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Rationality vs ignorance: The role of MNE headquarters in subsidiaries’ innovation processes

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  • Francesco Ciabuschi

    (Department of Business Studies, Uppsala University, Uppsala, Sweden)

  • Mats Forsgren

    (Department of Business Studies, Uppsala University, Uppsala, Sweden)

  • Oscar Martín Martín

    (1] Department of Business Studies, Uppsala University, Uppsala, Sweden[2] Department of Business Administration, Public University of Navarre, Pamplona, Spain)

Abstract

Innovation processes in multinational enterprises (MNE) are largely context specific, and carried out at the subsidiary level. Therefore, corporate headquarters (HQ) involvement in these processes becomes a major issue. A typical assumption in international business (IB) theory is that HQ, based on its own knowledge, makes rational choices about its own involvement. However, according to some studies, HQ involvement can be assumed to be less rational, in the sense that it reflects not HQ knowledge but the normative expectations associated with the role of HQ as top manager. The purpose of this paper is to contrast these two perspectives by exploring their implications regarding the relationship between HQ knowledge about and HQ involvement in innovation processes at the subsidiary level, and regarding the impact of this potential involvement on innovation processes performance. The analysis results in six propositions and an illustrative case. Our contribution to IB research is primarily theoretical: we bring to the scene an alternative approach – the sheer ignorance perspective – with the potential to explain the behavior of key actors in the MNE. We argue, however, that the theoretical conflict between the two perspectives should be addressed by empirical research. We conclude with suggestions for the directions such research might take.

Suggested Citation

  • Francesco Ciabuschi & Mats Forsgren & Oscar Martín Martín, 2011. "Rationality vs ignorance: The role of MNE headquarters in subsidiaries’ innovation processes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(7), pages 958-970, September.
  • Handle: RePEc:pal:jintbs:v:42:y:2011:i:7:p:958-970
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    Cited by:

    1. repec:spr:manint:v:57:y:2017:i:6:d:10.1007_s11575-017-0325-z is not listed on IDEAS
    2. repec:eee:intman:v:23:y:2017:i:3:p:255-267 is not listed on IDEAS
    3. repec:spr:manint:v:53:y:2013:i:4:d:10.1007_s11575-012-0156-x is not listed on IDEAS
    4. Hadjikhani, Amjad & Hadjikhani, Annoch Isa & Thilenius, Peter, 2014. "The internationalization process model: A proposed view of firms’ regular incremental and irregular non-incremental behaviour," International Business Review, Elsevier, vol. 23(1), pages 155-168.
    5. Verbeke, Alain & Kano, Liena, 2016. "An internalization theory perspective on the global and regional strategies of multinational enterprises," Journal of World Business, Elsevier, vol. 51(1), pages 83-92.
    6. de Jong, Gjalt & van Dut, Vo & Jindra, Björn & Marek, Philipp, 2015. "Does country context distance determine subsidiary decision-making autonomy? Theory and evidence from European transition economies," International Business Review, Elsevier, vol. 24(5), pages 874-889.
    7. Uschi Backes-Gellner & Marlies Kluike & Kerstin Pull & Martin R. Schneider & Silvia Teuber, 2016. "Human resource management and radical innovation: a fuzzy-set QCA of US multinationals in Germany, Switzerland, and the UK," Journal of Business Economics, Springer, vol. 86(7), pages 751-772, October.
    8. Yuzhe Miao & Yuping Zeng & Jeoung Yul Lee, 2016. "Headquarters Resource Allocation for Inter-Subsidiary Innovation Transfer: The Effect of Within-Country and Cross-Country Cultural Differences," Management International Review, Springer, vol. 56(5), pages 665-698, October.
    9. Conroy, Kieran M. & Collings, David G., 2016. "The legitimacy of subsidiary issue selling: Balancing positive & negative attention from corporate headquarters," Journal of World Business, Elsevier, vol. 51(4), pages 612-627.
    10. repec:bla:jomstd:v:54:y:2017:i:8:p:1121-1143 is not listed on IDEAS
    11. repec:bla:jomstd:v:54:y:2017:i:4:p:422-454 is not listed on IDEAS
    12. repec:eee:iburev:v:27:y:2018:i:1:p:161-172 is not listed on IDEAS

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