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Innovation in Multinational Subsidiaries: The Role of Knowledge Assimilation and Subsidiary Capabilities
Abstract
Subsidiaries of multinational firms play an important role in the globalization of innovation, yet we have an incomplete idea of the influences on their innovative activity. Drawing on prior research in international business and strategy, we identify two sets of factors that influence the absorption and utilization of knowledge in multinational corporation subsidiaries: (a) the range of external and internal knowledge sources available; and (b) the subsidiary capabilities associated with knowledge absorption and utilization. We find that knowledge absorbed from the host country is useful to subsidiary innovation. We also find support for the role of subsidiary capabilities: both sourcing capability and combinative capability have a significant influence on the scale and quality of innovation. Journal of International Business Studies (2008) 39, 901–919. doi:10.1057/palgrave.jibs.8400383
... Although some studies have highlighted the uniqueness of knowledge distance (Phene and Almeida, 2008;Moreira et al., 2018), the role of knowledge distance-an essential contextual element-in the relationship between technological boundary-spanning search and firm innovation remains largely unaddressed. Additionally, it has been proved that boundaryspanning search does not lead to fruitful innovative results in all organizations. ...
... Poor integration of internal and external knowledge significantly hinders firm innovation. Firms tend to be more interested in knowledge with higher similarity (Phene and Almeida, 2008). Similar external knowledge can supplement the internal resources of an organization and enhance its ability in specific technical fields, compensating for the lack of professional knowledge (Nerkar, 2003). ...
... The research results show that knowledge distance weakens the positive impact of technological boundary-spanning search on firm innovation. This conclusion verifies the viewpoint of Phene and Almeida (2008), who indicated that knowledge distance may prevent firms from accurately identifying external technical knowledge and inhibit the innovation effect produced by external resources. As emphasized by Grigoriou and Rothaermel (2017), although external knowledge is recognized as an effective means for firms to transcend the original technical trajectory, firms cannot implement search strategy blindly and it is essential to inspect whether internal and external knowledge are compatible. ...
Purpose
Technical knowledge is a key factor in firm innovation. This study aims to construct a theoretical framework of technological boundary-spanning search, exploratory innovation and exploitative innovation to help firms adjust their search strategies and improve the effect of external resources on internal innovation.
Design/methodology/approach
The study uses questionnaires to collect data and conducts empirical analysis using SPSS25 and AMOS24.
Findings
Technological boundary-spanning search is positively correlated with ambidextrous innovation. Additionally, knowledge base positively moderates the effect of technological boundary-spanning search on ambidextrous innovation and knowledge distance negatively moderates the effect of technological boundary-spanning search on ambidextrous innovation. When a firm’s knowledge base is robust, its ambidextrous innovation can benefit more from technological boundary-spanning search. Additionally, when the knowledge distance is less, a firm’s ambidextrous innovation can benefit more from technological boundary-spanning search.
Originality/value
Considering organizational ambidexterity, this study divides firm innovation into exploratory innovation and exploitative innovation and presents a theoretical framework for the effect of technological boundary-spanning search on ambidextrous innovation. Additionally, it provides a comprehensive understanding of the crucial roles of knowledge base and knowledge distance in the relationship between technological boundary-spanning search and exploratory and exploitative innovation.
... Although a parent firm often transfers knowledge to its foreign subsidiaries (Zeng, Grøgaard, & Steel, 2018), successful knowledge transfer does not guarantee that the subsidiaries will develop local innovation capabilities. Prior studies of this topic have largely focused on the general development of subsidiaries' local innovation capability (Almeida & Phene, 2004;Phene & Almeida, 2008); relatively few have addressed how foreign subsidiaries develop local innovation capabilities after knowledge has been transferred from a parent MNE. This study was therefore designed to reveal what factors most influence the effectiveness of the transition from knowledge recipient to local innovator once a foreign subsidiary has taken knowledge from a parent MNE. ...
... Scholars have long been interested in understanding the innovation capabilities of foreign subsidiaries (Almeida, 1996;Almeida & Phene, 2004;Phene & Almeida, 2008). A foreign subsidiary's two main sources of knowledge are its parent MNE and its local environment. ...
... Knowledge normally first flows from parent firm to subsidiary (Gupta & Govindarajan, 1991;Tseng, 2015). Previous studies have found that knowledge flows from a parent firm generally lead to desirable outcomes at a subsidiary, including in many cases increased innovation (Almeida & Phene, 2004;Michailova & Zhan, 2015;Phene & Almeida, 2008), enhanced bargaining power (Mudambi & Navarra, 2004), increased viability (Zeng, Shenkar, Song, & Lee, 2013), and improved performance (Berry, 2015;Fang, Wade, Delios, & Beamish, 2007;Manolopoulos, Dimitratos, Young, & Lioukas, 2009). For example, Berry (2015) found that the transfer of technical knowledge from parent to foreign subsidiary is value-creating when home country innovation dominates and the foreign country lags. ...
Knowledge transfer from a parent multinational to a foreign subsidiary does not automatically lead to innovation in a host country. To develop from a learner into an innovator, a foreign subsidiary must develop sufficient absorptive capacity. But too much reliance on knowledge transferred from a multinational could hinder local innovation by generating resource constraints and organizational rigidity. We thus predict an inverted U-shaped relationship between knowledge transfer from a parent multinational and local innovation. Moreover, factors which influence the transition from learner to innovator were investigated using data on patent applications by foreign subsidiaries of 75 large multinationals in China between 2008 and 2016. The number of research and development centers the subsidiary maintains was found to be influential, as is hiring a local executive as the subsidiary’s top manager. Greater institutional distance between the parent’s and the subsidiary’s economies was found to promote the transition, as do greater technological richness and more vigorous competition in the host country. The relationship between knowledge transfer from a parent multinational and local innovation is weaker, however, in older subsidiaries.
... Yet, competence-creating subsidiaries are unique in that they need to continually balance contradictory knowledge creation demands as they seek to expand their innovative capacity in co-evolving internal and external networks (Ryan et al., 2018). A commonly held assumption in this literature is that these subsidiaries can develop technological or innovative capabilities to enhance their product innovativeness and grow their competence-creating mandates (Andrews et al., 2022;Collinson and Wang, 2012;Figueiredo et al., 2020;Phene and Almeida, 2008;Song, 2014). In contrast, for competence-exploiting subsidiaries, though they may demonstrate dual embeddedness, they do it for different purposes, such as adapting the products from the HQ for local markets with limited innovative capacity or autonomy (Cantwell and Mudambi, 2005). ...
... Traditionally, the process through which MNEs innovated was linear and 'closed', with knowledge created and developed in the home market of the HQ and transferred to its global network of subsidiaries (Almeida et al., 2002;Roth and Morrison, 1990). More recently, this process is increasingly iterative and 'open', requiring MNEs to frequently access and utilise external sources of knowledge embedded in local markets (Nell et al., 2011;Phene and Almeida, 2008). Subsidiaries are generally expected to lead this complex search process locally, but often struggle to effectively tap into and acquire valuable knowledge due to entry barriers to local networks (Cantwell and Mudambi, 2011;Phene and Almeida, 2008;Song et al., 2011). ...
... More recently, this process is increasingly iterative and 'open', requiring MNEs to frequently access and utilise external sources of knowledge embedded in local markets (Nell et al., 2011;Phene and Almeida, 2008). Subsidiaries are generally expected to lead this complex search process locally, but often struggle to effectively tap into and acquire valuable knowledge due to entry barriers to local networks (Cantwell and Mudambi, 2011;Phene and Almeida, 2008;Song et al., 2011). Although local complexity in terms of varied cultures (Aoyama, 2009), heterogeneous knowledge (Sammarra and Biggiero, 2008), or intertwined networks (Owen-Smith and Powell, 2004) offer valuable opportunities to expand subsidiary innovativeness, they may also increase search costs for subsidiaries and stunt the growth of their mandates. ...
Developing dual embeddedness for subsidiaries with competence-creating mandates in multinational enterprises (MNE) presents contradictory knowledge demands in internal and external networks that hamper their innovative capacity. Sourcing knowledge externally and transferring this across the MNE is a delicate yet demanding balancing act, and scholars suggest that competence-creating subsidiaries achieve this by building firm-specific innovative capabilities. Although open innovation (OI) studies contend that intermediaries may be important in connecting subsidiaries locally, we have yet to fully understand if, and how, these intermediaries influence subsidiary dual embeddedness. Through an exploratory qualitative case study design, we find that an OI intermediary performs a critical dual knowledge role through internal weaving and external filtering in helping subsidiaries navigate the conflicting knowledge challenges of dual embeddedness. Specifically, we disentangle how performing this role requires the OI intermediary to habitually engage in a range of complementary activities that enhance intra-firm knowledge transfer both vertically and laterally, to and from the subsidiary, as well as expanding the capacity of the subsidiary to source knowledge externally in their local network. In spotlighting the intermediary-subsidiary interface, our findings generate greater integration between the literature in international business (IB) and open innovation, specifically subsidiary dual embeddedness, and OI intermediaries.
... Mediante a complexidade econômica global contemporânea, as multinacionais passaram a ser reconhecidas como entidades cada vez mais porosas e com limites ambíguos (Low;Ho, 2016). Dada a variedade de fontes externas e internas de conhecimento disponíveis e as capacidades das subsidiárias relacionadas à absorção e utilização do conhecimento (Guimon; Salazar-Elena, 2015;Almeida, 2008), o foco do conhecimento não se limita mais à rede multinacional, mas também ao país anfitrião e as ligações de conhecimento com outras entidades nessas redes Phene, 2004). ...
... Com base nisso, ao longo dos anos estudos buscaram analisar a natureza do conhecimento das MNEs associados à alavancagem de inovação Phene, 2004;Alnuaimi et al., 2012;Almeida, 2008), especialmente no que tange à teoria da Inovação Aberta, a Open Innovation (OI) (Naqshbandi;Jasimuddin, 2018;Pitelis;Teece, 2018;Guimon;Salazar-Elena, 2015;Vives et al., 2015;Vanhaverbeke;Du;Zedtwitz, 2013). ...
