Electronic Thesis and Dissertation Repository

Degree

Doctor of Philosophy

Program

Business

Supervisor

Paul W. Beamish

Abstract

For many firms, there is no long term effective strategy except to continue to grow and evolve through innovation. Hence, investment in developing these capabilities is a significant managerial priority. The original view within international business research holds that these capabilities are developed in the headquarters of the multinational enterprise (MNE) and are subsequently exploited globally through foreign affiliates. However, as MNEs become established in a multitude of foreign markets, affiliates are now often involved in innovation activities themselves.

Establishing innovation mandates within foreign affiliates often requires the transfer of practices from elsewhere within the MNE network. If, in accordance with the knowledge based theory of the firm, the MNE is superior to markets in the exploitation and diffusion of knowledge and capabilities, it must identify and diffuse superior practices throughout the innovation network.

Case study methodology is used to examine the transfer, adaptation and diffusion of innovation practices and the resulting development and enhancement of associated capabilities within four MNEs. Contributions from this study include a) the role of headquarters in creating mutual interdependencies amongst subsidiaries in order to hasten innovation capability development and enhance knowledge flow, b) an identification of different modes of innovation practice transfer consisting of central administration, brokering, and organic diffusion, the structural configurations which favour them, and the role of headquarters in creating signals to indirectly control the flow of practices. Furthermore, the relative influences on innovation practice adoption and adaptation at the national, organizational, subsidiary and practice levels of analysis were identified.

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