Impact of subsidiaries' cross-border knowledge tacitness shared and social capital on MNCs' explorative and exploitative innovation capability

As subsidiaries' cross-border knowledge increases in tacitness, it becomes more difficult for subsidiaries to articulate and for multinational corporations' (MNCs') headquarters to integrate and apply. Herein, dynamic capabilities and social capital theory frame structural and relational social capital as capabilities that improve the productivity of subsidiaries' cross-border knowledge tacitness shared on MNCs' headquarters explorative and exploitative innovation capability. The hypotheses are tested on a data set consisting of survey data collected from 220 senior managers or executives at the headquarters of Taiwan-based MNCs. Interestingly, structural social capital between headquarters and subsidiaries strengthens the negative association between subsidiaries' cross-border knowledge tacitness shared and explorative innovation capability; relational social capital attenuates the negative association between subsidiaries' cross-border knowledge tacitness shared and both explorative and exploitative innovation capability. Stated differently, different types of social capital can facilitate (i.e., relational social capital) or impede (i.e., structural social capital) innovation capability when cross-border knowledge tacitness is high. The validity and managerial implications of these findings are explored through interviews with senior managers or executives of MNCs headquarters or subsidiaries. Theoretically, this study emphasizes the importance of understanding relationships between subsidiaries and MNCs' headquarters to understand the association between subsidiaries' resources and MNCs' headquarters innovation capability.     

South African MNCs' HRM Systems and Practices at the Subsidiary Level: Insights From Subsidiaries in Ghana

Despite the extensive literature on the human resource management (HRM) systems and practices of multinational companies (MNCs) from developed countries, there are serious gaps in our understanding of emerging countries multinationals HRM practices and systems at both home and host countries. This study empirically examines the similarities and differences of South African (SA) MNCs' HRM systems and practices at both the headquarters in SA and at the subsidiaries operating in Ghana. The study reveals that with the exception of compensation and industrial relation practices which are localised, EMNCs HR systems and practices are mainly transferred to subsidiaries with minimal adaptation to contextual realities. Further research and practical implications are discussed.     

The Management of Information and Managers in Subsidiaries of Multinational Corporations

A key challenge facing multinational corporations (MNCs) is how to encourage the development of firm specific advantages throughout the network of subsidiaries while maintaining global coherence. As a result, a critical task for top managers in the MNC is to structure the relationship between headquarters and subsidiaries. Thus, headquarters' control of subsidiary behaviour and performance becomes a central integrating function in the MNC. We examine first the relationship between the nationality of the MNC headquarters and its information management, namely the key performance metrics utilized by the parent to evaluate subsidiary performance. Second, we investigate the relationship between the MNC nationality and its management of managers, specifically, the transfer of parent company nationals and corporate acculturation. These questions are investigated in a study of MNC subsidiaries located in Australia, Ireland and Singapore. Our data provide strong evidence that MNCs of all nationalities place the greatest emphasis on financial metrics compared to other performance metrics. Moreover, there are differences in the degree of emphasis on performance metrics across MNC nationality. We found that Japanese and German MNCs place significantly less emphasis on financial measures than US and UK MNCs. Our hypotheses relating to the management of managers were also supported by the data. In comparison with all other MNC nationalities, Japanese MNCs place greater emphasis on the transfer of Japanese managers to overseas subsidiaries and less emphasis on corporate acculturation. While some researchers have argued that management control has become more isomorphic as a result of globalization, our results show that companies from different nationalities diverge in their practices.     

Information systems for multinational enterprises—some factors at work in their design and implementation

Information systems for multinational companies (MNCs), referred to as international information systems (IIS), have been a problem area for many years, yet have failed to attract more than token attention from the academic information systems research community. This study applies a grounded theory method to establish a first theoretical framework dealing with the structure of IIS and the dynamics of their development and implementation. The substantive theory is based on extensive, long-term work with three MNCs and covers four key areas: (a) the dealings between the actors concerned with an IIS take place in a force field; (b) the force field is reflected in a generic two-dimensional architecture an IIS, which always has a ‘core’ of systems used by all (or many) of the regions and ‘local’ systems, different at every regional site; (c) the balance of functionality between the ‘core’ and the ‘local’ parts of an IIS follows the degree to which the operations of the MNC require synchronous access to data and processing within the IIS. (d) The interactions of IT and users in the force field follow a cyclical, self-reinforcing dialectic such that an enforced consensus process is required in order to boost acceptance and to limit the probability that continuing rejection leads to catastrophic failure. The limitations of the theory are discussed and directions for future research are given.     

