In this context, we studied the case of the OPERACOM group, a French telecommunications multinational. The centralization of the innovation process within the Headquarters has created difficulties within the Polish subsidiary. The awareness of the challenges inherent in this situation has prompted the group to rethink its operations and develop new telecommunication services. Perceived as new within the group, the practice of hybridization is a combination, through the innovation process, of sharing knowledge held by the parent with that of its subsidiaries.

Considering hybridization as a new practice and an organizational innovation, we present first its main features. Then, we present the results of our empirical investigation, which will be discussed within the conceptual framework mobilized.

More recently, Boyer (1998) used the regulation framework to give a more complete description of the hybridization concept. By studying the automotive sector, Boyer highlighted the principle of transformation applied to production models. According to this author, hybridization can be described as a process through which innovations are transformed and adapted according to the local context. These innovations are imported from different economic and social spaces. So, hybridization is more than the simple adaptation of the environment resistance. It is emerging as “the interaction between different national systems, legal or institutional, different political contexts, different labour markets and structures of skills, different infrastructures” (Tolliday et al., 1998). According to this definition, knowledge transfer will not be possible if hybridization does not occur. In this context, knowledge must be modified in a first step and then it becomes possible for organizations to transfer it in a second step. This definition also suggests that hybridization is not only about knowledge transfer, but that it can also include other managerial practices such as organisational procedures, production processes, training programmes, internal policies, etc.

Hybridization can be implemented when two actors (or more) are interacting in a given context. Thus, hybridization can be considered as a process leading to a new managerial model resulting from the interaction between two systems. Hybridization can occur in various forms of collective actions such as networks, clusters, alliances, acquisitions or international activities. In the inter-firm networks, companies develop close and dynamic linkages to achieve a common strategic action (Gulati et al., 2000; Malerba, 2006). In this case, hybridization can occur following an exchange or an inter-organizational collaboration (Robertson, Langlois, 1995) [1]. The interaction with a specific type of partner (even customers, Von Hippel, 1988) is expected to influence innovative performance by the transfer of appropriate knowledge (Knudsen, 2007).

In the specific case of clusters, “the region is increasingly the level at which innovation is produced through regional networks of innovators, local clusters and the cross-fertilising effects of research institutions” (Lundvall, Borrâs, 1997, p. 39). In this context, the competitiveness can be enhanced through knowledge hybridization between two main actors: the industrial cluster (firms) and the institutional infrastructure (higher education campuses, technology transfer agencies, vocational training organisations, business associations, financial institutions, R&D centres) (Asheim, Isaksen, 1997). An economic coordination can also be established through the local user-producer interaction and the combination between local and global available R&D competencies (Lundvall, 1992).

Hybridization can also occur in a learning perspective in the context of strategic alliances (Hamel, 1991; Doz, 1996). In this configuration, inter-organisational relationships are channels that promote and enhance information flows and other resources from position to position within a social structure (Eisenhardt and Schoonhoven, 1996; Owen-Smith and Powell, 2004). For cross-alliances and joint ventures, resource combinations between partners are seen as a key for success (Antonelli, 2005).

Within the field of domestic and international acquisitions, the hybridization process is highly critical and important for success. In fact, in both configurations, the acquiring firm needs to absorb external knowledge from acquired firms (Zou, Ghauri, 2008). It will combine these newly acquired resources with existing know how and knowledge. This hybridization process produces a new combined knowledge.

In Multinational Corporations, hybridization may involve several actors such as different R&D laboratories. In this context, “The multi-hub R & D structure has allowed the multinational to take advantage of dispersed sources of knowledge and exploit synergies across different R & D centres through cross-border innovation projects” (Criscuolo, Narula, 2007, p. 656). Hybridization can also take place between Headquarters and subsidiaries or between subsidiaries (Foss, Pederson, 2002; Ordóñez de Pablos, 2006). The current article will focus on the first case (i.e., between Headquarters and subsidiaries). We will highlight the importance of hybridization in producing new knowledge developed by subsidiaries that can result in a stronger innovatory ability of the mother firm. Therefore, we can emphasize that hybridization is based on the integration of resources between two or more actors. Thus it can be considered as a form of organizational innovation.

