Scope and Scale of Technology Challenge and MNE Subsidiary Knowledge Sourcing in Host Countries

Current research has emphasized the role that industry characteristics play in MNEs knowledge sourcing decisions. However, much remains to be understood regarding the specific circumstances uncertain which MNEs opt for internal, external, local or global sources of knowledge, especially within a single industry. Using a study of MNE knowledge sourcing and creation in the offshore oil industry in Newfoundland, Canada, we find that MNEs source knowledge in accordance with the geographic scope and complexity scale of the technology challenges being faced. MNEs tend to source knowledge through established partners – their headquarters or other MNE subsidiaries – for localized and small-scale challenges as well as for global and large-scale ones. In contrast, localized large-scale challenges and global small-scale ones result in greater rates of knowledge sourcing from host region suppliers or research institutions. This understanding helps clarify how MNEs choose their sources of knowledge and breaks with the existing dichotomy of traditional versus fast-paced industries