MNEs are unique and complex types of organisations (Sundaram and Black, 1992) and face particular problems in managing their elaborate structures. One difficulty is the need to co-ordinate their diverse activities and the various units or subsidiaries in which these activities take place. The issues involved in the management of these interunit linkages have been seen as representing a major influence on strategic international human resource management (SIHRM) issues, function and policies and practices (Schuler, Fulkerson and Dowling, 1991; Schuler, Dowling and De Cieri, 1993). The notion of organisational learning has been accepted as critical in understanding the processes involved in managing these interunit linkages (Ghoshal and Nohria, 1989; Doz and Prahalad, 1991), but this paper suggests that it is the contribution of learning theory that is the crucial [if missing] factor in interpreting the processes involved in interunit relationships. The paper begins by considering some of the literature on learning theory and its application to strategic management before considering how learning takes place in an international context. A research agenda and some preliminary findings are then presented.

Beyond the HRM domain, however, organisational learning has made many other significant contributions in the management discipline. The concept can now be considered as having moved centre stage in attempts to explain competitive advantage and is beginning to appear as the integrating mechanism in resource based views of interfirm competition (Moingeon and Edmondson, 1996; Nanda, 1996). The field has long relied for inspiration on its original seminal founders, drawn from disciplines such as organisation theory, cybernetics and culture - March and Simon (1958); Cyert and March (1963); Forrester (1965); Schein (1985) and Argyris and Schon, 1978).

More recently, important contributions have been made by many commentators. It was De Geus (1988) who made the by now memorable statement about learning faster than one's competitors being the only sustainable competitive advantage and Senge (1990) who argued for five component 'technologies' of learning organisations - systems thinking, personal mastery, mental models, shared vision and team learning. Pedler et al, (1990) have become key influences of the 'learning as self-development' agenda, believing that within rapidly changing, knowledge-intensive contexts, managers need to rely on themselves as much as, if not more than, corporate HR departments for continued skill enhancement. Cohen and Levinthal (1990) suggested that 'absorptive capacity' was a significant influence on the amount and nature of organisational learning ability, indicating that structural impediments to individual learning need to be removed in order that such learning spreads throughout the organisation. Such structural mechanisms would also be central to the views of Prahalad and Hamel (1990) who argued that the building of core competencies as 'bundles' of long-lasting skills and intelligences represented the most important strategic issue facing organisations. Starkey brought the co-ordination issue to the individual level when he suggested that: 'The crucial leadership skill in the MNC will be the ability to synthesise difference and interdependence' (1996: 379).

Nonaka (1991) argued that individual and organisational knowledge which was often tacit needed to be made explicit within organisations - his suggestions that metaphor and 'redundancy' could be utilised in this process appear too great a challenge for many, if research in these areas is any measure. Argyris (1992) has attempted both to link individual learning and organisational routines by focusing on what might prevent effective learning i.e. 'barriers' to organisational learning and on how making managers' attempts at learning success and learning failure more evident can help improve an organisation's overall ability to learn. Garvin (1993) proffered a definition of a learning organisation, a set of different stages of knowledge - as moving through a cognitive-behavioural-performance combination of steps and a systemic approach to organisational learning:

Learning organisations are skilled at five main activities: systematic problem solving; experimentation with new approaches, learning from their own experience and past history, learning from the experience and best practices of others and transferring knowledge quickly and efficiently throughout the organisation. Each is accompanied by a distinctive mind-set, tool kit and pattern of behaviour. Many companies practice these activities to some degree. But few are consistently successful because they rely largely on happenstance and isolated examples. By creating systems and processes that support these activities and integrate them into the fabric of daily operations, companies can manage their learning more effectively [p. 81].

From this much referred-to analysis, typical of much writing in this field, at least four questions present themselves: what are these 'systems and processes', what is 'integrate(d) into the fabric of daily operations' and how is this achieved, and perhaps most important of all, who decides that this overall approach is necessary and begins the process of recognising the importance of organisational learning? In other words, who will act as the 'learning entrepreneur'? This raises the intriguing question of whether we are where Penrose (1959) was when she argued that the only obstacle she could then find to firm growth [which must also, we contend, mean learning] was the supply of entrepreneurial management to the firm and the rate at which it could be assimilated?

