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.     

Subsidiary goals,learning orientations,and ownership strategies of multinational enterprises: evidence from foreign direct investments in Korea

This paper investigates the links among subsidiary goals, learning orientations, and ownership strategies of multinational enterprises (MNEs). The authors hypothesize that an MNE's ownership strategy is determined by subsidiary goals and learning orientations. Furthermore, interactions between learning orientations and subsidiary goals are predicted to influence the ownership strategy. Based on 723 foreign subsidiaries of MNEs operating in Korea, our findings suggest that when MNE foreign subsidiaries influence ownership choice, market-seeking goals and resource-seeking goals have a stronger fit with the exploitation orientation than with the exploration orientation. In contrast, the category of knowledge-seeking goals has a stronger fit with exploration than with exploitation.     

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。     

British co-operative societies as retail innovators: Interpreting the early stages of the self-service revolution

Multinational companies and their subsidiaries have been important actors in the world economy. However, we know relatively little about the evolution of subsidiaries and their adaption to host country conditions. This article is a case study of a Norwegian subsidiary of the Canadian mining multinational Falconbridge Nickel Mines Ltd. It examines what autonomy the subsidiary had, how the autonomy was used, its development of knowledge and how it adapted to Norwegian ways of doing business. The article shows that subsidiaries may contribute significantly to the development of their mother companies. It highlights four factors that influenced the degree of autonomy and the evolution of subsidiaries in the inter-war era; namely host country politics, the line of business, the configuration of knowledge within the given multinational company and in case of acquisitions; the prehistory of the subsidiary.     

MNE subsidiary evolution from sales to innovation: Looking inside the black box

Whereas the innovation-related evolution of multinational enterprise (MNE) subsidiaries has been extensively studied, the numerous sales subsidiaries in MNE networks have received little attention in this context. This study examines the evolution process of a sales subsidiary towards acquiring innovation-related capabilities and actively supporting innovation activities of a MNE. The evolution is explained in terms of technical information flow in an in-depth case study of a semiconductor MNEs’ sales subsidiary in South Korea. We find that the evolution of the sales subsidiary to innovation support has been enabled by a combination of subsidiary-related, lead market-related and event-related factors. We contribute to the literature on MNE subsidiary evolution by studying the unexplored evolution of a sales subsidiary. We combine the general framework of subsidiary evolution with the lead user perspective and suggest directions for potential theory extensions on MNE subsidiary evolution.     

From local to global innovation: The role of subsidiaries’ external relational embeddedness in an emerging market

This study examines factors that influence the development and transformation of local innovations into global innovations from an emerging market subsidiary. We argue that subsidiaries’ relational embeddedness with the external local network is essential for the development of local innovations. Turning local innovations into global ones is the result of the level of innovativeness evoked by the subsidiary located in an emerging market. However, the transformation of local into global innovations is more likely to happen in the case of subsidiaries having previous reverse knowledge transfers in functional areas. Reverse knowledge transfers indicate internal embeddedness, which is essential for local innovation to be transformed into global innovation. We draw on survey evidence from 131 foreign subsidiaries operating in Brazil. Using a Structural Equation Modeling technique, our results support our hypotheses and show that subsidiaries’ relational embeddedness with the external local network is positively associated with local innovation, which is transformed into global innovation, especially when innovation is developed in the subsidiary´s functional areas with previous reverse knowledge transfers. We draw implications for the field of subsidiary management research, specifically to understand the role of local innovation from foreign subsidiaries in emerging markets.     

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.     

Enterprise Resource Planning Systems Implementation in a Global Subsidiary Organization: Lessons Learned

This article describes the implementation of an enterprise resource planning (ERP) implemented by British Petroleum (BP) Worldwide, from the perspective of one of its subsidiary organizations, BP Singapore. The ERP solution, an internally developed system, was implemented globally by BP worldwide quite successfully from a global perspective, though not without challenges at the local level. This study examines the process of implementing a global ERP solution at the local subsidiaries, and the unique problems that may be encountered in force-fitting a global solution at the local level. Among the issues and problems experienced by the subsidiary are higher-than-anticipated costs, longer development times, lack of technical expertise, and compromises in business processes. The findings of the study could be helpful in formulating coping mechanisms in implementing global ERP solutions.     

