The Impact of Turbulent Events on Knowledge Acquisition

This paper defines CBAs as a foreign firm’s participation in an existing local firm by acquiring partial equity ownership.

The crisis triggered changes in the government attitude toward foreign investments, and subsequent FDI liberalization strategies enabled Korea to attract dramatically increased foreign investments. Zwinkels and Beugelsdijk (2010) suggest that FDI inflows from other countries are often promoted by factors such as significant changes in FDI policy and business environment.

Hypotheses need to be based on previous studies, but no one has attempted to identify the impact of crisis (or any turbulent event) on learning mechanisms. In other words, it is virtually impossible to clearly indicate that on the basis of the crisis, the impact of each certain determinant will be different by supporting the argument with previous studies. In this vein, discussions leading to hypothesis 5 are inevitably general, but we expect that other researchers may be able to specify their argument by using our explanations.

Previous studies often measure firm size by the number of employees. In particular, some researchers (e.g., Caloghirou et al.2004; Minbaeva et al.2003) represent the variable by the logarithm of the firm’s total number of employees. The dictionary definition of “logarithm” is merely a number that it can be represented by in order to make a difficult multiplication or division sum simpler. In this vein, some other researchers (e.g., Park2010; Tsang2002) perceive it is not compulsory to assess the variable by using “logarithm”, and thus they simply adopt employee numbersper se. We accept the latter type of measurement in this research.

We particularly use a stepwise technique in order to winnow down a large collection of candidate predictors.

A control variable, ‘time difference’ is insignificant in the combined (full) sample. This finding clearly implies the importance of our empirical examination. In other words, most researchers believe that due to age-long operations with foreign partners who possess sophisticated knowledge, it is often expected that older organizations tend to have better knowledge base and thereby superior absorptive capacity relative to younger organizations (For reference, older CBAs formed before the crisis were coded as 1, whereas younger CBAs formed after the crisis were coded as 0. If our result reveals the statistical significance of the control variable it means the general view above is correct). However, the fundamental assumption of our study is that the general view may not be applicable in the case where firms have experienced destructive crisis situation and subsequent rapid changes in business environments. As expected, the result from regressions supports our conviction that crisis encourages organizations to be more involved with learning to overcome such a circumstance by altering behavioral patterns of knowledge acquisition. In this vein, the insignificant association between the control variable and knowledge acquisition confirms the value and the necessity of our examination.