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This essay is set to critiques the article The tension of information sharing: Effects on subsidiary embeddedness by Grazia Domenica on the 24 February 2011 published in the international business review on the dangers of informatiomation sharing necessitated by the growth of businesses beyond borders. This study essay aims to present critical analysis of issues surrounding information sharing in international business from a digital globalization world.
The paper sought to investigate completion and relation between foreign subsidiary companies that are in most cases embedded in the peripheries (countries like Asia and Africa) of developed economies of North America and Europe. Eisenhardt, 1989 and Ricks, 1985 have shown. Furthermore, because the ideas of the Authors are of interest, they pave way for future writers to experiment and investigate and see if the findings are the same today as they were more than two decades ago.
The article fronts its argument with a lot of pessimism as it argues out that pressure to innovate and united knowledge spillovers compete in the bid to draw a line between the competition and embeddings in information sharing arising from the from international business conglomeration. The article goes further and places an assumption that tension can be relaxed when accounting for the subsidiary companies competence and creation of entry motives. Although the article assumes says the statistical argument supports the argument it strongly imposes and the studies contributes to broad international business network and research on the creation of linkages in the Multinational enterprises, it does not present measures of audits to ascertains the claims.
Key assumptions in the approach
The approach taken by the paper takes the format of the classical dialectic and proceeds from the capitalist perspective which forward assumes that need to make profit or high return on investments is the principal and the only motivation for businesses going global. The researchers should understand that concepts can be at times misconstrued by their readers if not properly put in context. Osigweh, 1989 and Preffer's, 1993
Another major tenet in the article is the need for information balancing and the risk associated by the need to share information with the offshore subsidiaries. The writes strongly believes that information sharing will hurt business even as he acknowledges the need for companies to go global and hence strengthening the aspects of international businesses.
The articles also front an assumption that going global or rather engaging in international business which definitely necessities sharing of information will not bring forth an increased income but hurt the image and puts the company in hard task of having to struggle to keep secret clients information. The argument being raised here is that a lot of resources will be put in taking care of information instead of company's product innovation and clientele base growth. Khanna, 2006 is also noted as urging author to desist from using historical information on nations to enhance an ancient stereotype
The article further claims that companies crucial information is at risk since the information sharing systems can be trusted as such. It argues out that the internet has its limitation and can be trusted as the sole system of information sharing. With the digital globalization of business internet plays crucial role, a fact the article concurs with but insists that the internet is not secure.
Conceptual model and hypotheses
The main argument is that current system that dominate international business system of sharing information can be can no longer be considered as the most appropriate way for growing and developing global company's subsidiaries. Current sharing of information by companies adopted by businesses is practices that promotes a form of corporatism in which the owners of business are forced to share crucial information hence being separated from control, business is more immersed into the pool of global industry, and the idea of a "having concern" concern for international development sets basis for economic slavery. The articles attribute the last global economic crunch to such issues as information sharing as it is said so much information can a times be dangerous even though information is power.
Contribution to research and community of inquiry
The article is without a doubt a very a timely. The author labored himself to investigate crucial issues of information the international business community and how sharing it will be dangerous. He dwells with issues critical to the current business throughout the globe.
Pressure to innovate
Week after week global leaders sit to chat way forward for entering new zones and be among market leaders to take up new business opportunities, get listed in stocks exchange markets throughout the world and continue to grow their brand further by establishing international subsidiaries. What the business community forgets is a way to share information and share it in the right way with their international subsidiaries.
Unintended private knowledge spillovers
Every company has its own secrets and tradition which keeps them moving. The worst nightmare that can ever happen to a business leader to wake up and find information he/she highly cherishes spilled all over the industry. Such information as a company filing for bankruptcy or lower growth forecasts can send its stock markets downhill. It will seem to the world as though the company has lost it all and perhaps a new one is stake over the market. Such information can easily spill over in an enhanced international business environment.
The role of entry motives
In the midst of all these are the company executives, in particular those in the management levels who are trying to find ways to prevent their particular companies from collapsing will need to share information. How then or at what level can someone be trusted with information. Head hunt are happening all over and if an executive is taken over by another companies than he might get away with information belonging to the company. Such activities are only prevented when the owners are in direct contacts with the top employees but in the case of international subsidiaries it get difficult. For example Coca-Cola company recruit individual who are given the beverage formulae sent to all subsidiaries to implement the formulae instead of giving it to all employees. This seems like a smart move but its very expensive to the company. Though the earlier writers Ricks, 1985 gave a strong argument that International Business shouldn't include economics, politics, legal issues, social development
I argue that the relationships between competition and embeddedness may be driven by two competing forces which can be summarized in the tension of information sharing (Asakawa 2001). The article work is limited by the current pace of digital change in an enhanced global world, by alternative, means of information sharing which are not taken into account in the paper. In the contemporary variegated nature of global business practices sharing information is however inevitable. The work is limited to dominant practices and definitive relationships.
The article should have gone further into the creation of models to support arguments and link them to respective propositions. Hofstede, 1993 shows us what management means to various societies around the world.
When it comes to the Practical implications - The article provides a useful perspective for understanding the future direction of international business, specifically in terms of sharing information related to the business in the aspects of product communication, regional culture, and understandings of value.
The articles add value to the business and technology information that might be in possession of the entrepreneurs. This article offers an alternative, competitive view of globalization within the context of information sharing framework and proposes a new theoretical and analytical synthesis for safe information sharing between the companies and its international subsidiaries.
In respect to the changes in the field of International Business today, I feel that the guidelines on what constitutes International Business Research in Ricks Paper are somewhat outdated. International Business today has to include more intricate, triple bottom line, political, legal and cultural issues especially with the advancements in technology and the rationalization of nations e.g. the E.U. Ultimately, narrowing the field of International business could be its demise. More recent articles such as Shenkar, 2004 acknowledge the need to include these once separate notions.