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.     

Competing globally: How Japanese MNCs have matched goals and strategies in India and China

Japanese MNCs have established strong investment positions in the US, Europe and Asia. China has been a major recipient of Japanese foreign direct investment (FDI), while investment in India has grown much more slowly. We argue that the differences extend much beyond the levels of investment—Japanese involvement in India and China is qualitatively different. Japanese FDI in China was motivated by access to location-specific productive resources, and it involved a high degree of technology, management skills and organizational knowledge transfer. The Japanese subsidiaries in China were integrated with the network of international subsidiaries as a part of the MNC's global strategy. Japanese FDI in India, however, was motivated by the desire to access local markets. It involved less transfer of technology and management skills, and Japanese subsidiaries in India operated independently as part of a multi-domestic strategy. We conclude that foreign entrants to the region should be aware and able to respond to the unique advantages of each host country and to the different strategies and capabilities of the subsidiaries of Japanese MNCs.     

Factors in the effective transfer of knowledge from multinational enterprises to their foreign subsidiaries: a Mozambican case study

The purpose of this article is to better understand the role of internal stakeholders in subsidiaries of multinational companies (MNCs) in order to offer potential insights into the cross‐border transfer of knowledge from those companies’ headquarters to their subsidiaries. The focus is upon subsidiaries in developing countries, here Mozambique. More specifically, the article is concerned with identifying factors that influence the learning of internal stakeholders and noting practices which seem associated with a high level of absorptive capacity and performance of subsidiaries. The starting point is evidence of ineffective transfer of knowledge by MNCs to their subsidiaries in developing countries, with consequent sub‐standard performance. The research reported involves four case studies of Portuguese companies operating in Mozambique and draws on data from interviews with senior and middle managers in the firms’ Mozambican subsidiaries. The results obtained suggest that successful knowledge transfer to overseas subsidiaries is found under the following conditions. First, the parent company knows the local context and provides a flow of relevant information. Second, application of knowledge locally is done flexibly to suit local circumstances. Next, a participatory approach is used so that local staff can see why the knowledge conveyed is necessary. Fourth, explanation and demonstration are key techniques, with major roles for on‐the‐job training, continuous improvement and training at headquarters. Finally, issues arising from local culture may need to be addressed.     

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.     

Japanese multinationals in the post-bubble era: new challenges and evolving capabilities

Since the bursting of Japan's bubble economy, from 1990 onwards, Japanese multinational companies (MNCs) have faced new competitive challenges and questions about the management practices on which they had built their initial success in global markets. Japanese engagement in the international economy has undergone a number of phases. In the period before the Second World War, Japanese companies learnt from foreign MNCs in trading, shipping, and manufacturing, frequently through strategic alliances, and leveraged their capabilities to succeed in overseas and largely Asian markets. In the immediate post-war decades, during the Japanese ‘economic miracle’, there were notable examples of MNC investment in raw materials and labour intensive production, but both inward and outward foreign direct investment were not significant. Japanese companies achieved leadership in management and technology, in order to support a strategy of export-orientated industrialization. Changes in government policies in the developed economies of the US and Western Europe forced leading Japanese manufacturers to convert themselves into MNCs and to transfer their home-grown capabilities to overseas subsidiaries. The period after 1990 marked declining Japanese competitiveness and it asked questions about the ability of Japanese MNCs to be more responsive and global in their strategies, organization and capabilities.     

Innovation Processes in the Russian Manufacturing Subsidiaries of Multinational Corporations: An Integrated View from Case Studies

The extant literature acknowledges the role of overseas subsidiaries in the growth and development of multinational companies (MNCs). Such subsidiaries are viewed as critical players in the innovation process at MNCs. This topic remains largely under-researched in the Russian context. This study aims to fill this gap by examining the dynamics of the innovation process in Russian-based subsidiaries of global MNCs. We present qualitative findings that indicate Russian subsidiaries are not only recipients of knowledge and technology developed elsewhere in the MNCs but are active developers of innovative products and solutions.     

