Abstract
•We connect technology strategy to organizational capability to investigate MNE subsidiary upgrading in emerging markets.•We suggest technology strategies to be delineated by subsidiaries’ manufacturing orientation (local or global) and knowledge transfer type (uni-directional or multi-directional).•We outline four technology strategies that MNE subsidiaries in emerging markets pursue for process, product and functional upgrading in global value chains.This paper investigates technology strategy in subsidiaries of Multinational Enterprises (MNEs) in emerging markets and suggests implications for subsidiary upgrading in Global Value Chains (GVCs). Technology strategy is delineated by the MNE subsidiary's manufacturing orientation (local or global) and knowledge transfer type (uni-directional or multi-directional). Drawing upon a multiple case study of seven of the largest Brazilian subsidiaries of Swedish MNEs, the study identifies four different MNE technology strategy types: 1) technical; 2) improvement; 3) development; and 4) creation. The findings suggest that technology strategy influences subsidiary upgrading through development of operational and dynamic capabilities.