Purpose The purpose of this paper is to contribute to the discussion on how multinational company (MNC) headquarters (HQs) can manage the existing coopetition paradox to ensure innovation within the MNC. In contrast to the rather scarce previous research, the authors argue that HQ needs to solve the coopetition paradox under the sway of a parenting paradox. Hence, HQ faces a dual paradox.Design/methodology/approach Drawing on the literature on HQ's role during MNCs' innovation processes, this conceptual paper revisits the previously suggested HQ measures to enable coopetition among subsidiaries. By applying a sheer ignorance perspective, the authors contribute with a more nuanced understanding of the HQ's role in innovation activities.Findings The article identifies four challenges as the HQ faces a parenting paradox that hinders its ability to solve the coopetition paradox: context specificity of subsidiaries' innovation work, normative expectations of subsidiary managers, potential opportunistic behavior of HQ manager and HQ underestimation of needed resources. The article suggests that HQ needs to become more informed and preferably even embedded in the local innovation networks of its most important subsidiaries and that coopetition should not be managed solely on an HQ level.Originality/value Advocating a sheer ignorance perspective, the article pioneers in discussing the role that HQ plays in managing coopetition among subsidiaries in innovation activities.

This paper explores how different types of mandates (competence-creating and competence-exploiting) shape subsidiary coopetitive behavior and the role subsidiary managers play in this process. We conducted an in-depth qualitative study investigating 50 episodes of competition and cooperation observed across five headquarters–subsidiary relationships. Findings demonstrate that a competence-creating subsidiary mandate role tend to influence more competitive behavior, since the role brings status and prestige, whereas cooperative behavior is observed for subsidiaries involved in competence-exploiting mandate role as a response to the need for survival. By examining the influence of different mandates and the role of subsidiary managers, this study enhances our comprehension of how competence-creating and competence-exploiting mandate roles impact subsidiary behavior. Additionally, we address the crucial role subsidiary managers play in shaping the mandate dynamics within MNEs, as their aspiration for career development motivates them to engage strategically in competition and cooperation with their peers at different times. Understanding these dynamics can help MNE managers to make more informed decisions regarding resource allocation, innovation strategies, and subsidiary role development, ultimately contributing to the MNE’s competitiveness and success.

Purpose In this paper, the authors contribute with insights on competition and cooperation in multinational enterprises with a focus on challenges related to these governance mechanisms in a knowledge development context. The mechanisms have been widely recognized as important for developing knowledge, but their contradicting nature implies considerable complexity when it comes to governance. The complexity is further increased as a result of the headquarters-subsidiary relationships. The aim of this paper is to contribute with theoretical and empirical insights on these aspects by focusing on the research question: How and why does competition and cooperation in an MNE emerge over time? Design/methodology/approach A manufacturing MNE with headquarters (HQ) in Sweden is analyzed on both HQ and subsidiary levels. Interviews with 24 managers in Sweden and India have been performed. Findings The study illustrates that competition and cooperation are integral aspects in HQ-subsidiary relationships. The results show that both competition and cooperation depend on environmental, organizational and object-related conditions and that these conditions influence the dynamics of the interplay. The importance of including a subsidiary perspective and the interdependencies in an MNE setting are emphasized. Originality/value The authors add to the discussion on the interplay between competition and cooperation as they play an important role for knowledge development in MNEs. The results indicate that they do not take place simultaneously, and therefore, the authors suggest that the dynamic can be better understood by focusing on the interplay and analyze the concepts separately.

The literature emphasises that technological advances have enabled firms to expand internationally at accelerated speed. Yet, technological advances are treated as a contextual variable and little is known about how firm-level technological innovations influence the internationalisation speed of small and medium-sized enterprises (SMEs). To address this shortcoming, we draw on insights based on capability development theory to establish the effects of innovation timing and pace on SME international expansion speed. We test our conceptual model using a sample of 180 Swedish SMEs and show that the faster the innovation pace, the faster the internationalisation. We then address the boundary conditions of this relationship to show that the elapsed time between a firm's founding and first innovation negatively moderates the positive effects of its innovation pace. Our findings have theoretical, managerial and policy implications.

