Critical Context and International Intrafirm Best-practice Transfers

The sharing and transfer of knowledge and best practices across the organization have long been recognized as a critical driver of a firm's capabilities and performance. In fact, Gupta and Govindarajan (1991) maintained that MNCs exist primarily because of their superior ability to transfer knowledge internally relative to the ability of markets. This paper examines factors that influence the success of intrafirm, cross-border knowledge transfers. We investigate the critical context similarity between best-practice source and recipient units and the impact of critical context similarity on transfer eventfulness. We argue that best practices are embedded within a set of 5 central contextual elements, which are critical to the firm's ability to utilize them. A model is developed and tested that explains the impact of context in enabling or inhibiting best-practice transfers. Our findings suggest that critical context dissimilarity inhibits best-practice transfers. The impact of congruence among the source and recipient units along the dimensions of culture, strategy, decision-making, environment and technology affects the eventfulness of the transfer in terms of time, budget and satisfaction. Additionally, the effect of the fit between the practice characteristics, and the transfer mechanisms employed, is examined.