Characteristics and influences of multinational subsidiary entrepreneurial culture: The case of the advertising sector

This paper undertakes an exploratory study into the characteristics of entrepreneurial culture of the multinational subsidiary; and, into the associated influences and manifestations linked to multinational corporation (MNC) and environmental contexts. The theme of multinational subsidiary entrepreneurial culture is an unexplored theme in the literature, and has considerable research and managerial significance. This qualitative research is based on eight multinational subsidiaries in the advertising sector in the UK. The evidence suggests that the constituents of multinational subsidiary entrepreneurial culture include global vision, entrepreneurial orientation and entrepreneurial MNC network management. The related influences and manifestations refer to subsidiary autonomy, target market servicing and responsiveness to local environmental conditions. In addition, the findings show that while entrepreneurial behaviour was evident in all investigated subsidiaries, its locus varied significantly. Specifically, entrepreneurship in multinational subsidiaries can be subsidiary-, headquarters-, or jointly-driven.     

Subsidiary Technology Upgrading and International Technology Transfer,with Reference to China

This paper reviews the research on technology upgrading in the subsidiaries of transnational corporations and the research on the development of Chinese high technology firms. On the basis of this it develops fresh policy options for government intent upon facilitating international technology transfer to their jurisdictions. Technology upgrading is the use of increasingly complex technologies in products and processes, and the development of the managerial and organizational capabilities needed to leverage those technologies effectively. Technology upgrading by the subsidiaries of transnational corporations can contribute to the economic development of the host region and is often driven by the entrepreneurial activities of subsidiary management. The upgrading process involves collaborating/lobbying with suppliers, headquarters and sister subsidiaries. Economic development policy should foster subsidiary technology upgrading as part of initiatives to increase international technology transfer.     

Global competition and latecomer production strategies: Samsung of Korea in China

This contribution illustrates how latecomer multinational companies (MNCs) have organized international production activities and maintained their competitive advantage under growing global competition. In doing so, an interdisciplinary approach, including an evolutionary theory of MNCs, global strategic management, and organizational and technological learning, is adopted through the case study of Samsung Electronics as a sample latecomer MNC. Samsung reveals that competition in the electronics industry in China is based on the diferential capabilities of players in the market, and their ability to transfer and improve these capabilities faster than competitors. Latecomer MNCs' foreign subsidiaries are under strong pressure to be actively involved in design and product development activities near to production facilities. In order to gain a sustainable competitive advantage, foreign subsidiaries of latecomer MNCs need to rapidly improve their product innovation capability by combining knowledge transferred from the MNC headquarters and global subsidiaries' networks with information about consumer requirements in the foreign location.     

Knowledge development in MNC subsidiaries: The influence of MNC internal and external knowledge and control mechanisms

In this study, we examine the influence of control mechanisms and internal and external knowledge on multinational company (MNC) subsidiary knowledge development. Previous research stresses the importance of these factors for subsidiary behavior, but nonetheless they remain underexplored in the context of subsidiary knowledge development. The study is based on questionnaire data from 161 MNC subsidiaries in China and Finland. The results indicate that MNC internal and external knowledge, as well as decision‐making autonomy of MNC subsidiaries, positively influence knowledge development in MNC subsidiaries. Conversely, the importance of knowledge development as a performance evaluation criterion did not show any influence on MNC subsidiary knowledge development. © 2008 Wiley Periodicals, Inc.     

The endogenous role of location choice in product innovations

The location choice of product innovations is a prevalent phenomenon one that has received little attention in the literature. This study examines the ways in which comparative industry environment, technology and product characteristics, and entry timing affect the firm's location choice of new product development activities between headquarters and foreign subsidiaries and the implications of location choice for performance. Our findings indicate that: (1) firms are more likely to locate their new product development activities at foreign subsidiaries in mainland China than at headquarters in Taiwan when the industry environment at foreign subsidiaries is more favorable, when technologies and products are more mature, and when the entry to mainland China's market is earlier than that of its competitors; (2) in general, firms locating their new product development activities at headquarters in Taiwan perform better than firms locating their new product development activities at foreign subsidiaries in mainland China after controlling for endogeneity bias; (3) firms locating their new product development activities at headquarters (at foreign subsidiaries) perform better than if they had located their new product development activities at foreign subsidiaries (at headquarters). Managerial implications and future research directions are discussed.     

