Reverse knowledge transfer in multinational companies: A systematic literature review.
| Autor | Kogut, Clarice Secches |
| Cargo | Report |
Abstract
The mainstream literature has focused on knowledge transfers from parent companies to subsidiaries, while paying less attention to knowledge created at the subsidiary level. But there is a growing trend to knowledge co-creation, and the responsibility of knowledge creation has shifted from headquarters to the corporation as a whole and its subsidiaries. Using a thorough systematic review over a 15-year period in top-tier journals, this thematic analysis finds interesting literature gaps to be filled and proposes a theoretical framework that conceptualizes the reverse knowledge transfer as a complex process; moreover, we offer a detailed view on the phenomenon of reverse knowledge transfer, seeking to contribute to a better understanding of it and providing a basis to assist corporate managers in global strategic planning and knowledge management and scholars in future academic research in the field.
Key words: thematic analysis; reverse knowledge transfer; international competitive advantage; knowledge management; subsidiary headquarters relationship.
Introduction
The knowledge transfer between headquarters and subsidiaries is an important research topic in International Business (IB) studies (Alharbi & Singh, 2013). However, the mainstream literature has focused on knowledge transfers from parent companies to subsidiaries (Dunning, 2001; Johanson & Vahlne, 1977, 2009; Rugman, 2006; Vahlne & Johanson, 2014; Vernon, 1966, 1993), and not vice versa (from subsidiaries to parent company).
The literature on such bottom-up transfer, referred hereafter as reverse knowledge transfer (RKT), is still limited (Ambos, Ambos, & Schlegelmilch, 2006; Criscuolo, 2009; Hakanson & Nobel, 2001; J. Li, Strange, Ning, & Sutherland, 2016; Tseng, 2015), in spite of its growing importance to the knowledge generation (Frost & Zhou, 2005; Gupta & Govindarajan, 2000; J. Li et al., 2016; Tseng, 2015) of multinational enterprises (MNE) and its contribution to global competitive advantage (Chung, 2014; Eden, 2009; Frost & Zhou, 2005; Makela, Bjorkman, & Ehrnrooth, 2009; Tseng, 2015).
In addition to being limited in terms of the number of studies, the RKT literature is also limited in breadth, with papers usually falling short of analyzing the phenomenon as thoroughly and holistically (Perez-Nordtvedt, Kedia, Datta, & Rashee, 2008) as possible, and often merely addressing a single aspect of the process. Thus, the literature has many gaps to be filled, and by failing to examine the company and the process as a whole, "the spread of innovation, technological, managerial and marketing advantages is not addressed" (Ietto-Gillies, 2005, p. 11).
Using a thorough systematic review of a 15-year period, from 2001 to 2016 (1), in top tier journals, this present study finds interesting literature gaps to be filled and proposes a theoretical framework that conceptualizes the reverse knowledge transfer as a complex process with factors to be analyzed in detail such as the sender of knowledge (subsidiary), the receiver (parent), the direct and indirect mechanisms of knowledge transfer and the characteristics of the knowledge itself. In addition, the antecedents of the subsidiary and - most importantly - how the RKT benefitted the MNE are examined. In this work we intend to provide a detailed view of the phenomenon of reverse knowledge transfer, contributing to a better understanding of it and seeking to serve as a basis to assist corporate managers in global strategic planning and knowledge management and scholars in future academic research in the field.
To the extent that an understanding of how reverse knowledge transfer can benefit the parent company is interesting not only vis-a-vis internationalization but also vis-a-vis strategic management, we hope this paper to be all the more appealing. According to Autio (2005), most internationalization theories have tended to rely on either economic or organizational and behavioral theories; however, the internationalization context and its attendant theories have contributed little reciprocal insight to organizational and strategic theories. Autio therefore points to this as an important research gap and suggests empirical and theoretical academic works to be conducted "to better understand the sources and effects of the 'internationalization competitive advantage' as well as to articulate the practitioner implications of this potential effect" (Autio, 2005, p. 16).
This paper is organized as follows: second section provides a theoretical background on the importance of knowledge and knowledge management for IB and the subsidiary's respective role; third section explains the perceived research gap and how previous work has been framed. Fourth section explains the methodology used; fifth section discusses results and findings; and finally, sixth section concludes by listing some limitations and contributions of the research as well as possible avenues for future research.
