Headquarters Resource Allocation for Inter-Subsidiary Innovation Transfer: The Effect of Within-Country and Cross-Country Cultural Differences

• Published in: Management international review Vol. 56; no. 5; pp. 665 - 698
• Main Authors: Miao, Yuzhe, Zeng, Yuping, Lee, Jeoung Yul
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer 01.10.2016; Springer Berlin Heidelberg; Gabler Verlag; Springer Nature B.V
• Subjects: Analysis; Budget allocation; Business and Management; Business innovation; Business Strategy/Leadership; China; Chinese culture; Communication channels; Competitive advantage; Corporate headquarters; Corporate strategies; Cross cultural studies; Cultural differences; Culture; Decision making; Emerging Markets/Globalization; Individualism; Innovations; International business enterprises; Knowledge; Knowledge management; Knowledge transfer; Korean culture; Management; Management science; Multinational corporations; Multinational enterprises; Operations Management; Organization; Research Article; Resource allocation; Social networks; South Korea; Studies; Subsidiaries; Subsidiary companies; China; United States > US; Sub-national culture; Cultural distance; Headquarters resource allocation; Innovation transfer
• ISSN: 0938-8249; 1861-8901
• DOI: 10.1007/s11575-015-0266-3

Although the importance of cross-country cultural distance is widely acknowledged in the international business literature, we have limited understanding about how culture distance at different levels influences multinational corporations' (MNCs') subsidiary management. This paper contributes to culturerelated research by stressing cultural differences at the sub-national level by examining how cultural distances at both the within- and cross-country levels simultaneously influence headquarters resource allocations for innovation transfer projects between subsidiaries. We find that the within-country cultural distance between subsidiaries is positively related to headquarters resource allocation for innovation transfer projects based on 1439 dyadic innovation transfer projects between Korean MNC subsidiaries located in China, and this relationship is strengthened when the cross-country cultural distance between headquarters and the sending subsidiary increases.