Academic journal article Management International Review

The Performance Effects of Headquarters' Involvement in Lateral Innovation Transfers in Multinational Corporations

Academic journal article Management International Review

The Performance Effects of Headquarters' Involvement in Lateral Innovation Transfers in Multinational Corporations

Article excerpt

Abstract:

* Developing an analytical framework to help examine the impact of HQs direct involvement in lateral innovation transfers on efficiency and effectiveness of

* Develop hypotheses which are tested by multiple regression analyses on data relating to 129 lateral innovation transfers in multinational corporations

* Three key findings: dyadic willingness positively affects transfer efficiency and effectiveness willingness HQ involvement negatively effects transfer efficiency; HQ involvement negatively moderates the effect of willingness on transfer effectiveness

* HQ face a dilemma in managing lateral transfers: on the one hand, the network structure that typifies many MNCs has beneficial impacts on the performance of the transfer process; on the other hand the HQ need to ensure that lateral transfers initiated by subsidiaries ('organic' transfers) are in line with MNC strategy. However the findings from our study strongly suggest that HQ direct involvement in the transfer process is at best a very blunt instrument for achieving a resolution of this dilemma.

Keywords: Multinational corporations * HQ involvement- Innovation transfer efficiency. Effectiveness * Transfer performance

Introduction

Although the management of knowledge transfer and integration is regarded as a key component of organizational capability in multinational firms (Tsai and Ghoshal 1998; Tsai 2000, 2002; Schultz 2003; Gupta and Govindarajan 2000; Foss and Pedersen 2002; Minbaeva et al. 2003; Bjorkman et al. 2004; Persson 2006a; Zhou and Luo 2005; Adenfelt and Lagerstrom 2006; Monteiro et al. 2008) relatively little attention has been paid to the role of headquarters (HQ) in the process and hence to the possible consequences of HQ direct involvement in intra-MNC knowledge transfers. While the development of the MNC's knowledge assets has always been of strategic importance to the HQ; recent studies suggest a heightening of strategic assertiveness by the HQ vis-a-vis subsidiaries (Nolan et al. 2002; Yamin and Ghauri 2010; Buckley 2010), particularly in relation to knowledge and competence development in MNCs. HQ direct involvement in knowledge transfer (entailing instructing a particular transfer and participating in the transfer process) within the MNC would be a facet and a reflection of such enhanced assertiveness. HQ would naturally be actively involved in vertical knowledge transfers as they are either the sender or the recipient (in the case of 'reverse' transfers; Subramaniam et al. (1998) and Subramaniam and Venktraman (2001)). However where lateral, inter-subsidiary, knowledge transfers are concerned, current research has examined only HQ policies that may influence knowledge transfer by subsidiaries. Thus the few existing studies on HQ management of lateral knowledge transfers have focused on issues such as compensation policies; the employment of expatriates and the application of socialization and shared value approaches (Tsai and Ghoshal 1998; Gupta and Govindrajan 2000; Tsai 2000; Bjorkman et al. 2004; Persson 2006a). None of these studies consider the direct involvement of HQ in lateral transfers.

In this study we examine the consequence of HQ direct involvement for the efficiency and effectiveness lateral knowledge transfers. Previous studies on knowledge transfer have not adopted a performance perspective, although it is acknowledged that knowledge transfer is a costly or sticky process (Teece 1977; Szulanski 1996; Jensen and Szulanski 2004; Gupta and Govindarajan 2000). The costs stem partly from the inherent characteristics of the knowledge to be transferred (tacitness and complexity); partly from the motivational stances of individual subsidiaries towards transferring and receiving knowledge and the relational aspects of particular transfer dyads.

However this literature does not consider (a) the efficiency of the transfer--that is, whether and to extent the costs may be above the minimum that may be expected in any transfer projects and (b)--effectiveness of the transfer--the completion of the transfer project and a satisfactory transfer outcome (Daft 1992). …

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