– The purpose of this paper is to draw attention to the link between knowledge transfer flow and the location of a multinational corporation (MNC).
– The authors put forward a conceptual approach to formulate the mathematical modelling of a firm’s performance following the decision to join a regional cluster. This model builds on a recent stream of theoretical literature which has investigated the relationship between networks and the creation and diffusion of knowledge. The purpose of this model is to propose a mathematical tool to determine the long-term financial results induced by knowledge transfer from an MNC’s acquired subsidiary located in a cluster to another part of the MNC.
– This study has several important research implications. First, it is a useful step towards a better understanding of how knowledge transfer effects may interact with cluster effects, while explaining subsidiary location performance. Second, it focuses on the most valuable, often highly tacit knowledge competencies.
– Other investigations would certainly be welcome to improve the links between the proposed mathematical model and the efficiency of the location of an MNC in a cluster through a quantitative study.
– The authors constructed this study with the aim of developing a model that would give us a better understanding of the impact of embedded knowledge on the efficiency of a localization choice made by an MNC.
– To date, there has been little in the literature on the profit arising from a multinational firm’s choice of location.
