Learning networks, power and legitimacy in multinational subsidiaries

Abstract

This paper demonstrates how learning networks are used by subsidiaries to maximize the strategic value of knowledge as a source of power; and how the embedded nature of knowledge influences this process. Using resource dependence and legitimacy concepts, it is argued that different forms of learning networks afford knowledge the legitimacy to act as a source of power. These forms are based on combinations of intra- or inter-organizational local and international relations. The results indicate that local learning networks are more likely to enable innovations because local contexts are perceived as being the most useful or legitimate. Moreover, international intra-organizational learning networks reinforce the legitimacy of knowledge as an important resource by encouraging diffusion. The tension between organizational strategies and institutional structures supporting innovation is explored.