Complexity offering opportunity: Mutual learning between Zhejiang Geely Holding Group and Volvo Cars in the post‐acquisition process

Abstract

Research SummaryWhile much of the literature on complex global environments builds on studies of multinationals from mature markets, little is known about how firms from emerging markets understand and cope with complexity. This paper builds on a longitudinal case study of Zhejiang Geely Holding Group (ZGH) in the post‐acquisition process of Volvo Car Group (VCG) and its efforts to learn how to learn in order to catch up with the internationalization process as means for developing capabilities and compete in the global automotive industry. Building on the Uppsala model, we contribute with insights how an emerging market multinational understands complexity and organize the post‐acquisition process to explicitly emphasize the importance of mutual learning to develop and exploit opportunities to improve the business.Managerial SummaryA key finding is that ZGH does not understand complexity only as a risk that should be coped with, managed and controlled—following the western idea of risk management—but also as an opportunity for learning. While the importance of knowledge management and organizational learning is often emphasized as a means to achieve competitive advantage, it is seldom as easily managed in practice. Building on insights from ZGH we illustrate that to enable knowledge development and mutual learning, top‐management from the acquiring firm needs to emphasize learning and trust the acquired firm rather than controlling it. It is equally important that the acquired firm trust the intentions of the new owner and reflect on the interest in learning—not least to improve and remain valuable.

Complexity and multinationals

“…First, internal process complexity concerns aspects such as the evolution of internal structures and the integration of new tasks and activities. For example, Jonsson and Vahlne (2021) explore how MNCs from emerging countries understand and cope with complexity. Through a longitudinal case study of the post-acquisition process between Zhejiang Geely Holding Group and Volvo Car Group, the authors study how firms can learn by internationalizing, enabling them to develop capabilities and compete globally.…”

Inheriting the DNA of emergingness: Strategies of advanced market firms under emerging market ownership

“…Additionally, EMF acquirers invest heavily in AMF targets in developing intangible assets and improving employee compensations (Carril‐Caccia, 2021; Fuest et al, 2022), which boosts AMF targets' innovation performance (Yang & Ai, 2021). Moreover, despite the often assumed one‐directional learning by EMF acquirers from AMF targets, such learning is found to be mutual and benefits both parties (He et al, 2018; Jonsson & Vahlne, 2021).…”

A Critical Analysis of the Challenges of Collaborative Governance in Climate Change Adaptation Policies in Bandar Lampung City, Indonesia

“…Additionally, a sense of process ownership has influenced the emergence of a sense of shared responsibility for the process. Trust plays a role in ensuring that each actor fulfils this obligation [41].…”