A Study On Intra-organizational Knowledge Transfer And Firm Performance

With the rapid development of Chinese economy in recent decades, the rise of made inChina has attracted people s concern all over the world. Local firms in China not only cangain the opportunity to access to the global market and share the benefits from the globalvalue chains (GVCs), but also can acquire advanced knowledge from the leadingmultinational companies in the world, through participating in global production networks(GPNs). At present, the competitiveness of local firms in China generally is based on thelow-cost labor and raw materials, also on the lower environmental standards than developedcountries and the advantages of Chinese taxation policies, so it s difficult for them to achievehigher profitability and the sustainable development. Usually they fall into the distressedsituation that be locked on the bottom the value chains. Therefore this dissertation aims tofind factors affecting the knowledge transfer from leading firms on GPN/GVC to local firmsin China, analyzes the relationship between this special knowledge transfer and theperformances of local firms in China, and offers feasible countermeasures and suggestions toChinese local firms to choose their upgrading strategy and enhance their competitiveness.Based on knowledge-based theory of the firm, GPN theory and GVC theory, first thisdissertation proposes a two-stage affecting model on knowledge transfer on GPN/GVC byliterature review; second verifies the conceptual model through the case study on Foxconncompany, Glanz company and Bosideng company, and concludes two feasible upgradingpathways for local firms on GPN/GVC, and analyzes what factors affecting the upgrading;third proposes the structural model and hypotheses on the basis of the conceptual model,related literature and conclusions from case study; forth builds structural equation model andcarries on empirical analysis; finally sum up the conclusions. Its conclusions are thefollowing:(1) Two-stage affecting model on knowledge transfer on GPN/GVC. It argues thatsuccessful knowledge transfer should be of quality, efficiency and effectiveness. The processof knowledge transfer from the flagship firms on GPN/GVC to local firms can be divided intotwo stages: the first stage is knowledge acquisition phase. Four factors which arecharacteristics of transferred knowledge, networking capabilities of local firms, the quality ofthe relationship between flagship firms and local firms and cultural distance affect efficientaccess to high quality knowledge. The second stage is knowledge application phase. Threefactors which are the quality of knowledge transfer, the efficiency of knowledge transfer and absorptive capacity of local firms affect the final effect of knowledge transfer that is firmperformance.(2) Two feasible upgrading pathways for local firms on GPN/GVC. Path NO.1, the localfirms focus on cultivating their routine technological capabilities through the digestion andabsorption of knowledge transfer on GPN/GVC, and realize the upgrading from the lowability OEM to high ability OEM. Path NO.2, based on Path NO.1, local firms focus oncultivating their innovative technological capabilities, and realize the upgrading from the highability OEM to ODM and OBM, namely low ability OEM high abilityOEM ODM OBM.(3)It s found that following hypotheses are supported by empirical analysis: H1-2, thecharacteristics of transferred knowledge is negatively associated with the efficiency ofknowledge transfer; H2-1, networking capabilities of local firms are positively associatedwith the quality of knowledge transfer; H2-2, networking capabilities of local firms arepositively associated with the efficiency of knowledge transfer; H3-1, the quality of therelationship between flagship firms and local firms is positively associated with the quality ofknowledge transfer; H3-2, the quality of the relationship between flagship firms and localfirms is positively associated with the efficiency of knowledge transfer; H4-1, the culturaldistance between flagship firms and local firms is negatively associated with the quality ofknowledge transfer; H4-3, the cultural distance between flagship firms and local firms isnegatively associated with the quality of the relationship between them; H5, the quality ofknowledge transfer is positively associated with performances of local firms; H6, theefficiency of knowledge transfer is positively associated with performances of local firms;H7,absorptive capacities of local firms are positively associated with performances of local firms.(4) Network rigidity. Once local firms in China embed in GPN led by leading firms whichare MNCs, they usually rely on the resources, markets, technology and knowledge fromflagship firms for the power asymmetries on GPN. In other words, local firms embedding inGPN are controlled by flagship firms on some extent. Because of the network rigidityphenomenon, it s difficult for local firms to improve their positions on GPN/GVC by usingtheir networking capabilities.