In this context, we might also add the problems we perceive in what has developed into one of the more popular ways of answering this core question - an emphasis on 'experiential learning' (Mumford, 1988). Mumford reported from his empirical study of 144 company directors in the United Kingdom how important learning while doing was to his survey participants:

Learning from doing the job was the most frequent, pervasive and intimate experience of learning. The reason for this was well expressed by a famous American bank robber Willie Sutton. When asked why he robbed banks he replied 'That's where the money is'. Managers' perception of why they learn from doing the job offers the same kind of perception, 'that's where the real learning occurs' (p. 16).

At least four questions present themselves here: what kind of experiences do managers have? Can we be sure that at least some will be positive? In what ways do managers learn from experience? How does the organisation benefit from the experiential learning of its individual managers? Add to this set of questions the additional pressures arising from doing business internationally and the problems raised here surely become more difficult.

More recent work in organisational learning has attempted to answer some of these questions. Edmondson and Moingeon (1996) pointed to the distinction between learning how [the process improvement of skills and routines] and learning why [the definition of causality]. DiBella et al, (1996) suggested that identifying organisational learning styles - in a range from rugged individualism via communal to evangelical - helped in understanding how learning was likely to be characterised in specific organisations. Spender has added to the debate about hidden knowledge debate by arguing for the 'unpacking' of tacit knowledge into three types - conscious practical, automatic practical and collective practical, each with a different required strategic architecture. Collis (1996: 157) contends that learning is the connection between an organisation's overall capability: '…the dynamic routines that produce continual improvement in the efficiency or effectiveness of the performance of the product market activities' and profit. Orton (1996) has used Weick's model of organising [which suggests that past structures contain present actions] to argue that focusing on the processes rather than on the structures within organisations might yield more practical insight into how organisations learn. Phills Jr (1996) put forward the view that the notion of generic analytical activities [or GAAs], defined as comparison, explanation, prediction and prescription: 'provides a more detailed view of the epistemological foundations for strategy development efforts, particularly as conducted by management consultants' [p. 217] and can shed light on why change efforts can be frequently frustrated by the inertia inherent in so many organisations.

Notwithstanding this welcome deepening and broadening of the research literature, there still exists much criticism of how little we know of what it is and how firms actually learn. Further, the bulk of research on the learning organisation has, to our knowledge, been conducted on firms within assumed national borders [or where internationality was not considered important enough to highlight] and in relation to managers as individual learners in situ. A key question, therefore, is whether organisational learning is any different in an international context, i.e. in the multi-national enterprise or MNE, especially given the unique nature of the MNE as outlined in the first section above. While the notion of organisational learning in international contexts has been identified (Dibella et al, 1996; Starkey, 1996) this part of the organisational learning field appears largely unexplored.

While understanding the nature of organisational learning is complex enough when considered in a domestic context, this complexity is multiplied in an international setting. There is now a very extensive literature on MNEs and various attempts have been made to categorise and understand the processes which take place within these large and complex organisational structures (e.g. Dowling and Schuler, 1990; Bartlett and Ghoshal, 1989; Ghoshal and Bartlett, 1990; Doz and Prahalad, 1986; Edwards, Ferner and Sisson, 1996). One of the central issues in these analyses is how the relationships with subsidiaries should be managed; the relationships or 'interunit linkages' (Schuler et al., 1993) that exist between subsidiaries themselves as well as between subsidiaries and headquarters. The issue has been variously described as one of managing differentiation and integration (Lawrence and Lorsch, 1967), globalness and localness (Bartlett, 1992), isomorphism and consistency (Rosenzwieg and Singh, 1991), differentiated fit and shared values (Nohria and Ghoshal, 1994), and controlled variety (Doz and Prahalad, 1986). However, this management process in not an end in itself; Schuler et al. (1993: 729) suggest that the major objectives in interunit linkages for SIHRM is:

Balancing the needs of autonomy (thereby facilitating variety and diversity), co-ordination and control for the purpose of global competitiveness, flexibility and learning through the use of relevant SIHRM policies and practices.

This issue is examined by first by all considering the frameworks put forward for understanding the relationships and then by examining the ways in which these relationships are managed in practice.

