Intra-organizational communication and its consequences

Purpose: The purpose of this paper is to address intra-organizational communication between parent firms and foreign subsidiaries and examine how such communication effectively facilitates knowledge sharing between parent firms and their subsidiaries. Design/methodology/approach: This study approaches the relationship between intra-organizational communication and the effectiveness of knowledge sharing from the viewpoint of foreign subsidiaries. The data have been collected from local managers in subsidiaries operating in Japan using a questionnaire survey. The hypotheses are tested by employing a robust regression model. Findings: This study finds that intra-organizational communication between parent firms and foreign subsidiaries is positively associated with the effectiveness of knowledge sharing. The benefits from intra-organizational communication are greater for service firms than for manufacturing firms. Subsidiaries established through acquisition are found to enjoy a greater positive effect from intra-organizational communication than those established through greenfield investment. Practical implications: The results of this study suggest that multinational corporations should facilitate intensive intra-organizational communication for knowledge sharing that can lead to the effectiveness of foreign subsidiaries. In particular, service firms should appreciate the value of communication. This study also indicates that foreign subsidiaries established through acquisition should promote communication with their parent firms for successful knowledge sharing. Originality/value: This study demonstrates that the effect of intra-organizational communication on knowledge sharing differs among industries and among entry modes. This is the initial step to further investigations on the industry and the entry strategy effects of intra-organizational communication.