Subsidiaries as Sources and Recipients of Innovations in the Multinational Corporation

Sammanfattning: Technological advancement and innovation lie at the core of the competitiveness of firms. For the multinational corporation (MNC), the ability to leverage innovations and value-added resources within the MNC is an important element of competitive advantage. This thesis deals with the development and transfer of innovations in the MNC, specifically considering the role of subsidiaries as sources and recipients of innovations. The results are based on the analysis of quantitative data from two empirical studies and are presented in four papers.The findings suggest that subsidiaries’ collaborations with counterparts external to the MNC have a decisive impact on the development of novel innovations, whereas collaborating with counterparts within the MNC has a weaker effect. An interesting finding is that the combined effect of internal and external collaboration during the development process can be detrimental to innovation novelty.Concerning the transfer of innovations within the MNC, the findings indicate that characteristics of the innovation and of the relationship between the sender and the recipient units affect whether intra-MNC innovation transfer is useful for the recipient. Innovation novelty has a positive impact on the usefulness of a received innovation to the recipient subsidiary, whereas innovation specificity has a negative impact. Furthermore, the mutual commitment of the sender and the recipient to the transfer of the innovation positively influences usefulness.The results show that the embeddedness of a recipient subsidiary’s corporate and external network relationships contributes to that part of the business performance that is attributable to the exploitation of a received innovation. However, high relationship embeddedness in the subsidiary’s external business network, in combination with a received innovation that is unique, has a detrimental impact on the recipient’s innovation-related business performance.Finally, intra-MNC transfer of innovations contributes to knowledge flows from the subsidiary to its local customers and suppliers and to local competitors. Competitive pressure in the local business environment and the embeddedness of the subsidiary’s relationships with important local customers and suppliers influence these knowledge flows. Moreover, knowledge flows within the subsidiary’s most important customer and supplier relationships can result in knowledge flows to local competitors.