Subsidiary development of new technologies: managing technological changes in multinational and geographic space

Abstract

This study explores the co-evolutionary processes of the subsidiaries of the multinational firm with their global organizations and geographic locations. How subsidiaries expand their technological scope is determined by the nature of changes in dual contexts, within their organizations and within their geographies. Using the concepts of local search and communities of practice, we propose that changes in these contexts have differential effects on new technology development. Increased technology creation in the organizational context, in areas specific to the subsidiary’s expertise, leads to the development of focused, competence-exploiting technologies, while increased host country innovation in the broad technological spectrum is conducive to expansive, competence-creating technologies in the subsidiary. Subsidiary embeddedness in these dual contexts enhances the effects of the organizational and locational contexts on the scope of subsidiary new technology development.