Why don't you use it: An attention-based view on the paradoxical non-recognition of foreign R&D subsidiaries

In this paper we examine why multinational companies (MNCs) do not recognise foreign R&D subsidiaries, despite the fact that these subsidiaries are wholly-owned and have valuable knowledge and capabilities. Research conducted over the last 20 years has consistently con-firmed this neglect of international R&D subsidiaries. This phenomenon is much at odds with predictions from various theories that have been used to analyse the MNC. We therefore employ a new theoretical perspective by using the attention-based view of the firm to build the argument that the varying degrees of subsidiary recognition are due to differences in corporate-level managerial attention with respect to the subsidiary's characteristics. We then hypothesise on specific action-related and structure-related subsidiary characteristics and test our hypotheses with intrafirm data from 93 foreign R&D subsidiaries. Our findings suggest that recognition is positively associated with action-related characteristics, but the findings are mixed for structure-related characteristics. Finally, we discuss implications for our theoretical understanding of the MNC.