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Exploring the effects of vertical and lateral mechanisms in international knowledge transfer projects.


* Knowledge is critical for creating and sustaining competitive advantage and in today's fast-moving international market firms need to leverage knowledge globally. Therefore, one important question becomes what effect different transfer mechanisms have on transfer success.

* This study investigates 169 international knowledge transfer projects in multinational corporations focusing on the role of hierarchy, heterarchy and IT in terms of effects on knowledge transfer success, that is, efficiency and effectiveness of the transfer project.

* We find that the effects of the different integrative and coordinative structures on knowledge transfer success are contradictory. Centralization through headquarters involvement is negatively related to knowledge transfer success in both its dimensions, while previous cooperation between subsidiaries has positive effects on transfer effectiveness, but not on efficiency. The use of IT nurtures knowledge transfer success in both dimensions.

* This study adds to the knowledge about the effects of vertical and lateral mechanisms on the success of knowledge transfer projects.

Keywords: Hierarchy and heterarchy * IT * Knowledge transfer * Multinationals * Vertical and lateral mechanisms


Knowledge is one of the most important factors in differentiating firms from their competitors and in creating competitive advantage. The creation and sustenance of capabilities in order to continuously generate knowledge is a primary objective of strategy (Teece et al. 1997). However, advantage positions eventually erode through competition and imitation (Schumpeter 1942; Nelson and Winter 1982). According to the resource-based view (Barney 1991), resources and capabilities generate competitive advantage only as far as there are barriers to imitation. One important barrier to imitation lies in the causal ambiguity of knowledge concerning the resource inputs and the productive output it renders (Lippman and Rumelt 1982; Reed and DeFillippi 1990). This implies somewhat of a paradox for globally dispersed firms that need to transfer and replicate knowledge, practices and capabilities in multiple locations. In fact, barriers to imitation are also barriers to internal transfer (Szulanski 1996; King and Zeithaml 2001). For multinational corporations (MNCs)--which are geographically dispersed and can be conceptualized as inter-organizational networks (Ghoshal and Bartlett 1990; Andersson et al. 2007)--dealing with this issue is paramount. The development and international transfer of knowledge have been identified as primary strategic issues for MNCs (Bartlett and Ghoshal 1989) and the ability to facilitate such processes within an organizational context has been advanced as a main explanation for the existence of MNCs (Kogut and Zander 1993). Thus, a key management concern in MNCs is to understand what mechanisms and structures are available for transferring ambiguous knowledge, and what trade-offs these mechanisms might entail. For instance, are activities organized laterally between subsidiaries and vertically through centralization always favorable for international knowledge transfer projects? These mechanisms may both hinder and facilitate global integration and coordination of knowledge. In this study we are particularly interested in what results different types of mechanisms generate in terms of knowledge transfer success.

According to Foss (2006), there is still little understanding of the effects of different organizational mechanisms and structures that can be used in knowledge transfer processes. The most common findings indicate that knowledge transfer is, while worthwhile, problematic and costly (Teece 1977; Szulanski 1996; Simonin 1999; Gupta and Govindarajan 2000). A number of studies from the 1990s have come to define the field--among them, Szulanski's study (1996) of best practice transfers in firms, Nonaka and Takeuchi's (1995) work on knowledge creation, and the formulation of a knowledge-based view of the firm (Grant 1996; Spender and Grant 1996). Since then, knowledge transfer has predominantly been seen as dependent on the properties and attributes of that which is transferred. A recent study by Van Wijk et al. (2008) examines through a meta-analytic review the antecedents and consequences of knowledge transfer. However, besides including knowledge characteristics, organizational and network characteristics were also considered, although they do not open up the tool box of transfer mechanisms. Overall, we can see that there has been limited emphasis on the effects of strategies and structures of MNCs, i.e., vertical and lateral mechanisms (such as organizational structures and information technology solutions) in relation to knowledge transfer, as high-lighted by for instance Sambamurthy and Subramani (2005).

Findings and arguments for successful knowledge sharing are contradictory and still inconclusive related to formal and informal organizational structures (e.g., Tsai 2002; Foss 2006; Van Wijk et al. 2008), with previous research focusing on knowledge flows and not on the actual transfer success (Gupta and Govindarajan 2000; Hansen 2002; Bjorkman et al. 2004; Van Wijk et al. 2008; Gooderham et al. 2010). There have been some notable exceptions in trying to problematize the successfulness of a transfer in different outcomes and dimensions (Szulanski 1996; Kostova 1999; Kostova and Roth 2002). However, there is still a clear gap in the literature warranting the investigation of different outcomes of knowledge transfer.

To fill this gap, this study aims at deepening the analysis by considering the effects of vertical and lateral mechanisms on the success of international knowledge transfer projects. We conceptualize successful transfer of knowledge in two distinct dimensions. Transfer efficiency reflects the speed and cost of the transfer (Teece 1977; Zander and Kogut 1995; Szulanski 1996), and transfer effectiveness relates to the extent to which knowledge is satisfactorily implemented and used in the receiving subsidiary (Leonard-Barton and Sinha 1993; Kostova 1999; Kostova and Roth 2002). We develop a conceptual framework to investigate the determinants of knowledge transfer success that contrasts hierarchy and heterarchy (Hedlund 1993) and explore the issue by means of an empirical investigation. We study 169 knowledge transfer projects in MNCs, looking at the effects of vertical and lateral mechanisms including information technology (IT) in the transfer of knowledge. Specifically, we investigate centralization, subsidiaries' previous dyadic relationships and the role of IT that span both hierarchy and heterarchy. These mechanisms are likely to affect integration and coordination of knowledge in the MNC. This is subsequently connected to knowledge transfer success measured in terms of efficiency and effectiveness of the transfer project.

Our findings confirm that management of international knowledge transfer projects must include considerations of what mechanisms are favored as there is a trade-off in the results related to the different mechanisms. It is important to underline that this study is contributing to the literature by not only discussing and isolating causes of knowledge transfer problems/success as previous studies have done (Simonin 1999; Minbaeva et al. 2003) but, more specifically, by presenting a fine-grained analysis of effects, i.e., the efficiency and effectiveness dimensions of specific knowledge transfer success, which can be seen as meeting Weick's (1974, p. 366) critique that "... we typically do a fine-grained analysis to isolate separate causes but then do a coarse grained analysis when examining the effects".

We begin this paper by outlining the basic theoretical assumptions of knowledge transfer, noting the tension between inimitability as a source of competitive advantage but also as an obstacle to transfer. Building on this, we proceed to specify our analytical framework in terms of different aspects of transfer success and various organizational mechanisms, i.e., centralization, previous cooperation, and IT, while formulating our hypotheses. We then describe our data and present our results. The paper moves on to discuss the findings and concludes by bringing attention to managerial and theoretical implications of our study.

