Explaining subsidiaries' knowledge-diffusion behaviours within MNEs

This study explores how subsidiaries can contribute their advantages for the whole MNE in knowledge diffusion processes. The research model includes both organisational factors and local resources in a host country to explain subsidiaries' diffusion behaviours. We carried out an online survey for R&D managers in 15 European countries to collect data about subsidiaries' behaviours. Different multivariate methodologies were used to examine direct and indirect (moderating) effects of the three main factors on knowledge diffusion. Both subsidiaries' innovative characteristics and subsidiaries' network resources can encourage the diffusion behaviours directly. Finally, the linkages between headquarters (HQ) and the subsidiary (e.g., personnel rotation) have both direct and indirect influences on knowledge-diffusion behaviour. The results imply that HQ has to establish a suitable organisational atmosphere to encourage subsidiaries, while subsidiaries should accumulate specific innovativeness or capabilities, and play a brokerage role to share the accumulated knowledge with the whole MNE.