Exploring the paradox of competence‐creating subsidiaries: balancing bandwidth and dispersion in MNEs

Rajneesh Narula

No 2013-046, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This paper seeks to synthesise the various contributions to the special issue ofLong Range Planning on competence-creating subsidiaries CCS, and identifies avenues for future research. Effective competence-creation through a network of subsidiaries requires an appropriate balance between internal and external embeddedness. There are multiple types of firm-specific advantages FSAs essential to achieve this. In addition, wide-bandwidth pathways are needed with collaborators, suppliers, customers as well as internally within the MNE. Paradoxically, there is a natural tendency for bandwidth to shrink as dispersionincreases. As distances technological, organisational, and physical become greater, there may be decreasing returns to MNE spread. Greater resources for knowledge integration and coordination are needed as intra- and inter-firm RD cooperation becomes more intensive and extensive. MNEs need to invest in mechanisms to promote wide-bandwidth knowledge flows, without which widely dispersed and networked MNEs can suffer from internal market failures.

Keywords: Multinational Firms; International Business; Business Economics; Economic Sociology; Economic Anthropology; Social and Economic Stratification (search for similar items in EconPapers)
JEL-codes: F23 M21 Z13 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cse and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2013046

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