Knowledge is at the root of understanding how organizations gain and sustain competence. Therefore, knowledge management in recent decades has become a hotly-discussed topic in academia as well as in business circles. The literature of various theoretical perspectives explains why knowledge is a critical element in achieving competitive advantages as well as improving organizational performance.
But firms struggle in solely creating the requisite knowledge to meet the requirements of a dynamic environment. Thus, to achieve their goals of producing flexible responses to environmental chances as well as remaining competitive, firms should acquire and exploit new knowledge, transferring such knowledge from external sources to internal knowledge banks.
Organizational learning theory is applied to answer the research questions raised in this study. Focusing on the process and effects of knowledge transfer, this study examines the causal relationships between the acceptability of external knowledge, knowledge absorptive capability and motivation, knowledge transfer, and firm performance. It is expected that (a) the acceptability of external knowledge will facilitate knowledge transfer; (b) the transfer of external knowledge will improve firm performance; (c) those firms with higher levels of absorptive capability ─ acquirement capability and application capability ─ are more likely to transfer knowledge from external sources and to translate external knowledge into organizational performance; (d) those firms with higher levels of absorptive motivation are more likely to transfer knowledge from external sources and translate external knowledge into organizational performance; (e) the interactive effect of knowledge absorptive capability and motivation will increase the level of external knowledge transfer and its resultant performance.
The scope of analysis in this study is the knowledge transfer from headquarters and other subsidiaries in the same MNC to the focal subsidiary. The research objects are foreign subsidiaries operating in South Korea. A Quantitative research methodology using questionnaire survey is utilized.
The empirical results support the hypotheses, demonstrating statistical significance. The theoretical and practical implications of the findings are: (a) Firms should seek, transfer, and exploit more external knowledge to improve their competitive edges and their organizational performance. In particular, the acceptability of external knowledge should be an important concern in the process of knowledge transfer. (b) Firms should continuously develop their knowledge absorptive capability (both acquirement capability and application capability) to absorb, learn and use valuable external knowledge. (c) Firms should emphasize not only absorptive capability but also absorptive motivation. Various types of incentive systems and policies can be established to motivate employees to search, learn, and utilize external knowledge. Firms with strong absorptive capability and motivation can learn and transfer more external knowledge, which can be translated into greater levels of competence and performance.