Knowledge Transfer in MNCs

In this paper we use innovations in order to capture technological knowledge (Teece 1986; Kreiner and Mouritzen 2003). We broadly define innovation in a Schumpeterian manner as the creation of a new production function (Schumpeter 1934), i.e., innovation refers to a change in a process or in the outcome of a process, related to industrial production and/or exchange (Zander 1991). Moreover, we specifically consider innovations in terms of subjective perception, along the lines of Rogers (1995), that is, if a practice is new to a particular firm, it is an innovation, regardless of whether that practice is new to the world or not.

We define knowledge transfer as the process/project taking place in a specific time when knowledge is shared, by means of selected mechanisms, between specific and distinct parties, i.e., senders and receivers (Szulanski et al. 2004). In this study we are concerned with intra-firm knowledge transfer where one subsidiary (sender) has developed or acquired knowledge and transfers it to one or more subsidiaries (receivers) within the MNC. The transfer is targeted, which means that we are dealing with purposeful transfers rather than involuntary diffusion. In the process of knowledge transfer it is important to consider what is actually transferred. In this study the transfer is conceived of as the transfer of specific technological knowledge, including the transfer of surrounding knowledge regarding its application, maintenance, servicing, and the like, necessary for it to add value at the receiving subsidiary. This allows us to use the transaction as the unit of analysis as recommended by Foss (2007).

The competitive advantage of MNCs is increasingly based on knowledge from multiple locations and its rapid dissemination across the firm. Such MNCs must simultaneously manage local knowledge, international learning and global integration, while overcoming the inertia produced by the administrative heritage (Bartlett and Ghoshal 1989). In this view, MNCs are explained not only in negative terms--how they enable transactions by internalizing knowledge flows subject to market failure--but also in positive terms, how they facilitate knowledge creation and leverage it internationally through integration and coordination (Kogut and Zander 1993; Ghoshal and Moran 1996; Nohria and Ghoshal 1997). From this standpoint, research on MNCs needs to address knowledge development and transfer at the subsidiary level. The reason is that the larger, more diversified and more dispersed an organization is, the greater the potential leverage of knowledge is--but, for exactly the same reasons, so are the potential difficulties in transferring and utilizing knowledge in different contexts (Szulanski 1996; Andersson et al. 2002).

Knowledge Transfer Success--Efficiency and Effectiveness

Previous studies have emphasized the flow of knowledge when investigating knowledge transfer without dealing with the actual success of the process (e.g., Haas and Hansen 2005). Consequently, such research rests on the assumption that the more knowledge flows within the organization, the better it is (Gupta and Govindarajan 2000; Bjorkman et al. 2004). However, it is difficult to investigate the performance of a flow. Left out from such an analysis includes dimensions of whether the transfer is complete (Argote and Ingrain 2000), the knowledge is used and implemented at the receiving subsidiary (Kostova 1999; Kostova and Roth 2002), and the transfer process is capital and time consuming (Teece 1977). To study the success of a transfer, individual transfer projects taking place between two subsidiaries needs to be considered (Foss 2007). Szulanski (1996) and Kostova and Roth (2002) discuss if knowledge transfer can be perceived as a distinct experience related to specific projects. This allows for variation in the performance tO be captured in an in-depth way.

In this research context we deem it appropriate to separate success aspects of the transfer in the efficiency and effectiveness dimensions since their relative importance may differ according to the setting. While the best result for a transfer project conceivably is one that is cheap, fast and complete, in reality many managers may need to prioritize one aspect over the other. Thus, distinguishing between different aspects of transfer success allows of a more fine-grained analysis. Similar distinctions have previously been used in research on project failure (Pinto and Mantel 1990), transfer of best practices (Szulanski 1996) and product development/innovation (Brown and Eisenhardt 1995).

Efficiency can be defined as "the amount of resources used to produce a unit of output" and effectiveness as "the degree to which goals are attained" (Daft 1998, p. 663). Transfer efficiency entails the relative amount of resources, effort and time spent on the transfer process, i.e., there are direct and indirect costs associated with transfer. If the cost of a transfer project becomes greater than the benefits of conducting the transfer, the merits of conducting the transfer can be questioned. As observed by Teece (1977), transfer consumes considerable amounts of resources. Thus, direct cost (Reagans and McEvily 2003) is one key dimension of efficiency. Another dimension of efficiency is transfer time. If a transfer is conducted quickly, the knowledge can be put to use earlier at the receiving subsidiary, thus enabling the organization to make use of its knowledge stock more efficiently (Cool et al. 1997). Hence, the speed dimension is a critical component of transfer efficiency (Zander and Kogut 1995).

Transfer effectiveness refers to the extent knowledge is implemented and used at the receiving subsidiary. Attaining this goal is the target to aim for in a satisfactory effective process (Pfeffer and Salaneik 1978; Leonard-Barton and Sinha 1993). Effectiveness means that knowledge not only has to be transferred, but also adopted (Abrahamson 1991), used (Kostova 1999) and implemented (Dougherty 1992; Kostova and Roth 2002; Repenning 2002) at the receiving subsidiary. A corollary of a subsidiary not only ceremonially adopting knowledge (Kostova and Roth 2002) is that the relevance of knowledge becomes important, and high relevance is important for knowledge transfer effectiveness as conceptualized in this paper (Schulz 2003; Yang et al. 2008). This is consistent with the completeness of the transfer project (Argote and Ingram 2000).

Toward a Model of Knowledge Transfer Success

When discussing the different dimensions of knowledge transfer success, it is important to keep in mind that even within MNCs transfer can be arduous and does not occur automatically (Gupta and Govindarajan 2000). Integrative mechanisms play a key role in transferring knowledge between individuals, across departments and subsidiaries (Sanchez and Mahoney 1996; Szulanski 1996; Watson and Hewett 2006; Gooderham et al. 2010). Specifically, in MNCs the international transfer of knowledge is influenced by the vertical as well as lateral mechanisms that emerge from organizational structures (Gupta and Govindarajan 1991; Zander and Kogut 1995; Grant 1996). Organizational structure establishes formal patterns of authority, responsibility and communication, and influences informal interaction and cooperation. Examples include routines between sister subsidiaries (Nelson and Winter 1982; Grant 1996) and headquarters control and incentives systems (Doz and Prahalad 1981). In this paper we focus on one vertical mechanism, centralization, one lateral mechanism, previous cooperation, and one mechanism spanning both the vertical and lateral MNC structures, the intranet. The rationale behind this can be found in Hedlund's (1993) discussion of the relative merits of hierarchy versus heterarchy where he emphasizes control, subsidiary cooperation and the increasing importance of information technology (Hedlund 1993).