Frameworks for Understanding Interunit Linkages

Doz and Prahalad (1986) describe four types of subsidiaries: export platforms, large integrated subsidiaries, large self contained subsidiaries and small importing subsidiaries. Although each provides a different challenge, for Doz and Prahalad the key consideration is how to combine 'strategic variety and strategic control'. Thus, in the case of the large integrated subsidiaries, 'the challenge is to ensure active and effective participation of these subsidiaries into the formulation of global strategies and the transfer and sharing of their information, knowledge and expertise' (p. 57).

Bartlett and Ghoshal (1989) suggest that there are four types of organisation: the multinational with its dispersed and loosely co-ordinated subsidiaries which tends to be highly decentralised; the 'global' company with its more co-ordinated and centralised approach to international operations; the international company which focuses on the adaptation of parent-company skills; and the transnational in which there are different contributions from each national team, with knowledge shared and a structure based on a matrix rather than a traditional hierarchy. Bartlett and Ghoshal argue that organisations move from one model to another as situations change and see the transnational as the model that allows for both local and global needs to be served: the transnational must be a flexible, innovative organisation that encourages learning. In a later paper, Ghoshal and Bartlett (1990: 604) sees the MNE as 'a network of exchange relationships among different organisational units, including the headquarters and the different national subsidiaries'. Here the power of the subsidiaries is determined not solely by the role allocated by headquarters, but also by the positions they occupy within their local networks of customers, suppliers, regulators and others.

Another approach to understanding this issue has been made through a reappraisal of the integration-differentiation debate which originated with Lawrence and Lorsch (1967). Kamoche (1996) refers to this as the IN-DI puzzle and defines this as 'how firms balance the internal/headquarters demand for integration with those of responsiveness at the subsidiary/unit level' (p. 231). Kamoche extends the integration-differentiation debate by using a resource capability view of the firm to offer new insights into the management of expertise in an international context. The value of the resource-based view in the context of the MNE is that this perspective focuses on the heterogeneity of resources: that to have the potential to generate sustained advantage, resources must meet the criteria of value, rarity, imperfect imitability and non-substitutability (Barney, 1991). Thus, the diversity of the units comprising the MNE is not a disadvantage but rather a potential source of competitive advantage. But this diversity must also be harnessed in some way. For many writers this may be achieved through a process of organisational learning and Hamel and Prahalad (1993) suggest that it is a firm's ability to learn faster and apply its learning more effectively than its rivals that give it competitive advantage.

Managing the Interunit Linkages in Practice

There are many examples of how organisations try to manage their inter-unit linkages and thereby achieve organisational learning. Many commentators (Evans, 1992; Tichy, 1992; Scullion, 1993) argue that management development is the key to the success of the MNE, that it is the 'glue' (Evans, 1992) to bond together the otherwise separate entities. Yet managers may be used for various purposes. Bartlett and Ghoshal (1992: 131) describe different types of global manager who have the knowledge, skills, expertise and vision to implement cross-border strategies. Such managers act as conduits in this learning process 'by scanning for new developments, cross-pollinating best practice and championing innovations with transnational applications'. But there is also evidence that international managers may be used as part of a control strategy. Scullion's (1994) study of 45 British and Irish international companies indicated that in 33 of these firms, control was identified as a key reason for the use of expatriates. However, no matter the value placed on international managers, they are not easy creatures to create; there is ample research evidence indicating the difficulties involved in expatriation and repatriation (e.g. Barham and Oates, 1991; Brewster, 1991).

Other measures are also used to enhance this learning. For example, Pucik et al. (1992) suggest that having some units serve as centres of excellence, i.e. creators of knowledge, thus becoming benchmarks for the other units for specific practices, may serve to benefit all units. Rosenzweig and Singh (1991) indicate the role that the headquarters can play in both identifying innovations and good practices in subsidiaries and then acting as an instrument for diffusing these to other units.

While there is plenty of evidence that some MNEs do pursue strategies to enhance learning, there are also indications that many find this a difficult and tortuous process while others actively encourage rivalries among their subsidiaries. Edwards et al. describe two studies, one which examined the car industry (Mueller and Purcell, 1992) and one which involved a US-owned pharmaceuticals firms (Frenkel, 1994). Here, direct inter-plant productivity comparisons were used to decide investment decisions. A study of nine multinationals operating in Ireland (Monks, 1996) found that while learning did occur within some MNEs, in others subsidiaries saw themselves as being in direct competition with other subsidiaries. Many of the policies and practices within these organisations were pursued in order to ensure that the subsidiary retained its position within the MNE. In addition, while some subsidiaries had become the centres of excellence that Pucik et al. (1992) identify, this process was perceived more as a mechanism for ensuring the continual survival of the subsidiary rather than as a means to encourage the dissemination of learning. This attitude is not surprising, as Ireland's economy is heavily dependent on multinational investment and recent years have seen major job losses where MNEs have suddenly withdrawn, particularly from plants with excellent track records (e.g. Digital, Semperit).

