Emerging economy MNEs exploring the integration of knowledge transfer and strategy for sustainable performance

This book focuses on the modes of knowledge transfer practiced, strategic actions adapted, the dynamicbusiness environment of predictability and changeability experienced; andthe applied

Emerging Economy MNEs

Emerging Economy

MNEs

Exploring the Integration of Knowledge Transfer and Strategy for Sustainable Performance

Joan Lilian Ogendo

Emerald-El Jay Management

Consultants

Nairobi, Kenya

ISBN 978-3-319-52035-3 ISBN 978-3-319-52036-0 (eBook) DOI 10.1007/978-3-319-52036-0

Library of Congress Control Number: 2017930631

© The Editor(s) (if applicable) and The Author(s) 2017

This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed.

The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information

in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institu- tional affiliations.

Cover pattern © Harvey Loake

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Springer International Publishing AG

The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

the understanding of knowledge; to my Dad Mr Samson OgendoApondi, now deceased, and to my mother Mrs Yuniah Ogendo Dad, Iappreciate you for imparting knowledge in me and your dream toperceive my future publications that your demise did not allow you towitness Mama, I am grateful for your consistent support, prayers,patience, understanding and love that enabled my determination to

attain this far

The acquisition of knowledge is on high demand in the current age of thetwenty first century Competition is the order of this century in theproduction of substitute goods and services being offered in the market

It would be appropriate if the competitors understood the market andutilized the available knowledge efficiently and effectively in producingquality goods and services to their firms’ customers and other stake-holders’ at the most economical values This book focuses on the modes

of knowledge transfer practiced, strategic actions adapted, the dynamicbusiness environment of predictability and changeability experienced; andthe applied sustainable balanced scorecard performance by the EmergingMultinational Enterprises in Kenya The book describes the strategicactions that are applied for sustainable performance It further explainsthe linkage of strategic actions and the modes of knowledge transfer forsustainable performance Fundamentally, the book enlightens about the

influence of the modes of knowledge transfer on strategy for sustainableperformance in dynamic business environment

The integration of knowledge transfer and strategy for sustainable mance in Emerging Multinational Enterprises is important to managers,investors, business persons, researchers, post graduate students and consul-tants Managers may be interested to ascertain ideas that can enable them toset up their organizational policies Investors could be interested in geogra-phical regions and organizations where they can invest in Business personswould be interested in organizations where they can trade their products andservices Researchers may be interested in information that would enablethem to create awareness to their clients on business issues and benefits of

perfor-vii

given regions Post graduate students would be interested for academicreference and clarity of knowledge Consultants would use this information

to advise their clients on the appropriate policies and practices of EmergingMultinational Enterprises

The research was conducted on 25 Emerging Multinational Enterprises inKenya who have their headquarters offices in Kenya and trade outside Kenya

or have foreign direct investments These Emerging MultinationalEnterprises operate in diverse business sectors across the economy Amongthe business sectors, these organizations operate in agriculture, commercialand services, telecommunications and technology, banking, insurance, man-ufacturing and allied, construction and allied; and energy and petroleumbusiness sectors Some of these Kenyan Multinational Enterprises operatewithin the East African countries of Kenya, Uganda and Tanzania Othersoperate in the African countries such as Zanzibar, Malawi, South Sudan,Rwanda, Burundi, Ethiopia, Congo, Mozambique, Somalia, Egypt,Zimbabwe, Angola, Ghana, Nigeria and Zambia A few operate outsidethe African continent

I acknowledge Professor Evans Aosa, Professor Martin Ogutu andProfessor G P Pokhariyal for encouraging me to pursue the research toaccomplishment Dr James Njihia, Dr Vincent Machuki, Dr NicholasLetting and Professor Z B Awino for guidance during the research work.Siblings, Mr Paul Apondi and Dr Margaret Ogendo – Oloo for theirencouragement and empathy prior, during and after the script of thisbook; and finally, the University of Nairobi fraternity, together with allthe Emerging Multinationals that participated in this research to ensure itssuccess The author is also grateful to all those who participated directlyand indirectly and are not mentioned above

Strategy and Knowledge Transfer for Sustainable Performance 1

2 Materialization of Knowledge Transfer, Strategy,

Dynamic Environment and Sustainable Balance

4 Integral Modes of Knowledge Transfer on Strategy

Strategy, Knowledge Transfer and Sustainable Performance 47

ix

The Influence of the Knowledge Transfer on Strategy

The Influence of the Modes of Knowledge Transfer

The Influence of the Modes of Knowledge Transfer

The Influence of the Modes of Knowledge Transfer

The Influence of the Modes of Knowledge Transfer

5 Achieve Sustainable Performance in Dynamic

Strategy, Knowledge Transfer, Business

The Effect of Strategy, Knowledge Transfer,

The Effect of Industry Environment on Strategy,

The Effect of Macroenvironment on Strategy,

The Effect of Microenvironment on Strategy,

The Effect of Environmental Dynamism on Strategy,

The Influence of the Modes of Knowledge Transfer and

Environmental Dynamism on Strategy and Performance 86

Recommendations 99

CONTENTS xi

Fig 1.1 The linkages of strategic actions, the modes of knowledge

transfer, environmental dynamism and sustainable balanced

Fig 3.1 The significant results on strategy and performance 44 Fig 4.1 Signi ficant results on strategy, knowledge transfer and

Fig 5.1 The signi ficant results on strategy, knowledge transfer,

environment and performance 87

xiii

LIST OF TABLES

Table 2.1 Manifestation of knowledge transfer 21 Table 2.2 The demonstration of strategic actions 24 Table 2.3 The display of predictability of business environment 26 Table 2.4 The display of changeability in the business environment 28 Table 2.5 The expression of sustainable performance 31 Table 3.1 The effect of product development on performance 39 Table 3.2 The effect of market penetration on performance 40 Table 3.3 The effect of market development on performance 40 Table 3.4 The effect of diversi fication on performance 41 Table 3.5 The joint effect of strategy on performance 42 Table 4.1 The in fluence of socialization on product development

Table 4.9 The in fluence of socialization on market development

Table 5.1 The effect of strategy, knowledge transfer, industry

environment and performance 80 Table 5.2 The effect of strategy, knowledge transfer, macro

environment and performance 80 Table 5.3 The effect of strategy, knowledge transfer, micro

environment and performance 81 Table 5.4 The joint effect of strategy, knowledge transfer

and environmental dynamism on performance 82

CHAPTER 1

Introduction

Abstract Ogendo presents the background of the integration of edge transfer and strategy for sustainable performance The focal pointexplains the theoretical foundation, the emerging economy of multina-tional arguments and the predicament of the book The theoretical foun-dation engages the dynamic theory of knowledge creation, theknowledge-based theory of the firm, contingency theory, Porter’s fiveforces model and the stakeholders’ model The chapter delves into thebroad and specific goals and explains the theoretical, policy and practicalaspects of the book

knowl-Keywords Emerging economy MNEs
Knowledge creation
Knowledge-based theory
Stakeholders’ theory
Porter’s five forces

