Managing global knowledge transfer: Inpatriate manager embeddedness and firm innovation

Highlights

• Social embeddedness theory being used to explain knowledge transfer in expatriate/repatriate assignments.

• An inpatriate becomes embedded within the firm’s HQ, tacit knowledge transfer will occur for new innovative practices.

• The program for Inpatriate Adjustment and Organization Innovation and its development serves as a very inspirational framework.

Abstract

The purpose of this study is to explore the role of tacit knowledge transfer in a particular type of global manager - the inpatriate manager who is typically relocated from the MNC’s subsidiary to headquarter. To do so, we draw on social embeddedness theory. Our paper suggests that if an inpatriate manager becomes embedded within the MNCs headquarter, tacit knowledge transfer will occur resulting in innovative practices and a global mindset within the MNCs headquarters. This study takes the unique approach of studying the barriers that inpatriate managers face in the transfer of tacit knowledge and highlights the role of human resources in facilitating the transfer of knowledge across the MNC. The paper articulates the implications for policy and practice and a future research agenda.

Introduction

The headquarters (HQ) of multinational corporations (MNCs) need to acquire and integrate global knowledge throughout all its global subsidiaries to develop innovative processes (Chesbrough, 2003; Kiessling, Harvey, & Dabic, 2008; Kiessling, Richey, Meng, & Dabic, 2009; Shujahat et al., 2019; Vlajčić, Caputo, Marzi, & Dabić, 2019; West & Bogers, 2014). Human resource management (HRM) plays a critical role in this global accumulation of knowledge within the organization and embedding an employee within the organization (Papa, Dezi, Gregori, Mueller, & Miglietta, 2017; Stoermer, Davies, & Froese, 2020). HRM research suggests that certain practices develop knowledge management (KM) capabilities and, subsequently, innovation (Hussain, Iren, & Rice, 2019).

This paper explores the stream of literature regarding global knowledge management (KM) with a focus on how to manage global employees’ knowledge for innovation success, especially for reverse knowledge adoption and innovation from foreign subsidiaries. Our focus is on the inpatriate manager who is relocated from the subsidiary to HQs on a semi-permanent to permanent basis. A staffing method described to act as a linking pin to HQ (Harvey, 1997; Moeller, Maley, Harvey, & Kiessling, 2016; Reiche, 2007)

Although global knowledge accumulation and transfer to the HQs is imperative for MNCs (Harzing, Pudelk, & Sebastian Reiche, 2016), there is a gap in the literature in how the transfer of foreign knowledge can be accumulated, combined and utilized globally by the HQs (Kogut & de Mello, 2018; Li & Scullion, 2010). In line with Harzing et al. (2016), we operate under the assumption that knowledge transfer from the HQs to foreign subsidiaries is less complicated/arduous than the process of knowledge transfer from subsidiaries to the MNCs HQ. Research has continuously illustrated that MNC’s knowledge transference facilitates innovation development (Kogut & de Mello, 2018; Peltokorpi & Yamao, 2017). However, scant scholarly attention defines the specific mechanisms of transference of individuals’ tacit knowledge (Minbaeva, 2013).

Global knowledge is both explicit and tacit. However, research suggests that the most valuable knowledge is typically tacit, not codified, and interdependent upon the social context, making it difficult to understand and transfer (Li & Scullion, 2010). Although an entire research stream continues to explore explicit information transfer to HQ, very little research focuses on the most crucial aspect of subsidiary global knowledge, that of tacit knowledge (Amir, Okimoto, & Moeller, 2019; Stoian, Dimitratos, & Plakoyiannaki, 2018; Li & Scullion, 2010).

Knowledge of an individual employee is a combination of experience, expertise, and know-how that is culturally specific and challenging to transfer (Nonaka, 1994; Polanyi, 1966). MNCs competing globally need to acquire tacit knowledge regarding the global marketplace and foreign subsidiary innovation and, consequently, transfer to the home office (Hong & Snell, 2015). This study explores how tacit knowledge can be transferred from the subsidiary to the HQs for innovation through the use of inpatriation.

