Divisional power, intra-firm bargaining and rent-seeking behavior in multidivisional corporations

Increasing divisional operational responsibilities and the dispersal of knowledge creating activities within the firm have loosened the traditional hierarchical structure of multi-divisional firms. In this paper we argue that a similar mixture of competition and cooperation that is found in inter-firm relationships now characterizes intra-firm relationships. Our model describes a situation in which divisional managers have their own objectives that may diverge from those of the firm as a whole.Thus, divisional managers are both profit-seekers in creating value that can be appropriated and rent-seekers in attempting to maximize their divisional share of the value d by the firm. The bargaining power of a division to maintain and increase its share of the profits generated by the operations of the firm as whole is crucially determined on its strategic independence.

Government Policy toward MNEs in the Presence of Foreign Exchange Scarcity

While there is a large literature on government policy towards MNEs, the effects of output tradability have not been addressed. In this paper the topic is studied in the context of foreign exchange scarcity and shown to be of crucial importance in determining the effects of government policy toward the MNE. The analysis proceeds by considering two alternative specifications of the output good. In the first case, the output is produced solely for domestic consumption. In the second, the good may be either sold domestically or exported. The effects of government policy in these two scenarios are radically different. These results suggest that the tradability of the output good is part of the explanation of the differing policies adopted by various developing countries towards foreign firms.MNE

Location, collocation and innovation by multinational enterprises: a research agenda

The distribution of creative economic activity over space has been viewed from three distinct perspectives. International business focuses on the multinational enterprise and the location of activities across national borders; economic geography studies the characteristics of the location site; and innovation scholars are mainly concerned with the technologies and knowledge that arises from the interaction of location and the creativity of actors. All these communities have drawn attention to collocation. However, the nexus of the three literatures is surprisingly thin, in particular with regard to the conditions under which collocation is an advantage or a disadvantage. In this paper, we take stock of the knowledge developed by the three communities and move the discussion further by qualifying a number of these conditions. Based on these considerations, we then propose a number of directions for future research

What are the most promising conduits for foreign knowledge inflows? Innovation networks in the Chinese pharmaceutical industry

We study innovation networks in emerging markets, where foreign actors have been identified as key sources of knowledge spillovers as well as progenitors of industry clusters. Focusing on connectivity as a channel for international knowledge sourcing, we widen our lens beyond multinational enter- prises (MNEs) to include critical innovative actors such as research institutions (i.e. universities and research centers). We examine the geographic dispersion of co-inventor networks generated by US patents associated with the Chinese pharmaceutical industry. Previous research has highlighted the role of organizationally driven MNE networks as enablers of foreign knowledge inflows to less de- veloped countries. However, our results emphasize the critical role of individually motivated networks arising from advanced economy research institutions in connecting China to global knowledge networks

Strategic Adaptation to Deregulation in the Indian Auto Components Industry

We explore the strategic adaptation by domestic firms subsequent to economic liberalization and industry deregulation in an emerging economy. We study the Indian auto components industry during a ten-year period (1992-2002), using the Prowess database complemented by in-depth interviews with senior industry executives. Firms in our sample accounted for over 70 percent of industry sales during the period. Results of our analysis of indicate that technology licensing by domestic firms was significantly and positively related to their performance during the six-year period (1992-1997) immediately after industry deregulation. During the subsequent five-year period (1998-2002) domestic firms’ ability to create strong relational ties with downstream automakers was more significantly and positively related to performance. A potential implication of our study is that domestic firms need to adapt their strategic behavior by forging successive “fits” with the evolving policy and market environments

A longitudinal study of MNE innovation: the case of Goodyear

Purpose – The purpose of this article is to provide insights into the innovation trajectory, and knowledge pipelines of mature industry multinational enterprises (MNEs). The ability to innovate constantly amidst a turbulent and competitive environment is often the key force behind MNE survival and dominance. Design/methodology/approach – This study conducts an in-depth longitudinal study of the Goodyear Tire and Rubber Company, a global manufacturing company in the tire and rubber industry. The findings are based on USPTO patent and trademark data from 1975-2005. Findings – The analysis reveals three crucial trends: the major role of continuous investment in innovation in the firm’s survival and turnaround; the evolution of the firm’s innovation network from a headquarters-centric model toward more geographical dispersal; and the changing mix of innovation from traditional “hard” science-based research toward a greater emphasis on “softer” competencies in design and trademarks. This third trend, in particular, opens up important new avenues for research on MNE innovation practices. Originality/value – This study integrates historical analysis of a single firm in the context of its changing industry environment. The historical analysis is enriched by a detailed longitudinal quantitative analysis using a variegated dataset of patents and trademarks to investigate innovation

Knowledge connectivity in an adverse context: global value chains and Pakistani offshore service providers

This paper contributes to theory building efforts around the concept of knowledge connectivity and its relevance in buyer-supplier relationships in global value chains. We use the Pakistani IT industry as our study context. Pakistan suffered a significant adverse perception bias following terror attacks in 2008-09. We based our illustration on the experiences of 12 Pakistani offshore service providers (OSPs) who succeeded in offsetting the negative implications of the country’s adverse political environment. The case firms link into two distinct value chain configurations. In each configuration, we observe a distinct course of strategic action, which we term step-up and break-out, respectively. While these observations emerged from the Pakistani context, the implications of the resulting dynamic framework for theory and practice go beyond this particular adverse country setting