A critical examination of the importance and subsequent challenges of knowledge transfers in international strategic alliances in China

Introduction

China has been predicted by Wilson and Purushothaman (2006) to be the world's largest economy by 2050 with China being positioned as one of the BRICS economies (a group made up of Brazil, Russia, India, China and South Africa). As a result of this focus on growth, increased attention has been directed towards China and in particular, an examination of international strategic alliances in China as a powerful driver of economic success. As discussed in the work of Dunning (2015), Jin, Von Zedtwitz and Chong (2015) and Zhao (2015) strategic alliances are a process by which many Chinese firms are expanding their international markets to stimulate both firm level and economy level advantages. Although strategic alliances offer potential and opportunities for knowledge sharing and the leveraging of knowledge, challenges can also result. Whilst these challenges have been explored in the literature including in the work of Gulati, Wohlgezogen & Zhelyazkov (2012), a gap has been identified that very little focus is directed towards specific challenges Chinese firms face despite China being identified as being both a unique and challenging business environment (Moser & Yu, 2014). As a result, the different approaches between the West and the East could be a challenge in strategic alliances. Such challenges could in turn impact upon the extent, quality and nature of knowledge transfers that take place and thus require examination. This research proposes a mixed methods methodology to uncover such challenges in detail in addition to the nature of knowledge transfers.

For the purpose of this research, a strategic alliance can be defined as 'a legal agreement between two distinct organisations that provides for sharing resources collaboratively in pursuit of a mutually beneficial goal' (Financial Times, 2016: 1). Further, the very nature of a 'strategic' alliance refers to a variety of criterion centred around an organisation which has undertaken an alliance or partnership with another firm critical to the success of that business. A business, for example, may undertake an alliance to increase capacity for knowledge sharing or capabilities, a core theme that is likely to emerge in this research. Second, an alliance often restricts or blocks a competitive threat and as such, alliances are regularly positioned as being a process which enables competitive strength as presented in the research of Brouthers, Nakos and Dimitratos (2015), and Bouncken, Pesch and Gudergan (2015), research that this study draws on.

Dunning (2015: 111) refers to the modern world as being in 'an age of alliance capitalism' thus encompassing the strategic power of alliances. As a result of this, there is a need to understand this growing trend and its subsequent link with competitive success. The crux of this exploratory research seeks to understand the extent to which knowledge transfers exist in strategic alliances between domestic Chinese firms and international partners and the extent to which these underpin competitive success. This focus on competitive success is an inherent driver of this research due to the strong link between strategic alliances and competitive success in the literature.

For this to be examined, the meaning of knowledge and the nature of knowledge transfers must first be understood. At a basic level, knowledge transfers refer to some exchange of knowledge, which may be either explicit or tacit which is used to enhance learning within the firm. Such knowledge transfers are increasingly positioned as being valuable, as a result of their treatment as a capability allowing an organisation to achieve superiority if such a capability is achieved and then focused upon (Calvo-Mora et al, 2016; Suarez, Calvo-Mora & Roldán, 2016). Knowledge, at its superficial level, is often ambiguous in tone and thus refers to and is underpinned by the concepts of understanding, intuition and experience. Knowledge can take both implicit forms, which may be innate or based on the experience of an individual, or it may take a more explicit form where information is depicted and translated easily. For knowledge transfers to promote a superiority and competitive advantage, tacit, implicit information is valuable and therefore needs to be facilitated however, as has been discussed challenges exist.

Building on the limitations of existing work (e.g. Jensen & Szulanski, 2004; Simonin, 1999) surrounding international strategic alliances in China, this research argues that there is a need to focus upon what strategic alliances look like, the nature of knowledge transfers and the challenges faced all within the growing and important context of the Chinese economy. At present, studies examining knowledge transfers can be viewed as being generalised often due to their large geographical scope e.g. Shekhar (2016) and thus the rationale for this study, to summarise, is twofold: one to understand the meaning of knowledge transfers and what they look like to move away from current black box interpretations as seen in the work of Simonin (1999); and two, to focus upon the Chinese market and the nature of knowledge transfers to understand the challenges faced. This focus on the Chinese market is necessary due to the business approach in China being notably different to that of the west (Zhao & Zhang, 2016). As a result, there is a need to examine if this context supports a different understanding or perspective of knowledge transfers to, in particular understand the challenges within this context.

