Under what conditions do subsidiaries learn?

Abstract

Purpose

The main purpose of this paper is to evaluate literature on subsidiary learning, and to trace the main logics and conventional opinions in international business. A secondary purpose is to evaluate the fit, suitability and applicability to this topic.

Design/methodology/approach

A literature review on subsidiary learning and knowledge transfer in International Business and Economic Geography was conducted following an explorative design. Through a survey of articles on subsidiary learning sources, barriers, and the required mechanisms were identified. Some underlying theoretical contributions were also surveyed to better capture core constructs.

Findings

Motivation, knowledge, absorptive capacity, and role of the subsidiary influence on learning, and the more embedded the subsidiary the better for performance. Furthermore, more advanced economies are expected to create more valuable knowledge, and knowledge flows therefore from advanced to transition economies. The more value‐chain activities that are carried out, a greater flow of knowledge flow is expected. Not much research is conducted on the value of the knowledge flows. Subsidiary learning is not studied in transition economies by economic geographers, or international business researchers. Subsidiary learning is not studied in transition economies by economic geographers, or international business researchers.

Research limitations/implications

Little knowledge exists on knowledge flows from subsidiaries in transition economies, to multinational corporation (MNC') entities in developed economies. Mapping of ongoing relations through the lenses of business networks may be one viable way to capture evolution and change in the role of subsidiaries, or it could be mapped through analysis of evolution and change in the routines between dyads in the MNC.

Practical implications

MNCs may overlook learning opportunities due to biases in literature. Knowledge management and formal and informal integrative mechanisms for knowledge transfer may be as important in transition – as in developed economies. As Western firms continue to offshore critical activities to transition economies, they should explore the learning opportunities for organisational learning and improved strategic performance.

Originality/value

The value of this paper lies in questioning the conventional knowledge on learning and knowledge transfer which is most often researched in developed economies.

Citation

Johansen, T. (2007), "Under what conditions do subsidiaries learn?", Baltic Journal of Management, Vol. 2 No. 2, pp. 181-195. https://doi.org/10.1108/17465260710750982