Knowledge Transfer, Control, and Local Presence Affecting MNEs Functioning in Saudi Arabia

Purpose - The overarching aim of this study is to examine the influence of the structural, relational and cognitive dimensions of knowledge sharing in of foreign subsidiaries of MNEs located in Saudi Arabia. The impact of these flows on the performance of subsidiaries is also investigated. The study thus reflects on the influence made by MNEs being a powerful actors contributing in the Middle East region developments.Design/methodology and approach - A cross-sectional survey research design involving the use of questionnaire to acquire the primary data was adopted. A questionnaire was distributed in the three major cities of Saudi Arabia. One set of 350 questionnaires to multinational managers were distributed while 147 valid questionnaires were used in the study. Descriptive statistics as well as a multivariate regression analysis were used in the analysis of the data.Findings - The study found that the presence of knowledge flow from parent to subsidiary was relatively high; while knowledge flows, local presence, and higher levels of rule-based (formal) and output control mechanisms were positively associated with performance.Research limitations/implications - The methodology adopted for this study can be extended to other countries in the Middle East or in GCC countries.Originality/value - The study, as its main contribution, surveys the diverse MNE landscape of Saudi Arabia, which for the first time has been used to define clearly the relationships between MNEs and their subsidiaries based in Saudi Arabia, while relating these relationships to development goals prioritising partnership with the private sector to make available new technologies and promote rule-based, and good, governance. In particular, the study results indicate that increasing knowledge flows is not only helpful for development goals, but is also associated with business success.