Chinese parent firm’s knowledge types and governance modes’ effect on overseas subsidiaries’ performance : a contingency perspective

Purpose: Based on an ensemble sample of multinational enterprises (MNEs), this study aims to explore the effect of the interactions between Chinese parent firms’ knowledge (including both technological and marketing knowledge), equity control and cultural distance on the business performance of their overseas branches under different subsidiary roles. Design/methodology/approach: The study uses a data set compiled from 138 listed Chinese manufacturing enterprises and their 231 overseas subsidiaries to test the hypotheses regarding the interactive effects of transferred knowledge types and the subsidiary’s control mode. Findings: The empirical results suggest that the moderating effects of equity control and cultural distance vary with the types of the parent firm’s knowledge and subsidiary roles. Specifically, equity control positively regulates the relationship between technological knowledge and subsidiary performance while negatively moderating the relationship between marketing knowledge and subsidiary performance. Cultural distance appears to negatively regulate the relationship between marketing knowledge and subsidiary performance. This binary relationship is shown to be more significant for the implementer subsidiaries. Originality/value: Drawing on the literature on inter-firm governance and knowledge-induced innovation mechanisms, the authors develop a theoretical contingency framework to derive some managerial implications for inter-firm and infra-firm knowledge transfer in light of MNEs’ performance integrity.