The Impact of Absorptive Capacity on Knowledge Transfer and Performance of Korean Subsidiaries of Foreign MNCs

Due to the recent growing uncertainty and competition in the global business environment, knowledge is considered to be a dominant source of competitive advantage Very few firms, however, are capable of creating the requisite knowledge and thus, firms should acquire and exploit new knowledge through knowledge transfer processes. Given the significance of knowledge, this study examines the relationships among local adaptability of knowledge, level of knowledge transfer and firm performance and tests a moderating role of absorptive capacity within the boundary of MNCs. Results of the empirical analyses using survey data collected from subsidiaries of MNCs in Korea present that local adaptability of knowledge leads to high level of knowledge transfer, which contributes to high performance. In addition, subsidiaries with strong absorptive capacity can acquire more external knowledge from the headquarters and other subsidiaries and achieve high performance.