The Impact of Subsidiary Autonomy on MNE Knowledge Transfer: Resolving the Debate

Abstract

This paper explores theoretical and empirical ambiguities in the literature concerning the impact of foreign subsidiary autonomy on intra-MNE knowledge transfer. We argue that understanding the interdependences between subsidiary autonomy and the use of different communication systems - e.g. person-based and electronic-based communication systems - is crucial to putting forward new insights in the debate. Based on the recent literature on strategic management, we hypothesize that the two communication systems call for different degrees of subsidiary autonomy and vice versa. Using a data set consisting of 307 dyads between foreign subsidiaries and their parent companies, we find that two distinctive configurations positively affect the extent of knowledge transfer from foreign subsidiaries to their parent companies. The first is the combination of a high degree of subsidiary autonomy and the use of person-based mechanisms, and the second is the combination of low subsidiary autonomy and the use of electronic-based mechanisms.