Knowledge sharing in international markets for product and process innovation: moderating role of firm's absorptive capacity

Abstract

Purpose
This study examines the relationship between knowledge-sharing activities of the firm and its innovation capability. It also investigates the moderating impact of the firms' absorptive capacity on the relationship between knowledge sharing and firm innovation capability from the cross-subsidiary perspective in the international market environment.

Design/methodology/approach
This study reviewed the literature from the areas of knowledge management, international market and innovation management. Through the literature review, absorptive capacity theory and dynamic capability view (DCV) theory, a conceptual model has been developed. This model has been validated using partial least squares structural equation modeling (PLS-SEM) technique with 612 respondents from 16 multinational firms from different countries.

Findings
The study finds that knowledge-sharing activities across subsidiaries of multinational firms are important for product and process innovation. Firms’ absorptive capacity also impacts the relationship between firms' knowledge-sharing activities and their different dynamic capabilities, such as sensing, seizing and transforming. The study also finds that firms' innovation capability positively impacts their competitiveness.

Research limitations/implications
This study provides valuable inputs to the management of multinational firms to recognize the importance of knowledge-sharing activities across their different subsidiaries in the international marketing knowledge management (MKM) context.

Originality/value
The study adds to the literature on knowledge management, international market and firms' innovation capability. As the study examines the knowledge-sharing activities across different subsidiaries of multinational firms, especially in the context of process and product innovation, it is considered unique. The study also provides a unique validated model.

Full text

Knowledge sharing in international
markets for product and process
innovation: moderating role
of firm’s absorptive capacity
Sheshadri Chatterjee
Computer Science and Engineering, IIT Kharagpur, Kharagpur, India
Ranjan Chaudhuri
National Institute of Industrial Engineering, Mumbai, India, and
Demetris Vrontis
Marketing, University of Nicosia, Nicosia, Cyprus
Abstract
Purpose –This study examines the relationship between knowledge-sharing activities of the firm and its
innovation capability. It also investigates the moderating impact of the firms’absorptive capacity on the
relationship between knowledge sharing and firm innovation capability from the cross-subsidiary perspective
in the international market environment.
Design/methodology/approach –This study reviewed the literature from the areas of knowledge
management, international market and innovation management. Through the literature review, absorptive
capacity theory and dynamic capability view (DCV) theory, a conceptual model has been developed. This model
has been validated using partial least squares structural equation modeling (PLS-SEM) technique with 612
respondents from 16 multinational firms from different countries.
Findings –The study finds that knowledge-sharing activities across subsidiaries of multinational firms are
important for product and process innovation. Firms’absorptive capacity also impacts the relationship
between firms’knowledge-sharing activities and their different dynamic capabilities, such as sensing, seizing
and transforming. The study also finds that firms’innovation capability positively impacts their
competitiveness.
Research limitations/implications –This study provides valuable inputs to the management of
multinational firms to recognize the importance of knowledge-sharing activities across their different
subsidiaries in the international marketing knowledge management (MKM) context.
Originality/value –The study adds to the literature on knowledge management, international market and
firms’innovation capability. As the study examines the knowledge-sharing activities across different
subsidiaries of multinational firms, especially in the context of process and product innovation, it is considered
unique. The study also provides a unique validated model.
Keywords Knowledge sharing, MKM, International market, Product innovation, Process innovation, DCV,
Absorptive capacity theory
Paper type Research paper
1. Introduction
A firm can improve its strategic, innovative and marketing abilities by the proper creation,
storage and effective dissemination of knowledge. In this context, knowledge management
with appropriate marketing capabilities can be considered an appropriate driver to
internationalize a firm’s business and to sustain its competitive advantage (Andersson et al.,
2020;Del Giudice and Della Peruta, 2016;Majumdar et al., 2020). Compared to traditional
firms, knowledge-intensive firms are found to be more successful at achieving a structured,
robust process to internationalize business from the perspective of product and process
innovation (Bhattacharya and Chatterjee, 2020;Ibeh et al., 2019;Kuivalainen et al., 2004;
Mahmoud et al., 2020). Effective knowledge management, with appropriate marketing
Knowledge
sharing in
international
markets
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0265-1335.htm
Received 18 November 2020
Revised 22 January 2021
Accepted 30 March 2021
International Marketing Review
© Emerald Publishing Limited
0265-1335
DOI 10.1108/IMR-11-2020-0261

capabilities in the environment of open product and process innovation, is considered vital for
the firms to sustain competitive advantage in the international market (Nguyen et al., 2020;
Rana et al., 2021;Santoro et al., 2018;Vrontis et al., 2017). It is also important for the
subsidiaries of multinational firms, working in different countries, to achieve competitive
advantages; therefore, multinational firms need to effectively utilize the potentials of open
innovation (Davcik and Sharma, 2016;Rana et al., 2020). International marketing strategies
need to deal with a complex marketing situation. This is necessary because international
firms have to apply specialized knowledge to satisfy the needs of the customers of other
countries (Malhotra and Birks, 2007). To address this problem, the marketing managers must
always be well prepared by gathering knowledge from other countries where they do
businesses. They should develop their knowledge by assimilating local as well as global
cultures (Berthon et al., 2012). Hence, MKM is essential to face these problems for continuous
value creation based on knowledge management practices to internationalize the business.
However, in the context of product and process open innovation, the firms must possess
the abilities to structure, consolidate and reconstitute their sources (Li and Liu, 2014;Santoro
et al., 2019). Hence, companies functioning in different countries as subsidiaries of
multinational firms must possess such capabilities to best utilize the open innovation
through marketing knowledge management (Ferreira and Franco, 2019;Kang and Kang,
2014;Sreenivasulu, and Chatterjee, 2019). To survive in the international market through
marketing knowledge management (MKM), the subsidiaries must benefit from the potentials
of open innovation by improving their dynamic capabilities (Teece et al., 1997;Hill and
Rothaermel, 2003) and sensing activities by seizing the observed opportunities (Cepeda and
Vera, 2007;Inoue and Liu, 2015;Kizgin et al., 2019), and by appropriately reconfiguring their
abilities (Ferreira and Franco, 2019;Kar and Chatterjee, 2019;Wu, 2010). To internationalize
the knowledge management process to improve marketing abilities, multinational firms must
take appropriate steps so that their subsidiaries develop the abilities to reconstruct, integrate,
create, renovate and, in some cases, dispose the existing resources for product and process
innovation (Becker and Dietz, 2004;Teece, 2007).
Thus, multinational firms need international marketing strategies to nurture a complex
and dynamic market situation in the context of knowledge management to develop their
absorptive capacity to understand and appropriately utilize the local as well as the global
business culture (Berthon et al., 2012;Kar and Chatterjee, 2020;Mahmoud et al., 2020). To
become successful in MKM in the international market, knowledge needs to be shared across
the subsidiaries of a multinational firm, and the subsidiaries, through their different dynamic
abilities (Cohen and Levinthal, 1990;Zahra and George, 2002), must have the capacity to
absorb such knowledge, recognizing its value, assimilating it and applying it for commercial
gain, and to sustain competitive advantage (Ghosh et al., 2019;Rafique et al., 2018).
Studying the challenges of MKM in the international context reveals opportunities. The
firms must take advantage of the opportunities of assimilating knowledge to align it with
their process. This issue is important, especially in the international marketing context
(Chaudhuri et al., 2021;Ghosh et al., 2020a). Some studies have dealt with the process and
technique for achieving competitive advantage in the international marketing context. But
studies covering several international business phenomena, mentioned above, that could
bridge the nexus between international marketing growth and the existing MKM practices
remain underexplored (Cadogan, 2012;Mahmoud et al., 2020). This background has
motivated us to study how knowledge sharing, supported by the absorptive capacity and the
dynamic abilities of the subsidiaries of multinational firms, would impact product and
process innovation (Chaudhuri et al., 2019;Ghosh et al., 2020b). This research also studied
how product and process innovation could impact a firm’s competitive advantage in the
context of MKM. Therefore, the aim of this study is to attempt to address the following
objectives.
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(1) To examine the importance of knowledge sharing in international markets for
product and process innovation by developing the MKM practices.
(2) To investigate if knowledge sharing among cross-subsidiaries provides competitive
advantage to multinational firms.
(3) To find out the moderating impact of firms’absorptive capacity on the relationship
between “knowledge sharing among cross-subsidiaries”and “dynamic capabilities”
of the multinational firms.
Next, the study reviews the literature, which is followed by an analysis of the theoretical
background and the development of a conceptual model. After that, details of the research
methodology have been provided along with data analysis. Thereafter, results so obtained
are discussed, followed by an analysis of implications and mentioning the current study’s
limitations and suggestions for further study. The article ends with a comprehensive
conclusion.
2. Literature review
Through creating and disseminating knowledge, the strategic as well as the innovative
capabilities of a firm are improved, which help it to collect appropriate information about
potential customers (Mahmoud et al., 2020). Multinational firms have to share business-
centric knowledge among the subsidiaries, thus helping them to develop their innovative
processes (Lee and Yoo, 2019). The shared knowledge would greatly help the multi national
company (MNC) subsidiaries if the firms possess abilities to sense, seize and transform such
gathered knowledge (Lo and Tian, 2019). Moreover, sharing knowledge would benefit firms if
they use knowledge appropriately through effective knowledge management practices
(Daveik and Sharma, 2016).
Studies have transpired that knowledge management is considered an effective driver to
help a firm internationalize its business (Andersson et al., 2020;Del Giudice and Della Peruta,
2016). It has been observed that in comparison to traditional firms, knowledge-intensive firms
could gain methodical and structured internationalization process to sustain competitive
advantage (Chaudhuri et al., 2020;Christofi et al., 2013;Ibeh et al., 2019;Kuivalainen et al.,
2004). In the present business world, open innovation process is being explored and exploited
for sustaining competitive advantage in the international market, and knowledge plays an
important role (Santoro et al., 2018). In the context of international market operation,
knowledge management abilities are considered fundamental for supporting product and
process innovation (Vrontis et al., 2017). The marketing, innovative and strategic abilities of a
firm are improved through creation, dissemination as well as an effective knowledge-sharing
process. This would help a firm gather appropriate and meaningful customer information
(Dohan and Chatterjee, 2020;Mahmoud et al., 2020;Malhotra and Majchrzak, 2004). In terms
of dynamic capability view (DCV) theory (Zahra et al., 2006), MKM could establish a soothing
nexus between management information system and business intelligence for fostering
marketing success, especially in the context of international market (Chatterjee, 2019;Del
Giudice and Maggioni, 2014;Santoro et al., 2019). As regards international marketing
strategies, a multinational firm needs to help its subsidiaries, which function across different
countries, develop their essential knowledge to satisfy the needs of their local customers
(Ferraris et al., 2019;Malhotra and Birks, 2007). The knowledge-intensive firm possesses the
ability to accurately manage market information, including information about the needs of
potential customers (Malhotra and Kubowicz, 2011;Rosado-Pinto and Loureiro, 2020).
Innovativeness and export performance of a firm can be best achieved through effective
MKM with networking abilities (Davcik and Sharma, 2016). Well-designed knowledge
management strategy helps a firm to frame and detangle various cultural layers instrumental
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markets

