Session 143

Managing MNC Subsidiaries: Innovation, Control and Subsidiary Initiatives

Track G

Date: Tuesday, October 13, 2009


Time: 14:30 – 15:45


Room: Meeting Room 13

Session Chair:
Gabriel R G Benito, BI Norwegian Business School

Title: Exploring Contextual Boundaries of the Integration-Responsiveness Framework


  • Birgitte Grogaard, BI Norwegian Business School

Abstract: According to the 2008 Fortune Global 500 ranking, six of the ten largest global companies are natural resource seeking firms in the oil and gas industry. These multinationals face complex strategic challenges of coordinating geographically spread activities. Our current international strategy frameworks have been developed by studying traditional manufacturing firms and do not satisfactorily address the complexities facing many of the natural resource seeking firms. Through an exploratory case study, it is identified that the foreign subsidiaries in oil and gas multinationals face dual pressures of global integration and local responsiveness. While our current theoretical frameworks suggest different pressures for integration and responsiveness across subsidiaries in a multinational, these findings suggest that some firms require a combination of roles within each foreign subsidiary.

Title: Innovativeness of Manufacturing Subsidiaries of Foreign Firms versus Domestic Firms


  • C. Annique Un, Northeastern University

Abstract: I analyze the innovativeness of subsidiaries of foreign multinational enterprises (MNEs) in comparison to domestic firms. Existing theories do not specify whether subsidiaries of foreign firms are more or less innovative than domestic firms. Linking ideas from technology strategy and neo-institutional theory, I argue that subsidiaries of foreign firms are more innovative than domestic firms, not only because of their access to technology from the MNE, as traditionally argued, but also because they are better at transforming R&D investments into innovations. Unlike domestic firms, subsidiaries of foreign firms face two sets of pressures, one at the MNE level and another at the host country level. Rather than competing, as has been argued by MNE studies using neo-institutional theory, these pressures complement each other in influencing subsidiaries to be more effective at innovation than domestic firms.

Title: The Dark Side of Subsidiary Innovation: Knowledge Creation and Control in MNEs


  • Ulf Andersson, Mälardalen University
  • Christian Asmussen, Copenhagen Business School
  • Ram Mudambi, Temple University

Abstract: In a competitive global business environment, it is often assumed that multinational enterprises (MNEs) want to encourage innovation activities in their foreign subsidiaries. At the same time, subsidiaries may sometimes engage in innovation as a tactical means of obtaining internal power over peer units. Fusing these conflicting views, this paper develops a model that draws on agency theory and captures both the benefits and the dangers of subsidiary innovation seen from an MNE perspective. We show that a complex interaction between the cost of innovation and the rent-distributing effect of power determines the equilibrium level of innovation, which may deviate from the optimal level by being either too small (due to a free-riding problem) or too large (due to an internal power struggle).

All Sessions in Track G...

Sun: 10:00 – 11:30
Session 270: Globalizing the Young Venture: A Conversation with Four High Tech CEOs
Sun: 13:00 – 14:30
Session 271: The Duke Offshoring Research Network Project: Implications for Research and Practice
Sun: 15:00 – 16:30
Session 272: Location, Knowledge, and Competitive Dynamics: New Research Directions
Sun: 16:30 – 17:30
Session 311: Global Strategy, IG Meeting
Mon: 12:45 – 14:00
Session 138: Doing Business in China
Mon: 15:45 – 17:00
Session 139: Offshoring & Outsourcing
Mon: 17:15 – 18:30
Session 142: Liability of Foreignness
Tue: 10:00 – 11:15
Session 140: Global Diversification and Firm Performance
Tue: 11:30 – 12:45
Session 145: Institutions and Governance in an Uncertain World
Tue: 14:30 – 15:45
Session 141: Entry Strategy & Location Choice
Session 143: Managing MNC Subsidiaries: Innovation, Control and Subsidiary Initiatives
Wed: 10:00 – 11:15
Session 146: Global Knowledge Search
Wed: 11:30 – 12:45
Session 147: Internationalizing the Firm: Institutions, Emerging Markets and Performance Considerations

Strategic Management Society

Washington DC