This paper inquires into the factors that make the international transmission of knowledge more efficient within multinationals than between unaffiliated parties. It provides evidence, drawn from a sample of contracts for the acquisition of technology by Spanish firms in 1991. As found in previous studies, the competitive advantage of multinationals lies in the transmission of tacit knowledge, a type of knowledge often transferred together with process technologies. Furthermore, evidence is found that the lower costs of internal transfers permit some transfers of tacit technology to be carried out in cases where it would be impossible by means of an unaffiliated agreement. Finally, the relative advantage of multinationals increases with the interrelation between the source and the host countries.