Skip to main content
SpringerLink
Log in

Managing knowledge transfer in MNCs: the impact of headquarters control mechanisms

  • Article
  • Published:
Journal of International Business Studies Aims and scope Submit manuscript

Abstract

In this paper we explore the impact of organisational mechanisms on inter-unit knowledge flows in multinational corporations (MNCs). A comprehensive model, based on agency theory and socialisation theory, is tested on a sample of 134 Finnish and Chinese MNC subsidiaries. Our findings indicate that MNCs can influence inter-unit knowledge transfer by specifying the objectives of the subsidiary and by utilising corporate socialisation mechanisms. However, we found no support for the hypothesised impact of management compensation systems and the use of expatriate managers on the extent of knowledge transfers from foreign subsidiaries to other parts of the MNC.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1

Similar content being viewed by others

References

  • Allen, T.J. (1977) Managing the Flow of Technology: Technology Transfer and the Dissemination of Technological Information within the R&D Organization, MIT Press: Cambridge, MA.

    Google Scholar 

  • Andersson, U., Forsgren, M. and Holm, U. (2002) ‘The strategic impact of external networks: subsidiary performance and competence development in the multinational corporation’, Strategic Management Journal 23(11): 979–996.

    Article  Google Scholar 

  • Argote, L. and Ingram, P. (2000) ‘Knowledge transfer: a basis for competitive advantage in firms’, Organizational Behavior and Human Decision Process 82(1): 150–169.

    Article  Google Scholar 

  • Birkinshaw, J. and Hood, N. (1998) ‘Multinational subsidiary evolution: capability and charter change in foreign-owned subsidiary companies’, Academy of Management Review 23(4): 773–795.

    Google Scholar 

  • Boyacigiller, N. (1990) ‘The role of expatriates in the management of interdependence, complexity and risk in multinational corporations’, Journal of International Business Studies 21(3): 357–381.

    Article  Google Scholar 

  • Cantwell, J. (1992) ‘The theory of technological competence and its implications for competitiveness’, in O. Granstrand, H. Hakanson and S. Sjolander S (eds.) Technology Management and International Business, Wiley: Chichester pp: 137–162.

    Google Scholar 

  • Chang, E. and Taylor, M.S. (1999) ‘Control in multinational corporations (MNCs): the case of Korean manufacturing subsidiaries’, Journal of Management 25(4): 541–565.

    Article  Google Scholar 

  • Cohen, W.M. and Levinthal, D.A. (1990) ‘Absorptive capacity: a new perspective on learning and innovation’, Administrative Science Quarterly 35(1): 128–152.

    Article  Google Scholar 

  • Davenport, T.H. and Prusak, L. (1998) Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press: Boston, MA.

    Google Scholar 

  • Doz, Y.L. and Prahalad, C.K. (1993) ‘Managing DMNCs: a search for a new paradigm’, in S. Ghoshal and E. Westney (eds.) Organizational Theory and the Multinational Corporation, St Martin's Press: New York pp: 24–50.

    Chapter  Google Scholar 

  • Edström, A. and Galbraith, J.R. (1977) ‘Transfer of managers as a coordination and control strategy in multinational organizations’, Administrative Science Quarterly 22(2): 248–268.

    Article  Google Scholar 

  • Eisenhardt, K. (1988) ‘Agency- and institutional-theory explanations: the case of retail sales compensation’, Academy of Management Journal 31(3): 488–512.

    Article  Google Scholar 

  • Eisenhardt, K. (1989) ‘Agency theory: an assessment and review’, Academy of Management Review 14(1): 57–74.

    Google Scholar 

  • Forsgren, M. (1997) ‘The advantage paradox of the multinational corporation’, in I. Bjorkman and M. Forsgren (eds.) The Nature of the International Firm: Nordic Contributions to International Business Research, Copenhagen Business School Press: Copenhagen pp: 69–85.

    Google Scholar 

  • Forsgren, M., Johansson, J. and Sharma, D. (2000) ‘Development of MNC centres of excellence’, in U. Holm and T. Pedersen (eds.) The Emergence and Impact of MNC Centres of Excellence, Macmillan: London pp: 45–67.

    Google Scholar 

  • Foss, N.J. and Pedersen, T. (2002) ‘Transferring knowledge in MNCs: the role of sources of subsidiary knowledge and organizational context’, Journal of International Management 8(1): 1–19.

    Article  Google Scholar 

  • Frost, T. (2001) ‘The geographic sources of foreign subsidiaries’ innovations’, Strategic Management Journal 22(2): 101–123.

