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.     

Unravelling agency relations inside the MNC: The roles of socialization,goal conflicts and second principals in headquarters-subsidiary relationships

Prior research has advanced classical agency theory to account for various characteristics of headquarters (HQ)-subsidiary relations in the multinational corporation (MNC). In an attempt to contribute to this line of research, in this paper, we propose and test an agency model for HQ-subsidiary relations inside the MNC. Drawing on classical agency assumptions, we develop a baseline hypothesis that links informal controls (i.e., socialization), HQ-subsidiary goal conflicts, and the HQ’s use of formal controls (i.e., behavioral controls). We subsequently introduce an important boundary condition, which reflects subsidiaries’ internal agency relations with subsidiary CEOs as second principals. More specifically, we argue that the baseline relationship only holds under low levels of second principal power. To test our model, we employed a unique study design with three parallel surveys addressing the agents and the two principals involved in 131 agency relations within one MNC.     

The complexity of the business network context and its effect on subsidiary relational (over-) embeddedness

Many studies have focused on the effects of MNC subsidiaries’ external relational embeddedness. Little attention has been given to its antecedents and especially to the potential effect that the business network context might have. We try to fill this gap and attempt to explain variation among subsidiaries’ degree of relational embeddedness. Our results show a strong and robust effect of the business network context – i.e. the network context in which the direct business relationships between the subsidiary and its partners are embedded – on the degree of relational embeddedness. However, contrary to previous literature, we find an inverted u-shaped relationship. We discuss our findings with regard to the issue of over-embeddedness and the literature on the strength of weak vs. strong ties.     

“I just don’t feel comfortable speaking English”: Foreign language anxiety as a catalyst for spoken-language barriers in MNCs

Over the last two decades, the impact of language standardization in MNCs has attracted considerable research attention. However, although the current IB literature strongly suggests that the introduction of English can cause a significant barrier, we still have not fully understood the micro-foundations of such barriers. We conducted an inductive study and interpret our findings using an interdisciplinary approach drawing from both IB related research as well as research from the field of linguistics and language studies. We propose that a major challenge for MNC employees is the foreign language anxiety they typically experience in a non-native language. It is manifest in communication avoidance and withdrawal, as well as code-switching. Our findings indicate that such communicative behaviors can have a considerable impact on interpersonal communication, affecting both the content and relationship dimension. Our study contributes to emerging research on the role of anxiety-related factors as micro-foundations of language barriers and provides a so far rather neglected starting point for firms to reduce the language barrier in corporations.     

From Voids to Sophistication: Institutional Environment and MNC CSR Crisis in Emerging Markets

Why do multinational corporations (MNCs) frequently encounter corporate social responsibility (CSR) crises in leading emerging markets in the new century? Existing research about institutional impacts on MNC CSR has developed a void-based account about how the flawed institutional system allows misdeeds to happen. But the fact that such misdeeds have turned into increasing CSR crises in the new century along with institutional change is rarely taken into account. This paper combines studies of institutional voids, institutional entrepreneurship, and stakeholder theory to develop a concept of institutional sophistication, which refers to both the top-down maturation of the regulatory system that standardizes firm behavior and the bottom-up diversification and intensification of grassroots initiatives that redefine stakeholder membership. Based on this concept, we developed a framework to comprehensively demonstrate how both institutional voids and sophistication drive the MNC CSR crisis in leading emerging markets. Empirically, we established an original database that includes 309 publicized CSR crises encountered by major foreign MNCs in China, India, and Russia, 2000–2011. Through a content analysis, the paper reveals six common sophistication processes that drive the MNC crisis across contexts and also specifies stakeholder strategies that make these processes happen and vary by social problems and national contexts. We also discussed the value of studying corporate social irresponsible behavior in understanding the institution–MNC relationship.     

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。     

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.     

跨国公司业绩评价标准的研究

基于跨国公司业绩评价较之国内经营企业业绩评价的特殊复杂性,设计跨国公司业绩评价的汇率决策模型,建立跨国公司业绩评价的指标体系,给出跨国公司业绩综合评价值模型,确定了跨国公司业绩评价标准的原则;从而,为构建跨国公司业绩评价标准的系统模型及跨国公司业绩评价提出了一种新方法。     

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.     

