Exploring MNEs’ inter-organizational knowledge transfer processes for enhancing innovation capability

Purpose This study investigates how multinational enterprises (MNEs) operating in emerging markets (EMs) acquire locally embedded knowledge and transfer it back to their headquarters (HQs) in developed economies. Design/methodology/approach We adopt a qualitative case study approach, using the Gioia methodology, to examine knowledge flows within three MNEs operating in the Chinese market. Data were collected through 22 in-depth interviews with expatriates and their colleagues in both HQ and host units. Findings Our findings highlight the value of emerging market knowledge for driving innovation for developed-economy MNEs and reveal eight sub-processes shaping expatriates’ knowledge acquisition (KA) and knowledge transfer (KT): (1) becoming acquainted with the host unit’s business environment, (2) identifying useful knowledge sources, (3) fostering relationships aimed at the development of friendships with external parties, (4) acquisition, (5) gaining senior (HQ) management support, (6) enhancing the absorptive capacity of HQs, (7) boundary spanning and (8) transferring knowledge. Additionally, we introduce renqing-based and face-based trust as novel dimensions of social capital theory, providing new insights into trust dynamics in emerging market contexts. Originality/value This study uncovers micro-level processes by which expatriates facilitate KA and KT from EMs to developed-economy HQ, addressing gaps in HQ-centric and emerging multinational enterprise-focused research. It advances social capital theory by introducing culturally nuanced trust dimensions and provides a more holistic, context-sensitive understanding of cross-border knowledge flows in coopetitive relationships, incorporating multi-actor perspectives.