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.     

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 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.     

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.     

‘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.     

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.     

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.     

The MNC as an externally embedded organization: An investigation of embeddedness overlap in local subsidiary networks

MNCs have been conceptualized as differentiated networks that, in turn, are embedded in external networks. Previous research has predominantly focused on the embeddedness of established subsidiaries into their local environment, omitting to shed light on the phenomenon of headquarters linkages to the local context which creates embeddedness overlap. We develop a model of why MNCs develop overlapping linkages to local subsidiary networks even if the subsidiaries have grown out of the initial start-up phase. Using detailed information on 168 European subsidiaries, we find that MNCs build and maintain more overlapping network ties when subsidiaries are high performers, hold important resources, operate in turbulent environments, and are closely connected to multinational actors as opposed to purely domestic firms.     

The effects of subsidiary’s leadership and entrepreneurship on international marketing knowledge transfer and new product development

This study investigates the role of a strong subsidiary leadership and entrepreneurial culture in the promotion of marketing knowledge inflows. We further examine their consequences on the subsidiary’s ability to develop new products when moderated by the tacitness of knowledge. The data were collected from 202 Portuguese subsidiaries of multinational corporations and were analyzed using partial least squares structural equation modelling to test the hypotheses. The results indicate that subsidiaries’ strong leadership support and entrepreneurial culture are fundamental mechanisms that foster marketing knowledge inflows from both the headquarters and peer subsidiaries. Moreover, marketing knowledge inflows enhance the focal subsidiary’s innovation abilities. We also find that tacit knowledge exerts contradictory moderating effects on the transfers of marketing knowledge, carrying distinct implications for a subsidiary’s knowledge management. The results expand our understanding of the effectiveness of transferring marketing knowledge among multinational corporations’ (MNCs) subsidiaries.     

Expatriate management: Comparison of MNCs across four parent countries

This article reports the results of a study of expatriate management and headquarters‐subsidiary relations in 29 American, British, German, and Japanese multinationals and a sample of 46 of their foreign subsidiaries based on face‐to‐face and telephone interviews with key international HR, subsidiary HR, and subsidiary managing directors. We found that earlier studies, heavily weighted with U.S. multinationals, cannot necessarily be applied to expatriate management experiences of other national industrial countries. Also, expatriate management is more similar for American and British MNCs, while both German and Japanese multinationals in our sample had fairly distinct systems of using expatriates in their foreign subsidiaries. Thus, we can discuss at least three fairly distinct models of expatriate management and corporate‐foreign‐subsidiary control. © 2000 John Wiley & Sons, 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.     

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.     

Subsidiary managers’ knowledge mobilizations: Unpacking emergent knowledge flows

Knowledge flows are a key source of advantage for multinational corporations (MNCs); however the nuances of knowledge flow practices and their micro-foundations require further theoretical development. Using qualitative data on 40 cases of subsidiary managers’ knowledge mobilizations, this paper unravels micro-level practices of knowledge flows in MNCs. We find that subsidiary managers’ knowledge mobilizations initiate a complex pattern of subsidiary knowledge inflows, pinpointing the significance of lateral and bottom up exchanges (locally as well as internationally). We use these insights to distinguish between two types of subsidiary knowledge flows: deliberate and emergent, and discuss how their differences have profound implications for the investigation of MNC knowledge flows and their micro-foundations.     

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.     

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.     

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.     

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.     

Institutional distance and the quality of the headquarters–subsidiary relationship: The moderating role of the institutionalization of headquarters’ practices in subsidiaries

Through the lens of the institutional theory, we developed and empirically tested a contingency theoretical framework that examines the effects of formal and informal institutional distances on the quality of the headquarters–subsidiary relationship, and how such effects are contextualized by internal institutionalization of headquarters’ practices in subsidiaries of Chinese multinational enterprises (MNEs). Data were collected from both the headquarters of 297 Chinese MNEs and their respective subsidiaries. The results show that regulative and cultural distances are positively associated with the quality of the headquarters–subsidiary relationship, and that these positive relationships are stronger when subsidiaries institutionalize headquarters’ practices to a higher degree. Theoretical and practical implications are highlighted in the paper.     

An empirical study of executive nationality staffing practices in foreign‐owned MNC subsidiaries in Ireland

This study provides empirical evidence of executive nationality staffing practices in foreign‐owned multinational company (MNC) subsidiaries in Ireland. Aiming to both describe current practice and understand the factors that influence the choice of practice, the study involved the collection of data from 238 foreign‐owned companies in Ireland. The findings negate previous findings (Harzing, 1999a, b) that all foreign‐owned MNC subsidiaries in Ireland are managed by Irish nationals. The employment of parent country nationals was found to differ according to country‐of‐origin, industry, subsidiary, and MNC factors. The study has relevance theoretically in providing empirical evidence in an area dominated by conceptual assertions and for practice in explaining the strategic staffing decisions of MNCs. © 2004 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。