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Subsidiary roles as determinants of subsidiary technology sourcing: empirical evidence from China

Journal of Analytical and Institutional Economics (Politica Economia), 2018, online first


Si Zhang, Shasha Zhao, Ioannis Bournakis, Robert D. Pearce, Marina Papanastassiou

Emerging economies have become new destinations for knowledge sourcing, forcing Multinational Enterprises (MNEs) to reconfigure their global innovation strategies and structure. While foreign subsidiaries located in emerging economies were conventionally viewed as having market or efficiency seeking roles, they have started to evolve towards knowledge-seeking roles. We argue that the conventional wisdom shall be reassessed considering this recent shift. We empirically investigate 129 manufacturing MNE subsidiaries of Fortune 500 companies in China, in terms of their roles and sources of technology. Our results indicate that market and knowledge seeking subsidiaries located in China tend to have a positive impact on the generation of new knowledge, either through locally established MNE R&D laboratories or through collaborations with local firms and scientific institutions.
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