The investigation of socialization as a conduit of knowledge transfer and development (KTD) to subsidiaries in emerging economies is still in its infancy. This paper aims to discern empirically and theoretically the underlying mechanisms of interpersonal-level micro-foundations of socialization as a conduit of KTD in emerging economy subsidiaries. This study draws on a four-year longitudinal in-depth qualitative case study of Volvo Car China. The observational unit is the subsidiaries' temporal dual management constellations referred to as matched pairs (MPs). The study illustrates how the MPs acted as a means of temporal socialization, conducive in the creation of knowledge collectivities that aided in the development of local managerial capacity. A grounded model with four overarching theoretical dimensions is developed and discussed to illustrate the theoretical insights derived from this study. The main overarching disclosure is the prevalence of recursive interrelatedness between competence and competency of the individual, context-, and the expansion of managerial capacity. Findings of the case study opens up for a more nuanced view on transferring- and developing tacit and explicit knowledge in a context with less dense social capital. The study contributes to research on knowledge transfer and development, managerial capacity development, and internationalization of multinational corporations.
Scholars agree that competing within and outside of emerging economies require approaches and choices that differ from those prescribed in traditional models of multinational corporation (MNC) behavior (e.g. Luo and Tung, 2007; Aulakh and Kotabe, 2008; Hoskisson et al., 2013). With regard to vertical intra-firm (headquarters-subsidiary) knowledge transfer and development through socialization, this is especially true. Socialization, as a conduit of knowledge transfer and development (KTD), is an important tool for the multinational company to disperse knowledge within its internal network of business entities (Edström and Galbraith, 1977; Gupta and Govindarajan, 2000; Minbaeva et al., 2003; Björkman et al., 2004). Concurrently, the arguments for socialization as a powerful means for successful KTD within the MNC is well established, whether such success is defined based on the degree to which transferred knowledge is absorbed and internalized in the recipients (Kostova, 1999; Minbaeva, 2007), the degree to which knowledge is replicated at the recipient end (Kogut and Zander, 1992; Szulanski, 1996), the knowledge is integrated into existing knowledge bases (Grant, 1996), or “new” knowledge that is developed (Gnyawalị et al., 2009). Even so, our understanding of MNCs' organizing approach when using socialization as a conduit of KTD to emerging economy subsidiaries is in its infancy (Corredoira and McDermott, 2014; Williams and Lee, 2014; Khan et al., 2015). Studies on KTD to emerging economy subsidiaries have traditionally assumed that the presence of any type of human capital and socialization can alone fully account for such transfers, given the platform for knowledge flow provided by the MNCs' internal network (Williams and Lee, 2014). However, it should not be assumed that social interaction and the platform for knowledge flows provided by the MNCs' internal network automatically results in KTD (Gupta and Govindarajan, 2000; Li et al., 2007). Emerging economies often have limited ability to provide MNCs with experienced local managerial resources that possess the required competences, knowledge, and developed skills (Björkman and Xiucheng, 2002; Cooke, 2012). Experience and prior knowledge are crucial aspects of knowledge transfer and development success since managers with overlapping experience and knowledge are in a better position to absorb and draw benefits from knowledge transfer and development (see Minbaeva et al., 2003). Therefore, how the MNC actively organizes and manages employees with different experiences, competences, knowledge, and skills locally in the emerging economy has a more critical role to play than previously believed in MNCs' quest for managerial capacity (Williams and Lee, 2014).