Interpersonal cross border knowledge transfer within the multinational enterprise: Subsidiary power, intra-MNE competition and cultural intelligence

Abstract

Cross border knowledge transfer is not only a major activity of multi-national enterprises (MNEs), but also the very reason for their existence. Most of the literature has investigated cross-border knowledge transfer at the firm level - with the headquarters or the subsidiaries as the actors. However, the action of knowledge transfer occurs between people within organizations but not between amorphous organizations. To account for the heterogeneous, independent individual behaviour, which may not always align with organizational objectives, I investigate interpersonal cross-border knowledge transfers (knowledge seeking and sharing) between subsidiaries in an MNE.

Based on the Social Identity Theory (SIT) insights, my proposed conceptual model hypothesised the impact of subsidiary power on interpersonal knowledge seeking and sharing being mediated by organisational identity of the individuals. It also includes two boundary conditions, intra-MNE competition and cultural intelligence, due to which knowledge transfer outcomes are likely to vary. The proposed conceptual model is tested using a questionnaire survey data from 333 employees from 40 R&D subsidiaries of foreign MNEs in India. Before analysing the data with Conditional Process Analysis using the PROCESS macro within SPSS, a Confirmatory Factor Analysis was conducted with the help of AMOS.

The findings suggest that subsidiary power has a significant direct effect on knowledge sharing and an indirect effect on knowledge seeking. The results show that when it comes to seeking knowledge from another subsidiary, subsidiary power influences employees’ seeking behaviour due to the organizational identification of employees. Whereas, although the decision to share knowledge is influenced by subsidiary power, it is due to factors other than identification. Further, cultural intelligence is found to moderate the indirect effect on knowledge seeking and intra-MNE competition moderates the indirect effect on knowledge sharing.

My study makes three key contributions. Firstly, I bring in SIT insights to the knowledge governance approach (KGA). I have argued and proposed identity based KGA mechanisms such as subsidiary power and intra-MNE competition which influence individual level knowledge transfer. Such mechanisms (although not governance mechanisms per se) can be used by the subsidiary to govern individual knowledge exchanges across the border. Secondly, I contribute by examining two boundary conditions for the subsidiary power and interpersonal knowledge transfer relationships. This explains under what conditions the effect of subsidiary power is strengthened or weakened. Finally, by conducting the study in the context of India, which is fast emerging as a R&D hub for MNEs from different countries, the study provides insights to employees’ knowledge exchange behaviour which is crucial for knowledge transfers within the MNEs and for their success.