Knowledge Sourcing by the Multinational Enterprise
An Individual Creativity-based Model Santangelo, Grazia D.; Phene, Anupama
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Accepted author manuscript
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Journal of International Business Studies
DOI:
10.1057/s41267-021-00444-z
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2022
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Citation for published version (APA):
Santangelo, G. D., & Phene, A. (2022). Knowledge Sourcing by the Multinational Enterprise: An Individual Creativity-based Model. Journal of International Business Studies, 53(3), 434-448.
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Knowledge Sourcing by the Multinational Enterprise An individual creativity-based model
Grazia D. Santangelo
Department of Strategy and Innovation Copenhagen Business School
Kilevej 14, 2000 Frederiksberg, Copenhagen (Denmark) gs.si@cbs.dk
Anupama Phene School of Business George Washington University Funger Hall, 2201 G Street, NW
Washington DC 20052 anuphene@gwu.edu
Abstract
We examine how individual heterogeneity can be managed across geographically dispersed units of the multinational enterprise (MNE) to facilitate effective knowledge sourcing. To explore individual heterogeneity, we adopt the componential theory of creativity, which links heterogeneous features of individuals to creativity performance. We propose that these features shape individuals’ responses to unit‐level practices stimulating international knowledge sourcing and sharing. We further acknowledge that MNE units are subject to the pressures for global integration and local adaptation. Individuals’ responses to unit‐level knowledge transfer practices may be inconsistent with one or both of these pressures. We explore, in a nuanced fashion, conditions that can lead to such inconsistencies, and investigate how they can be resolved at the unit level to ensure effective knowledge sourcing by the MNE. Ultimately, our model challenges the assumption that individual knowledge‐related efforts automatically accrue to the MNE level. We argue that effective knowledge sourcing by the MNE is the result of successful unit-level processes in managing individual heterogeneity and ensuring consistency with global integration and local adaptation pressures. Our multi‐level model contributes to both the MNE and individual‐level perspective on international knowledge sourcing, and the growing microfoundations research on the role of the individual in an MNE.
Keywords: International knowledge sourcing, microfoundations, componential theory of creativity.
Acknowledgments. The authors thank the Acting Editor, Linea Kano, for insightful guidance during the review process, and four anonymous reviewers for constructive feedback and suggestions. They also acknowledge Dana Minbaeva for thoughtful comments on earlier versions of this article.
INTRODUCTION
Research on international knowledge sourcing has been dominated by a focus on the multinational enterprise (MNE) and its foreign subsidiaries, and on the effective management of these intra- MNE relationships. At the same time, there is an emerging stream of literature that has adopted a micro-level perspective with a focus on, for instance, expatriates, star employees, boundary spanners, and top management teams. Although these streams emphasize different levels of analysis, a key challenge common to both is the assumption that individual knowledge-related efforts are automatically integrated at the MNE level through diverse organizational efforts (Zahra, Neubaum, & Hayton, 2020). No “individual-level factors that clearly determine the efficacy of [these] … efforts” (Zahra, et al., 2020: 167) are considered. As a result, both streams have faced an inherent difficulty in addressing the multi-level nature of the international knowledge sourcing process and remain disconnected from one another.
However, the need to bridge the micro (i.e., the individual) with the macro (i.e. the organization) domains is especially compelling in connection with the study of multilevel phenomena such as international knowledge sourcing, where the ultimate outcome relies on cross- level mechanisms (Rousseau, 2011). In this process, problems of knowledge flows across domains are amplified by the difficulty of crossing national/institutional boundaries, with individual cognition and motivation adding further complexity (Carlile, 2002, 2004). In particular, in a layered, geographically dispersed organizational context, such as the MNE, sourcing knowledge across borders involves a tension at the unit level between global integration and local adaptation, which is engendered by cross-national dissimilarities in institutional structures (Kostova & Roth, 2002, Rosenzweig & Singh, 1991). A multilevel approach can provide insights into how individual heterogeneity at the unit adds complexity to this tension and, thus, hamper the effectiveness of international knowledge sourcing. Traditionally, international business scholars have adopted a structural network perspective (Forsgren, Holm, & Johanson, 2005, Hedlund, 1986) and, consequently, considered individual heterogeneity in terms of quantity and quality of individual social linkages to bridge the macro and micro domains (e.g., Schotter, Mudambi, Doz, & Gaur, 2017).i
Our model proposes a unique perspective on individual heterogeneity and examines how
model adopts a multi-dimensional characterization of individual heterogeneity based on creativity to illustrate how individual responses to practices stimulating international knowledge sourcing and sharing may be inconsistent with either or both the pressures for global integration and local adaptation. Second, it introduces unit-level processes that can resolve these inconsistencies and presents a nuanced exploration of the conditions under which they can be addressed to ensure effective knowledge sourcing by the MNEs.
