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The 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.

The article draws on insights from a longitudinal comparative case study of three Swedish MNCs' Indian R&D units.

The 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.

Drawing 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.

The 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.

The 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.

Drawing on the contingency perspective of strategy, the purpose of this paper is to extend current understanding of fit between a differentiation strategy of the industrial firm’s foreign subsidiary and key contextual boundaries.

A conceptual framework is developed in which a differentiation strategy involves the complementary approaches of innovativeness and customer responsiveness. The key boundaries consist of local competitive dynamics and the value-adding mandate assigned to the subsidiary. Detailed features of four types of differentiation strategies are identified by analysing strategies applied by subsidiaries of industrial firms operating on the US market.

Four propositions are developed regarding alignment between strategy types and the boundaries. Relationships are proposed regarding a strategy type and a context specified by rivalry/relational competitive dynamics, and a broad/narrow value-adding mandate.

The conceptual framework and the propositions may be tested by analysing statistical data on industrial firms’ subsidiaries operating in several host countries.

To increase a foreign subsidiary’s contribution to the global competitiveness of an industrial firm, an awareness of the boundaries to the subsidiary’s strategy of differentiation that may hamper the subsidiary’s performance is essential.

The conceptual framework, and the propositions, contributes to literature on the industrial firm’s global strategy because it focuses on subsidiary strategy and extends present understanding of the mechanisms that drive the effectiveness of a foreign subsidiary’s differentiation strategy.

This paper aims to explore the effect of subsidiary autonomy on knowledge transfers during captive offshoring to emerging markets.

Five longitudinal cases of captive R&D and manufacturing offshoring to emerging markets.

The propositions entail the dual effect of operational subsidiary autonomy on primary knowledge transfer and reverse knowledge transfer. For newly established subsidiaries, operational subsidiary autonomy has a mainly negative effect on primary knowledge transfer and a mainly positive effect on reverse knowledge transfer and local collaboration activities increase this effect. Strategic subsidiary autonomy is mainly negative for primary and reverse knowledge transfer.

Limitations concerning the applied exploratory case study approach suggest that further research should test the identified relationships using surveys, after the initial pilot study.

A gradual increase of operational subsidiary autonomy as the subsidiary capability level increases is beneficial to ensure primary knowledge transfer. Allowing subsidiaries to collaborate locally within the confines of their mandates benefits reverse knowledge transfer.

This paper extends the secondary knowledge transfer concept to include knowledge flows with local collaboration partners, not only other subsidiaries and clarifies the distinction between operational and strategic autonomy concerning local collaboration. A subsidiary asserts operational autonomy when its collaboration with local partners relates to its existing mandate. A subsidiary asserts strategic autonomy when it collaborates with local partners beyond this mandate.

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.

This study aims to explore capability upgrading of EMNE’s subsidiaries in developed countries and how the parent-subsidiary relationship influences such upgrading.

The study adopts an interdisciplinary approach to capability upgrading of EMNEs subsidiaries in developed countries. It employs a single case study to explore this under-research area.

The analysis challenges the orthodox view and suggests broad-based capability upgrading has taken place in the EMNE-acquired subsidiaries ranging from product, process, functional to intersectoral. In addition, the capability upgrading was contingent on the degree of subsidiary autonomy and subsidiary mandates.

This study represents one of the first to examine capability upgrading and parent-subsidiary relationship in the context of EMNEs’ internationalisation activities.

This paper investigates whether changes in autonomy and embeddedness in host locations by foreign owned subsidiaries are associated with improvements in performance by subsidiaries. The results provide evidence that increasing operational decision‐making autonomy is associated with enhanced performance as measured by both subjective and more objective measures of performance. The results on the importance of increasing strategic decision‐making autonomy and embeddedness are less clear, with improved performance being detected in some cases, but only for the subjective measure of performance.

This paper aims to develop a more nuanced view of subnational location choice with a particular focus on global cities. It is argued that multinational firms may use global cities to establish bridgeheads-subsidiaries at intermediate levels of the ownership chain that enable further international as well as subnational expansion.

Beyond those host country subsidiaries that are directly owned by a foreign multinational, the authors go deeper and focus specifically on the multi-tiered – “subsidiaries of subsidiaries” to examine how the geographic origins and destinations of these investments are associated with micro-location choices in a host country.

The authors find that there are substantial differences between the types, roles, activities and geographic origins of the firms locating in different areas, and in the ownership structures spanning them. The authors propose that this has managerial and theoretical implications which may be understood based on an organizing framework describing a tradeoff between the pursuit of global connectivity and local density on the one hand and cost control on the other.