STRATEGY ANDKNOWLEDGETRANSFER FORSUSTAINABLE

PERFORMANCE

The transfer of knowledge in organizations is more complicated, sincemost of it is tacit and difficult to articulate (Argote and Ingram,2000)besides, knowledge mostly dwell on tools, tasks, the stakeholders of theorganizations and their sub-networks Knowledge transfer in thefields oforganizational learning and development may cause practical problems(Levin and Cross,2004) Nonaka (1994) argued that declarative knowl-edge is real knowledge conveyed in the form of suggestions, while

© The Author(s) 2017

J.L Ogendo, Emerging Economy MNEs,

DOI 10.1007/978-3-319-52036-0_1

1

procedural knowledge is methodological knowledge applied in activitiessuch as remembering how to ride a bicycle and how to play the piano Hefurther suggested that for cognitive skills to develop, declarative knowledge

is expected to change into procedural knowledge The strategy typology byMiles and Snow (1978) visualizes strategy as a collection of decisions thatalign managerial processes with the environment of the organization’s stra-tegic business unit (Desarbo et al.,2005) Ansoff’s (1965) strategic choices

of market penetration, product development, market development anddiversification, focus on the expansion of business strategies Porter (1980)introduced cost leadership, differentiation and focuses on identifying thebusiness strategy The environment is dynamic Therefore, environmentalscanning keeps abreast of change, reveals factors that constitute threats andopportunities, monitors competitors’ activities and gives the necessary stra-tegic formulation and implementation inputs (Babatunde,2012) Johnsonand Kaplan (1987) claim that the traditional cost or management account-ing system measure of performance, introduced in the early 1900s, is notappropriate in the current business environment anymore

Inkpen (2008) argued that the effectiveness of knowledge transfer canactively be improved and managed, given that, there is a possibility ofdesigning organizational strategies and structures to support and enhanceknowledge sharing in international alliances Pillania (2009) establishedthat in the recent years, Multinational Enterprises (MNEs) from the emer-ging markets are rapidly expanding and acquiring companies in the devel-oped countries He further ascertained that emerging market MNEs aregiving tough competition to the existing MNEs in developed countries aswell as Third World countries Khanna and Palepu (2010) suggested astructural framework for thinking about the nature and extent of differ-ences between emerging economies that involve mature markets on theone hand and emerging markets on the other

On the theoretical perspective in this study, knowledge transferanchors the dynamic theory of knowledge creation (Nonaka, 1994)and the knowledge-based theory of the firm (Grant, 1996) Ansoff’s(1965) strategy matrix deals with the expansion of business TheIndustrial Organization Economics paradigm of structure-conduct-per-formance framework, the behavior of which is based on the industryenvironment in which it competes (Porter,1981), anchors the linkage ofstrategic actions, knowledge transfer, and organizational performance.The stakeholders’ theory focuses on the sustainable balanced scorecard

(Kaplan and Norton1992; Hubbard2009), which communicates egy across the organization and anchors the organizational performance.Lawrence and Lorsch’s (1967) contingency theory and Porter’s fiveforces model anchor the environmental dynamism.

strat-The concept of knowledge transfer involves the transfer of awarenessthrough social media, team working interests, individual creativity, onthe job training, product development, manager’s flexibility, informationtechnology, sharing culture, strategic plan, workshops, replication andprovision of non-financial bonuses Strategic actions involve productdevelopment, market development, market penetration and diversifica-tion of goods and services Environmental dynamism signifies the pre-dictable development and observed environmental changes It involvesthe threat of new entrants in the industry, competition among rivals inthe industry, exit barriers in the industry, relative power of customers ofthefirm, the relative power of suppliers of the enterprise, the threat ofsubstitute products within the industry, macroenvironment and micro-environment The balanced scorecard measures thefinancial perspective

of the financial returns required by investors, customer perspective onwhat customers want, internal business process perspective on what thecompany needs to deliver; and learning and growth (Kaplan and Norton,

1992) social and environmental aspects (Figge et al., 2002; Hubbard,

improved knowledge transfer Bezerra et al (2013) established that theimpact of the in-house and external network on the reverse knowledgeprocess for Multinationals’ foreign subsidiaries within their economiesand their subsidiaries abroad, do not occur with integration Nair et al.(2016) established that perceived knowledge relevance, capability, andabsorption capacity positively influence reverse knowledge transfer.For a successful sustainable balanced scorecard performance, theMNEs should mobilize change through the strategic actions deploy-ment, translation of knowledge, alignment of the organization to thestrategy, and scan the environmental dynamism Knowledge transfer may

be an issue in most organizations due to the lack of proper education,competition and globalization The way these organizations managetheir modes of knowledge transfer should influence the choice of strategyand ensure optimal sustainable balanced scorecard performance, giventhe fact that they are not subject to the same environment which canaffect modes of knowledge transfer and strategic actions to give thesustainable performance

JUSTIFICATION OF THEBOOK

This book examines knowledge transfer rather than knowledge creationdue to their relationship Knowledge transfer is the movement, convey-ance or transmission of information, facts or data from one individual,group or organization, to another Knowledge creation involves thetransfer of tacit and explicit knowledge within the matrix of the fourmodes of knowledge conversion (Nonaka, 1994); indeed, conversionmeans, to transfer Knowledge creation is, therefore, an approach, form

or means of knowledge transfer For that reason, knowledge transfer andknowledge creation intertwine, since knowledge creation involves thecyclical transfer process of learning from socialization, externalization,combination to internalization on a particular concept According toGourlay (2004), the model of knowledge creation finds support insocialization and combination, but it also has some shortfalls Heexplains that the origin of knowledge creation study describes that eachmode of knowledge transfer is pegged on different case studies and not aspecific one to confirm a spherical process of knowledge creation Hefurther ascertained that the cases specified the activities of bread makingfor socialization, a car production for externalization; MBA educationand modern computer for combination, and learning by doing for

internalization The distinct application of each and every mode ofknowledge transfer for separate activities in Nonaka’s (1994) study con-firms the justification of examining knowledge transfer and not knowl-edge creation in this study This argument implies that knowledgetransfer is the construction of knowledge creation This book considersknowledge transfer with regard to Nonaka’s (1994) knowledge creationtheory.

