How do multinational companies leverage technological competencies? Moving from single to interdependent explanations

Abstract

This paper explores the relationships among four fundamental determinants of intrafirm competence transfers that have hitherto been analyzed only separately: formal organization structure, informal relations, geographical distance, and relatedness of competencies across subsidiaries. Using a data set consisting of 4840 dyads between new product development teams and subsidiaries that were potential targets for competence transfers in a high‐technology multinational company, we find that these determinants interact in surprising ways to explain different patterns of transfers. Results revealed that teams preferred to approach people they knew rather than people who knew related technologies well. They also showed that teams steered away from spatially distant subsidiaries that had related competencies and that the negative effect of large spatial distances could be overcome through established informal relations. These findings indicate that studying one of the determinants separately can yield biased results, as their net effect may change when the moderating effects of the other determinants are considered. Research on synergies, integration, technology transfers, and geographical and cultural differentiation in multinational enterprises therefore needs to be broadened by analyzing multiple determinants of competence transfers. Copyright © 2004 John Wiley & Sons, Ltd.