To characterize individual heterogeneity, we adopt the lens of the componential theory of creativity (CTC) (Amabile, 2012, 1983).ii Several reasons motivate our use of CTC. CTC has the distinctive advantage of beginning with a focus on the individual, in contrast to other theories that are more focused on the organization, organizational unit, or relationships of individuals and organizations. It provides an overarching framework for evaluating different aspects of individual diversity, that are associated with skills, motivation, and agency issues and that are specific to creativity performance. It has the benefit of serving as an umbrella to encompass all individuals in the organization, rather than focusing on specific groups, such as expats, star employees, and top managers (Boone, Lokshin, Guenter, & Belderbos, 2019, Oldroyd & Morris, 2012, Reiche, Harzing, & Kraimer, 2009). Further, while CTC has an individual focus, it also considers the work context of the individuals. It bridges the micro (i.e., the individual) with the macro (i.e., the organization) domains to ultimately understand the outcome of multilevel phenomena (Rousseau, 2011), such as knowledge sourcing by the MNE.
To connect individual creativity traits to knowledge sourcing by the MNE at the unit level, we use the multilevel approach of Ployhart and Moliterno (2011) and the associated notion of emergence enabling processes. These are processes such as communication and coordination mechanisms, reward systems, transactive memories, and social integration systems, whereby
“individual knowledge, skills, abilities, and other characteristics are transformed … into valuable unit-level resources” (Ployhart & Moliterno, 2011, 135), thus enabling the emergence of the unit’s human capital resources. In the reminder of the paper, we refer to these processes as “unit-level emergence enabling processes”. We propose that effective knowledge sourcing by the MNE depends on the success of the unit-level emergence enabling processes in managing individual heterogeneity and ensuring consistency with the pressures for global integration and local adaptation faced by the unit.
Our study advances research on international knowledge sourcing that has adopted an individual perspective (Boone, et al., 2019, Morris, Wright, Trevor, Stiles, Stahl, Snell, &
Farndale, 2009, Morris, Zhong, & Makhija, 2015, Oldroyd & Morris, 2012, Reiche, et al., 2009, Schotter, et al., 2017). Related to this research, it leverages CTC and changes the conversation in this stream by accounting for individual heterogeneity along multiple creativity-related dimensions. We also advance the existing dominant perspective in international knowledge sourcing research, which focuses on the MNE, its foreign subsidiaries, and MNE-subsidiary relationships (Berry & Kaul, 2015, Björkman, Barner-Rasmussen, & Li, 2004, Cantwell, 1989, Phene & Almeida, 2008, Zhao, 2006). For this research, we outline how individual heterogeneity based on creativity engenders complexity in the process of knowledge sourcing by the MNE. A key contribution we offer is to the broader international business research on managing across borders (Bartlett & Ghoshal, 1989) by considering an articulated role for the individual in the MNE’s management of the tension between global integration and local adaptation.
RESEARCH ON MNE KNOWLEDGE SOURCING
International knowledge sourcing is the phenomenon of MNEs obtaining access to external know- howiii in overseas locations through their own operations or through partners, and the sharing (i.e., transfer and use) of this knowledge within the MNE network (Berry & Kaul, 2015). It is of great strategic importance for the MNE because it increases innovation performance, to possibly change the existing technological order, and ultimately enhances the firm’s competitive advantage (Phene, Fladmoe‐Lindquist, & Marsh, 2006). It also contributes to MNE productivity growth by complementing domestic R&D (Belderbos, Lokshin, & Sadowski, 2015).
This phenomenon is traditionally underpinned by three interrelated factors. First, knowledge development varies across locations as a result of the interplay of skills, capabilities, and institutions within a national/regional system of innovation (Lundvall, 1992, Nelson, 1993).
Second, characteristics of knowledge create difficulties for transfer and dissemination, especially across geographic space. Tacit knowledge is “imperfectly accessible to conscious thought”
(Nelson & Winter, 1982: 79) and, thus, harder to transfer; but even codified knowledge appears vulnerable to these challenges to some extent (Jaffe, Trajtenberg, & Henderson, 1993, Tallman &
enable access to tacit and location-bound knowledge by allowing for an understanding of local buzz in a meaningful manner (Bathelt, Malmberg, & Maskell, 2004). Thus, international knowledge sourcing reflects the effort of the firm to link places across space (Beugelsdijk, McCann, & Mudambi, 2010) based on the locations’ specific features, and MNEs’ capabilities and needs (Cantwell & Janne, 1999). Given this framing of the international knowledge sourcing phenomenon, it is not surprising that much of international business research on the topic has adopted an MNE perspective or a perspective focusing on a particular part of the MNE such as a subsidiary and on the resulting intra-MNE relationships (Papanastassiou, Pearce, & Zanfei, 2020), while studies adopting a more individual perspective have remained at the periphery.
