Performance implications of MNE subsidiary federation: Evidence from India

Building on extant and emerging scholarship on the deepening of MNE operations in a foreign country, we develop the notion of subsidiary federation, viz., a constellation of legally independent majority-owned subsidiaries of a foreign MNE, in a single host country. We posit that subsidiary federation is a reservoir of host country experiences, resources, knowledge, and networks, and allows the parent MNE strategic flexibility in terms of where and how they choose to operate. The sharing of knowledge facilitated by interactions among the managers of affiliated subsidiaries bestows advantages that, we argue, are performance positive for the affiliates. We hypothesize that multiple subsidiaries in a foreign host country is positively associated with corporate level diversity, and that benefits to the affiliates in a subsidiary federation are associated with the size of the federation and with relative geographic location of the affiliates. We test our theory on a sample of foreign MNE subsidiaries in India during the 2000–2013 period and find strong empirical support for our hypotheses. We conclude with avenues for future research.     

FDI and Technology as Levering Factors of Competitiveness in Developing Countries

Technology creation and absorption are two relevant processes that affect the role that multinational enterprises (MNE) may play in the competitiveness improvement of the developing economies. The importance of internal factors in local contexts, the increasing integration in the industrial international value chain and the access of firms from these countries to diverse external learning sources, constitute a suitable framework for the analysis of competitiveness shift. In this paper, we study how the integration of firms from developing countries in sophisticated high-tech markets can be defined by the combined action of MNE and the ability for technology absorption and creation. Our empirical analysis with panel data shows how the different dimensions of internal and external factors affect international competitiveness in high-tech industries.     

Dual Organizational Identification in Multinational Enterprises and Interpersonal Horizontal Knowledge Sharing: A Conceptual Model

How does a subsidiary employees' dual organizational identification (DOI) – with both the local subsidiary and the overall corporation – shape the pattern of interpersonal horizontal knowledge sharing (IHKS) in multinational enterprises (MNEs)? This conceptual article develops a conceptual model demonstrating the relationships between subsidiary employees' DOI and their IHKS patterns (i.e., quantity, quality, and timing). We propose that subsidiary-oriented DOI is negatively associated with IHKS, while MNE-oriented DOI has the opposite effect. Building on this central argument, we posit that the geographic distance, relative competence, and interpersonal similarity between employees and colleagues at other subsidiaries can moderate the relationship between DOI and IHKS and cause unevenness in IHKS patterns that may aggregate at the corporate level, resulting in uneven knowledge flows in the whole MNE system. Our theorizing advances understanding of intra-MNE knowledge sharing by yielding novel propositions about the predictors of IHKS and uneven knowledge flows in MNE.     

Isolated Foreign Subsidiary's Initiative in Knowledge Transfer Within the MNE

Knowledge transfer is an essential issue of strategic management in MNEs, because it enables them to utilize their strategic resources across borders. However, it is far from perfect, and there are isolated foreign subsidiaries that are excluded from the knowledge network within the MNE. A primary contribution of this paper is to shed light on a fact which such an isolated foreign subsidiary can initiate the internal knowledge transfer within the MNE, in order to overcome the liability of internal isolation. This paper analyzes such a subsidiary initiative, with an extreme case of a large Japanese ICT company's Finnish subsidiary, which initiated an adoption of its headquarters' strategic practice. I collected and analyzed data by ethnographic fieldwork in this subsidiary for over one year. After depicting the details of the initiation process, I show how the initiation process was influenced by the subsidiary managers' dual motivation; solving the liability of internal isolation, and keeping the advantage of isolation. I hope that this study would enrich theory building of subsidiary isolation and also contribute to subsidiary managers who have struggled with the liability of internal isolation.     

The Performance of MNE Subsidiaries in China: Does It Matter to Be Close to the Political or Business Hub?

This study examines the impact of distance on financial performance of multinational enterprise (MNE) subsidiaries in China. We hypothesized and found that MNE subsidiaries performed better when located closer to the country's business hub, but performed less well when located closer to the political hub. We also hypothesized that distance effects are moderated by subsidiary size, subsidiary network, and state capital contribution to subsidiary. Our findings were based upon 45,248 MNE subsidiaries with location and geographic distance measured at the prefectural level in China.     

