Competence-creating overlaps and subsidiary technological evolution in the multinational corporation

Abstract

This paper explores overlapping competence-creating activities within the boundaries of the multinational corporation by investigating how foreign greenfield subsidiaries' technological evolution is affected by the addition of an acquired unit in the same location. Drawing upon the complete U.S. patenting activity by subsidiaries of 21 Swedish multinationals over the 1893–1990 period, we use repeated event history analysis to test a set of hypotheses concerned with the effect of this competence-creating overlap. Findings include an initial retrogressive effect on greenfield subsidiaries' technological evolution as a result of competence-creating overlaps, which, over time diminishes to become positive after more than a decade of overlap exposure. Thus, we add to the theory of subsidiary evolution by expanding the view of the archetypal subsidiary that has so far been constrained to evolve without operational overlaps.