Analysing corporate political activity in MNC subsidiaries through the integration-responsiveness framework

Our study applies the well-known, market-strategy focussed integration-responsiveness (IR) framework and extends it to incorporate the non-market corporate political strategies of MNC subsidiaries. We find government regulation and the market strategies of integration and innovation have positive relationships with MNC subsidiary political activities. Interestingly, whereas the market strategy of innovation has a positive effect on subsidiary performance (but not on legitimacy), the non-market corporate political activities undertaken by MNC subsidiaries enhance subsidiary legitimacy (but not subsidiary performance). In addition, both market innovation and non-market subsidiary political activities are useful tools to gain favourable government decisions. Overall, our study incorporates both market and non-market strategies within a single overarching IR framework, and highlights their complementary role in achieving the twin goals of performance and legitimacy respectively.     

Gender factors and female entrepreneurship: International evidence and policy implications

Nowadays, the transformations taking place in female entrepreneurship at the national and international levels and the importance of such entrepreneurship for economic growth and poverty alleviation underscore the need for more global and diversified analysis of female entrepreneurial activities. The literature however regarding international comparisons of female entrepreneurship practices remains limited and becomes even more limited when exploring such practices beyond the developed countries context. To this end, this paper examined the impact of five gender-related variables on the extent of female entrepreneurial activities in 44 developed and developing countries. Among its five focused variables, the paper found female education, extent of female economic activities, female earnings ratio, and fertility rate to be significant in all estimations with two different dependent variables representing female entrepreneurial activities. The remaining focus variable related to gender empowerment was found to be significant with one of the two dependent variables. Among its contributions, the paper explored gender entrepreneurship from an international perspective and extended the analysis of the topic beyond the main stream Anglo-Saxon context. It also highlighted the variations in results with regards to developed and developing countries environment. Understanding factors that could influence the development of female entrepreneurial activities and exploring their potential variability across stages of economic development could also be useful for policy makers exploring effective incentive structure to promote gender entrepreneurship in their respective countries.     

Composing the top management team in the international subsidiary: Qualitative evidence on international staffing in U.S. MNCs in the Republic of Ireland

International staffing is a central plank of enquiry in MNC research. In this context, much of the research effort has been dedicated to providing an understanding of expatriation from a headquarter perspective and on unearthing explanatory factors and situational issues associated with the expatriation of parent country nationals. Comparatively less is known about the utilisation of host country nationals (HCNs) and third country nationals (TCNs) in staffing key positions in MNC subsidiary operations. Drawing on the results of a qualitative study in the Irish context, the current paper presents a nuanced perspective on the staffing of MNC subsidiaries from a subsidiary perspective. We find that HCN and TCN employees play a key role in managing the U.S.-owned Irish subsidiaries investigated, most of which display a strong centralised control over their Irish subsidiaries. Our findings also point to a pattern of temporal evolution in the staffing policies pursued within the MNCs. Furthermore, our research lends support to the proposition that the use of HCNs and TCNs to staff senior positions in new expansions within the host country is higher where the expansion follows a wave of earlier investment in that location. We explicate our findings in the context of the enfolding literature and highlight the implications of the research for international staffing theory and practice.     

The overlooked distinction of multinational enterprise subsidiary learning: Its managerial and entrepreneurial learning modes

The theme concerning modes of learning in multinational subsidiaries is the focus of enquiry in the current study. This theme is closely linked to the issue of how subsidiaries become alert and seize opportunities. Such an investigation is also important for management practice because effective subsidiary learning can render sustainable competitive advantage in the host country. We performed an in-depth case examination on six multinational subsidiaries of a large Finnish firm. We identify two learning modes of multinational subsidiaries that we refer to as managerial and entrepreneurial learning. We find that managerial learning shares characteristics with the systems-structural learning perspective; is facilitated by embeddedness of the subsidiary in the MNE system; and, transferred in the MNE through many conventional and reverse knowledge flows. On the contrary, entrepreneurial learning shares characteristics with the interpretive learning perspective; is facilitated by embeddedness of the subsidiary in the host country; and, transferred in the MNE through relatively fewer reverse knowledge flows. The distinction between these two learning modes and their discrete characteristics enlighten past research that has largely failed to pinpoint the importance of the two modes for MNE subsidiary activities.     