Innovative Projects Between MNE Subsidiaries and Local Partners in China: Exploring Locations and Inter-organizational Trust

We explore innovative projects carried out by MNE subsidiaries with local partners in China, focusing on the roles played by different components of inter-organizational trust with the local partners as well as features of the business environment in the specific location of the subsidiary. From a sample of 44 managers in MNE subsidiaries that we interviewed in three locations: Beijing, Shanghai and Guangzhou, we identify 33 cases of innovative projects with prominent local partner involvement. Using a qualitative, thematic analysis of the data, we gain new insights that explain innovative outcomes for the subsidiaries. Firstly, we find a tendency towards a sociological component of trust with local partners in Beijing in contrast to higher levels of an economic component of trust in Shanghai and Guangzhou. Secondly, we find that a successful outcome was noted by informants where the sociological component of trust was utilized in Beijing and the economic component of trust in Shanghai and Guangzhou. The findings highlight the interaction between business context and the nature of trust with local partners in determining innovative outcomes in an emerging economy. We discuss implications for managers and policy makers.     

Translating Local Knowledge at Organizational Peripheries *

This article theorizes about the kinds of knowing present in organizations that share both a structural similarity in the organization of work and work practices – a ‘double periphery’ in which a community of practitioners acts across both a horizontal, geographic periphery and a vertical, hierarchical periphery – and a common mode of practice – translating across these peripheral borders. In principle, these workers develop knowledge in interaction with clients and customers that could be valuable to the organization, were it but to learn from them. Instead, the ‘local knowledge’ they learn in acting across these peripheries is discounted, if not disparaged, by more centrally‐located managers and executives. The article theorizes about the nature of translating local knowledge concerning organizational practices and about the structural character of local versus ‘expert’ knowledge.     

Global Innovation Networks – Organizations and People

Innovation is increasingly the outcome of global networks that connect geographically dispersed knowledge centers. The international business (IB) literature has developed a sophisticated understanding of the multinational enterprise (MNE) as an organization generates value by integrating knowledge across national borders. We advance this literature by making three key arguments. First we highlight the three megatrends that shape the strategy of the modern MNE: the disaggregation of the value chain into ever narrower activities, the migration of value to knowledge-intensive intangibles and the rise of huge emerging markets like China and India, whose domestic firms can grow to enormous size before venturing abroad. Second, we trace these three megatrends to falling spatial transaction costs, enabled in the main, by digitalization. Third, we draw on earlier research on the generic forms of global linkages, arguing that the IB literature has limited itself to organizational pipelines, while paying relatively little attention to personal relationships. The latter are particularly important in the genesis of both entrepreneurship and radical innovation, but are particularly sensitive to the anti-globalization policies. An environment where technology continues to reduce spatial transaction costs, while policy raises them, strengthens large MNEs at the expense of innovative international new ventures.     

How dimensions of internationalization shape the MNE's renewal capability: Multidimensional and multilevel considerations

We investigate the theoretical and empirical implications of internationalization as a multidimensional and multilevel construct and its relationship to the renewal capability of the firm. Theoretically, internationalization describes a diverse range of cross-border activities by the multinational enterprise (MNE), and thus carries with it multiple dimensions of depth, breadth, and speed. Empirically, internationalization contains both within- and between-MNE variance, each with potentially different effects on the MNE's renewal capability. Using a unique, longitudinal dataset of 94 MNEs, we find support that each dimension and level of internationalization relates differently to the renewal capability of the MNE. At the within-level, the MNE internationalization breadth is negatively related to the its renewal capability, yet internationalization speed is positively related to renewal. At the between-level, the depth of internationalization is positively related to the MNE's renewal capability. In concert, our results suggest that the effects of internationalization on important outcomes cannot be simplified into general relationships. Rather, attention to the nuances of internationalization, especially as related to the MNE's capabilities, is needed.     

Knowledge Complementarity and Coordination in the Local Supply Chain: Some Empirical Evidence

Knowledge, managed or coordinated as a strategic resource, can help to internalize uncertainty or volatility and play an important role in generating and sustaining competitive advantage. One potentially important determinant of knowledge coordination between firms is the relative strength of the knowledge bases of the two partner companies. In the context of the local supply chain, this paper examines the extent of knowledge coordination between a group of 18 Northern Ireland‐based MNE plants and their local suppliers. A typology of knowledge complementarity is developed and related to the extent of firms' knowledge coordination activities. The analysis suggests three main empirical results. First, and somewhat unexpectedly, the relationship between MNE plants and their suppliers is characterized by a wide range of configurations of knowledge complementarity. Second, clear differentials exist between the occurrence of knowledge coordination activities incidental to normal trading relations and more intentional knowledge coordination activities. Third, no direct link was evident between knowledge complementarity and the level of knowledge coordination. The implication is that firms' willingness to coordinate knowledge, something that may be strategically determined, is more important than capability in determining the extent of knowledge coordination.     

