Developing New Capabilities across a Supplier Network through Boundary Crossing: A Case Study of a China-Based MNC Subsidiary and its Local Suppliers

Our nested case study shows how a China-based focal subsidiary of a Japanese MNC used various power bases to orchestrate a co-opetitive and diverse supplier ecosystem, and to drive cumulative cycles of collaborative capability development involving successive phases of capability gap articulation, evolution and institutionalization. All phases of capability development required the crossing of cognitive boundaries, which was facilitated by mutual engagement with boundary objects, and by common possession of generic background knowledge disseminated by the focal firm. The capability evolution phase also required the crossing of social and governance boundaries, which was supported and legitimized by shared framing assumptions about mutual benefit and continuous development, while the capability institutionalization phase also required the crossing of governance boundaries. Although the focal firm was open to suggestions for mutual benefit, it exercised unilateral control over design decisions, thereby pressurizing its suppliers to engage in capability development to meet specifications that they found arduous. Supplier diversity was a resource, and co-opetition a driving force for the discovery of solutions to manufacturability problems during the capability evolution phase, such that failure to develop requisite capabilities was uncommon.

[1]  K. Seers.  Qualitative data analysis , 2011, Evidence Based Nursing.

[2]  Kyle J. Mayer,et al.  Contract design as a firm capability: An integration of learning and transaction cost perspectives , 2007 .

[3]  Giovanni Gavetti,et al.  Capabilities, cognition, and inertia: evidence from digital imaging , 2000 .

[4]  Tomi Laamanen,et al.  Cognitive Dynamics of Capability Development Paths , 2009 .

[5]  S. Newell,et al.  Project-Based Learning and the Role of Learning Boundaries , 2004 .

[6]  Etienne Wenger,et al.  Situated Learning: Legitimate Peripheral Participation , 1991 .

[7]  Jeffrey H. Dyer,et al.  Relation‐specific capabilities and barriers to knowledge transfers: creating advantage through network relationships , 2006 .

[8]  Geert Duysters,et al.  Learning mechanisms and differential performance in alliance portfolios , 2007 .

[9]  Jeffrey H. Dyer,et al.  Strategic Supplier Segmentation: The Next “Best Practice” in Supply Chain Management , 1998 .

[10]  M. Lubatkin,et al.  Learning together and apart: A model of reciprocal interfirm learning , 2001 .

[11]  Russell Wayne Coff,et al.  The Co-Evolution of Rent Appropriation and Capability Development , 2010 .

[12]  Jacky Swan,et al.  The object of knowledge: The role of objects in biomedical innovation , 2007 .

[13]  Constance E. Helfat.  Guest editor's introduction to the special issue: the evolution of firm capabilities , 2000 .

[14]  I. Nonaka,et al.  The Concept of “Ba”: Building a Foundation for Knowledge Creation , 1998 .

[15]  Ronald N. Ashkenas,et al.  The boundaryless organization : breaking the chains of organizational structure , 1995 .

[16]  M. Thompson,et al.  Placing Knowledge Management in Context , 2004 .

[17]  I. Talmud,et al.  The Structure of Knowledge and Seller-Buyer Networks in Markets for Emergent Technologies , 2003 .

[18]  S. Winter,et al.  Introduction: The Nature and Dynamics of Organizational Capabilities , 2001 .

[19]  David A. Hounshell,et al.  The nature, sources, and consequences of firm differences in the early history of the semiconductor industry , 2000 .

[20]  Russell L. Purvis,et al.  The Assimilation of Knowledge Platforms in Organizations: An Empirical Investigation , 2001 .

[21]  Giovanni Gavetti,et al.  Cognition and Hierarchy: Rethinking the Microfoundations of Capabilities' Development , 2005, Organ. Sci..

[22]  Ramkrishnan V. Tenkasi,et al.  P ERSPECTIVE M AKING AND P ERSPECTIVE T AKING IN C OMMUNITIES OF K NOWING , 2000 .

[23]  Carsten S. Østerlund,et al.  Relations in Practice: Sorting Through Practice Theories on Knowledge Sharing in Complex Organizations , 2005, Inf. Soc..

[24]  Geert Duysters,et al.  *Alliance Capability as a Mediator between Experience and Alliance Performance: An Empirical Investigation into the Alliance Capability Development Process , 2005 .

[25]  Timothy S. Clark,et al.  Between Innovation and Legitimation— Boundaries and Knowledge Flow in Management Consultancy , 2009 .