The top-down knowledge transfer is often used from Headquarters to subsidiaries (Inkpen, Dinur, 1998; Szulanski, 1996). In fact, these transfers were fostered by some specific factors: ownership, transaction costs and exploitation of specific advantages linked to market imperfections. In this case, Headquarters formulates the global strategy and specifies the results expected from each subsidiary. The local units receive and implement the global knowledge and sometimes adapt it to their context. The predominance of this model can be justified by three theoretical approaches: reduction of transaction costs, dependence on Headquarters resources (Pfeffer, Salancik, 1978) and the agency theory (Jensen and Meckling, 1976). The Headquarters play the role of “leader” while subsidiaries play the role of “agents”. We can consider that this practice is used exclusively by Multinational Corporations, which design and implement a global strategy (Bartlett, Ghoshal, 1989). This strategy is based on the assumption that customers’ needs are homogeneous throughout the world, resulting in products standardization.

With the new design of the Multinational Corporation as a differential network (Bartlett and Ghoshal, 1989), valuing subsidiaries has grown. As a result, the “bottom up” transfer [2] (Håkanson, Nobel, 2001) has increased, which has largely emerged following the recovery of local roots (Frost, 2001). Indeed, the subsidiaries are in close collaboration with local customers and suppliers. The wealth of local contexts has then become a source of technological know-how, production (Zanfei, 2000), knowledge management or marketing (Björkman et al., 2004). The subsidiaries can be seen as major players once they contribute to increasing the knowledge capital of the Headquarters and “sister” units. In fact, knowledge transferred from subsidiaries is more than just exploited. It can be newly developed (Almeida and Grant, 1998) through a learning/experimentation process (Inkpen, 2008). Unlike the “top down” transfer, “bottom up” flows characterize any Multinational Corporation following a multidomestic strategy. This means, according to Bartlett and Ghoshal (1989), the implementation of a local innovation process within subsidiaries. These two complementary facets of knowledge transfer appear to be very dichotomous. Indeed, dyadic [3] knowledge transfer has been studied either on the Headquarters’ or on the subsidiary’s side. This remains an extraction of knowledge from its original context and its move to a new context. On one hand, the top down transfer, knowledge circulates between different institutional contexts. In this case, local adaptations are very difficult (Ferner et al., 2005). On the other hand, the “bottom-up” transfer depends heavily on the absorption capacity of the Headquarters (Cohen, Levinthal, 1990) and its degree of NIH (Not Invented Here) (Katz and Allen, 1982) syndrome sensitivity. In order to overcome these difficulties, Multinational Corporations have to devise new practices based on communication and reciprocity (Monteiro et al., 2008). This should foster more interaction between Headquarters and subsidiaries to mix local and global knowledge.

We previously stressed that “top down” and “bottom up” flows of knowledge fall respectively under the global strategy and multi-domestic innovation. The hybridization relates more to transnational strategy. By mobilizing the design of Bartlett and Ghoshal (1989) [4], we can consider that the development of new practices is made through the combination of local requirements with a high degree of standardization.

The hybridization appears as an organizational innovation from the moment it is based on activities of successive adjustment between the initial model of Headquarters and the subsidiary, leading to the joint construction of a final hybrid model. Despite the importance of this practice, it does not appear to have been studied in the context of the Multinational Corporation, especially in the innovation management field. In fact, some researchers have tried to apply it in the field of International Human Resource Management for Multinational Corporations. According to Yahiaoui (2007), hybridization is a complex process. Its effectiveness depends heavily on the degree of subsidiaries’ involvement. This author also highlighted the importance of taking into account the specific local perceptions and interests of local actors. According to these theoretical characteristics, we can formulate three propositions that we will discuss in the next section of this article.

