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Innovative Capability In Mnc Subsidiaries: Evidence From Four European Transition Economies

Author

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  • Kokko, Ari

    (European Institute of Japanese Studies)

  • Kravtsova, Victoria

    (MERIT, Maastricht, Netherlands)

Abstract

This paper explores the determinants of innovative capability in a sample of multinational company (MNC) subsidiaries in four transition economies: Estonia, Hungary, Poland, and Slovenia. It finds that capability in product and process technology appears to be determined by a different set of variables than capability related to marketing and management knowledge. The most independent affiliates – those that are diversified, oriented towards the local market, established through acquisitions rather than greenfield investments, and where the foreign MNCs’ only hold minority ownership – are also those that acquire the strongest innovative capability in product and process technology. For marketing and management capability, the pattern is nearly the opposite. The highest levels of capability are recorded in subsidiaries that are closely tied to the parent company, with high foreign ownership shares and substantial exports back to the parent company. These differences can be expected to have some impact on the kinds of spillovers different kinds of foreign direct investment (FDI) projects may generate.

Suggested Citation

  • Kokko, Ari & Kravtsova, Victoria, 2006. "Innovative Capability In Mnc Subsidiaries: Evidence From Four European Transition Economies," EIJS Working Paper Series 224, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0224
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    Cited by:

    1. Lingyun Huang & Xiaming Liu & Lei Xu, 2012. "Regional Innovation and Spillover Effects of Foreign Direct Investment in China: A Threshold Approach," Regional Studies, Taylor & Francis Journals, vol. 46(5), pages 583-596, August.
    2. Dyah Wulan Sari & Noor Aini Khalifah & Suyanto Suyanto, 2016. "The spillover effects of foreign direct investment on the firms’ productivity performances," Journal of Productivity Analysis, Springer, vol. 46(2), pages 199-233, December.
    3. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    4. Dyah Wulan Sari, 2019. "The Potential Horizontal and Vertical Spillovers from Foreign Direct Investment on Indonesian Manufacturing Industries," Economic Papers, The Economic Society of Australia, vol. 38(4), pages 299-310, December.
    5. Ari Kokko & Tran Toan Thang, 2014. "Foreign Direct Investment and the Survival of Domestic Private Firms in Viet Nam," Asian Development Review, MIT Press, vol. 31(1), pages 53-91, March.
    6. Suyanto & Salim, Ruhul A. & Bloch, Harry, 2009. "Does Foreign Direct Investment Lead to Productivity Spillovers? Firm Level Evidence from Indonesia," World Development, Elsevier, vol. 37(12), pages 1861-1876, December.
    7. Magdolna Sass & Andrea Szalavetz, 2014. "R&D-based integration and upgrading in Hungary," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 153-180, November.
    8. Marković Dušan & Đurović Ana & Savović Slađana, 2022. "Post-Acquisition Management in Transitional Economies: Empirical Analysis of Acquired Company in Telecommunication Industry," Economic Themes, Sciendo, vol. 60(4), pages 495-512, December.
    9. 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).
    10. Ljiljana BOZIĆ & Valerija BOTRIĆ, 2017. "Innovation investment decisions: are post(transition) economies different from the rest of the EU?," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 8, pages 25-43, December.
    11. Ari Kokko & Victoria Kravtsova, 2012. "Regional Characteristics And Effects Of Inward Fdi: The Case Of Ukraine," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 3(2).

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    More about this item

    Keywords

    FDI; MNC subsidiaries; innovative capability; spillovers;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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