The performance implications of knowledge management and strategic alignment of MNC subsidiaries

Purpose: The purpose of this paper was to investigate antecedents and results of strategic choices of multinational corporation (MNC) subsidiaries in Croatia economy. Hence, the authors examined knowledge management and its association with performance. Additionally, they explored which of the strategies will be most likely chosen by subsidiaries in transitional economies that are characterized by market volatility and uncertainty. Design/methodology/approach: Data were collected from a survey of 131 MNC subsidiaries operating in Croatia. To test the theoretical correlation between knowledge management capabilities and strategic orientation, the authors used the ANCOVA method and controlled for industry, years in international business and firm size. Findings: The results pointed out the recognized necessities for a specific alignment between environment, strategy and knowledge management capabilities. The findings also suggest that there is a positive relationship between knowledge management and performance. Research limitations/implications: As with most of the research, this paper has limitations. First, all data were collected using self-report surveys raising the possibility of response set biases. Additionally, all data were collected at one point in one country specifically in Croatia. Practical implications: Clearly, there is substantial interaction between the MNC subsidiary’s environment and the MNC subsidiary’s strategic orientation. Most notably, the environment studied here was at the competitive and consumer market level. Firms need to develop a strategic plan for knowledge management based upon the local environmental influences. Social implications: Other firms from Central and Eastern European and developed countries may compare their own environment, strategy and knowledge management practices in MNCs with findings from Croatia to be aware of similarities and market differences. Originality/value: The strategic employment of knowledge acquisition, conversion and application are examined across firms using the Prospector, Analyzer, Defender and Reactor strategic orientations

Does knowledge sharing pay? A multinational subsidiary perspective on knowledge outflows

Empirical studies on the impact of knowledge management on the performance of MNC subsidiaries remain elusive to date. This study examines the effect of knowledge management tools on absorptive capacity and firm performance with unique data from subsidiary units in a large German MNC – HeidelbergCement. The findings suggest that knowledge management tools unfold their performance impact through their significant influence on absorptive capacity and knowledge inflows. The key contributions to the current literature on knowledge flows in the MNC include an empirically corroborated link between deployments of knowledge management tools and their impact on the subsidiary employee’s ability and motivation to learn from internal knowledge flows in the MNC as well as their impact on subsidiary business performance

The Role of Corporate HR Funcitons in MNCs: The Interplay Between Corporate, Regional/National and Plant Level

The HR literature has been abundant in providing typologies of the roles of HR professionals in their organisation. These typologies are largely related to the changing nature of HRM over time, and the context in which empirical work was carried out. In this paper we focus on the context of the increasing internationalisation of firms and how this has an effect upon modern-day typologies of HR roles. We explore these roles by focusing on the way in which HRM practices come about. Especially in a MNC setting of increasing internationalisation of firms the issues of coordination, shared learning and standardisation versus leeway for adapting to the local context (customisation) are prominent. These issues present themselves both at the corporate and regional level and at the national and local (plant) level. On all these levels HR practitioners are active and find themselves amidst the interplay of both (de-)centralisation and standardisation versus customisation processes. This paper thus explores the way in which HR practices come into being and how they are implemented and coordinated. These insights help us understand further the roles of international corporate HR functions that are being identified. Our data is based on 65 interviews, which were held (as part of larger study of HR-function excellence) with HR managers, line managers and senior executives of six multinational companies in eight countries from September to December 2004. This data reveals new classifications of processes by which HR activities are developed, implemented and coordinated, both in terms of who is involved and how these processes are carried out

The Role of Corporate HR Functions In Multinational Corporations: The Interplay Between Corporate, Regional/National And Plant Level

