Knowledge management in MNCs: the importance of subsidiary transfer performance

The aim of this paper is to shed light on how subsidiary willingness to transfer knowledge is influenced by formal control mechanisms from headquarters, and how this affects knowledge transfer performance.

The study highlights and tests the influence of two formal control mechanisms: formal demand to transfer knowledge from headquarters, and performance evaluation system related to knowledge transfer. This is tested by subjecting a dataset of 149 knowledge transfer processes to a two‐stage least square regression analysis.

The robust results indicate that formal evaluation systems related to subsidiary knowledge transfer increases subsidiary willingness to transfer, and subsequently knowledge transfer performance, whereas formal demand by headquarters to share knowledge show a negative but not significant impact.

The results highlight the strategic importance of eliminating motivational barriers in order to enhance knowledge transfer performance. By using outbound knowledge as a criterion when evaluating the subsidiary, managers can increase transfer performance by fostering subsidiary willingness to perform knowledge transfer.

The findings indicate that KM in terms of subsidiary transfer willingness and transfer performance can be fostered and enhanced by the introduction of formal evaluation systems related to knowledge sharing. The results also contribute by revealing that formal control mechanisms differ in their degree of influence in terms of fostering subsidiary transfer willingness and transfer performance.