The determinants of R&D-intensity differ between subsidiaries in a
multinational enterprise (MNE). Previous literature suggests that whether a
subsidiary achieves a competence-creating output mandate depends on the
qualities of its location. R&D strategies in competence-creating
subsidiaries are supply-driven while those in purely competence-exploiting
subsidiaries are demand-driven. Using
data on UK subsidiaries of non-UK MNEs, we find that the level of subsidiary
R&D depends on MNE group-level and subsidiary-level characteristics as well
as locational factors. The R&D of mandated subsidiaries rises with
acquisition, but for non-mandated subsidiaries R&D falls upon acquisition.
MNEs that grow through acquisition have more inter-subsidiary R&D diversity.
Short title: MNE Competence-Creating Subsidiary Mandates.
Keywords: MNEs, Competence, R&D, Subsidiary
entrepreneurship, Mandates, Acquisition.
would like to thank Bruce Kogut, Steve Kobrin, discussants at the European
International Business Academy meetings in Maastricht as well as seminar
participants at Wharton, Tsukuba, Kyoto and Paris for helpful comments.
Perceptive comments of two anonymous referees were extremely helpful.
The usual disclaimer applies.
Cantwell is Professor of International Business at Rutgers University and
Professor of International Economics at the University of Reading.
Mudambi is Associate Professor of Strategic Management at Temple University and
Reader in International Business at the University of Reading.
of General & Strategic Management
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