The impact of knowledge management on MNC subsidiary performance: the role of absorptive capacity

Empirical studies on the impact of knowledge management on the performance of MNCsubsidiaries remain elusive to date. This study examines the effect of knowledgemanagement tools such as corporate university, communities of practice, groupbenchmarking, learning systems and rewards upon absorptive capacity and performancewith unique data from subsidiary units in a large German MNC - Heidelberger Cement.The findings suggest that knowledge management tools unfold their performanceimpact through their significant influence on absorptive capacity and knowledgeinflows. The key contributions to the current literature on knowledge flows in the MNCinclude an empirically corroborated link between deployments of knowledgemanagement tools and their impact on the subsidiary employee's ability and motivationto learn from internal knowledge flows in the MNC as well as their impact onsubsidiary business performance.