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Article
Publication date: 13 February 2018

Enrique Claver-Cortés, Patrocinio Zaragoza-Sáez, Mercedes Úbeda-García, Bartolome Marco-Lajara and Francisco García-Lillo

Based on the knowledge-based theories of the MNC, this research aims to develop and test a holistic model to analyse the relationship between the strategic knowledge…

Abstract

Purpose

Based on the knowledge-based theories of the MNC, this research aims to develop and test a holistic model to analyse the relationship between the strategic knowledge management (SKM) processes undertaken by subsidiaries and MNC performance. Additionally, it focuses on determining the impact that the relational context can have on knowledge creation and transfer inside the internal network of an MNC.

Design/methodology/approach

The research hypotheses are tested by partial least squares (PLS) with data from a sample of Spanish subsidiaries of foreign multinational firms belonging to high-technology and knowledge-intensive sectors.

Findings

The results confirm that: the implementation of a SKM by a subsidiary positively impacts on knowledge creation; the knowledge created by a subsidiary positively influences knowledge transfer, increasing the knowledge existing in the MNC; the knowledge transfer across all MNC units has a positive impact on MNC performance; the subsidiary’s relational context arises as a mediating variable between the knowledge created by a subsidiary and its transfer to the rest of the MNC.

Originality/value

The research proposes a holistic model that contemplates the joint interaction of the variables knowledge creation, knowledge transfer and performance. In addition, the proposed model contemplates the variable SMK of the subsidiary as the beginning of the knowledge creation-knowledge transfer-performance process. Finally, the mediating role of the relational context in the relationship between knowledge creation and transfer is analysed.

Details

Journal of Knowledge Management, vol. 22 no. 5
Type: Research Article
ISSN: 1367-3270

Keywords

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Book part
Publication date: 8 April 2005

Ricardo Madureira

This paper illuminates the distinction between individual and organizational actors in business-to-business markets as well as the coexistence of formal and informal…

Abstract

This paper illuminates the distinction between individual and organizational actors in business-to-business markets as well as the coexistence of formal and informal mechanisms of coordination in multinational corporations. The main questions addressed include the following. (1) What factors influence the occurrence of personal contacts of foreign subsidiary managers in industrial multinational corporations? (2) How such personal contacts enable coordination in industrial markets and within multinational firms? The theoretical context of the paper is based on: (1) the interaction approach to industrial markets, (2) the network approach to industrial markets, and (3) the process approach to multinational management. The unit of analysis is the foreign subsidiary manager as the focal actor of a contact network. The paper is empirically focused on Portuguese sales subsidiaries of Finnish multinational corporations, which are managed by either a parent country national (Finnish), a host country national (Portuguese) or a third country national. The paper suggests eight scenarios of individual dependence and uncertainty, which are determined by individual, organizational, and/or market factors. Such scenarios are, in turn, thought to require personal contacts with specific functions. The paper suggests eight interpersonal roles of foreign subsidiary managers, by which the functions of their personal contacts enable inter-firm coordination in industrial markets. In addition, the paper suggests eight propositions on how the functions of their personal contacts enable centralization, formalization, socialization and horizontal communication in multinational corporations.

Details

Managing Product Innovation
Type: Book
ISBN: 978-1-84950-311-2

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Article
Publication date: 16 April 2020

Chang Hoon Oh, Jennifer Oetzel, Jorge Rivera and Donald Lien

The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different…

Abstract

Purpose

The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different location portfolios can serve to mitigate investment risk.

Design/methodology/approach

The author sample includes data on 437 Fortune Global 500 firms and their initial entry into Chinese provinces between 1955 and 2008.

Findings

Using a fixed effects logit model of discrete time event history analysis, results show that geographic proximity to same multinational corporation (MNC) subsidiaries and different MNC subsidiaries from the same home country mitigates the negative effect of natural disasters on MNC entry into an affected province, while geographic proximity to other MNC subsidiaries from different home countries does not.

Originality/value

The knowledge needed to respond to severe disasters appears to be highly context-specific and shared only between firms with a high degree of commonality and trust.

Details

Multinational Business Review, vol. 28 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

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Article
Publication date: 14 June 2019

Mansoor Ahmad, Matthew M.C. Allen, Muhammad Mustafa Raziq and Wali ur Rehman

Existing work on convergence/divergence among HRM practices in MNCs and local firms mainly focuses on Europe and the USA. Limited research examines these organizations in…

Abstract

Purpose

Existing work on convergence/divergence among HRM practices in MNCs and local firms mainly focuses on Europe and the USA. Limited research examines these organizations in Pakistan, hindering our understanding of what policies MNCs are likely to adopt there as well as the extent of any differences between HRM in MNC subsidiaries and local firms. The purpose of this paper is to examine the similarities and differences between the HRM practices of MNC subsidiaries and domestic firms to assess if there is evidence for convergence or divergence.

