Boundary Conditions of Subsidiary Reverse Knowledge Transfer Benefiting the MNE Parent

Abstract

The subsidiary reverse knowledge transfer (RKT) has recently drawn much attention in the IB research. Despite prior efforts on exploring the determinants of the subsidiary RKT from diverse perspectives, the subsidiary RKT benefit to the MNE parent in contingency with heterogeneity of subsidiary entrepreneurial initiatives, the MNE parent’s discretion over the subsidiary resource use, and the knowledge transfer mechanism are rarely examined in a holistic approach. Drawing on the organizational learning perspective and resource dependence theory to develop our hypotheses, and testing them with a unique sample of 2277 observations of 1831 Taiwan MNEs collected from 2013 to 2017, we found that (1) the RKT both of subsidiary exploitative and explorative initiatives are beneficiary to the MNE parent, and the benefit derived from the exploitative initiative is stronger than the explorative one; (2) the knowledge transfer conduit of bureaucratic routine is more detrimental to the RKT benefit of subsidiary explorative initiative; and (3) the MNE parent’s higher resource discretion enhances the RKT benefit of subsidiary explorative initiative. Our findings provide academic contributions to the IB literature and managerial implications for managing the subsidiary RKT.