for international marketing strategy so it can thrive in the international market as well as to
be closer to its global audience (Chatterjee, 2020a;Ferreira and Franco, 2019;Steenkamp,
2001). The multinational firm needs to share knowledge with its subsidiaries in different
countries that would help in their product and process innovation by improving both their
dynamic capabilities and absorptive capacity (Chatterjee, 2020c;Lo and Tian, 2019;Lee and
Yoo, 2019). The subsidiaries will derive potential benefits from the inflow of knowledge
coming from different sources, including other subsidiaries, provided they possess dynamic
ability that includes sensing, seizing and transforming capacity (Chatterjee, 2020b;Lee and
Yoo, 2019). In the rapidly changing marketing environment, open innovation is considered a
method for sustaining competitive advantage (Ulrich, 2009). Open innovation also helps to
develop product and process innovation, which would prompt competitive advantage
(Chatterjee, 2020d;Bae and Chang, 2012). Studies have observed that knowledge
management activities help different firms to improve their innovation with effective
marketing management technique (Boso et al., 2013;Karagouni et al., 2018;Tsai and Shih,
2004). Although MKM has ample opportunities, even in the international marketing arena, to
sustain competitive advantage, studies of this aspect are found to be at a rudimentary stage
(Cadogan, 2012;Penco et al., 2019).
3. Theoretical background and development of conceptual model
3.1 Theoretical background
It is a crucial question how a firm can sustain competitive advantage. This issue has attracted
the attention of many scholars. Different studies have observed that firms can gain
competitive advantage by devising meaningful knowledge management strategies (Lo and
Tian, 2019). There are various ways for knowledge management. Knowledge is to be
captured, created, shared, utilized and eventually to be applied. The knowledge-sharing
process is conceptualized as a structured process where the employees of the firms mutually
exchange knowledge. They jointly create a new form of knowledge fostering innovation to
sustain competitive advantage. However, the crux of the question is that how employees can
realize the value of knowledge with their absorptive capacity as enjoined in absorptive
capacity theory (Cohen and Levinthal, 1990). This theory posits that absorptive capacity may
be conceptualized as the “ability of a firm to recognize the value of new, external information,
assimilate it and apply it to the commercial ends”(Cohen and Levinthal, 1990, p. 128).
Absorptive capacity is divided into potential and realized absorptive capacity (Zahra and
George, 2002). Potential absorptive capacity includes the sense of acquiring and assimilating
knowledge, whereas realized absorptive capacity includes the concept of transforming and
exploiting knowledge (Liao et al., 2007). In the context of a multinational firm sharing
knowledge among its cross-subsidiaries, it should ensure effective results if the subsidiaries’
dynamic capabilities exhibit better absorptive power of such shared knowledge, as higher
level of sharing of knowledge is closely connected with higher level of absorptive capacity
(Ali et al., 2018). Knowledge sharing and absorptive capacity are closely linked with each
other. Employees of the various subsidiaries of a multinational firm obtain knowledge from
external sources and share it among other employees, thereby increasing the absorptive
capacity of the firm in the dynamic international marketing environment (Rafique et al., 2018).
DCV theory (Teece et al., 1997) is useful to interpret the competitive advantage and
business performance that knowledge management provides when integrated with a firm’s
marketing abilities. It can be used especially in relation to a firm’s international marketing
environment for creating, consolidating, integrating and reconfiguring internal and external
competencies. Dynamic capability not only enhances firms’capabilities to proactively realize
and recognize potential technological changes but also improves firms’ability to adopt
changes by inducing innovation (Hill and Rothaermel, 2003). Essentially, DCV theory holds
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that when subsidiaries of an MNC acquire knowledge through knowledge sharing among
each other, they must incorporate the acquired knowledge into their sensing abilities
(Chesbrough, 2003). That way, they will be able to seize and capitalize on the sensed
opportunities by selecting an appropriate business model for developing a new product and
for articulating a new process to address the demand of the dynamic market. Besides, in an
ever-changing international marketing environment, an MNC’s subsidiaries must be able to
transform the resources, which are the basis of the firm’s competitiveness, to appropriately
react and respond to rapid business environmental changes (Malhotra and Birks, 2007;
Berthon et al., 2012;Vrontis et al., 2017). Thus, according to DCV theory, subsidiaries should
not only be satisfied with acquiring knowledge through knowledge-sharing activities, but
they should have the capacity to sense, seize and transform the resources so they are suitable
to improve their product and process innovation activities, which would eventually impact
their competitive advantage (Lee and Yoo, 2019;Rosado-Pinto and Loureiro, 2020).
3.2 Formulation of hypotheses and development of conceptual model
This study investigates the international marketing knowledge-sharing activities of the
various subsidiaries of a multinational firm. Primarily, we focus on how these activities
impact on subsidiaries’dynamic capabilities of sensing, seizing and transforming.
We then assess how this helps to improve a firm’s competitive advantages by developing
product and process innovation. From the theories and literature, we have identified the
determinants, which we explain to formulate the hypotheses. We also consider the absorptive
capacities of the subsidiaries of the multinational firms as a moderator in developing a
conceptual model.
3.2.1 Knowledge sharing among cross-subsidiaries (KSC). Knowledge sharing is
considered one of the key processes for knowledge management (Foote and Halawi, 2018).
Knowledge sharing is a process that transforms the skills, explicit and tacit knowledge and
experience of employees of knowledge-intensive firms. Researchers have used different
terminologies to explain knowledge sharing, including dissemination, transformation,
distribution, contribution and even socialization (Lo and Tian, 2019). Knowledge sharing may
occur at either the individual level or the firm level, and the shared knowledge would help to
create knowledge and innovative ideas (Eerme and Nummela, 2019;Huysman and de Wit,
2003). However, the employees must be able to recognize the value of this external
information and then assimilate it to effectively utilize and apply it. This is the main theme of
absorptive capacity theory (Cohen and Levinthal, 1990). Knowledge sharing ultimately helps
develop firms’absorptive capacity, improving innovative ability (Glavas et al., 2019;Liao
et al., 2007). Knowledge sharing among the subsidiaries of a multinational firm helps to
improve their MKM abilities, which eventually improves and sustains their competitive
advantages in the international marketing context (Rafique et al., 2018). If the firms’
subsidiaries do not reprocess the shared knowledge, do not sense the opportunity the shared
knowledge prompts and therefore fails to seize the opportunity to transform it for proper
utilization and application, mere knowledge sharing is not enough (Ibeh et al., 2019;Vega-
Jurado et al., 2009;Liao et al., 2007). All these inputs help to formulate the following
hypotheses.
H1a. Knowledge sharing among cross-subsidiaries (KSE) positively and significantly
impacts the sensing capacity (SEN) of the subsidiaries.
H1b. Knowledge sharing among cross-subsidiaries (KSE) positively and significantly
impacts the seizing capacity (SEI) of the subsidiaries.
H1c. Knowledge sharing among cross-subsidiaries (KSE) positively and significantly
impacts the transforming capacity (TRA) of the subsidiaries.
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3.2.2 Sensing capacity (SEN). In terms of DCV theory, sensing capacity (SEN) is considered an
important component of a firm’s dynamic capability (Teece, 2007). SEN is conceptualized as the
capability needed for a firm to appropriately identify opportunities for product and process
innovation. A firm must possess the expertise to aptly and efficiently recognize and react to the
changes in the ever-dynamic marketing environment. This is beneficial for the firm’ssurvival
(Bresciani et al., 2013;Mahmoud et al., 2020). This firm’s cognitive activity should include its
structured evolution, the potential market demand, a proper examination of in-house research
prospects, potential customer needs and demands and technological innovation (Teece, 2007;
Inoue and Liu, 2015). As a part of the sensing activities for responding to the ever-changing
marketing environment, firms need to source external knowledge (Chesbrough, 2003;Eerme
and Nummela, 2019). They need to collect information on the rapidly changing markets along
with changes and advancement of technology. Firms need to acquire suitable skills and
knowledge to develop product and process innovation (Inoue and Liu, 2015). Product innovation
and process innovation depend on the internal, physical, aswell as human resources that impact
the firm’s research and development (R&D) activities. The R&D activities guide the firm as to
how to augment product and process innovation (Glavas et al., 2019;Kiron and Shockley, 2011).
R&D activities can help firms to generate new ideas for new products (Ramanathan et al.,2017).
In consonance with the changing market environment in theinternational context, firms need to
restructure their strategic approach by reshaping and developing their process innovation
(Chatterjee et al., 2020a;Troilo et al.,2016). These discussions lead us to infer that with
the sensing ability, a firm can realize the dynamic marketing environment and will be able
to generate new ideas for product development and to appropriately develop their structural
approach. All these inputs help to formulate the following hypotheses.
H2a. The sensing capacity (SEN) of a firm positively impacts the product innovation
(PRD) abilities of the firm.
H2b. The sensing capacity (SEN) of a firm positively impacts the process innovation
(PRI) abilities of the firm.
3.2.3 Seizing capacity (SEI). Seizing capacity (SEI) is considered one of the components of
dynamic capability as envisaged in the DCV theory (Teece, 2007). SEI is conceptualized as a
capability of a firm to take advantage of the sensed opportunities, to select the right business
model for developing a new product and reshaping the work process, to allocate essential
resources and finally to commercialize the new product developed through the restructured
process (Andersson et al., 2020;Cepeda and Vera, 2007). A firm’s SEI includes technology-
related process, development strategy, market-oriented strategy for product development,
transparent strategic goal, leadership support, timely and appropriate design-making
and developed supply chain management with vertical integration strategies (Eisenhardt
and Martin, 2000;Ibeh et al., 2019). A firm with a strong SEI can achieve better product and
process innovation abilities to select the most suitable opportunity at the correct moment in a
dynamic market, which is the concept of DCV theory. A firm with SEI can realize the dynamic
market needed to improve its capacity for product and process innovation, which is in
conformity with DCV theory (Helfat and Peteraf, 2009;Kim et al., 2013). These inputs ideate to
develop the following hypotheses.
H3a. The seizing capacity (SEI) of a firm positively impacts product innovation (PRD)
abilities of the firm.
H3b. The seizing capacity (SEI) of a firm positively impacts process innovation (PRI)
abilities of the firm.
3.2.4 Transforming capacity (TRA). Transforming capacity (TRA) is one of the
main components of a firm’s dynamic capability, as envisaged in DCV theory (Helfat and
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Peteraf, 2009). TRA is conceptualized as a firm’s ability to integrate, reconstruct, create and
renovate the existing resources for product and process innovation (Teece, 2007). It has been
argued by Becker and Dietz (2004) that for successful knowledge sourcing, in the context of
international MKM in the dynamic environment, it is essential for a firm to have the capacity
to manage, coordinate and control activities with other firms. This concept is in consonance
with DCV theory. It will help the firm to perform better innovative activities (Ferreira and
Franco, 2019;Gold et al., 2001). It implies that firms need to build a knowledge management
system to improve its efficiency in problem-solving by transforming various information
from internal and external origins (Ferreira and Franco, 2019;Chatterjee et al., 2020a). The
capacity to transfer knowledge becomes more important when it takes place across national
boundaries, as it internationalizes marketing (Vrontis and Christofi, 2019). This is because the
two cultural dimensions “local”and “global”need to be combined (Berthon et al., 2012;
Andersson et al., 2020). From this perspective, internationalizing business activities by
developing TRA may be conceived as a mechanism involving continuous value creation
practices to adjust to the dynamic international market, which is the concept of DCV theory
(Ruigrok and Wagner, 2003). Thus, TRA is perceived as a prerequisite for firms to ensure that
detection of product and process innovation activities are performed well. With these inputs,
the following hypotheses are designed.
H4a. The transforming capacity (TRA) of a firm positively impacts product innovation
(PRD) abilities of the firm.
H4b. The transforming capacity (TRA) of a firm positively impacts process innovation
(PRI) abilities of the firm.
3.2.5 Product innovation (PRD). Generating new ideas to benefit a firm is conceptualized as
innovation (Kiron and Shockley, 2011). A firm’s creativity would help in coming up with new
ideas for placing a new product or upgrading an existing product befitting the dynamic
market (Ledesma-Chaves et al., 2020). This concept is supported by DCV theory (Heiko, 2011).
Product innovation (PRD) will help to sustain competitive advantage, as it refers to the release
of new goods or services or to the development of existing products or services to meet the
needs of the customers whose choice always changes with the dynamic market (Eng and
Okten, 2011;Ibeh et al., 2019). The firms need to realize that the market environment is ever-
changing to improve its abilities in product innovation (Glavas et al., 2019;Kim et al., 2013).
Therefore, firms need to acquire appropriate data by exchanging knowledge that is available
from different sources to improve product innovation quality, in consonance with the demand
of a dynamic market, and in terms of the DCV concept (Helfat and Peteraf, 2009). The
subsidiaries of a multinational firm need to improve their PRD capability, since their
competition is global, in the international marketing context. These inputs lead to formulate
the following hypothesis.
H5. Product innovation (PRD) abilities of a firm positively impact a firm’s competitive
advantage (CA).
3.2.6 Process innovation (PRI) and competitive advantage (CA). Knowledge management
ability along with marketing expertise helps a firm to react and respond to the external
dynamic marketing demand (Cosic et al., 2015;Glavas et al., 2019). With its dynamic ability, a
firm becomes competent to appropriately restructure its work processes in a convenient and
consistent manner (Larson and Chang, 2016;Santoro et al., 2019). A firm that acquires
knowledge content from various sources will be able to generate innovative ideas to develop
its strategic approach to perform better than other firms functioning in the same environment
(Karagouni, 2018;Klatt et al., 2011). The firm, through its developed knowledge management
activities, could acquire useable data to meet dynamic market demand, even in the
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international context, which is according to DCV theory (Helfat and Peteraf, 2009). To address
the demand of the dynamic marketing environment, firms restructure and reshape their
system of work so that they perform better than other firms (Giacosa et al., 2018;Chatterjee
et al., 2020b). This approach is perceived to sustain the firm’s competitive advantage. The
concept of competitive advantage means the measure by which a firm’s performance would
achieve better business benefits compared to other firms functioning in the similar condition
(Rogers, 1983). The attempts to sustain competitive advantage by restructuring the work
process and system become more dominant for the subsidiaries of a multinational firm since
the competition is global. These inputs ideate the following hypothesis.
H6. Process innovation (PRI) abilities of a firm positively impact the firm’s competitive
advantage (CA).
3.2.7 Moderating effects of absorptive capacity (AC). When a relationship between two
constructs is not constant, the impact of a third variable on this relationship may strengthen
or weaken the relationship and even, sometimes, change the direction of the relationship. This
third variable is called a moderating variable. In this study, we have considered absorptive
capacity (AC) as a moderator. The A) of a firm is interpreted as the ability of a firm to
recognize the value of new, external information, assimilate it and apply it to commercial ends
(Cohen and Levinthal, 1990, p. 128). This capacity has been categorized into two groups
(Zahra and George, 2002): potential absorptive capacity, which includes acquiring and
assimilating knowledge; and realized absorptive capacity, which includes transforming and
exploiting knowledge. It is known that knowledge sharing helps to develop absorptive
capacity, which improves innovative ability (Eerme and Nummela, 2019;Liao et al., 2007).
The firms which receive information must have the ability to weigh the value of it and then to
assimilate and apply it to benefit its business (Rafique et al., 2018). In the context of the
present study, knowledge sharing takes place in different subsidiaries of a multinational firm.
The subsidiaries must have the ability to appropriately absorb the shared knowledge
according to their dynamic capabilities of sensing, seizing and transforming (Karagouni,
2018;Teece, 2007). Thus, it appears that absorptive capacity has considerable influence on
the relationship between the knowledge-sharing activities and the different components of
dynamic ability of the recipient of the knowledge (Leal-Rodriguez et al., 2014;Kang and Lee,
2017). With these inputs, the following hypotheses are developed.
H7a. Absorptive capacity (AC) has a moderating effect on the relationship between
knowledge sharing among cross-subsidiaries (KSC) and sensing capacity (SEN) of
the subsidiaries.
H7b. Absorptive capacity (AC) has a moderating effect on the relationship between
knowledge sharing among cross-subsidiaries (KSC) and seizing capacity (SEI) of
the subsidiaries.
H7c. Absorptive capacity (AC) has a moderating effect on the relationship between
knowledge sharing among cross-subsidiaries (KSC) and transforming capacity
(TRA) of the subsidiaries.
With all these inputs, a conceptual model is developed and is shown in Figure 1.
4. Research methodology
The hypotheses and the conceptual model have been validated statistically using partial least
squares structural equation modelling (PLS-SEM) technique. The PLS-SEM technique was
preferred because it yields better results in analyzing an exploratory study like this (Akter
et al., 2011). Besides, this process helps to analyze data that are not normally distributed
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(Akter et al., 2017). This is not done with the CB-SEM technique. Moreover, this technique
does not require any sample restriction in the survey (Hair et al., 2018). The process involved
quantifying the participants’replies in the survey through a specific scale. Here, a five-point
Likert scale has been used. The data analysis has been done using SmartPLS, version 2.0.M3.
4.1 Measurement instruments
With the inputs from theory and literature, 31 questions in the form of statements have been
prepared. For preparing the questionnaire, a series of corrective procedures was carefully
followed. The corrective steps include analyzing the literature, obtaining experts’opinion and
so on (Carpenter, 2018). For enhancing the readability and comprehensiveness of the
questions, we consulted seven experts on the domain of our study. Following their opinion,
we made some minor rectifications in the items’wording of the items. In this way, 31
questions were fine-tuned. To measure the construct KSC through four instruments, we took
inputs from studies by Eerme and Nummela (2019) and Lo and Tian (2019). For measuring
SEN, four instruments were articulated with the help of two studies (Teece, 2007;Mahmoud
et al., 2020). We referred to Ibeh et al. (2019) to measure the construct SEI through four
instruments. The other construct TRA was assessed with four instruments, which were in
accordance to Ferreira and Franco (2019). PRD and PRI could be measured by five
instruments each, with the inputs from Glavas et al. (2019) and from Santoro et al. (2019),
respectively. Five instruments measured the construct CA, which was supported by
Chatterjee et al. (2020b). The recital of the instruments is provided in Appendix 1.
4.2 Data collection strategy
For selecting the respondents, 32 multinational firms were chosen from the list published by
Forbes in 2018. We contacted managers of different ranks at these firms by email and
telephone and requested them to participate in this survey. We apprised them that the aim of
this study was purely academic. However, our attempts at targeting the respondents were not
encouraging. Managers of most of these 32 multinational firms expressed their reluctance to
participate in this survey. Eventually, 1,107 managers of different ranks at 16 multinational
firms (eight IT service firms, five manufacturing firms and three conglomerates) agreed to
participate in this survey. These 16 multinational firms were from Europe, the Middle East,
the Africa (EMEA) region, America, as well as the Asia-Pacific region. These 1,107 managers
were sent emails with the response sheet attached, and they were requested to return the
H1a
H2a
H2b
H1b
H1c
H7c
H7b
H7a
H3a
H4a
H3b
H4b
H5
H6
Figure 1.
Conceptual model
Knowledge
sharing in
international
markets