The MNE and subsidiary perspective
Research adopting an MNE perspective has highlighted that firms are often motivated to source knowledge abroad to offset home country technological disadvantages, catch up to augment their competences, or reduce their fixed R&D costs (Almeida, 1996, Cantwell, 1989, Chung & Yeaple, 2008). They are also heterogeneous in terms of technological capabilities that enable them to make the most of their international R&D operations (Penner‐Hahn & Shaver, 2005). It is well established that knowledge sourcing involves knowledge dissemination (Almeida, 1996), which raises issues of knowledge protection (Cantwell & Santangelo, 2002, Chung & Alcacer, 2002), with institutions forming an important backdrop for the MNE’s knowledge sourcing and protection strategies. Institutions can influence the protection of the MNE’s knowledge and intellectual property (Lynn, Reddy, & Aram, 1996). They also act as facilitators of international connectedness of foreign knowledge (Jandhyala & Phene, 2015), especially in relation to international knowledge sourcing in and from emerging markets (D’Agostino, Laursen, & Santangelo, 2013, Elia &
Santangelo, 2017). To address variations in institutional strength, firms resort to different knowledge sourcing and protection strategies ranging from geographical dispersion/concentration of their R&D activities in core versus non-core technologies (Cantwell & Santangelo, 2000, 1999), technological partnerships with co-located competitors (Narula & Santangelo, 2009), modularization of their R&D projects across geographically separated organizational units (Zhao, 2006) and internal linkages (Belderbos, Park, & Carree, 2021).
Based on the key role subsidiaries play in MNE’s international knowledge sourcing, a relatively large body of research has adopted a subsidiary perspective. These works have characterized foreign subsidiaries as those that proactively engage in new knowledge exploration
by sourcing local knowledge and those that exploit firms’ existing knowledge in the host location (e.g., Cantwell & Mudambi, 2011, Frost, Birkinshaw, & Ensign, 2002, Kuemmerle, 1999) with only a limited number of “superstar” subsidiaries being able to successfully enter into new technologies (Blomkvist, Kappen, & Zander, 2010). Interestingly, subsidiaries of emerging market MNEs differ from those of advanced country MNEs as the former more pro-actively source host country and market-driven knowledge (Awate, Larsen, & Mudambi, 2015). Further, knowledge sourcing decisions of advanced-country MNE subsidiaries in emerging markets critically depend on local institutions (Santangelo, Meyer, & Jindra, 2016). Diversity in subsidiary mandates has been related to the technological characteristics of the host context, to subsidiary’s reliance on home versus host country’s knowledge sources (Almeida & Phene, 2004), to subsidiary’s initiative and pursuit of riskier projects (Monteiro, 2015) as well as to the technological coevolution within the subsidiary’s organizational and host country context (Phene & Tallman, 2018). Whatever the subsidiary mandate, subsidiary heterogeneity is influenced by absorptive capacity (Minbaeva, Pedersen, Björkman, Fey, & Park, 2003) in sourcing and combining knowledge (Phene &
Almeida, 2008, Song, 2014), by its embeddedness in the MNE network and host country (Almeida
& Phene, 2004, Andersson & Forsgren, 2000), and by its ability to enjoy a relational advantage (Cantwell & Mudambi, 2011).
The MNE and subsidiary literature intersect, suggesting that the effective management of intra-MNE relationships (Björkman, et al., 2004, Gupta & Govindarajan, 2000, Nobel &
Birkinshaw, 1998, Noorderhaven & Harzing, 2009), specifically the organizational and control mechanisms adopted by headquarters (Ambos, Ambos, & Schlegelmilch, 2006, Iwasa & Odagiri, 2004, Rabbiosi & Santangelo, 2013), determine the extent to which the MNE can ultimately benefit from subsidiary knowledge sourcing. Also, this research outlines the dual embeddedness of the subsidiary in the MNE network and external context (Meyer, Mudambi, & Narula, 2011) and, consequently, the subsidiary’s privileged access to the host country and MNE knowledge and the challenge to deal with the isomorphic pressures from both contexts (Kostova & Roth, 2002, Phene & Almeida, 2008). Yet, a major assumption of the MNE and subsidiary perspective on international knowledge sourcing remains that individual-level knowledge-related efforts automatically translate at the MNE level (Zahra, et al., 2020).
The individual perspective
Against the large body of studies at the MNE level, the role of specific individuals, such as expatriates, star employees, and/or groups of individuals (e.g., teams) in knowledge flows within the MNE is relatively less studied.
This stream has pointed to the relevance of a number of individual-level aspects that are useful for MNE knowledge sourcing and resulting innovation. A key aspect relates to the individual’s capability (Nuruzzaman, Gaur, & Sambharya, 2019, O'Brien, Sharkey Scott, Andersson, Ambos, & Fu, 2019). This capability is reflected by an individuals’ cross-country interpersonal ties and boundary spanning ability (Klueter & Monteiro, 2017, Levin & Barnard, 2013, Reiche, et al., 2009). Expatriates, for instance, appear to have a special capability in internal boundary spanning and are pivotal in disseminating not only their own technical and managerial skills, but also organizational knowledge within the MNE through their influence on communication and control mechanisms (Fang, Jiang, Makino, & Beamish, 2010, Gaur, Delios,
& Singh, 2007). These abilities, however, are conditional on individual motivation, with intrinsic and extrinsic motivation playing important roles (Minbaeva & Santangelo, 2018, Reinholdt, Pedersen, & Foss, 2011). However, the focus remains on the nature of incentives and on the organizational conditions that help overcome the impediments to knowledge sharing of specific groups of individuals, such as star employees (Morris, et al., 2015, Oldroyd & Morris, 2012).
