Flowers bloom in time: the impact of long-term orientation and financial slack on reverse knowledge transfer in multinational enterprises

Purpose This study aims to investigate the impact of long-term orientation (LTO) and financial slack on reverse knowledge transfer (RKT). Existing research presents conflicting views on financial slack, whether it supports innovative projects or leads to suboptimal investment decisions. In this study, the authors propose that financial slack per se provides mixed effects on RKT. However, financial slack together with LTO promotes financial allocation for firms’ future growth and improves RKT outcomes. Design/methodology/approach The authors tested hypotheses on a sample of 135 US-based pharmaceutical multinational enterprises during 2013–2020 financial years. The authors operationalized RKT as backward patent citations, which can capture formal and codified knowledge. For the estimation method, the negative binomial model was adopted to address the count-data nature of RKT. For a robustness check, the zero-inflated negative binomial regression was used. Findings The empirical results from negative binomial regressions provide support for the hypotheses. LTO positively relates to RKT. In addition, the interaction effect between LTO and financial slack has a positive impact on RKT. Practical implications This study highlights the importance of strategic alignment among temporal orientation, financial resources and business strategy in building a firm’s competitive advantages. Originality/value Long-term-oriented firms perceive RKT as a strategic investment, which can contribute to competitiveness. LTO helps address the conflicting views on financial slack. This study proposes and tests that its impact is contingent on the strategic orientations of firms. Financial slack, together with LTO, fosters RKT.