Subsidiary roles as determinants of subsidiary technology sourcing: empirical evidence from China

Abstract

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The internationalization of innovation towards the South: A historical case study of a global pharmaceutical corporation in China (1993–2017)

“…Hence, we argue that AZ's internal motive for deepening its involvement in China during this period was worldwide learning (Bartlett and Beamish, 2013;Zhang et al, 2018). This strategic shift from market expansion (as found in period one) and local responsiveness (as found in period two) can be attributed to further changes in ownership advantages and local conditions when compared to the two earlier periods.…”

“…These activities of product adaptation and localization were achieved in the form of in-house R&D support and collaboration with local Chinese hospitals to ensure safety and suitability of drugs to Chinese patients. Similarly, Zhang and Pearce (2010) and Zhang et al (2018) note that market-seeking subsidiaries in China incorporated a strong element of product adaptation in local operations. Thus, in order to meet the idiosyncratic demand conditions in China, local sourcing of technology became an essential precondition.…”

“…Liu et al, 2011;Liu and Chen, 2012) suggests that MNE R&D mandates in these locations have increasingly gone beyond the traditional pattern of knowledge exploitation. Pearce (2004;, Dunning and Lundan (2008), and Zhang et al (2018) have found that technological dynamism tends to shape the internal organisational structure of the MNE, which often explains the initial and subsequent strategic motivations of overseas subsidiaries. The strategic motivation underlying the establishment of subsidiaries in different countries depends on the locational opportunities and advantages that are present at the time of the initial investment.…”

“…As the local environmental conditions in the South continue to evolve, benefits of an embedded innovation capacity for developing goods in and for host markets and regions become apparent. As a result, initial motivations of market-or efficiency-seeking can often shift towards local innovation through 'asset augmenting' activities (such as knowledge-seeking) ( Bartlett and Beamish, 2013;Dunning and Lundan, 2008;Zhang et al, 2018).…”

MNE R&D internationalization in developing Asia

“…We consider this as the East-East knowledge transfer. In terms of East-West knowledge transfer for global markets, some of these increasingly innovative subsidiaries begin to formally identify complementary or novel knowledge (at a pre-competitive stage) useful for meeting MNE global market needs (Jha et al, 2018;Zhang, Zhao, Bournakis, Pearce & Papanastassiou, 2018;Zhao et al, 2019). A truly original innovation can, through well-activated and persistent assimilation and adaption, be crucially open-ended and feed into the sustained competitive evolution of the MNE.…”