Chinese MNEs and managerial knowledge transfer in Africa: the case of the construction sector in Ghana

Abstract

This paper examines managerial knowledge transfer from Chinese multinational enterprises in Africa, in the context of the Ghanaian construction sector. Using empirical data from in-depth qualitative interviews and by comparing Chinese MNEs to western MNEs, the paper investigates key channels as well as determinants and impediments of managerial knowledge spillovers in this sector. It finds that managerial knowledge transfer from Chinese MNEs in the construction section is constrained by limited local employment at the managerial level in Chinese construction firms, as well as cultural and linguistic barriers. Localisation strategies, in which Chinese managers are progressively replaced by local ones, are found to emerge in Chinese MNEs. This helps to overcome these barriers, foster managerial knowledge spillovers, and ensure these MNEs' sustainability in Africa. JEL classifications: O14, O19, O33 Keywords: foreign direct investment, knowledge spillovers, management, China, Africa 3 Caution is recommended with FDI statistics. Pietrobelli et al. (2010:3) noted that the MOFCOM FDI statistics "underestimate the real value of investments because they do not include the financial sector and are based on the value arising from approval procedures rather than the effective value of bids ... In addition, these data do not account for most M&A activity ... Notwithstanding these limitations, MOFCOM data represent the most up-to-date source of information on Chinese FDI, disaggregated by destination country and sector".

Reviewing the research on the internationalization of Chinese firms

“…When investing in other emerging markets or less developed countries, Chinese firms act as knowledge disseminators (Auffray and Fu, 2015;Rui et al, 2017). In the context of Chinese OFDIs to Africa, Rui et al (2016) highlighted that Chinese enterprises purposely reduce the complexity of the knowledge intended to be transferred in order to meet the needs of the recipients and not to overexert their absorptive capacity.…”

“…In the context of Chinese OFDIs to Africa, Rui et al (2016) highlighted that Chinese enterprises purposely reduce the complexity of the knowledge intended to be transferred in order to meet the needs of the recipients and not to overexert their absorptive capacity. Focusing on the managerial knowledge transfer process triggered by Chinese OFDIs to the construction sector in Ghana, Auffray and Fu (2015) found limited local employment, as well as cultural and linguistic barriers, as impediments for this process.…”

Forty Years Development of China's Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

“…According to a field study by Shen (2015) of five African host countries (Ethiopia, Liberia, Nigeria, Rwanda and Zambia), although three admitted that Chinese investment in their labor-intensive sectors had facilitated local industrialization, none of them gained substantial technology transfers from Chinese investments. However, Auffray and Fu (2015) found that despite linguistic and cultural barriers, positive managerial spillovers to African countries had been achieved by Chinese firms' localizing their managerial workforce.…”

An Evaluation of Project Risk Dynamics in Sino-Africa Public Infrastructure Delivery; A Causal Loop and Interpretive Structural Modelling Approach (ISM-CLD)

“…Studies in Sino-Africa infrastructure partnerships outline several reasons for the failure or challenging project implementation. Some of these include communication and cultural differences, bribery and corruption, conflict of interest, and lack of trust and transparency [86,87]. These risks affect negotiation and cause lengthy decision making and eventually the development and management of conditions of contract [88].…”