provided a more detailed view of the integration and application of knowledge resources. In addition, this IJV comprised four core partners with additional partners brought in as needed, providing insights into complex partnerships. The fourth main case, also successful, was the largest and most complex, chosen because of its conscious and successful use of a liaison person to manage knowledge management processes across the complex relationships. Four adjunct cases were cho-

21

sen to provide insights into speci®c issues raised in the four main cases. These issues were adaptation and integration of knowledge resources, impact of mindset on knowledge management, nature of knowledge resources and the implication on learning integration, and types of knowledge needed to achieve effectiveness. A qualitative research protocol was designed to gather data about the knowledge management processes. The protocol was re®ned using the outcomes of a pilot study and reviews by researchers of organizational learning and international alliances. The ®nal protocol, called an interview map, served as a guide for the parent and the joint venture interviews. The case analysis followed a pattern of Description, Interpretation, Evaluation and Application (Miles & Huberman, 1994), an analytic method that ®rsts tells the ``story'' of the situation, describing what happened, then constructs a ``map'' of the elements of that story, identifying key variables, before a theory or a model can be built predicting how the variables are connected and related. Data analysis was completed with the aid of NUD.IST, a qualitative data analysis software package. NUD.IST stands for Nonnumerical Unstructured Data Indexing Searching and Theorizing. It is a computer package designed to aid users in handling nonnumerical and unstructured data in qualitative analysis. NUD.IST does this by supporting processes of indexing, searching and theorizing. The originating data (interview transcripts, archival documents, researchers observations) are imported as source documents. The data is coded into bins (major variables in general domains of interest). The contents of each bin is analyzed and summarized for each case in the sample within each case, identifying key descriptors, a phrase describing the condition, process or outcome in a manner that is quickly readable and comparable without losing the meaning. The descriptors were then compared across all cases of the sample formulating patterns that differentiate the successful and unsuccessful cases. 5.1. Performance outcomes Measuring the effect of knowledge management on performance is dif®cult. Behavioral interactions and processes are ongoing and complex, enhancing or

22

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

impeding performance over time. In addition to the time delay, measuring the subjective outcomes such as adaptability and responsiveness, and the objective outcomes such as patents, brands, trademarks, capital expenditures and R&D programs are problematic (Mintz, 2000). Therefore, it is necessary to show a relationship between processes and performance in other ways. Particularly in situations of risk and uncertainty, for example, ®nancial performance indicators are not as good at evaluating outcomes as qualitative measures such as productivity, ®nancial resource indicators or the ability to adapt and innovate. Whatever outcome measures are used, however, they should relate to the strategic intentions of the organization (Anderson, 1990). Since learning was the process of interest in this study, performance was evaluated based on learning outcomes, i.e., knowledge gained and learning processes engaged in, in addition to traditional measures of strategic, ®nancial and operational performance. 5.2. Results The cases showed that even though ®nancial performance was severely affected by the economic crisis of Mexico, the successful cases still showed operational success as well as learning outcomes. The most signi®cant learning outcomes were in the IJVs' ability to surpass the combined knowledge contributions of the parent ®rms and create new value through knowledge transformation in its complementary activities. While some examples existed of parent ®rms harvesting new technological knowledge from those IJV activities, even in cases where that transfer was blocked by patent protections, the parent ®rms gained important market and partnering knowledge. The most successful partnerships provided ongoing bene®ts in new operations or markets not originally anticipated. Those bene®ts stemmed from having developed successful working relationships that supported new activities in new markets. This outcome argues for the use of alliance networks as learning vehicles (Powell, Koput, & Smith, 1996). The case studies highlighted the bene®t of gaining a better understanding of the company's existing operations and processes by engaging in them in a new contextÐthat context being both the physical surroundings of Mexico and the entities (partners)

