Many German multinational companies aim to transform their subsidiaries in China that previously solely focused on manufacturing into subsidiaries that also drive innovation. However, these companies face numerous challenges, due to local differences compared to the West. In order to facilitate the process, this paper studies practices for building innovation capabilities at German manufacturing subsidiaries in China, taking into account the local challenges. Based on in-depth interviews with managers in China, this study identifies three practices for driving the build-up of innovation capabilities within the subsidiary organisation: build knowledge, establish a mindset for innovation and increase measures for employee retention. The study adds to extant research by detailing these practices with approaches that target local challenges. Compared to the West, the local challenges include differences in skills and knowledge, culture, as well as work behaviour.
Employee innovative behavior has been recognized as a key enabler for competitiveness in China. As more and more foreign multinational companies (MNCs) are setting up innovation activities in China, fostering employee innovative behavior is playing an increasingly central role in their development strategies. However, while there is an abundance of literature on contextual success factors to foster employee innovative behavior set in Western contexts, there has been little attention on the impact of culture-specifics in China. Also, there has been limited effort to determine the relative importance of the factors and define which ones are key. We address these gaps by conducting a Delphi study set in a foreign manufacturing subsidiary in China. Among a list of 24 success factors identified in extant literature, our results reveal reward and pay, cross-functional cooperation, and company innovation strategy as the three most important factors to foster employee innovative behavior in China. We discuss these factors as to why they play a vital role for Chinese employees and finally we provide practical suggestions for implementing them. These include the set up of transparent guidelines for rewards, enhancing cross-functional cooperation and setting aligned goals among different functions.
Based on the observation of higher internationalization 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, organizational structures, and interaction with the headquarters that differentiate subsidiaries’ innovation roles with regards 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.