Title: Tacitness on multinational corporations' location choice: multi-level moderating of knowledge transfer and absorptive capability

Authors: Fang-Yi Lo; Kun-Huang Huarng; Yu-Ling Chiang

Addresses: National Sun Yat-sen University, No. 70, Lianhai Rd., Kaohsiung, 804, Taiwan ' National Taipei University of Business, Zhongzheng District, Taipei City, Taiwan ' Department of International Business, Feng Chia University (Taiwan), Seatwen, Taichung, Taiwan

Abstract: Based on both the resource-based theory and knowledge-based theory, this research looks at the tacitness of resources influencing the international location choice of Multinational Corporations (MNCs). Under a multi-level setting this study includes multinational networks of parent companies and their foreign subsidiaries to examine the factors influencing location choice. We adopt the hierarchical linear model statistics method to simultaneously analyse multi-level data of parent companies' resources and their subsidiaries' locations. This approach fills a research gap in the literature by investigating subsidiaries and parent companies and clarifying that foreign direct investment is a multi-level phenomenon that cannot be scrutinised using a one-level analysis method. Empirical data from the Taiwan Economic Journal database cover 855 Taiwanese MNCs and their 12,637 subsidiaries around the world. Results support that explicit and tacit resources do influence location choices. Moreover, parent companies act as a moderator to transfer capability, and subsidiaries' absorptive capacity successfully decreases the constraint of tacit resources when choosing international locations. Doing so raises the flexibility of MNCs to conduct their international investment activities.

Keywords: hierarchical linear model; knowledge-based theory; location choice; parent companies' transfer capability; resource-based theory; subsidiary absorptive capacity.

DOI: 10.1504/EJIM.2024.141660

European Journal of International Management, 2024 Vol.24 No.3/4, pp.511 - 537

Received: 05 Apr 2022
Accepted: 19 Oct 2022
Published online: 30 Sep 2024 *

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