involved. A new context shines a ``a new light'' on existing systems, processes and knowledge and illuminates imperfections as well as excellence. This type of learning responds to Teece's (1998) call to ``explore the importance of entrepreneurial capabilities'' of knowledge management, particularly in alliances and JVs. The case studies indicate that those IJVs that were able to successfully transform the knowledge transferred by the parents and to create new knowledge did achieve positive sales, operational and ®nancial performance. In these joint ventures knowledge resources were created and harvested that led to competitive advantage for the IJV and parents. The case studies also showed that learning was necessary to overcome crises caused by inadequate resources, chaotic market shifts and economic dif®culties. The conclusion is that effective knowledge management leads to the ability to avoid or overcome relationship dif®culties and the ability to avoid or overcome market, operational and economic dif®culties. The analysis also revealed six characteristics (descriptors) that differed between the successful and unsuccessful cases: mindset, controls, strategic integration, training and development, resource contributions and integration and relationship development. Each descriptor is discussed in detail and then a summary table of patterns differentiating successful from unsuccessful cases is provided in Table 1. 5.2.1. Mindset Mindset is the set of attitudes, thoughts and feelings that in¯uence decisions and actions. The mindset of key decision-makers and authority ®gures will in¯uence the partnership as well as the resources and activities of the IJV. Mindset regarding two issues proved to be relevant to effective knowledge management. First were the intentions for the IJV, second was the perspective of the partner. Intent is the initial purpose for which the parent engaged in the IJV and how this intention changed as the venture progressed. This intent will affect the resources that the parent contributes to the IJV, the controls established on the activities of the IJV, the evaluation of its performance and outcomes, and the degree to which the parent learns from the IJV. The joint venture had to be seen as offering greater learning potential through its activities than the

Table 1 Key descriptors of knowledge management processes Successful knowledge outcomes

Unsuccessful knowledge outcomes

Mindset: Set of attitudes, thoughts and feelings that influence decisions and actions. The principals of the parent company view the IJV and the partner as valuable contributors to the partnership, providing not just explicit resources, but also competencies which will help the IJV succeed. Recognizing the potential to develop competencies of greater value. Believing that knowledge is an important resource and that development and dispersion must be actively managed.

The principals of the parent company view the IJV and the partner as contributors of necessary resources. Being critical of the partner, the IJV and the culture of both. Believing that success depends on teaching what is already known and controlling the activities through strictly defined procedures.

Strategic integration: The degree to which IJV activities duplicate parent activities. The strategic importance of the IJV activities and outcomes to the core activities of the parent organization. The IJV activities are complementary to the parent activities, allowing for enough overlap to The operations follow strict guidelines of the parent, with no allowance for create redundancy of knowledge, while being entrepreneurial enough to add value for both the unique situation of the IJV. Systems and processes are transferred and parents. There is tolerance of and respect for the different business practices. The mechanisms expected to be adhered to. Different business practices are not tolerated and used to overcome those differences honor the values embedded in the practices and focus create difficulties in the relationship. on the common goals of the partners. The IJV becomes a working partner in the relationship. Its operations are strategically integrated The IJV is considered a subunit contributing only financial or tactical gains. with at least one of the parents. There are personal interactions between the decision-makers Integrating links are weak and insufficient to transfer tacit knowledge. as well as the employees involved in the operations. The more tacit the knowledge being integrated, the more intense and lengthy is the integration of people. Training and development: Formal and informal methods of education, training and development of management and employees. The IJV engages in ongoing training and development of its employees, incorporating basic, No training is provided, or minimal on-the-job training only. theoretical and practical knowledge. Resource contributions and integration: The nature of knowledge resources contributed relative to the IJV activities, the process by which those contributions were made, and the degree to which knowledge resources are combined and adapted to local context. The contributions are minimal and follow initial plans. Further contributions The contributions are based on the anticipated needs of the IJV and are sufficient to allow the IJV to develop beyond initial expectations. If the competencies contributed are insufficient, are reactive (based on need), and restrictive (limited by cost considerations). If the contributions are insufficient or inadequate, the IJV is not able to make other sources of competence are sought out freely. Contributed resources are integrated into the new context of the IJV operations and environment. the parent understand their additional needs. Resources are transferred without recognition of the need for integration.

