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Management International Review
Published in: Management International Review 4/2018

28-05-2018 | Research Article

From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets

Authors: Srivardhini K. Jha, Charles Dhanaraj, Rishikesha T. Krishnan

Published in: Management International Review | Issue 4/2018

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Abstract

Our inductive study of nine European multinational enterprises (MNEs) and their R&D units in India uncovers a distinct trajectory of overseas R&D evolution in emerging markets. In contrast to the well-established trajectory of foreign R&D evolution that begins by adapting existing MNE products to the local market, this alternative trajectory begins by leveraging cost arbitrage and progresses through three unique configurations towards a global product mandate. Our study also unravels how the R&D units build embeddedness within the MNE network and with the local ecosystem, and how such embeddedness influences the evolution of their R&D mandate. We present a stylized taxonomy of R&D configurations and integrate this into an evolutionary model of emerging market R&D and suggest that research on MNE R&D in emerging markets must shift from focusing on the macro environment to exploring the dynamics of embeddedness. The study also provides useful insights to practitioners on managing R&D in emerging markets.
previous article Hybrid State-Owned Enterprises and Internationalization: Evidence from Emerging Market Multinationals

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Footnotes
1
This study was part of a larger effort commissioned and funded by the European Commission to understand the nature of innovation within European Union (EU) firms, and the nature of EU MNE R&D in India.
 
2
Unless an OU evolves into an FTU, it has little chance of surviving, since the nature of work undertaken by an OU can easily be substituted with an arm’s-length outsourcing arrangement or consolidated within another subsidiary. Therefore, any unit that fails to move beyond OU to take on a more strategic role is unlikely to survive.
 
3
We thank one of the anonymous reviewers for pointing this out.
 
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Metadata
Title
From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets
Authors
Srivardhini K. Jha
Charles Dhanaraj
Rishikesha T. Krishnan
Publication date
28-05-2018
Publisher
Springer Berlin Heidelberg
Published in
Management International Review / Issue 4/2018
Print ISSN: 0938-8249
Electronic ISSN: 1861-8901
DOI
https://doi.org/10.1007/s11575-018-0353-3

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