Vertical Mechanisms--Centralization

Centralization is defined as "the extent of hierarchical authority exercised by the headquarters over various subsidiary decisions" (Nohria and Ghoshal 1994, p. 442). Ghoshal and Bartlett (1990) and Birkinshaw (2001) argue that headquarters can be influential in managing knowledge flows between subsidiaries. As such, centralization captures both coordination (Ghoshal et al. 2004) and monitoring (Mudambi and Navarra 2004) of intraMNC knowledge transfer.

In general, there is some support for the importance of control and involvement by headquarters in subsidiary activities (e.g., Ambos and Schlegelmilch 2007). Particularly, it is shown that headquarters is most likely to become involved when it deems the transfer highly important from a strategic point of view (Poppo 2003). Headquarters main concern when dealing with knowledge transfer is aimed at increasing the efficiency of the transfer project. The logic behind this is that it is easy for headquarters to concentrate on something measurable such as the flow of knowledge (O'Donnell 2000). The focus on the efficiency dimension is likely to be associated with subsidiary incentives, in order for the subsidiary to act in accordance with the behavior desired by headquarters (Osterloh and Frey 2000). Put differently, specific incentives and evaluations can elicit the behavior wanted at the subsidiary level (Gupta and Govindarajan 2000; O'Donnell 2000) positively influencing the efficiency of the transfer project. Thus, the headquarters focus becomes a priority for the subsidiaries. Thus we postulate the following hypothesis:

Hypothesis 1a: Centralization in the transfer project is positively related knowledge transfer efficiency.

At the same time, centralization may reduce the initiatives taken by subsidiaries and the use of local resources, making the transfer more costly and time consuming. The involvement of headquarters means that one more actor is engaged in the transfer process, potentially making it more complicated, demanding more coordination and reporting requirements are likely to increase when headquarters focuses on cost and speed. In other words, transfer efficiency is likely to decrease because such involvement increases project visibility, prestige and reporting requirements, which adds to the cost and time required carrying out the projects (Bjorkman et al. 2004; Birkinshaw et al. 2007). The coordination costs of a transfer project where headquarters is actively involved are likely to be higher than for a bilateral process, as more people and locations are involved. Moreover, when headquarters is directly involved in specific transfer projects, the process is less likely to benefit from transfer routinization, as the headquarters is unlikely to have as much specific knowledge about the application or about the sender and receiver contexts as these parties themselves have (Holm et al. 1995). Transfer routinization between the transferring subsidiaries facilitate on-going knowledge sharing since it can foster structures, processes and practices between the parties (Mintzberg 1979; Szulanski 1996). Thus, we find compelling theoretical arguments for centralization to influence transfer efficiency both positively and negatively. We therefore suggest the following competing hypothesis:

Hypothesis 1b: Centralization in the transfer project is negatively related to knowledge transfer efficiency.

To ensure an effective transfer, headquarters can support transfer projects directly by providing expertise and commitment. Such involvement makes a particular project visible, participation in it becomes more legitimized, and active involvement by headquarters may enhance and support the effectiveness of knowledge transfer, influencing overall satisfaction with the knowledge and creation of business value (Lin 2007). In cases of resistance from the receiving subsidiary, headquarters can attempt to strengthen the climate for implementation, for instance, by providing specific rewards and sanctions, or by using other means to create a positive feeling toward a technology. By involving itself, headquarters signals that the transfer project is a priority and that it can resolve conflicts between the transferring parties (Argyres 1995). This is likely to facilitate knowledge adoption and diffusion in the organization. When corporate top management has prioritized and committed itself to a knowledge transfer project, it will be difficult for receiving subsidiaries to resist adoption. Following this line of thoughts we suggest the following hypothesis:

Hypothesis 2a: Centralization in the transfer project is positively related to knowledge transfer effectiveness.

However, if headquarters focus is on financial targets and easily measurable dimensions, this is likely to act detrimentally to effectiveness, which will be more difficult to capture and communicate. Hence, there is a risk of a superficial transfer process, where the knowledge is only ceremonially adopted (Kostova and Roth 2002). Moreover, headquarters involvement in knowledge transfer processes may create ill feelings towards the knowledge transferred (Ghoshal and Moran 1996; Kostova and Roth 2002) and a negative disposition at the receiving subsidiary toward truly adopting and integrating the knowledge subject to transfer (Forsgren 2008). Finally, headquarters involving itself in transfer processes can lead to less relevant knowledge being transferred owing to the sometimes superficial knowledge about subsidiary operations and needs possessed by headquarters (Holm et al. 1995), which is supported by the fact that the relevance of knowledge has been found to affect transfer performance (Yang et al. 2008). With these contradictory theoretical arguments as a starting point, we propose the following competing hypothesis:

Hypothesis 2b: Centralization in the transfer project is negatively related to knowledge transfer effectiveness.

Lateral Mechanisms--Previous Cooperation

Beside the role of headquarters in knowledge transfer as discussed above, it will be relevant to consider social activities at the subsidiary level, since it is at this level the transfer takes place (Kostova and Roth 2003). One aspect of organizational structure is previous cooperation among sister subsidiaries. In the heterarchic (Hedlund 1993) conceptualization of the MNC, transfer routines built on previous cooperation are found to be a critical factor in efficiently fostering knowledge transfer at the subsidiary level. Previous cooperation has been shown to generate trust between counterparts (Uzzi 1997; Inkpen and Tsang 2005), which Tsai and Ghoshal (1998) have proven to be positively influencing the success of knowledge transfer. Thus, by getting to know your counterpart better, the knowledge subject to transfer is likely to become more relevant, which naturally affects transfer success positively as the counterparts will be more committed to the project (Schulz 2003; Szulanski et al. 2004; Yang et al. 2008). Therefore, we postulate that:

Hypothesis 3: Previous cooperation between the sending and receiving subsidiaries is positively related to knowledge transfer efficiency.

Concerning inter-organizational transfers, Simonin (1999) showed that the duration of alliances moderates transfer performance. The existence of transfer routines indicates relations cutting across formal organizational structures, characterized by previous cooperation and experience of transfer projects, which facilitates communication between subsidiaries as the counterparts know one another and each other's processes. While these routines take time to establish, they facilitate contact and aid in overcoming motivational issues such as the not-invented-here syndrome (Szulanski 1996; Watson and Hewett 2006). Thus, routines would increase the efficiency, i.e., reduce costs and increase the speed of the transfer project, and at the same time increase effectiveness in terms of the level of implementation and satisfaction with the project (Eisenhardt and Martin 2000; Zollo and Winter 2002). Thus, we hypothesize that:

Hypothesis 4: Previous cooperation between the sending and receiving subsidiaries is positively related to knowledge transfer effectiveness.

