A Comparative Study of Multinational Subsidiaries and Local Companies in Emerging Economies: A Manufacturing Practice Approach

Abstract

This paper investigates whether multinational companies possess superior manufacturing knowledge relative to domestic companies operating in emerging market countries. Manufacturing knowledge is operationalized as knowledge in use through the implementation and performance impact of manufacturing practices. Using survey data of 216 manufacturing plants located in five emerging countries, we apply analysis of variance (ANOVA) and structural equation modelling (SEM) to identify the potential knowledge surplus of multinational subsidiaries over local companies. Results of our analysis show that, generally, multinational subsidiaries invest significantly more effort in implementing manufacturing practices. Nevertheless, their knowledge superiority concerning the effective use of these practices is only materialized in terms of practices related to human resource development and advanced manufacturing technologies.