Subsidiary Development Research Articles

Excess is just as bad as deficiency: Parent director appointments and subsidiary innovation input

AbstractCorporate parents are important to subsidiary development. Drawing on the parent–subsidiary relationship perspective, this paper examines the impact of parent director appointments on subsidiary innovation input. Although existing research indicates that disproportional board representation can enhance control, the literature is silent on the effects of proportional board representation. Using a sample of listed nonfinancial Chinese subsidiaries between 2007 and 2021, we find that parent director appointments in line with shareholdings significantly enhance subsidiary innovation input. The positive effect is more pronounced when the parent appoints an executive manager, and the subsidiary operates in regions with a favorable institutional environment. Based on the analysis of innovation willingness and resource, the mechanism test reveals that parent moderate appointment of directors can improve innovation input by alleviating financial constraints and fostering a greater appetite for risk.

Why do MNE foreign subsidiaries differ in supply chain management capability, and how does it matter?

PurposeDespite the growing and widespread importance of exploring the primary factors facilitating global value chain (GVC) and supply chain management, this topic has received surprisingly little attention to date. Drawing upon the technology–organization–environment framework and the resource-based view, this study aims to fill these important gaps in the literature by theorizing and developing a comprehensive model to explain how a foreign subsidiary of multinational enterprises can improve the upgrading of the GVC and supply chain performance in a host market.Design/methodology/approachUsing survey data collected from 266 foreign subsidiaries of multinational enterprises operating in the Chinese manufacturing sector, this study empirically examines the theoretical framework using a structural equation modeling approach.FindingsThe results demonstrated that the relative advantages of digital technology, supplier diversification and environmental uncertainty all contribute positively to the development of foreign subsidiaries’ supply chain management capabilities. Meanwhile, supply chain management capability plays a positive role in foreign subsidiaries facilitating GVC upgrading and enhancing supply chain performance.Research limitations/implicationsThe findings of this study provide many important implications and useful insights to foreign subsidiaries operating in an emerging host market by concentrating on how to develop and maintain their competitive advantages in the process of GVC reshaping and supply chain restructuring.Originality/valueThis study provides a useful guide to help firms better understand how they may develop and enhance their competitive advantages in upgrading their GVCs and implementing supply chain restructuring. In addition, this research generates important policy implications considering the recent trend toward creating more effective and sustainable global supply value chains.

Multinational R&D decentralization in emerging markets: subsidiary evolution, autonomy, and influence in global innovation

This study examined how multinational enterprises (MNEs) decentralized research and development (R&D) strategy impacts different evolution paths of R&D centers in emerging markets (EMs). We analyzed the centers' evolution paths in relation to subsidiary autonomy and influence in the MNE's global innovation. We conducted an inductive, in‐depth case study on the Volkswagen Group. We collected data from the headquarters and R&Ds centers of five subsidiaries in EMs. Our study revealed that Volkswagen adopted a decentralized R&D strategy, giving more autonomy to the EMs R&D centers, increasing the subsidiaries' innovation opportunities and their strategic role in the global innovation strategy. We compared two different evolution paths in EMs subsidiary R&D centers. The first path was a traditional one – found in Brazil, Mexico, and the Czech Republic – in which the R&D centers evolved from adapting products from the headquarters to launching innovative products for local markets and, later, becoming a global R&D center. In the second path, observed in China and India subsidiaries, the R&D centers evolved from offshoring units to technology units and finally to global R&D centers. This happened due to EMs' abundance of highly qualified, low‐cost labor and location‐specific technological capabilities. We advanced previous MNE R&D research by explaining how EMs R&D centers with different evolution paths gained more autonomy, increasing their sphere of influence in the multinational's global innovation strategy. We also provided insights on how to manage R&D in EMs.

