The overlooked distinction of multinational enterprise subsidiary learning: Its managerial and entrepreneurial learning modes

The theme concerning modes of learning in multinational subsidiaries is the focus of enquiry in the current study. This theme is closely linked to the issue of how subsidiaries become alert and seize opportunities. Such an investigation is also important for management practice because effective subsidiary learning can render sustainable competitive advantage in the host country. We performed an in-depth case examination on six multinational subsidiaries of a large Finnish firm. We identify two learning modes of multinational subsidiaries that we refer to as managerial and entrepreneurial learning. We find that managerial learning shares characteristics with the systems-structural learning perspective; is facilitated by embeddedness of the subsidiary in the MNE system; and, transferred in the MNE through many conventional and reverse knowledge flows. On the contrary, entrepreneurial learning shares characteristics with the interpretive learning perspective; is facilitated by embeddedness of the subsidiary in the host country; and, transferred in the MNE through relatively fewer reverse knowledge flows. The distinction between these two learning modes and their discrete characteristics enlighten past research that has largely failed to pinpoint the importance of the two modes for MNE subsidiary activities.     

Production transfer within multinational enterprises and American wages

This paper tests whether the transfer of production stages within US-headquartered multinational enterprises (MNEs) from US parents to foreign affiliates has contributed to within-industry shifts in US relative labor demand toward the more-skilled. There are two main empirical results. First, there is evidence of MNE transfer during the past 20 years. Second, regression analysis does not support the MNE hypothesis. MNE transfer tends to have small, imprecisely estimated effects on US relative labor demand. This finding is inconsistent with models of MNEs in which affiliate activities substitute for parent unskilled-labor-intensive activities.     

Self-categorization as a nonmarket strategy for MNE subsidiaries: Tracking the international expansion of an online platform

This article examines how MNE subsidiaries develop nonmarket strategies to create a fit between a global market strategy and a local nonmarket framework. Derived from an analysis of archives and interviews on eBay’s expansion into France, our findings suggest that MNE subsidiaries engage in defensive and proactive self-categorization to create their nonmarket strategic fit. Specifically, through the purposeful use of labels, rhetoric and narratives, self-categorization enables subsidiaries to strategically position themselves vis-à-vis both regulators and local incumbents, thereby exercising agency to influence the nonmarket environment in their preferred direction. The findings contribute to the institution-based view of international strategy by shedding new light on the interaction between MNE subsidiaries and local institutional authorities in a context of international expansion. Furthermore, we theorize how subsidiaries use self-categorization to transfer global organizational practices to the host country.     

Digital transformation,sustainability, and purpose in the multinational enterprise

We discuss how environmental and pandemic crises in combination with digitization are presenting the multinational enterprise (MNE) with increasing geopolitical, organizational, and market tensions. Institutional pluralism is creating a more complex global environment. The organization of productive work is shifting, which challenges how MNEs structure and coordinate their activities. Changing consumer and investor expectations are broadening the understanding of value creation with implications for business models. We contend that the tensions invite MNEs to reconsider how they frame, formalize, and realize corporate purpose. We close with a research agenda that recognizes the need for MNEs to become purpose-driven actors.     

The Localization Choice of Multinational Firms’ R&D Centers: A Survey in the Piedmont Area

Research on the linkages between R&D, environment, strategy, and localization choices is quite new and often lacks empirical investigation. The aim of this article is to study the localization choices of MNE R&D activities in Piedmont. Specifically, it investigates the extent of locating in a specific place on the strength of several drivers and the level of satisfaction of the choice after 3 years from the settlement. The findings aim to verify the main drivers that led 51 MNE to choose Piedmont as the ideal area for their R&D activities and also to show how the high level of presence after 3 years from the settlement confirms the result.     

Operating in the middle-power position: Conceptualising the role of regional headquarters through loaned and owned power

This conceptual paper argues that the role and development of regional headquarters (RHQ) is dependent on and determined by intense power relations and political interactions with interdependent actors in the multinational enterprise (MNE). We demonstrate how studies to date on the RHQ have focused on exploring its bridging function as either administrative or entrepreneurial in managing trade-offs between global and local contexts. Equally, we suggest that research on MNE power and politics has concentrated on understanding the power dynamics that exist in the corporate headquarters (CHQ)-subsidiary relationship. By combining and enriching these disparate works of literature, we conceptualise how the RHQ role shapes, and in turn is shaped by, political struggles, diverging interests, and conflictual tensions at critical interfaces across the MNE. A novel contribution from our paper is the development of a typology that conceptualises how RHQ role variations are defined by the RHQ’s loaned power over subsidiaries as well as its owned power over CHQ.     