23

Relationship development: The time frame and processes by which the partnership was initially started, developed and matured. The potential partners are selected by someone not directly involved, such as The principals of both companies are directly involved in the identification and selection of partners. The choice of partner is based on an intuitive assessment of both the people involved a consultant. The initial period of getting to know one another is based on and the company they represent. The informal agreement between the principals forms the basis mistrust and mutual forbearance rather than caution and inquiry. The contract and strict operating guidelines are developed throughout this period, of the partnership with the formal contract fulfilling legal requirements. A close, personal bond develops between principals. Managing the relationship is the specific responsibility of laying the ground rules out as a protective measure. No specific measures a liaison person or team of counterparts. are taken to manage the relationship.

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

Controls: The systems and structures guiding and monitoring operations, performance expectations, and involvement of the Board of Directors in IJV activities. The principals of the parent company work on shared goals and flexible expectations of outcomes The principals of the parent company place strict controls on the activities of to guide the activities of the IJV. There is a preference for ``joint learning and coaching.'' the IJV and rigid expectations on the outcomes. There is a preference for The principals of the parent are personally aware of the activities of the IJV and the ``teaching and control.'' The principals of the parent receive information decisions being made. through reports, rarely coming into personal contact with the activities.

24

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

partner could accomplish on its own and that those activities were to be continually improved. In fact, the most important skill learned was effective partnering. Intent was found to be an important determinant of the efforts a ®rm puts into learning from a JV partner (Benvignati, 1983; Hamel, 1991; Quinn, 1992). Perspective is one partner's view of the other partner. The analysis of the mindsets of key decisionmakers in each of the eight cases led to the conclusion that positive relations and outcomes could be achieved when the partner was treated respectfully and the IJV relationship was supportive. In contrast, criticizing the partner, controlling the IJV activities and believing that the greatest value was in teaching the IJV to replicate existing activities and then monitoring their adoption was related to negative relations and outcomes. The implications are that, having a respectful, positive and developmental mindset will lead to decisions and actions that encourage the JV to continually learn and improve. Alternatively, maintaining a critical, authoritarian mindset will lead to decisions and behaviors that limit creative problem solving and discourage development. The mindset related to successful knowledge outcomes in our companies is described as follows and supports the view that when you believe something you will see it, not the other way around:  Believing that knowledge is an important resource and that development and dispersion must be actively managed.  Recognizing the potential to learn new skills and competencies from the partner and from the IJV activities.  Intending to acquire new knowledge and to achieve mutual benefit with the partner and the IJV through the joint activities.  Intending to improve the operations of the IJV or partner, as well as gain financial or strategic benefits.  Viewing the IJV and partner as valuable contributors to the partnership.  Providing competencies that helped the IJV succeed as well as explicit resources.  Recognizing the potential to develop competencies of greater value.

5.2.2. Controls All of the IJVs operated under the supervision of a board of directors comprised of parent representation equal to the IJV ownership. What differed was the nature of the board's involvement in the IJV activities and decisions being made. The successful IJVs were supported and guided by the mutual goals of the partners as opposed to being controlled by the strict behavioral guidelines imposed by the foreign parent. This subtle difference again highlights the importance of a cooperative vs. a mistrustful mindset. If the principals believe that the IJV management or partner may cheat them, and are not actively involved in the operations to recognize if they are being cheated, then they will place strict controls on the activities of the IJV. If, however, the principals believe that the IJV management and the partner desire the same outcomes as they do, then they will focus more on supporting the activities to achieve those goals rather than controlling the activities. Control will determine the amount of ¯exibility the IJV management has to adapt resources to local demands and to develop new capabilities. Guidelines for controls that were related to successful knowledge outcomes were:  The principals of the parent company worked on shared goals and flexible expectations of outcomes to guide the activities of the IJV.  There was a preference for ``joint learning and coaching.''  The principals of the parent were personally aware of the activities of the IJVand the decisions being made. 5.2.3. Strategic integration Successful IJVs engaged in activities that were complementary to the parent operations yet entrepreneurial enough to add value to the existing parent operations as well as provide new business opportunities for both parents. There was a joint bene®t in this complementary-entrepreneurial approach in that not only were existing opportunities acted on but also new opportunities were created. Rather than just duplicate the activities of one parent in the new market, the IJV provided an opportunity to develop a competence in complementary activities closer to a market in which those activities applied. Inkpen (1992) found that JVs weakly linked to parent strategies would be less likely to provide

