Scope and scale of technology challenge and MNE subsidiary knowledge sourcing in host countries

Research emphasizes the role that industry characteristics and knowledge bases play in MNE subsidiaries' knowledge sourcing decisions. This article extends the knowledge sourcing literature by examining how technology challenges themselves help determine both the geographic location—local or distant—and the actor from which the knowledge will be sourced. Using a study of MNE subsidiaries' knowledge sourcing in a peripheral region without a preexisting industry-specific knowledge cluster, we find that MNE subsidiaries’ decisions on where and from whom to source knowledge vary in accordance with the geographic scope and complexity scale of the technology challenges being faced. In peripheral regions, MNE subsidiaries tend to source knowledge from established parties (i.e., the subsidiaries of other MNEs or their headquarters) for localized small-scale technology challenges and for global and large-scale ones. In contrast, localized large-scale technology challenges and global small-scale technology challenges result in more knowledge sourcing from host region actors or from within the subsidiary. This understanding helps clarify the forces behind MNE knowledge sourcing decisions and how multiple sourcing approaches may be simultaneously deployed. •The role of technology challenges is an underexplored factor influencing MNE subsidiaries' knowledge sourcing practices.•The scope and scale of a technology challenge influences the knowledge sourcing decision.•Knowledge is sourced from existing partners for local/incremental, and internally for global/radical technology challenges..•MNE Knowledge is sourced from novel host region partners for local/radical or global/incremental technology challenges.•A study of oil industry subsidiaries illustrates how technology challenges induce multiple types of knowledge sourcing.