Can locally-recruited R&D personnel significantly contribute to innovation in multinational subsidiaries in an emerging economy?

This paper assesses the role of locally-recruited R&D personnel relative to their expatriate counterparts as regards innovation in multinational subsidiariesin an emerging economy. Two hypotheses are developed based on a network approach to multinational enterprises in an emerging economy setting, and tested on a sample of 317 multinational subsidiaries in China. Our results indicate that locally-recruited R&D personnel have played a limited role in innovation within multinational subsidiaries. While making a marginally significant contribution to R&D output due to their direct supply of technological knowledge, locally-recruited R&D personnel are unable to translate subsidiary R&D expenditure into successful patent applications probably because of their lack of technology management skills. In comparison, R&D expatriates significantly contribute to multinational subsidiary R&R output in both dimensions.