questionnaire within two months from the date of receiving this communication. After one
month, we reminded them through email to expedite their replies. Within the time limit, 629
managers of different ranks from these 16 multinational firms sent their replies. It should be
mentioned that the response sheet contained five options, from 1 for SD (Strongly Disagree) to
5 for SA (Strongly Agree), where each respondent was to put a tick mark in one option for
each question. The response rate was 56.8%. We scrutinized the 629 replies and found that
out of 629 replies, 17 replies were incomplete, and therefore we omitted those replies. We
started our analysis with 612 useable replies to 31 items. The demographic information of
these 612 respondents is shown in Table 1.
5. Analysis of data with results
5.1 Measurement properties with discriminant validity test
The loading factor (LF) of each item was determined to assess the convergent validity of each.
average variance extracted (AVE), composite reliability (CR),
α
and variance inflation factor
(VIF) of each construct were estimated to verify the validity, reliability, construct constancy
and multicollinearity defect, respectively. Results shown in Table 2 highlight that all the
parameters are within the specified range.
The cross-loadings of all the items were assessed. It is found that all the values of cross-
loadings are less than the corresponding values of loadings. It confirms discriminant validity.
Again, through Fornell and Larcker criteria (Fornell and Larcker, 1981), all bi-factor
correlation coefficients are found to be less than the square root of AVEs. It also confirms
discriminant validity. The results are provided in Appendix 2. The results of the cross-
loadings and loadings are shown in Table 3.
5.2 Multigroup analysis (MGA)
Multigroup analysis (MGA) was conducted to assess the moderating effects of absorptive
capacity on the relationships covered by H1a,H1b and H1c. This process was done using an
accelerated and bias-correlated bootstrapping procedure to consider 5000 resamples. The
effects of high absorptive capacity and low absorptive capacity on these three relationships
were analyzed. Analysis revealed that, for the two categories of the moderator on each of
these three relationships, the p-value differences are 0.02, 0.04 and 0.01, respectively for H1a,
H1b and H1c. All the p-value differences are less than 0.05, confirming that the effects of the
moderator absorptive capacity on these three linkages are significant (Hair et al., 2016).
The effects of the moderator on these three linkages will also be analyzed graphically in the
subsequent section.
5.3 Common method variance (CMV)
This study is based on self-reported data; hence, there is a chance of having biased results. To
avoid this and to get unbiased replies from the respondents, the participants in this survey
Category Specification No. of respondents Percentage (%)
Gender Male 398 65.0
Female 214 35.0
Working position Senior manager 275 44.9
Mid-level manager 201 32.8
Junior manager 136 22.3
Region EMEA 159 25.9
America 239 39.0
Asia-Pacific 214 35.1
Table 1.
Demographic
information (N5612)
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were assured their responses were confidential and that their anonymity would be preserved.
This was done as a preemptive measure. However, to reconfirm CMV, Harman’s single-factor
test (SFT) was performed, and the result transpires that the first factor emerged as 32.92%,
which is less than the highest cutoff value of 50%, as recommended by Podsakoff et al. (2003).
Hence, the data could not distort the results.
5.4 Hypotheses testing
For hypotheses testing, a blind folding procedure was followed through an accelerated and
bias-correlated bootstrapping process considering 5000 resamples. To achieve this, omission
separation of five was considered. This was done to obtain a cross-validated estimate of
redundancy concerning the corresponding variable. The result of Stone-Geisser’sQ
2
value
Construct LF AVE CR
α
VIF t-value Item No.
KSC 0.83 0.88 0.85 4.5 4
KSC1 0.90 21.78
KSC2 0.95 29.22
KSC3 0.85 26.91
KSC4 0.95 31.04
SEN 0.86 0.90 0.88 3.9 4
SEN1 0.94 37.10
SEN2 0.92 32.11
SEN3 0.96 34.72
SEN4 0.88 19.11
SEI 0.87 0.92 0.90 4.1 4
SEI1 0.90 26.36
SEI2 0.88 34.04
SEI3 0.96 32.12
SEI4 0.98 26.17
TRA 0.88 0.90 0.87 3.7 4
TRA1 0.96 26.32
TRA2 0.96 31.15
TRA3 0.95 27.89
TRA4 0.88 20.12
PRD 0.86 0.91 0.89 3.5 5
PRD1 0.90 26.17
PRD2 0.95 29.51
PRD3 0.93 32.54
PRD4 0.91 26.11
PRD5 0.94 29.04
PRI 0.84 0.87 0.85 4.8 5
PRI1 0.91 24.17
PRI2 0.87 32.19
PRI3 0.96 19.26
PRI4 0.94 17.18
PRI5 0.89 31.11
CA 0.85 0.89 0.88 4.2 5
CA1 0.90 32.14
CA2 0.85 31.17
CA3 0.96 29.47
CA4 0.88 26.72
CA5 0.90 28.01
Note(s): AVE 5Average variance extracted; CR 5Composite reliability;
α
5Cronbach’s alpha;
VIF 5Variance inflation factor
Table 2.
Measurement
properties
Knowledge
sharing in
international
markets