IT as an Organizational Boundary Spanner

As emphasized by Maltz (2000), further work at both theoretical and empirical levels on the importance and role of different knowledge transfer mechanisms between subsidiaries is needed. Dewett and Jones (2001) call for empirical investigations into IT utilization and performance as a knowledge management mechanism. Findings presented by Hansen et al. (1999) suggest that firms exhibit an overall dominance of either direct means of knowledge transfer or IT mediated knowledge management systems. However, it has not been demonstrated that these mechanisms are mutually exclusive or even substitutes within the knowledge transfer process. For example, direct interaction through teamwork could be strengthened by IT means and vice versa. Bolsani and Scarso (1996), as well as Ciborra and Hanseth (1998) describe IT systems as tools with high potential in knowledge management, especially in terms of efficiency and scope of knowledge access, although limited in terms of richness if compared with more direct types of mechanisms. Given an initial investment in an IT infrastructure, knowledge transfer can occur faster and cheaper compared with more costly and time-consuming alternatives, such as extensive traveling, recoding of information, and handling complex documents. Corporate-wide intranet systems and knowledge management systems, for example, may prescribe the articulation and codification of knowledge to facilitate the transfer. A logical consequence is that better adoption of knowledge will occur if it is rendered explicit and structured in, for instance, corporate manuals, guides and documents. In this paper we particularly focus on intranet systems as they provide a very flexible platform for different types of applications that potentially can be used by everybody in the organization. The main use of the intranet is for communication and collaboration among organizational members (Prichard et al. 2000). For instance the intranet can be used to publish, to search, to transact, to interact, to share and to record. Thus, an intranet offers the potential for information transfer and collaboration across departments, functions, and different information systems within the organization (Bernard 1996). One of the strengths of the intranet is its potential to adapt to the different necessities of the users and to be potentially linking the whole organization, without excluding functions or certain typologies of users (as other more specialized IT tools might do). However, the value of an intranet for knowledge managementis largely dependent on the content and tools that it provides to its users and itsultimate application in business operations (Hall 2001).

Intranets are providing organizations with opportunities to create knowledge, e.g., for new product development (Scott 1998). As argued by Von Hippel and von Krogh (2003), implementation becomes easier and projects can be better understood with the help of information and communication tools. They can also decrease the distance present in international knowledge transfer projects (Van Alstyne and Brynjolfsson 2005). Thus knowledge can be diffused more rapidly and be better integrated by the subsidiaries (Van Alstyne and Brynjolfsson 2005). On the basis of the above argumentation we put forward the following two hypotheses:

Hypothesis 5: IT use during the transfer project is positively related to knowledge transfer efficiency.

Hypothesis 6: IT use during the transfer project is positively related to knowledge transfer effectiveness.

Figure 1 summarizes the hypotheses. In the following section, we will confront our model with empirical data.


Data and Methods

Sample and Data Collection

This research is part of a larger project focusing on the development and transfer of innovations in MNCs. Data was collected from 169 dyadic transfer projects at the subsidiary level. The research builds on the notion that innovations capture and embody knowledge (Kreiner and Mouritzen 2003; Teece 1986). The 169 transfer projects investigated concerned 72 innovations that were developed by 63 subsidiaries in 23 MNCs. The sample firms represent different industries with an emphasis on manufacturing. The subsidiaries in the sample all undertook their own development of the sampled innovations, which they subsequently used in their own business activities. The descriptive statistics show that the subsidiaries average size was 571 employees, sales 281 million [euro], age 48 years and R&D budget around 8 million [euro]. The subsidiaries were located in 14 countries, where Swedish subsidiaries accounted for 38.8% of the innovations. The remaining part was released by subsidiaries in Taiwan (18.8%), Italy (8.2%), France (7.1%), the United Kingdom (7.1%), the United States, Germany, Belgium and Finland (3.5% each), and Austria, the Czech Republic, Denmark, the Netherlands and Switzerland (1.2% each).

As with much managerial research, population definition and sampling procedures are problematic and require considerations of both empirical generalizability and pragmatism. To collect the data we approached large MNCs with a global presence that plausibly undertook knowledge development and transfer projects. The data was collected between 2002 and 2005 by a group of researchers who visited subsidiaries located in different countries. We tried to ensure data collection equivalence and our data collection procedures are described below (Hult et al. 2008; Sinkovics et al. 2008). Initially, a formal letter was sent to the companies asking them to participate in the study. The first meeting was usually held at headquarters and had the objective of getting acquainted with the organization and of asking for potential respondents at the subsidiary level. Subsidiary managers and project managers were asked to identify innovations to be studied. The next step was to identify receiving subsidiaries that were the subject of the transfer projects. For practical and analytical reasons, we limited our investigation to a maximum of three transfer projects per innovation, although more could have occurred. Respondents at the sending subsidiary were asked to describe and assess specific aspects of the transfer projects and we were careful not to make the respondents select receiving subsidiaries that were important for a pre-specified reason. The data was collected using a standardized questionnaire that had been qualitatively pre-tested by means of two pilot interviews with MNC managers to eliminate ambiguous questions and to enhance the applicability of indicators. Through face-to-face interviews the interviewer was able to interact with the respondents and clarify questions when necessary. The interviews lasted between two and four hours and were sometimes supplemented by a visit to the facilities and a practical demonstration of the innovation in question. The questionnaire was administered using English as the language of communication. The possibility to meet in person with the respondents ensured that the information came from a well-informed person, and the possibility to clarify questions as well as detect inconsistencies in answers increased face-validity and reliability of the data (for a similar approach, see Andersson et al. 2002). A drawback with this time and resource consuming data collection procedure is that we only have information from the sending subsidiary. However, this has to be put in relation to the advantages of having the opportunity to meet with respondents in face-to-face interviews. It can be assumed that such respondents are well-informed about the transfer process in relation to processes at both the sending and receiving subsidiary.

Admittedly, there is a possibility of an overrepresentation of successful innovations in the sample, i.e., under-sampling of failure. However, sampling was not done on market success, but still, the results need to be cautiously interpreted, even though the selection criterion for the transfer observations was potential to be transferred, not successful transfer, thus somewhat limiting this problem.

Operationalization of Measures

Single item indicators are avoided in the dependent and independent variables, as recommended by Boydet al. (2005), to the extent possible given our theoretical model (IT is captured using a single item, i.e., intranet for reasons elaborated on below). In this way we have tried to minimize measurement error and offer a multifaceted representation of the underlying construct (Hair et al. 2006). A full list of the specific indicators used in the dependent and independent variables is found in Appendix A.