Individuals have also been studied as members of teams, with team composition influencing knowledge sourcing and ultimately the ability to transform sourced knowledge into improved project performance (Boone, et al., 2019, Haas & Cummings, 2015). Although these studies have built on micro-level assumptions shifting the emphasis to individuals, the discussion on the alignment between people, processes, and systems overlooks individual heterogeneity (Morris, et al., 2009). Thus, the multi-level nature of the international knowledge sourcing process remains unexplored.
COMPONENTIAL THEORY OF CREATIVITY
A natural starting point for the role of individuals in knowledge sourcing is centered on their creativity, which is the production of novel and useful ideas (Amabile, 1983, Amabile, Barsade, Mueller, & Staw, 2005, Amabile, Conti, Coon, Lazenby, & Herron, 1996). CTC is based on four
psychological and social components that explain the variation in the levels of creativity of individuals (Amabile, 2012, 1977).
The first three are individual-level components. The first component refers to domain- relevant skills (i.e., factual knowledge, technical skills, and special talent in the domain in question) or the raw materials that the individual can draw on for creative performance. A great deal of domain-specific knowledge, technical skills, and talent are required to imagine and think about relevant problems and solutions, enabling creativity in fields as diverse as nuclear physics, strategic management, and computer engineering. The second component refers to creativity- relevant skills and includes cognitive styles and personality characteristics that are most favorable to the search for new pathways. This component depends to a great extent on personal characteristics such as orientation toward risk-taking and taking new perspectives on problems and applications of techniques (or "heuristics"). The third component of the framework is task motivation. Unlike the first two components, which determine what an individual is capable of doing, this component determines what she will actually do. It reflects individual passion, enjoyment, and the intrinsic motivation to pursue a problem because solving it is satisfying.
The fourth component relates to the work environment of the individual. It addresses factors in the workplace context that stimulate or hinder creativity, such as extrinsic motivations as well as mechanisms for developing new ideas, and norms of actively sharing ideas across the organization.
AN INDIVIDUAL CREATIVITY-BASED MODEL OF MNE KNOWLEDGE SOURCING
To bridge the micro (i.e., the individual) with the macro (i.e. the organization) domains to study international knowledge sourcing, we first apply CTC individual and environmental components to an international setting. Then, we develop arguments unveiling how unit-level processes can leverage the individual creativity traits for effective knowledge sourcing at the MNE level while considering the pressure from global integration and local adaptation the unit has to deal with.
Figure 1 illustrates our model.
INSERT FIGURE 1
CTC in an international setting
The domain-relevant component reflects the requisite skills of individuals within the MNE that enable them to search for knowledge from around the globe, and provide the support necessary to acquire and deploy the sourced knowledge to other individuals within the network. Diverse domain-relevant skills result from different kinds of education paths. Consequently, they reflect different knowledge endowments, preferences, and behavior to engage in creative activities (Allen, 1977). In the multinational context, the variety of education paths individuals have undergone can result, for instance, in electronic engineers that have a more theoretical background and specialized in conceptual design and development activities compared to those that are more focused on practical knowledge and have a broader industry emphasis.
The creativity-relevant component reflects the cognitive style and personality characteristics of the individuals within the MNE who are open and receptive to opportunities for sourcing new external knowledge and also willing to engage with these opportunities in an unconventional and more risky manner. In an international compared to a domestic context, cognitive characteristics are influenced by a variety of individual experiences and socialization diversity. Cognitive characteristics of women seem to positively affect the creativity of mixed and more gender-balanced teams because the inclusion of women broadens the team’s cognitive perspective (Díaz-García, González-Moreno, & Jose Sáez-Martínez, 2013, Østergaard, Timmermans, & Kristinsson, 2011). Yet, biases against women adversely affect their representation in teams (Carli, 2010). Similarly, cognitive characteristics of migrants support knowledge sourcing in multiple forms – from home to host countries as well as in the opposite direction, as well as within and across countries and regions (Agrawal, Kapur, McHale, & Oettl, 2011, Hunt & Gauthier-Loiselle, 2010, Nanda & Khanna, 2010). Migrants tend also to have different risk perceptions than their local peers as a result of their exposure to varying experiences and societies.
The component of task motivation is reflected in the intrinsic motivations of the individuals in the MNE. Intrinsically motivated individuals engage in specific activities because these are personally meaningful. These are goal-directed activities that the individual conducts with the sheer grit and determination to effectively source the relevant knowledge from external sources.
In an international context, this trait tends to reflect the greater variety of individual’s cultural backgrounds.
With regard to the MNE, the fourth component of the individual’s work environment can be layered into more distant and proximate kinds of contexts (Johns, 2006). The more distant MNE-wide context refers to the framework of practices and norms, governing individual heterogeneity and behavior, which leverages individual knowledge, and supports convergence within the MNE. The more proximate context refers to the geographic unit within the MNE network where the individual is located. This is where the practices and norms of the MNE-wide framework are implemented to stimulate the individuals located in the unit to engage in external knowledge sourcing and subsequently in sharing this knowledge within the MNE. This implementation occurs through emergence enabling processes that are the means through which the creativity traits of the individuals in the unit, are transformed into valuable unit-level knowledge resources (Ployhart & Moliterno, 2011) and, thus, channeled into the MNE network.
