1. ¹Graduate School of Business, Seoul National University, Seoul, Korea
2. ²College of Management, Long Island University, Greenvale, USA

Correspondence: J Song, Seoul National University, Shillim Dong, Kwanak Ku, Seoul 151-742, Korea. Tel: +82 2 880 9080; Fax: +82 2 878 3154; E-mail: jsong@snu.ac.kr

Received 22 November 2003; Revised 10 May 2007; Accepted 9 July 2007; Published online 3 January 2008.

Abstract

We investigate the factors that influence the extent to which a multinational corporation's headquarters (MNC-HQ) sources knowledge from the host countries of its R&D labs. We propose that the technological capabilities held by MNC-HQs present a paradox. On the one hand, they enhance MNC-HQs' learning capabilities. On the other hand, they reduce MNC-HQs' motivations to outsource knowledge from host countries. We also argue that it is important to consider both relative and absolute levels of technological capabilities, because relative levels can influence MNC-HQs' motivations to source knowledge from host countries. Statistical findings generally support our arguments.