Solution?Contractual governance vs relational governance (Kano, 2019)•Develop relational capital with key partners and influence their strategic decisionsand operations•Reduce the number and variety of partners to allow for relational governance2.Knowledge management across the MNE network•What is Knowledge?–Knowledge is a broad and abstract notion / an elusive concept.–Knowledge includes both information and tacit knowledge.•Knowledge is a valuable organisational resource -builds the competitive advantages of the firm.•According to the knowledge based view of the firm, “given assumptions about the characteristics of knowledge and the knowledge requirements of production, the firm is conceptualisedas an institution for integrating knowledge.” (Robert Gant, 1996)Traditional view MNEs can apply the technology they have developed in other locations to expand their markets.•Gain competitive advantage in new markets
•Realise economies of scale in the development of the technology, since technological advancements can be implemented in markets beyond the home market, thus reducing the cost of technology (R&D, etc.) per production unit•Enhance the home developed technology through interaction with the host economy and the skills and competences available there, thus improving the performance of the technology•Transfer some or all of the technology development to the host market to take advantage of more beneficial local technology development conditionsNetwork view •Knowledge management is required externally (with partners in managing IJV, SA, and M&A ) as well as internally (within the MNE at the subsidiary level).•Knowledge flow between HQand subsidiary–Knowledge exploitation: HQ has unique knowledge resources and the subsidiary exploit them in thehost markets. In this case only one way knowledge transfer takes place–fits with globalisation strategy.–Knowledge augmentation: Subsidiary accumulate knowledge (such as local innovation, local preferences etc .) from the host markets and reverse transfer them to the HQ. In this case, two ways knowledge transfer takes place –fits with multi-domestic and transnational strategy. Subsidiary and knowledge •Off-shores-Main purpose is to produce a standardized product, which has been researched and developed centrally, in order to export it to multiple markets at a low cost. This approach is possible if barriers, such as tariffs, are low.•Server plants(global or multi-domestic)-Might be a better choice, if barriers are high. These subsidiaries produce inside the local market, with the possibility to make necessary adjustments to the product.•Enhancers-As the name implies, this subsidiary type contributes even further, by actually improving the products.•Centresof excellence-Situated in areas where some of the world’s top knowledge, within a certain field, comes together. The MNE then tries to absorb as much of this knowledge, into its intrafirm network, as possible.
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