[26]  C. Gibson,et al.  THE ANTECEDENTS , CONSEQUENCES , AND MEDIATING ROLE OF ORGANIZATIONAL AMBIDEXTERITY , 2004 .

[27]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[28]  A. Edmondson,et al.  Situated Knowledge and Learning in Dispersed Teams , 2002 .

[29]  P. Schoemaker,et al.  Strategic assets and organizational rent , 1993 .

[30]  Uwe Wilkesmann,et al.  The Absence of Cooperation Is Not Necessarily Defection: Structural and Motivational Constraints of Knowledge Transfer in a Social Dilemma Situation , 2009 .

[31]  Kathleen M. Eisenhardt,et al.  DYNAMIC CAPABILITIES, WHAT ARE THEY? , 2000 .

[32]  Paul R. Carlile,et al.  Into the black box: the knowledge transformation cycle , 2003, IEEE Engineering Management Review.

[33]  David C. Wilson,et al.  Inertia in Japanese Organizations: Knowledge Management Routines and Failure to Innovate , 2006 .

[34]  Wenpin Tsai.  Social Structure of Coopetition Within a Multiunit Organization: Coordination, Competition, and Intraorganizational Knowledge Sharing , 2002 .

[35]  Teppo Felin,et al.  Dynamics of Industry and Innovation: Organizations, Networks and Systems Strategic Organization: a Field in Search of Micro- Foundations Strategic Organization: a Field in Search of Micro-foundations , 2022 .

[36]  Daniel A. Levinthal,et al.  Crossing an Apparent Chasm: Bridging Mindful and Less-Mindful Perspectives on Organizational Learning , 2006, Organ. Sci..

[37]  F. Al-Shamali,et al.  Author Biographies. , 2015, Journal of social work in disability & rehabilitation.

[38]  J. Birkinshaw.  Entrepreneurship in multinational corporations : The characteristics of subsidiary initiatives , 1997 .

[39]  Christopher B. Bingham,et al.  What makes a process a capability? Heuristics, strategy, and effective capture of opportunities , 2007 .

[40]  Annette L. Ranft,et al.  Capturing knowledge and knowing through improvisation: what managers can learn from the thoracic surgery board certification process , 2001 .

[41]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[42]  C. Lakshman,et al.  Supplier-Focused Knowledge Management in the Automobile Industry and its Implications for Product Performance , 2007 .

[43]  Giovanni Dosi,et al.  Organizational Capabilities, Patterns of Knowledge Accumulation and Governance Structures in Business Firms: An Introduction , 2008 .

[44]  野中 郁次郎,et al.  The knowledge-creating company , 2008 .

[45]  T. Kostova.  Transnational Transfer of Strategic Organizational Practices: A Contextual Perspective , 1999 .

[46]  Mona V. Makhija,et al.  The Relationship Between Control and Partner Learning in Learning-Related Joint Ventures , 1997 .

[47]  Torben Pedersen,et al.  Organizing Knowledge Processes in the Multinational Corporation: An Introduction , 2004 .

[48]  W. Mitchell,et al.  Path-dependent and path-breaking change: reconfiguring business resources following acquisitions in the U.S. medical sector, 1978–1995 , 2000 .

[49]  Torben Pedersen,et al.  The Economic Geography of Offshoring: The Fit Between Activities and Local Context , 2011 .

[50]  Pierre Bourdieu,et al.  Outline of a Theory of Practice , 2020, On Violence.

[51]  J. Brown,et al.  Knowledge and Organization: A Social-Practice Perspective , 2001 .

[52]  S FeldmanMartha.  Organizational Routines as a Source of Continuous Change , 2000 .

[53]  J. Birkinshaw,et al.  Managing Power in the Multinational Corporation: How Low-Power Actors Gain Influence , 2008 .

[54]  Takahiro Fujimoto,et al.  Evolution of Manufacturing Systems and Ex Post Dynamic Capabilities: A Case of Toyota's Final Assembly Operations , 2001 .

[55]  Beth A. Bechky,et al.  Boundary Organizations: Enabling Collaboration among Unexpected Allies , 2008 .

[56]  Robin Stanley Snell,et al.  Knowledge flow and boundary crossing at the periphery of a MNC , 2009 .

[57]  Georg Schreyögg,et al.  How dynamic can organizational capabilities be? Towards a dual-process model of capability dynamization , 2007 .

[58]  Roderick E. White,et al.  An Organizational Learning Framework : From Intuition to Institution Author ( s ) : , 2007 .

