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The effects of spatial and contextual factors on headquarters resource allocation to MNE subsidiaries

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Abstract

Subsidiaries of multinational enterprises are located in a range of environments, in which they are exposed to organizational, national, and sub-national characteristics. Instead of being distributed equally, economic resources are agglomerated in specific countries, or even regions, and the subsidiaries located in these different environments have a heterogeneous resource configuration. This implies that dimensions of space related to geography and subsidiary network relationships may affect how the firm is managed. This paper investigates how spatial and contextual distance within multinational enterprises affects headquarters resource allocation to specific innovation transfer projects between subsidiaries. In brief, the results suggest that sub-national factors, such as the structure of the subsidiary network, offer a strong explanation for headquarters resource allocation. Positive and negative effects of national factors were also found, which implies that distance matters for headquarters resource allocation activities. By integrating the organizational and geographic dimensions, this paper contributes to knowledge about the drivers of headquarters resource allocation to subsidiaries, thereby extending theories related to how subsidiaries can evolve within the multinational enterprise with support from headquarters.

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Notes

  1. The authors wish to thank one of the anonymous reviewers for the suggestion to incorporate this framework.

  2. This study is part of a broader research project with the intention of investigating a range of questions related to the development and transfer of innovations in MNEs.

  3. Various techniques were used to test for potential differences. First, a variable was computed to capture working title, which was conceptualized as follows: 0=general/subsidiary manager; 1=R&D/technical manager; 2=mix of the two (possible when more than one respondent). t-tests were performed for the groups in different combinations, using the mean of the dependent variable as the investigated variable, to identify whether the respondents judged the question differently, depending on the working title. For example, the p-value for the general manager group against the R&D group was p=0.69, and the value for the general manager group against the mixed group was p=0.53. Thus the results were far from significant, and it seems as though the respondents’ perception of the dependent variable was not significantly different, regardless of the working title group affiliation: that is, the estimations by the respondents were similar, irrespective of the working title.

  4. This embeddedness measure does not encompass the subsidiary receiving the innovation.

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Acknowledgements

We would like to thank Area Editor Professor Paul Almeida and the three anonymous reviewers for insightful comments and suggestions. All remaining errors are our own. We are grateful to our colleagues from the TIME-research project for data collection. Financial support from Handelsbanken's Research Foundation and the Bank of Sweden Tercentenary Foundation is gratefully acknowledged.

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Authors and Affiliations

  1. Department of Business Studies, Uppsala University, Uppsala, Sweden

    Henrik Dellestrand & Philip Kappen

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  1. Henrik Dellestrand
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  2. Philip Kappen
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Correspondence to Henrik Dellestrand.

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Accepted by Paul Almeida, Area Editor, 14 November 2011. This paper has been with the authors for three revisions.

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Dellestrand, H., Kappen, P. The effects of spatial and contextual factors on headquarters resource allocation to MNE subsidiaries. J Int Bus Stud 43, 219–243 (2012). https://doi.org/10.1057/jibs.2011.57

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