Effective Mnc Knowledge Resources During a Radical Environmental Shift

Zusammenfassung

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To learn and adapt are key challenges confronting MNCs. While knowledge resources can be accumulated over time through experience and learning, sometimes prior learning can be a hindrance in adapting to radically shifted environments. We investigated the types of knowledge resources and capabilities that provided flexibility or acted as rigidities during the recent Asian economic crisis.

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Effective Mnc Knowledge Resources During a Radical Environmental Shift

The Resource-Based View (RBV) argues that firms can gain competitive advantage by building a tight link between an organization's resources and capabilities and the demands imposed by the organizational environment (Collis/Montgomery 1995). These capabilities give the firm flexibility to adapt quickly to changes in the organizational environment (Teece/Pisano/Shuen 1997). Firms with strong resources and capabilities, particularly knowledge or experience, will have a better chance to withstand, and potentially profit from, upheavals in the external environment.

However, not all knowledge resources are equally valuable during an environmental shift. Some resources and capabilities lock firms into patterns of actions and routines because of their path dependency and prevent firms from adapting to a new environment (Hannan/Freeman 1984, Nelson/Winter 1982, Rangan 1998, SuIl 1999). As these resources and capabilities become "core rigidities", firms can fall into competency traps (Leonard-Barton 1992). These rigidities are often magnified in a multinational environment because the added complexity of the global environment can reduce the speed of firm responses (Hannan/Freeman 1984). For example, multinational corporations (MNCs) may have so many operations in different countries that they may not fully anticipate the extent of the environmental shift being faced in one of their host countries and fail to respond in time (Greve 1999, Rangan 1998, SuIl 1999).

We investigated the flexibility and rigidity associated with knowledge resources in the context of the Asian economic crisis from 1996 to 1998. Unlike industrial crises, which are usually caused by industrial accidents or technological innovation and have negative impact on a single firm or industry (e.g. internet), economic crises affect a country (e.g. Mexico in 1994) or a region (e.g. Asia in 1998). The Asian crisis altered significantly some Asian countries' market demand and caused serious social and political instability (Grewal/Tansuhaj 2001). While many companies did not survive the crisis, others prospered. Using longitudinal data from 104 Japanese subsidiaries in Thailand, Malaysia, Indonesia and South Korea, we were able to identify the knowledge resources that enhanced firm performance from 1996 to 1998.

Our results showed that subsidiary experience in the host country wa...

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