emerged as 0.67 (Geisser, 1975;Stone, 1974). It confirms that the data have predictive
relevance.
To verify that the proposed model is in order, the procedure recommended by Henseler
et al. (2014) was followed by considering the root mean square residual (SRMR) as the
standard index. Analysis revealed that the value of SRMR was 0.062 for PLS and 0.033 for
consistent partial least squares (PLSc). Both these values are less than 0.08 (Hu and Bentler,
1998). This helps to infer that the proposed model is in order. Through this process, we could
determine the path coefficients of the linkages, probability values (p-values) and coefficient of
determinants (R
2
values). The results are shown in Table 4.
The proposed model after validation is shown in Figure 2.
The details of the loading items associated with the different variables are shown in
Appendix 3.
6. Results
This study has formulated 14 hypotheses, out of which, H7a,H7b and H7c are covered by the
effects of the moderator AC on the linkages H1a,H1b and H1c, respectively. All the
hypotheses have been statistically validated. Among the impacts that KSC has on SEN, SEI
and TRA, its impact on TRA is the highest, as the concerned path coefficient is 0.46, with a
Items/Constructs KSC SEN SEI TRA PRD PRI CA
KSC1 0.90 0.14 0.22 0.26 0.24 0.25 0.26
KSC2 0.95 0.17 0.24 0.27 0.26 0.28 0.16
KSC3 0.85 0.28 0.28 0.31 0.27 0.29 0.19
KSC4 0.95 0.29 0.32 0.29 0.29 0.33 0.18
SEN1 0.17 0.94 0.34 0.34 0.31 0.32 0.27
SEN2 0.12 0.92 0.36 0.33 0.34 0.36 0.26
SEN3 0.28 0.96 0.21 0.32 0.22 0.28 0.35
SEN4 0.22 0.88 0.24 0.34 0.18 0.19 0.24
SEI1 0.24 0.25 0.90 0.17 0.26 0.31 0.15
SEI2 0.26 0.21 0.88 0.16 0.29 0.14 0.18
SEI3 0.26 0.24 0.96 0.19 0.17 0.16 0.21
SEI4 0.31 0.32 0.98 0.31 0.21 0.18 0.32
TRA1 0.32 0.19 0.25 0.96 0.23 0.17 0.34
TRA2 0.31 0.27 0.27 0.96 0.28 0.32 0.17
TRA3 0.17 0.31 0.29 0.95 0.31 0.35 0.33
TRA4 0.19 0.18 0.31 0.88 0.32 0.16 0.26
PRD1 0.20 0.24 0.24 0.18 0.90 0.13 0.17
PRD2 0.22 0.17 0.27 0.17 0.95 0.17 0.19
PRD3 0.23 0.15 0.31 0.28 0.93 0.29 0.26
PRD4 0.18 0.25 0.18 0.25 0.91 0.21 0.31
PRD5 0.17 0.31 0.19 0.34 0.94 0.24 0.32
PRI1 0.29 0.24 0.26 0.31 0.15 0.91 0.34
PRI2 0.31 0.23 0.25 0.32 0.17 0.87 0.35
PRI3 0.14 0.25 0.24 0.38 0.19 0.96 0.37
PRI4 0.13 0.35 0.31 0.33 0.21 0.94 0.18
PRI5 0.17 0.19 0.17 0.14 0.23 0.89 0.19
CA1 0.18 0.18 0.28 0.16 0.24 0.26 0.90
CA2 0.25 0.17 0.22 0.18 0.16 0.27 0.85
CA3 0.31 0.26 0.24 0.26 0.31 0.29 0.96
CA4 0.19 0.31 0.26 0.29 0.33 0.33 0.88
CA5 0.26 0.24 0.21 0.22 0.26 0.35 0.90
Note(s): Italic number represents loading factors of the items
Table 3.
Loadings and cross-
loadings
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level of significance p< 0.01(**). The impact of KSC on SEN is significant as the concerned
path coefficient is 0.23, with a significance level of p< 0.01(**). This corresponds to H1a.
Moreover, the impact of KSC on SEI is also significant since the corresponding path
coefficient is 0.31, with a level of significance at p< 0.05(*). This relates to H1b. Among the
effects that SEN, SEI and TRA (H2a,H3a, and H4a) have on PRD, the impact of SEI on PRD
(H3a) is the maximum since the concerned path coefficient is 0.43, with a level of significance
of p< 0.05(*). Besides, the impact of SEN on PRD is significant, as the concerned path-
weightage is 0.32, with a level of significance of p< 0.01(**), and the impact of TRA on PRD is
also significant, as the corresponding linkage strength is 0.39, with a significance level of
p< 0.001(***). Among the impacts of SEN, SEI and TRA (H2b,H3b and H4b) on PRI, the
impact of SEN on PRI (H2b) is the highest as the concerned path coefficient is 0.46, with a level
of significance at p< 0.001 (***). However, the impact of SEI on PRI, as well as the impact of
Linkages Hypotheses Path coefficients/R
2
p-values Remarks
Effects on SEN R
2
50.41
By KSC H1a 0.23 p< 0.01(**) Supported
Effects on SIE R
2
50.45
By KSC H1b 0.31 p< 0.05(*) Supported
Effects on TRA R
2
50.40
By KSC H1c 0.46 p< 0.01(**) Supported
Effects on PRD R
2
50.47
By SEN H2a 0.32 p< 0.01(**) Supported
By SIE H3a 0.43 p< 0.05(*) Supported
By TRA H4a 0.39 p< 0.011(***) Supported
Effects on PRI R
2
50.55
By SEN H2b 0.46 p< 0.001(***) Supported
By SIE H3b 0.41 p< 0.001(***) Supported
By TRA H4b 0.44 p< 0.001(***) Supported
Effects on CA R
2
50.68
By PRD H5 0.52 p< 0.001(***) Supported
By PRI H6 0.56 p< 0.001(***) Supported
Effects of AC
on KSC →SEN H7a 0.24 p< 0.05(*) Supported
on KSC →SEI H7b 0.32 p< 0.01(**) Supported
on KSC →TRA H7c 0.39 p< 0.01(**) Supported
Table 4.
Results of path-
coefficients, R
2
values
and p-values
Figure 2.
Model after validation
Knowledge
sharing in
international
markets

