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Product development in MNC subsidiaries: Local linkages and global interdependencies

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  • Boehe, Dirk Michael
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    Abstract

    The aim of this paper is to identify and explain how different forms of local linkages vary across different patterns of global workflow interdependence in MNC subsidiaries' product development activities. Both global workflow interdependence and local linkages are essential for innovating and long-term success of a subsidiary. This paper's theoretical approach differs from previous MNC research in that we combine the tightly coupled (or rational) network model with the more common loosely coupled (or differentiated, federative) network model. Empirical data was obtained from subsidiaries in Brazil using web-survey design. Our findings show a positive relationship between local outsourcing linkages and global workflow interdependence in product development provided local cooperative linkages are low. Furthermore, results suggest empirical support for the tightly coupled model and its extension, the adaptively rational model proposed by Astley and Zajec [Astley, W.G., Zajac, E.J., 1991. Intraorganizational power and organizational design: reconcilling rational and coalitional models of organization. Organization Science 2 (4), 104-113.]. Accordingly, our study implies that the more subsidiaries create dependent and counter-dependent relationships, the better they will be positioned within their MNC innovation network and the more pronounced their innovative activities shall be.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 13 (2007)
    Issue (Month): 4 (December)
    Pages: 488-512

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    Handle: RePEc:eee:intman:v:13:y:2007:i:4:p:488-512

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    Keywords: Multinational company Subsidiary Product development Dependence Workflow interdependence Local linkages Outsourcing Cooperation;

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    1. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    2. Schmid, Stefan & Schurig, Andreas, 2003. "The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary's business network," International Business Review, Elsevier, vol. 12(6), pages 755-782, December.
    3. Andersson, Ulf & Forsgren, Mats, 1996. "Subsidiary embeddedness and control in the multinational corporation," International Business Review, Elsevier, vol. 5(5), pages 487-508, October.
    4. Maurizio Sobrero & Edward B. Roberts, 2001. "The Trade-off Between Efficiency and Learning in Interorganizational Relationships for Product Development," Management Science, INFORMS, vol. 47(4), pages 493-511, April.
    5. Gupta, Anil K. & Govindarajan, V., 1994. "Organizing for knowledge flows within MNCs," International Business Review, Elsevier, vol. 3(4), pages 443-457, December.
    6. Holm, Ulf & Sharma, D. Deo, 2006. "Subsidiary marketing knowledge and strategic development of the multinational corporation," Journal of International Management, Elsevier, vol. 12(1), pages 47-66, March.
    7. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January.
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    Cited by:
    1. Dörrenbächer, Christoph & Gammelgaard, Jens, 2010. "Multinational corporations, inter-organizational networks and subsidiary charter removals," Journal of World Business, Elsevier, vol. 45(3), pages 206-216, July.
    2. Baier, Elisabeth & Rammer, Christian & Schuber, Torben, 2013. "The impact on innovation off-shoring on organizational adaptability," ZEW Discussion Papers 13-109, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Giroud, Axèle & Scott-Kennel, Joanna, 2009. "MNE linkages in international business: A framework for analysis," International Business Review, Elsevier, vol. 18(6), pages 555-566, December.
    4. Gammelgaard, Jens & McDonald, Frank & Stephan, Andreas & Tüselmann, Heinz & Dörrenbächer, Christoph, 2012. "The impact of increases in subsidiary autonomy and network relationships on performance," International Business Review, Elsevier, vol. 21(6), pages 1158-1172.
    5. Nader Ale Ebrahim & Shamsuddin Ahmed & Zahari Taha, 2009. "Innovation and R&D Activities in Virtual Team," Post-Print hal-00593360, HAL.
    6. Edwards, Tony & Tempel, Anne, 2010. "Explaining variation in reverse diffusion of HR practices: Evidence from the German and British subsidiaries of American multinationals," Journal of World Business, Elsevier, vol. 45(1), pages 19-28, January.
    7. Igor Gurkov & Sergey Filippov, 2013. "Innovation processes in the Russian manufacturing subsidiaries of MNCs – an integrated view from case studies," HSE Working papers WP BRP 11/MAN/2013, National Research University Higher School of Economics.
    8. Jonas Rundquist, 2008. "World-Class Or Good Enough — The Choice Of Partner When Outsourcing New Product Development In Medium-Sized Firms," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 5(04), pages 423-445.
    9. Peerally, Jahan A. & Figueiredo, Paulo N., 2013. "Techological capability building in MNE-related social businesses of less developed countries: The experience of Grameen-Danone Foods in Bangladesh," MERIT Working Papers 036, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Holl, Adelheid & Rama, Ruth, 2012. "Foreign subsidiaries and technology sourcing in Spain," MPRA Paper 42328, University Library of Munich, Germany, revised Oct 2012.
    11. Nader Ale Ebrahim & Shamsuddin Ahmed & Zahari Taha, 2009. "Virtual Teams: a Literature Review," Post-Print hal-00593357, HAL.
    12. Nell, Phillip C. & Ambos, Bjérn & Schlegelmilch, Bodo B., 2011. "The MNC as an externally embedded organization: An investigation of embeddedness overlap in local subsidiary networks," Journal of World Business, Elsevier, vol. 46(4), pages 497-505, October.
    13. Boehe, Dirk Michael, 2011. "Collaborate at home to win abroad: How does access to local network resources influence export behavior?," Insper Working Papers wpe_248, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    14. Ale Ebrahim, Nader & Ahmed, Shamsuddin & Taha, Zahari, 2008. "Virtuality, Innovation and R&D Activities," MPRA Paper 27267, University Library of Munich, Germany, revised 12 Apr 2009.
    15. Figueiredo, Paulo N., 2013. "Beyond technological catch-up: An empirical investigation of further innovative capability accumulation outcomes in latecomer firms with evidence from Brazil," MERIT Working Papers 048, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Tsai-Ju Liao & Chwo-Ming Yu, 2013. "The impact of local linkages, international linkages, and absorptive capacity on innovation for foreign firms operating in an emerging economy," The Journal of Technology Transfer, Springer, vol. 38(6), pages 809-827, December.
    17. Elisa Giuliani & Chiara Macchi, 2013. "Multinational Corporations’ Economic And Human Rights Impacts On Developing Countries: A Review And Research Agenda," Discussion Papers 2013/158, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    18. Collinson, Simon C. & Wang, Rowena, 2012. "The evolution of innovation capability in multinational enterprise subsidiaries: Dual network embeddedness and the divergence of subsidiary specialisation in Taiwan," Research Policy, Elsevier, vol. 41(9), pages 1501-1518.

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