Organizational rejuvenation for knowledge exploitation: Exploring corporate entrepreneurship in an MNE

The purpose of this paper is to study how organizational rejuvenation is used to increase and support knowledge exploitation in multinational enterprises. Using case-study data to explore the theoretical arguments, interesting findings emerge. The main finding is that entrepreneurial activities in IT industry enable organizational rejuvenation with repercussions beyond the focal function. Other findings relate to how corporate entrepreneurship activities provide possibilities for continuous knowledge exploitation within the MNE and how entrepreneurial groups inside MNEs form the foundation from which the organizational rejuvenation originates. Finally, the form of organizational rejuvenation studied embraced both structural and behavioral changes. The authors acknowledge an equal share in the development of this article.     

Nestlé coping with Japanese nationalism: Political risk and the strategy of a foreign multinational enterprise in Japan, 1913–45

This paper focuses on the strategy adopted by the MNE Nestlé in Japan between the establishment of a branch at Yokohama in 1913 and the end of World War II. It highlights the difficulties encountered by the firm in its attempts to open up and operate production facilities due to strong opposition from local condensed milk makers, supported by the state. Eventually, in 1934, Nestlé opened a factory by founding an incorporated company, ARKK, all of whose shareholders were Japanese working for Nestlé. Although the war drastically curtailed the activities of both Nestlé Japan and ARKK, the organisational facilities set up during the inter-war period provided a springboard for Nestlé's post-war success in Japan.     

Host-Country Determinants of the Market Strategies of US Companies' Overseas Subsidiaries

As compeition in many industries becomes increasingly global, MNEs have found that import-substitution subsidiaries, focusing on the supply of national markets, are much less viable. In the pursuit of enhanced competitiveness through export-oriented subsidiaries, MNEs are also finding that relying on low-cost host-country inputs to produce established productss is also a limited strategy. The more dynamic strategy of allowing subsidiaries to use a wider range of creative local inputs to take full responsibility for the development, production and international marketing of distinctive new products is a more effective approach. Such an upgrading of the subsidiaries' role within the MNE often parallels the aims of host-country governments to achieve a more individual and dynamic basis for their country's evolving comparative advantage. It is thus argued that MNE subsidiaries and host countries can go through a mutually supportive period of creative transition, endowing both with a new level of technological dynamism and independence. The paper tests aspects of these arguments by analysing the host-country determinants of the degree of export-orientation of US MNEs' overseas subsidiaries.     

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.     

Configurational characteristics of mandate portfolios and their impact on foreign subsidiary survival

This study examines how the composition of subsidiaries’ mandates affects their survival, by investigating the configurational characteristics of mandate portfolios. Examining data from 1991 to 2017 on 14,952 foreign subsidiaries of 4,877 multinational enterprises reveals that while having a mandate portfolio with greater scope in relation to same-parent subsidiaries enhances the survivability of foreign subsidiaries, the effect is weakened when the portfolio has a higher degree of overlap with those of other same-parent subsidiaries. Conversely, when a subsidiary’s mandate portfolio puts a greater emphasis on the multinational enterprise’s (MNE) global value-chain activities, its effect on subsidiary survival is strengthened.     

Affective conflict and identification of knowledge sources in MNE teams

How does affective conflict influence identification of knowledge sources in MNE teams? We apply social exchange theory and consider the effect of two types of affective interpersonal conflict: relational tension and self-interest on identification of knowledge sources in MNE teams. We further analyse how these effects are related to geographic and nationality differences. We test our hypotheses with a field study of 1181 dyadic interactions between 160 members within 40 MNE teams engaged in product innovation, human resources, and operational improvement in three large diversified MNEs. We find that affective conflict has a direct negative relationship to identification of knowledge sources in MNE teams. This relationship is further negatively moderated by geographic differences and nationality differences. Our study contributes to theoretical and empirical micro-foundations of conflict and identification of knowledge sources in MNE teams.     

How Environmental Management Competitive Pressure Affects a Focal Firm's Environmental Innovation Activities: A Green Supply Chain Perspective

Recently, environmental management offers firms a source of competitive advantage in the marketplace. The development of environmental innovations is critical to the success of today's firms. Drawing on the Schumpeterian perspective of competition, this research examines how the perception of rival firms' green success influences a firm to pursue and produce environmental innovation through its green supply chain integration activities. Using survey data from 230 firms, a conceptual model is developed and tested using structural equation modeling. We find that the firms in our sample do perceive pressure from their competitors' success in environmental management activities, and thus take supply chain action to pursue integration activities. By differentiating incremental and radical environmental innovation, this study also reveals the role of three dimensions of green supply chain integration (internal, supplier, and customer integration of green product development) on incremental and radical environmental innovation separately. Specifically, findings suggest that green supply chain integration has a positive impact on developing incremental environmental innovation, while only customer integration has a significant positive impact on developing radical environmental innovation.     

