The West Knows Better? The Evolution of Knowledge Transfer Between a Subsidiary and its Chinese HQ

Abstract

Taking a longitudinal process view, the study investigates the dynamic evolution of knowledge transfer (KT) between a Chinese multinational enterprise and its acquired European subsidiary. Different from the common view held in the existing studies that reverse knowledge transfer (RKT) from western subsidiaries to Chinse parent is the only possible way, our findings reveal a gradual KT process with four distinctive phases - from the no-KT phase to RKT phase, to the bi-directional KT phase, and ultimately to the knowledge co-creation phase. Each step forward represents a managers’ breaking of the old mindset. Our study sheds light on the high potential of bi-directional KT and knowledge co-creation that has not been well identified and enough discussed in the current literature. Furthermore, another interesting phenomenon is discovered - the whole KT process is initialized by the subsidiary whereby its strategic knowledge-creation role in the whole group and the light-touch integration approach applied by the parent firm provided ample space for its initiatives in KT. Finally, the study contributes to the research of internal knowledge transfer in specific and to the extant M&A literature in general.