As discussões sobre a visão baseada no conhecimento das Multinational Enterprises (MNEs) têm trazido uma série de desafios gerenciais e organizacionais a respeito de como essas empresas estão inovando. A abordagem de Open Innovation (OI), ao tempo em que contribui para esclarecer tal contexto, dispõe de publicações seminais ainda ocultas quanto aos processos de gestão do conhecimento nas MNEs. Logo, este estudo objetivou analisar os insigths principais discutidos na literatura acerca da OI e de sua aplicabilidade mediante a visão baseada em conhecimento das MNEs, propondo um framework sobre a natureza dos componentes de conhecimento nesse contexto. As proposituras metodológicas se pautam em uma Revisão Integrativa inspirada em Torraco (2016) e Gegenfurther et al. (2009), com busca nas bases Scopus, Web Of Science Sage Journals, Wiley Online Library e Oxford Journals. Como resultados principais, o framework criado aponta a existência de componentes microambientais e macroambientais complementados por eixos de intersecção. No contexto micro, as subsidiárias são vistas como núcleo principal onde o processo de OI Interna é desenvolvido junto aos mecanismos como cultura, adaptação e agilidade organizacional, orientação estratégica para o conhecimento e financeiro. No macro, tem-se como núcleo os Sistemas Nacionais de OI e os mecanismos externos são as instituições acadêmicas, parcerias público-privada baseada no conhecimento, fornecedores e foco no usuário. Por fim, como eixos de interseção, têm-se a atuação da geração e proteção da inovação e dos aspectos políticos, sociais e ambientais, os quais podem desenvolver um papel complementar ou determinante no processo de OI nas MNEs.
... Almeida and Phene (2004) investigated the influence of external knowledge on semiconductor subunits between 1981-1992, and found that the differences in their innovation capability were a function of the sources of knowledge available to these subunits. In a later study (Phene & Almeida, 2008), focused on the same time period, these authors examined patented inventions. They show that the knowledge absorbed from the host country was useful for subunit innovation and that both sourcing and combinatorial capabilities had a significant influence on the scale and quality of the innovations. ...
... A given institutional environment might be specific to the particular subsidiary, but this could result in reduced bargaining power in the context of the corporate knowledge sharing process (Forsgren, Johanson, & Sharma, 2000;Geppert & Matten, 2006). Several scholars, including Almeida and Phene (2008) and Cantwell and Piscitello (2015), note the multiplicity of knowledge sources available to MNE subunits. Figure 1 provides a synthetic overview of the typical knowledge building structures identified in the MNE technology management literature. ...
This paper explores the temporal sequencing of the evolution of internal and external knowledge sourcing by Multinational Enterprises (MNEs) in the pharma sector, between 1976 and 2016, a period that saw the biotechnology sector coalesce and gather momentum. We find that MNEs' knowledge sourcing followed a pattern of dynamic substitution, in which internal knowledge search was replaced, over time, by local inter-organizational and international intra-MNE knowledge sourcing. It might be that the key to pharma MNEs' longevity is their ability to successfully internalize externally generated knowledge.
Keywords: Innovation; Multinationals; Patents; Time series; Pharmaceutical.
... This complexity is of specific interest when it comes to innovation, a key activity for the competitive advantage of firms (Ciabuschi et al., 2017). As innovation processes are largely context-specific (Andersson et al., 2007;Asakawa, 2001) and increasingly emanate from subsidiaries (Phene and Almeida, 2008;Strutzenberger and Ambos, 2014), HQ is expected to manage a complex system of interdependent subsidiaries in a differentiated network (Ghoshal and Bartlett, 1990). In such a system, subsidiaries involved in their local networks must compete for HQs resources and attention while also cooperating to fulfil overall organizational goals. ...
... The current international business literature puts an MNC's ability to innovate on par with its ability to manage the paradox of coopetitionnamely, the simultaneous quest for competitive and cooperative activities across geographically dispersed subsidiaries (Hong and Snell, 2015;Luo, 2005;Tippmann et al., 2018). Such a paradox exists as innovations within most contemporary MNCs originate not only from the parent organization but also, and increasingly, from innovation activities carried out at subsidiaries (Birkinshaw and Hood, 1998;Lagerström et al., 2019;Phene and Almeida, 2008;Reilly et al., 2023) as a result of their close relationships with local external actorsthat is, their external embeddedness (Dellestrand, 2011;Ferraris, 2014;Nell and Ambos, 2013). ...
Purpose
The purpose of this paper is to contribute to the discussion on how multinational company (MNC) headquarters (HQs) can manage the existing coopetition paradox to ensure innovation within the MNC. In contrast to the rather scarce previous research, the authors argue that HQ needs to solve the coopetition paradox under the sway of a parenting paradox. Hence, HQ faces a dual paradox.
Design/methodology/approach
Drawing on the literature on HQ’s role during MNCs’ innovation processes, this conceptual paper revisits the previously suggested HQ measures to enable coopetition among subsidiaries. By applying a sheer ignorance perspective, the authors contribute with a more nuanced understanding of the HQ’s role in innovation activities.
Findings
The article identifies four challenges as the HQ faces a parenting paradox that hinders its ability to solve the coopetition paradox: context specificity of subsidiaries’ innovation work, normative expectations of subsidiary managers, potential opportunistic behavior of HQ manager and HQ underestimation of needed resources. The article suggests that HQ needs to become more informed and preferably even embedded in the local innovation networks of its most important subsidiaries and that coopetition should not be managed solely on an HQ level.
Originality/value
Advocating a sheer ignorance perspective, the article pioneers in discussing the role that HQ plays in managing coopetition among subsidiaries in innovation activities.
... Subsidiary knowledge flow is internally dependent and is believed to have much more impact on external network capacity in which external knowledge flows, unlike internal knowledge flows, which give the firm a competitive edge (Robert M Grant, 1996;G. Wang, Liu, & Liu, 2019), and the ability to take independent performance-effect decision (Phene & Almeida, 2008). Studies showed that the knowledge source perception of recipients affects the knowledge flow process, and a higher degree of knowledge flow influences subsidiary efficiency (F. ...
... It is predicted that socialization's impact is greater in strengthening subsidiary and headquarters embeddedness and firm to provide a competitive edge (Robert M Grant, 1996;Singh & Hong, 2017). However, knowledge inflow may secure the embeddedness between the subsidiary and headquarters, and knowledge outflow possibly increases independent decisions to be more innovative further, and at the same time, the willingness of knowledge sharing phenomenon increases (Ferraris et al., 2018;Phene & Almeida, 2008). ...
This concept paper extends research on knowledge transfer based on the network and resource base. It claims smart firms can accelerate their stock of strategic knowledge by employing an efficient socialization process and gaining competitive advantages. Nonetheless, exploiting the knowledge in the corporate network is not straightforward. The transition of substantial strategic resources within a business must be acquired and used efficiently. Using the socialization process thus significantly reduces the barriers to best practices or strategic knowledge transfer. This paper presents a theoretical model explaining acquiring knowledge through socialization. Nevertheless, this paper demonstrates that without socialization mechanisms, subsidiary-headquarters embeddedness could adversely affect.
... To develop the argument, it is highlighted that most of the proposed mechanisms by which offshoring affects innovativeness, in particular in setting where resource exploring motives dominate (Meyer, 2015, Papanastassiou et al., 2020, relate to a firm's internal capabilities to innovate. This is most evident in the case for the access-to-knowledge argument stating that offshoring allows firms to access valuable knowledge abroad (Almeida & Phene, 2008;Bos et al., 2017;Zhang et al., 2019). However, it is also true for implied costs resulting from managerial complexity (Kedia & Mukhherjee, 2009;Baier et al., 2015) or intra-firm opportunism (Ceci & Prencipe, 2013), as both mechanisms directly address a firm's ability to structure effective managerial processes to allow for innovation. ...
... While we corroborate these findings for the innovation propensity, we additionally show that the picture may be considerably less favourable for market diffusion. This has important implications for management practice, because it means that businesses must strategically differentiate internationalisation motives aimed at increasing their innovation capabilities (Cuervo-Cazurra et al., 2015), for example, by driving innovation propensity by gaining access to untapped knowledge sources on the one hand (Almeida & Phene, 2008;O'Dwyer & O'Flynn, 2005;Felker, 2012;Bos et al., 2017) and, on the other hand, motives related to achieving greater market diffusion. In fact, it was shown that under certain circumstances, both these goals might be in conflict with each other. ...
Although the effects of captive offshoring on firm innovation have increasingly become a subject of study, the literature did so far not distinguish between the effects on introducing innovation as opposed to the effects their market diffusion. This distinction is important. By integrating insights from the innovation diffusion literature, we argue that the effects of captive offshoring on home base innovation are likely to differ between the generation and the diffusion phases. Using a matched employer-employee panel dataset drawn from consecutive waves of the Swedish Community Innovation Survey (CIS) between 2009 and 2015, it is shown that captive offshoring, as measured by the share of employees at foreign locations, has an inverted u-shape effect on innovation propensity (with positive effects for the average firm). In contrast, employment offshoring does not, on average, affect the rate of diffusion as measured by the share of turnover from new products. For firms with more novel product innovations, the effects are even negative.
... In this traditional view, foreign operations are considered mainly as agents that exploit advantages created by headquarters. More recent studies recognize that foreign operations can also create new knowledge for MNCs (Kuemmerle, 1999;Phene and Almeida, 2008;Cantwell and Mudambi, 2005;Berry, 2006 and, and that the geographic dispersion of R&D activities by MNCs creates the potential for firms to tap into and leverage diverse stocks of knowledge that exist in foreign countries through their foreign operations. At the same time, however, the majority of MNCs still centralize their knowledge and innovation activities in their home country (United Nations Conference on Trade and Development (UNCTAD), 2005; Berry, 2014 and 2018). ...
