The influence of communication barriers on subsidiary intra-MNC connectedness

The importance of knowledge exchange within Multinational corporations (MNCs) is widely recognized by scholars. It is known however that some subsidiaries are not active in the knowledge-exchange activities within the MNC, i.e. they are not connected with the other parts of the MNC. As knowledge exchange requires some form of communication, communication barriers could play a role in the level of knowledge exchange within a MNC. This study investigates the knowledge exchange between headquarters and its subsidiaries abroad. More specifically, it looks at the impact of communication barriers on knowledge exchange. It argues that communication barriers negatively influence intra-MNC connectedness of a subsidiary. Furthermore it argues that this effect is moderated by both the experience of the subsidiary with the corporate network, as by the proportion of expatriates in the subsidiary. Using data of 167 subsidiaries in a single host country, we find that communication barriers do have negative effects on communication intensity, however they do not influence knowledge exchange negatively.