Researching Innovative Capacity of Local Subsidiaries in Selected CEE Countries

Tugrul U. Daim*, Zoran Aralica, Marina Dabić, Dilek Özdemir, A. Elvan Bayraktaroglu

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

3 Citations (Scopus)


The aim of the paper is to research the innovative capacities of local subsidiaries in selected CEE countries. We define innovative capacity as an ability of conducting innovation activities with innovation output variables i.e. innovation products and/or processes as the visible results of innovation inputs i.e. innovation investments. We found that the determinants of innovation input differ from the determinants of innovation output. The Innovation outputs variables are affected by productivity variables. On the other hand, local subsidiaries as a knowledge source for other unit of MNEs group as well as SMEs as a type of the ownership affect the innovation input determinants. However, similarities between innovation input and innovation output exist between business functions i.e. process engineering appear in both cases as determinants.The innovation performance measured by productivity are strongly reliant on local subsidiaries performance—changes in value in earning before interests and taxes, where investments into resources related to technologies are crucial i.e. differences in number of R&D employees between 2005 and 2002 and difference in the annual expenditure on R&D and innovation as a percentage of total sales positively influence local subsidiaries performance.

Original languageEnglish
Title of host publicationInnovation, Technology and Knowledge Management
Number of pages24
Publication statusPublished - 2014

Publication series

NameInnovation, Technology and Knowledge Management
ISSN (Print)2197-5698
ISSN (Electronic)2197-5701

Bibliographical note

Publisher Copyright:
© 2014, Springer International Publishing Switzerland.


10Explanatory factors for the differences in the prices of the final products include the differences in sectoral structures of a national economy, and on the firm level functional structure (Steffen and Stephan [64]). 11Country selection is a result of participation in the U-KNOW project, partially financed by the European Commission (EC) Framework Programme 6 (contract nr CIT5-028519). 12Appendix 1 consists of the list of selected variables. 13In Croatia the survey took place in April and May 2007. Therefore the analysed years are different. In analysed countries the survey took place in 2002 and 2005 whereas in case of Croatia, the survey was conducted in 2003 and 2006.

FundersFunder number
European CommissionCIT5-028519


    • Absorptive Capacity
    • External Knowledge
    • Innovation Activity
    • Innovation Output
    • Innovation Performance


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