Centers of excellence in multinational corporations
Article first published online: 24 SEP 2002
Copyright © 2002 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 23, Issue 11, pages 997–1018, November 2002
How to Cite
Frost, T. S., Birkinshaw, J. M. and Ensign, P. C. (2002), Centers of excellence in multinational corporations. Strat. Mgmt. J., 23: 997–1018. doi: 10.1002/smj.273
- Issue published online: 24 SEP 2002
- Article first published online: 24 SEP 2002
- Manuscript Accepted: 28 MAY 2002
- Manuscript Received: 25 OCT 1999
- center of excellence;
- multinational corporation;
- foreign subsidiary
This paper seeks to understand the conditions under which ‘centers of excellence’ emerge in foreign subsidiaries of multinational firms. We define a center of excellence as an organizational unit that embodies a set of capabilities that has been explicitly recognized by the firm as an important source of value creation, with the intention that these capabilities be leveraged by and/or disseminated to other parts of the firm. Drawing on overlapping research in international business and strategic management, we argue that the formation of centers of excellence is shaped by conditions in the subsidiary's local environment as well as by various aspects of the subsidiary's relationship with other parts of the multinational firm. Based on a survey of 99 foreign units in Canada, our results highlight the fundamental role played by parent firm investment as well as the role of internal and external organizations in the development of subsidiary capabilities. Performance implications of the center of excellence phenomenon are also explored. Copyright © 2002 John Wiley & Sons, Ltd.