Reverse knowledge transfer and innovation in MNCs

Abstract

Abstract Purpose – The purpose of this paper is twofold: to study the relationship between reverse knowledge transfer (RKT) and headquarters’ innovation, examining potential moderators of such relationship, and to analyze the role of headquarters’ absorptive capacity (AC) and the coordination mechanisms they adopt as antecedents of RKT. Design/methodology/approach – Quantitative data were collected from 104 Spanish multinational companies. Structural equation modeling was used to test hypotheses. Findings – Findings provide the evidence of a positive relationship between RKT and headquarters’ innovation. This relationship is higher when the knowledge transferred from subsidiaries to parent units is of a more tacit nature, and also when the organizational distance between them is larger. The results also show that the parent unit’s AC and the use of mechanisms for coordinating company units can facilitate RKT. Practical implications – MNCs that wish to be more innovative should be aware that it is worth the effort of fostering RKT, especially when knowledge is more tacit and comes from subsidiaries with different organizational practices and culture because these two variables increase the positive relationship that it was found between effective RKT and the development of innovation in the headquarters. Additionally, results show that in order to facilitate RKT, the improvement of headquarters’ AC and the use of mechanisms of coordination between them and its subsidiaries can be useful. Originality/value – Up to the authors’ knowledge, this is the first empirical study that examines the link between RKT and headquarters innovation, and one of the few that focuses on headquarters characteristics as determinants of RKT. Thus, the findings contribute to the literature that highlights the benefits of RKT for MNC’s competitiveness, and that seeks to know how to promote RKT.