AIM research project: International Knowledge Transfer and Dynamic Capabilities of MNCs

Professor Mark Easterby-Smith (Management Learning and Leadership) secured grant research funding from the UK Economic and Social Research Council (ESRC) as part of the Advanced Institute of Management (AIM) research initiative from 2003 to 2006. 

The project focused on dynamic capabilities of multinational companies (MNCs) operating in China. The principal researchers were Professor Mark Easterby-Smith and Dr Shenxue Li. They undertook their initial field study in collaboration with some leading multinationals (including Siemens, Ericsson, BASF, HSBC and Allianz) in 2004.

The rise of China and its strategic position in the world have offered a good context to investigate the dynamics of an emerging market and explore how MNCs ride the waves of environmental changes there. The MNC is engaged in intensive knowledge transfer across-borders. However, its success in a dynamic market like China does not only rest on the technological and managerial knowledge it transferred to China, although that is crucially important. Understanding the fundamental differences of this particular market and accordingly deploying relevant business strategies by developing new capabilities, reallocating firm resources, and reorganising its business structure and routines will bring the MNC a competitive edge.

The theory of organisational learning assumes that there is a link between organisational learning and the firm’s dynamic capabilities. This study examines the relevance of this proposition within the context of MNCs in China.