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Both the absorptive capacity (AC) and international business (IB) literatures are interested in knowledge processes and learning in organizations. Although originating from different streams of research, AC and IB were thus meant to meet and reinforce each other. Fundamentally, the role of AC in IB is to condition the performance outcome of firms’ internationalization efforts. Firms benefit from their IB activities conditional on being able to absorb new knowledge and learn. In other words, multinational corporations (MNCs) need to have the necessary AC to overcome their liabilities of foreignness and outsidership. Short of AC, the costs and challenges of entering foreign markets and operating across countries are likely to outweigh potential performance gains. Moreover, AC plays a role in the technological upgrade and economic development of nations, as it helps firms in emerging economies to benefit from spillovers of foreign direct investments by MNCs from more economically advanced economies. And national governments can play an important role to facilitate this effect by developing appropriate economic and innovation policies that support knowledge creation and learning. Firms can also proactively develop AC. For instance, MNCs can nurture a broad knowledge base that can be leveraged in different contexts and opt for a decentralized structure with mechanisms that help subsidiaries access the knowledge base of the parent organization. They can also practice specific routines to identify and access relevant knowledge from their external environment, transfer that knowledge in their organization, and assimilate it in their own knowledge creation processes. Moreover, MNCs can adopt human resources management practices that help raise the capacity and motivation of their employees to acquire and exploit new knowledge. Ultimately, the most important contribution of AC in IB might be to help MNCs develop the strategic flexibility that enables them to thrive in dynamic environments. High-AC MNCs may indeed be in a better position than other firms to (a) build diverse options to prepare for uncertain evolutions in the market, (b) access flexible resources to allocate to new courses of actions, and (c) redeploy resources across options over time. Unpacking the exact mechanisms as well as boundary conditions for the role of AC in building strategic flexibility offers ample opportunities for future research on a highly relevant topic for MNCs.

Internationalization of R&D facilitates knowledge sourcing of multinational corporations (MNCs) on a global scale. As MNCs internationalize R&D, they not only engage in domestic-driven R&D but are actively involved in overseas-driven R&D. And accordingly, the role of overseas R&D laboratories often evolves, from applying the HQ-generated innovation to local market, to innovating locally and contributing to the parent company. Within an MNC boundary, knowledge flows have become multidirectional: on top of the most typical knowledge flows from headquarters (HQ) to a subsidiary, reverse knowledge flows from a subsidiary to HQ as well as horizontal knowledge flows among overseas subsidiaries have become more salient. In addition to knowledge flows within a firm, increasing attention has been paid to external knowledge sourcing, i.e., knowledge sourcing from foreign locations outside the firm. MNCs commonly engage in local knowledge sourcing, i.e., sourcing knowledge from an overseas local environment, to tap into local hotbeds of innovation. But MNCs are also increasingly conducting global knowledge sourcing, i.e., sourcing knowledge from around the world, to practise global open innovation. Theoretically, knowledge sourcing in international R&D has often been examined from the capability and embeddedness perspectives. The effect of capability has been discussed in connection with motivation, autonomy, and mandates of subsidiaries. The effect of embeddedness has been discussed in connection with complementarity between external and internal embeddedness. As future research agenda, the following are suggested. First, cross-fertilization among the research fields of international R&D, global innovation, and open innovation deserves further attention. Second, greater research focus can be placed on managerial processes of global knowledge sourcing. Third, further research can be advanced on global knowledge sourcing at the team level. Fourth, the association between corporate governance and global knowledge sourcing can be investigated further. Fifth, much more attention needs to be paid to microfoundations of global knowledge sourcing. And lastly, further evolving patterns of global knowledge sourcing by advanced country multinationals (AMNCs) and emerging economies multinationals (EMNCs) continue to be relevant.

Although risk is an essential element of the business landscape and one of the more widely researched topics in business, there is noticeably less scholarship on strategic risk. Business risk literature tends to only delineate characteristics of risk that are operational rather than strategic in nature. The current operational risk paradigm focuses primarily on only two dimensions of risk: the probability of its occurrence and the severity of its outcomes. In contrast, literature in the natural and social sciences exhibits greater dimensionality in the risk lexicon, including temporal risk dimensions absent from academic business discussions. Additionally, descriptions of operational risk included minimal linkage to strategic outcomes that could constrain or enable resources, markets, or competition. When working with a multidimensional model of risk, one can adjust the process of environmental scanning and risk assessment in ways that were potentially more measurable. Given the temporal dimensions of risk, risk management cannot always function proactively. In risk environments with short risk horizons, rapid risk acceleration, or limited risk reaction time, firms must utilize dynamic capabilities. The literature proposes multiple approaches to managing risk that are often focused on single challenges or solutions. By combining a strategic management focus with a multidimensional model of strategic risk, one can match risk management protocols to specific strategic challenges. Lastly, one of more powerful dimensions of risky events is their ability to differentially affect competitors, changing the basis of competition. Risk need not solely be viewed as defending against potential losses; many risky occurrences may represent new strategic opportunities.