International Joint Ventures HRM and Viable Knowledge Creation

Int. J.
of Human Resource Management 13:4 June 2002 624–641
International joint ventures, HRM and

viable knowledge migration
Paul Iles and Maurice Yolles
Abstract International joint ventures (IJVs) are an increasingly popular form of

voluntary co-operation between organizations of different sizes, sectors and geographical
locations to satisfy strategic purposes and manage increasingly complex business
environments. However, international joint ventures may fail, and HRM plays an
important role in their success or failure. From a systems perspective, IJVs offer several
kinds of complexity which may contribute to the generation of con ict and failure. The
paper proposes that we explore the role of HRM in IJVs through viable systems theory,
especially in relation to knowledge migration and organizational learning. The theory
presented distinguishes between the cognitive, organizing and behavioural domains of the
IJV as a system in the analysis of the relationship between types of worldview and
behaviour in IJVs. It proposes a model of viable knowledge development in IJVs and its
relationship to HRM, involving knowledge migration, appreciation and action, leading to
organizational learning, and identi es directions for future research.
Keywords IJVs; viable systems; HRM; organizational learning; knowledge

migration.
Introduction
International joint ventures (IJVs) are of a different nature to more formal mergers,
acquisitions or intricate partnership agreements, being legally distinct organizations
formed by two or more sponsoring partners originating in two or more countries
(Geringer, 1991; Muralidharan and Hamilton, 1999). For Glaister and Buckley (1997:
200) ‘alliances’ are the generic form of co-operation, and equity joint venture a special
case cemented by ownership sharing through equity holdings. IJVs have become
popular because they enable organizations to deal more ably with complex environ-
ments. Partners may seek access to geographic or product markets, or to develop new
products and share risks, expecting to create more value by pursuing IJVs than they
would on their own. IJVs have often been studied from resource-based, transaction cost
and technology transfer/knowledge diffusion perspectives, but, increasingly, approaches
have focused on organizational learning (e.g. Schuler, 2001a, 2001b). The paper
proposes that we focus on the HRM practices involved in organizational learning and
knowledge migration in IJVs, especially on those involved in knowledge migration,
knowledge appreciation and knowledgeable action. This requires an analysis of the
Professor Paul Iles, Professor of Strategic HRM, Teesside Business School, University of
Teesside, Borough Road, Middlesbrough TS1 3BA, UK (tel: + 01642 342 800; fax: +01274
774 072; Paul.iles@tees.ac.uk). Dr Maurice Yolles, Reader in Systems, Liverpool Business
School, Liverpool John Moores University, 98 Mount Pleasant, Liverpool L3 5UZ, UK (tel:
+0151 231 3871; fax: 0151 231 3234; m.yolles@livjm.ac.uk).
t
Iles and Yolles: IJVs, HRM and viable knowledge migration 625
cognitive interests, purposes and in uences of the parties involved in different kinds of
IJV situations.
Though there have been recent reviews of research on HRM in IJVs (e.g. Schuler
2001a, 2001b) and speci c studies of HRM in IJVs in India (e.g. As-Saber et al., 1998,
Iles and Wilson, 2002) and China (e.g. Ding and Akhtar, 2000; Gamble, 2000, 2001;
Glover and Siu, 2000; Leung et al., 2001; Taylor, 2001; Tung and Worm, 2001;
Downloaded By: [informa internal users] At: 09:08 25 March 2008
Shenkar and Chow, 1995), theory in this area remains underdeveloped; in particular,
theory on HRM, organizational learning and knowledge development. The paper aims
to:
1. review the theoretical and empirical literature on IJVs, especially that focusing on
HRM in IJVs and its relationship with organizational learning and knowledge
development and migration;
2. develop a framework for understanding the role of HRM in IJVs in relation to
learning and knowledge migration in order to develop an agenda for further research
into HRM and IJVs;
3. develop a viable systems model of HRM, organizational learning and knowledge
migration in IJVs that focuses on the cognitive interests, purposes and in uences of
the parties involved and their impact on knowledge migration, appreciation and
knowledgeable action, and develop an agenda for further research.
Theoretical perspectives on IJVs