The book focuses on the Emerging market MNEs in Kenya TheEmerging markets Multinational are the MNEs headquartered in Kenyaand are engaged in outbound Foreign Direct Investments The reason forselecting Kenya as a country is because Kenya is a key growth centre which

is dignified to become one of the fastest growing economies in Africa.Globally, Kenya positions at 102 and 131 in the ranking of 189 economies

on the ease of enforcing contracts and trading across borders respectivelyand is ahead of the Sub-Saharan Africa (The International Bank forReconstruction and Development/World Bank2016) According to theWorld Bank, Kenya has made the enforcing contract and trade acrosseasier It has since introduced a case management system that will helpboost the efficiency and cost-effectiveness of commercial dispute resolu-tions; and also speeded up business by implementing an electronic cargotrading system and linking this system to the Kenya Revenue Authority’selectronic data interchange system for customs clearance, respectively.The generation and transfer of knowledge is an essential source(Osterloh and Frey,2000) offirm’s sustainable competitive advantage.There are practical problems caused by knowledge transfer in the orga-nizational learning and development (Levin and Cross, 2004) in anygiven corporate set up Knowledge transfer has been found to beamong the ways through which organizations achieve their goals Theway organizations undertake the modes of knowledge transfer isexpected to influence sustainable balanced scorecard performance.However, this power would be subject to strategic actions and environ-mental dynamism

Emerging MNEs in Kenya operate in various industries that cut acrossthe different sectors of the economy in which businesses entail bothservices and tangible products These organizations may manage themodes of knowledge transfer that have implications on their performance

to sustain competitive advantage However, the organization’s strategiesare likely to affect this relationship These Emerging MNEs operate inenvironments that manifest different levels of dynamism that are likely to

influence the effect of their strategic actions on the modes of knowledgetransfer It will be important to note that the ultimate impact of the modes

of knowledge transfer on the organization’s sustainable performance would

be subject to both the nature of their environmental dynamism as well as thestrategic actions that these Emerging MNEs make

While studies (Rasula et al.,2012; Hassan and Al-Hakim,2011; Fernandes

et al., 2006; Osterloh and Frey, 2000) have established the relationshipbetween knowledge transfer and performance, (Ogendo,2014) the influence

of environmental dynamism and the effect of strategic actions in this ship is inconclusive Knowledge transfer has been a subject of much empiricalresearch (Lin et al.,2005; Jacobson et al.,2005; Hansen,2002; Zander andKogut, 1995) The contextual gap in the previous empirical studies is theEmerging MNEs in Kenya Studies conducted on companies in Kenya includ-ing MNEs have focused on various concepts These ideas include ownershipstructure, board effectiveness and managerial performance (Ongore,2008);board of directors’ attributes, strategic decision making and corporate perfor-mance (Letting, 2011); and external environment, strategy co-alignment,firm level institutions and performance (Machuki, 2011) The conceptualgap in these studies is the relationship between knowledge transfer, strategicactions, environmental dynamism and sustainable balanced scorecard perfor-mance While these studies (Lin et al.,2005; Rasula et al.,2012; Hassan andAl-Hakim, 2011) have treated performance as a dependent variable, theirindependent, moderating and intervening variables are different from eachother

relation-From the empirical studies on knowledge transfer, the relationshipbetween modes of knowledge transfer, strategic actions, environmentaldynamism and organizational performance is inconclusive The inconclu-siveness has prompted the need to establish a book on the relationshipbetween strategic actions, the modes of knowledge transfer, environmen-tal dynamism and sustainable balanced scorecard performance This bookexamines the influence of the modes of knowledge transfer and environ-mental dynamism on the relationship between strategic actions and sus-tainable balanced scorecard performance of the MNEs in Kenya From theliterature review, knowledge transfer, strategy and organizational perfor-mance empirically study distinct concepts The knowledge gap is theinclusion of external environment in the joint study of strategic actions,the modes of knowledge transfer, environmental dynamism and sustain-able balanced scorecard performance Knowledge transfer conceptualizes

as an independent variable and at times intertwined with strategy as

moderating variables in the previous empirical studies The empiricalresearch in this book conceptualizes strategic actions as an independentvariable distinct from the modes of knowledge transfer Environmentaldynamism considers the moderating variable Strategic actions as theintervening variable and organizational performance as the dependentvariable This book focuses on the firms’ sustainable performance andnot the subsidiary performance, since the organizational performancerepresents the sustainable balanced scorecard (Hubbard 2009) of thecompany, of which the subsidiary is a part Grant (1996) conceptualizedthefirm as an institution for integrating knowledge This book, therefore,focuses onfirm and not just the joint venture or subsidiary.

The broader objective of this book is to establish the relations betweenstrategic actions, the modes of knowledge transfer, environmental dynamismand sustainable balanced scorecard performance This book specifies the

influence of the modes of knowledge transfer and environmental dynamism

on the relationship between strategic actions and sustainable balanced ecard performance, by integrating these concepts Prior research on knowl-edge have been classified according to the model type of game-theoretical andlinkages, for example, knowledge transfer type such as information structureand knowledge management; and research types such as field study andlaboratory Some empirical studies are not comparable due to the modeltype However, the findings by Fernandes et al (2006) and Lin et al.(2005) seem to support one another since firms see improvement whenknowledge efficiently transfers and that knowledge transfer must decide towhich type of information structure it belongs

scor-This book connects various theories which may contribute to theadvancement of the knowledge-based theory of the firm, the dynamictheory of knowledge creation, Ansoff strategy matrix, contingency theory,Porter’s five forces model and the stakeholders’ theory To the academi-cians and researchers, the study may be a data bank about information onstrategic actions, knowledge transfer, environmental dynamism and sus-tainable balanced scorecard performance

Policies and practices may be applied in given organizations to ensure

efficient and effective sustainable balanced scorecard performance about themodes of knowledge transfer and strategic actions The policy makers of theorganizations in public and private sectors including global MNEs may usethe information obtained from this book to make their plans The systemsmay also enable organizations to gain a competitive advantage over theircompetitors in the global market

This book may enable the practicing consultants to advise their clients onthe need to apply effective transfer of knowledge in thefirm despite turbu-lent environments The consultants might obtain the insight of the influence

of the modes of knowledge transfer and environmental dynamism on tegic actions and sustainable balanced scorecard performance The insightmay resolve issues about knowledge transfer in the given organizations.Knowledge is substantial in the competitive sustainability of any orga-nization Nonaka (1994) provided the foundation for this model when heexamined the dynamic theory of organizational knowledge creation Thisbook examinesfirst, the effect of strategic actions on sustainable balancedscorecard performance Second, the effect of strategic actions and themodes of knowledge transfer on sustainable balanced scorecard perfor-mance Third, is the influence of modes of knowledge transfer and envir-onmental dynamism on the relationship between strategic actions andsustainable balanced scorecard performance

stra-There are four views of knowledge transfer that underlines this book.Knowledge is transferable through socialization, externalization, combi-nation and internalization (Nonaka, 1994) Socialization is the methodthat transmits tacit knowledge in one person to another Externalization isthe process of making tacit knowledge explicit and involves the articula-tion, eliciting and translating tacit knowledge of others The combination

is a process whereby knowledge is conveyed in databases, documents,email, as well as through briefings and meetings The internalizationprocess transfers organization and group explicit knowledge to theindividual

