TRANSFER OF KNOWLEDGE ACROSS NATIONAL BORDERS

What is appropriate knowledge in one country may not suit the needs of the firm in other countries. Factors such as different language, business culture and institutional framework make up a psychic distance as perceived by managers. As the psychic distance between nations increases, it becomes more difficult for firms to acquire knowledge from abroad. Thus, a clash between national cultures may jeopardize the international transfer of knowledge.

By contrast, geographical proximity and cultural affinity could help knowledge transfer between countries and organizations.

 Governments can help improve a nations ability to learn best practices from successful societies by providing a suitable environment, through educational and training policies. However, it is important to be aware of the incompatibilities between foreign management practices and local social and cultural characteristics. This is particularly important for developing countries.

Developing Countries and Foreign Knowledge and Practices

The question of transfer of management practices is of crucial importance esp. for the less developed nations.
Many of these countries in an attempt to upgrade their organizational systems and to improve their performance, import various management techniques from the more advanced industrialized nations, without due regard to their own socio-cultural and technological conditions. If these imported techniques are not modified and adapted to the local conditions, both in cultural terms and in terms of the availability of human skills, the trnasfer will almost certainly fail.

 It is imp. for developing nations, in parallel with learning from abroad, to build on their own resources and develop compatible indigenous management practices. Thus, the transfer of management practices should not replace but in fact complement the local practices that are a culmination of specific context of a particular society. Current development efforts should focus on building institutional capacity through the encouragement of local self-reliance.

Ex-Communist Countries and Foreign Knowledge and Practices

Many companies in the ex-communist countries of central and eastern Europe are tempted to import some of the capitalist countries management practices.
In addition, multinationals with wholly-owned subsidiaries or joint ventures located there are keen to take their home-grown practices with them. However, the process of transfer from capitalist countries to ex-communist ones is a great deal more complicated than when the transfer takes place between two capitalist countries.

 This is because in capitalist countries companies generally perform similar functions but maybe in different ways. But in ex-communist countries, when they were under communist rule, companies didnt perform certain functions at all. The difference between capitalist and communist countries is not only that of style but also of substance. For ex: An avg. manufacturing co. in any capitalist country will have functions such as marketing, R&D, accounting, HRM. Whereas, in the ex-communist countries, many if these functions were either out of the co.s control or were not performed at all.

 In addition, cos. based in a capitalist country have already developed these functions in accordance with its existing socio-economic structure.

When importing new management and organizational practices from abroad, the cos. may only need to make certain adjustments to make them workable, and to train their employees to work in new ways.
In ex-communist countries, by contrast, cos. have to start by adapting their existing functions to their new domestic economic conditions, then learn to perform new sets of functions which would be necessary to survive in the market.

 From a western multinationals perspective, when deciding to transfer its home grown practices to central and eastern European countries, there is yet another complication : the cultural heterogeneity of these countries. Culture, in terms of values, attitudes and beliefs, is a deeply-rooted construct, which may not necessarily be eradicated by an imposed regime. Therefore, the effect of national cultures as well as former political economic structures of the ex-communist countries must be taken into account when transferring organizational knowledge there to elsewhere.