Subsidiary autonomy and performance in Japanese multinationals in Europe

Notwithstanding the growing body of research on headquarters–subsidiary relationships, the conditions under which subsidiary autonomy leads to enhanced subsidiary performance is still a subject of debate. This study adopts a contingency approach and investigates the effects of external uncertainties and intra-MNE coordination on the performance benefits of subsidiary autonomy. The empirical analysis is based upon cross-sectional data collected from 88 European subsidiaries of Japanese MNEs. Our findings show that subsidiary autonomy has a greater impact upon performance (a) under conditions of technological uncertainty; and (b) when expatriate involvement is high, as the subsidiary can reap the full benefits of entrepreneurial capabilities and enjoy resource interdependencies through interactions with the parent simultaneously. MNC executives should aim for an appropriate balance between subsidiary autonomy and these internal and external factors so that the subsidiaries achieve superior performance.     

Institutionalization of protection for intangible assets: Insights from the counterfeit and pirated goods trade in sub-Saharan Africa

Based on inductive qualitative multiple case studies of MNE subsidiaries in a sub-Saharan African market, this study investigates how multiple political networking capabilities are developed and leveraged to institutionalize protection for strategic internationally transferrable intangible assets in weak institutional environments. The study finds that MNE subsidiaries use a three-phase process to institutionalize protection for intangible assets: diagnosis of the nature of transaction costs and risks in the weak institutional environment (Phase 1); development of political networking capabilities to generate multiple political resources (Phase 2); and leveraging of a multiplicity of political resources to institutionalize protection for internationally transferable intangible assets (Phase 3). The study concludes that an ability to develop and leverage political networking capabilities to recombine multiple political resources enables MNE subsidiaries to institutionalize protection for internationally intangible assets in challenging host-market institutional environments. The wider theoretical, managerial, and public-policy complications of these findings are discussed, and avenues for future research proposed.     

International entrepreneurial marketing strategies of MNCs: Bricolage as practiced by marketing managers

The extant research lacks information on entrepreneurial marketing in large international firms. This study explores the international entrepreneurial marketing strategies of multinational corporations (MNCs), and its results reveal that MNC marketing managers use bricolage to develop international entrepreneurial marketing. A novel finding of the study is that the international entrepreneurial marketing strategies of MNCs include co-innovation, accelerating customer value, and international expansion based on regional market leadership. Marketing managers use both parallel and selective bricolage in their international entrepreneurial marketing. Environmental uncertainty and entrepreneurship culture are important drivers of the implementation of bricolage to develop international entrepreneurial marketing. The research findings can inform MNC management of the options available to utilize corporate venturing to facilitate bricolage and in turn to realize international entrepreneurial marketing strategies.     

How have Japanese multinational companies changed? Competitiveness,management and subsidiaries

Evidence on the strategies and capabilities of Japanese multinational companies (MNCs) and their subsidiaries points to aspects of established management practices (typically home-grown) that complicate or inhibit adaptation to the demands of global competition since the 1990s. Japanese MNCs have had to respond, amongst other trends, to the switch from production to buyer-driven global value chains, cross-border vertical specialization, global factory strategies and strategic alliances and cooperative relationships. Amongst the factors that might affect the ability of Japanese MNCs to make competitive and organizational transitions are: parental MNC intent and capability in the cross-border transfer of management practices; the impact of host country risk on investment, ownership and entry strategies; measures of institutional difference and the gap in economic development between home and host nations; parent firm–subsidiary and subsidiary–subsidiary power relations and knowledge boundaries; and the evolution of insider networks that might overcome institutional and cultural distances within an MNC.     

Testing Baumol: Institutional quality and the productivity of entrepreneurship

Baumol's [Baumol, W.J., 1990. Entrepreneurship: productive, unproductive and destructive. Journal of Political Economy 98 (5), 893–921] theory of productive and unproductive entrepreneurship is a significant recent contribution to the economics of entrepreneurship literature. He hypothesizes that entrepreneurial individuals channel their effort in different directions depending on the quality of prevailing economic, political, and legal institutions. This institutional structure determines the relative reward to investing entrepreneurial energies into productive market activities versus unproductive political and legal activities (e.g., lobbying and lawsuits). Good institutions channel effort into productive entrepreneurship, sustaining higher rates of economic growth. I test and confirm Baumol's theory, and discuss its significance to the literature, economic prosperity, and policy reform.     

Knowledge outflows from foreign subsidiaries and the tension between knowledge creation and knowledge protection: Evidence from the semiconductor industry

This paper analyzes the MNC subsidiaries’ trade-off between the need for knowledge creation and the need for knowledge protection, and relates it to the extent of knowledge outflows generated within the host location. Combining research in International Business with Social Theory, we build a conceptual framework suggesting that subsidiaries that extensively draw on external knowledge sources are also more likely to generate knowledge outflows to local firms. We argue that this may be explained by the subsidiaries’ willingness to build the trust that facilitates the establishment of reciprocal knowledge linkages. However, when the value of the subsidiary's knowledge stock is very high, the need for knowledge protection restrains reciprocity mechanisms in knowledge exchanges, thus reducing the extent of knowledge outflows to the host location. This study contributes to the literature on the firm-level antecedents of FDI-mediated local knowledge outflows, as well as to the broad IB literature on the relationship between subsidiaries and their host regions. The implications for managers and policy-makers are also discussed.     

