IDEAS home Printed from https://ideas.repec.org/a/sae/fbbsrw/v7y2018i2p109-125.html
   My bibliography  Save this article

Subsidiary Innovation in a Developing Economy: Towards a Comprehensive Model and Directions for Future Research

Author

Listed:
  • Dixit Manjunatha Betaraya
  • Saboohi Nasim
  • Joy Mukhopadhyay

Abstract

With the internationalization of innovation, multinational enterprise (MNE) subsidiaries have been found to play a critical role in product and process innovation. Deriving from a rich and diverse subsidiary innovation (SI) literature, this article attempts to develop a comprehensive model to study the factors that impact SI in a developing economy by devising three macro constructs, namely, (a) local environment (LE), (b) subsidiary traits (ST) and (c) headquarters (HQ) strategy (HS). The 15 factors associated with these macro constructs identified through literature review are statistically validated through an ‘Idea Engineering’ exercise for their contextual relevance. Based on an expert survey carried out in the developing economy context of India, barring 2 HS factors, rest of them have been found to be statistically significant in the Indian context. Antecedents of SI, identified by this article, can be used by domain practitioners and experts in the field to improve their organization’s innovative capability. The proposed model in this study can be further empirically validated by researchers working in the area of SI.

Suggested Citation

  • Dixit Manjunatha Betaraya & Saboohi Nasim & Joy Mukhopadhyay, 2018. "Subsidiary Innovation in a Developing Economy: Towards a Comprehensive Model and Directions for Future Research," FIIB Business Review, , vol. 7(2), pages 109-125, June.
    • Handle: RePEc:sae:fbbsrw:v:7:y:2018:i:2:p:109-125
    DOI: 10.1177/2319714518788387
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/2319714518788387
    Download Restriction: no
    File URL: https://libkey.io/10.1177/2319714518788387?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Julian Birkinshaw, 1996. "How Multinational Subsidiary Mandates are Gained and Lost," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(3), pages 467-495, September.
    2. Edwin Mansfield & David Teece & Anthony Romeo, 2008. "Overseas Research and Development by US-Based Firms," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 12, pages 297-306 World Scientific Publishing Co. Pte. Ltd..
    3. Alan M. Rugman & Alain Verbeke, 2005. "Subsidiary Specific Advantages in Multinational Enterprises," Chapters, in: Analysis of Multinational Strategic Management, chapter 6, pages 77-90, Edward Elgar Publishing.
    4. D Minbaeva & T Pedersen & I Björkman & C F Fey & H J Park, 2003. "MNC knowledge transfer, subsidiary absorptive capacity, and HRM," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(6), pages 586-599, November.
    5. Sumantra Ghoshal & Nitin Nohria, 1989. "Internal differentiation within multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 10(4), pages 323-337, July.
    6. Masaaki Kotabe & Denise Dunlap-Hinkler & Ronaldo Parente & Harsh A Mishra, 2007. "Determinants of cross-national knowledge transfer and its effect on firm innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 259-282, March.
    7. Harzing, Anne-Wil, 2001. "Of bears, bumble-bees, and spiders: the role of expatriates in controlling foreign subsidiaries," Journal of World Business, Elsevier, vol. 36(4), pages 366-379, January.
    8. Riccardo Crescenzi & Andrés Rodríguez-Pose & Michael Storper, 2012. "The territorial dynamics of innovation in China and India," Journal of Economic Geography, Oxford University Press, vol. 12(5), pages 1055-1085, September.
    9. Fuller, Douglas B., 2014. "Chip design in China and India: Multinationals, industry structure and development outcomes in the integrated circuit industry," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 1-10.
    10. Mehmet Demirbag & Keith W. Glaister, 2010. "Factors Determining Offshore Location Choice for R&D Projects: A Comparative Study of Developed and Emerging Regions," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1534-1560, December.
    11. Sumantra Ghoshal & Harry Korine & Gabriel Szulanski, 1994. "Interunit Communication in Multinational Corporations," Management Science, INFORMS, vol. 40(1), pages 96-110, January.
    12. Altenburg, Tilman & Schmitz, Hubert & Stamm, Andreas, 2008. "Breakthrough China's and India's Transition from Production to Innovation," World Development, Elsevier, vol. 36(2), pages 325-344, February.
    13. Li, Xiaoying & Wang, Jue & Liu, Xiaming, 2013. "Can locally-recruited R&D personnel significantly contribute to multinational subsidiary innovation in an emerging economy?," International Business Review, Elsevier, vol. 22(4), pages 639-651.
    14. Gassmann, Oliver & von Zedtwitz, Maximilian, 1999. "New concepts and trends in international R&D organization," Research Policy, Elsevier, vol. 28(2-3), pages 231-250, March.
    15. Kendall Roth & Allen J Morrison, 1992. "Implementing Global Strategy: Characteristics of Global Subsidiary Mandates," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 715-735, December.
    16. Mohan Subramaniam & N. Venkatraman, 2001. "Determinants of transnational new product development capability: testing the influence of transferring and deploying tacit overseas knowledge," Strategic Management Journal, Wiley Blackwell, vol. 22(4), pages 359-378, April.
    17. Anupama Phene & Paul Almeida, 2008. "Innovation in multinational subsidiaries: The role of knowledge assimilation and subsidiary capabilities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(5), pages 901-919, July.
    18. Anil K. Gupta & Vijay Govindarajan, 2000. "Knowledge flows within multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 21(4), pages 473-496, April.
    19. Paul Almeida & Anupama Phene, 2004. "Subsidiaries and knowledge creation: the influence of the MNC and host country on innovation," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 847-864, August.
    20. Alice Lam, 2003. "Organizational Learning in Multinationals: R&D Networks of Japanese and US MNEs in the UK," Journal of Management Studies, Wiley Blackwell, vol. 40(3), pages 673-703, May.
    21. Niels Noorderhaven & Anne-Wil Harzing, 2009. "Knowledge-sharing and social interaction within MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(5), pages 719-741, June.
    22. Norlela Ariffin, 2010. "Internationalisation of technological innovative capabilities: levels, types and speed (learning rates) in the electronics industry in Malaysia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 3(4), pages 347-391.
    23. Tina C Ambos & Ulf Andersson & Julian Birkinshaw, 2010. "What are the consequences of initiative-taking in multinational subsidiaries?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(7), pages 1099-1118, September.
    24. Chiao, Yu-Ching & Ying, Kung-Pao, 2013. "Network effect and subsidiary autonomy in multinational corporations: An investigation of Taiwanese subsidiaries," International Business Review, Elsevier, vol. 22(4), pages 652-662.
    25. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    26. René Belderbos, 2003. "Entry mode, organizational learning, and R&D in foreign affiliates: evidence from Japanese firms," Strategic Management Journal, Wiley Blackwell, vol. 24(3), pages 235-259, March.
    27. Johnson, William H.A. & Medcof, John W., 2007. "Motivating proactive subsidiary innovation: Agent-based theory and socialization models in global R&D," Journal of International Management, Elsevier, vol. 13(4), pages 472-487, December.
    28. Thomas W Malnight, 1996. "The Transition from Decentralized to Network-Based MNC Structures: An Evolutionary Perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(1), pages 43-65, March.
    29. Ulf Andersson & Mats Forsgren & Ulf Holm, 2007. "Balancing subsidiary influence in the federative MNC: a business network view," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(5), pages 802-818, September.
    30. Dirk Michael Boehe, 2008. "Product Development In Emerging Market Subsidiaries — The Influence Of Autonomy And Internal Markets On Subsidiary Roles," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 29-53.
    31. Michailova, Snejina & Zhan, Wu, 2015. "Dynamic capabilities and innovation in MNC subsidiaries," Journal of World Business, Elsevier, vol. 50(3), pages 576-583.
    32. Julian Birkinshaw, 1999. "The Determinants and Consequences of Subsidiary Initiative in Multinational Corporations," Entrepreneurship Theory and Practice, , vol. 24(1), pages 9-36, October.
    33. Tony S. Frost, 2001. "The geographic sources of foreign subsidiaries' innovations," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 101-123, February.
    34. John Cantwell & Ram Mudambi, 2005. "MNE competence‐creating subsidiary mandates," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1109-1128, December.
    35. Paulo Figueiredo & Klauber Brito, 2011. "The innovation performance of MNE subsidiaries and local embeddedness: evidence from an emerging economy," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 141-165, February.
    36. Ingmar Björkman & Wilhelm Barner-Rasmussen & Li Li, 2004. "Managing knowledge transfer in MNCs: the impact of headquarters control mechanisms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 443-455, September.