Design/methodology/approach

The authors targeted MNC subsidiaries and domestically owned firms working in the banking, information technology and pharmaceutical sectors in Pakistan. These sectors have enjoyed a steady inflow of foreign direct investment and have a sizeable number of MNC subsidiaries. Out of 1,081 companies, some 392 participated in a face-to-face survey (response rate of 36.4 percent). The authors ran a series of binary logistic regression models to test the hypothesized relationships between HR practices and nationality of ownership.

Findings

The authors reveal that a small minority of both types of firm use some practices, such as high compensation contingent on performance and performance review, appraisal and career development. However, domestic firms use some practices, such as extensive training, performance appraisals and performance-related pay significantly less than their multinational counterparts. The authors argue that these differences reflect institutional influences in Pakistan as well as a potential opportunity for local firms to change their HRM practices. In other areas, such as recruitment and employee involvement, there are no differences between the two groups.

Originality/value

The authors deepen our understanding of the types of HR practices that local companies in an emerging economy are likely to adopt as well as those that they are unlikely to adopt. Existing research has tended to downplay HRM in Pakistan and the different use of individual HRM practices among MNC subsidiaries and local firms. This research reveals that some companies in Pakistan have sophisticated HRM practices in place in some areas; however, MNC subsidiaries make greater use of some HR practices, reflecting different cultural norms between the two groups.

Details

Employee Relations: The International Journal, vol. 41 no. 5
Type: Research Article
ISSN: 0142-5455

Keywords

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Book part
Publication date: 17 February 2017

Julia Brandl and Anna Schneider

How headquarter (HQ) and subsidiary actors end conflicts and reach agreements is an important but still under-researched question in multinational corporations (MNC

Abstract

How headquarter (HQ) and subsidiary actors end conflicts and reach agreements is an important but still under-researched question in multinational corporations (MNC) literature. This conceptual article approaches these conflict dynamics from the Convention Theory perspective. Convention Theory draws attention to justice principles (known as “order of worth”) and to the material aspects in relations between MNC actors. We offer a framework that contributes to HQ-subsidiary relations research in three ways: (1) it links conflicts to justice principles, (2) it enriches the understanding of the stability of agreements, and (3) it sheds light on the activities needed for realizing preferred arrangements.

Details

Multinational Corporations and Organization Theory: Post Millennium Perspectives
Type: Book
ISBN: 978-1-78635-386-3

Keywords

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Book part
Publication date: 23 August 2017

Victor Meins Pedersen and Sebastian Spon Kofod-Jensen

As multinational corporations are becoming larger and more complex, it becomes increasingly difficult to balance between the need for overall standardization in the…

Abstract

As multinational corporations are becoming larger and more complex, it becomes increasingly difficult to balance between the need for overall standardization in the multinational corporation (MNC) and the need for local responsiveness. In order to allow subsidiaries to react on challenges and opportunities within their local markets, they should be granted with a certain level of decision-making autonomy. However, this freedom can facilitate a misalignment of activities among the headquarters and its subsidiaries.

This study suggests that subsidiaries should be granted with the autonomy to pursue own activities. There should, however, be limits to their independence, which should be aligned through a dialogue between the headquarters and the subsidiary. This study finds a positive correlation between strategic and operational autonomy and subsidiary performance when these are combined with a strong intra-organizational network relationship. Furthermore, the study argues that within operational autonomy it is important to distinguish between everyday activities that do not need approval from headquarters, and activities that should be decided in collaboration between the headquarters and the subsidiary. Subsidiaries that are operating in technological complex markets should be granted with the autonomy to take advantage of inter-organizational network relationships in order to exploit local knowledge and capabilities. However, this poses the risk of the subsidiaries losing connectivity to the MNC. In order to reduce this risk, the headquarters should combine such initiatives with a strong collaboration with its subsidiaries.

By establishing a strong intra-organizational network relationship, autonomy can have a positive effect on subsidiary performance.

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Book part
Publication date: 8 June 2012

Laszlo Tihanyi, Anand Swaminathan and Sarah A. Soule

We use insights from resource dependence, institutional theories and social movement theories to examine the indigenization of subsidiary management in the multinational…

Abstract

We use insights from resource dependence, institutional theories and social movement theories to examine the indigenization of subsidiary management in the multinational company (MNC). We discuss the effects of interdependence with local organizations, access to critical resources, and MNC legitimacy in the host country on the indigenization of subsidiary management. We consider the impact of local and extra-local social movement activity as well as the local political opportunity structure in the host country. The organizational variables in the framework include international strategy and experience. We suggest implications for further international management research and practice involving the operation of foreign subsidiaries.

