Innovation is the process through which new products or processes are introduced within the firm; it represents the end of a process of knowledge sourcing and transformation, as well as the beginning of a process of exploitation which may result in an improvement in the performance of the innovating firm (Roper and Love, 2008). Within the context of the multinational corporation (MNC), localized subsidiary innovation (innovation initiative) refers to the extent to which subsidiaries develop and adopt new products, processes or administrative systems locally (Mu et al., 2007; Ghoshal and Bartlett, 1988). The perspectives of organizational learning and knowledge (Cohen and Levinthal, 1990), and inter-firm networks (Forsgren, 2008) explain how subsidiaries have a local network of relationships that provides access to local knowledge. Authors have emphasized the importance of local resources for MNE innovation (Almeida, 1996; Pearce, 1999). In this chapter, both approaches are therefore considered. The literature first described how ownership-specific advantages were developed at the corporate HQ levels, and leveraged overseas through knowledge transfer. It is recognized now, however, that subsidiaries themselves can contribute significantly to the knowledge base of the MNC, creating ownership advantages through operations in dynamic host environments. Thus, foreign subsidiaries play a very important role by acquiring and creating valuable knowledge in their host country, in time, contributing back to the knowledge base of the entire MNEs (Zhao and Luo, 2005; Almeida and Phene, 2004; Birkinshaw and Hood, 2001; Cantwell and Piscitello, 1999)...
|Title of host publication||Innovation and Creativity|
|Subtitle of host publication||Pillars of the Future Global Economy|
|Editors||Filip De Beule, Yasabel Nauwelaerts|
|Place of Publication||Cheltenham|
|Publisher||Edward Elgar Publishing|
|Number of pages||19|
|Publication status||Published - 29 Mar 2013|