With intensive field research in Beijing, this paper investigates the interaction pattern between MNC R&D labs and one important actor in local innovation system – local universities. It further explores whether knowledge diffusion occurs along with the interactions. The empirical findings show that MNC R&D labs actively interact with local universities in Beijing through five different models: pure image-building, outsourcing model, sponsored research model, internship and training programs, and the joint lab model. In-depth analysis of these models based on the interviews and two case studies demonstrates that the joint lab model is the most efficient channel of knowledge diffusion for transferring both codified knowledge and tacit knowledge, which can contribute to local innovation capacity in the long run.
Keywords: knowledge diffusion, MNC R&D, local innovation capacity, university, China