Subsidiary Capability Development and the Reverse Knowledge Transfer: A Microfoundation Perspective

The study aims to highlight specific subsidiary managers’ initiatives as antecedents of the processes of knowledge acquisition, capability development, and capability knowledge transfer in the context of Brazilian subsidiaries of foreign multinational companies. Using survey data collected from 127 senior and middle managers of Brazilian subsidiaries from foreign multinational companies, this study finds support for the proposed analytical framework by confirming five hypotheses. When subsidiary managers make use of skills such as individual absorptive capacity, bricolage behavior, and knowledge influence, they favor the process of subsidiary capability development, as well as the process of capability knowledge transfer for potential application in the headquarters or in other subsidiaries of the multinational corporation.