An Examination of the Knowledge Management Process in the Emerging Chinese Hotel Industry

Since the Open-Door Reforms of the Chinese market to foreign investment in the late 1970s, numerous Western firms have sought to enter and establish their presence as a market leader in their particular industry. Establishing a presence and generating growth in the emergent Chinese market has proven challenging for Western firms; operating effectively and efficiently in this ‘new’ market environment (characterised by significant psychographic, cultural, legal and political differences) has highlighted a number of significant research opportunities. One such opportunity has manifest in a call to develop a finer-grained understanding of the knowledge management processes required by Western hotel chains attempting to enter and establish their operations in China. This chapter presents an exploratory analysis of the knowledge management issues and processes experienced by the Marriott Group during its entry and growth in the Chinese hospitality industry. This analysis is based on a series of semi-structured interviews with senior managers present during Marriott’s entry into China. The chapter concludes with a discussion of the managerial and theoretical implications emanating therefrom.


Introduction
The strategic management of organisational knowledge requires a comprehensive understanding of the process by which the various forms of tacit and explicit knowledge are generated, coded, stocked and leveraged for competitive gain (see Refs. [1,2]). The process of extracting value from the careful management of knowledge-based assets has been investigated in multiple disciplines, industries and markets (see Ref. [3]); however, according to Refs. [2,4], investigation into what constitutes appropriate knowledge management processes within emerging/developing markets remains limited. Many Western-based organisations seeking to enter emerging economies (such as those in South East Asia) have achieved mixed success, which in part has been attributed to the inherent limitations of transferring extant Western-based knowledge management processes to new international contexts (see Refs. [5][6][7]). Such attempts can be seen in the highly competitive Chinese hotel sector, which has become an important investment platform for leading multinational hotel groups including, but not limited to Marriott International, Accor, Inter-continental and Shangri-La (see Ref. [8]). Despite the heavy investment of these Western hotel groups, their ability to compete effectively in China remains an issue of ongoing concern (see Refs. [8][9][10]). As a result, Refs. [11][12][13][14] have called for a finer-grained understanding of what constitutes 'effective knowledge management' by Western firms in the highly competitive Chinese hotel sector. Focussing on one major Western hotel chain operating in China (i.e. Marriott International), this chapter presents an empirical exploration into the issues inherent to knowledge management processes in the Chinese hospitality industry. In addition, the potential implications identified during this exploration have been used to prepare and present an agenda for future research into knowledge management practices within the Chinese hospitality industry.

