The importance of innovation for firm´s competitiveness has long been discussed by the literature, and therefore, knowledge management has taken a pivotal role in innovation processes. In order to generate innovations, firms may access knowledge from different sources, including its internal and external environment. However, to fully assimilate such knowledge and apply it to commercial ends, firms need absorptive capacity (AC). Absorptive capacity is particularly important for multinational corporations, as they face several learning challenges arising from increased global competition as well as geographic, institutional and cultural differences. With this in mind, this thesis explores the relationship between knowledge management mechanisms and innovation and performance outcomes in multinational corporations (MNCs). I also explore the role of absorptive capacity in such relationships. In order to contribute to the existing literature in specific ways, this thesis unfolds in three empirical papers, which consider distinct sorts of knowledge management mechanisms (knowledge sourcing mechanisms, knowledge management capabilities, project-team dynamics), coming from different sources (MNC internal and external environment), entailing different types of innovation (product and process innovation), which result in different outcomes (local innovation, global innovation, and performance), explored in different contexts (reverse innovation, reverse knowledge transfer, and intra-organizational knowledge sharing projects). The thesis relies on a rationale that absorptive capacity can enhance the relationship between knowledge management mechanisms and innovation and performance outcomes. Therefore, the studies embraced several theoretical aspects of AC: i) the diminishing effect on AC in environments where learning is more difficult; ii) the different roles of R&D investment and innovation training in fostering AC; iii) the trade-off between inward-looking and outward-looking determinants of AC; iv) the need for more intense efforts and diversified knowledge to develop AC for problem solving as complexity increases. With the increasing importance of emerging markets in the global innovation landscape, the three studies primarily focus on an emerging market, Brazil, as the context of the studies. This thesis is structured as follows. First, I introduce the general research question and the specific theoretical and methodological aspects explored in each of the papers. Then, I present each of the papers, with its particular literature review, hypothesis development, methods, results and discussion. Finally I discuss the conclusions of the thesis, in light of the research questions raised and the overall contribution of the three studies. At last, an appendix in provided with further information on a case study at a Brazilian MNC, InterCement, from where one of the papers originated.