The spatial structure of foreign subsidiaries and MNE expansion strategy

Drawing on internalization theory and economic geography research, we examine how the spatial structure of MNE subsidiaries in supranational regions affects subsidiary location choices. Our analysis of foreign production investments by Japanese manufacturing firms from 1971 to 2006 supports our theoretical predictions: firms were more likely to establish new production subsidiaries in countries geographically more proximate to existing production subsidiaries, but not to trading subsidiaries, in the same region. The proximity effect diminished for production subsidiaries engaged in accessing natural resources or R&D. Performance of production subsidiaries was also stronger for those closer to other production subsidiaries in the same region.     

Reappraising liabilities of foreignness within an integrated perspective of the costs and benefits of doing business abroad

Several international business scholars have elaborated upon Hymer's [Hymer, S. H. (1960). The international operations of national firms: A study of direct investment. Unpublished Ph.D. dissertation, MIT, Cambridge, MA] costs of doing business abroad through the liability of foreignness notion. While this research has made important contributions, there is need for more conceptual refinement and synthesis due to the vastly increased scale and scope of MNE operations in recent years. Consequently, this study attempts to more precisely delineate the liabilities of foreignness component of costs of doing business abroad from other costs/liabilities that arise from the increasing complexity of global business. Further, we synthesize both the costs and benefits of cross-border operations that accrue to the foreign subsidiary into an integrated conceptual framework, and advance 11 theoretical propositions on how those impact its competitive dynamics. We illustrate these notions through a longitudinal case study on the operations of Ford Motor Company in India over the past 80 years.     

Determinants of voluntary environmental management practices by MNE subsidiaries

There have been few empirical studies of the determinants of voluntary environmental management practices (VEMPs) of MNE subsidiaries operating in emerging countries. To provide insight on this issue, this study explores the antecedent factors that drive MNE subsidiaries to adopt VEMPs, using data drawn from a key emerging country – Turkey. Based largely on the arguments of institutional theory and the resource based view of the firm, a number of hypotheses are formulated in order to investigate the effects of stakeholder pressures, perceived polluting potential, customer focus and competitive intensity. Each of these factors, with the exception of competitive intensity, is found to positively influence the adoption level of VEMPs by MNE subsidiaries. Some of the study's parent-level and subsidiary-level control variables are also found to have significant effects on the extent of VEMPs adoption by MNE subsidiaries.     

Exploring the role of internationalization knowledge in fostering strategic renewal: A dynamic capabilities perspective

Internationalization knowledge (IK) is important to successfully enter and develop competitive strategies abroad. Yet, how IK is advanced and improved across the multinational enterprise (MNE), and how this contributes to the MNE’s strategic renewal is less understood. This analysis is based on an in-depth case study of Microsoft International to explore how IK is advanced, improved, and integrated across the enterprise. Our findings suggest that IK plays a critical role in fostering strategic renewal of an MNE. More specifically, sensing, seizing, and transforming capabilities jointly provide the necessary basis that enable IK to facilitate strategic renewal. We contribute to the literature by (1) explicating three categories of IK and their hierarchical relationship; (2) reveal how three distinct capabilities required by MNEs capture and integrate the three categories of IK across the enterprise; and, (3) offering that strategic renewal is triggered by routines based on the development and integration of IK.     

Emerging versus advanced country MNEs investing in Europe: A typology of subsidiary global–local connections

This paper empirically investigates how subsidiaries of multinationals from both emerging (EMNEs) and advanced (AMNEs) economies investing in Europe learn from the local context and contribute to it as much as they benefit from it. To explore this we classify the behavior of MNE subsidiaries into different typologies on the basis of how knowledge is transferred within the multinational and on the nature of the local innovative connections. The empirical analysis relies on an entirely new, subsidiary-level dataset in the industrial machinery sector in Italy and Germany. Results show that EMNEs and AMNEs undertake different strategies for tapping into local knowledge and for transferring it within the company. We identify a new typology of EMNE subsidiary that contributes through its significant local innovative efforts to development processes in the host country. This result suggests possible win-win situations from which novel policy implications may be drawn.     

Orchestrating international production networks when formal authority shifts

We investigate how a brand-owning MNE can coordinate and safeguard exchanges in its international production network following a decline in formal authority and a shift in ‘hub firm’ status to another member of the network. Our empirical material is drawn from a case study of a Norwegian shipbuilder. We illuminate what mechanisms are used by a network orchestrator in a peripheral position with limited formal authority, when they are used, and by whom they are developed and deployed. Our findings question and extend theorizations that assume a single, stable orchestrator, and that typically give primacy to the ‘executive suite’.