The impact of distance (external) and organizational factors (internal) on the knowledge chain of multinational corporations: South Africa as a host country

Purpose – The geographic dispersion of MNCs implies that whilst it gives them access to new and different knowledge from diverse localities it also adds to the costs and complexities of managing that knowledge and its effective dispersal across geographies. The purpose of this paper is to examine how knowledge is transferred within MNCs and provide a framework for this process particularly focusing on the role that distance (external) and organizational factors (internal) plays therein. Methodology – A qualitative study is utilized focusing on two technology companies from different cultural home countries and the technology transfer process with their South African subsidiaries. Findings –We find that the standardization of knowledge impacts the creation and diffusion of knowledge, expatriates impact on the creation, diffusion and adoption, and finally relevance and localization impact on the adoption and utilization of knowledge. Contribution – We present a conceptual framework around trust and rationalization as regards transferring knowledge within MNCs and find some evidence of the impact of distance, particularly cultural, on the methods employed in this transfer. The paper illustrates the practical ways in which MNCs organize their internal resources and overcome various dimensions of distance in ensuring knowledge transfers. By choosing companies from such divergent home countries (one industrialized and one newly industrialized, with very different cultural settings) and examining their knowledge transfers with their South African subsidiaries we are able to unpack various dimensions of distance and how organizational mechanisms affect this process.