[59]  K. Weick.  The Generative Properties Of Richness , 2007 .

[60]  Harbir Singh,et al.  Building firm capabilities through learning: the role of the alliance learning process in alliance capability and firm‐level alliance success , 2007 .

[61]  Henry Wai-chung Yeung,et al.  Qualitative personal interviews in international business research: Some lessons from a study of Hong Kong Transnational Corporations , 1995 .

[62]  C. Bartlett,et al.  Managing across Borders , 2003 .

[63]  Nicolai J. Foss,et al.  Towards an Understanding of Cognitive Coordination: Theoretical Developments and Empirical Illustrations , 2009 .

[64]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[65]  Joseph W. Leonard.  Alliance Advantage: The Art of Creating Value through Partnering , 1998 .

[66]  Kathleen M. Eisenhardt,et al.  Special Issue: Frontiers of Organization Science, Part 2 of 2: Organizational Boundaries and Theories of Organization , 2005, Organ. Sci..

[67]  C. Huxham,et al.  The Past in Play: Tradition in the Structures of Collaboration , 2010 .

[68]  Daniel A. Levinthal,et al.  Exploration and Exploitation in Organizational Learning , 2007 .

[69]  E. Eisenberg.  Ambiguity as strategy in organizational communication , 1984 .

[70]  Susan Leigh Star,et al.  Institutional Ecology, `Translations' and Boundary Objects: Amateurs and Professionals in Berkeley's Museum of Vertebrate Zoology, 1907-39 , 1989 .

[71]  Nick Ellis,et al.  Marketing Identities: Shifting Circles of Identification in Inter-organizational Relationships , 2010 .

[72]  Sara Lindblom,et al.  Co Opetition , 2010 .

[73]  S. Ghoshal,et al.  Social Capital, Intellectual Capital, and the Organizational Advantage , 1998 .

[74]  Steven S. Lui,et al.  The Roles of Competence Trust, Formal Contract, and Time Horizon in Interorganizational Learning , 2009 .

[75]  A. Edmondson,et al.  METHODOLOGICAL FIT IN MANAGEMENT FIELD RESEARCH. , 2007 .

[76]  Steven Postrel,et al.  Shared knowledge, “glitches,” and product development performance , 1999 .

[77]  C. Fiol.  Consensus, diversity, and learning in organizations. , 1994 .

[78]  B. Kogut,et al.  Exploring internal stickiness : Impediments to the transfer of best practice within the firm , 2007 .

[79]  Maurizio Zollo,et al.  Deliberate Learning and the Evolution of Dynamic Capabilities , 2002 .

[80]  S. Lazzarini,et al.  Buyer–Supplier and Supplier–Supplier Alliances: Do They Reinforce or Undermine One Another? , 2008 .

[81]  B. Pentland,et al.  Organizational Routines as Grammars of Action , 1994 .

[82]  J. Hagen,et al.  Trust in Japanese Interfirm Relations: Institutional Sanctions Matter , 1998 .

[83]  I. Janis.  Victims Of Groupthink , 1972 .

[84]  Harbir Singh.  Building firm capabilities through learning: the role of the alliance learning process in alliance capability and firm-level alliance success , 2007 .

[85]  Jeffrey H. Dyer,et al.  The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage , 1998 .

[86]  Peer C. Fiss,et al.  INSTITUTIONALIZATION, FRAMING, AND DIFFUSION: THE LOGIC OF TQM ADOPTION AND IMPLEMENTATION DECISIONS AMONG U.S. HOSPITALS , 2009 .

[87]  H. Volberda,et al.  Co-Evolution of Firm Capabilities and Industry Competition: Investigating the Music Industry, 1877-1997 , 2001 .

[88]  Beth A. Bechky.  Sharing Meaning Across Occupational Communities: The Transformation of Understanding on a Production Floor , 2003, Organ. Sci..

[89]  Beth A. Bechky,et al.  When Collections of Creatives Become Creative Collectives: A Field Study of Problem Solving at Work , 2006, Organ. Sci..

[90]  K. R. Harrigan.  Formulating Vertical Integration Strategies , 1984 .

[91]  Daniel M. G. Raff,et al.  SUPERSTORES AND THE EVOLUTION OF FIRM CAPABILITIES IN AMERICAN BOOKSELLING , 2000 .

[92]  Jean-Philippe Vergne,et al.  The Path of Most Persistence: An Evolutionary Perspective on Path Dependence and Dynamic Capabilities , 2010 .

