Who is in and who is out? Integration of technological knowledge in the multinational corporation

This article concerns the integration of technological knowledge within multinational corporations (MNCs). We empirically investigate the degree of technological knowledge integration of competence-creating subsidiaries with headquarters and sister subsidiaries and explore the effects of intersubsidiary differentiation. Data on the complete US patenting activity of 22 Swedish multinationals from 1893 to 2008 reveal significant differences in degrees of technological knowledge integration. As expected, the results show that greenfield subsidiaries are more integrated with headquarters and other greenfield subsidiaries than with acquired subsidiaries. In contrast, acquired subsidiaries do not appear to be as easily integrated into the MNC, and for this group the empirical evidence shows very little integration of technological knowledge. The findings provide extended insights into the role of competence-creating subsidiaries as providers of technological knowledge to headquarters and other MNC subsidiaries, and suggest a distinct pattern of subsidiary knowledge integration, ordered by what appears to be in-groups and out-groups, that has been overlooked in the prior MNC literature.