MNE subsidiary evolution from sales to innovation: Looking inside the black box
Feb 01, 2017
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International Business Review
Volume 26, Issue 1, February 2017, Pages 145–155

Chaisung Lim (a), , Martin Hemmert (b), , , Seunghoi Kim (a),
a Konkuk University, School of Business, 1 Hwayang-dong, Gwangjin-gu, Seoul 05029, South Korea
b Korea University, School of Business, 145 Anam-ro, Seongbuk-gu, Seoul 02841, South Korea


Whereas the innovation-related evolution of multinational enterprise (MNE) subsidiaries has been extensively studied, the numerous sales subsidiaries in MNE networks have received little attention in this context. This study examines the evolution process of a sales subsidiary towards acquiring innovation-related capabilities and actively supporting innovation activities of a MNE. The evolution is explained in terms of technical information flow in an in-depth case study of a semiconductor MNEs’ sales subsidiary in South Korea. We find that the evolution of the sales subsidiary to innovation support has been enabled by a combination of subsidiary-related, lead market-related and event-related factors. We contribute to the literature on MNE subsidiary evolution by studying the unexplored evolution of a sales subsidiary. We combine the general framework of subsidiary evolution with the lead user perspective and suggest directions for potential theory extensions on MNE subsidiary evolution.

MNE subsidiary evolution; Sales subsidiary; Lead user; Innovation management; Role change; Case study