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.