Knowledge Transfer between Multinational Corporations’ Headquarters and Their Subsidiaries: Influences on and Implications for New Product Outcomes

Abstract

A multinational corporation's (MNC's) competitive advantage depends increasingly on control over intangible resources, such as knowledge and relational capital. Although prior research has suggested that cross-border knowledge transfer in MNCs is critical to their new product outcomes, the conditions under which such knowledge transfer can serve to induce positive outcomes remain unclear. This study builds on resource-based theory to suggest that knowledge and MNC network strength are the two critical firm resources individually and collectively influencing new product outcomes. Because MNCs are subject to the pressures on various environmental changes, the authors rely on the contingency theory to examine when knowledge transfer works in differential global market and technological turbulence. The results of a survey of MNC headquarters show that the impacts of cross-border knowledge transfer on new product outcomes are not always positive, depending on the levels of network strength and environmental turbulence.