Empirical work on foreign location choices should take into account ownership structures and take a more fine-grained view of subnational variation.

Managers need to consider the trade-offs between connectivity, density and costs when making foreign location decisions.

Policy makers should think about the unique contributions that various subnational regions such as global and ordinary cities can make to global value chains.

The authors bridge the hitherto separate literatures pertaining to subsidiary mandates and subnational dimensions of foreign location choice by investigating the fine-grained roles and ownership structures from a supranational as well as subnational perspective.

This study aims to focus on dual embeddedness as an important channel through which foreign subsidiaries access and share valuable and idiosyncratic knowledge within the multinational corporation (MNC). The authors examine the dual embeddedness challenges of foreign subsidiaries based in the context of Iran as a transitional market.

The final sample includes 144 active foreign subsidiaries in Iran from across a broad range of industries. A structured questionnaire was distributed to firms and structural equation modeling was adopted to analyze the results.

The findings reveal how building external embeddedness in an environment with potentially poor access to valuable knowledge, and risk of knowledge leakage impacts the subsidiary’s ability to subsequently transfer this knowledge within the MNC. The authors identify the significance of absorptive capacity as a way for the subsidiary to access knowledge from and share knowledge with firms in the local market.

Departing from existing work on subsidiary embeddedness in developed markets, the authors reveal how competence creating subsidiaries manage dual embeddedness and knowledge transfer in transition economies that are low in knowledge stocks. The authors unpack how subsidiary absorptive capacity enables access to local knowledge in a transitional market and increases reverse knowledge transfer in the MNC. In doing so, the authors answer calls for work on the dynamic and complementary relationships that exists between subsidiary dual embeddedness, absorptive capacity and knowledge sourcing in less open markets. Focusing on Iran as a transitional economy, this study provides greater contextual nuance to the extant literature on subsidiary dual embeddedness.

This paper adds to the literature on outward Foreign Direct Investments by Chinese Multinational Corporations (MNCs) in advanced economies. Its objective is threefold: to characterize the subsidiary roles that advanced economy targets of Chinese Multinational Corporations (CMNC) takeovers typically adopt, to assess the position that these subsidiary roles grant them within the CMNCs as a whole and to flesh out how subsidiary actors perceive and make sense of the particular constellation as a subsidiary of a CMNC. Furthermore, this paper aims to contribute to theory development on headquarters‐subsidiary relations by suggesting an additional theoretical lens.

The paper draws on in-depth qualitative case studies from the automotive, mechanical engineering and solar industries and focuses on German firms that have been acquired by Chinese MNCs. Theoretically, the present paper draws on extant post-merger integration (PMI) and subsidiary role research, particularly from a micro-political and sensemaking perspective, refined by adding a neo-imperial dominance – lens.

The paper reveals the subsidiary roles that German subsidiaries of Chinese MNCs typically adopt and discovers the PMI pattern of “reverse integration” delineating quite a particular form of reverse knowledge transfer. Regarding human integration, it emphasizes the importance of neo-imperial attitudes surfacing in the German subsidiaries.

The value of the paper is in contributing to fill the pending research gap on the subsidiary roles that advanced economy subsidiaries of Chinese MNCs adopt, on the resulting positions of these subsidiaries within the overall Chinese groups and the sense that subsidiary actors make of being acquired by a Chinese MNC. The paper also reveals the importance of neo-imperial dominance patterns and attitudes in PMI in the constellation scrutinized.

The purpose of this paper is to contribute to the literature discussing the internationalization of research and development (R&D) among multinational companies by proposing a process description to capture the development of local R&D capabilities in subsidiaries.

The authors build the conceptualization not only on the prevailing literature on resource management, subsidiary evolution and subsidiary initiatives, but also on empirical observations.

A process in four phases is distinguished to describe the evolution of R&D capabilities in subsidiaries: the identification of an opportunity in the host country that triggers the establishment of local R&D capabilities; the gathering of support – from the host country and from MNC internally – and resources; the bundling of the resources to build capabilities; and finally the leveraging of the capabilities.

By offering a conceptualization of the process through which subsidiaries build R&D capabilities, the authors contribute to the literature on R&D internationalization that hitherto has neglected the central role played by subsidiaries and the fact that a subsidiary needs to develop and manage resources and capabilities to change its R&D related role and/or mandate within the MNC.

By providing a process perspective on MNCs internationalization of R&D focussing on the development and management of R&D capabilities at subsidiaries, the paper adds a more dynamic dimension to the previously rather static view on R&D internationalization.