Sowing the seeds of subsidiary influence: Social navigating and political maneuvering of subsidiary actors

Subsidiary closures and relocations in the multinational enterprise: Reinstating cooperation in subsidiaries to enable knowledge transfer

Subsidiary closures and relocations, a process whereby a multinational enterprise (MNE) closes down a subsidiary and relocates its activities, are commonplace and increasing. Yet we lack an understanding of how knowledge in such situations can be successfully transferred to prevent loss and provide for future knowledge recombination in the MNE. Compared to periods of normal operation, knowledge sharing during subsidiary relocations is likely compromised by diminished sender motivation. In a detailed case study of a subsidiary closure and relocation, we find that the announcement of a subsidiary closure can lead to a break in cooperative behavior that inhibits knowledge transfer. It is therefore critical to reinstate cooperative behavior among subsidiary employees. Reinstatement can be achieved through a set of subsidiary leadership practices that affect the emotions of employees and subsidiary identity. This finding contributes to our understanding of knowledge transfer dynamics in MNEs during subsidiary relocations and closures, extends theory on the practices of subsidiary leadership in subsidiary death and adds to our understanding of identity in MNEs.

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

Purpose

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.

Design/methodology/approach

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

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.