How subsidiaries gain power in multinational corporations

This study focuses on how power is gained within large organizations, such as the intra-organizational network of MNCs. Drawing on resource dependence literature, this study develops and empirically tests a set of hypotheses aimed at explaining the multifaceted nature of power and decision making in multinational firms. Data collected from 2107 foreign-owned subsidiaries in seven European countries is used to test the hypotheses. The results indicate that mutual dependence and dependence imbalance provide strong explanations for subsidiary power. Furthermore, subsidiary power over strategic decisions in the MNC is gained through functional power, notably the possession of technological, rather than business-related, power or by the possession of both as they reinforce each other in strengthening the subsidiary's strategic power in the MNC network.     

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.     

Technology sourcing in multinational enterprises and the roles of subsidiaries: An empirical investigation

This paper views the Multinational Enterprise (MNE) as a differentiated learning network with foreign subunits playing a critical role in managing knowledge. Drawing on a sample of 92 subsidiaries operating in Greece, it empirically tests the relationship between sources of technology acquired and/or generated (internally or externally) and relates them to differently strategically motivated subsidiaries. Our findings record the existence of a multifaceted network of technology generation and transmission, which is differentiated among the different types of subsidiaries. In particular, results confirm the fact that larger and innovative subsidiaries have granted access to wider sources of technology. Moreover, evidence indicates that product mandates, as well as subsidiaries of a more efficiency-seeking nature, are likely to be better embedded in the local environment.     

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.     

eHRM adoption in emerging economies: The case of subsidiaries of multinational corporations in Indonesia

Electronic HRM (eHRM) is assumed to strengthen the position of HRM as a business partner by promising strategic benefits. Empirical support for this assumption, however, mostly comes from studies conducted in developed economies. Yet eHRM adoption in the emerging economy context remains poorly understood as is how eHRM can result in strategic benefits. We argue that the difference between an emerging economy compared to that of a developed economy affects the adoption of eHRM in multinational corporation (MNC) subsidiaries. In order to investigate which extrinsic factors of a firm in an emerging economy context play a role in the adoption of eHRM, we conducted semistructured interviews in 11 subsidiaries in Indonesia. We found that headquarters’ influence and the available resources have a strong influence on eHRM adoption in Indonesia. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

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.     

Agency controls and subsidiary strategic initiatives: The mediating role of subsidiary autonomy

Prior studies examining the impact of organizational controls on subsidiaries’ strategic initiatives have to a large extent failed to find a significant direct association between the two. We argue that this lack of direct association may be due to the fact that the control mechanisms used exert their influence on subsidiaries’ strategic initiatives indirectly by suppressing subsidiaries’ decision-making autonomy. Drawing upon agency theory we consider the effects of two types of controls, monitoring and incentive alignment, as mediated by subsidiaries’ decision-making autonomy. We test this effect on data from 115 subsidiaries of foreign multinationals operating in Greece. The results of our analyses empirically validate this assertion for both mechanisms. Our findings further show that, when both mechanisms are present, one may accentuate the effect of the other, highlighting the value of employing a contingency approach to fully capture the effects of organizational controls on the pursuit of subsidiaries’ strategic initiatives.     

An exploration of multinational enterprise knowledge resources and foreign subsidiary performance

Successful international expansion requires that parent firms simultaneously transfer multiple MNE knowledge resources and their foreign subsidiaries effectively absorb and utilize the knowledge. In this study, we examine the relationships between multiple knowledge resources (technological and marketing knowledge), the relatedness between parents and foreign subsidiaries, and subsidiary performance. Relatedness is specifically linked to the type of knowledge being transferred from the parent (i.e., technological relatedness versus market relatedness). We hypothesize that subsidiary performance improves with (1) the integration of a parent firm's technological and marketing knowledge resources, (2) high technological (market) relatedness between a parent firm and subsidiaries for transfer of parent technological (market) knowledge and (3) the co-presence of high technological and market relatedness. We find general support in our analysis of pooled cross-sectional data on more than 4000 observations of foreign subsidiaries from 572 Japanese MNEs across 47 countries. Theoretical implications and future research are discussed.     

Evolution of multinational strategy: Evidence from scottish manufacturing subsidiaries

Recent structural changes in the EC have focused attention on the process and natures of strategy formulation and evolution at the subsidiary level of multinational corporations. This paper reviews alternative conceptual approaches to subsidiary strategy, with particular attention to the integration/responsiveness grid developed by Prahalad and Doz. Using data obtained from a postal survey of 121 manufacturing multinationals located in Scotland, the validity of the grid is assessed and a mapping of subsidiary strategy and its evolution over time is proposed. The results are not wholly in line with Prahalad and Doz, yet yield interesting propositions for multinational firms and policy makers.     

Potential and recognized boundary spanners in multinational corporations

Boundary spanners play an important role in multinational corporations (MNC), yet it is unclear who these valuable individuals are and why certain individuals, and not others, perform this role. We advance a ‘recognition’ perspective based on whether and how relevant others on both sides on the boundary experience positive impact. A dynamic integrated mixed method analysis of 118 individuals involved in headquarters-subsidiary interactions in four MNCs, shows that only a minority are ‘recognized boundary spanners’, experienced by others to positively impact intergroup relations. We identify different categories and mechanisms of recognition, and make a methodological contribution by integrating qualitative and quantitative analysis.     