... As noted in the introduction, several studies in the international business literature have shown that intra-organizational relationships (Almeida, Song, and Grant, 2002;Phene and Almeida, 2008) can help organizations to share knowledge across their operations because knowledge sharing is facilitated by strong relationships (Hansen, 1999;Levin and Cross, 2004). Because the transfer of complex knowledge is a difficult task, the manufacturing outflows discussed in the first hypothesis are also likely to facilitate knowledge transfer across MNC operations, because of the strong connections and linkages that come from integrated manufacturing operations. ...
Research Summary
This paper examines the influence that intra-firm manufacturing linkages have on knowledge exploration outcomes in foreign subsidiaries. Although it is common to focus on the importance of keeping exploratory units separate from other firm operations to encourage a more diverse range of solutions, I explore the role that strong manufacturing outflows play in encouraging both the search for diverse knowledge and the diffusion of that knowledge across MNC operations. Empirical results from a comprehensive panel of US MNCs merged with the Derwent worldwide patent data reveal that foreign exploratory units with strong intra-firm manufacturing outflows are more likely to include new-to-the-MNC technology domains in their innovations and that these diverse innovations are more likely to diffuse out of units that have strong intra-firm manufacturing outflows.
Managerial Summary
Although foreign exploratory units can provide MNCs with opportunities to tap into diverse knowledge clusters to enhance the competitiveness of a firm, many studies report firm biases against new and unfamiliar knowledge that has been generated in foreign operations. This paper explores the role that manufacturing linkages play in providing visible signals of local operation competencies to the rest of an MNC, helping to overcome biases against new and unproven technology domains and enabling foreign exploratory units to pursue diverse, local knowledge inputs and specialization for the MNC. The empirical results confirm that foreign exploratory units that manufacture inputs and products for other MNC operations are more likely to use new-to-the-MNC technology domains in their innovations than foreign exploratory units without such linkages.
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... Some empirical articles, in the biotech context in particular, highlight the value of international alliances in increasing firms' repository of capabilities and technological knowledge (see, for example, Al-Laham and Souitaris 2008). In fact, because countries vary considerably in the nature of the innovation they perform and the innovation systems they develop (Kafouros, Buckley, and Clegg 2014;Miotti and Sachwald 2003), each country could accumulate unique knowledge and resources in specific scientific and technological areas (Phene and Almeida 2008). Since collaboration with competitors from various international areas can make innovation less dependent on the same national innovation system (Arranz and de Arroyabe 2008), such collaboration could ultimately provide access to and exploitation of unequally distributed knowledge for greater innovation performance. ...
... Once collaboration with coopetitors in a first area is mastered, innovation performance increases as the firm extends collaboration to competitors in additional international areas. This finding suggests that the problems of learning to manage coopetition and the international coordination required can easily be offset by the possibility of exploiting the knowledge and resources of partners located in very diverse international innovation systems (Phene and Almeida 2008;Rosenkopf and Almeida 2003), as well as by the learning effect experienced when increasing the international diversity of coopetitors. To date, the literature on coopetition has stressed the value of finding an ideal partner (see, e.g. ...
Collaboration with competitors – coopetition – enables access to valuable knowledge and resources for innovation and is seen as common practice in some knowledge-intensive sectors. Using longitudinal data from the Spanish biotechnology sector (a total of 1605 observations), this study examines the relationship between the international breadth of coopetition – the sum of the different international areas in which a firm’s coopetitors are located – and innovation performance. The results show that a firm must collaborate with competitors in more than a single geographical area to begin to experience the positive effect of international breadth on innovation performance. Furthermore, the results vary significantly in the presence of two different contingencies. Under conditions of lack of technological information, international breadth increases in value. When perceived market uncertainty is high, however, optimal results are achieved when the international breadth is limited to a single area.
... Our study contributes to this work by highlighting the negative and heterogeneous effects of temporal distance.Temporal distance can help explain why spatial distribution remains a relevant source of friction for some collaborative relationships, even in the age of low-cost digital communication technologies(Agrawal and Goldfarb 2008). It is especially important to document these effects given the rise in the global co-production of knowledge in MNCs(Phene and Almeida 2008, Alcácer and Zhao 2012, Choudhury 2017, Kerr and Kerr 2018, Branstetter et al. 2019, Bahar 2020 and the increase in cross-country scientific collaborations (e.g.,Freeman et al. 2014, Bahar et al. 2023, which critically depend on real-time communication between collaborators. ...
This paper examines the effects of temporal distance generated by time zone separation on communication in geographically distributed organizations. We build on prior research, which highlights time zone separation as a significant challenge, but argue that employees may time shift—move work-related communication to outside of regular business hours—to counteract temporal distance. We propose a theory in which employees’ tendency to time shift depends on the demands of their tasks and collaborative relationships and individuals’ ability to supply work outside of regular business hours. Analyzing communication-level data from 12,038 employees of a large multinational firm and using cities’ shifts to/from daylight saving time for identification, we find that temporal distance leads to sizable but smaller than expected reductions in volumes of rich, synchronous communication between employees. Consistent with our arguments, increased temporal distance significantly increases time shifting of work-related communication, especially among workers whose jobs are nonroutine and interactions in strong collaborative relationships. We further document that female employees and employees based in countries with stricter legal work hour limits engage in significantly less time-shifted communication. Our study improves understanding of a ubiquitous source of collaboration friction. It also sheds light on a potential source of inequities in workplace outcomes stemming from differences in individuals’ ability to work outside of regular business hours.
Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.17558 .
... To deal with the overdispersed dependent variable (mean = 3.28, SD = 20.76), we applied random effects negative binomial regression analysis, which allows the Gamma distribution to address the overdispersion (Hausman et al., 1984;Keil et al., 2008;Phene & Almeida, 2008). We mean-centered continuous variables in the interaction terms to prevent multicollinearity issues. ...
Existing research has underscored that the lack of supplier visibility poses a primary obstacle for multinational corporations (MNCs) to tackle human rights violations within their global supply chains (GSC). To address this challenge, MNCs are increasingly adopting the concept of “smart disclosure” to enhance supplier visibility. However, its conceptualization, operationalization, and efficacy in reducing human rights violations, remain unclear. Filling this gap, we first draw on research about attributes of digital technologies and information disclosure to define and operationalize smart disclosure in the context of GSC. We then draw on insights from institutional theory to theorize that smart disclosure – as a visibility-enhancing mechanism – enables MNCs to fulfill the role of “institutional carriers” and effectively impose institutional pressures on suppliers, fostering an environment where suppliers’ adherence to human rights standards is desired, supported, and rewarded. We further propose that this effect is stronger for suppliers with higher centrality in GSC networks and those in countries with greater civil society development. We found support for our arguments by analyzing 8527 observations at the MNC-supplier-year level in the global apparel industry from 2014 to 2020.
... There has been some research focusing on corporate behavior under environmental regulation. Some previous studies were carried out from the perspective of the influence of environmental protection policies, while others examined regulations whose behavior is positively correlated [6] or negatively correlated [7] under different environmental regulation situations and environmental control intensities, and media attention [8], community pressure, and consumer pressure [9] also play an active role; some studies mainly analyzed the impact of mandatory action and policies in improving or inhibiting enterprises' green transformation through quasi-natural experiments, including cleaner production policies [10], environmental technical standards [11], environmental taxes [12], mandatory disclosure of CSR policies [13], green credit policies, and so on [14][15][16]. In recent days, many scholars are focusing on corporate governance, arguing that the disclosures from the government, the society, as well as the environment itself show the influence on the green innovation [17,18], which is conveniently beneficial for transformation. ...
Behavior related to the overseas market has become an essential method for enterprises to acquire international resources. We aimed to do so using a difference-in-differences (DID) approach with the collected data of companies from China’s high-polluting industries in the A-share market between 2011 and 2019. The present papers aims to find the influence of the behavior towards the enterprises’ green transformation. The research results showed the following: (1) The behavior related to the overseas market not only increased enterprises’ environmental protection investment but also promoted enterprises’ green technology innovation, which promoted enterprises’ green transformation. (2) The mechanism analysis shows that corporate investment in protection of the environment increased mainly through the improved consciousness for the responsibility of environment, while corporates’ green technology innovation not only requires the increased awareness for environmental responsibility but also requires enterprises to learn advanced environmental protection methods and knowledge. (3) The role of the behavior related to the overseas market in promoting the green transformation of enterprises was more obvious in state-owned enterprises, and the enterprises with relatively better business performance were more enthusiastic about green technology innovation because of the motivation of advantage creation; thus, the promoting effect of the behavior related to the overseas market on the enterprises’ green transformation was more obvious. This paper provides empirical evidence and policy implications to help promote the green transformation of enterprises.
... Such an entity can be conceptualized as an interorganizational network that is embedded in an external network consisting of all other organizations such as customers, suppliers, regulators, and so on, with which the different units of the multinational must interact" (Ghoshal and Bartlett, 1990, p. 603). Specifically, subsidiaries may carry out specific activities to serve the entire MNC, such as producing a component or finished good with the support of their own R&D resources, or they may be R&D subsidiaries that develop innovations under a mandate from their headquarter by collaborating with it or other subsidiaries with specific capabilities (Ambos et al., 2011;De Marchi et al., 2022;Medcof, 2001;Phene and Almeida, 2008). ...
Over the past fifteen years, several studies have used the organizational theory of paradoxes to understand some typical organizational tensions, including that between global and local dimensions typically faced by multinational corporations. ese studies analyze paradoxical tensions at the organizational or even intra-organizational level, while the paradox lens has not yet been applied to study systems such as industrial districts. is paper attempts to do so by analyzing and comparing the local/global paradox in multinational corporations and industrial districts. For the latter, the analysis rests on some empirical studies conducted on Italian districts. Moreover, as the presence of multinationals in these districts has become stronger in the recent phase, an attempt has been made to understand if and how this phenomenon impacts the local/global tension at the district level.
... Given the importance of external knowledge search (Phene and Almeida, 2008;Monteiro and Birkinshaw, 2017;Laursen and Salter, 2014), and the need to access the best sources of knowledge, rival firms may find themselves simultaneously interacting with the same common partner, which establishes an indirect tie between a focal firm and its rivals. Such indirect ties are also likely to involve knowledge spillovers (Laursen and Salter, 2014) to rivals. ...