Foreign subsidiary performance: social trust–entry fit

PurposeThis paper aims to study whether the adoption of an entry mode that fits the social trust level contributes to the improvement of foreign subsidiary performance.Design/methodology/approachThe authors used the Probit model, linear regression, strategic fit approach and instrumental variable regression. The sample was made up of 11,095 observations of Chinese multinational enterprises' foreign subsidiaries in 54 countries from 2005 to 2020.FindingsThe results suggest that a host country with a high level of social trust results in fewer difficulties for enterprises in gaining legitimacy, thus foreign subsidiaries are more likely to select the wholly owned entry mode. The results also show that the effect is contingent on the formal institutions of host countries. The results of the mechanism test suggest that social trust influences subsidiaries' entry mode choice by reducing information asymmetry, costs and uncertainty risks. This study further finds that selecting a fit entry mode based on social trust level substantially increases foreign subsidiary performance and this effect is more significant when multinational enterprises (MNEs) are state-owned enterprises (SOEs).Research limitations/implicationsThe main limitation of this paper is its only focus on foreign subsidiaries of Chinese MNEs, which may limit the generalizability of research findings.Originality/valueThis paper responds to the call for conducting more research on informal institutions. Findings highlight the critical role of informal institutions in helping foreign subsidiaries in gaining legitimacy in host countries and the essentialness of selecting a fit entry mode based on the informal institutions of host countries for the development of foreign subsidiaries.

Role of Subsidiary Autonomy and Embeddedness in Subsidiary Knowledge Development: Emerging Economy Perspective

ABSTRACT: This study examines the factors contributing to developing subsidiary knowledge in Malaysian foreign subsidiaries. Prior research on subsidiaries in multinational corporations has either concentrated on transferring knowledge from headquarters to subsidiaries or vice versa, ignoring the factors associated with subsidiary knowledge development through embedded relationship factors. Although embedded relations are essential for developing knowledge, the direction is most important for developing subsidiary knowledge. The significance of subsidiary knowledge development, subsidiary autonomy, and external and internal embeddedness has been poorly illuminated by prior research. This is because the perception of knowledge development is emphasized from the headquarters' perspective, while the subsidiary functions as a passive recipient. Using the resource-based and network theories, we argue that subsidiary development depends on the subsidiary's autonomy practice and the level of engagement or network relations between external and internal network partners. Our research shows that subsidiary autonomy and external embeddedness are the most significant predictors of subsidiary knowledge development. Internal embeddedness in subsidiary knowledge development is inconsistent with the theoretical assumptions for subsidiary autonomy and external embeddedness. In regression analysis, the survey results of 170 foreign-owned subsidiaries in Malaysia validate our hypotheses. According to the results of this study, subsidiary autonomy and external and internal embeddedness are the most significant predictors of subsidiary knowledge development. This study's findings have implications for subsidiary administrators in developing nations and multinational corporations. While subsidiaries are developing their knowledge, multinationals need to consider how much autonomy to offer them in this process. When subsidiaries are able to make independent decisions, embedded relationships will increase, and knowledge will be more likely to develop. This specific knowledge eventually contributes to the knowledge base of the MNE.

Subsidiary capability and charter change: Making Birkinshaw and Hood's framework actionable

AbstractResearch SummaryWe provide a more granular and comprehensive approach to subsidiary evolution and enhance the understanding of the complexity of the subsidiary's evolution in the era of value chain fine‐slicing. We extend Birkinshaw and Hood's model of general processes of subsidiary evolution into a model of functional evolutionary paths that represents nine configurations of charter and capability changes. We examine initiative, autonomy, and track record as determinants of 1455 functional evolutionary paths identified in 266 subsidiaries operating in the Polish and Swiss manufacturing sectors. Through a two‐level multinomial logistic regression model, we learn that subsidiary initiative and track record are positively related to an increase in subsidiaries' charter and capability enhancement, respectively. Subsidiary autonomy though, is negatively related to charter increase and capability enhancement.Managerial SummaryWe consider subsidiaries' initiative, autonomy, and track record as factors shaping the changes in functional responsibilities and corresponding capabilities. Our results show that frequent and successful initiatives support a functional charter increase but do not necessarily enhance corresponding functional capabilities. Furthermore, a lower level of decision‐making autonomy in efficiency‐driven organizations does not translate into difficulties with a functional charter increase. A subsidiary can benefit from lower autonomy by focusing subsidiary‐development efforts on areas aligned with the headquarters' interests. A proven track record does not translate into a functional charter increase; in some cases, it even increases the likelihood of charter depletion. Nonetheless, it increases the likelihood of enhancing functional capability.

