Knowledge sources and MNC subsidiary roles

Abstract

In order to improve our understanding of the roles that subsidiaries play in the knowledge generation and innovation processes, the present study draws together the literature on knowledge sources and subsidiary mandates to develop a series of hypotheses about where the subsidiary obtains the knowledge that it deploys, and how this is linked to the roles and functions that the subsidiary performs for the corporation as a whole. We report the results of a series of empirical tests of these relationships, using data from a survey of the subsidiaries of foreign firms in Singapore. The results indicate, as postulated, that different subsidiary roles of implementation, innovation for the local market, and innovation for international markets do indeed have different patterns of significant relationships when it comes to knowledge sources. Counter to expectation, however, sister subsidiaries do not show up as significant sources of knowledge for either implementation or innovation roles, casting doubt on whether MNCs in practice behave as “networked” knowledge system with direct knowledge flows between multiple subsidiaries. We conclude with a discussion of the implications of our findings for managers, policy makers and for further research. (For more information, please contact: Peter James Williamson, University of Cambridge, United Kingdom: p.williamson@jbs.cam.ac.uk)