    Article  Google Scholar 

  • Frost, T., Birkinshaw, J.M. and Ensign, P.C. (2002) ‘Centers of excellence in multinational corporations’, Strategic Management Journal 23(4): 997–1018.

    Article  Google Scholar 

  • Ghoshal, S. and Bartlett, C.A. (1990) ‘The multinational corporation as an interorganizational network’, Academy of Management Review 15(4): 603–625.

    Google Scholar 

  • Ghoshal, S. and Moran, P. (1996) ‘Bad for practice: a critique of the transaction cost theory’, Academy of Management Review 21(1): 13–47.

    Google Scholar 

  • Grant, R.M. (1996) ‘Toward a knowledge-based theory of the firm’, Strategic Management Journal 17(Winter Special Issue): 109–122.

    Article  Google Scholar 

  • Gupta, A.K. and Govindarajan, V. (2000) ‘Knowledge flows within multinational corporations’, Strategic Management Journal 21(4): 473–496.

    Article  Google Scholar 

  • Hansen, M.T. (1999) ‘The search-transfer problem: the role of weak ties in sharing knowledge across organization subunits’, Administrative Science Quarterly 44(1): 82–111.

    Article  Google Scholar 

  • Harvey, M., Speier, C. and Novecevic, M.M. (2001) ‘A theory-based framework for strategic human resource staffing policies and practices’, International Journal of Human Resource Management 12(6): 898–915.

    Article  Google Scholar 

  • Hedlund, G. and Kogut, B. (1993) ‘Managing the MNC: the end of the missionary era’, in: G. Hedlund (ed.) Organization of Transnational Corporations, Vol. 6 in The United Nations Library on Transnational Corporations, Routledge: New York.

    Google Scholar 

  • Hendry, J. (2002) ‘The principal's other problems: honest incompetence and the specification of objectives’, Academy of Management Review 27(1): 98–113.

    Google Scholar 

  • Hennart, J.-F. and Park, Y.-R. (1993) ‘Greenfield vs acquisition: the strategy of Japanese investors in the United States’, Management Science 39(9): 1054–1071.

    Article  Google Scholar 

  • Holm, U. and Pedersen, T. (2000) ‘The centres of excellence project: methods and some empirical findings’, in U. Holm and T. Pedersen (eds.) The Emergence and Impact of MNC Centres of Excellence, Macmillan: London pp: 23–44.

    Google Scholar 

  • Jensen, M. and Meckling, W.H. (1976) ‘Theory of the firm: managerial behavior, agency cost, and ownership structure’, Journal of Financial Economics 3(4): 305–360.

    Article  Google Scholar 

  • Lane, P.J. and Lubatkin, M. (1998) ‘Relative absorptive capacity and interorganizational learning’, Strategic Management Journal 19(5): 461–477.

    Article  Google Scholar 

  • Levitt, B. and March, J.G. (1988) ‘Organizational learning’, Annual Review of Sociology 14: 319–340.

    Article  Google Scholar 

  • Lubatkin, M.H., Lane, P.J. and Schultze, W.S. (2001) ‘A strategic management model of agency relationships in firm governance’, in M.A. Hitt, R.E. Edwards and J.S. Harrison (eds.) The Blackwell Handbook of Strategic Management, Blackwell Business: Oxford pp: 229–258.

    Google Scholar 

  • Martinez, J.I. and Jarillo, J.C. (1989) ‘The evolution of research on coordination mechanisms in multinational corporations’, Journal of International Business Studies 20(3): 489–514.

    Article  Google Scholar 

  • Nohria, N. and Ghoshal, S. (1994) ‘Differentiated fit and shared values: alternatives for managing headquarters–subsidiary relations’, Strategic Management Journal 15(6): 491–503.

    Article  Google Scholar 

  • O’Donnell, S.W. (2000) ‘Managing foreign subsidiaries: agents of headquarters, or an interdependent network?’, Strategic Management Journal 21(5): 525–548.

    Article  Google Scholar 

  • Ouchi, W.G. (1979) ‘A conceptual framework for the design of organizational control mechanisms’, Management Science 25(9): 833–848.

    Article  Google Scholar 

  • Porter, M.E. (1985) Competitive Advantage, Free Press: New York.

    Google Scholar 

  • Roth, K. and O’Donnell, S. (1996) ‘Foreign subsidiary compensation strategy: an agency theory perspective’, Academy of Management Journal 39(3): 678–703.

