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" Academy of Management Journal2012, Vol, 55, No, 4, 927-948,http://dx.doi,oig/10,5465/am,2010,0985
EXPATRIATE KNOWLEDGE TRANSFER, SUBSIDIARYABSORPTIVE CAPACITY, AND SUBSIDIARY PERFORMANCE
YI-YING CHANGNational Taiwan University of Science and Technology
YAPEMG GONGHong Kong University of Science and Technology
MIKE W. PENGUniversity of Texas at Dallas
In this study, we theoretically identify three dimensions of expatriate competencies-ability, motivation, and opportunity seekingfor knowledge transfer. Integrating theability-motivation-opportunity framework and the absorptive capacity perspective, wepropose that expatriate competencies in knowledge transfer influence a subsidiary'sperformance through the knowledge received by the subsidiary, but tbat this indirecteect is stronger when subsidiary absorptive capacity is greater. We collected multi-source, time-lagged data from 162 British subsidiaries of Taiwanese multinationalrms. The results support our hypotheses. Overall, we contribute to expatriationtheory and research by revealing specic expatriate competencies as well as identify-ing boundary conditions for successful expatriate knowledge transfer.
How can the performance of subsidiaries of mul-tinational corporations (MNCs) be enhanced? Animportant competitive advantage of MNCs lies intheir ability to create and transfer knowledge fromheadquarters to subsidiaries and vice versa(Bartlett & Ghoshal, 1989; Kogut & Zander, 1993).MNCs often use expatriates to transfer knowledgefrom headquarters to subsidiaries (Edstrm &Galbraith, 1977; Harzing, 2001; Hocking, Brown,& Harzing, 2004), and such knowledge transfer isbelieved to be vital to subsidiary performance(Delios & Beamish, 2001; Gong, 2003a; Tan &Mahoney, 2006).
Using expatriation as a proxy for knowledgetransfer, researchers have examined the relation-ship between the number (proportion) of expatri-ates and subsidiary performance (Colakoglu & Cali-giuri, 2008; Gaur, Delios, & Singh, 2007; Gong,2003a). But the findings have been mixed. The
The first two authors are listed alphabetically. YapingGong mainly contributed to the theoretical aspects of thiswork, and Yi-Ying Chang mainly contributed to the em-pirical aspects. We thank Jason Shaw (associate editor)and three reviewers for constructive feedback. We ac-knowledge the financial support from the Carnegie Tmstin Scotland awarded to Professor Chang, from the Re-search Grants Gouncil of Hong Kong awarded to Profes-sor Gong (project no. 640709), and from the Jindal Chairand the Provost's Distinguished Professorship at UT Dal-las that supported Professor Peng's work.
relationship has been positive in some studies(Gong, 2003a) but not significant, or even negative,in others (Gaur et al., 2007). Moreover, knowledgetransfer has rarely been examined directly as thelink between expatriation and subsidiary perfor-mance. In some MNCs, expatriates are selected onthe basis of their technical skills (Tung, 1987) andthus may not have the "soft skills" required totransfer knowledge effectively (Peng, 2011). Goingforward, it is important to identify the specific ex-patriate competencies critical for successful knowl-edge transfer. Although expatriate competenciesare important, subsidiary absorptive capacitytheability to recognize the value of external knowl-edge, assimilate it, and apply it to subsidiary oper-ations (Cohen & Levinthal, 1990)may also matter(Gupta & Govindarajan, 2000). The role of recipientabsorptive capacity has been recognized in knowl-edge management research (Szulanski, 1996), but ithas not been integrated into expatriation research.Thus, no previous research has examined this cru-cial question: How do expatriate competencies andsubsidiary absorptive capacity jointly impact theknowledge transfer process?
The theory of knowledge management suggeststhat successful knowledge transfer depends on thecharacteristics of hoth the source and the recipientof knowledge (Easterby-Smith, Lyles, & Tsang,2008; Szulanski, 1996). Theorists have identifiedability, motivation, and opportunity as importantfor explaining the creation and transfer of knowl-
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edge (Argote, McEvily, & Reagans, 2003). Just as thesuccessful performance of any task depends on theability, motivation, and opportunity to perform thetask, knowledge transfer to a subsidiary depends onexpatriate ability, motivation, and opportunity toperform the transfer. Theorists have also identifiedrecipient absorptive capacity as a critical factor inthe successful transfer of knowledge (Szulanski,1996). In the context of expatriate knowledge trans-fer, knowledge, once received by asubsidiary, mustbe better absorbed and utilized to contribute moreto subsidiary performance.