We argue that knowledge leakage may occur between rival firms through indirect ties, i.e., if rivals collaborate on R&D with a common partner, but that firms with an aggressive reputation for IP litigation may be able to restrict such knowledge spillovers. We argue that knowledge leakage is more prominent, and litigation reputation is less powerful, when the common partner is a university or public research institution adhering to the open science paradigm, compared with when the common partner is another (non-rival) firm. Patent similarity analysis among dyads of leading pharmaceutical firms provides support for these hypotheses.
... The most recent year for which data was available in the database at the time of writing was 2019. This study examines the number of patents registered each year as a proxy for innovation, based on previous research articles on economy-wide innovation (Cheung & Lin, 2004;Nadolny, 2010;Phene & Almeida, 2008). To derive efficient estimators, we follow various literature, e.g., Das & Parry (2011), Law & Azman-Saini (2012 and Zeneli (2014), to estimate this panel data set by the Generalized Method of Moments (GMM). ...
While most studies in the existing literature focused on the direct relationship between FDI and innovation, this paper further analyzes whether governance in developing economies mediates this relationship. A 25-year cross-sectional time-series data from 1995 to 2019 were collected from the World Bank Development Indicators and the Worldwide Governance Indicators (2019) databases. This panel dataset was estimated using a system GMM. A novel finding emerged from the investigation: the positive impact of FDI on domestic innovation is mediated by two governance variables: voice and accountability and regulatory quality. This suggests that the impact of FDI on domestic innovation is strengthened when combined with the effects of mediating variables. The results imply that, in the absence of high governance quality, the traditional policy prescription—such as increasing government spending on R&D and education—may not be adequate to promote FDI's innovation spillovers. The findings suggest that governments in developing nations should work to improve the voice & accountability and regulatory quality indicators by ensuring that citizens take part in the decision-making to promote the flow of knowledge and information that fosters innovation. This will help to strengthen the influence of FDI on domestic innovations. In addition, the governments should foster an environment that is welcoming to foreign investment and implement the appropriate regulatory reforms, such as those that strengthen competition protection, property rights protection, and transparency in the operations of the organizations implementing policies.
... The most recent year for which data was available in the database at the time of writing was 2019. This study examines the number of patents registered each year as a proxy for innovation, based on previous research articles on economy-wide innovation (Cheung & Lin, 2004;Nadolny, 2010;Phene & Almeida, 2008). ...
While most studies in the available body of literature had focused on the direct relationship between FDI and innovation, this paper goes a step further to analyse whether governance in developing economies mediates this relationship. A 25 year cross-sectional time-series data was collected from the World Bank Development Indicators and the Worldwide Governance Indicators (2019) databases. This data spans the years 1995 to 2019. This panel dataset was estimated using a system GMM. The results of the study show that regulatory quality and voice and accountability are the two governance indicators that mediate the relationship between FDI and innovations. The results imply that, in the absence of high governance quality, the traditional policy prescription-such as increasing government spending on research and development (R&D), and education-may not be adequate to promote FDI's innovation spillovers. The findings suggest that governments in developing nations should work to improve the voice and accountability and regulatory quality indicators by ensuring that citizens participate in decision-making to promote the flow of knowledge and information that fosters innovation. This will help to strengthen the influence of FDI on domestic innovations. In addition, the governments should foster an environment that is welcoming to foreign investment and implement the appropriate regulatory reforms, such as those that strengthen competition protection, property rights protection, and transparency in the operations of the organisations' implementing policies.
... Furthermore, the role of geographically dispersed subsidiaries (see, e.g. Phene and Almeida, 2008;Strutzenberger and Ambos, 2014) must also be taken into consideration when discussing knowledge development, as headquarters (HQ) is not the only source of knowledge. Valuable knowledge also resides in the foreign subsidiaries. ...
In this paper, the authors contribute with insights on competition and cooperation in multinational enterprises with a focus on challenges related to these governance mechanisms in a knowledge development context. The mechanisms have been widely recognized as important for developing knowledge, but their contradicting nature implies considerable complexity when it comes to governance. The complexity is further increased as a result of the headquarters-subsidiary relationships. The aim of this paper is to contribute with theoretical and empirical insights on these aspects by focusing on the research question: How and why does competition and cooperation in an MNE emerge over time?
Design/methodology/approach
A manufacturing MNE with headquarters (HQ) in Sweden is analyzed on both HQ and subsidiary levels. Interviews with 24 managers in Sweden and India have been performed.
Findings
The study illustrates that competition and cooperation are integral aspects in HQ-subsidiary relationships. The results show that both competition and cooperation depend on environmental, organizational and object-related conditions and that these conditions influence the dynamics of the interplay. The importance of including a subsidiary perspective and the interdependencies in an MNE setting are emphasized.
Originality/value
The authors add to the discussion on the interplay between competition and cooperation as they play an important role for knowledge development in MNEs. The results indicate that they do not take place simultaneously, and therefore, the authors suggest that the dynamic can be better understood by focusing on the interplay and analyze the concepts separately.
... In this regime, the most powerful and important subsidiaries within the MNE are the ones that can source, absorb and transform knowledge for valuable product innovation. They achieve this through a strategy process that seeks the upgrading of their knowledge capabilities to increasingly higher-order ones to increase their level of importance within the MNE through the creation of valuable product innovation (Asakawa, 2001;Cantwell and Mudambi, 2005;Phene and Almeida, 2008). ...
Purpose
The authors’ contention in this paper is that the expression of subsidiary strategy in IB literature has become fragmented and incomplete. Therefore, this study aims to propose a rethink on how IB scholarship approaches the important issue of subsidiary strategy by holistically examining the discrete and integrated set of activities, choices and decisions that constitute the subsidiary strategy process for, in this context, assuming a competence-creating role within the multinational enterprise (MNE).
Design/methodology/approach
A conceptual model is designed to illustrate the holistic process of subsidiary strategy from assigned to assumed role and how a subsidiary can navigate a pathway to elevated performance and survival.
Findings
The paper identifies the key integrated elements that constitute a holistic strategic process that can enhance a subsidiary’s standing within the MNE and maximise its survival prospects.
Research limitations/implications
Particular focus is placed on subsidiaries that strategise to advance their internal corporate role to competence creator via upgraded knowledge capabilities.
Originality/value
This paper offers a roadmap for IB scholars to contribute to a future discourse around the subsidiary strategy process for assuming a competence-creating role.
... Green Patents calculated as the number of RE patents applied by the investors in a given year (Amendolagine et al., 2018;Stiebale, 2016); Forward Citations measuring the quality of patents are the average numbers of forward citations to the green patents applied by the investors each year (Perri & Andersson, 2014;Phene & Almeida, 2008). ...
... Global competition and new markets, shorter product life cycles, the increased worldwide dispersion of technological capabilities, and the availability of scientists and engineers outside industrialized countries have provided an impetus for an increased global orientation of R&D. The geographic dispersion of MNEs' R&D activities to facilitate access to knowledge hubs with specialized expertise (Frost, 2001;Phene & Almeida, 2008;Belderbos et al., 2013) and increase the breadth of technological search (Lahiri, 2010), allowing for knowledge recombination (Castellani & Zanfei, 2006), and the formation of global knowledge networks of MNEs (Bathelt & Li, 2020). Despite these benefits, a major portion of corporate R&D is still conducted in the home countries of the MNEs (Belderbos et al., 2013), due to the potential foregone advantages of scale and scope economies, concerns about intellectual property protection, increased coordination costs, and difficulties related to knowledge integration and transfer (Belderbos et al., 2021;Belderbos & Castellani, 2023). ...
... To reach international markets, companies mobilize available knowledge while simultaneously making extra efforts to acquiring/accessing/absorbing the new knowledge and dynamic resources that favour their positions in their core markets (Filatotchev et al., 2009;Gold et al., 2001;Grant, 1996b;Knight & Cavusgil, 2004;Phene & Almeida, 2008). ...