Knowledge management processes and the Chinese hotel industry
The knowledge management concept has been extolled across multiple disciplines as a control process whereby organisational knowledge is generated, retained and leveraged to enhance competitiveness and organisational growth (see Refs. [11,15]). Organisational efforts to strategically manage their store of knowledge continue to intensify as the business environment becomes progressively competitive, and new, dynamic markets continue to emerge (see Refs. [14,16]). The rapid expansion speed of new markets has allowed little time for Western organisations investing in markets such as China to reflect on the applicability of their existing managerial strategies to this emerging-market context (see Ref. [4]). Indeed, current theories related to knowledge management have predominantly been developed in Western markets where business dealings are traditionally transactional based; to date, little consideration has been given to the generalisability of these theories to Western organisations operating in emerging Asian economies where relational based business dealings are the norm (see Refs. [2,4,17,18]). In order to improve our understanding of what constitutes effective knowledge management for Western organisations seeking to enter and compete in the Chinese hotel sector, we felt it appropriate to adopt a knowledge management process model to guide our data gathering and analysis.
For this study, the Knowledge Management Cycle (KMC) model has been chosen; the KMC consists of seven phases: identify and/or create; store; share; use; learn; improve; and create 'organisational knowledge' (see Ref. [1]). If a request for new knowledge is triggered within an organisation, the first stage is to identify if existing codified and encapsulated knowledge assets and subjectively held tacit knowledge exist, or if new knowledge assets need to be created. The KMC model, therefore, suggests that managing the knowledge process is primarily reliant on (a) an organisation's executives' definition of what constitutes relevant 'knowledge' and 'knowledge gaps' in their organisation and (b) their ability to implement efficient and systematic methods to gather and/or communicate new knowledge to employees (see Refs. [18,19]). Organisational specific rules, cultures and evaluative criteria are able to be used as a lens for interpreting, analysing and applying existing or newly created knowledge to decision making (see Ref. [20]). If deemed valuable, any new knowledge generated is codified and systematically stored in organisational memory from which it can be drawn, shared and protected (see Ref. [1]). Fulfilment of these tasks can embed a learning culture within the organisation (see Ref. [21]); learning cultures enable employees to generate their own internal store of knowledge and leverage their own understanding to make innovative decisions and contribute to their organisation's dynamic capabilities (see Refs. [19,22]).
Research has determined that the existence of flexible and dynamic organisational networks, or communities of practice, provide the most effective means for encouraging and facilitating the dissemination of explicit and tacit organisational knowledge (see Refs. [14,18,20]). Once shared, the value from knowledge assets can be extracted and applied (see Ref. [20]). However, this stage can prove difficult as the ability of employees to extract value from the complex interplay of codified, encapsulated and tacit knowledge may also be influenced by additional factors, such as national culture and the institutional context (see Refs. [2,14,23]). The ability to simultaneously engage in continual organisational learning and develop a fluid store of country-specific knowledge (that supports distinctive culture-specific business practices) would seem, therefore, to be critical to Western organisational success in the Chinese market context. The success of knowledge management processes is therefore predicated on an organisation's Human Resource Management (HRM) practices and its ability to recruit, develop and motivate employees (see Refs. [2,17]). This in itself can prove problematic as studies into the HRM practices of Western firms in China have identified the inability to find talented employees (see Ref. [23]), and the lack of employee initiative and acceptance of responsibility (see Ref. [17]) to be major inhibitors for organisational performance. An additional complication is employee leakage from the industry due to open competition for skilled/Western-trained labour between economic sectors in emerging economic settings (see Ref. [20]). Given these complicating factors, this chapter seeks to contribute to the knowledge management literature by exploring one Western organisation's (i.e. Marriott International's) successful entry into the Chinese hotel industry and provide a discussion of the managerial and theoretical implications emanating from the organisation's experience in assessing and developing its knowledge management practices in this context.

Sample and methodology
In order to explore the knowledge management process in the Chinese hotel industry context, the case study method was adopted. This method allowed the researchers to explore an existing theoretical concept (knowledge management) in a new context (a Western organisation operating in the Chinese hospitality industry) and to refine and elucidate previously unidentified issues. To achieve this, the authors conducted a series of semi-structured interviews with senior managers in the Marriott Group's Chinese operation. The choice of Marriott was driven by three factors; the first being that it presents a revelatory case, whereby senior management can deliberate those aspects of knowledge management critical to the strategic management of its business. Secondly, Marriott represents a renowned global organisation seeking to leverage its brand into the expanding Chinese market. Finally, the researchers were able to secure access to the organisation's senior management team through a key informant, who is recognised in the industry as one of the longest serving General Managers in China. In total, twelve Marriott senior managers were recruited to provide primary data relating to the organisation's knowledge management processes in the Chinese hospitality industry. Of the twelve senior managers: three were General Managers, three were Marketing Directors (that had been working with Marriott since its entry into China in the mid-1990s), three were Human Resource Directors and three were Sales Directors.
A longitudinal approach to primary data collection was adopted whereby each respondent was interviewed four times, over a period of 4 years (i.e. 2009-2012). Given the complexity of the phenomenon, this approach was adopted for two reasons: firstly, it gave respondents the time needed to reflect on knowledge management issues idiosyncratic to the Chinese hospitality industry. Secondly, it gave the authors' time to probe evidence gathered from other sources and focus interviews on factors identified as specific to knowledge management processes in the Chinese context. The semi-structured interview questions were formulated to cover the necessary knowledge management issues, yet framed in an open-ended manner. This design provided respondents with ample scope for introspection, and the freedom to pursue and openly report on matters they considered important. In total, 46 semi-structured interviews were conducted over the 4 years, each with a duration of 60-120 min. Secondary data were sourced from historical publications pertaining to China's economic and hospitality industry development, annual reports of the Marriott group, local and international newspaper archives, and Chinese government agency publications. This collection of data from various sources provided triangulation and subsequently assisted in the aggregation, analysis, and validation of information.
A rigorous content analysis process using the five-stage protocol forwarded by Refs. [24][25][26] was applied to each interview transcript and all secondary data. The content analysis and the verification of the conclusions drawn were facilitated by the use of the NVIVO software package. During Stage One of the content analysis, the aims and objectives of the research were identified. During Stage Two, the interview transcripts and secondary data were converted into MS Word ® format and entered into a codified NVIVO database. Stage Three comprised an interrogation of the coded data to detect any significant themes emerging with regard to knowledge management issues in Marriott's strategic management of operations in China. These emergent trends and themes provided the basis for the second round of data coding categories. Stage Four of the content analysis involved a refinement of the second-round coding results, while Stage Five involved finalisation of the research findings. These findings are discussed in the following sections, along with implications for future research in the crosscultural knowledge management field.