Marketing Content of MNC Subsidiary Strategy

This paper reports on the results of a postal surveyof MNC manufacturing subsidiaries in Scotland. A reduced formof White and Poynter's (1984) subsidiary strategy paradigm isused to assess the determinants of subsidiary strategy, usinga number of marketing, manufacturing and technology measures.Multiple discriminant analysis produces a parsimonious evaluationof linkages between these variables and subsidiary strategy.A number of implications are identified for academics, subsidiarymangers, and policy makers.     

Foreign subsidiaries' status: Distinctive determinants and implications for subsidiary performance

The purpose of this article is to develop a theoretical framework for understanding what determines foreign subsidiaries' status, and how status affects their performance. The basic argument is that foreign subsidiaries have several unique characteristics that distinguish them from local firms in terms of the factors determining organizational status and the implications status has for subsidiaries' performance. This conceptual article first reviews the three existing determinants of organizational status as theorized by existing status research and makes the case for an extension of the three determinants to account for the special situation of foreign subsidiaries. Having examined the determinants of subsidiary status, this study explores the effect of organizational status on firm performance, and finds that it reduces the liability of foreignness (LoF) that foreign subsidiaries encounter. The study contributes to multiple research streams, including organizational status, LoF, country of origin (CoO), and the international business literature in general. Practically, this study highlights the importance of obtaining high organizational status and provides valuable suggestions for multinational managers in general and subsidiary managers in particular.     

Real call options to enlarge foreign subsidiaries – The moderating effect of irreversibility on the influence of economic volatility and political instability on subsequent FDI

This paper develops a real option model to explain the decision of enlarging a new foreign subsidiary by subsequent investment. The model is tested on a panel of 1148 subsidiaries in 22 host countries. The findings complement the traditional process model of firm internationalization. Rather than abiding by an incremental pattern of investment, internationalizing firms seem to keep foreign investment strategies flexible and build up their subsidiaries contingent upon the interaction of economic volatility and irreversibility of investment. However, the moderating effect of irreversibility on the relationship between uncertainty and investment may not hold for downside risks such as political instability.     

The intersubsidiary competition in an MNE: evidence from the Greater China region

We examine subsidiary survival from an intersubsidiary competition perspective. Drawing from 87 Taiwanese subsidiaries of MNEs we examine the influences of strategic importance of a subsidiary, resource asymmetry, and characteristics of value activities on the survival rate of a subsidiary. Results show that these factors have differential effects on the survival rates of a firm's foreign subsidiaries. Specifically, strategic importance and gains in intangible resources enhance a subsidiary's survival rate, whereas local responsiveness, gains in physical resources, and similarity and mobility of value‐added activities decrease its survival rate. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Learning from Older Siblings: Impact On Subsidiary Performance

Newer subsidiaries of a multinational enterprise (MNE) in a foreign (host) country will rarely possess the knowledge required for its performance. As such, a newer subsidiary will learn vicariously from the experiences of older subsidiaries of similar industries and the same MNE operating in the same host country. In particular, the newer subsidiary will learn two types of knowledge from older subsidiaries, namely, operational knowledge related to their experiences in the host country and their knowledge about local markets. Furthermore, we theorize that higher parent MNE ownership in newer subsidiaries will facilitate vicarious learning. We add that as newer subsidiaries gain experience, they become less dependent on vicarious learning from older subsidiaries. We find support for our hypotheses using a longitudinal sample of MNE subsidiaries in India. We conclude with implications for future research.     

