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This study investigates the impact of subsidiary autonomy to create and to transfer technical knowledge on its competitive differentiation. Rather than looking at an isolate internal transfer network, we analyse both external and internal networks in the formation of such knowledge. We have designed a survey with 108 American and European subsidiaries in the Brazilian automotive market. We have applied a partial least square structural equation model (PLS-SEM) to test our four hypotheses, two of them investigating the influence of autonomy on the process of reverse knowledge transfer (RKT) and two examing the impact on subsidiary competitive advantage. The findings suggest that autonomy leads to reverse knowledge transfer, which leads to increases in subsidiary differetiation and that American subsidiaries engage in more external partnerships to create and transfer knowledge than European subsidiaries do.
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