Local knowledge acquisition of foreign subsidiaries in Vietnam and China

Purpose – This paper seeks to examine how foreign subsidiaries of MNCs can acquire new local knowledge by focusing on two intra-organizational factors of learning mechanisms and formative organizational context. Design/methodology/approach – A mail survey was carried out with top managers among manufacturing subsidiaries of multinational corporations (MNCs) located in Hanoi, Vietnam and Guangdong province of China. In total 123 completed questionnaires from MNCs in Hanoi and China were received. Findings – The results suggested that training and mentoring and formative organizational context has positive association with knowledge acquisition. However, three interaction terms between learning mechanisms (experimentation, socialization, training and mentoring) with formative organizational context are significantly related to knowledge acquisition. Besides, the authors also found a positive and significant association between knowledge acquisition and subsidiary performance. Practical implications – Building a formative organizational context directly promotes knowledge acquisition and increases the effectiveness of more informal learning mechanisms. Besides, a learning mechanism may work differently in different contexts, and foreign managers need to be aware of when to apply what mechanisms. Originality/value – The paper argues that the alignment between organizational context and organizational learning mechanisms can help the foreign subsidiaries acquire new knowledge and improve subsequent performance. Local knowledge acquisition in MNCs should be conceived as a deliberate and managed act, requiring a careful selection of both formal and informal mechanisms supported by appropriate contextual conditions in foreign subsidiaries.