Some explanations for the diversity of strategies pursued by MNEs can be found in case studies of two British MNEs (Edwards et al., 1996), one in the engineering sector (Components) and one which manufactured chemicals and related products (Process). The study explored some of the mechanisms operating within MNEs including the extent to which synergy was important and how it was pursued, and the interplay between synergistic and financial models. The study indicated that although both these firms exemplified moves towards the transnational model depicted by Bartlett and Ghoshal (1989), both firms were involved in 'trying to balance financial and synergistic economies' (p. 37) within the context of their very different organisational histories, cultures and market structures. In this regard, Process appeared to be more successful, a fact which Edwards et al. suggest is a reflection of this company's historical legacy and the growth and predictability of its markets. As Edwards et al. point out, synergy is not something which can be prescribed, but depends 'on a degree of stability, for it takes time for co-operation and trust to evolve' (p. 37).

The Role of HRM in Generating Learning Capacity

The resource-based view of the firm also gives an insight into how HRM might assist in the process of enabling the MNE to generate a learning capacity. Boxall (1996: 67), in his analysis, cites a variety of studies which indicate that competitive success does not come simply from making choices in the present; it stems from building up distinctive capabilities over significant periods of time. Boxall argues that by taking a resource-based perspective, HRM 'can be valued not only for its role in implementing a given competitive scenario, but also for its role in generating strategic capability (Barney, 1991); for its potential to create firms which are more intelligent and flexible than their competitors over the long haul, firms which exhibit superior levels of co-ordination and co-operation (Grant, 1991)'. Boxall (p. 67) suggests that in resource base terms, HR policies and practice may be valuable because they are socially complex (competitors may not be able to replicate the diversity and depth of linked processes that sustain them) and historically sensitive (it takes time, for example, to build high levels of workforce trust. Employee know-how was rated as one of the most durable resources and one of the most important contributors to business success in studies undertaken of six successful companies in the UK (Hall, 1993) and core competencies of employees are highlighted by Prahalad and Hamel (1990).

In a later publication, Pucik (1992) also identifies how specific HR roles are linked to the development of competitive advantage for the global firm, competitive advantage that is seen as being gained through organisational learning, continuous improvement and competitive culture. Table 1 identifies the HR roles involved in the organisational learning element of this activity.

Beer et al. (1996) describe a strategic human resource management process developed by them. This process was designed to integrate the perspective of business policy/organisational theory and organisational behaviour/development in order to achieve a strategically aligned organisation. Their work in one MNE suggests that SHRM is 'a powerful tool for motivating, guiding and furthering the individual and organisational learning needed for strategic alignment to take place'. Its value is that it puts process ahead of content'.

Table 1: Direction and Criteria of Global HR Activities

(Pucik, 1992)

HR Roles	Organisational Learning
Organisation design	Integrated network
Staffing and selection	Slack resources, organisational competence
Performance appraisal	Teamwork, initiative
Reward system	Co-operation, information sharing
Management development	Multifunction and multicountry careers
Communication	Cross-boundary linkages

We are particularly interested in two ideas in relation to international organisational learning: (i) the notion of how knowledge and learning are managed in MNEs between and among headquarters and subsidiaries and (ii) how unlearning of 'old' knowledge happens alongside learning of 'new' knowledge, as Pettigrew and Whipp (1991) have argued. If unlearning (see Hedberg, 1981; Argyris, 1982; Mumford, 1988) must occur as part of the organisational learning process, what is unlearning like in the MNE, how is it efficiently achieved in this context, who manages it and what are the effects on the MNE of not 'unlearning' properly? (See figure 1 below).

