Interconnected global network representing multinational subsidiaries

Unlock Global Success: Are Your Overseas Branches Truly Connected?

Theo Raines in Business & Economy August 2025 • 4 min read.

"Discover how smart knowledge sharing and supportive environments in your multinational company can drive unparalleled growth and responsiveness in local markets."

In today's rapidly evolving global marketplace, multinational companies (MNCs) face the critical challenge of staying agile and responsive to local market needs. The ability of overseas branches to quickly adapt to changes in customer preferences and competitive landscapes is no longer a luxury, but a necessity for survival and growth. How can MNCs ensure their subsidiaries are not just surviving, but thriving in their unique environments?

Traditional approaches often emphasize global business efficiency, but the real advantage lies in empowering local branches to make informed decisions and innovate independently. This requires a delicate balance: leveraging the vast knowledge resources of the global network while fostering a culture of local responsiveness. The question becomes: how do MNCs effectively share knowledge across borders and cultivate environments that enable their subsidiaries to flourish?

Recent research offers valuable insights into this challenge, highlighting the importance of knowledge transfer, absorptive capacity, and supportive work environments. By understanding these key elements, MNCs can unlock the full potential of their overseas branches and achieve sustainable success in the global arena.

Why Knowledge Transfer Matters: The Power of Sharing

Interconnected global network representing multinational subsidiaries

One of the most significant findings is the power of knowledge transfer, where headquarters actively share insights and best practices with their subsidiaries. This two-way exchange empowers local branches to leverage valuable resources and expertise, leading to enhanced performance and greater responsiveness.

However, successful knowledge transfer is not simply about dissemination; it requires a conducive environment where subsidiaries are willing to embrace and utilize new information. This is where 'absorptive capacity' comes into play—the ability of a subsidiary to understand, process, and apply knowledge effectively.

Enhanced Innovation: Knowledge sharing stimulates new ideas and creative solutions tailored to local markets.
Improved Decision-Making: Access to global insights enables better-informed decisions at the local level.
Faster Adaptation: Quick access to best practices accelerates the response to market changes.

While knowledge transfer and absorptive capacity are crucial, the research reveals that the context in which these activities occur profoundly impacts their effectiveness. Factors such as shared values and psychological safety emerge as critical moderators, shaping the outcomes of knowledge exchange.

Turning Knowledge into Action: The Future of Global Success

As the global marketplace continues to evolve, MNCs must prioritize knowledge sharing, cultivate supportive environments, and embrace the unique challenges and opportunities of each local market. By fostering a culture of responsiveness and empowering their overseas branches, MNCs can unlock sustainable success and thrive in an interconnected world.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.jwb.2018.01.004, Alternate LINK

Title: Building Subsidiary Local Responsiveness: (When) Does The Directionality Of Intrafirm Knowledge Transfers Matter?

Subject: Marketing

Journal: Journal of World Business

Publisher: Elsevier BV

Authors: Zhaleh Najafi-Tavani, Matthew J. Robson, Ghasem Zaefarian, Ulf Andersson, Chong Yu

Published: 2018-06-01

Everything You Need To Know

What is the primary challenge faced by multinational companies (MNCs) in today's global market, and how can they overcome it?

MNCs face the critical challenge of staying agile and responsive to local market needs. To overcome this, they need to empower their overseas branches to make informed decisions and innovate independently. This requires a balance between leveraging the global network's knowledge resources and fostering local responsiveness. The key is not just survival, but thriving, by adapting to customer preferences and competitive landscapes quickly.

How does knowledge transfer impact the performance of overseas branches, and what role does absorptive capacity play in this process?

Knowledge transfer, where headquarters share insights and best practices, empowers local branches, leading to enhanced performance and greater responsiveness. However, successful knowledge transfer depends on the subsidiary's absorptive capacity. This is the ability of a subsidiary to understand, process, and apply knowledge effectively. Without a strong absorptive capacity, the benefits of knowledge transfer are diminished.

Why is a supportive work environment important for the success of knowledge sharing in multinational companies?

A supportive work environment, characterized by shared values and psychological safety, significantly impacts the effectiveness of knowledge exchange. Such an environment encourages subsidiaries to embrace and utilize new information shared through knowledge transfer. Without it, subsidiaries may be less willing to adapt and innovate, hindering the overall success of the MNC's global strategy.

What are the benefits of empowering local branches to make informed decisions and innovate independently?

Empowering local branches leads to several benefits. Firstly, it enhances innovation by stimulating new ideas and creative solutions tailored to local markets. Secondly, it improves decision-making by providing access to global insights, allowing for better-informed decisions at the local level. Lastly, it accelerates adaptation to market changes, enabling quick responses to evolving customer preferences and competitive landscapes, which is crucial for survival and growth.

How can multinational companies foster a culture of responsiveness and achieve sustainable success in the global marketplace?

MNCs can foster a culture of responsiveness by prioritizing knowledge sharing and cultivating supportive environments, addressing the unique challenges and opportunities in each local market. By focusing on these areas, and promoting the absorptive capacity, they can empower their overseas branches. This approach allows MNCs to adapt quickly to changes, drive innovation, and achieve sustainable success in the interconnected global arena.