Where Do We Go from Here?: Globalizing Subsidiaries Moving Up the Value Chain

This paper studies the international expansion of local subsidiaries of multinational enterprises (MNEs). The main questions asked are why and how MNEs' local subsidiaries in developing economies undertake international expansion. Drawing from the global value chain (GVC) perspective, I argue that local subsidiaries that were initially established to undertake production activities for export-oriented industries do not want to remain at the lowest-value-added position forever. They therefore undertake initiatives to get out of that position. The literature on initiative-taking subsidiary has predominantly focused on them becoming centers of excellence via R&D and innovation in the host country. I propose a different route of local subsidiary upgrading via foreign direct investment in more advanced countries. This strategy helps not only to gain internal prominence within the MNE network, but also to improve its external position within the GVC vis-à-vis the lead firms. The paper uses an in-depth case study of a Thai subsidiary of a Taiwanese electronic MNE to explore the transformation of the subsidiary from simply manufacturing for exports to becoming a strategic international expansion arm for the parent MNE.     

Socio-political processes in international management in post-socialist contexts: Knowledge,learning and transnational institution building

This paper contributes to the recent debates and emerging concepts in the international business literature by applying a social–institutionalist perspective that focuses on the processes of institution building in ventures between Western multinational corporations and post-socialist enterprises. It is argued that the knowledge and learning processes within these transnational sites are constitutive of the actual management and organizational practices that emerge in these social microcosms of transformation. In transition and other emerging economic contexts, international ventures are typically based on asymmetrical relationships, in which the balance of power is structurally weighted in favor of the MNC. Notwithstanding this dominance structure, constructing new practices within the transnational social space is a socio-political process involving power-holders such as senior managers representing the Western MNC and the local enterprise. The paper argues that the strategic orientations of these key power-holders are critical variables in explaining the diversity of concrete patterns of institution building on transnational sites.     

Equity sharing in international joint ventures: an empirical analysis of strategic and environmental determinants

Equity sharing in international joint ventures (IJVs) is a critical issue with implications for risk sharing, resource allocation, knowledge commitment, and organizational control. As a departure from previous research, this study aims to explore strategic antecedents and environmental dimensions underlying sharing arrangements. It argues that the structure of equity sharing controls the ex post degree of economic exposure or risk propensity, and boosts risk-adjusted returns earned from strategic resources or global integration. Analysis of data collected from IJVs in China suggests that strategic orientation, resource dependence, knowledge protection, and global integration as sought by MNEs are important antecedents of equity sharing. Equity sharing is an inverse function of host-country environmental complexity and hostility as perceived by MNE managers.     

Constructing managerial manoeuvring space in contradictory contexts

This paper discusses manoeuvring space and demonstrates how autonomy, power and discretion need to be understood as constructed and integrated behaviours where managers manoeuvre between dilemmas in their own management practices. Twenty-seven Norwegian police managers were shadowed and interviewed. We found that constructions of manoeuvring space presupposed that managers balanced dilemmas. We identified three different strategies through which managers constructed manoeuvring space by navigating between dilemmas and actively constructing demands and constraints. These strategies were (1) decoupling, (2) sensegiving and (3) strategic positioning. Our findings add to the managerial discretion literature, arguing that constructions of manoeuvring space are central to managers’ development and to how they create opportunities and possibilities to make choices that balance conflicting dilemmas in contradictory contexts.     

Living in the shadow of OD: HRD and the search for identity

The paper attempts to describe the similarities and differences between organizational development (OD) and human resource development (HRD). While it is argued that HRD practitioners need to acquire some of the skills of OD consultants, these are likely to be limited to the development of personal skills and learning in the attempt to achieve intrapreneurialism and personal transformations. We argue that HRD is living in the shadow of OD because it is slow to recognize its roots in the debates of that discipline. It is therefore suggested that HRD will recognize its true potential only when it identifies its core knowledge and skills. We argue that HRD can find its essential identity in four main ways: by focusing on the organization's business strategy; by devolving responsibility to line managers; by adopting an employee-centred approach to learning; and by emphasizing workplace learning. However, a wider behavioural understanding and a greater degree of reflectiveness in relation to the politics of change and the skills of the change agent must inform this identity.     