Scholars have studied inpatriation and inpatriates in areas such as recruitment (Harvey, Novicevic, & Kiessling, 2002), learning and development (Harvey, 1997), trust (Harvey, Griffith, Kiessling, & Moeller, 2011, Maley & Moeller, 2014), performance appraisal (Maley, 2009), psychological contract (Maley, 2009); building social capital (Moeller et al., 2016; Reiche, Kraimer, & Harzing, 2011); retention (Maley & Moeller, 2018). While global mobility scholars have researched the general notion of inpatriate KM (i.e. Murakami, 2017; Reiche, 2007, 2011), and on other types of global assignments and MNC knowledge transfer (Al Ariss & Shao, 2020; Duvivier, Peeters, & Harzing, 2019; Froese, Kim, & Eng, 2016; Reiche, 2012), they have not yet focused on the mechanism that explains exactly how and why inpatriates are enabled and motivated to transfer knowledge from the subsidiary to the HQ, and much less the importance of their tacit knowledge transfer (Collings, McDonnell, Gunnigle, & Lavelle, 2010; Jawad, 2020; Reiche, 2012). Yet, MNCs are utilizing inpatriation more so than ever (Moeller & Harvey, 2018; Portniagin & Froese, 2019).

Inpatriates poses are plethora of knowledge from their experience in subsidiaries specifically so market specific and network knowledge (Garrick & Chan, 2017; Peet, 2012). Inpatriate managers have tacit knowledge of the MNCs subsidiary which can be transferred globally (Harvey & Buckley, 1997; Maley & Moeller, 2018; Moeller et al., 2016), but often times are at a loss on how to apply this knowledge to a new context. However, unless the individual is supported upon arrival into HQ and becomes embedded within the MNC, this tacit knowledge may not be transferred. The key to understanding how embeddedness is formed is to understand the inpatriates’ job experiences. Applying the logic posed by Ng and Feldman (2013), inpatriates will experience perceptions of fit, links, and sacrifice in their new context. Complex mental processes (Crossley, Bennett, Jex, & Burnfield, 2007) take over to determine the level of embeddedness experienced. As job embeddedness grows over time (Wheeler, Harris, & Sablynski, 2012), so can the potential for expatriates to introduce innovative practices. Although various global staffing methods can contribute to firm innovation, we suggest that the inpatriation method (Harvey & Buckley, 1997) may well be a better knowledge transfer adoption and innovation methods from emerging to developed economies. Our research explores the strategic importance of tacit global knowledge for MNC innovativeness.

Our research utilizes the theoretical foundation of social embeddedness, which is a state influential to an inpatriate’s ability to transfer knowledge within the organization. As discussed in greater detail later, an individual’s social embeddedness within an organization is defined as how immersed an employee becomes, looks long-term for organizational improvement, shares and accumulates knowledge with an intent to stay. Past research (i.e. Alassaf, Dabić, Shifrer, & Daim, 2020; Hussain et al., 2019; Papa et al., 2017) suggests that perceived organizational support is imperative for embeddedness.

This research furthers the field by examining inpatriates and knowledge transfer from the social embeddedness theory’s unique theoretical foundation. Consequently, the purpose of this study is to explore the role of tacit knowledge of the inpatriate manager. Accordingly, this research focuses on answering the following question: How does organizational embeddedness of an inpatriate affect knowledge transfer for future innovation?

This study makes an important contribution to the KM and global mobility literature by taking the unique approach of studying the barriers and motivational issues that inpatriate manages face in the transfer of tacit knowledge and highlights HRM and other stakeholders’ role in facilitating the transfer of knowledge within the MNC. Moreover, our research suggests that inpatriate managers could become one of the most powerful global knowledge and innovation development conduits.

The manuscript proceeds as follows: First, we present an overview of the current knowledge management, and innovation literature works. This is followed by elaborating the precise role of inpatriates in the transference of tacit knowledge, including the moderating effects of culture and employee embeddedness. The discussion will explore a model of inpatriate embeddedness along four adjustment phases with five distinct features. Finally, the paper articulates the implications for policy and practice and a future research agenda.