TRA on PRI, is significant, as the corresponding path coefficients are 0.41 and 0.44,
respectively, each having level of significance p< 0.001(***). The impacts of PRD and PRI on
CA are both significant, as the concerned path coefficients are 0.52 (H5) and 0.56 (H6), each
having a level of significance of p< 0.001(***). The effects of the moderator AC are the
highest on the linkage H1c, as the concerned path coefficient is 0.39, with a level of
significance of p< 0.01(**). In terms of R
2
values, KSC could explain SEN, SEI and TRA to the
extent of 41%, 45% and 40% respectively. SEN, SEI and TRA could explain PRD to the tune
of 47%, and PRI 55% of the time. PRD and PRI jointly could explain CA 68% of the time,
which is the predictive power of the model.
7. Discussion and analysis of the result
This study attempted to analyze how knowledge sharing takes place in the subsidiaries of a
multinational firm and how the subsidiaries could sense, seize and transfer such knowledge
by their dynamic capability. In this context, the study has explained the contribution of
absorptive capacity theory to analyze the effects of knowledge sharing and emphasized that,
for achieving better results through knowledge-sharing activities, in the context of
knowledge management coupled with marketing ability, the firm must develop the ability
to acquire and assimilate (potential absorptive capacity) and to transform and exploit
acquired knowledge (realized absorptive capacity) (Zahra and George, 2002). This is in terms
of the validated hypotheses H1a,H1b and H1c. Moreover, this study has highlighted that
subsidiaries of MNCs merely receiving knowledge from different sources is not enough to
utilize the full potential of the acquired knowledge. The subsidiaries need to utilize their
dynamic capabilities to sense, seize and transform the acquired knowledge to the appropriate
areas. This will help to develop product and process innovation. This is in conformity with
the H2a,H3a H4a, and H2b,H3b and H4b, which have duly been validated by PLS-SEM
analysis. This is essential for subsidiaries to survive in the international marketing
environment and to sustain competitive advantage. These ideas received support from DCV
theory as well as from another study (Lo and Tian, 2019) which examined the dynamic
capabilities in Hong Kong’s higher education establishments. Our study shows that
innovation (product and process) impacts firms’competitive advantage (H5,H6) in the
context of MKM by improving their innovative abilities. This has received support from
another study (Lee and Yoo, 2019) which showed that open innovation significantly impacts
competitive advantage. Our study shows that AC plays a vital role in moderating
relationships covered by H1a,H1b and H1c in that knowledge sharing can develop absorptive
capacity, which ultimately improves the innovative abilities of the firms functioning in the
international marketing environment (Liao et al., 2007). Such innovation eventually sustains
competitive advantage. This concept has received support from another study, by Aziz and
Samad (2016), which established a nexus between innovation and competitive advantage,
though in another context. Now, we shall discuss, through graphical presentations, the effects
of high AC and low AC moderating the relationships covered by H1a,H1b and H1c. The
graphs are shown collectively in Figure 3.
In all the graphs, continuous lines represent the effects of high AC, and dotted lines
represent effects of low AC on the linkages covered by H1a,H1b and H1c. The three graphs
show that, as KSC increases, SEN (for H1a), SIE (for H1b) and TRA (for H1c) that are affected
by high AC increase at a greater rate than those affected by low AC, since in all three graphs,
the continuous lines bear greater gradients than those of dotted lines.
In this study, we have investigated how the dynamic capabilities of sensing, seizing and
transforming, impacted by knowledge-sharing activities, could help the subsidiaries of
multinational firms to sustain their competitive advantages, mediated through development
of innovative product and process activities. We have also investigated the moderating
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effects of the absorptive capacity on the relationships covered by H1a,H1b and H1c.
A question may arise whether only the dynamic capabilities of the subsidiaries could help to
sustain their competitive advantages through knowledge-sharing activities without
considering the moderating impacts of absorptive capacity or the mediating effects of
product and process innovation. To address this question, we have articulated an alternative
model and analyzed how that could impact competitive advantages of the subsidiaries.
Details have been discussed in Appendix 4.
7.1 Theoretical contributions
Our study offers several theoretical contributions to the extant literature and to future
researchers. We have investigated how the subsidiaries of multinational firms could improve
their competitive advantages through efficient knowledge-management activities coupled
with their dynamic abilities for developing innovative capabilities and supported by
enhancing their absorptive capacity to assimilate and exploit the acquired knowledge
content. No studies are available in the body of literature nurturing this issue. Our study is
perceived to be a unique attempt in this respect. Our study has also analyzed how it has been
possible for knowledge-intensive firms, with their structured and robust internationalized,
innovative product and process abilities, to sustain global and local cultures for
competitiveness and to drive internationalization by exploiting their creativities through
Figure 3.
Effects of the
moderator AC on H1a,
H1b and H1c
Knowledge
sharing in
international
markets