IJVs are often formed to gain knowledge, market entry, raw materials, channel access
and to exploit economies of scale, spread risks and improve global competitiveness
(Schuler, 2001a, 2001b). Firms lack complete control over strategy and structure in
IJVs; these need continual negotiation and re-negotiation. It is claimed that perhaps as
many as half IJVs formed fail (e.g. Kelly and Parker, 1997). Cultural differences are
often cited as the cause for failure (e.g. Fedor and Werther, 1996); managerial style, one
of its manifestations, can also jar alliances (Tsang, 1995).
However, despite the importance of culture and management style, most approaches
to alliances and IJVs have not been based on HRM theory (except for Schuler, 2001a,
2001b) but on transaction-cost (TC), organizational learning (OL) and resource-based
views (RBV) e.g. Glaister and Buckley (1997), as well as knowledge diffusion and
technology transfer approaches (Klauss, 2000; Hull, 2000). From TC perspectives,
rms seek partners with knowledge of local culture and markets, given the uncertainty
surrounding international expansion and the ability of the IJV to economize on
information requirements by sharing information at lower costs than would be the case
through hierarchical approaches, such as wholly owned foreign subsidiaries. RBV
focuses on the motivations for IJV formation, especially the need to exploit excess or
idle under-performing resources (including human resources) and to acquire or access
new resources for growth (again, including new human resources). IJVs are then seen
as bundles or portfolios of resources contributed by partners in accordance with a pre-
determined legal contract, not as coalitions of business activities. IJVs enable selective
access to required resources and phased approaches to resource acquisition and transfer
(e.g. IJV termination with acquisition by one partner, e.g. Zhai et al., 1999).
OL perspectives in contrast emphasize IJV learning and the need for partners to
acquire knowledge, although usually at a rather abstract strategic level rather remote
from most HRM theory and research (e.g. Hamel, 1991). Learning is becoming
increasingly important to IJVs; as Schuler (2001a) argues, the main source of both
instability and potential gains in competitive IJV collaborations is the relatively greater
626 The International Journal of Human Resource Management
learning capacity of one partner. The approach developed here recognizes the
importance of TC and seeks to build on RBV and OL perspectives by regarding
knowledge as a critical resource and identifying knowledge creation and migration as
key IJV processes leading to organizational learning. It thus seeks to overcome some of
the limitations of other approaches to ‘knowledge management’, ‘transfer’ and
‘diffusion’ in IJVs, such as ‘technology transfer’ (Klauss, 2000), often dominated by a
‘hardware orientation’ involving the application and transfer of ‘hard’ technologies in

relatively unproblematic ways (e.g. Hull, 2000). Such studies fail to question the
purpose or nature of the processes involved, often viewing them as involving one-way
transfer of modern management practices, including HRM practices, and technology.
‘Knowledge diffusion’ concepts rst emerged in the 1950s as a way of understanding
how multinational enterprises conceived of IJV formation as driven by knowledge
assets, especially technologies, management and HR systems. Unidirectional ows of
knowledge are often assumed – from the corporation’s home base (e.g. R&D function)
to its subsidiaries and alliances. As in technology transfer, there is a separation between
knowledge generation and application. Recent ‘knowledge leveraging’ perspectives
(e.g. Grant et al., 2000) focus more on the links between generation and application,
forms of productive knowledge other than technology, and on the need to acquire and
access knowledge from outside the rm’s boundaries. Knowledge is here seen as
created in many sites and functions and accessed in many locations, and its creation and
exploitation are seen as linked or complementary processes. New knowledge is seen as
needing to be aligned with existing knowledge, dependent on the recipient’s ‘absorptive
capacity’ (Cohen and Levinthal, 1990) or organizational learning capacity, linking this
perspective with organizational learning perspectives (e.g. Hamel, 1991; Pucik, 1988).
Grant et al. argue that ‘the movement of knowledge between different geographical
locations is central’ (2000: 115–16) to the process of adding value in knowledge
development. Here we conceive of this ‘movement’ of knowledge in IJVs not as
‘diffusion’ or ‘transfer’ but as knowledge ‘migration’, emphasizing the multidirectional,
unplanned and emergent nature of knowledge ows. Our approach therefore seeks to
build on earlier perspectives by regarding knowledge as a critical resource; knowledge
development and migration rather than knowledge transfer or diffusion are then seen as
key processes in IJVs, making HRM key to IJV success.
Empirical research on IJVs
A major issue for research in IJVs has been partner selection, as outcomes will be
in uenced by the nature of the chosen partner, in uencing the mixture of skills and
resources available to the IJV (including knowledge, HR practices and people) and its
ability to achieve strategic objectives (Geringer, 1991). Partners are likely to have
different strategic objectives, and, when partners possess complementary missions,
resource and managerial capabilities and other attributes that create a strategic t,
success may be more likely (Harrigan, 1985, 1990). Geringer (1991) distinguishes
between task-related and partner-related criteria in selecting IJV partners and argues
that partner-selection criteria have often been neglected (Glaister and Buckley, 1997).
The HRM characteristics of partners have been a particularly under-researched area.
Another focus of research has been strategic choice, especially the strategic interests
of foreign MNCs; the interests of local partners have often been overlooked, a
surprising omission, since Li and Shenkar (1997) argue that local partners’ strategic ob-
jectives also impact on choice of both IJV partner and structure (Gray and Yan, 1997).
Various changes alter partners’ incentives to continue IJV strategy and structure,
perhaps necessitating IJV restructuring (e.g. Harrigan, 1985); otherwise, the IJV may
fail to achieve its objectives (Muralidharan and Hamilton, 1999). The need for
restructuring may arise from misperceived initial t, perhaps because of hidden,
competitive objectives (Hamel, 1991), inter-partner learning and environmental changes
(Harbison and Pekar, 1998).
Non-contractual inputs (including HR inputs) are becoming increasingly important to

