Creation of Local Innovation by Foreign Subsidiaries from Specific Advantages of the Subnational Environment
DOI:
https://doi.org/10.18568/internext.v16i1.600Keywords:
Foreign subsidiaries, Subnational environment, Local innovation, Multiple linear regressionAbstract
Purpose - The study examines the effects of the (Brazilian) subnational competitive environment and relational embeddedness on the foreign subsidiary local innovation.
Method – Primary data are collected through a survey from 152 foreign subsidiaries located in thirteen states in Brazil. Secondary data are sourced from the World Bank Enterprise Surveys. The data are analyzed through multiple regression.
Main results - The results show a positive significant association between the subnational competitive environment and the local innovation of subsidiaries. However, there is no association between subnational external embeddedness and subsidiary local innovation. Furthermore, companies that enter through acquisitions are strongly associated with local innovation.
Relevance/Originality - The study adds to the existing exchanges on the effect of subnational environment on the subsidiary local innovation, taking Brazil as an empirical context. A subnational level analysis is important as it considers subnational institutional heterogeneity and reveals variations that could be disregarded where a national level analysis is undertaken.
Theoretical/methodological contributions: Although there is evidence of the impact of the institutional environment on strategy and innovation, this study makes some contributions. First, while existing studies do focus on both the developed as well as emerging markets, the focus with regard to the latter is mainly on Asia, and other important contexts such as Latin American having specific idiosyncrasies are ignored. Second, the study contributes to the studies of Economic Geography, supporting that each subnational environment has its particularities, as demonstrated in the nature of subnational issues in Brazil.
Social / management contributions: In managerial terms, the study draws attention to the importance of knowledge of the subnational competitive dynamics regarding the participation of the informal economy and extends implications for public policies.
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Author Biographies
Cristina Doritta Rodrigues, Escola Superior de Propaganda e Marketing - ESPM
Doutoranda no Programa de Pós Graduação em Administração pela Escola Superior de Propaganda e Marketing - PPGA/ESPM, (Bolsista CAPES Integral).
Felipe Mendes Borini, Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo -FEA/USP.
Muhammad Mustafa Raziq, National University of Sciences and Technology, H-12, Islamabad, Pakistan.
Manuel Portugal Ferreira, Departamento de Administração e Economia, Universidade Federal de Lavras - UFLA. Escola Superior de Tecnologia e Gestão, Polytechnic Institute of Leiria, Portugal.
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