Strategic coupling on the European periphery: A case study of a small Hungarian town

The FDI-based economic development policies in East-Central Europe and the strategies of transnational firms seeking cost-efficient production locations close to the main markets of the EU have led during the last decades to the integration of the region into different global/regional production networks, mainly in the form of locations for industrial production. While the intensity of re-industrialization largely determines economic growth and spatial socioeconomic inequalities outside metropolitan regions, the long-term success of this model, which tends to result in a dual economy, dependent development, and the ‘middle-income trap’, has been challenged. According to the GPN literature, which comprises the main theoretical basis of our research, the means of integration is the key to understanding the potential outcomes of this economic model. The process seems to depend on the quality of global-local interactions based on enterprise strategies and multi-level regional assets and agency. Our article focuses on making a comparative analysis of two transnational companies in a small peripheral town and uses the concept of strategic coupling as the analytical framework for the interpretation of the global-local interactions and their developmental outcomes. Based on secondary and primary sources, we examine the key assets and actors in the local environment, follow the development (upgrading trajectories) of subsidiaries, and analyse the dimensions and depth of their local/regional socioeconomic integration. We contribute to the special issue’s main objectives through our case study that reveals strategic coupling dynamics and quality and discusses the chance of more advantageous developmental outcomes in a peripheral location with limited and diminishing local (human) assets.

Mandate dynamics and the importance of mandate loss for subsidiary evolution

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

How does successive inpatriation contribute to subsidiary capability building and subsidiary evolution? An organizational knowledge creation perspective

Intra-company knowledge transfer is a key source of competitive advantage for multinational companies (MNCs) and this knowledge is usually embedded in individuals. Drawing on organizational knowledge creation theory, we explore how inpatriation contributes to knowledge transfer and, in turn, subsidiary performance. Inpatriation involves the international assignment of employees from an MNC’s foreign subsidiary to its headquarters. Despite increasing attention to the role of inpatriation, we lack a clear understanding of whether and how inpatriates provide value to their subsidiaries after returning from headquarters. Through a qualitative case study of Japanese MNCs, we demonstrate the process through which inpatriates’ knowledge transfer contributes to subsidiary capability building and subsidiary evolution over time, and explain why successive inpatriation is thus critical to enhance subsidiary performance. Our theoretical model highlights the value of inpatriates as knowledge agents, reveals the process through which inpatriates transfer knowledge between HQ and subsidiaries, and provides a more nuanced understanding of the micro-foundations of intra-MNC knowledge transfer processes. Based on these findings, we argue that inpatriation is not merely a staffing method that is complementary to expatriation, but a key practice in its own right to support subsidiaries’ growth and performance.

ЕКОНОМІКО-РЕЛІГІЙНІ ВІДНОСИНИ В УМОВАХ ГЛОБАЛІЗАЦІЇ

Globalization is an integral part of today, a process of global economic, political and cultural integration and unification. The process of globalization has many positive and negative consequences, given the views on globalization among scholars divided their views on the positive or negative consequences of globalization in international relations. Features of globalization and its impact on religion are described in the study. Religion has been an integral part of human development throughout history. The influence of religion on the economy and the economy on religion is investigated in the article. The peculiarities of the influence of religion and religious factor on the economy, economic development and factors of economic development of the country are analyzed in the work. Economic and religious relations in the context of globalization are described in the study. The concepts and features of globalization are described. The transformations of the world community into an open integrated system of socio-political, financial-economic, information, socio-cultural relations and interdependencies within the globalization process are studied. The role of religion and church in the development of multinational companies and subsidiaries in Asia is described. The role and place of religion and religious philosophy in the development of the economy of the Asian tiger. The influence of religion and religious philosophy on the development of Asian companies. The influence of religion on the development of the international banking system is analyzed. Features of Islamic banks and the influence of religion and religious traditions on their functioning and development. The modern development of Islamic banks and the principles of their activities in the process of globalization are described. Differences between Islamic banks and others are described. The situation of Islamic banks in the period 2007 is analyzed. The peculiarities of the existence and activity of Islamic banks have interested many of the world’s largest commercial banks, such as «Chase Manhattan», «ING». The work of Islamic banks has attracted a large number of companies, such as «General Motors», «Alcatel», and other. The influence of religion on the economy is a relevant topic of research in political science.