Marriott's knowledge management process in China's hotel industry
The second stage coding of the annual report data indicated that Marriott's knowledge management (as developed for the Chinese hotel industry) followed a five-stage process: (1) assessing the organisation's cross-cultural knowledge-base, (2) accessing domestic labour-market knowledge, (3) developing domestic labour-market/domestic employee knowledge, (4) developing domestic supply-chain knowledge, and (5) managing domestic employee satisfaction and commitment. Each of these five stages will be discussed in the following sections.

Stage 1: assessing the organisation's cross-cultural knowledge-base
During its entry stage into the Chinese hotel industry (i.e. the early 1990s), Marriott's senior management identified that a cross-cultural knowledge deficiency gap existed with regards to its Chinese operations. To address this deficiency and to simultaneously improve its image in the Chinese labour market, Marriott's senior management implemented strategies to (1) increase its capacity to understand the Chinese culture through its labour market and (2) establish its reputation as an 'employer of choice' in the Chinese hotel industry. Initially, Marriott implemented a two-tier brand reputation building and recruitment strategy; at the first-tier level, Marriott used their pool of existing domestic managers to work closely with (and gather data from) domestic hotel owners, recruitment agents and government officials regarding operational matters. At the second-tier level, Marriott used experienced expatriate managers to focus on working with the higher level national and local governments on its brand and reputation: We always have a pool of well-trained and experienced managers ready to be posted anywhere in the world. The combination of this pool of foreign managers supported by our selected domestic managers is one of Marriott's strengths (Human Resources Director 3, Personal interview, 2010).

… its two-tier brand [reputation] building strategy, Marriott able to depend on management capability to effectively negotiate between domestic hotel owners, governments and Marriott's head office in the United States (General Manager 1, Personal Interview, 2011).
As part of this two-tier recruitment strategy, Marriott sourced skilled and qualified domestic workers to fill essential positions across its hotels and overcome its deficiency in terms of local cultural knowledge. The central part of this strategy was leveraging the personal networks of experienced domestic managers and using them to identify and recruit qualified and appropriately skilled workers. These personal networks comprised past work colleagues, family members and relatives, friends and government officials. Marriott's senior management also drew upon the negotiation expertise and comprehensive understanding of the domestic employment context possessed by their experienced domestic managers. These insights provided key inputs into public relations activities that were designed to promote Marriott's reputation and assist in the negotiation of employment contracts:

We have a better understanding of domestic employment regulations and what governments are trying to achieve in the labour market…in a much better position to negotiate with relevant authorities regarding employment terms and conditions (Human Director 1, Personal Interview, 2010).
Marriott realised that if it were to continually improve its reputation as an employer of choice in the Chinese labour market (and, therefore, be able to attract skilled and qualified domestic workers), it would need to continue to improve its understanding of the Chinese market and establish a competitive advantage distinct from its international competitors. To achieve this aim, the Marriott website was used as a channel to promote the company to the domestic Chinese labour market and increase its brand reputation in the domestic market: In the last three years [2002][2003][2004][2005], developed seventeen international sites…to learn about different cultures, and how to tailor sites for specific markets. We're interested in understanding Chinese consumer habits and upcoming market trends (Director of User Experience, in Ref. [27]).

