The geographic scope of the MNC and its alliance portfolio: Resolving the paradox of distance

Authors


Abstract

Some research suggests that knowledge transfer and performance suffer when entities are distant from each other, while other work emphasizes that distance is beneficial by allowing firms to access novel and diverse knowledge. We resolve this paradox by focusing on the differing roles of MNC subsidiaries and headquarters vis-à-vis its alliances: distance between technology alliance partners and subsidiaries hurts MNC performance, but MNCs benefit when such partners are located afar from headquarters. We find support for these ideas in a longitudinal sample (2002 to 2006) of 126 Fortune 500 firms. Our work broadens the concept of the geographic scope of the firm, and suggests that MNCs gain by searching globally but collaborating locally.

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