Table 1
Propositions of the research

OPERACOM is a large French telecommunications group. The Headquarters and its subsidiary, located in Poland, had the will to assess the innovation process of the group. To study this phenomenon, we conducted exploratory interviews which oriented us to study the “Multimedia +” project. This is a high technology service: customers use it through a terminal (STB [5]) and a decoder. This service has already been launched in France and project managers are preparing to launch it in Poland. We began by gathering information about this project before following its development within the Polish OPERACOM subsidiary. In this context, we traveled in Poland with a schedule of appointments with some project managers (organized by the Headquarters planning account manager). Our goal was to identify specific knowledge that the Polish subsidiary could suggest to its Headquarters. Interviews conducted in Poland showed that managers had difficulties in developing and launching the “Multimedia +” service locally. After this phase, certain managers of the subsidiary suggested to the Headquarters a new way of working to improve the innovation process of the group: the hybridization. Back in France, we organized a meeting with some top managers from the international strategic innovation division. In this context, the Headquarters in turn organized exchange meetings with the subsidiary, OPERACOM Poland. This subsidiary is seen as being very active and dynamic with a real will to participate in the process of innovation within the group. It is also a subsidiary committed to the group’s global strategic goals with its real knowledge and skills, especially through its innovative R&D laboratory specialized in access networks.

In order to understand the features of this practice and the reasons that led to its implementation, we carried out twenty interviews with managers in OPERACOM Poland. The interviewees were managers involved in the development and the marketing of the “Multimedia +” service in Poland. Four interviews were conducted in English and 16 in French. We also made a “non-participant” observation, during one week, in Poland. We also carried out five interviews with managers at the Headquarters, in France. These interviews were about the features and the range of global and local knowledge hybridization. The following table shows the profile of the managers interviewed in Poland.

Table 2
The interviewees’ profiles in Poland: The “Multimedia +” project

All transcribed interviews were the subject of a thematic content analysis (Bardin, 2001). This method of data analysis consisted in grouping together all the comments collected from the managers interviewed. Several categories were identified: the strategic stakes for the Polish subsidiary and the Headquarters, the operational stakes in both entities, the types of knowledge to be integrated in the process of innovation. To have a better internal “validity” of this method, we proceeded to a double thematic coding. The following paragraph presents the findings of our research.

To experiment with this new telecommunications offer, French customers have been involved. At the end of the year 2003, the new service was commercialized on the French market. From there, we can notice that the whole process of “Multimedia +” development was centralized in France. Only the test of several facilities and terminals escaped this rule. In 2003, this activity was assigned to the R&D laboratory of the Polish subsidiary. At the end of the year 2005, OPERACOM decided to launch the “Multimedia +” service in Poland. In this context, an intensive knowledge transfer took place. It was essentially about the features of the “Multimedia +” service, its technical specificities (network, terminal) and business plan. The managers of the subsidiary had not previously participated in this project, and at the time, were simple recipients of knowledge and technology. According to the project manager at the French Headquarters, this situation and the “top down” knowledge transfer was justified by OPERACOM’s strategy: “Since 2005, the international constraints have been more and more increasing. The idea clearly indicated is to use the same platform, terminal… And this to be able to use in the subsidiaries, in Poland or other countries, what has been developed in France” (Project manager, Headquarters). Despite an intensive knowledge flow from Headquarters, the managers of the Polish subsidiary met numerous difficulties when attempting to reproduce the “Multimedia +” service locally.

On the operational side, the launching of the “Multimedia +” service in Poland was delayed, mainly due to some internal organizational problems, such as the lack of role clarification between the actors and the strong dependence on the Headquarters. Indeed, the lack of previous involvement of the subsidiary gave competitors an advantage in terms of time to market (TTM).

Concerning the communication flow between the Polish subsidiary and the French Headquarters, we noticed the important number of mediators. According to several interviewees, this situation strongly reduces communication, especially when goals are different. Whilst the subsidiary tries to learn the characteristics of “Multimedia +”, the Headquarters wants to add new features to the service (while taking advantage of the feedback from its subsidiaries).

