Problem solving in MNCs: How local and global solutions are (and are not) created

Abstract

It is widely acknowledged in the international business literature that subsidiaries can make a strategic contribution to multinational corporations (MNCs). Departing from the common focus on subsidiary role, contexts and organizational MNC factors, this study explores the micro-level details of managers’ actions and interactions. We conducted an in-depth qualitative study into 38 problem-solving processes employed across four subsidiaries. Taking a non-routine problem-solving perspective on how subsidiaries contribute strategically to renewing MNC competences, this paper uncovers four problem-solving approaches: local template adaptation; superior technology creation; local template creation; and global principle creation. The findings depict how the way problems are framed influences knowledge search and solution-finding activities, and how these different activities may result in local and global solutions. The paper extends insights into MNC innovation and subsidiary initiative by detailing how subsidiary managers navigate different problem-solving approaches, and contributes to discussions on the micro-foundations and social aspects of MNC knowledge flows, revealing factors that trigger distance-spanning knowledge search.