Chapter 7: Knowledge flows and International Expansion: Examining Local Market Knowledge Transfer Effects on Strategic Choice

A large and growing body of research describes a firm’s expansion into a new host country as a cumulative process of knowledge sharing and transfer from one division to another division of a multi-national corporation. Often in the international expansion literature, these knowledge flow processes are assumed or inferred based on time since entering a particular local market, or the number of markets within which the firm operates. Rather than infer knowledge flow processes based on time or number of markets, in this paper, we develop propositions that begin to examine specific knowledge flow processes within the multi-national, multi-divisional firm. We highlight both the determinants and consequences of local market knowledge flows within the firm as well as point to their critical effects on strategic choice and performance.