Introduction

One specific advantage multinational corporations (MNCs) possess is, it not only gains ownership advantages by operating internationally, but also “create new local competitive advantages that can be formalized as new superior capabilities and can then be used across different environmental contexts.” (Schotter and Bontis, 2009)
However, with the growth of international business, the geographically dispersed business units become the hindrance for transverse knowledge sharing, therefore, without a systematic method to facilitate Knowledge sharing across borders, the process often come to a standstill.
The major challenge that MNCs are facing in terms of knowledge management can be analysed into three levels. First, how to diffuse knowledge effectively and efficiently from parent company to sub business units (SBUs). Second, how to encourage the knowledge sharing between SBUs in different parts of the world. Third, how to motivate SBUs to produce their own knowledge and further transfer back to parent company.

Knowledge management in MNCs

Knowledge management creates competitive advantage by facilitating the knowledge flow between business units in MNCs.
The use of knowledge acquired from other business units can substantially reduce the time of completing tasks which share similar contents, and prevents from making the same mistake that had been tried before.
The study of Accenture’s Knowledge Exchange, which is used as a tool of knowledge capturing and transferring, shows that the past analysis and presentations which are stored in the database, can help reduce planning time and minimize risks (Paik and Choi, 2005). Benefits still, as in co-building new process or product that requires different source of techniques, SBUs could gain support from different units within the organisation due to the knowledge exchange.
Consequently, MNCs are eager to build up their own knowledge management system to monitor and promote the knowledge exchange.

Codification strategy or Personalisaton strategy

The problem revolves around the knowledge diffusing strategy that MNCs choose to adopt, either a codification strategy, or a personalization strategy (Hensen et al., 1999).
From the individual level, if