Impact of Organizational Culture on Reverse Knowledge Transfer: Synthesising the Parts

Abstract

The “Think Global, Act Local” concept pioneered by one of the popular multinational enterprises (MNEs) appears to have become the norm today. From an organization’s internal perspective, there are pressures for standardization to reap the benefits of scale and scope economies. On the other hand, from a customer’s perspective, there are equally strong pressures at adaptation and customization. Successful organizations tend to balance these conflicting forces by learning from their subsidiaries operating in different regions and locations. The notion of the transnational corporation proposed by Sumantara Ghoshal and Christopher Bartlett implies a two-way learning between corporate headquarters and strategic business units. Scholars have favoured the use of a number of inter-dependent factors – subsidiary autonomy, communication mechanisms, ability to absorb disparate patterns of knowledge, to name a few – to explain the phenomenon of Reverse Knowledge Transfer (RKT). This work argues that more than any other factor, organizational culture determines (1) the extent to which reverse knowledge flows from subsidiaries to headquarters and (2) the extent to which it is assimilated and adopted throughout the organization. The analysis is based on the experience of subsidiaries of multinational enterprises operating in India. The aim of this work is to enable a better understanding of reverse knowledge flows and their impact on organizational success in multinational enterprises.