The above summary of justification leads to the formulation of the following research objective and questions:

Research Questions

The research objective 'To explore and examine knowledge transfers within Chinese strategic alliances' will be achieved by focusing on the following research questions:

1. What are the challenges faced by Chinese firms in obtaining knowledge in their international strategic alliances?
2. How much knowledge transfer exists for Chinese firms in their international strategic alliances?
3. How do Chinese firms use the knowledge obtained from international strategic alliances to strengthen their competitive position?

Literature Review

Knowledge plays an important role in driving success and is often positioned as a determinant of growth (Zahra, 2015). The key concepts of knowledge, knowledge spillover and technological change require focus. Knowledge spillovers facilitate the transfer and exchange of knowledge, which can raise the value of knowledge itself (Ko & Liu, 2015). Whilst debate exists with regards to the use of one agreed definition of knowledge spillovers the definition provided by Griliches (1990: 1661) provides a useful starting point. Griliches (1990: 1661) defines knowledge spillovers as 'ideas borrowed by research teams of industry I from the research results of industry j'. This definition alludes to the fact that certain types of knowledge can be exchanged and reflects upon the importance of exchanges to facilitate and underpin competitive strength. Knowledge spillovers play an important role and subsequently, there is a need to focus upon the extent to which spillover in itself can be facilitated in a positive way to stimulate overall growth (Grossman & Helpman, 2015).

Inter-firm knowledge transfers emerge through strategic alliances yet the process of knowledge transfer can differ dependent upon the extent to which knowledge results in the development of capabilities (Mowery, Oxley and Silverman, 1996). As a result, the Resource Based View (RBV) of the firm comes into play when there is a need to consider the importance of developing capabilities to facilitate competitive success particularly in light of the sustainability of strategic alliance partnerships. Whilst some argue that strategic alliances facilitate a heightened arena for knowledge exchange and spillover (Ritala et al. 2015), others argue that it can result in weaknesses stemming from a lack of application to the newly received knowledge (Schulze, Brojerdi & Krogh, 2014).

Dyer and Hatch (2006) examine knowledge transfers and argue that barriers and challenges exist which requires examination. Such barriers may include structural factors e.g. top-heavy hierarchal structures or could be more people focused issues such as a lack of confidence or motivation to learn. Whilst organisational learning exists at the organisational level, organisational level learning does not exist without individual learning. As such, it is important to focus upon individual level capabilities such as the facilitation of learning to promote future transfers (Isaksson, Simeth, & Seifert, 2016). As a result, this area of research relates to the work of Turner and Pennington III (2015) where the opportunity for learning is discussed and this is argued to be underpinned by motivation and innovation practices within the firm (Teece, 2009).

The very nature of strategic alliances links to some concept of exchange and partnership taking place and it is possible to argue that the Chinese economy is regularly using strategic alliances to stimulate economic growth (Teece, 2009). Bingham et al (2015) highlight the importance of the nature of concurrent learning and argue the need for multiple dynamic capabilities to be developed. Such dynamic capabilities promote the importance of the emergent nature of learning and this dynamic nature links back to the opportunity strategic alliances provide to the Chinese economy. Strategic alliances promote an opportunity to facilitate a dynamic approach to the external competitive environment, as a result, emphasis is placed on the need to not stand still but for firms to push forward and facilitate growth. In order to do so the unique context within which strategic alliances in China are positioned must be explored.

