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Based on the knowledge-based theories of the MNC, this research aims to develop and test a holistic model to analyse the relationship between the strategic knowledge management (SKM) processes undertaken by subsidiaries and MNC performance. Additionally, it focuses on determining the impact that the relational context can have on knowledge creation and transfer inside the internal network of an MNC.

The research hypotheses are tested by partial least squares (PLS) with data from a sample of Spanish subsidiaries of foreign multinational firms belonging to high-technology and knowledge-intensive sectors.

The results confirm that: the implementation of a SKM by a subsidiary positively impacts on knowledge creation; the knowledge created by a subsidiary positively influences knowledge transfer, increasing the knowledge existing in the MNC; the knowledge transfer across all MNC units has a positive impact on MNC performance; the subsidiary’s relational context arises as a mediating variable between the knowledge created by a subsidiary and its transfer to the rest of the MNC.

The research proposes a holistic model that contemplates the joint interaction of the variables knowledge creation, knowledge transfer and performance. In addition, the proposed model contemplates the variable SMK of the subsidiary as the beginning of the knowledge creation-knowledge transfer-performance process. Finally, the mediating role of the relational context in the relationship between knowledge creation and transfer is analysed.

This study aims to examine the interaction of formal and informal cross-border knowledge-sharing practices of four large multinational corporations (MNCs) in aerospace, software, IT services and telecommunications industries. The goal was to determine the manner in which coordination and control mechanisms facilitated knowledge transfer.

Case studies comprised secondary data and semi-structured interviews with corporate headquarters and subsidiary managers in large MNCs conducted in the USA, Canada, Mexico, China, India and Eastern Europe.

The primary finding of this study is that knowledge transfer mechanisms arise as a result of both formal and informal structures of the MNC. Formal structures which create either mutual dependencies or occasions for knowledge exchange facilitate transfer. Formal structure which inhibits knowledge transfer can be overcome by knowledge brokers and evaluation metrics.

These findings suggest that knowledge transfer is more informal than formal, but that MNC headquarters does play a role, intended or not, through shaping the interdependencies among geographically distributed units. Managers should be mindful of both the manner in which tasks and the organization are structured, as these have an indirect impact on the development of knowledge channels.

This paper investigates the role of organizational structure and its effect, both intended and unintended, on the transfer of knowledge-based practices. While knowledge transfer has been heavily researched, this study examines the phenomenon at a finer-grained level of analysis.

A multinational company (MNC) looking to locate within a cluster is mainly interested in gaining access to scarce and highly valuable tacit knowledge. The transfer of such resources first requires sharing a certain degree of architectural and specific knowledge. This paper aims to examine the transfer of systemic technological expertise (specific tacit knowledge) that is incorporated into organisational practices (architectural knowledge). To quantify the level of knowledge transfer involved, the present study defines the architectural distance between the MNC and the cluster.

The mathematical expression of acquisition performance is inferred from a conceptual study that formulates hypotheses regarding the impact of these variables on knowledge transfer. The MNC chooses its location in such a way as to maximise this performance.

Applying a mathematical model to knowledge transfer between two of the MNC units helps to determine if the locally acquired knowledge could benefit other units of the MNC.

The present study defines the architectural distance between the MNC and the cluster. This architectural distance is defined by a vector composed of social, organisational, cultural, institutional, technological and geographic distances between the new acquisition and its network of local partners, on the one hand, and the MNC, on the other. Knowledge transfer also depends on the business players’ trust and motivation. Further research through a quantitative study would be useful to improve the links between the proposed mathematical model and the efficiency of an MNC’s location within a cluster.

The solution to the optimisation problem allows to put forward a simple decision criterion to assist a manager who has to face the problem of an optimal location choice.

First, this study contributes to a better understanding of how knowledge transfer effects may interact with cluster effects, while explaining a subsidiary’s performance with regard to location. Second, it provides an interpretation of the concept of knowledge embeddedness by showing that the effective transfer of architectural and specific knowledge involves the prior sharing of a certain amount of this knowledge.

