Subsidiary Determinants for Technology Acquisition in South Korea: A European Experience

Both the EU and South Korea (hereafter, Korea) are coming into a close relationship, for example through growing business collaboration among firms and the recent agreement on mutual free trade, which may promote an increase in direct investments from the EU. In the light of this, this study attempts to identify key factors affecting knowledge acquisition from European multinational enterprises (MNEs) by subsidiaries established in Korea (For reference, technology is used as a proxy for knowledge in this paper). This empirical examination is undertaken with the idea that acquisition of foreign knowledge from parent firms is one of the crucial prerequisites determining successful operations of subsidiaries in foreign markets. The findings reveal that most of the potential factors included in our model significantly influence subsidiary learning and we need to consider simultaneously all three fundamental groups (absorptive capacity, relational capital and knowledge transfer capacity) to better understand the overall picture of knowledge acquisition. The findings suggest some useful implications for practising managers in European MNEs which intend to enter the Korean market.