Multinational enterprises (MNEs) find it challenging to transfer technological knowledge to their overseas affiliates because transfer requires exchange of tacit knowledge and because technological knowledge may spill over to local rivals. The use of expatriates may help MNEs to address these challenges, aiding in the transfer process and ensuring tighter control of this transfer. In this paper we examine under which conditions the assignment of expatriates to foreign affiliates is associated with higher levels of technology transfer. Drawing on rich micro data on Japanese MNEs and their foreign affiliates, 2006-2022, affiliate fixed effect analysis confirms that expatriates facilitate knowledge transfer to foreign affiliates for small and medium sized MNEs, MNEs that are technology leaders, and when an affiliate is minority-owned by the MNE.

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