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Inertia and change in multinational enterprise subsidiary capabilities: an evolutionary economic geography framework

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  • Nicholas A. Phelps
  • Cris Fuller

Abstract

In this article we argue for a process-centred use of the dynamic capabilities-based view of evolution in multinational enterprise (MNE) subsidiary capabilities. In particular, we consider changes in the scale, scope and specialisation of resources and capabilities at subsidiaries over time by drawing on Dodgshon’s (1998) study of change in empires and societal systems. Following Dodgshon, we classify changes at MNE subsidiaries into processes of (i) expansion or contraction, (ii) reduction, (iii) involution, (iv) aggregation upwards and outwards, (v) accretion and (vi) replacement/substitution, illustrating this framework with reference to the extant literature. We suggest that the potential of this framework lies, in part, in its embrace of both change and inertia within MNEs and at their subsidiaries. It is important to consider both change and inertia if we are to understand the implications of MNE subsidiary evolution national and subnational economic development policy.

Suggested Citation

  • Nicholas A. Phelps & Cris Fuller, 2016. "Inertia and change in multinational enterprise subsidiary capabilities: an evolutionary economic geography framework," Journal of Economic Geography, Oxford University Press, vol. 16(1), pages 109-130.
    • Handle: RePEc:oup:jecgeo:v:16:y:2016:i:1:p:109-130.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbv002
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    Cited by:

    1. Carnevale, Marina & Nachum, Lilac & Korn, Helaine, 2017. "Why does MNE performance vary across countries?," International Business Review, Elsevier, vol. 26(6), pages 1196-1207.
    2. Miguel Atienza & Martín Arias‐Loyola & Nicholas Phelps, 2021. "Gateways or backdoors to development? Filtering mechanisms and territorial embeddedness in the Chilean copper GPN’s urban system," Growth and Change, Wiley Blackwell, vol. 52(1), pages 88-110, March.
    3. Li, Can, 2020. "Enhancing or inhibiting: The impact of investment in political ties on the link between firm innovation and productivity," International Business Review, Elsevier, vol. 29(2).
    4. Hendriks, Guus, 2020. "How the spatial dispersion and size of country networks shape the geographic distance that firms add during international expansion," International Business Review, Elsevier, vol. 29(6).
    5. Anupama Phene & Stephen Tallman, 2018. "Subsidiary development of new technologies: managing technological changes in multinational and geographic space," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1121-1148.
    6. Nicholas A Phelps & Andrew M Wood, 2018. "The business of location: site selection consultants and the mobilisation of knowledge in the location decision," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1023-1044.
    7. Nicholas A Phelps & Miguel Atienza & Martin Arias, 2018. "An invitation to the dark side of economic geography," Environment and Planning A, , vol. 50(1), pages 236-244, February.
    8. Crispian Fuller & Nicholas A Phelps, 2018. "Revisiting the multinational enterprise in global production networks," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 139-161.
    9. Bathelt, Harald & Li, Pengfei, 2020. "Processes of building cross-border knowledge pipelines," Research Policy, Elsevier, vol. 49(3).
    10. Harald Bathelt & John A Cantwell & Ram Mudambi, 2018. "Overcoming frictions in transnational knowledge flows: challenges of connecting, sense-making and integrating," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1001-1022.
    11. Marc Doussard & Greg Schrock & Laura Wolf-Powers & Max Eisenburger & Stephen Marotta, 2018. "Manufacturing without the firm: Challenges for the maker movement in three U.S. cities," Environment and Planning A, , vol. 50(3), pages 651-670, May.

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