Formal Structure and Knowledge Diffusion in the MNC

Abstract

Purpose – This study examines the interaction of formal and informal cross-border knowledge sharing practices of four large multinational corporations (MNCs) in aerospace, software, IT services, and telecommunications industries. The goal was to determine the manner in which coordination and control mechanisms facilitated knowledge transfer.Design/methodology/approach – Case studies comprised of secondary data and semi-structured interviews with corporate headquarters and subsidiary managers in large multinational companies conducted in the United States, Canada, Mexico, China, India and Eastern Europe.Findings – The primary finding of this study is that knowledge transfer mechanisms arise as a result of both formal and informal structure of the MNC. Formal structures which create either mutual dependencies or occasions for knowledge exchange facilitate transfer. Formal structure which inhibits knowledge transfer can be overcome by knowledge brokers and evaluation metrics.Research limitations/implications – These findings suggest that knowledge transfer is more informal than formal, but that MNC headquarters does play a role, intended or not, through shaping the interdependencies amongst geographically distributed units. Managers should be mindful of both the manner in which tasks and the organization are structured as these have an indirect impact on the development of knowledge channels.Originality/value – This paper investigates the role of organizational structure and its effect, both intended and unintended, on the transfer of knowledge-based practices. While knowledge transfer has been heavily researched, this study examines the phenomenon at a finer-grained level of analysis.