The effect of host country Internet infrastructure on foreign expansion of Korean MNCs

This study examines the effect of host country Internet infrastructure on a multinational corporation (MNC) foreign expansion. Using Heckman’s selection model on a sample of 2589 subsidiaries of 487 Korean MNCs between 1990 and 2011, we find that host country Internet infrastructure is important in MNC expansion decisions. In addition, we find that a well-developed Internet infrastructure within a host country leads to more investments from MNCs producing consumer over industrial goods and is more attractive to domestic market followers than market leaders. We find that the host country’s Internet infrastructure is important for an MNC foreign expansion decision, suggesting that efficient communication within an MNC is critical in coordinating globalized MNC subsidiary operations.     

The acculturative stress of host country managers working at MNC subsidiaries: Determinants and effects

This paper introduces the concept of acculturative stress to indicate a distinct psychological difficulty faced by host country managers working at multinational corporation (MNC) subsidiaries. Drawing on the social identity and self-verification theories, we suggest that host country managers are exposed to acculturative stress due to the challenges they face in verifying their national cultural identity. We identify the perceived cultural incongruence and the lower relative standing of host country managers as proximal determinants of acculturative stress and examine its negative impact on their work engagement. The analysis results of a sample of 643 Korean managers working at 60 MNC subsidiaries in Korea support our hypotheses on the determinants and effects of acculturative stress.     

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.     

Corporate Identity,Ethics and Reputation in Supplier–Buyer Relationships

Multi-national corporations (MNCs) have been criticised for not behaving ethically in some situations, which could have a negative effect on their reputation. This study examines the ethics of a large MNC in its relationship with its suppliers. A brief literature review of corporate identity, business ethics and buyer–supplier relationships is undertaken. The views and perceptions of the buying staff and the suppliers to a large South African MNC are obtained and discussed. The results indicate that this MNC has a good corporate reputation among both its suppliers (an important stakeholder) and its own buying department. The existence and implementation of formal codes of ethics was found to be a necessary, but not sufficient condition for good ethical practice. Candid relationships with suppliers emerged as a second and important factor. Ethical perceptions of buyers by suppliers are driven by the management of corporate identity, through the elements of ethical standards and candid relationships. We present a model of corporate identity/reputation in Buyer–Supplier Relationships. Michael Bendixen is a Professor of Research Methodology and Statistics at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include business ethics, governance and culture. His articles have appeared in the European Journal of Marketing, Industrial Marketing Management, Journal of Business Research, Journal of International Business Studies and Journal of Marketing Management amongst others. Russell Abratt is a Professor of Marketing at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include corporate identity management and business ethics. His articles have appeared in the Journal of Business Ethics, Journal of Business and Psychology, European Journal of Marketing, Journal of Marketing Management, Industrial Marketing Management, and Business Horizons amongst others.     

On the different “worlds” of intra-organizational knowledge management: Understanding idiosyncratic variation in MNC cross-site knowledge-sharing practices

This qualitative field study investigated cross-site knowledge sharing in a small sample of multinational corporations in three different MNC business contexts (global, multidomestic, transnational). The results disclose heterogeneous “worlds” of MNC knowledge sharing, ultimately raising the question as to whether the whole concept of MNC knowledge sharing covers a sufficiently unitary phenomenon to be meaningful. We derive a non-exhaustive typology of MNC knowledge-sharing practices: self-organizing knowledge sharing, technocratic knowledge sharing, and best practice knowledge sharing. Despite its limitations, this typology helps to elucidate a number of issues, including the latent conflict between two disparate theories of MNC knowledge sharing, namely “sender–receiver” and “social learning” theories (Noorderhaven & Harzing, 2009). More generally, we develop the term “knowledge contextualization” to highlight the way that firm-specific organizational features pre-define which knowledge is considered to be of special relevance for intra-organizational sharing.     

