Units Of Multinational Corporations Research Articles

A New Wave of Globalization, Public Policy Options and Possible Actions by Russian Companies

The article presents the process of globalization, i.e. “the growing interdependence between nations” as a superposition of particular elements of mutual dependence of nations over the past several thousand years. Four waves of globalization, following one another, namely – trade, financial, industrial and innovation globalization are presented. The main features of innovation globalization are indicated: 1) increasing the degree of research internationalization in the natural and technical sciences, 2) transfer abroad of research and development units by the large international corporations, 3) active purchase of promising technologies and prototypes of new products and processes for their production together with their developers, that is, the purchase of companies that have created prototypes of promising products or technologies (startups); 4) a growing stream of “reverse innovations” – when innovations are created in foreign manufacturing units of multinational corporations, often while implementing joint projects with other firms. It is indicated that all these phenomena are observed in Russia. Recommendations are given in the field of strategies of industrial corporations on the more active involvement of Russia in global innovation processes: 1) the participation of the Russian firms in creation of new industrial enterprises in the developed countries in cooperation with local companies; 2) the purchase of domestic and foreign startups that have developed the most promising technologies in the new areas; 3) expanding the circle of employees familiar with the most advanced production practices; 4) leasing at attractive rates of production and office space to foreign enterprises that own advanced technologies and forms of organization; 5) contract design and contract manufacturing abroad. It is concluded that these and other measures are capable of transferring Russian enterprises from an object to an active subject of the new wave of globalization.

Communications between Manufacturing Units of Multinational Corporations

Purpose – We aim to better understand the factors that shape the intensity and perceived effectiveness of communication between heads of the manufacturing units of multinational corporations (MNCs).Design/methodology/approach – A series of interviews and a medium-size survey among subsidiary executives were conducted.Findings – The intensity of most inter-unit communication channels depends on the speed and magnitude of the changes in products and production technologies that manufacturing subsidiaries experience. For newly established subsidiaries, mastering inter-unit communication channels precedes inter-unit cooperation. At the same time, different types of inter-unit cooperation strengthen specific channels of inter-unit communication. The assessment of the efficiency of a communication channel with high media richness strongly correlates to the intensity of its use.Research limitations/implications – The results are confined to one country where the manufacturing subsidiaries of MNCs were surveyed. Further research is needed for the general applicability of these findings to subsidiaries in several countries or regions.Practical implications – As inter-unit communication precedes inter-unit cooperation for newly established subsidiaries, headquarters and more experienced subsidiaries should promote the use of communication channels with high media richness. Several suggestions on how to perform such a task are proposed.Originality/value – This paper contributes to the ongoing discussion concerning inter-unit communication and knowledge transfer within MNCs.

Communications between Manufacturing Units of Multinational Corporations

Communications between Manufacturing Units of Multinational Corporations

Pull the Right Levers: Creating Internationally “Useful” Subsidiary Competence by Organizational Architecture

We study the effect of formal organizational architecture on the extent to which a focal subsidiary creates competence that is “useful” to other units of a multinational corporation (MNC). Elements of formal organizational architecture represent levers by which parent firm and subsidiary managers can realize their intentions. Building on motivation theory, we argue that an appropriate organizational architecture stimulates a subsidiary's motivation to create internationally “useful” competence so that its extent of competence creation will increase. We develop and empirically test hypotheses for three specific organizational elements, viz.: a home-base augmenting mission, interfaces with other MNC units, and the subsidiary's strategic and operational autonomy. Unique survey data from 287 subsidiaries provide intimate insights into the internal structure of MNCs and strongly support our account. We close by discussing the implications of our study for the academic literature, management practice, and future research.

