Chapter 9: Reverse technology diffusion: on the diffusion of technological capabilities from competence creating subsidiaries to headquarters of the MNE
According to recent research in the field of international business, developing and diffusing technology throughout the MNE network constitutes one of its most important policies and sources of competitive advantage (Bartlett and Ghoshal, 1989; Gupta and Govindarajan, 1991; Nohria and Ghoshal, 1997; Argote and Ingram, 2000; Piscitello, 2004; Mudambi, 2002; Mudambi et al., 2007). The general story often depicts the MNE as an increasingly interconnected and superior creature for leveraging technology domestically as well as internationally, where autonomous innovative activity by foreign subsidiaries serves as an important source for the technological development of the MNE as a whole (Pearce, 1989; Håkanson and Nobel, 1993; Nobel and Birkinshaw, 1998). Over time foreign subsidiaries have become responsible for an increasing share of research and development in the MNE (Cantwell, 1989; Dunning, 1994; Cantwell, 1995; Zander, 1997, 1999; Frost, 2001; Cantwell and Mudambi, 2005). In the earlier phases of MNE development, foreign subsidiaries are looked upon as extensions of the parent firm using technology supplied from home and attending to adaptation work and servicing local customers in foreign locations (Dunning, 1980).
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