Research Methodology

The next part of this proposal focuses upon the proposed research methodology for this research project. This section is underpinned by justifications surrounding methodological choices and the mixed methods methodology due to be employed.

a) Research Method

The proposed research is a mixed methods study where an online questionnaire, comprising both closed and open-ended questions, will be administered to a sample population of domestic firms in China who have undertaken an international strategic alliance in the last 1-5 years. The closed questions will be analysed quantitatively and the open-ended questions will be analysed qualitatively. It is expected that 100 firms will be targeted in total and will be recruited via personal networks and social media with a particular focus on LinkedIn. It is important for the firms questioned to have undertaken a strategic alliance in the last 1-5 years to ensure that they are able to comment on knowledge transfers. A mixed methods methodology is considered to be a suitable approach, as it allows for a larger sample to be obtained through a survey whilst at the same time benefiting from the detail achieved by the qualitative interpretation of the open-ended questions. Previous research conducted on knowledge is often ambiguous in nature and thus a mixed methods methodology allows for richer more in-depth data to be obtained which is important when trying to understand what knowledge looks like. Further, by administering the questionnaire online it is possible to access and target a larger population, thus enabling statistical analysis to take place (Taylor, Bogdan & DeVault, 2015).

Drawing on existing scales available in the literature, a new questionnaire will be designed to measure organisational learning, knowledge transfers and the process of knowledge exchange. Underpinned by a largely positivist philosophy, this research argues that there is a need to move towards a concrete measure of these constructs in an attempt to support firms as to how they can enhance knowledge transfers in strategic alliances. However, at the same time, this research recognises the value of interpretivism and thus seeks to complement statistical analysis with a more detailed interpretation of the open-ended questions. It is important to reflect upon the strength of the mixed methods methodology in order to identify what knowledge transfers look like and the challenges that exist. Such detail cannot be obtained from, closed, Likert scale questions alone.

This questionnaire will be designed online using the software Bristol Online Surveys (Bos), and Bos is used to ensure the professional look of the questionnaire. By designing the questionnaire online it is also possible to easily administer it online, particularly over social media sites including LinkedIn where a number of appropriate groups have been recognised e.g. Doing Business in China Discussion Group. Once the data has been collected, attention will be directed towards the analysis of the data. SPSS will be used to analyse the results; descriptive statistics and correlation tests will be carried out in order to determine the relationships between variables (Flick, 2015). A number of open-ended questions will also be placed in the questionnaire which lend themselves to more of a thematic approach to analysis. It is proposed that the questionnaire will contain 12 questions.

Throughout, primary data collection will be supported with relevant information from secondary data sources. Developing from the literature review, statistics will be collected regarding the number of strategic alliances in China and how their success if quantified. This type of secondary data will inform the context within which the primary data is collected.

b) Time Frame

c) Limitations

There is a need to consider the limitations of this proposed research and to do so in a manner that allows for action to be taken to remedy any potential limitations. One of the central limitations relates to the validity of the questionnaire, which may be reduced as a result of bringing together different scale items from the literature (Bryman & Bell, 2015). However, in order to reduce the extent to which this limitation occurs, attention will be directed towards the completion of two pilot studies used to pre-test the questionnaire prior to its use with the sample population. Further, a second limitation relates to the sample population where at present it is expected that 100 firms will be involved in the study. Referring to statistical practice a sample closer to 200 is needed to ensure statistical validity and therefore there are implications for generalizability (Bryman, 2015).

d) Conclusion

To conclude, this proposal has outlined and discussed the central components of this research and has discussed the need to carry out research in this area. Fuelled by the increasing dominance of China, this research focuses upon this research context and does so to explore important and often valuable knowledge transfers, which are widely linked in the strategic management and international business literature to competitive advantage. Through the use of a questionnaire, this research will investigate and measure knowledge transfers in order to examine the three central research questions. This information can then be used to feed directly into the future practice of firms undertaking international strategic alliances with a focus on identifying the challenges to then focus upon improving and facilitating knowledge transfers. Whilst limitations, as discussed above, do exist, an awareness of such limitations is expected to reduce the extent to which they influence the outcomes of the research project.

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