The phenomenon of international entrepreneurship (IE) gained prominence in the mid-1990s, greatly stimulated by globalization, digitization of the economy and the creation of institutional conditions favouring entrepreneurs. When combined and allied to various intangible assets developed by firms, these factors stimulated the identification and exploitation of business opportunities on a global scale, giving rise to the academic field of IE. Despite the apparent maturity of this field of study, only in the last decade has the academic community increased the number of publications, diversifying them, introducing new sub-topics and making it a field that should be studied and addressed from various lenses. Therefore, this thesis aims to explore various facets of IE, contributing to its consolidation and progress, approaching the topic from a multi-level perspective: macro, meso and micro. This is done over seven chapters. The first chapter is the general introduction of the thesis, describing the problem and the study context, the aims, the research design and methodology, the contribution and other aspects. The second chapter presents a Systematic Literature Review (SLR), entitled “International Entrepreneurship: a systematic review and future research agenda”. This chapter discusses the state-of-the-art of IE, reviewing the main studies that contributed to developing the area. To do so, the Web of Science (WoS) and content analysis techniques were used to give a holistic perspective of this field of study and identify new topics introduced in recent years and lines of convergence. IE was found to be concentrated fundamentally in four thematic groups: i) institutional environments, ii) drivers and process of internationalization, iii) international business opportunities and networks, and iv) entrepreneurs’ characteristics and motivations. An integrative framework was also developed to access, albeit in a simplified way, the status of IE research and understand how the diverse themes are inter-related. This SLR was determinant in advancing various topics for future lines of research, detailed by the thematic group, providing the structure of the chapters in this thesis. Therefore, the topics of the chapters forming the thesis were based on a future line of research for each of the four thematic groups/clusters detailed below. The third chapter, “Business environment reforms’ effect on the entrepreneurial activities of high-income economies: panel of the evidence” (cluster 1) deals with the activities. Specifically, the intention is to examine whether the reforms carried out by institutions in high-income economies, aiming to benefit the business environment, in fact led to higher rates of entrepreneurship. To this end, a longitudinal study was carried out using panel data for the period from 2010 to 2019, based on two secondary databases, namely ten indicators proposed by Doing Business (World Bank) and Total Early-stage Entrepreneurial Activity (TEA), by Global Entrepreneurship Monitor (GEM). The results showed that only the reforms carried out in three indicators of Doing Business – Dealing with Construction, Registering Property and Enforcing Contracts, affect TEA positively. The remaining indicators, Starting a Business, Getting Credit, Protecting Minority Investors and Paying Taxes, showed no significance, while the indicators of Getting Electricity, Trading Across Borders and Resolving Insolvency had a negative impact on TEA. This study points out important considerations for international and local entrepreneurs, as well as policy-makers, warning of the ineffectiveness of some measures introduced and the need to reconsider reforms. The fourth and fifth chapters focus on organisational (meso) dimensions considered relevant to develop intangible, strategic assets, giving Small and Medium-sized Enterprises (SMEs) early access to international markets, but also aiming for good levels of competitiveness and performance. The fourth chapter is entitled “International Entrepreneurial Culture: capturing differences between Born and non-Born Globals” (cluster 2). This chapter addresses International Entrepreneurial Culture (IEC), still a little-explored topic in terms of research. In particular, it seeks to capture differences in five dimensions of IEC (International Entrepreneurial Orientation [IEO], International Market Orientation, International Motivation, International Learning Orientation, International Networking Orientation) between born globals and non-born globals (late exporters). Primary data were collected from applying a questionnaire to 168 internationalized SMEs in Portugal, using MANOVA as the statistical technique to determine whether these groups present statistically significant differences in the dimensions of IEC. As results, this chapter revealed that born globals show differences from their non-BG counterparts in terms of autonomy, international motivation and orientation to the international market. Theoretical and practical implications are also presented for company managers aiming for early internationalization. The fifth chapter is entitled “The role of International Entrepreneurial Orientation for Early Internationalizing Firms: Moderating effects of International Networking” (cluster 3). This chapter sought to analyse the moderating effect of International Networking Orientation (INO) on the relations between the dimensions of IEO (risk, innovation, pro-activeness, competitive aggressiveness and autonomy) and early internationalization. To this end, a questionnaire was applied to a sample of 171 Portuguese SMEs, of which 96 are Early-internationalizing Firms (EIFs), and 76 are late exporters. The results showed that innovation, autonomy and competitive aggressiveness are variables at the origin of early internationalization. In addition, INO with competitors was found to present a positive interaction in the relation between pro-activeness and EIFs and a negative relation between these firms and risk-assumption. These results can help firms to configure their intangible assets in early internationalization processes. The sixth chapter deals with IE at a micro level, analysing the role of entrepreneurs and managers’ knowledge and dynamic capacities in International Business (IB), regarding the possible returns arising from international experience. It is entitled: “Knowledge and capabilities: what are their roles in SMEs’ international business?” (cluster 4). This study adopted a qualitative approach through ten semi-structured interviews with entrepreneurs in various industries. The results showed that knowledge and dynamic capabilities are determinants for the development of international activities. Furthermore, a presence in international markets was determinant for acquiring new knowledge and exploiting the new learning capabilities developed, which are essential to operate in domestic and other international markets. The thesis has one final chapter, which discusses the general conclusions, contributions and future lines of research. As contributions, the thesis combines a set of studies highlighting that IE, although a complex phenomenon, is increasingly present for SMEs with limited resources. It is suggested that these firms should develop and implement, at the organisational and individual level, a set of intangible strategic assets as a way to reach international markets at an early stage and quickly, aligning them with various typologies of knowledge and dynamic capabilities. Entrepreneurs are also informed that the conditions for successful international ventures depend on a favourable business environment provided by government institutions, marked by regular and effective reforms. To summarise, this thesis advances the perspective that IE is stimulated when organisations’ internal and external factors interact and complement each other, providing various orientations for policymakers, organisations, entrepreneurs and academics.
... There are two types knowledge collaboration benefits that knowledge chain members can get from knowledge sharing: collaboration effect and multiplication effect. The collaboration effect enables members can create more knowledge than the sum of individual knowledge by sharing heterogeneous and complementary knowledge (Phene and Almeida 2008;Wang and Noe 2010). The multiplier effect, also known as leverage effect, means that knowledge demanders improve their competitiveness through knowledge suppliers' knowledge. ...
Taking knowledge-advantage firms as masters and knowledge-disadvantage firms as apprentices in the knowledge chain, we construct a game model of knowledge collaboration strategy to explore how the knowledge potential difference affects the strategic choices of member firms. The theoretical results are verified by the case studies of HLT and KEDA and the simulation examples of the model. The research results show three points. First, the master may not be unemployed after sharing knowledge with the apprentice. Second, the master's optimal collaboration strategy is to actively share his own knowledge, while the apprentice's strategy is to absorb the knowledge of the master's knowledge under the influence of incentive and subsidy measures. Finally, the knowledge collaboration benefit of the knowledge chain can reach the Pareto optimum if the benefit distribution coefficient of the knowledge collaboration is controlled within a reasonable range. Specific countermeasures are proposed to help balance the distribution of knowledge collaboration benefits between the master and the apprentice.
... In which case being foreign avails such firms better opportunities to attract better-skilled workers and bear the enormous cost associated with innovation. It also suffices noting that such firms are also often knitted tightly with the lead firm through vertical integration, in which case they become knowledge-generating hubs and are more likely to generate innovations that are novel in and outside their local milieu (Ambos et al., 2006;Phene & Almeida, 2008;Marin & Bell, 2010). ...
Firm-level innovation in developing countries is mostly incremental and depends on non-R&D activities. Integration into global production networks is one such activity that could help firms in developing countries to innovate. This is particularly the case since new technologies and foreign knowledge diffuse through inter-firm linkages. This paper examines the relationship between Global Value Chain (GVC) participation and firm innovative capabilities in Africa, utilizing data from the World Bank’s Enterprise Survey (WBES). Addressing endogeneity arising from reverse causality, our results show that firms in Africa that engage in GVC activities have a higher likelihood of introducing innovative products onto markets. The results are robust to alternative definition of GVC and innovation variables and identification strategy. Our findings shed light on the mechanisms that make innovation possible within GVC firms, and the implications it has for trade, regional integration, and innovation in Africa.
... This in turn indicates the importance of obtaining more direct evidence on the nature and scale of the knowledge flows between affiliates and their parent companies. Semi-direct data on knowledge flows such as patent citations have helped our understanding of the process of technology transfer (Almeida 1996;Singh 2007;Phene and Almeida 2008). While this represents a significant step forward in this area, such analysis is still reliant on inferring intra-firm international technology transfer from links between knowledge stocks and patent citations, and ultimately employs a data source that is not gathered explicitly for the purpose to which it is being put. ...
... Absorptive capacity (ACAP). In line with the Oslo Manual and following previous studies (Diez-Vidal and Fern andez-Olmos, 2017), we consider five items that describe the innovation capabilities linked to a company's absorptive capacity: Many previous studies have demonstrated that these items impact the firm's ability to acquire, assimilate, combine and effectively apply new external knowledge to develop new capabilities and engage in innovation (Cohen and Levinthal, 1990;Phene and Almeida, 2008; Camis on and For es, 2010). ...
Purpose
The purpose of this study is to identify how firms' sustainability performance is affected by external knowledge sources and absorptive capacity, accounting for the influence of being located in a science and technology park (STP).
Design/methodology/approach
Drawing on data from the Spanish Technological Innovation Panel, the authors estimate the determinants of sustainability performance using fixed effects multiple linear regression models with robust standard errors. The analysis covers the period 2009–2016, with a total panel of 8,874 companies and a total sample of 47,870 observations.
Findings
This study highlights the heterogeneity in on-park firms’ sustainability performance, which can be explained by the different capacities of these firms when it comes to embedding themselves in STP networks and processes and effectively absorbing the knowledge from the many knowledge sources that may be on offer in the park.
Originality/value
This paper contributes to the literature by examining the influence of external sources of knowledge and absorptive capacity, and the relationship between them, on sustainability performance. This study approaches sustainability performance as an aggregate measure of firms’ competitiveness and potential for long-term survival from the triple bottom line perspective. In addition, this study examines the effect that location in an STP can have on business sustainability performance and, more specifically, the mediating effect that knowledge sources and absorptive capacity can exert on this relationship.
... In particular, when firms start to expand the business across borders, knowledge flows within multinational companies (MNCs) become extremely valuable (Crespo et al., 2014;Inkinen, 2016). Past research has pointed out that knowledge transfer within MNCs can enhance innovation (Phene & Almeida, 2008;Tsai, 2002), improve subsidiary performance (Fang et al., 2007), and facilitate the implementation of global strategies (Ambos et al., 2006). While it is common for HQ to transfer knowledge to foreign subsidiaries, more reverse knowledge transfer (RKT: from foreign subsidiary to HQ) exists and expatriates play the major role in the RKT process (Caligiuri & Bonache, 2016). ...
By analyzing the best practices in Japan and Finland, this study addresses the measures taken in those countries for enhancing the inclusion of disabled people in working life. The study reviews the existing research on diversity, inclusion, and decent work as well as the support programs for people with disabilities, and compares Japan and Finland in supporting the employment and human resource development (HRD) of disabled people from the perspective of diversity, inclusion, and decent work. The study considers the cases of the Accessibility Consortium of Enterprises (ACE) from Japan and the “Leap to Labour!” and “ILONA” projects of social firms from Finland in supporting the employment and HRD of disabled people. The conclusion section of the study highlights both the future challenges and opportunities in this area and provides a list of the policy implications.
... Widespread literature is present which has studied the relationship between knowledge transfer and innovation performance in multi-national firms (Chang-feng and Peng, 2009;Phene and Almeida, 2008). Innovation capability of any business firm is determined by its ability to generate, transfer and apply knowledge. ...
