MNC Networks Research Articles

Embedded opportunities and conflict of subsidiary initiatives

PurposeThe purpose of this paper is to advance understanding of why subsidiary initiative opportunities face constant opposition, despite being essential to the competitiveness of international organizations. The paper also develops a detailed theoretical framework to showcase the conflicts and opportunities created by subsidiary initiatives, as most research in this field is descriptive and comparative.Design/methodology/approachThe paper draws substantially on entrepreneurship, agency, contingency and institutional theories, and focuses on the conflict generated by subsidiary initiatives in the context of headquarters–subsidiaries relationships, including the impact of developed and emerging markets. Based on a thorough analysis of the literature, the paper’s conceptual approach aims to develop models of how MNC networks deal with subsidiary initiatives.FindingsThe findings indicate that subsidiary initiative opportunities face opposition from both the organization and its environment.Originality/valueThe paper builds conceptual models showing the network of opportunities and conflicts created by subsidiary initiatives.

Knowledge management in SMEs and MNCs: matching knowledge mobility mechanisms to supply network configuration profiles

While ‘knowledge mobility’ presents significantly different challenges for SMEs and MNCs, it is strongly influenced by two common factors: the type of knowledge to be integrated and the configuration of the operations network. Here, SMEs and MNCs are required to make critical decisions about ‘levels’ of collaboration and knowledge sharing with network partners. A Knowledge Mobility Configuration (KMC) framework was developed, tested and refined using five case studies indicative of a growing shift towards information and knowledge-intensive activities. In terms of contribution, there has been limited empirical research to-date into the determinants of successful knowledge transfers in MNC-SME network contexts. The network configuration element of the KMC framework provides insights on how such networks evolve, and how specific knowledge mobility profiles may evolve over time. This more nuanced approach may be used as a basis for a proactive and differentiated approach to knowledge mobility and integration across SME and MNC networks.

Factors affecting reverse knowledge transfer from subsidiaries to multinational companies: Focusing on the transference of local market information

AbstractAlthough research on reverse knowledge transfer (RKT) from subsidiaries to headquarters is increasingly prominent, the debate concerning the primary determinants influencing RKT has not reached an academic consensus. Therefore, we have attempted to draw an overall picture for RKT by using both knowledge transfer capacity and relational capital as overarching theoretical lenses. In a sample of South Korea, we find that knowledge development capability, subsidiary willingness, and autonomy are critical factors affecting the reverse transfer of local market information within MNC networks. Furthermore, both the knowledge integration mechanism and trust are facilitators for improving relational capital between subsidiaries and MNCs. This factor facilitates RKT from the former to the latter. Copyright © 2017 ASAC. Published by John Wiley & Sons, Ltd.

The role of dual embeddedness and organizational learning in subsidiary development

We investigate how subsidiaries exploit the knowledge flows embedded in internal and external networks and support their development in terms of scope (breadth of functional operations) and competence (ability to perform specific activities). We argue that individual subsidiaries have different organizational learning processes, which would influence the way subsidiaries evolve and manage multiple sources of knowledge and adapt their knowledge structure and routines systematically for subsidiary-wide development. Our analysis of 81 foreign-owned subsidiaries in China shows that subsidiary competence is enhanced by the knowledge arising from MNC networks whereas subsidiary scope depends on the knowledge embedded in the host environments. Moreover, organizational learning affects the way knowledge adapted from internal embeddedness but not external embeddedness. These findings imply that foreign subsidiaries must effectively cope with increased flows of distant knowledge within MNC networks while maintaining their location-specific advantage. The different outcomes of subsidiary development add a nuanced understanding of the relationship between dual embeddedness and subsidiary development.

Reverse knowledge transfer from subsidiaries to multinational companies: Focusing on factors affecting market knowledge transfer

AbstractDespite increasing research on reverse knowledge transfer (RKT) from subsidiaries to headquarters (HQs), there is no academic consensus on the primary determinants influencing RKT. By incorporating four different facets (i.e., absorption, sharing, implanting, and application of market knowledge) of the phenomenon, we draw new insights into RKT. Through empirically testing the phenomenon in the Korean context, we reveal that market knowledge absorption by subsidiaries is a critical component that influences the knowledge integration mechanisms (KIMs) within MNC networks. Furthermore, KIMs within MNC networks are primary keys for absorptive capacity (AC) of HQs and knowledge relevance between HQs and subsidiaries. Our results extend our understanding of RKT, while also offering useful implications for MNCs that intend to establish subsidiaries in foreign markets. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.

