Knowledge transfer of hotel chain investment in Thailand: antecedents and consequences.

• Author: Ooncharoen, Nantana

1. INTRODUCTION

   In recent year, many countries have attempted to attract foreign direct investment (FDI) due to their potential benefits within the national economy. Multinational firms are presumed to have advantages that spillover to domestic firms, increasing the productivity level or their growth rate. Theories have suggested that host firms may benefit from multinational companies (MNC) through imitation, competition impacts, and human capital mobility. There is also still evidence documenting MNC spillovers in developed and developing countries.

   Among all the resources of the firm, knowledge is the most strategically important resource (Grant, 1996). Knowledge indicates the capability for organizational action and new knowledge provides the competency for organizational renewal (Inkpen, 1998). Generally, the knowledge base of young subsidiaries established by multinational corporations (MNCs) in transition economies is weak (Lyles & Salk, 1996). Therefore, without successful knowledge transfer from their MNCs parents, it is difficult for those subsidiaries to create knowledge base, improve capabilities, accelerate management localization, and survive intense competition to generate good returns for their parents.

   Successful knowledge transfer requires the transferors to be capable and willing to acquire knowledge on the one hand (e.g. Gupta & Govindaraman, 2000), and the recipients to be capable and willing to acquire knowledge on the other hand (e.g. Hamel, 1991; Salk & Lyles, 2001). However, the importance of knowledge transfer for firms involved in foreign direct investment (FDI) activities.

   Hotel business in Thailand has more quickly expanded particularly, theses hotel chains because of most of Thai capitalists to invest and administrate by chain. Four- and five--star hotels in Thailand have been operating by chain for example, Accor group , the Regent group , Hilton group, Intercontinental Hotel group, Hyatt, Marriott, Starwood hotel,and Novotel. These firms have adapted to changing environment introducing novelties or improvement in product, process and organization. Today the number of hotels that operated through hotel chain in Thailand are increasing.

   In this paper, knowledge transfer activity and behaviour of hotel chain (MNC) were focused. The aim in this study is to develop such a model and thus intends to shed light on the complex issue of knowledge transfer in hotel chain in Thailand, and proposes a systematic explanation for the relationships between absorptive capability, trust, embeddedness, share vision and knowledge transfer that influence the creation of successful knowledge transfer through the role of knowledge articulability and parent's capacity to knowledge transfer as the moderator. In this study, the key research questions are how can firm achieve knowledge transfer and successful knowledge transfer?; and how do absorptive capability, trust, embeddedness, and share vision influence knowledge transfer?

   The study is presented in the following manner. First, this study draws from the research literature to identify absorptive capability, trust, embeddedness and share vision that impact knowledge transfer. Second, this study constructs a research model that explains the relationships of those factors to successful knowledge transfer. Third, this paper generates research propositions to empirically test them. Finally, this paper suggests for further research in this area and conclusion.

2. LITERATURE REVIEW

   In this study, organizational learning theory was adopted to explain the knowledge transfer between parent firm and hotel chain through economic theory. In this section, the first review the organizational learning theory and economic theory for this research will be discussed following by the review of the constructs relevant to the research model.

   Organizational learning theory and economic theory

   Recently, many researchers have advocated the "process-orientation" perspective (Lee, Courtney, & O'keefe, 1992; Crossan, Lane, & White, 1995). For example, Fiol and Lyles (1985) pointed out that organizational learning is a process of improving actions through better knowledge and understanding. Consequently, organizational learning is an evolutionary process to improve organizational performance. This process orientation has also served to explain how organizational learning consideration can be applied to improve knowledge creation within an organization and lead research in knowledge management systems (Alavi & Leidener, 2001). Some researchers have used absorptive capability to explain organizational phenomena. Absorptive capability is the firm's ability to recognize the value of new, external knowledge, assimilate the knowledge, and apply knowledge to commercial ends. On the other hand, the theory of organization argues that the creation and transfer of knowledge in to different firm's unit is the base for competitive advantage (Argote & Ingram, 2000). However, there is an evidences that firms differ in their ability to transfer knowledge from one unit to another in manufacturing (Galbraith, 1990) and service sectors (Baum & Ingram, 1998) and also among organization.

   The most relevant economic theory for this research is transaction cost economic (TCE). This is because the rules governing a transaction are among the critical variables that determine its governance structure (Williamson, 1991). A transaction is an economic exchange, i.e. the transfer of some goods or services between separable activities.

   2.1 Absorptive Capability

   Absorptive capability defined the term "absorptive capability" as a firm's general ability to value, assimilate, and utilize new, external knowledge (Choen and Levinthal, 1990). Kim (1998) indicates that absorptive capability is formed from a prior knowledge base and intensity of effort. The key factors of absorptive capability not only include relative pre-knowledge level, but also cover organizational form and combinative capabilities. Absorptive capability is recognized as a new creative value from the combination of pre-knowledge base and external knowledge from outside. Examination of transfer in systems environment is considered a crucial issue for information systems research (Alavi & Leidner, 2001). However, most pertinent work has been in other disciplines. These have supported the existence of the relationship between absorptive...