The impact of embeddedness (in)congruence on reverse knowledge transfer – An agency theory perspective

Reverse knowledge transfer (RKT) is critical for multinational corporations (MNCs), yet its relationship with subsidiary embeddedness, particularly given varied internal and external dimensions, remains unclear. This limits our understanding of how to manage subsidiary embeddedness to maximize RKT. Drawing on a congruence perspective and agency theory, we argue that agency problems arise when internal and external embeddedness are incongruent; thus, RKT is maximized when these two dimensions are congruent, regardless of their absolute levels. Using polynomial regression and response surface methodology, we test this congruence effect and examine the moderating effects of cultural distance and MNCs' host-country experience. Our study offers insights into the diverse configurations of subsidiary embeddedness and contributes a novel perspective on parent-subsidiary relationships and knowledge flows within MNCs.