Figure 1 Learning and Unlearning in the Multinational Company

Our second concern lies with the apparent gap between the current practice of quasi-messianic support for the importance of organisational learning and the theoretical base on which sound management strategy can be built in the use of learning concepts and practices. Why has such a gap appeared? How might it be closed? There are a number of important issues here. First, it appears that the bulk of attention has been on the apparent goodness of the learning idea and its portrayal as the 'holy ghost' of organisational management - a 'trust that it is good and thou shalt obtain powerful results' approach. This is a stance which borders too closely on faddism, in our view. Second, it is also evident that the overwhelming bulk of research in organisational learning has concerned itself with how organisations can learn - i.e. the assumed value of the exercise is given and attention directed on the means of learning. In attempting to reconsider the theoretical origins of the field and their useful impact on international organisational learning, however, we suggest that a focus on what organisations can learn might be useful. Such a question directs attention on to the outcomes or goals of organisational learning, and, ultimately, to the classic dilemma of the field: it is individuals who learn but it is organisational routines which need to be 'taught' or changed by individual learning - the systems thinking loop within organisations (Senge, 1990). After all, it is how what individuals learn ends up being adopted as effective new routines by the organisation which is the fundamental organisational learning question.

In conclusion, we have raised a number of questions in this paper:

1. What is the nature of organisational learning in international business - i.e. in the operations and strategic direction of MNEs? Is 'international organisational learning' any different to 'organisational learning' and if it is, why?

1. What is the nature of interunit learning in the MNE? Is international organisational learning affected by interunit rivalry? How might an effective international organisational technology be established? Is this what is meant by International Strategic Human Resource Management?

1. On what element/s of learning theory could an 'international learning organisation' model based?

4. Is 'asking' what can an organisation like an MNE learn a useful way of progressing the field?

5. What is the role of human resource management in encouraging and facilitating the transfer of learning within a multinational enterprise.

Some Preliminary Research Findings: Learning within EDS

In order to explore some of the questions raised by an analysis of the organisational learning literature, case studies are being undertaken in MNEs engaged in the development of learning capacity. Four in-depth analyses are planned and to date one has been completed in Electronic Data Systems (EDS).

EDS was established in the USA in 1962. Today, the company is a world leader in information technology services and employs more than 90,000 employees in 41 countries. It is a highly profitable company and reported record revenues of $2 billion for 1995. In 1992, EDS began an extensive strategic planning exercise. This was undertaken by the Director of EDS Corporate Strategy, Greig Trosper, in collaboration with Gary Hamel of the London Business School. Employees, customers and external advisers were asked to discuss business opportunities in the information industry and to consider the competencies required to remain competitive within that industry. EDS was changing from 'being a provider of technology services to being a provider of services based on technology (vice chairman, Gary Fernandez, Kirkpatrick, 1996) and in so doing had to try and revamp the reputation acquired during the 1960s and 1970s of 'being overly aggressive, cut-throat, brutal Green Berets' Merrill Lynch analyst, McClellan (Kirkpatrick, 1996)..

Analysis of these issues identified learning as a key competency: learning as individuals, teams and organizations. Alongside the strategic planning exercise, attention was also given to leadership development. A course was provided by the Center for Organizational Learning at MIT for a small group of the EDS executive team. This course was taught by Peter Senge and Fred Kofman and was followed by a number of awareness raising sessions at EDS. From the combination of the strategic planning and the leadership development exercises, 'organizational learning and leadership were deemed to be two capabilities critical to EDS's future success' (Moorefield and Losada, 1995:9). From this, a plan was developed to transform leadership at EDS.

There is an acceptance within EDS that there are different types of learning. A distinction has been made between incremental learning, just adding to what you already know, and transformational learning. While incremental learning is inherent in quality manuals, all documented processes etc., the focus in EDS has been on transformational learning: developing the capacity of individuals to learn for themselves, on building 'learning-to-learn skills', on development processes for leadership, teams etc.

Learning between HQ and Subsidiaries

Although there is no formal architecture in place to support learning, i.e. they haven't mapped out a precise structure, there are lots of structures in place to support and encourage learning. In part, these are derived from the four programmes that were initiated from the strategic review process. For example, Action Learning Teams are brought together to redefine and create corporate policies and methods such as the HR practices. The group is an international team which draws on people in the subsidiaries and they have assignments to do within the subsidiaries as part of the process.

Learning between the Subsidiaries

1. Corporate Learning Programmes

These bring together executives and developing executives, leaders, and teams for the purposes of development and sharing and they are targeting key areas through these programmes e.g.