IJV success through raising contributors’ levels of in uence and building expertise,
authority, goodwill and trust (e.g. Child et al., 1997). Trust has been an important issue
in IJV research; Butler and Gill (1997), distinguishing personal, procedural and
institutional trust, found it enhanced by low parent expectations at formation;
ambiguous parent goals for the IJV, but enough agreement to proceed; low reliance on
procedural trust; lack of competition or dependence between parents; and the relative
unimportance of the IJV to both parties. Parent trust, based on IJV performance, was
developed over time through multiple-level, ongoing interactions, and enhanced by high
and increasing levels of autonomy granted to the IJV, its physical separation from its
parents, its distinct geographical and organizational identity and its parents’ consistent
support (Gill and Butler, 1996). The relationship of trust to organizational learning and
the role of HRM in in uencing trust and learning have been less explored in research
speci cally focusing on HRM and IJVs.
HRM issues in IJVs
IJVs are entities with particularly complex sets of HR practices due to the high levels
of interaction between employees from collaborating partners of different corporate and
national backgrounds (who may be nationals of the parent-country (PCNs), host-
country (HCNs) or a third-country (TCNs)), which presents many HR challenges (e.g.
Dowling et al., 1994; Schuler et al., 1993; As-Saber et al., 1998). Two sets or more of
HR practices interact, with potential clashes between the need to comply with local HR
practices (over staf ng or labour relations, for instance) and the desire of the partners
to retain parent-country practices for reasons of familiarity and/or control. Establishing
a shared vision, developing negotiation, communication and con ict management skills,
harmonizing management styles and HR practices, acculturating managers to work with
foreign partners, developing a teamwork culture and using staf ng and career-
management practices to reduce psychic distance and encourage identi cation with the
IJV have often been cited as key challenges for HRM in IJVs (e.g. Pucik, 1988).
The decision to adopt an IJV mode of entry and select a particular partner also seems
in uenced by HRM (e.g. As-Saber et al., 1998). The local regulatory environment may
impact on staf ng and employee relations practices in particular, and local culture may
affect management style. Investing rms may be more likely to adopt IJV modes of
entry in relatively unfamiliar, culturally distant locations, seeing local partners as useful
for identifying a suitable workforce, dealing with employee relations issues and
minimizing the need for high-cost expatriate managers. HR issues in uenced selection
of the IJV as an entry mode, and cultural differences, unfamiliarity and low labour
productivity were seen as important HRM issues in Australian–Indian IJVs, but not
labour-force quality or militancy (As-Saber et al., 1998). Organization-speci c HR
issues such as jointly managing labour unrest, wage disputes, working hours and
facilitating inter-partner learning were seen as more in uential HR factors, but less
important than such factors as resource sharing, distribution channel access, transaction
cost minimization and compliance with government regulations. HRM did however
play a signi cant role in affecting IJV success, indicating its importance. Particularly
important HR issues included the appropriate selection of personnel, the use of
experienced PCNs, cross-cultural training, joint training of HCNs and PCNs, providing
special compensation to expatriates, using HCNs in key positions and building a unique
IJV culture. Other important HRM issues included using experienced HCNs familiar
with local markets and cultures (minimizing the costs of expatriation), using high-
quality experienced PCNs at the beginning of IJV operations (promoting inter-partner

learning and bridging cultural differences), using local partners to deal with corruption
and bureaucracy, coping with the high demand for experienced local managers,
exercising strategic control of IJVs through in uencing staf ng, and overcoming HR-
related problems by utilizing the local partners’ experience and familiarity with local
HR practices (As-Saber et al., 1998).
Increasingly important issues for IJVs, and of particular relevance to HRM, are issues
of organizational learning and knowledge creation in IJVs. These are taken up in more
detail by Schuler (2001a, 2001b), whose analysis we seek to develop further in this
paper.
IJVs, HRM and organizational learning
For Schuler (2001a, 2001b), learning is critical to IJVs, from the very foundation of the
IJV and as the parents learn more about each other, from each other, and from the IJV
itself, with such learning being useful for other units and IJVs. Some partners may
emphasize learning, others may not make it a priority; ‘the behaviours and styles of
managers in organizations have a signi cant impact on the ability and willingness of a
rm to learn’ (Schuler, 2001b: 317). HRM is important here, as a lack of openness, a
need for control, low cultural awareness and ethnocentricity may reduce the ability of
organizations and managers to learn, while exibility and a willingness to take risks
may promote it. HRM policies and practices may support or inhibit knowledge ows,
sharing and development. Asymmetry in learning capability may lead to alliance
instability and dissolution, despite short-term gains for one partner. Inkpen and Currall
(1997) suggest that, if partners learn at equal rates or engage in forbearance, the need
for control diminishes and trust increases. Learning about an alliance partner provides
the basis for increased trust, as trust is the vehicle for knowledge migration. Learning
from a partner provides the basis for increased bargaining power and reduced
dependence. Opportunistic behaviour may, however, lead to instability and greater
efforts at control by the other partner. Trust, control and learning seem interrelated, as
IJVs provide many opportunities for organizational learning, especially the transfer of
culturally embedded knowledge if trust is developed and substantial non-contractual
inputs, including HR inputs, are invested (Fitzgerald, 2000).
Bene ts are, however, likely to be appropriated asymmetrically according to the
organizational learning capacity (Pucik, 1988) or absorptive capacity (Cohen and
Levinthal, 1990; Grant et al., 2000) of the partners. From an HR perspective, a vital part
of a learning infrastructure includes HRM policies supporting the protection of
competitive advantage, in uencing the direction of the IJV, especially the development
of knowledge. HR planning may inhibit learning by failing to communicate strategic
intent, adopting short-term and static planning horizons, and giving learning activities
low priority. Employee resourcing may also inhibit learning, allowing insuf cient lead
time for staf ng decisions, adopting a resource-poor staf ng strategy, assigning low-
quality staff to the IJV and depending on the partner for IJV staf ng. HRD may also
inhibit learning, especially a lack of cross-cultural competence, a career structure not
conducive to learning and a poor climate for transferring learning. Reward management
may inhibit learning by focusing on short-term goal achievement, not encouraging
learning, providing limited incentives for knowledge transfer, and not aligning rewards
with the global strategy of the rm. Organization design and control may also inhibit
learning by failing to make responsibility for learning clear and by fragmenting learning
processes (e.g. Pucik, 1988; Schuler, 2001a, 2001b).
Developing a framework for understanding HRM, knowledge migration and

