Abstract
Subsidiaries conduct innovation activities in foreign markets either to capture valuable knowledge that is necessary to adapt their products to local markets or to create valuable knowledge for headquarters. For emerging market multinationals, most studies have overlooked the determinants of successful reverse knowledge transfer from subsidiaries located in emerging and developed markets. This paper analyzed the responses of a survey administered to 78 Brazilian multinationals that own subsidiaries in developed and emerging markets. We found that knowledge complexity developed at the subsidiary, its autonomy and embeddedness in the foreign market determine the successful reverse knowledge transfer to headquarters of emerging market multinationals. This paper contributes to previous studies of reverse knowledge transfer by underlying the main drivers for emerging market multinationals.
Highlights
The multinational enterprise (MNE) is a differentiated network in which its controlled subsidiaries vary widely in terms of duties and responsibilities (Nohria & Ghoshal, 1994)
Despite ambiguous evidence about reverse knowledge transfer (RKT) in Brazil (Fleury & Fleury, 2011), this study found that Brazilian subsidiaries with a high autonomy degree are more capable of transferring knowledge back to headquarters, confirming our hypothesis H1
An argument on the positive effect of autonomy for RKT is based on the idea that the subsidiaries independence provides greater access to local knowledge databases, knowledge from local partners and possibilities to innovate (Andersson et al, 2002; Ciabuschi & Martín, 2012; Gupta & Govindarajan, 1991; Cantwell & Mudambi, 2005)
Summary
The multinational enterprise (MNE) is a differentiated network in which its controlled subsidiaries vary widely in terms of duties and responsibilities (Nohria & Ghoshal, 1994). An underlying idea is that MNE make use of knowledge generated by foreign subsidiaries From this perspective, subsidiaries upgrade their competence enhancing role such as market expansion, cost reduction and supplier adaptation and begin to play a more active role through knowledge development. Foreign subsidiaries might develop new products, new technologies, create new practices, new skills that will later shape their own competence creating pathways as well as accumulate different degrees of technological capability (Birkinshaw, 1997; Borini et al, 2012; Borini, Costa, Bezerra, & Oliveira, 2014; Cantwell & Mudambi, 2005; Figueiredo & Brito, 2011; Frost, Birkinshaw, & Ensign, 2002; Ghoshal & Bartlett, 1988; Govindarajan & Trimble, 2012; Mudambi, Mudambi, & Navarra, 2007; Nohria & Ghoshal, 1997). Reverse knowledge transfer (RKT) gives visibility to subsidiaries that could leverage their strategic position in the multinational network (Borini et al, 2012; Holm & Pedersen, 2000)
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