Combining Stocks and Flows of Knowledge: The Effects of Intra‐Functional and Cross‐Functional Complementarity

While previous research has mostly focused on either knowledge stocks or knowledge flows, our study is among the first to integrate these perspectives in order to shed light on the complementarity effects of different types of knowledge stocks and flows in the multinational corporation (MNC). This study investigates intra‐functional as well as cross‐functional complementarity effects from the perspective of the knowledge recipient and tests their impact on the benefit created for MNC units. Based on a comprehensive sample of 324 relationships between MNC units, we find that both types of complementarity create benefits for these units, but that the effects from intra‐functional combinations of knowledge stocks and flows are significantly stronger than from cross‐functional combinations.

Factors of stickiness in transfers of know-how between MNC units

The effective sharing of organizational knowledge is particularly relevant for multinational corporations, where firm-specific tacit knowledge (know-how) is considered a source of competitive advantage for subsidiaries participating in a global strategy. To that end, multinational corporations (MNCs) are asking their IT departments to support both the exploitation of existing knowledge and the unit-to-unit transfer of new know-how derived in units from exploration. Nonetheless, new know-how derived from exploratory research, development and experience in one unit can be difficult to transfer to units that can exploit that know-how to commercial ends. The factors that impede the transfer of new know-how have been conceptualized as “factors of stickiness”. In this paper, we present a theoretical model of organizational factors that can cause (or conversely mitigate) stickiness in the flow of new know-how between MNC units. To test the six hypotheses of the model, we used meta-analytic structural equation modeling (MASEM) of 31 empirical studies, representing 10,432 cases of new know-how transfer between units. The result of MASEM shows that the factors of receiving units’ potential absorptive capacity and transmission channel in form of social capital that is enacted through its three dimensions (i.e., embedded social ties between units, institutional shared vision of units, and interorganizational trust of units) affect recipient subsidiaries’ capability to exploit new know-how in practice (i.e., realized absorptive capacity), thus effectuating its transfer. Based on our findings, we propose research directions within the context of agile information systems development, distributed software projects, and management of information systems functions in MNCs.

Combining Stocks and Flows of Knowledge: The Effects of Intra-Functional and Cross-Functional Complementarity

In the area of knowledge management and knowledge governance, previous research has mostly focused on either knowledge stocks or knowledge flows of firms or organizational units. Contrary to this work, our study is among the first to integrate these two perspectives in order to shed light on the complementarity effects of different types of knowledge stocks and flows in the multinational corporation (MNC). We investigate intra-functional as well as cross-functional complementarity effects from the perspective of the knowledge recipient. We test the impact of stocks on flows on the benefit that is created for MNC units. Based on a comprehensive sample of 324 relationships between MNC units we find that both types of complementarity create benefits for these units, but that the effects from intra-functional combinations of knowledge stocks and flows are significantly stronger than from cross-functional combinations.

Knowledge Transfer and Accommodation Effects in Multinational Corporations

Foreign subsidiaries in multinational corporations (MNCs) possess knowledge that has different sources (e.g., the firm itself or various sources in the environment). How such sources influence knowledge transfer is not well understood. Drawing on the “accommodation effect” from cognitive psychology, the authors argue that accumulation of externally sourced knowledge in a subsidiary may reduce the value of transferring that subsidiary’s knowledge to other parts of the MNC. The authors develop a parsimonious model of intrafirm knowledge transfer and test its predictions against a unique data set on subsidiary knowledge development that includes the sources of subsidiary knowledge and the extent of knowledge transfer to other MNC units. The authors show that a high level of externally sourced knowledge in a subsidiary is associated with a high level of knowledge transfer from that subsidiary only if a certain tipping point of internally sourced knowledge has been surpassed. This suggests that subsidiary knowledge stocks that are balanced in terms of their origins tend to be more valuable, congruous, and fungible, and therefore more likely to be transferred to other MNC units.

Predictors of career preferences of MNC knowledge professionals

PurposeThe purpose of this research is to find out the influence of the roles of Research and Development (R&D) laboratories of Multinational Corporations (MNCs); and of employee‐related characteristics on future career preferences of knowledge professionals in these laboratories. Career preferences include managerial, technical, project‐based and entrepreneurial paths.Design/methodology/approachThis study draws on a large scale study of 921 professionals employed in 70 R&D units of MNC subsidiaries operating in Greece. Four ordered probit regression models were run with employee career preferences forming the dependent variables.FindingsTwo R&D laboratory roles (Support Laboratory and Locally Independent Laboratory); and age and education of the employee stand out as predictors of career preferences of examined professionals.Research limitations/implicationsNotwithstanding that this is a study that took place in a country with an advancing economy, it is seemingly the first that incorporates the roles of R&D laboratories as potential predictors of career paths. Moreover, the idiosyncrasies of the Greek national context are provided as possible explanations that justify why some hypotheses based on prior literature were not supported.Practical implicationsMNC knowledge professionals employed in R&D units are a special group of employees whose career paths may be different from those of other groups. Thus, MNC management should tailor‐make career preferences for them.Originality/valueThis research is one of the few empirical studies providing evidence on career paths of employees in MNC R&D units; and suggests possible predictors that have not been put forward hitherto.

Political Heterarchy and Dispersed Entrepreneurship in the MNC

abstractWe develop and test a new perspective on dispersed entrepreneurship within the multinational corporation (MNC). Various literatures suggest that corporate, subsidiary, and individual level factors can lead to entrepreneurial initiatives diffusing outward from a subsidiary to other MNC units. We extend this to include political heterarchy (mechanisms by which subsidiary managers enhance their power base through heterarchy) as both direct and moderating factor. Using a survey of 135 managers in a wide range of MNC subsidiaries, we find that a tolerance for local initiative (subsidiary level), subsidiary manager proactivity (individual level), and political heterarchy directly influence initiative diffusion. In terms of moderating effects, political heterarchy is seen to activate corporate level entrepreneurial strategy. We show how political heterarchy is central to dispersed entrepreneurship within the MNC and highlight the positive function of networked organizational politics in rejuvenating the international firm.

Human resource management practices of large multinational firms in Hungary, 1988–2005

A model of human resource (HR) practices in the subsidiary units of multinational corporations (MNC’s) in Hungary was developed from a review of the literature. This model describes the evolution of different HR variables in the light of external (macro) and internal (firm specific) factors. Based on components of this model, an interview-based survey of top level HR executives at 42 subsidiaries of large multinational companies in Hungary was completed. Results suggest that local subsidiary HR executives still maintain significant authority over their functional processesvis-à-visthe corporate office and expatriates are used less now than in earlier stages of development. Critical issues facing these executives varied by stage of competitive development between 1988 and 2005, HR staff continue to have significant in-country head counts, consulting is largely limited to training and development activities and most privately owned subsidiaries perceive unions as a marginal institution in Hungary today. The paper concludes with a series of limitations based on the interview processes and small sample size and a discussion of areas for further regional and national research development relevant to the model.

Captive Offshoring of New Product Development in Brazil

This paper focuses on captive offshoring of new product development (NPD), i.e., relocating projects or project phases to foreign-based, wholly-owned, multinational corporation (MNC) subsidiaries (captive offshore units) to benefit from cost and efficiency advantages and/or from access to complementary technological resources and capabilities. Adopting a host country perspective, we theorize why different forms of local collaboration may complement or conflict with efficiency-seeking or arbitrage strategies and may thus influence why captive offshore units receive new product development orders from other MNC units located abroad. Using a sample from Brazil and applying structural equation modeling with partial least squares (PLS), we find that local NPD outsourcing constitutes a complementary relationship, while local cooperation with clients creates a trade-off relationship with captive offshoring. That these relationships are moderated by the captive offshore unit’s cost position within the MNC suggests that arbitrage effects transcend the headquarter-subsidiary relationship into the sphere of MNC subsidiaries’ local collaborations. Our findings imply that arbitrage in multinational contexts affects the interdependence between resources and transaction costs.

Shifting the faultlines of language: A quantitative functional-level exploration of language use in MNC subsidiaries

The body of case study-based research on language in multinational corporations (MNCs) is growing, but its findings have as yet been subjected to limited statistical validation. In this paper we use quantitative functional-level data to chart language use in subsidiaries’ communication with other MNC units and local partner firms, and to analyze some consequences of these patterns against the background of previous qualitative work in the area. Our findings confirm that MNCs are indeed multilingual, but that language fluency varies significantly across functions and organizational levels. This has important implications for communication, knowledge sharing and the viability of formal language strategies.

Integrating Strategy and Corporate Community Involvement in a Balanced Scorecard; Results from Action Research at Merck Thailand Ltd.

Increasingly large multinational corporations (MNCs) recognize the positive effects of Corporate Social Responsibly (CSR) on customers, employees, and talents. However, Small and Medium-sized Enterprises (SMEs) or local units of MNCs may not have the same spectrum of responsibilities, due to minor operations, with less scope, and fewer social and environmental issues. In these cases, we argue that a strategy which integrates Corporate Community Involvement (CCI) can be strong alternative to the broader concept of CSR. Still, to really make CCI accepted as a strategic approach amongst executives and employees, we argue that CCI should be integrated into strategic tools like the balanced scorecard. We thus develop a generic model for a Community-enabled Balanced Scorecard (CeBSC). Then, we apply this model in an actions research project in a subsidiary of a large chemical and pharmaceutical MNC. The paper ends with a discussion and conclusion.

PRODUCT DEVELOPMENT IN EMERGING MARKET SUBSIDIARIES — THE INFLUENCE OF AUTONOMY AND INTERNAL MARKETS ON SUBSIDIARY ROLES

Emerging market subsidiaries constitute an increasingly important asset for the innovative activities of multinational corporations (MNCs). This study examines how different types of these subsidiaries may be integrated into global R&D using two essential coordination mechanisms — hierarchical control and internal markets (competition among MNC units). Based on a sample of 146 Brazil based MNC subsidiaries, the key results suggest that (1) more innovative subsidiaries have higher autonomy than less innovative subsidiary as long as they have local market scope; (2) subsidiaries which develop new products for global or other emerging markets have competitive relationships with peer MNC units. Likewise, the results provide some preliminary support for an instrument which measures competition among MNC unit. Based on a comprehensive classification framework, the study puts forward some recommendations for MNC technology management regarding how subsidiary product development units may extend their market scope and technological capabilities.

Transferring HR practices within multinational corporations

There is extensive evidence that planned transfers of management practices by the headquarters of multinational corporations (MNCs) to foreign subsidiaries are not always successful. In this article, we outline a model of factors influencing the transfer of HR practices to MNC units abroad. The article has two main contributions. First, we develop a more holistic understanding of the outcome of HR practice transfer as encompassing three dimensions: implementation, internalisation and integration. Second, we expand current explanations of transfers of practices to foreign units. We argue that transfer of HR practices is a social process where the governance mechanisms used by the MNC, characteristics of the subsidiary HR systems, the social relationship between the subsidiary and MNC headquarters, and the transfer approach taken by headquarters management will influence the outcome of the process.

Subsidiary marketing knowledge and strategic development of the multinational corporation

Abstract This paper explores distinctive marketing knowledge of subsidiaries as an important resource contributing to the performance of the multinational corporation (MNC). Two different paths are analyzed. The first is the direct effect of the usage of subsidiary marketing knowledge on the perceived performance of other MNC units. The second is the indirect effect in which an MNC's usage of subsidiary marketing knowledge affects its performance via capability development in technology and market expansion within the MNC. Using data on 237 MNC subsidiaries in Sweden, six hypotheses are tested in a LISREL model. The results indicate that an MNC's usage of subsidiary marketing knowledge directly affects its performance. Additionally, the results reveal a strong relation between subsidiary marketing knowledge and the subsidiary's impact on development of the capabilities of other MNC units' technology and their expansion on the market, which in turn, positively impacts the performance of the MNC.