    37. Francesco Ciabuschi & Mats Forsgren & Oscar Martín Martín, 2011. "Rationality vs ignorance: The role of MNE headquarters in subsidiaries’ innovation processes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(7), pages 958-970, September.
    38. Chandra S Mishra & David H Gobeli, 1998. "Managerial Incentives, Internalization, and Market Valuation of Multinational Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(3), pages 583-597, September.
    39. Cyril Bouquet & Allen Morrison & Julian Birkinshaw, 2009. "International attention and multinational enterprise performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(1), pages 108-131, January.
    40. Gert Bruche, 2009. "A New Geography of Innovation ¨C China and India Rising," Transnational Corporations Review, Ottawa United Learning Academy, vol. 1(4), pages 24-27, December.
    41. Elenkov, Detelin S. & Manev, Ivan M., 2009. "Senior expatriate leadership's effects on innovation and the role of cultural intelligence," Journal of World Business, Elsevier, vol. 44(4), pages 357-369, October.
    42. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    43. Julian M Birkinshaw & Allen J Morrison, 1995. "Configurations of Strategy and Structure in Subsidiaries of Multinational Structure," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 729-753, December.
    44. Klaus E. Meyer & Ram Mudambi & Rajneesh Narula, 2011. "Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 235-252, March.
    45. Amit Karna & Florian Taübe & Petra Sonderegger, 2013. "Evolution of innovation networks across geographical and organizational boundaries: A study of R&D subsidiaries in the Bangalore IT cluster," ULB Institutional Repository 2013/206760, ULB -- Universite Libre de Bruxelles.
    46. Davis, Lee N. & Meyer, Klaus E., 2004. "Subsidiary research and development, and the local environment," International Business Review, Elsevier, vol. 13(3), pages 359-382, June.
    47. William G. Egelhoff, 2010. "How the Parent Headquarters Adds Value to an MNC," Management International Review, Springer, vol. 50(4), pages 413-431, August.
    48. Zander, Ivo, 1999. "How do you mean 'global'? An empirical investigation of innovation networks in the multinational corporation," Research Policy, Elsevier, vol. 28(2-3), pages 195-213, March.
    49. Sumantra Ghoshal & Christopher A Bartlett, 1988. "Creation, Adoption and Diffusion of Innovations by Subsidiaries of Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 365-388, September.
    50. Sheeja Krishnakumar, 2017. "Organization Culture on Innovation: Understanding the Influence using its Variables," FIIB Business Review, , vol. 6(3), pages 61-70, July.
    51. Collinson, Simon C. & Wang, Rowena, 2012. "The evolution of innovation capability in multinational enterprise subsidiaries: Dual network embeddedness and the divergence of subsidiary specialisation in Taiwan," Research Policy, Elsevier, vol. 41(9), pages 1501-1518.
    52. Ciabuschi, Francesco & Forsgren, Mats & Martín Martín, Oscar, 2012. "Headquarters involvement and efficiency of innovation development and transfer in multinationals: A matter of sheer ignorance?," International Business Review, Elsevier, vol. 21(2), pages 130-144.
    53. Andersson, Ulf & Forsgren, Mats, 1996. "Subsidiary embeddedness and control in the multinational corporation," International Business Review, Elsevier, vol. 5(5), pages 487-508, October.
    54. Leif Denti & Sven Hemlin, 2012. "Leadership And Innovation In Organizations: A Systematic Review Of Factors That Mediate Or Moderate The Relationship," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 16(03), pages 1-20.
    55. Niosi, Jorge & Godin, Benoit, 1999. "Canadian R&D abroad management practices," Research Policy, Elsevier, vol. 28(2-3), pages 215-230, March.
    56. Shaohua “Carolyn” Mu & Devi R. Gnyawali & Donald E. Hatfield, 2007. "Foreign subsidiaries’ learning from local environments: An empirical test," Management International Review, Springer, vol. 47(1), pages 79-102, February.
    57. Yulin Fang & Guo‐Liang Frank Jiang & Shige Makino & Paul W. Beamish, 2010. "Multinational Firm Knowledge, Use of Expatriates, and Foreign Subsidiary Performance," Journal of Management Studies, Wiley Blackwell, vol. 47(1), pages 27-54, January.
    58. Anja Schmiele, 2012. "Drivers for international innovation activities in developed and emerging countries," The Journal of Technology Transfer, Springer, vol. 37(1), pages 98-123, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Soukaina Zaoui & Safae Ait Hamou-ou-Brahim & Haiwei Zhou & Amina Omrane & Dechun Huang, 2021. "Consumer Purchasing Behaviour Towards Strategic Innovation Management Practices in Morocco During COVID-19 Health Crisis," FIIB Business Review, , vol. 10(2), pages 158-171, June.