Purpose-The purpose of this paper is to trace the evolution of dynamic capabilities theory in the primal theories of economics and strategic management. Then a comprehensive research framework is proposed to grapple with the dynamics of the contemporary global markets, incorporating the quintessential elements of the theory, i.e. absorptive capability, innovation capability and adoptive capability. Design/methodology/approach-The paper is conceptual in nature. It tries to review various economic systems of the world since 1770s till the present era. It also evaluates various theories of international business against dynamic capabilities theory and thus proposes various propositions for future empirical testing. Findings-The study has delineated various theories tracing in them the roots of dynamic capabilities. Capitalism, communism and socialism is explained to reach the present state of world economy. Various theories such as the theory of creative destruction, transaction-cost approach, resource-based view and knowledge-based view of the firm have been elaborated to identify their features and shortcomings. Finally, the contemporary theory of dynamic capabilities has been elucidated to integrate the shortcomings of the previous theories. A research framework has also been proposed to overcome the recent criticism of the dynamic capabilities theory of having under-specified constructs. Originality/value-Very few studies have elaborated various economic systems and theories to trace the evolution of dynamic capabilities theory. Thus, this study is original in nature and the proposed research model is also novel which induces further empirical evidence as proposed by the authors.
... In recent decades, Knowledge Management (KM) has become a popular discipline (Darroch, 2005) due to the importance that it plays in the international business landscape (Shams et al., 2019) and its ability to influence companies' propensity to innovate through knowledge (Phene & Almeida, 2008;Ferraris et al., 2021). According to the knowledge-based view, knowledge is an essential strategic resource to generate new value creation and competitive advantage (Grant, 1996). ...
This study analyses the impact of international experience on firm economic performance from the organisational learning approach. Moreover, the study explores the double mediating effect of green knowledge and eco-innovation in the relationship between international experience and economic performance. Using data from 120 Spanish internationalised agri-food companies, a structural equation model is proposed. Findings reveal that international experience does not have a direct and immediate effect on global economic performance. However, international experience positively influences eco-innovation in internationalised firms, which are exposed to more demanding environmental pressures and are able to assume this risker type of innovation with greater guarantees. Eco-innovation is more likely when the company increases its green knowledge stock, considering that the acquisition of green knowledge is also favoured by international experience. According to these results, it can be concluded that companies which do not use their international experience to acquire new knowledge and to introduce innovations, have more difficulty in improving their overall performance.
... Furthermore, the role of geographically dispersed subsidiaries (see, e.g. Phene and Almeida, 2008;Strutzenberger and Ambos, 2014) must also be taken into consideration when discussing knowledge development, as headquarters (HQ) is not the only source of knowledge. Valuable knowledge also resides in the foreign subsidiaries. ...
Purpose
In this paper, the authors contribute with insights on competition and cooperation in multinational enterprises with a focus on challenges related to these governance mechanisms in a knowledge development context. The mechanisms have been widely recognized as important for developing knowledge, but their contradicting nature implies considerable complexity when it comes to governance. The complexity is further increased as a result of the headquarters-subsidiary relationships. The aim of this paper is to contribute with theoretical and empirical insights on these aspects by focusing on the research question: How and why does competition and cooperation in an MNE emerge over time?
Design/methodology/approach
A manufacturing MNE with headquarters (HQ) in Sweden is analyzed on both HQ and subsidiary levels. Interviews with 24 managers in Sweden and India have been performed.
Findings
The study illustrates that competition and cooperation are integral aspects in HQ-subsidiary relationships. The results show that both competition and cooperation depend on environmental, organizational and object-related conditions and that these conditions influence the dynamics of the interplay. The importance of including a subsidiary perspective and the interdependencies in an MNE setting are emphasized.
Originality/value
The authors add to the discussion on the interplay between competition and cooperation as they play an important role for knowledge development in MNEs. The results indicate that they do not take place simultaneously, and therefore, the authors suggest that the dynamic can be better understood by focusing on the interplay and analyze the concepts separately.
Technology transfer in international collaborations is challenging but can bring benefits to both local and foreign‐owned firms in emerging economies. In this paper we focus on conditions for potential technology transfer in emerging economies. We develop a configurational theoretical framework and empirically operationalize it using qualitative comparative analysis. Building on differences in absorptive capacity between these two kinds of firms and relying on data from the construction industry in Ghana, we develop a process model of technology transfer in emerging economies. Our model shows that technology transfer in local and foreign firms can be achieved through different combinations of human resource development and knowledge management, as well as international collaborations and networks. The model also explicates mechanisms leading to potential technology transfer. Based on the findings and the process model, the study makes several contributions to the absorptive capacity and technology transfer literature in emerging economies by shedding light on the underlying processes that foster a firm's ability to absorb technology in international collaborations.
Purpose
This paper aims to conduct an analysis of the influence of both the breadth and depth of outward foreign direct investment (OFDI) undertaken by Chinese high-tech listed companies during the period spanning 2010–2019. The data pertaining to these companies was used as a research sample to analyze the effects of OFDI on radical innovation performance.
Design/methodology/approach
Hierarchical regression analysis was used to test the proposed models, using survey data collected from 442 high-tech companies in China.
Findings
The findings of this study indicate a curvilinear (i.e. U-shaped) relationship between the breadth/depth of OFDI and radical innovation performance. Additional analysis reveals that OFDI plays a role in facilitating innovation breakthroughs by enhancing the internal dynamic capabilities of companies. Moreover, it is observed that a well-established institutional environment in the host country of investment can positively moderate the relationship between OFDI breadth/depth and radical innovation performance.
Originality/value
This study proffers a significant contribution to the understanding of the crucial role played by OFDI from emerging economy companies in enhancing radical innovation performance. Moreover, it offers theoretical guidance for multinational companies aiming to foster innovation breakthroughs.
In this article, we highlight an alternate model of innovation for multinational corporations from advanced markets targeting emerging markets. This model, labeled the intermediate model, is characterized by the nature of the targeted markets as well as the development process. We show that, conversely to the glocal and local models, the intermediate model mixes corporate and local resources from the early stage of the innovation process, during the development and, until the deployment and commercialization of the innovation in the successive emerging markets. We address these questions through the case of a French telco operator targeting Africa and the Middle East.
We analyze the determinants of firm-based inventors’ collaborations with universities abroad, comparing them with collaborations with national universities. We propose a micro-founded theoretical framework that introduces the role of personal linkages and global organizational pipelines as drivers of international academic collaborations, and we empirically investigate collaborations with national and international universities in a sample of inventors in Italy. We find that in general international collaborations depend positively on inventors working for multinational enterprises (MNEs). Instead for collaborations with national universities, the personal local linkages of the inventors play a large role. However, we also find that for collaborations with very distant universities abroad, such as US ones, working for an MNE is less crucial and the personal linkages of inventors become more important. In this case being an inventor with a network of foreign colleagues and with greater acquaintance with the norms of open science facilitates the interaction. This applies also to inventors who work for MNEs. The results point to a hybrid model of global linkages in the case of collaborations between firms and universities, in which both the personal international linkages of the inventors and the global organizational pipelines of MNEs play an important role.
Purpose of the study: This study aims to examine the key drivers for the effect of selected commodity ratios and the exchange rate that haveinfluenced the return on investment of agriculture and animal feed companies in Indonesia. Methodology: This study uses the GARCH methodology. Using GARCH and IGARCH for monthly and daily data from 2014 until 2021, we also have a different timeline between before COVID and after COVID-19. Main Findings: According to the results of the study, there are generally significant effects of commodity prices and exchange rates on stock return, as for the COVID timeline, there are several companies that have been affected. Research limitation: There is a problem with finding the parameter estimates for the error distribution both in GED and Student’s t when finding the best GARCH (1,1) model. The best model finding may not present the best probability due to distributions that affect the tail distribution. Novelty/Originality of the study: This study suggests to look for more details on the effect of commodity ratio in daily data and monthly data, as thetransaction is mostly using USD rate with IDR rate. There are great possibilities that their movement will impact the return on the investment and people who like to invest in a certain company can use this study as a reference.
Boundary spanning is the process of search for knowledge beyond existing boundaries such as organizational, technological, temporal or geographic. This article summarizes the theories of search in strategy and the knowledge recombination processes. We explore the roots of the construct by connecting it to existing frameworks for exploration versus exploitation. We then discuss the empirical usage of boundary spanning in past research. We conclude with the model of four types of exploration based on boundary dichotomies from organizational and technological search.
For the sustainable development of multinational companies, one of the crucial issues for headquarters (HQ) is to value and integrate the knowledge acquired by expatriates during their international assignments. This chapter aims to investigate the Reverse Knowledge Transfer (RKT) of diversity management practices in multinational companies (MNCs). More specifically, we explore the factors that may hinder expatriates’ willingness and engagement in the RKT. With the data collected in French subsidiaries in Singapore, by capturing how French expatriates perceive and practice diversity management while working in the French subsidiaries in Singapore, and what organizational supports have been put in place to ease the RKT, the findings reveal the expatriates’ silence and the reasons behind the weak transfer of their diversity management knowledge to HQ. The results highlight the importance for both HQ and expatriates to pay attention to the reverse transfer of diversity management knowledge. Concrete policies and practices that foster RKT are outlined at the end of the chapter.
Dearing report by Higher Education Funding Council for England, 2006, suggested that in the times of intensified global competition, high- level skills and knowledge would become pertinent and indispensable for the country’s economic success. The SECI model of knowledge conversion given by Nonaka and his colleagues, is extensively used across industries and nations to explore the knowledge creation dimension of knowledge management. Areas of KM such as creation of novel knowledge and knowledge as intellectual capital require a lot of work and consideration from both theoretical as well as applied perspectives. With this in mind, the present study seeks to explore the social enablers or success factors contributing to knowledge creation in the higher education institutions in India. The findings suggest that the social success factors in the study significantly impact the process of knowledge creation. Moreover, different social enablers contribute significantly to different modes of the process of conversion and creation of new knowledge. The pragmatic implication of the present study could guide institutions to assess the prevalence of knowledge creation practices and success factors to be emphasized more to increase knowledge conversion and creation with respect to their organization.
