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This chapter presents an in-depth inductive analysis of a parent organization and the network of subsidiaries that it has created. The authors identify the significance of organizational processes label as “disciplining entrepreneurialism.” These are activities that encourage entrepreneurial individuals to propose and lead new businesses while also promoting strong identification with the parent firm. The authors explore the emergence of this phenomenon through an examination of subsidiary–headquarter relations. While conventional conceptualization of inter-organizational collaboration has tended to exclude ­subsidiary–headquarter network relationships, we use the Systems of Exchange framework (Biggart & Delbridge, 2004) to categorize disciplined entrepreneurship alongside market, hierarchy, and network relations. Disciplining entrepreneurialism is not experienced as either market nor hierarchy by the individual members in the subsidiaries, and these subsidiaries move between the two in ways that are not adequately captured as a network either. This disciplining entrepreneurship approach can thus be contrasted with networks as well as differentiated from both markets and hierarchies. Entrepreneurship is encouraged while maintaining commitment to the overarching enterprise of the parent company.

The aim of the chapter is to evaluate the concept of corporate parenting styles, identify missing elements in the theoretical constructs, and develop new theoretical constructs.

The chapter provides a summary of the existing literature on corporate parenting styles and uncovers the missing elements in the theoretical constructs. New theoretical constructs fill the gaps.

The chapter presents a new typology of corporate parenting style by combining corporate parents’ processes of adding value to and extracting value from subsidiaries. The five-type typology of corporate styles outlines the different levels of value addition and value extraction and various degrees of reciprocity in both processes. This chapter determines the most important factors that affect the selection of corporate parenting style. It postulates that the multinational corporation should exhibit different parenting styles toward its subsidiaries simultaneously and should be ready to amend its parenting styles to reflect changes in a subsidiary’s strategy and its motives for corporate ownership.

A new agenda for empirical studies oriented toward variability of parenting styles is proposed. Empirical tests of our propositions are needed. I encourage researchers to extend our research by considering the regional (supra-national), industry, and individual levels of analyses.

The chapter provides a more realistic view of corporate parenting styles than that found in the previous literature and outlines promising directions for further theoretical and empirical research.

This chapter investigates whether traditional design-oriented coordination instruments or more modern management concepts have a stronger influence on the success of forward technology transfers within MNCs.

We conducted an empirical study analyzing the relative influence of (a) traditional coordination instruments (structural, technocratic, and person-oriented) and (b) modern management concepts (epistemic community and absorptive capacity) on the success of forward technology transfers within MNCs.

The study finds evidence that the traditional coordination instruments relate to specific aspects of the success of such transfers. Comparing the different types of coordination instruments, this chapter shows that not only the person-oriented, but also the structural and technocratic coordination instruments relate positively with the achievement of technology transfer goals. The study finds stronger relationships between the traditional coordination instruments and the technology transfer goals than between the modern management concepts and the technology transfer goals.

We believe that these results have important implications for the management of international technology transfers in particular and for the focus of future (international) management research in general. Future MNC research studies need to include traditional coordination instruments, since they continue to strongly influence organizational behavior and outcomes. This would help to make organizational research on MNCs more cumulative and complete.

This chapter contends that the international business (IB) and strategic management (SM) fields have many commonalities that should be considered in a turbulent globalized business context. IB studies refer to the need for local integration and local adaptation whereas empirics in SM pinpoint the complementary effects of central planning and decentralized decision-making. We present and synthesize these rather field specific perspectives and try to synthesize insights from both fields in an adaptive strategy-making model including the effects of autonomous subsidiary initiatives and intended mandates from corporate headquarters. The model considers local subsidiary actions of both operational and strategic nature and we argue that it may be futile to distinguish between these effects as incremental operational responses can cumulate into more substantial changes over time with dimensions of strategic adaptation. The model provides a foundation for further considerations about how to combine central intent and direction with decentralization and autonomous initiatives in the multinational corporation.

Purpose – The purpose of this conceptual chapter is to discuss the limitations of the network organization in multinational corporations (MNCs). Since many IB/IM publications concentrate on the advantages of this organizational form, the focus of the chapter is on identifying the limitations that MNCs need to be aware of when they use network organizations.

Methodology – The analysis is based on a sound review of the literature that refers to the network organization in general and its application in MNCs.

Findings – The chapter shows that MNCs present a context that can aggravate the problems of a network organization. Four types of problems are identified: (1) knowledge transfer between MNCs’ subunits, (2) trust-building and corporate culture within MNCs, (3) subsidiary development and subsidiary managers’ stress, and (4) additional problems of a more general nature.

Practical implications – As a result of these problems, it is expected that the formal, hierarchical structure will remain an important organizational instrument for MNCs. The chapter specifies in which ways the formal organizational structure can help to reduce the limitations of the network organization. Finally, the chapter argues that, among the formal organizational models, the matrix structure should be considered more intensively in the future.