[93]  Richard Whitley,et al.  The Institutional Structuring of Organizational Capabilities: The Role of Authority Sharing and Organizational Careers , 2003 .

[94]  Paul R. Carlile,et al.  A Pragmatic View of Knowledge and Boundaries: Boundary Objects in New Product Development , 2002, Organ. Sci..

[95]  Florian Kohlbacher,et al.  Co-opetition and knowledge co-creation in Japanese supplier-networks: The case of Toyota , 2011 .

[96]  Jeffrey H. Dyer.  Specialized supplier networks as a source of competitive advantage : Evidence from the auto industry , 1996 .

[97]  Etienne Wenger,et al.  Communities of Practice: Learning, Meaning, and Identity , 1998 .

[98]  R. Mudambi,et al.  Is Knowledge Power? Knowledge Flows, Subsidiary Power and Rent-Seeking within MNCs , 2004 .

[99]  SambamurthyV.,et al.  The Assimilation of Knowledge Platforms in Organizations , 2001 .

[100]  D. Dougherty.  A PRACTICE-CENTERED MODEL OF ORGANIZATIONAL RENEWAL THROUGH PRODUCT INNOVATION , 1992 .

[101]  Mark Easterby-Smith,et al.  Transferring Organizational Learning Systems to Japanese Subsidiaries in China , 2006 .

[102]  Bernard L. Simonin.  Ambiguity and the process of knowledge transfer in strategic alliances , 1999 .

[103]  Patrick Llerena,et al.  Routines and incentives: the role of communities in the firm , 2003 .

[104]  Kathleen M. Eisenhardt,et al.  Theory Building From Cases: Opportunities And Challenges , 2007 .

[105]  Wanda J. Orlikowski,et al.  Knowing in practice: Enacting a collective capability in distributed organizing , 2002, STUDI ORGANIZZATIVI.

[106]  M. Feldman.  Organizational Routines as a Source of Continuous Change , 2000 .

[107]  J. Brown,et al.  Organizational Learning and Communities-of-Practice: Toward a Unified View of Working, Learning, and Innovation , 1991 .

[108]  Sidney G. Winter,et al.  The satisficing principle in capability learning , 2000 .

[109]  Robert E. Stake,et al.  Multiple Case Study Analysis , 2005 .

[110]  Booncharoen Sirinaovakul,et al.  Introduction to the Special Issue , 2002, Comput. Intell..

[111]  G. Andrews,et al.  Mja Guidelines for Assessing Qualitative Research Quality in Qualitative Research Criteria for Authors and Assessors in the Submission and Assessment of Qualitative Research Articles for the Medical Journal of Australia , 2022 .

[112]  J. H. Dyer,et al.  Creating and managing a high‐performance knowledge‐sharing network: the Toyota case , 2000 .

[113]  Mari Sako,et al.  Supplier development at Honda, Nissan and Toyota: comparative case studies of organizational capability enhancement , 2004 .

[114]  S. Winter,et al.  An Evolutionary Theory of Economic Change.by Richard R. Nelson; Sidney G. Winter , 1987 .

[115]  Jeffrey H. Dyer,et al.  Alliance capability, stock market response, and long‐term alliance success: the role of the alliance function , 2002 .

[116]  Scott M Elliott.  Collaborative Advantage: Winning Through Extended Enterprise Supplier Networks: Jeffrey H. Dyer;Oxford University Press, 2000. 209 + xii pages $27.50 , 2001 .

[117]  E. Wenger.  Communities of Practice: Learning, Meaning, and Identity , 1998 .

[118]  D. Teece,et al.  Strategy as Evolution with Design: The Foundations of Dynamic Capabilities and the Role of Managers in the Economic System , 2008 .

[119]  S K Jean Lee,et al.  Quantitative versus qualitative research methods — Two approaches to organisation studies , 1992 .

[120]  J. Birkinshaw,et al.  Multinational Subsidiary Evolution: Capability and Charter Change in Foreign-Owned Subsidiary Companies , 1998 .

[121]  J. Lave.  Cognition in Practice: Outdoors: a social anthropology of cognition in practice , 1988 .

[122]  Constance E. Helfat,et al.  Product Sequencing: Co-Evolution of Knowledge, Capabilities and Products. , 2000 .

[123]  Paul R. Carlile,et al.  Transferring, Translating, and Transforming: An Integrative Framework for Managing Knowledge Across Boundaries , 2004, Organ. Sci..