These processes relate the complexity of the knowledge-sourcing task of the unit, which requires coordination and interdependence among creative individuals in the unit, to the unit’s emergence enabling states. These states “consist of the unit’s behavioral processes, cognitive mechanisms, and affective psychological states…. Simply put, emergence enabling states describe how unit members act, think, and feel” (Ployhart & Moliterno, 2011, 135). In particular, the behavioral processes represent the communication and coordination mechanisms that create habitualized actions, routines, and standard operating procedures, that provide stability and support for individual knowledge exchanges. The cognitive mechanisms refer to the unit’s climate, memory, and learning. The unit’s climate reflects what is valued and rewarded in the unit. It includes reward systems, performance-based compensation, and promotion schemes. The unit’s memory is transactive memory that can be created through the use of a supraindividual repository enabling the access and use of individual knowledge by others (Ren & Argote, 2011). The unit’s learning takes place through, for instance, communities of practices that facilitate acquisition, absorption, and transfer of information and knowledge of the individual within her community. The affective processes refer to the unit’s cohesion, trust and affection and render the unit environment open to and supportive of individual knowledge-related efforts. These includes social integration systems that facilitate relational proximity and the establishment of trustworthiness and trusting relationships among the unit members.
Integrating creative individuals in the layered MNE environment
For an MNE, to effectively source knowledge across borders, the external knowledge acquired by individuals with different creativity traits in geographically dispersed units needs to be shared among other individuals within the MNE network (Spender, 1966).
The cross-national dissimilarities in institutional structures (e.g., education system, labor market, and technological heritage) faced by MNE units in different host countries are likely to create diverse structural, cognitive, and behavioral barriers, which may limit international knowledge sourcing by individuals within the MNE and, thus, impede the integration of individual knowledge within the MNE (Carlile, 2002, 2004). These barriers engender a distinctive tension at the unit level between global integration and local adaptation (Rosenzweig & Singh, 1991) because each unit has to deal with the isomorphic pressures from the host country and the MNE to maintain legitimacy in both the external and internal organizational context (Kostova & Roth, 2002). In particular, the unit has to implement the framework created at the MNE-context level to extrinsically motivate individual external knowledge sourcing and the sharing of this knowledge within the MNE network. Yet, the practices that the MNE expects the unit to implement, which have been formulated in and, thus, influenced by, the MNE’s home institutional context, might be considered inappropriate for the host country.
The tension between global integration and local adaptation is further complicated by individual heterogeneity within the unit because the individuals that are located at the unit are likely to have different creativity traits due to dissimilarities in their educational, cognitive, and cultural backgrounds. Consequently, the practices for stimulating heterogeneous individuals located at the unit may not be consistent with the isomorphic pressures faced by the unit both within the MNE and in the host country. Depending on her distinctive trait, the individual in the unit may demonstrate differences in her local knowledge sourcing and sharing behavior and might be responsive to practices that are considered inappropriate for the host country and/or for the MNE. Thus, a high potential capacity to source external knowledge by individuals within the MNE network does not necessarily translate into high realized knowledge sourcing by the MNE.
Effective knowledge sourcing by the MNE depends on the success of the emergence enabling processes at the unit level in ensuring consistency between the three forces (i.e., individual heterogeneity, the pressures for global integration, and local adaptation). We consider four
scenarios, as illustrated in Table 1, with the two at the extremes (scenarios 1 and 4) being our hypothetical bases for comparison.
INSERT TABLE 1
At one extreme, scenario 1 offers a natural alignment, therefore no effort in adjusting unit‐
level processes is required. The practices to which individuals with specific traits in a unit are responsive (i.e., practices aligned with the specific individual heterogeneity), are consistent with the global integration and local adaptation pressures. In this situation, because of consistency between the three forces, the unit enabling processes grapple with reduced complexity and knowledge sourcing by the MNE will be most effective. The processes can smoothly transform the creativity of individuals into valuable unit-level knowledge resources and channel them into the MNE network. At the opposite end (scenario 4), knowledge sourcing by the MNE will be least effective due to a lack of consistency between the practices to which the individuals with specific traits in the unit are responsive, global integration, and local adaptation pressures. This is because the lack of consistency creates significant complexity for the unit-level enabling processes requiring them to address different demands imposed by each of these forces. In this situation, the unit-level processes can align individual heterogeneity with one of the two pressures depending on the strategic orientation of the MNE toward one or the other.iv In both scenarios, the effort of the unit to align the three forces is limited because either they are naturally aligned (scenario 1), or they can be partially aligned as determined by the strategic orientation of the MNE (scenario 4). In scenario 4, managers at the unit will likely strive toward partial alignment, either with the MNE or the host country, following the MNE’s strategic orientation towards global integration or local responsiveness (Kostova & Roth, 2002).
