HOW DO MNEs INVENT? AN INVENTION-BASED PERSPECTIVE OF MNE PROFITABILITY

Mario Kafouros, Niron Hashai, Janja Annabel Tardios, Elizabeth Yi Wang

Research output: Contribution to journalArticlepeer-review

Abstract

Although MNEs create inventions both internally and collaboratively with partners as well as within and across countries, we know very little about the effects that combining such inventive activities have on their profitability. This study develops an invention-based perspective that considers how MNEs' profitability is influenced by the ways they organize the development of inventions across organizational boundaries (internally or collaboratively) and geographic boundaries (within or across countries). This perspective postulates that profitability is not merely driven by advantageous technological endowments but also by how such technological assets have been created. Accordingly, it explains why specific combinations of inventive activities across the two boundaries affect the likelihood of creating breakthrough inventions differently, provide different revenue and cost advantages, and have different effects on MNEs’ profitability. It further explains why cross-country inventions contribute more to profitability when they are internalized, while within-country inventions are more profitable when they are created collaboratively.

Original languageEnglish
Pages (from-to)1420-1448
Number of pages29
JournalJournal of International Business Studies
Volume53
Issue number7
Early online date8 Feb 2022
DOIs
Publication statusPublished - 8 Feb 2022

Keywords

  • collaboration
  • competitive advantage
  • innovation
  • performance
  • profitability
  • technology

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