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

harvesting opportunities whereas those JVs viewed as important to the parent strategy would lead to greater interactions, increasing the potential to learn. He also noted that redundancy, ``the conscious overlap of company information,'' encourages dialogue and enhances knowledge creation. Both these aspectsÐ strategic linkages and redundancyÐsupport the call for complementary-entrepreneurial activities. The IJVs that created new learning for themselves and their parents had the following characteristics:  The IJVactivities were complementary to the parent activities, allowing for enough overlap to create redundancy of knowledge, while being entrepreneurial enough to add value for both parents.  There was tolerance of and respect for the different business practices.  The mechanisms used to overcome differences honored the values embedded in the practices, focusing on common goals of the partners.  The IJV became a working partner in the relationship.  IJV operations were strategically integrated with at least one of the parents.  There were personal interactions between the decision-makers as well as the employees involved in the operations.  The more tacit the knowledge being integrated, the more intense and lengthy was the integration of the people. 5.2.4. Training and development A common theme among the successful partnerships was:  The successful IJVs engaged in ongoing training and development of its employees, incorporating basic, theoretical and practical knowledge. Different methods were used but the common elements were incorporation of basic, theoretical and practical training; repeated and ongoing delivery of the training; lengthy sojourns integrating the learners with the experts in the parent company; and, incorporation of both experiential training and practice. Although the training may have focused on technical aspects of the operations and could arguably be applicable only in an environment where basic knowledge could not be assumed, several arguments can be made

25

for the universality of this training theme. First, the Mexican labor force in technical ®elds is well educated although not always experienced with the latest technologies. Second, the training often involved a philosophical element as well as a practical or technological element. And third, the training maintained a mindset of learning among its employees. 5.2.5. Resource contributions and integration The basic need to ensure that parents contributed required resourcesÐphysical, technological, managerial and ®nancialÐwas complicated by the additional requirements of contributing these resources in an effective manner and integrating the diverse pools of contributed resources. In addition to the actual resources contributed, the process by which these resources were contributed was also important. The facilitating processes were easy access to tangible, knowledge, and management resources, and lengthy interactions with the carriers of the knowledge. Restricting contribution decisions based on resource valuation and cost responsibility issues, and making contributions only as a reaction to urgent need, were inhibiting processes. Having access to technical and management expertise when needed, without having to go through formal channels to access that expertise led to expedient problem solving. That access could be achieved by having resident experts on site or by providing counterparts in the parent organization that IJV people could contact directly as needed. It was evident that not having an expedient channel of information restricted the activities of the IJV. Sometimes having to ask, knowing that language barriers existed and the other party would have other priorities inhibited making the request in the ®rst place. Con¯icts over the valuation of contributed resources could prove problematic. Focusing on the cost of the support and who would cover that cost, inhibited access to needed managerial expertise. The IJVs that were able to successfully integrate the knowledge resources of the parents and create value by improving on that knowledge were the ones that were provided lengthy interactions with the parentlevel experts. Providing access to operations and technical knowledge through short, infrequent visits did not allow for the in-depth understanding needed to integrate that knowledge with the IJV operations.

