Knowledge Transfer in MNEs

Abstract

This chapter conceptualizes the MNE as a knowledge-based and institutionally embedded organization. Moving beyond traditional asset-exploitation views, it examines how competitive advantage depends on the generation, transfer, and recombination of knowledge across borders. The chapter introduces the knowledge-based view of the firm and explores models of cross-border knowledge flows, including communication theory, absorptive capacity, and the distinction between tacit and explicit knowledge. While early perspectives conceptualized knowledge transfer as a linear diffusion process from headquarters to subsidiaries, the chapter highlights critiques emphasizing contextual distance, institutional barriers, and power asymmetries. Empirical illustrations demonstrate that knowledge transfer often involves adaptation, negotiation, and contestation rather than simple replication. By integrating power perspectives, the chapter advances a more nuanced understanding of the MNE as a differentiated network in which knowledge flows are shaped by organizational politics, local embeddedness, and strategic intent.