Reverse Transfers of Innovation and National Development: Evidence from Brazilian Subsidiaries

Maitê Alves Bezerra,Felipe Mendes Borini,Maria Laura Ferranty Maclennan

doi:10.4067/s0718-27242015000400001

Abstract

The search for innovation has become an important motivation for the internationalization of companies in emerging countries. In that context, this study tests the impact that a nation’s development has on whether subsidiaries transfer innovation of products or that of processes. Survey data collected from 73 subsidiaries of Brazilian companies indicate that companies located in developed markets tend to transfer more product-oriented innovations than do those based in emerging countries. Furthermore, the size and age of a subsidiary has an impact on the transfer process. The larger and younger the subsidiary, the more likely a company is to favor the flow of product innovation into its headquarters. The level of national development was not identified as an influence on the flow of process innovation.

Highlights

Multinational corporations in developing countries (DMNCs) have been prominent in both the international business (Verbeke & Kano, 2015) and the innovation process literature (Fleury et al, 2013)
We seek to understand the type of technological knowledge that is transferred from subsidiaries to headquarters located in emerging markets and whether transferred knowledge varies depending on the type of environment at the subsidiary’s location
Because this study examines the flows of innovation transfer to headquarters from subsidiaries located in both developed and emerging markets, countries were divided into the two dimensions of developed and emerging markets

Summary

Introduction

Multinational corporations in developing countries (DMNCs) have been prominent in both the international business (Verbeke & Kano, 2015) and the innovation process literature (Fleury et al, 2013). The search for technological knowledge has become part of DMNCs’ internationalization strategies (Alvaro et al, 2015). Technological knowledge developed by subsidiaries in advanced countries has been imported by DMNCs’ headquarters (Iammarino et al, 2008). Some authors argue that DMNCs’ strategic models are guided by the search for overseas resources, such as technological knowledge, that can be combined with its existing resources (Bartlett & Ghoshal, 2000). For DMNCs, skills acquired in the international market are of obvious importance. We seek to understand the type of technological knowledge that is transferred from subsidiaries to headquarters located in emerging markets (i.e., reverse transfers of knowledge) and whether transferred knowledge varies depending on the type of environment at the subsidiary’s location

Objectives

Methods

Results

Conclusion