MNE-subsidiaries' innovation capability building and learning in emerging economies: Firm-level evidence from the ICT industry in Brazil

Abstract

This paper is concerned with innovation capability accumulation paths and the role of learning processes in MNE-subsidiaries in emerging economies. Drawing on evidence from subsidiaries of the ICT industry in Brazil (1996-2008) we found: 1 variability across the subsidiaries in terms of the manner in which they improved their innovation performance over time 2 such differences reflected heterogeneity across the subsidiaries in terms of their learning efforts to acquire knowledge through inter-organisational knowledge links 3 although all seven subsidiaries developed such links, they achieved differing levels of innovation performance 4 innovative subsidiaries responded pro-actively to the incentives from the local industrial policy. The paper suggests that in order to accumulate capabilities to move from 'initially imitative' into highly innovative subsidiaries, the international intra-MNE knowledge links cannot be handled independently from local knowledge links. © 2012 Inderscience Enterprises Ltd.