Learning to Compete in a Transition Economy: Experience, Environment, and Performance
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to
Compete
Experience,
in
a
Transition
Environment,
and
Performance YadongLuo* UNIVERSITY OF HAWAII
MikeW. Peng** OHIO STATE UNIVERSITY
Does organizational learning as measured by experience in a host country affect international expansion performance? If so, does such a relationship between experience and performance hold over time? How do the environmental forces in the host country affect such a relationship? Focusing on organizational learning enterprises by multinational (MNEs) operating in a transition economy, this study answers these three critical questions by exploring the relationships among experience, environment, and performance at the subsidiary level.
Based on a recent survey of 108 MNE subunits operating in China, we find that the intensity and diversity of host country experience is an important predictor of subunit performance. While the positive effect of the intensity of experience on performance diminishes over time, the impact of the diversity of experience on performance remains unchanged. Moreover, for MNEs experiencing greater environmental dynamism, complexity, and hostility, there is a stronger positive relationship between experience and performance.
Yadong Luo (Ph.D., Temple University) is an associate professor of international management at the University of Hawaii ([email protected]). He is the author of two books, International Investment Strategies in the People's Republic of China (Ashgate, 1998) and Entry and Cooperative Strategies in International Expansion (Quorum, 1999). This is his second contribution to JIBS. * Mike W. Peng (Ph.D., University of Washington) is an assistant professor of management at the Ohio State University ([email protected]). He is the author of two books, Behind the Success and Failure of U.S. Export Intermediaries (Quorum, 1998) and Business Strategies in Transition Economies (Sage, 1999 in press). This is his second contribution to JIBS. This study was supported in part by a Grant from the CIBER at the University of Hawaii, two Direct Allocations Grants from the Chinese University of Hong Kong (project codes: 2070162 and 2087004), and a Competitive Earmarked Research Grant from the Hong Kong Research Grants Council (project code: HKUST6174/98H/CUHK/EI16). We thank Orlan Lee, Yuan Lu, Sam Park, Denis Wang, Steve White, Aimin Yan, and three anonymous reviewers for helpful comments, and Justin Tan for discussions and sharing his questionnaire items. JOURNAL OF INTERNATIONAL BUSINESS STUDIES, 30, 2 (SECOND QUARTER 1999): 269-296.
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LEARNINGTo COMPETEIN A TRANSITIONECONOMY
Organizational learning has long been a key building block in the behavioral theory of the firm (Cyertand March, 1963; Fiol and Lyles, 1985; Levitt and March, 1988). Recently, this perspective has been incorporated into the resource-based view of the firm in the strategy literature, which conceptualizes a
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