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Subsidiary Initiatives in International Research and Development: A Survival Analysis

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I conduct this examination within the context of the global research and development (R&D) organisation of a multinational company (MNC). My research therefore intends to answer a primary research question: What determines the probability of survival of an initiative sent by a foreign R&D subsidiary?
To answer this research question, I proceed as follows: First, to frame the problem within both the subsidiary initiative and international R&D literature, I set out the problem of underutilisation of R&D resources, that is, the effect that occurs when most innovations still come from the MNC's parent firm, even though the MNC controls the resources of its international R&D subsidiaries. Although past research has advocated that in such a setting, subsidiaries should take an entrepreneurial stance and send initiatives to the parent firm to achieve better leverage of their resources and capabilities, empirical results consistently suggest that the problem of underutilisation is still not mitigated. This effect in turn suggests that most subsidiary initiatives are bound to fail. Thus, an investigation of why one initiative survives while another fails is appropriate.
To address this problem, I first develop a theoretical model of the subsidiary initiative process, based on an analogy constructed on a foundation of communication psychology. This model identifies six elements that shape the initiative process. To ensure data availability for empirical testing and better control of unobserved variance, I then focus on one of these six elements, namely, initiative characteristics. Subsequently, I develop six hypotheses that describe initiative characteristics upon which the survival or failure of a subsidiary initiative may depend.
After commenting on the statistical method of survival analysis that I employ throughout this dissertation, I test these hypotheses using a sample of 1,116 subsidiary initiatives that I collected from the global R&D organisation of a Swiss MNC. I extracted these initiative data directly from the firm's initiative database. This research setting allows me to collect unprecedented data on subsidiary initiatives, to rule out problems of unobserved between-firm heterogeneity, unobservable environmental influences, and measurement error from subjective respondents, and to study the MNC's intra-firm organisation directly rather than by proxy measures.
The findings show that initiative survival is positively influenced by the social and geographical closeness of the issuing R&D subsidiary to headquarters, the initiative's alignment with the firm's core areas of activity, and the manager's past success record (i.e., the number of already recognised initiatives sent by that manager). Moreover, initiatives that propose exploitative innovation are more likely to survive than initiatives that propose exploratory innovation. However, inter-subsidiary collaboration has no significant influence on initiative survival.
Finally, I discuss the findings and outcomes of my research and show their implications for theory development and management practice. I also comment on some limitations that suggest opportunities for further research.
type book (English)
keywords Strategic initiative; subsidiary; R&D; innovation; multinational; international; firm; survival time analysis
project Subsidiary Initiatives in International Research and Development: A Survival Analysis
date of appearance 2010
publisher Suedwestdeutscher Verlag fuer Hochschulschriften (Saarbruecken)
volume / edition 1
ISBN 978-3-8381-1218-3
page(s) 144
profile area SoM - Business Innovation
citation Keupp, M. M. (2010). Subsidiary Initiatives in International Research and Development: A Survival Analysis. Saarbruecken: Suedwestdeutscher Verlag fuer Hochschulschriften. - ISBN 978-3-8381-1218-3.