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To investigate the impact of knowledge-intensive FDI in the Chinese pharmaceutical industry, this study analyzes the activity of foreign MNEs operating in this context by exploring their innovative background, the organizational arrangements they use for local knowledge creation and the performance of their local innovative processes. Based on the analysis of the universe of USPTO pharmaceutical patents applied for between 1975 and 2010 and granted to foreign assignees utilizing the work of Chinese inventors, our results show that, while the presence of foreign MNEs in the Chinese pharmaceutical industry entails a strong potential for positive externalities that could enhance the performance of the local innovation system, such externalities do not completely materialize yet, likely because of local actors’ limited absorptive capacity.

The purpose of this article is to provide insights into the innovation trajectory, and knowledge pipelines of mature industry multinational enterprises (MNEs). The ability to innovate constantly amidst a turbulent and competitive environment is often the key force behind MNE survival and dominance.

This study conducts an in-depth longitudinal study of the Goodyear Tire and Rubber Company, a global manufacturing company in the tire and rubber industry. The findings are based on USPTO patent and trademark data from 1975-2005.

The analysis reveals three crucial trends: the major role of continuous investment in innovation in the firm’s survival and turnaround; the evolution of the firm’s innovation network from a headquarters-centric model toward more geographical dispersal; and the changing mix of innovation from traditional “hard” science-based research toward a greater emphasis on “softer” competencies in design and trademarks. This third trend, in particular, opens up important new avenues for research on MNE innovation practices.

This study integrates historical analysis of a single firm in the context of its changing industry environment. The historical analysis is enriched by a detailed longitudinal quantitative analysis using a variegated dataset of patents and trademarks to investigate innovation.