Foreign-owned subsidiary knowledge sourcing: The role of location and expatriates

Abstract

Multinational enterprises increasingly rely on knowledge that is sourced from outside their home country in order to sustain a competitive advantage. This research investigates knowledge sourcing in foreign-owned subsidiaries located in the emerging economy of Taiwan. Employing transaction cost economics and the resource-based view of the firm, we find that locational factors such as geographic distance or global city location, and the use of expatriates as managing directors, can positively influence knowledge sourcing. We employ symmetric and non-symmetric analysis techniques to investigate the competitive and combinative explanatory power of both theories. We find evidence for equifinality in that either, when taken separately or in combination, may create transactional and resource-based conditions to facilitate knowledge sourcing.