A TRANSNATIONAL PERSPECTIVE ON KNOWLEDGE SHARING IN
RETAIL INTERNATIONLIZATION: CASE STUDIES OF IKEA'S
ENTRY INTO RUSSIA, CHINA AND JAPAN.
Anna Jonsson
Lund University
School of Economics and Management
Department of Business Administration
ABSTRACT
Recently, researchers have stressed the need for more research on organizational aspects of retail internationalization. However, it is important to acknowledge that external and internal aspects are interrelated. This is illustrated by adopting the ideas about the transnational solution and current research focusing on knowledge and learning in retail internationalization. The corresponding aim with this paper is to increase our understanding for how and why knowledge is shared within the organization when retail firms enter new markets. The discussion builds on case studies of IKEA¨s entry into Russia, China and Japan.
KEY WORDS; Case study, China, IKEA, Japan, knowledge sharing, retail internationalization, Russia
INTRODUCTION
When reading about why some retailers succeed while other fail when entering new markets there seem to be an emphasis on understanding the new market and the problems of not being able to meet the specific challenges in the new market, i.e. not being able to adjust the marketing-mix to meet the specific consumer demands in that market. For example, when reading about the international expansion of Wal-Mart and the problems faced in the German market it is explained; ＾According to analysts, the main reason for Wal-Mart¨s losses was its failure to understand German culture and the shopping habits in Germany￣ (Ghauri & Cateora, 2006:564). However, although it may be accurate that Wal-Mart failed in terms of understanding the market, the reasons for why the organization failed in supporting the market entry are less common to read about. However, in the Wal-Mart case Fernie et al (2006) argue that Wal-Mart had problems of applying the corporate culture to the German culture. In addition Ghauri et al (2004) argue that one reason for why Wal-Mart failed to understand the specific characteristics of the German market might have been because of their strategy of putting Americans on the top positions. However, none of these discussions explicitly focus on understanding the organizational routines or processes for handling these challenges. As stressed by Palmer and Quinn (2005) research on retail internationalization . Earlier versions of this paper were accepted and presented at the following conferences; AMS Retail Conference 2006 (not presented) and The 4th SARD Conference 2006. implicitly stress organizational and learning aspects but not explicitly put it into a theoretical context. Thus, in order to increase our understanding for why some retailers are successful when entering new markets while others is not it would be interesting to understand how and if these retailers learn from their experiences by focusing on knowledge sharing in the internationalization process. Palmer and Quinn (2005:38) argue that by adopting literature on organizational learning to research on retail internationalization "can tell us more about why certain retailers have been more successful than others".
Research on retail internationalization has lately been subject to certain criticism where researchers have argued for the need to look into internal or organizational aspects (e.g. Burt et al, 2003). An increased understanding for organizational aspects should be especially important for retailers since it is often argued that internationalization of retailers is particularly challenging and complex, especially when compared to manufacturing (e.g. Alexander 1997; Burt and Carralero-Encinas, 2000; Dawson, 2000; Elg, 2003; Helfferich et al, 1997; McGoldrick, 2002). The explanations given for why retailing is more complex are mostly related to external circumstances focusing on market(ing) activities, e.g. when arguing that retailing is specific due to its responsiveness to local culture, the dispersed nature of operations, the large number of products and services offered and the large extent of network activities. However, as pointed out by Doherty (1999) research on retail internationalization has been of rather descriptive character and there is a need for understanding the organizational challenges with an international expansion. Jackson and Sparks (2005) argue that research about retail internationalization need to focus on the implications and impact of "how" and "why" questions, i.e. questions that are more related to organizational aspects. So, if we are to understand why some retailers fail (as well as succeed) in the process of internationalization we need to understand intra-organizational routines or knowledge sharing. Knowledge sharing is particularly important in the internationalization process because firms may discover new work methods as well as business opportunities, which is necessary in order to stay competitive and innovative (Van Maanen & Laurent in Ghoshal & Westney, 1993: 275). Adopting the view on knowledge sharing as a process (Winter and Szulanski, 2001) it is important to both being able to explore new ideas and exploit existing one. By exploiting locally created knowledge worldwide and by sharing this knowledge across intraorganizational borders despite differences in time, space, culture and language competitive advantage can be achieved (Schlegelmilch & Chini, 2003). As stressed by Burt et al (2003) internationalization involve both external circumstances and internal and that in order to understand retail internationalization it is important to acknowledge that these are interrelated.
Drawing on the idea about the transnational solution (Bartlett & Ghoshal, 1989) and the ideas about global efficiency, global learning and local responsiveness points toward the importance of understanding both external and internal aspects of internationalization. In their study, Bartlett and Ghoshal (1989) focused on reasons for why some firms were successful while others failed when entering new markets. It was found that in order to be able to succeed and compete effectively on the international arena "a company had to develop global competitiveness, multinational flexibility, and worldwide learning capability simultaneously. [...] Building these multiple strategic competencies was primarily an organizational challenge" (Bartlett & Ghoshal, 1989:16). Central themes for managing global competitiveness according to the transnational solution are knowledge development and knowledge sharing worldwide. Furthermore, the concept of the transnational solution is interesting to further develop to research on retail internationalization since it stresses the importance of knowledge sharing between national and intra-organizational borders. However, the reason for why certain subsidiaries collaborate and share knowledge is not fully developed nor is the fact that markets are different thus implying different marketing challenges. In order to understand the relationship between internal and external circumstances for retail internationalization it is important to further investigate how marketing challenges from one market effect the collaboration with another subsidiary in another market. Chini (2004) argue that a promising avenue for future research on knowledge sharing within MNCs could be to focus in which situations knowledge is shared and with what parts of the organization knowledge is shared.
As noted by Birkenshaw (2005) the service, or retail, sector is characterized for competing not on manufacturing assets but on the collective capabilities of their employees. It is therefore surprising that there is a dearth of research focusing on the organization and internal aspects. However, recently Palmer and Quinn (2005) presented a framework for international retail learning that Palmer (2005) further used when analyzing Tesco¨s experiences from international retailing. Focus is on explaining what retailers can learn from their international experiences thus stressing both internal and external circumstances. However, it is not discussed how knowledge is shared within the organization. This was illustrated in a later study by Jonsson and Elg (2006) who developed a tentative approach to knowledge and knowledge sharing in international retailing based upon previous literature about knowledge sharing and the internationalization process and the case study of IKEA¨s entry into the Russian market. Focus was on how knowledge was shared within the organization and at what levels of the organization as well as what kind of knowledge that was shared. This paper further contributes to the discussion about what was learnt from experiences of entering foreign markets by investigating not only on specific lessons learnt but also on how this knowledge is shared within an organization and why knowledge is shared with different parts of the organization.
The corresponding aim with this paper is to increase our understanding for how and why knowledge is shared within the organization when retail firms enter new markets.
The following section discusses research on retail internationalization with special focus on knowledge and learning. The idea about the transnational solution (Bartlett & Ghoshal, 1989) is also introduced as it stresses the importance of both external and internal aspects of internationalization. The empirical case studies of IKEA in China, Russia and Japan are then presented, based on the relevant constructs identified in the theoretical part. A comparative analysis focusing on differences and similarities between the three case studies is then discussed. The paper will conclude with a discussion on the paper¨s key themes and suggestions for future research.
