Copyfrom：Dept. of Trade Economics Time：2020-10-15
Theme：Knowledge Transfer from the MNE Network and Foreign Subsidiaries’ Local Innovation
ID：645 1625 9854
Knowledge transfer from a multinational (MNE) and its global network 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 parent firm could hinder local innovation by generating resource constraints. We thus predict an inverted U-shaped relationship between knowledge transfer from the MNE and its global network 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 (R&D) centers the subsidiary maintains was found to be influential, as is hiring a local person as the subsidiary’s top manager. Greater institutional distance between 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 an MNE and its global network and local innovation is weaker, however, in older subsidiaries.
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