An Empirical Research On The Influence Of Institutional Distance To The Knowledge Sourcing From The Host Country Customers

The headquarters of Multinational Companies is no longer the only source of knowledge in the networks. Instead, for the subsidiaries are more closely to the local clients’ knowledge pool, they can be access to the spillovers of host country’s clients’ knowledge. Effective being access to such knowledge can provide valuable local market information and create competitive advantage for the company. However, studies have shown that when MNCs do customer knowledge sourcing in the host country, they are facing liability of foreignness.From the institutional point of view, this paper discussed how the institutional gap affects the advantage about source of customer knowledge. Through reviewing the institutional views in the field of multinational business strategy and the customer knowledge sourcing theories in the customer knowledge management, this study established a theory frame of the effect of institutional distance to the customer knowledge sourcing in the host country. We used a broad dataset of 32 foreign banks from 16 countries or regional in China for samples, and use questionnaires and empirical research methods to test the hypotheses of the theoretical model by SPSS19.0. The results show that the farther institutional distance between host country and origin country, the less customer knowledge to get from the host country, large population density will intense this relation, in contrast, operating experience of the multinational subsidiaries will ease the disadvantage when multinational enterprises which from further institutional distance countries are sourcing customer knowledge of host country.This study is a useful exploration and trial for it bridged the institutional theory and the customer management theory. Through the study of whether institutional distance affects the valuable customer knowledge sourcing of the subsidiaries in the host country, it will provide evidence for location choosing and investment model strategic decision-making and enriched with the theories about customer knowledge sourcing and institutional distance.