organizational learning in IJVs
As Schuler (2001b) says, ‘learning is critical to today’s IJVs, and this begins with the
very nature of the design of joint ventures. Learning also continues as the parents learn
more from each other . . . consequently human resource issues and activities permeate
several stages of the IJV process’. Schuler (2001a, 2001b) identi es a number of HR
issues of relevance to alliance performance at the organizational level (parent-to-parent
relationships, including seeking, selecting and trust building; parent–alliance relation-
ships, including rationale, structure and integration; alliance–context relationships; and
parent characteristics such as culture, vision and values). At the individual/group level,
staff learning, stakeholder management, gaining and sharing knowledge, staff com-
petencies, staff attitudes and behaviours, staff motivation and commitment, and
recruitment to the alliance are important HR issues. Schuler (2001a, 2001b) presents a
multi-stage model for understanding HR issues in IJVs. At the alliance formation stage,
the reasons for the alliance, how its bene ts will be utilized (e.g. how knowledge is
managed), the selection of managers, the selection of partners, the building of trust and
negotiating the alliance are important HR issues. At the development stage, locating the
alliance, establishing the right structure and getting the right senior managers are crucial
HR processes. At the implementation stage, establishing alliance vision, mission,
values, strategy and structure, developing HR policies and practices, and staf ng and
managing employees are critical, especially in supporting and rewarding learning and
knowledge sharing. Finally, learning from the partner, the migration of the new
knowledge to the parents and the migration of the new knowledge to other locations are
critical processes in IJV advancement.
We here also consider restructuring to be an important further stage in considering
HR issues in IJVs, not speci cally addressed by Schuler (2001a, 2001b). Three key
issues of relevance to HR that need to be addressed throughout are control, trust and
con ict. Learning and trust are positively related, while trust and the use of informal
and formal controls are negatively related, so establishing mechanisms to enhance trust
may bene t the relationship between alliance partners (Schuler, 2001b). IJV failure may
therefore occur at the formation, development, implementation, advancement and
restructuring stages, affecting trust, learning and con ict, and HR issues therefore affect
performance at all stages.
A framework summarizing empirical research into and theorizing of IJV performance
and HRM, especially in terms of knowledge migration and organizational learning, is
presented in Figure 1 (building on Schuler 2001a, 2001b). IJV formation is seen as
in uenced by partner recruitment and selection criteria. Partners’ motives, objectives,
resource contributions (including knowledge and HR contributions), prior relationships,
organizational and national cultures, management styles, especially over issues of trust,
control and con ict, transaction costs and HRM practices (both organization-speci c
and environmental) are also seen as important factors. In particular, formation is seen as
in uenced by partners’ cognitive interests and purposes, concepts we discuss further
later in relation to knowledge migration and IJV cognitive purposes and interests.
Crucial HRM issues are HRM support in terms of knowledge, learning, staf ng,
communication, negotiation and con ict management. IJV development and imple-
mentation are then seen in terms of strategy, structure, mission, vision, value, policies
and practices, including HR practices and policies, in uenced by ongoing partner
interaction, support, forbearance, expectations and ongoing contractual and non-
contractual inputs, including HR inputs, with performance dependent on the develop-

ment of mutual trust, resource complementarity, inter-partner learning and, particularly,
knowledge development and migration. HR practices supporting learning and the
development of trust and a positive learning climate and knowledge migration are
critical factors, and a particularly important issue concerns the cognitive in uences the
partners bring to the IJV, also to be discussed later. Monitoring and evaluation of IJV
performance may then lead to advancement, especially in terms of learning and
knowledge migration (both back to the parents and to other locations, again requiring
HR support). Restructuring, seen here as dependent on knowledge tracking (assessing
the organizational environment and change from a knowledge perspective), line-
management involvement, management team diversity and experience and the presence
Source: adapted from Schuler (2001a, 2001b), Iles and Yolles (2002b)
Figure 1 HRM, development and performance in IJVs

