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2003 DECADE AWARD WINNING ARTICLE
Knowledge of the firm and the evolutionary
theory of the multinational corporation
B Kogut1 and U Zander2
1Wharton School, University of Pennsylvania,
USA; 2Institute of International Business (IIB),
Stockholm School of Economics, Sweden
Correspondence:
Bruce Kogut, INSEAD,
Boulevard de Constance,
77305 Fontainebleau Cedex,
France.
Tel: +33 1607242 05
Fax: +33 1607455 00/01
E-mail: [email protected]
Abstract
Firms are social communities that specialize in the creation and internal transfer
of knowledge. The multinational corporation arises not out of the failure of
markets for the buying and selling of knowledge, but out of its superior
efficiency as an organizational vehicle by which to transfer this knowledge
across borders. We test the claim that firms specialize in the internal transfer of
tacit knowledge by empirically examining the decision to transfer the capability
to manufacture new products to wholly owned subsidiaries or to other parties.
The empirical results show that the less codifiable and the harder to teach
is the technology, the more likely the transfer will be to wholly owned
operations. This result implies that the choice of transfer mode is determined
by the efficiency of the multinational corporation in transferring knowledge
relative to other firms, not relative to an abstract market transaction. The
notion of the firm as specializing in the transfer and recombination of
knowledge is the foundation to an evolutionary theory of the multinational
corporation
Journal of International Business Studies (2003) 34, 516–529. doi:10.1057/palgrave.
jibs.8400058