The effects of MNC parent effort and social structure on subsidiary absorptive capacity

Although the literature provides ample evidence that the global transfer and local implementation of knowledge represents a key advantage for multinational corporations (MNCs), we lack comparable understanding as to whether knowledge-creating MNC parents can actively expand the absorptive capacity of their subsidiaries. Using a teacher–student lens, this study examines the combined impact of specific structural mechanisms and motivational processes by MNC parents on the ability of 216 subsidiaries to absorb parent-initiated marketing strategies. The findings reveal that MNC parents can indeed cultivate subsidiaries’ ability to appropriate marketing knowledge through a combination of adopting specific social structures and investing in particular efforts. However, the effect of social structure on subsidiary absorptive capacity is indirect, and accounted for by the parents’ intensity of effort. A number of theoretical implications emerge from the findings for research on absorptive capacity in relation to the role of the knowledge source, the need to examine organizational influences in relation to one another, and validating the original absorptive capacity dimensions. For managers in the global marketplace, the findings lead to the suggestion that MNCs devote attention to nurturing the absorptive capacities at different organizational levels in order to optimize the global transfer of knowledge.