of IJV champions in the management team may also then occur if perceived as
necessary and/or urgent.
Figure 1 presents a simpli ed model of an IJV formed between two partners from
two countries; in reality, of course, there may be multiple partners from different
countries on each side, as well as several phases of restructuring. It is not intended to
offer a prescriptive model, but points to the need to develop a comprehensive model of
HRM, knowledge development and migration and organizational learning in IJVs. The
intention is for Figure 1 to act as a research framework identifying factors that may be
studied in future HRM research (including assessment of their relative in uence and
priority). The paper now seeks to develop further a model of HRM, knowledge and
learning in IJVs, building on viable systems perspectives on knowledge creation and
migration (e.g. Iles and Yolles 2002a, 2001b). As Schuler (2001a) says, since
organizational capability to learn from the IJV and the other parent appears crucial to
IJV success, especially in competitive IJVs, this process requires further analysis. We
propose that viable systems theory (VST) will help develop this analysis.
The purpose of IJVs and viable systems theory
IJVs are children of complexity, and various types of complexity can be identi ed.
Complex situations are particularly susceptible to examination by methodologies from
management systems, such as viable systems theory (VST), as they represent structured
approaches to inquiry capable of reducing complexity (Yolles, 1999). A particularly
important issue is the interaction of worldviews in IJVs and their role in facilitating or
inhibiting knowledge migration and learning.
According to Yolles (1999) there are two types of worldview: Weltanschauung and
paradigm. Weltanschauunge n (Churchman, 1979) become paradigms (Kuhn, 1970)
when formalized (Yolles, 1999). This requires a formalized or semi-formalized shared
Weltanschauung to be created, called a virtual paradigm, that may or may not become
a paradigm. Individuals and groups such as IJV partners may behave in ways that are
determined by their Weltanschauung, but paradigms emerge when these become
coherent through a degree of formalization. Partners in an IJV from different countries
may well manifest radically different organizational worldviews and, in particular, hold
different HRM paradigms, making commonality dif cult to achieve and presenting
dif culties in the establishment of effective IJV HR systems. For example, Iles and
Wilson (2002), in a study of an Anglo-Indian engineering joint venture, showed that the
two companies held very different models for what constituted successful and effective
managers, what the core competences of the companies were, the gendered nature of
jobs and what constituted the effective management of diversity. Many studies of joint
ventures in China (e.g. Gamble, 2000, 2001; Glover and Sui, 2000; Ding and Akhtar,
2000) have pointed out that the dominant model of HRM in many Chinese enterprises,
often persisting despite many economic, social and organizational changes, makes
radically different assumptions about such issues as organizational autonomy in HR
planning, recruitment and selection, pay policies and individualized appraisal and
reward from Western partners in an IJV.
Both forms of worldview operate through culture, established within ‘rational’
organized structures called propositions and norms (ibid.). They have a relationship
with each other, and with the behavioural world, that is coupled to the physical or social
forms that we see around us. This relationship applied to IJVs is shown in Figure 2
(Yolles, 1999), where types of worldview in IJVs are collected into a cognitive domain,
differentiated from the behavioural domain of IJVs within which it is de ned by the
Figure 2 Relationship between types of worldview and behaviour in an IJV
‘real’ or perceived behavioural world. In order to distinguish between these two

domains and the transformations that occur between them, we have also introduced an
organizing domain in IJVs.
According to VST (Yolles, 1999), all entities, including IJVs, that are purposeful and
adaptive have cognitive, organizing and behavioural domains, and so can be seen as
systems that have structure and behaviour and cognitive domain-determined meta-
systems, from which come decisions (Iles and Yolles, 2002a, 2002b).
Our interest here lies with purposeful adaptable organizations in interaction with
others in an IJV, modelled as actors in a supra-system of actors, themselves in an
environment. Each actor has a behavioural system that exists within a behavioural
domain, and a meta-system de ned in terms of the cognitive domain, within which
occur decision-making processes (Figure 3). The meta-system is the system’s
Figure 3 A supra-system of actors and a decision-making meta-system of one actor in an

IJV
metaphorical ‘cognitive consciousness’. The propositional logic of a meta-system
associated with one actor (e.g. IJV partner) is distinct from that of another, and the
paradigmatic language (e.g. meta-language) of each actor may represent meanings that
are not expressible in that of another. Finally, the culture associated with a given
meta-system will not allow particular perspectives to develop that may be part of
the meta-system of another actor.
Actors that are purposeful (such as IJVs and partners) manifest behaviour that is
ultimately worldview-determined, with social structures that both facilitate and bound
behaviour. The structure itself is a manifestation of the worldviews that actors maintain,
not only generating informal and formal perspectives, but also responsible for the
decision-making processes that occur. We assign these aspects of actors to meta-
systems that house the worldviews that give behaviour meaning.
Actors such as partners and the IJV itself manifest behaviour when viewed from the
perspective of the supra-system, but internally they display social, cultural and political
processes. They also possess an economy that facilitates organized behaviour. In this
way economic aspects can also be seen as part of the organizing process, and related to
the political aspect of actors.
The decision-making process for an actor is assigned to its meta-system, and the
aspects that we are interested in in terms of IJVs relate to HRM policy making and the
HRM paradigms and Weltanschauung of policy makers. Actors in a supra-system such
as an IJV interact with considerable frequency, according to regularized processes that
de ne coherent situations. In their mutual interactions, actors (e.g. IJV partners) display
characteristics represented by the types or classes of administrations that actors develop;
the role of entities in the actor system’s external relations; and the methods by which
actor resources are mobilized to achieve external objectives.
Traditionally, the interactive behaviour of actors (e.g. IJV partners) in a supra-system
is explained in terms of actor attributes and needs, including HRM attributes, and the
individual characteristics of policy makers (e.g. Schuler 2001a, 2001b). The external
environment, and particularly the structure of power and in uence in a supra-system,
may also have profound effects on the general orientations of one actor towards
another. Thus, the major characteristics of any supra-system can help explain the typical
actions of an actor.
While a supra-system may be a collection of actors in interaction, it can also have
purposefulness associated with it, and be seen as an actor in its own right. In such cases,
it is essential that a new supra-meta-system is formed that can act as its ‘cognitive
consciousness’ and make decisions for the supra-system. In many cases, such as may
occur with IJVs, the supra-meta-system does not successfully form, and attempts are
made to drive the supra-system from one of the actor meta-systems, such as one IJV
partner, often causing problems. The assembly of worldviews associated with each
actor of the supra-system will be incommensurable to some degree, which will be
greater if the actors derive from very different host cultures, as is often the case in IJVs
(e.g. Gamble, 2000, 2001; Iles and Wilson, 2002; Glover and Siu, 2000). The nature of
this incommensurability is important for the development of a supra-meta-system.
When two or more worldviews come together during attempts by a group of
viewholders to share meaning, as in an IJV, some cognitive strands become coincident,
providing for commonalities of understanding (Yolles, 1999). With worldview
incommensurability, a cognitive pattern emerges that entails ‘cognitive turbulence’,
becoming a source of con ict manifestation from the interference of incommensurable
differences in cognitive organization and knowledge. The patterns are responsible for
arbitrary stable processes of understanding and misunderstandings, and communication
and miscommunication; these can become institutionalized in IJVs. Con ict is therefore
the manifestation of cognitive turbulence in the behavioural world, and may be
enhanced by complexity in an IJV.
If actors in a supra-system such as an IJV nd themselves with a problem situation
due to cognitive turbulence, change can occur through their realigning their worldviews
to enable a new cognitive pattern to emerge.
Application of the viable systems model to HRM, organizational learning and