Dependent Variables

In order to capture transfer success in the efficiency and effectiveness dimensions we adopted an iterative approach as recommended by Churchill (1979) considering previous studies, thus taking received theory into account, and at the same time combining this with estimations of coefficient alphas (Nunnally 1978). Consequently, our constructs can be deemed to be theoretically valid as well as empirically reliable.

Transfer efficiency relates to the cost, i.e., relative expenditure (Teece 1977), and the speed (Zander and Kogut 1995) of the transfer project between the sending and receiving subsidiaries. In order to form the construct the three items used in this construct were summed and averaged. The cronbach alpha for transfer efficiency is 0.673, slightly below the recommendations by Nunnally (1978). Given this somewhat low item reliability, the mean inter-item correlation (MIC) was calculated as recommended by Carmines and Zeller (1979) returning with a value of 0.403 and thus being within the optimal range (Briggs and Cheek 1986), which made us decide to include the efficiency construct operationalized as indicated in Appendix A.

Transfer effectiveness refers to the extent knowledge was implemented and used at the receiving subsidiary. This goal attainment is the target to aim for in a satisfactory effective process (Pfeffer and Salancik 1978; Leonard-Barton and Sinha 1993). Thus, effectiveness means that knowledge not only has to be transferred, but also adopted and put to use at the receiving subsidiary (e.g., Dougherty 1992; Kostova and Roth 2002; Repenning 2002). We measure transfer effectiveness with four indicators representing the adoption and use of the knowledge at the receiving subsidiary. The indicators were summed and averaged in order to form the construct, and the cronbach alpha for the transfer effectiveness construct is 0.817.

It is important to highlight that the transfer projects were completed, in the sense of not being ongoing, at the time of the interviews. This is fundamental in order to be able to distinguish between the efficiency and effectiveness dimensions, as, for example, the transfer process may be quick, but the knowledge may actually never be used at the receiving subsidiary.

Independent Variables

Centralization aims at capturing headquarters hierarchical involvement and stance toward the specific transfer project with the help of four indicators which were summed and averaged in the subsequent statistical analysis. The cronbach alpha returned with a value of 0.632. Given the conservative nature of alpha tests, the MIC value was calculated returning with a value of 0.295 indicating that the construct can be used despite the somewhat low alpha. This construct is based on Ghoshal and Nohrias (1989) observation that centralization is fundamental in every headquarters-subsidiary relationship and similar measures have previously been used by, for instance, Gates and Egelhoff (1986), Birkinshaw et al. (1998), and Tsai (2002). Previous cooperation captures the extent of shared experience between the sender and receiver as it increases the relationship specific knowledge between the involved counterparts. This builds on the literature highlighting that previous experience is conducive for increasing the knowledge transfer capabilities (Devinney 1987; Ingram and Baum 1997). Two questions concerning the amount of previous cooperation and the level of knowledge shared were used in order to form the construct. This construct has a cronbach alpha of 0.738. In order to gauge the boundary spanning use of IT covering both the vertical and lateral dimensions of the knowledge transfer process a single item indicator was used, namely the level of use of the intranet during the transfer process. The intranet platform is a broad and flexible tool which may support a high number of various types of applications (both standard and developed in house). In this sense intranet captures a multiplicity of potential solutions that can be used when developing and transferring knowledge between units and functions of the organization (e.g., Bernard 1996; Prichard et al. 2000).

Control Variables

In order to reduce unobserved heterogeneity and other possible explanations we included control variables to capture subsidiary, knowledge, MNC, and macro features. It is natural to assume that the model may be influenced by the age of a specific subsidiary. Previous research has shown that the ability to exploit knowledge depends on past experience of similar activities (Cohen and Levinthal 1990). The control was included as the natural log of the number of years the sending subsidiary had been operating on the market. Subsidiary size was measured as the natural log of its number of employees and can be considered a good proxy for many characteristics related to the subsidiary (Yang et al. 2008), i.e., the importance of the subsidiary internally in the MNC and in the local environment. Other examples include that centralization via headquarters involvement may differ between larger and smaller subsidiaries. As a final control pertaining to the characteristics of the subsidiary, we included a dummy variable coded 1 if the subsidiary had an official research mandate and 0 if not.

Two controls for the certain type of knowledge were included in the models, one checking whether the knowledge had been awarded a patent and the other controlling for the degree of explicitness. The patent control was measured as a dummy variable taking the value 1 if awarded a patent, and 0 if not. This control relates to the issue of high versus low technological innovations where patents previously have been used as indicators (Tratjenberg 1990) and as markers of technical importance (Albert et al. 1991). Explicitness was measured as a two item construct asking the respondents on a 7-point Likert scale (1 = strongly disagree, 7 = strongly agree) if the innovation technology/process know-how was easily codifiable (in blueprints, instructions formulas etc.), and if the innovation technology/process know-how was more explicit (i.e. transferable) than tacit. The cronbach alpha for the construct is 0.661. The low degree of explicitness is frequently discussed as a potential barrier to transfer success (e.g., Zander and Kogut 1995). Knowledge sharing incentives were controlled for by asking the respondents to rate, on a 7-point Likert scale (1 = not important, 7 = very important), the importance of knowledge sharing for headquarters measurement of the subsidiary's performance. As an MNC specific characteristic, incentives or rewards have been shown to alter the behavior of employees (Birkinshaw et al. 1998; Tsai 2002; Mudambi and Navarra 2004). This control captures hierarchy on a more general level compared to the transfer specific mechanism centralization as used in one of the independent variables.

Finally, we included the GDP of the sending subsidiary's country as a general proxy for the munificence of the local technological and business environments (Bjorkman et al. 2004; Gupta and Govindarajan 2000). GDP was measured at the date of the initiation of the knowledge transfer expressed in the log of millions of USD (constant 2005 terms), using data obtained from the GGDC Total Economy Database (2008).


Table 1 presents the descriptive statistics of all the variables and the results from the Ordinary Least Squares (OLS) regressions can be found in Table 2. Two models were estimated in a stepwise procedure, including, first only the control variables and in the second model the centralization, previous cooperation and intranet variables. This was done for both efficiency and effectiveness.

Model 1, accounting only for the control variables, returned with an F-value of 3.380 (p>0.01) in the efficiency dimension, explaining 16.5% of the variance, and with an F-value of 3.420, accounting for 15.1% of the variance in the effectiveness dimension. In model 2, the efficiency dimension returns with an F-value of 3.781 (p>0.01) explaining 32.3% of the variance and the effectiveness dimension shows an F-value of 2.670 (p > 0.01), and an [R.sup.2] of 23.3%. Overall, these results support our model specifications.