Implementation of Marketing, Operational, and Human Capital Strategies for the Development of PT Sangyo Jaya Abadi (Subsidiary of PT Kuroshio Jaya Abadi)

Research conducted by PT Sangyo Jaya Abadi (PT SJA) has short-term goals: (1) to maintain customers of PT Kuroshio Jaya Abadi and increase publicity by participating in events/exhibitions at least every two years which are participated by many companies engaged in the automotive industry and oil & gas and other industries (2) to prepare raw materials and manpower for parts production according to customer requests (3) to obtain human resources with high competence and integrity. The long-term goals are (1) to increase the utilization of the premise by studying the development of subsidiaries in the field of machining precision (2) to develop the manufacture of Mold & Dies (3) to create a corporate culture that refers to innovation, creativity and continuous learning. This research uses qualitative spradley to describe the cultural characteristics more deeply in a systematic way that will have an impact on decision making by PT Sangyo Jaya Abadi. Target options that can be considered by PT Sangyo Jaya Abadi, reach all customer holding companies (PT Kuroshio Jaya Abadi) and get a name in the customer; addition of CNC machines with more modern and latest technology (5-Axis CNC machining); make purchases of raw materials needed for the manufacture of parts & other tools in accordance with the maximum stock quantity and forecast demand; cooperate with technology providers to produce Mold & Dies; manpower planning on understanding the technology of each line of the company reached 75%; and training and development programs in manufacturing technology, conducted every 6 months, especially for modern CNC machines (5-Axis CNC machining).

Multinational Enterprise Organizational Structures and Subsidiary Role and Capability Development: The Moderating Role of Establishment Mode

Multinational enterprises (MNEs) develop structural configurations for managing their geographically dispersed and disaggregated activities. These structures can be classified as (a) simple headquarters configurations (involves corporate, regional, divisional headquarters and mandated units) involving few direct reporting relationships; (b) network organizations involving no direct reporting relationships; and (c) matrix configurations involving multiple reporting relationships. While these structures are built for handling various complexities and purposes, it is unclear how they influence subsidiary role and capability development. We hypothesize how these structures influence subsidiary development and propose a moderating role of MNE establishment mode on the direct structure-subsidiary development relationship. Based on data from 429 foreign subsidiaries in New Zealand, our results show that subsidiary development varies across the structures such that simple headquarters configurations experience the least opportunities to develop. While the matrix and network structures as complex configurations offer distinct paths to subsidiary development, subsidiaries managed under the former are more likely to follow the developmental path of networking and interunit learning, and the subsidiaries managed under the latter are more likely to follow the path of autonomy and innovation. Furthermore, the positive association of network structure with subsidiary initiatives and autonomy is stronger for greenfield subsidiaries, whereas the positive association of matrix structure with subsidiary mandates is stronger for acquired subsidiaries.

Refining a subsidiary evolution framework: clarifying key concepts

PurposeWhile the evolution of subsidiaries has received considerable research attention, the framework for understanding it has not evolved much since the late 1990s. The purpose of this paper is to add both clarity and depth to the work on the foundations for – as well as the processes of – capability creation and development as a subsidiary evolves.Design/methodology/approachThis conceptual paper takes as its point of departure the micro-foundation literature, with a specific emphasis on the capability development literature. To describe capability creation and development, both the resource-based view and the resource management perspective are used here.FindingsThe paper adds a conceptual layer to the drivers of subsidiary evolution. To add further clarity regarding how capabilities are actually formed, the resources for capability creation and development are specified herein as entities, abilities and capacity. Arguments are also presented for why capabilities ought to be viewed as patterned behavior to decrease the terminological ambiguity surrounding the concept of capabilities. The process of capability creation and development with an emphasis on learning is brought forward. Further, capability typologies, in terms of substantive, managerial and dynamic capabilities, are presented to add specificity to the kinds of capabilities that are created and developed within a subsidiary.Originality/valueClarifying the concept of capability and how capabilities are formed by using advancements in the literature is important to add precision to the literature on the evolution of subsidiaries.

