How does successive inpatriation contribute to subsidiary capability building and subsidiary evolution? An organizational knowledge creation perspective

Intra-company knowledge transfer is a key source of competitive advantage for multinational companies (MNCs) and this knowledge is usually embedded in individuals. Drawing on organizational knowledge creation theory, we explore how inpatriation contributes to knowledge transfer and, in turn, subsidiary performance. Inpatriation involves the international assignment of employees from an MNC’s foreign subsidiary to its headquarters. Despite increasing attention to the role of inpatriation, we lack a clear understanding of whether and how inpatriates provide value to their subsidiaries after returning from headquarters. Through a qualitative case study of Japanese MNCs, we demonstrate the process through which inpatriates’ knowledge transfer contributes to subsidiary capability building and subsidiary evolution over time, and explain why successive inpatriation is thus critical to enhance subsidiary performance. Our theoretical model highlights the value of inpatriates as knowledge agents, reveals the process through which inpatriates transfer knowledge between HQ and subsidiaries, and provides a more nuanced understanding of the micro-foundations of intra-MNC knowledge transfer processes. Based on these findings, we argue that inpatriation is not merely a staffing method that is complementary to expatriation, but a key practice in its own right to support subsidiaries’ growth and performance.

Refining a subsidiary evolution framework: clarifying key concepts

Purpose While the evolution of subsidiaries has received considerable research attention, the framework for understanding it has not evolved much since the late 1990s. The purpose of this paper is to add both clarity and depth to the work on the foundations for – as well as the processes of – capability creation and development as a subsidiary evolves. Design/methodology/approach This conceptual paper takes as its point of departure the micro-foundation literature, with a specific emphasis on the capability development literature. To describe capability creation and development, both the resource-based view and the resource management perspective are used here. Findings The paper adds a conceptual layer to the drivers of subsidiary evolution. To add further clarity regarding how capabilities are actually formed, the resources for capability creation and development are specified herein as entities, abilities and capacity. Arguments are also presented for why capabilities ought to be viewed as patterned behavior to decrease the terminological ambiguity surrounding the concept of capabilities. The process of capability creation and development with an emphasis on learning is brought forward. Further, capability typologies, in terms of substantive, managerial and dynamic capabilities, are presented to add specificity to the kinds of capabilities that are created and developed within a subsidiary. Originality/value Clarifying the concept of capability and how capabilities are formed by using advancements in the literature is important to add precision to the literature on the evolution of subsidiaries.

The evolution of MNCs' R&D foreign units: the case of Swedish MNCs in India

PurposeThe article aims to explain how the drivers of subsidiary evolution influence a multinational company's (MNC) research and development (R&D) subsidiary's evolution over time.Design/methodology/approachThe article draws on insights from a longitudinal comparative case study of three Swedish MNCs' Indian R&D units.FindingsThe study shows that the evolution of R&D units is a triangular showdown among headquarter assignments, local market constraints, and opportunities, and that subsidiary choice is an important driver of both mandated extension and stagnation. We summarize our findings in various propositions that emphasize different drivers over time and that highlight the strong impact of a subsidiary's understanding of the corporate immune system on the evolution of that subsidiary's R&D mandate.Research limitations/implicationsDrawing on the common limitations of a case study approach, further research is needed to test the suggested propositions with larger samples, ideally with subsidiaries in other emerging and developed markets.Practical implicationsThe study illustrates the risks involved for subsidiary managers when pushing an R&D mandate-related initiative too far and provoking the corporate immune system. For headquarters management, the study highlights the importance of understanding that the development of R&D competence and capability at a subsidiary cannot be guided solely by headquarter assignments and local market characteristics; rather, the subsidiary's initiatives also need to be considered.Originality/valueThe study contributes to the literature on R&D internationalization by showing how the drivers of subsidiary evolution influence a subsidiary's R&D mandates over time and that subsidiary choice is an important driver of both mandated extension and stagnation.

Building R&D capability in subsidiaries – conceptualization of a process perspective

PurposeThe purpose of this paper is to contribute to the literature discussing the internationalization of research and development (R&D) among multinational companies by proposing a process description to capture the development of local R&D capabilities in subsidiaries.Design/methodology/approachThe authors build the conceptualization not only on the prevailing literature on resource management, subsidiary evolution and subsidiary initiatives, but also on empirical observations.FindingsA process in four phases is distinguished to describe the evolution of R&D capabilities in subsidiaries: the identification of an opportunity in the host country that triggers the establishment of local R&D capabilities; the gathering of support – from the host country and from MNC internally – and resources; the bundling of the resources to build capabilities; and finally the leveraging of the capabilities.Research limitations/implicationsBy offering a conceptualization of the process through which subsidiaries build R&D capabilities, the authors contribute to the literature on R&D internationalization that hitherto has neglected the central role played by subsidiaries and the fact that a subsidiary needs to develop and manage resources and capabilities to change its R&D related role and/or mandate within the MNC.Originality/valueBy providing a process perspective on MNCs internationalization of R&D focussing on the development and management of R&D capabilities at subsidiaries, the paper adds a more dynamic dimension to the previously rather static view on R&D internationalization.

Multilateral knowledge transfer and multiple embeddedness

Purpose – The purpose of this paper is to argue that multilateral knowledge transfer emerges from two lines of thinking in the international business (IB) literature – the exploitation of multinationality and the contributory role of subsidiaries – and links three levels of analysis – headquarters, knowledge-creating subsidiaries and host-country environments. Design/methodology/approach – Multilateral knowledge transfer, both vertical and horizontal, is considered in this paper as a cross-level phenomenon that emerges as a result of beneficial interdependencies between headquarters, knowledge-creating subsidiaries and their host-country environments. The paper also discusses the concept of embeddedness, which both lines of thinking draw upon, and argues that the multinational enterprise (MNE) headquarters can actually moderate both internal and external embeddedness through global strategy and organizational design. Findings – By putting forward an integrative cross-level interdependency framework that incorporates insights from the R&D internationalization literature and the subsidiary evolution literature, this paper delineates multilateral knowledge transfer as an MNE strategy to systematically transform and integrate knowledge created at the subsidiary-level for the global competitive advantage at the MNE group-level. Originality/value – Such a perspective reemphasizes the multi-level nature of IB studies and provides new opportunities for theoretical and empirical development as did the internalization theory which has theorized the conventional headquarters-to-subsidiaries knowledge transfer more than 40 years ago.