Reverse knowledge transfer from subsidiaries to MNCs in Korea: size matters

This paper attempts to identify the effects of knowledge transfer capacity and relational capital on the reverse transfer of local market information from subsidiaries within MNC networks. In particular, we try to examine the different influences of those determinants in organisations of different sizes. By using Spearman rank order correlation coefficients, we find that the key drivers for large subsidiaries are knowledge development capability, subsidiary autonomy and trust between subsidiaries and MNCs. The key drivers for medium-size firms are subsidiary willingness, trust and organisational distance. In the case of small firms, reverse knowledge transfer is driven by knowledge development capability, subsidiary autonomy and socialisation mechanisms. We believe that these findings offer valuable implications for both MNC managers and also for theory.

Reverse knowledge transfer from subsidiaries to MNCs in Korea: size matters

This paper attempts to identify the effects of knowledge transfer capacity and relational capital on the reverse transfer of local market information from subsidiaries within MNC networks. In particular, we try to examine the different influences of those determinants in organisations of different sizes. By using Spearman rank order correlation coefficients, we find that the key drivers for large subsidiaries are knowledge development capability, subsidiary autonomy and trust between subsidiaries and MNCs. The key drivers for medium-size firms are subsidiary willingness, trust and organisational distance. In the case of small firms, reverse knowledge transfer is driven by knowledge development capability, subsidiary autonomy and socialisation mechanisms. We believe that these findings offer valuable implications for both MNC managers and also for theory.

Supply Chain Orchestration Leveraging on MNC Networks and Local Resources: Approach Strategies

Competition is becoming more global and is between the networks of businesses rather than between the firms. Operating in such an increasing networked environment, companies have to innovate their business, either be orchestrators or be orchestrated. This exploratory paper proposes an overarching Supply Chain Orchestration (SCO) framework which leverages on the capabilities of the MNC’s networks and the local Logistics Service Providers (LSPs) at a strategic level. This framework comprises integrated components including orchestrated Supply Chain Network (SCN), the relationship model of the actors, a “Win-for-All” pro-orchestration model, and the collaboration platform for the LSPs. Specifically, the paper proposes a practical approach for upgrading the local industry through a virtuous model whereby the MNCs, LSPs, and government agencies collaborate to create a pro-orchestration environment for greater value adding. Using a semi-structured interview approach, key players across the logistics sector in Singapore were interviewed. The approach strategies for realizing this orchestration are investigated and the implications are discussed through a few application scenarios.

Characteristics of Low-autonomy Foreign Subsidiaries: Value Chains, Staffing, and Intra-organizational Relationships

This paper examines several characteristics of foreign subsidiaries with low autonomy. Data derived from a survey of 381 MNC subsidiaries located in Denmark, Germany and the UK demonstrate that lowautonomy subsidiaries are highly embedded in their respective MNC networks and that they establish a high number of intra-organizational relationships. Furthermore, such subsidiaries are typically managed by nationals of the MNC’s headquarters home country. Despite the fact that such subsidiaries have low autonomy, they employ a high proportion of professional staff members. We find a negative relationship between lower autonomy and the production activities carried out by the subsidiary. In fact, low-autonomy subsidiaries appear to be specialized in that they focus on a few value-chain activities and they typically serve as marketing outlets.

Influence of MNC Network Configuration Patterns on the Volatility of Firm Performance

Previous studies examining the influence of internationalization on the volatility of a firm’s performance have found inconsistent empirical evidence. Earlier studies support a reduction in volatility resulting from a higher level of international operations. However, more recent studies have found evidence supporting a positive correlation between internationalization and various measures of firm risk. This study suggests that these results are inconclusive because of their narrow conceptualization of international strategy as a one-dimensional construct. This paper suggests that two dimensions implicit in the configuration patterns of MNC networks and their respective interaction may have distinct effects on performance volatility. Regression results using a sample of 320 U.S. firms from 133 SIC segments provide evidence supporting this view. Consistent with the earlier literature, the empirical results support the reduction in volatility derived from a greater dispersion of international operations. In addition, the global integration dimension of an MNC network configuration increases exposure to potential performance swings. Lastly, the interaction term between global integration and geographic dispersion tends to be negatively associated with volatility. These results help reconcile the prior literature and provide evidence for the multidimensional nature of the internationalization construct.

The drivers of evolution/upgrading in Mexico's maquiladoras: How important is subsidiary initiative?

Corporate entrepreneurship may play an important role as a driver of industrial upgrading in multinational subsidiaries. In this study, we test to determine if subsidiary initiative is related to industrial upgrading in a sample of 50 Mexican maquiladoras. Based on qualitative and quantitative data collected from plant managers, this study provides qualified support for the notion that increased responsibilities within MNC networks are something earned through the entrepreneurial efforts of subsidiary managers rather than given by the parent company.