Do affiliate strategic roles within MNEs matter for divestment decisions, for reverse knowledge transfer, and for lateral knowledge transfer?

This PhD thesis seeks to explore the importance of affiliate strategic roles in determining affiliate survival in foreign markets, reverse knowledge transfer from the affiliate to the parent company, and lateral knowledge transfer between affiliates. I group affiliates into four different types including upstream, horizontal, downstream and unrelated affiliates based on their activities within multinational enterprises’ global value chains. Affiliates that are either upstream or downstream in the value chains are regarded as vertical affiliates. Robust to a number of different specifications and drawing on large MNE parent-affiliate linkage data in the period from 2004 to 2016, I find that the likelihood to divest poorly-performing affiliates and the effect of intra-MNE knowledge transfer are contingent on affiliate strategic roles. More specifically, the likelihood to divest poorly-performing affiliates is higher when the overseas affiliates are vertical rather than horizontal FDI, and when they are downstream, rather than upstream, in the MNE value chains. Besides, I find that the performance benefits from intra-MNE knowledge transfer are greater when the overseas affiliates are horizontal rather than vertical FDI, and when they undertake upstream, rather than downstream, activities. This thesis contributes to the international business literature by emphasizing the importance of affiliate strategic roles.