Anna Shaojie Cui, David A. Griffith, and S. Tamer Cavusgil
Executive Summary
Multinational corporations (MNCs) establish competitive postures in the global marketplace by leveraging strategic capabilities, such as knowledge management, through the transference of those capabilities to subsidiaries. However, because developing these organizational requirements is not costless, a question remains whether it is appropriate for an MNC to institute a standardized level of knowledge management capabilities for all of its subsidiaries, given that each subsidiary may operate in unique environmental contexts.
Using the environment–strategy–performance framework, Cui, Griffith, and Cavusgil develop a model that examines the individual and relative effects of two environmental market conditions on an MNC subsidiary’s knowledge management capabilities and resultant performance to understand the importance of strategic alignment to local environments. The authors test the model with a sample of 131 Croatian subsidiaries on file with the Croatian National Bank. Although both competitive intensity and market dynamism individually influence knowledge management capabilities, when examined jointly, market dynamism is a more influential environmental market condition than competitive intensity, empirical examination of the model indicates. They also find a significant, positive relationship between a subsidiary’s knowledge management capabilities and its performance.
The study emphasizes the importance of MNC subsidiaries’ strategic flexibility. The development of knowledge management capabilities is a complex process that involves both technological and organizational costs. The importance of knowledge management capabilities varies under different environmental market conditions. This means that it is important for MNCs to both understand the environmental market conditions in which knowledge management capabilities are most appropriate for their subsidiaries and allow their subsidiaries the strategic flexibility to leverage MNC knowledge management capabilities. For example, when firms operate in dynamic markets, knowledge management capabilities appear to be more beneficial than costly, and thus MNC subsidiaries investing in the development of knowledge management capabilities (or leveraging an MNC’s knowledge management capabilities into the local market) may be able to achieve enhanced performance gains.
This is not to suggest that knowledge management capabilities are not necessary in highly competitive markets, but rather to indicate that an MNC and its subsidiaries need to understand the relative influence of market environmental conditions on the need for the development of knowledge management capabilities; it may be ill-advised for an MNC to force a standardized set of knowledge management capabilities on all of its subsidiaries.
Biography
Anna Shaojie Cui is a doctoral candidate in Marketing in the Department of Marketing and Supply Chain Management at Michigan State University. Before beginning her doctoral studies, she received her degree in Finance and worked in the financial service sector. She is interested in marketing strategy, and her current research interests are in interfirm partnerships, international marketing, and innovation.
David A. Griffith is Assistant Professor of Marketing in the Department of Marketing and Supply Chain Management at Michigan State University. He received his bachelor’s degree from the University of Akron and his master’s degree and his doctoral degree from Kent State University. His areas of interest include international marketing strategy and global supply chain management. He has published in Journal of International Marketing and Journal of World Business.
S. Tamer Cavusgil is University Distinguished Faculty and John W. Byington Endowed Chair in Global Marketing in the Department of Marketing and Supply Chain Management at Michigan State University. He also serves as the Executive Director of MSU-CIBER. He specializes in international marketing strategy, early internationalization, and emerging markets. He is the author of several books and more than 100 peer-reviewed articles. Doing Business in Emerging Markets (Sage Publications 2002) is his most recent contribution. He is also the author of several computer-aided diagnostic tools for managers, including Company Readiness to Export (CORE V). He served as inaugural Editor-in-Chief of Journal of International Marketing, Associate Editor-in-Chief of Journal of International Business Studies, and Editor of the Elsevier book series Advances in International Marketing.
Journal of International Marketing, Vol. 13, No. 3, September 2005
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