International diversification, subsidiary performance, and the mobility of knowledge resources

Yulin Fang, Michael Wade, Andrew Delios and Paul W. Beamish

Strategic Management Journal, 2007, vol. 28, issue 10, 1053-1064

Abstract: We examine the link between international diversification, organizational knowledge resources, and subsidiary performance. The success of international corporate diversification depends on a firm's capability to transfer knowledge to its subsidiaries, and how its local subsidiaries effectively utilize that knowledge. As knowledge resources are imperfectly mobile, a firm may find it difficult to transfer knowledge to its subsidiaries. In our analysis of 4964 Japanese subsidiaries over a 14‐year period, we find that knowledge that is valuable, but not rare, positively affects subsidiary performance in the short term, but not the long term. In contrast, knowledge that is both valuable and rare affects subsidiary performance in the long term, but not the short term. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2007
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