Multinational Enterprise and Subsidiaries’ Absorptive Capacity and Global Knowledge Sourcing

Abstract

We build on extant theory of the Multinational Enterprise (MNE), MNE subsidiaries and absorptive capacity (AC) to develop a framework that allows us to explore the role of MNE subsidiaries in the global sourcing of knowledge and MNE performance. We develop and test hypotheses using primary questionnaire-collected data. Our results support the idea that subsidiaries’ realized AC can be improved by the realized and potential AC of the MNE group and the subsidiary and in turn may improve the performance of the subsidiaries and the MNE group as a whole.