Abstract
Emerging market multinational enterprises (EMNEs) increasingly access foreign technology and knowledge by internationalizing their R&D activities. Since technological laggardness hinders efficient knowledge transfer, a successful catch-up with advanced-economy multinational enterprises (AMNEs) requires EMNEs to transfer foreign knowledge across national boundaries more effectively. However, we lack a clear understanding of how EMNEs manage this knowledge transfer and integration and to what extent the employment and effectiveness of corresponding facilitation mechanisms may differ from AMNEs. Adopting a sender-recipient model and drawing on arguments from learning theory and transaction costs economics, we suggest that EMNEs benefit more from and, consequently, are more likely to engage in mechanisms to increase recipient capabilities and sender motivation. In a comparative analysis of Chinese, Indian, German, and U.S. MNEs and focusing on frequent international exchange of R&D personnel regarding recipient capabilities and the governance of foreign R&D activities regarding sender motivation, we observe positive relationships with home-market innovation for EMNEs, but not for AMNEs. Moreover, we observe that EMNEs exploit this positive effect and are more likely to use these mechanisms when focusing on technology- than on market-seeking.
Highlights
Knowledge is a key source of competitive advantage for the multinational enterprise (MNE) (Kogut and Zander, 1993)
Our findings suggest that mecha nisms to increase recipient capabilities and mechanisms to increase sender motivation are more effective and more likely to be applied by Emerging market multinational enterprises (EMNEs) than advanced-economy multinational en terprises (AMNEs)
While prior research acknowledges that EMNEs and AMNEs differ systematically in their motivation for R&D internationalization (Awate et al, 2015), we extend this view by theorizing and empirically showing that strategies directed at technological upgrading need to align with distinct transfer and integration mechanisms
Summary
Knowledge is a key source of competitive advantage for the multinational enterprise (MNE) (Kogut and Zander, 1993). We highlight that the use of KTIMs directed at increasing recipient capabilities and sender motivation can facilitate the upgrading and increase home-market innovativeness, despite EMNEs’ technological capability holes (Ramamurti & Williamson, 2019). Our findings suggest that mecha nisms to increase recipient capabilities (i.e., personnel exchange) and mechanisms to increase sender motivation (i.e., governance mode of the foreign activities) are more effective and more likely to be applied by EMNEs than AMNEs. EMNEs are more likely to use these mechanisms, if they focus on learning and accessing technology in their R&D internationalization. While prior research acknowledges that EMNEs and AMNEs differ systematically in their motivation for R&D internationalization (Awate et al, 2015), we extend this view by theorizing and empirically showing that strategies directed at technological upgrading need to align with distinct transfer and integration mechanisms. We believe that our findings spur some critical managerial implications, concerning how the current COVID-19 pandemic, which severely reduces international mobility and MNEs staff exchange, may affect the EMNEs’ technological upgrading processes
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