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The primary goal of this study is to examine the relationships among Taiwan’s overseas subsidiaries based on their strategic roles, organizational configurations and business performance. However, their relationships also depend on the subsidiaries’ cultural differences between parent company and its subsidiary. Using regression analysis, we show that different types of industries, stages of internationalization, degrees of integration, degrees of localization, and degrees of resource dependence are the most important factors on the subsidiaries’ perceived activity satisfaction. The results indicate that the sample of Taiwanese MNC affiliates falls into three subgroups depending on their global strategies. Active Subsidiaries are highly integrated and have high local responsiveness, Autonomous Subsidiaries have high local responsiveness but low integration,while Respective Subsidiaries have low local responsiveness, but are highly integrated.

In an age of rapid knowledge expansion, external knowledge sources are available in abundance. The purpose of this paper is to focus on the way in which firms can effectively internalize explicit knowledge and direct it into the tacit knowledge of employees, thereby enhancing the organization's competitiveness (knowledge internalization).

An exploratory research is adapted to discuss the issue of knowledge internalization based on learning cycle theory. A theoretical framework is developed which provides an analytical perspective on the knowledge internalization.

The results of this study reveal that an “incomplete learning cycle” is one of the reasons why explicit knowledge could not be successfully converted into tacit knowledge. Hence, when a more complete learning cycle is followed, explicit knowledge is more easily converted into tacit knowledge.

This study's results can be considered as a stepping‐stone for future rigorous theoretical and empirical investigations.

This paper seeks to develop a framework of knowledge internalization based on learning cycle theory that will serve as reference for both the academic and business communities.