Geographically Dispersed Technological Capability Building and MNC Innovative Performance: The Role of Intra-firm Flows of Newly Absorbed Knowledge |
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Authors: | Feng Zhang Guohua Jiang John A Cantwell |
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Institution: | 1. Business Program, Pennsylvania State University Abington, 1600 Woodland Road, Abington, PA 19422, USA;2. Department of Management, College of Business & Public Management, West Chester University, 700 S. High St, West Chester, PA 19383, USA;3. Management and Global Business Department, Rutgers Business School, Rutgers University, 1 Washington Park, Newark, USA |
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Abstract: | This study identifies key mechanisms linking multinationality with the knowledge advantages of multinational corporations (MNCs). These mechanisms are the absorption of new knowledge by one individual MNC unit and the subsequent flows of such newly absorbed knowledge to other geographically distant units of the same firm. The intra-MNC and inter-unit flows of such newly absorbed knowledge include exchanges between a parent and its overseas subsidiaries and those between subsidiaries. Through analyzing the U.S. patent data of the world's largest firms in the electrical equipment industry, our study shows that those two mechanisms are complementary in affecting MNC innovative performance. More notably, given the geographically dispersed new knowledge absorption within an MNC, only the flows of the newly absorbed knowledge between the parent and subsidiaries, in contrast to those between subsidiaries, are positively associated with MNC innovative performance. This study contributes to the MNC literature. Managerial implications are also discussed. |
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Keywords: | Corresponding author Multinationality Knowledge advantages Geographical dispersion Knowledge access and absorption Parent and subsidiaries MNCs |
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