Innovation initiative within foreign subsidiaries in South Korea: Determinants and outcomes

Axele Giroud, Yoo Jung Ha, Mo Yamin

Research output: Chapter in Book/Report/Conference proceedingChapter


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)...
Original languageEnglish
Title of host publicationInnovation and Creativity
Subtitle of host publicationPillars of the Future Global Economy
EditorsFilip De Beule, Yasabel Nauwelaerts
Place of PublicationCheltenham
PublisherEdward Elgar Publishing
Number of pages19
ISBN (Electronic)9781781004333
ISBN (Print)9781781004326
Publication statusPublished - 29 Mar 2013

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