Knowledge flows and performance of multinational subsidiaries: the perspective of human capital

Abstract

This paper examines the relationships between knowledge flows and subsidiaries' performance in the perspective of human capital. Our empirical study of 130 Taiwanese multinational companies' (MNCs') subsidiaries show that outflow of knowledge can enhance performance; however, the inflow of knowledge can facilitate performance only in the case of high investment of human capital in subsidiaries. Additionally, the effects of knowledge inflow on subsidiary's performance are found significant only in its earlier stage of establishment.