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Research Summary: We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelon perspective, we argue that managers’ characteristics, such as prior MNE work experience and industry experience, affect subsidiary innovation. We tested our hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as an external boundary‐spanning capability and, therefore, it has a greater effect on autonomous subsidiaries. In contrast, managers’ prior MNE work experience functions as an internal boundary‐spanning capability and, therefore, it has a smaller effect on subsidiaries that are less autonomous or engage in R&D. Managerial Summary: The success of an MNE now increasingly depends on its ability to generate knowledge anywhere in the world. Thus, the ability of foreign subsidiaries to generate innovation plays an increasingly important role in enhancing the performance of MNEs. In this regard, what factors determine the innovativeness of foreign subsidiaries is an important question for managers. Our study suggests that the international experience of the top management team (TMT) of a subsidiary and its CEO’s industry experience positively affect subsidiary innovation. Furthermore, the TMT’s international experience has a greater effect on the innovativeness of subsidiaries that remain dependent on their headquarters for knowledge transfer. In contrast, the CEO’s industry experience has a greater effect on the innovativeness of autonomous subsidiaries.

Research SummaryWe utilize the institution‐based view to study the effect of home institutions on the internationalization of emerging economy firms. We argue that institutional support and institutional hazards co‐exist and can influence firm internationalization simultaneously. However, institutional support has a stronger effect on internationalization than institutional hazards. Further, we argue that when the institutional environment is supportive of the internationalization effort, state ownership provides proximity to institutional resources and thus amplifies the relationship between institutional support and firm internationalization. However, when the institutional environment is perilous to business activities, state ownership increases dependency on the institutional environment and constrains the escape from the domestic market. Results based on the World Bank Enterprises Survey of 9,337 manufacturing firms from 81 emerging economies largely support our arguments.Managerial SummaryHome country institutions have different components, some of which can support while others can hinder the internationalization of emerging economy firms. Our study helps managers to identify different types of home‐based institutional supports that can help international expansion and home‐based institutional hazards that firms can avoid by diversifying their sales geographically. The findings suggest that leveraging institutional support at home country has a stronger effect on internationalization than escaping institutional hazards because institutional supports can complement other home‐based advantages that emerging economy firms have. Furthermore, state ownership can increase a firm's proximity to institutional resources, providing firms greater access to institutional support for international expansion.

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