The conceptual framework of this book narrates how the modes ofknowledge transfer and environmental dynamism are to influence theoutcome of the strategic actions on the sustainable balanced scorecardperformance The modes of knowledge transfer are expected to be presentfrom the time that the strategic actions are operational, to the time theyaffect the sustainable balanced scorecard performance The sustainablebalanced scorecard performance should be the outcome or resultsobtained from the effects of the strategic actions, the modes knowledgetransfer and the environmental dynamism.Figure 1.1 illustrates the con-ceptual framework

The Emerging MNEs in Kenya include the business sectors of ture, commercial and services, telecommunications and technology, bank-ing, insurance, investment, manufacturing and allied, construction andallied and petroleum and energy

There are underpinning theories that anchor the concepts of this book.Knowledge transfer is anchored to the dynamic theory of knowledge crea-tion and the knowledge-based theory of the firm Strategy actions isanchored to Ansoff’s strategy matrix The external environment is anchored

to contingency theory, while the sustainable balanced scorecard mance is anchored to the stakeholders’ theory However, these theorieshave their benefits and weaknesses The dynamic theory of organizationalknowledge creation through the modes of knowledge transfer analyses thediscipline of a learning organization by ensuring the application of sharedvision, testing mental models and system thinking As a result, the knowl-edge-based theory of the firms would be adaptable when knowledge istransferable within and around the organizations Coordination mechanismmay lead to efficient knowledge transfer Knowledge transfer may be activethrough socialization, internalization, externalization and combination Thecoordination mechanism may apply to common language for integrationand symbolic communication through information technology

perfor-The dynamic theory of knowledge creation and the knowledge-basedtheory would affect the industrial organizational economics theory at thecommencement of strategy formulation, affirmation of strategic actionsand during the strategy process The industrial organizational economics

Environmental Dynamism:

Industry Environment, Macroenvironment, Microenvironment

Financial Performance, Customer Performance, Internal Business Process Performance, Learning and Growth Performance, Social Performance,

Economical Performance

The Modes of Knowledge Transfer:

Socialisation, Externalisation, Combination, Internalisation

Fig 1.1 The linkages of strategic actions, the modes of knowledge transfer, environmental dynamism and sustainable balanced scorecard performance

theory evaluates the strategic actions-the modes of knowledge performance framework Given this, the book engages the contingencytheory to assess the environmental dynamism and the stakeholders’ theory

transfer-to evaluate the sustainable balanced scorecard performance of theEmerging MNEs in this book The outcome of the stakeholders’ theory

in this book is the function of the dynamic theory of knowledge creation,the knowledge-based theory of the firm, the industrial organizationaleconomics theory and the contingency theory

The dynamic theory of organizational knowledge creation (Nonaka,

1994) intensifies individual creativity and shapes it up as part of theknowledge network of the organization This theory has four modes ofknowledge transfer First, it postulates knowledge transfer from tacitknowledge to tacit knowledge through socialization Second, knowledgetransferred from explicit knowledge to tacit knowledge through interna-lization Third, knowledge transferred from tacit knowledge to explicitknowledge through externalization, and finally, knowledge transferredfrom explicit to explicit through combination; and enables the collection

of raw data, retrieving data; investigates new solutions based on istic queries and install permanency of newly discovered actions (Bhaghatand Black,2000) The theory explains how knowledge can be created byindividual, organizations and societies through spiral interactive intensifi-cation of tacit and explicit knowledge The application of this theoryfacilitates the transfer of knowledge in organizations Knowledge creation

probabil-is essential in organizations with scarce resources (Aghajani et al.,2011).However, the approach is limited to tacit and explicit knowledge creation

It focused on the knowledge creation within the organization andassumed that the team could not create in their surroundings The theorycould have considered the external environmental factors that enhanceknowledge creation Organizational learning has mediating influence onsocial capital and knowledge transfer performance (Li and Luo, 2010).When the corporate education costs are high, the financial goal may beimpaired Senge’s focus on distributed leadership disregards issues ofpractice and power, since his work does not provide the discovery forthe mounting dispersion of human agency, knowledge, power and auton-omy within the workplace (Caldwell,2005)

The knowledge-based theory of thefirm surveys the skill mechanismsthrough whichfirms integrate the specialist knowledge of their members.Grant (1996) argues that these tools depend upon the existence of com-mon knowledge for their operation The common knowledge postulates

common language for integration of mechanism which relies on verbalcommunication between individuals There are other forms of symboliccommunication such as information technology; commonality of specia-lized knowledge; shared meaning and recognition of particular knowledgedomain Business strategy affects knowledge sharing within organizations(Ryan et al.,2010) which support the knowledge-based theory of thefirm.The use of common language within and around organizations wouldenhance efficient knowledge transfer that may lead to optimal perfor-mance However, inefficient symbolic communication through informa-tion technology may hinder knowledge transfer to most of thestakeholders of the organization, and thus, result in inadequate perfor-mance by the teams in question.

The concepts of strategic actions, the modes of knowledge transfer andsustainable balanced scorecard performance support the traditionalIndustrial Organization Theory of structure-conduct-performance frame-work work of thefirm (Porter1981) The conduct represents the modes

of knowledge transfer of the enterprise, while performance is the goal ofthe company The concept of strategic actions represents the structure ofthe industrial-organizational economics theory The strategic choiceaspect bases Miles and Snow’s typology that describes the dynamic process

in which organizations continually adjust internal interdependencies toenvironmental prospects and threats (Miles and Snow,1978) The strat-egy attempts to achieve a long-term sustainable advantage in each of itsbusinesses, by responding appropriately to the opportunities and threats inthefirm’s environment and the strengths and weaknesses of the organiza-tion (Hohnen,2007) The strategy is a consistent, unifying and amalga-mated pattern of decisions (Bakir and Todorik, 2010) It selects thebusinesses that organizations operate in or are expected to function in(Mircea, 2008) The industrial organization economics theory assumesthat conduct is the intervening variable of structure and performance.However, Habib and Victor (1991) confirmed that conduct-structure fithad no effect on organization’s economic performance Wolf and Egelhoff(2002) argue that conduct-structurefit is an attribute created by managersand selected by competitive environments

The concept of environmental dynamism supports the contingencytheory (Lawrence and Lorsch, 1967) which argues that organizationshave to be differentiated and integrated to optimal performance subject

to the level of environmental uncertainty The environmental mism postulates by Porter’s (1980) five forces model of industrial

dyna-1 INTRODUCTION 11

environment postulates threat of new entrants, competition for rivals,exit barriers, the relative power of customer and suppliers of the firm,macroenvironment and microenvironment Dess and Beard (1984)integrated strategic management and organizational theory literatureand provided theoretical and empirical support for environmental dyna-mism, complexity, and munificence The particular environment thatone is in dictates the trust builders that offer the greatest potential forimproving interpersonal trust (Abrams et al., 2003) Mason (2007)argued that a stable environment changes little and is predictable,while there are many unexpected variations in a turbulent environment.