knowledge migration in IJVs
IJVs often begin life as intended purposeful supra-systems, and fail for a number of
reasons cited in the literature, including HR-related factors (e.g. Schuler 2001a, 2001b).
An important factor identi ed in Figure 1 is that actor cognitive purposes may be
different, or expressed differently because of problems of language; actor cognitive
interests may also be divergent or misinterpreted; and, perhaps most importantly,
cognitive turbulence may not be dealt with, with no stable supra-meta-system able to
form. Cognitive turbulence impacts on the organizing and behavioural domains. The
organizing domain is the place where worldview differences are contested, de ning a
cognitive purpose that will be directly responsible for the manifestation of con ict.
Intention is then realized through the creation and strategic pursuit of goals and aims
that may change over time, enabling actors through control and communications
processes to redirect their futures. The strategic process derives from a relational logic
that derives from actor rationality, different for each of the actors in a supra-system
involved in contesting differences. Each actor may pursue its own missions, goals and
aims, generating organization of thought and action that ultimately determines
behavioural possibilities. Ideology may de ne the manner of thinking, enabling policy
makers to interpret reality politically, involving ethical and moral orientations,
providing images of the future that enable action through ‘correct’ strategic policy and
giving a ‘correct’ view of the stages of historical development in respect of interaction
with the external environment (e.g. the view that economies in central and eastern
Europe are ‘in transition’ to a market economy (e.g. Iles and Yolles, 2002b)).
New paradigms are seen here as arising through knowledge recognition, creation or
knowledge migration, occurring through the cognitive in uences of other paradigms.
Cognitive interest relates to the structural/behavioural domain and can be differentiated
from the knowledge domain. Cognitive purpose (Yolles, 1999) relates to rational and
cybernetic processes that can also be differentiated from the knowledge domain.
Two basic cognitive interests in acquiring knowledge are proposed by Habermas
(1970): a technical interest relating to work and a practical interest for interaction.
Another cognitive interest proposed here is critical deconstraining, which results in
emancipation. Habermas’s classi cation is a cognitive property of the behavioural
domain; with reference to Figure 2, Yolles (1999) argues that cognitive purpose is a
cognitive property of the organizing domain, because it is through the organizing
process that cognitive purposes are made apparent. There are three types of cognitive
purposes that correspond to the three types of cognitive interest: cybernetic, rational and
ideological.
There is also a cognitive property associated with the cognitive domain: cognitive
in uences. The typological dimensions in this are cultural, political and social, and
contribute to knowledge migration from one worldview to another, such as from one
partner to another in an IJV.
Figure 4 The knowledge cycle
The cultural dimension has a cognitive organization that is part of a worldview, and,
when people perform social roles, they do so through their beliefs, values and attitudes.
Cultural elements affect how we interact (practically) and de ne our logico-relational
(rational) understandings .
The political dimension is concerned with polity (condition of order), and, as such,
has an interest in attributes that condition the social domain and its situations. It
involves the creation of power placed at the disposal of some social roles, the use of
which is also worldview determined. When conditions (of order) affect the social
domain and become issues, political processes are used to address them (e.g. con ict
resolution). Political in uences affect our manner of thinking (ideology) and our degree
of emancipation (critical deconstraining).
The social, cultural and political in uences that arise during the development of IJVs
are implicit in the processes of knowledge migration and organizational learning that
occur between the partners involved. We therefore argue here that knowledge creation
and organizational learning in IJVs may occur through a process of knowledge
migration from one partner’s worldview to another, involving knowledge identi cation.
The basic knowledge cycle model (Figure 4) depicts the three fundamental phases of
the knowledge creation process: knowledge migration, knowledge appreciation and
knowledgeable action. Migration is associated with the cognitive domain, appreciation
with the organizing domain and action with the behavioural domain. Each process has
an input and an output. A control process is also able to condition each process through
actions on the inputs or on the processes themselves. Knowledge migration in IJVs is
therefore conditioned through cognitive in uence, knowledge appreciation though
cognitive purpose and knowledgeable action through cognitive intention.
Towards a research agenda for studying knowledge migration, organizational

