Academic journal article Management International Review

Organizational Characteristics and Reverse Technology Transfer. (1)

Academic journal article Management International Review

Organizational Characteristics and Reverse Technology Transfer. (1)

Article excerpt


* Drawing on a sample of foreign R&D units in 17 Swedish MNCs, this paper examines how variations in the intensity of interaction with local partners -- `embeddedness' -- and with other corporate units -- `integration' -- affect the propensity of foreign subsidiaries to transfer technology to their parent organizations.

Key Results

* A unit's age and mode of establishment differentially affect its local embeddedness and integration with the rest of the corporation.

* Strong local embeddedness favorably influences the innovativeness of foreign R&D units

* Strong integration increases the propensity that locally developed technology be transferred to the parent organization.

Manuscript received August 1999, revised April 2000, revised August 2000.


Recent research suggests that to a significant extent, R&D in foreign subsidiaries of multinational companies (MNCs) is not only devoted to the traditional task of adapting parent company technology to local market needs and to provide technical support to local factories and customers. Increasingly, foreign R&D is used also as a means to access and develop new technologies (Cantwell 1991, 1995, Cantwell/Janne 1999, Cantwell/Piscitello 1999, Hakanson/Nobel 2000, Kuemmerle 1997, 1999, Papanastassiou 1997, Pearce/Singh 1992, Pearce 1999, Yamin 1995, 1997).

In parallel with empirically oriented analyses of the extent and pattern of foreign R&D, recent theoretical conceptualizations of the modern MNC have emphasized its capacity for worldwide learning across a multinational network of foreign subsidiaries (Hedlund 1986, 1993, 1994, Doz 1986, Bartlett/Ghoshal 1989, Kogut 1989). As summarized by Nohria and Ghoshal (1997), one central tenet of this view is that

   ... innovation in MNCs is no longer simply the responsibility of the
   corporate center. Indeed, relative to domestic companies, it is the
   capacity for distributed innovation that represents the unique
   organizational advantage of the modern MNC. Thus the most salient question
   from the vantage point of both theory and practice becomes this: How should
   the MNC be organized to enhance its capacity for distributed innovation or
   value creation? (Nohria/Ghoshal 1997, p. 32)

In spite of the relative preeminence it has come to enjoy, there has been surprisingly little empirical work undertaken to verify the concepts, relationships and predictions of the transnational/heterarchical view of the MNC (Egelhoff 1997, Leong/Tan 1993). The management of globally dispersed R&D activities has until recently attracted only limited scholarly attention (Hakanson/Zander 1986, 1988, de Meyer 1991a, 1991b, 1992, de Meyer/Mizushima 1989, Gerybadze et al. 1997, Gerybadze/Reger 1997, Chiesa 1996, Chiesa/Manzini 1996, Howells 1990a, 1990b, 1995) Similarly, only a handful of studies have directly addressed the issue of `reverse technology transfer,' i.e. the extent to which new technical knowledge is in fact transferred from foreign R&D units back to the parent organization or to other group companies (Ghoshal/Bartlett 1988, Nohria/Ghoshal 1997, Yamin 1995, 1997, Hakanson/Nobel 2000).

The currently most comprehensive study of reverse technology flows is that of Frost (1998), who analyzes citation patterns in the patents granted to 400 large non-US industrial firms and their US subsidiaries. Patent citations are used as an indication of technology flows between subsidiaries and corporate headquarters. One of several significant findings concerns the direction and relative volume of such flows: For the eleven year period 1980-1990, headquarters' patents cited prior US subsidiary patents 197 times. During the same period, patents originating in US subsidiaries cited headquarters' patents over 2,000 times (Frost 1998, p. 315).

Clearly, the prevailing pattern of technology transfer is the one predicted by traditional theory; technology developed in the home base (Porter 1986, 1990, Solvell/Bresman 1995, Solvell/Zander 1995, 1998) is transferred to foreign subsidiaries for international exploitation. …

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