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What Difference Does the Location Make?: A Social Capital Perspective on Transfer of Knowledge from Multinational Corporation Subsidiaries Located in China and Finland

Li Li, Wilhelm Barner-Rasmussen and Ingmar Björkman

Asia Pacific Business Review, 2007, vol. 13, issue 2, 233-249

Abstract: This article proposes that MNC subsidiaries located in economically highly developed countries will transfer more knowledge to other corporate units than will subsidiaries located in less developed countries. The direct effect of subsidiary location is tested, as well as the interaction effects of location and social capital, on outward knowledge transfer from subsidiaries to other MNC units. The analysis is based on a sample of 164 MNC subsidiaries located in Finland (an economically highly developed country) and China (a less developed country). Results indicate that subsidiaries located in Finland tend to engage more actively in outward knowledge transfer than do their peer units located in China. The conclusion is therefore that this negative ‘country-of-origin’ effect increases the need for promoting trust and shared vision among individuals and units in the MNC.

Date: 2007
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Handle: RePEc:taf:apbizr:v:13:y:2007:i:2:p:233-249