Low-Level Management Control and Cross-Border Knowledge Transfer of Emerging Economy Firms

Abstract

Abstract Purpose This paper seeks to provide an understanding of the relationship between the management control policy of emerging economy (EE) firms and the knowledge transfer with the acquired firm, as well as the mechanism by which specific management control policy facilitates knowledge transfer with the acquired firms. Design Employing an organizational learning theory, this paper examines the knowledge transfer from acquired firms to acquiring EE firms through multiple-case study of three EE firms. Findings Based on organizational learning theory and the results of case studies, this paper finds that the cooperation and willingness of employees in the acquired firm and language barriers are the main factors influencing the relationship between management control policy and the parent company’s knowledge transfer process. Research implication This study sheds light on cross-border knowledge transfer to EE firms from an organizational learning perspective and broadens the understanding of post-acquisition knowledge transfer in an emerging market context. Practical implications This study suggests that the low-level management control facilitates knowledge transfer from acquired firms. This is especially true when the parent company from the EE has limited learning experience and faces substantial language barriers between itself and its acquired firm. Originality This paper extends existing research by exploring how low-level control of acquired firms in developed markets facilitates knowledge transfer of EE firms after cross-border acquisition. Future research can extend this line of research by examining the knowledge transfer mechanism of EE firms through qualitative and quantitative methods.