In the know – How global companies win locally

We know that global companies face challenges in being successful abroad. Past research has focused on the transfer of knowledge – from global to local and vice versa – as a way to counter this so-called ‘liability of foreignness’. But how does global and local knowledge actually interact to create the new knowledge and capabilities that lead to success?

Shenxue Li and her co-authors have identified crucial knowledge interactions using in-depth analysis of four multinational companies operating in China. They find that the penetration of global knowledge locally increases absorptive capacity and that this, in turn, enables the careful blending and integration of global and local knowledge. Indeed, they suggest highly tacit local expertise may not be transferable without this approach.

One of the lessons for managers is that while establishing an effective global-local knowledge system requires planning and commitment, the payoff is likely to be worth it.

Li, S., Easterby-Smith, M., Lyles, M. A., and Clark, T. 2016. Tapping the power of local knowledge: A local-global interactive perspective. Journal of World Business, 51(4), 641-653.

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