Does Knowledge Sharing Pay? An MNC Subsidiary Perspective on Knowledge Outflows

This empirical paper explores knowledge outflow from MNC subsidiaries and its impact on the MNC performance. We develop and test hypotheses derived from literature on MNC knowledge flows integrated with the perspective of knowledge-creating, self-interested MNC subsidiaries. The hypotheses are developed using a simultaneous equation model applied to a unique dataset encompassing a German MNC, HeidelbergCement. Enablers and impediments of knowledge outflows are assessed in order to explain why subsidiaries share their knowledge with other MNC units. Implications are examined by studying the link between knowledge outflows and subsidiary performance. Our findings suggest that knowledge outflows increase a subsidiary's performance only up to a certain point and that too much knowledge sharing may be detrimental to the contributing subsidiary's performance.