Multinational Subsidiary Evolution and Public Policy: Two Tales from the European Periphery

The paper explores the link between subsidiary evolution and public policy towards multinational enterprises (MNEs). The cases of two peripheral EU economies (Portugal and Ireland) are contrasted, both in terms of their inward investment policy stances and as regards differential evolutionary processes at subsidiary level unveiled by empirical results from a new survey of subsidiaries operating in those two host countries. After examining issues such as motivations underlying investment, subsidiaries roles/strategies and evolution (addressing distinct paths in subsidiary transition), the paper discusses the potential contribution of subsidiaries to host country development and what constitutes an appropriate policy towards multinationals. Explicit consideration is given to subsidiaries value-added scope and the density and quality of local linkages as key determinants of host country impact.     

Internationalization of Italian Firms in Central and Eastern European Countries: Headquarters–Subsidiary Relationship

This article aims at providing further empirical evidence about the international activity of Italian small and medium enterprises (SMEs). In particular, the present contribution can be ascribable to the stream of research regarding the headquarters–subsidiary relationship. Focusing our attention on the subsidiary of Italian SMEs internationalized in Central and Eastern European countries (CEECs), we provide evidences about the main variables affecting their autonomy. Literature review provides us evidences of the fact that subsidiary autonomy is an extremely heterogeneous topic to investigate. Consequently, we decided to add to the quantitative analysis also a qualitative one. Through personal interviews with the Italian entrepreneurs and the managers of the local subsidiaries, we got a better and deeper insight into the evidences coming from the quantitative data.     

Malaysian Multinational Firms and the Management of their Subsidiaries

There are limited studies on multinational enterprises from lesser developed and smaller Asian countries and even less attention given to the area of subsidiary management in Asian firms. This article contributes to this knowledge gap with empirical evidence from a study of nine case studies of firms from Malaysia, a rapidly developing country. Differences as well as commonalities in the management of their subsidiaries were found among sample firms. These findings are discussed in relation to the literature on management of subsidiaries in other Asian and developed countries’ firms. Implications for research and limitations of the study are covered.     

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.     

Foreign subsidiaries as vehicles of industry 4.0: The case of foreign subsidiaries in a post-transition economy

We ask whether foreign subsidiaries may work as entities that neutralize the threat of marginalization of the post-transition economies in terms of Industry 4.0 (I4.0) adoption. Building on a conceptual model of foreign subsidiaries as I4.0 vehicles, we conducted interviews with 440 foreign subsidiaries from the manufacturing sector established in Poland. The originality of the paper concerns three key issues. First, our study shows that the strategy adopted by the headquarters is critical, as it impacts the possibility of foreign subsidiaries to act as vehicles of I4.0 transformation in host economies. Second, embeddedness in local environment guarantees the transition of knowledge, whereas the innovation capacity of a foreign subsidiary does not seem to play any role. Third, we focus on foreign subsidiaries established in a post-transition economy. The results of our research enrich the literature on types of foreign subsidiaries in transmitting and diffusing the knowledge received from headquarters and expose the prominent role of links with host market entities.     

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.     

Towards a Framework of Reverse Knowledge Transfer by Emerging Economy Multinationals: Evidence from Chinese MNE Subsidiaries in the United States

This article extends the research on knowledge transfer by emerging‐economy multinationals (EEMs) by exploring the determinants of successful reverse knowledge transfer (RKT) in Chinese enterprises operating in the United States. Building upon organizational evolution and learning literature, we propose a model linking strategic asset‐seeking motivations, headquarters (HQ) control, and subsidiary age to RKT. The model is empirically tested in the context of Chinese enterprises in the United States and further justified by four cases of Chinese multinationals. Our exploratory study provides initial evidence that strategic asset‐seeking motivations and HQ control are significantly and positively related to RKT. Furthermore, our empirical evidence indicates a negative relationship between subsidiary age and RKT. We discuss the implications for theory development and practice for managing and organizing EEMs and their subsidiaries and suggest avenues for future research on this emerging phenomenon. © 2016 Wiley Periodicals, Inc.