ПОТРЕБИТЕЛЬСКАЯ КООПЕРАЦИЯ В ФОРМИРОВАНИИ ПРОДОВОЛЬСТВЕННЫХ РЕСУРСОВ РЕГИОНОВ

The main area of activity of consumer cooperatives is rural areas, where, in cooperation with regional authorities, it solves the problems of forming food resources. Providing the population with food is one of the main tasks of consumer cooperation in the sphere of national security of the state. Consumer societies participate in the formation of the regional market of agri-food products, acting as an integral part of the infrastructure of the regional economy. The volume of purchases of agri-food products by the consumer cooperative is a reliable indicator of the relationship with agricultural producers. In the system of purchasing agricultural products, an important place is occupied by the cooperative store, acting as an Outpost of consumer cooperation. Procurement points of consumer cooperation play a significant role in the development of the regional economy and the formation of food resources. In the regions of Russia, the Centrosoyuz consumer cooperative has its own material and technical resources, a system for harvesting agricultural products, and a network of wholesale and retail trade. Consumer cooperation is a reliable channel for selling agricultural products of small businesses through distribution points and cooperative stores. The activity of consumer cooperatives in the food supply system of the regions fully fits into the solution of the tasks formulated in the Russian food security Doctrine. Consumer cooperation is of particular importance for the development of private subsidiary and peasant (farm) farms. Consumer cooperatives buy agricultural products and raw materials; sell compound feed, fertilizers, varietal seeds of agricultural crops, etc. to the rural population. Procurement organizations of consumer cooperatives (receiving points and cooperative stores) they have extensive experience in purchasing agricultural products from agricultural producers, thus ensuring that small agricultural businesses sell their products, including through retail regional markets, through which 48% of the volume of potatoes, 44% of fruit and vegetable products, almost 40% of meat and poultry, and 20% of eggs are sold.

INVESTMENT IN INNOVATIVE DEVELOPMENT OF COMPETITIVENESS OF RESOURCE AND PRODUCTION POTENTIAL OF MINING ENTERPRISES

The subject of the research is the processes of ensuring the competitiveness of the potential of mining enterprises based on certain key aspects of methodology and practice of rational management of investment distribution, which are inherent in the investment and innovation activities of subsidiaries within the parent company. The purpose and objectives of the study is to improve theoretical and methodological approaches to increase the competitiveness of the potential of mining enterprises on the basis of rational management of the allocation of investment resources in the process of their innovative development. Method (methodology). Solving issues of rational allocation of investment resources from the standpoint of proper competitiveness of mining enterprises is proposed to be carried out according to the method of optimizing multi-stage processes - the problem of dynamic programming of resource allocation between enterprises based on the principle of optimality R. Bellman. Results. As a result of research it is established that the most important criterion for optimizing the program of innovative development on the basis of rational distribution of investment resources is to choose the cost of sales, due to the dependence of financial performance of mining companies on total costs. The implementation of the proposed method of optimizing the allocation of investment resources is considered on the example of jointly operating in one company mining companies. Conclusions. Based on the generalization of research on theoretical and practical aspects related to improving the efficiency of managing the competitiveness of resource and production potential of mining enterprises, a methodological approach to prioritizing the allocation of investment resources in the context of innovation development working together in one company. The application of the developed methodological approach in practice allows the top management of large vertically integrated companies to rationally direct the allocation of investment resources to the stable innovative development of subsidiaries.

Method of forming strategic alternatives for the development of subsidiaries and choosing the optimal strategy for each of them

The article examines the methodology for the formation of strategic alternatives to the activities of a subsidiary and the choice of a strategy for its development, operating in a narrow market segment and included in an integrated structure. The proposed methodology should differ from the methodology for developing an autonomous operating enterprise, since the main task of a subsidiary is to obtain additional competitive advantages to the existing ones mainly by entering an integrated structure, which can be provided by a competitive strategy focused on costs or differentiation. The possibility of implementing a benchmark strategy of concentrated and diversified growth is considered. An expanded scheme for the formation of alternative development strategies for subsidiaries in the form of a combination of growth strategies and competitive strategies in their classical definition is presented. After the formation of alternative strategies of the subsidiary, the main task is to select the optimal development strategy for the enterprise from among the alternative, which will allow, by establishing relationships between the enterprises, to obtain the maximum possible competitive advantages. The authors have worked out the technique of choosing the optimal strategy for the development of a subsidiary from among alternative strategies to maximize competitive advantages

The enduring effects of relational attributes on subsidiary evolution after mandate loss

AbstractResearch SummaryWe explore the importance of the relational attributes, trust and commitment, and their association with subsidiary development after mandate loss. We examine how greenfield and acquired subsidiaries, through their interaction with headquarters and sister subsidiaries, develop relational attributes through mutual‐orientated adaption. These relational attributes are subsequently important elements in upholding and developing subsidiary activities despite the loss of a mandate. We trail this process through a longitudinal field study following the evolution of four multinational enterprise (MNE) subsidiaries. We explain how the subsidiaries relational attributes and part of their activities, associated with its mandates, remain even after the loss of a mandate. The study shows how these relational attributes mitigate and compensate for formal mandate loss.Managerial SummarySubsidiaries have been increasingly seen as the locomotive of MNEs value creation. This has coincided with the disaggregation of the MNEs value chain which has had a positive effect on the development of foreign subsidiaries. However, there is now more competition for responsibilities among subsidiaries leading to increased movement of responsibilities and activities between them. We find that the subsidiary managers relationship attributes (trust and commitment) between them, their headquarters and other subsidiaries in the MNE has a mitigating effect on the loss of these responsibilities for the subsidiary. By showing the impact of managerial micro‐activities in the MNE, our study offers insights for subsidiary managers on what they can leverage to pursue subsidiary charter consolidating activities and survival, or charter enhancing activities and growth.

The past, the present, and the foreseeable future of Russian manufacturing subsidiaries of Western multinational corporations

This article retraces the development of Russian manufacturing subsidiaries of Western multinational corporations from the late 1980s until 2019. Using secondary sources and a unique handcrafted database on significant extensions of manufacturing facilities of Western multinational corporations in Russia during 2012–2018, we present the position of Russian manufacturing subsidiaries of Western multinational corporations before and after the beginning of sanctions. We also indicate the major strategic challenges that they currently face, including the necessity to maintain dual loyalty (to home country and host country authorities), manage the deteriorating quality of business regulations in Russia, and overcome the increasing shortage of qualified personnel at all levels. The data on the opening of new facilities in 2017–2018 reveal that such issues impede but cannot stop the quantitative development of foreign-owned Russian manufacturing facilities. At the same time, saving on managerial expenses and low “investments in non-current assets” of the established manufacturing subsidiaries may break down “the innovation engine” assembled in many Russian manufacturing subsidiaries of Western multinational corporations and bring them into the periphery of their corporate parents, where the attention and resources from the corporate center are lacking.

“Of course, cooperation first”: the effect of subsidiary capability and perception gaps for subsidiary development

PurposeThis study aims to discuss not only the relationship between performance and cooperation but also discusses whether a subsidiary should prioritize performance above cooperation or whether a subsidiary should prioritize cooperation above performance. In addition, because the headquarters-subsidiary relationship influences the subsidiaries, the perception gaps (PGs) between headquarters and subsidiaries are taken as moderators to explore when there are perception differences between headquarters and subsidiaries and the effect on the relationship between subsidiaries’ cooperation (SCO) and performance (SP).Design/methodology/approachThis study obtained the data through a survey of 170 subsidiaries in China; chief executive officer or senior managers were selected as the data collection sources. AMOS analysis was used to address sophisticated data analysis issues.FindingsThe empirical evidence indicates that subsidiary capabilities have direct impacts on SCO and SP. In addition, SCO and performance have mediating effects. More specifically, SCO has a full mediating effect and SP has a partial mediating effect. For the moderating effects, the PG weakens the effect of SCO on SP.Originality/valueThis study contributes to the literature on subsidiary capabilities by offering a headquarters-subsidiary relationship model. As both the conceptual and empirical research studies on this topic are still underdeveloped, the study provides fresh insights into collaborative management and offers significant theoretical and managerial implications. Specifically, this study focuses on the impacts that subsidiary capabilities and PG have on cooperation and performance.

The evolution of MNCs' R&D foreign units: the case of Swedish MNCs in India

PurposeThe article aims to explain how the drivers of subsidiary evolution influence a multinational company's (MNC) research and development (R&D) subsidiary's evolution over time.Design/methodology/approachThe article draws on insights from a longitudinal comparative case study of three Swedish MNCs' Indian R&D units.FindingsThe study shows that the evolution of R&D units is a triangular showdown among headquarter assignments, local market constraints, and opportunities, and that subsidiary choice is an important driver of both mandated extension and stagnation. We summarize our findings in various propositions that emphasize different drivers over time and that highlight the strong impact of a subsidiary's understanding of the corporate immune system on the evolution of that subsidiary's R&D mandate.Research limitations/implicationsDrawing on the common limitations of a case study approach, further research is needed to test the suggested propositions with larger samples, ideally with subsidiaries in other emerging and developed markets.Practical implicationsThe study illustrates the risks involved for subsidiary managers when pushing an R&D mandate-related initiative too far and provoking the corporate immune system. For headquarters management, the study highlights the importance of understanding that the development of R&D competence and capability at a subsidiary cannot be guided solely by headquarter assignments and local market characteristics; rather, the subsidiary's initiatives also need to be considered.Originality/valueThe study contributes to the literature on R&D internationalization by showing how the drivers of subsidiary evolution influence a subsidiary's R&D mandates over time and that subsidiary choice is an important driver of both mandated extension and stagnation.