A microfoundations approach to studying innovation in multinational subsidiaries

N. Nuruzzaman, Ajai Gaur, Rakesh B. Sambharya

Research output: Contribution to journalArticle

20 Citations (Scopus)

Abstract

Research Summary: We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelon perspective, we argue that managers’ characteristics, such as prior MNE work experience and industry experience, affect subsidiary innovation. We tested our hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as an external boundary-spanning capability and, therefore, it has a greater effect on autonomous subsidiaries. In contrast, managers’ prior MNE work experience functions as an internal boundary-spanning capability and, therefore, it has a smaller effect on subsidiaries that are less autonomous or engage in R&D. Managerial Summary: The success of an MNE now increasingly depends on its ability to generate knowledge anywhere in the world. Thus, the ability of foreign subsidiaries to generate innovation plays an increasingly important role in enhancing the performance of MNEs. In this regard, what factors determine the innovativeness of foreign subsidiaries is an important question for managers. Our study suggests that the international experience of the top management team (TMT) of a subsidiary and its CEO’s industry experience positively affect subsidiary innovation. Furthermore, the TMT’s international experience has a greater effect on the innovativeness of subsidiaries that remain dependent on their headquarters for knowledge transfer. In contrast, the CEO’s industry experience has a greater effect on the innovativeness of autonomous subsidiaries.

Original languageEnglish (US)
Pages (from-to)92-116
Number of pages25
JournalGlobal Strategy Journal
Volume9
Issue number1
DOIs
StatePublished - Feb 1 2019

Fingerprint

Subsidiaries
Multinational subsidiary
Microfoundations
Innovation
Multinational enterprises
Industry
Managers
Innovativeness
Foreign subsidiaries
Work experience
International experience
Chief executive officer
Boundary spanning
Top management teams
Innovation performance
Factors
Headquarters
Knowledge transfer

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Keywords

  • MNEs
  • autonomy
  • boundary spanning
  • managerial experience
  • subsidiary innovation

Cite this

Nuruzzaman, N. ; Gaur, Ajai ; Sambharya, Rakesh B. / A microfoundations approach to studying innovation in multinational subsidiaries. In: Global Strategy Journal. 2019 ; Vol. 9, No. 1. pp. 92-116.
@article{2e704887e3874cac958b8d450afd960c,
title = "A microfoundations approach to studying innovation in multinational subsidiaries",
abstract = "Research Summary: We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelon perspective, we argue that managers’ characteristics, such as prior MNE work experience and industry experience, affect subsidiary innovation. We tested our hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as an external boundary-spanning capability and, therefore, it has a greater effect on autonomous subsidiaries. In contrast, managers’ prior MNE work experience functions as an internal boundary-spanning capability and, therefore, it has a smaller effect on subsidiaries that are less autonomous or engage in R&D. Managerial Summary: The success of an MNE now increasingly depends on its ability to generate knowledge anywhere in the world. Thus, the ability of foreign subsidiaries to generate innovation plays an increasingly important role in enhancing the performance of MNEs. In this regard, what factors determine the innovativeness of foreign subsidiaries is an important question for managers. Our study suggests that the international experience of the top management team (TMT) of a subsidiary and its CEO’s industry experience positively affect subsidiary innovation. Furthermore, the TMT’s international experience has a greater effect on the innovativeness of subsidiaries that remain dependent on their headquarters for knowledge transfer. In contrast, the CEO’s industry experience has a greater effect on the innovativeness of autonomous subsidiaries.",
keywords = "MNEs, autonomy, boundary spanning, managerial experience, subsidiary innovation",
author = "N. Nuruzzaman and Ajai Gaur and Sambharya, {Rakesh B.}",
year = "2019",
month = "2",
day = "1",
doi = "10.1002/gsj.1202",
language = "English (US)",
volume = "9",
pages = "92--116",
journal = "Global Strategy Journal",
issn = "2042-5791",
publisher = "John Wiley and Sons Inc.",
number = "1",

}

A microfoundations approach to studying innovation in multinational subsidiaries. / Nuruzzaman, N.; Gaur, Ajai; Sambharya, Rakesh B.

In: Global Strategy Journal, Vol. 9, No. 1, 01.02.2019, p. 92-116.

Research output: Contribution to journalArticle

TY - JOUR

T1 - A microfoundations approach to studying innovation in multinational subsidiaries

AU - Nuruzzaman, N.

AU - Gaur, Ajai

AU - Sambharya, Rakesh B.

PY - 2019/2/1

Y1 - 2019/2/1

N2 - Research Summary: We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelon perspective, we argue that managers’ characteristics, such as prior MNE work experience and industry experience, affect subsidiary innovation. We tested our hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as an external boundary-spanning capability and, therefore, it has a greater effect on autonomous subsidiaries. In contrast, managers’ prior MNE work experience functions as an internal boundary-spanning capability and, therefore, it has a smaller effect on subsidiaries that are less autonomous or engage in R&D. Managerial Summary: The success of an MNE now increasingly depends on its ability to generate knowledge anywhere in the world. Thus, the ability of foreign subsidiaries to generate innovation plays an increasingly important role in enhancing the performance of MNEs. In this regard, what factors determine the innovativeness of foreign subsidiaries is an important question for managers. Our study suggests that the international experience of the top management team (TMT) of a subsidiary and its CEO’s industry experience positively affect subsidiary innovation. Furthermore, the TMT’s international experience has a greater effect on the innovativeness of subsidiaries that remain dependent on their headquarters for knowledge transfer. In contrast, the CEO’s industry experience has a greater effect on the innovativeness of autonomous subsidiaries.

AB - Research Summary: We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelon perspective, we argue that managers’ characteristics, such as prior MNE work experience and industry experience, affect subsidiary innovation. We tested our hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as an external boundary-spanning capability and, therefore, it has a greater effect on autonomous subsidiaries. In contrast, managers’ prior MNE work experience functions as an internal boundary-spanning capability and, therefore, it has a smaller effect on subsidiaries that are less autonomous or engage in R&D. Managerial Summary: The success of an MNE now increasingly depends on its ability to generate knowledge anywhere in the world. Thus, the ability of foreign subsidiaries to generate innovation plays an increasingly important role in enhancing the performance of MNEs. In this regard, what factors determine the innovativeness of foreign subsidiaries is an important question for managers. Our study suggests that the international experience of the top management team (TMT) of a subsidiary and its CEO’s industry experience positively affect subsidiary innovation. Furthermore, the TMT’s international experience has a greater effect on the innovativeness of subsidiaries that remain dependent on their headquarters for knowledge transfer. In contrast, the CEO’s industry experience has a greater effect on the innovativeness of autonomous subsidiaries.

KW - MNEs

KW - autonomy

KW - boundary spanning

KW - managerial experience

KW - subsidiary innovation

UR - http://www.scopus.com/inward/record.url?scp=85041751336&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85041751336&partnerID=8YFLogxK

U2 - 10.1002/gsj.1202

DO - 10.1002/gsj.1202

M3 - Article

VL - 9

SP - 92

EP - 116

JO - Global Strategy Journal

JF - Global Strategy Journal

SN - 2042-5791

IS - 1

ER -