What factors determine the subsidiary mode of overseas R&D by developing-country MNEs? Empirical evidence from Chinese subsidiaries abroad |
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Authors: | Yanyu Wang Wei Xie Jizhen Li Chenxi Liu |
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Institution: | 1. School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing, 100876 China;2. School of Economics and Management, Tsinghua University, Beijing, 100084 China;3. Lee Kong Chian School of Business, Singapore Management University, 50 Stamford Road, Singapore, 178899 |
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Abstract: | This study examines the determinants of the subsidiary modes of overseas research and development (R&D) by Chinese multinational enterprises (MNEs). Based on resource-based view and absorptive capabilities, we propose that financial resources and technological resources have different effects on the selection of overseas R&D subsidiary modes, which are competence-exploiting mode or competence-creating mode. This is supported by the empirical results in this paper using data from a survey of 40 Chinese overseas R&D subsidiaries. The results demonstrate that the parent firms with richer financial resources and more R&D expenses prefer the competence-exploiting mode, while the parent firms with more R&D personnel favor the competence-creating mode. Additionally, this study finds that firms matching our mode choice model tend to enjoy a higher level of innovative performance. |
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