Foreign subsidiaries’ learning from local environments: An empirical test

• DOI: 10.1007/s11575-007-0005-5
• Publication Date: 2007-03-09T16:22:11Z
• Authors: Shaohua “Carolyn” Mu; Devi R. Gnyawali; Donald E. Hatfield
• Keywords: 0502 economics and business; 05 social sciences

Abstract and Key Results This study examines antecedent factors that influence foreign subsidiaries’ innovation through learning from local environments, which in turn influences their knowledge contribution back to the headquarters. We argue that subsidiary local embeddedness, subsidiary top management team heterogeneity, and MNC corporate entrepreneurial culture are the key enablers for subsidiaries to learn and innovate in the local environments. The findings support that the learning and innovation of U.S.-based subsidiaries are significantly influenced by their local embeddedness, their top management team heterogeneity, and the corporate entrepreneurial culture of their parent company, along with the control variables including subsidiary size and the internationalization of parent company.