EIJS Working Papers Series
No 224:
INNOVATIVE CAPABILITY IN MNC SUBSIDIARIES: EVIDENCE FROM FOUR EUROPEAN TRANSITION ECONOMIES
Ari Kokko ()
and Victoria Kravtsova
Abstract: This paper explores the determinants of innovative
capability in a sample of multinational company (MNC) subsidiaries in four
transition economies: Estonia, Hungary, Poland, and Slovenia. It finds that
capability in product and process technology appears to be determined by a
different set of variables than capability related to marketing and
management knowledge. The most independent affiliates – those that are
diversified, oriented towards the local market, established through
acquisitions rather than greenfield investments, and where the foreign
MNCs’ only hold minority ownership – are also those that acquire the
strongest innovative capability in product and process technology. For
marketing and management capability, the pattern is nearly the opposite.
The highest levels of capability are recorded in subsidiaries that are
closely tied to the parent company, with high foreign ownership shares and
substantial exports back to the parent company. These differences can be
expected to have some impact on the kinds of spillovers different kinds of
foreign direct investment (FDI) projects may generate.
Keywords: FDI; MNC subsidiaries; innovative capability; spillovers; (follow links to similar papers)
JEL-Codes: F23; O32; O33; (follow links to similar papers)
28 pages, April 11, 2006
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- This paper is published as:
-
Kokko, Ari and Victoria Kravtsova, (2008), 'INNOVATIVE CAPABILITY IN MNC SUBSIDIARIES: EVIDENCE FROM FOUR EUROPEAN TRANSITION ECONOMIES', Post-Communist Economies, Vol. 20, March 2008, No. 1, pages 57-75
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