Building a MNC Knowledge Structure: The Roles of Knowledge Sources, Complementarities, and Organizational Context

We develop a view of the MNC as a knowledge-creating and and utilizing entity, building on the extant literature on the differentiated MNC as well as on Lyles and Schwenk’s work on corporate knowledge structures. The starting point for this conceptualization is that MNC management through choices regarding organizational control, motivation and context can influence the development, characteristics and transfer of knowledge. This extends existing literature. For example, in most of the literature, the characteristics of knowledge are seen as exogenous rather than endogenous variables. However, to the extent that management chooses a specific way of sourcing knowledge, it also implicitly chooses the characteristics of the sourced knowledge and the ease with which it can be transferred inside the MNC. This is because knowledge from different knowledge sources have different characteristics and are thus transferred at different cost. The six hypotheses that we draw from the main argument are tested on the basis of a unique and very rich dataset on subsidiary knowledge development (including information on the organizational setting, sources of subsidiary knowledge and the extent of knowledge transfer to other MNC-units) that has been constructed in connection with a cross-national project Centres of Excellence (Holm and Pedersen 2000a). The dataset covers more than 2.000 subsidiaries located in seven different European countries.