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From local to global innovation: The role of subsidiaries’ external relational embeddedness in an emerging market

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  • Isaac, Victor Ragazzi
  • Borini, Felipe Mendes
  • Raziq, Muhammad Mustafa
  • Benito, Gabriel R.G.

Abstract

This study examines factors that influence the development and transformation of local innovations into global innovations from an emerging market subsidiary. We argue that subsidiaries’ relational embeddedness with the external local network is essential for the development of local innovations. Turning local innovations into global ones is the result of the level of innovativeness evoked by the subsidiary located in an emerging market. However, the transformation of local into global innovations is more likely to happen in the case of subsidiaries having previous reverse knowledge transfers in functional areas. Reverse knowledge transfers indicate internal embeddedness, which is essential for local innovation to be transformed into global innovation. We draw on survey evidence from 131 foreign subsidiaries operating in Brazil. Using a Structural Equation Modeling technique, our results support our hypotheses and show that subsidiaries’ relational embeddedness with the external local network is positively associated with local innovation, which is transformed into global innovation, especially when innovation is developed in the subsidiary´s functional areas with previous reverse knowledge transfers. We draw implications for the field of subsidiary management research, specifically to understand the role of local innovation from foreign subsidiaries in emerging markets.

Suggested Citation

  • Isaac, Victor Ragazzi & Borini, Felipe Mendes & Raziq, Muhammad Mustafa & Benito, Gabriel R.G., 2019. "From local to global innovation: The role of subsidiaries’ external relational embeddedness in an emerging market," International Business Review, Elsevier, vol. 28(4), pages 638-646.
    • Handle: RePEc:eee:iburev:v:28:y:2019:i:4:p:638-646
    DOI: 10.1016/j.ibusrev.2018.12.009
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    Cited by:

    1. Scott-Kennel, Joanna & Saittakari, Iiris, 2020. "Sourcing or sharing in MNE networks? National headquarters and foreign subsidiaries as knowledge conduits in SMOPECs," International Business Review, Elsevier, vol. 29(1).
    2. Sarkar, Soumodip & Mateus, Sara, 2022. "Value creation using minimal resources – A meta-synthesis of frugal innovation," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    3. Bausch, Madeleine & Barmeyer, Christoph & Mayrhofer, Ulrike, 2022. "Facilitating factors in the cross-cultural transfer of management practices: The case of a German multinational in Brazil," International Business Review, Elsevier, vol. 31(2).
    4. Afriyadi Cahyadi & Róbert Magda, 2021. "Digital Leadership in the Economies of the G20 Countries: A Secondary Research," Economies, MDPI, vol. 9(1), pages 1-15, March.
    5. Jian Du & Shan Zhu & Wen Helena Li, 2023. "Innovation through internationalization: A systematic review and research agenda," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1217-1251, September.
    6. Ferraris, Alberto & Bogers, Marcel L.A.M. & Bresciani, Stefano, 2020. "Subsidiary innovation performance: Balancing external knowledge sources and internal embeddedness," Journal of International Management, Elsevier, vol. 26(4).
    7. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 2020. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 538-576, June.
    8. Han, Xiaomin & Goxe, François & Freeman, Susan, 2024. "Internationalization through social networks: A systematic review and future research agenda," International Business Review, Elsevier, vol. 33(4).
    9. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 0. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-39.
    10. Hutzschenreuter, Thomas & Harhoff, Philippa-Luisa, 2021. "The accelerating effect of institutional environment unfamiliarity on subsidiary portfolio expansion in a new host country," International Business Review, Elsevier, vol. 30(3).
    11. Badreldin Mohamed Ahmed Abdulrahman & Sanaa Mostafa Mohammed, 2024. "Investigating the Impact of Digital Leadership Dimensions on Service Economics Dimensions: An Empirical Study of Service Ministries in the Kingdom of Saudi Arabia," International Review of Management and Marketing, Econjournals, vol. 14(6), pages 325-333, October.
    12. Jankowska, Barbara & Götz, Marta & Tarka, Piotr, 2021. "Foreign subsidiaries as vehicles of industry 4.0: The case of foreign subsidiaries in a post-transition economy," International Business Review, Elsevier, vol. 30(6).
    13. Mazboudi, Mohamad & Sidani, Yusuf M. & Al Ariss, Akram, 2020. "Harmonization of firm CSR policies across national contexts: Evidence from Brazil & Sweden," International Business Review, Elsevier, vol. 29(5).
    14. De Marchi, Valentina & Cainelli, Giulio & Grandinetti, Roberto, 2022. "Multinational subsidiaries and green innovation," International Business Review, Elsevier, vol. 31(6).
    15. Dabić, Marina & Obradović, Tena & Vlačić, Božidar & Sahasranamam, Sreevas & Paul, Justin, 2022. "Frugal innovations: A multidisciplinary review & agenda for future research," Journal of Business Research, Elsevier, vol. 142(C), pages 914-929.
    16. Zheng, Li & Ma, Pengcheng & Hong, Jacky Fok Loi, 2022. "Internal embeddedness of business group affiliates and innovation performance: Evidence from China," Technovation, Elsevier, vol. 116(C).
    17. Gao, Xinyi & Dong, Siyuan & Liu, Cheng, 2024. "Overseas operations, global value chain position and technological innovation," International Review of Economics & Finance, Elsevier, vol. 94(C).
    18. Lô, Amadou & Geiger, Martha, 2022. "Managing internal embeddedness in multinational corporations’ R&D subsidiaries: An evolutionary perspective on the automotive industry in Silicon Valley," Technovation, Elsevier, vol. 113(C).
    19. Ferraris, Alberto & Degbey, William Y. & Singh, Sanjay Kumar & Bresciani, Stefano & Castellano, Sylvaine & Fiano, Fabio & Couturier, Jerome, 2022. "Microfoundations of Strategic Agility in Emerging Markets: Empirical Evidence of Italian MNEs in India," Journal of World Business, Elsevier, vol. 57(2).
    20. Liu, Ting & Li, Xizhuo, 2022. "How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective," Journal of International Management, Elsevier, vol. 28(3).
    21. René Belderbos & Boris Lokshin & Federico Michiel, 2021. "R&D and Foreign Subsidiary Performance at or Below the Technology Frontier," Management International Review, Springer, vol. 61(6), pages 745-767, December.
    22. Callaghan, Christian William, 2021. "Consequences of deindustrialisation for globalisation: Insights for international business," International Business Review, Elsevier, vol. 30(3).
    23. Helene Loe Colman & Birgitte Grøgaard & Inger G. Stensaker, 2022. "Organizational identity work in MNE subsidiaries: Managing dual embeddedness," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(9), pages 1997-2022, December.

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