When Do Distance Effects Become Empirically Observable? An Investigation in the Context of Headquarters Value Creation for Subsidiaries

Integrating distance research with the behavioral strategy literature on MNC headquarters-subsidiary relations, this paper explores how the distance between headquarters and subsidiaries relates to value added by the headquarters. We show for 124 manufacturing subsidiaries in Europe that, on average, distance is unrelated to value added by headquarters but that this effect is contingent upon the extent to which the subsidiary is locally embedded. Only after a certain threshold level of subsidiary embeddedness, distance is negatively related to headquarters value added. This effect is more pronounced for cultural, economic, and administrative distances than for pure geographic distance, highlighting the critical role of contextual variation for MNCs.     

Work systems in heavy engineering: the role of national culture and national institutions in multinational corporations

This paper is based on an Anglo-German research project of two research groups in both countries. It is based on data collected by qualitative research in the three largest multinational corporations (MNCs) in the lift and escalator industry. The headquarters (HQs) of the three corporations are based in the United States, Finland and Germany, respectively, and all three MNCs each have subsidiaries in Germany and Britain. Our main objects of analysis were change processes in the work systems of these three MNCs.We chose the lift and escalator industry as an example because it has been characterized by strong concentration processes during the last 10 years. Most of these corporations have grown by acquisition and there are strong tendencies in the market towards standardized, globally uniform products.National cultures and institutions, first of all play a role on the HQ level. Important areas were the standardization of products and production technology, the design of management systems and location and relocation decisions for R&D and manufacturing. Second, MNCs take differences in national cultures into account and deliberately “use” them in allocating resources and investment within the multinational group. National cultures and institutions massively shape the very formulation of manufacturing strategies within the multinational groups, as well as the R&D strategies—a particular important field in an industry still relying heavily on small-batch and unit production. National cultures also play a significant role in implementing the global strategies of MNCs in different host countries. Our data reveal striking differences on this level.     

基于软环境视角的跨国公司内部知识转移影响因素研究

为了探求软环境视角下跨国公司内部母子公司之间双向知识转移的影响因素,本文构建出包含知识本体因素、子公司自身因素和母子公司之间关系因素三构面的整合模型,提出相应理论假设,并以跨国公司在华子公司为样本进行问卷调研和统计分析。实证结果表明,知识的复杂性,在华子公司中外派人员能力、培训措施和知识存量价值,以及母子公司之间正式整合机制、信任水平和组织距离对跨国公司内部母子公司之间双向知识转移具有显著影响。     

Getting the seal of approval: Pathways to subsidiary initiative acceptance

Multinational corporations (MNCs) are proactive, entrepreneurial, and decentralized organizations. They seek to incorporate and leverage knowledge from their foreign subsidiaries. Initiatives in which subsidiaries pursue new business opportunities are one way that subsidiaries contribute to MNCs' knowledge stocks, but prior research suggests that few subsidiary initiatives secure headquarters approval. We argue that the extent to which initiatives are accepted by the headquarters of an MNC depends on a range of relational and contextual conditions that configure in complex ways. Using a neoconfigurational approach, we identify five equifinal configurations associated with the acceptance of subsidiary initiatives. We advance theory of subsidiary management by uncovering how subsidiary activities gain traction within the MNC.     

子公司绩效目标虚减操纵行为与激励机制对策研究

 企业集团总部与子公司在绩效计划阶段围绕目标值的设定存在博弈行为,子公司往往利用自身的信息优势虚减绩效目标,这种操纵行为将误导集团总部正常决策,影响资源配置效率并减少激励机制效用。本文基于子公司绩效操纵的委托代理模型与适应性预期假设,以两期收益为周期,按照激励相容的机制设计条件,对绩效目标的虚减操纵行为进行建模,分析指出子公司虚减操纵的条件触发因素和集团总部可行的控制方法,并据此提出企业集团总部相应的激励机制建设建议。     

A Path to Successful IT Outsourcing: Interaction Between Service‐Level Agreements and Commitment

Although service‐level agreements (SLAs) are important for IT outsourcing management, appropriate mechanisms for constructing effective SLAs are still poorly understood, leading to inadequate or overcomplicated contracts that are ineffective. This study examines the associations among three distinct sets of SLA characteristics and outsourcing success, as well as the role of commitment in these relationships. Analyzing survey data based on a model theorizing the alignment of SLA characteristics with intended outsourcing objectives, we find that different types of benefits attained through IT outsourcing arrangements are associated with the use of specific contractual dimensions. We also find that commitment, in general, moderates the impact of SLAs on outsourcing success, although the nature of the moderation varies with the different benefits IT outsourcing engagement is intended to achieve. Interestingly, in certain cases—change characteristics for achieving technology benefits, in particular—commitment can be a barrier to the effective use of SLAs in achieving intended outsourcing benefits. As such, our study extends the literature on IT outsourcing, contracting and commitment, as well as provides a general guideline for practitioners to structure effective SLAs and to properly use commitment for managing IT outsourcing engagements to successfully achieve intended benefits.     