He further explained that environmental complexity measures diversity

in the environment, as systems become more involved, making sensebecomes more complicated, and ecological adaptation becomes moreproblematic Environmental munificence entails the abundance ofresources or otherwise (Machuki,2011) Thefirm’s adoption capability

to different business environments is valuable, difficult to imitate, tradable, rare but not scarce and path-dependent resource (Ferreira

2005) Building a balanced scorecard performance system using a givenframework would enable managers to think more strategically abouttheir organization (Caraiani et al.,2012) The global crisis has demon-strated the need for reporting that gives better information about howbusinesses perform against the long-term strategy Companies thatimplemented balanced scorecard suggested that it contributed to theirsuccess and none of them was to abandon it (Petr et al., 2012) Thebalanced scorecard is tailored for large public owned businesses rather

that small private companies who base their achievement on financialperformance (Wang,2005) Managers should think seriously about themanagerial purposes to which performance measurement might contri-bute and deploy the organization’s measures (Behn,2003) These the-ories view organization as systems of interdependent activities embeddedindependent wider environments (Shafritz et al.,2011).

REFERENCES

Abrams, L C., Cross, R., Lesser, E., & Levin, D Z (2003) Nurturing Interpersonal Trust in Knowledge-Sharing Networks Academy of Management Executive, 17(4), 64–77.

Aghajani, H., Yahyazadehfar, M., & Hosseinzadeh, S A (2011) Knowledge Creation Processes: A Survey of SMEs In the Iranian Province of Mazandaran Journal of Global Entrepreneurship Research, 1(1), 59 –71 Ansoff, H I (1965) Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion New York: McGraw-Hill.

Argote, L., & Ingram, P (2000) Knowledge Transfer: A Basis for Competitive Advantage in Firms Organizational Behaviour and Human Decision Processes, 82(1), 150–169.

Babatunde, B O (2012) Strategic Environment Scanning and Organization Performance in a Competitive Business Environment Economic Insights – Trends and Challenges, 64(1), 24 –34.

Bakir, A., & Todorovic, M (2010) A Hermenutic Reading into ‘What Strategy Is’: Ambiguous Means-End Relationship The Qualitative Report, 15(5), 1037 –1057 Behn, R D (2003) Why Measure Performance? Different Purposes Require Different Measures Public Administration Review, 63(5), 586 –607.

Bezera, M A., Costa, S., Borini, F M., & Oliveira Jr, M D (2013) Reverse Knowledge Transfer: A Comparison Between Subsidiaries of Emerging Markets and Subsidiaries of Developed Markets Iberoamerican Journal of Startegic Management, 12(4), 67 –90.

Bhaghat, S., & Black, B (2002) The Non-Correlation between Board Independence and Long-term Firm Performance Journal of Corporate Law,

27, 231 –273.

Caldwell, R (2005) Leadership and Learning: A Critical Reexamination of Senge’s Learning Organization Systematic Practice and Action Research, 18 (4), 335 –434.

Caraiani, C., Lungu, C L., Dascalu, C., & Climpoeru, M V (2012) Social and Environmental Performance Indicators: Dimensions of Integrated Reporting and Benefits for Responsible Management and Sustainability African Journal

of Business Management, 6(14), 4990 –4997.

1 INTRODUCTION 13

Desarbo, W S., Benedito, C A., Song, M., & Sinha, I (2005) Revisiting the Miles and Snow Strategic Framework: Uncovering Interrelationships Between Strategic Types, Capabilities, Environmental Uncertainity and Firm Performance Strategic Management Journal, 26, 47 –74.

Dess, G G., & Beard, D W (1984) Dimensions os Organizational Tasks Environment Administrative Science Quarterly, 29, 52 –73.

Fernandes, L M., Morales, V G., Molina, V B., & Moreno, A R (2006) Interorganizational Knowledge Transfer and Performance OLKC 2006 Conference at the University of Warwick (pp 1 –21) Coventry: OLKC Ferreira, M P., Serra, F R., Li, D., & Armagan, S (2009) Adaption to International Business Environment: A Resource Advantage Perspective Instituto Politecnico de Leiria Leiria, Portugal: Globadvantage.

Figge, F., Hanh, T., Schaltegger, S., & Wagner, M (2002) The Sustainability Balanced Scorecard – Linking Sustainability Management to Business Strategy Business Strategy and the Environment, 11, 269 –284.

Gourlay, S (2004) SECI Model of Knowledge Creation: Some Empirical Shortcomings Kingston Hill: Kingston Business School.

Grant, R M (1996) Towards a Knowledge Based Theory of the Firm Strategic Management Journal, 17(Special Issue: Knowledge and the Firm), 109 –122 Habib, M M., & Victor, B (1991) Strategy, Structure and Performance of U S Manufacturing and Service MNCs: A Comparative Analysis Strategic Management Journal, 12(8), 589 –606.

Hansen, M T (2002) Knowledge Networks: Explaining Effective Knowledge Sharing in Multiunit Companies Organization Science, 13(3), 232 –248 Hassan, S., & Al-Hakim, L A (2011) The Relationships Among Critical Success Factors of Knowledge Management, Innovation and Organizational Performance: A Conceptual Framework 2011 International Conference on Management and Arti ficial Intelligence (pp 94–103) Indonesia: IACSIT Press.

Hohnen, P (2007) Corporate Social Responsibility: An Implementation Guide for Business (pp.1 –115) Manitoba, Canada: International Institute for Sustainable Development.

Hubbard, G (2009) Measuring Organizational Performance Beyond the Tripple Bottom Line Business Strategy and Environment, 19, 177 –191 Inkpen, A C (2008) Managing Knowledge Transfer in International Alliances Thunderbird International Business Review, 50(2), 77 –90.

I šoraité, M (2005) The Balanced Scorecard Method: From Theory to Practice Interlectual Economics, 1(3), 18 –28.

Jacobson, N., Butterill, D., & Goering, P (2005) Consulting as a Strategy for Knowledge Transfer The Milbank Quarterly, 83(2), 299 –329.

Johnson, H T., & Kaplan, R S (1987) Relevance Lost: The Rise and Fall of Management Accounting Boston, MA: Harvard Business School Press.

Kaplan, R S., & Norton, D P (1992) The Balanced Scorecard – Measures That Drive Performance Harvard Business Review, 70(1), 71 –79.

