Knowledge Transfer between MNC Subsidiaries and Local Firms: The Case of Foreign Owned MNC Subsidiaries in Finland

The role of MNC subsidiaries in exchanging knowledge from their local relations is crucial for the success of MNCs. Foreign subsidiaries, which are embedded in their respective local networks, do not have the same propensity to access and leverage local knowledge. It is determined by several antecedents of inter-organizational knowledge transfer. In this study, several hypotheses were developed and tested on data collected from managers of foreign owned MNC subsidiaries operating in Finland. The results show that similarities in business practices and existence of rich communications between the units have significant positive impact on the amount of knowledge transferred. Length of knowledge exchange relationships, volume of inter-unit trade, parent country nationality of subsidiaries and the existence of lateral relations between the two units do not have significant impact on the amount of knowledge transferred. A minimum level of shared business practices and lateral relations are essential for social communications to have impact on the amount of knowledge transferred.