Examining multinational corporations R&D subsidiaries embeddedness in multiple networks of knowledge

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.This research study elaborates on one of the most important features of the modern International Business (IB) area; the multinational R&D subsidiary. Taking into consideration the strategic importance and the particular role the R&D subsidiary plays, this study sheds light on the multiple forms of knowledge networks in which the R&D subsidiary is embedded. Accordingly, based on the two already known dichotomies of subsidiary knowledge networks (external home vs. external host and external host vs. internal) this thesis draws on the existing theory and empirical evidence and proposes a triangular view (i.e. external home, external host and internal) between the R&D subsidiary and its embeddedness within the surrounding knowledge networks. Accordingly, based on three major theories of the management in the IB area, Social Network Theory (SNT), Resource Dependency Theory (RDT) and Agency Theory (AT), this study provides answers on a number of under researched questions. First, what are the determinants of each type of R&D subsidiary embeddedness in each of the three available knowledge networks? Second, considering the relative costs influencing R&D subsidiaries to rely more or less on one form of embeddedness compared to another, what sort of relationship exists (i.e. complementary or substitutive) between the aforementioned forms of R&D subsidiary embeddedness? Finally, considering the contextual- and HQ-specific factors that impact the overall functioning of the R&D subsidiary, what sort of effect do the multiple forms of R&D subsidiary embeddedness have on the latter’s innovative performance? This study adopts a quantitative approach and employs appropriate econometric methods in order to provide answers to the aforementioned research questions. Furthermore, data from three different sources are amalgamated. First, a unique survey questionnaire is utilised. This instrument was originally developed in the University of Reading and corresponds to both subsidiaries and the HQ. The sample covers Fortune 500 Multinational Enterprises (MNEs). Second, and in order to augment the information derived from the survey, supplementary information on patent characteristics is sourced from the United States Patent and Trademark Office (USPTO) database. Third, a range of aggregate-level (secondary) data enriches the existing dataset. The findings reveal that each form of R&D subsidiary embeddedness is determined by a set of different predictors. Precisely, it is found that host location’s macroeconomic uncertainty positively influences subsidiary’s embeddedness in the home location’s knowledge network. Being an R&D subsidiary and having an adaptation and support-oriented profile, as well as being highly centralised to the HQ, negatively influences the R&D subsidiary’s embeddedness in the host location’s knowledge network. On the other hand, having a more research intensive and internationally integrated R&D role positively influences the R&D subsidiary’s embeddedness in the internal knowledge network of the MNE. The findings also indicate that a complementary relationship exists between external home and external host, as well as among external host and internal knowledge networks. On the contrary, a substitutive relationship is indicated between external home and internal networks under which the R&D subsidiary is embedded. Finally, as regards the last research question the results indicate that only internal embeddedness has a positive and significant impact on innovative performance, while scientific and research endowment of the host locations is also found to positively influence the innovative output of the R&D subsidiary. Implications for academics and practitioners (both managers and policy makers) are widely discussed and suggest that the three-dimensional view of embeddedness is useful in understanding and explaining the way MNEs’ foreign R&D subsidiaries operate.CEIBIEM previous Director Professor Francesco Moscone who agreed to provide financial aid for Postgraduate Certificate in Econometrics at Birkbeck College. Brunel Business School for awarding full studentship

Achieving the paradox of concurrent internationalization speed: Internationalizing rapidly in both breadth and depth

In this paper, we draw on the notions of breadth and depth of internationalization speed in an attempt to examine the performance implications for multinational enterprises (MNEs) that rapidly and concurrently internationalize in new and existing foreign markets. Specifically, we examine the organizational paradox which suggests that firms which grow internationally by concurrently expanding rapidly in both new foreign markets (breadth) and in foreign markets they currently operate (depth), are better off than firms which do not adopt such an approach. Since past research has not examined the interaction between the breadth and depth of MNE internationalization speed on firm performance, we contribute to the temporal dimension of the internationalization process by developing a novel, yet paradoxical approach. Our analysis is based on a longitudinal sample of the world’s largest retail MNEs covering the period 2003 – 2012, which includes the 2008 financial crisis that had a significant effect on the global economy. We find that concurrent internationalization speed positively relates to firm performance during periods of stability. Further, we draw from the upper-echelons theory and find that the aforementioned relationship can be strengthened by the level of CEO international experience and CEO education

Digital sales channels and the relationship between product and international diversification: Evidence from going digital retail MNEs

We argue that in the era of e-commerce, retail firms can simultaneously grow their product and international portfolio by adopting a multichannel strategy, that is, using digital and physical channels. Drawing on the resource bundling perspective, we argue that the previously advocated negative relationship between product and international diversification is mitigated by the retail firm's digital sales intensity. By separately examining product and international diversification across digital and physical channels, we find that while increased product diversification in physical channels relates negatively with international diversification in both physical and digital channels, increased product diversification in digital channels relates positively with international diversification in both channels. Our hypotheses are tested against a sample of 122 born physical - going digital retail MNEs over the period 2006–2016

Institutional distance and location choice: an experimental approach to the perception puzzle

