Chinese subsidiaries in the UK : nature and motives for investment and learning processes
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China is one of the largest outward foreign-direct-investors (OFDIs) and is rapidly internationalising. There are numerous studies about the internationalisation of Chinese MNCs, in particular their development, determinants, motivations and performance. Many scholars in international business argue that one of the major reasons for firms from emerging markets such as China to invest in developed economies is to assimilate new knowledge and resources; exploring learning by Chinese MNCs in the developed countries is therefore significant. However, there is little research about Chinese MNCs learning abroad and even fewer studies on the processes of learning. This thesis analyses these processes and the motivations of Chinese OFDI in the UK and explores how their subsidiaries learn, exploit knowledge, develop capabilities, and how they transfer knowledge and capabilities to the headquarters (HQs). In order to explore the learning of Chinese subsidiaries in the UK, it is crucial to understand the nature and motives of their OFDI to ensure the existence of learning in these firms. This dataset includes the largest survey (30 respondents) of Chinese subsidiaries in the UK and qualitative interviews with 40 employees in 15 subsidiaries and seven HQs of Chinese MNCs. Based on the resource-based view of the firm, absorptive capacity, knowledge transfer and Andersson, Forsgren and Holm’s (2001) processes of capabilities development in a MNC, a conceptual framework is developed, which guides data collection and analysis: this is then revised, based upon the study’s findings. This new framework suggests a unique process of capabilities development within a Chinese subsidiary and their HQs, two different learning circles. The longer learning circle presents Chinese subsidiaries exploiting new knowledge to develop capabilities and transfer the new capabilities to the HQs. The shorter learning circle shows Chinese subsidiaries sometimes transferring unexploited information and knowledge to the HQs. Whilst HQs develop capabilities through directly absorbing new knowledge created by subsidiaries, HQs also inhibit subsidiaries from collecting knowledge useful in developing new capabilities. Therefore, the learning and knowledge transfer in the subsidiaries is mainly based on the HQs’ interests and requests; thus under-utilising the absorptive capacity of subsidiaries. There are other important findings. The scope of learning in subsidiaries is restricted by the scope of their operations, especially in human resources, sales and marketing. There is also dissonance between the intent to learn and the actions of learning, which arises from the majority of these Chinese MNCs not having formal and systematic approaches towards learning, knowledge exploitation and knowledge transfer.