How “space” and “place” influence subsidiary host country political embeddedness

As a part of multinational corporations (MNCs), subsidiaries operate in distinct host countries and have to deal with their external context. Host country political embeddedness, in particular, helps subsidiaries to obtain knowledge and understanding of the regulatory and political context, and to get access to local networks. Moreover, they get some guidance and support from their headquarters. Distance between MNC home and host countries, however, alienates subsidiaries from the MNC and influences the extent of subsidiary host country political embeddedness. We suggest that the host country political and regulatory context moderates the effect of distance on subsidiary host country political embeddedness by reducing the need and/or value of headquarters support. Using a sample of 124 European manufacturing subsidiaries, we find that distance (space) and context (place) matter jointly: the impact of distance is stronger for subsidiaries that operate in host countries with low governance quality and low political stability in place.     

Social identity in MNCs based on language and nationality

The existence of multiple languages in a multinational corporation (MNC) causes tensions in the firm both by causing problems in communicating and by creating social groups. MNCs that adopt a common corporate language that is not their home language will find a problem of competing languages. Nationality is another cultural feature that leads to perceived biases that favor home‐country nationals. We explore both of these influences using social identity theory. Our research was conducted in a Spanish MNC that has subsidiaries in 42 countries and has adopted English as its corporate language. We used a mixed‐method approach with a mailed survey of 216 managers across 42 subsidiaries in the MNC and personal interviews of headquarters executives. We found that Spanish speakers enjoyed advantages in terms of access to resources for themselves and their subsidiaries, relative to non‐Spanish speakers. This access was greater when the Spanish speakers were Spanish nationals and was moderated by geographic proximity of the subsidiary to the headquarters and age of the subsidiary.     

‘Inpatriation’ for knowledge-transfer within Japanese multinational corporations

This article uses knowledge management theory and the gravity model to analyse the determinants of ‘inpatriation’ for knowledge-transfer within multinational corporations (MNCs) and the differences in their effects based on the region of the subsidiary’s host country. The empirical analysis uses data collected through a survey of the overseas subsidiaries of Japanese MNCs and finds that factors related to both the countries and the individual MNCs affect inpatriation, with the former factors having a stronger influence than the latter. With regard to the country factors, a smaller geographic distance and a larger cultural distance between the home and host countries and a lower GDP per capita in the subsidiary’s host country increase inpatriation. Regarding the individual MNC factors, a larger subsidiary R&D budget, a larger parent firm and the execution of collaborative R&D projects between a subsidiary and its parent firm increase inpatriation. Additionally, this study finds that in Asia, geographic closeness and low GDP per capita facilitate inpatriation, whereas a relatively small R&D budget and rare collaborative R&D projects with Japan decrease inpatriation. More subsidiaries in Asia send inpatriates to Japan than do subsidiaries in other regions because these positive factors are much stronger than these negative factors.     

The challenge of Chinese state‐affiliated multinationals in benefiting from foreign subsidiary knowledge transfer: A criticism of light‐touch integration

Acknowledging the sharp growth of Chinese state‐affiliated multinationals and their strategic asset‐seeking investments abroad, this study investigates the effects of headquarters' home‐country political ties on the multinational‐wide benefits gained from subsidiary knowledge transfer in Chinese multinationals. It also looks at how these effects are mediated by organizational distance and social integration between headquarters and subsidiary. Based on a survey of 177 subsidiaries of 99 Chinese multinationals, we find that headquarters' political ties trigger organizational distance and hinder social integration between headquarters and foreign subsidiaries and these, in turn, hamper the potential benefits that Chinese multinationals derive from subsidiary knowledge transfer. This study identifies new challenges related to political ties and light‐touch integration in gaining benefits from subsidiary knowledge transfer.     

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.     

Managing global knowledge transfer: Inpatriate manager embeddedness and firm innovation

The purpose of this study is to explore the role of tacit knowledge transfer in a particular type of global manager - the inpatriate manager who is typically relocated from the MNC’s subsidiary to headquarter. To do so, we draw on social embeddedness theory. Our paper suggests that if an inpatriate manager becomes embedded within the MNCs headquarter, tacit knowledge transfer will occur resulting in innovative practices and a global mindset within the MNCs headquarters. This study takes the unique approach of studying the barriers that inpatriate managers face in the transfer of tacit knowledge and highlights the role of human resources in facilitating the transfer of knowledge across the MNC. The paper articulates the implications for policy and practice and a future research agenda.     

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.     

An exploratory examination into the challenges to technology transfer in the transitional economy of Croatia

In this study, the transfer of technology between foreign multinational corporations (MNCs) and Croatian subsidiaries is explored under a dynamic capabilities perspective. Insights from 80 managers of Croatian subsidiaries are used to explore the issues facilitating and inhibiting technology transfer. The findings suggest that while technology transfer is desired by MNCs, home and host governments, and Croatian subsidiaries, limitations in MNC capabilities to transfer technology, limited governmental assistance, and the inability of Croatian subsidiary managers to apply new technology may hinder effective technology transfer. Implications for academics and practitioners are addressed. © 2005 Wiley Periodicals, Inc.     

Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness

Sharing knowledge across borders has proven to be especially relevant to multinational corporations (MNCs). Foreign subsidiaries have become active players in these knowledge flows. However, the network effects of interacting with multiple agents on the evolution of the R&D role played by subsidiaries are still undeveloped. The present study focuses on changes in subsidiary capabilities and on the dynamic mechanisms by which their R&D role might evolve, especially, as a consequence of their interaction with a variety of knowledge networks. We examine this issue by conducting four longitudinal case studies of subsidiaries operating in Spain. Using an inductive approach to theory building, we develop a general theoretical framework considering the subsidiary's embeddedness in the knowledge networks within the MNC (internal) and within the host country (external). We find that evolving towards a competence-creating mandate is characterised by the simultaneous growth of embeddedness in both internal and external networks; otherwise, a subsidiary may gravitate away from upgrading its R&D role. Thus, the contribution of this paper is to present a dynamic model that sheds light on how internal and external knowledge embeddedness interact in generating outcomes for subsidiary R&D roles.     

Learning from foreign subsidiaries: An empirical investigation of headquarters' benefits from reverse knowledge transfers

Within MNCs, the traditional role of headquarters as prime source of knowledge and competencies is changing. Increasingly, headquarters act as a receiver of knowledge from their internationally dispersed subsidiaries. But what drives the benefits headquarters can gain from such reverse knowledge transfers? Drawing on an empirical sample of 294 intra-MNC knowledge transfers, we identify the key variables impacting on headquarters' ability to benefit from reverse knowledge transfer. Taken collectively, our findings indicate that the efficiency of the MNC as a knowledge integrating institution is being driven by changes in both, the subsidiary's context and its capabilities to process knowledge. We discuss the implications of our analysis on the emerging knowledge based theory of the firm, draw out inferences for the strategic agenda of MNCs and suggest avenues for future research.     

Proximity at a distance: The relationship between foreign subsidiary co-location and MNC headquarters board interlock formation

Corporations seek various relationships, such as board interlocks, with other firms to reduce resource dependencies. The consistent theoretical expectation and empirical finding that physical proximity is an important driver for board interlock formation is seemingly at odds with the emerging and growing literature on transnational board interlock ties. We argue that the effect of proximity on multinational corporation (MNC) board interlock formation can also be attributed to the firms’ internationalization strategy, namely, when they have co-located subsidiaries in foreign markets. We call this “proximity at a distance”. We test our assumptions on a dataset covering almost 43,000 board interlocks among MNC headquarters and their 12 million subsidiary co-location pairs. We confirm that proximity among headquarters increases the odds of interlocking but also find robust evidence that co-located subsidiaries also increase firms’ propensity to interlock, particularly for transnational board interlocks. Our results help provide an explanation for the “paradox of distance” by showing that the interlock between two distant MNCs may be driven by proximity to their foreign subsidiaries. As such, we illustrate how MNCs’ resource-dependent strategic responses can occur at the headquarters level to address uncertainties experienced at the subsidiary level.     

Building subsidiary local responsiveness: (When) does the directionality of intrafirm knowledge transfers matter?

The present study focuses on effects of subsidiary internal knowledge-based activities—knowledge transfer and reverse knowledge transfer—and absorptive capacity on local responsiveness. We also examine whether absorptive capacity, shared values, and psychological safety, representing constituents of the motivation-opportunity-ability model of behavior, moderate relationships of subsidiary internal knowledge-based activities with responsiveness. Based on a sample of 173 Chinese subsidiaries, the results suggest knowledge transfer and absorptive capacity facilitate local responsiveness. Shared values moderates positively and absorptive capacity negatively, the relationship between knowledge transfer and responsiveness. Psychological safety strengthens the link between reverse knowledge transfer and local responsiveness.     

The performance effects of vertical and horizontal subsidiary knowledge outflows in multinational corporations

Horizontal and vertical subsidiary knowledge outflows in multinational corporations (MNCs) are argued to be central to effective MNC performance. Building on the knowledge-based view of the firm, we develop a conceptual model to investigate the performance consequences, determinants and interaction effects due to coordination and control mechanisms, of horizontal and vertical MNC subsidiary knowledge outflows. The hypotheses are empirically tested with a dataset comprised of survey and archival data from over 200 MNC subsidiaries. Results indicate that explicitness and communication positively influence vertical and horizontal subsidiary knowledge outflows and that national cultural distance, centralization, formalization, and specialized resources moderate these influences. We also find that knowledge outflows to headquarters and to peer subsidiaries enhance an MNC's financial performance (i.e., return on assets). The results provide substantive evidence as to how vertical and horizontal knowledge operate within MNCs.     

The interplay of networking activities and internal knowledge actions for subsidiary influence within MNCs

Knowledge-based and network-based activities are known determinants of foreign subsidiary influence. We demonstrate that the interaction between these factors is essential in understanding how subsidiaries gain influence within an MNC. We test this using data on 184 foreign-owned subsidiaries in the UK. The results indicate that the possession of strategic resources (knowledge or embedded relations) increases subsidiary influence only when the knowledge is transferred back to headquarters. Importantly, the impact of subsidiary–headquarters embeddedness, external embeddedness and knowledge development on influence is mediated by the extent of reverse knowledge transfer. This mediating role sheds new light on the antecedents to subsidiary influence.     

