Multinational enterprises’ global competitiveness through emerging markets strategies and integration in global innovation networks

Abstract

This research undertaken at the foreign subsidiary level explores how multinational enterprises (MNEs) from advanced nations harness global network-integrated R&D when it is extended to emerging markets. In both developed and developing country contexts, organizations are momentously devising strategies to integrate global innovation networks (GIN). Still a clear understanding of this rapidly emerging phenomenon is lacking. Case studies of 26 R&D Centres located in India and China belonging to 18 European MNEs in high-technology sectors enabled us to explore the underlying process. An integrated framework developed to position various R&D strategies that MNEs pursued in host facilities, enabled us to identify key dimensions. The core argument is that strategies are not static and can evolve in many ways. We are able to identify that this results from the inter-play between – the level of capabilities that have evolved in host R&D facilities, and the extent of integration in the GIN of parent MNE. Further, these strategies are not mutually exclusive and fit on a continuum. A trend towards greater integration in GIN and a deepening of local linkage is apparent, raising important issues regarding its implications. From a policy perspective, curtailing this process can impact the long-term competitiveness of industries and firms. Our research confirms that technology-based innovations now require combining knowledge inputs from multiple fields. Such new and complimentary knowledge/functions are increasingly being sourced from emerging markets. From an MNE perspective, past engagement in emerging markets and their experiences in interacting with host institutions are most critical, specifically linkages with the government and key stakeholders in R&D consortia. This is vital to mobilize host-market-related inputs and specialized technical knowledge/functions.