One Condition Contributing to MNCs’ Global Business Success

Knowledge is a source of competitive advantage which strengthens multinational corporations’ (MNCs) market position, and thus, they set up overseas subsidiaries partly to access other firms’ knowledge which resides in local markets. From the MNC viewpoint, due to the innate characteristics of international joint ventures (IJVs) partially owned by local firms, they have a chance to access local market information (LMI), develop new competencies themselves and share this information with their headquarters, thereby contributing to the formation of MNCs’competitive advantages. This study posits that the extent to which overseas subsidiaries reverse transfer of local information is influenced by their knowledge transfer capacity (KTC). Through OLS regressions, this study finds that first, subsidiaries’ KTC plays a pivotal role in transmitting LMI to MNCs, and second, knowledge development capability, subsidiary willingness and subsidiary autonomy function as a vehicle to transfer new information. This study contributes a theoretical concept, KTC, and provides practical implications to MNC managers.