Configurations of innovation performance in foreign owned subsidiaries: focusing on organizational agility and digitalization

Abstract

The authors investigate conditions that drive innovation performance in foreign-owned subsidiaries. The authors study five variables affecting innovation performance: organizational agility and digital capabilities as the main drivers and competencies and embeddedness in internal and external networks as complementary antecedents of innovation. The authors draw on the neo-configurational perspective and apply fuzzy set qualitative comparative analysis (fsQCA) to empirically test survey data from subsidiaries located in the emerging economies of Thailand and Vietnam. While the authors find no single condition on its own determining innovation performance, the authors do find that in concert they form four configurations of high innovation performance. The results indicate that all configurations contain competencies, as well as that subsidiaries should prioritize between internal and external networks to complement agility, digital capabilities, to achieve high innovation performance. The authors also reveal intriguing contextual differences in the innovation performance configurations between the two host countries. By incorporating causal complexity as well as substitutability and complementarity of innovation drivers, the authors extend the current understanding of subsidiary innovation performance outcomes.

Keywords: Digital capability, Emerging economies, fsQCA, Innovation performance, Organizational agility, Subsidiaries