An Examination of the Core Dimensions
New Horizons in International Business series
Chapter 6: Learning to Manage International Joint Ventures
INTRODUCTION Increasingly knowledge is considered a vital ingredient in competitive success. As the integration of global markets intensifies competition, companies must devote more attention to ways of acquiring the knowledge resources that they need. With constantly shifting technologies, products and processes, competitive advantage may rest on the ability of a company to learn and diffuse accumulated knowledge throughout the organization (Garratt, 1987; Choi and Lee, 1997; Nonaka, 1991, 1994; Lynn and Rao, 1995; Spender, 1994). In this context the possibility of using co-operative strategies, especially international joint ventures, as instruments for gaining knowledge is being more readily acknowledged (Lyles, 1987; Inkpen, 1995). The importance of learning within organizations has long been considered an important determinant of technological progress and the raising of efficiency and productivity. Child and Faulkner (1998: 287) maintain that the ability to learn is probably the most important intangible asset that a company can possess. In the mainstream economics literature the phenomenon of ‘learning by doing’ (that is, increases in output without additional investment) was formally elucidated in the 1960s by Arrow (1962), Levhari (1966), and Sheshinski (1967). More recently, the learning process in organizations has been examined within the realms of organizational theory and strategic management (Huber, 1991). This literature focuses not only on the outcomes of learning but also on the processes of learning, that is, on the methods used by firms to utilize knowledge and develop organizational efficiency. Principally, this is done through more effective use of skills in order to achieve the outcome...
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