effective blending of applications of. We also claim this as a theoretical contribution of our
study. This study has successfully used dynamic capability view theory to elucidate how, in
the dynamic international marketing environment, firms could survive by effectively
reacting and responding to the ever-changing marketing demands. The study has also used
absorptive capacity theory to successfully investigate how the subsidiaries of international
firms could effectively sense, seize and transform the acquired knowledge to sustain
competitiveness in the international market by exploring and exploiting the complementary
relationship between marketing abilities and knowledge management. We claim this as a
unique contribution of our study. Lo and Tian (2019) studied how the Hong Kong higher
education system could use knowledge sharing to improve competitive advantage by
enhancing AC and innovative abilities. We have used the concept of their study in the
business perspective and extended it to investigate how firms could successfully
internationalize their business to sustain competitive advantage, in particular, how they
can improve knowledge management activities by exploiting AC and innovative abilities and
appropriately assimilating their dynamic capabilities and developing marketing abilities. We
claim that this study has contributed effective inputs to the body of related literature. In a
study by Lee and Yoo (2019), data from Korean manufacturing firms established a nexus
between dynamic capability view and competitive advantage and even with open innovation.
We have extended this thought in our study in the international marketing context by
focusing on what dynamic abilities are essential for firms to use their knowledge in to survive
in the international market. This could be achieved by reacting and responding to the ever-
changing dynamic marketing demand and focusing on utilizing the combined global and
local cultures to sustain competitive advantage. This attempt is claimed to be novel and, as
such, is also construed as another important theoretical contribution of this study.
A study by Liao et al. (2007) found that knowledge sharing as well as AC and innovative
ability helped to improve a firm’s performance, so far as knowledge-intensive industries of
Taiwan are concerned. We extended this idea in our study by applying it in the context
of subsidiaries of multinational firms. In another study (Glavas et al., 2019), acquisition of
knowledge via Internet-based platforms could help to improve the performances of SMEs in
the international context. Our study has taken this idea and has extended it with the
supposition that knowledge acquisition, through effective absorptive capacity, could help the
subsidiaries of the multinational firms to sustain competitive advantages by improving their
performances. Effective utilization of the knowledge from different studies helped us to
provide a successful theoretical model in this study, which we claim is a special theoretical
contribution of this study.
7.2 Practical implications
Our study claims to contribute several practical implications beneficial for marketing
practitioners and managers of firms. This study highlights that knowledge sharing impacts
firms’sensing capacity, seizing capacity and transforming capacity for better innovation.
This implies that the managers of the firms who function in the international marketing
context should focus attention on upgrading employees’competencies. This will help them to
correctly sense the opportunities to develop the work system (process) befitting the local
culture, so that employees (who are mostly assumed to be local employees) may not feel
impeded to follow the process. Properly training the employees could also help them to seize
the sensed opportunities for appropriately developing the business model to commercialize
the product in a profitable manner. The managers should be vigilant to watch that the
knowledge employees accumulate from different sources is transferred properly to other
employees so that the gained knowledge becomes an asset to the firm and is not lost if
employees holding that knowledge leave the firm.
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The study highlights that these dynamic capabilities impact positively on the firms’
innovative abilities, especially on product and process innovation that depends on firms’open
innovative abilities. In the dynamic market, open innovation strategies help firms’continuous
survival by sustaining competitive advantage in the competitive and challenging
international market. In this context, mangers and top executives of the firms need to
react and respond to the competitive environment by continuously collecting information
from external sources regarding the market as well as advancement of technologies (Kang
and Kang, 2014). This way, the firms’managers and top-level leadership should focus
attention on how quick they are to assimilate any new idea and to translate it into a finished
product that is first-to-market, to maximize profit and sustain competitiveness (Prajogo and
Ahmed, 2006). This study shows that international market strategies need to deal with
diversified and complex market situations in the context of possessing necessary knowledge
for satisfying the overseas customers who have different cultures. Hence, the managers of the
subsidiaries of multinational firms need to continuously assimilate updated knowledge of
foreign cultures, which would help them to explore and exploit the firm’s creativity by mixing
the local and global cultures for survival.
Again, the managers should also be vigilant to improve and restructure the work system
in the international environment so that the new items are produced quicker, incurring less
expenditure. For this, it may be necessary to adopt new technology to revitalize the process of
sharing knowledge from other subsidiaries located in other countries. This also needs
developed and updated capabilities in the volatile and changing market environment,
especially in the international context. The technology might either be procured from outside
or done by existing employees who brush up their competencies through appropriate
training. The top executives should decide which procedure they will adopt. In this context,
the viability aspect is important and depends on the experience and expertise of the firms’top
management.
7.3 Limitations and scope for future research
Although this study has many potentialities in the field of knowledge management, which is
supported by the firms’marketing abilities to sustain competitive advantage in the
international marketing environment, it is not free from limitations. In this study, we collected
data from respondents of different firms located in different countries for an international
perspective. But our analysis did not differentiate employee feedback from manufacturing,
service or other types of international firms. It is essential to conduct further research on how
these results could be applicable in different types of the firms. Each type of firm operates in
different fields and has different subjects of innovation, which would matter much. Future
researchers may take up this issue. This study has dealt with how product and process
innovation of a firm impacts competitive advantage. Hence, our study is limited to the issues
of inbound open innovation that analyzes the expertise of acquiring and internationalizing
knowledge and technology from external sources. But we have not dealt with the issues of
outbound open innovation strategy, which uses internal knowledge for external exploitation.
Research covering both types of open innovation could project explicit understanding of how
open innovation is helped by international MKM in the international marketing context. This
may be taken up by future researchers. While validating the model, we considered replies of
612 useable respondents. In the international context, the number of useable respondents
considered in this study should not be construed to project generalizability, since the size
appears to be inadequate. Future researchers should analyze the results by considering a
larger sample size to effectively internationalize the results in terms of the present research
context. The proposed model has achieved 68% predictive power. Consideration of other
boundary conditions like trust factors and risk might have improved the strength of the
model, which future researchers might explore. This study stands on the survey results,
Knowledge
sharing in
international
markets