The drivers of evolution/upgrading in Mexico's maquiladoras: How important is subsidiary initiative?

Corporate entrepreneurship may play an important role as a driver of industrial upgrading in multinational subsidiaries. In this study, we test to determine if subsidiary initiative is related to industrial upgrading in a sample of 50 Mexican maquiladoras. Based on qualitative and quantitative data collected from plant managers, this study provides qualified support for the notion that increased responsibilities within MNC networks are something earned through the entrepreneurial efforts of subsidiary managers rather than given by the parent company.     

The relationships between types of network organization and adoption of management mechanisms: an empirical study of knowledge transactions of MNC’s subsidiaries in Taiwan

This paper examines the relationships of various types of network organizations and the adoption of management mechanisms through the application of network theory. We found that strong relationships exist as described within the four hypotheses by empirically evaluating case studies of MNC subsidiaries in Taiwan. Based on “the knowledge transaction density” observed between an MNC’s enterprise group and local firms, the subsidiaries can be classified into three categories of network organization, namely: (1) Self-sufficient, (2) Production- based, and (3) Operation-centered subsidiaries. The literature review suggests that there are four types of mechanisms that MNC headquarters use to control their foreign subsidiaries. These mechanisms are bureaucratic, personnel, performance and cultural controls. This research reports three major findings. Firstly, for Operation-centered subsidiaries, headquarters prefer to adopt two or more management mechanisms simultaneously. Secondly, for Production-based subsidiaries, headquarters prefer to adopt bureaucratic management mechanisms. Finally, for Self-sufficient subsidiaries, headquarters prefer to adopt performance and cultural management mechanisms.     

The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary’s business network

Within business literature in general, capabilities have advanced to the prime determinant of the corporation’s economic rents. Within international business literature, it is further assumed that multinational corporations can enhance their pool of capabilities through foreign subsidiaries. Foreign subsidiaries are seen as means to assimilate new capabilities from their local, external network and integrate these capabilities into the multinational corporation. Data from more than 2000 foreign subsidiaries shows that some foreign units actually are endowed with superior capabilities which are useful for other corporate entities. It is argued that the development of critical capabilities within these subsidiaries is driven not only by internal corporate actors, but also by external actors. The analysis provides evidence that the role of different internal and external network partners for capability development varies according to the functional activity under consideration. Thus, subsidiaries benefit from various internal and external network actors in very different ways. The contribution ends with some conclusions and some avenues for future research.     

Entrepreneurship and Multinational Subsidiaries’ Performance in an Era of Financial Crisis and Economic Uncertainty

ABSTRACT

Since entrepreneurial foreign investments may act as a catalyst for economic recovery in crisis periods, we examine the influence of entrepreneurship-related variables on the performance of multinational subsidiaries in Greece, in an era of financial recession and high economic uncertainty. Our conceptual foundation identifies in-house technological capabilities, autonomy and strategic mandates as core predictors of subsidiaries’ entrepreneurial aspects. Drawing upon a questionnaire-based survey of 87 foreign firms operating in the focal economy, our findings suggest that subsidiaries’ product mandate role and increased autonomy impacts positively on performance. Surprisingly enough, the performance effect of technology-related variables linked to entrepreneurship seems insignificant.     

Weathering storms – Technological exploration of MNCs in times of financial crisis

We generate new knowledge about financial crises and their consequences for MNC technological development, thereby addressing a largely uncharted issue at the crossroads of the organization, strategy and international business literatures. Drawing on threat-rigidity theory, we argue that financial crises have an overall negative effect on MNC technological exploration and that the strength of the effect differs across greenfield and acquired subsidiaries. Results from an empirical investigation of 21 MNCs over the 1890–2008 period suggest that the dampening effect of financial crises on technological exploration is confined to home-country units and greenfield subsidiaries, whereas it is found to be of less significance among acquired foreign subsidiaries. We suggest that such differentiation within the MNC is indicative of a previously unobserved advantage from multinationality, which allows it to smoothen the effects of financial crises on long-term technological development and corporate growth.