Christian Geisler Asmussen

Knowledge Transfer and Accommodation Effects in Multinational Corporations: Evidence from European Subsidiaries

Foreign subsidiaries in multinational corporations (MNCs) possess knowledge that has different sources (e.g., the firm itself or various sources in the environment). How such sources influence knowledge transfer is not well understood. Drawing on the “accommodation effect” from cognitive psychology, the authors argue that accumulation of externally sourced knowledge in a subsidiary may reduce the value of transferring that subsidiary’s knowledge to other parts of the MNC. The authors develop a parsimonious model of intrafirm knowledge transfer and test its predictions against a unique data set on subsidiary knowledge development that includes the sources of subsidiary knowledge and the extent of knowledge transfer to other MNC units. The authors show that a high level of externally sourced knowledge in a subsidiary is associated with a high level of knowledge transfer from that subsidiary only if a certain tipping point of internally sourced knowledge has been surpassed. This suggests that subsidiary knowledge stocks that are balanced in terms of their origins tend to be more valuable, congruous, and fungible, and therefore more likely to be transferred to other MNC units.

Global, Local, or Regional? The Locus of MNE Strategies

This paper provides an overview of the main insights arising from the ‘regional strategy’ literature. It also develops the contours of a new, rich research agenda for future international strategy scholarship, whereby the region should be introduced as an explicit, third geographic level of analysis, in addition to the country-level and the global level. Regional strategy analysis requires a fundamental rethink of mainstream theories in the international strategy sphere. This rethink involves, inter alia, internalization theory, with its resource-based view and transaction cost economics components, as well as the integration (I) – national responsiveness (NR) framework.

The Geographic Orientation of Multinational Enterprises and its Implications for Performance

Diametrically opposed views exist on the nature of global strategic management, the existence of global multinational enterprises (MNEs), and the performance implications of regional and global orientation. However, these divergent opinions on the nature of global strategy “should be considered a starting point for introducing systematically a regional component in international business research” (Rugman & Verbeke, 2004a, p. 5). Our aim in this chapter, therefore, is to examine the geographic orientation (i.e., regional versus global) of multinational firms to provide new insights into some of the important characteristics that distinguish between these MNE archetypes. Our findings suggest that the interaction between the MNEs organizational characteristics and its geographic orientation is associated with MNEs performance. By arguing for a contingency perspective on regional and global strategy, we thus attempt to bridge the gap between these two opposing viewpoints.

Foundations of regional versus global strategies of MNEs

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.

Mode Configuration Diversity: A New Perspective on Foreign Entry Mode Choice

There is a large body of literature on modes of entry in foreign markets, with a focus on make-or-buy decisions (Melin, 1992; Sarkar and Cavusgil, 1996; Datta et al., 2002; Malhotra et al., 2003). By using different theories and a large number of contextual variables, entry mode researchers have been quite successful in making predictions regarding such choices. They have had a dual aim of both testing theory and predicting firms’ choice of foreign market operation method given a number of characteristics of firms, products, industries, and home/host markets. However, researchers’ quest for theory testing and predictive vigor has, especially in an empirical context, led to simplifying the mode choices made by entrant firms. The success in theory testing and entry mode prediction comes at a cost: namely, the sacrifice of subtleties in how firms structure foreign activities — including the opportunities for using multiple and constantly changing mode packages in a foreign market (Benito and Welch, 1994; Petersen and Welch, 2002; Benito et al., 2005).

The dynamics of regional and global expansion

Purpose – The purpose of this paper is to model and test the dynamics of home-regional and global penetration by multi-national enterprises (MNEs). Design/methodology/approach – Drawing on international business (IB) theory, the authors model MNEs adjusting their home-regional and global market presence over time. The authors test the resulting hypotheses using sales data from a sample of 220 of the world’s largest MNEs over the period 1995-2005. The authors focus specifically on the relationship between levels of market penetration inside and outside the home region and rates of change in each domain. Findings – The authors demonstrate that MNEs do penetrate both home-regional and global markets, often simultaneously, and that penetration levels often oscillate within an MNE over time. The authors show firms’ rates of regional and global expansion to be affected by their existing regional and global penetration, as well as their interplay. Finally, the authors identify differences in the steady states at...

Global cities, ownership structures, and location choice: Foreign subsidiaries as bridgeheads

This paper aims to develop a more nuanced view of subnational location choice with a particular focus on global cities. It is argued that multinational firms may use global cities to establish bridgeheads-subsidiaries at intermediate levels of the ownership chain that enable further international as well as subnational expansion.,Beyond those host country subsidiaries that are directly owned by a foreign multinational, the authors go deeper and focus specifically on the multi-tiered – “subsidiaries of subsidiaries” to examine how the geographic origins and destinations of these investments are associated with micro-location choices in a host country.,The authors find that there are substantial differences between the types, roles, activities and geographic origins of the firms locating in different areas, and in the ownership structures spanning them. The authors propose that this has managerial and theoretical implications which may be understood based on an organizing framework describing a tradeoff between the pursuit of global connectivity and local density on the one hand and cost control on the other.,Empirical work on foreign location choices should take into account ownership structures and take a more fine-grained view of subnational variation.,Managers need to consider the trade-offs between connectivity, density and costs when making foreign location decisions.,Policy makers should think about the unique contributions that various subnational regions such as global and ordinary cities can make to global value chains.,The authors bridge the hitherto separate literatures pertaining to subsidiary mandates and subnational dimensions of foreign location choice by investigating the fine-grained roles and ownership structures from a supranational as well as subnational perspective.

Competitive Advantage and the Existence of the MNC: Earlier Research and the Role of Frictions

This paper provides a counterpoint to Buckley and Hashai’s paper “Is competitive advantage a necessary condition for the emergence of the Multinational Enterprise?”. We agree with their conclusion that it is, in fact, not a necessary condition, but argue that the theoretical reasons behind this are different and more diverse than the ones they propose. We suggest that much extant economic theory is in fact consistent with their view that firms may internationalize without owning or achieving competitive advantages, and model various other ways in which imperfections can drive their overall result. We strongly applaud Buckley and Hashai’s attempt to add more rigor to International Business theory and call for future work to extend this debate.

GEOGRAPHIC ORIENTATION AND PERFORMANCE OF GLOBAL VERSUS REGIONAL MNEs.

This paper examines the drivers that differentiate between regional and global MNCs, showing that the liability of foreignness creates conditions under which proprietary assets and the managerial r...