Abstract
We build on extant theory of the Multinational Enterprise (MNE), MNE subsidiaries and absorptive capacity (AC) to develop a framework that allows us to explore the role of MNE subsidiaries in the global sourcing of knowledge and MNE performance. We develop and test hypotheses using primary questionnaire-collected data. Our results support the idea that subsidiaries’ realized AC can be improved by the realized and potential AC of the MNE group and the subsidiary and in turn may improve the performance of the subsidiaries and the MNE group as a whole.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
A brief description of the survey questionnaire may be found in Appendix2.
- 2.
All these variables come from the questionnaire.
- 3.
For a description of variables falling into either of the two categories, see Appendix1.
- 4.
As we examine the intensity of own RAC (own R&D lab), and unlike RQ1, the years of operation of the subsidiary is not relevant, while the age of the R&D lab is.
- 5.
A number of performance variables are plausible. Our focus on turnover from sales is in line with the focus of the resource-based view (RBV), in particular Penrose’s view (see Pitelis 2002, for an extensive discussion).
- 6.
We do not include the number of scientific personnel here, because this belongs to the R&D lab, so by including the existence of the laboratory by definition we account for the scientific personnel engaged in the lab.
References
Andersson U, Forsgren M (2000) In search of centre of excellence: network embeddedness and subsidiary roles in multinational corporations. Manag Int Rev 40:329–350
Armstrong JS, Overton T (1977) Estimating non-response bias in mail surveys. J Mark Res 14(3):396–402
Birkinshaw J, Hood N, Jonsson S (1998) Building firm specific advantages in multinational corporations: the role of subsidiary initiative. Strateg Manag J 19:221–241
Birkinshaw J, Nobel R, Ridderstrale J (2002) Knowledge as a contingency variable: do the characteristic of knowledge predict organizational structure? Organ Sci 13(3):274–289
Buckley P, Casson M (1976) The future of multinational enterprise. Macmillan, London
Cohen W, Levinthal D (1989) Innovation and learning: the two faces of R&D. Econ J 99(397):569–596
Cohen W, Levinthal D (1990) Absorptive capacity: a new perspective on learning and innovation. Adm Sci Q 35(1):128–152
Daghfous A (2004) Absorptive capacity and the implementation of knowledge-intensive best practices. SAM Adv Manag J 69(2):21–27
Dunning JH (2000) The eclectic paradigm as an envelope for economic and business theories of MNE activity. Int Bus Rev 9:163–190
Dunning JH, Pitelis CN (2008) Stephen Hymer's contribution to international business scholarship: an assessment and extension. J Int Bus Stud 39:167–176
Fosfuri A, Tribo LA (2008) Exploring the antecedents of potential absorptive capacity and its impact on innovation performance. Omega 36:173–187
Frenz M, Michie J, Oughton C (2004) Co-operation, innovation, and firm’s absorptive capacity. Working Paper No. 12, Birmingham
Håkanson L, Nobel R (2001) Organizational characteristics and reverse technology transfer. Manag Int Rev 41:395–420
Harzing AW (1997) Response rates in international mail surveys: results of a 22 country study. Int Bus Rev 6(6):641–665
Hirsch S (1976) An international trade and investment theory of the firm. Oxford Econ Pap 28(2):228–239
Hymer S (1976/1960) The international operations of national firms: a study of direct investment. Ph.D. dissertation, MIT, USA
Ivarsson I, Jonsson T (2003) Local technological competence and asset-seeking FDI: an empirical study of manufacturing and wholesale affiliates in Sweden. Int Bus Rev 12:369–386
Jansen J, Van den Bosch F, Volberda H (2005) Managing potential and realized absorptive capacity: how do organizational antecedents matter. Acad Manag J 48(6):999–1015
Kamien MI, Zang I (2000) Meet me half-way: research joint ventures and absorptive capacity. Int J Ind Organ 18:995–1012
Kedia BL, Bhagat RS (1988) Cultural constraints on transfer of technology across nations: implications for research in international and comparative management. Acad Manag Rev 13:559–573
Kim L (1997) From imitation to innovation: the dynamics of Korea’s technological learning. Harvard Business School Press, Cambridge, MA
Kim L (1998) Crisis construction and organizational learning: capability building in catching up at Hyundai motor. Organ Sci 9:506–521
Kuemmerle W (1999) The drivers of foreign direct investment in research and development: an empirical investigation. J Int Bus Stud 30(1):1–24
Lane PJ, Salk JE, Lyles MA (2001) Absorptive capacity, learning and performance in international joint ventures. Strateg Manag J 22:1139–1161
Lane PJ, Koka B, Pathak S (2002) A thematic analysis and critical assessment of absorptive capacity research. Acad Manag Proc 2002 BPS:M1
Leahy D, Neary JP (2004) Absorptive capacity, R&D spillovers and public policy. CEPR Discussion Papers No. 4171, London
Mangematin V, Nesta L (1999) What kind of knowledge can a firm absorb? Int J Technol Manag 18(3–4):149–172
Minbaeva D, Pedersen T, Bjorkman I, Fey C, Park HJ (2003) Knowledge transfer, subsidiary AC and HRM. J Int Bus Stud 34:586–599
Mowery DC, Oxley LE (1995) Inward technology transfer and competitiveness: the role of national innovation systems. Camb J Econ 19:67–93
Newey LR, Shulman AD (2004) Systemic absorptive capacity: creating early-to-market returns through R&D alliances. R&D Manag 34(5):495–504
Nieto M, Quevedo P (2007) Absorptive capacity, technological opportunity, knowledge spillovers and innovative effort. Technovation 25:1141–1157
Oltra MJ, Flore M (2003) The impact of technological opportunities and innovative capabilities on firms’ output innovation. Creativity Innov Manag 12(3):137–145
Patel P, Vega M (1999) Patterns of internationalization of corporate technology: location versus home country advantages. Res Policy 28:145–155
