Decoupling orientations from actions : an investigation of MNC subsidiary learning and innovation performance
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[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] Globalization has led to a universal learning race in which organizations strive to achieve or maintain a competitive advantage through learning and innovation. Extant literature in organizational learning and international marketing, however, is often confusing and/or ambiguous on the fundamental conceptualization of different types of learning, and on the relationships between different types of learning and subsequent innovation performance. This study proposes a contingency model to examine how external market conditions and internal organizational conditions influence the learning pathways taken by subsidiaries of multinational companies (MNCs) and, in turn, how those choices affect innovation performance. Drawing on organizational learning and international marketing literatures, this study (1) explicitly distinguishes between a subsidiary's learning orientations (i.e., the exploration and exploitation orientations) and actual manifested learning actions (i.e., the exploration and exploitation activities); (2) unpacks the internal organizational conditions under which the relationships between exploration / exploitation orientations and exploration / exploitation actions become stronger or weaker; and (3) identifies the external market conditions under which exploration / exploitation actions become more effective in contributing to subsidiary innovation performance. The proposed model was empirically tested with survey data collected from 212 executive managers of subsidiaries operating in China, an emerging market with high strategic importance to foreign direct investment and offering rich opportunity for organizational learning and innovation. The results indicated that subsidiary autonomy and interdependence amplifies the impact of exploitation orientation on exploitation actions, while subsidiary internal competition amplifies the impact of exploration orientation on exploration actions. The research findings also suggested that subsidiary exploration actions are more effective on innovation performance under unique and dynamic market conditions. This study contributes to a greater clarity and better understanding of how MNC subsidiaries may effectively pursue different types of learning, under different market and internal organizational conditions, to improve innovation performance. The findings also have implications for company managers' critical resource allocation as they attempt to maximize benefits from their exploitation and exploration activities.
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