This paper examines two aspects of the internationalisation of innovation in Finnish multinational companies, the growing innovativeness of foreign subsidiaries ('creative subsidiaries') and the phenomenon of 'cross-fertilisation', between R&D labs in Finland and those in foreign subsidiaries, in the innovative process of Finnish MNEs. We review existing literature pertaining to innovation in multinational enterprises and the growing capability of foreign subsidiaries to undertake innovation. Consistent with the general thrust of the literature we develop and examine two hypotheses relating to subsidiary innovation and cross-fertilisation between subsidiaries and the parent for 30 Finnish MNEs between the years 1975-1995, employing patent data from the US patent office. Our findings provide support for the hypotheses. We conclude by pointing out the limitations of the current study and deriving implications from our findings for future research.