International strategy is enhanced by organizations’ ability to learn in host markets; yet, it remains ambiguous how post-entry knowledge gaps between home – and host country shape MNE’s absorptive capacity. This article builds on the specific contributions of ‘extreme case’ internationalization to advance literature in this field. We foster the understanding of the role of rare knowledge and the mechanisms that link knowledge acquisition to absorptive capacity dynamics used in the internationalization path of multinational enterprises (MNEs). We opt for in-depth qualitative research into the post-entry phase of ‘extreme’ (thus particularly crude) international joint venture (IJV) investment, and analyze the perspective of managers from a developed economy MNE located in a high-risk, weak-institutions host country. The firm’s absorptive capacity and its interaction with external environments that are categorized into four distinct contexts are found to be contingent upon pro-active experiential learning, concurrent to managerial willingness and simultaneous organizational commitments to learning and to exploiting rare knowledge. We thus uncover managerial perceptions of a knowledge gap identified as host-country challenges and resulting managerial solutions, which reveal rare learning opportunities and knowledge exploitation dynamics. The capacity to compensate for knowledge gaps is a critical key within the design and consolidation of an alternative internationalization path for developed-country MNEs. This challenges the traditional risk–return–commitment dependencies in prior literature.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Interviewees are not identified for confidentiality reasons and upon their request. Interviews were conducted by one of the co-authors in Afghanistan in 2004. Each quote used in this text has been verified and each has been expressed by a different interviewee, assuring sufficient and relevant scale and scope of research.
Ahmed-Ghosh H (2003) A history of women in Afghanistan: lessons learnt for the future or yesterdays and tomorrow: Women in Afghanistan. Journal of International Women’s Studies 4(3), 1–14.
Ambrosini V, Bowman C and Collier N (2009) Dynamic capabilities: an exploration of how firms renew their resource base. British Journal of Management 20(S1), S9–S24.
Balogun J and Johnson G (2004) Organizational restructuring and middle manager sensemaking. Academy of Management Journal 47(4), 523–549.
Banham R (2002) Are kidnappers changing the rules? Treasury and Risk Management 12(4), 18–23.
Banham R (2005) Between Iraq and a hard place. Treasury and Risk Management 15(1), 33–35.
Barkema H and Drogendijk R (2007) Internationalising in small, incremental or larger steps? Journal of International Business Studies 38, 1132–1148.
Barney J and Hesterly W (2010) VRIO Framework. In: Strategic Management and Competitive Advantage (pp. 68–86). New Jersey: Pearson.
Barth S (1998) In dangerous places. World Trade 11(10), 64–67.
Becker-Ritterspach F, Hotho J and Saka-Helmhout A (2010) Subsidiary Learning and Social Interaction: The micro-foundations of absorptive capacity. In European Academy of Management Annual Conference 2010, Conference Proceedings, Rome.
Beeman D, Sharkey T and Magill S (1988) Will you return from your next business trip? Business Horizons 31(4), 58–63.
Brouthers KD, Brouthers LA and Werner S (2008) Real options, international entry mode choice and performance. Journal of Management Studies 45(5), 936–960.
Brouthers K and Hennart J (2007) Boundaries of the firm: Insight from international entry mode research. Journal of Management 33(3), 395–425.
Brown S and Eisenhardt K (1997) The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly 42(1), 1–34.
Canabal A and While G (2008) Entry mode research: Past and future. International Business Review 17(3), 267–284.
Cantwell J (2014) Revisiting international business theory: a capabilities-based theory of the MNE. Journal of International Business Studies 45, 1–7.
Cantwell J and Narula R (2001) The eclectic paradigm in the global economy. International Journal of the Economics of Business 8(2), 155–172.
Central Intelligence Agency CIA (2008) and (2009) The World Factbook: Afghanistan, https://www.cia.gov/library/publications/the-world-factbook/geos/af.html (accessed 14 February 2008 and 15 March 2009).
Charmaz K (2006) Constructing grounded theory: A practical guide through qualitative analysis. London: Sage.
Clarke J, Tamaschke R and Liesch P (2012) International experience in international business research: A conceptualization and exploration of key themes. International Journal of Management Reviews 15(3), 265–279.
Cohen W and Levinthal D (1990) Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly 35(2), 128–152.
Cooper N (2002) State collapse as business: The role of conflict trade and the emerging control agenda. Development and Change 33(5), 935–955.
Czinkota M, Knight G, Liesch P and Steen, J (2010) Terrorism and international business: A research agenda. Journal of International Business Studies 41, 826–843.
Economist (2004) Doing business in dangerous places. The Economist 372(8388), 11.
Economist (2007) Shining a light – Face value, The Economist: 10. London.
Eriksson K, Johanson J, Majkgaard A and Sharma DD (1997) Experiential knowledge and cost in the internationalization process. Journal of International Business Studies 28(2), 337–360.
Evered R and Louis MR (1981) Alternative perspectives in the organizational sciences: “Inquiry from the inside” and “inquiry from the outside”. Academy of Management Review 6, 385–395.
