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  • Global Strategy Journal

Role of Context in Knowledge Flows: Host Country versus Headquarters as Sources of MNC Subsidiary Knowledge Inheritance

By: Mike Horia Teodorescu, Prithwiraj Choudhury and Tarun Khanna
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Abstract

We respond to calls in the strategy and international business literature for elucidating how multinational subsidiaries develop contextual intelligence in host countries and how they use the local context as a source of valuable opportunities for learning. Applying the theoretical lens of subsidiary absorptive capacity and building on a gravity model, we propose an approach that can distinguish and compare the influences of the host country context and headquarters over the subsidiary knowledge production. Some subsidiaries may become global second headquarters and innovation hubs, as evidenced qualitatively in the paper with the case of Cisco. Essentially, subsidiaries, characterized by higher stocks of knowledge and greater number of locally hired employees are likely to absorb relatively more knowledge from the local host country context.

Keywords

MNCs; Knowledge Flows; Innovation; Gravity Model; Absorptive Capacity; Multinational Firms and Management; Business Subsidiaries; Knowledge Management; Business Headquarters; Innovation and Invention

Citation

Teodorescu, Mike Horia, Prithwiraj Choudhury, and Tarun Khanna. "Role of Context in Knowledge Flows: Host Country versus Headquarters as Sources of MNC Subsidiary Knowledge Inheritance." Global Strategy Journal (forthcoming).
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About The Authors

Prithwiraj Choudhury

Technology and Operations Management
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Tarun Khanna

Strategy
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More from the Authors
  • FIELD Immersion 2022: Tulsa, Oklahoma By: Prithwiraj (Raj) Choudhury and Annelena Lobb
  • Tata Group in 2021: Pursuing Profits through Purpose By: Tarun Khanna, Krishna G. Palepu and Vidhya Muthuram
  • FIELD Immersion 2022: San Antonio, Texas By: Tarun Khanna, Sara Fleiss and James Barnett
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