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On Incentives for an Efficient Flow of Knowledge within Multinationals

Author

Listed:
  • Amir Shoham

    (Department of Business Administration, Ben-Gurion University, Israel and Negev Academic College of Engineering, Israel)

  • Varda Lewinstein Yaari

    (Department of Business Administration, Ben-Gurion University, Israel)

  • David M. Brock

    (Department of Business Administration, Ben-Gurion University, Israel)

Abstract

In this paper we develop a principal-agent, game-theoretic model of an MNC, intended to add to the understanding of how smart choices between incentives, monitoring, and structures are linked to an effective intra-firm flow of knowledge. We find that the equilibrium depends on the efficiency of substituting incentives for monitoring. Our study sheds light on arguments within the international management field about monitoring, incentives for managers, and managing knowledge transfer between subsidiaries.

Suggested Citation

  • Amir Shoham & Varda Lewinstein Yaari & David M. Brock, 2003. "On Incentives for an Efficient Flow of Knowledge within Multinationals," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 2(3), pages 213-226, December.
    • Handle: RePEc:ijb:journl:v:2:y:2003:i:3:p:213-226
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    References listed on IDEAS

    as
    1. Rogerson, William P, 1985. "The First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 53(6), pages 1357-1367, November.
    2. Foss, Nicolai J. & Pedersen, Torben, 2002. "Transferring knowledge in MNCs: The role of sources of subsidiary knowledge and organizational context," Journal of International Management, Elsevier, vol. 8(1), pages 49-67.
    3. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    4. Gupta, Anil K. & Govindarajan, V., 1994. "Organizing for knowledge flows within MNCs," International Business Review, Elsevier, vol. 3(4), pages 443-457, December.
    5. M Krishna Erramilli, 1996. "Nationality and Subsidiary Ownership Patterns in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 225-248, June.
    6. Mohan Subramaniam & N. Venkatraman, 2001. "Determinants of transnational new product development capability: testing the influence of transferring and deploying tacit overseas knowledge," Strategic Management Journal, Wiley Blackwell, vol. 22(4), pages 359-378, April.
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    Cited by:

    1. Ma, Danni & Fee, Anthony & Grabowski, Simone & Scerri, Moira, 2022. "Dual Organizational Identification in Multinational Enterprises and Interpersonal Horizontal Knowledge Sharing: A Conceptual Model," Journal of International Management, Elsevier, vol. 28(1).
    2. Jong-Shin Wei & Chwen-Chi Liu, 2003. "Structure, Conduct, and Performance of Principal-Agent Models: An Overview," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 2(3), pages 177-178, December.
    3. Xing, Yijun & Liu, Yipeng & Tarba, Shlomo Yedidia & Cooper, Cary L., 2016. "Intercultural influences on managing African employees of Chinese firms in Africa: Chinese managers’ HRM practices," International Business Review, Elsevier, vol. 25(1), pages 28-41.

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    Keywords

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

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