The mutual construction of knowledge transfer and shared context in capability development within the networked MNC

Consistent with the knowledge‐based view of the firm, capability augmentation in the multinational corporation (MNC) entails the adaptation and diffusion of knowledge within a network of globally dispersed subsidiaries. We used case study methodology to examine the transfer of knowledge practices within four MNCs in order to identify specific mechanisms through which social context impacts efficiency and effectiveness of transfer, as well as the resulting development of associated capabilities. The primary findings of this study are the identification of mechanisms that headquarters can use to create mutual interdependencies among subsidiaries, which in turn hasten capability development and enhance knowledge flow; and the mutually constructive roles of knowledge transfer and shared context, through promotion of organizational knowledge use. The manner in which these coordination and control mechanisms are implemented facilitates the integration of different units within the networked MNC.