Knowledge creation capability in MNC subsidiaries: Examining the roles of global and local knowledge inflows and subsidiary knowledge stocks

• We model MNC subsidiaries’ knowledge creation capability as a function of knowledge inflows and knowledge stocks.
• Knowledge stocks are conceptualized as a subsidiary's internal human, social, and organizational capital.
• Knowledge inflows are conceptualized to generate from the host country (local) or from other units of the MNC (global).
• Local knowledge inflows are more effective in enhancing knowledge creation capability compared to global knowledge inflows.
• Results point to a not-invented-here syndrome in the exploitation of knowledge sourced from the MNC.

Grounded in knowledge-based theories of the multinational corporation (MNC) and building on organizational learning literature, this paper develops and tests a model of MNC subsidiaries’ knowledge creation capability as a joint function of knowledge inflows to subsidiaries and their knowledge stocks (i.e., subsidiaries’ internal human, social, and organizational capital). Survey-based data from 106 subsidiaries located in the U.S. suggests that local (i.e., host country) knowledge inflows to a subsidiary are more effective in enhancing a subsidiary's knowledge creation capability compared to global knowledge inflows from other units of the same MNC. Furthermore, results point to a not-invented-here syndrome in the exploitation of knowledge sourced from the parent company; such that when a subsidiary's internal social capital is high, the relationship between global knowledge inflows and knowledge creation capability is negative and when it is low, the relationship becomes positive.