which was conducted within a limited time. A longitudinal study might have projected more
explicit insights of the results. Future researchers might deal with this issue.
8. Conclusion
This study highlights how the process of creation, storage, effective and purposeful
dissemination of knowledge could improve innovative, strategic and marketing abilities
among the employees of various subsidiaries of a multinational firm. This study also presents
a successful model in the international context. The model exhibits how the different dynamic
capabilities of the subsidiaries of a multinational firm could help to capitalize on the essence
of open innovation by using knowledge management abilities integrated with developed
marketing capabilities. This study shows that the MKM abilities of the subsidiaries of the
multinational firms could successfully internationalize the business intelligence with
developed management information system for fostering firms’success in marketing in the
international dynamic environment. This study discusses how knowledge-intensive firms
could successfully manage and articulate their internal marketing strategies. These must be
adjusted to a varied and complex international marketing environment from the perspective
of knowledge management to satisfy the needs of customers residing in different countries.
This study also highlights how firms could improve their knowledge assimilation and
exploitation abilities by enhancing their absorptive capacity to sustain competitive
advantage in the ever-changing international marketing environment. This study nurtured
the MKM challenges in the international context and developed a model showing the
managers of the firms a roadmap for achieving sustained competitive advantage by
internationalizing the idea.
But still this study has some shortcomings, especially in dealing with different types of
firms and exploring the effects of open innovation from all angles. Had it been possible to
cover all the untouched points, the study could have projected a more comprehensive insight
regarding the overall contributions of firms’MKM abilities in the international marketing
scenario.
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IMR

