Chapter 7 Subsidiary Entrepreneurship and Headquarters Involvement During Innovation Development: Dual Paths to Subsidiary Performance

Purpose – The chapter aims at enhancing our understanding on how the headquarters involvement and subsidiary entrepreneurship during the innovation development process of multinational corporation (MNC) subsidiaries affect the outcome of the innovation in terms of their home market- and organisational performance. Design/methodology/approach – The study is based on cross-sectional questionnaire survey data from 87 innovation projects in 64 MNC subsidiaries located in Europe, East Asia and the United States. Findings – Subsidiary entrepreneurship during the innovation process has a positive impact on the subsidiary's market performance and a negative impact on its organisational performance, whereas the involvement of corporate headquarters has a negative impact on the market performance, and a positive impact on the organisational performance. Research implications – The research provides a starting point for further research on the relationship between the management of innovation processes among MNC subsidiaries and the performance outcomes of such processes. Practical implications – The study implies that there is a need for corporate managers to take into account the entrepreneurial endeavour of subsidiaries when formulating corporate innovation strategies. Originality/value: Integrates a top-down and bottom-up perspective on the strategic management of innovation development processes in MNC subsidiaries.