The impact of reverse knowledge transfers on exploitative and exploratory innovations in MNCs: The role of knowledge distance

Abstract

This study investigates the impact of reverse knowledge transfers on the exploitative and exploratory innovations of multinational corporations (MNCs) and explores the moderating effect of knowledge distance between parent and subsidiary companies. Based on survey data from 197 Chinese MNCs, we found that internal-oriented knowledge transferred from subsidiaries facilitated exploitative innovations in the parent companies, while external-oriented knowledge had significant positive impacts on exploratory innovations. We also found that greater knowledge distance further promoted the parent company’s exploratory innovations, which were motivated by the transfer of external-oriented knowledge. Surprisingly, the moderating effect of knowledge distance on the relationship between reverse knowledge transfer and exploitative innovation was not significant. The consideration of knowledge and innovation types complemented the research on innovation development by MNCs in developing countries using external knowledge resources. This study also revealed that novel knowledge is the basis and key to the exploratory innovations of Chinese MNCs.