Complementarity and substitution in the knowledge networks of R&D subsidiaries

• We argue that a foreign-based R&D subsidiary of a multinational enterprise (MNE) can potentially source knowledge from three diverse knowledge networks, namely (i) external knowledge network of the homecountry, (ii) external knowledge network of the host country, and (iii) internal (MNE) knowledge network. Drawing on the relative costs andbenefits associated with the process of synergistic knowledge, this studyexamines whether a substitutive or a complementary relationship exists when two of the aforementioned networks collaborate in order to generate new knowledge at the subsidiary level.Our study’s sample is based on asurvey questionnaire addressed to foreign-based R&D subsidiaries of Fortune 500 companies. We assess the existence of complementarity/substitutability using the “production function approach.” Our results indicate that a complementary relationship exists between external knowledge network of the host and the home country, as well as between external knowledge network of the host country and internal knowledge network. On the other hand, external knowledge network of the home country and internal knowledge network form a substitutive relationship. Our study offers a more comprehensive view of the diverse sources/knowledge networks that R&D subsidiaries are sourcing knowledge from when compared to existing research. We also specify and account for the costs/benefits involved in knowledge sourcing and thereby detect possible substitution/complementarity between different sources ofknowledge. So far, there has been limited to nonexistent research into the diversity of knowledge networks of R&D subsidiaries and the examination of potential substitutabilities and complementarities. Hence our empirical study contributes to the development of this particular research stream.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Keyword

Knowledge networks

knowledge sourcing

complementarity

substitution

Publication and Content Type

ref (subject category)

kap (subject category)