26

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

In cases where the foreign parent focused on achievement of end goals and allowed the IJV the autonomy to adapt systems and operations to their knowledge of the local context, performance outcomes were positive. In the case of the parent who focused on strict control, ensuring that current systems were not changed, performance outcomes were negative. In summary, the more successful joint ventures were characterized by the following:  The contributions were based on the anticipated needs of the IJVand were sufficient to allow the IJV to develop beyond initial expectations.  If the competencies contributed were insufficient, other sources of competence were sought out freely.  Contributed resources were integrated into the new context of the IJV operations and environment. 5.2.6. Relationship development The most prominent characteristic of the positive relationships in the case studies was the close, personal bond that developed early on and was maintained between key people of the parents and the IJV. Initially, this bond developed between the decision-makers of the alliance but the bond was evident in the older alliances as well between counterparts within the IJV and the foreign parent. Trust seemed to be one of the outcomes of this bond, knowing the person well enough to feel comfortable that they will not make unexpected decisions based on incongruent values. Yet, it seemed to go beyond trust. It seemed that these relationships incorporated respect and a desire to work with that person and to help that person and their organization achieve bene®ts. If dif®culties were encountered in the initial relationship, they became a barrier to ongoing value creation. The barriers to problem resolution were a negative mindset about the partner or the IJV, hesitancy in managing problems, and development of mistrust during initial interactions. In several cases, the relationship between parents and IJVs became very complicated and multifaceted with the parties acting as suppliers, customers and competitors to each other. Yet, even in the cases were the IJV started under the protective Mexican closed economy, the potential for competitiveness did not destroy the cooperative nature of the successful part-

nerships. In the case of the unsuccessful partnership, mistrust was related to a relationship best described as mutual forbearance (Buckley & Casson, 1988: 32) wherein the partners struggled over control of the IJV and were disturbed by the obscurity of each other's activities. The future of this relationship was uncertain with the foreign parent considering whether to include the partner in ongoing ventures. They considered taking advantage of the opportunity to buy-out a major share of the partner's ownership in order to inject capital into the ®nancially strapped IJV. In the successful partnerships there was an active working relationship between the foreign parent and the IJV rather than controlling the IJV activities at arms-length through the board or only through an active relationship with the local partner. The IJV was described as an equal partner, ``a brother'' rather than ``a sibling'' as often suggested in the literature. In these cases, the IJV was integrated into the local parent organization, often as a division, and inherited many of the local parent's best assets such as human resource systems, operating philosophies, and access to managerial talent. The best description of the situation was that the IJV, rather than being a completely separate entity, was an entrepreneurial entity strategically integrated with both parent organizations. A characteristic of the positive relationships in the cases was the equality and mutual respect among the individuals involved. There was no sense of inferiority or inability to candidly express concerns or views in fear of negative repercussion. The initial phases of the successful partnerships were described using terms that implied a desire to gain knowledge of each other, determine each others' strength and weaknesses as well as goals, and to assess whether a working bond was possible. By contrast, the initial period in unsuccessful partnerships was described using terms that implied a desire to test each other's limits and naiveteÂ. The successful partnerships all followed a process of personal involvement to select and decide on the alliance partner in contrast to allowing the selection and evaluation of partners to be conducted by a third party. The importance of partner choice on the achievement of goals, a ®nding supported by survey respondents who indicated that choice of partner facilitated IJV performance, would indicate a need for personal involvement in making that choice.

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

The most striking characteristic of effective relationship management was the empowerment of a liaison person to take responsibility for the relationship. This person became the boundary spanner, taking responsibility for resolving problems, sharing knowledge and mobilizing resources for the joint venture. Effectiveness was dependent on working for the bene®t of the IJV rather than either partner. Trust in a relationship is important, as are the personal interactions of key principals at the executive level and an operations level. However, they are still involved in their own companies, whether the parents or the IJV, and it is not always possible to pay the necessary attention to the relationship; other responsibilities and activities prevail. Putting the management of the relationship into the hands of one individual whose role it is to act as a liaison and protect that relationship, with an understanding of the different perspectives and the common goals, ensures that the relationship does not suffer because of other priorities. Individuals function within their own context, which does not always center in the partnership. Placing an individual in the context of the partnership, the boundary between parties, ensures a balance between individual and joint priorities. It also places dif®cult decisions in the hands of a party who is respected by all but has primary allegiance to the partnership. In addition to the use of liaisons, individual counterparts were teamed up to manage issues that arose and to jointly take responsibility for decisions based on their combined knowledge and expertise. A practice followed in the successful partnerships was the development of partnering expertise through apprenticeship. None of the companies in this study provided formal partnership training. Yet, several provided their managers with repeated experience in alliances and several pointed out that learning how to manage the partnership was an important component of success. It is evident from the case studies that companies engaged in IJVs do gain knowledge of how to better manage their partnerships. The case studies show that effective management of those relationships leads to more successful outcomes. In summary:  The principals of both companies were directly involved in the identification and selection of partners.