Concerning the hypotheses, hypothesis l b is supported with a significantly negative relationship being found in model 2 (p > 0.01) between centralization and transfer efficiency. Hypothesis 2b is supported, returning with a significantly negative coefficient (p > 0.05) in model 2. Thus, centralization also has a significantly negative effect on transfer effectiveness. Consequently, hypotheses la and 2a are rejected. In the discussion section we will further elaborate on the role of centralization for transfer success. Only directional support is found for hypothesis 3, i.e., the coefficients return with the expected sign but with an inadequate level of significance. Hence, we cannot draw any conclusions concerning the effect of subsidiaries' previous cooperation on transfer efficiency.

However, we find that previous cooperation has a significantly positive effect on transfer effectiveness (p > 0.05) in model 2, thus lending support to hypothesis 4. Support is found for hypotheses 5 (p > 0.01) and 6 (p > 0.01), indicating that the use of an intranet has a significantly positive impact on transfer efficiency and effectiveness. The findings are summarized in Table 3 and before the results are discussed, we will briefly explore the issues of multicollinearity, normality, and heteroscadasticity of the data as well as common method variance.

To ensure that multicollinearity issues do not disturb the interpretation of the results, the variance inflation factor (VIF) was calculated for each of the two models in both the efficiency and effectiveness dimensions with the highest mean VIF value returning for model 2 in the efficiency dimension (mean = 1.4 l 1). The single highest VIF value was for age in the efficiency dimension (1.539) in model 2, being well below the normal cut off point recommended in the literature, which is usually set around 5 (Hair et al. 2006). Thus, it is unlikely that the predictor variables interfere with each other, causing concern when interpreting results.

Estimating OLS regressions assumes data normality and homoscedastic residuals. We applied the Jarque-Bera test of normality and used White's heteroscedastic consistent covariance matrix to produce the standard errors and t-values of the regressions. The Jarque-Bera test of both regressions returned with insignificant p-values indicating support for normality of the data. Further, we employed the Ramsey Reset test to investigate if non-linear alterations of the independent variables would yield a higher adjusted [R.sup.2] (see Table 2). The outcomes suggest that the models are better off without introducing power alterations to the independent variables.

In order to test for common method variance we followed the procedure recommended by Lindell and Whitney (2001) and introduced a marker variable. The marker variable should be measured by the same instrument as for the other variables included in the analysis. However, the marker variable should be theoretically unrelated to the relevant perceptual variables. From the questionnaire the respondents answered the question: To what extent have representatives from your unit's general management department been involved in the development of the innovation? The respondents answered on a 7-point Likert scale (1 =not at all, 7=very much). The question was selected since there did not seem to be any theoretical reason why it should be related to the variables in the conceptual model. This variable was measured in the same way as the other perceptual measures. We controlled for any effect of the marker variable on the partial correlations of all variables in the model. All significant correlations remained the same, and the marker variable did not correlate with any of the measures. Thus, this test for common method variance indicates that it is not likely to affect the outcomes of our estimations. Moreover, to reduce the likelihood of common method bias, already in the planning of the questionnaire we made sure that the items used in the study were spread out in the questionnaire so as to limit the possibility of respondents rationalizing their answers and throughout the questionnaire different scales and phrasings were used. Thus, methodological and psychological separation was considered ex ante in order to reduce common method variance (Podsakoff et al. 2003).


For MNCs that are active in industries with a global scope, the ability to quickly leverage knowledge across the entire organization is imperative. Different organizational mechanisms can either facilitate or hinder efficient and effective exploitation of knowledge on a global scale, thus affecting the MNC's competitive advantage (e.g., Doz et al. 2001; Cantwell and Mudambi 2005). Our study reinforces and extends this view. Specific implications of our findings relate to strategies for knowledge transfer, including trade-offs in transfer success incurred by the use of different mechanisms, and the role of management.

Theoretically, we add to the understanding of vertical and lateral structures and of its relation to international knowledge transfer success, i.e., vertical and lateral mechanisms matter for knowledge transfer success. While this has been recognized in the management literature, much of the current discussion about knowledge transfer and knowledge management is concerned mainly with the properties of knowledge itself (e.g., Szulanski 1996; Simonin 1999; Osterloh and Frey 2000). This is indeed a relevant topic, but it may be overemphasized in current discussions. In particular, our study casts some doubts as to the logical implication that the central issue for firms is to somehow convert or modify knowledge in order for it to be efficiently and effectively transferred.

Our findings have implications for the role of top management in knowledge transfer processes. Centralization in knowledge transfer projects through headquarters involvement reduces both the efficiency and effectiveness of the process. As outlined in the text preceding hypotheses 1 and 2, there are compelling reasons to be found in theory predicting both positive and negative effects of centralization on transfer efficiency and effectiveness. Our findings are clear and we conclude that the value-added role of headquarters does not lie in actively participating in specific transfer projects. This is in itself an important contribution to knowledge management theories. One possible explanation of the result of headquarters role related to transfer efficiency may be sought in reverse causality, i.e., headquarters involves itself in inefficient transfer projects that are costly and time consuming. What speaks against this line of reasoning is that we measure the dependent variable in relation to expected outcomes of the process rather than in absolute values. Other explanations of the negative effect of headquarters in relation to transfer success can be found in the business network literature. Headquarters is not likely to be well informed of all activities and opportunities occurring at the subsidiary level (Holm et al. 1995; Shane and Venkatarman 2000). This implies that headquarters is more likely to make uninformed decisions regarding the transfer process vis-a-vis the sender and receiver. This increases the risk of knowledge of low relevance being transferred, thus impeding transfer success (Yang et al. 2008). Moreover, subsidiaries may show ill feelings toward transfer projects being imposed on them (Ghoshal and Moran 1996). This is likely to reduce both efficiency and effectiveness, especially if the knowledge transferred is poorly suited to the receiving subsidiary's operations and existing knowledge base (Kostova 1999).

Being recognized as a transfer project driven by headquarters is likely to increase the visibility and an enhanced formalized structure, which can have negative effects on the costs and speed of the transfer. Thus, headquarters should limit its activities to facilitating transfer processes indirectly by fostering cooperation between subsidiaries and by developing IT infrastructures and specific applications that may contribute to international knowledge transfer success. This suggestion is supported by the positive effects found for lateral mechanisms and IT usage.

Our results suggest that transfer projects driven by previous cooperation have a positive influence on the effectiveness of transfer but have no effect on the efficiency dimension. Thus, on the one hand, the findings are consistent with earlier research that has postulated that shared routines and previous cooperation enhance effectiveness (Eisenhardt and Martin 2000; Zollo and Winter 2002). On the other hand, it seems that dyadic experience is not reducing transfer time or costs. This could be explained by the fact that we have investigated knowledge transfer in relation to specific innovations (e.g., new products, processes and technology). This would imply that although the counterparts, i.e., the sender and the receiver have common past experience and routines set up, due to the novelty of each project there are necessary steps in the transfer process that always need to be taken. For instance a new product and related competence need to be explained in depth to the receiver and the latter needs to adapt the innovation to its organization and business even before adopting it. Considering that there could be a wide variety of knowledge that each time is different vis-a-vis the previous transfer it could be assumed that costs and time required are strictly dependent on the type (and novelty) of the knowledge being transferred.

