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From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets

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  • Srivardhini K. Jha

    (Indian Institute of Management Bangalore)

  • Charles Dhanaraj

    (Temple University)

  • Rishikesha T. Krishnan

    (Indian Institute of Management Indore)

Abstract

Our inductive study of nine European multinational enterprises (MNEs) and their R&D units in India uncovers a distinct trajectory of overseas R&D evolution in emerging markets. In contrast to the well-established trajectory of foreign R&D evolution that begins by adapting existing MNE products to the local market, this alternative trajectory begins by leveraging cost arbitrage and progresses through three unique configurations towards a global product mandate. Our study also unravels how the R&D units build embeddedness within the MNE network and with the local ecosystem, and how such embeddedness influences the evolution of their R&D mandate. We present a stylized taxonomy of R&D configurations and integrate this into an evolutionary model of emerging market R&D and suggest that research on MNE R&D in emerging markets must shift from focusing on the macro environment to exploring the dynamics of embeddedness. The study also provides useful insights to practitioners on managing R&D in emerging markets.

Suggested Citation

  • Srivardhini K. Jha & Charles Dhanaraj & Rishikesha T. Krishnan, 2018. "From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets," Management International Review, Springer, vol. 58(4), pages 633-661, August.
    • Handle: RePEc:spr:manint:v:58:y:2018:i:4:d:10.1007_s11575-018-0353-3
    DOI: 10.1007/s11575-018-0353-3
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