27

 The choice of partner was based on an intuitive assessment of both the people involved and the company they represented.  The informal agreement between the principals formed the basis of the partnership with the formal contract fulfilling legal requirements.  A close, personal bond developed between principals.  Managing the relationship was the specific responsibility of the liaison person or teams of counterparts. 6. Conclusions The case studies allowed for six descriptors to be mapped across learning and performance outcomes to differentiate successful and unsuccessful cases. The strategic value added of these ®ndings is presented in terms of knowledge gained and knowledge ¯ows. 6.1. Knowledge gained The literature discusses two basic types of knowledge acquired in an IJV, ®rm-speci®c knowledge that supports the IJV's internal activities and market-speci®c knowledge that supports the ®rm's activities within a particular market or country. Combining ®rm-speci®c knowledge with market-speci®c knowledge requires a reassessment of the ``arguments, decisions, uncertainties and processual nature of decision-making [which] are hidden away inside a piece of technology or in a complex representation'' with the ``radical local differences in belief, practice and knowledge'' (Bowker & Star, 1994). Through alliances, a ®rm also has the opportunity to develop resource-integration knowledge and partnering knowledge. Integrating the knowledge embedded in ®rm-speci®c knowledge resources with the knowledge embedded in local business practices is a necessity for effective use of resources within IJVs. Business practices comprise norms and preferences not only embodied in the behaviors of people, but also in artifactsÐ the machinery, the systems, the procedures, the techniques. It is not until those artifacts are taken into a new context that the norms and behaviors become noticeable, when they become the exception rather than the expectation. For this reason, an important knowledge resource to IJV activities is resource-integration

28

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

knowledgeÐthe competence in integrating contributed pools of knowledge resources. Managers in the study recognized and discussed the importance of ®rm-speci®c and market-speci®c knowledge resources, and their role in the formation and activities of alliances. However, to add value to existing ®rm-speci®c knowledge in the context of the new market realities, resource-integration knowledge was required. In order to maintain the relationship, achieve successful resource-integration and to carry forward the added value of the integrated resources to new opportunities, partnering knowledge was needed. This indicates a hierarchy of IJV knowledge. Yet, while there was recognition of the importance of partnering and resource-integration knowledge the full potential of IJVs to create knowledge of higher value was not being recognized. Nor was the full potential of learning processes recognized as a way to overcome dif®culties within the IJV. The case studies show that the types of knowledge related to more successful outcomes were as described later. Firm-speci®c knowledge related to successful knowledge outcomes . . .  The IJV operations improved beyond the combined capabilities of the partner contributions, and beyond the capabilities of similar operations within the parent companies to the point of developing their own patents.  The parents, although potentially restricted from accessing the proprietary technological knowledge, did learn about systems and processes used in the IJV. Market-speci®c knowledge related to successful knowledge outcomes . . .  The foreign parent gained knowledge about the market in which the IJV operated, and had both an understanding of and tolerance for, the different business practices.  The local parent and the IJV gained an understanding of how to function in other foreign markets, particularly that of the foreign parent.  There was cultural involvement on the part of the foreign parent and some understanding of the language. Resource-integration knowledge related to successful knowledge outcomes . . .

