Learning-by-Doing in Emerging Market Multinationals: Integration, Trial and Error, Repetition, and Extension

Abstract

We analyze learning-by-doing and how emerging market multinationals use it to upgrade their capabilities. Building on an in-depth case study, we present two novel arguments. First, we clarify the concept of learning-by-doing by identifying four distinct processes in which learning-by-doing occurs: Integration, whereby the firm incorporates external knowledge and coordinates multiple sources of knowledge to undertake an activity; trial and error, whereby the firm attempts a new activity until it succeeds; repetition, whereby the firm improves the activity by undertaking it multiple times; and extension, whereby the firm takes on a larger and more complex activity. Second, we extend our understanding of how the country of origin influences firm behavior by explaining how particular characteristics of emerging markets (few specialized providers, relative knowledge isolation, rapid market growth, and increasing consumer sophistication) strengthen the relationships between the four learning-by-doing processes and the upgrading of capabilities to international levels.

Keywords: learning-by-doing, capabilities, upgrading, emerging countries, case study, CSCEC

JEL Classification: F23; O32