A Simple Criterion to Locate a Multinational Corporation Resulting from Optimization of Technological Knowledge Transfer

The aim of this study is to formulate both a conceptual and a mathematical model giving a criterion of choice for the location of an MNC in search of new technological knowledge and the means to optimize it. On the basis of a bibliographical study, we develop a conceptual argument in order to formulate hypotheses regarding the impact of distances and motivation on knowledge transfer and the acquisition's resulting performance. The assumptions thus formulated make it possible to justify the mathematical expression of performance in a function of the architectural distance, the knowledge transfer, and the motivation. The resolution of this optimization problem makes it possible to obtain the optimal architectural distance and the optimal motivation corresponding to the best choice of localization of an MNC. The authors deduce a simple criterion aiming at helping a manager confronted with the problem of localization choice. The presented model helps to define the typology of MNC units: isolating and exploiting a MNC's knowledge or using the local knowledge and transferring it to other units.