Details

Institutional Theory in International Business and Management
Type: Book
ISBN: 978-1-78052-909-7

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Article
Publication date: 13 November 2009

Cher‐Hung Tseng and Yao‐Sheng Liao

The purpose of this paper is to explore the factors influencing whether a multinational corporation (MNC) appoints an expatriate or a local national as the CEO of its subsidiary.

Abstract

Purpose

The purpose of this paper is to explore the factors influencing whether a multinational corporation (MNC) appoints an expatriate or a local national as the CEO of its subsidiary.

Design/methodology/approach

The study proposes a framework comprising ownership‐specific, location‐specific and internalization‐specific factors to examine determinants of expatriate CEO assignment. MNCs' subsidiaries in Taiwan were selected for the study.

Findings

For the effect on the assignment of an expatriated CEO to a subsidiary, the factors of a subsidiary's capability and size, MNC's global strategy and internalization motivation are positive; in contrast, the factor of the host country's locational advantages is negative. In addition, in circumstances of large cultural distances, the effect of high internalization motivation is positive and that of low internalization motivation is negative.

Research limitations/implications

The research does not differentiate between two different types of expatriates and focuses on advanced countries' MNCs' subsidiaries in Taiwan. The theoretical implication of the study lies in the application of the perspectives of resource‐based view and transaction cost theory on an MNC's decision concerning the assignment of an expatriated CEO for subsidiaries.

Practical implications

MNCs could make a subsidiary's staffing decision by taking into account ownership‐, location‐, and internalization‐specific factors. Failure to do so will lead to poor operation of the subsidiary.

Originality/value

The research contributes to knowledge about the determinants of expatriate CEO assignment, and illuminates the importance of ownership, location and internalization factors for MNCs.

Details

International Journal of Manpower, vol. 30 no. 8
Type: Research Article
ISSN: 0143-7720

Keywords

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Article
Publication date: 1 February 2013

Cher‐Hung Tseng and Liang‐Tu Chen

This study aims to investigate the influence of transaction cost (TC) factors and the moderating influence of firm capability factors on the extent of domestic outsourcing…

Abstract

Purpose

This study aims to investigate the influence of transaction cost (TC) factors and the moderating influence of firm capability factors on the extent of domestic outsourcing of a multinational corporation (MNC) subsidiary.

Design/methodology/approach

A new research framework is developed comprising four constructs and six research hypotheses, coupled with international experience (IE) and subsidiary scale (SS) as moderating constructs. Applying the regression model, the hypotheses were tested on data from MNC subsidiaries engaged in manufacturing in Taiwan, based on the TC theory, resource‐based view, and outsourcing literature.

Findings

The TC factors, including environmental dynamism and subsidiary technology level, are negatively related with degree of domestic outsourcing. Moreover, the MNC IE and SS can reduce the TCs, thus increasing the degree of domestic outsourcing by MNC subsidiaries at the high environmental dynamism and subsidiary technology levels.

Research limitations/implications

The study data were obtained from MNC subsidiaries operating in Taiwan, and the single country research design is a limitation of this study.

Practical implications

This study provides useful insights into how MNCs and subsidiaries should concentrate on the factors that increase the TCs of domestic outsourcing. Moreover, MNCs and subsidiaries must endeavor to cultivate and apply capabilities to mitigate TCs and fully realize the benefits of domestic outsourcing.

Originality/value

This study demonstrates that TC factors can also be applied to examine the outsourcing strategies of firms operating in less advanced countries. Additionally, the capability factors of MNCs and subsidiaries can reduce TCs, thus increasing domestic outsourcing by subsidiaries.

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Book part
Publication date: 17 February 2017

Rebecca Piekkari and D. Eleanor Westney

The multilingual MNC provides a promising territory for enhancing the dialogue between organization theory and International Business. We draw parallels between research…

Abstract

The multilingual MNC provides a promising territory for enhancing the dialogue between organization theory and International Business. We draw parallels between research on the multinational corporation and that on the multilingual corporation. Our review shows that the changing conceptualizations of the MNC toward a network model have carved space for language-sensitive research in International Business. We scrutinize this stream of research from the viewpoint of three organization theory lenses: the role of language in organizational design and architecture, in identity building and culture, and in organizational political systems, and comment on future research.

Details

Multinational Corporations and Organization Theory: Post Millennium Perspectives
Type: Book
ISBN: 978-1-78635-386-3

Keywords

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