Pearce R, Papanastassiou M (1996) The technological competitiveness of Japanese multinationals: the european dimension. Michigan University Press, Michigan, MI
Pearce R, Singh S (1992) Globalizing research and development. St Martin Press, New York
Penrose ET (1995/1959) The theory of the growth of the firm, 3rd edn. Oxford University Press, Oxford
Pitelis CN (2007) Edith Penrose and a learning-based perspective on the MNE and the OLI. Manag Int Rev 47(2):207–219
Rothwell R, Dodgson M (1991) External linkages and innovation in small and medium-sized enterprises. R&D Manag 21:125–137
Schimdt T (2005) What determines absorptive capacity. Paper presented at the DRUID Tenth Anniversary Summer Conference on Dynamics of Industry and Innovation: Organisations, Networks and Systems, Copenhagen, Denmark
Stock G, Greis NP, Fischer WA (2001) Absorptive capacity and new product development. J High Technol Manag Res 12:77–91
Tu Q, Vonderembse MA, Ragu-Nathan TS, Sharkey TW (2006) Absorptive capacity: enhancing the assimilation of time-based manufacturing practices. J Oper Manag 24:692–710
Van den Bosch F, Volberda H, de Boer M (1999) Coevolution of firm absorptive capacity and knowledge environment: organizational forms and combinative capabilities. Organ Sci 8:98–118
Vega-Jurado J, Gutierrez-Gracia A, De Lucio F (2008) Analysing the determinants of absorptive capacity: beyond R&D. R&D Manag 38(4):392–405
Veugelers R (1997) Internal R&D expenditures and external technology sourcing. Res Policy 26:303–315
Vinding AL (2000) Absorptive capacity and innovation performance: a human capital approach. Department of Business Studies-DRUID/IKE Group, Aalborg University, Denmark
Welsch H, Liao J, Stoica M (2001) Absorptive Capacity and Firm Responsiveness: An Empirical Investigation of Growth-oriented Firms. Proceedings of 2nd USASBE/SBIDA Conference, An Entrepreneurial Odyssey, Orlando, USA
Zahra SA, George G (2002) Absorptive capacity: a review, reconceptualization, and extension. Acad Manag Rev 27(2):185–203
Acknowledgments
This paper is based on research under the program PYTHAGORAS II which was funded by the EU and the Greek Ministry of Education and on the DYNREG Project funded from the European Communities' RTD 6th Framework Programme.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendices
Appendix A
Appendix B
Questionnaire
-
1.
How your company was originally established? (please tick relevant answer)
-
(a)
By the takeover of an existing UK company
-
(b)
By the creation of a new company with its own production facilities
-
(c)
Is a joint venture with an existing UK company
-
(a)
-
2.
What is the current sales/turnover of the subsidiary?
-
3.
What percentage of the sales of the whole MNE group of which the subsidiary is part, does its sales represent?
-
4.
What proportion of your production is exported?
-
5.
What percentage of your exports go to other parts of the MNE group?
-
6.
Please grade each of the following roles in terms of their importance in your operation as:
-
(4) our only role
-
(3) our major role
-
(2) a secondary role
-
(1) not a part of our role
-
(a)
To produce for the UK market products that are already established n our MNE’s group product range
-
(b)
To play a role of the MNE’s European supply network by specializing in the production and export of part of the established product range
-
(c)
To play a role of the MNE’s European supply network by producing and exporting component parts for assembly elsewhere
-
(d)
To develop, produce and market for the UK and/or European or (wider) markets, new products additional to the MNE group’s existing range
-
-
7.
Please grade the following sources of technology for your operation as:
-
(4) our only source of technology
-
(3) our major source of technology
-
(2) a secondary source of technology
-
(1) not a source of technology
-
(a)
Existing technology embodied in established products we produce.
-
(b)
Technology of our MNE group from which we introduce new products for the UK/European market that differ from other variants introduced in other markets
-
(c)
R & D carried-out by our own laboratory
-
(d)
R&D carried out for us by another R&D laboratory of our MNE group
-
(e)
R & D carried out in collaboration with another firm
-
(f)
R&D carried out for us by local scientific institutions (e.g., universities, independent laboratories, industry laboratories)
-
(g)
Development and adaptation carried out less formally by members of our engineering unit and production personnel
-
-
8.
If your subsidiary has its own R&D laboratory to support its operations
-
(a)
When was it set up?
-
(b)
How many scientific personnel does it employ?
-
(a)
-
9.
If your subsidiary has its own R&D laboratory to support its operations, please grade as:
-
(4) its only role
-
(3) its major role
-
(2) a secondary role
-
(1) not a part of its role
-
(a)
Adaptation of existing products and/or processes to make them more suitable to our markets and conditions
-
(b)
To play a role in the development of new products for our distinctive markets
-
(c)
To provide advice on adaptation and/or development to other producing subsidiaries of our MNE group
-
(d)
To carry out basic research (not directly related to our current products) as part of a wider MNE group level research program
-
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Kottaridi, C., Papanastassiou, M., Pitelis, C.N., Thomakos, D.D. (2011). Multinational Enterprise and Subsidiaries’ Absorptive Capacity and Global Knowledge Sourcing. In: Nijkamp, P., Siedschlag, I. (eds) Innovation, Growth and Competitiveness. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-14965-8_12
Download citation
DOI: https://doi.org/10.1007/978-3-642-14965-8_12
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-14964-1
Online ISBN: 978-3-642-14965-8
eBook Packages: Business and EconomicsEconomics and Finance (R0)