The External Knowledge Sourcing Process in Multinational Corporations

L. Felipe Monteiro, INSEAD; and Julian Birkinshaw, London Business School

Strategic Management Journal, February 2016

Research Summary

We study the processes through which multinational corporations (MNCs) identify and make use of external sources of knowledge. Based on a seven year longitudinal study of one MNC’s overseas scouting unit, we show how a simple one-directional “channelling” process gradually gave way to three higher value-added processes, labelled “translating”, “matchmaking” and “transforming.” Building on these insights, we develop an integrative framework, defining the conditions under which each of the four processes is likely to transpire, and showing how the stock of social capital held by the scouting unit allows it to perform increasingly high value-added activities over time. Implications for the MNC, external knowledge sourcing and boundary spanning literatures are discussed.

Managerial Summary

Over the years, many multinational corporations have created overseas “scouting” units to tap into new ideas and opportunities in leading-edge markets, but with mixed outcomes. In this study, we describe the development of a European telecom firm’s scouting unit in Silicon Valley during the 2000s, focusing on the specific approaches used by the scouting managers to build effective connections between Silicon Valley start-ups and the firm’s business units back in Europe. We identified four distinct approaches for different types of opportunities, and we observed a clear sequencing of effort over time as the scouting managers built the necessary capabilities and credibility.

Read the full article here.