Absorptive Capability of Japanese and European MNCs : Balance between Autonomy and Control of R&D Subsidiaries in the US

This paper analyzes the capability of Japanese and European multinational companies (MNCs) to absorb technological knowledge from the United States through their R&D operation in the US. Employing the notion of “absorptive capacity”, this research defines the capability of a firm to absorb technological knowledge from abroad as “absorptive capability (AC),” and aims to examine the components of AC and their interrelationships using patent and sales data in the context of R&D management of Japanese and European MNCs at home and in the US. This paper also presents the taxonomies to show that a balance of autonomy and control is the key to increasing AC in the US and contributing to the US market sales by utilizing the home and host country technologies