Influence of subsidiary business networks on the performance of inter-subsidiary innovation transfer in MNCs

Purpose: This research aims to understand inter-subsidiary innovation transfers from a subsidiary business network perspective. We examine transfer performance with particular interest in the influence of subsidiary business networks in innovation development stage. The moderating effect of knowledge inputs, that is, external and internal business partners, on transfer efficiency and effectiveness are hypothesized. Methodology/approach: This study utilizes the data of 129 intersubsidiary transfer projects from 19 multinational corporations. The empirical analysis specifically examines how and to what extent the development partnership - source of knowledge inputs - affects the efficiency and effectiveness of innovation transfer between subsidiaries. Findings: The results indicate that the source of knowledge inputs influence transfer performance indirectly, but not directly. The impact is made through the dyadic relationship to the transfer performance. The findings complement the literature on innovation/knowledge transfer by incorporating innovation development into scrutiny and gauging transfer efficiency and effectiveness explicitly. Value of paper: The empirical evidence highlights the significance of dyadic willingness to both transfer efficiency and effectiveness. Its influence to transfer performance exceeds that of dyadic similarity or previous collaboration experience. The result provides useful managerial implications to MNCs headquarters and subsidiaries. The lack of previous collaboration experience or technical similarity may pose the down side for innovation transfer between subsidiaries. But that should not put off the initiatives to conduct innovation transfers. Such problem could be effectively remedied by strong willingness between the dyad. The resources and support that subsidiaries receive could counteract the hurdle of dissimilarity and unfamiliarity. Copyright © 2010 by Emerald Group Publishing Limited.