This paper examines the relationships between learning mechanisms, formative organizational context, local knowledge acquisition in MNCs subsidiaries in China and Vietnam. We hypothesized that learning mechanisms are positively related to knowledge acquisition, which in turn affects subsidiary performance in a positive way, and these relationships are moderated by formative organizational context. The results suggest that training & mentoring and formative organizational context has positive association with knowledge acquisition. However, three interaction terms between learning mechanisms (experimentation, socialization, training & mentoring) with formative organizational context are significantly related to knowledge acquisition. This indicates that the effectiveness of a learning mechanism is contingent on the strength of formative organizational context. We also found a positive and significant association between knowledge acquisition and subsidiary performance.