Title: Open innovation in multinational companies' subsidiaries: the role of internal and external knowledge

Authors: Alberto Ferraris; Gabriele Santoro; Stefano Bresciani

Addresses: Department of Management, University of Torino, Corso Unione Sovietica, 218 bis, 10134 Torino, Italy; Laboratory for International and Regional Economics, Graduate School of Economics and Management, Ural Federal University, Ekaterinburg, Russia ' Department of Management, University of Torino, Corso Unione Sovietica, 218 bis, 10134 Torino, Italy ' Department of Management, University of Torino, Corso Unione Sovietica, 218 bis, 10134 Torino, Italy

Abstract: The mainstream literature on innovation management has recognised that most organisations can and must innovate using both internal and external knowledge sources. The management of knowledge in multinational companies (MNCs) implies that subsidiaries should achieve centrality because they are in the unique position to tap into many different sources of knowledge from different cultural contexts. In this context, this paper aims to highlight the importance of 'openness' at the subsidiary level, combining both external and internal knowledge (within the MNC but outside the subsidiary). To do so, we test the single and joint effects of external and internal 'openness' on subsidiaries' innovation performance. Using Amadeus databases, 163 subsidiaries were selected and data were collected through a standardised questionnaire. Then, three hypotheses were tested through an OLS regression model. The results indicate that external and internal knowledge openness positively affects subsidiaries' innovation performance. Moreover, the inclusion of the interaction term shows that a high level of both leads to a multiplicative and positive effect. The findings are discussed in the light of the extant literature, and several implications for future research and MNC and subsidiary managers are highlighted.

Keywords: open innovation; external knowledge sources; knowledge; knowledge management; multinational corporations; MNCs; subsidiaries; openness; internal open innovation; internal knowledge sources.

DOI: 10.1504/EJIM.2017.085583

European Journal of International Management, 2017 Vol.11 No.4, pp.452 - 468

Received: 11 Mar 2016
Accepted: 24 Aug 2016
Published online: 31 Jul 2017 *

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