Stage 2: accessing domestic labour-market knowledge
During the early 1990s, the Chinese hotel industry was considered an attractive industry to work in by the domestic workforce. However, with the influx of international hotels and consistent double-digit gross domestic product growth, China developed into a highly competitive labour market for hospitality workers. As the skilled and educated workers sought more secure and lucrative careers with government departments and multinational organisations in other industries, the hotel industry was faced with ongoing skill-shortages. Marriott recognised that in order to recruit enough skilled workers, they needed to improve their domestic management expertise and knowledge (to compete with other industries for domestic talent). In order to achieve this outcome, Marriott implemented a modified version of one of their successful recruitment strategies employed in the United States during the 1960s; Marriott actively recruited veteran Chinese hotel operators from surrounding countries, such as Hong Kong and Singapore, to improve their domestic management expertise and knowledge. According to Marriott's senior management, the modified recruitment strategy enabled Marriott to effectively source many of its skilled and qualified workers from across various provinces and cities: [Domestic] managers are all Marriott people and the first job they do is to find domestic talent, as they know the domestic market (General Manager 1, Personal Interview, 2012). In order to build on its reputation as an employer of choice, Marriott's senior management also implemented a series of strategies to promote and retain its existing experienced domestic Chinese managers. One such strategy was to provide experienced domestic managers with a distinctive career succession plan and promoting them to the position of general manager in newly opened hotels in second and third-tier cities. This succession strategy was designed to leverage their experienced domestic managers' expertise, knowledge and networks to serve the emerging domestic segments in the second and third-tier cities and provide a retention incentive:

Our US managers not very effective in communicating with our Chinese key stakeholders [suppliers, hotel owners, and domestic government officials], needed domestic managers who speak Chinese and
understand local culture to work closely with stakeholders to achieve desired outcomes for all parties (Human Resources Director 1, Personal Interview, 2009).
Marriott uses the second-tier cities as part of their domestic executive promotion strategy…it gives Marriott the domestic representation it needs in these cities, it also acts as an incentive to retain managers and to increase staff loyalty (Key Informant 1, Personal Interview, 2012).

Stage 3: developing domestic labour-market/domestic employee knowledge
During the early stages of its operation in China, Marriott's senior management found that the level of trust and productivity between the domestic employees and management was substantially lower in China than in the US. From their experience, Marriott recognised that if they were to successfully build trust and productive relationships with their domestic employees, they needed to gain their loyalty through organisational culture-based training and development initiatives. Marriott leveraged their experienced managers to work closely with employees (whom they term 'associates') to achieve required organisational standards and at the same time, to instil its organisational culture of the 'Marriott's Way':

…our domestic associates needed to be shown how to perform tasks and to be reminded how to work within the boundaries of procedures and processes (Human Resources Director 2, Personal Interview, 2010).
According to Marriott, the 'Marriott's Way' enabled the company to build strong relationships with its employees that encouraged them to share tacit knowledge across the company's structure: Our competitive advantage is that we care about our people, our associates…the "Marriott's Way" is the core capability to our success for over eighty years, based on the philosophy of if you treat your associates well, in turn they will treat your customers well (General Manager 2, Personal Interview, 2011).

Overall, good experienced managers are still looked upon as the person who set the brand standards in a country where human capital is still at a development stage and the "Marriott's Way" is still very effective in associates' training and development. Hopefully, we can keep them for as long as possible before our competitors poach them away (General Manager 1, Personal Interview, 2012).
Marriott attempted to reinforce a strong bond with its domestic Chinese employees by conducting a series of ongoing targeted training and development programs throughout their careers. For example, an average 78 h of on-the-job training (plus another 34 h of professional development) is provided to each associate every year; for more senior employees, Marriott provided a specialised career and training paths to ensure they were prepared for future management positions:

…in the 1990s and even in the early 2000s investing in your employees and treating them well were not common management practices in China…Marriott is perceived as a very good employer in the Chinese market (Human Resources Director 1, Personal Interview, 2012).
Marriott is very good with in-house training programs….we spending around US$800.00 per manager per year in training expense back in the early 2000s…we value our skilled associates and in China where hospitality skills are very hard to find, we use our in-house training programs to increase our available pool of skilled human resources (General Manager 1, Personal Interview, 2011).