The other two scenarios lie in between these two extremes engendering a level of complexity that can be effectively managed by the unit-level emergence enabling processes. First, the practices to which individuals with specific traits in the unit are responsive may be consistent with those considered appropriate for the host country, but not with the MNE framework (scenario 2). Second, the practices to which individuals with specific traits in the unit are responsive may be considered appropriate for and, therefore, consistent with the MNE, but not for the host country institutional structure (scenario 3).
different countries and are part of an MNE headquartered in an Anglo-Saxon country. We consider three units, one located in a collectivist country, another in a masculine-oriented country, and a third in a country with lower power distance. For each unit, we discuss how unit-level emergence enabling processes transform domain-relevant, creativity-relevant skills, and task motivation, respectively into valuable unit knowledge. For each of the three creativity traits, we consider a particular source of individual heterogeneity for the sake of simplicity.v Specifically, we consider background orientation for domain-relevant skills, gender for cognitive-relevant skills, and intrinsic vs. extrinsic motivation for task motivation.vi In each scenario, our focus is only on those heterogeneous individuals whose differences create a lack of alignment with the MNE or the host country.
Transforming domain-relevant skills into valuable unit knowledge
To illustrate the two scenarios in relation to domain-relevant skills we use the example of heterogeneity in the background of engineers at a unit located in a collectivist country, such as Japan. In relation to scenario 2, we focus on those engineers at this unit who have a background oriented toward practical knowledge and, thus, put emphasis on experience accumulated in the organization and intensive human-based networked relationships. Consequently, they are organization-oriented and value group and teamwork. Yet, unit-level emergence enabling processes that rely on group and team-based rewards can create inconsistencies with the global integration pressures exerted from the MNE. Because the MNE is headquartered in an Anglo- Saxon country, it considers individual performance-based rewards to be more appropriate (Allen, Takeda, White, & Helms, 2004).
As for scenario 3, we focus on those engineers at the Japanese unit who have a more theoretical background and, thus, put emphasis on concept development, like scientists.
Consequently, they value recognition-based rewards and the freedom to work on their projects based on self-direction. In collectivistic countries, such as Japan, where group and teamwork incentives are considered appropriate practices (Keeley, 2001), granting freedom to stimulate engineers with this background for MNE knowledge sourcing is likely to expose the unit to the risk of lack of local legitimacy.
A solution at the unit level is to implement emergence enabling processes that are effective in addressing the specificity of individual traits and consistent with the pressure for global integration (scenario 2) and local adaptation (scenario 3). These processes can entail a creative
combination of career advancement and salary increase based on how the individual is rated by different organizational constituents. This leverages the organizational orientation of the engineers with a background based on practical knowledge. At the same time, these are recognition-based rewards that appeal to engineers that have a more theoretical background. Further, being performance-based, these rewards are consistent with the pressure for global integration from the MNE. They are also consistent with the pressure of local adaptation that the Japanese unit faces due to their emphasis on organizational collectivism.
Transforming creativity-relevant skills into valuable unit knowledge
In connection with creativity-relevant skills, the two scenarios can be illustrated by considering men and women in a unit of the same Anglo-Saxon MNE located in countries with a masculine- oriented culture.
In relation to scenario 2, we focus on those men who tend to have a greater preference for
“old boys networks” (Durbin, 2011) and, thus, prefer working in male-dominated teams.
Emergence enabling processes based on single-gender teams may be effective practices in stimulating the knowledge-related effort of males in countries with a masculine-oriented culture and are considered appropriate in these local contexts. Yet, these practices are likely to be inconsistent with the global pressure exerted from the MNE headquartered in an Anglo-Saxon country where inclusion in the workplace is an increasingly established corporate policy.
As for scenario 3, at the same unit of Anglo-Saxon MNE, we focus on those women who can broaden the team’s cognitive perspective and require more empowerment. To enable the broader cognitive perspective, mixed-gender teams may be effective to stimulate women’s involvement in knowledge-related efforts. These practices are consistent with the global pressure from the MNE headquarter, but they are considered inappropriate in the local context.
A solution at the unit level is to implement emergence enabling processes that can support the participation of both women and men in communities of practices though, for example, reward systems that empower women and stimulated men to engage in an inclusive manner. In these communities, engagement is virtual and, therefore, these processes are less likely to be controversial in the host context and can enable interaction based on competence. As a result, the processes can overcome or soften gender biases and are consistent with the global integration
Transforming task motivation into valuable unit knowledge
To illustrate the two scenarios in terms of task motivation, we consider intrinsically and extrinsically motivated individuals that are at a unit located in countries with a lower power distance culture, such as Denmark.
To illustrate scenario 2, we focus on those individuals that are intrinsically motivated. They are typically more sensitive to intrinsic rewards, such as job autonomy (Deci, Ryan, Gagné, Leone, Usunov, & Kornazheva, 2001). Emergence enabling processes revolving around these practices are consistent with those considered appropriate in the local context that is characterized by a lower power distance culture (Huang & Van de Vliert, 2003). Yet, they are inconsistent with the global pressure exerted from the MNE headquartered in Anglo-Saxon countries where financial rewards tend to prevail.