Originality/value of chapter – Since existing discussion of the network organization in MNCs tends to ignore the limitations and downsides of this organizational form, the chapter contributes to a more balanced understanding of the network organization.

Purpose – Taking a configurational perspective, this study explores if there are different market entry strategies used and if there are ideal configurations of subsidiary strategy in different types of foreign countries.

Methodology – The study is based on a sample of 238 subsidiaries of German companies that are located in 38 different countries. Capturing many different facets of the subsidiary strategy, the configuration of top performers in different environments is identified. With a ‘fit as profile deviation’ approach, it is investigated whether the strategy of the top performers indeed constitutes an ideal strategy.

Findings – The host countries of the subsidiaries can be clustered in four types: BRICs, Eastern Europe, Western Europe and the USA. Chosen market entry modes differ significantly between those four host country types. The top performing subsidiaries in each of the country types have distinct strategy patterns. However, deviation from the strategy profile of the top performers only explains the lower performance of subsidiaries in country types BRICs and Eastern Europe. Performance differences between subsidiaries in Western Europe and the USA cannot be explained with the variables captured in this study.

Research limitations/implications – Taking a configurational approach on subsidiary strategy proves to be a promising path to create new insights. But subsidiary strategy pattern alone is insufficient to explain performance in two country types. Thus, other influence factors must be investigated. Furthermore, the study did explore subsidiary strategy patterns with a cluster analysis, without ex ante hypotheses about the patterns. Hence, further studies are needed to re-investigate these patterns.

The study presented in this chapter examines an increasingly important phenomenon in the internationalization of small and medium-sized enterprises (SMEs). Following technological developments, more and more SMEs are using high-commitment foreign market entry modes. These firms, called micromultinationals, have established subsidiaries in international markets despite their resource constraints. The study is an examination of a micromultinational’s development during its internationalization life-cycle regarding changes in international entry mode, organizational structure, communication, sharing of knowledge and control.

A multiple case study method has been selected for this research. Data has been collected from four Finnish micromultinationals.

The study postulates that despite smallness and youth, immediate multinationalization is possible, as is the simultaneous expansion of both geographic scope and operations. The international operation mode of the case companies has moved toward the highest-commitment entry modes during their internationalization life-cycle. The micromultinational’s globalization process takes time and continuous readjustments and development. Some of the cases have struggled with issues related to things such as communication and sharing of knowledge throughout their existence.

The results of the study suggest that any micromultinational should carefully consider their choice of investment mode (wholly owned greenfield vs. partly owned acquisition) to avoid the stagnation phase. The unlearning is difficult and with a certain path dependency, learning advantage of newness does not seem to exist even if a firm is small and relatively young.

This is the first study to examine the internal development of a micromultinational company during its internationalization life-cycle.

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.

Multinational corporations (MNCs) have increasingly sourced knowledge across borders, and foreign subsidiaries operations have played a critical role in MNC international knowledge sourcing strategies. The growing responsibility of foreign subsidiaries has paralleled an interest on the geography of this phenomenon by international business and international management scholars. In this chapter, we review this research. In addition, based on recent research in economics and management drawing on economic geography and innovation studies, we highlight possible avenues of research to enrich our understanding of the geographical aspects of international knowledge sourcing. In particular, we suggest three lines of research opportunities. A first opportunity relates to the explicit consideration of distance and border effects. A further research opportunity arises from investigating the geographical distance of heterogeneous host country knowledge sources from the foreign subsidiary. A final research opportunity we discuss is about the contribution of heterogeneous host country knowledge sources to the variety of knowledge developed by the foreign subsidiary.

Purpose – This research aims to understand inter-subsidiary innovation transfers from a subsidiary business network perspective. We examine transfer performance with particular interest in the influence of subsidiary business networks in innovation development stage. The moderating effect of knowledge inputs, that is, external and internal business partners, on transfer efficiency and effectiveness are hypothesized.

Methodology/approach – This study utilizes the data of 129 inter-subsidiary transfer projects from 19 multinational corporations. The empirical analysis specifically examines how and to what extent the development partnership – source of knowledge inputs – affects the efficiency and effectiveness of innovation transfer between subsidiaries.

Findings – The results indicate that the source of knowledge inputs influence transfer performance indirectly, but not directly. The impact is made through the dyadic relationship to the transfer performance. The findings complement the literature on innovation/knowledge transfer by incorporating innovation development into scrutiny and gauging transfer efficiency and effectiveness explicitly.

Value of paper – The empirical evidence highlights the significance of dyadic willingness to both transfer efficiency and effectiveness. Its influence to transfer performance exceeds that of dyadic similarity or previous collaboration experience. The result provides useful managerial implications to MNCs headquarters and subsidiaries. The lack of previous collaboration experience or technical similarity may pose the down side for innovation transfer between subsidiaries. But that should not put off the initiatives to conduct innovation transfers. Such problem could be effectively remedied by strong willingness between the dyad. The resources and support that subsidiaries receive could counteract the hurdle of dissimilarity and unfamiliarity.