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The Development of International Business

A Narrative of Theory and Practice

Robert Pearce

In this wide-ranging and groundbreaking new book, Robert Pearce provides an analytically-informed basis for understanding the modern multinational enterprise. It does this by tracing the development over the past half-century of two parallel strands of analysis in International Business; designated as the ‘theoretical’ and the ‘practical’. The book shows how the practical restructuring of the MNE as an organisational form has responded to changes in the wider global economy and how this evolution has interfaced with the enriching of the relevant theorising. By tracing the persisting dynamics of the MNEs’ structure and strategic positioning it demonstrates how what it is now can be used as a template for understanding and organising its further evolution as additional changes condition its environment.
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Chapter 7: The knowledge-seeking transition: decentralising innovation and R & D

A Narrative of Theory and Practice

Robert Pearce

Extract

The two hierarchical organisation structures discussed in Chapter 4 both involved the ‘exploitation’ of firms’ mature sources of competitiveness. The organisational ‘transition’ analysed here involves the increased relevance of the other key priority: ‘exploration’ for new sources of competitiveness. This is analysed as ‘knowledge seeking’ (KS) with MNEs addressing the diverse knowledge and innovation capabilities of an increasing number of countries that possess different creative potentials. The adoption of KS alongside ES (and possibly elements of MS) characterises the modern MNE as a dynamic differentiated network or heterarchy/transnational. The chapter explores in detail two key manifestations of the KS imperative in these MNEs. (i) The decentralisation of innovation. This section incorporates an elaboration of the different competitive roles now played by subsidiaries in the modern MNE, so as to emphasise the emergence of those subsidiaries (product mandates; strategic leaders; competence creating subsidiaries) that aim to innovate for their MNE group from attributes of the host economy. (ii) The decentralisation of R & D. Traces how the academic understanding of R & D in MNEs evolved from an initial quantitative awareness of its significance to a more qualitative comprehension of the varied roles that have been played by differently positioned overseas R & D labs. Some of these roles are seen as co-determined with innovation subsidiaries but others take more stand-alone positions (basic-research units).

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