Subsidiary Technological Scope and Learning: A Fresh Perspective on the Role of the Foreign Subsidiary for the Cross-border Organization of MNE Innovation

This chapter examines the role of foreign subsidiary technological scope in the learning process that culminates in MNE innovation. It explores how subsidiary scope, reflected in the dispersion of its technological activity, operates across different stages of the learning process. To develop the arguments, insights on specialists and generalists from organizational research are integrated with research on firm reasoning. The authors posit that search and extension stages involve unpredictable environments that create an advantage for generalist subsidiaries who can engage in analogical reasoning by drawing on a wider variety of familiar chunks of knowledge. In contrast, access and integration stages create predictable learning environments where specialized subsidiaries are in an advantageous position, with access to fewer but deeper chunks of knowledge resulting in effective learning. Futhermore, theoretical and managerial implications for the cross-border organization of MNE innovation are developed to present a more nuanced view of the role of the subsidiary.