Knowledge flows in MNCs: An empirical test and extension of Gupta & Govindarajan’s typology of subsidiary roles

This study offers an empirical test and extension of Gupta & Govindarajan’s typology of subsidiary roles based on knowledge inflows and outflows. A four-fold typology of subsidiary roles – global innovators, integrated players, implementors and local innovators – is tested using a sample of 169 subsidiaries of MNCs headquartered in the US, Japan, UK, Germany, France and the Netherlands. Results confirm the typology and show that different subsidiary roles are associated with different control mechanisms, relative capabilities and product flows. In comparison to earlier studies, our results show an increased differentiation between subsidiaries, as well as an increase in the relative importance of both knowledge and product flows between subsidiaries suggesting that MNCs are getting closer to the ideal-type of the transnational company.