Integration of Local and Global Knowledge in Finnish Business Operations in Russia
To adapt foreign business practices to the turbulent business environment of Russia is a challenging task. Most research has analyzed transfer of MNE practices to the Russian operations (e.g. [May et al., 2005]), whereas the use of local knowledge has received less attention [Karhunen et. al., 2008]. This paper shows that in order to succeed in Russia, a foreign company needs not only to transfer its firm-specific advantages to the local operations but also harness local knowledge. We address this question by first, evaluating what kind of knowledge gaps a MNE entering Russia should close to operate successfully. Second, we analyze what means are used to upgrade managerial skills in the subsidiary. Empirically, we analyze Kemira GrowHow, a Finnish MNE, which has operated in Russia since the Soviet era. We first review literature pertinent to our research topic: the challenge of global integration versus local responsiveness, and the division of management responsibilities between the headquarters and the subsidiary.