Feinberg S and Gupta A (2009) MNC subsidiaries and country risk: Internalization as a safeguard against weak external institutions. Academy of Management Journal 52(2), 381–399.
Foreign Policy (2007) Failed states index 2007. Foreign Policy, 161(July-August), 54–63.
Forsgren M (2002) The concept of learning in the Uppsala internationalization process model: a critical review. International Business Review 11, 257–277.
Frohman D (2006) Leadership under fire. Harvard Business Review 84(12), 124–131.
Ghauri P (2004) Designing and conducting case studies in international business research. In R. Marchan-Piekkari & C. Welch (Eds.), Handbook of Qualitative Research Methods for International Business (pp. 109–204). Cheltenham: Edward Elgar.
Giustozzi A (2006) Afghanistan: exploring the peace-building potential of the private sector. London: International Alert.
Glaser B and Strauss A (1967) The Discovery of Grounded Theory: Strategies for Qualitative Research. New York: Aldine.
Hennart J-F (2007) The theoretical rationale for a multi-nationality-performance relationship. Management International Review 47(3), 423–452.
Hennart J (2009) Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets. Journal of International Business Studies 40, 1432–1454.
Huber GP (1991) Organizational learning. The contributing processes and the literatures. Organization Science 2(1), 88–115.
Idahosa P (2002) Business Ethics and development in conflict (zones): The case of Talisman Oil. Journal of Business Ethics 39(3), 227–246.
Index Mundi (2012) Afghanistan Demographics Profile 2012, http://www.indexmundi.com/afghanistan/demographics_profile.html (accessed 10 August 2012).
Johanson J and Vahlne J (1977) The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies 8(1), 23–32.
Johanson J and Vahlne J (2009) The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies 40, 1411–1431.
Kafouros MI, Buckley PJ and Clegg J (2012) The effects of global knowledge reservoirs on the productivity of multinational enterprises: The role of international depth and breadth. Research Policy 41(5), 848–861.
Khanna T and Palepu K (1997) Why focused strategies may be wrong for emerging markets. Harvard Business Review 75(4), 41–51.
Khanna T and Palepu K (1999) Policy shocks, market intermediaries, and corporate strategy: The evolution of business groups in Chile and India. Journal of Economics and Management Strategy 8(2), 271–310.
Khanna T and Palepu K (2000a) The future of business groups in emerging markets: Long-run evidence from Chile. Academy of Management Journal 43(3), 268–285.
Khanna T and Palepu K (2000b) Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. Journal of Finance 55(2), 867–891.
Khanna T and Palepu K (2010) Emerging giants competing at home. How emerging market-based companies can build competitive advantage at home, In Khanna T and Palepu K (2010). Winning in Emerging Markets: A Road Map for Strategy and Execution, Chapter 5, Harvard Business Press, Cambridge, MA
Khanna T, Palepu K and Sinha J (2005) Strategies that fit emerging markets. Harvard Business Review 83(6), 63–76.
Kupisz R (2006) Close to the edge: Notes from the Green Zone, Baghdad. Journal of Facilities Management 4(2), 132–142.
Kuschminder K and Dora M (2009) Migration in Afghanistan: History, Current Trends and Future Prospects, Paper Series: Migration and Development Country Profiles, Maastricht Graduate School of Governance.
Lautze S, Leaning J, Raven-Roberts A, Kent R and Mazurana D (2004) Assistance, protection, and governance networks in complex emergencies. Lancet 364(9451), 2134–2141.
Leonard B (2004) Workplace as war zone. HR Magazine, 37 and 48.
Levinthal DA and March JG (1993) The myopia of learning. Strategic Management Journal 14, 95–112.
Madsen PM and Desai V (2010) Failing to learn? The effects of failure and success on organizational learning in the global orbital launch vehicle industry. Academy of Management Journal 53(3), 451–476.
March JG (1999) The pursuit of organizational intelligence. MA, Blackwell: Malden.
Marsden P (2003) Afghanistan: the reconstruction process. International Affairs 79(1), 91–105.
Michailova S and Minbaeva D (2012) Organizational values and knowledge sharing behavior in MNCs. International Business Review 21, 59–70.
Mintzberg H and Waters JA (1985) Of strategies, deliberate and emergent. Strategic Management Journal 6, 257–272.
Nielsen N (2005) Diary. Afghanistan, Unpublished.
O’Grady S and Lane H (1996) The psychic distance paradox. Journal of International Business Studies 27(2), 309–333.
Organisation for Economic Co-operation and Development (OECD) (2006) OECD Risk awareness tool for Multinational enterprises in weak governance zones. Paris: Organisation for Economic Co-Operation and Development.
Petersen B, Pedersen T and Lyles M (2008) Closing knowledge gaps in foreign markets. Journal of International Business Studies 39, 1097–1113.
Piekkari R, Nell Ph and Ghauri P (2010) Regional management as a system. Management International Review 50, 513–532.
