Technological complexity and the evolving structure of MNC subsidiary knowledge accumulation

Abstract

The paper analyses the implications of increasing technological complexity and organizational restructuring for the knowledge accumulation activities of the subsidiaries of multinational corporations (MNCs). An analysis of foreign-owned subsidiaries in the German pharmaceutical industry in 1975-1995 indicates that the restructuring and intensification of knowledge exchange mechanisms in MNCs are an essential factor to enable subsidiaries to play a more creative role in knowledge generation. Although subsidiaries might use internal and external knowledge networks in their knowledge accumulation process in a complementary way, the purposes differ. In particular, the international internal knowledge networks of subsidiaries have been used increasingly for incremental knowledge building within the same field, whereas local external knowledge networks have been used far more for transferring more technologically complex knowledge.