Tapping tacit local knowledge in emerging markets – the Toyota way

This paper presents insights from two case studies of Toyota Motor Corporation and its way of global knowledge creation. In 2004, Toyota announced an initiative to increase the self–reliance of overseas manufacturing facilities, especially in emerging markets. In 2005, Toyota Peugeot Citroën Automobile, an international joint venture between Toyota and Peugeot in Kolín, Czech Republic started the production of small compact vehicles in order to react to the changing European customer market. We will show how Toyota's knowledge creation has changed from merely transferring knowledge from Japan to subsidiaries and affiliations around the globe to a focus of creating knowledge and tapping tacit local knowledge in foreign markets by local staff. In fact, Toyota's new strategy of ‘learn local, act global’ for international business development and its knowledge–based approach to marketing proved successful for tapping rich local knowledge bases, thus ensuring its competitive edge and global lead in the automotive industry.