The HR literature has been abundant in providing typologies of the roles of HR professionals in their organisation. These typologies are largely related to the changing nature of HRM over time, and the context in which empirical work was carried out. In this paper we focus on the context of the increasing internationalisation of firms and how this has an effect upon modern-day typologies of HR roles. We explore these roles by focusing on the way in which HRM practices come about. Especially in a MNC setting of increasing internationalisation of firms the issues of coordination, shared learning and standardisation versus leeway for adapting to the local context (customisation) are prominent. These issues present themselves both at the corporate and regional level and at the national and local (plant) level. On all these levels HR practitioners are active and find themselves amidst the interplay of both (de-)centralisation and standardisation versus customisation processes. This paper thus explores the way in which HR practices come into being and how they are implemented and coordinated. These insights help us understand further the roles of international corporate HR functions that are being identified. Our data is based on 65 interviews, which were held (as part of larger study of HR-function excellence) with HR managers, line managers and senior executives of six multinational companies in eight countries from September to December 2004. This data reveals new classifications of processes by which HR activities are developed, implemented and coordinated, both in terms of who is involved and how these processes are carried out

Ethics and taxation : a cross-national comparison of UK and Turkish firms

This paper investigates responses to tax related ethical issues facing busines

How Do Regional Headquarters Influence Corporate Decisions in Networked MNCs?

In networked MNCs where knowledge and power are distributed, corporate strategy processes benefit from input arising from many different levels of the organization. Recently, the regional (i.e., supra-national) level has been emphasized as an important additional source of knowledge and input, and as a bridge between local subsidiaries and global corporate headquarters. This paper builds theory on the antecedents to regional headquarters' influence on corporate decisions (i.e., organizational, behavioral, and motivational). Based on a survey of regional headquarters in Europe and their relations with MNC headquarters, we provide empirical evidence that a regional headquarters' autonomy and signaling behavior have significant effects on its influence on corporate strategy. Furthermore, we find support for our hypothesis that the regional headquarters' charter moderates such bottom-up influence

Digital Transformation of Global Business Processes: The Role of Dual Embeddedness

While much existing research on MNC digital transformation has followed a linear design and implementation logic using cross-sectional data, the multiple and divergent needs of headquarters (HQ) and subsidiaries suggest that MNC digital transformation actually involves a more iterative journey. In this paper, we apply the theoretical perspective of embeddedness to better define the complexities of MNC digital transformation, and identify how HQ and subsidiaries can navigate the complexities. This paper presents a longitudinal multi-case study of five Forbes Global 2000 firms that are HQ in Europe with large subsidiaries in the U.S. We find that the process of digital transformation is significantly influenced by internal embeddedness (relationship of HQ with subsidiaries and across subsidiaries) and external embeddedness (relationship of subsidiaries with their local markets), and also by strategy, financial and technology considerations. While HQ and subsidiaries have different perspectives, an understanding of these influences can help HQ and subsidiaries navigate digital transformation

Foreign Subsidiary Management in the Contemporary Multinational Enterprise

As multinational enterprises (MNEs) expand into foreign markets that are not only heterogeneous but also change in an unsynchronized manner, the locus of strategic decision-making increasingly lies with foreign subsidiaries as a means of coping with complex multinational operations. However, although this shift towards more subsidiary autonomy seemingly represents a key building block of contemporary MNE strategy, existing international business literature offers little theoretical clarity regarding when an MNE’s headquarters will increase levels of autonomy over foreign subsidiary strategic decisions. Moreover, while prior research highlights increased decision-making autonomy as a key driver of subsidiary performance outcomes, several studies point to efficiency- and agency-based problems associated with higher levels of autonomy. Following the predominance of subsidiary-focused research in international business studies over the last two decades, the aforementioned issues have resulted in scholarly calls to better our understanding of foreign subsidiary management by MNE headquarters and more generally revisit the role of MNE headquarters in subsidiary success. Accordingly, this dissertation aims to propel a more coherent and contextualized understanding of these interrelated and pressing issues, thus advancing theory of MNE strategy and structure. I submit three essays towards that end. Specifically, essay one leverages existing empirical evidence to conduct a meta-analysis of foreign subsidiary autonomy determinants, focusing on theoretically relevant conditions shaping the headquarters’ inclination to increase subsidiary autonomy. Essay two offers a more nuanced, contextualized theory of the outcomes of subsidiary autonomy by demonstrating that subsidiaries can innovate without autonomy in specific contextual settings. Finally, essay three assesses the role of the MNE headquarters, relative to other classes of explanatory variables, to explaining foreign subsidiary performance differences. The result of these efforts is a more lucid theory of global MNE strategy and structure