Learning from Project Failure: Globalization Lessons for an MNC

We study a multinational corporation's (MNC) failure in implementing a firm‐wide information technology system (ITS) project. To counter heightened competitive pressures, the MNC sought to improve its supply chain responsiveness by implementing the ITS project. However, since the headquarters (HQ) personnel lacked nuanced understanding of the micro issues in the subsidiaries, their design efforts turned out to be inadequate. Organizational practices that restrict member behavior to recipes from past knowledge served to amplify the problem—by disfavoring cooperation. Our study suggests a need to rethink the notion of the HQ as the design place. Further, there is a case for subsidiary personnel being afforded a greater say in design of changes to their work processes, given their higher exposure to process variety. This may offset the HQ‐subsidiary power imbalance noted in prior literature. © 2015 Wiley Periodicals, Inc.     

跨国公司海外子公司研究综述及最新进展

文章按照分析的层级和对MNC概念化两个维度,回顾评析了跨国公司海外子公司研究所经历的4个阶段。回顾研究发现,随着跨国公司海外子公司的不断成熟,学者们越来越多地将研究焦点从关注跨国公司整体转移到其海外子公司层面,一些海外子公司在公司网络中的战略性作用不断增强。此外,对其所依据的主要基础理论进行了回顾分析发现,它们的演化和融合趋势日渐明显。在此基础上,总结了海外子公司研究的最新进展,即下属单位角色发展、下属单位创业和逆向护佑研究。     

Headquarters to subsidiary transfer effects on marketing strategy exploitation

The transfer of locally created marketing strategies worldwide represents a key competitive advantage for multinational corporations (MNCs). Although a research topic of much interest, empirical content of past studies is scarce. Absorptive capacity studies typically test direct effects of either the transfer capacity of the strategy's initiator or the recipient's ability to process and exploit the strategy on related learning outcomes. Mixed findings allow the possibility of more complex relationships. This study examines the relationships between MNC headquarters and marketing units located in subsidiary firms using a sample of 213 marketing managers. The study systematically explores linear, interaction, and quadratic effects within a structural equation modeling paradigm. The findings indicate that the relationship between a MNC headquarters' transfer capacity and a subsidiary marketing unit's processing capacity on the strategy's exploitation is one of mediation and moderation. The subsidiary marketing unit's processing capacity is a key mediating variable and headquarters' transfer capacity moderates the effects of this variable on the exploitation of the marketing strategy by the subsidiary's unit.     

Product innovation and decision-making autonomy in subsidiaries of multinational companies

This paper investigates the relationship between subsidiary decision-making autonomy and their development of product innovations. Using survey data from 563 subsidiaries located in six European countries, we show how the degree of decision-making autonomy, as well as the functional area in which the subsidiary has decision-making autonomy, affect the probability of a subsidiary developing product innovations. We find that higher decision-making autonomy increases the probability of a subsidiary developing a product innovation. This effect is particularly pronounced, but not restricted to, decision-making in the area of R&D or the adoption of technologies. The positive effect extends also to functional areas such as investment, finance, supplier selection as well as marketing and sales. In addition, our study suggests that higher degrees of novelty of product innovation still benefit from subsidiaries’ autonomy, but may require higher degrees of managerial involvement by headquarters.     

Organizing for knowledge flows within MNCs

This paper conceptualizes the multinational corporation (MNC) as a network of knowledge flows and argues that, within the same MNC, subsidiary strategic roles can be expected to differ in terms of the extent and directionality of knowledge flows between a focal subsidiary and the rest of the corporation. Building on this framework, the paper hypothesizes and empirically tests for systematic associations between a subsidiary's knowledge-flow based strategic role and the systems and processes linking the subsidiary to the rest of the corporation. The empirical data, collected from 359 subsidiaries of major US, Japanese, and European MNCs (i) provide strong support to the notion of differentiated knowledge flow roles as well as differentiated systems and processes within MNCs, and (ii) suggest that innovation by foreign subsidiaries is more typically the result of autonomous initiative by the subsidiaries rather than strategic directives issued from corporate headquarters.     

Aligning corporate transfer intentions and subsidiary HRM practice implementation in multinational corporations

We study HRM practice implementation in subsidiaries of multinational corporations (MNCs) and diverge from extant research by focusing on alignment, which we conceptualize as the degree to which subsidiary implementation of HRM practices corresponds with the subsidiary-specific transfer intentions of corporate headquarters. In explaining alignment we examine different aspects of the headquarters–subsidiary relationship, namely, the extent of formal control, interpersonal relationships and subsidiary strategic HRM capabilities. Based on a sample of 105 subsidiaries from 12 Nordic MNCs, the results highlight the importance of expatriates, trust and the strategic HRM capabilities of the subsidiary HR function. We conduct post hoc analyses to shed further light on (i) the relationship between our independent variables and the two separate components of alignment – corporate intentions and subsidiary implementation, and (ii) two different types of misalignment – excessive and insufficient.