In this study, we draw upon the ability-motiva-tion-opportunity framework (Blumberg & Pringle,1982; Boxall & Purcell, 2003) to identify three di-mensions of expatriate competenciesability, mo-tivation, and opportunity seekingfor knowledgetransfer, and examine their effects on subsidiaryperformance through the amount of knowledge re-ceived (hereafter, knowledge received) by the sub-sidiary. Integrating the ability-motivation-opportu-nity framework and the absorptive capacityperspectives, we propose that the mediation effectis moderated by subsidiary absorptive capacity: ex-patriate competencies in knowledge transfer have astronger indirect effect on subsidiary performancewhen subsidiary absorptive capacity is greater. Wechose subsidiary absorptive capacity because of itsprominent role in knowledge management theoryand research (Szulanski, 1996; Van Wijk, Jansen, &Lyles, 2008). Although the two perspectives share afocus on knowledge transfer, they concern thesource side and the recipient side, respectively.Complementing each other, these two perspectivesjointly provide a more complete explanation forknowledge transfer success.
We endeavor to make three theoretical contribu-tions. First, we go beyond the focus on number ofexpatriates by identifying three dimensions of ex-patriate competencies in knowledge transfer,thereby addressing previous calls for understand-ing the expatriate characteristics that facilitateknowledge transfer and subsidiary performance(Hbert, Very, & Beamish, 2005; Tan & Mahoney,2006). Second, our focus on subsidiary absorptivecapacity adds a missing piece to research on expa-triation and subsidiary performance. We not onlytest the idea that absorptive capacity enhancesknowledge received by a subsidiary, but also ex-tend it by showing that the effect may depend onexpatriate competencies in knowledge transfer.Third, we test the idea that knowledge received bythe subsidiary mediates the relationship betweenexpatriation and subsidiary performance. More-over, we extend it by showing that subsidiary ab-sorptive capacity moderates the indirect effects of
expatriate competencies in knowledge transfer onsubsidiary performance. Overall, we contribute tothe broader literature on knowledge transfer, inwhich a fundamental issue is to identify "the con-ditions under which moving people will result inknowledge transfer" (Argote & Ingram, 2000: 164).We identify specific personnel characteristics andrecipient absorptive capacity as conditions contrib-uting to successful knowledge transfer via person-nel movement (Argote & Ingram, 2000; Song,Almeida, & Wu, 2003). We make these contribu-tions by using a multisource, time-lagged researchdesign and a sample of Taiwanese MNCs operatingin the U.K. This study is among the first to empir-ically examine expatriation and knowledge transferin MNCs from an emerging economy operating in adeveloped economy and thereby expands the liter-ature that hitherto has focused predominantly onMNCs from developed economies.
THEORY AND HYPOTHESES
The ability-motivation-opportunity frameworksuggests that ability, motivation, and opportunityare the primary building blocks of successful taskperformance (Blumberg & Pringle, 1982; Boxall &Purcell, 2003; Campbell, McCloy, Oppler, & Sager,1993). Ability refers to the knowledge, skills, andexperience needed to perform a task. Motivationrefers to the willingness (or the degree to which aperson is inclined) to perform it. Opportunity con-sists of resources in a workplace that enable taskperformance (Blumberg & Pringle, 1982). Motiva-tion involves the choices of direction (where todirect the effort), intensity (the amount of effort toexert), and persistence of effort (Campbell et al.,1993; Kanfer, 1990; Mitchell, 1997). "Motivation isa combination of psychological processes that cul-minates in the wanting and intending to behave ina particular way.. .. Actual effort or persistence arethe behavioral outcomes of motivation, not motiva-tion itself" (Mitchell, 1997: 63-64). Ability, moti-vation, and opportunity are often specified in rela-tion to specific tasks. For example, motivation tolearn is defined as "a desire on tbe part of traineesto learn the content of the training program"(Colquitt & Simmering, 1998: 654).
In this study, the task in question is knowledgetransfer to subsidiaries. The knowledge transferperspective on expatriation suggests that expatri-ates represent a means of transferring knowledge tosubsidiaries (Bonache & Brewster, 2000; Edstrm &Galbraith, 1977; Harzing, 2001; Hocking et al.,2004). Expatriates act as agents to transfer corporate
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culture to subsidiaries and to develop subsi