    Article  Google Scholar 

  • Roth, K., Schweiger, D.M. and Morrison, A.J. (1991) ‘Global strategy implementation at the business unit level: operational capabilities and administrative mechanisms’, Journal of International Business Studies 22(3): 369–402.

    Article  Google Scholar 

  • Rugman, A. and Verbeke, A. (2001) ‘Subsidiary-specific advantages in multinational enterprises’, Strategic Management Journal 22(3): 237–250.

    Article  Google Scholar 

  • Schulz, M. (2001) ‘The uncertain relevance of newness: organizational learning and knowledge flows’, Academy of Management Journal 44(4): 661–681.

    Article  Google Scholar 

  • Simonin, B.L. (1999) ‘Ambiguity and the process of knowledge transfer in strategic alliances’, Strategic Management Journal 20(7): 595–623.

    Article  Google Scholar 

  • Spender, J.-C. (1996) ‘Making knowledge the basis of a dynamic theory of the firm’, Strategic Management Journal 17(Winter Special Issue): 45–62.

    Article  Google Scholar 

  • Stroh, L.K., Brett, J.M., Baumann, J.P. and Reilly, A.H. (1996) ‘Agency theory and variable pay compensation strategies’, Academy of Management Journal 39(3): 751–768.

    Article  Google Scholar 

  • Szulanski, G. (1996) ‘Exploring internal stickiness: impediments to the transfer of best practice within the firm’, Strategic Management Journal 17(Winter Special Issue): 27–43.

    Article  Google Scholar 

  • Szulanski, G. (2000) ‘The process of knowledge transfer: a diachronic analysis of stickiness’, Organisational Behavior and Human Decision Process 82(1): 9–27.

    Article  Google Scholar 

  • Szulanski, G. (2003) Sticky Knowledge: Barriers to Knowing in the Firm, Sage: London.

    Google Scholar 

  • Tosi, H.L. and Gomez-Mejia, L.R. (1989) ‘The decoupling of CEO pay and performance: an agency theory perspective’, Administrative Science Quarterly 34(2): 169–189.

    Article  Google Scholar 

  • Tosi, H.L., Katz, J.P. and Gomez-Meija, L.R. (1997) ‘Disaggregating the agency contract: the effects of monitoring, incentive alignment, and term in office on agent decision making’, Academy of Management Journal 40(3): 584–602.

    Article  Google Scholar 

  • Tsai, W. (2001) ‘Knowledge transfer in intraorganizational networks: effects of network position and absorptive capacity on business unit innovation and performance’, Academy of Management Journal 44(5): 996–1004.

    Article  Google Scholar 

  • Tsai, W. and Ghoshal, S. (1998) ‘Social capital and value creation: the role of intrafirm networks’, Academy of Management Journal 41(5): 464–476.

    Article  Google Scholar 

  • Van Maanen, J. and Schein, E.H. (1979) ‘Toward a theory of organizational socialization’, in B.M. Staw (ed.) Research in Organizational Behaviour, Vol. 1 JAI Press: Greenwich, CT pp: 209–264.

    Google Scholar 

  • Zander, U. and Kogut, B. (1995) ‘Knowledge and the speed of the transfer and imitation of organizational capabilities: an empirical test’, Organisation Science 6(1): 76–92.

    Article  Google Scholar 

Download references

Acknowledgements

This research was carried out within the Academy of Finland-financed project ‘Managing knowledge creation and transfer in multinational corporations: a Finnish perspective’. We thank Anette Björkman and Patrick Furu for their contributions to the data collection. We would also like to thank the editors of the focused issue Nicolai Foss and Torben Pedersen, as well as the three JIBS reviewers for valuable comments and suggestions on an earlier version of the paper.

Author information

Authors and Affiliations

  1. INSEAD, Fontainebleau Cedex, France

    Ingmar Björkman

  2. Department of Management and Organisation, Swedish School of Economics, Helsinki, Finland

    Ingmar Björkman, Wilhelm Barner-Rasmussen & Li Li

Authors
  1. Ingmar Björkman
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Wilhelm Barner-Rasmussen
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Li Li
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ingmar Björkman.

Additional information

Accepted by Nicolai Juul Foss and Torben Pedersen, Departmental Editors, 31 March 2004. This paper has been with the author for one revision.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Björkman, I., Barner-Rasmussen, W. & Li, L. Managing knowledge transfer in MNCs: the impact of headquarters control mechanisms. J Int Bus Stud 35, 443–455 (2004). https://doi.org/10.1057/palgrave.jibs.8400094

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/palgrave.jibs.8400094

Keywords

Search

Navigation