The geographically dispersed organization of multinational corporations (MNCs) has attracted considerable attention over the past a couple of decades. Since Bartlett and Ghoshal (1989) described the organizational structure of MNCs as a ‘differentiated network’, various strands of literature have suggested significant attitude changes in the relationship between the headquarters and overseas subsidiaries of the equivalent MNC. A variety of terminologies have been used to describe MNCs to incorporate such attitude changes, for instance ‘interorganizational network’(Ghoshal and Bartlett, 1990),‘network-based MNC’(Zander, 1998),‘federative MNC’(Andersson, Forsgren and Holm, 2007). In particular, the parent-driven view has been largely abandoned in reference to organizing, especially, locationally dispersed competence-creating activities within the MNC. In addition to the advantages of multinationality that have been extensively discussed in previous literature, such as the flexibility and therefore reduced risks to shifting production and sales across locations as suggested by the real-option theory of MNCs (see Li and Rugman, 2007 for a detailed review), increased economies of scale (Chandler, 1990), or the ability to exchange threats (Graham, 1978), more recently interests in MNCs’ ability to integrate related knowledge have emerged (Zander, 1998), the interest in which is specifically associated with MNCs’ spatial organization of R&D.

As has been documented, new knowledge generation is generally a process of combining current and acquired knowledge or recombining current knowledge (Kogut and Zander, 1992). In the former case, the ability to create or access new technological knowledge has become vital for the survival and