Cross-border flow of knowledge is fraught with many challenges. The complexity associated with the organization of multinational corporations (MNCs), and the information asymmetry in foreign locations poses particular challenges to knowledge flow. Yet, effective transfer of knowledge is critical for the survival and performance of MNCs. The purpose of this paper is to present a comprehensive framework to understand the difficulties in the smooth flow of knowledge in MNCs.

The study is conceptual in nature and is based on an extensive review of the extant literature.

This review of the literature suggests that knowledge flow in MNCs is affected by country-level, firm-level and individual-level factors. The authors discuss these in the backdrop of the MNC strategy and the knowledge transfer context. The authors present their theoretical model and discuss the implications for advancing research in this domain.

This is one of the first papers to present a comprehensive framework to understand knowledge flows in MNCs.

The role of knowledge, organizational learning and innovation as levers of competitive advantage is now a commonly acknowledged insight in research in international management, specifically in the emerging ‘knowledge-based view’. However, this view has not yet developed into a unifying framework and there are significant holes in the understanding of how knowledge may be turned into a source of competitive advantage for MNCs. In order to advance the knowledge-based view of the MNC – and particularly of the metanational company – we develop the notion of the MNC as a global knowledge system that links local knowledge structures and combines local knowledge elements that are complementary in order to achieve strategic advantage. These ideas are used to frame the changing environments, strategic intents and learning stances that characterize MNCs, and to derive a set of research challenges for MNC research.

Purpose – This research aims to understand inter-subsidiary innovation transfers from a subsidiary business network perspective. We examine transfer performance with particular interest in the influence of subsidiary business networks in innovation development stage. The moderating effect of knowledge inputs, that is, external and internal business partners, on transfer efficiency and effectiveness are hypothesized.

Methodology/approach – This study utilizes the data of 129 inter-subsidiary transfer projects from 19 multinational corporations. The empirical analysis specifically examines how and to what extent the development partnership – source of knowledge inputs – affects the efficiency and effectiveness of innovation transfer between subsidiaries.

Findings – The results indicate that the source of knowledge inputs influence transfer performance indirectly, but not directly. The impact is made through the dyadic relationship to the transfer performance. The findings complement the literature on innovation/knowledge transfer by incorporating innovation development into scrutiny and gauging transfer efficiency and effectiveness explicitly.

Value of paper – The empirical evidence highlights the significance of dyadic willingness to both transfer efficiency and effectiveness. Its influence to transfer performance exceeds that of dyadic similarity or previous collaboration experience. The result provides useful managerial implications to MNCs headquarters and subsidiaries. The lack of previous collaboration experience or technical similarity may pose the down side for innovation transfer between subsidiaries. But that should not put off the initiatives to conduct innovation transfers. Such problem could be effectively remedied by strong willingness between the dyad. The resources and support that subsidiaries receive could counteract the hurdle of dissimilarity and unfamiliarity.

Purpose – The purpose of this conceptual chapter is to discuss the limitations of the network organization in multinational corporations (MNCs). Since many IB/IM publications concentrate on the advantages of this organizational form, the focus of the chapter is on identifying the limitations that MNCs need to be aware of when they use network organizations.

Methodology – The analysis is based on a sound review of the literature that refers to the network organization in general and its application in MNCs.

Findings – The chapter shows that MNCs present a context that can aggravate the problems of a network organization. Four types of problems are identified: (1) knowledge transfer between MNCs’ subunits, (2) trust-building and corporate culture within MNCs, (3) subsidiary development and subsidiary managers’ stress, and (4) additional problems of a more general nature.

Practical implications – As a result of these problems, it is expected that the formal, hierarchical structure will remain an important organizational instrument for MNCs. The chapter specifies in which ways the formal organizational structure can help to reduce the limitations of the network organization. Finally, the chapter argues that, among the formal organizational models, the matrix structure should be considered more intensively in the future.

Originality/value of chapter – Since existing discussion of the network organization in MNCs tends to ignore the limitations and downsides of this organizational form, the chapter contributes to a more balanced understanding of the network organization.