Appendix 1
Items Statements
Response [SD][D][N]
[A][SA]
KSC1 Knowledge sharing among employees is essential for marketing knowledge
management
[1][2][3][4][5]
KSC2 Cross-subsidiary knowledge sharing is important for marketing knowledge
management
[1][2][3][4][5]
KSC3 Cross-subsidiary knowledge sharing helps in improving performance of the
firm
[1][2][3][4][5]
KSC4 Subsidiary should be able to absorb knowledge shared by headquarter [1][2][3][4][5]
SEN1 Better sensing capacity helps in marketing knowledge management [1][2][3][4][5]
SEN2 Superior sensing capacity helps to improve competitiveness [1][2][3][4][5]
SEN3 Sensing capacity supports process innovation helping marketing
knowledge management
[1][2][3][4][5]
SEN4 Better sensing capacity supports product innovation helping marketing
knowledge management
[1][2][3][4][5]
SEI1 I believe that improved seizing capacity helps for new product development [1][2][3][4][5]
SEI2 I think that superior seizing capacity helps to improve competitiveness of
the firm
[1][2][3][4][5]
SEI3 Seizing capacity supports process innovation improving marketing
knowledge management
[1][2][3][4][5]
SEI4 Superior seizing capacity helps in improving innovation capability of the
firm
[1][2][3][4][5]
TRA1 I think that superior transforming capacity of a firm improves its
competitiveness
[1][2][3][4][5]
TRA2 I believe that transforming capacity helps in better marketing knowledge
management
[1][2][3][4][5]
TRA3 I believe that superior transforming capacity impacts in process innovation [1][2][3][4][5]
TRA4 Superior transforming capacity helps to improve product innovation [1][2][3][4][5]
PRD1 Product innovation can be improved by international market knowledge
capability
[1][2][3][4][5]
PRD2 Knowledge sharing among subsidiaries helps in faster product innovation [1][2][3][4][5]
PRD3 Firm leadership must pay attention for superior product development [1][2][3][4][5]
PRD4 Knowledge sharing among subsidiaries helps product development [1][2][3][4][5]
PRD5 Product innovation management complements international marketing
knowledge
[1][2][3][4][5]
PRI1 Improving process efficiency for managing knowledge helps to sustain
competitiveness
[1][2][3][4][5]
PRI2 Process innovation is essential for improving international marketing
knowledge management
[1][2][3][4][5]
PRI3 Process innovation is helped by knowledge sharing for better marketing
knowledge management
[1][2][3][4][5]
PRI4 Efficient process management complements performance of the firm [1][2][3][4][5]
PRI5 Process innovation is improved by managing knowledge for betterment of
international marketing
[1][2][3][4][5]
CA1 Better knowledge management improves process innovation for sustaining
competitiveness
[1][2][3][4][5]
CA2 Efficient marketing knowledge management provides competitive
advantage
[1][2][3][4][5]
CA3 Marketing knowledge management helps in improving international
marketing process
[1][2][3][4][5]
CA4 Better sensing capacity helps firms to achieve better competitive advantage [1][2][3][4][5]
CA5 Better absorptive capacity helps a firm for sustaining competitiveness [1][2][3][4][5]
Note(s):SD5Strongly disagree; D5Disagree; N5Neither agree nor disagree; A5Agree;
SA 5Strongly agree
Table A1.
Summary of
questionnaire
Knowledge
sharing in
international
markets

Appendix 2
Discriminant validity reconfirmation test
On analysis, the study found that square roots of all AVEs of the constructs are greater than the
corresponding bi-factor correlation coefficients that meet the Fornell and Larcker criteria (Fornell and
Larcker, 1981), confirming discriminant validity. The results are shown in the following table.
Appendix 3
Estimated model (with all the items)
Construct KSC SEN SEI TRA PRD PRI CA AVE
KSC 0.91 0.83
SEN 0.17 0.93 0.86
SEI 0.19*** 0.18 0.93 0.87
TRA 0.26 0.31 0.20 0.94 0.88
PRD 0.29 0.28** 0.22** 0.29 0.93 0.86
PRI 0.27 0.25 0.26 0.28** 0.17* 0.92 0.84
CA 0.31** 0.17 0.19* 0.21 0.16 0.18 0.92 0.85
Key: KSC = Knowledge Sharing among Cross subsidiaries; SEN = Sensing Capacity;
SEI = Seizing Capacity; TRA = Transforming Capacity; PRD = Product Innovation;
PRI = Process Innovation; CA = Competitive Advantage; AC = Absorptive Capacity
Table A2.
Discriminant validity
test (Fornell and
Larcker criteria)
IMR

Appendix 4
Alternative, or rival, model
The rival model only considers impacts of KSC directly on SEN, SIE and TRA, without considering
the impact of the moderator AC on the linkages KSC →SEN, KSC →SIE and KSC →TRA. In the
proposed model (Figure 1), we have considered the moderating effects of AC. Slight observation reveals
that, on analysis, the path coefficients of these three linkages in the rival model are shorter than the path
coefficients of these linkages when considering the effects of the moderator AC, as has been done in the
proposed model (Figure 1). The path coefficients in the proposed model, concerning these three linkages,
are 0.23*, 0.31* and 0,46**, whereas in the rival model, the corresponding values are 0.17*, 0.21* and
0.24*. The deficiency in the path strength is due to an absence of the impacts of the moderator AC in the
rival model. Besides, R
2
values are also less for the rival model. The path coefficients of the linkages in
the rival model SEN →CA, SIE →CA and TRA →CA are also less than the path coefficients linking
SEN, SEI and TRA, with CA mediating through PRD and PRI, as considered in the proposed model
(Figure 2). Moreover, the predictive power of the rival model is 0.41, whereas it is 0.68 in our proposed
main model (Figure 2). In brief, the analysis highlights that consideration of the moderator AC, and the
mediating variables PRD and PRI make effective contributions to strengthening the effectiveness of the
proposed main model (Figure 1).
About the authors
Dr. Sheshadri Chatterjee is a postdoctoral research student at Indian Institute of
Technology Kharagpur, India. He has completed PhD from Indian Institute of
Technology Delhi, India. He is having work experience in different multinational
organizations such as Microsoft Corporation, Hewlett Packard Company and IBM.
Sheshadri has published research articles in several reputed journals such as
Government Information Quarterly, Information Technology and People, Journal of
Digital Policy and Regulation and Governance. Sheshadri is also a certified project
management professional, PMP, from Project Management Institute (PMI), USA, and
completed PRINCE2, OGC, UK and ITIL v3 UK. Sheshadri Chatterjee is the corresponding author and
can be contacted at: sheshadri.academic@gmail.com
Knowledge
sharing in
international
markets

Ranjan Chaudhuri is an associate professor in marketing at National Institute of
Industrial Engineering, Mumbai. He was a Fulbright Fellow to USA in 2012. Dr Ranjan
Chaudhuri also served as an associate professor at Vinod Gupta School of
Management, Indian Institute of Technology Kharagpur and at the Department of
Management Studies, Indian Institute of Technology Delhi. Dr Ranjan Chaudhuri has
over eighteen years of industrial, teaching and research experience. Dr Ranjan
Chaudhuri was also the chair of the Postgraduate Programme; chair, Marketing Area;
and chair, International Relations at National Institute of Industrial Engineering
Mumbai. Dr Ranjan Chaudhuri has published over 100 research papers, one book and has over thirty
International and National Awards and Honours to his credit. Dr Ranjan Chaudhuri’s teaching and
research interests are in the area of business-to-business marketing, global marketing and retail
management.
Demetris Vrontis is a professor and executive dean at the University of Nicosia in
Cyprus. He is the founding editor and editor-in-chief of the EuroMed Journal of
Business and the associate editor-in-chief of the International Marketing Review.Heis
also the founder and president of the EuroMed Research Business Institute (http://
emrbi.org). Professor Vrontis has widely published in over 200 refereed journal articles
and 40 books in the areas of business management, marketing, human resource
management, innovation and entrepreneurship. He is a fellow member and certified
chartered marketer of the Chartered Institute of Marketing and a Chartered Business
and Chartered Marketing Consultant. He also serves as a consultant and member of board of directors to
a number of international companies.
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