 There was an understanding going into the partnership that resources may have to be adapted in some way, even if it was not initially clear what those adaptations would be. Partnering knowledge related to successful knowledge outcomes . . .  There was a better understanding of how to manage the relationship with the IJV and the partner.  There was an understanding that the relationship took work but that there was a benefit to be accrued beyond just the financial or strategic gains repatriated from the IJV. 6.2. Knowledge ¯ows: managing intangible assets to create value The IJVs that displayed poor learning and performance outcomes were those that engaged in only the transfer of existing knowledge. In those cases, the IJV was not able to move beyond the capabilities of the parent and there was a one-way ¯ow of learning from the parent to the IJV. Cases that displayed high learning and performance outcomes were those that engaged in both transformation and harvesting processes, in addition to the transfer of existing knowledge. In terms of transformation, the IJV had moved beyond their initial capabilities and those of similar parent operations. The IJV gained a dominant market position. The relationship had transformed such that the partners jointly took advantage of new opportunities in other markets. In terms of harvesting, the parent company, while not necessarily sharing in newly developed technological knowledge, was successful in new partnerships or new business activities as a result of knowledge gained through the relationship. The results showed variations in the behavioral processes of the parent and IJV management of successful and unsuccessful IJV networks. These variations help us understand how effective knowledge management can be achieved in partnership networks. There was an indication that managing knowledge resources leads to enhanced adaptability and responsiveness for the IJV, and long-term strategic bene®ts for the parent ®rms. The strategic advantages of effective knowledge management are evident. Choosing to focus on management of knowledge resources

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

is a strategic decision. The ®ndings of this work outline some of the behavioral processes by which that decision can be implemented. The mindset of key players will de®ne the way in which decisions are made and the activities that the decisions support. In order to ensure decisions that encourage learning, decision-makers must have learning on their minds. Another key factor is using resource contributions to maximize learning outcomes rather than minimize cost. These ®ndings call for a learning culture, behaviors based on the belief that learning is possible, bene®cial and important. Casson (1994) suggests that, in negotiating for the purchase of information (which partnering is an example of), standardizing information can overcome the threat of a party supplying bad information. Yet, in one of the cases in this study it was the standardization of information ¯owing from the IJV to the American partner that allowed for the falsi®cation of the information leading to near bankruptcy of the IJV. The difference seems to be addressed by Casson's further suggestion that companies need to be able to move from the regulation of information to the regulation of the processes of obtaining that information. Similarly, Porter (1994) argues that the apprenticeship required to develop a skill can be by-passed with the standardization, for example, of equipment or processes. One American partner standardized their foreign market entry program having started with no idea of how to successfully proceed in a new market. Other global managers, without having to go through the same apprenticeship process that the original principals went through, can carry out the program. Companies need to move from the standardization of information to the standardization of the processes for obtaining that information. These processes capture individual learning and transform it into organizational knowledge that can be deployed and managed to create value. 7. Limitations 7.1. Sample size Since in-depth case analysis was chosen as the appropriate methodology for this study, the number

29

of cases studies was limited to eight. The next step will be to develop an instrument with which empirical testing of these ®ndings can be conducted. 7.2. Survivor bias This research is limited to organizations that still exist. This bias towards survivors means that ®ndings can only be generalized to existing IJVs motivated to leverage learning jointly or those poor performers who have not yet collapsed. It screens out those IJVs that may have learned and then purposely dissolved. Inkpen and Beamish (1997) point out the destabilizing effect that learning can have on IJVs. 7.3. Successful case bias While we do have one clear unsuccessful (yet surviving) IJV and one that overcame poor performance, most of our cases display effective learning processes and performance. These cases have shown a consistent pattern that is not apparent in the unsuccessful cases. However, the conclusions must be tested further with a more balanced sample to improve the power of the results. 7.4. Regional bias While a conscious decision, the choice to focus on production based IJVs within the NAFTA partnership does limit generalization of the results.

