Knowledge outflows from foreign subsidiaries: The tension between knowledge creation and knowledge protection

Alessandra Perri and Ulf Andersson ()
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Ulf Andersson: Department of Strategic Management and Globalization, Copenaghen Business School

No 18, Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia

Abstract: This paper analyzes the MNC subsidiaries' trade-off between the need for knowledge creation and the need for knowledge protection, and relates it to the extent of knowledge outflows generated within the host location. Combining research in International Business with Social Theory, we find that subsidiaries that extensively draw on external knowledge sources are also more likely to generate knowledge outflows to local firms. We argue that this may be explained by the subsidiariesÕ willingness to build the trust that facilitates the establishment of reciprocal knowledge linkages. However, when the value of the subsidiary's knowledge stock is very high, the need for knowledge protection restrains reciprocity mechanisms in knowledge exchanges, thus reducing the extent of knowledge outflows to the host location. This study contributes to the literature on the firm-level antecedents of FDI-mediated local knowledge outflows, as well as to the broad IB literature on the relationship between subsidiaries and their host regions. The implications for managers and policy-makers are also discussed.

Keywords: local knowledge outflows; FDI; knowledge creation; knowledge protection (search for similar items in EconPapers)
JEL-codes: M16 O32 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-10
New Economics Papers: this item is included in nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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