[IS Theory]Absorptive capacity, learning, and performance in international joint ventures

Absorptive capacity, learning, and performance in international joint ventures
 Lane, P. J., Salk, J. E., & Lyles, M. A.. 2001. Strategic Management Journal. 22(12). pp. 1139-1161 

 

- An Organization’s absorptive capacity is its ability to

 (1) Understand new external knowledge

 (2) Assimilate it

 (3) Apply it to commercial ends

 

 

- The results provide support for the hypotheses concerning factors influencing the IJV’s ability to understand and assimilate knowledge from its foreign parent, and strong support for the hypotheses regarding factors influencing the IJV’s ability to commercially apply that knowledge.  

- Unexpectedly, trust between the parents and support provided to the IJV by the foreign parent are associated with performance instead of directly with learning.

 

1) Understanding External Knowledge 

 -  relatedness of their businesses, the similarity of the problems and priorities with which they are faced, is most important for the recognition of new knowledge.

 - trust was not related to learning but was instead related to performance

 - the level of trust between the parents does not seem to influence the downward knowledge transfer to the IJV. Alternatively, trust becomes important only when there is a risk of opportunistic behavior by the parents

 - while the evidence of a relationship between trust and IJV performance is not in keeping with the mainstream of IJV theory, it is not unprecedented

 

 2) Assimilating External Knowledge

 - Flexibility and adaptability are consistently important in facilitating this process

 - A high level of training by the foreign parent also can assist IJV sensemaking by providing mechanisms for reducing the ambiguity in new knowledge, particularly tacit knowledge

 - firms with high prior learning benefit most from training provided by the foreign parent

 

 3) Applying external knowledge

 - while knowledge from foreign parents matters, the IJV adopting a business strategy appropriate for its home market matters more, and the IJV’s competence in training and personnel development matters most of all