TY - JOUR

T1 - Subsidiary innovation performance

T2 - Balancing external knowledge sources and internal embeddedness

AU - Ferraris, Alberto

AU - Bogers, Marcel L.A.M.

AU - Bresciani, Stefano

PY - 2020

Y1 - 2020

N2 - The open innovation (OI) literature has focused primarily on OI strategies and external sourcing of knowledge at the organizational level and has paid less attention to the role of subsidiaries in the OI activities of multinational corporations (MNCs). In contrast, International Business (IB) scholars have shown that subsidiaries play an emergent role in MNC innovation activities and have highlighted the relevance of subsidiaries' external and internal linkages. In this paper, we bring together these perspectives by examining OI at the subsidiary level within MNCs and test our hypotheses through an empirical analysis using data from 91 MNC subsidiaries. Our findings show an inverted U-shaped relationship between the openness of subsidiaries to external knowledge sources and innovation performance. Moreover, we find that subsidiaries' internal embeddedness positively moderates the above relationship. Practically, our findings suggest the need for MNC and subsidiary managers to develop mechanisms to manage intra-organizational relations in order to achieve improved innovation performance while leveraging of external knowledge sources at the subsidiary level, thus favoring MNCs' knowledge management (KM) approach. We contribute to different interrelated streams of research by providing compelling evidence to support the assertion that subsidiaries need to balance external and internal openness.

AB - The open innovation (OI) literature has focused primarily on OI strategies and external sourcing of knowledge at the organizational level and has paid less attention to the role of subsidiaries in the OI activities of multinational corporations (MNCs). In contrast, International Business (IB) scholars have shown that subsidiaries play an emergent role in MNC innovation activities and have highlighted the relevance of subsidiaries' external and internal linkages. In this paper, we bring together these perspectives by examining OI at the subsidiary level within MNCs and test our hypotheses through an empirical analysis using data from 91 MNC subsidiaries. Our findings show an inverted U-shaped relationship between the openness of subsidiaries to external knowledge sources and innovation performance. Moreover, we find that subsidiaries' internal embeddedness positively moderates the above relationship. Practically, our findings suggest the need for MNC and subsidiary managers to develop mechanisms to manage intra-organizational relations in order to achieve improved innovation performance while leveraging of external knowledge sources at the subsidiary level, thus favoring MNCs' knowledge management (KM) approach. We contribute to different interrelated streams of research by providing compelling evidence to support the assertion that subsidiaries need to balance external and internal openness.

KW - Internal embeddedness

KW - Knowledge management

KW - Open innovation

KW - Subsidiary innovation

U2 - 10.1016/j.intman.2020.100794

DO - 10.1016/j.intman.2020.100794

M3 - Journal article

AN - SCOPUS:85094628109

VL - 26

JO - Journal of International Management

JF - Journal of International Management

SN - 1075-4253

IS - 4

M1 - 100794

ER -