Technology Sourcing in Multinational Enterprises and the Roles of Subsidiaries: An Empirical Investigation

Abstract

This chapter views the Multinational Enterprise (MNE) as a differentiated learning network with subsidiaries playing a critical role in managing knowledge (Gupta and Govindarajan, 2000; Birkinshaw et al, 1998). Today, rather than accepting predetermined roles, subsidiaries are asked to actively engage in developing their operations and explore procedures that would increase the efficacy of the whole MNE network (Birkinshaw, 1996; Crookell and Morrison, 1990). Building on recent advances regarding the strategic evolution of subsidiary roles, we argue that the MNE is a vehicle for integrating knowledge generated internally and externally from its global operations (Bartlett and Ghoshal, 1989). There are many cases of subsidiaries that perform specific value-added activities, which are fundamentally ‘embedded’ in their respective host-countries’ knowledge systems (evidence is provided by Kuemmerle, 1999a; Dunning, 1996; Jarillo and Martinez, 1990).