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Asset Recombination in International Partnerships as a Source of Improved Innovation Capabilities in China

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  • Simon Collinson

    (Birmingham Business School, University of Birmingham)

  • Rajneesh Narula

    (Henley Business School, University of Reading)

Abstract

This paper examines how multinational enterprises (MNEs) and local partners, including suppliers, customers and competitors in China, improve their innovation capabilities through collaboration. We analyse this collaboration as a three-way interaction between the ownershipspecific (O) advantages or firm-specific assets (FSAs) of the MNE subsidiary, the FSAs of the local partner, and the location-specific assets of the host location. Our propositions are examined through a survey of 320 firms, supplemented with 30 in-depth case studies. We find that the recombination of asset-type (Oa) FSAs and transaction-type (Ot) FSAs from both partners leads to new innovation-related ownership advantages, or 'recombinant advantages'. The study reveals important patterns of reciprocal transfer, sharing and integration for different asset categories (tacit, codified) and different forms of FSA and explicitly links these to different innovation performance outcomes. Ot FSAs, in the form of access to local suppliers, customers or government networks are particularly important for reducing the liability of foreignness for MNEs.

Suggested Citation

  • Simon Collinson & Rajneesh Narula, 2014. "Asset Recombination in International Partnerships as a Source of Improved Innovation Capabilities in China," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-05, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:jhdxdp:jhd-dp2014-05
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    References listed on IDEAS

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    Cited by:

    1. Christian Asmussen & Tailan Chi & Rajneesh Narula, 2022. "Quasi-internalization, recombination advantages, and global value chains: Clarifying the role of ownership and control," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(8), pages 1747-1765, October.
    2. Rajneesh Narula, 2016. "The Modern MNE as an Efficient Meta-integrator: Emerging Market MNEs Need to Foster Internal Embeddedness to Succeed," John H Dunning Centre for International Business Discussion Papers jhd-dp2016-02, Henley Business School, University of Reading.
    3. Madan Dhanora & Ruchi Sharma & Walter G. Park, 2021. "Technological Innovations and Market Power: A Study of Indian Pharmaceutical Industry," Millennial Asia, , vol. 12(1), pages 5-34, April.
    4. Al-Atwi, Amer Ali & Amankwah-Amoah, Joseph & Khan, Zaheer, 2021. "Micro-foundations of organizational design and sustainability: The mediating role of learning ambidexterity," International Business Review, Elsevier, vol. 30(1).
    5. Qiao, Penghua & Chang, Ming & Zeng, Yuping, 2024. "The influence of digitalization on SMEs’ OFDI in emerging countries," Journal of Business Research, Elsevier, vol. 177(C).
    6. Elitsa R Banalieva & Charles Dhanaraj, 2019. "Internalization theory for the digital economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1372-1387, October.
    7. Irina Surdu & Henrich R. Greve & Gabriel R. G. Benito, 2021. "Back to basics: Behavioral theory and internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1047-1068, August.
    8. Yanting Gu & Fiorenza Belussi & Rajneesh Narula, 2023. "Entering European countries: advantages and difficulties for Chinese electric vehicle firms," "Marco Fanno" Working Papers 0302, Dipartimento di Scienze Economiche "Marco Fanno".
    9. Evers, Natasha & Andersson, Svante, 2021. "Predictive and effectual decision-making in high-tech international new ventures – A matter of sequential ambidexterity," International Business Review, Elsevier, vol. 30(1).
    10. Liu, Yipeng & Collinson, Simon & Cooper, Sir Cary & Baglieri, Daniela, 2022. "International business, innovation and ambidexterity: A micro-foundational perspective," International Business Review, Elsevier, vol. 31(3).
    11. Liena Kano & Luciano Ciravegna & Francesco Rattalino, 2021. "The family as a platform for FSA development: Enriching new internalization theory with insights from family firm research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(1), pages 148-160, February.
    12. Rajneesh Narula & Christian Geisler Asmussen & Tailan Chi & Sumit Kumar Kundu, 2019. "Applying and advancing internalization theory: The multinational enterprise in the twenty-first century," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1231-1252, October.

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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