    2. Jalal Rajeh Hanaysha & Mohammed Emad Al-Shaikh & Shanmugan Joghee & Haitham M. Alzoubi, 2022. "Impact of Innovation Capabilities on Business Sustainability in Small and Medium Enterprises," FIIB Business Review, , vol. 11(1), pages 67-78, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 0. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-39.
    2. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 2020. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 538-576, June.
    3. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    4. 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).
    5. De Marchi, Valentina & Cainelli, Giulio & Grandinetti, Roberto, 2022. "Multinational subsidiaries and green innovation," International Business Review, Elsevier, vol. 31(6).
    6. Reilly, Marty & Scott, Pamela Sharkey & Tippmann, Esther & Mangematin, Vincent, 2023. "Sustaining competence creation in the multinational enterprise: The role of piloting in subsidiaries," Journal of International Management, Elsevier, vol. 29(3).
    7. Zhaleh Najafi-Tavani & Axèle Giroud & Rudolf R. Sinkovics, 2012. "Mediating Effects in Reverse Knowledge Transfer Processes," Management International Review, Springer, vol. 52(3), pages 461-488, June.
    8. Kawai, Norifumi & Chung, Chul, 2019. "Expatriate utilization, subsidiary knowledge creation and performance: The moderating role of subsidiary strategic context," Journal of World Business, Elsevier, vol. 54(1), pages 24-36.
    9. Achcaoucaou, Fariza & Miravitlles, Paloma & León-Darder, Fidel, 2014. "Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness," International Business Review, Elsevier, vol. 23(1), pages 76-90.
    10. Figueiredo, Paulo N. & Larsen, Henrik & Hansen, Ulrich E., 2020. "The role of interactive learning in innovation capability building in multinational subsidiaries: A micro-level study of biotechnology in Brazil," Research Policy, Elsevier, vol. 49(6).
    11. Esther Tippmann & Pamela Sharkey Scott & Vincent Mangematin, 2014. "Subsidiary managers’ knowledge mobilizations: Unpacking emergent knowledge flows," Post-Print hal-00864324, HAL.
    12. Beugelsdijk, Sjoerd & Jindra, Björn, 2018. "Product innovation and decision-making autonomy in subsidiaries of multinational companies," Journal of World Business, Elsevier, vol. 53(4), pages 529-539.
    13. Li, Xiaoying & Wang, Jue & Liu, Xiaming, 2013. "Can locally-recruited R&D personnel significantly contribute to multinational subsidiary innovation in an emerging economy?," International Business Review, Elsevier, vol. 22(4), pages 639-651.
    14. Galli Geleilate, Jose-Mauricio & Andrews, Daniel S. & Fainshmidt, Stav, 2020. "Subsidiary autonomy and subsidiary performance: A meta-analysis," Journal of World Business, Elsevier, vol. 55(4).
    15. Athreye, Suma & Batsakis, Georgios & Singh, Satwinder, 2016. "Local, global, and internal knowledge sourcing: The trilemma of foreign-based R&D subsidiaries," Journal of Business Research, Elsevier, vol. 69(12), pages 5694-5702.
    16. Tippmann, Esther & Sharkey Scott, Pamela & Mangematin, Vincent, 2014. "Subsidiary managers’ knowledge mobilizations: Unpacking emergent knowledge flows," Journal of World Business, Elsevier, vol. 49(3), pages 431-443.
    17. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2017. "Gone are the creatures of yesteryear? On the diffusion of technological capabilities in the ‘modern’ MNC," Journal of World Business, Elsevier, vol. 52(1), pages 1-16.
    18. Zhang, Feng & Jiang, Guohua & Cantwell, John A., 2019. "Geographically Dispersed Technological Capability Building and MNC Innovative Performance: The Role of Intra-firm Flows of Newly Absorbed Knowledge," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    19. Maximilian Palmié & Marco Zeschky & Stephan Winterhalter & Philipp Walter Sauter & Naomi Haefner & Oliver Gassmann, 2016. "Coordination mechanisms for international innovation in SMEs: effects on time-to-market and R&D task complexity as a moderator," Small Business Economics, Springer, vol. 46(2), pages 273-294, February.
    20. Grazia D. Santangelo & Anupama Phene, 2022. "Knowledge sourcing by the multinational enterprise: An individual creativity-based model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(3), pages 434-448, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:fbbsrw:v:7:y:2018:i:2:p:109-125. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.