Knowledge transfer, controls, and performance of MNE subsidiaries in the Kingdom of Saudi Arabia

Abstract

Purpose

The purpose of this study is to examine the influence of the structural, relational, and cognitive dimensions of knowledge‐sharing in subsidiaries of multinational enterprises (MNEs) located within the Kingdom of Saudi Arabia (KSA), and the impact of knowledge flows on the performance of such subsidiaries.

Design/methodology/approach

A cross‐sectional survey research design, involving the use of a questionnaire to acquire the primary data, is adopted. The analysis is based on 147 completed questionnaires. Descriptive statistics and multivariate regression analysis are used in the analysis of the data.

Findings

Formal control mechanisms are widely used as opposed to informal channels of control. Knowledge flows are associated with personalised or bureaucratic controls. Both mechanisms are negatively associated with performance, whilst output control and informal coordination are positively associated. Increased local presence and subsidiary R&D is positively associated with performance.

Research limitations/implications

The methodology adopted for this study can be extended for similar studies in the Middle East or in GCC countries. Policy makers in host countries in which MNE subsidiaries operate may find the results an important leverage for negotiating with MNEs for R&D to be conducted in their countries. Possible spill‐overs and diffusion effects of such R&D could then also benefit domestic firms.

Originality/value

This is one of few studies of this nature conducted in the Middle East, and the only one in the context of KSA, which has explicitly investigated the connection between knowledge flows, controls, and performance.

Citation

Alharbi, J. and Singh, S. (2013), "Knowledge transfer, controls, and performance of MNE subsidiaries in the Kingdom of Saudi Arabia", Foresight, Vol. 15 No. 4, pp. 294-306. https://doi.org/10.1108/FS-04-2012-0021