Extreme case learning: the manager perspective on rare knowledge and capabilities development

Abstract

International strategy is enhanced by organizations’ ability to learn in host markets; yet, it remains ambiguous how post-entry knowledge gaps between home – and host country shape MNE’s absorptive capacity. This article builds on the specific contributions of ‘extreme case’ internationalization to advance literature in this field. We foster the understanding of the role of rare knowledge and the mechanisms that link knowledge acquisition to absorptive capacity dynamics used in the internationalization path of multinational enterprises (MNEs). We opt for in-depth qualitative research into the post-entry phase of ‘extreme’ (thus particularly crude) international joint venture (IJV) investment, and analyze the perspective of managers from a developed economy MNE located in a high-risk, weak-institutions host country. The firm’s absorptive capacity and its interaction with external environments that are categorized into four distinct contexts are found to be contingent upon pro-active experiential learning, concurrent to managerial willingness and simultaneous organizational commitments to learning and to exploiting rare knowledge. We thus uncover managerial perceptions of a knowledge gap identified as host-country challenges and resulting managerial solutions, which reveal rare learning opportunities and knowledge exploitation dynamics. The capacity to compensate for knowledge gaps is a critical key within the design and consolidation of an alternative internationalization path for developed-country MNEs. This challenges the traditional risk–return–commitment dependencies in prior literature.