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Enriching Absorptive Capacity Through Social Interaction

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Absorptive capacity is frequently highlighted as a key determinant of knowledge transferwithin MNEs. But how individual behaviour translates to absorptive capacity at thesubsidiary level, and exactly how this is contingent on subsidiaries’ social context, remainsunder-addressed. This not only limits our understanding of the causal linkage betweenindividual and organizational level absorptive capacity, it also hampers further research onpotentially relevant managerial and organizational antecedents, and limits the implicationswe can draw for practitioners in the field seeking to increase their organization’s capacity toput new knowledge to use. To address this shortcoming we conduct an in-depthcomparative case study of a headquarters-initiated knowledge transfer initiative at twosubsidiaries of the same MNE. The findings demonstrate that social interaction is a keyrequirement for subsidiary absorptive capacity as it enables employees to participate in thetransformation of new knowledge to the local context. Second, the findings illustrate howorganizational conditions at the subsidiary level can impact subsidiary absorptive capacityby enabling or constraining local interaction patterns. These insights contribute to theabsorptive capacity literature by demonstrating the scale and scope of social interaction asthe key link between individual- and organizational-level absorptive capacity.

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Jasper J. Hotho, Florian Becker-Ritterspach, Ayse Saka-Helmhout

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