learning and HRM in IJVs
We argue that the control process involved with knowledge migration occurs through
the development of interconnections between the worldviews of the actors (e.g. IJV
partners) in a given supra-system, and is the result of semantic communication. As part
of the process of knowledge migration, new knowledge is locally generated within the
Figure 5 Basic form of the control model
actor (e.g. one partner) and can be seen as actor local spontaneous, when the process of
knowledge migration operates as a knowledge-creation trigger. Knowledge that enables
the nature of a control process to be understood is seen here as local and worldview
dependent. Empirical and reference control criteria are also seen as worldview
dependent, value laden and susceptible to ideological and ethical in uences. Condition-
ing control processes are seen as implemented in a local inquirer-relative way. These
propositions have implications for the way in which an actor, such as one of the IJV
partners, responds to control situations and appreciates the need for semantic
communications that make it broadly meaningful.
In Figures 5 and 6, we consider the control process involved with knowledge
migration and the development of interconnections between the worldviews of the
actors in a given supra-system (e.g. the IJV) as a result of semantic communication. As
part of the process of knowledge migration, new knowledge may be locally generated
for an actor (e.g. one IJV partner). For example, Ding and Akhtar (2001) discuss the
way many Chinese enterprises show ‘organizational inertia’, which constrains the
success of foreign investors in implanting new HRM systems and practices. Barriers to
successful transfer include the cultural and institutional heritage of Chinese organiza-
tions, re ected in their size, age, location (e.g. interior vs coast) and ownership (e.g.
foreign invested vs state owned). IJVs were more likely to choose human capital-
oriented HRM practices than state-owned enterprises, being freer to hire employees
from the open labour market and formulate their own. Policies the Japanese–Chinese
IJVs studied by Taylor (2001) did not generally transfer Japanese HR practices, while
Figure 6 Control model for knowledge migration within IJV

Gamble (2001), in discussing the operation of a UK–Chinese joint retail venture, argues
that the HR system developed in the Shanghai operation shared many, but not all,
characteristics of the London operation (e.g. more extensive communication, training
and performance-related pay than most state-owned enterprises, open plan of ces and
rst name terms for managers). Interestingly, given the older nature of the workforce as
compared to those in many Chinese IJVs, many workers regarded the climate
positively, as reminiscent of 1950s egalitarian China, which, along with the person-
alized relationships and ‘team spirit’ feeling, may have enabled more effective semantic
communication, and therefore knowledge migration, between the expatriate manage-
ment and workforce.
Though there are many arguments for ‘localizing’ IJVs and other foreign-invested
enterprises, Gamble (2000) makes the case that rapid localization in China is hindered
by the lack of suitably quali ed local managers, that expatriates can perform control
and surveillance functions, and that they can also act as trainers, coaches, role models,
co-ordinators and relatively neutral ‘outsiders’. Hence they can play an important role,
if ‘culturally literate’ as knowledge identi ers and migrators in organizational learning.
Local employees can also act as potential customers, identifying knowledge that can
help such expatriates learn about actual and potential markets. However, Tung and
Worm (2001) argue that the high use of expatriates in senior staff positions in
European–Chinese IJVs may affect their ability to build appropriate guanxi (connec-
tions) with local authorities, hindering their effectiveness as knowledge identi ers and
migrators. It should not necessarily be assumed that expatriate cultural similarity
develops more effective job attitudes in local employees; Leung et al. (2001) showed
that Western expatriate hotel managers were more effective in enhancing Chinese
workers’ job attitudes than were Japanese or overseas Chinese managers, who, despite
apparent greater cultural similarity, may be less effective knowledge migrators.
Professional and organizational culture may play an important role alongside national
culture in the development of worldviews (e.g. Iles and Wilson, 2002; Gamble 2000,
2001).
Newly migrated knowledge may be shared and re-shared within the supra-system
between the IJV partners and other units, because the new knowledge created by one
actor will have a local de nition that will be different for others. As a result, the original
migrated knowledge will have to be re-migrated in a feedback loop. This does not stop
the knowledge from being ‘contagious’ to relevant others (e.g. other partner units)
within a given supra-system, through the continuous semantic communication process
by which they participate in recursive migration (that is re-migration and re-
re-migration) of knowledge. Each recursive knowledge migration has the potential for
new knowledge creation for each actor in the IJV supra-system. As knowledge migrates,
it is likely to pass through a morphogenic process, and sometimes a metamorphic one that
makes it new to the IJV or partners (Figure 6). The process of knowledge appreciation in
an IJV can follow knowledge migration; an appreciation of how migrated knowledge
can be of use to a relevant other, such as other IJV partners, is essential if they are to
be able to harness it within a behavioural world (Figure 7).
Knowledge appreciation by relevant others is dependent upon knowledge contagion
to these others. However, this is ltered through knowledge that activates wel-
tanschauung-derived ideology and ethics. In addition, the evaluation reference criteria
derive from knowledge about intention and logico-relational cognitive purposes. A
consequence of the process of knowledge appreciation may be its intelligent application
within the IJV or within its partners, resulting in knowledgeable action (Figure 8) such
Figure 7 Control model for knowledge appreciation within IJV
as the implementation of HR systems that are new to the partners (e.g. Gamble, 2001)
or new quality management systems requiring changes to training, pay and appraisal
policies (Glover and Siu, 2000). Measurement of this control process may require
researchers to search the local environment for ways in which knowledge has been
applied (directly or indirectly) to varieties of situations by one of the actors within an
IJV. For example, local Chinese employees in hotel joint ventures seem to have become
more sensitive in the 1990s to issues of organizational justice and fairness, increasingly
using expatriate managers as a reference group for social comparison (Leung et al.,
2000).
A consequence of the process of knowledgeable action that derives from knowledge
migration is the creation of a new de nition of relationships between identi able actors,
such as partners in the IJV, giving meaning to work-related activities.
In terms of a future research agenda, measures within this control loop with respect
to knowledgeable action may require the examination of the environment in which that
action has occurred. Work and interaction knowledge that conditions knowledgeable
action can be explored by examining how work and interaction processes change with
the introduction of new knowledge (e.g. Gamble, 2001). Knowledge about emancipa-
tion may also be determined through in-depth questioning of relevant others involved in
the IJV (e.g. Iles and Wilson, 2002).
Figure 8 Control model for knowledge action within IJV

