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Multinational Enterprise and Subsidiaries’ Absorptive Capacity and Global Knowledge Sourcing

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Book cover Innovation, Growth and Competitiveness

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

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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.

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Notes

  1. 1.

    A brief description of the survey questionnaire may be found in Appendix2.

  2. 2.

    All these variables come from the questionnaire.

  3. 3.

    For a description of variables falling into either of the two categories, see Appendix1.

  4. 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. 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. 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.

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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

  1. Department of Economics, School of Management and Economics, University of Peloponnese, End Karaiskaki Street, 22100, Tripolis, Greece

    Constantina Kottaridi

  2. Centre for Strategic Management and Globalization, Copenhagen Business School, 24 Porcelæanshaven, Frederiksberg, DK-2000, Denmark

    Marina Papanastassiou

  3. Háskólinn á Bifröst, 311, Borgarnes, Iceland

    Marina Papanastassiou

  4. Centre for International Business & Management, Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK

    Christos N. Pitelis

  5. Department of Economics, School of Management and Economics, University of Peloponnese, End of Karaiskaki Street, 22100, Tripolis, Greece

    Dimitrios D. Thomakos

Authors
  1. Constantina Kottaridi
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  2. Marina Papanastassiou
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  3. Christos N. Pitelis
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  4. Dimitrios D. Thomakos
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Corresponding author

Correspondence to Constantina Kottaridi .

Editor information

Editors and Affiliations

  1. VU University Amsterdam, De Boelelaan 1105, Amsterdam, 1081 HV, Netherlands

    Peter Nijkamp

  2. (ESRI), Economic and Social Research Institute, Whitaker Square, Sir John Rogerson's Quay, Dublin, 2, Ireland

    Iulia Siedschlag

Appendices

Appendix A

Table A.1 Definitions of variables
Full size table
Table A.2 2 Groupings of variables in realized and potential AC
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Table A.3 Establishment of a Lab with Scope of Subsidiary
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Table A.4 Establishment of a lab with sources of knowledge
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Table A.5 Importance of own R&D as a source of technology with scope of subsidiary
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Table A.6 Importance of own R&D as a source of technology with other sources of knowledge
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Table A.7 Importance of own R&D as a source of technology with function of an established lab
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Appendix B

Questionnaire

  1. 1.

    How your company was originally established? (please tick relevant answer)

    1. (a)

      By the takeover of an existing UK company

    2. (b)

      By the creation of a new company with its own production facilities

    3. (c)

      Is a joint venture with an existing UK company

  2. 2.

    What is the current sales/turnover of the subsidiary?

  3. 3.

    What percentage of the sales of the whole MNE group of which the subsidiary is part, does its sales represent?

  4. 4.

    What proportion of your production is exported?

  5. 5.

    What percentage of your exports go to other parts of the MNE group?

  6. 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

    1. (a)

      To produce for the UK market products that are already established n our MNE’s group product range

    2. (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

    3. (c)

      To play a role of the MNE’s European supply network by producing and exporting component parts for assembly elsewhere

    4. (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. 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

    1. (a)

      Existing technology embodied in established products we produce.

    2. (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

    3. (c)

      R & D carried-out by our own laboratory

    4. (d)

      R&D carried out for us by another R&D laboratory of our MNE group

    5. (e)

      R & D carried out in collaboration with another firm

    6. (f)

      R&D carried out for us by local scientific institutions (e.g., universities, independent laboratories, industry laboratories)

    7. (g)

      Development and adaptation carried out less formally by members of our engineering unit and production personnel

  8. 8.

    If your subsidiary has its own R&D laboratory to support its operations

    1. (a)

      When was it set up?

    2. (b)

      How many scientific personnel does it employ?

  9. 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

    1. (a)

      Adaptation of existing products and/or processes to make them more suitable to our markets and conditions

    2. (b)

      To play a role in the development of new products for our distinctive markets

    3. (c)

      To provide advice on adaptation and/or development to other producing subsidiaries of our MNE group

    4. (d)

      To carry out basic research (not directly related to our current products) as part of a wider MNE group level research program

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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

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