Knowledge processes and learning outcomes in MNCs: an empirical investigation of the role of HRM practices in foreign subsidiaries

By examining the case of American and European firms operating in Japan, this article contributes to the central debate of how and when multinational corporations (MNCs) learn from their foreign subsidiaries. Through structural equation modeling, we assess how specific human resource management (HRM) practices (critical thinking encouragement, supervisory encouragement, learning incentives, deployment of internal mechanisms and processes, expatriation, and corporate training) enhance (1) knowledge transfer outflows from the subsidiary to other parts of the MNC and (2) the subsidiary's performance in its local market. We find learning orientation to be a key antecedent of all HRM practices we investigated. From a practical point of view, a noticeable finding relates to the lack of effects of critical thinking encouragement on market knowledge acquisition and dissemination when (1) there is a significant presence of expatriates in the subsidiary and (2) when local managers have access to training programs at headquarters (HQ) and other affiliates. © 2009 Wiley Periodicals, Inc.

[1]  K. Jantke.  Planning for Learning , 2020, The Power of Assessment for Learning: Twenty Years of Research and Practice in UK and US Classrooms.

[2]  Torben Pedersen,et al.  Organizing Knowledge Processes in the Multinational Corporation: An Introduction , 2004 .

[3]  John C. Narver,et al.  Market Orientation and the Learning Organization , 1995 .

[4]  E. Rogers,et al.  Diffusion of innovations , 1964, Encyclopedia of Sport Management.

[5]  P. M. Podsakoff,et al.  Self-Reports in Organizational Research: Problems and Prospects , 1986 .

[6]  J. Mentzer,et al.  The Effects of Entrepreneurial Proclivity and Market Orientation on Business Performance , 2002 .

[7]  S. Scott,et al.  DETERMINANTS OF INNOVATIVE BEHAVIOR: A PATH MODEL OF INDIVIDUAL INNOVATION IN THE WORKPLACE , 1994 .

[8]  Robert E. Morgan,et al.  The effect of market and learning orientation on strategy dynamics: The contributing effect of organisational change capability , 2005 .

[9]  C. K. Prahalad,et al.  THE DOMINANT LOGIC: RETROSPECTIVE AND EXTENSION , 1995 .

[10]  L. Argote,et al.  KNOWLEDGE TRANSFER: A BASIS FOR COMPETITIVE ADVANTAGE IN FIRMS , 2000 .

[11]  Chris Pullig,et al.  Salesforce automation systems: an exploratory examination of organizational factors associated with effective implementation and salesforce productivity , 2002 .

[12]  Anil K. Gupta,et al.  Knowledge flows within multinational corporations , 2000 .

[13]  C. Hendry,et al.  Performance and rewards: cleaning out the stables , 2000 .

[14]  Monica Adya,et al.  Knowledge sharing and the psychological contract: Managing knowledge workers across different stages of employment , 2007 .

[15]  Ahmet H. Kirca,et al.  Market Orientation: A Meta-Analytic Review and Assessment of its Antecedents and Impact on Performance , 2005 .

[16]  James M. Sinkula,et al.  The synergistic effect of market orientation and learning orientation on organizational performance , 1999 .

[17]  D. Garvin.  Building a learning organization. , 1993, Harvard business review.

[18]  Bernard J. Jaworski,et al.  Market orientation: The construct, research propositions, and managerial implications. , 1990 .

[19]  Timothy T. Baldwin,et al.  TRANSFER OF TRAINING: A REVIEW AND DIRECTIONS FOR FUTURE RESEARCH , 1988 .

[20]  P. Nystrom,et al.  To Avoid Organizational Crises, Unlearn , 1984 .

[21]  Jay R. Galbraith,et al.  Transfer of Managers as a Coordination and Control Strategy in Multinational Organizations. , 1977 .

[22]  Rosalie L. Tung.  Selection and Training Procedures of U.S., European, and Japanese Multinationals , 1982 .

[23]  D. Dillman.  Mail and telephone surveys : the total design method , 1979 .

[24]  P. Senge.  The fifth discipline : the art and practice of the learning organization/ Peter M. Senge , 1991 .

[25]  J. Birkinshaw,et al.  INNOVATION IN MULTINATIONAL CORPORATIONS: CONTROL AND COMMUNICATION PATTERNS IN INTERNATIONAL R&D OPERATIONS , 1998 .

[26]  Nancy K. Napier,et al.  Toward an Integrative Model of Strategic International Human Resource Management , 1996 .

[27]  James M. Sinkula,et al.  A framework for market-based organizational learning: Linking values, knowledge, and behavior , 1997 .