Conclusions
It is appropriate to differentiate between traditional concepts associated with HRM and

IJVs and those derived from the VST constructs discussed here. IJV theory and research
are seen here as requiring exploration of how IJVs satisfy cognitive in uences, purposes
or interests, developed through establishing a virtual paradigm that may initially be ill
formed and unstable. Because of this, they can be volatile, with many dissolving
prematurely. IJVs may thus have limited cognitive in uence, purpose or interest and an
intended limited life span and domain of action. Alternatively, there may be enduring
general agreements intended for the long term. If this occurs, it is usually the case that
a paradigm, including an HRM paradigm, will have developed that will have associated
with it recognizable patterns of behaviour.
Our interest here is to formulate what may become the base of a systemic theory of
HRM in IJVs. We start by proposing that IJVs may occur between purposeful adaptive
organizations, and that complementariness involves creating a virtual paradigm that
enables the formulation of the nature of the co-operative behaviour. The argument is
that, when a cognitive domain is established, it results in the formation of a meta-
system that directs the system. It is essential, according to the theory outlined above,
that a cognitive interest or purpose exists to facilitate an IJV. However, this cannot
work without the formation of a local frame of reference, from which derives a local
meta-system. This will be formed through the cognitive in uences of all the worldviews
involved, and will be a formation of the whole rather than any one part of the actors of
the supra-system. It is through the locally de ned meta-system that the actors can deal
with paradigm incommensurability, and thus the formation of cognitive turbulence and
manifest con ict. With it local purposefulness and direction can develop. Without it,
IJV behaviour will be prone to chaos. IJVs can therefore be considered to be purposeful
adaptive activity systems, enabling them to be considered in terms of three domains:
cognitive, transformational and behavioural, each with the cognitive properties of
in uence, purpose and interest. The importance of this is its potential for further
developing the theory associated with HRM, organizational learning and knowledge
migration in IJVs, which may enable research to be more focused on processes of
learning and knowledge migration in IJV. Future research may involve exploring the
worldviews of the actors involved, their cognitive interests, purposes and in uences,
and the processes of knowledge ows and migrations between the parents and the IJV
and from the IJV to the parents. Cyr (1995) suggests that the lack of involvement in HR
issues in IJVs is not due to lack of recognition of their importance, but because
information on the development and implementation of HRM practice in IJVs is
limited. We have sought to build on the multi-stage model of HRM in IJVs proposed
by Schuler (2001a, 2001b) by emphasizing the importance of learning and knowledge
migration in IJVs within a viable systems framework as one step towards building this
understanding.
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Int. J.

of Human Resource Management 13:4 June 2002 624–641

International joint ventures, HRM and

Paul Iles and Maurice Yolles

Abstract International joint ventures (IJVs) are an increasingly popular form of

Keywords IJVs; viable systems; HRM; organizational learning; knowledge

Theoretical perspectives on IJVs

‘hardware orientation’ involving the application and transfer of ‘hard’ technologies in

Empirical research on IJVs

Non-contractual inputs (including HR inputs) are becoming increasingly important to

HRM issues in IJVs

quality experienced PCNs at the beginning of IJV operations (promoting inter-partner

IJVs, HRM and organizational learning

Developing a framework for understanding HRM, knowledge migration and

contractual inputs, including HR inputs, with performance dependent on the develop-

Figure 1 HRM, development and performance in IJVs

The purpose of IJVs and viable systems theory

Figure 2 Relationship between types of worldview and behaviour in an IJV

‘real’ or perceived behavioural world. In order to distinguish between these two

Figure 3 A supra-system of actors and a decision-making meta-system of one actor in an

Application of the viable systems model to HRM, organizational learning and

Figure 4 The knowledge cycle

Towards a research agenda for studying knowledge migration, organizational

Figure 5 Basic form of the control model

Figure 6 Control model for knowledge migration within IJV

Figure 7 Control model for knowledge appreciation within IJV

Figure 8 Control model for knowledge action within IJV

It is appropriate to differentiate between traditional concepts associated with HRM and

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