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the Jinn-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical-biotechnology RED alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. (C) 1998 John Wiley & Sons, Ltd.
This paper examines interfirm knowledge transfers within strategic alliances. Using a new measure of changes in alliance partners' technological capabilities, based on the citation patterns of their patent portfolios, we analyze changes in the extent to which partner firms' technological resources ‘overlap’ as a result of alliance participation. This measure allows us to test hypotheses from the literature on interfirm knowledge transfer in alliances, with interesting results: we find support for some elements of this ‘received wisdom’—equity arrangements promote greater knowledge transfer, and ‘absorptive capacity’ helps explain the extent of technological capability transfer, at least in some alliances. But the results also suggest limits to the ‘capabilities acquisition’ view of strategic alliances. Consistent with the argument that alliance activity can promote increased specialization, we find that the capabilities of partner firms become more divergent in a substantial subset of alliances.
In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advan- tage is the relationship between firms and identify four potential sources of interor- ganizational competitive advantage: (1) relation-specific assets, (2) knowledge- sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view. Scholars in the strategy field are concerned fundamentally with explaining differential firm performance (Rumelt, Schendel, & Teece, 1991). As strategy scholars have searched for sources of competitive advantage, two prominent views have emerged regarding the sources of super- normal returns. The first-the industry structure view-associated with Porter (1980), suggests that supernormal returns are primarily a func- tion of a firm's membership in an industry with favorable structural characteristics (e.g., rela- tive bargaining power, barriers to entry, and so on). Consequently, many researchers have fo- cused on the industry as the relevant unit of analysis. The second view-the resource-based view (RBV) of the firm-argues that differential firm performance is fundamentally due to firm heterogeneity rather than industry structure (Barney, 1991; Rumelt, 1984, 1991; Wernerfelt, 1984). Firms that are able to accumulate re- sources and capabilities that are rare, valuable, nonsubstitutable, and difficult to imitate will achieve a competitive advantage over compet-
Unstable market conditions caused by innovation and increasing intensity and diversity of competition have resulted in organizational capabilities rather than served markets becoming the primary basis upon which firms establish their long-term strategies. If the strategically most important resource of the firm is knowledge, and if knowledge resides in specialized form among individual organizational members, then the essence of organizational capability is the integration of individuals' specialized knowledge.
This paper develops a knowledge-based theory of organizational capability and draws upon research into competitive dynamics, the resource-based view of the firm, organizational capabilities, and organizational learning. Central to the theory is analysis of the mechanisms through which knowledge is integrated within firms in order to create capability. The theory is used to explore firms' potential for establishing competitive advantage in dynamic market settings, including the role of firm networks under conditions of unstable linkages between knowledge inputs and product outputs. The analysis points to the difficulties in creating the “dynamic” and “flexible-response capabilities” which have been deemed critical to success in hypercompetitive markets.
This paper advances the understanding of absorptive capacity for assimilating new knowledge as a mediating variable of organization adaptation. Many scholars suggest a firm's absorptive capacity plays a key role in the process of coevolution (Lewin et al., this issue). So far, most publications, in following Cohen and Levinthal (1990), have considered the level of prior related knowledge as the determinant of absorptive capacity. We suggest, however, that two specific organizational determinants of absorptive capacity should also be considered: organization forms and combinative capabilities. We will show how these organizational determinants influence the level of absorptive capacity, ceteris paribus the level of prior related knowledge. Subsequently, we will develop st framework in which absorptive capacity is related to both micro- and macro-coevolutionary effects. This framework offers an explanation of how knowledge environments coevolve with the emergence of organization forms and combinative capabilities that are suitable for absorbing knowledge. We will illustrate the framework by discussing two longitudinal case studies of traditional publishing firms moving into the turbulent knowledge environment of an emerging multimedia industrial complex.
Virtually all research on strategic control within multinational corpo- rations (MINCs) has focused on macro differences in control systems and processes across entire MNCs. Taking a less macro (i.e., subsid- iary-specific contingency perspective), this article examines how, within the same corporation, the nature of corporate control might also vary systematically across subsidiaries. Differences in subsidi- ary contexts are analyzed along two dimensions: (a) the extent to which the subsidiary is a user of knowledge from the rest of the cor- poration and (b) the extent to which the subsidiary is a provider of such knowledge to the rest of the corporation.
We conduct a detailed analysis of 289 absorptive capacity papers from 14 journals to assess how the construct has been utilized, examine the key papers in the field, and identify the substantive contributions to the broader literature using a thematic analysis. We argue that research in this area is fundamentally driven by five critical assumptions that we conclude have led to its reification and that this reification has led to stifling of research in this area. To address this, we propose a model of absorptive capacity processes, antecedents, and outcomes.
How should we understand why firms exist? A prevailing view has been that they serve to keep in check the transaction costs arising from the self-interested motivations of individuals. We develop in this article the argument that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organization. This knowledge consists of information (e.g., who knows what) and of know-how (e.g., how to organize a research team). What is central to our argument is that knowledge is held by individuals, but is also expressed in regularities by which members cooperate in a social community (i.e., group, organization, or network). If knowledge is only held at the individual level, then firms could change simply by employee turnover. Because we know that hiring new workers is not equivalent to changing the skills of a firm, an analysis of what firms can do must understand knowledge as embedded in the organizing principles by which people cooperate within organizations.
Based on this discussion, a paradox is identified: efforts by a firm to grow by the replication of its technology enhances the potential for imitation. By considering how firms can deter imitation by innovation, we develop a more dynamic view of how firms create new knowledge. We build up this dynamic perspective by suggesting that firms learn new skills by recombining their current capabilities. Because new ways of cooperating cannot be easily acquired, growth occurs by building on the social relationships that currently exist in a firm. What a firm has done before tends to predict what it can do in the future. In this sense, the cumulative knowledge of the firm provides options to expand in new but uncertain markets in the future.
We discuss at length the example of the make/buy decision and propose several testable hypotheses regarding the boundaries of the firm, without appealing to the notion of “opportunism.”
In this paper we present a study of the structure of three lead firm‐network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm’s knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm’s boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource‐based and knowledge‐based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.
Previous research suggests that knowledge diffusion occurs more quickly within Toyota’s production network than in competing automaker networks. In this paper we examine the ‘black box’ of knowledge sharing within Toyota’s network and demonstrate that Toyota’s ability to effectively create and manage network‐level knowledge‐sharing processes at least partially explains the relative productivity advantages enjoyed by Toyota and its suppliers. We provide evidence that suppliers do learn more quickly after participating in Toyota’s knowledge‐sharing network. Toyota’s network has solved three fundamental dilemmas with regard to knowledge sharing by devising methods to (1) motivate members to participate and openly share valuable knowledge (while preventing undesirable spillovers to competitors), (2) prevent free riders, and (3) reduce the costs associated with finding and accessing different types of valuable knowledge. Toyota has done this by creating a strong network identity with rules for participation and entry into the network. Most importantly, production knowledge is viewed as the property of the network. Toyota’s highly interconnected, strong tie network has established a variety of institutionalized routines that facilitate multidirectional knowledge flows among suppliers. Our study suggests that the notion of a dynamic learning capability that creates competitive advantage needs to be extended beyond firm boundaries. Indeed, if the network can create a strong identity and coordinating rules, then it will be superior to a firm as an organizational form at creating and recombining knowledge due to the diversity of knowledge that resides within a network. Copyright © 2000 John Wiley & Sons, Ltd.
This paper presents a dynamic, firm‐level study of the role of network resources in determining alliance formation. Such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed. Data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners, such resources are an important catalyst for new alliances, especially because alliances entail considerable hazards. This study also assesses the importance of firms’ capabilities with alliance formation and material resources as determinants of their alliance decisions. I test this dynamic framework and its hypotheses about the role of time‐varying network resources and firm capabilities with comprehensive longitudinal multi‐industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989. The results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms’ decisions to enter into new alliances. This study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior. Copyright © 1999 John Wiley & Sons, Ltd.
This paper introduces the important role of networks of interfirm ties in examining fundamental issues in strategy research. Prior research has primarily viewed firms as autonomous entities striving for competitive advantage from either external industry sources or from internal resources and capabilities. However, the networks of relationships in which firms are embedded profoundly influence their conduct and performance. We identify five key areas of strategy research in which there is potential for incorporating strategic networks: (1) industry structure, (2) positioning within an industry, (3) inimitable firm resources and capabilities, (4) contracting and coordination costs, and (5) dynamic network constraints and benefits. For each of these issues, the paper outlines some important insights that result from considering the role of strategic networks. Copyright © 2000 John Wiley & Sons, Ltd.
It has long been assumed that product innovations are typically developed by product manufacturers. Because this assumption deals with the basic matter of who the innovator is, it has inevitably had a major impact on innovation-related research, on firms' management of research and development, and on government innovation policy. However, it now appears that this basic assumption is often wrong. In this book I begin by presenting a series of studies showing that the sources of innovation vary greatly. In some fields, innovation users develop most innovations. In others, suppliers of innovation-related components and materials are the typical sources of innovation. In still other fields, conventional wisdom holds and product manufacturers are indeed the typical innovators. Next, I explore why this variation in the functional sources of innovation occurs and how it might be predicted. Finally, I propose and test some implications of replacing a manufacturer-as-innovator assumption with a view of the innovation process as predictably distributed across users, manufacturers, suppliers, and others. Keywords: innovation, innovators, user innovation
This paper aims to shed light on the interplay of capabilities and knowledge transfer effectiveness. Adopting a dynamic capabilities perspective, we provide a new angle on knowledge transfers within MNCs. Empirical data on 324 knowledge transfer relationships of MNC units, i.e. headquarters and subsidiaries, was used to test the impact of coordination and systems capabilities on knowledge transfer effectiveness. Our results show that organizational capabilities are vital to increase knowledge transfer effectiveness and that coordination capabilities are moderated by cultural distance. As an extension, we explore some differences between knowledge flow directions in the MNC.