• Leading Learning Communities programme
• Transformation Agents programme (for executives)
• Accounts Leaders programmes
• Strategic Value Selling Programme (for sales and marketing people)

2. Web sites

These have been set up around knowledge areas in order to share information around. They use the internet and also have intranets. They have built these around centres of knowledge and expertise in all their industries, e.g. healthcare, manufacturing.

3. Internal feedback system

They have an internal customer satisfaction index and HQ asks the subsidiaries to report on this.

4. Web Site devoted to learning to learn skills

This is a knowledge net, so individuals can share learning through this medium.

The organisational learning efforts have spread from HQ to the operational units 'to a great extent' and . ' Now HQ is regrouping to redefine its role in the process, the subsidiaries are actively promoting the LO approach and HQ is trying to find its own role'. A conscious decision was made not to measure OL, but the results of the learning are measured by mechanisms such as whether customers choose EDS rather than a competitor and the 'balanced scorecard is used and focuses on customers, people and productivity'

The Role of HR Practices in Generating Learning Capacity

The structure of the HR function and the operation of HR practices both foster learning within EDS. A great deal of contact takes place between corporate headquarters and the subsidiaries, and between the subsidiaries: the communication is ongoing and utilises every type of medium including email, video and tele conferencing. A reporting function is part of this contact and the subsidiaries provide regular information to corporate headquarters. However, this contact extends well beyond a directive/reporting function: the aim is to share ideas and experiences of HR practices. For example, all countries will have a say in a major initiative such as a ranking exercise; all will participate in conferences such as expatriate administration which are held every quarter. If a subsidiary develops a new approach to HR practice, there are mechanisms to encourage the sharing and dissemination of this information.

A wide range of structures exist to promote learning and development and the company has invested millions of dollars in training and development and there are hundreds of different types of training programme. As part of the curriculum element of training and development, a career library has been set up on the EDS Web site and this is accessible by every employee. This identifies a variety of development activities for individuals including job changes, training courses, self-development and learning-in-place, and is seen as a repository of learning options. Although the career library was developed by the policy setting group at corporate headquarters, any HR manager can add to the library.

The Operation of HR Practices within EDS

One of the Action Learning Teams reviewed the HR system and developed a new framework. Processes and measures to identify and encourage learning are built into each element of the framework. For example, at the selection stage behaviourally oriented questions are asked in order to elicit the ways in which individuals approach and manage learning and change situations. Individuals are expected to improve and to increase their contribution to EDS and this is facilitated through the numerous development opportunities available within the organisation and assessed through the performance review system. The performance review form includes sections on 'organisational learning' and 'dealing with complexity' which enable individuals to identify the ways in which they have tackled learning situations.

Individuals are expected to learn on a continual basis and to learn from the experience of new situations such as expatriation. Thus, senior managers will have worked all over the world and international assignments are received as a key to development because they foster different insights and views of the world; diversity is therefore valued. The leadership profile features competencies such as 'visionary', 'emotional bonding' and 'manage complexity'. Coaching and mentoring are also major elements of leadership: individuals are expected to contribute to the learning environment.

Recognition is also given to the 'unlearning' and 'relearning' that is part of both individual and organisational learning. Relearning is identified as part of the transition process in the acclimation of employees to new job situations and as part of the management of change, complexity and innovation. Each employee is familiarised with the concept of 'mental models' (Senge, 1990).

This article has considered the problem of how MNEs co-ordinate their diverse activities and the various units or subsidiaries in which these activities take place. The organizational learning and strategic management literatures were taken as the starting point for understanding some of the theoretical issues on learning while the contextual issues were explored through the literatures which have developed in the area of international management and strategic human resource management. The literature analysis raised a variety of questions about learning in the multinational enterprise and the case study conducted in EDS in Ireland begins to shed light on some of the questions posed in this paper. For example, this particular company is focusing very much on a 'learning-to-learn' philosophy, with an emphasis on changing the ways in which employees view the world, as their strategy for the encouragement and facilitation of learning within their organisation. In addition, this company has embedded learning into its human resource practices and the HR system is critical to the supporting infrastructure of organisational learning. This initial research will be followed by studies in other multinationals in an attempt to explore the complex web of activities which takes place in the multinational enterprise.

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