A Micro-Foundations Approach to Studying Innovation in the Multinational Subsidiaries

We study antecedents of innovation performance for the subsidiaries of multinational enterprises (MNEs) using the microfoundations approach. Based on the upper echelons perspective, we argue that managers’ demographic characteristics, such as prior MNE work experience and industry experience affect subsidiary innovation. We tested the hypotheses on a sample of 228 MNE subsidiaries from 11 countries. Results indicate that managers’ industry experience serves as external boundary spanning capability and therefore it has a greater effect in subsidiaries that are autonomous. In contrast, managers’ prior MNE work experience functions as internal boundary spanning capability and therefore it has a smaller effect in subsidiaries that are less autonomous or engage in R&D