9.4 Greenhalgh and Rogers
Define Absorptive Capacity:
The follower country's ability to find, learn, and use new technology. This depends on factors like education levels and the presence of domestic firms capable of understanding and applying the new knowledge.
International Spillovers are strengthened by what?
The strength of these spillovers is increased by factors like trade openness and high levels of education.
Why are alliances in R&D risky according to the article?
A partner could use the knowledge they gain to become a future competitor, or the knowledge could leak through a shared partner to other rivals in the industry.
What was the "swarm-out" policy in 2000s?
encouraging local companies to acquire firms abroad to become globally competitive before China joined the World Trade Organization.
"Latecomer" firms in developing countries face two major hurdles:
Name+ definition
A Technology Challenge: They often lack the necessary technology, are located far from global centers of R&D, and have a weak domestic science base to draw upon.
A Market Challenge: They are also far from their potential customers, making it difficult to learn about consumer needs, marketing, and distribution in foreign countries.
Define R&D Clusters and why they occur?
Foreign R&D centers tend to cluster in specific regions, such as Beijing in China and Bangalore in India. These clusters form around universities and public research institutes, and their growth becomes self-reinforcing due to knowledge spillovers and the creation of an active labor market for scientists and engineers.
Explain the "Paradox of Embeddedness":
Relying too heavily on a closed network of familiar partners can be a problem. It can stifle radical innovation by preventing the firm from accessing truly new and diverse ideas from outside its established circle.
Name 1 of the 4 reasons for early failures
Flawed Strategy: The initial strategy was to combine low-cost Chinese manufacturing with the global brands and sales networks of Western companies. What seemed like a "dream marriage" often proved to be a "nightmare".
Poor Due Diligence: Chinese companies often failed to properly investigate their targets. For example, TCL acquired Thomson's TV operations without realizing the brand was "old and tired" and had been losing large amounts of money.
Inability to Integrate: Chinese firms lacked managers with international experience and were unable to assimilate foreign companies. This led to major culture clashes over issues like working on weekends and resulted in dysfunctional organizations.
Poor Target Selection: Acquirers often pursued inexpensive deals for unprofitable businesses that required a major turnaround, which they were not equipped to handle.
The article uses Samsung Electronics as an example of a firm that successfully overcame these challenges. In its early days, Samsung had to use a variety of strategies to learn, including:
(there are 4 name one)
Forming joint ventures with Japanese companies.
Using licensing agreements to access foreign technology.
Reverse engineering products like microwaves and VCRs when it could not find foreign partners.
This process took many years and required significant investment and government support.
How does proximity effect spillovers
What did the study say?
Spillovers are not entirely global and can be affected by physical proximity.
that UK firms benefit most from U.S. R&D spillovers when they conduct their own R&D within the United States. This suggests that being close to centers of innovation is crucial for building the necessary absorptive capacity.
2 Motivations for Forming Alliances and what theory is behind it explain
1.Cost Minimazation: Transaction Cost Theory, this view suggests firms form alliances to reduce the costs and risks of R&D, share expenses, and protect themselves from opportunistic behavior.
Value Creation: Strategic Management theories, this view sees alliances as a way to create new value. Firms use them to access complementary resources, learn new skills from partners, develop new products, and enter new markets.
what are the 3 things they changed
1. Focus on Hard Assets and Technology:
2. Pursue Growth at Home First:
3. Partner, Don't Dominate:
Chinese companies are increasingly leaving the existing management of the acquired firm in place. They recognize the value of their experience and culture.