In relation to scenario 3, we focus on those individuals that are extrinsically motivated.
These individuals tend to respond more promptly to financial rewards (Osterloh & Frey, 2000), which are considered appropriate in Anglo-Saxon contexts. Emergence enabling processes that are based on these practices are consistent with the global integration pressure exerted by the MNE but may create legitimacy issues for the local unit in the host institutional context.
A solution at the unit level is to implement emergence enabling processes based on career advancement, which can be valued by intrinsically motivated individuals to the extent that career progression allows these individuals to make choices on how they want to complete their work and set their short-term and long-term goals. This will also appeal to extrinsically motivated individuals in a different manner, as they will value the financial benefits associated with career progression. At the same time, these practices ensure consistency with the pressure for global integration, being less controversial at the MNE level and local adaption resulting in legitimacy in the host country.
DISCUSSION
Our study advances research on international knowledge sourcing by connecting individual heterogeneity to the effectiveness of knowledge sourcing by the MNE. We analyze individual heterogeneity through Amabile’s (2012, 1983) CTC lens to explicitly focus on aspects that are specific to creativity performance along multiple dimensions. To explain how individual creativity traits connect to knowledge sourcing by the MNE, we resort to the multilevel approach of Ployhart
and Moliterno (2011) and bridge the micro with the macro domain through unit-level emergence enabling processes. In our model, effective knowledge sourcing by the MNE is the result of the success of these processes in managing individual heterogeneity and ensuring consistency with global integration and local adaptation pressures.
Contributions to the individual perspective
Our model contributes to advance the work that has adopted an individual perspective to international knowledge sourcing in different directions. First, the adoption of the CTC allows us to change the conversation in this stream, which has traditionally adopted a uni-dimensional definition of individual heterogeneity and, consequently, focused on specific individuals or groups of individuals (e.g., expats, star employees, top managers, boundary spanners) (Boone, et al., 2019, Oldroyd & Morris, 2012, Reiche, et al., 2009, Schotter, et al., 2017). The consideration of individual heterogeneity in terms of multiple creativity traits enables us to provide a more nuanced understanding of individual heterogeneity and to consider all individuals in the organization.
Future research could extend the analysis to include all employees within the MNE. An additional line of research could investigate the heterogeneity of expats, star employees, top managers, and boundaries spanners in terms of creativity traits.
Second, we shift the conversation from the nature of the incentives to the heterogeneity of individuals. Extant research has pointed to the diversity of incentives that can motivate employees within the MNC to source external knowledge and share it internally (Morris, et al., 2015). We illuminate this stream by suggesting a more complex picture. Distinctive individual creativity traits prompt heterogeneous responses to different incentives and, more generally, to different emergence enabling processes. Looking ahead, an interesting line of research could simultaneously study the heterogeneity in the nature of incentives and individual creativity traits to identify optimal combinations for international knowledge sourcing.
Third, we bridge the micro and macro domain under an overarching theoretical lens that combines an individual focus with the work context of the individuals. Thus, our model adds to the discussion on the alignment between people, processes, and systems (Morris, et al., 2009). A promising line of research would be to examine the role of heterogeneity of people in managing the pressures for alignment exerted by specific global environments.
approach to international management. Our model sheds light on how unit-level emergence enabling processes affect an individual’s behavior transforming her knowledge-related effort into MNE knowledge sourcing. Thus, we substantiate the argument of Foss and Pedersen (2019) that the context, which has traditionally attracted greater attention in international business research (see e.g., Berry, Guillén, & Hendi, 2014), is not, a negation of “micro”.
Contributions to the MNE subsidiary perspective
To the research on international knowledge sourcing adopting an MNE, subsidiary, or intra-MNE relationship perspective, we contribute by responding to the call by Kano and Verbeke (2019) for a nuanced understanding of the microfoundations assumptions and the way these nuances can affect MNE outcomes. In particular, we challenge the assumption of automatic integration of individual knowledge-related efforts at the MNE level. We suggest that the integration is successful only if unit-level emergence enabling processes can ensure consistency between individual heterogeneity, global integration, and local adaptation. The consideration of these multiple sources of complexity and the emergence-enabling role of the unit paves the way for new research directions.
The work on international knowledge sourcing at the MNE level has examined how MNEs can limit the risk of dissemination of proprietary knowledge by looking at technological, geographical, and organizational aspects (Belderbos, et al., 2021, Cantwell, 1989, Cantwell & Santangelo, 2000, 1999, Narula & Santangelo, 2009, Zhao, 2006). However, the complexity deriving from the inconsistencies between the tension for global integration, local adaptation, and individual heterogeneity may constrain the MNE’s selection of specific knowledge protection strategies that require greater cross-unit knowledge sharing. For example, the modularization of R&D projects across geographically dispersed units, can be less viable than other knowledge protection strategies (e.g., geographical distance from competitors) in scenarios of greater complexity. As an illustration, future research could explore MNE’s units, which are located in collectivistic countries where sharing is a societal expectation, and, at these units, examine extrinsically motivated individuals, who are typically unwilling to share their knowledge inside or outside the MNE network without appropriate incentives. This example shows that the complexity added by individual heterogeneity calls for further analysis that accounts for micro-level elements in macro- level decision processes and outcomes.
