AN INTEGRATED MODEL OF KNOWLEDGE TRANSFER FROM GLOBAL FLAGSHIPS TO LOCAL FIRMS IN GLOBAL PRODUCTION NETWORKS

It is known that global flagships’ capacity and willingness to transfer knowledge in global production networks will affect the knowledge acquisition of local firms. However, the mechanism is not clear enough, or rather scattered, and thus lacks an integrated model for comprehensive conceptualization. Adopting a sample of 105 Chinese firms, we construct an integrated two-stage model to interpret the mechanism of knowledge transfer from global flagships to local firms and find that global flagships’ capacity and willingness to transfer positively impact the knowledge acquired by local firms through the mediation of the knowledge contributed by the global flagships. Organizational distance and local firms’ absorptive capacity affect the knowledge acquired by local firms as well. The influences of the latter two also depend on the different types of ties between global flagships and local firms.

Foreign Direct Investment from Emerging Markets. Theory and Practice

This text presents a critical review of theoretical approaches to Foreign Direct Investment. Since, in recent years, the contribution of emerging markets to FDIhas increased (especially on less advanced markets), it is interesting to define how the existing theory can explain the new players phenomenon on these markets. There are two hypotheses considered: one – the existing theoretical explanations of FDI are limited and, today, even historical; second – the essence of the comparative advantage of FDI from emerging markets is a smaller technological and organizational distance between investors and less developed host markets. The discussion is illustrated by Chinese and Indian FDI experience to support the authors’ assumptions.

Reverse knowledge transfer and innovation in MNCs

Purpose The purpose of this paper is twofold: to study the relationship between reverse knowledge transfer (RKT) and headquarters’ innovation, examining potential moderators of such relationship, and to analyze the role of headquarters’ absorptive capacity (AC) and the coordination mechanisms they adopt as antecedents of RKT. Design/methodology/approach Quantitative data were collected from 104 Spanish multinational companies. Structural equation modeling was used to test hypotheses. Findings Findings provide the evidence of a positive relationship between RKT and headquarters’ innovation. This relationship is higher when the knowledge transferred from subsidiaries to parent units is of a more tacit nature, and also when the organizational distance between them is larger. The results also show that the parent unit’s AC and the use of mechanisms for coordinating company units can facilitate RKT. Practical implications MNCs that wish to be more innovative should be aware that it is worth the effort of fostering RKT, especially when knowledge is more tacit and comes from subsidiaries with different organizational practices and culture because these two variables increase the positive relationship that it was found between effective RKT and the development of innovation in the headquarters. Additionally, results show that in order to facilitate RKT, the improvement of headquarters’ AC and the use of mechanisms of coordination between them and its subsidiaries can be useful. Originality/value Up to the authors’ knowledge, this is the first empirical study that examines the link between RKT and headquarters innovation, and one of the few that focuses on headquarters characteristics as determinants of RKT. Thus, the findings contribute to the literature that highlights the benefits of RKT for MNC’s competitiveness, and that seeks to know how to promote RKT.

An Examination of the Legal Liability Associated with Outsourcing and Offshoring Audit Procedures

SUMMARY: Accounting firms have steadily increased the use of outsourcing and offshoring of professional services including independent audit procedures. While firms suggest that the work is of higher quality and similar litigation risk, questions remain as to whether public perceptions may be more negative. This paper examines liability associated with an audit failure when work is performed by another office of the same firm or outsourced to a separate firm, and whether the work is performed domestically or in another country. Results indicate main effects for outsourcing on compensatory damages and an interaction between outsourcing and offshoring on punitive damages. Surprisingly, jurors assess higher than expected litigation awards for a failure by another domestic office of the firm for punitive damages. This result suggests that the close proximity in terms of both geography and organizational distance of the domestic office of the firm leads jurors to find the audit failure less understandable. Post hoc analyses indicate that potential jurors perceive that work completed by another domestic office of the firm has the highest expected quality and lowest risk, while work that is outsourced offshore is expected to be lowest quality and highest risk—consistent with proximity theory.