Abstract
This study compares knowledge and its performance effects between Asian and Western MNEs in the People's Republic of China. It examines knowledge differences along four dimensions including technological skills, organizational capabilities, marketing knowledge, and environment familiarity between two groups. The discriminant analysis of the survey data containing 178 MNE sub-units in China suggests that Asian MNEs are inferior in technological and organizational competencies but superior in host country-specific knowledge such as marketing tactics and environmental familiarity, compared to Western counterparts. Despite such differences, knowledge in all four dimensions is found to enhance financial returns and overall performance for sample firms no matter where they come from. The logic underlying the dominance of Asian MNEs in China's FDI, from economic, cultural, and institutional perspectives, is also highlighted.