Headquarters Allocation of Resources to Innovation Transfer Projects within the Multinational Enterprise

This paper examines headquarters allocation of resources to specific innovation transfer projects within the multinational enterprise between sending and receiving subsidiaries, focusing on the role of the subsidiary hosting the transfer. Resource allocation is of key strategic importance for the organization given that resources are limited in the multinational enterprise and that headquarters is the principal actor in distributing resources internally between competing innovation transfer projects. Findings from a dataset of 169 innovation transfer projects reveal that headquarters tend to favor established lines of innovation at the subsidiary level, as opposed to overall subsidiary operational relatedness for additional corporate resources. It is found that headquarters also tend to allocate resources to acquired subsidiaries' transfer projects to a higher degree than to those of greenfield ones. A curvilinear effect is found for subsidiary bargaining power which is initially positive and subsequently negative. The results highlight that certain subsidiary and innovation traits are determinants of headquarters resource allocation.     

Developments in Human Resource Management in MNCs from BRICS Nations: A Review and Future Research Agenda

In this introductory article, we analyze developments in the field of human resource management (HRM) in multinational corporations (MNCs) from the BRICS countries (Brazil, Russia, India, China, and South Africa). We do this in terms of conceptual models, theoretical frameworks, empirical studies, research designs and MNC settings, with a view to setting the future research agenda on this emerging topic. In doing so, we identify research gaps as well as propose a number of research directions that can act as a useful guide for future research. The article therefore provides valuable information to both academics and practitioners and paves the way for future studies on the nature of HRM systems in MNCs from BRICS.     

Revisiting the relationship between ownership and control in international business operations: Lessons from transition economies

This article develops a conceptual model linking two interrelated dimensions of foreign business operations in transition economies: resources committed to the entry in terms of ownership, and resources committed to control the operations. The model outlines four types of foreign operations in transition economies: 1) arm's length contractor (low degree of foreign ownership and low level of foreign control over the operations); 2) hands-on contractor (low ownership and high control); 3) brand protector (high ownership and control); and 4) market share maximizer (high ownership and low control). These types are illustrated with examples of companies in four sectors of the Russian economy: metals, textiles, oil products, and beverages.We contribute to the literature on ownership and control in foreign operations, and their linkage to resource commitment at different stages of operations. In particular, we explicate situations characteristic of transition economies where ownership and control are not positively correlated. Moreover, we illustrate that the (financial) resources committed at the entry stage do not necessarily correlate with the managerial resources committed to the operations. For example, contractual collaborations in transition economies typically require few financial resources but more managerial resource commitment than in more developed market economies. On the other hand, operations with major commitment in the form of foreign equity investment may be managed autonomously by a local manager or a minority shareholder.     

You Learn From What You Measure: Financial and Non-financial Performance Measures in Multinational Companies

According to recent studies in international management, relationships between headquarters and subsidiaries in the global economy are characterised simultaneously by elements of organisational interdependence and local autonomy. These characteristics challenge the traditional design and use of performance measurement systems (PMSs). Contemporary approaches to PMSs emphasise the role of performance indicators for strategy implementation and advocate the adoption of non-financial indicators in addition to traditional financial metrics. We investigated the factors associated with the inclusion of non-financial indicators in PMSs used in relationships between headquarters and subsidiaries. Our empirical study is based on 141 questionnaires collected from Italian subsidiaries of foreign companies and 13 interviews with respondents. Non-financial performance indicators contained in PMSs refer equally to customer, internal processes and people measurement perspectives. Furthermore, we find that the inclusion of non-financial indicators is positively associated with relative performance evaluation, interactive use of PMSs, subsidiary size, headquarters nationality and subsidiary participation in the design of PMSs. Information gathered through interviews provides explanations of our results, and suggests that the inclusion of non-financial perspectives in PMSs contributes to the strategic alignment of international organisations by supporting learning and dialogue within relationships between headquarters and subsidiaries.     

