Performance effects of explorative and exploitative knowledge sharing within Korean chaebol MNEs in China

Abstract

Do explorative and exploitative nature of knowledge shared within emerging multinational enterprises (EMNEs) (here, Korean chaebol MNEs) affect the EMNE subsidiaries' financial performance? The international business and strategy literature has emphasised the importance of intra-multinational enterprise (MNE) knowledge sharing yet researchers have remained largely silent about explorative and exploitative nature of knowledge shared within EMNEs. Further, when we consider explorative and exploitative nature knowledge shared within emerging economy business groups (EEBGs) (here, Korean chaebols), we still do not know much about how the foreign subsidiaries within EEBGs mobilise their knowledge sharing across networked units in order to promote innovations. Using a sample of 646 subsidiaries in China of 175 Korean MNEs within 37 chaebols, we examine how intra-EMNE sharing of explorative and exploitative knowledge affects an EMNE subsidiary's financial performance. Our findings suggest that there is a positive interaction effect between increased sharing of both explorative and exploitative knowledge and a negative effect of the relative imbalance between sharing of explorative and exploitative knowledge. Our findings show that both the effectiveness in intra-chaebol knowledge sharing and explorative and exploitative nature of knowledge shared within a chaebol have a substantial influence on the chaebol EMNE subsidiary's performance.