The purpose of this article is to examine the performance consequences of an early and rapid foreign network entry process. We develop a theoretical model that uses theories on first mover advantage and capability development as mechanisms to explain the relationship between the timing and speed of entering the network and SME performance in the network. The theoretical model is tested with a dataset collected on-site at 198 SMEs. The results show that earlier network entry positively affects performance and that the speed of relationship development in the network entered has a curvilinear (inverted U-shaped) effect on SMEs’ performance. Although the extant literature recognizes that firm performance is affected by the degree of insidership reached in foreign business networks, little is known about the performance effects of the timing and the speed of entering the network. Our findings suggest that managers of exporting SMEs should move first into new networks to give themselves time to grow slowly in the foreign market network to mitigate diseconomies of time compression.

This study investigates how competition or cooperation are implemented strategically by the headquarters (HQ) to influence its subsidiaries’ behavior. In specific, we center our attention on the strategies MNEs consider for different internal configurations of competition or cooperation. Our main argument is that competitive or cooperative relationships are socially constructed and to discuss this we combine literature-based conceptual arguments with empirical observations on headquarters-subsidiary relationships. Our study demonstrates that cooperation or competition (whether headquarter-led or subsidiary-led) are manifestations of reward systems, mandates, and position systems. These important strategic and structural influencing factors explain how technologies are developed and how responsibilities are distributed across the organization. Hence, organizing sometimes for competition or sometimes for cooperation is challenging, yet very helpful, to headquarters addressing innovation capability development, to facilitate knowledge transfer and learning as well as to advance technological innovation.

PurposeIn the mainstream international business literature on multinational corporations (MNCs), an authoritative central headquarter (HQ) that transfers standardised practices to its subsidiaries remains the norm. This study aims to explore how MNCs coordinate their management practices through principles.Design/methodology/approachThe paper draws on empirical findings from a qualitative in-depth single case study based on evidence-rich qualitative data including observations from how a high-tech MNC headquartered in Sweden coordinates its development practices.FindingsAn alternative informal coordination approach (i.e. coordination by principles) is identified. Additionally, antecedents and implications of the approach are presented.Practical implicationsCoordination by Principles may facilitate the internalisation of practices and be a feasible compromise between context adaptation and traditional standardisation, particularly for MNCs with highly heterogeneous research and development operations.Originality/valueThis paper highlights the importance of acknowledging that firm practices often are based on management ideas that HQs adopt to prevent loss of legitimacy. As such, this study contributes to the scarce literature that critically questions the assumption that HQs solely transfer practices to subsidiaries to improve subsidiary efficiency and performance.

Economists and researchers of decision-making and business behavior increasingly rely on findings from the field of economic psychology. We argue that, by following a similar route, knowledge of firms’ internationalization is considerably enriched. The aim of this commentary is to point to the potential of including insights from research on human cognition and judgment in explaining internationalization behavior. We offer some examples relying upon commitments and knowledge development as outlined in the Uppsala model and thereby propose a conceptualization linking the nano- and micro-levels within the model.

PurposeWhile 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/approachThis 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.FindingsThe 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/valueClarifying 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.

In this conceptual paper, we add to the discourse on the Uppsala model's (in)ability to explain a firm's internationalization through non-linear dynamics and discontinuities by highlighting individuals' behaviors. We include (more) realistic assumptions about cognitive, emotional, and social triggers as well as biases that affect managers' decision-making. Distinguishing between the process and outcome of resource commitment decisions, we conclude that, though discontinuous internationalization processes are rare, disruptive outcomes can occur through incremental commitment processes.

Purpose This paper aims to contribute to the multinational company (MNC) literature by studying the diffusion of a management idea within an MNC and its interaction with the MNC's corporate immune system (CIS). Design/methodology/approach The qualitative single case study draws on evidence of how a management idea augments within an MNC and changes its development practice. Findings The study identifies four phases of the diffusion process and presents the interaction between the management idea and the CIS in each phase. Practical implications The more subsidiaries within an MNC that take the initiative to adopt a management idea, the harder will it become for the headquarters (HQ) to reject it. Thus, to ensure that changes in management practices are based on informed and, ideally, deliberate decisions, managers should critically evaluate management ideas immediately at inception. Originality/value The study breaks new ground by explaining how the CIS reacts to the diffusion of management ideas in MNCs.