Corporate planning and management by objectives

Management by Objectives seeks to integrate the company's objectives for profit and growth with the personal goals and satisfaction of managers. The system requires a review of company objectives and an attempt to translate these into key objectives and performance standards to which individual managers are committed. MBO dependes for its success on the existence of a company environment in which the individual can grow and provides a basis for harnessing the human resources of the organization in the achievement of company objectives.     

A Study of Risk Relevance Reasoning Based on a Context Ontology of Railway Accidents

With the application of risk management and accident response in the railway domain, risk detection and prevention have become key research topics. Many dangers and associated risk sources must be considered in collaborative scenarios of heavy-haul railways. In these scenarios, (1) various risk sources are involved in different data sources, and context affects their occurrence, (2) the relationships between contexts and risk sources in the accident cause mechanism need to be explicitly defined, and (3) risk knowledge reasoning needs to integrate knowledge from multiple data sources to achieve comprehensive results. To express the association rules among core concepts, this article constructs two ontologies: The accident-risk ontology and the context ontology. Concept analysis is based on railway domain knowledge and accident analysis reports. To sustainably integrate knowledge, an integrated evolutionary model called scenario-risk-accident chain ontology (SRAC) is constructed by introducing new data sources. The SRAC is integrated through expert rules between the two ontologies, and its evolution process involves new knowledge through a new risk source database. After three versions of the upgrade process, potential risk sources can be mined and evaluated in specific contexts. To evaluate the risk source level, a long short-term memory (LSTM) neural network model is used to capture context and risk text features. A model comparison for different neural network structures is performed to find the optimal evaluation results. Finally, new concepts, such as risk source level, and new instances are updated in the context-aware risk knowledge reasoning framework.     

Coordinating business strategy and technical planning

Business managers face the decisions discussed in this article regularly. Without a systematic framework, the business context for these decisions is more difficult to establish and to communicate in a company. Where technology is the life-blood of the company, the strategic decision-makers can ill-afford to have the technological resources allocated in a suboptimal fashion. Nor can they afford a business strategy which does not recognize the implications of their technological assets. This article describes an approach to technological strategy formulation that has successfully achieved this.     

Role of technology in strategic management

The accelerating pace of technological change has made technology a major strategic factor for many organizations. Some firms respond defensively, seeing technology as a problem, while others through strategic use of technology gain permanent advantage.The engineering function typically contains the bulk of the firm's technological expertise, yet engineers and engineering managers are seldom directly involved in strategic analysis. Strategy typically trickles down to engineering in the form of technological problems demanding solutions. This weak linkage between engineering activities and strategic thinking is far from optimal, and in the current turbulent technological environment it can even endanger the firm's survival.The linkage can be strengthened, but it requires behavioral and managerial changes at the top of the firm and at the engineering level. First, both levels must understand the concepts of strategic management and commit to implementing them. Then the strategic nature of technology must be understood, including the limitations and potential traps of technology-based strategies. Finally, creative opportunities for considering technology strategically must be made available at the engineering level, and both design engineers and engineering managers must be rewarded for their strategic contributions.     

How strategy professionals develop and sustain an online strategy community – The lessons from Ericsson

In this paper, we report on an in-depth and inductive study of strategy professionals that proactively initiated, developed and sustained an online community dedicated to continuously engaging with issues of strategic relevance for the company Ericsson. We identified the design of an online community structure, cooperation of internal and external actors with diverse expertise and from different hierarchical levels, and formulation of adequate strategic content, as the three main decision areas that strategy professionals have to consider carefully. The detailed empirical analysis enabled us to expose characteristic interdependencies among decisions and contradictory demands that make open strategy processes a paramount organizational challenge. We argue that organizing of such collective action transforms professional strategists from expert planners and analysts into managers that centralize responsibility for decisions affecting a) permeability of community boundaries for different types of community members; b) incentive mechanisms that mobilize participation and stimulate knowledge sharing across hierarchical levels, and c) framing of strategic content needed to integrate fragmented contributions, often less aligned with strategic frames of senior managers, into actionable strategic initiatives.