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6 - Local embeddedness of firms and strategies for dealing with uncertainty in global projects

Published online by Cambridge University Press:  05 June 2012

By
Ryan J. Orr  and
Raymond E. Levitt
Edited by
W. Richard Scott ,
Raymond E. Levitt  and
Ryan J. Orr
Ryan J. Orr
Affiliation:
Stanford University, California
Raymond E. Levitt
Affiliation:
Stanford University, California
W. Richard Scott
Affiliation:
Stanford University, California
Raymond E. Levitt
Affiliation:
Stanford University, California
Ryan J. Orr
Affiliation:
Stanford University, California
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Summary

What is called foreknowledge cannot be elicited from spirits, nor from Gods, not by analogy with past events, nor from calculations. It must be obtained from men who know the situation.

– Sun Tzu (500 BCE)

Introduction

A CEO went to Okinawa for the first time. He was on vacation – to see the beaches, to experience the local culture, and to play golf. After the trip, a researcher asked him a question: “How much did the success of your trip depend on your knowledge of the local Japanese context: the language, history, culture, economics and politics?” His answer was: “Gee. Not very much. I had to count local currency, book a hotel room and I even learned a few words of Japanese and it was a good holiday.”

A second CEO also went to Okinawa, also for the first time, but with a different objective. He went to buy land, obtain permits, and develop a beachfront hotel and resort. Two years into the project, he was asked the same question and he offered a far more elaborate reply:

It was impossible to know all the risks going in. And even the risks that we thought we knew, it didn't mean we knew what to do about them. Our success owes more to our [adaptability] than it does to our ability to predict the risks. And we adapted by making friends with locals and by tapping local knowledge for each key decision … [Local knowledge includes] all manner of facts and trends about the local theatre – about real estate activity, capital markets, city bylaws, building codes, contract protocol, the gray area between the written law and what is enforced. […]

Type
Chapter
Information
Global Projects
Institutional and Political Challenges
 , pp. 183 - 246
Publisher: Cambridge University Press
Print publication year: 2011

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