In this chapter we investigate the organization of competition among subunits in multinational corporations (MNCs) with the intent to explore how headquarters encourages and organizes for competition and when and why competition is handled by subunits that cooperate. The organization of competition by headquarters among the subunits is characterized by special conditions due to the formal hierarchical organization and access to legitimate tools to instil competition. Competition arises around three sources: allocation of resources, system position and headquarters attention, and the allocation of subsidiary mandates. Empirical findings from six MNCs are used to illustrate the adoption of cooperative and non-cooperative behaviours among subunits as outcomes of headquarters implementation of different tools to organize for competition. The findings also show that headquarters is not only a fourth—but also a third—party as it adjudicates many of the competitive situations that it organizes among its units.

This article contributes to the literature on mergers and acquisitions that hitherto has neglected the demerger of previously merged/acquired firms by offering a process description. To provide structure and deliver insights into such a process, we apply the metaphor of a divorce process and use insights from a case study—namely, the demerger between Ford Motor Company and Volvo Cars Corporation. Our findings suggest that a demerger process of previously merged/acquired firms can be divided into six phases: disillusionment, erosion, detachment, physical separation, mourning, and second adolescence/hard work. The motives for the initial merger or acquisition and the degree of integration are possible factors argued to play a major role in the identified phases during the demerger.

Purpose The 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/approach The article draws on insights from a longitudinal comparative case study of three Swedish MNCs' Indian R&D units. Findings The 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/implications Drawing 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 implications The 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/value The 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.

Purpose This paper aims to examine the de-internationalization process to determine how different forms of attitudinal commitment influence the de-internationalization process. Design/methodology/approach Because of the exploratory nature of the study, a case study design is used. Two cases of Swedish companies, which de-internationalize from the French market, are studied. Findings Different commitment profiles influence the de-internationalization process. In particular, a general commitment profile, in which affective, normative, instrumental and continuance commitment play a role, influences the timing of de-internationalization, while the effort directed toward the execution of de-internationalization is mainly influenced by normative commitment and the extent of de-internationalization mainly by instrumental commitment. Research limitations/implications By offering three propositions regarding the four types of commitment and the effects of these commitment types on the process of de-internationalization, the authors contribute to the literature on de-internationalization and the commitment literature. Practical implications The findings suggest that there is a risk that managers continue to commit resources to a market for a longer period without clear benefits because of affective and continuance commitment. As local employees persist in committing to the local market because of continuance commitment, offering viable alternatives reduces commitment to the foreign operations. Originality/value Distinguishing between different types of commitment, the paper builds on a more fine-grained typology of commitment than previous internationalization literature. Thereby, the paper opens up for new insights in the de-internationalization process.

PurposeThis paper aims to contribute to the subsidiary initiative literature by studying the interaction between a headquarters and its subsidiary during an initiative process that has the potential to “wag the corporate dog” that is, for the global corporation’s promising subsidiary initiative in a strategically important emerging market to question the corporation’s prevailing schemata.Design/methodology/approachThe longitudinal single case study draws on evidence from the Indian subsidiary of Swedish Volvo Bus and its efforts to introduce a value product in India.FindingsThe study argues that wag the dog initiatives provoke the corporate immune system independent of the initiative’s potential and the subsidiary’s autonomy and legitimacy. If the idea behind the wag the dog initiative is perceived as strategically important for the multinational corporation, then the corporate immune system tries to engulf – most likely unsuccessfully – the idea within the prevailing schemata. Failed attempts to engulf the initiative weaken the corporate immune system temporarily, thereby opening the organization to revitalization of the original initiative. Resistance, even though weakened, from the corporate immune system continues to exist.Practical implicationsSubsidiary managers need to avoid having their headquarters perceive an initiative as a wag the dog initiative by balancing their need to sell persistently the initiative with avoiding negative attention.Originality/valueThis study is a pioneer in explaining how the corporate immune system reacts towards wag the dog initiatives taken from subsidiaries in large emerging markets.

While prior research has recognized the importance of intra-firm competition or cooperation for innovation and performance, we know little how competition and cooperation should be internally organ ...

In India, it has become imperative for multinational corporations (MNCs) to succeed in the value segment. Based on a longitudinal case study of Volvo Bus and understanding the introduction of a value product as a subsidiary initiative, we take an internal perspective highlighting the interaction between the headquarters and the local subsidiary. We find that recurring resistance of the corporate immune system—as a political intervention or lack of resources and support—is a major hindrance for the introduction of a value product; this results in the MNC distancing itself from the value product opportunity over time.

A myriad of reasons for de-internationalization have been identified in the current literature, but how firms de-internationalize has been studied only sporadically. Building on two cases of medium ...