Abstract
This study adds to the literature on business ecosystems and knowledge management by examining managerial ties as contingency factors. We suggest that managerial ties can be symbiotic (resources) or parasitic (constraints) to a foreign firm. We support our contention with evidence from Korean subsidiaries in China. We find that domestic political ties strengthen the effect of headquarters' knowledge transfer on performance. On the other hand, business ties are a double-edged sword, strengthening the performance impact of local knowledge acquisition while weakening that of headquarters' knowledge transfer.
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Notes
We thank an anonymous reviewer for his or her suggestion on conducting the last two tests for endogeneity.
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Appendix: CFA results and measures
Appendix: CFA results and measures
Measures | Standardized Factor Loadings | AVE | Construct Reliability |
---|---|---|---|
Headquarters’ knowledge transfer (anchored on a seven-point bipolar scale from 1 = a little extent to 7 = a large extent) | 0.61 | 0.88 | |
Please indicate the extent to the following areas of organizational knowledge has been transferred to your subsidiary from the headquarters: | |||
1. The development of basic and applied technologies | 0.95 | ||
2. New product design and development | 0.88 | ||
3. Manufacturing activities | 0.79 | ||
4. Sales, marketing and distribution | 0.63 | ||
5. General management | 0.58 | ||
Local knowledge acquisition (anchored on a seven-point bipolar scale from 1 = a little extent to 7 = a large extent) | 0.61 | 0.86 | |
Please indicate the extent to which your company has formally and deliberately acquired the following areas of knowledge from the host country | |||
1. Adapting management to the local Chinese market | 0.64 | ||
2. Chinese culture and traditions | 0.77 | ||
3. Laws, regulations and policies in China | 0.86 | ||
4. Financial and monetary systems in China | 0.83 | ||
Business ties (anchored on a seven-point Likert scale from 1 = strongly disagree to 7 = strongly agree) | 0.61 | 0.82 | |
1. Top executives of our company maintain good personal relationships with local business partners | 0.79 | ||
2. Top executives of our company meet local business partners in relaxed environment (e.g., dining out) | 0.78 | ||
3. Top executives of our company contact local business partners after office hours | 0.77 | ||
Political ties (anchored on a seven-point Likert scale from 1 = strongly disagree to 7 = strongly agree) | 0.77 | 0.93 | |
1. Top executives of our company invested a lot of resources into building relationships with government officials | 0.84 | ||
2. Top executives of our company contact local government officials after office hours | 0.98 | ||
3. Top executives of our company meet local government officials in relaxed environment (e.g., dining out) | 0.91 | ||
4. Top executives of our company maintain good personal relationships with local government officials | 0.76 | ||
Subsidiary local market performance (anchored on a seven-point bipolar scale from 1 = much lower to 7 = much higher) | 0.73 | 0.89 | |
Please indicate the level of your firm performance compared to your major competitors in the last three years in terms of the following in your local market | |||
1. Sales growth | 0.71 | ||
2. Market share | 0.90 | ||
3. Returns on assets | 0.93 |
Separate CFAs and their model fits
GFI | CFI | NFI | IFI | RMSEA | |
---|---|---|---|---|---|
Headquarters’ knowledge transfer | 0.96 | 0.98 | 0.97 | 0.97 | 0.16 |
Local knowledge acquisition | 0.97 | 0.98 | 0.97 | 0.98 | 0.15 |
Business ties | 1 | 1 | 1 | 1 | 0 |
Political ties | 0.97 | 0.98 | 0.99 | 0.99 | 0.13 |
Subsidiary local market performance | 1 | 1 | 1 | 1 | 0 |
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Li, J., Lee, R.P. & Zhang, L. Managerial ties and knowledge transfer in business ecosystems: Evidence from Korean subsidiaries in China. Asian Bus Manage 17, 183–207 (2018). https://doi.org/10.1057/s41291-018-0033-y
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DOI: https://doi.org/10.1057/s41291-018-0033-y