Whereto the multinational? The evolution of technological capabilities in the multinational network

This paper empirically investigates how internationalization influences the generation of new technology within the multinational corporation. Data on the introduction of 756 technologies by 23 Swedish multinationals over the 1971-1990 period show that foreign units account for an increasing share of all new technologies that are introduced in the multinational network. Additionally, foreign units are associated with a significantly higher probability of entry into new and more distantly related fields of technology, creating a long-term drift into new technological capabilities. The data support the proposition that foreign acquisitions are particularly likely to introduce new and more distantly related technology to the multinational group, although this aspect of technological renewal predominantly applies to firms carrying out explicit international acquisition strategies. The findings are consistent with an evolutionary view of the multinational corporation, involving a gradual movement into new fields of technology through maturing international operations and more significant departures from established technology portfolios through events like foreign acquisitions. It is argued that international growth allows the multinational to leverage its accumulated experience in the exploitation of geographically dispersed and idiosyncratic technological capabilities. At the same time, the observations point to a fundamental, growing and perhaps underestimated tension between technological opportunity and coordination and control in the maturing multinational corporation.