Foreign and Domestic Firms Growing Apart: Learning- vs. Capability-based Imprinting

Abstract

Using 60 interviews with large-sized Taiwanese and Chinese domestic apparel firms in southern China, this article contributes to the organizational imprinting literature in two ways through 1) disentangling learning-based versus capability-based imprinting mechanisms; and 2) directly comparing the imprinted and non-imprinted organizations. The first contribution comes from a comparison one group at two different times. Taiwanese entrepreneurs embedded in the global apparel value chain carry the imprint of forty years of experience with one business model, and have twice encountered the combined challenges of rising labor cost, increasing labor shortage and currency appreciation. These two encounters offer an ideal research opportunity to disentangle the learning- and capability-based imprinting mechanisms. The first time (i.e., late 1980s in Taiwan), they failed to learn alternative strategies, such as developing their own brands for the domestic market when moving to the mainland, and continued their focus on the export market. The second time (i.e., ongoing challenges on the mainland), although they have learned the potential of branding for the Chinese domestic market from the success of local domestic entrepreneurs, they lack the essential capabilities for pursuing such strategic reorientation. The second contribution is based on the coexistence of both Taiwanese and Chinese domestic entrepreneurs, which permits the direct comparison of imprinted vs. non-imprinted entrepreneurs. Without the imprint of global apparel value chains, the domestic entrepreneurs have successfully entered the domestic market.