Governing cross-border innovation: how country-specific director experience enables board-level boundary spanning in MNEs

Abstract The internationalization of innovation is critical for multinational enterprises (MNEs), yet foreign subsidiaries often struggle to gain headquarters support for their innovations, while knowledge from subsidiary-country contexts remains underused in headquarters’ R&D. This study examines how directors with professional experience in a subsidiary country help boards govern these challenges. Drawing on boundary-spanning theory, we argue that such directors improve headquarters’ evaluation of subsidiary innovations and expand the scope of knowledge that headquarters draws upon. Using 8,264 firm-country-year observations for U.S.-headquartered MNEs from 2000 to 2021, we find that headquarters-based directors with experience in subsidiary countries are positively associated with both subsidiary innovations patented in the home market and headquarters’ use of subsidiary–country knowledge reflected in patent citations. Both relationships are amplified by knowledge distance, the divergence between home and subsidiary-country innovation systems, because directors are most consequential when headquarters’ cognitive frameworks are most misaligned with the subsidiary context. The findings contribute to international business, corporate governance, and innovation research by showing how board composition shapes where innovation is supported and which foreign knowledge enters headquarters-led R&D. Practically, MNEs can improve global innovation governance by matching directors’ international experience to the countries in which their subsidiaries operate.