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New Competence Creation in Multinational Company Subunits: The Role of International Knowledge

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  • John Cantwell
  • Lucia Piscitello

Abstract

type="main" xml:id="twec12175-abs-0001"> It has been demonstrated that more creative innovative activities of subunits of multinational companies (MNCs) rely upon the munificence of local knowledge in the host country. Here, we argue that the strength of international business network connections of a host location influences the potential accessibility of international knowledge and hence tends to widen the domain of new knowledge search that can be successfully undertaken by an MNC subunit. This in turn increases the likelihood of an MNC subunit building new areas of competencies, that is, in fields of competencies which are relatively new to the MNC. Specifically, we suggest that the relevant international business network connections are those involving local actors in the MNC subunit's relevant industry. Moreover, geographical proximity between MNC subunits and their parent company has an inverse U-shaped relationship with new competence creation by subunits. Using a balanced panel data set on innovative activities conducted abroad by 194 of the world's largest industrial firms from 1975 to 1995, we find support for our expectations.

Suggested Citation

  • John Cantwell & Lucia Piscitello, 2015. "New Competence Creation in Multinational Company Subunits: The Role of International Knowledge," The World Economy, Wiley Blackwell, vol. 38(2), pages 231-254, February.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:2:p:231-254
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    File URL: http://hdl.handle.net/10.1111/twec.2015.38.issue-2
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    Cited by:

    1. Qiu, Ranfeng & Cantwell, John, 2018. "General Purpose Technologies and local knowledge accumulation — A study on MNC subunits and local innovation centers," International Business Review, Elsevier, vol. 27(4), pages 826-837.
    2. Liu, Ting & Li, Xizhuo, 2022. "How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective," Journal of International Management, Elsevier, vol. 28(3).
    3. Scuotto, Veronica & Garcia-Perez, Alexeis & Nespoli, Chiara & Messeni Petruzzelli, Antonio, 2020. "A repositioning organizational knowledge dynamics by functional upgrading and downgrading strategy in global value chain," Journal of International Management, Elsevier, vol. 26(4).
    4. Christopher Baum & Hans Lööf, & Pardis Nabavi, 2015. "Innovation, Spillovers and Productivity Growth: A Dynamic Panel Data Approach," EcoMod2015 8970, EcoMod.
    5. Christopher F Baum & Hans Lööf & Pardis Nabavi, 2019. "Innovation strategies, external knowledge and productivity growth," Industry and Innovation, Taylor & Francis Journals, vol. 26(3), pages 348-367, March.
    6. Sarianna Lundan & John Cantwell, 2020. "The local co-evolution of firms and governments in the Information Age," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1516-1528, December.
    7. Harald Bathelt & John A Cantwell & Ram Mudambi, 2018. "Overcoming frictions in transnational knowledge flows: challenges of connecting, sense-making and integrating," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1001-1022.
    8. Anthony Frigon & David L. Rigby, 2021. "Geographies of Knowledge Sourcing and the Value of Knowledge in Multilocational Firms," Papers in Evolutionary Economic Geography (PEEG) 2132, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2021.
    9. Hohberger, Jan & Wilden, Ralf, 2022. "Geographic diversity of knowledge inputs: The importance of aligning locations of knowledge inputs and inventors," Journal of Business Research, Elsevier, vol. 145(C), pages 705-719.
    10. Zhanna A. Mingaleva & Lyudmila N. Deputatova & Nikolay B. Akatov & Yurii V. Starkov & Elena Mitrofanova, 2019. "Application of HADI-cycle for providing sustainability of processes of knowledge and innovation," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 1628-1640, December.
    11. Fumio Komoda & Atsuho Nakayama & Takabumi Hayashi, 2021. "Intra-firm Global R&D Networks of US IT MNCs as a Source of Competitiveness: Focusing on the Polar Comparison of Google, IBM and Canon," International Journal of Global Business and Competitiveness, Springer, vol. 16(2), pages 104-115, December.
    12. Kvedarienė Audronė, 2019. "Strategic technology management within global value systems," Open Economics, De Gruyter, vol. 2(1), pages 43-52, January.

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