Does Knowledge Sharing Pay? A Multinational Subsidiary Perspective on Knowledge Outflows.

Empirical studies on the impact of knowledge management on the performance of MNC subsidiaries remain elusive to date. This study examines the effect of knowledge management tools on absorptive capacity and firm performance with unique data from subsidiary units in a large German MNC – HeidelbergCement. The findings suggest that knowledge management tools unfold their performance impact through their significant influence on absorptive capacity and knowledge inflows. The key contributions to the current literature on knowledge flows in the MNC include an empirically corroborated link between deployments of knowledge management tools and their impact on the subsidiary employee’s ability and motivation to learn from internal knowledge flows in the MNC as well as their impact on subsidiary business performance.