Subsidiary non-localised search and MNC performance: the role of subsidiary intra-firm knowledge outflows

Abstract

While previous literature focused on firm–level new product introduction rate that is brought by firm–level non–localised search, this measure may not be able to reflect the effects of non–localised search on multinational corporations (MNCs) because of their geographically dispersed organisational structure. We argue that for large MNCs the pattern of intra–firm knowledge flows would offer further insight into the effects of geographically dispersed non–localised search on the MNC as a whole. By differentiating intra–firm knowledge outflows from a subsidiary to the headquarters (namely vertical outflows) and those to peer subsidiaries (namely horizontal outflows), we are able to show one mechanism, through which the MNC with its spatial organisational structure could enjoy the benefits of non–localised search at a subsidiary–level. This study bridges organisational learning literature and MNC literature, and the findings have implications on knowledge management strategies of the MNC.