References Anderson, E. (1990). Two ®rms, one frontier: On assessing joint venture performance. Sloan Management Review, 31(2): 19± 30. Beamish, P. W., & Berdrow, I. (2001). Unfolding the myth of international joint venture learning. Working Paper. Benvignati, A. (1983). International technology transfer patterns in a traditional industry. Journal of International Business Studies, 14(3): 63±76. Boulton, R. E., Libert, B. D., & Samek, S. M. (2000). Cracking the value code. New York: Harper Business. Bowker, G., & Star, S. L. (1994). Knowledge and infrastructure in international information management: Problems of classi®cation and coding. In L. Bud-Frierman (Ed.), Information acumen: The understanding and use of knowledge in modern business. London: Routledge.

30

I. Berdrow, H.W. Lane / Journal of World Business 38 (2003) 15±30

Buckley, P., & Casson, M. (1988). A theory of cooperation in international business. In F. Contractor, & P. Lorange (Eds.), Cooperative strategies in international business (pp. 31±53). Lexington, MA: Lexington Books. Casson, M. (1994). Economic perspective on business information. In L. Bud-Frierman (Ed.), Information acumen: The understanding and use of knowledge in modern business. London: Routledge. DeLong, D., & Seeman, P. (2000). Confronting conceptual confusion and con¯ict in knowledge management. Organizational Dynamics, 29(1). Doz, Y. L. (1996). The evolution of cooperation in strategic alliances: Initial conditions or learning processes? Strategic Management Journal, 17SI: 55±83. Hamel, G. (1991). Competition for competence and inter-partner learning within international strategic alliances. Strategic Management Journal, 12: 83±103. Harris, K., Fleming, M., Hunter, R., Rosser, B., & Cushman, A. (1999, March 18). The knowledge management scenario: Trends and directions for 1998±2003. Strategic Analysis Report Gartner Group http://gartner4/gartnerweb.com:80/gg/purchase/ 0/0/775/40/doc/00077540/. Hedlund, G. (1994). A model of knowledge management and the N-form corporation. Strategic Management Journal, 15: 73± 90. Inkpen, A. C. (1992). Learning and collaboration: An examination of North American±Japanese joint ventures. Unpublished Ph.D. Dissertation, Western Business School. Inkpen, A. C. (1995). Organizational learning and international joint ventures. Journal of International Management, 1(2): 165±198. Inkpen, A. C. (1996). Creating knowledge through collaboration. California Management Review, 39(1): 123±140.

Inkpen, A. C., & Beamish, P. W. (1997). Knowledge, bargaining power, and the instability of international joint ventures. Academy of Management Review, 22(1): 177±203. Killing, P. J. (1983). Strategies for joint venture success. New York: Praeger Publishers. McDermott, R. (1999). Why information technology inspired but cannot deliver knowledge management. California Management Review, 41(4): 103±117. Miles, M. B., & Huberman, A. M. (1994). Qualitative data analysis (vol. 2). Thousand Oaks, CA: Sage Publications. Mintz, S. L. (2000, February). The second annual knowledge capital scoreboard: A knowing glance. CFO Magazine, Feb 01: 52±62. Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5(1): 14±37. Porter, T. M. (1994). Information, power and the view from nowhere. In L. Bud-Frierman (Ed.), Information acumen: The understanding and use of knowledge in modern business (pp. 217±230). London: Routledge. Powell, W. W., Koput, K. W., & Smith, D. L. (1996). Interorganizational collaboration and the locus of innovation: Networks of learning in biotechnology. Administrative Science Quarterly, 41: 116±145. Quinn, J. B. (1992). Intelligent enterprise: A knowledge and service based paradigm for industry. New York: The Free Press. Teece, D. J. (1998). Research directions for knowledge management. California Management Review, 40(3): 289±292. Von Glinow, M. A., & Teagarden, M. (1988). The transfer of human resource management technology in Sino±U.S. cooperative ventures: Problems and solutions. Human Resource Management, 27(2): 201±229. Zack, M. H. (1999). Developing a knowledge strategy. California Management Review, 41(3): 125±145.