Changing Innovation Roles of Foreign Subsidiaries from the Manufacturing Industry in China

Based on the observation of higher internationalisation of innovation activities of multinational companies towards emerging markets, this paper aims to provide insights on how foreign subsidiaries from the manufacturing industry are changing their innovation roles in China. Based on in-depth expert interviews conducted from the subsidiary perspective in China, this paper affirms that foreign subsidiaries are moving towards higher innovative activities. The study contributes to extant literature by revealing three characteristics, namely innovation capabilities, organisational structures, and interaction with the headquarters that differentiate subsidiaries’ innovation roles with regard to their geography and magnitude of innovation. This study illustrates how these distinctive characteristics and their underlying elements advance as subsidiaries move towards greater innovation roles and discusses implications for managerial practice.