Khan, Z., Shenkar, O., & Lew, Y K (2015) Knowledge Transfer from International Joint Venture to Local Suppliers in a Developing Economy Journal of International Business, 46, 656 –675.

Khanna, T., & Palepu, K G (2010) Winning in Emerging Markets: A Road Map for Strategy and Execution Boston, MA: Harvard Business Press.

Lawrence, P R., & Lorsch, J W (1967) Organizational and Environment Managing Differentiation and Intergration Boston, MA: Harvard Business School Leposky, T., Arslan, A., & Knotkanen, M (2015) Reverse Knowledge Transfer (RKT) from Emerging Market Subsidiaries to Headquarters of Multinational Enterprises: Conceptual Discussion and Propositions on Marketing RKT AIB- UKI April Manchester: Journal of International Business Studies.

Letting, N K (2011) Board of Directors ’ Attributes, Strategic Making and Corporate Performance of Firms Listed on the Nairobi Stock Exchange Nairobi, Kenya: Unpublished PhD Thesis, University of Nairobi Levin, D Z., & Cross, R (2004) The Strength of Weak Ties You Can Trust: A Mediating Role of Trust in Effective Knowledge Transfer Management Science, 50(11), 1477 –1490.

Decision-Li, Z., & Luo, F (2010) The In fluence Path of Social Capital on Knowledge Transfer Performance: A Moderating Role of Organizational Learning Proceedings of the Third International Symposium on Electronic Commerce and Security Workshops (ISEC ‘10) (pp 179–183) Guangzhou: ISEC ‘10 Lin, L., Geng, X., & Whinston, A B (2005) A Sender Receiver Framework for Knowledge Transfer MIS Quarterly, 29(2), 197 –219.

Machuki, V N (2011) External Environment Startegy Co-Alignment, Firm Level Institutions and Performance of Publicly Quoted Companies in Kenya Nairobi, Kenya: Unpublished PhD Thesis, University of Nairobi.

Mason, R B (2007) The External Environment ’s Effect on Management and Strategy: A Complexity Theory Approach Management Decisions, 45(1), 10 –28 Miles, R E., & Snow, C C (1978) Organizational Strategy, Structure and Process New York: McGraw-Hill.

Mircea, M (2008) Strategy for Selecting a Business Strategy Solution Informartica Economica, 1(45), 103 –109.

Nair, S R., Demirbag, M., & Mellahi, K (2016) Reverse Knowledge Transfer in Emerging Market Multinationals: The Indian Context; International Business Review International Business Review, 25(1 Part A), 152 –164.

Nonaka, I (1994) A Dynamic Theory of Organizational Knowledge Creation Organizational Science, 5(1), 14 –37.

Ogendo, J L (2014) Knowledge Transfer, Strategy Content, External Environment and Performance of Companies Listed on the Nairobi Securities Exchange Nairobi, Kenya: Unpublished Doctoral Thesis, University of Nairobi.

1 INTRODUCTION 15

Ongore, V (2008) The Effect of Ownership Structure, Board Effectiveness and Managerial Discretion on Performance of Listed Companies in Kenya Nairobi, Kenya: Unpublished PhD Thesis, University of Nairobi.

Osterloh, M., & Frey, B S (2000) Motivation, Knowledge Transfer, and Organizational Forms Organization Science, 11(5), 538 –550.

Petr, P., Jaroslav, W., & Michal, M (2012) Strategic Performance Measurement Systems Implemented in The Biggest Czech Companies with Focus on Balanced Scorecard – An Empirical Study Journal of Competitiveness, 4(4),

Ryan, S D., Windsor, J C., Ibragimova, B., & Prybutok, V R (2010) Organizational Practices That Foster knowledge Sharing: Validation Across Distinct National Cultures Informing Science: The International Journal of

Wolf, J., & Egelhoff, W G (2002) A Reexamination and Extension of International Strategy – Structure Theory Strategic Management Journal, 23 (2), 181 –189.

Zander, U., & Kogut, B (1995) Knowledge and Speed of Transfer and Imitation

of Organizational Capabilities: An Empirical Test Organizational Science, 6(1), 76–92.

Keywords Knowledge transfer
Strategic actions
Environmental mism
Sustainable balanced scorecard
Emerging multinational enter-prises (MNEs)

dyna-KNOWLEDGETRANSFER

Knowledge considers human faculty that results from an understandingthat evolves from the combination of data, information, experience, indi-vidual interpretation and interpreted information (Nyarko 2009).Knowledge transfer is when knowledge generates across an organizationthrough personnel movement, and the experts’ knowledge transferredacross individuals through social cohesion (Argote et al 2003)

© The Author(s) 2017

J.L Ogendo, Emerging Economy MNEs,

DOI 10.1007/978-3-319-52036-0_2

17

Knowledge transfer is evident when experience acquired in one unit ofperson, firm or organization affects another group Lin et al (2005)suggest that knowledge increasingly transfers between geographically dis-persed individuals and subsidiaries in multiunit organizations; for example,strategic alliance, outsourcing and globalization imply knowledge transferacross organizational, cultural and national boundaries Knowledge trans-fer may occur either in the internal or external intelligence market since itprecedes knowledge utilization A party’s information set is considered ascomplete if it contains sufficient information for its own to reach thecorrect expected value of the knowledge transferred.

Nonaka (1994) established the four modes of knowledge conversion.First, the mode of knowledge conversion that enables individuals to con-vert implied knowledge through interaction between themselves all theway through language, imitation, observation and practice is also known

as socialization Second, the mode of conversion that transfers tacit edge into clear knowledge is also known as externalization Third, themode of knowledge conversion involves the use of social processes tocombine different bodies held by an individual, whereby, exchangemechanisms such as meetings and telephone conversations are practiced.The reconfiguration of the existing information in the explicit knowledgethrough sorting, adding, categorizing and phrasing can lead to newinsights, and this is referred to as combination The fourth mode ofknowledge conversion is the transfer of plain knowledge into unspokenknowledge, which is similar to learning, is also called internalization.The knowledge that can transfer is imitable, and hence, not necessarily asource of competitive advantage However, Zander and Kogut (1995) arguethat the transfer of manufacturing capabilities influence the degree to whichthey may be codified, taught or threat of the market pre-emption Thecapacity to speed the internal transfer of knowledge to new markets is afundamental significance to a competitive environment Gupta andGovindarajan (2000) argued that knowledge outflows and inflows from asubsidiary positively associates with the richness of transmission of channels.Also, knowledgeflows from a branch positively associates with the value ofthe subsidiary’s knowledge stock and its motivational disposition to shareknowledge, while knowledge inflow into a subsidiary would be positivelyrelated to disposal to acquire knowledge and the capacity to absorb incom-ing knowledge Moreover, Argote and Ingram (2000) established thatembedding knowledge in the sub-networks that involve people minimizesthe likelihood of knowledge transfer to the external organization because

knowl-knowledge in these reservoirs is least likely to fit other contexts, sinceattaining compatibility between the sub-networks moved from one site toanother is even more problematic Therefore, achieving knowledge transferthrough moving the sub-networks involving people is more problematicbetween organizations than within.

