MNE competence-creating subsidiary mandates

Authors

  • John Cantwell,

    1. Rutgers Business School-Newark and New Brunswick, Rutgers University, Newark, New Jersey, U.S.A.
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  • Ram Mudambi

    Corresponding author
    1. Fox School of Business and Management, Temple University, Philadelphia, Pennsylvania, U.S.A.
    • Department of General and Strategic Management, Fox School of Business and Management, Temple University, Speakman Hall (006-00), Philadelphia, PA 19122, U.S.A.
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Abstract

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 U.K. subsidiaries of non-U.K. 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. Copyright © 2005 John Wiley & Sons, Ltd.

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