Creating and sharing subsidiary knowledge within multinational corporations

Abstract: The conditions facing multinational corporations today reflect the increasing globalization of international business, in which knowledge is an important ingredient. Subsidiaries are important as they, to various degrees, possess unique knowledge, thus accounting for the strength of the multinational corporation, which is the topic under study in this thesis. The multinational corporation consists of geographically dispersed units, which are linked together in a complicated pattern. One of the issues explored in this thesis is what drives the knowledge creation of subsidiaries, as it is acknowledged that the strength of a multinational corporation resides in these globally dispersed units. Another issue is to investigate the role of headquarters’ recognition and of corporate relationships in sharing of subsidiary knowledge. A third issue explored is the use of Centres of Excellence and transnational teams as two organizational forms for knowledge creation and sharing. A combination of research methods was used to provide an enhanced picture of the research phenomena. As a part of an international research project, a survey was undertaken, resulting in data from 2107 foreign-owned subsidiaries located in seven different countries. In addition, two case studies have been performed in order to gain deeper understanding of (i) how subsidiaries create knowledge and (ii) the use of different organizational forms in MNCs for processing knowledge. The five papers included discuss creation and sharing of subsidiary knowledge. It was confirmed that subsidiaries create knowledge of significance for other units within the multinational corporation. The results show that that one of the main drivers for the creation of knowledge is interaction based on local market relationships, especially those with market customers. Corporate sharing of subsidiary knowledge is brought about by headquarters recognition of these units’ knowledge. This is facilitated if other corporate units have been involved in the creation of that knowledge. Another finding in the study is the use of Centres of Excellence and transnational teams for knowledge creation and sharing. Although the two different organizational forms serve the same purpose, they differ in organization and in antecedents to their knowledge processes.