In this research, we designed and implemented a unique vignette experiment to study the effect of managers’ perceptions of institutional distance on foreign location choice, as well as the moderating effect of managerial international experience and preferred entry mode on this relationship. We employ an experimental vignette methodology (EVM) approach applied in the context of Chinese managers to test the causal relationships depicted in our hypotheses. In this way, we measure the decision-makers' perceptions ex ante, i.e., in conjunction with and prior to a decision about a foreign location choice. Our findings show that managers’ ex-ante perceptions of institutional distance negatively affect decisions on foreign location choice. Also, we find that managerial international experience and preference for high commitment entry modes mitigate the negative effect of managers’ perceptions of institutional distance on foreign location choice. This research study adds to our understanding of the effect of managers’ perceptions of institutional distance and managerial contingencies on foreign location decisions. Further, it advances novel experimental design in international business research in general and on foreign location choice in particular

Internationalisation speed and MNE performance: A study of the market-seeking expansion of retail MNEs

Existing research is divided on whether firms that rapidly expand their overseas operations perform better than firms that internationalize slowly. Drawing on Penrose’s theory of the growth of the firm we argue that the positive effects of rapid internationalization give way to negative effects with increasing internationalization speed, leading to an inverted U-shaped association between internationalization speed and firm performance. We analyse the market-seeking expansion of 110 retailers over a 10-year period (2003–2012) and find support for a curvilinear relationship between internationalization speed and firm performance that is moderated by the geographic scope of firms’ internationalization path and firms’ international experience. Our study contributes to resolving conflicting views on the link between internationalization speed and firm performance

The contingent effect of product relatedness on B2B firms’ pricing strategy. Evidence from India

This paper empirically examines the contingent effect of product-related diversification on B2B firms' pricing strategy. Drawing our arguments from the recent advances in corporate strategy (i.e., resource-based view of the firm and product diversification strategy) and industrial marketing literatures, we argue that product-related diversifiers are more capable in adopting a high rather than a low pricing strategy. We also contend that this relationship will be positively moderated by a number of firm-specific factors, namely a firm's ability to establish high barriers to entry in its focal industry, as well as its strategic decision to invest in promotion strategy. We test our hypotheses against primary data collected from India. The data consists of a cross section from 127 domestic firms and subsidiaries of foreign MNEs operating in the chemicals / pharmaceuticals and the electronics industry. The results provide support for all the aforementioned hypotheses

Revisiting the relationship between product diversification and internationalization process in the context of emerging market MNEs

We examine the contingent effect of existing product diversification on the scope and speed of firms’ subsequent internationalization. Understanding these effects is important because prior research on the product - geographic diversification relationship assumes that the relevant decisions are taken simultaneously. This assumption does not apply to firms that consider international expansion only after having grown domestically through product diversification. Drawing on and extending transaction cost logics, we argue that product-diversified firms following geographically diverse and rapid internationalization incur higher transaction costs and are thus less likely to do so. We also find that international experience plays a moderating role

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector. An extended penrosean perspective

Building on and extending Penrosean logic we argue that rapid international expansion by firms might lead to a breach of Penrosean constraints on efficient expansion and to subsequent divestment of international operations to bring firm scope back into Penrosean constraints. We further predict that intra-regional concentration and international experience moderate the above effect because they influence firms ability to avoid a breach of Penrosean constraints and/or weaken the consequences of such a breach. Using data on the international expansion and divestment of large retail MNEs over the period 2003-2012 we find empirical support for the proposed extended Penrose effect in explaining international divestment as well as for the moderating effects of intra-regional concentration and international experience. Our study contributes to the development of Penrosean logic and to our understanding of the factors that drive firms to divest overseas operations

Impediments on the Way to Entrepreneurship. Some New Evidence from the EU's Post-socialist World

The purpose of this study is to shed light on demographic, environmental and perceptional characteristics and their impact on entrepreneurial engagement in the post-socialist region of the European Union (EU). Data from the Flash Eurobarometer Survey on Entrepreneurship 2007 are used, while a binomial probit regression model is employed. In total, 3,454 observations from eight transition economies of the EU are incorporated in the model. In the econometric analysis, a set of individual and country-level variables is used and provides evidence that males, as well as individuals whose mother was entrepreneur are more likely to engage in entrepreneurship. On the other hand, economic factors, such as unemployment and economic growth are both reported as negative determinants of self-employment. Interestingly the findings also suggest that lack of financial resources, a large number of start-up procedures and increased tax rates are all positively related to entrepreneurial engagement. Finally, risk-averse individuals are more likely to get involved with entrepreneurship compared to risk lovers. Implications are discussed analytically and it is suggested that the existing structural changes and transition process under which the examined countries operate have influenced the attitude of individuals toward entrepreneurial engagement throughout the last two decades. The study provides useful information in relation to the attitude of post-socialist society toward structural issues which possibly dishearten its engagement to entrepreneurship. First, the geographical area approves of great interest since it provides new evidence regarding the perceptions of people who live in this particular post-socialist region. Second, the time this research was conducted (i.e. 2007) means now is an ideal time for re-examination, considering that these countries have recently become members of the EU