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

Rafael Morais Pereira (School of Economics, Business and Accounting, University of Sao Paulo, São Paulo, Brazil; Ibirapuera University, São Paulo, Brazil and Faculdade Aliança Educacional do Estado de São Paulo, Itapevi, Brazil)
Felipe Mendes Borini (School of Economics, Business and Accounting, University of Sao Paulo, São Paulo, Brazil and Fundação Instituto de Administração, São Paulo, Brazil)
Leandro Lima Santos (School of Economics, Business and Accounting, University of Sao Paulo, São Paulo, Brazil)
Moacir de Miranda Oliveira Jr (School of Economics, Business and Accounting, University of Sao Paulo, São Paulo, Brazil)

Journal of Science and Technology Policy Management

ISSN: 2053-4620

Article publication date: 21 February 2020

Issue publication date: 18 June 2020

Abstract

Purpose

The 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/approach

A 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.

Findings

The 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/value

This 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.

Keywords

Acknowledgements

Funding: This study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior – Brasil (CAPES) – Finance Code 001.

Citation

Pereira, R.M., Borini, F.M., Santos, L.L. and Oliveira Jr, M.d.M. (2020), "Environmental conditions, subsidiaries’ autonomy and global innovation in multinational enterprises", Journal of Science and Technology Policy Management, Vol. 11 No. 2, pp. 247-262. https://doi.org/10.1108/JSTPM-07-2018-0072

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited