Dynamic capabilities for hire - How former host-country entrepreneurs as MNC subsidiary managers affect performance

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments

Knowledge protection strategies of multinational firms: A cross-country comparison

International knowledge spillovers, especially through multinational companies (MNCs), have recently been a major topic of discussion among academics and practitioners. Most research in this field focuses on knowledge sharing activities of MNC subsidiaries. Relatively little is known about their capabilities for protecting valuable knowledge from spilling over to host country competitors. We extend this stream of research by investigating both formal protection strategies (e.g. patenting) as well as strategic ones (secrecy, lead time, complex design). We conceptualize the breadth of firm's knowledge protection strategies and relate it to the particular situation of MNC subsidiaries. Moreover, we argue that their approaches differ with regard to host country challenges and opportunities. We address these issues empirically, based on a harmonized survey of innovation activities of more than 1800 firms located in Portugal and Germany. We find evidence that MNCs prefer broader sets of knowledge protection strategies in a host country with fewer opportunities for knowledge sourcing (Portugal). In Germany, though, they opt for narrower sets of knowledge protection strategies if they invest in innovation activities themselves. We deduce that these results are due to a need for reciprocity in knowledge exchanges to benefit fully from promising host country knowledge flows

Stop the knowledge flow: Knowledge protection intensity of MNC subsidiaries

International knowledge spillovers, especially through multinational companies (MNCs), have recently been a major topic of academic and management debate. However, most studies treat MNC subsidiaries as relatively passive actors. We challenge this assumption by investigating the drivers of knowledge protection intensity of MNC subsidiaries. We argue that knowledge protection intensity is determined by MNC subsidiary mandates and by opportunities and risks originating from the host region. We hypothesize that not just competence-creating but also competence-exploiting mandates increase knowledge protection intensity. In addition, technological cluster regions in the host country can be expected to provide opportunities for knowledge sourcing and MNC subsidiaries may be willing to protect knowledge less intensively to participate in cluster networks. We test our hypotheses using a dataset of 694 observations of 631 MNC subsidiaries in Germany and develop recommendations for research, managers and policy makers

Dynamic capabilities for hire – How former host-country entrepreneurs as MNC subsidiary managers affect performance

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments