Sources of open innovation in foreign subsidiaries: An enriched typology

This paper analyzes the drivers of multinational affiliates' innovation, using a dataset based on the Community Innovation Survey for Belgium. Specifically, we investigate the role of external knowledge sources on foreign affiliates' research efforts and innovation. We thereby develop an enriched typology by taking both the MNC and the host country perspective into consideration and distinguish between different types of subsidiaries, in order to disentangle differences in the use of knowledge sources between technology exploiting, seeking and creating subsidiaries. Our findings show that technology-creating foreign affiliates are able to tap into a combination of industry-based value chain partners and science-based partners. In particular, a combination of clients and universities have a powerful impetus on the research effort of technology creating firms. Our results also indicate that technology-seeking subsidiaries make more use of collaboration with competitors. Technology exploiting subsidiaries make significantly less use of external knowledge sources and have a lower R&D intensity.