Nevertheless, there are barriers to knowledge transfer Eckl (2012)ascertained that restrictions associated with the relevance of externallygenerated knowledge occur due to the participation group within theprocess of knowledge generation as well as the culture of the researchinstitute The free rider dilemma of public research and precompetitiveresearch association may result in barriers to knowledge transfer if theknowledge originator is not willing to transfer the knowledge because ofeither the already occurred costs or deficient benefits The culture of theresearch institute due to content specialization and type of institutionalfunding poses the potential of difference facing the goals and the expec-tation of the industry in research association

The transfer of knowledge in organizations is more complicated since most

of it is the unspoken knowledge that is difficult to articulate as it resides intools, tasks, organizational members and sub-networks (Argote and Ingram,

2000) Knowledge transfer links with the communication of a message from asource to a beneficiary in a given context (Cummings,2003) Grant (1996)argued that the transferability of knowledge is a critical determinant of capacity

to consider competitive advantage both betweenfirms and within firms Thegeneration of knowledge and its transfer is a vital source of a company’ssustainable competitive advantage (Osteloh and Frey,2000)

Knowledge is a dynamic human progression of mitigating personalbelief towards truth (Nonaka and Takeuchi, 1995) Tsoukas (2003)noted that, by using the concepts of tacit and explicit knowledge (ascited in Nonaka and Krogh, 2009), organizational knowledge creationtheory departed from the original work of Polanyi (1966, 1969) sinceexplicit knowledge is always grounded in tacit knowledge The knowledgetransfer would influence the strategy during the knowledge transfer pro-cess, commence at the socialization stage of knowledge transfer and affirmthe implicit and explicit awareness of an organization The control mayenable the members of the team to participate in the transmission of thegiven knowledge personally As a result, the management would be in aposition to put appropriate control measures of the given knowledge.The indicators of knowledge transfer have been analysed using the coeffi-cient of variation and t-value and p-value The coefficient of variation tests

2 MATERIALIZATION OF KNOWLEDGE TRANSFER, STRATEGY 19

the variability, while the t-value shows how statistically significant are thedifferences between means in the manifestation of knowledge transfer acrossthe organizations The p-value tests the significance level This sectionfocuses on the transmission of tacit knowledge from one person to anotherthrough the interaction using the social media, sharing knowledge in rele-vant teams and analysing ideas that are worth pursuing this mode of knowl-edge transfer referred to as socialization Second, the transfer of theorganization’s knowledge to individual employees through documentedon-the-job training procedures, the organization availing adequate resourcesand expertise for innovation and the manager’s flexibility in accommodatingsuggestions from other staff; this mode of knowledge transfer is referred to asinternalization Third, the transfer of tacit knowledge from a person to thestakeholders of the organization through the use of information technology,encouraging all the parties concerned to practice knowledge to share cultureand the adoption of the organization’s strategic plan; this method is referred

to as externalization Finally, the transfer of the team’s knowledge to ments and employees through attendance of educational workshops, suc-cessful replication of relevant knowledge within organizations and providingnon-financial bonuses to relevant employees who share the organization’sknowledge; this mode is referred to as combination

docu-Table 2.1 illustrates the manifestation of knowledge transfer Themodes of knowledge transfer of socialization, internalization, externaliza-tion and combination are significant (High t-values, p < 0.05) Teamworking interests, individual creativity, on–the-job training and work-shops have the highest mean score of 4.00 Social media (37.18%), pro-duct development (22.66%), strategic plan (33.01%) and non-financialbonuses (42.96%) have the highest variability of the modes of knowledgetransfer of socialization, internalization, externalization and combination,respectively Non-financial bonus (1.306) has the highest standard devia-tion followed by the strategic plan (1.215), while the least standarddeviation is product development (0.843)

This section reveals that the practice of the modes of knowledge transfer

by the Emerging MNEs is dominant Team working interests, individualcreativity, on–the-job training and workshops are practiced to a large extent,while social media, product development, information technology, sharingculture, strategic plan, replication and non-financial bonuses are practiced to

a moderate extent The provision of non-financial gifts to stakeholders whoshare knowledge is the least practiced The Emerging MNEs in Kenya

practice the modes of knowledge transfer of socialization, internalization,externalization, and combination to a moderate extent.

STRATEGICACTIONS

Strategy is the analysing of the current situation, changing it if necessaryand ascertaining what one’s resources are and what they ought to be(Drucker,1954) The four distinct types of such rules are objectives, businessstrategy, organizational concepts and operational strategies Neumann andMorgenstern (1947) are thefirst scholars (as cited in Bracker,1980) to relate

Table 2.1 Manifestation of knowledge transfer

the idea of strategy in the theory of game and economic behaviour and definedstrategy as a series of actions by a firm that is decided upon according toexacting situations A strategy is a set of management regulations for guidance

on organizational behavior (Ansoff and McDonell,1990)

The content of strategy determines and reveals the organization pose regarding long-term goals, actions programs and resource allocation(Chandler,1962), as strategy engages all the hierarchical levels of the form

pur-of corporate, business, and functional Miles and Snow (1978) argued thattheir pattern of decisions conceptually classifies firms Prospectors aretechnically innovative and seek out new markets, analysers tend to have apreference of a second but better strategy, defenders are engineeringoriented and focus on maintaining a safe and sound niche in relativelystable market segments, and reactors lack a steady strategy and are highlyresponsive to short-term environmental demands On the other hand,theprocess of policy evaluates plan as the nature of economic and non-economic contributions it intends to make to the organization’s stake-holders (Ansoff, 1965) It attempts to achieve a long-term sustainableadvantage in each of its businesses, by responding appropriately to theopportunities and threats in thefirm’s environment and the strengths andweaknesses of the organization (Hohnen,2007) It is also a consistent,unifying and integrative pattern of decisions (Bakir and Todorik,2010).Strategy enhances the selection of the businesses that the organization is in

or that in which it is planning to become invovled (Mircea,2008)

As strategy development process orientation arises deliberately throughdeliberate planning, planning as a guided learning process, planning bylogical incrementalism and emergent strategy formulation (Pearce andRobinson, 2005), strategy development goal orientation arises throughthe content of strategy of strategic stance and strategic actions Strategicstance is a long-term goal, and it entails a general description of theorganization’s position and how it interacts with its environment byimproving performance (Andrews et al., 2006) Strategic action is ashort-term goal and engages general strategies that enable an organization

to obtain a competitive advantage against its competitors Ansoff’s (1965)strategic actions matrix involves product development, market develop-ment, market penetration and diversification The strategic actions ifapplied may affect the modes of knowledge transfer to determine thesustainable performance

The indicators of strategic measures have been analysed using thecoefficient of variation, t-value and p-value The coefficient of variation

tests the variability, while the t-value shows how statistically significant arethe differences between means in the demonstration of strategic actionsacross the Emerging MNEs in Kenya The p-value tests the significancelevel This section focuses on the adoption of product developmentthrough the creation of new or improved products to replace the existingones and the maintenance of the security of existing markets, while devel-oping or changing new products Market penetration is settled in gainingmarket share through improving quality, productivity and market activ-ities Market development is resolved through providing diversified pro-ducts from the same resources to customers and then selling goods andservices to the diversified market segment Diversification of the goods andservices are accustomed through the combination of some of the firm’sresources and capabilities with those of the other companies to create acompetitive advantage and also produce private label products for foreignbusinesses and allow them to attach their brand names and trademarks.

