Environmental conditions, subsidiaries’ autonomy and global innovation in multinational enterprises

• Published in: Journal of science and technology policy management (Online) Vol. 11; no. 2; pp. 247 - 262
• Main Authors: Rafael Morais Pereira, Felipe Mendes Borini, Leandro Lima Santos, Moacir de Miranda Oliveira Jr
• Format: Journal Article
• Language: English
• Published: Bingley Emerald Group Publishing Limited 18-06-2020
• Subjects: Autonomy; Averages; Competition; Competitive advantage; Decision making; Determinism; Discriminant validity; Environmental conditions; Foreign subsidiaries; Globalization; Host country; Hypotheses; Innovations; Knowledge; Local conditions; Multinational corporations; Multivariate statistical analysis; Reliability; Reliability analysis; Reliability aspects; Subsidiaries; Technological change
• ISSN: 2053-4620; 2053-4639
• DOI: 10.1108/JSTPM-07-2018-0072

PurposeThe purpose of this study is to analyze the influence of environmental conditions of the subsidiaries’ host country in the process of developing global innovation. It is argued that, even though the local environment in which subsidiaries are placed must be taken into account, this is not the only important factor to directly create global innovation, but it also becomes necessary for the subsidiaries to be endowed with autonomy, in this sense allowing them to enjoy the local conditions for innovation purposes.Design/methodology/approachA quantitative approach is opted for the research development, while the hypotheses were evaluated from the analysis of the relationship between four constructs: global innovation, local market conditions, local competitive dynamics and autonomy to innovate. The structural equation modeling technique is applied, using data from 172 foreign subsidiaries located in Brazil.FindingsThe validity and reliability parameters analyzed in the proposed model were suitable (average variance extracted, Cronbach’s alpha, composite reliability and discriminant validity). H1 (the better the market conditions of the host country, the greater the subsidiary’s autonomy to innovate) was not supported. However, both H2 and H3 were supported, suggesting the influence of local competitive dynamics on autonomy to innovate, and also the influence of autonomy to innovate on global innovation, respectively.Originality/valueThis paper provides some contributions for the advance in researches about the global innovation management, considering the subsidiaries’ perspective, showing the relevance of the subsidiary’s autonomy for the development of global innovation given a favorable local competitive dynamic.