Internationalization as a learning process: Singapore MNCs in China

Abstract

Executive Overview To face the challenge of increasing global competition, domestic companies need to leverage their strengths overseas. Newcomers to the international arena may encounter difficulties different from those of established multinational corporations (MNCs). This article examines the internationalization process of fledgling MNCs from an organizational learning perspective. The discussion is supported by an empirical study of 19 Singapore companies and their operations in China, including joint ventures and wholly owned subsidiaries. Internationalization is the transfer of a firm's physical and organizational technologies from one country to another. Companies that learn efficiently from their experience are able to expand overseas faster and with fewer mistakes. Managers who are directly involved in establishing and managing foreign operations are agents of learning on behalf of their companies. In order to fully make use of the experiences gained by their managers, the experiences have to be shared and institutionalized. The empirical study found that the Singapore companies generally learned in an unintentional manner and, as a result, their learning was inefficient. Suggestions for improving the learning process are proposed.