Purpose – To investigate the effects of headquarters (HQ) involvement in innovation development and transfer at unit level.
Methodology/approach – We develop a theoretical model that we test on a sample of 71 innovations belonging to 52 business units located throughout Europe, Asia, and the USA. The data were collected by personal interviews and analyzed using the partial least squares (PLS) technique.
Findings – While HQ involvement in innovation development enhances the effects on the unit engaged in the development, it is detrimental to performance of the innovation transfer process. We also find higher HQ involvement in the innovation development process and stronger innovation impact on the subsidiary to be associated with higher HQ involvement in the transfer process.
Research limitations/implications – There is a significant beneficial effect of HQ involvement in the development process in terms of the increased impact of the innovation in the unit, and a harmful influence on the specific performance associated to the transfer process.
Practical implications – HQs will benefit from improved performance if they become more involved in important innovations while limiting their direct engagement in the transfer of “marginal” innovations. It might also be wise for the HQs to rethink their involvement at unit level by separating the development process from the transfer process in their decision framework.
Originality/value of the paper – This is one of the first attempts to empirically connect the processes of innovation development and transfer at unit level in MNCs and to show the implications of HQ involvement in innovation projects at subsidiary level.
Emerald Group Publishing Limited , 2009. 157-183 p.