Table 2.2illustrates the demonstration of strategic actions The gic actions of product development, market penetration, market develop-ment and diversification are significant (High t-values, p < 0.05) Marketshare through quality has the highest mean score of 4.32, while allowancefor the use of trademarks has the lowest average rating of 1.60 Allowance

strate-of the use strate-of brand names (71.97%), permission strate-of the use strate-of trademarks(65.05%), the combination offirm’s resources (51.11%) and the combina-tion offirm’s capabilities (50.09%) have the highest variability on strategicactions The combination of firm’s capabilities (1.563) has the higheststandard deviation followed by the combination of firm’s resources(1.513), while the least standard deviation is market share through quality(0.748)

This section reveals that the Emerging MNEs in Kenya have adoptedthe strategy of market penetration and they gain market share throughquality goods and services to a large extent, while they gain market sharethrough productivity and marketing to a moderate extent Product devel-opment and market development strategies adapted to a reasonableextent Diversification strategy is least taken since these organizations donot allow the use of brand names and trademarks, though they combinetheir firm’s resources to a small extent and company’s capabilities to amoderate degree The Emerging MNEs in Kenya have adopted marketpenetration strategy to a large extent, product development and marketdevelopment strategies to a reasonable extent and diversification strategy

to a small extent

2 MATERIALIZATION OF KNOWLEDGE TRANSFER, STRATEGY 23

ENVIRONMENTAL DYNAMISM

The external environment is the outside world that the organizationrelates with (Worthington and Britton, 2009) The microenvironmentfor mostfirms includes competitors, suppliers, labour markets, customersand financial institutions and may also include trade unions, tradingorganizations and possibly a parent company (Serfontein, 2006) Themacroenvironment factors comprise of political, economic, socio-cultural,

Table 2.2 The demonstration of strategic actions

Strategic actions N Mean Std.

deviation

Coef ficient of variation (%)

technological, legal and ethical influences of the business (Banhan,

2011) Firms competing in the same business sector tend to developsimilar competitive strategies for investing in technology and marketingresources (Mauri and Michaels, 1998) Comparable levels of resourceallocation for the development of related resources by twofirms in thesame business sector do not lead to possession of the same resources.Longer periods increase the likelihood of competition settling down andallow long-term stability to be reached within a business sector.Bourgeois III (1980) argues that the development of a strategy toguide organizational actions is a significant managerial function, andthe guidance accomplished is through the effect of co-alignment ofcorporate resources with the environmental conditions The environ-mental characteristics such as complexity, dynamism, and munificencecan have an influence on organizational performance both indirectly anddirectly (Machuki, 2011) Scanning of the environment may enableorganizations to determine the modes of knowledge transfer and theappropriate strategic actions to be applied for optimal sustainablebalanced scorecard performance

The indicators of environmental dynamism have been analysed usingthe coefficient of variation and t-value and p-value The coefficient ofvariation test the variability, while the t-value shows how statisticallysignificant are the differences between means in the demonstration ofstrategic actions across the Emerging MNEs in Kenya The p-value teststhe significance level The extent to which environmental development ispredictable and changes observed in the industry, macro- and microenvir-onment are dimensions used to measure environmental dynamism

Table 2.3illustrates the display of predictability of the business onment The industry environment, macroenvironment and the micro-environment are significant (High t-values, p < 0.05) The threat ofsubstitute products within the sector has the highest mean score of 3.28,while exit barriers in the industry have the lowest average rating of 2.52.Political factors in the economy (49.42%), exit obstacles in the sector(47.38%), technological changes in the market (42.31%) and threats ofnew entrants in the industry (41.51%) have the highest variability on thepredictability of the business environment Political factors in the econ-omy (1.384) have the highest standard deviation followed by technologi-cal changes in the market (1.513), while the least standard deviation isrelations with labour markets (0.943)

envir-2 MATERIALIZATION OF KNOWLEDGE TRANSFER, STRATEGY 25

Table 2.3 The display of predictability of business environment

The development of threats of new entrants and exit barriers in theindustry is predictable to a small extent, while competition of rivals andthreat of substitute products in the industry, the relative power of custo-mers and suppliers of thefirm are predictable to a moderate extent In themacroenvironment, the political factors, socio-cultural activities and legalfactors in the economy are predictable to a small extent, while economicvariations within the economy and technological changes in the market arepredictable to a moderate extent On the microenvironment, relationswith labour market and trade unions are predictable to a small extent,while relations with financial institutions and business organizations arepredictable to a moderate extent The industry environment is predictable

to a reasonable extent, while the macro- and the microenvironment arepredictable to a small extent

Table 2.4illustrates the display of changeability of the business onment The industry environment, macroenvironment and the micro-environment are significant (High t-values, p < 0.05) Economicalvariations within the economy have the highest mean score of 3.80,while exit barriers in the industry have the lowest average rating of 2.24.Exit obstacles in the sector (50.35%), the threat of substitute products inthe industry (42.53%), technological changes in the market (40.17%) andrelations with labour markets (36.02%) have the highest variability on thechangeability of the business environment Technological changes in themarket (1.350) have the highest standard deviation followed by techno-logical changes in the market (1.513), while the least standard deviation isecological changes (0.831)

envir-There are modest variations in the threat of new entrants, competitionamong rival and threat of substitute products in the industry The sameapplies to the relative power of thefirm’s customers and the suppliers; exit

of barriers in the industry has a small change On the macroenvironment,political and legal factors in the economy, economic variations within theeconomy, socio-cultural activities and technological shifts in the markethave modest changes, while ecological changes are few On the micro-environment, most of these Emerging MNEs observe moderate changewith financial institutions, while they observe little change in their rela-tions with labour markets, trading organizations and trade unions TheEmerging MNEs in Kenya have observed normal variations in the industryand macroenvironment and little changes in the microenvironment

2 MATERIALIZATION OF KNOWLEDGE TRANSFER, STRATEGY 27