Managing knowledge transfer in MNCs:: the impact of headquarters control mechanisms

In this paper we explore the impact of organisational mechanisms on inter-unit knowledge flows in multinational corporations (MNCS). A comprehensive model, based on agency theory and socialisation theory, is tested on a sample of 134 Finnish and Chinese MNC subsidiaries. Our findings indicate that MNCS can influence inter-unit knowledge transfer by specifying the objectives of the subsidiary and by utilising corporate socialisation mechanisms. However, we found no support for the hypothesised impact of management compensation systems and the use of expatriate managers on the extent of knowledge transfers from foreign subsidiaries to other parts of the MNC.