Effective knowledge transfer between the headquarters and a subsidiary in a MNC: the need for heeding capacity

Purpose This paper aims to focus on knowledge transfer between the headquarters and a subsidiary of a multinational corporation (MNC). A framework with type of knowledge, absorptive capacity, disseminative capacity and tie strength is proposed. The framework is verified qualitatively and then further developed by adding another capacity needed by the headquarters: heeding capacity. Design/methodology/approach To check the validity of the proposed conceptual framework empirically, interview-based qualitative studies were conducted for two partner programs implemented in the Japanese subsidiary of a US-based IT company. Interviews were undertaken with 17 respondents in the headquarters, the Japanese subsidiary and two alliance partners in Japan. Findings It is confirmed that type of knowledge and absorptive capacity clearly affect the effectiveness of knowledge transfer. Also, it is found that the knowledge sender’s disseminative capacity matters. Additionally, a case is found in which network ties mitigate the ineffectiveness caused by low disseminative/absorptive capacity. Research limitations/implications In this research, cultural influences have not been considered. Also, this research has not paid attention to inter-organizational knowledge transfer. These provides potential for further research which could explore this complexity in more depth. Practical implications It is suggested that the headquarters of a MNC need to have a “heeding capacity” in cases where the target subsidiary’s disseminative capacity is low and tie strength between the subsidiary and the headquarters is weak. It is a capacity for the headquarters to heed what a subsidiary would like to transmit but cannot do well, and this is achieved by listening carefully and not letting language barriers or cultural differences obfuscate the meaning. Originality/value By focusing on a dyad between the headquarters and the Japanese subsidiary, the importance of disseminative capacity of a subsidiary is highlighted, which is not often the case in the extant literature. Also, headquarters’ heeding capacity is proposed.