Firm-Level Determinants of Political CSR in Emerging Economies: Evidence from India

Multinational companies (MNCs) frequently adopt corporate social responsibility (CSR) activities that are aimed at providing ‘public goods’ and influencing the government in policymaking. Such political CSR (PCSR) activities have been determined to increase MNCs’ socio-political legitimacy and to be useful in building relationships with the state and other key external stakeholders. Although research on MNCs’ PCSR within the context of emerging economies is gaining momentum, only a limited number of studies have examined the firm-level variables that affect the extent to which MNCs’ subsidiaries in emerging economies pursue PCSR. Using insights from resource dependence theory, institutional theory, and the social capital literature, we argue that MNCs’ subsidiaries that are critically dependent on local resources, have greater ties to managers of related businesses and to policymakers, and that those that are interdependent on the MNCs’ headquarters and other foreign subsidiaries, are more likely to be involved in PCSR. We obtain support for our hypotheses using a sample of 105 subsidiaries of foreign firms that operate in India. Our findings enhance our understanding of the factors that determine MNCs’ political CSR in emerging economies.     

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.     

Unbundling European operations: regional management and corporate flexibility in American and Japanese MNCS

Empirical research on the European operations of 19 American and Japanese multinational companies (MNCs) suggested, first, that the strategic importance of the region did not translate into an enhanced role for regional headquarters, and second, that American and Japanese MNCs are “unbundling” their European operations as a means of enhancing their flexibility. American MNCs preferred to carve up regional tasks for delegation to local subsidiaries, with coordination assured increasingly by “councils” bringing top European managers together. Japanese MNCs have not altered the formal organizational structure; but the recent internationalization of basic research labs in Europe has forced them to modify their previously monolithic approach to European subsidiaries.     

The Impact of Communication on Conflict between Expatriate and Local Managers Working in NPD Projects of MNC Subsidiaries: A Local Perspective

This study investigates the impact of communication between expatriate and local managers on two types of conflict in subsidiaries of multinational companies (MNCs) engaged in new product development (NPD). The data was collected from 438 local NPD managers who regularly collaborate and communicate with expatriate managers. The findings suggest that the quality and bidirectionality of cross-cultural communication reduce relationship conflict but increase task-related conflict. In addition, a more formalized communication style increases both relationship conflict and task conflict. The findings hold implications for MNCs in that improvements to different communication dimensions are suggested.     

Knowledge flows in MNCs: An empirical test and extension of Gupta and Govindarajan's typology of subsidiary roles

This study offers an empirical test and extension of Gupta and Govindarajan's typology of subsidiary roles based on knowledge inflows and outflows. A four-fold typology of subsidiary roles—global innovators, integrated players, implementors and local innovators—is tested using a sample of 169 subsidiaries of MNCs headquartered in the US, Japan, UK, Germany, France and the Netherlands. Results confirm the typology and show that different subsidiary roles are associated with different control mechanisms, relative capabilities and product flows. In comparison to earlier studies, our results show an increased differentiation between subsidiaries, as well as an increase in the relative importance of both knowledge and product flows between subsidiaries suggesting that MNCs are getting closer to the ideal-type of the transnational company.     

HRM in Western Subsidiaries in Russia and Poland

Abstract

This study analyzes the Human Resource Management (HRM) practices in joint ventures and wholly-owned subsidiaries of Western MNCs located in Russia and Poland. Different hypotheses are developed, testing whether or not MNCs are more likely to implement standardized practices in Poland and Russia. The effects on HRM practices of MNC equity share, non-financial resources provided by MNCs to the focal unit, and mode of establishment of the foreign unit are also investigated. Implications for future research and managers are discussed.     

The Impact of Distance (External) and Organizational Factors (Internal) on the Knowledge Chain of Multinational Corporations: South Africa as a Host Country

