Drivers of competence development in different types of multinational R&D subsidiaries

The modern multinational corporation (MNC) is no longer so markedly characterized so much by the efficient exploitation of its firm-specific advantage. Rather, the MNC's potential advantage over local firms is constituted by its ability to draw on the distinct competence of its internationally dispersed units. In this modern MNC some subsidiaries become the providers of valuable competence for other units, while many others are the recipients. While there has been much research on the roles of subsidiaries, there is still no clear understanding as to how the subsidiary's distinctive competence influences its corporate role. This paper examines what it is that drives the competence development in different foreign R&D subsidiaries, and how such drivers are related to the role of the subsidiary. The results of analyses-of-variance of 468 multinational subsidiaries show that competent and important R&D subsidiaries are characterized among other things by being deeply embedded in their local business environment and by exhibiting high levels of investments in competence development. These findings suggest that it is important for the multinational corporation to maintain a presence in competitive environments, as well as purposefully supporting and building competence in its subsidiaries.