International Entrepreneurship as Foreign Subsidiaries’ Initiative in the Process of Knowledge Management

Abstract

The guiding research question of this paper is to discover whether foreign subsidiaries’ initiative in global knowledge management activity improves firm performance. The authors’ short-cut answer to this puzzle is affirmative. The base of this perspective is that the way of approaching to the competitive advantages to improve firm performance is broadened through the increase in global learning derived from foreign subsidiaries’ roles. Furthermore, away from the traditional functions, the roles of foreign subsidiaries are shifted from the negative users who simply exploit home country-based knowledge resources to the positive creators who explore new knowledge resources in foreign markets. We surveyed for this research targeting foreign subsidiaries of foreign global companies in China aiming at three research models. Questionnaire was distributed through the internet, and email and total 538 surveys were collected. The main findings are as follows. Foreign subsidiaries’ initiative in the process of reverse knowledge transfer makes a firm adaption to market opportunities and threats happen properly. As such, global firms gain an opportunity for home country-specific resources as well as host country-specific resources. It is noteworthy that the effect of foreign subsidiaries’ initiative increases in association with dynamic capability-based firm-specific competitive advantages. Therefore, dynamic capability view (DCV) demonstrates sustained superiority over resource-based view (RBV).