Pursuing a nodal (i.e., subsidiary) level of analysis, this paper advances and tests art overarching theoretical framework pertaining to intracorporate knowledge transfers within multinational corporations (MNCs). We predicted that (i) knowledge outflows from a subsidiary would be positively associated with value of the subsidiary's knowledge stock, its motivational disposition to share knowledge, and the richness of transmission channels; and (ii) knowledge inflows into a subsidiary would be positively associated with richness of transmission channels, motivational disposition to acquire knowledge, and the capacity to absorb the incoming knowledge. These predictions were tested empirically with data from 374 subsidiaries within 75 MNCs headquartered in the U.S., Europe, and Japan. Except for our predictions regarding the impact of source unit's motivational disposition on knowledge outflows, the data provide either full or partial support to an of the other elements of our theoretical framework. Copyright (C) 2000 John Wiley & Sons, Ltd.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
This paper addresses an increasingly debated issue in international business literature: the emergence of cross-border innovation in the multinational corporation. It identifies duplication and diversification of advanced technological capabilities as increasingly important dimensions of the multinational network, and proceeds to investigate how growth along these dimensions has led to the formation of cross-border innovation processes in the multinational corporation. Based on a review of existing empirical studies, we suggest three research avenues to shed further light on innovation processes in the multinational corporation: (1) a more thorough investigation of patterns of knowledge exchange in the multinational network; (2) how these patterns are influenced by industry-, fim-, and technology-related variables; and (3) how cross-border innovation may constitute a significant competitive advantage of the multinational corporation.
The assumption that 'local search' constrains the direction of corporate R&D is central in evolutionary perspectives on technological change and competition. In this paper, we propose a network-analytic approach for identifying the evolution of firms' technological positions. The approach (I) permits graphical and quantitative assessments of the extent to which firms' search behavior is locally bounded, and (2) enables firms to be positioned and grouped according to the similarities in their innovative capabilities. The utility of the proposed framework is demonstrated by an analysis of strategic partnering and the evolution of the technological positions of the 10 largest Japanese semiconductor producers from 1982 to 1992.
Unstable market conditions caused by innovation and increasing intensity and diversity of competition have resulted in organizational capabilities rather than served markets becoming the primary basis upon which firms establish their long-term strategies. If the strategically most important resource of the firm is knowledge, and if knowledge resides in specialized form among individual organizational members, then the essence of organizational capability is the integration of individuals' specialized knowledge. This paper develops a knowledge-based theory of organizational capability, and draws upon research into competitive dynamics, the resource-based view of the firm, organizational capabilities, and organizational learning. Central to the theory is analysis of the mechanisms through which knowledge is integrated within firms in order to create capability. The theory is used to explore firms' potential for establishing competitive advantage in dynamic market settings, including the role of firm networks under conditions of unstable linkages between knowledge inputs and product outputs. The analysis points to the difficulties in creating the "dynamic" and "flexible-response capabilities" which have been deemed critical to success in hypercompetitive markets.
This cross-national study explores the relative contributions of academic and corporate research to subsequent industrial R&D activities within one industry. Japanese university research emerged as less influential than Japanese corporate research. The difference between the relevance of U.S. university and U.S. corporate research was only marginally significant. In both countries, university research appeared to contribute most to domestic firms. These findings accentuate the role that national institutional structures play in influencing a country's university research activity.
Historical trends in international patterns of technological innovation a dynamic model of the post-war growth of international economic activity in Europe and the USA the evolution of technological competition between US and European firms technological advantage as a determinant of the international economic activity of firms technological competition and intra-industry production in the industrialised world a classical model of the impact of international trade and production on national industrial growth towards and evolutionary theory of international production.
Researchers have used the absorptive capacity (ACAP) construct to explain various organizational phenomena. However, they have not been consistent in defining and measuring ACAP or in articulating the conditions under which it can enhance value creation. In this paper, we review the literature to identify the key dimensions of ACAP and offer a more definitive reconceptualization of this construct.
The management and processing of organizational knowledge are increasingly being viewed as critical to organizational success. By exploring how firms access and exploit alliance-based knowledge, the authors provide evidence to support the argument that the firm is a dynamic system of processes involving different types of knowledge. Using data from a longitudinal study of North American-based joint ventures (JVs) between North American and Japanese firms, they address three related research questions: (1) what processes do JV partners use to gain access to alliance knowledge; (2) what types of knowledge are associated with the different processes and how should that knowledge be classified; and (3) what is the relationship between organizational levels, knowledge types, and the transfer of knowledge?
Although many generalizations have been drawn about the merits of knowledge-based resources and the creation of knowledge, few efforts have been made to establish systematically how firms acquire and manage new knowledge. Moreover, prior alliance research has not addressed in detail the nature of alliance knowledge and how knowledge is managed in the alliance context. The authors examine the processes used by alliance partners to transfer knowledge from an alliance context to a partner context. They identify four key processes—technology sharing, alliance-parent interaction, personnel transfers, and strategic integration—that share a conceptual underpinning and represent a knowledge connection between parent and alliance. Each of the four processes is shown to provide an avenue for managers to gain exposure to knowledge and ideas outside their traditional organizational boundaries and to create a connection for individual managers to communicate their alliance experiences to others.
Although all of the knowledge management processes are potentially effective, the different processes involve different types of knowledge and different organizational levels. The primary types of knowledge associated with each process are identified and then linked with the organizational level affected by the transfer process. From those linkages, several propositions about organizational knowledge transfer and management are developed. The results suggest that although a variety of knowledge management strategies can be viable, some strategies lead to more effective knowledge transfer than others.
In this paper we present a study of the structure of three lead firm-network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm's knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm's boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource-based and knowledge-based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.
Do multinationals go abroad to acquire technological knowledge? Do they also contribute knowledge locally? We investigate the learning and contribution patterns of multinational firms in the U.S. semiconductor industry through the analysis of citations to their patents and through field interviews. We find that the knowledge used in innovation by foreign subsidiaries in U.S. regions is predominantly local (at the regional and country level). In fact, foreign firms use regional knowledge significantly more than similar domestic firms. In the case of European and Korean firms, foreign investment is directed towards offsetting home country technological weaknesses. The study finds that foreign firms also contribute to local technological progress—a significant proportion of the citations to their patents are local. Local learning without contributing may not be possible.
For US techology-intensive corporations striving to develop effective global strategies, the establishment of R&D facilities in Japan is increasingly seen as a necessary means of tailoring products to the large local market, of effective technology scanning of Japanese competitors, and of tapping into Japan's growing capabilities in science and technology. The establishment and management of such facilities, however, is not easy task. A comparative study of US and Japanese computer firms identified major differences on five dimensions: the corporate research structure, the linkage between R&D and manufacturing, mechanisms of recruitment of R&D personnel, career patterns and the locus of responsibility for careers, and reward and incentive systems. These differences have important implications for US firms trying to set up research facilities in Japan, both in terms of managing those facilities effectively and in terms of integrating them into the firm's overall technology strategy.
We examine how interaction between mid-level managers in technical committees facilitates subsequent alliance formation in a longitudinal study of 87 cellular service providers and equipment manufacturers. Joint participation by firms in technical committees helps them identify potential alliance partners and particular opportunities for technical collaboration. This effect is magnified by sustained participation by individuals on behalf of their firms, demonstrating that interfirm relationships are enhanced by the interpersonal bonds that are forged in technical committees. In contrast, we find that the effect of joint technical committee participation on alliance formation decreases as firms have more prior alliances, suggesting that technical committees provide a more critical avenue for knowledge exchange when firms do not have the luxury of exchanging information through contractual linkages. Taken together, these findings suggest one venue where managerial action can transform existing social structure, because technical committee activity facilitates the entry of less-established firms into alliance networks.
This paper investigates how subsidiary companies are able to contribute to the firm-specific advantages of the multinational corporation (MNC). Specifically we examine the determinants of the contributory role of the subsidiary and subsidiary initiative. The study reveals the following significant relationships: (a) internal subsidiary resources in combination with initiative have a strong positive impact on the subsidiary's contributory role; (b) subsidiary initiative is strongly associated with the leadership and entrepreneurial culture in the subsidiary; and (c) contributory role is strongly associated with subsidiary autonomy and a low level of local competition. We discuss the implications of these findings and some of the theoretical issues associated with subsidiary initiative. Our provisional conclusion is that MNC subsidiaries can not only contribute to firm-specific advantage creation, they can also drive the process. © 1998 John Wiley & Sons, Ltd.
This study contributes to the literature on the nature and evolution of the multinational enterprise by exploring the geographic origins of the knowledge sources utilized by foreign subsidiaries during the process of technological innovation. Through a synthesis of the multinational literature and the broader literature on external sources of innovation, I develop and test a set of hypotheses that explain the conditions under which innovating subsidiaries are likely to draw upon sources of knowledge located in the home base of the firm and/or the subsidiary's host country environment. The hypotheses are tested through an analysis of the citations listed on over 10,000 patents issued to U.S. greenfield subsidiaries between 1980 and 1990. Copyright © 2001 John Wiley & Sons, Ltd.
This paper studies the influence of external knowledge on innovation in subsidiaries of multinational firms. The focus on subsidiaries is especially interesting since they are simultaneously embedded in two knowledge contexts: (a) the internal multinational corporation (MNC) comprised of the headquarters and other subsidiaries; and (b) an external environment of regional or host country firms. We develop hypotheses to suggest that the extent of influences of these contexts on subsidiary technological innovation depends on the characteristics of the knowledge network (technological richness and diversity) and the knowledge linkages of the subsidiary with other entities. The study uses patent citation data pertaining to innovations by foreign subsidiaries of U.S. semiconductor firms to test these hypotheses. The paper finds that (a) the technological richness of the MNC, (b) the subsidiary's knowledge linkages to host country firms, and (c) the technological diversity within the host country have a positive impact on innovation. Copyright © 2004 John Wiley & Sons, Ltd.
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Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the firm-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical–biotechnology R&D alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. © 1998 John Wiley & Sons, Ltd.