Theoretical Background
Multinationals are, above all, in the relentless pursuit of international competitive advantages, meaning advantages over competitors based on some exclusive strategic resource (Barney, 1991). The Resource-based View (RBV) argues that for a company to have a competitive advantage its resources need to be VRIS: valuable, rare, difficult to imitate and difficult to substitute, as per Penrose (1959) and Barney (1991), among other authors.
Expanding on that came the knowledge based view (KBV), with several authors arguing "knowledge has emerged as the most strategically-significant resource of the firm" (Grant, 1996, p. 375; J. H. Li, Chang, Li, & Ma, 2014; Oliveira, 2007; Perez-Nordtvedt, Mukherjee, & Kedia, 2015). Even though authors from other school of thought may not be so assertive about that, it is a consensus in the literature that after the shift from industrial to a post-industrial age, that knowledge is the most critical resource to firms (Nonaka & Takeuchi, 1995).
Accordingly, among the many benefits of internationalization for an organization, most scholars would agree that knowledge creation and sharing are important ones, so important, in fact, that noteworthy authors from several different schools in internationalization (Dunning, 2001; Johanson & Vahlne, 1977, 2009; Oviatt & MacDougall, 1994; Rugman, 2006; Vahlne & Johanson, 2014; Vernon, 1966, 1993) have frequently addressed the subject in their theories, paradigms and models. Although knowledge may not be explicitly central in some if not most discussions, it is important enough to garner attention, thus demonstrating its relevance and need for a better understanding of its mechanisms and flows in the context of multinational companies.
Figure 1 below summarizes the views of the main schools of internationalization as to where or with whom knowledge lies in the organization and its potential transferability, aiming not to contrast them but to show the importance of knowledge for internationalization theories in general.
Economic School Product life Other Economic cycle theories -Vernon -Rugman(1975 (*)) (1966) - Dunning (1977 (*)) Knowledge K tied to a Tied to the firm location location (non-location bound) (location-bound) Knowledge Difficult to Transferable from transferability transfer parent to subs. in an international expansion Behavioral School International Uppsala Model entrepreneurship - Johanson andVahlne - Oviatt and McDousall (1977) (1994) Knowledge Tied to a person--experiential Must not be tied location (non-location anywhere or to anyone bound) in the organization Knowledge Transferable from person Must flow within the transferability (in parent) to person (in organization but not subsidiary) - more outside it difficult Figure 1. Main Internationalization Theories and Their View on Knowledge and Knowledge Transferability Source: prepared by authors. (*) date of first paper. In this paper, knowledge is assumed to be a firm-specific strategic resource, one that is valuable, rare and difficult to imitate or substitute (Barney, 1991; Cuervo-Cazurra & Un, 2004; Loane & Bell, 2006), such as any kind of innovation, technology, management techniques, capabilities, marketing and production skills that can be transferred from one location to another.
As can be seen from Figure 1 above, most authors (Dunning, 2001; Johanson & Vahlne, 1977, 2009; Rugman, 2006; Vahlne & Johanson, 2014; Vernon, 1966, 1993) focused knowledge created at the parent company or headquarters level. It is reasonable to assume that this is because the main theories were conceived in periods preceding the current level of globalization and are rooted in the contexts of developed countries; therefore, they do not account for more recent phenomena such as emerging market multinationals or bi-directional information flows (Fleury & Fleury, 2007).
A very interesting, useful and more recent theory that may help address the above issue (EM MNE) is the Springboard Perspective (Luo & Tung, 2007; Petersen & Ivarsson, 2015). With EM MNEs being less likely to seek cost minimization strategies, as they are usually already located in low-cost countries, they usually follow a market-seeking or asset-seeking strategy. Strategic assets include technology, know-how, R&D facilities, human capital, brands, consumer bases, distribution channels, managerial expertise, and natural resources, all with the specific purpose of (a) strengthening their position at home, and (b) compensating any firm-level competitive disadvantages they may have. This perspective is thus of special interest to this study as it necessarily involves a RKT process. However, the springboard perspective does not specify any of the steps or actors in the process, stating only that "their resource commitment, especially investment size, is not necessarily a function of time, experience or learning" (Luo & Tung, 2007, p. 491). Regarding knowledge and knowledge transferability specifically, which is the...
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