“The ‘Multimedia +’ service is a French offer: created, conceived and developed here in France. I don’t see the interest of Poland participating in development of a service that concerns our market. We will be able to consider an exchange once the service is marketed there. Then, but not before, one will be able to have some returns on the business plan, and on the uses” (Marketing Manager, Headquarters). For the Headquarters, a reduction of its international market share was the major stake. Indeed, the delay of the commercial launchings in different countries finally posed a threat to the competitiveness of the OPERACOM group. The above results show that the development process of the “Multimedia +” service has been centralized. Its distribution to Poland was characterized by many obstacles. According to several interviewees at the Polish subsidiary, their early involvement in the development process could have helped to avoid many issues. The following table summarizes the stakes found in this situation.

Table 3
The strategic and operational stakes of centralization of the innovation process

According to the observation made in Poland, we notice that all these difficulties are due to the sequential rolling out of the “Multimedia +” service. Polish managers wanted to be involved in the innovation projects of the Headquarters. After a long negotiation, OPERACOM group decided to conceive a new operational innovation strategy: Every subsidiary, interested in a new service, should participate at the very early stage of each innovation process. “The implication of subsidiaries will allow us to win resources and time, to minimize differentiations, to communicate on the local problems. This means that each subsidiary must share its knowledge, which will be integrated in the innovation process by the Headquarters” (Manager, OPERACOM Poland).

In order to put into practice this new idea of hybridization, and therefore to innovate better, a team has been created. Three managers were put in charge of identifying the knowledge to be hybridized (between the Headquarters and its subsidiaries) as well as the criteria on which this new practice shall be based. We participated in this project and our work consisted in contacting the Polish managers interviewed initially. We asked two main questions:

We performed a thematic analysis of the information collected. Four types of knowledge to be hybridized have been identified:

The analysis of the information also showed that this knowledge will be the subject of interaction between the Headquarters and every subsidiary. However, these local and global resources will be integrated at different moments of the innovation process.

In order to finalize the operational features of the hybridization process, the innovation committee determined criteria and applied weights to each. These parameters will allow for the selection of the knowledge to be provided by the subsidiaries, for integration into the innovation process. This different criteria and weightings are detailed in Table 4 below:

Table 4
The criteria of knowledge hybridization at the Headquarters level

According to these analyses, we can note that hybridization consists of integrating the knowledge coming from the subsidiaries into the innovation project piloted by the Headquarters. This combination is a dynamic and strategic process. It takes into consideration the different contextual variables and ensures the involvement of various actors. Pre-determined criteria and a notation grid are used as a tool to assess suggestions and decide upon knowledge to hybridize.

In order to experiment this new practice of hybridization, the Headquarters requested its subsidiary “OPERACOM Poland” to develop a second version of the “Multimedia +” service. As a result, additional service ideas were suggested by managers. Following this, the Headquarters analyzed them according to the notation grid.

In this sense, the link between organizational and technological innovation is evident. Indeed, the transmission of the “Multimedia +” service by the Headquarters required supplementary efforts of revision and adaptation in Poland, which resulted in the conception and implementation of a new practice: knowledge hybridization. It can be considered as an organizational innovation, as it is a different way of functioning. This practice, which consists in combining the local and the global (techniques, processes…) knowledge, can sometimes lead to a reinvention. According to Rogers (2003), it can be assimilated to the sense given to the adoption of innovation, to its degree of change or modification during its affectation to the local context.

The results of our survey show the necessity of knowledge adjustment, at the Headquarters level, before its transmission to subsidiaries. This idea joins the “traduction” (translation) school (Callon, 1986; Callon, Latour, 1986). According to its adepts, an innovation must be adapted to the environment, to the network and to the interests of all the actors. So “it is necessary to accept to translate their demands, waiting and observations under the shape of suitable technical choices” (Callon, 1994).