[28]  Giles Hirst,et al.  Learning to lead: The development and testing of a model of leadership learning , 2004 .

[29]  Ken Kamoche.  Knowledge creation and learning in international HRM , 1997 .

[30]  C. Bartlett,et al.  Creation, Adoption and Diffusion of Innovations by Subsidiaries of Multinational Corporations , 1988 .

[31]  G. Day.  The Capabilities of Market-Driven Organizations , 1994 .

[32]  Peter R. Dickson,et al.  The Static and Dynamic Mechanics of Competition: A Comment on Hunt and Morgan's Comparative Advantage Theory , 1996 .

[33]  Michael J. Prietula,et al.  The making of an expert (cover article) , 2007 .

[34]  Torben Pedersen,et al.  The Emergence and Impact of MNC Centres of Excellence: A Subsidiary Perspective , 2000 .

[35]  J. Birkinshaw,et al.  Multinational Subsidiary Evolution: Capability and Charter Change in Foreign-Owned Subsidiary Companies , 1998 .

[36]  G. Hult,et al.  Innovation, Market Orientation, and Organizational Learning: An Integration and Empirical Examination , 1998 .

[37]  James C. Anderson,et al.  STRUCTURAL EQUATION MODELING IN PRACTICE: A REVIEW AND RECOMMENDED TWO-STEP APPROACH , 1988 .

[38]  Anil K. Gupta,et al.  Knowledge Flows and the Structure of Control Within Multinational Corporations , 1991 .

[39]  G. Hedlund.  The hypermodern MNC—A heterarchy? , 1986 .

[40]  E. Carmines,et al.  Analyzing models with unobserved variables: analysis of covariance structures , 1981 .

[41]  D. Minbaeva,et al.  HRM practices and MNC knowledge transfer , 2005 .

[42]  Laurie J. Bassi,et al.  Maximizing your return on people. , 2007, Harvard business review.

[43]  V. G. Ouchi,et al.  A conceptual framework for the design and organizational control mechanisms , 1979 .

[44]  Michelle Brown,et al.  Balancing global and local strategic contexts: expatriate knowledge transfer, applications, and learning within a transnational organization , 2007 .

[45]  Snejina Michailova,et al.  Diagnosing and Fighting Knowledge-Sharing Hostility , 2002 .

[46]  Donald A. Schön,et al.  Organizational Learning: A Theory Of Action Perspective , 1978 .

[47]  R. Bagozzi,et al.  On the evaluation of structural equation models , 1988 .

[48]  Stephen Tallman.  Managing across Borders: The Transnational Solution , 1990 .

[49]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[50]  O. C. Ferrell,et al.  A GLOBAL LEARNING ORGANIZATION STRUCTURE AND MARKET INFORMATION PROCESSING , 1997 .

[51]  D. Minbaeva,et al.  Knowledge transfer and expatriation in multinational corporations: The role of disseminative capacity , 2004 .

[52]  Amy H. Amy.  Leaders as facilitators of individual and organizational learning , 2008 .

[53]  G. Hult,et al.  MARKET ORIENTATION AND PERFORMANCE: AN INTEGRATION OF DISPARATE APPROACHES , 2005 .

[54]  Esra F. Gençtürk,et al.  A Resource-Based Model of Market Learning in the Subsidiary: The Capabilities of Exploration and Exploitation , 2003 .

[55]  G. Hamel,et al.  Competitive collaboration: Learning, power and dependence in international strategic alliances. , 1990 .

[56]  Sharon O'donnell,et al.  MANAGING FOREIGN SUBSIDIARIES: AGENTS OF HEADQUARTERS, OR AN INTERDEPENDENT NETWORK? , 2000 .

[57]  V. Pucik,et al.  Strategic alliances, organizational learning, and competitive advantage: The HRM agenda , 1988 .

[58]  Augustine A. Lado,et al.  Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective , 1994 .

[59]  J. V. Maanen,et al.  Toward a theory of organizational socialization , 1977 .

[60]  Bernard L. Simonin.  An Empirical Investigation of the Process of Knowledge Transfer in International Strategic Alliances , 2004 .

[61]  Bernard J. Jaworski,et al.  Market orientation: Antecedents and consequences , 1993 .

[62]  T. Kostova,et al.  Social Capital in Multinational Corporations and a Micro-Macro Model of its Formation , 2003 .

[63]  B. Hedberg.  How Organizations Learn and Unlearn , 1981 .

[64]  Robert P. Bostrom,et al.  An Examination of Managers' Beliefs about their Roles as Facilitators of Learning , 2002 .

[65]  J. Nunnally.  Psychometric Theory (2nd ed), New York: McGraw-Hill. , 1978 .