The role of culture on knowledge transfer: the case of the multinational corporation

Abstract

PurposeThis paper aims to look at the issue of culture's role in knowledge transfer within multinational corporations (MNCs). Studies of MNCs have hinted at the importance of culture to the performance of subsidiaries. Using Hofstede's cultural dimensions of power distance, individualism/collectivism, uncertainty avoidance, and masculinity/femininity, it is argued that the location of subsidiaries along each of these cultural dimensions will significantly impact the possibility of knowledge transfer occurring between subsidiaries.Design/methodology/approachThe objectives were achieved by providing additional insights into the complex nature of knowledge transfer efforts in MNCs. To do so, a discussion of the challenges associated with the dimensions of culture is presented. These challenges are further complicated by the degree to which the home office is involved in the strategic decision‐making process surrounding inter‐subsidiary knowledge transfers.FindingsThe paper suggests that managers should pursue knowledge transfer activities cautiously. Although these efforts may be supported by the home office, resistance to change and sharing must be carefully managed. Furthermore, knowledge transfer efforts are most likely to be successful if the parties are culturally aligned. And, when this is missing, success is highly dependent upon home office directives and support.Research limitations/implicationsThis paper forces us to address a critical question: how do subsidiaries deal with the challenges to knowledge transfer efforts posed by cultural differences? While research has looked at various aspects of culture and its impact on MNC activities, more research is needed on these issues. As knowledge continues to be emphasized as the basis for performance differences, more thorough examination of the issues affecting it is necessary. In addition, variables such as spatial distance, native origin, and language differences, all of which make translation difficult, are not considered.Practical implicationsThe ideas presented here reinforce the notion that national context and its impact on culture has major consequences for inter‐subsidiary knowledge transfer efforts. This is particularly the case when these transfers involve subsidiaries with different cultural dynamics. Since, knowledge is contextual, this helps subsidiaries identify their partners in this process, what are there benefits to be gained from engagement, and how involved the home office needs to be in these transfer efforts. Therefore, managers need to pay careful attention to contextual issues that affect knowledge transfer efforts.Originality/valueIt reinforces the notion that subsidiaries have access to confidential information regarding developments in other subsidiaries. This access to inside information allows for the speedy pursuit of knowledge transfer opportunities. However, such pursuits must be tempered by understanding that cultural differences may inhibit success.