Knowledge management by east African breweries Ltd in it’s internationalization process

Abstract

The background of this study highlights the process through which a firm enters and starts operations in a foreign country i.e. internationalization. While this is a complicated process owing to uncertainties in foreign markets, Knowledge plays a critical role in shaping the entry strategies and commercial operations in those foreign markets as highlighted by the Uppsala model on the role of knowledge in internationalization. This model is the main theory driving this study. The aim of this study was to stress the importance of a more critical discussion about knowledge in theories about internationalization process and develop a clear understanding on the link between knowledge management and internationalization process and its effect on operating performance based upon previous literature about knowledge sharing and the internationalization process (Johanson & Vahlne, 1977, 1990). The theoretical approach is used to discuss and analyse the case of East African Breweries Ltd entry strategies in the regional markets. The purpose of the research should be regarded as explorative to increase our understanding on how general internationalization theories can be applied in firms and the role of knowledge management on operating efficiency. From the literature review, knowledge has been assigned a meaning as defined in the oxford English dictionary and also from the philosophical debates perspective. The concept of knowledge management is also discussed further as a concept in which organizations deliberately put effort to gather, organize, analyze and share its knowledge as a way of improving performance. This concept of knowledge management is further linked to the idea of a learning organization where great scholars like Senge (1990) defines learning organizations as organizations where people continuously learn and expand their capacity with a view to achieve the desired results. Various empirical findings from previous studies have been highlighted. A key findings which forms the basis for the conceptual framework for this study was from a study by Calson (1975) which showed the sequence of entry strategies where the companies started with exports, then establish a local sales organization and finally putting up a manufacturing unit in the foreign country. Other studies covered like Argote (1999), Nelson & Winter and Cohen & levinthal (1990) emphasizes experiential learning as the enabler as the firms pursues internationalization. This being a case study, the data was collected through interviews targeting senior managers charged with the responsibility of managing the international business. Additional data was also captured vi from the annual reports of the company and all the data collected has been analysed using content analysis method. The findings were consistent with the previous empirical studies that knowledge plays a critical role in shaping the entry strategies at EABL. Knowledge acquired helps in minimizing uncertainties and therefore more resource commitment. The knowledge acquired is market specific and helps in shaping the commercial activities in a market and mode of operation. In addition to that, knowledge management was found to be instrumental in enhancing information sharing and organization learning which boosts operational efficiency and also guides the right decisions. A notable shortcoming found during the study was lack of a clear framework to ensure organization learning instead of concentrating knowledge on individuals and teams. As a result the study recommends formulation of a policy on documents retention and operation of knowledge management system with a view to entrench organization learning. Another key recommendation goes to the government in facilitating information and opportunities in the regional markets and also giving incentives in form of enhancing management capability for the firms seeking regional expansion as a way of growth which in turn promotes economic development. There were limitations of the study particularly due to tight schedules of the respondents. Some gave short answers owing to the limitation of time. Confidentiality was another challenge especially on any information that is not publicly available especially discussions around shareholder influence. The study did not test the significance of the factors identified as important in the link between knowledge management and internationalization. As a result of the limitations, the study recommends a further across industry study with a big sample and analyse the degree of significance for each of the factors identified as critical to have knowledge about in order to achieve effective internationalization.