Absorptive Capacity of Multinational Subsidiary in Intra-Firm Knowledge Transfer: Cases from Japanese Multinational Manufacturers

This paper discusses the concept of absorptive capacity as a determining factor of knowledge transfer difficulties by using cases Japanese multinational company between headquarters and their overseas subsidiaries. This concept is initially presented to show costs or difficulties of newly transferred R&D related knowledge from external environment, and defined as capability accumulated through prior experience to exploit newly transferred knowledge determines transfer cost. Then several studies improve this concept to apply a greater variety of knowledge. However, it can be said that studies in this field as still inadequate for several reasons. Therefore this study makes another attempt to improve this concept. This paper consists from four parts. Firstly, several studies conceptualization of “absorptive capacity” are reviewed, and neglected aspect of this concept is pointed out. Secondly, based on the theoretical argument, reconceptualized model of absorptive capacity is presented. Thirdly, in order to support newly proposed model, qualitative study is conducted. In this study, cases of knowledge transfer within Japanese multinational companies between headquarters and their subsidiaries are shown and analyzed. Finally, results of empirical study, conclusions, practical implications, limitation and future perspectives are presented.