INTRA-FIRM AND INTER-FIRMKNOWLEDGE TRANSFERS AND PRODUCTIVITY IN THE RETAILING SECTORDolores Anon HigonJeremy CleggIrena Grugulis Allan WilliamsNicholas Vasilakos Odul Bozkurtboth conventional controls (such as scale of firm and establishment, sub-regional location and market segment), and specific knowledge channels, such as codified knowledge, boundary spanners, communities of practice, and learning regions (communities of geographical proximity) must be investigated in understanding productivity differences between firms. The survey-based part of our project will consider these externalized forms of knowledge transfer.The recent emphasis on the possibilities and inodes of knowledge transfer using networks external to the firm have also prompted the further investigation of specific processes of knowledge transfer inside the multinational corporation. Inkpen and Dinur (1998), in their longitudinal study of North-American based joint ventures between North American and Japanese firms, identify technology sharing, interoiganizational interaction, personnel transfers, and strategic integration as the four fundamental knowledge transfer processes inside (he firm. Gupta and Govindarajan (2000) recognize the significance of the “existence and richness of transmission channels, but their empirical findings underscore also the significance of motivational disposition to acquire knowledge and absorptive capacity5, for the extent of (successful) knowledge inflows into subsidiaries, and of motivational disposition to share knowledge and value of knowledge stock for the extent of outflows from the subsidiary. Schlegel milch and Chini (2003), in their more specific discussion of the marketing functions of mullinalionals, build a model of knowledge transfer where knowledge transfer effectiveness is determined by the a-) development of knowledge transfer capabilities, which are inclusive of channels, infrastructure and processes, b-) organizational distance, and c-) cultural distance.Different sectors will display different levels of international integration of operations, and depending on whether the products and services prtxluced by a multinational are standardized or segmented within the organisations network. The mode and degree of international integration of operations in turn relies closely on the motivations of transnationalization in a sector or for a specific firm. Peter Dicken has identified the motivations for the transnationalization of a retail firms operations as including a-) lhe saturation of the domestic market, b-) intensification of competition in the domestic market, c-) regulatory constraints in the domestic market, d-) perception of profitable opportunities overseas, such as those in some fast-growing developing country markets, e-) desire to exploit a firms specific advantages in new markets (Dicken 2003: 500). Wrigley argues that in retailing major corporations have specific incentives io transnationalizc operations because they derive competitive advantages from a-) innovative retail formats, b-) logistics and distribution systems, particularly those that economize on inventory and distribution costs, c-) IT systems and supply chain management, d-) access to low- cost capital for expansion, e-) transfer of “best practice, knowledge, f-) depth of human/nianagement capital resources giving access to a wide range of international management experience, and g-) the ability to source supplies globally (Wrigley 2000: 306-308).Wrigley further argues that (his last ability of global sourcing has not been as important in the operational success of global food retailers as has sometimes been suggested. The non-food consumer product categories in the hypermarkets (that constitute the elite group of retail TNCs) offered the greatest scope to leverage global purchasing scalethe potential in food products was more limited due to differences in national tastes and preferences, perishability issues, and the more restricted overlap between countries in the food products stocked by retailers than might first appear (Wrigley 2000:501). In fact, although an increasing number of retailers have expanded rapidly across national boundaries in the past decade, retailing has traditionally had, and largely coniinues to have, a predominantly domestic orientation. Some of the worlds largest retailers in terms of sales revenues continue to be entirely embedded in their domestic market. For example, although seven of the top ten retailers in the world are headquartered in the United States, only one of these firms, Wal-Mart, can be regarded as a genuine transnational retailer. Four of the US firms in (he top (cn have no presence whatsoever outside North America (Dicken 2003: 494).Retailing, “the final link in the production chains extremely sensitive to the specific characteristics of the consumer markets it serves. Consumption markets for retail continue (o have a high degree of individua