Knowledge embeddedness and the transfer mechanisms in multinational corporations

This paper reports a qualitative study conducted at four Japanese subsidiaries in China and Vietnam about their process of international knowledge transfer. Building on the literatures concerning the diverse types and characteristics of knowledge in multinational corporations (MNCs), we explore the broad mechanisms adopted and locally generated by the host country subsidiaries for transferring the foreign knowledge and putting the locally embedded knowledge into practical use at the local settings. The findings indicated (1) the limitations of applying a standardized and universal set of knowledge transfer mechanisms without considering local idiosyncrasies and (2) the contributions of local agents and institutions throughout the process of local knowledge adaptation and development.     

Subsidiary coopetition competence: Navigating subsidiary evolution in the multinational corporation

This paper examines the engagement of subsidiaries in coopetition, the simultaneous pursuit of competitive and cooperative behavior, in subsidiary role development. Drawing on twelve detailed case studies, we uncover how framing of the mandate situation shapes subsidiary actions to influence role development, thereby leading to competitive and cooperative subsidiary behavior. This paper advances our understanding of coopetition in MNCs by developing the concept of subsidiary coopetition competence and extends theory on subsidiary evolution.     

Organizational values and knowledge sharing in multinational corporations: The Danisco case

While the existing knowledge sharing literature, in general, emphasizes the link between organizational culture and knowledge sharing, it remains rather ambiguous about how certain components of the former may shape the latter. This issue is especially relevant to multinational corporations (MNCs), which typically consist of multiple organizational (sub)cultures and whose existence depends, to a great extent, on sharing knowledge across borders. The present study examines the influence of one key component of organizational culture – organizational values – on knowledge sharing. From 2003 to 2007, we studied Danisco, a Danish MNC, to examine the processes of espousement, enactment and internalization of a core organizational value – dialogue. In particular, we studied how these processes influence knowledge sharing behavior among employees. We collected original empirical data using content analysis and a questionnaire-based survey among 219 managers and employees in 11 countries in four continents. We argue that knowledge sharing behavior is not influenced by organizational values per se but by the degree of their internalization by organizational members.     

Environmental risks and the bargaining power of multinational corporations

Government policies are integral to the internalization theory of foreign direct investment (FDI). However, the role of government policies in affecting FDI as a strategic choice of firms has not been fully explored. This article therefore expands the analysis of the role of government policy in the internalization theory of FDI. Some government policies reduce market imperfections while others create them. Some of those policies and their effects on market imperfections furthermore make FDI less attractive as a strategic alternative, while other policies and their effects on market imperfections make FDI more attractive. This study also argues that a comprehensive integration of political variables in FDI theory requires several levels of analysis of both political and economic variables.     

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.     

The kitchen and the multinational corporation: An analysis of the links between the household and global corporations

The paper examines relationships between multinational corporations and the unwaged work women do in their homes. It is argued that far from being a sanctuary, the home has become a dumpsite for unnecessary and unsafe products. Women in North America and the Third World are now dealing with health and safety issues in their neighbourhoods and households. Consciousness of these dangers has resulted in mobilization and the formation of alliances aimed at confronting multinationals and securing more government regulation. The experience of one group of women in a small Ontario community is described. Harriet Rosenberg is Assistant Professor in the Social Science Division at York University. She is the Principal Investigator of a SSHRC Grant for her Aging and Caregiving in an African Population. She is the co-author of Through the Kitchen Window: The Politics of Home and Family, with M. Luxton, Network Basic Series, Garamond Press, Toronto; and co-author with M. FitzGerald of Surviving in the City: Urbanization in the Third World, Oxfam, Toronto.Paper presented at Women and the Invisible Economy Conference, Institute Simone de Beauvoir, Concordia University, Montreal, Quebec, Feb. 22, 1985.     

Dual embeddedness,influence and performance of innovating subsidiaries in the multinational corporation

This study adopts a business network view to study the effects of subsidiary embeddedness on both subsidiary influence within the MNC and innovation-related business performance. Through Structural Equation Modeling we analyze subsidiary relationships connected to 85 innovation projects. The results show that external and corporate embeddedness are complementary contexts, although they affect subsidiary influence and performance differently. Whereas external embeddedness directly affects innovation-related business performance, corporate embeddedness strengthens the subsidiary's influence within the MNC, which in turn positively relates to performance. Moreover, as the study also finds that external and corporate embeddedness are positively associated, it stresses the issue of simultaneously balancing both external and corporate relationships (i.e., dual embeddedness) to nurture innovation projects.     

Antecedents and temporal dynamics of strategic divergence in multinational corporations: Evidence from Europe

Coordinating consistent strategy implementation has been identified a key challenge for multi-national corporations. Based on intraorganizational evolutionary models of strategy formation, this paper thus empirically investigates the antecedents and temporal dynamics of strategic divergence. Strategic divergence is the deviation of a firm's resource allocation decisions with its articulated concept of corporate strategy. Large-scale empirical analysis of 11,406 resource allocation decisions of twenty-five publicly listed, multi-national and multi-business European firms indicates that decision type, operational and divisional manager involvement in decision making and structural context changes exert a significant influence on strategic divergence. Importantly, results further suggest that firms’ levels of strategic divergence tend to increase over time and that the antecedents of strategic divergence have a differential impact as time passes.