This translation process takes place according to an effect of “whirlwind” following multiple transformations. For the OPERACOM group, the implication of each actor (the Headquarters, R&D in France, the managers of the subsidiary in Poland, R&D in Poland), seemed essentially to lie in the development of a second version of the “Multimedia +” service. From the results of this research, we can note that hybridization emerges following an interaction between the actors. Their strategies and their individual interests influence strongly the progress of the innovation process. In order to combine global and local knowledge, the exchanges between actors are essentially based on a continuous communication and an important degree of involvement. Thus, a dynamic negotiation process is very important to take into account subsidiaries’ knowledge. The subsidiary has to convince the Headquarters to integrate this knowledge in the innovation process. For this reason, the subsidiary must identify its own market needs. Thus, the success of the implementation of knowledge hybridization requires a high degree of reciprocity between the actors. Consequently, the NIH (Not Invented Here) syndrome must be ousted. From this analysis, we can confirm the third proposition (P3) [7] of this research.

The knowledge hybridization process, as described above, is dynamic, involuntary and non deterministic. Indeed, the multiple interactions, between the Headquarters and its subsidiaries, can take the place of ad hoc attempts at adjustment. The knowledge created constitutes a reinvention of the initial innovations conceived by the Headquarters. This reflection joins the model of knowledge conversion developed by Nonaka and Takeuchi (1995). Indeed, the authors based their analyses on the Polanyi’s taxonomy [8] (1969) which distinguishes the explicit knowledge (formal and easy to communicate) from tacit knowledge (experiences/experiments difficult to transfer). Based on this distinction, Nonaka and Takeuchi underline the existence of four modes to create new knowledge: the socialization (sharing of tacit knowledge), the externalization (the tacit knowledge becomes explicit through dialogue and collective reflection), the combination (the exchange of explicit knowledge) and the internalization (conversion of the explicit towards the tacit). In spite of the difficulty of this model’s operational processes, it emphasizes the importance of learning in creating new knowledge, and consequently in innovation. By applying this taxonomy to the results of this research, we can consider the commercial knowledge as explicit. On the other hand, the constraints, the needs and the local results (specific to each local market) are, rather, tacit knowledge. To innovate better, both modes (the externalization and the socialization) are necessary to facilitate the knowledge hybridization between subsidiaries and Headquarters.

In some cases, the combination of local and global knowledge creates innovations adopted by customers in several countries (“glocal” products). In fact, for Multinational Corporations, the convergence between the knowledge of the Headquarters and that of the subsidiaries succeeds in becoming an integrated process. In this setting, on one hand the products take into account the common features on the world plan. It tends towards standardization and global integration. On the other hand, Multinational Corporations take into account the local specificities (needs of the markets, institutional pressures, national cultures…). It leads to local adaptation. Leading on from this, it appears that hybridization conducts the Multinational Corporation to adopt a global and “multidomestic” strategy (Doz, Prahalad, 1991; Subramaniam, Venkatraman, 2001; Subramaniam, 2006). The hybridization can enhance the transnational innovation capability of Multinational Corporations. This result confirms the second proposition formulated in the setting of this research (P2) [9].

These reports join also the conception of Boyer (1998), which defends the non-determinism of the hybridization process characterized many strategic interactions which are bearers of innovation. Hybridization consists then in combining the knowledge of the Headquarters with that developed by the local units (deep-rooted in the specificities of local countries).

According to Rogers (2003), a “reinvention” is born when the transferred knowledge is transformed. This is what Boyer et al. (1998) qualify as “creative hybridization”. On the other hand, when the subsidiaries use their strong resources as an argument to apply pressure and to change the content or the sense of each innovation, it becomes a “resistive hybridization” (Ferner et al., 2005).

This new concept, which constitutes a real organizational innovation (compared to traditional knowledge transfer practice), takes into account the divergences between the countries. Thus the regulations, the institutional pressures and the local specificities are mixed. This research shows that four types of local knowledge can be integrated: the needs, the constraints, the results and the commercial knowledge. This process produces some innovations whose features integrate these different aspects.

Otherwise, hybridization is often an involuntary process. It’s based on the involvement of each actor from the subsidiaries. Besides this, the innovation process is enriched with both global and local practices while improving the competitiveness of the whole enterprise. This research puts in evidence the importance of hybridization for developing new products within Multinational Corporations. In order to increase the understanding of this new practice, other cases deserve to be studied. An aggregated analysis of its development mode will add value to future studies of trans-national innovation strategy.