The Impact of Knowledge Management On Mnc Subsidiary Performance: The Role of Absorptive Capacity

Zusammenfassung

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To date, empirical studies on the impact of knowledge management on the performance of MNC subsidiaries remain few in number. This study examines the effect of knowledge management tools upon absorptive capacity, knowledge-flows and performance with unique data from subsidiary units in a large German MNC - HeidelbergCement. Treating absorptive capacity as an endogenous construct subject to managerial discretion, we show how knowledge management tools unfold their performance impact through their significant influence on absorptive capacity and knowledge inflows.

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Auszug

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The Impact of Knowledge Management On Mnc Subsidiary Performance: The Role of Absorptive Capacity

Introduction

This study examines the effect of applying knowledge management tools to develop absorptive capacity enabling knowledge flows between subsidiaries to improve business performance. We utilize a unique data set from a German MNC - HeidelbergCement. The company has grown mainly through acquisition of international subsidiaries, and consequently a key managerial challenge has been to integrate subsidiaries into the company's global network. Those knowledge management tools, which have been deployed, include a learning system, several knowledge teams, the group benchmarking report, and the corporate university. Proxies measuring subsidiary employee's ability to learn from knowledge-inflows capture absorptive capacity. Several dimensions including economic gains, process improvement, and innovation assess business performance. Knowledge management tools strongly predict absorptive capacity indicating managerial discretion in the development of a unit's absorptive capacity; absorptive capacity as an endogenous variable strongly predicts knowledge inflow and knowledge inflow significantly predicts business performance on a subsidiary level. Findings suggest integration of research on knowledge-flows, absorptive capacity, as well as subsidiary performance and a concomitant stimulant for future research along these lines.

Many authors, who view the modern MNC as a "differentiated network", have discussed the importance of knowledge flows between subsidiaries for the MNC performance (Bartlett/Ghoshal 1989, Gupta/Govindarajan 1991, 2000). However, only a few studies have started to examine this relationship empirically, looking mainly at the effect of antecedence to knowledge sharing and learning in the external (e.g. Lyles/Salk 1996, Lane/Lubatkin 1998, Lane/Salk/ Lyles 2001, Simonin 1999) and internal relations of the MNC (e.g. Gupta/Govindarajan 2000, Hansen 1999, Holm/Pedersen 2000, Minbaeva et al. 2003). Common to these studies is how they foc...

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