Knowledge that Transforms

As the number, size, and complexity of Japanese multinational companies' (MNCs) overseas operations increase, many of them have begun to realize that they face some fundamental and difficult organizational challenges. Drawing on research undertaken with several large and successful Japanese MNCs, the authors define the nature and source of some of these organizational challenges, and describe some approaches that can be taken to resolving them. The article starts with a brief assessment of the traditional organizational capabilities and existing managerial approaches of Japanese companies, comparing them to the emerging challenges in the international environment. Then, after identifying some constraints and barriers to an effective response to the new demands, the authors propose a series of actions to overcome the problems.

In the context of strategic alliances that involve competitive collaboration, the competitive advantage of a firm can be protected only through its capability to accumulate invisible assets by a carefully planned and executed process of organizational learning. As this process is embedded in people, many of the necessary capabilities are closely linked to HRM strategies and practice. The article advocates that the transformation of the HR system to support the process of organizational learning is the key strategic task facing the HR function in firms engaged in international cooperative ventures.

The significant reduction in the use of home country expatriates abroad by American multinationals is generally taken positively, reflecting internationalization, the environmental competence of host country nationals, equity, and the cost of maintaining Americans abroad. In this article I dissent, arguing that the phase‐out of expatriates has gone too far, much further in fact than European or Japanese competition and that the dominant reason for the cutback is the difficulty Americans have in adapting to overseas assignments and the high failure rate they have experienced. I conclude that expatriate reduction has significant consequences for the strategic management of multinational corporations: reduced identification with the worldwide organization and its objectives, difficulty exercising control through personnel, and a lack of opportunities for Americans to gain international expertise through assignments abroad. Although I do not advocate returning to the ineffective and inequitable over‐reliance on home country nationals, I argue that a corps of expatriates performs a function valuable to the MNC and that a means must be found to develop a group of managers who identify with the organization as a whole and provide overseas experience to home country managers.

Corporate culture has been described as the “glue” that holds organizations together by providing cohesiveness and coherence among the parts. Multinational companies are increasingly interested in promoting corporate culture to improve control, coordination, and integration of their subsidiaries. Yet these subsidiaries are embedded in local national cultures wherein the underlying basic assumptions about people and the world may differ from that of the national and corporate culture of the multinational. These differences may hinder the acceptance and implementation of human resource practices, such as career planning, appraisal and compensation systems, and selection and socialization. This article discusses the assumptions about people and about the world underlying these HRM practices as they may differ from those of the national culture of the subsidiary. Finally, issues concerning the use of corporate culture as a mechanism for globalization will be raised.