Rationality vs Ignorance: The Role of MNE Headquarters in Subsidiaries’ Innovation Processes

It has been recognized that innovation processes in multinational enterprises (MNEs) are largely context-specific, local activities carried out at the subsidiary level (e.g., Andersson, Forsgren, & Holm, 2007; Asakawa, 2001; Birkinshaw & Hood, 1998; Doz & Prahalad, 1981; Ghoshal & Bartlett, 1988; Hedlund, 1986; Rugman & Verbeke, 2001). As a consequence, the ability of corporate headquarters (HQ) to influence these widely dispersed processes has become a major issue in contemporary research on MNEs. What is the role of HQ in these processes? To what extent can it participate in and play an active role in specific innovation processes? What are the performance implications when it gets involved? These questions, which have not yet established answers, warrant further research. In addition, studies aimed at finding the answers have not yet debated the validity of alternative perspectives related to the knowledge asymmetry between the potential participants in innovation processes.