The Modern Journey to the West : Exploring Key Factors Influencing Reverse Knowledge Transfer in Emerging-market Multinationals

Sammanfattning: As latecomers to the world economy, emerging-market multinational corporations (EMNCs) often use international expansion as a ‘springboard’ for seeking and accessing advanced knowledge from overseas, particularly from advanced markets, with the goal of offsetting their competitive weaknesses and catching up with their Western counterparts. This behavior is conceptualized as the springboard perspective formulated by Luo and Tung (2007). From this perspective, reverse knowledge transfer (RKT) from subsidiaries to home-country units is a compulsory path to achieve innovation catch-up in EMNCs. This thesis explores reverse knowledge transfer in EMNCs and its key influencing factors, an important and timely phenomenon that has so far received little attention in research.Empirical data were collected through a combination of a qualitative case study of one Chinese state-owned multinational and a survey of Chinese multinationals. Results suggest that headquarters’ political relationships in home countries both promote and inhibit RKT practices in EMNCs. Specifically, headquarters’ political relationships are found to enhance the motivation to seek and demand knowledge from subsidiaries. However, at the same time, these political relationships hinder RKT by reducing headquarters’ absorptive capacity, subsidiary willingness and headquarters’ control over subsidiaries, and by increasing the organizational distance between headquarters and subsidiaries. Thus, this study highlights the fact that political relationships can be a liability for cross-border knowledge acquisition. These results contrast with many prior studies, which have tended to view political ties mostly as a source of competitive advantage for EMNCs during internationalization.This study also shows how subsidiary willingness to transfer knowledge is restricted by headquarters’ political ties and a large organizational distance between headquarters and subsidiaries in EMNCs. However, the low willingness of subsidiaries to transfer knowledge can be ameliorated if expatriate managers have good-quality relationships with subsidiary local managers. Moreover, the findings suggest that expatriate managers do not engage directly in RKT through their relationship ties. Instead, their relationship ties with local managers can enhance the extent of RKT by stimulating subsidiary willingness. This finding challenges the view of expatriate social ties as channels for transferring knowledge.By highlighting the relevance of headquarters’ home-country political relationships and expatriate managers’ relationships in the RKT practices of EMNCs, this thesis enriches the literature on reverse knowledge transfer, on the political relationships of EMNCs and on expatriation. In addition, it contributes to the view of multinationals as a differentiated network. This research also contributes to the understanding of the antecedents and difficulties behind the logic of springboard internationalization and extends the knowledge of intra-organizational agency problems in the context of expatriates and reverse knowledge transfer.