The study furthermore found that IT has a positive effect on transfer success, i.e., on efficiency and effectiveness. This implies that IT is important for the success of transferring knowledge and it indicates that firms should be aware of the benefits of using different IT solutions but caution is to be recommended toward relying too much on IT based knowledge management systems for knowledge transfer (Yamin and Sinkovics 2007, 2010; Jean et al. 2010). As suggested by Brynjolfsson and Saunders (2010), the best results are likely to occur when IT usage is combined with lateral processes.


Theoretical Implications

In this study we started by questioning the actual effects of vertical and lateral mechanisms in MNCs on international knowledge transfer projects. Specifically, the main concern has been to investigate the relative merits of three specific organizational mechanisms, i.e., centralization, previous cooperation between subsidiaries, and IT, and to assess their effect on international knowledge transfer success, conceptualized as knowledge transfer efficiency and effectiveness. This idea originates from the writings of Gunnar Hedlund (1993) where he elaborates on the role of hierarchy and heterarchy as well as emerging forms of global integrative mechanisms.

The trade-off between the effect of vertical and lateral mechanisms on successful knowledge transfer indicates that a broader view of knowledge transfer is warranted in addition to investigations into knowledge-related factors as previously discussed in the literature. Our study sheds new light on the means of transfer and the structures it occurs in. Our analysis is anchored in recent research emphasizing the need for a more finegrained analysis of knowledge transfer effects (Kostova and Roth 2002). Conceptualizing knowledge transfer success in efficiency and effectiveness dimensions helps explain contradictory findings in the literature in relation to formal and informal knowledge sharing mechanisms (Tsai 2002). Moreover, we add to the understanding of how transfer success is affected differently depending on the transfer context. This in turn supports the notion that knowledge transfer still is a viable research area deserving considerable attention and that transfer can and needs to be conceptualized in more dimensions than in flows or generic success.

The positive effect of the IT component on transfer success in both efficiency and effectiveness terms is important. It not only confirms previous studies particularly focusing on the efficiency of the transfer through IT, but it shows that once knowledge is codified, the risk of losing knowledge related value due to the relatively low media richness of IT is rather limited or somehow compensated. This helps us understand how transmission losses can be reduced (Shannon and Weaver 1998). We also bring new insights into the understanding of the effect of IT on the effectiveness of knowledge transfer projects.

Managerial Implications

For MNCs, knowledge transfer is key to growth and exploitation of resources located throughout the organization. Thus, it becomes critical to be able to assess the different transfer outcomes for MNC managers, and to be aware of the potential trade-offs between different mechanisms. Such knowledge or awareness enables managers to prioritize and make strategic decisions related to international knowledge transfer in order to stimulate a successful transfer. As a corollary, MNCs will be in a position to increase their competitive advantage in the global arena.

We propose that subsidiary managers should be more selective in the use of appropriate structures and mechanisms for transferring knowledge. Particularly, subsidiary mangers should try to rely more on building routines with the other corporate subsidiaries and the use of available IT infrastructure when comes to knowledge transfer projects and try to limit and definitely not prioritizing intervention by headquarters. This is a delicate situation as research have showed more than once the potential relevance of headquarters at subsidiary level, see for instance arguments of parenting advantage suggested by Campbell et al. (1995), and benefits from headquarters attention (Bouquet and Birkinshaw 2008). However, in the specific context of knowledge transfer headquarters is not always and clearly adding value and it is important to be aware of different implications for different types of activities.

Therefore, top managers should be careful in getting too much directly involved in transfer projects. It seems that headquarters should be investing more in global coordination at the subsidiary level sustaining the vision of heterarchical organizations. This means that top managers should not try to vertically integrate knowledge transfer projects. Instead of getting involved, they should provide the subsidiaries with more autonomy and resources. Obviously some of these actions such as resource distribution may be a tuff job as headquarters might have little (or even the wrong) knowledge concerning what is going on at subsidiary level. Still relying more on subsidiary initiatives, instead of headquarters deciding autonomously when to get involved, could be a better approach to handle corporate knowledge transfer.

Limitations and Future Research

This study is a first step toward investigating the effects of vertical and lateral transfer mechanisms and separating transfer success in the efficiency and effectiveness dimensions. Results show the importance of lateral integration and use of IT support. At the same time we underline the detrimental effect of centralization, headquarters direct involvement in the knowledge transfer process. We therefore see a problem concerning intra-MNC knowledge transfer related to the shifting back of decision making rights to headquarters as indicated by recent studies (Rugman 2005). In fact, future research should actually bring the issue of better defining the role and power base of headquarters in the "knowing MNC" to the fore (Forsgren 2009).

We are aware that there are some limitations to the study that temper its implications. First of all, this study considers only three types of mechanisms. More research is called for to gain a better understanding of the wide variety of structural properties and transfer mechanisms available to firms. We have deliberately limited our model to key features of hierarchical and heterarchical organizations (Hedlund 1993) rather than try to create a more full-fledged model owing to our desire to empirically investigate potential tradeoffs of the effects in different dimensions of transfer success. Future studies may cover additional aspects concerning vertical and lateral transfer relationships and the connection to successful knowledge transfer. Another limitation of the study is that it is only concerned with the use of intranet and it leaves out other more specific type of IT solutions (e.g. ERP or CMR systems). However, the strength to examine a broader and very flexible type of IT platform such as the intranet system is that in all firms the intranet is the most used IT platform and it may contain a high number of different types of applications, both standard and developed in house. In this sense intranet captures a multiplicity of potential solutions that can be used when developing and transferring knowledge. Finally, there are issues related to the fact that we use perceptual measurements in our constructs. To remedy the potential self-assessment bias we have used a data collection technique aimed at getting face-to-face information from well-informed respondents. Of course, this does not negate the problem completely, but we believe that it reduces it greatly.

Future studies should consider triangulation of data in terms of respondents from both sides of the transfer relationship as well as try to supplement the perceptual data with more objective measures of transfer success, although such data is very difficult to obtain. Nevertheless, we believe that this study advances our understanding of knowledge transfer in important ways. While we fully agree that knowledge is important to account for in today's economy, it is time for managerial research to widen its perspective. There is a need for considering a wider array of mechanisms for managing knowledge transfer. In this sense, unraveling the complexities of knowledge transfer is fundamental to competitiveness, and our research is a first explorative step in that direction.