Research at the subsidiary level has pointed to the diversity in subsidiary mandates and absorptive capacity as major factors in sourcing and combining knowledge across different countries (Minbaeva, et al., 2003, Phene & Almeida, 2008). Based on our model, subsidiary diversity can be studied in relation to the emergence-enabling role of the subsidiary to understand how this role coevolves with the subsidiary’s absorptive capacity and mandate. Interesting research questions to be explored relate to the dynamics of this coevolution across the four scenarios outlined in our model.
In connection with research on international knowledge sourcing looking at intra-MNE relationships (Ambos, et al., 2006, Björkman, et al., 2004, Rabbiosi & Santangelo, 2013), our model can contribute to the conversation on the allocation of decision-making authority in parent- unit relationships by offering directions to define and explore the role of the heterogeneity of individual creativity traits and the emergence enabling processes in managing these relationships.
Moving forward, future research may examine the following research questions: Are autonomous subsidiaries more successful in managing the tension between global adaptation and local responsiveness while accounting for individual heterogeneity? Does this success depend on whether the individual heterogeneity at the subsidiary level arises from domain-relevant skills, creativity-relevant skills, or task motivation? Are more autonomous subsidiaries able to implement emergence enabling processes that can resolve situations of greater complexity?
The claim that unit‐level processes must be aligned with creativity traits of individuals that inhabit these units offers interesting managerial implications. In practical terms, this means that either the processes must be tailored to match individuals, or units must be staffed to match the processes. In either case, units must have discretion in how to facilitate knowledge sourcing and dissemination.
Contributions to the broader international business research
Our study advances the broader international business literature, which has traditionally adopted a structural network perspective to bridge the micro and macro domain (see e.g., Schotter, et al., 2017). By adopting CTC, our study accounts for a more articulated role of the individual in managing the tensions between global integration and local adaptation. Specifically, we augment the model by Kostova and Roth (2002) and advance extant research by offering a more nuanced
research could explore the extent to which a subsidiary can afford ceremonial adoption of MNE practices in situations of greater inconsistencies between global integration, local adaptation, and individual heterogeneity, such as in scenario 4 in our model.
To conclude, our individual creativity-based model invites us to rethink how we conduct research on knowledge sourcing by the MNE.
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Figure 1. An individual creativity-based model of MNE knowledge sourcing*
ORGANIZATIONAL CONTEXT
Unit’s context
Individual Heterogeneity Individual creativity traits
Domain-relevant skills
Creativity-relevant skills
Task motivation ORGANIZATION-LEVEL
OUTCOME MNE knowledge sourcing MNE’s context
UNIT EXTERNAL CONTEXT Global Integration
pressure
Local Adaptation pressure
Emergence-enabling processes
Table 1. Scenarios outlining the conditions for effective MNE knowledge sourcing
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Practices aligned with Individual Creativity traits at the unit (Individual heterogeneity - IH) MNE’s context
Global Integration
pressure (GIP) Consistent Inconsistent Consistent Inconsistent
Unit external context Local Adaptation
pressure (LAP) Consistent Consistent Inconsistent Inconsistent
↓ ↓ ↓ ↓
Unit-context Emergence enabling processes
Focus on IH due to consistency between
IH, GIP and LAP
Manage lack of consistency between
IH and GIP
Manage lack of consistency between
IH and LAP
Impeded by lack of consistency between
IH, GIP and LAP
↓ ↓ ↓ ↓
MNE knowledge
sourcing Most effective Effectiveness depends on consistency achieved via unit-level emergence
enabling processes Least effective Note: Bold items indicate the components of the model in Figure 1 and italicized items reflect the forces associated with each of them.
i Aligned with the literature on knowledge and the multinational (Foss & Pedersen, 2019), we use the term macro level to refer to the MNE and its subsidiaries, and micro level to refer to the individual and groups of individuals.
ii We acknowledge that Amabile’s theory has been used by international business scholars (e.g., Rubera, Ordanini, &
Griffith, 2011, Zaheer, Lamin, & Subramani, 2009). However, as far as we are aware, it has not been used to study international knowledge sourcing.
iii This literature builds on “the epistemological distinction between knowing how and knowing about which is captured by distinctions between subjective vs. objective knowledge, implicit or tacit vs. explicit knowledge, personal vs. prepositional knowledge, and procedural vs. declarative knowledge” (Grant, 1996, 111).
iv In scenario 4, the unit level processes will resemble either scenario 2 or 3, depending on the strategic orientation of the MNE towards global integration or local adaption.
v We acknowledge that there can be other sources of individual heterogeneity for each of the three traits examined.
vi We select these sources of individual heterogeneity because they are among those considered by the literature on knowledge in the international context (see e.g., Lam, 1997, Makela, Kalla, & Piekkari, 2007, Osterloh & Frey, 2000).
