Technology Sourcing and a 'Creative Transition' in Subsidiaries: The Case of MNE Operations in China

The paper focuses on a ‘creative transition' (CT) as a crucial tipping point in the strategic evolution of MNE subsidiaries. Before a CT a subsidiary's operations will be based around application (in a market-seeking or efficiency-seeking strategy) of the successful established technologies and products of the MNE group. After the CT (as, for example, a Product Mandate) the subsidiary will be deriving new sources of technology, notably from its host country, and developing new products from these. Thus, we argue, the sources of technology
accessed and/or generated by a subsidiary are crucial in defining its competitive status. Evidence cited from a study of MNE subsidiaries in China demonstrates the value of the concept of CT. Though pre-CT operations of
an ES, export-oriented, nature have played a role in China it is shown that, to an increasing degree, it is now post-CT innovation that provides the dominant imperative. But, contrary to traditional Product Mandates, a major strand of this innovation targets an embedded position in China's growth for MNEs.