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From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets

Srivardhini K. Jha (), Charles Dhanaraj and Rishikesha T. Krishnan
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Srivardhini K. Jha: Indian Institute of Management Bangalore
Charles Dhanaraj: Temple University
Rishikesha T. Krishnan: Indian Institute of Management Indore

Management International Review, 2018, vol. 58, issue 4, No 5, 633-661

Abstract: Abstract Our inductive study of nine European multinational enterprises (MNEs) and their R&D units in India uncovers a distinct trajectory of overseas R&D evolution in emerging markets. In contrast to the well-established trajectory of foreign R&D evolution that begins by adapting existing MNE products to the local market, this alternative trajectory begins by leveraging cost arbitrage and progresses through three unique configurations towards a global product mandate. Our study also unravels how the R&D units build embeddedness within the MNE network and with the local ecosystem, and how such embeddedness influences the evolution of their R&D mandate. We present a stylized taxonomy of R&D configurations and integrate this into an evolutionary model of emerging market R&D and suggest that research on MNE R&D in emerging markets must shift from focusing on the macro environment to exploring the dynamics of embeddedness. The study also provides useful insights to practitioners on managing R&D in emerging markets.

Keywords: Multinational R&D; Emerging markets; Innovation; Embeddedness; Cost arbitrage; Competence creation (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11575-018-0353-3

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