The Impact of Origins of Reverse Technology Transfer on MNC Home‐Country Product Development

Reverse technology transfer (the transferring of multinational corporation [MNC] subsidiaries’ technological knowledge to their home country) deserves more executive attention since the source of competitive advantage of MNCs resides in their capabilities to leverage knowledge from different units across borders. This article examines three salient “origins” of reverse technology transfer—headquarters, local constituents, and subsidiary research and development (R&D) activity—and their impact on MNCs’ home‐country product development. We argue that reverse technology transfer from subsidiary R&D activity is more likely to have a positive impact on MNC home‐country product development than the other two origins because reverse transfer from local constituents requires high integration cost, and transfer from headquarters adds little technological novelty. We also develop two contingency hypotheses for the latter two origins to increase their likelihood of positive impacts on home‐country product development. Using a data set of 1,331 Taiwanese MNCs, our empirical evidence provides two important messages to managers: (1) a subsidiary whose technology mainly relies on its R&D would be an ideal target for reverse transfer; and (2) reverse transfer from local constituents and headquarters can be effective when they fit with an appropriate organizational mechanism, such as governance mode and absorptive capacity. © 2016 Wiley Periodicals, Inc.     

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.     

Regional location of multinational corporation subsidiaries and economic development contribution: Evidence from the UK

The regional location of multinational corporation (MNC) subsidiaries in their host country and their associated entrepreneurial output and networking activities are likely to affect their economic development contribution, measured in terms of technology and management know-how transfers; enhancement of innovativeness of other firms; and company spinoffs. This theme has considerable research and public policy value. We investigate the issue drawing from a large-scale study of 264 MNC subsidiaries based in the UK. The findings show that activities in developed regions are associated with higher economic development contribution than those in less developed regions. Moreover, entrepreneurial output and networking with partners external to the MNC system positively affect economic development contribution. Key implications of this study are that entrepreneurship critically influences economic development contribution, underlying the importance of the MNC subsidiary research stream; and that the policy practice of supply-side measures fostering entrepreneurial output and embeddedness in local networks seems to be appropriate to pursue.     

Interpersonal similarity and knowledge sharing within multinational organizations

Previous research has established that interpersonal similarity can influence knowledge sharing in such a way that similar people are more likely to share knowledge than those who are dissimilar. We contribute to the literature by showing that in the MNC context, cultural and functional similarity can become more powerful sources of bias than more commonly assumed demographic characteristics such as gender or seniority. This may be driven by the salience of such boundaries in the MNC: while demographic characteristics are more broadly distributed, cultural and functional barriers create more defined and observable faultlines, often coinciding with unit boundaries. We further argue that it may not be similarity as such that matters but rather its positive impact on different dimensions of social capital, which mediate the relationship between similarity and knowledge sharing. These microfoundations of inter-unit knowledge exchange point to important theoretical and practical implications for international management.     

Conflict and control in MNC new product introduction

One of the advantages of the multinational corporation (MNC) is that it can exploit new product ideas globally in a rapid manner. This raises the issue of control of MNC new product introductions. It has been demonstrated that control over MNC subsidiaries differs depending on the strategic role assigned to the subsidiary. But, in addition to its role in the MNC, a subsidiary also has a role in a business network of relationships with important customers, suppliers, and other business partners. There is a latent conflict between these two roles. This article formulates and analyzes a structural model in which the dependencies associated with the two roles are related to conflict and control in subsidiary new product introduction. The model is supported empirically and demonstrates that control is a matter of handling the latent conflict between the two roles.     

“Teaching the Sushi Chef”: Hybridization Work and CSR Integration in a Japanese Multinational Company

While corporate social responsibility (CSR) is recognized as taking on various national meanings and practices, research has not sufficiently investigated how multinational companies (MNC) simultaneously achieve global CSR integration and local CSR adaptation. Building on a qualitative case study carried out at ASICS, an MNC headquartered in Japan, we show how this organizational dilemma may be solved through hybridization work, a form of institutional work performed by CSR managers in subsidiaries to combine and adapt different institutional approaches to CSR. By developing the notion of hybridization work, we contribute by (1) revealing a set of practices that contribute to institutional change within organizations and (2) enriching the study of CSR organizational change and international business by showing how hybridization Work leads to a greater organizational integration between core and periphery, and by identifying the triggering factors for subsidiary initiative in CSR.