Learning Economy : to in a and Performance Yadong

Abstract

Does organizational learning as measured by experience in a host country affect international ex- pansion performance? If so, does such a relationship between ex- perience and performance hold over time? How do the environ- mental forces in the host country affect such a relationship? Fo- cusing on organizational learning by multinational enterprises (MNEs) operating in a transition economy, this study answers these three critical questions by explor- ing the relationships among ex- perience, environment, and per- formance at the subsidiary level. Based on a recent survey of 108 MNE subunits operating in China, we find that the intensity and diversity of host country experi- ence is an important predictor of subunit performance. While the positive effect of the intensity of experience on performance di- minishes over time, the impact of the diversity of experience on performance remains unchanged. Moreover, for MNEs experiencing greater environmental dynamism, complexity, and hostility, there is a stronger positive relationship be- tween experience and perfor- mance.