Origins of knowledge creation and multinational firm performance

Knowledge creation is one of the most important instruments of firm survival and growth (Grant, 1996; Kogut and Zander, 1992; Kogut and Zander, 1993). Firms make decisions on whether to create knowledge using single country or international strategies, individually or in collaboration with various internal and external partners such as units, universities or research centres, which may operate in different countries (Arora et al., 2014; Berry, 2014; He and Wong, 2004; Kogut and Zander, 1992; Kogut and Zander, 1993; Van de Vrande, 2013). Therefore, firms make strategic choices regarding the locational and organisational origins of knowledge creation. Despite a growing body of research suggesting that firms increasingly create knowledge using international, multi-country strategies (Berry, 2014; Patel et al., 2014; Van de Vrande, 2013), many aspects of these strategies remain unclear. Using insights from knowledge of the firm and subsidiary evolution theory as well as interrelated theories, this thesis aims to show the value of different international knowledge creation strategies, how firms combine them in their overall knowledge strategy and align them to different contexts in which they operate. Based on a sample of 46,712 patents as indicators of knowledge creation granted to 150 UK headquartered manufacturing sector multinational firms and their 5,352 first level subsidiaries during the 2003 to 2012 period, the findings show that international internal and external knowledge creation strategies have a U-shaped relationship with performance. Also, this thesis offers evidence that multinational firms need to combine single country and international as well as internal and external international knowledge creation strategies in a balanced way in their overall strategy. Finally, these effects depend significantly on the characteristics of the environment in which multinational firms operate.