Competence-creating subsidiaries and FDI technology spillovers

•This paper investigates whether technology spillovers from FDI vary with innovation activity type in an MNE subsidiary.•Our results show that technology spillovers from competence-creating (CC) subsidiaries differ significantly from those from competence-exploiting (CE) subsidiaries.•We suggest that FDI spillovers are influenced by technological and strategic roles in a subsidiary in the dispersed innovation network of an MNE.

Building on International Business research on subsidiary activities, this paper investigates the relationship between the type of innovation-intensive activities in an MNE subsidiary and FDI spillovers. Our results show that competence-creating activities by MNE subsidiaries generate significantly different horizontal and vertical spillovers compared with competence-exploiting activities. The findings suggest that FDI spillovers are influenced by the dynamic development of technological and strategic roles in a subsidiary in the dispersed innovation network of an MNE.