Is knowledge like salmon - does it jump upstream? The workings of vertical reverse knowledge flows from emerging market subsidiaries

Abstract: Purpose – The purpose of this study is to increase the understanding of how reverse knowledge flows from emerging market subsidiaries work and what affects them. Consequently, the study contributes to the global business behavior of MNCs and how to benefit from knowledge within the company network. Methodology – This study has been conducted as a multiple case study. The primary data was collected through ten MNC subsidiaries located in Asian emerging markets with HQs in Europe. Main findings – Knowledge sharing through formal communication channels in interoffice meetings is found to provide extensive value for reverse knowledge flows between the subsidiary and its HQ. Additionally, modern digital software such as video conference programs and intranets are found to be beneficial for knowledge sharing. In addition, perceived distance is decreased between the MNC employees by the digital tools, even though spatial distance is large. In addition, gaining a better understanding of the contrasting environments that the subsidiary and HQ operate in affects reverse knowledge flows positively. This is encouraged by using expatriates and increased awareness of the institutional profile of the host country. Practical implications – For HQ managers, having a clear strategy on how to utilize the knowledge gained by repatriates in its subsidiaries is vital for increased knowledge exchange. The HQ-subsidiary reporting structure needs to be clear and avoid too many points of contact, as knowledge otherwise gets lost. For emerging market subsidiary managers, the ability to communicate sensitive feedback to HQ constructively can be beneficial for knowledge sharing.