The Sensitivity of Subsidiary Knowledge In- and Outflows to Language Proximity

Abstract

This study draws on theories of opportunity, motivation and ability to investigate the conditional effects of language proximity in HQ-subsidiary relationships for subsidiaries’ knowledge flows from and to corporate headquarters. Building on a large-scale empirical study of 817 subsidiaries located in nine different countries/regions, we find support for our hypotheses that the opportunity-related variables frequency of face-to-face interaction and centralization in HR decision-making, and the motivation-related variables trust in HQ managers and shared values and goals are conducive to both subsidiary knowledge inflows from and subsidiary knowledge outflows to headquarters. Most importantly, we also show that the ability-related variable language proximity exerts different conditional effects on the role of these antecedents. Implications for research on HQ-subsidiary knowledge flows and cross-national distance are discussed.