Pitelis C (2007) Edith Penrose and a learning-based perspective on the MNE and OLI. Management International Review 47(2), 207–219.
Polkinghorn B and Byrne S (2001) Between war and peace: An examination of conflict management styles in four conflict zones. International Journal of Conflict Management 12(1), 23–46.
QZ/Quartz (2014) And there was light: Afghanistan just spawned a multinational that’s taking on global giants in Africa. http://qz.com/192010/afghanistan-just-spawned-a-multinational-thats-taking-on-global-giants-in-africa/ (accessed 01 September 2015).
Rajagopalan N, Rasheed A and Datta D (1993) Strategic decision processes: Critical review and future directions. Journal of Management 19(2), 349–384.
Rugman AM and Verbeke A (2007) Internalization Theory and its Impact on the Field of International Business. 4 Editor(s): Jean J. Boddewyn ISBN: 978-0-7623-1470-6 eISBN: 978-1-84950-550-5. Available online: http://www.henley.reading.ac.uk/web/files/management/mgmt_a_rugman_internalizationtheoryanditsimpacton.pdf (accessed 22 January 2012).
Rynecki S (2013) The Future of Mobile Money in Afghanistan, USAID, https://blog.usaid.gov/2013/05/the-future-of-mobile-money-in-afghanistan/ (accessed 25 September 2015).
Sanchez-Peinado E and Pla-Barber J (2006) A multidimensional concept of uncertainty and its influence on the entry mode choice: An empirical analysis in the service sector. International Business Review 15(3), 215–232.
Santangelo GD and Meyer KE (2011) Extending the internationalization process model: Increases and decreases of MNE commitment in emerging economies. Journal of International Business Studies 42(7), 894–909.
Sitkin SB (1992) Learning through failure: The strategy of small losses. Research in Organizational Behavior 14, 231–266.
Slangena A and Van Tulderb R (2009) Cultural distance, political risk, or governance quality? Towards a more accurate conceptualization and measurement of external uncertainty in foreign entry mode research, Multinational Enterprises and the Internationalisation Process. International Business Review 18(3), 276–291.
Song J and Shin J (2008) The paradox of technological capabilities: a study of knowledge sourcing from host countries of overseas R&D operations. Journal of International Business Studies 39(2), 291–303.
Strauss A and Corbin J (1998) Basics of qualitative research. London: SAGE Publications.
Suder G (2006) Location decisions, or: modelling operational risk management under international terrorism. In G. Suder (Ed.), Corporate Strategies under International Terrorism and Adversity. Cheltenham, UK: Edward Elgar.
Suder G and Czinkota MR (2005) Towards an understanding of terrorism risk in the MNE. Multinational Business Review 13(3), 3–23.
Taleb N (2007) Black Swans and the Domains of Statistics. The American Statistician 61(3), 198–200.
Teece D, Pisano G and Shuen A (1997) Dynamic Capabilities and Strategic Management. Strategic Management Journal 18(7), 509–533.
Tong T and Li J (2008) Real option and MNE strategies in Asia Pacific. Asia Pacific Journal Management 25(1), 153–169.
Transparency International (2008) and (2010) Corruptions Perceptions Index (CPI); http://www.transparency.org/policy_research/surveys_indices/cpi/2007 (accessed 14 February 2008 and 20 December 2010).
Veran A and Suder G (2010–2012) Personal Interviews of Monaco Telecom’s Director General by G. Suder. Working paper notes, SKEMA Business School, Sophia Antipolis. Unpublished.
Verbeke A (2003) The evolutionary view of the MNE and the future of internalization theory. Journal of International Business Studies 34, 498–504.
Verbeke A and Kano L (2012) An internalization theory rationale for MNE regional strategy. Multinational Business Review 20(2), 135–152.
Volberda H and Lewin A (2003) Guest editors’ introduction: Co-evolutionary dynamics within and between firms: From evolution to co-evolution. Journal of Management Studies 40(8), 2111–2136.
Welt LGB (1986) Executive travel: A guide to self-preservation. Management Review 75(11), 24–25.
Wirtz B, Mathieu A and Shilke O (2007) Strategy in high-velocity environments. Long Range Planning 40(3), 295–313.
World Bank (2012) Afghanistan Country Overview 2012; http://www.worldbank.org.af/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/AFGHANISTANEXTN/0,,contentMDK:20154015~menuPK:305992~pagePK:141137~piPK:141127~theSitePK:305985,00.html (accessed 01 September 2012).
Yin R (2003) Case Study Research: Design and Methods. London: Sage Publications.
Zahra SA and George G (2002) Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review 27(2), 185–203.
About this article
Cite this article
Suder, G., Birnik, A., Nielsen, N. et al. Extreme case learning: the manager perspective on rare knowledge and capabilities development. Knowl Manage Res Pract 15, 130–145 (2017). https://doi.org/10.1057/s41275-016-0001-2
- absorptive capacity
- extreme cases
- institutional voids