Stage 4: developing domestic supply-chain knowledge
To continually and systematically promote Marriott as an employer of choice within the labour market, its senior management actively sought to engage with supply-chain members of the hospitality industry. For example, Marriott entered into arrangements with domestic hospitality training schools across China (as well as selectively inviting suitable candidates to participate in their internship program). Marriott's senior management state that their talent building campaigns focused on both the internal and external labour markets have provided them with a skilled labour force providing consistent delivery of its brand promises:

We [Marriott] work closely with domestic hospitality training schools in China…we get good students from some of these schools…our in-house training programs help students to get up to our standards pretty quickly once they have started with us (Human Resources Director 3, Personal Interview, 2011).
Marriott also promoted the 'Marriott's Way' organisational culture (on their "Destination Marriott" career website) to local supply companies to reinforce the quality standards required by the company. The 'Destination Marriott' career website was designed to assist potential employees to apply for the various careers available at Marriott worldwide and to highlight the various benefits and rewards enjoyed by Marriott's associates. For the more senior positions within Marriott, senior management continued to leverage their domestic managers' networks to seek out and appoint experienced managers from other industry sectors, as well as from direct competitors.
A fluent Mandarin speaking expatriate manager is still a rare resource in today's market, but we commonly transfer them across our hotels internally….one of our immediate issues is finding enough English speaking associates…English language skills are still considered to be low in China and that causes us concern with regard to our service quality level (Human Resources Director 1, Personal Interview, 2011).

The country [China] and its cities can build the world's most outstanding or tallest buildings…but the skills level is still very much behind most of the developed markets (General Manager 5, Personal Interview, 2011).
As part of Marriott's strategy in China, its senior management continued to actively seek high growth opportunities in second and third-tier cities outside the major urban areas. These cities are located outside key gateway cities such as Shanghai and Beijing in different provinces across China. The local governments, supply chain members and customers were the three major market segments identified in these second and third-tier cities. Marriott's senior management recognised that if they were to compete effectively in these emerging market segments, they needed to communicate key messages to these segments which focussed on how the company could better serve and satisfy their needs. To achieve this, Marriott implemented a modified recruitment strategy that they had employed when first expanding into China (i.e. by appointing experienced senior domestic managers to work closely with these three major emerging market segments in second and third-tier cities): Our growth has been fast in emerging markets like China, but we have to do things differently to succeed. Manpower is an issue. Finding experienced associates is difficult….Awareness is an issue, so public relations and local marketing efforts are important to establish the brand (Senior Vice President of International Marketing, in Ref. [28]).
…we get relocated to second-tier cities to manage our major clients [domestic governments and key stakeholders] and to train our management team to ensure our domestic customers get the services they want (General Manager 4, Personal Interview, 2009).

Stage 5: managing domestic employee satisfaction and commitment
As skill shortages continued to be one of the major challenges faced by the hotel industry in China, Marriott implemented a number of strategies designed to build staff loyalty with both its internal and external labour markets. Marriott's senior management implemented internal employment strategies which were designed to promote and retain experienced domestic managers. Further, as part of their internal staff loyalty building campaigns in China, a variety of in-house multi-disciplinary training and development programs were implemented which were designed to up skill all associates. …with good support and training from Marriott's international office, we able to achieve good results from some of the newly implemented processes and systems in areas such as hotel operation standards, overall food and beverage offerings and management and general customer ser-vice…but up-skilling our associates took longer…a continuous process (General Manager 1, Personal Interview, 2010).
As previously discussed, according to Marriott's senior management, the use of action and policies designed to communicate and instil the ethos of "Marriott's Way" enabled the company to build productive relationships with its associates as well as to motivate them to improve their performance: …if you see some strangers talking to your top managers, you can be certain that your top managers are being poached by your competitors (General Manager 4, Personal Interview, 2011).
It is becoming more difficult to employ and retain younger, quality staff because there are so many opportunities now open to young people in China (Director of User Experience, in Ref. [28]).
To maintain its market leadership position in China, Marriott continued to strategically build and market their brand as the employer of choice in the domestic market. Being the employer of choice enabled Marriott to select and recruit a skilled workforce to maintain and deliver its quality service level and to combat protected domestic competitors: …the one child policy has contributed to the current skill-shortage situation in China. However, hotels are also competing with the domestic government departments for skilled employees, as the domestic governments are now providing benefits such as welfare, less hours and higher salaries to attract talents (Human Resources Director 3, Personal Interview, 2009

