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Essay text:
The multinational corporation arises not out of the failure of
markets for the buying and selling of knowledge, but out of its superior
efficiency as an organizational vehicle by which to transfer this knowledge
across borders. We test the claim that firms specialize in the internal transfer of
tacit knowledge by empirically examining the decision to transfer the capability
to manufacture new products to wholly owned subsidiaries or to other parties.
The empirical results show that the less codifiable and the harder to teach
is the technology, the more likely the transfer will be to wholly owned
operations...
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