Previous studies have contributed to understand the determinants of MNC's internal knowledge flows. However, the critical role played by internalization-specific factors in determining the knowledge flows has attracted relatively little attention. The present study aims to fill this gap by investigating the relationship between an MNC's motivation to acquire internalization advantages (MIA) and the level of knowledge inflows to its foreign subsidiaries; including both the vertical knowledge inflows (VKF) from the headquarters and the horizontal knowledge inflows (HKF) from other subsidiaries. Furthermore, it is asserted that the relationship between the MIA of the MNC and the knowledge inflows is contingent on two specific subsidiary characteristics, namely the subsidiary importance and the subsidiary local experience. An analysis of 100 Taiwanese MNCs' foreign subsidiaries demonstrates that the MIA is indeed an important determinant of knowledge inflows to subsidiaries. Moreover, the effects of MIA on the VKF and HKF vary with the subsidiary-specific characteristics. This study supports the validity of internalization factors on explaining the internal knowledge flows of the MNC and the necessity of incorporating the subsidiary-specific characteristics to comprehend the complex phenomenon of knowledge flows.

Purpose – This study aims to explore the effects of subsidiary–local supplier linkage characteristics in a supply chain and the moderating effects of a multinational corporation’s (MNC’s) international experience (IE) and a subsidiary’s innovation orientation (IO) on the subsidiary’s technological capability. Design/methodology/approach – A new research framework is developed comprising four constructs and six research hypotheses. Applying the regression model, the hypotheses were tested on data from Taiwanese MNC’s subsidiaries of manufacturing industries in Asian developing countries. Findings – The subsidiary–local supplier linkage characteristics, including economic aspect: asset-specific investment (ASI) of local supplier and social aspect: relational capital (RC) of local linkage, are positively associated with subsidiary’s technological capability. Moreover, the MNC’s IE can enhance the positive effect of RC on the subsidiary’s technological capability and the subsidiary’s IO decreases the positive impact of ASI on the subsidiary’s technological capability. Practical implications – This study provides useful insights into how MNCs and subsidiaries should concentrate on the factors that increase the subsidiary’s technological capability. Moreover, MNCs’ and subsidiaries’ managers must endeavor to establish long-term linkages with carefully selected local suppliers, induce these suppliers to provide appropriate ASI, and actively develop RC in the subsidiary–local supplier linkage to enhance the subsidiary’s technological capability. Originality/value – This study demonstrates that subsidiary–local supplier linkage characteristics, MNC’s IE and subsidiary’s IO can be applied to examine the technological capability of subsidiaries operating in less advanced countries.

Purpose -This study aims to investigate the influence of transaction cost (TC) factors and the moderating influence of firm capability factors on the extent of domestic outsourcing of a multinational corporation (MNC) subsidiary. Design/methodology/approach -A new research framework is developed comprising four constructs and six research hypotheses, coupled with international experience (IE) and subsidiary scale (SS) as moderating constructs. Applying the regression model, the hypotheses were tested on data from MNC subsidiaries engaged in manufacturing in Taiwan, based on the TC theory, resource-based view, and outsourcing literature. Findings -The TC factors, including environmental dynamism and subsidiary technology level, are negatively related with degree of domestic outsourcing. Moreover, the MNC IE and SS can reduce the TCs, thus increasing the degree of domestic outsourcing by MNC subsidiaries at the high environmental dynamism and subsidiary technology levels.Research limitations/implications -The study data were obtained from MNC subsidiaries operating in Taiwan, and the single country research design is a limitation of this study. Practical implications -This study provides useful insights into how MNCs and subsidiaries should concentrate on the factors that increase the TCs of domestic outsourcing. Moreover, MNCs and subsidiaries must endeavor to cultivate and apply capabilities to mitigate TCs and fully realize the benefits of domestic outsourcing. Originality/value -This study demonstrates that TC factors can also be applied to examine the outsourcing strategies of firms operating in less advanced countries. Additionally, the capability factors of MNCs and subsidiaries can reduce TCs, thus increasing domestic outsourcing by subsidiaries.

Since the importance of the subsidiary's role continues to increase, a growing number of studies have focused on MNC subsidiary strategies. The aim of this study is to explore the determinants of a subsidiary's initiative. Based on the subsidiary research's classification provided by Birkinshaw and Hood, an integrated framework is developed to examine the influences of three groups of variables on the subsidiary initiative, namely, the headquarters-subsidiary relationship, the subsidiary resources and the network characteristics of the subsidiary. Since previous studies have focused on subsidiary initiatives in developed countries, this study addresses the issue of MNC subsidiaries in developing countries. The present analysis of 67 European, US and Japanese MNC subsidiaries in Taiwan reveals that each of the three groups of variables influences the subsidiary initiative. Furthermore, in terms of individual variables, it is determined that procedural justice, a subsidiary's relative capabilities, and a subsidiary's local responsiveness all have a positive influence on the subsidiary initiative. Finally, because innovation is critical to small business's global strategy, this study discusses the implications of subsidiary initiatives for global strategy of small business and indicates potential directions for future research.

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