Network Knowledge in International Business
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Network Knowledge in International Business

  • New Horizons in International Business series

Edited by Sarianna M. Lundan

This book focuses on current cutting-edge research concerning the increasing strategic importance of subsidiary networks to the multinational firm. It combines contributions from three major related areas of inquiry: the changing theoretical conception of networks and the structure of the multinational firm, the importance of spillovers and agglomeration economies related to multinational investments, and the management of the flow of information and knowledge from headquarters to subsidiaries and vice versa.
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Chapter 6: Sources of subsidiary knowledge and knowledge transfer in the MNCs

Nicolai J. Foss and Torben Pedersen

Extract

Chapter 6 21/6/02 11:25 AM Page 1 6. Sources of subsidiary knowledge and knowledge transfer in MNCs 1 Nicolai J. Foss and Torben Pedersen INTRODUCTION It is now commonly accepted that knowledge ranks first in the hierarchy of strategically relevant resources (e.g., Grant 1996), in fact, it is so widely accepted ‘… as to have become almost axiomatic’ (Gupta and Govindarajan 2000: 473). More precisely, the issue of knowledge imitability is seen as crucial to the understanding of competitive advantage and its sustainability (Lippman and Rumelt 1982; Simonin 1999). Accordingly, a cottage industry has emerged on the various characteristics of knowledge that may hinder the imitability of rent-yielding knowledge assets, such as causal ambiguity (Lippman and Rumelt 1982; Mosakowski 1997), complexity and tacitness (Winter 1987). Much of this has taken place in the context of resource-based (Wernerfelt 1984; Barney 1991), knowledge-based (Grant 1996) and evolutionary theories of the firm (Nelson and Winter 1982; Foss, Knudsen and Montgomery 1995). The conceptually different, yet closely related, issue of how knowledge is created and renewed has been treated in, for example, the organizational learning (Cohen and Sproull 1996) and the innovation management literatures. However, the issues of the knowledge-based determinants of competitive advantage and the creation and renewal of knowledge have not yet been integrated. Moreover, the literature on the connection between knowledge and competitive advantage has paid relatively little attention to the organizational aspects of the connection. For example, little attention has been paid to which organizational mechanisms might decrease ‘internal stickiness’...

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