Knowledge Development and Transfer in Foreign Subsidiaries and Their Parent Transnational Corporations

The article aims at analysis of knowledge-oriented growth of TNCs' foreign subsidiaries, their transformation and evolving participation in knowledge development by parent transnational corporations (TNCs). The author's concept of increasing involvement of foreign subsidiaries in leveraging knowledge in TNCs' organizations is presented with a focus on a new process of “creative transition” by corporate foreign subsidiaries and its implications for the parents and host economies. The research method is based on integration of concepts, elements and instruments used in international management and international business to investigate the evolution of the knowledge development process in TNCs' cross-border organizations.

The analysis of knowledge development and transfer in TNCs, and growth of their foreign subsidiaries as well as key factors of expanding their knowledge-oriented activities reveals the “creative transition” process which is underway in the subsidiaries. It leads to their increased participation in the knowledge development by TNCs and implies some results for parent firms and host economies. It is concluded that the knowledge-oriented activity of foreign subsidiaries can result in possible capturing valuable knowledge co-created by domestic entities what can imply weakening innovativeness and competitiveness of the host economies.

The problem of knowledge-oriented activity of TNCs' foreign subsidiaries and its domestic impacts has not been investigated in Polish publications yet. The article offers a conceptual basis for further theoretical and empirical research with a focus on impacts in a host economy resulting from the knowledge-oriented activity of TNCs' foreign subsidiaries and shows a necessity to work out a fair approach to sharing benefits of knowledge creation and utilization in the host economy.