DOI 10.1007/s 11575-011-0068-1
Appendix A

Dependent and independent variables, alpha

Transfer efficiency
The actual cost of the innovation transfer was much higher 0.673
than expected (b,c)
The starting point of the innovation transfer was much
earlier than expected (c)
The first day of innovation use by the receiver was much
earlier than expected (c)

Transfer effectiveness
Evaluate the level of completed innovation transfer (d) 0.817
The counterpart adopted the innovation very quickly (c)
The innovation has been very easy to adopt by this
counterpart (c)
The performance of the innovation transfer process was
very satisfactory (c)

The headquarters has formally instructed you to share this 0.632
innovation with the counterpart (c)
The transfer of innovation has occurred without any
sanctions by headquarters with the counterpart (b,c)
The transfer of the innovation was driven by requirement
from headquarters (e)
The transfer of the innovation was driven by headquarters
evaluation system (e)

Previous Cooperation
To what extent have you previously cooperated with this 0.738
counterpart (e)
To what extent have you previously shared knowledge with
this counterpart (e)

With regard to the transfer, what was the level of use of --
the Intranet (d)

(a) The items were evaluated by the respondents in relation to the
specific dyadic transfer project

(b) These items were reverse coded, in order to properly reflect
the construct and to be congruent with the other indicators' coding

(c) Measured on a scale from 1 (totally disagree) to 7 (totally agree)

(d) Measured on a scale from 1 (not at all) to 7 (very high)

(e) Measured on a scale from 1 (not at all) to 7 (very much)

Acknowledgements: We would like to thank special issue editor Rudolf Sinkovics and two anonymous reviewers for insightful comments and suggestions. We also appreciate the financial support from Handelsbankens Research Foundations.

Received: 30.11.2009 / Revised: 21.06.2010 / Accepted: 06.10.2010 / Published online: 29.03.2011


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Assoc. Prof. F. Ciabuschi ([mail]) * Asst. Prof. H. Dellestrand * Asst. Prof. P. Kappen

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Table 1: Descriptive statistics

 Mean SD 1 2 3

 1. Efficiency 4.059 1.243 1.000
 2. Effectiveness 5.493 1.182 0.586 ** 1.000
 3. Centralization 2.723 1.676 -0.411 ** -0.101 1.000
 4. Previous 4.940 1.722 0.112 0.265 * 0.118
 5. Intranet 2.960 2.278 0.066 0.097 -0.012
 6. Age 3.531 0.980 -0.053 -0.010 0.125
 7. Size 5.714 1.703 -0.254 * -0.103 0.374 **
 8. Basic 0.640 0.482 -0.102 0.013 0.213 *
 9. Explicit 5.315 1.634 0.269 * 0.185 -0.121
10. Patent 0.510 0.502 0.095 -0.016 -0.266 *
11. GDP 9.920 0.132 0.114 0.141 0.280 **
12. Knowledge 4.930 1.572 -0.116 -0.008 0.087

 4 5 6 7

 1. Efficiency
 2. Effectiveness
 3. Centralization
 4. Previous 1.000
 5. Intranet 0.083 1.000
 6. Age 0.122 -0.053 1.000
 7. Size -0.010 0.261 * -0.045 1.000
 8. Basic 0.063 0.093 0.439 ** 0.071
 9. Explicit 0.156 0.013 -0.328 ** 0.095
10. Patent 0.239 * 0.324 ** -0.036 -0.043
11. GDP 0.134 0.047 -0.108 0.222 **
12. Knowledge 0.236 * -0.121 0.037 -0.219 *

 8 9 10 11 12

 1. Efficiency
 2. Effectiveness
 3. Centralization
 4. Previous
 5. Intranet
 6. Age
 7. Size
 8. Basic 1.000
 9. Explicit -0.312 ** 1.000
10. Patent -0.139 0.115 1.000
11. GDP -0.010 0.227 * 0.082 1.000
12. Knowledge 0.113 -0.255 * -0.108 -0.205 1.000

Spearman's correlation coefficients reported. Correlations
significant at the 0.01 and the 0.005 level are indicated
by ** and * respectively (2-tailed)

Table 2: Results from the OLS analysis

Regressor Model 1

 Efficiency Effectiveness

 [beta] s.e. [beta] s.e.

Age 0.036 0.154 0.002 0.113
Size -0.201 ** 0.079 -0.074 * 0.061
Research 0.503 0.295 0.679 ** 0.232
Explicitness 0.089 0.094 0.065 0.067
Patent -0.366 * 0.211 -0.102 0.201
GDP 2.804 *** 0.849 2.423 *** 0.778
Knowledge sharing 0.102 0.085 0.091 * 0.051
Previous cooperation

N 169 169
Jarque-Bera (p)
Ramsey Reset test (p) (a)
[R.sup.2] 0.165 0.151
[DELTA][R.sup.2] 0.165 0.151
Adj. [R.sup.2] 0.117 0.106
F-value 3.380 3.420

Regressor Model 2

 Efficiency Effectiveness

 [beta] s.e. [beta] s.e.

Age 0.099 0.155 0.116 0.128
Size -0.171 ** 0.078 -0.136 ** 0.065
Research -0.065 0.287 0.193 0.254
Explicitness 0.128 * 0.077 0.073 0.081
Patent -0.551 ** 0.264 -0.551 ** 0.224
GDP 2.844 ** 1.117 2.433 ** 0.914
Knowledge sharing 0.023 0.071 0.058 0.066
Centralization -0.326 *** 0.076 -0.168 ** 0.081
Previous cooperation 0.010 0.079 0.178 ** 0.069
Intranet 0.137 *** 0.053 0.131 *** 0.044

N 169 169
Jarque-Bera (p) 0.109 0.153
Ramsey Reset test (p) (a) 0.189; 0.125;
 0.409; 0.183;
 0.544 0.122
[R.sup.2] 0.323 0.233
[DELTA][R.sup.2] 0.158 0.082
Adj. [R.sup.2] 0.238 0.145
F-value 3.781 2.670

Standard errors and t-statistics corrected by White's heteroscedastic
consistent covariance matrix. Parameter estimates considered
significant at
* p < 0.1, ** p < 0.05, and *** p < 0.01 respectively

(a) Ramsey's Reset test probabilities based on power functions 2;
2 and 3; and 2, 3, and 4

Table 3: Summary of

Hypothesis 1a Not supported
Hypothesis 1b Supported
Hypothesis 2a Not supported
Hypothesis 2b Supported
Hypothesis 3 Not supported
Hypothesis 4 Supported
Hypothesis 5 Supported
Hypothesis 6 Supported
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Author:Ciabuschi, Francesco; Dellestrand, Henrik; Kappen, Philip
Publication:Management International Review
Article Type:Report
Date:Mar 1, 2011
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