Abstract

Since multinational corporations (MNCs) in host countries frequently face location-based disadvantages, local market knowledge acquisition has become an increasingly important topic in the knowledge management literature. Within this research stream, the process of local market knowledge transfer has been widely discussed. However, the issues of the source (especially the internal and external sources) for MNCs to obtain local market knowledge have not been well studied, especially in the emerging market context. Also, the consequence of choosing a local market knowledge source, which interests practitioners more, rarely appears in the literature.

This study aims to be the first conceptual paper discussing both antecedents and outcomes of choosing either inside or outside local market knowledge source in the emerging market context. The framework we propose, using MNCs as the unit of analysis, includes both micro-environmental factors (organizational culture and the home market performance of MNCs) and macro-environmental factor (the openness of the economic system in the emerging market) that impact the local market knowledge source choice (insider or outsider) of MNCs. In addition, we discuss how the extent of the environmental turbulence (especially market turbulence) in the emerging market moderates the relationship between either inside or outside local market knowledge source and the performance of MNCs in the emerging market.

We believe our framework is a parsimonious and systematically clear way of explaining what is actually a complicated phenomenon and we hope that this paper provides a conceptual framework, which stimulates subsequent empirical studies.

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