Does parenting matter in subsidiary innovation in emerging economies? Exploring the role of parent superior competitiveness in affecting subsidiary contextual ambidexterity

Abstract

Parenting in the multinational enterprises (MNEs) creates a dilemma when parent company manages the subsidiary contextual ambidexterity, in which parent superior competitiveness may nurture subsidiary exploitation while inhibit exploration. This study addresses this dilemma by developing an integrated framework and investigating how parent superior competitiveness affects the subsidiary contextual ambidexterity (innovation initiative and motivation of learning from the parent), which in turn increases subsidiary innovation performance. Furthermore, it is also examined that what tactics subsidiaries should take to resolve the dilemma. Using 296 survey responses from multiple informants of 111 subsidiaries in China, we find that parent superior competitiveness hinders subsidiary innovation initiative, but enhances subsidiary motivation of learning from the parent company. The negative effect of parent superior competitiveness on subsidiary innovation initiative becomes weaker when the strengths of subsidiary external tie and parent-subsidiary communication are enhanced. The positive effect of parent superior competitiveness on subsidiary motivation of learning is strengthened by subsidiary external tie, whereas no significant effect is found of parent-subsidiary communication. In addition, subsidiary innovation initiative contributes to subsidiary innovation performance through knowledge exploration and subsidiary motivation of learning from the parent positively affects innovation performance.