The Impact of Parent Firm Knowledge Transfers on Foreign Subsidiary Innovation

Abstract

In this paper, I examine how three knowledge transfer mechanisms, including managerial knowledge transfers, product transfers and technology transfers, impact the innovation output of foreign subsidiary operations. I argue that the combination of tacit and explicit transfers of parent firm knowledge through expatriate managers and product and technology transfers respectively will result in conditions that are more conducive to new knowledge generation in foreign subsidiaries. Empirical results from a comprehensive panel of US MNCs show that conditional on foreign operations doing R&D, the combined effect of knowledge transfers through parent products and expatriate managers significantly impacts foreign subsidiary knowledge generation. By exploring how a combination of tacit and explicit knowledge transfer mechanisms can encourage knowledge extension and generation, this paper contributes to the knowledge management literature while also showing how a comprehensive database of US MNCs link their operations to extend their knowledge assets.