Multinational companies (MNCs) are facing important challenges within the current economic context. Rapid technological changes, the globalization of the economy, the existence of increasingly demanding consumers are, among other factors, the origin of the difficulties involved in achieving and sustaining a competitive advantage in the long term.One of the keys for overcoming these difficulties is to manage knowledge-based resources appropriately. However, in order to be able to manage these resources, the multinationals need to know, with complete transparency, just what these resources are, and this is achieved by quantifying them. The quantification of knowledge-based resources and the preparation of intellectual capital statements represent two strategic challenges for the MNCs.
The resource-based view of the firm and the literature on knowledge management and organizational learning state that knowledge-based resources are a source of sustained competitive advantage due to their distinctive characteristics: causal ambiguity, social complexity, organizational path dependence, time compression diseconomies, and idiosyncratic value (Barney, 2001; Dierickx & Cool, 1989; Mahoney, 1995; Ordóñez de Pablos, & Peteraf, 2004, 2005; Peteraf, 1993; Reed & DeFillippi, 1990; Wernerfelt, 1984; 1995). These special features of knowledge-based resources require that the organization develops new strategies to manage them.
Knowledge management and intellectual capital literature respectively provide both a conceptual framework and specific tools for the management of intraorganizational and interorganizational knowledge flows in multinational companies (MNCs). Multinational companies consider that the transfer of knowledge flows at the international level represents a source of opportunities and risks.
This chapter has two basic aims. First, it analyzes the complex dynamics of knowledge flow transfers in multinational firms. Second, it addresses the measuring and reporting of knowledge-based resources in MNCs.