The Role of Multinational Corporations in Metropolitan Innovation Systems: Empirical Evidence from Europe and Southeast Asia

Using firm-level survey data from Barcelona, Stockholm, and Vienna in Europe, and Singapore, Penang (Malaysia), and Bangkok in Southeast Asia, we enquire into the different R&D and innovation behaviour of multinational and local companies in these metropolitan regions. Scrutinizing a set of input, throughput, and output indicators as well as information on cooperation characteristics, we try to evaluate (a) if the spatial pattern of more (intense) innovation activity in Europe when compared with Southeast Asia is still valid; and (b) if there are reasons to believe that R&D units of multinational corporations in Europe are concerned mainly with the enhancement of the knowledge base and the development of future competitiveness by tapping into localized knowledge and using the particular host regions' innovation systems, whereas multinational corporations in Southeast Asia use R&D to support existing production facilities in order to exploit an existing competitive advantage. We are able to show that there is still a major gap in innovation performance between Southeast Asia and Europe and that there are indeed indications that R&D units in Europe are orientated more towards the augmentation of the company's knowledge base.

Enhancing Synergistic Innovative Capability in Multinational Corporations: An Empirical Investigation

A substantial amount of research has focused on determining and classifying the structures of the global research and development (R&D) organization of multinational corporations (MNCs). However, little research has been undertaken to show how the various R&D structures adopted by MNCs affect their abilities to generate and deploy innovations globally. This study initiates analysis and discussion of this latter dimension, providing empirical evidence of the relationship between the coordination structures and innovative capabilities. Specifically, this study investigates how intrafirm collaborative relationships among globally dispersed R&D units of MNCs enhance the synergistic innovative capabilities of the MNC group. The nature of the collaborative relationships among globally dispersed R&D units is evaluated in the context of four well‐established structural constructs: autonomy, formalization, socialization, and communication. Synergistic innovative capability is defined as a higher‐order ability to accumulate and deploy new knowledge or to recombine existing knowledge to create new innovations more effectively and efficiently due to collaboration among globally dispersed R&D units. It is measured using 10 items commonly used in innovation management research to measure the innovativeness of firms. The analysis is based on survey data collected from 79 R&D units belonging to North American, Japanese, and European MNCs in the telecommunications, biotechnology, pharmaceutical, chemical, and automotive industries. In addition to the survey data, seven highly experienced R&D executives who have worked for several companies were interviewed by telephone in order to obtain a richer perspective of issues and a better context from which to interpret the statistical results. Respondents included personnel from the levels of director, managing director, and vice president who were directly responsible for participating R&D units. The data were analyzed using partial least squares, a structural equation modeling technique that works well with small datasets. The results indicate that synergistic innovative capability has four distinct dimensions uniquely related to the structural variables defining the nature of collaborative relationships among globally dispersed R&D units. The four dimensions of synergistic innovative capabilities are labeled strategic R&D synergy, managerial and operational synergy, knowledge management synergy, and innovative proficiency synergy. The research and managerial implications of the findings are discussed in this article.

Advertising standardization in multinational corporations: The subsidiary perspective

This study examines the relationship between patterns of advertising program standardization in the subsidiaries of multinational corporations (MNCs) in four countries. The data are gathered from wholly owned subsidiaries of U.S., European, and Japanese MNCs in China, Hong Kong, Singapore, and Taiwan. Results indicate that patterns of advertising standardization vary based on the national origins of MNCs. The subsidiaries of U.S.-based MNCs are the most likely to pursue a standardized advertising approach, whereas the Japanese are least likely to standardize. Larger subsidiaries demonstrate a greater likelihood of pursuing advertising standardization. The coordination and control construct is a predictor of advertising standardization across all groups of firms. Consumer similarity, advertising infrastructure, and competitive position impact advertising standardization in the subsidiaries of U.S.-based MNCs. Market and consumer similarities are significant predictors of standardization in European firms. Advertising standardization within the units of Japanese MNCs is influenced by the global identity and branding construct.