Knowledge ambiguity, innovation and subsidiary performance

Purpose – The purpose of this paper is to focus on the effect that knowledge‐ambiguous innovations have on the subsidiary performance of multinational corporations (MNCs). Specifically, the paper sheds light on the relationship between knowledge ambiguity in the innovation context, in terms of tacitness, complexity and specificity, and innovation‐related subsidiary performance. Design/methodology/approach – The authors build a model integrating these three main components of ambiguous knowledge and test a set of hypotheses on a sample of 85 innovation projects developed by subsidiaries of MNCs. Data were collected through personal interviews and a partial least squares (PLS) technique was used to analyze the data. Findings – Knowledge ambiguity affects performance in different ways. None of the three components of knowledge ambiguity influences all areas of subsidiary activities (i.e. market, coordination, efficiency, and R&D). Moreover, it was found that innovations characterized by knowledge tacitness are detrimental to market performance. Research limitations/implications – The limitations to this research are its cross‐sectional nature and the use of perceptual indicators to measure the constructs. The major research implication is the importance of distinguishing between different dimensions of knowledge ambiguity in the innovation context. Practical implications – During innovation development, it is important to understand the implications and control aspects of knowledge ambiguity. This ambiguity not only impacts subsidiary performance but also indirectly influences the decisions and strategies of knowledge transfer. Originality/value – The paper contributes to the strategy and innovation management literature by suggesting that ambiguous knowledge does not always enhance performance. The paper fills a gap in the literature by addressing the impact on the subsidiary performance of MNCs by the three key components of knowledge ambiguity in innovations.