DescriptionThe innovative activities of multinational corporation (MNC) operations overseas can be represented as two types: either competence exploiting (CE) – exploiting the core competence base of the parent group – or competence creating (CC) – creating new competencies that were not already among the strengths of the relevant parent company. To a large extent, the share of these two types of activities determines and reflects a given subunit’s strategic role within its MNC. This research examines (1) the patterns of MNC subunits’ knowledge sourcing in terms of the technological and geographical dispersion of knowledge sources; (2) the extent to which MNC subunits’ technological fields of expertise are distinct from those of their parent companies, and how this technological distinctiveness is related to their knowledge sourcing patterns; and (3) how MNC subunits’ profiles of CC and CE activities (in terms of their overall technological distance from their parent companies, and the degree to which they are engaged in CC versus CE activities) evolve over time, reflecting the evolution of their knowledge creating role and status within their international group. Attention is focused on the heterogeneity of firm-specific evolutionary paths in the patterns of knowledge accumulation that support CC activities, controlling for the industry-specific determinants, location-specific factors, and MNC group structural influences on such technological trajectories. This study proposes a dynamic model in which the extent to which a subunit is likely to take up CC activities is influenced by the technological and geographical dispersion of that subunit’s knowledge sourcing. The results show a consistently positive relationship between the technological and geographical dispersions of knowledge sourcing, an effect that is moderated by the extent of subunit specialization in general purpose technology (GPT) fields, and the geographical proximity between dispersed knowledge sources. We also find a positive relationship between the technological dispersion of knowledge sourcing and the technological distinctiveness of subunits. However, the geographical dispersion of knowledge sources has a negative relationship with subunit technological distinctiveness. A typology of subunit strategic roles is proposed, based upon the evolutionary trajectory of a subunit’s share of CC activities and its technological distance from its parent company.