The Role of Internal and External Complexity in Global Factory Performance: An NKC Application

The global factory literature suggests that MNCs can take advantage of global operations by extensively offshoring and outsourcing activities. However, the added difficulty for the lead firm to coordinate the resulting complex structure is often underestimated. Evidence could be found in Boeing's 787 Dreamliner project, in which the external complexity disrupted MNC performance. Motivated by the gap between theory and practice, this study focuses on systems of MNCs connected with each other with supplier-client relationships and/or outsourcing. In particular it investigates the interplay of the internal and external complexity in such systems and how their balance affects the system performance. The study models the internal and external complexity by using the NKC-simulation methodology and adjusting it to the specific MNC context. The NKC methodology is widely used in organization theory to study complex systems. Simulations comparing the performance of MNCs that use outsourcing to different degrees indicate that a balanced level of internal and external complexity is beneficial in the context of global factory.     

Upgrading local operations for global arbitrage

This study shows that upgrading sales operations in host countries towards production allows MNCs to perform global arbitrage in their networks of foreign subsidiaries and thereby contributes to a strategy of reaping the benefits of multinationality. We predict and find that operation upgrades follow opportunities of improving resource flows in the subsidiary network to exploit the advantages of host countries in tax rates, investment incentives, and technological knowledge across borders. Performance effects on the level of the MNC network give evidence of these benefits from global arbitrage.     

The role of R&D resource commitment in accessing co-location advantages

In a globalized economy, multinational enterprises (MNEs) pursue competitiveness through cross-border knowledge exploitation and exploration in international R&D. It is conventionally assumed that for subsidiaries to effectively access co-location advantages in knowledge milieus abroad, high levels of resource commitment are required. This paper analyses the relationship between resource commitment and access to co-location advantages, first theoretically and then through a case study of two MNEs in high-tech industries. We disaggregate the composite concept of resource commitment and demonstrate the dimensions accentuated, respectively, by the resource-based view, transaction cost economics and institutional theory. Next, we analyse the relationship between resource commitment and co-location advantages for 11 R&D subsidiaries of the two MNEs. Based on this analysis, we discuss the relationships between the empirical findings and the theoretically differentiated resource commitment dimensions. The study finds that high resource levels are less important for access to co-location advantages than conventionally assumed, while the level of commitment associated with allocated resources appears consistently to be important, lending more support for the relevance of institutional theory-related dimensions of resource commitment than the resource-based view-related ones. We also find support for the claim that more flexible governance arrangements promote access to co-location advantages in asset exploration.     

Structural sources of personnel problems in multinational corporations: Third-country nationals

The paper examines the extent to which multinational corporations (MNCs) whose staffing policies approach the genuine multinational model are free of the dysfunctions found by the authors in earlier studies of ethnocentric MNCs. The findings are based on comparative research in 51 MNCs, and intensive diagnostic studies of seven subsidiaries of MNCs operating and headquartered in four continents. The findings may be summed up as follows: (1) certain, but very few, morale problems have indeed been eliminated; (2) others are still present; (3) others are still present and their effect has intensified; and (4) new problems have appeared which are unique to the staffing policy approximating to the genuine multinational model. These findings shed new light on several of the assumptions underlying this model. The general conclusion is that each prevalent type of staffing policy has several sources of morale problems—some inherent in its uniqueness, and others shared by the alternative staffing policies—irrespective of the personal qualifications of the managers. Therefore, it is unrealistic to expect that a change toward the genuine multinational model would solve the basic morale problems prevalent in the dominant type of MNCs.     

Determinants of strategic options in multinational market competition

This article conceptually explores the determinants of strategic options in multinational market competition. It draws on and integrates three research streams in strategy and international management: action and response in competitive rivalry; multipoint competition, and global competition and strategy. Specifically, it examines the various factors that determine whether and when a multinational corporation (MNC), while under attack from a rival MNC, will adopt the following responses: doing nothing, defending, counterattack, and total war. Those factors are organized into four categories: (1) types of attack, including price cut, introduction of new product, entry into new market, and advertising campaign; (2) awareness of interdependence of multinational markets, determined by market overlap, MNC strategy, and MNC organization; (3) motivation for globally coordinated moves, determined by the centrality of national markets, strategic importance of national markets, perceived importance of national markets, and perceived importance of rivals; and (4) feasibility of response, determined by entry barriers and diversity of national markets as well as resource heterogeneity and differential between rival MNCs. The effects of these four categories of factors on the choice of response are explored respectively. Research implications are offered in concluding remarks.