Understanding How Knowledge Differences Between Parent and Subsidiary Companies Drive Business Model Innovation

This study concentrates on the subsidiaries of enterprise groups as the research object, explores the impact of knowledge heterogeneity of parent-subsidiary companies on the subsidiaries’ business model innovation, as well as the role of strategic orientation and institutional support in this process. Based on survey data from 292 Chinese subsidiaries, this study employs hierarchical regression and bootstrap analysis to test the proposed hypotheses. The study finds that both explicit and tacit knowledge heterogeneity of parent-subsidiary companies can promote subsidiaries’ business model innovation. Moreover, both explicit and tacit knowledge heterogeneity can further influence subsidiaries’ business model innovation through market orientation and technology orientation. The higher the level of institutional support a subsidiary has, the stronger the effect of parent-subsidiary explicit knowledge heterogeneity and tacit knowledge heterogeneity on subsidiaries’ business model innovation. Therefore, this study provides guidance for subsidiaries, enabling them to harness the diverse knowledge available within the relationships of parents and subsidiaries to formulate tailored strategies that align with their internal goals and external conditions, ultimately driving business model innovation.