DETERMINANTS AND OUTCOMES OF KNOWLEDGE TRANSFER: A STUDY OF MNCs IN CHINA.

Abstract

This paper focuses on the factors that affect the transfer of knowledge from MNCs originating from a more developed economy to their subsidiaries in a transitional economy. We propose and test a two-stage model for knowledge transfer from an MNC to its subsidiary. In the first stage, our model proposes factors affecting knowledge contributed by the MNC to its foreign subsidiary. In the second stage, the model proposes factors affecting knowledge acquired by the subsidiary from its parent. Finally, knowledge acquired by the subsidiary is predicted to influence its performance. We test this model in the context of knowledge transfer between MNCs and their subsidiaries in China, employing a sample of 297 ventures. We examine the transfer of management and technological knowledge, and distinguish between transfers to wholly owned and joint venture subsidiaries. The empirical data and geographical context address a weakness in research of intra-firm knowledge transfer, inadequate large-scale empirical study of cross-border knowledge transfer within a comprehensive framework. Results substantially support the proposed model, showing that the MNC's knowledge base, knowledge transfer skills, benefits from knowledge transfer, and fear of appropriation of knowledge impact knowledge contributed to its subsidiary. Knowledge contributed by the MNC parent, subsidiary's learning capacity and intent, provision of training, link between rewards and learning, and the learning objective of local partner determine knowledge acquired by the subsidiary. Importantly, we demonstrate that management knowledge acquired by a subsidiary significantly influences its performance.