Knowledge is a strategic resource for firms and it can enable them to achieve competitive advantage. Large companies engaged in internationalization pay particular attention to knowledge as a source of innovation. The purpose of this paper is to investigate current debates in the field: the first is about cumulative vs composite knowledge; the second concerns the degree of diversity and redundancy in knowledge-based dynamics; and the third debate is about incremental vs radical innovation.

The authors have used an inductive approach to perform a longitudinal case study of multinational corporation-semiconductor (MNC-SC). Total of 13 interviews were conducted over a four-year period. The MNC-SC case study has given the opportunity to analyse knowledge resources, knowledge, and innovation processes in a context of internationalization.

The findings indicate that in order to achieve technological innovation in a context of internationalization, the company builds knowledge in a cumulative fashion, which can create a path dependency problem. To ensure complementarity between cross-functional teams located long distances from one another, and maximize the utilization of resources, MNC-SC must establish common standards. To maximize returns from composite knowledge, in a context of internationalization, knowledge diversity is preferable over redundancy. However, true knowledge transfer, sharing, and learning are limited. Combinatorial and incremental innovation through internationalization is a process based on trial and error; it maximizes technological performance and enables the company to fulfil needs without diverging from the technological trajectory of the SC industry.

The internationalization process revealed limitations: limited understanding of the content of each knowledge module, competency traps, limited innovativeness, and therefore limited wealth creation.

This study aims to focus on dual embeddedness as an important channel through which foreign subsidiaries access and share valuable and idiosyncratic knowledge within the multinational corporation (MNC). The authors examine the dual embeddedness challenges of foreign subsidiaries based in the context of Iran as a transitional market.

The final sample includes 144 active foreign subsidiaries in Iran from across a broad range of industries. A structured questionnaire was distributed to firms and structural equation modeling was adopted to analyze the results.

The findings reveal how building external embeddedness in an environment with potentially poor access to valuable knowledge, and risk of knowledge leakage impacts the subsidiary’s ability to subsequently transfer this knowledge within the MNC. The authors identify the significance of absorptive capacity as a way for the subsidiary to access knowledge from and share knowledge with firms in the local market.

Departing from existing work on subsidiary embeddedness in developed markets, the authors reveal how competence creating subsidiaries manage dual embeddedness and knowledge transfer in transition economies that are low in knowledge stocks. The authors unpack how subsidiary absorptive capacity enables access to local knowledge in a transitional market and increases reverse knowledge transfer in the MNC. In doing so, the authors answer calls for work on the dynamic and complementary relationships that exists between subsidiary dual embeddedness, absorptive capacity and knowledge sourcing in less open markets. Focusing on Iran as a transitional economy, this study provides greater contextual nuance to the extant literature on subsidiary dual embeddedness.

A multinational corporation (MNC) looking to locate within a cluster is mainly interested in gaining access to scarce and highly valuable tacit knowledge. The transfer of such resources first requires sharing a certain degree of architectural and component knowledge. The social, organizational, cultural, institutional, technological, and physical distances between a MNC and the new subsidiary, as well as its local partners, offer a good indication of the way the architectural and technological knowledge is shared. The purpose of this paper is to examine the transfer of systemic technological expertise (component tacit knowledge) that is incorporated into organizational practices (architectural knowledge).

The mathematical expression of localization performance is inferred from a conceptual research that formulates hypotheses regarding the impact of these variables on knowledge transfer. The MNC chooses its location in such a way as to maximize this performance.

This research contributes to a better understanding of how knowledge transfer effects may interact with local effects, while explaining a subsidiary’s performance with regard to location.

In order to apply this model, one would need to numerically compute the variables of this model and the performance in order to obtain a numerical estimation of the variables, by the econometric methods, which intervenes in the performance. Then one could use this numerical expression of the performance as a specific criterion of localization. Indeed it would be sufficient to evaluate both architectural and component knowledge which could be exchanged as well as different distances and the motivation for each of possible localizations and to select the one which gives the maximal numerical value for the performance.

The authors deduced from the mathematical model a simple decisional criterion for a manager in search of an optimal location.

This research provides an interpretation of the concept of knowledge embeddedness by showing that the effective transfer of architectural and component knowledge involves the prior sharing of a certain amount of this knowledge.