CAPITALISATION ON FOREIGN SUBSIDIARY KNOWLEDGE: STICKINESS FACTORS AFFECTING REVERSE KNOWLEDGE TRANSFER

Abstract

In the nowadays highly competitive environment, multinational companies (MNCs) seek for the new sources of sustainable differentiation to outperform other players in the market. Building on the recent knowledge-based view of the firm, this paper adopts the view, that knowledge is a key to creating a competitive advantage. This research focuses on how MNCs capitalize on the knowledge lying within the organization, and more particularly – how they leverage knowledge from its foreign subsidiaries. However, as capitalization of subsidiary knowledge does not necessarily result in positive outcomes, this paper pays a great attention to the challenges associated with knowledge transfer. These challenges are also referred in the literature as “stickiness factors” and presented in greater detail in the current paper.

To investigate on the factors that predict the difficulty of reverse knowledge transfer, a qualitative method was applied - 10 semi-structured interviews with the subsidiary managers within a single MNC were conducted. The interviews findings explain the failures behind the reverse knowledge transfer from the subsidiary’s viewpoint. The key findings manifest that the outcomes of subsidiary-headquarters knowledge transfer depend on scope of factors, such as organizational, social, relational, and also depend on subsidiary- or knowledge characteristics.

Bearing in mind the newness of the concept of reverse knowledge transfer, and hence, gaps in literature, current study offers a theoretical contribution to the existing theory. Finally, this research is also instrumental for the managers, as it brings to the attention challenges occurring in reverse knowledge transfer and can serve as a tool to understand and address these challenges.