The Innovation Performance of MNE Subsidiaries and Local Embeddedness: Evidence from an Emerging Economy

  • Paulo N. FigueiredoEmail author
  • Klauber Brito
Conference paper


We examine the innovation performance of MNE subsidiaries and their embeddedness in sources of local knowledge in a policy framework within the context of an emerging economy. Based on first-hand evidence from multiple case studies, we found that: (1) there was variability between the subsidiaries in terms of the cumulative manner and speed at which they improved their innovation performance over time, using progressively levels of accumulated capability as a proxy; (2) these differences in innovation performance improvement reflected heterogeneity between the subsidiaries in terms of the learning efforts made to acquire knowledge from local organizations; (3) the varied frequency in which the subsidiaries developed such local relationships reflects their differing responses to a common industrial policy that makes use of tax incentives to stimulate such links. The paper reveals the limitations of this conventional type of industrial policy in stimulating industrial development and the embeddedness of MNEs. It also suggests that a new direction for policy, which incorporates public-private negotiations and a focus on the firm-centred building of innovation capabilities, should be pursued in order to accelerate the innovation performance progress of latecomer firms.


Innovation Performance Innovation Activity Industrial Policy Local Organization Patent Citation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



This paper forms one of the outcomes of a research project on the business strategies and competitive performance of MNE subsidiaries in the electronics industry in Brazil at EBAPE/FGV. An earlier version of this paper was presented at the 12th Conference of the International Joseph A. Schumpeter Society in Rio de Janeiro, Brazil, in July 2008. We thank the participants of the conference, two anonymous JEE reviewers and the editors of this Special Issue for their useful comments, and suggestions. We also thank Marcela Cohen for her assistance in carrying out this research. Any errors that remain are our own. We also gratefully acknowledge funding from the Brazilian Association for the Electro-electronics Industry (Abinee). All disclaimers apply.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  1. 1.Brazilian School of Public and Business Administration (EBAPE), Getulio Vargas Foundation (FGV)Rio de JaneiroBrazil

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