Strategically Accessing External Technological Knowledge: The Case of Foreign Subsidiaries in China

Adopting a differentiated network view of multinational corporations (MNCs), this study investigates how recently formed subsidiaries access diversified technological knowledge that allows them to differently contribute to the MNCs’ competence building. By employing a firm-specific measure of different technological knowledge categories, we study the competence building of foreign subsidiaries in China in electric and office equipment industry between 1996 and 2005. We find that foreign subsidiaries in China extensively access background technological knowledge to adjust to and benefit from technical changes in supply chain activities. Meanwhile, these subsidiaries actively access marginal technological knowledge to explore potential opportunities. Our results offer the supporting evidence of a differentiated network view of MNCs and contribute to subsidiary evolution literature.