The Effects Of Internal And External Knowledge On Subsidiary Performance:the Case Of Korea Firms In China

The theory of MNE subsidiaries’progressing suggests that, every subsidiary has its special characteristics, so it is reasonable to choose it as the specific research object. Furthermore, the subsidiary is a separate performance center, a collective body of capabilities and resources, and therefore it is scientific to investigate subsidiaries’ performance through study the subsidiary except headquarters. During the process of rating the subsidiary’s performance, if we just make it as a separate unit of profit-creation, measured the level of performance by market and result, obviously, it is unreasonable, and also bad to the development of the whole MNE. Owing to each subsidiary is in different environment, it is necessary adapt itself to the host country’ policy, economy and culture background etc., consequently, when rating the performance of subsidiaries, it is important to consider the subsidiary’role to the development of MNEs’strategy comprehensively. Many domestic and foreign scholars have studied subsidiaries’performance in different dimensions, such as the rating standard of subsidiaries’performance, factors which affect subsidiaries’ performance, and so on; those conclusions are very useful and crucial to the following researches.Learning from internal and external network are two important factors to the subsidiary’s performance, but previous studies had largely focused on the relationship between learning from internal network and subsidiaries’performance, and little study has been done about the relationship between subsidiary’s performance and learning, from both internal network learning and external network learning. Based on this study status, through product questionnaire survey to Korean corporations in our country, collect research data, and have, got126effective questionnaires in all. After making essential statistical analysis, use multiple regression method to investigate the roles internal and external knowledge played on the subsidiaries’performance, this study regards knowledge which achieved from internal network as parent knowledge, while regards knowledge which achieved from external network as host country knowledge. Furthermore, embody other three factors:absorptive capability, trust and environment complexity, investigate what a function do these factors play in the process.Results from the research show that parent knowledge has a positive effect on subsidiary performance, but the effect from host country knowledge to subsidiary performance is not significant; absorptive capability, during the process of both parent knowledge and host country knowledge affect subsidiary performance, plays positive role; trust between home corporation and subsidiary has a positive effect on subsidiary performance, but the trust between main economical body in host country and subsidiary has no significant impact on subsidiary performance; environment complexity has not play a significant impact on the relationship between parent knowledge and subsidiary performance as predicted, and also on the relationship between host country knowledge and subsidiary performance.Our country is a fast developing country, has already attracted a lot of MNEs to invest and build factories in our country, the influx of MNEs accelerated the development of economy and technology, therefore research on the subsidiary which conduct manufacturing and managing activities, not only could increasing theory in knowledge management field, but also could provide certain theoretic guide enterprises to solve practical solutions.