If at first you don't succeed: globalized production and organizational learning at Hyundai Motor Company

Abstract

This article reviews the development of a global production system through a cross-case analysis of the establishment of Hyundai Motor Company's five major overseas production facilities. It concludes that establishing a global production network can be a catalyst for organizational learning and the development of new competencies; in particular, that the complexities and uncertainties of operating in unfamiliar economic and cultural contexts provide a powerful impetus to increasing a firm's absorptive capacity. The article identifies the strategies that enabled the Hyundai Motor Company to learn from its initial failures in overseas production. It focuses on the localization of production, the internal transfer of experienced staff, the codification of previous experience and the use of aggressive goal-setting. The analysis suggests that organizational resilience, that is the ability to rebound from initial failure, is a further important aspect in the process of organizational learning.