Subsidiary Performance In MNCs: The Influences Of Absorptive Capacity And Social Capital On Knowledge Transfer

Abstract

Multinational corporation (MNC) subsidiaries have become more closely linked to globalized business networks. The rapid technological changes are accelerating globalization, these changes have forced producers to constantly upgrade their process technologies, introduce new products and reduce costs to increase profits. Subsidiary performance is at the core of increased profits for MNCs. Accordingly, this research focuses upon subsidiary performance regarding three key contingencies that current international business literature deems likely to impact the bottom line: absorptive capacity, knowledge transfer and social capital. Unique data from more than 300 MNCs with locations in China, Japan, Malaysia, Singapore, South Korea and Taiwan were collected and analyzed. Findings suggest that concentrating on these three factors in subsidiaries’ knowledge environment could improve MNCs’ overall performance.