The geographic dispersion of multinational corporations (MNCs) implies that while it gives them access to new and different knowledge from diverse localities, it also adds to the costs and complexities of managing that knowledge and its effective dispersal across geographies. The purpose of this article is to examine how knowledge is transferred within MNCs and provide a framework for this process, particularly focusing on the role that distance (external) and organizational (internal) factors plays therein. A qualitative study is utilized, focusing on two technology companies from different cultural home countries and the technology transfer process with their South African subsidiaries. We find that the standardization of knowledge impacts the creation and diffusion of knowledge; expatriates impact on the creation, diffusion, and adoption; and, finally, relevance and localization impact on the adoption and utilization of knowledge. We present a conceptual framework around trust and rationalization as regards transferring knowledge within MNCs and find some evidence of the impact of distance, particularly cultural, on the methods employed in this transfer. The article illustrates the practical ways in which MNCs organize their internal resources and overcome various dimensions of distance in ensuring knowledge transfers. By choosing companies from such divergent home countries (one industrialized and one newly industrialized, with very different cultural settings) and examining their knowledge transfers with their South African subsidiaries, we are able to unpack various dimensions of distance and how organizational mechanisms affect this process. © 2017 Wiley Periodicals, Inc.     

组织学习的跨文化效应:中国和荷兰的比较

Based on the theory of cross-cultural management and organizational learning, this paper comparatively analyzes the role of culture differences between China and the Netherlands in organizational learning processes, climate, and capabilities. Three propositions are proposed to help multinational corporations (MNCs) build learning-oriented subsidiaries in China.      

The Role of Religiosity in Business and Consumer Ethics: A Review of the Literature

This study investigates antecedents of corporate social responsibility (CSR) in multinational corporations’ (MNCs’) subsidiaries. Using stakeholder theory and institutional theory that identify internal and external pressures for legitimacy in MNCs’ subsidiaries, we integrate international business and CSR literatures to create a model depicting CSR practices in MNCs’ subsidiaries. We propose that MNCs’ subsidiaries will be likely to adapt to local practices to legitimize themselves if they operate in host countries with different institutional environments and demanding stakeholders. We also predict that MNCs’ subsidiaries will be likely to adapt to local practices to avoid spillover effects if their parent companies suffer major legitimacy problems at home or abroad. However, we speculate that MNCs’ subsidiaries will be less likely to adapt to local practices if they are strongly annexed to their parent companies and the benefit to gain internal legitimacy outweighs external legitimacy. This article contributes to the discourse on CSR across borders by exploring the antecedents of CSR practices in MNCs’ subsidiaries at social and organizational levels, and integrating institutional and stakeholder views. We provide a number of propositions for future studies and explore implications for practitioners.     

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.     

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.     

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.     

Practice creation in multinational corporations: Improvisation and the emergence of lateral knowledge

Lateral collaboration across subsidiaries is beneficial for innovation in multinational corporations (MNCs), such as the creation of new organizational practices, because it helps working towards shared, rather than subsidiary-centric, objectives and creates new knowledge. To instill lateral collaboration, prior research has mainly focused on coordination mechanisms that rely on interpersonal exchanges among dispersed individuals across subsidiaries. However, due to rising concerns over coordination cost and sustainability of international travel, MNCs are increasingly challenged to search for other approaches that require less direct interpersonal interaction across subsidiaries. We, therefore, ask: How can MNCs elicit lateral collaboration during practice creation in a less space-time sensitive way? Drawing on a longitudinal case study, we develop a model of practice creation in MNCs. Our model offers two main insights. First, it details a novel approach for unleashing the benefits of lateral collaboration in globally-linked innovation processes in MNCs. In contrast to emphasizing coordination mechanisms that focus on interpersonal interactions across subsidiaries, our study contributes by detailing the emergence of lateral knowledge through a shared technological artefact as key enabler. Second, our model illuminates how MNCs can innovate new organizational practices that reflect both MNC and local subsidiary needs by adopting an improvisational approach.     

Balancing the trade-off between learning prospects and spillover risks: MNC subsidiaries’ vertical linkage patterns in developed countries

This paper investigates local vertical linkages of foreign subsidiaries and the dual role of such linkages as conduits for learning as well as potential channels for spillovers to competitors. On the basis of data from 97 subsidiaries, we analyze the quality of such linkages under varying levels of competition and subsidiary capabilities. Our theoretical development and the results from the analysis document a far more complex and dynamic relationship between levels of competition and MNCs’ local participation in knowledge intensive activities, i.e. learning and spillovers, than previous studies do. We find a curvilinear relationship between the extent of competitive pressure and the quality of local linkages confirming our argument of a trade-off between learning prospects and spillover risks. Furthermore, the level of subsidiary capabilities moderates this relationship.