Concluding remarks
Given the results of this qualitative analysis, we propose the following five-stage knowledge management process model (see Table 1) for the emerging Chinese hotel industry. This process model illustrates Marriott's experience in assessing its knowledge management deficiencies in its Chinese operations, and the human resource/strategic management practices used to address them.
In terms of assessing the organisation's cross-cultural knowledge base, Marriott utilised its human resource inventory systems not only to audit the store of human resources it controlled in its Chinese hotel operations but also to gauge the extent to which the organisation had the capacity to access the tacit knowledge it possessed. Strategically, therefore, the initial stage of the knowledge management process required not only an understanding of what information/ knowledge deficiencies the organisation possessed, but also what data-gathering deficiencies it had in this regard. In terms of accessing domestic labour-market knowledge, Marriott recognised the importance of its recruitment and selection processes; in particular, it recognised that it had to adapt its recruitment and selection processes (that had been effective in the Western context) to account for the idiosyncrasies of the Chinese labour market. Strategically, Marriott recognised the need to establish itself as an "employer of choice" within the Chinese

Stage One
Assessing the organisation's cross-cultural knowledge-base hotel industry to attract, motivate and retain the highest quality employees. In terms of developing its domestic labour-market/domestic employee knowledge, Marriott sought to develop strong employee-employer relationships with its domestic Chinese employees via its training and development programs. In addition to the organisation's standard programs (which focused on improving operational performance), the company also sought to improve the levels of trust in the organisation through training and development programs focused on indoctrination into the organisation's culture. In terms of developing domestic supply-chain knowledge, Marriott ensured that it maintained dynamic and mutually beneficial relationships with domestic suppliers, educational institutions and government departments. Lastly, Marriott found that one of the most effective ways of protecting the store of knowledge they had generated in the Chinese hotel industry was to take measures to ensure that their domestic employees were satisfied with their employment relationship and reported high levels of organisational commitment. Indeed, in the face of intense competition from within China's expanding hotel industry (and from employers in other industry sectors), the raising of the 'exit barriers' for their domestic employees represented a strategic priority.
Given these findings and the potential implications for Western organisations' knowledge management practices within the Chinese hospitality industry, we suggest the following avenues for future cross-cultural knowledge management research within the Chinese context (and emerging Asian economies generally): firstly, we believe that there needs to be further in-depth analysis of the link between knowledge management practices and 'employer-of-choice' and 'industry-of-choice' concepts within the Chinese hospitality/ emerging market context. A finer-grained understanding of knowledge management practices within China may enable Western organisations to become employers-of-choice and foster a strong organisational culture. For example, at an organisational level such investigation could inform the design of superior human resource and employer-marketing strategies that communicate the expected international standards of skill and behaviour to both existing and potential domestic employees. At an industry level, this research suggests the need for industry-wide marketing efforts formulated to promote hospitality as an industry of choice providing valuable long-term career options. The absence of such industry-based marketing efforts may result in the hospitality industry being seen as nothing more than a training ground for any alternate industry better able to market their career opportunities. It is anticipated that outputs from this research agenda would not only benefit both domestic operators looking to improve their competitive stance within this highly dynamic market and international hospitality operators engaged in (or considering) investment in the Chinese market, but importantly, it would contribute valuable insights and extend the current store of knowledge management theory.