Headquarters to subsidiary transfer effects on marketing strategy exploitation

a r t i c l e i n f o The transfer of locally created marketing strategies worldwide represents a key competitive advantage for multinational corporations (MNCs). Although a research topic of much interest, empirical content of past studies is scarce. Absorptive capacity studies typically test direct effects of either the transfer capacity of the strategy's initiator or the recipient's ability to process and exploit the strategy on related learning outcomes. Mixed findings allow the possibility of more complex relationships. This study examines the relationships between MNC headquarters and marketing units located in subsidiary firms using a sample of 213 marketing managers. The study systematically explores linear, interaction, and quadratic effects within a structural equation modeling paradigm. The findings indicate that the relationship between a MNC head-quarters' transfer capacity and a subsidiary marketing unit's processing capacity on the strategy's exploitation is one of mediation and moderation. The subsidiary marketing unit's processing capacity is a key mediating variable and headquarters' transfer capacity moderates the effects of this variable on the exploitation of the marketing strategy by the subsidiary's unit. In the field of strategy, widespread agreement exists that the long-term prosperity of organizations lies in their ability to identify and share strategic assets (Gupta & Govindarajan, 2000; Teece, Pisano, & Schuen, 1997: 226). This perspective is most relevant for the multinational corporation (MNC), where the diffusion of strategic knowledge along lateral and hierarchical flows between geographically distant subunits represents a key source of competitive advan-In this context, marketing functions serve as boundary spanning links between customers and other organizational units within the MNC (Schlegelmilch and Chini, 2003: 216). Although marketing functions located in MNC subunits typically create strategic knowledge in their own cultural contexts, they also heavily source this knowledge from other parts in the MNC and subsequently need to balance global strategies with a feasible local application. Marketing strategies are " sticky " because they typically evolve in specific cultural contexts, which make a transfer across time, space, and culture difficult for both the initiator and the recipient (Szulanski, 1996, 2003). Researchers on absorptive capacity give interesting insights and useful suggestions on how knowledge receiving units can enhance the ability to absorb external knowledge (Jansen, Van den Bosch, & Volberda, 2005). Other studies point to the dual embeddedness of MNC organizational units (they belong to the MNC network and are simultaneously situated in local markets) and highlight that being …