Technological Evolution in Foreign Subsidiaries : Among Average Joes, Superstars and the New Kids on the Block

Abstract: This thesis is concerned with the ultimate limits for technological evolution among advanced foreign subsidiaries within the boundaries of the multinational corporation. It explores the theoretical drivers behind the evolution of foreign subsidiaries’ technological capabilities and empirically examines the long-run, evolutionary developments by investigating the patterns and pace of entering new technologies.Using a comprehensive database covering the complete U.S. patenting activity by foreign subsidiaries from a set of Swedish multinationals over the 1893-1990 period, the empirical analysis reveals accelerated entry into new technologies, but at a moderate pace. The results lend support for established theorizing about the evolution of technological capabilities in foreign subsidiaries, but question extreme views on the growing technological and strategic importance of advanced foreign subsidiaries of the multinational corporation. It is also shown that whenever broadening of the technological portfolio is sought after by the multinational corporation, foreign acquisitions should be the preferred mode of entry into foreign countries. Further, this thesis opens up the hitherto unexplored area of overlapping activities by multiple foreign subsidiaries in the same country. It is found that such overlapping activities should, generally, be avoided not to slow down the evolutionary process of entering new technologies.The thesis also makes a methodological contribution by introducing the method of repeated events to the field of international business and business studies more generally and provides guidance for researchers interested in analyzing the effects of prior events. Further, it empirically tests and motivates the need for more robust use of explanatory variables that may vary over time.